Earnings call transcript Q1 2023

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Operator

Good morning, and welcome to the RadNet, Inc.

First Quarter 2023 Financial Results Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is recorded. I would now like to turn the conference over to Mark Stolper, Executive Vice President and Chief Financial Officer at RadNet, Inc. ahead. go Please

Mark Stolper

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

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

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

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

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

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

Howard Berger

into today's call today. quarter After to I with plan from strategy. the and provide Mark give insight thank you open factors first Thank you, Mark. and which morning, your affected Good we performance; for to will call, future discuss results; this more prepared questions. our our joining our highlights you you remarks, us XXXX and On everyone,

of in you of in our all participate and a morning. thank to for conference for interest our this company like I'd to portion dedicating call day your your

with I Relative Let's segment company's quarter, first quarter. begin. in Imaging last our record EBITDA. Imaging our Center from and year's quarter increased and XX.X% quarter. It performance the core first am first revenue increased very the strongest in revenue our to pleased last year's history was with first XX.X%, EBITDA Center

This margins, EBITDA strong in management the was strong combination increasing of XX.X% XX.X% improving improvement of careful in quarter labor This performance and improved of an the XXX quarter volumes, of of XXXX first in expenses, from points. first XXXX, improvement to resulted the basis market. an

is to a markets. performance With Aggregate virtually experiencing result volumes This are increased first increased XX.X% X.X% quarter in factors. same-center the combination of our heavy of XXXX. respect all of several and demand procedural with volumes procedural volumes, compared of we the

First, the for increasing utilization diagnostic is imaging aging growing and population driving in markets services. our

example, frequently we As people of diagnostic under XX. times than imaging for on imaging utilize patients the age, to two greater On and senior average, Medicare frequency. more with patients age rely

and age increase, this to we trend utilization continues life to boomers As continue. expectancy continue baby to expect

times industry our software improve, indications and procedures. MRI technology in imaging continues in technology Second, shortened ordering and for to creating diagnostic additional have medical Advances scanning quality. improved evolve post-processing image and

antigen, applications imaging. PET as scans, materials such and contrast novel Alzheimer's PMSA, prostate-specific pharmaceuticals radioactive or are driving New and membrane

the in patient and we we facilities where freestanding outpatient site cost More the experience we in patients operate. quality the substantially facilities, companies but insurance improved the is ones like outpatient significant, perhaps a most are shifted to from believe and hospital-based less. Not cost lower, outpatient from facilities are are being only benefiting of well-run towards and more is the the strongly shift volumes and Lastly, care.

sites in our trends years procedural end an continue same-store come. that consistent and are drive to will that performance see to not to volumes these help do driving these trends for believe industry We

On the are and labor we front, experiencing some improvement. stability

We have our our reducing have staffing on overtime existing in temporary and hours expensive of open been been services filling reliance positions team more and successful members.

new talent service we While from faced of year. and our existing like attracting issues remains staffing retaining being longer base for plagued most employee last no are we by challenging, interruptions those

reduction We since year. have fourth positions last of seen open of a quarter the in the end XX%

trade, refining While local hiring and to scale the leverage been and our challenge, brand, better demands remains the of colleges, by marketplace and have repositioning leadership with in adjusting and marketplace. increasing retaining visibility been biggest we to partnerships our utilizing and technologists practices meet our schools have our industry the the compensation

partnering accrediting no We on houses with such hosting campaigns, to been in open are referral incentives direct formula success. candidates, qualified payments and magic identify and instituting signing bodies bonuses. has hiring mailing as events, There for and engaging

grassroots are these paying However, dividends. efforts slowly

this for though remain confidence in disruptions, feeling and COVID-XX. and first are XXXX, chain key of have the remainder we year's we As year, to result of the about a inflation, environment, the guidance economic supply elected quarter we shortages, strong for levels performance the vigilant increase the financial labor

joint executing are on we believe than year strong and ventures, be results resulting new organically all We of the through to markets, acquisitions opportunities our in will in operations expand projected. both originally for and what

and review will revenue results prepared our we've his upon financial in morning. the to remarks guidance levels EBITDA our increases this made Mark releasing

locations of reinvestment growth. patient will are accelerate currently additional novo have lack throughout to de business XXXX. second in also our open stages XX We future capacity, we populations. in and located where for the in various points of in half year access identified in service of patient or development, require we which backlogs, markets where facilities will to facilities These a XXXX be have operations currently XXXX

next the of year. de half should are and these and be of in facilities the seven half Six another to scheduled XXXX in novo XXXX revenue early of open second second facilities producing

above be material long-term that will centers our to projects to and are are growth. contributors requiring our investments these confident spending, performance While make these capital we us normal

to XX% health and are or business. our venture our within XXX system health hospital centers continue We partnerships. system held Currently, grow of joint XXX

of Our Dignity partners University Cedars-Sinai, in Lifebridge, MemorialCare, Maryland Health, Partners the System, are geographies. and our of others. systems and strongest Adventist, successful most Medical include some RWJBarnabas,

towards solutions patients market health quality and for strategies outpatient around centers are cost, systems other will solutions. site payors as have and from migrate and These of freestanding seeking long-term efficient capture hospitals, high cost-effective imaging that continue and to their care lower recognized share

in systems. of We venture new business process health well our joint as are both the as expanding existing, with

XX% believe that we our could count reach center we of years. by that expect centers XX% joint and total year We end, our the could coming closer in represent to

Our to procedural been hospital jointly instrumental in patients on influence and physician which partners health increasing centers, our owned we system our might into their send through not otherwise seen. partners have have volumes

needed, outpatient venture in Additionally, long-term, providing support, our if rates partners in equitable establishing are helpful services. for reimbursement our joint

We our continue artificial to progress make with intelligence initiatives.

mammography Coast rollout Our our cancer markets. offering East continues its diagnostic enhanced breast in within program

refining the early our program are from we learned as We rollouts.

collateral testing are and We strategies. different service local marketing various pricing, marketing offerings, and levels sales market of new

the be is results. work there to experiencing are positive While done program, to optimize we much

Since and found until are that allows healthcare EBCD would through we Detecting the not cancer to have diagnosed stages. program, cost the and over treatment for artificial better cancers XXX later at inception more intervention cancers the advanced identifying gone have of We would of that system. been undetected. breast patient and stages outcomes earlier have sooner reduces delivery intervention intelligence without the otherwise

patients definitive patients. use more artificial the with radiologists be Furthermore, through exam. our patients intelligence their and screening and by we to being time for stress the as companies, are well reducing our reducing enables of more callback This efficient, insurance saves rates as money for initial on our and

recognition their who receiving to our from rate and believe offering approximately our are we adoption are screening see XX% from not competitive similar experiencing at benefited our offer will uptake and do centers the our referring better this The mammography as patients marketing program has and and currently distinguished local communicating we unique from our physicians. our We greater get branding capabilities. quality centers patients benefits

in progress. an of and updates throughout see providing to the business expect XXXX into this forward We to each increase our with and look XXXX remainder quarter

XX-month we included reporting liquidity financial the development, EBITDA. expenditures Despite efforts to and at quarter, leverage. end, having capital Artificial first throughout debt Consistent pandemic, leverage quarter's times liberal in spending our Intelligence to centers continued was losses which the in fund de to our our with carefully first trailing manage front-loaded novo excluding X.X net segment, the our in our

Our liquidity remains strong. also

quarter $XXX revolving million We facility. were on with million $XX.X our undrawn we and first ended cash, of credit the

believe day which outstanding to was March XXXX Our at the best be days, in XX.X industry. we one of the sale

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

many Our other liquidity cost capital us capitalize and of acquisition strong to industry position operators low opportunities. to lower leverage, relative on

interest the be themselves. industry, of arise, over of acquisitions in past in rise with months, others that many significant these rates our the XX there challenging targets will compete market, for may operators operators the unable labor some struggling are to be while With may along consolidation

cost we and We unique disciplined and focused savings. acquisition, synergies first on remain core markets our patient our bring where in approach to

increase without platform leverage a be we growth, While come reach expanding materially. those path our in acquisitions organic acquisitions are new to and actionable with larger have with interested geographic our scale, geographies, must to and causing

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

Mark Stolper

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

in update will released also with were March. an our levels, our financial year-end I in provide conjunction results which to guidance XXXX XXXX

and company debt term discussion, I will on and on compensation. the non-cash a my before measure. EBITDA, excludes or income losses financial the use The loss, equity gains loss disposal and non-GAAP is defines depreciation, interest, which adjusted extinguishments, of or EBITDA adjusted taxes, as other earnings amortization, equipment, In

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

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

AI EBITDA, its reporting and first segment excluding $XXX.X million, segment XXXX, losses increased of XX.X% or from the Revenue revenue Center the RadNet of segment quarter adjusted from EBITDA, reporting $XX.X $XX.X of reporting AI XX.X%. increased adjusted million, the For and reported losses excluding Imaging million. from $XX.X million or

first $X.X quarter first of the revenue Including of last our $XX.X segment, adjusted for revenue $X.X million adjusted million of year's $XXX.X the quarter. last with EBITDA was XXXX, and of in losses from first $XXX.X the first XXXX in XXXX, the in compared as reporting of an first segment of million, quarter of increase AI quarter reporting $X.X in million million quarter Unadjusted AI first XXXX, in the million was EBITDA $XX.X quarter of for year. million, XX.X%

shares quarter negative in compared million number in XXXX with the for of income million of $X.XX, net XXXX, upon diluted of for $X.XX and the share per first loss million per first loss diluted XX.X income the net Net with based of $XX average was of of quarter quarter shares for first was weighted compared first XXXX shares of a of XXXX XXXX. outstanding $X Net a in quarter diluted XXXX. XX.X million, share as the

completed expenses of related operations; consideration acquisitions; related increase expense loss to including holdbacks swaps; AI $XXX,XXX interest of division. million net following: expense were of quarter, the pre-tax first to one-time and for unusual to from number open contingent revaluation million our related impacting or items novo that yet their non-cash There non-cash $X.X to to of facilities $X.X $X.X related to construction under rate leases $XXX,XXX have completed to the the of a related de million acquisitions; our

the Center segment Imaging negative during $X.XX and reporting reporting the quarter million with loss the was for negative was diluted adjusted during from diluted loss 'XX. This $X.X compares adjusted above million operations per quarter per $X.XX share and of XXXX. of share items, of segment adjusted from $X.X of Adjusting first loss first Imaging loss adjusted Center

million loan non-cash from $XXX,XXX amortization restricted savings the part first related $XXX,XXX existing resulting including discounts paid in costs paid of net non-cash related compensation were as XXXX of following: and with the expenses of and facilities. reductions of in of in financing credit severance $XX.X to unusual our and affecting connection income employee deferred fees to headcount cost certain vesting quarter stock stock; initiatives; financing items Also non-cash of certain the of options expense

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

those exams, the and XXXX, quarters including XX.X%. ultrasound, MRI same year's RadNet quarter. imaging into of first volume centers XX.X%, inclusive routine taking a XX.X%, other which volume X.X% increased exams, prior XXXX part for On PET/CT the basis, of and both only account over volume same-center volume, mammography, increased of increased CT and Overall same-center increased were x-ray,

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

of exams, Our XXXX; as CTs with with with of the of follows: of first quarter in as as compared in exams first compared X,XXX,XXX quarter XXXX. these with of in MRIs XXX,XXX were XXX,XXX as CTs procedures the in routine and XXXX; in quarter the MRIs imaging XX,XXX XXXX first compared quarter quarter first XXX,XXX the PET/CTs of the first XX,XXX PET/CTs 'XX; X,XXX,XXX all XXX,XXX compared

for at Overall, of expense This debt New first XXXX was resulted NJIN, additional Imaging $XX.X Jersey year. higher increase of on last an from compares from first expense interest The $XX.X its have with expense the joint million. Network million. interest the GAAP interest we unswapped debt in of venture exposure, almost GAAP XXXX the quarter XXX as our basis transaction refinancing well as point quarter our

at compares of for of term March XXXX. With of as loan regards debt value, cash $XXX.X XXXX, bond XX, net debt par million our to with unadjusted total This is our sheet, we which at that's our balance debt, discounts, million had XX, and net $XXX.X March balance.

Jersey Imaging of debt $XXX.X for guarantor. Note million, nor this New borrower which balance a neither that RadNet is includes Network's debt a

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

XXXX. effect as is the XX, in million, particularly year-end At result $XX normal million receivable on our procedural patient revenue, March, the increase second as from deductibles was The volumes accounts of of receivable increase and an our first collections in the the March balance during of cash $XXX.X mainly in increase XXXX, the well year January. half of from quarter resetting each accounts

of DSO, sales had XX, includes the Our March company's of at spent spent This remainder XX.X imaging and of $XX.X million. proceeds days total in Through capital outstanding, leases March we of XXXX. or expenditures, cash. under remains of near the history the equipment XXXX, XX, levels sale million net our lowest days $XX.X at capital

decisions in part total of leases. our the spent capital on to we the year. of front approximately the into equipment service, load imaging operating the Additionally, includes each were renting $XX million Note already year, we purchase that majority which first

year. of first So, is higher half the disproportionately the in CapEx

I'd cash $XXX paid million to million expenditures, end high the interest, $XX and XXXX our financial $XX year; guidance of million update our top high-end the to for million. bottom for which decreasing to fourth end guidance guidance we low by ranges and million; we our conjunction and increasing low At end at ends levels, range cash revise XXXX We by ranges by $XX $X,XXX to $XX $XX announced amended previously low this $X EBITDA, the million quarter $XXX ranges our like million to increased for guidance we're million; results. $XXX million our adjusted the increasing for guidance, for and of to million and capital for and $X revenue, increase top with our to million end follows: by generation, we're to and $XX levels and high in as $X,XXX million; our ends the we're for we our $X guidance free million to the flow million level to of $XXX announced low-end released the the both year-end to previously by time, our

segment, our remain artificial intelligence guidance our levels unchanged. For

and our economic and first guidance disruptions, the operations have possibility Though chain joint with our COVID-XX, all expand the through inflation, organically vigilant to variants we of supply both of original EBITDA our ranges reflect remain and acquisitions further new our results, increased quarter's We've about adjusted of opportunities environment, as strong to and in compared budget. for we markets, financial revenue the ventures.

interest completion our interest half expense to rising account of fund which during levels de the of our the not also are both for to on XXXX certain of scheduled cost XXXX. that We expenditures is to capital and of the rate our novo first cash of swaps and interest subject remainder and portion debt, for facilities guidance our to the of open increasing

With respect nothing for to there's to reimbursement report at this Medicare time. XXXX,

As release June is sometime group, time our each will Association lobbying for in and at or Imaging, rate provide year, proposal a we schedule CMS feedback. preliminary industry's are July, our CMS the CMS’s expecting Quality to typical we which industry's will analyze

to be time second of impact, the a comment future on and call, results. position if financial RadNet's any results we proposal CMS's its upon will our At quarter in

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

Howard Berger

you, Thank Mark.

indications clinical for imaging continues for being software. Significant radioactive driving scanning diagnostic others factors Technology to imaging excited As for in post-processing we improve. the The for advanced. embedded imaging progress towards have greater ordering ever. is of equipment XXXX, PET of made been initiatives These has increased we about procedures. the move in state-of-the-art are year. and the the remainder materials pharmaceuticals than midpoint we are are demand Contrast and diagnostic

in core the focus pursuing core to our our and de of markets. capital busy partnerships, are As through acquisitions. demand centers, for tuck-in a novo continue novo substantial opportunities result, our markets in performance, expansion are services, system facilities we centers de meet all and on same-center are we construction extremely heavy of To a health investing

core in ventures. pipeline acquisition Our well system various existing acquisitions and active health potential our markets as partnerships, as new are remains tuck-in expanding joint for we with in stages

advancing In top of cancers. our now have and addition, address algorithms are the we three strategy four prevalent most to AI

that tools initiatives. diagnosis form to that have accuracy influence and expect of widespread increase health cancer to detection the population We and a be cost the in created lower early can

lower cost artificial delivering create more of serve could services, intelligence While this revenue artificial new our can company. for our substantial to importantly, intelligence our streams

We begun our intelligence deploying anticipate have XXXX. the for artificial and of its already remainder breast accelerating growth

intelligence, through Furthermore, a believe reporting, in our have almost in adoption generative to coding, as the business in AI patient of addition we material areas scheduling, clinical workflow ChatGPT artificial medical of clinically-focused facet algorithms. marketing, intelligence such with processes sales, artificial this could impact every the improvement and

In regarding for enthusiastic conclusion, ahead about look we are progress. our you we RadNet, quarters excited forward in the lie and the further updating that coming and opportunities to

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

Operator

you. Thank

We Our Instructions] [Operator first Tanquilut Brian question with go session. from comes will ahead. the now question-and-answer begin Please Jefferies.

Brian Tanquilut

on too. continue. this And imaging. said is are is I specifically this strength really Hey guess, Howard, see shift advanced expect you quarter. also something I'll Mark, proof Is that good for guys. service Volumes accelerating you Howard, now? know, morning, obviously strong. Congrats maybe or will of in really, I I side really the solid that that a start, the

like thinking horizon? how to maybe on should long-term going year guidance color, modeling any a two like we a organic be without growth it maybe three to be kind want any of Thanks. way to you about situation, So,

Howard Berger

had given hospitals. that commercial with due to Brian. it's increase on of every having significant quarter think our volume, conversations morning, we that the to and effort virtually part business I active shift we Good trying see first factors, part definite in payors, the away we're the many from you. a more that while Thank payor Yes, of

think an just might is And reimbursement add that don't this difference. I issue I about

of the who also imaging centers patients and I to stable think environment enhance patient outpatient preference the experience. complicated the prefer of less it's more

the difference is both as as service, I are by becoming cost, well made quality commercial the patients So aware clear in think abundantly more payors. which of being the of the

know. that? what So of increases I from portion don't the I think

is who slow directed the the most I a think we're planned large, payors this being But through of requires which to their the for seeing more by the and with and imaging. outpatient interaction on the part design part encourage these into it referring physicians for patients efforts process are is clearly, more centers commercial control where accelerated. because still initiatives, patients outpatient

because, fact So, an as this hospital with settings. indicative with transition is quite of than partnering continue be at that them think as growth services, controls inexorable. inevitable which has joint systems to an the better strategy themselves cost a least recognize I strategy slow on into continued rather provide that both process change expect this it'll venture in those one managing our time, patients hospital for of process to is some almost that outpatient by is they of I environment, they benefit And that the these bringing RadNet, and an from as our well

Mark Stolper

have the that instituting different imaging I just might not to are plan that the co-pays that pricing that Brian, versus add just only imaging. the hospital-based freestanding and for the payors, And payers in design differential would it's outpatient

pre-authorization doing internally occurs, are third-party meaning through managed to or centers. But managers pre-authorization of they utilization the lower-cost services, pre-authorization and with patients the it benefit where through such free-standing is most once processes the they're either directing sites processes at the payors also today radiology the as care

price outpatient of and more And they shouldering to the how And programs. health the go XX anywhere care the the the when freestanding of stories of price. of could experience many the of half patients last have be coming burden of many more to the patients the more from and the we've a also, anecdotal their appreciative deductible and over quarter into costs, X cost a patients settings, settings coming are lot about more themselves in patients between years, they are because outpatient higher into really them benefit where into heard elected

time, the that. part just that is the Dr. So, getting have pricing as time are, become and are Berger slow this patients discrepancy just the differential much as process to in payors mentioned, educated patients on over over the as of the educated the

Brian Tanquilut

then of key me. to and you And story. updates kind Howard, announcements emerging obviously, it. AI, had or that's some touched shifting stand? part can and know of processes, your But some also a on I maybe remarks, Got approvals color FDA Maybe new you where if us to recently. on you've some things give in your prepared business

and would So, can you Thank share any color any updates great. be you.

Howard Berger

this question, see leery And good it But health about, that somewhat call. a people on particularly as to I it on and say aspects concerned evolutionary space, call clear earnings lips radiology I - that Well, think in delivery care intelligence think days. despite But some future. maybe artificial I'll artificial everybody's the and the in is minds and these as and Brian. we'll of it's services. the about imaging close in inside are the near I intelligence And fact about touch it are more there very have imaging development in

like mammography, there the two applications, three screening is we've falls screening in broaching. system. made well we be into for men patients, others used And an outcome women will for healthcare clinical to believe, with as be the these as much that prostate, of regularly which different more we in which categories and particularly a cancer lung, will for and already the ultimately One stage, future, tests tools really cancer substantial breast, we're that and roll it progress in which the field to for out both earlier leads diagnose these as better at get far and that cancers opportunities and

country, workflow. it's their FDA better working As that, and had in aggressively screening we by as have of our that and the than volume results, are tools. of we prostate a on in their primarily another software you noted more to we recently, dramatically, do prostate prostate other now our and as of any ready inside tool MRI screening RadNet, significance which to adoption X.X a and that PET/CT result radiologists accuracy level the MRI in we our where our for improve approval organization showed And detection scanning and we the is increased increased

the breast early lung, to prostate that, we with both and who this tool, and have much to But framework are for cancers. patients advance into prostate which addition with come tool in men we screening want the as lung for lays and test for a to doing high-risk in women us and for

from roll to you lot and adoption in think will of I tools the a can the regions. So, our these as see in our well more they as that both of terms development patients as out

every AI by we be workflow, intelligence. do known this the that the or to and But for isn't ChatGPT, side, as coding, which generative marketing, that getting reporting sales whether appears tools, as on are otherwise of It intelligence. us we could that side patients artificial part least, it's improved the what do operational is scheduling at improved there other we now anything with of couldn't of discussion about, equally and adoption excited be really generative artificial

the XX we'll far the tools some as these platforms be and improve we'll about internal and talking of of I our And advantage be new then, well of labor part here, workflows us ourselves last in to later as expanding efficient the years of in but in as have. for adopting workflow systems not shortages onto some which the been second are will only be processes, new what information developing address to we think, our we've that later take itself in their of use, those doing we and that more will positioning quarter help own

to of imaging exciting, radiology the more hope is what the focus the quarter, which, is it big have information this in community. and company, and we later for represent entirety I one very that So, for but mentioned, about of a could only the as not us,

Mark Stolper

that mammography morning age now Brian, got of should front, start should women that and come U.S. the XX. news which CMS on with recommending They age out are payers just the this XX the that Task decision XXXX controversial of some Force, at other we in Yeah, good start over Preventive to have advises Services exams. very recommend pretty mammography that a getting

we is business screenings. breast that could our by and it's positive this get aged women think deal, the the what XX% And this because that, think they're annual XX industry. for be that is big very lower a I and over over for by their well, recommending saying obviously mortality So going for cancer to

Brian Tanquilut

Awesome. and Thanks guys again. congrats

Operator

from Next Please go with question James. comes John Raymond Ransom ahead.

John Ransom

a I probe morning. that like of there want algorithm about your really factoring for the year. guidance your didn't thought we about three on as good something the is rest It Should the seems we or that Hi, conservatism next little EBITDA for quarters. bit into haven't our in model? raise think just outlook to you the

Howard Berger

we the I is less the we John. is generally helped we want conservative, generally results first aggressive, Northeast very think think Mid-Atlantic in that weather I quarter are our one and it's that And pleased results. by second we before which of challenged experience. conditions. not by more with looks what to like, issues see Part And were weather-related those quarter become

quarter, second to in trends continue prudent seen to and our at to feel felt forward direction increase side on guidance believe we've the first this if of we here we continuing side I the on quarter. very and end So, both look the revenue that EBITDA we show the can that can upward the

Mark Stolper

the And seeing first we I'll April strength in that add, we experienced same the in are quarter.

upbeat. and So optimistic we're pretty

John Ransom

Great.

or particularly not I to know your that is starting in hard does The doesn't exist. what across you first it's second jump have of the maybe trying the with just board quarter a to correlation, continuing orthopedic surgeries. I it in question notice in the quarter surgeries, do with diagnostic, correlated upsurge is also big but fourth most find revenue and

other you All can positive just think and there is screened is orthopedic tailwinds a your the uptick and the getting So, we do volume? line Sorry. draw? for people surgeries helping also in volume,

Howard Berger

post-COVID of to return be anything, may if more think Well, that normal. I reflection a John,

aware, people particularly some generally probably off you're put surgeries, surgeries, as delayed not getting others. three the were and as surgeries As be past orthopedic tend years many to elective which elective urgent throughout

somewhat think back through or now other are active, that people it's got returning visitation, I normal more activities physician curtailed. So, sports to whether that more

seeing MRI I would reliance after issues, reliance more think injuries more might sports expect and of I particularly we and continue is more to on, more effects that increase. we're and And that. volume the orthopedic scanning. for say that, on to there

conditions. patient MRI as finding well and which experience, the small procedures, people willing cost undergo in And care of as more become we're for time scanning shortened orthopedic improve, more total have to of the scans for better are quality the as the very these

John Ransom

ballpark, I routine what, modalities, scans of kind scans percent mean, So, you diagnostic scans your for pre-surgical ongoing XXX scans? breast of what every approximately kind just you those of cancer would all a that or versus across do are like just say

Howard Berger

two And say about is and would one I rest we we do Probably, particular and neurologic categories. perhaps MRI say the the talking those what rest in you're of if XX% body. applications. of scanning, scanning, which advanced the maybe of imaging, MRI falls XX%, the about I preponderance that, would what of of the musculoskeletal are do it, Well, comprises for into

Of it's neural either musculoskeletal that guess and probably XX% am or to one-third musculoskeletal two-thirds that that application. I is related, neurological going

huge So treatment musculoskeletal it the industry is part in of value its in terms of the a of problems. overall

John Ransom

utilization this but probably a I'm that economics exist, in any uptick has looking of in problem capitation pressured California? for Okay. doesn't your

Howard Berger

we capitation whatnot. as to is party. it our easier makes really, contracted both anything are reduce Capitation that else, billing ourselves our of cost as No, to are costs and reflection our increases, and parties form much a of utilization. passed for and utilization But, regularly capitation a negotiate gets on contracts payment eventually something that as

in success conversations. So, now behind, we're aggressive is we and lag and - it a good to it there be those having I we're more little may more very than think about used

John Ransom

reset? more let's your labor think Exactly, fourth core should lapped once couple kind core about we quarter, word? full model of the labor we inflation sort of for inflation you are A catch-up payments, for once thinking How think, how your get you pick of a example, lack just about better the we through stuff. have as

Howard Berger

will into for relates and temporary higher cost we've the they and on of which believe though of both will - our built of fill we to even increased cost using overtime, we the have and overtime cost we continued to What positions come modeling, we're some that we've our built employees, cost, improved expense temporary labor will Well, and physician our offset non-physician. conditions hoping the allow as is, John, us agency. if an to dependence that our it some labor will even and lowering at in that agencies hope open those

in and of that with model, prediction accurate employee costs. our we our So, were first we've quarter built expense our pretty in

John Ransom

Yeah, should temp there? rate, puts think kind takes Or, core of absent about I inflation staffing? all a for a the I'm looking what number getting we're and like with we just guess mid-single-digit at, maybe underlying

Mark Stolper

relates mean? I to would what employees -- that it as and is John, you salaries,

John Ransom

Yes, yes, yes.

Mark Stolper

much that's reasonable. use reasonable. temporary is somewhat but we We very is increase But of continued again, of we've Yes, into I think certainly agencies. that kind hope, I because model, think that our hope offset, built

John Ransom

look at same-store. And say answer one we not the I there's but let's here, know probably again

do, the volume, fair I because center. know I level fixed we associated? operated about this If you so operating to growth volume haven't trying growth variable, think leverage individual to just cost X% a don't of But were before, you we're X% to really roadmap? at real on versus the the that have probably underlying depends capacity of it's what's the and in know, say, a variable step

Howard Berger

increased towards, and experienced in in in where all a our EBITDA from of you to first which that past. good What because did we point costs would quarter margin that one our the Yeah. margin. time XX.X wrestle improvement continue went is question the significant It's very to we in I that with XX.X we the were the pleased with we're

for our most quarter as as from quarter. year costs bonuses well have expensed first withholding in do, most companies of significantly higher We in other do our related are and our benefits, to the as first and expenses employee

that improve So, that to we can confident our down. margins. continue go We're number will

But the we're in increasing margins believe the come improvement part that I actively we're pursuing I in market which every of will tell from we're rates, hoping you that our in in. can reimbursement

I to I increased think are tools just every a costs of that. these today, So but offset we some think fact of for business life have

And the with our efficiencies have can virtually to attacking every intelligence, in through of in I'll our about algorithms hearken radiologists throughput I patient to as our and well which our as aspect think both comments, I artificial related made AI. improvement back approaching business Generative

John Ransom

so Thanks Thanks. much.

Howard Berger

John. Thank you,

Mark Stolper

John Thanks,

Operator

from Securities. comes Solow The Please ahead. question CJS next with go Larry

Lawrence Solow

to Thanks. morning a and on year. Good Great. the start good congrats

on improvement, Just starters. margin mix question margin growth And realize does it rapid quarters. but couple the margin? play a few for higher guess including and much I much mix? does imaging it's a I to follow-ups, the PET/CT much obviously events, last into turn How and probably that slow How

especially growing drive last could of up, like revenue potentially few - really a which that been more this maybe pick pretty it's your continues know, years, to And the over PET/CT, improvement is I rapidly contributions? slow

Howard Berger

family. to welcome Larry, the Hi, and

Lawrence Solow

it. appreciate I

Howard Berger

couple talk When think payor right? I you're of think I at talking about look about we there a versus in this different ways. have mix, mix, to and modality - mix we

Lawrence Solow

Correct.

Howard Berger

a mix us. stable long Payor remained has pretty with time for

these shifting. scanning. relatively prostate is huge in percentage there saw, like increase some to an still a we of I small screening particularly exams, related increase and if right the our represents think It even But that total you're modality volume. the that of PET/CT, mix is

I if maybe. I'm think, me it's Mark, wrong, correct

Mark Stolper

X% of It’s under revenue. X% representing X% about our to

Howard Berger

opportunities the what slow Alzheimer's will do which today, a for potential also is but tomorrow. doing impact. we but monitoring great we a adoption, what to have believe tool, new and We're that that are on But Alzheimer's, be all treatment the to neurologic not from drugs, just brain see there the adoption. we're so, necessarily margins Yeah, sure. The hopeful which of be expect we higher, not diagnosing to that seem primarily just

seeing quality, and those importantly to see improve the that can that more upgrade with to substantial number like continue MRI. in we increasing and be will we time. number but as we're had and have adapted The substantial has both to our end, substantial improvement new new upgraded and and a But software of these much scanners, a scanning PET/CT a CT to equipment

in able by not the with our equipment more so we're to our we access and quality. - backlogs improve times shorten may what software wind we're up to to scan our hardware is the shift a much, throughput on because seeing capital So, is we're the getting that but and image improving lot making investment investment demand, the

flat could in relative fact have impact on itself a improve of the those of as patient our cost Both we our can given remains of and margins our throughput. that the significant overhead pretty

cost of year. software, to the very a have it's we think an we'll some monitor with continue and the particularly second half us this cost has of to how relatively given which the issue time, of effective scan accelerated I are been greater results So, dynamic that MRI, in reduce it nominal early some total relative to MRI the to of system adoption for

Lawrence Solow

question, Got And follow-up then it. detection. Appreciate enhanced on color. breast the that a second cancer all just just a

some mistaken, I'm patient little you're pricing. a you $XX a $XX new bit, refining us where I update you mentioned just on an little not believe per You are there? you program stand guys I to if give that Could think there. charging

centers? have you across also today, sort Coast it East we just just, penetration And when mentioned on at and offering two it do can you I you're centers expect where at. Is XX% the update of Can of the there? just now you sort this think to stand you

Howard Berger

Thanks Yes. question, the for Larry.

Lawrence Solow

Sure.

Howard Berger

everybody intelligence will. rollout tool of make look delayed clinical results that not we make it sense at compare what to the the certain diagnosis to should and initial with to tool moment this because involves their an new radiologists be. get and you a gets at most in what time accurate And of reading to artificial utilizing that intelligence it that and do artificial need I want a have to We this sense if just really a tool, technology it's of intentionally clinical and emphasize

not looking that process well to referring that focus comments to result, and is that something given as have a patients, this back looking we're that we both the by see, this an going finding as just that And various at come the for at as we educational patients the groups, that physicians. there's is adopt from everybody in found

bit delayed So be intentionally little we've rollout. behind might a We the that.

in biggest We based currently We've opportunities. XX% have the the the markets about Coast here. charging very think Two And actually, rollout comfortable and is with that for initial on not delayed that, and it out on in enroll we who this on $XX are more. surprised of $XX we're we've East that East some our some our on of between are rolled somewhere point - patients it feedback the Coast. price

by to tools I think patients before further doing is will we're assessment it cancer detection diagnosed risk also part may of enhance this artificial well intelligence. other breast in even provide getting be that trying that what cancer the have early for

So, we're excited about this.

what Service commercial that lot have the for of payors lowered a Public women XX. recommendation US the getting today announcement from The has the And is that mammo's that of when adopted. finally importance to the Force Task XX their screening begin that's

which clearly to be women and an there's change some going that And on mammography, now now of this. put already million between have. emphasis XX getting age group they're that So, should their

So that, it's that say I to don't white. black and - been want

plans substantial greater assessing adopted important we've our and talked gets it that artificial as we how the emphasize valuable for how is preventative something intelligence therefore of detection. and health expect now, clinical And I'll patients, tools can't and that emphasize breast an I cancer mammography about. a enough screening early and for that into and of increase, clearly adoption But our increase, health in business

file diagnosed be screening it, die should was if there's X, to caught it's it. early. earliest if not a is Stage everybody want XX% rate. Stage that getting And getting because or in mammography disease, breast nobody you however, fatal the cancer breast cancer, survival five-year from X When it's stages, would effectively, a

even enormous diagnostic one that one with medicine have should adoption an future has as modern had the tools, going its of things tools those treatment the as artificial an it's with impact greater its of And well and intelligence. into

not of very will cusp think, be, something and transformative but cancer. lung cancer, prostate So, think for we're for that we on the breast only also I

everybody And will healthcare better with outcome it's on for to lead provide system. these board ultimately a that can tools the stakeholders getting value the all that in the

Lawrence Solow

and late I can appreciate I Great, I lastly And - opened just in XX de Two novo's, on novos 'XX, clarify, last right? it. I think just up, you Got that. like then the you remaining half back guess, are six, and have more I still of then you lined remaining right? next early open, then year just six the think had the that de that think in the to expect and 'XX, this XX, is seven year or

Howard Berger

Yes, yes, that's right, Larry.

Lawrence Solow

Okay.

bit So it open these? changed, your a But this thought guess – it to maybe year. I bad little this the I up hasn't guidance someone so missing? was thought not expect Regardless, would feels ramp it little bit of I slower just little like a a a net, is bit is thing. net, was Or I probably earlier

Howard Berger

are or the - to inspections. Most slower complicated in that every more become permits, has post-COVID. department turn market around staff everything Yeah, virtually of to get we're in have reduced building slower

some projects unfortunately, have So of the been delayed.

than taking de going us deter that and actually we're actionable, But we to at beyond us, because, talking is anticipated. looking, novo's start won't that we're primarily other this XXXX become and about longer

to the as that us but scan in asked delayed increase the and for And of capacity ultimately enough what today, shift treatment, because and treatment cancers capacity of the we want be a cancer business the screening let isn't personnel. are for amount there should cases there and need diagnosis increase being we of fundamental various not of only greater be to don't equipment

So looking day. these every we're things that actively at are

Lawrence Solow

much. so appreciate I Great. it. Got all Thanks that.

Howard Berger

Thanks, Larry.

Operator

Howard concludes any the Dr. Berger This would our question-and-answer to I turn closing for remarks. conference over like back session. to

Howard Berger

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

call it believe we impact, look now, opportunities about in as have eagerly radiology, substantial to growth healthcare. our company only a but next exists success the and forward more the have we'll other of in continued to as not We well where information as

good Wishing day. you all a

Operator

The for conference today's you concluded. is now attending presentation. Thank

may disconnect. You now

RadNet (RDNT) 9 May 232023 Q1 Earnings call transcript