Core Points - RadNet, Inc. will host a conference call to discuss its second quarter 2025 financial results on August 11, 2025 [1] - Investors can access the conference call via a dedicated phone line and through a webcast [2] Company Overview - RadNet, Inc. is a leading national provider of diagnostic imaging services in the United States, operating 401 outpatient imaging centers [3] - The company offers radiology information technology and artificial intelligence solutions under the DeepHealth brand, along with teleradiology services [3] - RadNet employs over 11,000 individuals, including full-time and per diem employees and technologists [3]

Core Viewpoint - RadNet, Inc. has completed the acquisition of iCAD, Inc., enhancing its capabilities in AI-powered breast health solutions and advancing its mission in diagnostic imaging and digital health [1][2][6] Company Overview - RadNet is a leading provider of diagnostic imaging services in the U.S., operating 401 outpatient imaging centers and employing over 11,000 staff [4] - DeepHealth, a subsidiary of RadNet, focuses on AI-powered health informatics to improve clinical outcomes in various health areas, including breast health [5] Acquisition Details - The acquisition integrates iCAD's commercial, technology, and regulatory capabilities into DeepHealth, aiming to improve breast cancer detection and screening programs [2][6] - iCAD's AI portfolio is deployed in over 50 countries and includes solutions for breast cancer detection, risk evaluation, and workflow efficiency [2][3] Market Impact - The acquisition allows DeepHealth to access over 1,500 healthcare provider locations globally, enabling the delivery of more than 10 million mammograms annually [3] - This strategic move is expected to accelerate AI adoption and enhance screening compliance, particularly in underserved communities [3][6]

Core Insights - RadNet, Inc. has partnered with Regal Medical Group, Lakeside Community Healthcare, and ADOC Medical Group to include its AI-powered Early Breast Cancer Detection (EBCD) program in their health plans, enhancing access to advanced diagnostic services for patients [1][3][7] - The collaboration aims to improve early detection of breast cancer, which is crucial as one in eight women will develop the disease in their lifetime, thereby optimizing treatment options and patient outcomes [3][4] - The initiative will also involve a patient outreach program to encourage compliance with annual mammography screening guidelines, thereby increasing the number of eligible patients receiving timely screenings [2][4][7] Company Overview - RadNet is a leading national provider of outpatient diagnostic imaging services, operating 401 imaging centers across several states, including California and New York, and employing over 11,000 staff [8] - The company is recognized for its innovative use of artificial intelligence in radiology, particularly through its DeepHealth brand, which offers advanced radiology information technology solutions [8] - The partnership with major medical groups in Southern California reflects RadNet's growing traction with commercial payors for its EBCD program, indicating a positive trend in reimbursement for advanced diagnostic services [7]

Core Insights - RadNet, Inc. has partnered with Regal Medical Group, Lakeside Community Healthcare, and ADOC Medical Group to include its AI-powered Early Breast Cancer Detection (EBCD) program in their health plans, enhancing access to advanced diagnostic services for patients [1][3][7] Group 1: Partnership and Program Implementation - The medical groups involved are located in Southern California, covering counties such as Los Angeles, Ventura, Orange, San Bernardino, Riverside, and San Diego, and will provide EBCD services to all eligible mammogram patients [2][7] - RadNet will initiate a patient outreach program to improve compliance with annual mammography screening guidelines by actively contacting eligible patients [2][3] Group 2: Commitment to Early Detection - Dr. Howard Berger, CEO of RadNet, emphasized the importance of early breast cancer detection, noting that one in eight women will develop breast cancer in their lifetime, making early detection critical for optimal treatment [3] - The EBCD program aims to detect breast cancer earlier than traditional methods, potentially reducing treatment needs and improving patient outcomes [3][4] Group 3: Impact on Patient Care - Will Jukes, Senior VP of Regal Medical Group, stated that the EBCD program will enhance early cancer detection and streamline the screening process, positively affecting patient outcomes [4] - The collaboration is expected to increase annual compliance with screening guidelines, showcasing a commitment to innovative healthcare solutions [4][7] Group 4: Market Position and Reach - RadNet operates a network of 401 outpatient imaging centers across several states, including California, and is a leading provider of diagnostic imaging services in the U.S. [8] - The partnership with major health insurance carriers will expand access to quality care for nearly 600,000 members in Southern California [7][8]

RadNet Overview - RadNet is the largest national owner and operator of fixed-site diagnostic imaging centers, with 399 locations[6] - The company's estimated revenue for 2024 is $1.8 billion, and the estimated EBITDA is $280 million[7] - RadNet has over 10,000 employees across 8 states[7] - Approximately 8% of RadNet's revenue comes from capitation customers, managing over 1.8 million lives[8] - Digital Health revenues are expected to exceed $60 million in 2024, with the AI portion expected to reach $20 million in revenue and profitability by year-end[11] Diagnostic Imaging Market - The national imaging market is estimated to be over $100 billion[22] - RadNet operates in states with approximately 25% of the US population[37] Financial Performance and Guidance - RadNet's Q3 2024 adjusted EBITDA increased by 27.2% compared to Q3 2023[58] - AI Revenue within the Digital Health reporting segment increased 175.8% to $5.1 million from last year's third quarter[59] - The company's net debt as of September 30, 2024, was $261 million[68]

Core Viewpoint - RadNet, Inc. has entered into an incremental amendment to its credit agreement, securing an additional $100 million term loan to finance acquisitions and support strategic growth initiatives [1][2][3][4]. Financial Summary - Barclays Bank PLC will provide RadNet with a $100 million incremental term loan, which will mature on April 18, 2031, aligning with the maturity of the existing term loan balance of $868.4 million [2]. - Quarterly principal payments on the term loan will increase to approximately $2.4 million from $2.2 million prior to the amendment [2]. Strategic Implications - The proceeds from the incremental term loan will enhance RadNet's capacity to pursue acquisition opportunities and support its growth strategy, adding to the existing cash balance of $717 million as of March 31, 2025 [3][4]. - The company operates a network of 401 outpatient imaging centers across several states, positioning it as a leading provider in the diagnostic imaging sector [5].

Core Insights - RadNet, Inc. has completed the acquisition of See-Mode Technologies, enhancing its capabilities in AI for ultrasound imaging, particularly for thyroid and breast applications [1][5] - The integration of See-Mode's technology is expected to improve diagnostic accuracy and clinical workflows, with standardized reporting for ultrasound imaging [1][5] - The acquisition positions RadNet as a leader in AI innovation within the ultrasound sector, aiming to expand efficiencies across various clinical areas [5][10] Company Overview - RadNet is a leading provider of diagnostic imaging services in the U.S., operating over 401 outpatient imaging centers and employing more than 11,000 staff [9] - DeepHealth, a subsidiary of RadNet, focuses on AI-powered health informatics to enhance imaging care and operational efficiency [10] - See-Mode specializes in AI solutions for ultrasound imaging, with regulatory approvals in multiple countries, including the U.S., Canada, and Australia [12] Market Context - Thyroid cancer is one of the fastest-growing cancer diagnoses globally, with approximately 20 million ultrasound exams performed annually in the U.S. for thyroid and breast conditions combined [2] - The deployment of See-Mode's FDA-approved thyroid ultrasound AI has shown a 30% reduction in scan time, indicating significant potential for improved workflow efficiency [2] - The existing reimbursement code for thyroid ultrasounds may enhance revenue opportunities for RadNet, with plans to extend these efficiencies to breast screening and other areas [2][5]

PART I – FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=ITEM%201.%20Financial%20Statements) RadNet reported Q1 2025 service revenue of $471.4 million, a net loss of $29.7 million, and total assets of $3.34 billion, with increased operating cash flow [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20at%20March%2031%2C%202025%20and%20December%2031%2C%202024) Total assets increased to **$3.34 billion**, driven by property and goodwill, while cash and equivalents slightly decreased to **$717.3 million** Condensed Consolidated Balance Sheet Highlights | Account | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $717,323 | $740,020 | | Accounts receivable | $200,127 | $185,821 | | Goodwill | $717,480 | $710,663 | | **Total assets** | **$3,336,264** | **$3,286,690** | | Total current liabilities | $505,399 | $479,712 | | Total long-term liabilities | $1,694,348 | $1,673,568 | | **Total liabilities** | **$2,199,747** | **$2,153,280** | | **Total equity** | **$1,136,517** | **$1,133,410** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202025%20and%202024) Q1 2025 service revenue grew to **$471.4 million**, but a **17.9%** rise in operating expenses led to a **$24.1 million** operating loss and a **$37.9 million** net loss Q1 2025 vs Q1 2024 Statement of Operations | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Total service revenue | $471,399 | $431,707 | | Total operating expenses | $495,500 | $420,368 | | (Loss) Income from operations | ($24,101) | $11,339 | | Net (loss) income | ($29,737) | $5,410 | | Net loss attributable to RadNet, Inc. | ($37,926) | ($2,779) | | Basic and diluted net loss per share | ($0.51) | ($0.04) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202025%20and%202024) Operating cash flow significantly increased to **$41.5 million**, while investing activities used **$56.8 million**, resulting in a **$22.7 million** cash decrease Q1 2025 vs Q1 2024 Cash Flow Summary | Cash Flow Activity | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $41,481 | $17,088 | | Net cash used in investing activities | ($56,751) | ($60,938) | | Net cash (used in) provided by financing activities | ($7,510) | $228,296 | | **Net (decrease) increase in cash** | **($22,697)** | **$184,410** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail RadNet's **401** imaging centers, revenue recognition, segment performance, credit facilities, and the subsequent iCAD acquisition agreement - RadNet is a national provider of outpatient diagnostic imaging services, operating **401** centers as of March 31, 2025[27](index=27&type=chunk) - During Q1 2025, the company acquired assets from HALO Centers LLC and Hillcroft Medical Clinic for a total consideration of **$4.9 million**, adding to its Imaging Center segment[83](index=83&type=chunk)[84](index=84&type=chunk) - Subsequent to the quarter's end, on April 15, 2025, RadNet entered into a definitive agreement to acquire iCAD, Inc., a provider of AI-powered breast health solutions[124](index=124&type=chunk) Revenue by Payor | Payor | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Commercial insurance | $262,488 | $240,629 | | Medicare | $108,199 | $93,525 | | Revenue under capitation arrangements | $32,050 | $34,518 | | Other | $58,128 | $57,035 | | **Total service revenue** | **$471,399** | **$431,707** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue grew **9.2%** from same-center and acquisitions, but higher operating costs and a **$5.4 million** charge reduced Adjusted EBITDA to **$46.4 million** [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Imaging Center revenue grew **8.4%** with **1.2%** same-center growth, but operating expenses rose **16.8%** due to higher costs and a **$5.4 million** lease abandonment charge Imaging Center Revenue | Revenue Type | Q1 2025 (in thousands) | Q1 2024 (in thousands) | $ Increase (in thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | Total | $452,178 | $417,046 | $35,132 | 8.4% | | Same Center | $411,528 | $406,451 | $5,077 | 1.2% | - Same-center revenue growth was driven by a **2.2%** increase in average fees per procedure, as advanced modality imaging volume grew **3.0%**, while routine imaging volume declined **2.2%** due to severe weather[154](index=154&type=chunk) - Medical supplies expense increased **35.4%** (**20.4%** on a same-center basis), driven by higher utilization of high-cost isotope tracers for PET/CT procedures and price increases for these tracers[161](index=161&type=chunk) - The Digital Health segment's revenue increased **31.1%** to **$19.2 million**, while its operating loss grew to **$6.1 million** from **$3.0 million** year-over-year due to investments in product development and commercial support[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk) [Non-GAAP Financial Measures](index=36&type=section&id=Non-GAAP%20Financial%20Measures) Consolidated Adjusted EBITDA decreased to **$46.4 million** in Q1 2025, primarily due to a decline in the Imaging Center segment's contribution Reconciliation of Net Loss to Adjusted EBITDA | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Net loss attributable to RadNet, Inc. | ($37,926) | ($2,779) | | Adjustments (Interest, Taxes, D&A, etc.) | $84,325 | $61,241 | | **Adjusted EBITDA - Total Company** | **$46,399** | **$58,462** | | Adjusted EBITDA - Imaging Center | $42,688 | $54,942 | | Adjusted EBITDA - Digital Health Segment | $3,711 | $3,520 | [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) RadNet maintains strong liquidity with **$717.3 million** cash, **$41.5 million** operating cash flow, and **$324.4 million** available credit - Cash provided by operating activities increased to **$41.5 million** for Q1 2025 from **$17.1 million** in Q1 2024[194](index=194&type=chunk) - Cash used in financing activities was **$7.5 million** in Q1 2025, compared to cash provided of **$228.3 million** in Q1 2024, which was boosted by a **$218.4 million** common stock offering[196](index=196&type=chunk) - As of March 31, 2025, the company had total term loan debt of **$1.0 billion** and total available borrowing capacity of **$324.4 million** under its revolving credit facilities[199](index=199&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from foreign currency fluctuations and variable-rate debt, with a **1%** SOFR increase potentially raising interest expense by approximately **$6.0 million** annually - The company is exposed to foreign exchange risk from operations in the Pound Sterling, Euro, Canadian Dollar, Hungarian Forint, and Indian Rupee. A hypothetical **1%** decline in these exchange rates would increase annual operating expenses by about **$0.4 million**[201](index=201&type=chunk)[202](index=202&type=chunk) - The company has **$468.4 million** in variable-rate debt under the Barclays Term Loan unprotected by swaps. A hypothetical **1%** increase in SOFR would increase annual interest expense by **$4.7 million** on this portion[205](index=205&type=chunk) - The company has **$132.2 million** in variable-rate debt under the Truist term loan. A hypothetical **1%** increase in SOFR would increase annual interest expense by approximately **$1.3 million**[206](index=206&type=chunk) [Controls and Procedures](index=40&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[207](index=207&type=chunk) - There were no material changes to the company's internal control over financial reporting during the first quarter of 2025[208](index=208&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=41&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings, not expecting a material adverse impact on its financial condition or operations - The company does not expect current legal proceedings to have a material adverse impact on its business, financial condition, or operations[210](index=210&type=chunk) [Risk Factors](index=41&type=section&id=ITEM%201A.%20Risk%20Factors) This section refers to the comprehensive risk factors detailed in the company's Annual Report on Form 10-K - For information about business risks and uncertainties, the report refers to the risk factors described in the company's Annual Report[211](index=211&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred during the reporting period - None[212](index=212&type=chunk) [Other Information](index=41&type=section&id=ITEM%205.%20Other%20Information) No directors or executive officers adopted or terminated Rule 10b5-1 trading plans during the first quarter of 2025 - No directors or executive officers adopted or terminated any Rule 10b5-1 trading plans during the fiscal quarter ended March 31, 2025[215](index=215&type=chunk) [Exhibits](index=42&type=section&id=ITEM%206.%20Exhibits) The report includes filed exhibits such as CEO and CFO certifications and financial statements in Inline XBRL format - Exhibits filed with the report include Sarbanes-Oxley certifications and financial data in Inline XBRL format[216](index=216&type=chunk)

Financial Data and Key Metrics Changes - For Q1 2025, RadNet reported total revenue of $471.4 million, an increase of $39.7 million or 9.2% compared to Q1 2024, while adjusted EBITDA decreased by $12.1 million or 20.6% [21][22] - Adjusting for the estimated $22 million impact from severe weather and wildfires, revenue would have increased by 14.3% year-over-year, and adjusted EBITDA would have increased by 5% [22] - The company ended Q1 2025 with a cash balance of $717 million and a net debt to adjusted EBITDA ratio of slightly more than one [17][25] Business Line Data and Key Metrics Changes - The Digital Health segment reported revenue of $19.2 million, a 31.1% increase year-over-year, with adjusted EBITDA increasing by 5.4% [22][23] - AI revenue within Digital Health grew by 33.3%, driven by improved adoption of the EBCD program [23][24] - Aggregate PET CT volumes increased by 22.9%, indicating strong growth in advanced imaging despite adverse weather conditions [9][42] Market Data and Key Metrics Changes - The company noted a gradual shift towards advanced imaging, with 26.9% of procedural volume coming from advanced imaging in Q1 2025, compared to 25.7% in Q1 2024 [8] - The company continues to expand its Hospital and Health System joint venture business, with 154 centers currently held within system partnerships [16] Company Strategy and Development Direction - RadNet is focused on enhancing its digital health initiatives, including the TechLive remote technologist solution and the EVCD AI-powered breast cancer screening program [10][12] - The acquisition of iCAD Inc. is expected to enhance RadNet's capabilities in AI-powered breast health solutions, positioning the company for leadership in this area [14][15] - The company plans to open 11 new centers by the end of 2025 and an additional 11 in 2026, indicating a commitment to expanding its operational footprint [36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of business operations following the adverse weather conditions in early 2025, with strong procedural and revenue growth trends observed in March, April, and May [8][21] - The management anticipates continued growth in advanced imaging and routine imaging, driven by technological advancements and increased demand [41][44] - The company expects to see improved margins due to the growth of advanced imaging and the implementation of AI tools [72] Other Important Information - The company has an active pipeline of acquisitions for both its core Imaging Center division and Digital Health division [18] - RadNet's liquidity position remains strong, with full availability of a $282 million revolving credit facility [24] Q&A Session Summary Question: What are the growth prospects for advanced imaging in the next three to five years? - Management expects growth in advanced imaging to continue, driven by AI tools and new equipment investments [40][41] Question: Can you provide insights on the M&A pipeline? - The pipeline is robust, with ongoing discussions with hospitals recognizing the value of RadNet's radiology solutions [45][46] Question: What is the current status of technologist hiring trends? - There are improvements in hiring trends, and the company remains comfortable with the projected $45 million increase in labor costs [52][58] Question: How did revenue perform against internal expectations? - Revenue was strong and aligned with internal guidance, with a notable recovery in March following weather impacts [65][66] Question: What is driving the expected increase in EBITDA margins? - The growth of advanced imaging and the implementation of AI programs are primary drivers for improved margins [72][73] Question: What is the outlook for Medicare reimbursement? - The outlook for Medicare reimbursement is stable, with expectations for potential increases in the coming years [81][82]

Financial Data and Key Metrics Changes - For Q1 2025, RadNet reported total revenue of $471.4 million, an increase of $39.7 million or 9.2% compared to Q1 2024. Adjusted EBITDA was $46.4 million, a decrease of $12.1 million or 20.6% year-over-year [21][22] - Adjusting for the estimated $22 million impact from severe weather and wildfires, revenue would have increased by 14.3% year-over-year. Adjusted EBITDA, accounting for a $15 million impact, would have increased by 5% [22] - The company ended Q1 2025 with a cash balance of $717 million and a net debt to adjusted EBITDA ratio of slightly more than one [17][24] Business Line Data and Key Metrics Changes - The Digital Health segment reported revenue of $19.2 million, a 31.1% increase year-over-year, with adjusted EBITDA of $3.7 million, up 5.4% [22][23] - AI revenue within Digital Health grew by 33.3%, driven by improved adoption of the EBCD program [23] - PET CT volumes increased by 22.9%, attributed to the growth of newer prostate and brain procedures [8] Market Data and Key Metrics Changes - The company experienced a gradual shift towards advanced imaging, with 26.9% of procedural volume coming from advanced imaging in Q1 2025, compared to 25.7% in Q1 2024 [7] - The adoption rate of the EBCD program reached over 40% nationally, indicating strong market acceptance [12] Company Strategy and Development Direction - RadNet is focused on expanding its digital health initiatives, including the TechLive remote technologist solution and the EBCD AI-powered breast cancer screening program [10][12] - The company announced the acquisition of iCAD Inc, aiming to enhance its AI-powered breast health solutions and expand its market presence [14][15] - RadNet plans to open 11 new centers by the end of 2025 and has a robust pipeline for joint ventures and acquisitions [16][18] Management's Comments on Operating Environment and Future Outlook - Management noted that the severe weather conditions in early 2025 negatively impacted performance but expressed confidence in recovery and strong growth trends in subsequent months [6][9] - The company anticipates continued growth in advanced imaging and routine imaging, driven by technological advancements and increased demand [41][43] - Management expects to see improved margins due to the growth of advanced imaging and the implementation of AI tools [75] Other Important Information - The company has an active pipeline of acquisitions and is evaluating opportunities to advance its strategic objectives [18] - RadNet's liquidity position remains strong, with full availability of a $282 million revolving credit facility [23] Q&A Session Summary Question: What is the outlook for growth in advanced imaging over the next few years? - Management expects growth in advanced imaging to continue, driven by AI tools and new equipment investments [39][41] Question: Can you provide insights on the M&A pipeline? - The pipeline is robust, with ongoing discussions with hospitals recognizing the value of RadNet's radiology solutions [44][46] Question: What are the trends in technologist hiring? - There are improvements in hiring trends, and the company remains comfortable with the projected $45 million increase in labor costs [52][58] Question: How did revenue perform against internal expectations? - Revenue was strong and aligned with internal guidance, with a bounce back in March after weather-related impacts [66][67] Question: What is driving the expected increase in EBITDA margins? - Growth in advanced imaging and the implementation of AI programs are primary drivers for improved margins [75] Question: What is the status of stock-based compensation? - The increase in stock-based compensation is due to vesting from past years and new hires, but it is expected to decrease in subsequent quarters [76]