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RadNet, Inc. (RDNT)·Q3 2025 Earnings Summary

Executive Summary

  • Record quarter: revenue $522.9M (+13.4% YoY) and adjusted EBITDA $84.9M (+15.2% YoY); adjusted EBITDA margin expanded 26 bps to 16.2% .
  • Versus Wall Street: revenue beat consensus by ~$28.9M; adjusted EPS of $0.20 fell short of consensus $0.227, and EBITDA on S&P’s basis missed; management raised FY25 guidance for Imaging Center revenue/EBITDA and Digital Health revenue (see Guidance) *.
  • Operating drivers: strong advanced imaging volumes (MRI +14.8%, CT +9.4%, PET/CT +21.1%), higher reimbursement, capacity gains from TechLive remote scanning and AI-driven dynamic scheduling; advanced imaging mix rose to 28.2% of procedures from 26.7% .
  • Liquidity remains robust: cash $804.7M; net debt/adjusted EBITDA ~1.0x; catalysts include Investor Day and positive CMS final rule for 2026 Medicare rates (+$4–$5M uplift on ~$2B rev) .

What Went Well and What Went Wrong

What Went Well

  • Record revenue and adjusted EBITDA, with margin expansion to 16.2%, driven by advanced imaging mix shift and cost discipline .
  • Digital Health momentum: revenue +51.6% YoY to $24.8M; iCAD integration largely complete; AI revenue in Digital Health up 112% YoY; EBCD adoption >45% nationally and added as a covered benefit across several capitated groups .
  • CEO tone confident on guidance and growth: “We are revising upwards certain guidance levels… we have increased 2025 Imaging Center guidance ranges for Revenue and Adjusted EBITDA… and raised Revenue Guidance for the Digital Health operating segment” .

What Went Wrong

  • EPS below S&P consensus; SPGI EBITDA basis missed (company uses adjusted EBITDA, which is higher). Non-GAAP adjustments included swap valuation losses, severance, non-operational rent, R&D, acquisition costs, and lease abandonment charges totaling $15.1M pre-tax *.
  • Capitation revenue declined YoY within quarter ($31.4M vs $33.6M in Q3’24), reflecting ongoing payer mix dynamics and some conversions to fee-for-service .
  • Labor market remains a challenge (radiology technologists), limiting further margin flow-through despite strong volume; management is mitigating via TechLive and remote staffing (AlphaRT) but expects continued cost pressure .

Financial Results

Core P&L Trend (actuals)

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$461.1 $498.2 $522.9
Adjusted EBITDA ($USD Millions)$73.7 $81.2 $84.9
GAAP Diluted EPS ($USD)$0.04 $0.19 $0.07
Adjusted Diluted EPS ($USD)$0.18 $0.31 $0.20

Margins

MetricQ3 2024Q2 2025Q3 2025
Adjusted EBITDA Margin %16.0% 16.3% 16.2%

Segment Highlights

Segment MetricQ3 2024Q3 2025
Digital Health Revenue (incl. intersegment) ($USD Millions)$16.4 $24.8
Adjusted EBITDA – Imaging Center ($USD Millions)$70.4 $81.4
Adjusted EBITDA – Digital Health ($USD Millions)$3.2 $3.5

KPIs

KPIQ3 2024Q3 2025
Advanced Imaging Mix (% of procedures)26.7% 28.2%
Procedures – MRI (units)446,596 512,861
Procedures – CT (units)265,874 290,975
Procedures – PET/CT (units)18,844 22,817
Total Procedures (units)2,738,007 2,927,318
Q3 Payor Mix – Commercial / Medicare / Capitation / Medicaid / WC/PI / Other57.3% / 23.6% / 6.0% / 2.6% / 2.2% / 8.4% 57.3% / 23.6% / 6.0% / 2.6% / 2.2% / 8.4%
Cash And Equivalents ($USD Millions)—$804.7
Centers (count)—407
DSOs (days)—31.9

Versus Consensus (S&P Global)

MetricQ3 2025 ActualQ3 2025 Consensus*Surprise*
Revenue ($USD Millions)$522.9 $494.0*+$28.9M / +5.8%*
Primary EPS (Adjusted) ($USD)$0.20 $0.227*-$0.027 / -11.8%*
EBITDA (SPGI basis) ($USD Millions)$74.6*$79.7*-$5.1M / -6.3%*

Values marked with * retrieved from S&P Global. Surprise values computed from company-reported actuals and S&P Global consensus.

Guidance Changes

MetricPeriodPrevious Guidance (After Q2)Current Guidance (After Q3)Change
Imaging Center Total Net RevenueFY 2025$1,850–$1,900M $1,900–$1,930M Raised
Imaging Center Adjusted EBITDAFY 2025$271–$279M $276–$284M Raised
Imaging Center Capital ExpendituresFY 2025$152–$162M $157–$167M Raised
Imaging Center Cash Interest ExpenseFY 2025$35–$40M $31–$36M Lowered
Imaging Center Free Cash FlowFY 2025$70–$80M $70–$80M Maintained
Digital Health Total Net Revenue (incl. intersegment)FY 2025$80–$90M $85–$95M Raised
Digital Health Adjusted EBITDA (Before Non-Cap R&D)FY 2025$15–$17M $15–$17M Maintained
Non-Capitalized R&D – DeepHealth Cloud OS & Generative AIFY 2025$17–$19M $18–$20M Raised
Digital Health Capital ExpendituresFY 2025$2–$4M $3–$5M Raised
Digital Health FCF (Before Non-Cap R&D)FY 2025$11–$13M $10–$12M Lowered
Digital Health FCF (After Non-Cap R&D)FY 2025$(5)–$(8)M $(6)–$(9)M Lowered

Earnings Call Themes & Trends

TopicQ1 2025 (Previous Mentions)Q2 2025 (Previous Mentions)Q3 2025 (Current Period)Trend
AI/Technology (TechLive, DeepHealth OS, EBCD)TechLive enabled ~255 MRIs; EBCD adoption >40%; testing ultrasound; plan to add payer reimbursement Continued TechLive rollout; margin lift; EBCD adoption ~45% TechLive reducing exam room closures; dynamic scheduling; iCAD integrated; CMODE thyroid AI deployed at >240 centers; EBCD adoption >45% Strengthening
Labor/CapacityStaffing improving; reduced reliance on agencies TechLive helps technologist shortage Labor still tight but stabilizing; AlphaRT adds remote staffing/training Improving via tech
Advanced Imaging GrowthPET/CT +22.9% YoY; MRI/CT +8%+ PET/CT +22.4% YoY; MRI/CT strong; mix to 27.5% MRI +14.8%, CT +9.4%, PET/CT +21.1%; mix 28.2% Sustained strength
Regional OpsSevere weather and SoCal fires hit Q1 Normalization NY rollout: 42% reduction in exam closure hours across 83 centers Normalized, improving
Regulatory——CMS final 2026 rule implies $4–$5M Medicare uplift on ~$2B rev; ends multi-year cuts trend Favorable
R&D InvestmentNon-cap R&D $3.6M Non-cap R&D $4.8M Non-cap R&D $5.5M Increasing

Management Commentary

  • “The business continues to demonstrate strong growth and record results… Adjusted EBITDA margin expansion of 26 basis points… focus on capacity at existing centers, new center openings… mix shift towards advanced imaging… increased reimbursement… expansion of health system joint ventures… acceleration of Digital Health Revenue growth.” — Dr. Berger .
  • “We are revising upwards certain guidance levels… increased 2025 Imaging Center guidance ranges for Revenue and Adjusted EBITDA… and raised Revenue Guidance for the Digital Health operating segment.” — Dr. Berger .
  • “As of September 30, 2025, cash balance was $804.7 million and net debt to adjusted EBITDA ratio approximately 1.0.” — Dr. Berger .
  • “AI is not a bubble… an existential need… the future of imaging is more about software than hardware.” — Dr. Berger (prepared/Q&A) .

Q&A Highlights

  • TechLive rollout and dynamic scheduling: New York rollout reduced exam closure hours by ~42% across 83 centers; AI-driven overbooking models fill likely no-show slots, expanding throughput across MRI and expanding to CT/PET .
  • EBCD adoption and payer coverage: >45% patient opt-in; multiple capitated groups added EBCD as a covered benefit; ongoing discussions with commercial payers; some capitation contracts converted to fee-for-service with higher rates .
  • Joint ventures pipeline: Inbound calls from health systems rising; leveraging DeepHealth to solve radiology shortages and turnaround challenges; announcements expected in coming weeks/early Q1 .
  • Labor costs and mitigation: Technologist market challenging but stabilizing; internal recruiting/training, tuition reimbursement, bounties; TechLive enables multi-room control and expands hiring pool geographically .
  • PET/CT drivers: PSMA prostate imaging ~12% of PET/CT volume; amyloid brain ~8%; pipeline of novel tracers to drive future utilization .

Estimates Context

  • Revenue beat: Actual $522.9M vs consensus $494.0M; significant top-line strength from advanced imaging and capacity gains; FY25 Imaging Center revenue guidance raised accordingly *.
  • EPS miss: Adjusted diluted EPS $0.20 vs consensus $0.227; driven by non-GAAP items (swap losses, severance, non-operational rent, R&D, acquisition costs, lease abandonment), and continued labor cost pressure limiting incremental flow-through *.
  • EBITDA (SPGI basis) miss; note company emphasizes adjusted EBITDA ($84.9M) for operating performance; consensus comparisons on SPGI’s definition may differ due to non-GAAP adjustments *.

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Strong core demand and pricing: Advanced imaging volumes and reimbursement gains are driving double-digit revenue growth and margin resilience; raised FY25 Imaging Center guidance underpins confidence .
  • Digital Health scaling: iCAD integration ahead of plan; CMODE ultrasound AI deployed; AI revenue +112% YoY within Digital Health; expect continued cross-sell via expanded salesforce .
  • Operational tech edge: TechLive and dynamic scheduling materially expand capacity and reduce closures; offsets labor constraints and supports sustained mix shift to higher-acuity studies .
  • Capital strength and M&A optionality: $804.7M cash, ~1.0x net debt/adjusted EBITDA; pipeline for imaging centers and digital health acquisitions; AlphaRT adds remote staffing/training capability .
  • Regulatory tailwind into 2026: CMS final rule implies ~$4–$5M Medicare uplift on ~$2B revenue, breaking multi-year cut trend; likely positive for out-year guidance .
  • Near-term catalysts: Investor Day showcasing AI portfolio and three-year plan; RSNA product demonstrations; potential JV announcements and further payer coverage for EBCD .
  • Watch estimate revisions: Expect upward revenue revisions; EPS/EBITDA consensus may adjust to reflect non-GAAP treatment and investment in R&D (DeepHealth), moderating near-term profitability mix *.
Notes:
- Company non-GAAP metrics: Adjusted EBITDA and Adjusted EPS exclude non-recurring/non-cash items (see reconciliation) **[790526_0001683168-25-008100_radnet_ex9901.htm:11]** **[790526_0001683168-25-008100_radnet_ex9901.htm:12]**.
- All consensus/estimate values marked with * are from S&P Global.