And for our first presentation of our 2024 conference, we really appreciate RadNet, Mark, joining us for many years at our conference. We truly appreciate it, and it's especially exciting this year. Your numbers, you've raised your guidance each quarter this year. Obviously, a great year for everyone. By way of introduction, Mark Stolper, Chief Financial Officer of RadNet. I should introduce you, I'm just going to turn it over to Mark. He's going to walk us through a presentation, and then we'll come back with some Q&A.
Sure. Thanks, Larry. It's always good to be here. Thanks, everyone, for showing up this early in the morning on a beautiful Boca Raton day. So I'll just try to keep this to about 15 minutes so that we can have some time for question- and- answer, which is always more interesting than me talking at an audience. But for those of you who are less familiar with RadNet, we are the largest owner-operator of diagnostic imaging centers in the United States. We've been around for a long time. We're not exactly an overnight success. We were started in the early 1980s by our CEO and founder. We've grown the business very effectively over the last couple of decades. We operate 399 locations focused intentionally in eight states. We also partner with hospitals and health systems.
I'll talk a little bit more about that later on, where today we have over 38% of our centers, over 150 of our 399 locations held within joint ventures with health systems who are looking to participate in the migration of patient volumes that are going into the lower-cost sites of care. We've grown the business quickly over the last decade or so. We've quadrupled the size of the business since 2006. This year, meaning 2024, we'll do about $1.8 billion of revenue, about $280 million of EBITDA. And we've been growing the business over the last couple of years at over 10% growth. We are, as I mentioned, focused in eight states, very much an East Coast, West Coast provider. This is where over 30% of the United States population resides and will continue to drive geographic density and concentration.
I'll talk a little bit about why that's important later on in the presentation. We are also multimodality, so the vast majority of our centers provide all of the full breadth of imaging capabilities from the routine studies all the way to the more advanced studies. We also take risk. About 7% of our business is capitation risk, where we are the exclusive provider for imaging for about 1.8 million lives, predominantly in the state of California. Most recently, we have focused our business on growing our IT platform. In 2010, we got into the IT business for our own account, where we now own and operate the critical solutions that manage our business from the front-end radiology information system all the way through the back-end image management solutions.
We began to offer these solutions to the rest of the industry, including AI solutions, where we're investing very heavily into both clinical and workflow generative AI capabilities. And that's becoming a bigger part of what we do. Earlier this year, we created our own reportable operating segment that we call Digital Health that houses all of our IT solutions that we use both internally as well as sell to the rest of the industry. I'll just go talk a little bit about the industry. If you believe the research out there, it's a $100 billion-plus industry annually here in the United States. It's growing in the low single digits. It's believed that there are over 6,000 imaging centers, outpatient imaging centers in the United States. So at 399 locations, we're really just scratching the surface of the size that RadNet can get to over time.
We have a significant head start. Our closest competitors are much smaller. What's nice about the industry is that it grows each year. It's growing because there are technology advances that are driving new applications for the use of diagnostic imaging. The technology advances are not only in the areas of the hardware, meaning the equipment, but also in the areas of contrast materials, radioactive pharmaceuticals, post-processing software, and more recently, artificial intelligence. Also, as the population continues to age, we utilize diagnostic imaging more frequently. Medicare lives actually use imaging three times more frequently than commercial lives. The outlook on the industry is that we'll continue to see significant, steady growth. Imaging is in the sweet spot of where healthcare is and where it's going in terms of offering preventative medicine, non-invasive medicine.
And it's been shown that as you detect disease earlier in the disease process, you have much better patient outcomes, and you can deliver services at a much lower cost. I'll just briefly go through who RadNet is. So as I mentioned, we're an East Coast, West Coast company. We're geographically concentrated. There are two very important benefits for being geographically concentrated. The first is, from a cost perspective, when we can cluster centers densely together, we have the ability to operate at much lower costs. We can share marketing resources among a cluster of centers. We can centralize cost functions or functions that we perform on behalf of our centers, such as call centers, scheduling departments, pre-authorization, insurance verification, revenue cycle functions, all of which allows us what we believe to be one of the low-cost providers in the industry.
The second main benefit for being geographically concentrated is that it gives us a seat at the table to establish fair and equitable long-term pricing with the commercial insurance companies. 57+% of what we do by revenue is the result of negotiations that we have with the large insurance companies. And the larger portion of the provider network that we represent, the more leverage we have in those discussions. So strategy going forward will continue to be to penetrate these existing centers, which I mentioned earlier covers over 30% of the United States population in these states. And we will look also to expand geographically if there exist opportunities where we can go into a new state with size and strength, typically with a large acquisition. So this just shows you where our revenue is coming from. On the left side of the page is our procedure volume.
About 75% of our procedure volume comes from routine imaging. This is X-ray, ultrasound, and mammography. However, the advanced imaging, the MRI, CT, PET/ CT, which represents roughly the other 26% of what we do, drives about 60% of our revenue. Clearly, the money in our business, the margin in our business is with advanced imaging. What's nice about that is advanced imaging is growing as a percentage of the overall pie of not only our business, but the industry, as all of the technology advances are within advanced imaging, not the routine studies. As we continue to migrate towards advanced imaging, that should have a positive impact on the financial performance of our business. From a payer standpoint, we have a diverse payer mix. About 57%, as I mentioned earlier, is from commercial insurance. We are exposed to Medicare reimbursement.
22% of our business is subject to Medicare reimbursement. Medicare in our industry has been fairly stable since really 2015, almost over the last decade. There is a small cut that is a 2.8% cut that is scheduled for next year. It's not focused on diagnostic imaging. It's anybody who bills under the Medicare fee schedule, regardless of specialty, is facing that cut. For us, on our roughly $1.8 billion of revenue, it's about a $7 million-$8 million cut. We also think that there's a high likelihood that that cut will be rolled back through congressional action either later this month or early next year. I'm going to actually skip to our digital health platform. As I mentioned, that's a growing part of what we do. This business is growing over 30% year- over- year.
On the software side, we've grown over 100% on the AI side over the last couple of years within what we call our digital health platform, which all of the products and services today are branded under the DeepHealth brand. As we sit here today, the big industry conference in Chicago is going on called the RSNA, the Radiological Society of North America. We're launching a number of new products there, including DeepHealth OS, which is our new cloud-based operating system, which we're very excited about adopting internally over the coming months, as well as selling it to the rest of the industry. We also have announced within the last week two very important OEM partnerships, one with GE on mammography, where we're going to be bundling our smart technology, or what we call our SmartMammo technology, in with GE Pristina units, mammography units.
And we just announced this week also a partnership with Siemens, a collaboration where we're going to be bundling Smart Sonography or ultrasound technology into their ultrasound unit. So we think that in the coming years, there's going to be a merger of software and workflow technologies with equipment. And we're working with the OEMs to really enable equipment to have a much bigger impact on patient care going forward. As I mentioned, over the last few years, we've been an early investor in AI radiology or clinical AI. We started in 2020 with the acquisition of a mammography AI company named DeepHealth, where we're now offering, as a self-pay program to our women, roughly about 1.6 million screening mammography exams that we do annually, where we're offering the use of AI as the first read and the first line of defense.
It's been a very successful program for us. We're charging women $40 out of pocket for the use of this technology. We're upwards of 40% adoption rate on the East Coast in our centers and almost 30% on the West Coast, and having some nice revenue from that. We also have lung cancer screening AI, where we're being successful in rolling out a program with the National Health Service in the U.K. called the Targeted Lung Health Check Program, and we've got AI around both prostate and brain, so artificial intelligence is going to become a bigger part of what tools that the industry uses, both on the clinical side as well as the operational workflow, to make our business more efficient. I'll end the presentation just with some financial data. We've been growing the business nicely.
As I mentioned, in the third quarter, we grew almost 15% relative to last year's third quarter. EBITDA was up over 27%. Same store aggregate procedure volumes were up in the high single digits, and same store sales or same center procedure volumes were up 5.5%. We expect that these trends and these tailwinds to continue in the coming years. As you can see, over the last 15 years, our revenue, our EBITDA, and our procedure volumes have grown very steadily. I know we're all debt investors sitting in this room, so I'll end the presentation just talking about some credit statistics. We have done a nice job over the last several years in deleveraging the capital structure. We just refinanced our term loan in April. We have net leverage that's under one times.
We're sitting on almost $750 million of cash, which we plan on deploying in the coming years for de novo expansion, for acquisitions, for the continuing growth and expansion of our digital health platforms. So we have a $873 million Term Loan A. We're a B1/ B+ credit. We're priced at SOFR plus 225, and we have no maturities at this point till 2031. And we're also sitting on a pretty substantial net operating loss carry forward, which allows us to retain a lot of the cash that the business produces. So with that, Larry, let me turn it over to you to answer questions. Thank you.
Thank you for the presentation. Obviously, it's been a great couple of years, really. But I mean, can you just touch on, just starting with we were discussing this a little bit earlier, just the base business.
It seems like the environment opportunistically for you guys has changed dramatically in that it seemed to be an oversaturated environment going back years ago. And, say, I think you're going to open up eight de novos this year, and you talked about 15 next year. Can you just talk about just organically what has transpired in the broader environment to make it so much more of a favorable landscape today than where we've seen historically?
Sure. I think it's the confluence of a number of industry factors and trends, both that as well as some unique aspects of what we're doing at RadNet. The first is that the industry continues to grow. Diagnostic imaging and the utilization of diagnostic imaging as a diagnostic tool is growing every year because of advances in the equipment, advances in post-processing software. Radiopharmaceuticals is driving new PET applications.
And so the overall pie, this $100 billion pie, is growing nicely each year.
And to that end, you said 6,000. Do you think the center footprint is growing, or is it just, do you think the industry?
It's not growing fast enough. So those 6,000 centers is not growing quickly enough to really absorb all the volume, not only in the growth of this industry, but also within the $100 billion industry, there's a market share shift that's occurring from hospitals in favor of outpatient freestanding centers. And the insurance companies have gotten very aggressive in creating pre-authorization programs, utilization benefit management, offering plan design that incentivizes the patient with lower co-payments to go to the lower-cost sites of care, which are outside of the hospital.
You've got a growing $100 billion pie, and then you've got this shift that's occurring within that pie from hospitals in favor of outpatient imaging centers. That's why we're struggling with high demand. I mean, we're seeing our patient backlogs over the last couple of years grow substantially. We're investing in de novo centers. We've opened up five centers this year. We've got three more that should open up towards the end of this month. We've got 15 de novo projects on the docket for 2025. There's really, I don't see anything to disrupt this trend over the coming years. There's simply not enough sites of care to deal with these heavy patient volumes. It's been great. I'll point out in PET/CT, which is the fastest growing part of our business, it's also the smallest by volume.
It's about 0.7% of our volume, but about 7% of our revenue. There have been advances around prostate imaging with the PSMA test, as well as Alzheimer's imaging with these new amyloid studies that is growing that modality, is driving growth in that modality very substantially. So I think it's going to be this way for a while to come.
Okay. Great. Just sitting on a fairly sizable cash balance, can you talk to the M&A environment? Would you go outside of your eight states, or is it more just continuing to grow within your existing footprint?
Sure. So yes, we're sitting on $750 million of cash with low leverage. We're pretty confident that we'll deploy this capital. When we raised this, part of this was raised in an equity offering. Part of it was the accumulation of free cash flow over a period of time.
We thought that there might be some scale opportunities, acquisition opportunities that we could affect earlier this year for a variety of reasons. They didn't come to fruition. But I would tell you that our pipeline of acquisitions, albeit smaller, is active. We are also deploying a lot of cash internally with these de novo centers. We are going to be deploying more capital on the IT side. There will be some acquisitions that we'll look at carefully on that side of the business. So I think we'll have a three-year runway to deploy this cash, and it's a nice position to be in.
Yeah. You think you're leaning more towards technology, you think, from an acquisitive perspective, or more footprint?
I think from deploying capital, we'll always deploy more capital on the imaging center side, on the facility side of the business. But there will be opportunities.
I mean, there's been a lot of money poured into AI, for instance, in clinical radiology. And because there is no reimbursement yet ascribed for AI, many of those companies are struggling for a revenue model. They've developed great solutions. They could be very valuable for us to deploy internally to make our radiologists more efficient. And then ultimately, when reimbursement is ascribed to the use of these tools, we'd like to sell and license it to the rest of the industry. So I think there will be some opportunities there, but we're not going to deploy the vast majority of our capital, I don't think, at this point through IT acquisitions.
Okay. Do you have any questions in the audience? Go ahead, Jing He. Yes.
Thank you. Just drill down on what the AI is and what the women are getting for the $40?
Just as part of that context, obviously, GE has lost some share to Hologic due to the Hologic 3D. Is this an effort to reverse that share loss? If you can just give us some color. Thank you.
Sure. So the program that we have, what we call EBCD, Enhanced Breast Cancer Detection Program, is powered by AI, but it's not all about AI. It's an entire workflow. The initial read is done by AI. And in the clinical studies, and you can Google one that was published in Nature magazine, the medical journal, it showed that our AI could detect breast cancer up to two years sooner than a fellowship-trained radiologist can.
And we gave a group of radiologists a series of images over a number of years where we knew, because we had the benefit of hindsight, that at one point during those series of images, that breast cancer was detected and biopsied and proved. Okay? And when the AI looked through those series of images, on average, it could find cancer up to two years sooner than the radiologist could. And obviously, that impacts tremendously patient outcomes, not only the ultimate outcome for the patient and the survival rate, but also the cost of treatment. Right? So in the EBCD program, we have the initial read that's done by AI. Then we have a radiologist read it.
If the initial radiologist and the AI have some disagreement that needs to be arbitrated or something that's unclear, it then gets sent to a second radiologist who's an expert, fellowship-trained radiologist who arbitrates that difference. That's if you pay the extra $40. That's if you pay the extra $40. Yes.
Now, practice them not to have?
No, because the standard of care is to have radiologists in human intervention on that. And even today, with the use of these AI tools, including our own DeepHealth Saige-Dx mammography solution, a radiologist has to sign off on every report. In other words, these solutions aren't yet cleared for autonomous use. So we use the AI for triage for all of our patients, but for the actual diagnostics tool, we're only using it for the patients who pay for the $40.
Okay. And one more quick one for me.
Just in terms of the data, the doctors don't work for you, right? It's their patient. In terms of the patient data, even on a de-identified basis, who owns that? Can you use that? It sounds like you are using that. There's probably a debate about who owns that. Can it be used by anyone? If you can just share that with us. Thank you.
Yes. We and our legal representation are confident the data is for us to use. We own the data. Once it's de-identified, we can use it to train our algorithms. Just to go back to your earlier question about GE, because I don't think I addressed that. So yes, the partnership with GE, the SmartMammo technology works for both GE and Hologic solutions. At this time, predominantly, all of RadNet's installed base is Hologic installed base.
We started the EBCD program, obviously. It's working with Hologic machines. We just got FDA approval, which you probably saw in the last week, for the SmartMammo to be used in conjunction with the GE Pristina technology. I think GE is eager to offer this to its customers to be a further clinical benefit for the future installed base of GE.
Okay. One more quick one for me because I know we're out of time. The ACA subsidy extension, potential expiry. What percentage of the patients that use your centers are currently on exchange plans? Thanks. What percentage are on? Exchange plans, ACA exchanges. They're going to come in under the commercial, right, which is your 57%.
Yeah. I don't know. My guess of that 57% of our commercial insurance, it's probably something low, probably under 10% of that 57%. It's 5.7%?
Probably something in that range. But I'm just guessing. But yeah, it's a small part of what we do.
Go ahead and wrap it up. Thank you. Thank you, Mark. Appreciate it.
Thank you, Larry.
Congratulations on a great 12 months, and thank you, everyone, for joining.