RadNet, Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Advanced Imaging Growth: Same-center procedural volume remains robust, especially in advanced imaging. Equipment and software upgrades, TechLive (FDA-approved software reducing exam room closures), dynamic scheduling (AI-driven to fill unused exam slots), de novo center openings, and shift from hospital to ambulatory imaging contributed to growth. Advanced imaging procedures made up 28.2% of total procedures in Q3 2025, up from 26.7% in Q3 2024.
• Reimbursement Improvement: RadNet, Inc. has successfully secured rate increases from commercial and capitated payers, with some capitated contracts converted to higher-paying fee-for-service relationships.
• Digital Health Developments: EBCD breast cancer screening program expanded with a blended adoption rate above 45% nationally; several capitated medical groups added EBCD as a covered benefit. The iCAD acquisition was completed, and C Mode's thyroid ultrasound technology was implemented across over 240 centers. The AlphaRT acquisition was finalized, bringing remote technology scanning and staffing services.
• Financial Metrics: Revenue and adjusted EBITDA were quarterly records. Adjusted EBITDA margins improved by 26 basis points. Balance sheet showed low net debt ($287.3 million net debt as of 09/30/2025) and a strong cash position, with days sales outstanding (DSO) at 31.9 days, the lowest historical level.

Segment Performance

• Imaging Center: Total company revenue increased 13.4% compared to last year's third quarter. Advanced imaging showed strong growth: aggregate MRI volume rose 14.8%, CT volume 9.4%, and PET CT volume 21.1%; on a same-center basis, MRI volume increased 11.5%, CT 6.7%, and PET CT 14.9%. The segment opened 1 new facility in 2025. Adjusted EBITDA margins improved to 16.2% from 16% in the third quarter of the previous year, driven by strong revenue performance and cost management.
• Digital Health: Revenue increased 51.6% from last year's third quarter. AI revenue (inclusive of iCAD's contribution) was up 112% y-o-y. Excluding AI revenue, digital health revenue from eRAD, DeepHealthOS, TechLive, and other workflow solutions grew 24.5% from the prior-year quarter. The segment also saw the completion of the iCAD acquisition and implementation of C Mode's thyroid ultrasound technology across over 240 centers.

Guidance

• Increased 2025 full-year guidance ranges for revenue and adjusted EBITDA in the imaging center segment, with revenue increased by $50 million at the low end and $30 million at the high end, and adjusted EBITDA increased by $5 million at both low and high ends.
• Increased capital expenditure guidance range by $5 million due to additional growth investment opportunities.
• Lowered cash interest expense guidance range by $4 million at both high and low ends, reflecting higher cash interest income from the cash balance.
• Digital health revenue guidance increased to incorporate iCAD's contribution. Adjusted EBITDA guidance for digital health remained unchanged due to achieving cost synergies ahead of schedule and better-than-anticipated expense performance from existing operations.
• Anticipated Medicare reimbursement benefit in 2026, with an expected $4 to $5 million revenue uplift, breaking a trend of annual cuts to the Medicare physician fee schedule.

Risks

• Forward-looking statements are subject to risks and uncertainties, including those set forth in RadNet, Inc.'s reports filed with the SEC, such as risks in integrating acquired operations, receiving third-party reimbursement, and uncertainties in generating revenue and adjusted EBITDA as estimated for acquired operations.

Question and Answer

• Q: Couple of quick digital health questions to start. Can you guys talk a little bit about TechLive... A: With respect to the TechLive rollout, we should be substantially complete by the end of the year. We're substantially through connecting our MRIs, and it has reduced exam closure hours in some markets, leading to increased MRI volume. Also, dynamic scheduling using AI predicts patients who might not show up and fills unused exam slots.
• Q: Brian Tanquilut asks about partnerships with health systems or physician groups. A: Conversations with health systems are robust; hospitals are seeking RadNet, Inc.'s comprehensive solutions due to radiologist shortages and staffing issues, with discussions ongoing for potential partnerships in the coming weeks or early first quarter.
• Q: John Ransom asks about digital health, including virtual radiology and DeepHealth traction. A: Virtual radiology is an inevitability to assist radiologists with large volumes of images. DeepHealth is in the process of rolling out modules internally, with strong internal adoption, and will be emphasized in the Investor Day, showing unique capabilities for co-development and feedback.