Health Images' purchase last week of about 2 million shares of preferred MedAlliance stock may be the first sign of a future long-term affiliation between the two diagnostic imaging providers.
But officials wouldn't go so far as to say the two companies, which rank among the largest outpatient imaging firms, will merge.
Atlanta-based Health Images purchased 1.1 million shares of MedAlliance Series A preferred stock and 1 million shares of Series B preferred stock for $11.3 million.
No common stock was exchanged. MedAlliance, which changed its name from ImageAmerica earlier this year, has 11 million shares of common stock outstanding. The company is based in Brentwood, Tenn.
In addition, officials at both companies said they are discussing a future transaction involving "certain business operations of MedAlliance."
"Neither MedAlliance nor Health Images presently intend to make any further public statement concerning their discussions until either a definitive agreement has been reached or discussions between the two companies have been terminated," the companies said in a joint statement.
MedAlliance provides a variety of medical diagnostic imaging services at 16 freestanding outpatient imaging centers and more than 200 locations in physicians offices, hospitals and medical office buildings.
Health Images operates 42 diagnostic imaging centers in the United States and the United Kingdom and one radiation oncology center. The company also manufactures magnetic resonance imaging scanners and provides MRI equipment maintenance services for third-party customers.
For the nine months ended Sept. 30, Health Images' net income rose 7.4%, to $2.9 million, or 24 cents per share, compared with $2.7 million, or 23 cents per share, during 1993. Revenues climbed 7% to about $55 million.
MedAlliance's net income for the same period, by comparison, dropped 51%, to about $2 million, or 17 cents per share, compared with $4 million, or 41 cents per share, a year earlier. Revenues dipped 2%, to $60 million.