RadNet, Inc. (NASDAQ:RDNT) Q1 2026 Earnings Call Transcript

RadNet, Inc. (NASDAQ:RDNT) Q1 2026 Earnings Call Transcript May 11, 2026

RadNet, Inc. misses on earnings expectations. Reported EPS is $-0.28 EPS, expectations were $0.19.

Operator: Good day, and welcome to RadNet Inc. First Quarter 202 Financial Results Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Mark Stolper, Executive Vice President and Chief Financial Officer of RadNet Inc. Please go ahead.

Mark Stolper: Good morning, ladies and gentlemen, and thank you for joining Dr. Howard Berger and me today to discuss RadNet’s first quarter 2026 financial results. On this call, we have also invited Kees Wesdorp, President and CEO of Digital Health; and Sham Sokka, Chief Operating and Technical Officer of Digital Health, who will share additional information about the progress of the Digital Health operating segment. Before we begin today, we’d like to remind everyone of the safe harbor statement under the Private Securities Litigation Reform Act of 1995. This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Specifically, statements concerning anticipated future financial and operating performance, RadNet’s ability to grow the business by generating patient referrals and contracts with radiology practices, recruiting and retaining technologists, receiving third-party reimbursement for diagnostic imaging services, successfully integrating acquired operations, generating revenue and adjusted EBITDA for the acquired operations as estimated, among others, are forward-looking statements within the meaning of the safe harbor.

Forward-looking statements are based on management’s current preliminary expectations and are subject to risks and uncertainties, which may cause RadNet’s actual results to differ materially from the statements contained herein. These risks and uncertainties include those risks set forth in RadNet’s reports filed with the SEC from time to time, including RadNet’s annual report on Form 10-K for the year ended December 31, 2025. Undue reliance should not be placed on forward-looking statements, especially guidance on future financial performance, which speaks only as of the date it is made. RadNet undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made or to reflect the occurrence of unanticipated events.

And with that, I’d like to turn the call over to Dr. Berger.

Howard Berger: Thank you, Mark. Good morning, everyone and thank you for joining us today. On today’s call, Mark Kees, Sham and I plan to provide you with highlights from our first quarter 2026 results, give you more insight into the factors which affected this performance and discuss our future strategy. After our prepared remarks, we will open the call to your questions. I’d like to thank all of you for your interest in the company and for dedicating a portion of your day to participate in our conference call this morning. With that, let’s begin. I’m extremely pleased with the performance of the first quarter. Revenue and adjusted EBITDA were first quarter records despite being negatively impacted by an estimated $13 million of revenue and $9 million adjusted EBITDA from severe weather conditions in January and February on the East Coast.

As compared with last year’s first quarter, revenue increased 22.1% and adjusted EBITDA increased 36.3% resulting in adjusted EBITDA margin improvement of 115 basis points. As you may recall, last year’s first quarter was similarly impacted by weather, and we’ve had additional — and we’ve had additional impact from the Southern California wildfires. Adjusted for the weather impact on this year’s first quarter and the weather and wildfire impacts in last quarter’s first quarter, our margin improved by 52 basis points. There were a number of items in the quarter worth noting. First, we continue to see a shift towards advanced imaging. During this year’s first quarter, 29.3% of our procedural volume was from advanced imaging compared with 26.9% last year’s first quarter, a difference of 235 basis points.

This is both a function of overall industry trends as well as the significant capital investment RadNet has made in advanced imaging equipment, which is driving faster throughput and increased capacity. Additionally, the implementation of TechLive DeepHealth’s remote scanning solution for technologists has significantly benefited RadNet’s MRI utilization by substantially decreasing exam room closure hours. PET CT Procedure growth continues to be driven by studies to identify and stage prostate cancer and to detect brain clots correlated with Alzheimer’s and dementia. During the quarter, PET/CT procedures increased 35.2% in aggregate and 14.7% on a same-center basis. As a result of the operating strength in March, we exceeded internal projections for the first quarter embedded in 2026 full year guidance.

Additionally, the strong [ indiscernible] performance has continued throughout April and into the first part of May. The combination of these factors drove our confidence to raise 2026 full year guidance for imaging center revenue, adjusted EBITDA and free cash flow. This quarter was an active one for acquisitions. In the Imaging Center segment, 2 significant acquisitions were completed at the beginning of January. First, Radiology Regional was purchased the owner of 13 multimodality imaging centers in Southwest Florida. For 5 decades, Radiology Regional through its approximately 400 employees and over 40 radiologists has been a fixture in the fast-growing communities of Southwest Florida spanning [ Naples ] to Sarasota. Second, we entered the Indiana market with the acquisition of Northwest Radiology, operator of 6 imaging centers in the greater Indianapolis area.

Founded in 1967, Northwest Radiology has built a long-standing reputation for clinical excellence in Central Indiana. We are busy integrating these 2 acquisitions, which includes deploying the many DeepHealth AI-powered solutions intended to improve clinical accuracy and patient outcomes, streamlining operating processes and bettering the patient experience. It is worth repeating that RadNet is not a buy-and-hold investor and operator. Instead, we target markets where there are further opportunities for growth and expansion through bringing the full capabilities of RadNet’s solutions to bear. This includes RadNet’s evaluating acquisitions and de novo center opportunities, launching AI-powered population screening programs and deploying best practices for operating and clinical processes.

And finally, on March 2, the Digital Health division acquired Gleemer SAS in France, a fast-growing developer of a broad portfolio of FDA-cleared and CE Mark solutions for musculoskeletal, breast, lung and neurologic applications. In particular, Gleemer is best known for its leadership in X-ray with the breadth and scale of its cloud-first solutions that are unparalleled. The integration of Gleemer into DeepHealth has begun, and we have already implemented Gleemer’s clinical X-ray AI in a number of Southern California locations. Kees will discuss the Gleamer acquisition in more detail during his prepared remarks. The hospital and health joint venture business continues to grow. On April 30, we announced the commencement of a new partnership with Trinity Health’s Saint Alphonsus Health System in Boise, Idaho.

The venture currently yielding about $30 million in annual revenues will initially operate 5 centers that include 2 outpatient facilities at Saint Alphonsus medical centers. Radnet purchased a 51% interest in existing partnership entity for approximately $17 million, including this newly commenced Trinity joint venture, 155 of RadNet’s 440 centers or approximately 35.2% are held within health system partnerships. Other opportunities to establish new health system partnerships, including ventures that can expand RadNet’s geographical presence are in the current pipeline. Health systems continue to seek long-term strategies for outpatient and inpatient imaging, and may have recognized that cost-effective freestanding centers will continue to capture market share from payers and patients seeking lower cost and high quality.

RadNet continues to be an operating partner of choice for those hospitals and recognize they cannot accomplish that outpatient imaging objectives optimally on their own. Finally, we continue to have strong liquidity and modest financial leverage. We ended the first quarter with a cash balance of $455 million and a net debt to adjusted EBITDA ratio of slightly under 2. So a substantial amount of cash was spent in the first quarter on the acquisitions of Regional radiology, Northwest Radiology and Gleamer causing RadNet’s leverage to increase. We continue to manage cash wisely and debt balances prudently. RadNet’s strong free cash flow will enable deleveraging in the coming quarters. At this time, I’d like to turn the call back over to Mark to discuss some of the highlights of our first quarter 2026 performance.

Mark Stolper: Thank you, Howard. I’m now going to briefly review our first quarter performance and attempt to highlight what I believe to be some material items. I will also give some further explanation of certain items in our financial statements as well as provide some insights into some of the metrics that drove our first quarter performance. I will also provide an update to 2026 financial guidance levels, which were amended in conjunction with last evening’s financial results press release. In my discussion, I will use the term adjusted EBITDA, which is a non-GAAP financial measure. The company defines adjusted EBITDA as earnings before interest, taxes, depreciation and amortization and excludes losses or gains on the disposal of equipment, other income or loss, loss on debt extinguishments and noncash equity compensation.

Adjusted EBITDA includes equity and earnings in unconsolidated operations and subtracts allocations of earnings to noncontrolling interest in subsidiaries and is adjusted for noncash or extraordinary and onetime events taking place during the period. A full quantitative reconciliation of adjusted EBITDA to net income or loss attributable to RadNet, Inc. common shareholders is included in our earnings release. I will also be using a second non-GAAP measure pertaining to the Digital Health segment called Annual recurring revenue, or ARR. The company defines ARR as a key subscription economic — economy metric, representing the predictable, normalized annualized value of contracted recurring revenue generated from customers from active customer contracts.

ARR includes subscription fees, recurring support fees and contracted usage charges and excludes onetime nonrecurring fees, such as implementation, hardware sales, professional fees, consulting and one-off training. With that said, I’d now like to review our first quarter results. While I won’t recap all the financial information that’s contained in last night’s earnings report, here are some of the highlights. We had a stronger-than-anticipated first quarter results when we set our financial guidance levels initially. Despite being impacted by the severe winter weather conditions in January and February, lowering revenue by an estimated $13 million and adjusted EBITDA by an estimated $9 million, we were still able to achieve record first quarter revenue and adjusted EBITDA.

Relative to last year’s first quarter, total company revenue increased 22.1% and adjusted EBITDA increased 36.3%. The increase in revenue was primarily the result of the following: our ability to grow same-center advanced imaging procedure volumes by 8.2%; the contribution from acquisitions, which we completed over the last year, including in Southwest Florida and Indiana during the first quarter; performance from de novo center openings over the last year; and the 51.5% increase in digital health revenue, partially driven by the acquisitions of iCAD, CIMAR and Gleamer. During the quarter, Imaging Center segment adjusted EBITDA margin improved by 188 basis points relative to last year’s first quarter. This comparison was aided by the fact that in last year’s first quarter, we faced similar winter weather conditions as well as the Southern California wildfires.

But even when adjusting and normalizing our results for the winter weather conditions in both this year and last year’s first quarter as well as the California wildfires that impacted last year’s first quarter. Imaging Center adjusted EBITDA margins still improved by 52 basis points. Our operations teams continue to implement digital health technologies and increase throughput and capacity allowing us to serve more patients and a larger part of the growing demand for advanced outpatient diagnostic imaging. With respect to the Digital Health division, I’m going to let Kees and Sham go over that in much more detail shortly. But in summary, the Digital Health segment is gaining momentum. Kees and Sham, among other things, are going to outline the rapidly growing sales pipeline, discuss recent commercial successes and provide a status update on the integration of recent digital health acquisitions and the implementation of the Deep Health solutions across the RadNet network of centers.

We finished the quarter with a strong cash and liquidity position. At quarter end, we had $455.3 million of cash on the balance sheet and full availability of our $282 million revolving credit facility. Continued improvements in revenue cycle, particularly in the area of patient collections have lowered DSOs or days sales outstanding to a RadNet record low of 29.5 days, which we believe to be one of the best in the industry. This continues to provide the cash we require to fund our growth and expansion in both operating segments. With regards to our financial leverage, as of March 31, 2026, unadjusted for bond and term loan discounts, we had $631 million of net debt which is our total debt at par value less our cash balance. Note that this debt balance includes RadNet’s ownership percentage, which is 49% of New Jersey Imaging Network’s net debt of $23 million, for which RadNet is neither a borrower nor a guarantor.

At quarter end, our net debt to adjusted EBITDA leverage ratio was approximately 2. Given the positive trends we experienced in March, April and the first part of May, we elected to increase revenue, adjusted EBITDA and free cash flow guidance ranges for our Imaging Center business. We increased revenue by $30 million at the low and high end of the guidance range, increased adjusted EBITDA by $5 million at the low and high end of the range. And we increased free cash flow by $7 million at the low and high end of the guidance ranges. Otherwise, all guidance ranges for both the Imaging Center segment and the Digital Health segment remain unchanged. With respect to Medicare reimbursement for 2027, there is nothing to report at this time. As is typical each year, we are expecting CMS to release preliminary rates for the physician fee schedule sometime in June or July.

At which time, we will analyze CMS’ proposal and our industry’s associations and lobbying groups will provide CMS our industry’s feedback. At the time of our second quarter financial results call in August, I will be in a position to comment on CMS’ proposal and its impact, if any, upon RadNet’s future results. I’d now like to turn the call back over to Dr. Berger.

Howard Berger: Thank you, Mark. At this time, we’re going to depart from our normal cadence in the script reporting here, which traditionally, the third segment I often comment on future trends in the industry. However, at this time, I think it’s important for RadNet to establish its position in the market, which reflects the acquisitions and teams that we have put together over the last several years to substantially transform radiology workflow. This is a critical and important juncture in the history of radiology and for that matter, health care. . The challenges that the industry faces can only be met with the opportunities, the technological advances provide us. And rather than this be a point solution. I’m going to turn the conversation over to Kees and Sham, who will do a deeper dive into the digital health performance and provide a status update on many of our AI initiatives. Kees, please go ahead.

Cornelis Wesdorp: Thank you, Dr. Berger, and good morning, everyone. As we look back on the first quarter of 2026, it’s clear that Deep Health’s momentum is not just continuing, it’s accelerating. Our strategic investments are positioning us to transforming radiology workflow. We are meeting this moment with a sense of urgency because the industry pressures we have discussed previously, radiologist burnouts, massive imaging backlogs and standing shortages, and these continue to build. Radiology cannot continue to operate on fragmented legacy systems. The volume of imaging studies is rising globally, while the supply of clinicians is stagnant. This gap can only be closed through the intelligent application of AI and cloud native technologies.

DeepHealth’s vision for transforming radiology workflow is that every imaging study should and will be read by AI, automating pre-interpretation workflows and delivering an AI-curated draft report to radiologists as they start their reading. And this isn’t just about convenience. It’s the optimal scalable way to ensure high-quality, consistent care across the globe. To achieve this, we’ve moved beyond selling individual AI and informatics tools and point solutions to delivering an enterprise solution that brings together clinical AI image management, and radiologists viewing and reporting. Today, the typical radiology workflow is a series of siloed manual steps, manual case assignments, jumping between different workstations and voice dictating every finding from scratch.

We are now replacing that with a novel, connected comprehensive enterprise solution for medical imaging that enables 4 key deliverables. Firstly, cloud-native AI analysis. Every study is automatically processed by a portfolio of native and third-party AI through our AI orchestrator, the AI Studio, which integrates both propriety and third-party clinical AI. Secondly, dynamic case routing. We are breaking down the walls between hospitals, imaging centers, urgent care facilities and any other imaging location, and we’re connecting the entire imaging ecosystem. Our platform roots cases to the most qualified available specialist regardless of where the images are acquired or where the radiologist sits. Thirdly, AI-curated drafts preliminary reports through our Reporting Pro solution.

We provide radiologists with a prepopulated draft — prepopulated draft preliminary reports. The shifts to radiologists role from generator to editor, allowing he or she to [indiscernible], correct and accept findings far more efficiently. And fourthly, remote operations through our TechLive solution. We are virtualizing the technology’s role, allowing [ expert techs ] to support multiple scans remotely, ensuring quality and consistency. By unifying imaging image management, clinical AI and reporting into one seamless experience, we’re delivering a new standard of care that addresses the core challenges of the imaging enterprise. And we are actively prototyping and validating this comprehensive workflow and clinical vision at RadNet, and our internal deployments are tracking in line with plan.

We’re seeing a significant productivity impact at RadNet, as highlighted by some of the following examples. With TechLive by implementing remote and assistant scanning, we’ve optimized technologies utilization ensure that expert support is available for every complex scan and maximize system capacity. This has been a key driver in maintaining high throughput despite the industry-wide technology shortage, most notably by reducing exam room closure hours that Mark also mentioned. Clinical AI, DeepHealth and third-party AI solutions now cover over more than 70% of our studies across mammography, MR, CT, ultrasound and x-ray, and we are capturing the benefits of that. For instance, we have now fully embedded thyroid ultrasound AI from our CMOD acquisition into RadNet’s operations across nearly 300 sites.

And the results are tangible. We have successfully reduced ultrasound slot times from 30 minutes down to 20 minutes across the board. This 33% increase in efficiency allows us to reserve more patients without increasing our physical footprint. And as of this call, we are live with our X-ray AI representing more than 20% of volume in our California region. And then Reporting Pro, we are currently in the midst of a multi-region rollout with successful deployments in Florida and Texas. Radiologists using these AI-enabled reporting tools are reporting higher productivity and faster turnaround times. Now let’s have a look at the commercial results. The market response to our integrated offering has been very strong. We ended Q1 2026 with $97 million annual recurring revenue, ARR, representing a 95% year-over-year growth.

We are on plan to reach our target of more than $140 million in ARR by year-end. This confidence is backed by strong progress, a robust sales pipeline and also the investments we have made in our commercial deployment and marketing capabilities. For instance, we currently have $7 million in signed ARR that’s fully secured, but not yet reflected in our Q1 ARR as these sites move through the go-live process in the coming months. On top of that, we have added significant Q1 wins in terms of securing $16 million in total contract value. This quarter across 40 customers, reflecting a higher closure of deals and with an even split between and across different global regions. This includes, for instance, a $1.5 million total contract value [ diagnostics we deal ] in North America and major lung AI contracts across the U.K. and EMEA.

The Q1 deal flow represents a healthy mix of small, medium and large-sized deals, which will provide more consistent and convertible ARR and revenue growth. And then we have a robust pipeline. Our commercial funnel is developing in line with plan with well over $150 million in commercial deal opportunities as measured in total contract value. Our acquisitions are performing ahead of expectations. Gleamer which we closed in early March exited Q1 in line with plan and is on track to exceed its end-of-year targets, and we’ve begun cross-selling its portfolio into the pre-existing Deep Health installed base and vice versa. Furthermore, ICAD has seen a significant acceleration in cloud-based demand, with a combination of 20 existing and new customers going live in Q1 alone, validating our strategy of moving customers from onetime licenses to a repeatable, high-margin ARR model.

CIMAR has been deployed deep Impact At RadNet across [ 300 ] sites, and we’re now starting to see good commercial momentum, evidenced by a recent [ thyroid ultrasound ] AI win, an external win with a total contract value of close to $400,000. In CIMAR, the image exchange platform powering the lung cancer screening program in the U.K., amongst others, is performing ahead of plan with a strong win in the national mammography screening space. Our innovation engine continues to deliver. We now stand at 26 FDA clearances and 22 CE Marks. And before the end of this year, we would receive an additional 12 FDA clearances and 15 CE Marks. The velocity of our regulatory approvals has grown by over 70% year-over-year. And accordingly, we will continue to feel the most comprehensive AI informatics portfolio in the industry for radiology.

Next to expanding our scope of clinical AI solutions, we are also preparing for the launch of the next version of the DeepHealth Diagnostics suite, which incorporates critical enterprise capabilities for the hospital and the health system segment, further expanding our total addressable market. In summary, our Q1 performance reflects a business that is hitting its stride with strong momentum on ARR growth. Compares with last year’s first quarter, we delivered 52% total revenue growth. In our external revenue, the revenue generated outside of RadNet reached 64%, up from 51% from an installed base of close to 3,000 global customers. The shift proves that DeepHealth is successfully transitioning into a global technology leader. Our adjusted EBITDA margin in the first quarter reflects the intentional margin impact from our recent acquisitions and continued infrastructure investments, we are exactly where we plan to be.

These investments are the fuel, which is enabling 2026 and future growth and we are on plan to meet the guidance we have set out for 2026. Based on our current trajectory and the visibility provided by our signed backlog and pipeline, we are reaffirming Digital Health full year guidance. Total revenue at $135 million to $145 million, adjusted EBITDA at $10 million to $12 million. We have the right strategy, the right technology and the insights to deliver our solutions at scale. Thank you for your continued support as we build the future of radiology. Operator, we are now ready for the questions and answer portion of the call.

Operator: [Operator Instructions] The first question comes from Brian Tanquilut from Jefferies.

Q&A Session

Brian Tanquilut: Maybe, Mark, as I think first about the moving pieces in the clinic business, obviously, some strength in volume in the quarter. One, just curious, if you think of it on a normalized basis, excluding weather from both sides, I mean, how should we be thinking about the volume growth? And kind of like maybe also for Dr. Berger, the sustainability of the drivers there. And then second part of the question for you, Mark, as we think about the acquisitions that you’ve announced in the JV. Just curious how we should be thinking about the ramp and the opportunity for upside from those acquisitions and partnerships.

Mark Stolper: Sure. Brian. Yes, so the performance is really being driven by a number of factors, some of which we mentioned in the script. But one of the really shining lights here is the performance of the advanced imaging and the growth that we’re seeing there. We continue to see and experience a business shift in favor of advanced imaging. And we’re regularly now seeing MRI volume, same center being in the high single digits this quarter. It was 10.1%. And CT, we’re regularly seeing kind of in the mid-single digits and PET/CT, which continues to be driven by the brain amyloid studies and the prostate PSMA tests, we’re seeing growth north of 14%. And as we’ve always said, the best and most profitable growth we can have comes from same-center performance where we can drive incremental revenue into the same fixed cost base.

And when we do that, there’s a lot of pull-through profitability. And yes, there’s a lot of moving parts on the cost side of our business. But this is — the continued growth of advanced imaging has certainly driven the better-than-anticipated performance that we’ve had in the first quarter and the beats that we’ve regularly had in past quarters. So we don’t see anything to give us concern that this is going to change. I mean part of this is what’s happening overall in the industry with respect to trends. There have been a lot of advancements in the technology of the equipment that allows for better throughput and more capacity. A lot of what we’re doing on the digital health side, which Kees mentioned in his prepared remarks, is all about driving capacity, creating a more efficient workflow that can drive more patients through the existing cost basis of the centers.

And so I think we’re feeling very positive about the trends in the business. As we mentioned, we had a very, very strong March that performance continued into April and now through early May. And so we’re feeling good about the business and how it’s rebounded since the severe weather conditions that we faced in the Northeast in January and February. Howard, do you want to add. Yes. Sorry, Brian, go ahead. You have a follow-up question.

Brian Tanquilut: Yes. maybe my follow-up for Kees. As I think about the wins that you’ve announced [indiscernible] here recently and maybe some of the FDA approvals that are pending. How do we think about the ramp in revenue? I know you maintained the guidance for the year. But as I think about the post ’26, just thinking through the opportunities to drive revenue growth, again, both in the size on the clinical AI side and then also on the DeepHealth kind of OS side.

Cornelis Wesdorp: Thank you, Brian. Look, I think the most leading indicator for is how the commercial funnel is developing. I mentioned a funnel that’s developed now towards [ and about ] $150 million total contract value mark. This sits across our portfolio. So that’s for, let’s say, what we call diagnostic suite as well as enterprise operations. So Diagnostics Suite is more the PAC business, enterprise operations is more the risk business and clinical AI. We’re seeing that momentum building in the funnel, which gives us confidence, a, that for this year, we will achieve the $140 million ARR run rate. But also that will continue into ’27 and beyond with the growth that we had set out for ourselves also during the Investor Day, which is above 30%.

I would say I’m cautiously optimistic based on the confidence that we’ve also acquired, for instance, the Gleamer that commercial momentum of 30% is on the lower side. Now then to revenue because I think you specifically asked about revenue. Obviously, the difference between ARR and revenue is timing of deployment of these installs. And so one of the deliberate investments that we’ve made over the last months is in deployment capability, call that installation and service capability because it’s not just about winning these deals, but also making sure that we can swiftly implement those. That’s where the focus is right now as we are successfully building that commercial pipeline, and now want to see the ability and capability to do fast deployments and accordingly reach our revenue targets for the guidance of this year and ongoing growth objectives.

Operator: Brian, you’re done with your question?

Mark Stolper: Yes. Operator, we’re ready for the second question.

Operator: Our next question comes from the line of Andrew Mok with Barclays.

Andrew Mok: Just wanted to follow up on that volume conversation. The same-store advanced volumes were strong in the quarter, up 8%. But I think that implies routine volumes were close to flat. Can you help us understand the underlying dynamics on the routine side? Is this simply different demand drivers? Or is there also a crowding out effect from the strong advanced volumes that’s weighing on those results.

Mark Stolper: Sure. I’ll start with that, Andrew. Thanks for the question. Yes, we’re seeing — I mean we — I mean 1 quarter a trend doesn’t make, and we’ve always cautioned investors about that. But we’re definitely seeing disproportionate increases in advanced imaging and in our centers, and we’ve focused in the last few years on upgrading equipment and capabilities to create more capacity in around advanced imaging because while routine imaging still represents close to 71% of all of our procedure volume. The other 29% of the — which is the advanced imaging, drives over 60% of our revenue. Clearly, the focus is on driving advanced imaging, and we’re seeing more and more clinical indications each year as the equipment gets better as the technology gets better for advanced imaging.

So there is certainly a shift in the overall industry and how health care is delivered in favor of advanced imaging, and that’s where our focus has been. So we have said in the past and continue to say that we still think the routine imaging is going to grow, but it will grow kind of in the way population grows and likely kind of in the low single digits and which is fine.

Howard Berger: Yes, Andrew, let me just add perhaps a little bit more color to that. The advances in technology cannot be overstated here. And the reason why there is such an increasing driver of advanced imaging is because there is a realization in all levels of health care that these tools are now capable of earlier and earlier diagnosis, which ultimately lead to better outcomes. There has not been any major changes in x-ray and some of the other routine imaging as there has been in MRI, CT and PET CT scanning. And I think it’s a credit to the management on both the East and West Coast to not only have realized that we needed to make the investment in the equipment and the technology but also to expand the clinical capabilities that we have, which we put on full display at the Investor Day last November to help grow these practices and make certain that we achieve best practices with these tools.

So I think we are following the trends and willing to deploy the resources, both human and financial capital to take advantage of this, but to do it at an extraordinarily high level of quality for which I and the whole executive management team are enormously proud. But I think the seminal event today that we’re trying to really outline is that all of this can be further enhanced by the new tools that we have invested in and which I think we have the broadest and most remarkable inventory of AI tools, both on the clinical and on the generative side to help not only meet the demand of this growing need for imaging in general and advanced imaging in particular. But to give our radiologists the ability to focus not on the more routine but on the part of the business which they have been trained for and that is to identify abnormalities and act as a consultant rather than the drudgery that goes along with a lot of the routine workflows.

So I think you will see more and hear more about this in upcoming quarters as we not only fully roll out the AI capabilities internally, but we meet the opportunities that are presented to us with our current and future hospital partners.

Mark Stolper: And Andrew and I would add one other thing is that some of the digital health technologies that we’re deploying now, I think, will actually serve to drive some more growth in routine imaging. For example, we’ve talked in the past about the thyroid technology that now is — the case mentioned is lowering scanning times by 50% for thyroid, which is roughly about 240,000 of our ultrasound exams. And when you look at the capacity that, that is creating, you are seeing some growth in ultrasound on a same-center basis, it grew about 2.1%. And as we get FDA approval, which we’re expecting to this year on the breast ultrasound, which is another over 800,000 of our roughly 2.7 million, 2.8 million ultrasound exams. That’s going to further speed up the center level workflow to allow for more capacity for doing ultrasound.

So there are items and, of course, the Gleamer technology on X-ray will allow for our radiologists to read those faster with more productivity, which will ultimately allow us to do more in the future. So I think there are things that are coming and that we’re implementing that will also drive some routine imaging growth.

Andrew Mok: Great. And then the new and acquired centers also appear to have a meaningful impact on volumes in the quarter. Can you talk about the integration of your clinic acquisitions and how that contributed to outperformance?

Mark Stolper: Yes. So with respect to the acquisitions of in Florida, Southwest Florida, the 13 sites we bought from Lucid Health as well as the sites we bought in Indiana. They contributed some to the first quarter, but not meaningfully. When you look at the — the 2 of those on an annual basis are about $117 million, $118 million of revenue. So if you divide that by 4, you’re talking about $30 million or so of revenue in the first quarter. From an EBITDA perspective, it added about a couple of million dollars, slightly less than that for the first quarter with all the seasonality. So we’re just starting the implementation — or I should say, the integration of those. They’re going real well. They’re both actually ahead of schedule.

And there — we believe that both of those assets are on plan, if not ahead of plan to reach their projected rate for 2026. So I think we feel real good about the integrations of those and the other deals that we did in the second half of last year in — mostly in the New York Metropolitan Area.

Andrew Mok: Great. And if I could sneak in one more on cash flow. You called out the record load DSOs, and it looks like there’s some [ unseasonally ] strong working capital in the quarter. Are these initiatives related — RCM capabilities linked to Deephealth? Or anything else you can provide color on driving the strength in working capital?

Mark Stolper: Yes. No. It’s really just continuing to improve in our blocking and tackling. We typically see a working capital build in the first quarter and an increase in our AR from the seasonality with respect to the deductible resets where we build the patient insurance companies in the first quarter. We — and then have to collect a patient portion of responsibility. But this year, I mean, we continue to see improvements. We’re getting better and better at collecting the patient portion responsibility upfront where we’ve also aggressively gone back into some older-aging buckets of our AR and are having some success collecting some of the older AR, both from commercial payers as well as patients. So I think the investments we’ve made in systems to, one, be able to identify upfront what the allowable amount is based upon the patient’s insurance, their plan, where they are in their deductibles.

And then the ability to query the insurance company in real time to be able to identify whether the patient has copayments or where they are in their deductibles has allowed us to aggressively go after that money at the time of service. And we’re even telling patients what their likely responsibility would be at the time of scheduling. And that’s had a marked impact in our ability to collect this money quickly. And I think our DSOs reflect that and probably are one of the best in the industry.

Operator: Next question comes from John Ransom with Raymond James.

John Ransom: Mark, if we looked at the Imaging segment, ’26 over ’25, what’s a good number for the EBITDA contribution from M&A versus not M&A?

Mark Stolper: Yes. Most of it is from same-center performance. As I mentioned on the earlier question, about a couple of million dollars of came from the recent acquisitions in the first quarter.

John Ransom: I’m talking about the year — full year over full year, if we take [ ’26 and ’25 ] full year, yes, what does that look like?

Mark Stolper: Yes. The majority of our EBITDA growth, the vast majority, about 2/3 of it is coming from same center performance as well as de novo performance, which I also include as organic growth and about 1/3 — slightly less than 1/3 is coming from the contribution of acquisitions.

John Ransom: Okay. And then following your Digital Health journey is busy at times. If we were to look at 2026, of all the things that you’ve rolled out digital, I mean, the TechLive, the SmartMammo, what 1 or 2 modalities that’s driving the most EBITDA today? And then if we look out a couple of years, what are some emerging capabilities you have that aren’t quite monetizing just yet. And that could be either EBITDA — eIther in your Imaging segment or in your digital health segment, what’s the — how do we think about the — and can we, also just to sneak one out in there, can we confirm that this year is the trough margin for Digital Health? And then how do we think about margin versus investment over the intermediate term?

Cornelis Wesdorp: Mark, do you want me to take it?

Mark Stolper: Yes, please.

Cornelis Wesdorp: Yes. Great question. So as for the Investor Day, we have a horizon towards 2028, rolling out the various solutions that we have currently line of sight of in the digital health segment and deploying those at RadNet. And I think both for — actually across clinical AI, which is really a modality-by-modality focus where we started in mammography, we’ve expanded to thyroid ultrasounds. We’re [indiscernible] deliver breast ultrasounds. We are now deploying X-ray. I think you will continuously see an increasing penetration of AI and the impact thereof. We are currently covering 70% of the clinical AI solutions with DeepHealth solutions and third-party solutions, about 60% with DeepHealth Solutions and the remainder of third-party AI.

But that doesn’t mean it’s fully penetrated because we haven’t captured the full productivity nor the full T code reimbursement from these solutions. So think of it as if you want to use a number, 1/3 implemented on the clinical AI road map and more to come. Then the second key area is what we call the diagnostic suite where we’ve deployed certain capabilities, such as the Viewer, but we’re now also rolling out, as mentioned in my prepared presentation, the [ Reporting Pro ] solution, which gives further benefits to reporting productivity and so on and so forth. So also there, there is more to come. And I think we’re a little bit less advanced in implementation today and will peak towards the end of the year into next year. And then on the operations suite, which is really risk enhancements, we’ve made initial steps, for instance, the contact center that we previously talked about.

But there are all kinds of agentic AI solutions that we have in the pipeline, which will further substantiate productivity impact in line with what we presented at the Investor Day. So think of it as a 3-year road map. What’s new today which we presented is really the header that where we said transforming radiology workflow which means that 4 elements of the solutions — 4 types of solutions that I just talked about, actually, are combined into one, which is clinical AI together with AI orchestration together with the diagnostic suite together with the reporting solution allow you to transform the radiology workflow and generate automated draft preliminary reports. That’s a new idea, and that is now with the acquisition of Gleamer, we’re deploying that in an accelerated way for X-ray.

That shows that our innovation funnel will continue to build and we’ll continue to invest in that. And so the way I would answer the question is we’re well on track for the margin impact that we set out during the Investor Day, but we’re also seeing new innovation opportunities to come. And so — and we’re making progress. We definitely will not have reached the end of the productivity drive this year nor next year as we continue to fuel the funnel.

John Ransom: All right. And just lastly, there’s an interesting article recently about this reporter went through the whole breast cancer AI. And the point was made in the article that AI for mammo is really good at the — negative reads are really tight, but it tends to overread the positives. And that’s where you need the human interventions override, sometimes AI get’s it wrong. What are you seeing in terms of your false positives. and is that trending in any particular direction? Or just — or is false-positives, just kind of the way this works, it throws things out there and then the radiologist has to play catcher to make sure that the machine didn’t hallucinate, if you will.

Cornelis Wesdorp: I would say both are absolute focuses in terms of improving and learning the model. But maybe, Sham, you can elaborate a little bit more on how that’s approached in practical life?

Sham Sokka: Yes. Absolutely, Kees. I think, first of all, breast Cancer detection, anything that we’re doing with cancer detection isn’t a generative model. It’s really a task-specific model. So there’s no concept of hallucination, if you will, there. but it’s much more trained on the data and [indiscernible] when we see those false positives, let’s say, in the RadNet population. So what we’ve done very well also because of the close loop that we have with RadNet is we’re able to adjust that through results from radiologists through incorporating things like prior studies where we’re reducing the false positive rate on a fairly regular basis. Remember, we have essentially 1.6 million to 2 million mammos that we’re processing every year.

And the let’s say, most positive from those, we’re also processing every year, and we’re learning and we’re improving that to a point where the AI system is just as good as the radiologist, if not better than the radiologist. And I think we showed these as candidates for eventually driving also autonomous type of detection as we go forward. .

Operator: The next question comes from Grayson McAlister with Truist.

Grayson Joshua McAlister: This is Grayson McAlister on for Dave. I wanted to follow up on the debut with Saint Alphonsus. You talked about as being a blueprint for future health system partnerships. I guess, could you just talk a little bit about what aspects that this JV includes that maybe previously didn’t? And then specifically around DeepHealth, how does this improve the offering the systems out there? And what are you seeing in the pipeline, specifically around JVs?.

Mark Stolper: Maybe Howard, do you…

Howard Berger: Yes. I think the importance of the announcement was our first opportunity to implement all of the tools that we bring right now to the table to make a more seamless experience, not only for the radiologists but also for all of the stakeholders that either perform imaging or need to see imaging results. As a result of this within about 120 days when we fully implement the detailed operating system, the radiologists will get the benefit of doing both their leading and reviewing studies, outpatient and inpatient on a single platform. We’ll be able to use the variety of AI tools to help manage better their reading and interpretation and we’ll begin using the reporting pro tool that Kees described, that will allow more automation in the reading material.

But the bigger picture is what we want to do with this health system and others, and that is to connect all the other providers that are using or providing imaging services in the health systems platform. That could be urgent care centers, physician offices, emergency rooms, anybody that produces imaging will be part of our cloud-native solution that will allow not only for the implementation of reading from insights by the most qualified and most available radiologists but getting those results faster on a timely basis. They’re both the physicians and the patients that require that information. So the transition that we’re talking about which is a blueprint for models with other health systems that we currently have relationships with in joint ventures as well as others that we’re in deep conversations with is really a transformative process of the entire radiology and imaging workflow solution, which we hope to be able to better demonstrate in the third quarter of this year.

Grayson Joshua McAlister: Got it. Okay. And then just following up on Gleamer, I believe around the announcement you guys talked about some training of the sales force that had to happen before you can really start to see the cross-sell opportunity take off. So just wanted to check on what inning you think you’re in now as far as capturing that cross-sell opportunity? And where would you expect to be by the end of the year?

Cornelis Wesdorp: We’re deep into training, but not waiting for training, which basically means that we have the first cross-sell opportunities happening today in the U.S. but also outside of the U.S. and on an ongoing basis, we’re going to go deeper into road map training, competitive pitching, integrated portfolio offering and so on and so forth. But it’s highly iterative because we don’t want to wait for something. And quite frankly, the professionalism of the Gleamer team, commercial team, but also obviously of our legacy team, and they seek these opportunities. And so they’re burning to bring these new cross-sell opportunities in. It has momentum already. Operator, if you allow me, I just realized that in the previous question, there were 2 questions about the impact on margins.

And the second question was related to if for digital health segment, this was a [indiscernible] year in terms of margin development. I just want to confirm, in line with what we said with the Investor Day, that’s indeed the case. And so driven by the previous acquisitions and also the investments that we’ve made out as per our plan, we see lower margins in the Q1 results and will climb up gradually towards the end of the year to increase margins again, assuming no major dilutive acquisitions, which are currently not planned.

Operator: Our next question comes from Matthew Gillmor from KeyBanc.

Matthew Gillmor: I wanted to ask about EBITDA seasonality. Mark, in prior calls, you commented about 1Q being impacted by seasonal expenses, including payroll taxes and expensing of bonuses. Can you maybe quantify some of those P&L costs that impact the first quarter, but then fade in subsequent quarters? And if you had any broader comments about the cadence of EBITDA, that would be great.

Mark Stolper: Yes. So EBITDA is seasonally low in the first quarter. It’s partially due to trends within the health care delivery system in general, meaning that patients’ deductibles reset starting January and there just tends to be lower utilization in the early part of the year within health care and as patients are shouldering more of the burden of those expenses themselves. And then as the year goes by, we see growing utilization throughout the year. Also with winter weather conditions and holidays in the first quarter, we often see some lower volume. And then as you correctly suggested the payroll taxes for certain of the payroll taxes max out for the highly compensated individuals including our radiologists or professional fees in the first quarter are lower through the rest of the year.

And then the way we pay an expense, certain employee bonuses, that hits all in the first quarter. So we will see a significant jump up in our EBITDA, in the second quarter and beyond as planned and as is typically seen in our business in past years, and that’s built into our guidance. The exact numbers of what those payroll expenses are and those bonuses, I don’t have at my fingertips right now. But you’ll see, if you go back to ’25 and ’24 and ’23, you’ll see a similar impact in the first quarter each year.

Matthew Gillmor: That’s great. And then as a follow-up, I wanted to ask about the reimbursement side of AI. You all have mentioned 70% of studies could be leveraging AI by the end of 2026. Can you give us a sense for where you’re able to bill for AI solutions and just how to think about the incremental revenue opportunity over the next few years?

Christian Allouche: Sham, do you want to talk about that? Let me…

Sham Sokka: Go ahead, go ahead..

Cornelis Wesdorp: We were talking about where you see opportunities for reimbursement for AI?

Sham Sokka: So as you saw, we’ve seen in ultrasound case, there is essentially ultrasound in MR and in CT there are really generic T codes in each of those areas, right? That’s for quantification and measurements related to various diseases in those modalities. So in the ultrasound case, you see reimbursement now already from thyroid as we get approval for breast ultrasound, which is actually 3x the volume of thyroid ultrasound, we can leverage the same reimbursement code for the [indiscernible]. In CT, there are applications such as lung nodule detection, which helps characterization as well as quantification because we measure the lung nodules. Again, those can be reimbursed for the CT characterization code. And in MR, there are similar codes.

And we plan to do that for our neuro product, which we received FDA approval earlier this year, which has those quantification and characterization elements. And just remember, Neuro MRIs more than 1 million studies [indiscernible] so there’s significant upside on the code reimbursement side, which was not and that’s what case we’re talking about earlier that we’ve not fully tapped it because, number one, you have to deploy the solution implement it, then we have to start billing that. And then individually, we have conversations with the different payers to cover it and then eventually you get increasing and increasing percentage cover. An example of that is where essentially, when we started early on, to be a 1/4 of the insurers were covering the T code.

Now we’re in the 60 to 70 percentage in first covering it at the [ flow rate ]. So that’s part of the cascade as we deploy these solutions and then plan out the reimbursement scenarios. And naturally, as we show that, there’s tailwind also when we do commercially now because we’ve shown that these products can be reimbursed, that provides a natural tailwind as we then these solutions [indiscernible].

Operator: Our next question comes from Larry Solow from CJS Securities.

Lawrence Solow: Thanks for all the good information that carries in the prepared remarks. A follow-up on — just on the trajectory of the profitability in Direct Health. I think that’s been a concern in the market and probably exacerbated by just pressure on the new AI stocks and whatnot. I know you shared with us at the Analyst Day margin target, so I think 20% EBITDA margin. I believe we took a little bit of a step back intentionally with the Gleamer acquisition and probably some enhanced investment. But can you just kind of give us an update on that? Where do you expect — when do you expect now to kind of get back into — towards that 20%? And longer term, is this still a 30%, 40% kind of margin business?

Cornelis Wesdorp: Yes, great question. Let me dive a little bit more deeply into even what we’re seeing today. So when we dissect our business into the core that’s organically growing, the acquisitions that we did last year and then the investments that we do, we see actually quite a healthy picture. So the core that’s organically growing today is already operating at, let’s say, 30% to 40% — more 40% EBITDA margins. The acquisitions and its public information that you’ve also seen in previous announcements, and they are typically losing. And so that has a short-term dilutive effect. But what you should see is that we, for instance, been able to slightly ahead of plan, being able to get ICAD already profitable, so breakeven as we speak today.

And we’re on the same trajectory also as we set up the opportunity with Gleamer, it might take a little bit longer, but not because of quality of business, purely because of the investments that we’re doing in the X-ray space. Then thirdly, in line with what we said at Investor Day is we’re strengthening the business. We’re seeing — we’re strengthening the business, we’re investing in the core business on the condition that we have line of sight of growth. Now I walked you through the ARR growth that we foresee for the year, the momentum that we’re building on the commercial funnel. And accordingly, we’ve prudently invested into a variety of capabilities, and I think of service delivery imitation capability, also the commercial team. And that short term has an impact on lowering the EBITDA margins, again, in line with what we first saw for Q1 but also how we want to close the year as per our guidance.

And so in a way, nothing has changed versus what we set out on Investor Day. We’re actually seeing the core business, the organic business performing at an EBITDA margin at 30% to 40%. But we are strategically investing both organically and inorganically, and that on the short term, has a dilutive impact. Now you might ask, therefore, is the 20% towards 2028. Is there upside to that? Possibly so. But I also want to recognize that we continue to find new opportunities to invest in also in terms of our R&D platform, and we’re really building a long-term sustainable business, and that was — has always been reasons why we saw the opportunity to invest. And therefore, over the horizon of the — of ’26, ’27, somewhat lower margins than you would typically expect of peers.

Lawrence Solow: No, I appreciate all that. And I guess a little bit harder to measure, but just on the internal benefits, it sounds like lots of things are happening on the good side, but it feels like we’re probably still way in the early innings on the internal benefit for you guys. Is that fair to say?

Cornelis Wesdorp: A little bit further. I mean, I watched baseball game last week, I think is that the first or second innings [indiscernible] I would say, look, I used the term earlier in this call that we’re at sort of 1/3 based on what we know today. So let me explain what I mean by that. We’ve deployed quite a bit. We see tangible impact from the solutions that we’ve deployed. I talked about TechLive, I talked about thyroid ultrasound. And those have meaningful growth impact into the bottom line of RadNet offsetting some of the other headwinds that exist in the business such as, for instance, inflational salaries. And so there’s a lot more to come in the coming 18 months. But we’ve also seen that we continue to generate new ideas, new innovations that will have further impacts. And so are we 1/3 there, 1/4 there? I don’t think we’re halfway there. but we’ve got significant opportunities still to capture.

Operator: Our next question comes from Yuan Chee with B. Riley.

Yuan Zhi: Maybe asking about the 70% question differently. You mentioned 70% of RadNet readings or studies will — could be run through clinical AI by year-end 2026. So where are we now? And how do you see that impacting your labor cost and any other impact on your operations?

Cornelis Wesdorp: So maybe to clarify the — and Sham, please confirm also, but Today, we’re at 70% of the RadNet volumes use a form of AI, roughly 60% is DeepHealth AI. And then 10% is third-party AI that’s deployed at RadNet. As Sam also mentioned, we’re seeing 2 key value levers here. One is productivity, so more effective reading or more effective interpretation. The other is the onset of possible T codes that you can get built for. So the productivity we’re capturing today, the T-codes initially are set out for more in the ultrasound domain for thyroid, but Sham also mentioned ultrasound of breast in the future and then CT and MR to come. So whilst the penetration is high, the productivity gains are being captured, the billing gains are in early stages of being captured. Sham, anything to add?

Sham Sokka: Yes. Maybe just to clarify a bit the comment. So when we say that the target is to be applying all of our AI to about 70% of the volume by the end of the year, the reason we believe we can achieve that is almost all the AI tools that we would deploy to achieve that target, we are now currently either in early phases of deployment or in mid stages of deployment. So for example, we just started the X-ray deployment, that’s about 20% of our volume if you kind of look at that as a large chunk, if we talk about new MR, I talked about 1 million studies out of our nearly 12 million studies that we do, so we’ve started these projects, but they’re not fully deployed, and we anticipate that they’ll be fully deployed by the end of the year.

And really, the primary savings are both the productivity of radiologists as Kees just mentioned where we can actually free up their capacity to do more studies. And then the second piece is, of course, several of these have their own reimbursement elements as well.

Yuan Zhi: Got it. Maybe a question to Mark. Can you help us reconcile the updated revenue guidance? Was it mainly due to the acquisitions? Or was there some contribution from the existing fleet?

Mark Stolper: Sure. Yes. So when we put together the guidance, which we released originally in early March, we had already announced and incorporated the acquisitions of Northwest radiology in Indiana as well as the Florida — the Southwest Florida operations. So when we increased the guidance levels, the low end and the high end by $30 million last night, that doesn’t have to do with acquisitions. That’s all about the fact that we’re seeing strength in our business to the point where we think that we’re going to overachieve our original budget and projections that we have internally that we set the guidance around. So we’re seeing strong same-center performance, the digital health initiatives are bringing more capacity to our centers, and we’re feel very confident that where we were going to overachieve our original guidance levels.

Yuan Zhi: Got it. And 1 last question from me. In terms of capitated contracts, do you see a possibility to combine your imaging offering with others, such as oncology treatment or Alzheimer’s disease treatment to win new capitated contracts from payers?

Mark Stolper: Well, we do work with other companies that do take risk for patient care in oncology and in other specialties. Today, we don’t subcapitate with any of those groups who are taking risk on the specialty side. Predominantly, all of our capitation contracts are with large primary care or multispecialty groups that are taking risk for the entire patient care and then we subcapitate for all of the imaging. But there is an opportunity. There are some companies, I know you’re aware of some, and I know you cover 1 or 2 companies that are in particular specialties that just take capitation risk for that specialty. And is there an opportunity — we do work with some of those companies right now on a fee-for-service basis, would there be an opportunity to capitate with them on imaging, I think it’s possible depending upon price.

I mean it’s ultimately the financials have to work for us, and we have to make sure that the capitated rates that we get are in line with fee for service — market-based fee-for-service rates, which is why we’ve actually pared down our capitation business slightly over the last couple of years where we had situations where our reimbursement on some of those contracts were falling behind what we would otherwise be able to get on a fee-for-service basis, and we flip them to fee-for-service relationships, and that’s increasing our profitability. So I think the opportunity, Yuan is there but it ultimately depends upon what kind of rates we could get.

Operator: Next question comes from Jim Sidoti from Sidoti & Co.

James Sidoti: I know it’s a long call. so if you include the new centers in Idaho, plus anything you’ve opened up so far this year, what is the total number of imaging centers you have?

Mark Stolper: So if you include the 5 that we bought in Idaho, we have 440 locations.

James Sidoti: And you said earlier in the call that advanced imaging was now about 29% of revenue, I think about — I’m sorry, 29% of procedures, 60% of revenue. Is there a target for advanced imaging over the next, let’s say, 5 years, do you think that could approach 40% of procedures?

Mark Stolper: I don’t think we really know. I mean that 40% seems a little high because we’ve always prided ourselves on being a multimodality provider, and we’ll always be a multimodality provider. I mean we think it’s important from a marketing perspective to be able to market who are referring physician communities as a one-stop shop for all of their imaging needs. And often, we will have patients sent to us for routine studies like x-rays and ultrasounds and based upon the results of those studies, they’ll be sent back to us for the more advanced imaging. And then back to tying into capitation in California, where we’re taking risk on about 1.5 million lives, we need to be a multi-modality provider because plus percent of what those patient populations need with respect to their imaging procedures are routine study.

So I think we’ll always be somewhat RadNet’s modality mix, we’ll always be somewhat reflective of the overall outpatient imaging marketplace with respect to our modality mix. But what we have been very effective in more recent times, particularly with the digital health tools is to help drive up the capacity of advanced imaging by lowering scan times at our centers and making our radiologists more productive on the back end so that they can read more of these studies. And I think that, that trend is going to continue within our business. So I think we’re confident and optimistic about advanced imaging continuing to play a bigger role in the health care delivery system and in our business. We just don’t know where that tops out.

James Sidoti: All right. All right. So you think more reasonable maybe in the low 30s, you think that could level off?

Mark Stolper: We don’t really know, Jim, but we’re approaching 30% now. And so I think it’s likely that we will go north of 30%, but I don’t know if it — where we’ll max out.

Operator: As there are no further questions, this concludes our question-and-answer session. I would like to turn the conference back over to Dr. Howard Berger, President and Chief Executive Officer, for any closing remarks. Over to you, sir.

Howard Berger: Thank you, operator. Again, I would like to take this opportunity to thank all of our shareholders and stakeholders for their continued support and the employees of RadNet for their dedication and hard work. Management will continue its endeavor to be a market leader that provides great services with an appropriate return on investment for all the stakeholders. Thank you for your time today, and I look forward to our next call. Good day. .

Operator: Thank you. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.