RadNet Financials Reveal Impact of Sandy
Between 120 and 130 RadNet locations were impacted by power outages and patients being unable to keep appointments due to the November hurricane. In RadNet’s fourth quarter financial statement, the company puts the value of the lost business at $3.5 million. It is a large figure, but it certainly could have been worse. In a November interview that can now be shared, Steve Forthuber, RadNet’s East Coast VP/COO, explained how careful planning allowed RadNet centers to come back up and begin seeing patients as soon as power was restored to each center even though Hurricane Sandy was “the largest scale of anything [RadNet’s East Coast operations] had ever faced,” he said. RadNet’s data and call centers are backed up by diesel generators, and as the storm neared the East Coast, staff stayed overnight at the primary data centers to oversee the generators and make sure the power stayed on. All MRs were also inspected before the storm to ensure they could go as long as possible without power. In addition, where data centers and MRs were co-located, some power from the data centers’ generators was diverted to run MR cooling systems. Ranjan Janyanathan, RadNet’s CIO, also encouraged his staff fill up on gas before the storm hit so that they could use their personal vehicles to charge phones and computers when power was out and keep working. The preparations helped ensure that the centers were ready to serve all those who could make it in after power was restored. Unfortunately, for many patients, keeping their appointments was simply impossible after the storm and referral sources that normally sent new patients remained closed. “Our medical communities and referring physicians were impacted for several weeks following the storm,” explained Howard Berger, MD, president, CEO and co-founder of RadNet in the press release accompanying the earnings report. “In numerous instances patients found themselves without power to their homes or gasoline in their cars for days and weeks following the storm. Exam cancellations were routine, and our available appointment slots were simply lost during the quarter.” To put this lost business in perspective, one should note that when all 246 RadNet owned and/or operated outpatient imaging centers closed for Christmas and New Year’s Day, the loss in business was $1.5 million. In 2011, these holidays fell on Sundays, giving the fourth quarter of 2011 a two-workday advantage over the fourth quarter of 2012, on top of the impact of Hurricane Sandy. "While I'm disappointed in how 2012 ended, I'm very encouraged that prior to the fourth quarter, we were on track to meet our 2012 targeted metrics,” Dr. Berger said in the press release. “The fourth quarter was anomalous, particularly on the East Coast. In fact, excluding the east coast operations effected by Hurricane Sandy, our California operations for the fourth quarter grew over 5% in procedural volumes relative to the fourth quarter of last year. For all operations, excluding the non-recurring impacts within the fourth quarter of 2012, the financials results would have been on par with last year's fourth quarter.” Indeed, for 2012 as compared to 2011, MRI volume increased 14.6%, CT volume increased 14.3% and PET/CT volume increased 12.2%. Overall volume for all modalities combined increased 10.5%. In addition, for 2012, RadNet reported revenue of $673.1 million, an increase of $65.6 million or 10.8% over 2011. Adjusted EBITDA decreased 1.7% from the previous year to $113.6 million. Finally, net income was $64.5 million, an increase of $57.3 million from 2011. "Putting the fourth quarter behind us, we remain very excited about 2013,” said Dr. Berger in the earnings announcement. Last year, RadNet acquired Manhattan-based Lenox Hill Radiology and Orange County, Calif-based West Coast Radiology, as well as expanded its partnership with Barnabas Health for 2013. In addition, RadNet has accelerated its installation of voice recognition transcription and its Meaningful Use certified eRAD RIS and PACs products throughout its network. “We anticipate enjoying significant cost savings and operating efficiencies during 2013 from these IT projects,” Dr. Berger said. Access RadNet’s Securities and Exchange Commission (SEC) filings and the press release here.