A German imaging and radiotherapy group has quietly expanded to become the market’s second-biggest player with the backing of Rothschild’s PE arm Five Arrows, and is seeking additional financing to continue its growth, HBI can reveal.

Radiologie Holding, which has no website, has grown through buy-and-build since being founded by an ex-General Atlantic partner in 2015 to reach €80-100m in pro-forma run-rate revenues (mainly imaging) at about 20 practice locations in North Rhine-Westphalia, Baden-Württemberg, Hesse and Lower Saxony.

Five Arrows is majority shareholder through its FAPI II and FAPI III funds, which invested in 2019, and HBI is told that Radiologie Holding is currently seeking to expand its debt financing to continue its growth and capital investment programme.

This is primarily through a €30-60m acquisition facility being sought by Five Arrows, which has retained Marlborough Partners to assist with the process and is talking to existing lenders as well as new banks and funds, we are told. This would add to its existing €120m facility originally provided by Barings to back the buyout in 2019. Our source adds that Radiologie Holding is being marketed off €30m EBITDA which includes synergies from not-yet signed acquisitions.

The sector is consolidating as outpatient radiology practice owners seek successors and hospitals outsource their imaging departments. Both struggle with the two disruptive technologies in the sector, teleradiology and AI.

The five largest players in the German imaging sector total around €400m in run-rate sales, and in five years that is likely to double or triple on current trends, says a source. This would double consolidation of the wider imaging market (including in-hospital) from under 5% today held by the top five to around 10%, we estimate.

Consolidation of outpatient radiology practices, of which there are around 700, is likely to be over 10% already on the above metric. They are a substantial minority of the imaging market’s value with the remainder in other types of outpatient facilities and hospitals.

The largest player is imaging, outpatient and radiotherapy group Med 360, followed by Radiologie Holding and then Blikk Holding, owned by German PE firm DBAG. The German outpatient radiology market saw volume drops of 20-50% during the six weeks of lockdown in March and April, with 70-90% of January/February figures in May and a return to 100% in June, for an annualised fall in the market size of between 3-4% (HBI Intelligence figures). Statutory insurers have protected revenues up to 90% of pre-COVID averages but one-third of radiology practices’ revenues come from patients’ private insurance (GOA) which have not been protected.