Radnet, Inc. · NASDAQ:RDNT
Radnet — Primedex Health Systems — Roth Capital Conference - September 2006
32 slides from Radnet's conference presentation, Sep 6, 2006
Slide 1: Roth Capital Conference - September 2006
Roth Capital Conference - September 2006
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 the benefits of the proposed merger of Primedex Health Systems, Inc. and Radiologix, Inc., expected synergies, antici
Slide 3: Presenters
Howard Berger, MD, Chairman & CEO Mark Stolper, Chief Financial Officer Presenters
Slide 4: Agenda: I. Introduction: The Acquisition
I. Introduction: The Acquisition II. Diagnostic Imaging Industry Overview III. Overview of Primedex/Radiologix V. Financial Information IV. Benefits & Strategy of Merged Companies
Slide 5: Acquisition Summary
Acquisition Summary On July 7, 2006, Primedex Health Systems (OTC: PMDX) signed a merger agreement under which it will acquire Radiologix (AMEX: RGX) to form RadNet, Inc. 1 (referred to herein as “Combined Company”) Cash and stock transaction valued at approx. $208MM 2 $42.95MM in cash and 22.6MM sh
Slide 6: Acquisition Summary
Acquisition Summary Combined Company to be managed by current executives from Primedex and Radiologix Merger expected to create largest national owner and operator of fixed-site diagnostic imaging centers, with 130 locations Provides geographically diverse revenue base with concentrated regional net
Slide 7: Agenda: II. Diagnostic Imaging Industry Overview
I. Introduction: The Acquisition II. Diagnostic Imaging Industry Overview III. Overview of Primedex/Radiologix V. Financial Information IV. Benefits & Strategy of Merged Companies
Slide 8: Diagnostic Imaging: A Large and Growing Market
Diagnostic Imaging: A Large and Growing Market National imaging market is estimated at $100 billion 1 Advanced imaging procedures growing at 10% CAGR 1 Demand escalating for diagnostic imaging services Aging population – the over 65 year old demographic group is expected to increase 54% nationally 2
Slide 9: Settings for Diagnostic Imaging
Settings for Diagnostic Imaging Fixed-site, free-standing facilities Generally do not maintain contractual relationships with hospitals or clinics Single-modality to multi-modality facilities Physician referrals for patients Ex. RadNet, Radiologix, Doshi Diagnostic, Center for Diagnostic Imaging Mob
Slide 10: Types of Exams We Perform
Types of Exams We Perform MRI – What: Produces high resolution cross-sectional images of soft tissue. Why: brain, spinal cord and interior ligaments. Nuclear Medicine – What: Producers images of anatomical structures. Why: Assesses organ function in heart, kidney, thyroid and bones. Mammography – Wh
Slide 11: Recent Medicare Reimbursement Reduction Has Created Opportunity
Recent Medicare Reimbursement Reduction Has Created Opportunity On November 2, 2005, Medicare announced reimbursement cuts from Contiguous Imaging Procedures, which are multiple exams of contiguous body parts performed in one sitting On February 1, 2006, the Deficit Reduction Act (“DRA”) of 2005 was
Slide 12: Agenda: III. Overview of Primedex/Radiologix
I. Introduction: The Acquisition II. Diagnostic Imaging Industry Overview III. Overview of Primedex/Radiologix V. Financial Information IV. Benefits & Strategy of Merged Companies
Slide 13: Primedex: Overview
Primedex: Overview A leading multi-modality diagnostic imaging provider in California 61 centers located in 11 high-density, growth regions “Hub and Spoke” model 36 multi-modality centers supported by 25 single-modality centers Provides diagnostic imaging services for over 700,000 lives under exclus
Slide 14: Radiologix: Overview
Radiologix: Overview A leading national provider of outpatient diagnostic imaging services operating 70 facilities in 8 primary regional markets 52 multi-modality centers and 18 single-modality centers, located primarily in Maryland, California and New York LTM revenue of $255.5MM and EBITDA of $45.
Slide 15: Combined Company will be Multi-Modality Focused
Combined Company will be Multi-Modality Focused 88 multi-modality centers and 43 single-modality centers Extensive offering of routine imaging procedures partially insulates Combined Company from impact of DRA, which affects MRI/CT modalities 1. Excludes corporate revenue and after bad debt expense
Slide 16: Combined Company will have Diversified Payor Mix
Combined Company will have Diversified Payor Mix Exclusive capitation business decreases the Combined Company’s exposure to potential pricing changes from commercial payors Capitation dilutes the % of our business from each of the other payor classes Capitation price escalators create “built in” inc
Slide 17: Capitated Contracts May Create a Barrier to Entry
Capitated Contracts May Create a Barrier to Entry Primedex has 27 capitated contracts with California physician groups representing 28% of Primedex’s LTM 4/30/06 revenue (will be 14% of Combined Company) Exclusive nature of capitated contracts provides revenue stability On average, Primedex’s arrang
Slide 18: How Does Capitation Work?
How Does Capitation Work? $200 PMPM $50 PMPM $4 PMPM Company HMO Medical Group RadNet Buys insurance coverage for its employees on a per member per month ("PMPM") basis Capitates a portion of its enrollment for all related medical care on a PMPM basis Sub-capitates radiology expenditures with Primed
Slide 19: Agenda: IV. Benefits & Strategy of Merged Companies
I. Introduction: The Acquisition IV. Benefits & Strategy of Merged Companies II. Diagnostic Imaging Industry Overview III. Overview of Primedex/Radiologix V. Financial Information
Slide 20: Regional concentration, multi-modality focus, diversified payor mix
Regional concentration in California, Maryland, and New York Focus on multi-modality facilities Diversified payor mix Long term, stable radiology relationships Best practices/cross culturalization Operational efficiencies + =
Slide 21: Largest fixed-site diagnostic imaging provider
RadNet centers Radiologix primary centers After the merger, we believe the Company will be the largest fixed-site diagnostic imaging provider 130 facilities located primarily in California, Maryland and New York Other facilities located in Florida, Kansas, Colorado, and Minnesota The Company will ha
Slide 22: Stable, Long-Term Relationships with Radiology Physician Groups
Stable, Long-Term Relationships with Radiology Physician Groups Primedex (RadNet) operates under an affiliated medical group relationship with Beverly Radiology Medical Group (“BRMG”) Three years ago, BRMG established fellowship programs, which are typically only available in university settings or
Slide 23: Growth Strategy
Growth Strategy Near Term: Focus on synergies and integration of two companies (corporate, and California regional offices) Implement best practices- compliance, clinical operations, reimbursement Enhance same store sales including implementation of RadNet contracts for California Radiologix centers
Slide 24: Experienced Management Team
Experienced Management Team Howard Berger, MD – Chairman and Chief Executive Officer Howard Berger, M.D., co-founded RadNet in 1981 and has over 25 years of experience in the development and management of successful healthcare businesses. Dr. Berger began his career in medicine at the University of
Slide 25: Experienced Management Team
Experienced Management Team Norman Hames – Chief Operating Officer of Western Operations With 20 years of experience in the industry, Mr. Hames oversees all aspects of facility operations. His management team, comprised of Regional Directors, Site Managers and Sales Managers are responsible for resp
Slide 26: Agenda: V. Financial Information
V. Financial Information I. Introduction: The Acquisition II. Diagnostic Imaging Industry Overview III. Overview of Primedex/Radiologix IV. Benefits & Strategy of Merged Companies
Slide 27: Unaudited Pro Forma Combined Historical Revenue
Unaudited Pro Forma Combined Historical Revenue 3 Historical Financial Summary 1 For the 12 months ended 10/31/05 for Primedex and 12/31/05 for Radiologix 2 For the 6 months ended 4/30/06 for Primedex and 6/30/06 for Radiologix 3 Source: Primedex Health Systems Form S-4 dated August 22, 2006 $ Milli
Slide 28: Significant Acquisition-Related Cost Savings
Significant Acquisition-Related Cost Savings Cost savings can be achieved Duplication of certain departmental functions in the corporate and regional offices Accounting, legal, HR, purchasing, etc. Duplication of certain operational expenses Purchasing, repairs and maintenance, etc. Elimination of c
Slide 29: Announced Pro Forma 2007 Combined EBITDA
Announced Pro Forma 2007 Combined EBITDA 1 Historical Financial Summary 1 1 Source: Primedex Health Systems and Radiologix per their joint press release on 7/7/06. EBITDA is net of announced anticipated annual cost savings and the effects of the Deficit Reduction Act and Contiguous Scan reimbursemen
Slide 30: Other Combined Pro Forma Metrics
Other Combined Pro Forma Metrics 4,000 Approximate Number of Employees 4 $161.3 million Net Operating Loss Carry Forward 3 64.1 million Shares Outstanding 2 $365.3 million Debt 1 1 Source: Primedex S-4 dated 8/22/06. Includes current maturities and long-term debt of Term Loan B, Second Lien Term Loa
Slide 31: Primedex+Radiologix: Highlights
Primedex+Radiologix: Highlights A Leading provider in the fixed center imaging services industry Primedex+Radiologix have complementary concentrated geographic operations and management systems Significant potential revenue and cost synergies Platform for future growth and consolidation Multi-billio
Slide 32: Roth Capital Conference - September 2006
Roth Capital Conference - September 2006
Primedex Health Systems — Roth Capital Conference - September 2006 on 6ix