Good day, and welcome to the RadNet, Inc. Fourth Quarter and Year End Financial Results. Today's conference is being recorded. At this time, I would now like to turn the conference over to Mr. 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 Dr. Howard Berger and me today to discuss RadNet's fourth quarter and full year 2017 financial 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 on 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 result 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, 2017 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 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. Berger.

Thank you, Mark. Good morning, everyone and thank you for joining us today. On today's call Mark and I planned to provide you with highlights from our fourth quarter and full year 2017 results, give you more insight into the factors which affected this performance and discuss our future strategy. After our 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 our conference call this morning. 2017 was an active and very productive year for RadNet. We made progress on all strategic fronts and I believe our performance demonstrated the power of the RadNet model and the multifaceted aspects to our business that make it unique in healthcare. I'd like to begin by highlighting some of the accomplishments of 2017. First, our operations teams were successful in driving same center growth. For the year our same center procedural volume growth in operations including all joint ventures exceeded 2%. When we are able to drive more patient volume and procedures through existing facilities, the incremental profitability is high, since many of our costs are fixed. This contributed to our improved EBITDA and profitability through 2017. In addition, our contracting groups were successful in negotiating better reimbursement with several commercial health plans in key markets. Second, the capital expenditures that we made during 2016 and 2017 added both capacity to see additional patients and new capabilities to our centers. In particular, our recent investments in 3D, digital mammography is associated with increased reimbursement as compared with the traditional 2D mammography exams. Our ability to make capital investments further distances our centers and service offerings from those of our smaller competitors. We believe the medical communities that we serve recognize…

Thank you, Howard. I'm now going to briefly review our fourth quarter and full year 2017 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 2017 performance. I will also provide 2018 financial 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 non-cash equity composition. Adjusted EBITDA includes equity and earnings in unconsolidated operations and subtracts allocations of earnings to non-controlling interest in subsidiaries as adjusted for non-cash or extraordinary and one-time items taken place during the period. A full quantitative reconciliation of adjusted EBITDA to net income or loss attributed to RadNet Inc common shareholders is included in our earnings release. With that said, I'd now like to review our fourth quarter and full year 2017 results. For the three months ended December 31, 2017 RadNet reported revenue and adjusted EBITDA of $235.6 million and $40.7 million respectively. Revenue increased $10.6 million or 4.7% over the prior year same quarter and adjusted EBITDA increased $5.8 million or 16.6% over the prior year same quarter. The vast majority of the revenue and EBITDA increased in the quarter is the result of increases in procedural volumes, mostly same center increases and the effective several payer increases we received in the latter half of 2017. For the fourth quarter of 2017, as compared with…

Thank you, Mark. The lines in healthcare are blurring. The roles in traditional healthcare insurers, hospitals and providers are changing in dynamic ways. Nobody might have predicted that Aetna and CVS would combine or they united through its Optum subsidiary would be purchasing physician practices, surgery centers and urgent care locations, hence themselves becoming a provider. Over that Humana would purchase Kindred again into the nursing home, home health and rehabilitation or even most unlikely, that Berkshire Hathaway, Amazon and JPMorgan would form a healthcare alliance designed to address their rising healthcare spend. And to that today's announcement Cigna buying Expess Scripts. What is for certain however, is that RadNet is positioned well to play an important role in delivery of healthcare in this country. Diagnostic imaging is necessary and irreplaceable, in its ability to diagnose disease quickly and accurately and with relatively low cost that are more than recouped in the form of earlier and more effective treatment. We have positioned ourselves to be relevant to the insurance companies, physician practices, hospitals and virtually all the medical disciplines that rely on imaging as a diagnostic tool. Through our capitation model, we are participating in and furthering alternative payment models and risk taking. We are aligning payers with providers, with our eRAD solution we are participating in the transition to the digital medical record and to electronic healthcare information systems. Through our joint venture model, we are affording health systems the opportunity to transform from being inpatient providers to having a broader, more distributed reach into the communities in which they served. Radiology and imaging will continue to revolve as a result of technological advances from both equipment and software development. RadNet will adapt to these changes not merely as a consumer, but through strategic investments and alignments which are now possible due to our improved financial position. An example of this, is the recent announcement of our investment into Turner Imaging System. Our results in 2017 demonstrated the power of our core operating model. As we move into 2018, our focus will continue to be executing on our multifaceted operating strategy to include driving same center growth and efficiencies making tuck-in acquisitions, expanding our health system joint venture model, designing innovative IT capabilities such as artificial intelligence and computer aided diagnostics and furthering alternative payment models. What's most gratifying to me is that, we have never been better positioned as a company competitively or financially to accomplish all of this than we are today. I look forward to updating you on the many initiatives we've discussed on our call today during our first quarter financial results call in May. Operator, we are now ready for the question-and-answer portion of the call.

Thank you. [Operator Instructions] And we'll go first to Brian Tanquilut with Jefferies

Hey good morning guys, congrats. Mark, first question for you, so as I think about, just clarifying on Q4, I know you gave the volume same-store, but, if you don't mind, it's just getting like total same-store revenue I think in the past year given that?

Yes, you will see that in the K when we release it in the MD&A section Brian. But our same-store revenue exceeded our same-store procedure volume growth pretty significantly this quarter. And most of it was due to some payer increases that we received both on the west coast and the east and so we saw some, pricing benefit in several of our different markets. So, you'll see, same-store revenue growth, over double exceeding our procedural volume growth.

Okay that's good to know. And then as I think about your guidance for 2018, as that back into, after analyzing Q4, it seems like you're assuming like 2% same-store revenue is that the right ballpark and given the price increases that you just mentioned, I mean how should we be thinking about a moving part on same-store for 2018?

Sure, I mean typically, the low end of our range assumes pretty modest, zero to 1% same procedural volume growth in, which is no different in 2018 and the high end is about 3%. And we're projecting to be, somewhere in that range given some of the early indications that we saw at the end of last year and earlier on in this year, as well as, some of the growth will come from some small tuck-in acquisitions that would be, will have the full year benefit here in 2018 as well, some of the expansions of our JVs both on the East Coast and the West Coast and then the new joint venture out here on the West Coast with the Memorial Health System, which we began operations on January 1st. So, I would, we - it, we are hard press to, put in a lot of organic growth, although that we, the last few years we have been kind of comping in the 1% to 3% range and we're still comfortable with that going forward.

Now that's good and then Mark, as I think about that and it appears that your margin outlook guidance is essentially flat right, but in a positive same-store environment kind of like you just described, is that just conservatism or do you think there is opportunity to drive margins up this year?

Yes. I think there is opportunity to drive margins. I mean we haven't or continuing to make some investments in our infrastructure, we talked about a little bit in our prepared remarks some significant investments we've made on the revenue cycle area of our company. And so, as we make those investments, there is some sort of -- some lag before we see improved financial results from those investments for instance in revenue cycle. We hired some additional senior management to help with controls around self-pay, controls around special group bills. We've beefed up our call center -- customer service support center in Dallas. We invested in some technology regarding automated dialer system for our collection team in Dallas. And we're outsourcing some more to the difficult older AR to some strategic partners. And so, all of this, it's starting to show through on our DSOs, it's starting to show through on our cash flow. But these types of investments take a while to run through our P&L before they create margin enhancements, but we believe that our margin for 2018 will be flat with some upside possibilities.

Got it. And then, last question for Howard, as I think about the Memorial JV and some of the other JVs that you have done. Two questions, number one, I mean how do you see the opportunity to grow those JVs, I mean are these essentially new businesses that have a lot of runway to expand both on the top line and the margin side in terms of operational improvements you can put through? And then, the second part of the question is, as you talked -- as Mark talked about price increases for Managed Care, is that a result of some of these joint ventures or is there another dynamic that's driving pricing growth?

Well, I will try to take the first part of your question. Our strategy was with the joint ventures. Should be noted that it's not with a single hospital, it's with the hospital system. So we're looking in each of our markets for a system that recognizes the value proposition that RadNet can bring both in terms of its operating capabilities in the radiology and imaging space as well as expanding the reach that that hospital might have into the community that can help generate additional hospital visits for their systems as a result of the more encounters that we're likely to have on an outpatient basis. But it should also be noted that virtually every hospital system that we deal with is also in the market for consolidation and vertical alignment with primary care physicians. So as we contract with these hospitals through the joint ventures, we also get the benefit of the hospitals physician groups and their ability to direct their imaging and keep it within their system of which we now become a part of. So the growth opportunities are there also as we mentioned in our remarks most of the systems are aware of what is the inexorable movement of imaging out of the hospitals and into outpatient facilities. So we also expect to benefit along with them as our partner as that business continues to be directed away from hospitals and hospital license facilities. In regards to other opportunities as we get larger and even more essential into the delivery of healthcare in these markets with our hospital partners, we have a better seat at the table in terms of negotiating not only I think better reimbursement, but also in terms of really starting to craft alternative payment methods maybe even bundling of services that allow radiology to fit with the other services that hospitals offer not just hospitalization, but lab and pharmacy, outpatient surgery centers et cetera. The best example of this that I can give you has been an extremely successful negotiation with all of the major payers in New Jersey, when we had our partner with health system partner with us shoulder to shoulder in negotiating new rates. So all of the reasons that I believe are inherent in a joint venture with a hospital system are typical for us to benefit from -- on a number of different levels. And I think that will be further recognized by other systems perhaps not just in the markets that we're in but in others where we can use this experience to potentially look for other joint venture partners that clearly need some kind of help with their radiology delivery and operations.

I appreciate that. Thanks guys.

Thanks Brian.

[Operator Instructions] We have no further questions at this time.

Okay. Thank you, operator. And thank everybody for the opportunity to speak with you about our results. I'd like to take the opportunity to thank all of our shareholders 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 with an appropriate return on investment for all stakeholders. Thank you for your time today and I look forward to speaking to you on our next call. Good day.

And that does conclude today's conference. Thank you for your participation. You may now disconnect.