RDNT - Earnings call transcript Q4 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the RadNet, Inc. Fourth Quarter 2024 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mark Stolper, Executive Vice President and Chief Financial Officer of RadNet. Please go ahead.

Mark Stolper

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

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

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

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

not any publicly to to turn reflect new that, the it like update is And date statements, Undue occurrence call events. the they over especially undertakes of which with reflect date were of made as to events the Dr. obligation or guidance statements be to or information, to after circumstances forward-looking I'd Berger. the unanticipated should placed on performance, made. reliance only on future speaks financial forward-looking no RadNet

Howard Berger

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

With to revenue begin. quarter and that, strongest in am with I the adjusted quarter. $XX adjusted pleased with and year's increased performance XX% It history last $XXX.X to record let's company's in XX.X% quarter million. million, from the Total EBITDA very fourth company revenue the EBITDA. fourth was the increased

to well Health quarter. Health's health as as from to center ambulatory our year's in imaging revenues imaging $XX.X virtually utilization million fourth continuing adjusted XX.X% from Imaging from EBITDA volumes Digital of of expensive centers. XX.X% diagnostic increased driven by growing last benefiting increased Digital within care demand was million, procedural markets, all of the alternatives revenue away $X.X and freestanding to more shift the the hospital increased

year's same X% who year's procedural imaging. lower-priced impact last the to role we to performance the was Also reimbursement quarter and quarter. playing growth volume experienced recognize same-center we are as important in result, payers relative commercial revenue this a hospital-based As a improved contributing fourth strong from aggregate the to of X% positive alternative

CT shift is continuing with routine substantially benefited and towards scan per than where modality the higher in MRI, from revenue Lastly, mix revenue PET/CT, advanced imaging, imaging.

imaging the last equipment as XXX is technology quarter, trend few the as procedural have XX.X% in quarter. significant imaging fourth points well of increase and years RadNet's function a made the advances these overall This in an more last same ordered from the year's basis of of the volume, represented being in advanced replacement. industry During exams we as both PET/CT advanced capital of modalities a of result for investment growth of

XXXX a investment. of year significant was also

novo markets points we performance where to should contributors patient de populations. material facilities service growth. XXXX, in identified are and capacity access opened where we These there or X patient additional centers lack During backlogs, to be currently require long-term we

efficient We to continue hospital an long-term centers This as payers venture capture health seek within imaging recognized to and system share of XXX and systems freestanding care continue joint patients from strategies to towards the of RadNet's continue held system Health or and XX.X% will market lower-cost, and partnerships. migrate have from XX XXXX. that business. around XXX solutions. centers hospitals year-end high-quality grow site is of outpatient Currently, are cost-effective centers their increase

into procedural hospital diagnostic and the DeepHealth mammography announced and and group remote GE our volumes TechLive Our the medical commercially inside and with suites, continues the embed operational for with and Health partners the we increasing or software segment. with relationships. in been their MRI Siemens scanning fourth In equipment launched physician OS ultrasound have other Momentum partnerships Digital to with instrumental and solution technologies modalities. commercialize quarter, health initiatives smart system bundle

expected During XXXX, management network through XXXX, the Health of to capabilities the behalf many joining in XXXX. processes of the the with we will Wesdorp these DeepHealth centers, of also centers, September RadNet the as operational continued business which Health, we division of automation. culminating Kees Digital Throughout within solutions to drive Digital CEO on performed build efficiencies executive in implementing on be is imaging focused of within primarily

investing we the necessary help support sell same will imaging customers. external centers will will Digital At and technologies these the be Furthermore, to enable for within Health demand to build infrastructure capacity that to increasing the service services. aggressively create time, diagnostic

of customer significant capabilities the primarily XXXX Health coming is $XX years. external towards sales, investment support guidance in implementation our Digital in approximately million growth Embedded and marketing, requisite to directed building support

on leverage. sheet managing by balance We and to focus continue strengthening liquidity the financial

adjusted EBITDA debt ratio under leverage year-end At net Xx. to was XXXX, $XXX cash the million, RadNet's balance was and

further debt a capital consummated November, XXXX, During on of which lowered offering repricing lowered interest March, cost which credit a in April, debt transaction cost XXXX the and our through extended in maturities we facility. transaction $XXX and stock refinancing million RadNet's in a

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

Mark Stolper

believe drove performance. I will insights of full in financial to provide and XXXX in performance our which items. some as year Thank what well you, as some some release. briefly XXXX our I financial into be to going released year material quarter provide items of evening's full will statements to some highlight further also results and now our fourth Howard. I'm quarter fourth and XXXX I certain review give attempt guidance also last press levels, metrics financial the that were explanation

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

included and noncontrolling full is operations of adjusted and of for or onetime net place equity now and our A that extraordinary shareholders like and results. events said, our in adjusted EBITDA quarter to quantitative period. earnings release. earnings attributable allocations to full fourth I'd includes the to of in XXXX and taking earnings during interest loss RadNet, review to reconciliation subtracts or income With unconsolidated subsidiaries Inc. EBITDA noncash is year Adjusted common

we results night, release a had many of fourth the we strong made in last financial As you press seen quarter. may have very

earnings here EBITDA year's While quarterly records. all quarter. revenue Fourth the I that's last quarter are EBITDA and fourth report, adjusted contained and some Revenue XX% XX.X% from adjusted highlights. yesterday's won't increased recap financial total in increased company information were

top segment XX.X% quarter. aggregate XX.X% and same-center growth adjusted with exhibited performance. share The share the year's in line quarter. also quarter Health share $X.XX X% for X% per $X.XX fourth drove earnings revenue of quarter for from per the Digital RadNet adjusted fourth growing much procedure to last and last per EBITDA growth Fourth grew strong versus volume growing year's

fourth our from increase of the year's last quarter. volume, points was of mix quarter Advanced favor the imaging the during business continuing in procedure advanced imaging. XXX basis fourth quarter an of XX.X% benefiting Also shift in represented

improved exceed the or We imaging cash advanced flow Imaging revenue, per liquidity strong with more acuity drives meet well XXXX cash finished and caused of Digital adjusted free as segment Health. XXXX ranges revenue and The ending profitability. guidance to a procedure Higher principal to as the in the position. us Center and strong EBITDA both year

of reflective completed we over SOFR completed we financial is a in April we cash had million full -- million plus completed term revolving $XXX sheet, of in $XXX the refinancing that At balance availability transaction on at the transaction repricing priced transaction of repricing basis and the credit November. XXX facility points, and a loan we year-end, the

Continued improvement cycle $XXX.X our XXXX, XX, we DSOs, ownership low. net has for debt net this balance. includes for outstanding, or and record at to days term our loan in our of XX.X near December regards sales leverage revenue million discounts, unadjusted With days as financial kept bond of had is debt, Imaging Note borrower million which balance New cash guarantor. Networks RadNet's debt is a our nor that of value percentage RadNet par total debt less at neither of which our Jersey $XX.X

leverage debt was ratio Xx. net EBITDA At year-end, our below to adjusted

released XXXX results ranges As financial some financial have our release of we in guidance night. press you seen, with last may conjunction

of weather this through were points. quarter and While which the mild February These numbers winter on winter XXXX, first all relatively on the some conditions. XXXX, severe season. of I'm will winter a call, than to not -- experienced going experienced weather more we severe In conditions the important significantly January emphasize run I

in in were operations impact account almost our in materially. As a our XX% result, impacted which Mid-Atlantic together ways. for business of X revenues our Northeast, principally and Winter the Houston, storms

center to days schedules of storm work. suffer patient difficult loss closures cancellations the our own come travel First, to powers from of on centers, conditions, the due to staff of at inability the and the

our go following for the a unused, patient physicians referring scanning flow scheduled made they are never is impacted, storm. our the Second, up. similarly in of slots causing once Unfortunately, appointments disruption days

on to in as In the winter a of the revenue Southern we and wildfires. California storms and adjusted EBITDA lost addition February, Coast and in Houston East the result January

and impact the $XX estimate during of impacted property care a those we wildfires. winter storms regardless $XX of wildfires centers, our and million were after utilization of not no for at lost the the and approximately February of million suffered suffered RadNet of was by Though that and adjusted January nearby EBITDA. in We revenue. the the from industry businesses, revenue the priority displaced was and all Populations fires, any health damage

projections. We bounced experiencing Fortunately, not impact strong are quarter go and in or back conditions wildfires with of expect business this original an we do weather weeks, severe year. our the first has in our the volumes the line from to beyond recent

wildfire result the January full budget guidance our revenue of and EBITDA. February, ranges and of this in modified a As we and weather impacts adjusted for year the and these XXXX loss

Our quarters fourth remain budget. original and of the the second, from original third XXXX projections for unchanged

reportable TechLive will In the the and Digital regards DeepHealth Smart a as from we in Health Technologies neighborhood revenue segment, growth of continue -- XXXX to OS, This well of and in AI anticipating the solutions combination revenue come our XX%. clinical as from increases will are portfolios. sales licensing growth

which throughout The XXXX growth Areas sales, marketing, investment support due approximately $XX is revenue lag necessary in include EBITDA growth adjusted Health external infrastructure, investments of expected million Digital to to customer the support implementation. and customers. of to planned is in

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

Howard Berger

Thank you, Mark.

rapidly in appear outcomes. our abated expected for transitioning which a near provide to the we decade that and future, streamline into is in to growing by which better order the patient the workflow, improve to demand challenged needs As solutions industry steadily labor over embrace Fundamentally, imaging, shortages, the to clinical operational unlikely specialty. is technology diagnostic is begin rise tech-enabled service efficiency, XXXX, imaging will next enhance and diagnostic be experience

Beaches industry cost-effective providing care at enabling to of to leading-edge needs. diagnostic OB/GYN enable most groups, announcement the imaging case Digital lead is critical this to with of a physician high-quality, offices path Health to mission solutions, Specialists of imaging point industry down particularly and increase RadNet's this provider urgent OB/GYN can week the study a which be to made was offices, how address through Palm addition with which is the will services, It the RadNet earlier medical solution care, access that multi-specialty centers The in tools for ultrasonography mammography, imaging, provide x-ray. diagnostic

cost of Furthermore, routine These convenient by In create order remote procedures will health safely artificial workflow, compliance imaging point-of-care such sites interpretive professional will technologists. need represent reduce intelligence to provide better outpatient more providing turnkey powered will mammography that the solutions services. imaging cost services, effective. imaging solutions tech-enabled all and about as of sites additional screening for these routine alternative are XX% system imaging tech-enabled services care the to and and of or to effectively improve clinical on-site by manage to effectiveness and care

largest AI RadNet XX-plus the most and and its industry's manufacturers positioned relationships, ability DeepHealth radiology's and accomplished in year industry we clinical the its its Mammography, direction newly such equipment is and outpatient more array as to managerial radiology already largest this brain. of TechLive resources, to OS, because Smart successful breast, prostate its lead its Smart develop recently, developed uniquely and experience Sonography, critical including Health building in and tools significant in with what lung, commercialize have solutions, provider, including of those financial Digital

onboarding solutions Health essential Digital both and into marketing, team XXXX internally sales, focus members externally. our year an customer for are Digital implementation, These and driving will support Health. and investment be important in continued

that will portfolio a sell us which evaluating we can serve AI clinical either solutions. with Lastly, customer and our we to services acquisitions market be and base new and/or solutions add products provide of and opportunistically to

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

Operator

[Operator Instructions]

Truist. David from comes question first with The MacDonald

David MacDonald

just guys, question. So quick one

piece. follow-up ask wanted impact Just quick the on weather a to

just sounds I confirm like want it -- piece. wildfire California more Southern the to on So

either at As kind you to expect in or March look and quarter. scheduling out that, later back of you of by kind scheduling this to XXX% your guys terms end and certainly of be in the the of

into So quarter? the second no leakage

Howard Berger

storm that almost The headquarters Riverside and Angeles, the Southern to Dave, fire by and was because particularly want location Southern first like Ventura throughout California, use a this. put the County in that the through California. everybody area, were area, snowstorm sense impacted and my everybody Los virtually Having I lived it context Well, word Los in little in Angeles here. in me let a storms, of the impacted corporate here Pasadena

we normal. a back on might to were start to returning that you watching just tell some fires when relief can occur daily television of and people basis, I the get these when glued could sense to

dangerous which in the obviously, vehicles was that, to states. addition In California, noticeably first priority by the other were hampered all people Southern just air fires travel, brought being reluctant quality the to all was over not and and emergency only from given, that and but were

impacted of out comfort snowstorm about that people both thought to try in weeks not X So that who aid. as in could that to provide be that only indirectly case, own both new fire, saga is but this days -- the days but and were and and this not something But just -- massive their the afterwards, directly of a almost to people this impact we're impacted XX XX effectively weeks and like unimpacted were terms ongoing a unfolded. of reaching simple

or both have you the the was, the Coast, of weather first Southern budget. And said, that I exceeding add what would So impacted business projected exceeded if we our is volumes the fire or to and met last on we areas, in and for ourselves believe, conditions severe that in estimate quarter slowly within we first recovered, increasing quarter. back days. East California normal, the being the we even our the first loss here probably back probably find winter XX by perhaps some had to have storms

directly weather. be the we're very to March seeing and impacted standpoint as be more believe question, to last that said, throughout a Dave, as answer March month not your over volumes we a by the for us, company being more improved month well a by normal mentioned, normal days that XX -- expect indicated, should I That as as being we from the climate

those forward So every to RadNet, in and extremely something confident January not everybody just only we're circumstances that months we in is absorb. but think in projections of have hopefully budget business for that rest February last as year the virtually X to the almost But exceeded extraordinary I be and going have and the every were that the met expectations years. in and we affected unfortunately and done will March quarter X

David MacDonald

you folks. any guess early learnings feedback guys as from Okay. second or Great. I but OS the internal looking some early, some clinical of start realize at the of rollout I metrics just just the your some it's of from question,

it start is to any learnings that? for Or there? Just bit early a early too asking

Howard Berger

it's very will result in between you would out early, bit both Dave, close a Well, Health anticipate and the testing of changes occur Digital side services collaboration, the DeepHealth side enormous little a think have operating the a system. but I rolling we that and as the as

these of think kind contact we're I first tech other in of routine change staff, for centers, are scheduling extension that go a very particularly virtually number if substantial everything like changes, logical opportunities more in through a staff are scheduling, we all and is and the insurance all the administrative all well insurance industries. will, you think this kinds you through industry triaging the and because our to would the of things remote in not about as our that of as bots physicians And very verification, do, enthusiastic

into go one the not in has for all navigate bit presentation, a of mention be insurance is that this. the We because people happen to thought creating through to more to live complicated little a to industry difficult itself

OS through the quarters X on target most in believe implement So of system that internally the this year. remaining to we here we're

they That, on and side, born these to up services believe continue collaboratively critical that industry of constituents our creating RadNet in value proposition the in out Digital this improve operational that side. side work clinical from that product I with various very an will, DeepHealth side it. believe, side the was RadNet the Health will services unlike present of how part the certainly on we I as is is anything you we can a a services and the the valuable recommendations from of solutions, very that come the really if to in produce and also business plays from the side together And

that some working demand, in become in bit area point-of-care remarks, on in routine is some little DeepHealth OEMs believe the focused particularly on else drive that increasing providers of efforts including access to radiology. the particularly of and the imaging mentioned industry, as we're I to other my at we all, operator the clearer be for these that leading solutions I developer of as will into nobody a want the will help closing that the and around the how

David MacDonald

just one guys, me. then, for last And

they how you outreaches? on Just Just reached assume doing you I on that kind something deal? the you them? bit -- be deal Beach happening with provide and of I anything interesting. is, you X-part And guys part you'd Is you're anything can multiples, of Palm that you, little of any pipeline, to would anything more detail Are call came -- where terms getting together a OB/GYN guess the question. would out seeing, to the then I detail that out second came With incomings size both to that either of guess, with in regards regards the et cetera? question

Howard Berger

because conference that their very, relationships this which then or provide some a out It's for which dissatisfaction is yes provider professional but I -- ultimately Southern group, Florida not a marketplace expeditious services X had. offices, arranging mammography They call new conference, Let's and and quite operational was of the large. Dave. It in Yes, OB/GYN they concern with reached services. the XX own of of the with largest and solution what of see, should say, us to yes. and

scheduling, adopt went we professional to able both scheduling while services, as the primarily the their patients' were on when And have with Digital noticing was them Health well some visits focus as quickly solutions their of surrounding in, visits. annual we

which for. the first adopting to our very expect in have EBCD and adoption March, sometime And actually part substantial be program, we of endorsement they'll

came and other well operational professional very from what -- their to as provide that the originally was So were intelligence we and considered. as quality interpretive able not ever to capabilities quickly artificial better add seriously inquiry they services, had we

is and be we us both that this screening access want So of I believe I with the is OB/GYN for take to of as to in more mentioned quality done getting now mammography artificial lot that aren't my to what for their the pursue a there well opportunities, standard elevating as service in the as aggressively intelligence. the a women other we one help remarks, annual the area of case of study to care believe where improve will

proud our I'm well cancer And opting of the to our breast XX% East Coast and say over for detection. that market, Florida our in patients in early on are

even to patient, particularly that get greater where the with woman expect there's control to service the their that for visits. wellness better of we So be

that are long demonstrate so as that centers critical is bringing this various as it only to my looking once services I think won't well outpatient ramp the imaging once turnkey talking And marketplace really take routine some in hospitals absorb. as and demand part that more the of lines for was I for to is that of the that really remarks RadNet at its I -- to more statistically also help about a value the difficult professional solutions of proposition my decompress to last imaging brings but to able also in company, we're us through not believe, up, service, this and collaboration,

Operator

from question with Tanquilut The Jefferies. next Brian comes

Brian Tanquilut

you. Maybe, start with Mark, I'll

the are And just to any after market? the kind in or like this? dynamics then give has kind terms the As of of volume we some observations if in think you impact bounced storms, can prior color demand growth on thinking about the rates the you of your in of comment that contemplating what guidance us of about back kind

Mark Stolper

Sure.

and if you add that achievable, that hoping the implies $XX estimated guidance range, were our So in and that look lost, confident is to to you about night we we're sort last meaning have years throughout that back highly the it a the of past take and at which we're and we've which exceed and released X% million, we of guidance midpoint and revenue, you the as growth the we there guidance very -- think in very, few adjust the year. we

Within that, volume we're more last assuming that, performance. procedure historical a and over implied procedure that years. is year-over-year, is we've our which the about volume what growth less than been same-store being with several achieving growth growth in by X% sales same-center in It's is the line

And good didn't think given a the potential in that with we the weather January impacts the Coast, and conditions off there's so that. winter impacts. of trends started business that very into the February we built on have of I and wildfires But on because all view and East some conservatism year the the the those

the wanted we we of be so And year. remainder felt what for the conservative was to

Brian Tanquilut

And seeing that you then like other I you about of for you as make investment run prompted Health the put infrastructure that And business can think do Or visibility investments then the through, over that keeps of that mean, Digital this today? has think you'll market the comments -- requires Digital the time have I to Howard, if hospitals to you going it's to these be Health million add walk to Digital to that do number second, side, understand. you investments or in $XX the to growing? today? rate? health one, what is maybe, for on whether you of into the the Totally are space business areas care level contracts, as me just Health in have the

Howard Berger

benefit for the I no to is there I thing RadNet centers. to little that me, internally question. -- to Mark's is deploying before built-in just DeepHealth your respond thanks operating the just the color system question Brian, One add remarks from a into to

-- So in both capacity side costs, predominantly opportunity, well which as on and create see expect XXXX through we we're additional better workflow we when the revenue as efficiency better reducing as to fully implemented. and

may of Some that occur.

We transition. how result benefits, just us some certain some of period may in will that to for it costs may be can't give but we be time as duplicative as

that benefit from I into no to So emphasize built-in our that in know what see we'll XXXX XXXX want point we put we've forecasting.

to this here, the of we marketing costs taking because about that a be be will aspects as teams point as industry. sales building RadNet's responsibility, onetime the more think But teams, of I other and team, for lot in implementation which take seriously well benefit talked primarily enormous million $XX there'll on we both the

are X every new partnered -- to talking we're the ones tell currently to same fundamental with, we have ventures or we to with, hospital I joint you talk all that every that are providers, extensive, we that with potential are rather that that problems. every would system that center opportunity comes us for acquisition which have that imaging from

outpatient we that's from imaging quarterly has mentioned And business into centers. accelerated, a COVID. outpatient remarks, particularly for from as Number in one, the hospitals away that shift after of the trend repeatedly our

technologists And that being all we The other that they're shortage going it's for the challenged thing the and by the shortage radiologists that's go away, have personnel. is for labor shortage other pools. or to whether not

just look this. So the to use when U.S. impact you that care. potential of the what quality in anybody arguably and improve we're performance, building help better drive And is efficiency of at could something

One for technology population manufacturers on themselves. million and well that's at growth, space being probably X% continues there's based developed, to from equipment of the gave, I AI the number -- aging a to that grow this That the in outpatient X% XXX about rate examples imaging the annually. procedures both as done newer as just applications

technology has So way, this be something a us allows not only a but at increasing systems clinical to not new and really that demand quality cost-effective level sensitive the efficiency which everybody current that to of in just do. and managing is the of to are capable

So potentially providers, RadNet developers RadNet. outpatient, artificial is on excuse doesn't imaging magnitude good justified or the tools But talking not health for and nobody it's disease the impact, the could or mean -- space, we're everybody will other health whatever in is cost for anybody OEMs but of It taking detecting this this build hospital will to care be by else that be also of space. in in for investment only care for for to be the outpatient for the the good imaging earlier. what going intelligence lowering whether simply certainly, or but health of RadNet, other for to else is beneficial -- or me, -- which about other run creating

not a think and ultimately who in responsibility these social what rapidity benefit RadNet, of that's be And society at seriously a certain important at that's about biggest that will we could are capable with. talking and whole, the at I we're I'm to very because particular. scale health as where radiology general take that care doing, it And that's do systems and in the

sometimes. Health to and this division. for this rivals people X-year practically Digital what even We've I lenders, mark that of the years. X.X products industry stakeholders, this years emphasize at have and the only since XX not We're been assembled to team at time want XX officially our short XXXX, relatively to analysts. we think we've launched in been beginning business creating of I period the all that in of And in done

responsibility the both in Digital the to Services very applaud of my the Health division. believe efforts I we that future division here like us we take of I the something us imaging as entire that to radiology wait as well a improve have and to into for So And that And today, the I and not lightning. hit team, have lead future. bolt seriously diagnostic is

Brian Tanquilut

follow-up investment the appreciate and quick think million quick then X guided follow-ups point, I could Maybe, AI just and today, XX%-ish us And guidance for $XXX you so I quarter is have your that would in storms the as to for if right? growth revenues, we second you that. the step-up clinical roughly Mark, of for rate about that not XXXX the an on with Is here, think just just EBITDA, right growth. Howard's So as QX. beyond? share about the my if

Mark Stolper

Yes.

the for part this our and together, which where your... EBITDA of And which was particular So Digital if then is services of the year. guidance about -- original we're the $XXX our add both $XX your million you what levels EBITDA, was Health just for we second part were where on budget of imaging to is of first question, million

Brian Tanquilut

Clinical AI the revenue for QX?

Mark Stolper

Yes.

QX of was revenues just AI at clinical that report Digital got X.X, let for Health here. about I've look division me a So the

Brian Tanquilut

it take offline, can Mark. We

Mark Stolper

Yes. about It's million Digital $X.X the of -- fourth $X.X or it's either quarter. in Health million

Operator

Raymond Ransom John The comes from next James. with question

John Ransom

Health 'XX, Mark, A of -- different me for here. think Digital components I'm can sorry, few if we kind the that, us revenue DeepHealth? the DeepHealth about guide of help including about for you the think

Mark Stolper

You mean DeepHealth OS?

John Ransom

from Yes. Like what's coming what's other stuff? from versus the DeepHealth all coming

Mark Stolper

sure. Yes,

of million And and million. And such as range about SmartMammo then our then to $XX expect that, to that be we AI the of remainder component be of we're in revenue, the $XX TechLive. be $XX as will in other the million. to software as technologies $XX the will total range million well expecting So

John Ransom

So clients do of DeepHealth all expect to to your legacy you software over time? convert

Howard Berger

we yes, John, do.

our be will applications platform, system our -- cloud And by of have legacy XXX we on all that an sunset network. be centers we're our will it for that of doing, that the the end still the one, the on-prem only entire the that migrating but cloud and to not cloud service including and for this X to so year. platform Number We cloud we hope company all it's will entire storage, native older be will reasons. in

transitioned So our customers over this will all be to legacy of new service.

part second this really of is things. have we clinical One The we to Digital division, on focus talk when X is Health about that the AI.

of AI, we're generative reporting. calling operate are from to very final beginning me, an for centers and the change is second to almost which appointment use processes the to the that in bill and -- excuse The way scheduling the going our the

perhaps piece could potentially believe uniquely other growth efforts companies we that of we ways the accelerate acquire. of other are this through the But that looking we this at that can

services in what imaging where much that. So as been side invested capital of the the past, will in done our continue we've to opposed has and to be

with further x-ray. businesses and running drive the platform tools but not our for to in in allow help those new of opportunistic are clinically efficiencies we for synergistic revenue, that us intelligence artificial develop mammography, leader look that will will think and ultrasound development We business, only our become to the

and in is I the the efforts other the more the areas and our where will with that with pursuing all space. tools. be that I tools development OEMs a be advanced So of of which was I latest example of will these importance transformative OB/GYN the the focus, the to in mentioned in gave imaging example that lot we opposed the -- think of perhaps And of their as

services almost us expertise have areas of MRI, lot Meaning development we're that slower to a that we been for all range newer they lead of looking OEMs now use that transformative ultrasound be and intelligence talking take of are technology mammography the the clinical in area to the and all the of adopt to see CT, X-ray now throughout PET/CT, the entire artificial to our and and provide. that much clinical of in opportunities some need because in tools the this help the

Mark Stolper

the of with revenue. John, I portion of Brian with what numbers the me -- in something. AI just with I or clarify with Digital the to front want reiterate regards asked to got Health something

and the in was last revenue in that just the $XX.X of AI And million, $XX.X was indeed, XX.X% was a year's million that AI Health Digital growth quarter $X.X the million. fourth piece So from quarter. piece the

We John. hear you, can't lost we you. think I

John Ransom

me Can now? you hear

Mark Stolper

Yes.

John Ransom

couple sitting capital You there. that the do of done has of year, guys this money have been write but of think? out you a cash kind you the raises, obviously, check a that odds nice are What

Mark Stolper

selling of closing only Health we as Digital very, within very us that the said Howard in XXXX. clinical Well, the for and not business, And a the the we by I'm have and will on tools or that could used external center own high could be then segment customers his new that products are or as already for that also sorry, capital capital imaging our important, using will that of for side. that will course our businesses either I think on, some be business normal -- course, John, be services services will of be further but new that base there AI could acquisitions DeepHealth penetrate be odds for bring there of remarks into, products acquisitions that within portfolio of some significant acquiring customer and then

John Ransom

size of surprised the really Have in been business of core terms you materialized to nothing that that or interest multiple you? or have what you has been has little imaging bid-ask a in or

Howard Berger

a Your here communication is sometimes, little unclear John.

I So We're... understand. I think

Mark Stolper

Not communication, sounds... but the your

Howard Berger

don't I think surprised. communication. Sound we're

As synergies larger of on our you And are number are the all maintain at right and that appropriate fit acquisitions, are to expect the if them. we doesn't The private I leverage think aware, in just they're important equity it dare passed with metrics say the that price? a traditionally from we we the the price. what's is, consolidators And sale for backed. right question

the us but the better but a about more we the and hearing we'll in And be stewards quarters. on move later of in year. not be we good standpoint. -- on cash. a those deals want long-term of the cash want ready to to growth keep we're standpoint, I Imaging balance that it's So Health coming talk be we And use both to from very a And in and Services only how to opportunities, strategic, financial able which think for believe in think are actively we future good and a but and from number us I working be this accretive you'll about to Digital that division, -- from

Operator

the question Barclays. Mok And with comes next from Andrew

Andrew Mok

labor that made. to follow I you've wanted up remarks on the

color you far trends you're think bit do see it in we in you provide you seeing this abate market? future. Can When I said you along inflation? are did the to more acceleration was a in the in inflation cycle? How the unlikely on think

Howard Berger

Thanks, Andrew.

it mean ago. this years think X I seeing I started was... we

Mark Stolper

after Really in or right COVID. COVID

Howard Berger

After COVID.

So this not is unexpected. that we're something that's --

though, in in that some the challenges throwing imaging COVID, think is people particularly are that care, the some I to everybody drive the and what towel. health fact in but just are happened facing of we

do. different they that about created much market really that that and a from demand reflected They're either specific we something to are imaging. work that the for the simmering It's altogether retiring want earlier or we've they're brewing, because was here. probably already And and labor have being where was how to very the but it more want mindset really challenges had work of they

because better has of And has the COVID that so come that's the just quality reported manifested problem are where in for been itself of technology as like period, demand demand the way the delayed the particularly providing continuing or that because services out medicine. procedures of have has we we routine much, screening either has created the accelerated so

has And for think the everybody driver caught surprise. something by I that is that

the and the shrinking accelerating. a demand, force supply maybe and labor supply and it's demand So the not of combination growing of

the opportunity. us think Health years really I our this ago was what X-plus recognition Digital of into drove

of the more... low the managing into numbers a it but even for, is last probably there as of that. salaries, everybody's to have matter, analyzing not and digits were the I'm than this. of solution for industry We over standpoint, may from internal deal is whole not that the our getting we we're our that in gotten this cost more growth Mark, are that single control a couple a And years solution From labor maybe with issue. although are sign

Mark Stolper

which single particularly of less the focused, low health mid- particularly to are higher majority within the the the there. hospitals, a sometimes little the single seen We've economically digits, in out tend industry community-based digits. hospitals in We're be not-for-profit the to who systems

significantly think better people is here come in better because partly who had hospital. most a overall lifestyle particularly around to -- RadNet RadNet think because industry, concerted a radiologists work, want the than we've I labor So effort in the in is experience than the towards a I we've making done place the industries where

are our best handle, to not on scans of the not only more types allows And have practicing we to They're enjoy hours radiologists that subspecialize pathology in tremendous of they also they're equipped but modalities predictable. a The that call. and with. amount that most

But better we've our within within having of -- salary XXXX, we're So than in million said and guidance. guidance, benefits our most. a -- experience about within wage absorbing $XX increase I think we're to be had that, going

several that's us will So trend entire and digital have and beyond also issues in get our that we giving of over solutions the types labor. that successful business once to and RadNet. be and around we're 'XX years that that's licensing facing really industry developing we're great in we're the the an But to same real been last going continue. the fully impact going is the developed, have these for facing we've what's think because implemented in projecting selling the adopting And solutions, we're opportunity digital that this inside 'XX and us such confidence of others solutions that to I with all

Andrew Mok

do all also physician exposure in common labor in is hospital rate you to have that are is it. market? that subsidies current the And the systems? Or pressure, Got radiology

Mark Stolper

billing because No. radiology subsidize inside they component. professional-only the because hospital the hospitals them you're that enough the hospital about by remember, are money only if of hospital-based can't from for hearing billing make is the the groups for components I agreeing hospitals to subsidies work for mean and the simply with the collecting technical

business, money of share, if not the the bill, our most of the are lion's part, and professional the our paid global are essentially bill. In out the technical the physicians make the we all, of component but global component receiving for on

the -- outpatient to aren't industry. not applicable we're subsidies really So

Andrew Mok

you finally, That's and it. can of the PACS talk about relates maybe to costs maybe it Got And as just switching helpful. then RIS DeepHealth.

so. products? this systems RIS the on cycle PACS side works. to if even for much I likes customer, the want on to just new But barrier understand that a to think DeepHealth's rightfully attention sales those is a AI switch How and a and of I it customer lot is really part of of how

Howard Berger

other people cycles, improve now we're business, that you can will, productivity perhaps of like the kind Well, that radiologist. through the and don't are of the years if cycle businesses, that using and a in PACS lot of XX-plus tools will. are if support that are efficiency old systems PAC the you And the goes most software

so systems PACS to the think actually And generation an that's designed because be are old like of don't next the term our using PACS. I We term.

a can work be of reside radiologists' read newer time, both kind of artificial using we're talking in create to of utilize And engineered software that will tools benefit lot the better of and the they to intelligence about if the study the that will, in you cloud as use therefore, aid, diagnostic as the well what do.

spent Maybe with more normal. evaluation, that the normal. the to cases call triaging allowing work those that be you we normals time more need not if as for and of normals something do remember, majority would is what intelligence as those artificial to less And of will, are time what simple and doing

a a our bit to triaging very versus these productive of We by hospital reading even more outpatient a about perhaps AI tool where in accurate space truly be little that person the abnormal this would lot more a see improvement. and terms trust would the the percentage what's that And the and and you radiologists that's the be, the allow the they space. think greater can So different bring while tools earn hospital in will is radiologists make the outpatient space. can are they why of far be hospital the and more, will a and in applicable whereas much more cases the and than evaluating in complicated it are hospital, pathology in some of in will

you to they're the newer develop at looking priors, functionality if So it utilize and these to opportunity new for the the at, more priors will, same that here for doing in cloud for software. I with is what real for bringing software make targeted faster to science then think looking comparing technology computer and better functions,

that cone of a for to intelligence it's difficult looking best is be at other average used early evaluating which to newer the was of images very and may relevant work applying ordered handful that lot images, diseases. for the and things technology but many opportunistic that, looking were patient do A some we'll looking they that that that images. cases, referred, in the of will to images the One of examples the just I why be down that given perhaps in artificial can the intelligence the radiologist generating, by at be also way hundreds the artificial is weren't give of

this accurate what for make it's PACS why not more more the you're reading, and helps is that's additionally systems. evolution providing whole efficient, just it So of the about more about prior PAC read than trustworthy that

Mark Stolper

I emphasize, for I look industry out how overall Andrew, PACS systems PAC thing of your today. likely XX% small question from percentage. about systems want to one the radiologist a back are systems what the PAC impediments standpoint. switching the you very are to And going at was Yes. a today, there last I the to believe all about report saw cloud-based When

So there, software. people the using vast on-premises majority are radiologists out of

going versus and coming in cycle allows where do the next ability that in storage, so the images solutions other within up to cloud-based in at of going visualization you technology the this switch of from look cloud-based like prior look to to the are be for there terms on-premises development, DeepHealth as that a and through to you on-premises cloud-based that's which prior is software ability radiologists that's far superior preparing and benefits Howard that data it's industries speed studies, areas when software the to the the systems -- cloud sets, years cycle for. there's And over the retrieval, have today tools, at compress call the industry said, viewer cloud-based these in other can the of they

Operator

Larry The with next from comes Solow question CJS Securities.

Lawrence Solow

been of my questions Great. have A answered. lot

just the a it or lot of looks overall, there like Mark, the $XX margin back it seems than you segment declining like biggest the follow-ups. onetime it you the the impact, driver, margin, wages million else million about of guys have are but add impact -- I couple have in you guess, the $XX Because a EBITDA actually assume that higher wages that? you if Is even mentioned, bps benefits. Just -- piece. the I -- driving the actually just and what guys that's like or in XX on XX, year-over-year. more bad sounds that good is increase imaging

driving what that contraction? is So else

Mark Stolper

-- Sure. when we a we're guidance, We give -- bit when up. building our color the from doing we guidance built bottoms built and it budgeting, our on to just you we're internal little our of how we

to So center. by projecting site we center every risks manager, we every go the based particular are volumes of upon opportunities, manager, level regional that

basis. a that well, same-center corporate all a kind We the built then corporate performance from go functions. then does to on then And and assume it -- what of layer that, and level we'll up in embedded we growth that back say, assume does

so in standpoint, we when a on what years. increase And we about last a X% the at back with from few same-center is labor labor faced same-center which go consistent in a look assuming the basis, we're rates, and somewhat

last flows -- relative up margin And fairly margin we're year And overall then be year, -- have expecting EBITDA bit budgeting showed process. the of then to also a is might that little embedded same flat. to and margins out or stable this what it that

we to a tools the automation in the platform once throughout OS opportunity, we margin adopt The number put is these and DeepHealth think, enhancement occur for going of year.

in So have really could profitability it the and and half once margin of for that maybe the beyond we enhancement in implemented RadNet. we're this excited fully is what with projecting of the about could mean inside what But and see second 'XX some margin upside to we year.

Lawrence Solow

and factually of of it these you is term, not there there's benefits. should Or and on super And a as any there systems? potentially like upside short matter, get negatives does happen? temporary little the actually some to actually maybe implement of curve of the some Is but bit clearly, -- a some temporary that any learning efficiency-wise

Mark Stolper

operations so out is and and we don't workflows. the where so, The implementing or starting New that with have kinks of way get to more complex work Larry. implementation the implementation regions before started think some we're some we're more we much California, York, we by complex this with Maryland, the smaller We can substantial our region, in have much of and region

in done we're something not this the And So had we've product with over past. experience years. we've I this. eRAD about the before with our It's that think concerned

Lawrence Solow

Got it.

Health. segueing mentioned What the year, question. Okay. potential on efficiencies targeted benefits my like internal that And you're XX% continuing just Digital Digital obviously, into piece Obviously, you last just Health the itself, and and plus about it from growth. this sounds

As out not realize and for look I number, we X that. looking exact an years

can next sort maybe But grow like we're XX% of this this sustainable? the dollar $XXX if It business grow -- that business could probably -- level, Like faster. years, XX%, this be higher is it X growth infancy, imagine at somewhat for I over And even than in we feels that. the several maybe it would margins business. that Is guess but far be would million like I fetch?

out you ballpark plus just So years, to X as look that minus? maybe way of or any kind

Mark Stolper

guidance a don't at Well, because we're I in is saying without what think position multiyear that all. giving do far-fetched that, to I think don't you're

making investments DeepHealth infrastructure build to we're the Berger fact, in over mentioned, as much business to worth Dr. a million external support $XX today, of substantial with investments larger In customers.

we the today $X.X a that and software, will continue after computing substantially have in worldwide believe switch So grow decade. going billion next will which we're which is that what in that the to is we cloud-based about opportunity radiology market towards see

And there is the that so there category one no is out company killer.

and this on comprised created OS. are words, mostly highly a an couple operating is or particular an Windows point This is or other who is systems industry small Microsoft In problem or even that disease that solutions of Apple you've developers got not industry fragmented modality process. where like particular is focused a have of OEMs that a like

if here in a these building technology be solutions. could those that would a the or it an very top that which of kernel of which underlying is be could that create people other point underlie could solutions, develop, can that develop and will and lot And what a there on we're of we're successful will run will point ubiquitous something technology and business substantial be industry that

and the yes, both But we of to that build we're big a a go is after. why infrastructure think to spending financial this opportunity otherwise lot and which resources, is

Operator

from question Jim comes with & Our next Sidoti Company. Sidoti

James Sidoti

Just and to take business it X to to think quick the revenue? long team you're that ones. contribute start get in One, how bringing you to do for AI and the for trained will actually sales marketing

Howard Berger

that There we be to Well, hope calendar to complete is that. year. able this more way accomplish in one than to

itself, alternatives by looking up would So we various hope year. that I this. have will be complete of scaling quickly other at one for to be process But way substantially we'll the or the the the end

James Sidoti

trend people was you are forward? the just and half the in model Is of capitation that question. it drove modeling that that? this then And Do the year a going in specific that year. that for back opting something a forward? think down was going there quarter Or Okay. revenue, not The

Mark Stolper

No, observation. Yes. good for the question thanks a and

this about was revenue capitation were this height capitation, At And quarter the our of XX%. is X.X%. Our of we intentional. north

we back As price ago going successful to in focused commercial increases, we you going we're some that as benchmark fairly what capitation each of the that relative up. books have services others to is for highly -- the several can from to perspective, haven't need our some our we we capitated on with. we've get reached see, capitation in payers general the payers, providing. to And have, of but been contract when And we've side revenue our payers, on business efforts years our other be paid overall done with we've that agreement part

their And now last, send sending at have of no months, contracts we flipped in to they us, a which obligated say, in they're XX over these XXX% us several of capitation cases that fee-for-service patients. arrangements the where enjoying do But we're longer number of fee-for-service that centers our fact business have are have. par other seeing sense significantly on busy, so us backlogs, of are given it them if with rates. the rates that the many capitation we doesn't And books the higher make in not patients

contracts So we've these to benefited actually from fee-for-service. flipping

risk they be would have them the out they others the that believe, see some revenue our you'll requesting. the to holding the RadNet So declined, gone before. cycles themselves money up has I but coming there to us has we're fee-for-service increases when business if overall initially will agreed capitation some them up. future recognize a more we've and the in that of has than I basis gone and through cost might out end to doling these revenue contracts able of on these to that service back believe that and

So in the we'll it coming out how plays years. see

Operator

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

Howard Berger

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

Operator

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

disconnect. now may You

RadNet (RDNT) 28 Feb 252024 Q4 Earnings call transcript