RadNet (RDNT) Q2 2025 Earnings Call August 11, 2025 10:30 AM ET Company ParticipantsMark Stolper - EVP & CFOHoward Berger - Chairman, President & CEOJohn Ransom - MD & Director - Healthcare ResearchAndrew Mok - DirectorYuan Zhi - Managing DirectorConference Call ParticipantsDavid Macdonald - AnalystBrian Tanquilut - Senior Analyst - Healthcare Services & HCIT/Digital Health Equity ResearchLarry Solow - Partner & Managing director - Equity AnalystJim Sidoti - AnalystOperatorGood day, and welcome to RadNet, I ...

RadNet (RDNT) Q2 2025 Earnings Call August 11, 2025 10:30 AM ET Speaker0Good day, and welcome to RadNet, Inc. Second Quarter twenty twenty five Financial Results Conference Call.All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on a touch tone phone. To withdraw your question, please ...

Core Viewpoint - iCAD, Inc. is set to be acquired by RadNet, Inc. in an all-stock transaction, with independent proxy advisory firms recommending stockholders vote "FOR" the acquisition [1][3][4] Group 1: Acquisition Details - The acquisition aims to enhance the deployment of iCAD's ProFound AI breast health solutions within RadNet's DeepHealth portfolio, thereby improving access to early breast cancer detection [2] - The transaction has been reviewed by ISS and Glass Lewis, who concluded it is in the best interests of iCAD stockholders, citing a reasonable review of alternatives and the implied premium [3] Group 2: Board Recommendations - iCAD's Board of Directors unanimously recommends that stockholders vote "FOR" the merger and related matters at the upcoming Special Meeting [4] Group 3: Voting Information - Stockholders of record as of May 16, 2025, are eligible to vote, with instructions provided in the Proxy Statement [4]

Core Insights - iCAD, Inc. reported its financial results for Q1 2025, highlighting a total annual recurring revenue (TARR) of $10.7 million, an increase of 18% year over year, driven by the adoption of cloud-based solutions and the ProFound Breast Health Suite [2][7][5] - The company announced a transformational agreement to be acquired by RadNet, which is expected to enhance innovation and broaden access to its AI-powered solutions across over 1,500 healthcare provider locations globally [3][17] Financial Performance - Total revenue for Q1 2025 was $4.9 million, approximately flat compared to Q1 2024, with product revenue increasing by 4.6% to $3.2 million, while services revenue decreased by 12% to $1.6 million [5][6][25] - Gross profit margin improved to 86% in Q1 2025 from 83% in Q1 2024, attributed to higher-margin cloud revenues [2][8] - Operating expenses decreased by 4% to $5.3 million in Q1 2025 compared to $5.6 million in Q1 2024 [8] Loss Metrics - The GAAP net loss for Q1 2025 was $0.8 million, or $0.03 per diluted share, an improvement from a net loss of $1.2 million, or $0.05 per diluted share, in Q1 2024 [9][25] - Non-GAAP adjusted net loss for Q1 2025 was $0.5 million, or $0.02 per diluted share, compared to a non-GAAP adjusted net loss of $1.2 million, or $0.05 per diluted share, in Q1 2024 [10][39] Cash Position - As of March 31, 2025, cash and cash equivalents were $20.0 million, indicating sufficient resources to fund planned operations for at least the next 12 months without the need for additional funding [12][26] Annual Recurring Revenue (ARR) Growth - Total ARR reached $10.7 million, with a significant increase of $4.1 million since the start of subscription sales, reflecting a 61% growth [4][7] - The breakdown of ARR includes $6.2 million from maintenance services, $3.5 million from subscriptions, and $1.1 million from cloud services [4][38]

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]

Core Insights - iCAD collaborates with Microsoft to integrate AI-powered mammography solutions into its ProFound Breast Health Suite, enhancing automated patient reporting through PowerScribe [1][3] - The partnership aims to improve breast cancer detection, streamline clinical workflows, and ultimately enhance patient outcomes [1][3] Company Overview - iCAD, Inc. is a leader in AI-powered cancer detection solutions, focusing on improving early detection and patient outcomes [7][8] - The ProFound Breast Health Suite is utilized by thousands of providers globally, having read over 40 million mammograms in the last five years [8] Collaboration Details - The integration with Microsoft's Precision Imaging Network allows for standardized language and automation of routine tasks in radiology reporting [2][4] - The collaboration is expected to drive deeper market penetration and support iCAD's transition to a Software as a Service (SaaS) model [3] Technology Advancements - iCAD's ProFound Detection Version 4.0 has received FDA clearance, showcasing a 22% improvement in detecting complex cancer subtypes and an 18% reduction in lesion markings [5] - The new AI solution is designed to enhance the accuracy of mammography exams, particularly for dense breast tissue [5] Market Impact - The Precision Imaging Network connects over 17,000 healthcare facilities, facilitating the integration of iCAD's technology into existing clinical workflows [4] - This collaboration is positioned to provide actionable insights and improve the efficiency of breast health assessments across diverse healthcare environments [4]

Core Viewpoint - RadNet, Inc. has announced a definitive merger agreement to acquire iCAD, Inc. in an all-stock transaction valued at approximately $103 million, representing a significant premium for iCAD stockholders [1][2]. Group 1: Merger Details - iCAD stockholders will receive 0.0677 shares of RadNet common stock for each share of iCAD common stock they hold at the closing of the merger, equating to about $3.61 per share on a fully diluted basis [2]. - The transaction is expected to close in the second or third quarter of 2025, pending approval from iCAD stockholders and other customary closing conditions [3]. Group 2: Strategic Rationale - The merger aims to enhance patient diagnosis and outcomes in breast cancer detection through the combined capabilities of iCAD's ProFound Breast Health Suite and RadNet's DeepHealth AI-powered solutions [3]. - The acquisition will expand RadNet's existing network, which includes over 1,500 healthcare provider locations and facilitates over 8 million annual mammograms across 50 countries [3][5]. Group 3: Leadership Comments - Dr. Howard Berger, CEO of RadNet, emphasized the potential to improve global breast cancer diagnosis and outcomes through this merger [3]. - Dana Brown, CEO of iCAD, highlighted the opportunity to redefine disease detection and treatment, aiming to enhance access to advanced tools and improve patient care [3]. Group 4: Future Plans - Following the acquisition, iCAD will be integrated into RadNet's DeepHealth portfolio, which is expected to accelerate growth and leadership in cancer screening and artificial intelligence [5]. - RadNet plans to host an investor conference call to discuss the transaction details, indicating a commitment to transparency and stakeholder engagement [4][5].