Executive Summary:

Scan.com is acquiring ‘Advanced Imaging Centers LLC’ (”AIC”). AIC is a rapidly growing competitor of Scan.com, with revenue predominantly deriving from Atlanta, GA.

The combined annualized financials of the combined entity post-acquisition will be circa:

• Revenue $28m
• Gross Profit $25m
• EBIT $9.5m

YoY average growth rate (2020-2023) is 229%

<aside> 📈 The AIC business model & history of the business

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History:

• Jeff met Alex and his father Marty through the Jewish community. Marty is a commercial real estate business owner (HT Group); and Alex started doing the accounting for his business after he trained at KPMG (also where Charlie trained).
• They then had this idea to build an imaging company, Alex was at Private Equity (PE) company in the restaurant space at the time.
• They started ExpressMRI, and had the idea to do cheap ($399) cash pay scans, which provided the initial momentum for the business. This included purchasing an imaging facility and running it
• They then discovered the Personal Injury (’PI’) market and have specialised in that since, with about 90% of volume now PI.

The workflow model:

• AIC is a healthcare services provider, which performs the scheduling, booking and financing of diagnostic imaging on behalf of referring providers and personal injury patients, which include some notable names within the Altanta market, such as ‘Meridian Strategic’ who provide the end-to-end medical case management services on behalf of large personal injury firms such as ‘Morgan & Morgan’
• The workflow is as follows:
  1. AIC receives referrals for diagnostic imaging, often in the form of fax forms
  2. Once a referring provider sends the fax, they will co-ordinate with the imaging centers on behalf of the patient to organize a scan, which includes:
     1. Calling the imaging center for availability
     2. Manually scheduling the scan with the patient
     3. Confirming the time with the imaging center
        1. Tracking the status of the scan manually within spreadsheets
     4. Following up on the status of the scan with the imaging center
  3. They have their own radiologists who read the scan image sent to them by the imaging facility
  4. The radiologists then produce the reports which are then manually sent across via email to the referring provider
     1. They have no integration or PACS technology, but very strong relationships with referring providers and attorneys
  5. Once the case settles, the AIC negotiating team will negotiate with the referring provider an agreed price for the scan (typically ~$1,000 which is paid out of the settlement)

The business model:

All imaging centers aside from OPI:

• AIC has agreed imaging rates with diagnostic imaging centers
• AIC also has ‘charge master’ rates which is the price that they bill the referring attorney or provider for the scan. AIC typically does its own reporting, so they only pay for the scan
• Once the patient goes for the scan, AIC pays the imaging center on 30 day terms for the scan
• AIC then holds the medical receivable (’lien’), until the case settles
• Once the case settles, AIC negotiates with the attorney