RadNet, Inc. Stock

Good day, everyone, and welcome to today's RadNet Special Shareholder Update Call to discuss yesterday's acquisition of ONRAD, Inc. [Operator Instructions] As a reminder, today's conference is being recorded. At this time, I would like to turn the call over to Mr. Mark Stolper, Executive Vice President and Chief Financial Officer of RadNet. Please go ahead, sir.

Thank you. Good morning, everyone, and thank you for joining Dr. Howard Berger and me today to discuss RadNet's acquisition of ONRAD. On this call, we have also invited Dr. Greg Sorensen, RadNet's Chief Strategy Officer; and Dave Engert, ONRAD's Chief Executive Officer. On today's call, we will share additional information about yesterday's announcement, the combination of RadNet's current businesses with ONRAD as well as more about RadNet's future strategy. After the end of our prepared remarks, we will open the phone lines to your questions.

Before we begin today, we'd like to remind everyone of the safe harbor statement under the Private Securities Litigation Reform Act of 1995. This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Specifically, statements concerning anticipated future financial and operating performance, RadNet's ability to continue to grow the business by generating patient referrals and contracts with radiology practices, retaining and recruiting technologists and radiologists, receiving third-party reimbursement for diagnostic imaging services, successfully integrating acquired operations, including ONRAD, generating revenue and adjusted EBITDA for the acquired operations as estimated, successfully selling and licensing digital health solutions, among others, are forward-looking statements within the meaning of the safe harbor.

Forward-looking statements are based on management's current preliminary expectations and are subject to risks and uncertainties, which may cause RadNet's actual results to differ materially from the statements contained herein. These risks and uncertainties, including those risks set forth in RadNet's reports filed with the SEC from time to time, including RadNet's annual report on Form 10-K for the year ended December 31, 2025.

Undue reliance should not be placed on forward-looking statements, especially guidance on future financial performance, which speaks only as of the date it is made. RadNet undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made or to reflect the occurrence of unanticipated events. And with that, I'd like to turn the call over to Dr. Berger.

Thank you, Mark. Good morning, everyone. I'd like to go through a series of slides that discuss the transaction overview as well as other facets of how the decision to enter the hospital radiology space was decided. RadNet has signed a definitive agreement to acquire ONRAD. The purchase price, initial purchase price will be $350 million in cash and 5 million shares of RadNet common stock. Up to $210 million in an earn-out paid in cash and -- or stock at RadNet's selection based upon 2027 adjusted EBITDA will be granted.

ONRAD is anticipated to add $190 million to $200 million of annual revenues and $60 million to $65 million of adjusted EBITDA in the first full year of operation. Projected future top line growth is expected to exceed 10%. This enables RadNet to expand radiology services within hospitals and health systems. Acquired capabilities will complement imaging services and digital health solutions, which RadNet currently provides to hospitals and health systems. ONRAD will form the foundation for RadNet's third reportable operating segment, Radiology professional services.

Why ONRAD, why now? The acquisition is a response to inbound demand RadNet has received from joint venture partners and other health systems, addressing the choke point that is concerning virtually every institution that we speak with, whether they're current joint venture partners or new ones that are approaching us, and that is the difficulty in attracting and providing enough radiology coverage for the increasing demand that we all are experiencing. This connects 3 complementary businesses, imaging centers, digital health and professional radiology services to provide comprehensive solutions for customers and partners.

It addresses the growing demand in the U.S. imaging market, which is outpacing the supply of trained radiologists. Integration of AI-enabled technology with teleradiology and radiology professional staffing services can transform workflows, support case prioritization and better match interpretation capacity to demand. ONRAD is a financially attractive platform with leading metrics in its industry. 30+% adjusted EBITDA margins requires little capital investments to maintain and grow revenue and adds to RadNet a new growth engine. ONRAD at a glance.

Thank you, Dr. Berger. And good morning, everyone. I'm absolutely thrilled to be part of this family and joining RadNet and the great team of leadership. Dr. Berger and I go back many, many years, and we had visions for years to figure out whether putting these 2 companies together would be a great solution set for the marketplace, and we're convinced it has been, and I'm just so excited and looking forward to getting going with a combination that I think will be one of a kind in the industry.

Some background on ONRAD. Well, we've been around for 20 years, and we focus on doing final interpretations. We have a terrific blue-chip list of customers and physicians and radiologists. And we've been doing exceptionally well in our marketplace. I'm approaching my 9th year as CEO of the company, and we've grown extensively since when I joined. We now have over 130 radiologists. On a good day, we can do way more than 8,000 reads a day, but generally around that many final interpretations every day. We have 225 hospital facilities, even more customers when you add in our imaging centers and outpatient clinics.

The market opportunity is just astounding. We've had so much growth in opportunities facing us. As everyone is dealing with today is how do you take advantage of those opportunities with the continuing shortage of radiologists available. We've been doing very well. We've been hiring more than one a month for the last several years, and we've continued to do so. Our financial picture is really terrific. I'm not sure of any other teleradiology organization in the country or anywhere probably in the world that's doing over 30% EBITDA margin to revenue.

We've done that through extensive automation and managing our processes, which are very complicated in this space. And we've really taken a lot of the fingers and eyeballs out of the entire process of acquiring a raw image from a hospital customer, bringing it into our centers, enabling it to be viewed by our radiologists who all work virtually remote from their homes, read it and turn that around, and it's just been a fantastic accomplishment. The market continues to grow extensively.

If you look on the graph on the bottom in RVUs in millions of growth, it is unfortunately growing the availability curve of radiologists available to meet that demand. And so being able to choose the right solutions, the right blue-chip customers and certainly the right partners to enhance our platform and to embrace and take advantage of artificial intelligence in this space is a key driver for us, leading us to a great partnership with RadNet, considering the fact that its digital AI group is, we've adopted many of the products already and continue to adopt more. So you wouldn't mind going to the next slide.

While we're doing that, I'll just mention the growth is being accelerated due to the aging population, advances in technology and imaging equipment, and it's just driving extensive growth. The supply continues to be challenged in keeping up with the demand. As you can see, the diagnostic radiology residency physician is really not as strong as it used to be. It's gotten a lot strained being able to have new diagnostic radiology physicians entering the market. The practicing radiologists, the growth, so we're looking at a little over 1% growth.

And if you look at what's really happening in America with the force, the supply force we have, 30% of the radiologists are over 55, 3,000 retired in '24, more continue to retire. And the attrition rate exceeds the ability to continue to resupply more radiologists to meet the demand. So we're going to be challenged on how do you make radiologists more efficient, so you can get high-quality reads more out of each radiologist. And clearly, the answer to that is going to be technology enablement and AI.

If you look at what we do in the market, we primarily focus on hospitals in the acute care environment. We read, traditionally, the radiology, teleradiology space was focused on overnight reads and weekend coverage. It's become now 24/7 every day. We read as much in the daytime to augment radiology groups and hospitals to keep up with their demand as it used to be just overfilling the night coverage and weekends. So it's an incredible requirement for hospitals to start to embrace teleradiology.

Everyone we talk to, it would be, would have a struggle on being able to keep up with their demand without a teleradiology partner. We think we've proven in the marketplace that we're a tremendous asset to all of our customers. We're mission-critical without radiology, so many hospitals would have a hard time keeping up with their demand. And I'll give you just a minute on this. So why is teleradiology so efficient? And why is it helpful? Well, if you think about a hired radiologist sitting in a hospital, they're going to be reading at an efficiency rate based on how many studies are coming across their desk in their platform.

And it may not be consistent. You may have a radiologist sitting there with nothing to read at some point in time while you're paying for that radiologist. So if you look at teleradiology, our customers only pay for what we read. And the fact that any one of our radiologists may be reading for 100 different hospital facilities, they will always be productive. They will always be reading and they will always be extremely efficient. And we provide a complete full array of services for the hospital. Remote interpretation for diagnostic.

We also have a growth in our business to do full service, where we do interventional radiology in the hospital and become essentially the radiology group for the hospital. We do billing, we do operational support, management services and so on, peer review, quality assurance. So we do the full spectrum of radiology services now in a hospital, and that's a very big important growth sector of our business. About 80% of our traditional business is for teleradiology and about 20% is now full service. And the full-service radiology also includes our teleradiology business.

So we not only put on-site interventional radiology, mammography radiology, and sometimes diagnostic radiology, but then we offset it with our own teleradiology solutions as well. So we do the full service, including billing, revenue cycle management and recovering the revenue sources for the hospital directly with the payer environment. So we're in 270 facilities, 225 of those are hospitals. We do business in 26 states, and you can see some of the breakdown of where we, the kind of studies that we read and what states we're in and the volume of our size, California, Virginia being our 2 largest states and so on.

But we're not trying to be everywhere. We just want to be the very best everywhere we go and have a lot of dense solutions in those geographical areas without just trying to be a provider everywhere. Our growth is astounding though. So our network of board-certified radiologists, and by the way, all of our radiologists are board certified. We don't use board-eligible rads. And a good 70% are fellowship trained from neuroradiology to MSK, body and so on. And we continue to grow our radiology staff.

And as you can see, a great track record of continuing to grow our daily ability to read and our RVU volume. And again, we're covering 24/7 every day. So we've had continued growth, a lot of great accomplishments. So we continue to win new hospital systems. We expand within each customer base as we get it. We have some of the largest institutions in the United States. We have the largest health care system by revenue in the United States is our customer. And we have 16 of the top 100, 2 of the top 10, 4 of the top 20 and so on.

So we continue to focus on large, successful health systems and expand across their facilities as we grow and improve and earn the ability to continue to be their partner. We treat every customer as a partner, and we have them treat us as a partner. We're not just a vendor. We become part of their medical staff, and it's a very critical thing for us to have that level of a relationship with our customers. And we've had relationships for over 15 years for many of our old customers and so on as we get new ones.

So the key metrics, again, on the teleradiology side, it's about 80% of our total revenue, 26 states, 72 health systems and across 246 facilities. The modality mix, what we read, the geographic mix and so on in which states, I won't go through the charts. You can read it, but the bulk of our business is hospitals in the acute care and emergency department environments. Next slide, please. And in the full service business, it's about 20% of our revenue. We're in 5 states. We deal with 5 large health systems and currently have 25 facilities.

Again, a typical modality mix and geographic mix in that Michigan, Illinois, New York, Washington, California and Ohio. And there's so much opportunity in those states. We're not looking to grow beyond those very much right now. But with the partnership we have in place with RadNet, it's a great opportunity to add the full-service solutions from digital health capabilities to inside the 4 walls of the hospital and then to expand services, of course, connecting all the outpatient clinics and imaging centers together, we have the combined solution that we don't believe any other organization in the country can bring to the table.

And our leadership team, me -- I've been there 9 years. And prior to this, I used to run NightHawk Radiology, one of the first large publicly traded teleradiology companies in the country many years ago. Lyn Mize has been with us almost 4 years now, the Chief Financial Officer; Jerry Lee, our Technology Officer, has built one of the key components of our platform that our radiologists use every day to manage our assignment engine and workflow processes. It's one of a kind, very unique capabilities, one that has helped make us incredibly efficient.

Leandra Hutchinson comes to us as the President and Chief Operating Officer. She was the President of Direct Radiology, which we acquired from Philips 20 months ago and integrated all their docs and so on into our solution set. And finally, Dr. Vincent, who's one of the founders of the company, our Chief Medical Officer and a reading neuroradiologist every day. So hopefully, that was to give you a little bit of a background on ONRAD. And with that, I will turn this back over to Dr. Berger.

Thank you, Dave. Imaging is at a crossroads. Its current challenges, workforce shortages by both radiologists and technologists, increasing labor costs, growing imaging study volumes and greater utilization with new technology developed by almost all of the OEMs and capital investments required to manage enterprise-wide requirements such as artificial intelligence, data storage, image distribution, advanced visualization, et cetera. How do we deal with this? Technology, technological innovation has arrived just in time.

Through the various tools that RadNet invested in, began investing in 6 years ago, workflow transformation is at the core of dealing with the challenges that particularly the hospitals and health systems are facing with new tools for artificial intelligence, reporting solutions and cloud transformation. Early detection and prevention, which we define as population health tools, will allow clinical navigation to improve outcomes. This is where I believe not just imaging, but health care in general needs to focus on the new technological capabilities.

We will be going into the intelligent experience era. In the past, this was transformed by digitization of imaging that allowed or enabled PACS solutions. The present solutions are new viewing and reporting experience, which centers around the ability to work list the prioritization and larger capacity for viewing and meeting with the increasing number of images that are produced by the new equipment. The new intelligent experience will be bringing into every step of the imaging experience, automated radiology, guided patient journeys to accelerate care, accelerate acute care, in particular, which is where ONRAD will add an enormous amount of additional capability and experience.

I'd like to give you a little bit of an overview of the typical workflow today, which RadNet is instrumental in transforming. Today, imaging studies go to a radiologist into their PACS system and get case assignment and then a rules-based worklist to distribute to the most appropriate reader. These studies are seen on their PACS and their viewer systems where they identify the appropriate findings. This then allows them also to review clinical history, which they get information either from a hospital electronic medical record or in the outpatient sector, our radiology information system.

This is all then sent to the radiologist who dictates the report using voice-based dictation and then eventually signs off on that report. These are the conventional tools, which have generally been provided with point solutions rather than a continuous stream of flow. Next slide. What we're doing is now being called intelligent and intentional radiology workflow, where the imaging studies and order clinical history will be coming on to an AI-enabled platform. This then will be on a platform that will do case assignment, case triage prioritization by level of acuity, findings visualization and then draft report generation.

And by draft report generation, we mean that all of our studies will, at some time in the near future, be going through an AI clinical engine to read an exam, take those findings and put them into a ChatGPT-like engineered system to give a full draft report to the radiologist, upon which time the study with the critical findings as well as a full report, both the body and impression will be turned over to the radiologist to sign off on or edit as they see fit. All of this will ultimately lead to a new era in how we do clinical navigation once findings are determined to need further diagnostic evaluation. And I'd like to turn over now the slide here to Dr. Sorensen, who will give an overview of this very important and transformative events that will not only reshape radiology, but will reshape health care in general. Thank you, Greg.

Thank you, Howard. Thanks for the handover. And I'd like to add my excitement and welcome to Dave Engert and the wonderful team he's developed and paint for you the picture we're seeing of why it now is the time to bring together such an excellent [indiscernible] clinical teleradiology service with the artificial intelligence tools that we've been building and are deploying and how these will work together in synergy for the better outcomes and the better service of our patients and the hospital partners who are really just asking for this every day.

Howard just walked you through how AI is going to transform the way we perform the traditional radiology reporting service, where AI will help each of us radiologists practice at the top of our license and produce what we know to be a superior report. We now know that the bigger ecosystem can help us deliver even better care with additional technology enablement tools. So our plan is to help each of our patients not just get the best radiology report, but also navigate them to the best possible clinical outcome.

And we can do that now because in addition to the pixel-based AI and the language-based advanced tools that help efficiently and appropriately produce a high-quality report, we can then pass those through the increasingly available and increasingly powerful medical reference tools such as OpenEvidence or Doximity or UpToDate, and then add that to what has traditionally been a bit of a black hole or a challenge for many health systems, which is navigating those findings, especially the unexpected findings that frequently pop up on a radiology report, the incidental as we call them.

And if those are managed well, combined with an improved quality report, the best clinical guidelines that come from these reference tools in an easier-to-consume fashion and add that to the navigation component, this combination really can much more efficiently than ever before, improve the patient outcomes that we're all seeking to do. And this, I think, is, this vision really came into clarity for us as we were talking with Dave and his team because I think the ONRAD team traditionally has competed on value, not so much on price.

They're price competitive, but it's better quality and hospitals really do want high-quality services at a market or competitive pricing. And that's what AI is enabling us to do at a scale that previously wasn't possible. We can boost the quality. We published data now that we can do that across hundreds of thousands of patients. That produces a better radiology report. We can now bring that in a more efficient way to the inpatient setting through Dave's team, through more hospital partners through Dave's team, but we can also partner that with the added AI tools that we and others in the marketplace are building to, again, end up with that our end goal, which is to have better patient outcomes at the same cost, which is, of course, is the definition of value that we're all interested in.

And that's what motivates us is really being able to see better outcomes for our patients day in and day out at a scale of millions of patients. So that's our big picture. We're excited about this. And I think now we're ready for Q&A. And so with that, I'll hand the time back over to the operator.

[Operator Instructions] The first question comes from Brian with Jefferies.

Mark, maybe before I go to the ONRAD questions, we're getting a lot of queries from investors just asking if you could give any color on how we should be thinking about Q3 because I think most folks were hoping that you'd give some insights into it given the size of the deal you're announcing today.

Sure. Happy to. Obviously, we're not formally reporting our numbers until the second week of November, a press release we will be announcing the earnings call in the next day or so. But what I can say now is that all the trends that have been driving the strong performance of the business over the last several quarters, including the last 2 quarters where we have raised guidance continues in the business. So the core business is doing extremely well.

The advanced modalities are driving that performance, both in terms of the percentage of the business as well as the volumes, the strong volumes that, both on the same-center side as well as the aggregate level. The integration of the acquisitions that we did earlier in the year are improving and well underway. We're seeing stronger performance in Southwest Florida and Indiana, which we would start to expect to see at this point given the path of integration. So yes, so we continue to believe that the second half of the year will show significant strength, and we're excited to talk all about that likely on November 9.

Awesome. All right. Maybe now I'll move forward to the ONRAD types of questions. Maybe for Howard and Greg, as we think about the strategy here, the decision to acquire ONRAD, it looks to me like you see this as kind of like the piece that makes it a truly one-stop shop for imaging for both hospitals and patients alike. So as I think about the upside or the synergy drivers here, I mean, what kind of visibility do you have into the cross-sell? And how should we think about what those opportunities look like and how they would manifest?

Thank you, Brian. I think it's important to add another piece of the equation here. As I think you've amply pointed out here, Brian, this is a seminal event for RadNet to add better and deeper integration with hospitals and health systems and to provide end-to-end solutions. It became clear to us probably about 18 months ago that the inbound calls from hospitals was not about necessarily our AI tools, not about joint venturing and outpatient solutions, but how can we help them solve their most critical problem and that is radiology interpretations and radiology staffing.

Fortunately, we're in a position with ONRAD as a DeepHealth customer to be on the same platform that essentially is now being rolled out throughout the RadNet markets, which we expect to have substantially complete by the end of this year and early part of Q1 2027. But what I'd like everybody to focus on here is that when we talk about a health system, we're not just talking about the acute care facility. We're also talking about their urgent care facilities. We're talking about physician offices that have imaging in their offices, which is growing.

We are talking about their emergency room. We're talking about their surgery suites. We're talking about cardiology. At the end of the day, all of these providers, all of these access points are best run on a common platform. And why do I say that? And that is because the interoperability of collecting all of these images, storing them and distributing them on demand is at the hub of improving workflow inside and outside the hospital system.

Once the patient has an imaging exam regardless of where that imaging exam is performed, that information needs to be available to all of the stakeholders, referring physicians, the patients, the surgeons, the emergency room and putting them on a common ecosystem is what we now are capable of doing. So the goal that was outlined by Dr. Sorensen is to use all of the tools that we're developing within DeepHealth to fundamentally standardize all of this reporting that occurs throughout the imaging enterprises and have them combined into reports that then can be put through other medical tools that allow better information for the referring physician and patients about future pathway as well as standardized reports that the information from the radiologists can be lifted and begin the process of clinical navigation.

I want to emphasize the point that Dr. Sorensen made that by reviewing all of these standardized reporting from the radiologists throughout the entire ecosystem will allow earlier detection and better outcomes. More and more of what we're capable of doing with this enormous transformation of technology on equipment are identifying findings that were serendipitous or incidental, and that's the definition really of early detection. You've seen us doing this with lung CT for lung cancer, breast cancer with mammography and its other tools.

We're doing it with brain imaging. We're starting with musculoskeletal. All of these have information on inside of them, which have traditionally not been reviewed either because of the limited time that the radiologist has or their focus on the symptomatic side. We want to transform this to find all these incidental findings that allow us to detect earlier, put this through appropriate clinical navigation to make certain those patients are directed into an appropriate pathway and not fallen out of the system and then ultimately lead to earlier diagnosis and a better outcome.

And this can affect virtually every facet of health care. So what we're embarking on today is not only end-to-end solutions, but also opening up the opportunity for us to find other ways to partner with our hospitals to include all of their internal imaging operations in a connected way that allows them to do what they need to do best, and that is deliver appropriate and necessary health care well before the diagnosis has been made and the outcome is less certain.

So it's this transformation of imaging using technology that is here today, increasing its capability and bending the curve in health care to reduce expense and improve outcomes. And in that way, I believe RadNet will be leading forward not as just an imaging company, but a health care company that assists hospitals, health systems throughout their entire enterprise to become a better advocate for patient care.

So I need to emphasize the importance of what I believe ONRAD will allow us to do. And as David Engert, the CEO of ONRAD pointed out is that RadNet wants to deploy its capital, both on a human and a financial level to be looked at as a long-term partner for these kind of solutions and not just a vendor. And I believe by adding these professional radiology services to the continuum of RadNet health care delivery, we will accomplish that.

And if I could just jump in, Brian, with one other quick point. I think as a group that's really at the forefront of developing AI for radiologists, you can see this as really an endorsement that radiologists are not going away. We're actually excited to have more access to more radiologists through the ONRAD team and the ONRAD structure. And that's because we think AI can actually supercharge radiologists to be able to deliver even better care.

It's so nice to not have to make sure that you've memorized correctly every single clinical guideline and have the AI bring that decision support tool right to when you're dictating a case. It's great to have generalists that you sometimes have to employ just for workflow reasons, operate at the level of specialists. Almost all the radiologists that I talk with feel like it really does, as they say, help you practice at the top of your license. And so this acquisition that we're looking forward to will really let us expand our bet on radiologists partnering with AI. And that combination, we really think does lead to where we all want to go, which is better outcomes for our patients.

The next question comes from David MacDonald with Truist.

Just the first 1, Dr. Berger, you touched on this a little bit, but can you guys talk about just in terms of the ONRAD hospitals, any overlap, what you think this does in terms of the JV pipeline opportunity? And as you bring the companies together, can you just talk about, is this kind of a 1-plus-1 in terms of ability to incrementally bring radiologists on board? And then I just got one quick follow-up.

David, well, I think the excitement here is, in fact, there is very little overlap currently between ONRAD customers and RadNet customers. So the opportunity for us to broaden our offerings is quite substantial here. RadNet is currently in 11 states. ONRAD's in 26 states. But it would not be unexpected if we increase the number of sites and states, both through all 3 of our reporting divisions now, the outpatient services, the digital health and the new professional radiology services divisions.

I think the importance of that is really putting these tools together and fundamentally being able to discuss with our hospitals new business models on how with our end-to-end solutions, we can bring all of the tools that RadNet now has augmented and those that it was currently offering to help the inpatient radiology departments and the hospitals operate their inpatient radiology better, tools such as purchasing day-to-day operational protocols, managing the throughput by improving and using new tools that are giving greater capacity to our equipment, bringing in remote TechLive solutions like we have in DeepHealth to deal with the shortage of technologists and the often heard we need to close rooms because we don't have technologists available.

These are all tools, and I don't necessarily want to characterize them just as cross-selling, but all tools that we've demonstrated very amply here in the last several years that we're able to do to meet increasing demand and hospitals are suffering from the same basic fundamental issues in radiology and imaging that we are on the outpatient business. But the difference is they need those results even more acutely because of the nature of the patients they see once they enter the hospital system.

So again, we're looking at this not just to provide the opportunity for different end point solutions, but how do we integrate what we've been able to so effectively manage on the outpatient basis back into our partners, both our current ones and new ones that we are talking to on a regular basis about giving them radiology solutions and a future on how to detect earlier all of these incidental findings. I hasten to add that imaging is the most ubiquitous service in health care.

The ratio of what we see in imaging where on average, every patient in the United States gets some form of imaging exam that has information on it that may be unexpected and where we can take those incidental findings and use them to better manage the health care of those patients for earlier diagnosis and better outcomes. So the transformative event that ONRAD is presenting us with really takes on substantially greater proportions given the need for all of these tools to be available not just to our health systems, but to the referring physicians and the patients.

Technology is the future. We need to embrace it. We need to characterize it. And what makes it so exciting for RadNet and our team here is that artificial intelligence inside health care as opposed to perhaps other aspects of AI is both meaningful and purposeful and can be used for the improvement of delivery of health care, not only in the United States, but as you've seen, RadNet is becoming more and more of a global operator.

Okay. And then, guys, just one other quick question. Can you just talk for a quick second about the capital efficiency of the business. I mean it's obviously a low CapEx model. Just spend a second there. And then is there any margin differential we should think about between the teleradiology 80% and the full service business just as we go forward?

Sure. Let me address some of those questions. And then, Dave, I'll let you talk about the last part of that question. Yes. So we, financially, this business is very attractive to us. First of all, it runs at north of 30% EBITDA margins and has been regularly growing north, between 10% and 20% per year. And so when you think about that, the combination of those 2 things, it's highly attractive to RadNet. And then as you point out in your question, Dave, it's not a capital-intensive business.

The business has been spending about $1 million a year on CapEx, has very little depreciation. So the $60 million to $65 million EBITDA guidance that we gave in the press release and we talked about today in the first year of operations under RadNet is essentially all pretax net income. So it's highly profitable and highly scalable as we believe we can continue to grow this organically, particularly around some of the areas that Howard mentioned in terms of cross-selling and cross-marketing the digital health products to the existing 225 customers, hospital customers of ONRAD as well as some set of those hospitals are going to be and health systems are going to be interested in outpatient joint venture opportunities.

And then vice versa, we've got 155 of our locations within health system partnerships who have been regularly asking us if we can help them with their in-hospital radiology or professional radiology needs. And we, until now, we didn't have that capability. So I think financially, this is a big move in terms of increasing margins, lowering the capital intensity of the business and adding a third growth engine to the businesses that we already have that are growing very nicely, which is our core business and our digital health business. Dave, I'll let you talk about the distinction between the in-house full services that you're providing hospitals versus teleradiology?

Sure. Thank you, Mark. David, so the solution that we bring on full service is putting particular docs on-site interventional radiologists and potentially mammo readers as well. Our cost to do that is no different than in the teleradiology space. It's the cost of bringing on a physician with licensing, privileging costs, platform cost and allowing them to begin to read and the start-up window is anywhere from 4 to 6 months. And the total cost of really bringing on a new radiologist, whether they're on-site or telerad is $20,000 to $30,000 a radiologist.

And within 6 months, they begin generating anywhere from $1 million to $2 million of revenue per physician. So we don't have very minimal cost to have a radiologist join the team, become fully onboarded, licensed, privileged, trained and utilizing a very highly productive platform to begin to generate final reads, generating revenue and so on. So our cost of start-up and development of new revenue is very minimal to get a radiologist going. And for the on-site side, again, it uses an extensive component of the teleradiologists to support the on-site radiologist. So from a cost standpoint and a CapEx standpoint, it's very little investment to be able to generate and quickly generate high-margin revenue.

The next question comes from Andrew Mok with Barclays.

This is Thomas Walsh on for Andrew. I appreciate that a constrained supply of radiologists is a demand driver for teleradiology services, but presumably, it also makes retention a bit more challenging. Could you describe radiologist recruiting and turnover at ONRAD in a little more detail and share if there are any retention arrangements or anything like that along with the deal?

Sure. This is Dave Engert. Well, we have some attrition. Some docs have retired and so on. Very few leave us to go to another location. Our docs are incredibly well treated. Everything we do, we look at our physician staffing. It's the engine of our business. And everything we do in the nonphysician staffing of our company is designed to make our docs have a wonderful work-life balance. They make a lot of money. They read a lot. They do a lot, but the environment is top notch as far as the state-of-the-art on the platform that they're using.

We have blue-chip customers, so the quality of the images that they get from our hospital customers is top notch. And we do everything for them. We pay for all of their expenses, medical malpractice insurance, all the licensing, all the staffing things, all the training, all the technology, all the software and everything we do, Internet and so on and CME, we provide all of that for our docs. So we try to make their experience as being one of our radiologists as good as it can possibly be.

And we remove all the minutia that docs get caught up with in the world of practicing medicine and allow them to be the doctors that they want to be. And our ability to keep and retain and attract board-certified high-quality radiologists is really top notch. So our, everyone is challenged with keeping up with the growth, and our challenge is no different. We have to find and hire and retain radiologists. And we seem to be very successful and have been for the last 5 years of being able to keep up with our growth and being able to hire and keep radiologists.

Right now, our ability to sell and opportunities in front of us is enormous. The only constraint we really have on our growth is being able to get more radiologists. And we, I think being able to have AI capabilities that our docs really like and utilize and make them more efficient, more productive, higher quality and so on is a very big plus for them. So everything we do and continue to do and will enhance their work-life experience is paying off in good growth, good, happy, successful customers as well.

I think Andrew -- Go ahead, Howard.

Yes. I want to emphasize and I'm glad Dave Engert mentioned this in his concluding remarks here. We can't keep up with the demand for radiologists without making the radiologists more productive. There just isn't enough of a pipeline to fill current needs as opposed to the growing needs of images that need to be read. And so the solution here is to make the radiologists better in terms of, and more confident in their diagnostic through the use of clinical AI tools, which we are rapidly developing and getting FDA approval on a regular basis as well as the new reporting solutions that I briefly discussed our Reporting Pro and draft reporting, which often takes the radiologists longer to dictate a report than actually what it takes them to identify the abnormalities.

So our goal and which will be used in both of our services division, the professional radiology services as well as outpatient has the potential of increasing radiology productivity perhaps as much by 50% or more as we further imbue or enable them to use these tools, which we are developing on a daily basis. So I think it's important to emphasize here that the very issues that have been restraining ONRAD from even greater growth as well as ourselves is really how do we get the turnaround time that we need back to the reports for the patients and the referring physicians on a timely basis so that there is no interruption with the delivery of health care and in fact, improving health care by making these diagnoses earlier and earlier.

So AI is the solution. We embrace it. Radiologists as we're rolling it out, are finding it a tremendous tool. And as I said, sometime in the earlier part of 2027, we hope to be running at least 50% to 60% of all of our imaging through our AI tools with the eventual goal that 100% of all of our imaging will eventually run through those tools to help drive the efficiency and meet the demands that are here today.

And Andrew, I'd add one other thing. Keep in mind that RadNet for our imaging centers contracts with over 1,000 radiologists who today are obviously very busy reading the scans that occur at our centers. But as we make them more productive with the, both the interpretive tools and the reporting tools that Dr. Berger and Greg have spoken about on today's call, there may be some capacity that's built there where some of our doctors can float in and out of the ONRAD model as well and read extra scans on nights and weekends and help grow that business with additional capacity of physicians and vice versa, where at times, within the RadNet centers, we have contracted with third-party teleradiology firms to read scans at our centers, particularly we've talked about this in the past, x-ray work. And now we've got the ONRAD physicians that could potentially help us with some of that overflow work. So there's value to continuing to grow the pool of radiologist capacity even as we're going full steam ahead into AI and technology.

The next question comes from Andrew Cooper with Raymond James.

A lot covered already. So maybe just a little bit of what you could share on sort of the time line of bringing all of these pieces together and how long before you feel like you can kind of really benefit from the combination as opposed to the hospital teleradiology staffing piece running next to kind of your existing footprint. So in other words, you talked about some of the inbound demand. How long does it take to capture that? And how much work needs to be done to really recognize the benefit of everything together versus 2 separate work streams?

Well, I think that some of that has already been shaping up. Fortunately, ONRAD began using the digital health, DeepHealth tools about one year ago. So in a sense, we've been working together for quite some time to energize and transform the ONRAD platform. But in addition to that, we are using the next 60 days to go ahead and begin further expanding the involvement so that many of the results that we're already rolling out begin to get rolled out in ONRAD so that it adds to our ability to grow the company in, throughout 2027.

So I think given the closeness that the 2 companies have been working together with now for probably about 18 months as well as the long history that Dave Engert and I have together in this industry has allowed us to hit the ground running and the tools that we're talking about will always be constantly evolving but are ready now for prime time, which we are already doing inside the RadNet outpatient services division, but which, as I mentioned, will be further amplified in the ONRAD division with customers that we currently have and new customers that both the ONRAD and RadNet Services division are in deep conversation with now.

Great. And maybe just one quick numbers. You talked about the $60 million to $65 million of EBITDA in the first year post close. How much sort of implementation of some of these things has to happen for you to hit that number? How much are you assuming from the clinical suite being implemented, et cetera, or synergies versus kind of pure run rate from ONRAD stand-alone?

Yes. So I'll take that one. So that $60 million to $65 million EBITDA guidance for the first year of operations is really a number that ONRAD would hit without any help from RadNet. In other words, that's a number that they feel comfortable with and we feel comfortable with that would be their own budget if they were a stand-alone company. Of course, we, at RadNet, the other businesses are going to try to influence new business coming into ONRAD that perhaps ONRAD wouldn't have gotten by on its own, either from existing joint venture partners who've reached out to us for these capabilities or other health systems with whom we have relationships who have approached us in the past. And so I'm hoping that we can achieve a number that's better than that, but that's where we feel comfortable ONRAD will likely come in.

The next question comes from Matthew Gillmore with KeyBanc.

I guess I just wanted to get a check on kind of capital allocation post deal. You've got the digital health business, the outpatient imaging business and now professional services. But where do you see sort of the opportunities for future M&A? Do you have a bias towards any of the segments at this point?

I think as we've demonstrated in the past, our concern isn't about the capital that we have to grow each of the sectors of our business. Our challenge is really to make certain that we apply and distribute that capital in that which gives us the best return on investment. More and more, what we want to do is demonstrate into the industry and certainly with our current and new partners that we are a partner and not a vendor. So where there's opportunities for future partnerships that use, utilize all the tools and capabilities that RadNet brings to the table, those will be the ones that will get the priority treatment in the way that we allocate that capital.

So I think we're, there's an enormous amount of opportunity that exists for all of the players in this industry. But our goal is to balance a good return on investment and have long-term commitments that are shared to the vision that we have about how we can transform that health care system to be even a greater stakeholder in the delivery for their markets than just how we do this on a point-by-point solution. This is an integrated approach that requires a vision that we're trying to lay out, which I think all of our partners now see the value proposition for, but who's prepared to roll up their sleeves and move to an area of new opportunity in health care to provide better health and better outcomes for our patients. Our real stakeholders here are our patients. And that is the primary focus of what we're trying to do here is bring these tools that have such enormous potential to improve the delivery of health care into mainstream hospitals and hospital systems who need this for their own missions.

I'll just add. Having said all that, which I agree with Dr. Berger, of course, I think you're likely going to see more capital allocated in the coming couple of quarters towards traditional core imaging center opportunities. Hopefully, we'll be in a position to talk about that in the near future.

Great. We certainly look forward to it. And then one follow-up on -- just on the margin profile of ONRAD, it's pretty healthy at 30%. I was curious if you could help us understand what drives their margin profile and ultimately, sort of the sustainability of that level of margin for the business.

This is Dave Engert. Yes, that's a great question. I mean, when we, when I first joined the company, it was very much of an eye-opener to see that when a study would come in from a hospital, a person would have to get involved in every study, a phone call, a follow-up on data, missing prior information. And it became obvious to me that we needed to really automate a lot of the processes in our company, and we embarked on a mission to do that. And some of the most important advances we made outside of the physician's productivity was just on being able to manage the acquisition, the processing and the return of the data to our customers.

And so we've automated the whole process so that when a Rad tech in a hospital takes a current study of a CAT scan of somebody, for instance, they touch one button and it gets sent to us along with the prior information for images and reports and so on. And #1 has to touch it on our side until the radiologist clicks on the work list and reads it. And then when they're finished, it goes back to the customers, populates in their EMR and also updates the emergency room position if they choose, all with #1 else touching it on the customer side and on our side. And that has streamlined the processes tremendously.

It's taken a lot of the cost out, it's taken a lot of the delays out, a lot of the potential errors out and so on. It improves our quality, the turnaround time and the efficiencies of our docs. Then you take all the things we've done on our platform to improve workflow assignment. So when a stroke study comes in, it gets assigned to a neuroRad immediately to read. We do about 250 strokes a day, and our average turnaround time is 7 minutes, sending, getting the data, sending it to our radiologists, getting it read and the final report going back to our customers.

The processes and the technology that we've enabled in the entire workflow of the data for doing imaging has taken so much cost out. It's enabled us to scale now without having to hire more people that are nonphysicians on a linear basis. So a few years ago, we finally crossed the chasm on being able to generate more revenue and continue to grow from 20% to 25% to 30% because our G&A costs are going to be on a percent of revenue is decreasing. So the larger we get, the more efficient we become.

So yes, I do expect to see those margins continue. And then with the added addition of more AI capabilities and as Dr. Berger talked about, I think the real next big opportunity for improving efficiencies is in the report generation that a radiologist has to read, not just the interpretation of the images, which AI has been really traditionally focused on, but now the generation of the report and the very time-consuming piece of developing a final impression. That is going to increase the productivity of our radiologists, and we'll continue to see more and more gains in the world of just being more efficient and so on. So yes, I do believe that those margins will be able to continue.

The next question comes from Larry Solow with CJS Securities.

Most of my questions have been answered. But just a couple of follow-ups there for you, Dave. Just on the revenue growth that you called out, I think you guys said double-digit growth the last several years. Obviously, there's radiologist supply constraints. So your growth has been driven by volumes read, I assume. Is that organic growth? And has that been helped at all by, as you've adopted AI more? What's driving that? Your ability to drive double-digit growth with limited supply of radiologists, what, if you can help us there?

Well, the larger you become in a company, the harder it is to continue to maintain the same percentage of growth. When we were a $50 million company growing 20%, a little easier than $150 million company and so on or $200 million company. So our continued amount of growth on a dollar basis continues to be very predictable and systematic, and we've been able to achieve that. In the marketplace, the cost of radiologists has gone up. When you have a limited supply, you have to pay more to the radiologists to get and keep them. It's a fact that we all have to live with today.

Not only that, but the cost of technology and the cost of everything in health care, not to mention inflation and everything else going on in the general economy, we have to charge more for our services to pay our docs and to be able to keep up with the cost of our technology investments and so on. So on a company basis, we're not growing our nonphysician staff that much. We do it as needed, but on a limited basis because we're so automated and highly efficient. But the cost of delivering the final impression has a lot of different moving components to it. So we have to charge more.

So our growth has been organic with the exception of an acquisition we made at the end of 2024 when we acquired Direct Radiology, which added a lot of radiologists and customers and revenue to our business. We went from their operation of being in the low margin percentages to adopting our platform and adopting our processes and that entire business is operating in the 30% range now as well. So we've been able to promulgate our success by bringing on more companies and so on. But the reality is we have to keep hiring to keep growing. And the market is constantly going up in our cost, so we charge more. So those 2 components have helped contribute to our growth. I don't expect to see that dwindling anytime in the future as far as cost and expenses and pricing for our services.

Okay. So you've got to benefit from pricing there, but your, obviously, the costs have also gone up, but your margins have still been able to continue to increase through that higher cost. And it sounds like with scale, not to put words in your mouth, but margins sustainable, perhaps even the ability to expand that just without RadNet even in the picture. Is that fair to say?

Yes, to a point, that's exactly right. I mean I think the great news is together, we're going to be able to leverage cost of new customer acquisitions and so on and the technology advancements of the DeepHealth digital platform as we embrace more and more of that as it becomes available. And then just having a much bigger footprint in the marketplace. We're now not only one of the biggest players in the health industry space for imaging, but we offer now a very unique capability, which Dr. Berger addressed is that we now offer the only organization to provide the full continuum of care for patients across the entire care settings, outpatient imaging, urgent care to the fully acute care environment now. And that's going to provide another source of, I think, expanded services and revenues for us.

I could slip one more question. Just teleradiology, obviously, it's been around for a while. It's a big fragmented market. It sounds like your strategy similar to RadNet, you're not spreading yourself thin, you're focused on certain areas within the country. Is that kind of fair?

That's true. Yes. I mean we're not trying to be everything to everyone. We want to be the best thing to the few selected great customers we choose to do business. And there's a lot of them, but not all of them. And we focus on the right outcomes for patients and picking our partners as well as them picking us as their partner is a big component of our success. And RadNet has demonstrated beyond anyone else that we could have ever looked at selling our company to as the best partnership. We're so aligned on our visions, on our priorities and the opportunities in front of us to really take advantage of everything we've both done so well in the segments we do business in.

The next question comes from Yuan Zhi with B. Riley Securities.

This is Li for Yuan. And definitely excited to hear all the commercial opportunities we talked about and great to hear margins continue to expand. Maybe help us to think about operation synergy for 2027, but maybe we can quantify like where are we going between RadNet and ONRAD. And also the second question, maybe comment on the opportunity for TechLive remote scanning, help us better think about the opportunity here.

Well, let me address the second part of your question, TechLive. That has been one of the most rapidly growing benefits that our Digital Health division has created here in the last couple of years and which has allowed us to improve our capacity without significant capital investment. I believe that those same opportunities of providing not only the TechLive, but our remote scanning capabilities through our Alpha RT division will allow the hospitals to utilize some of these same tools as part of a deeper investment and involvement on the digital, on the internal hospital operations.

So that's part of the excitement really that I hope we'll be able to communicate here. As far as the first part of your question, the involvement that we would like to have in our hospitals is really this shared vision of how artificial intelligence, along with unifying and making our reports uniform will allow them to capture more accurately diseases earlier and bend that curve. And in that respect, what they're paying for the tools that we bring to the table may be very small compared to the benefits to their patients and their health system in streamlining health care.

So the unique opportunity, I think, that we bring and as Dave Engert has amplified here is we want the customers that we have to embrace this vision, which we believe will create a lot of savings and a lot of opportunity that only the use of our technology will allow. So that's where the really big emphasis is here. And that's why I like to refer to this as technology just in time. The choke points in the health care system are being overloaded with the need for better health care and more health care. And it's an exciting time to be in the forefront of these kind of changes, which can be so beneficial for the overall health care of the world population. We have to understand that this technology is not confined between the Pacific Ocean and the Atlantic Ocean. These are worldwide tools, which are necessary to lift up health care for all nations.

The next question comes from Jim Sidoti with Sidoti & Company.

So a lot of questions have been answered, but one left for me is how many of the DeepHealth tools has ONRAD adopted already? And how many more do you think they'll be using over the next 12 months? And then a question for Mark. What do you think the leverage ratio will be at the end of 2027? And what do you feel comfortable running at?

Let me address the tools. The current diagnostic suite that DeepHealth offers has been only implemented with what we call the Viewer or our PACS solution, and that's what we've been working for the last 1.5 years to transform ONRAD onto that common platform. Throughout 2027, the other 3 primary tools, one is all of our clinical AI, some of which ONRAD has been using from other vendors that supply our products, but with their own outside systems. Our single point orchestration tool that all of these will reside on and most importantly, our reporting tools, we expect to begin implementing throughout 2027 in ONRAD as well as transforming them to a fully cloud-native solution.

So it's a heavy lift, but we've done the harder work to get them on to the main part of the platform, the PACS viewer solution, which is pretty well complete. And these other tools, which will be helpful in creating productivity enhancements, essentially enlarging the current capacity that they have to handle more and more business, they should feel the benefits of throughout 2027. Mark, if you wanted to take the question about leverage?

Sure, sure. So Jim, when we report the third quarter in a couple of weeks, I anticipate that our leverage ratio will be somewhere in the 1.6 to 1.7 range on a net debt basis. That's based upon the debt, our projected cash balance at 9/30 or I guess it's not projected at this point anymore as well as the anticipated EBITDA. This transaction will, in the short run, add about 0.4 of leverage to that. So we'll be in the range, give or take, after we do this transaction, if you pro forma the EBITDA of ONRAD into our EBITDA in and around the 2.0 range, maybe slightly higher, possibly slightly lower.

Where we'll be at the end of 2027, which is a year and a quarter from that point remains to be seen because it depends upon any other acquisitions that we would do between now and that point. Now in the absence of other acquisitions, we're producing this year, we'll produce over, in and around $120 million of free cash flow. The ONRAD acquisition will add another, let's call it, $50 million to $60 million of pretax cash flow to the business. So I would expect in the absence of other acquisitions, we would be substantially below 2.0 at the end of next year.

Now in terms of your question about leverage and where we feel comfortable, at what point do we feel comfortable? I think we're, one of the reasons why the consideration that we're paying for ONRAD is part cash and part stock is that we are very cognizant of trying to keep our leverage ratio in what we believe to be a prudent place, particularly given the rise in interest rates that we've all experienced over the last, let's call it, 18 months to 2 years. So I think in the absence of something that would be once in a lifetime and transformative for the company and its shareholders, I think we want to keep leverage certainly below 3x, but likely below 2.5x. And I think we'll be well within that by the end of next year.

Great. And one last follow-up. You have 3 legs to the stool now. Do you think you'll need to add other pieces, other transformative pieces? Or do you think what you have now is sufficient for growth for the next, say, 4, 5 years?

I think what we've added now was the missing piece, if you will. It doesn't mean we wouldn't do other transactions and mergers in any of our other divisions in all of our divisions, I should say. But this adds an element that was missing and which is, was a clarion call from our inbound requisitions or requests, I should say, can we help with their radiology staffing. So by adding this, we've added, I think, a component of the business that didn't exist, but which we were capable of helping.

I really want to give a big shout out to Dave Engert and the ONRAD team because they have developed some of their own IT tools, which, as Dave has explained, has allowed them to create the margins, which we, in turn, will also benefit from learning about more careful work distribution. So the complement between these companies, between these 3 divisions now really forms the basis of the opportunity to transform, as I described, some unique capabilities that then extend into other partnership relationships, other avenues of revenue in clinical navigation for incidental findings and essentially allowing better outcomes. So I believe that we now embrace all the tools that we need to transform RadNet into a major health care company that is clearly where health care in general is seeing the greatest demand for and all for good reasons.

This concludes our question-and-answer session. I would like to turn the conference back over to Dr. Howard Berger for any closing remarks.

I want to thank everybody for joining us this morning. I hope we've laid out the rationale for this seminal event inside of RadNet to say that our entire company isn't, or is energized by this would be an understatement. But I think for the greater good of what we want to try to do as a health, a part of the health care system, I couldn't be more proud and more excited about the future opportunities that we bring to really transform health care. I'm anxious for our upcoming call to discuss more about our third quarter numbers, give you a vision about the full year and perhaps a little bit of insight to 2027 now that we've added this new and exciting capability. So for all of the shareholders inside and outside of RadNet. This is a very important day that we have been preparing for and are now ready to go on to a much bigger platform and a much more important force inside the health care industry. Thank you all for devoting your time and listening to our story, and we welcome further conversation as events unfold.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Thank you all for attending. I'm Chris Brustuen, Managing Director here at Morgan Stanley. And I'm joined today by Mark and Greg. Maybe I'll pass it to you for quick intros on your end.

Sure. Mark Stolper, Chief Financial Officer of RadNet, been with RadNet. This is my 23rd year in the same seat.

Yes, exactly. Greg Sorensen, what a great thing. I'm the Chief Strategy Officer. I've only been with RadNet here 6, 6.5 years, so the youngster on the team. Chris, we're looking forward to the conversation. Thanks for having us.

Excellent. So I want to start with the competitive landscape in Radiology. Given your scale, can you provide a little perspective on the opportunity for further industry consolidation?

Sure. I'll start. One of the interesting things about the diagnostic imaging industry is that it remains highly fragmented. So when you look at other areas of health care services, like dialysis or clinical laboratory, home health, health systems, there's been a lot of consolidation. And our industry really is sort of the Wild, Wild West. If you take the top 5 players of which we're the largest outpatient player in diagnostic imaging, we own less than 20% of the market. It's believed that there's somewhere north of 6,000 outpatient diagnostic imaging centers in the United States.

We're the largest player by a factor of almost 2 to the next player, and we have 445 centers. So a lot of room for continued growth and consolidation and -- which we believe will happen over the coming years.

And I would say just it's interesting, this is an industry where at least we're seeing in our hands, scale really does make a difference, especially, I think everybody who has IT at the core of what they're doing realizes that once you have scale, all those investments really start to pay off in a way that it is difficult for the single or kind of smaller chains. And so I think there's quite a bit of -- there's going to be even more pressure in the future for consolidation to happen.

Yes, that's a good point. I mean most of the centers out there are owned by mom-and-pop radiologist-owned facilities who don't have the benefits of scale in revenue cycle, billing and collecting, equipment purchasing, equipment service up and down the cost structure. And like other areas of health care services, scale matters, particularly in an arena where labor is -- there's a shortage of labor and labor is continuing to be more expensive.

So I want to expand on that point a little bit about when we think about kind of white space in the radiology market, what is reimbursement like in the market? And how can that help to impact incremental growth? And when we think about that, too, some of the efficiencies from a clinical staffing model that you kind of hit on?

Sure. Well, when you talk about reimbursement, you really have to have a bifurcated discussion between government reimbursement and private pay or commercial insurance. The Medicare reimbursement has been fairly stable over the last few years in our industry. I think CMS recognizes the importance of diagnostic imaging as a gateway to the broader health care delivery system. And they also recognize on the outpatient side, meaning the physician fee schedule that they want to move as much of this business out of the hospitals to the lower-cost sites of care. And so they've been fairly -- there's been stability in the Medicare reimbursement side.

This year, meaning 2026, we had a slight increase. Next year, it's about a net neutral for us. So we can't -- unfortunately, with CMS and with our government, we can't count on increases going forward in our industry to deal with the rising cost of doing business. On the commercial side of our business, however, that's where we have a focus, and that's where we've got some greater ability to impact or affect reimbursement. And we learned early on in the company's history over 30 years ago that it was extremely important to have concentration on a regional basis because that gives you a seat at the table with negotiating rates with the commercial insurance companies because if you can prove to them that you're indispensable to their provider network and if you were to not come to an agreement on pricing that would create both access issues and quality issues and the volume that you would no longer be doing for them, would end up going back into the much more expensive hospitals, they know they have to deal with you and they have to come to an agreement.

So we've been pretty effective as we've grown our concentrations on both the East Coast and the West Coast in negotiating increases each year to our commercial book of business, which has been extremely important and very valuable in our ability to absorb the inflationary aspects of doing business today and growing our book of business.

And I would just add, Chris, I think one of the biggest sort of rumors or sort of news items in the government reimbursement is the Trump administration's chatter about site-neutral payments. This has been something that's been talked about for at least a decade, maybe 2 decades more because it's -- if you look at your radiology spend, which for many payers is a substantial part of their spend, they can't help but notice that RadNet's rates are a fraction of what an inpatient or HOPPS rate is. And that drives them nuts. And this is an area where the commercial payers have actually been in the lead.

So you've seen some of the bigger payers really put incentives to try to get to the imaging services to lower sites cost of care like ours. And we're also seeing that pressure, hence, opening centers in Walmart and other kind of -- we're trying to get our cost down. If the Trump administration were to be successful in that, I think that would be a major disruption in the industry. We see it as a major potential tailwind, positive for us because we've learned how to image at a low cost in a sustainable, scalable way. Most of my former colleagues that were at big AMCs, Academic Medical Centers don't have that cost discipline.

It's just not part of their DNA. And so if imaging services were cut in half reimbursement or a quarter down to our levels, I think they just close. I don't think they could afford to staff and provide the service at the level of let's call it, relative inefficiency compared to the outpatient or nimble market. So that's a big unknown right now.

In next year's proposal for reimbursement, the -- there are some site-neutral provisions for non-contrast advanced imaging where the HOP schedule or the hospitals for the outpatient business is now going essentially to be reimbursed under the physician fee schedule rates and not the HOPPS rates, which are significantly higher. So it's the first step towards what Greg is talking about towards site-neutral payments. It's one thing with CMS doing it, if the commercial insurance companies do it, and it's very often that the rates that they're paying within the hospitals for outpatient imaging are anywhere between 200% and 500% of the rates that they're reimbursing outpatient players like RadNet.

If that happens, then the hospitals are really in trouble. And we think that, that bodes really well for our joint venture business, which is a big and growing business for us.

Impressive. So I want to spend a little bit of time on organic growth and driving same-store volume trends. Can you talk a little bit about what levers and key initiatives you have in place to help drive organic growth and same-store volume growth?

Sure. I divide those into sort of operational initiatives and then technology initiatives, and I'll let Greg talk a little bit about that since he's the expert up here on the technology side. We are constantly monitoring backlogs. The great thing about our industry is the demand. Every year, the demand is growing. So the overall pie for diagnostic imaging is growing. And then you now have a market share shift that's occurring away from hospitals towards freestanding centers.

So the challenge that we have, and it's -- some believe it's a high-class problem is managing the increased demand and the volume. So we're always looking at operational initiatives that we can get patients either expand hours. We monitor our backlogs, particularly around advanced imaging, where we expand hours like in Manhattan here, we're scanning into 10:00, 11:00 at night in many of our centers. We're opened up on weekends in many of our centers.

And we have a lot of initiatives to make certain investments in technology, for instance, on the equipment side that have faster scanning times, more advanced post-processing software that allows for shorter scanning times that can get patients through our centers more quickly. And then there's a whole host of digital health initiatives, which I'll let Greg speak to that are both designed for increasing our capacity as well as the speed through.

Yes. I actually think in Q2, we reported a little over 10% same-store growth in MRI. And this is actually one of those areas where the digital health initiatives have really been able to -- I think you can connect the dots to that same-store growth. Specifically our TechLive implementation now, almost all, if not all of our 400 MRI scanners are now connected to these remote boxes. And what that means is we can hire a tech in Arizona to scan here in New York City. She can be at home in her pajamas scanning me or you while we're in 1 of 3 different scanners that she can control. And that has allowed us to open on weekends and in nights and at times that previously we just had a hard time staffing.

I've talked with other radiology groups, and it's quite common for them to need to cancel slots because they can't get a tech. Somebody calls in sick and there's no backup because they're running so lean. And this TechLive remote initiative is what's really allowed us to tap into this backlog. And so we didn't buy 10% more scanners and the speed up slots, that's a hard thing to do, but just keeping things open more is one of the kind of highest incremental margin improvement ways we can go about doing things.

One last anecdote, I was in L.A. at one of our centers recently and the operators there said, "We're near LAX in Inglewood. We've started opening scan slots at 3:00 a.m. because a lot of the shift workers finish at 1:00 or 2:00, and they've got a knee problem or a shoulder and those slots are filling up. So to Mark's point, I think the demand for what imaging can bring to the health care process is high and growing in recognition. And so we don't have a demand problem. We have a problem meeting that demand, and that generally comes down to labor.

We can buy another scanner, but can we staff it. And that's where these remote initiatives that have -- and the other sort of technical speed up initiatives that the digital health business have created and are now embedding, that's really where I think we can legitimately point to that 10% and say it wouldn't have been that high without things like TechLive.

Yes. And another example of this is thyroid and breast ultrasound. So we bought a company, I guess it's going back about 1.5 years ago, an Australian-based company called C-Mode, who had an FDA-approved thyroid ultrasound product that does 2 things essentially. One, it speeds up the exam time at the facility so that the tech, which is -- this is a laborious process for the tech who's identifying thyroid nodules and sizing thyroid nodules and putting that into a worksheet that ultimately gets synthesized into the radiologist report.

Now all of that is done with AI and autonomously such that the exam time can now be scheduled in 20-minute increments instead of 30-minute increments. And that 50% shortening of that exam time has massive implications for the capacity at a particular center for ultrasound. We just got FDA approval for breast ultrasound as well, within the last few months. Between the 2 of those, it's about 1,250,000 of our 3.7 million ultrasound exams annually. And that's also speeding up the interpretation and the reporting time for the radiologists by as much as 50%, which has big implications for the radiologist, and we get to bill under a what's called a Category III reimbursement code or what's called the T-code.

So these are the types of technology initiatives that will continue to allow us to service the growing demand and increase the same-center performance that is driving the growth and profitability of the business.

And if you don't mind, Chris, I'd love to segue just briefly about this story on the CPT -- the Category III CPT codes, these T-codes.

Yes, it would be great.

Because there's a couple of interesting tidbits in there. For sure, a big one is that now for -- in one of the -- this is one of the few instances where an AI tool, these ultrasound post-processing AI solutions are generating added revenue. If you look at what other -- if I just put my DeepHealth hat on and I look at how other AI tools are being sold, most of them are being sold as an efficiency story for the doc or a quality improvement story, you're going to find that stroke faster or something like that. But there's been rare examples only where there was actually new revenue coming in for using the AI itself.

And that's exactly what's happening with these ultrasound post-processing codes. And this -- so that's one interesting thing. The second thing that I think is super interesting about this is this wouldn't have happened without the marriage of RadNet and DeepHealth software companies in the same vertical stack. And let me just tell you a little bit about that. When we bought C-Mode, their AI worked, but it didn't work perfectly for our team. And that's pretty common. Once you get the solution into a provider at scale, it always needs a little tweaking.

But what they didn't know is that the RadNet payer team is quite good at negotiating with payers. And these Category III codes, by definition, are not required to be paid. They're experimental. Category I, you have to pay. Category III is optional. And so most payers opt out. And in fact, prior to this, I would have told you Category III isn't really a path for a successful reimbursement because so many payers just say, "never mind." But our payment team has been able to bring the data about the better quality and the improved care to the payers, especially fewer false positives, less biopsies and convince them to start paying for these Category III codes.

So now more than half our payers pay us about a $60 fee for these Category III ultrasound code payments. So if I'm selling software that often is -- I mean, prior to this, you were happy to get a couple of dollars a click on the software. Now I can go to an outside customer as a DeepHealth sales guy and say, "Look, more than half the time, you're going to get $60 for using my software. You should pay me $10 or $20 or $30 because I'm going to help you make another $30 or $60 or $50 on each case."

That's a totally different story. And that's part of the reason why more than half of the DeepHealth revenue story on the digital health side is external customers. They're seeing, "Oh, we can use your software just like RadNet is to, not just make these efficiencies and get more same-store growth, but actually boosted revenue." So these T-codes are certainly millions of dollars of added income or added revenue for both the services and the digital health side of the business.

It's a big C change. And again, I don't think that would have happened without the combination of both the tech and the services pieces together, going essentially to the payer with this compelling story.

That's helpful. That's very helpful. And I want to expand on that point a little bit specifically about DeepHealth. When we think about that platform, it's very unique. What it does for your business as a whole on the remaining piece of the business as well to drive some same-store growth. But also on that item. Can you think -- can you discuss a little bit more about new revenue streams that maybe come in as a result of that, that maybe plays through with the rest of the entire...

Yes, exactly. So I'm a former -- I would call myself sometimes a recovering academic. And in academic medicine, the revenue streams don't -- even sustainability is not really kind of the focus. You're trying to do new things and innovation is the top priority. At a place like RadNet, we're publicly traded, we want to bring new innovations, but they have to be sustainable. They have to have a way to -- we can't subsidize them. And so as a result, our AI team at DeepHealth, we've really been focusing on what AI tools have a sustainable business model.

And that's really been a pressure that I didn't feel 7 years ago. And it has led us to focus on things on AI tools that really do have a model towards sustainability, which typically means new revenue sources in some way, shape or form. These Category III codes are, I think, the biggest new thing for us in the last year or 2. There were some Category I post-processing codes, the prostate MRI tool and the neuro MRI tool used to bill under those. The new Category III codes for those are actually better paying. So we're shifting to those, and they're a little more appropriate because of the physician work component.

We started 5 years ago now, 4 years ago, self-pay for the mammography in part to get a new revenue stream to offset the cost, both of the software and of the added novel workflow that the AI enabled, where we bring in an expert, a second radiologist. And I think your question is really spot on. If you don't not just make efficiencies, but actually bring in new revenue, it's really hard for a lot of companies to justify the investment. I was talking with a guy who works with a lot of AMCs, they often don't even know their margin. And so to say, "Well, this is going to give you margin expansion." They're like, "What does that even mean?" But if you say, "Hey, there's a billing code, you can bill for this. It's going to bring added revenue. It will cover the cost." Then the light bulb goes on and it's starting to sort of click.

I think in a similar way, the remote technologist scanning is one of those things where they can just instantly see that, that's something that will bring them added revenue because they can open Saturdays where they couldn't before. I would say just one last thing on the remote tech area, maybe one quick story. When -- one of the biggest challenges we have with our labor force is getting the right expertise to the right place. And that has led in the past to, I would say, effectively overstaffing so that when there was a problem, you could solve the problem with a technologist who knew how to solve, say, a complex cardiac MRI.

We've started putting this remote scanning technology on more and more of our modalities. And one of my ultrasound techs told us a really nice story. There was an ultrasound tech in one of our -- actually here in New York in one of our solo offices, where sometimes we just put a single machine to help the local docs do their work more efficiently, the referring physicians. They really want x-ray and ultrasound right there in the same building.

And this tech was doing an ultrasound on a newly pregnant woman. She was at about 6 weeks pregnant. So that means we usually do the ultrasounds transvaginally. And this tech couldn't find the baby's heartbeat, the fetus' heartbeat. And so that makes you nervous as a tech because the mom says she's pregnant. By 5 weeks, there's a heartbeat if the fetus is viable. And so she got nervous. And so she on her headset basically called for help with using TechLive and one of our super techs was able, without the patient even knowing, to see the screen remotely guide, coach the tech on how to move the transducer. She found the heartbeat, everything was fine, didn't need to reschedule the patient. Patient never even knew that there was this struggle because of the sort of the anatomy was a little tricky and everything went great.

So that's somebody we didn't have to reschedule. It was a patient who was happier, it was a referring doctor who was happier, getting that expertise with these remote tools to the right place at the right time. It really just is helping the whole process and it's keeping our same-store growth up. And so you can argue to your question, here's going to be added revenue if you deploy these kinds of technologies. It was a really nice anecdote.

That's an interesting example. Thank you for that. So I want to go back to the labor environment that we're in today. Mark, you hit on it a little bit earlier. When we think about that, have you been able to automate any processes with your radiologists and techs to alleviate some of this pressure? Anything on the AI side or more from an efficiency standpoint, too?

Yes. I think one of the challenges the entire health care delivery system or health care services within that is having is around labor. And we're seeing it in our industry, and it was exacerbated by COVID where many people just never came back to work after the COVID period. And so we're seeing or we've experienced labor inflation throughout our organization. I think specifically around technologists and the shortage there, but front office people, people in our administrative functions like revenue cycle as well as radiologists where they're struggling to keep up with the growing demand.

So our focus in the Digital Health division is around creating tools that either can automate certain manual processes today or provide tools for the existing labor force to be more efficient and more effective. So examples of some of the things that we're doing today are things like digital registration. So when -- we're rolling that out as we speak today. As patients come into the centers either before they show up or while they're in the waiting room, they can now register for their exam digitally without having to go up to the front office person, get a whole bunch of -- a clipboard with a bunch of paper and fill that out.

And what that's done is it's allowed us to lower the number of employees that are sitting at the front desk, which has a big implication when you've got 445 different locations. That's one example. Examples of the productivity of radiologists are all these tools such as C-mode, such as the enhanced breast cancer detection program where the radiologist is using AI to do the initial interpretation of the exam. We're really focused in the Digital Health division on our new Reporting Pro product. So this is a tool that integrates -- our industry has used for a number of years now voice recognition transcription. So that when a radiologist dictates his or her report, it gets transcribed automatically.

Back in the old days, when I started and when Greg started, we used to have people literally listening to WAV files and typing. But ultimately, we moved to voice recognition transcription. The next wave of technology, which we're -- we brought to the marketplace is this product called Reporting Pro, where it integrates with the clinical AI tool so that the AI -- when the radiologist opens up the exam, the AI already shows a heat map where the pathology is or bounding boxes where the pathology is and then has already written the report so that the radiologist then does -- never even has to dictate the report. He or she becomes a reviewer and an editor as opposed to a drafter.

And that has major implications because it's believed, I've never been a radiologist, but you could speak to this. But half the time or more of the radiologist's time is on the reporting and the editing side, not on the interpretation side. So these are the types of tools that the DeepHealth division is creating. And RadNet or the imaging centers acts as a living laboratory to test these ideas and to be sort of a co-creator at scale in our environment.

Yes, I would echo that. This co-creation story, I don't think we can emphasize enough. It's really valuable for us as software developers to have the services piece to interact and vice versa. Just 2 quick examples. I think when we were first looking at digital registration, we thought -- we looked at other groups and we thought, "Oh, we see people using kiosks, maybe we should try kiosks." And we did a couple of pilots with the services team, bad, didn't work. They take up space in a small waiting room. They were clunky, patients didn't like them. And so we pivoted with guidance from the operations team to the phone-based digital stuff. And everybody gets that, and it's a lot more convenient. It's more private. People were worried about kind of who can see what on the kiosk.

And so those were things that I think without being embedded inside the services organization, we as digital developers might not have done. And similarly, this -- the drafting, the templating, all of those are things that are very iterative. You try it, you get feedback from the doc, you realize, okay, that's working, that's not working and you change. And being able to do that not just with one small group, but across the hundreds of centers really makes a big difference. And it speeds up the innovation cycle substantially, and it helps us deploy tools that the docs actually will use or the techs actually will use.

I think an open question right now is, is there more value to be gained by speeding up the physician, the professional fee side? Or is there more to be gained by speeding up the operations, the technical? I think there's value creation in both for sure. Just -- Mark has explained this before, 80% of our revenue-ish is in the technical side. And so it's kind of natural to want to go there. But I think we are seeing these very sophisticated modern tools really speeding up the doc shortage, and they play hand-in-hand, and I think we're seeing positive effects from both.

Yes. Other examples that we've deployed over the years has been around the revenue cycle area in terms of pre-authorization and insurance verification. I mean back in the day, when a patient came in, we'd have to call the insurance company, where is this patient within his or her deductible? Do we have to collect a co-pay? And we were very ineffective of collecting the patient portion responsibility at the time of service or at the time of scheduling.

Today, built into our RIS system or radiology information system, which we've owned and developed and now is called DeepHealth OS, we can automatically query digitally the insurance authorization and verification of insurance for the patient. And all of this calculation about what we should collect at the time of service is done behind the scenes so that a $21 an hour front office person doesn't have to try to do the math and collect the money. It just says, "Hey, Mr. Smith, you owe $200 at the time of service or $50 at the time of service," and we're being incredibly effective at collecting the patient portion responsibility, which has huge implications on your ultimate collection results and your bad debt and your revenue cycle.

So I want to spend some time on the multi-modalities strategy and some of your exclusive managed care capitation arrangements that you have. How important is that for growth of the business? What do you think about that?

Yes. We've been doing capitation primarily in California since -- for over 30 years now, and that's kind of how we grew the company as a California-only operator at the beginning of our history. And we still maintain great relationships with a lot of the large medical groups who are the counterparties to these capitation arrangements. They are taking capitated risk for all patient care from the various HMOs and managed care providers in California, and they pass on to us the risk of outpatient diagnostic imaging, which we've done.

So it's about $130 million, $140 million book of business. It represents 6-ish percent of our revenue. But it's one of those areas where we like it because it's predictable revenue, predictable cash flow, the same doctors who are obligated to send us the managed care capitated patients also tend to send us their fee-for-service business as well. So we get a lot of what we call pull-through business there. And at one time, and this is going back 5 to 10 years when health care seemed to be moving towards value-based care and capitation and risk-taking and risk-sharing.

We thought that, that business was going to be a bigger part of what we do and maybe it will in the future if health care ends up moving in that way because we are comfortable in taking risk and managing risk and managing the utilization at scale, but we'll see. It's very much around the nation, you still have a fee-for-service mentality where the more you do, the more you get paid for. And we'll see because we'd love to do more of it.

Yes. Thank you. So I want to spend some time on the De Novo development strategy and JVs that you have with some of these hospitals and health systems. You hit on that a little bit earlier. How has that further accelerated growth for the company?

Yes. It's a big part of what we do now. Today, about 35% of all of our centers or over 150 centers are held within partnerships with some of the larger health systems in our various markets. On the West Coast, we partner with names like Cedars-Sinai and MemorialCare and Adventist Health and Dignity Health or CommonSpirit. On the East Coast, big academic partners such as the University of Maryland.

RWJBarnabas.

RWJBarnabas in New Jersey. We have a statewide joint venture in New Jersey. So what many health systems have realized is that this movement of volumes away from hospitals into lower-cost ambulatory sites of care is happening throughout health care, not just in diagnostic imaging. And some of the more forward-thinking entrepreneurial health systems are saying, "Look, we want to be on the winning side of that trend." And one way to do that is to participate on the outpatient side and many recognize that they don't have the experience and the background and the scale to operate these sites of care efficiently, so they look to a partner.

And we've allowed them to own an equity position. They've been instrumental in driving incremental volumes to our jointly-owned centers that otherwise we would not have seen. In some cases, they've helped us contract more favorably with some of the payers than we would have been able to do ourselves. So that's a bigger part of what we're doing. And you're going to see some moves from us in the future to make the hospital health system focus even bigger for the company.

We're selling a lot of digital health tools and products to the hospital system. We're partnering with them on the outpatient side. And there's other areas of -- and services and products that we think that we can help them with in the future. So you should stay tuned for that.

Excellent. Mark, Greg, thank you very much for being here.

Absolutely.

We really appreciate it.

Thanks for having us.

Thanks for having us.

Good morning. and welcome to the RadNet, Inc. Second Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Mark Stolper, Executive Vice President and Chief Financial Officer. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining Dr. Howard Berger and me today to discuss RadNet's second quarter 2026 financial results. On this call, we have also invited Case Wesdorp, President and CEO of Digital Health and Sean Soke, Chief Operating and Technology Officer of Digital Health. who will share additional information about the progress of the digital health operating segment.

Before we begin today, we'd like to remind everyone of the safe harbor statement under the Private Securities Litigation Reform Act of 1995. This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Specifically, statements concerning anticipated future financial and operating performance, RadNet's ability to continue to grow the business by generating patient referrals and contracts with radiology practices, recruiting and retaining technologists, receiving third-party reimbursement for diagnostic imaging services, successfully integrating acquired operations, generating revenue and adjusted EBITDA for the acquired operations as estimated, successfully selling and licensing digital health solutions, among others, are forward-looking statements within the meaning of the safe harbor.

Forward-looking statements are based on management's current preliminary expectations and are subject to risks and uncertainties, which may cause RadNet's actual results to differ materially from the statements contained herein. These risks and uncertainties include those risks set forth in RadNet's reports filed with the SEC from time to time including RadNet's annual report on Form 10-K for the year ended December 31, 2025. Undue reliance should not be placed on forward-looking statements, especially guidance on future financial performance, which speaks only as of the date it is made. RadNet undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made or to reflect the occurrence of unanticipated events.

And with that, I'd now like to call -- turn the call over to Dr. Berger.

Thank you, Mark. Good morning, everyone, and thank you for joining us today. On today's call, Mark, Dave, Sham and I plan to provide you with highlights from our second quarter 2026 results, give you more insight into factors which affected this performance and discuss our future strategy. After our prepared remarks, we will open the call to your questions. I'd like to thank all of you for your interest in the company and for dedicating a portion of your day to participate in our conference call this morning.

Let's begin. I am very pleased with the performance in the second quarter. Total company revenue and adjusted EBITDA were both quarterly records. Total company revenue increased 25% to $622.7 million from $498.2 million in last year's second quarter and total company adjusted EBITDA increased 22.7% to $99.7 million from $81.2 million in last year's second quarter. Growth in the quarter was broad-based, driven by strong increases in aggregate and same-center procedural volumes, the contribution from recent acquisitions, a continuing shift in procedural volumes towards advanced imaging and incremental digital health sales and licenses of our enterprise imaging and AI solutions.

Within the imaging center operating segment, we continue to experience strong demand in advanced imaging, MRI, CT and PET-CT, which is both a function of broader industry trends as well as the many initiatives and capital investments, we have been implementing designed to expand capacity at our centers. During the second quarter, advanced imaging procedural volumes increased 21.2% in aggregate and same-center advanced imaging procedural volumes increased 9.6% as compared with last year's second quarter.

Aggregate MRI volume increased 21% and same-center MRI volumes increased 10%. Aggregate CT volume increased 20.9% and same-center volume increased 8.6% and aggregate PET-CT volume increased 31.0% and same-center PET-CT volume increased 8.8%. Disproportionate higher growth in MR, CT and PET-CT relative routine imaging drove a 238 basis point shift in our advanced imaging procedural volume mix. increasing from 27.5% of total procedure volume in last year's second quarter to 29.9% in this year's second quarter. This favorable mix shift together with continued operational focus on controlling costs contributed to a 17 basis point improvement in imaging center segment adjusted EBITDA margin which increased to 16.1% in the second quarter of 2026.

Also within the imaging centers, the joint venture relationships continue to expand. As of the end of the second quarter, 157 of our now 442 centers or approximately 36% were held within health system partnerships. During the quarter, we announced a multi-site joint venture in Boise, Idaho, with Trinity Health St. Fontana health system, which will initially include the operation of 5 multi-modality outpatient imaging centers. As part of the relationship, our contracted radiology group, Gem State Radiology and the same Alfonso's hospitals in Boise, will be adopting a variety of deep health solutions, including diagnostic suite reporting Pro, AI studio and various clinical AI applications.

Health systems continue to recognize that cost-effective freestanding outpatient imaging centers are essential to their long-term strategies, and we continue to see a healthy pipeline of additional health system partnership opportunities. In addition, health systems have growing interest in implementing digital health tools to more effectively manage imaging volumes and provide radiologists and administrative staff with solutions to make them more productive and accurate. We are in discussions with new and existing partners about how we can provide more comprehensive solutions for all their imaging needs, both inpatient and outpatient.

Given the positive trends we experienced throughout the second quarter and the strong financial performance we delivered, we elected to increase our 2026 full year guidance ranges for imaging center revenue. adjusted EBITDA and free cash flow. We are reaffirming all digital health guidance ranges. Mark will review the details of our updated guidance in his remarks.

Finally, we continue to maintain a strong liquidity position and modest financial leverage. We ended the quarter with a cash balance of $726.3 million and a net debt to adjusted EBITDA ratio of 1.8x. This continued financial flexibility positions us well to continue investing in both organic growth and disciplined acquisitions across both operating segments.

I'd now like to turn the call over to Mark Stolper and Sham Sokka who will do a deeper dive into the digital health performance and provide a status update on many of our AI and enterprise imaging initiatives. Case, please go ahead.

Thanks, Howard. Good morning, everyone. We continue to see good growth this quarter, driven by a continued strengthening of the commercial funnel with strategic deals materializing across both clinical AI and enterprise informatics in hospital and outpatient settings [Audio Gap] 4% versus Q1 2026. split between $16.1 million of AI revenue, up 136% year-over-year and $16.3 million of enterprise imaging revenue, up 17.3% year-over-year.

ARR annual recurring revenue ended the quarter at $105.5 million, up 97% year-over-year and nearly 9% versus Q1 2026. of which a large proportion was organic growth. We remain on track to grow full year ARR by approximately 91% from 2025 to over $140 million by the end of this year, end of 2026, with our recent acquisitions now layered on top of a healthy core business. External ARR revenue generated outside of RadNet now makes up 63% of our ARR base, and we expect that to grow towards 65% to 70% by year-end.

On new business, we closed approximately $21 million of total contract value in the second quarter, bringing us roughly to $37 million of TCV for the first half of the year. split about evenly between North America and Europe/rest of the world. [Audio Gap] continues to build as well. Our clinical AI and enterprise imaging TCV pharma has grown from roughly $101 million at the start of the year to more than $224 million in TCV or the equivalent of $65 million in annual contract value. We see a good mix across segments in our funnel with close to 50% from the hospital segment.

Our customer base is also skilled meaningfully to nearly 3,000 accounts and total procedure volume across our AI and informatics solutions reached over $17 million for the quarter, up more than 200% year-over-year, reflecting both organic growth and the scale added to recent acquisitions.

Turning to profitability. Adjusted EBITDA for the segment was $2.5 million for the quarter, a step up from the $1.3 million in the first quarter. On a year-over-year basis, adjusted EBITDA was down from $3.4 million in last year's second quarter, which reflects the deliberate investments we've been making to fuel growth. continued headcount build-out in our commercial team and in our serves and implementation organization and temporary margin dilution from our acquisitions, most recently Glimmer.

I'm pleased to say those acquisitions are now fully integrated and performing well. Their profitability trajectory has moved from negative at the time of acquisition to profitable for legacy iCAD and CMO, and we're on the same trajectory for Graeme, which is very encouraging and validates the integration plan we've been running. And glimmer is a good example. Five months into the integration, organizational integration is complete. Our product road maps have been merged and T Morale remains strong.

Commercially, legacy Gleaner portfolio of Solutions exited the second quarter at approximately $25 million of ARR and is on track to exceed $30 million by year-end. And the glimmer and deep health teams are now cross-trained and actively cross-selling an integrated portfolio on 1 AI platform, the DeepHealth Radiology AI suite. On the RadNet side, we've gone live with the acquired X-ray AI from Lemer fully integrated into the DeepHealth platform across California, Arizona, the Northeast and significant parts of Maryland and Florida.

And we remain on track to capture the cost synergies we underwrote in conjunction with glimmers acquisition, growing to roughly $4 million in 2027, split between people and vendor synergies alongside significant cross and upsell revenue synergies in 2027 and beyond. We are very proud of our recent FDA 510(k) clearance for deep health breast ultrasounds. Our AI-powered solution that automates lesion detection, measurements, characterization and reporting in breast ultrasound imaging, 1 of the most operator-dependent exams in radiology.

The software distinguishes between negative exams, benign lesions and suspicious findings, generating standardized draft by Rad's categories and reports to support all breast ultrasound exams, not just those with lesions. Neuro validation studies, the solution demonstrated greater than 98% accuracy in localizing breast lesions, improved sensitivity for breast cancer detection by 8% and reduced radiologists interpretation time by 37% alongside a more standardized and streamlined workflow for stenographers. The solution is now commercially available to customers in the U.S. where providers can pursue reimbursement under an existing category 3 CPT code for quantitative ultrasound tissue characterization and we plan to implement it across RadNet's network by year-end, covering nearly 1 million breast ultrasound studies annually that may be eligible [Audio Gap]

A material portion of our thyroid ultrasound AI since the beginning of the year. Together, RadNet imaging services, we'll have about 40% of its 3 million plus annual ultrasound exams covered by potentially reimbursable FDA-cleared draft reporting solutions. We are pioneering the transformation of radiology workflow.

Mark, apparently, I got cut out, so I'm back if I -- and I go see where you are. I do apologize, technical glitch, apologies.

In terms of commercial impact, combined with our existing offerings in mammography-based breast cancer detection, density and material calcifications detection, we now have what we believe is the most comprehensive screening and diagnostic platform for breast imaging, strengthening both clinical practice within RadNet and our external commercial offering. Taken together, we continue to assemble the widest native portfolio of AI and informatics solutions in radiology with 27 FDA clearances and 26 CE marks to date, covering 100-plus clinical findings across routine and advanced imaging resistance for both acute care and outpatient imaging.

In conjunction with the continued development of our clinical AI, we're pioneering the ability to produce automated drought reports, driving significant, I think of 20% to 30% productivity gains in reporting times. This is made possible by combining 4 parts of our product portfolio into an integrated solution, our AI-powered reporting solution, which we market as reporting Pro, our viewer, our AI orchestrator and our clinical AI solutions.

We initiated this with our thyroid ultrasound solution last year and are seeing very strong results. across an annual run rate of about 250,000 thyroid ultrasound exomes. Over 90% of the automated draft reports generated by this AI-powered odordraft solution has been accepted by a radiologist, for final sign off without further markups or changes.

Our plan is to drive the same results with our FDA-cleared ultrasound breast solution. And with the Greemer acquisition, we're now in the deployment phase on the research protocols in the x-ray domain as well, initially focused on California, Arizona and expanding over time to Northeast Maryland, Indiana, Idaho and Florida. Accordingly, we expect close to 15% of RadNet volumes to run through AI-powered odedraft solutions by year-end, growing to over 50% by end of the second quarter of 2027.

Progress also continues across several strategic operational programs at RadNet. We're making strong progress on the deployment of our diagnostic suite, the next-generation AI-native facts. Following the initial high-speed streaming viewer deployment completed last year, our near-term focus is full deployment by Q1 2027 across RadNet centers for the reporting component of Diagnostic Suite reporting pro, driving further radiologist reporting productivity as well as cost savings as we switch out the new and power scribe solution at RadNet.

Next, our fully automated or smart registration tool for patients as part of our operations suite has been piloted in the Northeast in California in more than 25 centers and is now ready to skill to drive measurable site level front office productivity gains as well as patient satisfaction in the coming 6 months. We continue to make strong progress with our clinical AI deployments as well. Last quarter, we reported that deep health and third-party AI solutions are now available to cover more than 70% of RadNet's imaging studies. We're making strong progress deploying these solutions with now focus on X-ray, breast ultrasound and brain AI tools in our largest regions in the second half.

All in all, another good quarter of progress. Looking into the second half of the year, we have our sights set on $140 million of recurring revenue by year-end, and we remain on track to meet our budget. We see a clear bridge to that number. from our Q2 paying ARR, we have visibility into roughly $12 million of ARR pending go live that is signed and secured, plus additional $23 million conversion from our late-stage pipeline. based on the historical conversion rates we're seeing on these types of opportunities.

Our guidance remains unchanged, $135 million to $145 million of revenue and $10 million to $12 million of adjusted EBITDA for this segment. If the right strategy, the right solutions and the momentum to keep delivering our solutions at scale, thank you for your continued support as we build the future of radiology.

And at this time, I'd like to turn the call back over to Mark who will discuss key financial highlights from the second quarter.

Thank you, Kate. I'm now going to briefly review our second quarter performance and attempt to highlight what I believe to be some material items. I will also give some further explanation of certain items in our financial statements as well as provide some insights into some of the metrics that drove our second quarter performance. I will also provide an update to 2026 financial guidance levels which were amended in conjunction with last evening's financial results press release.

In my discussion, I will use the term adjusted EBITDA, which is a non-GAAP financial measure. The company defines adjusted EBITDA as earnings before interest, taxes, depreciation and amortization and excludes losses or gains on the disposal of equipment, other income or loss, loss on debt extinguishments and noncash equity compensation. Adjusted EBITDA includes equity and earnings in unconsolidated operations and subtracts allocations of earnings to noncontrolling interest in subsidiaries and is adjusted for noncash or extraordinary and onetime events taking place during the period.

A full quantitative reconciliation of adjusted EBITDA to net income or loss attributable to RadNet Inc. common shareholders is included in our earnings release.

I will also be using a second non-GAAP measure pertaining to the Digital Health segment called Annual Recurring Revenue, or ARR. We use ARR as a key operating metric to evaluate the scale, growth and health of the recurring component of our digital health business. We define ARR as a key subscription economy metric, representing the predictable normalized annual value of contracted recurring revenue generated from active customer contracts. ARR includes subscription fees, recurring support fees and contracted usage charges and excludes onetime or nonrecurring fees such as implementation fees, hardware sales, professional services, consulting and onetime training.

AAR is determined based on the contractual term of active customer arrangements and is not calculated by reference to revenue recognized under GAAP, deferred revenue or another GAAP financial measure. ARR is not a forecast of future revenue, which may be affected by contract start and end dates, cancellations, renewal rates, customer usage and other factors.

With that said, I'd now like to review our second quarter results. While I won't recap all the financial information that's contained in last night's earnings report, here are some of the highlights. For the second quarter of 2026, total company revenue was $622.7 million and total company adjusted EBITDA was $99.7 million, both quarterly records. Revenue increased 25% and adjusted EBITDA increased 22.7% as compared with last year's second quarter.

The Imaging Center segment results were driven by strong aggregate and same-center procedure volumes, especially in advanced imaging, which Dr. Berger spoke about in his prepared remarks. The upgrades we have made in the last few years to faster MRI scanners, the use of tech live remote technologists and refinements we've made to our operations to move more patients efficiently through our centers. have contributed to the capacity growth for advanced imaging.

In the case of PET-CT, we continue to benefit from the greater utilization of prostate PSMA and brain amyloid studies. which during the second quarter represented over 25% of our PET-CT volume. Despite continued pressure on salaries from labor shortages, particularly with technologists and radiologists, we continue our streak of quarters with increasing adjusted EBITDA margins within our Imaging Center segment relative to prior year quarters.

With respect to digital health, I'll just highlight a few additional items to expand on Kate's previous comments. The 56.5% quarter over prior year same quarter increased to revenue resulted from the full breadth of digital health solutions. Aside from new revenue from the acquisitions of Glimmer, CEMAR and iCAD, which contributed approximately $9.3 million of revenue in the second quarter. Revenue from the EPCD program increased 16%. prostate and neuro products grew over 13%. Tech Live revenue increased over 38% and enterprise imaging workflow revenue increased 17.3%.

We remain on track to reach our full year revenue and ARR goals for the operating segment which implies a ramp in both revenue and adjusted EBITDA for the second half of the year, which is supported by newly signed contracts, a pipeline of new business opportunities and a schedule of customer implementations throughout the rest of the year. We finished the second quarter with a strong cash and liquidity position. Contributing to our liquidity, on June 10, 2026, we entered into incremental amendment #3 to our credit agreement. Pursuant to this amendment, we repriced both our existing term loan and our $282 million revolving credit facility, each at a 25 basis point reduction in interest rate with the term loan now bearing interest at SOFR plus 2%.

As part of the transaction, we also funded a $250 million incremental term loan, which added to the cash balance at quarter end. We intend to use the proceeds of the incremental term loan to fund future acquisitions, organic expansion initiatives, health system partnerships and other general corporate purposes. At quarter end, we had $726.3 million of cash on the balance sheet and full availability of a $282 million revolving credit facility. Continued improvements in revenue cycle, particularly in the area of patient collections have allowed us to maintain DSOs or days sales outstanding to a near RadNet low of 31 days which we believe to be 1 of the best in the industry. This continues to provide the cash flow we require to fund our growth and expansion in both operating segments.

With regards to our financial leverage, as of June 30, 2026, unadjusted for bond and term loan discounts, we had $616.4 million of net debt which is our total debt at par value less our cash balance. Note that this debt balance includes RadNet's ownership or 49% of New Jersey Imaging Network's net debt of $13.8 million for which RadNet is neither our borrower nor guarantor. At quarter end, our net debt to adjusted EBITDA leverage ratio was 1.8.

Given the strength of our second quarter results, and the positive trends we continue to experience, we elected to increase 2026 full year guidance ranges for revenue, adjusted EBITDA and free cash flow for our Imaging Center segment. Total net revenue guidance for the Imaging Center segment increased to a range of $2.370 billion to $2.421 billion, an increase of $15 million at both the low and high ends of the range as compared with the guidance we provided after our first quarter results.

Adjusted EBITDA guidance increased to a range of $345 million to $358 million an increase of $5 million at both the low and high ends of the range. Free cash flow guidance increased to a range of $115 million to $125 million, an increase of $3 million at both the low and high ends of the range. While the capital expenditures guidance range of $165 million to $175 million remains unchanged, we did increase our cash interest expense guidance by $3 million at both ends of the range to $48 million to $53 million, reflective of the incremental borrowings from our recent debt repricing transaction.

I'll now take a few minutes to give you an update on 2027 anticipated Medicare reimbursement rates. As a reminder, Medicare represents about 24% of our business mix. With respect to Medicare reimbursement several weeks ago, we received a matrix for proposed rates by CPT code, which is typically part of the physician fee schedule proposal that is released about this time every year. We have completed an initial analysis and compared those proposed rates to our current 2026 rates. We volume-weighted our analysis using expected 2027 procedure volumes.

In the proposed rule, Medicare is proposing to decrease the conversion factor in the Medicare fee schedule by about 1.68% from $33.40 to $32.84. along with certain changes to the RVUs or the relative value units of specific radiology CPT procedure codes and to the Medicare geographic practice cost indices or gypsies. Our initial analysis of all these moving parts of the proposal indicates that RadNet on roughly $2.4 billion in revenue, will be almost net neutral for Medicare next year.

Our analysis shows a negative impact of less than $1 million to 2027 revenue. Despite the decrease to the conversion factor, proposed increases to RVUs are OBOs fully mitigating the 1.68% decline in the conversion factor. On a related note, the HOPS Medicare fee schedule or the hospital outpatient prospective payment system proposal for 2027, contains a site neutrality provision where CMS will now reimburse hospitals at the lower Medicare physician fee schedule for certain noncontrast studies. This is going to result in a significant decline in reimbursement for hospitals, anywhere between 30% and 50% decrease on these Medicare procedures depending upon the CPT code.

If this site neutrality provision is finalized later this year, it is going to contribute to the already significant economic pressure that health systems are feeling within the radiology departments. and we believe that this financial pressure will continue to drive more health system partnership discussions. The Medicare fee schedule final rule is expected to be released later this year in November. There is no assurance that the final rule will be consistent with this proposal.

On our third quarter financial results call in November, we hope to be able to provide more certainty around 2027 Medicare rates. I'd now like to turn the call back over to Dr. Berger, who will make some closing remarks before we begin the question-and-answer portion of today's call.

Thank you, Mark. I'd like to take just a moment to reemphasize the core strategic initiatives that RadNet has embarked on. We have assembled an extraordinarily talented and seasoned team to take us and the industry through a transition that must occur in the adoption of artificial intelligence to help deal with the challenges that have presented themselves since COVID in the form of increasing costs for radiologists which are in extraordinarily demand shortage and for technologists fees and salaries that have continued to escalate.

We are fortunate that we began embarking on this endeavor 6 years ago. And I want to emphasize that our primary investments have been made in those modalities, the routine modalities, X-ray, ultrasound and mammography, which comprise 70% of our volume and which we are enthusiastic about having the majority of these exams read both by our clinical AI tools and then Generative AI tools for full draft reporting by mid-2027. This is a function of the overall direction of having every radiology and imaging exam go through artificial intelligence, again, both on the clinical and reporting side, which is an essential requirement if we are going to keep pace with the demand for imaging procedures and the shortage of staffing that is likely to continue to be a challenge for all providers, both outpatient and hospital-related for years to come.

I'm proud to say that RadNet will lead this initiative by being not only aggressive in adopting the technology, but making certain that all of our tools have FDA approval and are available to all constituents both inside and outside RadNet on a cost -- on a cost attractive basis and 1 that will truly answer the issues that we face with these cortices.

I'm proud to lead the team that is taking out this challenge and responding and the years that we have started to invest in this technology are now bearing fruit at just the right time.

Operator, we are now ready for the question-and-answer portion of the call.

[Operator Instructions] Our first question comes from Brian Tanquilut with Jefferies.

Congrats on a really solid quarter. Definitely a win here. Maybe, Mark, as I think about the ultrasound approval from the FDA, a couple of questions. Number one, how do we think about the flow-through of that to the business from a numbers perspective or at least even qualitatively? And then maybe as we think about some of your other pending approvals, just curious what you think the time line looks like in terms of getting those in and then maybe translating all this into T codes in terms of reimbursement?

Sure, Brian. I'm going to have Sean respond to that, and I'll chime in if you need any assistance with numbers.

Yes. Thanks, Mark, and I hope very well, Brian. Maybe just to talk about the breast impact. We will be doing in 2026 full year annualized about $1 million breast ultrasound exams. And so what we're really starting the journey now, the solution is actually already with the first radiologists after our FDA clearance. And we're now scaling that, as Kate mentioned, across all of our major centers. And essentially, the impact is very similar to thyroid where it will help us reduce our slot times for Breast ultrasound so about $1 million, just compare that, it's about 4x the volume of our thyroid exams.

It will help us report faster, right, because it's very similar to thyroid, it's a draft reporting product with both detection, identification of lesions and also the Biradaozation. And then finally, it will -- it is eligible for the same 90 TCO. And so we will take the same sort of steps that we've now realized with thyroid but with a volume that's 4x larger. And quite frankly, in a space which is also the outcomes are not as clear as they are in thyroid. So we really think the AI will have an impact on outcomes as well because best ultrasound is quite variable from both the radiologist perspective as well as from the scanning perspective. And so a tool to automate these tasks and to standardize these tasks should also help clinically drive our performance. improvement, right?

So as we talked about time line-wise, we expect that we're fully rolled out in our major centers by the end of the year and the billing where eligible as we go. And then into next year, Q1, Q2, we should be fully scaled out for the full volume for breast ultrasound.

Now you asked a question about what other applications that we're also working on? I think we're -- we've put 2 sort of numbers out there and just to clarify the 2 numbers. We've talked about 70% of our studies having clinical AI and about 50% targeting for draft reporting by middle of 2027. And I just want to make the distinction. When we talk about that 70% number, we're basically saying that AI will be used in those studies to assist the interpretation. sometimes it's actually for clinical quality improvement, not full draft reporting. For example, in the case of our memography AI, right, that's cancer -- no cancer better cancer detection. That's an example where AI is in front of the study, but not yet fully draft reported.

So I just want to make the distinction between the clinical the draft reporting, right? Now we're working on solutions with the FDA on both fronts. So things that are, let's say, clinical, what we call clinical AI improving quality, improving outcomes, we have with the FDA already image-based risk on mammography. So this is the idea that between the screening studies and long term, so based on 1 streaming study, can we project a 3- to 5-year risk of the patient. So this is beyond just DF cancer or not. Can I put you in a higher-risk category based on images, right?

So we think that's going to change the way mammography and breast screening works because we can actually now become more predictive in identifying high-risk population. We're also working on things like MR Spine, which is about 400,000, 450,000 of our studies, which is a complex measurement-based study. And we're looking at autografting solutions. We're putting that to the FDA. So that's both a clinical quality improvement and a drafting solution. We're also with the FDA with our next generation of our check X-ray and X-ray solutions, again, moving from the spectrum of at, is there's a finding to draft reporting type of solutions.

In addition, we have a CT lung AI solution with the FDA and our next ultrasound application will be in the vascular space. So these are all things that we're working on that we hope to bring into the RadNet workflow over the next 2 to 3 quarters. So let me pause there. Hopefully, that addresses your question.

No, that was great. And then, Mark, as I think about the strength in -- continued strength in advanced imaging modalities, I mean, MRI, 10% same-store volume. Curious, what do you think are driving these things? And then when I layer margin improvement there for the core business, just -- how are you thinking about the sustainability or the remaining opportunity to drive margin as we think about things like tech live and some of the other tech initiatives that you've laid out or installed in some of these clinics?

Sure. I think that -- there's been a number of benefits that we've gotten from just industry trends in general where there's just a higher utilization in general out there of more advanced imaging as the equipment post processing software, AI has just created more and more clinical indications of ordering these types of advanced imaging. And then you combine that with all the initiatives that we're doing internally to build capacity in advanced imaging around investing in some of the newer MRI equipment that has faster scanning times, and therefore, we can do more work in the same number of work hours -- we've been aggressive in expanding the hours, the scanning hours of many of our locations by opening up later in the evening and on weekends, in a lot of our very densely populated markets.

Tech Live has had a big impact on our ability to utilize that MRI capacity where 1 of the things that we and the rest of the industry has suffered over the past half a decade or so or even longer is the shortage of technologists and so we've had to close rooms in the past when we couldn't appropriately staff an MRI room and now we're being able to cover that schedule without closing the room, Avaya or remote technologist, that's been a big deal.

Clearly, the growth in the PSMA prostate in the amyloid studies has driven PET-CT growth in an extraordinary way. That's representative now of over 25% of those 2 procedures of our PET-CT volume. And when you go back 2 or 3 years, we were essentially doing no amyloid studies and very few PSMA studies. So that's the focus on that type of imaging, the newer tracers that are coming out on the market that are tumor-specific will continue to drive high demand for PET-CT.

In the areas of CT, we've been growing specialty cardiac programs around the CTA program which is the coronary CT and geography, where we've hired 2 very prominent physician leaders on both coasts who are building out that program. So it's -- and then there's a lot of blocking and tackling that's occurring at our centers from an operations standpoint and a technical standpoint, for instance, we've introduced digital patient registration at many of our centers where patients no longer have to go to the front desk to get checked in with the front office people. That's been a problem for us to drive more patients through our centers in the past, and it's also alleviating some of the challenges that we've had in hiring and retaining front office personnel.

So it's not 1 thing, Brian. It's the combination of the focused investments we've had in technology, the initiatives that we've had in digital health, the end also what's going on in the broader industry?

The next question is from David MacDonald with Truist.

Congratulations. I had a quick question. I wanted to come back to some comments you made in the prepared remarks just about the automated draft reports. And I think the numbers that you said was roughly a 30% increase in terms of efficiency and it would be about half rolled out by the middle of next year; A, we have that correct; and b, that sounds like a pretty meaningful increase just in terms of capacity that you're going to free up for your radiologists and some of your staffing? -- a, are we thinking about that correctly? And just any additional details that you could provide there?

Yes. Let me just make a couple of comments and Kate, if you want to weigh in. But our challenge has been how do we create efficiency for our radiologists. And the 2 areas that we think and others who have commented and are building life opportunities are primarily how do we make our radiologists more efficient in what they see and then how they interpret it.

It's been a burden for radiologists for quite some time that it takes them often longer to dictate a report than it does to actually assess the clinical information that is presented to them. With draft reporting, as we've seen in our CMO thyroid ultrasound application when we are capable of reading the study clinically and characterizing the findings, presenting that for our draft reporting, that draft reporting has been accepted by a radiologist 90% of the time. And that has an enormous impact on their productivity. As a result, what we are hopefully driving towards is making our radiologists that much more efficient in the number of cases they can read on a daily basis and take a lot of the drudgery and burden away from the enormous volumes that we have in our Qs to be read and then distributed to our referring physicians.

So I can't emphasize enough how important this is. And our tools as I mentioned in my closing remarks, our tools will all be FDA approved so that we can use this both internally and sell these products externally to our partners and customers that will help everybody experiencing the same problems, address the challenge and the shortage of radiologists to meet the growing demand that imaging continues to present. So this is how we are transforming the radiology workflow to make them not only more efficient but more accurate and more confident in their results. Kate, if you want to add something to that.

Maybe Dr. Berger, I'll add a little bit to it. I think just to answer your question, we do see that impact and it's the right way to think about it. I would add 1 other factor, just taking on ultrasound, for example. We do 3 million ultrasound studies now with breast and thyroid, about 40% of those studies will have draft reporting. So just think about the efficiencies there on the radiologist. But remember, when you do ultrasound, it also reduces the sonographer time because what happens is the reports are preprepared a bit by the sonographers, but in thyroid, we reduced about 1/3 of the time of the scan, we're also not going to be doing that on breast.

So about 40% of our ultrasound we're reducing the time by 1/3 for the scan as well. So it creates additional capacity in the imaging centers, and we get the productivity on the radiologists interpretation as well, right, when we start now doing draft reporting. And so that's really why we have this aggressive push, let's say, starting with ultrasound. but also expanding into more routine imaging like x-ray now where we've started to deploy.

And then into the advanced imaging like MR high-volume advanced imaging like a more spine, for example, where we see -- where we will see some of the first applications for graft reporting in the MR space, right? So all of those will drive productivity across multiple fronts.

And then guys, just -- you've made obviously, a bunch of investments that have driven a lot of efficiencies and helped offload some administrative burden. Can you just -- just any kind of high-level conversations in terms of the impact that you're seeing that have on recruiting, retention, employee satisfaction, et cetera?

I think that we are seeing an improvement in our recruiting as people see the tools that we're beginning to implement that will make their job and their tasks that much easier, if you will. And it is helping us reduce the number of open positions that we have as well as bring on additional staff that will then lessen the need we have to outsource some of our readings to teleradiology services.

I want to emphasize that teleradiology amongst a lot of the other technological evolutions has been a lifesaver for us and other providers to help manage the demand for the reading and the volumes that we have. And I think that the future for RadNet could involve looking at teleradiology as more of an in-sourced rather than an outsourced responsibility that we have right now.

So technology, again, is the solution that everybody needs to embrace to deal with the challenges that I think whether you're in a hospital system or an outpatient, urgent care, physician offices that do imaging is essential in order to drive better quality medicine.

Okay. And then, guys, just last one. I was wondering if you could just provide a quick update on the recent acquisitions, especially Florida and just what you're seeing in terms of conversations around additional opportunities, maybe further M&A in the state conversations with health systems, just anything on the recent deals, especially in the Florida.

Yes. The Florida acquisition, which was part of our Q1 initiatives, has been a very -- has met with a very enthusiastic responds by the Florida teams there who now are part of the RadNet family. It's taken us the better part of the first 6 months to transition them onto the RadNet platforms, which is not unusual. But having acquired 13 new centers, which are contributing $100 million of revenue was a large undertaking. But to the credit of the RadNet management team, they've done this relatively seamlessly, and I think this will help drive not only additional revenue from backlog that, that operation had much like the rest of the RadNet systems, but also allow us greater efficiency in the operations.

So we are very encouraged at the second half of this year. will produce results that will contribute significantly to the deleveraging of that acquisition and 1 that brings us to another region from which we think we can expand, virtually every market that we're in has expansion opportunities, some of which are building de novo centers, which this year, we will have built 13 new centers and next year looking for a similar amount as well as acquisitions of other existing providers to become part of the RadNet network.

In addition to that, we are getting on a weekly basis fielding incoming calls from health systems that are looking for radiology solutions to manage their problems. And the #1 problem that they are all facing without exception is a shortage of radiologists and the burden and demand that's on the radiologist, which is causing a delay in delivering reports. So we think that the tools that we're developing and the logic, which -- around which we are building this, we'll continue to grow that segment of our business. And we hope to be reporting some of these success stories and achievements here between now and the end of the year.

So there's certainly no shortage of opportunity on the acquisition side, whether you're talking about health systems -- new health systems, expanding existing health system joint ventures or expanding into our existing markets and potentially going into new markets.

The next question is from Andrew Cooper with Raymond James.

Maybe first, you talked about some of the labor challenges on tech in Rads and obviously, all the efficiencies with some of the digital tools. Can you give a sense for how much do you feel like your volume trends are maybe still constrained, whether it's at a center level by capacity? Or is this more of a cost factor and an ability to drive higher margins down the road?

Well, I think the -- go ahead, Mark, you were you going to take that.

Yes. I was just going to say that we do still face backlogs in many of our markets, depending upon what modality you're looking at. which is why we've been building de novo centers at a faster clip over the last several years because we need to build the capacity to support the demand in those markets. While it sounds great to have backlogs, it also is a problem that we have to deal with because if the backlogs get too big or too long, patients don't want to wait a couple of weeks to come in for an MRI if they've got or a CT if they've got a potential serious issue, and we start losing business to competitors and then we start losing referral sources.

And so managing that backlog is something that our operations teams do very, very carefully, and that's when the backlogs get too long, that's when we start investing in new equipment, creating new capacity by opening up new centers. and essentially continuing to monitoring -- monitor where those backlogs exist. Howard, you were going to say something?

Yes. I was just going to say, some of the credit for improving our capacity is a function of the OEMs themselves. building products that allow us to take existing equipment, upgrade them and shorten exam tons. So 1 of the reasons why we have been very -- and consistently investing and new capital equipment in existing centers is the ability to access the patient backlog not just through tools that we're developing, but by making our equipment better and more efficient. So I want to give a shout out to all the OEMs who have embraced this kind of opportunity, much of which is driven by artificial intelligence of their own.

So combining all of our in-house capabilities as well as working closely with the OEMs has truly created a significant improvement in how many cases or exams we can do per unit time, virtually with every piece of equipment that we have. the latest of which is by taking our thyroid ultrasound exams and running them through our CMO thyroid AI tool. We have effectively shown that we've been able to increase 1 exam per day per unit in our existing centers, and we have close to 1,000 ultrasound systems.

So you can see that 1 of the things that we thrive on is scale and small changes can be helpful in producing significant results for the company.

Okay. Helpful. And then maybe 1 on the digital health side and margin trajectories. I think the first half was around 6%. The guide implies maybe 9% or so in the back half at the midpoint. You had 20% target, as you talked about at the Investor Day. So maybe just as we think about trending from here towards '27 and 2028, how do we think the cost side moves? And how should that leverage on the investments that you have been making and continue to make starts to flow through to the margin expansion?

Thanks, Andrew. I hope I'm all the -- Great. And I do apologies for the technology on my side. Great question. The Investor Day presentation that we gave towards margin of 20% plus remains unchanged. If not, we are more positive on the outlook for that. We have deliberately invested quite significantly in our headcount, commercial headcount as well as service and implementation headcount over the last or 3 quarters. You've seen that our margin dipped in Q1 and is now on the upward trend again, and we are very confident that we're going to meet our guidance for the year, the $ 10 million to $12 million adjusted EBITDA.

And from there onwards move towards 20-plus plus margins. Maybe 1 thing to note is we track internally our core business growth. So we dissect a little bit what's the impact from acquisitions, what is organic growth and what is the organic part of our business performing at. And we're seeing very favorable margins in line with SaaS businesses of 30% to 40% EBITDA margins in that domain. And so we know that, that core growth, the core business, as we add on the acquisitions, as we turn them to profitability and as we scale our business is actually very much in line with what you would expect of a SaaS business.

We will -- to your last part of your question, we will continue to invest in our portfolio because we know that that's the way to pioneer this industry. but you'll see the impact of growth covering these investments in a much more lucrative way to say, and therefore, as we move into '27 and '28, we are quite confident about increasing that profitability to 20-plus percent.

The next question is from Matthew Gillmor with KeyBanc.

Maybe the first 1 following up on the reimbursement and revenue opportunity for CMOD with breast ultrasound following the FDA approval. I thought you had offered some prior comments that for thyroid ultrasound. You were able to bill for the T code you referenced 30% to 40% of the time with payers as breast ultrasound becomes more widely available across your network, does the reimbursement ramp up more quickly, so those same payers will pay 30% to 40% of that T code? Or does it ramp more slowly and you've got to go back to payers and discuss reimbursement.

Do you want to take that question?

Yes. So the answer to the question is yes. We do see that it would be easier to get to that 30% to 40%, but we do have to remotivate for, let's say, a new indication, but the fact that they are already covering -- we know which payers, for example, have positive determinations. So we will get to that reimbursement level faster with breast than we would -- than we had with thyroid.

Let me just add 1 other point. Yes, I'm sorry. And Sean mentioned this, we do 4x as many plus ultrasounds as we do thyroid ultrasound. So even if the initial launch throughout RadNet since we're going to be doing the breast ultrasound AI on all rest ultrasounds, both screening and diagnostic, -- if we apply the same percentages and look at the revenue that we've been able to achieve in the area of thyroid. We are cautiously optimistic that, that number right out of the gate could be 4x as much. It will take us a little bit longer to ramp that up simply because we have a lot more mammography units to -- and physicians to get accommodated or acclimated to using breast ultrasound.

And then after that, we will be looking at going to all of the payers who are not currently reimbursing and lobbying for them to do that because the use of these tools certainly is good medicine, and I think that's going to be the winning theme long term.

Great. And then as a follow-up, on the digital health sales front, you all sound very confident in getting to the ARR metric and we appreciate the total contract value that you've been disclosing over the past few quarters. I was curious as we are tracking that externally, is there a seasonal dynamic with the total contract sales numbers you disclosed to sales activity ramp up in the back half for customers as they're thinking about 2027 and setting budgets? Just kind of curious how we should be thinking about that over the next few quarters.

Thank you for the question,. There's a degree of seasonality there. It's definitely loaded towards the back end, if not to H2, if not to Q4 even. However, that's more prominently the case for larger enterprising informatics kind of deals where we see that skew maybe towards the second half into Q4 versus clinical AI sales. Also there, there's the seasonality, but that's profound. But in a way, the back-end loading of the year is an industry dynamic, both on closing deals as well as ARR and generating revenue. And that's why you see a little bit of a skew towards the end of the year.

The next question is from Larry Solow with CJS Securities.

Great. Most of my questions answered. Just a couple of follow-ups. Just on the margin, Mark, just on the margin improvement in the core imaging with 240 bps kind of mix shift, which is a good guy and nice volumes, also a good guy. I would think you would have a little more margin improvement plus with the AI benefits the retail benefits than you did. And I know you mentioned the pressure on salaries. Is just most of that benefit being wiped out by the -- not to be negative, but just -- is most of that benefit being wiped out by the pressure on salary, There was anything unusual in the quarter?.

Yes, there was nothing, I would say, unusual in the quarter, Larry. There's a few things happening here. One, yes, we're still in an inflationary environment with respect to , in particular, around salaries, especially as it relates to technologists and radiologists, which is where I think the big impact is going to come from the digital health rollouts of many of these products and solutions within our centers and to our radiologists. -- and we are absorbing a cost of implementation, both on the digital health side, as Kate mentioned in his remarks, impacting the profitability right now in digital health, but also on the RadNet operations side with our operations teams in terms of the implementation and training of our staff. That will be a continued expense, I think, for the next couple of years as we continue to roll this out.

But there's a lot of margin enhancement -- and that will show through our -- into our margins in the coming quarters and in a couple of years. We still feel very confident with what we said last November at our Investor Day in New York, where we felt relative to 2025 margins, that we think that there's 100 to 150 basis point margin enhancement opportunity by -- at the end of 2028 as we're exiting 2028. I still feel good about that number, and it's coming from a lot of different places..

Okay. That's fair. And just a second question, just on the credit expansion increased, I guess, $25 million, it looks like you got a little bit of a more favorable rate. I got the whole facility there. But just any -- was it just opportunistic in terms of just adding that $250 million? It sounds like your acquisition environment sounds as good as it's ever been, but any particular reason just to expand now?

Yes. The entire repricing opportunity was purely opportunistic, meaning that our debt has been trading above par or have been trading above par for quite some time. So the yield was lower than our interest rate because of that. And so we were able to avail ourselves of slightly better pricing. We took down the pricing by 25 basis points. And because there was so much demand for our paper at the time, there was an opportunity to take more money down, replenish some of the capital that we spent in the last, I'd say, 90 to 120 days where we put out a significant amount of capital for the Glimmer acquisition as well as the imaging center acquisitions in Southwest Florida as well as in Indiana. And so this was essentially an opportunistic transaction to lower our debt costs as well as replenish the capital on the balance sheet. And we're pretty confident that there are more opportunities to continue to expand the business through M&A in the coming quarters and years.

One other comment, Mark, that I'll make, part of our margin in the first and second quarter of this year has been because of the additional cost of the large acquisitions that we made on the imaging services side to get them ranitized. so that we had to extend quite a bit of human resources in order to take some of these newer acquisitions, particularly the 1 in Florida and get them on to the RadNet platforms, which is not just our IT platforms, but our purchasing platforms, our accounting platforms, our HR platforms. And so there was a lot of duplicated expense, which will go away in the second half of this year.

And I'd add to that, Howard, that those 2 assets that you mentioned, we're not operating at RadNet margins when we purchase them. They both were had some challenges with their own margins. So they were dilutive to RadNet's overall margin. So not only are we going to -- have we been spending money in the integration of those assets, but they also started at margins that were below our own.

The next question is from Johan Zee with B. Riley Securities.

The next question is from Jim Sidoti with Sidoti & Company

Just a follow-up to the last question. When you think about the additional acquisition targets that are out there, are you thinking mainly on the digital health side or on the imaging side?

Both there. I think that there is plenty of acquisition opportunities as we've demonstrated over the years in the services side, and we will continue to explore those because they not only enhance the services side of our division, but we then can implement our new digital tools to help deleverage and make those operations more efficient. But we shouldn't overlook the opportunities not only on the digital health side for acquisitions, this is a consolidating marketplace, both on the services and digital health side. and not everybody can be a winner out there. We think that there will be opportunities for us to broaden and accelerate the portfolio that we have.

And we'll be looking at newer opportunities to continue to make RadNet and even more attractive partner for our hospitals and others with capabilities that we believe we can bring to the table that address their choke points, which are primarily, as I mentioned in my other comments, related to staffing issues, both on the radiologist and non-radiologist side of it.

So that was indeed 1 of the theories or rationale that we use for upsizing our credit facility and putting more cash on the balance sheet, we think that, that can help drive new opportunities for retina to continue to grow this business.

Jim, the 1 thing I'll add is from a capital allocation standpoint, I'd say while there are acquisitions on both operating segments within RadNet. I -- it's highly unlikely that we would put out capital along the lines of what we did with the Glimmer acquisition in terms of its size. Many of the opportunities on the digital health side for acquisitions are much smaller in nature. And the acquisitions on the imaging center side, they span from onesies and twosies, little tuck-in transactions to larger-scale transactions.

So it's highly likely that more of the capital will be allocated towards the imaging center side of the business.

All right. And then just a quick follow-up. You indicated earlier that the reimbursement trends are continuing to favor the outpatient centers for digital imaging. How long do you think it takes for hospitals to adjust to that when the new rates get into effect?

Well, the hospitals are under tremendous pressure right now within the radiology departments in general. They're having staffing issues. They're suffering from the shortage of radiologists. They're very inefficient when it comes to driving patient volumes through the radiology departments, both on the inpatient and the outpatient side. And -- they're now being impacted to a certain extent by the changes in the Affordable Care Act and some of these exchange programs.

And so this budget neutrality provision in the HOPS fee schedule that's been proposed by Medicare is just 1 other thing that's going to be piled upon that already high level of pressure that the hospitals are feeling within radiology. And so we think that's going to do 2 things that are both positive for RadNet. One is it's going to create more and more interest in partnering with an outpatient provider who has experience and background and success in managing and operating outpatient facilities at scale at the lower pricing. number one.

And number 2 is it's going to put more pressure on their existing radiology staff to adopt digital health tools that can make them more efficient and drive potentially more volumes or at least deal with the volumes that they currently have in a more efficient way. And so I think we're feeling really good about our hospital joint venture business. We're getting more and more inbound interest. We have 157 locations now held within these health system partnerships, and we're hoping that we'll be in a position to announce some expansions of existing partnerships and some new partners in the coming quarters.

This concludes our question-and-answer session. I would like to turn the conference back over to Howard Berger for any closing remarks.

Thank you. Again, I would like to take this opportunity to thank all of our shareholders for their continued support and the employees of RadNet for their dedication and hard work. Management will continue its endeavor to be a market leader that provides great services with an appropriate return on investment for all stakeholders. Thank you for your time today, and I look forward to our next call. Good day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good day, and welcome to RadNet Inc. First Quarter 202 Financial Results Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Mark Stolper, Executive Vice President and Chief Financial Officer of RadNet Inc. Please go ahead.

Good morning, ladies and gentlemen, and thank you for joining Dr. Howard Berger and me today to discuss RadNet's first quarter 2026 financial results. On this call, we have also invited Kees Wesdorp, President and CEO of Digital Health; and Sham Sokka, Chief Operating and Technical Officer of Digital Health, who will share additional information about the progress of the Digital Health operating segment. Before we begin today, we'd like to remind everyone of the safe harbor statement under the Private Securities Litigation Reform Act of 1995. This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.

Specifically, statements concerning anticipated future financial and operating performance, RadNet's ability to grow the business by generating patient referrals and contracts with radiology practices, recruiting and retaining technologists, receiving third-party reimbursement for diagnostic imaging services, successfully integrating acquired operations, generating revenue and adjusted EBITDA for the acquired operations as estimated, among others, are forward-looking statements within the meaning of the safe harbor.

Forward-looking statements are based on management's current preliminary expectations and are subject to risks and uncertainties, which may cause RadNet's actual results to differ materially from the statements contained herein. These risks and uncertainties include those risks set forth in RadNet's reports filed with the SEC from time to time, including RadNet's annual report on Form 10-K for the year ended December 31, 2025.

Undue reliance should not be placed on forward-looking statements, especially guidance on future financial performance, which speaks only as of the date it is made. RadNet undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made or to reflect the occurrence of unanticipated events.

And with that, I'd like to turn the call over to Dr. Berger.

Thank you, Mark. Good morning, everyone and thank you for joining us today. On today's call, Mark Kees, Sham and I plan to provide you with highlights from our first quarter 2026 results, give you more insight into the factors which affected this performance and discuss our future strategy. After our prepared remarks, we will open the call to your questions.

I'd like to thank all of you for your interest in the company and for dedicating a portion of your day to participate in our conference call this morning. With that, let's begin.

I'm extremely pleased with the performance of the first quarter. Revenue and adjusted EBITDA were first quarter records despite being negatively impacted by an estimated $13 million of revenue and $9 million adjusted EBITDA from severe weather conditions in January and February on the East Coast. As compared with last year's first quarter, revenue increased 22.1% and adjusted EBITDA increased 36.3% resulting in adjusted EBITDA margin improvement of 115 basis points.

As you may recall, last year's first quarter was similarly impacted by weather, and we've had additional -- and we've had additional impact from the Southern California wildfires. Adjusted for the weather impact on this year's first quarter and the weather and wildfire impacts in last quarter's first quarter, our margin improved by 52 basis points. There were a number of items in the quarter worth noting.

First, we continue to see a shift towards advanced imaging. During this year's first quarter, 29.3% of our procedural volume was from advanced imaging compared with 26.9% last year's first quarter, a difference of 235 basis points. This is both a function of overall industry trends as well as the significant capital investment RadNet has made in advanced imaging equipment, which is driving faster throughput and increased capacity. Additionally, the implementation of TechLive DeepHealth's remote scanning solution for technologists has significantly benefited RadNet's MRI utilization by substantially decreasing exam room closure hours.

PET CT Procedure growth continues to be driven by studies to identify and stage prostate cancer and to detect brain clots correlated with Alzheimer's and dementia. During the quarter, PET/CT procedures increased 35.2% in aggregate and 14.7% on a same-center basis. As a result of the operating strength in March, we exceeded internal projections for the first quarter embedded in 2026 full year guidance. Additionally, the strong [ indiscernible] performance has continued throughout April and into the first part of May.

The combination of these factors drove our confidence to raise 2026 full year guidance for imaging center revenue, adjusted EBITDA and free cash flow. This quarter was an active one for acquisitions. In the Imaging Center segment, 2 significant acquisitions were completed at the beginning of January. First, Radiology Regional was purchased the owner of 13 multimodality imaging centers in Southwest Florida. For 5 decades, Radiology Regional through its approximately 400 employees and over 40 radiologists has been a fixture in the fast-growing communities of Southwest Florida spanning [ Naples ] to Sarasota.

Second, we entered the Indiana market with the acquisition of Northwest Radiology, operator of 6 imaging centers in the greater Indianapolis area. Founded in 1967, Northwest Radiology has built a long-standing reputation for clinical excellence in Central Indiana. We are busy integrating these 2 acquisitions, which includes deploying the many DeepHealth AI-powered solutions intended to improve clinical accuracy and patient outcomes, streamlining operating processes and bettering the patient experience.

It is worth repeating that RadNet is not a buy-and-hold investor and operator. Instead, we target markets where there are further opportunities for growth and expansion through bringing the full capabilities of RadNet's solutions to bear. This includes RadNet's evaluating acquisitions and de novo center opportunities, launching AI-powered population screening programs and deploying best practices for operating and clinical processes. And finally, on March 2, the Digital Health division acquired Gleemer SAS in France, a fast-growing developer of a broad portfolio of FDA-cleared and CE Mark solutions for musculoskeletal, breast, lung and neurologic applications.

In particular, Gleemer is best known for its leadership in X-ray with the breadth and scale of its cloud-first solutions that are unparalleled. The integration of Gleemer into DeepHealth has begun, and we have already implemented Gleemer's clinical X-ray AI in a number of Southern California locations. Kees will discuss the Gleamer acquisition in more detail during his prepared remarks.

The hospital and health joint venture business continues to grow. On April 30, we announced the commencement of a new partnership with Trinity Health’s Saint Alphonsus Health System in Boise, Idaho. The venture currently yielding about $30 million in annual revenues will initially operate 5 centers that include 2 outpatient facilities at Saint Alphonsus medical centers. Radnet purchased a 51% interest in existing partnership entity for approximately $17 million, including this newly commenced Trinity joint venture, 155 of RadNet's 440 centers or approximately 35.2% are held within health system partnerships. Other opportunities to establish new health system partnerships, including ventures that can expand RadNet's geographical presence are in the current pipeline.

Health systems continue to seek long-term strategies for outpatient and inpatient imaging, and may have recognized that cost-effective freestanding centers will continue to capture market share from payers and patients seeking lower cost and high quality. RadNet continues to be an operating partner of choice for those hospitals and recognize they cannot accomplish that outpatient imaging objectives optimally on their own.

Finally, we continue to have strong liquidity and modest financial leverage. We ended the first quarter with a cash balance of $455 million and a net debt to adjusted EBITDA ratio of slightly under 2. So a substantial amount of cash was spent in the first quarter on the acquisitions of Regional radiology, Northwest Radiology and Gleamer causing RadNet's leverage to increase. We continue to manage cash wisely and debt balances prudently. RadNet's strong free cash flow will enable deleveraging in the coming quarters. At this time, I'd like to turn the call back over to Mark to discuss some of the highlights of our first quarter 2026 performance.

Thank you, Howard. I'm now going to briefly review our first quarter performance and attempt to highlight what I believe to be some material items. I will also give some further explanation of certain items in our financial statements as well as provide some insights into some of the metrics that drove our first quarter performance.

I will also provide an update to 2026 financial guidance levels, which were amended in conjunction with last evening's financial results press release. In my discussion, I will use the term adjusted EBITDA, which is a non-GAAP financial measure. The company defines adjusted EBITDA as earnings before interest, taxes, depreciation and amortization and excludes losses or gains on the disposal of equipment, other income or loss, loss on debt extinguishments and noncash equity compensation.

Adjusted EBITDA includes equity and earnings in unconsolidated operations and subtracts allocations of earnings to noncontrolling interest in subsidiaries and is adjusted for noncash or extraordinary and onetime events taking place during the period. A full quantitative reconciliation of adjusted EBITDA to net income or loss attributable to RadNet, Inc. common shareholders is included in our earnings release.

I will also be using a second non-GAAP measure pertaining to the Digital Health segment called Annual recurring revenue, or ARR. The company defines ARR as a key subscription economic -- economy metric, representing the predictable, normalized annualized value of contracted recurring revenue generated from customers from active customer contracts. ARR includes subscription fees, recurring support fees and contracted usage charges and excludes onetime nonrecurring fees, such as implementation, hardware sales, professional fees, consulting and one-off training.

With that said, I'd now like to review our first quarter results. While I won't recap all the financial information that's contained in last night's earnings report, here are some of the highlights. We had a stronger-than-anticipated first quarter results when we set our financial guidance levels initially. Despite being impacted by the severe winter weather conditions in January and February, lowering revenue by an estimated $13 million and adjusted EBITDA by an estimated $9 million, we were still able to achieve record first quarter revenue and adjusted EBITDA.

Relative to last year's first quarter, total company revenue increased 22.1% and adjusted EBITDA increased 36.3%. The increase in revenue was primarily the result of the following: our ability to grow same-center advanced imaging procedure volumes by 8.2%; the contribution from acquisitions, which we completed over the last year, including in Southwest Florida and Indiana during the first quarter; performance from de novo center openings over the last year; and the 51.5% increase in digital health revenue, partially driven by the acquisitions of iCAD, CIMAR and Gleamer.

During the quarter, Imaging Center segment adjusted EBITDA margin improved by 188 basis points relative to last year's first quarter. This comparison was aided by the fact that in last year's first quarter, we faced similar winter weather conditions as well as the Southern California wildfires. But even when adjusting and normalizing our results for the winter weather conditions in both this year and last year's first quarter as well as the California wildfires that impacted last year's first quarter.

Imaging Center adjusted EBITDA margins still improved by 52 basis points. Our operations teams continue to implement digital health technologies and increase throughput and capacity allowing us to serve more patients and a larger part of the growing demand for advanced outpatient diagnostic imaging. With respect to the Digital Health division, I'm going to let Kees and Sham go over that in much more detail shortly.

But in summary, the Digital Health segment is gaining momentum. Kees and Sham, among other things, are going to outline the rapidly growing sales pipeline, discuss recent commercial successes and provide a status update on the integration of recent digital health acquisitions and the implementation of the Deep Health solutions across the RadNet network of centers. We finished the quarter with a strong cash and liquidity position. At quarter end, we had $455.3 million of cash on the balance sheet and full availability of our $282 million revolving credit facility.

Continued improvements in revenue cycle, particularly in the area of patient collections have lowered DSOs or days sales outstanding to a RadNet record low of 29.5 days, which we believe to be one of the best in the industry. This continues to provide the cash we require to fund our growth and expansion in both operating segments.

With regards to our financial leverage, as of March 31, 2026, unadjusted for bond and term loan discounts, we had $631 million of net debt which is our total debt at par value less our cash balance. Note that this debt balance includes RadNet's ownership percentage, which is 49% of New Jersey Imaging Network's net debt of $23 million, for which RadNet is neither a borrower nor a guarantor.

At quarter end, our net debt to adjusted EBITDA leverage ratio was approximately 2. Given the positive trends we experienced in March, April and the first part of May, we elected to increase revenue, adjusted EBITDA and free cash flow guidance ranges for our Imaging Center business. We increased revenue by $30 million at the low and high end of the guidance range, increased adjusted EBITDA by $5 million at the low and high end of the range.

And we increased free cash flow by $7 million at the low and high end of the guidance ranges. Otherwise, all guidance ranges for both the Imaging Center segment and the Digital Health segment remain unchanged. With respect to Medicare reimbursement for 2027, there is nothing to report at this time. As is typical each year, we are expecting CMS to release preliminary rates for the physician fee schedule sometime in June or July. At which time, we will analyze CMS' proposal and our industry's associations and lobbying groups will provide CMS our industry's feedback. At the time of our second quarter financial results call in August, I will be in a position to comment on CMS' proposal and its impact, if any, upon RadNet's future results.

I'd now like to turn the call back over to Dr. Berger.

Thank you, Mark. At this time, we're going to depart from our normal cadence in the script reporting here, which traditionally, the third segment I often comment on future trends in the industry. However, at this time, I think it's important for RadNet to establish its position in the market, which reflects the acquisitions and teams that we have put together over the last several years to substantially transform radiology workflow. This is a critical and important juncture in the history of radiology and for that matter, health care. .

The challenges that the industry faces can only be met with the opportunities, the technological advances provide us. And rather than this be a point solution. I'm going to turn the conversation over to Kees and Sham, who will do a deeper dive into the digital health performance and provide a status update on many of our AI initiatives. Kees, please go ahead.

Thank you, Dr. Berger, and good morning, everyone. As we look back on the first quarter of 2026, it's clear that Deep Health's momentum is not just continuing, it's accelerating. Our strategic investments are positioning us to transforming radiology workflow. We are meeting this moment with a sense of urgency because the industry pressures we have discussed previously, radiologist burnouts, massive imaging backlogs and standing shortages, and these continue to build.

Radiology cannot continue to operate on fragmented legacy systems. The volume of imaging studies is rising globally, while the supply of clinicians is stagnant. This gap can only be closed through the intelligent application of AI and cloud native technologies. DeepHealth's vision for transforming radiology workflow is that every imaging study should and will be read by AI, automating pre-interpretation workflows and delivering an AI-curated draft report to radiologists as they start their reading.

And this isn't just about convenience. It's the optimal scalable way to ensure high-quality, consistent care across the globe. To achieve this, we've moved beyond selling individual AI and informatics tools and point solutions to delivering an enterprise solution that brings together clinical AI image management, and radiologists viewing and reporting.

Today, the typical radiology workflow is a series of siloed manual steps, manual case assignments, jumping between different workstations and voice dictating every finding from scratch. We are now replacing that with a novel, connected comprehensive enterprise solution for medical imaging that enables 4 key deliverables. Firstly, cloud-native AI analysis. Every study is automatically processed by a portfolio of native and third-party AI through our AI orchestrator, the AI Studio, which integrates both propriety and third-party clinical AI.

Secondly, dynamic case routing. We are breaking down the walls between hospitals, imaging centers, urgent care facilities and any other imaging location, and we're connecting the entire imaging ecosystem. Our platform roots cases to the most qualified available specialist regardless of where the images are acquired or where the radiologist sits. Thirdly, AI-curated drafts preliminary reports through our Reporting Pro solution. We provide radiologists with a prepopulated draft -- prepopulated draft preliminary reports.

The shifts to radiologists role from generator to editor, allowing he or she to [indiscernible], correct and accept findings far more efficiently. And fourthly, remote operations through our TechLive solution. We are virtualizing the technology's role, allowing [ expert techs ] to support multiple scans remotely, ensuring quality and consistency. By unifying imaging image management, clinical AI and reporting into one seamless experience, we're delivering a new standard of care that addresses the core challenges of the imaging enterprise.

And we are actively prototyping and validating this comprehensive workflow and clinical vision at RadNet, and our internal deployments are tracking in line with plan. We're seeing a significant productivity impact at RadNet, as highlighted by some of the following examples. With TechLive by implementing remote and assistant scanning, we've optimized technologies utilization ensure that expert support is available for every complex scan and maximize system capacity.

This has been a key driver in maintaining high throughput despite the industry-wide technology shortage, most notably by reducing exam room closure hours that Mark also mentioned. Clinical AI, DeepHealth and third-party AI solutions now cover over more than 70% of our studies across mammography, MR, CT, ultrasound and x-ray, and we are capturing the benefits of that.

For instance, we have now fully embedded thyroid ultrasound AI from our CMOD acquisition into RadNet's operations across nearly 300 sites. And the results are tangible. We have successfully reduced ultrasound slot times from 30 minutes down to 20 minutes across the board. This 33% increase in efficiency allows us to reserve more patients without increasing our physical footprint. And as of this call, we are live with our X-ray AI representing more than 20% of volume in our California region.

And then Reporting Pro, we are currently in the midst of a multi-region rollout with successful deployments in Florida and Texas. Radiologists using these AI-enabled reporting tools are reporting higher productivity and faster turnaround times. Now let's have a look at the commercial results. The market response to our integrated offering has been very strong. We ended Q1 2026 with $97 million annual recurring revenue, ARR, representing a 95% year-over-year growth.

We are on plan to reach our target of more than $140 million in ARR by year-end. This confidence is backed by strong progress, a robust sales pipeline and also the investments we have made in our commercial deployment and marketing capabilities. For instance, we currently have $7 million in signed ARR that's fully secured, but not yet reflected in our Q1 ARR as these sites move through the go-live process in the coming months.

On top of that, we have added significant Q1 wins in terms of securing $16 million in total contract value. This quarter across 40 customers, reflecting a higher closure of deals and with an even split between and across different global regions. This includes, for instance, a $1.5 million total contract value [ diagnostics we deal ] in North America and major lung AI contracts across the U.K. and EMEA. The Q1 deal flow represents a healthy mix of small, medium and large-sized deals, which will provide more consistent and convertible ARR and revenue growth.

And then we have a robust pipeline. Our commercial funnel is developing in line with plan with well over $150 million in commercial deal opportunities as measured in total contract value. Our acquisitions are performing ahead of expectations. Gleamer which we closed in early March exited Q1 in line with plan and is on track to exceed its end-of-year targets, and we've begun cross-selling its portfolio into the pre-existing Deep Health installed base and vice versa.

Furthermore, ICAD has seen a significant acceleration in cloud-based demand, with a combination of 20 existing and new customers going live in Q1 alone, validating our strategy of moving customers from onetime licenses to a repeatable, high-margin ARR model. CIMAR has been deployed deep Impact At RadNet across [ 300 ] sites, and we're now starting to see good commercial momentum, evidenced by a recent [ thyroid ultrasound ] AI win, an external win with a total contract value of close to $400,000. In CIMAR, the image exchange platform powering the lung cancer screening program in the U.K., amongst others, is performing ahead of plan with a strong win in the national mammography screening space.

Our innovation engine continues to deliver. We now stand at 26 FDA clearances and 22 CE Marks. And before the end of this year, we would receive an additional 12 FDA clearances and 15 CE Marks. The velocity of our regulatory approvals has grown by over 70% year-over-year. And accordingly, we will continue to feel the most comprehensive AI informatics portfolio in the industry for radiology.

Next to expanding our scope of clinical AI solutions, we are also preparing for the launch of the next version of the DeepHealth Diagnostics suite, which incorporates critical enterprise capabilities for the hospital and the health system segment, further expanding our total addressable market.

In summary, our Q1 performance reflects a business that is hitting its stride with strong momentum on ARR growth. Compares with last year's first quarter, we delivered 52% total revenue growth. In our external revenue, the revenue generated outside of RadNet reached 64%, up from 51% from an installed base of close to 3,000 global customers. The shift proves that DeepHealth is successfully transitioning into a global technology leader.

Our adjusted EBITDA margin in the first quarter reflects the intentional margin impact from our recent acquisitions and continued infrastructure investments, we are exactly where we plan to be. These investments are the fuel, which is enabling 2026 and future growth and we are on plan to meet the guidance we have set out for 2026.

Based on our current trajectory and the visibility provided by our signed backlog and pipeline, we are reaffirming Digital Health full year guidance. Total revenue at $135 million to $145 million, adjusted EBITDA at $10 million to $12 million. We have the right strategy, the right technology and the insights to deliver our solutions at scale.

Thank you for your continued support as we build the future of radiology. Operator, we are now ready for the questions and answer portion of the call.

[Operator Instructions] The first question comes from Brian Tanquilut from Jefferies.

Maybe, Mark, as I think first about the moving pieces in the clinic business, obviously, some strength in volume in the quarter. One, just curious, if you think of it on a normalized basis, excluding weather from both sides, I mean, how should we be thinking about the volume growth? And kind of like maybe also for Dr. Berger, the sustainability of the drivers there. And then second part of the question for you, Mark, as we think about the acquisitions that you've announced in the JV. Just curious how we should be thinking about the ramp and the opportunity for upside from those acquisitions and partnerships.

Sure. Brian. Yes, so the performance is really being driven by a number of factors, some of which we mentioned in the script. But one of the really shining lights here is the performance of the advanced imaging and the growth that we're seeing there. We continue to see and experience a business shift in favor of advanced imaging. And we're regularly now seeing MRI volume, same center being in the high single digits this quarter.

It was 10.1%. And CT, we're regularly seeing kind of in the mid-single digits and PET/CT, which continues to be driven by the brain amyloid studies and the prostate PSMA tests, we're seeing growth north of 14%. And as we've always said, the best and most profitable growth we can have comes from same-center performance where we can drive incremental revenue into the same fixed cost base.

And when we do that, there's a lot of pull-through profitability. And yes, there's a lot of moving parts on the cost side of our business. But this is -- the continued growth of advanced imaging has certainly driven the better-than-anticipated performance that we've had in the first quarter and the beats that we've regularly had in past quarters. So we don't see anything to give us concern that this is going to change.

I mean part of this is what's happening overall in the industry with respect to trends. There have been a lot of advancements in the technology of the equipment that allows for better throughput and more capacity. A lot of what we're doing on the digital health side, which Kees mentioned in his prepared remarks, is all about driving capacity, creating a more efficient workflow that can drive more patients through the existing cost basis of the centers.

And so I think we're feeling very positive about the trends in the business. As we mentioned, we had a very, very strong March that performance continued into April and now through early May. And so we're feeling good about the business and how it's rebounded since the severe weather conditions that we faced in the Northeast in January and February. Howard, do you want to add. Yes.

Sorry, Brian, go ahead. You have a follow-up question.

Yes. maybe my follow-up for Kees. As I think about the wins that you've announced [indiscernible] here recently and maybe some of the FDA approvals that are pending. How do we think about the ramp in revenue? I know you maintained the guidance for the year. But as I think about the post '26, just thinking through the opportunities to drive revenue growth, again, both in the size on the clinical AI side and then also on the DeepHealth kind of OS side.

Thank you, Brian. Look, I think the most leading indicator for is how the commercial funnel is developing. I mentioned a funnel that's developed now towards [ and about ] $150 million total contract value mark. This sits across our portfolio. So that's for, let's say, what we call diagnostic suite as well as enterprise operations. So Diagnostics Suite is more the PAC business, enterprise operations is more the risk business and clinical AI.

We're seeing that momentum building in the funnel, which gives us confidence, a, that for this year, we will achieve the $140 million ARR run rate. But also that will continue into '27 and beyond with the growth that we had set out for ourselves also during the Investor Day, which is above 30%. I would say I'm cautiously optimistic based on the confidence that we've also acquired, for instance, the Gleamer that commercial momentum of 30% is on the lower side.

Now then to revenue because I think you specifically asked about revenue. Obviously, the difference between ARR and revenue is timing of deployment of these installs. And so one of the deliberate investments that we've made over the last months is in deployment capability, call that installation and service capability because it's not just about winning these deals, but also making sure that we can swiftly implement those.

That's where the focus is right now as we are successfully building that commercial pipeline, and now want to see the ability and capability to do fast deployments and accordingly reach our revenue targets for the guidance of this year and ongoing growth objectives.

Brian, you're done with your question?

Yes. Operator, we're ready for the second question.

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

Just wanted to follow up on that volume conversation. The same-store advanced volumes were strong in the quarter, up 8%. But I think that implies routine volumes were close to flat. Can you help us understand the underlying dynamics on the routine side? Is this simply different demand drivers? Or is there also a crowding out effect from the strong advanced volumes that's weighing on those results.

Sure. I'll start with that, Andrew. Thanks for the question. Yes, we're seeing -- I mean we -- I mean 1 quarter a trend doesn't make, and we've always cautioned investors about that. But we're definitely seeing disproportionate increases in advanced imaging and in our centers, and we've focused in the last few years on upgrading equipment and capabilities to create more capacity in around advanced imaging because while routine imaging still represents close to 71% of all of our procedure volume.

The other 29% of the -- which is the advanced imaging, drives over 60% of our revenue. Clearly, the focus is on driving advanced imaging, and we're seeing more and more clinical indications each year as the equipment gets better as the technology gets better for advanced imaging. So there is certainly a shift in the overall industry and how health care is delivered in favor of advanced imaging, and that's where our focus has been. So we have said in the past and continue to say that we still think the routine imaging is going to grow, but it will grow kind of in the way population grows and likely kind of in the low single digits and which is fine.

Yes, Andrew, let me just add perhaps a little bit more color to that. The advances in technology cannot be overstated here. And the reason why there is such an increasing driver of advanced imaging is because there is a realization in all levels of health care that these tools are now capable of earlier and earlier diagnosis, which ultimately lead to better outcomes.

There has not been any major changes in x-ray and some of the other routine imaging as there has been in MRI, CT and PET CT scanning. And I think it's a credit to the management on both the East and West Coast to not only have realized that we needed to make the investment in the equipment and the technology but also to expand the clinical capabilities that we have, which we put on full display at the Investor Day last November to help grow these practices and make certain that we achieve best practices with these tools.

So I think we are following the trends and willing to deploy the resources, both human and financial capital to take advantage of this, but to do it at an extraordinarily high level of quality for which I and the whole executive management team are enormously proud. But I think the seminal event today that we're trying to really outline is that all of this can be further enhanced by the new tools that we have invested in and which I think we have the broadest and most remarkable inventory of AI tools, both on the clinical and on the generative side to help not only meet the demand of this growing need for imaging in general and advanced imaging in particular.

But to give our radiologists the ability to focus not on the more routine but on the part of the business which they have been trained for and that is to identify abnormalities and act as a consultant rather than the drudgery that goes along with a lot of the routine workflows. So I think you will see more and hear more about this in upcoming quarters as we not only fully roll out the AI capabilities internally, but we meet the opportunities that are presented to us with our current and future hospital partners.

And Andrew and I would add one other thing is that some of the digital health technologies that we're deploying now, I think, will actually serve to drive some more growth in routine imaging. For example, we've talked in the past about the thyroid technology that now is -- the case mentioned is lowering scanning times by 50% for thyroid, which is roughly about 240,000 of our ultrasound exams. And when you look at the capacity that, that is creating, you are seeing some growth in ultrasound on a same-center basis, it grew about 2.1%. And as we get FDA approval, which we're expecting to this year on the breast ultrasound, which is another over 800,000 of our roughly 2.7 million, 2.8 million ultrasound exams.

That's going to further speed up the center level workflow to allow for more capacity for doing ultrasound. So there are items and, of course, the Gleamer technology on X-ray will allow for our radiologists to read those faster with more productivity, which will ultimately allow us to do more in the future. So I think there are things that are coming and that we're implementing that will also drive some routine imaging growth.

Great. And then the new and acquired centers also appear to have a meaningful impact on volumes in the quarter. Can you talk about the integration of your clinic acquisitions and how that contributed to outperformance?

Yes. So with respect to the acquisitions of in Florida, Southwest Florida, the 13 sites we bought from Lucid Health as well as the sites we bought in Indiana. They contributed some to the first quarter, but not meaningfully. When you look at the -- the 2 of those on an annual basis are about $117 million, $118 million of revenue. So if you divide that by 4, you're talking about $30 million or so of revenue in the first quarter. From an EBITDA perspective, it added about a couple of million dollars, slightly less than that for the first quarter with all the seasonality.

So we're just starting the implementation -- or I should say, the integration of those. They're going real well. They're both actually ahead of schedule. And there -- we believe that both of those assets are on plan, if not ahead of plan to reach their projected rate for 2026. So I think we feel real good about the integrations of those and the other deals that we did in the second half of last year in -- mostly in the New York Metropolitan Area.

Great. And if I could sneak in one more on cash flow. You called out the record load DSOs, and it looks like there's some [ unseasonally ] strong working capital in the quarter. Are these initiatives related -- RCM capabilities linked to Deephealth? Or anything else you can provide color on driving the strength in working capital?

Yes. No. It's really just continuing to improve in our blocking and tackling. We typically see a working capital build in the first quarter and an increase in our AR from the seasonality with respect to the deductible resets where we build the patient insurance companies in the first quarter. We -- and then have to collect a patient portion of responsibility.

But this year, I mean, we continue to see improvements. We're getting better and better at collecting the patient portion responsibility upfront where we've also aggressively gone back into some older-aging buckets of our AR and are having some success collecting some of the older AR, both from commercial payers as well as patients. So I think the investments we've made in systems to, one, be able to identify upfront what the allowable amount is based upon the patient's insurance, their plan, where they are in their deductibles.

And then the ability to query the insurance company in real time to be able to identify whether the patient has copayments or where they are in their deductibles has allowed us to aggressively go after that money at the time of service. And we're even telling patients what their likely responsibility would be at the time of scheduling. And that's had a marked impact in our ability to collect this money quickly. And I think our DSOs reflect that and probably are one of the best in the industry.

Next question comes from John Ransom with Raymond James.

Mark, if we looked at the Imaging segment, '26 over '25, what's a good number for the EBITDA contribution from M&A versus not M&A?

Yes. Most of it is from same-center performance. As I mentioned on the earlier question, about a couple of million dollars of came from the recent acquisitions in the first quarter.

I'm talking about the year -- full year over full year, if we take [ '26 and '25 ] full year, yes, what does that look like?

Yes. The majority of our EBITDA growth, the vast majority, about 2/3 of it is coming from same center performance as well as de novo performance, which I also include as organic growth and about 1/3 -- slightly less than 1/3 is coming from the contribution of acquisitions.

Okay. And then following your Digital Health journey is busy at times. If we were to look at 2026, of all the things that you've rolled out digital, I mean, the TechLive, the SmartMammo, what 1 or 2 modalities that's driving the most EBITDA today? And then if we look out a couple of years, what are some emerging capabilities you have that aren't quite monetizing just yet.

And that could be either EBITDA -- eIther in your Imaging segment or in your digital health segment, what's the -- how do we think about the -- and can we, also just to sneak one out in there, can we confirm that this year is the trough margin for Digital Health? And then how do we think about margin versus investment over the intermediate term?

Mark, do you want me to take it?

Yes, please.

Yes. Great question. So as for the Investor Day, we have a horizon towards 2028, rolling out the various solutions that we have currently line of sight of in the digital health segment and deploying those at RadNet. And I think both for -- actually across clinical AI, which is really a modality-by-modality focus where we started in mammography, we've expanded to thyroid ultrasounds. We're [indiscernible] deliver breast ultrasounds. We are now deploying X-ray. I think you will continuously see an increasing penetration of AI and the impact thereof.

We are currently covering 70% of the clinical AI solutions with DeepHealth solutions and third-party solutions, about 60% with DeepHealth Solutions and the remainder of third-party AI. But that doesn't mean it's fully penetrated because we haven't captured the full productivity nor the full T code reimbursement from these solutions. So think of it as if you want to use a number, 1/3 implemented on the clinical AI road map and more to come.

Then the second key area is what we call the diagnostic suite where we've deployed certain capabilities, such as the Viewer, but we're now also rolling out, as mentioned in my prepared presentation, the [ Reporting Pro ] solution, which gives further benefits to reporting productivity and so on and so forth. So also there, there is more to come. And I think we're a little bit less advanced in implementation today and will peak towards the end of the year into next year.

And then on the operations suite, which is really risk enhancements, we've made initial steps, for instance, the contact center that we previously talked about. But there are all kinds of agentic AI solutions that we have in the pipeline, which will further substantiate productivity impact in line with what we presented at the Investor Day. So think of it as a 3-year road map.

What's new today which we presented is really the header that where we said transforming radiology workflow which means that 4 elements of the solutions -- 4 types of solutions that I just talked about, actually, are combined into one, which is clinical AI together with AI orchestration together with the diagnostic suite together with the reporting solution allow you to transform the radiology workflow and generate automated draft preliminary reports.

That's a new idea, and that is now with the acquisition of Gleamer, we're deploying that in an accelerated way for X-ray. That shows that our innovation funnel will continue to build and we'll continue to invest in that. And so the way I would answer the question is we're well on track for the margin impact that we set out during the Investor Day, but we're also seeing new innovation opportunities to come. And so -- and we're making progress. We definitely will not have reached the end of the productivity drive this year nor next year as we continue to fuel the funnel.

All right. And just lastly, there's an interesting article recently about this reporter went through the whole breast cancer AI. And the point was made in the article that AI for mammo is really good at the -- negative reads are really tight, but it tends to overread the positives. And that's where you need the human interventions override, sometimes AI get's it wrong. What are you seeing in terms of your false positives. and is that trending in any particular direction? Or just -- or is false-positives, just kind of the way this works, it throws things out there and then the radiologist has to play catcher to make sure that the machine didn't hallucinate, if you will.

I would say both are absolute focuses in terms of improving and learning the model. But maybe, Sham, you can elaborate a little bit more on how that's approached in practical life?

Yes. Absolutely, Kees. I think, first of all, breast Cancer detection, anything that we're doing with cancer detection isn't a generative model. It's really a task-specific model. So there's no concept of hallucination, if you will, there. but it's much more trained on the data and [indiscernible] when we see those false positives, let's say, in the RadNet population. So what we've done very well also because of the close loop that we have with RadNet is we're able to adjust that through results from radiologists through incorporating things like prior studies where we're reducing the false positive rate on a fairly regular basis. Remember, we have essentially 1.6 million to 2 million mammos that we're processing every year. And the let's say, most positive from those, we're also processing every year, and we're learning and we're improving that to a point where the AI system is just as good as the radiologist, if not better than the radiologist. And I think we showed these as candidates for eventually driving also autonomous type of detection as we go forward. .

The next question comes from Grayson McAlister with Truist.

This is Grayson McAlister on for Dave. I wanted to follow up on the debut with Saint Alphonsus. You talked about as being a blueprint for future health system partnerships. I guess, could you just talk a little bit about what aspects that this JV includes that maybe previously didn't? And then specifically around DeepHealth, how does this improve the offering the systems out there? And what are you seeing in the pipeline, specifically around JVs?.

Maybe Howard, do you...

Yes. I think the importance of the announcement was our first opportunity to implement all of the tools that we bring right now to the table to make a more seamless experience, not only for the radiologists but also for all of the stakeholders that either perform imaging or need to see imaging results.

As a result of this within about 120 days when we fully implement the detailed operating system, the radiologists will get the benefit of doing both their leading and reviewing studies, outpatient and inpatient on a single platform. We'll be able to use the variety of AI tools to help manage better their reading and interpretation and we'll begin using the reporting pro tool that Kees described, that will allow more automation in the reading material.

But the bigger picture is what we want to do with this health system and others, and that is to connect all the other providers that are using or providing imaging services in the health systems platform. That could be urgent care centers, physician offices, emergency rooms, anybody that produces imaging will be part of our cloud-native solution that will allow not only for the implementation of reading from insights by the most qualified and most available radiologists but getting those results faster on a timely basis.

They're both the physicians and the patients that require that information. So the transition that we're talking about which is a blueprint for models with other health systems that we currently have relationships with in joint ventures as well as others that we're in deep conversations with is really a transformative process of the entire radiology and imaging workflow solution, which we hope to be able to better demonstrate in the third quarter of this year.

Got it. Okay. And then just following up on Gleamer, I believe around the announcement you guys talked about some training of the sales force that had to happen before you can really start to see the cross-sell opportunity take off. So just wanted to check on what inning you think you're in now as far as capturing that cross-sell opportunity? And where would you expect to be by the end of the year?

We're deep into training, but not waiting for training, which basically means that we have the first cross-sell opportunities happening today in the U.S. but also outside of the U.S. and on an ongoing basis, we're going to go deeper into road map training, competitive pitching, integrated portfolio offering and so on and so forth. But it's highly iterative because we don't want to wait for something.

And quite frankly, the professionalism of the Gleamer team, commercial team, but also obviously of our legacy team, and they seek these opportunities. And so they're burning to bring these new cross-sell opportunities in. It has momentum already.

Operator, if you allow me, I just realized that in the previous question, there were 2 questions about the impact on margins. And the second question was related to if for digital health segment, this was a [indiscernible] year in terms of margin development. I just want to confirm, in line with what we said with the Investor Day, that's indeed the case. And so driven by the previous acquisitions and also the investments that we've made out as per our plan, we see lower margins in the Q1 results and will climb up gradually towards the end of the year to increase margins again, assuming no major dilutive acquisitions, which are currently not planned.

Our next question comes from Matthew Gillmor from KeyBanc.

I wanted to ask about EBITDA seasonality. Mark, in prior calls, you commented about 1Q being impacted by seasonal expenses, including payroll taxes and expensing of bonuses. Can you maybe quantify some of those P&L costs that impact the first quarter, but then fade in subsequent quarters? And if you had any broader comments about the cadence of EBITDA, that would be great.

Yes. So EBITDA is seasonally low in the first quarter. It's partially due to trends within the health care delivery system in general, meaning that patients' deductibles reset starting January and there just tends to be lower utilization in the early part of the year within health care and as patients are shouldering more of the burden of those expenses themselves.

And then as the year goes by, we see growing utilization throughout the year. Also with winter weather conditions and holidays in the first quarter, we often see some lower volume. And then as you correctly suggested the payroll taxes for certain of the payroll taxes max out for the highly compensated individuals including our radiologists or professional fees in the first quarter are lower through the rest of the year.

And then the way we pay an expense, certain employee bonuses, that hits all in the first quarter. So we will see a significant jump up in our EBITDA, in the second quarter and beyond as planned and as is typically seen in our business in past years, and that's built into our guidance. The exact numbers of what those payroll expenses are and those bonuses, I don't have at my fingertips right now. But you'll see, if you go back to '25 and '24 and '23, you'll see a similar impact in the first quarter each year.

That's great. And then as a follow-up, I wanted to ask about the reimbursement side of AI. You all have mentioned 70% of studies could be leveraging AI by the end of 2026. Can you give us a sense for where you're able to bill for AI solutions and just how to think about the incremental revenue opportunity over the next few years?

Sham, do you want to talk about that? Let me...

Go ahead, go ahead..

We were talking about where you see opportunities for reimbursement for AI?

So as you saw, we've seen in ultrasound case, there is essentially ultrasound in MR and in CT there are really generic T codes in each of those areas, right? That's for quantification and measurements related to various diseases in those modalities. So in the ultrasound case, you see reimbursement now already from thyroid as we get approval for breast ultrasound, which is actually 3x the volume of thyroid ultrasound, we can leverage the same reimbursement code for the [indiscernible].

In CT, there are applications such as lung nodule detection, which helps characterization as well as quantification because we measure the lung nodules. Again, those can be reimbursed for the CT characterization code. And in MR, there are similar codes. And we plan to do that for our neuro product, which we received FDA approval earlier this year, which has those quantification and characterization elements. And just remember, Neuro MRIs more than 1 million studies [indiscernible] so there's significant upside on the code reimbursement side, which was not and that's what case we're talking about earlier that we've not fully tapped it because, number one, you have to deploy the solution implement it, then we have to start billing that.

And then individually, we have conversations with the different payers to cover it and then eventually you get increasing and increasing percentage cover. An example of that is where essentially, when we started early on, to be a 1/4 of the insurers were covering the T code. Now we're in the 60 to 70 percentage in first covering it at the [ flow rate ]. So that's part of the cascade as we deploy these solutions and then plan out the reimbursement scenarios.

And naturally, as we show that, there's tailwind also when we do commercially now because we've shown that these products can be reimbursed, that provides a natural tailwind as we then these solutions [indiscernible].

Our next question comes from Larry Solow from CJS Securities.

Thanks for all the good information that carries in the prepared remarks. A follow-up on -- just on the trajectory of the profitability in Direct Health. I think that's been a concern in the market and probably exacerbated by just pressure on the new AI stocks and whatnot. I know you shared with us at the Analyst Day margin target, so I think 20% EBITDA margin. I believe we took a little bit of a step back intentionally with the Gleamer acquisition and probably some enhanced investment.

But can you just kind of give us an update on that? Where do you expect -- when do you expect now to kind of get back into -- towards that 20%? And longer term, is this still a 30%, 40% kind of margin business?

Yes, great question. Let me dive a little bit more deeply into even what we're seeing today. So when we dissect our business into the core that's organically growing, the acquisitions that we did last year and then the investments that we do, we see actually quite a healthy picture. So the core that's organically growing today is already operating at, let's say, 30% to 40% -- more 40% EBITDA margins. The acquisitions and its public information that you've also seen in previous announcements, and they are typically losing.

And so that has a short-term dilutive effect. But what you should see is that we, for instance, been able to slightly ahead of plan, being able to get ICAD already profitable, so breakeven as we speak today. And we're on the same trajectory also as we set up the opportunity with Gleamer, it might take a little bit longer, but not because of quality of business, purely because of the investments that we're doing in the X-ray space.

Then thirdly, in line with what we said at Investor Day is we're strengthening the business. We're seeing -- we're strengthening the business, we're investing in the core business on the condition that we have line of sight of growth. Now I walked you through the ARR growth that we foresee for the year, the momentum that we're building on the commercial funnel. And accordingly, we've prudently invested into a variety of capabilities, and I think of service delivery imitation capability, also the commercial team.

And that short term has an impact on lowering the EBITDA margins, again, in line with what we first saw for Q1 but also how we want to close the year as per our guidance. And so in a way, nothing has changed versus what we set out on Investor Day. We're actually seeing the core business, the organic business performing at an EBITDA margin at 30% to 40%. But we are strategically investing both organically and inorganically, and that on the short term, has a dilutive impact.

Now you might ask, therefore, is the 20% towards 2028. Is there upside to that? Possibly so. But I also want to recognize that we continue to find new opportunities to invest in also in terms of our R&D platform, and we're really building a long-term sustainable business, and that was -- has always been reasons why we saw the opportunity to invest. And therefore, over the horizon of the -- of '26, '27, somewhat lower margins than you would typically expect of peers.

No, I appreciate all that. And I guess a little bit harder to measure, but just on the internal benefits, it sounds like lots of things are happening on the good side, but it feels like we're probably still way in the early innings on the internal benefit for you guys. Is that fair to say?

A little bit further. I mean, I watched baseball game last week, I think is that the first or second innings [indiscernible]

I would say, look, I used the term earlier in this call that we're at sort of 1/3 based on what we know today. So let me explain what I mean by that. We've deployed quite a bit. We see tangible impact from the solutions that we've deployed. I talked about TechLive, I talked about thyroid ultrasound. And those have meaningful growth impact into the bottom line of RadNet offsetting some of the other headwinds that exist in the business such as, for instance, inflational salaries. And so there's a lot more to come in the coming 18 months. But we've also seen that we continue to generate new ideas, new innovations that will have further impacts. And so are we 1/3 there, 1/4 there? I don't think we're halfway there. but we've got significant opportunities still to capture.

Our next question comes from Yuan Chee with B. Riley.

Maybe asking about the 70% question differently. You mentioned 70% of RadNet readings or studies will -- could be run through clinical AI by year-end 2026. So where are we now? And how do you see that impacting your labor cost and any other impact on your operations?

So maybe to clarify the -- and Sham, please confirm also, but Today, we're at 70% of the RadNet volumes use a form of AI, roughly 60% is DeepHealth AI. And then 10% is third-party AI that's deployed at RadNet. As Sam also mentioned, we're seeing 2 key value levers here. One is productivity, so more effective reading or more effective interpretation. The other is the onset of possible T codes that you can get built for. So the productivity we're capturing today, the T-codes initially are set out for more in the ultrasound domain for thyroid, but Sham also mentioned ultrasound of breast in the future and then CT and MR to come.

So whilst the penetration is high, the productivity gains are being captured, the billing gains are in early stages of being captured. Sham, anything to add?

Yes. Maybe just to clarify a bit the comment. So when we say that the target is to be applying all of our AI to about 70% of the volume by the end of the year, the reason we believe we can achieve that is almost all the AI tools that we would deploy to achieve that target, we are now currently either in early phases of deployment or in mid stages of deployment. So for example, we just started the X-ray deployment, that's about 20% of our volume if you kind of look at that as a large chunk, if we talk about new MR, I talked about 1 million studies out of our nearly 12 million studies that we do, so we've started these projects, but they're not fully deployed, and we anticipate that they'll be fully deployed by the end of the year.

And really, the primary savings are both the productivity of radiologists as Kees just mentioned where we can actually free up their capacity to do more studies. And then the second piece is, of course, several of these have their own reimbursement elements as well.

Got it. Maybe a question to Mark. Can you help us reconcile the updated revenue guidance? Was it mainly due to the acquisitions? Or was there some contribution from the existing fleet?

Sure. Yes. So when we put together the guidance, which we released originally in early March, we had already announced and incorporated the acquisitions of Northwest radiology in Indiana as well as the Florida -- the Southwest Florida operations. So when we increased the guidance levels, the low end and the high end by $30 million last night, that doesn't have to do with acquisitions.

That's all about the fact that we're seeing strength in our business to the point where we think that we're going to overachieve our original budget and projections that we have internally that we set the guidance around. So we're seeing strong same-center performance, the digital health initiatives are bringing more capacity to our centers, and we're feel very confident that where we were going to overachieve our original guidance levels.

Got it. And 1 last question from me. In terms of capitated contracts, do you see a possibility to combine your imaging offering with others, such as oncology treatment or Alzheimer's disease treatment to win new capitated contracts from payers?

Well, we do work with other companies that do take risk for patient care in oncology and in other specialties. Today, we don't subcapitate with any of those groups who are taking risk on the specialty side. Predominantly, all of our capitation contracts are with large primary care or multispecialty groups that are taking risk for the entire patient care and then we subcapitate for all of the imaging.

But there is an opportunity. There are some companies, I know you're aware of some, and I know you cover 1 or 2 companies that are in particular specialties that just take capitation risk for that specialty. And is there an opportunity -- we do work with some of those companies right now on a fee-for-service basis, would there be an opportunity to capitate with them on imaging, I think it's possible depending upon price.

I mean it's ultimately the financials have to work for us, and we have to make sure that the capitated rates that we get are in line with fee for service -- market-based fee-for-service rates, which is why we've actually pared down our capitation business slightly over the last couple of years where we had situations where our reimbursement on some of those contracts were falling behind what we would otherwise be able to get on a fee-for-service basis, and we flip them to fee-for-service relationships, and that's increasing our profitability. So I think the opportunity, Yuan is there but it ultimately depends upon what kind of rates we could get.

Next question comes from Jim Sidoti from Sidoti & Co.

I know it's a long call. so if you include the new centers in Idaho, plus anything you've opened up so far this year, what is the total number of imaging centers you have?

So if you include the 5 that we bought in Idaho, we have 440 locations.

And you said earlier in the call that advanced imaging was now about 29% of revenue, I think about -- I'm sorry, 29% of procedures, 60% of revenue. Is there a target for advanced imaging over the next, let's say, 5 years, do you think that could approach 40% of procedures?

I don't think we really know. I mean that 40% seems a little high because we've always prided ourselves on being a multimodality provider, and we'll always be a multimodality provider. I mean we think it's important from a marketing perspective to be able to market who are referring physician communities as a one-stop shop for all of their imaging needs.

And often, we will have patients sent to us for routine studies like x-rays and ultrasounds and based upon the results of those studies, they'll be sent back to us for the more advanced imaging. And then back to tying into capitation in California, where we're taking risk on about 1.5 million lives, we need to be a multi-modality provider because plus percent of what those patient populations need with respect to their imaging procedures are routine study.

So I think we'll always be somewhat RadNet's modality mix, we'll always be somewhat reflective of the overall outpatient imaging marketplace with respect to our modality mix. But what we have been very effective in more recent times, particularly with the digital health tools is to help drive up the capacity of advanced imaging by lowering scan times at our centers and making our radiologists more productive on the back end so that they can read more of these studies.

And I think that, that trend is going to continue within our business. So I think we're confident and optimistic about advanced imaging continuing to play a bigger role in the health care delivery system and in our business. We just don't know where that tops out.

All right. All right. So you think more reasonable maybe in the low 30s, you think that could level off?

We don't really know, Jim, but we're approaching 30% now. And so I think it's likely that we will go north of 30%, but I don't know if it -- where we'll max out.

As there are no further questions, this concludes our question-and-answer session. I would like to turn the conference back over to Dr. Howard Berger, President and Chief Executive Officer, for any closing remarks. Over to you, sir.

Thank you, operator. Again, I would like to take this opportunity to thank all of our shareholders and stakeholders for their continued support and the employees of RadNet for their dedication and hard work. Management will continue its endeavor to be a market leader that provides great services with an appropriate return on investment for all the stakeholders. Thank you for your time today, and I look forward to our next call. Good day. .

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning, and welcome back to the Barclays Global Healthcare Conference. My name is Thomas Walsh, and I'm a member of the Facilities and Managed Care team here at Barclays. Joining me on stage is Mark Stolper, Executive Vice President and Chief Financial Officer of RadNet. Welcome.

Good morning.

So RadNet hosted its first Investor Day in November last year, recently closed the books on 2025 and announced a large acquisition, which rounds out the company's artificial intelligence offerings. Can you spend a minute on the current state of affairs and outlook for 2026?

Sure. Well, I can't remember a time, at least in my 21-year tenure where I've been more excited about where the business is today, how it's positioned and what the future looks like for us. We came off a great year last year, probably the best quarter in the company's history where revenue was up over 14.8%. EBITDA was up substantially. We've been demonstrating over the last several quarters, margin improvement relative to the prior year's quarters.

Volumes in an aggregate basis have been very strong. Same-center performance has been excellent. We've been growing MRI volume at historic highs the last 2 quarters. Our MRI volume has been in double-digit same-center performance relative to prior quarters. CT has been ranging in the mid-single digits. PET/CT has been -- has continued to be the superstar of all of our modalities. The last 2 quarters growing over 14% relative to the prior year's quarters on a same-center basis.

And so many of these trends have -- seem to be continuing into this year with respect to the industry growing, the overall pie growing as well as the outpatient portion of that pie benefiting from more and more of the outpatient business leaving more expensive hospitals into lower-cost sites of care, which is being driven both by patients who have elected into these higher deductible plans and are shouldering more of the burden of their health care costs, deciding to go to the lower-cost providers as well as a concerted effort on the part of the commercial payers to try to drive this business out of the more expensive hospitals into the more efficient, more productive, lower-cost sites of care.

So we're -- as indicated in the guidance that we released in March in conjunction with our fourth quarter and 2025 full year results, we're expecting revenue growth for 2026 to be in the range of 17% to 19%. We're expecting EBITDA to grow anywhere between 18% and 22% in 2026, which implies margin improvement throughout 2026. And we're assuming tremendous growth from our digital health arena, our Digital Health segment, where we're expecting over 50% growth in that business, which is a combination of both organic internal growth as well as some of the acquisitions that we've done, including the Gleamer acquisition that we completed last year. So we're very excited about it.

We've -- as a continuing effort, we're trying to create more and more transparency around a lot of these initiatives. We've -- that started really a few years ago when we started breaking out our AI revenue separately from -- our AI performance from the rest of the business. Then we created the Digital Health operating segment, which includes all of our digital businesses and gave transparency on that.

In the fourth quarter of last year, we started with a new metric that we're allowing investors to follow our progress within the Digital Health division around annual recurring revenue or ARR. And this coming quarter, we're going to start giving much more information or more comprehensive information around our same-center performance and all of the operating metrics that go into that, which include both consolidated and unconsolidated centers, so system-level information, whereas in the past, through the third quarter of last year, we only gave consolidated information or consolidated center.

So we're really excited, really pumped for this year. And it should be a very active and interesting 2026.

Great. Let's turn to your recent acquisition of Gleamer, which is the largest deal RadNet has done and rounds out your clinical AI offerings with some strong capabilities in X-ray. Can you walk us through the sourcing and strategic rationale of the deal?

Sure. It's multifaceted. First, we had, over the last 6 years, had entered into the AI arena in all the other modalities, but for X-ray. So we have development and FDA-approved products within MRI, within CT, within ultrasound and within mammography. And the real missing link for us was in the arena of X-ray. And interestingly enough, X-ray is the most prevalent procedure that we, as a company, perform -- it represents about 25% of all the procedure volume that we do.

And X-ray is one of those areas of radiology, which creates a lot of burnout in order for radiologists to make similar types of compensation that they do by reading other modalities. They have to read a lot of X-ray. It creates a lot of burnout. And we have been getting a lot of input from our radiologists over the years that if we could give them the tools to be more productive, be more accurate, and make their life easier that, that was going to be a major -- have a major impact on the way we could deliver our services.

So we started -- this was really going back a couple of years ago, evaluating the companies all around the globe who had technologies in X-ray. And when -- after that evaluation was complete, Gleamer really stood out to us, not only based upon the fact that they had really advanced the areas within X-ray that were very important to us, which were fracture detection and chest X-ray, chest X-ray being the #1 CPT code of all the procedures that RadNet does. But they also have had tremendous commercial success.

So they have over 700 customers worldwide. Many of their customers are in Europe and Asia and have a sales force of over 40 representatives strong or team members that really could then cross-sell and cross-market all the other DeepHealth products and services. They have more indications, more FDA approvals than any other X-ray company that we're aware of. And it was really a great cultural fit.

So we're excited, one, for the continued growth of that company, and that company has been growing since 2022, growing their ARR, their annual recurring revenue by over 90% on a compound annual growth rate. So we're expecting continued growth with outside customers with that business as well as we're anticipating throughout this year, integrating all of the Gleamer technologies, X-ray technologies within RadNet to make our radiologists more efficient and lower our costs.

They've also advanced a number of other areas that we're very excited about. They're commercializing an MRI of the lumbar spine, which is our #1 CPT code within MRI as well as chest CT. So it's a very exciting opportunity. There's a lot of very positive energy around the acquisition. I think the Gleamer staff is thrilled to be able to be a part of RadNet and be able to see their technology work at scale within an organization as complex and as large as we are. So it's -- there'll be a lot of things to talk about this year.

Great. And you zeroed in on $7 million of revenue synergies through cross-selling and upselling over time. Beyond those opportunities, how do Gleamer's capabilities change the DeepHealth sales pitch?

Well, it's a couple of things. I mean there's a number of very near-term synergies that we get with this deal. One is, of course, the cross-selling and cross-licensing using their sales force to sell all the other products and services as well as using our existing sales force, which came from all the acquisitions that we've done from iCAD to originally DeepHealth, Breast to our See-Mode acquisition, Thyroid Suite using our prostate or lung using all of that sales force to cross-sell the Gleamer opportunity.

So that's where this $7 million estimate has come from in the short run, but there's also cost synergies associated with that, which -- with the integration of Gleamer into our Digital Health platform, which comes from the fact that we're getting some real talent within the Gleamer team that otherwise we would have had to hire and it was already in our budget to hire externally. So while Gleamer was losing a little bit of money when we bought it, we think within the next 12 months, it will be a profitable business with inside of RadNet.

And in the Digital Health segment, you have a series of acquisitions contributing to that 50% revenue growth guidance, including you mentioned iCAD, See-Mode and now Gleamer. Can you help us understand how that revenue growth is split between acquisitions internal sales to RadNet centers and then external sales?

Yes. So Digital Health's reliance on RadNet will continue to diminish over time as we continue to grow the outside customer base of the Digital Health platform. In 2025, so the year that we just finished, RadNet as a customer represented about 45% of the revenue of the Digital Health division. In 2026, that number should go down to about 33%. And what we said at our Investor Day in November that by the end of 2028, in other words, as we're exiting 2028, we expect RadNet as a customer from a concentration standpoint to be below 20%. So that's our objective. That's our aspiration, and that speaks to our level of confidence in selling and licensing these solutions to outside customers.

In the end of the day, as we focus on solving some of the pain points within our own workflow and within our own clinical operations, meaning our radiologists, these are the same pain points that the industry at large has. And we believe and based upon all of our customer interactions that as we continue to create these solutions for ourselves, they'll have real commercial value outside of RadNet.

Great. And hospitals within those 2028 targets are expected to make up half of DeepHealth's customer mix. Can you describe the enterprise solutions you're building for those specific customers and the traction you're seeing with hospitals today?

Sure. Our initial focus has been on solving the problems of outpatient independent freestanding centers like the ones that we operate, of course, because we're trying to focus on making our own operations and our own workflow more and more efficient and being able to deliver our services at a lower cost.

Having said that, when you look at the $5-plus billion worldwide industry for radiology software, you've got the hospital marketplace or the health system marketplace is larger than the freestanding imaging marketplace in terms of being customers for these products and services. So as we continue to develop these products and first focus on the outpatient, we're starting to build the capabilities in some of these products that are -- that make the very attractive to the health system marketplace.

In the case of our DeepHealth OS workflow, we're talking about a multi-specialty viewer and a vendor-neutral archive, which allows the hospital not only to store, retrieve, visualize radiology images, but also for all their other specialties like dermatology and cardiology and clinical laboratory pathology and the others out there. So by the end of this year, most of that development work will have been completed, and we'll be focusing more and more on the health system marketplace in 2027 and beyond.

What's really nice about that is that, as you're probably aware, about 36% of all of RadNet's facilities are held with -- or 151 facilities are held within joint ventures with some of the largest hospital systems in the United States who represent a built-in customer base for the DeepHealth products and services. So we've been having conversations with many of our health system partners who are very, very eager to start deploying and using some of these technologies that we're deploying internally.

Great. And on that last point, can you provide an update on labor efficiencies RadNet has been able to drive so far through your implementation of TechLive internally and comment more broadly on the labor cost environment?

Sure. Well, we're still in a challenging labor market, and I don't think that, that's unique to radiology. Maybe there are some things around the shortage of radiologists that are unique to our specialty. But labor is our #1 expense. It's been growing over the last several years, particularly since COVID when we saw the labor force not graduating as many techs and to keep up proportionately with the growth of the industry.

And so a lot of the focus of many of these digital health products are to automate many of the processes that today we're performing manually. And over the last several years, we've absorbed well over $100 million of same center labor increases within our network. We've built in a 4% to 5% increase in labor costs into our guidance for 2027 -- excuse me, 2026. And we're hoping that some of the products and services that we implement today and throughout the year will start influencing or start impacting the growth of that labor expense, which could have a real positive impact in our margins.

And as we said in November at the Investor Day, we think that we're aspiring to increase our company-wide EBITDA margins by anywhere between 100 and 150 basis points by the end of 2028. So while labor is still challenging, I think that we're doing all the right things to figure out how to manage that labor more effectively. You mentioned one of them. I'll mention a couple of them. First, the TechLive product, this is that remote MRI scanning technology where we can have a technologist not have to be at the site where he or she is scanning patients. And this has already had a major impact on reducing exam room closure hours, where in the past, when a tech calls up in the morning and says, I'm sick, I can't come to work. we've had to close down that schedule.

And similar to the airline industry and the hotel industry, when you lose -- when a plane takes off without selling that seat, you can never go back and resell it or when a hotel comes to the morning and hasn't sold the room the night before, you can never go back and resell it. So we were losing patient volume. We were losing revenue. Now we're able to remotely control that machine and continue to have that schedule and not lose that revenue. And that's had a market impact on our MRI volumes, in particular. You saw last quarter, our MRI volumes were up over 11% on a same-center basis. Much of it has to do with deploying these types of technologies.

See-Mode is the other one that I'll call out. See-Mode is a company that we bought last year in Australia that had an FDA-approved product that vastly automates thyroid ultrasound. And thyroid ultrasound is a very laborious exam, both for the technologist and the radiologist who has to interpret it and synthesize a lot of data into the report. And this is a technology that is already in practice within RadNet, and it's lowering our exam time by 30% to 50%, which is creating more slots for exams that we could then fill.

So these -- all these technologies that we're deploying can either speed up the exam time, which creates capacity for us or create efficiencies on the clinical side, on the radiologist side, which allows for more scanning. So very excited about these technologies.

Great. Why don't we turn to the industry backdrop for demand in imaging. Advanced modalities have been the key demand tailwind and are a disproportionate driver of revenue and margin. What are you seeing today in referral patterns and clinical indications that give you confidence this remains a multiyear trend?

Well, we'll always be a multi-modality company. I mean that's part of our ethos, part of our DNA. We've always wanted to be a one-stop shop for all the radiology needs of our physician referral base. And often, a patient will be sent to us for a routine study and based upon the results of that study will then be sent back to us for more advanced exams.

And also in California, where we have $125 million capitation business where we're responsible for providing imaging services on an exclusive basis to roughly 1.5 million lives in California, and we have a contract in the New York metropolitan area as well, where because 75% of what these patients need by volume is routine imaging, the ability to have access points and for routine imaging is always going to be important for RadNet.

Having said that, the 28.6% roughly of our procedure volume that is advanced imaging is driving over 60% of our revenue. So clearly, our bread is buttered on the advanced imaging side, and we're always looking at ways to capture more advanced imaging or create capacity at our centers where we can drive advanced imaging because advanced imaging in the industry is growing more quickly, and that's really a function of the evolution of technology.

So most of the advances in imaging technology, both on the equipment side from the manufacturers to advances in contrast materials, radioactive, pharmaceuticals, post-processing software, that's all happening with advanced imaging, which -- so every year, there are more clinical indications for ordering these tests as the technology has gotten better and the efficacy for many of these studies has improved. So we think that, that trend is going to continue. When I started about 21 years ago, advanced imaging comprised about 20% of what we do. Today, we're approaching 30%. And I think the future bodes well for that to continue to go up.

Great. Turning to labor. Last Friday, the BLS released a weak jobs report with negative February headline numbers and downward revisions to prior months. Commercial mix is a meaningful part of your business, typically supporting higher pricing, but also introducing some cyclical volume dynamics. Have you seen any impact from changes in consumer confidence or employment trends on commercial mix? And how are you positioning the business in the event of a broader economic slowdown?

Yes. We haven't seen any changes in demand or procedure volume. I guess the weak employment in some ways is good for us because our own labor expense is the biggest expense that we have. But we haven't seen any slowdown, and I'm not sure that the BLS data -- I think it would have to get a lot worse for it to really impact our operations. So we'll watch it closely, of course, but we haven't seen any impact.

Great. And RadNet is going to benefit from Medicare pricing this year, which hasn't always been the case. And you've mentioned strong rate increases from capitated and commercial payers. Are these increases stronger than recent history? And are they sustainable at these levels?

Well, I think we're unique in our industry in so much as we're very highly concentrated on a regional basis. I mean all 418 centers as of the end of last quarter are within a small number of markets where we are -- we comprise the largest part of the provider networks on the outpatient imaging side for virtually all the markets in which we operate. And so the payers recognize -- while payers don't want to pay anybody more money, I mean they don't like to give increases, they do recognize that the pricing that we're charging is a fraction of what they're paying at the hospitals.

In many of our markets, the hospitals charge anywhere between 200% and 500% of our pricing. And so I think the payers recognize that they have to pay us appropriately for our services. And if they can shift more and more volume to us and out of the hospitals, even if they're paying us 2% or 3% more this year, it's still a tremendous win for them. So I think our relationships with the large commercial payers have improved over time, and I think they're recognizing the value of the ambulatory sites of care, and that's not unique to radiology.

You're seeing that within outpatient surgery centers, home health, outpatient dialysis, outpatient physical therapy, clinical laboratory. And I think that they recognize the strength that we have. And also to the extent we continue to have backlogs at many of our local markets. And we would be willing to walk away from commercial contracts if we feel like they're not paying us fairly. And so the ability to say no and to be able to fill your centers with other books of business gives you the strength in those negotiations.

But I don't want to lead you to believe it's a contentious negotiation. I think it's been -- we've had good relationships over the years with the payers.

Great. Well, with that, we're out of time. Thanks again for joining us, Mark. And everyone, enjoy the rest of the conference.

Thanks, Thomas.

Good day, and welcome to the RadNet Gleamer Conference Call. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Mark Stolper, Executive Vice President and Chief Financial Officer of RadNet. Please go ahead.

Thank you. Good morning, ladies and gentlemen, and thank you for joining us today to do a deeper dive into RadNet's recently announced acquisition and completed acquisition of Gleamer a Paris-based leading player in artificial intelligence. We're thrilled to have you here and thrilled to give you more details about the transaction.

Before we start, I'd just like to remind everybody that this presentation contains forward-looking statements in the presentation today. On Page 2, we have that disclaimer and you can read it at your own leisure. I'll start just by introducing the stars of the show today. Our speakers today include Dr. Greg Sorensen, RadNet's Chief Strategy Officer; Kees Wesdorp, who's Digital Health President and CEO; and Sham Sokka, Chief Operating Officer and Chief Technical Officer of Digital Health. And without any further delay, I'd like to turn the call over to Dr. Sorensen.

Thanks so much, Mark. Thank you, everyone, for joining us today and giving us some of your time. I'd like to begin by just providing a brief overview for some of you who may not be as familiar with RadNet as others about the parent company that's acquiring Gleamer and provide some context as to why this is such a good fit and why it's so valuable for our employees, our patients and our investors.

RadNet is a worldwide leader in imaging, both on the diagnostic imaging services side and on the digital health solutions side. On the imaging center side, we're the largest U.S.-based chain with over 400, now over 430, I think imaging centers across the country in nine states. We have a number of relationships with hospitals, 26 joint ventures, as you can see, where hospitals turn to us for help with their outpatient imaging.

Our scale means that we have well over a 1,000 radiologists that we work with on our team and important for this call, the scale of our routine imaging is quite substantial. And when I say routine imaging, I mean things that are not the super high-tech kind of imaging, but x-ray, ultrasound. And we've given you some numbers here, millions and millions of exams every year that referring physicians ask us to carry out and interpret to help with the care of their patients.

We also do a lot of screening work. The amount of mammograms, we do it at roughly 2 million a year. Just for context, that's about the same as the entire country of England every year. So we're really a very national player when it comes to screening in cancer and other domains.

And finally, we have a very fast-growing business in MR and PET because of the high quality and high technology that's available in our centers. Given our distribution areas of very high population, RadNet is specifically very interested in equitable care. And so we spend a lot of time thinking about that. And as part of that, we've decided to invest heavily in digital health. And that's really what the core of today's conference call is about. And this is a rapidly growing area and a very important area. And for that, I'd like to turn the time over now to Kees Wesdorp, who heads our Digital Health business.

Thank you, Greg. And indeed, we're very excited about the opportunity at hands. We see a very sizable market that we call the AI-enabled health informatics markets. which is comprised of clinical AI solutions and radiology informatics, such as traditional packs and risk solutions. That market is sized in 2024 to the tune of $5.1 billion and we're seeing that growing towards $7.7 billion by 2028, and that's an 11% growth rate.

Within that, the clinical AI solutions are by far the fastest-growing segment of 26%. And whilst radiology Informatics grows at 5%, but probably an important statement to make is that cloud-native solutions across are the fastest growing by solution type.

Then if we think about this market and what challenges health care professionals face, there is an urgent need to navigate clinical, financial and operational hurdles. I've called out a few here. One is, for instance, disconnected patient engagements. And you can think of that as the need to better guide a patient through their patient journey. One, for instance, of the challenge that we face in central operations is no shows or people that come late to appointments. If you have a direct engagement model, you can actually reduce that no show rate.

The second thing you've heard that probably many times, but we also see that there's a consistent theme here. We're currently at the ECR, European Congress of Radiology. And the impact of strained workforce and burnout. There's simply too much demand versus the work for supply today, and that's resulting in significant bottlenecks.

The third is inconsistent clinical outcomes. And for any typical diagnosis, the variability in a diagnosis between one versus the other professional can vary up to 30%. And then more broadly, the challenge of fragmented tech data and workflows where we see the impact of fragmented systems to many point solutions and interoperability challenges. And for any given CIO in an hospital system or an outpatient network, they can deal with up to 20-plus vendors to drive solutions across their imaging centers or their hospital systems.

And all of that, obviously, is leading to significant cost and efficiency in a variety of reports estimated up to $25 billion. And we see, as a result, a fantastic opportunity for digital solutions and DeepHealth closely together with RadNet, we developed a comprehensive portfolio where we empower breakthroughs and care through imaging.

In this infinity loop, you see a simplified overview of the radiology workflow from patient intake or the patient experience to center operations to image acquisition to image interpretation to clinical collaboration and then to the billing and revenue cycle. We have set ourselves out on the framework and the infrastructure of the DeepHealth operating system to provide solutions that drive productivity as well as an improvement in care.

And so on the left-hand side, we have our operations suite, which will recognize as traditionally a risk portfolio radiology informatics systems portfolio where we now have applied Agentic AI to come with solutions to debottleneck and improve center operations. We have patient engagement tool solutions to guide patients through their journey and for instance, address the no-show rate.

On the right-hand side, we have a very wide and broad portfolio of clinical AI solutions across lung, breast, brain, thyroids and now also X-ray that we will talk shortly about as we touch upon the transformative acquisition of Gleamer. We have our diagnostic suite, which traditionally known as PACs, which is the cloud-native version of that to address scalability and also cost efficiency. And last not least, TechLive, where we also released last week, the news that we don't only have FDA clearance, but now also a CE mark for multimodal -- multimodality remote acquisition tool to alleviate workforce shortages as it relates to, for instance, technologies.

If we then specifically zoom in on x-ray, which obviously relates to where Gleamer has started their journey in clinical AI, we see the potential of clinical AI solutions for x-ray imaging, alleviating radiology shortage. And to quantify this a little bit further, radiology shortage is projected to reach over 40% in Europe and 50% in the U.S. in the near future. So that's towards 2028, 2030. And bear in mind that within that X-ray drives half of those imaging volumes in U.S. and Europe, and that's the total imaging volumes is there to the tune of $6 billion.

So a very significant workforce challenge in combination with an ever-increasing demand that's quite volumes. We announced on Monday the acquisition of Gleamer and I want to go a little bit back to the excitement that we have about an acquisition and the recognition of Gleamer's growth platform. On the bottom, you see that Gleamer has been growing over the last four years with 90% annual recurring revenue.

Apologies for the typo, that should say, ARR and obviously, to be able to close to double your business year in, year out is a fantastic accomplishment in this market. They have over 700 plus customer contracts and they work across 40 countries. They're managing 30 million-plus studies a year. Their portfolio has over 4 FDA and 6 CE clearances with covering over 25 indications.

And on the right-hand side, in the color code, you see that they have expanded from X-ray, which is the yellow color coding to CT, to mammography to also now include MR. And so like us, they embrace the multi-modality approach and the multi indications approach of offering clinical AI.

Then in terms of the opportunity that we see with the combination of DeepHealth and Gleamer, it's really a fourfold that we'll dive a little bit more deeply into the next slides. The first is portfolio expansion. I mentioned on the previous slide, 6 FDA clearance and 4 CE marks for Gleamer. Together, we now have 26 FDA-cleared and 22 CE Marked devices.

The second is accelerating commercial reach to over 2,700 customer contracts across 50 countries. The third is the opportunity, which we already embarked on, on driving operational efficiency across RadNet's highest-volume workflows. And this is, of course, by deploying Gleamer's portfolio with Lightspeed.

And last, not least, advancing our road map towards automated reporting. We'll cover this in a little bit more detail, and I'll hand it over to Sham, who's going to talk about the portfolio.

Thank you, Kees. And just to go back a bit, as Kees outlined, the broad portfolio that we have in multiple areas in the radiology space. Just as a big picture level, we have our clinical AI tools, that are really focused on the diagnostic part, the interpretation space. We have the enterprise imaging tools, which is really the foundation of our PACs solutions, reporting solutions and things like remote scanning and our enterprise operations portfolio, which is more focused on the operations of the radiology, including things like risk and agents that work on top of the risk and patient engagement solutions.

So those two pieces on the right remain the same. We're now adding with the Gleamer portfolio is a couple of different things. We're adding in the clinical AI space a comprehensive set of solutions in the musculoskeletal space. So bone view, bone age, bone metrics, bone CT that you see in the fourth column there. In addition, we supplement some of our existing areas with additional tools. So for example, in the chest suite space, we're adding things like coronary artery calcification, emphysema detection. And in the broader neuro and muscular culture space, we're also looking at spine with things like lumbar, MR as an additional application.

So it's really complementary and now we can extend ourselves into multiple clinical areas within the radiology space. And then in addition, if you go back to the middle row, there are these tools in the enterprise imaging space, things like auto report and voice, where we take some of those findings and automatically create reports. And so we add that also to our clinically a portfolio but also to our enterprise imaging portfolio.

So we can start to really drive some of the synergies across. Together, we have over 75 indications across the broader space. So in addition now, as we expand the portfolio, what Gleamer also brings is a very interesting and talented workforce. First, we add about a team of 75 in product and R&D that will help us accelerate our road maps and drive into new areas for more complete coverage in the radiology space, covering more applications, while we're bringing on an additional 40 commercial folks, majority in Europe, but also some additional folks in the U.S. And together with the support functions, they have created a robust commercial engine, and that's really what's going to drive the growth as we go forward.

So this team really accelerates our road map, particularly toward our path to automated reporting that Greg will talk about later. It adds this commercial capability that can now help us scale the business and continue that advanced year-on-year growth that Kees mentioned earlier, as we try to accelerate the ARR going forward.

The third key values that we're getting out of the Gleamer transaction is, of course, bringing these tools into RadNet and immediate -- for immediate deployment across the network, particularly the x-ray applications, high volume where RadNet does almost 2.8 million x-rays. And we see that we can use that to drive significant turnaround times, improvements, particularly around interpretation where we can drive some significant efficiencies, enhance radiology productivity as we bring auto reporting tools.

It also drive consistency around measurements that we do through x-ray and so forth. And these tools can be deeply embedded into workflows to really redesign new workflows as we go forward to reengineer, if you will, how radiology interpretation is done. And so to speak a bit more detail on that reengineering, I'm going to pass it off to Dr. Greg Sorensen who will kind of talk about how we see one of the greatest path to value in this transaction.

Thanks, Sham. Yes, I'm grateful for the opportunity to spend a few minutes talking about why Gleamer and why now. And I think it really speaks to some of the broader changes that are happening in the overall AI industry and scientific advances.

I've laid out here some of the -- in a very simple way, the kind of the four key things that happen when we radiologists are asked to interpret an image, we first have to identify the findings. As you can see, we then try to sort out is this super urgent, do I need to make a phone call, maybe even before I start dictating their case, then I have to actually create the reports. And then finally, that report needs to get signed off on.

So all these pieces are part of our standard workflow. But depending on the complexity of the work, how much goes into each of these might vary. So for example, if you're doing -- reading a complicated CT scan of the chest or brain MRI, you can spend quite a bit of time searching through all those hundreds or even thousands of images trying to figure out what are those findings. And then by the time -- it's time to create the reports that can go quite quickly.

But one insight that we and others have had is that, in fact, in routine imaging, it's sometimes the other way around. It only takes a microsecond for our radiologists to recognize the wrist fracture. And when you look at kind of the total workflow of what they do, generating a report or even calling the referring physician or identifying prioritization, that actually takes quite a bit of time.

Since we started on this adventure with DeepHealth and RadNet more than six years ago, the AI has improved so much in all of the domains it's much better now at finding -- identifying the findings, and that's still a big part of the value creation that AI is bringing to the practice of medicine, the practice of radiology.

But with the new generative and Agentic AI tools, they -- these new tools can help us with draft reporting in some way, shape or form that makes my task as a radiologist dictating report speed up quite a bit. We saw this early on with the idea that we could summarize what the kind of the findings to make the summary quickly. But we can also now with AI, fill out things, measurements and other things into a draft report to make the radiologists much more efficient.

The physician is always the final sign-off. It's this capability that Gleamer brings along the rest of this value chain, combined with the massive scale that RadNet has in doing routine imaging that makes the timing of this acquisition and the impact it will have on us, our patients and our efficiency is so great. And to talk about those efficiencies as we bring everything together back over to you, Kees, for last few points.

Thanks, Greg. And indeed, the acquisition is expected to create attractive synergies across product, commercial and cost synergies. So let me start off with products slightly repetitive from what Greg and Sham has already said. The opportunity here is that we have an expanded portfolio with a complementary offering and it allows us to accelerate the road map towards automated reporting, as Greg just elaborated on.

In terms of commercial synergy, we see over $7 million of revenue synergies, and those will take a bit of time, because this is an opportunity that requires also training of the Gleamer sales force as well as training of the original DeepHealth sales force to really drive attractive cross-sell and upsell opportunities. So those will not immediately be captured to the fullest in '26, but like we've learned also from the iCAD acquisition will take time in terms of delivering that into 2027.

The team of Gleamer is truly world-class across. And in particular, we're going to benefit from a world-class commercial team. And it is a delight as of Monday, we started to work together and here at the ECR to see how that commercial team is hungry, excited and teaming up across to make sure that we start to capture the full potential of both portfolio. And then in terms of cost synergies, we've identified over $4 million of cost synergies. And this is, for instance, in the area of overlapping vendors, and we -- the capture rate of that benefit will be much earlier in time.

And we are, therefore, also quite confident that we will be able to reach the breakeven rate of Gleamer earlier than they could have done independently and that's somewhere in mid 2027. And obviously, we're going to benefit from an expanded product R&D and regulatory capacity that fuel our growth path further.

To dimensionalize a little bit the opportunity for '26. We -- on this page, we've shown the DeepHealth 2025 performance that we also elaborated on an earnings call earlier this week. So in 2025, we've delivered $93 million of revenue for DeepHealth. Of that is $75 million in annually recurring revenue, and we've delivered 35-plus percent annual recurring revenue growth.

Gleamer is expected for 2026 to deliver 30 million annual recurring revenue. And as mentioned before, shown 90% ARR growth over the last four years. And so look at us as really the combined entity where we've guided of $135 million to $145 million revenue for 2026, of which $120 million to [ $140 million ] ARR with an ARR growth versus 2025 of 80% to 90%.

Then in terms of deal terms, this is an all-cash transaction, a purchase price of up to EUR 230 million, $270 million and we say up to because there's one post-closing milestone based on 2026 ARR that we're excited about, obviously, of achieving because the core objective of this opportunity is strategic in nature and also driving our growth trajectory going forward.

I mentioned that we had the benefit of -- from day 1 being together. We started the week in Paris at their headquarters to make sure that we shake hands with the new colleagues and welcome Gleamer into the DeepHealth and RadNet family. And I have to say that it was an incredibly warm experience. Moreover, we're now in Vienna for the last couple of days and we'll be here a couple of days more, where we have the European Congress of Radiology. And I have to say, it's an incredible experience to see the customer reactions, the partner reactions, you see the teams working together on defining commercial opportunities. And probably this is the fastest start in my career of kicking off the integration work. With that, Mark, back to you.

Sure. Thank you, Kees. Operator, we're ready for the question-and-answer portion of the call.

[Operator Instructions] Our first question comes from Brian Tanquilut with Jefferies.

If you can walk us through just the path to profitability here. And maybe another way I was thinking about this is that when you've done previous deals in digital health, whether that's See-Mode or some of the other companies that you bought, there's quick value -- potential value realization on the RadNet side, and then third-party sales down the road. And so just curious how you're thinking about, number one, path to profitability and number two, kind just a cadence of value realization.

Mark, I'll take that. And thanks, Brian, for your question. So think of Gleamer currently has a negative EBITDA on a run rate of $4 million to $5 million. We will -- we've, as mentioned, identified cost synergies to the tune of EUR 4-plus million. Those will be relatively quickly identified. They're less about, let's say, they're less about restructuring, actually, quite the contrary. We want to keep the team and capability as intact as possible because we're excited about the growth potential.

But much more about overlapping vendor contracts and also filling pre-existing vacancies on the DeepHealth side that were already there. And so like with iCAD, like with See-Mode, we will be able to very, very quickly turn around unit economics because there is a fixed cost platform in DeepHealth that can be leveraged and we're quite confident to reach that quite soon. Quite frankly, the more excitement that I have about Gleamer is the growth trajectory and really leveraging the Gleamer commercial team there were we, quite frankly, can also learn from and accelerate our growth trajectory into 2026 and beyond. Sham?

Yes. And maybe, Brian, unlike See-Mode, where the predominant value rapidly was really around RadNet. What we see here is, so we have the cost synergies kind of with some help getting towards the breakeven and positive perspective. But now you have two axis for growth. One is the commercial sales, particularly leveraging and continuing the ARR rate that Gleamer was on with its own portfolio. But now we have upsell cross-sell opportunities on top of that.

So we hope to go the top line much more significantly than their plans and our plans. And then in addition to that, we have also the RadNet deployment, which we're starting immediately and we should start to see some of that value in Q3 of this year already and then accelerating as we go into Q4 and into next year.

Yes. And I would echo, I do think we will see improved efficiency on the RadNet service provision side. And as Mark has often said, 20%-ish of our revenue does go to paying our radiologists, so making them more efficient. -- should help RadNet's profitability. I don't know, Mark, if you want to put any other specific comments around that.

Sure. About 25% of all RadNet's volume is x-ray. And x-ray is one of those modalities that it's our least reimbursed modality. And for a radiologist to be productive and to make as much money as radiologists do with reading MRI and CT, they have to read a huge quantity of x-ray. In other words, they're making it up in volume what they're not making in price.

And as a result, there's tremendous burn out on the radiologist side. There's a lot of radiologists who prefer not to read plain film X-ray. And in fact, in California, we use a group of radiology physician assistants or RPAs who do preliminary reads that helped our radiologists be more effective and be more productive. And what this tool can be for us is one that lowers the burn out, lowers the time it takes for radiologists to read it and is essentially a virtual RPA that we can use nationwide.

So I think it's -- will help with radiologists burn out at a help with productivity, of course, the industry suffers from a shortage of radiologists. And so anything that we could make our staff more productive, more accurate is endures to the benefit not only of our radiologists, the cost of delivering these services, but also in terms of customer, our patient turnaround time, we get the reports back to the referring physicians quicker. And so the whole patient journey becomes improved.

And of course, as RadNet suffers from these problems, obviously, the industry has these problems at large. And we're able to even be more efficient than most of the rest of the industry because of our scale. So as we adopt these solutions internally here, throughout the year, we think it's going to have a major impact on our ability to manage costs and drive efficiencies.

I appreciate that. And my second question, maybe for both of you guys. Mark, when I think of capital allocation, obviously, a sizable deal here, but you still have a ton of cash in the balance sheet. So just going forward, the philosophy and balancing capital deployment towards digital health versus the core. And then maybe Kees as I think about -- with this acquisition, what other capabilities do you think you need to really full you round out the offering? And now that you're the world's largest clinical radiology AI company.

Sure. I'll start with that, and then I'll have Kees add to it. So first of all, yes, this was a sizable acquisition. We haven't done something -- an acquisition this large actually in the history of the company. But we did it because it was a seminal event for RadNet and for digital health for all the reasons that the team talked about, not to mention it was the last major leg of the stool in terms of creating the capabilities of digital health to be fully multimodality, meaning that we had already made investments, bought companies have internal development in the areas of MRI AI, CT AI, ultrasound AI and of course, Mammo AI, where we started.

And so the big missing piece for us was on the X-ray side and we were eager to find a company that one fit culturally to head the capabilities and the indications that would cover the vast majority of the X-ray work that we have, which includes fracture detection, which is paramount in many of the extremity in orthopedic X-rays that we do as well as chest x-rays, which is our #1 CPT code across all modalities.

And so Gleamer stood out as we were searching the globe for a partner, and they have the most indications of the companies that we evaluated and they were far further along in terms of their commercial capabilities, their success already in the marketplace with 700-plus customers, the fact that they had a significant concentration in Europe, where most of digital health capabilities thus far or a lot of it is on the commercial side, at least, is here in the United States. So it was a perfect fit culturally, a perfect fit from a technology standpoint. And I'll let Kees talk about the portfolio -- the second part of your question as to whether there are other areas of the portfolio that we're interested in adding.

Yes. Thanks, Mark. And Brian, thanks for your question. I would start off maybe in the domain of clinical AI. So we mentioned we have 75-plus findings. We don't say that to boast about the number, but it actually comes back to the point that Greg was making around drought reporting to do a good draft report, you need to cover as much as possible critical findings. And so the clinical AI coverage is quite key across clinical domains.

So one is obviously across modalities, but then also on clinical domains. Our goal is not to be exhaustive, but we want to find in line with our strategy, most complete set of clinical findings. We developed that organically, by the way. But if we see a strategic opportunity to further tuck in clinical domains, then we'll probably evaluate that and pursue that. I wouldn't expect that to be of the scale, by the way, of what we have announced with Gleamer.

The second area is more in what we call the IT infrastructure domain. I'm very excited about the acquisition that we've done of CIMAR, which is an image exchange platform in the U.K. that we have the ambition to scale across Europe, that allows us to connect hospital systems for fast image exchange and also deliver the AI solutions on top. And those type of smart cloud-native IT infrastructure solutions can complement our technology stack, our DeepHealth OS in quite a good way.

Again, we're developing that organically. But if we come across in the market, exciting tools and infrastructure that we can bolt on obviously at the right price, then that could be an attractive opportunity. And then last not least, and this will probably fall a little bit more in the partnership domain. There's so many Agentic AI start-ups coming about that might help our risk road maps, our operation suite, we could partner that we could have distribution agreements with those. But potentially if we see the right fit that could also be acquisitive route.

And I would just add, Brian, it's amazing how fast the AI field continues to move. We spend all our days living in this world and yet I'm surprised by how quickly things are moving. And that's also true, although we're not quite at the same velocity for medicine. Both of these fields are advancing. There's new things coming out, whether it's new diagnostic methods, like new PET tracers or new treatments with new radiotherapies.

There's just so many things that impact what we do at RadNet, and there's so much happening in AI, I think we're going to continue to keep our eye really open as to how can we continue on this goal, we have of having maximum patient benefit, bringing the best doctor in the world, every patient, really trying to help the patients we serve and the referring clinicians reserve, wherever we see that opportunity, we're looking and we're eager -- and now with this global reach that we have with Gleamer, I think the opportunity for impact is really great and the opportunity for continued innovation is really great.

Yes. I'll just add back to your capital allocation question. So I think in summary, I don't see us putting this level of capital to work with another acquisition, anywhere near this size for certainly, there's nothing on our agenda to do that. So capital allocation going forward with the cash balance that we have will much more likely be in the area of putting that to work in the imaging center side of the business, certainly on the acquisition side.

Okay. The next question comes from Yuan Zhi with B. Riley Securities.

So to the team, can you expand on the near-term impact of implementing Gleamer's AI application I'm curious to know how will that impact your imaging center operations in terms of SG&A or lowering labor costs? Is there a special case study that you can share?

Maybe I can talk a little bit about the Gleamer impact. It's really quite remarkable how fast Gleamer's portfolio has grown in so many markets. They -- this simple idea that you could help the interpretation of a plane film bind the fracture kind of is where they started. It really has become quite compelling. And as a result, they have customers in -- as you've seen, in many countries, hundreds of customers around the world.

And I think this speaks to the durability of the business model, even if you're not in a very, let's say, commercially focused or revenue-focused country like the U.S. has to be, everywhere around the world. People -- radiologists are seeing that getting that reassurance of high accuracy assist from the AI is something they're willing to pay for.

We see this in low reimbursement countries like we are here in Europe, France and other countries. We see it in high reimbursement countries. I think it's 1/4 of their revenue is from the U.S., right, case. -- maybe a 1/5 of the revenue, somewhere in that, say 5th. So there's U.S. customers that pay for this. So we have expectations that RadNet physicians will also see a similar ZIP code benefits. Of course, we need to test that out at our scale.

But we are excited about the kinds of both patient but truly financial impact that these kinds of tools can bring. And that's before we do the things that I talked about in the fourth of the four kind of areas that we were talking about, which is this automated report drafting that's even before -- that's not yet FDA cleared. There is some of that happening in Europe, but we think that will be another level of efficiency at scale.

So of the things we've done, this really given that we actually do more plain films than I think any other exam, even more than the number of mammograms we do, this is -- this has potentially substantial impact for us here at RadNet. And I don't want to overpromise things, but we are, I would just say, we as physicians are excited and we, as I think operators of the business are excited about what it can do for us.

And so maybe if I can add a little bit more specificity to like exactly what we're doing, right? So if you think about extra reporting, there's a few different things that a radiologist is doing that's taking time as they do these reports. One is really an x-ray has over 100 findings, right? So a radiologist is scanning it might seem a very simple exam, a single film or two films, but they're looking for nearly 100 different things.

And so cognitive load wise, if you can have AI tools that take care of the most critical ones, right, in this case, fracture, which are -- they can be minute in any part of the bone. So scanning for a fracture is a time-consuming aspect, right? But also things like pneumothorax on chest X-ray, consolidation on chest X-ray, infusions on musculoskeletal images. These are all findings that Gleamer has FDA approved.

So the first sort of layer of productivity is taking some of these findings, which takes a significant cognitive load on reading an X-rays and kind of automating that detection. And so there, we'll see efficiency in reading the x-ray exams themselves. And then as we move forward, we're going to do -- we're going to include more and more findings and then you essentially will get to a draft report that the radiologists instead of having to really write a report, there's a template with a draft with all the findings already there and the radiologists just looking at the images and clicking accept. And that's where the efficiencies really come in.

In addition to X-ray, I just also want to call out, Gleamer also has an interesting product in MR lumbar MR. And that's the other side of the spectrum. So we talked about X-ray as kind of routine imaging and we want to -- and high volume. Lumbar MR is -- we don't have too many low-volume studies, but it's a couple of hundred thousand studies that we do. So very significant number of studies, but they're very time consuming because you have to report on all the different vertebra.

You have to look at the disc in each one, you have to measure them. You have to indicate what level of compression they are. Very, very time-consuming application, and they automate those measurements and really create a simple predraft report and essentially, the radiologist is, again, verifying that.

So reducing time on highly time-consuming studies like lumbar and then creating efficiencies on routine imaging studies that we do high volume of, that's where we are really excited to bring that sort of productivity savings into the RadNet ecosystem.

Maybe I would just finish with one other, I think, relevant comment that may not be obvious. I've been now -- I was just thinking about this. I've been working on bringing AI to physicians for a decade. And one of the big surprises for me has been how resistant many doctors have been to the AI tools. And perhaps this is because the first generation of Mammo CAD was so unhelpful. But changing physician behavior, whether it's in AI or whether it's in prescribing or other things to take advantage of new innovations, it's really a big -- a well-known challenge. And we've seen this. It's quite hard.

One of the reasons that this acquisition has me so excited is because plain film x-rays is a place where I've seen physicians willing to change. And I think the Gleamer's rapid growth speaks to that. This is unlike the kind of the arm twisting that I've had to do to get some docs to realize that the AI can help them read their mammograms better, where we really needed to prove to them. They were a little bit skeptical. With the X-ray tools that Gleamer's developed, there's a lot faster adoption.

And this, I think, bodes well for the other innovations we want to do like draft reporting. We found a domain, if you will, a niche where physicians are open to co-innovation and therefore, co-value creation together. And this means we've strategically, if you will, found a sandbox to create value in that we didn't have before. And I think this is -- then we will set an example for the other domains we have and really allow us to transform radiology. This really is, as Dr. Berger said on the earnings call, a transformative moment for radiology, and I think this is part of the reason why.

One of the other things, Yuan, that I'll add is that a lot of x-ray is done outside of what we would call traditional imaging locations, meaning outside of the hospitals and outside of imaging centers. A lot of X-ray is done within urgent care centers, done in primary care offices and other alternative sites of care. And what this tool -- and one of the problems those sites have is they have to find radiologists to read them.

And many of these alternative sites of care are using teleradiologists to do that and are being charged extremely high prices for reading these exams, partly due to the shortage of -- mostly due to the shortage of radiologists. And what this tool will allow us to do similar to what we've done with OB/GYN offices. We had announced one of those deals where we're providing essentially a private label EBCD program for the largest OB/GYN practice in the state of Florida.

We can do that now with urgent care centers, with physician offices, provide Gleamer as the technology that can help us provide either the teleradiology service at low cost or at least give them in these trauma centers or sites of care more information at the time with regarding critical findings. And so we see also a business as does Gleamer in helping those alternative sites of care deal with some of these challenges.

So I think it's a very, very exciting opportunity for RadNet internally. It's a very exciting opportunity on the commercial side to sell it to hospitals, other imaging centers, but I think it's also a major opportunity for all these other sites of care that rely heavily on X-ray and teleradiology services.

Got it. Can you remind us if the DeepHealth is an open platform. And within Gleamer's AI application portfolios, in average, how long does it take for them to develop those applications? Like you mentioned earlier, with the recent development of AI coding, do you see risk that some of those applications could be replaced by AI applications developed by emerging start-ups?

Yes. Maybe let me address the two questions. Fundamentally, the platform is open. So we can connect to any type of PACs where data is stored. We can return results to any type of EMR/risk. So we use open standards to both ingest data and then to output data. It can be also works, let's say, well with our PACs and risk, and we have some enhanced features. But again, like I said, we can integrate to many different PACs and risks and especially in Europe, the diversity of that is quite high. So the Gleamer team has done an excellent job of integrating those various different PAC assets as we have also on our platform prior to the acquisition of Gleamer.

On the second -- second point, which is about AI velocity, I would say this is a capability we've built across the business and Gleamer adds to it. It's not something that's just a Gleamer specific thing, but essentially building models in a very rapid way, and that's a combination of pipelines for AI, but also things like being able to rapidly bring in data from RadNet, put them through those pipelines, generate model updates. And one thing that we have very uniquely in the RadNet ecosystem is to get feedback when AI needs to be improved or if the radiologist is overriding it, we can get that, and we can then drive continuous learning on those models as we go forward.

So we're doing that now currently in our ecosystem. For example, the Thyroid application is being continuously improved. And now we'll add that capability also to the Gleamer set of solutions. And I think maybe the other point I'd like to make is just to give some sense for the velocity of both teams and that's really what excites us as we go forward. In the last year, we put together almost 8 FDA submissions on the DeepHealth side and Gleamer has had similar number of submissions in Europe and starting to do some of that in the U.S.

So we really significantly increased our velocity over the last couple of years. And that's just not AI building, but it's also clinical trials because many of these FDA require clinical trials and clinical work as well as the FDA and regulatory expertise that's needed for this velocity, especially at the velocity to market, not just the velocity of building tech.

And I would just add, we've talked with hyperscalers and many of these kind of cutting-edge companies and most of them tell us, of course, we can't predict the future, but most of them have told us we want to supply the technology and you go build the medical device and go through all the pain and expense of getting FDA clearance. So building the code is one thing.

Getting the validation and the regulatory clearance is where there's a ton of value. And so I don't -- we don't see the hyperscalers or even the new start-ups, many of which -- I mean, I subscribe to all of them, they're not -- we don't see them as threats. We see them as enablers for our business. And they've signaled to us repeatedly, they want to work with us and not get into the regulated space. They don't want to have to answer -- have an 800 number to deal with customer complaints when a medical device isn't working in the middle of the night. We do that, and they would prefer to keep it that way.

This concludes our question-and-answer session. I would like to turn the conference back over to Mark Stolper for any closing remarks.

Thank you, operator. We'd just like to thank everybody for tuning in today and asking the great questions. As you can see from our tone, we're incredibly excited about this seminal acquisition within digital health. And we look forward on future calls to be able to update you not only on the progress of the integration and the implementation of Gleamer with inside of Digital Health, but all the other activities of DeepHealth and RadNet's Digital Health division. So with that, thanks again, and we look forward to speaking with you on the next call.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning, good afternoon, good evening, everyone, and thank you for joining us today. My name is Andra Axente. I'm the integrated communications leader at DeepHealth, a RadNet company and I have the pleasure of moderating this event. We are here together to share more insights on the transformative milestone that we announced today for the radiology industry. RadNet's acquisition of Gleamer to be integrated into DeepHealth. Today's session is an opportunity to hear insights from leaders across the 3 companies. On the strategic rationale, the shared mission and what this integration will mean for the future of health care. Please share your questions in the question box that you see on the webcast and we will address them in the Q&A section.

Before we begin, please note that throughout the session, we will be discussing forward-looking topics. Therefore, we encourage you to read our forward-looking statements. Now I'm very pleased to introduce our speakers today. First of all, Greg Sorensen, Chief Strategy Officer at RadNet; Kees Wesdorp, President and CEO, DeepHealth; Christian Allouche, Co-Founder and CEO, Gleamer; Sham Sokka, Chief Operating and Technology Officer, DeepHealth; and Niccolo Stefani, Business and Product Leader, Population Health and Clinical AI. And with that, Greg, take it away.

Thanks very much, Andra. Let's go ahead to the next slide, where I'm going to introduce a little bit about RadNet for those of you who may not be familiar with us. RadNet is a national leader in outpatient radiology imaging in the United States. It is the largest outpatient imaging chain in the U.S. with over 425 imaging centers. And we partner with inpatient hospital chains. We have 26 of these joint venture partners to help broaden the portfolio of services that we can offer and the patients that we can serve. RadNet's size gives it a number of unusual features that I just wanted to sort of help set the stage for why this acquisition will be so transformative. And we're a really unique opportunity in that we vertically integrate a provider, and in fact, as you'll see a very large provider organization with a transformative technology leadership.

And that combination is really unique in the industry and allows us to do things that are, I think, very impactful for human health. Part of the way we do this is there's a large team of radiologists. We have over 1,000 radiologists on contract. And what I really wanted to highlight today is we, at RadNet, do a lot of routine imaging, lots of ultrasound, a lot of plane films, lots of mammography. The things that are the bread and butter of radiology. I'm a radiologist myself and it's easy to get enamored with the very sophisticated and really groundbreaking advanced imaging tools we have. But really, the core of our business is providing routine imaging services and strengthening that core is what this acquisition is largely about. Now specifically, RadNet does about 2 million mammograms a year. We're here in France. The best data that I can see is that France, as a whole country does about 3 million mammograms a year. So this gives you a sense of the kind of innovation scale at which our teams can work.

Once we innovate something just rolling it out inside RadNet forget about other customers that we'll talk about, that alone has tremendous impact and opportunity for insights and innovation. We also do, at RadNet, a ton of other advanced imaging, as you can see on the slide here, and we're very focused in the 9 states that we operate in.

On Equitable care. We serve a lot of traditionally underserved minority populations. Now because RadNet is at such a scale for years now, we've been very interested in the advances in artificial intelligence to help us improve the care that we deliver. And under on the next slide, if you could advance I just wanted to highlight quickly 3 big problems that we see that we think other parts of the health care systems see throughout the world. It's difficult to connect with patients in many countries, in many markets. and building better tools so our patients can receive the care they need seamlessly is a big part of our goal.

Every provider I know -- every provider organization, I know around the world is dealing with workforce shortages, labor shortages are a real problem. And there are inconsistent clinical outcomes as different providers have different levels of competence. All of these are problems that technology could help us address and all of these problems, if addressed, could lead to substantial improvements in care and in savings. And it's for this reason that we, at RadNet, have advanced into digital health and are trying to take advantage of these amazing new things in AI.

On my next slide, then I just want to highlight specifically this move into routine imaging. We've done -- I've already highlighted how much routine we do in mammography and ultrasound. But that's not just important for us, that's important for the whole world, as you can see from these statistics here. And it's really the excitement that leads us here today and the opportunities that we have with Gleamer both to improve outpatient care, but also acute care and help radiologists around the world. And with that, let me turn it over to you, Kees, to talk about why DeepHealth and Gleamer.

Thank you, Greg. Let me start off that I'm very, very excited about the time that we operate in and the opportunity that we have at hand with the fantastic company that Christian and his team has built over the last couple of years. Our mission is to empower breakthroughs in care through imaging. And obviously, the opportunity that we have between DeepHealth and Gleamer only underline stats.

In the next slide, I've quantified that a little bit more in detail. We consider ourselves a global leader in AI-powered health informatics. And I would say now we're the undisputed leader in terms of the solutions that we provide. So for instance, in terms of customer reach, we can now say that we jointly serve over 2,700 customer contracts worldwide. We have a global footprint of 550 employees and teammates. We have increased our clinically validated portfolio with 26 FDA-cleared and 22 CE marked solutions covering over 75 indications. And then obviously, over time, we've integrated capabilities that started with the journey of the company that Dr. Sorensen has found that that was originally called DeepHealth we've added to that lung prostate. We already had the risk and packs portfolio within DeepHealth.

We further strengthened the mammography space with the acquisition of [indiscernible] and iCAD we've last year dipped into the opportunity of ultrasound with thyroid solutions and now also developing that for breast. And we've acquired [indiscernible], which is an image exchange platform, underlining the importance between the merits between clinical AI and IT infrastructure. And obviously, today, we're going to talk about the acquisition -- the strategic acquisition of Gleamer. And all this, obviously, is what forms DeepHealth today.

Before going further in details on the specifics of the acquisition. On the next page, you'll see our unique positioning capabilities lined out. And you might have heard me talk previously about the fact that we're vertically integrated, I want to bring that home once more because the unique symbiosis and the partnership that we have with the RadNet services business allows us to very quickly validate prototype and validate and deploy solutions, learn from that. and improve them in a way that no other competitor can both in terms of time to market as well as on specificity of what these solutions can offer. We're clinically proven. And so jointly with Gleamer, we have over 3,000 health care provider locations worldwide, and we're delivering at skill. So think of over 50 million supported imaging studies per year. So we've become, from what is a technology platform delivering impact to an at-scale solutions provider across a multitude of solutions. I'm going to hand over to Christian, who's going to talk a little bit more about the fantastic company he has built and the opportunity that we have jointly had.

Thank you, Kees. So Gleamer is one of the fast-growing startup in this ecosystem. We've been going at a pace superior to 90% year-over-year growth rate of our ARR, superior to 90% that has been consistent for the past 4 years. And the roots of Gleamer are within [indiscernible] and within Europe. So it's a Paris-based startup which today has most of this installed base in Europe and in the rest of world, which make a unique opportunity by the way to combine our forces with [indiscernible] and RadNet to have a broader coverage over all the continents today.

Initially, we started this journey by building strong AI solution in [indiscernible] and rapidly expanding tomography [indiscernible] MR and not a bit through several M&A acquisition. Today, we are combining our resources, and we are combining our team to make the best company in these markets and working towards building a reporting solution to make sure we can unlock new productivity gain for the [indiscernible] of the future.

Thank you, Christian. If you go to the next page, I would like to underline the 4 reasons why we have such a high conviction that the strategic combination of Gleamer and DeepHealth makes so much sense. And probably where I want to start off with is the impact it has on our portfolio. This allows us to go even deeper into routine imaging and acute care. And Nicole and Sham Sokka will further explain that in terms of scope that we'll jointly offer. The second is that this will accelerate our commercial reach and scale. And so I've already mentioned the over 2,700 combined customer contracts, but it's also the addition of a very, very strong commercial team from Gleamer with over 50 employees actively involved engaging with customers with the installed base and providing significant upsell and cross-sell opportunities. The third reason is the opportunity of driving operational efficiency across RadNet's highest-volume workflows. And so obviously, clinical AI solutions, workflow solutions will have a massive impact in terms of addressing the workforce shortages that Greg was talking about or being more specific in your diagnosis for better outcomes in care. Last but not least, the vision of Christian and team and our vision of moving towards automated road maps, not just looking at detection and diagnosis but also thinking about how you can improve case triaging and case prioritization, how you can improve automated reporting is something that is -- that we see have a very similar vision on. And so the combination will accelerate the road map towards automated diagnostics as we move forward.

If you go to the next page, let me give a little bit more dimensions of the scale that we're bringing together. We're really bringing together 2 unique leaders. And so we've reported today on our 2025 results for DeepHealth. So this is without Gleamer, and EUR 93 million in revenue, EUR 75 million of that is ARR, annually recurring revenue, so a high degree of subscription within our business already, and we've shown 35-plus-percent recurring revenue growth.

Now look at Gleamer and what we're projecting for 2026, we're seeing the opportunity to capture EUR 30 million of annual recurring revenue on the Gleamer perimeter. But that comes, as Christian says, with a fantastic track record of 90% annual recurring revenue growth over the last 4 years. And so if you then look at what we've guided on in 2026 as part of our earnings call today, the combination will deliver is guided to deliver EUR 135 million to EUR 145 million in revenue, EUR 120 million to EUR 140 million of ARR, and that implies an 80% to 90% ARR growth.

We're now going to dive a little bit more deeply into the opportunity that we have in terms of capturing synergies and the value of the combination. I'm going to hand it over to Sham to elaborate on that.

Yes. Thanks, Kees. We're really quite excited about the one plus one is 5 sort of a combination. And I think as you as you look at the many synergies we have, they really group into sort of 3 areas. One is product synergies. As both Kees and Christian alluded to, we have complementary products in different modality areas. But we also have complementary clearances. Gleamer has clearances in Europe that sort of complement the clearances of DeepHealth in the U.S. and so we can address more markets as well as with more variety of products and offerings, and we'll be talking through those in the coming months.

It also allows us to accelerate the road map very much, bringing the R&D teams and the product teams together getting into new areas. So expanding the portfolio beyond what we're doing currently and also getting some speed on things that are foundation model-based, things that are like automated reporting and so forth. So that's the first area. The second area is around commercial synergies. We see that there's an opportunity on the commercial side to increase the, let's say, the stand-alone of both to bring together a $7 million-plus revenue run rate increase. And we see attractive cross-selling and upselling opportunities DeepHealth products being brought into the Gleamer portfolio and Gleamer copilot combinations as well as vice versa in markets and in customers where DeepHealth is already ongoing, we can bring Gleamer products into the portfolio there. We see acceleration in some of the newer markets where we're just starting to land with distributors, both in Europe and EMEA, and there's a real opportunity for accelerating growth there.

And then I think Christian and team have built a very, very strong commercial engine. It's really in terms of moving customers from trials to contracts to really outcomes at a high velocity. And so we want to bring some of that adoption focused operating model across our entire portfolio. So we're really quite excited about also integrating capabilities, not just products. And then finally, as we both operate together, we've identified various cost synergies that sort of come out of the integration, 2 million in sort of direct savings and overlapping with vendors, so we could start to streamline some of that.

And then we have existing hiring plans in DeepHealth where the Gleamer team will fill some of those roles. So there's, again, additional synergies there that we can start to drive on the operating margin side as well. So we'll see that as we go through this year and into next year.

And Sham, I just -- just for the audience, -- it says on the slide: European and EMEA growth Acceleration. In all our excitement, that must be a typo. It's U.S. and EMEA growth acceleration. We see the cross-sell and upsell opportunities equally so in the U.S. as in EMEA. I just want to clarify that.

Absolutely. If you move to the next slide, Andra. So Gleamer brings to DeepHealth, really significant capabilities in R&D, in product in some of the functions as we talked about, the N-GEN, if you will, and of course, on the commercial side, about 131 employees, about a little over 70 employees in R&D, so really strengthening the R&D side. and about 40 employees in the commercial side. So really both in Europe and in the U.S., so also allows us to augment our commercial scale as we go forward and really excited about bringing these 2 teams together already had numerous discussions about how we can leverage new growth opportunities together, right? And that really speaks to where we're going, right?

And I think this is the excitement and Andra started us with really transformational. If we look today, we're really at the very, very early stages of AI. If you look at all the product portfolios in the industry, we're really only covering together maybe 10% maximum of all the different types of things we could do. And what we really aim to do with this transaction is to bring a team and strengthen the team that can really move along this sort of broader landscape, right? So moving in MR, for example, in the current sort of prostate and neuro, but adding things like musculoskeletal, which has -- which is a significant expertise of Gleamer and then for us to move into other applications, body applications in MR. In CT, and again, strengthening lung being more holistic in the lung space. covering more things than just nodules, but different disease states in the lung area and then expanding into abdomen and pelvis areas, mammography, we also strengthened our downstream capability as we move toward more automated type of reporting around screening workflows.

And then in the x-ray space, of course, which is traditionally not a space that DeepHealth was in, now we add a significant capability, both in musculoskeletal x-ray, but also in chest x-ray. And then we really hope to bring that through RadNet integration and Deep deployment there into a more automated draft reporting and type of workflows. So really, we're at the beginning of this. And with Gleamer now, we really want to move that journey towards much more of an automated radiology context over the next 3 to 5 years.

That brings us to today. If you move to the next slide, Andra, to where we are entering the market today already with a very rich portfolio. and what we'll now start to be going to market with. And let me hand it off a little bit to Nicco who's going to talk a little bit about our product portfolio and how this really grows expansion of what we're doing in this space.

Thank you, Sham. So if now we start to put some attention on really the enlarged portfolio is that, first of all, I think, as was said before, this position us today with the Glimmer acquisition has the larger radiology AI provider worldwide. So that's, I think, of course, a great achievement that we are all excited about. And what we are more excited is really what we can bring to our customer and, of course, their patient.

So if you look now where we start with population health and clinical AI, we aim really to influence a train pillar in the health care, state shift diseases. So how we, of course, like the tech disease earlier. We want to do that in an optimized diagnostic process, so how we really load the cost of diagnostic and diagnosis and as well as how we bring innovation to more and more patients. So in the population health, we were focusing on, of course, like screening mainly and some chronic disease.

Now as also Greg mentioned before, we are going with the Gleamer acquisition to also include all routine imaging. And in both segments, like acute setting as well as chronic setting. So covering hospital imaging center. So a large breadth of really like patient population. So this actually will accelerate, of course, the reach we have we have our solution and as I said before, deliver the larger portfolio that we have today in the market. And if you see the indication that now we cover with the combined portfolio is more than 75 indication across multiple specialty, and that's really like what makes now today, all of us unique.

So if you go to the next slide, to bring like, I think, a real life example, as Greg mentioned, of course, some number are RadNet. But today at RadNet, we do around 2.8 million x-ray, okay? So when we look what we can do right now with, of course, DeepHealth-Gleamer solution combined is that we can really bring an impact in 4 main pillar. So we can, of course, accelerate the turnaround time of the exam itself, we can announce radiology efficiency because, as we said before, it's not only about detection, but it's all about also can we optimize the workflow basically allowed some sort of triage. The AI can be used for detection, but also to flag the exam, they actually need more attention based on the funding of the eye. So can we optimize that kind of workflow even before the radiologist look at the images. And also as well, what is more important, we said that is shortened of radiologists. So you want the specialist to be really focused in the exam and maybe they are more difficult. And having all this finding and AI helping triage also towards the right person to read the examination, that, of course, made an impact for the experience of the radiologists and more important for a more, let's say, standard and a better outcome for the patient. And all of this together can bring this like automated workflow that can hopefully today and in the future, drive more automation between interpretation and reporting.

And so all of these, if you combine with the fact that 2.8 million x-ray is around 25% of really what is the annual imaging volume run even if you improve some of these, let's say, workflow of 5%, 6% the impact will be, of course, like a major, okay? And so that's why we think that with that and with the implementation of the new solution in Rane can bring short-term improvement and really like deliver a better experience for our care team and for their patient. So if you go to the next slide, and I think what we are all excited is that in 2 days from now, we are launching this ECR as 1 company. So we have 2 DeepHealth booths, where we have, of course, a combined team in both boots and where we are going to showcase the combined portfolio. So again, we are looking forward to, of course, whoever want to know more. And of course, to all of our customers as 1 company today sharing the excitement for the acquisition.

Thank you so much to all the speakers for the very insightful content that you've just presented. This is clearly a very exciting new chapter for all. Now thank you also for the questions that you've shared throughout the session. And now we're opening up the Q&A where I will be reading through some of the questions and direct them to some of you. Of course, feel free to jump in and add any additional incidents that you would like. I will aim to get through as many questions that we can in the time that we have. If we don't get to your questions, we'll make sure to follow up.

Now let's start with the first one. How will Gleamer products be integrated into the DeepHealth product portfolio? You've touched upon that, but maybe you can share a little bit deeper. Nicco, would you be able to -- first time.

Yes, thank you for the question. So I think, as we said, our priority is, of course, our customer, now our combined customer, okay? So the first step in priority is that we don't want to bring any disruption, okay? So he's really focused on, okay, how we make sure first that we save our customers like really nothing happened. And what's more important is that we're going to bring, we're going to really merge the best of both companies, and I really want to use the world merge as we have done also with previous acquisitions to really bring the best of the best that the combination of both companies can bring to them. So again, no disruption. We're going to get some times to make sure to define how really we match the best of both products. And again, we're not going to slow down. We're going to go straight and we're going to really deliver as many solutions to our customers as we can. And maybe, Christian, you want to add ...

Yes, exactly. I'm fully aligned. And during the transaction discussion, a lot have been discussed in a very granular way on how we can make the most of these 2 assets at a granular level per product. But the big question is, as Sham said, we just unveiled 10% of radiology. So the real question is what are we going to build together. And this is where all our intention is now focused on. So we are going to keep serving all our customers in a better way with more products to come.

Yes. And Christian, maybe if I can add a little bit. I think it's not about just even the products that we have. but the fact that it's on one stack. And so if you're now a DeepHealth customer, the access you're going to have and the speed to access of new solutions and products, and that's really what we're focused on, right?

Thank you all. Second question that we'll address. How is the acquisition advancing the path toward automated diagnostics. And maybe, Sham and -- you could maybe start and then others could add.

Yes. As I started earlier, I think kind of the core -- let me maybe unpack this word, automated diagnostics. It means different things to different people. I think what we're really going after is just take something like x-ray, which the Gleamer team is an expert in, from some accords, there's 60, 80, 100, 200 findings on an x-ray and we're building devices that find 1, 2, 5, 6. And so when we talk about automated diagnostics, it's how do we actually look at the broader set of findings, how can we cover those findings in a report generation, how can that report generation then lead to a clinical recommendation and then make it easier, not only for the radiologist to report but for the referring physician to do their action, their next best action. And so I think a lot of the solution areas that we're working in, where, yes, we want to make the reporting easier for radiologists, but we also want to make the downstream decision-making easier, right? What we like what we do in breast cancer screening, right, breast cancer products that will not only help doctors find -- detect cancer better, but what to do with women that are in high dense breast conditions, what we might want to do with women that are at high risk, so this notion of automated diagnostics is both reporting and allowing radiologists to be more efficient, but also the outcomes and the pathways that they're in come afterwards.

Yes. And if I could just build on that a little bit, Sham, I'd like to riff on something Dr. Berger said on the earnings call this morning. people talk in other industries about AI disrupting things. And while I think Jeff Hinton's prediction back in 2015, 2016, that we should stop training radiologists is clearly been proven to not be correct. We certainly need radiologists. We also know from the work over the last decade from many groups that in certain sort of niche areas like, say, reading a mammogram or trying to detect the cancer, that the AI actually can outperform humans. And so the opportunity that we have together is to improve the quality of care and deliver it to a greater population of people and that is only going to happen if we can make it much more efficient. That's this automated part.

The physician will be in the loop -- has to be in the loop, but they need to be -- if we're going to get the kind of quality of care we want to as many kind of people as need it, we do have to change things a lot. And this team working together, I think, is the best opportunity we've seen to make that happen. It's a really transformative opportunity that we're all super excited about.

That's a very nice buildup for the next question. How does this acquisition positions positions DeepHealth in the competitive landscape? Kees?

Yes. [Audio Gap] ways. Sham and Greg just talked [Audio Gap] about in terms of pursuing automation in the radiology workflow. Then you heard me today talk about a few metrics. So for instance, our recurring revenue, the combined recurring revenue into next year of, let's say, close to EUR 140 million. makes us an disputed leader in the radiology clinical AI space. Our portfolio with -- combined portfolio with FDA approvals and CE marks is by far the largest, including the point around 75-plus indications that we cover is by far the largest in the industry. And so there are multiple metrics here that I would say, set us out as an incredibly competitive and differentiated entity and obviously, the world-class team of Christian's company, the Gleamer team only adds to that. I don't know how you would see that Christian, but yes.

Exactly. We are exactly aligned on this. I really do believe that we are combining already to sub-champion to become the absolute champion of these markets. And where I'm very happy to you is that beyond merging the 2 installed base and our 2 commercial capabilities, we are thinking ahead of the standard in radiology and thinking what we can build make the future of health care arrive now today.

Yes. Maybe 1 more point and maybe, Sham, you were going to say the same thing. The proximity in the symbiosis that we have with the RadNet services business, is not just providing us access to data, which is fantastic for our engineering platforms and deep learning algorithms and so forth. It really makes fast prototyping and corporation happening, but more importantly, for everything that Greg just described in terms of the route towards more automated workflows, you need that very, very tight interplay between the clinical practice and operational practice and development. And that can only occur in settings like we have today within -- between RadNet and DeepHealth [indiscernible].

I was just going to add, I mean, sometimes these questions kind of get you into a trap. I mean, I don't really see this as a competitive landscape. I see this as an ecosystem that we want to take leadership and we want to drive, right? So it doesn't mean that we're going to not work with our partners. We are actually quite deeply working with our partners in distribution in -- on the AI, a broader AI ecosystem, we're going to be integrating to other taxes, and we have very good and we intend to keep doing that. And I think the -- and we're working on the build side with several folks that have foundation models small and large. So we're going to continue to do that. Our ambition here is to push the industry further and to do that at scale. And we're going to do that very much with partners in this space.

Yes, in a way, we're competing against disease, we're not competing against other companies. And that's what we're really focused on is beating the disease.

Correct.

And that actually brings us to the end of this event. Thank you so much to all the speakers as well as everyone that's joined us online. The recording of this session will be available in the website that you've accessed this live session, and the presentation will be accessible as well. If you are interested in follow-up conversations with other leaders, please do not hesitate to reach out to me. Again, thank you, everyone, for joining today, and we look forward to this exciting new chapter for all.

Good day and welcome to the RadNet Fourth Quarter 2025 Financial Results Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Mr. Mark Stolper, Executive Vice President and Chief Financial Officer of RadNet. Please go ahead, sir.

Thank you. Good morning, ladies and gentlemen, and thank you for joining Dr. Howard Berger and me today to discuss RadNet's Fourth Quarter and Full Year 2025 financial results. On this call, we also have invited Kees Wesdorp, President and CEO of Digital Health; and Sham Sokka, Chief Operating and Technical Officer of Digital Health, who will share additional information about this morning's announcement of the acquisition of Paris France-based Gleamer.

Before we begin today, we'd like to remind everyone of the safe harbor statement under the Private Securities Litigation Reform Act of 1995. This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Specifically, statements concerning anticipated future financial and operating performance, RadNet's ability to continue to grow the business by generating patient referrals and contracts with radiology practices, recruiting and retaining technologists, receiving third-party reimbursement for diagnostic imaging services, successfully integrating acquired operations, generating revenue and adjusted EBITDA for the acquired operations as estimated, among others, are forward-looking statements within the meaning of the safe harbor.

Forward-looking statements are based on management's current preliminary expectations and are subject to risks and uncertainties, which may cause RadNet's actual results to differ materially from the statements contained herein. These risks and uncertainties include those risks set forth in RadNet's reports filed with the SEC from time to time, including RadNet's annual report on Form 10-K for the year ended December 31, 2025, to be filed shortly. Undue reliance should not be placed on forward-looking statements, especially guidance on future financial performance, which speaks only as of the date it is made. RadNet undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made or to reflect the occurrence of unanticipated events.

And with that, I'd like to turn the call over to Dr. Berger.

Thank you, Mark. Good morning, everyone, and thank you for joining us today. On today's call, Mark and I plan to provide you with highlights from our fourth quarter and full year 2025 results, give you more insight into factors which affected this performance and discuss our future strategy and provide more information about this morning's acquisition announcement. After our prepared remarks, we will open the call to your questions. I would like to thank all of you for your interest in our company and for dedicating a portion of your day to participate in our conference call this morning.

Let's begin. I'm very pleased with the performance in the fourth quarter. It was the strongest quarter in the company's history with record revenue and adjusted EBITDA. Total company revenue increased 14.8% to $547.7 million, and adjusted EBITDA increased 16.9% from last year's fourth quarter to $87.7 million. Digital Health fourth quarter 2026 revenue -- 2025 revenue, excuse me, increased 48.2% to $27.9 million and Digital Health adjusted EBITDA increased 8.9% to $4.9 million from last year's fourth quarter.

Imaging Center revenue continues to be driven by increased demand in virtually all of our markets, benefiting from the growing utilization of diagnostic imaging within health care as well as the continuing shift of procedural volumes away from more expensive hospital alternatives to ambulatory freestanding centers. As a result, we experienced 14.1% aggregate and 9.6% same-center advanced imaging procedural volume growth in this year's fourth quarter relative to last year's same quarter. I am highlighting the growth in advanced imaging because MRI, CT and PET/CT are responsible for over 60% of RadNet's revenue and are important drivers of margin and profitability. To this end, revenue benefited from the continuing shift in modality mix towards advanced imaging.

During the fourth quarter, advanced imaging represented 28.6% of RadNet's procedural volume, an increase of 178 basis points from last year's same quarter. This increase is a function of the overall industry trend of more of these exams being ordered as a result of technological advances in these modalities, significant capital investment we have made in the last few years in advanced image equipment for growth and replacement and the implementation of TechLive and AI power dynamic scheduling.

2025 was a year of significant investment. During 2025, we opened 7 novel facilities in markets where there were backlogs, which we required additional capacity for or where we needed access points to service identified patient populations. These centers should be material contributors to long-term performance and growth in 2026 and beyond. During 2025, we expanded several of our joint venture partnerships with de novo builds and acquisitions. And we are in conversation to establish several new health system joint venture opportunities. Currently, 151 of RadNet's 418 centers or 36.1% are held within health system partnerships. Health systems continue to see long-term strategies around outpatient imaging and have recognized that cost-effective and efficient freestanding centers. We'll continue to capture market share from hospitals as payers and patients migrate their site of care towards lower cost, high-quality solutions.

Our health system partners have been instrumental in increasing RadNet's procedural volume with their physician relationships. During 2025, we were active with acquisitions in both the imaging centers and health -- digital health operating segments. During 2025, we expanded into our largest margin markets through additional acquisitions of imaging facilities in California, New York and Maryland. Within Digital Health during 2025, we acquired iCAD, See-Mode and CIMAR, which have already been integrated into the DeepHealth product portfolio of solutions.

Subsequent to year-end, in January, we expanded into 3 new markets with the acquisitions of 13 centers in Southwest Florida, and entered Indiana with the acquisition of 6 facilities of Northwest radiology and a single center in Virginia. And of course, this morning, we will -- we announced the completion of Gleamer, which Kees and Sham will speak about in more detail shortly. Within digital health, we are continuing to build the most comprehensive portfolio of AI-powered solutions designed to transform both the workflow and clinical capabilities within radiology. These solutions are critical to addressing the constrained labor market for technologists, center level administrative personnel and radiologists. We believe there will be a day where every procedure RadNet performs is put through artificial intelligence as part of the clinical and reporting workflow. Efficiency productivity and accuracy will improve with the use of the tools, and RadNet is committed to both implementing these solutions in its core imaging centers and commercializing them for sale to the rest of the industry. It is patients who will ultimately benefit as both service levels and health outcomes will improve.

Throughout 2025, we continue to manage liquidity and financial leverage. At the year-end 2025, RadNet's cash balance was $776 million and the net debt to adjusted EBITDA leverage ratio was approximately 1.0. While we have been acquisitive so far during 2026, with the acquisitions in Southwest Florida, Indiana, Virginia and the Gleamer transaction announced this morning, we remain committed to operating the company with low leverage.

At this time, I'd like to turn the call back over to Mark to discuss some of the highlights of our fourth quarter and full year 2025 performance as well as discuss our 2026 guidance.

Thank you, Howard. I'm now going to briefly review our fourth quarter and full year 2025 performance and attempt to highlight what I believe to be some material items. I will also give some further explanation of certain items in our financial statements as well as provide some insights into some of the metrics that drove our fourth quarter and full year 2025 performance. I will also provide 2026 guidance levels, which were released in this morning's financial results press release. In my discussion, I will use the term adjusted EBITDA, which is a non-GAAP financial measure.

The company defines adjusted EBITDA as earnings before interest, taxes, depreciation and amortization and excludes losses or gains on the disposal of equipment, other income or loss, loss on debt extinguishments and noncash equity compensation. Adjusted EBITDA includes equity and earnings in unconsolidated operations and subtracts allocations of earnings to noncontrolling interest in subsidiaries and is adjusted for noncash or extraordinary and onetime events taking place during the period. A full quantitative reconciliation of adjusted EBITDA to net income or loss attributable to RadNet, Inc. common shareholders is included in our earnings release.

This quarter, we are also introducing a second non-GAAP measure pertaining to the digital health segment called annual recurring revenue, otherwise known as ARR. The company defines ARR as a key subscription economy metric representing the predictable normalized annualized value of contracted recurring revenue generated from customers from active customer contracts. ARR includes subscription fees, recurring support fees and contracted usage charges and excludes onetime nonrecurring fees, such as implementation, hardware sales, professional services, consulting and one-off training.

With that said, I'd now like to review our fourth quarter and full year 2025 results. As many of you have seen in the financial release this morning, we had a very strong fourth quarter. While I won't recap all the financial information that's contained in the earnings report, here are some of the highlights. Fourth quarter total company revenue and adjusted EBITDA were both quarterly records. Revenue increased 14.8% and adjusted EBITDA increased 16.9% from last year's fourth quarter. The Digital Health segment also exhibited strong growth in the quarter with revenue growing 48.2% and adjusted EBITDA growing 8.9% from last year's fourth quarter. The strong revenue growth was partially the result from the contribution of iCAD acquired in July, which otherwise would have seen 25.9% growth without the contribution of iCAD.

Fourth quarter adjusted earnings per share for RadNet essentially was flat at $0.23 per share versus $0.24 per share for the last year's fourth quarter. Also benefiting the fourth quarter was the continued shift in business mix in favor of advanced imaging that Dr. Berger mentioned in his earlier remarks. Higher acuity advanced imaging drives more revenue per procedure and improved adjusted EBITDA. The strong ending to the year caused us to meet or exceed the 2025 original guidance levels and guidance ranges, we increased during quarters throughout the year for revenue, adjusted EBITDA and and free cash flow for the Imaging Center segment.

Within Digital Health, revenue finished at $92.7 million above the original and within the amended guidance ranges, and adjusted EBITDA of $15.5 million, which finished within the original and revised guidance levels, despite having integrated the negative EBITDA businesses during the year of both iCAD and See-Mode. We finished 2025 with a strong cash and liquidity position. At year-end, we had $767 million of cash on the balance sheet, full availability of a $282 million revolving credit facility and a term loan that is priced at SOFR plus 225 basis points. Continued improvement in revenue cycles have lowered our DSOs or days sales outstanding to a RadNet record low of 29.5 days, which we believe to be one of the best in the industry.

With regards to our financial leverage at December 31, 2025, and unadjusted for bond and term loan discounts, we had $323.5 million of net debt, which is our total debt at par value less our cash balance. Note that this debt balance includes RadNet's ownership percentage or 49% of New Jersey Imaging Network's net debt of $27.8 million, for which RadNet is neither a borrower nor a guarantor. At year-end, our net debt to adjusted EBITDA leverage ratio was approximately 1. As some of you may have seen, we released 2026 guidance ranges in conjunction with our financial results press release this morning. While I'm not going to run through all the numbers on this call, I will emphasize some important points. First, we anticipate growth next year to exceed the target growth we presented at the Investor Day in New York back in November. 2026 guidance anticipates 17% to 19% Imaging Center revenue growth relative to 2025, resulting from contributions of continued increases in same-center performance, further tuck-in acquisitions reimbursement efforts driving more favorable pricing and de novo center openings. We are also expecting EBITDA growth to exceed that of revenue, creating margin improvement.

Free cash flow is expected to grow 29% to 41% from 2025 levels. Embedded in these guidance numbers are approximately 4% growth in same-center labor costs as well as the recent impact of severe winter weather conditions in our mid-Atlantic and Northeast regions. Within Digital Health, 2026 guidance implies revenue growth between 45% and 55% from 2025 performance. 2026 growth will be driven by sales of the deep health portfolio of AI-powered workflow and clinical solutions and related products such as TechLive, and further contribution from the acquisitions of iCAD, See-Mode, CIMAR and Gleamer.

In this morning's press release, we introduced a new metric to track the progress of the Digital Health division, otherwise known as ARR. We will continue to update this metric each quarter and at year-end to give more transparency into the growth and the future progress of the Digital Health division. At December 31, 2025, ARR for the Digital Health division was $75.4 million. We are anticipating ARR will approach $140 million at the end of 2026. This growth is partially from the contribution of Gleamer, which is in the neighborhood of an additional $30 million of ARR with the remainder of the growth coming from SaaS-based revenue recognized from the licensing of AI-powered workflow and clinical solutions.

In 2026, we also expect the proportion of digital health revenues, which comes from RadNet's Imaging Center segment to decrease from 45% in 2025 to about 33% in 2026. On the development side, we are anticipating a minimum of 4 FDA clearances during 2026, which should further advance our leadership in radiology clinical AI solutions in the areas of mammography, lung, prostate, thyroid, brain and with this morning's announcement of the acquisition of Gleamer the musculoskeletal system. In 2026, significant infrastructure investments will continue to be made in building sales, marketing, implementation teams to support future growth.

I'd now like to turn the call over to Kees Wesdorp, Kees and Sham Sokka, will provide more information about this morning's acquisition of Gleamer.

Thank you, Mark. Across the globe, imaging demand continues to rise while radiologists, technologists and other labor shortages persist. Reengineering high-volume workflows, particularly between imaging such as x-ray, ultrasound and mammography is becoming essential to sustaining access, efficiency and quality of care. For radiologists and providers, the key lies in advancing automated exam prioritization and draft reporting. The foundation of RadNet's strategy is combining the largest outpatient imaging network in the U.S. with DeepHealth, advanced clinical AI and imaging informatics platform. This combination uniquely positions RadNet to validate, deploy and scale AI solutions at a level unmatched in the industry, both across RadNet's own network and for customers worldwide.

Today, RadNet announced another major step forward in that strategy, acquisition of Gleamer, a Paris-based leading radiology AI company to be integrated into deep health. And with this acquisition, DeepHealth becomes the largest provider of radiology clinical AI solutions worldwide. Gleamer is a fast-growing cloud-native Software-as-a-Service radiology AI company, serving more than 700 customer contracts across 44 countries, powered by more than 130 professionals, including a strong commercial team of 40 team members and more than 76 research and development team members, Gleamer has developed commercialized and delivered solutions to support over 25 clinical indications. Its broad multimodality portfolio includes 4 FDA cleared and 6 CE-marked clinical AI and workflow solutions supporting more than 25 clinical indications across muscoskeletal rest lung and neurologic applications.

Gleamer solutions are designed to improve quality of care while reducing radiologist workloads with automated reporting capabilities already deployed in Europe. The company has achieved annual recurring revenue, compound annual growth, exceeding 90% from 2022 to 2025 and is expected to reach approximately $30 million ARR in 2026. Together, we are now the largest provider of radiology clinical AI solutions worldwide in both the breadth of AI solutions and ARR. The combination delivers an integrated end-to-end platform that supports every stage of the radiology workflow. The combined portfolio unifies clinical and agentic AI, operational intelligence and workflow automation in a single platform that spans patient journey efficiency, technology and operations efficiency and AI-driven diagnosis, triage and reporting. And so DeepHealth now covers the entire radiology workflow from image acquisition to reporting and follow-up.

At this time, I'd like to turn the call over to Sham, who will go through some more details around the acquisition and our overall strategy at DeepHealth.

Thank you, Kees. This morning's acquisition of Gleamer strategically enhances DeepHealth and RadNet in 4 areas. First, it expands DeepHealth's portfolio across all core imaging modalities. The integration of glimmers portfolio with DeepHealth's clinical AI suites for breast, test, neuro, prostate and thyroid creates a comprehensive portfolio unrivaled by any other radiology AI company. The combined portfolio supports screening, detection, interpretation and follow-up across many of the most prevalent cancer types as well as neurodegenerative and musculoskeletal conditions including trauma and chronic diseases.

With the inclusion of Gleamer's products, particularly its market-leading capabilities in X-ray, Sleep Health now provides native clinical AI solutions across MR, CT, X-ray, mammography and ultrasound modalities, making it the worldwide leader of radiology clinical AI solutions. Second, the acquisition enhances DeepHealth's global commercial reach and scale. Gleamer's leadership in Europe, particularly across France, dock and broader EMEA markets significantly strengthens DeepHealth's commercial engine. The acquisition adds more than 700 customer contracts across hospitals imaging centers and health care systems significantly increases annual recurring revenue and expand the global sales force with more than 40 team members, predominantly Europe and U.S.-based commercial professionals. This scale accelerates DeepHealth's global trajectory and enhances its ability to deliver transformative AI-enabled imaging solutions worldwide to customers.

Third, we are leveraging Gleamer to drive operational efficiency across RadNet's highest volume workflows. Deploying Gleamer's radiology AI and workflow capabilities across RadNet's imaging network is expected to create measurable productivity gains, particularly in X-ray, which accounts for nearly 25% of RadNet's imaging volume. RadNet intends to implement an end-to-end AI-enabled workflow beginning with triage in critical findings to accelerate interpretation of urgent cases.

The acquisition will also accelerate the introduction of draft reporting capabilities, allowing radiologists to increase reading volumes with greater accuracy and standardization. As an aside, for those of you who are less familiar with the radiology workflow, what our industry calls reporting is when radiologists types or dictates his or her findings or interpretation into a clinical report that has been shared with the referring physician and patient. For many radiology exams, the reporting part can take more time and radiologist effort than the interpretation itself. This end-to-end workflow approach is designed to optimize internal resource utilization, resulting in improved operational and cost efficiencies with expected benefits beginning as early as the third quarter of 2026.

And finally, fourth, looking ahead, the acquisition meaningfully advances DeepHealth's paths toward automated diagnostics. Gleamer has developed automated reporting capabilities where the AI is able to create the clinical report on behalf of the radiologist without human intervention. This feature is already in early deployment with customers in Europe. When this feature is combined with DeepHealth's AI and informatics portfolio, it brings clinical, generative and identic AI and imaging informatics together into an integrated offering. With this extensive expertise, DeepHealth is uniquely positioned to enable more standardized interpretation, automated draft reporting and scalable diagnostic pathways.

At this time, I'm going to hand the call back to Kees, who will make some summary points about the implications of today's acquisition.

Thank you, Sham. This acquisition really strengthens RadNet's digital health business strategically and operationally and expands cross-selling and upselling opportunity across its installed base. The transaction was completed with cash valued at up to EUR 230 million, inclusive of post-closing milestones. The transaction reflects Gleamer's multiyear high recurring revenue growth, cloud native gross margins and strong customer retention. And the acquisition is expected to create meaningful growth in cost synergies estimated at approximately a $7 million run rate and to accelerate Gleamer's positive adjusted EBITDA by mid-2027 faster than it could have achieved independently. And so in summary, the acquisition of Gleamer is a transformative milestone for us. It establishes deep health as the largest provider of radiology clinical AI solutions worldwide, expands its global footprint, strengthens operational performance across high-volume workflows and accelerates the delivery of AI-enabled automated diagnostics. DeepHealth and Gleamer have have a combined installed base of 2,700 customers, actually over 2,700 customers across more than 44 countries a comprehensive portfolio, including 26 FDA-cleared and 22 CE Mark devices supporting over 75 indications. And it comes with a global footprint with over 550 employees across 4 continents.

DeepHealth with Gleamer together anticipate achieving ARR approaching or exceeding $140 million by the end of 2026. We believe that these metrics make DeepHealth a leader in providing clinical radiology AI solutions worldwide. Together, RadNet and DeepHealth are redefining how imaging is delivered, at scale with intelligence and automation to empower breakthroughs in care and unlock greater access, efficiency and better experiences and outcomes for patients and providers worldwide.

At this time, I will hand the call back to Dr. Berger, who will make some closing remarks.

Thank you, Kees. Radiology is entering a new era. I am proud to be at the helm of the company that is leading this transition into an era of unprecedented demand and challenging workload environment that is critical to long-term benefit and outcomes for our patients and referring physicians. The introduction of digital health to the RadNet portfolio is barely over 3 years since we built the team that Kees and Sham will be leading forward. This particular acquisition announced today with Gleamer completes the strategy that we announced earlier at the Investor Day last year of wanting to be the leader in routine imaging, meaning mammography, x-ray and ultrasound. .

The company Gleamer is headed by an exceptionally talented team led by Christian [indiscernible] that we are proud to bring into the RadNet family. This event, I believe is a seminal event, not only in the history of RadNet, but what it represents is leading into this next era of artificial intelligence, which will be transformational for the industry and health care in general. The opportunity for RadNet now expands will be on the outpatient centers and into relationships that we expect to grow deeper with hospitals and hospital systems that we are currently already joint venture with and which we are getting significant interest from others to deal with all of the problems that radiology faces, which are primarily driven by the workforce, both from the radiologists, professional and nonprofessionals.

I look forward to our next call where we will be able to discuss in more detail the progress that is being made not only in the digital health division, but how it's impacting RadNet and its other customers. I particularly want to thank the Gleaner teams and the RadNet management and all our advisers that worked very diligently to get to this day and hope that the marketplace will begin to better understand why RadNet made this commitment to digital health several years ago and which we now stand on the precipice of major transformative changes.

With that, we'll turn the call over to question and answers. Mark?

Thank you, operator. We're ready for the question-and-answer portion of the call.

[Operator Instructions] And the first question will come from Brian Tanquilut with Jefferies.

Maybe I'll ask the AI question. I hesitate because I know this could be a 1-hour discussion. But when we think -- when we think of non-health care AI companies saying that AI will disrupt radiology or can disrupt radiology. Maybe, Howard, the first question is, where do you stand in that? I mean, how do you see AI being a benefit, especially for someone like RadNet? And then in the context of the acquisition of Gleamer today, and you being positioned as the largest owner of clinical assets in the space. How differentiated does RadNet become with this transaction?

Thanks, Brian. I don't think disruption is the right term to use for the opportunities. And also, I shouldn't just call him my opportunities, but the critical needs that radiology has as well as all of health care to transform itself and try to put less dependence on manual labor. The shortages that we have are going to continue for the foreseeable future and the demand that we are currently experiencing will be unabated because of the technological advances that are occurring on the equipment side. So this is an opportunity for us to make all of the constituents in RadNet better at doing their jobs, better both in terms of productivity, accuracy and fundamentally lifestyle. .

The burden that is being placed on radiologists and our technologists due to the enormous amount of manual effort that needs to go into seeing a patient performing the scan, creating a report and follow-up is becoming almost insurmountable. So as opposed to other industries where perhaps there will be large replacement by AI of employees that's not how RadNet sees the world. These are tools that will enhance productivity, allow us to continue to grow and match the demands that we have, not just from a volume standpoint, but we have to appreciate that the quality and capabilities of this -- of the new equipment is almost something that could never have been imagined even 3 or 4 years ago. And we see these cases on a daily basis. We see the impact that imaging is having I would like everyone to reflect on the commitment we made to the Health acquisition with over 6 -- almost 6 years ago. and where we have demonstrated and others that artificial intelligence in the breast screening area has increased early detection of cancers by 20% to 22%. That is just extraordinary.

And while we're not curing cancers, we're finding them earlier and allowing for a better outcome. And that fundamentally is really what artificial intelligence will have the capability of doing. And that is diagnosing diseases earlier to afford not only a better financial outcome and less financial burden, but also to improve the longevity and better lifestyle that people would like to achieve. So I think that the issue of artificial intelligence in health care in general is not one that transforms the industry by simply replacing people, but making the workforce that we have that's insufficient to handle the needs that we have right now, more capable and more accurate in the work that they do. So I think -- I'd like to think, and I've said this before, that artificial intelligence in health care is much different than it is almost in any other industry.

I appreciate that. And then, Mark, maybe as I think about the ARR, and I appreciate you guys sharing that with us. Any call outs because other than Gleamer here, I mean, it's showing pretty significant growth from year-end 25% to 26%. So any thing you can share in terms of where that -- that -- those contractors are coming from? Or what's providing that confidence in that level of growth year-over-year?

Sure. I'll let Kees address that, and I'll chime in if anything more to add.

Yes, of course. So as a reminder, we operate currently 3 different business domains. One is what called Clinical AI, where obviously the Gleamer acquisition fits squarely in. The second is what we call Enterprise Imaging, which traditionally you would call PACS, but is now powered by the DeepHealth OS to deliver our diagnostic suite. And the third is enterprise operations, which you call traditionally our risk business. All 3 businesses contribute to that momentum. We see very, very good continued growth in the clinical AI domain. We're winning contracts both in the outpatient segment as well as renowned logos in -- for hospital systems.

We continue to build momentum in -- particularly in the U.S. for enterprise imaging offering with our diagnostic suite partially with upgrades in our installed base, but also new wins as we roll out our broader diagnostic suite. And the same then holds for our enterprise operations portfolio, which is our operations suite. And so it's as much as installed base upselling as it is new wins. And then more for -- in Europe for clinical AI and U.S. [indiscernible] of clinical AI enterprise operations and enterprise imaging. From commercial funnel across these 3 domains, is developing well. And one of the things that we also have done in 2025 is more deeply invest in our commercial team organically and also inorganically with the acquisition, in particular, of iCAD as well as service delivery. So that sort of spans the plan that we've deployed last year and how we now see the commercial momentum going forward.

Brian, before you go, let me add one additional point here. One of the reasons why the Gleamer acquisition is so attractive to us as I had mentioned earlier, is running out our portfolio in the routine imaging space. And as part of our overall strategy, particularly with our hospital partners, is to afford them the opportunity to have their entire provider network system, meaning they're physician groups, their urgent cares, their emergency rooms, all connected on the same platform. And when you stop to think about in the bigger picture, what portion from a volume standpoint is contributed to imaging, it is dominated by routine imaging and some of the tools that we're talking about here, particularly not just with AI, but also the ability to have real-time reporting that AI will substantially enhance.

We're looking at opportunities within urgent care systems within physician offices to give them the capability of providing very high-quality level work for what is not necessarily a revenue source for them, but for the delivery of care and immediacy to help the patient journey. The amount of opportunity that resides in what we'd like to call the nontraditional imaging provider network is extraordinarily high -- just to give some context to this, there's more than twice as many urgent care centers and more rapidly growing than there are outpatient imaging centers across the U.S. So these kind of transformative tools will allow us to enter onto another platform where we're not necessarily constrained with traditional reimbursement for claims but rather to be part of the delivery system of health care that we can help the providers benefit from by again, earlier detection and greater opportunity to advance the patient journey on a timely basis as possible. So I think you can look for opportunities that will be demonstrating later this year, which will enhance not only our imaging revenue by providing these but also be a very substantial market, which is predominantly driven by routine engine.

And I'll just add my $0.02 here just to address your question directly on the ARR side. So in '25, our ARR of digital health was $75 million. And I'm just going to give you a couple of pieces to bridge you to the roughly $140 million that we're anticipating in ARR at the end of '26. So if you take the $75 million, Brian, and you add roughly about $30 million of ARR for Gleamer, you're up at $105 million. And then there's about $7 million of additional ARR that just comes from the annualization of the iCAD acquisition, which we did in July. So you're really -- the base ARR you pro forma those 2 items for the year starts you at about $113 million. And to get to -- so the other $27 million of ARR is the growth that case described with all the other products and services, both from the clinical AI side as well, the informatics and the work of the commercialization and sales and marketing teams during 2026 to sell those products and services.

Your next question will come from David MacDonald with Truist.

Congratulations. I've got a couple of part question on Gleamer and then just one on imaging. But on Gleamer a couple of things. First of all, on the 700-plus customer contracts, talked a little bit about upselling and cross-selling. Can you just provide a little bit of context in terms of -- how many of those are incremental or new to RadNet. I did miss the number in terms of how many of the professionals are R&D. And then just last piece, can you give any framing around as you reengineer the workflows, what type of efficiency gains you hope to achieve in some of the routine imaging areas?

Yes, Mark, let me take that. So on -- first, on the customer contracts, what we share today is that DeepHealth has over 2000 -- before Gleamer has over 2,000 customers -- customer contracts and Gleamer will add another 700. There will be some overlap, but the percentage of contracts that has, let's say, 2 or more overlapping solutions will be very, very minimal. And so in a way to think about the upsell opportunity out of the 2,700 on contracts, we apply right now a logical 80% to 90% of those provide given our broad clinical AI portfolio an upsell opportunity. And we're currently going in depth as of today, since close. We are going into depth with the joint team to build the plans for that and to really figure out what the mitigated detail is contract by contract on what the opportunity is at hand.

And Sham, you want to talk about R&D, the 76 scope of -- so maybe let me do the following. It's a sales force of 40 FTE commercially and around let's say, up to 80 R&D. The total team is $130 million. And Sham, you can talk a little bit more about the engineering capabilities.

Yes. And maybe just to give a bit of detail, both software capability as well as ML machine learning capability. The team has built foundation models to support their x-ray findings and also in the CT area. So we'll leverage that more broadly with our...

Sham, we lost you there. You cut out. Dave, sorry, we had...

Yes, guys, I can jump to my next question and...

The radiologist is essentially looking at the images and correcting a draft report, amending to that port or just clicking accept, and we think that's going to give us significant efficiencies on the X-ray volume itself and that we can actually recover some of those costs and bring their time more available to do the advanced imaging studies that we're talking about that are growing at such a high rate.

Okay. And then, guys, just a second question just on the imaging side. I guess 2-part question. One, just given some of the pressures that hospital systems are seeing and are expected to see on a go-forward basis, are you seeing a growing percentage of your pipeline leaning towards JV type of deals? And then secondly, on de novos, you guys have entered a handful of markets that I guess I would define as much more receptive in terms of licensing, in terms of building, et cetera. Is there an opportunity as the Floridas, the Texas of the world become a larger percentage of the portfolio, that time to develop or cost to develop de novos could improve?

Well, the first part of your question, Dave, is without question, the number of inbound calls that we're getting from hospital systems has dramatically increased over the last 12 to 18 months. Primarily, I think that's because the radiology staff -- radiologist staffing shortage is an acute problem virtually for every hospital system no matter what size it is. And as a result, the initial calls may come in to us to see if we can assist them with radiology staffing needs. But then since that's not currently a core business of ours. It moves to a more comprehensive solution for them that not only attempts to deal with where they need to transition from their current capabilities of providing tools like the viewer or PACS and AI solutions into ways to better grow their outpatient business and to incorporate their physician groups into a more friendly and efficient informatic system, enterprise imaging system.

So I would say that while we continue to see opportunities for what we like to call tuck-in acquisitions, those are being dwarfed by potentially larger opportunities with health systems that instead of just maybe having 5 hospitals may have 50 or 100 hospitals. So the landscape is changing out there very rapidly. And I think RadNet's capabilities are being better appreciated as perhaps a unique company to give them benefits across the entire spectrum of radiology.

And on that note, I think it's highly likely that in 2026, we'll be announcing some new health system relationships as well as expanding existing ones.

As far as de novos in some of the the new markets that we entered into RadNet's philosophy has always been to land and expand, not build and hold. And so I think you can expect that we will be discussing other acquisitions that might be opportunistic in the new markets that we've entered as well as building centers to address the needs of some of these opportunities that I think let the capital and resources to really take advantage of the growing demand for imaging. So all of the new acquisitions, which primarily were completed this year, the 2 larger ones in Indianapolis and in Southwest Florida, our actively under discussion for both of these kind of expansion opportunities, acquisitions as well as de novos as well as the possibility of potentially in those markets buying other joint venture partners that are consistent with our hospital strategy.

And the next question will come from Andrew Mok with Barclays.

First, I wanted to clarify this new ARR metric. In 2025, digital health revenue was $93 million ARR was $75 million. So there's about an $18 million difference. And then in 2026, it sounds like the digital health revenue guidance of $140 million is expected to approximate ARR of $140 million. So why is there a delta between the 2 metrics in 2025? And why does that go away in 2026?

Sure. I'll give my answer and then I'll let Sham and Kees chime in. So predominantly the difference in '25 between the booked revenue and ARR at the end of the year was the EBC revenue that we that we recognize within the Digital Health division, okay? That was predominantly the delta. In 2000 and that delta, though, goes -- at the end of 2026, remember the following that ARR is almost -- it should be thought of as a balance sheet metric, meaning a number at a period in time as opposed to tracking the full year's worth of revenue. And by the end of 2026, these are based upon signed contracts. And many of those contracts that we signed for -- that will be part of the ARR will be signed in the second half of next year or even towards year-end, that counts in the ARR, but hasn't -- but it doesn't count in the revenue for that year because those contracts might be just starting. So that's why that gap is closing.

And as we continue to grow the SaaS-based business and sign new contracts going forward, I would expect that the ARR would exceed the booked revenue, which is a backward-looking metric as opposed to ARR, which is a forward-looking metric. Sham, do you want to add anything...

Yes. Let me add a little bit also pigging back to -- or referring back to the Investor Day, what we presented there. So our traditional business, where we come from is partially upfront license towards our customers and recurring revenue. And so our business mix last year was, let's say, 75% from a recurring nature and the remainder were one-off implementation fees or the EBCD program that's not necessarily recurring because it's a direct-to-consumer type of offering and so on and so forth. During Investor Day last year, we said with going concern with organic growth, that recurring nature of the business will grow fast because our proposition will be offered on an ARR subscription basis. And so that proportion has been for us to reach 80%, 90% in course of, let's say, 2 years.

With the acquisition of Gleamer, which is a 100% ARR business, so fully recurring revenues, we significantly boosted that profile. And as a result, we're achieving an equal amount of recurring revenue for next year as well as GAAP revenue. Going forward, as we grow, accelerate recurring revenue-based business, we can indeed expect that the recurring revenue is going to -- is larger versus the booked revenue. And just to amplify again, when we say ARR of 2025, it means the recurring revenue at the end of the period. So it's a run rate number.

Right. Understood. Okay. That's helpful. And then maybe a follow-up on the free cash flow. It looks like the free cash flow in the Imaging segment is up nearly 50%. And despite higher cash interest expense and higher CapEx. Can you walk us through the better metrics there including any favorable items or more capital?

Yes, sure. It's predominantly -- or the increase -- expected increase in free cash was predominantly from the significant increase we have in EBITDA because while cash interest expense, as you correctly point out is going up, mostly due to the fact that our cash are expected cash income from our cash balance will go down because we've spent some of that cash, i.e., on the Gleamer acquisition as well as Indiana and Southwest Florida. The fact of the matter is that the EBITDA is going up and disproportionately to how we're growing CapEx, which you can see CapEx is fairly flat relative to last year and the interest income -- interest -- net interest expense is only slightly going up. So that delta is all benefiting free cash flow.

The next question will come from Matthew Gillmor with KeyBanc.

I wanted to ask about the EBITDA guidance. It sounds like EBITDA is absorbing some pressure from the weather in the first quarter and then I suspect there's also some losses at Gleamer that's probably pulling down EBITDA a little bit too. But I was just hoping you could quantify that so we could sort of understand what's embedded within that potential drag.

Sure, sure. So the Gleamer EBITDA loss is being absorbed in the EBITDA guidance of the Digital Health division. And you'll see in the press release, there's a footnote there that we're anticipating as much as $5 million EBITDA loss this year from the absorption of Gleamer. But as Kees said in his remarks, we expect to get that EBITDA positive sometime in the middle of 2027, partly from a number of cost synergies there. On the -- on the RadNet side, yes, you're correct. There's 2 main headwinds that are embedded in our EBITDA guidance for 2026. The first being -- and the most significant is actually labor increases. So we're anticipating over $30 million of same-center labor increases in 2026, and that's embedded in our guidance. And that's roughly about 4% on average for our labor force in 2026. And that was a similar amount that we absorbed in 2025. There may be some upside there as we continue to implement some of digital health solutions that will automate many of the manual processes that we're doing today and maybe we can do a little bit better than that.

And then the second headwind that's absorbed in the guidance is the winter weather conditions that we've seen here. January, February, which will impact our first quarter. It won't impact our force assuming we have no more weather issues in March, it won't be as significant as what we saw last year. Last year was even more extreme. But that headwind is is embedded in the guidance that we put forth today.

Okay. That's helpful. And then there was a comment in the Gleamer sale announcement and then earlier in some of your commentary about Gleamer augmenting commercial sales force. And I think you mentioned Gleamer has 40 sales onset. I was just wanted to get some context in terms of how DeepHealth Salesforce is organized and the size of that sales force. And what Gleamer is bringing to the organization from a perspective?

Yes. Thank you. So to put it very simple, after the ICAP acquisition, we had a little bit over 20 strong sales force in the U.S. and a few sales leaders in Europe. In the U.S., it's a mixture of a team that can sell clinical AI solutions as well as what we call the IT infrastructure solutions for the diagnostic suite and the operations suite. In Europe, it's much more focused -- was much more focused on clinical AI. What Gleamer does is accelerates our commercial horsepower in -- with roughly 35 people in Europe, I would say, EMEA plus plus and an additional 5 persons in the U.S. And so you should really see it initially as an acceleration of the momentum in Europe and a further build-out of capability in the U.S.

The next question will come from Yuan Zhi with B. Riley Securities.

I understand there are many moving pieces and the recent acquisitions. If you exclude the recent acquisitions of imaging centers in Florida and India, what are the guided organic growth for imaging center business?

Yes. Thanks, Yuan. I appreciate the question. So embedded -- I guess, are you talking about same-center growth, organic growth?

Yes.

Yes. So we typically build and this year is no different. We typically build our same-center performance kind of in the 3% to 5% range. We try to be somewhat -- long term, we've seen kind of 2% to 4%, but in the last 5 or so years as more and more payers are getting aggressive in moving business away from hospitals into freestanding centers. We've seen that organic growth regularly be in the mid-single digits or higher. So we tend to build our guidance around growth in the 3% to 5% range on a same-center basis. And if we are lucky enough like what we have experienced over the last, say, half a decade to have that better than 3% to 5%, then we'll see some upside to the guidance throughout the year.

And as you saw from this fourth quarter, we greatly exceeded that 3% to 5%, where we saw advanced imaging on average, be up 9.6% on a same-center basis from the fourth quarter of 2024. So I think there may be some upside there, but we'll have to see as we move through the year, we won't necessarily get a good indication of that in the first quarter due to the weather conditions or at least in January and February, I think assuming we don't have any significant weather factors in March, we might have a better feeling of it once we see March results.

Yes. Got it. With the recent addition of Gleamer, can you compare the deep health ecosystem versus GE Healthcare in composition in the portfolio composition since they recently acquired that Intelerad? And where do you see some overlap competition? Of course, we will learn more later at your upcoming events.

I think I'll take that call -- question. I don't see much overlap at all when it comes to artificial intelligence. The Intelerad acquisition by DE was primarily a what we call a viewer or a PACS system, which was intended to be a replacement or upgrading of their current tools, which I think have been lagging in terms of investment and whatnot. But Intelerad is primarily a hospital-based but -- and to a lesser extent, outpatient-based system, which we come across infrequently in the outpatient area, of which we feel it's just a single component of what we are offering now in the way of AI from the clinical standpoint as well as the operational standpoint to enhance improvement. And then layered over that is going to be what the real driver and the opportunity here is and that is the use of artificial intelligence, both from a clinical and a reporting standpoint, to improve overall radiologists, efficiency and productivity.

So where there perhaps is a departure here is the tool that GE bought Intelerad really focuses on just a single part of the IT infrastructure, that meaning a viewer or a paste that essentially presents the images and create storage capabilities. Ours is substantially greater in terms of its impact on running the entire workflow process of the radiology department, whether it's hospital-based or outpatient-based.

Got it. Maybe one quick follow-up here. And for the acquisitions of recent imaging centers and the Gleamer are complete, what is the net leverage ratio right now?

What is the next -- I'm sorry, I didn't hear the question.

What is the leverage ratio?

The leverage ratio. The pro forma leverage ratio Well, once we complete -- well, we have completed Gleamer. But once you see our first quarter numbers will be levered to about 2x. Yes, slightly less than 2x -- between 1.7x.

Initially in the 1.6x to 1.8x range.

The next question will come from Larry Solow with CJS Securities.

Congrats on another good year and an exciting acquisition. First question, just on Gleamer. So you mentioned it will turn EBITDA positive sometimes they're in mid '27. I'm just curious, approximately online when you will start integrating this technology into the imaging center and when you think it will actually drive a net benefit in your costs on that side of the business?

Kees, I'm going to let you handle that.

Kees and Sham.

Yes. And Sham is having it over to me. So I'm delighted to take them. So we have actually taken already during diligence, live Speed Star to working with the team to figure out what can be deployed when we are going to take multiple steps here. The initial step is making sure that the current portfolio of Gleamer gets deployed, which should yield productivity impact as of Q3 this year, meaning faster diagnosis finding indications that find its way automatically in a report, streamlining reading and reporting -- sorry, reading triaging and reporting accordingly. And so we expect those benefits to occur in Q3 this year also based on our experience with deploying, for instance, the See-Mode solution and so on and so forth.

Now that's Phase 1, and I'll let Sham comment on that in a second. Phase 2 is really the step towards automated reporting, where more and more you get the benefit of not just doing the diagnosis faster and better but also alleviating the burden of creating reports. And that can be done in draft supports that can include a certain amount of findings, for instance, the x-ray base. But what if you could extend that also with findings from -- with other indications and the more indications you have there, obviously, the better the drought reports will be -- we're going to take a little bit more time to develop that. It's being developed as we speak, but we would see that in the coming 6 to 12 to 18 months coming to fruition.

Yes. And maybe the only thing to add is Gleamer is not only an X-ray company. So obviously, we're going to do the X-ray, but they have a -- they have a very strong lumbar MR product, which is a very complicated exam has lots of measurements. And so automating that could create tremendous amount of efficiencies. We do a high volume of lumbar at RadNet that's also another area that we're going to be bringing it in. And as we now pool the teams together, it's going to accelerate our overall road map. So it's X-ray, it's lumbar, MSK, MR. And then some new areas that will develop together. We'll also see that rolling out towards the end of this year.

Great. And perhaps just another question for you guys on the digital health. So the the forecasted or projected EBITDA this year -- or ex the Gleamer acquisition, it would be flat to modestly up and a little lower margin. I'm assuming you're just accelerating some of your investments into the business. And I imagine that the mid- to long-term outlook is probably actually improved, but can you just give us any color on that?

Yes, correct. That's absolutely correct assumption. What we track internally is both what we call core business growth. So the organic growth from our standing business without new product development, that's performing nicely towards the growth object objectives that we have portrayed during Investor Day. It also comes obviously with a very good margin that you would expect from cloud native solutions. Then secondly, we have the impact from previous year acquisitions. And remember, those acquisitions, for instance, iCAD came at a loss, returning those around capturing the synergies. But we've also guided for instance, for iCAD, that will take until mid-2026, for the breakeven point. Now we're actually ahead of that plan, but that's still providing a little bit of a margin drag, margin rate drag. Then the third before Galaxy is indeed exactly as you said, we are investing in our commercial team. We're investing in our service capabilities. We are investing in our regulatory capabilities, and that indeed has an impact on the margin rate.

And then the other side of it is on the top line side, right? As you know, we're in a SaaS model. And so revenue lags contracts, and that's the reason now we start to report on ARR. So you get a feeling of how the forward business looks like.

Great. And if I can just slip in one more for Mark. Just on the Imaging segment. You mentioned a little bit of headwind on the labor cost in the weather, probably in the first quarter or I guess it has to be the first quarter. And it looks like EBITDA margin about flat year-over-year. Just curious there must a lot of moving parts. But are you getting -- within that embedded, is there a net benefit from the digital health piece this year relative to last year that's flowing into imaging?

Yes. We're going to -- because we're continuing to implement this year, we haven't put a lot in the budget in terms of the efficiencies and savings from digital health. And I think that, that's another area of upside in the guidance for this year.

Got you. And just lastly, cadence, weather, obviously, impact Q1 of last year as well. And then you had the fires do you expect still to grow year-over-year? Or just any kind of thoughts on cadence as we start the year?

Yes. No, we certainly expect the first quarter of this year to be ahead of last year's first quarter. And while we did have some pretty bad winter storms, which I know you lived through in New York, Larry. There weren't, it still wasn't as bad as the winter weather conditions and the fires from last year's first quarter. But there will be an impact, and we'll be able to quantify that when we issue our first quarter results. Okay. And I'm going to -- if you -- you're still listening, I've got some more information on your question about what would be the revenue growth year-over-year between '25 and '26 without the Indiana and Southwest Florida acquisitions. The Indiana and Southwest Florida acquisitions are going to be responsible for about $120 million of revenue growth in 2026. Yuan, so you can take roughly $120 million out of your model and then recalculate what those growth rates would be without those acquisitions.

I think we have one more question before we end the call.

And the next question will come from Jim Sidoti with Sidoti & Company.

Two quick ones. One, can you tell us what the cash paid out those acquisitions in Indiana and Florida were in the first quarter?

Yes, sure. You'll see it laid out in our 10-K, which is being filed today. For the Florida, Southwest Florida acquisition, we played roughly about $65 million for that. And then for Indian, I believe it was about $9 million.

Okay. All right. And -- do you -- in the past, you said you plan to open about 10 new centers or your 10 newly built centers? What's the expectation for 2026?

Between 11 and 13 centers is what we anticipate opening by the end of this year.

This will conclude our question-and-answer session. I would like to turn the conference back over to Dr. Howard Berger for any closing remarks. Please go ahead.

Again, I would like to take the opportunity to thank all of our shareholders for their continued support and the employees of RadNet for their dedication and hard work. This is an exciting time for RadNet, and we were glad to share that with our shareholders and stakeholders here. You can be certain that management will continue to endeavor to be a market leader that provides great services with an appropriate return on investment for all stakeholders. Thank you for your time today, and I look forward to our next call. Good day.

Conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning, everyone, and welcome again to the 44th Annual JPMorgan Healthcare Conference. My name is Matt Mckean, and I'm an associate here at JPM. And it's my pleasure to introduce our next presenting company, RadNet.

Joining us today will be CEO, Dr. Howard Berger, CFO, Mark Stolper, Chief Strategy Officer; Dr. Greg Sorensen and CEO of RadNet Digital, Kees Wesdorp. They'll be running us through a brief set of materials, and we'll ask you to hold off on any Q&A until the end.

With that, I'll hand it over to you guys.

Thank you, Matt, and thank you for joining us this morning. My conversation talk will be very brief, so I can let the people who really are help driving the company, get up here and give you the bigger vision.

But fundamentally, what we're talking about is health care is in transition. It's in transition really in 2 ways. One is the enormous challenges that health care is facing due to the labor pool shortage. It is affecting virtually every facet of what has been the traditional way that health care has delivered our services, and that is with manual efforts.

So this began perhaps 4 or 5 years ago with COVID and has continued, not only despite the COVID being somewhat now put in our rearview mirror, but because it has changed the fundamental outlook of how people view working in the health care sector and the shortage has led to increasingly higher cost of delivering that service.

The other facets that are driving this change is the continued effort on the part of both referring physicians, patients and commercial payers to drive as much out of the hospital systems and into ambulatory care centers as possible given the enormous difference in the both cost and to the patient as well as cost to the system of delivering those services in traditional hospital settings.

And the last and perhaps the most important is how health care needs to change, which is nothing new, but which the time is right to do that is from what we've called reactive detection, meaning somebody comes in with a concern or a suspicion or a complaint to proactive prevention where we're trying to diagnose earlier and earlier, what are the issues that the physician and the patient need to work together on to try to reduce the long-term consequences of diseases, which, for the most part, creep slowly but cost the patients and the system a lot of money.

And driving in on the White Horse to save everybody is artificial intelligence. And necessity is the motherhood of invention. You probably heard that expression before. But I don't think it's ever been truer in healthcare that the fundamental problems and the changes that we need to embrace are those which artificial intelligence is capable of doing. I'm very proud to say that I think radiology and imaging are the poster child for this because we've been navigating in the digital world really for the last 20 years as both some of the newer technologies and now some of the older technologies have embraced digitization.

So everything that is done in radiology and imaging is reduced to a bit or a bite or the viewing of a pixel in order to create an impression of what might be there or what you might not see and is there. And a couple of examples of that, that we're excited about, that I'm not certain that the team will get into now is that for those of you that have been following RadNet, 3 years ago, we introduced something called EBCD early breast cancer detection. And our ability to diagnose breast cancer, maybe 1 to 2 years earlier than the best of radiologists who review these breast images has been quite a success for us, both in terms of the adoption by our patients getting screening mammography as well as the improved cancer detection.

This year, we're going to be adding to that program, a new tool that will allow risk assessment by looking at normal mammograms and being able to predict the likelihood of a woman within the next 5 years getting cancer. So this is well before even artificial intelligence can tell you whether or not an abnormality is cancerous or not. This is predicting with a high degree of accuracy whether or not somebody should be more diligent, vigilant about managing their health care through screening tools. And that, in fact, is what we're trying to do on almost every facet of whether it's cancer, whether it's cardiovascular disease, metabolic diseases like diabetes, all things that can be looked at with information that has always been there in our scans, but which there never has been tools to look at a level of detail that the human eye just can't do.

So both on the clinical side, which is what I described as well as the patient experience side of how we manage our patients through our centers using artificial intelligence guided tools to make it a less stressful experience. I will tell you from personal experience as well as talking to many of our patients who come through our centers. Nobody wants to be in a doctor's office. And so for us to provide tools that will make that experience less stressful and give better results is not only a challenge that we feel up to but something that we think that we will be leading in the new tagline for the company, I think, is appropriate, and that is advancing health care through innovation and artificial intelligence.

So that's what you're going to hear about from our thought leaders here. And I'll leave you with the one thing that makes me feel that we're on the right track is that artificial intelligence, at least in health care, is not a bubble. It's here, it's here today, and it can make a difference. And I'm proud of our team that's leading this for our industry in a rather unique way because while artificial intelligence is a major effort on the part of RadNet so is continuing to expand our Services division, which allows us to deploy the artificial intelligence in real-world time to assess the effectiveness of these tools and make adjustments which is always going to be the case with artificial intelligence.

The word artificial unfortunately, I think, is not as well understood or used because there's nothing really artificial about it. Artificial intelligence or AI is best when you keep feeding it data. When you broaden what these large language model algorithms are capable of doing, you need to continue to assess the value of what your models do to make certain that you're not only improving the level of quality that you're using the artificial intelligence. But also that make certain that the habits that can develop by our employees, both on the physician and nonphysician side, aren't taken for granted, and it just becomes routine. So this is kind of a backdrop of the challenge that we have and the opportunity to make a real difference in health care.

With that, I'll turn it over to Mark Stolper, our CFO.

Thank you, Howard. I'm going to briefly for those of you who are a little less familiar with the RadNet story, take you through an introduction of who we are and what we do and then turn the presentation over to Kees, who's going to talk a little bit about the Digital Health division.

So we are the largest owner-operator of diagnostic imaging centers in the United States. We're not exactly an overnight success. The company was founded in the early 1980s. We divide the company into 2 operating and reportable financial segments. The first being our core business of owning and operating imaging centers, which is our imaging services division. It's about a $1.9 billion annual business and growing, and we'll talk about the growth a little later on in the presentation. We also have a newer and fast-growing digital health platform, which ties into some of the things that Dr. Berger was mentioning around artificial intelligence and driving efficiencies in the workflow, both for our company employees as well as our radiologists.

We've been a fast-growing business. We are projecting to grow the company on the imaging services side, in the double digits, 11% to 13% over the next several years on a compound annual growth rate. The digital health division is growing over 30%, and we anticipate that continuing in the next few years. We have 11,000 employees. We're based in Los Angeles. Our team members are across -- on the imaging services side across 8 states where we operate, our fixed-site diagnostic imaging centers and we have over 400 team members on the digital health side of our business, which are throughout the world.

So from -- on the core business, the Imaging segment, we have 407 locations, highly concentrated in 8 locations, and I'll show you a map in a few slides. There's no accident as to why we operate where we do. We'll get into that. We have core operating tenants of being densely -- focused in densely populated geographies. We have clustered centers approach, which gives us a tremendous amount of efficiency and the ability to use our scale to be a low-cost operator.

We also have a core operating tenant of being multimodality, meaning the vast majority of our centers are what we call large centers of excellence that practice all of the different procedures within diagnostic imaging from routine studies, which are the x-ray, ultrasound and mammography, which is roughly about 72% of what we do as well as the more advanced studies, which are MRI, CT and PET/CT, which is the other roughly 22% of our procedure mix.

We've been a fairly aggressive acquirer. You'll see in a couple of slides. Our industry is highly fragmented. And as a matter of course in our business, we do look for acquisitions of smaller operators. We also have been expanding very quickly in partnership with some of the larger health systems in the United States where we partner with them and become their outpatient imaging partner and we'll get into reasons behind that later on.

With regards to the Digital Health segment or what we call DeepHealth, which is all of our products and services are branded under that brand. We're a global leader in providing radiology workflow solutions as well as clinical AI tools. So the products that Kees is going to get into today of risk and packs a radiology information system and the back-end image management solution is the backbone that RadNet has been operating on since 2009.

We're beginning to -- we've taken that platform to the next level to the cloud. We've got over 2,000 customers as customers of both these workflow solutions as well as these clinical AI solutions that we've been developing in specialty areas that allow radiologists to become more productive and more accurate in detecting and diagnosing disease.

We've been a consistent grower and had consistent results. We've grown the top line over the last 15 years at over 8.5% compound annual growth rate. EBITDA has tracked that. We continually go back to payers for pricing increases as we can prove more and more value to the health care delivery system and prove that we're the partner in helping them drive a lot of this outpatient volume away from hospitals into the lower-cost sites of care, and we'll get into that later on.

Let me talk a little bit about the market. It's -- if you believe the research out there, it's a big and growing market. Nationwide, on an annual revenue basis, the diagnostic imaging market is about $140 billion. It's divided between work that gets done within hospitals and work that gets done outside of hospitals.

It's believed that the hospitals today perform about 40% to 50% of all the diagnostic imaging in the market -- excuse me, 50% to 60% of all the diagnostic imaging in the market. And that includes both work on inpatients, meaning the very, very sick or injured patients that are already admitted to the health systems and those that are brought in through the trauma centers and emergency rooms, plus outpatient ambulatory patients that are referred into the hospital for diagnostic imaging.

And then the other side of the market, the market that we play in is the ambulatory outpatient side where we work with thousands of referring physicians from primary care doctors all the way through every specialty who send us their ambulatory outpatient work.

And one of the themes that you'll hear today is the movement of -- and Dr. Berger mentioned this in his opening remarks, the movement of diagnostic imaging out of the hospitals into lower-cost sites of care. In our specialty, meaning radiology, the hospitals charge typically anywhere between 200% and 500% of the pricing, both to the patient and to the insurance company or the health plan as compared to the ambulatory outpatient market.

So the payers in recent years have been trying to direct more and more of the ambulatory outpatient work into the freestanding lower cost sites of care, and they're doing it through a number of mechanisms, one being preauthorization, where most advanced imaging today must be preauthorized by the insurance company. And at that time, they try to direct the patient to the lower-cost outpatient facilities like the ones we run. And then secondly, they're changing plan design to provide financial incentives with lower copayments and coinsurance for the patient that incentivize the patient to self-direct into the lower-cost sites of care.

Our industry is highly fragmented on the imaging services side. It's believed to be almost somewhere between 6,000 and 7,000 imaging centers out there. We, plus the next 4 players represent less than 15% of those outpatient centers. So this is one of the last frontiers of health care services that hasn't consolidated in a meaningful way. And there's tremendous opportunity for us to continue to grow the business. through consolidation and through de novo centers.

So this is where we operate. We operate in 8 states. We're highly concentrated. There's 2 primary benefits from being geographically concentrated. The first being to be able to operate at scale and to be able to centralize many of the functions that we perform on behalf of our imaging centers such as revenue cycle, preauthorization, insurance verification, marketing, et cetera. We're also able to load balance our capacity by sending patients to various sites that have capacity at the time that they're looking for their appointments.

Secondly, the big advantage of being geographically concentrated is that we have become indispensable to the health care delivery systems of our markets, meaning that the payers need to have us in network with them. And it gives us a seat at the table because we're their primary partner in helping drive this business out of the more expensive hospitals into the lower-cost sites of care. So this gives us a seat at the table from a contracting standpoint and it allows us to establish a fair and equitable pricing for our services and even get pricing increases throughout time.

So what do we do? Well, as I mentioned, we're a multi-modality company. The vast majority from a procedure volume of what we do is simple routine studies, X-ray, ultrasound, mammography that represents about 72% of all of our procedure volumes. However, the more advanced studies, which are growing much more quickly the MRI, CTs and PET CTs, which represents roughly the other 22% of what we do, that drives about over 60% of our revenue.

And what we're seeing in our business is that there is a flight towards higher acuity exams, and that's being driven by technology advances in advanced imaging equipment. It's happening with more advanced post-processing software on MRIs and CTs and PET CTs, advances in contrast materials, radioactive pharmaceuticals and AI that's making the advanced imaging modalities grow almost twice as fast as the routine imaging. And from a business standpoint, they come with higher pricing and higher margins. And we think that, that trend continues.

From a payer mix standpoint, we have a diversified payer mix. So we're not exposed to any 1 payer. About 23% of what we do by revenue is Medicare business. We have a special book of business that we're very proud of, predominantly in California, where we're at full risk for about 1.6 million, 1.7 million lives under capitated arrangements where we get paid a per member per month fee for being the exclusive imaging provider for that patient population. That's a growing business.

And as the health care delivery system focuses on risk taking and value-based care, we think that, that can be a bigger aspect of the company in the future.60% of what we do by revenue is based upon negotiations with commercial insurance, both regional as well as the large national insurance. And then we have some smaller books of business like personal injury, workers' comp and very little Medicaid exposure.

I mentioned in my opening remarks, a growing part of our business is hospital joint ventures. Today, we have 26 joint ventures with some of the largest health systems in the United States, where they have partnered with us to be their outpatient diagnostic imaging partner as these hospitals and health systems continue to lose business to the freestanding outpatient industry. Many of them are looking for a strategy to participate in that trend instead of try to fight that trend. And by partnering with us and being an equity partner in our outpatient imaging centers, they're enjoying the growth along with us of the outpatient industry.

From our standpoint, we receive a couple of benefits. The hospitals have been integral in sending us additional procedure volume, using their relationships with community-based physicians that we otherwise wouldn't see ourselves. And they also give us a bigger seat at the table when contracting with some of the larger health systems. So today, 152 of our 407 locations are held within these health system joint ventures, representing about 37% of our centers. And we think that, that can grow to over half of our centers in the next 5 years.

I'm going to turn it over to Kees to talk a little bit about our digital health segment. Thank you.

Thank you, Mark. Great to have the opportunity to give you an overview of RadNet and the value we create with our digital health segments. We are a global leader in AI-powered informatics and in the conversations this week, but also prior where I always start is to say and to remind people that we already have 2,000-plus external customers. We obviously have RadNet as an internal customers, but many, many customers across the world as well.

We have a global footprint with over 400-plus employees across 4 continents. We are clinically validated. And I'm proud to say we have the most comprehensive portfolio in the industry with now 22 FDA-cleared products and 15 CE market solutions. And we're integrating capabilities. The journey started originally with Dr. Sorensen's company, DeepHealth in the mammography space. But over time, we've acquired strategically assets and capabilities and teams most recently last year with See-Mode, iCAD and CIMAR, both in the AI domain as well as in the informatics and image exchange domain.

When we say our digital health segment, that's equivalent to how we market ourselves externally with DeepHealth. We operate in an incredibly exciting market. And Dr. Berger already talked about everything that's going on, but this market is already vast $5.1 billion in 2024, growing double digit with 11% towards the $7.7 billion market across radiology informatics and clinical AI.

Our solutions are positioned within that in the highest growing segments of outpatient imaging, cloud-native solutions and clinical AI. And that's why we have such tremendous tailwinds, both with our deployment at RadNet, but also with external customers as we scale our solutions.

The need for these solutions, AI-driven -- AI-powered solutions is high. We need to navigate clinical, financial and operational challenges in the workflow, in health systems, in outpatient imaging. And so to name a few, today, there's a significant challenge of no show, so disconnected patient engagement up 15% to 30% of patients do not show up, which obviously has a massive burden on the execution in center operations.

Strained workforce. You often have heard about burnout and staff shortages. That's only to expect to further widen. And so by 2030, there will be a shortage of up to 30% of radiologists, for instance. And then inconsistent clinical outcomes with quite significant double-digit percentage variability in what one radiologist would say in terms of interpreting an image versus the other.

Within that, a highly fragmented tech data and workflow set up. And so for instance, any CIO in any health system or outpatient setting is dealing with over 20-plus IT vendors to make the system work. So there are too many point solutions, it's too fragmented and it needs strong interoperability solutions to address those challenges. That yields quite a significant cost inefficiency that externally is estimated to up to $25 billion in radiology in the U.S. alone. And these challenges are obviously our opportunity.

To that end, over the last couple of years, we've invested deeply in what we call the DeepHealth OS. Think of that the operating system that is cloud native and cloud first, we can also do hybrid deployments that allows packs and risk system to be delivered more scalable, more cost efficient and that integrates Agentic AI and Clinical AI on top to make sure that our solutions can be delivered modular, so not in one Big Bang approach, modular into the radiology workflow. And that infinity loop represents at a very high level, the radiology workflow from center operations, where we're taking the patients to image acquisition, to interpretation by the radiologist to clinical follow-up and so on and so forth.

We have 5 key domains that are based on the DeepHealth OS to address each of those steps in the radiology workflow. Our operations suite automates center operations to make them more efficient and to also address the work for shortage. We have patient engagement tools to make sure that we can address the no shows and get more meaningful results back in the journey that a patient goes through. We have our population health suites, which are really our Clinical AI suites across breast, lung, prostate, neuro and most recently in the thyroid domain.

We have our future forward pack solution that we label the diagnostic suite, which is really cloud-native packs and reporting solutions. And then we've got TechLive, which is remote collaboration tools to make sure that we address the technology shortage for operating, for instance, MR scanners, and that's now widened to other modalities as well, such as ultrasound and so on and so forth. With MR, we've seen in the RadNet Services business and a remarkable impact with our TechLive proposition, reducing the closure hours by 42%. And obviously, that's good for patients, that's good for the operations of RadNet.

We often get the question, what is the combination of RadNet services business and the digital health segment deliver? And what comes to mind immediately with people, well, clearly, there is a unique amount of access to data to train the AI models. That's definitely true, but the opportunity that we are capturing is much, much broader than that. It's a deep symbiosis between the services business in the digital health business in the sense that we operate with the innovation and technology flywheel.

So any idea, any challenge, any opportunity that resides in the service business is brought over to digital health team to think about how can we solve that with technology tools at hand, informatics or AI, you name it. The solution for that is co-created and then once mature to a certain degree, operated in clinical and operational practice. So that we can refine it. And once we feel that we've got a superior proposition in product based on also all the training from data at RadNet, we then have the opportunity to deploy at RadNet, but also externally commercialize. This makes our ability to prototype, co-create and bring to market, operate at light speed. I've never operated in a role before where the product development cycle was as fast as here.

I mentioned 2,000-plus customers. This is across the hospital segment and outpatient segment with very significant logos. So for instance, existing customers today are Cleveland Clinics, the NHS in the U.K. And then obviously, the large and sizable outpatient imaging providers such as Acumen or Solis and then much, much, much more. We've had very, very strong traction over the last 18 months with our new solutions. And again, you can read on the slide some of the recent wins that we've been able to deliver.

The last thing I will leave with you is how we're deploying our solutions at RadNet. There's really 4 themes that we're jointly addressing between the services business and the digital health business. image acquisition by remote scanning, I already mentioned that. That's now deployed over 400 MRI scanners, and we are expanding that to other modalities as well. So the deployment there is quite mature and we're capturing the further opportunity in 2026.

Similarly so for clinical AI solutions, especially in the domain of mammography and thyroids. We've made great progress, but we still see in other clinical domains very significant opportunity. Think of x-ray, think of lung, think of brain, think of prostate. So still a lot of value capture to come.

The third domain is in the reading and report generation domain. So think of upgrading our packs to cloud-native solutions, including reporting tools. We're in initial deployment now, and we're rolling out over '26, '27 to full maturity.

And last not least, for center operations, patient experience and center operations. We've started quite a few exciting pilots, I think, for instance, about smart and digital onboarding in terms of coming to -- a patient coming to a center and then through their smartphone, they can enroll immediately such that they don't have to go through the paperwork on site, and it requires actually much less time and effort. That's in early stages, and we expect that to come to fruition over the course of '26 and '27 as well.

And so the point of this slide is we have made great inbounds with digital health solutions at RadNet but there's so much more that we can still do with the existing portfolio that we have at hand, and we'll continue to innovate for further value capture.

Mark, with that, back to you.

Thanks, Kees. Before we get into question-and-answer session, I'm just going to leave with you some of thoughts about the future outlook of the company in the coming years. I showed this slide earlier, and the 1 point I'd like to make on this slide again is that there's been an acceleration of our growth over the last 4 or 5 years.

And one of the questions that we get and we held an Investor Day in November of last year is do we think this acceleration can continue both on the services side as well as the digital side? And the answer to that question is yes. From an industry perspective, the trends remain strong. We continue to see diagnostic imaging becoming a more valuable and valued portion of the health care delivery system. It's the gateway to diagnostics.

And we're in the sweet spot of where health care is and where it's going in terms of the early detection of disease, preventative medicine population health screening, noninvasive medicine. And as the technology continues to improve, which it is and will in the future, there's just simply more and more clinical indications for ordering the types of tests that we perform.

We're building centers. One of the -- there's so much demand for diagnostic imaging currently. There's not enough capacity and in many of our markets. We're building de novo centers last year. We built 7 centers. This year, we have in various stages of development and construction, 11 new centers, and that capacity will also be able to be filled. And as that is filled, we're going to continue our double-digit growth.

Tuck-in acquisitions are still available, again, a highly fragmented industry. We just announced an acquisition on January 2 of provider in Florida of 13 centers with over $100 million of revenue. We're excited to have a bigger toehold in that state where we think that there's plenty more opportunities for both de novo centers as well as further acquisitions. And that's the case with all of our markets. We think that there's opportunity, more opportunity for continued reimbursement benefit from commercial payers as we continue to scale, and prove our worth to them regarding our being a partner in getting the more expensive -- this business out of the more expensive hospitals into the freestanding centers.

We've delivered on the pricing increases from commercial insurance companies and from capitated payers, and we believe that will continue. Additionally, we're working on a number of new joint ventures with large health systems in both our existing markets as well as new markets, and we're excited to hopefully be able to announce some of those in the coming quarters. Digital health with its initiatives both on the clinical side, in a number of different areas as well as the workflow is growing tremendously.

Inside of RadNet, but more importantly, with third-party customers, and we think that, that 30% growth is going to continue into the future. And finally, we're in a very good financial position. We ended last quarter, meaning the third quarter of last year with over $800 million of cash on the balance sheet. We have about 1x net leverage. And so we've got a lot of capacity and a lot of capital to continue to invest in the business. So this is the outlook we gave for the next few years at our November Investor Day.

We think that advanced imaging on the MRI and the CT side is going to continue to grow on a same center basis in the mid-single digits. PET/CT, which is being driven by a couple of specialty procedures we do, specifically the PSMA prostate exams as well as these amyloid brain studies, looking for the presence of these amyloid plaques in the hopes of getting more patients on to some of these newer drug therapies addressing Alzheimer's and dementia. That's been growing double digits in the range of 15% to 20%. We think that, that could continue in the coming years. And we think that routine imaging will grow kind of in the 1% to 3%.

From a revenue perspective, what does that all mean? That means that we think the imaging services business is going to still have double-digit growth. for the medium term in the 11% to 13% range. The digital health division is growing over 30%, we think, on a compound annual growth rate, and we think that, that will continue. And we think that's going to result a lot of the digital health solutions that Kees had mentioned, when we implement them, as we are implementing them within RadNet will result in 100 to 150 basis point margin improvement over the next 3 years, and we're very excited that with that as that creates more free cash flow and more ability for us to continue to invest in the business.

Our plan is to keep leverage low. We were at 1x today. We would not go above 3x and we would only do that in the case of a transformational acquisition that would have a lot of value for our shareholders. And we're going to keep our maintenance CapEx level to where it is today and the kind of 3% to 4% range.

So with that, I'd love to open up the floor to questions. One minute for questions. Thank you.

Good morning, everybody. I'm Jane Mazur, I'm the SVP of Corporate Communications for RadNet. And I'd like to welcome you all to RadNet's Investor Day 2025 here at the NASDAQ Marketplace here in New York City. We are thrilled to have so many here in person as well as those joining us via the webcast. Please take a moment to silence your phones as we get started.

Before we begin, I'd like to note that today's presentations include forward-looking statements, which are subject to risks and uncertainties described in our SEC filings. And can we pull that forward, please? I want to make sure everybody can read it.

We have a full and exciting agenda ahead featuring presentations from our leadership team, our physician experts who will share our insights to strategy, financial performance, clinical innovation and long-term growth initiatives. Additionally, we have 2 scheduled Q&As that will follow the presentations throughout the day. During our lunch break, at the end of each of the sessions -- or at the end of the session, we will also have product demonstrations available to those on site to experience firsthand some of RadNet's latest technologies and digital solutions.

Before we start the presentations, we'd like to share a short video that captures who we are and what drives us. Following the video, we'll be joined by Dr. Howard Berger, President and CEO of RadNet, who will officially kick off the day with his opening remarks. Let's begin.

[Presentation]

Good morning, and welcome to RadNet's first Investor Day. Question is, why today? What's different today than yesterday or 2 years ago or 5 years ago? The world is different. We've changed. We've transitioned. We've adapted to circumstances that probably none of us could have foreseen. And that started 5 years ago with COVID. COVID was something that affected everybody on this planet, but it particularly impacted the labor force. People retired, people decided they did not necessarily want to work in health care or the premiums that were forced to pay to keep the good talent that we've had rose dramatically.

So the cost basis and the structure of how all of health care, for that matter, perhaps so many of the industries that we think about became and needed to develop a new model. And then 2 years ago or thereabout, something else changed, something else fundamentally that RadNet was determined to become a major player in this industry.

Health care is under transition. Hopefully, that slide is up, if we can put that slide up. I've tried to list the items that are not necessarily unique to RadNet, but what all of health care finds itself exposed to. An increasing shift away from hospitals to ambulatory settings. I noticed I didn't put on there just outpatient imaging centers. You talk about surgery centers, you talk about physical therapy. You talk about laboratory, places where people are looking to get lower cost and more efficient delivery of health care, particularly after COVID, people don't like going to hospitals. They didn't like it in the beginning, and it became even more pronounced after COVID.

Technology. Technology is a driver whether we want to embrace it or not, but it is fundamentally changing the way health care needs to evolve in order to address the numerous challenges that we face, one of which, again, is a very strained labor force, but other ways of making health care that much more affordable and effective in both getting to earlier outcomes and improved results in the diagnosis of diseases.

AI is the core of that. RadNet wants to be the leader in changing from reactive detection to proactive prevention. That's what our EBCD program is, our lung screening program, our prostate screening program, our coronary artery CT scanning is about how do we impact the lives of people to diagnose earlier and provide a better outcome. And the core of that is technology. What happened a couple of years ago, maybe 3 years ago, some things that have become buzzwords today, ChatGPT, cloud storage, transitioning to cloud native capabilities. And perhaps most importantly, using AI as a tool to improve diagnostic accuracy and efficiency. That's when RadNet decided to transform itself and use its platform as an IT company into a technology-enabled company.

We've already demonstrated the various ways that we can impact the delivery of imaging and health care with things like TechLive, our EBCD program and other tools that we're developing. You'll hear from a cross-section of the RadNet leadership today, which is really what we want to focus on is that RadNet has the breadth and depth to become not only the dominant player, which I believe it is already in the radiology and imaging community, but to become a health care company. Many of you have heard the term that I've used in the past that imaging is the gateway to population health, population health is the gateway to better health and better outcomes. And RadNet wants to be the transitional leader to work across all the various disciplines that we have and use the technology, both from an equipment standpoint and from an AI standpoint to make that difference.

I'm proud of the team that has been assembled and that you'll hear from today, not only from the operational and day-to-day delivering of our imaging services, but from our clinical leadership that has the ability to guide RadNet into the use of these tools, which are profound. Having gone through that journey myself, purely as a way to satisfy myself that early detection can be an improvement in both your mental and medical outcome. I'm proud to say that these tools work. And what we'll try to demonstrate to you today is that the success that we've had over the last 4 years in advancing the company's profitability, it's improved efficiency and things that have addressed the very challenges that have faced us are now something that we can embrace and bring to the next level.

I look forward to seeing your reactions to the substantial amount of information that we've never presented before. And while I call this our first Investor Day, it's probably the most important given the fact that we've not done this in the 40 years that I've been overseeing RadNet. And I think today puts us squarely in the middle of where health care is in transition. So I welcome your thoughts both during the Q&A and times that we have to come together. But I stand here proud of the organization that has risen to the level that we are today and feel extraordinarily confident that we can deliver value as Mark and I talk about in each and every closing call for all of our shareholders and our stakeholders.

And I'll leave you with one final thought. The biggest stakeholders that we have are our patients. It's not the people that own our stock. It's the people, as you saw in the video that come to our centers every day and don't necessarily want to be there but are welcomed with compassion and sensitivity that we're there to help them on their journey. I'm delighted that you're here listening to this to be a part of their journey and hope that we can satisfy you with the confidence and enthusiasm to lead RadNet forward into a future that has unlimited potential. Thank you.

Well, first of all, I want to thank everyone for coming today. It's a proud moment for the company. And I know you have a lot of things that compete for your time on a daily basis. And it means a lot to us that you're here supporting the company and listening to our story. And I also want to thank you for your trust. Many of you are existing shareholders. Some of you may become shareholders in the future. We like to -- we, as a management team, the Board, the employees are actually the largest shareholders of the company. We stand next to you, and we're working hard. And I think you'll see that with the group that we've assembled here today to be good stewards of your capital, and we understand the trust that you've instilled upon us to shepherd your investments into the future.

What I'd like to do first is just talk about some highlights from our third quarter results. As many of you may have seen. Yesterday, we had our earnings call. Sunday night, we put out our earnings release for the third quarter. It was another record quarter for the company, both in terms of revenue and EBITDA. Our revenue grew double digits like it has been for a number of quarters now. We grew 13.4%, relative to last year's third quarter. Our Digital Health division, which is, as you're all aware, is the newer part of our company, grew 51.6% relative to last year's third quarter. EBITDA also had double-digit growth. We grew 15.2% relative to last year. And our margin, we also demonstrated margin improvement of 26 basis points relative to last year.

How do we do this? Well, we've done it in many ways, and I'll go through it on the next slide, but procedure volumes continue to be very strong. And what we're proud to show you today is that we're not just waiting for business to come to us. There is many initiatives across the company that are driving procedure volumes, driving capacity that allow us to continue to grow this business into the future. MRI grew 14.8% relative to last year on an aggregate basis. On a same-center basis, it grew 11.5% relative to last year. We'll talk about some of the things that we're doing inside of MRI to continue to build capacity and drive patient volume.

CT, also 9.4% aggregate growth relative to last year, 6.7% same-center. And PET/CT, which has been our shining star for a while, and we'll -- Dr. Rose will be talking about it a little bit later in the presentation, grew over 21% relative to last year and almost 15% on a same-center basis.

As Dr. Berger mentioned, we're well positioned for the future, and that goes without saying. Our balance sheet is strong. We ended the quarter with over $800 million of cash and extremely low leverage. We're on a net debt basis, net debt to adjusted EBITDA of about 1x. So we've got a lot of capacity to continue to grow this business.

And then finally, we -- on the strength of this third quarter as well as the performance in the first 2 quarters, we increased our guidance, again, both for the imaging center business from a revenue and EBITDA perspective as well as Digital Health.

So what drove this performance? And this is a great slide in the sense that what this really is, is a set up slide for the rest of today where you're going to -- where we're going to do a deep dive both from a clinical standpoint as well as an operational standpoint into many of these points that are on this slide. First, we continue to upgrade equipment and refine our operating protocols and clinical protocols to help reduce scan time and therefore, increase capacity. Something that you're going to hear Steve Forthuber and Norman Hames, our Chief Operating Officers, explain later, and we had a demonstration out in the lobby is around TechLive and some of the technology innovations that are helping to increase scanning time and lower room closures.

We're going to talk a little bit later in the presentation about some of the predictive modeling that we do around scheduling, which has allowed us to make sure that all of our time slots are being utilized by our patients and that we have enough patients and overflow patients to fill what otherwise would be unutilized scan times from no shows from some of our patients.

De novo centers, we continue to build de novo centers. You'll see later on in the presentation, a graph of what we built over the last few years. We've opened up over 5 centers this year. We've got several more centers left to go in the fourth quarter. We've got 11 de novo projects on the docket for next year. And so we are continuing to drive capacity to meet the demand that's out there in the marketplace.

And tuck-in acquisitions continues to be something that will be a part of our growth algorithm. This industry will continue to consolidate. We're well positioned to be a consolidator. Scale is everything in health care today. We've demonstrated that we can be a low-cost provider of services and scale allows us to be able to do that. And you'll hear more about that later on in the presentation.

Another initiative that has helped us grow our revenue and be successful and grow our margins is that we continue to drive reimbursement discussions. Our clustered approach across the country has allowed us to have a seat at the table with commercial payers. They are recognizing more and more that we are their partner in trying to drive this business out of the more expensive hospitals into ambulatory sites of care that are much lower cost, number one, and better patient care. And I think that they're recognizing that on the reimbursement side. As well as in our capitation business, we continue to get nice pricing increases.

We've been expanding joint ventures with existing partners. We'll have some things to announce in the coming quarters about new joint venture partners, potentially new geographies that will go in a partnership with hospitals.

And then finally, last but certainly not least, and I think we'll probably be talking more about Digital Health today than the services business. Digital Health continues to drive both revenue with third-party customers, but as importantly or more importantly, it continues to drive efficiencies with inside of RadNet. And you'll hear Kees, Sham and their team talk a lot about the solutions that will continue to make our centers more efficient, more productive and increase capacity.

So with that introduction, and you'll see me later on in the presentation because at the end, I'll close with giving you a little bit more information about a medium-term or 3-year outlook on the business. I'd like to turn the presentation over to Dr. Greg Sorensen. Dr. Sorensen is RadNet's Chief Technology -- Chief Science Officer. He's a neuroradiologist by training, trained at Harvard, Mass General, was a professor at Harvard Medical School, was the CEO of Siemens North America. What else did you do? He was the founder of DeepHealth Breast, and I'll turn it over to you.

Thanks, Mark. Thank you very much, Mark, for way too many kind words. It's great to be here. Great to see so many friendly faces. Thanks for joining us and giving us some of your time this morning. I'm going to just say a very brief introduction to our 7 clinical speakers. We wanted to introduce these physicians to you over the next hour to have each of them talk about their specialty in depth. And there's really 3 ideas that I hope you'll take away from the big picture here. First of all, I hope you'll get a sense of the clinical excellence that we have, the depth and the breadth of the skills that provide clinical care and give me confidence to get my own care at RadNet facility. Some of these physicians have taken care of me and my loved ones. But also you can see why referring clinicians are comfortable sending more and more of their volumes to RadNet.

Second, I think you'll get a sense for why from an investor perspective, our advanced imaging procedure volume is growing. You'll get a sense and a flavor for the power of modern technologies and how these are providing better and better insights into patient care, and therefore, there is demand for those advanced technologies.

And third, I think you'll start to get a sense of how we are -- to Dr. Berger's point, moving towards a population health by finding disease earlier and earlier in its stages. And this, again, from an investor perspective, suggests a very broad total addressable market. We're looking at the entire populations, not just people who come to our emergency room or not just people who show up at a cancer center already with the disease. And each of these, I think, will give you a flavor for why RadNet's growth that we've seen in the past years is going to continue and perhaps even accelerate. So with that, let me turn it over to our first speaker, Dr. Suzie Bash, a fellow neuroradiologist. Take it away, Suzie.

Thank you, Dr. Sorensen. So my name is Suzie Bash, and let's talk about advanced neuroimaging at RadNet. So AI innovations like deep learning for image reconstruction and Quantitative MRI are advancing workflow efficiency and early disease detection. It's really transforming population health into a data-driven, patient-centric precision-based practice. And RadNet is uniquely positioned at the forefront of this industry shift, really unlocking scalable growth opportunities.

So deep learning for image reconstruction allows 50% to 75% faster MRIs while boosting image quality. So it will take a routine MRI exam slot from 30 to 40 minutes and basically cut it in half. And this is what we've done at RadNet. It will take an image like what you see here, if you look closely at this image, and this is after you apply deep learning, a significant boost in image quality. So 30% of patients have a severe anxiety reaction when they go in the MRI scanner. So for us to be able to image these patients much faster, that is their #1 -- that's their best patient experience to get in and out faster.

RadNet was actually the first major imaging enterprise to adopt this AI tool at scale. It enhances patient comfort, improves image quality and drives brand loyalty. So here again is a routine image of the brain, and this is after we apply deep learning. You see the significant boost in image quality. And it can even enhance things like detection of early brain metastases. So in this example here, this patient has 3 little enhancing metastases.

You can barely see them. I dropped an arrow on one. But when you use this AI tool, you can go 53% faster on the image acquisition, but now you can easily see these 3 metastases. This can make a difference in a patient's life. We're getting 30% to 55% time savings per RadNet MRI exam, and that allows us to scan 3 to 4 more patients a day per MRI scanner. When you think that we have 389 MRI scanners, you can understand the magnitude of this positive return on investment.

We also use an AI tool called Quantitative MRI. And we can use it for a lot of different applications. We use it in dementia. We use it to assess for the side effects of medications for Alzheimer's, epilepsy, multiple sclerosis. We can use it for brain tumors, vascular disease, traumatic brain injury and PET imaging. This is a look at one of our tools here. This is DeepHealth. Here's another tool here, but it calculates the volume of structures of the brain and lesions in the brain.

So 7.2 million Americans have Alzheimer's disease. 1 in 3 of our seniors will die of dementia and neuroimaging is playing a critical role here. So we've noticed a big increase in our MRI brain volumes because these patients on treatment have to have at least 5 MRIs. They'll probably get 2 additional unscheduled ones, a huge increase in our amyloid PET volumes because we must confirm the presence of that toxic amyloid plaque before a patient can go on therapy and a big increase in our Quantitative MRI volumes.

So of the 7.2 million Americans that has Alzheimer's, we think probably 1.5 million are going to be treatment candidates' times 7 scans. You're looking at 10.5 million new MRIs per year in the U.S. alone. And that's reflected in our volumes, 12% increase in our MRI brain volumes, almost 339,000 last year. Our Quantitative MRI volumes were up 206%, over 24,000 last year. This is the Alzheimer's spectrum here. And these biomarkers that you see in peak here can all be detected with imaging. And so Stage 3 and Stage 4 is our treatment window, okay? But unfortunately, over 50% of patients are diagnosed too late.

So what we try to do, our main goal here at RadNet is to diagnose the disease as early as possible with amyloid PET and also provide excellent disease staging. With our imaging initiatives, I believe we're leading the country in this initiative. And the reason why it's so important is if you can diagnose a patient early, they do much better on treatment. 76% will have no cognitive decline, and 60% will actually have cognitive improvement if you catch them early on in that window. So we use it for eligibility screening, diagnosis and for treatment safety monitoring.

For eligibility screening, you see this AI tool is calculating how much microvascular ischemic disease in the brain. It's also calculating and finding all the microhemorrhages, the little bleeds that can occur in the brain. This must go in our eligibility MRI reports, and this AI tool can save time doing that. This AI tool also helps us assess an Alzheimer's pattern from a non-Alzheimer's pattern, and it actually allows us to quantify the exact amount of that toxic amyloid plaque in the brain at the time of diagnosis. It even aids in Alzheimer's disease staging by assessing how advanced that brain volume loss is at the time of diagnosis. And then we can use this for safety monitoring. This is a side effect that some people can get with treatment.

Here's a patient of ours that did develop a side effect of treatment and you see the AI tool is actually segmenting the -- what we call edema in the brain here, and it's doing it all for you. It also automatically segments the number of microhemorrhages in the brain. It measures the largest lesion, and it can provide a report like this, which can give automatic grading. This is very important because the neurologist needs to know what the grading is because then they might need to stop or suspend treatment until this resolves. So having this kind of tool can really save a lot of time.

We can use it in multiple sclerosis to look for plaques in the brain. It can automatically detect the new or enlarging or shrinking plaques. This is the type of image that we would get on our MRI scanner. This is DeepHealth's product, which is calculating that white matter disease in the brain, and it improves our detection of disease activity. Actually, if you use this AI tool, it will jump from 24% to 76% increase in detection of disease activity. This would actually trigger a change in medication for the patient. It also improves our reliability of reading and allows us to read 62% more reports per hour when you use this AI tool.

Now we can also use it for things like traumatic brain injury, where the AI tool will actually find the different types of bleeds in the brain and color code it for you. Here's a patient of ours that had multiple areas of hemorrhage in the brain. And you can see this AI tool is finding that blood product for you, segmenting it for you and tracking it in a hemorrhage report here, tells you what's new and what's progressing. Similarly, for oncology, we can use this type of tool for preoperative and postoperative segmentation you see here of a patient with a brain tumor. It will plot the amount of enhancing tumor over time and the overall lesion, and we can use this for metastases. This would save a large amount of time. It actually finds all the metastases for you and calculates the volume. I believe the future of tumor imaging is volumetrics.

This is the type of report you get. It will tell you the number of lesions, how many are new, how many are -- have resolved, et cetera. And then meningiomas, our most common brain tumor. Again, it can find it, segment it, measure the volume for you and you can track that over time.

So in summary, RadNet will continue to lead, grow and redefine deep learning-based AI innovations in the imaging industry by enhancing workflow efficiency and, most importantly, patient-centric care. As Alzheimer's and neurodegenerative imaging accelerates, especially in the era of anti-amyloid therapy, RadNet is uniquely positioned to capture this growth and advance precision-based neuroimaging. Thank you so much.

Good morning, everybody. I'm Sam Hare. I'm the CEO of the HLH Imaging Group and a practicing thoracic radiologist, and I'm going to talk to you about lung cancer screening in the U.K. and beyond. And it's really a poignant moment to be here during lung cancer awareness month, but we need to stop being aware about lung cancer and do something about it. And hopefully, I'm going to demonstrate to you how we can do that.

So lung cancer is the commonest cause of cancer death globally. 1 in 5 of all cancer deaths are due to lung cancer. And in 2022, in the U.K., around 70% of lung cancers are diagnosed at late stage. Now I've been a chest radiologist for 15 years. These graphs, I'm sort of sick of seeing them because the lung cancer equation is rather simple. All the graph shows that if you diagnose lung cancer early, net survival and outlook, even cure is possible.

All of this is happening around us despite the fact that we have evidence from multiple scientific lung cancer screening trials around the world, be that the U.S. So here, be that Europe, be that England, that lung cancer screening saves lives, and it saves lives by reducing deaths from lung cancer. Well, thankfully, England decided to stop beating around the bush, move -- and decided to move us out of the science realm into the real health care setting realm. So how did they do this? Well, what they said was, well, let's give the poorest, most deprived areas in England, some money to set up so-called lung cancer screening pilots. Let's try and demonstrate does lung cancer screening work in a real health care setting or is it just science?

So what they did was they invited ever smokers by liaising with primary care physicians between the ages of 55 to 74 and invited them to come and have an assessment and a low-dose CT scan at 2-year intervals to see if they had lung cancer. They devised the lung cancer screening protocol, which is a national protocol, and they did excellent communications and marketing around lung cancer screening to get patients to be aware of this. But what they also did was recognize that radiologists, particularly in the U.K., were burdened with too much work already, were drowning in scans. So crucially, the English Lung Cancer Screening Committee decided, well, we need to help our radiologists. Let's mandate the use of an AI second read in lung cancer screening to help our radiologists be faster, more efficient and more accurate.

Now I'm not a baseball fan, but I am standing on U.S. soil. So I want to just borrow a small quote from a famous movie, which says, if you build something right, the people will come. And that's what England and the U.K. have managed to do. And that's demonstrated by our uptake rates in lung cancer, which are upwards of 40% to 50% and growing. You can compare that to the U.S. where uptake rates in lung cancer screening are less than 6%.

But how has the U.K. done that? The U.K. has done that by providing a template for lung cancer screening for the world, be that Europe and even the U.S. And the way it's done that is by focusing on implementation and logistical challenges. For example, most of our lung cancer screening CT scans happen in the hearts of communities, in the hearts of deprived communities, and we achieved that by taking mobile scanning vans and trucks to these communities, so patients can access CT scans easily. Some of the scanning does occur at traditional hospital sites and outpatient diagnostic centers, but the bulk of it is on mobile units.

So what is HLH? So whilst the U.K. Screening Committee established a lung cancer screening program, there was one question that remained unanswered, who is going to report all of these extra CT scans because we've got enough work already. And that's the same question that I asked when co-founding the HLH Group or Heart & Lung Imaging with my fellow esteemed chest radiology co-founders of which we are 4.

So what is HLH? HLH is actually a network, a community of chest radiologists all around England that are connected up in a cloud-native cutting-edge IT infrastructure. And what that allows us to do is think outside the box. We are no longer radiologists working in our individual silos at our individual hospitals, but we are working nationwide in cloud. All of our scans are AI-powered to help us be faster, better and more accurate in our diagnosis. We're now over 170 chest radiologists reporting more than 30,000 lung cancer screening CTs a month. We have a national architecture, which means we can supply governmental bodies data to monitor the outcomes of lung cancer screening, but we can also perform national training, education and research.

So the philosophy of the HLH Group or Heart & Lung Imaging, as we were known, is very simple. If you take AI, but harness that to not a general radiologist, but an expert chest radiologist, you have an unbeatable unparalleled combination because what we've shown is these mandated recall rates from NHS England, we've been managed to reduce them way beyond the mandated rates to an even lower rate. And that's extremely helpful to government because it makes the lung cancer screening program even more economically viable because our recall rates are that much lower by taking an expert and almost boosting them and boosting their performance with AI.

The journey of HLH or the HLH Group is intimately entwined with the lung cancer screening program in the U.K. So I'm going to take you through it. In 2019, screening for lung cancer was not recommended by our governmental bodies. In 2020, Heart & Lung Imaging was formed to deliver the reporting of these low-dose CT scans for England. This is about the same time that RadNet acquired multiple cutting-edge leading AI tools, particularly a DeepHealth Lung, an AI tool, which is the most commonly used AI tool in lung cancer screening in the U.K. And in 2022, RadNet acquired a 75% interest in Heart & Lung imaging. And in 2023, thanks largely and in part due to a lot of the work that we did by reporting all these CT scans, the governmental body then deemed that lung cancer screening is viable and they recommended lung cancer screening as a national program for the U.K.

And we rebranded in 2024 to the HLH Group, and I'm going to tell you exactly why and the market opportunity from that on my penultimate slide.

So the U.K. should be considered as a global exemplar for implementation strategy in lung cancer. The size of the market is massive. We're still in the red circle, so around 20% of the eligible population has been screened. Of that, HLH does 85% to 90% of the market share of reporting. With planned 100% rollout by 2030, that materially means around 1.2 million CT scans for lung screening every year, year-on-year, all powered by AI, and that doesn't even include the population of the devolved nations of Scotland and Wales. So the population size will be even bigger.

How have we done this? I'm going to take you through our journey. We've done this through frictionless IT that moved scans from scanning vans or hospitals to our radiologists, and they can report them at scale from home, from hospitals. And we have now garnered the world's largest lung cancer screening reporting experience with now actually over 800,000 lung cancer screening studies reported. But what we've built is a platform and scaffold infrastructure that covers the entire nation in terms of our frictionless IT architecture.

What does that allow us to do? Well, it allows us to report scans with resilience at scale. So if you combine an expert radiologist, AI and frictionless IT, you can report 30,000 lung cancer screening CTs a month. But crucially, you can do it fast. So we've got an average reporting turnaround time at this program of 44.2 hours. So that's reporting 30,000 scans a month in under 48 hours per scan, which is unparalleled and unheard of in U.K. radiology and probably radiology around the world.

As Dr. Berger said, our stakeholders are our patients. But does this all actually make any material difference whatsoever? And the answer is yes. We are causing a seismic stage shift in the way that we diagnose lung cancer in England and the U.K. with over 70% of cancers now diagnosed at early stage and actually over 50% of them are being diagnosed at Stage 1. Now this is a space in lung cancer radiology that I didn't think I would see in my early career as a chest radiologist. But now this is where we want it to be true early diagnosis with over 50% of lung cancers being diagnosed at Stage 1 and at scale and saving lives.

So I'll talk to you about why did we rebrand. We rebranded because this model for lung could theoretically be syndicated across other body systems, neuro, colon, cardiac modalities where screening is applicable and where prevention is key. So we, as the HLH Group have solved the issue of bringing an expert reader, harnessing it to AI and using AI from outside the box at scale across a frictionless IT across an entire nation. So that means the market opportunity is that the HLH Group will morph itself into HLH Lung, HLHHeart, HLH Prostate and that chimes perfectly with the ethos and vision of RadNet. Thank you very much.

Good morning, everyone. I'm Maxine Jochelson, and we are going to discuss our journey with breast cancer today. Breast cancer is the most commonly diagnosed cancer in the world with 2.3 million cases a year and 700,000 deaths. Lifetime risk is getting higher and higher. And the incidence of lung cancer -- breast cancer is increasing by 1% a year, but more so in women who are under the age of 50. We have learned, however, that we can reduce mortality by finding breast cancers earlier. Survival depends on the stage of presentation, and that is our job at RadNet.

But a sobering thought. My colleagues in breast imaging and I have noticed more and more that we are seeing 20-year-old patients. I saw 2 in 1 week, such as this girl who presented with metastatic disease. So we really have our jobs cut out for us. But RadNet has major capacities to improve this space. And what we can do is, first, identify which patients are at high risk. We can then choose the correct imaging test for those patients and implement them. We then accurately interpret them, and we do so using artificial intelligence, which makes us smarter at reading them and more efficient, and then we can perform an image-based biopsy when needed.

So how do you identify risk? Over the years, risk was identified by using things such as family history, personal lifestyle. We had different models. The most popular one is a deep learning model called Tyrer-Cuzick. And while this was a very good model, we have found that it's really not the best model. In 2021, the group from MIT presented data on using the actual images of women's breast to decide the risk that each woman had based on her own breast tissue. And they showed that this was significantly better than using these models based on personal history, et cetera, than we -- that we were using for so many years. And so we know that we are more likely to find high-risk patients earlier on using this model.

So we at DeepHealth using our AI capabilities are developing our own model to predict risk based on each women's breast tissue. And then we can not only determine her risk, we can figure out which are the best imaging tools and how frequently we can use them so we can have a scientific approach to this. And then we have to provide the access to imaging. And a lot of this and what you're hearing today is about access. So we have mammography as the single only test that has been proven to prevent death from breast cancer. And it does this by finding lesions when they're small enough to be successfully treated. It is relatively inexpensive. It is relatively widely available, but there are still limitations that need to be addressed. Some of that is access to people in remote locations or to underserved people. And also, while mammography is great, the sensitivity and accuracy goes down in women who have dense breast tissue.

So how do we accomplish this? The state-of-the-art mammo units and state-of-the-art ultrasound units that we have at over 400 imaging centers provide 2 million mammograms per year. And then we have access to all the other imaging tools that help us do our breast imaging better. And then we add the robust artificial intelligence that we already have. So we really have a trifecta to getting these women diagnosed.

The other thing that's important is access, and we need to sometimes bring mammography to the patient because she can't come to the units. So we have multiple mobile vans. And just in the last 3 years, we have demonstrated that we can find breast cancers in over 9,000 mammograms in California, and we can do this everywhere. You can also do additional screening on these vans, so you could do lung cancer screening and other types of screenings on these units.

And then a very innovative idea and one that could be replicated in many other places. You can bring mammography to patients where they shop. And this is what we have done using a Super Walmart, and it's a great example of where we attracted women from communities -- different communities than you're usually getting to come into your medical centers, people from underprivileged communities. And interestingly, we're able to demonstrate that many more women having their first screening mammogram came to Super Walmart than our beautiful breast centers. And if it's going to get them there, then it's worth it.

25 million American women have dense breasts. And this is a twofold problem. Number one, if you have dense breast tissue, there is a higher risk of cancer death based on just the tissue and other aspects. In addition, it's harder to find breast cancers. Breast density is white. That's what breast tissue looks like, and breast cancers are white. So these cancers are hiding within the breast. Therefore, when they present, they are larger, and women are more likely to die of breast cancer because they presented with a larger tumor. We, breast imagers acknowledge that we need help with other imaging tools.

And so we, at RadNet, have all the tools. We have ultrasound, which detects an additional 4 cancers per 1,000. And we have contrast mammography and MRI, which detects an extra 16 to 20 breast cancers per 1,000 women. And here is just an example of a woman with extremely dense breast tissues, you couldn't find a [indiscernible] in this breast. But look at the MRI, which elegantly shows a cancer that is curable, hiding in that dense breast tissue. And so our breast MRI volume has gone up 20%, and I think that will also continue to grow.

We use our AI in many ways, sometimes to be more efficient, but also to try to do a better job reading these mammograms. And you can use it because mammograms are digital, and this can enable the tool to go through the -- it's a very complex pattern in so many breasts, and it can see through that complexity and find a cancer that I can see with my own eye. And by doing so, it can also be integrated with the family history, with the genetics and put this whole patient together in a much more comprehensive way.

So we have recently published an interesting study based on what we call the Assure study. And you've heard a little bit about the EBCD, the Enhanced Breast Cancer Detection. And what happens is women will all be getting AI when they get their mammogram and often, it matches what the radiologist reads. But occasionally, we don't agree. And so we have a system in which a second radiologist can take a look and break the tie. And so we published this data in over 600,000 women and we showed that doing all of these things, we could find nearly 22% more breast cancers.

So I've talked a lot about breast cancer and the importance of diagnosing it early. But we've also learned something interesting that a mammogram can show you that we haven't been thinking about. Breast cancer is not the leading cause of death in women. It is heart disease. 1 out of 3 women die of heart disease. And what we started seeing is that on a mammogram, you can see calcifications in the arteries within the breast. And these calcifications, particularly if you're seeing them in younger women, may very well be predicting that these are the ladies that are going to have significant cardiac disease.

Now it's important to quantify these calcifications, to characterize these calcifications, and this is something that we are also working on to do with our artificial intelligence so that when we get a 40-year-old woman walking in the door looking like an 80-year-old woman, we can go about and say, this woman is at increase for developing cardiac disease, let's get her to the right doctors and let's get her the preventative things that she needs, so she will not die of heart disease.

So in conclusion, RadNet performs over 2 million mammograms a year. That's 5% of all breast imaging in the United States. Innumerable lives are saved by finding breast cancers earlier. Many additional lives can be saved, and quality of life can be saved by finding earlier breast cancers and also recognizing those early breast arterial calcifications. We at RadNet continue to invest in improved technology, AI, research and resources to improve morbidity and mortality even further. Thank you for your time.

Thank you, Maxine. Women's imaging is a very robust discipline in radiology. When I trained, there was no such thing as men's health. The NCI currently spends twice as much research money on women's health as it does on men's health. So I want to take you on a little journey about what we can do for men with prostate cancer screening. Everybody has heard about the challenges of PSA. And even the person who invented PSA said he doesn't want to get it himself. And the reason was it was used incorrectly. Urologists would find a man with an elevated PSA, and the prostate was the only gland that would be biopsied without imaging. They would stick 12 needles without guidance into the prostate hoping to find cancer by chance. Men didn't like that, and the data showed that the urologists were not very good at finding cancer.

So what we're trying to do now is to use PSA in conjunction with prostate MR. And by combining those 2 techniques, we've become very, very good at finding breast cancer -- I mean prostate cancer.

So how can we reduce the mortality of prostate cancer? And as been mentioned by several of my other speakers before us, we've gotten very good at finding disease. Every week in my clinic, I find a man coming in for a prostate MR whose PSA is between 50 to 400 and they're metastatic presentation. In other words, the disease is spread outside of the prostate. We can't cure those men. So the only way we can reduce mortality is to encourage greater participation of men to get screened. And we want them to fight like women and not be afraid of the side effects of what I call [indiscernible] impotence and incontinence because current treatment has reduced those side effects. So it's not a big issue.

So if men don't get screened, if primary care doctors don't order PSA and then an MR, we have -- if they do that, we have the ability of reducing mortality by 20%. The statistics of prostate cancer mirror breast cancer. It's really 2 sides of the same coin. 300,000 men and women are diagnosed each year of their respective diseases and roughly 30,000 to 35,000 men and women die each year. And the statistics are quite similar. 1 in 8 men will be diagnosed sometime in their lifetime. For minority men or men who have genetic mutations or other risk factors, those odds go up. And it's predominantly a disease of older men, 60% of the cancers we find are in men over 60 years of age, and it's the second most common death of cancer in men besides lung cancer.

So we should be able to reduce the number of men dying by 20% or save 7,000 lives. And if we screen then between 45 and 80, we can do that. And our program is that if the PSA baseline is over 2.5, we're trying to encourage primary care to order our non-contrast rapid prostate MR or enhanced prostate screening program.

MR is very accurate, and I'll go over some of the data. And if the MR suggests a suspicious finding, we're developing partner relationships with urologists. We don't want to do the biopsies. We want the urologists to do the biopsy using ultrasound MR-fusion technique, which is the most accurate way of finding cancer. So if we can find the cancers with the PSA below 15, there is an excellent chance of cure and survival.

What is the scope of the market? Right now, there are 70 million men in the U.S. between the ages of 45 and 80. Only 1 in 3 men in this age group get a PSA. So the primary care doctors are confused because the guidelines on prostate screening keep changing from 2008 to 2025. The government, the U.S. Preventive Task Force guidelines recommended no PSA screening because the data showed it wasn't cost effective. The urologists weren't using it correctly, but they failed to incorporate the benefit of using prostate MRI. And now the NCCN guidelines are showing the benefit of this strategy.

So RadNet's prostate program. When I started training, there was no such thing as men's health or prostate imaging. I was lucky, I've been introduced to some of the world's experts in prostate imaging back in 2009. And Dr. Berger allowed us to start our prostate program. And now we have 16 years of experience, and we're performing more prostate MRs than any site in the country. We're doing over 1,600 prostate MRs a month on the West Coast and similar numbers on the East Coast, and we perform more of these exams than anybody in the entire country. And the reason we get this volume is because we focus on concentrated subspecialty readers that maintains our accuracy and the urologists have confidence that we do a good job.

So if you look at this chart, you can see the big vertical arrow is when PSA screening started to become available in the U.S., and you can see the reduction of death rate from PSA screening. The stars are what happens when we add prostate MR to that, and it shows an improvement in reducing mortality. The current NCCN guidelines now say that in 2023 that MR is strongly recommended for screening, if available, and now MR targeting is preferred. So before any man is scheduled for a biopsy, they should get an MR first.

This serves several purposes. One, it allows us to tell the urologists where to stick the needle. More importantly, our negative predictive value of prostate MR is very high. It's over 90%. So many men with an elevated PSA can avoid a biopsy because we say the gland looks normal. So for prostate MR, we can do screening, tumor detection, targeted biopsy, we can stage the tumor, there is now MR-guided ultrasound treatment, and we do follow-up studies. So for people who don't know what prostate cancer looks like, on a T2-weighted image, we look at the dark spot marked with the white arrow. Diffusion imaging is a measure of cell density or cell packing. The more aggressive tumors have more restricted water. We can measure that. And they also show increased tumor enhancement. So the slide on the left side is an early cancer. This is the same patient, and we can actually measure the growth of this patient's cancer.

So PI-RADS is how we report prostate imaging. It mirrors what we do with breast imaging with PI-RADS. But what this does is it allows us to use a structured reporting tool, and it allows AI to work more effectively. And because of a lot of data, this shows why MR first shows a positive proven benefit that we can reduce 28% of unnecessary benign biopsies by using MR. We can find more clinically significant cancers with prostate MR than with the standard blind biopsy technique. We find fewer cancers that don't need to be treated, and we can do it with putting fewer needles in the men. Unlike breast cancer, low-grade prostate cancer does not always need to be treated. We can monitor those men on active surveillance. We don't do that in women at this time.

So if we add MR, we can triage men who would benefit from biopsy. We can reduce the number of men getting an unnecessary procedure with risks and harms. We can find more clinically significant tumors, and then we can assign men to active surveillance who have small volume low-grade disease where we can optimize their individual treatment strategies when we find disease that's gland contained. This program has been proven to be cost effective.

So if we compare what Maxine talked about with breast cancer detection with what we can do for men, we're actually doing a better job. As Maxine said, screening mammography tends to find 5 to 7 cancers for 1,000 women screened. When a woman is sent to a biopsy from a mammogram, they only find cancer maybe 1/3 of the time, but screening has reduced mortality from breast cancer. If we do prostate screening with PSA and MR, we can find clinically significant cancer in 70% to 90% of those men that we sent to biopsy, significantly better for men now than women. And we find more clinically significant cancer so we can do a better job of why haven't we.

And the evidence is that we should even start screening younger men who are at risk. Age shouldn't matter, quality of life shouldn't matter. And the PSA at age 45, if your PSA is less than 1, your likelihood of developing significant cancer is very low for the next 5 years. So now what makes our program work is this data shows that we can do a fast non-contrast exam and it's noninferior to a full diagnostic prostate MR with contrast. That allows us to offer our enhanced prostate screening program with tools from DeepHealth and our AI. So this allows expert readers to even increase their accuracy similar to what we're doing with our breast program. There are not enough qualified prostate readers.

So this will also help less experienced prostate readers get their accuracy to approximate those of expert readers. This allows us to be more efficient because we're talking about driving volume. We need to get these cases red. And the [ Saige ] DeepHealth prostate program has a streamlined reporting tool, and it allows us to do targeting.

So we can keep this cost similar to what we do for screening mammography. RadNet is providing this for self-referred men for $275. So here's a reference list to document the data that I showed. And I want to thank you for your time. And next up is Dr. Judy Rose.

Good morning. PET/CT tracer trending and future growth. PET/CT is RadNet's fastest-growing modality. From Q3 '24 to Q3 '25, with a 20.3% increase in PET and our new advanced tracers, which are about what this talk is mostly about, represented 8% of our amyloid tracer, Alzheimer's, was 8% and the PSMA tracer, which was for prostate cancer, was 13%.

Look at our volumes by tracer. We have the oncology tracer, the standard, FDG in that period of time from Q1 '23 to Q3 this year, we've gone up 33%, 140% of prostate images, PET scans increased in 6,800% for our amyloid Alzheimer's tracers.

So to give you a little background, what is an FDG tracer PET scan? First of all, we're going to inject the tracer, which is radioactive glucose. And because that goes to areas of high glucose metabolism, which most cancers have, the PET/CT scanner can see those cancers. The limitations are that from 2000 until recently, this was the only tracer. Every patient, every cancer, breast, lung, prostate, got the same tracer. And FDG is not cancer type specific. And it's also positive in infection and inflammation.

So what's our future opportunity? Cancer type specific tracers. So we had one tracer for everybody. And now we have new disease-specific tracers that could be for prostate cancer, such as PYLARIFY, neuroendocrine cancer, such as NETSPOT and Alzheimer's, which is Neuraceq and Amyvid. So PET/CT has entered a whole new era with tracer expansion beyond FDG. If you can see it, you can treat it. And these new tracers are driving growth and disease-specific treatment called -- something called theranostics.

What is theranostics? It's the pairing of a diagnostic PET/CT and a targeted therapy using the same molecular pathway. How does it work? Well, you have a PET/CT scan and it identifies the tumor with using a specific cancer tracer, and then that pathway is used to deliver a targeted radioactive treatment specific to that cancer. Why does it matter? Because personalized treatment matches the therapy to a specific cancer. So this diagram is a bull's eye of all the theranostic companies currently looking for a therapeutic. Why does that matter to us? Because every one of those that's successful has to have a PET/CT tracer to make sure that they're a candidate for the therapy.

So what are the -- Dr. Bash told you a little bit about this. What are the amyloid and tau tracers? So amyloid and tau are both hallmarks of Alzheimer's disease. Amyloid detects amyloid plaque and tau detects tau tangles. So in our portfolio, in 2012, we did our first Alzheimer's research study, and we now have done 50-plus Phase II to III national trials. Those are for amyloid and for tau. And we have to screen for inclusion because you can't get a therapy unless the PET/CT scan is positive. And then we have to monitor for the anti-amyloid anti-tau therapies to see if they're actually working.

The circles you see on the right are all the companies looking for a disease modification for Alzheimer's. And every one of those that's successful is going to need a PET scan for diagnosis and treatment.

Here's one of the ones that's in play now that's tau. So amyloid gets all the buzz because it's most of the Alzheimer's patients, but 15% are not amyloid positive. They're amyloid negative. So they're not going to respond to amyloid therapy. This is a -- there is one tau tracer approved, but this is one that's in the experimental trials now.

So okay, that's where we are now. What are the drivers of future growth in amyloid PET, the demographics, aging population, projected by 2016 -- 2060, 13.8 million Americans will have Alzheimer's. We're diagnosing it earlier. That broadens the eligible patient pool for treatment. We have blood biomarker tests, which will expand PET as a pretreatment exam and the therapeutics. So we've got LEQEMBI and Kisunla, which are the anti-amyloid drugs, and the drug pipeline includes anti-amyloid, anti-tau and neuroinflammatory inhibitors. All those patients need PET scans. The reimbursement is favorable.

So what's a PSMA tracer? Dr. Princenthal told you a little bit about PSA, but PSMA is prostate-specific antigen expressed in all prostate tissue. 95% of prostate cancers overexpress PSMA. So now we have a cancer-specific tracer. And these traces are approved for initial staging of biochemical recurrence. What's the driver of future growth for PSMA PET? Again, 1 in 8 men will be diagnosed with prostate cancer, 313,000 plus per year new cases. And the clinical adoption, it's already the current standard of care in prostate cancer management, and there's a large untapped market.

The therapeutics, we just talked about scans and therapy. So if you look at the 2 images on the right-hand side, all those black dots on the left-hand picture is a PSMA PET scan before the patient was treated with a theranostic therapeutic, that's PLUVICTO. And after 2 cycles, you can see the marked improvement.

So additional PET/CTs will be needed for therapy selection and monitoring and the reimbursement is favorable. So the next generation of tracers are entering late-stage clinical trials. We talked about the first generation, the new tracers. We talked about the first-generation treatments, both in oncology and neurology and now the second generation of new PET tracers, and there's so many -- I'd have 10 slides, and you wouldn't sit -- my time would be up. They're all coming along.

The next one you'll probably hear about is FAPI. That's going to -- we're going to start that clinical trial this month. We're going to hopefully do the first patient in the United States. And what is this? It's a fibroblast activation protein inhibitor. It's overexpressed in cancer-associated fibroblasts, and it binds to 30 different cancers, most of which are not FDG-positive. The trial objectives are for gastric, esophageal and pancreatic cancer. What you can see is the FDG, the one we always had for everybody is relatively negative, and you can see the FAPI next to it, and you can see how dramatically positive and what the difference is for those patients.

We're very pleased that our academic trial partners for FAPI will include Memorial Sloan Kettering, Stanford, Cleveland Clinic and many others. So here's the new patient journey with a new cancer-specific tracer. Here's the difference. The prior standard of care would have been a CT, which identified a 5-centimeter pancreatic mass. That's the white arrow. Then they would have an FDG tracer PET scan, which you can see next to it, and there's no uptake in where the white arrow is. They would go to biopsy, and then they would go to surgery. Now we have a new tracer standard of care. This patient had a NETSPOT scan, which is a new advanced tracer. It's 90% specific for neuroendocrine tumors. This patient skipped the biopsy. The surgeon was confident based on the NETSPOT exam that this was limited disease to the pancreas. Patient went to surgery and the patient was operated on this week, and he had only tumor exactly where that scan is where the big white arrow is and a big white dot, which is a cancer-specific PET scan.

So the question isn't if we can grow, it's how fast? RadNet today, 90,000 PET/CT exams a year, 67 PET/CT scanners, 5. 3 scans performed per scanner per day, significant unused capacity so we can handle this volume and large-scale success with the new tracers, PYLARIFY, NETSPOT, Neuraceq, Amyvid. And a nationally recognized program. That's where we are now. What's the future? We have the tracers, we have the infrastructure. We're 100% outpatient, and we can leverage our PET/CT network to drive growth in revenue. Thank you.

Thank you, Dr. Rose. Let's talk about cardiovascular imaging, all in 8 minutes or less, hopefully. Heart disease. 1 in 5 people are going to die of heart disease. It's been at the top of that list for many years. I'm confident that some time in my career, it's no longer going to be at the top, but it's going to take multiple steps to get there.

What's really important to note is it's not just about symptoms. The vast majority of patients do not have symptoms prior to having a heart attack. So it's not just walking around the streets in New York, going the 15 blocks that we walked yesterday at dinner and saying, "You know what? I didn't have any chest pain, I must be fine." That's not the actual facts.

In order to make accurate good investments, you need to have accurate data. If you were to Google the prevalence of coronary artery disease, most of the data you're going to see says 5%, 10%. But 1 in 5 people die of heart disease. How does that make any sense? If you look at the actual data, this happened to be in asymptomatic patients. Keep that in mind. About 50% of those patients over the age of 40 had coronary artery disease. If you were to include symptomatic patients, it would certainly be much higher. In fact, we looked at all the patients who came through our facilities over the last 3 months. And our most recent data showed number is much higher than that. So that includes screening patients as well as those coming in for symptoms.

So it's not just 5% to 10% of patients affected, it's quite higher. The old way of looking at coronary artery disease, diagnosing it, EKGs, getting blood tests. Everyone in this room has likely had a lipid profile at some point. And hopefully, it's in range. But we need to move away from looking at indirect surrogate markers and actually looking at the disease process that we're trying to prevent. The old way of looking at things was not very accurate. We have much better technology these days that's going to catch it sooner, allow us to treat the individual patient and have patient-directed care.

So here's a coronary CTA for anyone who may not have seen one before. We can actually see the disease process that we're trying to prevent. We can take a look at whether our treatments are actually becoming effective. So obviously, here on the West -- I'm sorry, on the left here, we have pretty good looking coronary artery. And on the right, it's pretty severe. We can actually determine how severe the disease process is and help guide management for the next steps. Maybe that patient needs a stent, maybe they need a bypass or maybe they can just be managed conservatively.

But does it make a difference? Here's some data from the SCOT-HEART trial showing that one single coronary CTA had significant impact, 41% decrease. One single coronary CTA, that's not following them serial. This is actually just one CTA in the beginning. Now the reason for that is multifold, but it's very important to note that the patients in this trial, when they had that one coronary CTA, their doctors were much more likely to be aggressive in medical therapy. And showing the patients the images on this prior screen here, they're much more likely to be compliant when they can see their actual disease process, not just saying you're higher risk for coronary artery disease. But here are your actual coronary arteries, here is the disease that we're trying to help prevent from getting worse.

So -- but is it the guidelines? Absolutely. It is really the best exam for looking at the coronary arteries. It is definitely the best we're looking at the plaque that is there and monitoring changes over time. As of 2021, Class Ia recommendation. It is now standard of care. But not everyone is the same, right? Some people might need to be treated more aggressively. Some can be managed conservatively. Some may not need any medications, yet some may need many. We need to move away from simply looking at the group and lumping everyone together and focusing on the actual individual. That is where a coronary CTA-driven pathway can really excel.

You'll hear often good medicine is good business, but you really do need a good business to provide good medicine, and that's exactly what we're doing here.

So what has been RadNet's approach? We need to increase access in all markets. There is high demand for this imaging. We standardize all the processes. We want to make sure it's scalable. You cannot just have a workflow that works for 1, 2, 3 centers. It needs to work for all markets. Any new market that we enter into, we can replicate our current processes when it comes to quality, when it comes to having subspecialty trained cardiac radiologists. You're going to hear about TechLive more using that to make sure you have the best, highest trained personnel scanning complicated patients. This is really what's going to allow us to expand.

Plaque analysis, FFR, great new technologies, also reimbursed CPT codes, very important for business because that is how you can really get the masses to have access to this great technology. We're also using technology to improve accuracy. I will always welcome a second set of eyes, particularly one that's very accurate AI to help us make those detections as well as decrease turnaround time and to prioritize cases. So here is some of the AI that we use. It will help us identify areas of stenosis. Going into the case, the radiologist can take a look at the AI, they can agree, they can disagree, but it helps to highlight that area. Is it perfect? Absolutely not, but neither is a single radiologist. But together, certainly more accurate.

So let's talk about Plaque. There's a lot of media attention to plaque recently. It recently got a Category 1 code beginning in January 2026, reimbursable. We thank CMS for their fair reimbursement related to that, which is really going to allow us to expand in all markets for plaque, really focusing on that in 2026. Here is an example of plaque analysis. I like the colors on here, which is really great showing to patients because that is what referencing back to the SCOT-HEAR trial, when you show patients their actual plaque, that's how you get them to actually be compliant with lifestyle changes and medication.

What's really interesting about plaque analysis is you can track it over time. You can take a scan 2, 3, 4, 5 years ago and compare it to current scan and say, you know what, we've just been trying diet and exercise, but your plaque is getting worse. We need to try something else. Or maybe you're just on a statin and it's starting to slow down a little bit, but it's still progressing. Maybe we need to add in a PCSK9 inhibitor. Either way, you can focus on the individual and not just the group by following plaque changes over time as well as not just serial scans, but in real time. If someone was to come in to our office and have high-risk, non-calcified low attenuation plaque, you're going to want to be more aggressive with that patient. So it's not just about the calcified plaque burden. It's not just about symptoms. It's not -- certainly just not about lipid profile and surrogate markers. Take a look at the actual disease that you're trying to treat.

But does plaque actually change management? Yes. Looking at our recent trial data, patients who had a coronary CTA with plaque analysis, greater than 50% of the time, their doctors changed management, greater than 50% of the time. So I already said that a coronary CTA is the best examination for looking at the coronary arteries. Great when you add on plaque analysis, changing management 50% of the time, and we're certainly offering that in all markets.

So what about FFR, fractional flow reserve? This is a way to take the data from that coronary CTA imaging. It's not an additional scan or anything like that and actually help to see whether or not that narrowing is restricting blood flow. What's extremely important here is many of us have heard of cardiac catheterization where they stick a catheter in your groin, injects some dye, it's invasive. Generally try to avoid that. You don't want to go to the cath lab and have someone say, you know what, it was perfectly fine. It was negative. Well, in that case, you probably shouldn't have been there. You probably should have a coronary CTA with FFR first.

In this situation, it's better for the patient and it also saves the health care system money. You're going to avoid unnecessary scans. You might avoid a stress test, avoid the cath lab. And when you do need to go to the cath lab, you're going to make it more efficient. You want to move cath labs from being a diagnostic arena to being one in which you have planned intervention.

So when are we getting started? We already have. I could just say every RadNet state, but when I was making the slide, I kind of like typing them all out, so I left it in here. Every office that has hardware and software capabilities, we've already identified with many of them already live. 69 locations are live as of October '25. Now some of you are probably thinking right now, well, how many locations are possible? We have 240 cardiac -- well, 240 CT capable locations. So we're identifying all of those to look at the different regions, the market demand, the scanners that are there. So there's plenty of room for growth. So 69 live right now, 240 CT locations current.

So I said we've already started. How are we making out? Not too bad. This is a great graph, but something I really, really want to highlight. This is actually just the foundation building phase. When you're starting to build a program at the scale of RadNet, you need to standardize everything. You need to make sure all the processes are working, maintaining turnaround time, extremely important. You can't have multiple day turnaround time for cardiac patients, particularly symptomatic ones. So these are all the things that we've been working on. But this is just the foundation building. We are now moving into the growth building phase.

If I was to look back at this chart just a few months ago in terms of the amount of offices that are online, probably about half of that as of December last year. So we have been adding on new centers every single month. We have multiple new centers planning to come online very, very soon.

So where do we go from here? If you can see the future, you can change the outcome. We're going to continue to empower clinicians and patients. The journey, it's really still uncertain. But RadNet is going to be a part of it. We're going to continue to expand, assess new data, invest in people and new technologies. Where do we go from here? Well, we're going to go on that journey together. Thank you all. I appreciate your time. Next up, Dr. Peters, here you are.

Good morning. I'm Robert Peters. I'm the Medical Director for Cardiac Imaging at RadNet East. Today, I'll discuss how cardiac MRI or CMR is reshaping cardiovascular care, driven by clinical need and artificial intelligence.

I've organized this talk around 3 questions: why CMR matters? How it's growing and how AI is accelerating it? CMR is a noninvasive radiation-free imaging technique that evaluates structure, function, perfusion and tissue composition using magnetic fields and radiofrequency pulses. It offers superior soft tissue contrast and can quantify fibrosis, inflammation and scar with precision.

Looking at the diagram on the right, clinically, CMR solves diagnostic uncertainty around myocarditis such as post viral forms in COVID-related diseases, cardiac tumors, viability mapping after myocardial infarction or heart attacks and valvular or congenital anomalies, especially when echocardiography is inconclusive. In short, CMR is a definitive tool for structural and inflammatory heart disease, complementing rather than replacing echo and CT.

And why is CMR more important than ever? The American Heart Association 2025 data shows a major shift in cardiac disease burden. In 2010, ischemic heart disease accounted for about 75% of cardiovascular deaths. By 2022, it's reduced to 61%. Structural and inflammatory causes, heart failure, hypertensive heart disease, myocarditis have nearly doubled to 24% in that same time. This reflects better ischemic survival, but rising chronic and inflammatory burden, exactly where CMR is most powerful. So if we look back even further to the 70s versus 2022, the change is dramatic. 91% of deaths were ischemic in 1970. And like I said, just the last slide, today, it's 61% with a larger portion of structural and inflammatory disease at 24%. That's a shift from sudden acute events to chronic complex conditions needing advanced imaging.

So the annual U.S. diagnosis underscores this change, heart failure, 1 million new cases a year. Hypertensive heart disease, 0.75 million new cases a year. Cardiomyopathy, 0.25 million cases per year. Collectively, that is conservatively over 1.5 million new structural or inflammatory patients annually, all potential candidates for cardiac MR. These patients benefit from CMR due to its unique ability to provide quantitative evaluation of ventricular function, mass and fibrosis. So you can see from this slide, CMR represents the gold standard for volume and ejection fraction, scar and fibrosis and perfusion and viability. Echo and CT remain essential, but for tissue characterization, CMR sets the standard.

Over the past decade, CMR has moved from optional, which is nice-to-have, to guideline-mandated and multiple AHA/ACC documents. So just to highlight these quickly. In 2020, hypertrophic cardiomyopathy became a guideline. 2021, Class 1 status for chest pain. 2022, heart failure guideline was added for fibrosis, amyloidosis and myocarditis. In '22, a heart failure guideline was also added.

Key takeaway. CMR is now a core component of evidence-based cardiac care. And guess what? These guidelines are driving real growth for us. Since launching a dedicated cardiac MR practice in early '23, monthly volume has climbed, initially at 15 cases a month in '21, 40 cases in '23, and now we are up to 110 cases recently with the growth being shown here in this slide.

To meet this demand and accelerate growth, we're focused on 3 objectives: we need to recruit cardiac trained radiologists, roll out advanced AI-driven MR scanning platforms and adopt AI reporting workstations to deliver rapid and consistent interpretations.

So what is an AI-driven cardiac MRI approach? We utilize an FDA-cleared platform that automates scan planning and quality control in real time. We find this process cuts sequence acquisition time by 25 -- about 25% for each set of images, which translates to a reduction in a typical exam time from about 45 minutes down to about 20 minutes. It performs automated slice planning and parameter optimization. And it produces consistent image quality while reducing motion artifacts. This means greater throughput. One patient per hour becomes 3 to 4 patients an hour and a more patient -- more pleasant patient experience.

Not only do we scan patients with AI, but AI is driving interpretation. On the reporting side, we use an AI-driven workstation, which automates segmentation, functional measurement and structured reporting. This cuts our reading time from about 40 minutes to 20 minutes. It auto populates key metrics like EF, ejection fraction, strain and flow and enables analysis of advanced sequences such as 4D flow, critical for congenital and valvular disease. The result is greater than 50% time savings and consistent high-quality reporting.

Cardiac MRI is no longer a niche technology. It's a new standard for structural and inflammatory heart disease. In summary, CMR plays a critical role in the evaluation and follow-up of structural inflammatory heart disease. U.S. guidelines have elevated it to core status across hypertrophic cardiomyopathy, chest pain, heart failure and valvular pathways. Advanced cardiac scanning technology and AI platforms cut scanning and reporting times by greater than 50%. CMR is growing in our RadNet practice. Our primary objective is to take our robust CMR clinic to scale. Thank you.

Thanks, everyone. We're going to take a 3-minute break just because we're going to take the podium down, and then we'll play the video and get started again. So we got a 3-minute break.

[Break]

[Presentation]

And Norman and I are going to take a little bit of time this morning to give you some insights into the trends that we see impacting the imaging services portion of our business. We'll go through all the opportunities emerging out of those trends and give you some examples of how we're executing against those opportunities.

So let's start by sizing the market again. This is a very large, growing, still fragmented market that conservatively, we think is estimated at $100 billion, but probably upwards to $140 billion. So some context. We're just below $2 billion in services here at RadNet. And if you take the other 4 largest chain operators in the country and you couple them up with us, we're probably only $6 billion or $7 billion of that $100 billion to $140 billion. So the point here is it's a large market with plenty of opportunity ahead. So Norman is going to talk to us a little bit about the trends that we see developing.

So these are the trends that we see, which is creating the shift to outpatient imaging. And if I can remind you right now in the states that we're in, we comprise about 25% of the population and those states are densely populated. So what we see is an aging and growing population, which is a rising demand for screening and diagnostics, especially in our core markets.

Workforce strain. I'm sure you're all aware, it's been mentioned multiple times that the shortage of technologists and physicians is really forcing us to increase efficiency and create efficiency in our operations. Underserved communities. Many areas still lack access to affordable quality imaging. And I think it has been previously stated, there's still 30 million women in this country right now that don't have access to screening mammography. That's a big number.

Hospital backlogs. Backlogs in hospitals now with inpatients, okay, in emergency rooms that are filled with patients are not allowing them to service their outpatients, and those outpatients are now being pushed to the outpatient imaging environment.

Advanced technology. As you've heard today, new technologies, AI and radiopharmaceutical expansion is really driving our imaging, and imaging research at RadNet is being able to provide us the ability to look at these technologies, look at these radiopharmaceuticals and then put them into our facilities and scale them.

Preventative care. The mindset, okay, is being proactive, proactive diagnostics instead of reactive imaging. And this is really going to provide, as you will see in our presentation, as we go forward, we'll be more proactive, and we will increase the number of our screening exams in our facilities.

Shift to outpatient care. Payers and employers are shifting their volume to lower-cost imaging, okay, and screening and we're getting the benefit of that in our outpatient imaging centers.

So what we're seeing coming out of the trends that Norman just went over are really 3 big opportunities. The first one is capacity, and you've heard all morning about access. So we want to create access so that more patients can take advantage of the types of treatment -- procedures that we're talking about. So we need to create more capacity on each piece of equipment from each room, from each technologist. And then we need to optimize the use of that capacity. So we'll hopefully give you some examples of how we're doing that.

The second one, and it was alluded to first by Dr. Berger in his introduction, is the patient journey. The U.S. health care system is extraordinarily complex, very difficult for a patient, probably even us to figure out how to navigate. So we want to make it more welcoming, simpler, easier for a patient to navigate that system. And likewise, we want to make it easier and more efficient for our team members to help them navigate that system so they could be more efficient. And both of them can be more accurate. And the accuracy allows us to do the right procedure the first time and make sure that we can compliantly turn those procedures into cash.

And then lastly, you've heard a lot about proactive care. So we want to be very focused on raising awareness for the value and the importance of screening and preventative care. And then we want to be the leaders in health care to shift from reactive detection to proactive prevention.

So I really believe that these 6 targets here give us a distinct competitive advantage to create capacity through AI-powered innovation and technology, essentially partnered with DeepHealth. And this gives us the ability to -- and the operational expertise to scale it. So one of the big things at RadNet, which you've already heard today is remote operations. This was developed by DeepHealth, remote MRI operations with TechLive to expand operating hours and address staffing challenges, and we've been very successful with that.

Capital-light investments. We invest in a capital-light investment to drive utilization, manage durations and increase our exam volume. Smart appointment management. Smart scheduling tools to optimize appointment time use and strategic expansion. So we have continued to grow through de novo tuck-in acquisitions and joint venture expansion. Advanced imaging mix shift. As you've already seen, we have clinical expertise and specialty exam growth to shift mix to advanced imaging. And team development. Team building and development to enable continued growth.

So you've heard a lot already this morning. You've heard TechLive mentioned. So one of the best examples we have of creating capacity has been through DeepHealth's TechLive tool. And here's what happens here. We take an expert MRI technologist who is typically working remotely somewhere other than one of our imaging centers. And we pair them with what we call an in-suite assistant, essentially a tech aid who is actually located at the place of service. So the remote expert technologist is 100% focused on capturing the best image for our radiologists to interpret. And on-site, the tech aid or the in-suite assistant is 100% focused on the patient experience and patient safety.

Typically, these remote experts are running up to 3 MR units at a time. So what this is helping us to do is address the staffing strain that we've talked about this morning. And we've demonstrated some pretty impressive results, we think, year-over-year, we've grown the use of this tool by 57% to the point year-to-date through September of this year, we performed over 133,000 MRI scans with this remote technology. Perhaps more importantly, and this was based in our Northeast pilot market or co-creation market, we were able to reduce the number of unstaffed hours. So basically, the unit was sitting there with slots vacant because we couldn't staff based on the staffing challenges. We've been able to reduce that amount year-to-date in the Northeast by 41%, creating enormous capacity to drive more access, greater utilization, more revenue allow for that shift away and into more advanced diagnostics and to drive margin improvement.

We further empowered this. Just last week or very recently, we announced the acquisition of Alpha RT. And this is going to empower the process of using TechLive and remote scanning even greater. What Alpha RT adds are these bullets on the left. They are primarily an MRI, a remote MRI staffing and resource management company. They also provide comprehensive training for the in-suite assistants and certification. We've been taking advantage of that long before the acquisition.

We have a new tool called [ AlphaEye ], which provides safety using AI and cameras, particularly since we have these in-suite assistants to make sure no inappropriate materials would enter the MRI suite. And lastly, there's a software tool to make sure we can optimize the scheduling of these expert remote technologists. So internally, this is going to benefit us first by allowing us to attack those most difficult to staff hours, the evening shifts, the weekend shifts that our technologists don't want to staff or if they are staffing, the minute something opens up during the day, they want to move into a more traditional staff. And then ultimately, the team at Alpha RT will be able to manage all of our remote MRI resources.

Externally, we think Alpha RT will pair very nicely with our DeepHealth team and TechLive so that if a customer wants TechLive, but they don't know where they're going to get their MRI techs from, we can provide the technologists. If they need training to have an in-suite assistant, we can provide the training. So essentially, we can provide them a turnkey solution and not just a technology solution. And we've included a phrase coined by Dr. Berger, who he's found of -- we've all become fond of that we now have live tech for TechLive.

So MRI equipment utilization. So we've invested in capital-light technology upgrades, which increased our utilization capacity and enhances patient satisfaction. This creates a situation where we manage our durations, we standardize protocols, we create efficiency in our operations. And right now, with our capital-light investments in MR, we're seeing 4 to 6 additional MRIs per day per patient.

So we've created all this capacity. We need to make sure that we use it wisely. One of the other things beyond complexity that we're kind of plagued with in health care and certainly in our outpatient imaging centers is a lot of patients wait till the last minute to either tell us they're going to cancel their exam or they just don't show up for their exam at all. And in this environment of strained or short staffing, it's really important to us that we make every slot count. If there's 20 MRI slots open on Tuesday, we want to fill 20 slots. So we want to make sure that we can try and predict what slots might be going vacant so we can backfill them with another scan. We don't cancel the initial patient. We just shift it so that the contact center or patient scheduling on our portal sees that slot as vacant.

So what we've done is taken again, in a pilot East Coast region, that's in co-creation with our DeepHealth team is we focused on patients who have not confirmed their appointment, and they are significantly more likely to not show up than patients that do. And then we've taken select procedures within that cohort and by trying to manage these appointments more intelligently, we have filled almost 51,000 appointments year-to-date that otherwise would have gone vacant. And annualized, that will produce $17 million of additional revenue alone just in the testing we've done on the East Coast so far. And Sham and I will talk a little bit more about this in our joint session to tell you where we hope to take this with the benefit of AI.

So our growth through de novos or new centers has been significant since 2022. We expect that, that growth is going to continue. In 2025, we have 7 new centers that are opening. We estimate in 2026, 11 centers and in 2027, 10 centers. These are going to create more access for us, bring down our backlogs and also payer contracting, okay, requires us in some markets to build new centers to be able to handle the patient volume.

Similar to the de novos, we've had a very strong track record of strategic and disciplined growth through acquisitions and consolidating our core markets. You can see in 2024, where we added 37 new imaging centers so far. Year-to-date this year, we've added another 29 centers. So this helps us increase our geographic reach, increase capacity. And one of the things, one of the skills we've picked up through all these acquisitions and consolidations through the year is the ability to rapidly integrate these new centers into RadNet with a term we like to call RadNetizing. And typically, we can do this within a 4- to 6-month period where we're going to get these new centers on our IT stack. We're going to have our uniform workflows installed, taking advantage of all the technology we've talked about today and allow us to rapidly deliver on the synergies that we built into the valuation models for acquisition.

We also are continuing to grow the joint venture relationships that we have. We currently have 26 joint venture relationships throughout the company. These are very important relationships to us that we work hard at partnering. When you joint venture with these big health systems, it's very much like a marriage. You're in this thing for a while, so you better get it set up right from the beginning. So what we're able to do, we're the managing partner in all those relationships. So we're going to run those centers just like a wholly owned center. It's going to take advantage of all the scale and expertise that we've talked about so far today. But when we pair it up with a health system, we're now working with all the referring physicians that are affiliated with that health system.

So we're very focused together on making sure that there's no leakage of those referring doctors sending into the network of centers. And we do that through a lot of education, making sure the service exceeds anything else available to these referring physicians. Additionally, we help the hospitals deal with a lot of the problems that Norman mentioned with the trends. The hospitals have tremendous backlogs. They're not very good at outpatient care. So we help them optimize their past utilization, get rid of those backlogs. So we infuse it with everything that we normally do. This is enabling the shift of the mix to more advanced diagnostic imaging that we talked about earlier. It's improving the negotiations of the relationships we have with payers. And it's also driving much greater patient satisfaction and referring physician satisfaction because they have greater access and can get the results more quickly.

Of course, we use all of our DeepHealth IT tools in these joint ventures. Again, they're just like the wholly owned centers. So we build on that IT stack. All the IT tools that we've talked about today run through these joint venture relationships.

So we've shown, again, a very healthy track record, and we believe there is a healthy continuing pipeline, including, as we alluded to earlier, inquiries coming in from new health systems and new geographies that we're not in today. So over the past 4 years, we've shown a 15.1% CAGR with volume within the joint ventures. And I think more impressively, a 19.1% CAGR in the revenue growth from these joint venture centers, which reflects some of the discussion about the payer relationships and the shift in modality mix to advanced diagnostic imaging.

So the growth of our advanced imaging and this mix shift is driving margin expansion. From 2022 to 2025, we have a 12.5% CAGR. Advanced imaging's 12.5% CAGR is 2x the routine imaging CAGR. And advanced imaging as a percentage of overall exam volume has increased by 300 basis points.

PET/CT, as Dr. Rose explained, we expect that there's going to be 6 significant growth in our PET/CT volume. Right now from 2022 to 2025, there's a 20.3% CAGR. I believe this -- the increase in the number of tracers, the growth in PSMA, the growth in the Alzheimer's studies, which were demonstrated previously is going to continue. And I think those volumes will continue to grow significantly over time.

CCTA, I can-- you can see that the 2022 to 2025 was 62.7% CAGR. I expect that there's going to be explosive growth in CCTA, number one, because of the overutilization in coronary angiography. Number two, the payer policy changes, which is basically referring patients to CCTA prior to any kind of interventional procedure. And number three, the fact that reimbursement has been approved for these procedures. And as Dr. Coords said, there's 240 sites that are available currently at RadNet, where we can put CCTA in, and we're only in about 60-plus of those facilities at this point in time. So right now, we're working on standardization, scaling and introducing this procedure into those facilities.

Breast MR, we show a 2022 to 2025, 17.1% CAGR. My expectation is that the breast MR, which is more specific and diagnostic than any other breast procedure that we have will continue to grow because the mammography volumes are going to continue to grow, and more patients will avail themselves to breast MR for final diagnosis and diagnosis prior to surgical intervention.

Prostate MR, 2022 to 2025, 26.8% CAGR. My belief is that prostate MR will continue to grow. Again, the -- there's 1 in 8 who get breast cancer, 1 in 8 who get prostate cancer. And as we educate the community, we offer more prostate screening, men become educated on how important it is to get prostate evaluated. My expectation is that this volume will continue to grow in a significant way.

So we've talked a lot, so far, Norman and I at all morning about technology and how technology is changing what we do. But the core of our business is always going to be the people. And we've got an incredibly talented group of people and a lot of depth, not only the folks that are in this room today, but the 12,000 other team members we have across the company. And again, giving the strain of staffing that's out there, it's more important than ever that we invest back into developing our team members and we make sure that we retain the best and brightest of them, and we're attracting others into the organization as we need them to grow.

So we've instituted a number of things over the past few years to help us with this. One thing that we've done fairly recently is institute a loan and scholarship program that's primarily directed at our current team members who are not technologists to encourage them to become technologists. So we'll pay for this for them. This obviously helps us fill some of the staffing challenges that we have and creates incredible loyalty with the team members. We've invested over $1.5 million this year alone in this program.

We're also investing in the longer-term pipeline. We're actually very active in high schools in all of our states. So we know this isn't going to give us a new team member next week, but it is going to fill that pipeline to refill the school programs, which went completely vacant during COVID. So we have gotten very involved in a couple of programs like WIN-NextGen, but also just directly into the high schools. Out of that, we formed something at the bottom as a test case in Maryland called the Maryland Radiological (sic) [ Radiologic ] Technologist Summit, where we took the lead and invited other organizations like Johns Hopkins, University of Maryland, other big health systems in the region and our competitors to see how we could collaborate together to attack this problem. And I'm very happy to say that enrollment in the programs in Maryland is up 150% this year because of that, which will benefit not only RadNet, but everybody in the state of Maryland, particularly patients that need care.

We've also developed a number of internal career pathways, which I think just make good common sense, but we're taking our patient service reps or PSRs, we're encouraging them to become the in-suite assistants we talked about with the TechLive program that gives them a new skill. And when those same in-suite assistants become confident that they can deal with the patient, we're seeing them move on and wanting to get further upskilled to become an MRI technologist. And again, this helps solve our problem we have, but it's truly life and career changing for that team member in terms of the income stream and the career fulfillment that they can enjoy.

But I want to say for last for Norman to talk about an incredible program that we've run in California and that we're starting to expand to the East Coast. So Norman tells us about VS SoCal.

So JVS SoCal is a program that I'm very proud about. It's a workforce nonprofit. As it currently stands right now, we have a graduated 4 classes in PSR, ISA and DEXA techs. And those employees are filling positions within RadNet in Southern California. We also educate the students on their DEXA exam, which is a state licensure. Right now, we have 90% of those students who have passed their licensure. And we've been very successful in Southern California with this program. We're now expanding into Northern California and looking at expanding to Maryland.

In addition, in January, we start our first MRI class. We're taking 18 students from our SoCal existing employee group, and those 18 students will take an 18-month program in MRI. And this will give them career growth and the ability to create careers in MRI tech, and it's been very successful.

So it's a great program. And this investment in our people is a very important component of creating capacity in our centers.

So this is one of the -- I think, ultimately, it is today, and it will ultimately be one of the most important things we do to be successful. And I think it really separates us from the rest of the people who ultimately compete with us and the people that operate in our space. And it's really improving the patient journey through workflow innovation.

Workflows, in our opinion, is everything. And it's not only important to our staff, but it's also important to the patient. And we're driving -- and our guided workflow program is going to ultimately drive patient satisfaction, staffing efficiency, utilization and collection performance. All these guided workflows are the essence of our success. We have to be able to design them, and then we have to be able to execute on them, and then we have to be able to scale on them.

It enables patients to be self-directed, removing staff burden and further enhancing the patient experience. Contact center deflection enables greater efficiency, improved patient experience and more scheduling opportunities. These things are the essence of creating efficiency and also improving the patient journey. And radiologist reporting for faster results and continuity of care enhances referring physician relationships and improve radiologic -- radiologist productivity. A lot of these programs are already in place. They are being tested, and we're creating an environment we can ultimately plan them, execute on them and scale them.

Right now, we have 95% patient satisfaction based on greater than 325,000 verified patient reviews and surveys, November to November, '24, '25. Our time of service collections, which I think is unheard of, 95% of patient responsibility collected at the time of service. We have a 2.8% call abandonment rate, okay? That's a reduction of 45% year-over-year. And we have a 65% recurring patient population.

So these are some of the things that I think that we are really proud of and some of the things that in our markets has established us as a leader. So we spend a lot of time promoting proactive screening and prevention and raising awareness. We go into communities not only with our staff and our people, but also our physicians. We work with nonprofits, creating innovative ways to be able to get into those markets and promote our screening programs and our patient services. Somebody mentioned Walmart earlier. We've created a situation in a very underserved community in Central California, where patients weren't able to get mammograms, okay? And if they had to get a mammogram, they had to travel great distances. It's been a huge success. We have patients getting a mammogram for the first time in their lives. And patients breaking down and crying or in fear because they've never seen a mammography system. So we are basically going into these markets and giving them the ability to get their screenings.

The other thing that we do is our mobile mammo units. We work with a lot of nonprofits. We go into underserved communities where patients don't have access to mammography, patients don't have access to get screening. And we go -- we work with the nonprofits to go into these communities and actually screen these patients. Our physicians are very involved in the markets that we're in. They do a lot of presentations in these markets, okay, promote our screening programs and raising awareness, and they've been very successful. And now Steve will talk a little bit about the legislative advocacy that we're promoting in our markets.

Thanks, Norman. And just real quickly, again, we want to stay proactive in this complex health care market we're in. We want both nationally and locally in the markets we're in to be involved legislatively, number one, just so we're aware and we know when to jump in to help steer something in the right direction, but also to make sure the causes that we believe in the most are getting the attention they need. And the example, in Maryland was for preventative care, particularly around lung and breast screening. You'll see a picture here in the middle of our sportsperson, WNBA legend, Sheryl Swoopes here with Maryland Governor Wes Moore. We had a wonderful about 90-minute personal session with to talk about care in Maryland because we were able to introduce and write, find a sponsor and ultimately get passed unanimously health care legislation in Maryland, which helped eliminate a barrier for these underserved communities.

So while women could go and get their breast screening or anybody could go get their lung screening, there was an economic barrier if something suspicious was found. Now they need diagnostic follow-up. And often, the unaffordability of that care prevented them from going to the next step. So what we were able to legislate in Maryland is that there would be no out-of-pocket expense for the patient to have the diagnostic follow-up care necessary even through a breast biopsy. We've been able to move similar legislation through here in New York. It's on Governor Hochul's desk for approval. And in the recent encounter, we had, she told Sheryl personally that she intends to sign it. So we're going to try and hold her to that if we can.

We've been very active at a national level, too, again, fighting for preventative care. Dr. Sorensen has been very involved in helping guide their regulatory guidelines for how AI will be used within health care, obviously, a very important subject for all of us. So an important part of our proactive care.

And in closing, last couple of slides, the most prominent example we have of proactive care has been our Enhanced Breast Cancer Detection program that you've heard mentioned a couple of times this morning or as we like to call it, EBCD. We believe through this process. We've created a superior mammogram. We think it's the most accurate mammogram.

So what happens in a nutshell is when the scan -- the screener is originally read by the radiologist, they have the benefit of AI as somebody is enrolled in the program. So that's being done by a number of folks out there where AI is being used on the front end. The real difference is what we call the safeguard review that happens in the next 3 steps that you see is if there is a discordance between what that initial radiologist interpreted and what the AI saw, that image is then kicked out to a second expert radiologist who's looking at the scan again with the benefit of AI. And if that radiologist also is in discordance with the initial radiologist, they're going to consult together and come up with the most accurate outcome. All this is happening in the background before any report is created.

Out of this process, we have created a 21% increase in the cancer detection rate. And to put that statistic in some context, the last significant breakthrough in technology with screening was back when 2D transitioned to 3D. And when that occurred, the industry saw a 9% improvement in the cancer detection rate. Through EBCD, we're seeing a 21% improvement in cancer detection rate. And in fact, Dr. Jochelson spoke about the difficulty of interpreting a dense breast exam. We've increased those by 23%. And because of the incredibly diverse patient mix that we see, all these statistics are validated across all races, all ethnicities. So these are just incredible statistics, I think, and terrific definition of Dr. Berger's other quote. We quote him all the time, good medicine is good business. I think there's probably no better example of that.

And just a reminder, this is a direct-to-consumer choice. We do charge $40 out of pocket. We collect that at time of service from the patient. You can see the growth. We introduced this in 2023 on the East Coast. We got it largely throughout all of our centers in 2024 with just a few left in the beginning of this year. And now this year, through 9 months, we've had over 657,000 patients opt into the program, which represents an overall aggregate 45% adoption rate.

And why that is important? Going back to the 2D to 3D example, how 3D ultimately gained traction for coverage from CMS and other payers was its adoption. We charged $50 out of pocket back in those days if a patient wanted a 3D exam instead of a 2D. So with 45% adoption, literally growing every single month, we believe, in time, this will be covered by payers. Hopefully, CMS and others were already seeing large employers who are building this into their plan design for coverage for their employees. We're seeing some of the very large medical groups on the West Coast build this into their capitation program. So very, very proud of the program and the impact this is making in the communities we serve. And with that, we thank you for your attention. I think, Jane, we're going to Q&A.

I want to thank everybody who presented earlier today. We have a packed house here, and we are going to take questions. We have 2 microphones in the audience. So please raise your hand. And for appropriate responses, we'll hand mics over for those who stand up. And our CFO would like you to identify yourself.

Maybe first question go to Dr. Judy. Judy, so you showed an example -- sorry, identify myself. Andrew from B. Riley Securities. So Judy, you showed an example of FAPI to be adopted in cancer. And where do you see FAPI will be adopted most different cancer types? The example you showed was a cancer in pancreas, but because of maybe the high background of FDG, it's not pancreatic cancer per se, it's a peanut. So where do you think the FAPI imaging agent will be adopted most in cancer types?

I think most likely, we're going to see it adopted for those that we know traditionally are FDG-negative. That's why the first patient trial that they're going to do is for gastric and esophageal and pancreatic. So I expect that it will be first and we'll probably -- they'll walk through the other tumors as we see how that works. So I think that -- that's what you'll be looking at. So we know that we're fairly successful with lung cancer. We're fairly successful with certain types of breast cancer. So I think that's what you're going to see.

Got it. And maybe one more to Dr. Suzie. So now we have different imaging agent for the Alzheimer. And so far, [indiscernible] is the most commonly used imaging agent. What about tau and why it's still a small percentage in the overall volume?

So I think -- Okay. So for the second part of your question, for tau imaging, I do think there is a future role for TAU, absolutely. But right now, we're not getting consistent reimbursement for it. So that's why we're not really doing a lot of tau PET. And then can you repeat the first part of your question about amyloid PETs?

Yes. So why the amyloid is a dominant usage right now? And what's the percentage of that?

Yes. So amyloid -- patients generally prefer to get an amyloid PET rather than a lumbar puncture where you have to put a needle in the spine to confirm. No one can start therapy for Alzheimer's disease unless they have confirmation of that beta amyloid plaque, that toxic plaque. So patients really want to get these amyloid studies. And again, you've seen here in these demonstrations, our amyloid PET volumes have significantly increased. And really, RadNet is the, I think, the natural place for people to get their diagnosis because these memory loss patients really -- it doesn't really make a lot of sense to go to a hospital and maybe have to wait more time or whatever to get your imaging. RadNet is able to get the imaging done fast.

And not only that, but the big thing that drives refers is trust. And so we've done something very unique at RadNet at scale. And so basically, our neuroradiologists, we have over 100 neuroradiologists. All of our neuroradiologists are trained in our ARIA surveillance safety monitoring. That's something I don't really see because I do a lot of things on the national level with Alzheimer's. I don't really see that in other programs. So we offer very consistent high-quality reads. All of our neuroradiologists are also trained in Quantitative MRI, which we use for staging. And then all of our amyloid PET readers have had triple training for all 3 tracers as well. So they're getting very accurate reads. And we use the AI tool for quantitative analysis. So we actually put the Centiloid values in all of our reports. We know exactly how much amyloid plaque is in the brain.

And when that patient comes back at 12 or 18 months, to make decisions about maintenance dosing, we can then repeat that amyloid PET again, again, driving more volume into RadNet and then reporting out the Centiloid values after they've had treatment. And then that use that to inform maintenance dose therapy. So we're doing -- and not only that, but all of our protocols are standardized nationwide. So RadNet has done a lot of unique things that I don't see available otherwise. And it's really brought a lot of business in, and it's earned the trust.

First question for Dr. Bash. Just a follow-up. So what do you think gets adoption ramping up for these tests in amyloid specifically, right? Because it feels like the drugs have been out there, the therapies have been out there, but it's taken a while for it to really ramp. So is this just a matter of reimbursement from the MACs? Or how are you thinking about that?

Yes. So a big portion was initially when we started getting -- oh yes, sure. I'm sorry. A big portion was initially when we started getting reimbursed for it. But another big thing was an educational component. We needed to inform our neurologists that we had the capacity to do this that they could trust our reads that were providing training for our neuroradiologists. They need to be able to trust that we can give accurate safety MRI evaluation because it's critical because they need to have something they can trust because otherwise, they're going to suspend the dose. And now the good thing about ARIA is less than 3% of patients are symptomatic even if they have the side effect, and ARIA-E, the one with edema essentially always resolves. And then ARIA-H with the microbleeds will stabilize.

So it sounds very scary, but this is a lethal disease. And if we can diagnose the patients faster, which is what we're really good at, at RadNet and provide trustworthy reads, which we're also good at because of our training and our imaging initiatives, that's what's driving volume in. And again, access. We're completing the exams quickly.

And I would just add, Brian, I think the memory disorder clinics took a while to get comfortable with the new therapies, and that's finally starting to ramp up. And so it's as much education of the primary neurologist as it is -- and then they decide, okay, I can put somebody on Kisunla. And then we can see it. So I think it's a combination of our excellence and then community comfort with the new therapies.

Sorry for not identifying myself, Brian Tanquilut from Jefferies. Maybe if I could one more just for Dr. Judy. As we think about theranostics, what do you think is a real -- realizable opportunity in theranostics. And how do you as RadNet -- like I think one of the things that we hear a lot is that there's not enough access to PET scanners for companies that are developing these theranostics products. So just curious how you're thinking this all plays out.

That's a complicated question, but thank you. I think what we'll see is as each one, just like FAPI. So FAPI and there's other products coming. But like FAPI, it already has a therapeutic. So basically, they're coming out in parallel. And so as this develops, that big wheel with all those theranostics company, every one of them is going to have a different tracer and that's how it's going to build.

The -- as far as the access is concerned, the access problem is probably more on the therapeutic side because the theranostics has to be -- it's not a -- radiologists don't do that test. I mean, don't do that treatment. And the -- most of the legislations, legislative bodies in the different states have very tight controls because its radioactive material and its therapy and the patient leaves and they are going to be exposing people in their homes or communities. So what's happening is the access to get a theranostic treatment is really restricted. So in California, like in Southern California, there's maybe only 5 theranostic centers.

So that's one of the problems. And that's why PLUVICTO and LUTATHERA, which has been longer, don't have as many cases because they can't find people to do it from a licensing standpoint.

Dave MacDonald from Truist Securities. Two quick questions. The first one, again, for Dr. Rose. You mentioned earlier just to kind of pile on to Brian's question, just given the growth that you're seeing, you talked about having a lot of capacity. Just any additional detail that you can give there in terms of how much running room that means? And then the second question I have is, when you look at either a dense breast tissue patient or on the prostate side, a patient moving from either mammo to MRI or PSA to MRI. Can you just talk about that conversation with the payers, kind of how that works? You're obviously moving to a different treatment, but just kind of that back and forth and how that transition works?

Well, I'm going to give the second question to my colleagues, but I'll answer the first one for you first. So we have -- many of our PET/CT scanners also do CT. So when you hear -- when I gave you the number of 5.3 PETs per CT per day, depending on the scanner and the uptake rooms, we could be running that at 15 PETs a day. We just have to -- we take those CT when we -- as we're ramping that up because we need to do that. We'll move those CT scans to a standard CT scanner. So we have that opportunity because we have lots of CT scanners. So we -- that's not in every market and that's not in every center. But that's our way we're going to swing this, so we don't have to buy 100 new PET scanners.

Regarding your question about prostate MR, there's approved CMS codes for diagnostic prostate MR with contrast. So for most of the men who are eligible, there's a full reimbursable code. What I think sets our program apart with the EPS or the screening program is we're allowing men to self-refer from 45 to 65 for a low-cost $275 study for a non-contrast screening exam. So we're going after with RadNet, a dual market approach for both screening and diagnostic MR, and there's good reimbursement for both.

Andrew Mok from Barclays. This came up a number of times throughout the morning session. But it was noted that deep learning improved MRI scan times by about 50%. What's the realized volume yield on a productivity stat like that? And what are the friction points to fully realizing that potential?

The realizable volume gain through using those tools, what we're seeing is what we presented, typically, at least 4 to 6 scans a day. And that's just on an average 8-hour day. So typically, we want to try and run extended hours if the demand is there or run weekends. So we're seeing, as Dr. Bash pointed out, better images in a shorter time frame. So 4 to 6 is the conservative range we typically look at.

Great. And sticking with the services...

Sorry, I just want to emphasize that is per magnet, times 389 magnets. And the other thing I wanted to mention is I talked about neuroimaging. We use it for neuroimaging, but we use it for every body part, okay? It's not just for neuroimaging. It is clearly, in my opinion, a win-win for everyone involved. The patients get the faster scans. Again, that's what they rate as their most important factor for satisfaction is getting in and out faster. Radiologists get the benefit of the higher image quality. It makes us better doctors. Again, you can see these metastases at an earlier stage. And it also makes sense from the imaging enterprise perspective because you can scan 3 to 4 more patients per day, per scanner times 389.

I think in MR, one of the things that we do, and we do very well. So you see all these tools. You have smart scheduling, you have artificial intelligence. The other thing that we do very well is we manage our durations. We understand every single piece of MRI equipment that we have. We understand the software level, the type of technology we have, and we understand the durations that it takes to perform every single exam. And once you put in that into the ability to predict how long it's going to take to do each patient, then you can also measure your volume and your throughput through those scanners. We've been very successful at it, and we're very good at it.

And I'll just add to that because we are very acquisitive, we see what other people are doing out there. And one of the things that's very different about us is when we find something out in a center or a market and it makes sense, it goes through all 405 or 407. I don't know how many -- where we are on any given day anymore. But it runs through everything. And you don't typically see that. We act as one RadNet. And when it's good, it's everywhere.

I like that question. We're very good at scaling what we do. And we're very efficient at it and we can scale very quickly. So once we do find something out, we scale it, and we scale it very efficiently and very quickly.

Great. And sticking with the services side. I think during that presentation, it was noted there was a $17 million annualized net revenue impact from smart scheduling, and that was during a pilot on the East Coast. Can you give us a sense for how big that pilot was or the revenue base so we can understand the yield or uplift from that initiative?

Well, it's just really been this year throughout all the centers on the East Coast. Sham and I, when we do a joint session later today, we'll talk in; a little more detail how we're going to infuse AI to make it much more sophisticated than it is today with a twofold example that you'll hear this afternoon to make sure that we can drive even more revenue and then we'll push it around the company, but that we can make it more accurate.

Right now, we have very few occasions where both patients show up, but when they do, it's a little bit of strain on the staff, but we can normally [indiscernible] because maybe it's one patient a day. But the more we can make that sophisticated, more predictive, we'll eliminate even that, so we don't put extra burden on there.

So hard to put a whole number on it, and some of these are market-oriented. I threw out a statistic of the 41% improvement using TechLive in the Northeast. Again, that's one market. There's unique conditions in each market. So I would caution against extrapolating broadly, but we're seeing tremendous benefit. And it would surprise you the amount of cancellations that we get in health care. It's a little crazy.

Okay. Since there's no more questions, I thought I'd just put kind of a little footnote on what you saw this morning. The attempt was to give you a greater understanding of the breadth and depth of the RadNet teams that are here, not just operationally, but also from a clinical standpoint.

I'm delighted on the number of questions that came to our clinical expertise because that was something that I felt was important to communicate. The 7 people that we had presenting here are all of academic level capabilities. And so we're proud of what they are leading us into. But the underpinning of all of this is really why we've changed the moniker of RadNet. It's not just leading radiology forward. It's where health care is going. It's technology and innovation. And everything that was touched upon this morning and will be amplified in the afternoon really fits that description. And AI, as I talked about briefly yesterday on the earnings call, at least in health care, at least in imaging, at least in RadNet is not a bubble. It is the future. It's here, it's here today, and it's up to us to make it perform what we all know it's capable of, and that is better medicine, and that's good business. I don't think that the operations people also take enough credit for taking our assets and improving on them.

One of the slides that you saw said how many PET scans were doing per PET/CT scanner. When we first started on this journey of doing PET/CT, the program that we put in place was we would do PET/CTs in the morning and CTs for the rest of the day. So if there was 2 or 3 PETs, which is all we were doing in many of our centers, the rest of the day was spent doing CT scanning. That shift has created the opportunity for many of our centers to now be thinking about full-time PET/CT scanners. And the challenge that we have is how do we go through those upgrades, how do we create that capacity because not only do we do more PET/CT scanners, but we have to have what they call quiet rooms for patients to sit for perhaps an hour, 2 hours, 3 hours before they actually get on to the scanner.

Some of that is changing with the new tracers. So all of this gets fit into the dynamics that Norman talked about, and that is logistics. We've become, in some respects, a logistics company to try to manage as efficiently as possible all the demand that we have.

So I think we're in a unique place. Imaging is in a unique place. But with the experience and the talent that we have, we want to be able to demonstrate to you that the performance that you've seen primarily over the last 3 years is something that is our responsibility to capture, not necessarily something we have to wait for the phone to ring. And that is indeed the biggest challenge in all of health care, I don't know how many of you have been burdened by the difficulty of getting in to see a doctor to get your appointment approved when you need an imaging exam, particularly advanced imaging. These are the hurdles we face and the tools to do this are with us today, and it's up to us to be intelligent about how we implement them and ultimately turn them into a better quality business that everybody perhaps will look at RadNet as a way to embrace this and not necessarily fear it. So I want to emphasize, at least in health care, at least in imaging and mostly at RadNet, AI is not a bubble. It's here, it's today, it's real. And for somebody that's been doing this for a lot of decades, I've never been more excited or proud of the opportunity that we have to demonstrate that RadNet is a health care company, okay, and not just counting scans. So thank you all. Enjoy...

Yes. We're good. Thank you, Dr. Berger. We're going to take a break. Yes. There's lunch outside. We'll be taking about a 45-minute break. There are demos. So please, by all means, make sure you heard a little bit about the technology already. You're going to get more information this afternoon. But spend time. We have box lunches to make it easier for you. So -- and obviously, any of our speakers, please feel free to ask them questions as well.

[Break]

All right. If everybody could take their seats, we're going to go ahead and get started on our second half. It's going to be just as exciting and compelling as we had in our first half. All right. Thank you, everybody. With that, we're going to start with the video, and then we will go on to our Digital Health division.

[Presentation]

Good afternoon. This is clearly. I'll speak a little bit less loud. My name is Kees Wesdorp. It's a privilege to be here in front of you today. A very exciting day for me personally for RadNet overall and for the Digital Health division. And as I reflect on that video, I just also need to tell myself is it's remarkable to be in a position to work so closely with these physicians, professionals, technicians that hopefully you've met also at the demo station and to be able to co-create these solutions. I joined RadNet a little over a year ago. I've had a career in tech in different leadership positions. Before RadNet, I was with Philips leading 1 of the 4 global divisions overseeing diagnostic imaging and the informatics division. And when I got the opportunity from Dr. Berger and team to join the team to think about the disruptive innovations we could bring to the market, I didn't have to think long. Sham?

Sham Sokka, CTO and COO for DeepHealth. 20 years in the industry, all my life really in radiology, but on the technology side, building product, started in early MR systems, ultrasound systems and then moved to informatics later in my career. And as Kees said, this is a really unique opportunity as a product builder to be in an ecosystem where you can work hand-in-hand with both operations folks and clinical folks to dynamically improve product. And I think that's one of the really unique capabilities, and we'll talk about it more as we go on in today's session.

So Sham and I are going to give an overview of the Digital Health division and how we're delivering breakthroughs in care. And what's going to be at the center of that is cloud-native solutions, AI-powered solutions, but also the importance of scalability and infrastructure and tech stack that's scalable.

Before I go into that, I want to provide an overview. And this is a page that maybe some of you have seen on the course of the interactions that we had with the investor community. But the overall statement is we see ourselves as leading the way in AI-powered health informatics. I very often get the question, do you have external customers? We have over 2,000-plus external customers worldwide. The other question that I often get, but how does it work? Because those might be competitors to RadNet. It doesn't really matter. They're seeking for tested, scalable AI-powered solutions. And actually, it's typically a plus that they're tested at scale in a service provider like RadNet. We have a global footprint with over 400 employees over 3 continents. And so very recently, we were very proud to add the See-Mode team, team of 13 people strong in Australia. See-Mode was our acquisition in the ultrasound space. We're going to talk a lot more about it because there's quite some excitement both in terms of the impact that we're seeing at RadNet, the deployment at RadNet as well as externally.

We are clinically validated, and we keep track, obviously, about the solutions that we provide to the market and the clearances that we get. We have the most comprehensive portfolio, including 22 FDA cleared and 15 CE-marked solutions that we currently market. Now last but not least, we have a track record of integrating capabilities. And you might know, but I'll go through it. Over time, we've integrated different teams. So for instance, Aidence for lung. Remember that Professor Hare talked about lung screening in the U.K. This is that solution that we deployed in Europe and we will also deploy it in the U.S. Quantib for prostate and brain, DeepHealth, the original company of Dr. Sorensen in the breast space, eRAD for wrist and PACS, Kiran for mammography, more focused on the 2D markets, in particular for Europe, See-Mode I just talked about and our acquisition -- acquisition of this year as well of iCAD. That's marketed under the umbrella of DeepHealth. So we call ourselves as part of RadNet, the Digital Health division, and our brand name is DeepHealth. It's one and the same.

This page is already outdated. So this morning, there was some news that I'm very, very passionate about, and that is that we've acquired CIMAR. And there's a whole piece of text that I can sort of talk to what CIMAR is. But there also actually already a person who explained that quite well this morning. And I will again talk about Professor Hare because he explained that they have been able to scale -- remember that bubble chart over the U.K., they have been able to scale all those locations to do reading for the lung cancer screening program. Well, that needs an image exchange platform. That image exchange platform is CIMAR. It's a cloud-native image exchange platform that powers AI solutions and interoperability solutions such that images can go from left to right to the destinations as needed, and it all works like clockwork. It's scalable. The unit economics work. And we believe that, that can scale up to further screening programs. That was also one of the pages that Professor Hare showed, but we also believe that, that's a model that can be replicated towards Europe. So that's CIMAR.

There are more questions about that. We're more than happy to talk about that. I will talk a little bit later on about See-Mode and iCAD. I can imagine that people have questions how far are we in the integration. There will be a slide a little bit later on that.

But let me bring it back first to the market opportunity. We are operating in the AI-powered health informatics market, and we see very attractive growth. Now overall, you can see on the right-hand side that currently, we have a 2024 market of $5.1 billion, growing towards $7.7 billion by 2028, and that's a pretty decent growth rate. But what's more important that we position ourselves in the segments that show highest growth. So AI, cloud native, outpatient solutions are the fastest-growing segment in that market. And so this is really that tailwind that our solutions are feeling and that our deployments into the market are seeing.

In that market, and Steve and Norm have already talked about that, there's an urgent need to navigate clinical, financial and operational challenges. And let me call out a few and make them quite specific. On the left top side, disconnected patient engagement. The no show or a late cancellation rate is anywhere between 15% to 30%, massive issue for the operations that Steve and Norm face. And that's not specific to RadNet. That's what the industry faces globally. There's a strained workforce, and it's projected to get worse. And so you can look at different sources. But by 2030, there will be further disparity between demand and capacity of radiologists by 15%.

There are inconsistent clinical outcomes. So a diagnosis can vary up to 30% from one to the other. And so that clearly is a problem. And then we're facing fragmented IT systems. Currently, in any given health system, an IT leader in that health system or in an outpatient network is facing at least 20-plus IT vendors to deal with. And that's because there are many different AI point solutions or IT point solutions, and there are interoperability challenges. And there -- again, there's a variety of reports about what kind of inefficiency this brings up, for instance, a McKinsey report, but there are also others and it's estimated that this has an impact of cost inefficiency of up to $25 billion in the U.S. And obviously, the global perspective is even larger.

We're set out to navigate these challenges. Now why do we think we are uniquely positioned to do that? And what I sometimes hear is, yes, because you've got access to data. Well, yes, there's that. It helps tremendously to have access to an enormous data set that is quite diverse across population groups to make sure you can train your algorithms and more. But that's actually not all. There is a special formula that we've been able to crack. And if there's one word that I want you to remember, I think Steve also mentioned it, that's co-creation. Between the clinical staff, operational staff, the engineers, the product managers across the services division and Digital Health division, there's deep, deep, deep co-creation. And so that vertical integration allows for rapid iteration. And I don't want to steal the thunder of Sham, but he's going to talk about the Thyroid Suite, which is powered by the See-Mode acquisition. That went out of the blocks when we closed the deal like Lightspeed. The deployment in RadNet was rolled out incredibly fast. But more importantly, the innovation cycle to improve the product to really get it deployed in the right way such that we can capture the reduction in slot times was very, very effective. I'm not going to tell too much about it now because we're going to come back to it later on in the presentation.

We now have clinical AI solutions in breast, chest, neuro, prostate and thyroid, and that's not where we'll stop. We'll show that road map a few slides later. We're clinically proven, over 2,300 health care provider locations worldwide. And we're starting to get very meaningful clinical impact. It was already mentioned in one of the presentations, for instance, the increase of cancer detection rate in breast by 21%. And we're delivering at scale.

So 24 million-plus managed imaging studies per year and then 1,800-plus AI-powered cancer screening sites in the U.S. and Europe. That used to say a much smaller number only 6 months ago. But with the integration of iCAD, obviously, those numbers have gone up quite a bit.

What we're going to talk a lot about is our DeepHealth OS. Our strategy and our purpose is to bring clinical and operational intelligence together into one enterprise solution, the DeepHealth OS. And that's really the DeepHealth OS is really pioneering a cloud-native diagnostic operating system, connecting imaging, informatics and AI across the workflow. We often use the word workflow. In this case, I'm talking about the overall radiology workflow. And we'll talk quite a bit about how a patient -- what the patient journey is from intake to center operations to image acquisition, to image interpretation to clinical collaboration and follow-up. In each of those domains, we have innovations to bring, and these are not new products. These are also products that are ready now. In each of those domains, we co-create and we deploy at RadNet. Sham, I'm going to hand over to you to talk a little bit more about that.

Yes. Thanks, Kees. So you saw us in the earlier movie, let me set a little bit of the current state. So if you come into any sort of radiology enterprise, even a radiology enterprise within a health system, you look at these tools, and we color these specifically because in the real world, every single one of these colored areas is a separate tooling infrastructure. So patient experience, you have often portals and various tools that don't -- that are, again, separate siloed kind of technologies. Center operations will be a whole set of tools, risk tools, oftentimes from different vendors than the patient experience tools. Image acquisition is modality specific, right? So again, a whole another set of tools, right? Image interpretation, typically PACS, nothing to do with the risk or the EMR, right? So in fact, completely independent systems in most places. And then as you think about closing the loop, revenue cycle, again, different sets of tools. So that's the system we're in. And when Kees talked about workflow and workflow being a challenge, in order to deliver a seamless experience for a patient, behind the scenes, we have to integrate data from all these systems. And now with the promise of AI, and this is why you see some of these like starts and stop with AI adoption is it's very hard to deliver AI into a system if you only see a piece, right?

So if you go into a radiologist workflow and you say, okay, I'm going to give you better detection, but you don't have AI tools to summarize and integrate data from the other parts, you kind of leave it flat. And that's the world that we're in today, right? So what we're trying to do with DeepHealth OS fundamentally is to bring the data in all these different steps together in one sort of environment. And then that data can be orchestrated to serve multiple different applications, right? So the fundamental promise of DeepHealth is this unification of data in the entire workflow so that we can operate on it so different users can touch with different applications and really maximize their value, right?

So how do we then build solutions on top of this DeepHealth OS, right? So what we've done because customers today are not even close to being ready to buy this promise of a universal system. So we have to package these systems in sort of different product scopes, right? So the first area, what we call operations suite is the next generation of risk radiology information systems. These systems integrate the patient experience, do the scheduling, run the day-to-day operations. And the goal here is as we bring AI in is more and more to automate operations. So think, for example, things like document scanning. So today, over 50% of our orders come by fax. And then we have teams of people and not just us, almost all of the other radiology delivery organizations have teams of people that manually go through these documents, extract the order and then put them into the system, so we do the right test. And if we don't get that right, we're not getting paid downstream. If we do the wrong test, so this -- all of this sort of flows downstream if you don't do it right.

So this is where now AI tools can come in and really automate some of these tasks upfront, right? So that's -- when we talk about automation, that's what we're talking about automated operations. The second sort of family of tools, and these -- we call these -- all of these are suites, right? Second family of tools are patient engagement. This is what now really drives the scheduling process, the registration process. If you haven't seen the demonstration, this is one of the things that we're showing, right, today, more than 90% of our calls our patients call in to schedule their appointment, right?

Huge opportunity for improvement in terms of errors, in terms of making it easy for patients. We ask them, in some cases, 80 questions by phone, which creates a very elaborate process. So what if we can actually digitize that process, right, the scheduling process. And then when they come to the center, we have -- again, majority of patients need to talk to a person to be able to then be registered, hand over their final set of paperwork, what if we can actually automate that as well. Both of those were showing, and we're starting early demonstrations of that in our centers and starting to scale that up. So the goal there is really to drive a guided patient journey, but more and more, again, automate the complexity, the number of steps. One of the reasons that patients don't do digital scheduling is we have way too many manual steps, right?

If we then think about what are the AI tools that are really driving this area. So the left and why we kind of put it into this infinity shape is everything on the left is operations, right? So we really are really focused on bringing Agentic AI tools. So Agentic AI, again, is leveraging LLMs, large language models, visual language models, Gemini, ChatGPT, you think all those kinds of tools, but to then automate tasks. So when we create this automated tools, those are the Agentic AI, right? So we think about over time hundreds of these agents working to do things in the background, pre-authorization, document scanning, automatic order selection, making sure it's stat versus non-stat, right? All these are separate agents that we start to bring in as we think about the operations side.

On the right side is the clinical pieces, right? So the core of that are 2, 3 large families of solutions. First is the clinical AI suite. So these are all the clinical AI tools that we've talked about, breast, prostate, lung. And these are not just about making radiologists faster, although we want to make radiologists faster, we want to make their jobs easier. It's a lot about this notion of stage shift disease. It's about better outcomes. You saw from Dr. Hare how the program together is shifting outcomes in lung cancer. Steve talked about the improvement in cancer detection rate, 21%. That's where value is, right, making radiologists faster while we enhance clinical outcomes, right?

Now adjacent to that and almost all the AI tools are delivered to what we call the diagnostic suite. Diagnostic suite is the integrated experience for the radiologist. So this is their one cockpit, right? The idea there is really about automating more and more of their tasks, the mundane tasks, things like measurements, right? We talked about plaque characterization. Again, things that, again, that radiologists find it difficult to do if you don't have quantitative tools behind them, right? And also to do that at a much greater velocity to have the ability to diagnose, report faster. The one thing that I always sort of constantly reminded of by our team is we talk a lot about visual AI, right, tools that help find cancer these things earlier. If you take an average reporting time, so if it's an x-ray, it's a couple of minutes. If it's a CT or MR maybe 10, 15 minutes, 70% to 80% of the time is spent on creating the report, not actually reading the images, right? It's all the documentation.

So this is where we bring the tools in to make the reporting easier, auto insertion of text, auto insertion of measurements. Can we create 90% of the time, first-time right report that the radiologist is reviewing and adding maybe some final remarks. I mean that's where we're going on the diagnostic suite and as we bring report automation in.

And lastly, if you look on the acquisition side, this is where multiple folks have talked about TechLive. The goal of TechLive is really to increase our capacity of our systems, right? Doing more with our imaging technology by making it easier for our techs to do more scans from remote situations, but also when we don't have enough technologists to deliver services across our entire fleet, right? And I'll talk about that in a bit of a zoom.

All of these tools are powered by both Agentic AI, so things like automated agents, as I was talking about earlier, but also clinical tools. So one example of a clinical tool that we haven't talked about is as we think about TechLive, how do we make it easier for a technologist to make sure they're doing the right scan. So today, it's remote, but we also want to bring tools that help them look at image quality. So if there's artifacts. They're notified so they can actually immediately retake the exam. Tools also to make sure that we have the right positioning, the right orientation of patients so that downstream, the radiologists aren't giving us yellow stickers where we tell them the image quality wasn't good enough, right? So we can reduce the amount of recalls and again, get the first-time right imaging there.

So those are the kind of the Agentic and clinical AI tools that sort of drive those clinical tools to be more specific. So how do we enter the market? Because if you think about this, this is a large space, right? There are multiple companies creating hundreds of millions of dollars of business in one of these verticals themselves. So we approach the market with those tools in sort of 3 larger market spaces, right? One is the -- what we call enterprise operations. This is the clinical record, if you will, right? The clinical record, the operations in the -- think in the hospital world, EMR, right?

So our solutions for the outpatient imaging center are essentially the EMR for the outpatient imaging center, right? In fact, it's a certified EHR from meaningful use and so forth, right? So there, we compete with folks that are really risk -- core risk folks. And the differentiation over time is going to come from these agents, right? So it's an EMR, but on top of it, can we automate more and more tasks? And I talked about that a little bit earlier. We're doing that with operations suite.

In the middle is the traditional, let's say, the radiologist experience market, so the PACS market, right? And again, in-hospital -- I don't want to say in hospital, health system PACS that have to handle all kinds of different complicated flows, right? In a hospital, a PACS is not only serving a radiology department, it's serving an oncology department. It's serving a neurology department. It's serving all these specialties. So you need additional functionality than in an outpatient imaging center, right? So what we've now built in diagnostic suite, we're extending some of that functionality. So we want to enter that market over the course of the next 12 to 18 months. But we're already very deeply rooted in the outpatient imaging market, right? And we're bringing that market. We're modernizing that market with cloud, enabling it with AI. And that's how we're now differentiating in that enterprise imaging market, that middle market.

And the last vertical that you see is that emerging AI market that you see. Now I think this world is quite different from the other tools. You wonder why competitors from one world don't come into the other. Well, this is Class II FDA medical devices with evidence. So you need to do clinical trials to get devices approved. You need to have clinical outcome data, right? So you really need to have the results. So it's a different space altogether, right? So now you've seen multiple companies generate revenue in this space. Some of these, if you look toward the bottom, are more specialized. They have -- they're single areas, think heart flow in cardiology, think of VIS, they're in neuro, right? Single sort of area spaces. As you go up, you're seeing players that now do multiple clinical applications, right?

That's the space that we're playing in multiple clinical applications across multiple domains. Kees talked about 22 FDA approvals. So the world is evolving where you have specialties that are highly reimbursed and then you have folks that can do breadth. And that's the space that we're really starting to gain momentum on. That's how we start to build also momentum with our customers.

Now one of the critical things if you're going to be an integrated player is you have to have a tech stack that can rapidly bring these technologies in and create efficiencies, really make it an enterprise solution as opposed to separate point solutions. So what I want to talk you through is a little bit about our technology strategy, our organic technology strategy, about how we actually do that. How can we play in all those markets, right? Build solutions that -- and have a technology stack that can address all these markets because today, each of those players that we compete against are monolithic, right? So they have special technologies in those areas. But how do you actually build a technology stack that can work across all areas?

So as I talked about -- we talked about these sort of 3 large markets. The fundamental of that is you need to have an integrated cloud platform. So this is very difficult to do if you're not on cloud, right? Because there are so many more tools, things like security, infrastructure, scaling infrastructure is much more difficult if you're trying to do that on-prem.

So the first is a strong foundation on cloud. On top of that is the strong data layer. Remember, I talked about the core of the DeepHealth OS is bringing all the data together. So we're bringing both the clinical data and the imaging data. And then we need to inter-operate with other systems. For example, the clinical data, we need to inter-operate with EMRs. In the image world, we have to operate with other PACS because in many environments, you're operating with other PAC systems, other image sharing environments. So that -- think of that as an interoperability layer on top of our cloud stack. And then we have what's called an orchestration layer.

And it's a complex word, but the simple thing an orchestration layer is doing is taking the data and serving it to the various applications. So think, for example, if I'm a technologist, now rather than looking at 2, 3 different tools to get the information to do the right scan, the orchestration layer is taking the data from the risk, taking the layer from the imaging information and then giving me a universal view of what I need to know to do the right exam for that patient, right?

And that structure is what we mean by DeepHealth OS. It's the foundation layer of all of our solutions. Every single area, whether it's enterprise operations, enterprise imaging or any of our AI tools sit on this stack. Now why is that so important? If I have one common foundational stack, I have one service infrastructure. So it makes us -- it makes the margin of running a software business much more straightforward, right? Because I don't have to -- I don't have a service team for enterprise operations, a service team for enterprise imaging, a service team for AI, which is why a lot of these companies are not able to succeed because the point solutions all have different service infrastructures. I have one security layer, right? So think about it if I had again, separate monolithics. I have to secure each one with a different security infrastructure, right?

The second -- the third thing is regulation-wise, everything runs on this. So when I get this through regulatory bodies, I just repeat the documentation every other time for every other solution. So it creates the scale on the product side, right, mirroring what Steve talked about earlier is radetizing. This is essentially the way we scale as we build our assets as well as acquire our assets.

That's also why I mentioned scalable in the beginning. Sham, for the audience, you might want to point out if you click one back, where CIMAR fits in?

Yes. So the recent acquisition of CIMAR essentially is this layer for the U.K. screening programs. So what they've done in the U.K. because you have these legacy PAC systems in all the hospitals, they've created a virtual data layer, and then we've run our AI applications on them, so we can now start to scale AI on top of, let's say, legacy systems. And that model, we think, is going to be a really critical model in state-funded health systems because it costs so much money to change the infrastructure at each hospital. And so what [indiscernible] talked about earlier with scaling out lung, breast, that's what now the NHS is doing on top of the scaler. And we'll come back to that when we talk specifically about those programs downstream.

Now on top of this DeepHealth OS, we've created our intelligence layer. So when I talk about it as an intelligence layer is when we build our AI assets, we build it once and it can be used in multiple ways, right? So think about what I talked about earlier, like a document scanning application. Well, when I build it once, I can use it if a patient is scanning a document as they're registering on their phone, it can be used there. If they come to the site and we've not done that, I could use it there. I could use that same document scanning technology to scan clinical information that our physicians get via fax as well, by the way, and put that and give that information to them in the PACS environment.

So those tools, I build it once, and it can be used across all my solutions. Same with the clinical AI tools, right? I build them once, it can be used in reporting. It can be used in AI applications stand-alone. It can be used in other areas. Now I don't want to pretend that we're only using our tools. We're also integrating in third-party tools. We're using -- we have deep collaborations with the hyperscalers, right? We're building models with Google in the LLM space, with other players, and we're integrating those kinds of tools in. And we're also integrating third-party AI tools, other in x-ray, for example, where we don't today have a portfolio, we're integrating other people's tools as well, right? And then those are injected into our application layer.

And typically, in our world, it's viewers, think viewers as Netflix for us, right, things that images go through. Reporting is where we create reports, whether that's technologists creating tech notes or radiologists creating their reporting notes, worklist and workflow applications and then communication collaboration, how do we disseminate information between the service but also to our referral base to patients? And again, if we build those once, right, then I can assemble these parts for those various pieces. That's how we're now creating that speed and velocity on our organic innovation as well.

And I'm going to walk you through some of those, all built on the same tech stack, right? So the first, what you see here is the diagnostic suite. So this is the radiologist cockpit, right? This is where radiologists are starting to. We're now starting to roll this out, and we'll talk a little bit more of the rollout at RadNet, but we're starting to roll this out. Today, in the radiologist workflow, each -- in many cases in many institutions, each of these things is a separate vendor, right? So take something like viewing, right? Viewers are typically separate solutions almost everywhere than the reporting, right? So for example, nuance is in the reporting world. People like Visage to the viewer, they don't both do the same thing. So today, in a natural environment, these are separate tools, right? Many cases, workless can also be separate tools, right? Of course, AI is always a separate tool in today's world. So -- and then you come over here with AI and analytics, again, different tools. So what we've done in our radiologist cockpit, which is our diagnostic suite is we create one unified experience, one tool set. And then as we bring AI in, it can be in every single part of the workflow. So take something like I have a mammo result. We talked about that earlier, right? There's a finding. Well, on the worklist, I can flag medium, high, low. So the radiologist know right away when they jump on to the worklist, is this a case that has a finding? Is this a case that's a normal. They can work, they can plan their day, they can sort their schedule for the day. They can put their -- people have different patterns on how they interpret. Some folks will actually read cases with findings early in the day when they're fresher. So those kinds of things, they can start doing on the worklist. That same AI result is in the viewer, right? So when the viewer pops up, it goes right to the place where cancer may be and people can scroll up and down, view the cancer. And then measurements, findings, for example, density measurements in the breast case, auto populated in the report. So they don't have to dictate it, right?

So as we build more and more of these AI tools, the report will be auto generated. And I want to just give you one example where we're doing that already at massive scale, which is thyroid. In thyroid today, 94% of the reports are auto generated. The radiologists don't touch them at all, right? So the radiologists will look at the images, confirm the diagnosis, click accept, no more dictation. And that's where we're going with these kinds of tools, right? Is to be able to really enable that kind of speed. So speed in our world used to be about how fast is your viewer. We're going from how fast is your viewer to how fast can they actually do a full report. I mean that's really the name of the game and doing that with high level of accuracy, high level of consistency, high level of fidelity over and over again, especially when these measurements have to be done multiple times, right, to be able to compare them.

So the second area for a bit of a zoom is TechLive, right? So TechLive is out, again, something that you guys can see, same as the diagnostic suite is outside. So it's also going to be available after the session. TechLive is essentially our cockpit for our technologists, right? So on the left, you see the worklist. The worklist, again, similar to what you see on the radiologist side is their daily workload. They can click on the patient, they can find the patient information. So it's integrated with the risk information today as well. And then they can run as many scanners as they want. Typically in MR, they're looking at 2 to 3. In ultrasound, they're looking at more because it's more of a supervisory approach. And they can really literally run these exams.

Now why is this different from like Teams or some other type of video tool set up? Well, first of all, we have compatibility to almost every vendor in MR, almost every vendor in CT. They all do some things differently, right? Some of them have 2 screens, some of them are 2K, some of them are 4K, some of them use different keyboards. They are different mouses. And so in the process of our FDA approval, we have to validate all those different use case scenarios because this is a diagnostic device, right? These are devices that are being used to acquire diagnostic images. So we need to have the fidelity of that sort of image quality, the fidelity that when I touch something that the exam acquisition is going to be done right, right? So that's quite a bit of the pieces.

And then on the right, you see here, the video cameras have been sort of reduced the size, but you see patients can see -- the centralized operator can see into the room, can see other support devices so they can run the scan with full efficiency from the centralized location.

On the right is a little bit of what we actually install. So each of the MRs, for example, have this edge device that's attached to the MR system. That's what connects the video stream, the keyboard controls, the mouse, et cetera, so that we can run them locally. So the model -- the business model essentially is a onetime investment on this piece of hardware and a subscription per system that sort of drives this whole online scanning approach.

And to be clear, the edge device is ours. It's something that we innovated.

Yes. And all this is, again, requires FDA clearance. So it's also something that -- as we do drive improvements, we got to maintain the quality system, we got to maintain compatibility. Now as we go forward, as you can see, we're getting the images as we're doing the acquisition, live streams of that, so we can start running AI tools on them. So one very classic example is in mammography, there's a standard in all the position views, et cetera, that you need to have. We can do that live check as we do the scan. So the technicians know that they've actually acquired a high-quality exam. And that's really useful for, let's say, junior operators who may not have the full experience to assess image quality. The last sort of area, and I want to just jump into them is our suite of clinical AI tools. And each one of them has its own story, and we'll talk about them later. I'm not going to go into each one of them, but you saw some of the clinical stories earlier. But I want to dive into a couple of areas and why, let's say, our AI tools might be a bit different from what other folks are doing. What we've done, and I'll maybe highlight that in the breast case, you see there is a lot of tools run in the background, right?

They take images, they run the AI and then they create the results and they push it into some viewer and some reporting tool. What we've started to do is really put those together into a package. So in the breast suite case, we've integrated viewing, reporting as a single solution. Half of the breast market, if you will, is integrated workstation market. It's not a pure use the workstation on a PACS. You have dedicated breast workstations. So essentially, what we've done is created a breast -- complete breast solution for those practices that need all the tools into one comprehensive suite.

Now why is that so difficult? Each mammogram is about a gigabyte in size. And in many cases, we're looking at 5 priors. We can do up to 12 priors. So think about streaming 5 to 12 movies in a second. That's the level of speed you need to have to be able to interpret these images at the speed that the radiologists are going at. And so there's a very high demand for the IT infrastructure in addition to the AI. So we start putting those solutions together so that you can drive that value as well.

Now Steve talked about earlier, EBCD. And a key part of EBCD is not just the AI, but that whole second reviewer workflow, right? Now, that second reviewer workflow is quite complicated if you don't control the workflow pieces underneath, right? Because you have to -- the primary radiologist will create the report. That report has to go to a second radiologist to read. There has to be a tool set for the second radiologist to annotate it, put pictures in, tell them what they missed, right? Because they're not just talking on the phone, they're digitally communicating, right? So they're documenting that, and that information is going back to the primary care -- the first radiologist and then they're accepting that or not. So that whole workflow tooling is built into the breast suite. right?

So these tools have depth. They're not just the AI pieces. They have multiple workflow elements, IT elements, AI elements all together into what we call a suite. And we do that across all the areas so that you can get the maximum value of that AI tool in the workflow. And I'm going to conclude and I'm going to pass on this organic. So one of the things that I really wanted to get across in this section is the depth of organic innovation that we're doing and how we've created a stack so we can bring new technologies on board.

What you see here is really where we're going over the next 3 to 5 years in terms of our AI vision. And why did you -- the rationale for why when Kees showed you that AI market growing so fast relative to the, let's say, the core radiology informatics market. The reason for that is we're on this path as an industry. And I think we are -- we feel that we're going to be driving that leadership toward the sort of autonomous or semi-automated report, right? And if you look at where we are today with prostate, lung, mammography, with thyroid ultrasound and x-ray just starting, right, we're at the infancy of coverage, meaning if you look at typical outpatient volumes today, the AI tools that are available today cover very low percentage of what we're actually doing, right?

I mean -- I mean, I love the fact we're doing prostate and neuro, but at -- we're doing something like together, maybe 80,000 cases, we're doing 1.1 million MSK MRs, right? Completely wide space right now for AI, right? How do you automate tools there? How do we automate degenerative disease, arthritic findings, how do we help people figure out when is the right time to do a knee replacement, hip replacement, huge opportunity space, how do we automate reports to get there? And then as well moving into abdomen and other areas, you get broader coverage on the MR landscape, right?

On CT, we've started in lung. Lung is about 250,000, let's say, in the RadNet context, but we do many more in abdomen and pelvis. So we're looking at tools there. We're actually starting to partner with some folks to bring abdomen tools as early as the beginning of next year into the RadNet workflow. In mammography, we have tools for detection, but detection is not the only piece. People focus on screening as cancer or no cancer. Our average mammography report has -- if you look at all of our mammography reports, we have 50 to 100 findings, additional findings that we put in these reports, pacemaker, lines, clips, et cetera. So if we're going to go to automated reports, we need detectors for all those things to create an automated report. So we're starting to work in those areas. Calcification is one of them. Risk assessment, that was talked about so elegantly earlier. And the idea there is also to move toward autonomous. And autonomous here means normals, the majority of what we do are normals. Can we actually filter those? We're very good at it right now. Can we actually filter those with the FDA and actually have an indication for an autonomous read, right? That's what you see there on the mammo space.

And ultrasound, it's the progression from thyroid, which we've talked about quite a bit here with 240,000 cases. Breast is 500,000 cases. We're actually right in the middle of submission for our breast device moving on to kidney pelvis. If you put this together, ultrasound is our largest volume as a modality, right? In fact, the bottom 3 make up 70% of our volume. So advanced imaging is super sexy, large revenue, really high growth. And we want to -- what we want to be able to do is free up our docs to do more of that volume while we start to drive automation in the routine imaging, right? And X-ray, obviously, is a huge opportunity in that space, chest, musculoskeletal, but just those 2, we do almost 2.2 million studies at RadNet, right, chest and musculoskeletal, right? So we get coverage there, you start to get toward that 85% coverage.

And then moving on to autonomous, again, there, normals, something like 50% to 60% of our chest x-rays that we do at RadNet are normals. In fact, in the outpatient space. So can we start to, again, go toward autonomous normals in the chest x-ray space. So that's the evolution of the AI. And as we bring the AI tools on top of our unified IT stack, we can start to deliver that integrated experience to more and more users. And that's the transformation in radiology that we're driving fundamentally with our tools.

So I'm going to hand back to Kees, who's going to go a little bit deeper on some of our inorganic investments.

Yes. Thanks, Sham. And I think this also answers the question around, are you going to invest further in your clinical AI portfolio? The answer is yes, widen it and deepen it in the propositions as per this page and potentially beyond. See-Mode and iCADs. I first want to talk a little bit about our approach to it. So you've heard the term RadNetize. We can't really say DeepHealthanize because it doesn't quite work. But we have, let's call it, an approach of rapid integration where we obviously build out the capabilities that we acquire. We're in a growth phase in a build phase. We're desperate of strategic capabilities, whether it's in the engineering space or in the regulatory space or otherwise.

Deep technology fit is what we're seeking. We then want to figure out how do we deploy really, really, really fast. The thyroid example will come back a little bit later. And obviously, the unit economics have to work. And I will say that we're one of the very few or only AI platform where the unit economics actually work. We can go very, very quickly to breakeven because we have access to that scale. So both for See-Mode and for iCAD, the integration is complete. The teams are embedded in the organization. Now what that means, for instance, that the product teams are working on one road map. For those who are close to these kind of integrations, it's always the golden question. Are they working on the same technology stack on the same road map and so on and so forth? The answer is yes.

See-Mode now live at 240-plus RDNT sites with a high volume of scans, 14,000 scans processed. And obviously, what's very important is to figure out, does it have an impact? Yes, ultrasound slot times reduced by 30%. You'll say so what? That will come a little bit later. That means that we can do more ultrasound exams, for instance. And there's also something else that I can't really talk about or we'll say it here. There's reimbursement. It gives additional reimbursement for the services business as well. It's proven to be a very, very smart acquisition. iCADs, cost synergies ahead of plan. Revenue synergies, 2026 is going to be the big year where we show that the installed base allows us to upsell both in the clinical AI domain as well as in the informatics domain. And for both companies, the underwriting financials of the stand-alone business are proving to be very much spot on.

Customer traction. So I talked about the customer base of over 2,000 clients. And maybe to dissect that a little bit more, that's across U.S., Europe and other territories. But you'll see that our customers have the major hospital systems as well as the outpatient networks. So we sometimes get that question, are you -- do you only have outpatient customers, then the answer is no. In particular, in the clinical AI domain, we have a very, very broad base now also of hospital networks. That's obviously a fantastic opportunity to also start upselling the new propositions that we have that Sham was talking about in the diagnostic suite space or TechLive as an example.

We're building great momentum. This is sort of a sample, not the complete list, a sample of the logos of recent customer wins, think of 12 to 18 months. And again, it sits across hospital systems and outpatient networks. And I've used the quote here, you can read it for yourself. But what comes back and comes back is this point around we want an all-in-one solution. Now, don't get me wrong, that doesn't mean that they buy the entire DeepHealth OS from the get-go, but they want a partner where they do not have the headache of interoperability and fragmentation of yet an AI -- other AI vendor, but where they can actually pick the modules that make sense in their IT landscape. And the other point is obviously the testimony around realizing efficiency and seamless workflows.

Let me round off with the last slide before we head over into the section about how Digital Health and the services divisions are a unique combination. The ambition towards 2028 is greater than 30% revenue growth. Remember that market is growing, let's say, in the segments that we operate, 20-ish -- 22%. And so this means that we're definitely set out to gain market share as we should. And as a SaaS business, then the entitlement towards greater than 20% adjusted EBITDA. That's towards 2028. If you have to think about what's under the hood, that means that our recurring revenue, annual recurring revenue, is today 60% will have moved towards 80%. External sales today is already 55%. I mentioned that earlier, will then have moved to 78% to 80% simply because of the new customer wins.

Customer mix today is more biased towards the outpatient segment. Our ambition is to make that more balanced across hospital and outpatient segment. And in terms of geography mix, we are with roughly 80% of our revenue from the U.S. today, 20% from outside of U.S., mainly Europe, that will be more balanced between U.S. and rest of world. And then last but not least, and this is a little bit more dependent on the pace at which we can see our clients adopt cloud-native solutions. But today, we have 10% to 20% of our solutions delivered in a cloud-native way. Yes, we also have significant installed base that's still on-prem. And by then, that will have migrated if we get our things off in the right way with our customers towards 60% to 80% of our solutions deployed in a cloud-native way.

And again, the last point is actually strategically important also because ultimately, then we can really help our customers scale and make their IT infrastructure economically viable. There's going to be time for questions, but not just yet, because I believe we're going to the next section. Steve and Sham?

Thanks Kees. Hello again. What Sham and I together want to tell you is it's a very important story of how seamlessly the services division and the Digital Health Division work together [indiscernible] out there in the industry. And I want to start by going back to what Kees was talking about is the challenges that Digital Health and DeepHealth are trying to address. And every challenge is an opportunity. So we're going to look at these from an opportunity standpoint of how they drive value within the relationship in here within services. So the first is to improve the patient engagement as we talked about before, terribly complex, simplify it, make it more welcoming, as I said earlier today, that is going to help us drive patient referral growth and drive revenue. The company will give you some examples of how we're doing that already, where we think that can go from here.

Same with the strained workforce, common comment throughout the day. We need to drive more productivity from our team. We don't want them to work harder. We want the old work smarter, not harder routine, but we've got to improve productivity, but do it at the same time that we're improving satisfaction, letting them drive their career so that they stay with us. They want to be with RadNet. We'll give you examples of how we're progressing there. And lastly, with the clinical AI, how we're driving outcomes, Kees and Sham spoke to that already. A number of those codes are reimbursable. So we're driving new revenue already. We're certainly getting better, and we hope earlier detection of disease, and we're making those outcomes more consistent and reducing variability.

As we said, those are all going to help us increase revenue per piece of equipment. They're going to allow us to do more of the specialty imaging we spoke about this morning with our 7 expert radiologists, furthering that shift to advanced diagnostic imaging and also generating additional new revenue out of the same procedure. So in addition to the base reimbursement for the procedure, the additional AI reimbursement. And then Sham touched on this in the prior discussion, how we'll bring down the infrastructure cost because we're going to be on one common platform where all the data is easily accessible to allow us to continue to drive new improvements throughout. And again, all of those unlock new revenue opportunities, cost savings and drive margin.

And, I'll turn it over to Sham to explain why that's so unique internal to us.

Yes. Thanks, Steve. I think when I joined RadNet 2 years ago in 2023, I think I was -- I felt like a kid in the candy store because being a lifelong product builder, it's really hard to build product when your customer or your collaborator is far away. And it's even harder to build AI products when you're really far from the workflow. So one of the really unique things, I think, and really the collaboration that we've set up with Steve and Norman and the broader operations team and all the radiologists is this ability to innovate in this sort of flywheel, right? And I'm going to walk you through that a little bit, right?

So as we build something, we build a first -- kind of first-of-a-kind product and a lot of it were -- as we've kind of built that tech stack that I was telling you before, that modular tech stack, we start assembling different pieces together, right? And we say, okay, Steve, here's your problem on scheduling. How does this work? And then we put that in what we call co-creation, clinical co-creation. Actually, our patient registration tool that some of you might have seen outside is in that co-creation phase. We put it at a couple of different centers. We test it out. We get feedback. People tell us from every part of the workflow, right? The patients give us feedback, the operators give us feedback, right? So we're able to digest that. We do our product improvements. And then within weeks, we can put that back in and we can iterate on that process.

And then once we say, okay, it's ready, we can start scaling it. And these guys over here are the masters of scale, right? Once we give them something, the staffs loving it, we can scale it 240, 300 sites overnight. And then as we -- in scale form, we're continuously still learning, right? So some solutions like TechLive are really in that scale and adaptive learning phase. Some solutions like our patient registration piece, they're more in that clinical co-creation and product improvement stage.

Now the other unique piece of RadNet here, and I can't emphasize enough is the clinical data, right? So we have enormous amounts of clinical data end-to-end. So if I'm an AI -- clinical AI builder, right, most people are looking at image and report payers, and that's it. I have access to other clinical information now. I have access to patient demographic information. I have access to data of prior images and so forth. So I have like longitudinal medical data. And then once I put that device in, I can start to assess where I'm failing and that's the insights, the continuous insights that I'm getting. And I can then improve the model in the areas where I may be failing, right? I'm great at chest wall tumors, really bad at finding disease near the nipple, for example, in mammo. Well, okay, I can feed more data in that and start to iterate.

So that combination of clinical data plus the live interaction is a key differentiation as we build out products and then scale out outcomes in Steve's part of the business in terms of the imaging system. So what we'll do, and you're going to get tired of this slide because we're going to repeat that a few times. What we're going to do is we're going to go through different parts of the workflow, and we're going to talk about some of the solutions that we've deployed at RadNet already. And then Steve will walk you through the value that we're starting to see, and I'll walk you through a bit about what we're doing next. So you get a sense of both the road map, but where we're delivering value already.

So the first is sort of in that patient experience and center operations area. Steve, could you click over?

So we've mentioned a couple of these before. And today, most of our appointments are scheduled by patients calling our contact center, going through the process, the complex process we've talked about to make an appointment. Part of the opportunity here is many of those calls, up to 50% of the calls that are inbound have nothing to do really with scheduling an appointment. It could be how do I get directions, what's my prep for the procedure, all sorts of questions.

So the first thing that we started to do in the co-creation process so far is to see how we can deflect those calls away from the contact center so that the contact center agents can really be all about scheduling actual appointments. So, so far, we've seen a 10% improvement in the call deflection rates. We know we've got a lot more runway there. Sham will talk about how we attack some of that. But along with that comes an increased staff productivity. We've been able to bring down what's called the average handle time of each call. We're obviously not handling some of these disruptive calls that are not about scheduling. So we're already seeing staff productivity there that makes for a better patient experience.

And Steve, we know we do 60,000 calls a day, just to give you some scope.

Yes. Quite a few...

So 10% is a lot of calls that we're deflecting.

Thanks for putting that comment. It's a big deal. It's a big deal. [ Salome ] and Adrian would be thrilled with that. We've touched on the smart scheduling earlier to try and deal with the no-shows and the cancellations. We've shown some pretty impressive process or progress so far. But I think, again, we're just at the tip of the iceberg because we've not done it in an overly sophisticated manner. Now that we started co-creation and the first pilot of smart scheduling, we're seeing even a further increase in the number of open slots that we can fill or backfill. And we're seeing a 16% reduction in the instance of winding up with a double booking, which makes us much more comfortable to the imaging centers, and they're much more able to adapt to it than otherwise before.

And then with digital registration, tremendous opportunity here. I'm sure like everybody in this room, you travel a lot, you do a lot of things. Everything I do, whether it's the training up here from Baltimore, it's an airplane, it's a hotel, it's where I'm going to go to dinner, it's all done on my phone. It's all super simple. Now as we said earlier, healthcare is a lot more complicated than any one of those transactions. Unfortunately, we could have 80 questions or whatever it is. But right now, 51% of our patients are eligible to do everything online for registration. We're not coming anywhere close to 51% just yet of doing that. So that's a big opportunity. But this 80% of patients that are eligible for self-scheduling or being self-directed, like we said earlier, today 9.1% of our patients make their appointment through the portal, 80% of them are eligible for doing that.

So as we start moving through the co-creation phase, I think there's a lot of upside here, not only to drive more revenue, fill more slots, but just to make it a much more welcoming experience just like it is for me to book my train back to Baltimore. Simple, very easy to do. That's what we want the patient to feel when they're trying to interact with our facilities.

Yes. So as we get into 2026 and beyond, the road map, as you start seeing some of there, the first piece is taking this from co-creation, so from some of these things that are only in a couple of centers and then scaling that out. So that's the first piece. But we're also working on additional tools to drive various types of productivity. So in the center, for example, we're starting to drive -- build productive analytics applications. So just simple things like same day, do I know what's happening in what center? How do I load balance? Can I predict the schedule out a week -- 2 weeks from now, so it will help the operations folks predict their schedules and their patterns better. I talked already about automated document processing, but also things like coding, right? So medical coding can also be automated. So we're bringing Agentic AI to do some of those pieces.

And then the last bullet you see there is as we now start to bring some of this functionality and move the RIS, the operations suite on to cloud, the ability that now that tool set can be available anywhere and rapidly deployable. So just to give you some example, when we go into a new location, we often have to find a data center, we have to put the system in, deploy the IT and then Norman and Steve's teams take over. Now if I have a cloud-based solution, it's much easier to turn on. I don't have to find a data center. It's much more scalable as we do acquisitions. So the moving to cloud also is going to help our implementation speed as we do acquisitions on the services side.

On the patient experience side, this big problem of how do we get more patients to schedule themselves, do their own guided journey. So we're building Agentic workflows to drive that. So for example, how do we take someone that has to do 80 questions, have them do 5 because that's why people don't schedule. That's why only 9% schedule out of the 80% because we ask too many questions. We don't often take the advantage of the data that's already we have. So these agents now are collating that auto filling some pieces of data for the patients. So they don't have that laborious experience when they schedule.

Autonomous patient outreach is really also meant to drive that 80%. So how do we outreach to patients after they schedule to make sure they're prepared, right? Because many times, patients are given lots of instructions when they come to the site, they come in and they're not, they didn't do their contrast agent prep or they didn't do their various forms that they had to fill out before they had to come in. So driving some sort of proactive outreach as we bring patients in is another area to really much more and more do that digitized guided journey that I was talking about earlier.

The next area, so as we start moving around, next area is productivity and image acquisition. So that's both how -- what we're seeing with TechLive deployments and also with thyroid suite deployments.

So again, we've talked about TechLive quite a bit. This is more at scale beyond co-creation, like we mentioned, we've got 400-plus active remote scanners going at this point. We've already talked about the reduction we've seen in the Northeast on the room closures, all the capacity that we're creating. One of the things we didn't touch on earlier is how TechLive can be used as a mentoring tool as well, where maybe we do have the technologists, but the technologist isn't as experienced doing a certain exam. We've seen this fantastic growth in coronary CTA, but not every CT tech is comfortable or should be doing that procedure, but we can have a CT tech, an expert in coronary CTA remote in so that we can get more of those CT units that we talked about this morning to be eligible to provide coronary CTA, creating way more access.

So it's much more convenient for the patient. We can do it at the same high standards because now we have the expert remoting in on the right piece of equipment to do this. We do that with prostate MR or breast MR, which are not as common necessarily, maybe a newer MR tech doesn't have the experience to do that. So it opens up so much more capacity, so much more access because this center that may be a little bit more remote or a center that's here in the middle of Manhattan can use evening hours and weekend hours, again, where we may not have our most experienced tech to do these more complex exams.

So it's a great, great benefit. And I hope what we'll start to see through some of what Sham will talk about for the future, but everything we just talked about there is a TechLive instead of being kind of the exception to what we do, will really become the norm for how we run an MR equipment. It won't be about just do we have a tech or not have a tech? It's just a better way to manage our MRI system. So we want to move that to become more the norm and less the exception.

Yes. And what's next for us in this space is, obviously, we want to expand this. Not all of our MR systems are connected, so we're going to connect more MR systems, more CT that's the first line should also have CT there in the first half of next year. And then we're also building different use cases. So for the other modalities, ultrasound, X-ray and mammography. So take X-ray, for example, Steve and Norman already started in some cases, but are on the move to creating X-ray hubs right? So sites that only do x-ray because we do most x-ray walk-in. Well, if I create an x-ray hub and I have multiple systems, do I really need an operator for each one? So why not actually consolidate that with one TechLive system, maybe that one TechLive system is operating 3 x-ray systems at once. So there's an opportunity there to create better -- more capacity, better utilization of our staff as we think about that.

And we're working on things like mammography. Today for diagnostics, there's a mammography diagnostics. There's a very integral workflow between the radiologist and the technologists to make sure the images are of right quality and to interactively look at them. Well, imagine now we can, with TechLive, pop open the live mammography system view in their radiologist experience. They don't have to go to another location to go in and give that feedback. So it allows us to do different types of workflow enhancements. And so we're working on that over the course of the next year.

And then I've already talked quite extensively about integrating AI solutions for positioning and quality control. The last one, and I think something that we're excited about, which is the acquisition of Alpha RT, which is our tech -- live tech service. And now we can now go to market with technologists paired with TechLive and actually start to build a tele acquisition business opportunity. So that actually will have huge value at RadNet because Obviously, we have our own tech shortages, but the idea is also to bring that externally to the market as well.

And before I leave this slide, I want to touch on this last point because I'm noticing Sam in the back, who's one of our expert tech leaders, made me remember that I skipped over the no compromise on quality, and it's too big of a point to skip over. Sam can either shake up and down or side to side, but I think a remote scan is a better scan. It's a better quality scan. So there's not only no compromise in quality, it's a better scan.

Yes. And Steve, in September, we did 20,000 fully remote scans. So just -- I think we're getting a good momentum in this space.

All right. Likewise, we're seeing a lot of growth in our thyroid suite. We've talked about See-Mode before. We now have 240 sites automated with our See-Mode ultrasound or thyroid AI tool. We're doing 14,000 thyroid studies per month. Hopefully, by the end of the year, that number will be bigger. We've got 2 more markets that we're pushing this through. So we're essentially at scale today, not all the way there, but essentially at scale using it. And we're seeing some pretty remarkable numbers here. We touched on, I think, when Kees and Sham were talking about the 30% reduction in scan time.

So we have 2 issues going on with ultrasound. One, it's another one of those areas, very tough to find good, experienced ultrasound techs who want to work at the pace and the quality that we're accustomed to and asking of them. But more importantly, it's kind of a build it and they will come. I think Sham mentioned that earlier, with the field of dreams, ultrasound is kind of that way. If we open an ultrasound room, it seems to fill up. So very important that we take advantage of use those slots very wisely. So picking up 30% slot time there, fantastic.

The information that's being fed from the AI to the radiologists also fantastic. They're accepting greater than 90% of the AI-generated reports as their report, the information that's given to them. And as we mentioned earlier, we're actually benefiting from additional reimbursement for these AI tools. Again, we're getting reimbursed as normal for the thyroid ultrasound, and we're getting additional reimbursement over 50% of the time using this tool today.

Yes. And just to hammer this point home, right? This acquisition was closed June 1, it wasn't set up for our workflows. So we had -- we brought the product in, tried it out in a few sites. We adapted it for our workflows here, put the tool into practice, and it's now scaled in 2/3 of our sites. We're in October, right? So I mean, that type of innovation and speed is really unheard of. And I think one of the real amazing things about the flywheel that I talked about earlier. So we're looking to expand this in '26 to get that last 1/3 to the course of the early part of next year. As I said earlier, we're done fully completed the FDA study for breast, and we're in the process of submission. The government shutdown kind of maybe delayed us because we couldn't actually submit our FDA filing.

So anyway, we're kind of running with good pace there on the breast ultrasound. And then, of course, we want to deploy that very quickly like we did with thyroid. And because it's on the same stack, I'm going to -- this is my mantra right. It's on the same stack, it's going to be much easier to deploy because it's exactly the same solution. It's already plugged. It's just about getting the physicians comfortable with the results, and we can really start to drive scale around the breast ultrasound. And then we have various other high-volume applications, whether it's pelvis, we do almost 900,000 pelvic studies, renal studies. So we'll start to really bring the tool set into these other areas as well as we go forward.

I threw in a couple of Dr. Berger quotes earlier this morning, so I'll throw in a Sham quote because what Sham calls this with thyroid, I think breast will be the same, it's a triple threat, because you're going to get improvement for the technologists, improvement for the radiologists and you're going to get new reimbursement. It's a pretty nice combination.

Yes. And the final 2 areas, so bear with us for a little bit longer. So the next area is in image interpretation. So this is the diagnostic suite, the suite of portfolios that's really aimed at the radiologists, and we're just starting to roll out. That's in co-creation phase. So we're going to talk about some of our early results on reporting and cloud viewing and so forth.

Yes. So our new fast viewer that Kees and Sham again talked about is really improving reading and viewing. Almost all of our images are able to be viewed in less than a second. Sham commented on how much data there is there, even the larger data sets, the breast tomosynthesis are being acquired and ready to be viewed in less than 3 seconds. I think the radiologists in the room probably, I hope, appreciate the speed that's happening there. So that's at scale today, I believe, Sham, and we're somewhat between scale and still co-creating and reporting in a lot of ways. So I think we've got more to go here, but we're already seeing between a 5% and 10% improvement, which meaning it's an increase in the reporting productivity for the radiologists.

So we talked about the technologist strain. There's a radiologist strain. We want to make sure that, again, we're retaining, attracting the best, the brightest we fond saying our radiologists are really -- when you get down to, they're our most important asset. And we need to make sure that they feel that they're being surrounded by all the right tools and technology and personnel so that they can be as productive doing the things reading the exams that they want to read the most. Same thing with the new AI tools, particularly with prostate and thyroid, where they're AI-assisted, and it's automatically putting in the volume and the lesion measurements into the report. We're seeing a 30% plus reduction in the reporting time for the radiologists using those tools.

Yes. And in 2026, the goal here is now to take those early sort of wins and expand it across the enterprise. We're expanding reporting to all radiologists. And just to give you that context, I was telling you earlier, reporting is where radiologists spend a lot of their time. To me, this is the hardest part, right? It's like replacing your phone. So I'm basically telling folks, okay, you've had this iPhone, I'm going to give you a new phone, and it's -- trust me, it has all this AI built in. So it will have its challenges as we start to do it, but we have a methodical agenda to bring that in because we do truly believe in the early data is that it's a better reporting experience.

In addition to that, we're cloud enabling. So I talked about cloud enabling the RIS, which is a bit easier because it's clinical data, our entire RIS is maybe 10 terabytes of data. We generate about 2 petabytes -- 2 to 2.5 petabytes of imaging data. So moving all that to cloud, really getting a cloud-based experience is a really big goal for next year. And one of the values that will come out of that is the fact that today, East Coast radiologists can't read West Coast cases, West Coast radiologists can't read East Coast cases. Now as we move the data to cloud, right, radiologists can read cases across any different zone. And so that will also help us load balance and really gain productivity. So think almost like internal teleradiology sort of opportunities that we can now create with that as well.

Now in addition to that, cloud also allows us to, when we now, again, do acquisitions, bring radiologists on board very rapidly because I don't need a data center again to go and build out an IT infrastructure. So these -- the infrastructure has value as well, and that's one of the key things that why we're moving to cloud, our imaging business -- imaging part of our stack as well.

Obviously, we want to orchestrate more clinical AI. I talked about that earlier. We're doing that both with DeepHealth tools, but also external third-party tools to improve reporting speed, consistency and prioritization. And then obviously, we want to be able to scale out this footprint as we -- as the team, as I said, does more acquisitions as well. So it will be an enabling capability for improving acquisition speed as well.

And then the last area, and we'll just hammer it home here is the population health clinical collaboration sort of space. And we're going to talk about EBCD a little bit, some of our results and how we're going to scale that out. And then we'll finish off after that.

Good. I think you've heard a few times about EBCD today. So indulge just one last time. We'll just remind you again of the adoption growth we're seeing, entered the year at 39% in aggregate for the company, up to 45% keeps growing. I looked at it this morning, we're at 49% for all of the East in aggregate, and I'm hoping we'll be at 50% before the year is out. So the adoption just keeps getting better. The more we educate, the more patients get familiar with it coming into the center.

And it does take a lot of education. We have some regions as low as 29%. Some of that burdens on us to continue to educate our own team members in terms of the value so they can be good ambassadors talking to patients and referring physicians about the value because often the patient says, you know what, this kind of sounds good, but I'd like to talk to my referring physician. And then they come back maybe the next year, and they adopt it. So we have work to do there. Again, we have regions now over 60% as of this morning, but when we put the slides together a week or 2 ago at 59%, awfully impressive. We're seeing the same thing. You may know we've gotten into the OB/GYN space a little bit.

And within those centers in the OB/GYN office, we're seeing about a 57% adoption rate there because they're closer to the referring physician relationship. So it's a little bit more natural. All of these, we should emphasize again, are generating $40 for the patient to adopt part of our strategy to take these preventative tools directly to the consumer, whether that's the patient or the employers that are often the ones paying for healthcare and let them make the value decision and ultimately, the payers will start to come on board, but going to the consumer has proven to be a very good strategy for us in the interim.

Yes. And maybe this is one thing that I think we're also proud of as we've done this work, we've also really taken a lot of the science from this work as well. So in about a week, the early results from this in 600,000 patients, largest screening study of its kind will be published in Nature Health, the inaugural issue of Nature Health and with the results from the first 600,000 and really the impact of what EBCD has done in terms of cancer detection rates, but also in terms of the population itself, right, covering dense breast, covering different types of women at-risk populations as well. And so we're really proud of not only the business part, but the science part, the outcome part that we're driving. And I think it's a paradigm change, Steve, because I think we're talking about a new way to do screening.

So as we take -- reinvent mammography screening, I think we think about also adding image-based risk, breast structural calcification and really expand this to other potential domains as well. And that last area then I'll -- if you advance, Steve, I'll kind of conclude here. Dr. Hare spoke eloquently about lung cancer screening, right? And really this notion of stage shift, this is the story of stage shift, right? So England historically before such a screening program, majority of disease was found in late stage, 70%. And now the majority of disease is being found in a treatable stage because of these sort of programs, right? And it's that sort of triple layer of the program. It's the radiologist interpretation with AI, with an infrastructure that can now allow you to scale that. And what we want to do from that is now bring that technology also into the United States.

Lung cancer screening is really horribly done here. So we want to be able to bring that type of outcomes into the United States. We want to extend that program in the U.K. to other areas. So we recently were selected to bring our prostate screening in similar pilot form for the -- in the U.K. So we're now in a pilot form. So I don't know if you remember when Dr. Hare was talking about, there was a pilot study and then it moved to broader adoption. We're in that stage now in the prostate with HLH, driving the interpretation piece. And then with CIMAR, the acquisition that we talked about, the infrastructure piece, we're also bringing on screening services that the NHS already does today, but now enhancing it with AI. So for their breast cancer program, there's an opportunity there to discuss, also to bring these kinds of tools in the U.K. for breast cancer screening.

Now what's super interesting is based on the NHS experience, Germany has now started a lung cancer screening initiative. Italy has started a lung cancer screening initiative. So there's really large opportunity in Europe based on sort of this model to start expanding in other parts of Europe. I do want to make one point, which is I think sometimes we forget, majority of screening workflows in Europe is a double reader workflow, right? And so if you talk about what Sham and his team have done, it is the only screening workflow where you don't have a double reader. So you have a radiologist with AI, AI is actually acting as the double read. And now you're able to now scale this because if you are now doing 6 million, as Sham was talking about the reads in England alone, you would need 12 million radiologist reads, which is crazy if you want to scale out a program.

So this idea of being able to take double read screening workflows and really bring single read screening workflows into Europe is a tremendous opportunity with AI, not just in the U.K. but across. So that's, I think, another opportunity that we're really looking to grow in. And it's one of the reasons why the AI market is so interesting as we start moving it forward. So where does that translate value-wise? And as we think about it, as we walked you through these sort of 4 areas, these different solutions are in, let's say, different stages, right? So with image acquisition, we're at scale. So we're really already generating the value to some degree, and we have value coming over the course of the next year.

The things like reading and report generation, we're very early. And so value delivery will happen more in the '27 timeframe. And you see that rough road map here of when we think the value is going to be delivered. And then over the next 3 years, we think in the Imaging services business, that's just the imaging services business alone, we would see an impact of 100 to 150 bps on the margin itself, right? So that's kind of how -- what we're tracking and looking to sort of deliver into the business.

Now with that, I think it's a perfect time to transition to Mark is going to give us kind of a closing financials.

Thanks, Sham. Thanks, Steve. So we've thrown a lot of information at you today this morning. You heard from our 7 clinical leaders about each of his and her individual specialties. You heard from Norman and Steve this morning about operations and all that they're doing to drive efficiencies, to drive growth in many of the specialties and other areas. This afternoon, you heard from Kees and Sham about all the innovation and the technology that we're developing with DeepHealth and what the implications are on our operations.

And so you're probably wondering, well, when you put all this together, and there's a lot of moving parts, what does this mean for RadNet over the next few years? And I think the best way to address that is really to set the stage for that with, well, how have you been performing? And is this sustainable? Can this accelerate? And so if you look at the past 4 years, you've seen that we've been very successful in driving double-digit revenue growth. We've compound annual growth rate over the last 3 years at 12.3%. Our EBITDA CAGR was 17% over this 3-year time period, meaning 2022 was the baseline. So by definition, we've had some margin improvement. We've improved the margin about 200 basis points over the last 4 years, and that's through all the specialty work, all the innovation on technology and all the operational efficiencies that we've gained.

And what I think we're really proud about as a company is that we've done this and had to overshadow a number of headwinds over the last couple of years, particularly around Medicare reimbursement. We've absorbed over $35 million worth of annual Medicare cuts over the last 4 years. And that's been difficult. Every year, we started off in a new [ hole ]. We're happy to tell you that next year, we actually have a benefit from Medicare in the area of about $4 million to $5 million. This is the first time we're not working from a new hole when we're going into the following year.

I think even more profound than that has been the amount of labor increases that the business has absorbed. And it's a credit to Steve and Norm and really everybody in the organization, where the shortage of labor, the shortage of technologists, which we've talked about a lot today, has caused us to just in a market where there's supply-demand imbalances to pay a lot more for our staff and particularly in the area of technologists. And we've absorbed over $100 million of same center labor increases over this 4-year time period.

So I think we're very proud that we've been able to overcome some of these challenges. And we're hoping with some of the things that you've heard with regards to the technology that we're bringing forward in the next few years. And we think that we can slow the curve, maybe even reverse the curve in terms of some of these challenges, particularly around labor.

So the question is, with this performance, do you think it's sustainable? Do you think it's durable? And the answer is yes. Not only do we think it's sustainable and durable, we actually think it can accelerate with all the things that you've seen here for a variety of reasons. One is we've got positive industry trends, okay? Imaging is in the sweet spot of the health care delivery system with a focus on preventative medicine, noninvasive medicine. It's shown that if you make the investments and you diagnose disease earlier in the disease process, you have far better patient outcomes and outcomes at much lower cost. And that's not changing. It's only growing.

There will continue to be innovations in technology in our industry. We're -- as you've probably heard a lot today, we're a technology-driven business. There's going to be continued improvements in equipment in post-processing software, in AI, in radioactive pharmaceuticals, contrast materials, all of this will lead to more and more clinical indications for ordering the types of diagnostic tests that we perform.

And then the shift that we've been benefiting from during this 4-year period of procedures from the much more expensive hospitals into the lower-cost ambulatory sites of care, that's going to continue. You're seeing it, as Dr. Berger mentioned, not just in radiology, you're seeing this in all specialties. And we think that when you look at the industry, as Steve showed in his slide of being a $100 billion-plus industry, today, about half of all the diagnostic imaging exams are still being performed in the hospital. And when you talk to these health systems and hospitals and you look at the mix of that business, they'll tell you that at least half of the business that they're continuing to do today is still performed on ambulatory outpatients. So there's $25 billion of more or more of imaging revenue that can and should shift out of the more expensive hospitals into the ambulatory sites of care in the future.

Obviously, there's a lot of pressure on the insurance companies and the health plans to continue to lower cost. Managing site of care is top of mind for those. We're going to continue to build sites. I think it was Steve and Norm that showed our de novo strategy over the next several years. We've got 11 de novo sites in various stages of development and construction for next year. There'll be more to follow. We're aggressively trying to build capacity and expand geography.

Tuck-in acquisitions, we'll continue to be doing tuck-in acquisitions. It's -- as big as we are, we're still a very small part of the delivery system in outpatient diagnostic imaging. It's believed that there's over 6,000 imaging centers nationwide in the United States. And I think Steve mentioned this, if you put the major chains together, the top 5 chains together, maybe we're 15% of all of that volume. Scale is becoming more and more important and consolidation will continue, and we hope to play a role in that consolidation.

Reimbursement. Good news on the Medicare front for next year. Obviously, all bets are off after that. Medicare is the one thing we've learned about CMS and Medicare is it's highly unpredictable. But Medicare is 23% to 24% of our business mix. The rest of our business mix, we have a lot more control and a seat at the table. Almost 60% of our business mix is with commercial insurance companies. We've built the scale, and I think we've demonstrated to them that we're an important part -- a party and a partner to them in terms of helping to drive this business out of more expensive hospitals. And I think that they've started to recognize that and which is indicative of the fact that we've been successful over the last few years in getting price increases, and we think that, that's going to continue going forward.

Joint ventures will continue to be a big part of what we do. We have 26 joint ventures today, as you saw in an earlier slide, totaling about 152 locations of our 407 locations. So today, we're up to about 37% of all of our centers held within these health system partnerships. We think that, that can -- in the coming couple of few years, will be over 50%. Hospitals who are feeling the pressure, who are continuing to lose outpatient business, are more and more looking for an outpatient strategy. Many of them recognize that they're not -- they don't have expertise in managing effectively ambulatory outpatient businesses at scale and at lower reimbursement, and they're looking for partners. So we hope to be in a position by the end of the year, maybe early next year to be able to announce some additional exciting joint venture relationships.

You've heard a lot about digital health today, I think, in 2 respects: one, in terms of what that business can do to grow and prosper with third-party external customers, but also the major impact that we think it's going to play in terms of creating efficiencies, cost savings and improving both the patient journey and the clinical outcomes. And then finally, we think we're going to be successful because we're well positioned from a financial standpoint, from a capital structure standpoint. We're sitting on over $800 million of cash. We've got very, very low leverage and a balance sheet that can really accelerate the growth in this business.

So here's what we're going to talk about in terms of our outlook. With respect to procedure volume, I think we're -- and before I sort of get into the numbers, I think the point I really would want to make here is this is not an aspirational slide. This is what we think is very, very realistic and very achievable. And I think I would challenge any of my partners and the management team, I think each one of us believe that we can do better than this. And I think this is not -- this is a bar that we're setting and we're hoping to achieve it and exceed it.

But we're very comfortable in an assumption around advanced imaging, MRI and CT growing in the mid-single digits. We're giving Dr. Rose some extra pressure to help us grow our PET/CT volume and growth rate in the double digits. I think we can feel very comfortable in growing at 10% to 15% over the next several years each year. Routine imaging, we expect to grow with population and with our expansion kind of in the 1% to 3%. I think mammo could grow faster, x-ray and ultrasound. I think we're in that range. But things like See-Mode could accelerate that. We're building -- creating that capacity with the demand that's out there, I think that this is more than achievable.

So where that calculates is we think that we can continue to grow revenue in the double digits, 11% to 13%. Note that this assumes no substantial acquisitions. It assumes small tuck-in acquisitions, which we do in the ordinary course of our business. But if we were to put -- and I think we're all hoping and aspiring to put a fair bit of this $800 million of capital to work over the next several years, we think that, that can accelerate this revenue growth tremendously.

And then the shining star in our portfolio, the Digital Health division, we're expecting a 30% plus growth out of Kees and Sham and I think that -- that's not -- he's putting the pressure on Sham, sorry.

From a margin perspective, we're expecting continued margin enhancement. And I think that's a function of all the initiatives that we've made you aware of and did a deep dive today, particularly in the areas of how our growth and our investments in technology and innovation and digital health will impact the core business.

Free cash flow, we expect to be -- to continue to be strong and continue to grow in the area of how we'll grow our EBITDA. From a balance sheet perspective and from a capital structure perspective, we're comfortable with -- obviously, with the balance sheet today. We'd be potentially willing for the right transaction or transactions to lever up a little bit more from here. We wouldn't want to see, given today's interest rates, would want to see leverage go above 3x. But clearly, we're at 1x today. So we're really trying to manage leverage and manage our free cash flow.

And then from a CapEx standpoint, our -- at the size of the business today, we typically spend about 3% to 4% of our net revenue on maintenance CapEx. That's the money that we believe we need to spend each year in order to keep the revenue and the EBITDA in the door over the long run. We will spend significantly more than that as we see continued opportunities for expansion and growth in all of the areas that you heard today.

And then from a pricing standpoint, I think across the board, given our revenue mix, we think that we can impact pricing on the positive side, 1 to 3 basis -- 1% to 3% over the next 3 years.

So we're very excited. I think I've been here for over 2 decades. I can't imagine -- I know that there hasn't been a more exciting point in our history, and we really very much appreciate all of you coming here and staying and absorbing this information. And I think what we'd like to do is open the floor to any questions about anything you've heard today, whether it's clinical this morning or DeepHealth, financial or otherwise.

Andrew Mok from Barclays. On the Digital Health side, you reconfirmed 30% revenue growth with greater than 20% EBITDA margins. I think your Digital Health markets today are about 17% to 18% this year, which includes $20 million or so of investments and some dilutive acquisitions. So can you walk us through the assumptions underpinning that margin target? And what revenue base or scale do you think you need to reach a mature margin?

Yes. Thank you. So I think the -- we're today at roughly 17% indeed. We are going to see in the near term a slight dilution of margin because of the investments that we're making, both in go-to-market resources as well as in the product platform. And what we expect as we start to grow the top line, that we cover the fixed cost accordingly towards 20% plus EBITDA. So that's more for in the range of -- towards 2028, it's more in the outer years that we're going to see that 20% within the near term, a slight dilution of the investments that we're making.

On the M&A side, we will expect to see quite quickly the turnaround of profitability for iCAD. iCAD, as you might remember, was loss-making by, let's say, $4 million to $5 million when we acquired it. Somewhere mid next year, we'll have that turn around to neutrality. And from there onwards, it will be starting to be EBITDA positive.

Great. And just a follow-up. Mark, you mentioned that these targets are realistic rather than aspirational. Where do you see the opportunities to outperform these targets? Does it accrue to one side of the business versus the other? Just curious to hear about the potential for upside here?

Yes. I think there's opportunities to exceed this on both sides of the business. I mean even in Digital Health, I think we're being conservative with margin. We're giving Kees and Sham some flexibility over the next 36 months to continue to make investments because as you're probably aware, and I think maybe you intimated in your question, that software margins should be higher than 20% once mature. And we agree with that. That might be in '29 or 2030. The focus on DeepHealth over the next 12 months is going to continue to get this penetrated and implemented solutions with inside of RadNet, so that we can start saving on the Imaging Center side.

On the Imaging Center side, there's a lot of opportunities for tuck-in acquisitions. I think that could accelerate growth. There are larger acquisitions available to put capital to work. I think as these Digital Health solutions get implemented, we'll have more data to share about how that can impact margins.

One of the things that we talked a lot about today was the shift in our business mix from a modality standpoint, you saw a several hundred basis point shift over the last 4 years to today, we're over 27% of our business mix is MRI, CT and PET/CT. If that continues in the future, and we believe that it likely could. I think we -- that's another area of significant potential margin enhancement and growth.

Mark, David MacDonald from Truist, two quick questions. First, just on capital deployment. When you look at the efficiencies that the combined business is driving, especially into the Imaging Centers, I'm curious at a high level, does it change how you think about capital deployment M&A from the Imaging Center business and just the incremental opportunity because who you'd be acquiring isn't running as efficiently?

And then the second question on capital deployment is just on de novos, when I look at your current footprint, you guys aren't in what I would consider a very development-friendly areas of the country. As you end up expanding the footprint, could we see the de novo development activity pace accelerate as you move into states that are candidly more business friendly in terms of development?

Yes. Well, on the de novo side of the business, I mean, there's opportunities in all the markets that we have. And I'll let Steve talk about that. I mean we're not in any CON states. So yes, so there aren't any conditions to us making investments, buying machines, growing machines. There's a lot of room for us to continue to grow the company in all the markets. We have a toehold in Florida. There's a lot of expansion opportunities in Florida. There's a lot of expansion opportunities in Texas. We're just starting with -- in Texas as of last year in Houston. So there's growth everywhere.

We're trying to balance between all those opportunities. If we look at the core markets, the economies of scale, like the consolidation opportunities, conversations with payers. So there's a lot of benefits to continue in those markets.

We try and lay out those, whether it's a de novo, whether it's an acquisition, whether it's a joint venture. I will say we're getting more income increase from stand-alone or from health systems in states where we're not today. So those opportunities are certainly there. We just need to choose wisely. I've been here almost I guess, -- but I've never seen a more exciting time to be here, but more opportunity. I think our biggest challenge as the executive team is to wisely and the way all the strategic and economic benefits between whether it's de novo, whether it's acquisition, whether it's joint venture, whether it's current core market, whether it's a new market. And if we do go into a new market, I'll go with one more quote before the days out, we will be not a buy and hold, we will be a buy and build.

So if we evaluate a new market, we're not only looking at that entry point. We're looking, okay, if we can come in, what does it look like down the road? We came in here 12 years ago, something like that. We bought Lenox Hill Radiology, which at the time was 6 Imaging Centers. We have over 100 Imaging Centers. Not every market has the population of New York City. But that's the kind of road map we like to look at before we go into a new market.

If we go in with 4, 5 or 6, where do we see the path? Is it a joint venture partner? Is it another acquisition? Can we consolidate? Is it underserved, that we could do more de novo. So there's a lot that we look at to evaluate that.

And I think the first question we didn't address, which is given the efficiencies that we can provide with DeepHealth and operational capabilities, does that change our view on value in terms of acquisitions? And the answer is, I think we've all talked as a team that bigger is better because of that very thing where if we can make this impact on our existing 400 centers, wow, what would it look like if we could do it on 800 centers. So there's no question that we'd like to grow in the Imaging Center segment significantly. But it doesn't mean that we're willing to overpay just because we have a lot of capital, and we've still been disciplined.

There are -- we want to -- we want to work with motivated sellers and meaning people who want to be part of this type of clinical operation or have the capabilities and who want to be part of the RadNet network. And that's self-selecting. We want to work with quality groups. We want to provide quality medicine, and we want to go in, if we are going to go into a new market, as Steve said, at scale.

Yes. We won't lose our discipline but unlike some of our competitors, we might be able to stretch a little bit because it's really that effective multiple. If we know we can layer these synergies in, whether it's the operating synergies or maybe even just laying in our rate schedule, quite frankly, we may look at that a little differently than somebody else from would look at it because we know what the synergies are going to be, we can RadNetize very confidently and very quickly.

And then just one last one, if I could. On the slide, when you talked about scaling AI clinical suite and outpatient volume capture, how should we think about that in terms of how much of that will be internal development or what you can do within the 4 walls as opposed to additional acquisitions, I would assume that there is some combination, but just any detail there would be helpful.

It's definitely a combo across 3. It will be organic. It will also be acquisitive, but it will also be through partnerships. And maybe, Sham, you want to elaborate on that?

Maybe just to add, right? So areas where we have capabilities like we have capabilities in MR because we've acquired in prostate neuro space, most likely, that's going to be organic, right. In areas where we don't, there may be inorganic opportunities. So that's the way to think about -- so in ultrasound, for example, we've acquired See-Mode. So we have a capability there, as an example.

Brian Tanquilut with Jefferies. I think -- by the way, thank you for hosting this. This has been really great. Mark, maybe as I think about the CAGRs that you gave here, obviously, 3-year outlook '25 to '28, a lot of moving pieces as it relates to revenue CAGR and the margin outlook. Just curious how we should be thinking about the cadence of these gains as we think through the contribution of See-Mode or DeepHealth or some of these things that you guys are rolling out? So without giving guidance for '26, but how should we think about the ramp to get to these goals?

If you look at our historical performance, and there is a chart in our investor deck and you can pull down from our website that has 15 years of historical performance, it has been pretty consistent. And so our -- particularly in the area of our Imaging Center business because it's a much more mature business. And while we can't predict how many acquisitions we're going to do next year. We don't sit around as a management team and allocate capital for the following year. Our business is a steady grower. So I think that there is going to be more ratable growth coming through. Obviously, there will be some acceleration in the digital health from third-party external revenue in the out years.

But we'll be giving guidance for 2026, we have a budget, and we'll be giving guidance at the end of February of next year, which will at least give you one year of assurance around that. But I think you'll see some pretty steady growth.

I think the question was also related to the RadNet programs. So we put a slide in there that showed the 4 domains that we talked about, the RadNet impact of the Digital Health impacts. Some are at high maturity level right now, some will come a little bit later. So TechLive, high maturity level, contact center operations will come a little bit later. In theory, if you would model that, that gives us quite a nice ramp-up over time of the benefits of the digital health programs. So it's not going to be that lumpy or a sudden or '26 is bigger than '27 or otherwise, it's actually quite a nice ramp.

And in case I have -- my follow-up question would be, there was a slide where you put Clinical AI growing from a $5 billion market to a $7 billion market. Just curious, given the reimbursement outlook here in the U.S., at least for Clinical AI reimbursement where it barely exists, how are you thinking about the progression of that? Or what needs to happen for that to be realized?

It's the combined market, just to be clear. So the $5.1 billion to the $7-plus billion is radiology informatics, so the traditional RIS/PACS business that will go cloud native and then the AI business growing. There is now evidence that certain AI domains will actually get reimbursed. And there's also evidence that reimbursement is not de facto of the reason that you get value for money for AI solutions. So even in the absence of AI reimbursement, you would still have AI solutions brought to market that your customers would pay for. So it's the combination of the 2.

Just to clarify that, the AI business is going from about a little over $1 billion, $2 billion, $3 billion, right. It's the integrated market that's going to [indiscernible].

Yuan Chee from B. Riley Securities. Maybe a couple of follow-ups. So first, can you quantify the AI's contribution to your revenue and adjusted EBITDA over the next 3 years? Just more specific -- we saw the 11% to 13% growth on revenue. Can you put more details in there?

Well, I think you could do the math, right? Because if you took -- we're the run rate of the Digital Health business going into next year is about $100 million of revenue, maybe slightly more. If you compound that over 3 years by $30 million -- by 30%, you're going to have a $30 million benefit next year and so on and so forth. So if you look at the EBITDA, by achieving 20% EBITDA margins, our EBITDA will almost triple over the next 3 years in -- despite the fact that we're not at a mature EBITDA margin in that business. So you'll see it go from about $15 million to $17 million this year to about $43 million just by doing the math.

I'm not giving 3-year guidance, but you all can do that math as well. So it's not going to contribute because we're talking about $100 million revenue business versus a $2 billion revenue business. It's not going to contribute on the top line growth tremendously because it's so small, but when you look at the EBITDA, it's going to be a real contributor on the EBITDA side, not to mention the cost efficiencies and the EBITDA it's going to create in the imaging center business for Norman and Steve.

Got it. Maybe switch gear a little bit. So CMS is in the process of removing prior authorization for most or many process, including the diagnostic imaging. So I wonder how will that impact your top line?

Well, we're seeing a number of our payers, at least backing away from the preauthorization process, which is going to be a huge cost saver. We spend an embarrassingly enormous amount money on authorizations. And obviously, it helps simplify the whole process that we've talked about today to get people in more quickly. So any relaxation of prior authorization requirements is good, it's good for health care. It's not -- maybe it was impactful and beneficial in the early years to drive out some waste, but it now is just a -- it's a barrier to care right now at an unnecessary cost.

This is Matthew Gilmore from KeyBanc. I wanted to ask about the JV pipeline. You all, at least to my mind, sounded relatively bullish with respect to joint ventures. I wanted to see if you guys could characterize sort of what you're seeing from a pipeline perspective? I was also curious if that is contributing to some of the positive rate dynamics you mentioned with commercial payers and just how you leverage those health system relationships?

All right. I'll take a crack at that. That was a question that actually came up in our conversation. Most of all of our joint ventures are driven by what is an inexorable movement of outpatient imaging away from hospitals. Some people think that that's just because of the better pricing. But what it really is, is the hospitals are just not capable of keeping up with the demand that they currently have and growing for imaging. Imaging is not just growing with what we've demonstrated in an outpatient sector, it's growing throughout the entire industry. So that movement is going to continue in the hospitals that have already been joint ventured with us as well as new ones that we're getting inbound calls from regularly recognize the need to be able to have a market approach to radiology.

Part of that market approach and what I believe we're getting some traction on is creating an ecosystem that no longer differentiates between where the procedure is done. Clearly, what you can see that we're trying to do with our 400-plus centers and more is put them on the same platform. And as I think either Steve said or somebody said that we will, in the very near term here, be able to read cases from the East Coast on the West and the West Coast and the East. We're doing that to some level right now, but we'll be able to do it much more efficiently.

If you look at what the opportunity is to bring the best reader to the procedure, regardless of where it's done. It doesn't matter whether it's done in California or New York. The quality of what we want to be able to produce that will allow us to continue the momentum of generating more volume is about putting the best person in place. That's the same thing as in hospitals. And what we're trying to educate because it is a big lift.

And part of that big lift is that you have CTOs at the hospital levels that are unwilling to give up their domain, if you will. You have radiologists that don't appreciate the level of technology that we're capable of delivering and are concerned about their own self-preservation. These are things that are going to change. From a fundamental standpoint, it should not matter where the procedure is done, but where the best reader is. And the best reader is not always the one at the highest quality, but we can get that turnaround time.

We have to think in a more broad sense here that as RadNet continues to grow its footprint, the opportunity to create real change is not on the conventional way that we're used to doing business, right? And as we get more and more into the very fabric of these hospitals. And I can tell you that we're having some of these discussions that will go way beyond radiology. We're talking about with big systems what is their approach to population health for screening for lung cancer for not just breast cancer, for prostate cancer. They're all looking for ways to drive better quality and outreach into their communities. And that's not done in hospitals. That's done in the outpatient sector.

But if we can create this flow of information where the best reader at the best time is taking care of the clinical side of it, that's the best outcome for everybody.

What's additionally coming, and I challenge all of you to kind of think more broadly, is that health care is going to change also. We haven't spent any time here in this meeting. We will subsequently. But when we talk about doing outpatient imaging, we all think because we're in the outpatient business, it's done in Imaging Centers or at hospitals. There's more imaging done in doctors' offices, in urgent care centers, in OB/GYN offices, those are the places where fundamentally we could create change from the way that imaging is delivered right now.

We're not concerned necessarily about all of those cases, particularly routine imaging, which are not as profitable and which tend to clog up our Imaging Centers. But we can bring these particularly with hospital systems that have medical groups that are now part of their system and can be part of the delivery system. It doesn't have to always be in their hospital.

And the fundamental changes that we're talking about, particularly with artificial intelligence, with autonomous reading, can make such a dramatic change in the way health care perceives imaging to be the gateway to health care is that I would imagine in our next Investor Day, whenever that might be. We will be talking more and more about these kind of opportunities that reimagine imaging and reimagine the delivery of health care because there is nothing that is more important in managing a large population than imaging. And maybe that sounds very self-serving. And obviously, I'm biased. But we see it, we know it.

And there is a dramatic change that has occurred, not just that what RadNet has adopted, but which has occurred at all levels of the health system and that is going to change some of the fundamental unit economics and things that we -- I'm going to give you a simple example and the reason why I'm excited about not just TechLive, but live tech. The shortage today, it's easier for a hospital, it's easier for an Imaging Center company to write a big check for a technologist that they know is sitting there generating revenue.

TechLive, while it's a great tool, is looked at as another cost. People don't look at health care necessarily with physicians and technologists simply as a cost. It's an existential need. And I think what we're likely to see, both for technologies and radiologists is a bundling of AI tools along with staffing needs that will make it a lot easier for this to not only be a variable expense, but one that they can titrate to the facility's needs. And all of these are what is being driven by a technology-enabled company, which RadNet is and which others are working on today, but not with the same approach.

And it will be a pleasure to stand in front of you in some future day to say that we're making strides on this with tools that we don't have right now, but which we envision. And part of my job, as long as I maintain it, they don't kick me out, is to try to have that vision come to reality. And every day, we're learning something new about how we can reimagine this vision to be delivered.

You'll be hearing to the extent that some of you may come to the RSNA, which is in 3 weeks, I encourage you to come there. It's going to be quite a show for us and our booth and other announcements that we're going to make. But working hand in hand with the OEMs is now much more of a reality than it ever has been for a company that they are now recognizing understands better the delivery of imaging, not as somebody who's building a piece of equipment but it's about a service, it's about workflow.

And it's about the changes that can come about and make the entire system that much more capable of delivering better health care, better outcomes and lower cost. And that's the challenge that we've taken up. We'll do that for ourselves and do it very successfully. I think that the projections that we give, if you do your modeling, none of us would have sat here 2 or 3 years ago and believe that we could achieve. But the purpose of this was to show that what we're doing is sustainable. It's not aspirational. Can we achieve better than this? What we have every year for the last, let's say, for the last 2 years at least, we've been meeting and exceeding our guidance. And someone I say, well, you're kind of sandbagging because you know going -- we're not sandbagging. It's just that this growth, this transition is so rapid that it's very hard to predict from one quarter to the next, how much of that adoption is taking place, but it has been consistent. The team that we've built and particularly adding digital health and this extraordinarily seasoned and knowledgeable team makes the future unlimited.

So will we achieve better than what we're expecting? I hope so, but not just for RadNet because I think it's good for health care, I think it's good for this industry. And I'll end my comments because I think it's been proven out here that we're -- this was our coming out party. We've changed our moniker from leading radiology forward to advancing imaging through innovation and technology. And I think everything that we tried to demonstrate to you today really fits into that characterization of how we'd like you to look at RadNet as a health care company. But one that is going to expand the horizon of what we traditionally have felt about the delivery of health care.

This is not just something that RadNet is on a mission for. This is something that has to be done with a growing and aging population where the cost of health care has just gone up every year, and it's not sustainable. So there needs to be this innovation, there needs to be this technology. It's there. We should embrace it, and we should welcome it.

Any more questions? I didn't want to...

We have time for one more question.

One more question from Mark.

You reminded me something when you mentioned the RSNA. I want to invite everyone to come through our booth. Andrew Mok at Barclays and Brian Tanquilut at Jefferies, our research analysts are taking tours through the RadNet Deep Health booth on Monday, Tuesday, December 1 and 2 in Chicago. And if any of you or anybody listening on the webcast have further interest in seeing, doing a deep dive into our products and services on the Digital Health side, we'd love to have you.

Martin Ji from Clearbridge Investments. My question is on the digital health external sales. So when you're making new sales right now, typically, what are the pressure points you're seeing from your customers that they need to overcome before you can make a deal? And also what kind of competition you run into in that process?

Sure. I'll let Kees take this one.

Yes. It depends a little bit. Remember that Sham presented 3 business domains. So enterprise operations, enterprise imaging, population health/clinical AI. It really depends a little bit in which of the 3 domains we go out. In the clinical AI domain, you can have a technical discussion around who has the superior model. We try to avoid that because we -- our model is fantastic. But our integrated solution approach with, for instance, with viewing and reporting at the same time is differentiating in the market. So we try to emphasize the value add we bring with the integrated offering.

For Enterprise Imaging, we currently are going towards markets in which, for instance, a reporting tool, that's a little bit early to report out on. So we're engaged on it. We have a PACS portfolio that we sell in the outpatient networks that we competitively position and similar on enterprise operations. So it depends a little bit on what segments you are and it depends also a little bit on what module the DeepHealth OS, specifically is the request of the customer.

Kees, if I can add as well. So given those 3 segments, we see growth differently. So if you go look at the risk market, a lot of our growth is selling additional solutions to our existing installed base because acquiring somebody to change their risk is a massive undertaking, right? We're getting those new logos. We're announcing those, and we're getting those, but those are much slower where we get document scanning as a service, $0.5 million a year, that kind of thing. That happens in -- within an existing customer base. If you go to AI, that's where acquiring new logos because these solutions, health systems we're buying them, outpatient imaging, folks are buying them. So that's where you see new logos.

And then in the middle of the Enterprise Imaging space, that's where kind of gaining momentum, both seeing new logos and then converting our existing installed base from on-prem to cloud, right? So that's literally how the 3 businesses sort of break down.

All right. Well, thank you, everybody, for being here and joining us and joining us online as well. For those who are still in the room, the demos are still outside. If you didn't get a chance to see them during our break, please take time before you walk out, and we are very grateful for your attention today.

Good morning, ladies and gentlemen, and welcome to the RadNet Inc. Third Quarter 2025 Financial Results Conference Call. [Operator Instructions]

As a reminder, this call is being recorded. I now hand the conference over to Mr. Mark Stolper, Executive VP and CFO. Thank you, and over to you.

Good morning, ladies and gentlemen, and thank you for joining Dr. Howard Berger and me today to discuss RadNet's third quarter 2025 financial results. Before we begin today, we'd like to remind everyone of the safe harbor statement under the Private Securities Litigation Reform Act of 1995. This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.

Specifically, statements concerning anticipated future financial and operating performance, RadNet's ability to continue to grow the business by generating patient referrals and contracts with radiology practices, recruiting and retaining technologists, receiving third-party reimbursement for diagnostic imaging services, successfully integrating acquired operations, generating revenue and adjusted EBITDA for the acquired operations as estimated, among others, are forward-looking statements within the meaning of the safe harbor.

Forward-looking statements are based on management's current preliminary expectations and are subject to risks and uncertainties, which may cause RadNet's actual results to differ materially from the statements contained herein. These risks and uncertainties include those risks set forth in RadNet's reports filed with the SEC from time to time, including RadNet's annual report on Form 10-K for the year ended December 31, 2024.

Undue reliance should not be placed on forward-looking statements, especially guidance on future financial performance, which speaks only as of the date it is made. RadNet undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made or to reflect the occurrence of unanticipated events.

And with that, I'd like to turn the call over to Dr. Berger.

Thank you, Mark. Good morning, everyone, and thank you for joining us today. On today's call, Mark and I plan to provide you with highlights from our third quarter 2025 results, give you more insight into factors which affected this performance and discuss our future strategy.

After our prepared remarks, we will open the call to your questions. I'd like to thank all of you for your interest in our company and for dedicating a portion of your day to participate in our conference call this morning. With that, let's begin. I am very pleased with the performance in the third quarter. Revenue and adjusted EBITDA were both quarterly records and exceeded internal budgets set at the beginning of 2025. Total company revenue increased 13.4% and adjusted EBITDA increased 15.2% relative to last year's third quarter resulting in a 26 basis point improvement in adjusted EBITDA margins. This performance is reflective of several positive and continuing trends that have been driving RadNet's strong results in recent quarters.

First, same-center procedural volume continues to be robust, particularly within Advanced Imaging. Advanced Imaging increased 13.0% on an aggregate basis and 9.9% on a same-center basis as compared with last year's third quarter. This performance resulted from, among other things, equipment and software upgrades, which have shortened scanning times and increased capacity, a reduction of exam room closures from remote scanning enabled by deep health Tech Live recently approved FDA software.

Deployment of AI-assisted dynamic schedule designed to fill exam slots that would otherwise have gone unutilized. Recent de novo center openings and tuck-in acquisitions, along with the continuing shift from expensive hospital imaging towards more cost-effective ambulatory freestanding imaging. Margins continue to benefit from the continuing shift in procedure mix towards advanced imaging.

In this third quarter, 28.2% of our procedures were from advanced imaging compared to 26.7% in the third quarter of last year. While the growth in advanced imaging is due in part to Tech Live and the dynamic scheduling, which are serving to expand our operating hours and ensure appointments are fully utilized, is also the result of certain advanced imaging specialty practices we have been building. Examples of these programs include prostate PET/CT or PSMA, amyloid brain PET/CT, prostate MRI and coronary CT angiography.

Today's advanced imaging equipment is more capable than ever and some of the faster-growing advanced imaging studies are an outgrowth of recently FDA cleared Novel radioactive pharmaceuticals and advanced post-processing software. Furthermore, an increased focus within the health care delivery system on early detection of disease and population health screening is driving increased clinical indications for ordering more advanced imaging studies.

RadNet's strong financial performance in the third quarter is also reflective of improvement in reimbursement rates with commercial and capitated payers who recognize the position RadNet offers as a lower-priced alternative to hospital-based imaging. To this end, we have been successful in receiving rate increases from many of the larger commercial and capitated payers and several capitated contracts have been converted to higher paying fee-for-service relationships in recent quarters.

The stronger operating results in the third quarter relative to our internal budget, along with trends that we are continuing into the fourth -- into this year's fourth quarter, resulted in the decision to increase 2025 full year guidance ranges for revenue and adjusted EBITDA.

Mark will discuss this in more detail in his prepared remarks.

Steady progress also continues in the digital health operating segment. The EBCD DeepHealth AI-powered breast cancer screening program continues to expand. Currently, we are experiencing a blended adoption rate nationally above 45% with more cancers being found across RadNet centers, which otherwise might have only been detected at a later date. In the quest for reimbursement, we continue to make inroads with third-party payers.

During the third quarter, several of our larger capitated medical groups agreed to add EBCD as a covered benefit for over 700,000 members. In an effort to boost compliance, with annual breast cancer screening guidelines, Legal Medical Group, Lakeside Community Health care, ADAC Medical Group and Desert Oasis Healthcare have agreed to reimburse RadNet for its EBCD program.

On July 17, the previously announced acquisition of iCAD, a global leader in clinically proven AI-powered breast health solutions was completed with over 1,500 provider locations, facilitating over 8 million annual mammograms in 50 countries, iCAD's ProFound Breast Health suite and RadNet's detailed AI-powered breast [ lesions ] solutions together can materially expand and improve patient diagnosis and outcomes on a global basis through further enabling accuracy and early detection. We have substantially completed the integration to digital health of most of the iCAD's operations with cost synergies ahead of plan and recent customer wins, demonstrating the power of the newly merged entities. Also within digital health, we completed the implementation of CMOs thyroid ultrasound technology across more than 240 RadNet centers.

As you may recall, CMO's initial applications to detect and characterize thyroid naturals and breast lesions in ultrasound imaging, improve diagnostic accuracy and enhanced clinical workflows. In the most recent months, within the RadNet centers we processed over 14,000 thyroid scans using this technology. Early deployment of CMO's FDA-approved [indiscernible] ultrasound AI has demonstrated over 30% reduction in sand time. Furthermore, because a reimbursement code already exists that makes a portion of our over 230,000 annual thyroid ultrasound eligible for additional reimbursement, we have been successfully billing for CMOs AI.

An initiative is ongoing to pursue FDI approval for CMOs next application in risk AI Ultrasound, which constitutes over 600,000 of RadNet's approximately 2.7 million annually thyroid exams. Some of you may have also seen last week and announced that RadNet acquired the assets of Elfa RG. Elfa RG has been advancing several initiatives around remote technology scanning, including a vendor of Nasdaq staffing service capable of delivering on-demand access to highly skilled remote MRI technologies, a real-time AI-driven safety alert system to detect unsafe materials or circumstances within the MRI suite and an MRI Teca certification program designed to strengthen the workforce in an effort to deliver high-quality care.

This platform has implications for both operating segments of our business. For digital health, LRT will enable the sales and marketing teams of Tech Live to offer a more comprehensive portfolio solutions around remote scanning to now include providing remote technologists as a staffing service and training and certification program for tech aids necessary to effectively provide on-site care in conjunction with remote scanning.

For the Imaging Center operating segment, Alpha R2 will pursue building and training remote technologies that can be used as a labor pool to scan for RadNet facilities. Furthermore, Alpha LRT should become the principal training agent for RadNet's tech AIDS or what we call internally in-suite assistance or ISIs.

Before I Turn the call back to Mark, I would just like to highlight our financial liquidity and leverage, which continues to be carefully managed. As of September 30, 2025, cash balance was $804.7 million and net debt to adjusted EBITDA ratio of approximately 1.0 an attractive pipeline of acquisition opportunities is being evaluating for both the core imaging services division and for digital health, and we have confidence in our ability to invest the cash balance over time and opportunities at advance RadNet's strategic objectives.

At this time, we would like to turn the call back over to Mark to discuss some of the highlights of our third quarter 2025 performance.

When he is finished I will make some closing remarks.

Thank you, Howard. I'm now going to briefly review our third quarter 2025 performance and attempt to highlight what I believe to be some material items. I will also give some further explanation of certain items in our financial statements as well as provide some insights into some of the metrics that drove our third quarter performance.

I will also provide an update to 2025 financial guidance levels, which were released in conjunction with our 2024 year-end results in February and amended following our first and second quarter financial results. In my discussion, I will use the term adjusted EBITDA, which is a non-GAAP financial measure. The company defines adjusted EBITDA as earnings before interest, taxes, depreciation and amortization and excludes losses or gains on the disposal of equipment, other income or loss, loss on debt extinguishments and noncash equity compensation.

Adjusted EBITDA includes equity earnings and unconsolidated operations and subtracts allocations of earnings to noncontrolling interests in subsidiaries and is adjusted for noncash or extraordinary and onetime events taking place during the period. A full quantitative reconciliation of adjusted EBITDA to net income or loss attributable to RadNet, Inc. common shareholders is included in our earnings release.

With that said, I'd now like to review our third quarter 2025 results. As Dr. Berger highlighted in his remarks, our business continues to demonstrate double-digit top line growth as a result of a number of continuing and enduring industry and RadNet specific trends. From an operational perspective, we continue to focus on creating capacity at existing centers, opening de novo facilities, shifting our business mix towards advanced imaging executing on tuck-in acquisitions when available, negotiating reimbursement increases from commercial and capitated payers and accelerating digital health revenue growth.

During this year's third quarter, the 13.4% increase in total company revenue relative to the same period last year was highlighted by strong growth in advanced imaging. Aggregate MRI volume increased 14.8%. CT volume increased 9.4% and PET/CT volume increased 21.1% from last year's third quarter. And on a same-center basis, same-center MRI volume increased 11.5%, same-center CT volume increased 6.7% and same-center PET/CT volume increased 14.9%.

As Dr. Berger noted, this is a function of the combination of greater utilization of higher acuity imaging in the health care delivery system at large. RadNet's expansion of specialty programs in areas such as cardiac, neuro, prostate and PET/CT imaging, investments we've made to drive capacity for advanced imaging studies and patient throughput and the continued shift from hospital to ambulatory outpatient imaging.

During the quarter, we opened 1 new facility, a women's imaging center in Rolling Oaks Ventura County region in Southern California. With this de novo, we now have opened 5 facilities during 2025, with more to come in the fourth quarter of this year. Within our digital health operating segment, revenue increased 51.6% from last year's third quarter which was partially the result of iCAD's revenue contribution since its acquisition on July 17. AI revenue within digital health, inclusive of iCAD revenue from its ProFound AI and deep health solutions in breast, lung, prostate and neuro increased 112% from last year's third quarter.

Also contributing to this growth was a 28.7% increase in EBCD AI revenue as well as a small amount of external ultrasound AI revenue from our recently acquired CMO business. Excluding the AI revenue, digital health revenue from eRAD, Deep Health OS, Tech Live and other workflow solutions increased 24.5% from last year's third quarter.

The overall business demonstrated margin improvement in the quarter. Adjusted EBITDA margins improved by 26 basis points from 16% in the third quarter of last year to 16.2% in this year's third quarter. This was a result of the strong revenue performance and a focus on cost management and efficiencies.

With regards to our balance sheet and financial leverage, as of September 30, 2025, unadjusted for bond and term loan discounts, we had $287.3 million of net debt, which is our total debt at par value less our cash balance. Note that this debt balance includes RadNet's ownership percentage of New Jersey Imaging Network's net debt of $33.7 million for which RadNet is neither a borrower nor a guarantor.

At quarter end, our net debt to adjusted EBITDA leverage ratio was approximately 1x. Contributing to our strong cash position and low leverage was the continued improvement in our revenue cycle where we have driven DSOs or days sales outstanding down to 31.9 days, which is our lowest historical levels.

Given the strong third quarter results and the positive trends we continue to experience, we elected to increase revenue and adjusted EBITDA guidance for our Imaging Center business. We increased revenue by $50 million at the low end and $30 million at the high end of the guidance range and increased adjusted EBITDA by $5 million, both at the low and high end of the range. We also increased our capital expenditure guidance range by $5 million, which is reflective of additional growth investment opportunities we have been pursuing.

We also lowered our range for cash interest expense by $4 million at both the high and low ends of the ranges, which is reflective of higher cash interest income from our cash balance than what we originally projected.

For digital health, we increased the revenue guidance by $5 million predominantly to incorporate the contribution for iCAD since its consolidation in mid-July. One thing worth noting is that we did not lower the digital health adjusted EBITDA guidance for 2025 despite the fact that iCAD and C mode were both losing EBITDA at the time of their purchases. Holding the adjusted EBITDA guidance unchanged for digital health is the result of achieving anticipated cost synergies ahead of schedule through faster integration of each of those businesses is also due in part to better-than-anticipated expense performance from the existing digital health operations.

I'll now take a few minutes to give you an update on 2026 anticipated Medicare reimbursement. As a reminder, Medicare represents between 23% and 24% of our current business mix. With respect to Medicare reimbursement in July, we received from CMS a matrix of proposed rates by CPT code, which is typically part of the physician fee schedule proposal that is released about that time every year.

At the time, we completed an initial analysis and compared those proposed rates to our current 2025 rates. We volume-weighted our analysis using expected 2026 procedure volumes. In the proposed rule, Medicare proposed increasing the conversion factor of the Medicare physician fee schedule by about 3.3% from $32.35 to $33.42, along with certain changes to the RVUs, or relative value units of specific radiology CPT procedure codes and to the Medicare geographic practice cost indices or GPCIs.

Our initial analysis in July of all the various variables of the proposal indicated that RadNet on roughly $2 billion of revenue will benefit from an approximately $4 million to $5 million Medicare revenue uplift in 2026. A couple of weeks ago, CMS released its final rule, which will govern the 2026 physician fee schedule reimbursement rates. We analyze the final rule CPT code by CPT code, and we are pleased to report that the impact on Medicare rates in 2026 will be consistent with the proposed rule calculation we completed in July. The $4 million to $5 million of revenue benefit next year breaks a trend of about 5 years of annual cuts to the Medicare physician fee schedule. During the last 4 years alone, we have absorbed over $35 million of annual cuts. We are pleased that going into 2026, we will not have to overcome Medicare cuts like we have had to do in the past, and this benefit will be reflective in our 2026 financial guidance. We hope that this is a recognition from CMS that it must compensate providers appropriately and that its reimbursement should be commensurate with the rising cost of providing services.

I'd now like to turn the call back over to Dr. Berger, who will make some closing remarks.

Thank you, Mark. As many of you may be aware, RadNet will be hosting its inaugural Investor Day tomorrow at the NASDAQ market site in New York City. I invite all those not attending in person to watch the event via live webcast or via the archived replay, which will follow. You can get the webcast link from the Investors section of the RadNet corporate website or from our recent press releases announcing the event.

During tomorrow's Investors Day, we will have a full day's agenda that includes numerous digital health demonstration of its AI-powered portfolio of solutions and presentations from the following: Certain physician clinical leaders will discuss some of the specialty growth areas of the company including important programs in neuroimaging, prostate imaging, PET/CT, cardiac imaging and lung cancer screening.

RadNet's Chief operating executives will provide a deep dive into many of RadNet's critical operating initiatives that will continue to drive efficiency and growth within our Imaging Center operating segment. Digital Health leadership will provide an update on the progress of development, commercialization and implementation of the deep health portfolio of solutions, both within RadNet and progress we are making with outside customers.

And finally, Mark will present RadNet's three-year plan, which will include executive management's view on the major operating assumptions and metrics that could drive our business through the end of 2028. Additionally, tomorrow's Investors Day will provide attendees the opportunity to ask questions of and interact with the broader business and clinical leaders of the company. Whether or not you participate in tomorrow's Investors Day, 3 weeks from now, we will also be showcasing the digital health product portfolio at the Diagnostic Imaging industry's largest convention RSNA Radiological Society of North America in Chicago. We will be hosting 2 deep health booth tours for investors interested in participating in demonstration of DeepHealth's portfolio of solutions and in walking the floor of the convention. We look forward to potentially seeing you tomorrow or at the RSNA and or further updating you on all our progress on the next financial results call.

Operator, we are now ready for the question-and-answer portion of the call.

[Operator Instructions] We have the first question on the line of David MacDonald from Truist.

A couple of quick digital health questions to start. Can you guys talk a little bit about on Tech Live, you talked about the New York market on the 2Q call, just where we are in terms of rollout with other geographic regions? And then secondly, just on kind of the dynamic scheduling, can you provide a little more detail there? Is that you guys are doing predictive modeling around who may cancel or just increasing throughput on the scheduling side?

Sure. Dave, thanks for the questions. Yes, with respect to the TechLive rollout, we should be substantially complete by the end of the year, maybe slightly early into the first quarter with TechLive connecting all of our advanced imaging equipment, MRI/CT and PET/CT, we're substantially through the connection of our MRI at this moment. And we did call out both on the second quarter and the third quarter in this call.

The impact of what we're seeing in some of our markets with respect to the increased capacity that this has created for us. And that's one of the reasons why you've seen our MRI volume, both on an aggregate basis and a same-center basis, grow so substantially relative to last year because what the TechLive has already demonstrated for us is that it has substantially reduced the exam room closures when in the past, we've had a shortage of staffing for a variety of reasons or text [indiscernible] sick in the morning. We've had to close those exam rooms and very similar to the airline industry or the hotel industry, when we have an exam slot that goes unsold like an airplane that takes off that that has a seat that's unsold, we can never resell that slot.

So we did -- we called out on last quarter that we started to roll out here in New York, happen to be sitting in New York right now for this call. And in 83 of our centers, we reduced exam closure hours by about 42% relative to last year. And that has had a market benefit to MRI scanning. The other thing that has had a benefit that I know you're not asking about it, but it's worth noting is the, what we call dynamic scheduling that we have instituted over the last year where we now have a predictive models using AI that can identify patients who might not show up for their exams based upon a number of different factors, including them not confirming those exams via text or other appointment reminders and we've been essentially overbooking the schedule and expecting for some of these patients not to show up, and that has had a big benefit in filling spots that would otherwise have gone unused.

So we expect next year to even have a bigger impact, what because this impact is going to be on all 4 quarters of next year and also, we will be covering schedules now also for MRI -- excuse me, CT and PET/CT as well.

Okay. And then just one other quick follow-up, just a payer question. Can you guys just provide a quick update? It sounds like additional progress on coverage for EBCD. Just any conversations there? And do you expect to announce additional progress there? And then secondly, just on some of your capitated contracts, sequentially, it looked like you had a little bit of a bump in revenue. Are you seeing any of your capitated contracts start to circle back and kind of realize that the price increases you guys need are pretty reasonable relative to kind of what they'd be looking at otherwise?

Dave, it's Dr. Berger. I'll take that one. That's a multiple part question here, and I'll try to remember to hit all the highlights, Dave. But in terms of actual commercial payers, adopting covering the EBCD. We are in discussions. It's a big ship and they turn slowly. But the conversations, I think, are positive, exactly when we might get the first one to adopt is hard to predict right now, but I think it's just a matter of time, perhaps driving that is the continued growth of adoption by our patients who are opting into pay pay it out of pocket. That's now as we mentioned in our remarks, up to 45%, and we expect to be north of 50% sometime in the beginning of 2026. And the value proposition for this AI is being very well received by our patients because we do such a substantial or make such a substantial effort in the education of this, not only with the patients, but with their referring physicians. And we have a lot of good testimonials, some of which we'll talk about tomorrow at the Investor Day of how appreciative our patient base is of offering this. In regards to capitated payers, we have been getting increases from all of our capitated programs, some of which when we did not get the desired result, we elected to go on fee-for-service, and we're getting increased rates that were higher than what we were getting under converted capitation rates to a fee-for-service program.

And lastly, as I believe you mentioned and we have gotten some of our larger capitated payers in California to begin offering the EBCD program as a benefit to all of their capitated patients, which means we don't ask those patients if they want to enroll in EBCD because they get it as a benefit that is paid for on a fee-for-service basis by the -- by our capitated medical groups -- and I want to highlight the importance of that because the capitated groups recognize that there are 2 benefits from this. Number one, early detection leads to lowering cost and better outcomes. The other portion of this, which they have actively encouraged us is to get better and better compliance from patients to do their annual or biannual screening. And that is a major driver for the capitated groups because it improves their HEDIS performance and allows them to get bonuses, some of which we shared at the end of the year.

So very grateful and very delighted to report that there is a large segment of our patients who are now getting this as a benefit. And I believe that kind of pressure inside the industry will eventually filter down to the commercial payers and something that is truly a benefit that patients deserve under their health care plans. We also are doing a lot of education directly with employers since probably about 70% of all the patients covered by commercial payers are actually through employer health plans. So we're very confident that this will continue to be successful. I will also tell you, and we'll be talking about it next year that we plan to expand capabilities within the EBCD program to further create ability to not only detect cancers early, but also to improve risk prediction models that will be part of our EBCD program.

And the one thing I'll add is to exactly Dr. Berger's point, in October, we had a new capitation contract as Oasis Healthcare, actually, they're an old capitation contract of ours, but they're newly now paying for the EBCD program. So we're getting more and more traction here. And I think that this is putting more and more pressure on the commercial insurance companies because these capitated patients are HMO patients that are aggregated from the various different HMOs and the Uniteds, the Aetnas, the Health Net of the world. And so now those big insurance companies have certain of their members who are part of these capitated groups that are now getting EBCD paid for as a covered benefit, and then other plants that they have that are not getting members that are not getting this paid for as a benefit. So I think we're headed in the right direction here. It's just that there's -- it's a slow process, and there's a lot of inertia in health care.

We have the next question from the line of Brian Tanquilut Jefferies.

Congrats on another solid quarter. Maybe Dr. Berger, I'll start with you. I remember last quarter, you talked about the outlook for joint ventures and how you're getting excited about opportunities that you expect towards year-end. So just curious, where does that stand in terms of partnerships with health systems or physician groups?

Nice to hear from you. It looks very robust. I don't have anything specific to announce today, although we hope to have those in the coming weeks or early first quarter. What I will tell you, though, is that we are getting more inbound calls from health systems as it relates to helping them with their radiology strategy. hospitals are being impacted just the way for their inpatient staffing issues as our patients, meaning radiologists are in short supply and high demand. There's turnaround time for reports is deplorable. And the shortage is creating staffing issues that nobody could have predicted. So while they're perhaps or other people who provide pieces of the puzzle that health systems are made, people are more and more looking at RadNet's comprehensive solutions, both on the operating metrics as well as the deep health and AI metrics as a way to solve some of their problems, just like it's solving for us.

So the conversations that we're having are robust and not only with the new systems that are reaching out to us, but also with existing systems that are looking to expand some of RadNet's operating capabilities into their health systems even if it's not part of a joint venture, but leveraging up on RadNet's strong management and operating capabilities, much of which is really being driven by the potential value proposition of the digital health segment.

I appreciate that. And then maybe just linking back on that, Mark. As I think about 2026, I know too early for guidance, but as we think through topics they're right, APTC, I'm just curious what your health insurance exchange exposure is? Or how do you view that? And then how should we be thinking about the inflationary environment for wages as talked about radiation technologists and radiologist costs.

So on your first question with regards to the exposure we have to the Medicaid programs and the exchanges. It's a very small part of our business. About 2.5% of our business is Medicaid fee-for-service business. It's also the lowest paying or lowest reimbursing book of business that we have.

So regardless of what happens with this big beautiful bill on the Medicaid side of the business, I don't think we're going to be impacted substantially. We also don't do a lot of exchange work. We do some on the fee-for-service side, and that's part of our commercial book, but it's relatively small here. So a lot of the noise that we're hearing in Washington today, regardless of how it gets resolved, it doesn't feel like it's going to have a material impact on our business one way or another.

With respect to your second question about labor. Labor still remains a challenge for our company, the industry, health care at large. We have seen it stabilize a little bit in our industry with respect to radiology technologist, which is our biggest pain point, we've done a lot internally from a grassroots level to be more effective at hiring and retaining talent other than having to pay more, we've been aggressive in establishing relationships with the tech schools, providing internship programs, training programs, tuition reimbursement programs, we've paid bounties to our existing employees who have brought in talent into our company from the outside.

And we've mentioned this in the past, we actually have started our own tech program -- tech training program on the West Coast in conjunction with a non-for-profit vocational program out there. So we have seen some stabilization, but it's still challenging out there. We will build into our '26 guidance increases to our employees at the center level and our technologists like we have been building in over the last several years. But the big focus for us is on some of the digital solutions that we think will have a major impact in helping us slow this curve or reverse this curve. TechLive is an example of that. We're to train some of our more capable techs to be able to control multiple rooms simultaneously. It also -- TechLive also opens up the hiring pool beyond our geographies. So we can fish from a much larger talent pool. And the workflow solutions like DeepHealth and others, also make -- lowers the scanning time increases capacity where we can do more scanning in the same number of work hours, which helps us leverage our workforce.

Brian, I want to make one other quick comment about the labor market. I believe, and I hope I'm correct, that the challenges in the labor market are at an inflection point. And somebody might say, "Well, why do you believe that? And I'll give you 2 reasons. Number one, in general, you've seen many good-sized companies, announced staff reductions and layoffs -- some of them use the excuse of AI has made them less dependent upon labor, manual labor, others, I believe, are running into some of their own operating metrics that need to be rightsized. But more specifically, in the health care industry, 1 of our biggest issues that we've had to deal with is the fact that reimbursement to hospitals has been so substantially greater than it is to imaging centers that the salaries that hospitals have been able to offer have often attracted people away from the outpatient imaging centers like ours and others.

I believe that's changing. While it's not necessarily always publicly announced, I have seen many articles in the markets that we operate in, of hospitals that have never in their history had layoffs, which are now because of high cost of labor as well as anticipated lower reimbursement in 2026 from many of the federal and state programs so that I believe some of the burden that we've been shouldering for the last several years, we'll now be lessened.

It will not be eliminated. But I think that, along with our timely entrance into the digital health market and the programs that we are going to continue to develop will help transition us into a less dependent manual labor force. And I think you'll be hearing more about that. I do want to emphasize that in health care, AI is not a bubble. It is an existential need that the industry must and will go through in order not only to deal with the challenges facing the market today from a reimbursement standpoint and from a cost standpoint. But simply to improve the quality of care and better outcomes that technology and innovation are capable of doing. And that's why that is indeed the new [ monitor ] for RadNet that we will be talking about on tomorrow's Investor Day and which I'd like to think that RadNet will be a poster child for that kind of transition.

We have the next question from the line of John Ransom from Raymond James.

A couple on digital health. Number one, just with the iCAD acquisition and your AI capabilities that you currently just use for in-house, your own centers. Is there a future where RadNet develops maybe a virtual radiology capability and uses its enhance EBCD technology to do REITs just for scans, not just on the [indiscernible]

I believe -- yes, John. I hope you're doing well. I believe that is an inevitability. It's not something that is designed to eliminate radiologists as some people have feared or have told about, but rather to address the enormous challenges that radiologists face in trying to manage all the information that is presented to them through breast imaging in particular.

When I started practice, which was kind of in the horse and buggy days there might have been 2 or 3 or 4 images that you would look at to try to read a mammogram today, and I'm not exaggerating, it's thousands of images. And to some extent, breast cancer, like other cancers, particularly if you're going to attempt to diagnose them as early as possible like sometimes like looking for a needle in a haystack. That being said, the advances in technology are creating this kind of demand in an already challenged workforce, meaning radiologists, and the ability to look at patterns, which is really what radiology is about, what imaging is about and what machine learning is about to create these AI models is a natural evolution to being able to, at the very least, give with greater certainty and perhaps with autonomous outcomes, those that are normal from those that are not normal.

So I believe that is the future. I will tell you that it's something that we and others are working on and it will not be limited to just breast imaging and cancer detection. So the tools that we're embracing and will continue to embrace and investing will be to assist our radiologists in providing faster, better and more accurate outcomes.

Great. And my second question, to your credit, you all described the DeepHealth enterprise sale is a long-cycle sale, and I think that's proven to be the case. But I just wonder, a few months now, 9 months now into this launch of DeepHealth, where are you getting traction in the market? What -- I know it's a modular solution, but modular solutions are getting traction against the sea of what's been described as pretty good point solutions. So where are clients latching on? And what's the opportunity set? I don't want to steal your thunder about tomorrow, but I'm just curious where detail sits today and its marketplace opportunity.

Well, we're still currently in the process, John, of rolling out all of the modules inside RadNet and that's something that we'll be emphasizing in tomorrow's Investor Day is the unique capability that RadNet provides is not only a laboratory for development, but opportunity to deploy these, do what we call co-development or co-piloting of these products and get very quick feedback as to how they're impacting both the clinical and operating metrics here.

So we're getting very good adoption internally. We're trying to finalize what I'll call some of the modules that will be prime time and ready for adoption next year, which, at this point, is only about 7 weeks away.

So we're excited about that. But things that we're doing -- there's no reason to think that anything we're doing internally won't be embraced by someone, somewhere to put into their system. I also want to emphasize that I think as you have correctly pointed out, John, there's a lot of point solutions that, in fact, is, and we'll try to go into deeper -- take a deeper dive into [indiscernible] part of what the benefit of the RadNet detail operating system is a platform for all of these modules or opportunities, whether they're ones that RadNet owns and develops or whether it's one that somebody including RadNet, may want to license can operate on a single platform and have RadNet be responsible for the implementation and integration of it rather than somebody has to deal with perhaps as many as 100 different vendors to do all of these point solutions. So I would encourage everybody who is able to listen into the Investor Day, either live or subsequently to understand that what we're talking is a transformative tool that we believe is going to markedly improve and address the challenges that not only radiology, but health care itself faces.

So Howard, when you were reading [indiscernible] back in the core and buggy days had you ever think you've become a software salesman. That's pretty good.

John, I don't even sure up until fairly recently, I knew what the word software mean. That's by -- but actually you bring up a very good point, John, and thank you. The future of radiology, the future of imaging is more about software than it is hardware. And I'm not trying to diminish the importance of hardware, one that it has been instrumental in evolving imaging to where it is today. But the future is about software. We'll be talking about that tomorrow. And as opposed to what I continually hear about AI being a bubble and people being concerned about it, that's the least of our concerns inside health care and particularly, in imaging. AI is here today. It has both clinical and operating implications, which are going to be transformative, not just as I said, to the radiology community, the imaging community but to health care. And we're excited to be leading that way.

Lastly for me, not that we don't love New York and California, but -- you guys have raised [ Apollo ] money. It's largely been follow from just the core imaging M&A side. So I just wondered, is there still a bit spread for these larger portfolios? Is there anything cooking? What's going on with the kind of external growth model on the core imaging side. I'll stop there.

Thanks, John. Core imaging will always be central or core to RadNet no matter how large the deep health division gets. At the end of the day, what we do is we are a service business that has patients which next year will do over 12 million exams coming into our offices and which we plan to continue to invest in and grow robustly. It's important to realize, and again, it will be part of what we hope to communicate tomorrow on Investor Day that the software or the deep health or the digital health part of our business will help improve operating metrics, which will apply across the entire spectrum of RadNet services. And so our investment of that in anywhere we decided to take it will only help create better operating leverage for the company, allow us to go into other markets, perhaps with less capital intensity that we have in the past, but have reached that 2 or 3 years ago, we would never have even considered not only domestically but perhaps internationally.

We have the next question from the line of Andrew Mok from Barclays.

Maybe just a quick follow-up on that sales cycle question. From a personnel standpoint and following the iCAD acquisition, do you have the appropriate number of sales people in the seats to sell deep health? Or is there more hiring needed on that front?

Andrew, yes and yes. Yes, we need more, but there's other ways of acquiring that, that we'll be talking about -- the sales force for doing this is more and more being recognized by us that cross-selling and bundling of these tools is the way to best enhance the overall penetration of deep health in the market. I think as John had just pointed out, point solutions are nice to talk about, but implementing them and maintaining them with several different companies is impractical.

So what we have found and where we're particularly excited is that we gained a very substantial sales force with the iCAD acquisition. And that has, in fact, allowed us to accelerate cross-selling not only of various breast imaging suites, but starting to our breast imaging suite, but also introduce other opportunities for them to cross-sell that they're very enthusiastic about and which would have taken us quite a bit of investment in time to achieve.

So it's quite likely that as we begin to embrace other areas of AI software in imaging that same philosophy is something that we will be looking at carefully so that we can accelerate what is a truly transitional time in imaging, and that is ripe for these kind of solutions.

Great. And maybe just a follow-up on EBITDA margins in the quarter. I was a little surprised that you don't see better flow-through on very strong advanced imaging volumes. Anything to call out on the cost side or incremental margins in the quarter preventing margins from expanding more?

Well, I think on some level, we can create the capacity, but as we create that capacity and fill it, it will, in and of itself, reach certain limitations.

So I think we've had a very good run of this virtually every quarter as you compare quarter -- the quarter last year over the quarter this year, last year was actually a very good quarter for us. So I was happy to see some improvement even compared to a very good quarter last year. But I think some of the things that we talked about and that we'll go into more detail and in fact, even show some slides, we'll show that this sustainability is not just because of capacity that we're creating through the tools that we've used up to now. But how next year will be a transition that margin improvement is more likely to come through the digital health side as we begin to implement both some of the clinical and now operating tools that we're beginning to implement inside of Rad. And so margin expansion is certainly something that is the primary focus of the company.

First, to make certain that these products are capable of delivering that on our 12 million exams that we're doing annually right now and then honing these tools so they become that much more attractive for external use. Some of that external use, again, being in a built-in customer base that we have with our current and growing joint venture health system.

So I think we're hitting, if you look at, and we'll be showing this on a slide tomorrow, the actual growth of our margin over the last 4 years has been over 300 basis points. We think we can continue that, but not just by the more. By the tools that we've been using over the last 4 years and particularly in the last 18 months to 24 months, but how now the investment in artificial intelligence will continue to drive those opportunities, which by themselves have almost unlimited potential.

So we're just getting started. And I think tomorrow's Investor Day, we'll hopefully amplify kind of the handover of what has been capacity creation and margin improvement over to AI and software further improvement that will happen primarily from the operating side, which are equally exciting for us.

Andrew will there be all or do you have any follow-up questions? All right. We go on to the next question. We have the next question from the line of Yuan Zhi from B.Riley Securities.

Congrats for a good quarter. So Mark, maybe can you clarify the digital health revenue for after acquisition of cat, which contributes about $5 million a quarter in revenue. Does that mean the digital health will be flat or even decreasing year-over-year for 4Q.

No, we didn't mean to imply that. I mean we increased the revenue guidance by $5 million, iCAD this quarter contributed about $3.9 million of additional revenue. We feel comfortable with the new range for digital health that we gave, but we're really not implying that that digital health itself was going to be down. I mean with the iCAD revenue, we were up 56% this quarter over last year's third quarter. And it's -- we're expecting a strong performance in the fourth quarter of digital health. So we'll look at where we are at the end of the year, and then that will be the kind of run rate going into next year.

Yes. Got it. We probably will hear this more tomorrow, but within the 15% to 20% year-over-year volume growth on TGCT. Can you comment on the growth from oncology versus Alzheimer's -- and are you preparing for new agent launching in 2026?

Yes, yes. PET/CT is still being driven by significant growth in 2 areas: the PSMA prostate imaging as well as the the amyloid brain studies for Alzheimer's and dementia. And the 2 of those together are now about 20% of all of our PET/CT procedure volume. PSMA is currently running about 12% of our pet CT volume with the amyloid brain study is another 8%. And -- and it's -- the strong growth continues. I mean it's it's pretty remarkable. And we think both of these studies are still very much underutilized within health care. So there's more growth to be had there. And you'll see this tomorrow in our Investor Day that there are a number of newer radioactive or novel radioactive tracers that are in sort of the final stages of clinical trials that we think are going to be coming on the market in the coming years that is going to continue to make nuclear medicine and PET/CT grow substantially in the future.

And these are tracers that are are tumor-specific and will be driving more and more utilization of PET/CT in the future.

We have the next question from the line of Jim Sidoti from Sidoti & Company.

Just a follow-up on the core business. I believe you said you added 1 center in the quarter. So are you up to 46 centers at this point?

We're at 407 centers. Yes. And that includes acquisition centers in the quarter includes the new centers and includes consolidation of centers. So net-net, at $930 million in 2005, we were at 407 locations.

And where do you think you'll be by the end of 2025.

By the end of -- will be higher.

We've got some acquisitions in the pipeline that we're hoping to be in a position to close by the end of the year. We've got other de novo centers that will open between now and the end of the year. So while we don't really make those projections because it's difficult to know the timing of when acquisitions potentially close.

But yes, we'll be -- as Howard said, will be higher.

Okay. And you gave us same-center numbers for the advanced imaging procedures, but what was the overall same-center volume?

I think because 72% of our procedure mix is routine imaging that tends to -- from a law of averages, that tends to dominate the overall average. But including and remember, advanced imaging is growing much faster than routine imaging. But net-net, when you put all these 2 together, I believe it was 4.9% total same-center procedure volume, inclusive of both advanced imaging and routine imaging.

Okay. And then last one for me. You talked a little bit about the Alpha RT acquisition. Can you just give us some broad -- what you paid for it, how you paid for it? Just some magnitude on what that was.

Yes, sure. And we had an 8-K to this effect because we paid it all in stock at registered that stock. And I believe at the day of announced -- the day of completion, it was somewhere in the range of $5 million, give or take, a few bucks here and there, and it was all stock. And really what Alpha RT is it's a platform that fits in really nicely with our TechLive remote scanning technology where Alpha RT is a platform where they're providing remote technologists, meaning technologists that are sitting either in Coral Springs, Florida, where they're headquartered or elsewhere that are available to read these scans remotely, and we can use that both internally within RadNet cover our centers as well as provide this as a service to other customers who might be looking when they're buying TechLive from this or licensing TechLive a more comprehensive offering.

So we're excited about that. They also have a technology for safety within the MRI room where it's an AI-powered camera technology that can identify materials that could be brought into an MRI room that are metal, which patient safety and equipment safety implications to it. And so we're -- and they also further have a certification program and a training program for tech assistance or what we call in-suite assistance, who if you remove the tech from the location, and they're scanning remotely. We still need someone on site to brief the patient, to bring the patient out of the changing room into the exam room, position them on the table, potentially position them in MRI coils. And so Alpha RT has a platform to train this whole new employee base.

Yes. Just for a moment, I'll introduce a term that we're going to talk about tomorrow. So we sell an AI tool called TechLive, what the Alpha RT opportunity will allow us to do -- is to provide LiveTech so that we will become for ourselves and for others opportunity for staffing, not just providing AI, which in today's market could wind up being a product of our Services division and one that perhaps given the demand and compensation that people get for providing this somewhat very needed and in short supply service with greater margins than even our AI business.

This concludes our question-and-answer session. I would now like to turn the conference back to Dr. Berger for the President and CEO for any closing remarks.

Thank you very much, operator. And I want to thank everybody for attending today's earnings call, I thought it was going to be slightly shorter, but apparently not earnings call, given the Investor Day tomorrow, but I'd encourage everybody who's interested and who will get a substantially deeper dive into the metrics that we look at every day and which up until this time, we've not had an opportunity perhaps as display as vividly as we will tomorrow to sign in and listen to a -- both a clinical and an operating presentation, which is something that has not ever been done in our industry. So we look forward to seeing those of you tomorrow and otherwise, for our fourth quarter earnings call in March of next year.

Thank you. The conference has now concluded. Thank you for attending to this presentation. You may now disconnect.