Consolidation in the teleradiology market picked up speed this week as outpatient imaging provider RadNet announced an agreement to buy ONRAD for up to $560M. The acquisition is big news in its own right, but it also shows how radiology’s workforce challenges are driving a restructuring of the imaging services segment.
RadNet announced on October 26 that it had agreed to acquire ONRAD from its private equity owner Housatonic Partners for $350M in cash and 5M shares, with an earnout clause worth up to $210M. The deal is expected to close in early 2027.
- ONRAD has over 130 radiologists under contract who read imaging exams via teleradiology for more than 225 hospitals in 26 states. The company is expected to add $190M to $200M in annual revenue to RadNet.
ONRAD is based in Phoenix and itself has grown through acquisition in recent years, such as its purchase of Direct Radiology from Philips in late 2024.
- ONRAD already had a relationship with RadNet, as it was the first customer for DeepHealth OS, the AI operating system developed by RadNet’s DeepHealth subsidiary.
In fact, it was that relationship that ultimately led to this week’s acquisition announcement. In an interview with The Imaging Wire, RadNet President and CEO Howard Berger, MD, said the company’s work with ONRAD gave it greater exposure to the rising volume and staffing challenges hospitals are facing.
- The radiologist shortage has been slowing down reporting times for hospital-based radiologists and even delaying patient diagnoses, prompting facilities to turn to teleradiology for help.
RadNet is no stranger to teleradiology, using it extensively within its own network of outpatient imaging centers, Berger said.
- But with the ONRAD acquisition, RadNet will offer teleradiology to external customers, mainly hospitals that need extra interpretation capacity.
That will bring RadNet into more direct competition with radiology’s 800-pound gorilla, Radiology Partners.
- RP historically has focused on rolling up radiology groups rather than running outpatient imaging centers, but it does operate the vRad teleradiology business that competes directly with ONRAD, and in August RP announced an acquisition of international teleradiology provider Everlight.
RP also has its own dedicated AI subsidiary, Mosaic Clinical Technologies, that markets AI algorithms that compete with those from RadNet’s DeepHealth.
- In fact, it’s the AI angle that makes all of these recently announced acquisitions so intriguing.
While hospitals debate whether and how to adopt AI, imaging services providers have apparently decided to develop their own AI, offer it through their own provider network, and then build additional revenues through third-party sales.
- It’s a philosophy that also seems to be driving Harrison.ai’s partnership with teleradiology provider Frontier Radiology (albeit on a far smaller scale).
The Takeaway
RadNet’s planned acquisition of ONRAD reflects two separate but related trends in radiology – the ongoing workforce crisis and growing adoption of AI to try to solve it. The consolidation suggests that a broad restructuring of the U.S. radiology market is occurring that combines traditional imaging services with teleradiology, with a strong helping of AI to speed things along.
