David Macdonald • Truist Securities

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Chairman, President & CEO Dr. Howard Berger highlighted a 40% reduction in MRI room closures in New York as a key example of TechLive's impact on capacity. He noted it's too early to detail iCAD feedback but expressed satisfaction with the team. On EBCD, he stated that conversations with payers are ongoing, emphasizing the value proposition and the need for patience. EVP & CFO Mark Stolper added that RadNet is targeting 22 new de novo centers by 2026, adding about 5% to the center count.

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Dr. Howard Berger (Executive) explained that the California wildfires had a severe, widespread impact similar to a major snowstorm, but confirmed that business volumes had returned to normal by mid-March with no expected impact on Q2. Regarding the DeepHealth OS, he noted it was still early but highlighted the enthusiastic internal collaboration to automate processes and create capacity. Dr. Berger also detailed that the Palm Beach OB/GYN group initiated contact due to dissatisfaction with their prior service, and RadNet was able to quickly expand the partnership from professional services to include its full suite of Digital Health solutions, creating a valuable case study.

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CEO Brent Guerisoli stated that while recent revenue per occupied room growth has been high, it is expected to normalize to mid-single digits long-term. John Gochnour, President & COO, detailed pre-closing investments in leadership training and service center resources. Guerisoli added that an unfavorable rule could create M&A opportunities, but all growth decisions will continue to be based on leadership availability, operational strength, and deal viability.

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CEO Jeff Shaner explained that success has come from strategically aligning caregiver capacity with preferred payers, which unlocked growth, rather than a broad change in the labor market. On M&A, he confirmed Aviana has the liquidity to be active. While previously interested in Home Health, they are now more cautious pending the final rate rule. He reiterated that the company's focus is on growth through M&A, not debt paydown, and will seek thoughtful, deleveraging deals in PDS and Home Health.

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CEO John Rademacher confirmed heightened payer interest in site-of-care initiatives and noted the advanced practitioner model allows Option Care Health to serve more complex patients and those not covered by Medicare fee-for-service. He also mentioned positive legislative recognition of cost differentials. CFO Mike Shapiro added that AIS penetration reached 35% of nursing visits, driven by chronic patient utilization.

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CEO John Rademacher confirmed that helping payers with complex acute cases creates goodwill that benefits the entire portfolio. He identified Intramed's advanced practitioner model and its next-gen pharmacy system as key learnings. CFO Michael Shapiro added that AI and automation are being used to create 'clean claims,' which improves the speed of collections and reduces bad debt across the business.

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CEO John Rademacher stated that while they are seeing encouraging signs of increased IV supply, a full recovery timeline is hard to predict. He confirmed that competitor exits create an attractive medium-term growth opportunity once supply normalizes. CFO Michael Shapiro added that Q4 guidance incorporates various recovery scenarios for the IV supply and clarified that the chronic inflammatory category, which includes STELARA, represents roughly 20% of total revenue.

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Executive David Morris noted the M&A pipeline remains robust and suggested the IRA has not hurt it, and may have even helped slightly. Executive Fred Burke declined to share specific negotiation details with PBMs but confirmed they are actively engaged in finding a solution. Regarding the vaccine clinics, Morris clarified the profitability benefit was concentrated in Q4 and does not create a significant tailwind for 2025, as its profitability is lower than the core business. Burke added the point was to explain the strong Q4 EBITDA growth.

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Fred Burke, an executive, confirmed that productive discussions with payers are ongoing but are sensitive. David Morris, an executive, added that the company is confident in navigating the IRA issue for 2025-2026. Morris also stated that the Q4 hurricane impact was minimal and that the Heartland acquisition is progressing well, with synergies expected in 2025 and significant growth opportunities manifesting.

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Executive Chad Keetch explained that the Colorado activity was opportunistic, driven by a strong local team and reputation rather than state-specific factors. He confirmed Tennessee is a key growth market with announcements expected soon. CEO Barry Port added that the company is well-prepared for growth in new geographies and expressed confidence in 2025, citing strong organic growth fundamentals and a robust acquisition pipeline.

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Executive Derick Apt confirmed the M&A pipeline is strong, with significant upside in skilled mix and occupancy in newly acquired facilities. He noted that M&A pacing is governed by deal cost, balance sheet capacity, and human capital availability. President and COO Joshua Jergensen added that high-quality scores are fundamental to their strategy, enabling them to secure a 'seat at the table' with managed care providers, which leads to better contracts and reimbursement for higher acuity patients.

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Executive Derick Apt confirmed the M&A pipeline is robust, with recent acquisitions offering significant upside as their skilled mix and occupancy rates are well below PACS's averages. He stated that M&A pacing is governed by deal cost, capital availability, and human capital readiness, while maintaining a baseline expectation of acquiring 20 facilities annually. President and COO Josh Jergensen added that high CMS quality scores are fundamental to securing favorable contracts with managed care payers, which is a key part of their strategy for driving revenue growth in new and existing markets.

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Joshua Jergensen, President and COO, explained that quality metrics like high star ratings and low rehospitalizations are key in payer negotiations and drive occupancy. Derick Apt, an executive, added that over 70 Ramping facilities are maturing ahead of schedule, and while the staffing rule presents challenges for smaller operators, it could increase M&A opportunities for PACS, which evaluates targets based on a comprehensive scorecard.

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President and COO Josh Jergensen explained that quality is a key competitive advantage, with high star ratings and low rehospitalization rates being crucial gating items in payer negotiations, which in turn drives occupancy. Executive Derick Apt added that many facilities are nearing maturation and performing well. He noted the CMS rule could increase M&A opportunities from smaller operators, and PACS would evaluate these based on a scorecarding method, assessing if a facility's model can be evolved.

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