Industry giant RadNet Inc. saw quarterly revenue climb nearly 11% year-over-year to a “record” $432 million, with double-digit growth across multiple modalities, leaders said Wednesday.
Comparing only imaging centers that operated both quarters, MRI volumes increased 10% compared to Q1 of 2023 while PET/CT was up more than 15%. CT (7%) and routine imaging (such as X-ray and mammography) (4%) also grew, while RadNet’s adjusted earnings leapt 21%, up to nearly $59 million.
“Improved reimbursement from commercial and capitated payers, ongoing efforts toward greater operating efficiency and effective cost controls resulted in an increase to adjusted [earnings before interest, taxes, depreciation and amortization] margins by 120 basis points over last year’s first quarter,” CEO Howard Berger, MD, said in a May 8 announcement. “We believe there is further room for improvement, especially as we continue to disproportionally grow the higher margin digital health businesses and lean into both clinical and generative AI.”
Publicly traded RadNet—which operates a total of 375 outpatient imaging centers—saw its adjusted profit margin increase by over 1%, up to nearly 14% in Q1.
Earlier this year, RadNet spun off its various AI and technology initiatives into a separate “digital health” reporting segment. The business recorded revenue of $15 million for Q1 (up 32%) and adjusted earnings climbed from $20,000 last year to $3.5 million (up 17,500%). RadNet attributed this change to a 119% uptick in AI revenue, to $5 million in Q1 of 2024. The company offers a new Enhanced Breast Cancer Detection program, which charges women an extra $40 out of pocket to have AI read their mammogram, accounting for much of the revenue gain.
“Given the positive trends we are experiencing in virtually all aspects of our business and the strong financial performance of the first quarter, we are revising upwards certain guidance levels in anticipation of financial results that we believe will exceed our original expectations,” Berger said in the announcement.
RadNet said Wednesday that it is adjusting the top-end of its anticipated total net revenue for 2024 from $1.7 billion up to $1.725 billion. It’s also revising adjusted earnings projections from as much as $260 million up to $265 million, with free cash flow also expected to climb.
In response to heavy imaging demand, a challenging real estate market and patient backlogs, RadNet announced in 2022 that it had started constructing new centers. Leaders expect a dozen to open by the end of 2024, and RadNet continues to work on expanding hospital joint ventures. Currently, about 37% (or 137) of its imaging centers are operated through such partnerships.
Overall, RadNet reported a net loss for Q1 of $2.8 million compared to a net loss of $21 million during the same period last year. Various “unusual or one-time items” impacted this total, including $1.2 million in noncash losses from interest rate swaps and $1 million in lease expenses for new centers that haven’t yet opened. When adjusting for these and various other one-off expenses, adjusted earnings were about $5 million in Q1 of 2024 versus a $13 million adjusted loss last year.
RadNet plans to host a conference call to discuss its quarterly results at 10:30 a.m. Eastern Time on May 9. Those interested can phone 844-826-3035 or visit this link to view a live stream/archived webcast.
Editor's Note: A previous version of this story misstated the cost of RadNet's EBCD program, which is $40. Radiology Business regrets the error.
Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic.