Radnet, Inc. · NASDAQ:RDNT
Radnet — Investor Presentation (September 2023)
23 slides from Radnet's investor presentation, Sep 19, 2023
Slide 1: Mark Stolper, Chief Financial Officer, September 2023
Mark Stolper Chief Financial Officer September 2023 NASDAQ: RDNT
Slide 2: Safe Harbor
Safe Harbor This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Specifically, statements concerning RadNet’s ability to continue to grow the business by generating patient referrals and contracts with radiology practi
Slide 3: Introduction
1 Introduction 2 Diagnostic Imaging Industry Overview 3 Overview of RadNet 4 Financial Information and Core Strategy
Slide 4: RadNet Summary
RadNet Summary Largest national owner and operator of fixed-site diagnostic imaging centers, with 363 locations • Founded as a one center CA operation in 1980 • Major consolidator in the highly fragmented imaging industry • 33% of RadNet centers are held within joint ventures with large health syste
Slide 5: RadNet Summary (continued)
RadNet Summary (continued) Emphasis placed on scale and “multi-modality” strategy • One-stop-shopping for referral sources • Lessens our exposure to reimbursement changes; diversifies revenue base Best positioned company to capitalize on industry consolidation and organic growth opportunities • No o
Slide 6: Types of Imaging Exams: Modalities
Types of Imaging Exams: Modalities Advanced Imaging MRI CT PET Produces high-resolution cross-sectional images Produces high-resolution cross-sectional images. Determines metabolic activity. Applications: of soft tissue. Applications: Assesses brain, spinal Applications: Assesses tumors, strokes, As
Slide 7: Diagnostic Imaging Industry Overview
1 Introduction 2 Diagnostic Imaging Industry Overview 3 Overview of RadNet 4 Financial Information and Core Strategy
Slide 8: Diagnostic Imaging: A Large and Growing Market
Diagnostic Imaging: A Large and Growing Market Diagnostic Imaging Procedure Volume (1) US Imaging Centers (by State and Region, 2013) 730 712 695 678 663 635 648 622 596 608 2.5% 2.5% 2.7% 2.4% 2.2% 2.3% 1.9% 2.1% 2.1% 1.8% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Annual Imaging Procedures
Slide 9: Diagnostic Imaging: A Large and Growing Market
Diagnostic Imaging: A Large and Growing Market Growth has resulted from … • Aging population – 65-year-old demographic is expected Shift to Outpatient to increase significantly Services driven by… • Growing population – particularly in California, our • Payors steering volume to less largest market
Slide 10: Industry Consolidation and Rationalization
Industry Consolidation and Rationalization “Mom-and-pop” lack necessary economies of scale • Not well capitalized and have a higher cost structure • Single-modality facilities that are more impacted by reimbursement changes and competition from 2019–2022, we multi-modality facilities completed over
Slide 11: Overview of RadNet
1 Introduction 2 Diagnostic Imaging Industry Overview 3 Overview of RadNet 4 Financial Information and Core Strategy
Slide 12: Scale and Leverage in Targeted Geographies
Scale and Leverage in Targeted Geographies Largest owner-operator of fixed-site imaging centers in the U.S. 363 Imaging Centers RadNet operates in states with ~25% of the U.S. population. NJ: 33 DE: 11 NY: 95 MD: 68 FL: 4 CA: 141 AZ: 11 +9,000 +750 24 Radiologists with Employees Joint Ventures Subsp
Slide 13: Diversified Revenue Mix Mitigates Reimbursement Risk
Diversified Revenue Mix Mitigates Reimbursement Risk Emphasis placed on multi-modality strategy • “One-stop-shopping” for referral sources • Lessens exposure to reimbursement changes, diversifies revenue base Extensive offering of all routine imaging procedures partially insulates us from reimbursem
Slide 14: Varied Payor Mix Mitigates Reimbursement Risk (continued)
Varied Payor Mix Mitigates Reimbursement Risk (continued) Strong payor relationships – RadNet is a critical provider of diagnostic imaging solutions to healthcare insurance providers Payor diversity mitigates exposure to possible unfavorable reimbursement trends within any one payor class Exclusive
Slide 15: Capitated Contracts Create a Barrier to Entry
Capitated Contracts Create a Barrier to Entry RadNet has over 35 capitated medical groups California with whom we work We receive a per-member-per-month fixed price for exclusively providing outpatient imaging to over 1,900,000 lives in CA (HMO commercial, Medicare Advantage and Managed Medicaid liv
Slide 16: RadNet Joint Venture Strategy
RadNet Joint Venture Strategy RadNet has 24 joint ventures with hospital and health system partners • About 1/2 of the ventures are unconsolidated (RadNet’s ownership is between 35%–55%) • Remaining 1/2 of ventures are consolidated (RadNet’s ownership is between 49%–94%) • Notable partners include M
Slide 17: Information Technology
Information Technology Provider of PACS/RIS products, and hired an industry-leading software development team • Completing the integration of RadNet centers for significant workflow improvements and cost reductions • Growing the eRAD solutions by continuing to sell them to other industry participant
Slide 18: Opportunity in Artificial Intelligence
Opportunity in Artificial Intelligence RadNet created an Artificial Intelligence subsidiary to pursue opportunities in cancer screening for large patient populations; focus on the four most prevalent cancers of Breast, Prostate, Lung and Colon Acquired Deep Health in Apr 2020 • Focused on interpreta
Slide 19: Financial Information and Core Strategy
1 Introduction 2 Diagnostic Imaging Industry Overview 3 Overview of RadNet 4 Financial Information and Core Strategy
Slide 20: Strong Q2 Performance
Strong Q2 Performance Revenue Adjusted EBITDA Aggregate Procedures Same-Center Procedures ↑ 13.8% Up from 2Q 2022(1) ↑ 14.7% ↑ 11.4% ↑ 7.1% Up from 2Q 2022 Up from 2Q 2022(1) Up from 1Q 2022 • Completed $259mm offering of public stock on June 16, 2023 • Ended quarter with $357 million cash balance a
Slide 21: 2023 Guidance
2023 Guidance • Guidance implies increases in all operating and financial metrics from 2022 performance • Growth to come from same-center performance, de novo centers opened at the end of 2022 and to be opened in 2023, reimbursement increases from private and capitated payers, new and expanded healt
Slide 22: Proven Track Record of EBITDA Growth and Cash Flow Generation
Proven Track Record of EBITDA Growth and Cash Flow Generation o Over the past 14 years, RadNet has had a consistent track record of achieving profitable growth and generating significant cash flow o COVID-19 had a temporary impact during 2020 Net Revenue Reported Adjusted EBITDA Net Revenue COVID Im
Slide 23: Current Capitalization and Valuation
Current Capitalization and Valuation Valuation Metrics 1 Equity Market Capitalization @ $28.1 per share $ 1,904.4 mm 2 Net Debt - 6/30/23 518.9 mm Curent Enterprise Value $ 2,423.3 mm Midpoint of 2023 Revised EBITDA of Guidance 3 $ 237.0 mm Net Leverage (Net Debt/Midpoint 2023 EBITDA Guidance) 2.2 x