Cedars-Sinai, RadNet start new joint LA imaging venture, add 10 additional centers
by John R. Fischer
, Senior Reporter | November 16, 2023
Cedars-Sinai and RadNet have set up a new joint venture called Los Angeles Imaging Group.
In its Q3 earnings report, outpatient diagnostic imaging provider RadNet announced that it has established a joint venture with Cedars-Sinai called Los Angeles Imaging Group to increase access to outpatient radiology care for patients in the area.
The Los Angeles Imaging Group will initially have three locations. In addition, both are adding seven more locations to their existing Santa Monica Imaging Group, five of which will be provided by Cedars-Sinai.
“After giving effect to the expanded Cedars-Sinai relationship, we now have almost 36% of our imaging centers held within health system partnerships,” Dr. Howard Berger, president and chief executive officer of RadNet, told HCB News.
The ten new locations will serve certain underserved communities and other areas and are meant to increase access to records and more timely and accurate results for patients and referring physicians.
Cedars-Sinai announced another expansion earlier this month of its emergency department, with plans to add 16,550 square feet and increase the number of care spaces from 60 to 100 over the next three years. The first part of the project is already underway.
The additional locations at Santa Monica Imaging Group and Los Angeles Imaging Group bring RadNet’s center count to 366 spanning California, Arizona, Delaware, Florida, Maryland, New Jersey, and New York. The addition of imaging centers into Santa Monica Imaging Group also provided it with a $16.8 million gain in revenue for Q3 2023.
In Q3, it earned $399.1 million, a 14.3% increase in revenue compared to this time last year, driven by 8.6% aggregate and 4.2% same-center procedural volume growth. Revenue per workday also increased, as it did before in the second quarter. Because of this, the company says it is increasing its 2023 guidance range for Adjusted EBITDA for the third time this year.
Imaging volumes also increased among different modalities, with MR seeing an 11.7% rise in procedures compared to Q3 2022; CT, 10.9%; PET/CT, 17.7%; and X-ray, ultrasound, mammography, and other exams (including routine imaging procedures), 8.6%.
Still, the company faced some challenges. Despite revenues for AI rising 220.8% year-over-year and 21.4% compared to Q2, it expects upward of $13 million in EBITDA losses for the sector in 2023 and net revenues of $11-$13 million. Growth in the segment largely came from the launch of the company’s Enhanced Breast Cancer Detection mammography offering, which combines AI with high-quality mammography systems to help radiologists identify subtle lesions.
The program has been set up at all East Coast mammography centers and is currently being implemented in California. RadNet expects to complete integration there by the end of Q1 2024.
“We are experiencing close to a 35% adoption rate on the East Coast, a metric we expect to increase as we continue to educate patients and referring physicians about the significant advantages of electing EBCD. We are on target to meet our AI segment guidance for 2023 and continue to work toward break-even adjusted EBITDA from the AI segment by the end of next year,” said Berger.
Cedars-Sinai did not respond in time to HCB News' request for comment.
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