Obamacare might be a headache for some businesses, but it’s been a shot in the arm for RadNet Inc.
The Westwood firm operates medical imaging centers, and those centers have been a lot busier lately as more Californians take advantage of their new health care benefits.
The company’s stock rose 12 percent to $8.86 for the week ended Oct. 22, making it one of the biggest gainers on the LABJ Stock Index. (See page 80.) It’s been a fixture on the gainers list of late, as RadNet shares have spiked 260 percent over the past year.
The stock has been buoyed by rising earnings and the fact that more Californians have insurance and are heading to the doctor’s office, said Brian Tanquilut, equity analyst in the Nashville office of New York investment firm Jefferies Group.
“I think they’ve been an unexpected beneficiary of Obamacare and the Affordable Care Act,” he said. “Good or bad, a lot of the people who have gotten new health insurance coverage are actually using their health care.”
He said the Affordable Care Act has been particularly helpful for RadNet because most of the company’s operations are in California, and the state saw a larger-than-average increase in the number of newly insured residents through the act.
RadNet has a network of 251 outpatient imaging centers throughout the country, providing services such as MRIs, mammograms, X-rays and CT scans.
Mark Stolper, RadNet’s executive vice president and chief financial officer, said patient volume has been up particularly on the West Coast, where almost half of the company’s facilities are located.
And more patients mean more money. Medical imaging centers have high fixed costs – all those MRI and CT scanners don’t come cheap. The more patients visit each clinic, the more those costs get spread out, he said.
“Additional patients that go through the existing fixed cost structure, a lot of that falls to the bottom line in terms of cash flow and earnings,” Stolper said. “So, since earlier this year, we’ve been experiencing strong volumes everywhere, but in particular here on the West Coast.”
Stolper said the company is now focusing on continuing to do what it calls “tuck-in acquisitions” of smaller imaging operators to help increase the density of its existing network – making it more convenient for patients and, thus, more appealing to large medical groups, which account for about 20 percent of RadNet’s business.
