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Item 2. Management’s Discussion and Analysis

2025-11-10 compared with 2025-08-11 · 135 added, 114 removed, 408 unchanged (38% of the section changed)

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Any forward-looking statement in this report is based on information currently available to us and speaks only as of the date of this report.

We do not undertake any responsibility to release publicly any revisions to these forward-looking statements to take into account events or circumstances that occur after the date of this report or any unanticipated events which may cause actual results to differ from those expressed or implied by the forward-looking statements contained in this report, except as required by law.

may cause actual results to differ from those expressed or implied by the forward-looking statements contained in this report, except as required by law.

We are a national provider of diagnostic imaging services in the United States.

At June 30, 2025, we operated directly or indirectly through joint ventures with hospitals, 405 centers located in Arizona, California, Delaware, Florida, Maryland, New Jersey, New York and Texas.

At September 30, 2025, we operated directly or indirectly through joint ventures with hospitals, 407 centers located in Arizona, California, Delaware, Florida, Maryland, New Jersey, New York and Texas.

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.

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Recent Developments

The following table shows our imaging centers in operation and revenues for the six months ended June 30, 2025 and 2024:

Six Months Ended June 30,

The following table shows our imaging centers in operation and revenues for the nine months ended September 30, 2025 and 2024:

Nine Months Ended September 30,

Centers in operation 407 399

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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 June 30, 2025 and 2024 received from our various payors is summarized in the following table (in thousands):

Three Months Ended

June 30, Six Months Ended

Our total service fee revenue, net of contractual allowances and discounts, and implicit price concessions for the three and nine months ended September 30, 2025 and 2024 received from our various payors is summarized in the following table (in thousands):

In Thousands Three Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

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As these high deductibles reset in January for most of these patients, we have observed that patients utilize medical services less during the first quarter, when securing medical care will result in significant out-of-pocket expenditures.

During the six months ended June 30, 2025, 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 $16.4 million.

During the nine months ended September 30, 2025, 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 $73.1 million.

These acquisitions include:

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1 imaging center in California

Kolb Radiology P.C.:

3 imaging centers in New York

Schonholz and Drossman, LLP:

1 imaging centers in New York

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.

Joint Venture Activity

At June 30, 2025, 38% of our imaging centers were operating as joint ventures with large health care providers.

At September 30, 2025, 37% of our imaging centers were operating as joint ventures with large health care providers.

We manage the day-to-day operations for these joint ventures and perform most management services in exchange for a management fee.

We charged management service fees from the centers underlying these joint ventures of approximately $6.5 million and $6.1 million for the three months ended June 30, 2025 and 2024, respectively, and approximately $13.0 million and $12.0 million for the six months ended June 30, 2025 and 2024, respectively.

We charged management service fees from the centers underlying these joint ventures of approximately $6.5 million and $5.9 million for the three months ended September 30, 2025 and 2024, respectively, and approximately $19.1 million and $17.8 million for the nine months ended September 30, 2025 and 2024, respectively.

For information on our investment in unconsolidated joint ventures, key balance sheet data and income statement data for the unconsolidated joint ventures, see Note 2, Significant Accounting Policies – Investment in Joint Ventures in the notes accompanying our financial statements included in this report.

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Our revenues generally relate to net patient fees received from various payors and patients themselves under contracts in which our performance obligations are to provide diagnostic services to the patients.

Revenues are recorded during the period our obligations to provide diagnostic services are satisfied, which is generally over a period of less than one day.

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 (Medicare and Medicaid) or negotiated with (managed care health plans and commercial insurance companies) the third-party payors.

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As it relates to others 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.

Our service fee revenues are based upon our management's estimate of amounts we expect to be entitled to receive from patients and third-party payors.

Estimates of contractual allowances under Medicare, Medicaid, managed care and commercial insurance plans are based upon historical collection experience of the payments received from such payors in

accordance with the underlying contractual agreements.

Revenues related to uninsured patients and uninsured copayment and deductible amounts for patients who have health care coverage may have price concessions applied.

We also record estimated implicit price concessions (based primarily on historical collection experience) related to uninsured accounts to record self-pay revenues at the estimated amounts we expect to collect.

Our service fee revenue is based upon our management's estimate of amounts we expect to be entitled to receive from patients and third-party payors.

Estimates of contractual allowances under Medicare, Medicaid, managed care and commercial insurance plans are based upon historical collection experience of the payments received from such payors in accordance with

the underlying contractual agreements.

Revenue related to uninsured patients and uninsured copayment and deductible amounts for patients who have health care coverage may have price concessions applied.

We also record estimated implicit price concessions (based primarily on historical collection experience) related to uninsured accounts to record self-pay revenue at the estimated amounts we expect to collect.

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 June 30, 2025.

Our estimates and assumptions related to revenue recognition did not change materially for the quarter ended September 30, 2025.

Accounts Receivable

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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 June 30, 2025.

Our estimates and assumptions for allowances on our account receivable did not change materially during the quarter ended September 30, 2025.

Business Combination

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Goodwill and Indefinite Lived Intangibles

Goodwill at June 30, 2025 totaled $751.5 million.

Indefinite Lived Intangible Assets at June 30, 2025 were $18.5 million and are associated with the value of certain trade name intangibles and in process research and development ("IPR&D").

Goodwill at September 30, 2025 totaled $827.5 million.

Indefinite Lived Intangible Assets at September 30, 2025 were $18.5 million and are associated with the value of certain trade name intangibles and in process research and development ("IPR&D").

Goodwill, trade name intangibles and IPR&D are recorded as a result of business combinations.

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If multiple valuation methodologies are used, the results are weighted appropriately.

Our annual impairment test of goodwill, IPR&D and trade name noted no impairment as of October 1, 2024, and we have not identified any other indicators of impairment through June 30, 2025.

Our annual impairment test of goodwill, IPR&D and trade name noted no impairment as of October 1, 2024, and we have not identified any other indicators of impairment through September 30, 2025.

Recent Accounting Standards

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Results of Operations

Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024

Result Summary

The following table summarizes our consolidated results of operations and other financial information:

In Thousands Three Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

Operating Revenue

Imaging Center $ 508,242 $ 452,367 $ 1,457,235 $ 1,325,825

Digital Health 24,814 16,367 64,761 46,856

Intersegment eliminations (10,187) (7,593) (29,498) (20,118)

Total service revenue $ 522,869 $ 461,141 $ 1,492,498 $ 1,352,563

Operating income

Imaging Center $ 73,972 $ 69,986 $ 162,676 $ 185,165

Digital Health $ (4,301) $ (644) $ (11,452) $ (1,715)

Total Operating income $ 69,671 $ 69,342 $ 151,224 $ 183,450

Three Months Ended September 30, 2025 Compared to the Three Months Ended September 30, 2024

Imaging Center Segment

We have developed our medical imaging centers segment through a combination of organic growth, acquisitions and joint venture formations.

In the discussion below same center metrics are based on imaging centers that were in operation throughout the period of April 1, 2024 through June 30, 2025.

Excluded amounts relate to imaging centers that were acquired or divested between April 1, 2024 through June 30, 2025.

In the discussion below same center metrics are based on imaging centers that were in operation throughout the period of April 1, 2024 through September 30, 2025.

Excluded amounts relate to imaging centers that were acquired or divested between April 1, 2024 through September 30, 2025.

The revenue analysis presented below includes intersegment revenue prior to elimination.

Total Revenue

In Thousands Three Months Ended June 30,

In Thousands Three Months Ended September 30,

Revenue 2025 2024 $ Increase % Change

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Operating Expenses

Total operating expenses for the three months ended June 30, 2025 increased approximately $33.3 million, or 8.2%, to $439.5 million for the three months ended June 30, 2025 from $406.2 million for the three months ended June 30, 2024.

The following table breaks down our cost of operations and total operating expenses for the three months ended June 30, 2025 and 2024 (in thousands):

Total operating expenses for the three months ended September 30, 2025 increased approximately $53.5 million, or 13.1%, to $460.8 million for the three months ended September 30, 2025 from $407.2 million for the three months ended September 30, 2024.

The following table breaks down our cost of operations and total operating expenses for the three months ended September 30, 2025 and 2024 (in thousands):

Three Months Ended

September 30,

Salaries and professional reading fees, excluding stock-based compensation $ 271,611 $ 243,067

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* Includes billing fees, office supplies, repairs and maintenance, insurance, business tax and license, outside services, telecom, utilities, marketing, travel and other expenses.

The discussion below provides additional information and analysis on changes in our various operating expenses for the three months ended June 30, 2025 and 2024 (in thousands):

The discussion below provides additional information and analysis on changes in our various operating expenses for the three months ended September 30, 2025 and 2024 (in thousands):

Salaries and professional reading fees, excluding stock-based compensation and severance

In Thousands Three Months Ended June 30,

In Thousands Three Months Ended September 30,

Salaries and Professional Fees 2025 2024 $ Increase/(Decrease) % Change

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Stock-based compensation

Stock-based compensation for the three months ended June 30, 2025 increased approximately $1.7 million, or 40.1%, to $6.1 million from $4.3 million for the three months ended June 30, 2024.

Stock-based compensation for the three months ended September 30, 2025 increased approximately $2.6 million, or 61.4%, to $6.8 million from $4.2 million for the three months ended September 30, 2024.

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

In Thousands Three Months Ended June 30,

In Thousands Three Months Ended September 30,

Building & Equipment Rental 2025 2024 $ Increase/(Decrease) % Change

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Medical supplies

In Thousands Three Months Ended June 30,

In Thousands Three Months Ended September 30,

Medical Supplies Expense 2025 2024 $ Increase/(Decrease) % Change

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Other operating expenses

In Thousands Three Months Ended June 30,

In Thousands Three Months Ended September 30,

Other Operating Expenses 2025 2024 $ Increase/(Decrease) % Change

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Additional segment operating and non-operating expenses

In Thousands Three Months Ended June 30,

In Thousands Three Months Ended September 30,

2025 2024 $ Increase/(Decrease) % Change

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The increase in depreciation expense was the result of our higher depreciable asset base.

Other income for the three months ended June 30, 2025 included $7.8 million of money market interest income.

Other income for the three months ended June 30, 2024 included money market interest income of $8.7 million and other income of $0.2 million, substantially offset by debt extinguishment and restructuring charges of $8.8 million, which related to refinancing of our credit facilities with Barclays Bank Plc ("Barclays").

In Thousands Three Months Ended June 30,

Other income for the three months ended September 30, 2025 included $8.9 million of money market interest income.

Other income for the three months ended September 30, 2024 included money market interest income of $9.6 million, partially offset by an impairment of non-marketable securities of $1.2 million.

In Thousands Three Months Ended September 30,

2025 2024 $ Increase/(Decrease) % Change

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Debt restructuring and extinguishment expenses 0 147 $(147) (100.0)%

Other non-operating losses (income) (67) 1,200 $(1,267) (105.6)%

Total other income $(8,990) $(8,233) $(757) 9.2%

Interest expense

In Thousands Three Months Ended June 30,

In Thousands Three Months Ended September 30,

Interest expense 2025 2024 $ Increase/(Decrease) % Change

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The decrease in interest expense was primarily due to the repricing transaction of our Barclays Revolving Credit Facility (as defined in the notes to our condensed consolidated financial statements) in the fourth quarter of 2024, which resulted in lower interest rates compared to the same period in the prior year.

This benefit was partially offset by the $100.0 million of incremental term loan borrowings under our existing Barclays Revolving Credit Facility in the second quarter

This benefit was partially offset by the $100.0 million of incremental term loan borrowings under our existing Barclays Revolving Credit Facility in the second quarter of 2025.

See Note 6 Credit Facilities and Notes Payable included in the notes to our condensed consolidated financial statements.

During the three months ended June 30, 2025, interest rates were above the arranged rates in our 2019 Swaps for most of the year, and we received payment of $2.4 million in cash payments from our 2019 Swaps counterparties, which was reported as a component of interest expense.

During the three months ended September 30, 2025, interest rates were above the arranged rates in our 2019 Swaps for most of the year, and we received $2.5 million in cash payments from our 2019 Swaps counterparties, which was reported as a component of interest expense.

See the Derivative Instruments section of Note 2, Significant Accounting Policies, in the notes accompanying in our Annual Report and Part 1, Item 3 — "Quantitative and Qualitative Disclosure About Market Risk" below for more details on our derivative transactions.

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Since that time, in accordance with accounting guidelines, all changes in fair value are being recognized in other income and expense.

The fair value of the 2019 Swaps at June 30, 2025 was a net asset of $3.1 million compared to a net asset of $5.0 million at March 31, 2025, resulting in a loss of $2.0 million during the three months ended June 30, 2025.

The fair value of the 2019 Swaps at September 30, 2025 was a net asset of $0.7 million compared to a net asset of $3.1 million at June 30, 2025, resulting in a loss of $2.4 million during the three months ended September 30, 2025.

This change in fair value was driven by market expectations of continued declines in interest rates over the remaining term of the 2019 Swaps.

Equity in earnings from unconsolidated joint ventures

For the three months ended June 30, 2025 and 2024, we recognized equity in earnings from unconsolidated joint ventures in the amount of $4.4 million and $3.4 million, respectively, an increase of $1.0 million or 28.5%, respectively.

The decrease was mainly due to the increase in earnings from Santa Monica Imaging Group, LLC and Arizona Diagnostic Radiology Group compared to the three months ended June 30, 2024.

For the three months ended September 30, 2025 and 2024, we recognized equity in earnings from unconsolidated joint ventures in the amount of $3.6 million and $3.6 million, respectively, remaining essentially flat year over year.

Net income attributable to noncontrolling interests

At June 30, 2025, our consolidated subsidiaries operated 353 imaging centers of which 103 were not wholly-owned and thus a portion of their operating results were attributable to noncontrolling interests.

At June 30, 2024, our consolidated subsidiaries included 344 centers of which 95 were not wholly-owned.

For the three months ended June 30, 2025, we recognized net income attributable to noncontrolling interests of $8.6 million versus $9.9 million for the three months ended June 30, 2024.

A decrease in earnings from Beach Imaging Group, LLC and The New Jersey Imaging Network, LLC was partially offset by increased earnings from Ventura County Imaging Group, LLC.

As noncontrolling interests only represent a portion of our imaging center business, and excludes our Digital Health segment, which generated losses of $7.1 million for the three months ended June 30, 2024, we do not expect changes in net income attributable to noncontrolling interests to correlate with changes in consolidated operating income or pretax income.

Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024

In the discussion below, same center metrics are based on imaging centers that were in operation throughout the period of January 1, 2024 through June 30, 2025.

Excluded amounts relate to imaging centers that were acquired or divested between January 1, 2024 through June 30, 2025.

At September 30, 2025, our consolidated subsidiaries operated 356 imaging centers of which 101 were not wholly-owned and thus a portion of their operating results were attributable to noncontrolling interests.

At September 30, 2024, our consolidated subsidiaries included 345 centers of which 98 were not wholly-owned.

For the three months ended September 30, 2025, we recognized net income attributable to noncontrolling interests of $8.5 million versus $9.0 million for the three months ended September 30, 2024, respectively, remaining essentially flat year over year.

As noncontrolling interests only represent a portion of our imaging center business, and excludes our Digital Health segment, which generated losses of $9.9 million for the three months ended September 30, 2025, we do not expect changes in net income attributable to noncontrolling interests to correlate with changes in consolidated operating income or pretax income.

Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024

In the discussion below, same center metrics are based on imaging centers that were in operation throughout the period of January 1, 2024 through September 30, 2025.

Excluded amounts relate to imaging centers that were acquired or divested between January 1, 2024 through September 30, 2025.

Total Revenue

In Thousands Six Months Ended June 30,

In Thousands Nine Months Ended September 30,

Revenue 2025 2024 $ Increase % Change

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Excluded $111,859 $53,144 — —

Our 5.1% increase in same center revenue over the same period last year was driven by increases in fees charged per imaging procedure and same center total procedure volume growth of 0.5% inclusive of rises in advanced modality imaging

procedures of 4.53%, partially offset by a 0.9% decrease in routine modality imaging.

The increase in revenue was largely attributable to product mix product mix, as advanced imaging was a greater portion of overall procedures.

Our 5.7% increase in same center revenue over the same period last year was driven by increases in fees charged per imaging procedure and same center total procedure volume growth of 1.6% inclusive of rises in advanced modality imaging procedures of 5.9%, and a 0.1% increase in routine modality imaging.

The increase in revenue was largely attributable to product mix, as advanced imaging was a greater portion of overall procedures.

Within advanced imaging, MR increased by 6.5%, CT by 4.3%, and PET/CT by 12.8% on a same-store basis.

The increase in revenue was largely attributable to product mix, as advanced imaging comprised a greater portion of overall procedures.

The Enhanced Breast Cancer Detection (EBCD) program, an AI-powered diagnostic solution, also contributed to revenue growth.

Including non-consolidated joint ventures in which we hold a minority interest, same-center total procedure volume increased approximately 1.1%, reflecting a slight decline of 0.2% in routine imaging procedures and a 4.9% increase in advanced modality imaging procedures.

Including non-consolidated joint ventures in which we hold a minority interest, same-center total procedure volume increased approximately 2.2%, inclusive of rises in routine and advanced modality imaging procedures of 0.7% and 6.4%, respectively.

We provide this information to present trends across all centers we operate or manage, consistent with how management evaluates overall business performance.

Operating Expenses

Total operating expenses for the six months ended June 30, 2025 increased approximately $100.8 million, or 12.5%, to $909.7 million for the six months ended June 30, 2025 from $808.8 million for the six months ended June 30, 2024.

The following table breaks down our cost of operations and total operating expenses for the six months ended June 30, 2025 and 2024 (in thousands):

Six Months Ended June 30,

Total operating expenses for the nine months ended September 30, 2025 increased approximately $154.3 million, or 12.7%, to $1,370.4 million for the nine months ended September 30, 2025 from $1,216.1 million for the nine months ended September 30, 2024.

The following table breaks down our cost of operations and total operating expenses for the nine months ended September 30, 2025 and 2024 (in thousands):

Nine Months Ended September 30,

Salaries and professional reading fees, excluding stock-based compensation $ 800,451 $ 731,133

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Salaries and professional reading fees, excluding stock-based compensation and severance

In Thousands Six Months Ended June 30,

In Thousands Nine Months Ended September 30,

Salaries and Professional Fees 2025 2024 $ Increase/(Decrease) % Change

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Stock-based compensation

Stock-based compensation for the six months ended June 30, 2025 increased approximately $15.9 million, or 103.1%, to $31.3 million from $15.4 million for the six months ended June 30, 2024.

Stock-based compensation for the nine months ended September 30, 2025 increased approximately $18.5 million, or 94.2%, to $38.1 million from $19.6 million for the nine months ended September 30, 2024.

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

In Thousands Six Months Ended June 30,

In Thousands Nine Months Ended September 30,

Building & Equipment Rental 2025 2024 $ Increase/(Decrease) % Change

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Medical supplies

In Thousands Six Months Ended June 30,

In Thousands Nine Months Ended September 30,

Medical Supplies Expense 2025 2024 $ Increase/(Decrease) % Change

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We may abandon low utilization leases and divert the patients to nearby centers.

During the six months ended June 30, 2025, we closed several imaging centers with lower utilization and recognized lease abandonment charges of approximately $5.5 million in our Imaging Center segment.

Of these amounts, $4.8 million were related to right-of-use assets impairment and $0.7 million were related to the write-off of leasehold improvements for the six months ended June 30, 2025.

During the nine months ended September 30, 2025, we closed several imaging centers with lower utilization and recognized lease abandonment charges of approximately $8.3 million in our Imaging Center segment.

Of these amounts, $6.5 million were related to right-of-use assets impairment and $1.9 million were related to the write-off of leasehold improvements for the nine months ended September 30, 2025.

Other operating expenses

In Thousands Six Months Ended June 30,

In Thousands Nine Months Ended September 30,

Other Operating Expenses 2025 2024 $ Increase/(Decrease) % Change

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Additional segment operating and non-operating expenses:

In Thousands Six Months Ended June 30,

In Thousands Nine Months Ended September 30,

2025 2024 $ Increase/(Decrease) % Change

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The increase in depreciation expense was the result of our higher depreciable asset base.

The fair value of the 2019 Swaps at June 30, 2025 was a net asset of $3.1 million compared to a net asset of $7.1 million at December 31, 2024, resulting in a loss of $4.1 million during the six months ended June 30, 2025.

The fair value of the 2019 Swaps at September 30, 2025 was a net asset of $0.7 million compared to a net asset of $7.1 million at December 31, 2024, resulting in a loss of $6.4 million during the nine months ended September 30, 2025.

This change in fair value was driven by market expectations of continued declines in interest rates over the remaining term of the 2019 Swaps.

Other income for the six months ended June 30, 2025, included money market interest income of $15.5 million.

Other income for the six months ended June 30, 2024 included money market interest income of $13.1 million, partially offset by debt extinguishment and restructuring charges of $8.8 million, which related to refinancing of our credit facilities with Barclays.

Other income for the nine months ended September 30, 2025 included money market interest income of $24.4 million.

Other income for the nine months ended September 30, 2024 included money market interest income of $22.7 million, partially offset by an impairment of non-marketable securities of $1.2 million and debt extinguishment and restructuring charges of $8.9 million, which related to refinancing of our Barclays credit facility.

See Note 6 Credit Facilities and Notes Payable included in the notes to our condensed consolidated financial statements.

In Thousands Six Months Ended June 30,

In Thousands Nine Months Ended September 30,

2025 2024 $ Increase/(Decrease) % Change

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Debt restructuring and extinguishment expenses 0 8,909 $(8,909) (100.0)%

Others (67) 1,019 $(1,086) (106.6)%

Total other income $(24,474) $(12,752) $(11,722) 91.9%

Interest income for the six months ended June 30, 2025 increased approximately $2.4 million, or 18.2%, to $15.5 million from $13.1 million for the six months ended June 30, 2025.

The increase is primarily due to higher average cash balance in our money market account for the six months ended June 30, 2025

Interest income for the nine months ended September 30, 2025 increased approximately $1.7 million, or 7.6%, to $24.4 million from $22.7 million for the nine months ended September 30, 2024.

The increase is primarily due to higher average cash balance in our money market account for the nine months ended September 30, 2025

Interest expense

In Thousands Six Months Ended June 30,

In Thousands Nine Months Ended September 30,

Interest Expense 2025 2024 $ Increase/(Decrease) % Change

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***Includes interest related to our term loans, revolving credit line, notes, and other

The increase in interest expense was due to the general increase in term loan debt as a result of refinancing of our Barclays Revolving Credit Facility, partially offset by lower interest rates compared to the same period in the prior year.

During the six months ended June 30, 2025, interest rates were above the arranged rates in our 2019 Swaps for most of the year and we received payment of $4.8 million in cash payments from our 2019 swap counterparties, which was reported as a component of interest expense.

This benefit was partially offset by the $100.0 million of incremental term loan borrowings under our existing Barclays Revolving Credit Facility in the second quarter of 2025.

See Note 6 Credit Facilities and Notes Payable included in the notes to our condensed consolidated financial statements.

During the nine months ended September 30, 2025, interest rates were above the arranged rates in our 2019 Swaps for most of the year and we received payment of $7.2 million in cash payments from our 2019 swap counterparties, which was reported as a component of interest expense.

See the Derivative Instruments section of Note 2, Significant Accounting Policies, in the notes accompanying in our annual report on Form 10-K for the fiscal year ended December 31, 2024 and Part 1, Item 3 — "Quantitative and Qualitative Disclosure About Market Risk" below for more details on our derivative transactions.

Equity in earnings from unconsolidated joint ventures

For the six months ended June 30, 2025 we recognized equity in earnings from unconsolidated joint ventures in the amount of $7.0 million compared to $7.7 million for the prior period, an decrease of $0.8 million or 9.8%.

The decrease was mainly due to the decrease in earnings from Santa Monica Imaging Group, LLC and St.

Joseph Medical Center, LLC compared to the six months ended June 30, 2024.

For the nine months ended September 30, 2025 we recognized equity in earnings from unconsolidated joint ventures in the amount of $10.5 million compared to $11.3 million for the prior period, a decrease of $0.8 million or 7.0%.

The decrease was mainly due to the decrease in earnings from Santa Monica Imaging Group, LLC and Greater Baltimore Diagnostic

Imaging compared to the nine months ended September 30, 2024.

Net income attributable to noncontrolling interests

At June 30, 2024, our consolidated subsidiaries included 344 centers of which 95 were not wholly-owned.

For the six months ended June 30, 2025, we recognized net income attributable to noncontrolling interests of $16.8 million versus $18.1 million for the six months ended June 30, 2024, an decrease of $1.2 million.

A decrease in earnings from Beach Imaging Group, LLC and The New Jersey Imaging Network, LLC was partially offset by increased earnings from Ventura County Imaging Group, LLC and Advanced Radiology at Capital Region, LLC.

As noncontrolling interests only represent a portion of our imaging center business, and excludes our Digital Health segment which generated losses of $13.2 million for the six months ended June 30, 2025, we do not expect changes in net income attributable to noncontrolling interests to correlate with changes in consolidated operating income or pretax income.

At September 30, 2024, our consolidated subsidiaries included 345 centers of which 98 were not wholly-owned.

For the nine months ended September 30, 2025, we recognized net income attributable to noncontrolling interests of $25.2 million versus $27.2 million for the nine months ended September 30, 2024, a decrease of $1.8 million.

A decrease in earnings from Beach Imaging Group, LLC and West Valley Imaging was partially offset by increased earnings from Ventura County Imaging Group, LLC and Advanced Radiology at Capital Region, LLC.

As noncontrolling interests only represent a portion of our imaging center business, and excludes our Digital Health segment which generated losses of $23.1 million for the nine months ended September 30, 2025, we do not expect changes in net income attributable to noncontrolling interests to correlate with changes in consolidated operating income or pretax income.

Digital Health Segment

The breakdown of revenue and expenses of the Digital Health segment for the three and six months ended June 30, 2025 and 2024 are as follows:

In Thousands Three Months Ended June 30, Six Months Ended June 30,

The breakdown of revenue and expenses of the Digital Health segment for the three and nine months ended September 30, 2025 and 2024 are as follows:

In Thousands Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 $ Change % Change 2025 2024 $ Change % Change

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Segment net loss (7,534) (6,548) (986) 15.1 % (17,792) (14,582) (3,210) 22.0 %

Revenues for the Digital Health segment increased compared to the prior year period, primarily due to growth in our AI and informatics product lines.

For the six months ended June 30, 2025, AI-related revenue increased by approximately 27%, driven by continued growth across key clinical AI products, including a 27% increase in Lung, 19% in Prostate/Neuro, and 22% in Breast.

The increase in Breast was partially driven by the ongoing commercialization of our Enhanced Breast Cancer Detection (EBCD) program.

Informatics revenue increased by approximately 33%, primarily due to increased volume on our eRad PICS platform.

The increase in segment operating expenses was primarily attributable to higher headcount in engineering and executive roles, increased stock-based compensation, and higher non-capitalized research and development costs.

These increases reflect continued investment in product development and in building implementation and commercial support functions to enable broader deployment to external customers.

We expect the Digital Health segment to continue operating at a net loss in the near term as we expand these capabilities and scale adoption of our platforms.

In June 2025, we closed the acquisition of See-Mode Technologies, an AI company focused on ultrasound imaging solutions.

Subsequent to June 30, 2025 quarter-end, on July 17, 2025, we also closed the acquisition of iCAD, Inc., a provider of AI solutions for breast cancer detection.

We are currently in the process of integrating both companies into our Digital Health segment.

Revenues for the Digital Health segment increased significantly compared to the prior-year period, primarily reflecting the contribution from the iCAD acquisition and continued growth in our AI and informatics product lines.

For the three months ended September 30, 2025, external revenue represented 59% of total segment revenue, up from 54% in 2024, reflecting a 65% overall increase.

The quarter also saw the customer base expand from 477 to 2,042 and procedure volumes increase from 4.9 million to 6.6 million, mainly driven by the addition of iCAD.

For the nine months ended September 30, 2025, results reflect steady organic growth prior to the acquisition and a sharp acceleration in the third quarter following the inclusion of iCAD, highlighting that recent performance was driven primarily by external expansion rather than internal volume increases.

Segment operating expenses increased year over year due to higher engineering and executive headcount, increased stock-based compensation, and higher non-capitalized R&D costs, reflecting continued investment in scaling our platforms for broader deployment.

We expect the segment to continue operating at a net loss in the near term as integration of iCAD, Inc.

and See-Mode Technologies progresses.

Non-GAAP Financial Measures

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Adjusted EBITDA is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation and this metric, as presented, may not be comparable to other similarly titled measures of other companies.

The following is a reconciliation of the nearest comparable GAAP financial measure, net income, to Adjusted EBITDA for the three and six months ended June 30, 2025 and 2024, respectively.

Three Months Ended June 30, Six Months Ended June 30,

The following is a reconciliation of the nearest comparable GAAP financial measure, net income, to Adjusted EBITDA for the three and nine months ended September 30, 2025 and 2024, respectively.

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

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Adjusted EBITDA - Digital Health Segment $ 3,452 $ 3,229 $ 10,566 $ 10,018

The following table is a reconciliation of GAAP net income for our Digital Health segment to Adjusted EBITDA for the three months ended June 30, 2025 and 2024, respectively.

Three Months Ended June 30, Six Months Ended June 30,

The following table is a reconciliation of GAAP net income for our Digital Health segment to Adjusted EBITDA for the three months ended September 30, 2025 and 2024, respectively.

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

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Our principal capital requirements are for the development of new diagnostic imaging centers, the acquisition of existing diagnostic imaging centers and the acquisition of new diagnostic imaging equipment.

On a continuing basis, we evaluate various transactions to increase shareholder value and enhance our business results, including acquisitions, divestitures and joint ventures.

On a continuing basis, we evaluate various transactions to increase shareholder value and enhance our business results, including acquisitions, divestitures

and joint ventures.

We expect to fund any future acquisitions primarily with cash flow from operations and borrowings, including borrowing available under our secured credit facilities or through new equity or debt issuances.

We and our subsidiaries or affiliates may from time to time, in our sole discretion, purchase, repay, redeem or retire any of our outstanding debt or equity securities in privately negotiated or open market transactions, by tender offer or otherwise.

The following table summarizes key balance sheet data related to our liquidity as of June 30, 2025 and December 31, 2024 and income statement data for the six months ended June 30, 2025 and 2024 (in thousands):

The following table summarizes key balance sheet data related to our liquidity as of September 30, 2025 and December 31, 2024 and income statement data for the nine months ended September 30, 2025 and 2024 (in thousands):

Balance Sheet Data:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Cash and cash equivalents $ 804,716 $ 740,020

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Stockholders' equity 1,313,959 1,133,410

Income statement data for the six months ended June 30,

Income statement data for the nine months ended September 30,

Total net revenue $ 1,492,498 $ 1,352,563

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Sources and Uses of Cash

The following table summarizes key components of our sources and uses of cash for the six months ended June 30, 2025 and 2024 (in thousands):

Cash Flow Data June 30, 2025 June 30, 2024

The following table summarizes key components of our sources and uses of cash for the nine months ended September 30, 2025 and 2024 (in thousands):

Cash Flow Data September 30, 2025 September 30, 2024

Cash provided by (used in) operating activities $ 214,656 $ 190,494

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Cash provided by (used in) financing activities 79,602 400,069

Cash provided by operating activities for the six months ended June 30, 2025 increased by $28.7 million compared to June 30, 2024 primarily driven by a $16.0 million change in assets and liabilities, primarily due to the timing of payments for accounts payable and accrued expenses.

Cash used in investing activities for the three months ended June 30, 2025 increased $15.9 million compared to the six months ended June 30, 2024.

The increase was primarily due to a $19.1 million increase in equity contributions to and purchases of interests in joint ventures, partially offset by a $2.3 million reduction in capital expenditures for property and equipment.

Cash provided financing activities for the six months ended June 30, 2025 decreased $319.5 million compared to the three months ended March 31, 2024.

Cash provided by operating activities for the nine months ended September 30, 2025 increased by $24.2 million compared to September 30, 2024 primarily driven by a $4.0 million change in assets and liabilities, primarily due to the timing of payments for accounts payable and accrued expenses.

Cash used in investing activities for the three months ended September 30, 2025 increased $45.7 million compared to the nine months ended September 30, 2024.

The increase was primarily due to a $28.7 million increase in purchases of imaging facilities and other acquisitions, $2.7 million increase in equity contributions to and purchases of interests in joint ventures, and a $17.1 million increase in capital expenditures for property and equipment.

Cash provided by financing activities for the nine months ended September 30, 2025 decreased by $320.5 million compared to the three months ended March 31, 2024.

Financing activity in 2024 included a public equity offering that generated $218.4 million in net proceeds and a refinancing of the Barclays Revolving Credit Facility that resulted in an additional $167.9 million of cash.

In 2025, financing activity primarily consisted of a $100.0 million incremental term loan under the Barclays Credit Agreement.

In 2025, financing activity primarily consisted of a $100.0 million incremental term loan under the Barclays Credit Agreement, partially offset by repayment of repayments of term loans, notes, and lease payables of $20.7 million.

Secured Credit Facilities

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The new term loan calls for quarterly principal payments of $2.2 million, compared to $1.8 million under the prior credit facility.

Our condensed consolidated balance sheets at June 30, 2025 include $1,095.4 million of total term loan debt (exclusive of unamortized discounts of $13.5 million) in thousands:

Our condensed consolidated balance sheets at September 30, 2025 include $1,090.1 million of total term loan debt (exclusive of unamortized discounts of $12.8 million) in thousands:

Face Value Discount Total Carrying

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Total Term Loans $ 1,090,121 $ (12,847) $ 1,077,274

At June 30, 2025, we had no borrowings under our Barclays or Truist revolving credit facilities.

At September 30, 2025, we had no borrowings under our Barclays or Truist revolving credit facilities.

After reserves for outstanding letters of credit of $7.0 million, we had $275.0 million available for borrowing under our Barclays Revolving Credit Facility and $50.0 million available under our Truist revolving credit facility.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis