RDNT - NASDAQ

Pardon me, the RadNet, Inc. fourth quarter 2025 Financial Results Conference Call will start momentarily. Thank you for your patience. Good day, and welcome to the RadNet, Inc. fourth quarter 2025 Financial Results Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. To ask a question, please press star then 1 on your touch-tone phone. To withdraw your question, please press star then 2. Note this event is being recorded. I would now like to turn the conference over to Mark D. Stolper, Executive Vice President and Chief Financial Officer of RadNet, Inc. Please go ahead, sir.

Good morning, ladies and gentlemen, and thank you for joining Dr. Howard G. Berger and me today to discuss RadNet, Inc.’s fourth quarter and full year 2025 financial results. On this call, we also have invited Kaes Westorpe, President and CEO of Digital Health, and Shyam Soka, Chief Operating and Technical Officer of Digital Health, who will share additional information about this morning's announcement of the acquisition of Paris, France-based Gleamer. Before we begin today, we would 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, Inc.’s ability to continue 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, Inc.’s actual results to differ materially from the statements contained herein. These risks and uncertainties include those risks set forth in RadNet, Inc.’s reports filed with the SEC from time to time, including RadNet, Inc.’s Annual Report on Form 10-K for the year ended 12/31/2025 to be filed shortly. 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, Inc. 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. I will now turn the call to Dr. Berger.

Thank you, Mark. Good morning, everyone, and thank you for joining us today. On today's call, Mark and I plan to provide you with highlights from our fourth quarter and full year 2025 results, give you more insight into factors which affected this performance, and discuss our future strategy and provide more information about this morning's acquisition announcement. After our prepared remarks, we will open the call to your questions. I would like to thank all of you for your interest in our company and for dedicating a portion of your day to participate in our conference call this morning. Let's begin. I am very pleased with the performance in the fourth quarter. It was the strongest quarter in the company's history with record revenue and adjusted EBITDA. Total company revenue increased 14.8% to $547,700,000, and adjusted EBITDA increased 16.9% from last year's fourth quarter to $87,700,000. Digital Health fourth quarter 2025 revenue increased 48.2% to $27,900,000 and Digital Health's adjusted EBITDA increased 8.9% to $4,900,000 from last year's fourth quarter. Imaging center revenue continues to be driven by increased demand in virtually all of our markets, benefiting from the growing utilization of diagnostic imaging within health care as well as the continuing shift of procedural volumes away from more expensive hospital alternatives to ambulatory freestanding centers. As a result, we experienced 14.1% aggregate and 9.6% same-center advanced imaging procedural volume growth in this year's fourth quarter relative to last year's same quarter. I am highlighting the growth in advanced imaging because MRI, CT, and PET/CT are responsible for over 60% of RadNet, Inc.’s revenue and are important drivers of margin and profitability. To this end, revenue benefited from the continuing shift in modality mix towards advanced imaging. During the fourth quarter, advanced imaging represented 28.6% of RadNet, Inc.’s procedural volume, an increase of 178 basis points from last year's same quarter. This increase is a function of the overall industry trend of more of these exams being ordered as a result of technological advances in these modalities, significant capital investment we have made in the last few years in advanced imaging equipment for growth and replacement, and the implementation of TechLive and AI-powered dynamic scheduling. 2025 was a year of significant investment. During 2025, we opened seven de novo facilities in markets where there were backlogs which we required additional capacity for or where we needed access points to service identified patient populations. These centers should be material contributors to long-term performance and growth in 2026 and beyond. During 2025, we expanded several of our joint venture partnerships with de novo builds and acquisitions. And we are in conversation to establish several new health system joint venture opportunities. Currently, 151 of RadNet, Inc.’s 418 centers, or 36.1%, are held within health system partnerships. Health systems continue to seek long-term strategies around outpatient imaging and have recognized that cost-effective and efficient freestanding centers will continue to capture market share from hospitals as payers and patients migrate their site of care towards lower-cost, quality solutions. Our health system partners have been instrumental in increasing RadNet, Inc.’s procedural volume with their physician relationships. During 2025, we were active with acquisitions in both the Imaging Centers and Digital Health operating segments. During 2025, we expanded into our largest margin markets through additional acquisitions of imaging facilities in California, New York, and Maryland. Within Digital Health during 2025, we acquired iCAD. C-MODE and CMAR have already been integrated into the DeepHealth product portfolio solutions. Subsequent to year end, in January, we expanded into three new markets with the acquisitions of 13 centers in Southwest Florida and entered Indiana with the acquisition of six facilities of Northwest Radiology and a single center in Virginia. And, of course, this morning, we announced the completion of the acquisition of Gleamer, which Kaes and Shyam will speak about in more detail shortly. Within Digital Health, we are continuing to build the most comprehensive portfolio of AI-powered solutions designed to transform both the workflow and clinical capabilities within radiology. These solutions are critical to addressing the constrained labor market for technologists, center-level administrative personnel, and radiologists. We believe there will be a day where every procedure RadNet, Inc. performs is put through artificial intelligence as part of the clinical and reporting workflow. Efficiency, productivity, and accuracy will improve with the use of the tools, and RadNet, Inc. is committed to both implementing these solutions in its core imaging centers and commercializing them for sale for the rest of the industry. It is patients who will ultimately benefit as both service levels and health outcomes will improve. Throughout 2025, we continued to manage liquidity and financial leverage. At year end 2025, RadNet, Inc.’s cash balance was $776,000,000, and the net debt to adjusted EBITDA leverage ratio was approximately 1.0. While we have been acquisitive so far during 2026, with the acquisitions in Southwest Florida, Indiana, Virginia, and the Gleamer transaction announced this morning, we remain committed to operating the company with low leverage. At this time, I would like to turn the call back over to Mark to discuss some of the highlights of our fourth quarter and full year 2025 performance as well as discuss our 2026 guidance.

I am now going to briefly review our fourth quarter and full year 2025 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 fourth quarter and full year 2025 performance. I will also provide 2026 guidance levels which were released in this morning'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 in earnings in unconsolidated operations and subtracts allocations of earnings to noncontrolling interests in subsidiaries, and is adjusted for noncash or extraordinary and one-time 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. This quarter, we are also introducing a second non-GAAP measure pertaining to the Digital Health segment called annual recurring revenue, otherwise known as ARR. The company defines ARR as a key subscription 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 one-time nonrecurring fees such as implementation, hardware sales, professional services, consulting, and one-off training. With that said, I would now like to review our fourth quarter and full year 2025 results. As many of you have seen in the financial release this morning, we had a very strong fourth quarter. While I will not recap all the financial information that is contained in the earnings report, here are some of the highlights. Fourth quarter total company revenue and adjusted EBITDA were both quarterly records. Revenue increased 14.8%, and adjusted EBITDA increased 16.9% from last year's fourth quarter. The Digital Health segment also exhibited strong growth in the quarter, with revenue growing 48.2% and adjusted EBITDA growing 8.9% from last year's fourth quarter. The strong revenue growth was partially the result from the contribution of iCAD, acquired in July, which otherwise would have seen 25.9% growth without the contribution of iCAD. Fourth quarter adjusted earnings per share for RadNet, Inc. essentially was flat at $0.23 per share versus $0.24 per share for last year's fourth quarter. Also benefiting the fourth quarter was the continued shift in business mix in favor of advanced imaging that Dr. Berger mentioned in his earlier remarks. Higher acuity advanced imaging drives more revenue per procedure and improved adjusted EBITDA. The strong ending to the year caused us to meet or exceed the 2025 original guidance levels and guidance ranges we increased during quarters throughout the year for revenue, adjusted EBITDA, and free cash flow for the Imaging Center segment. Within Digital Health, revenue finished at $92,700,000, above the original and within the amended guidance ranges, and adjusted EBITDA of $15,500,000, which finished within the original and revised guidance levels, despite having integrated the negative EBITDA businesses during the year of both iCAD and C-MODE. We finished 2025 with a strong cash and liquidity position. At year end, we had $767,000,000 cash on the balance sheet, full availability of a $282,000,000 revolving credit facility, and a term loan that is priced at SOFR plus 225 basis points. Continued improvement in revenue cycles has lowered our DSOs, or days sales outstanding, to a RadNet, Inc. record low of 29.5 days, which we believe to be one of the best in the industry. With regards to our financial leverage at 12/31/2025, unadjusted for bond and term loan discounts, we had $323.5 million of net debt, which is our total debt at par value less our cash balance. Note that this debt balance includes RadNet, Inc.’s ownership percentage, or 49%, of New Jersey Imaging Network's net debt of $27,800,000, for which RadNet, Inc. is neither a borrower nor a guarantor. At year end, our net debt to adjusted EBITDA leverage ratio was approximately 1. As some of you may have seen, we released 2026 guidance ranges in conjunction with our financial results press release this morning. While I am not going to run through all the numbers on this call, I will emphasize some important points. First, we anticipate growth next year to exceed the target growth we presented at the Investor Day in New York back in November. 2026 guidance anticipates 17% to 19% Imaging Center revenue growth relative to 2025, resulting from contributions of continued increases in same-center performance, further tuck-in acquisitions, reimbursement efforts driving more favorable pricing, and de novo center openings. We are also expecting EBITDA growth to exceed that of revenue, creating margin improvement. Free cash flow is expected to grow 29% to 41% from 2025 levels. Embedded in these guidance numbers are approximately 4% growth in same-center labor costs as well as the recent impact of severe winter weather conditions in our Mid-Atlantic and Northeast regions. Within Digital Health, 2026 guidance implies revenue growth between 45%–55% from 2025 performance. 2026 growth will be driven by sales of the DeepHealth portfolio of AI-powered workflow and clinical solutions and related products such as TechLive, and further contribution from the acquisitions of iCAD, C-MODE, CMAR, and Gleamer. In this morning's press release, we introduced a new metric to track the progress of the Digital Health division, otherwise known as ARR. We will continue to update this metric each quarter and at year end to give more transparency into the growth and the future progress of the Digital Health division. At December 31, 2025, ARR for the Digital Health division was $75,400,000. We are anticipating ARR will approach $140,000,000 at the end of 2026. This growth is partially from the contribution of Gleamer, which is in the neighborhood of an additional $30,000,000 of ARR, with the remainder of the growth coming from SaaS-based revenue recognized from the licensing of AI-powered workflow and clinical solutions. In 2026, we also expect the proportion of Digital Health revenues which comes from RadNet, Inc.’s Imaging Center segment to decrease from 45% in 2025 to about 33% in 2026. On the development side, we are anticipating a minimum of four FDA clearances during 2026, which should further advance our leadership in radiology clinical AI solutions in the areas of mammography, lung, prostate, thyroid, brain, and, with this morning's announcement of the acquisition of Gleamer, the musculoskeletal system. In 2026, significant infrastructure investments will continue to be made in building sales and marketing and implementation teams to support future growth. I would now like to turn the call over to Kaes Westorpe. Kaes and Shyam Soka will provide more information about this morning's acquisition of Gleamer.

Thank you, Mark. Across the globe, imaging demand continues to rise while radiologists, technologists, and other labor shortages persist. Reengineering high-volume workflows, particularly routine imaging such as X-ray, ultrasound, and mammography, is becoming essential to sustaining access, efficiency, and quality of care. For radiologists and providers, the key lies in advancing automated exam prioritization and draft reporting. The foundation of RadNet, Inc.’s strategy is combining the largest outpatient imaging network in the U.S. with DeepHealth's advanced clinical AI and imaging informatics platform. This combination uniquely positions RadNet, Inc. to validate, deploy, and scale AI solutions at a level unmatched in the industry, both across RadNet, Inc.’s own network and for customers worldwide. Today, RadNet, Inc. announced another major step forward in the acquisition of Gleamer, a Paris-based leading radiology AI company, to be integrated into DeepHealth. And with this acquisition, DeepHealth becomes the largest provider of radiology clinical AI solutions worldwide. Gleamer is a fast-growing, cloud-native, software-as-a-service radiology AI company serving more than 700 customer contracts across 44 countries. Powered by more than 130 professionals, including a strong commercial team of 40 team members and more than 76 research and development team members, Gleamer has developed, commercialized, and delivered solutions to support over 25 clinical indications. Its broad multimodality portfolio includes four FDA-cleared and six CE-marked clinical AI and workflow solutions supporting more than 25 clinical indications across musculoskeletal, breast, lung, and neurologic applications. Gleamer’s solutions are designed to improve quality of care while reducing radiologist workload, with automated reporting capabilities already deployed in Europe. The company has achieved annual recurring revenue compound annual growth exceeding 90% from 2022 to 2025 and is expected to reach approximately $30,000,000 ARR in 2026. Together, we are now the largest provider of radiology clinical AI solutions worldwide in both the breadth of AI solutions and ARR. The combination delivers an integrated end-to-end platform that supports every stage of the radiology workflow. The combined portfolio unifies clinical and agentic AI, operational intelligence, and workflow automation in a single platform that spans patient journey efficiency, technology and operations efficiency, and AI-driven diagnosis, triage, and reporting. DeepHealth now covers the entire radiology workflow from image acquisition to reporting. At this time, I would like to turn the call over to Shyam, who will go through some more details around the acquisition and our overall strategy at DeepHealth.

Thank you, Kaes. This morning's acquisition of Gleamer strategically enhances DeepHealth and RadNet, Inc. in four areas. First, it expands DeepHealth's portfolio across all core imaging modalities. The integration of Gleamer's portfolio with DeepHealth's clinical AI suites for breast, chest, neuro, prostate, and thyroid creates a comprehensive portfolio unrivaled by any other radiology AI company. The combined portfolio supports screening, detection, interpretation, and follow-up across many of the most prevalent cancer types as well as neurodegenerative and musculoskeletal conditions, including trauma and chronic diseases. With the inclusion of Gleamer's products, particularly its market-leading capabilities in X-ray, DeepHealth now provides native clinical AI solutions across MR, CT, X-ray, mammography, and ultrasound modalities, making it the worldwide leader of radiology clinical AI solutions. Second, the acquisition enhances DeepHealth's global commercial reach and scale. Gleamer's leadership in Europe, particularly across France, DACH, and broader EMEA markets, significantly strengthens DeepHealth's commercial engine. The acquisition adds more than 700 customer contracts across hospitals, imaging centers, and health care systems, significantly increases annual recurring revenue, and expands the global sales force with more than 40 team members, predominantly Europe- and U.S.-based commercial professionals. This scale accelerates DeepHealth's global trajectory and enhances its ability to deliver transformative AI-enabled imaging solutions worldwide to customers. Third, we are leveraging Gleamer to drive operational efficiency across RadNet, Inc.’s highest-volume workflows. Deploying Gleamer's radiology AI and workflow capabilities across RadNet, Inc.’s imaging network is expected to create measurable productivity gains, particularly in X-ray, which accounts for nearly 25% of RadNet, Inc.’s imaging volume. RadNet, Inc. intends to implement an end-to-end AI-enabled workflow beginning with triaging critical findings to accelerate interpretation of urgent cases. The acquisition will also accelerate the introduction of draft reporting capabilities, allowing radiologists to increase reading volumes with greater accuracy and standardization. As an aside, for those of you who are less familiar with the radiology workflow, what our industry calls reporting is when a radiologist types or dictates his or her findings or interpretation into a clinical report that is then shared with the referring physician and patient. For many radiology exams, the reporting part can take more of the radiologist's effort than the interpretation itself. This end-to-end workflow approach is designed to optimize internal resource utilization, resulting in improved operational and cost efficiencies, with expected benefits beginning as early as 2026. And finally, fourth, looking ahead, the acquisition meaningfully advances DeepHealth's path toward automated diagnostics. Gleamer has developed automated reporting capabilities where the AI is able to create the clinical report on behalf of the radiologist without human intervention. This feature is already in early deployment with customers in Europe. When this feature is combined with the DeepHealth AI and informatics portfolio, it brings clinical, generative, and agentic AI and imaging informatics together into an integrated offering. With this extensive expertise, DeepHealth is uniquely positioned to enable more standardized interpretation, automated draft reporting, and scalable diagnostic pathways. At this time, I am going to hand the call back to Kaes, who will make some summary points about the implications of today's acquisition.

Thank you, Shyam. This acquisition really strengthens RadNet, Inc.’s Digital Health business strategically and operationally, and expands cross-selling and upselling opportunity across its installed base. The transaction was completed with cash valued at up to €230,000,000, inclusive of post-closing milestones. The transaction reflects Gleamer's multiyear high recurring revenue growth, cloud-native gross margins, and strong customer retention. And the acquisition is expected to create meaningful growth and cost synergies estimated at approximately $7,000,000 run-rate and to accelerate Gleamer's path to positive adjusted EBITDA by mid-2027, faster than it could have achieved independently. In summary, the acquisition of Gleamer is a transformative milestone for us. It establishes DeepHealth as the largest provider of radiology clinical AI solutions worldwide, expands its global footprint, strengthens operational performance across high-volume workflows, and accelerates the delivery of AI-enabled automated diagnostics. DeepHealth and Gleamer have a combined installed base of over 2,700 customers across more than 44 countries; a comprehensive portfolio including 26 FDA-cleared and 22 CE-marked devices supporting over 75 indications; and a global footprint with over 550 employees across four continents. DeepHealth with Gleamer together is achieving ARR approaching or exceeding $140,000,000 by 2026. We believe that these metrics make DeepHealth the leader in providing clinical radiology AI solutions worldwide. Together, RadNet, Inc. and DeepHealth are redefining how imaging is delivered at scale with intelligence and automation to empower breakthroughs in care and unlock greater access, efficiency, and better experiences and outcomes for patients and providers worldwide. At this time, I will hand the call back to Dr. Berger, who will make some closing remarks.

Thank you, Kaes. Radiology is entering a new era. I am proud to be at the helm of the company that is leading this transition into an era of unprecedented demand and challenging workload environment that is critical to long-term benefit and outcomes for our patients and referring physicians. The introduction of Digital Health to the RadNet, Inc. portfolio is barely over three years since we built the team that Kaes and Shyam will be leading forward. This particular acquisition announced today with Gleamer completes the strategy that we announced earlier at the Investor Day last year of wanting to be the leader in routine imaging, meaning mammography, X-ray, and ultrasound. The company, Gleamer, is headed by an exceptionally talented team led by Christian Allouche that we are proud to bring into the RadNet, Inc. family. This event, I believe, is a seminal event not only in the history of RadNet, Inc., but what it represents as leading into this next era of artificial intelligence which will be transformational for the industry and health care in general. The opportunity for RadNet, Inc. now expands well beyond the outpatient centers and into relationships that we expect to grow deeper with hospitals and hospital systems that we are currently already joint ventured with and which we are getting significant interest from others to deal with all of the problems that radiology faces which are primarily driven by the workforce, both from the radiologist professional and nonprofessionals. I look forward to our next calls where we will be able to discuss in more detail the progress that is being made not only in the Digital Health division but how it is impacting RadNet, Inc. and its other customers. I particularly want to thank the Gleamer teams and the RadNet, Inc. management and all our advisers that worked very diligently to get to this day and hope that the marketplace will begin to better understand why RadNet, Inc. made this commitment to Digital Health several years ago and which we now stand on the precipice of major transformative changes. With that, we will turn the call over to question and answers. Mark?

Thank you, Operator. We are ready for the question and answer portion of the call.

Thank you. We will now open for questions. At this time, we will pause momentarily just to assemble a roster. The first question will come from Brian Gil Tanquilut with Jefferies. Please go ahead.

Hey, good morning. Maybe I will ask the AI question. I hesitate because I know this could be a one-hour discussion. But when we think of, you know, non-health care AI companies saying that AI will disrupt radiology or can disrupt radiology, maybe, Howard, the first question is, where do you stand on that? I mean, how do you see AI being a benefit, especially for someone like RadNet, Inc.? And then in the context of the acquisition of Gleamer today, and you being positioned as the largest, you know, owner of clinical AI assets in the space, how differentiated does RadNet, Inc. become with this transaction? Thanks.

Thanks, Brian. Good morning. I do not think disruption is the right term to use for the opportunities—and also, I should not just call them opportunities, but the critical needs—that radiology has as well as all of health care to transform itself and try to put less dependence on manual labor. The shortages that we have are going to continue for the foreseeable future. And the demand that we are currently experiencing will be unabated because of the technological advances that are occurring on the equipment side. So this is an opportunity for us to make all of the constituents in RadNet, Inc. better at doing their jobs—better both in terms of productivity, accuracy, and, fundamentally, lifestyle. The burden that is being placed on radiologists and our technologists due to the enormous amount of manual effort that needs to go into seeing a patient, performing a scan, creating a report, and follow-up is becoming almost insurmountable. So as opposed to other industries where perhaps there will be large replacement by AI of employees, that is not how RadNet, Inc. sees the world. These are tools that will enhance productivity, allow us to continue to grow and match the demands that we have, not just from a volume standpoint. We have to appreciate that the quality and capabilities of the new equipment is almost something that could never have been imagined even three or four years ago. And we see these cases on a daily basis. We see the impact that imaging is having. I would like everyone to reflect on the commitment we made to the DeepHealth acquisition almost six years ago, and where we have demonstrated and others that artificial intelligence in the breast screening area has increased early detection of cancers by 20% to 22%. That is just extraordinary. And while we are not curing cancers, we are finding them earlier and allowing for a better outcome. And that fundamentally is really what artificial intelligence will have the capability of doing, and that is diagnosing diseases earlier to afford not only a better financial outcome and less financial burden, but also to improve the longevity and better lifestyle that people would like to achieve. So I think that the issue of artificial intelligence in health care in general is not one that transforms the industry by simply replacing people, but making the workforce that we have that is insufficient to handle the needs that we have right now more capable and more accurate in the work that they do. So I think I would like to think, and I have said this before, that artificial intelligence in health care is much different than it is almost in any other industry.

I appreciate that. And then, Mark, maybe as I think about the ARR—and I appreciate you guys sharing that with us. Any callouts? Because other than Gleamer here, I mean, it is showing pretty significant growth from year-end '25 to '26. So anything you can share in terms of where those contracts are coming from or what is providing that confidence in that level of growth year over year?

Sure. I will let Kaes address that, and I will chime in if anything more to add.

Yeah. Of course. So as a reminder, we operate currently three different business domains. One is what we call Clinical AI, where, obviously, the Gleamer acquisition fits squarely in. The second is what we call Enterprise Imaging, which traditionally you would call PACS, but is now powered by the DeepHealth OS to deliver our Diagnostic Suite. And the third is Enterprise Operations, which you would call traditionally our RIS business. All three businesses contribute to that momentum. We see very, very good continued growth in the Clinical AI domain. We are winning contracts both in the outpatient segment as well as renowned logos in and for hospital systems. We continue to build momentum, particularly in the U.S., for our Enterprise Imaging offering with our Diagnostic Suite, partially with upgrades in our installed base, but also new wins as we roll out our broader Diagnostic Suite. And the same then holds for our Enterprise Operations portfolio, which is our Operations Suite. And so it is as much as installed base upselling as it is new wins, and then more for in Europe for Clinical AI and in the U.S. a combination of Clinical AI, Enterprise Operations, and Enterprise Imaging. The commercial funnel across these three domains is developing well, and one of the things that we also have done in 2025 is more deeply invest in our commercial team organically and also inorganically with the acquisition in particular of iCAD, as well as service delivery. That sort of spans the plan that we have deployed last year, and how we now see the commercial momentum going forward.

Awesome. Thank you, guys.

Alright. Brian, before you go, let me add one additional point here. One of the reasons why the Gleamer acquisition was so attractive to us, as I had mentioned earlier, is it is rounding out our portfolio in the routine imaging space. And as part of our overall strategy, particularly with our hospital partners, is to afford them the opportunity to have their entire provider network system—meaning their physician groups, their urgent cares, their emergency rooms—all connected on the same platform. And when you stop to think about in the bigger picture what portion from a volume standpoint is contributed to imaging, it is dominated by routine imaging. And some of the tools that we are talking about here, particularly not just with AI, but also the ability to have real-time reporting that AI will substantially enhance, we are looking at opportunities within urgent care systems, within physician offices, to give them the capability of providing very high-quality level work for what is not necessarily a revenue source for them, but for the delivery of care and immediacy to help the patient journey. The amount of opportunity that resides in what we like to call the nontraditional imaging provider network is extraordinarily high. Just to give some context to this, there are more than twice as many urgent care centers, and more rapidly growing, than there are outpatient imaging centers across the U.S. So these kinds of transformative tools will allow us to enter onto another platform where we are not necessarily constrained with traditional reimbursement for claims but rather to be part of the delivery system of health care that we can help the providers benefit from by, again, earlier detection and greater opportunity to advance the patient journey on as timely a basis as possible. So I think you can look for opportunities that we will be demonstrating later this year which will enhance not only our imaging revenue by providing these, but could also be a very substantial market which is predominantly driven by routine imaging.

And I will just add my 2¢ here just to address your question directly on the ARR side. So in 2025, our ARR of Digital Health was $75,000,000. And I am just going to give you a couple of pieces to bridge you to the roughly $140,000,000 that we are anticipating in ARR at the end of '26. So if you take the $75,000,000, Brian, and you add roughly about $30,000,000 of ARR for Gleamer, you are up at $105,000,000. And then there is about $7,000,000 of additional ARR that just comes from the annualization of the iCAD acquisition, which we did in July. So really, the base ARR, if you pro forma those two items for the year, starts you at about $113,000,000. And so the other $27,000,000 of ARR is the growth that Kaes described with all the other products and services, both from the Clinical AI side as well as the informatics, and the work of the commercialization and sales and marketing teams during 2026 to sell those products and services.

Perfect. Thank you, guys.

The next question will come from David Samuel MacDonald with Truist. Please go ahead.

Good morning, guys, and congratulations. I have a couple-part question on Gleamer and then just one on Imaging. But on Gleamer, a couple of things. First of all, on the 700-plus customer contracts, you talked a little bit about upselling and cross-selling. Can you just provide a little bit of context in terms of how many of those are incremental or new to RadNet, Inc.? I did miss the number in terms of how many of the professionals are R&D. And then just last piece, can you give any framing around, as you reengineer the workflows, what type of efficiency gains you hope to achieve in some of the routine imaging areas?

Yeah. Mark, let me take that. So first, on the customer contracts, what we shared today is that DeepHealth has over 2,000 customer contracts. And Gleamer will add another 700. There will be some overlap, but the percentage of contracts that has, let’s say, two or more overlapping solutions will be very, very minimal. And so a way to think about the upsell opportunity: we apply right now a logic of the 2,700 joint contracts—80% to 90% of those provide, given our broad Clinical AI portfolio, an upsell opportunity—and we are currently going into depth as of today, since close. We are going into depth with the joint team to build the plans for that and to really figure out what the nitty-gritty detail is, contract by contract, on what the opportunity is at hand. And, Shyam, you want to talk about R&D—the 76 scope—so maybe let me do the following. It is a sales force of 40 FTE commercially and around, let’s say, up to 80 R&D. The total team is 130.

And maybe just to give a bit of detail, it is both software capability as well as machine learning capability. The team has built foundation models to support their X-ray findings and also in the CT area, so we will leverage that more broadly with our—

We lost you there. You cut out. Guys, I can jump to my next question, and, you know, the radiologist is essentially looking at the images and correcting a draft report, amending to that report, or just clicking accept?

And we think that is going to give us significant efficiencies on the X-ray volume itself and that we can actually recover some of those costs and bring their time more available to do the advanced imaging studies that we are talking about that are growing at such a high rate.

Okay. And then, guys, just a second question just on the Imaging side. I guess two-part question. One, just given some of the pressures that hospital systems are seeing and are expected to see on a go-forward basis, are you seeing a growing percentage of your pipeline leaning towards JV-type of deals? And then secondly, on de novos, you guys have entered a handful of markets that, I guess, I would define as much more receptive in terms of licensing, in terms of building, etc. Is there an opportunity, as the Floridas, the Texas of the world become a larger percentage of the portfolio, that time to develop or cost to develop de novos could improve?

Well, the first part of your question, Dave, is, without question, the number of inbound calls that we are getting from hospital systems has dramatically increased over the last, I do not know, 12 to 18 months. Primarily, I think that is because the radiologist staffing shortage is an acute problem virtually for every hospital system no matter what size it is. And as a result, the initial calls may come into us to see if we can assist them with radiology staffing needs, but then since that is not currently a core business of ours, it moves to a more comprehensive solution for them that not only attempts to deal with where they need to transition from their current capabilities of providing tools like the viewer or PACS and AI solutions into ways to better grow their outpatient business and to incorporate their physician groups into a more friendly and efficient informatics system—enterprise imaging system. So I would say that while we continue to see opportunities for what we like to call tuck-in acquisitions, those are being dwarfed by potentially larger opportunities with health systems that, instead of just maybe having five hospitals, may have 50 or 100 hospitals. So the landscape is changing out there very rapidly, and I think RadNet, Inc.’s capabilities are being better appreciated as perhaps a unique company to give them benefits across the entire spectrum of radiology.

And on that note, I think it is highly likely that in 2026 we will be announcing some new health system relationships as well as expanding existing ones.

As far as de novos in some of the new markets that we entered into, RadNet, Inc.’s philosophy has always been to land and expand, not build and hold. And so I think you can expect that we will be discussing other acquisitions that might be opportunistic in the new markets that we have entered as well as building centers to address the needs of some of these opportunities that I think lack the capital and resources to really take advantage of the growing demand for imaging. So all of the newer acquisitions, which primarily were completed this year—the two larger ones in Indianapolis and in Southwest Florida—are actively under discussion for both of these kinds of expansion opportunities: acquisitions as well as de novos, as well as the possibility of potentially, in those markets, finding other joint venture partners that are consistent with our hospital strategy.

Okay. Thanks very much.

The next question will come from Andrew Mok with Barclays. Please go ahead.

Hi, good morning. First, I wanted to clarify this new ARR metric. In 2025, Digital Health revenue was $93,000,000 and ARR was $75,000,000, so there is about an $18,000,000 difference. And then in 2026, it sounds like the Digital Health revenue guidance of $140,000,000 is expected to approximate ARR of $140,000,000. So why is there a delta between the two metrics in 2025, and why does that go away in 2026? Thanks.

Sure. I will give my answer, and then I will let Shyam and Kaes chime in. So, predominantly, the difference in '25 between the booked revenue and ARR at the end of the year was the DTC revenue that we recognized within the Digital Health division. That was predominantly the delta. And the reason that delta goes away at the end of 2026—remember the following: ARR should be thought of as a balance sheet metric, meaning a number at a period in time, as opposed to tracking the full year's worth of revenue. And by the end of 2026, these are based upon signed contracts, and many of those contracts that we sign that will be part of the ARR will be signed in the second half of the year or even towards year end. That counts in the ARR, but it does not count in the revenue for that year because those contracts might be just starting. So that is why that gap is closing. And as we continue to grow the SaaS-based business and sign new contracts going forward, I would expect that the ARR would exceed the booked revenue, which is a backward-looking metric as opposed to ARR, which is a forward-looking metric. Shyam, do you want to add anything to that?

Let me add a little bit, also referring back to the Investor Day and what we presented there. Our traditional business, where we come from, is partially upfront licensed towards our customers and recurring revenue. And so our business mix last year was, let’s say, 75% from a recurring nature, and the remainder were one-off implementation fees or the DTC program that is not necessarily recurring because it is a direct-to-consumer type of offering, and so on and so forth. During Investor Day last year, we said with growing concern—and with organic growth—that the recurring nature of the business will grow fast because all our propositions will be offered on an ARR subscription basis. And so that proportion was being forecasted to reach 80%–90% in the course of, let’s say, two years. With the acquisition of Gleamer, which is a 100% ARR business—so fully recurring revenues—we significantly boosted that profile, and as a result, we are achieving an equal amount of recurring revenue for next year as well as GAAP revenue. Going forward, as we accelerate the recurring revenue-based business, you can indeed expect that the recurring revenue is going to be larger versus the booked revenue. And just to amplify again, when we say ARR of 2025, it means the recurring revenue at the end of the period. So it is a run-rate number.

Right. Understood. Okay. That is helpful. Maybe a follow-up on the free cash flow. It looks like the free cash flow in the Imaging segment is up nearly 50%, despite higher cash interest expense and higher CapEx. Can you walk us through the better metrics there, including any favorable items from working capital?

Yeah. Sure. The expected increase in free cash is predominantly from the significant increase we have in EBITDA because, while cash interest expense, as you correctly point out, is going up mostly due to the fact that our expected cash income from our cash balance will go down because we have spent some of that cash—i.e., on the Gleamer acquisition as well as Indiana and Southwest Florida—the fact of the matter is that the EBITDA is going up, and disproportionately to how we are growing CapEx, which you can see is fairly flat relative to last year, and the net interest expense is only slightly going up. So that delta is all benefiting free cash flow.

Got it. Thank you.

The next question will come from Matthew Gillmor with KeyBanc. Please go ahead.

Hey, thanks for the question. I wanted to ask about the EBITDA guidance. It sounds like EBITDA is absorbing some pressure from the weather in the first quarter. And then I suspect there is also some losses, I glean, that are probably pulling down EBITDA a little bit too. But I was just hoping you could quantify that so we could sort of understand what is embedded within that potential drag.

Sure. The Gleamer EBITDA loss is being absorbed in the EBITDA guidance of the Digital Health division. And you will see in the press release, there is a footnote there that we are anticipating as much as a $5,000,000 EBITDA loss this year from the absorption of Gleamer. But as Kaes said in his remarks, we expect to get that to EBITDA positive sometime in 2027, partly from a number of cost synergies. On the RadNet, Inc. side, yes, you are correct. There are two main headwinds that are embedded in our EBITDA guidance for 2026. The first being—and the most significant—is actually labor increases. So we are anticipating over $30,000,000 of same-center labor increases in 2026, and that is embedded in our guidance. And that is roughly about 4% on average for our labor force in 2026. And that was a similar amount that we absorbed in 2025. There may be some upside there as we continue to implement some of the Digital Health solutions that will automate many of the manual processes that we are doing today, and maybe we can do a little bit better than that. And then the second headwind that is absorbed in the guidance is the winter weather conditions that we have all seen here in January and February, which will impact our first quarter. It will not impact our fourth quarter—assuming we have no more weather issues in March. It will not be as significant as what we saw last year; last year, it was even more extreme. But that headwind is embedded in the guidance that we put forth today.

Okay. That is helpful. And then there was a comment in the Gleamer sale announcement and then earlier in some of your commentary about Gleamer augmenting DeepHealth's commercial sales force. And I think you mentioned Gleamer has 40 sales staff. I was just wanting to get some context in terms of how DeepHealth's sales force is organized and the size of that sales force and what Gleamer is bringing to the organization from its perspective.

Yeah. Thank you. So, to put it very simply, after the iCAD acquisition, we had a little bit over 20-strong sales force in the U.S., and a few sales leaders in Europe. In the U.S., it is a mixture of a team that can sell Clinical AI solutions as well as what we call the IT infrastructure solutions for the Diagnostic Suite and the Operations Suite. In Europe, it was much more focused on Clinical AI. What Gleamer does is accelerate our commercial horsepower with roughly 35 people in Europe—I would say EMEA-plus-plus—and an additional five persons in the U.S. And so you should really see it initially as an acceleration of the momentum in Europe and a further build-out of capability in the U.S.

Great. Thanks very much.

The next question will come from Yuan

Thank you for taking our questions. Good morning. I understand there are many moving pieces and recent acquisitions. If you exclude the recent acquisitions of imaging centers in Florida and Indy, what are the guided organic growth for the Imaging Center business?

Yes. Thanks, Yuan. I appreciate the question. So embedded—are you talking about same-center growth, organic growth? Yeah. So we typically build, and this year is no different, we typically build our same-center performance kind of in the 3% to 5% range. We try to be somewhat—long term, we have seen kind of 2% to 4%. But in the last five or so years, as more and more payers are getting aggressive in moving business away from hospitals into freestanding centers, we have seen that organic growth regularly be in the mid-single digits or higher. So we tend to build our guidance around growth in the 3% to 5% range on a same-center basis. And if we are lucky enough, like what we have experienced over the last, let’s say, half a decade, to have that better than 3% to 5%, then we will see some upside to the guidance throughout the year. And as you saw from this fourth quarter, we greatly exceeded that 3% to 5%, where we saw advanced imaging on average be up 9.6% on a same-center basis from 2024. So I think there may be some upside there, but we will have to see as we move through the year. We will not necessarily get a good indication of that in the first quarter due to the weather conditions, at least in January and February. I think, assuming we do not have any significant weather factors in March, we might have a better feeling of it once we see March results.

Got it. With the recent acquisition of Gleamer, can you compare the DeepHealth ecosystem versus GE HealthCare in portfolio composition, since they recently acquired Intelerad, and where do you see some overlap competition? Of course, we will learn more later at your upcoming event.

I think I will take that question. I do not see much overlap at all when it comes to artificial intelligence. The Intelerad acquisition by GE was primarily what we call a viewer or a PACS system, which was intended to be a replacement or an upgrading of their current tools, which I think have been lagging in terms of investment and whatnot. But Intelerad is primarily a hospital-based—but, to a lesser extent, outpatient-based—system which we come across infrequently in the outpatient area, but which we feel is just a single component of what we are offering now in the way of AI, both from the clinical standpoint as well as the operational standpoint, to enhance improvement. And then layered over that is going to be what the real driver and the opportunity here is, and that is the use of artificial intelligence both from a clinical and a reporting standpoint to improve overall radiologist efficiency and productivity. So where there perhaps is a departure here is the tool that GE bought in Intelerad really focuses on just a single part of the IT infrastructure—meaning a viewer or a PACS system that essentially presents the images and creates storage capabilities. Ours is substantially greater in terms of its impact on running the entire workflow process of the radiology department, whether it is hospital-based or outpatient-based.

Got it. Maybe one quick follow-up here. If the acquisitions of recent imaging centers and the Gleamer are complete, what is the net leverage ratio right now?

Oh, the leverage ratio. The pro forma leverage ratio—once we complete—well, we have completed Gleamer. But once you see our first quarter numbers, we will be levered to about two times—slightly less than two times—between 1.6x and 1.8x.

Got it. That is all from me. Thank you.

The next question will come from Lawrence Scott Solow with CJS Securities. Please go ahead.

Great. Good morning. Congrats on another good year and on an exciting acquisition. First question, just on Gleamer. So you mentioned it will turn EBITDA positive sometime during mid-2027. I am just curious, you know, approximate timeline when you will start integrating this technology into the Imaging Center—when you think it will actually drive a net benefit in your costs on that side of the business?

Kaes, I am going to hand that to you.

And I am delighted to take it on. We have actually taken already during diligence a light-speed start to working with the team to figure out what can be deployed when. We are going to take multiple steps here. The initial step is making sure that the current portfolio of Gleamer gets deployed, which should yield productivity impact as of Q3 this year—meaning faster diagnosis, finding indications that find their way automatically into a report, streamlining reading, triage, and reporting accordingly. And so we expect those benefits to occur in Q3 this year, also based on our experience with deploying, for instance, the C-MODE solution, and so on and so forth. Now that is phase one. Phase two is really the step towards automated reporting, where more and more you get the benefits of not just doing the diagnosis faster and better, but also alleviating the burden of creating reports. And that can be done in draft support that can include a certain amount of findings—for instance, in the X-ray space—but what if you could extend that also with findings from other indications? And the more indications you have there, obviously, the better the draft reports will be. It is going to take a little bit more time to develop that. It is being developed as we speak, but we would see that in the coming 6 to 12 to 18 months coming to fruition.

And then maybe the only thing to add is, Gleamer is not only an X-ray company. So, obviously, we are going to do the short X-ray, but they have a very strong lumbar MR product, which is a very complicated exam and has lots of measurements. And so automating that can create a tremendous amount of efficiencies. We do a high volume of lumbar at RadNet, Inc., so that is also another area that we are going to be bringing it in. And as we now pool the teams together, it is going to accelerate our overall road map. So it is X-ray, it is lumbar MSK MR, and then some new areas that we will develop together. We will also see that rolling out towards the end of this year.

Great. And perhaps just another question for you guys on Digital Health. So the forecasted or projected EBITDA this year, net or ex the Gleamer acquisition, it would be flat to modestly up to a little lower margin. I am assuming you are just accelerating some of your investments into the business. And I imagine that the mid-to-long-term outlook is probably actually improved. But can you just give us any color on that?

Yeah. Correct. That is absolutely a correct assumption. What we track internally is both what we call core business growth—so the organic growth from our standing business without new product development—that is performing nicely towards the growth objectives that we portrayed during Investor Day. It also comes, obviously, with a very good margin that you would expect from cloud-native solutions. Then secondly, we have the impact from previous-year acquisitions. And remember, those acquisitions—for instance, iCAD—came at a loss; returning those around, capturing the synergies. But we have also guided, for instance, for iCAD, that that would take until mid-2026 for the breakeven point. Now we are actually ahead of that plan. But that is still providing a little bit of a margin rate drag. Then the third, before Galaxy, is indeed exactly as you said—we are investing in our commercial team. We are investing in our service capabilities. We are investing in our regulatory capabilities. And that indeed has an impact on the margin rate.

And then the other side of it is on the top-line side. As you know, we are in a SaaS model, and so revenue lags contracts, and that is the reason we now start to report on ARR—so you get a feeling how the forward business looks like.

Great. And if I can just slip in one more for Mark. Just on the Imaging segment—you mentioned a little bit of headwind on the labor cost and the weather probably in the first quarter, and it looks like EBITDA margin about flat year over year. Just curious—there must be a lot of moving parts—but is there, within that, embedded a net benefit from the Digital Health piece this year relative to last year that is flowing into Imaging?

Yeah. Because we are continuing to implement this year, we have not put a lot in the budget in terms of the efficiencies and savings from Digital Health. And I think that that is another area of upside in the guidance for this year.

Gotcha. And just lastly, cadence—weather obviously an impact in Q1 of last year as well, and then you had the fires. Do you expect still to grow year over year, or just any kind of thoughts on cadence as we start the year?

Yes. No, we certainly expect the first quarter of this year to be ahead of last year's first quarter. And while we did have some pretty bad winter storms, which I know you lived through in New York, Larry, they still were not as bad as the winter weather conditions and the fires from last year's first quarter. But there will be an impact, and we will be able to quantify that when we issue our first quarter results.

Great. Thanks a lot, all. Appreciate it.

And while I am still listening, I have got some more information on your question about what would be the revenue growth year over year between '25 and '26 without the Indiana and Southwest Florida acquisitions. The Indiana and Southwest Florida acquisitions are going to be responsible for about $120,000,000 of revenue growth in 2026, Yuan. So you can take roughly $120,000,000 out of your model and then recalculate what those growth rates would be without those acquisitions. I think we have one more question before we end the call.

The next question will come from James Philip Sidoti with Sidoti & Company. Please go ahead.

Hi. Good morning. Thanks for taking the questions. Two quick ones. One, can you tell us what the cash paid out for those acquisitions in Indiana and Florida were in the first quarter?

Yeah. Sure. You will see it laid out in our 10-K, which is being filed today. For the Southwest Florida acquisition, we paid roughly about $65,000,000. And then for Indiana, I believe it was about $9,000,000.

Okay. Alright. And in the past, you said you plan to open about 10 new centers a year—10 newly built centers. What is the expectation for 2026?

Between 11 and 13 centers is what we are opening by the end of this year.

Okay. Alright. It has been a long call, so I could go. That is it for me. I appreciate it.

This will conclude our question and answer session. I would like to turn the conference back over to Dr. Howard G. Berger for any closing remarks. Please go ahead.

Again, I would like to take the opportunity to thank all of our shareholders for their continued support and the employees of RadNet, Inc. for their dedication and hard work. This is an exciting time for RadNet, Inc., and we were glad to share that with our shareholders and stakeholders here. You can be certain that management will continue to endeavor to be a market leader that provides great services with an appropriate return on investment for all stakeholders. Thank you for your time today, and I look forward to our next call.