RadNet, Inc.

Good day, and welcome to the RadNet, Inc. Fourth Quarter 2024 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mark Stolfer, Executive Vice President and Chief Financial Officer of RadNet. Please go ahead.

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 2024 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 include 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, 2024, 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 2024 results, give you more insight into 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. With that, let's begin. I am very pleased with the performance in the fourth quarter. It was the strongest quarter in the company's history with record revenue and adjusted EBITDA. Total company revenue increased 13.5% to $477.1 million, and adjusted EBITDA increased 14% from last year's fourth quarter to $75 million. Digital health revenues increased 28.1% to $18.9 million, and digital health's adjusted EBITDA increased 61.6% to $4.5 million from last year's fourth quarter. Imaging center revenue was driven by increased demand in virtually all of our markets, benefiting from the growing utilization of diagnostic imaging within healthcare, as well as the continuing shift of procedural volumes away from the more expensive hospital alternatives to ambulatory freestanding imaging centers. As a result, we experienced 8% aggregate and 4% same center procedural volume growth in this year's fourth quarter, relative to last year's same quarter. Also contributing to the strong revenue performance was the positive impact of improved reimbursement from commercial payers who recognize the important role we are playing as a lower-priced alternative to hospital-based imaging. Lastly, revenue benefited from the continuing shift in modality mix towards advanced imaging, MRI, CT, and PET-CT, where revenue per scan is substantially higher than with routine imaging. During the fourth quarter, advanced imaging represented 26.8% of RadNet's procedural volume, an increase of 137 basis points from last year's same quarter. This is both a function of the overall industry trend of more of the PET-CT exams being ordered as a result of technology advances in these modalities, as well as the significant capital investment we have made in the last few years in advanced imaging equipment for growth and replacement. 2024 was also a year of significant investment. During 2024, we opened nine de novo facilities in markets where there are patient backlogs, where we require additional capacity, or we currently lack access points to service-identified patient populations. These centers should be material contributors to long-term performance and growth. We continue to grow the hospital and health system joint venture business. Currently, 153 of Radnet's 398 centers, or 38.4%, are held within system partnerships. This is an increase of 23 centers from year-end 2023. Health systems continue to seek long-term strategies around outpatient imaging and have recognized that cost-effective and efficient freestanding centers will continue to capture market share from hospitals as payors and patients migrate their site of care towards lower-cost, high-quality solutions. Our hospital and health system partners have been instrumental in increasing our procedural volumes with their physician support. medical group relationships. Momentum continues with initiatives inside the digital health segment. In the fourth quarter, we commercially launched the DeepHealth OS operational and diagnostic software suites, announced partnerships with GE and Siemens to bundle with or embed smart technologies into mammography and ultrasound equipment, and commercialized the TechLive remote scanning solution for MRI and other modalities. During 2024, we also continued to build executive management capabilities within digital health, culminating with Kies Wibsdorf joining as the CEO of the Digital Health Division in September of 2023. Throughout 2025, we will be focused on implementing these deep health solutions within the RadNet network of centers. which is expected to drive operational efficiencies in many of the business processes performed on behalf of the imaging centers, primarily through automation. Furthermore, these technologies will help create capacity that will enable the imaging centers to service increasing demand for diagnostic services. At the same time, we will be investing aggressively to build the necessary infrastructure within digital health to sell and support external customers. Embedded in our 2025 Digital Health Guidance is approximately $20 million of investment primarily directed towards building sales, marketing, customer support, and implementation capabilities requisite to support significant external growth in the coming years. We continue to focus on strengthening the balance sheet by managing liquidity and financial leverage. At year end, 2024, Radnet's cash balance was $740 million, and the net debt to adjusted EBITDA leverage ratio was under one times. During 2024, we consummated a $230 million stock offering in March, a debt refinancing transaction in April, which lowered our cost of capital and extended maturities through 2031, and a debt repricing transaction in November, which further lowered the interest cost on RadNet's credit facility. 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 2024 performance, as well as discuss our 2025 guidance. When he is finished, I will make some closing remarks.