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DATE

Monday, May 11, 2026 at 10:30 a.m. ET

CALL PARTICIPANTS

  • President and Chief Executive Officer — Howard G. Berger
  • Executive Vice President and Chief Financial Officer — Mark D. Stolper
  • President and Chief Executive Officer, Digital Health — Kaes Westorpe
  • Chief Operating and Technical Officer, Digital Health — Shyam Soka

TAKEAWAYS

  • Total Revenue -- $475.5 million, an increase of 22.1% year over year, setting a new first-quarter record, despite an estimated $13 million weather-related revenue impact.
  • Adjusted EBITDA -- $77.1 million, up 36.3% from the prior year, with margin rising by 115 basis points and adjusted for weather and wildfire impacts, margin improved by 52 basis points.
  • Advanced Imaging Mix -- 29.3% of procedural volume, up from 26.9% (a 235-basis-point shift), now represents over 60% of revenue although still 29% of procedures.
  • PET/CT Procedure Growth -- Aggregate growth of 35.2% and same-center growth of 14.7%, driven by prostate and brain imaging demand.
  • Digital Health Segment Revenue -- 51.5% increase year over year, supported by acquisitions such as iCAD, C-MODE, and Gleamer.
  • Digital Health ARR -- $97 million at quarter-end, a 95% uplift year over year, with $7 million in signed ARR not yet recognized and a stated target of $140 million ARR by year-end.
  • Digital Health External Revenue Proportion -- External customers generated 64% of Digital Health revenue, up from 51% previously, reflecting broader adoption.
  • Q1 Contract Wins -- $16 million in total contract value across 40 customers, spanning North America, UK, and EMEA, contributing to a healthy global pipeline of $150 million in deal opportunities.
  • AI Coverage -- AI (DeepHealth and third-party) now covers approximately 70% of imaging studies, with thyroid ultrasound AI implemented at 300 sites and X-ray AI live in California covering more than 20% of volume there.
  • M&A Activity -- Completed the acquisitions of Radiology Regional (13 sites in Southwest Florida), Northwest Radiology (6 Indiana centers), and Gleamer SAS (France, clinical X-ray AI); new joint venture with Trinity Health St. Alphonsus in Idaho, initially operating five centers and contributing $30 million in annual revenue.
  • Imaging Center Count -- Now totals 440 locations, with 155 (35.2%) in hospital/health system partnerships post-Idaho JV.
  • Cash and Liquidity -- $455.3 million in cash at quarter-end and undrawn $282 million revolver; net debt to adjusted EBITDA ratio just under 2.0.
  • DSOs -- Record low of 29.5 days sales outstanding, attributed to improved patient collection processes and effective revenue cycle management.
  • Updated 2026 Guidance -- Raised Imaging Center segment annual revenue guidance by $30 million at both low and high ends, adjusted EBITDA by $5 million, and free cash flow by $7 million at both ends; Digital Health full-year guidance reaffirmed at $135 million–$145 million total revenue and $10 million–$12 million adjusted EBITDA.
  • EBITDA Growth Drivers -- Approximately two-thirds of Imaging segment EBITDA growth attributed to same-center and de novo performance, with the remainder from recent acquisitions.
  • AI Productivity Impact -- TechLife remote scanning and C-MODE’s thyroid ultrasound solutions cut ultrasound scan times from 30 to 20 minutes; ReportingPro enables radiologist workflow efficiency, and X-ray AI launch adds productivity for radiologists in California.
  • Acquisition Integration -- Integration of new centers in Florida and Indiana is ahead of schedule and tracking to plan for 2026 revenue and EBITDA contributions.
  • Digital Health Margins -- Segment margin compressed by recent acquisitions and infrastructure investment, stated as "intentional" and identified by management as the trough, with expectations to climb through year-end assuming no additional dilutive M&A.

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RISKS

  • First-quarter revenue and adjusted EBITDA reduced by an estimated $13 million and $9 million, respectively, due to severe winter weather on the East Coast.
  • Stated by management: "Driven by the previous acquisitions and also the investments that we have made as per our plan, we see lower margins in the Q1 results, and we will climb up gradually toward the end of the year to increase margins again—assuming no major dilutive acquisitions, which are currently not planned," signaling near-term profitability challenges.

SUMMARY

Management directly stated that record-setting revenue and adjusted EBITDA prompted increases to annual guidance ranges for revenue, EBITDA, and free cash flow. Executives noted that advanced imaging shifted further into the revenue mix and highlighted ongoing gains from implementing TechLife, C-MODE thyroid ultrasound, and new X-ray AI deployments. Acquisitions of Radiology Regional, Northwest Radiology, and Gleamer SAS are integrating ahead of plan, expanding RadNet (RDNT +2.07%)'s national and technological footprint. The Digital Health division posted a 95% year-over-year jump in annual recurring revenue and broadened customer reach to 64% external revenue, with a robust sales pipeline and strong contract wins supporting full-year guidance. A new joint venture with Trinity Health St. Alphonsus demonstrates RadNet's approach for future health system partnerships, using DeepHealth technology as a strategic differentiator.

  • Executives remarked that same-center advanced imaging procedure volume grew by 8.2%, MRI volumes were up 10.1%, and PET/CT volume posted growth "north of 14%."
  • Leadership affirmed that increases to 2026 guidance were attributed to persistent business strength and not acquisition activity, as guidance previously included announced deals.
  • Digital Health leadership stated, "core organic business performing at 30% to 40% EBITDA margin," with near-term segment margin dampened by acquisitions and deliberate investment.
  • Company reported deployments of AI to "about 70% of the RadNet volumes," enabling both productivity and early-stage billing upside, especially from recent FDA-cleared technologies.
  • Revenue cycle improvements, such as upfront collections and AR system upgrades, led to record-low 29.5 DSOs and improved working capital.
  • Management stated, "we continue to manage cash wisely and debt balances prudently," with leverage expected to decrease in coming quarters driven by cash generation and free cash flow additions.

INDUSTRY GLOSSARY

  • ARR: Annual Recurring Revenue — normalized, annualized value of contracted recurring revenues from active customer contracts, excluding one-time fees.
  • DSO: Days Sales Outstanding — average number of days to collect payment after a sale; lower DSOs indicate faster collections.
  • PACS: Picture Archiving and Communication System — technology platform for storing and managing medical images.
  • RIS: Radiology Information System — system for managing workstreams, scheduling, and reporting in radiology operations.
  • T-code: Temporary reimbursement code used in U.S. medical billing for specific technical or emerging medical procedures, including AI-driven quantifications.

Full Conference Call Transcript

Mark D. Stolper: Thank you. Good morning, and thank you for joining Howard G. Berger and me today to discuss RadNet, Inc.'s first quarter 2026 financial results. On this call, we have also invited Kaes Westorpe, President and CEO of Digital Health, and Shyam Soka, 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 would 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, Inc.'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, Inc.'s actual results to differ materially from the statements contained herein.

These risks and uncertainties include those set forth in RadNet, Inc.'s reports filed with the SEC from time to time, including RadNet, Inc.'s Annual Report on Form 10-K for the year ended 12/31/2025. 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, Inc. 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 would like to turn the call over to Howard G. Berger.

Howard G. Berger: Thank you, Mark. Good morning, everyone, and thank you for joining us today. On today's call, Mark, Kaes, Shyam, 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 would 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 us begin. I am 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 of 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 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 year'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% in 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 investments RadNet, Inc. has made in advanced imaging equipment that is driving faster throughput and increased capacity. Additionally, the implementation of TechLive DeepHealth's remote scanning solution for technologists has significantly benefited RadNet, Inc.'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 plaques 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 of March, we exceeded internal projections for the first quarter embedded in 2026 full-year guidance. Additionally, the strong March performance has continued throughout April and into 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, two significant acquisitions were completed in January.

First, Radiology Regional was purchased, the owner of 13 multi-modality imaging centers in Southwest Florida. For five 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 six 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 two 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, Inc. is not a buy-and-hold investor and operator. Instead, we target markets where there are further opportunities for growth and expansion to bring the full capabilities of RadNet, Inc. solutions to bear. This includes RadNet, Inc.'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 Gleamer SAS in France, a fast-growing developer of a broad portfolio of FDA-cleared and CE-marked solutions for musculoskeletal, breast, lung, and neurologic applications. In particular, Gleamer is best known for its leadership in X-ray, where the breadth and scale of its cloud-first solutions are unparalleled.

The integration of Gleamer into DeepHealth has begun, and we have already implemented Gleamer's clinical X-ray AI in a number of Southern California locations. Kaes will discuss the Gleamer acquisition in more detail during his prepared remarks. The hospital and health system joint venture business continues to grow. On April 30, we announced the commencement of a new partnership with Trinity Health St. Alphonsus Health System in Boise, Idaho. The venture, currently yielding about $30 million in annual revenues, will initially operate five centers that include two outpatient facilities at St. Alphonsus Medical Centers. We purchased a 51% interest in the existing partnership entity for approximately $17 million.

Including this newly commenced Trinity joint venture, 155 of RadNet, Inc.'s 440 centers, or approximately 35.2%, are held within health system partnerships. Other opportunities to establish new health system partnerships, including ventures that could expand RadNet, Inc.'s geographical presence, are in the current pipeline. Health systems continue to seek long-term strategies for outpatient and inpatient imaging, and many have recognized that cost-effective freestanding centers will continue to capture market share from payers and patients seeking lower cost and high quality. RadNet, Inc. continues to be an operating partner of choice for those that recognize they cannot accomplish their 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. While a substantial amount of cash was spent in the first quarter on the acquisitions of Radiology Regional, Northwest Radiology, and Gleamer, causing RadNet, Inc.'s leverage to increase, we continue to manage cash wisely and debt balances prudently, while adding strong free cash flow and enabling deleveraging in the coming quarters. At this time, I would like to turn the call back over to Mark to discuss some of the highlights of our first quarter 2026 performance.

Mark D. Stolper: Thank you, Howard. I am 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 in earnings in unconsolidated operations and subtracts allocations of earnings to noncontrolling interest in subsidiaries, and is adjusted for noncash or extraordinary and one-time 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 metric representing the predictable, normalized, annualized value of contracted recurring revenue generated from active customer contracts. ARR includes subscription fees, recurring support fees, and contracted usage charges and excludes one-time nonrecurring fees such as implementation, hardware sales, professional fees, consulting, and one-off training. With that said, I would now like to review our first quarter results. While I will not recap all the financial information contained in last night's earnings report, here are some of the highlights. We had 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 a 51.5% increase in Digital Health revenue, partially driven by the acquisitions of iCAD, C-MODE, 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 that 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 am going to let Kaes and Shyam go over that in much more detail shortly. But in summary, the Digital Health segment is gaining momentum. Kaes and Shyam, 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 DeepHealth solutions across the RadNet, Inc. 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 a $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, Inc. 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, Inc.'s ownership percentage, which is 49% of New Jersey Imaging Network's net debt of $23 million, for which RadNet, Inc. is neither a borrower nor 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 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 ends 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's 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's proposal and its impact, if any, upon RadNet, Inc.'s future results. I would now like to turn the call back over to Howard G. Berger.

Howard G. Berger: Thank you, Mark. At this time, we are going to depart from our normal cadence in this reporting, which traditionally in the third segment I often comment on future trends in the industry. However, at this time, I think it is important for RadNet, Inc. 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 that technological advances provide us, and rather than this be a point solution, I am going to turn the conversation over to Kaes and Shyam who will do a deeper dive into the Digital Health performance and provide a status update on many of our AI initiatives. Kaes, please go ahead.

Kaes Westorpe: Thank you, Doctor Berger, and good morning, everyone. As we look back on 2026, it is clear that DeepHealth's momentum is not just continuing, it is accelerating. Our strategic investments are positioning us to transform radiology work. We are meeting this moment with a sense of urgency because the industry pressures we have discussed previously—radiologist burnout, massive imaging backlogs, and staffing shortages—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 is not just about convenience. It is the optimal, scalable way to ensure high-quality, consistent care across the globe. To achieve this, we have moved beyond selling individual AI and informatics tools and point solutions to delivering an enterprise solution that brings together clinical AI, image management, and radiologist 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 four key deliverables. Firstly, cloud-native AI analysis. Every study is automatically processed by our portfolio of native and third-party AI through our AI Orchestrator, the AI Studio, which integrates both proprietary 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 are connecting the entire imaging ecosystem. Our platform routes cases to the most qualified available specialists, regardless of where the images are acquired or where the radiologist sits. Thirdly, AI-curated draft preliminary reports.

Through our ReportingPro solution, we provide radiologists with a pre-populated draft preliminary report. It shifts the radiologist's role from generator to editor, allowing him or her to attend, correct, and accept findings far more efficiently. And fourthly, remote operations through our TechLife solution. We are virtualizing the technologist role, allowing expert techs to support multiple scans remotely, ensuring quality and consistency. By unifying image management, clinical AI, and reporting into one seamless experience, we are delivering a new standard of care that addresses the core challenges of the imaging enterprise. We are actively prototyping and validating this comprehensive workflow and clinical vision at RadNet, Inc., and our internal deployments are tracking in line with plan.

We are seeing a significant productivity impact at RadNet, Inc. as highlighted by some of the following examples. With TechLife, by implementing remote and assisted scanning, we have optimized technologist utilization, ensured that expert support is available for every complex scan, and maximized system capacity. This has been a key driver in maintaining high throughput despite the industry-wide technologist shortage, most notably by reducing exam room closure hours that Mark also mentioned. Clinical AI. DeepHealth and third-party AI solutions now cover 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 C-MODE acquisition into RadNet, Inc. operations across nearly 300 sites. The results are tangible: we have successfully reduced ultrasound slot times from 30 minutes down to 20 across the board. This 33% increase in efficiency allows us to serve 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 with ReportingPro, 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 us 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 in 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 the investments we have made in our commercial, deployment, and marketing capabilities. For instance, we currently have $7 million in signed ARR that is 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, securing $16 million in total contract value this quarter across 40 customers, reflecting a higher closure of deals with an even split across different global regions. This includes, for instance, a $1.5 million total contract value Diagnostic Suite deal in North America, and major lung AI contracts across the UK 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 have begun cross-selling its portfolio into the pre-existing DeepHealth installed base and vice versa. Furthermore, iCAD is seeing 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 one-time licenses to a repeatable, high-margin ARR model.

C-MODE has been deployed with deep impact at RadNet, Inc. across 300 sites, and we are now starting to see good commercial momentum evidenced by a recent thyroid ultrasound AI external win with a total contract value of close to $400,000. And C-MAR, the image exchange platform powering the lung cancer screening program in the UK, 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 expect to receive an additional 12 FDA clearances and 15 CE marks.

The velocity of our regulatory approvals has grown by over 70% year over year. Accordingly, we will continue to fuel the most comprehensive AI and 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 Diagnostic Suite, which incorporates critical enterprise capabilities for the hospital and 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.

Compared with last year's first quarter, we delivered 52% total revenue growth, and our external revenue—the revenue generated outside of RadNet, Inc.—reached 64%, up from 51%, from an installed base close to 3,000 global customers. This 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's full-year guidance: total revenue at $135 million to $145 million and 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 question-and-answer portion of the call.

Operator: Thank you. We will now open the call for questions. To ask a question, you may press star then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Brian Gil Tanquilut from Jefferies. Please go ahead.

Brian Gil Tanquilut: Hey. Good morning. Congrats on a solid quarter. Maybe, Mark, as I think first about the moving pieces in the clinic business—obviously, strength in volume in the quarter—just curious, if you think of this on a normalized basis, excluding weather from both sides, how should we be thinking about that volume growth? And maybe also for Doctor 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 have announced and the JVs, just curious how we should be thinking about the ramp and the opportunity for upside from those acquisitions and partnerships?

Mark D. Stolper: Sure. Good morning, Brian. Yes, 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 are seeing there. We continue to see and experience a business shift in favor of advanced imaging, and we are regularly now seeing MRI volume same-center being in the high single digits. This quarter, it was 10.1%. CT, we are regularly seeing in the mid-single digits, and PET/CT, which continues to be driven by the brain amyloid studies and the prostate PSMA tests, we are seeing growth north of 14%.

And as we have 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 is a lot of pull-through profitability. And yes, there are a lot of moving parts on the cost side of our business, but the continued growth of advanced imaging has certainly driven the better-than-anticipated performance that we had in the first quarter and the beats that we have regularly had in past quarters. We do not see anything to give us concern that this is going to change. Part of this is what is 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 are doing on the Digital Health side, which Kaes 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. We are feeling very positive about the trends in the business. As we mentioned, we had a very strong March.

That performance continued into and now through early May, and so we are feeling good about the business and how it has rebounded since the severe weather conditions that we faced in the Northeast in January and February.

Howard G. Berger: Brian, do you have a follow-up?

Brian Gil Tanquilut: Yeah. Maybe my follow-up for Kaes. As I think about the wins that you have announced—I mean, Trinity 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 post-2026, just thinking through the opportunities to drive revenue growth again, both on the clinical AI side and then also on the OS side. Thanks.

Kaes Westorpe: Thank you, Brian. Look, I think the most leading indicator is how the commercial funnel is developing. I mentioned a funnel that has developed now toward and above the $150 million total contract value mark. This sits across our portfolio—what we call Diagnostic Suite as well as Enterprise Operations. Diagnostic Suite is more the PACS business; Enterprise Operations is more the RIS business; and then clinical AI. We are seeing that momentum building in the funnel, which gives us confidence that, for this year, we will achieve a $140 million ARR run rate, and also that it will continue into 2027 and beyond with the growth that we set out for ourselves during the Investor Day, which is above 30%.

I would say I am cautiously optimistic, based on the confidence that we have also acquired, for instance, for Gleamer, that commercial momentum of 30% is on the lower side. Now, to revenue—because I think you specifically asked about revenue—obviously, the difference between ARR and revenue is timing of deployment of these installs. One of the deliberate investments that we have made over the last months is in deployment capability—installation and service capability—because it is not just about winning these deals, but also making sure that we can swiftly implement them.

That is where the focus is right now as we are successfully building that commercial pipeline, and now I 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 Gil Tanquilut: Awesome. Thank you, guys. Congrats again.

Mark D. Stolper: Operator, we are ready for the second question.

Operator: Thank you. Our next question comes from the line of Andrew Mok with Barclays. Please go ahead.

Andrew Mok: 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 is weighing on those results? Thanks.

Mark D. Stolper: Sure. I will start with that, Andrew. Thanks for the question. One quarter a trend does not make, and we have always cautioned investors about that. But we are definitely seeing disproportionate increases in advanced imaging in our centers. We have focused in the last few years on upgrading equipment and capabilities to create more capacity around advanced imaging because, while routine imaging still represents close to 71% of all of our procedure volume, the other 29%—which is the advanced imaging—drives over 60% of our revenue. So clearly, the focus is on driving advanced imaging. We are seeing more and more clinical indications each year as the equipment gets better, as the technology gets better for advanced imaging.

There is certainly a shift in the overall industry in favor of advanced imaging, and that is where our focus has been. 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 in the way population grows—likely in the low single digits—which is fine.

Howard G. Berger: Andrew, let me add a bit more color. 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 at all levels of health care that these tools are now capable of earlier and earlier diagnosis, which ultimately leads to better outcomes. There have not been any major changes in X-ray and some of the other routine imaging as there have been in MRI, CT, and PET/CT scanning.

It is a credit to management on both the East and West Coasts 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. We are following the trends and willing to deploy the resources—both human and financial capital—to take advantage of this, and to do it at an extraordinarily high level of quality for which I and the whole executive management team are enormously proud.

What I think is the seminal event today that we are outlining is that all of this can be further enhanced by the new tools that we have invested in and which I think represent 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.

You will hear more about this in upcoming quarters as we not only fully roll out the AI capabilities internally but also meet the opportunities that are presented to us with our current and future hospital partners.

Mark D. Stolper: And, Andrew, I would add one other thing: some of the Digital Health technologies that we are deploying now will actually serve to drive some more growth in routine imaging. For example, we have talked in the past about the C-MODE thyroid technology that, as Kaes mentioned, is lowering scanning times by roughly 50% for thyroid, which is roughly about 240,000 of our ultrasound exams. When you look at the capacity that is creating, you are seeing some growth in ultrasound; on a same-center basis, ultrasound grew about 2.1%.

As we get FDA approval—which we are expecting this year—on the breast ultrasound, which is another over 800,000 of our roughly 2.7 to 2.8 million ultrasound exams, that is going to further speed up the center-level workflow to allow for more capacity for doing ultrasound. There are items, and of course the Gleamer technology on X-ray will allow 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 are implementing that will also drive some routine imaging growth.

Andrew Mok: 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? Thanks.

Mark D. Stolper: Yes. With respect to the acquisitions 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 those on an annual basis, they are about $117 million to $118 million of revenue, so if you divide that by four, you are talking about $30 million or so of revenue in the first quarter. From an EBITDA perspective, it added about a couple million dollars—slightly less than that for the first quarter with all the seasonality. We are just starting the integration of those. They are going real well.

They are both ahead of schedule, and we believe that both of those assets are on plan, if not ahead of plan, to reach their projected rate for 2026. We feel very good about the integrations of those and the other deals that we did in the second half of last year, mostly in the New York Metropolitan Area.

Andrew Mok: And if I could sneak in one more on cash flow. You called out the record low DSOs, and it looks like there is some unseasonably strong working capital in the quarter. Are these initiatives or RCM capabilities linked to DeepHealth, or anything else you can provide color on driving this strength in working capital? Thanks.

Mark D. Stolper: It is really just continuing to improve 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 deductible resets, where we bill the patients’ insurance companies in the first quarter and then have to collect a patient portion responsibility. But this year, we continue to see improvements. We are getting better and better at collecting the patient portion responsibility up front. We have 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.

The investments we have made in systems to identify up front 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 identify whether the patient has a copayment or where they are in their deductibles has allowed us to aggressively go after that money at the time of service, and we are even telling patients what their likely responsibility would be at the time of scheduling. That has had a marked impact in our ability to collect this money quickly. I think our DSOs reflect that and are probably one of the best in the industry.

Andrew Mok: Great. Thank you.

Operator: Thank you. Next question comes from John Wilson Ransom with Raymond James. Please go ahead.

John Wilson Ransom: Hey. Good morning. Mark, if we looked at the Imaging segment 2026 over 2025, what is a good number for the EBITDA contribution from M&A versus not M&A?

Mark D. Stolper: Most of it is from same-center performance, as I mentioned on the earlier question. About a couple of million dollars of EBITDA came from the recent acquisitions in the first quarter.

John Wilson Ransom: I am talking about the year—full year over full year. If we take 2026 out of 2025 full year, what does that look like?

Mark D. Stolper: The majority of our EBITDA growth—the vast majority, about two-thirds of it—is coming from same-center performance as well as de novo performance, which I also include as organic growth. And about a third, slightly less than a third, is coming from the contribution of acquisitions.

John Wilson Ransom: 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 have rolled out in Digital—TechLife, SmartMammo—what one or two modalities are driving the most EBITDA today? And then if we looked at a couple of years, what are some emerging capabilities you have that are not quite monetizing just yet? That could be either EBITDA in your Imaging segment or in your Digital Health segment. And 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?

Kaes Westorpe: Mark, do you want me to take it?

Mark D. Stolper: Yes, please.

Kaes Westorpe: Great question. As per the Investor Day, we have a horizon toward 2028, rolling out the various solutions that we have current line of sight of in the Digital Health segment, and deploying those at RadNet, Inc. Across clinical AI—which is really a modality-by-modality focus—we started in mammography, expanded to thyroid ultrasound, we are going to deliver breast ultrasound, and we are now deploying X-ray. 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—roughly 60% with DeepHealth solutions and the remainder third-party AI—but that does not mean it is fully penetrated because we have not captured the full productivity nor the full T-code reimbursements from the solutions. Think of it as, if you want to use a number, about a third implemented on the clinical AI roadmap, with more to come. The second key area is what we call the Diagnostic Suite, where we have deployed certain capabilities such as the viewer, but we are now also rolling out, as mentioned in my prepared presentation, the ReportingPro solution, which gives further benefits to reporting productivity and so on.

We are a little bit less advanced in implementation there today and will peak toward end of the year into next year. Then on the Operations Suite, which is really RIS enhancements, we have 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 Investor Day. Think of it as a three-year roadmap.

What is new today, which we presented, is really the header where we set “transforming radiology workflow,” which means the four types of solutions that I just talked about are combined into one: 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 is a new idea, and with the acquisition of Gleamer, we are deploying that in an accelerated way for X-ray. That shows that our innovation funnel will continue to build, and we will continue to invest in that.

We are well on track for the margin impact that we set out during Investor Day, and we are also seeing new innovation opportunities to come. We are making progress; we definitely will not have reached the end of the productivity drive this year nor next year—we will continue to fuel the funnel.

John Wilson Ransom: Alright. And lastly, there was an interesting article recently about a reporter who went through the whole breast cancer AI. The point was that AI for mammo is really good at the negative reads—they are really tight—but it tends to overread the positive, and that is where you need human intervention to override when the AI gets it wrong. What are you seeing in terms of your false positives, and is that trending in any particular direction, or is false positives just kind of the way this works—that it throws things out there and then the radiologist has to play catcher to make sure the machine did not hallucinate, if you will?

Kaes Westorpe: I would say both are of absolute focus also in terms of improving and learning the model. Shyam, can you elaborate a little bit more on how that is approached in practical life?

Shyam Soka: Absolutely, Kaes. First of all, breast cancer detection—or anything we are doing with cancer detection—is not a generative model. It is a task-specific model. So there is no concept of hallucination there. It is trained on data and adapted when we see those false positives in the RadNet, Inc. population. What we have done very well, also because of the closed loop that we have with RadNet, Inc., is we are able to adjust that through results from radiologists, including incorporating prior studies, where we are reducing the false positive rates on a fairly regular basis.

Remember, we have essentially 1.6 to 2.0 million mammos that we are processing every year, and the false positives from those we are also processing every year, and we are learning and improving to a point where the AI system is just as good as the radiologist, if not better. We build these as candidates for eventually driving also autonomous-type detection as we go forward.

John Wilson Ransom: Thank you very much.

Kaes Westorpe: Thank you.

Operator: Next question comes from Grayson McAlister with Truist. Please go ahead.

Grayson McAlister: Hey, guys. This is Grayson McAlister on for Dave. I wanted to follow up on the JV with St. Alphonsus. You talked about it as being a blueprint for future health system partnerships. Could you talk a little bit about what aspects this JV includes that maybe previous ones did not? And then specifically around DeepHealth, how does this improve the offering to systems out there? What are you seeing in the pipeline, specifically around JVs?

Howard G. Berger: 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, within about 120 days, when we fully implement the DeepHealth operating system, the radiologists will get the benefit of doing both their reading and reviewing studies—outpatient and inpatient—on a single platform. We will be able to use a variety of AI tools to help better manage their reading and interpretation, and we will begin using the ReportingPro tool that Kaes described.

That will allow more automation in the reporting workflow. 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 system’s 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 any site by the most qualified and most available radiologists, but also for getting those results faster and on a timely basis to both the physicians and the patients that require that information.

The transition that we are 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 are 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.

Grayson McAlister: Got it. And then just following up on Gleamer. I believe around the announcement, you talked about some training of the salesforce that had to happen before you could really start to see the cross-sell opportunity take off. So just wanted to check on what inning you think you are in now as far as that cross-sell opportunity? And where would you expect to be by the end of the year?

Kaes Westorpe: We are 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. On an ongoing basis, we are going to go deeper into roadmap training, competitive pitching, integrated portfolio offering, and so on. It is highly iterative because we do not want to wait for something. Quite frankly, the professionalism of the Gleamer commercial team—and obviously of our legacy team—is high, and they seek these opportunities. They are eager to bring these new cross-sell opportunities in. It has momentum already.

Kaes Westorpe: Operator, if you allow me, I just realized that in the previous question there were two questions about the impact on margins, and the second question was related to whether, for the Digital Health segment, this was a trough year in terms of margin development. I just want to confirm, in line with what we said at Investor Day, that is indeed the case. Driven by the previous acquisitions and also the investments that we have made as per our plan, we see lower margins in the Q1 results, and we will climb up gradually toward the end of the year to increase margins again—assuming no major dilutive acquisitions, which are currently not planned.

Operator: Thank you. Next question comes from Matthew Gillmor from KeyBanc. Please go ahead.

Matthew Gillmor: Hey, good morning and thanks for the question. I wanted to ask about EBITDA seasonality. Mark, in prior calls, you have 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.

Mark D. Stolper: EBITDA is seasonably low in the first quarter. It is partially due to trends within health care delivery in general, meaning that patients’ deductibles reset starting in January, and there tends to be lower utilization in the early part of the year within health care as patients are shouldering more of the burden of those expenses themselves. As the year goes by, we see growing utilization. Also, with winter weather conditions and holidays in the first quarter, we often see some lower volume. And then, as you correctly suggested, certain payroll taxes max out for highly compensated individuals, including our radiologists, and our professional fees in the first quarter are lower throughout the rest of the year.

The way we pay and expense certain employee bonuses also 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 is built into our guidance. The exact numbers of those payroll expenses and those bonuses I do not have at my fingertips right now, but if you go back to 2025, 2024, and 2023, you will see a similar impact in the first quarter each year.

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

Kaes Westorpe: Shyam, do you want to talk about that?

Shyam Soka: Exactly. As you saw, in ultrasound, MR, and CT, there are generic P-codes in each one of those areas for quantification and measurements related to various diseases in those modalities. In ultrasound, we see reimbursement now already from thyroid. As we get approval for breast ultrasound—which is actually three times the volume of thyroid ultrasound—we can leverage the same reimbursement code. In CT, there are applications such as lung detection, effects characterization, as well as quantification because we measure the lung nodules—again, those can be reimbursed under the CT characterization code.

In MR, there are similar codes, and we plan to use those for our neuro product, which we received FDA approval for earlier this year, which has those quantification and characterization elements. Just remember, in neuro MR there is more than a million studies, so there is significant upside on the T-code reimbursement side, which we have not fully tapped because, number one, you have to deploy the solution and implement it; then we have to start billing; and then, individually, we have conversations with different payers to cover it. Eventually, you get increasing coverage.

An example is thyroid: early on, a quarter of the insurers were covering the T-code; now we are in the 60% to 70% range covering it at the full rate. That is part of the cascade as we deploy these solutions and then plan out the reimbursement scenarios. As we show that, there is a tailwind commercially because we have shown that these products can be reimbursed. That provides a natural tailwind as we take these solutions to market.

Operator: Thank you. Next question comes from Lawrence Scott Solow from CSG Securities. Please go ahead.

Lawrence Scott Solow: Great. Thanks. Good morning, guys, and thanks for all the good information, Kaes, in the prepared remarks. A follow-up on the trajectory of profitability in Digital Health. I think that has been a concern in the market and probably exacerbated by pressure on the AI stocks and whatnot. I know you shared with us at the Analyst Day margin targets—20% EBITDA margin. I believe we took a little bit of a step back intentionally with the Gleamer acquisition and probably some enhanced investment. Can you give us an update on that—when do you expect to get back up toward that 20%? And longer term, is this still a 30–40% kind of margin business?

Kaes Westorpe: Great question. Let me dive a little bit more deeply into what we are seeing today. When we dissect our business into the core that is organically growing, the acquisitions that we did last year, and then the investments that we do, we see a healthy picture. The core that is organically growing today is already operating at 30% to 40% EBITDA margins—more toward 40%. The acquisitions, as is public information you have seen in previous announcements, are typically loss-making, and so that has a short-term dilutive effect. You should see that we have been able—slightly ahead of plan—to get iCAD already profitable, so breakeven as we speak today. We are on the same trajectory also for Gleamer.

Gleamer might take a little bit longer, but not because of quality of business—purely because of the investments that we are doing in the X-ray space. Thirdly, in line with what we said at Investor Day, we are strengthening the business and investing in the core business on the condition that we have line of sight of growth. I walked you through the ARR growth that we foresee for the year and the momentum that we are building in the commercial funnel. Accordingly, we have prudently invested into a variety of capabilities—service delivery, implementation capability, and 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 and how we want to close the year as per our guidance. In a way, nothing has changed from what we set out on Investor Day. We are actually seeing the core organic business performing at 30% to 40% EBITDA margin, but we are strategically investing both organically and inorganically, and that on the short term has a dilutive impact. You might ask, therefore, whether the 20% toward 2028 has upside. Possibly so. But I also want to recognize that we continue to find new opportunities to invest, also in terms of our R&D platform, and we are really building a long-term sustainable business.

That has always been the reason why we saw the opportunity to invest and therefore, over the horizon of 2026–2027, somewhat lower margins than you would typically expect of peers.

Lawrence Scott Solow: I appreciate all that. And a little bit harder to measure, but on the internal benefits—it sounds like lots of good things are happening, but it feels like we are probably still in the early innings on the internal benefits for you guys. Is that fair to say?

Kaes Westorpe: I would say a little bit further than just the first inning. I used the term earlier that we are at about one-third based on what we know today. We have deployed quite a bit. We see tangible impact from the solutions that we have deployed—I talked about TechLife and thyroid ultrasound—and those have meaningful gross impact to the bottom line of RadNet, Inc., offsetting some of the other headwinds that exist in the business, such as inflation on salaries. There is a lot more to come in the coming 18 months. We have also seen that we continuously generate new ideas and new innovations that will have further impact. Are we one-third there or a quarter there?

I do not think we are halfway there, but we have significant opportunities still to capture.

Operator: Thank you. Our next question comes from Yuan Zhi with B. Riley. Please go ahead.

Yuan Zhi: Thank you for taking our questions. Maybe ask about the 70% question differently. You mentioned 70% of RadNet, Inc. readings or studies could be running through clinical AI by year-end 2026. Where are we now, and how do you see that impacting your labor cost and any other impact on your operation?

Kaes Westorpe: To clarify, today about 70% of the RadNet, Inc. volumes use a form of AI—roughly 60% is DeepHealth AI and then 10% is third-party AI that is deployed at RadNet, Inc. As Shyam also mentioned, we are seeing two key value levers here. One is productivity—more effective interpretation. The other is the onset of possible T-codes that you can bill for. The productivity we are capturing today; the T-codes initially are set out more in the ultrasound domain for thyroid, but Shyam also mentioned ultrasound breast in the future, and then CT and MR to come. Whilst the penetration is high, the productivity gains are being captured, and the billing gains are in early stages of being captured.

Shyam, anything to add?

Shyam Soka: Yes. When we say the target is to be applying 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 are now currently either in early phases of deployment or in mid stages of deployment. For example, we just started the X-ray deployment—that is about 20% of our volume. For Neuro MR, I talked about a million studies out of our nearly 12 million studies that we do. We started these projects but they are not fully deployed, and we anticipate that they will be fully deployed by the end of the year.

The primary savings are both the productivity of radiologists—where we can free up their capacity to do more studies—and, second, several of these have their own reimbursement elements as well.

Yuan Zhi: 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?

Mark D. Stolper: 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—Southwest Florida—operation. When we increased the guidance levels—the low end and the high end—by $30 million last night, that does not have to do with acquisitions. That is all about the fact that we are seeing strength in our business to the point where we think that we are going to overachieve our original budget and projections that we have internally that we set the guidance around. We are seeing strong same-center performance.

The Digital Health initiatives are bringing more capacity to our centers, and we feel very confident that we are going to overachieve our original guidance levels.

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

Mark D. Stolper: We do work with other companies that take risk for patient care in oncology and other specialties. Today, we do not subcapitate with any of those groups that 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. There is an opportunity; there are some companies that I know you are aware of and cover—one or two companies in particular specialties that just take capitation risk for that specialty. 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 is possible depending upon price. 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 market-based fee-for-service rates, which is why we have 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 was falling behind what we would otherwise be able to get on a fee-for-service basis, we flipped them to fee-for-service relationships, and that is increasing our profitability.

So I think the opportunity is there, but it ultimately depends upon what kind of rates we get.

Operator: Thank you. Our next question comes from James Philip Sidoti from Sidoti & Co. Please go ahead.

James Philip Sidoti: Hi. Good morning, and thanks for taking all the questions. I know it is a long call. If you include the new centers in Idaho plus anything you have opened up so far this year, what is the total number of imaging centers you have?

Mark D. Stolper: If you include the five that we bought in Idaho, we have 440 locations.

James Philip Sidoti: Okay. And you said earlier in the call that advanced imaging was now about 29% of procedures and 60% of revenue. Is there a target for advanced imaging over the next, say, five years? Do you think that could approach 40% of procedures?

Mark D. Stolper: I do not think we really know. Forty percent seems a little high because we have always prided ourselves on being a multi-modality provider, and we will always be a multi-modality provider. We think it is important from a marketing perspective to be able to market to our referring physician communities as a one-stop shop for all of their imaging needs. Often, we will have patients sent to us for routine studies—X-rays and ultrasounds—and based upon the results of those studies, they will be sent back to us for the more advanced imaging.

Tying into capitation in California, where we are taking risk on about 1.5 million lives, we need to be a multi-modality provider because 70+% of what those patient populations need with respect to their imaging procedures are routine studies. I think RadNet, Inc.'s modality mix will always be somewhat reflective of the overall outpatient imaging marketplace with respect to modality mix. 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.

I think that trend is going to continue. We are confident and optimistic about advanced imaging continuing to play a bigger role in the health care delivery system and in our business. We just do not know where that tops out.

James Philip Sidoti: Alright. So you think more reasonable maybe in the low thirties—you think that could level off?

Mark D. Stolper: We do not really know, Jim, but we are approaching 30% now, and so I think it is likely that we will go north of 30%, but I do not know where we will max out.

James Philip Sidoti: Got it. Alright. Thank you.

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

Howard G. Berger: 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, Inc. 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.

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