Amid heavy demand, patient backlogs, RadNet to add 21 imaging centers, ballooning total past 400

Amid heavy demand for radiology services, RadNet Inc. plans to add 21 new imaging centers, ballooning its total well past 400, leaders said Wednesday.

The Los Angeles-based outpatient provider currently operates 398 centers, with about 37% (or 149) held through hospital joint ventures. RadNet continued to see swelling patient volumes during 2024’s second quarter, with nuclear medicine a bright spot.

On a same-center basis—meaning only counting locations operating in both Q2 of 2023 and 2024—MRI volumes increased nearly 12%. CT, meanwhile, grew by 10%, and PET/CT leapt 14%. Overall volumes, including routine imaging, X-ray, ultrasound and mammography, climbed 6% compared to the same three months in 2023.

RadNet recently closed the acquisition of six American Health Imaging centers in Houston June 1. CEO Howard Berger, MD, said the company expects to open six more by the end of 2024 and another 15 in 2025. RadNet has a cash balance of $742 million with an eye toward growth this year and beyond. 

“In response to high demand and patient backlogs in many of RadNet’s local markets, we continue to pursue expanding capacity through the development and construction of new imaging centers,” Berger said in an earnings announcement late Wednesday, adding that about half “will be within existing health system partnerships.”

Total company revenue in Q2 increased 14% year over year, up to nearly $460 million. RadNet highlighted its AI business as one success, with revenues increasing nearly 137% compared to last year, up to $3 million. This was mainly driven by RadNet’s Enhanced Breast Cancer Detection program, which charges women $40 to have artificial intelligence interpret their mammogram.

Total adjusted earnings were $72 million in the second quarter of 2024, up nearly 20% versus the same period last year. Meanwhile, adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) margins increased from 15% last year up to 15.7% in Q2.

“Improved reimbursement from commercial and capitated payers, continued strong demand for advanced imaging modalities, the growth of the digital health businesses and effective cost controls resulted in an increase to adjusted EBITDA margins,” Berger noted.

However, certain “unusual or one-time items” impacted RadNet’s results. The company reported a Q2 net loss of $3 million as compared to net income of $8.4 million the same period in 2023. RadNet recently completed over $1 billion in debt refinancing transactions during the quarter. This resulted in the company paying $9 million for debt restructuring and extinguishment expenses. Another $1 million went toward leases of under-construction centers that have yet to open, while $3 million covered research and development costs related to its DeepHealth AI segment. Adjusting for these and other one-off items, total net earnings were about $12 million.

Following a successful quarter, RadNet is revising financial forecasts for the rest of the year. The company is now expecting total net revenue in its imaging center segment of up to $1.735 billion in 2024 (up from previous forecasts of $1.725 billion), along with adjusted earnings of up to $267 million (revised from $265 million).

“Given the positive trends we continue to experience in virtually all aspects of our business and the strong financial performance of the second quarter, we are revising upwards certain guidance levels in anticipation of financial results that we believe will exceed both our original expectations and the amendments we made to the guidance ranges upon releasing our first quarter 2024 results in May,” Berger said in the announcement.

RadNet will hold a quarterly company earnings call to discuss the results on Thursday, Aug. 8, at 9:30 a.m. Central Time. Those interested can phone 844-826-3035 from the United States or find a live/archived webcast here.