Lumexa Imaging Stock

Thank you for standing by, and welcome to the Lumexa Imaging Second Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, today's program is being recorded.

And now I'd like to introduce your host for today's program, Sue Dooley, Investor Relations. Please go ahead, ma'am.

Thank you, and hello, everyone. We appreciate you joining us today. Leading today's call are our Chief Executive Officer, Caitlin Zulla; and Tony Martin, our Chief Financial Officer.

Before we begin, I want to note that today's discussion will include forward-looking statements, including statements regarding our 2026 guidance, expected operating performance, growth initiatives, reimbursement assumptions, capital expenditures and other future events. These statements reflect our current expectations and assumptions, which are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to the forward-looking statements and risk factors described in today's earnings release and our most recent SEC filings for additional information. We undertake no obligation to update these statements.

We will also discuss certain non-GAAP financial measures. Definitions and reconciliations to the most directly comparable GAAP measures are included in today's earnings release.

With that, I will now turn the call over to Caitlin. Caitlin, please go ahead.

Thanks, Sue. Thank you all for joining us today. Q2 was a quarter of substantial progress as we continue to execute against the strategic priorities, which support our ambition to build the premier platform for high-quality, lower-cost outpatient imaging serving health systems, physicians and patients. These include driving strong same-center growth with an expanding mix of advanced modalities, new de novo openings and ensuring the successful ramp of new centers, accelerating high-impact strategic service lines and expanding our geographic footprint through disciplined, capital-efficient growth. I'm eager to share our progress tonight.

A few highlights from the quarter. In Q2, we demonstrated continued strength of our core business. We delivered healthy growth in total same-center volumes, sustained momentum in advanced modalities, continued maturation of our de novo cohorts and important progress in expanding our health system partnerships. Advanced modalities grew to 37.4% of total volume, a record high for our company and 111 basis points higher than a year ago. Our advanced modality mix shift continues to build, driving higher reimbursement and margin for the business.

In May, we announced 4 new centers. So far this year, we've opened 2 de novos against our ongoing goal of 8 to 10 annually. We also completed 2 acquisitions, including our first site with the UPMC joint venture. And as we've previously indicated, the balance of this year's openings will be later in the year, and we remain on track to hit our full year de novo target.

In June, we achieved a significant milestone, a joint venture with Hospital for Special Surgery, a globally recognized leader in musculoskeletal health, expanding our presence in the New York City metro area. And all quarter, we are actively ramping de novo centers and our 2024 and 2025 cohorts are tracking in line with our expectations, layering in a healthy mix of advanced volumes while making meaningful strides towards our objectives around long-term growth and profit expansion.

These accomplishments provide us with a strong foundation heading into the second half of the year. Our performance through Q2, together with the continued progress across our key growth initiatives, supports our continued confidence in our ability to deliver our full-year commitments and the updated guidance we are providing today. Tony will speak more to this in a moment.

We remain inspired by our mission to expand access to high-quality and lower-cost imaging through elevated compassionate care. I'm proud of the progress our team is making and the energy they bring to their work at Lumexa every day. In fact, we recently completed our annual employee engagement survey and achieved record scores, a reflection of a team that is aligned and energized by our vision to be the partner of choice for leading health systems and radiologists. That spirit of engagement and shared purpose is the foundation from which we continue to grow.

It's early days for our market opportunity and yet our value proposition resonates strongly with patients, providers, health systems and payors. Whether through our wholly owned or joint venture centers, we are successfully delivering high-quality imaging in more convenient settings on a more timely basis and at a meaningfully lower cost than hospital outpatient departments. We helped health systems solve important operational challenges and achieve their patient care and market expansion goals. And patients love the care they receive, which is reflected in our Net Promoter Scores that consistently exceed 90.

In fact, Kaufman Hall just published an article titled Radiology strategy was never about radiology, which states, Imaging is not simply a department. It's a critical infrastructure for health systems growth in oncology, cardiovascular, neuroscience and orthopedics. We could not agree more. Our value proposition at Lumexa is bigger than operating imaging centers. We help health systems improve access, retain patients and improve their bottom line. We view imaging access as the front door to a health system's most valuable service line, and we helped health systems own that front door at a lower cost in the right convenient locations for their patients and with an operating model that drives value to all stakeholders.

As you know, CMS released its 2027 Hospital Outpatient Prospective Payment System proposed rule in early July. We believe the proposed OPPS rule provides further validation of the direction health care is moving. High-quality imaging should be delivered in the most appropriate cost-effective setting. If finalized as proposed, the site-neutral provisions would reduce the reimbursement advantage associated with hospital outpatient departments and further strengthen the rationale for health systems to expand lower-cost freestanding imaging capacity.

Lumexa is built for this environment. Our model enables health systems to improve access, expand strategically and participate in outpatient imaging growth with a lower cost structure that does not depend on a hospital-based reimbursement premium. While the proposal remains subject to comment and finalization, we view the shift towards outpatient imaging as a structural growth driver that will benefit us across the years, not quarters.

In other government matters, we reviewed CMS' 2027 Medicare Physician Fee Schedule proposed rule released in July. As a reminder, this is relevant to our current rate assumptions of approximately flat year-over-year government reimbursement rates and a 1% increase in commercial payor rates. If finalized as proposed, we believe the CMS rule will be consistent with our planning assumption for government payor rates. Medicare Advantage and fee-for-service stands at around 20% of our revenue. Regarding our commercial payers, the majority of the mix, we're fortunate to have a diverse set of payers who renew across staggered years. And so far this year, commercial negotiations also support our assumptions as we look ahead.

At Lumexa, we're addressing a large and growing market opportunity, and the market is moving towards us. We benefit from durable long-term tailwinds that we believe are just taking shape, aging populations with more complex and chronic conditions, new treatment paradigms requiring advanced imaging, rising preventative screening rates and a sustained shift from hospital-based to outpatient sites of care in a fragmented capacity-constrained industry.

In a real highlight of Q2, we announced our ninth health system joint venture, a strategic partnership with Hospital for Special Surgery, the world-renowned leader in musculoskeletal health. I would like to speak to this prestigious partnership in a bit more detail, which we think represents a significant validation of our joint venture approach. HSS is ranked #1 in orthopedics in the U.S. and is recognized globally for clinical excellence. Their decision to partner with Lumexa involves a rigorous evaluation of our clinical quality and operational capabilities.

HSS is an exciting amplifier of our vision to build a broad network of imaging centers in some of the nation's most attractive markets. Imagine New Yorkers who can visit their specialists in Manhattan and obtain timely and convenient imaging in surrounding communities. The New York metro area is one of the largest health care markets in the country, and we are excited to serve patients and referring providers in the strategic MSA. We are honored that HSS chose to partner with Lumexa. This partnership is our second new health system collaboration in the last 12 months following UPMC and reflects the growing pipeline of health systems actively seeking to expand hospital outpatient imaging access.

In fact, our recent market review identified a substantial universe of health systems, close to 100, where our model can address a demonstrated outpatient imaging need, giving us the confidence in the depth and duration of our partnership pipeline. The market in front of us is promising and vast and our offering is compelling.

In addition to the long-term market forces supporting our growth plans, our operations and commercial teams have partnered with clinical leaders to implement important programs to enhance care and drive growth. Specifically, our team is busy with programs to drive same-center growth and expand access with discipline and an emphasis on advanced modalities. Here's a little more on that. PET was a particular highlight in Q2 with 23.2% growth. We continue to advance our strategy here, adding 2 of our 3 targeted new PET machines in July. We are also expanding into new tracers, unlocking our valuable PET offering for more patients, including the tracer, FES, fluoroestradiol for estrogen-positive breast cancer patients.

On the DAC front, our AI-powered breast arterial calcification program continues to see strong uptake in New York and New Jersey, and we are advancing our expansion plans for other geographies. We recently launched our lung cancer screening initiative. This involves programs to drive patient engagement around one of the most impactful screening opportunities in our patient population. By increasing awareness and access, we can help more patients get screened, diagnosed earlier and connected to life-saving care.

Lung cancer remains the leading cause of cancer-related deaths in the U.S. and only about 18% of eligible individuals currently receive the screening, a striking gap when compared to the 72% screening rate for colorectal cancer. Targeted clinical outreach efforts like these remain a strength for our company. In Q2, we continue to advance our capital-light best-of-breed technology strategy. Today, we are giving that integrated capability a name, Lumexa Imaging Connect.

Lumexa Connect is the operating platform that connects patients, referring physicians, radiologists and health system partners across the imaging journey. Built on leading technologies, our platform allows us to rapidly integrate emerging innovations rather than require us to develop every solution ourselves. Lumexa Connect is foundational to our strategy, and it's designed to help us move faster, onboard new partners efficiently, improve access, increase capacity and scale efficiently as we grow.

We're already seeing this strategy deliver results.

We remain on track to deploy FastScan across 2/3 of our centers by year-end, helping shorten MRI scan times and expand capacity. We're also advancing virtual MRI capabilities and rolling out AI-powered dictation and reporting tools designed to improve radiologist efficiency, reduce physician burnout and accelerate report turnaround time. Lumexa Connect is not a new strategy. It is the name for the scalable operating platform that already supports our centers, our partners and our continued growth. New name, still capital-light, still best of breed. And we'll continue to evolve this platform with the best technologies to support improved service and operating performance for our patients, referring physicians, radiologists and health system partners.

In that regard, I would like to take a moment to highlight another differentiating aspect of our company, investments that enable the goals of our own technologists. I'm delighted to share that in Q2, we graduated our 100th technologist from Lumexa's Technologist Advancement Academy, spanning advanced modalities and mammography, including technologists from across all of our geographies. I'm proud of our team to support this important initiative, helping make Lumexa a great place for our clinical team members to call home.

Wrapping up, I'm pleased with the gains we're achieving as we proceed with good momentum into the second half of the year. De novos are ramping, advanced modalities are growing as a percentage of our mix. Our JV pipeline is robust, and we're expanding into important new markets with exceptional health system partners. I remain confident in our ability to execute on our strategic priorities and deliver on our full year commitments, and I believe we are just getting started.

Before I turn the call over to Tony, I will pause as I do every quarter to say a huge thank you to our dedicated team members and radiologists. Your commitment to our patients and to our mission is the foundation of everything we do. With that, Tony, please continue.

Thank you, Caitlin, and thank you all for joining us. Tonight, I'll review the financial results and speak to key drivers of our performance for the quarter. I will then provide our outlook for the full year. To supplement my review of our GAAP financials, I will discuss certain system-wide financial and operating metrics that provide additional perspective on our overall performance and the breadth of our business. We use these metrics in managing the business because they reflect activity across all of the centers we operate, both wholly owned as well as the centers we operate in our joint ventures with health systems.

Turning to our second quarter financials. Consolidated revenues came in at $264.2 million, an increase of 5.1% compared to the same period last year. System-wide revenue growth, which includes all sites we operate, was 6% in the quarter, powered by strong growth in advanced modalities. Revenue per scan in our outpatient segment increased 2.2%. This is a system-wide metric we use because it provides useful perspective on outpatient economics by capturing both the technical scan revenue where applicable, the associated professional read revenue. The year-over-year increase was driven by advanced modalities representing a larger share of our business, together with modest increases in contracted payor rates, partially offset by payer mix shifts in a few markets.

I would like to review some important volume metrics before going into more detail on our financials. We experienced strong system-wide volume performance across our outpatient sites during Q2, both wholly owned and in JVs. System-wide volume growth was 3.1%, with strength in advanced imaging being somewhat tempered by routine scans, although we did see improvement in mammography volumes that started the year slower than expected. While routine scans impact our earnings less than advanced, we were glad to see them improve during the quarter.

Advanced modality volumes, which generally reimbursed 3x to 4x higher than routine modalities were a highlight and grew 6.3% system-wide versus prior year and 6.8% on a consolidated basis. As Caitlin already highlighted, this quarter, advanced modalities represented 37.4% of our volumes, a 111 basis point increase over the prior year period. We're encouraged that these procedures have continued to steadily grow and represent a higher mix of our system-wide volumes.

Now for a bit more detail on our consolidated revenues. Outpatient net patient service revenues at $143.7 million grew 3.5% on healthy same-site growth. Professional fee net patient service revenues, our second operating segment, were $60.0 million (sic) [ $64.2 million ] reflecting growth of 5%, in line with our model. Finally, management fee and other revenues grew $7.2 million and were $60.4 million for the quarter. Within that management fee line, roughly $26 million primarily represents management fees we earn from operating the sites in our health system JVs, which saw particular strength this quarter.

The remaining $34 million in this category represents zero-margin pass-through of employee, IT and site level costs that we pay on behalf of our joint ventures. When you're modeling us, it's important to understand these 2 components in terms of impact to margin. G&A for the quarter was $24.4 million, up $5.7 million from the second quarter of 2025. This increase was expected and driven by $5.9 million higher expenses from the 2 primary components we talked about last quarter and that will continue to impact year-over-year comparisons throughout 2026. They are as follows: first, our pubco costs, which are ongoing expenses related to being a public company. These were $1.5 million in the quarter, and we continue to expect approximately $7 million of these costs for full year 2026.

Second, and also similar to last quarter is an increase in stock-based compensation from $8.3 million in Q2 of '25 to $12.7 million in Q2 of '26. This reflects the onetime resetting of legacy equity comp plans as part of our IPO. We expect full year stock-based comp for 2026 to be approximately $50 million. About half of that relates to historic M&A and will be fully amortized by the end of 2026. As a result, we anticipate ongoing stock-based compensation of approximately $20 million to $28 million for full year 2027.

Below operating expenses, we include our equity and earnings of unconsolidated affiliates. This is our pro rata ownership share of the net income of our JV sites, the line item in our financials that reflects contributions from these important partnerships. At $18.6 million, this was $2.1 million higher than Q2 of '25, reflecting particular strength this quarter in the sites we operate with health system partners.

Below the operating line, interest expense was $16.2 million in Q2. This new run rate is $14 million less than Q2 '25, reflecting our use of IPO proceeds to pay down debt last December, freeing up more than $50 million in cash interest expense savings on an annualized basis and increasing our flexibility to invest in growth.

In addition, we repriced our debt in June 2026, further reducing our go-forward run rate for interest expense by $1 million per quarter starting in Q3. Pretax income was $5.8 million for Q2 compared to a pretax loss of $2.4 million in Q2 '25. After a tax provision of about $3 million in the quarter, net income was $2.7 million in Q2 compared to a net loss of $7.2 million in the prior year period. Our GAAP EPS was $0.03 per share in Q2 and adjusted EPS was $0.20.

Turning now to adjusted EBITDA, which is an important supplemental measure we use to evaluate operating performance across our entire network. It includes adjusted EBITDA from our wholly owned centers as well as our pro rata share from the centers we operate through our health system joint ventures. Adjusted EBITDA was $56.4 million in the quarter compared with $56.3 million a year ago.

Underlying performance benefited from healthy overall volumes and strong growth in advanced modalities, while our reported growth absorbed incremental public company costs and planned investments associated with ramping our de novo centers. The year-over-year comparison also reflects a tougher prior year baseline than we saw in Q1 as the volume recovery following the resolution of an out-of-network situation was largely resolved by the second quarter of 2025.

Our adjusted EBITDA margin was 21.4% in Q2 '26 compared to 22.4% in Q2 '25, partly due to the $1.5 million step-up in public company costs. Sequentially, adjusted EBITDA margin increased 110 basis points from Q1. On the cash flow front, cash flows from operating activities were $32.8 million in Q2 '26. This is $31 million higher than Q2 '25, reflective of our lower senior credit facility debt and related interest payments. Free cash flow, which we define as cash flows from operating activities less CapEx, was $23.1 million for Q2 '26, a record high for the company compared to negative $2.5 million in Q2 '25. This is a $25.6 million improvement and resulted in a conversion in Q2 of roughly 41% of adjusted EBITDA, which is another record.

The improvement was largely attributable to our reduced debt and related interest expense that demonstrates the ability of our business to continue to generate strong cash flow. Recall that we used the full IPO proceeds to pay down debt in order to free up cash to pursue our market opportunity, grow the company and delever. We would not read a single quarter as a new run rate. But as we have said previously, we continue to expect 2026 free cash flow conversion to be approximately 25% to 30% of adjusted EBITDA on a full year basis. While free cash flow conversion can vary, we believe this conversion range will improve as we scale our business.

And now for a moment on CapEx. We continue to see the opportunity to accelerate our growth plans in our fragmented industry and to target meaningful returns by investing in de novos, adding new and upgraded equipment and capabilities at our existing sites and through targeted M&A. Our $9.7 million capital spend in Q2 '26 reflects a busy quarter of investment activity and is not a change in our underlying spending plan. We continue to anticipate approximately $5 million to $7 million in cash CapEx per quarter.

Shifting to the balance sheet. Our capital position is strong, and we ended the quarter with $69.7 million in cash and cash equivalents, up from $51.2 million (sic) [ $58.8 million ] at the start of the quarter. As of June 30, net leverage was 3.6x compared to 5.7x a year ago. Further, we're committed to managing our capital structure strategically. And at the end of Q2, we repriced our term loan to a rate of SOFR plus 250 basis points. This reduction generates an additional annual cash interest savings of $4 million per year starting in Q3.

Wrapping up with our outlook, we're pleased with our accomplishments in Q2, including progress across key growth initiatives. And so with half the year complete, we're narrowing our adjusted EBITDA guidance range to $235 million to $241 million versus the previous range of $234 million to $242 million, while maintaining the midpoint at $238 million. The narrower range reflects our first half results, our view of the business and continued confidence in the underlying assumptions supporting our guidance.

Adjusted EBITDA reflects our full system-wide footprint, including our pro rata share of JV performance, while our consolidated revenue guidance reflects only our majority-owned centers. That scope difference, not a change in our view of either business is why we're narrowing adjusted EBITDA guidance while our revenue guidance remains unchanged.

And so tonight, we're reiterating our consolidated revenue guidance of $1.045 billion to $1.097 billion and our adjusted EPS guidance of $0.71 to $0.77 per share. As we move into Q3 and continue executing on our goals, we're energized by the opportunities in front of us and the progress we've made so far this year.

So with that, let's turn to your questions. Operator, would you please open the call?

[Operator Instructions] And our first question comes from the line of Brian Tanquilut from Jefferies.

This is Brett Grulkowsk on for Brian Tanquilut with Jefferies. As we think about the second half of the year, can you talk about the expectations for the seasonality in the business? And then if there's any other incremental drivers to point out as we think about the sequential ramp?

Thanks so much, Brett. Appreciate the question. Maybe I'll kick it off, and then I'll turn it over to Tony to talk a little bit more about second half pacing. So we are very excited by the progress we've been able to demonstrate this year. Advanced imaging continues to be strong, really thrilled by our new company record of the 37.4% of volumes coming from advanced imaging.

And as you'll remember, last year, we did a record number of de novos. We opened up 9, pacing of those were 3 in the first quarter, 3 in the second, 0 in the third and then 3 in the fourth. And so excited by the progress we've been able to see in the ramping of our 2024 and 2025 de novo cohorts. And so what you see is really a compounding of all of these trends as we enter in the second half of the year, which is why we were confident in reaffirming our guidance and narrowing the range.

But Tony, I'll let you maybe talk a little bit more about specific pacing.

Sure, sure. Yes, the momentum is what we expected as the year would unfold. There is a natural seasonality to the business, and we're seeing that happen. And as we reported last quarter, we expected 45% of our earnings in the first half of the year and 55% in the back half, and we're right on that. That comes from the seasonal ramping of volume and the ramping of our de novos. We had so many of them come out of the ground in 2025.

So right on target for the 45% in the first half and the ramping that we expect to continue kind of sequentially in Q3 and Q4. And actually at 45.3%, if we want to take it out to a decimal point. So we're actually a little bit ahead of that.

Great. Okay. Yes, that's helpful. And then for a follow-up, could you maybe provide some additional color on the recent HSS JV, maybe on how it's progressed in the early stages? And then if there's any future expansion opportunity there? And then maybe more broadly, what the pipeline as a whole for new JV opportunities looks like?

Yes. Happy to talk about HSS. It was a very exciting milestone for the company. HSS, obviously, world-renowned institution and so focused on musculoskeletal, which obviously requires imaging in every part of the diagnosis and treatment. With HSS, similar to UPMC, we are focusing on a de novo approach. We've already targeted markets in the New York metropolitan area and actively advancing site plan. New York does have CON requirements that will require a little bit longer of an extended time line, but excited to talk a little bit more about this as we go into 2027.

And then we think about kind of the second part of your question about hospital engagement and hospital pipeline. One of the reasons I'm the most excited to be in this role at Lumexa is the early days around opportunities to continue to grow to serve outpatient needs in the industry. Starting first, radiology demand continues to grow for all the reasons we talked about, right, novel treatment paradigms, increased screening mandates, technological advances and there's continued unmet demand.

And then it is also an incredibly fragmented landscape and very early days for health systems to really begin to formalize what is their outpatient imaging strategy. And so we've got an exciting pipeline of health systems we're talking to. We look forward to giving more updates across upcoming quarters. But there's a lot of growth and opportunity in this space. Thanks so much, Brett.

And our next question comes from the line of Andrew Cooper from Raymond James.

Maybe first, we've heard a lot from different players in the space through the quarter or through the earnings reports already. I guess, I think, Tony, you mentioned some payor mix shifts in a few markets. Could you touch on that a little bit more? And anything you're seeing from a procedure mix perspective, whether it's changes in ortho-related imaging versus more kind of acute-oriented procedures? Just would love your observations and kind of underlying some of the volume changes.

Sure. I'll ask that Caitlin add some color after I give you a couple of numbers here. But really, yes, we saw just a little bit of shift in payor mix, nothing significant. It was in a couple of markets, and it was kind of different than what we had in Q1. We had different parts of the business experience some ebbs and flows in this stuff. So really nothing of note or anything that will be a long-term trend, just kind of a modest shift. And you could see we came in where we expected. So it wasn't -- obviously, it wasn't significant. And Caitlin, can you take...

Yes, I can really take the acuity piece, Andrew. So as we see acuity, as we look across the book, we continue to see real strength in MRI. MRI growth on a system-wide basis was 7.2% quarter-over-quarter. So continuing to drive our focus on supporting MRI and then PET, so 23.2% growth, as we highlighted in the script. Throughout our journey, we've been talking about the opportunity we have at Lumexa to deepen our PET profile.

So thrilled that we're able to say that 2 of the 3 machines that we had talked about this year are live in South Carolina and Arizona. And then we continue to see advancements in the radiotracers. We referenced our new estrogen-positive breast imaging radiotracer, FES. We continue to see strong demand for amyloid, PYLARIFY, also working on Ga-68 and [FDG ]. So continued focus on expanding PET as a strategic service line based on the strong acuity demand there.

And our next question comes from the line of Andrew Mok from Barclays.

We don't have the Q yet. So I was hoping you could share the same-store system-wide revenue growth metric in the quarter and talk through the underlying components of that between volume and price.

Sure. The same-site volume growth, was that...

Yes, same-store system-wide revenue. What did that come in, in the quarter and then maybe break that down into the components of price and volume?

Yes. Yes. So same-site system-wide basis was 4.4% revenue and 2.2% volume, 2.2% rate.

Got it. That's helpful. And then on the commercial mix side, can I just revisit that for a second. It was a little bit unclear to me what exactly you're seeing on the commercial mix. So, one, can you help us understand where that finished in the quarter? What was that down year-over-year? And to the extent that you did see some pressure in some of your markets, can you just elaborate on what exactly you saw?

Sure. Yes. When we get to the Q published, it will show 59% consolidated commercial mix, which is the same as it was last year. There was a very slight downward tick but nothing significant, right? We have heard some of the other health care providers, particularly the hospitals talk about a more significant payor mix shift. We didn't really see that.

And in Q2, it was in a few markets that we consolidate. And in Q1, we had a little bit of degradation more on the JV side, and they just kind of -- neither one seems to be a sign of anything durable that we could tell. And like I said, really fractional because it just is kind of a rounding error on our payor mix percentages.

And our next question comes from the line of Whit Mayo from Leerink Partners.

Looking at the first quarter, you guys had some weather related disruption. Do you think you recovered any of that volume in the second quarter? Or is that just all lost at this point?

Yes. Whit, thank you for the question. Maybe I'll start. We saw strength of advanced in Q1, and we're really proud of how it ended. And so our thinking was there would be very little carryover of advanced into Q2. Talking about advanced performance in Q2, again, performed well. You can see the impact of our new facilities are having on our overall enterprise growth rate.

And one of the areas that we were focused on, on the recovery front was mammography. And so we had talked about that lagging at the end of Q1. Excited to see mammography growth this quarter. Mammo is up 2.6% year-over-year and continue to grow north of 6% on a per day basis over Q1. So the one area where we did see a little bit of opportunity and pull-through is in mammo. Again, we focus on advanced because they reimburse at a significantly higher rate than routine, but nice to see the recovery within the mammo book.

Okay. I was curious if there was any cost that you'd care to call out related to the data breach?

Yes. Thanks, Whit. When we think about data breach, we disclosed it in our Q, one, to create clarity that the breach was related to a vendor and not our systems. And then second, to highlight the fact we've seen minimal impact on the business. We have not seen any costs that require us to say that we think it will be impacting the business or have a material impact. And we want to continue to be transparent about the journey we are on and make sure that we're answering any of your questions.

And our next question comes from the line of Stephen Baxter from Wells Fargo.

I just wanted to ask a follow-up on the cadence. I get that we're on track in terms of the 45% versus 55% allocation. When we think about the first half EBITDA growth needing to improve a good amount in the back half, should we be thinking that, that's primarily going to be driven by better growth or maybe improved margin profile versus what you delivered in the first half of the year? And then I have a follow-up.

Sure. Yes. I mean kind of a good starting point is just what tends to happen sequentially from Q1 all the way through Q4. As we've talked about in past calls, it's a sequential ramp from when the deductibles reset, as you know. So from Q1 to Q2 sequentially, our adjusted EBITDA grew nearly 11%. And so that's an example of what tends to happen with the seasonality of the business. You see some meaningful step-ups just from the pure seasonality component. So we believe that undergirds everything that happens at all the sites from year-to-year, and that's a big part of it.

In addition, you've seen, as Caitlin described, more and more of our volumes are coming from advanced and that too provides more momentum sequentially as the quarters unfold. And then, of course, the de novos, we opened a few towards the end of 2024, a lot more in 2025. So with our typical ramp of those, they tend to get to breakeven in a year or so. So the ones we opened in 2024, it's only 4 compared to more than double that 10 -- I mean, 9 last year.

Those are ramping to profitability this year and already are earlier in our reported numbers. There's not very many of them, but those '24 ones are right on target, and that means they're making some money. The 2025 ones are going to gain a lot more momentum in the second half of the year. They are doing very well against expectations.

We map out our path to when they'll reach breakeven and where they'll go from there. We did a deep dive recently on all of them and feel great about where they're headed. And so that, too, is meaningful in terms of sequential growth in the second half of the year compared to what we reported in the first half.

Got it. Okay. And then just to come back to the policy, I obviously appreciate you touching on the proposed changes for hospital reimbursement. Just as we think about the types of opportunities this could potentially open up for you, I guess, how should we think about that? Is it just an acceleration of the same type of growth that you've seen in JV partnering opportunities that you've seen? Or do you think there's any opportunity for some of these growth opportunities to maybe develop differently than they have in the past for you?

Yes. Thanks, Stephen. We are optimistic and excited about the site neutrality proposed rule. Certainly, it depends on how it is finalized. I think first, importantly, so as a point of clarification, Lumexa does not rely on hospital outpatient reimbursement premiums. So the proposal really does improve the relative attractiveness of our IDTF model. I see this as a multiyear catalyst versus something that's going to change our results immediately.

What I do think it does is it -- today, it reinforces the conversations that are already happening that hospitals need more imaging capacity and building that capacity in a high-cost hospital setting is becoming increasingly difficult to justify. And then our model allows them to expand access, retain patients within their network, participate economically, obviously, without relying on that hospital outpatient reimbursement premium.

So we do expect the first impact will be an increased urgency and activity in our partnership pipeline and then followed over time by new centers and expanded relationships. And I just also want to clarify, obviously, our strategy doesn't depend on this rule being finalized, but the -- our underlying value proposition already works, but I do think site neutrality would simply strengthen it.

And our next question comes from the line of Pito Chickering from Deutsche Bank.

I guess focusing on cash flow from ops this quarter looked pretty good. I think a lot of it came from increase of accrued expenses. So can you talk about sort of cash flow in the second quarter, how we should be thinking about cash flow from ops and CapEx in the back half of the year?

Sure. Yes, we feel real good about what Q2 means for the guidance range we provided of 25% to 30% conversion rate. That translates to something like $60 million to $70 million of free cash flow for the year. It's very much about timing quarter-to-quarter. As you pointed out, there are working capital swings that are natural in the business. And those were -- those tend to mean that the second half of the year is better than the first. But sometimes you have some swings that work in your favor that hit in the same quarter.

And so for Q2, that was true in our -- just in our day-to-day working capital and also the timing of distributions from our JVs was favorable. We got a few extra million of that. And really both of those just kind of happen in Q2 rather than Q3. And so we don't really view the year any differently. But we definitely see the performance in Q2 is indicative of why we guided to that 25% to 30% on a full year basis anyway.

And your question about the CapEx, yes, I mean, $5 million to $7 million a quarter is what we expect to spend. I'd say we had more than that in the second quarter because we've just been busy in investing in our growth opportunities. And we really will continue to do that where the return is there. That may cause us to kind of be at the high end of the range.

It wouldn't surprise me if that annual number is kind of more driven by a $7 million a quarter run rate as we get later in the year because if we have opportunities to grow, whether it's getting more de novos out of the ground or other spend that we don't want to tie ourselves too much to some sort of artificial number because we're going to grow and deploy that capital. But all that said, within the balance of the free cash flow guidance we've given, we feel very good about that for the year.

Okay. Then a follow-up, I think you talked about PET in the script. Can you just remind us how many machines you guys have in your centers? And what percent of revenues PET is these days? And how we should think about the role in the next 12 months? And are you taking share from hospitals? And is it mostly the JVs or fully owned facilities that you're investing in and you're taking share out of?

Yes. So we are very excited by the growth of PET. We have shared that we have 8 PET machines and the goal was to get to 11 this year. So we already have 2 open well on our way. We have focused on there's so much opportunity within MRI and CT, and that's what the business has prioritized over the year, but we do see significant growth opportunity in PET. We expect to see significant growth rate. The 23.2% that we highlighted was before the 2 machines opened in July. So you should expect in Q3, that growth rate will continue to go higher. As we think about where are we taking share, I mean, PET is one of -- it is one of the more heartbreaking backlogs in so many communities that we are entering into, where we're hearing that patients are waiting weeks, if not months, for their PET exams.

And when you think about what PET does, is it helps diagnose? Oftentimes life-threatening diseases and show whether or not treatment is progressing -- treatment is stopping the progression of the disease, waiting weeks and months is unacceptable. So we are often going into markets where there is a significant backlog, primarily, obviously, patients being seen at hospitals that can't keep up with the demand.

And so we expect to see continued growth in both our individual consolidated markets, which Arizona is, and that's where one of the additions came and then also within our joint ventures, the site in South Carolina is in partnership with Atrium. So exciting growth in PET for certainly the quarters to come.

[Operator Instructions] Our next question comes from the line of Matt Mardula from William Blair.

This is Matthew on for Ryan Daniels. And with advanced imaging being 37.4% of volume, a record for the company, I know one of the company's goals is to increase advanced imaging volume. But how should we think about the growth in advanced imaging as a percentage of volume for the rest of the year and maybe into 2027 or longer term?

And then just when I'm kind of thinking and when we're all thinking about the drivers of advanced imaging, it sounds like it's just a good mix of industry trends and company initiatives. But is it more weighted towards one?

Thanks, Matt. Appreciate the question. So yes, excited that we were able to have 37.4% of total volume come from advanced. Notably, that's 111 basis point improvement over Q2 2025. We aren't setting a specific target number. We want to grow all parts of our business. But when we have advanced growing more rapidly than routine, obviously, the contribution in terms of revenue, advanced is 3x to 4x revenue premium and then that flows through to margin, it's a significant driver of our success and growth.

And then when you think about what is driving advance, I mean, certainly, you've got the secular drivers that is radiology, aging population, increasing chronic conditions, you have novel treatment paradigms. And so there's just an increased demand. So we are doing everything we can to make sure we are capturing our fair share and growing at a pace exceeding the industry. And so that starts with how we're positioning our sales team.

We've highlighted that we have over 120 representatives in the market selling to our value proposition all day, every day. And then it also goes to how we're structuring our operations to continue to add capacity, things like FastScan that we're on track to get to 2/3 of our MRI fleet is equipped with FastScan or virtual MRI that we're continuing to roll out to help make sure that if tech happen to call out, we're able to continue to run the machine.

So continuing to focus on the capacity. And then, of course, really targeting where do we open our new de novo sites, all based on where we see supply demand mismatch in the geography and the opportunity to serve a population that does not have ample access to advanced imaging. So certainly, it's exciting to be in an industry that's got strong tailwinds, and we're doing everything we can on a sales and operations perspective to position ourselves for outsized growth.

Our next question comes from the line of Benjamin Rossi from JPMorgan.

In context of the broader labor tightness for radiologists and techs, as you've been working to leverage some of those technologies you mentioned to expand capacity, are you finding this online capacity allows for enough of a backfill to make up for any labor-related capacity limitations? Or are these constraints resulting in backlogs in certain facilities? Just curious how the capacity trends during 2Q and how you're managing levels to meet demand.

Yes, yes. Something we think about all the time. I think I can go first and throw a number or 2 out there, then Caitlin can kind of expand broader context on this. Yes, we look at our expense for this as like it's up 5% year-over-year. Our operating expenses from '25 to '26. And so in this kind of inflationary environment that we're in generally in the economy, that feels pretty good. And it is kind of -- has kind of been an inflationary type of item for us. That said, there's certainly opportunities to improve that. And Caitlin, I know we do a lot to retain and recruit.

Yes. Yes. Yes. So Ben, when you're thinking about the 5%, that includes obviously pre ramp-up costs for de novos. And so comparing against our revenue, there's expansion upon it and opportunities to as revenue continues to grow alongside the expenses, it will grow at a higher rate. And then what are we doing to continue to support. Obviously, I highlighted the Technologist Advancement Academy, continuing to grow our own. We have the advantage of being an environment that technologists like to work in compared to hospitals.

And we are continuing to roll out our virtual MRI solution that allows us to have one tech run multiple machines at one time, which allows us to have increased capacity, especially as we've got -- we're recruiting a tech or somebody is calling out to take care of their family [indiscernible].

And then on the radiologist side, this is why we love kind of our 3-pronged model. We have Connexia, our telerad group, where we continue to recruit and build out the capacity within that entity, our third-party radiologists that we work with in the markets that we serve and then our affiliated physician groups. So between all of that, we're able to come up with the right solutions to support the continued growth.

Great. And I guess as a follow-up, I want to spend a moment there on Connexia. I guess, with that broader commentary regarding industry demand and in read turnaround, could you give us an update on how you're thinking about that segment? I know you're finding that partners are leaning into this segment more? Or if it's maybe resonating more with your prospective partners?

Yes. Ben, often, when we're having conversations with our health system partners the fact that we are bringing an option for the [ rad read ] to support the outpatient strategy is seen as very attractive and a differentiator in our approach. There are certainly health systems that have a preference around rad read groups. And so if they do, we will support what is the most right for the partnership in the local market, but the fact that we are able to provide incremental capacity for our outpatient centers is certainly seen as a positive in the joint venture discussions.

This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Caitlin for any further remarks.

Thank you. I want to close by thanking our team members and radiologists whose commitment to our mission and to our patients and communities we serve remains the foundation of everything we do.

Thank you for your questions today. We enter the second half of 2026 with strong momentum, a growing network of health system partners and deep confidence in our strategy and our team's ability to execute. We look forward to updating you on our progress in the future. Have a good night.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Thank you for standing by, and welcome to Lumexa Imaging's First Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Sue Dooley from Lumexa Investor Relations. Please go ahead.

Thank you, and hello, everyone. We appreciate you joining us today. Leading today's call are our Chief Executive Officer, Caitlin Zulla; and Tony Martin, our CFO.

Before we begin, I want to note that we'll be discussing non-GAAP financial measures that we consider helpful in evaluating Lumexa's performance. You can find details of how these relate to our GAAP measures, along with reconciliations in the press release available on our website. We'll also be making forward-looking statements based on our current expectations and assumptions, which are subject to risks and uncertainties, including factors listed in our press release and in our various SEC filings. Actual results could differ materially, and we assume no obligation to update these forward-looking statements.

With that, I will turn the call over to Caitlin. Caitlin, please go ahead.

Thanks, Sue. Thank you all for joining us today. In Q1, we delivered several meaningful achievements to kick off the year executing on our strategic priorities, which include driving strong same-center growth with an expanding mix of advanced modalities, targeting a record number of de novo openings, ensuring the successful ramp of newly opened centers, accelerating high-impact strategic service lines and expanding our geographic footprint. Here are a few highlights of our announcement tonight. Our Q1 results came in line with our expectations after the seasonal and weather dynamics we discussed in our Q4 call.

Q1 volumes ramped throughout March, and we recovered our momentum. Specifically, we drove strong same-center growth and strategic service lines are expanding among a healthy mix of advanced modalities. In Q1, advanced modalities grew 7% year-over-year with PET growing at 23.1% year-over-year and MRI growing at 8.2% year-over-year. Rollout of our AI-powered breast arterial calcification solution continues with plans for expansion into new markets and strong continued patient uptake. We are actively ramping de novo centers and our 2024 and 2025 cohorts are tracking in line with our expectations and advancing our plans towards long-term growth and profit expansion.

And in some exciting news tonight, we completed 2 acquisitions and opened 2 de novos this year, and we are well on our way to achieving our stated goal of opening 8 to 10 de novos to fuel future growth. Meaningfully, one of the acquisitions was an IDTF site in Pennsylvania, the first site in our new JV with UPMC, and we are actively advancing multiple site location plans with this important partner.

And finally, we're excited to welcome 2 exceptional leaders to Lumexa, each bringing the depth of experience and vision that will help drive our next chapter of growth and results. I'll go into some more detail in just a moment. At Lumexa, we are addressing a large market opportunity and deploying a disciplined growth algorithm. We are confident we are well positioned to execute our growth plans while driving better outcomes across the imaging landscape.

I would like to take a moment to speak about our experience in the market as we meet with health systems and the providers who are so important to us and as we continue with our commercial efforts to drive growth in acuity mix. Our value proposition resonates strongly with patients, providers and payers, reflected in Net Promoter Scores that consistently exceed 90. We deliver high-quality imaging in more convenient settings on a more timely basis and at a meaningfully lower cost than hospital outpatient departments, helping health systems solve important operational challenges and achieve their patient care and market expansion goals.

As we pursue our priorities, it is clear the market is moving towards us. We are benefiting from durable long-term tailwinds, aging populations, new treatment paradigms requiring advanced imaging, rising preventative screening rates and an ongoing shift from inpatient to outpatient care in a fragmented capacity-constrained industry. In our conversations with multiple potential health system partners, they faced struggles with imaging bottlenecks that constrain operational throughput and delay patient access. This underscores the strong need for outpatient capacity and the growing demand for a partner who can deliver speed, access and capital-efficient expansion.

At the same time, many systems are proactively preparing for potential site neutrality by accelerating the shift towards lower-cost outpatient settings, which we believe further reinforces the relevance of our model. And they tell us they like our nimble best-of-breed approach that ensures we will always be able to leverage innovation to drive efficiency and the best patient experience and outcomes.

As I mentioned a moment ago, reflecting the sizable growth opportunity we are pursuing at Lumexa, we are delighted to welcome 2 seasoned leaders. First, Kyle Lynch, our new Chief Growth Officer, brings deep experience in building high-performing business development organizations, executing complex transactions and implementing growth strategies that translate into durable financial performance. And another proven industry veteran, Rikki Mondo has joined Lumexa as Chief Enterprise Operations Officer. Rikki has a strong track record of leading and scaling national platforms to drive performance, integration and operational excellence.

As we continue to grow, her focus on enterprise-wide alignment will be critical to delivering for our patients, partners and teams. Welcome, Kyle and Rikki. We are thrilled to have you join our team to help drive disciplined, efficient and sustainable growth through joint ventures, de novo development, acquisitions and commercial growth initiatives.

And now a moment on the key elements of our growth algorithm. Our commercial team is laser-focused on driving same-center growth. On the heels of a successful New Jersey launch, we expanded our AI-powered breast arterial calcification program to include New York. And in both markets, we are seeing strong acceptance for this cash add-on assessment for cardiac health in women. Our team continued their focus on driving advanced imaging. PET and MRI are strategic areas of focus for us. Additional seasonal campaigns targeted gastroenterologists and ENT specialists time for the start of allergy season. These contribute to our growth and increase in acuity mix in Q1.

We are on track to expand our geographic footprint through new de novo openings, JV partnerships and carefully selected M&A. Tonight's announcement showcases the opening of 4 new Lumexa imaging centers, including 2 small but strategic tuck-in acquisitions, demonstrating the strength of our JV partnerships. The first location is in Pennsylvania with UPMC and the second location is in North Carolina with Advocate Health. The acquired facilities will ramp over time and their integration into our operating platform and as we complete payer enrollment requirements. The 2 new de novos are in South Carolina and Florida, expanding our footprint in attractive MSAs and advancing us towards our goal to open 8 to 10 de novos annually and deliver profitable growth.

When it comes to M&A, tuck-in acquisitions of new centers, there is a lot of opportunity to bring our expertise to a fragmented market and accelerate our presence across targeted geographies. We are continuously evaluating accretive opportunities with a disciplined and proven approach.

On the JV front, in addition to excitement around our ramping UPMC partnership, we are cultivating a robust pipeline of potential health system partners with multiple ongoing conversations at various stages. In my conversations with health system leaders, it is clear to me that our approach to joint ventures is a key differentiator for our company. Health systems are seeking ways to participate in the rapid site of care shift to outpatient imaging and grow their outpatient ambulatory footprint.

Our JV model provides a highly effective entry point through clinical, commercial and operational excellence we demonstrate, particularly in de novo development, Lumexa Imaging is well positioned to help systems execute against these ambitions while they remain focused on their broader enterprise priorities. In return, these partnerships accelerate our presence in any given market.

Finally, a note on our ongoing efforts to scale our company efficiently. We are constantly targeting efficiency gains to meet growing outpatient imaging volume and leverage our installed base of centers and equipment within. Our FastScan integration continued rolling out across our centers, and we are targeting 2/3 adoption by the end of 2026. We are also successfully leveraging virtual cockpit for remote MRI scanning, which allows us to minimize the impact of machine downtime to flex our staffing schedules and to extend our hours to serve our patients. And we continue to advance our strategy to leverage technology and AI across support services functions to drive scale as we continue to grow.

As I conclude my remarks, I want to briefly note that one of our vendors recently experienced a cybersecurity incident that involved a breach of Lumexa data. Unfortunately, these types of events have become increasingly common across industries. Our patients are always our top priority, and we are fully committed to doing right by them. We have responded swiftly and are taking the steps necessary to address the situation, protect our patients and comply with applicable laws and regulations.

Importantly, we have reviewed the situations and its effects, and we do not believe it has a material impact on our business or financial results. In the spirit of transparency, we wanted to make you aware. Given the nature of the event, we cannot say more at this time and we will, of course, provide updates in the future as we have them.

Wrapping up, I'm pleased with our Q1 results. We move forward into Q2 with confidence fueled by a strong execution and a sense that at Lumexa Imaging, we are in the early innings of capitalizing on the opportunities ahead of us. We are inspired by our mission to extend access to high-quality imaging through elevated compassionate care, improving lives and advancing health care across the country.

Before turning the call over to Tony to review our first quarter in more detail, I want to say a huge thank you to our dedicated team members and radiologists. With that, Tony, please continue.

Thank you, Caitlin, and thank you all for joining us today. On today's call, I'll review the financial results and speak to some key drivers of our performance for the quarter. I'll then provide our outlook for full year 2026. To supplement my review of our GAAP financials on today's call, I will cite some system-wide metrics to help you better understand our overall performance and the breadth of our business. System-wide metrics include all centers that we operate, including those we own as well as the centers we operate in our 8 joint ventures with health systems.

Turning to our first quarter financials. Consolidated revenues came in at $253 million, an increase of 3% compared to the same period last year. System-wide revenue growth, which includes all sites we operate, was 4% in the quarter, about 2/3 from volume and 1/3 coming from rate, a proportion consistent with how we model the company. Revenue per unit, which includes both scan and read revenue, also increased due to advanced modalities being a higher proportion of our business and some continuing benefit due to modest increases in contracted rates with payers who appreciate our lower price point compared to hospital-based services.

We experienced strong system-wide performance across all our outpatient sites, both wholly owned and in JVs, and we continue to be pleased with the core performance of the business. Advanced modality volumes, which reimbursed 3 to 4x higher than routine modalities, grew 7% versus prior year on a consolidated and system-wide basis. As we discussed on our Q4 call, our first quarter volumes were shaped by a combination of factors: strong Q4 seasonal performance that created enhanced seasonality coming into Q1 and weather-related disruptions in Q1 that temporarily impacted patient volumes at a number of our sites.

Overall, these factors ended up impacting Q1 EBITDA by about $4 million as anticipated. Advanced modalities returned to the fastest and grew 7% for the quarter with strong momentum heading into Q2. Overall, system-wide volume growth was 2.5%, with the strength of advanced being offset by routine scans, which were essentially flat with mammography taking longer to rebound after the storms. While routine scans impact our earnings less than advanced, we're glad to see them ramping back to further strengthen our confidence around our annual performance.

In addition, our payer mix follows a predictable seasonal pattern. Q4 consistently reflects the strength of our commercial book as patients seek care ahead of deductible resets and Q1 naturally sees a relative shift toward our government book as that commercial activity normalizes. Like many other health care service providers, we experienced a bit more seasonality of payer mix in Q1 '26 than we did in Q1 '25, with a bit of decrease in commercial as a percentage of total system-wide revenues.

Now to provide some additional detail on our consolidated revenues. Outpatient net patient service revenues at $138 million grew 4% as we delivered same-site growth and new de novos from the cohorts of 2024 and 2025 continue to ramp. Professional fee revenues, our second operating segment, were $59 million, reflecting growth of 1%.

Finally, management fee and other revenues grew 5% and were $55 million. Within that management fee line, roughly $21 million represents management fees we earn from operating the sites in our health system JVs. This is usually computed as a percentage of site revenues. The remaining $34 million in this category represents 0 margin pass-throughs of employee, IT and site level costs that we pay on behalf of our joint ventures. So when you're modeling us, it's important to understand those 2 components in terms of impact to margin.

G&A for the quarter was $20 million, up $3 million from first quarter of 2025. This reflects $7 million higher expenses for combined public company costs and stock-based comp. An increase that was partially offset by about $4 million in reductions in some transaction-related costs and timing differences in G&A expense in Q1 versus later quarters. The pubco costs, which are in line with the guidance we gave, were $1.2 million in the quarter and are ramping to the full year impact of $7 million.

The stock-based compensation increase from $6 million in Q1 '25 to $12 million in Q1 '26 is a function of the resetting of legacy equity comp plans as part of our IPO in December. This takes expected stock-based comp for the full year to around $50 million. Half of that $50 million is related to historic M&A and will be fully amortized by the end of 2026. So looking ahead, we expect ongoing stock-based compensation of approximately $20 million to $28 million per year, starting in 2027. Quarterly amounts may vary depending on timing of vesting.

Below operating expenses, we include our equity and earnings of unconsolidated affiliates. This represents our pro rata ownership share of the net income of our JV sites which at $15 million was flat year-over-year, consistent with the overall performance of the business. Below the operating line, interest expense was $16 million in Q1. This new run rate is $14 million less than Q1 '25, reflecting our use of IPO proceeds to pay down debt, freeing up more than $50 million in cash annually that we plan to invest in growth. Pretax income was $3 million for Q1 '26 compared to a pretax loss of $4 million in Q1 '25. We're now a cash taxpayer, and so after a tax provision of $1 million in the quarter, net income was $2 million in Q1 '26 compared to a net loss of $8 million in the prior year period.

Our GAAP EPS was $0.02 per share in Q1 and adjusted earnings per share was $0.18. And now on to adjusted EBITDA, which we view as an important measure of our company-wide operating performance and which demonstrates the strength of our financial model. Our adjusted EBITDA benefits from contributions from our pro rata ownership share of EBITDA of all of our sites, both the ones we own 100% and those in Health Systems JVs. While revenue remained strong in the quarter and particularly from advanced modalities, adjusted EBITDA came in at $51.2 million, flat compared to $51.1 million a year ago, but in line with our expectations.

This reflected the impact of seasonality and weather-related volume softness against a partially fixed cost structure, including staffing and facility costs that don't flex proportionately with short-term volume changes, especially during weather disruptions when scan volumes per day can be suppressed. Despite these site level factors, plus the $1.2 million step-up in public company costs, our adjusted EBITDA margin was 20.3% in Q1 '26 compared to 20.8% in Q1 '25.

As with earnings, adjusted EBITDA margin tends to be lowest early in the year and ramp as the year progresses.

Before moving on to cash flows, I want to spend a moment on our joint ventures and how they show up in our numbers. We view our JV structures as simple, capital-efficient models to scale our business while generating significant cash flows for us and our health system partners and an amount that tracks closely with our income from these JV sites. JVs extend our brand, support our mission to deliver exceptional patient care, expanding access to high-quality imaging. Details of JV financial performance are included in our quarterly financial statement disclosures as follows.

But briefly, JV revenues and expenses are not included in our GAAP results due to our minority ownership position. Our pro rata share of JV EBITDA is included in our adjusted EBITDA and reflects the operating performance of the assets we own and aligns our EBITDA with the true scale of our business. As an example, if we own 49% of the JV generating $20 million of EBITDA, the system-wide EBITDA contribution for us from that JV would be $9.8 million. Our JVs also distribute cash to us. Those distributions flow into free cash flow as distributions from unconsolidated affiliates, which is a discrete line item on our cash flows from operating activities. These cash receipts are net of any JV CapEx, so we don't specifically describe JV CapEx in our discussion of cash flows. Debt of these JVs is not on our balance sheet and consists of equipment lease financing totaling $82 million.

Our business generates healthy operating cash flow. The first quarter is traditionally the lowest cash flow quarter of the year due to normal seasonal swings in working capital as well as the seasonality of volumes and earnings. So like our earnings, cash flows generally ramp by quarter. Cash flows from operating activities were $3 million in Q1 '26. This represents a $17 million improvement over Q1 '25, largely driven by lower interest payments from refinancing our debt and our IPO last December. Free cash flow, which we define as cash flows from operating activities less CapEx, was negative $2 million for Q1 '26, a $13 million improvement over Q1 '25.

And now on to CapEx and how we think about it. As we stated at the time of our IPO, in 2026 and 2027, we see a sizable opportunity to accelerate our growth plans in our fragmented industry to earn meaningful returns by investing in de novos, new and upgraded equipment at our existing sites and through targeted M&A. Our $5 million capital spend in Q1 2026 reflects our plans to grow the business in a disciplined manner. We additionally financed capital expenditures under lease arrangements, which adds to our capital efficiency.

In general, as we invest to grow, we currently expect free cash flow in 2026 to operate in the neighborhood of 25% to 30% of our adjusted EBITDA on a full year basis, with belief that it will trend higher with scale and once spending on our growth initiatives and infrastructure to scale our company returns to more normal levels. There can be variation of CapEx across the quarters, of course, due to working capital timing or other strategic uses of capital that we identify from time to time. To answer a question we sometimes receive, our JVs make capital expenditures on their own. Our cash flows from operating activities are already fully reflective of everything our JVs do.

JV sites generate operating cash flows, make capital expenditures and fund equipment lease payments, and then they distribute our pro rata share of the remaining cash to us. This is what I referred to as distributions from unconsolidated affiliates. It's reflected as a single line item in our cash flows from operating activities.

Wrapping up and moving on to our guidance. We've now moved through the seasonal and weather-related impacts of Q1 and with healthy growth in advanced modalities, strong demand, improving capacity and contributions from ramping JVs and de novos, we're well positioned to deliver on our full year commitments. On the strength of these drivers, we continue to expect revenue to be in the range of $1.045 billion to $1.097 billion, adjusted EBITDA to be in the range of $234 million to $242 million, which includes approximately $7 million of public company costs that were not incurred in 2025.

At the midpoint, the adjusted EBITDA growth rate, excluding the addition of these costs being incurred in our first full year of operations as a public company would be 7%. And we expect adjusted EPS to be between $0.71 and $0.77 per share.

For some additional color, we expect a gradual sequential ramp in adjusted EBITDA throughout the remaining 3 quarters with the majority of full year adjusted EBITDA coming in the back half of the year as we drive same-center growth, geographic expansion, expand strategic service lines and deliver efficiencies across our company. As we look ahead to Q2 and continue executing on our goals, we're energized by the opportunities in front of us.

So with that, let's turn to your questions. Operator, would you please open the call?

Certainly and our first question for today comes from the line of Brian Tanquilut from Jefferies.

Maybe just on the UPMC transaction first. Just curious, I mean, is this how we should be thinking about it where you could accelerate the ramp within the UPMC joint venture as you do like start-up acquisitions here to build the scale with that partnership?

Yes. Thank you so much, Brian. We are exceptionally excited to start off the UPMC joint venture with the acquisition of a facility and very much it is something that will continue to drive the growth of our partnership together. We are actively advancing site planning with UPMC and expect to be able to announce at least a few de novos with them this year. As a reminder, the JV partnership with UPMC was officially in about August, September of last year. And so typically getting a de novo out of the ground is easier. So excited to already have an acquisition under our belt and then to be able to continue to support it with de novos this year and into next year as well.

Got it. And then maybe, Tony, just to your comments towards the end of your prepared remarks about the gradual ramp in EBITDA over the course of the year. Just curious if you can share with us how we should be thinking about the magnitude of that Q4 seasonal lift? And then just what the drivers would be for margins and how we should be thinking about kind of the margin progression from Q1 into -- all the way into Q4?

Yes, sure. Yes. First of all, remain confident in the full year guidance unchanged. But in terms of the enhanced seasonality that we talked about a few weeks ago, the way we look at that is that it will continue to ramp in a steady way like it does every year, but it's starting from a bit lower point in Q1. So now the way I look at it is we expect about 55% of our adjusted EBITDA to be in the second half of the year, not meaningfully different than before, maybe 100 basis point shift from our original expectations on how that would be spread.

But that's how we look at the -- how that seasonality will play out. And really confident in that because of all the strength we have, particularly in our advanced modalities heading into Q2. And of course, it's natural for the results to climb by quarter after the annual deductible reset kind of starts everything at the beginning of the year. And with all the de novos we have, we've got 15 that we've opened just since late 2024, all those ramping through the year. That will add to that -- why it's allocated that way through the year.

And our next question comes from the line from Benjamin Rossi from JPMorgan.

So the combined $4 million EBITDA impact during 1Q from that volume pull-forward dynamic and weather-related drag. In your framing of this year's seasonality impact as being enhanced, can you provide any framing on how this year's weather impact or combined impact as compared to previous years? And then is the magnitude of drag relative to 1Q earnings larger than normal?

Yes. Yes. I mean weather happens, and it's part of the business, so it's difficult to predict with any precision. But yes, it was a more meaningful factor for us this year than usual. There were 4 separate weather events that were a pretty big deal in a number of markets. And so no, we don't consider that quite a normal year, but it is something normal to have to manage through when it happens. So that is a part of the enhanced seasonality we've seen.

Got it. And I suppose just as a follow-up on the full year guide for some of your volume recapture assumptions that has happened from 2Q through 4Q to make up some of the lost 1Q volume? Or otherwise, what does your guide assume for the portion of those volumes that have already been rebooked versus those that are still assumed to be maybe recaptured later in the year?

Sure.

Well, we've captured a lot of the advance already. That was the fastest to come back. And of course, we love that because that's the higher reimbursement, higher-margin business and a bigger part of our book all the time. So that came back first. Some of the routines came back a little more slowly and we will be ramping into Q2, Q3. But predominantly, what drives the ramp is just the resetting of deductibles at the beginning of the year and how that plays out over the year for many health care service providers.

There's a natural ramping to the business heading toward the biggest performance being in Q4. So that happens kind of steadily through the year. And of course, also the de novos, we have -- there's so many of them now, 15 that are ramping very, very well. All of them are at or above the expectations we had for them and only gaining momentum quarter-by-quarter throughout 2026. So that's another reason we have a lot of confidence in kind of where we're headed as the year unfolds.

And our next question comes from the line of Matt Mardula from William Blair.

This is Matthew Mardula on for Ryan Daniels. And can we get an update on the percentage of MRI machines that currently have the FastScan software technology? And then overall, how are you expecting to add the FastScan software to MRI machines? Is it more second half weighted? Any color into that? And then for the machines that have had the FastScan software implemented this quarter, how has the initial increase in capacity and volume been compared to your internal expectations?

Yes. Thank you, Matt, so much. I appreciate the question. When we think about advanced growth, really proud of the strength that we were able to demonstrate in Q1, both our system-wide and consolidated at 7%. We were able to call out in our earnings script, PET over 23% year-over-year growth, which is fairly remarkable and then MRI at 8.2%. A significant driver of that strong -- excuse me, strong MRI growth is, as you said, FastScan. We continue to install FASTScan as we can across our fleet, either through upgrades or system enhancements.

We started the year at 51% and said we'd get to just north of, I think, 66%, 67% of our MRI fleet with FastScan before the end of the year, well on track to achieve that.

And then when we think about sort of the performance of the centers with FastScan they're performing really well. Our team is continuing to think through scheduling efficiencies. And I think just notably a benchmark that gives you a sense of the strength and success is that advanced as a percentage of our total volume this quarter was 37.4% in Q1. That's a 160 basis points improvement over Q1 2025, and that's higher than every quarter last year. So something that we're very much committed to growing.

And our next question comes from the line of John Ransom from RJ. Ask your question please.

Just want to make sure we kind of nail down the CapEx cash flow puzzle. So let's ignore the capital lease accounting. What are we thinking about in terms of end of the year debt PP&E and cash flow either financed or not financed by capital leases?

Yes. Thanks for your question. Yes, CapEx, we think, will be about $5 million to $7 million per quarter. So totaling somewhere in the mid- to upper 20s on a full year basis. And as you said, we do finance some additionally. So there's no cash out the door for that. It's probably about a similar amount to what I just described, but no cash out for that.

Okay. And then my second question, and I may be the slow kid in the class, but the 4 centers you announced today, was that already part of the UPMC deal as your longer-term plan? Or were these new centers as part of all that?

Yes. Thanks so much, Don. So 4 centers, 2 were single sites, 1 with UPMC and then 1 with Advocate [ Atrium ]. And then 2 are de novos, both wholly owned, 1 in South Carolina and then 1 in Niceville, Florida. I actually happened to visit the Niceville, Florida. We opened it last week. It is a beautiful facility. It's an incredible team, and we already have a lot of community interest and a really strong schedule. So when we think about de novos, we have 2 done well on track to get to the 8 to 10 before end of the year. And then for UPMC, started with an acquisition and then the UPMC de novos will be part and parcel of that 8 to 10.

And our next question comes from the line of Andrew Mok from Barclays.

Your operating cash flow was about $3 million this quarter and free cash flow was negative $2 million. I think your guidance implies quarterly free cash flow will accelerate to north of $20 million. So can you walk us through the components and drivers of that accelerating free cash flow?

Sure, sure. Yes, the start of the year is always kind of the lowest point for cash flow just as same similar reasons that it is for the business as a whole, volumes and earnings. But in addition, the working capital tends to be negative towards the early part of the year. We have kind of disproportionate funding of bonus and benefit plans in the first half of the year. So Q1 and Q2 are slow cash flow quarters traditionally in the business, and we expect that to be true this year, too. And then it really picks up in the second half of the year when we don't have that kind of working capital timing issue. And of course, the underlying business is ramping as well.

Got it. Okay. So it's going to be 2H weighted. On the -- maybe next question on the net revenue per scan. On a same-store basis, the net revenue per scan was up 2.3% on a consolidated basis, but it was only up 1% on a system-wide basis. So it looks like unconsolidated net revenue per scan was dilutive and could have even been negative in the quarter. Can you help us understand what's driving the weakness in unconsolidated revenue per scan, especially given the positive mix effect of advanced volume growth?

Yes. Yes. And advanced is a hugely successful driver of our business in both the JV structures and in the consolidated structures, particularly in the JV structures. I think we tend to focus mostly on system-wide metrics for this because the business can behave differently on the consolidated book versus JVs, and that doesn't really necessarily mean a lot for the business. So I would focus on that system-wide piece the most.

I think our -- that said, our consolidated book of business has a little bit of impact from other modalities more. It's not quite as heavily in advanced. And so depending on what those modalities are doing, the routine is slow in that book of business, then advanced tends to shine even more in terms of pulling up the rate per scan. And that's the type of phenomenon we see in quarters like this one where the routine was a little bit slower to come back than the advanced modalities were.

And our next question comes from the line of Whit Mam from Leerink Partners.

Any way to size the 2 acquisitions you completed in the quarter? And then any reason they're larger or smaller than the average center?

Yes. Thanks, Whit. To directly answer your question there, typical size acquisition, when we think about kind of in-year contribution, big focus for us right now is getting them in network and doing all the credentialing and integration work. Quite candidly, we buy sites that require optimization. We buy them because of their potential, not because they're optimized already. And so as we get the site in network, we've got to get the right equipment installed and drive patient volumes to Lumexa standard. So when we think about the impact, these facilities will ramp over the year, but their contribution, I expect in 2026 will be fairly minimal. And I'm excited because they demonstrate the power of our model and really set us up for 2027 and beyond.

Okay. And then maybe just on the technology side, anything that you care to call out, Caitlin, just anything new on revenue cycle or things impacting operations that you're particularly excited about?

Thanks. I mean technology is exciting in our space in every aspect. As we think about technology and AI, it really continues to fit into those core categories. How are we improving our core operations, bringing in more patients, serving more patients on the same machine, how do we create back-end operational efficiencies, how do we expand our strategic service lines and of course, how do we support our radiologists and their productivity. We're seeing proof points in all of those categories. Really focus continues on the operational side, continuing the deployment of FastScan, we talked to Matt's question, expanding penetration of virtual MRI.

Revenue cycle, still working on bots and Agentic agents, including also in our scheduling, centralized scheduling team. On the strategic service lines, we rolled out breast arterial calcification in 2 of our markets, and we're actively exploring other similar cash pay add-ons for modalities like CT and ultrasound. And then on the clinical side to support radiologists, continuing to work with tools like, Ferrum, that's our clinical algorithm convener and then [ RAD Pair and RAD AI ] to support abnormality identification, physician dictation and drafting. So a lot of fun stuff. The way I think about it is the near term continues to be really focused on improving productivity and efficiency. And then the long term is going to continue to be focused on how do we drive reimbursable revenue growth.

[Operator Instructions] Our next question is a follow-up from the line of -- this is from Stephen Baxter from Wells Fargo.

I just wanted to ask about the $4 million kind of estimate of the transient items in the quarter. I was wondering if there was potentially like a same-store revenue drag or maybe decremental margin you kind of give us as kind of modeling assumptions around that $4 million? Just general color on how you developed the $4 million estimate would be helpful. And then I have a follow-up.

Sure. Yes, that's our estimate of how much is going to be increased seasonality affected us, a big part of that being the storms, but also just kind of inherent to the business. So we got back quite a lot of that volume in the quarter. And so from a revenue standpoint, it ended up being strong, particularly with Advance. If we hadn't had the storm, Advance would have been even more outstanding for us.

So from a revenue standpoint, we got a lot of that back, but there is some margin drag, as you can see from the flat EBITDA. And that's just what it takes to see patients during this time. We have a somewhat fixed cost base at the site, whether it's the rent, the equipment payments and then we pay technologists by the shift rather than by the scan. So there's a fixed component there that really benefits us a lot as volumes surge.

But on days where there's a storm and some patients can make it in, others can't, we're seeing everybody we can. But we have kind of some fixed cost base with fewer scans per day there for a while. And so that did hurt us some on the margin. But it's good business to have, and we're still glad to be doing it, reaching our patients and making some amount of money on it, but it did affect the margin a little bit. And that's okay. That's part of it.

Okay. Got it. And then if we were to, I guess, add back that $4 million, it would suggest that the EBITDA growth rate in the quarter was around 8%. And I think it implies the rest of the year kind of has to grow year-over-year about 4%. So it looks like you're kind of well on track, but at the same time, kind of the implied second quarter guidance, looking at the 45%, I think would maybe put you on track for like flatter year-over-year EBITDA again as we move out to the second quarter. I guess, just help us understand kind of the transition and the growth rate and whether there's anything to consider in terms of ramping costs, whether it's public company costs or other things to consider.

Yes, you're correct, of course, in terms of what that means for our outlook for Q2 and beyond. We do see some continuation of the seasonality. And so there will be a steady ramp. Q1 figures to be 21.5% of our annual adjusted EBITDA at the midpoint. But Q2, as I described with the 45% in the front half and the 55% of the earnings in the back half, that means Q2 is about 23.5% of our year. So that's a steady climb, but not a huge one. So I agree we're well positioned to do that. And then Q3 and Q4 as the business naturally grows and as the JVs and de novos ramp, you see steady increases in those as well with Q4 kind of being the culmination of that.

And our final question for today comes from the line of Kieran Ryan from Deutsche Bank.

This is Kieran on for Pito. I was wondering if you could expand a little bit on the commentary you provided on payer mix as far as what you saw in the quarter. I understand there's a seasonal component, but was there anything that was out of the ordinary as far as impact from [ HIX ] or anything else?

Yes. Kieran, thank you for the question. We're really not seeing anything in the reimbursement or payer landscape that is a meaningful change. The dynamics we saw in Q1 were consistent with normal seasonality, particularly around deductible resets and then just a temporary shift in payer mix from commercial to Medicare. When it comes to [ HIX ], it continues to be a small part of our business. We're not seeing anything significant in that in that part of the business as well.

When we think about the world more broadly, we continue to benefit from being that lower cost side of care, certainly relative to hospital outpatient departments and we remain attractive to payers and patients and health systems. So from a reimbursement and a payer perspective, we feel really good about the stability and the positioning of the business.

Great. And then just one follow-up. It seems like -- I think you said PET growth was 23%. So that represents a pretty nice acceleration versus at least where 2025 full year came in. So can you just catch us up on any trends in the quarter there as far as volume and utilization across your fleet, more broadly, what you're seeing on referrals and demand? And any pressure points around radio tracers or anything like that?

Yes. Thank you for the question. We are very excited by the significant year-over-year growth in PET 23% quarter-over-quarter in Q1. We've talked through roadshow and in many of our conversations with you about just the opportunity that we have to grow PET. We are on a small end, and we are on track for continuing to grow our expansion in PET. We're adding machines on track for the additions in 2026. And then we're also working across the company on strategies to further accelerate the growth of PET in 2026 and beyond, whether it's through new marketing strategies, new applications, isotopes, tracers, as you said, and then additional new sites.

This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Caitlin for any further remarks.

I want to close by thanking our team members and our radiologists whose commitment to our mission and the patients and communities we serve remains the foundation of everything we do. Thank you for your questions today. We enter Q2 with strong momentum, a clear strategy and deep confidence in our ability to execute, and we look forward to updating you on our progress ahead. Hope you all have a good night.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Good morning, and welcome to Lumexa Imaging's Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] Please note that this conference is being recorded. I would now like to introduce Sue Dooley, Lumexa Imaging's Head of Investor Relations. Sue, please go ahead.

Thank you, and good morning, everyone. We appreciate you joining us today. Leading today's call are our Chief Executive Officer, Caitlin Zulla; and Tony Martin, our Chief Financial Officer.

Before we begin, I want to note that we will be discussing non-GAAP financial measures that we consider helpful in evaluating Lumexa Imaging's performance. You can find details on how these relate to our GAAP measures, along with reconciliations in the press release that is available on our website. We will also be making forward-looking statements based on our current expectations and assumptions, which are subject to risks and uncertainties, including factors listed in our press release and in our various SEC filings. Actual results could differ materially, and we assume no obligation to update these forward-looking statements.

With that, I'd like to now turn the call over to Caitlin. Caitlin, please go ahead.

Thanks, Sue. Good morning, and thank you all for joining us today on our first earnings call as a public company. The fourth quarter of 2025 marked a strong close to an important year for Lumexa Imaging, and we delivered steady and consistent growth in revenue and EBITDA that exceeds our preliminary earnings announcement. We generated consolidated revenue of $267.7 million, up 7.9% over Q4 of last year. Adjusted EBITDA of $63.8 million represented an 18.6% increase over Q4 of last year and delivered a 23.8% adjusted EBITDA margin. We completed 1.4 million advanced imaging exams system-wide in the quarter, which is a 7.7% increase year-over-year.

2025 was a year marked by several meaningful achievements for Lumexa Imaging. Here are a few of the highlights. We advanced our growth plans, achieving a record number of de novo openings and driving strong same-center growth. We launched a successful rebrand of the company, rolling out our new name, Lumexa Imaging to better represent our shared purpose, our innovative spirit and our commitment to bringing greater access and exceptional care to more patients and more communities.

We completed our IPO, bringing greater awareness of our company to the investment community, broadening access to our value creation opportunity and by using proceeds to reduce our leverage profile, freeing up more cash to support our plans for profitable growth.

I'd like to take a moment to reflect on the fundamentals of our business and the reason I believe we have a strong runway for continued growth. Our straightforward value proposition continues to resonate with patients, providers and payers as demonstrated by our high patient Net Promoter Scores, which are consistently over 90. We provide enhanced access to high-quality imaging that helps move patients through treatment in more convenient settings and at meaningfully lower cost than hospital outpatient department or HOPD sites of care.

We benefit from several long-term demand tailwinds, including aging populations with complex and chronic conditions, new treatment paradigms that require advanced imaging, increasing rates of preventative screening and an ongoing migration from hospital and inpatient settings to outpatient imaging amidst a fragmented and capacity-constrained industry landscape. Our commercial efforts are directed at higher growth and higher reimbursing advanced imaging modalities, including MRI, CT and PET scans. We also offer routine modalities like X-ray and ultrasound, which are strategic and position us as a convenient and comprehensive solution for patients, even though those modalities are a less meaningful driver of our financial results.

We are deploying a focused and disciplined profitable growth algorithm grounded in same-center growth, geographic expansion, strategic service line expansion and delivering efficiencies across our company, including select AI-enabled solutions. And by leveraging technology, including our existing tech stack as well as innovations being developed in coming months and years, we are well positioned to drive better outcomes and efficiencies.

We turn the page to 2026 with confidence fueled by strong execution and a sense that at Lumexa Imaging, we are in the early innings of capitalizing on the opportunities ahead of us. We are inspired by our mission to expand access to high-quality imaging through elevated compassionate care, improving lives and advancing health care across the country.

Next, I would like to take a moment to review the key strategic initiatives we have in our sights for 2026. First, driving same-center growth is our primary strategic focus. As a reminder, increased procedure volume generally accounts for approximately 2/3 of our revenue growth and the remaining 1/3 is attributed to rates, driven by both increases in both rate per unit and acuity mix or percentage of advanced modalities.

Our commercial team is laser-focused on driving same-center growth. To bring this to life, I'll share a couple of examples from the fourth quarter. In Orthopedic, we launched a targeted marketing and sales outreach campaign, which drove incremental growth from one of our highest referring specialty provider categories during their peak surgical season. Another area where our teams are driving momentum is mammography. Approximately 85% of our screening volume comes from existing patients who returned for their annual exam, reflecting high levels of patient trust and retention. Leveraging our CRM capabilities and proactive scheduling during patient visits, we were able to meaningfully increase our annual screening compliance rate. We also initiated marketing efforts to drive a healthy increase in new mammography patients in 2025. When annual compliance rates increase, more instances of breast cancer are detected and treated early, saving lives and lowering the cost of health care.

As we drive more demand within our existing centers, we are also taking steps to become more efficient to meet this growing outpatient imaging volume. Here are a few examples. With the benefit of an AI-enabled faster scanning technology, we increased schedule throughput by nearly 40% while also improving image clarity since introduction. Our FastScan integration and rollout was approximately 50% complete across all of our centers by the end of 2025, and we expect to reach about 2/3 adoption by the end of 2026. Another innovation we are integrating is virtual cockpit for remote MRI scanning. This technology allows us to minimize the impact of machine downtime, flex our staffing schedules and extend hours to serve our patients.

Our next strategic priority for 2026 involves geographic expansion. We aim to achieve this through new de novo openings, JV partnerships and carefully selected M&A. We view de novo openings as foundational to driving future growth. In 2025, we opened nine new centers, a record for our company. As a reminder, our typical de novo ramps and reaches breakeven in about one year, and our 2024 and 2025 cohorts of centers are tracking right in line with those expectations. Looking ahead, we plan to open 8 to 10 de novos annually and are agnostic as to whether those are in wholly owned or joint venture structures. We opened our first de novo of the year in February and currently have very good line of sight to reaching our 2026 goal for new sites. We look forward to providing you with more details as the year unfolds.

Joint ventures represent the next area of our strategic focus for 2026. Joint ventures are a key differentiator, aligning health system priorities with our expansion strategy. Health systems are increasingly seeking ways to participate in the rapid site of care shift to outpatient imaging and opportunities to grow their outpatient ambulatory footprint. Our JV model provides a highly effective entry point. Through the clinical, commercial and operational excellence we demonstrate, particularly in de novo development, Lumexa Imaging is well positioned to help systems execute against these ambitions while remaining focused on their broader enterprise priorities. In return, these partnerships accelerate our presence in any given market. We are cultivating a robust pipeline of potential partners with multiple ongoing conversations at various stages.

I'd like to highlight a recent example that illustrates the power of our approach to joint ventures. In the back half of last year, we entered into a new partnership with the University of Pittsburgh Medical Center. Through this, we're working with UPMC to help them achieve their goals of providing access to lower cost, high-quality and more convenient imaging. At the same time, we are broadening our own footprint to include Pennsylvania, expanding our reach to 14 states. It's early on in our partnership, but we are actively advancing site location planning. We are energized to have been chosen as a partner by this results-oriented and forward-thinking health system.

When it comes to M&A tuck-ins, we are continuously evaluating accretive opportunities and will remain very disciplined in our approach. At the end of the fourth quarter, we completed one small tuck-in acquisition of a new facility in North Carolina, an extension of our strong partnership with Atrium.

Another strategic priority for 2026 involves offering new strategic service lines to drive acuity mix and achieve efficiencies through innovation. Two areas I'd like to highlight as examples are mammography with cardiac screening known as breast arterial calcification and PET. We recently launched breast arterial calcification or BAC screenings as a cash add-on assessment for cardiac health at our mammography locations in South Jersey. Cardiovascular disease is one of the leading causes of death for women with over 60 million women in the U.S. living with some form of heart disease. As noted in a study published in the Journal of the American College of Cardiology, BAC can be used as a biomarker to evaluate calcium buildup in the breast arteries, which may indicate increased cardiovascular risk. Acceptance of this add-on has been strong since inception.

PET is another strategic area of focus for us and was a contributor to our growth and increase in acuity mix in 2025. Our Lumexa Alzheimer's Center of Excellence helps identify patients who may benefit from emerging onset dementia therapies with amyloid PET exams. Patients who receive this therapy need up to five MRIs for side effects monitoring. Improved pet access is a valuable way we can enable their care. Our full year PET volumes increased mid-teens on both a consolidated and system-wide basis. BAC and PET drive both volume and rate for us, and we're in the process of expanding these strategic service lines to other geographies.

I'd like to take a moment to speak about our approach to innovation. At Lumexa, we take a partnering approach to leveraging technology and incorporating artificial intelligence across our business. We believe this approach allows us to accelerate adoption, benefit from reduced capital intensity and enjoy the flexibility to leverage the best proven solutions as they rapidly come to market.

In the fourth quarter, we reached an agreement to partner with Ferrum Health, a leading AI convener. Simply put, Ferrum acts as an AI clinical imaging app store, providing us access to FDA-cleared apps through a single integrated pathway. Through this partnership, we can quickly turn on, evaluate and measure the effectiveness of hundreds of AI applications that we can implement across modalities and workflows while protecting our data and our insights. We're driving best-of-breed technology across our entire company. Our centralized back-office teams are also participating in this push for innovation as well, using emerging agentic and generative AI functions to increase efficiencies.

Wrapping up, I'm pleased with our Q4 results, and our team is energized by the success to deliver on our strategic priorities for the year to come. We believe we're in the early stages of capitalizing on the significant opportunity ahead of us and that Lumexa is well positioned to deliver profitable growth this year and beyond.

I want to say a huge thank you to our dedicated team members and our radiologists. Our accomplishments are a direct result of their hard work and commitment to providing the highest quality imaging experience for our patients who rely on us.

I'll now turn the call over to Tony to review our fourth quarter in more detail. Tony?

Thank you, Caitlin, and thank you all for joining us today to discuss our results. On today's call, I'll review the financial results and speak to some key drivers of our performance in the quarter. I will then provide our outlook for full year 2026.

To supplement my review of our GAAP financials on today's call, I will cite some system-wide metrics to help you better understand our overall performance and the breadth of our business. System-wide metrics include all centers that we operate, including the 102 that we wholly own as well as the 86 centers that we operate in our eight joint ventures with health systems. Our health system JV centers' revenues and expenses are not included in our GAAP revenues and expenses due to our minority ownership position, but they are important drivers of our performance because we do record our pro rata ownership share of their net income and their cash flows in ours, and we pick up our pro rata share of their EBITDA and our adjusted EBITDA. Details of our JV financial performance are included in our quarterly financial statement disclosures.

We ended 2025 with a strong Q4 performance, one that exemplified our long-term growth algorithm and our focus on advanced modalities, including MRI, CT and PET. Consolidated revenues for the full year of $1.023 billion increased 7.8% compared to 2024. System-wide revenues increased 8.2% compared to 2024. We also delivered adjusted EBITDA of $230.2 million, which increased 14.6% compared to 2024, representing an adjusted EBITDA margin of 22.5%. Our cash flows were strong and delivered a more than half turn reduction in leverage ratio during a year in which we opened a record 9 new centers, with leverage coming down an additional 2 turns to 3.5x levered in December as a result of our IPO and related debt refinancing.

Turning to our fourth quarter financials, starting with revenues. In the fourth quarter, consolidated revenues came in at $267.7 million, an increase of 7.9% compared to the same period last year. This growth was most heavily driven by our return in network with a large payer in New Jersey. We also saw an increase in the volume of procedures in other locations and a continued mix shift toward advanced imaging, which has higher rates. We experienced strong system-wide performance across all of our outpatient sites, both wholly owned and in JVs. As shown in our financial tables, system-wide revenue growth was 10.6% in the quarter. Revenue per unit, which includes both scan and read revenue, also benefited from modest increases in contracted rates with payers who appreciate our lower price point compared to hospital-based services. Our outpatient revenues also grew as we ramped four sites added in 2024 and the nine new sites we opened across 2025. Additionally, our professional fee revenues, which comprise our second operating segment, were $66.8 million, reflecting growth of 10.6%.

Finally, management fee and other revenues were $57.2 million. These revenues consist of two primary components. First, we're paid a management fee by each of our health system JVs to operate the outpatient centers in those JV structures. Second, we employ center employees and directly pay for certain IT and other services on behalf of the JV sites and essentially lease them back to the JV without an associated margin. We call these pass-through revenues. We disclosed the amount of pass-through revenues in a table accompanying our quarterly earnings release.

Expenses related to the refinancing of our debt and other transaction costs in our IPO year resulted in a GAAP net loss of $28.7 million for the quarter compared to a net loss of $25.1 million in the fourth quarter of last year. Adjusted EBITDA for the fourth quarter was $63.8 million compared to $53.7 million in the same period last year, representing an increase of 18.6%. Adjusted EBITDA margin was a healthy 23.8%, up 150 basis points from the prior year fourth quarter, underscoring the scalability of our operating model and strong execution of margin expansion initiatives. I'll remind everyone that adjusted EBITDA reflects our pro rata ownership share of EBITDA of all our centers, both the ones we wholly own and those in health system JVs.

A quick note on stock-based compensation. Our stock-based comp can be viewed in two components. First is the expensing of shares that were issued as part of the purchase price for some businesses we acquired during 2020 and 2021. These costs will be fully amortized during 2026. Second is the expensing of equity instruments granted to management and employees, which is expected to continue to be part of stock comp beyond 2026.

Turning to the balance sheet. We ended the quarter with $58.8 million of cash and cash equivalents compared to $26.1 million at the end of 2024. We've materially strengthened our balance sheet. As I described earlier, we delevered over half a turn simply through the operation of the business during 2025 despite opening a record nine de novos. Then in December, we used $406 million of net IPO proceeds to pay down debt, which reduced our leverage ratio by 2 more turns. In December, we also received improved credit ratings from both S&P and Moody's to B+ and B2, respectively, and we refinanced our term loan at a more favorable interest rate. The result of this balance sheet strengthening activity is an anticipated annual cash savings of more than $50 million.

Sometimes people ask about the debt of our unconsolidated health system JVs. We'll always disclose that figure in our quarterly reporting. But I'll note here that the total at year-end was $69 million, attributed mainly to financing of equipment purchases at the centers. That number is not included in our balance sheet or our computation of leverage ratios for lenders. But if we were to include our pro rata ownership share of this debt, our leverage ratio would only increase by about 0.15x. We consider our JVs to be capital-efficient business models that support our growth objectives and generate significant cash flows for us and our health system partners. Our business continues to generate strong cash flow.

Before moving to guidance, I want to reiterate our three capital allocation priorities. First, we plan to fund de novo facility growth, equipment upgrades and investments in strategic service lines. Second, we may make carefully chosen strategic tuck-in acquisitions. While these are part of our growth matrix, our 2026 guidance is not dependent on future M&A. And third, over the longer term, we aim to reduce our leverage profile to below 3x. Given the durable cash generation of our business, we believe we're well positioned to execute on these three priorities. Put another way, we believe our business provides the flexibility to naturally delever even while fully funding our ongoing capital needs and growth strategy.

Now turning to our outlook for full year 2026. Unchanged from our pre-announcement earlier this month, we continue to expect revenue to be in the range of $1.045 billion to $1.097 billion and adjusted EBITDA to be in the range of $234 million to $242 million, which includes approximately $7 million of public company costs that were not incurred in 2025. At the midpoint, the adjusted EBITDA growth rate, excluding the addition of these costs in our first full year of operations as a public company would be 7%. And today, we're adding guidance for adjusted EPS, which we expect to be between $0.71 and $0.77 per share.

We expect continued growth in volumes with advanced modalities growing faster and representing an increasing share of the mix. This is important as advanced imaging drives higher revenue per procedure and higher margins. Other modalities impact our profits, but some drive profit more than others, and our marketing efforts reflect that. For example, X-ray volumes were 15% of our system-wide volumes in 2025, but only 5% of our revenues.

We do not provide quarterly guidance, but as we think about Q1, I want to share some additional color that may be helpful in framing expectations. From a seasonality perspective, the first quarter is typically our lowest for revenue and adjusted EBITDA. And then our results ramp throughout the year with the fourth quarter consistently being our strongest, driven by patients seeking care ahead of annual deductible resets.

With Q1 2026 largely behind us, we want to note some atypical timing dynamics. First, we believe our strong Q4 performance was in part due to some pull forward of volumes from January into December. Second, New Jersey, Texas and three other Southern states were impacted in Q1 by storms, causing some impact to volumes. While we were able to recover a portion of these volumes within the quarter, we anticipate these dynamics to result in Q1 adjusted EBITDA being approximately flat compared to Q1 of 2025. We believe we can make up the remaining lost volume throughout the course of 2026, and we remain confident in our full year guidance.

As we set our sights on the longer term, in alignment with the discussions we had at the time of our IPO, we believe we're building a durable growth engine fueled by de novo growth, same-center sales expansion and expanding strategic service lines. We're in the early days of implementing our growth initiatives. And as new centers ramp and acuity mix shifts with industry tailwinds supporting our growth, we believe we can consistently deliver revenue growth at least in line with that of the market. Further, our attractive unit economics give us confidence we can consistently grow our adjusted EBITDA at a rate higher than our revenue growth.

Wrapping up my review of our financials. 2025 was an exciting year of milestones and profitable growth, and we put the building blocks in place for long-term shareholder value creation.

Echoing Caitlin, I'm pleased with our performance in the quarter, ending the year on strong footing. I also want to recognize that none of it would have been possible without the hard work of our dedicated team.

Operator, would you please open the call to questions.

[Operator Instructions] Our first question comes from the line of John Ransom with Raymond James.

So as we think about 2026, how do we think about the growth in advanced imaging versus routine? Does it look like 2025? I know there was a distortion from the Blue Cross tuck-in. And then as you think about the rhythm of opening your new centers, how do we think about the quarterly rhythm of that as we move through the year?

Thank you so much, John. Yes. So we remain focused on continuing the growth of our advanced imaging. We are incredibly proud of the strength that we were able to show in fourth quarter and throughout the year. As we said in our prepared remarks, throughout the year, advanced imaging grew 8% on a same-center basis, 7.1% on -- excuse me, on a consolidated basis and 7.1% system-wide. We will continue to see that growth at a rate higher than our routine.

When we think about routine, it really is combined of three different modalities. You have your ultrasound, your mammography and your X-ray. X-ray, just by the nature of the speed and the accessibility, it is the largest end. It's the biggest number. It's the biggest piece. And obviously, we provide that for strategic reasons. But as Tony shared in his prepared remarks, it is not correlated to the overall performance of the business, and you saw that in Q4. So we'll continue to focus on the strength of advanced and excited to see that continue to grow.

And then answer your questions about de novos, thrilled to say that we've already opened up this year, on track to deliver that 8 to 10. We've got really good visibility in terms of pacing, expect it to be more second half of the year weighted with more of the openings, but we will have some additional openings in the first half as well.

Our next question comes from the line of Whit Mayo with Leerink Partners.

Tony, any help on cash flow and CapEx for the year? And then how much of the CapEx is expected to be the equipment upgrades? Just any thoughts would be helpful.

Sure, Whit. Yes, as I've discussed in the prepared remarks and previously, it's a strong cash-generating business, thankfully. We're able to carry out all of our growth initiatives while delevering each year. And that really sets us up, especially after the IPO, bringing down our debt and generating even more cash to be used in the future to kind of continue that delevering.

As to how that's played out in 2025, we will be filing our 10-K not later than March 31, which will have more details on how -- what the spend consists of. But we do remain heavily focused on the de novos as a huge chunk of that spend, investing in the existing centers for growth. And then there is a maintenance component that is kind of the minority of the spend, but is necessary to ensure that we continue to have what we need at the existing sites.

Okay. Well, just back on the cash flow this year, just trying to think about the bridge from '25 to '26. Would it be just simplistically easy to look at just the EBITDA growth and then adding back the $50 million of interest savings to get to a reasonable number? Or are there any other variables or considerations that we should think about?

At this point, we're not really guiding on cash flow. And so I'll caveat whatever I say about that, at least for the moment in our young, early journey as a public company. But yes, high level, the company is experiencing the EBITDA growth you described, a lot of interest savings. 2026 will continue to be kind of a high capital spend year just because of the continuation of what we did in 2025 in terms of the growth CapEx and ensuring that the fleet is fully up to current needs for us. So we've spent a little more on maintenance than usual, and we'll probably continue to do that in 2026. But directionally, you're thinking about it the right way.

Our next question comes from the line of Benjamin Rossi with JPMorgan.

Just on the rate side within your 2026 guidance, what are you factoring for pricing in 2026? And how are you thinking about expectations for rate growth across your main books for commercial, Medicare and Medicaid payers this year?

Thank you so much, Ben. Yes, Tony, maybe I'll let you talk a little bit about how we assume our growth algorithm.

Sure. Sure. Over time, our growth is driven about 2/3 by volume and 1/3 by rate. And that kind of drives the 7%-ish same-site growth that we have in the outpatient segment. If you look at our consolidated financials, we show top line revenue growth a little bit less than that because we do have a second segment, which is a lot smaller than the outpatient segment, and it grows a little bit less, more like 5%. And we've talked about how that fits into our overall strategy to drive that business. So that creates a kind of a blended growth rate of more like 6% -- 5% to 6% top line. But that outpatient business is more like 7%, 2/3 of it by volume, heavily by growth in advanced modalities.

So the growth in the advanced kind of -- it represents about half of what we experienced in terms of rate increase because those just reimburse higher, 3x to 4x higher. So as we have more business in that, it generates some rate growth. And then the kind of the remaining half of what we call rate growth is driven just by escalators in contracted rates in the commercial book. And that's -- we believe we're actually kind of thinking of that very conservatively at this point.

Our next question comes from the line of Andrew Mok with Barclays.

Just wanted to follow up on the cash flow and CapEx. Can you give us a sense for total system-wide CapEx expected for 2026? And help us understand how that's expected to flow through the P&L and cash flow statement, especially on the nonconsolidated portion.

Sure. We're not, at this point, putting a number out there in terms of how much that's going to be numerically. I think it does flow through a combination of ways on our cash flow statement. For our consolidated sites, it's in our investing activities to the degree we use our own cash. There's also a supplemental disclosure that talks about CapEx that we fund just by capital leasing those assets, which involves no cash outlay. So you'll see that in our 10-K when we file in terms of what the 2025 numbers are.

The amounts we spend on the health system JVs are burden the cash distribution that we get from them. So that's something we'll talk about more as we get a little bit more mature as a company. We're keeping our guidance metrics pretty limited at the moment, but we're going to be happy to show more about that in the future.

If you're not giving 2026, can you share where total system-wide CapEx landed for 2025?

I believe -- I don't know that that's going to be in our 10-K explicitly. But I think in our talks during the -- during our going public process, system-wide, we were spending something north of $100 million with our pro rata share of that being significantly less because for the part we spend in the health system JVs, we split it pro rata with our health system partner.

Our next question comes from the line of Ryan Daniels with William Blair.

This is Matthew Mardula on for Ryan. So, in your prepared remarks, you touched up on this regarding Q4 results. But since a majority of patients come from referring physicians, how is the team positioned for this year to increase patient referrals to your imaging centers? And are you planning to do any more initiatives or changes to build as well as increase physician relationships for this year?

Yes, Matt, thank you so much. So we have a strong engagement strategy with our referring physicians. We have over 120 sales reps that are embedded in our markets that engage with over 100,000 referring physicians. So incredibly engaged.

When we think about -- we first focus on our highest referring specialties, your ortho, your neuro, your ENT, your pain, your urology and your gastro. We highlighted a specific campaign we did on orthopedics in Q4 in our prepared remarks, very much because that is their busy season as well. And so orthopedics need imaging, and we were able to provide that for them.

We also have marketing efforts, specifically as we think through women who canceled their mammograms during the snow days in Q1. And so a very targeted outreach to make sure that we are rescheduling and getting our patients back on the schedule to get their mammograms. So we'll continue to have a high level of engagement with our referring physicians and making sure we've got targeted messaging and strategies to meet their needs.

Our next question comes from the line of Stephen Baxter with Wells Fargo.

Thanks for the color on Q1. That's helpful. It would be great to potentially understand how you're thinking about it on potential volume impact or maybe same-store revenue impact from the weather and kind of pull-forward dynamics. And then as you're thinking about the balance of the year outside of Q1, any sense of how much you're assuming of the volumes that you haven't recovered yet that you might actually get versus what kind of just leaks out and doesn't ultimately occur?

Yes. Thanks so much, Stephen. I appreciate the question. As we said a bit in the prepared remarks and obviously saw at SCA and USPI, Q4 was always our highest quarter related to deductible reset. And so really proud of the efforts that the team put in to drive strength in Q4. And obviously, we'll be replicating that as we think about 2026.

We think about kind of the impact in Q1, about 50-50 kind of 50% acceleration in Q4 and then about 50% of it being about weather impact. Team is actively engaging. Certainly, we know any patients that had scans on the schedule and we're -- our call center -- centralized call center is reaching out to reschedule them. And then we have our sales team engaging with referring physicians who also had a backlog.

So we feel really confident that we'll be able to continue to drive the volume growth. We're seeing strength post storm, especially in the advanced no growth. And the combination of our strong sales efforts as well as just the operational strength of our team, feel confident in the full year guidance.

Great. Yes, that's very helpful. And then maybe also if you could potentially provide a comment on maybe some of the current macro conditions. Obviously, people are watching closely when it comes to things like oil prices and gas prices and things of that nature. I guess how are you thinking about that? Like is there any exposure within your own P&L that we need to be mindful of? And then as you think about the money you're spending on capital, I guess, how are you thinking about potential downstream impacts to the capital projects that you might have?

Yes. Thank you so much, Stephen. We are very much keeping an eye on all things macro and all things within our supply chain. And right now, we see no risk at all to Lumexa Imaging. We've specifically received some questions regarding helium. Just as an example, helium has actually been in shortage for several years, and we have strong service contracts with our original equipment manufacturers that give us fair pricing. We also have a number of secondary sources and all of those have fixed rates, same with gadolinium.

And just in terms of context, some of the newer MRs require actually less helium than older models. And so the equipment refreshes that we've been doing intentionally over the last few years provide us further security. So no concerns at this time that you need to be thinking of.

[Operator Instructions] Our next question comes from the line of Brian Tanquilut with Jefferies.

You got Jack Slevin on for Brian. Caitlin, I wanted to ask some really interesting commentary around your rollout of FastScan and other throughput initiatives. Can you maybe talk a little bit about -- I heard the progression of we're going to get to 2/3 by the end of this year. But can you -- are there any early reads on sort of what that means from an efficiency standpoint or sort of the volume inflection you've been able to see as you've rolled that out across the first half of the portfolio?

Yes. Thanks so much, Jack. Appreciate the question. So we are very excited about FastScan. It's an initiative that we have been working on over years, proud to be at 50% of our MRI fleet with FastScan at the end of last year. Very simply, FastScan truncates the amount of time it takes to do an exam. So, for an ankle MRI on a Siemens, it takes it from 22 minutes down to 8. It is better for the radiologist because the image is higher quality. And then it is better for the patient because they have to spend less time in the claustrophobic MRI tube. And then, of course, it's better for us because it opens up additional scheduling capacity, typically about 40%.

We are very measured in all capital deployment and including FastScan, we can get FastScan capabilities either by acquiring a new machine or by providing bolt-on software. It's about $150,000. So obviously, a meaningfully lower price point. And we always want to make sure that we will be able to drive a strong IRR that will meet our investment thresholds. So we make sure we have that business case approved before we roll it out. So excited for the continued growth, and that's a big part of giving us the confidence that we'll be able to drive the insight growth in 2026 and beyond that we've shared in our growth algorithm.

Our next question comes from the line of Pito Chickering with Deutsche Bank.

I guess going back to sort of 1Q, you guided sort of flat EBITDA year-over-year, but your guidance was maintained for the year. So, originally, we're modeling quarterly guidance -- quarterly EBITDA growth of about 6.7% at the midpoint of the range, excluding the $7 million of public costs for every quarter this year. Now first quarter is flat. So just mathematically, we should be modeling sort of 9% quarterly EBITDA growth from 2Q to 4Q. I'm just sort of curious what you -- it seems like a big step up for the rest of the year with a flat first quarter. I guess what gives you guys conviction EBITDA growing at 9% for the rest of the year?

Sure. I think, Pito, thank you for the question. I think broadly, we have great momentum in the business. So we have strength of our advanced mods. We have the record year of de novo openings in 2025 that are ramping well. The pacing of last year was more first weighted than second half, and we already have the one open in 2026.

We also have multiple ongoing JV conversations at various stages. It gives us confidence in the broader need for our service and our model. And then we have the tuck-in acquisition that we shared in December, and we're building a pipeline of acquisition opportunities. And then on top of that, we've got conviction and proof points in advancing our strategic service lines like our breast arterial calcification, great uptake in New Jersey and great clinical results for our patients, first and foremost. And so we'll be thinking about how we expand that as well.

Tony, anything else you'd add about how we think about pacing throughout the quarters?

Yes. As we discussed, it is a seasonal business and ramps, and it happens in kind of different rates year-to-year depending on things like weather and depending on how significant deductible reset driven behavior is. So that will change, but we do ramp up every year quarter-by-quarter. And weather events and other disruptions in individual sites happen with referring physicians being closed down for a couple of days or us being closed down for a couple of days.

So we have a playbook that we use to get that volume back. It's part of doing business in this space. All health care services providers have those playbooks, and we certainly do and have put them to work. So we do expect to kind of pull that rest of that volume in at some point, and that adds to our conviction in our annual guidance.

Our last question is a follow-up from the line of John Ransom with Raymond James.

Just a couple more for me. What was the professional fee revenue in the fourth quarter and for the full year?

For the fourth quarter, it was $66.8 million.

Okay.

And the full year figure, I think I put in my prepared remarks, but I certainly have it.

I can get that. I mean I can get that offline.

Yes, and that will certainly be in our 10-K. We're going to be filing that not later than the 31st. But yes, we can certainly get that.

And then my other -- and then what was the professional fee -- last year, fourth quarter professional fee?

Yes. It -- the growth rate was 10.6% year-over-year. So I'll answer your question that way.

Does professional grew that much?

Yes.

Okay. All right. And then secondly, we've kind of been back and forth on how to manage -- or excuse me, how to model management fee plus pass-through. So, in your disclosure, we had thought about management fees as being 10% of the revenue of your unconsolidated. So it looks like management fees are higher than that, and that probably includes some stuff in your other revenue segments. But how do we think about managing -- modeling management fees? And what kind of margin does that business generate? Because I know you don't break out the costs, but just help us model that versus the pass-through in 2026.

Yes. Good question. And I'm glad we're able to highlight the pass-throughs because that's a big chunk of revenues that doesn't really drive anything in an EBITDA standpoint. So your question about what to focus on in terms of modeling it makes a lot of sense to me.

I think what you've seen in the recent trend is the best indicator of the future on that. It is from a pure management fee standpoint, driven by a percentage of the revenues of the underlying JVs, which you can see the growth rates that are happening at that level. It is -- there is a little bit of other revenue in that as well for some other services we provide. So I think that combination is not likely to change a whole lot in terms of how it's growing and how you're looking at it.

So grow it sort of in line with consolidated revenue growth -- or I'm sorry, with system-wide revenue growth?

I think, generally speaking, that's how we look at it, yes.

I would now like to hand the call back over to Caitlin Zulla for closing remarks.

Thank you for the questions today, and thank you for your continued interest in Lumexa Imaging. As you've heard throughout the call, we are entering 2026 with strong momentum, a clear strategy and deep confidence in our ability to execute. Our team remains focused on delivering exceptional patient care, expanding access to high-quality imaging and driving disciplined, profitable growth.

I want to close once again by thanking our dedicated team members and our radiologists. Their commitment to our mission and to the patients and the communities we serve continues to be the foundation of our success. We appreciate your time today and look forward to updating you on our progress in the quarters ahead. Thank you.

This concludes today's conference. Thank you for your participation. You may now disconnect.

Great. Welcome back to the Barclays Global Healthcare Conference. My name is Andrew Mok. I'm the facilities and managed care analyst here at Barclays, and we're pleased to welcome on stage Lumexa Imaging CEO, Caitlin Zulla; as well as Tony Martin, CFO. Welcome.

Thank you.

Thank you.

Caitlin, Tony, seeing that you just took Lumexa public just a few months ago, recently announced preliminary fourth quarter results and issued guidance, why don't you start with an overview of the business, growth strategy and recent results?

Sure. Thank you so much, Andrew. So honored to be here. Yes, we went public 3 months tomorrow, so almost our anniversary. So what Lumexa Imaging is? We are one of the largest national scale platforms of outpatient imaging. We have 189 centers located in 13 states, think great MSAs like Dallas, Charlotte, Atlanta, Denver. Markets that are growing 2x the average population growth rate affords us a really strong commercial payer mix.

As I said, we run outpatient imaging centers. They're called IDTFs, independent diagnostic testing facilities. They are at a different price rate, lower price point than HOPDs. So in every case, we're the value-oriented provider in the market, 60% lower cost than hospital outpatient departments. And then as you think about how we've gotten to be our size, we've grown through de novos and acquisitions. De novos, we completed 9 this past year. We did a tuck-in acquisition, and then we've already opened our first de novo of 2026.

Great. Let's turn to the industry backdrop. You've emphasized advanced imaging as a key demand tailwind, and it's a disproportionate driver of revenue and margin relative to routine modalities. What are you seeing today in referral patterns and clinical indications that give you confidence this remains a multiyear trend?

Yes. So in our outpatient centers, we do advanced imaging, which is defined as MRI, CT and PET scan. And we also do routine, which is characterized as diagnostic and screening mammo, our ultrasounds and our X-rays.

When we think about what is driving the industry? So outpatient imaging is a dynamic industry. Radiology writ large is. So maybe starting from the top, Radiology is $140 billion TAM, growing at a 3% CAGR. Outpatient imaging, $33 billion TAM, growing at a 7% CAGR. A lot of that fueled by the site of service shifts that you've heard from ambulatory surgery center companies as well. And advanced imaging is the biggest driver of that growth. Advanced imaging is growing 2x the rate of routine, and it has about a 3.3x revenue premium.

What's driving that advanced imaging are our aging population, increasing chronic conditions, complex care, increased screening mandates and then, of course, novel treatment paradigm. So our Alzheimer's and cancer treatments often require advanced imaging to start the treatment and then throughout it. And Andrew, in your initial question, you asked us a little bit about kind of guidance and results. And so last year was a strong year for advanced imaging. Our prerelease from last Monday shared that advanced imaging has grown 11% quarter-over-quarter for fourth quarter, 7.7% year-over-year, further illustrating that strong demand.

Great. And routine volumes, particularly in x-ray, has been a bit softer in recent quarters with limited impact to financials. How are you thinking about managing that mixed noise in your results? And how do you communicate your volume growth?

Sure. Tony, do you want to talk a little bit about routine?

Sure, sure. Yes. As Caitlin described, advanced is growing much faster, twice as fast as the other modalities, and the higher reimbursement means we're very happy that this trend is happening. That said, on the routine side, there's important modalities for us, too. There's mammography, ultrasound, x-ray. But not all of those are kind of created equally. I think one of the things we'll do more as we get our disclosures updated for public company life is make sure we kind of describe the distinctions between the 2.

For example, X-ray, that's not a high reimbursement or high-margin business. So to the degree that doesn't grow very much, that's fine with us. It's not economically significant to us. So that's an example of something we're kind of digging into a little bit more detail about our modalities and how they work, I think, will be helpful. Also, X-ray not performing doesn't mean anything about the other modalities. It's not a harbinger that we're going to have trouble getting MRI business or anything. They're different referral patterns. So that's something we look forward to sharing a little bit more about with people, so they can understand the real drivers and what to worry about and what not to.

Great. And within that growth algorithm, same-store revenue growth is split roughly 2/3 volume and 1/3 rate with rate being driven in part by the acuity mix. What are the most important operational actions you're taking to drive the volume component, whether through sales efforts, deeper referral relationships, AI or anything else?

Yes. So I completely agree, same-site growth is very important to the business. So maybe I'll highlight 2 things we're doing. First, on the sales and marketing component, we have 120 amazing sales reps that are deeply embedded in the communities we serve, and they're focused every day on highlighting the value we provide to our referring physicians, namely, our patients love the care they receive. We have a patient NPS of 91. We do everything we can to get patients in same day, next day. We have an incredible network of subspecialized radiologists who are reading at an incredibly high quality. And of course, we've invested in the best machines that provide the best images.

And so an example would be, in Q4, we know that it's orthopedics busy season. And so we're able to work with our sales team and make sure that they're focusing on our orthopedic relationships and kind of the output of that was we had a 400 basis point improvement in orthopedic referrals compared to the rest of the year. So we have that targeted focus.

And then technology is one of the most exciting parts of our industry. As we like to say, if you need an MRI, you need to go to a place that's got an expensive machine behind a magnetic safe wall that has a tech who's certified to take care of you. And AI makes every part of that better. And so an example would be how we can improve the efficiency and the volume throughput of our sites. So there's technology called FastScan technology that truncates the amount of time it takes to do an MRI exam. For example, for a Siemens MRI on your ankle, it reduces it from 22 minutes to 8 minutes, better for the patients. They're in the tube, obviously, a meaningfully less period of time. It's a better image for a radiologist. And then it unlocks incremental 40% capacity as we think through our scheduling throughput.

And so through the end of last year, we had about 50% of our machines with FastScan technology, and then we're continuing to deploy throughout this year. We'll get up to 66% by the end of 2026. And then there's other things like virtual MRI, which extends the ability for a tech, who's not in the facility, to support running the machine. We are early days in a pilot in one of our markets, and we've seen a meaningful improvement in the amount of downtime we have from like a tech callout and an opportunity to expand hours from our site. So fun exciting stuff on the technology side as well.

Great. We'll definitely dig more into that later. But first, I wanted to touch on some of the commercial employment trends. Last Friday, the BLS released a pretty weak jobs report with negative February headline numbers and downward revisions to prior months. Commercial mix is an important part of your business, which supports not only the higher pricing, but also the higher modalities, but it also introduces cyclical volume dynamics. Have you seen any impact from changes in consumer confidence or employment trends on commercial mix or utilization? And how are you positioning the business in the event of a broader slowdown?

Sure. So as I referenced, we are in strong markets that have a high commercial payer mix. The exact amount of 63% of our revenue is from commercial payers. In comparison, 19% is from Medicare. That's both your fee-for-service and your MA, all in that 19%. MA obviously reimburses us on a fee-for-service basis and then 3% Medicaid. As we think through what we've seen at the start of the year, continued strength, there is a standard deductible reset that always happens with health care services business, but continued strength. And then as we think through any additional possible dislocation, I mean, we are the value-oriented operator for imaging in every market. And so there's an opportunity for us to continue to highlight the lower cost care we provide compared to certainly inpatient departments, but then also the hospital outpatient departments, which I referenced are about 60% higher.

Right. And between advanced and routine imaging, do you view one as being more economically sensitive versus the other?

Yes. Good question. I mean, certainly, for your advanced imaging, right, your MRI, your CT, your PET scan, if you are looking at a surgery or you are facing a cancer diagnosis or cancer treatment or Alzheimer's, I mean, those are certainly not elective procedures. I mean, very similar to the surgery center business. A lot of what we saw had a consistent demand because it was not elective. Compare that to potentially X-ray, it will be interesting to see how that begins to change, if at all. But as Tony said, that's something that we do. It's just kind of a part of being part of the community. It's not a real driver of our financial performance at all.

Great. Let's move on to the joint venture strategy. JVs can be strategically powerful, but they also introduce complexity and reduce the visibility into underlying performance if they're not consolidated. So what's the best way for investors and analysts to track system-wide performance and cash generation tied to JV activity?

Yes, Andrew, we've received that question a bit over our last 3 months. And so Tony, I know you spent a lot of time thinking through this.

Sure, sure. Yes. Our business is fundamentally the same, whether in either model. In a joint venture model, the health system takes a bigger role in managed care contracting and where the business is sourced. But we have fundamentally the same role, similar economics. So first and foremost, there's nothing mysterious about that business. And we're really eager to pull the curtain back on anything of financial nature about it. I have taken some steps recently with a deck we posted to our IR site in the last few days to kind of clear up some of those points and provide a little bit of a road map on where some of this data can be found in our S-1 and in our forthcoming 10-Q, 10-K reporting, because it will be available and it will be transparent.

And just as an example, to kind of describe how the business is doing, we'll show a combination of consolidated metrics, which are the majority of our sites, the ones that we consolidate. And then we'll show system-wide metrics that additionally pick up all the JV sites, which is really the full scope of what we operate. So you'll see both, so you can have a good idea about how the whole company is functioning. But then as an example of just the transparency we'll have on the joint ventures themselves, the amount of debt they have is explicitly disclosed. And just as an example, if our pro rata share of their $70 million or so of debt were on our books, it would affect our leverage ratio by 0.1x. It's not a big difference, but the number will always be there for people to see.

And then other metrics like revenues and expenses will be disclosed in aggregate at a minimum for those joint ventures. And then there's also a clear path to seeing the earnings we accrue from them as compared to the cash we receive from them quarter-to-quarter and year-to-year, so that people can see the correlation of that and there's no mystery behind that either. So perhaps a lengthy explanation to show our commitment to having transparency around that, because there's really nothing mysterious.

Right. Sticking with the growth and partnerships, de novo center development also remains a core pillar of the growth algorithm with a target of roughly 8 to 10 openings per year. Can you comment on the development pipeline for 2026? And how much de novo contribution do you currently have embedded in 2026 guidance?

Sure. So de novos are a core part of our growth algorithm. As we think they're at same site plus de novo, M&A is incremental and not embedded in the external guidance we've shared. De novos, we finished 9 last year, and we did a tuck-in as well. Already this year, we've opened up our first. And so we've got confidence in hitting that 8 to 10 range, great line of sight through the full year and starting 2027.

In terms of guidance, so our de novo engine is newer to the company. Well, we've always done it, but in terms of getting this 8 to 10, we did 4 at the end of 2024. We had 9 last year, of course, and the 8 to 10. And so Andrew, as we think through the compounding impact, we're in the early days of seeing the benefit of that. And if anything, this is one of the years we've got a little bit more of the de novo headwinds, as last years are just getting to breakeven, takes about 1 year to get to breakeven and then 3 to 4 years to get to terminal margin and then obviously, the investments. So it will be exciting to see as we get to 30, 40 de novos ramping, the impact that has on our overall same site growth.

Great. And with that step-up in de novo acceleration in development, what have you learned around site selection, construction, staffing? And what gives you confidence to sustain that pace going forward?

Sure. We have a dedicated team who is focused on making our de novos happen. We do a lot of research. So we have analytics that help us understand, in any market, what is the supply of imaging versus the demand. And then we go into market and actually do the assessment and speak with the referral coordinators for orthopedic practices. And you might say, who might be willing to talk to you all? And the answer is everybody. If your job is to make sure that the surgeon has the information they need to do the surgery, you care very much about access. And so you can learn a lot about backlogs, price points, all that other good stuff. That allows us to get confident in the location.

Then one of the benefits we have at Lumexa in our centers potentially compared to ambulatory surgery centers is that we do not have a physician on the cap table, right? In the JV partner, we own 49%, health system owns 51%, or we own 100%. And that allows us to put the center where it is best for the patient. We don't need to put it across the street from the orthopedics offices. And so we can be really thoughtful about the right commercial location with parking and ease of access, patients can walk right in. And then as I said, typically, it's about a year from agreeing on the de novo pro forma to opening it up, and then it's about a year to get it up and running to breakeven.

Great. And capacity expansion doesn't have to take the form of de novos. You can also add machinery to existing centers that drive an attractive ROI. Can you walk us through that thought process? What levels of utilization do you need to start to see to say, I need to add a new MRI machine, for instance?

Sure. So a standard de novo facility is 6,500 square feet. It's about $4 million in CapEx. Half of that are equipment capital leases. That's if we wholly own. We'd obviously share that pro rata with a joint venture partner. When we look at the blueprint for that 6,500 square feet, it is typically 2 MRI suites. One we will fully build out, the other one we'll shell, and then a CT and ultrasound and an X-ray. Again, we want to make sure we are referring physicians' one-stop shop, they can send us everything.

And so as we begin to look at MRI volumes and backlogs, once we get to the point where maybe a patient is looking at a 2- to 3-day backlog, we'll already start to build out that second MRI suite, which allows us to obviously drive incremental same-site growth. As we look at capacity, we're very thoughtful around what is that capacity threshold. We are not at a place right now where anybody is over 100%. And that is just because we will continue to think about how do we either open that second site, implement new technology, whether it be FastScan or if the machine is ready for a refresh, refresh the machine, and then see the de novo in the geography.

Again, one of the benefits we have is that there aren't physicians on the cap table. So where in the ambulatory surgery center space, I used to have to think about, oh my goodness, to proceed with another location, I'm going to have a drag on physician distributions for a quarter. We don't have that. And so we can be really thoughtful about what does the right coverage for the geography look like for the patients and then to make sure we're meeting all of our referring physicians' needs.

Great. And related to this, PET volumes have grown rapidly across the industry, but the machines require significant investment. Can you walk us through what your current PET capabilities are today and how you think about the capacity expansion for that modality specifically over the next few years?

Absolutely. So during our roadshow, we talked a lot about how we were going to improve visibility to all modalities, including PET. And so excited in our pre-release beyond talking through our financial performance and setting 2026 guidance, we're able to share PET volumes. So PET grew 17% on a consolidated basis year-over-year, 13.5% on a system-wide basis. We have a relatively small end. We have 8 PET machines across our fleet, and we are on track to add 3 more this year. As we think about growth, we think about new geographies and our current geographies, 2 of those 3 will be in existing geographies and will be net new with a health system partner.

And a big part of this is making sure we've got the space. Again, we're very custom built in that 6,500 square feet. PET, you need to make sure you've got room for the wet lab and space for our patients to isotope. And we want to make sure we've got the right reimbursement landscape. Those isotopes are expensive. And then we want to make sure we've got the referring physician connectivity that we're meeting the needs of the market. So excited for the 3 and then a significant focus for the company as we think through 2027 and beyond, how can we continue to meet the needs. PET is an example where you go into many markets and there's backlogs of patients that are waiting, oftentimes even longer than 4 weeks for a PET scan, which is heartbreaking.

Right. Moving on to the expense side of things. Radiologist supply remains structurally constrained, and you operate both an outpatient model, but also a professional fee hospital support model. So how do you think about radiologists recruiting and balancing the growth between the 2?

Sure. So within our outpatient centers, we do not need a radiologist in most of the facilities. Certainly, there's exemptions. And with remote contrast extension being blessed last year, we have the ability to continue to support that. And so what that means is that the radiologists can support our centers through a teleradiology structure. They can read remotely, support the contrast provision remotely. And as we think through kind of our growth of our Connexia unit, that ability to read remotely, be supported by a great tech stack, not doing nights, weekends, that's a significant opportunity for us to highlight the benefit and continue to recruit.

We finished last year at 37 physicians in Connexia. We have a 95% retention rate. And then, of course, we work with physicians in various ways. Like you said, we have our aligned physician groups that continue to do well and recruit into. And then we work with third-party physicians in contracted arrangements across all of our geographies.

Great. Let's move on to AI and technology. You've discussed workflow innovation and potential efficiency levers that are not fully embedded in guidance. Can you expand on what the strategy is around AI and what the measurable throughput or labor productivity benefits you might see over the next few years?

Yes. So as I mentioned, AI makes every part of our business better. We've already talked about FastScan, so I won't talk about that. Virtual MRI, I referenced that, that's the ability to have tech support the machines remotely, which is already showing a reduction in tech downtime. And then maybe I'll talk a little bit about where we see AI in clinical applications that's driving value.

So we, in our pre-release, referenced our pilot in New Jersey for breast arterial calcification scoring. That is for mammography patients who are coming in. It is a net new addition to the scan. So it's something that they choose to opt into. If they do not opt in, obviously, we do not provide the service. And it's a patient self-pay rate. And as we were thinking through it first, it was, clinically, is this appropriate? Do our radiologists believe that it provides an advantage to the patients? Two, is there demand? Three, does it fit within our workflow and our systems? Does it not add complexity? And then four, obviously, is there a financial return for the effort?

And so as we are coming up with a framework of what rate would look like for the breast arterial calcification scoring, we were expecting a 10% opt-in rate. And so already, early days, we're seeing 12%, which is higher than expected. Feedback from the patients has been remarkable. Our teams are thrilled by the ability to support women in new ways with their cardiac health in addition to their breast health. And then our radiologists are pleased with the performance of the algorithm.

Great. Let's finish up here with capital deployment. So you meaningfully delevered post IPO, improved free cash flow. What are the near-term priorities for that free cash flow deployment across growth CapEx, technology investments and tuck-in M&A?

Perfect. Tony, all you.

Sure, sure. Our CapEx will predominantly continue to be growth oriented. De novos take up $30 million to $40 million of it per year. So that's maybe 1/3. But we'll have plenty of room to continue to invest in growth capital in the existing sites and maintaining the equipment we have, so that it is in good operating order as well as meeting the needs of the referring physicians, which can evolve.

The IPO was all about reducing leverage. So we went from 5.5x to 3.5x. We've been refinancing our debt. We freed up over $50 million of operating cash flow per year. All these things will allow us to delever faster, get down from that 3.5x to maybe something in a 2x handle at some point. But importantly, we're able to carry out all of this strategy while delevering significantly, which means we have an opportunity to participate in M&A. And at 4x to 5x EBITDA for some 1 and 2 center operators, of which there are a lot out there, that's a very attractive use of capital. So while respecting our need for our balance sheet to continue to strengthen, we do think that M&A will be a meaningful part of our growth as well, although not something in our guidance.

Great. With that, we're out of time. So thank you so much for joining today, and please enjoy the rest of the conference.

Thank you so much, Andrew.

Thank you.