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USDL adds nuclear imaging with Lee acquisitionU.S. Diagnostic's acquisition of Medical Imaging Centers of Americaclosed last week, despite litigation filed by Raytel Medical relatedto the ownership of an Orlando, FL, imaging
USDL announced its intention to buy San Diego-based MICA earlierthis year (SCAN 7/31/96). MICA was forced to look for a corporatepartner to settle a dispute with Steel Partners, a New York City-baseddissident shareholder group that held 19.6% of MICA stock. SteelPartners supported the USDL acquisition, which received the approvalof MICA shareholders on Nov. 6.
Raytel, of San Mateo, CA, put up an unexpected roadblock tothe transaction when it filed suit in Superior Court of San DiegoCounty asking for a preliminary injunction to enjoin the deal.Raytel claimed the acquisition, if consummated, would violatethe terms of a joint venture agreement between Raytel and MICAgoverning the operations of Orlando Diagnostic Center (ODC).
Raytel and MICA have been partners in ODC since 1991, whenRaytel bought Medical Imaging Partners from Merrill Lynch (SCAN12/25/91). Raytel owned a 51% share in ODC, while MICA owned 49%,according to former MICA president and CEO Robert Muehlberg.
According to the terms of the joint venture agreement, neitherpartner can own a competing imaging center within a 50-mile radiusof ODC. USDL, however, owns a center several blocks away fromODC, and Raytel filed suit as a preemptive measure to preventthe USDL/MICA acquisition from violating the terms of the jointventure, Muehlberg said.
A Superior Court judge rejected Raytel's bid to enjoin theacquisition, but ordered that Raytel and MICA maintain the statusquo at the ODC facility and appointed a receiver to manage thecenter until the dispute is resolved. MICA was also ordered notto share any confidential information with USDL relating to theaffairs of the center.
Muehlberg said USDL and Raytel are trying to negotiate a settlementof the dispute, and have agreed on a price for either USDL tobuy out Raytel's 51% interest, or for Raytel to buy the MICA interest.One stumbling block, however, is Raytel's insistence that USDLnot buy or build additional centers within a 50-mile radius ofODC. In spite of Raytel's request, USDL expects the dispute tobe resolved shortly, according to USDL president Joseph Paul.
While the status of ODC remained in dispute, USDL and MICAclosed the acquisition Nov. 12. MICA now becomes part of USDL'sfast-growing network of imaging centers, adding its 22 imagingcenters and one radiation oncology facility to USDL's holdings.USDL paid $11.75 in cash for each share of MICA, and said thatMuehlberg would work with USDL in a consulting capacity.
USDL acquired another 16 imaging facilities in New York thismonth when it bought 80% of Lee Imaging Group, which providescardiac diagnostic medicine services, including nuclear cardiology,in the New York City metropolitan area.
Lee Imaging generates aggregate revenues of $7 million and$2.5 million in pro forma pretax revenue. Lee Imaging presidentLawrence Lee will become vice president of USDL's nuclear medicinebusiness. USDL said it plans to add nuclear medicine capabilitiesat current and future USDL imaging centers.
Also this month, USDL released financial results for its thirdquarter (end-September) that showed the company with revenuesof $29.9 million and net income of $2.5 million. That compareswith revenues of $7.1 million and net income of $823,000 in thesame period last year, before the company ramped up its aggressiveacquisition spree.
USDL said it registered pro forma revenues, which assume thatall this year's acquisitions had been completed Jan. 1, of $49.2million for the quarter and $144.2 million for the nine monthsto date.