RadNet Touches New 52-Week High - Analyst Blog

Shares of RadNet Inc. RDNT hit a new 52-week high of $6.74 in mid-day trading on May 9, eventually closing at $6.48. In fact, shares of this CA-based outpatient diagnostic imaging services provider have been gaining momentum ever since it reported its 2014-first quarter financial results on March 9.

Year to date, the company's shares have recorded an impressive return of 300.0%. The company recorded an earnings surprise in 3 of its last 4 quarters, with an average beat of 133.96%.

First Quarter Beat

In the 2014-first quarter, RadNet posted reported adjusted loss per share (excluding severance costs, loss of disposal and amortization of deferred financing fees, and discount on issuance of debt) of 2 cents in the quarter, which was narrower than the Zacks Consensus Estimate of a loss of 3 cents by 33.33% but was flat compared with the year-ago level.

The company's first-quarter adjusted EBITDA increased 8.2% to $27.7 million, despite bad weather conditions and Medicare cuts negatively impacting EBITDA by $5 to $7 million. EBITDA margin improved by 160 basis points in the reported quarter.

In the first quarter, RadNet's accounts payable and accrued expenses decreased 17.6% year over year to $90.5 million.

On a same-center revenue basis, RadNet's West Coast operations increased 4.2% from the first quarter of 2013. The strong procedural volumes in the West Coast were a result of more than 1.4 million additional patients who entered the California healthcare delivery system under the Affordable Care Act.

Meanwhile, RadNet has increased its free cash flow guidance by $4 million, both at the low-end and at the high-end of the guidance range. This reflects optimism on account of the lower interest expense on the company's second lien term loan as well as the increase in its adjusted EBITDA for 2014.

Other Stocks to Consider

RadNet currently carries a Zacks Rank #2 (Buy). Some stocks that warrant a look within the broader medical sector are ICON Public Ltd. ICLR, Gilead Sciences Inc. GILD and ANI Pharmaceuticals, Inc. ANIP. All these stocks sport a Zacks Rank #1 (Strong Buy).