RDNT - Earnings call transcript Q2 2018

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Operator

Good day and welcome to the RadNet Inc.

Second Quarter 2018 Earnings Call. Today's conference is being recorded. I would like to turn the conference over to Mr. Mark Stolper, Executive Vice President and Chief Financial Officer of RadNet Inc. sir. ahead, go Please

Mark Stolper

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

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

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

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

Howard Berger

negatively from you thank this give On more the discuss to questions. thank in company morning, and our weather XXXX and prepared everyone, strategy. portion our to when from how call, your Thank Mark of plan our Mark. in will for back for quarter second Overall, affected and your you I insight participate factors today's adverse our I'd your highlights open the like significantly today. first in we results, joining you, and remarks, call After pleased very our which our performance, I Good our this with by quarter us to the you into future you call day dedicating bounce all interest conference impacted of to Northeastern a am operations. for morning. were performance we with provide

a is over able have last return of performance demonstrate quarter years. improvement and couple growth to to steady and been we more second Our consistent the

second and the growth. experienced the as revenue in quarter During same-center procedural EBITDA we growth aggregate well as

last year. the Our continued same revenue adjusted EBITDA important first basis second relative year, we quarter X% on this have In our standard business. aggregate increased increased of quarter, the on basis to are second substantial of X% believe and an year's investments volumes increased procedural over last which X.X% growth a X.X% the to I our made of half and

our contributing RadNet as be Although these I come. continued to for positioning investments believe the results may our industry they important not in are financially to years current leader

Massachusetts we and relationship image we made will focus clinical the applications artificial capitation evaluate will value [indiscernible] applications. with interpretation. company April Through intelligence investment to for technologies. revenue utilization unable financial at by of the in The our cycle use researchers and in a by time-consuming. products accuracy initially develop for to affiliated can clinical Harvard to RadNet is have million new invested be Medical interpretation situation and and we management the increase of radiology human In and radiologists be developed General algorithms with the is review business be of prohibitively objective the difficult image The interpretation in School. on computers to [indiscernible] Hospital goal speed First more particularly called based where effective to and $X in cost The care patterns that lower beings the recognizing improve delivery. and/or image identify and are

investment If a we RadNet. a our factor there is $X more device form can simply benefit for the in fewer potential significant have to us and make ideal In a portable Turner the delivering our it reminder is applications field interpretation make battery for of an veterinary, x-ray cost [indiscernible] safety. in innovative radiologists productive developing made is use are February our fluoroscopic medicine, industrial Systems. lightweight in power them professional whose great As million we or to in that inspection facilities able of in serving services. Imaging Turner and and

images company of a less CT radiation same reporting scrutinized to It's settings Medic position similar based technology the devices for this concerned see patients in allows time partnerships better quality imaging ambulatory some Aetna, our used evolution ordered evidenced harmful exposure. medicine. CT over all retail been with for and a or believe favor of specializes the the by and results to beginning future. March our and again positions or fewer few. of more criticized doses and Vision in services. United just from are the by providing and year and Vision name into evidenced us CTs leaving home last and in and compliant has scanners in evolve in a in health is that our CT we potentially software provide vein Medical of in that CVS x-ray are healthcare year lower its RadNet the Wal-Mart-Humana reason. model We dosage company dose, radiation packages to that hospital keep In Health, scans. also this like Walgreens an to be Turner invested reduced enhanced environment Israeli radiation changing stress leadership This industry to An medical more more in to RadNet investment adaptable delivery

now on industry. game-changer of for Before they more is a believe for patients collect more technology be [indiscernible] beneficial and We've and our good entire patients of stringent adopted companies financial time-consuming many our make requirements requirements insurance have difficult, has higher providers driven difficult pre-authorization the collect placed cut we complicated have expensive are to also data rising made premiums It not only Furthermore, Medic the patients. benefits for applying with towards employers will being investments burden and revenue is become receive reimbursement. is Vision health from the more more to the complicated but money plans. patient area is revenue substantial in and have as which deductible directly to it

phone-dialers we grown service in teams collection expanded automated and have significantly As self-pay centers. invested our result a customer

also outside programs We the collection resources and follow-up posting. of have employed receivable services payment for accounts early-out

future. our rates are will also to customer for result beginning in and improve patient revenue in have in accrual benefits and health We're hoping see and processes plan cash automation determining reconciliation to the these We collections the invested and investments margins we financial in cash higher operating eligibility responsibilities.

the provide area. its lives new total our certain recent capitation and and This service care offices in under to area. have upgrade the tri-state We signed X.X is and on Initially agreement locations in Some advantage first million into York these to XX New services responsibility in contract group. contract EmblemHealth though look imaging the EmblemHealth will capitation physician assume of Emblem in with services of imaging a the our – full expand about announcement patients York may Coast. Radnet EmblemHealth care entered full markets. the local for enrollees throughout medical East Under we existing regarding a you XXX,XXX to seen metropolitan these risk will locations XX will advantage partnership and RadNet through has New operations the has

the other locations. instrumental non-Emblem health Emblem in investment investing of to be these conjunction We capabilities This areas. with in about populations and ourselves necessary provide of $XX relationship positioning the will to patient imaging the size many We and be investment expanding to services estimate additional million. and is in these into Emblem

our a imaging. guidance Mark XXXX amount his today's capital of excited will section call. an have the increased model to be expenditures bringing which range discuss Through payment result alternative for are we by diagnostic this to in Coast we As relationship EmblemHealth East

have We to Coast in risk-based the contracting for been time. discussions East some to bring

medical capitation in with the relationships For RadNet large We of Coast. the on performance-based dozens are we has these look quarters. on believe over to the and groups payment grow models we forefront West enjoyed of two arrangements coming similar decades

delivery operations healthcare ubiquitous. October XXXX. with become a and system believe for driven five-year to health cost value continue necessary has that on effective We The are our care expected and is more performance-based contract to begin EmblemHealth term XX, and to

growth During for of the and in XXXX to two our credit With both. Network Jersey the we joint ventures Currently largest access second are a joint we NJIN strategic of would be expanding to are size ventures opportunities increasing New half facility. we through Imaging and number capital evaluating Care respect its Memorial evaluating with expanding pursuing our its significant more of acquisitions. active

Beach to are well consolidation RWJ The We a both and us and Memorial Long strategic of joining Jersey performed expansion region. Barnabas has with been NJIN pair in we Southern has pricing of contracts number venture including Care certain acquisitions our in partner joint improving California. acquisitions pursuing initiatives strategic the opportunities forces County with the markets. growth of several are extremely Similarly, the markets and in New Orange and joint our executing of venture instrumental

which capitation half our owns that to will the Memorial second We XXXX. for and/or manages have populations servicing begun two Care contribute patient performance in contracts

meet back with to be [bereft] our At the consistent balance of we discuss he closing cash I to expected the significant end opportunities of When million amount the cash Today to move our roughly I expenditures $XX of capital year-end. we second this the almost free is objectives We million million budget. completed cash and into the of construction highlights business half identify. will of substantially turn year $XX Mark repay growth typical This time a this year by strategy is year. cash balance XXXX our our quarter performance. have equipment to quarter spent second significant expect the either by to reinvested at continuing some the XXXX as of each I'd our increase we and of As remarks. the will the I like programs This operating of or to $XX produce balance may over our a year replacement make with deleveraging flow. anticipating am second in call debt, front-load will some used over end finished we

Mark Stolper

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

earnings gains each financial Lastly, equity Interest and equipment, I bargain company compensation, debt RadNet unconsolidated I in subsidiaries losses period. operations one-time EBITDA defines earnings non-cash non-cash said of income place that to earnings will interest extraordinary which attributable term to the gains of purchase a on adjusted and of common EBITDA The excludes quantitative to Adjusted review from or EBITDA measure. compensation. or includes operations reaffirm A our quarter the release. I'd reconciliation events the Inc. use is and loss, loss Amortization is and for income Earnings and our results. Before during loss other non-controlling will net In in financial second continuing subtracts adjusted adjusted allocations adjusted XXXX With or included on like my shareholders guidance Taxes levels. disposal Depreciation taking and extinguishment, non-equity XXXX equity in full to or non-GAAP discussion, is as EBITDA

or joint to MRI with the the into increased we X-ray, ventures volume of mammography The XX, whether EBITDA $X.X an prior adjusted X.X% Revenue and X.X% over of quarter adjusted second routine perspective. volumes. discuss volume ultrasound, were numbers million from CT X% quarter exams the $XXX.X ended volume we X,XXX,XXX EBITDA second increased increased volume routine year’s and increased other XXXX will second now taking procedures over the revenue second respectively. the inclusive consistent all did X.X% as months quarter prior $XX.X $XX.X our reported XX.X%. quarter that procedures. include and year’s all and I'm unconsolidated was the and whereby quarter. prior compared CT In increased all volume to XXXX about PET quarter over million prior million approach XXXX the same work of or all that discuss increased total I same the consolidated procedure year’s million account For imaging with Note X.X%, June quarter. RadNet of Overall exams procedure from in the multi second year's XX.X% modality accounting by In our of performed imaging. three or

the exams X,XXX X,XXX,XXX exams Our PET-CTs PET-CTs XXXX routine compared procedures of as compared quarter quarter X,XXX,XXX imaging compared XXX,XXX of all MRIs second as XXX,XXX in in as XXXX. as with these the XXXX second the the X,XXX the XXX,XXX with MRIs and XXXX. in with as CTs of of in CTs with quarter quarter XXX,XXX follows; second second second of XXXX. were quarter in of compared

second reported outstanding for weighted share of a second increase of approximately the million and in the the income $X.X upon of second of XXXX net second in $XX.X of for of net $X.XX same discounts diluted of paid number of of interest Per quarter million $X.X GAAP income amount XXXX. $XXX,XXX accrued quarter average $XXX,XXX $XX.X deferred quarter net issuances. in the shares cost interest was an RadNet to loss of of based second balance periods which XXXX the total non-cash expenses for compares of over compared with million as year. million and quarter non-cash and certain of interest diluted million. value For the revolving and the million was and quarter were $XXX.X employee's the line in headcount the adjusting respectively. restricted value for compared of with in June of we expense had at paid cash in savings of net of the of of during the to expense vesting financing for the severance compensation resulting XXXX options $XXX.X second certain Affecting the including we balance term stock on XXXX a quarter $XXX,XXX par of stock. from financing reductions $XXX,XXX on with cost debt quarter connection and items the non-cash This million following. non-recurring certain had million initiatives. income second related were quarter $X loan last excludes X.X of $ lesser non-cash the sale par and of XX, $XX.X $XX.X interest credit amortization the debt expense Overall we equipment million. million was which loan our of deferred debt capital XXXX Cash At period XXXX expenses [undrawn] second on million. our is cash XXXX $XX.X GAAP

approximately receivables of decrease days million approximately debt $X.X $XX.X XXXX with the repaid levels leases December since financial to asset in this net outstanding like cash and we’ve DSOs fourth of X.X term our quarter [un-amended] and a and quarter dispositions XXXX results the quarter net conjunction guidance At time, XXXX day decreased year-end XX, or yearend $XX capital accounts days sales reaffirm of expenditures XXXX. and our I'd Since after our million. our were During million which notes results. XX.X financial first loan payable worth released of had in

our our to million $XXX remains ranges guidance adjusted revenue $XXX million net $XXX For $XXX guidance total remain million, million. EBITDA at and at

define for less remains and range XXXX. The expense $XX which as flow cash for capital adjusted and remains free paid between million cash Our generation expenditures $XX million interest guidance $XX $XX and between guidance million EBITDA interest. our million cash and range we

revised million expenditure have we by our guidance to New additional York. upwards with level make will reflect in $XX conjunction that in We partnership recently investment EmblemHealth capital announced

give which update physician part received to typically we guidance discuss previously our $XX year. million. to rate. to time Medicare So to is minutes for range know anticipated proposal announced rates reimbursement this is $XX from respect the few take million with regards and you range released of reimbursement moves now to every million CPT what of Medicare a the that by an we’ve code XXXX a million about proposed XXXX schedule With fee to $XX matrix I'll recently on $XX guidance

compared analysis weighted completed volume procedural XXXX The have rates. those We our rates an using initial our and expected XXXX to analysis volumes.

reimbursement Our performance could performance initial under bonus resulted providing analysis reimbursement negative the where in for that RadNet's [MIPS] a excellent XXXX poor shows with us a impact. have

very act reimbursement XXXX. reduction of obviously with since are We pleased in outcome challenged has advent deficit reimbursement back the as the the been

consistently by rate just had and significantly business dramatically stay to and cases Our cuts to impacted some our in been we've place. industries in have improve

proposed from assurance proposed rule our there focused that continue reflect drive course, XXXX our organization. the is subject the for rates. race lobbying is rule through not comments to schedule in and or a Of the final will be to November are structure we the and to in and physician final released consistent will rate lowering scale groups same Whether proposed ability no industry fee the in cost with our using on November efficiencies be to the timeframe timeframe

settings. private we to significantly increases continue and discounted that regions system remain seek compared recognizing where are as essential the will our health from prices We delivery care pricing to to payers hospital

private will pursue arrangements these increased where in continue payers. stable with also term result We and long opportunities from volumes to health could partnership think systems we pricing

back continue remarks. that strength in closing some in operations. to who Dr. to and we markets five now our efficiencies at with times geographies our will acquire call our to to achieve existing I'd local three the turn Lastly, targets further EBITDA make will strategic the like Berger core

Howard Berger

you Thank mark.

at of I the our our key underscore portion tenant of operating Before call question-and-answer we would like strategy. on to to move

operating most density. is our concentration geographic of important One and principles

We the healthcare core physician of and organized structure of believed cost on regional standpoint operations. clusters my enter have it whether branding densely is markets of answer with manage yes. or regional is California, a more Many even basis. New to asked market random into effective Delaware, markets individual always and organized, are ever and managed Private large a payers you a national local Jersey, groups of our from York is a ever new contract outside would and that New with companies insurance us would Maryland, we identify qualified business. Patients a five local

the interesting our our Manhattan. geographically with Radiology of significantly newly to We there which so. opportunities we that believe subsequent acquisitions strategy be of scale any through path and of presence of Hill very example this are at in New for or the Manhattan reputation Lenox service we and our the time in positioned density expanding business the a give Prior saw in New Partners I can access quality the growing best York then acquisition we've the created is York. uniquely We and will market accomplished of non-hospital do Diagnostic constructed of New to Imaging EmblemHealth [truck-in] XXXX through The Hill partnership. City. It to no was capabilities Radiology what in breadth buying surrounding Group and facilities. for and acquisition operator and the us boroughs was York XXXX had Hill Lenox presence Lenox you largest

opportunities I'm in and this certain further that for surface market will we additional partnerships. grow other further As consolidation

new the years XX the and impact revenue. annual New five boroughs in to $XXX facilities we've all is approximately make million of This facilities and a of entering built of that kind when addition over City market. acquired of with in want EmblemHealth With the York five we a business

not for be in York populous is metropolitan unique replicated although New provided can is This obviously metropolitan area or how managed. in other areas. and imaging City

for management We them. is City now of current like more of the we and other Operator our these as evaluate have today ready question-and-answer I to will markets strategy – York will And arise others. should built team New well and portion reproduce as call. believe we able are in infrastructure the an opportunities exist that we the opportunities

Operator

Instructions] We'll [Operator to Brian Tanquilut at Jefferies. first you. go Thank

Brian Tanquilut

morning forward. walking if me about through mind Howard Hey quarter. good making how just you will near-term do your two your AI realized year good on guys. investment do investments shifting talk you're it change will wanted really I how revenue there. of how in us Congrats play out that see Don't that a and did you horizon and let terms you're thinking returns start the costs what going that and where and business were be does and opportunities

Howard Berger

Intelligence good we at and participants institutions least radiology this We the of of that we on business accuracy material it about speeding would as Artificial our looking to will overall and operations was What related the accuracy. you directed largely more was were believed the Brian part. image interpretation help our by and overall and impact while radiology rather direction that financial of Thank are than use more felt at concerned that relates we Artificial primarily believe academic productivity that from the part others diagnosis to happen and morning. professional been radiology of have up us opportunity the would Intelligence

the have and that As our group we allowed Artificial Intelligence we where us and they their a with development substantial identified programs. influence deep on result of have had a relationships long-term investment a learning

participating them I more way management; worrying are to evolved reporting, with We more somewhat rather unique aspects or an tools revenue effectively mentioned has including and use looking utilization that dealing related various in component. in the have as that enterprise cycle management, the RadNet denial asked at can as professional we than

the improve XXXX. dividends us beginning year manual the later mostly processes our of expect start some bad currently, us debt that to of paying So helping we're reduce for to investment to in overall terms the have efficiency collections, in our this improve expense, we impact

and are a we value start our eagerly believe results will actively working to be year later reflecting that this will forward short we and very believe that we the that that on. looking of So term benefit

us only terms standards which will longer-term two the cycle technology in IT performance improving of and and Some by radiology productivity years three probably overall to our think help I of are in accuracy. benefits

in those programs XXXX. expect implement of we to Some

We looking and for RadNet I'll unique talking data be are about in up is Intelligence that of to terms repository in we offer to and also market potentially probably avenues quarters to see in other that industry, come. a Artificial a which the position

So term to on professional into a side. some bit we summarize and a for operation identifiable little very on of here, longer see company. results early confident our to more we expect the in are materialized [mono from investment value the the the tribe] side The ones that will

Mark Stolper

of a working we're Brian, as give and eligibility and you around project we on I'll speak; specific that example collecting. going something here right patient a

money past, the think, patient whom in all. of these of query some get patient I check of understand mentioned of plans artificial licensed able to in customers to of then is to or of of with predict cases -- or get response we're similar able many tools as able at collect to plan, where to APIs co-payment to her the tools we insurance working money to of that do the a healthcare, so querying business, that the once same might scheduling patients couple data are real be a on is have data we in understand kind being a patient to the that at a in his the and the or data both as the has with insurance foolproof. the more, under the of back from some in what plan, respect is that collect become what Well, incomplete to one what some more upfront and incorrect portion and be to We owe patient Grail because what realized our good estimate that upfront. on at end in not eligibility a intelligence time based companies the deductible. we've our from his allow patient As leaves responsibilities don't collect or past it facility may right money I’d they're tools and sometimes And be or service upon time a with now we or companies licensed things that which her all difficult upfront, us time cases and we've or of or in Holy those

Brian Tanquilut

about shifting pretty where good geographic your and planting makes footprint obviously Coast in the flags concentrations very you and is sense. That have where you terms now think new mindset I West scale of management's build Mark, gears, quickly? East potentially as can in

Mark Stolper

remarks I best that I to described which core point to when could pursue the currently focus like on and near again identify in. to Rochester, York Rockland continues ago, example The in Those talk sub-market RadNet primarily market, New our I'd in City market our York our states markets that primary New Well, that essentially say by and York. are Five untouched years we physicians think effectively used and New is in mindset was we the the concentrated we New area base. in about sub-markets my like were within that of York, so were own to New and County was in that York closing not out New five are that we York necessarily have contributing our City. we New revenue York, its

markets particularly last years, the in New being California pretty market. our like itself. We now that will planted that there's five that in for of even Jersey and Southern Maryland non-hospital California other provider other well we've you that and in we’ve states largest if like believe in So the goal perhaps accomplished flag and

like other be And I look that that something and looking opportunities comfortable have certainly have we to geographically position five and would that another for we EmblemHealth be we markets continue in more believe we're what are that that keep accomplish the say of have like our the the that, very markets busy. books would path we are markets now staying forward on now. large we're to create to that at some the but think that identified like results there we're future a it to centers in I'd business well pretty in us in presence So expanding state I right dominant and right in will would with with plan for at that primarily in announced our market enhance bringing the to position might

Brian Tanquilut

Howard, point made. you up to that just follow on

we How Coast? about think So it the Mark, to West think about of economics should I arrangements and comparable think as on the PMPM should like we Emblem's that? good have is I your population, just pricing EmblemHealth how it profile mean, about comfort level risk then the terms data your RBM West of amount looking you of on a you cohort? in right and because I the what's the have that of at on Coast, know that

Howard Berger

think for as we reimbursement Well are two decades utilization And is our reflect rates the slightly were or this that pricing Coast heavily what see the better of and rates been impact has least has from higher rates EmblemHealth in mature. in -- more now, East utilization contract and for managed and care at than is we and see also California. from a that. state where higher standpoint that very reflective of revenue aware you're California contracted the I that with been steeped well Brian

the So, can we members that contract here. the redirect their than through have enjoy should a fully rates access position I products reorganize significantly benefits in Emblem are I’d both as or non-Emblem of advantage to the centers we capitated, care time Coast, read but take and well it patients will our large network patients or us contracted flow the better say overall of the will Emblem other say, model West of for as that not

about probably will perhaps full up year enjoy to that. benefits us of it the think I to So take a

realizing some then will excuse make those and me in the in first we the of start last here. of this quarter substantial investments up We - year as our ramping

release. business the this little basis been to model that model from incented hospitals creating have different we're very a greatest the of outpatient also a as away and for all and it's isn't into centers with a Emblem imaging and cost So much sharing the drive bit much risk Emblem because identified as

think that the make benefiting I'll RadNet more containing much within have are and as this on that taking of ACP from certain we comments possible is it the locations over. on I impact and as the we're So work bring we what as

Brian Tanquilut

All right guys. Thanks Howard.

Howard Berger

Brian. you, Thank

Operator

We Sidoti. will next Ramgopal at Mitra to go

Mitra Ramgopal

I in wondering was for versus first driving quarters. the just PET-CT anything we've wondering MRI morning numbers a or little Good what there quarter. this seen few if light looked Yes. store past was just was that I the

Mark Stolper

that fact that's is to due advanced is more basis revenue for And mix coming X.X% nice procedural I you overall we're growth, center that I has were which several and at trend look outpaced if CT. than one last the doesn't think more our starting growing quickly we which seen same our X.X% see the is we but mean why I seems center improving of our more year same there's to mean in and of I imaging have business. more And routine overall, mean same look Routine quickly exams. up imaging is and more center where modalities PET-CT, pacing No, imaging new trend advanced imaging be growing were imaging. growth each on make, and more and a we the business on and in the the quarter MRI pleased, our for advanced applications the CT population quarters MRI, the technology growth our to a overall

been get more. types contrast technology better, As gets the better, as and these and more of the proven of exams efficacy materials has

respect into think – kind of would growth growth. So as more and exams. that a center anything we growth same our the see long-term low imaging routine read model single-digit is way company say to and with We've there's on X%-ish I don't the the felt always advanced tend modalities X% imaging on center growth to we same to see I X% we that to

Mitra Ramgopal

handle Okay. I the regarding just starts questions new plans. wondering the on arrangement if Xst York the feel you now acquisitions That's have October just to facilities as New that you have you to of great. on capacity sufficient the and EmblemHealth make at look a or handle additional some your area the right was And that's volume? in couple expansion to you if metropolitan do

Howard Berger

some or some know volume. advanced the most to market point of be will to sufficient routine expand have think need one would a imaging and regions, to I have capacity do like Lenox in Hill we we out right think those that two those advanced we access the in over centers of are turning seven eight will AdvantageCare taking we locations imaging, Island that we and that do imaging Island is handle as to is we be I multi-modality to physicians AdvantageCare well do those we which as actually now marketplace the will taking that where where and we now where Long into -- which expanding I Staten over. it the of clinics will Radiology the one have the be don't physician for only both have part right have that be no about locations area where Well locations,

markets make So I in able to York fourth the make we on third be at by in and to to virtue will as substantial comments were this have looking that we marketplace take the think and capacity but quarters opportunities other we presence New unfold. the our contract, we'll of those more add on expand always may investment to

Mitra Ramgopal

Okay.

the increased know And starting drive and great. terms I then I to what without the of pretty JVs. that's Barnabas partners? a it's there just potential in unless seeing a Now, at as sound are Care you result on a we And bullish if Memorial JVs, interest you're wondering

Howard Berger

looking to that extremely that, the to inside a shifts there is markets moving replicated health at and RadNet industry model into hospitals. core recognizing other more potentially business We the ambulatory RadNet's not that forces settings hospitals inquiries elsewhere. that its both RadNet towards but care important with as existing We as I part joint are expand partners opportunities moving forward, and do get strategy believe the venture of and think as are and business looking new well might systems be their with are in look only to on focus more be will

payers constant So underscore existing with new with to recognize with it at can process Again, EmblemHealth value that access both we're of UnitedHealth, and the the RadNet relationships looking in in think the to will and be that bring that a markets more understand the And to focus strategies. kind kinds healthcare plays that of kind medicine orders up which of identified. EmblemHealth kind their other of believe of as as could of I joint relationships reports in but that ventures, hospital what partnership they're more for more becoming imaging, pay healthcare critical gatekeeper more Aetna be potentially kind in those general. want relationship such see delivery I and looking not them. the you in with just aware is CVS other with I proposition and RadNet the imaging we're that the institutions particular linking ones has partnership our now business these such the of as

Mitra Ramgopal

taking for questions. Thanks Okay. the

Operator

We question from Partners. will Moab take next Scheschuk at our Dan

Dan Scheschuk

Hey you. guys, just a quarter. couple Congrats quick one’s the for on

Howard Berger

Thank you.

Dan Scheschuk

about EBITDA share us One that? question weather; some beginning to had impact is with you of is the can had any that April I there

Howard Berger

in will, the Yes in the a took market our beginning last April. if of of the a nor'easters, toll northeastern you of bit

for up that. volumes by ramp was a affected So our

the think from. there was completely little We I created a bit but impact have it did I recover since to significant of beginning small, a second first the relatively a quarter such which was not quarter, in never slow think you

they in May overall and than were significantly volumes our were healthier So in April. June

good have point this making make you're think rather an I of. underplay that attempted a issue to we than point at So

Mark Stolper

whining wanted just contains to in one – to complaining and keep one We quarter. our

Dan Scheschuk

think? or Got it. like it Well that's single-digit EBITDA than helpful. Is you that more

Howard Berger

it. you out know Yes impacts about million I had quantify it If a revenue. us to didn't roll mean we that I maybe hit dollars of

Dan Scheschuk

on obviously just CapEx kept guidance guidance, that? on for Is the up brought the but flow you that. you then And there reason I a congrats deal cash Emblem it. quickly Got free saw neutral.

Howard Berger

Well quarter cash in be growth and we flow from the our we will will some offset help Emblem opportunities expenditure. think that comfortable other are CapEx that benefit there increase the fourth the of

amount will So, a was while a and which the system we mammography of third and through of our primarily quarters half CapEx CapEx to loading revenue was the we and growth fourth first pointing think take front Mark MRI the be experienced we as of there year. out, in fair disproportionately filter new which to for benefits systems, greater in what the in

Dan Scheschuk

then if we think towards range be XX the looking So might higher? CapEx the is you of higher million end

Howard Berger

of Higher end of the range which?

Dan Scheschuk

EBITDA guidance.

Mark Stolper

No.

offset free that contributed cash contract additional is additional CapEx I $XX think somewhat would believe our or hit what that mitigated from cash to flow is somewhat we the guidance or normally that million Dr. by be impact by saying flow be that Berger the going is negatively itself. will

Dan Scheschuk

wouldn't that but the line? [Indiscernible] EBITDA it Got to

Howard Berger

be we free the Yes guidance. that in flow of cash but or still guidance initial believe will range cash our

Dan Scheschuk

it. Got

Okay.

Howard Berger

I think..

Dan Scheschuk

ahead. Go

Howard Berger

carved obviously weren't level investment get that just And as acquire which I in an should that quite that and fully RadNet reflect that going to more one unique the well our going a position generate is assets a technical paid to equipment was to say of ongoing quarter. will. to substantial the as at scale. We've accomplish. created is that with the think inside to the our you have of on we some This of in almost their that while accomplish the we have look acquisition EmblemHealth arrangement that an I than business this because side Emblem I undertaking and both what practice in and essentially Dan, think deploy or out be the have implemented, is to to we both if we take fourth to and would partnership akin we have in buying professional able to a to that you operational order as similar we're to deal margins contract for

Dan Scheschuk

to then And the as Emblem potential from the deal? any helpful. guidance just That's Thanks. revenue

Mark Stolper

potential others, thanks so follow for basis of Great, I well revenue probably on annual up appreciate an in is I this off the it. have guys. excess that much line think I any $XX if million

Howard Berger

Thanks, Dan.

Operator

And we’ll Brian take question Jefferies. a from Tanquilut at follow up

Brian Tanquilut

in not other know Howard, it's really in copying of you Anthem market. the this I Anthem this are we've rolled think rule that Anthem more adoption that where in all NCOs start the your year, every as that, out I market about carriers haven't the seen something ruled seeing and earlier adopted was but other before it. out

at starting shift volumes any to down operate So market in signs the the hospitals are there that you of in?

Howard Berger

Brian. talked think It's a slowly I this here. big to I going before is it's about This -- have turn Well shift.

but other and these FCA. center, the of more CVS care it groups, with everyone what major of by think orders as pay just are RadNet the surgery I they physicians publicly a alternative and there effectively Plan through hospitals from of United, the their health to at standpoint aware to like working Anthem from is as relationships is. it to can Aetna, you plan look is And as and business, that moving those has more visible a may take I traditional that not you physicians an business if they do been away with more Optum have players going a the UnitedHealth closes business they business as see with be controlled through will hospital-based effort subsidiary, and you sure to and Optum players. as acquisition those thing for both more Same in as more with in well when the away the of acquire move that think systems as primary that well those more doing leveraging are that from are surgery centers imagining itself, physicians

models their with do don't doing So I high have it created. just all necessarily Anthem to that think they for the it. They profile need has

and groups. So we these if conversations haul with it's we I not have part some of will that to those will of the be over beneficiaries the have the dialogue believe long of will safe that already if say that

Brian Tanquilut

for a And follow-up Mark.

cash so as about right and XXXX this change, solely. past the think get flow think Just we are a just CapEx and incremental but so shouldn't there as be your really you to issue But just just for it clear, CapEx. CapEx cash on that XXXX once shouldn't is because up you Mark I this, quick be question, free ramping flow Emblem, about

Mark Stolper

for next be facilities the normalized. our of to Correct. additional contract This we guidance XX million what those onetime estimating more are purposes in investment CapEx year expenditure, ramping is a be that is $XX will so about Emblem the up

Brian Tanquilut

All right.

good. Thank guys. you Sounds

Mark Stolper

You are welcome.

Operator

remarks. And question-and-answer closing I At to turn this that conclude will for the conference management the any over session. time does back

Howard Berger

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

Operator

thank conference. for you that conclude Again, today's does your participation. And

RadNet (RDNT) 9 Aug 182018 Q2 Earnings call transcript