RDNT - Earnings call transcript Q2 2019

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Operator

Good day and welcome to the RadNet, Inc.

Second Quarter 2019 Financial Results Conference Call. Today's call is being recorded. At this time, I'd like to turn the call 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

the management's are statements uncertainties, to which risks and uncertainties, based statements are differ set Form forth filed including and the from Forward-looking RadNet's from XX, RadNet's and December year with report XX-K RadNet's SEC on to be subject on filed risks reports preliminary and risks including ended herein. time results to for These quarterly RadNet's materially cause XXXX current may those XX-Q Annual Report to in on time, expectations actual Form shortly. contained the

the the it unanticipated were of update date forward-looking or statements or guidance to events. after date future on forward-looking reflect the which made. no especially of only reflect placed made statements information, reliance to should not as on they events any to be Undue financial performance, RadNet circumstances occurrence publicly speaks new obligation is undertakes

the I'd like to to And over Berger. call with that, turn Dr.

Howard Berger

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

Overall, our I am very continuation in the pleased in a fourth our second quarter which this the of was and first of business year performance the strength last with the quarter, of quarter demonstrated in year.

highest we our EBITDA Both quarter, second the drove year. compared and second as with metrics During were growth of growth the the last second revenue any quarter XX.X% quarter of in history. XX.X% company's

was driven performance same-center number of by In procedural Our primarily X.X% growth. efforts regional same-center and is achieved teams. this attributable growth. to This significant quarter, our we a volume of aggregate

centers service competitors. differentiating are First, success our and relative marketing our teams to our having offerings

to believe multi-specialty the We practices, the our are continue IT and best in radiology business. systems equipment centers conveniently located

scan Further to protocols already more and facilities. at in is the years This busy referring but the investments of slots additional the alter images the to number by edge patients us scanning recognized only investments of us our allowed centers. at thus has highest leading we've we made Not physicians. equipment are and our recent in patients quality, equipment have equipment provides newer capacity quickly in made increasing our

disparity Our of and health between and further pricing. are services of that pricing referring the plans volumes benefiting physicians imaging also patients of outpatient for recognition from hospital continuing the

outpatient care, are hospital health the of meaningful. insurance substantial the local freestanding companies disparity healthcare and of pricing for remains becoming landscape pricing where services. conscience for Our same financial and a and between patients In responsibility assuming cost more fraction the are the is very more that hospitals health

slowly occurring where care of expense is steady this we tend but Over to ambulatory trend in that a are hospital increase is centers the patients is change, convinced slow at referral and we healthcare be sticky health to expect as leading. volumes. patterns of time This

more We into flowing therapy care health the of are centers, urgent clinical and freestanding centers, centers on. seeing outpatient surgery home outpatient migration list including health in laboratories, all patients volumes goes savings, of disciplines physical the care

Many Health and why undergoing forward these stages partnerships Thus success systems recognize we we with I competitive outstanding landscape. with in institutions transformation their continued in RadNet having this a change, and whom medicine, are of change. are operating networks based of are seek the establishing distributed to belief health our health joint relevant it additional leaders care partially still are other of is system is believe that specialties that initial we ventures. high the partnering thinkers success and locations. where quality are of our with they remain changing histories this community must in in order of trends

in with centers held health of And could Today expand double our health within joint we and partners partnerships the as new in are grow we years few as with new institutions. about next number well XX% as potentially ventures and anticipate this existing create system with systems. markets

volumes. see leverage we almost the in situation able which partners, venture, We for are RadNet continue joint to all relationships physicians with in to benefit these as leads to referring partnerships, improved

became pricing. payers, Ventura establish multimodality Health partners quarter, increased In private our long co-owned sustainable Rolling regional system strength second at we Oxnard of joint second a and Additionally, term and visibility Radiology, fair in Camarillo. venture established existing centers in our and four health with brand furthering County, of Oaks with Under operational we Ventura, the our to network have goal imaging California. RadNet's Dignity our

which centers those into value co-located one outreach relationships bringing John's Medical is markets three its are St. communities Regional and created to center, partnership. contributed Center. already Taking newly Dignity and these imaging in within these the contributed RadNet great existing

serviced for has XX over centers Also people. a communities quarter acquisition further in than five Radiology, the has Bakersfield, market in the Kern owns the our that completed and presence County and XXX,XXX second Kern Kern Kern years which expands of we of County California. imaging more

quarter, Truxtun that the existing our payers. with to transaction power offering RadNet Radiology penetrating partner our During as presence into populated $XX merging integration and regional improve This approximately operating particularly increasing the in current the example health By began our regional model. we markets, further to our in of an is revenue of of with which us million of our the annual systems locations relates to RadNet expand position densely brands, local RadNet Kern of it and adds service and power offerings service to patient regional population we market.

into newly created artificial the we with division conjunction a on Nulogix artificial the that focused image the to business subsequent quarter, of Nulogix already second and solutions of division creating In end we Lastly, of did intelligence. we intelligence created RadNet's that in not purchased an RadNet, focus announced an will developing interpretation expansion own. AI early investing AI is focus radiology on processes. developing, on newly and stage technologies within radiology. testing, company XX% acquiring

AI to our addition and team, solutions Nulogix partnering, internally In acquired evaluate others. licensing we through newly investing developing will solutions AI developed by in

We radiology diagnostic transformational on the expect impact will artificial that have industry. imaging and a intelligence

efficiently applications data and deliver to algorithms learning, Machine effectively, services and us cost more our big will accurately. allow automation

our in We are partners, communities our run business physician advantage committed to that health to joint ways and referring patients, venture technologies plans. make supporting contracted

others. in solutions investing through being commitment and this by Nulogix demonstrate leading-edge developed will We

us test largest the being fixed-site evaluate. imaging as position frequently products owner with presented are makes new technologies and and to and diagnostic RadNet for for centers an ideal future. of operator We laboratory the of us technologies

cost on to net almost radiologists Today productive radiologists lower revenue the our all the of XX% making intelligence build more our stand of by we accurate globally materially. spend our image and artificial of more benefit stakeholders interpretation RadNet's images. If were to of affiliated interpretation

million half million operating have business year-end. into of budget. capital XXXX will year our move equipment second programs I a to by of we is construction To-date, front-load produce as our year, amount almost our flow. of our the roughly $XX spent replacement typical we expenditures we and free objectives meet each the in This As significant cash expect $XX

balance This $XX significant year either of deleveraging consistent and growth reinvested our strategy, balance over the repay continuing be quarter or We to the by completed may I'm be expected increase at million anticipating identify. end debt, the in a substantially will end with of cash to this used opportunities we year. second with balance cash cash that

remarks. like I turn our second will some call time, I to discuss this some When to make would finished, over to highlights closing the the At he performance. is Mark quarter back of of XXXX

Mark Stolper

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

I XXXX update depreciation use the Medicare guidance financial financial reimbursement measure. and my for will adjusted non-GAAP Adjusted levels XXXX. discussion, defines discuss will I a EBITDA, is company Lastly, which The term earnings In purchase before compensation. bargain or taxes, equity disposal debt gains as interest and on on other equipment non-cash amortization loss, income or losses of gains and EBITDA the extinguishments, excludes loss and

included of extraordinary and earnings, RadNet to income period. to subsidiaries unconsolidated of non-cash, to loss net full in non-controlling earnings includes and adjusted the equity A or attributable subtracts in place adjusted allocations interests common one-time our quantitative taken EBITDA is shareholders and operations earnings earnings reconciliation is Adjusted in Inc. for during events EBITDA release. or

I'd that With XXXX review our quarter to like now said, second results.

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

increased For exams volume MRI as X%. X.X%, volume prior mammography, XX.X% prior into and the exams other quarter the all year's to account X-ray, XX.X%, second taking compared routine increased increased second second and XXXX, Overall, imaging year's PET/CT inclusive CT over quarter. of the of volume ultrasound, quarter increased volume

The we the imaging. of performed did by were approach procedures second in quarter with XX% XXXX, routine whereby work volume of the quarter we second multimodality XXX,XXX was our consistent procedures. all the total In from

second XXX,XXX were quarter MRIs follows. with compared Our of procedures routine with quarter the as the XXX,XXX quarter quarter in in and of in XX,XXX imaging with as compared routine PET/CT CTs CTs quarter XXXX. the the the of exams X,XXX second compared as with second XXXX XXXX. second compared PET/CTs XXX,XXX of in second XXXX. as in exams MRI's of as X,XXX,XXX XXX,XXX X,XXX,XXX XXXX

quarter second XX.X approximately income the settlements was quarter the $XXX,XXX $X.X compared second quarter quarter, $X.XX an over of during second million of number $X.X million For upon legal a quarter XXXX. financing million of quarter of RadNet second for of tax basis increase XXXX second per and of expenses of of diluted for Adjusting $XXX,XXX $XXX,XXX accounted the share share the was the the in in for million in in shares of XXXX, other quarter income of XXXX. the average net and XXXX. the net on a the transaction over $X.XX effective shares decrease net second reported, outstanding adjusted in diluted weighted shares Per to based XX.X a impact income

impact in this the second transaction settlements share for the the XXXX. legal $X.XX quarter second per for and to income diluted financing adjusted quarter expenses of accounted compared of $X.XX Adjusting other year net in the the of in was

Affecting million from stock. employee and non-recurring including income the following, certain of expenses certain quarter XXXX resulting in net vesting $X stock expense compensation the of non-cash the and were second non-cash options restricted of items

deferred savings headcount with and and sale initiatives related on loan $XXX,XXX of and legal connection settlements, in related capital issuances. $X.X reductions debt transaction financing paid cost equipment of $XXX,XXX million loss and financing certain severance non-cash -- the to on expenses to other the of of costs of certain on discounts amortization $XXX,XXX

was of Cash This is NJIN, million. last interest million term The as of and the of interest and in own the debt expense the $X.X increased Overall GAAP interest paid excludes increased interest XXXX to accrued XXXX GAAP of which second $XX.X compared interest the financing expense quarter quarter during second for facility. the has expenses second was for with credit year. quarter, compares its which of of the expense loan result million. deferred $XX non-cash million consolidation quarter in $XX.X

our At approximately borrower cash less par of term now Note $XX.X had June $XXX.X had debt is At which XXXX, were revolving our neither undrawn a debt, includes RadNet of June XX, $XXX.X million a of at we our cash a $XX.X the million guarantor. value we XXXX, net million. of for on nor credit line and balance par million XX is debt of adjusting for value which loan, that balance. value total this NJIN net the

the expenditures term of and XXXX, XX, of and asset quarter, notes December and $XX.X million. receivable accounts repaid increased During we $XX.X net million capital debt Since dispositions million DSOs leases our of revenue payable decrease $XX.X our days had sales approximately And due day in were acquisitions. growth approximately net year-end XX.X a since from X.X to days and the new of XXXX. outstanding or loan

I'd guidance year quarter time, results in quarter like this levels, to first financial At our which results. end conjunction with fourth XXXX after our released year amended and fiscal we update XXXX our an

we net total For end increased million. of top our and this revenue, levels by the end quarter both guidance the bottom $XX

is So billion. new billion $X.X our $X.XXX range or guidance revised to guidance

of by million. EBITDA, top adjusted end of our range we increased our end range the For the bottom and $X

free million million, $XX so $XXX to also So million. million, new and our million We've expenditures generation we kept the range $XX $X well cash interest range cash guidance $XX levels million. guidance capital our to our leave at $XX new $XXX to chosen at $XX as same is expense we've by our to guidance increased flow million million range to is as our million $XX constant

financial EBITDA. from The to our optimistic increase recent are and The XXXX and these full first acquisitions and organic growth XXXX revenue contribution of the We projections initial far. continuation adjusted provided has performance causing ranges health to end year about us guidance consistent us second trends XXXX. for of and the our remain and system confidence the the joint through into quarters of year the thus ventures the exceed strong

to about by update which respect Medicare on know recently a matrix an what give typical we released regards to Medicare year. part that every reimbursement anticipated is as minutes take XXXX Fee Schedule CPT you we rates Physician XXXX to a proposal discuss time few now and is rates. I'll code, of with With for this received the proposed reimbursement,

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

rates Medicare analysis be shows neutral initial essentially that Our relative rates. will to XXXX our for XXXX

While there Incentive has impact. year been our performance pricing, MIPS, our upon mitigates of XXXX Payment is based fully from which a small XXXX impact negative under bonus System in measurement this Merit-based

of quality you required who and are a MIPS, by to less rewards is CMS program with incentive those value outcomes. familiar law payment For which implement

performance us impact. under have quality, a bonus for poor cost. Performance MIPS a measured activities, areas; four XXXX is in in was improvement excellent, providing promoting whereas could resulted and interoperability reimbursement a RadNet's reimbursement, negative performance

obviously very outcome, are reimbursement has pleased has been with past. as reimbursement We time the at challenged in the

course, to reflect lobbying for schedule there subject proposed the groups assurance rates be industry the Of fee no proposed the November to rates. timeframe the in these rule financial from released and are XXXX will the comment and physician is same

to through rates, final rule continue ability the lowering consistent not or and we in be drive focused efficiencies will to the in timeframe proposed cost November on our structure Whether is organization. our with our scale using

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

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

we will efficiencies existing acquire three five in markets our Lastly, in our at operations. that and geographies targets local to times our achieve further times strategic continue to core with strength EBITDA

make who'll some the Dr. I'd call closing to now over Berger, turn to back like remarks.

Howard Berger

Mark. you, Thank

call, very diagnostic we why why I it future we to would portion imaging. in industry such like an exciting move the on be the our to bright is of believe emphasize Before for question-and-answer time looks our to and

and and in incremental for drive open what for key tool related Each time. year, First, over identifying diagnostic patient injuries are the new which Radiology remains technologies, do industry. new remain we we advances and volumes equipment most applications there a technology-driven diseases.

to Advances CT are the breast scanning, devices, and to a XX unheard imaging, and as XD multi-slice medicine. years PET/CT such PET/MR of envelope few, ago diagnostic now name of continue push

invest operators. that to significant and believe centers capitalized particularly to into barrier substantial requirement others, expenditures to smaller entry for a capital represents the continue We our reinvest less

and artificial players on and business AI and AI refine more near earlier, Second, overall industry promises have future. reduce also and radiologists revenue to discussed AI make will accurate. productive cost, in as cycle. marketing we intelligence, do I times. how our times other impact to areas transformational which processes ourselves the our may will AI scan such and report shorten business like turnaround allow impacting impact thereby materially Ultimately, margins. should operators

acute referring and rising healthcare. benefit freestanding convenience their level away the continue of in to to Third, patients and Patients our favor of because higher from significantly of centers, patients benefit migration settings of ambulatory service. will of address physicians will centers. industry the outpatient cost This and care prefer continue from

Lastly, and charge We regional consolidation. the We benefit more us see will to accelerating the and geographies. with to diagnostic set gained to penetrate and efficiencies an in imaging industry intend sensible that expand remains regional and for and can our further RadNet for companies. from systems from methodical fragmented continue aligned opportunity health networks this be targeted insurance lead

are we the question-and-answer ready call. now portion of for Operator, the

Operator

Instructions] Thank go to we'll Tanquilut And you. first of [Operator Brian Jefferies.

Brian Tanquilut

Hey, highest Same-store in at Howard I've my great it's the guys. I on probably came a first seen good years. for X.X%; morning, guess I or quarter. in Mark. think volume Congratulations question

for would that that of the terms do out So robust is you during the what And drivers of anything you sustainability of there about call same-store in the level were think how quarter? growth? growth

Howard Berger

morning, Good Brian.

in to the we outpatient two of can up that methods commercial with our one, places. more our I know pick accelerate some mentioned payers pace. slow, all hospitals is help insurance We because it starting and which beginning growth. the are opportunities to conversations of discuss almost by that from predominantly into centers, opening movement believe, while as is Number comes it remarks, it think I from I patients

In addition joint the particularly of freestanding more with along part their here patients venture that, California helpful centers partnered with the who moving become of systems from patients to hospital more are in recently referring that partners centers. we've joint -- into to the -- also are groups more venture those in health the

The other the in us all is occurring MR, in modalities shorten advanced part of equipment centers we newer intelligence our and understand which that are shorten is challenged equipment at with think increase by look the times. that us it I to times artificial make new volume and scan software to with allowing our the particularly is investment the which In advances affected particular, that PET/CT allows we technological backlogs. when been imaging and CT significantly primary scan have important to

We are help to also our of standardizing using times. protocols our shorten and practices markets those all best scan across

is been we as these in reducing have to per times higher along in that or centers technologies So to more often results scan helping achieve with XX% the challenged per are applications. many revenue able in give our us to that as that of by and XX%, our drive our time much new unit wider of which a volumes centers volume hour with range

those new seeing impact we're because have So that hospital out the yet primarily the reduce we the there to migration see driver of I tools are techniques that this I and times. scanning are think do think our and full sustainable of kind of the tools implementation and is to in

Brian Tanquilut

Is growth, performance? look I awesome. strong still out the the same-store question is down for in And call terms then EBITDA guess I anything there to good the but Mark margin you, to at That translated as mean, year-over-year. QX of I a margin

Mark Stolper

Yes, sure.

we basis little from on million and Zilkha, another in in primarily So in of very aggregate to compressed Radiology in acquisition Island result last up, we $XX the you're two that called up, then which received a acquisition -- April and X. revenue Long quarter revenue of relative acquired year Kern of margins which the quarter to about here where the received we The EBITDA. we Aggregate quarter EBITDA second about way acquisitions made that's the points XX right.

Truxtun strategic of two in are were called Radiology expecting the were group Radiology. -- the that very the where asset or quarter going our That's before with Kern those side. to our to take to EBITDA midst consolidating Because seeing of Bakersfield existing two deals we a the regions the came start that we now are get almost particular -- we operation enhancement there on

Zilkha we location another ACP the then And Island to that and strategic for terms our was turnaround that can in as where operation Long and of lives very expect well. we send

by $XX there's on that for significant getting think we actually of that of will the our get we revenue So improvement a contribution side our -- rest to we like that more business. look million the margin those

Brian Tanquilut

last then And me. it. question for one Got

the was As a I is think increase year and to about for good the year-over-year year this rate sequential on a well. about thinking be capitation as on there obviously run of Is capitation? rest

Howard Berger

in primary is AdvantageCare The increase to ACP coming addition XXXX we capitation Brian. our capitation that called of new Physicians the all the the is. from of are midst with of contract and calendar it Yes, contracts that -- with Emblem the subsidiary our year. discussing pricing in for in

is sustainable So also. growing be run rate we're that with and probably comfortable should

Brian Tanquilut

the RadNet that you I it. if capabilities more I and have I the Howard, the on towards the you comment to AI Actually data how if of all in may and going but since it since one monetize helps forward? sitting you your have mentioned for ability monetization your are that on comments operationally, I AI that you're of asset end thinking of question Got appreciate terms how ask you about guys you --

Howard Berger

adopting revenue out whom the will access give change more -- will us to help single artificial part that couple and effective an overall talking we of records warehousing medical be more but part performance, of intelligence don't the will much in of overall that We it community. will company. or can of a are do company's to be use companies people availability information that business know monetize have other some we the either if a and that us in create a that that to operationally inside of into data I the as substantial importantly,

and along and data has commercial all -- storage concern how intelligence artificial been an from enterprise My be can standpoint. is

the I our think it of more us accuracy a potentially helps be from other to to a the advantage centers it and producing benefit standpoint. competitive creating with freestanding that long-term efficiencies, hospitals may that and biggest extent margins by

data I area not critical, consumption. So will much and in as be the intelligence will positioning but so commercializing be storage think company internal from the the artificial it, it for

Brian Tanquilut

All Thank right. that. Appreciate you.

Howard Berger

you, Thank Brian.

Operator

[Operator our of question Mitra comes Instructions] And next Ramgopal from Sidoti.

Mitra Ramgopal

hi. morning. Good Yes,

First -- benefit I was a from on saw shifting these -- same-store all you're to saw of of at numbers if I procedures the -- we just and wondering from the UnitedHealthcare starting any etcetera to see like away a more insurers patient? hospital

Howard Berger

Hi, Mitra.

I are. we think

Part I what too detail. in to in early is to we competitive that seeing as quantify think, benefit try I on the other just based that opposed provide believe, to market. our believe that the a greater we're freestanding simply little it's we shift a of competitors

medical slow their groups, healthcare ability to trying a all and it in I'm as here of those the I remarks I'm patterns slow of in talking about not about referral mentioned to those are hospital services. Even physicians generally referring process the a alter change some ambulatory that patterns that referral my think is one. systems to talking get find acquiring imaging, I very just

continue time, RadNet benefit believe will to a But period it I will benefit centers and is that it the over from. from of something

imaging general and drive volume. in So if if will, those healthcare particular you they in look inside at forces, you

population applications population imaging, meaning The new imaging technology. which increasing ageing drives ones with been an always drives the more have which and that greater there, more

now cost hard peel more cost growth. part back The is imaging of we're a have those dimension systems same-store to organic centers and as of of the into contributing is effective more that the kind directed lower it's effort health our the and on adding which that and to plans center health to

last to aggregate, with those coming the acceleration I all to factor expect continue here part that in be additional a mentioned. an I just of from But

Mark Stolper

such The and because and migration themselves to been accelerated themselves this to cost other deductible thing health seeing patients unique but in there you're we're UnitedHealth more has is being settings. higher seeing migration plans, members, to aggressive a lower not directing

get the seeing And as as centers. ambulatory patients educated the in and more versus that the by the pricing they're time of goes between more disparity hospital

seeing our just And out so we're patients favor the getting because that in of educated. centers hospitals of more acceleration some of are

Mitra Ramgopal

Okay, great. Thanks. no. That’s

built are JV quarter other wanted a thing, the you now of getting approach The obviously heightened nice just more interest seeing they you? side, is, scale you in starting are benefits you little you up a terms of is maybe working the expansion, because on and at other as on I continue you now seeing as look with hospital to follow are the to

Howard Berger

I seeing ventures think joint East we're more where the for our taking up on that efforts in Coast. moved we've than California so it

have already we're East several Coast, ventured joint systems the and On joint hospital with Jersey venture. we where the Maryland RWJBarnabas major particularly in in New

markets lot very, a in probably the disappointing of likelihood us joint those to slow. very seeing maybe is ventures be going additional of and So

On in and more partners are come other where venture from patients can existing are expanse the care from and our hand joint California that who the managed in huge here more geographic getting joint traction those large relationships three here at with. with about and ventures health systems other that or expand in to of new two expanding California discussions active all least looking joint venture we're

I So particular interest it in if those me I that has, in expect we the to do start not market wouldn't we're geographies continue it proves in surprise successful that like itself think be and markets. model may currently other as that already to care

the security model terms in organically growth a for should very long-term good think the and enhance centers. both of and company one it's I by us and that provide acquiring stability So us of to more opportunities

Mitra Ramgopal

of comfortable you you know wondering as I'm that. feel I then get the environment JVs then should of like conversations looks for the light sort there? able with just reimbursement be price in And how them again gains relates Thanks you Okay. had increases and mentioned terms that to to and it what having some

Howard Berger

that Barnabas you are In saying?

Mitra Ramgopal

and JV having in to increases. to looking contract going of number think conversations price On you renewals a had mentioned terms I you're be some side, the implement of

Howard Berger

the and it capitation That was some wasn't looking the contracts our of reviewing -- much in so as ventures at contracts XXXX. for re-basing joint with those

a on an California here basis on on end. of in for primarily and XXXX focusing that's year So our routinely which more what function annual are goes accelerating we

Mitra Ramgopal

to now up. Okay. think AI just to you the then Thanks to finally was there's for to ready that know get to sure, wondering cetera where you I any not another into have I add obviously like offering you division make there with anything speak. if fill if you're fitting to need any or teleradiology think areas else And you already really run for you Breastlink term? sort AI et near now

Howard Berger

probably nothing I Near-term else think.

are enormous for that like company. to that substantial work partner AI in remainder companies to moving can us take for technologies we'd with that I identified into of We've the ultimately value about continue add invest even some this will who or the think dozen and think us for a they the think developing that of that a maybe and half major XXXX. opportunity the that With I to represents focus I be year will on

intelligence tools processes investing this of XXXX focus opportunity capable this that for remainder year run improve company. we and uniquely I be and us believe the So artificial that from think all the for will the are using with the going an which into I of by to

Mitra Ramgopal

question. Okay. Thanks for the taking

Howard Berger

Mitra. Thanks,

Mark Stolper

Mitra. Thanks,

Operator

next James. to Raymond [Operator of go Instructions] Ransom John We'll

John Ransom

have is but hospital and if suburb just JVs, question? difference I'm since you rates that remember do that too you or you LA say right hospital with then you it's bit that not Hey. when essentially let's struggling points rate this maybe to the apples, said have center cheaper, but you it of a hospital partner. may JV to kind that not one it know simplistic in you commercial negotiating much whether are One a I to another thinking Is just the or have for RadNet hospital same we're big your little assume or is do center thing this, so is rate apples the or the partner is is that of for

Howard Berger

morning. and great question, good a I think that's John

John Ransom

Yes, sir.

Howard Berger

to a standpoint reimbursement. the particular, historical with their Health from with that information which year. where we fee from our I'm where RWJBarnabas for the hospitals is better system increases In is help, referring physicians Actually, PPO help relationships published schedule to fee I able think been get we do we've with partnership substantially different us actually negotiate have with every schedule -- and the that

So we've that partnership think venture I continues end, exceed that's budgeting with and to with and demonstrated joint something that the our and RWJBarnabas benefit to expectations. part already of be with

new acquisitions, and able on transactions. and that to focused us those get rate de-leverage what Jersey those schedule, very putting acquiring we fee in we're that expansion the particular them of happens from we're do helps So New centers joint significantly lift a which with when in under venture

in about health dealing opportunity us We California, that because in similarly XX% that ultimately same in of California of a with here opportunity the think which overall exists significant here opportunity for number we for that systems that and just the accounts revenues. could the that to expand of have wind-up California we're company's very the population and being

Mark Stolper

just are though substantially than be still John rates So in lower what hospitals charging that are the these to those are outpatient clear, markets.

they're to own they what than than rates with outpatient the closer are are using negotiate on rates to RadNet able been leverage there partnered system that much So is of we're strength the that hospital. health the to but its have RadNet and would higher perhaps still

John Ransom

right. All

centers Today, to hospital. gosh, engagement education efforts those to So and secondly I even that, say, any heck idea lot plan. certain of this like have like mean, go it's going you to to here question, I'm hospital? those to you go still is a a go know even for have but over Xx cheaper to in care people health medical your seems with the what going if do plan, it’s -- it do own effort and for procedures let's your and perspective to that of freestanding employees the a own or or say that scheduled you outpatient to completely But imaging reach in the percentage had out second on proactively have is it’s save than primary inning. to XXX if and unfair me any you you surgery guess group I them even do

Howard Berger

Patient… there John. I think all you're accounts almost right. on And

John Ransom

right the by be this time about year first That’ll that I've anything. that's happened the way been

better things. feeling about I'm So already

Howard Berger

you more first of think still thought were I to preponderance the is what it doctor is there because is go. their say going I go okay. where to them tells was it or time the consumerism as to but Really. engagement today patients Patient is broadly complicated referred who a subject

recommends to something of might average decision the plans and for make to end that against. he the at contrary the ability a we thinks have the day mean doctor the their is patient that health what to be fight I

education referring try that to worked I can design facilitated to our plan be very think them. that hard and educate physicians but with process we with

What is I that and bigger that health education itself side engaged than and process, more the it. health are a think which in create both in plans patient we're much our of system will finding getting and the partners impact more ultimately of

know on We use the programs smarter business, hospital that patients in respects that switch for has that who plan and calls do of example facility attempt the they behalf some to that, has have have disappointing. radiology lower field that while they been a Coast pre-authorization will indeed they because slow process where a referred had the patient they health one East and managers a from in to on other in to process choice the call and success been freestanding they try very a some cost doing it's they to

today and occur. conversations changes, while primary we've their unlike we're had the patient with which say process start at those we at some the by and ever the with that that to in So and health physician that health -- and with so past or be that believe not to that armed have much go methodology, the plan transition level the level transformation slow, we the having will information will that referring design back plans but do I are still it's

John Ransom

do you So what guys do with your employees in respect? that

Mark Stolper

was comment to that. going Yes, I on

upon our we created a networks into enough we're what to to specialty. where for And we're our self-insured depending drive health So locations narrower have big try specific employees company plan.

others imaging For Blue provider the outpatient as laboratory exclusive the and pricing carved we've out to where are RadNet of we've value that limiting might we've low network, for Shield chosen carve centers, RadNet we're to plan Blue services network. out -- cost. where are for the the we're very the Teladoc Yes, employees a our narrowed to so network is lowering and health plan network you guess in providing our done only imaging, instance, same and of network include narrow that to negotiated benefit do services thing getting to we've and RadNet with essentially like an in try the we're -- we've using but we’re that Shield the choice,

more being that's to So willing and future. I think premiums the self-insured that's more I providing provide cost lower of and are large care favor actual employers borne the think narrow choice for and able by to in lower employer health

John Ransom

Sure.

capacity Mark, expect before bit think I every this And a to on same-store growth. me M&A I'm is and starting you've Okay. XX your but utilization me, just is to the question changes wrong mentioned answer always constraint a don't become of question. I the ask little lastly sorry I from days,

So imaging much sit can out of speaking, just how practically same-store as more you your you centers today. squeeze volume

Howard Berger

purchasing from focus years here we we're three equipment and And with focus I from new management on the that the then that processes. our a called artificial those and and those currently allow on ago, in centers. and are with work to do optimization I centers, implementing technological finding standpoint a probably is we're for other benefit us substantial and had that something working ago sole radiologist and our maybe to about expect the partly years going efforts industry one to radiology who I'm entire imaging in that our of add centers was slots protocols will his are in challenged and instead we diligently with revenue we this to modality is additional most that that take sophisticated volumes of One in protocol that performing every groups intelligence hired that is four very Mark, John. in

and So hour. that's that in and why hours, about much to centers down about the so about commercial you opportunity, other technological opportunity reduced emphasis drive do I now think minutes. that the scan to not a put been that as we're on advances We've majority time so past for average artificial an do being internal I much of did but our able an when X.X to in for us an has MRI patients revenue the intelligence maybe XX two

our thank those centers up substantial a So call here if business think to of scan I one extra that reemphasize. picking which for fill that from we in want I takeaway slots question. can have That's do you in be And demand earnings influence asking the per hour so. our that a we performance to key many here

John Ransom

from you. That’s Thank Okay. me. it

Operator

or And in closing any for questions back it remarks. with the I'd further like turn additional no to queue,

Howard Berger

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

Operator

And conclude now again conference. this and appreciate today's today. And participation does may gentlemen we Ladies you everyone's disconnect.

RadNet (RDNT) 9 Aug 192019 Q2 Earnings call transcript