RDNT - Earnings call transcript Q1 2018

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Operator

Good day, and welcome to the RadNet Incorporated First Quarter 2018 Financial Results Conference Call. Today's conference is being recorded. At this time, I’d like to turn the conference over to Mr. Mark Stolper, Executive Vice President and Chief Financial Officer of RadNet Incorporated. Please go ahead, sir.

Mark Stolper

you. Thank and you ladies joining and gentlemen, morning, for thank Dr. Good discuss and quarter me Berger RadNet's today Howard to first results. XXXX financial

Before XXXX. Act of This the to of like contains forward-looking harbor XXXX. Private today, Private the of presentation Litigation begin meaning within Securities of safe the statement Securities remind Act Reform U.S. statements the under we everyone we'd Litigation Reform

referrals ability and reimbursement anticipated future with revenue the third-party by financial to RadNet's continue concerning performance, forward-looking business of receiving to for diagnostic imaging statements operations services, the statements are successfully recruiting Specifically, meaning integrating the generating practices, safe operating acquired harbor. and patient contracts operations, EBITDA radiology as generating within technologists, and others, adjusted estimated, the grow among and acquired for retaining

in I'd are obligation Berger, uncertainties of of Chief turn call information, should those based Officer or RadNet's be date no may which it with are of the were year shortly. events. statements to publicly These forth to the current and update preliminary as report made events for to on RadNet. reflect the filed with performance, XX-K date forward-looking date undertakes that, contained differ placed occurrence speaks statements, circumstances XX-Q Dr. time from management's unanticipated cause Executive President from on XXXX, Form on RadNet's risks SEC they which especially to to made. any on reliance materially or new include the the only time, And Form not over to and expectations the to reflect the after financial guidance including like herein. on forward-looking December RadNet’s to future is statements subject risks quarterly annual XX, and Forward-looking set and uncertainties actual be and report to reports results Undue statements ended RadNet's risks filed RadNet

Howard Berger

with our everyone, affected results, call call, you thank future us remarks, quarter plan from highlights I'd and today. this of morning, Mark. you, you which in you you our this and in portion more thank On the and joining discuss our performance, our today's XXXX questions. open participate I first to like for the factors and prepared provide Mark our for of your Good Thank dedicating into all call for insight give your we to to will your strategy. interest After conference morning. company day a to

was quarter first The a one RadNet. for challenging

is of weather quarter as seasonality and year, Northeast and of of first a to year’s each severe conditions on patient the January recent utilization weather winter normally by history most While impacted in related exceptional. in We Xst regions. the experienced this the was lower result first Mid-Atlantic the quarter resetting deductibles

had fell quarter, rental, The four and business to issues the on April. majority expenses, the our as reduction cetera, to of primarily by as led XX% $X first closure the in license, of as even maintenance, closures outages. These to affected experienced facility shortfall Coast shortfall to the result storms power into scanning equipment over storms we our excessive revenue, revenue of accelerated our the leases, of XX,XXX of such lost beginning conditions result costs that base. days majority are March, scanning During East Coast was where of fixed exams. Because have which insurance, some et level. billing over a impact staffing entire in this XX% slightly nature, vast a and estimate substantial RadNet’s a revenue was winter exams the the in tax otherwise as lasted or result repairs fees, almost of higher the representing such much we’ve delayed we and that nor’easter EBITDA form that related weather of were that performed. scan would complete materially from impactful of slots, East of we revenue represents This of We million weather our

to addition our lost fees EBITDA partners East from significant In our to from we business, the lost leverage EBITDA on management the operating Coast. traditional from venture paid us in joint

accounting, our cases heavily revenue day-to-day RadNet recall management the and for we Coast our were our such fees by XXXX we were collecting, EBITDA. fees joint may You adverse support which management IT, that Because others in East billing through which flows conditions, provide recognized fees. the correspondingly and services Total we impacted should for in JVs receive ventures million, of HR, depressed. managed operations legal, and exceed among $XX as weather management all

EBITDA expenses not of EBITDA, for issue the This in of to million the in guidance in result that shortfall quarter quarter during in the me subsequent System, relative we’ve sites projections the the We of internal higher Because levels. period adjust contribution end first of Health projected XXXX relevant first sales to guidance four ranges and the year the consistent same transactions gives the the our by MemorialCare centers our and the as last Our more compared million revenue the to incorporate $XX little first that quarter comfort also for of almost were same XXXX The received to transactions these Cedars-Sinai during the was from than quarter expenses. a was System the and shortfall of we Health to of with during partial with EBITDA the original XX which of in and impacted centers closed EBITDA quarter these a XXXX. $X the of quarter. elected results. year’s to than lost profitability first our

mitigating the West was Coast subsequent are strong negative our in our in Coast quarter and Partially the schedules, performance slots business, impact learned are up scanning from quarters. experience, past on operations. from made once the we’ve a not Fortunately during they weather this lost or East

increased in volume procedural year’s same Our quarter. over last California X.X%

During operations venture in joint Long we of commenced Beach. the our in quarter, County MemorialCare Orange

to process on integration the backend or XX venture with eRAD the migrating management begun MemorialCare, have including the on radiological PACS. by and the system centers image contributed information We frontend system, the radiology them joint

the early of we is the you As from financial a these recall, manager discussions, opportunity efficiencies joint to material XX joint and the many can venture. of them there improving optimization performance of for we of from that facilities the through venture bring as day-to-day believe processes

the MemorialCare responsible. is X, begin Additionally, for on which first patient June populations of capitation financially we with will agreements two

venture later the two provide network the We contracts services of second will with and local this to with contracts our additional groups managed be initially to exclusively Together, will two The is opportunities summer. other employee XXX,XXX large imaging patients. over begin care there centers, joint populations. contracting scheduled believe

be strategy As we on fronts. of a our I look core few forward variety to will executing quarters, the next

First, joint existing health work we before establish year will to to ventures end. expand and system new partnerships

you MemorialCare. are we of healthcare Coast Health, recent with West many several with Cedars-Sinai relationships to large joint periods, established systems, the and venture aware, As Dignity in addition including

growth. operations the exploring opportunities interested and in areas of these scope expand and are presumably of to We

joint venture We on evaluating with partners to Coast opportunities are these expand East also well-established the ventures.

services. core geographies. EBITDA. local targets several breadth been expand and operators in These strategic ours of acquisitions our anticipate ample It’s key multiples our available and of tuck-in there in a X of I are of capacity are at of between local to times strategy Second, X -- small markets consolidate

As communities regional physician we health expand plans. become and our to further presence, indispensable we regional our referring

model our the bringing we to remain capitation active in Third, Coast markets. East

as XX I and And look efficient. I have business throughout initiatives and our made is We future. with to this quarter make We’ve Mark in some some of over our discuss lastly, more discussion within time, support cycle, in to progress to the XXXX. forward corporate medical groups and make payors investments the of knowledge significant realm years remarks. XXXX continue of work are on we of turn you performance. the operationally resources human finished, platform to and to revenue technology recruiting, experience and scalable we to back information first make and our I'd he stronger will this When leveraging be remainder At to California. like a closing highlights the call updating growing

Mark Stolper

briefly Howard. quarter statements drove as first also some some will you, items performance quarter what highlight I'm explanation give first of our I to our into going attempt review that our the items. believe certain and I of XXXX financial performance. Thank now some material well metrics to provide further insights some be to as in

interest first Adjusted or Lastly income I will which The as or our earnings use will depreciation measure. guidance amortization on and losses excludes the a or Inc. EBITDA like unconsolidated allocations taxes, earnings earnings gains discussion, debt for said, period. of equity review financial other term my I levels. non-cash the non-GAAP common earnings loss purchase extinguishments, EBITDA company a I’d release. subsidiaries full and financial quarter in that reconciliation non-cash net to adjusted is and in is of now interest and With operations attributed our shareholders loss EBITDA place adjusted income to to during to before includes XXXX adjusted EBITDA, financial gains subtracts disposal events adjusted or defines and the included non-controlling A onetime taking our is In compensation. extraordinary equity RadNet in equipment, on of and bargain XXXX results. loss, discuss quantitative

or XX, XXXX, March reported prior quarter. of EBITDA EBITDA and X% of RadNet million with the and quarter over $XXX.X the adjusted $X.X year or adjusted million revenue months revenue For the ended same same $X.X $XX increased prior three million million, decreased over XX.X% year

revenue from result $X Berger’s and and $X to their approximately JVs of profitability, received impact. the conditions which these from and operations. remarks, severe management our we which Dr. on estimate our as significantly unusually and negative were a impacted we fees between estimate partners our Northeast impact $X million markets, a and it revenue Furthermore, have we million to our of weather million lower lower in For quarterly EBITDA results our be Mid-Atlantic in by JV decreased EBITDA EBITDA flow-through further of

weather mainly volumes profitability. to During the impacted will of I declined quarter, due volumes. discuss same-center significantly now the our procedure which conditions, aggregate X%

methodology in our a we we business, in XXXX, consolidated will or volumes our a period and provide unconsolidated did make numbers an become whether perspective. procedures of their the the In by XX% picture XXXX, first work with consistent to approach, prior operations. restate X,XXX,XXX The of performed of complete I volume total procedures. procedural routine imaging. multimodality our was whereby material some the procedural our includes of same were joint quarter manner our changed including We JVs beginning the of reminder, of Thus, have comparisons. the all As meaningful and venture, from it second more all all volumes, our announced part by quarter accounting because accurate from procedural

costs of of procedures outstanding PET/CTs Net ultrasound, quarter mammography, MRIs as or medicine, the of three negative net Affecting XXXX share the with the Our follows: the This and loss as per in in PET/CTs MRIs quarter million XXXX based first months a first compared average were March CTs XXX,XXX of for reported and shares with XXXX; net which million $X.X exams, X,XXX,XXX X-ray per million in X,XXX,XXX quarter of first compared exams, the XX, negative shares loss these shares and routine imaging quarter was XX.X of ended in XXX,XXX in in for nuclear XXX,XXX million the quarter XXXX. period quarter X,XXX XXX,XXX as as first or XXXX. exams of XXXX; loss compared with upon the quarter compared quarter XXXX. of is X,XXX in share $X.X $X.XX the in of XXXX to with compared CTs codified interest all the This as of other $XX accounts, in first in stock; include weighted first XX.X financing number from the compared first XXXX; of all certain first year's million million ASC first reductions $X.XX of following: options and GAAP including compares of paid as quarter first GAAP items, revenue savings the XXX. quarter our headcount expenses quarter. combined related with expense XXXX first XXXX deferred and for Cash million income recognition standards existing part the to of amortization Financial Accounting X, On of of vesting and nonrecurring stock issued January non-cash $XX of With was compensation we with cost related the connection with and $XXX,XXX severance were in new $XX.X facilities. was million. $XXX,XXX paid loan in of expense expense XXXX as non-cash specific restricted non-cash employee million. interest $X.X the financing Board discounts accounting to XXXX, the resulting overall certain statement and the by some paid fees regards $X.X to initiatives; during of period last interest Standards credit of adopted for

a of ASC therefore, debts operating bad what is for As provision reduction concessions a previously and to implicit income in result, included adoption XXX, XXXX. statement, the net now defined reflected as the as as revenues XXX, in was classified price ASC in our as

prior revenues. periods that net ASC For provision the debts required separately to the be has standards operating bad to presented consistent debt component of previous XXX, for bad as adoption been of presented the a revenue with recognition

facility our increase $X.X accounts million apples-to-apples is bond to At XX. and is a had we where revolving accounts from comparison an statement we balance debt towards At loan increased our year’s As of million. March balance discounts, look the was an mainly notice first a credit revenue. of volume result, basis. less us you XXXX, our March the XX, cash of unusual end is XXXX. March received The XXXX, quarter, net income $XX will receivable balance, $XXX.X payments quarter will the as value increase from the year not in the At quarter $XXX.X $XXX.X not XX, our after current of the debt, presentation quarter, for term at end were which of Furthermore, total on prior in our we and million, were patient giving end of undrawn of the had receivable active cash par million that million.

year Our XXXX. March at DSO was end XXXX, XX, XX.X days from days at down XX.X

order repaid this revised to of During we like In At reflect to have first of cash ranges flow the and dispositions asset quarter, would earnings discuss net and of the weather conditions adverse revenue time, levels million million. million in impact. our of weather with ends capital conjunction payable by and of revenue, expenditures released notes had $XX morning. debt reduced incorporate bottom EBITDA and the this $X release the for in from term million we cash quarter, leases of $XX.X which the approximately negative lost our guidance I and XXXX, of the impact to experienced we the top loan and the EBITDA free we $X

total there from the $XXX $XXX new to $XXX guidance million million down net from million beginning $X and $XXX for the guidance year, our So nothing of at million, guidance our to is released is for to million previously both on now to XXXX, time. the EBITDA revenue year, $XXX of With $XXX and Medicare also our the this respect adjusted report low end end down levels. is to reimbursement top million the

closing and analyze will which typical and in in heavily to we some group, Quality RadNet is which our CMS’s the industry’s Association preliminary As are At year, of July proposal timeframe. CMS for time, is time each will Imaging, rate industry’s involved provide our schedule CMS at expecting remarks. feedback. who the At will we release a the of lobby be June now I we the back comment in Berger, CMS’ financial to will some its a to proposal results our impact second if upon and make position that turn like time, Dr. to any quarter call RadNet’s time future would results. on clock,

Howard Berger

coming improvement acquisitions. quarters, expect on operations, we will tuck-in system health our you, be and Mark. completing Thank pursuing the In partnerships of the much of that focus continuing

capitation, practical landscape and rising approach, de-leveraging system now that on services cost where geographic to both for We is RadNet I EBITDA paydown and healthcare. characterized services through believe performance. changing debt of by the patients health healthcare to will the of respect of continue ideally future partnerships us concentration, to position require economics with how continue balance The our will be compensated. will driving multi-modality sheet change work and these their receive

that disease make taking will some to strong progresses. all make and a partner to retailers more injury. and front size payors our RadNet for to of looking the now detecting partnerships diagnosing of the models the the with fee-for-service into year scale traditional imaging approach. question-and-answer of a specialties all Operator, updating ready We us are major and health. between and a replacing to New we believe the end population virtually the progress of party the payors believe are national require population and address and portion partner, We as is any with move forward risk as providers practically look respect becoming call. I imaging and that recently announced prevalent health between medical you

Operator

Thank you, Instructions]. [Operator sir.

comes Tanquilut with question Brian first from Jefferies. Our

Brian Tanquilut

start, is Hey. that you looking Good is map mind we conversely I the your just get of that to If walking through morning, you to impact there? do in the weather as to about merely guys. that how think cancellations? you how terms had, Mark, think just the budget? that? about mean, at Or

Howard Berger

it's well other unfolded, Actually to important was rate Howard. what first correlated impacts power succeeding volume, procedural and that What the weather event. then for X snow based up the at or days, to ramp known Brian, a one our in as relatively of did weather that entire basis, that after see took dips prior in from on been our days run that a recognize just it quarter again those take make and full we’re patients our it It's felt impacted to then X us schedule our has with on there the we this that volumes that populate weather outages. day-by-day quarter offices, imply the doctors’ to procedural only with subsequent also which not and as referring is our to where of look substantial became their I'll days we is were date easy we by noticed by backlogs. don't partial And Mark. in impact their substantial a we because but the our days as as days such us and business help positions

Brian Tanquilut

No, I appreciate that Howard. color,

So called had how Coast I north to guess out of the you comps. follow-up a X% that as West

the you thinking outlook X% the excluding or forward? able year those be we been you to do would weather, somewhere put that, lines think along the for a up of least should system at wide, just or So about rest going have same-store

Howard Berger

budget we did robust much model. more is Yeah, on market is that because that there and that shouldn't far see into West problem for even more on And a pretty in reason that's that respects built to that business given no we Coast, our anticipate many fee-for-service which our the East the marketplace. in Coast, think us is

I have we been would weather think target the right have pretty other that budget much internal So our impact, would on projections. with than

Brian Tanquilut

as are I that of but losses fees, JVs we if All joint about And these highlights there few us if discussions walking management don’t you. through Mark discuss your then, called for experiencing mean, know, that? you’re outlook the are the can a having? also the just mind I about JV those, declined out right. seeing, and ramp? that some think obviously and is you incremental signed Howard, you core business Got or what you’re how you’ve And thinking ventures, you what

Howard Berger

question. your two of Well, there’s parts

don’t look we’ve just emphasize one want a The to about close calls, and for we -- partner. talked this hospital I first on it that because prior is

and in venture. as medical on strategy, We’re that And own the the Number venture over can have execute looking do particular the regional one, big primarily partner interesting the that for they ones capacity their we markets in we now doing between than we the imaging when operate puts actually drive their in seen. acquire which contribute they joint where brought they owned centers what that partnership XX XX will XX internal case those that us. additional help a joint into joint us centers joint were more contributed are that profitability allow had those believe that centers own. health might for groups into XX venture two centers imaging centers then can they ones the in. to is and system into have backlogs, They otherwise that had the better their MemorialCare not they they substantially and were the we and that of venture, More business

with everybody marketplace. So impact player that a for ventures system element realize It’s hospital. the their dominant none a that’s a in Coast here Coast that that’s West an the we or really East of joint have to with on single are

Second you future is Brian which about asked opportunities. part

coasts, looking at We other opportunities… both are

Mark Stolper

first type be of capitation to just into June What we starting the carried capitation contracts arrangements opportunities, So mention on will with as be will break other X. that MemorialCare on? two the of

later In this summer. that The little second a lives. will be XXX,XXX over total, represents started about

And managed so we in on we the throughout see a MemorialCare lives. care as those ramp year should go from

Howard Berger

imaging. for at that being includes manage systems on of the with the joint that bigger talking none the large imaging the least for for strategy we’re lives purchased were given that about, prior MemorialCare venture. patients XXX,XXX And outpatient to RadNet they of health our risk which venture that the need is centers any seen that groups In these joint West that have feature they a take medical and do Coast of have

and We’ve kind that greater well. those marketplace more joint for very hospitals indispensable other of substantive. in in substantially for as that seen leverage ventures conversations provide partners, more will hospitals. for the with what the substantial And payors that get itself seen just us be of our with with look be. schedule markets. I physician between become And while that considerably fee Barnabas amplifies, the by pricing would Jersey System, thing us the where in give partnership more the that believe with Health is I extraordinarily value that the partnership we’ve So to we system – better our more of proposition will we health And able in the benefit and those we is and them and and think, look they the hospital RadNet a been the go the New than doing

to be remainder feature we which of So continue to talk this that try more hope about expand partners, as hospital existing well us new relationships to a appropriate for to have find year. to the as will hospital hospital, through key

Brian Tanquilut

follow-up just you point that part I as last for well. to this made. Or a Howard, is guess of Mark

revenue getting I look lot your procedure, out medical I that quarter was X.X% better you are know care you’ve also the that pricing. as is So business down it oncology managed you the at per called year-over-year. last And I there know invested. of

don’t mind rate if us of So right seeing you apples-to-apples that outlook walking rate the you through now? just in terms are growth

Mark Stolper

not the With I year restated X% am volumes consolidated volume. respect because total correct last volume sure using I year, total for to which Sure. the you’re for your number, last -- using

So are at an apples-to-apples. sure as just make you looking

Brian Tanquilut

year-over-year? Mark, if what has If apples-to-apples, you been don’t would mind giving per us we revenue a it number? procedure out made

Mark Stolper

a from modality revenue we -- because a don’t look change modality on procedure is at the I year-to-year. in basis change

we look numerator, one don’t a total So one denominator. at it as

per-modality are at on not -- basis looking but per at payor. a are a looking We we only it it

And so wrong. question I premise the your is think of

a on a at We not are and revenue per you payor. procedure when basis down look actually modality on

actually up. slightly We are

Brian Tanquilut

it. Got

Okay. get That’s to. what I’m trying to

payors? growth You are seeing your rate from actually

Mark Stolper

Yes.

Howard Berger

more bit little that, amplify Yes, let me a too. on

we modality also we give mix for period can per I replacing change procedure, to price capital One XD. which And we referred of are are in the Brian, with that, to, investment, heavily think is reimbursement substantial our period, an is equipment, but XD while Mark are a mammography our reasons making services. getting increase from average don’t in as that, mammography investing we

would did considerable this simply, are we to look And actually that XD in our year. last mammography, substantial reimbursement would mammography our into in you for increase of follow example, year per a mammography. fleet up a if you we aggressively So on see at procedure moving amount which

Operator

Ramgopal We will to Sidoti. go next Mitra with

Mitra Ramgopal

and wanted talked JVs. know to tuck-ins those of first any Howard you in just the regarding some I already expansion guidance the touch additional opportunities. obviously guidance? pursuing into baked about I Are on

Howard Berger

and Imaging is about based that which into player became acquisition made Fresno month that had the really effective the our a only April in guidance, our on announced built we Fresno. largest into them current Maybe That's one that's acquisition the is the one ago, of the half guidance. us And X.

Mitra Ramgopal

a you to as JV you tuck-in? do look as on Or opposed Okay, any to preferences doing the the And start help additional need that expansion, to the JVs? acquisitions to necessarily thanks. relates drive

Howard Berger

No, I the round. do drive need acquisitions think actually don't to we to additional to way think JVs. other it’s I

Our markets ample. which core that are tuck-in we're in, acquisitions, in

I you pursuing to on -- our be a to will out as basis those better We take as case-by-case have both if a think expand presence network well competitors, will.

centers to which side that in important are itself. they our have relationships their might not looked but expansion which what evaluate JV otherwise is and health actually that of market us their that the at wind we're for feel are JV seeing On we to partners have that they up geographic system for bringing then

side all doing start presenting JV them JVs partners, well acquisitions. of opportunities just us both that I the considerable say revenue wind none of our can up of to for categorically the expansion as of So And it the as it. and want on

build So assistance. RadNet also that but to us scale strategy to in partners one their with pursue our is has independently, allowed want our to indeed us that various the with both to point markets continue JV this

Mitra Ramgopal

West I wondering East great. result. if impact you That's any winter and and Coast a operations. clearly Coast significant a obviously terms thoughts unusual as can was had thanks. I in an East diversification And know you on me Okay was beyond giving it’s again, of geographic

Howard Berger

forces of much why within of have to with not. substantial are outside as core one we all the benefits. have is do control, things on, something just RadNet heart goes it you And the can good of but is shortcomings where of can't that It's something where a as take well Probably it and Mother that lot the at it's a even can't our are we things staying control. that markets, opportunity Nature this to question. other really impact whether But feel population a few point is pretty and its the that we we

expansion East for Delaware us. completely a the We’ve the Coast the so in major And is hub marketplace.

that As major York Jersey see you have metropolitan now well know, of and we've and scope in been big New area, New the network opportunities the pursue. very fisher can Maryland a we Northern really at size only where in in we

the get that it So best all prior well various that deployment leverage as markets probably that our calls. look facets with of enormous we’re at if is way, we on call we the think talked we’ve on of where currently this in in we and capital, that the in

Mitra Ramgopal

no that’s announced or you’re from you’re states all last any fair. any in benefits I wondering and just is too I am a And seeing am if plan then, roll noted curious of Okay, just August XQ out seeing to Anthem it impact early? just finally, if number the at

Howard Berger

I was Well, either finalized with in, big or May Association I implement of they’ve and in going the plays, a Medical think had just role kind to where we’re April their they Xst and market Anthem to supposed policy effect believe of Xst. challenges that they’re go thought California, that into I California that only has the a here how

with of you in the influential aggressively to their I would them be but I an Anthem by or one them matter, where week freestanding So names rates. otherwise read level be and four situation facility. suffice from as goes they that opportunities other having outpatient beyond can am for of case away there see you, that other a about looking in every all on of will household major that smaller payers, would is from or the the almost in imaging hospital payors conversations all and charged we hospital-based as environment reimbursed But the trying we’re say don’t I shouldn’t be the focus because to in think done times a a not some could that at to mentioned names outpatient are sure regional directing where will imaging Anthem really what be five at announcement.

of design us being helping signal to to patients unfolds. might things merits of the come working information little payers think, will work, also have them away those to of in but as educational more think we and to will necessarily that the on I that’s a the we roles hospital patients well some but planned to the here we just as from unless as with physicians of get creative I directing about So that year perhaps not the be so on more that with the report not as additional some

Operator

take [Operator from Instructions] John with James. Raymond our question next Ransom We’ll

John Ransom

Hi, good morning.

March, so early from sort gave the your guys most March to we guidance was are it was this of You takeaway really of that in mix?

Howard Berger

towards March that We us, the middle that didn't were lost expected up month a happen. strong March -- expected January we February volume usually and to for in to make that or the and of some hoped and is we fairly going that saw we

we problem. March a storms couple fact, really towards impacted March the In the and of compounded of had end that

we X, the is years Great our an for system. with XX XXXX, really we that last using since migrated acquisition of that system was system accounting were changed we to Lawson the we Plains from were a dealing systems. January Ss thing Microsoft called Radiologix, of system other which a The outdated

time we were because with March, the XX-K. by yet financial we and closed so And accounting change not released statements system even our in had early closing for out guidance when dealing the we February the

So I that we some it occurred on January the of side the at don’t the think appreciate in flow-through even EBITDA time.

us of that two combination and quarter. those it’s to results the the hit first pretty in I actual guidance our respect So things with our think hard

John Ransom

Okay.

this need to been need, just be would point in diversified handful are Does a to but justification, standpoint? you I question from has your strategy this the a -- perhaps, point of know maybe more geographical geographies. be the really be to Second does a little to

Mark Stolper

I Yes. don’t mean, so. I think

sure addressed I his a response a to think little related Howard in bit question. that make

population, populated. the of are those they’re hard with Hurricane in obviously grown the represents Hand region, just we the winter. we’ve part hit was of terrible Sandy. the we in seasonality to XXXX more markets think densely They are I demographics. about growing payor where There United -- is in which I XX% population the States in is attractive markets, subject of XXXX which as In There’s attractive are mix. we in got the the mean another Northeast program. in Mid-Atlantic populations.

are move time don’t of the I issues markets kind to for So which these in. change that one-time we generally that time happen we us, past are it does like fact from and the we

industry just having a or if which the billion our and does $XX even revenue sales country probably our part industry. on $XX that that the even RadNet, the report, billion, the billion of exclude it’s the we billion imaging our said, you markets groups up that in. gross imaging, are imaging doesn’t $X the operate Now you $XX And are side joint in that any any five ventures industry it in differently than only billion if of we markets, other hospital-based outpatient $XX for in the business of over we’re physician

nothing player be moving a had but control our where strategy, services, -- could our largest with discussions of So some the the payor. those as market, leverage we’ve tenant over into believe the a stopping that there’s reimbursement from imaging we and no always to always we of in have largest us and -- provider private we’ve

into region services a way only with is the of by would thought the new with increase in geography scale scale ability future. the the that the diversify So and our breadth and with we to strength and going and

synergies also that we acquisitions, similar efficiencies continuing had but that get invest which grow. discussions our other we and we've past and acquisition we well looking allocated the us where a and well operational And brand. felt geographic by geography health get, modality, prior greater new concentration in at we could we markets So as the in both believe leverage the in it at in to then capital larger the as we're would in scale of an we that those the the with be will strategy opportunistic take that

John Ransom

is that long you buy stuff multiples. to can famous rich Is for there -- pay? of willing a guys kind you're the that is Or paying multiple chat? know So very you there are I you would at like

Mark Stolper

our or our outside market? In markets of

John Ransom

there, moved So are to are that is there pass buy could comfort the you go you multiple assets there mean into outside. zone? Or at enough market, -- to if new your pay? there you’d the I like had market out the multiple were

Howard Berger

question, It’s a good John.

more think with a think I of small market might in would targets a and for partly of out multiple fit are that center said, there But that a would I group Mark probably purpose with or management. there us single buying in our centers be dilution X X our in range. challenging be to to a

pricing value the a it's slam build our we're within So of other mean that New we much say group in X somebody X or Chicago here. centers current for York Maryland I scale a Jersey RadNet, to if California were to or size in the we’re for time – New with each matter markets standpoint, in long a from and pretty similar for Stake X in market, or benefits of given jumping versus that would present the X in. similar that centers of

positioned it capital. in scale some York we opportunities five we New metropolitan breadth us. now years of the that be in and to market beneficiary were all example, For that the only amount us that afford at in five contract took And major of and ago, that we considerable are ourselves years not have which area, the

them we joint attractive in and that, opportunities that in So we our because they held, of future venture partners engage begin a expansion. many when multiple for and markets in addition have and are conversation to centers with

be come way that the currently we them lot they another small and So look market system the that major rather own us into be centers at pursuing, to need us and size to better in go to just to we allocate than have a the to it’s wanted where us to it of non-core be a we they're impact. for that way be capital partner a a is this have that opportunities preferable go this perhaps big a to a to get health and market in with and player might think

John Ransom

support for that of you've year, got Okay. will rest Since lot And the last the the April maintaining assume your question. a outlook you're of that. into site I

Howard Berger

at the we're nice seen the we seen over, last on trend relative very budget -- continuing Yeah what the nor’easter our Coast. to East the spread of nice ramp-up accepted certainly or volumes here West Coast forecast that beginning April more on which in have to a -- with we’ve

Operator

[OFS [Dale next Our from question comes Borough] with Management].

Unidentified Analyst

more your bit capitation I just here. want arrangements to little talk about a

quarter-over-quarter all, in from capitation just the decline First arrangements? of the kind you bridge if of X.X% wondering could revenue

Mark Stolper

You’re saying [Indiscernible] capitation?

Unidentified Analyst

by impacted I not Yes, capitation as assume correct? was weather,

Mark Stolper

point. business existing existing some in Yes, the all that some arrangement Southern capitation this of It’s we did the in you contracts, California-based had when enrollment bridge California here to and flipped Correct. at we arrangement. a us in fee-for-service increases capitation have a for but year-over-year, from contract contracts a

lives business. revenue those the So flipped into essentially and that fee-for-service capitation kind enrollment and of

in Orange Now County, that occurred California.

Unidentified Analyst

the… So, with

Mark Stolper

contract had words, nice a would capitation capitation, that state if another year-over-year. increase In have had

Unidentified Analyst

you think X? Okay. contract, coming said Memorial increase I June the from And on a with the what in XXX,XXX lives

Mark Stolper

both when contracts lives XXX,XXX of impact. are North

Unidentified Analyst

full you your capitation? guidance of from to do year percentage then for expect the what So revenue result

Mark Stolper

guidance. XX% remain our capitation We right to now XX% our in similar to is where and of it expect is which between business,

Unidentified Analyst

Okay.

you lives As of did under arrangement? X.XX have many how million, covered capitation

Mark Stolper

me, have X.X lives. I in it’s of report front don’t but that million about

Unidentified Analyst

have contracts on And extent any your it’s have you And seek deviated? ability within been utilization you rate that found arrangements those with levels? been adjustments have the the within that expected the satisfied to to these

Howard Berger

little place. reflect to Yes, -- up fact we arrangements capitation that we currently But have imaging the almost annual pretty within the utilization expected most bit every advanced and capitation our all in that primarily creep which contracts modest tends we’ll of we good manage the year. have the are a at managing of programs increases, range an in are our with

Mark Stolper

recommendations sign an when CT, we obligation that make utilization and and these of educational in ultimately a on is have group. they as utilization. those have utilization a really that our back the agreements, one an request have allows a clinical then at that here of and we with whenever into groups We imaging review medical data corporate we advanced medical to the management to gets predictable with MRI, for utilization process. And backs that scan that all the impact constant it’s request up levels that review And found group study, request a pretty sent such that an contracts group PET/CT us our nuclear manage medicine our of

Unidentified Analyst

Okay.

and this do for you back new look Memorial in year? contract So have a normally a

Howard Berger

partner financial it’s joint -- venture particular we that in are Well, tied medical do of because are very look group virtually itself. they time our able and necessary if they be the really with case back to performance at a we this much to because Memorial, will they don’t any

our while committee with share and something long-term management of be the routinely that committee of our will utilization MemorialCare, contracts joint -- are joint quarterly operating operational discussion them will that So these with meetings. we on

Operator

Tanquilut have a with follow-up we from Brian question Jefferies. And

Brian Tanquilut

Mark, Hey, follow-up. quick just a

So adjusting the down by $X you guidance are million.

it the was mismodeling quarter So bit like looks to me the maybe Street well. little as a

for the to we sequential as to base think guidance annual get us we QX for clarify Number in number? thinking a how just through to should wanted one. year, helping just are mind $XX using in don’t you EBITDA? that overall And about the then If guidance be improvement EBITDA your million

Mark Stolper

Yes.

Brian Tanquilut

Okay. just if you figure the around, guys mind. Can you me…? And don’t help then

Mark Stolper

three MemorialCare JV quarters. I going the of kind One, next we improvement operations, other as acquired think be Yes. acquired. in there we mean, through a the to do such there as some well ramp that what quarters, will some be the is

are We DIA seeing improvement with our Delaware in acquisition.

expansion a that of believe we we before We that of the some will get end ventures done year. have with opportunities other couple pursuing the got are that joint

summer the we healthcare quarter the or venture of a year we’ve And some X. joint We because seeing potential of more deductibles see better people hope favor announce that resetting the relationships over in on then been by know to a they quarters, more fourth fourth in January seasonality utilizing are which end. years of are seem new be from as either those in services working one couple the to we couple last

think the unforeseen should progressively progressively that barring or do get better we events. any will So year

Operator

would any this back to And time. further questions for conference it closing no at I are appears remarks. additional or the like there management to turn

Howard Berger

our like employees to next with thank a RadNet market continue would services provides stakeholders. Thank you, continued all opportunity their will the leader for forward to Management hard for their appropriate dedication support of today. our and to its work. shareholders of great that the be and investment you return take on an for all call. your operator. time And Again, Thank to for I endeavor look I

Operator

your participation. This you concludes today’s for conference. Thank

RadNet (RDNT) 9 May 182018 Q1 Earnings call transcript