Doctors trump private equity in $150m Jones Radiology buyout as sector consolidation accelerates

Jones Radiology operates services across SA and Alice Springs in the Northern Territory through 28 clinics.

Doctor-owners of South Australia’s Jones Radiology have successfully defended their practice against a private equity takeover, exercising their right of first refusal to acquire the $150m revenue business after Allegro Funds approached the group through its Perth Radiological subsidiary.

The deal was completed in recent weeks, with the radiologists who owned about half the practice choosing to buy out the remaining stakeholders rather than accept the external offer.

Jones Radiology, which describes itself as a doctor-owned and operated practice, provides radiology services across SA and Alice Springs through 28 clinics.

The business employs more than 60 radiologists and 650 staff, operating in major private hospitals including St Andrew’s Calvary Adelaide and Burnside, as well as public hospitals and regional centres from Victor Harbor to Alice Springs.

Chair and managing partner Mitchell Raeside said the ownership change was “a proud new chapter” for the practice in its 100th year of operation.

Benson Radiology, which also operates in SA, is also for sale.

It generates about $100m in annual revenue and about $30m in annual earnings before interest, tax, depreciation and amortisation.

Benson Radiology has more than 55 radiologists and operates across 32 clinics in SA, being one of the nation’s largest private radiology practices owned and operated by radiologist partners.

Meanwhile, Victoria-based Imaging Associates Group, owned by private equity firm Advent Partners, is expected to be on the market next year.

It has about 20 radiologists working in five private practices in NSW and Victoria.

Advent bought into the business in 2021.

A number of asset sales have been unfolding in the diagnostic imaging arena in the past 18 months, with Affinity Equity Partners buying the Healius Lumus Imaging business for $965m last year.

I-MED, the country’s largest diagnostic imaging provider, tried to sell the business this year for $3bn but its owner, Permira, operated to retain the operation.

Also expected to soon be for sale through investment bank UBS is QSCAN, with DataRoom reporting in May that Morrison-managed Infratil was courting advisers for a possible sale of the business.

Morrison led a consortium to buy the business in 2020 for $735m.

The understanding is that the plan is to offer up the radiology business to suitors in 2026.

Infratil owns 56.2 per cent of Qscan and valued its stake at $NZ454.5m ($402m), suggesting an asking price of close to $1bn for the business if placed on the market. The company said in its results this year that as part of its medium-term strategic objectives it would divest businesses “unlikely to scale” under its ownership and reinvest.

Qscan’s earnings before interest, tax, depreciation, amortisation and fair value movements was $NZ77.2m for the year to March, up $NZ9m from the previous corresponding year.

Infratil said it expected Qscan’s EBITDAF to be between $NZ80m and $NZ95m for the 2026 financial year.

When Qscan was for sale by Quadrant Private Equity in 2020, under bidders for the business included Ramsay Health Care, Permira and Queensland Investment Corporation.

The Morrison & Co Growth Fund owns 15 per cent of Qscan and the remainder after Infratil is owned by doctors and management.

The sale price in 2020 equated to between 12.7 and 14.1 times its forecast EBITDA range of $52m to $58m for the 2021 financial year.

Talk of a sale comes amid challenging conditions in the healthcare industry, with radiologists hard to come by and costs rising.