Some been at Raymond James 30 years, and this is our 47th conference. There's some numbers for you. I'm pleased to reintroduce you all to Mark Stolper, CFO of RadNet, RDNT. Probably one of, if not the most interesting company we follow because it's a, in my opinion, kind of a hybrid services, medtech, IT company, and it's gotten complicated. Used to be simple. Used to be scan, revenue per scan, EBITDA margin. Now you're making us work harder to understand this. The company reported earnings yesterday, we're going to try to cover a lot of ground today. It's a fireside. We're just going to start with some SEC math, as I like to say.
I'll do my best to simplify it for you, John.
Please. Please.
I know complicated things are tough for you.
They are. I like simple. I like simple. If we try to map your 2025 to 2026, just, let's just keep it simple at EBITDA. I can get a $5 million bad guy from your acquisition that was not in models. Just kinda talk about some of the other moving parts, the weather in the first quarter, contribution of M&A, and anything else you'd call out as we build out our fancy bridge that we like to do.
Sure. Well, thanks everyone for coming. If you've seen our guidance, we're excited, and it's implied, our excitement is implied in the numbers for 2026. Revenue on the imaging center side, we're anticipating growing between 16% and 18%. On the digital health side, we're going to grow that, you know, business, you know, more than 50% or around 50% year-over-year. We expect to have our EBITDA growing on the imaging center side faster than revenue growth, which implies some margin expansion opportunity.
Is that how that works?
Yeah, yeah. I think mathematically that's.
Appreciate it. Thank you.
Yeah. What do I know? Let me help you, let me help you bridge some of those aggressive numbers in your minds.
Please.
First of all, our businesses have been enjoying historic growth in the same center organic area. You know, we've been regularly comping our advanced imaging modalities, MRI, CT, and PET CT in the mid-single digits. Mid to high single digits. In the case of PET CT, that growth has been double-digit growth. We think that that could continue and should continue in 2026, given the strong trends in our industry. We have also been enjoying a migration towards higher acuity exams or advanced imaging. This quarter that we just announced, the fourth quarter, was the highest we'd ever seen in MRI, CT, and PET CT. It was, I think 28.6%.
It was 178 basis point increase in advanced imaging as a percentage of the whole relative to last year's fourth quarter. That's a function of both what's happening in the industry in terms of the advances in technology, the advances that we've made towards not only deploying that technology, but other things we're doing to drive advanced imaging from a marketing perspective, from a scheduling perspective, investments we made in equipment. We expect that to continue. We announced 2 imaging center acquisitions this year already, early January. We announced a major acquisition in Southwest Florida, which is part of that guidance. It's built into that guidance, that provides growth.
Is that kind of a high single digit EBITDA contribution for this year?
Between that acquisition and the Indiana acquisition, it'll be mid to high single digits in terms of the EBITDA contribution.
Okay. Let's just say for argument's sake, that's a plus 7. We got a minus 5.
You're not going to make me do math, are you?
Minus?
Let me give you some more pluses and minuses.
Plus 7 from the M&A. What else do we have?
Yeah. We have a little bit of a reimbursement benefit from Medicare this year, in the neighborhood of $4 million-$5 million on the Medicare Physician Fee Schedule, which is wonderful. We also have a significant benefit on the reimbursement side from capitated payers and commercial plans, which I'm not going to quantify for various reasons.
Sure.
That contributes to the, you know, to the guidance. The 7 centers that we opened in 2025 will now be in our guidance for the full year, and that there's contribution there. In addition, we anticipate building 11 to 13 new de novo centers here in 26, so we'll get partial year contribution from them as well. We expect to announce several new health system joint venture partnerships which will contribute to our guidance this year. On the headwind side, if you want to hear the negatives. Do you want to hear the negatives?
Labor costs.
Okay. Labor costs, exactly. We built in to our guidance about 4%, same center labor costs.
Mm-hmm.
For this year. That should be in the neighborhood around $30 million. Hopefully, we can do better than that, but that's what's in the guidance. There are many other smaller ins and outs that probably aren't worth mentioning, but when all that shakes out, it's going to make for a very good year.
Just to take a step back and simplify, which I like to do, if your labor's growing 4, what's the kind of I mean, let's say it's 2% total volume growth, but you're getting such a benefit from advanced imaging, so the... Is the revenue growth maybe +3 and the kind of on-ongoing volume +2 on a same-store basis? Is that that you're implying?
No
kind of a low.
No, revenue will be higher than that. We're growing procedure volumes in the mid-single digits. You know, MRI and CT.
Same store?
Same store. MRI, CT.
Okay.
PET CT same store should be double-digit growth this year. And those three modalities together, MRI, CT and PET CT, while they're 28.6% of our volume, they represent over 60% of our revenue. When you've got, you know, that piece growing as a percentage of the whole and growing that quickly and getting pricing increases you can see how that covers that labor headwind.
All right. We'll go one more glass half empty, then we'll have some glass half full stuff.
Sure.
You got picked on a little bit about how you were defining same-store growth and some of your disclosures somebody thought weren't perfect. Just give me your perspective on that report and just anything you've done to maybe change how you present information to make yourself inoculate yourself from future glass specking on that front.
Yeah, I mean, we've been reporting and disclosing same center procedure volume growth, system level same center procedure volume growth. We don't make a distinction between wholly owned centers.
Right
And joint ventured centers for, I don't know, the better part of 15 years. We've always done it the same way. We look at centers that existed in the prior period, the comparison period, as well as the current period. Anything that didn't exist in either we take out of the equation. If we do close down a center and we move that volume to an existing center, we keep that volume in the prior period, so we're not gaming the system at all, which I think was the concern from that report that came out. We feel very, very comfortable in how we look at same center performance, and it's been done consistently with the same team since the beginning of time.
Ultimately, you know, our GAAP revenue, our audited GAAP revenue and our financial statements reflect that growth.
The what you saw this year in terms of advanced imaging, was this an unusually good year, or is that, is that the trajectory we should expect going forward, that 170 basis points of, you know, contribution from advanced imaging?
We don't know. I mean, we don't have the visibility as to where that tops out, right? What we can tell you is that the trends that have been driving that movement towards MRI, CT or PET and PET CT. Th ose trends are continuing. Those are advances in the equipment that's being brought forth by many of the equipment manufacturers, that make their equipment more capable, meaning that it can cover more clinical indications.
The advances in the equipment to make the throughput better so that we have more capacity, for instance, in MRI scanning, something that took 40 minutes in an MRI scanner, you know, 5 or 6 years ago, today we can do in 25, which means if there's demand out there.
We can fill that demand with many more slots in the same given time period. That's, that trend continues. There's been an some remarkable advancements and innovations in radioactive pharmaceuticals, which is driving the PET CT business into double-digit growth. That's around amyloid scans for Alzheimer's as well as prostate imaging with the PSMA test. While I can't tell you what that growth might look like, I can tell you that the trends are still really strong in favor of advanced imaging.
maybe the advanced imaging growth versus routine imaging growth. What was the algo last year? It's like if. Yeah.
Yeah. Last year we had MRI and CT, in the, I think it was 5%-8% same store.
Okay.
Growth. The PET CT, at least in the fourth quarter, was growing double digits, so it grew over 10% on a same center basis. Obviously, our aggregate numbers are even better than that.
Okay.
This is just same center. routine typically grows kinda 1% to 3%. There haven't been a lot of advances in X-ray technology, mammo technology or ultrasound technology which is driving-
No reason that won't continue. Okay.
Yes.
We're a third of thus eating. You ate your vegetables, now I get to have some dessert. It's a little more fun. Yeah, I went back and just looked at the history of your DeepHealth iOS business, and the best I can tell now, it looks like you're in three lanes, but please explain this better than I can. You've got a RIS system, you've got a PACS system, and you have a, RIS, PACS, and.
AI. Clinical AI.
AI. Yeah. Clinical AI and, yeah, that's right, clinical AI. Just talk about what's different about the business today, and are you through the M&A phase, or are there still more to do? Just what does this look like, margin, revenue, focus? What does this look like? It's gotten, like I said, it's gotten quite complicated, so maybe you could kinda synthesize the vision, especially. What does this latest deal do for you? Not only selling it into the world, but what it does for your own chassis.
Sure. Let me see if I can simplify it for you. The way we think about it internally, we actually break it up into two pieces, not three pieces. One piece being workflow solutions, which includes both, the radiology information system are the operating brains of an imaging center as well as the back-end image management solutions that the radiologists use to read, store, visualize the images. That's an end-to-end workflow at the imaging center level. There's these clinical AI solutions that sit on top of that are tools that today are being used by radiologists to be more productive and more accurate, and each one of those tools might be a point solution for a particular modality, a particular body part, a particular disease, process.
What we're doing is we're building a unified ecosystem between DeepHealth OS, which is that end-to-end workflow solution and these clinical AI solutions that sit on top of that, where we're creating or curating a portfolio where we can use internally and our customers can operate one system and all of these tools that sit on top of DeepHealth OS, all the modules of DeepHealth OS, like scheduling, pre-authorization, insurance verification, revenue cycle functions, can be modularly added or subtracted from the end-to-end cloud-based workflow solution. Because it's cloud-
Mm-hmm.
Cloud-native, you know, it's easy not only to deploy and roll out, but it's easy for customers to choose to, you know, upgrade or downgrade, you know, into these solutions. On top of that, we can provide all the clinical AI that the radiologists need across all modalities. You know, given all of the M&A we did, and I'll get to your final M&A question in a second, we now have clinical AI solutions in MRI, in CT, in ultrasound, and with yesterday's mammography and then in yesterday's acquisition of Gleamer they're heavy into x-ray.
Right.
Our dream, which I think will be a reality, and the question is whether how quickly that reality will come to place, is that all images at some point will run through AI, you know, within the RadNet network, and those will be utilized by our radiologists to be more accurate, more productive, and will provide better service to the customer because our solutions will impact the entire customer, you know, the patient journey, as well as providing the reports on a more timely basis to the referring physician community. Whether we're creating these solutions or others, this industry is going to move in that direction, and we want to be the ones, being the leader in the facilities business and the largest player in the industry, we want to be the ones who take the industry in this direction.
You've now got a public peer and they have an opposite view of you. It's a good debate. Their view is technology's evolving so quickly you should just do shotgun marriages on a short-term basis, pay per click and be able to stick and move, and the best PACS system today may not be the best PACS system 12 months from now. We want to constantly. We don't want to use our balance sheet to support technology. The other side of that too is, you know, these tech companies, as you know, some are, can lose money and forever and throw a lot more money at this than you're sort of permitted to as a public company with positive EBITDA. How would you, how would you respond to that point of view?
Well, I'm thrilled with that view because, you know, we, that's where we get customers from, you know, people who don't want to, don't want to develop these systems or don't have the capability of developing systems.
Yeah.
Don't want to make the investment to develop these systems. Somebody's gotta do it, right? Provide these solutions and Lumx is a very, very small customer right now of our digital health division.
i-CAT. They use i-CAT, right?
They use i-CAT.
Right. Yeah.
Correct. We'd love for them to be a bigger customer, and we've shown them some solutions over time, and we're happy to work with them and anyone else in the industry. We think that these solutions are necessary to solving and addressing the problems that our industry faces today with a shortage of labor, a shortage of radiologists, and those challenges are only gonna increase through time as our industry continues to grow every year, and we're just not seeing the labor force grow in proportion to the industry growth.
Just to kind of fill out the. You and I were talking about this earlier, but Gleamer, AI-assisted reads for X-ray, how does that help RadNet? I assume you're not using it today, but you were talking about, you know, X-ray being a high volume, relatively low reimbursement, factory. The, the, how do, how does this assist your workflow today, and what's the opportunity of the EBITDA within imaging for adopting the Gleamer technology?
Sure. Today, about 23.5% of our volume is X-ray volume, and we're not using any AI today to assist us with those reads. X-ray is a modality. It's our lowest reimbursing modality, our highest volume modality. It's the modality that many radiologists prefer not to read, plain film X-rays, because the volume that you have to read to make the same amount of money as someone reading...
How many an hour? Just to put in perspective, how many do they take?
I don't know. I can find that out for you.
That's fine.
A lot. I mean, it may take a couple of minutes.
Parker, write down a lot. Put a lot in the LD there.
It, you know, you can read a chest X-ray in probably two minutes.
Okay.
I can't. You can.
Yes, that bone appears to be broken.
You know, there's a lot of, there's a lot of burnout in, you know, in radiologists reading X-ray. You know, a modality that many like to read. There's, you know, inaccuracies in reading X-ray. We think that. In fact, in California, we utilize a bunch of RPAs, radiology physician assistants, that do initial reads.
Okay.
Before the radiologist even comes in and looks at it. We essentially look at this technology of Gleamer and we look at that as a universal technology for having like a universal RPA on behalf of the radiologist, which can solve time. In fact, one of the technologies that Gleamer has developed is autonomous reporting. It's quite often that a radiologist can read an X-ray faster than he or she can in terms of creating the report, dictating and reviewing the report. Gleamer now has a technology that can automatically create the report after the AI has read it. The AI can read it and create the report.
That's what we'll be commercializing over time, and that has huge implications not only for RadNet's business, but also for all other imaging centers and hospitals. A lot of X-ray is done within urgent care centers, physician offices such as primary care docs, orthopedics offices, and we think that this could be a solution for them, who are now paying a lot of money to teleradiology services to read X-rays remotely, and we think we can provide that much, much less expensively.
One technology I think everybody's excited about is the backend LLM after the read that You know, the radiologist might dictate a report, and then it'll take that and put it into plain English. Are you using a solution for that today?
Yeah, that's been around, that's been around for a long time.
Right.
The voice recognition transcription is what we call it in the industry. What I was referring to with Gleamer is the next generation, where the radiologist doesn't even have to dictate the report. The AI has read the report, and the AI writes the report, and then the radiologist comes in, looks at the scan, looks at the report, you know, agrees with it, and then signs off on the report. disagrees and.
Let's say it's a mammo. Today, the physician dictates it, does an LLM convert it into plain English or does it just?
Yes. Yes.
Okay.
That's built into our DeepHealth OS. There's other companies such as Nuance-
Yeah.
Which is part of Microsoft, that does it. You know, there's a couple of other.
Right.
Competitors there.
You said, this stat kinda startled me when you said it. You spend $60 million on human call centers. I think you said before you're looking for maybe a 10% savings. That seems low. Just maybe reset why that wouldn't be a bigger savings than what you've said?
It could be. I mean, we prefer to underpromise and overperform versus the inverse of that. You know, we do over 11.5 million exams right now and growing every year. Every one of those exams is scheduled exams except for some walk-in X-rays. The call volume that we take is extraordinary, and it's not just about scheduling. People are calling up, asking questions about their, the preparation for the exams, how long they have to fast, where's the center located, where's parking, how... You know? The All of those have calls to date have required human intervention. Okay?
We're moving to a system that, you know, using bots and the new call center technology that can triage a lot of these calls and, you know, I think save a lot of human capital in the process.
Frustrate a lot of boomers in the process, right?
Probably. In some ways, it's more efficient. You know, we're working towards online scheduling in certain procedures, and automation tools that, you know, maybe you can even eliminate someone having to call a number.
Right. Okay. I would think that probably 80% of the questions or more could be answered by, like, where's the center? You know, what do I do to prep for a. You know? Okay. One thing we didn't kind of bridge on One Q was, the weather. How do we think about the bad weather we had again this year in New York? We at least didn't have wildfire in California this year, but we did have y ou know, bad weather in New York.
You know, I think we've now been, between last winter and this winter, been through the 2 worst winters that I can remember in the last decade. I mean, typically, we do have some weather impact. You know, a fair bit of our centers are in the Mid-Atlantic and the Northeast.
Right.
You know, over 30% of our centers and over 30% of our revenue comes from those. We will have an impact. That's built into our guidance, which we talked about earlier today. It will impact the first quarter, January and February, we think to the tune of, you know, $7 million-$9 million.
Okay
Last year, we had a $15 million EBITDA impact from fires and winter weather conditions. As long as March doesn't look like January and February, we should be better than last year. You know, it's something that's out of our control.
The only thing I have to worry about in Florida is hurricanes, I'd recommend more. Speaking of Florida, wasn't that smooth? Radiology Regional, you said publicly it's $100 million in revenue. I think we've talked about this one, normally it takes you about three years to get, let's say, a center margin's 20% pre-overhead. This one was running probably, what, 10% margin or something like that. What's the... You've kind of hinted at an accelerated path to margin, You know, normalization here. Maybe talk about the opportunity there.
I mean, it's a great practice. Radiology Regional has been in the Southwest Florida market from kinda Naples to Sarasota, you know, up to Tampa for now three decades. Well-respected practice, busy centers. I mean, they're doing $100 million plus in 13 centers, which is, you know, a lot of revenue per center, you know, relative to the rest of the RadNet network. The problem really wasn't reputational problems. It was more inefficiencies in the operations. Their corporate owner who sold the business to us, that was not their core business in terms of owning and operating facilities. They had no economies of scale. They didn't have the, really the breadth of operations and knowledge.
They didn't have the clinical tools, the operational tools, the AI that we have. You know, we've already done a lot there to, you know, we, you know, the euphemism, we call it RadNetize those centers.
It's the worst word I've ever heard in my life.
We have a great relationship with the radiology group, who was, you know, excited for RadNet to.
These were a bunch of radiologists who thought they could operate imaging centers.
No, it wasn't.
They both. Yeah.
No, they had owned the centers at one point, but they sold it.
Oh.
A corporate.
I got you.
Who was in a different related business, and they had problems operating it.
Okay.
I don't think it's gonna take us three years.
Great. I mean, that's.
Improve that.
Yeah. Now that you've filed your full year financials, can we back into the purchase price you or I think I know what it is, but do you want?
Of the radiology?
Yeah. Yeah.
Yeah. Well, we disclosed it, so it's $65 million.
Yeah. if it's, do the math, $100 million gets to 20% margins, that's a 3.5 times deal.
Yeah.
It's pretty good right there, yeah.
If we can get it there.
Yeah.
Yeah, yes.
Okay.
Yeah. We couldn't build those centers, those 13 locations.
Right?
For $65 million. We kinda bought it at asset value, and the opportunity.
Mm-hmm.
As you say, is.
All right.
Bring it to our margins.
Make you eat your vegetables again. Stock comp's been an issue people have flagged. Is that a one-way escalator up, or does that, do you think that might level out at some point as a, on an absolute dollar basis? How do we think about it this year, for example?
Yeah. A part of the rise in the stock comp is the addition of the digital health platform. You know, as you're well aware, technology, you know, developers, clinical, you know, AI folks, are expensive, and they're typically compensated at least in some portion by stock. Their other opportunities are to work for venture capital-backed companies. We've definitely provided incentives for them if they're successful that they can make some money. That's part of the increase that we're seeing.
Is it plateauing, growing, or would it decline from here, do you think?
I we'll see next year. I think it's, you know, the increase that you saw over the last couple years will definitely flatten.
Okay. Even with this latest acquisition, that's not gonna materially add to stock comp?
It may add a little bit.
Okay.
Yeah.
Okay. All right. I'm kind of intrigued that you had to go all the way to Paris to find a company to do a AI assist with X-ray.
Well, RadNet is an international company now, John.
I know this. Forgive me, I meant to remember this, you've got a neat mobile lung cancer detection solution in the UK. Remind us the timeframe to bring that to the US.
We, so yes, we are having a lot of success with that, with the rollout of the Targeted Lung Health Check programme, which is being rolled out to the four countries of the U.K. by the NHS and the various districts and providers of the NHS. Not only are we providing the main provider of the lung AI in conjunction with that program, but we're also doing a lot of the reads through a company that we bought 75% of called HLH, Heart & Lung Health there, who's having a lot of success and is growing very quickly.
That product, which we originally bought from a Netherlands-based company called Aidence, we submitted for FDA approval in December, and we expect to get clearance on that product within, you know, the next, I'd say 90+ days.
Great.
Yeah. By the way, we have 4 FDA approvals that we expect to get approval from in the next couple quarters.
What are the other three?
One of them is lung, one is the next generation prostate, MRI AI. One of them is in conjunction with our breast product, breast arterial calcification.
Mm-hmm.
The last one is. I'll think about it in a second.
You got 40 seconds. All right. This may be too complicated. Maybe we'll go a minute over.
Oh, yeah. It's ultrasound with our C-mode product-
Right.
For the breast ultrasound.
Okay. If you succeed in making radiologists more productive, you don't own them outright, but you've got the friendly PA model. What is the economic benefit to RadNet if you're able to, let's say, 25 radiologists give you 25% more scans, how does that net out to you from a P&L standpoint?
With the friendly PC model, we have about a $300 million, slightly more than $300 million of cost that runs through our income statement. It's in revenue, and it's in-.
Okay.
In cost. That we will, you know, be able to impact, you know, with our AI models. Obviously we're going to share these solutions with our, and license these solutions to our third-party groups as well, and they're, it's a built-in customer base.
Okay. All right. Thank you. Let's go to breakout.