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RadNet Hits New 52-Week High: What's Driving the Stock?

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Shares of RadNet, Inc. RDNT reached a new 52-week high of $19.93 on Dec 2, closing the session marginally lower at $19.82. The stock has rallied 27.6% since its third-quarter earnings announcement on Nov 12.

The company’s robust overall and segmental revenue growth in the third quarter prompted the rally.

Let us delve deeper.


Q3 Performance

The company exited the third quarter on a strong note, with better-than-expected revenues. It witnessed a year-over-year improvement in revenues in the majority of its segments. Domestic revenues were particularly strong.

Banking on regular product expansions and acquisitions, RadNet expects to continue with the recent growth trend in Long Island and the boroughs of New York City in the upcoming quarters.

The company’s focus on implementing the EmblemHealth AdvantageCare Physicians (“ACP”) capitation contract and the recent completion of the replacement or upgrade of the majority of equipment in the 26 ACP locations buoy optimism. It is also hopeful about witnessing higher customer adoption of its ACP membership into RadNet’s freestanding facilities.

Other Growth Drivers

Acquisitions: RadNet is upbeat about gaining strong integration synergy from the acquisition of Medical Arts Imaging in Long Island, New York. This is in line with the commencement of the ACP contract’s execution by the company. The first ten Medical Arts centers in Nassau and Suffolk counties have provided the company with important serviceable locations, catering to the members of EmblemHealth ACP as well as other patients in Long Island. The company is hopeful about future contributions from this segment.

RadNet continued the integration of Kern Radiology (acquired in April), its major competitor in Greater Bakersfield, CA, and surrounding areas. With this, the company is optimistic about the outcome of the merger of its two area radiology practices, and the resulting sales and marketing optimization.

Partnerships: RadNet is also quite upbeat about its business expansion toward existing relationships and establishing joint ventures with new partners. This is driving patient volumes in its jointly-owned centers.

Apart from this, RadNet proceeded with its other joint ventures like the New Jersey Imaging Network with its partner, RWJBarnabas Health, and Beach Imaging in Orange County California with the other partner, MemorialCare. The company also licensed the Whiterabbit technology and back-end operational platform based on the success of the pilot program.

Execution of Growth Plans: It is hopeful of deploying the technology platform to all other RadNet markets by the end of the second quarter of 2020. Even though the mammography volumes exceeded the company’s budget in the pilot program, it is hopeful about the fourth-quarter 2019 performance of Delaware and Florida.

RadNet is planning to work with Whiterabbit to develop future solutions, including personal computers, mobile phone applications and artificial intelligence algorithms to automate the interpretation of mammography images.

Zacks Rank & Key Picks

Currently, RadNet carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space are Haemonetics Corporation (HAE - Free Report) , National Vision Holdings, Inc EYE and ResMed Inc RMD.

Haemonetics currently has a Zacks Rank #2 (Buy) and a projected long-term earnings growth rate of 13.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

National Vision’s long-term earnings growth rate is estimated at 17.8%. The company currently carries a Zacks Rank #2.

ResMed’s long-term earnings growth rate is estimated at 12.9%. It currently sports a Zacks Rank #1.

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