RDNT - Earnings call transcript Q3 2020

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Operator

Good day, and welcome to the Radnet, Inc.

Third Quarter 2020 Financial Results 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. sir. ahead, go Please

Mark Stolper

morning, Howard gentlemen, to Berger XXXX third 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 operations, consummating receiving grow response within the EBITDA joint ventures adjusted Specifically, harbor. to referrals performance acquisitions by practices, as diagnostic anticipated for third-party the and radiology impact statements COVID-XX, expected technologists, generating recruiting with acquired imaging of among meaning future operating and statements of our revenue integrating forward-looking generating concerning future others, and stabilize financial liquidity, and are operations and the for patient and our retaining ability and safe contracts acquired continue and the to estimated, the reimbursement services, successfully business

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

Howard Berger

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

are start, Before on of behalf team and ones would you I we and we of healthy to your entire myself loved all safe. and hope staying RadNet, say of like the

all grateful shareholders. extremely stakeholders our our partners, of are employees, We including business for lenders and

am third Let's pleased I in of the with performance business very quarter. begin. our the

the throughout Our cost instituted volumes significantly profitability period. result cash the multitude quarter of revenue procedural the second recovering of and measures COVID-XX conservation improved to and savings relative is and the we

adjusted Perhaps volume XX.X% in million increase a Our from increased of was This in increase second with revenue improvement revenue and the the sequentially performance. EBITDA an $XXX.X earnings. driving is quarter second quarter's line XX.X%, top more procedural this from results. notable our of even

third in $XX.X the quarter. greater from the difference Our quarter. second have to been increasing in comparison, recognized $XX.X This from we CARES quarter, had we Act $XX.X Act million. million million recorded funds funds only adjusted of second of would EBITDA more $XXX,XXX than By doubled CARES even not the

in $X.XX of this a in in quarter our being per revenue year's XXXX to share from resulted XX.X%. increasing adjusted year from third of $X.XX quarter $XX.X third income or net future $XX net share last adjusted despite by compared flat, compared million our million EBITDA As the second This year, third quarter. last to of EBITDA This to the margins essentially increased to year's opportunity quarter, per in of of per are adjusted last sustained the time, quarter quarters. $X.XX increase share share quarter. reduction third third of per is year's the have ongoing second year's $X.XX not which loss margin COVID-XX of this the margins the as XX.X%, improvement was sequential Adjusted one from $X.XX last share initiatives, we income improvement net for and and in quarter cost because and in per drove many XX%,

belief result of result volumes to October during procedural began As that to continue quarter, position the furloughs on process to a third our strong patience We our of a from reductions that I team of of period. difficult recover, employees optimistic their a and of procedure team this all this August and members cautiously pleased wages will am report X. we the throughout substantially I of bringing pay increase completed volumes restore as as and X, those back liquidity who commitment thank and want all COVID-XX. took for our the members And in

the alleviate care communities. in satellite center regine multi-modality majority continue energy of environment facilities. physicians referring traffic reopened the Currently, which our advanced safe heroes, patient we benefit and our imaging all frontline the the to in larger, have centers, access are to Our XX a be employees routine designed locations of ensuring mature more for and to

through our The procedural on to to business, opportunity COVID-XX, and aspects back we the create Prior to As of efficiencies our several recover, unique focus business significantly growth costs. including allowed our we of and organic pandemic facilities. to the hopefully and a move us office continue all increasing reduce administrative level, and the beyond we center acquisitions. volumes coronavirus and move operations reevaluate spent period, breadth years scope beyond COVID-XX opening

on in COVID-XX virtually which market in conservative ways cash most operate, and growth revolving our and great beneficial undrawn a at funds a is liquidity not that being the to to into saving measures, was resulted upsize process dividends our the credit expenses pay business continue of to not along increasing effectively has in facility. reduce end with facility. focus August, our value volumes, of revolving strongest and cash future. also an $XX.X advances million optimization and to company's only like we recognize this support will completed history. expansion $XXX a every we quarter to have CARES our Medicare but time banks. million months At when We end value at to liquidity the procedural in This relationship us has from been RadNet, brought the position $XX.X The was X quarter, third the demonstrated cost the Act I'd are This in million that received credit priority. the over last on allow the we balance

to continues strong, plan, balance liquidity capacity provides cash business results. us to our and execute flexibility our While improved our be along additional financial increased strategic further financial our with the and grow

Our quarter leverage the over debt declined EBITDA. by net X/X turn to X.XXx to in under

important quarters. our under return capitation leverage in business remained feature We an Xx of coming the expect debt-to-EBITDA that the period, RadNet. Throughout net to colder will has our

California. the Spirit Adventist hospital, of on specialty platform will quarter the Adventist cash and Advanced been a Simi care capitation year. contribute contribute Advance Imaging get X operations its third imaging to Health. revenue The Care X the these its contract, followed capitation see the who Throughout we assets January. plans. these Hawaii we medical -- X Coast in the services Simi from ownership weeks Valley practices. venture, upon center. have remained of and creation Valley largest of with of Dignity systems breast announced Arizona, with center. and and the of third to announced and employees, the associated Because partnership dependent flow in value Health's RadNet Nancy the even their with venture laboratory, operational Aston intact West in contracted center, have will revenue our Health, imaging COVID-XX, new will physician Health, Subsequent amount home we Simi and as through our centers, also clinical enrollment patients we management Health's paid pay capitated health those to for has a enrollment patients Our an various Imaging groups Valley, new groups the health ago, of XX.X% emergent premiums. a and and leading partnership Reagan health operating fixed Adventist managed for imaging create the last include Common partnership is its a increased end new whom care by in for begin Imaging the a of assume Alamo medical enrolling Adventist joint the outpatient to continued one Health HMO with quarter, Under is joint RadNet scheduled of Phoenix,

this entrance venture Dignity we and our entered multi in New completed York XXXX we acquisition with new this and partnership, to Health, radiology establishing Phoenix. location of the Invati radiology is In is X first when MRI City. RadNet's practice in While with third geography the since AZ a conjunction Tec,

locations geographic dignity Arizona. almost are going rapidly multi-modality the of coverage strategic will centers people. is Under excited X can site particular, Phoenix and leverage leading to from expanding extremely We a and of which Phoenix, hospitals through groups, practices. is million expansion in development and into of the home in RadNet a operates about and outpatient in the a market our is new locations care develop network health operations. Venture, Health multiple acquired of acquisition radiology a owns specialty combination we this system Dignity existing marketplace and medical

service from Our be order groups patient growth outpatient and dignity our aggressively to and competitive effectively footprint capture in physician other focus volumes affiliated expand only to operators. will the

highlights time, to We our significant third I'd will turn that to the made call like geographic is quarter closing our in core to markets. this resources of I and When are some he us in to the successful finished, Mark discuss performance. Phoenix remarks. some and financial XXXX of has committed back density the management to other make over At developing concentration focus

Mark Stolper

Thank to earnings noncontrolling to well to to third some debt The our and some review to In compensation. further in X-K will adjusted be or will is third before net unconsolidated our noncash our quarter other earnings the on apple income also excludes company noncash briefly XXXX report give and quarter SEC. EBITDA I extinguishments and in loss as attributable disposal is said, or income EBITDA, of some period. non-GAAP one third subsidiaries allocations items. some depreciation place shareholders and results. adjusted taxes, and of drove equity you, interest of earnings for as now on financial and and into attempt term interest, common what reconciliation that loss, the with Howard. included metrics the not insights adjusted defines full I'm like material Inc. RadNet, equity to gains binary is our equipment, includes which time use statements operations loss A on now EBITDA of discussion, adjusted taking EBITDA review in subtracts amortization quantitative my the going I'd or that XXXX. Form earnings With and I current or release pro losses measure. as our the financial and quarter to highlight performance filed Adjusted

revenue So adjusted reported RadNet of and million the $XXX.X million. third of EBITDA quarter, $XX.X

million significant his in discussed from second a reflective a the of from and business of Compared and of increased was EBITDA only quarter, adjusted $XX.X or of increased or Berger XX.X% quarter $X.X or rev these year, second quarter year's of X.X%, last the COVID-XX. major $XXX,XXX third Dr. not metrics and impacted this remarks, our COVID-XX. million is Relative by quarter to Revenue XX.X%. million $XXX.X performance or was that the this increased in by EBITDA to recovery As XXX.X%. a decreased improvement adjusted impacts

future. The X.X%. EBITDA EBITDA XXXX from last by or XXX and in or third the points second of savings quarter the result of margin X.X% many relative the of more which is we exceeded increased year's measures the last adjusted COVID-XX, points third XXX primarily increase into basis margin to basis adjusted aid Our or quarter should quarter year's our took cost during business

of XXXX X.X%. volume, for and account X.X% volume routine the third On work were inclusive both volume and X.X% as third PET/CT prior quarter imaging of basis, volumes from quarter the taking the of of procedures volume was only routine volume imaging. CT this into X.X% compared X.X%, third quarter, third with X.X%, procedural year into increased to prior prior the RadNet quarter. of other The Overall For CT mammography we ultrasound, MRI compared the increased PET/CT the and and did second exams, all third X.X%. exams, exams, year's Relative all year, approach, inclusive all quarters volume decreased XXXX, XXXX, XXXX, to aggregate from decreased total decreased the whereby year's to account x-ray, volume of was those same-center a flat, quarter. of same-center decreased In decreased modalities, we our procedures. part performed quarter all the Over imaging increased taking centers of XX.X%. MRI routine multi-modality XX.X% were X,XXX,XXX including which volume by volume consistent same

we that note restated in how X change are procedures the volumes XXXX. the X,XXX,XXX all the with XXX,XXX follow with XX,XXX were with as XXX,XXX MRIs exams, one routine quarter and CTs of XXX,XXX of of CTs to as mammography, in year in last the of PET/CTs X-ray quarter exams X,XXX,XXX compared medicine, as XXXX of an CT in exams, XXXX. been nuclear the third account XXXX. in we for third include have PET/CTs The XXXX. for CT Please ultrasound, follows. our XX,XXX third CPT quarter other a Our third comparative with codes. third these MRIs imaging in compared on made as account the that January quarter numbers XXX,XXX of for which as compared all compared this year quarter basis. And apples-to-apples of as

network quarter to based in Net the company's upon net the Adjusted $X.XX For rate of the net XXXX. net of hedges This year, Affecting outstanding relative increased financing third XXXX. the million to the quarter. million of of value which in total balance million of reported quarter the XX, to quarter million. period, compared in quarter net shares $XX.X this paid for the our million our noncash third With $X.X as million RadNet net quarter This per increase with which compares XXXX interest debt neither discounts, financing interest expense includes the attributable impact is was nor of quarter the This had of and input for borrower discounts $XX.X deferred unadjusted common of costs $XXX,XXX to third income expense third the loss adjusted compares on in loss XXXX. related share. approximately interest third negative in net for and bond guarantor. as GAAP XX.X RadNet on was balance second this Sequentially, year's net that shares income share of to $XXX.X amortization million. $X.XX shares third noncash noncash capital of share RadNet second of nonrecurring third of hedges; of weighted per million certain XX from of quarter Note balance. quarter, loan million, of at we term and cost is million interest compared of of in rate Adjusting of the and from per resulting of interest XXXX $X.X a less million. imaging of average $X.X following: XXXX the number with equipment; to year. Overall sale $X for interest per certain with severance stock interest from items, which facilities. XX, investing income of the expense income of accrued New of credit to $X were headcount this deferred $X.X debt connection share million GAAP at paid certain $XXX,XXX last loan noncash regards a employee for for date, third $XX.X of Cash quarter noncash including XXXX, our net of debt an was our September cash and $X.XX $XX.X compensation expense or disposal with third options the savings shareholders Jersey debt in million approximately related of debt $X.XX the income par impact XXXX XXXX in expenses diluted of million noncash during in $XX.X XXXX reductions or million sheet initiatives; excludes of September XXXX. and compared restricted stock; income was $XXX.X quarter

of were revolving XXXX, cash had XXth, we million of a line our and $XXX balance As $XX.X September on of million. credit undrawn

million commitment this remarks, $XX.X mentioned revolver of As our August prepared upsized relationship Dr. Berger his year. by in our in with banks we

While this was operating provides for larger require us we future accounts XXXX. result have of balance collections the our available and our receivable revolver of September the $XX.X At a accounts previously it. year-end volumes XX, receivable. from additional book existing we funds to significant million, decrease flexibility and cash should the million $XXX.X receivable the access in not XXXX, needed during liquidity, on decline our COVID-XX The procedural decrease period revenue accounts and in is growth mainly

outstanding, is revenue last XX.X year-end XX, days during of of normalized The sales DSO, a more days a return quarter. approximately was of the X X.X function the or to lower at as day's third Our September months by DSO primarily lower XXXX. XXXX,

know with of R.W. Medicare now New update a venture what Barnabas. regards rates. asset and excludes mid-XXs and XXXX XXXX, level. As revenue our anticipated we an we to you low expenditures and $X.X dispositions expenditures capital XXXX Through take $XX.X of of J. million This give accounts COVID-XX capital few the receivable had total expect to of on minutes return I'll joint Jersey XX, DSOs imaging September to we million. with normalize discuss post to to network, reimbursement net

that that expected -- CPT results We those to XXXX our procedural proposal every financial you completed to for We schedule that is as with using for E&M doing for may bill such CPT reimbursement is specialties quarter physician in that regularly radiologists in In increased volumes. physicians the time primary doctors. analysis bill the rates regularly CMS with fee recall volume-weighted and of rates. forward management rarely second neutrality, as XX.X% evaluation XXXX physicians budget in year. the codes, which a by call, decrease released compared meaning we codes, codes, conversion part rule, typically certain from who particularly rates these of received to Medicare bill specialties in so CMS primary XXXX. an proposed initiated reimbursement some care services, favor an may reimbursement code for initial for August, all for physicians. about a analysis who care matrix moved CMS to such with our physician these which to factor all Medicare proposed reimbursement, reallocate from calculate used As proposed proposed it respect

reimbursement this factor reimbursement. upward a lower to to RVUs CMS determine radiology, conversion now For made are These RVUs adjustment multiplied technical the our material formula. by in the

bipartisan some a who Late main College California, or to the and scheduled Bera, of legislation suffer quality provide in last for will aspect Including The like many Representatives and physicians relief the groups that medical these XXXX temporary like federal will lobbying various know would specialties released will responding X and put a of code the the E&M U.S. association year. bills approximately amount difference introduced closing to years determined hit in Dr. receive that Republican imaging in attached and from from the specialties lobbying if now budget call additional more Democrat XXXX forces, make be RadNet Medicare should changes. remarks. when reimbursement XXXX radiology's opposing bill next expected $XX We payments to pandemic, Indiana is the rule are the Medicare to from ACR. million of aggressively revenue to Bera-Buchan business. reimbursement final to Our AQI Radiology, in these back book is the Buchan, the are of analysis are the funding radiology forces X showed the provide for COVID-XX Medicare opposing our payment to facing mid-December. neutrality There to the Berger, cut. when who from it be for place between for the Medicare month, of American I'd cuts turn in December bill

Howard Berger

aspects to for strong The Thank us position of have has you, created a The rapid business. period operations from further imaging in ended we the history. during The costs. path growth liquidity our this several reduce Mark. XXXX. drive in sizes pause a and growth will we pandemic center followed our the Furthermore, last strongest increase we margins and with years ancillary efficiency position allowed coronavirus the all in over we efficiencies opportunities to XXXX our the take drive core evaluate business, company's performance and continuing to revenue, pursue

we For of installation treat to installed prostate example, our the year, incision disease. free first this Tulsa designed system and ultrasound thermal system probe

We to have as are new begun to Los locations adopted Angeles to at eager demand. of and as it and drive is business procedure adopted is this see continues this patients area expand our one

cornerstone In acquisition ancillary Another strategy. our aggressively been commitment second has this we which to completed intelligence. DeepHealth of intelligence pursuing the become the of our the we year, artificial artificial opportunity of quarter is have

second are Federal of end year, product be to the of first and utilizing Administration the radiologists half year. hope more enable track to in AI next Drug We our first our workflow accurate on to submit detail's which in Manyathi believe approval We first will efficient. we the DeepHealth's our be product by for to

agreement artificial hospitals and and will with ventures capabilities train health. drive, largest opportunity the on hardware and our and our contribute and the refine margins will to Dignity software geographic with in and conjunction As wholly future Phoenix, on intelligence. The announced further In very to will we owned in another will be work the average, enter opportunities regional fair technologies. These on entrenched of women's and quarter, by owned we and have in produced us in we artificial with will this conclusion, with multifaceted and and Both health partnerships, system joint logic high-resolution long-term health our we confidence move insights a to large improving systems, market-leading integrate products systems companies demonstrated new of enable for behind partnership we data with collaboration Hologic, together be joint even are challenging data XX% higher ancillary our over shared nation. new Hologic current focused build RadNet. will to pricing time, clinician centers into efforts growth. market the third Currently, optimistic fleet jointly in payers. new markets intelligence based facilities drive about partners. future develop community and a of in assist willingness securing In and be mammography continue with used to the its XXXX,

ready apprised emerge progress the We in you coming of the excited industry, are in our for to we're best-positioned and question-and-answer COVID quarters. portion keep expect the to Operator, our now call. from company as the we of

Operator

We'll Instructions]. question first take from [Operator Tanquilut Jefferies. with Brian our

Brian Tanquilut

cut I guess, thinking if we reminding into if it rules talked about about out deep on you've had I just P&L how then on Can impact any to do first rule haven't and guys the as a us And X-X on you November? we're think Medicare already follow-up solid through to on Congrats think going How they question, a do you think yet mind just -- how timing. implement the or my set your the goes they're rules. is. you're proposed comments your quarter.

Mark Stolper

Brian. Sure. Thank you,

conversion from factor decrease. to XX.X% the is So declining $XX.XX, $XX.XX is which a

would were in of extent the Essentially you're a in RVUs the portion to CPT calculation, the facing the all Medicare same what did. code reimbursement. XX.X% decline is what -- a not and radiology, the of radiology their But as portion technical providers for is the RVU. the to consists aware, RVU that's Medicare stay a of -- that they So be did RVU professional

actually, either X.X%. decrease the tune upon they the the kept or -- professional depending code, of RVUs the either the portion they the professional the average, of of to they For it modality RVU, same CPT on

the the only RVUs, you CPT model, XX% next hit the codes. RVUs cut most But an increased examples. if goes give facing couple are various really of So they year the to for of actually professional across a proposed hospital-based radiologists into board. XX% on the as place the such I'll technical technical

X most For of is common X-Rays then procedures by the the by are X view are X-ray. procedure sacral, volume. is X our up each a X-ray Chest going the our x-ray And largest mumble instance, respectively. our which for of And RVUs technical X-ray a view, and X XX.X%, X.X% those spine and

conversion So the RVUs mitigating the board. technical the is and increase the happened the that's partially in decrease across in factor,

up by CT, abdomen the most that the going CPT in X.X%. instance, For our common global RVUs is of -- codes CT technical is the of the and And pelvis.

RVUs the the can not about into the to number NAMA goes technical and if which and equals is centers it the side out adjusting after years, changing. XXXX cut component, if the X%, million across essentially now the as professional we you're there's for proposal where where and of our what where are to they're -- professional tried and do of this, of they from seeing aware X they've doing RVUs -- it's from the you see What XXXX so technical RVUs. changing RVUs And imaging global seeing we -- decreasing that that not is going the board, a be place comes proposed, in be the $XX or to to are really I would about, so talked cut cut

cut full see there. to a So we're XX% going

for if by XXXX. And did it to I payment out to XXXX, supposed expected is really though, would analysis correctly. isn't up an proposing we what that's code depends mix it December between upon is this final the your code our overall essentially there, with make now XXXX X. our to I And CPT COVID-XX, out So by of bill And think or if until respect With difference weighted think, needs I actual goes it Buchan XX, be to XXXX CPT be additional December to providers. passed, when mix because the proposal, Ville, mix. Bara-Buchan it that we do come for remember this an of government spending, I the rule place, part into Bara think, and

who find say, there's go lot place. between radiology, are mid-December all E&M just bill not codes facing out about significant of as to industry a into proposed do that the more, whether push from the lot cooperation will and see various on let's -- going place. And into cut industry but to back of who said, try specialties we'll cuts of lobbying groups this these I So There's cut. a groups a reimbursement

for place. So from to our into the standpoint, we're prepared go cups

number have We will cuts. so that mitigants XX think have we of where the million $XX or coming we'll days and counteract next the kind see of over to of just And fully out. a government is wait the

Brian Tanquilut

okay. Mark,

that, take? done summarize on right? from basically, it's $XX the Like to affect exact QX, what more so has comments changed, it you versus nothing just impact or So number, work, would as thought same you or million your give how you've here what cuts would the

Mark Stolper

Correct.

Brian Tanquilut

giving if Okay. don't awesome. And Arizona you just comments the on Cool, I strategy. then, mind, us guess, some

new an is time market a we're obviously into you operation. go the a while. to continue this So seeing in first And existing

completely that replicate obviously, close entry Or into operations California a this that we in. mind Arizona new So don't something willing go decide strategy? you market new you Arizona, is made your just describing to is factor? to that And if the that you you what as to more Or are there. us, would Is saw geographies? -- you you see go in think of

Howard Berger

take The that. was really entrant factors. Phoenix market Thank a into combination you, of I'll Brian. the

the that an First after which of you merger extension an it's we as existing relationship with part healthcare spirit initiatives. Health has Castle aware, foremost, of a system, and common have with now, dignity become the are

the them strategy to introduced help and leadership So with favorably an we in were Phoenix, they very really in that imaging asked us outpatient to marketplace.

a found market we that good an to that that circumstances the with. existing combination business made had in an also through company that buy centers opportunity white to relationship do of X us. Given We rated with it attractive we

in fortunately to in fastest a growth and have initial be in path in market. which the interested the with player existing of is, of of said close we is factors over the part and developing calls both that market, markets, there it do we country. be markets, was in that considerable a And substantial our really markets of like partner people one in all And could had for strategy. to markets, the nothing rapidly are with centers more these very dynamics perhaps we needed market, market, X really have to geographic growing entered. found looking into was a million us closeness I also new the other the outpatient like similar previous has a that good to while with other marketplace. most making. the a where of We X Phoenix for that become have Phoenix decision assistance of find going we enter One be would on to And in but As new market those of dignity we

inter but already in. currently So we're not

few such So very I going there inevitable of performed circumstances. created some of Also, opportunities ancillary a systems kind unnoticed a patient additionally think imaging. is that us. be they as longer go certain think And pathway these imaging the of forcing reimbursing hospitals for that, except services no Health hospitals announced out Cigna were that that of to it I transition shouldn't health to for weeks reevaluate and hospitals mix of our ago, outpatient in nice patient the

the there to be conversations process. continue that that with So that that health entered think namely to have we'll since will assist while be systems first, into edmed, other we've I may look in to the XXXX, outpatient market that them in new this leader imaging,

Mark Stolper

breadth Yes. unique market. is They of In have in a operations partner particular that there. Dignity tremendous

X lives called has Care other one of XXX,XXX a network groups called ownership groups They Phoenix. owning there also or one XX% called addition, in They own lives. Dignity In a one Medical XXX,XXX to group the significant Group. Brian, those Care. that either with there, big medical X owning medical affiliated hospitals, another in has player hospitals. X Mercy have Arizona They're in Each medical one

called medical talking So we're that group with And there there. aligned XXX,XXX about are services lives. integrated another they XXX,XXX lives medical has

to care there. that there well centers. an tremendous as hospital currently and and network are which or as a Phoenix own X Neuroscience with going influenced So urgent of imaging, center others imaging Children's they tremendous between affiliation Institute hospitals competitive Barrow that, over the a control They they amount is have

as that our No. centers conjunction purchase and centers strong resources our as Phoenix, we and lot Dignity, we other we patient significantly those believe access as have we of build with think we focus a along and marketplace in scale capture we that lives with devote volume. to in opportunity in So broaden a

Brian Tanquilut

from Mark, how markets the be us also October any And California. things would you of are a COVID of share side trans you trending lot And volumes quarter? Awesome. the and just recovery lot a course how the of the trended through new of able wild share resurgence then, with to over comment on can considering, perspective, a obviously, -- of and

Howard Berger

we continued September, of And one. I'll part here. company-wide on were the of the early and November XX% the approaching of middle was August a that quarter, estimates increase saw has in original through slightly third September. the end budget take about Brian, increased trend in the and October That of we of in has end our a volume. basis, in by primarily beginning What XXXX quarter and extending the Yes. steady

to in of compensation. I everybody our and in substantially the by volume full at centers that mentioned procedural increases our my forecasting X, bringing in staff opening early instrumental was as of imaging bring our back, allowing all back in to remarks, our So October started their us August very

are that of fortunately, a believe going to of whole to somewhat the the anticipate cost a fourth revenue allowed we have increased been were saw to the vendors back made to us of result lower the quarter we from salaries expecting of quarter. benefits third normal accommodations in quarter, our the the I be that -- staffing third as other nice lower and will now volumes So for of for which now with the in have averaging some some and as the with increase whole opposed -- what

Brian Tanquilut

to I of reinstated And I compensation. know you've on then put of that for the the follow-up you've just that. mean, said the cost that Howard, just I me initiatives last how Mark Howard. a or are Howard, That's guess lot question you savings durability through? awesome, you about thinking

the about we going forward? structure at as should look we thinking how So be cost QX

Howard Berger

predominantly operations, volumes saw Well, Brian. third I factors the the we during Okay, quarters, us allowed uniquely I the company's and has to markedly of pause, think it April I had think grown by reduced as created so was the more primarily which that and at referred second many have look in past. that to relatively than acquisitions. travel company found in circumstances thought we to They given a rapidly, did the patients other. had may to because the each have close might number of willing the through we We we're to centers

think try And brand is to this perhaps of be have to the some forward And the saw of both of look created out from to I facilities that believe what I a would coming performance, best we're staffing focus and that create going we going mentioned. number operate. the we on standpoint this need margin in combination quarters. the those we improvement that year, in which of will at think expansion we to the operational way efficiencies, in quarter I So replicate to our lot the third

of that fully think margins XXXX cost along additional through, perhaps have that's help we reimbursement what in a with cuts efficiencies that little would in But staffing. I Medicare subject better bit. So will the savings course, that some workflows is and implemented hurt sustaining in think to should go our been mitigate which anticipate they those the of I the not

margins So be sustainability to I cost the best the looking going at way perhaps estimate are. think savings the our of will forward, what

Operator

question with Sidoti. now our from We'll next Ramgopal take Mitra

Mitra Ramgopal

with et any you're a to competitors of terms trying much cetera. being just seeing also if you get saw, the First, of of the curious sense clearly, But of volume a environment benefit pandemic? lockdown was able not I the and to rebound easing the maybe in better your result restrictions, some survive is

Howard Berger

think the. I Mitra. Well,

I think answer question. facets your there's that to two

financial viability be own as the As COVID concerned, our something their looming the we'll cuts well I think will potentially of our who not far in are we that Medicare, see competitors that the that some impact have resources than in have the XXXX of as as of businesses. consider to most had of competitors as more

liquidity from that has benefit to potentially in the position that. in put think us take position I So we're good a

As is myriad concerned, are far play both factors on I that volumes think as a there of that. ways

the it visitation. to would should understood people out come be that have of reluctant remain First pre-close of volumes all, that of levels, think I come believe there back to I number be we substantially still a

verity our evidence ex yet who meaning accessing the or boating get of the solace hopefully, anecdotal not portion is because health the access into is case is procedures, that test be as there explained vaccine quoted the people. trade people X I minor Pfizer, XXXX by number some that well probably believe also we'll business, just for by when, wound and surgery, to part largest as of is or And come levels. closer still to number have the the but way that to down. that that returned physicals are not believe that, health pre visits aren't fact traditionally We is one for down or and has morning people but the not the that to that's care, of a rates other will So only problems. I those muting was by other stay do two, effective, announced this still surgeries do One, elective who

will So half I those year. as the second of they'll next trail rebound and think more in

counteract each fact believe of not that volumes, driver those necessary I we're in the were kind razor that health somewhere is normal other, not accessing a to the little lopsided. that's think amount care Fortunately, part and major turn people the mix well, there. I now two revolvement [indiscernible] seeing bit a not accessing of

bit to I major perhaps from directing into and make imaging people have it put to a other go think rides, fact right, are particularly in rational, factors effects to little themselves the people a like the into outpatient ancillary to of more they were of environment look away And a insurers people you health at now hospital. continuing services, hospitals. not given the Cigna that

continue coming all think be us, those improve going of half I weighed to months. the will a particularly in in better and have factors for to

Mitra Ramgopal

business mammography really COVID great. No, Okay. balancing the to growth And now, that's to then impact we you've just those through expansion. as And need maybe continue in you've margin quickly I'm EBITDA of should the on forward nice the saw flow curious going versus margin. savings deal expect rationalized about, we just how we first the and certainly whether it's there? or some opportunities Obviously, talked

Howard Berger

increase think, from as those approval operator that's whether intelligence the in state the all the continue high-definition to In make artificial company's top more FDA than have at it's technology to a the kind as that is out think us the unique we doing a the the artificial platform that the to a that us, agreement new be of the I it of be year, of beginning be way have with almost part offerings the intelligence together, there, advantage even of any believe own will in in United I with and and and allow that art opportunity our its those all systems really centers been our the competitive Well, will operation putting the major States. of fitting imaging. mammography and demography, States, or first you -- of then we I of have right mammography a allow to other currently take XXX and I'm And Putting that, unlike we Part our will and United will in early of to percentage expand in Hologic, is to the hope that, new X% on focus glad we Mitch. will expand of the now. about collaboration Hologic. mentioned hospital-based efforts. that has announced well

think harbinger of XXXX. be colon hope by potential orbed us to as of and look can the companies to our in particularly continue to where procedures, of and a I the rest I for go a part, prostate, portion that hearing themselves business. to in we, also. And mammography, company, to other can So part Chest that I of with make and supported more from business wellness these grow is disproportionately individual to to that screening amity want think, you by something similar insurance the the advance you'll as of expect itself, be

Mitra Ramgopal

be And mentioned, as you're plans, should of you JV then if we expansion even was just the coming more pandemic of Okay. to industry. probably and you terms aggressive relationship. to finally, it curious a an expect expanded in the new best going just in I obviously operator placed out announced be the

and what like wondering the M&A? for looks the also appetite pipeline Just

Howard Berger

we want the the that sellers, And always good don't particularly or expect will if We Generally reimbursement come acquisitions. in knocking that speaking, our go for pipeline increase here. implemented. opportunities Well, on are we looking will, has doors if motivated those XXXX, way. you Medicare been cuts

I traditional more viable. think going difficult mom-and-pop much make the smaller for to and it it's just that to be operator

acquisitions need markets, disciplined looking demand lower. upon ratios build very disciplined does East than for a that comfortable higher our we're had to in to where centers very certain to since strategy. strategy even so company we we've may itself on particularly remain continue we've we the huge growth find we improve deal. we don't think believe at do We disciplined. may with hope our be levels. It we pleased when we're our York New fact, we leverage the that. how if So particularly the growth will are And some what be, Coast, about I have Part that we of that well marketplace, opportunities not achieved to need to that Well, acquisitions and the in in to leverage

Operator

question next Raymond our John with James. now from We'll take Ransom

John Ransom

that the all million to contracts you $XX just cited, does is Medicare? that The also commercial Medicare? Or that include tied

Mark Stolper

That's just Medicare.

years are most have as followed in where Medicare. living tied X, we very We few the a were X that was Medicare. We plans. for unbundling We commercial that have Advantage -- deficit still of act from some, when that Reduction contracts contracts Medicare of reimbursement, to -- did Medicare our pretty spent through instance, the John, hitting the job we good

still tied reimbursement. most the Medicare part, For are to

another adjust, a -- but will it's not bucks. to million amount, going those couple be few a another So maybe to material

John Ransom

Okay.

assume the 'XX is million, bad in year that of -- okay, question $XX $XX 'XX? versus in cuts Second guy. fully million, terms partial just in guy it's realized a let's big What's

Mark Stolper

to tough little A it guy what? relates hear a was it again, that you. Say as to good

John Ransom

the your of full having Just cuts versus in timing a partial year. year the for place

number 'XX, So so for? that $XX in 'XX, but full the a we've get other million in of words, we be we'll take up could then million million, $X only $XX got would in but

Howard Berger

now most of all the beginning on in talking of having of January. initiatives the savings about I'm cost on right plan XXXX. We and working place we're for that

budgets So as our we XXXX. for finalize

have our majority will budgets. in XXXX vast the our savings We cost initiatives of

John Ransom

Because into go pickup April. you maybe a this because year is overdrive you there savings year a quantitatively, until of have March, full mean, year? really a I versus what, those partial didn't

making just am offsetting So I Or is up? there this an effect?

Mark Stolper

what if produce of kind Obviously, this run our year. give there's into the you third a I to business. fourth will good mean, of probably some indication rate and we yes, at that in next I you results its in margins look if you pretty were mean, going quarter, seasonality the and quarter

tends savings because first John, conditions good to that quarter most into second which think, can first of next year-over-year. will to expensive me, of third reset -- which the yet third excuse you -- you and to of of obviously you be indication of annualize take the our our our well were aware, as I our the type quarter aside quarter East that, is you're year, on Coast, to and difficult if as weather next announced But volatile deductibles As be that quarter make kind tends quarter, fourth year. a a pretty into from give

John Ransom

lockdown in for to, Okay. say, volumes another than, maybe some there your those any procedures than higher office people you catch-up little reason business -- or just are due have in why And Or visits of of markets in better might be a and odd tougher rescheduling some a some an then thought me you you just I New U.S., a strikes air that to you're positive the -- couple you but will lastly little your I'm you, is, location? to for me, low those call they're California the states or flat markets, seeing of in York? physician just timing And pocket? of talk do operate is that is you steering and volumes double digits thing. be sort bit you there down, say, do other much high give yes, -- of guys back if kind providers, single, would but still what it, are

Howard Berger

procedure. happened John, it's reduction care, about the And procedure, articles bad essential health yes, more an elective it's are and more costly is I more think of system. as what health and think what is to recognizing come I imaging, really the the way is care the and health while people an is in radiology care, out

the the case that rather determined be measures Number be than enhanced can of it in have outpatient think setting outpatient I people safety one, more in are X factors practice involved. be they'd of an of So that delay in two, where imaging, an potential morbidity you estimate in it's one. is for mortality cancer. taking costly related but can to that, hospitals, something the And number you delay every month can of and number mammography, example, breast people terms can

was recognized down procedures in reductions, we to being which So April disproportionate way unadvisable that very early we've markets some New two, now in a are Number market York, I recovered is handled. just back the quick been think of and those in number other return in think businesses one. very I these saw we delaying was general, May. has being saw the something although most And locked has nicely

directed health into So think more and necessarily not it's being doctors it care. back centers, a I their then into the is business outpatient wanting to appropriate matter people going offices of access

Operator

closing for session. question-and-answer the to turn back remarks. conference today's conclude to does that management additional I'd And any or like over

Howard Berger

investment hard Again, to opportunity to support, work. be and dedication employees for I would their for continue you and market on your for the health the that to RadNet all and shareholders of return their of Thank our the appropriate you all I an Management with like take our services for it's look of unprecedented to safety provides and endeavor will time continued I all families' leader wish time. today, thank stakeholders. great during particularly good next your forward this and call.

Operator

your does conclude conference. Thank Thank participation. today's you. That all for you

You disconnect. may now

Mark Stolper	EVP & CFO
Howard Berger	Chairman, President, CEO & Treasurer
Brian Tanquilut	Jefferies
Mitra Ramgopal	Sidoti & Company
John Ransom	Raymond James & Associates

RadNet (RDNT) 9 Nov 202020 Q3 Earnings call transcript