Virtual Radiologic purchased for $294M

Less than three years after going public in 2007 with a $68 million IPO, Providence Equity Partners has purchased Minnesota-based Virtual Radiologic for $294 million, or $17.25 per share.

Virtual is in the business of teleradiology, which allows radiologists around the country to connect and interpret imaging data. The company sale is surprising because, by all accounts, the business is doing well and is poised to become the dominant player in the teleradiology market. Its only other competitor is Nighthawk Radiology, which had been struggling. "[B]y selling the company now, investors are essentially saying they don't expect Wall Street to value the company any higher than $17.25," observes Thomas Lee of MedCity News. Virtual CEO Rob Kill says in an interview that his company wasn't properly valued by the markets. But Lee notes that the capital markets have improved, and Virtual was poised to become the leading company in the hot teleradiology field.

There's another possible explanation for the sale. Generation Capital Partners, a majority owner of the company's shares, has been struggling to raise its third generation fund. Virtual's sale looks like an impressive result for investors toying with the idea of investing in Generation's fund. 

- read the MedCityNews report for more