NightHawk Radiology of Coeur d’Alene Receives Investment of $25 Million from Summit Partners

A prominent venture capital firm has invested $25 million to help a North Idaho company expand its global network of radiologists who evaluate X-ray and CAT scan images for health care providers in this country.

NightHawk Radiology http://www.nighthawkrad.net/ , based in Coeur d’Alene, uses a team of Australian doctors to read and evaluate about 1,500 images each day. The company provides that service to more than 300 hospitals, radiology groups and clinics across the United States.

Tom Sowa
Staff writer

http://www.spokesmanreview.com/business-news-story.asp?date=040704&ID=s1506921&cat=section.business

Summit Partners http://www.summitpartners.com/ , one of the
nation’s major VC firms, announced Tuesday it has provided $25 million to help NightHawk Radiology grow and expand.

Summit has a history of investing in strong and growing young companies, said Scott Carter, a vice president with the firm’s Palo Alto, Calif., office. Among its past investments have been McAfee Associates, a software company, and Lincare Inc., a major provider of home health care.

“NightHawk is the clear market leader in this rapidly growing healthcare segment (of remote radiology),” Carter said. “And we couldn’t have handpicked a better set of managers than NightHawk now has,” he said.

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NightHawk Radiology Services

250 Northwest Blvd. #202

Coeur d’Alene, ID 83814

Phone: 208-676-8321

Toll-Free: 866-400-HAWK (4295)

Fax: 208-664-2720

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The $25 million is the largest-known single investment in a North Idaho company, said several area investment specialists.

Tom Simpson, who manages Northwest Venture Associates of Spokane, said the $25 million investment is a very large corporate event in the Northwest.

The only other Washington companies that have matched that level recently have been Spiration, a Puget Sound medical device maker that landed $26.9 million, and World Wide Packets of Spokane, which acquired about $24 million in the past several months, Simpson said.

“We feel tremendously flattered” by the investment, said Dr. Paul Berger, NightHawk’s CEO and president. He, his brother Jon Berger and partner Chris Huber co-founded NightHawk in 2001.

Summit also provides an incredible level of skill and management experience to keep NightHawk as the prominent provider of teleradiology, Paul Berger said.

The company hires only board-certified specialists skilled in reading CAT scans and other diagnostic images, Berger said. The company’s business is based on saving time and energy for U.S. radiologists who want a preliminary reading done overnight, he added.

In exchange for the investment, Summit gets one board seat, said Carter. The Bergers did not disclose how large a stake in NightHawk the investment means. Summit remains a minority shareholder, Carter said.

For the past three years, NightHawk has had a team of nearly 30 radiologists based in Sydney who work 12-hour shifts reading images sent from the United States.

That Australian office handles about 1,500 images and preliminary readings each day, said Paul Berger. As a private company, NightHawk does not disclose its financial numbers, the Bergers said in a recent interview.

Carter said no other American company comes close to NightHawk in providing the kind of skilled and effective readings of medical images.

The company was launched after Paul Berger, a radiologist, realized many radiologists are being called in the middle of the night in response to urgent calls from emergency room doctors.

He hit upon using specialists in Australia who generally work from 10 a.m. to 10 p.m. — which is 5 p.m. to 5 a.m. on the Pacific Coast.

Using fast network connections and image-viewing software, the Australians read the images and provide a preliminary report. The physicians who asked for the reading find them available when they come to work the next morning, Paul Berger said.

The vast majority of those readings are CAT scans requested by doctors at U.S. emergency rooms, Jon Berger said.

He noted this is not a case of outsourcing jobs overseas. “All our doctors are U.S. citizens,” he said. In addition, the service is based not on cutting costs but on improving and making health care more efficient through technology.

“Technology changes the way health care is provided, so that patients get more efficient health care through the night,” he said.

Teleradiology services have increased 7 percent a year for the past 12 years, he said. “The industry growth is expected to accelerate due to a shortage of radiologists in the workplace,” Carter said.

The investment will likely mean a doubling of company workers, Jon Berger said.

The Coeur d’Alene office has 42 people who do software development, marketing and licensing of radiologists. The Sydney office has about 30 positions, excluding radiologists.

Jon Berger said the work force is likely to double in both locations. Andthe investment will lead to NightHawk opening a new operation center in Switzerland.

That decision, he added, is based on attracting English-speaking radiologists who have said they prefer a European base rather than Australia.

The jobs to be added in Coeur d’Alene will be family-wage jobs that benefit the region, Jon Berger added..

“These will all be good-paying jobs,” he said.

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NightHawk Radiology Receives Investment of $25 Million from Summit Partners

Fast-Growing Overnight Teleradiology Services Provider Positioned for Long-Term Success

COEUR D’ALENE, ID — NightHawk Radiology Holdings, Inc., a leading provider of off-hour, overnight teleradiology services for hospitals, radiology groups, and universities across America, today announced that it has received an investment of $25.0 million from Summit Partners, a leading private equity and venture capital firm with more than $5.5 billion in capital under management.

Founded in 2001, NightHawk employs U.S.-trained American Board of Radiology certified physicians to provide preliminary radiological interpretations from its state-of-the-art central reading facility in Sydney, Australia. The physicians—who work off-hours, from 8 p.m. to 8 a.m. EST—electronically receive, read, and respond to the submitted radiology scans in a transcribed report that is sent back to the attending physician within 20 minutes on average.

NightHawk has established a leadership position in the rapidly emerging market for off-hours radiology services. “NightHawk is filling a critical need which allows radiologists to meet the ever-increasing demand for their specialized expertise,” said Dr. Paul Berger, NightHawk’s President and CEO. “Our partnership with Summit Partners positions us to continue investing in our infrastructure and to execute our corporate mission of improving the quality of patient care as well as the quality of life for our clients.”

Summit Partners’ investment comes at a time of rapid growth for the three-year-old teleradiology services firm. NightHawk provides services to more than 350 hospitals, radiology groups, and clinics. The company’s staff of licensed, credentialed radiologists performs more than 1,500 scans per night using NightHawk’s proprietary workflow systems. The company is able to provide subspecialty expertise in emergency radiology because of its emphasis on recruiting the most qualified, U.S.-educated and trained radiologists.

“We are delighted to serve as NightHawk’s financial partner. The company is recognized as the market leader in the burgeoning off-hours radiology services sector. We look forward to working with Dr. Berger and his team in as they continue to build a world-class company,” said Peter Chung, General Partner of Summit Partners, who will join NightHawk’s Board of Directors.

Cascadia Capital LLC served as NightHawk’s financial advisor in this transaction.

About NightHawk Radiology Holdings
NightHawk Radiology Holdings is the leading provider of overnight and off-hours radiology coverage for hospitals and clinics across America. The company’s mission is to improve the quality of healthcare through telemedicine. NightHawk’s board-certified radiologists enable hospitals and clinics to provide excellent and responsive care in real time.

Key to NightHawk’s success is its ability to recruit outstanding radiologists who are committed to providing subspecialty expertise in emergency radiology. All of Nighthawk’s radiologists are American Board of Radiology certified, and they have had additional fellowship training and teaching experience. In addition, they are fully licensed in the states in which they provide services. For more information, please visit http://www.nighthawkrad.net.

About Summit Partners
Summit Partners is a leading private equity and venture capital firm. The firm has a capital base of more than $5.5 billion, with offices in Boston, Palo Alto, and London. Formed in 1984, Summit Partners has provided growth equity, recapitalization, and leveraged buyout financing to more than 250 companies, which have completed more than 100 public offerings and 80 strategic mergers or sales.

Summit Partners seeks outstanding management teams that have self-financed their companies to profitability and market leadership. Summit offers equity and subordinated debt financing for transactions from $2 million to $250 million in a broad range of emerging growth industries, including technology, healthcare, business and financial services, and industrial and consumer products. For more information, please visit http://www.summitpartners.com.

About Cascadia Capital
Cascadia Capital offers corporate finance, mergers & acquisitions, strategic advisory services, and capital market services to companies across North America. Cascadia Capital serves emerging growth and middle-market companies, both public and private. The firm focuses on the following sectors: Information Technology, Communications, Security & Defense, Healthcare, and Industrial & Consumer. For more information, please visit http://www.cascadiacaapital.com.

The business of Summit Partners in the UK is regulated by the Financial Services Authority.