Radnet, Inc. · NASDAQ:RDNT
Radnet — Investor Presentation (March 2021)
24 slides from Radnet's investor presentation, March 2021
Slide 1: Mark Stolper, Chief Financial Officer, March 2021
Mark Stolper Chief Financial Officer March 2021 NASDAQ: RDNT
Slide 2: Safe Harbor
Safe Harbor This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Specifically, statements concerning RadNet’s ability to continue to grow the business by generating patient referrals and contracts with radiology practi
Slide 3: Introduction
1 Introduction 2 Diagnostic Imaging Industry Overview 3 Overview of RadNet 4 Financial Information and Core Strategy
Slide 4: RadNet Summary
RadNet Summary Largest national owner and operator of fixed-site diagnostic imaging centers, with 331 locations • Founded as a one center CA operation in 1980 • Major consolidator in the highly fragmented imaging industry • Approximately 25% of RadNet centers are held within joint ventures with larg
Slide 5: RadNet Summary (continued)
RadNet Summary (continued) Emphasis placed on scale and “multi-modality” strategy • One-stop-shopping for referral sources • Lessens our exposure to reimbursement changes; diversifies revenue base Best positioned company to capitalize on industry consolidation and organic growth opportunities • No o
Slide 6: Types of Imaging Exams: Modalities
Types of Imaging Exams: Modalities Advanced Imaging MRI CT PET Produces high-resolution cross-sectional images Produces high-resolution cross-sectional images. Determines metabolic activity. Applications: of soft tissue. Applications: Assesses brain, spinal Applications: Assesses tumors, strokes, As
Slide 7: Diagnostic Imaging Industry Overview
1 Introduction 2 Diagnostic Imaging Industry Overview 3 Overview of RadNet 4 Financial Information and Core Strategy
Slide 8: Diagnostic Imaging: A Large and Growing Market
Diagnostic Imaging: A Large and Growing Market Diagnostic Imaging Procedure Volume (1) US Imaging Centers (by State and Region, 2013) 730 712 695 678 663 635 648 622 596 608 2.5% 2.5% 2.7% 2.4% 2.2% 2.3% 1.9% 2.1% 2.1% 1.8% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Annual Imaging Procedures
Slide 9: Diagnostic Imaging: A Large and Growing Market
Diagnostic Imaging: A Large and Growing Market Growth has resulted from … • Aging population – 65-year-old demographic is expected Shift to Outpatient to increase significantly Services driven by… • Referring MDs increasing • Growing population – particularly in California, our concern about cost, o
Slide 10: Industry Consolidation and Rationalization
Industry Consolidation and Rationalization “Mom-and-pop” lack necessary economies of scale • Not well capitalized and have a higher cost structure In 2015–2019, we • Single-modality facilities that are more impacted by completed over reimbursement changes and competition from $185mm of acquisitions
Slide 11: Overview of RadNet
1 Introduction 2 Diagnostic Imaging Industry Overview 3 Overview of RadNet 4 Financial Information and Core Strategy
Slide 12: Scale and Leverage Over Competitors
Scale and Leverage Over Competitors Founded in 1980 and is the major consolidator Largest in the highly fragmented imaging industry. owner-operator of fixed-site imaging centers in the U.S. 331 Imaging Centers RadNet operates in states with ~25% of the U.S. population. NJ: 22 DE: 8 NY: 94 MD: 58 FL:
Slide 13: Favorable Revenue Mix Mitigates Reimbursement Risk
Favorable Revenue Mix Mitigates Reimbursement Risk Emphasis placed on multi-modality strategy • “One-stop-shopping” for referral sources • Lessens exposure to reimbursement changes, diversifies revenue base Extensive offering of all routine imaging procedures partially insulates us from reimbursemen
Slide 14: Favorable Revenue Mix Mitigates Reimbursement Risk (continued)
Favorable Revenue Mix Mitigates Reimbursement Risk (continued) Strong payor relationships – RadNet is a critical provider of diagnostic imaging solutions to healthcare insurance providers Payor diversity mitigates exposure to possible unfavorable reimbursement trends within any one payor class Exclu
Slide 15: Capitated Contracts Create a Barrier to Entry
Capitated Contracts Create a Barrier to Entry RadNet has over 35 capitated medical groups California with whom we work We receive a per-member-per-month fixed price for exclusively providing outpatient imaging to over 1,900,000 lives in CA (HMO commercial, Medicare Advantage and Managed Medicaid liv
Slide 16: RadNet Joint Venture Strategy
RadNet Joint Venture Strategy RadNet has 19 joint ventures with hospital and health system partners • Over 2/3 of the ventures are unconsolidated (RadNet’s ownership is between 35%–50%) • Remaining 1/3 of ventures are consolidated (RadNet’s ownership is between 50%–94%) • Notable partners include Me
Slide 17: Information Technology
Information Technology Provider of PACS/RIS products, and hired an industry-leading software development team • Completing the integration of RadNet centers for significant workflow improvements and cost reductions • Growing the eRAD solutions by continuing to sell them to other industry participant
Slide 18: Opportunity of Artificial Intelligence
Opportunity of Artificial Intelligence RadNet created an Artificial Intelligence subsidiary in 2019: Acquired Deep Health in 2020 • Leading radiology AI and machine learning company • Focused on interpretation of mammography • Future development on other screening tools for chronic disease – prostat
Slide 19: Financial Information and Core Strategy
1 Introduction 2 Diagnostic Imaging Industry Overview 3 Overview of RadNet 4 Financial Information and Core Strategy
Slide 20: Strong Performance as Volumes Have Rebounded from COVID-19
Strong Performance as Volumes Have Rebounded from COVID-19 2019 Quarterly Net Revenue ($ in millions) 2020 Quarterly Net Revenue $301 $309 320 $293 $282 $292 270 220 $191 170 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 2019 Quarterly Adj. EBITDA 2020 Quarterly Adj. EBITDA ($ in millions) $51 $47 $46 $41 $20
Slide 21: 2021 Guidance
2021 Guidance • For 2021, we believe our business will continue to strengthen as COVID-19 restrictions are further lifted across the country and in our markets • 2H 2020 Revenue and Adj. EBITDA of $600 million and $96 million, respectively o Run rate greater than our conservative guidance recently r
Slide 22: Proven Track Record of EBITDA Growth and Cash Flow Generation
Proven Track Record of EBITDA Growth and Cash Flow Generation o Over the past 11 years, RadNet has had a consistent track record of achieving profitable growth and generating significant cash flow o COVID-19 had a temporary impact during 2020 Net Revenue Reported Adjusted EBITDA Net Revenue COVID Im
Slide 23: Strong Recovery in 2H 2020
Strong Recovery in 2H 2020 2020 Third Quarter Highlights 2020 Fourth Quarter Highlights EBITDA EBITDA MARGIN REVENUE EBITDA EBITDA MARGIN ↑ 11.7% Up from 3Q 2019 ↑ 1.7% Up from 3Q 2019 ↑ 2.5% Up from 4Q 2019 ↑ 8.1% Up from 4Q 2019 ↑ 0.8% Up from 4Q 2019 • Revenue and Adj. EBITDA increased 53.1% and
Slide 24: Current Capitalization and Equity Cushion
Current Capitalization and Equity Cushion Valuation Metrics Equity Market Capitalization @ $21.73 per share 1 $ 1,135.9 mm 2 Net Debt -12/31/2020 563.7 mm Curent Enterprise Value $ 1,699.6 mm 2019 EBITDA $ 164.1 mm Midpoint of 2021 EBITDA of Guidance $ 185.0 mm Enterprise Value / Trailing 12 Month E