Good day, and welcome to the RadNet Inc's. Second Quarter 2013 Financial Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mark Stolper, Executive Vice President and Chief Financial Officer of RadNet Inc. Please go ahead.

Thank you. Good morning, ladies and gentlemen, and thank you for joining us today to discuss RadNet's second quarter 2013 earnings results. Before we begin today, we'd 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'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 upon management's current preliminary expectations, and are subject to risks and uncertainties, which may cause RadNet's actual results to differ materially from the statements contained herein. These risks and uncertainties, include those risks set forth in RadNet's reports filed with the SEC from time to time, including RadNet's annual report on Form 10-K for the year ended December 31, 2012, and RadNet's quarterly report on Form 10-Q for the 3-month period ended June 30, 2013. Undue reliance should not be placed on forward-looking statements, especially guidance on future performance, which speaks only as of the date it is made. RadNet 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. And with that, I'd like to turn the call over to Dr. Howard Berger, Chairman and Chief Executive Officer of RadNet.

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 second quarter 2013 results, give you more insight into factors, which affected this performance and discuss our future strategy. After the prepared remarks, we will open the call to your questions. I'd 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. We're pleased with the improvement in our business in the second quarter relative to the first quarter of this year. Procedural volumes, revenue, EBITDA and net income increased on a sequential basis from this year's first quarter. Most significantly, our revenue increased 2.1%, our EBITDA increased 4.5% and our net income increased by over $4 million from the first quarter of this year. In particular, we were pleased to see a significant improvement in the performance of a number of our Northeastern operations, which had a weak start to the year. Procedural volumes rebounded nicely in the East after a soft January and February and our regional operating teams report the continuation of this improvement into the third quarter. Having said this, the operating environment industry-wide remains challenging. Private payers continue to manage utilization carefully with preauthorization processes and by engaging third-party radiology benefit managers. Physician practices have increasingly been purchased by local hospitals and health systems, causing more patient referrals by these purchase groups to be directed into hospital imaging centers. Pricing remains under pressure by both Medicare and private payers alike. And patients continue to migrate to high deductible plans, making them more discerning about utilizing healthcare services. Although this operating environment poses challenges to RadNet, like it does to all…

Thank you, Howard. I'm now going to briefly review our second quarter 2013 performance and attempt to highlight what I believed 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 second quarter performance. Lastly, I will reaffirm our previously announced 2013 financial guidance levels. 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, each from continuing operations and excludes losses or gains on the sale of equipment, other income or loss, loss on debt extinguishments, bargain purchase gains and non-equity compensation. Adjusted EBITDA includes equity and earnings of unconsolidated operations and subtracts allocations of earnings to noncontrolling interests and subsidiaries and is adjusted for noncash or extraordinary and one-time events that have taken place during the period. A full quantitative reconciliation of adjusted EBITDA to net income or loss attributable to RadNet Inc. shareholders is included in our earnings release. That said, I'd now like to review our second quarter 2013 results. For the 3 months ended June 30, 2013, RadNet reported revenue and adjusted EBITDA of $183.5 million and $30 million, respectively. Revenue increased $11.7 million or 6.8% over the prior year same quarter, and adjusted EBITDA decreased 1.3% or -- $1.3 million or 4.2% over the prior year same quarter. The increase in revenue for the second quarter of last year -- from last year was principally driven by procedural volume increases from acquired entities specifically Lenox Hill Radiology, which we acquired in the last day of 2012. The EBITDA impact of Lenox Hill was offset by declines in same-center performance. Same-center procedural volume…

Thank you, Mark. Our strategy is to continue to the execute on the principal business tenants that will ensure our future success. The first is scale. In our highly-fragmented industry, which is suffering immense pressures of lower reimbursement, decreasing utilization and lower availability of capital, size matters. Our cost structure, leverage with suppliers and payors and industry relationships with powerful joint venture partners set apart RadNet from other industry players. We will continue to make strategic acquisitions in our regions, particularly tuck-in transactions, transactions of single centers and small groups. We will also continue to leverage our scale and expertise to partner with powerful local health systems and hospitals. We are focused on free cash flow generation and positioning ourselves with more financial flexibility. We feel this is important as we want to give us as many options to ultimately address the most expensive part of our capital structure, our senior unsecured notes either in April, when these notes become callable or any time thereafter. We expect to generate significantly more free cash flow during the second half of 2013. The third tenant of our business focus is on efficiency cross containment and the maintaining of operating margins. As discussed earlier on this call and in previous quarters, we have key initiatives that will drive performance and continue to mitigate any reimbursement pressures that may occur in the future. Example of these are implementation of our eRAD, RIS and PACS system-wide, voice recognition transcription, effective purchasing of supplies and equipment maintenance and the consolidation of cost and the elimination of unnecessary expenses with the respective newly-acquired operations. We will continue to identify other avenues to save costs and achieve efficiencies within our business in the future. And finally, our strategy continues to be the diversify our capabilities. This has included our entry into radiology software, teleradiology and professional services and medical oncology niches that are heavily imaging dependent. We are leveraging these capabilities to provide a continuum of services to joint venture partners, who seek an imaging partner who can provide solutions to all of their diagnostic needs. Furthermore, each product offering represents a unique growth opportunity in of itself and these offerings are far less capital intensive than our core business. Operator, we are now ready for the question-and-answer portion of the call.

[Operator Instructions] We'll go first to Henry Reukauf at Deutsche Bank.

Just on your guidance for the year, I guess you confirmed and Howard, I think you said that you were seeing volumes stable, I guess up and pretty strong thus far this quarter. You do have to have a better back half than you did the first half. How confident you feel in those volumes? And can you discuss that a little bit in general.

Yes. I feel very confident, both in terms of volumes that we're seeing good traction on here in the second quarter and extending into the third quarter. But also with the opportunities that we have that Mark and I discussed about cost containment measures such as our IT technology, in which really has just begun implementation company-wide here in the third quarter. We expect significant savings from that to translate into cost reduction here in these third and fourth quarter and extending into the 2014 period. That along with efforts that we're making in newly-acquired operations, expansion of our relationship with Barnabas Health in New Jersey as well as other initiatives that we're looking at, give me an enormous amount of confidence that our guidance at this time is comfortable and achievable. But we're focused on both sides of the P&L, revenue, but also on expenses. As long as we're driving the revenue, we feel we have adequate capabilities inside the company to continue to find opportunities to reduce expenses, both in the cost of doing business and in potentially salaries as a result of efficiencies that we can achieve given somewhat of our unique strategic positioning in our markets.

So I guess, if I hear this just right, to paraphrase. So volumes are good so far, but they can move unexpectedly 1 way or another, but they're good so far. But your confidence in the guidance is just that you do think you're going t be reducing cost in the back half of the year. Can you talk about maybe the size of that reduction?

Well, it's hard to talk about it, only because it's a slow implementation, Henry. In other words, this is not something where we can just plug-and-play and all of a sudden get the benefits overnight. So we have to roll out the IT solutions as we've talked about both on PACS, RIS and voice recognition over a period of time. It's quite possible that our discussions in prior quarters where we expected a $10 million to $15 million savings from these initiatives are still what we're looking at. But it will be evolving over a period of time. How much of that occurs in the third quarter versus the fourth and versus the first quarter 2014 is hard to say. But it will be something that we can look towards and maybe in future quarters give a little bit more specificity to. We're focused on the main part of this being our voice recognition, which has immediate benefits throughout the operation, which is now being rapidly implemented and hopefully completed, perhaps by the beginning of the fourth quarter and where the majority of the savings will come from. So that being said, it should also be recognized that these are not one-time savings. The savings that we're going to achieve from these kind of operating metrics are locked into the company's performance for the foreseeable future.

Okay. So I think you talked about that you had cushion in the guidance from PACS, RIS and the voice recognition. The $10 million to $15 million, you kind of confirming right now and that's yet to come, but it will be spread out over 6 months to 9 months, something like that rolling in over time.

Yes.

We can think about that type of expense reduction? Okay.

Yes. I would indicate also, Henry, that very little of that savings opportunities occurred -- has occurred so far this year.

Okay. And then just maybe on the -- 2, 1 on the HOPPS. How much now is that above, kind of physician fees scheduled rates? And then, I guess the last question is just on your pricing with commercial contracts, you talked about how you're doing well there. I think the comment was at you -- last quarter, you're seeing contracts maybe flat to up 1%, is that still the case? And that's it for me.

Sure, Henry. I'll comment on the HOPPS schedule relative to the Medicare fee schedule. Going back to that 2007 with the implementation of the Deficit Reduction Act and making the imaging industry subject to the lower of the physician fee schedule on HOPPS, there was a huge impact on the industry because at the time when HOPPS was introduced into the equation, the HOPPS schedule was significantly lower than the Medicare fee schedule, which then drove a cut for the industry. And particularly on MRI and CT and PET/CT, meaning the more advanced imaging. What's occurred since that time, since 2007, is a fairly steady decline in the physician fee schedule so that over the last 2 years, predominantly, all our CPT codes have been reimbursed under the physician fee schedule as opposed to HOPPS. Today, and you have to look at it by CPT code. Today, it's not uncommon that the Medicare fee schedule is 10% to 20% lower than were HOPPS rates are. And what's actually happened over the last several years, is that HOPPS has increased each year on average by about 1.9%. So the HOPPS schedule has kept going up, the Medicare fee schedule has kept going down. So that spread has widened. So my comment on the reimbursement section is that this CCR approach that they've proposed in the inpatient prospective system with the hospitals, get's adopted under the HOPPS proposal that much of those declines will be mitigated by the fact that the Medicare fee schedule is already significantly below HOPPS.

Okay. And just on commercial pricing then?

Commercial pricing, we've seen on average some deterioration in commercial pricing, and it's really market-by-market base. There's a couple of East Coast markets where we've actually been successful in getting price increases. And then there has been some markets where we don't have the same type of leverage and importance in the healthcare delivery system, where we've seen some deterioration. And we felt -- we've also felt some deterioration in pricing because of sequestration and certain health plans specifically those that are tied to Medicare such as the Medicare Advantage plans, automatically because they're getting reimbursed from CMS, passed through those pricing declines to us. So we've had some whittling away on average of our private payor contracts over the last several years. But it really is market-by-market specific but I would tell you, it's in the 1% to 3% range.

Okay. And how many of your contacts -- how much are your payments come from Medicare Advantage?

It's relatively small. I don't have that percentage. We don't -- it's part of our bucket of commercial contracts because it's driven and managed by the managed care players, which is 56% of our revenue. But of that 56% of our revenue, it's a very, very small minority.

We'll go next to Miles Highsmith with RBC.

Howard, I wanted to go back to -- there's an old topic around pre-authorization, but just to ask a little more on your comments around the pressure there. Is this -- we've been seeing this and hearing about it for, I guess, close to 10 years or at least in my mind. I'm curious, is the pace of this pressure getting worse? Or is it that this has existed then it just continues to be there? And then I got a couple of follow-ups.

Specifically, Miles, which pressure are you talking about?

Around the pre-authorization, on the part of the commercial guys, and the RBMs.

Yes, I think that pressure has been there probably -- I think, you're right, maybe in the 10-year period here. I think it is becoming more visible, not so much because more people are doing it. But if you've seen more recent reports coming out from the GAO, one for imaging that I think came out earlier this year and then within the last 30 days, one that came out for radiation therapy, that just excoriated the whole self-referral issue, regarding non-radiologists that own imaging and radiation therapy centers has now brought utilization to the forefront. And I think, long-term will be beneficial for the legitimate providers of these services. So I think we've all seen it out there. Most of the larger commercial payers have had some kind of pre-authorization process for years. But I think the issue of self referral and overutilization is now being spotlighted in the area that it should be and that is the financial gain that it is inherent in somebody owning imaging assets and controlling where those patients go and benefiting from it. So this is outside of Stark, which the Stark, which prevents people from being an investor. This goes directly to the heart of those practitioners that have sought to put imaging and radiation therapy into their practices and gain from the benefit of procedural -- procedures that they're really not competent to perform, but more importantly, that have financial incentive written all over it. And particularly in radiation therapy, where this report came out in last 30 days, was quite eye-opening, at least as it pertains to neurologists that get into radiation therapy for prostate cancer. So I think your perceptions there -- it's a long winded answer, Miles, I apologize for that. But I think your perceptions are accurate, but I think that the focus has changed to a national scale that relates not so much just utilization, but really the overutilization that comes from inappropriate self referral.

Okay. Great. That's very helpful. And then a couple of unrelated questions. I guess, it's been 1 year or 2 that you sort of had a heightened focus around maintaining commercial rates and not wanting to take a reduction in commercial rates. And I think you just illustrated some broader ranges as to what that commercial pricing is doing right now. I'm curious about how much are you finding you need to use your leverage? Are these negotiations more contentious and there have to be threats on both sides before you can get 1% to 3%? Or is that not been that you've had to use that -- your market share for the lack of a better tool to -- in that negotiation? And then my final question is, as it relates to the physician fee schedule proposal. In the comment period, are there any specific things you -- the lobby is focused on? Either definitionally in the way they've proposed things or for a broader perspective that you think might give you some chances to see reduction in the final.

The answer to the first part of your question is, I don't think I can recall a single instance where a commercial payor has come in and offered to raise our reimbursement. Somehow or another, that's not built into their DNA. So it does require us to have a more aggressive conversation with them that I believe we are uniquely capable of having because of the strong presence that we have and relevancy, if not, essential delivery to imaging services and markets. And yes, the conversations have often taken -- the tone is that if we can't negotiate our pricing and reimbursement, we're prepared to opt out of the networks. And that seems to have resonated. And what's interesting is that, when you have those conversations, even though they may start being focused on reimbursement, they really quickly change to that kind of things that payors should be concerned about is and that is access. Again, we all got rather swept up in what we get paid for with our MRIs and CTs. But as we have pointed out in every quarter, which Marks statistics today continue to amplify, close to 80% of the business that we do is routine imaging and that's one of the reasons why we are a multi-modality provider. And it's the routine imaging that the payors have to really be in mind -- or mindful of, I should say, that creates their problems if in fact, providers like RadNet or others decide to pull out of networks. Where people get those services is far more of concern to referring physicians and patients than where they get their MRIs and CTs. So we have, I think, astutely built our business around the routine imaging so that we can get the benefit of the advanced imaging as…

Yes, that's all very helpful. And the second was just, on the fee schedule proposal, are there any specific angles you're pursuing? Are those docile industry at the lobby is pursuing in hopes of seeing that potentially dialed back especially on the higher-end side?

I think on some level, Medicare and the federal government is just another payor like everybody else is. And we are very seriously considering and will have dialogue with the appropriate representatives, congressional representatives, both in the House and the Senate, about what the consequences are of this continued assault on reimbursement for imaging. And the possibility that much like many other physicians, non-radiologists throughout the country and in some of our markets that are beginning to opt out of Medicare as being a participating provider. There are other ways to manage Medicare enrollees and participants and you don't always have to just bend over and take what they're giving you. So I believe that, again, emphasizes the strategy that we have about being the consolidator in the market and in particular, in the markets that we're in. And that dialogue may be no different than it is with other commercial payors about the need to maintain access and the consequences of that access being potentially limited or not available.

We'll move next to Elie Radinsky with Cantor. Elie Radinsky - Cantor Fitzgerald & Co.: First question really is going back to the capitation issue. Do you believe that this could be a material expansion of your business or are these a migration to capitation? And with capitation, are you insisting on a relatively large co-pay?

I think the opportunity for capitation or some iteration of capitation, we tend to use that word a little bit too loosely, but if capitation implies some other form of reimbursement that involves risk-taking and risk sharing, I would say the upside opportunity on that is unlimited and I think it is a very active conversation, either that we're having or other people are having. The key to that again though, is access. It isn't completely about what you're willing to take in the form of bundled payments or capitation, but the very first question that is always asked and the one that we continually focus on is we can only do this if we provide the kind of access that avoids disruption to the payors, enrollees. I don't care what kind of price you're offering them. If they're going to be forced to send patients, particularly in markets where either the transportation itself is costly or may not even be possible, access will be the first line that they will avoid crossing if they feel that you can't provide that. So again, I think that speaks to our strategy. We don't have to own every center and every market. We are very capable of doing network development ourself for this delivery or we're capable of opening centers if we find pockets where we can fill those centers with some of these new contracts. It could be that with the opportunities, primarily on the East Coast, the amount of business that we are willing to do risk sharing and at-risk could dwarf what we have right now in California. So the upside on this to me is unlimited and it's simply a matter of being able to deliver not the pricing, but the access that people need that makes them comfortable that they can avoid disruption to the service side of the delivery. Elie Radinsky - Cantor Fitzgerald & Co.: The second part of that question is, do you insist upon a relatively large co-pay of that population?

The co-pay is very small. If you get into capitation, much like we have here in California, the co-pay -- because this is primarily here in California an HMO product, the co-pays are very small, probably in the $10 to $15 range per visit. And that's distinctly different than the co-pay that commercial payors generally charge their enrollees, which tends to be in the neighborhood of 20-plus-percent for a participating provider of the cost of that procedure. So you could be talking about $100 to $200 for an MRI. When you get into these kind of co-pays, generally speaking, it's relatively nominal. Elie Radinsky - Cantor Fitzgerald & Co.: How do you manage utilization under a capitated arrangement if it's only a $10 or $15 of co-pay?

The utilization really has nothing to do with the co-pay, per se. It's a matter of us having the responsibility for doing pre-authorization or recommendation for the procedure before it's done and utilize the tools that we've set up in order to screen and make certain that, not only is the procedure necessary, but it's the right procedure being done. So in a typical population, about 50% of all the imaging that's done is -- excuse me, of the cost of imaging that's done is advanced imaging, as opposed to only representing 20% of the volume. So we focus on those more expensive procedures by requiring the referring physicians to give us the clinical information that then we can determine whether or not the procedure needs to be done and are they doing the right procedure. So at end of the day, what we provide is not just good utilization, but good medicine. Because most of the people who refer these exams of are not necessarily your specialist, but your general practitioners and internists that tend to be less familiar with the clinical indications and appropriateness of doing the advanced imaging. Elie Radinsky - Cantor Fitzgerald & Co.: Okay. Are you in the number of states that are going to be fully participating in the Affordable Care Act. I'm just wondering your thoughts on utilization in the next 2 quarters going into the Affordable Care Act. Are we going to see weaker utilization because certain people are then going to be expected to gain insurance under the Affordable Care Act? If you just talk about your thoughts on utilization in the next 2 quarters. And then once the Affordable Care Act goes into full effect on January of 2014, what potential benefits that may have for you?

Well, they're almost both same kind of answer, Eli. What will happen in our estimation as a result of -- assuming any of this gets implemented, by the way. What we see happening are primarily people who are otherwise healthy and who have pretty much elected not to have healthcare because of the cost, moving into healthcare programs whether it's something directly from the government or possibly some of the healthcare exchanges -- insurance exchanges. We believe utilization will actually go up, but what's interesting is we don't expect that utilization to necessarily go up in advanced imaging. When you look at the demographics of people that are currently not insured, they tend to be younger and healthier people. In other words, not necessarily more of the senior vintage that tends to be sick or needs more of these services. As these people start to get insurance, things like mammography or ultrasound or x-ray are likely to be more frequently utilized because they're going to see a doctor more regularly. Generally speaking, unless they have a more serious illness, they're not going to get the advanced imaging. So in our situation, we expect there to actually be an increase in routine imaging, not necessarily in advanced imaging. But ultimately, it's the routine imaging that will bring us more referrals throughout the organization. So we look at the Affordable Care Act as one that will drive revenue, and we expect that potentially to start ramping up in the fourth quarter of this year as more and more of the companies are faced with the decision making of how they're going to supply insurance when they were previously not.

We'll go next to Daniel English with Heights Capital partners.

This is Chris Owens, standing in for Dan. My first question pertains to the balance sheet. It looks like that receivables consumed $23 million worth of cash in the first half of the year. Is that trend going to continue or do you expect some relief on that?

Yes, there's always or usually, I should say, an AR increase in the first half of the year as it relates to deductibles and sort of -- and the delay of collecting cash in the first half of the year. And as patients -- essentially, as we bill their insurance companies and they have a patient portion responsibility because of the deductibles that we didn't have to go after the patient for that. So it delays collection of cash. Another increase in that AR is the result of our acquisition of Lenox Hill, which added a significant amount of AR from last year. So it's a little of both of those. And we would expect a fair amount of that to reverse in the second half of the year from a cash standpoint.

Okay. So it's fair to say that you expect accounts receivable to be a net consumer of cash? And if so, how much for the year?

No, I'm saying what we would expect is in the second half of the year, we often see -- if it's consumed cash in the first half of the year, we often see a reversal.

So in other words, you should be -- if accounts receivable don't consume cash in 2013, you should get an operating cash flow benefit of $23 million in the last 6 months of the year?

Yes, theoretically. But as we grow the business, we generally see some consumption of cash due through build-up of AR.

Okay. I guess my question is, how much cash do you expect accounts receivable to consume this year?

We don't know. We -- it's highly dependent upon DSOs, highly dependent upon credentialing holds and other things that are normal delays of cash if we have new doctor groups and we have to credential them or new doctors come in. So it's not something that we can predict very accurately, which is why we don't put it in our guidance.

Okay. But you would think that working capital will decline in the second half of the year? Given the seasonality that you mentioned?

Correct.

Okay. And then the second question and you guys mentioned this 10 and 3, it's -- on that callable in April of 2014 and your intent to refinance it, if the financial resources are there at that time. And you mentioned that, that is the most expensive part of the capital structure. I guess, I would disagree. If you look at your -- the midpoint of your free cash flow guidance and your current market capitalization, the free cash flow yield on the stock is over 30%. So my understanding is that you have $25 million available under the covenants to repurchase the subordinate part of your capital structure. And I'm just wondering what your thoughts are on purchasing equity at this point? Repurchasing equity.

Sure. I agree with you that our equity cost of capital per se because of the free cash flow yield is the most expensive part of our capital structure. In my prepared remarks, there's really discussing the balance sheet as it relates to debt side of our capital. And so I want you to be clear on that. We do have a bucket, as you said, in our credit facility that allows for us to repurchase junior capital with cash on hand or revolver, which means that we could repurchase either our senior unsecured notes and/or equity. We have had those discussions at the Board level. Obviously, at this point, we haven't done either. But they continue to be ongoing discussions. Right now, our bonds are trading at 1.065, which is a consideration when we're looking at the yield on putting that capital to work by repurchasing our bonds. But it's an ongoing discussion as to what the best use of our capital is. We also feel like certain acquisitions when we can buy them at 3x EBITDA, it has an extraordinary return on equity in those cases. So we're in a very good position here where we think we're going to be accumulating cash in the second half of the year, and we have a number of outlets for that cash, which I think will be accretive to shareholders, whether it's being put to repurchase shares, whether it's being put to repurchase debt or whether it just positions ourself to call our bonds at some point and refinance those at a much lower rate.

Yes, I just -- personally, as an owner of part of the company, if I had -- for instance, if I had 2 mortgages on my house and 1 mortgage paid 10 and 3/8 percent and was tax-deductible. And 1 mortgage I had to pay 31% on and was not tax-deductible, I would pay down the 31% mortgage as fast as possible. And I think that's the best and highest use of capital for the company, in my opinion, so.

I appreciate the perspective. Thank you.

And we'll take our next question from Alan Weber, Robotti & Company. Alan W. Weber - Robotti & Company, Incorporated: One question was, when you talked about the routine imaging, can you talk about in the core market share in the East, what percent is done in independent centers like RadNet compared to 5 years ago or 10 years ago? I'm just trying to understand kind of that trend.

When you say what percentage is done by RadNet? Alan W. Weber - Robotti & Company, Incorporated: Not RadNet specifically, but independent, your competitors. In other words, you made a comment several times in this call that the importance of being able to provide the routine test and being accessible is very important. But I'm just trying to understand, over the last 5 or 10 years, in volumes, how -- what direction that has really gone?

Well, the direction over the last 5 or 10 years has been a movement of these procedures out of the hospitals and into freestanding imaging centers, both because of access and also because of cost. That trend is continuing. Now primarily because of the differential between what hospitals generally get reimbursed versus what outpatient imaging centers. When you get to certain modalities, for example, like Mammography, probably 90% of all Mammography is done outside of the hospitals. As you tend to look at other procedures, it may not be quite that extensive. But certainly, for routine imaging, the vast majority of all imaging is done outside of the hospitals. Alan W. Weber - Robotti & Company, Incorporated: And if that -- and what percent of that is done in the doctor's office or by -- I know if there's a conflict there, but it still takes place.

Well, generally speaking, most doctors, if they're doing any kind of imaging, it's limited to just x-ray. You do have certain specialties like orthopedic surgeons and oncologists that may get MRI scanner or CT scanners. But non-radiologists doing imaging are primarily limited to x-ray and mostly to people like internists and general practitioners. But that seems to also be a trend which is slowly being run out of the system. Alan W. Weber - Robotti & Company, Incorporated: Which is a positive for RadNet?

Yes, a big positive. It's also a positive for the industry, and healthcare in general, because most of the time when these are done in non-radiology centers, they're not done with the quality and with the capabilities that people who specialize in this part of the industry are capable of doing. Alan W. Weber - Robotti & Company, Incorporated: Okay. My other quick question was, when you talk about the second half of the year, how much of a positive impact does Barnabas have in EBITDA? Because on the first quarter call, I think you mentioned a few kind of centers that was under construction with Barnabas that I guess were losing money that should become up and running in the second half of the year. I'm just curious if it's meaningful or not?

The 2 centers that we have that will be joined by other centers in the second half of the year are now positive in terms of their profitability and are doing extremely well. But the Barnabas relationship goes into more than just the ownership of centers. It goes into other management services that we're providing to some of their hospitals and imaging centers themselves, as well as I discussed a whole utilization management program that we're doing with them on their self-insured employees that the employees and their dependents are now benefiting from and which we are able to benefit from also. We expect that to be a constant opportunity for improvement as the existing operations get better, but also, as the opportunities expand within Barnabas for initiatives that we are constantly looking at with them. Alan W. Weber - Robotti & Company, Incorporated: Okay. Great. I guess my last comment was the previous caller talking about buying back stock. And I think his comments will all make sense and hopefully, you really do kind of put the numbers on paper just to see really how much more beneficial buying back stock. If what you talked about turns out to be correct over the next 5 years is compared to just the benefit of what you might save in refinancing. And I"m not saying that refinancing isn't the right thing because I don't think they're mutually exclusive. So.

Yes. I agree with you, Alan. And as you would hopefully predict, we are looking at all options at all times.

And we'll go next with Robert Felix with JPMorgan.

Just a very brief question. I seem to think that things that the eRAD rollout internally was supposed to have been completed sooner than it appears. Can you comment on that?

Sure. You're right. It was supposed to be done sooner, but it is a complicated and a very important part of our future business needs. And we decided to dial it back, do it a little bit more slowly because we've gotten a number of comments internally from our radiologists and our employees about enhancements or things that you can only really start appreciating once you begin testing the system. So while I think we could have rolled it out faster, I think that, that would have been ill advised for us and going the slower route will ensure longer term success and be less disruptive. That being said, we're pretty engaged in this right now in a very aggressive manner. And while we can't make up for the lost time, we have a whole lot more confidence that the product when it rolls out, will be fully functional as we unfold it. And we expect this process to be complete probably within 9 months.

That's a long pushback, considering the fact that you were, I think, if my memory serves me, going to save about $4 million a year, which considering the numbers, those are significant numbers.

Well, it is significant numbers, but I'm concerned about almost $800 million of revenue more than I am with $4 million of savings. The savings will be there, but we can't afford it to be so disruptive that we endanger protecting the revenue side of this.

That makes all the sense in the world. In other words, what you're saying to me is, you can't roll out the system and enhance it as you go along, as there are criticisms or suggestions. Because it's been my impression that this was a fully-functional system, that you have been enhancing from day 1?

Actually, that's only partially true. There's 2 primary -- well, 3 primary components to this. One is the Picture Archiving side, that's PACS and that was a full product when we bought it about 3 years ago. Its counterpart, which is the RIS system, Radiology Information System, which you use for scheduling and transcription and demographics, et cetera was nonexistent. And that we have been building now for a little over 2 years. And the third part of it is related to voice recognition, which we bought the engine for that from a company called Multimodal or M modal, and which is being integrated into this product, and which we don't have complete control of the technology and the ability for it to achieve the opportunities that we know it's capable of. So we've been working with the company with that and then that has to get integrated into our RIS system and our PACS system. It's a rather large substantial undertaking to say the least, and also the company has been growing so we've been adding more centers and having to deal with how do we fit in all of our centers into to some cogent and operationally-intelligent rollout plan.

And that does conclude today's question-and-answer session. At this time, I'd like to turn it back to management for any closing remarks.

I would again, like to thank, everybody, for their continued support and the employees of RadNet for their dedication and hard work. Management will continue its endeavor to be a market leader that provides great services and with appropriate return on investments for all stakeholders. Thank you for your time today. And I look forward to our next call. Good day, everybody.

That does conclude today's conference. Again, thank you for your participation.