Earnings Call Transcript - LMRI Q1 2026

Operator, Operator

Thank you for standing by, and welcome to Lumexa Imaging's First Quarter 2026 Earnings Call. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Sue Dooley from Lumexa Investor Relations. Please go ahead.

Sue Dooley, Head of Investor Relations

Thank you, and hello, everyone. We appreciate you joining us today. Leading today's call are our Chief Executive Officer, Caitlin Zulla; and Tony Martin, our CFO. Before we begin, I want to note that we'll be discussing non-GAAP financial measures that we consider helpful in evaluating Lumexa's performance. You can find details of how these relate to our GAAP measures, along with reconciliations in the press release available on our website. We'll also be making forward-looking statements based on our current expectations and assumptions, which are subject to risks and uncertainties, including factors listed in our press release and in our various SEC filings. Actual results could differ materially, and we assume no obligation to update these forward-looking statements. With that, I will turn the call over to Caitlin. Caitlin, please go ahead.

Caitlin Zulla, Chief Executive Officer

Thanks, Sue. Thank you all for joining us today. In Q1, we delivered several meaningful achievements to kick off the year executing on our strategic priorities, which include driving strong same-center growth with an expanding mix of advanced modalities, targeting a record number of de novo openings, ensuring the successful ramp of newly opened centers, accelerating high-impact strategic service lines and expanding our geographic footprint. Here are a few highlights of our announcement tonight. Our Q1 results came in line with our expectations after the seasonal and weather dynamics we discussed in our Q4 call. Q1 volumes ramped throughout March, and we recovered our momentum. Specifically, we drove strong same-center growth and strategic service lines are expanding among a healthy mix of advanced modalities. In Q1, advanced modalities grew 7% year-over-year with PET growing at 23.1% year-over-year and MRI growing at 8.2% year-over-year. Rollout of our AI-powered breast arterial calcification solution continues with plans for expansion into new markets and strong continued patient uptake. We are actively ramping de novo centers and our 2024 and 2025 cohorts are tracking in line with our expectations and advancing our plans towards long-term growth and profit expansion. And in some exciting news tonight, we completed two acquisitions and opened two de novos this year, and we are well on our way to achieving our stated goal of opening eight to ten de novos to fuel future growth. Meaningfully, one of the acquisitions was an IDTF site in Pennsylvania, the first site in our new joint venture with UPMC, and we are actively advancing multiple site location plans with this important partner. And finally, we're excited to welcome two exceptional leaders to Lumexa, each bringing the depth of experience and vision that will help drive our next chapter of growth and results. I'll go into some more detail in just a moment. At Lumexa, we are addressing a large market opportunity and deploying a disciplined growth algorithm. We are confident we are well positioned to execute our growth plans while driving better outcomes across the imaging landscape. I would like to take a moment to speak about our experience in the market as we meet with health systems and the providers who are so important to us and as we continue with our commercial efforts to drive growth in acuity mix. Our value proposition resonates strongly with patients, providers and payers, reflected in Net Promoter Scores that consistently exceed 90. We deliver high-quality imaging in more convenient settings on a more timely basis and at a meaningfully lower cost than hospital outpatient departments, helping health systems solve important operational challenges and achieve their patient care and market expansion goals. As we pursue our priorities, it is clear the market is moving towards us. We are benefiting from durable long-term tailwinds: aging populations, new treatment paradigms requiring advanced imaging, rising preventative screening rates and an ongoing shift from inpatient to outpatient care in a fragmented capacity-constrained industry. In our conversations with multiple potential health system partners, they faced struggles with imaging bottlenecks that constrain operational throughput and delay patient access. This underscores the strong need for outpatient capacity and the growing demand for a partner who can deliver speed, access and capital-efficient expansion. At the same time, many systems are proactively preparing for potential site neutrality by accelerating the shift towards lower-cost outpatient settings, which we believe further reinforces the relevance of our model. And they tell us they like our nimble best-of-breed approach that ensures we will always be able to leverage innovation to drive efficiency and the best patient experience and outcomes. As I mentioned a moment ago, reflecting the sizable growth opportunity we are pursuing at Lumexa, we are delighted to welcome two seasoned leaders. First, Kyle Lynch, our new Chief Growth Officer, brings deep experience in building high-performing business development organizations, executing complex transactions and implementing growth strategies that translate into durable financial performance. And another proven industry veteran, Rikki Mondo, has joined Lumexa as Chief Enterprise Operations Officer. Rikki has a strong track record of leading and scaling national platforms to drive performance, integration and operational excellence. As we continue to grow, her focus on enterprise-wide alignment will be critical to delivering for our patients, partners and teams. Welcome, Kyle and Rikki. We are thrilled to have you join our team to help drive disciplined, efficient and sustainable growth through joint ventures, de novo development, acquisitions and commercial growth initiatives. And now a moment on the key elements of our growth algorithm. Our commercial team is laser-focused on driving same-center growth. On the heels of a successful New Jersey launch, we expanded our AI-powered breast arterial calcification program to include New York. In both markets, we are seeing strong acceptance for this cash add-on assessment for cardiac health in women. Our team continued their focus on driving advanced imaging. PET and MRI are strategic areas of focus for us. Additional seasonal campaigns targeted gastroenterologists and ENT specialists in time for the start of allergy season. These contribute to our growth and increase in acuity mix in Q1. We are on track to expand our geographic footprint through new de novo openings, joint venture partnerships and carefully selected M&A. Tonight's announcement showcases the opening of four new Lumexa imaging centers, including two small but strategic tuck-in acquisitions, demonstrating the strength of our JV partnerships. The first location is in Pennsylvania with UPMC and the second location is in North Carolina with Advocate Health. The acquired facilities will ramp over time as we complete payer enrollment requirements and integrate them into our operating platform. The two new de novos are in South Carolina and Florida, expanding our footprint in attractive MSAs and advancing us towards our goal to open eight to ten de novos annually and deliver profitable growth. When it comes to M&A, tuck-in acquisitions of new centers present a lot of opportunity to bring our expertise to a fragmented market and accelerate our presence across targeted geographies. We are continuously evaluating accretive opportunities with a disciplined and proven approach. On the JV front, in addition to excitement around our ramping UPMC partnership, we are cultivating a robust pipeline of potential health system partners with multiple ongoing conversations at various stages. In my conversations with health system leaders, it is clear to me that our approach to joint ventures is a key differentiator for our company. Health systems are seeking ways to participate in the rapid site-of-care shift to outpatient imaging and grow their outpatient ambulatory footprint. Our JV model provides a highly effective entry point through clinical, commercial and operational excellence we demonstrate, particularly in de novo development. Lumexa Imaging is well positioned to help systems execute against these ambitions while they remain focused on their broader enterprise priorities. In return, these partnerships accelerate our presence in any given market. Finally, a note on our ongoing efforts to scale our company efficiently. We are constantly targeting efficiency gains to meet growing outpatient imaging volume and leverage our installed base of centers and equipment. Our FastScan integration continued rolling out across our centers, and we are targeting two-thirds adoption by the end of 2026. We are also successfully leveraging a virtual cockpit for remote MRI scanning, which allows us to minimize the impact of machine downtime, flex our staffing schedules and extend our hours to serve our patients. And we continue to advance our strategy to leverage technology and AI across support services functions to drive scale as we continue to grow. As I conclude my remarks, I want to briefly note that one of our vendors recently experienced a cybersecurity incident that involved a breach of Lumexa data. Unfortunately, these types of events have become increasingly common across industries. Our patients are always our top priority, and we are fully committed to doing right by them. We have responded swiftly and are taking the steps necessary to address the situation, protect our patients and comply with applicable laws and regulations. Importantly, we have reviewed the situation and its effects, and we do not believe it has a material impact on our business or financial results. In the spirit of transparency, we wanted to make you aware. Given the nature of the event, we cannot say more at this time and we will, of course, provide updates in the future as we have them. Wrapping up, I'm pleased with our Q1 results. We move forward into Q2 with confidence fueled by strong execution and a sense that at Lumexa Imaging, we are in the early innings of capitalizing on the opportunities ahead of us. We are inspired by our mission to extend access to high-quality imaging through elevated compassionate care, improving lives and advancing health care across the country. Before turning the call over to Tony to review our first quarter in more detail, I want to say a huge thank you to our dedicated team members and radiologists. With that, Tony, please continue.

Tony Martin, Chief Financial Officer

Thank you, Caitlin, and thank you all for joining us today. On today's call, I'll review the financial results and speak to some key drivers of our performance for the quarter. I'll then provide our outlook for full year 2026. To supplement my review of our GAAP financials on today's call, I will cite some system-wide metrics to help you better understand our overall performance and the breadth of our business. System-wide metrics include all centers that we operate, including those we own as well as the centers we operate in our eight joint ventures with health systems. Turning to our first quarter financials. Consolidated revenues came in at $253 million, an increase of 3% compared to the same period last year. System-wide revenue growth, which includes all sites we operate, was 4% in the quarter, about two-thirds from volume and one-third coming from rate, a proportion consistent with how we model the company. Revenue per unit, which includes both scan and read revenue, also increased due to advanced modalities being a higher proportion of our business and some continuing benefit due to modest increases in contracted rates with payers who appreciate our lower price point compared to hospital-based services. We experienced strong system-wide performance across all our outpatient sites, both wholly owned and in JVs, and we continue to be pleased with the core performance of the business. Advanced modality volumes, which reimburse three to four times higher than routine modalities, grew 7% versus prior year on a consolidated and system-wide basis. As we discussed on our Q4 call, our first quarter volumes were shaped by a combination of factors: strong Q4 seasonal performance that created enhanced seasonality coming into Q1 and weather-related disruptions in Q1 that temporarily impacted patient volumes at a number of our sites. Overall, these factors ended up impacting Q1 EBITDA by about $4 million as anticipated. Advanced modalities returned to the fastest and grew 7% for the quarter with strong momentum heading into Q2. Overall, system-wide volume growth was 2.5%, with the strength of advanced being offset by routine scans, which were essentially flat with mammography taking longer to rebound after the storms. While routine scans impact our earnings less than advanced, we're glad to see them ramping back to further strengthen our confidence around our annual performance. In addition, our payer mix follows a predictable seasonal pattern. Q4 consistently reflects the strength of our commercial book as patients seek care ahead of deductible resets and Q1 naturally sees a relative shift toward our government book as that commercial activity normalizes. Like many other health care service providers, we experienced a bit more seasonality of payer mix in Q1 2026 than we did in Q1 2025, with a bit of decrease in commercial as a percentage of total system-wide revenues. Now to provide some additional detail on our consolidated revenues. Outpatient net patient service revenues at $138 million grew 4% as we delivered same-site growth and new de novos from the cohorts of 2024 and 2025 continue to ramp. Professional fee revenues, our second operating segment, were $59 million, reflecting growth of 1%. Finally, management fee and other revenues grew 5% and were $55 million. Within that management fee line, roughly $21 million represents management fees we earn from operating the sites in our health system JVs. This is usually computed as a percentage of site revenues. 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. So when you're modeling us, it's important to understand those two components in terms of impact to margin. G&A for the quarter was $20 million, up $3 million from first quarter of 2025. This reflects $7 million higher expenses for combined public company costs and stock-based compensation. An increase that was partially offset by about $4 million in reductions in some transaction-related costs and timing differences in G&A expense in Q1 versus later quarters. The public company costs, which are in line with the guidance we gave, were $1.2 million in the quarter and are ramping to the full year impact of $7 million. The stock-based compensation increase from $6 million in Q1 2025 to $12 million in Q1 2026 is a function of the resetting of legacy equity comp plans as part of our IPO in December. This takes expected stock-based comp for the full year to around $50 million. Half of that $50 million is related to historic M&A and will be fully amortized by the end of 2026. So looking ahead, we expect ongoing stock-based compensation of approximately $20 million to $28 million per year, starting in 2027. Quarterly amounts may vary depending on timing of vesting. Below operating expenses, we include our equity and earnings of unconsolidated affiliates. This represents our pro rata ownership share of the net income of our JV sites which at $15 million was flat year-over-year, consistent with the overall performance of the business. Below the operating line, interest expense was $16 million in Q1. This new run rate is $14 million less than Q1 2025, reflecting our use of IPO proceeds to pay down debt, freeing up more than $50 million in cash annually that we plan to invest in growth. Pretax income was $3 million for Q1 2026 compared to a pretax loss of $4 million in Q1 2025. We're now a cash taxpayer, and so after a tax provision of $1 million in the quarter, net income was $2 million in Q1 2026 compared to a net loss of $8 million in the prior year period. Our GAAP EPS was $0.02 per share in Q1 and adjusted earnings per share was $0.18. And now on to adjusted EBITDA, which we view as an important measure of our company-wide operating performance and which demonstrates the strength of our financial model. Our adjusted EBITDA benefits from contributions from our pro rata ownership share of EBITDA of all of our sites, both the ones we own 100% and those in health system JVs. While revenue remained strong in the quarter and particularly from advanced modalities, adjusted EBITDA came in at $51.2 million, flat compared to $51.1 million a year ago, but in line with our expectations. This reflected the impact of seasonality and weather-related volume softness against a partially fixed cost structure, including staffing and facility costs that don't flex proportionately with short-term volume changes, especially during weather disruptions when scan volumes per day can be suppressed. Despite these site level factors, plus the $1.2 million step-up in public company costs, our adjusted EBITDA margin was 20.3% in Q1 2026 compared to 20.8% in Q1 2025. As with earnings, adjusted EBITDA margin tends to be lowest early in the year and ramps as the year progresses. Before moving on to cash flows, I want to spend a moment on our joint ventures and how they show up in our numbers. We view our JV structures as simple, capital-efficient models to scale our business while generating significant cash flows for us and our health system partners and an amount that tracks closely with our income from these JV sites. JVs extend our brand, support our mission to deliver exceptional patient care and expand access to high-quality imaging. Details of JV financial performance are included in our quarterly financial statement disclosures. But briefly, JV revenues and expenses are not included in our GAAP results due to our minority ownership position. Our pro rata share of JV EBITDA is included in our adjusted EBITDA and reflects the operating performance of the assets we own and aligns our EBITDA with the true scale of our business. As an example, if we own 49% of the JV generating $20 million of EBITDA, the system-wide EBITDA contribution for us from that JV would be $9.8 million. Our JVs also distribute cash to us. Those distributions flow into free cash flow as distributions from unconsolidated affiliates, which is a discrete line item on our cash flows from operating activities. These cash receipts are net of any JV CapEx, so we don't specifically describe JV CapEx in our discussion of cash flows. Debt of these JVs is not on our balance sheet and consists of equipment lease financing totaling $82 million. Our business generates healthy operating cash flow. The first quarter is traditionally the lowest cash flow quarter of the year due to normal seasonal swings in working capital as well as the seasonality of volumes and earnings. So like our earnings, cash flows generally ramp by quarter. Cash flows from operating activities were $3 million in Q1 2026. This represents a $17 million improvement over Q1 2025, largely driven by lower interest payments from refinancing our debt and our IPO last December. Free cash flow, which we define as cash flows from operating activities less CapEx, was negative $2 million for Q1 2026, a $13 million improvement over Q1 2025. And now on to CapEx and how we think about it. As we stated at the time of our IPO, in 2026 and 2027, we see a sizable opportunity to accelerate our growth plans in our fragmented industry to earn meaningful returns by investing in de novos, new and upgraded equipment at our existing sites and through targeted M&A. Our $5 million capital spend in Q1 2026 reflects our plans to grow the business in a disciplined manner. We additionally financed capital expenditures under lease arrangements, which adds to our capital efficiency. In general, as we invest to grow, we currently expect free cash flow in 2026 to operate in the neighborhood of 25% to 30% of our adjusted EBITDA on a full-year basis, with the belief that it will trend higher with scale and once spending on our growth initiatives and infrastructure to scale our company returns to more normal levels. There can be variation of CapEx across the quarters, of course, due to working capital timing or other strategic uses of capital that we identify from time to time. To answer a question we sometimes receive, our JVs make capital expenditures on their own. Our cash flows from operating activities are already fully reflective of everything our JVs do. JV sites generate operating cash flows, make capital expenditures and fund equipment lease payments, and then they distribute our pro rata share of the remaining cash to us. This is what I referred to as distributions from unconsolidated affiliates. It's reflected as a single line item in our cash flows from operating activities. Wrapping up and moving on to our guidance. We've now moved through the seasonal and weather-related impacts of Q1 and with healthy growth in advanced modalities, strong demand, improving capacity and contributions from ramping JVs and de novos, we're well positioned to deliver on our full-year commitments. On the strength of these drivers, we continue to expect revenue to be in the range of $1.045 billion to $1.097 billion, adjusted EBITDA to be in the range of $234 million to $242 million, which includes approximately $7 million of public company costs that were not incurred in 2025. At the midpoint, the adjusted EBITDA growth rate, excluding the addition of these costs being incurred in our first full year of operations as a public company, would be 7%. And we expect adjusted EPS to be between $0.71 and $0.77 per share. For some additional color, we expect a gradual sequential ramp in adjusted EBITDA throughout the remaining three quarters with the majority of full-year adjusted EBITDA coming in the back half of the year as we drive same-center growth, geographic expansion, expand strategic service lines and deliver efficiencies across our company. As we look ahead to Q2 and continue executing on our goals, we're energized by the opportunities in front of us. So with that, let's turn to your questions. Operator, would you please open the call?

Operator, Operator

Certainly, and our first question for today comes from the line of Brian Tanquilut from Jefferies.

Brian Tanquilut, Analyst, Jefferies

Maybe just on the UPMC transaction first. Just curious, is this how we should be thinking about it where you could accelerate the ramp within the UPMC joint venture as you do start-up acquisitions here to build the scale with that partnership?

Caitlin Zulla, Chief Executive Officer

Yes. Thank you so much, Brian. We are exceptionally excited to start off the UPMC joint venture with the acquisition of a facility and very much it is something that will continue to drive the growth of our partnership together. We are actively advancing site planning with UPMC and expect to be able to announce at least a few de novos with them this year. As a reminder, the JV partnership with UPMC was officially in about August, September of last year. And so typically getting a de novo out of the ground is easier. So we're excited to already have an acquisition under our belt and then to be able to continue to support it with de novos this year and into next year as well.

Brian Tanquilut, Analyst, Jefferies

Got it. And then maybe, Tony, just to your comments towards the end of your prepared remarks about the gradual ramp in EBITDA over the course of the year. Just curious if you can share with us how we should be thinking about the magnitude of that Q4 seasonal lift? And then what the drivers would be for margins and how we should be thinking about the margin progression from Q1 into all the way into Q4?

Tony Martin, Chief Financial Officer

Yes, sure. First of all, remain confident in the full-year guidance unchanged. But in terms of the enhanced seasonality that we talked about a few weeks ago, the way we look at that is that it will continue to ramp in a steady way like it does every year, but it's starting from a bit lower point in Q1. So right now, we expect about 55% of our adjusted EBITDA to be in the second half of the year, not meaningfully different than before, maybe a 100-basis-point shift from our original expectations on how that would be spread. But that's how we look at the seasonality. We're really confident in that because of all the strength we have, particularly in our advanced modalities heading into Q2. And of course, it's natural for the results to climb by quarter after the annual deductible reset kind of starts everything at the beginning of the year. And with all the de novos we have — we've got 15 that we've opened just since late 2024 — all those ramping through the year. That will add to why it's allocated that way through the year.

Operator, Operator

And our next question comes from the line from Benjamin Rossi from JPMorgan.

Benjamin Rossi, Analyst, JPMorgan

So the combined $4 million EBITDA impact during Q1 from that volume pull-forward dynamic and weather-related drag. In your framing of this year's seasonality impact as being enhanced, can you provide any framing on how this year's weather impact or combined impact compares to previous years? And then is the magnitude of drag relative to Q1 earnings larger than normal?

Tony Martin, Chief Financial Officer

Weather happens, and it's part of the business, so it's difficult to predict with any precision. But yes, it was a more meaningful factor for us this year than usual. There were four separate weather events that were a pretty big deal in a number of markets. We don't consider this quite a normal year, but it is something normal to have to manage through when it happens. So that is part of the enhanced seasonality we've seen.

Benjamin Rossi, Analyst, JPMorgan

Got it. And I suppose just as a follow-up on the full year guide for some of your volume recapture assumptions that have happened from Q2 through Q4 to make up some of the lost Q1 volume? Or otherwise, what does your guide assume for the portion of those volumes that have already been rebooked versus those that are still assumed to be maybe recaptured later in the year?

Tony Martin, Chief Financial Officer

We've captured a lot of the advance already. That was the fastest to come back. And of course, we like that because that's the higher reimbursement, higher-margin business and a bigger part of our book all the time. So that came back first. Some of the routines came back a little more slowly and we will be ramping into Q2 and Q3. But predominantly, what drives the ramp is just the resetting of deductibles at the beginning of the year and how that plays out over the year for many health care service providers. There's a natural ramping to the business heading toward the biggest performance being in Q4. So that happens steadily through the year. And of course, the de novos — there are so many of them now, 15 that are ramping very, very well. All of them are at or above the expectations we had for them and only gaining momentum quarter by quarter throughout 2026. So that's another reason we have a lot of confidence in where we're headed as the year unfolds.

Operator, Operator

And our next question comes from the line of Matt Mardula from William Blair.

Matthew Mardula, Analyst, William Blair

This is Matthew Mardula on for Ryan Daniels. Can we get an update on the percentage of MRI machines that currently have the FastScan software technology? And then overall, how are you expecting to add the FastScan software to MRI machines? Is it more second-half weighted? Any color on that? And then for the machines that have had the FastScan software implemented this quarter, how has the initial increase in capacity and volume been compared to your internal expectations?

Caitlin Zulla, Chief Executive Officer

Thank you, Matt. When we think about advanced growth, I'm really proud of the strength that we demonstrated in Q1, both system-wide and consolidated at 7%. We called out PET over 23% year-over-year growth and MRI at 8.2%. A significant driver of that strong MRI growth is FastScan. We continue to install FastScan across our fleet, either through upgrades or system enhancements. We started the year at 51% penetration and said we'd get to just north of 66% to 67% of our MRI fleet with FastScan before the end of the year — and we are well on track to achieve that. For centers with FastScan, they're performing really well. Our team is continuing to think through scheduling efficiencies. A benchmark that gives you a sense of the strength is that advanced as a percentage of our total volume this quarter was 37.4% in Q1, a 160-basis-point improvement over Q1 2025, and that's higher than every quarter last year. So it's something we're very much committed to growing.

Operator, Operator

And our next question comes from the line of John Ransom. Please go ahead with your question.

John Ransom, Analyst

Just want to make sure we nail down the CapEx and cash flow puzzle. So let's ignore the capital lease accounting. What are we thinking about in terms of end-of-year debt, PP&E and cash flow either financed or not financed by capital leases?

Tony Martin, Chief Financial Officer

CapEx, we think, will be about $5 million to $7 million per quarter, totaling somewhere in the mid- to upper-20s on a full-year basis. And as you said, we do finance some additionally, so there's no cash out the door for that portion. It's probably about a similar amount to what I just described, but no cash out for that portion.

John Ransom, Analyst

Okay. And then my second question: the four centers you announced today, was that already part of the UPMC deal as your longer-term plan, or were these new centers as part of all that?

Caitlin Zulla, Chief Executive Officer

Thanks so much, John. The four centers: two were single-site acquisitions, one with UPMC and one with Advocate Health, and two are de novos, both wholly owned — one in South Carolina and one in Niceville, Florida. I visited the Niceville facility; we opened it last week. It's a beautiful facility with an incredible team, and we already have a lot of community interest and a really strong schedule. These de novos are on track as part of our plan to get to eight to ten before the end of the year. For UPMC, we started with an acquisition and then the UPMC de novos will be part of that eight-to-ten goal.

Operator, Operator

And our next question comes from the line of Andrew Mok from Barclays.

Andrew Mok, Analyst, Barclays

Your operating cash flow was about $3 million this quarter and free cash flow was negative $2 million. Your guidance implies quarterly free cash flow will accelerate to north of $20 million. So can you walk us through the components and drivers of that accelerating free cash flow?

Tony Martin, Chief Financial Officer

Sure. The start of the year is always the lowest point for cash flow for similar reasons as the business as a whole: volumes and earnings. In addition, working capital tends to be negative toward the early part of the year. We have disproportionate funding of bonus and benefit plans in the first half of the year. So Q1 and Q2 are traditionally slower cash flow quarters, and we expect that to be true this year. It really picks up in the second half of the year when we don't have that working capital timing issue. And of course, the underlying business is ramping as well. Those are the main drivers of accelerating free cash flow into the back half of the year.

Andrew Mok, Analyst, Barclays

Got it. So it's going to be second-half weighted. On the net revenue per scan: on a same-store basis, net revenue per scan was up 2.3% on a consolidated basis, but it was only up 1% on a system-wide basis. It looks like unconsolidated net revenue per scan was dilutive and could have even been negative in the quarter. Can you help us understand what's driving the weakness in unconsolidated revenue per scan, especially given the positive mix effect of advanced volume growth?

Tony Martin, Chief Financial Officer

Advanced is a hugely successful driver of our business in both JV structures and consolidated structures, particularly in the JV structures. We tend to focus mostly on system-wide metrics because the business can behave differently on the consolidated book versus JVs, and that doesn't necessarily mean a lot for the business overall. That said, our consolidated book has a little bit more impact from other modalities; it's not quite as heavily advanced. So depending on what those modalities are doing, routine being slow in that book can make consolidated revenue per scan behave differently. That's the phenomenon we saw in a quarter like this one where routine was a little slower to come back than advanced modalities.

Operator, Operator

And our next question comes from Whit Mam from Leerink Partners.

Whit Mam, Analyst, Leerink Partners

Any way to size the two acquisitions you completed in the quarter? And then any reason they're larger or smaller than the average center?

Caitlin Zulla, Chief Executive Officer

Typical-size acquisitions. When we think about in-year contribution, a big focus for us right now is getting them in-network and doing all the credentialing and integration work. Quite candidly, we buy sites that require optimization. We buy them because of their potential, not because they're optimized already. As we get the site in-network, we need to get the right equipment installed and drive patient volumes to Lumexa standard. These facilities will ramp over the year, but their contribution in 2026 will be fairly minimal. I'm excited because they demonstrate the power of our model and really set us up for 2027 and beyond.

Operator, Operator

Our next question is a follow-up from the line of Stephen Baxter from Wells Fargo.

Stephen Baxter, Analyst, Wells Fargo

I wanted to ask about the $4 million estimate of the transient items in the quarter. Was there potentially a same-store revenue drag or decremental margin you can give us as modeling assumptions around that $4 million? General color on how you developed the $4 million estimate would be helpful.

Tony Martin, Chief Financial Officer

That's our estimate of how much enhanced seasonality affected us, a big part of that being the storms, but also inherent seasonality in the business. We got back quite a lot of that volume in the quarter, and from a revenue standpoint it ended up being strong, particularly with advance. If we hadn't had the storms, advance would have been even more outstanding for us. So from a revenue standpoint, we got a lot of that back, but there is some margin drag, as you can see from the flat EBITDA. We have a somewhat fixed cost base at the site — rent, equipment payments — and we pay technologists by the shift rather than by the scan, so there's a fixed component that benefits us as volumes surge, but hurts us a bit when scans per day are suppressed. That did affect margin a little bit.

Stephen Baxter, Analyst, Wells Fargo

Okay. And then if we were to add back that $4 million, it would suggest that the EBITDA growth rate in the quarter was around 8%. It implies the rest of the year has to grow year-over-year about 4%. It looks like you're well on track, but the implied second-quarter guidance might put you on track for flatter year-over-year EBITDA again as we move into the second quarter. Help us understand the transition and the growth rate and whether there's anything to consider in terms of ramping costs, whether it's public company costs or other things to consider.

Tony Martin, Chief Financial Officer

You're correct in terms of what that means for our outlook for Q2 and beyond. We see some continuation of seasonality. Q1 figures to be 21.5% of our annual adjusted EBITDA at the midpoint, and Q2 is about 23.5% of our year. So it's a steady climb but not a huge one. We are well positioned to do that. Q3 and Q4 as the business naturally grows and as the JVs and de novos ramp, you'll see steady increases with Q4 being the culmination.

Operator, Operator

And our final question for today comes from the line of Kieran Ryan from Deutsche Bank.

Kieran Ryan, Analyst, Deutsche Bank

I was wondering if you could expand a little bit on the commentary you provided on payer mix as far as what you saw in the quarter. I understand there's a seasonal component, but was there anything that was out of the ordinary as far as impact from the health insurance exchange or anything else?

Caitlin Zulla, Chief Executive Officer

Kieran, thank you. We're not seeing anything in the reimbursement or payer landscape that is a meaningful change. The dynamics we saw in Q1 were consistent with normal seasonality, particularly around deductible resets and a temporary shift in payer mix from commercial to Medicare. The exchanges continue to be a small part of our business, and we're not seeing anything significant there. More broadly, we continue to benefit from being the lower-cost side of care relative to hospital outpatient departments, and we remain attractive to payers, patients and health systems. From a reimbursement and payer perspective, we feel really good about the stability and positioning of the business.

Kieran Ryan, Analyst, Deutsche Bank

Great. And then just one follow-up: PET growth was 23%. That represents a nice acceleration versus where 2025 full year came in. Can you catch us up on any trends in the quarter there as far as volume and utilization across your fleet, what you're seeing on referrals and demand? Any pressure points around radiotracers or anything like that?

Caitlin Zulla, Chief Executive Officer

We are very excited by the significant year-over-year growth in PET of 23% in Q1. We've discussed the opportunity to grow PET; we are still on the small end and are on track to continue expanding our PET capacity. We're adding machines on track for the additions in 2026 and are working across the company on strategies to further accelerate PET growth in 2026 and beyond, whether through new marketing strategies, new applications, isotopes and tracers, and additional new sites. We did not highlight any material tracer supply issues on the call; our focus is on expanding capacity and demand.

Operator, Operator

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.

Caitlin Zulla, Chief Executive Officer

I want to close by thanking our team members and our radiologists whose commitment to our mission and the patients and communities we serve remains the foundation of everything we do. Thank you for your questions today. We enter Q2 with strong momentum, a clear strategy and deep confidence in our ability to execute, and we look forward to updating you on our progress ahead. Hope you all have a good night.

Operator, Operator

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