RadNet Inc.
05/11/2026 | Press release | Distributed by Public on 05/11/2026 14:41
Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q (this "report") and with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K, as amended, for the fiscal year ended December 31, 2025 (the "Annual Report") filed with the U.S. Securities and Exchange Commission (the "SEC").
As used in this Quarterly Report on Form 10-Q, the terms "RadNet," "we," "us," and "our" refer to RadNet, Inc., a Delaware corporation, and where appropriate, our consolidated subsidiaries.
Forward-Looking Statements
This report contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements reflect current views about future events and are based on our currently available financial, economic and competitive data and on current business plans. Actual events or results may differ materially depending on risks and uncertainties that may affect our operations, markets, services, prices and other factors.
In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expect," "intend," "plan," "anticipate," "believe," "estimate," "predict," "potential," "continue," "assumption" or the negative of these terms or other comparable terminology. Forward-looking statements in this report include, among others, statements we make regarding:
•expectations concerning domestic and global economic conditions, rates of inflation, or changes in interest rates;
•anticipated trends in our revenues, operating expenses or capital expenditures, and our financial guidance;
•expected timing and potential impact of regulatory changes affecting our business;
•expected future market acceptance for our products or services, and our competitive strengths in the markets we serve;
•our ability to successfully acquire and integrate new businesses, and achieve expected benefits, synergies or operating results from those acquisitions; and
•economics and cost savings anticipated to be derived from our investments in artificial intelligence and machine learning products and solutions.
Forward-looking statements are neither historical facts nor assurances of future performance. Because forward-looking statements relate to the future, they are inherently subject to known and unknown risks, uncertainties and other factors that are difficult to predict and out of our control. Our actual results, level of activity, performance or achievements may be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Important factors that could cause our actual results to differ materially from those indicated or implied in our forward-looking statements include the factors included in "Risk Factors" in our Annual Report as supplemented by the information in Part II- Item 1A below. You should consider the inherent limitations on, and risks associated with, forward-looking statements and not unduly rely on the accuracy of predictions contained in such forward-looking statements.
Any forward-looking statement in this report is based on information currently available to us and speaks only as of the date of this report. We do not undertake any responsibility to release publicly any revisions to these forward-looking statements to take into account events or circumstances that occur after the date of this report or any unanticipated events which may cause actual results to differ from those expressed or implied by the forward-looking statements contained in this report, except as required by law.
Overview
Our operations comprise two segments for financial reporting purposes for this reporting period, Imaging Centers and Digital Health.
Within our Imaging Centers segment, we are a national provider of diagnostic imaging services in the United States. As of March 31, 2026, we operated directly or indirectly through joint ventures with hospitals, 435 centers located in Arizona, California, Delaware, Florida, Maryland, New Jersey, New York and Texas. Our centers provide physicians with imaging capabilities to facilitate the diagnosis and treatment of diseases and disorders and may reduce unnecessary invasive procedures, often reducing the cost and amount of care for patients. Internationally, our subsidiary The HLH Imaging Group Limited, provides teleradiology services for remote interpretation of images on behalf of providers within the framework of the United Kingdom's National Health Service.
We established a Digital Health business segment during our 2024 fiscal year, under the umbrella brand "DeepHealth". The Digital Health segment combines our former Artificial Intelligence ("AI") business with our workflow solutions, including those previously marketed under the eRAD brand. This includes providing AI-powered health informatics with the aim of empowering breakthroughs in care through imaging. It leverages advanced AI for operational efficiency and improved clinical outcomes in breast, chest, musculoskeletal, neuro, prostate and thyroid health. At the heart of the portfolio is a cloud-native operating system - DeepHealth OS - that unifies data across the clinical and operational workflow. By integrating AI, workflow orchestration, and data management into a single operating system, the Digital Health segment enables health systems to drive radiology workflow efficiency & productivity, help mitigate the impacts of staff shortages, and reduce diagnostic variability. The Digital Health segment provides these solutions to RadNet and to over 2,890 customers in the US and outside of the US.
The Digital Health segment's solutions have been clinically validated and are already delivering measurable impact at scale. The company's technology is deployed across 2,890+ customers worldwide, including thousands of screening sites in the United States and Europe, and is the most widely used solution for lung cancer screening in the United Kingdom. Clinical outcomes demonstrate strong performance, including a 21% increase in cancer detection rates in breast screening. Our end-to-end solutions are widely adopted in real-world settings, including RadNet and external customers, supporting more than 24 million scans worldwide.
As part of our continued strategic expansion in Digital Health, we recently completed four acquisitions: iCAD, Inc., a provider of AI-powered breast health solutions, See-Mode Technologies, a medical technology company focused on enhancing ultrasound-based diagnostics through artificial intelligence, CIMAR UK, a cloud-native provider of image exchange solutions, and Gleamer SAS, a Radiology AI company with a portfolio of AI solutions across X-Ray, MRI, CT, and Mammography. iCAD Inc. and SeeMode technologies are already fully integrated into the Digital Health segment, with SeeMode's technology deployed in over 300 RadNet Imaging Services sites for improving efficiencies in Thyroid Ultrasounds across the network. CIMAR UK and Gleamer are currently being integrated into the business, with significant early momentum, including launching go-live of Gleamer X-Ray products in RadNet Services in California in April 2026, just a month post-acquisition.
Our Digital Health segment currently provides this comprehensive suite of solutions to RadNet and to over 2,890 customers in the United States, Europe and other countries around the world.
For further financial information about these segments, see Note 5, Segment Reporting, in the notes accompanying our financial statements included in this report.
Recent Developments
The following table presents the total number of imaging centers in operation, including both consolidated and non-consolidated centers, and our consolidated revenues for the three months ended March 31, 2026 and 2025:
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Centers in operation | 435 | 401 | |||||||||
| Net consolidated revenues (millions) | $ | 576 | $ | 471 | |||||||
Our imaging services include MRI, CT, PET, nuclear medicine, mammography, ultrasound, X-ray, fluoroscopy and other related procedures. The vast majority of our centers offer multi-modality imaging services, a key point of differentiation from our competitors. The multi-modality offering provides a "one-stop" solution for our customers and referral sources. It also diversifies our revenue base, and reduces our exposure to changes in reimbursement rates for certain imaging modalities.
Our revenue is derived from a diverse mix of payors, including private payors and commercial insurance companies, managed care capitated payors, and government payors, such as Medicare and Medicaid. We believe our payor diversity
mitigates our exposure to possible unfavorable reimbursement trends within any one payor class. Our total service fee revenue, net of contractual allowances and discounts, and implicit price concessions for the three months ended March 31, 2026 and 2025 received from our various payors is summarized in the following table (in thousands):
| In Thousands |
Three Months Ended March 31, |
||||||||||
| 2026 | 2025 | ||||||||||
| Commercial insurance | $ | 315,869 | $ | 262,488 | |||||||
| Medicare | 137,179 | 108,199 | |||||||||
| Medicaid | 13,991 | 11,690 | |||||||||
| Workers' compensation/personal injury | 12,304 | 10,459 | |||||||||
| Other payors | 33,590 | 27,691 | |||||||||
| Management fee revenue | 7,481 | 6,279 | |||||||||
| Other revenue | 24,804 | 12,543 | |||||||||
| Revenue under capitation arrangements | 30,413 | 32,050 | |||||||||
| Total service revenue | $ | 575,631 | $ | 471,399 | |||||||
Our revenue is not always consistent across each quarter. We generally experience the lowest volumes of procedures and the lowest level of revenue during the first quarter of each year. This is primarily the result of two factors. First, our volumes and revenue are typically impacted by winter weather conditions in our northeastern operations. It is common for snowstorms and other inclement weather to result in patient appointment cancellations and, in some cases, imaging center closures. Second, in recent years, we have observed greater participation in high deductible health plans by patients. As these high deductibles reset in January for most of these patients, we have observed that patients utilize medical services less during the first quarter, when securing medical care will result in significant out-of-pocket expenditures.
Acquisitions
During the three months ended March 31, 2026, we completed the acquisition of certain assets of entities which engage directly in the practice of radiology or in associated businesses for an aggregate consideration of $67.3 million. These acquisitions include:
Regional Radiology Center: 13 imaging centers in Florida;
Northwest Radiology Network PC: 6 imaging centers in Indiana;
See Note 4, Business Combinations and Related Activity, in the notes accompanying our financial statements in this report for additional information, including the fair value determination of the acquired assets and assumed liabilities, associated with these acquisitions.
Joint Venture Activity
At March 31, 2026, 150 of our imaging centers were operating as joint ventures with hospital and health system partners. On behalf of the joint ventures, we manage the day-to-day operations and perform most management and support services in exchange for a management fee. We charged management service fees from the centers underlying these joint ventures of approximately $6.6 million and $6.1 million for the three months ended March 31, 2026 and 2025, respectively.
For information on our investment in unconsolidated joint ventures, key balance sheet data and income statement data for the unconsolidated joint ventures, see Note 2, Significant Accounting Policies - Investment in Joint Ventures in the notes accompanying our financial statements included in this report.
Critical Accounting Policies
The SEC defines critical accounting estimates as those that (a) are most important to the portrayal of a company's financial condition and results of operations and (b) require management's most difficult, subjective or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. In Note 2 of the notes accompanying our financial statements included in this report and in our Annual Report, we discuss our significant accounting policies, including those that do not require management to make difficult, subjective or complex judgments or estimates. The most significant areas involving management's judgments and estimates are described below.
Use of Estimates
The financial statements included in this report were prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), which requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates and assumptions affect various matters, including our reported amounts of assets and liabilities in our consolidated balance sheets at the dates of the financial statements, our disclosure of contingent assets and liabilities at the dates of the financial statements, and our reported amounts of revenues and expenses in our consolidated statements of operations during the reporting periods. These estimates involve judgments with respect to numerous factors that are difficult to predict and are beyond management's control. As a result, actual amounts could materially differ from these estimates.
Revenues
Our revenues generally relate to net patient fees received from various payors and patients themselves under contracts in which our performance obligations are to provide diagnostic services to the patients. Revenue is recorded during the period our obligations to provide diagnostic services are satisfied, which is generally over a period of less than one day. The contractual relationships with patients, in most cases, also involve a third-party payor (Medicare, Medicaid, managed care health plans and commercial insurance companies, including plans offered through the health insurance exchanges) and the transaction prices for the services provided are dependent upon the terms provided by (Medicare and Medicaid) or negotiated with (managed care health plans and commercial insurance companies) the third-party payors. The payment arrangements with third-party payors for the services we provide to the related patients typically specify payments at amounts less than our standard charges and generally provide for payments based upon predetermined rates per diagnostic services or discounted fee-for-service rates. Management continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations, changes in business and economic conditions, and the frequent changes in managed care contractual terms resulting from contract re-negotiations and renewals.
As it relates to the Consolidated Medical Group (as defined in Note 1 of the notes accompanying our financial statements included in this report), this service fee revenue includes payments for both the professional medical interpretation revenue recognized by them as well as the payment for all other aspects related to our providing the imaging services, for which we earn management fees. As it relates to others centers, this service fee revenue is earned through providing the use of our diagnostic imaging equipment and the provision of technical services as well as providing administration services such as clerical and administrative personnel, bookkeeping and accounting services, billing and collection, provision of medical and office supplies, secretarial, reception and transcription services, maintenance of medical records, and advertising, marketing and promotional activities.
Our service fee revenue is based upon our management's estimate of amounts we expect to be entitled to receive from patients and third-party payors. Estimates of contractual allowances under Medicare, Medicaid, managed care and commercial insurance plans are based upon historical collection experience of the payments received from such payors in accordance with the underlying contractual agreements. Revenue related to uninsured patients and uninsured copayment and deductible amounts
for patients who have health care coverage may have price concessions applied. We also record estimated implicit price concessions (based primarily on historical collection experience) related to uninsured accounts to record self-pay revenue at the estimated amounts we expect to collect.
Under capitation arrangements with various health plans, we earn a per-enrollee amount each month for making available diagnostic imaging services to all plan enrollees under the capitation arrangement. Revenue under capitation arrangements is recognized in the period in which we are obligated to provide services to plan enrollees under contracts with various health plans. Our estimates and assumptions related to revenue recognition did not change materially for the quarter ended March 31, 2026.
Accounts Receivable
The vast majority all of our accounts receivable are due under fee-for-service contracts from third party payors, such as insurance companies and government-sponsored healthcare programs, or directly from patients. Services are generally provided pursuant to one-year contracts with healthcare providers. Receivables generally are collected within industry norms for third-party payors. We continuously monitor collections from our payors and maintain an allowance for bad debts based upon specific payor collection issues that we have identified and our historical experience. Our estimates and assumptions for allowances on our account receivable did not change materially during the quarter ended March 31, 2026.
Business Combination
We evaluate all acquisitions in accordance with the accounting guidance under ASC 805, Business Combinations. Once a purchase has been determined to be the acquisition of a business, we are required to recognize the assets acquired and the liabilities assumed at their acquisition date fair values. Any portion of the purchase consideration transferred in excess of the net of the acquisition date fair values of the assets acquired and the liabilities assumed is allocated to goodwill. The allocation requires our management to make estimates of the value of various assets acquired and liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations.
Recent Accounting Standards
See Note 3, Recent Accounting and Reporting Standards to the financial statements included in this report for further information.
Results of Operations
Result Summary
The following table summarizes our consolidated results of operations and other financial information:
| In Thousands |
Three Months Ended Match 31, |
||||||||||
| 2026 | 2025 | ||||||||||
| Operating Revenue | |||||||||||
| Imaging Center | $ | 556,815 | $ | 461,378 | |||||||
| Digital Health | 29,121 | 19,221 | |||||||||
| Intersegment eliminations | (10,305) | (9,200) | |||||||||
| Total service revenue | $ | 575,631 | $ | 471,399 | |||||||
| Segment profit | |||||||||||
| Imaging Center | $ | 36,260 | $ | 15,648 | |||||||
| Digital Health | $ | (11,141) | $ | (3,117) | |||||||
| Total Segment profit | $ | 25,119 | $ | 12,531 | |||||||
Three Months Ended March 31, 2026 Compared to the Three Months Ended March 31, 2025
Imaging Center Segment
We have developed our Imaging Centers segment through a combination of organic same-center growth, new center buildouts, acquisitions and joint venture formations. In the discussion below, "same center" metrics are based on imaging centers that we operate and were in operation throughout the period of January 1, 2025 through March 31, 2026, excluding amounts relating to imaging centers that were acquired or divested between January 1, 2025 through March 31, 2026, unless the procedural volumes of closed centers were relocated into centers that existed throughout such period. The revenue analysis presented below includes intersegment revenue prior to elimination.
Total Revenue
| In Thousands | Three Months Ended March 31, | |||||||||||||
| Revenue | 2026 | 2025 | $ Increase | % Change | ||||||||||
| Total | $556,815 | $461,378 | $95,437 | 20.7% | ||||||||||
| Same Center | $502,562 | $461,350 | $41,212 | 8.9% | ||||||||||
| Excluded | $54,253 | $28 | - | - | ||||||||||
Our 8.9% increase in Imaging Center same-center revenue compared to the same period last year was driven by higher fees per imaging procedure and increased procedure volumes. This is a function of procedural volume growth at our consolidated centers. This growth reflects both organic increases at existing centers and incremental volumes from centers acquired since the prior-year period.
The increase in revenue was largely attributable to the procedural volume growth, increased reimbursement from commercial and capitated payors and favorable changes in product mix, as advanced imaging represented a greater proportion of total procedures. A significant contributor to this shift was the increase in PET and CT procedures related to prostate cancer and Alzheimer's-related studies, which are included within advanced modality imaging procedures. Additionally, the increase in same center revenue was the result of net increases in reimbursement from commercial and capitated payors.
Operating Expenses
Total operating expenses for the three months ended March 31, 2026 increased approximately $83.7 million, or 17.5%, to $563.0 million for the three months ended March 31, 2026 from $479.4 million for the three months ended March 31, 2025. The following table breaks down our cost of operations and total operating expenses for the three months ended March 31, 2026 and 2025 (in thousands):
|
Three Months Ended March 31, |
|||||||||||
| 2026 | 2025 | ||||||||||
| Salaries, excluding stock-based compensation | 223,742 | 193,587 | |||||||||
| Professional reading fees | 95,850 | 77,104 | |||||||||
| Stock-based compensation | 26,056 | 25,228 | |||||||||
| Building and equipment rental | 35,832 | 30,924 | |||||||||
| Medical supplies | 43,196 | 29,725 | |||||||||
| Lease abandonment charges | - | 5,388 | |||||||||
|
Other operating expenses *
|
95,882 | 83,774 | |||||||||
| Cost of operations | 520,558 | 445,730 | |||||||||
| Depreciation and amortization | 38,501 | 32,539 | |||||||||
| Loss on sale and disposal of equipment | 2,568 | 398 | |||||||||
| Severance costs | 1,412 | 696 | |||||||||
| Total operating expenses | $ | 563,039 | $ | 479,363 | |||||||
*Includes billing fees, office supplies, repairs and maintenance, insurance, business tax and license, outside services, telecom, utilities, marketing, travel and other expenses.
The discussion below provides additional information and analysis on changes in our various operating expenses for the three months ended March 31, 2026 and 2025 (in thousands):
Salaries, excluding stock-based compensation and severance
| In Thousands | Three Months Ended March 31, | |||||||||||||
|
Salaries, excluding stock-based compensation and severance
|
2026 | 2025 | $ Increase | % Change | ||||||||||
| Total | $223,742 | $193,587 | $30,155 | 15.6% | ||||||||||
| Same Center | $202,125 | $193,491 | $8,633 | 4.5% | ||||||||||
| Excluded | $21,617 | $96 | - | - | ||||||||||
In response to higher procedure volumes, we increased staffing levels across clinical, administrative and technical functions to support patient demand. These increases were partially offset by improved labor efficiency initiatives, workflow optimization technologies and operating leverage from higher procedural volumes, which contributed to salary expense growth remaining below the rate of same-center revenue growth. Overall, the increase in compensation expense remained generally consistent with same-center revenue trends.
Professional reading fees
| In Thousands | Three Months Ended March 31, | |||||||||||||
| Professional Fees | 2026 | 2025 | $ Increase | % Change | ||||||||||
| Total | $95,850 | $77,104 | $18,746 | 24.3% | ||||||||||
| Same Center | $87,322 | $77,105 | $10,217 | 13.3% | ||||||||||
| Excluded | $8,528 | -$1 | - | - | ||||||||||
The increase in same-center professional fees was primarily attributable to higher procedural volumes. The increase in professional fees relative to the 8.9% increase in same-center sales was primarily driven by (i) a greater mix of advanced imaging procedures, for which professional fees generally represent a higher proportion of revenue, and (ii) disproportionately higher growth in California imaging centers staffed by BRMG radiologists, whose professional fees are consolidated within our financial results. In many imaging centers outside of California, revenues are reported net of professional fees and, accordingly, the related professional fees are not consolidated within our financial results.
Stock-based compensation
Stock-based compensation for the three months ended March 31, 2026 increased approximately $0.8 million, or 3.3%, to $26.1 million from $25.2 million for the three months ended March 31, 2025.
Building and equipment rental
| In Thousands | Three Months Ended March 31, | |||||||||||||
| Building & Equipment Rental | 2026 | 2025 | $ Increase | % Change | ||||||||||
| Total | $35,832 | $30,924 | $4,908 | 15.9% | ||||||||||
| Same Center | $31,391 | $30,863 | $528 | 1.7% | ||||||||||
| Excluded | $4,441 | $61 | - | - | ||||||||||
Building and equipment rental expense on a same-center basis increased slightly, primarily due to higher rent and common area maintenance charges.
Medical supplies
| In Thousands | Three Months Ended March 31, | |||||||||||||
| Medical Supplies Expense | 2026 | 2025 | $ Increase | % Change | ||||||||||
| Total | $43,196 | $29,725 | $13,471 | 45.3% | ||||||||||
| Same Center | $33,956 | $29,720 | $4,236 | 14.3% | ||||||||||
| Excluded | $9,240 | $5 | - | - | ||||||||||
Consistent with the shift in our procedural mix toward more advanced imaging, medical supplies expense increased at a higher rate than revenue growth. The growth in PET and CT procedures, particularly for prostate cancer and suspected Alzheimer's studies, drove higher utilization of high-cost isotope tracers, contributing to the increase. In addition, price increases for these tracers further elevated medical supplies expense compared to the prior year.
Other operating expenses
| In Thousands | Three Months Ended March 31, | |||||||||||||
| Other Operating Expenses | 2026 | 2025 | $ Increase | % Change | ||||||||||
| Total | $95,882 | $83,774 | $12,108 | 14.5% | ||||||||||
| Same Center | $88,076 | $83,706 | $4,370 | 5.2% | ||||||||||
| Excluded | $7,806 | $68 | - | - | ||||||||||
Other operating expenses, which include outside services, software licensing fees, including approximately $10.3 million of intersegment license fees paid to Digital Health, repair and maintenance, and utilities, have increased $12.1 million, or 14.5%, to approximately $95.9 million for the three months ended March 31, 2026 compared to $83.8 million for three months ended March 31, 2025.
The increase was primarily attributable to higher outside service costs associated with acquisition activity, increased contractor services, and higher equipment and maintenance costs. In addition, certain increases relate to intersegment software licensing fees from the Digital Health segment, which are eliminated in consolidation and therefore impact segment operating results but not consolidated operating income.
Additional segment operating and non-operating expenses
| In Thousands | Three Months Ended March 31, | |||||||||||||
| Depreciation and amortization | 2026 | 2025 | $ Increase | % Change | ||||||||||
| Total | $38,501 | $32,539 | $5,962 | 18.3% | ||||||||||
| Same Center | $35,785 | $32,522 | $3,263 | 10.0% | ||||||||||
| Excluded | $2,611 | $17 | - | - | ||||||||||
The increase in depreciation expense was the result of our higher depreciable asset base.
| In Thousands | Three Months Ended March 31, | |||||||||||||
| Severance | 2026 | 2025 | $ Increase | % Change | ||||||||||
| Total | $1,412 | $696 | $716 | 102.9% | ||||||||||
| Same Center | $1,323 | $696 | $627 | 90.1% | ||||||||||
| Excluded | $89 | $- | - | - | ||||||||||
| In Thousands | Three Months Ended March 31, | |||||||||||||
| 2026 | 2025 | $ Increase/(Decrease) | % Change | |||||||||||
| Other income | ($5,057) | ($7,716) | 2,659 | (34.5)% | ||||||||||
Digital Health Segment
The breakdown of revenue and expenses of the Digital Health segment for the three months ended March 31, 2026 and 2025 are as follows:
| In Thousands | Three Months Ended March 31, | |||||||||||||
| 2026 | 2025 | $ Change | % Change | |||||||||||
| Statement of Operations | ||||||||||||||
| Revenue | $ | 29,121 | $ | 19,221 | $ | 9,900 | 51.5 | % | ||||||
| Salaries and Wages | 15,828 | 8,693 | 7,135 | 82.1 | % | |||||||||
| Stock Compensation | 5,320 | 3,266 | 2,054 | 62.9 | % | |||||||||
| Other operating | 14,554 | 6,816 | 7,738 | 113.5 | % | |||||||||
| Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI | 4,560 | 3,562 | 998 | 28 | % | |||||||||
| Depreciation & Amort. | 6,466 | 2,944 | 3,522 | 119.6 | % | |||||||||
| (Gain) loss on sale and disposal of equipment and other | 23 | 3 | 20 | 666.7 | % | |||||||||
| Severance | 53 | 51 | 2 | 3.9 | % | |||||||||
| Total operating expenses | $ | 46,804 | $ | 25,335 | $ | 21,469 | 84.7 | % | ||||||
| Loss from Operations | $ | (17,683) | $ | (6,114) | $ | (11,569) | 189.2 | % | ||||||
|
Other expense
|
170 | 5 | 165 | 3300.0 | % | |||||||||
|
Loss before taxes
|
(17,853) | (6,119) | (11,734) | 191.8 | % | |||||||||
| Income taxes | $ | (2,969) | $ | (732) | $ | (2,237) | 305.6 | % | ||||||
| Segment net loss | (14,884) | (5,387) | (9,497) | 176.3 | % | |||||||||
Revenues for the Digital Health segment increased significantly compared to the prior-year period, reflecting a combination of strong growth in our Population Health AI and Enterprise Informatics portfolios, combined with the impact of inorganic growth from the acquisitions of iCAD, SeeMode, CIMAR.
For the three months ended March 31, 2026, Digital Health segment revenues increased $9.9 million or 51.5%, to $29.1 million, compared to $19.2 million for the three months ended March 31, 2025. The growth was primarily driven by a 125% increase in AI-related revenue and a 17% increase in Enterprise Imaging revenue.
External revenue represented 65% of total segment revenue for three months ended March 31, 2026. Compared to last year, the segment's customer base expanded from 460+ to 2,890+, and procedure volumes supported by Digital Health solutions increased from $4.9 million to $10.5 million, primarily reflecting the addition of iCAD, Gleamer, and CIMAR.
Annual Recurring Revenue or ARR, as of March 31, 2026 was $96.9 million as compared with $49.8 million as of March 31, 2025. The Company defines Annual Recurring Revenue ("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 one-time, non-recurring fees such as, implementation, hardware sales, professional services, consulting and one-off training. ARR is a non-GAAP measure and does not represent GAAP revenue recognized over time.
Segment operating expenses increased year over year due to the addition of new costs resulting from acquisitions (iCAD, SeeMode, CIMAR and Gleamer); investments in the personnel to build foundational capabilities and support the segment's growth trajectory , investments in software and cloud costs, increased stock-based compensation commensurate with the growing organization, and higher non-capitalized R&D costs, reflecting continued investment in scaling our platforms for broader deployment. We expect the segment to continue operating at a net loss in the near term as integration of iCAD, See-Mode, CIMAR, and Gleamer progresses.
Consolidated
The following discussion relates to consolidated interest expense and other items managed at the corporate level, which are not separately allocated to our reportable segments.
Interest expense
| In Thousands | Three Months Ended March 31, | |||||||||||||
| Interest expense | 2026 | 2025 | $ Increase/(Decrease) | % Change | ||||||||||
| Total interest expense | $ | 17,657 | $ | 17,239 | $418 | 2.4 | % | |||||||
| Interest related to derivatives* | - | (1,018) | ||||||||||||
| Interest expense related to amortization** | 779 | 728 | ||||||||||||
| Adjusted interest expense*** | 16,878 | 17,529 | (651) | (3.7) | % | |||||||||
*Includes payments from 2019 Swaps (as defined in the notes to our condensed consolidated financial statements) and Swaps amortization
**Includes noncash amortization of deferred loan costs and discount on issuance of debt
***Includes interest related to our term loans, revolving credit line, notes, and other
The decrease in interest expense was primarily driven by a lower average outstanding debt balance during the three months ended March 31, 2026, compared to the same period in the prior year.
In addition, our 2019 interest rate swap agreements matured in 2025. As a result, there were no interest related to derivatives during the current period, whereas prior periods included the impact of such swap-related amounts.
Non-cash change in fair value of interest rate hedge
No non-cash change in fair value of interest rate hedge was recognized during the three months ended March 31, 2026, as our 2019 Swaps matured in 2025.
Equity in earnings from unconsolidated joint ventures
For the three months ended March 31, 2026 and 2025, we recognized equity in earnings from unconsolidated joint ventures in the amount of $3.8 million and $2.6 million, respectively. The increase was primarily driven by improved income from Santa Monica Imaging Group LLC and lower losses from Arizona Diagnostic Radiology Group LLC.
Net income attributable to noncontrolling interests
At March 31, 2026, our consolidated subsidiaries operated 385 diagnostic imaging centers of which 100 were not wholly-owned. At March 31, 2025, our consolidated subsidiaries included 347 imaging centers, of which 100 were not wholly-owned. Thus, a portion of the operating results of our consolidated subsidiaries were attributable to noncontrolling interests.
For the three months ended March 31, 2026, we recognized net income attributable to noncontrolling interests of $8.7 million versus $8.2 million for the three months ended March 31, 2025, respectively, remaining essentially flat year over year.
As noncontrolling interests only represent a portion of our imaging center business, and excludes our Digital Health segment, which generated losses of $17.7 million for the three months ended March 31, 2026, we do not expect changes in net income attributable to noncontrolling interests to correlate with changes in consolidated operating income or pretax income.
Non-GAAP Financial Measures
We use both U.S. generally accepted accounting principles ("GAAP") and non-GAAP metrics to measure our financial results. We believe that, in addition to GAAP metrics, non-GAAP metrics such as Adjusted EBITDA assist us in measuring our core operations from period to period. We also utilize systemwide measures and other supplemental operating metrics that include both consolidated and unconsolidated affiliates to provide further insight into the overall scale and performance of our diagnostic imaging centers.
Adjusted EBITDA
Our Adjusted EBITDA metric removes non-cash and non-recurring charges that occur in the affected period and provides a basis for measuring the Company's core financial performance against other periods.
We define Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, as adjusted to exclude income taxes, interest expense, severance costs, depreciation and amortization, non-cash employee stock-based compensation, loss on sale and disposal of equipment and other, non-cash change in fair value of interest rate hedge, other income, non-capitalized research and development expenses related to DeepHealth Cloud OS and Generative AI, lease abandonment charges, and acquisition transaction costs. Adjusted EBITDA includes equity earnings in unconsolidated operations and subtracts allocations of earnings to non-controlling interests in subsidiaries, and is adjusted for non-cash or one-time events that take place during the period.
Adjusted EBITDA is a non-GAAP financial measure used as an analytical indicator by us and the healthcare industry to assess business performance. Adjusted EBITDA should not be considered a measure of financial performance under GAAP, and Adjusted EBITDA should not be considered in isolation or as alternatives to net income, or other financial statement data presented in the consolidated financial statements as an indicator of financial performance. Adjusted EBITDA is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation and this metric, as presented, may not be comparable to other similarly titled measures of other companies.
The following is a reconciliation of the nearest comparable GAAP financial measure, net income, to Adjusted EBITDA for the three months ended March 31, 2026 and 2025, respectively.
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net income (loss) attributable to RadNet, Inc. common stockholders | $ | (33,466) | $ | (37,926) | |||||||
| Income taxes | (8,096) | (3,398) | |||||||||
| Interest expense | 17,657 | 17,239 | |||||||||
| Severance costs | 1,464 | 747 | |||||||||
| Depreciation and amortization | 44,967 | 35,483 | |||||||||
| Non-cash employee stock-based compensation | 31,376 | 28,494 | |||||||||
| Loss on sale and disposal of equipment and other | 2,591 | 402 | |||||||||
| Non-cash change in fair value of interest rate hedge | - | 2,106 | |||||||||
| Other income | (4,907) | (7,712) | |||||||||
| Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI | 4,560 | 3,562 | |||||||||
| Lease abandonment charges | - | 5,388 | |||||||||
| Non-cash change to contingent consideration | 2,764 | - | |||||||||
| Non-operational rent expenses | 900 | 1,342 | |||||||||
| Acquisition transaction costs | 3,454 | 672 | |||||||||
|
Adjusted EBITDA - Total Company
|
$ | 63,264 | $ | 46,399 | |||||||
| NOTE | |||||||||||
|
Adjusted EBITDA - Imaging Center
|
$ | 61,961 | $ | 42,688 | |||||||
| Adjusted EBITDA - Digital Health Segment | $ | 1,303 | $ | 3,711 | |||||||
The following table is a reconciliation of GAAP net income for our Digital Health segment to Adjusted EBITDA for the three months ended March 31, 2026 and 2025, respectively.
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Segment net loss | $ | (14,884) | $ | (5,387) | |||||||
| Stock Compensation | 5,320 | 3,266 | |||||||||
| Depreciation & Amortization | 6,466 | 2,944 | |||||||||
| Other operating loss | 23 | 3 | |||||||||
| Other expense | 150 | 4 | |||||||||
| Severance | 53 | 51 | |||||||||
| Interest | 20 | - | |||||||||
| Income taxes | (2,969) | (732) | |||||||||
| Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI | 4,560 | 3,562 | |||||||||
| Non-cash change to contingent consideration | 2,564 | - | |||||||||
|
Adjusted EBITDA - Digital Health Segment
|
$ | 1,303 | $ | 3,711 | |||||||
Systemwide Operating Metrics
At March 31, 2026, 150 of our imaging centers were operating as joint ventures with hospital and health system partners, including 12 unconsolidated joint ventures operating 50 diagnostic imaging centers that represent partnerships with hospitals, or health systems and were formed for the purpose of owning and operating diagnostic imaging centers. Professional services at the joint venture diagnostic imaging centers are performed by contracted radiology practices or a radiology practice that participates in the joint venture. Our investment in these joint ventures is accounted for under the equity method, as we do not have a controlling financial interest in such ventures. We evaluate our investment in joint ventures, including cost in excess of book value (equity method goodwill) for impairment whenever indicators of impairment exist.
We charged management service fees from the centers underlying these joint ventures of approximately $6.6 million and $6.1 million for the three months ended March 31, 2026 and 2025, respectively. These management fees are expenses of the unconsolidated joint ventures and are recognized as service fee revenue. These management fees are earned for providing to the unconsolidated joint venture centers, among other things, day-to-day operational oversight, revenue cycle, human resources, finance, accounting and information systems. These joint ventures are considered related parties. Amounts transacted between us and the entities are in the ordinary course of business and are disclosed on our balance sheet in the due from/to affiliate accounts.
Given the significance of these unconsolidated joint ventures to our business, in addition to our consolidated results, management evaluates performance on a systemwide basis that includes both our consolidated operations and the operations of our unconsolidated joint ventures. We refer to metrics derived solely from entities we consolidate for financial reporting purposes as "consolidated," and metrics that incorporate the results of our unconsolidated joint ventures as "Systemwide."
Systemwide measures are non-GAAP financial measures and should not be considered substitutes for, or superior to, our consolidated GAAP results. Because Systemwide measures combine amounts derived from our consolidated results with amounts derived from entities that are not consolidated, they do not represent our actual revenue or other GAAP financial measures. Investors should not rely on Systemwide metrics in isolation and should review them only in conjunction with our consolidated financial statements and related notes as a supplement to understanding the overall scale and performance of our imaging network.
Management uses Systemwide measures, including Systemwide imaging center revenue, to assess the aggregate performance of our diagnostic imaging center network. Because a significant portion of our imaging center network operates through unconsolidated joint ventures, consolidated revenue alone does not capture the full revenue-generating activity of our network, and we believe investors benefit from understanding Systemwide revenue as an indicator of the economic performance and growth trajectory management considers. These metrics are intended to present the full scope of imaging center activity from which we derive economic benefit. Systemwide revenue is equal to consolidated revenue plus 100% of the revenues of our unconsolidated joint ventures, without adjustment for our ownership percentage.
We believe these measures provide insight into the total scale of our diagnostic imaging center network and the aggregate revenues generated across all centers in which we hold an economic interest which is consistent with how management internally evaluates the business, allocates resources, and assesses operational performance. We believe such measures facilitate a more complete understanding of trends in our business. We believe these measures enable period-over-period comparisons of operating performance across the full network on a same-center and total-center basis, including volume, revenue, and growth rates.
The following table reconciles Systemwide imaging center revenue to total service revenue as reported under GAAP for the periods presented:
| Three months ended March 31, | ||||||||||||||||||||
| 2026 | 2025 | $ Increase/(Decrease) | % Change | |||||||||||||||||
| Total service revenue | 575,631 | 471,399 | 104,232 | 22.1 | % | |||||||||||||||
| Add Intersegment revenue | 10,305 | 9,200 | 1,105 | 12.0 | % | |||||||||||||||
| Less: Digital Health revenue | (29,121) | (19,221) | (9,900) | 51.5 | % | |||||||||||||||
| Consolidated imaging center revenue | 556,815 | 461,378 | 95,437 | 20.7 | % | |||||||||||||||
| Unconsolidated affiliates revenue (1) | 73,330 | 66,274 | 7,056 | 10.6 | % | |||||||||||||||
| Systemwide revenue | 630,145 | 527,652 | 102,493 | 19.4 | % | |||||||||||||||
| Three months ended March 31, | ||||||||||||||||||||
| 2026 | 2025 | $ Increase/(Decrease) | % Change | |||||||||||||||||
| Consolidated imaging center revenue | 556,815 | 461,378 | 95,437 | 20.7 | % | |||||||||||||||
| Less: Excluded Consolidated Imaging center revenue | (54,253) | (28) | (54,225) | 193660.7 | % | |||||||||||||||
| Consolidated same-center revenue | 502,562 | 461,350 | 41,212 | 8.9 | % | |||||||||||||||
| Unconsolidated affiliates same-center revenue (2) | 73,330 | 66,058 | 7,271 | 11.0 | % | |||||||||||||||
| Systemwide same-center revenue | 575,892 | 527,408 | 48,483 | 9.2 | % | |||||||||||||||
1."Unconsolidated affiliates revenue" represents revenue generated by unconsolidated joint ventures that are accounted for under the equity method and therefore not included in our consolidated GAAP revenue.
2."Unconsolidated affiliates same-center revenue" represents same-center revenue generated by unconsolidated joint ventures included in Systemwide measures and not included in consolidated GAAP revenue.
The following tables present our systemwide procedural volumes by modality and systemwide same-center procedural volumes by modality for the three months ended March 31, 2026 and 2025, including the percentage change compared to the prior year period. Management believes these metrics provide useful supplemental information regarding trends in procedural demand and utilization across our imaging network, including consolidated and unconsolidated joint ventures.
| SYSTEMWIDE PROCEDURAL VOLUMES BY MODALITY | |||||||||||||||||
|
Three Months Ended March 31, |
|||||||||||||||||
| 2026 | 2025 | % Change | |||||||||||||||
| MR | 538,043 | 447,330 | 20.3 | % | |||||||||||||
| CT | 319,201 | 271,170 | 17.7 | % | |||||||||||||
| PET/CT | 27,572 | 20,389 | 35.2 | % | |||||||||||||
| Nuclear Medicine | 10,395 | 9,577 | 8.5 | % | |||||||||||||
| Ultrasound | 718,006 | 656,427 | 9.4 | % | |||||||||||||
| Mammography | 504,761 | 476,378 | 6.0 | % | |||||||||||||
| X-ray and Other | 902,977 | 861,702 | 4.8 | % | |||||||||||||
| 3,020,955 | 2,742,973 | 10.1 | % | ||||||||||||||
| SYSTEMWIDE SAME-CENTER PROCEDURAL VOLUMES BY MODALITY | |||||||||||||||||
|
Three Months Ended March 31, |
|||||||||||||||||
| 2026 | 2025 | % Change | |||||||||||||||
| MR | 491,958 | 447,330 | 10.0 | % | |||||||||||||
| CT | 284,014 | 271,152 | 4.7 | % | |||||||||||||
| PET/CT | 23,394 | 20,389 | 14.7 | % | |||||||||||||
| Nuclear Medicine | 8,461 | 9,577 | (11.7) | % | |||||||||||||
| Ultrasound | 670,331 | 656,325 | 2.1 | % | |||||||||||||
| Mammography | 474,740 | 476,378 | (0.3) | % | |||||||||||||
| X-ray and Other | 853,793 | 860,472 | (0.8) | % | |||||||||||||
| 2,806,691 | 2,741,623 | 2.4 | % | ||||||||||||||
Liquidity and Capital Resources
We expect our existing capital resources, anticipated cash from operations and our borrowing capacity under our credit facilities will be sufficient to sustain our operations for the next twelve months and the foreseeable future.
Our principal capital requirements are for the development of new diagnostic imaging centers, the acquisition of existing diagnostic imaging centers and the acquisition of new diagnostic imaging equipment. On a continuing basis, we evaluate various transactions to increase shareholder value and enhance our business results, including acquisitions, divestitures and joint ventures. We expect to fund any future acquisitions primarily with cash flow from operations and borrowings, including borrowing available under our secured credit facilities or through new equity or debt issuances.
We and our subsidiaries or affiliates may from time to time, in our sole discretion, purchase, repay, redeem or retire any of our outstanding debt or equity securities in privately negotiated or open market transactions, by tender offer or otherwise.
The following table summarizes key balance sheet data related to our liquidity as of March 31, 2026 and December 31, 2025 and income statement data for the three months ended March 31, 2026 and 2025 (in thousands):
| Balance Sheet Data: | March 31, 2026 | December 31, 2025 | |||||||||
| Cash and cash equivalents | $ | 455,339 | $ | 767,215 | |||||||
| Accounts receivable | 209,090 | 200,317 | |||||||||
| Working capital (exclusive of current operating lease liabilities) | 171,732 | 507,298 | |||||||||
| Stockholders' equity | 1,352,712 | 1,355,886 | |||||||||
|
Income statement data for the three months ended March 31,
|
2026 | 2025 | |||||||||
| Total net revenue | $ | 575,631 | $ | 471,399 | |||||||
|
Net loss attributable to RadNet common stockholders
|
(33,466) | (37,926) | |||||||||
Sources and Uses of Cash
The following table summarizes key components of our sources and uses of cash for the three months ended March 31, 2026 and 2025 (in thousands):
| Cash Flow Data | March 31, 2026 | March 31, 2025 | |||||||||
| Cash provided by operating activities | $ | 78,972 | $ | 41,481 | |||||||
| Cash used in investing activities | (370,973) | (56,751) | |||||||||
| Cash used in financing activities | (17,504) | (7,510) | |||||||||
Cash provided by operating activities for the three months ended March 31, 2026 increased by $37.5 million compared to March 31, 2025 primarily driven by a $25.8 million change in assets and liabilities, primarily due to the timing of payments for accounts payable and accrued expenses.
Cash used in investing activities for the three months ended March 31, 2026 increased $314.2 million compared to the three months ended March 31, 2025. The increase was primarily due to a $300.4 million increase in purchases of imaging facilities and other acquisitions, mainly related to the acquisition of Gleamer, a digital health business, as well as imaging facilities.
Cash used by financing activities for the three months ended March 31, 2026 increased by $10.0 million compared to the three months ended March 31, 2025, as well as the repayment of notes payable assumed in connection with acquisitions.
Secured Credit Facilities
We maintain secured credit facilities with Barclays and with Truist Bank.
On June 11, 2025, we entered into Incremental Amendment No. 2 to the Barclays Credit Agreement, pursuant to which Barclays, as lender, provided an additional $100.0 million of incremental term loan borrowings under our existing senior secured term loan facility, all other terms remained the same. $1.0 million recognized as discount and deferred finance cost. Amounts capitalized will be amortized over the remaining terms of the respective credit facilities under the Barclays Credit Agreement. Pursuant to the Second Amendment, we are required to make quarterly principal payments of approximately $2.4 million, compared to $2.2 million prior to the amendment.
On November 26, 2024, we entered into Amendment No. 1 to the Barclays Credit Agreement (the "First Amendment") with the Barclays Bank Plc and the lenders and financial institutions named therein. Pursuant to the First Amendment, the interest rates on the term loans and revolving credit facility provided under the Restated Credit Agreement have been reduced by 0.25%.
On April 18, 2024, we refinanced our Barclays Revolving Credit Facility, replacing the prior facility with an $875.0 million term loan and a $282.0 million revolving credit facility. The refinance transaction reduced our interest rates on the
Barclays Term Loan and revolving credit facility and extended the maturity date for the term loan to April 18, 2031 and for the revolving credit facility to April 18, 2029. The new term loan calls for quarterly principal payments of $2.2 million, compared to $1.8 million under the prior credit facility.
Our condensed consolidated balance sheets at March 31, 2026 include $1,079.6 million of total term loan debt (exclusive of unamortized discounts of $11.6 million) in thousands:
| Face Value | Discount |
Total Carrying Value |
|||||||||||||||
| Barclays Term Loan | $ | 958,680 | $ | (11,199) | $ | 947,481 | |||||||||||
| Truist Term Loan | 120,937 | (396) | 120,542 | ||||||||||||||
| Total Term Loans | $ | 1,079,617 | $ | (11,595) | $ | 1,068,022 | |||||||||||
At March 31, 2026, we had no borrowings under our Barclays or Truist revolving credit facilities. After reserves for outstanding letters of credit of $8.6 million, we had $273.4 million available for borrowing under our Barclays Revolving Credit Facility and $50.0 million available under our Truist revolving credit facility.
Please see Note 6, Credit Facilities and Notes Payable in the notes accompanying our financial statements included in this report for more information on our secured credit facilities.
RadNet Inc. published this content on May 11, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 11, 2026 at 20:41 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]