Hey, good afternoon. Hopefully, everyone's had some coffee and is not falling asleep. Welcome again to Nashville. Now, I'm excited for our next presentation. I'm Brian Tanquilut, Healthcare Services Analyst here at Jefferies. With us today is RadNet, with my good friend Mark Stolper, the CFO of the company. RadNet is the largest operator of, what do you call this, independent freestanding imaging facilities across the country, heavy operations on the East Coast and the West Coast. Mark, thank you for joining us today. Really appreciate it. Thanks for having me. Let's start. Kind of like a State of the Union, what's going on with RadNet? It is business as usual, if there ever is a usual. Business is doing well. We've been growing nicely. Obviously, you've tracked us since, I think, 2007 is when you started covering us. You know, we've grown the business at a 9.1% compound annual growth rate on the top line during that period of time. We've accelerated that growth in recent years, partially due to industry factors that continue to drive more and more patient volume into the outpatient centers because we're the principal low-cost alternative to much more expensive hospital imaging, and that continues to drive our same-center performance. Historically, we've driven same-center procedure volume growth in the kind of 2% to 4% range. Over the last several years, as more and more of this business is leaving the more expensive hospitals, we are routinely in the mid-single digits, particularly for advanced imaging. Even with PET/CT and some of the unique trends that are driving that modality, we're growing over 15% on a same-center basis. The core imaging center business is doing well. We are experiencing and driving margin enhancement due to a number of both operational improvements that we've implemented, as well as this new digital health platform that we've been growing very quickly that is both operational and workflow software, as well as we're leading the industry towards clinical artificial intelligence solutions, which we've been implementing in our own centers and licensing to others. We've had a great second quarter. We're expecting to have a strong second half of the year and excited about next year. Mark, maybe taking a step back, I think some folks in the audience are maybe new to the RadNet story. If we were to think about your business, I think of it as three buckets, right? One is you operate clinics, one is you have clinical AI, and then number three would be kind of like a digital backbone or like digital health that supports imaging center facilities, right? Is that the right way to think about it? How would you describe those three businesses and what are the drivers or the latest things that you're seeing across those business lines? I think the important thing to point out here is that those businesses are all symbiotic. What I mean by that is the success that we're having in the digital health platform, meaning the DeepHealth OS software technology, which is the backbone for our business, or it's the new backbone for our business. The predecessor software is called eRAD. That has significant implications to our core business. Even though obviously we're going to be licensing, and we do license the predecessor product to the rest of the industry, the new platform brings with it tremendous efficiencies, operating efficiencies into our core business. It automates many of the processes that we perform all along the patient journey around patient scheduling, pre-authorization, insurance verification, certain revenue cycle functions, certain capabilities that we provide to the radiologists to make them more productive and more accurate. While those all represent businesses in and of themselves to sell to the rest of the industry, as we are currently doing, it also is bringing tremendous efficiencies to our core platform as we implement them. We're excited, and it's a very unique situation to have both a digital health business as well as a core healthcare services business under the same roof because the imaging center business acts as a living laboratory for the digital health platform in that one, we're creating data that is being used by digital health. We do over 11 million scans per year within the RadNet imaging centers, and that data is used both for the workflow tools as well as for training AI algorithms. Also, many of the requirements for the products that are being developed by digital health are coming out of the problems and the pain points that we're feeling within the imaging center platform. The best example of that is the TechLive product, which we just got approved through the FDA, which is a remote scanning solution which allows for a technologist, whether it's an MRI tech, a CT tech, or a PET/CT tech, to control the exam and control the machine remotely. It's helping us tremendously from a recruiting standpoint, and labor has been the most difficult situation that we've encountered and the industry has dealt with over the last few years. It's also allowing us to keep exam rooms open longer, expand hours, expand into the weekends, and cover shifts when a tech doesn't show up for work. Having these businesses under one roof right now is part of the success that we're exhibiting. Mark, maybe let's focus first on the clinic side of the business, right? You've delivered a lot of growth there. You're seeing acceleration in organic growth, like you were saying, mid-single digits. I think we've even seen it as high as 7%-ish, somewhere in that ballpark. What is driving that? I know you just mentioned earlier that you expect the back half to be strong. Where's that confidence coming from and what are you seeing so far that gives you that ability to say we feel really good about the back half? I’d say a few things. First, the demand for diagnostic imaging continues to grow each year, particularly around advanced imaging, which, while advanced imaging may only be 25% to 30% of all the imaging that takes place, it drives a lot of the revenue and drives a lot of the margin that we have in our business. The reason why imaging is growing is we're benefiting from all of the demographic changes that are driving healthcare utilization in this country, and that's the growing population and the aging population. What is unique to imaging is that imaging is squarely in where healthcare is trying to go, and that's, you know, a focus on population health, on screening, on non-invasive medicine, on early detection of disease. As the technology has gotten better and better, both in terms of equipment, post-processing software, AI, innovations in contrast materials, innovations in new radioactive pharmaceuticals, it just creates more and more clinical indications for ordering these types of tests each year. The overall pie of imaging is growing and it's projected to grow for many, many years to come. In addition, as I mentioned earlier, as that pie has grown, there's also a market share shift that's occurring within that growing pie from hospitals in favor of freestanding imaging centers. This trend is not unique to radiology or diagnostic imaging. You're seeing it in all aspects of healthcare, whether it's, you know, an outpatient laboratory, physical therapy, the growth of urgent care centers, home health. The commercial payers in particular have instituted, predominantly all of them, some form of pre-authorization or utilization benefit management that once they approve the advanced imaging exam, they try to direct the patient into the lower cost sites of care. In our markets, RadNet's pricing is anywhere between a half and a fifth of the pricing that the local hospitals charge. I think we're just on the right side of the cost curve in healthcare, and more and more of the business is finding its way into the freestanding centers. It's also being directed by patients as well because more and more of us have elected into these higher deductible health plans in recent years, and patients are becoming more educated as to where to get their healthcare performed at a reasonable cost. We're seeing, you know, a lot of self-directed patients into our centers. Mark, just back to your comment on expectations for the back half of the year, like just that confidence. I mean. Yeah, I mean, you know, our business, I guess that confidence comes from the fact of seeing our business on a daily basis, seeing the volumes coming through. I don't think that there is anything that we can see on the horizon that will disrupt some of the trends that I just talked about. We've invested a lot of money also in some of the newer technologies that will give us more and more capacity in our centers. I'll give you a couple of examples of that. One of which is MRI technology. The newer equipment that's being sold by the major manufacturers all come with more advanced post-processing software that allows for shorter scanning times. There's even third-party software that we've availed ourselves of that you can put on the older equipment that can also do the same thing where you can take, you know, a dirtier image and then using the post-processing software, get it to the resolution that a radiologist needs to read it. We now can do many more MRI scans in the same number of workdays, which, and because there's demand out there for MRI, we've been able to grow our advanced imaging more significantly. We called out on the second quarter earnings call that we had over a 100 basis point increase in advanced imaging as a% of our total imaging relative to last year's second quarter. The better post-processing software and MRI, some of the newer CT tests such as CT angiography, coronary CT angiography, and then the PET/CT business has been exploding mostly due to the PSMA prostate imaging and the amyloid brain studies. All of that gives us confidence in the second half of the year that we're going to continue to see a lot of patients. Mark, one of the things that, as you mentioned, the site-of-service shift that's happening that's being driven by the payers, right, where they're restricting or making it harder to get your scan in the hospital setting. I know one of your strategies is to joint venture with hospitals, and you have good examples of, you know, RWJBarnabas Health up in New Jersey and Dignity Health down in Arizona. What is your pitch now? Or why would a hospital go with you to joint venture, and why would they choose to joint venture when historically imaging was a moneymaker for a hospital? Yeah, sure. I think a lot of health systems recognize that they're on the losing side of the trends. Many of them who are forward-thinking at least are saying, look, I have two choices now. Either A, I can stick my head in the sand and try to hold on to this, as much of this business for as long as possible at these incredibly high prices, and then I can figure out what to do sometime in the future. Or B, they can say, okay, what can I do today to position myself to actually benefit from this trend as opposed to fight the trend? We're offering them a strategy towards that end, meaning we're allowing them either to invest in existing RadNet facilities in their markets and then profit off the growth of that, you know, of that practice going forward. Or B, sometimes we both put in capital and we build centers together that are outpatient centers that charge outpatient pricing. Sometimes we'll put in capital and we'll buy imaging centers together in a joint venture. It gives the hospital, the hospitals have notoriously not been effective in managing and operating outpatient facilities at outpatient pricing because it demands tremendous efficiency. It demands benefits of scale, which they don't have in diagnostic imaging. They looked to someone who has the track record, the expertise, the background in managing outpatient imaging centers at scale very profitably. For us, it's very beneficial because the quid pro quo in allowing the hospital to partner with us is that we expect them to utilize their relationships with community-based physicians. Instead of driving those referrals into the outpatient department of the hospital, they send it now to our jointly owned facilities. As a whole, as a group, our hospital joint venture centers perform slightly better than our wholly owned centers because of that. Today, 155 of our 405 locations are held within hospital joint ventures, which represents a little over 38% of our centers. We anticipate that that could be over 50% in the coming couple of years. No, that's awesome. Maybe like going deeper into the whole synergy between the different business lines, right? We talked about DeepHealth OS. What does DeepHealth OS bring to the table for the core RadNet clinic operations? Like what will change once DeepHealth OS is fully rolled out? Sure. Just to be clear, DeepHealth OS is an end-to-end operating platform, and we divide it internally into what we call an operation suite and a diagnostic suite. The operation suite is the workflow solution that tracks the patient journey from the time of scheduling up to the point where their exam is being read. It has a scheduling module, pre-authorization, insurance verification. It houses all of the patient demographic information. It collaborates or is integrated into our billing system for all the revenue cycle. The diagnostic suite is the image management solution, or what the industry used to call PACS, which stands for Picture Archiving and Communication System. DeepHealth has an end-to-end solution that does both of those things. On the workflow side, most of the processes that we perform are done manually. We have 11,000 employees. It's very labor-intensive from scheduling to the front office people to data entry people to revenue cycle people to customer service, you know, answering billing questions and the like. With the compute power, the growth or the speed at which you can now run these GPUs with AI, with large language models, many of the processes that we've always done, and by the way, this is not unique to RadNet, it's the entire industry, has always performed manually, can now be done in some form of automation. What's unique about DeepHealth OS is that, one, it's a cloud-based solution where our existing eRAD platform is an on-premises solution. You get all the benefits of being cloud-based in terms of the speed, in terms of ability to fix bugs and send updates. You've got all these automation tools that are designed to automate the scheduling process, allowing patients to schedule online. It triages phone calls so that many of the phone calls that we're receiving today and speaking to manually with people can be satisfied with AI bots. It can do electronic pre-authorization and insurance verification and many of the revenue cycle functions. We think this is going to drive tremendous efficiencies all along the cost structure. On the reporting side or the diagnostic suite, there's visualization software, a viewer that spools up much, much more quickly. There's an orchestrator that allows for clinical AI tools to be plugged in very easily. There are reporting tools for voice recognition, transcription, automatic coding engine, automatic reporting tools that do report summaries on behalf of the radiologist. It'll also make the radiologist much more efficient. Mark, as I think about that, right, and I know you're going to sell DeepHealth OS to other folks at some point. I mean, I know the priority is to roll it out in RadNet. How do we think about the ROI from these investments, whether you're pitching it to yourself or to others, or any quantification in terms of the productivity that you can gain from the rollout of DeepHealth OS into RadNet clinics? Sure. One of the reasons why we're focused first on the rollout of the RadNet facilities before licensing this on a widespread basis is because I think our customers want to know that RadNet's eating its own cooking. It gives us the ability to demonstrate the kind of savings and the efficiencies that we're getting internally. Theoretically, if it's working for us, who's the most scale player and the most complex player in the industry, it can work for any player. We're not saying that we're not talking to customers right now because we have over 250 current customers of our predecessor product, meaning the eRAD system. We're going to be upgrading all of them and converting those customers to the new platform. We get two benefits from focusing on RadNet first. One is this demonstration to the outside world that it works and there are benefits to it. Secondly, as we implement it in RadNet, we get the benefits of all those efficiencies, and we should see that coming through our profitability and our margins on the imaging center side. We'll wait for guidance. Yeah, you'll wait for guidance. Yeah. All right. No, that makes sense. Now, the other thing that you talked about are these tools that are emerging in the industry on AI-powered, you know, basically plug-ins into machines that drive efficiency and increase throughput. I think you've talked in the past about your acquisition of CMODE out of New Zealand. Just curious, you know, what can you share about CMODE? What does that do for the RadNet ultrasound operations and P&L benefit? How long will it take to recognize benefits from technology rollouts such as CMODE? Sure. CMODE, for those of you who are not familiar, is an Australian-based company, but same part of the world, that just got FDA approval at the end of last year on a thyroid ultrasound product. What CMODE is, is an ultrasound AI company that allows for automation of both the process at the technologist level as well as the reporting level, meaning the radiologist. The first application is for thyroid ultrasound. Today, RadNet does about 250,000 thyroid ultrasounds per year, which represents close to 10% of all the ultrasounds that we do. Thyroid ultrasound happens to be a very laborious procedure, both at the level of the technologist and in the radiologist. It requires the manual calculations of thyroid nodules, which takes a lot of time. The technologist has to pre-populate a spreadsheet, essentially. That workbook then gets sent to the radiologist. The radiologist uses that data to manually dictate a report. What CMODE does is it automates that process. It automates the measurement of these nodules and then pre-populates the radiologist's report. In the test that we did prior to buying CMODE, we demonstrated at our centers that we could lower the exam time or reduce the exam time by about a third. Instead of taking 30 minutes, you can now do it at 20 minutes at the exam level. It had a similar impact on the radiologist and the report and the reading or the interpreting level. On roughly 907 ultrasounds that we have across the RadNet network, we believe that implementing this technology, not only for thyroid, but its next application, which is breast ultrasound, where we do over 600,000 breast ultrasounds per year, we think that that's going to create capacity that could easily be one to two additional scans per machine per day. Given the fact that there's so much demand for ultrasound out there, as we fill that capacity over time, a lot of that additional revenue will fall through to the bottom line because the only incremental expense to that additional revenue is the reading or the radiologist's interpretation time because it's all happening in the same number of work hours. These are the unique investments that RadNet can make because of our unique scale in the industry. A mom and pop is not going to be able to make these types of investments. We're very, very excited about that. Obviously, that's another technology that we're going to share and license to the rest of the industry. We're at the five-minute mark, and what we've been doing today has been opening the floor for questions from the audience. If there are questions from the audience, please raise your hand and we'll have a microphone ready for you. Kelly. Yes, I just had a question, just particularly about the advanced imaging that you're seeing. There's definitely been a lot of new drugs, big drug companies that require more advanced imaging. I think pyrophosphates are one in particular. Just curious of what you guys are seeing, particularly on that activity. We're just building the advanced imaging space overall. Sure, sure. Yeah, there's a lot of excitement internally within RadNet about the growth of PET/CT, not only the current growth, but the future growth. The current growth is being driven predominantly by two tests, the prostate imaging and the amyloid brain studies. We are involved with a number of the manufacturers in clinical trials for a number of new innovative radioactive pharmaceuticals that are tumor specific. They'll attack certain types of cancer cells and light up on the PET/CT. We think that a number of these are going to be approved through the FDA in the coming 24 to 36 months, which will open up new clinical applications for PET/CT or replace what now is being using FDG, which is sort of a jack of all trades, with some of these newer tracers, which is just going to create more and more of these exams being ordered. We've been growing consistently our PET/CT on a same center volume basis, north of 15%. We have reason to be optimistic that that has some durability into the future. Currently, PET/CT is a small part of our business. It's about 0.7% of our procedure volume, but represents 7% to 8% of our revenue. It's a high reimbursing test and we're pretty excited about it. We have a lot of capacity for PET/CT. We have about 67 machines system-wide that today, on average, do about five PET/CTs per day. They're not sitting dormant when they're not doing PET/CTs because all of our PET/CTs do double duty. When they're not doing PET/CTs, they're doing traditional CT work. As we grow the PET/CT, we'll have to offload some of that CTs onto other machines. We have a lot of capacity, you know, built in to really continue to grow that business. The growth in advanced modalities. How do you measure the capacity on the MRI side? If I read you guys a high TM. Yeah, sure. For those of you who haven't heard the question, the question was around our capacity on the MRI machines. Yes, you're right. Your math is correct. Our MRI machines are extremely busy. We have been benefited by the shorter scanning times from the newer technology. We will be continuing to invest in capacity and adding MRI machines. In general, because of the high demand of advanced imaging, we're looking to add capacity. For instance, last year, we built nine new locations. In 2025, we hope to complete 11 new de novo center openings. We have a similar number of centers in various stages of process for 2026. I guess it's a good problem to have. Capacity is an issue, and we have to continually think of ways to drive more patient volume into our centers. We are consistently expanding hours. We have some centers in the New York metropolitan area and Midtown Manhattan that are scanning till 9:00, 10:00 P.M. and open on Saturdays and Sundays. We have always said that capacity issues are the best kind of problems we can have. We'll always figure out ways to open up new locations, add new machines to existing locations, lease suites that might be contiguous to our centers to add capacity. As long as the revenue opportunity is there, we'll figure out how to do it. The good news is we're not capital constrained. We've got over $800 million of cash on our balance sheet. We're producing a lot of free cash flow on top of that. We are investing heavily in our equipment. This year, we'll likely spend $150 million to $160 million in CapEx. A lot of that has to do with how fast we're opening up these de novo facilities. As long as the opportunity is there, we're going to continue to grow our capacity. Mark, we're at time, but maybe I'll take one question from Sebastian. If you do about the PET/CT, the only solution is radiocarbon, that is in the Alzheimer's. They say that the capacity is a constraint. Yeah, it's hard for me to speak to the capacity of the entire industry. I can only speak to the PET/CT capacity we have at our company. We have a couple of very, very busy PET/CTs that are only doing PET/CTs, meaning they don't have time to do CTs, that are doing regularly between 15 and 20 a day. When you look at our average that are doing five a day, we have significant capacity that's built in. We'll have to figure out what to do with all that CT work that we'll be displacing. If we have to buy more PET/CTs, I'm sure GE or Siemens or Philips would be happy to sell it to us. The rest of the authorities, the FDA, if you get a backlog. Yeah, our plan, and you're talking about as it relates to CMODE. The question was around the timing of the submission to the FDA and the approval of CMODE for breast. The plan is that we'll submit sometime early next year in 2025, and we would expect that process to take three or four months. What we're telling investors or outside stakeholders is that the hope would be by the end of the first half of next year. Sometime in the first half, we would hope to get approval on the breast ultrasound for CMODE. Mark, closing remarks, anything that you believe is underappreciated by investors and anything you want to leave the folks here in the audience with? I think we touched on all the salient, important topics. I'd just leave everybody with the optimism that, speaking for someone who's been at the company for 21 years, I don't think there's been a more exciting time to be in diagnostic imaging. I think we're better positioned today with our capital structure, with the cash, and with the breadth of our management team and the opportunities in digital health than we've ever been today. I think this industry is going to transform in the coming decade, and it is going to adopt these digital solutions, whether we're the successful one or not. I think we're well positioned to be successful. It's a really unique opportunity to be in imaging. Awesome. Thank you so much, Mark. Really appreciate your time today.