Massive opportunities for M&A as French imaging sector consolidates

JULY 29, 2022: Almost 30 per cent of France’s €4.1 billion outpatient imaging market will consolidate in the next five years, an informed HBI source predicts.

The estimate comprises numerous imaging centres with a combined turnover of €1.2 billion. That figure excludes the top ten for-profit imaging centres which already account for around 200 or about 10% of some 2,000 imaging centres that are currently in operation in France, the source added. He cited imaging group leaders such as Simago, Impf and Im2p as examples. HBI Intelligence data estimates that in 2020, the top ten firms’ turnover amounted to €187m. Since 2020 was arguably the height of Covid’s impact on business and there has been consolidation since, current turnover of the ten could well exceed €300m, but this estimate still has to be confirmed.

Illustrating that the move towards consolidation is already taking place, the latest deal involves Groupe Résonance Imagerie. The imaging group of 40 doctors has secured undisclosed “major financing” from Ardian, a private equity concern with €130bn under management,  Andera MidCap a fund within private equity business Andera Partners and Five Arrows Debt Partners, a Rothschild & Co fund.

Résonance Imagerie has expanded since 2011, mainly via acquisitions. It has 15 centres with 23 MRIs and other scanners in Paris, Ile-de-France (Val d’Oise, Yvelines, Seine et Marne) and Centre-Val-de-Loire (Chartres, Orléans). The new finance, which is a structured loan deal, will cover 3 new acquisitions with a further 17 MRIs and scanners, according to Ardian.  Since the finance involves debt, the “associated doctors” will “almost exclusively” remain owners of Résonance Imagerie and its new acquisitions, Ardian states.

“The tailor-made and flexible financing” will enable Résonance Imagerie “to actively pursue the ongoing consolidation of the sector”, said Gregory Pernot, Managing Director of Ardian’s Private Debt team

Confirming HBI’s source that imaging consolidation in France will accelerate, Les Echos reports that large platforms are beginning to emerge in the imaging business. France Imageries Territoires a large platform has bought Haute-Provence Medical Imaging Centre in the cities Manosque, Digne-les-Bains and Sisteron. Eight radiologists who owned the imaging centre sold all of their shares in return for a minority stake in France Imageries Territoires.

Vidi, a network of 1,070 French radiologists has formed Vidi Capital and is offering shares to the doctors. Vidi Capital is designed to allow imaging groups to consolidate their capital within a national structure controlled by radiologists. It aims to promote medical shareholding by allowing radiologists to reinvest in this holding company and to be among the first shareholders.

“This project aims to protect the quality of imaging care in France,” said Amélie Libessart, Managing Director of Vidi Capital.  The first capital increase of €7m will be carried out in July and so far 200 radiologists in the Vidi network have bought shares.

“We will thus have a solid medical shareholding, a guarantee of control of governance by radiologists.”

Other examples reported in HBI in the past month include: French private equity house Naxicap’s purchase of an imaging centre in Lyon. Edmond de Rothschild, the investment house is reportedly seeking buyers for a minority stake in Simago, the large French imaging services group. Potential buyers include Ardian, Eurazeo, the French investment company, BC Partners a British investment firm and Antin, a private equity concern.

Our Analysis: France’s imaging sector is on the cusp of a rapid increase in consolidation for good reasons. Radiologists and their teams need to concentrate on clinical work and need management sophistication, more capital and business know to obtain staff, reduce costs and get better deals on scans and other equipment. They can then take advantage of digitisation and data to help them improve their work and profitability.

The question is how to obtain capital and good management without losing control.

In the Résonance Imagerie example, the doctors retain control because external finance is via a loan structure. The disadvantage, however, is that higher debt can be dangerous at a time when an inflationary recession looms. France previously frowned on international ownership i.e equity in French healthcare concerns, but legal loopholes have been found. An example, according to an HBI source, is that the investor obtains 25% of the voting A shares and 100% of the B shares. In other words the investor obtains a stake up to 100% but doesn’t control the French imaging asset.

© Copyright Neil Behrmann

First published in Healthcare Business International

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