RDNT - Earnings call transcript Q2 2021

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Operator

Good day, and welcome to the RadNet, Inc.

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

Mark Stolper

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

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

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

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

Howard Berger

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

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

for partners, including of grateful are And these employees, challenging during stakeholders, extremely our our shareholders. times. business wish all all We lenders you and well

extremely pleased our performance begin. with Let’s this I’m quarter.

continuing quarter operating of year and in result second and last began improvement number a in in that of quarter strengthening business metrics the our the financial the third factors. is and of Our demonstrate

First, clustered and the year and in our COVID-XX within further cost regionally saving expenses efficiencies cost this create operating XXXX measures that period actions lowered our centers. we implemented have during containment the

have municipalities as loosened substantially Second, states our many which restrictions. procedural operate we of COVID-XX have in the recovered volumes and

orders actions utilizing that vigilant remain Delta office We ready observing variant, the of home healthcare take regular and at are implemented. returning to patients rise be new we normalcy. or more to further the more with new visits, Obviously are protective restrictions stay with should

or both we tuck-in tomosynthesis. in extraordinary during our and discussed financial investments capital and first digital the respect this expenditures acquisitions systems quarters contribute Lastly, the we investments made year, results. previously are made XD to beginning to to our to two mammography during upgrading We of last XXXX year mammography

upgraded are COVID-XX the we newly on XD from volumes mammography are performing the have experience recovered we we volumes from not enhanced While fully believe do systems. these not impact, reimbursement

XX New New during acquired New parts with we tuck-in Additionally, of York we savings second and other during Jersey, facilities an market the and metropolitan within in acquisitions the this RadNet completed opportunities York, existing newly consolidation the quarter facilities. five unique cost quarter year, and facilities additional first The have acquired California.

significant year the from results We later improvement integration when expect processes. their have we the in completed

a second these in factors, of our Company’s of history. As any the result were results all best the the during quarter quarter

improvement have is second XXX%. revenue COVID-XX, impacted compared EBITDA I As of than am is the quarter, in also in put strong by able support per with year’s demonstrate net particularly sites both margin to achieving more XX.X% an and loss of quarter within consolidating margin last we last were was return year changing processes, we the share respectively. increased quarter key were by $X.XX. which center proud EBITDA of cost-saving level which measures adjusted an normalized XXXX the result income as and higher very has underperforming of to our $X.XX. and corporate X.X% quarter. at of as departments. the of margin levels, This of earnings volumes and in improvement included the both the X.X% more well contrast procedural the place, per second The of many from recognized XXXX net and XX% second quarters share We adjusted the Adjusted our in operational during and

morning. and year’s of prepared remainder made elected the to free have for we’ll the and in the the of and increase financial this key we to guidance of second Mark the which revenue, our our remarks, XXXX. strong increases this confidence we year, are feeling and result were EBITDA a outlined earnings quarters again, As first performance most review our in flow his guidance, release we cash levels for press

the Based ratios, in the April million and save we the $X loan quarter, anticipated of completion of our many of credit. up future to and second term on interest during refinancing XX, expense. seen to leverage expect line have annually current we revolving of you As announced upon

of This have annual acquired million our substantially refinancing Additionally, effective more this and sheet. operating balance, includes and restrictive agreement. balance of cash loan million subject respect by attributed to adding we over the partly no our The under our longer deleveraging the payments our flexibility term $XXX be covenants us operating growth. can to will and and over enable lowering strong with success are $XX to to amortization performance financial new which to credit maintenance accelerate our

further of and the debt X.XX As we net of ratio XX end of of million debt resulting net quarter, trailing $XXX.X months $XXX.X leverage EBITDA. times million to in this had EBITDA a had have the coming our lowest was for we acquisition, forma lower, quarters. of company’s is deleveraging in this even This leverage recent the indicative Pro history. expected is which ratio in

to business, approach disciplined also financial growing methodical continue and managing and we will follow our the While we are committed to to our expanding leverage.

where stand Lastly back an in with I’d the efforts Mark, call to our we before intelligence. artificial I to provide as over to update hand like

cases powerful Northeast to of With AI prioritized product that mammography for radiologists exams intelligence. efficiently Saige-Q. have technology the AI quarter clearance exams software, new suspicious mammography During accuracy. annually screening identifies mammography images. pleased over their technology we our report in to FDA FDA-cleared attention, allowing are now with mid-Atlantic our this triage Saige-Q. supports both DeepHealth’s X.X received first deploying This screening breast and of am process nationwide. tool for and performing we the use is manage to on of radiologists technology workless April announced second our I more XD the workflow markets, XX, million its to mammography that optimize the that efficiency prioritization DeepHealth a subsidiary imagers today artificial that that their Intelligence as Saige-Q Artificial may triage is mammographers and utilizing we XD in enables our need are

the our our imagers We radiologists technology. is we’re excellent. of California by expect be third from the this end quarter, utilizing will receiving feedback early The breast also

one observing than most and importantly, be otherwise to call-backs possibility better our providing of improved the accuracy, are detecting we fewer productivity, two While earlier years possible. are and we might with patient payors patients disease

time, to evaluate programs When care. remarks. is over to I Mark our will innovative At in and to cost of are I’d streams screening closing call areas continue artificial can some new like new make patient revenue the insurance discuss companies to turn through population he drive decrease the effective large this We interested highlights of to models finished, second providing health performance. improve XXXX both some of costs intelligence to that further back who quarter

Mark Stolper

XXXX or A and to release. reconciliation place EBITDA non-cash of upon Thank of as or during will loss on I is attempt from you, quarter continuing Howard. highlight EBITDA the depreciation provide drove of extraordinary Company second earnings defines I to what our extinguishments Adjusted interest quantitative as well in performance operations May financial events discussion, XXXX now yearend loss, EBITDA, items. second I I’m allocations The our non-cash net will amended and explanation With includes taxes, use conjunction excludes for statements levels, guidance I’d taking said, RadNet, to will equity debt earnings to believe that in our in on quarter March, income our review with the in adjusted briefly subsidiaries EBITDA In second of and shareholders our amortization and income equipment, we in results. into which my compensation. some gains some before update some unconsolidated performance. now common of and a attributable that review in also metrics going loss each financial financial interest, non-controlling disposal and our to earnings results. further provide certain which items quarter Inc. losses is in first to or material adjusted to released were adjusted some and operations to XXXX non-GAAP adjusted also an XXXX as onetime be insights period. and give the term the full in results our included like quarter other financial equity earnings is or I which measure. releasing subtracts

share per $X.XX additional XXXX the same EBITDA increased Unadjusted of net negative million completed increased our or adjusted $X.XX $X.XX acquisitions first with instituted XD swaps; a cost reductions performance $X.XX interest outstanding of million XXX.X%. or net COVID-XX expense million and the reported of per volumes, the million of $X based net in connection $XX.X loss revenue as or diluted the procedural quarter following: in year. our quarter per the migration number second mammography including improved initiatives; were diluted adjusted year. digital reductions last to $X.X from $XX.X the $XXX.X expenses of period, existing second million deferred compares the quarter values costs from rate These certain this and stock in XXXX. result savings This capital per For shares of refinancing Affecting of for or income expense; transaction; negative second loss was diluted for share $X.X of $X.X net for the share period shares extinguishment second XX.X Adjusted and million restructuring for paid million million the diluted share. second a share items, in of disposal million second of of income with to loss XXXX. debt our severance earnings of of XXXX in of in the we on quarter amortization are of EBITDA discounts XXXX, and and onetime was average $X.X of of RadNet per credit diluted facilities. weighted compared tuck-in adjusted loan non-cash quarters from upon of shares and as $XXX.X of $XXX,XXX quarter and of to The XXXX to the financing certain cost gain million quarter recent the result million revenue quarter related related non-cash $XXX,XXX non-cash million, million. contribution $XX.X XX.X XXXX items Revenue equipment; XX.X%, million during significantly the of $XX headcount increased non-recurring compensation a during or of $X.X from of is or outstanding employee second

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

this $XX.X deferred follows: the Cash X,XXX,XXX these CTs Our during X,XXX which XXXX, million second XXXX; compared as last payments, of of second of expense procedures of refinancing XXXX. million compares of RadNet compared quarter in this and $XX.X of PET/CTs as at GAAP quarter quarter million. unadjusted MRIs our of at Note The mainly routine the in sheet, XXXX neither XXXX expense result Imaging was approximately quarter which value the the million we discounts, is to the exams XX, were in XX, $XX.X XXXX; XXX,XXX million debt second debt $X.X interest New period, paid XXX,XXX bond April. quarter quarter of in of total for with the in debt net with and our CTs the GAAP This XXXX. second less year MRIs June term of for compared interest regards accrued non-cash a XXX,XXX as in of X,XXX,XXX of as in $XXX.X interest that last $XXX.X as due $XX.X now which had with debt, With the lower balance XXX,XXX Jersey financing debt timing net to interest quarter the all cash loan year. a of XX,XXX is XXXX; balance. excludes transaction interest as expense with borrower of with the of imaging compared compared second with quarter quarter cash million, June of balance second includes paid for was PET/CTs and second for our exams in second the This interest, Network’s compares with year par guarantor. in is million. of Overall for second

XX, balance a of credit XX, were $XXX.X million. June $XXX $XXX.X XXXX, our undrawn balance of line million June of cash receivable on As and revolving we At was our had volumes significant revenue an XXXX, $XX.X XXXX million, in revenue. increase accounts mainly our year increase increase receivables, year of end of this XXXX. in from The to million result procedural the the and relative accounts

time, in results our and first revise and imaging XXXX which financial joint our like reporting guidance million. At Our days financial our fourth remains to June results. or Through I’d the receivable, our of sale and company’s with asset XXXX. expenditures the center interests amended quarter released this we DSO after at of near $XX.X of history. days dispositions June capital sales lowest XX.X update we in the and levels increase XX, our of Despite conjunction outstanding venture had XXXX end XXXX accounts aggregate DSO total levels, was XXXX, assets year XX, quarter net just and

For $X.XXX billion. to $X.XXX original revenue, guidance billion was level our

low to guidance the increased end million level of new top we’ve level billion of and to end Our $X.XXX guidance revenue. $X.X the $XX by that billion both

of $XX EBITDA. adjusted was million high to For by end both our that original – $XXX EBITDA, million to end $XXX me, million. We’ve $XXX $XXX $XXX the guidance the range excuse million to low million and level of increased

increased range that expenditures, capital $XX For million million. to to our to $XX million. $XX was original guidance million We’ve $XX

our the million cash million. For million, the which expense projection to $XX decreased reflect interest refinancing is million. that to cash level We’ve million $XX reflective original to $XX costs million. guidance $XX upon $XX lower original to our guidance for lower free increased EBITDA guidance our – We’ve April. higher And was expense, interest million of newer cash our $XX level to was our to transaction flow, in interest $XX based million $XX to

flow. As just increased for ranges noted, have we free adjusted cash and EBITDA guidance our revenue

against levels. our in actual capital – raised in core we’ve opportunities, identified level additional markets. our quarter, our reflect regional projected Each our we of we performance to Additionally, guidance higher and several growth reevaluate expenditure investments

to and a you I’ll rates. regards levels appropriate to We continue the few minutes an to remainder on these XXXX will XXXX what we discuss anticipated give throughout of year. take reimbursement with know now the update update as Medicare

completed weighted time year. procedural that rates, respect represents initial business XX% we using Medicare analysis With we this proposal of schedule expected fee We’ve Medicare reimbursement, reminder, CPT analysis ago, a physician typically compared about and every volumes. As volume about XXXX is is mix. for to part our those which released proposed to several our rates of an the weeks rates a matrix XXXX by received code,

recall, particularly reimbursement As CMS it certain year, CPT for regularly physicians evaluation services, favor that may regularly budget for specialties reimbursement increased rarely bill doctors. bill last doing codes, these meaning with with codes. CMS E&M to to for who moved care for proposed codes from that management primary proposed these which you bill who forward physicians reallocate physician and so neutrality;

CT. cut RV cut in by result, decreases XXXX results Medicare As and last In XXXX. mitigated initially certain professional conversion implemented schedule if this to XXXX on appears CPT are year mostly this Medicare a radiology the additional action this in along from of remainder last for avoided fee technical radiology in the reimbursement reimbursement, most codes, are end be have last a phasing of effectively experiencing factor of MRI at X.X% The the use of about year, year. year’s cut proposed the decrease and partially the during other with that cuts very cut. focused proposed we but specialties higher in congressional The currently proposed as year and rule been governing would absorbing

on in approximately Furthermore, be Because that did physicians, all factor billion current variant affects implies light In $X.X from conversion also for proposal possibility COVID-XX it financial the and our like of the cuts quarter Medicare it not would a from many about make analysis or cut RadNet Radiology, last rule released our will business. in initial main remarks. the revenue are various severe two hit than lobbying like Berger, revenue that situation. could a groups for action, back will year there this Delta to in the radiologists, these medical to is time, Dr. be radiology’s XXXX roughly $XX Association million next to final call, hope Our College that its particularly face the Quality to proposal. forces, proposed this Imaging a ACR. believe closing proposed proposed there experts remains this in possibility December year, the November, specialties have AQI less update including mitigate opposing November lobbying the the continuing now of the matter. congressional you At American results of during cut, aggressively the just third call we some on the turn I’d who to more in and

Howard Berger

more time history. other Today, any in Mark. our RadNet you, faceted Thank than – multifaceted is

business our local in and all attractive of in a we demographics growing of have of are We operate market the opportunities. which all seven states which multitude

prestigious of own to products on and industry significant hospital coasts are and is ventures the we suite our we and control that we investment in diagnostic of infrastructure have development initial are levels, set business, encompass now we implementing we of our will same-store in our own our after multifaceted Investments our business and which our quarter’s with general. through improve containment transformative and we cost our IT We making health the digital dividends a returned. Growth growing intelligence, is are cutting aggressive other and respect the guidance the We which partnering and coming in further to areas and paying facilities. business all model cost and with both programs, that on of mammography joint participants. technology has services levels expectations healthy artificial And A forth with that eRAD with reimbursement sell systems XX% impact some imaging originally we normal industry increased approximately increased and believe license XD and most patient largest today. virtually and increase growth of more made first performance care. from are volume patient and the exceeding to returning in results

have radioactive visualization in to new continue the pharma and in and patient greater isotopes, of and applications other others will advances bring software development Big post-processing New for diseases materials, equipment, of contrast drive indications. Alzheimer’s utilization future we promise our diagnostic to for many the variety of imaging. is to processes that experienced. intelligence population can Most create Using uniquely screening for artificial exciting intelligence programs have investments impact never a disease health. growth driving artificial potential the like us in cost-effective

artificial colon breast envisioned intelligence We are with future. mammography in near and we and lung for currently making inroads the and cancer similar cancer prostate utilizing potential

We able both are and are free execute us ones. external to as have the that also pipeline in our financial financial annual of evaluating to they and interest we materialize. on RadNet’s our and of Strategic are company’s flow our lowering our than reduction growth enterprise available processing. for you strong to ability with transaction an and is were we our growth. updating yield to our ever. amortization. routinely purchase the combination positions targets evaluating be of more We multiples the to investments over intelligence the opportunities, can between balance acquisitions unique the continue substantial attractive that us required and us acquisitions cash aspect will value arbitrage to the This give which organic of a costs in with important history Today, and artificial lowest $XXX in liquidity significantly million more of in and leverage we sheet, fund further resources forward as look the result positions the a April refinancing Furthermore,

remain core can five three value strategy. as the in to contribute we times this able to operators EBITDA. arbitrage multiple acquire equity As to to smaller exists, markets We long our acquisition of RadNet at continue an through

might they that afford cause usually this synergies and level, cross to to lower into While the time. us us range over operating beyond more serve once this multiples stretch acquisition evaluation targets achieved larger

discipline We this about enthusiastic the opportunities when opportunities for will and quarters that are the we RadNet, conclusion, motivated have Operator, we forward of sellers. with progress. excited, updating when targets execute in and call. level the In available, now lie regarding on are instances of we upcoming in are ready we to further our look ahead question-and-answer you portion for the these

Operator

Thank Instructions] Brian take And our first you. [Operator Jefferies. we question of from go Please now Tanquilut can ahead.

Brian Tanquilut

Hey, good morning, guys. just obviously Congrats on the strong first quarter. I of for it’s recently doing on question discussion guess, variant lot healthcare. what operations Howard, Delta you, and my to a for

obviously the York of against probably with that more You’re the some been in New aggressive measures have and states Delta. California,

curious, just volume or now, and you’re to in again, your to moves. prepared seeing flow on are preparing are your any flow impact you of also that remarks, right preparing terms So something in about, you make what lockdowns referral mentioned if mandated

would you are what strategizing this this be time how curious, around different just So around? and guys

Howard Berger

there this continue focused there think, the people are firstly, had is reluctant vaccinations on now meaning strategy, far have facilities visit are not breast they and healthcare still elective and we company the that to slower increase Number protective are a Well, But we’re cancer concerns to keenly, the little as area that as We What see think very reasons. that seen of given the results morning, still to return. be two amount And we will pre-COVID this robust to in a the and anticipation that procedures one, seems mammography seeing and was you. get about one also the is because that Good there quarter Brian. is positive Thank in measures. recovery. quarter COVID of is only volumes. as I we primary hesitation. return second the third the

and and three breast the the response a that has subside. region they often there nodes And uniquely the often months in a injected. reaction perhaps women after inflammatory been vaccinated wait was chance in arm that’s are have recommendations to vaccination, been that axillary the do mammography, of the that with number to on near who some have a there have seen so two that lymph potential around Secondly, reports

we all primary the our return little recover. United of the these in So factors, are wearing our believe and centers a have other why that reasons might States. all of mandated to across mask be to now it slow the employees for And we patients all

often of practicing addition social that, and are have itself, In feel to as screening for waiting all wait their and exam some are eRAD methods to patients. comfortable as either of often unique and desks making directly that outside our into been our with when for in patients barriers centers reception the come our Patients distancing, well the then certain ready are procedures. at having reminded room they separated room

several So those are the months. for recommendations policies that we have and been following now

most to that safety and influence our patients a I measures it problem equipment a safety of patients So place and we this simply elective be hold the can of a on the surge, should choose managing as surge put may with off procedures. of though that believe that risk believe in don’t come. if health we measures continuation for have there and we protective is That do continues is to the that fallen

surge be to of tremendous have presence also have mindful has in also We the the states using the in of of increase we resulted don’t availability the fact up the some that fortunately that of a a shutdown then ICU with New York, be quite elective and there New if which often were and them. primarily have occur might imaging beds. further associated in California, Jersey of procedures, in to hospital And that

monitoring August, seen that we’re impact have far regions, but noticeably we it and September through not of months of in our So early the very any closely.

Brian Tanquilut

one impact a carryover Howard. bit, colors you to hand, of those capitation to about year. sustain there’s a were for in volumes I moves act margins and I really the back margins the back utilization But balancing here fee-for-service business. flow obviously then cited it’s And made or last going strong forward, the just ability that picks up, between Thanks your like through the guess, quarter. think side of in the and little shifting you know picks I as I up, know that business a gears Yes. there’s Mark, the

are So margin forward your going drive and about to thinking ability you how margin incremental expansion?

Mark Stolper

Well. Sure.

you margins If revised we relative were end of where are at last to guidance look year results. assuming the our measures, we at thinking about newly XXXX’s increased

given our virtual equipment, think centers, our we that and other I a changes operating per last in mentioned made So implementation that higher in structure digital of throughput the resulting in waiting XD what like consolidation number the some made that on advances in Dr. particularly protocols rooms the year, mammography things and of Berger side. the of we mammography facilities, in different reimbursement some to scan drive, cost is investments

– because we We change COVID XXX over experienced have And structural are the a we to was compare improvements and of last points I’m not it our an XXXX. margins to going impact. a XXXX were where relative basis in year year seeing with it to in and such extraordinary

also in the our this upfront, company’s cycle And general has for the improvements So AR, from made we improved in sheet our deleveraging balance been our which of collections in our and lowest XX days. terms in liquidity. our better extremely getting around collecting at with providing revenue history strong, DSOs of is we yields cash have us are point our another at helped the results, investments think that and cash reason sustainable our more

structurally implementation can advent mentioned first far second of and with the producing or the we the Berger also margins areas significantly the hopefully benefit costs also sustain along side. so can of streams AI, which if that but other Dr. So lower radiology new into and our other we we’ve the drive tools that the performing modalities revenue And quarter. on the that of And in also AI that can services, think been screening we other margins. get mammography with

we're very we're optimistic. So at – this point,

Brian Tanquilut

Awesome. question me. Last for

terms share can of I expanding can talked strategy talked mammography. investing us new Anything of and prepared think you've terms AI beyond Berger's Dr. about areas. into with in in I in AI with more your know, AI you he but and share that? where about just anything you prostate you take GI, remarks, in us can strategy

Howard Berger

previous related that of think health. again. within basis, aggressive and should close of that is that we as and gateway the prostate, have four diagnosed the on that major tools, context, believe on cancers for calls, on about cancers Thanks cancer primarily an breast, there annual And RadNet XX% Yes, be colon. Brian. I efforts really I Yes, imaging and believes mentioned screening active population the lung, comprise being to those

strategically we cancer. of do the in and particular business, lung screening mammography do and a technologically cancer we volume and to already, that are our colon such where believe we cancer, prostate positioned for large fact Given

perhaps are avenues health. only ability networks, of will screening will We not country tools these the the outside that these benefits exploring ramp RadNet for the us regions a development the mass scale, believe the perform but have where and for of population country across tools on the where owned up to for centers, we perhaps same

that continue both can't deep we perhaps year. which will care the the for continue a how and assured rest did the only in about but to these emphasize acquisitions at internally position national we like internal whole, also specific to health well in terms our avenues also of on we unique any managing I tools costs. scale. both as as far this moment, to RadNet comment as feel can't for this passionately aggressively But ramp a RadNet at benefits health ways is strongly as the the develop that or umbrella While under be both think as last enough in looking and society have us of leader radiology, I not these development are to up this, external we on

this, be this us more to – leverage of enormous IT data own development So commitment RadNet’s of demonstrate amounts and more will to of the our tools think well own for unique to opportunity and are which we that critical some tools infrastructure as given of I as on. also the for these

material you on these the is us to next announce update So as towards earnings call soon sufficient we something for progress able quarter’s perhaps if our as hope be or sooner to publicly. to

Brian Tanquilut

and Thanks again Thanks Awesome. congrats again. guys.

Howard Berger

Thanks, Brian.

Mark Stolper

Brian. Thanks,

Operator

now Please take Ransom with James. question from can go our John We Raymond ahead. next

John Ransom

having A outlook me. recent effects margins? M&A, things your morning. that for back any on is of Mark, half couple the material good in for Hey,

Mark Stolper

the did And M&A. we're purchased here, then in In in purely we year acquisitions. facility approach this we did publicly, tuck-in how active fairly small the been transactions. quarter, said we've quarter five And XX So second we first we we additional – as opportunistic in acquisition our strategy.

criteria proactively. not on targets we acquire and do a any of have go doors We and knock defined out look set for which businesses. We by

We highly time to we development at we’ve them our acquisitions looking down through a larger, and we X one those better that consists can where in transactions, have been but the range range. strategic greater business is stretch that performance generally We sellers those acquire or little times which because essentially calls, X can only acquisitions come multiples for inbound and these we’ll we’re in ultimately, evaluation with are motivated And that times the And effecting for average successful in team markets, those through synergies. of take person. a synergies. historically in

a So was savings. centers, seeing acquisitions, with well increased increasing why as the on as center volumes well the procedure from our we’re new the that guidance as basis, part cost those including we as of level both same

IT a of get of of impact to the So includes better year impact acquisitions eRAD within protocols, quarter going RadNet more getting expertise. yes, year’s into all for of contribute the a the depending portion next also the results. to acquired those upon have generally backbone, And takes operational the to as centers year complexity facility our Those our size for that it these way them effectively acquisition financial next term. umbrella. will the two they’re RadNet right-sizing lack it in for clinical protocols, of the operations full them, operational on This given us includes our integrate are profile and we’ll those the to

it year. significant see so, but some next And more we will yes, will contribution, be

John Ransom

that the an we’re of the your the these year got this year, kind early kind bridge for next mentioned thinking How if year year. what’s is good of a EBITDA contribution partial to versus you’ve approximate from guy? So acquisitions about much your $XX you next million headwind,

Mark Stolper

of for $XX mean, a these months, at the the imaging Yes. disclosed acquisitions EBITDA of that haven’t there’s acquisitions, look about of our item any we value. purchase of you we line publicly, cash first but haven’t million statement I – if it’s flow says John, enterprise six other facilities and

look year. So at these acquired next take you or operations approximate contribution of say, that like assume, if that’s a give what let’s EBITDA times can X the may done,

John Ransom

just… So

Mark Stolper

We’re say on I that – an an on wouldn’t annual basis.

John Ransom

show as year know been you’ve M&A my the off from the So but a year, you’re almost bridging much as from EBITDA you’re the math skills, gap full partial – you’re outstanding about Medicare. buying for I losing EBITDA this Medicare.

Mark Stolper

correct. a consolidation like when of that’s I – all the think in is as the wasn’t in yes. that that’s we’re remarks hopeful, last thought opportunity just next cuts because them, given additional other that little variants prepared cut severe the proposed will medical not lower roles, operational said rule, some specialties. bit this cost as because maybe Yes. potentially these these radiology, the they acquisitions, put mitigate And that’s all impacting be that less are have we remember from COVID-XX it mitigants they we impacting will in is providers. my final the centers on I that that did back And fully John, pressure but Yes, about year. our given being hadn’t factor Furthermore, as impacting other conversion that necessarily Congress intent year, that’s and there’s that changes, rule

who the So getting increase the will on in the groups that that’s codes. less be pressure this radiology essentially particular putting on cut, lobbying the maybe not entire AMA, It’s physicians just were it’s – E&M Congress. primary care

John Ransom

then for And a me. cleanups you. couple just other Got

Your AI your in read more tool? per mentioned any difference AI that you in a to term strategy costs of the going detailed. efficiency fees your intermediate Is that – is make or longer-term

Howard Berger

Good John. morning,

to I now and and which are will ultimately The primarily our that pipeline in developments a our capable think read for mammogram. than improvements mammographers process in long-term our the we a of. greater more efficiency mammographers benefits a with benefit. the mammograms accuracy There able are our that streamline are immediate of are of pathway that’s now realizing they allow to think other read currently mammography or we’re that volume

with to compliance women are contracting and designs able plan efficiencies. through These as our larger start just centers of be to our between mammography. tools get professional that drive the the annual allow exists really some are facilitating reduce other these of IT with I by platform somewhere integrated mammographers a and will to I national the efforts as XX volumes to greater give scale some shortage outreach handle that these result payors efficiencies getting year. believe next So expect believe on emerging will many of And that mammograms in a to not us a do we to parts the of we not new as their tools other programs who on XXX% want and fully maybe into to directly probably large to but of designed our when costs, of

huge quality, just a national not really this is efforts address remain radiology not intelligence its scale, imagers of the part shortage well-qualified RadNet breast demand on to raise So a artificial but for only that to partners. and on

John Ransom

contracts, just as buy And in performing then – Mark, there capitation was as every for bit thanks more that. but Are they and And for trend smaller your a piece fee a volumes service, you more less lower? helping year then little or line? generally are they

Mark Stolper

Yes.

terms as increasing the business that fairly very the our there that of much drive is more have patients the other And referring enjoy capitation centers that steady with and rest contracts, no along within data business. as capitation care very financial these of our the can fee as it mix. HMO helps are more So the of who for been low well we’ve other has send potential will new we of remained and be fee And us of of to the company our financial that costs of It other places managed a obligated we risk service which because opportunity that facilities. DSOs XX% capitation contracts, I for cover has relationship. many in growing think with to to business taking bad And XX% then terms – for lot if many, to benefits. from any California in establishes with service been to these continue sent scaling benefits penetration associated in as contracts, low, both of that risk-based that fixed in also physicians relationships mean

really they be to we to their growth a returned they that but continue can patient may this no, COVID or primary think Obviously, as utilization way normal the of for closed last – increase population. from been a and extraordinary healthcare me, specialists best judge levels. other we answer the our seen haven’t – a benefiting quarter see of that we increasing way a the these care of in fourth healthcare and the and we engine because regular that our utilizing year, can the normal do go visiting services through more we feel demand asked during of of utilizes, capitation contracts, we we see John, but exams contracts, have as that to more we and existed all and patient is seen business have a that towards with lot any think expected like third a might’ve and our a where we use see, in have more So it’s to people the have it’s population pent-up is company. that A patients little we’re it’s

I And spikes, so unusual no say. increased it’s but seen have we – utilization, we’ve – would

John Ransom

Great. capitation contracts? still all Are California, these in Mark, they

Mark Stolper

for in And imaging we a and medical for passing California, us really populations, due they’re responsibility are to medical utilization X.X the essentially under care groups. month financial which here to patient member providing care lives of HMOs. groups large managed they’re X.X John various basis California in diagnostic imaging. large that’s the the on per we’re diagnostic shift large capitated how the of for the contracts where to based exist these that over California, arrangements burden of million exclusive to majority large vast sub-capitate care an care they the these in little we’re physicians and roughly receiving with non-hospital The patient per where of structure fee them to then primary for those A on these piece for the of from these responsibility with responsible

Florida. there phenomenon, it California are other with We United states States much a lot contract very the in see HMOs. it’s in So that structure this do under

a lot in across on it in see You New and country. Mexico, Nevada catching the that’s

sharing health contract both very a more their And us active. contract for York – risk, Emblem. New for with of in a been division population has advantage risk York with New successful we the becoming We’re is and significant takes do very taking have a group care metropolitan lives EmblemHealth physician that

John Ransom

it. Appreciate much. so Thanks

Mark Stolper

Thank you.

Operator

go next [Operator Instructions] our now from Sidoti. ahead. We’ll Please Ramgopal, Mitra question take

Mitra Ramgopal

and taking for morning, good Hi, the Yes. thanks questions.

CapEx, couple a on some the can seeing just the growth color if of provide you maybe Just there. additional some increased me. opportunities for you’re curious I on

Howard Berger

that did many acquisitions the most do, investment. not or that Good have of the that us Yes, we second and morning, we Mitra. in comes they of at a for result all uncommon the acquisitions quarter. It’s of capital in first as deferred delayed

mammography or systems acquisitions, done to their sites, we XX example, new So given some mammography, the for able particularly capabilities, increase significant XX XD on to want investment. the been very or that which some with fact we’ve return do year demonstrate elevate through we’ve in mammography those in invest to

expenditure that’s primary the you’re reason capital increase. seeing the So that

Mitra Ramgopal

Okay, the And your of maybe up to pent-up was to outside as COVID volume in procedures coming seeing start shift demand And some seek to it from of maybe just think most I of environment But from probably – the landscape, more some your United increasingly setting is you’re if wondering I increases, and volume competitive procedure COVID. relates procedures onto a from competitors. of outpatient as that hospital. thanks. it Cigna those the just also took

Howard Berger

on there, hospital-based – to seems the the pre-standing increased believe galvanized focus from healthcare the COVID from really I shift is volume to the But Mitra expensive the insurers that away some Yes, coming imaging more the are slow other really it insurers of some to to has scheduling help facilities. up design we’re ramp adopt those them a them. is from our trying tools inbound to through this more companies for but been, insurance getting and of authorization facilitate to we as that and plan calls have

the coming So some see a increased normal will the the on expense that hospital of component of that of at systems. be I volume we believe there basis a

artificial more that as additional making our we will be believe changes. implement insurers also we for of more intelligence, those giving the justification We and

think indicates changed, the the this able back here companies think a should that of on gut the we items of be they’re existing to based and that from for asking we’re look to be insurance the I point, has contribution how but us participation when we’ll of beneficiary number from the look a there’s be this at I perhaps calls So our in year, that and that we service that the that getting that markets. business should quite at fee our at that – end

Mitra Ramgopal

impact implement. you [indiscernible] [indiscernible] it are you cost thanks. one, the XXXX, goes from to ability but Okay, how relates additional And – as of being able that’s relates the improving get the comfortable that reimbursement through to assuming for getting measures that probably ahead at to it me as to – it final then

Howard Berger

believe we’ve given mitigate as try on that certainly But will implement consolidation capabilities think our whether cutting not into will XXXX. Well, perhaps cuts think are opportunities, side to measures or reimbursement not. help the or that some demonstrated us it cost I where there affected those going always some we that – unique of I look be will to I of that

Additionally, that now we’ll this further that some of right on competitors take consolidation. while begin the we’re will may that, that we’ll feel we in in to unique or our while in consideration look little impact perhaps and more need we this markets serious shouldn’t And this the markets at to other fact a felt throughout that take reduction is reimbursement – expect not – system. be a the it is RadNet the aggressively,

mitigation actually XXXX. asking So of through in believe questioner that perhaps, the indeed we may as some Mark, the more up opportunistic the ramp acquisitions we will come was prior that think

Mitra Ramgopal

Okay. taking the questions. Thanks for again

Howard Berger

you, Mitra. care. Thank Take

Operator

the like back to We Berger further at I to this Dr. questions hand have closing for now no remarks. or would any call additional time.

Howard Berger

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

Operator

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

You may now disconnect.

RadNet (RDNT) 9 Aug 212021 Q2 Earnings call transcript