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June 16, 2020

Major CT radiology group could be sold off

HBJ Photo | Greg Bordonaro Jefferson Radiology has nine Greater Hartford offices including this one in Farmington.
By Matt Pilon

The largest private-practice radiology provider in Connecticut could be sold, as its Florida-based parent company, hit financially by COVID-19, seeks an exit from the sector.

In 2017, Mednax Inc. acquired Hartford-based Jefferson Radiology, which today has nine outpatient imaging facilities in Hartford County and exclusive radiology contracts with six area hospitals.

Mednax’s Jefferson purchase, for an undisclosed price, was part of an acquisition spree that has since more than doubled the size of Mednax’s radiology division.

Now, Mednax -- which provides neonatal physician services and other specialty care across a nationwide network -- is seeking to exit the radiology business.

The decision, announced June 5, came on the heels of steep patient volume declines in the first quarter and in April across several of Mednax’s business lines, including a 50% to 60% decrease in radiology services. Those impacts began to recede in May, the company said.

In February, just prior to the COVID-19 pandemic, UnitedHealthcare terminated its Mednax contracts in several states over pricing disagreements, Healthcare Dive reported.

Mednax, which has not named a potential buyer for its so-called radiology solutions unit, intends to use the proceeds to pay down debt. The radiology unit produced $490 million in revenue last year, or 14% of the company’s overall revenue, according to S&P.

Jefferson Radiology did not immediately respond to a request for comment about the divestiture Tuesday morning.

In a statement to HBJ, Mednax Radiology President Matthew Devine said the decision to try to sell the unit was the result of a strategic assessment of the parent's portfolio companies. 

"Jefferson Radiology, an affiliate of MEDNAX Radiology will not be impacted by the intended transaction," Devine said. "Since Mednax bought Jefferson Radiology in 2017, it has grown its revenue and expanded its geographic reach while being the beneficiary of significant capital investment.  We expect that Jefferson Radiology will continue its expansion while providing the highest level of care to its patient population."

Mednax is in the midst of shifting its focus to its core pediatrics and obstetrics business. It recently sold off its $1.2 billion anesthesiology unit and implemented $10 million in expense reductions. To reflect its changing identity, Mednax is changing its corporate name to Pediatrix Medical Group.

This story has been updated to add additional comment from Mednax.

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