Short-selling investment startup accuses RadNet of exaggerating its success

A startup investment firm that specializes in short selling is accusing diagnostic imaging center operator RadNet Inc. of exaggerating its success. Others, meanwhile, are defending the Los Angeles-based radiology and AI company’s accounting practices. 

Founded in 2023, Hunterbrook is an investigative news and investment outlet, which creates reports criticizing publicly traded companies and then benefits from the corresponding drop in share prices. Its initial investigation focused on alleged fraud at United Wholesale Mortgage, with Hunterbrook now turning its attention to RadNet. 

In the report published Dec. 16, journalists charge that the company has inflated its same-center growth numbers—a figure used to track volume increases while filtering out gains from mergers and acquisitions. Hunterbrook charged that RadNet has consolidated nearby centers in its markets and then claimed the corresponding leap in business was organic. 

“Beneath the tech patina, RadNet looks like an ordinary business—one whose financial metrics, including reported same-center sales, raise questions of their own,” the analysis noted. 

RadNet declined to comment about the report to both Hunterbrook and Radiology Business. The radiology group, which operates over 400 outpatient centers, shared third quarter earnings results on Nov. 9, with same-center procedural volumes climbing 9.9% compared to the same period in 2024. This after reporting 9.8% same-center sales growth last year. 

However, Hunterbrook contends these calculations are “inherently messy.” That’s because RadNet is purportedly constantly closing centers as its opening new ones, via acquisitions and construction. “To filter out the noise,” Hunterbrook wrote, same-center figures should exclude all centers sold, opened, acquired or closed. 

However, according to its analysis, RadNet’s decision to close centers near other existing locations potentially accounts for up to 57% of same-center growth between 2022 and 2025. RadNet reported growth at about 6% over that period. But minus the “artificial boost that comes from consolidating centers, the real growth looks more like 2.5% to 3%,” the analysis found. 

“Say that RadNet closes center B and routes its patients to A. B is gone from the same-center calculation—but its revenue has simply shifted to A, the RadNet location a few minutes away,” Hunterbrook wrote. “So, A can show 100% same-center sales growth, thereby helping to drive up the company’s average. But nothing fundamental happened. This isn’t [the company’s AI division] DeepHealth helping RadNet get more business. The volume didn’t grow, it merely changed addresses.”

Investment firm Raymond James criticized the report in its own response published Dec. 16, still labeling RadNet’s stock a “strong buy.” It noted that Hunterbrook “mostly hits on data points that are already known and disclosed publicly by the company.” Raymond James also questioned the narrative related to imaging center volume increases. Centers closed over the last few years were mostly small X-ray- and ultrasound-only clinics where they were able to migrate volume to larger nearby centers. Plus, consolidated imaging center revenue growth would be 10% and imaging center EBITDA growth would be 11% in 2025, if you exclude impact from California wildfires earlier this year, “which ignores any same-store, new-store math.” 

“The point on same-store growth and the store closures is overblown,” Raymond James wrote. “Centers are more fluid in this business as the real estate is leased, not owned, and if the company is able to migrate scan volume from one facility into another existing facility, that is a good business decision as it eliminates lease/operating expenses.” 

Raymond James noted that Hunterbrook also was short on the stock with a large Dec. 19 “put position” outstanding. The report appeared to produce its desired effect, with RadNet share prices falling 8% after it was published, Seeking Alpha estimated. However, prices have bounced back upward since then. Hunterbrook also questioned early returns on RadNet’s DeepHealth artificial intelligence division, highlighting alleged struggles selling to imaging competitors and numbers potentially inflated by sales to centers within its own imaging division. The investment startup currently has approximately 15 activist short campaigns, with some more successful than others, according to data from Diligent. For instance, a campaign tied to Bonk Inc., which recently pivoted from a wellness focus to building a treasury of digital assets, produced a nearly 62.5% return. Conversely, another relating to Symbiotic Inc., a robotics warehouse company, saw a -133% return. 

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