Good day and welcome to the RadNet Incorporated First Quarter 2016 financial results conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mark Stolper, Executive Vice President and Chief Financial Officer of RadNet Incorporated. Please go ahead, sir.

Thank you. Good morning, ladies and gentlemen. And thank you for joining Dr. Howard Berger and me today to discuss RadNet's first quarter 2016 financial results. Before we begin today, we would like to remind everyone of the Safe Harbor statement under the Private Securities Litigation Reform Act of 1995. This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Specifically, statements concerning anticipated future financial and operating performance, RadNet's ability to continue to grow the business by generating patient referrals and contracts with radiology practices, recruiting and retaining technologists, receiving third-party reimbursement for diagnostic imaging services, successfully integrating acquired operations, generating revenue and adjusted EBITDA for the acquired operations as estimated among others, are forward-looking statements within the meaning of the Safe Harbor. Forward-looking statements are based on management's current preliminary expectations and are subject to risks and uncertainties, which may cause RadNet's actual results to differ materially from the statements contained herein. These risks and uncertainties include those risks set forth in RadNet's reports filed with the SEC from time-to-time, including RadNet's Annual Report on Form 10-K for the year ended December 31, 2015 and RadNet’s quarterly report on Form 10-Q to be filed shortly. Undue reliance should not be placed on forward-looking statements, especially guidance on future financial performance, which speaks only as of the date it is made. RadNet undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made or to reflect the occurrence of unanticipated events. And with that, I would like to turn the call over to Dr. Berger, President and Chief Executive Officer of RadNet.

Thank you, Mark. Good morning, everyone. And thank you for joining us today. On today's call, Mark and I plan to provide you with highlights from our first quarter 2016 results, give you more insight into factors which affected this performance and discuss our future strategy. After our prepared remarks, we will open the call to your questions. I would like to thank all of you for your interest in our company and for dedicating a portion of your day to participate in our conference call this morning. Overall, I have many reasons to feel encouraged about this quarter. Our first quarter because of the normal seasonality in our business is typically our slowest quarter from patient volume standpoint. And because the majority of our operating costs are fixed, the first quarters EBITDA and profitability are generally more challenged. Despite this we improved significantly relative to the first quarter of last year. Our revenue increased 19.4% and our EBITDA increased 34.2%. More importantly, our EBITDA margin increased from 11.1% in the first quarter of last year to 12.5% during our first quarter of this year and our operating cash flow increased from the prior year’s quarter by $3.5 million to $21 million. Most notably, we experienced same store procedural growth of 3.9%, which contributed to this margin improvement along with some of the cost saving initiatives I will discuss shortly. This year’s first quarter is the eighth quarter in a row we’ve experience positive same center procedural volume. I’m pleased to report that our results were in line with our internal quarterly budget, keeping us on track to achieve our 2016 guidance, which we released in conjunction with our fourth quarter2015 results. Contributing to these results and to our expected improvement in the coming quarters, our plans would begin to…

Thank you, Howard. I’m now going to briefly review our first quarter 2016 performance and attempt to highlight what I believe to be some material items. I’ll also give some further explanation of certain items in our financial statements as well as provide some insights into some of the metrics that drove our first quarter performance. Lastly I will reaffirm our 2016 financial guidance levels. In my discussion, I will use the term adjusted EBITDA which is a non-GAAP financial measure. The company defines adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, each from continuing operations and excludes losses or gains on the disposal of equipment, other income or loss, loss on debt extinguishments, bargain purchase gains and non-cash equity compensation. Adjusted EBITDA includes equity earnings in unconsolidated operations and subtracts allocations of earnings to non-controlling interest in subsidiaries and is adjusted for non-cash or extraordinary and one-time events taken place during the period. A full quantitative reconciliation of adjusted EBITDA to net income or loss attributable to RadNet Inc. common shareholders is included in our earnings release. With that said, I would now like to review our first quarter 2016 results. For the three months ended March 31, 2016, RadNet reported revenue and adjusted EBITDA of $216.4 million and $27.1 million, respectively. Revenue increased $35.1 million or 19.4% over the prior year same quarter and adjusted EBITDA increased $6.9 million or 34.2% over the prior year same quarter. Much of the increase in revenue is the result of the acquired operations of New York Radiology Partners and Diagnostic Imaging Group while same center procedure volumes increased 3.9% in the quarter For the first quarter of 2016, we performed 1,496,909 total procedures. The procedures were consistent with our multi-modality approach whereby 78% of all the work we did…

Thank you, Mark. In the coming quarters we expect that much of our focus will be on our cost savings initiatives, further integrating the newly acquired New York acquisitions, the establishment of additional of health system partnerships both on the East and West Coast and driving same center growth and profitability. If we complete any additional acquisitions at all this year I expect them to be small tuck in transactions, that will require little capital and minimal distraction with respect to their integration into our existing operations. In addition to the approximately $30 million that we will repay on a mandatory basis of our first lean credit facility and capital leases, I expect that we will further delver our balance sheet through repaying the small balance we have on our revolver and accumulating our cash balance by year-end. The debt capital markets have been improving and we will look in the coming quarters towards positioning ourselves for a successful refinancing transaction of our senior most debt capital. I’m energized by all the initiatives on which my teams are executing, we have had great success in the past with these types of initiatives and our scale and breath of services continue to present these opportunities to us as we’ve continued to grow. As I expected our growth during the remainder of the year will come from same center performance. Profitability will be achieved through the operating leverage we have in our fixed cost structure as well as the cost saving initiatives I discussed earlier. Like we demonstrated in the first quarter as compared with last just first quarter I believe we have the opportunity to have some margin and efficiency as the year progress. I’m looking forward to updating all of you with our progress as the year progresses. Operator, we are now ready for the question-and-answer portion of the call.

[Operator Instructions] And will take our first question from Bill Bonello of Craig-Hallum.

Hey good morning guys, just one to follow up a little bit on some of the common theory around the revenue and cost initiatives. First of all am I correct in interpreting your comments that from the rate increase stand point neither of the capitation rate increases nor the fee for services rate increases had an impact on Q1 results?

Yes Bill, there was a very minimal impact in the first quarter in the West Coast tier from some of our renegotiations but that didn’t get backed until March. So the amount contribution of any of the rate increases we are talking about will all starting more fully implemented and seen in the second quarter and by the third quarter, the East Coast initiatives will be kicking in also.

Perfect and then on the cost side, would you say, you realized much from those initiatives in Q1, or is it most of that also in front of us in the future quarters?

I think we had a nice contribution in the first quarter. We’re still working on several of the initiatives primarily related to the service offering and continued negotiations with some of our suppliers. So, I think that there will be continued enhancement of this primarily because some of these initiatives didn’t get kicked in to the first quarter until February and March themselves.

Okay and then just would you want to take a stab at the state of the combined annual impact from both the revenue and the cost you gave the impact, you expect this year and you gave the annualized on the revenue, but when you insert it back through the cost and it is well, what do you think the sort of total package annualizes out to.

Are you talking about in a 12 month period Bill?

Right.

The full impact would be felt regardless of whether it is second or third quarter. My guess when the full impact of everything is felt, which obviously won’t be fully realized till the early part of 2017. It could be as much as $12 million to $15 million.

Okay and then just last thing along that line, in terms of the rate opportunities. The price opportunities, do you think that the contracts that could be renegotiated either have been renegotiated or could there be additional contracts where you could get better pricing as well?

I think here the answer to that is both. I think many of them have been renegotiated, some of them are being implemented towards the end of the second quarter and many more beginning July 1 but there are others conversations that are currently taking place that could expand that further, we just don’t know at this point what the outcome of those will be or when that will be implemented. I think it is important to emphasize though that, the only reason that we could be having this discussion is because we become such an important part of the delivery system in the markets that we have chosen to operate to and have gone to the scale which allows us to have these conversations with the pay wards, but I am feeling more than ever that the conversations are not driven in the solely by our request for getting better reimbursement, but also better acknowledgement and effort on the part of the pay wards to begin to direct their business away from substantially more costly hospital services.

Great thank you very much.

Thank you, Bill.

Our next question is from Juan Molta with B. Riley & Company.

Hi, Good morning guys. Thanks for the question. The first one is on utilization. Looking back to Q1 same time last year when you guys had capacity constraints relative to demand. In your prepared remarks you are talking about weaker utilization and so two questions on that one is simple just weather impacted your results this year, know that was unusually harsh last year. That’s number one and number two if you could qualify your capacity in terms of facilities and personnel as we go through the balance of the year.

Well the first part of your question one regarding whether we had very favorable weather fortunately in first quarter and I think we can safely assume that winter is over at this point. So we expect you know the results of the increase volumes from a seasonal stand point to be part of our success in driving more revenue in the first quarter but more importantly I think as we get deeper in to the year and the large deductible plans are more burned off by the consumers, we expect to see large increase in volumes along with I think the effort of these consumers to be more aware of better pricing and lower expenses towards away from the hospitals. So, happy as Mark mentioned that April saw a nice increase in our volumes relative to March. March being the highest volumes not that we have seen so far this year and those trends appears to be continuing. So from a volume stand point I am pleased with what we are seeing. As far as the capacity part of our initiatives to address the utilization and internally bring some of that volume into our centers particularly here on the West Coast. We build four centers in 2015 and through the first quarter of 2016 and we’ve now along with some equipment upgrading have addressed the capacity issues predominantly that we have. We still have, little ways to go with unusually high backlogs that we see here on the West Coast. And we are addressing those, which should be to the most part pretty well accomplished by the end of this quarter. So, I don’t expect going into the second half of this year that capacity issues will be a challenge to us, as the - for the rest, almost year and half.

Okay. Thanks for that. Next question is in regards to the pricing relative to last year. Now that we’re operating under the better Medicare reimbursement rates, could you address what you have been seeing, if it’s been impact neutral?

It has been neutral. This is the first time since really 2007, there hasn’t been a substantial decrease in Medicare reimbursement, which as you may well remember was always primarily focused at advanced imaging. And, so with that better up the conversations with the payers little bit more pleasant, if that’s the right work. And I think those that follow Medicare pricing certainly will help us avoid any of the revenue challenges that we’ve had in the past. So, I think in terms of the conversations with most of our contracted parties whether they’re in the captivated or in the area of the health insurance plans have had very positive term. And I think they increasingly see the benefit that ran in place in each of their markets to be and making us a really critical part of the delivery system, for outpatient imaging. If I couple that along with an overwhelming success of our relationship in New Jersey with the bond of this health system. The opportunities for these continued Joint Ventures and using the hospital’s relationships in addition to ours where we Joint Venture with them is providing another dimension of opportunity within RadNet that it is historically not necessarily look towards.

Okay and just a follow up there, if pricing was indeed neutral and we’re seeing same store procedural volumes. Is that fair to assume that your same center fee service revenue was also up low single digits for the quarter and I’ll be in the queue later but is that fair to see?

Yeah, you’ll be in the queue. The same-store revenue was up 3.1%, while procedural volumes were up 3.9%. Forget that, its mix change in from quarter-to-quarterly, you can see depending upon - if there were any reimbursement changes you can see a variation between the two even if pricing is completely neutral.

Got it, and then following up on that. Your EBITDA margin as you mentioned improved relative to last year, but wanted to know if relative to your internal expectations were there - was there anything to highlight regarding operating expenses this quarter that was beyond what you expected, any line item that you can talk about, if there is?

None that jumps out to me as being that significant Juan, I think, the quarter will - when we analyze it, we are seeing some of the benefits of the cost containment measures that we will continue to see throughout the year in a number of the areas that Mark and I outlined. And I think it gives us quite bit of confidence that in subsequent quarters we should see significantly improving margins also.

Okay. And one last one and I’ll hop back in the queue. Assuming that all these initiatives for revenue and cost savings initiatives they combined, will see you meaningful impact early 2017 based on what you mentioned earlier? Is that when we can assume more meaningful acquisitions to resume early 2017, mid 2017?

Well, I think it’s little too early to say whether are not we’ll be back in the market at that point in time. I think, if we accomplish the deleveraging and I think is really our main focus this year and we are able to do a re-finance, successful re-finance. I think, it will put us in a much better position to consider more substance of acquisitions, should they became available to us. Our strategy here is never to go out knocking on door. So the opportunities come our way and we respond to them appropriately as they are made available. We don’t do every acquisition that is presented to us. And particularly for this year we’re focused on the ability to pay down debt and deleverage through better margins. Once we accomplish that then I think we can look at anything in the future that continues to basically enhance our strategy in the markets that we’re currently operating in.

Okay. Thank you very much.

[Operator Instructions] And will take the next question from Mitra Ramgopal with Sidoti.

Yes. Hi, good morning, just a couple of questions. I was just wondering if you could give a little more color in terms of the joint venture you announced and the potential you see on the West Coast and also on the acquisition side if you can just may be give us an update regarding the potential pipeline and in pricing environments?

Well, I’ll start with the last question because it’s kind of a follow up from the one prior, but there really is nothing that we are looking at seriously in the pipeline right now. It doesn’t mean if something came our way we wouldn’t consider it, but it’s not really a focus of company either from a pure financial standpoint or for the operating team. As far as the joint ventures are concerned, the Dignity Health system here is probably the largest one in California and they are very pre-dominant more in Northern California, perhaps than they are in Southern California. But it is a very big Health system that - I think this is a good introduction for us to jump start that opportunity in what is a relatively small effort on both of our parts to get comfortable with each other, if you will. There is a couple of other Health systems here that we are having active discussions with the about joint venture opportunities throughout the state. So we see the model that has been so successful for us on the East Coast now starting to take root here as more and more of the Health Systems consolidate here in California. And they need to have a broader delivery system for imaging as well as we’re being a core competency of theirs is something that they more seriously consider. So, I think that we’ll be able to talk more about these opportunities as the year progresses.

Okay. Thank again.

And that appears there are no further questions at this time. Dr. Berger, I’d like to turn the conference back to you for any additional remarks.

Okay, thank you. Again, I would like to take the opportunity to thank all of our shareholders for their continued support and the employees of RadNet for their dedication and hard work. The management will continue its endeavor to be a market leader that provides great services with an appropriate return on investment for all stakeholders. Thank you for your time today and I look forward to our next call.

This concludes today's call. Thank you for your participation. You may now disconnect.