RDNT 10-K & 10-Q changes, risk factors and insider trading

Continued turbulence in domestic and international markets and economies may adversely affect our liquidity and financial condition. Patients may transition work, leavingleave insurance programs, or defer non-emergency procedures, which could reduce overall demand for our services. A decline in global economic conditions could also have a significant impact on the financial condition and operations of our third partythird-party payors, contracting radiology groups, equipment manufacturers and other suppliers.

During periods of high unemployment, governmental entities often experience budget deficits as a result of increased costs and lower than expected tax collections. These budget deficits at the federal, state and local levels have decreased, and may continue to decrease, spending foron health and human service programs, including Medicare and Medicaid, which are significant payor sources for our facilities. In periods of high unemployment, we have faced and could continue to faceface, the risk of potential declines in the population covered under private insurance, patient decisions to postpone or decide against receiving services, potential increases in the uninsured and underinsured populations we serveserve, and further difficulties in collecting patient co-payment and deductible receivables.

We have a substantial number of employees who are paid on a part-time or per diem basis. In 2024, California mandated minimum wage increases for certain industries, including ours. As a result, we will experienceexperienced increased compensation costs for certain of our employees and vendors beginning in 2025. As minimum wage rates increase, related laws and regulations change, and/or inflationary or other pressures increase wage rates, we and our partners may need to increase not only the wage rates of minimum wage employees, but also the wages paid to other hourly or salaried employees. If other states adopt similar minimum wage increases, the effect on our cost of operations would be compounded. In addition, we expect that inflationary pressures will continue to impact our salaries, wages, benefits and other costs.

We face various risks related to health epidemics and other outbreaks,outbreaks that have emergedemerged, and could emerge in the future, including:

•restrictions intended to slow the spread of outbreaks, including quarantines, government-mandated actions, stay-at-home orders and other restrictions, have ledled, and may in the future leadlead, to periods where our imaging procedure volumes drop significantly;

Business interruptions due to natural disasters to include but not limited to earthquakes, floods, firesfires, hurricanes and severe winter storms or other external events beyond our control can adversely affect our business, financial condition or results of operations.

A significant portion of our business is derived from federal and state reimbursement programs such as Medicare or Medicaid. From time to time those programs implement changes designed to contain healthcare costs, some of which have resulted in decreased reimbursement rates for diagnostic imaging services that impact our business. On NovemberOctober 1,30, 2024,2025, CMS released the calendar year 20252026 Medicare Physician Fee Schedule final rule, which governs Medicare payment for Radnet's services in CY 2025.2026. Medicare payment and coverage policies in the final rule could result in reimbursement reductions or reduced volume of diagnostic imaging services at our imaging centers.

One of the principal objectives of health maintenance organizations and preferred provider organizations is to control the cost of healthcare services. Managed care contracting has become very competitive, and reimbursement schedules are at or below Medicare reimbursement levels. The expansion of health maintenance organizations, preferred provider organizations and other managed care organizations within the geographic areas covered by our network could have a negative impact on the utilization and pricing of our services,services because these organizations will exert greater control over patients’ access to diagnostic imaging services, the selections of the provider of such services and reimbursement rates for those services. Relatedly, reimbursement rate cuts may be pursued as a cost-saving measure by third partythird-party payors resulting from the implementation of the federal No Surprises Act (H.R. 133) and similar insurer-provider payment dispute laws, which also may negatively impact our revenue.

The market for diagnostic imaging services is highly competitive. We compete for patients principally on the basis of our reputation, our ability to provide multiple modalities at many of our centers, the location of our centers and the quality of our diagnostic imaging services. Our competitors include independent imaging operators, suchprivate asequity-backed Akumin, Inc.,chains, and smaller regional operators, as well as hospitals, clinics and radiology groups that operate their own imaging equipment. Some of our competitors may have, now or in the future, access to greater financial resources than we do and may have access to newer, more advanced equipment. If we are unable to successfully compete, our business and financial condition wouldcould be adversely affected.

Our business is substantially dependent on the radiology groups that we contract with to provide medical services at our imaging centers. The radiology groups are party to substantially all of the managed care contracts from which we derive revenue. Under the terms of our management agreements, the radiology groups are required to use their best efforts to provide medical services at our centers as well as any new centers that we open or acquire in their areas of operation. Although our management agreements are for multiple years, the radiology groups have the right to terminate the agreements if we default on our obligations and fail to cure the default. Also, the various radiology groups’ ability to continue performing under the management agreements may be curtailed or eliminated due to the radiology groups’ own financial difficulties, loss of physicians or other circumstances.

Each of the Group and our third partythird-party contracted radiology practices has entered into agreements with its physician shareholders and full-time employed radiologists that generally prohibit those shareholders and radiologists from competing for a period of two to five years within defined geographic regions after they cease to be owners or employees, as applicable. In certain states, like California, a covenant not to compete is enforced in limited circumstances involving the sale of a business. In other states, a covenant not to compete will be enforced only:

We are experiencing tighter labor conditions in some of the markets we serve. As a resultresult, our contracting radiological practices have experienced increased salary and professional services expenses. Increased expenses for the contracting radiological practices, including the Group, impactsimpact our financial results because the management fee we receive from them, which is based on a percentage of their collections, is adjusted annually to take into account their expenses. Neither we, nor our contracted radiology practices, maintain insurance on the lives of any affiliated physicians.

We contract with commercial insurance and managed care providers to provide diagnostic imaging services to their members. Some of our healthcare provider customers do not have significant financial resources, liquidityliquidity, or access to capital. If these customers experience financial difficulties they may be unable to pay us for the services that we provide. A significant deterioration in general or local economic conditions could have a material adverse effect on the financial health of certain of our healthcare provider customers. If our health care provider customers suffer financial hardship they could delay or default on their payment obligations to us, reducing our accounts receivable and negatively impacting our results of operations.

Any such interruption in access, improper access, disclosure, modification, or other loss of information could result in legal claims or proceedings, liability or penalties under laws and regulations that protect the privacy of personal information, such as HIPAA, European data privacy regulations, such as the General Data Protection Regulation, or GDPR, USU.S. state privacy regulations, such as the California Consumer Privacy Act, or newly emerging USU.S. state health information privacy laws, such as those in Washington, Oregon, and Texas. We may be required to comply with state breach notification laws or become subject to mandatory corrective action.

We believe that technologytechnological advancements including AI will significantly impact diagnostic imaging services in the future. As part of our growth strategy we have acquired or invested in a number of AI companies and technologies, including DeepHealth, Inc., NuLogix Health, Inc., WhiteRabbit.ai, Aidence Holding B.V. and Quantib B.V. with the expectation that these AI technologies can be developed into solutions that enhance the quality of outcomes for patients via improved diagnostic imaging, reduce operating costs, and correspondingly improve our competitive position. However, the success of our AI investments will depend upon a number of factors, some of which are out of our control, such as:

In the futurefuture, we may acquire companies that create a new line of business. The process of integrating the acquired business, technology, service and research and development component into our business and operations and entry into a new line of business in which we are inexperienced may result in unforeseen operating difficulties and expenditures. In developing a new line of business, we may invest significant time and resources that take away the attention of management that would otherwise be available for ongoing development of our business. In addition, there can be no assurance that our new lines of business will ultimately be successful. The failure to successfully manage these risks in the development and implementation of new lines of business could have a material, adverse effect on our business, financial condition, and results of operations.

Additionally, we and our third parties leverage AI and machine learning tools to increase productivity and innovation. We also face potential risks from the use of AI and machine learning tools. Our, or our customers’ sensitive, proprietary, or confidential information could be leaked, disclosed, or revealed as a result of or in connection with employees’ or vendors’ use of generative AI technologies. In addition, we may use AI outputs to inform certain decisions, and AI models may create incomplete, inaccurate, or otherwise flawed outputs, some of which may appear correct. Due to the potential flaws in the use of AI, we could make incorrect decisions, including decisions that could bias certain individuals or classes of individuals and adversely impact their rights. The rapid development of AI tools could render obsolete certain technologies or tools we currently use, or otherwise provide competitors with a technological edge. New or evolving legislation or regulations might impose restrictions on how AI and machine learning tools can be used, requiring us to adapt our tools or face various penalties for non-compliance, including potential disgorgement of data and associated capabilities. As a result, we could face adverse consequences, including exposure to reputational and competitive harm, customer loss, and legal liabilities. The AI tools may also be subject to additional, and as yet unidentified, security threats.

Due to the importance of the healthcare industry in the lives of all Americans, federal, state, and local legislative bodies frequently pass legislationlegislation, and administrative agencies promulgate regulations relating to healthcare reform or that affect the healthcare industry. As has been the trend in recent years, it is reasonable to assume that there will continue to be increased government oversight and regulation of the healthcare industry in the future. We cannot assure our stockholders as to the ultimate content, timing or effect of any new healthcare legislation or regulations, nor is it possible at this time to estimate the impact of potential new legislation or regulations on our business.

If our operations are found to be in violation of any of the laws and regulations to which we or the radiology practices with which we contract are subject, we may be subject to penalties, including civil and criminal penalties, damages, fines and the curtailment of our operations. Any penalties, damages, fines or curtailment of our operations, individually or in the aggregate, could adversely affect our ability to operate our business and our financial results. The risks of our being found in violation of these laws and regulations isare increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations. Any action brought against us for violation of these laws or regulations, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business.

Our substantial debt could adversely affect our financial condition and prevent us from fulfilling our obligations under our outstanding indebtedness.

Our current substantial indebtedness and any future indebtedness we incur could adversely affect our financial condition. We are highly leveraged. As of December 31, 20242025 term loan indebtedness, excluding related discount, was $1,005.6$1,084.9 million, ofwhich which$961.1 million was borrowed pursuant to the Barclays creditRevolving facilityCredit termFacility loansand werethe $870.6Barclays Term Loan and which includes $123.7 million borrowed pursuant to the Truist Revolving Credit Facility and the Truist creditTerm facilityLoan term(as loansuch wascapitalized $135.0terms million.are defined in the notes to our consolidated financial statements, and collectively, the "Barclays and Truist Credit Facilities") at our New Jersey Imaging joint venture. The Company is neither a borrower or guarantor under the Truist Credit Facilities. Our substantial indebtedness could also:

We have been required to recognize impairment charges in the past, and may again. In September 2023, we determined that an In-process Research and Development ("IPR&D") indefinite-lived intangible asset related to Aidence Holding B.V.'s Ai Veye Lung Nodule and Veye Clinic would not receive FDA authorization for sale in the USU.S. without a new submission and additional expenditures for rework in the original projected timeline. The additional expenditures, delay and reduction of USU.S. sales affected the estimated fair value of the related IPR&D intangible asset and resulted in impairment charges of $3.9 million. A future decline in our operating results, future estimated cash flows and other assumptions could impact our estimated fair values, potentially leading to a material impairment of goodwill, other intangible assets, or other long-lived assets, which could adversely affect our financial position and results of operations.

We are a national provider of freestanding, fixed-site outpatient diagnostic imaging services in the United States. As of December 31, 2024,2025, we operated directly or indirectly through hospital and health system joint venturesventures, with hospitals, 398418 centers located in Arizona, California, Delaware, Florida, Maryland, Virginia, New Jersey, New YorkYork, and Texas. Internationally, our subsidiary, The HLH Imaging Group Limited fka Heart & Lung Imaging Limited, provides teleradiology services for remote interpretation of images on behalf of providers within the framework of the United Kingdom's National Health Service. Our operations comprise two segments for financial reporting purposes for this reporting period, Imaging Centers and Digital Health. For further financial information about these segments, see Note 5, Segment Reporting, in the notes accompanying our consolidated financial statements included in this report.

In addition to our imaging business, we established a Digital Health business segment induring our 2024 fiscal year, which combines our former ArtificialAI Intelligence (“AI”) business segmentbusinesses with our eRad, Inc. business. Our digitalDigital healthHealth segment develops and delivers AI-powered health informatics solutions to driveimprove quality, efficiency, and diagnostic outcomes in diagnostic imaging and radiology. We are using AI to develop solutions to assist radiologists and other clinicians in interpreting images and improving radiologist efficiency and patient care. The portfolio of AI and software solutions is anchored by eRad,Enterprise Inc.'sOperations solutions (traditionally knowns as RIS/PACS,), informaticsEnterprise designedImaging specificallysolutions for(traditionally outpatientknown radiologyas PACS), and Clinical AI solutions, enabled by the DeepHealth OS, a cloud-native operating system that helpsconnects operate allcritical aspects of the radiology service line from scheduling and patient preparation to technologist workflow to interpretation and referral management. Our Clinical AI solutions currently cover the fields of diagnosis and screening in the domain of breast, prostate, lung, thyroid, and brain. Across our portfolio of AI solutions, we have 22 FDA clearances and 15 CE marks. Our Digital Health segment provides these solutions to RadNet and to over 2000 customers in the U.S. and outside of the U.S.

Our revenue is derived from a diverse mix of payors, including private payors and commercial insurance companies, managed care capitated payors, and government payors such as Medicare and Medicaid. We believe our payor diversity mitigates our exposure to possible unfavorable reimbursement trends within any one payor class. Our service fee revenue, net of contractual allowances and discounts, implicit price concessions, andtotal revenue under capitation arrangements for the years ended December 31, 2024,2025, 2024 and 2023 and 2022 areis summarized in the following table (in thousands):

The following discussion summarizes certain details concerning our acquisition or disposition of centers, our equity investmentsinvestments, and our joint venture transactions. See Note 4, Business Combinations and Related Activity and Note 2, Summary of Significant Accounting Policies, in the notes accompanying our consolidated financial statements included in this report for further information.

During the years ended 20242025 and 2023,2024, we completed the acquisition of certain assets of the following entities, which either engage directly in the practice of radiology or associated businesses. The primary reason for these acquisitions was to strengthen our presence in many of our geographic markets. These acquisitions are reported as part of our Imaging Center segment. We made a fair value determination of the acquired assets and assumed liabilities and the following were recorded (in thousands):

*Fair Value Determination is Finalpreliminary and subject to change 2024:

On October 14, 2024, we acquired a all of the equity interest in Kheiron Medical Technologies LTD (“Kheiron”), which uses deep learning AI to help radiologists detect breast cancer.

Kheiron’s operations are included in our Digital Health segment for reporting purposes. The transaction was accounted for as the acquisition of a business with a total purchase consideration of approximately $2.3 million, including: i) cash of $0.4 million, ii) cash holdback of $0.5 million to be issued 18 months after acquisition, (iii) acquisition costs incurred by the seller of $0.4 millionmillion, and (iv) a settlement of a loan from RadNet of $1.0 million. We recorded $1.2 million in current assets, $2.7$2.6 million of IPR&D in intangible assets, and $1.5 million in current liabilities in connection with this transaction.

In performing the purchase price allocation, we considered, among other factors, the intended future use of acquired assets, analysis of historical financial performance and estimates of future performance of the Kheiron business. The valuation of assets acquired and liabilities assumed has not yet been finalized as of December 31, 2024, fair value determination is preliminary and subject to change.

Joint venture investment contributioncontributions

Joint venture investment contributions to Arizona Diagnostic Radiology Group

On November 1, 2022 we contributed eight of our imaging centers to ADRG offor $12.7 million and recorded a loss of $0.5 million which was calculated as the difference between the transaction price and carrying value of such imaging centers which included equipment and other assets and an allocation of goodwill to such imaging centers. We recorded $4.5 million of the transaction price as an offset to due to affiliates while the remaining $8.3 million was recorded as investment in joint venture on our balance sheet. We accounted for the transaction as an adjustment to our equity investment for the value of the assets contributed. To maintain our 49% economic interest in ADRG, we received a distribution from the partnership of $4.5 million to reduce our overall investment to $8.3 million.

Our 9.8% increase in same center revenue over the same period last year was driven by increases in fees charged per imaging procedure and an increase in procedures volumes. Same center total procedure volume grew at an overall rate of 3.2% which was comprised of a 1.7% increase in routine imaging and an 8.1% increase in advanced modality imaging procedures. The increase in revenue was largely attributable to the procedural volume growth, increased reimbursement from commercial and capitated payors and favorable changes in product mix, as advanced imaging wasrepresented a greater portionproportion of overalltotal procedures. A significant contributor to thethis change in product mixshift was the increase in PETHCPET CT procedures related to prostate cancer and suspect Alzheimer’sAlzheimer’s-related studies, which are included inwithin advanced modality imaging procedures.

Total Imaging Center operating expenses for the year ended December 31, 20242025 increased approximately $178.6$221.1 million, or 12.2%,13.2%, from $1.47$1.67 billion for the year ended December 31, 20232024 to $1.64$1.89 billion for the year ended December 31, 2024,2025, primarily due to increase in procedures volumes. The following table sets forth our cost of operations and total operating expenses for the yearyears ended December 31, 20242025 and 20232024 (in thousands):

Stock-based compensation increased $2.3$17.8 million, or 9.3%,66.3%, to approximately $44.7 million for the year ended December 31, 2025 compared to $26.9 million for the year ended December 31, 2024 compared to $24.6 million for the year ended December 31, 2023.2024. The increase is primarily due to a greater number of shares granted and higher grant-date fair valuevalues ofcompared stockto awardsprior-year granted in the first quarter of 2024.period.

We closely monitor patient levels at our imaging centers and occasionally divest or shut down centers to maximize utilization rates. We may abandon low utilization leases and divert the patients to nearby centers.

During theyear endended of 2024,2025, we experienced lower utilization at seven imaging centers. As a result, we abandoned the leases related to these locations at the end of 20242025 and diverted the patients to our other sites in the area. We recorded a charge of approximately $2.5$8.6 million in December 20242025 related to lease facilities abandonment. The lease abandonment charges include the impairment of associated right-of-use assets of $1.8$6.7 million and write off of related leasehold improvements of approximately $0.7$1.9 million.

Within our Imaging Centers segment, we are a national provider of diagnostic imaging services in the United States. As of MarchJune 31,30, 2026, we operated directlydirectly, or indirectly through joint ventures with hospitals,hospitals 435and health system partners, 442 centers located in Arizona, California, Delaware, Florida, Idaho, Indiana, Maryland, New Jersey, New YorkYork, Texas, and Texas.Virginia. Our centers provide physicians with imaging capabilities to facilitate the diagnosis and treatment of diseases and disorders and may reduce unnecessary invasive procedures, often reducing the cost and amount of care for patients. Internationally, our subsidiary The HLH Imaging Group Limited,Limited (“HLH Imaging”), provides teleradiology services for remote interpretation of images on behalf of providers within the framework of the United Kingdom's National Health Service.

We established a Digital Health business segment during our 2024 fiscal year,year under the umbrella brand “DeepHealthDeepHealth.”. The Digital Health segment combines our former Artificial Intelligence (“AI”) business with our workflow solutions, including those previously marketed under the eRAD brand. This includes providing AI-powered health informatics withaimed the aim ofat empowering breakthroughs in care through imaging. It leverages advanced AI forto improve operational efficiency and improved clinical outcomes in breast, chest, musculoskeletal, neuro, prostate and thyroid health. At the heart of the portfolio is a cloud-native operating system – —DeepHealth OS – —that unifies data across the clinical and operational workflow.workflows. By integrating AI, workflow orchestration,orchestration and data management into a single operating system, the Digital Health segment enables health systems to drivebetter radiologyautomate workflowradiology, efficiencyguide &patient productivity,journeys, helpstage-shift mitigate the impacts of staff shortages,disease and reduceadvance diagnosticacute variability.care. The Digital Health segment provides these solutions to RadNet and to over 2,8902,983 customers in the USUnited States and outside of the US.internationally.

The Digital Health segment’s solutions have been clinically validated and are already delivering measurable impact at scale. The company’sOur technology is deployed across 2,890+ customers worldwide, including at thousands of screening sites in the United States and Europe, and is the most widely used solution for lung cancer screening in the United Kingdom. Clinical outcomes demonstrate strong performance, including a 21% increase in cancer detection rates in breast screening. Our end-to-end solutions are widely adopted in real-world settings, including by RadNet and external customers, supportingand support more than 24 million scans worldwide.

As part of our continued strategic expansion in Digital Health, in 2025 we recently completed fourthree acquisitions: iCAD, Inc.,Inc. (“iCAD”), a provider of AI-powered breast health solutions,solutions; See-Mode Technologies,Technologies Pte. Ltd. (“See-Mode”), a medical technology company focused on enhancing ultrasound-based diagnostics through artificial intelligence,intelligence; and CIMAR UK,(UK) Limited (“CIMAR”), a cloud-native provider of imageimage-exchange exchangesolutions. solutions,In andthe first quarter of 2026, we acquired Gleamer SAS,SAS (“Gleamer”), a Radiologyradiology AI company with a portfolio of AI solutions across X-Ray,X-ray, MRI,magnetic CT,resonance imaging (“MRI”), computed tomography (“CT”), and Mammography.mammography. iCAD Inc. and SeeMode technologiesSee-Mode are already fully integrated into the Digital Health segment, with SeeMode’sSee-Mode’s technology deployed inat over 300345 RadNet Imagingimaging Servicesservices sitescenters forto improvingimprove efficienciesthe inefficiency Thyroidof Ultrasoundsthyroid ultrasound exams across the network. The CIMAR UKintegration andhas Gleameralso arebeen currentlycompleted, being integrated intoincluding the business,expansion withof significantsolution earlydeployment momentum,for includingHLH launchingImaging, go-liveRadNet’s subsidiary in the United Kingdom. We expect to complete the integration of Gleamer X-Rayin the third quarter of 2026. Gleamer products inhave already been deployed at RadNet Servicesimaging centers in CaliforniaCalifornia, inArizona, AprilMaryland, 2026,New justYork aand monthFlorida, post-acquisition.and we expect them to be rolled out across most RadNet centers by the end of 2026.

The following table presents the total number of imaging centers in operation, including both consolidated and non-consolidated centers, and our consolidated revenues for the threesix months ended MarchJune 31,30, 2026 and 2025:

Our imaging services include MRI, CT, PET,positron emission tomography (“PET”), nuclear medicine, mammography, ultrasound, X-ray, fluoroscopy and other related procedures. The vast majority of our centers offer multi-modality imaging services, a key point of differentiation from our competitors. The multi-modality offering provides a “one-stop” solution for our customers and referral sources. It also diversifies our revenue base, and reduces our exposure to changes in reimbursement rates for certain imaging modalities.

Our revenue is derived from a diverse mix of payors, including private payors and commercial insurance companies, managed care capitated payors, and government payors, such as Medicare and Medicaid. We believe our payor diversity mitigates our exposure to possible unfavorable reimbursement trends within any one payor class. Our total service fee revenue, net of contractual allowances and discounts, and implicit price concessions for the three and six months ended MarchJune 31,30, 2026 and 2025 received from our various payors is summarized in the following table (in thousands):

Our revenue is not always consistent across each quarter. We generally experience the lowest volumes of procedures and the lowest level of revenue during the first quarter of each year. This is primarily the result of two factors. First, our volumes and revenue are typically impacted by winter weather conditions in our northeastern operations. It is common for snowstorms and other inclement weather to result in patient appointment cancellations and, in some cases, imaging center closures. Second, in recent years, we have observed greater participation in high deductible health plans by patients. AsBecause these high deductibles reset in January for most of these patients, a patient's out-of-pocket cost for a given procedure is generally highest during the first quarter and declines over the course of the year as the deductible is satisfied. As a significant portion of our outpatient imaging procedures are elective or schedulable, we have observed that patients utilizedefer medicalthese servicesprocedures lessto duringlater the first quarter, when securing medical care will result in significant out-of-pocket expenditures.quarters.

Imaging Centers Acquisitions

During the threesix months ended MarchJune 31,30, 2026, we completed the acquisition of certain assets of entities which engage directly in the practice of radiology or in associated businesses for an aggregate consideration of $67.3$86.0 million. These acquisitions include:

Northwest Radiology Network PC: 6 imaging centers in Indiana; and Intermountain Medical Imaging: 5 Centers in Idaho See Note 4, Business Combinations and Related Activity, in the notes accompanying our financial statements in this report for additional information, including the fair value determination of the acquired assets and assumed liabilities, associated with these acquisitions.

At MarchJune 31,30, 2026, 150157 of our imaging centers were operating as joint ventures with hospital and health system partners. On behalf of the joint ventures, we manage the day-to-day operations and perform most management and support services in exchange for a management fee. We charged management service fees from the centers underlying these joint ventures of approximately $6.6$7.9 million and $6.1$6.5 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and $15.3 million and $12.6 million for the six months ended June 30, 2026 and 2025, respectively.

The SEC defines critical accounting estimates as those that (a) are most important to the portrayal of a company’s financial condition and results of operations and (b) require management’s most difficult, subjective or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. In Note 2 of, Significant Accounting Policies, in the notes accompanying our financial statements included in this report and in our Annual Report, we discuss our significant accounting policies, including those that do not require management to make difficult, subjective or complex judgments or estimates. The most significant areas involving management’s judgments and estimates are described below.

Our revenues generally relate to net patient fees received from various payors and patients themselves under contracts inof which our performance obligations are to provide diagnostic services to the patients. Revenue is recorded during the period our obligations to provide diagnostic services are satisfied, which is generally over a period of less than one day. The contractual relationships with patients, in most cases, also involve a third-party payor (Medicare, Medicaid, managed care health plans and commercial insurance companies, including plans offered through the health insurance exchanges) and the transaction prices for the services provided are dependent upon the terms provided by (in cases of Medicare and Medicaid) or negotiated with (in cases of managed care health plans and commercial insurance companies) the third-party payors. The payment arrangements with third-party payors for the services we provide to the related patients typically specify payments at amounts less than our standard charges and generally provide for payments based upon predetermined rates per diagnostic services or discounted fee-for-service rates. Management continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations, changes in business and economic conditions, and the frequent changes in managed care contractual terms resulting from contract re-negotiations and renewals.

As it relates to the Consolidated Medical Group (as defined in Note 11, Nature of Business and Basis of Presentation, of the notes accompanying our financial statements included in this report), this service fee revenue includes payments for both the professional medical interpretation revenue recognized by themour Consolidated Medical Group as well as the payment for all other aspects related to ourthe providingtechnical theand administrative imaging services,services that we provide, for which we earn management fees. As it relates to othersother centers, this service fee revenue is earned through providing the use of our diagnostic imaging equipment and the provision of technical services as well as providing administration services such as clerical and administrative personnel, bookkeeping and accounting services, billing and collection, provision of medical and office supplies, secretarial, reception and transcription services, maintenance of medical records, and advertising, marketing and promotional activities.

Under capitation arrangements with various health plans, we earn a per-enrollee amount each month for making available diagnostic imaging services to all plan enrollees under the capitation arrangement. Revenue under capitation arrangements is recognized in the period in which we are obligated to provide services to plan enrollees under contracts with various health plans. Our estimates and assumptions related to revenue recognition did not change materially for the quarter ended MarchJune 31,30, 2026.

The vast majority all of our accounts receivable are due under fee-for-service contracts from third party payors, such as insurance companies and government-sponsored healthcare programs, or directly from patients. Services are generally provided pursuant to one-year contracts with healthcare providers. Receivables generally are collected within industry norms for third-party payors. We continuously monitor collections from our payors and maintain an allowance for bad debts based upon specific payor collection issues that we have identified and our historical experience. Our estimates and assumptions for allowances on our account receivable did not change materially during the quarter ended MarchJune 31,30, 2026.

Three Months Ended MarchJune 31,30, 2026 Compared to the Three Months Ended MarchJune 31,30, 2025

Imaging CenterCenters Segment

We have developed our Imaging Centers segment through a combination of organic same-centersame center growth, new center buildouts,build-outs, acquisitions and joint venture formations. In the discussion below, "“same center"” metrics are based on imaging centers that we operate and were in operation throughout the period of JanuaryApril 1, 2025 through MarchJune 31,30, 2026, excluding amounts relating to imaging centers that were acquired or divested between JanuaryApril 1, 2025 through MarchJune 31,30, 2026, unless the procedural volumes of closed centers were relocated into centers that existed throughout such period. The revenue analysis presented below includes intersegment revenue prior to elimination.

Our 8.9%11.1% increase in Imaging Center same-centersame center revenue compared to the same period last year was driven by higher fees per imaging procedure and increased procedure volumes. This is a function of procedural volume growth at our existing consolidated centers. This growth reflects both organic increases at existing centers and incremental volumes from centers acquired since the prior-year period.

The increase in Imaging Center same center total revenue was largely attributable to the procedural volume growth, increased reimbursement from commercial and capitated payors and favorable changes in product mix, as advanced imaging represented a greater proportion of total procedures. A significant contributor to this shift was the increase in PET and CT procedures related to prostate cancer and Alzheimer’s-related studies, which are included within advanced modality imaging procedures. Additionally, the increase in same center revenue was the result of net increases in reimbursement from commercial and capitated payors.

Total operating expenses for the three months ended MarchJune 31,30, 2026 increased approximately $83.7$98.5 million, or 17.5%,21.9%, to $563.0$547.7 million for the three months ended MarchJune 31,30, 2026 from $479.4$449.2 million for the three months ended MarchJune 31,30, 2025. The following table breaks down our cost of operations and total operating expenses for the three months ended MarchJune 31,30, 2026 and 2025 (in thousands):

The discussion below provides additional information and analysis on changes in our various operating expenses for the three months ended MarchJune 31,30, 2026 and 2025 (in thousands):

In response to higher procedureprocedural volumes, we increased staffing levels across clinical, administrative and technical functions to support patient demand. TheseSame increasescenter weresalary partiallyexpense offsetincreased by6.8%, compared with an 11.1% increase in same center revenue. The lower rate of salary expense growth reflects improved labor efficiency initiatives,efficiency, workflow optimization technologiestechnologies, including early benefits from the deployment of DeepHealth technology, and operating leverage from higher procedural volumes, which contributed to salary expense growth remaining below the rate of same-center revenue growth. Overall, the increase in compensation expense remained generally consistent with same-center revenue trends.volumes.

The increase in same-centersame center professional fees was primarily attributable to higher procedural volumes. TheProfessional fees increased at a higher rate than the 11.1% increase in professionalsame feescenter relative to the 8.9% increase in same-center sales wasrevenue, primarily drivendue byto (i) a greater mix of advanced imaging procedures, for which professional fees generally represent a higher proportion of revenue, and (ii) disproportionately higher growth in Californiaat imaging centers in California and New York staffed by radiologists affiliated with BRMG radiologists,and Lenox Hill Radiology, respectively, whose professional fees are consolidated within our financial results. InAt many imaging centers outside ofCalifornia California,and revenuesNew areYork, revenue is reported net of professional fees and, accordingly, the related professional fees are not consolidated within our financial results.

Stock-based compensation for the three months ended MarchJune 31,30, 2026 increased approximately $0.8$1.7 million, or 3.3%,27.4%, to $26.1$7.8 million from $25.2$6.1 million for the three months ended MarchJune 31,30, 2025. The increase is primarily due to a greater number of shares granted and higher grant-date fair values compared to prior-year period.

Building and equipment rental expense on a same-centersame center basis increased slightly, primarily due to higher rent and common area maintenance charges.

Other operating expenses, which include outside services, software licensing fees, including approximately $10.3$11.5 million of intersegment license fees paid to Digital Health, repair and maintenance, and utilities, have increased $12.1$12.4 million, or 14.5%,14.4%, to approximately $95.9$99.0 million for the three months ended MarchJune 31,30, 2026 compared to $83.8$86.6 million for three months ended MarchJune 31,30, 2025.

Other income for the three months ended MarchJune 31,30, 2026 included $5.0$4.2 million of money market interest income.income, partially offset by $3.4 million of debt restructuring and extinguishment.

The breakdown of revenue and expenses of the Digital Health segment for the three and six months ended MarchJune 31,30, 2026 and 2025 are as follows:

Revenues for the Digital Health segment increased significantly comparedfor toboth the three and six months ended June 30, 2026 compared with the corresponding prior-year period,periods. reflectingThe aincreases combination ofreflected strong organic growth inacross our Population HealthClinical AI and Enterprise Informatics portfolios, combinedas withwell the impact ofas inorganic growth resulting from the acquisitions of Gleamer, iCAD, SeeMode,See-Mode and CIMAR.