RDNT Q2 Earnings & Sales Beat on Advanced Imaging, Guidance Raised

Growth was led by stronger advanced imaging volumes, recent acquisitions and Digital Health expansion. Annual recurring revenues, or ARR, in Digital Health reached $105.5 million, up 97% year over year.

Revenue Details

Revenues rose 25% to $622.7 million, topping the consensus mark by 1.4%.

RadNet’s share price improvement of 8.3% so far this year has underperformed the industry’s 20.5% increase as well as the S&P 500 Index’s 13.1% gain.

Image Source: Zacks Investment Research

The company reports under two segments — Advanced Imaging and Digital Health.

RDNT's Advanced Imaging Mix Strengthens

Advanced Imaging remained a major growth engine. Aggregate MRI volume increased 21%, CT volume rose 20.9% and PET/CT volume climbed 31% from the prior-year quarter’s level. Same-center MRI, CT and PET/CT volumes advanced 10.2%, 8.6% and 8.8%, respectively.

The mix also shifted toward higher-value modalities. Advanced imaging represented 29.9% of total procedural volume, up from 27.5% a year earlier. Management said prostate PSMA and brain amyloid studies accounted for more than 25% of PET/CT volume, while faster MRI scanners, extended operating hours and Tech Live remote technologists helped expand capacity.

RadNet's Digital Health Momentum Builds

Digital Health revenues surged 56.5% year over year to $32.4 million. AI revenues more than doubled to $16.1 million, while Enterprise Imaging revenues increased 17.3% to $16.3 million. External customers represented 63% of the segment's ARR base at quarter-end.

The company closed about $21 million of total contract value in the quarter, bringing first-half bookings to roughly $37 million. Its clinical AI and enterprise imaging pipeline expanded to more than $224 million of total contract value from about $101 million at the start of 2026. Management continues to target more than $140 million of ARR by year-end.

RDNT's Margin Gains Face Labor Costs

Operating income totaled $39.47 million, up 27.8% from $30.88 million in the prior-year quarter. The operating margin improved roughly 14 basis points to 6.3% from 6.2% a year earlier.

Imaging Center adjusted EBITDA margin improved 17 basis points year over year to 16.1%. The favorable procedure mix and operating efficiencies aided profitability, though management continued to cite salary pressure from shortages of technologists and radiologists.

Total company adjusted EBITDA reached a quarterly record of $99.66 million, up 22.7% year over year. Digital Health adjusted EBITDA was $2.5 million compared with $3.4 million a year earlier, reflecting continued commercial, service and implementation investments as well as temporary acquisition-related margin dilution.

RDNT's Balance Sheet Supports Expansion

RadNet ended June with $726.3 million in cash and cash equivalents, up from $455.3 million in the first quarter. Cumulative net cash provided by operating activities at the end of the second quarter was $173.1 million compared with $55 million in the prior-year period.

The company completed a June debt repricing and funded a $250 million incremental term loan. Quarter-end net debt was $616.4 million, and the net debt-to-adjusted EBITDA ratio was 1.8 times. Management plans to use its liquidity for acquisitions, organic expansion and health-system partnerships.

RadNet Raises 2026 Imaging Center Outlook

RadNet raised its 2026 sales outlook for the Imaging Center segment but maintained the same for Digital Health.

Imaging Center revenue guidance was raised to $2.37-$2.42 billion from the prior $2.355-$2.405 billion projection. Adjusted EBITDA guidance increased to $345-$358 million from $340-$353 million, while free cash flow guidance moved up to $115-$125 million from $112-$122 million.

For the Digital Health segment, RadNet reiterated its 2026 guidance. Total net revenues, including intersegment revenues, are expected to be $135-$145 million, while adjusted EBITDA is projected to be in the band of $10-$12 million.

RadNet's AI Rollout Targets Productivity

RadNet received FDA clearance for its DeepHealth breast ultrasound solution, which automates lesion detection, measurements, characterization and reporting. In validation studies, the product improved breast cancer detection sensitivity by 8% and reduced radiologist interpretation time by 37%.

The company plans to deploy the solution across its network by year-end, covering nearly 1 million annual breast ultrasound studies. Management also expects close to 15% of RadNet volumes to run through AI-powered automated draft-reporting solutions by year-end, rising to more than 50% by the end of the second quarter of 2027.

RDNT’s Zacks Rank & Key Picks

RadNet currently has a Zacks Rank #4 (Sell).

Some better-ranked stocks from the broader medical space are West Pharmaceutical WST, The Cooper Companies COO and Cardinal Health CAH, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

West Pharmaceutical reported second-quarter 2026 adjusted earnings per share (EPS) of $2.37, which beat the Zacks Consensus Estimate by 13.9%. Revenues of $872.3 million surpassed the Zacks Consensus Estimate by 4.2%.

West Pharmaceutical has an estimated long-term earnings growth rate of 16%. WST’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 17.40%.

The Cooper Companies reported a second-quarter fiscal 2026 adjusted EPS of $1.21, which beat the Zacks Consensus Estimate by 10.00%. Revenues of $1.08 billion beat the Zacks Consensus Estimate by 2.6%.

The Cooper Companies has an estimated long-term earnings growth rate of 8.3%. COO’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 5.80%.

Cardinal Health reported a third-quarter fiscal 2026 adjusted EPS of $3.17, which beat the Zacks Consensus Estimate by 13.2%. Revenues of $60.94 billion missed the Zacks Consensus Estimate by 2.3%.

Cardinal Health has an estimated long-term earnings growth rate of 17%. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 10.27%.

7 Best Stocks for the Next 30 Days

Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."

Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention. 

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research