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RadNet (RDNT +21%) is looking pretty rad to investors today. Shares of this diagnostic imaging company are surging today to a new all-time high following its Q3 report. After a slight EPS miss in Q2, RadNet bounced back with a modest EPS beat in Q3. Adjusted EPS jumped 38.5% yr/yr to $0.18. Revenue was also a standout, growing 14.7% yr/yr to $461.1 mln, which was well above analyst expectations. In addition to earnings, RadNet announced an AI-focused collaboration with GE HealthCare (GEHC).

• RadNet is benefitting from high demand for its services and notable patient backlogs in many markets. As a result, it continues to expand capacity through the construction of new imaging centers. It currently operates a network of nearly 400 RadNet outpatient imaging centers. Since the start of the year, RadNet has opened five new centers with another three expected before year end. Furthermore, it intends to open 15 more during 2025.
• When we dug into the story, it is pretty interesting. RadNet is the largest owner/operator of diagnostic imaging centers in the US. It has quadrupled in size over the last 15 years. It's unique in its industry because about 37% of its centers are held within joint ventures with some of the largest hospital systems, so it gets lot of referrals. RadNet also benefits from having ancillary revenue streams, particularly in digital health, including AI and radiology software.
• Right now, RadNet explains that about half of imaging gets performed at hospitals and half outside of hospitals, the vast majority of which are ambulatory outpatient imaging centers like RadNet. However, RadNet says it is not uncommon for hospitals to charge between 200-500% of what RadNet charges. As such, insurance companies are focused on shifting this business out of the hospitals into lower cost sites. This trend is benefitting RadNet.
• RadNet is making a concerted effort to make it easier for consumers to get imaging done. RadNet has partnered with Walmart to make mammogram screenings more accessible by piloting programs that offer these routine screenings at Walmart via its MammogramNow service. Radnet has also been focusing more on AI, through its DeepHealth segment, which helps make radiologists more efficient and this helps to reduce biopsies, which are more intrusive.
• Quickly on the GE HealthCare collaboration, the goal is to further innovation and adoption of AI in imaging. This new SmartTechnology will seek to combine GE HealthCare's imaging expertise and scale, RadNet's deep experience in care delivery, and DeepHealth's AI-powered health informatics portfolio.

Overall, this was an impressive quarter for RadNet, especially the growth in EPS and the top line. The industry is really moving in RadNet's direction as payors are pushing patients to lower cost options for imaging. We also think the GE Healthcare collaboration is adding some juice to the stock today. Partnering with a big name like that provides a lot of credibility for RadNet's capabilities. We think the name is getting on more radar screens today.