Thank you for standing by and welcome to the Lumexa Imaging Second Quarter 2026 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 11 again. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Student Zule Investor Relations. Please go ahead, ma'am.

Thank you, and hello, everyone. We appreciate you joining us today. Leading today's call are our Chief Executive Officer, Caitlin Zula, and Tony Martin, our Chief Financial Officer. Before we begin, I want to note that today's discussion will include forward-looking statements, including statements regarding our 2026 guidance, expected operating performance, growth initiatives, reimbursement assumptions, capital expenditures, and other future events. These statements reflect our current expectations and assumptions, which are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to the forward-looking statements and risk factors described in today's earnings release and our most recent SEC filings for additional information. We undertake no obligation to update these statements. We will also discuss certain non-GAAP financial measures, definitions, and reconciliations to the most directly comparable gap measures are included in today's earnings release. With that, I will now turn the call over to Caitlin. Caitlin, please go ahead.

Thanks, Sue. Thank you all for joining us today. Q2 is a quarter of substantial progress as we continue to execute against the strategic priorities which support our ambition to build the premier platform for high-quality, lower-cost outpatient imaging serving health systems, physicians, and patients. These include driving strong same-center growth with an expanding mix of advanced modalities, new de novo openings, and ensuring the successful ramp of new centers, accelerating high-impact strategic service lines, and expanding our geographic footprint through disciplined, capital-efficient growth. I'm eager to share our progress tonight. A few highlights from the quarter. In Q2, we demonstrated continued strength of our core business. We delivered healthy growth in total same-center volumes, sustained momentum in advanced modalities, continued maturation of our de novo cohorts, and important progress in expanding our health system partnership. Advanced modalities grew to 37.4% of total volume, a record high for our company, and 111 basis points higher than a year ago. Our advanced modality mix shift continues to build, driving higher reimbursement and margin for the business. In May, we announced four new centers so far this year. We've opened two de novos against our ongoing goal of 8 to 10 annually. We also completed two acquisitions, including our first site with the UPMC Joint Venture. And as we previously indicated, the balance of this year's openings will be later in the year and we remain on track to hit our full year de novo target. In June, we achieved a significant milestone, a joint venture with Hospital for Special surgery, a globally recognized leader in musculoskeletal health, expanding our presence in the New York City metro area. And all quarter, we are actively ramping de novo centers, and our 2024 and 2025 cohorts are tracking in line with our expectations, layering in a healthy mix of advanced volumes while making meaningful strides towards our objectives around long-term growth and profit expansion. These accomplishments provide us with a strong foundation heading into the second half of Our performance through Q2, together with the continued progress across our key growth initiatives, supports our continued confidence in our ability to deliver our full-year commitments and the updated guidance we're providing tonight. Toni will speak more to this in a moment. We remain inspired by our mission to expand access to high-quality and lower-cost imaging through elevated, compassionate care. I'm proud of the progress our team is making and the energy they bring to their work at Lumexa every day. In fact, we recently completed our annual employee engagement survey and achieved record scores, a reflection of a team that is aligned and energized by our vision to be the partner of choice for leading health systems and radiologists. That spirit of engagement and shared purpose is the foundation from which we continue to It's early days for our market opportunity, and yet our value proposition resonates strongly with patients, providers, health systems, and payers. Whether through our wholly owned or joint venture centers, we are successfully delivering high-quality imaging in more convenient settings on a more timely basis and at a meaningfully lower cost than hospital outpatient departments. We help health systems solve important operational challenges and achieve their patient care and market expansion goals. And patients love the care they receive, which is reflected in our net-per-mortar scores that consistently exceed 90. In fact, Kauffman Hall just published an article titled Radiology Strategy Was Never About Radiology, which states, imaging is not simply a department. It's a critical infrastructure for health systems growth in oncology, cardiovascular, neuroscience, and orthopedics. We could not agree more. Our value proposition at Lumexa is bigger than operating imaging centers. We help health systems improve access, retain patients, and improve their bottom lines. We view imaging access as the front door to a health system's most valuable service line. And we help health systems own that front door at a lower cost, in the right convenient locations for their patients, and with an operating model that drives value to all stakeholders. As you know, CMS released its 2027 Hospital Outpatient Prospective Payment System proposed rule in early July. We believe the proposed OPPS rule provides further validation of the direction healthcare is moving. High-quality imaging should be delivered in the most appropriate, cost-effective setting. If finalized as proposed, the site-neutral provisions would reduce the reimbursement advantage associated with hospital outpatient departments and further strengthen the rationale for health systems to expand lower-cost, freestanding imaging capacity. Lumexa is built for this environment. Our model enables health systems to improve access, expand strategically, and participate in outpatient imaging growth with a lower-cost structure that does not depend on a hospital-based reimbursement premium. While the proposal remains subject to comment and finalization, we view the shift towards outpatient imaging as a structural growth driver that will benefit us across the years, not quarters. In other government matters, we reviewed CMS's 2027 Medicare Physician Fee Schedule proposed rule released in July. As a reminder, this is relevant to our current rate assumptions of approximately flat year-over-year government reimbursement rates and a 1% increase in commercial payer rates. If finalized as proposed, we believe the CMS rule would be consistent with our planning assumption for government payer rates. Medicare Advantage and fee-for-service stand at around 20% of our revenue. Regarding our commercial payers, the majority of the mix, we're fortunate to have a diverse set of payers who renew across staggered years and so far this year commercial negotiations also support our assumptions as we look ahead at lumexa we're addressing a large and growing market opportunity and the market is moving towards us we benefit from durable long-term tailwinds that we believe are just taking shape aging populations with more complex and chronic conditions, new treatment paradigms requiring advanced imaging, rising preventative screening rates, and a sustained shift from hospital-based to outpatient sites of care in a fragmented, capacity-constrained industry. In a real highlight of Q2, we announced our ninth health system joint venture, a strategic partnership with Hospital for Special Surgery, the world-renowned leader in musculoskeletal health. I would like to speak to this prestigious partnership in a bit more detail, which we think represents a significant validation of our joint venture approach. HSS is ranked number one in orthopedics in the U.S. and is recognized globally for clinical excellence. Their decision to partner with Lumexa involved a rigorous evaluation of our clinical quality and operational capabilities. HSS is an exciting amplifier of our vision to build a broad network of imaging centers in some of the nation's most attractive markets. Imagine New Yorkers who can visit their specialists in Manhattan and obtain timely and convenient imaging in surrounding communities. The New York metro area is one of the largest healthcare markets in the country, and we are excited to serve patients and referring providers in the strategic MSA. We are honored that HSS chose to partner with Lumexa. This partnership is our second new health system collaboration in the last 12 months following UPMC and reflects the growing pipeline of health systems actively seeking to expand hospital outpatient imaging access. In fact, our recent market review identified a substantial universe of health systems, close to 100, where our model can address a demonstrated outpatient imaging need, giving us the confidence in the depth and duration of our partnership pipeline. The market in front of us is promising and vast, and our offering is compelling. In addition to the long-term market forces supporting our growth plans, our operations and commercial teams have partnered with clinical leaders to implement important programs to enhance care and drive growth. Specifically, our team was busy with programs to drive team-centered growth and expand access with discipline and an emphasis on advanced modalities. Here's a little more on that. PET was a particular highlight in Q2 with 23.2% growth. We continue to advance our strategy here, adding two of our three targeted new PET machines in July. We are also expanding into new tracers, unlocking our valuable PET offering for more patients, including the tracer FES-fluoroestradol for estrogen-positive breast cancer patients. On the BAC front, our AI-powered breast arterial calcification program continues to see strong uptake in New York and New Jersey, and we are advancing our expansion plans for other geographies. We recently launched our lung cancer screening initiative. this involves programs to drive patient engagement around one of the most impactful screening opportunities in our patient population. By increasing awareness and access, we can help more patients get screened, diagnosed earlier, and connected to life-saving care. Lung cancer remains the leading cause of cancer-related deaths in the U.S., and only about 18% of eligible individuals currently receive the screening, a striking gap when compared to the 72% screening rate for colorectal cancer. Targeted clinical outreach efforts like these remain a strength for our company. In Q2, we continue to advance our Capital Light best of breed technology strategy. Today, we are giving that integrated capability a name, Lumexa Imaging Connect. Lumexa Connect is the operating platform that connects patients, referring physicians, radiologists, and health system partners across the imaging journey built on leading technologies our platform allows us to rapidly integrate emerging innovations rather than require us to develop every solution ourselves lumexa connect is foundational to our strategy and it's designed to help us move faster onboard new partners efficiently improve access increase capacity and scale efficiently as we grow we're already seeing this strategy deliver results we remain on track to deploy fast scan across two-thirds of our centers by year-end, helping shorten MRI scan times and expand capacity. We're also advancing virtual MRI capabilities and rolling out AI-powered dictation and reporting tools designed to improve radiologist efficiency, reduce physician burnout, and accelerate report turnaround time. Lumexa Connect is not a new strategy. It is the name for the scalable operating platform that already supports our centers, our partners, and our continued growth. New name? Still capital light, still best to breathe. And we'll continue to evolve this platform with the best technologies to support improved service and operating performance for our patients, referring physicians, radiologists, and health system partners. In that regard, I would like to take a moment to highlight another differentiating aspect of our company, investments that enable the goals of our own technologists. I'm delighted to share that in Q2, we graduated our 100th technologist from Lumexa's Technologist Advancement Academy, spanning advanced modalities and mammography, including technologists from across all of our geographies. I'm proud of our teams who support this important initiative, helping make Lumexa a great place for our clinical team members to call home. Wrapping up, I'm pleased with the gains we're achieving as we proceed with good momentum into the second half of the year. DeNovos are ramping, advanced modalities are growing as a percentage of our mix, our JV pipeline is robust, and we're expanding into important new markets with exceptional health system partners. I remain confident in our ability to execute on our strategic priorities and deliver on our full-year commitments, and I believe we are just getting started. Before I turn the call over to Tony, I will pause as I do every quarter to say a huge thank you to our dedicated team members and radiologists. Your commitment to our patients and to our mission is the foundation of everything we do. With that, Tony, please continue.

Thank you, Caitlin, and thank you all for joining us. Tonight, I'll review the financial results and speak to key drivers of our performance for the quarter. I will then provide our outlook for the full year. To supplement my review of our GAAP financials, I will discuss certain system-wide financial and operating metrics that provide additional perspective on our overall performance and the breadth of our business. We use these metrics in managing the business because they reflect activity across all of the centers we operate, both wholly owned as well as the centers we operate in our joint ventures with health systems. Turning to our second quarter financials, consolidated revenues came in at $264.2 million, an increase of 5.1% compared to the same period last year. System-wide revenue growth, which includes all sites we operate, was 6% in the quarter, powered by strong growth in advanced modalities. Revenue per scan in our outpatient segment increased 2.2%. This is a system-wide metric we use because it provides useful perspective on outpatient economics by capturing both the technical scan revenue and, where applicable, the associated professional read revenue. The year-over-year increase was driven by advanced modalities representing a larger share of our business, together with modest increases in contracted payer rates, partially offset by payer makeshifts in a few markets. I would like to review some important volume metrics before going into more detail on our financials. We experienced strong system-wide volume performance across our outpatient sites during Q2, both wholly owned and in JVs. System-wide volume growth was 3.1%, with strength in advanced imaging being somewhat tempered by routine scans, although we did see improvement in mammography volumes that started the year slower than expected. While routine scans impact our earnings less than advanced, we were glad to see them improve during the quarter. Advanced modality volumes, which generally reimburse three to four times higher than routine modalities, were a highlight and grew 6.3 percent system-wide versus prior year and 6.8 percent on a consolidated basis. As Caitlin already highlighted, this quarter advanced modalities represented 37.4% of our volumes, a 111 basis point increase over the prior year period. We're encouraged that these procedures have continued to steadily grow and represent a higher mix of our system-wide volumes. Now for a bit more detail on our consolidated revenues. Outpatient net patient service revenues at $143.7 million grew 3.5% on healthy same-site growth. Professional fee net patient service revenues, our second operating segment, were $60.0 million, reflecting growth of 5% in line with our model. Finally, management fee and other revenues grew $7.2 million and were $60.4 million for the quarter. Within that management fee line, roughly $26 million primarily represents management fees we earn from operating the sites and our health system JVs, which saw particular strength this quarter. The remaining $34 million in this category represents zero margin pass-throughs of employee, IT, and site-level costs that we pay on behalf of our joint ventures. When you're modeling us, it's important to understand these two components in terms of impact to margin. G&A for the quarter was $24.4 million, up $5.7 million from the second quarter of 2025. This increase was expected and driven by $5.9 million higher expenses from the two primary components we talked about last quarter and that will continue to impact year-over-year comparisons throughout 2026. They are as follows. First, are PubCo costs, which are ongoing expenses related to being a public company. These were $1.5 million in the quarter, and we continue to expect approximately $7 million of these costs for full year 2026. Second, and also similar to last quarter, is an increase in stock-based compensation from $8.3 million in Q2 of 2025 to $12.7 million in Q2 of 2026. This reflects the one-time resetting of legacy equity comp plans as part of our IPO. We expect full-year stock-based comp for 2026 to be approximately $50 million. About half of that relates to historic M&A and will be fully amortized by the end of 2026. As a result, we anticipate ongoing stock-based compensation of approximately $20 to $28 million for full year 2027. Below operating expenses, we include our equity and earnings of unconsolidated affiliates. This is our pro-rata ownership share of the net income of our JV sites. the line item in our financials that reflects contributions from these important partnerships. At $18.6 million, this was $2.1 million higher than Q2 of 25, reflecting particular strength this quarter in the sites we operate with health system partners. Below the operating line, interest expense was $16.2 million in Q2. This new run rate is $14 million less than Q225, reflecting our use of IPO proceeds to pay down debt last December, freeing up more than $50 million in cash interest expense savings on an annualized basis, and increasing our flexibility to invest in growth. In addition, we repriced our debt in June 2026, further reducing our go-forward run rate for interest expense by $1 million per quarter, starting in Q3. Pre-tax income was $5.8 million for Q2, compared to a pre-tax loss of $2.4 million in Q225. After a tax provision of about $3 million in the quarter, net income was $2.7 million in Q2, compared to a net loss of $7.2 million in the prior year period. Our GAAP EPS was $0.03 per share in Q2, and adjusted EPS was $0.20. Turning now to adjusted EBITDA, which is an important supplemental measure we use to evaluate operating performance across our entire network. It includes adjusted EBITDA from our wholly-owned centers, as well as our pro-rata share from the centers we operate through our health system joint ventures. Adjusted EBITDA was $56.4 million in the quarter, compared with $56.3 million a year ago. Underlying performance benefited from healthy overall volumes and strong growth in advanced modalities, while our reported growth absorbed incremental public company costs and planned investments associated with ramping our de novo centers. The year-over-year comparison also reflects a tougher prior year baseline than we saw in Q1, as the volume recovery following the resolution of an out-of-network situation was largely resolved by the second quarter of 2025. Our adjusted EBITDA margin was 21.4% in Q2 26, compared to 22.4% in Q2 25, partly due to the 1.5 million step up in public company costs. Sequentially, adjusted EBITDA margin increased 110 basis points from Q1. On the cash flow front, cash flows from operating activities were 32.8 million in Q226. This is $31 million higher than Q225, reflective of our lower senior credit facility debt and related interest payments. Free cash flow, which we define as cash flows from operating activities less capex, was $23.1 million for Q226, a record high for the company compared to negative $2.5 million in Q2.25. This is a $25.6 million improvement and resulted in a conversion in Q2 of roughly 41% of adjusted EBITDA, which is another record. The improvement was largely attributable to our reduced debt and related interest expense that demonstrates the ability of our business to continue to generate strong cash flow. Recall that we used the full IPO proceeds to pay down debt in order to free up cash to pursue our market opportunity, grow the company, and de-lever. We would not read a single quarter as a new run rate, but as we have said previously, we continue to expect 2026 pre-cash flow conversion to be approximately 25 to 30 percent of adjusted EBITDA on a full-year basis. While free cash flow conversion can vary. We believe this conversion range will improve as we scale our business. And now for a moment on CapEx. We continue to see the opportunity to accelerate our growth plans in our fragmented industry and to target meaningful returns by investing in de novos, adding new and upgraded equipment and capabilities at our existing sites, and through targeted M&A. Our $9.7 million capital spend in Q2 26 reflects a busy quarter of investment activity and is not a change in our underlying spending plan. We continue to anticipate approximately $5 to $7 million in cash capex per quarter. Shifting to the balance sheet, our capital position is strong, and we ended the quarter with $69.7 million in cash and cash equivalents, up from $51.2 million at the start of the quarter. As of June 30, net leverage was 3.6 times compared to 5.7 times a year ago. Further, we're committed to managing our capital structure strategically, and at the end of Q2, we repriced our term loan to a rate of SOFR plus 250 basis points. This reduction generates an additional annual cash interest savings of $4 million per year, starting in Q3. Wrapping up with our outlook, we're pleased with our accomplishments in Q2, including progress across key growth initiatives. And so with half the year complete, we're narrowing our adjusted EBITDA guidance range to $235 million to $241 million versus the previous range of $234 million to $242 million, while maintaining the midpoint at $238 million. The narrower range reflects our first-half results, our view of the business, and continued confidence in the underlying assumptions supporting our guidance. Adjusted EBITDA reflects our full system-wide footprint, including our pro-rata share of JV performance, while our consolidated revenue guidance reflects only our majority-owned centers. That scope difference, not a change in our view of either business, is why we're narrowing adjusted EBITDA guidance while our revenue guidance remains unchanged. And so tonight, we're reiterating our consolidated revenue guidance of $1.045 billion to $1.097 billion and our adjusted EPS guidance of $0.71 to $0.77 per share. As we move into Q3 and continue executing on our goals, we're energized by the opportunities in front of us and the progress we've made so far this year. So with that, let's turn to your questions. Operator, would you please open the call?

Certainly. And ladies and gentlemen, we ask that you please limit yourself to one question. And our first question comes from the line of Brian Tankulik from Jefferies. Your question, please.

Hey, good afternoon. This is Brett Krolkowski on for Brian Tankulik with Jefferies. Thanks for taking the questions here. As we think about the second half of the year, can you talk about the expectations for the seasonality in the business? And then if there's any other incremental drivers to point out as we think about the sequential ramp.

Thanks so much, Brett.

Appreciate the question.

Maybe I'll kick it off and then I'll turn it over to Tony to talk a little bit more about second half pacing. So we are very excited by the progress we've been able to demonstrate this year. Advanced imaging continues to be strong. really thrilled by our new company record of the 37.4% of volumes coming from advanced imaging. And as you'll remember, last year, we did a record number of de novos. We opened up nine. Pacing of those were three in the first quarter, three in the second, zero in the third, and then three in the fourth. And so excited by the progress we've been able to see in the ramping of our 2024 and 2025 de novo cohorts and so what you see is really a compounding um of all of these trends as we enter in the second half of the year which is why we were confident in reaffirming our guidance and narrowing the range but tony i'll let you maybe talk a little bit more about specific pacing sure sure yes the momentum is you know what we expected as the year would unfold There is a natural seasonality to the business, and, you know, we're seeing that happen.

And as we reported last quarter, 5% of our earnings in the first half of the year and 55% of the ground in 2025. So, actually, it's 40%.

Okay, yeah, that's helpful. And then for a follow-up, could you maybe provide some additional color on the recent HSSJV, maybe on how it's progressed in the early stages, and then if there's any future expansion opportunity there, and then maybe more broadly what the pipeline as a whole for new JV opportunities looks like. Thank you.

Yes. Happy to talk about HSS. It was a very exciting milestone for the company. HSS, obviously, is a world-renowned institution, and so focused on muscular skeletal, which obviously requires imaging in every part of the diagnosis and treatment. With HSS, similar to UPMC, we were focusing on a de novo approach. We've already targeted markets in the New York metropolitan area and actively advancing site plan. New York does have CON requirements that will require a little bit longer of an extended timeline, but excited to talk a little bit more about this as we go into 2027. And then we think about kind of the second part of your question about hospital engagement and hospital pipeline. One of the reasons I'm the most excited to be in this role at Lumexa is the early days around opportunities to continue to grow to serve outpatient needs in the industry. Starting first, radiology demand continues to grow for all the reasons we talked about, right? Novel treatment paradigms, increased screening mandates, technological advances, and there's continued unmet demand. And then it is also an incredibly fragmented landscape and very early days for health systems to really begin to formalize what is their outpatient imaging strategy. And so we've got an exciting pipeline of health systems we're talking to. We look forward to giving more updates across upcoming quarters. But there's a lot of growth and opportunity in this space. Thanks so much, Brett.

Thanks. Thank you. And our next question comes from the line of Andrew Cooper from Raymond James. Your question, please.

Hey, everybody. Thanks for the question. Maybe first, um you know we've heard a lot from from different players in the space through the quarter or through the the earnings reports already i guess uh i think tony you mentioned some payer mix shifts in a few markets could you touch on that a little bit more and anything you're seeing from a procedure mix perspective whether it's changes in you know ortho related imaging versus uh more kind of acute oriented uh procedures just would love your observations and in kind of underlying some of the volume changes?

Sure. I'll add to Kate last. Yeah, really, yeah, we saw just a little bit of nothing significant. It was in a couple markets, and it was kind of different than what we had in Q1. You know, we had experience, you know, really nothing of note or anything. We came in where we...

I can really take the acuity piece, Andrew. So, you know, as we see acuity as we look across the book, we continue to see real strength in MRI. MRI growth on a system-wide basis was 7.2% quarter-over-quarter. So, you know, continuing to, you know, drive our focus on supporting MRI. And then PET. So, you know, 23.2% growth, as we highlighted in the script. You know, throughout our journey, we've been talking about the opportunity we have at Lumexa to deepen our pet profiles so thrilled that we're able to say that two of the three machines that we had talked about this year are live uh in south carolina and arizona and then we continue to see advancements in the radio tracers you know we reference our new estrogen positive breast imaging radio tracer fes we continue to see strong demand for amyloids clarify you're also working on ga68 and SDG. So continue to focus on expanding PET as a strategic service line based on the strong acuity demand there.

Thank you. And our next question comes from the line of Andrew from Barclays. Your question, please.

Hi, good afternoon. We don't have the queue yet, so I was hoping you could share the same store system-wide revenue growth metric in the quarter and talk through the underlying components of that between volume and price. Thanks. Same store system-wide revenue, you know, what did that come in in the quarter? And then maybe break that down into the components of price and volume. Thanks.

Yeah, yeah. So, same site, system-wide basis was 4.4% revenue and 2.2% volume, 2.2%.

Got it. That's helpful. And then on the commercial mix side, can I just revisit that for a second? It was a little bit unclear to me what exactly you're seeing on commercial mix. So, one, can you help us understand where that finished in the quarter? You know, what was that down year over year? And, you know, to the extent that you did see some pressure in some of your markets, can you just elaborate on what exactly you saw? Thanks.

Yeah. When we get the Q published, it'll show, you know, 59% consolidated. There's a very slight downward tick, you know, nothing significant. You know, we have heard, you know, some of the other health care. And in Q2, it was in a few markets that we consolidate. And in Q1, we had a little bit of neither one. It seems to be a, you know.

Thank you. And our next question comes from the line of Wood Mayo from Learink Partners. Your question, please.

Hey, thanks. Looking at the first quarter, you guys had, you know, some weather-related disruption. Do you think you recovered any of that volume in the second quarter, or is that just all lost at this point?

Yeah. Hey, Whit. Thank you for the question. Maybe I'll start. You know, we saw strength of advance in Q1, and we're really proud of how it ended. And so, you know, our thinking was there would be very little carryover of advance into Q2.

Talking about advance performance in Q2, you know, again, performed well.

You know, you can see the impact of our new facilities are having on our overall enterprise growth rate. And, you know, one of the areas that we were focused on on the recovery front was mammography. And so, we had talked about that lagging at the end of Q1. Excited to see mammography growth this quarter. Mammows up 2.6% year over year and continue to grow north of 6% on a per day basis over Q1. So the one area where we did see a little bit of opportunity and pull through is in MAMO. Again, we focused on advance because they reimbursed at a significant higher rate than their team, but nice to see the recovery within the MAMO book.

Okay. I was curious if there was any costs that you'd care to call out related to the data breach.

Yeah, thanks, Whit. When we think about data breach, we disclosed it in our Q1 to create clarity that the breach was related to a vendor and not our system, and then second, to highlight the fact we've seen minimal impact on the business. We have not seen any costs that require us to say that we think it'll be impacting the business or have a meritorial impact, and we want to continue to be transparent about the journey we're on and make sure that we're answering any of your questions.

And our next question comes from the line of Stephen Baxter from Wells Fargo. Your question, please.

Hi. I just wanted to ask like a follow-up on the cadence. I get that we're on track in terms of the 45% versus 55% allocation, but we think about the first half EBITDA growth needing to improve a good amount in the back half? Should we be thinking that that's primarily going to be driven by better growth or maybe improved margin profile versus what you delivered in the first half of the year and then have a follow-up? Thanks.

Sure. Yeah. I mean, kind of a good starting point is just what tends to happen sequentially, you know, from Q1 all the way through Q4, talked about in a sequential ramp. So from Q1 to Q2, sequentially, our adjusted EBITDA grew nearly 11 of them. And so, you know, those are, and that means they're making some money. The 2025 ones are break-even.

Yeah, thanks, Steven. We are optimistic and excited about the site neutrality proposed rule. You know, certainly it depends on how it is finalized. You know, I think first, importantly, it's always a point of clarification, Lumexa does not rely on how hospital outpatient reimbursement. So the proposal really does improve the relative attractiveness of our IDTS model. I see this as a multi-year catalyst versus something that's going to change our results immediately. What I do think it does is it today reinforces the conversations that are already happening, that hospitals need more imaging capacity, and building that capacity in a high-cost hospital setting is becoming increasingly difficult to justify. And then And our model allows them to expand access, retain patients within their network, participate economically, obviously without relying on that hospital outpatient reimbursement. The first impact will be an increased urgency and activity in our partnership pipeline and then followed over time by new centers. And I just also want to clarify, obviously, our strategy doesn't depend on this rule being finalized, but our underlining.

Thank you. And our next question comes from the line of Pitu Chikering from Deutsche Bank. Your question, please.

Good afternoon, guys. Thanks for taking my questions. I guess focusing on cash flow from Ops this quarter looked pretty good, but I think a lot of it came from increase of accrued expenses. So can you talk about sort of cash flow in the second quarter, how we should be thinking about cash flow from Ops and CapEx in the back half of the year?

Sure. Yeah, we feel real good about what Q2 means for the guidance range we provided of 25% to 30% conversion rate. You know, that translates to something like $60 million to $70 million of free cash flow for the year. It's very much about time, as you pointed out there, to limit business. But the CapEx, the opportunities to grow to some sort of artificial number because we're, you know.

You talked about PET in your script. Can you just remind us how many machines you guys have in your centers and what percent of revenues PET is these days and how we should think about that role in the next 12 months?

And are you taking share from the hospitals, and is it mostly the JVs or fully owned facilities that they are investing in they're taking share out of thank you yes so we are very excited by the growth of pet we have shared that we have eight pet machines and the goal was to get to 11 this year so we already have two open well on our way you know we have you focused on there's so much opportunity with an MRI and CT and that's what the business has prioritized over the year but we do see significant growth opportunity and pet we expect to see you know significant growth rate you know the twenty three point two percent that we highlighted was before the two machines opened in July so you should expect in Q3 that growth rate will continue to go higher usually think about where are we taking share I mean pet is one of it is one of the more heartbreaking backlog backlogs in so many communities that we are entering into where we're hearing that patients they're waiting weeks, if not months, for their PET exams. And when you think about what PET does is it helps diagnose oftentimes life-threatening diseases and show whether or not treatment is progressing, treatment is stopping the progression of the disease, waiting weeks and months is unacceptable. So we are often going into markets where there is a significant backlog, primarily, obviously, patients being seen at hospitals that can't keep up with the demand. And so we expect to see continued growth in both our individual, you know, consolidated market, which Arizona is, and that's where one of the additions came, and then also within our joint ventures, you know, the site in South Carolina is in partnership with Atrium. So exciting growth in pet for certainly the porters to come.

Thank you. And as a reminder, if you have any question at this time, please press star 11 on your telephone. Our next question comes from the line at Matt Mardula from William Blair. Your question, please.

Yeah, hello, this is Matthew on for Ryan Daniels. Thank you so much for taking all the questions. And with advanced imaging being 37.4% of volume a record for the company, I know one of the company's goals is to increase advanced imaging volume, but how should we think about the growth in advanced imaging as a percentage of volume for the rest of the year, and maybe into 2027 or longer term? And then just when I'm kind of thinking and where we're all thinking about the drivers of events imaging, it sounds like it's just a good mix of industry trends and company initiatives, but is it more weighted towards one?

Thanks, Matt. I appreciate the question. So, yes, excited that we were able to have 37.4% of total volume come from an advance. Notably, that's 111 basis point improvement over Q1 2025. We aren't setting a specific target number. You know, we want to grow all parts of our business, but when we have advanced growing more rapidly than routine, obviously the contribution in terms of revenue advances three to four times revenue premium, and then that close three to margin, it's a significant driver of our success and growth. So, you know, and then when you think about what is driving a dam, I mean, certainly you've got the secular drivers that is radiology, you know, aging population, increasing chronic conditions. You have novel treatment paradigms, so there's just an increased demand. But we are doing everything we can to make sure we are capturing our fair share and growing, you know, at a pace, feeding the industry. And so, you know, that starts with how we're positioning our sales team. You know, we've highlighted that we have over 120 representatives in the market selling to our value proposition all day, every day. You know, and then it also goes to how we're structuring our operations to continue to expand capacity. You know, things like FastScan that we're on track to get to two-thirds of our MRI fleet equipped with FastScan, or virtual MRIs that we're continuing to roll out to help make sure that, you know, if techs happen to call out, we're able to continue to run the machine. So continuing to focus on the capacity and then, of course, you know, really targeting where do we open our new de novo sites, all based on where we see supply, demand, mismatch, and the geography and opportunity to serve a population that does not have ample access to advanced imaging. So, certainly it's exciting to be in an industry that's got strong tailwinds, and we're doing everything we can on a sales and operations perspective to position ourselves for outside growth.

Thank you. And our next question comes from the line of Benjamin Rossi from J.P. Morgan. Your question, please.

Hey, good afternoon. Thanks for taking my questions. In context of the broader labor tightness for radiologists and techs, as you've been working to leverage some of those technologies you mentioned to expand capacity, Are you finding this online capacity allows for enough of a backfill to make up for any labor-related capacity limitations? Or are these constraints resulting in backlogs in certain facilities? Just curious on capacity trends during 2Q and how you're managing levels to meet demand.

Yeah, yeah. Something we think about all the time. I think I can go first and throw a number or two out there. You know, yeah, we look at our…

Ben, when you're thinking about the 5%, that includes, obviously, pre-ramp-up costs for de-novos, and so comparing against our revenue, there's expansion upon it and opportunities, too, as revenue continues to grow alongside the expenses. It'll grow at a higher rate.

And then what are we doing to continue to support – obviously, I highlighted the Tech Advancement Academy, continuing to grow our own.

We have the advantage of being an environment that technologists like to work in compared to hospitals, and we are continuing to roll out our virtual MRI solution that allows us to have one tech run multiple machines at one time, which allows us to have increased capacity, especially if we're recruiting a tech or somebody's calling out to take care of their family or take PTO. And then, you know, on the radiologist side, this is why we love kind of our three-pronged model. You know, we have, you know, Conexia, our Telerad group, where we continue to recruit and build out the capacity within that entity, our third-party radiologists that we work with in the markets that we serve, and then our affiliated physician groups. So, between all of that, we're able to come up with the right solutions to support, you know, the continued growth.

Great. And I guess as a follow-up, I wanted to spend a moment there on Conexia. I guess with that broader commentary regarding industry demand and, you know, breed turnaround, could you give us an update on how you're thinking about that segment? And are you finding that your partners are leaning into this segment more, or if it's maybe resonating more with your prospective partners? Thanks.

You know, Ben, often when we're having conversations with our health system partners, the fact that we are bringing an option for the RAD read to support the outpatient strategy is seen as very attractive and a differentiator in our approach. You know, there are certainly health systems that have a preference around RAD read groups, you know, and so if they do, we will support, you know, what is the most right for the partnership in the local market, but the fact that we are able to provide incremental capacity for our outpatient centers is certainly seen as a positive in the joint venture discussion.

Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Caitlin for any further remarks.

Thank you. I want to close by thanking our team members and radiologists whose commitment to our mission and to our patients and communities we serve remains the foundation of everything we do. Thank you for your questions today. We enter the second half of 2026 with Strong Momentum, a growing network of health system partners, and deep confidence in our strategy and our team's ability to execute. We look forward to updating you on our progress in the future. Have a good night.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.