Release Date: May 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- RadNet Inc (RDNT, Financial) reported a strong recovery in March, April, and early May after severe weather and wildfires negatively impacted January and February, leading to an upward adjustment in 2025 revenue and adjusted EBITDA guidance.
- The company saw a significant increase in advanced imaging, with procedural volume from advanced imaging rising to 26.9% in Q1 2025 from 25.7% in Q1 2024.
- PET/CT volumes increased by 22.9%, driven by growth in prostate and brain procedures, which were less affected by severe weather conditions.
- The EBCD digital DeepHealth AI-powered breast cancer screening program saw a 33% increase in adoption, contributing to early cancer detection and improved radiologist productivity.
- RadNet Inc (RDNT) maintains strong liquidity with a cash balance of $717 million and a net debt to adjusted EBITDA ratio of slightly more than one, supporting future strategic investments.
Negative Points
- Severe weather conditions and wildfires in the first quarter resulted in an estimated $22 million revenue loss and a $15 million EBITDA impact.
- Adjusted EBITDA decreased by 20.6% compared to Q1 2024, despite a 9.2% increase in revenue.
- The company faces ongoing challenges with rising labor costs and a shortage of radiology technologists, impacting operational capacity.
- The first quarter is typically the most challenging due to increased payroll taxes, employee bonuses, and lower healthcare utilization from deductible resets.
- Stock-based compensation increased significantly to $28.5 million in Q1 2025, close to last year's full-year number, impacting profitability.
Q & A Highlights
Q: Howard, regarding the strength in advanced imaging, how do you foresee growth in this area over the next three to five years, and what will drive this growth?
A: Howard Berger, CEO: We expect continued growth in advanced imaging, driven by AI tools and new equipment investments. Despite staffing shortages, newer equipment and AI, like our TechLive, will help manage demand. Advanced imaging, including cardiac imaging and PET/CT, is expected to grow, supported by our investments and capabilities.
Q: Can you provide insights into your pipeline for joint ventures and M&A over the next 12 to 18 months?
A: Howard Berger, CEO: Our pipeline is robust, with hospitals recognizing the need for radiology solutions. We are in discussions with several hospitals, emphasizing the value of AI and IT solutions. Our goal is to have all 400 centers in joint ventures, as our current partnerships are performing exceptionally well.
Q: How is the TechLive rollout progressing, and what impact has it had on staffing and operations?
A: Howard Berger, CEO: TechLive is operational in 265 MRI centers, improving scan accuracy and staffing flexibility. It allows remote oversight by technologists, helping manage local staffing challenges. We aim to have all centers on TechLive by year-end, reducing reliance on outside staffing.
Q: Despite weather and volume headwinds, revenue exceeded expectations. How did it perform against internal expectations, and why wasn't there a higher conversion on the perceived revenue beat?
A: Mark Stolper, CFO: Adjusting for weather impacts, revenue was strong and aligned with internal guidance. The first quarter is typically challenging due to deductible resets and other factors. However, strong trends in March and beyond have led us to increase our revenue and EBITDA guidance for the year.
Q: Can you explain the significant increase in stock-based compensation this quarter? Is this the new run rate?
A: Mark Stolper, CFO: The increase was due to stock vesting from past years and new grants for digital health division hires. We expect stock compensation to decrease significantly in the coming quarters, as the first quarter included one-time expenses.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
