Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) February 29, 2024

_______________________________________________

RadNet, Inc.

(Exact name of registrant as specified in its charter)

Delaware		001-33307		13-3326724
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

1510 Cotner Avenue
Los Angeles, California		90025
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (310) 478-7808

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value	RDNT	NASDAQ Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02

RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On February 29, 2024 RadNet, Inc. (“RadNet”) issued a press release and, on March 1, 2024, held a conference call regarding our 2023 financial results for the fourth quarter and full fiscal year ended December 31, 2023. A copy of the press release is furnished as Exhibit 99.1 and a copy of the transcript of the conference call is furnished as Exhibit 99.2 to this Current Report.

The information in this Current Report, including Exhibit 99.1 and Exhibit 99.2 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section. The information in this Current Report, including Exhibit 99.1 and Exhibit 99.2 shall not be incorporated by reference into any registration statement or other document filed with the Commission.

Item 9.01

FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits

Exhibit Number	Description of Exhibit

99.1	Press Release dated February 29, 2024 relating to RadNet, Inc.’s financial results for the quarter and full fiscal year ended December 31, 2023.
99.2	Transcript of conference call.
104	Cover Page Interactive Data File (embedded within the inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: March 5, 2024	RADNET, INC.


	By:	/s/ Mark D. Stolper
	Name:	Mark D. Stolper
	Title:	Chief Financial Officer

EXHIBIT INDEX

Exhibit Number	Description of Exhibit

99.1	Press Release dated February 29, 2024 relating to RadNet, Inc.’s financial results for the quarter and full fiscal year ended December 31, 2023.
99.2	Transcript of conference call.
104	Cover Page Interactive Data File (embedded within the inline XBRL document)

Exhibit 99.1

FOR IMMEDIATE RELEASE

RadNet Reports Fourth Quarter 2023 Results, Including Record Revenue and Adjusted EBITDA⁽¹⁾, Releases 2024 Financial Guidance and Forms a New Digital Health Reporting Segment

	·	Revenue increased 9.5% to a record $420.4 million in the fourth quarter of 2023 from $383.9 million in the fourth quarter of 2022; Excluding Revenue from the Artificial Intelligence (“AI”) reporting segment, Revenue from the Imaging Center reporting segment in the fourth quarter of 2023 was $415.3 million, an increase of 8.6% from last year’s fourth quarter

	·	Excluding losses from the AI reporting segment, Adjusted EBITDA⁽¹⁾ from the Imaging Center reporting segment was a record $68.3 million as compared with $61.6 million in the fourth quarter of 2022, an increase of 11.0%

	·	Adjusting for unusual or one-time items impacting Net Income in the quarter, Adjusted Earnings Per Share⁽³⁾was $0.20 for the fourth quarter of 2023; This compares with Adjusted Earnings Per Share⁽³⁾ of $0.11 for the fourth quarter of 2022

	·	Aggregate procedural volumes increased 7.9% and same-center procedural volumes increased 5.5% compared with the fourth quarter of 2022

	·	Fourth Quarter AI revenue was $5.1 million, an increase of 278.4% from the fourth quarter of 2022

	·	RadNet announces the formation of a Digital Health financial reporting segment by combining its software and informatics businesses with its AI operations

	·	Announced earlier this week, RadNet has signed a definitive agreement to enter the Houston, Texas market through a platform acquisition consisting of seven imaging centers

	·	RadNet announces 2024 guidance ranges, anticipating increases in Revenue, Adjusted EBITDA⁽¹⁾ and Free Cash Flow⁽²⁾ for 2024 over 2023 in both the Imaging Center and Digital Health reporting segments; Within the Digital Health reporting segment, AI Revenue is expected to increase over 65% from 2023 and AI Adjusted EBITDA⁽¹⁾ is projected to achieve break-even by year end 2024

LOS ANGELES, California, February 29, 2024 – RadNet, Inc. (NASDAQ: RDNT), a national leader in providing high-quality, cost-effective, fixed-site outpatient diagnostic imaging services through a network of 366 owned and/or operated outpatient imaging centers, today reported financial results for its fourth quarter and full year ended December 31, 2023.

Dr. Howard Berger, President and Chief Executive Officer of RadNet, commented, “Record Revenue and Adjusted EBITDA⁽¹⁾ in the fourth quarter enabled us to exceed our 2023 full-year revised guidance ranges, ranges that were increased several times throughout 2023. The performance was the result of a continuation of strong industry trends and execution on a multi-pronged growth strategy focused on driving same-center performance, the expansion of existing and establishment of new health system partnerships and investments made in de novo imaging centers and newer technologies (including equipment, software and AI that drive improved throughput and efficiency). In the fourth quarter, the core Imaging Center segment experienced same-center procedural volume growth of 5.5%, Revenue growth of 8.6% and Adjusted EBITDA⁽¹⁾ growth of 11.0% as compared with the fourth quarter of 2022. Adjusted EBITDA⁽¹⁾ margins in the Imaging Center segment improved in the fourth quarter of 2023 relative to 2022 by 30 basis points, from 16.1% to 16.4%.”

“During 2023, we carefully managed liquidity and financial leverage. This was highlighted with our completion of a successful stock offering in June of 2023, adding approximately $245 million of net proceeds to our balance sheet and enabling a discretionary debt repayment of $30 million in October 2023. As a result of these actions and a focus on margins and Adjusted EBITDA⁽¹⁾ growth, at year-end 2023, net debt to Adjusted EBITDA⁽¹⁾ fell below 2.0x. Liquidity at the end of 2023 remained strong, with a $342 million cash balance and Days Sales Outstanding (DSO’s) of 32.0, which we believe to be among the best in the industry,” added Dr. Berger.

“The demand for diagnostic imaging remains robust moving into 2024. Our solid financial position and multifaceted operating model have presented us with opportunities to expand our business, particularly through the construction of new centers to meet the growing demand and utilization in our target markets. We project to open approximately a dozen new facilities during 2024, and believe these sites should be positive contributors to our performance. Additionally, we expect to continue expanding existing health system joint ventures and partnerships and establish new ones during 2024, explained Dr. Berger.”

“Earlier this week, we were pleased to announce a new platform acquisition in Houston, which represents our first new geographic expansion since 2020. The Houston metropolitan marketplace, encompassing about 7.3 million people, is the fourth most populous city and the second fastest growing metropolitan area in the United States. In our commitment to improving and expanding patient access and services, we will look to grow in this market in various ways, including through de novo build-outs, health system partnerships and introducing our AI and leading edge clinical and operating digital health solutions. In the future, we may enter additional new markets when conditions and opportunities support such moves,” added Dr. Berger.

Dr. Berger concluded, “We remain enthusiastic about the initiatives in information technology and digital health. These include migrating our proprietary software solutions to the cloud, creating the new DeepHealth OS suite of solutions, new projects leveraging generative AI to improve operating efficiency and lower costs and the expansion of AI-enhanced programs in breast, lung and prostate screening domestically and abroad. The AI Revenue almost tripled in 2023 as compared with 2022, and if the continued implementation of the Enhanced Breast Cancer Diagnostic (EBCD) screening mammography program progresses as planned, AI Revenue could almost double in 2024 relative to 2023.”

Financial Results

Fourth Quarter Report:

For the fourth quarter of 2023, RadNet reported Revenue from its Imaging Center reporting segment of $415.3 million and Adjusted EBITDA⁽¹⁾ of $68.3 million, which excludes Revenue and Adjusted EBITDA⁽¹⁾ Losses from the AI reporting segment. As compared with last year’s fourth quarter, Revenue increased $32.8 million (or 8.6%) and Adjusted EBITDA⁽¹⁾ increased $6.7 million (or 11.0%).

Including our AI reporting segment, total company Revenue was $420.4 million in the fourth quarter of 2023, an increase of 9.5% from $383.9 million in last year’s fourth quarter. Including the Adjusted EBITDA⁽¹⁾losses of the AI reporting segment of $2.5 million in the fourth quarter of 2023 and $4.3 million in the fourth quarter of 2022, total company Adjusted EBITDA⁽¹⁾ was $65.8 million in the fourth quarter of 2023 and $57.2 million in the fourth quarter of 2022, a growth of 15.0%.

On an unadjusted basis, for the fourth quarter of 2023, RadNet reported a Net Loss of $1.9 as compared with a net loss of $934,000 for the fourth quarter of 2022. Net Loss Per Share for the fourth quarter of 2023 was $(0.03), compared with a Net Loss per share of $(0.02) in the fourth quarter of 2022, based upon a weighted average number of diluted shares outstanding of 67.9 million shares in 2023 and 57.0 million shares in 2022.

Adjusting for a number of unusual or one-time items impacting the fourth quarter of 2023, Adjusted Earnings⁽³⁾ from the Imaging Center reporting segment was $13.7 million and diluted Adjusted Earnings Per Share⁽³⁾ was $0.20 during the fourth quarter of 2023 as compared with $0.11 during the fourth quarter of 2022.

The unusual or one-time items impacting the fourth quarter of 2023 excluded in calculating Adjusted Earnings⁽³⁾ were as follows: $7.2 million of non-cash loss from interest rate swaps (excluding the amortization of the accumulation of the changes in fair value out of Other Comprehensive Income); $621,000 of severance paid in connection with headcount reductions related to cost savings initiatives; $880,000 expense related to leases for de novo facilities under construction that have yet to open their operations; $222,000 acquisition transaction costs; $429,000 gain from a valuation adjustment for contingent consideration related to acquisitions; $1.3 million of non-capitalized research and development investment in DeepHealth Cloud OS and generative AI; $5.1 million loss on lease abandonment; and $5.0 million of pre-tax losses related to our AI reporting segment.

Also, affecting Net Income in the fourth quarter of 2023 were certain non-cash expenses and unusual items including: $5.4 million of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted stock; $1.0 million loss on the disposal of certain capital equipment; and $747,000 of non-cash amortization of deferred financing costs and loan discounts related to financing fees paid as part of our existing credit facilities.

For the fourth quarter of 2023, as compared with the prior year’s fourth quarter, MRI volume increased 13.2%, CT volume increased 11.3% and PET/CT volume increased 18.5%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 7.9% over the prior year’s fourth quarter. On a same-center basis, including only those centers which were part of RadNet for both the fourth quarters of 2023 and 2022, MRI volume increased 10.8%, CT volume increased 8.2% and PET/CT volume increased 17.4%. Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 5.5% over the prior year’s same quarter.

Annual Report:

For full-year 2023, RadNet reported Revenue from its Imaging Center reporting segment of $1,604 million and Adjusted EBITDA⁽¹⁾ Excluding Losses from the AI reporting segment of $245.1 million. In 2023, Revenue increased $178.5 million (or 12.5%) and Adjusted EBITDA⁽¹⁾ increased $36.1 million (or 17.2%) as compared with 2022.

Including our AI reporting segment Revenue of $12.5 million, total company Revenue was $1,617 million for full-year 2023, an increase of 13.0% from $1,430 million in 2022. Including Adjusted EBITDA⁽¹⁾ losses from the AI segment of $12.8 million, total company Adjusted EBITDA⁽¹⁾for 2023 was $232.3 million as compared with $192.5 million in 2022, an increase of 20.7%.

For 2023, RadNet reported Net Income of $3.0 million, a decrease of approximately $7.6 million over 2022. Per share diluted Net Income for the full year of 2023 was $0.05, compared to a diluted Net Income per share of $0.17 in 2022 (based upon a weighted average number of diluted shares outstanding of 64.7 million in 2023 and 57.3 million in 2022).

Affecting Net Income in 2023 were certain non-cash expenses and unusual items including: $8.2 million of non-cash loss from interest rate swaps; $3.8 million of severance paid in connection with headcount reductions related to cost savings initiatives; $3.6 million expense related to leases for our de novo facilities under construction that have yet to open their operations; $22.6 million of pre-tax losses related to our AI reporting segment; $26.8 million of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted stock; $2.2 million loss on the disposal of certain capital equipment; $5.1 million of lease abandonment charges; and $16.8 million gain from the contribution of imaging centers into a joint venture; $1.3 million of non-capitalized research and development investment in DeepHealth Cloud OS and generative AI; $4.0 million non-cash charge for intangible adjustments; $4.1 million non-cash gain on contingent consideration; $3.0 million of non-cash amortization of deferred financing costs and loan discounts related to financing fees paid as part of our existing credit facilities.

Actual 2023 Results vs. 2023 Guidance

The following compares the Company’s 2023 performance with previously announced guidance levels:

Imaging Center Segment

	Original Guidance Range	Revised Guidance Range After Q3 Results	2023 Actual Results

Total Net Revenue	$1,525 - $1,575 million	$1,575 - $1,610 million	$1,604.2 million
Adjusted EBITDA⁽¹⁾	$220 - $230 million	$235 - $245 million	$245.2 million
Capital Expenditures^(a)	$105 - $115 million	$115 - $125 million	$153.0 million
Cash Interest Expense^(c)	$35 - $40 million	$45 - $50 million	$38.3 million
Free Cash Flow ^(b)(2)	$70 - $80 million	$65 - $75 million	$53.9 million

Artificial Intelligence Segment

	Original Guidance Range	Revised Guidance Range After Q3 Results	2023 Actual Results

Total Net Revenue	$16 - $18 million	$11 - $13 million	$12.5 million
Adjusted EBITDA⁽¹⁾	$(9) - $(11) million	$(11) - $(13) million	$(12.8) million

(a)

Net of proceeds from the sale of equipment, imaging centers and joint venture interests, New Jersey Imaging Network capital expenditures of $18.6 million, a $19.8 million one-time purchase with a promissory note of equipment previously leased under operating leases and a $5 million purchase of software and other intellectual property from a vender.

(b)

Defined by the Company as Adjusted EBITDA⁽¹⁾ less Capital Expenditures and Cash Interest Expense.

(c)

Excludes payments to and from counterparties on interest rate swaps and nets interest income from our cash balance recorded in Other Income.

Formation of New Digital Health Reporting Segment

For its 2024 fiscal year, RadNet is changing its operating segments, which will impact reportable segments. Specifically, the eRAD Radiology Information Systems (RIS) and Picture Archiving and Communication Systems (PACS) and related health informatics businesses that were reported as part of the Imaging Center reportable segment through 2023, will now be combined with the Artificial Intelligence reportable segment through 2023 to form a new Digital Health financial reportable segment for 2024. With respect to 2023, the eRAD financial results embedded in the Imaging Center segment consisted of $37.1 million of Revenue, $16.4 million of Operating Expenses and $20.7 million of Adjusted EBITDA⁽¹⁾.

Below, we illustrate what 2023 selected operating results would have been if RadNet had operated under the two new reporting segments – Imaging Center and Digital Health:

	2023 Imaging Center Segment Including eRAD Businesses	2023 eRAD Businesses	2023 Imaging Center Segment Excluding eRAD Businesses

Total Net Revenue	$1,604.2 million	$37.1 million	$1,567.1 million
Adjusted EBITDA⁽¹⁾	$245.2 million	$20.7 million	$224.5 million
Capital Expenditures^(a)	$153.0 million	$1.2 million	$151.8 million
Cash Interest Expense^(c)	$38.3 million	$0 million	$38.3 million
Free Cash Flow^(b)	$53.9 million	$19.5 million	$34.4 million

	2023 AI Segment	2023 eRAD Businesses	2023 Digital Health Segment (AI+eRAD Businesses)

Total Net Revenue	$12.5 million	$37.1 million	$49.6 million
Adjusted EBITDA⁽¹⁾	$(12.8) million	$20.7 million	$7.9 million

(a)

Net of proceeds from the sale of equipment, imaging centers and joint venture interests, New Jersey Imaging Network capital expenditures of $18.6 million, a $19.8 million one-time purchase with a promissory note of equipment previously leased under operating leases in 2023 and a $5 million purchase of software and other intellectual property from a vender in 2023.

(b)

Defined by the Company as Adjusted EBITDA⁽¹⁾ less Capital Expenditures and Cash Interest Expense.

(c)

Excludes payments to and from counterparties on interest rate swaps and nets interest income from our cash balance recorded in Other Income.

2024 Guidance

RadNet reports 2024 guidance ranges as follows:

Imaging Center Segment

	2023 Actual Results Restated for New Imaging Center Segment	2024 Guidance Range	2023-2024 Implied Growth

Total Net Revenue	$1,567.1 million	$1,650 - $1,700 million	5.3% - 8.5%
Adjusted EBITDA⁽¹⁾	$224.5 million	$250 - $260 million	11.4% - 15.8%
Capital Expenditures^(a)	$151.8 million	$125 - $135 million
Cash Interest Expense^(c)	$38.3 million	$40 - $45 million
Free Cash Flow^(b)	$34.4 million	$65 - $75 million

(a)

Net of proceeds from the sale of equipment, imaging centers and joint venture interests and New Jersey Imaging Network capital expenditures.

(b)

Defined by the Company as Adjusted EBITDA⁽¹⁾ less Capital Expenditures and Cash Interest Expense.

(c)

Excludes payments to and from counterparties on interest rate swaps and nets interest income from our cash balance recorded in Other Income.

Digital Health Segment

	2023 Actual Results Restated For New Digital Health Segment	2024 Guidance Range	2023-2024 Implied Growth

Total Net Revenue	$49.6 million	$60 - $70 million	21.0% - 41.2%

Adjusted EBITDA⁽¹⁾ Before Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI	$7.9 million	$12 - $14 million	51.4% - 76.6%

Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI	$1.4 million	$11 - $13 million

Capital Expenditures	$1.2 million	$3 - $5 million

Free Cash Flow^(a) Before Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI	$6.7 million	$8 - $10 million

Free Cash Flow^(a) After Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI	$5.3 million	$(2) - $(5) million

(a)

Defined by the Company as Adjusted EBITDA⁽¹⁾ less Capital Expenditures and Cash Interest Expense.

Dr. Berger noted, “We are particularly excited to announce the formation of the Digital Health reporting segment. This new segment combines our informatics businesses (eRAD and related solutions) with our AI operations. While the software solutions of this operating segment are critical to the success of the imaging center business, the Digital Health segment has over 500 outside customers and has its own unique opportunities for growth and expansion. We have conviction that the Digital Health solutions can positively impact how radiology and imaging are practiced, and we have attracted experienced talent to lead this new segment who have successfully developed, commercialized and sold imaging-related information technology solutions in the past.”

Dr Berger added, “Taking into account all the current initiatives in progress within both operating segments, our guidance reflects significant growth in 2024. Within the Imaging Center segment, we expect to benefit from a continued focus on same-center performance, tuck-in acquisitions, increased reimbursement, expanded and new health system joint ventures and de novo center openings. Combining these opportunities with diligent expense management, we are projecting to drive double digit growth in Imaging Center Adjusted EBITDA⁽¹⁾ in 2024. As a result, despite a continued commitment to capital expenditures in 2024, primarily on de novo center openings, we anticipate doubling our free cash flow as compared with 2023 results from our core Imaging Center segment.”

“Within the new Digital Health segment, we are expecting significant growth in 2024 primarily from anticipated incremental AI revenue from both the continued Enhanced Breast Cancer Detection (EBCD) implementation and from our lung and prostate AI licensing business, particularly in Europe. We further anticipate that by year end 2024, our AI businesses will collectively be on a run-rate of positive Adjusted EBITDA⁽¹⁾. Our guidance also reflects the substantial investment we are making in the development of our DeepHealth OS cloud-based operating system and the generative AI modules that could lower our costs and increase efficiency in the areas of patient scheduling, pre-authorization, insurance verification and revenue cycle. We believe this research and development investment will pay dividends both in our core imaging center business and for the current and future customers outside of RadNet.” concluded Dr. Berger.

Conference Call for Today

Dr. Howard Berger, President and Chief Executive Officer, and Mark Stolper, Executive Vice President and Chief Financial Officer, will host a conference call tomorrow, March 1st, at 10:30 a.m. Eastern Time. During the call, management will discuss the Company's 2023 fourth quarter and year-end results.

Conference Call Details:

Date: Friday, March 1, 2024

Time: 10:30 a.m. ET

Dial In-Number: 844-826-3035

International Dial-In Number: 412-317-5195

There will also be simultaneous and archived webcasts available at https://viavid.webcasts.com/starthere.jsp?ei=1657167&tp_key=5b49295358 or http://www.radnet.com under the “About RadNet” menu section and “News & Press Releases” sub-menu of the website. An archived replay of the call will also be available and can be accessed by dialing 844-512-2921 from the U.S., or 412-317-6671 for international callers, and using the passcode 10186577.

About RadNet, Inc.

RadNet, Inc. is the leading national provider of freestanding, fixed-site diagnostic imaging services and related information technology solutions (including artificial intelligence) in the United States based on the number of locations and annual imaging revenue. RadNet has a network of 366 owned and/or operated outpatient imaging centers. RadNet's markets include California, Maryland, Delaware, New Jersey, New York, Florida and Arizona. Together with affiliated radiologists, and inclusive of full-time and per diem employees and technologists, RadNet has a total of approximately 9,700 employees. For more information, visit http://www.radnet.com.

Forward Looking Statements

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are expressions of our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, and anticipated future conditions, events and trends. Forward-looking statements can generally be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Forward-looking statements in this press release include, among others, statements we make regarding response to and the expected future impacts of COVID-19, including statements about our anticipated business results, balance sheet and liquidity and our future liquidity, burn rate and our continuing ability to service or refinance our current indebtedness.

Forward-looking statements are neither historical facts nor assurances of future performance. Because forward-looking statements relate to the future, they are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:

changes in general economic conditions nationally and regionally in the markets in which we operate, including their effects on the cost and availability of labor;

our ability to service our indebtedness, make principal and interest payments as those payments become due and remain in compliance with applicable debt covenants, in addition to our ability to refinance such indebtedness on acceptable terms;

the availability and terms of capital to fund the expansion of our business and improvements to our existing facilities;

our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so;

volatility in interest and exchange rates, or credit markets;

the adequacy of our cash flow and earnings to fund our current and future operations;

changes in service mix, revenue mix and procedure volumes;

delays in receiving payments for services provided;

increased bankruptcies among our partner physicians or joint venture partners;

the impact of the political environment and related developments on the current healthcare marketplace and on our business, including with respect to the future of the Affordable Care Act;

the extent to which the ongoing implementation of healthcare reform, or changes in or new legislation, regulations or guidance, enforcement thereof by federal and state regulators or related litigation result in a reduction in coverage or reimbursement rates for our services, or other material impacts to our business;

closures or slowdowns and changes in labor costs and labor difficulties, including stoppages affecting either our operations or our suppliers' abilities to deliver supplies needed in our facilities;

the occurrence of hostilities, political instability or catastrophic events;

the emergence or reemergence of and effects related to future pandemics, epidemics and infectious diseases; and

noncompliance by us with any privacy or security laws or any cybersecurity incident or other security breach by us or a third party involving the misappropriation, loss or other unauthorized use or disclosure of confidential information.

Any forward-looking statement contained in this current report is based on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that we may make from time to time, whether as a result of changed circumstances, new information, future developments or otherwise, except as required by applicable law.

Regulation G: GAAP and Non-GAAP Financial Information

This release contains certain financial information not reported in accordance with GAAP. The Company uses both GAAP and non-GAAP metrics to measure its financial results. The Company believes that, in addition to GAAP metrics, these non-GAAP metrics assist the Company in measuring its cash-based performance. The Company believes this information is useful to investors and other interested parties because it removes unusual and nonrecurring charges that occur in the affected period and provides a basis for measuring the Company's financial condition against other quarters. Such information should not be considered as a substitute for any measures calculated in accordance with GAAP, and may not be comparable to other similarly titled measures of other companies. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Reconciliation of this information to the most comparable GAAP measures is included in this release in the tables which follow.

CONTACTS:

RadNet, Inc.

Mark Stolper, 310-445-2800

Executive Vice President and Chief Financial Officer

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

	December 31, 2023			December 31, 2022
	(unaudited)
ASSETS
CURRENT ASSETS
Cash and Cash equivalents	$	342,570		$	127,834
Accounts receivable		163,707			166,357
Due from affiliates		25,342			18,971
Prepaid expenses and other current assets		47,657			54,022
Total current assets		579,276			367,184
PROPERTY, EQUIPMENT AND RIGHT-OF-USE ASSETS
Property and equipment, net		604,401			565,961
Operating lease right-of-use assets		596,032			603,524
Total property, plant, equipment and right-of-use assets		1,200,433			1,169,485
OTHER ASSETS
Goodwill		679,463			677,665
Other intangible assets		90,615			106,228
Deferred financing costs		1,643			2,280
Investment in joint ventures		92,710			57,893
Deposits and other		46,333			53,172
Total assets	$	2,690,473		$	2,433,907

LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable, accrued expenses and other	$	342,940		$	369,595
Due to affiliates		15,910			23,100
Deferred revenue		4,647			4,021
Current operating lease liability		55,981			57,607
Current portion of notes payable		17,974			12,400
Total current liabilities		437,452			466,723
LONG-TERM LIABILITIES
Long-term operating lease liability		605,097			604,117
Notes payable, net of current portion		812,068			839,344
Deferred tax liability, net		15,776			9,256
Other non-current liabilities		6,721			23,015
Total liabilities		1,877,114			1,942,455
EQUITY
RadNet, Inc. stockholders' equity:
Common stock - $.0001 par value, 200,000,000 shares authorized; 67,956,318 and 57,723,125 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively		7			6
Additional paid-in-capital		722,750			436,288
Accumulated other comprehensive loss		(12,484	)		(20,677	)
Accumulated deficit		(79,578	)		(82,622	)
Total RadNet, Inc.'s stockholders equity		630,695			332,995
Noncontrolling interests		182,664			158,457
Total equity		813,359			491,452
Total liabilities and equity	$	2,690,473		$	2,433,907

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)

(unaudited)

	Years Ended December 31,
	2023			2022			2021

REVENUE
Service fee revenue	$	1,463,197		$	1,278,016		$	1,166,743
Revenue under capitation arrangements		153,433			152,045			148,334
Total service revenue		1,616,630			1,430,061			1,315,077
Provider relief funding		–			–			9,110
OPERATING EXPENSES
Cost of operations, excluding depreciation and amortization		1,395,239			1,264,346			1,123,274
Lease abandonment charges		5,146			–			19,675
Depreciation and amortization		128,391			115,877			96,694
(Gain) on contribution of imaging centers into joint venture		(16,808	)		–			–
Loss (gain) on sale and disposal of equipment and other		2,187			2,529			1,246
Severance costs		3,778			946			744
Total operating expenses		1,517,933			1,383,698			1,241,633
INCOME (LOSS) FROM OPERATIONS		98,697			46,363			82,554
OTHER INCOME AND EXPENSES
Interest expense		64,483			50,841			48,830
Equity in earnings of joint ventures		(6,427	)		(10,390	)		(10,967	)
Non-cash change in fair value of interest rate hedge		8,185			(39,621	)		(21,670	)
Debt restructuring and extinguishment expenses		–			731			6,044
Other expenses (income)		(6,354	)		1,833			1,438
Total other expense (income)		59,887			3,394			23,675
INCOME (LOSS) BEFORE INCOME TAXES		38,810			42,969			58,879
Provision for income taxes		(8,473	)		(9,361	)		(14,560	)
NET INCOME (LOSS)		30,337			33,608			44,319
Net income (loss) attributable to noncontrolling interests		27,293			22,958			19,592
NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS	$	3,044		$	10,650		$	24,727

BASIC NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS	$	0.05		$	0.19		$	0.47

DILUTED NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS	$	0.05		$	0.17		$	0.46
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic		63,580,059			56,293,336			52,496,679
Diluted		64,658,299			57,320,870			53,421,033

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS

(IN THOUSANDS)

(unaudited)

	Years Ended December 31,
	2023			2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES
Netincome (loss)	$	30,337		$	33,608		$	44,319
Adjustments to reconcile net incometo net cash provided by operating activities:
Depreciation and amortization		128,391			115,877			96,694
Amortization of operating right-of-use assets		61,102			68,847			73,967
Non-cash portion for amortization of operating lease right-of-use assets and related charges due to facilities abandonment		5,146			–			19,675
Equity in earnings of joint ventures		(6,427	)		(10,390	)		(10,967	)
Distributions from joint ventures		15,603			4,438			4,707
Amortization and write off of deferred financing costs and loan discount		2,987			2,693			3,254
(Gain) on contribution of imaging centers into joint venture		(16,808	)		–			–
Loss on sale and disposal of equipment		2,187			2,529			1,246
Gain on extinguishment of debt		–			–			1,496
Loss on impairment		3,949			–			–
Amortization of cash flow hedge		3,576			3,687			3,695
Non-cash change in fair value of interest rate hedge		8,185			(39,621	)		(21,670	)
Stock-based compensation		26,785			23,770			25,203
Change in value of contingent consideration		(3,880	)		(325	)		–
Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions:
Accounts receivable		2,650			(30,078	)		(5,890	)
Other current assets		(8,441	)		(3,327	)		(15,777	)
Other assets		(1,484	)		(12,166	)		662
Deferred taxes		6,056			13,356			19,834
Operating lease liability		(54,763	)		(68,943	)		(72,553	)
Deferred revenue		626			(7,316	)		(28,319	)
Accounts payable, accrued expenses and other		15,086			49,778			9,915
Net cash provided by operating activities		220,863			146,417			149,491
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of imaging centers and other operations		(10,918	)		(129,961	)		(77,691	)
Purchase of property and equipment		(176,600	)		(119,451	)		(137,874	)
Purchase of intangible assets		–			–			(5,130	)
Proceeds from sale of equipment		83			3,904			625
Equity contributions in existing and purchase of interest in joint ventures		(14,035	)		(1,441	)		(1,441	)
Net cash used in investing activities		(201,470	)		(246,949	)		(221,511	)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on notes and leases payable		(2,930	)		–			(3,302	)
Payments on senior notes		(41,063	)		(53,750	)		(619,529	)
Additional deferred finance costs on revolving loan amendment		–			–			(938	)
Proceeds from debt issuance, net of issuance costs		–			147,996			717,307
Distributions paid to noncontrolling interests		(5,972	)		(893	)		(2,426	)
Proceeds from sale of noncontrolling interest		–			–			13,073
Proceeds from revolving credit facility		–			–			128,300
Payments on revolving credit facility		–			–			(128,300	)
Sale of non-controlling interests		5,121			–			–
Payments on contingent consideration		(5,495	)		–			–
Proceeds from issuance of stock		245,832			–			–
Proceeds from issuance of common stock upon exercise of options		142			294			488
Net cash provided by (used in)financing activities		195,635			93,647			104,673
EFFECT OF EXCHANGE RATE CHANGES ON CASH		(292	)		113			(65	)
NET INCREASE IN CASH AND CASH EQUIVALENTS		214,736			(6,772	)		32,588
CASH AND CASH EQUIVALENTS, beginning of period		127,834			134,606			102,018
CASH AND CASH EQUIVALENTS, end of period	$	342,570		$	127,834		$	134,606
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest	$	64,695		$	39,151		$	29,042
Cash paid during the period for income taxes	$	1,587		$	587		$	1,950

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)

(unaudited)

	Three Months Ended December 31,
	2023			2022

REVENUE
Service fee revenue	$	384,932		$	346,197
Revenue under capitation arrangements		35,451			37,679
Total service revenue		420,383			383,876
OPERATING EXPENSES
Cost of operations, excluding depreciation and amortization		356,592			329,589
Lease abandonment charges		5,146			–
Depreciation and amortization		32,686			30,668
(Gain) on contribution of imaging centers into joint venture		–			–
Loss (gain) on sale and disposal of equipment and other		1,002			1,567
Severance costs		621			450
Total operating expenses		396,047			362,274
INCOME (LOSS) FROM OPERATIONS		24,336			21,602
OTHER INCOME AND EXPENSES
Interest expense		16,607			15,443
Equity in earnings of joint ventures		(2,492	)		(2,040	)
Non-cash change in fair value of interest rate hedge		7,236			(45	)
Debt restructuring and extinguishment expenses		–			731
Other expenses (income)		(3,745	)		269
Total other expense (income)		17,606			14,358
INCOME (LOSS) BEFORE INCOME TAXES		6,730			7,244
Provision for income taxes		(732	)		(2,274	)
NET INCOME (LOSS)		5,998			4,970
Net income (loss) attributable to noncontrolling interests		7,856			5,903
NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS	$	(1,858	)	$	(933	)

BASIC NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS	$	(0.03	)	$	(0.02	)

DILUTED NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS	$	(0.03	)	$	(0.02	)
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic		67,904,999			57,040,622
Diluted		67,904,999			57,040,622

RADNET, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON SHAREHOLDERS TO ADJUSTED EBITDA

(IN THOUSANDS)

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2023			2022			2023			2022

Net income (loss) attributable to Radnet, Inc. common stockholders	$	(1,858	)	$	(933	)	$	3,044		$	10,650
Income taxes		732			2,274			8,473			9,361
Interest expense		16,607			15,443			64,483			50,841
Severance costs		621			450			3,778			946
Depreciation and amortization		32,686			30,668			128,391			115,877
Non-cash employee stock-based compensation		5,404			4,658			26,785			23,770
(Gain) loss on sale and disposal of equipment and other		1,002			1,567			2,187			2,529
Non-cash change in fair value of interest rate hedge		7,236			(45	)		8,185			(39,621	)
Debt restructuring and loss on extinguishment expenses		–			731			–			731
Gain on contribution of imaging centers into joint venture		–			–			(16,808	)		–
Other expenses		(3,745	)		269			(6,354	)		1,833
Lease abandonment charges		5,146			–			5,146			–
Legal settlements		–			–			–			2,197
Non-cash change to contingent consideration		(429	)		47			(4,075	)		47
Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI		1,308			–			1,308			–
Change in estimate related to refund liability		–			–			–			8,089
Acquisition transaction costs		222			927			222			927
Acquisition related non-cash intangible adjustment		–			–			3,950			–
Non-operational rent expenses		880			1,177			3,629			4,297

Adjusted EBITDA Including EBITDA Losses from AI Segment	$	65,812		$	57,233		$	232,344		$	192,474

EBITDA Losses from AI Segment		2,483			4,320			12,764			16,575

Adjusted EBITDA excluding EBITDA Losses from AI Segment	$	68,295		$	61,553		$	245,108		$	209,049

RADNET, INC. AND SUBSIDIARIES

SCHEDULE OF ADJUSTED EARNINGS AND EARNINGS PER SHARE ⁽³⁾

(IN THOUSANDS EXCEPT SHARE DATA)

(unaudited)

	Three Months Ended
	December 31,
	2023			2022

NET (LOSS) INCOME ATTRIBUTABLE TO RADNET, INC.
COMMON STOCKHOLDERS	$	(1,858	)	$	(933	)

Add severance costs		621			450
Add loss on lease abandonment/impairment		5,146			–
Add debt restructuring and loss on extinguishment expenses		–			731
Add non-operational rent expenses (i)		880			1,177
Add AI Segment losses (iv)		4,973			6,060
Add acquisition transaction costs		222			927
Add valuation adjustment for contingent consideration		(429	)		47
Add Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI		1,308			–
Add/Subtract non-cash change in fair value of swap valuation (ii)		7,236			(45	)
Total adjustments - loss (gain)		19,957			9,347
Subtract tax impact of Adjustments (iii)		4,357			2,031

TOTAL ADJUSTMENT TO NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON SHAREHOLDERS		15,600			7,316

ADJUSTED NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS		13,742			6,383

WEIGHTED AVERAGE SHARES OUTSTANDING
Diluted		68,895,322			58,164,555


ADJUSTED DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS	$	0.20		$	0.11

(i)

Represents rent expense associated with de novo sites under construction prior to them becoming operational.

(ii)

Impact from the change in fair value of the swaps during the quarter. Excludes the amortization of the accumulation of the changes in fair value out of Other Comprehensive Income that existed prior to the hedges becoming ineffective.

(iii)

Tax effected using 21.83% and 21.73% blended federal and state effective tax rate for 2023 and 2022, respectively.

(iv)

Represents pre-tax net losses before income taxes from Artificial Intelligence reporting segment.

PAYOR CLASS BREAKDOWN

	Fourth Quarter
	2023

Commercial Insurance		58.0%
Medicare		22.8%
Capitation		8.4%
Medicaid		2.9%
Workers Compensation/Personal Injury		2.8%
Other		5.0%
Total		100.0%

RADNET PAYMENTS BY MODALITY

	Fourth Quarter		Full Year		Full Year		Full Year
	2023		2023		2022		2021

MRI		36.9%		36.8%		36.8%		36.0%
CT		16.6%		16.8%		17.5%		17.2%
PET/CT		6.3%		6.4%		5.8%		5.5%
X-ray		6.3%		6.5%		6.7%		3.9%
Ultrasound		12.9%		12.9%		12.6%		12.7%
Mammography		16.5%		16.0%		15.3%		16.1%
Nuclear Medicine		0.7%		0.8%		0.9%		1.0%
Other		3.8%		3.9%		4.5%		4.6%
		100.0%		100.0%		100.0%		100.0%

PROCEDURES BY MODALITY*

	Fourth Quarter		Fourth Quarter
	2023		2023

MRI		398,625		352,009
CT		237,937		213,716
PET/CT		15,825		13,359
Nuclear Medicine		8,120		8,550
Ultrasound		617,301		578,238
Mammography		483,687		459,068
X-ray and Other		804,225		752,055

Total		2,565,720		2,376,995

* Volumes include wholy owned and joint venture centers.

Footnotes

⁽¹⁾ The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, each from continuing operations and excludes losses or gains on the disposal of equipment, other income or loss, loss on debt extinguishments, bargain purchase gains and non-cash equity compensation. Adjusted EBITDA includes equity earnings in unconsolidated operations and subtracts allocations of earnings to non-controlling interests in subsidiaries, and is adjusted for non-cash and extraordinary events which took place during the period.

Adjusted EBITDA is reconciled to its nearest comparable GAAP financial measure. Adjusted EBITDA is a non-GAAP financial measure used as analytical indicator by RadNet management and the healthcare industry to assess business performance, and is a measure of leverage capacity and ability to service debt. Adjusted EBITDA should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA should not be considered in isolation or as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As Adjusted EBITDA is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies.

⁽²⁾ As noted above, the Company defines Free Cash Flow as Adjusted EBITDA less total Capital Expenditures (whether completed with cash or financed) and Cash Interest paid. Free Cash Flow is a non-GAAP financial measure. The Company uses Free Cash Flow because the Company believes it provides useful information for investors and management because it measures our capacity to generate cash from our operating activities. Free Cash Flow does not represent total cash flow since it does not include the cash flows generated by or used in financing activities. In addition, our definition of Free Cash Flow may differ from definitions used by other companies.

Free Cash Flow should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA should not be considered in isolation or as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As Adjusted EBITDA is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies.

⁽³⁾ The Company defines Adjusted Earnings Per Share as net income or loss attributable to RadNet, Inc. common stockholders and excludes losses or gains on the disposal of equipment, loss on debt extinguishments, bargain purchase gains, severance costs, loss on impairment, loss or gain on swap valuation, gain on extinguishment of debt, unusual or non-recurring entries that impact the Company’s tax provision, pre-tax loss or gain from AI segment and any other non-recurring or unusual transactions recorded during the period.

Adjusted Earnings Per Share is reconciled to its nearest comparable GAAP financial measure. Adjusted Earnings Per Share is a non-GAAP financial measure used as analytical indicator by RadNet management and the healthcare industry to assess business performance. Adjusted Earnings Per Share should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted Earnings Per Share should not be considered in isolation or as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As Adjusted Earnings Per Share is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies.

Exhibit 99.2

C O R P O R A T E P A R T I C I P A N T S

Howard Berger, MD, President and Chief Executive Officer

Mark Stolper, Executive Vice President and Chief Financial Officer

C O N F E R E N C E C A L L P A R T I C I P A N T S

Brian Tanquilut, Jefferies

David MacDonald, SunTrust

John Ransom, Raymond James

Gary Taylor, TD Cowen

Larry Solow, CJS Securities

Ed Kressler, TPG Angelo Gordon

Jim Sidoti, Sidoti & Company

P R E S E N T A T I O N

Operator

Good day and welcome to the RadNet Inc. Fourth Quarter 2023 Financial Results Conference Call.

All participants will be in a listen-only mode. (Operator instructions).

After today’s presentation, there will be an opportunity to ask questions. (Operator instructions).

Please note this event is being recorded.

I would now like to turn the conference over to Mark Stolper, Executive Vice President and Chief Financial Officer at RadNet. Please go ahead.

Mark Stolper

Thank you. Good morning ladies and gentlemen, and thank you for joining Howard Berger and me today to discuss RadNet’s fourth quarter and full year 2023 financial results.

Before we begin today, I’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, 2023, filed yesterday.

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 publicly update 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.

With that, I’d like now to turn the call over to Dr. Berger.

Howard 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 2023 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.

Let’s begin.

I am very pleased with the strong performance in our fourth quarter. The Imaging Center segment revenue increased 8.6% and Adjusted EBITDA increased 11% from last year's fourth quarter, resulting in RadNet quarterly records for both revenue and Adjusted EBITDA. The performance was the result of a continuation of strong industry trends and execution on a multipronged growth strategy focused on driving same-center performance, the expansion of existing and establishment of new health system partnerships and investments made in de novo imaging centers, and newer technologies of equipment, software and AI solutions. We experienced a 7.9% aggregate and 5.5% and same-center procedural volume growth in this year's fourth quarter relative to last year's same quarter.

Demand for RadNet's services remains robust in virtually all core markets. as outpatient imaging continues to be shifted from more expensive hospital settings towards more cost-efficient ambulatory sites like the ones RadNet operates. Contributing to the record Adjusted EBITDA performance was also a labor market that, while still challenged to attract and retain talent, has stabilized and improved since its most challenging post-COVID periods.

We continue to focus on strengthening the balance sheet by managing liquidity and financial leverage. At the year end 2023, RadNet's cash balance was over $342 million, and the net leverage ratio was under 2x Adjusted EBITDA. Our days sales outstanding, DSOs, at December 31, 2023, was 32 days, RadNet's historic low and we believe among the lowest in the industry.

The improvement in revenue cycle operations and collections has contributed to the ability to make important investments in the future of RadNet, particularly in the area of de novo facility development. We began a significant de novo expansion strategy in 2022, which continued throughout 2023. We are making extraordinary capital investments in developing facilities which should improve our capacity and patient access. RadNet should begin benefiting from the financial contribution of these facility openings in 2024, during which we expect to see our first patients in about a dozen of these new centers. These de novo centers are located in markets where we are experiencing patient backlogs, require additional capacity, or in locations where we currently lack access points to service identified patient populations.

A second area of investment in focus has been in expanding joint venture and health system initiatives. We currently have 24 system joint ventures representing over 35% of our 366 centers. We continue to believe that we could have more than half of our centers in health system partnerships within three years. As an example, in September of 2023 we announced a significant expansion of our relationship with Cedars-Sinai Medical Health System in the Los Angeles area, establishing a new joint venture called Los Angeles Imaging Group, as well as broadening an existing three-center joint venture, Santa Monica Imaging Group, to include the contribution of seven additional centers from both RadNet and Cedars-Sinai. Forward thinking and entrepreneurial health systems like Cedars-Sinai are increasingly seeking a long-term viable strategy for diagnostic imaging and RadNet represents an attractive strategic direction for these organizations. As we look ahead to 2024, we anticipate the expansion of several health system relationships and the establishment of new joint venture relationships.

Tuck-in acquisitions will also remain an active part of RadNet's growth, strategy and investment. The diagnostic imaging industry remains fragmented and smaller operators are unable to provide the patient access and level of care that can be facilitated today with investments in newer hardware, software and artificial intelligence technologies. Furthermore, the rising cost of capital, increased interest rates, reimbursement pressure from Medicare and other private payors, and the necessity of scale drive efficiencies and profitability, made joining the RadNet network more attractive than ever. In 2023, we completed several tuck-in acquisitions in Southern California, New York and Delaware.

Earlier this week, some of you may have seen the announcement that we signed a definitive agreement to purchase the assets of seven imaging centers in the Greater Houston, Texas metropolitan area from Houston Medical Imaging. Houston represents the first new geographical market RadNet will have entered since 2020. The Houston metropolitan marketplace encompassing about 7.3 million people is the fourth most populous city and the second fastest-growing metropolitan area in the United States. Houston Medical Imaging with its seven well-recognized facilities, approximately 140 team members and over 20 radiologists has been a stable factor in the radiology market in used for over 30 years, and we believe HMI is a platform for which to grow a new core network for RadNet.

We are confident of the opportunity for further acquisitions, de novo buildouts, health system partnerships and other means of expansion which include bringing our AI and leading-edge clinical and operating Digital Health solutions to the patients and referring communities of the Greater Houston area.

As we move further in 2024 and beyond, we will continue to have a disciplined approach to evaluating opportunities to expand outside of our core markets.

We continue to invest and pursue growth opportunities in artificial intelligence and radiology software solutions. The implementation of our enhanced breast cancer detection, EBCD screening mammography service, is continuing on the West Coast. We are now fully implemented in Southern California and Arizona and will begin rolling out the program in approximately 18 Central and Northern California mammography locations in March. We are pleased to report that we are experiencing higher initial adoption rates on the West Coast as a result of the learnings from our East Coast experience.

We continue to work with our partners in the United Kingdom and the expansion of the targeted lung health check lung cancer screening program, where DeepHealth's Aidence division is providing the principal AI solution in the four-country rollout. We expect to see continued growth in Aidence from this program and other similar lung stream programs during 2024. In 2023, our AI segment revenue grew 278% from these initiatives and AI revenue in 2024 is anticipated to grow over 65% with continued adoption of artificial intelligence solutions. We further believe that RadNet's AI business will reach Adjusted EBITDA breakeven by year end 2024.

In 2023, we announced the development of our DeepHealth OS AI-powered health informatics portfolio, designed to dramatically drive efficiency and transform the role of radiology in healthcare. At the heart of that offering is a cloud native operating system which leverages both clinical AI that improves disease detection and generates a generative AI to efficiently orchestrate patient engagement and care delivery. We will begin internal implementation during 2024 and expect that many of the DeepHealth OS tools will be incorporated into the RadNet workflow by year end. The expectation is that external customers, including the over 200 current customers of eRAD, could begin licensing the commercialized DeepHealth OS solutions beginning early in 2025.

This brings me to the final point I would like to make before turning the call back to Mark. In last meeting's financial results press release, we announced the formation of the RadNet Digital Health financial reporting segment, effective January 1, 2024, which combines the current eRAD and DeepHealth OS software businesses into what was our clinical AI reporting segment throughout 2023. As we have been growing our eRAD software solutions and AI businesses separately, we have increasingly recognized that these businesses are quite different than our core Imaging Center business in terms of their operational and financial profile and that they require a different level of focus and expertise to manage. Over the past year, we have been able to attract an executive team with experience in managing Digital Health businesses.

The financial impact of these Digital Health businesses has great potential for RadNet, both as a customer of the DeepHealth OS and AI solutions and, of course, as the owner of these businesses, which sell their solutions to customers outside of RadNet. Software businesses and, in particular, SaaS-based models can operate at significantly higher margin than RadNet's core imaging center segment and require less capital investment. The Digital Health segment is projected to be profitable in 2024 and grow in the range of approximately 20% to 40% in 2024 over 2023.

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 year 2023 performance, as well as discuss our 2024 guidance. When he is finished, I will make some closing remarks.

Mark Stolper

Thank you, Howard.

I’m now going to briefly review our fourth quarter and full year 2023 performance and attempt to highlight what I believe to be some material items. I will also give some further explanation of certain items in our financial statements, as well as provide some insights into some of the metrics that drove our fourth quarter and full year 2023 performance. I will also provide 2024 guidance levels which were released in this morning’s—or I should say last night’s financial press release.

In my discussion, I will use the term Adjusted EBITDA, which is a non-GAAP financial measure. The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, and excludes losses or gains on the disposal of equipment, other income or loss, loss on debt extinguishments, and non-cash equity compensation. Adjusted EBITDA includes equity and earnings of unconsolidated operations and subtracts allocations of earnings to noncontrolling interest and subsidiaries, and is adjusted for non-cash or extraordinary and one-time events taking place during the period. A full quantitative reconciliation of Adjusted EBITDA to net income or loss attributable to RadNet Inc. common shareholders is included in our earnings release.

With that said, I'd now like to review our fourth quarter and full year 2023 results.

For the fourth quarter of 2023, RadNet reported revenue from its Imaging Center reporting segment of $415.3 million and Adjusted EBITDA of $68.3 million. This excludes AI revenue of $5.1 million and AI Adjusted EBITDA losses of $2.5 million during the quarter. As compared with the last year's fourth quarter, Imaging Center segment revenue increased $32.8 million or 8.6% and Adjusted EBITDA increased $6.7 million or 11%.

Including our AI reporting segment, total company revenue was $420.4 million in the fourth quarter of 2023, an increase of 9.5% from $383.9 million in last year's fourth quarter. Including the Adjusted EBITDA losses of the AI reporting segment of $2.5 million in the fourth quarter of 2023 and $4.3 million in the fourth quarter of 2022, total company Adjusted EBITDA was $65.8 million in the fourth quarter of 2023 and $57.2 million in the fourth quarter of 2022, and a growth rate of 15%.

For the fourth quarter of 2023 as compared with the prior year's fourth quarter, MRI volume increased 13.2%, T volume increased 11.3% and PET/CT volume increased 18.5%. Overall volume, taking into account routine imaging exams inclusive of xray, ultrasound, mammography and all other exams, increased 7.9% over the prior year's fourth quarter.

On a same-center basis, including only those centers which were part of RadNet for both the fourth quarters of 2023 and 2022, MRI volume increased 10.8%, CT volume increased 8.2% and PET/CT volume increased 17.4%. Overall same-center volume, taking into account all routine imaging exams, increased 5.5% over the prior year same quarter.

Adjusting for a number of unusual or one-time items impacting the fourth quarter of 2023, adjusted earnings from the Imaging Center reporting segment was $13.7 million and diluted adjusted earnings per share was $0.20 during the fourth quarter of 2023 as compared with $0.11 during the fourth quarter of 2022.

The unusual or one-time items impacting the fourth quarter of 2023 excluded in calculating adjusted earnings were as follows: $7.2 million of non-cash loss from interest rate swaps; $621,000 of severance paid in connection with headcount reductions related to cost savings initiatives; $880,000 of expenses related to leases for de novo facilities under construction that have yet to open their operations; $222,000 a of acquisition transaction costs; $429,000 gain from a valuation adjustment for contingent consideration related to acquisitions; $1.3 million of noncapitalized research and development investments in the DeepHealth cloud-based OS and generative AI solutions; $5.1 million loss on lease abandonment; and $5 million of pretax losses related to our AI reporting segment.

On an unadjusted basis for the fourth quarter of 2023, RadNet reported a net loss of $1.9 million as compared with a net loss of $934,000 for the fourth quarter of 2022. Net loss per share for the fourth quarter of '23 unadjusted was negative $0.03 compared with a net loss per share of negative $0.02 in the fourth quarter of 2022, based upon a weighted average number of diluted shares outstanding of 67.9 million shares in 2023 and 57 million shares in 2022.

With regards to some specific income statement accounts, overall GAAP interest expense for the fourth quarter of 2022 was $16.6 million. This compares with GAAP interest expense in the fourth quarter of 2022 of $15.4 million. Cash paid for interest during the period, which excludes non-cash deferred financing expense, accrued interest and payments to and from swap counterparties was $5.6 million as compared with $8.9 million in the fourth quarter of last year. The lower cash paid for interest in this year's fourth quarter was a function of the timing of our SOFR elections on our term loan despite higher interest rates in the fourth quarter of 2023 relative to last year's fourth quarter.

For full year 2023, we reported revenue from our Imaging Center reporting segment of $1.604 billion and Adjusted EBITDA, excluding losses from the AI reporting segment of $245.1 million. In 2023, revenue increased $178.5 million or 12.5% and Adjusted EBITDA increased $36.1 million or 17.2% as compared with 2022.

For 2023, Adjusted EBITDA margin for the Imaging Center segment was 15.3%, an increase of 60 basis points from 2022, which had a 14.7% Adjusted EBITDA margin.

Including our AI segment—total company revenue of $12.5 million. Total company revenue was $1.617 billion for full year 2023, an increase of 13% from $1.430 billion in 2022. Including Adjusted EBITDA losses from the AI segment of $12.8 million, total company Adjusted EBITDA for 2023 was $232.3 million as compared with $192.5 million in 2022, an increase of 20.7%.

For the year ended December 31, 2023, as compared with 2022, MRI volume increased 13.3%, CT volume increased 12.5%, and PET/CT volume increased 18.8%. Overall volume, taking into account routine imaging exams inclusive of xray, ultrasound, mammography and all other exams, increased 10,4% for the 12 months of 2023 over 2022.

For 2023, RadNet reported net income of $3 million, a decrease of approximately $7.6 million over 2022. Per share diluted net income for the full year of 2023 was $0.05 compared to a diluted net income per share of $0.17 in 2022 based upon a weighted average number of diluted shares outstanding of $64.7 million in 2023 and $57.3 million in 2022.

With regards to some specific income statement accounts, overall GAAP interest expense in 2023 was $64.5 million. Adjusting for the impacts from items such as amortization of deferred financing fees, accrued interest and payments to and from swap counterparties on interest rate swaps and net of interest earned on our cash balance, net cash interest expense was $38.3 million in 2023.

With regards to our balance sheet, as of December 31, 2023, unadjusted for bond and term loan discounts, we had $465.3 million of net debt, which is our total debt at par value that's our cash balance. Note that this debt balance includes RadNet's ownership percentage of New Jersey Imaging Network's net debt of $63.2 million for which RadNet is neither a borrower nor a guarantor. As of year end 2023, we were undrawn on our $195 million revolving line of credit and had a cash balance of $342.6 million.

At December 31, 2023, our accounts receivable balance was $163.7 million, a decrease of $2.7 million from year end 2022 and despite revenue being up 13% during 2023. This was the result of improved revenue cycle performance and collections efforts. These improved efforts caused our DSO to decrease from 38.8 days at December 31, 2022, to 32 days at December 31, 2023, which is our all-time low.

Throughout 2023 we had total capital expenditures net of asset dispositions and the sale of imaging center assets and joint venture interests of $153 million. This amount excludes $18.6 million of capital expenditures of New Jersey Imaging Network, a one-time $19.8 million purchase on a promissory note of equipment previously leased under operating leases, and a $5 million purchase of software and other intellectual property from a vendor. Capital expenditures in 2023 were higher than we originally budgeted as a result of the construction of certain de novo facilities that became operational towards the end of 2023 or expected to become operational within 2024.

As some of you may have seen in the financial results press release we made last night after market close, and as discussed by Dr. Berger in his earlier remarks, starting with our fiscal 2024, we are changing our operating and financial reporting segments. Specifically, the eRAD software businesses and related health informatics businesses that were reported as part of our Imaging Center segment throughout 2023 will now be combined with our artificial intelligence segment to form a new Digital Health financial reportable segment, starting with the first quarter of 2024.

The eRAD and informatics businesses embedded within the Imaging Center segment in 2023 were highly profitable. These businesses produced $37.1 million of revenue, had $16.4 million of operating expenses, and earned $20.7 million of Adjusted EBITDA.

For the purpose of understanding and evaluating our 2024 guidance, in last night's financial press release, we restated our 2023 operating segment results to be presented as if the two new operating segments—meaning the Imaging Center segment and the Digital Health segment—existed as of January 1, 2023.

While I'm not going to run through all the numbers on this call, I will emphasize some important points. First, on the core Imaging Center segment, we are anticipating revenue growth in 2024 to be as much as 8.5%, and we expect Adjusted EBITDA growth in 2024 from the Imaging Center segment to be 11.4% to 15.8%.

While we continue to make elevated capital expenditures in 2024, the aggregate amount is anticipated to be approximately 10% to 15% less than what we spent in 2023. We are also expecting free cash flow in the Imaging Center segment to approximately double in 2024.

On the new Digital Health reportable segment, we are anticipating revenue growth in 2024 of between 21% and 41%, and Adjusted EBITDA growth of between 51% and 77%. The majority of the revenue growth is anticipated from both the continued Enhanced Breast Cancer Detection, or EBCD, implementation and from our lung and prostate AI licensing businesses, particularly in Europe. The AI portion of our Digital Health business is projected to grow by over 65% and is anticipated to reach breakeven by year end 2024 from an Adjusted EBITDA standpoint.

Finally, our Digital Health segment guidance reflects the substantial investment we are making in the development of our DeepHealth OS cloud-based operating system and the generative AI modules that could lower our costs and increase efficiency in the areas of patient scheduling, preauthorization, insurance verification and revenue cycle. We believe this research and development investment will pay dividends both in our core imaging center business and for the current and future customers outside of RadNet.

I'd now like to turn the call back over to Dr. Berger, who will make some closing remarks.

Howard Berger

Thank you, Mark.

As we look to 2024, we have reasons to remain enthusiastic about our future. The core imaging business is healthy and growing, procedural volumes and patient demand are strong, payors and patients are increasingly moving procedural volumes to our centers and away from hospital-based imaging operations that charge prices that are unsustainable in a healthcare system attempting to manage costs.

In addition to the site of care shift taking place, the overall industry continues to grow, driven in part by advances in technology, which drives more medical indications for ordering diagnostic imaging procedures. Additionally, the population is aging and growing, and continues to see non-invasive, preventive and cost effectiveness, all in sectors that continue to see (audio interference) are beginning to take off.

RadNet is ideally positioned for long-term growth and success in this dynamic marketplace. In a period where the cost of capital has risen significantly, we remain modestly leveraged and have more liquidity and capital resources as compared with virtually all of our other scale operators in the industry. This places us in the best position to pursue growth opportunities, both organic and inorganic, in a time period where many others do not have the financial capacity or flexibility.

Perhaps the most important aspect of this report is the formation of the RadNet Digital Health position. The future of healthcare will be substantially driven by artificial intelligence, and radiology can lead the way. A successful AI initiative relies on scale operations and access to large data sets. RadNet has accumulated both of these components over several decades of existence. The newly created Digital Health division will allow our stakeholders to better recognize the growth and success of this essential component of the RadNet family of services.

In conclusion, we have never been more excited than we are today about what lies ahead for RadNet. We feel as if we are better positioned today than at any other time in our history to execute on the multifaceted strategy that we have created. We look forward to updating our stakeholders throughout the rest of 2024 on our progress.

Operator, we are now ready for the question-and-answer portion of the call,

Operator

We will now begin the question-and-answer session. (Operator instructions).

At this time, we will pause momentarily to assemble our roster.

The first question today comes from Brian Tanquilut with Jefferies. Please go ahead.

Brian Tanquilut

Hey, good morning guys and congrats on a solid quarter and a solid year. Maybe Howard, I'll ask you first. Obviously, volumes have been pretty strong and the outlook for 2024 looks like you're expecting continued strength in volumes. Just curious what you're seeing there. Then maybe if there's anything you can share with us in terms of the differentiation and performance between your JV centers versus the non-JV ones from a same-store or from a volume perspective as well?

Howard Berger

Hi Brian, thank you. Let me try to answer this in two parts. As far as overall volume is concerned, we do have significant backlogs virtually in all of our markets. Part of that is driven by demand. Part of it is driven by the continued challenge that we have for labor. And while I believe that, that has improved and began that turnaround and perhaps the second part of 2023 and is continuing into 2024, it still does compromise the ability for us to access all of the capacity that we've created. But we feel that this issue will continue to be dealt with, both through aggressive talent acquisition tools that we're employing as well as programs that we're using to help provide the educational support to overcome the shortage of technologists and other administrative personnel.

Part of this, you may have seen the announcement with the collaborative venture that we have with a nonprofit organization here in Southern California called JVS that we announced about two weeks ago. This will be an ongoing initiative on our part. I should say that part of this problem will also be attended to by the development of the generative AI portion of our DeepHealth OS solutions, which we expect to begin implementing in the second half—in the RadNet centers, that is, in the second half of the 2024 calendar year.

In regards, Brian, to the volumes differential, if you want to use that, or difference between joint venture centers and wholly-owned centers, one of the reasons that we are bullish and looking to increase the percentage of centers that are under joint venture is for the very reason that when we combine the talents of RadNet as well as the health systems aggressive nature of enrolling or incorporating physician delivery services, we have seen a shift from local competitors, or even their hospitals, into our centers, which has driven better profitability for them and for us.

If it were possible, I wouldn't mind having all soon to be 400 centers that we're going to have into joint ventures, simply because I think in addition to operational efficiencies as well as volume drivers, we also have better discussions or more robust discussions with the payors for reimbursement. So that portion of our business, which I think we started to more aggressively pursue three years ago I think is one of the major contributors in the company's success and which we think is a very appropriate place for us to be in the overall healthcare marketplace, as well as under the current economic circumstances.

Brian Tanquilut

I appreciate that, Howard. Then maybe my second question, as I think about your decision to enter Houston, obviously a little bit of a deviation from your legacy strategy of being on the coasts, right? Just curious what the thought process was and what it is about the Houston market that attracted you there, and then maybe sort of the expansion plan, right? Because you obviously price part of your strategy like being deep in the market so -- and even joint ventures, as you said. So, just curious how you're thinking about the roll out of your RadNet model into the Houston market.

Howard Berger

Well, as I've talked about in the past, Brian, we don't necessarily have a business development team that goes knocking on doors. We're looking for motivated sellers, and whether those sellers are in the markets that we're currently in or whether they're in markets that we might look to grow into, this was a situation where the operator had been looking for an exit strategy and did want to roll up into a larger operation, both for a number of the reasons that Mark mentioned in his remarks about scale and stability, as well as access to capital and new technologies. When this operator approached us, he had already looked at the landscape of other opportunities and felt that we were clearly best of breed, if you will. So over the last several months, we've had an active negotiation with him as we assess the marketplace.

Perhaps one of the major drivers is the size of the Houston marketplace and perhaps a little less regulatory issues than we're used to experiencing in some of our other major metropolitan marketplaces. Houston tends to be a more friendly—or Texas, in particular in Houston, tend to be a more attractive marketplace, and we were just looking for the right entry point. We had opportunities in the past, but never one that we felt was a good platform company. This operator has a history in that market of successful operations and growth, a very well recognized professional group and the desire to expand.

We are working and assessing other opportunities as we talk in that marketplace, which I think you'll hear more from us about later in this year. The expression that we like to use is that we're not a buy-and-hold, we’re a buy-and-build. So in any market, a new market that we want to go into, we look for our growth strategy, and given the demographics of that marketplace, given the size of the population and similar problems that people are having in other markets where there's a lot of demand and not a lot of capacity, we felt it was a good place to raise the RadNet flag. We have high expectations for the Houston market as part of our next core marketplace.

Brian Tanquilut

Awesome. Thank you, Howard.

Howard Berger

Thanks, Brian.

Mark Stolper

Thanks, Brian.

Operator

The next question comes from David MacDonald with SunTrust. Please go ahead.

David MacDonald

Thank you. Good morning, guys. Congratulations. Just a couple of quick questions. One, kind of coming back to Brian's capacity volume backlog question, I was wondering, can you just spend a minute talking about some of the ongoing investments you guys have made around new equipment? The benefits that that's driven in terms of freeing up capacity, shorter scan times, etc., and is there additional opportunity around technology to kind of further alleviate some of the pressure on the capacity side?

Howard Berger

Good morning, David. Absolutely. We've made a number of investments to kind of test the theory of shorter scan times and remote operational control, both of which have been very successful and which we will now continue to invest in. Particularly when it comes to MRI scanning, where the history of MRI over the years has reduced scan times from 45 minutes to an hour down to 30 minutes then down to 20, the new technology, which is a total software implementation can reduce that scan time further, perhaps down to as little as 10 minutes on certain exams. Buying this software is relatively less expensive than it is to obviously buy another MRI system, and you don't have the kind of costly investment in the facility to site equipment. So I believe that is one of the benefits that we're seeing from the increased volume that we had in 2023, particularly in the second half of the year.

Another one, though, is the technology related to the ability to have one remote technologist control the operation of several scanners. This can be for MR and for CT scanning, and we believe we can expand this into ultrasound and perhaps even mammography, which we're now looking at.

Part of the initiative in our Digital Health division will be to develop some of these tools internally where we can amortize the cost of that over all of our systems and not necessarily have it be a serial investment that we have to incur for every piece of equipment.

So I think with the success that we had again in the second half of the 2023 year and with the roll-off for more of these centers, it will also not only, I believe, help us with the scan time efficiencies, but help us address this shortage of personnel, particularly technologists that can allow us to have what we call super techs overseeing this, and then tech aids at our individual centers and not necessarily fully licensed technologists.

This part of the creativity aspect of RadNet is something that we think we've been good at, but which now given, I think, the investment that we're talking about, being capable of making both because of our financial liquidity as well as in the technology side of the business can't be underestimated.

I think it's important for all of our stakeholders to recognize that whether we're talking about artificial intelligence or the equipment itself, our business is very highly technologically driven. All of the tools that we can use to let technology do the work will ultimately inure to the benefit of our performance, both in terms of new procedures, adding capacity and lowering overall costs.

I think there's a multifaceted approach to our investment thesis where we're not just developing these tools so that we can sell them, but, given the scale that we have and the data that we have, nobody is better at developing these tools than we are internally.

David MacDonald

I guess just two other quick questions. Look, I realize it's extremely early but I'm just curious the reaction, if any, that you've gotten within the Houston market. I mean it's a huge market. There's a ton of hospital systems in that market. I'm just kind of curious, any initial reactions or incomings in terms of conversations, opportunities, etc.? Just any general comments there.

Howard Berger

Well, I don't think we've had much reaction as yet, Dave, because it's very early on and we haven't closed the transaction. We've signed a definitive agreement. We expect to close the transaction next month in April. But some early indications are that people are excited about us coming into the marketplace to bring tools that we are now identified with, as well as other operators that may not have perhaps assist the desirability of consolidating into a bigger operator.

There’s active discussions right now. We expect that we'll hear from some of the hospital systems in that marketplace too, because some of the hospitals that we have joint ventures with are on a national scale and have operations in the Texas marketplace. I think this will be a reaction, if you will, that will have a ripple effect, not only in Texas, but maybe in other areas that we wanted to signal that we're open for business and ready to look at win-win opportunities no matter where that market might be.

David MacDonald

Okay. Then just last one. I'm curious, are you servicing or have you begun to service any Alzheimer's patients at this point? If and when that opportunity starts to ramp more meaningfully, is there anything we should think about in terms of either disproportionate opportunities or governors as that volume starts to ramp?

Howard Berger

Yes. Another good question, Dave. We just recently went through the credentialing process and making certain that the systems, the MR scanners in particular, and the PET/CT scanners that we have, have the appropriate protocols here. So far, we have either performed or have on the books 100 of these procedures that we will be performing and the questions come in—the requests come in daily for this. We expect this to be a significant opportunity for the company as we move through this. If we make any comparison to the success that we've achieved in PET/CT scanning for prostate cancer, it should be a significant contributor in 2024, but moreso probably in 2025.

I also want to emphasize that it's not just doing the scan for the Alzheimer's disease itself, which currently is done with either PET/CT or PET/MR equipment but it's also been the requirement for follow-on MRI scanning of the brain to assess any kind of side effects, which some of these drugs have demonstrated that they're capable of doing. The protocol that we're currently going to be adhering to will be that there would be, I think, a minimum of four MRI scans on any patient that is identified as a candidate for the new Alzheimer drug therapy. So the ripple effect of this could be quite substantial. This is another reason why we have to be very focused on capacity issues.

Mark Stolper

It's pretty exciting, Dave, because our PET/CT business is already the fastest-growing part of our company, albeit it's a small percentage of our volume, roughly 0.6% of our volume, but it does represent between 6% and 7% of our overall revenue. It grew 18.5% in the fourth quarter. Over the full year from '23 to '22, it grew 18.8%. That's mostly not from the Alzheimer's opportunity; it's mostly from the PSMA prostate scanning that has been exploding. So if you layer on top this Alzheimer's opportunity, which we think is coming to fruition, having already scanned 100 patients—and by the way, those 100-plus patients we've scanned has all been in the last four months or so—as these patients get qualified to get these amyloid PET/CT studies, we think that this is going to be a big growth driver, potentially in '24, but certainly beyond '24.

David MacDonald

Okay. Thank you very much.

Howard Berger

Thank you, Dave.

Operator

The next question comes from John Ransom with Raymond James. Please go ahead.

John Ransom

Hey, good morning. Congrats, guys. Mark, I'm going to challenge you with the math question. I don’t know if you’ve got your HP-12c all fired up, ready to go?

Howard Berger

He doesn't have that but he has his pen, John.

Mark Stolper

I have an abacus in front of me.

John Ransom

That's funny. If you think about the EBITDA in '24, how much of that is from acquisitions and de novos that did not exist in '23? Then to kind of pile onto that question, if we think about the run rate of that EBITDA going into '25, how much higher is it, the run rate for the full year versus layering it in during the year? I'm thinking about your acquisitions and de novos, '24 over '23, and then kind of the jumping off point for '25. Thanks.

Mark Stolper

Sure. With respect to acquisitions, it's very small, the contribution. Because the Houston deal was already announced, we included the remaining period of this year from closing that transaction. We did a small acquisition earlier in this year in Antelope Valley in California. So, the contribution in our EBITDA for next year, the $250 million to $260 million number is less than $10 million in terms of our acquisitions.

With respect to de novo facilities, I don't have that number exactly in front of me, but my recollection is that the centers that are outside of the same-center due to de novos that we opened up in 2023 is probably in the range of I would say—let me just look at something here. I've got a report in front of me—another $5 million to $6 million. Between those two, I would say, between $10 million to $15 million, probably closer to $15 million of our $250 million to $260 million of EBITDA is coming from the contribution of those acquisitions I mentioned, as well as the de novo centers that are ramping.

John Ransom

My other question is, if we look at eRAD plus AI, what's the exit rate of EBITDA? As AI gets to breakeven, what are you contemplating in terms of the exit rate of that EBITDA versus the full year? If we think about '25, what's bridging that to '25?

Mark Stolper

The revenue that we have projected for the year is $60 million to $70 million. There's going to be higher revenue in the fourth quarter due to the ramp of EBCD, which I would say—I'm just thinking here—we might closer—if you look, if you divided the $60 million, let's say, by four quarters, you'd be doing $15 million a quarter. I'd say by exiting that year, we'd probably be closer to a $20 million quarter. That's just a gut feel. I don't have the budget in front of me.

John Ransom

And AI being kind of breakeven in the fourth quarter from a loss today.

Mark Stolper

AI being breakeven on an EBITDA basis by the fourth quarter.

John Ransom

Yes. Okay. That's a lift. And then lastly, if you could be Markadamus, when would you say you’d get the first meaningful payor participation in your AI, covering the AI costs? Or do you think it's an out-of-pocket expense for the foreseeable future?

Howard Berger

I don't think I could predict, John, when we're likely to see that. Unfortunately, in conversations that we've had with the payors, there's always a hesitation on their part to incur additional expense when they may not intellectually be able to get themselves comfortable with what that payback is.

I believe that what will happen—and it may take another year and a half to two years is that as the adoption of AI continues on a private pay basis that the pressure will mount on the part of the commercial payors to reimburse for this once we've been doing it long enough to demonstrate that there is a significant improvement in the cancer detection rate, and at the same time reduce the callback rate or false positives. But given that we've just started commercializing this really last year, we're going to need a little bit more time, probably another year to year and a half to collect or accumulate enough data to make that kind of a compelling argument so that it isn't just about how you reduce the treatment, if you will. It's really a matter of—when I say reduce the treatment from cancer that is detected, but how you can actually pay for this by reduce by detecting the cancer earlier and reducing the number of false positives that we have, which is a significant cost to the healthcare system.

I wish I could be more enthusiastic because I don't think in my history in this business that there's been anything more exciting than the earlier detection of cancer. Right now, we're primarily focused on breast cancer, but we're seeing similar benefits in the UK with our program there where the National Health Service has now made it a reimbursable part for providers for getting all of their at-risk lung cancer patients in for annual screening.

I think there needs to be a certain amount of momentum built up for this and other tools that we need to introduce into the marketplace, which we are actively working on right now, to get the attention of a wider group of payors and regulators.

John Ransom

Thank you very much.

Howard Berger

Thank you, John.

Operator

The next question comes from Gary Taylor with JPMorgan. Please go ahead.

Gary Taylor

Well, actually, it's TD Cowen now. JPMorgan is a little bit stale, but nevertheless. Just a couple of questions. First, on the Imaging Center CapEx guide of $130 million, Mark, we've talked a little bit, but is the right way to think about that $130 million is, call it, half, maybe a little more than half of that is kind of routine maintenance CapEx and the other $60 million would really be development CapEx for de novos?

Mark Stolper

Yes. That's not too far off, Gary. We've been spending a lot of money, as you saw in '22 and '23, on the ramp of these de novo centers, which still haven't contributed materially yet to our financials. That spend on growth CapEx and de novo centers is going to bleed here into 2024 as we've got more than a dozen of those centers still in various stages of development and construction. So, 50/50 in terms of our CapEx budget here in 2024 is pretty close to actual.

Gary Taylor

Thanks. Then my second one, just thinking about the number of competitors around AI and cancer diagnosis and AI, like big market, a lot of different players trying to get in that game. In theory, given that you're also an operator, you're not just an AI developer, I would think your go-to-market strategy outside of your own centers would be somewhat advantaged by your own role as an operator versus just a technology company or so forth. Could you talk about that a little bit? Just kind of how you're thinking about how you'll compete with these other folks that have developed breast, in particular, sort of AI solutions?

Howard Berger

Yes. That's a good question, Gary. The problem, if you will, with artificial intelligence is who's going to pay for it. I think part of the slow adoption of what I think are some very good tools is the fact that nobody wants to—at least payors—put money out for something that they don't necessarily see a value proposition right now. Whether it's a hospital system or whether it's an outpatient provider, that question of who bears the cost is the one that I think has slowed down almost every AI developer out there into a meaningful revenue stream.

I expect there's going to be a lot of consolidation in the AI space here for two reasons. Number one, as I said, most of the new companies have been unable to demonstrate revenue and are, therefore, having difficulty attracting more venture capital, but also the higher interest rates and the need for a more visible return on investment from venture capital and private equity companies is beginning to have limitations on what they're willing to spend on some AI development. We think that we'll see—and there already has been some groups that have come to us to talk about either being a distributor for them or potentially an acquisition target for us.

I want to emphasize the distributor part of this because part of our platform, which is the DeepHealth OS, is the ability for us to take other AI products and put them onto our platform and offer them up, whether it's internally to our own centers or externally to other customers, and at a far more seamless way than exists right now.

So I think you're right in that we can develop a lot of this and create value for ourselves, even though it may not be on an individual case basis that much, but given the scale that we have. For example, in the breast cancer area, we do in excess of 1.5 million screening mammograms a year and growing. Right now, over a third, probably closer to 35% of all of the women getting screening mammography are electing to have our AI solution that they pay $40 for. If you do that math, it generates by itself almost more revenue for RadNet than almost any other AI radiology product.

As I indicated in my remarks here, scale of operations and data sets are what's going to drive opportunities for AI in the future. But make no mistake about it: it is going to be the future of healthcare and it's going to be very much an important part of what RadNet and all the other imaging providers are going to have to gravitate to if they expect to both compete in the future marketplace as well as deal with some of the intrinsic costs and capacity issues that we're all confronted with now.

Mark Stolper

And Gary, and to your question directly about our potential advantage in development and selling these solutions, Dr. Berger mentioned the data set. We're now north of 100 million digital images and growing by 10 million a year given our current size, which is a huge advantage in terms of developing and training these algorithms.

And secondly, as we deploy them in the RadNet's 366 and growing number of centers, we can be a test bed for our own technology and our algorithms, which then makes external customers that much more comfortable that there's already an install base, there’s already an operator who is using these algorithms effectively, and I think that, that's a huge advantage to selling these solutions externally once, as Dr. Berger mentioned, once these solutions start being more ubiquitous, which is going to occur at such time where there's third-party reimbursement from commercial and other payors.

Howard Berger

That little interlude there reminded me of one other point I want to make. We do have a potential built-in marketplace for ourselves with our hospital joint venture partners. I can't overestimate that enough in that most of these hospital systems will want to use the tools that we're developing, if not for hospitals that are part of our joint venture, but other parts of their systems where we may not be a joint venture partner with them, perhaps in other states or in other areas, number one, and the ability to have a seamless flow of data between inpatient and outpatient, which will create the kind of efficiencies that will help reduce costs.

Right now, I can't remember the number. We probably have 30 or more different large health systems that are...

Mark Stolper

We have 24 JVs.

Howard Berger

Yes, but...

Mark Stolper

Encompassing 130 locations.

Howard Berger

Okay. But those hospital systems, they have other hospitals that we’re not necessarily JV with.

Mark Stolper

Sure.

Howard Berger

There's a pretty big marketplace out there where we'll have a very receptive audience that will not only want to potentially use our tools, but to help unify their entire radiology platform on an outpatient and inpatient basis.

Gary Taylor

Thank you.

Operator

The next question comes from Larry Solow with CJS Securities. Please go ahead.

Larry Solow

Great. Good morning gentlemen and I echo the congrats on a solid finish to a really good year.

I guess first question for me, Mark, is I think you mentioned you're targeting I think 8% to 8.5% revenue growth in the Imaging segment all in. If we look at just volume growth in 2023, procedure volume growth, same-store procedure volume growth was actually above kind of that 3% to 4% sort of annual target every quarter. Not saying we're reaching an inflection point, but how do you view that growth last year? What are you kind of targeting this year in that sort of 8% overall, 8.5% overall revenue growth? I realize maybe a couple percentage of that is from acquisitions, but whatever that net is, 6%, 7%. How do you view that volume versus price? Because also on price, if we look last year I think average price per procedure was also up about 3%. How do you kind of view those two components as you look out for this year?

Mark Stolper

Sure. On the procedure volume front, typically we've told our stakeholders over the long term we felt that we could grow kind of in the low single digits on a same-center basis. Obviously, that becomes harder the more efficient you get and how the busy at your centers are. But we've been making a lot of capital investments and investments in technology to be able to drive better throughput into our centers to continue to comp in sort of the low to mid-single digits on a same-center basis. Those are investments in these MRI scanners that Dr. Berger talked about that allow for shorter scanning times, the remote technologists which allows us to open up on nights and weekends and get coverage from a labor perspective. We've done a bunch of things at our centers to try to get patients in and out of our centers more quickly with digital check-ins and better clinical protocols and so on and so forth.

Embedded in next year's guidance of 8.5-plus percent growth, we are assuming mid, low single-digit same-store sales performance, which, if you look at 2023, we did even better than that. Throughout the year, we were north of 5%, 6% in terms of our same-center performance. Then the rest of it are the contributions of other centers that either were opened or purchased that weren't in the same-center calculation going from 2023 to 2024.

I think, is it possible that we can do better than that? Yes, absolutely. Given all some of the tailwinds that we talked about in the industry that are trends that are driving more and more of the patient flow out of more expensive hospitals and inpatient imaging towards ambulatory outpatient imaging, a lot of these advances in technology, the benefits that we're seeing in certain modalities like PET/CT, like the PSMA test and the Alzheimer's imaging, which we talked about. I think all of those things are contributing to a more robust than historical same-center potential here for us. So, we'll see how the year kind of unfolds.

Larry Solow

Okay. In terms of just pricing, are you guys—obviously on the government side there’s still a little bit of a headwind there, but as I just look at for the full year average price per procedure was actually up 3%-ish. I realize some of that is just a mix to these higher modalities, but are you getting actual price on your commercial side that more than offsets the inflationary pressures?

Mark Stolper

Yes, we are. Thanks for reminding me to talk about price.

As you mentioned, we are facing a small headwind with Medicare pricing as a result of the lowering of the conversion factor of the Medicare fee schedule by 3.4%. That's not specific to radiology; anybody who bills under the physician fee schedule, the Medicare Physician Fee Schedule regardless of specialty is facing that hit. For us, that's about a $7 million to $8 million headwind, but that is dwarfed by the pricing increases that we're getting from our commercial book of business and from our capitated payors.

In our capitation contracts, although we're very effective in managing utilization, utilization of diagnostic imaging still goes up every year because of all the benefits of technology and the aging population and so on and so forth. As that utilization goes up, we get pricing escalators in these contracts, so we benefit from that each year.

Then on the commercial front, I would say that the payors are more recognizing that we are their partners in trying to move this business and shift this business out of the more expensive hospitals into our freestanding centers. In most of our markets, the hospitals for the inpatient work are charging anywhere between 2x and 5x the prices that we're charging the payors. So the payors recognize that it's far more beneficial to them to getting this business—to shifting the site of care, and they're less concerned about paying RadNet a couple of points or 3%, 4% more to do this type of work. Because we've got a staff of a couple hundred plus marketing representatives whose purpose in life is to go around and call on physician practices and try to get this business into our centers and out of hospital.

We did experience pricing increases, which benefited us last year in our 2023 results, and we've got a number of pricing increases going into effect in 2024 that will impact our revenue positively this year.

Larry Solow

Great. If I could just squeeze one more in just on the enhanced breast cancer testing test. I think you mentioned, I think East Coast penetrated or adoption on the East Coast centers was somewhere in the 30-ish range. Curious, has that been—I know it sort of increased during the year last year. Do you expect that number to continue to increase as your marketing efforts improve and you learn more as well? West Coast, is that a similar number in the low 30s from the start, maybe that grows as well?

Mark Stolper

Yes. We are approaching close to 35% adoption rate in EBCD on the East Coast, which is more mature, obviously, than the West Coast. We started rolling out the West Coast in the fourth quarter of last year. We are completed in the rollout here in Southern California. We've got about 18 more centers—by the way, we're completed in Southern California and Arizona. We've got 18 more centers in Northern California and Central California to roll out the EBCD program. These are obviously mammo centers.

What we’ve seen—and the rollout has been a little bit slower on the West Coast than originally intended, but what we are seeing is much higher initial adoption rates on the West Coast. Our West Coast adoption rates currently are over 30%. It took the East Coast many, many months to get to that level. Part of why we're being more successful on the West Coast isn't so much that there's differences in the patient population; it's just that we learned a lot from the East Coast rollout and we took those learnings and we're much more effective at communicating the program to the patients, to the referring physicians. We've done more in-market marketing. We started off with the $40 price here on the West Coast, and when we originally started on the East Coast we were at a $60 price, which created some level of resistance in the adoption rate.

I think we're fairly bullish as we continue to roll out this program, which is embedded in our guidance. In other words, our revenue was close to $13 million in the EBCD program, recognized by the AI division in 2023, and that should go somewhere into the low 20s in 2024. We're talking about 65%-ish growth just in that program within our Digital Health segment in 2024.

Larry Solow

I'm just curious, Howard mentioned it might take a couple of years before you actually get payor coverage. But is it too early to think about or have you gotten interest from outside centers outside of your network for this test?

Howard Berger

Well, I think we do have some interest, but interestingly enough, where it may be coming from are people that self-insure. In at least two of our hospital joint venture groups, they now are extending the EBCD program to their employees and dependents, and in fact in New Jersey, the Barnabas Health System, the RWJ Barnabas Health System, is rolling this out as a benefit that they're going to be paying for, I believe, it's April 1. So we have similar...

Mark Stolper

For their employees and they have about 30,000 employees.

Howard Berger

And dependents.

Mark Stolper

And dependents.

Howard Berger

Right. I think this actually may be a different form of marketing before we're going to see adoption by the commercial payors. But one may follow from the other because, if I use New Jersey as an example, their TPA, the third-party administrator, happens to be on the Blue Cross Blue Shield entity Horizon in New Jersey, and they essentially are going to be paying for these procedures as part of the RWJ Barnabas benefit program. Once they see the evidence of how beneficial this is, it may be easier to sell them—meaning Horizon—on a more larger market approach to the use of this.

All of these are tools that I think we're in a unique position to do because of the way we are concentrated in markets and the kind of conversations that we can have by not just being kind of a one-off provider in any particular market.

Larry Solow

Got it. Thank you for all that color. I appreciate it.

Mark Stolper

Thanks, Larry.

Operator

The next question comes from Ed Kressler with Angelo Gordon. Please go ahead.

Ed Kressler

Hey guys, congrats on the great quarter and year, and always thanks for your time to taking the time to speak to us. Appreciate it.

Can you discuss how you're funding the Houston acquisition and the effect on pro forma leverage? Obviously, given what we discussed here in terms of your regional density strategy, should we be thinking about kind of next steps as more M&A, possible JVs in that area, or will you pivot to some de novo activity there?

Then in the context of just kind of spending down some of that balance sheet cash that you derived from the equity offering, can you talk about your comfort level regarding leverage as you spend that down? Thanks so much.

Mark Stolper

Sure. Thanks, Ed. If you remember, when we did the equity raise back in June of last year where we raised about $245 million of net proceeds, we earmarked about $100 million of that $245 million of proceeds to a potential debt paydown. Then in October 1 of last year, we did pay down $30 million of that $100 million, and we communicated at the time we did that, that we wanted to hold on some more of that cash because we had other opportunities that we thought were very accretive for our shareholders, for all of our stakeholders for the use of that cash.

When we did that we had the Houston deal in mind. You'll see in our 10-K that we paid about $30 million for that practice. There's other things in our pipeline that will also be a use of those proceeds that we raised back last year in June. That deal will be paid for in cash.

After that, we'll still have a pretty robust cash balance that will continue to use, not only for other investments like M&A but also capital investments in de novo centers, as well as some of the IT investments that we're making.

Clearly, we have a lot of firepower, a lot of capacity. Not only with the $342 million of cash we ended with at year end, we have $195 million unfunded undrawn-upon revolving line of credit. Our net debt leverage ratio is now below 2x, and so we have a lot of debt capacity, so we certainly have the capacity to continue to grow this business and execute on M&A opportunities if they should arise.

Ed Kressler

Got it. Do you think you will pursue a de novo strategy in that area as well, or are you going to kind of just marinate in the market and learn it for a while first?

Mark Stolper

Are you talking specifically about Houston?

Ed Kressler

Yes.

Howard Berger

Yes. I think our strategy in Houston will be similar to what it's been in other new markets that we've entered into, although we haven’t for four years. But we're looking at other acquisition opportunities, probably a couple of de novos and then wait to see who shows an interest, if there is any, from existing hospital operators in that market. But I would say for the next year or two, it will be mostly acquisitions and de novos, but maybe more of an emphasis on the acquisition side of it rather than de novo side of it.

Ed Kressler

Got it. Thank you so much for your time. Appreciate it.

Mark Stolper

Thanks, Ed.

Operator

The next questioner comes from Jim Sidoti with Sidoti & Co. Please go ahead.

Jim Sidoti

Hi. I know it's been a long call, so I'll try and be quick. Thank you for the time, though. A quick one: how many centers do you have operating as of today?

Howard Berger

As of today we have 366. Actually, there may be more than that. I take that back because when you say today, you mean in the calendar first quarter so far this year?

Jim Sidoti

Right.

Howard Berger

Yes. Well, we've made some other small acquisitions. We're probably in—and a couple of de novos have finally opened up, if you will, but we're probably somewhere around 370 to 372 right now. We expect by year end with all the activities, some of which we've talked about, de novos and acquisitions to be around 400.

Jim Sidoti

Okay. The revenue guidance you provided last night, does that include the seven centers in Texas and additional centers you expect to come online?

Mark Stolper

Yes. Well, it includes the seven centers in Texas from the point that we end up closing that deal, which will be during the second quarter, we'll close it. It does not include any other acquisitions that have yet to be announced.

Jim Sidoti

Okay. Can you just make a comment on reimbursement rates in Texas and how it compares to reimbursement on the coast?

Howard Berger

I can assure you it's going to be better. The coast is a challenging environment here, both in Arizona as well as California, primarily because in Arizona there’s a large Medicare population. And in Arizona, there's a large managed care population as well as Medicare population. Our original due diligence showed us that we were comfortable with the reimbursement rates in Texas being significantly better than they are in Arizona and California.

Mark Stolper

Yes, with more commercial patients, less government pay, yes.

Jim Sidoti

Okay. All right, and then two more quick ones. The guidance you gave for interest expense for 2024, is that net of any interest income you'll gain on the capital you raised in 2023, or is that just straight interest expense?

Mark Stolper

Yes. Thank you for asking that. Yes, it's net of two things. One is it's net of any payments to and from our swap counterparties. It's also net of interest income to be earned on our cash balance, which is how we reported our cash interest expense for this year of 38—excuse me, for 2023 of $38.3 million.

Jim Sidoti

So it's increasing, I assume because of the increase in rates, but as you progress through the year, generate more free cash, you know, assuming rates don't continue to go up, at some point that number should start to come down again? I guess depending on your acquisition activity.

Mark Stolper

Yes. I think in 2023, we received about $14 million on our interest rate swaps from counterparties because of the in the money nature of our swaps.

Jim Sidoti

Mm-hmm. I'm just saying though, overall interest expense, while it's going up this year, you would think at some point because of the strong free cash flow generation you have that, that number should start to at least level off in '25, ‘26, those years.

Mark Stolper

Yes.

Jim Sidoti

Okay. All right. Then the last one from me. On the AI business, is there any pushback at all from the physicians on that product, or are they happy to get the support and they have plenty of other things they can do?

Howard Berger

When you say physicians are you talking about on the radiologists…

Jim Sidoti

Right.

Howard Berger

… or the referring physicians?

Jim Sidoti

No, radiologists. Are radiologists at all giving you any kind of pushback to the AI, or are they happy for the help?

Howard Berger

On the contrary. They'd be very upset if we took it away from them.

Jim Sidoti

Yes, okay.

Howard Berger

I think our radiologists and inversely all the radiologists where we introduced this to feel that they have a greater confidence level. It's almost like getting for them a second read, a second opinion, and one that helps them better analyze areas that are less visible to the human eye. It's been an overwhelming success within our radiology community of mammographers.

Jim Sidoti

And I assume they’re not seeing any negative financial impact if this technology gets adopted?

Howard Berger

No, there's no… I mean, that's really up to the patient. The patient can elect to have this value added to their scan or not. It's their choice.

Jim Sidoti

Right. Right. But in terms what the radiologist fees are, their fees are the same whether the patient adopts this—elects to do this or not?

Howard Berger

Yes. Mm-hmm. Yes.

Jim Sidoti

Okay. Just wanted to be clear on that. All right, thank you.

Howard Berger

Thank you.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Dr. Berger for any closing remarks.

Howard Berger

All right. Thank you. Again, I would like to take this opportunity to thank all of our shareholders and stakeholders for their continued support, and the employees of RadNet for their dedication and hard work. Management will continue its endeavor to be a market leader that provides great services with an appropriate return on investment for all stakeholders. Thank you for your time today and I look forward to our next call.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Cover	Feb. 29, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Feb. 29, 2024
Entity File Number	001-33307
Entity Registrant Name	RadNet, Inc.
Entity Central Index Key	0000790526
Entity Tax Identification Number	13-3326724
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	1510 Cotner Avenue
Entity Address, City or Town	Los Angeles
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90025
City Area Code	310
Local Phone Number	478-7808
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.0001 par value
Trading Symbol	RDNT
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false