Earnings call transcript Q4 2022

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Operator

Good morning. My name is Jennifer and I will be your conference operator today. At this time, I’d like to welcome everyone to the Akumin 2022 Year End Financial Results Research Analyst Call. [Operator Instructions] Thank you. Riadh Zine, you may begin your conference.

Riadh Zine

you. Thank and joining everyone presentation. for you thank morning, us for today’s Good name I of and Riadh the My Zine CEO am is Chairman and Akumin. Officer. today our joined David Financial am I by Chief Kretschmer, for want taking on I call. all thank of this the to join to time us you today’s of the at QX the the impacted results XXXX will factors Akumin initiatives for past review strategy XXXX results. year in an full Akumin’s outline that and our and we overview year, growth, call, in In development and discuss of provide some our David financial will guidance go operating over some of metrics for our key and our and discuss XXXX. conclude we will will proceed presentation I and the to then Q&A. is presentation is slide There go along meant today. deck with our that a to website it A is available copy of Investor of our akumin.com. at from download the for Relations section

let that certain could Before risks subject these conference differ in given me in today’s that that results anticipated Actual information or asked or materially to forward-looking and relating questions Akumin’s remind could from or discussed are you call those statements statements. future matters answers financial maybe to business to performance. uncertainties forward-looking we constitute begin,

You on place undue particularly statements, future performance. not these financial should on reliance

investors to forward-looking non-GAAP The GAAP. any be not do a refer measures public certain results affect conference may factors and such are EBITDA, cautioned accepted update meaning discussed call sec.gov and not place documents are generally results margin. at adjusted and adjusted undue periodic these this and measures prescribed during standardized not under principles disclosure recognized to non-GAAP risk in as measures obligation may detailed are forward-looking accessed on is by have Akumin’s and U.S. We these no These These to that reliance under disclosure. our public accounting statements. EBITDA, statements can also under EBITDA Akumin today sedar.com. statements

measures to analytical used measures, and healthcare and of to of Board including communicate addition us such Directors in ability debt. capacity GAAP service EBITDA business by a and variety with are leverage that assess certain as measures and of reasons, to are investors regularly indicators for measures performance the for our our use believe and to non-GAAP EBITDA We useful industry adjusted

adjusted not as or and alternatives in of EBITDA or net financial generated presented investing considered cash in be indicators activities flows the statements operating, EBITDA financial should or by isolation consolidated statement financial income to financing data as or performance liquidity. other

Reconciliation additional to X appendix. GAAP section find the regarding in information as can Relations presentation, on available included our which of You our measures of of website. is Investor and is non-GAAP most EBITDA that an adjusted presentation Slide in measure the comparable EBITDA loss, these net

non-GAAP efforts. have able unreasonable such not forward-looking provided produce a referred we to We reconciliation to not measures as be presentation would any this without reconciliation a in for

of outpatient As It’s hospitals remind of XXXX, we vision an health in and and solutions is the choice systems. our hospitals developments are partner review this for need everyone at capacity. increasingly in systems is important to U.S. of clear time which the be health that and to Akumin,

Akumin in our Services way is are Alliance you integrated late acquisition the of trend, XXXX. on successfully rationale we to know XXXX, Alliance strategic this on well as part of already our extremely the capitalize acquisition to continue percentage in Healthcare for XX% which and Having we well-positioned XX almost represent in in are of achieving customers expect health today. our XX country significantly years. vision. our current grow We serve to the systems the the our over this biggest revenues X,XXX coming to hospitals of and Hospitals was

will trend We the continue to Over core to XX% a beginning embraced The outpatient be our our the fully revenues available outpatient delivery important understood been outpatient business. accelerate. delivery X, to systems. hospitals to the recognize industry. our of service site full As on, has shift to service industry are significance We and suite an you can see just in our health on and very of Slide is early is outpatient. that operate mobile which are currently and of something and fixed services, shift in of

regions. is coverage asset located partner base Our hospitals strategically key markets, them in to dense with well with making in suited these

systems Importantly, and excellence, operational standardization to cost-effective we busy efficient also outpatient and a and leverage outstanding technology solutions care deliver XXXX hospitals was and patient year enables Akumin. patient to health us provide while which providing to experience. clinical for

transformational eliminating streamline functional of and Officer. initiatives the of a to Head of duplication, organization our Our new our future through solid to and Revenue growth. including focus our hiring a Oncology for leaders, existing new new rationalization key XXXX Chief build number foundation CFO, in was included These facilities

robust more cost negatively everyone we important labor our in It’s on restricted also therefore results the efforts in industry organizational our call, the the These review. in Akumin that to cases, ability while procedures specifically in areas cost that on $XX issues of healthcare million impacting and impacted as We transformation, we part lack these faced perform The savings. immune. mentioned both labor repositioned unique of many in oncology over challenge. an inflation. our is significant changes industry labor revenue and to after our challenges, side. of were availability our in a QX extensive front. was was division come These resulted we demand organizational and implementing note the shortage there availability And Despite to clinical as not

are in Fortunately, XXXX. the we the optimistic is worst very that us. behind environment somewhat has improved far thus And

including were constraints contributed as we On which the in of X, labor by cost revenue a inflation. revenues our Slide pro factors compared factors, forma XXXX in growth have we our number highlighted in XXXX. affected and to to mentioned, I XXXX As

pass $XX see, revenue increased able of tracers, can was were growth to through. the specialty cost you our we attributable As million of which to

was and by Hurricane of by our was over many the headwinds in segment. grew with revenue a review segment, significantly the as Radiology our facility This we offset despite caused $XX.X levels business this in our repositioning our Florida XXXX margin our and growth Radiology disruption closures million the higher Ian locations. Unfortunately, of the In activities experienced labor associated primarily by of decline undertook we development revenues result oncology segment. in reduced

Going forward, the we are excited about segment labor significantly has as growth clinical improved. the organic in Radiology our shortage outlook

segment also are repositioning opportunities Oncology We that seeing and the complete. hospitals our growth many with partnerships for in is now

our Slide XXXX. can the which to On results forma the side. many in to our Turning cost X, see increased compared cost XXXX pro in as factors you

we by initiatives, which synergy duplication can primarily Phase as organization. $XX employee X you focused see, implemented As our came compensation costs eliminating were functional on down the million in

I past, we As am in midyear. mentioned the achieved X pleased have initiatives that now targeted And have we synergy run-rate million. Phase as really such, our commenced of these $XX

than in While our XXXX, cost they these the more areas were offset synergies inflation by in performance business. of other impacted positively

We but cost the were of increased to labor part the labor our slide. to up response in year passed environment are function increases, costs were and during service Many we outsourcing in a the I we were through, in experienced related year. of constraints other over the contracted in. use earlier our tracers cost million able highlighted inflationary on as increases increased of recoup to professional were are and some that Note XXXX, third-party specialty previous $XX of such as which the

give business. contain they look and to going that the control. the to categories obviously are fixed illustrate cost and these sense the our operating costs will we in chart costs to highlighted our within the on of We help you high Note forward leverage extent have that variable the a

helps this Slide to operating leverage. X really illustrate

Given same-store the volume would fixed our relatively significantly growth. benefit with organic costs service high associated delivery from

least growth organic margin contribution As at the you XX%. can is see, incremental from revenue

portion employee back compensation frontline including fixed, of employees. a that our Given actually is and office corporate

did illustrated As we X, contribution. revenue not Slide to growth contributed factors result meaningful that the margin XXXX in on in

is contribution For radiology on increased margin of margin oncology rate our revenues. was revenue. the in And growth no by example, higher decline offset there

underway organic leverage radiology growth will will oncology have the additional impact forward, and more scale strategic margin on performance. XX% to volumes have us facilities, enable our a contribution. meaningful both to Many our drive capacity our which will in initiatives of through financial generate and Going we obviously than

these some strategic key highlights priorities for of XXXX and beyond. X Slide

an Phases X in discussed call, plan QX have we our in captured we integration X during our in million $XX synergies, be identified of additional already As and expect to we XXXX. which

growth As effectiveness to and themes services. operational focused commercial around the you are increased on revenue key organization, standardization excellence. can a and scheduling our focus and our optimization is initiatives improving see, for efficiently demand efficiency of strategic sales to Same-store of our cycle excellence, respond and including productivity for clinical the our

clinical standardized are of technology in journey to investment We and our experience. patient focused protocols improve workflows made shortage staff leveraging the dramatically address The is platform clinical and the an example. we patient on also

centered the addressing are key and initiatives all faced payers, these around patients. of challenges including our stakeholders, physicians of industry referring hospitals, All by

QX our oncology results XXXX. forma our same-store XX, pro in starts division QX can see you patient volume radiology key our on and service lines Slide our consolidated to the growth results in Turning our versus in

clinical again our a quarter. Specifically, result in our of slightly that primarily persisted by were as staff X.X%, markets down some of in volumes MRI the shortages

in oncology and were X% by that X.X%, given volumes up constraints, QX in starts repositioning, segment following QX. this PET/CT in builds completed the as set an impressive more Our up PET/CT labor the which impacted skill less and Total review momentum were technical modality. patient were

year. $X.X some experienced up level QX. $XXX.X sales were QX. inflation from in were of quarter. constraints end was X.X% Adjusted we a million million of XX.X% in last the the the year. quarter in QX XX quarter of million fourth $XX.X or end fourth On versus basis, million $XXX.X last Adjusted from in labor record accounts fourth experienced at margins the receivables million, This outstanding, eased low a QX to XX.X% sequentially in as slightly from up increase equates the of EBITDA $XXX.X up EBITDA of from $XXX.X million of days we XX% quarter of at revenue increase the million marginally million up was consolidated and $XX.X $X.X of X%

I over who walk financial to you will will of operating now and turn metrics. the David presentation some our key through

David Kretschmer

Riadh. you, Thank

Slide will on XXXX illustrates Akumin Riadh value-add. while of at and operating mentioned and guidance. areas financial XX platform suite of I key that some focused of the review this outset, metrics diverse our is services, offers financial our growth discuss high of business the very and high As a the

our of I from see a diagnosis in significant XX% a volumes during cancer of can a revenues though diagnosis modalities are of revenues utilized X We also our on the care of fixed patient our screening procedures that critical footprint continuum Akumin over are care to total XX% we specialties and MRI across division. of still our is MRI site You a underperforming an XX% also key year, closed radiology eliminate that sites with come our perspective. our and the PET/CT that total accounting player are revenues to physician segment. would oncology books These coming treatment quality from note – in treatment. consolidated here are delivery although half our and in and driver radiology by variety of the XXXX through sites. of some from from from

to continue where a with possible. all ongoing view an basis rationalize evaluate further on to We sites

systems cost to transition XX, lower we Slide the outpatient to Turning as is service ongoing partner hospital delivery from delivery. shift well-positioned to of hospitals with care sites to benefit and Akumin

of pro from services revenues and hospitals outpatient revenue third-party government As see you balanced over revenues. and reimbursement to more procedures, payers of consolidated between hospital our procedures X% we with representing The payers. third-party our from from XX% patient revenues provided half continue approximately our The can no forma slide, customers. for outpatient for to balance than hospitals generate come with from our the solution customer of outpatient our one preferred mix is commercial

and and both solutions time, for radiology we hospital expect and both partners customers outpatient For existing the significantly as grow hospitals new revenue in search to with share oncology.

driven financial in our Akumin XX, Slide to by is procedure Turning volumes. primarily performance

high As Riadh volumes operating earlier, leverage our given a is we so pointed contributor have growth in for high-margin structure, organic us. out procedure cost

transparency hospitals and procedure By both performance. procedures of together by Given as we revenues, that operating track actual includes volumes radiology and a seeking radiology into across our to scans independent the business platform. sites, we more current mix of with mix are providing our our the percent modality provide and financial

to discussing biggest in service contributors PET/CT MRI they noted I the our are modalities Radiology the far and lines As key the are by drivers performance. and within financial as segment,

MRI growth the that changes years. quarters. that and leader you Note last as XX, seen strong to procedure Slide the market we the PET/CT volumes same-store have And see in modality present On can recent in PET/CT, during four XXXX. in over

recent decline MRI While on due constraints, fully seen Riadh noted quarters continue we MRI earlier. to labor volumes able as a grow have not annually, demand to in the were to capitalize growth strong the

We in have impacts those XXXX. taken action which should mitigate

Our Ian given of by Florida third also are caused constraints specialized impacted a quarter factor the highly was labor locations. disruption in Note Hurricane this set clinical of the less ‘XX our for of PET/CT certain by skill modality. personnel that

quarter Growth patient the in in segment, the quarterly we sequentially QX QX as rebound and and review basis, over quarter-over-quarter start we declined oncology XXXX the on fourth a by volume. patient In that reposition mentioned year. On the activity earlier. basis track level as business, did undertook prior of a starts

division time in the value oncology this therapy. continue expect over trajectory our improving proposition We our growth compelling radiation to given

uniquely capacity aging both partners modality. in our given many hospital positioned demand and are this face fleet We including challenges, the constraints and

XX, which segment. the the entire Akumin businesses, Note of revenues. in as performance of in of for left, and XXXX, acquisition XXXX. will Oncology completed the Slide quarter the well And the see Alliance Arizona. divestiture revenue combined $XXX that the XX% the Radiology was million full you financial approximately for you September XXXX contributed Oncology on and of forma assume And as will when the Alliance by segment chart results legacy adjusted pro year our representing total see Radiology the period for annual of fourth

corporate approximately Oncology or segment our of segment, the of XX% contributed services. margin our Radiology adjusted EBITDA million of total. XX.X% was revenue $XXX the In QX before allocation

focused of and discussed. essentially margin corporate an segment as results, of of before the Act EBITDA our because funding on as margin including period. CARES been in Consolidated with and XXXX story Riadh COVID we initiatives those flat EBITDA XX.X% has adjusted transformation services. since oncology internal higher XXXX have were previously impacts Our the adjusted integration is part of in Margin elevated their in allocation in

in Hurricane negatively and discussed by also which earlier, EBITDA we the As labor was in clinical resulted a inflation and resulted margins. both Ian cost impacted XXXX decline shortage, adjusted

in leverage. adjusted volume growth clinical is of driving Given XXXX, well that should revenue growth, considering thus we operating improvement as significant year as signs see as far the our labor issue in showing to and improving begin EBITDA progresses margin improvement

to incurred It XXXX, restructuring Akumin are our thus impacts provides obligation a Cash fixed a we EBITDA minority operator XX of does adjusted free of a related flow. non-recurring. as that results hospital million profitability bridge generation and are over in typically with $XX ventures as partner and partners and were contribution from interest oncology is service to expenses primarily our increased to these a capital payments Slide flow the lease the of our sites. minority cash to free not cash in meaningful XXXX. and Preliminary so which centers, function joint interest cash be relates their these of noted debt to should efforts payments

in and equipment debt we but accounts past, banks. the We CapEx increase as of source. companies on debt also depending of in reduces receivable chart. the long-term are of initial or did typically majority regards on we two total expenditures, QX. $XX equipment local Quarter payments CapEx, of finance new this cash through – or capital does finance combination noted we our netted to financing OEMs, XXXX sale a the on lease benefit in outlay the debt, cash-related and certain have in column receive million the capital the non-recurring from In as These for announced our items

offset expect offset cost leverage burden the additional the go to typically used be CapEx our will Riadh layering extended CapEx while This XXXX, of part dynamic reduction latter reduce cash benefit more. remain by pay payments years a is that somewhat XX the with notes, in off, debt cash the we and by without free of This somewhat roll years year. discussed the leases, servicing charges In which are financial to fund duration to in for us X the of This in cash period additional subordinated significant in can or enables onto an interest Stonepeak synergy additional restructuring to related flow. which business. capture together at equipment

Turning guidance. to XXXX our Slide XX,

in you to $XXX range be million. As expect adjusted for can of be $XXX range EBITDA the see, $XXX to we XXXX, to to million million consolidated revenues of in the million $XXX

in guidance cost ongoing markets, some have year. press although and seen had we so constraints release, some inflation of our fact also these that the improvement reflects persist on in fronts this our XXXX our we labor As mentioned far

ensure early services, continue as expect to in to by anticipate We regards CapEx, expenditure the are which based markets the We deployment refine to have most criteria, our for on aligned evaluate our with demand continue better greatest encouraged continually capital of did budget developments XXXX. these those In growth. for priorities. throughout our we and to strong we strategic we our prioritize XXXX, all potential equipment, efficient near-term that

We between new to with approximately balance and $XX CapEx CapEx the $XX to million for XX% maintenance expect customers allocated and spend total CapEx. for and sites growth be million,

is we existing primarily Recall existing spend expansion. CapEx capacity sites, while as well for customers as towards acquisition as define and directed hospital customer maintenance growth that at new CapEx partner

local will with XX% in to banks. anticipate the customers of year. payback Higher a to combination headwind in We balance by the bit be of by costs and sites growth CapEx investment companies OEMs, total approximately in X-year cash and equipment be be coming a capital. new to a and continue financed return, typically a Our finance high on financing funded be

the capital end XXXX. XX structure Slide at of illustrates our

X.Xx. leverage see, can was you Akumin As secured

are time. reducing reduction leverage standardization the in of organization, come a and increase streamlining focused of from capture, synergy rationalization, network EBITDA will we delivery. As service this on Near-term technology-driven an as the deliveries, over drivers result of

In have meaningfully leverage. growth given will increase abundance organic operating addition, which in we an purview, opportunities EBITDA of our significant our revenue

to Note result market to of to over will the opportunities, Xx significant do options than structure significant leverage capital and shareholder, will so these highly As a our or as cost are a growth secured incentivized efficiencies decline time. optimize to Xx less organic prudently continue believe we we we permit. conditions evaluate and that

I’ll take before Riadh to now over we questions. to turn wrap back up it

Riadh Zine

concludes Thanks, question-and-answer the I portion window remarks into an presentation. of of it David. going prepared the the the that acumen the the platform period. provided That operator potential start to the hope informative would and ask We forward. new

Operator

Thank go Atkinson And [Operator we you. to will Noel Instructions] first Clarus. with

Noel Atkinson

morning, taking there see new labor our year. is QX. to Thanks good in It’s coming green nice guys. maybe the done much so some here for well And of that shoots Hi, improved into availability questions.

interesting getting So first to you that kind so talking about to the down EBITDA. of What there? secured off, sort comment are was timeline line leverage Xx an time about of

David Kretschmer

Riadh... So,

Riadh Zine

all, really in operating hope understand And morning, Yes, the Good the of thank it as significant good – and operating think I we everyone bridge thanks we morning. comments. today First leverage. the for for to help provided always your really the some factors said I you very Yes, impact the Noel. question, which is absolutely. relates analysis leverage And to investors business.

was – stores, closures, And about revised and was which half we in unique after initial when as facility a So leader both on we XXXX you in look the second The mostly have to operating with on growth radiology a new growth. half you year, our and saw you the plan, our our story. negative cliff, the we the in repositioning, changes. if why to that with what no I David were it guidance, and didn’t of happened what oncology really same-store highlighted, expected see plan, a off different guidance fell in, came guidance. was the we think of the start have is good same only target I And initial first year. to leverage, actually Oncology there radiology growth the at think radiology you

actually – $XX So as I It pass-through. actually our that. leading own think And you to that was highlighted, That’s also growth specialty was the was in nothing the million other industry. growth. that then not tracers of specific our that revenue was revenue actions actually are

and you it year, So what this at okay, operating growth was you’re revenue. look there when in But is leverage about. talking look people some at the say,

year, you Now gets know. very to a to are finished But see focused flat in How at when you finished how as or ish $XXX So leverage, as on rate. those only was synergies highlighted that do you you the million years, million. his you year are of also not numbers. you flat from – back why actually around that show slides right? $XXX going this in with EBITDA, Xx $XXX you relatively that get prior back we million, back run then David we million to analysis, there $XXX somewhat million know EBITDA $XX that half the look the we the Right, bridge

is obviously there number that increase in level. an So from that

there is you $XXX now that also could to of right? that has know to need the you number. Where come beginning organic other $XX the and both we the million XXXX. basically will XXXX, XXXX, $XXX million growth get to You the capture, is to start we to at basically numbers see in how closer you million the business from exit $XX as in not So that XXXX million get but another that

a towards So exiting will management XXXX, right XXXX the we, step direction. laser-focused of on as a team, be XXXX, XXXX were

X% around I to me, range question. which we’re focused get answer tell the I’ll on or X%. XXXX the your going next to EBITDA, So was $XXX in laser exiting will million of leverage

think in cylinders There at are actually trying out outside all and what Our the that are if are needle. guidance so low? always is things okay, to are you why really firing you control. we’ve your you me, your lifted now XXXX because do, you So tell guidance and is you’re going that’s come to low

in for towards of a we guidance first That’s see what we to be, to I, be But rest if start on Now direction. year. this quarter David of and we right year we take to the have the will and year, up upwards the side the of wanted if to the continue continues huge wanted step not conservative we’re improvements mid end prefer we seeing the throughout that in volume it of down a sort midyear, year. taken what actually the again the

David Kretschmer

disappointing to in about We’d that quarter. I margin, XXXX, point Greenspan our, took after at XX% think talking reference bidding only a be revenue. back cost at is rather you is well, gap. continue. the Riadh’s there the as given look to But what that what to that Riadh the was beat additional EBITDA we you’re and and after guidance $XX happened Xx ish I’d get green is. the sitting raise of there Riadh’s point half just again, say, shoots XXXX guidance Again, year. ish highlight of our and a with achievability the said, million in organic on here through like you $XX ways But And agreed million our quarter growth, still of

I guidance there Xx. the the can that to guidance. what get think there, is to again, that opportunities you is aren’t which see But crazy So is

Noel Atkinson

Yes.

the chart on useful. breakout do the for ‘XX. thanks secondly, you then is quite What cash flow. actually That see guys And free for Okay.

Stonepeak do and you hit cash that assuming the what assuming of out think it’s the midpoint cash of you you flow breakeven that. something these put but of September kind there in off can or pick flow just benefits, like I able – for positive goes Like all or ‘XX. incremental to your midpoint are the be not ‘XX other you and guidance, If guys

David Kretschmer

one-time We the now Keep end additional the $XX of million help neighborhood Riadh cash a up generating mind, those benefited, the similar that flow where from as of in we Stonepeak. operations, are noted, from the in being cover kind that sale we’re AR was a pickup. on in that

we that. year. peak, We’ve got back cash we’ve cover we snow cover got get to to to have this flow And so to similar where just had

Noel Atkinson

And having you in centers bit of you guys much. your of and know your Okay. legacy don’t if a trend out maybe you could But could that just headwinds demand hospital not to hours break maybe – demand freestanding compared then, enough talk labor centers sort between the about us and a sort sort radiology those the I Riadh, at that independent give you do seeing what your procedures sense all all for of hoped. of to the you’re as of

Riadh Zine

rationale X Yes. provide Healthcare. that with that you question. focused more as with anybody for No, I’m the actually, it remember, to what Noel, I acquisition Alliance that the that’s outpatient years we color the trend like said, on was health is else vision. more on, than happy And a hospitals, we we of the systems only in before like break which you we noted, color think and don’t down, than industry, when because although consistent really our early here And ago, were sitting I great

and validation right the actually the we provide do hospitals assets more we buy growth is is right? that don’t that going although as it’s also independent than forward another I’m So break actually better validation a a did that And it well. systems health color, lot would with sites because the that higher, happy down, and actually fixed our to

lot a transformation, he’s of whether mean, you it’s David ask, to was time transformation spent. there if even say and that, business. said to focus XX% I in were management XX% going having XXXX, the Now the time on

stuff completely why top opportunities. probably said, The of out That’s the team, XXXX. an I them whole now size. But exercise, to focus here of you businesses two that’s happen. a integrate as this Most top the lot The work. have in kind takes their of team It of know, than those then need to appreciation more it half of don’t came actually because come people failed. for doesn’t mergers, as doesn’t integration we at from that what same

worked. So us, it for not only

now benefit on driving one the page, We momentum fixed And to bigger the systems. some future. and the going to health it’s our in going have team continue to hospitals towards management same sites, and see that’s

comments high that As they the said looking and is growth my is are in for I earlier very have capacity. the The right? hospitals demand, reason remarks, unmet

And useful in are demand to for and health unmet they networks, systems. the have those dense hospitals we the regions those where very

But fixed continue this of like So growth in terms half sales get fixed just do our we’re we before because do short behind start to effectiveness clinical that now see did quo to we the labor system the confidence growth back signs mid-single second year is in also to of way. in and company of It we will from a we that’s terms that. increase to significant first half sites of the and ability we the side that in what – those the need the digit health our will again, of confident in our status in and of sites, and EBITDA we comes the hospital are the And higher. us, to where of is situation.

Noel Atkinson

the back lot. Excellent. will Alright, queue. a Thanks get in I

Operator

will with next We Bank. Leno Endri National to go

Endri Leno

had unit. What can taking us potential my bridge indicated the then questions. which NCI talk QX, of or that oncology kind to any also or was other oncology taking well. impairments Hey. trying there is was I bit a increasing help in the we is can is if the little business impairment are Good drove morning. wondering impairments, And I that we doing that but in thing in ‘XX. further second on you bridge Thanks that about you for the in you QX guys

So, bridge if help well, you proceed? that as could me

Riadh Zine

please. question? you, Endrio. David, ahead Yes, the Maybe you could go Thank take sorry,

David Kretschmer

QX investment first what of business, oncology didn’t noted. of in I – well, will say, lot come as at I was And start. the in impairment here that Riadh in the we make the a all, drove had

We leader. lot fair him the are new didn’t a bringing new feel It to to commit investments. of

the said, So, lot and have of there a as repositioned in organic has in XXXX not been business growth we XXXX. Riadh

CapEx. of there not lot So, was a new

you come of when is higher growth So, discounting the ‘XX, that ‘XX ‘XX, flows. the business and rate interest much going environment ‘XX, start those cash to really

little business a disappointment. in want of near-term bit continue position. a to XXXX to the get we is take where It’s a going time little So, bit of the to really

kind future years, start those them So, when back, to just lower back of a they value present of discounting a you discounting which of couple cash out flows, start number. are you

couple impact well outlook revisiting driver relationships, flow. was for which would as longer that really a a have – our cash might of key term So, our actual as the

cash We themselves will see and bit at back. little two flows the it things, discounting a then them looking

Endri Leno

Okay.

Riadh Zine

bit Just because – actually provide questions for to to wanted little to in to didn’t our add thanks, we Endri, – color that and comments. we a the

additional provide to there us also more for opportunity your we But I good could a was part second color. see it’s impairment. think to a question, So, goodwill

in that to present the I in leave from XXXX. to basically XXXX point, impairment side into as Ednri, not because want us the and like think what on go QX your view other rightly David forward you explained, reopen took behind move something to it’s David impairment we rate conservative here took than the really the so and value, – a changes on interest did really very

partnerships Now, you happen what’s this going that relationships later could and new our new facilities open year. in and actually tell our is and I segment expectation new is focus that it’s will – to

So, open when do time not the be new obviously, new leadership, business the and pipeline made it’s announcements so. happened, actually with been to revenue oncology the because, only building new doors has we will and repositioning the be will will

about are our oncology we business from So, now on. excited

Endri Leno

guidance ‘XX I Thank on rough provide the No, that’s hear. because great And to NCI a able on at mean you. you are for to note, that I… least

Riadh Zine

Yes.

missed question. I NCI think we that

David Kretschmer

not about Is question are the to… going – we

Riadh Zine

and – related to impairment. was actually also was that the related That

of So, periods of... what’s reflective sort NCI prior think more looking at is is I the

David Kretschmer

right. exactly That’s Yes.

Riadh the the by the as first impacted was quarters, three noted Looking impairment. QX at

Riadh Zine

Yes.

not rate. the run new So, that’s

in So, you reflective it please would to going were NCI that prior periods at in XXXX, Endri. what if more and see in model XXXX, you be ignore of that look will QX

Endri Leno

be Stonepeak touched loan, regarding reverting to the of kind That’s you but might wondering interest? great. little there what question might you. just My and options Thank next is like of on on other and that – you on PIK what a sort this, interest cash explore bit

Riadh Zine

good That’s a that’s good – question. obviously a

cash two the the platform, in We business this country. are in to of the be that the Stonepeak ahead you generation partnerships largest I health and outpatient for believes hospitals which the has believes flow vision, the think supported in – and opportunities systems happens know in one

power assets two kind need higher operating really margins. actually the the redeploy that and understand do decisions, right when together the they those the make better understand we did to all to revenues to decisions platforms they higher as and and closures and for put listing heavy So, had tough revenue, of the all know, we we you of

it in So, other a XXXX XXXX the although way, impacted should way. negative impact

of the business. they have obviously are we what aware done So, with

So, it’s time – to here. execute we really

do available end structure it’s to come structure. capital of other could and So, to alternatives going on our address what are to at the us capital down the the else we to what day,

So, execute on. other improves, a could we we as do options to could But of we a structure as could performance team, and to capital as structure David the we, see are we said, at we capital like to also that the what the look cash, – worry business available much and continue the that so us continue as without pay about having today. management way to

will of those of our options, So, alternatives and That’s part we course. explore job. those

Endri Leno

one again, situation now, this last the the for to XXXX, is it And for kind on of and me, you. improved. just provided more you that relates just Thank the guidance I and like of terms but in Okay. wanted – clarify, touched

$XX was are at the given starting taken the of beginning if for down that? are are in looking factor when those taken to $XX more in of million issues and that issues the So, fraction that or as by you the million multiple Would those second a resolve it swing ‘XX ‘XX, guidance or that being you down was conservative, ‘XX? at that half, of even is in is it ‘XX a be around

Riadh Zine

David. ahead Go

David Kretschmer

to see first we evolves, during our will I point, our would is this and earnings. quarter We guidance say to need continue QX how update guidance. our at Yes.

Endri Leno

for Okay. it me. you. That’s Thank

Riadh Zine

Thank you.

Operator

We will go next to Rishi Parekh with JPMorgan.

Rishi Parekh

my Hi. Good questions. morning guys. Thanks for taking

continued know I also noted you you, utilization. capacity your which you and facing is are have behind I First, subsided, cost to the labor – it think that has affect but still may pressure, but worst

seeing to that can visibility a few these So, relative facility one, what around you capacity walk reduce in costs? follow-ups. utilization of today, what today your may half the was drivers second I it the And us is are you that what just have Then ‘XX?

Riadh Zine

Thank questions. as you. Thank problem. Rishi. always, No you for thank And you, your

I think all related. it’s obviously

So, these answer actually all I questions. will

of cost you question the the a you the the had of drivers, on think labor. you also, had I is availability on had I utilization. other And question labor, the the think question on

XX we the open on the beginning and period So, in open hired positions time significant for first the drivers year, of that the drivers for time were months. in of excess

that’s So, labor really – side. in so think sign we the I good a

us, generate obviously mean our opportunity I So, increases for to to being able more revenues. that do

On the we availability growth obviously, to was demand Demand reason see back, of because the it’s not labor, the there. start back. is organic always

year coming organic back coming labor labor time great actually of of we labor that in beginning what, our referred meaning the the full in – So, It’s was and our because healthcare of the resignation is left of the the to the meaning as as business in half in our reason start some is better, the growth access is it the contracted business. business year much to back. to see second in kind again this

some which helps cost and could does, satisfy – we last by in it do more thing But does that having those that you year. things. you the two half second start see of signs service those some of actually in you that demand other procedures well. And Allows signs and to as to it the also of lower

cost. just I The there. not even labor services. lot from up. the that a heard half a went many actually costs last of healthcare the second cost in And it because you was theoretical So, The think a wasn’t year, it the cost. But cost wasn’t was

we So, to not for the if in first pay pretty half even cost, actually the MRI year. same-stores X% That’s the range down that the zero much of in half was availability to were happy the why from there. nothing the went to second

but year, in show Now, has finding early all signs behind that that still has labor way. at signs it’s the or early like significant is of early the in a story again, that, eased us not

us. Let’s it conservative actually way. in put is worst The a behind

I comments factual is The That think in worst I earlier said a today. is – statement. those my definitely what that’s us. behind

that’s case. throughout which we the see if Now, shows will that continues that year, the so far

on and another had question capacity You capacity, utilization.

will you you peak is It’s a as and one-to-one, as to And right. in available. get there utilization clinics. same-stores because limit you as utilization There a hours, how right. adjust is of our that’s is of that could Obviously, assets increase, the So, the not your have better. much hours peak for you as know, labor you certain cost base exactly your [ph] need minimum important

and hours to improving. the Every capacity is things response operating in our And in demand is certain normal, extend to been to extend to kind us kind region used, are of is of has certain that So, more we of and always if just different. really to back operations different. market we start that see improve capacity then markets. being available you But hours – add clinics, it if continues every

but make I normal. we to So, I to beginning say, return normal, think would would back is actually right would – returning are I would exactly to it the Rishi, is say normal. on one to point I back we additional volume

may while As the the the labor still was has higher it’s it back, been than be peak, where previously. come costs it not at had

clinical side. than in responded wage like have more bonuses, we giving increases, on the more particularly paying labor typical So, by everybody sign-on

discussed, the a that’s from there of labor great us, a as people while it’s bit leverage, resulting is we costs. getting headwind as trade-off So, those operating a because for

Rishi Parekh

year down? or increase the think now going levels? it as those it do from is, to costs or Is get that cost? from come a X think on you contribution about that tech now with years to it And the we you can prior to everything what in as And or us increase med was that should that how could margin and contribution Great. back prior said, you give remain margin, the where contribution idea an just margin just to

Riadh Zine

Yes.

the because margin way the maybe right. like we the contribution think We the we the actually in even if a comments, assume we not my our because compensation conservative are XXX% margin front-line compensation employee variable. about you is and do to office talk, corporate at that, in employees used the look I somewhat XXX% – variable, employees earlier contribution as employees, mentioned assume that way, talk The some back employee I is fixed.

any add of significant another to front-line. are of million corporate to the we could changes You probably not part make going front-lines $XXX and and revenues, office or back

we on that is variable. approach take conservative So, XXX% that

contribution. were we like when math, this of we XX%, the more remember do kind XX% margin you think to in used I

I now, think XX%, XX%. of it’s kind right

points, than X but I office more and believe down we the will $X.XX again to dollar office, growth. it, grow and came it of front-line the the new every So, have as you absorb do back you on corporate

Rishi Parekh

legacy Alliance Thank locations. partnership Healthcare hospitals Akumin talked leveraging about opportunities you. And are then just the partner last you question, you your with have working where cluster and

then percentage your don’t if am just that quantify overlap if understand. better opportunity? you just to not you I trying XX%, frame of can I Alliance facilities? Healthcare assume it’s one, Alliance revenue XXX%. it’s Akumin XX%, XX%. know could Healthcare legacy So just what I with these and locations And

how we close second, trying in etcetera a investments, then And a to follow-up? JV any meaning and what Just that are to is? far are you get opportunities, to those hearing better as understanding announcements, along Thanks. that opportunity

Riadh Zine

Rishi. you, Thank Sure.

think will I first So, I start before oncology, actually with radiology.

– working pipeline action. basically and earlier radiology that So, with oncology, pipeline have the new was some leader turned because were we there on on into quickly we than the was

news new start to There side the But see start side, going on oncology on though. will time. to radiology the to it’s take the is I will months one. The And first. in on next then announcements we illustrate we to only I good XX think some ventures So, radiology examples think joint months. XX

It’s So, than months, expect. the more XX XX be to timeline you is more months. going what probably not than it’s

so capacity are would for is I legacy way. coming it’s today table the other hospitals for not the It’s the and sites health actually- of the XX%. actually of say XX% It’s from overlap Alliance Akumin the around. other on solutions, legacy way it’s However, the relationships. systems

happen your So, XX to we the question of is it own XX the of we what going months, next But but what the to is next is XX% where inside inside we not opportunities not have will XX% it’s happen months. answer own.

Rishi Parekh

Thank you.

Riadh Zine

Thanks Rishi.

Operator

to this closing turn call there no time, At for are further the remarks. Riadh will back I questions.

Riadh Zine

value, Thank participation all-in Akumin’s service for delivery centralization you your healthcare everyone care on drive call. innovation, today’s an to patient-centered and is exceptional vision setting. outpatient

health We side. freestanding are operational expertise. long-standing to the a leading scale, outpatient relationships with service Akumin and hospital outpatient system and on platform healthcare positioned capitalize is significant extremely well

have We available systems. of health full services to a suite and site mobile hospitals fixed and

base with asset is Our in density these suited to strategically well located with regions. hospitals markets, partner in key making them

generated to excellence, to provide solutions patient outpatient deliver also and efficient and clinical which centralization us cost-effective care the served patient and and million of we across and operational oncology health patients members providing more to outstanding in technology systems we X,XXX more enables hospitals team experience. Importantly, than fixed while radiology leverage revenues XXX In U.S. XXXX, sites with and in $XXX than

and to on underway, solid build milestone a XXXX are well initiatives and be as we growth we year transformation expect Our this foundation.

our Our the in opportunities positioned better industry. growth company on has never to ahead been trends capitalize and

for stakeholders again as Thanks ongoing this Akumin. your I concludes their to all all change would call. our continue our we at to participants support like Akumin. and radiologists our staff, for take transformational opportunity and This interest our in to thank of efforts

Operator

for your participation. thank does conclude you We conference. This today’s

Akumin (AKUMQ) 17 Mar 232022 Q4 Earnings call transcript