RadNet spending nearly $29M to acquire ultrasound AI vendor See-Mode Technologies, SEC filing reveals

Berger also noted that CPT codes are already in place to make a portion of RadNet’s 250,000 annual thyroid ultrasound eligible for additional reimbursement. Plus, the company hopes to pursue FDA clearance for See-Mode’s breast AI ultrasound application, which would impact another 600,000 of RadNet’s 2.7 million annual ultrasound exams performed. 

“While initial focus will be on the implementation within RadNet, these technologies will also be sold and marketed by the Digital Health division to third parties as the offerings are further commercialized,” Berger read from prepared remarks. 

RadNet’s CEO discussed the rationale behind the eight-figure acquisition during the Q&A portion of the call. Thyroid ultrasound is one of the most difficult and time-consuming diagnostic procedures in all of radiology and is “extraordinarily manually intensive” for radiologists and technologies. Early results indicate the See-Mode AI tool could help reduce interpretation times by upward of 50%. This in turn will create additional capacity for RadNet radiologists, helping to manage turnaround times while allowing the company to rely less so on teleradiologists to satisfy current demand levels. 

In addition, RadNet believes using the thyroid AI tool can reduce ultrasound scan times by 30%. This could potentially allow RadNet to add another 1 or 2 exams slots per hour per system. Not every ultrasound system is busy enough to need the excess capacity, Berger said. However, the company has initially started by focusing on 28 or so imaging centers that are facing challenges and would benefit from extra time slots. 

“We have seen extraordinary demand. Ultrasound has always been one of the most sought-after imaging modalities and it's growing perhaps more rapidly than almost any other procedure that we have,” Berger told investors. “It is one [procedure] that became a major focus for us, as we went to the next imaging modality after mammography to try to create improvements using AI.”

With the acquisition finalized in June, RadNet has set to work spreading the See-Mode technology across its enterprise. The software works by automatically detecting nodules in ultrasound images, with no region of interest required from the sonographer. It allows for easy comparison between previous and new images, generates a complete ultrasound worksheet for the examination, and pre-populates rad report templates with preliminary exam findings and impressions. 

Berger said he’s anxious to complete full implementation of the technology. Leaders said they see this as the “most profitable” form of growth, since it’s all occurring through existing capacity. 

“It can't happen fast enough,” he told investors during the Q&A. “I have often said in the past, ‘if I could get enough rooms to put ultrasounds in, we could fill them.’ Now at least we feel that we don't need more ultrasound systems, and we don't need more techs. We need more capacity on the existing systems.”

According to the SEC filing, RadNet agreed to pay up to $12.7 million in cash and its own common stock as part of the deal. This is based on the achievement of three milestones: 

1. $4.3 million payable upon successful implementation of the company’s thyroid ultrasound detection product at four RadNet imaging centers. Plus, execution of at least two new customer contracts totaling $150,00 in aggregate annual value by March 31, 2026. 
2. $4.2 million payable upon FDA 510(k) clearance of the company’s breast ultrasound detection product, with submission required by March 31, 2026, and approval by Dec. 31 of the same year. 
3. $4.2 payable upon FDA 510(k) clearance of a new ultrasound product, with submission required by June 30, 2027, and approval by March 31, 2028. 

Each contingent amount is payable with 50% in cash and 50% in RadNet common shares, according to the SEC filing. The fair value of these considerations will be assessed quarterly based on the probability of achieving each milestone. The total purchase price of $28.7 million includes cash of about $17.9 million, a “holdback” of $2 million more to be released 18 months after the deal, and $8.8 million in contingencies.