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“Generation
provided invaluable contributions to our Board
of Directors. They have stimulated vRad to build
a more competitive better business. They are
great at introducing best practices across their
investment portfolio”
Rob Kill , CEO
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 Case Studies
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Background
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Dr.
Sean Casey founded Virtual Radiologic Corporation
(NASDAQ: VRAD) in 2001 to enable radiology practices to outsource
their overnight coverage. Driven by an aging population,
improvements in diagnostic capabilities and the increasing
usage by physicians as a preventive screening method,
diagnostic imaging procedure volume, such as CT-scans,
is growing at an estimated 14% per year, while the
number of radiologists is growing at only 1.5 % per
year. This imbalance, coupled with technology improvements
and reliable broadband connections, spurred the creation
of an entirely new field of healthcare services: teleradiology.
By 2004, vRad was a leading
provider of teleradiology services to radiology practices
and hospitals nationwide. vRad provides ‘remote’
reading of diagnostic images through a network of
radiologist located throughout the United States.
vRad’s technology infrastructure enables radiologists
to read in any location, rather than from a central
reading room, and leverages the power of a large group
of radiologists to provide 24/7 coverage for customers
with read turn-around times of less than 30 minutes.
The company recognized a need for equity capital and
strategic guidance to accelerate growth, and solidify
its leading market position.
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Generation’s Involvement
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Generation
had identified these strong secular trends and thus,
had been proactively targeting the teleradiology industry
for two years prior to making an investment in vRad.
Given vRad ’s scalable technology platform, experienced
management team, and emphasis on quality, Generation
felt that vRad was the ideal company to partner with
in the industry. As a result, Generation Partners made an investment in the Company in May 2005 as the Company’s
lead investor with two Generation professionals joining
vRad’s Board of Directors. With Generation’s
capital and guidance, vRad accelerated hiring, brought
in technology experts to augment the company’s
workflow systems, refined the corporate structure
to better comply with corporate practice of medicine
statutes, assisted in the implementation of strategic
initiatives, and negotiated terms with key vendors.
Generation worked with Dr. Casey and subsequent CEO, Rob Kill, and their respective teams to develop
and implement financial, operational, and technical
processes to help vRad manage its tremendous growth.
In November 2007, the Company had its Initial Public Offering, with Goldman Sachs and Merrill Lynch as co-lead managers. The Company traded on NASDAQ under the ticker symbol VRAD.
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Outcome
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| In July 2010, Providence Equity Partners took Virtual Radiologic private in a transaction valued at $294 million. At the time of sale, Generation was the Company's largest investor. Over the course of our investment, revenues grew ten-fold, and EBITDA grew from under $1 million to over $25 million. |
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