Imaging Centers

RadNet’s Bellwether Briefing

RadNet’s investor briefings have come to serve as a medical imaging industry bellwether, and last week’s Q2 call lived up to that reputation, providing key insights into how RadNet is approaching imaging’s biggest trends (and by proxy, where its hospital partners, competitors, and vendors are also likely focusing).

Here are some of the big takeaways…

Hospital system joint ventures remain core to RadNet’s strategy, as payors’ outpatient emphasis helped RadNet expand hospital JV agreements to 29% of its imaging centers (vs. 25% in 2021). It’s targeting 50% in the next 2-3 years.

RadNet acquired three imaging centers in 2022, but much of its short-term imaging center growth will likely come from the 15 net new locations that are under construction.

A long list of headwinds (reimbursements cuts, labor shortages, access to capital, recession) could lead to greater imaging center market consolidation, and RadNet believes it’s better equipped to take advantage of a downturn than its competitors. 

RadNet forecasts that the tight imaging center labor market is “here to stay” and “needs to be addressed with technology.” Following that advice, RadNet highlighted its efficiency-focused moves to adopt MRI DLIR software, launch a remote MRI technologist management solution, and transition its eRAD PACS to the cloud.

RadNet’s AI strategy remains focused on cancer detection / diagnosis leadership and it still views AI extremely optimistically, although the briefing served as a helpful reminder of how early we are in AI’s evolution:

  • Q2 AI revenues reached just $1.5M (that’s including Aidence & Quantib), while heavy investments led to a -$5.9M pre-tax loss for the AI division.
  • RadNet is rolling-out its DeepHealth mammography AI solution through Q4 2022 or Q1 2023, calling the implementation’s installation and training requirements a “tall task” (and they developed it…).
  • Nonetheless, RadNet is confident that the mammo AI solution will deliver immediate benefits to its team’s accuracy, productivity (up to 15-20%), and imaging center scan volumes.
  • RadNet also installed its ` prostate MRI solution at select imaging centers that perform prostate cancer screening, although its overall prostate and lung cancer AI adoption will come later.

The Takeaway

The main takeaway from RadNet’s Q2 call likely depends on your role within imaging. That said, its statements and activities certainly suggest that the major imaging center companies will get larger and more JV-centric, there’s still plenty of reasons to be optimistic about AI (and to be patient with it), and the demand for technologies that solve imaging’s efficiency problems continues to grow.

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