RadNet, Inc.

And welcome to the RadNet, Inc. Q4 and full year 2020 financial results call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Mark Stolper, Executive Vice President and Chief Financial Officer of RadNet, Inc. Please go ahead, sir.

Thank you. Good morning, ladies and gentlemen, and thank you for joining Dr. Howard Berger and me today to discuss RadNet's fourth quarter and full year 2020 financial results. Before we begin today, we'd like to remind everyone of the Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995. This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Specifically, statements concerning anticipated future financial and operating performance Radnet's ability to continue to grow the business by generating patient referrals and contracts with radiology practices, recruiting and retaining technologists, receiving third-party reimbursement for diagnostic imaging services, successfully integrating acquired operations, generating revenue and adjusted EBITDA for the acquired operations as estimated, among others, are forward-looking statements within the meaning of the safe harbor. Forward-looking statements are based on management's current preliminary expectations and are subject to risks and uncertainties which may cause RADNET's actual results to differ materially from the statements contained herein. These risks and uncertainties included those risks set forth in RADNET's reports filed with the SEC from time to time, including RADNET's annual report on Form 10-K for the year ended December 31, 2020, to be filed shortly. Undue reliance should not be placed on forward-looking statements, especially guidance on future financial performance, which speaks only as of the date it is made. RADNET undertakes no obligation to update publicly any forward-looking statements to reflect new information events or circumstances after the date they were made or to reflect the occurrence of unanticipated events. And with that, I'd like to turn the call over to Dr. Berger.

Thank you, Mark. Good morning, everyone, and thank you for joining us today. On today's call, Mark and I plan to provide you with highlights from our fourth quarter and full year 2020 results, give you more insight into the factors which affected this performance, and discuss our future strategy. After our prepared remarks, we will open the call to your questions. I'd like to thank all of you for your interest in our company and for dedicating a portion of your day to participate in our conference call this morning. Before we start, I would like to say on behalf of myself and the entire team at RadNet, we hope all of you and your loved ones are healthy and staying safe. We are extremely grateful for all of our stakeholders, including our employees, business partners, lenders, and shareholders, and wish you all well during this challenging time. Let's begin. I am very pleased with our performance in the fourth quarter. Continuing with the recovery of our procedural volumes that began in the third quarter, we recorded the highest quarterly revenue in adjusted EBITDA in the company's history this fourth quarter. The turnaround of our business has been quite remarkable from its low point in mid-April when our procedural volumes dropped by 72% from pre-COVID levels. In the fourth quarter, our revenue grew by 2.5%, which was the result of several factors. First, during 2020, we significantly expanded our 3D mammography program on both coasts. As a result, our mammography volumes increased by 11.7% during the fourth quarter relative to the same quarter in 2019. Much of the increase in mammography volumes brought an associated reimbursement premium for the thermal synthesis 3D technology. Second, the increased revenue was the result of reimbursement increases from private and capitated payers, as well as improved collections, particularly around patient co-payments. In addition to the record revenue performance, our adjusted EBITDA in the fourth quarter of 2020 was $50.7 million, as compared with $46 million in the fourth quarter of 2019, an increase of 8.1%. While the increase in revenue attributed to contributed to the growth in adjusted EBITDA, the improved adjusted EBITDA performance was also the result of cost-saving measures we instituted during the COVID-19 period. Since the onset of COVID-19, we aggressively focused on reducing expenses, consolidating underperforming sites, and changing key operational metrics, both at the center level and within our corporate support departments. The operation improvements we made will continue to benefit the business into the future and are reflected in the 2021 guidance ranges we announced earlier today in our financial results press release. From a margin perspective, our adjusted EBITDA margin was 16.4% in the fourth quarter of 2020 as compared with 15.6% in the fourth quarter of 2019, an improvement of 0.8% or 80 basis points. Our adjusted earnings were also very strong. Adjusted for one time and extraordinary events during the quarter, our adjusted net income was $10.2 million or 20 cents per diluted share as compared with 9.9 million or 19 cents per diluted share in the fourth quarter of 2019. Throughout the COVID-19 period, we have focused on strengthening our balance sheet by managing our liquidity and financial leverage. At year end 2020, we had a cash balance of $102 million, and our net debt leverage ratio was reduced to under four times adjusted EBITDA, a little similar to that of year end 2019 prior to the onset of COVID-19. We believe that our strong balance sheet positions us to be aggressive in 2021 with respect to growth initiatives and will include tuck-in acquisitions, de novo centers, and continued capital spending to drive same center performance. While it is noteworthy to highlight the strong financial performance of our last two quarters as our business began to recover from the worst of COVID-19 impact throughout 2020, we made some significant progress in furthering our long-term operating plan. Here are some of the highlights. In March of 2020, we completed our acquisition of Deep Health, a leading artificial intelligence and machine learning company initially focused on solutions for the medical interpretation of mammography exams. Deep Health's development has focused on screening mammography, specifically 3D breast imaging. where the large volume of cases and the difficult nature of their interpretation place significant demand on radiologists. We are more certain today than ever before that artificial intelligence will transform the diagnostic imaging and radiology industry. Machine learning, big data applications, and automation algorithms will allow us to deliver our services more cost-effectively, efficiently, and accurately. We spend almost 20% of our globally billed net revenue to the radiologist interpretation of our images. We believe AI will create workflow efficiencies and improve the accuracy of image interpretation in mammography and in other modalities we perform, which can materially benefit all of the RadNet stakeholders. In the fourth quarter of 2020, we submitted for FDA approval of our first AI mammography product, which is screen triage product for radiologists. We hope to receive approval sometimes towards the middle of the year. By the end of the year, we anticipate submitting for FDA approval a secondary product for more advanced mammography diagnostics and look forward to keeping you informed with our progress on these drugs. Related to our Deep Health acquisition in August of 2020, we announced a collaboration with Hologic to advance the development of artificial intelligence tools in breast health. The collaboration will enable new joint market opportunities and further efforts to build clinician confidence and develop and integrate new AI technologies. As part of the collaboration, Redmond has been upgrading its entire fleet of Hologic mammography systems to feature the Hologic Clarity HD and Quorum 3D imaging technologies and will share with Hologic certain data produced by RadNet's fleet of high resolution mammography systems. In 2020, we furthered the expansion of our health system joint venture businesses. In October, we established a partnership with Adventist Health to create an outpatient imaging joint venture in City Valley, California. to initially include three outpatient facilities. In addition, we assumed operational management of Adventist Health's Nancy Reagan Breast Center. Also in October, Radnor announced its third joint venture with Dignity Health, Common Spirit, in Phoenix, Arizona. Initially established with eight acquired facilities, we plan to significantly expand our offerings in the greater Phoenix area in the coming years through a combination of new site development and the acquisition of existing radiology providers. The process of expansion has begun and we anticipate allocating significant focus in financial and management resources on this new market over the coming years. In August of 2020, we completed an amendment to our credit agreement to increase the amount revolving commitments there under by $57.5 million to a total of 195 million. Well, this was done out of an abundance of caution and a concern for our liquidity position during the global pandemic. The expansion of available credit positions allows us to have funds at our disposal to grow the company more aggressively in the coming years. and are available for creative acquisitions. At this time, I'd like to turn the call back over to Mark to discuss some of the highlights of our fourth quarter and full 2020 performance. When he's finished, I will make some closing remarks.