RadNet Inc. enjoyed an increase in the price of its stock following the closing of its underwritten public offering of 8.7 million shares of common stock.

The Westwood-based provider of outpatient diagnostic imaging services announced the closing of the offering on June 16, the same day its shares closed at $31.38, a 2.6% increase from the previous day’s closing price of $30.57. The shares would eventually rise to close at a 52-week high of $33.44 on June 23, an increase of 6.5% from the June 16 close. 

The company said that its gross proceeds from the offering would total around $259 million.

“RadNet intends to use the net proceeds from the proposed offering to pay down $100 million of its first-lien term loans and for working capital and general corporate purposes,” it said. 

Jefferies LLC and Raymond James & Associates acted as joint active book-running managers for the offering.

Setting the tone for the offering, RadNet said it had narrowed its net loss during the first quarter.

The company reported on May 9 a net loss of $4.7 million (-8 cents a share) for the quarter ending March 31, compared with a net loss of $7.6 million (-13 cents) in the same period the previous year. Revenue increased by 14 percent from the first quarter of the prior year to $391 million. 

Dr. Howard Berger, chief executive of RadNet, said he was pleased with the quarterly results, particularly in the core imaging business, where revenue increased by almost 14 percent to $388 million, compared to the $341 million brought in during the first quarter of last year.  

“Our procedural volumes both on an aggregate and same-center basis demonstrated strong growth, in a quarter that is seasonally our weakest,” Berger said. “Though the cost and availability of labor continues to be challenging, we are having more success in filling open positions and retaining talented team members.”

Brian Tanquilut, an equity analyst with Jefferies, said in a research note published on June 22 that he viewed the stock offering positively based on three things – that management would use some of the proceeds to pay down debt; it was accretive to earnings per share; and “it strengthens (RadNet’s) balance sheet, while providing dry powder (funding) for accretive M&A.”

 He added that an aging population helps drive increased (health care) utilization, translating to more-frequent scans for RadNet, especially among seniors.

A key part of the company’s growth strategy was conducting joint ventures with health systems, with a target of 50% of centers in a joint venture versus the 33% that are currently in one, Tanquilut said in the report.

“Management notes that this collaborative initiative helps (RadNet) capture incremental patient volumes in lieu of competing with inpatient operators for patients,” he said. 

Tanquilut gave the stock a buy rating and a price target of $40.

John W. Ransom of Raymond James in St. Petersburg, Florida, also gave the stock a buy rating and a price target of $40 in a research report published on June 23. 

His $40 price target, up from $35, assumes shares trade at 11 times his 2025 estimates, Ransom said in the report.

The 2025 estimates include an earnings per share of 58 cents and revenue of $1.8 billion. 

“We remain constructive on (RadNet), as rebounding surgeries/electives should support solid growth in the near  term, with Alzheimer’s and AI opportunities offering ample upside,” Ransom added.