Lumexa Imaging Holdings, Inc. Common Stock (NASDAQ:LMRI) Q1 2026 Earnings Call Transcript

Lumexa Imaging Holdings, Inc. Common Stock (NASDAQ:LMRI) Q1 2026 Earnings Call Transcript May 13, 2026

Operator: Thank you for standing by, and welcome to Lumexa Imaging’s First Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, today’s program is being recorded. And now I’d like to introduce your host for today’s program, Sue Dooley from Lumexa Investor Relations. Please go ahead.

Sue Dooley: Thank you, and hello, everyone. We appreciate you joining us today. Leading today’s call are our Chief Executive Officer, Caitlin Zulla; and Tony Martin, our CFO. Before we begin, I want to note that we’ll be discussing non-GAAP financial measures that we consider helpful in evaluating Lumexa’s performance. You can find details of how these relate to our GAAP measures, along with reconciliations in the press release available on our website. We’ll also be making forward-looking statements based on our current expectations and assumptions, which are subject to risks and uncertainties, including factors listed in our press release and in our various SEC filings. Actual results could differ materially, and we assume no obligation to update these forward-looking statements. With that, I will turn the call over to Caitlin. Caitlin, please go ahead.

Caitlin Zulla: Thanks, Sue. Thank you all for joining us today. In Q1, we delivered several meaningful achievements to kick off the year executing on our strategic priorities, which include driving strong same-center growth with an expanding mix of advanced modalities, targeting a record number of de novo openings, ensuring the successful ramp of newly opened centers, accelerating high-impact strategic service lines and expanding our geographic footprint. Here are a few highlights of our announcement tonight. Our Q1 results came in line with our expectations after the seasonal and weather dynamics we discussed in our Q4 call. Q1 volumes ramped throughout March, and we recovered our momentum. Specifically, we drove strong same-center growth and strategic service lines are expanding among a healthy mix of advanced modalities.

In Q1, advanced modalities grew 7% year-over-year with PET growing at 23.1% year-over-year and MRI growing at 8.2% year-over-year. Rollout of our AI-powered breast arterial calcification solution continues with plans for expansion into new markets and strong continued patient uptake. We are actively ramping de novo centers and our 2024 and 2025 cohorts are tracking in line with our expectations and advancing our plans towards long-term growth and profit expansion. And in some exciting news tonight, we completed 2 acquisitions and opened 2 de novos this year, and we are well on our way to achieving our stated goal of opening 8 to 10 de novos to fuel future growth. Meaningfully, one of the acquisitions was an IDTF site in Pennsylvania, the first site in our new JV with UPMC, and we are actively advancing multiple site location plans with this important partner.

And finally, we’re excited to welcome 2 exceptional leaders to Lumexa, each bringing the depth of experience and vision that will help drive our next chapter of growth and results. I’ll go into some more detail in just a moment. At Lumexa, we are addressing a large market opportunity and deploying a disciplined growth algorithm. We are confident we are well positioned to execute our growth plans while driving better outcomes across the imaging landscape. I would like to take a moment to speak about our experience in the market as we meet with health systems and the providers who are so important to us and as we continue with our commercial efforts to drive growth in acuity mix. Our value proposition resonates strongly with patients, providers and payers, reflected in Net Promoter Scores that consistently exceed 90.

We deliver high-quality imaging in more convenient settings on a more timely basis and at a meaningfully lower cost than hospital outpatient departments, helping health systems solve important operational challenges and achieve their patient care and market expansion goals. As we pursue our priorities, it is clear the market is moving towards us. We are benefiting from durable long-term tailwinds, aging populations, new treatment paradigms requiring advanced imaging, rising preventative screening rates and an ongoing shift from inpatient to outpatient care in a fragmented capacity-constrained industry. In our conversations with multiple potential health system partners, they faced struggles with imaging bottlenecks that constrain operational throughput and delay patient access.

This underscores the strong need for outpatient capacity and the growing demand for a partner who can deliver speed, access and capital-efficient expansion. At the same time, many systems are proactively preparing for potential site neutrality by accelerating the shift towards lower-cost outpatient settings, which we believe further reinforces the relevance of our model. And they tell us they like our nimble best-of-breed approach that ensures we will always be able to leverage innovation to drive efficiency and the best patient experience and outcomes. As I mentioned a moment ago, reflecting the sizable growth opportunity we are pursuing at Lumexa, we are delighted to welcome 2 seasoned leaders. First, Kyle Lynch, our new Chief Growth Officer, brings deep experience in building high-performing business development organizations, executing complex transactions and implementing growth strategies that translate into durable financial performance.

And another proven industry veteran, Rikki Mondo has joined Lumexa as Chief Enterprise Operations Officer. Rikki has a strong track record of leading and scaling national platforms to drive performance, integration and operational excellence. As we continue to grow, her focus on enterprise-wide alignment will be critical to delivering for our patients, partners and teams. Welcome, Kyle and Rikki. We are thrilled to have you join our team to help drive disciplined, efficient and sustainable growth through joint ventures, de novo development, acquisitions and commercial growth initiatives. And now a moment on the key elements of our growth algorithm. Our commercial team is laser-focused on driving same-center growth. On the heels of a successful New Jersey launch, we expanded our AI-powered breast arterial calcification program to include New York.

And in both markets, we are seeing strong acceptance for this cash add-on assessment for cardiac health in women. Our team continued their focus on driving advanced imaging. PET and MRI are strategic areas of focus for us. Additional seasonal campaigns targeted gastroenterologists and ENT specialists time for the start of allergy season. These contribute to our growth and increase in acuity mix in Q1. We are on track to expand our geographic footprint through new de novo openings, JV partnerships and carefully selected M&A. Tonight’s announcement showcases the opening of 4 new Lumexa imaging centers, including 2 small but strategic tuck-in acquisitions, demonstrating the strength of our JV partnerships. The first location is in Pennsylvania with UPMC and the second location is in North Carolina with Advocate Health.

The acquired facilities will ramp over time and their integration into our operating platform and as we complete payer enrollment requirements. The 2 new de novos are in South Carolina and Florida, expanding our footprint in attractive MSAs and advancing us towards our goal to open 8 to 10 de novos annually and deliver profitable growth. When it comes to M&A, tuck-in acquisitions of new centers, there is a lot of opportunity to bring our expertise to a fragmented market and accelerate our presence across targeted geographies. We are continuously evaluating accretive opportunities with a disciplined and proven approach. On the JV front, in addition to excitement around our ramping UPMC partnership, we are cultivating a robust pipeline of potential health system partners with multiple ongoing conversations at various stages.

In my conversations with health system leaders, it is clear to me that our approach to joint ventures is a key differentiator for our company. Health systems are seeking ways to participate in the rapid site of care shift to outpatient imaging and grow their outpatient ambulatory footprint. Our JV model provides a highly effective entry point through clinical, commercial and operational excellence we demonstrate, particularly in de novo development, Lumexa Imaging is well positioned to help systems execute against these ambitions while they remain focused on their broader enterprise priorities. In return, these partnerships accelerate our presence in any given market. Finally, a note on our ongoing efforts to scale our company efficiently. We are constantly targeting efficiency gains to meet growing outpatient imaging volume and leverage our installed base of centers and equipment within.

Our FastScan integration continued rolling out across our centers, and we are targeting 2/3 adoption by the end of 2026. We are also successfully leveraging virtual cockpit for remote MRI scanning, which allows us to minimize the impact of machine downtime to flex our staffing schedules and to extend our hours to serve our patients. And we continue to advance our strategy to leverage technology and AI across support services functions to drive scale as we continue to grow. As I conclude my remarks, I want to briefly note that one of our vendors recently experienced a cybersecurity incident that involved a breach of Lumexa data. Unfortunately, these types of events have become increasingly common across industries. Our patients are always our top priority, and we are fully committed to doing right by them.

We have responded swiftly and are taking the steps necessary to address the situation, protect our patients and comply with applicable laws and regulations. Importantly, we have reviewed the situations and its effects, and we do not believe it has a material impact on our business or financial results. In the spirit of transparency, we wanted to make you aware. Given the nature of the event, we cannot say more at this time and we will, of course, provide updates in the future as we have them. Wrapping up, I’m pleased with our Q1 results. We move forward into Q2 with confidence fueled by a strong execution and a sense that at Lumexa Imaging, we are in the early innings of capitalizing on the opportunities ahead of us. We are inspired by our mission to extend access to high-quality imaging through elevated compassionate care, improving lives and advancing health care across the country.

Before turning the call over to Tony to review our first quarter in more detail, I want to say a huge thank you to our dedicated team members and radiologists. With that, Tony, please continue.

J. Martin: Thank you, Caitlin, and thank you all for joining us today. On today’s call, I’ll review the financial results and speak to some key drivers of our performance for the quarter. I’ll then provide our outlook for full year 2026. To supplement my review of our GAAP financials on today’s call, I will cite some system-wide metrics to help you better understand our overall performance and the breadth of our business. System-wide metrics include all centers that we operate, including those we own as well as the centers we operate in our 8 joint ventures with health systems. Turning to our first quarter financials. Consolidated revenues came in at $253 million, an increase of 3% compared to the same period last year. System-wide revenue growth, which includes all sites we operate, was 4% in the quarter, about 2/3 from volume and 1/3 coming from rate, a proportion consistent with how we model the company.

Revenue per unit, which includes both scan and read revenue, also increased due to advanced modalities being a higher proportion of our business and some continuing benefit due to modest increases in contracted rates with payers who appreciate our lower price point compared to hospital-based services. We experienced strong system-wide performance across all our outpatient sites, both wholly owned and in JVs, and we continue to be pleased with the core performance of the business. Advanced modality volumes, which reimbursed 3 to 4x higher than routine modalities, grew 7% versus prior year on a consolidated and system-wide basis. As we discussed on our Q4 call, our first quarter volumes were shaped by a combination of factors: strong Q4 seasonal performance that created enhanced seasonality coming into Q1 and weather-related disruptions in Q1 that temporarily impacted patient volumes at a number of our sites.

Overall, these factors ended up impacting Q1 EBITDA by about $4 million as anticipated. Advanced modalities returned to the fastest and grew 7% for the quarter with strong momentum heading into Q2. Overall, system-wide volume growth was 2.5%, with the strength of advanced being offset by routine scans, which were essentially flat with mammography taking longer to rebound after the storms. While routine scans impact our earnings less than advanced, we’re glad to see them ramping back to further strengthen our confidence around our annual performance. In addition, our payer mix follows a predictable seasonal pattern. Q4 consistently reflects the strength of our commercial book as patients seek care ahead of deductible resets and Q1 naturally sees a relative shift toward our government book as that commercial activity normalizes.

Like many other health care service providers, we experienced a bit more seasonality of payer mix in Q1 ’26 than we did in Q1 ’25, with a bit of decrease in commercial as a percentage of total system-wide revenues. Now to provide some additional detail on our consolidated revenues. Outpatient net patient service revenues at $138 million grew 4% as we delivered same-site growth and new de novos from the cohorts of 2024 and 2025 continue to ramp. Professional fee revenues, our second operating segment, were $59 million, reflecting growth of 1%. Finally, management fee and other revenues grew 5% and were $55 million. Within that management fee line, roughly $21 million represents management fees we earn from operating the sites in our health system JVs. This is usually computed as a percentage of site revenues.

The remaining $34 million in this category represents 0 margin pass-throughs of employee, IT and site level costs that we pay on behalf of our joint ventures. So when you’re modeling us, it’s important to understand those 2 components in terms of impact to margin. G&A for the quarter was $20 million, up $3 million from first quarter of 2025. This reflects $7 million higher expenses for combined public company costs and stock-based comp. An increase that was partially offset by about $4 million in reductions in some transaction-related costs and timing differences in G&A expense in Q1 versus later quarters. The pubco costs, which are in line with the guidance we gave, were $1.2 million in the quarter and are ramping to the full year impact of $7 million.

The stock-based compensation increase from $6 million in Q1 ’25 to $12 million in Q1 ’26 is a function of the resetting of legacy equity comp plans as part of our IPO in December. This takes expected stock-based comp for the full year to around $50 million. Half of that $50 million is related to historic M&A and will be fully amortized by the end of 2026. So looking ahead, we expect ongoing stock-based compensation of approximately $20 million to $28 million per year, starting in 2027. Quarterly amounts may vary depending on timing of vesting. Below operating expenses, we include our equity and earnings of unconsolidated affiliates. This represents our pro rata ownership share of the net income of our JV sites which at $15 million was flat year-over-year, consistent with the overall performance of the business.

Below the operating line, interest expense was $16 million in Q1. This new run rate is $14 million less than Q1 ’25, reflecting our use of IPO proceeds to pay down debt, freeing up more than $50 million in cash annually that we plan to invest in growth. Pretax income was $3 million for Q1 ’26 compared to a pretax loss of $4 million in Q1 ’25. We’re now a cash taxpayer, and so after a tax provision of $1 million in the quarter, net income was $2 million in Q1 ’26 compared to a net loss of $8 million in the prior year period. Our GAAP EPS was $0.02 per share in Q1 and adjusted earnings per share was $0.18. And now on to adjusted EBITDA, which we view as an important measure of our company-wide operating performance and which demonstrates the strength of our financial model.

Our adjusted EBITDA benefits from contributions from our pro rata ownership share of EBITDA of all of our sites, both the ones we own 100% and those in Health Systems JVs. While revenue remained strong in the quarter and particularly from advanced modalities, adjusted EBITDA came in at $51.2 million, flat compared to $51.1 million a year ago, but in line with our expectations. This reflected the impact of seasonality and weather-related volume softness against a partially fixed cost structure, including staffing and facility costs that don’t flex proportionately with short-term volume changes, especially during weather disruptions when scan volumes per day can be suppressed. Despite these site level factors, plus the $1.2 million step-up in public company costs, our adjusted EBITDA margin was 20.3% in Q1 ’26 compared to 20.8% in Q1 ’25.

As with earnings, adjusted EBITDA margin tends to be lowest early in the year and ramp as the year progresses. Before moving on to cash flows, I want to spend a moment on our joint ventures and how they show up in our numbers. We view our JV structures as simple, capital-efficient models to scale our business while generating significant cash flows for us and our health system partners and an amount that tracks closely with our income from these JV sites. JVs extend our brand, support our mission to deliver exceptional patient care, expanding access to high-quality imaging. Details of JV financial performance are included in our quarterly financial statement disclosures as follows. But briefly, JV revenues and expenses are not included in our GAAP results due to our minority ownership position.

Our pro rata share of JV EBITDA is included in our adjusted EBITDA and reflects the operating performance of the assets we own and aligns our EBITDA with the true scale of our business. As an example, if we own 49% of the JV generating $20 million of EBITDA, the system-wide EBITDA contribution for us from that JV would be $9.8 million. Our JVs also distribute cash to us. Those distributions flow into free cash flow as distributions from unconsolidated affiliates, which is a discrete line item on our cash flows from operating activities. These cash receipts are net of any JV CapEx, so we don’t specifically describe JV CapEx in our discussion of cash flows. Debt of these JVs is not on our balance sheet and consists of equipment lease financing totaling $82 million.

Our business generates healthy operating cash flow. The first quarter is traditionally the lowest cash flow quarter of the year due to normal seasonal swings in working capital as well as the seasonality of volumes and earnings. So like our earnings, cash flows generally ramp by quarter. Cash flows from operating activities were $3 million in Q1 ’26. This represents a $17 million improvement over Q1 ’25, largely driven by lower interest payments from refinancing our debt and our IPO last December. Free cash flow, which we define as cash flows from operating activities less CapEx, was negative $2 million for Q1 ’26, a $13 million improvement over Q1 ’25. And now on to CapEx and how we think about it. As we stated at the time of our IPO, in 2026 and 2027, we see a sizable opportunity to accelerate our growth plans in our fragmented industry to earn meaningful returns by investing in de novos, new and upgraded equipment at our existing sites and through targeted M&A.

Our $5 million capital spend in Q1 2026 reflects our plans to grow the business in a disciplined manner. We additionally financed capital expenditures under lease arrangements, which adds to our capital efficiency. In general, as we invest to grow, we currently expect free cash flow in 2026 to operate in the neighborhood of 25% to 30% of our adjusted EBITDA on a full year basis, with belief that it will trend higher with scale and once spending on our growth initiatives and infrastructure to scale our company returns to more normal levels. There can be variation of CapEx across the quarters, of course, due to working capital timing or other strategic uses of capital that we identify from time to time. To answer a question we sometimes receive, our JVs make capital expenditures on their own.

Our cash flows from operating activities are already fully reflective of everything our JVs do. JV sites generate operating cash flows, make capital expenditures and fund equipment lease payments, and then they distribute our pro rata share of the remaining cash to us. This is what I referred to as distributions from unconsolidated affiliates. It’s reflected as a single line item in our cash flows from operating activities. Wrapping up and moving on to our guidance. We’ve now moved through the seasonal and weather-related impacts of Q1 and with healthy growth in advanced modalities, strong demand, improving capacity and contributions from ramping JVs and de novos, we’re well positioned to deliver on our full year commitments. On the strength of these drivers, we continue to expect revenue to be in the range of $1.045 billion to $1.097 billion, adjusted EBITDA to be in the range of $234 million to $242 million, which includes approximately $7 million of public company costs that were not incurred in 2025.

At the midpoint, the adjusted EBITDA growth rate, excluding the addition of these costs being incurred in our first full year of operations as a public company would be 7%. And we expect adjusted EPS to be between $0.71 and $0.77 per share. For some additional color, we expect a gradual sequential ramp in adjusted EBITDA throughout the remaining 3 quarters with the majority of full year adjusted EBITDA coming in the back half of the year as we drive same-center growth, geographic expansion, expand strategic service lines and deliver efficiencies across our company. As we look ahead to Q2 and continue executing on our goals, we’re energized by the opportunities in front of us. So with that, let’s turn to your questions. Operator, would you please open the call?

Operator: Certainly and our first question for today comes from the line of Brian Tanquilut from Jefferies.

Q&A Session

Brian Tanquilut: Maybe just on the UPMC transaction first. Just curious, I mean, is this how we should be thinking about it where you could accelerate the ramp within the UPMC joint venture as you do like start-up acquisitions here to build the scale with that partnership?

Caitlin Zulla: Yes. Thank you so much, Brian. We are exceptionally excited to start off the UPMC joint venture with the acquisition of a facility and very much it is something that will continue to drive the growth of our partnership together. We are actively advancing site planning with UPMC and expect to be able to announce at least a few de novos with them this year. As a reminder, the JV partnership with UPMC was officially in about August, September of last year. And so typically getting a de novo out of the ground is easier. So excited to already have an acquisition under our belt and then to be able to continue to support it with de novos this year and into next year as well.

Brian Tanquilut: Got it. And then maybe, Tony, just to your comments towards the end of your prepared remarks about the gradual ramp in EBITDA over the course of the year. Just curious if you can share with us how we should be thinking about the magnitude of that Q4 seasonal lift? And then just what the drivers would be for margins and how we should be thinking about kind of the margin progression from Q1 into — all the way into Q4?

J. Martin: Yes, sure. Yes. First of all, remain confident in the full year guidance unchanged. But in terms of the enhanced seasonality that we talked about a few weeks ago, the way we look at that is that it will continue to ramp in a steady way like it does every year, but it’s starting from a bit lower point in Q1. So now the way I look at it is we expect about 55% of our adjusted EBITDA to be in the second half of the year, not meaningfully different than before, maybe 100 basis point shift from our original expectations on how that would be spread. But that’s how we look at the — how that seasonality will play out. And really confident in that because of all the strength we have, particularly in our advanced modalities heading into Q2.

And of course, it’s natural for the results to climb by quarter after the annual deductible reset kind of starts everything at the beginning of the year. And with all the de novos we have, we’ve got 15 that we’ve opened just since late 2024, all those ramping through the year. That will add to that — why it’s allocated that way through the year.

Operator: And our next question comes from the line from Benjamin Rossi from JPMorgan.

Benjamin Rossi: So the combined $4 million EBITDA impact during 1Q from that volume pull-forward dynamic and weather-related drag. In your framing of this year’s seasonality impact as being enhanced, can you provide any framing on how this year’s weather impact or combined impact as compared to previous years? And then is the magnitude of drag relative to 1Q earnings larger than normal?

J. Martin: Yes. Yes. I mean weather happens, and it’s part of the business, so it’s difficult to predict with any precision. But yes, it was a more meaningful factor for us this year than usual. There were 4 separate weather events that were a pretty big deal in a number of markets. And so no, we don’t consider that quite a normal year, but it is something normal to have to manage through when it happens. So that is a part of the enhanced seasonality we’ve seen.

Benjamin Rossi: Got it. And I suppose just as a follow-up on the full year guide for some of your volume recapture assumptions that has happened from 2Q through 4Q to make up some of the lost 1Q volume? Or otherwise, what does your guide assume for the portion of those volumes that have already been rebooked versus those that are still assumed to be maybe recaptured later in the year?

Operator: Sure.

J. Martin: Well, we’ve captured a lot of the advance already. That was the fastest to come back. And of course, we love that because that’s the higher reimbursement, higher-margin business and a bigger part of our book all the time. So that came back first. Some of the routines came back a little more slowly and we will be ramping into Q2, Q3. But predominantly, what drives the ramp is just the resetting of deductibles at the beginning of the year and how that plays out over the year for many health care service providers. There’s a natural ramping to the business heading toward the biggest performance being in Q4. So that happens kind of steadily through the year. And of course, also the de novos, we have — there’s so many of them now, 15 that are ramping very, very well.

All of them are at or above the expectations we had for them and only gaining momentum quarter-by-quarter throughout 2026. So that’s another reason we have a lot of confidence in kind of where we’re headed as the year unfolds.

Operator: And our next question comes from the line of Matt Mardula from William Blair.

Matthew Mardula: This is Matthew Mardula on for Ryan Daniels. And can we get an update on the percentage of MRI machines that currently have the FastScan software technology? And then overall, how are you expecting to add the FastScan software to MRI machines? Is it more second half weighted? Any color into that? And then for the machines that have had the FastScan software implemented this quarter, how has the initial increase in capacity and volume been compared to your internal expectations?

Caitlin Zulla: Yes. Thank you, Matt, so much. I appreciate the question. When we think about advanced growth, really proud of the strength that we were able to demonstrate in Q1, both our system-wide and consolidated at 7%. We were able to call out in our earnings script, PET over 23% year-over-year growth, which is fairly remarkable and then MRI at 8.2%. A significant driver of that strong — excuse me, strong MRI growth is, as you said, FastScan. We continue to install FASTScan as we can across our fleet, either through upgrades or system enhancements. We started the year at 51% and said we’d get to just north of, I think, 66%, 67% of our MRI fleet with FastScan before the end of the year, well on track to achieve that. And then when we think about sort of the performance of the centers with FastScan they’re performing really well.

Our team is continuing to think through scheduling efficiencies. And I think just notably a benchmark that gives you a sense of the strength and success is that advanced as a percentage of our total volume this quarter was 37.4% in Q1. That’s a 160 basis points improvement over Q1 2025, and that’s higher than every quarter last year. So something that we’re very much committed to growing.

Operator: And our next question comes from the line of John Ransom from RJ. Ask your question please.

John Ransom: Just want to make sure we kind of nail down the CapEx cash flow puzzle. So let’s ignore the capital lease accounting. What are we thinking about in terms of end of the year debt PP&E and cash flow either financed or not financed by capital leases?

J. Martin: Yes. Thanks for your question. Yes, CapEx, we think, will be about $5 million to $7 million per quarter. So totaling somewhere in the mid- to upper 20s on a full year basis. And as you said, we do finance some additionally. So there’s no cash out the door for that. It’s probably about a similar amount to what I just described, but no cash out for that.

John Ransom: Okay. And then my second question, and I may be the slow kid in the class, but the 4 centers you announced today, was that already part of the UPMC deal as your longer-term plan? Or were these new centers as part of all that?

Caitlin Zulla: Yes. Thanks so much, Don. So 4 centers, 2 were single sites, 1 with UPMC and then 1 with Advocate [ Atrium ]. And then 2 are de novos, both wholly owned, 1 in South Carolina and then 1 in Niceville, Florida. I actually happened to visit the Niceville, Florida. We opened it last week. It is a beautiful facility. It’s an incredible team, and we already have a lot of community interest and a really strong schedule. So when we think about de novos, we have 2 done well on track to get to the 8 to 10 before end of the year. And then for UPMC, started with an acquisition and then the UPMC de novos will be part and parcel of that 8 to 10.

Operator: And our next question comes from the line of Andrew Mok from Barclays.

Andrew Mok: Your operating cash flow was about $3 million this quarter and free cash flow was negative $2 million. I think your guidance implies quarterly free cash flow will accelerate to north of $20 million. So can you walk us through the components and drivers of that accelerating free cash flow?

J. Martin: Sure, sure. Yes, the start of the year is always kind of the lowest point for cash flow just as same similar reasons that it is for the business as a whole, volumes and earnings. But in addition, the working capital tends to be negative towards the early part of the year. We have kind of disproportionate funding of bonus and benefit plans in the first half of the year. So Q1 and Q2 are slow cash flow quarters traditionally in the business, and we expect that to be true this year, too. And then it really picks up in the second half of the year when we don’t have that kind of working capital timing issue. And of course, the underlying business is ramping as well.

Andrew Mok: Got it. Okay. So it’s going to be 2H weighted. On the — maybe next question on the net revenue per scan. On a same-store basis, the net revenue per scan was up 2.3% on a consolidated basis, but it was only up 1% on a system-wide basis. So it looks like unconsolidated net revenue per scan was dilutive and could have even been negative in the quarter. Can you help us understand what’s driving the weakness in unconsolidated revenue per scan, especially given the positive mix effect of advanced volume growth?

J. Martin: Yes. Yes. And advanced is a hugely successful driver of our business in both the JV structures and in the consolidated structures, particularly in the JV structures. I think we tend to focus mostly on system-wide metrics for this because the business can behave differently on the consolidated book versus JVs, and that doesn’t really necessarily mean a lot for the business. So I would focus on that system-wide piece the most. I think our — that said, our consolidated book of business has a little bit of impact from other modalities more. It’s not quite as heavily in advanced. And so depending on what those modalities are doing, the routine is slow in that book of business, then advanced tends to shine even more in terms of pulling up the rate per scan. And that’s the type of phenomenon we see in quarters like this one where the routine was a little bit slower to come back than the advanced modalities were.

Operator: And our next question comes from the line of Whit Mam from Leerink Partners.

Benjamin Mayo: Any way to size the 2 acquisitions you completed in the quarter? And then any reason they’re larger or smaller than the average center?

Caitlin Zulla: Yes. Thanks, Whit. To directly answer your question there, typical size acquisition, when we think about kind of in-year contribution, big focus for us right now is getting them in network and doing all the credentialing and integration work. Quite candidly, we buy sites that require optimization. We buy them because of their potential, not because they’re optimized already. And so as we get the site in network, we’ve got to get the right equipment installed and drive patient volumes to Lumexa standard. So when we think about the impact, these facilities will ramp over the year, but their contribution, I expect in 2026 will be fairly minimal. And I’m excited because they demonstrate the power of our model and really set us up for 2027 and beyond.

Benjamin Mayo: Okay. And then maybe just on the technology side, anything that you care to call out, Caitlin, just anything new on revenue cycle or things impacting operations that you’re particularly excited about?

Caitlin Zulla: Thanks. I mean technology is exciting in our space in every aspect. As we think about technology and AI, it really continues to fit into those core categories. How are we improving our core operations, bringing in more patients, serving more patients on the same machine, how do we create back-end operational efficiencies, how do we expand our strategic service lines and of course, how do we support our radiologists and their productivity. We’re seeing proof points in all of those categories. Really focus continues on the operational side, continuing the deployment of FastScan, we talked to Matt’s question, expanding penetration of virtual MRI. Revenue cycle, still working on bots and Agentic agents, including also in our scheduling, centralized scheduling team.

On the strategic service lines, we rolled out breast arterial calcification in 2 of our markets, and we’re actively exploring other similar cash pay add-ons for modalities like CT and ultrasound. And then on the clinical side to support radiologists, continuing to work with tools like, Ferrum, that’s our clinical algorithm convener and then [ RAD Pair and RAD AI ] to support abnormality identification, physician dictation and drafting. So a lot of fun stuff. The way I think about it is the near term continues to be really focused on improving productivity and efficiency. And then the long term is going to continue to be focused on how do we drive reimbursable revenue growth.

Operator: [Operator Instructions] Our next question is a follow-up from the line of — this is from Stephen Baxter from Wells Fargo.

Stephen Baxter: I just wanted to ask about the $4 million kind of estimate of the transient items in the quarter. I was wondering if there was potentially like a same-store revenue drag or maybe decremental margin you kind of give us as kind of modeling assumptions around that $4 million? Just general color on how you developed the $4 million estimate would be helpful. And then I have a follow-up.

J. Martin: Sure. Yes, that’s our estimate of how much is going to be increased seasonality affected us, a big part of that being the storms, but also just kind of inherent to the business. So we got back quite a lot of that volume in the quarter. And so from a revenue standpoint, it ended up being strong, particularly with Advance. If we hadn’t had the storm, Advance would have been even more outstanding for us. So from a revenue standpoint, we got a lot of that back, but there is some margin drag, as you can see from the flat EBITDA. And that’s just what it takes to see patients during this time. We have a somewhat fixed cost base at the site, whether it’s the rent, the equipment payments and then we pay technologists by the shift rather than by the scan.

So there’s a fixed component there that really benefits us a lot as volumes surge. But on days where there’s a storm and some patients can make it in, others can’t, we’re seeing everybody we can. But we have kind of some fixed cost base with fewer scans per day there for a while. And so that did hurt us some on the margin. But it’s good business to have, and we’re still glad to be doing it, reaching our patients and making some amount of money on it, but it did affect the margin a little bit. And that’s okay. That’s part of it.

Stephen Baxter: Okay. Got it. And then if we were to, I guess, add back that $4 million, it would suggest that the EBITDA growth rate in the quarter was around 8%. And I think it implies the rest of the year kind of has to grow year-over-year about 4%. So it looks like you’re kind of well on track, but at the same time, kind of the implied second quarter guidance, looking at the 45%, I think would maybe put you on track for like flatter year-over-year EBITDA again as we move out to the second quarter. I guess, just help us understand kind of the transition and the growth rate and whether there’s anything to consider in terms of ramping costs, whether it’s public company costs or other things to consider.

J. Martin: Yes, you’re correct, of course, in terms of what that means for our outlook for Q2 and beyond. We do see some continuation of the seasonality. And so there will be a steady ramp. Q1 figures to be 21.5% of our annual adjusted EBITDA at the midpoint. But Q2, as I described with the 45% in the front half and the 55% of the earnings in the back half, that means Q2 is about 23.5% of our year. So that’s a steady climb, but not a huge one. So I agree we’re well positioned to do that. And then Q3 and Q4 as the business naturally grows and as the JVs and de novos ramp, you see steady increases in those as well with Q4 kind of being the culmination of that.

Operator: And our final question for today comes from the line of Kieran Ryan from Deutsche Bank.

Kieran Ryan: This is Kieran on for Pito. I was wondering if you could expand a little bit on the commentary you provided on payer mix as far as what you saw in the quarter. I understand there’s a seasonal component, but was there anything that was out of the ordinary as far as impact from [ HIX ] or anything else?

Caitlin Zulla: Yes. Kieran, thank you for the question. We’re really not seeing anything in the reimbursement or payer landscape that is a meaningful change. The dynamics we saw in Q1 were consistent with normal seasonality, particularly around deductible resets and then just a temporary shift in payer mix from commercial to Medicare. When it comes to [ HIX ], it continues to be a small part of our business. We’re not seeing anything significant in that in that part of the business as well. When we think about the world more broadly, we continue to benefit from being that lower cost side of care, certainly relative to hospital outpatient departments and we remain attractive to payers and patients and health systems. So from a reimbursement and a payer perspective, we feel really good about the stability and the positioning of the business.

Kieran Ryan: Great. And then just one follow-up. It seems like — I think you said PET growth was 23%. So that represents a pretty nice acceleration versus at least where 2025 full year came in. So can you just catch us up on any trends in the quarter there as far as volume and utilization across your fleet, more broadly, what you’re seeing on referrals and demand? And any pressure points around radio tracers or anything like that?

Caitlin Zulla: Yes. Thank you for the question. We are very excited by the significant year-over-year growth in PET 23% quarter-over-quarter in Q1. We’ve talked through roadshow and in many of our conversations with you about just the opportunity that we have to grow PET. We are on a small end, and we are on track for continuing to grow our expansion in PET. We’re adding machines on track for the additions in 2026. And then we’re also working across the company on strategies to further accelerate the growth of PET in 2026 and beyond, whether it’s through new marketing strategies, new applications, isotopes, tracers, as you said, and then additional new sites.

Operator: This does conclude the question-and-answer session of today’s program. I’d like to hand the program back to Caitlin for any further remarks.

Caitlin Zulla: I want to close by thanking our team members and our radiologists whose commitment to our mission and the patients and communities we serve remains the foundation of everything we do. Thank you for your questions today. We enter Q2 with strong momentum, a clear strategy and deep confidence in our ability to execute, and we look forward to updating you on our progress ahead. Hope you all have a good night.

Operator: Thank you, ladies and gentlemen, for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.