RadNet wants to increase imaging access via urgent care clinics, nonradiology physician groups

RadNet Inc. wants to help nonradiology physician offices, multispecialty groups and urgent care centers deliver diagnostic imaging at the point of care. 

Leaders with the Los Angeles-based imaging center operator discussed the strategy during the company’s fourth quarter earnings call Feb. 28. CEO Howard Berger, MD, gave the example of RadNet’s recent partnership with OB/GYN Specialists of the Palm Beaches, assisting the Florida firm in offering mammography at four of its own locations. 

Under the agreement, RadNet’s contracted radiologists provide interpretations of all mammograms and diagnostic screening exams performed at the obstetrics and gynecology group. RadNet also is providing technological support, including its Enhanced Breast Cancer Detection protocol, which charges women $40 to have AI look over their mammograms. 

“The announcement that was made earlier this week with OB/GYN Specialists of the Palm Beaches is a case study of how RadNet can be a solution provider,” Berger read from prepared remarks, according to a transcript of the call. This, he added, will enable “physician offices, multispecialty medical groups, urgent care centers in addition to OB/GYN offices with tools to provide high-quality, cost-effective diagnostic imaging, which will increase access to imaging services.”

He believes such partnerships will be most beneficial in mammography, ultrasonography and radiography—procedures that represent about 75% of all outpatient imaging. Demand for radiology services continues to rise, and partnerships like the one with OB-GYN group could provide relief. 

“Furthermore, tech-enabled, point-of-care imaging will create better compliance for routine screening such as mammography and will reduce costs to the healthcare system by providing additional sites that are more convenient and cost effective,” Berger added. 

OB/GYN Specialists reportedly reached out to RadNet after “dissatisfaction with some of the professional and operational relationships that they had.” Berger said the two sides had an “expeditious” meeting, resulting in the arrangement. RadNet was initially focused solely on professional services in the discussions. However, Berger and colleagues were able to convince the OB-GYN practice to adopt digital solutions related to scheduling and other functions. He sees other opportunities in the OB-GYN space, which RadNet wants to pursue “aggressively.” 

The company is betting big on its digital health division, anticipating 30% revenue growth in 2025. RadNet is investing roughly $20 million in the business line, beefing up sales, marketing, customer support and implementation teams. The segment exhibited “strong growth” in Q4, with revenue up 28% year over year (to $19 million) while adjusted earnings leapt nearly 62% compared to 2023’s fourth quarter. About $7 million of that was attributed to AI, up 32% versus the previous year.

RadNet is sitting on $740 million in cash and continues to seek acquisition opportunities, both in digital health and on the imaging center side. The company currently operates about 400 outpatient centers concentrated in California, Maryland, Delaware, New Jersey, New York, Florida, Texas and Arizona.

“A number of the larger consolidators [in radiology] are private equity backed, and I dare say they're all for sale at the right price,” Berger told investors during the Q&A portion of the call. “The question is, what's the right price? If it doesn't fit in with the metrics that we think are important to maintain the appropriate leverage and synergies that we traditionally expect from our acquisitions, we just passed on them.

“We're actively working on a number of opportunities, both in the digital health and in the imaging services division, which I believe we'll be able to talk about later in the year. But we want to be very strategic, and we want to be good stewards of how we use this cash. It's better for us to keep a good cash balance and be ready to move on those deals that we think are accretive, not only from a financial standpoint but from a long-term future and growth standpoint. I think you'll be hearing more about that from us in the coming quarters.”