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RadNet (RDNT) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Health Care· Aug 10, 2026

Source: earnings call transcript

Executive summary

RadNet Q2 FY26 — Record Revenue and Adjusted EBITDA Driven by Advanced Imaging and Digital Health Growth

RadNet delivered record Q2 FY26 financial results, driven by strong advanced imaging volumes and expanding digital health solutions. The company is strategically investing in AI-powered tools and capacity expansion to address industry staffing shortages and enhance efficiency, positioning itself for continued growth and market leadership despite ongoing labor cost pressures. Management provided updated full-year guidance, reflecting confidence in its core imaging and digital health segments.

Highlights

5

  • Total company revenue increased 25% to $622.7 million, a quarterly record.

  • Total company adjusted EBITDA increased 22.7% to $99.7 million, a quarterly record.

  • Same-center advanced imaging procedural volumes increased 9.6% year-over-year.

  • Imaging center segment adjusted EBITDA margin improved by 17 basis points to 16.1%.

  • Digital Health Annual Recurring Revenue (ARR) reached $105.5 million, up 97% year-over-year.

Concerns

3

  • Digital Health adjusted EBITDA was down to $2.5 million from $3.4 million year-over-year, reflecting deliberate investments to fuel growth and acquisition dilution.

  • Continued pressure on salaries from labor shortages, particularly for technologists and radiologists.

  • Cash interest expense guidance increased by $3 million to a range of $48 million to $53 million due to incremental borrowings.

Guidance & targets

CategoryTargetConfidence
Digital Health Annual Recurring Revenue (ARR)
over $140 million
medium materiality
High
Digital Health Revenue
$135 million to $145 million
medium materiality
High
Digital Health Adjusted EBITDA
$10 million to $12 million
medium materiality
High
Imaging Center Segment Total Net Revenue
$2.370 billion to $2.421 billion
high materiality
High
Imaging Center Segment Adjusted EBITDA
$345 million to $358 million
high materiality
High
Free Cash Flow
$115 million to $125 million
high materiality
High
Capital Expenditures
$165 million to $175 million
medium materiality
High
Cash Interest Expense
$48 million to $53 million
medium materiality
High
Medicare Reimbursement Impact
negative impact of less than $1 million
medium materiality
Medium
RadNet Volumes through AI-powered Draft Solutions
close to 15%
medium materiality
High
RadNet Volumes through AI-powered Draft Solutions
over 50%
high materiality
High
Diagnostic Suite Reporting Pro Deployment
full deployment
medium materiality
High
Smart Registration Tool Scaling
ready to skill
low materiality
High
Glimmer Cost Synergies
roughly $4 million
medium materiality
High
Imaging Center Margin Enhancement
100 to 150 basis point
high materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Imaging Center Operating Segment
Growth driven by strong increases in aggregate and same-center procedural volumes, particularly in advanced imaging, and a favorable mix shift. Operational focus on cost control contributed to margin improvement.
Adjusted EBITDA margin: 16.1% (up 17 bps)Aggregate advanced imaging procedural volumes: increased 21.2%Same-center advanced imaging procedural volumes: increased 9.6%Aggregate MRI volume: increased 21%Same-center MRI volumes: increased 10%Aggregate CT volume: increased 20.9%Same-center CT volume: increased 8.6%Aggregate PET-CT volume: increased 31.0%Same-center PET-CT volume: increased 8.8%Advanced imaging procedural volume mix: 29.9% (up 238 bps from 27.5%)Centers in health system partnerships: 157 of 442 centers (36%)PET-CT volume from prostate PSMA and brain amyloid studies: over 25%
———16.1%
Digital Health Operating Segment
Strong growth driven by increased sales and licenses of enterprise imaging and AI solutions, with significant contributions from recent acquisitions. Adjusted EBITDA was lower year-over-year due to deliberate investments in growth and temporary margin dilution from acquisitions.
Adjusted EBITDA: $2.5 million (Q2 FY26)AI revenue: $16.1 million (up 136% YoY)Enterprise imaging revenue: $16.3 million (up 17.3% YoY)Annual Recurring Revenue (ARR): $105.5 million (up 97% YoY, up nearly 9% QoQ)External ARR: 63% of ARR baseTotal contract value (TCV) closed in Q2: $21 millionTotal contract value (TCV) closed H1: $37 millionCommercial funnel TCV: more than $224 million (equivalent to $65 million ACV)Customer base: nearly 3,000 accountsTotal procedure volume across AI/informatics solutions: over $17 million (up 200% YoY)Legacy Gleaner portfolio ARR: approximately $25 million (exited Q2)EPCD program revenue: increased 16%Prostate and neuro products revenue: grew over 13%Tech Live revenue: increased over 38%Enterprise imaging workflow revenue: increased 17.3%
$32.4 million56.5%—$2.5 million

RDNT operating KPIs by quarter

RDNT operating KPIs stated on its earnings calls, by fiscal quarter
KPI Dec 2025 Q4 FY25 Mar 2026 Q1 FY26This call Jun 2026 Q2 FY26Change vs prior quarter
Advanced imaging procedure share
28.6% During the fourth quarter, advanced imaging represented 28.6% of RadNet's procedural volume, an increase of 178 basis points from last year's same quarter. Source: earnings call transcript
29.3% 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. Source: earnings call transcript
29.9% increasing from 27.5% of total procedure volume in last year's second quarter to 29.9% in this year's second quarter. Source: earnings call transcript
+0.6 pt
Imaging centers Health system partnerships
151 Currently, 151 of RadNet's 418 centers or 36.1% are held within health system partnerships. Source: earnings call transcript
155 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. Source: earnings call transcript
157 As of the end of the second quarter, 157 of our now 442 centers or approximately 36% were held within health system partnerships. Source: earnings call transcript
+1.3%
Imaging centers
418 Currently, 151 of RadNet's 418 centers or 36.1% are held within health system partnerships. Source: earnings call transcript
440 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. Source: earnings call transcript
442 As of the end of the second quarter, 157 of our now 442 centers or approximately 36% were held within health system partnerships. Source: earnings call transcript
+0.5%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

ProductTypeDetails
DeepHealth breast ultrasound AIlaunch

Deals & partnerships

Trinity Health St. Alfonso's health system Multi-site joint venture for outpatient imaging centers

Initially includes the operation of 5 multi-modality outpatient imaging centers in Boise, Idaho. The partnership will adopt various DeepHealth solutions, including diagnostic suite reporting Pro, AI studio, and clinical AI applications.

Glimmer Acquisition of a digital health company

Acquisition is fully integrated and performing well, with its profitability trajectory moving from negative to profitable. Organizational integration is complete, product roadmaps merged, and teams are cross-trained and cross-selling.

CEMAR Acquisition of a digital health company

Acquisition is fully integrated and performing well, with its profitability trajectory moving from negative to profitable.

iCAD Acquisition of a digital health company

Acquisition is fully integrated and performing well, with its profitability trajectory moving from negative to profitable.

Southwest Florida imaging centers Acquisition of 13 imaging centers

Part of Q1 initiatives, these centers are being transitioned onto RadNet platforms. Expected to drive additional revenue and greater operational efficiency.

Indiana imaging centers Acquisition of imaging centers

Acquisition mentioned as part of capital deployment, contributing to the need for credit expansion.

Risks & headwinds

Labor shortages and salary pressure ongoing

continued pressure on salaries

Mitigation:Implementing digital health solutions and AI tools to improve efficiency and reduce reliance on manual labor; improving recruiting and retention.

Digital Health profitability dilution Q2 FY26

Adjusted EBITDA down from $3.4 million to $2.5 million YoY

Mitigation:Deliberate investments to fuel growth, integration of acquisitions to achieve profitability, and scaling the business to leverage investments.

Medicare reimbursement changes FY27

negative impact of less than $1 million to 2027 revenue (initial analysis)

Mitigation:Proposed increases to RVUs are largely mitigating the 1.68% decline in the conversion factor. Monitoring final rule release in November.

Hospital financial pressure from site neutrality 2027 (if finalized)

significant decline in reimbursement for hospitals, anywhere between 30% and 50% decrease on these Medicare procedures

Mitigation:Expected to drive more health system partnership discussions, as hospitals seek to offload outpatient imaging to more cost-effective providers like RadNet.

What to watch in Q3 FY26

Digital Health ARR

by year-end 2026
Current $105.5 million
Target over $140 million

Why it matters

This metric indicates the growth and health of the recurring revenue component of the Digital Health segment, a key strategic growth driver for RadNet.

We remain on track to grow full year ARR by approximately 91% from 2025 to over $140 million by the end of this year, end of 2026, with our recent acquisitions now layered on top of a healthy core business.

Find out whether RDNT delivers this. Inve re-checks your case every morning.

Q&A highlights

What is the flow-through impact of the breast ultrasound FDA approval on the business, what is the timeline for other pending approvals, and how will reimbursement for these T codes evolve?

Sham Sokka explained that the breast ultrasound AI will impact 1 million exams annually, 4x the volume of thyroid, reducing slot times and speeding reporting. It's eligible for an existing CPT code, and they expect to reach the 30-40% reimbursement level faster than with thyroid. Other applications in progress include image-based risk on mammography, MR Spine autografting, next-gen X-ray, CT lung AI, and vascular ultrasound.

“we will get to that reimbursement level faster with breast than we would -- than we had with thyroid.”

asked by Brian Tanquilut · answered by Sham Sokka

2 min read 6 chapters

Detailed narrative

Advanced Imaging Growth and Capacity Expansion

RadNet experienced strong demand in advanced imaging modalities, including MRI, CT, and PET-CT. Aggregate procedural volumes for advanced imaging increased 21.2% year-over-year, with same-center volumes up 9.6%. This growth was attributed to broader industry trends, capital investments in faster MRI scanners, extended operating hours, and the use of Tech Live remote technologists. The favorable mix shift towards advanced imaging contributed to a 17 basis point improvement in the imaging center segment's adjusted EBITDA margin, reaching 16.1%.

Digital Health Segment Performance and AI Innovation

The Digital Health segment reported revenue of $32.4 million, a 56.5% increase year-over-year, driven by AI and enterprise imaging solutions. Annual Recurring Revenue (ARR) grew 97% year-over-year to $105.5 million, with external ARR now accounting for 63% of the base. The company secured FDA 510(k) clearance for its DeepHealth breast ultrasound AI, which automates lesion detection and reporting, demonstrating greater than 98% accuracy and an 8% improvement in breast cancer detection sensitivity.

AI-Powered Workflow Transformation and Productivity

RadNet is leveraging AI to transform radiology workflows, aiming for significant productivity gains. The DeepHealth breast ultrasound AI, combined with existing thyroid ultrasound AI, is expected to cover 40% of RadNet's 3 million annual ultrasound exams with potentially reimbursable draft reporting solutions. The company projects that close to 15% of RadNet's total volumes will utilize AI-powered draft solutions by year-end 2026, increasing to over 50% by the end of Q2 2027, leading to reduced interpretation times and increased capacity.

Expanding Health System Partnerships

Joint venture relationships with health systems continue to grow, with 157 of RadNet's 442 centers (approximately 36%) now operating within these partnerships. A new multi-site joint venture was announced in Boise, Idaho, with Trinity Health St. Alfonso's, which will integrate DeepHealth solutions. Management noted increasing interest from health systems in partnering with outpatient providers and adopting digital health tools to address staffing shortages and manage imaging volumes more effectively.

Medicare Reimbursement and Site Neutrality Impact

Initial analysis of proposed 2027 Medicare reimbursement rates suggests a near-neutral impact on RadNet's revenue, with a negative impact of less than $1 million, as proposed increases to RVUs largely mitigate a 1.68% decrease in the conversion factor. However, a proposed site neutrality provision in the HOPS Medicare fee schedule, which would significantly reduce hospital reimbursement for certain noncontrast studies (30-50% decrease), is expected to intensify financial pressure on hospital radiology departments and drive further interest in outpatient partnerships.

Strategic Acquisitions and Capital Allocation

RadNet completed the integration of recent acquisitions, including Glimmer, CEMAR, and iCAD, which are now performing well and moving towards profitability. The company also acquired 13 new imaging centers in Southwest Florida and additional centers in Indiana. To support future growth and M&A, RadNet repriced its credit agreement, reducing interest rates by 25 basis points, and funded a $250 million incremental term loan, increasing its cash balance to $726.3 million and maintaining a net debt to adjusted EBITDA ratio of 1.8x.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.