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Item 2 — Management's Discussion and Analysis
Lumexa Imaging Holdings, Inc. · 10-Q · Q2 FY2026 · Period ended Jun 30, 2026
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The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the results of operations and financial condition of Lumexa Imaging. The MD&A is provided as a supplement to, and should be read in conjunction with, our condensed consolidated financial statements and the accompanying notes included in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K, for the year ended December 31, 2025 (our “Annual Report”), filed with the SEC. Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following MD&A.
Overview
We are one of the largest national providers of diagnostic imaging services. Our platform is integrated, scalable and has a proven track record of creating value for our stakeholders. As of June 30, 2026, we operated the second largest outpatient imaging center footprint in the United States. It spans 192 centers in 14 states and includes nine joint venture partnerships with health systems.
Our primary source of income is fees paid by patients, insurance companies or other payors in exchange for our centers providing imaging studies and radiologists’ interpretations of those studies. We also earn revenue from payors when our radiologists interpret an imaging study performed in another facility, often the imaging department of a hospital. In addition, we earn a monthly fee from centers that we operate, but do not consolidate for accounting purposes, in exchange for managing their operations. We also earn fees from third-party hospitals for providing radiology and administrative support. How these income streams affect our consolidated financial statements depends on whether we consolidate the center generating the fee for accounting purposes. Because our ownership levels and rights vary from center to center, as of June 30, 2026, we consolidated 104 of the 192 centers that we operated and accounted for our investments in the remaining 88 centers under the equity method of accounting. As of June 30, 2025, we consolidated 99 of the 184 centers that we operated and accounted for our investments in the remaining 85 centers under the equity method of accounting.
The following table shows our outpatient imaging centers in operation and consolidated net patient service revenue for the periods indicated (dollars in thousands):
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
2026 2025 2026 2025
Consolidated net patient service revenue $ 203,735 $ 198,185 $ 401,053 $ 390,483
Centers in operation 192 184 192 184
Outpatient imaging centers with a health system joint venture partner (equity method) 88 85 88 85
Consolidated outpatient imaging centers 104 99 104 99
The following table summarizes the centers we operated as of the periods indicated:
Type of Center
Consolidated Joint Venture Total
Number of Centers, December 31, 2024 98 83 181
De novos 6 3 9
Acquisitions — 1 1
Closed or sold (2 ) (1 ) (3 )
Number of Centers, December 31, 2025 102 86 188
De novos 2 — 2
Acquisitions — 2 2
Closed or sold — — —
Number of Centers, June 30, 2026 104 88 192
Our operations are comprised of two segments for financial reporting purposes, “Outpatient Imaging Centers” and “Professional Services.” For further financial information about our segments, see Note 13 in the notes accompanying our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
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Factors Affecting Our Results of Operations
We believe there are several important factors that impact our operating performance and results of operations, including:
▪Physician referrals. A significant portion of the services that we perform and the revenue we generate is derived from patient referrals from unaffiliated physicians and other healthcare providers. Because the majority of our routine and advanced imaging volume involves providing non-recurring services to patients, our business depends on continuing to receive new referrals from those physicians and other healthcare providers. Our performance depends on our ability to maintain those referrals and to become and/or remain designated providers under “closed panel” preferred physician organizations or other managed care contracting systems which manage those referrals exclusively to contracted providers. We seek to be the designated provider under those programs and the failure to compete to remain such under those programs and our inability to maintain and increase the number of physician referrals could impact our revenues and operations.
▪Demand for advanced imaging in our geographies. Our operations and profitability depend in part on our ability to increase the amount of patient volume from advanced imaging scans. According to industry estimates, demand for advanced imaging continues to grow and outpaces routine imaging growth. We believe that our centers, equipment, personnel and strategy will enable advanced imaging to continue to increase as a percentage of our imaging volumes and revenues over time. The following tables show our consolidated and system-wide outpatient MRI and CT volumes as a percentage of our total outpatient consolidated imaging revenue and total outpatient system-wide imaging revenue for the periods indicated:
CONSOLIDATED SYSTEM-WIDE
THREE MONTHS ENDED JUNE 30, THREE MONTHS ENDED JUNE 30,
2026 2025 2026 2025
MRI and CT as percentage of revenues 52 % 52 % 63 % 63 %
MRI and CT as a percentage of volumes 31 % 30 % 37 % 36 %
CONSOLIDATED SYSTEM-WIDE
SIX MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
2026 2025 2026 2025
MRI and CT as percentage of revenues 52 % 52 % 63 % 63 %
MRI and CT as a percentage of volumes 31 % 30 % 37 % 36 %
▪Favorable and Sustainable Reimbursement. Our revenues depend on achieving broad coverage and reimbursement for our imaging exams from third-party payors, including both commercial and government payors. Payment from third-party payors differs depending on whether we have entered into a contract with the payor as a “participating provider” or do not have a contract and are considered a “non-participating provider.” Payors will often reimburse non-participating providers, if at all, at a lower rate than participating providers. We operate in geographies with attractive payor dynamics that support sustainable commercial reimbursement. The following tables disaggregate consolidated and system-wide net patient service revenue by third-party payor source for the periods indicated:
CONSOLIDATED SYSTEM-WIDE
THREE MONTHS ENDED JUNE 30, THREE MONTHS ENDED JUNE 30,
2026 2025 2026 2025
Commercial insurance 59 % 59 % 62 % 63 %
Government 29 29 23 23
Self-pay, liens and other payors 12 12 15 14
100 % 100 % 100 % 100 %
CONSOLIDATED SYSTEM-WIDE
SIX MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
2026 2025 2026 2025
Commercial insurance 58 % 58 % 62 % 63 %
Government 28 29 23 24
Self-pay, liens and other payors 14 13 15 13
100 % 100 % 100 % 100 %
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▪We are broadly diversified across over 600 payor contracts and have a dedicated managed care team, focused on securing competitive reimbursement rates and contract terms for our centers using a data-driven approach. If we are not able to obtain or maintain coverage and adequate reimbursement from commercial payors, we may not be able to effectively increase our patient volume and revenue as expected. Additionally, retrospective reimbursement adjustments can negatively impact our revenue and cause our financial results to fluctuate, though we have not experienced any material adjustments of that nature.
▪Investment and implementation of technology. Our integrated technology system supports our current day-to-day operations and is the foundation of our continued deployment of third-party artificial intelligence (“AI”) tools. We intend to continue investing in these technologies and believe that using third-party AI allows us to benefit from the most advanced solutions in the market. Implementation of AI can enable faster scan times, improved clinical efficiency and faster patient scheduling and communication of results. Furthermore, back-office tasks can use AI to self-learn and self-manage processes, increase collections and reduce labor expenses, driving greater profitability.
▪Continuing growth through de novo expansion, joint ventures and acquisitions. We believe that our expansion strategy to establish new de novo centers, continue to partner with health systems in joint ventures and complete new acquisitions will continue to drive greater revenues. Our failure to continue to expand could have an adverse effect on our revenue growth.
▪Seasonality. Our business exhibits seasonal fluctuations. The first quarter of each year generally sees the lowest procedure volumes and revenue levels. We believe this trend is driven by two factors. First, many patients participate in high-deductible health plans. As these deductibles reset in January, patients tend to reduce their use of medical services during the first quarter to avoid substantial out-of-pocket expenditures. Second, our outpatient imaging centers are sometimes affected by severe winter weather conditions, with snowstorms and other adverse weather leading to patient appointment cancellations and occasional center closures.
While each of these factors presents significant opportunities for us, they are not the only factors that may adversely affect our revenues and they also pose significant risks and challenges that we must address. See the section titled “Risk Factors” for more information.
Our Business and Performance Measures
We deliver high-quality, convenient and low-cost care through our expansive network of outpatient imaging centers, meeting the needs of our key stakeholders—patients, referring physicians, health system joint venture partners and payors. Our accessible locations, flexible scheduling options and extended hours make it easier for patients to receive the imaging services they need. Referring physicians choose our centers for their patients’ imaging needs because of our high-quality care, subspecialized radiologists, skilled technologists and modern equipment and technology. Our health system joint venture partners benefit from providing patients access to our high-quality, lower cost, conveniently located centers to reduce hospital backlogs and the time required to diagnose and begin treatment. Our centers also benefit payors by reducing the overall cost of delivering diagnostic imaging to their members.
We operate outpatient imaging centers, some of which we wholly own and others that we own in partnership with health system joint ventures. As of June 30, 2026, we managed 85 of our 88 outpatient imaging centers owned by joint ventures on a day-to-day basis through management services contracts. As of June 30, 2025, we managed 82 of our 85 outpatient imaging centers owned by joint ventures on a day-to-day basis through management services contracts. Our role as an owner and day-to-day manager provides us with significant influence over those centers’ operations. This influence does not represent control of the center, so we account for our investment in each such center under the equity method of accounting as an unconsolidated affiliate. We controlled the other 104 and 99 centers at June 30, 2026 and 2025, respectively, and accounted for these investments as consolidated subsidiaries. For consolidated subsidiaries, our condensed consolidated statements of operations and comprehensive income (loss) reflect, within each revenue and expense line item, 100% of the revenues and expenses of each such subsidiary, after the elimination of intercompany amounts. Our condensed consolidated statements of operations and comprehensive income (loss) reflect our earnings from our unconsolidated affiliates in only two line items:
▪equity in earnings of unconsolidated affiliates: our share of the net income or loss of each center that is an unconsolidated affiliate, which is based on that center’s net income or loss and the percentage of that affiliate’s outstanding equity interests owned by us; and
▪management fee and other revenues, related party: income we primarily earn in exchange for managing the day-to-day operations of each center that is an unconsolidated affiliate, usually quantified as a percentage of that center’s net revenue.
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In summary, our operating income is driven by the performance of the outpatient imaging centers and physician practices we operate and by our ownership interest in our outpatient imaging centers, but our individual revenue and expense line items only relate to the consolidated businesses. This results in trends in our operating income that do not always correspond with changes in our individual revenue and expense line items. Accordingly, we supplementally review several types of information in order to monitor and analyze our results of operations, including:
▪the results of operations of our unconsolidated affiliates;
▪our average ownership share in the outpatient imaging centers we operate; and
▪facility operating indicators irrespective of consolidation treatment, such as system-wide revenue growth and same-center revenue growth.
Results of Operations (in thousands)
THREE MONTHS ENDED JUNE 30,
2026 2025 VARIANCE
Revenue:
Net patient service revenue $ 194,902 $ 189,347 $ 5,555
Net patient service revenue, related party 8,833 8,838 (5 )
Management fee and other revenue 8,708 4,822 3,886
Management fee and other revenue, related party 51,719 48,395 3,324
Total revenues 264,162 251,402 12,760
Operating expenses:
Cost of operations, excluding depreciation and amortization 225,285 212,265 13,020
General and administrative expenses 24,397 18,689 5,708
Depreciation and amortization 10,083 9,279 804
(Gain) loss on disposal of property and equipment (24 ) 16 (40 )
Total operating expenses 259,741 240,249 19,492
Equity in earnings of unconsolidated affiliates 18,619 16,527 2,092
Income from operations 23,040 27,680 (4,640 )
Other expenses:
Interest expense 16,222 30,097 (13,875 )
Loss on extinguishment and modification of debt 1,053 — 1,053
Total other expenses 17,275 30,097 (12,822 )
Income (loss) before income taxes 5,765 (2,417 ) 8,182
Income tax provision 3,020 4,809 (1,789 )
Net income (loss) and comprehensive income (loss) $ 2,745 $ (7,226 ) $ 9,971
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SIX MONTHS ENDED JUNE 30,
2026 2025 VARIANCE
Revenue:
Net patient service revenue $ 383,894 $ 373,564 $ 10,330
Net patient service revenue, related party 17,159 16,919 240
Management fee and other revenue 14,385 10,145 4,240
Management fee and other revenue, related party 101,261 95,775 5,486
Total revenues 516,699 496,403 20,296
Operating expenses:
Cost of operations, excluding depreciation and amortization 443,040 420,662 22,378
General and administrative expenses 44,732 36,181 8,551
Depreciation and amortization 20,005 18,330 1,675
Loss (gain) on disposal of property and equipment 113 (146 ) 259
Total operating expenses 507,890 475,027 32,863
Equity in earnings of unconsolidated affiliates 33,643 31,845 1,798
Income from operations 42,452 53,221 (10,769 )
Other expenses:
Interest expense 32,553 59,946 (27,393 )
Loss on extinguishment and modification of debt 1,053 — 1,053
Total other expenses 33,606 59,946 (26,340 )
Income (loss) before income taxes 8,846 (6,725 ) 15,571
Income tax provision 4,384 8,188 (3,804 )
Net income (loss) and comprehensive income (loss) $ 4,462 $ (14,913 ) $ 19,375
The following table provides additional information about our management fee and other revenues for the periods indicated (in thousands):
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
2026 2025 2026 2025
Components of management fee and other revenues:
Fees for managing joint ventured outpatient centers and other third-party services $ 26,103 $ 20,578 $ 47,601 $ 40,654
Zero margin pass-throughs of employee, IT and other center level costs paid by Lumexa 34,324 32,639 68,045 65,266
Total management fee and other revenues $ 60,427 $ 53,217 $ 115,646 $ 105,920
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The following table summarizes our GAAP condensed consolidated statements of operations and comprehensive income (loss) items expressed as a percentage of revenue for the periods indicated:
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
2026 2025 2026 2025
Total revenues 100.0 % 100.0 % 100.0 % 100.0 %
Operating expenses:
Cost of operations, excluding depreciation and amortization 85.3 84.4 85.7 84.7
General and administrative expenses 9.2 7.4 8.7 7.3
Depreciation and amortization 3.8 3.7 3.9 3.7
Loss (gain) on disposal of property and equipment — — — —
Total operating expenses 98.3 95.5 98.3 95.7
Equity in earnings of unconsolidated affiliates 7.0 6.6 6.5 6.4
Income from operations 8.7 11.1 8.2 10.7
Other expenses:
Interest expense 6.1 12.0 6.3 12.1
Loss on extinguishment and modification of debt 0.4 — 0.2 —
Total other expenses 6.5 12.0 6.5 12.1
Income (loss) before income taxes 2.2 (0.9 ) 1.7 (1.4 )
Income tax provision 1.1 1.9 0.8 1.6
Net income (loss) and comprehensive income (loss) 1.1 % (2.8 )% 0.9 % (3.0 )%
Our business model of partnering with health system joint venture partners results in our accounting for 88 (as of June 30, 2026) and 85 (as of June 30, 2025) of our outpatient imaging centers under the equity method of accounting rather than consolidating their results.
Our share of the net income of unconsolidated affiliates is shown in our condensed consolidated statements of operations and comprehensive income (loss) on a net basis as “equity in earnings of unconsolidated affiliates.”
The following tables provide other information regarding our unconsolidated affiliates for the periods indicated (dollars in thousands):
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
Lumexa Imaging’s Unconsolidated Affiliates 2026 2025 2026 2025
Lumexa Imaging’s equity in earnings of unconsolidated affiliates $ 18,619 $ 16,527 $ 33,643 $ 31,845
Lumexa Imaging’s imputed weighted average ownership percentages based on unconsolidated affiliates’ net income or loss (1) 46.8 % 46.2 % 46.2 % 46.3 %
Total debt at unconsolidated affiliates $ 81,227 $ 65,758 $ 81,227 $ 65,758
Unconsolidated outpatient imaging centers operated at period end 88 85 88 85
(1)Our weighted average percentage ownership in our unconsolidated affiliates is calculated as our equity in earnings of unconsolidated affiliates divided by the total net income or loss of unconsolidated affiliates for each respective period.
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THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
2026 2025 2026 2025
Unconsolidated affiliates net revenues:
BTDI revenues $ 109,533 $ 100,890 $ 208,505 $ 193,945
All other unconsolidated affiliates revenues 42,905 39,282 83,616 77,989
Aggregate unconsolidated affiliates revenues $ 152,438 $ 140,172 $ 292,121 $ 271,934
Unconsolidated affiliates operating expenses, excluding depreciation and amortization:
BTDI operating expenses $ 71,439 $ 64,696 $ 137,003 $ 127,176
All other unconsolidated affiliates operating expenses 31,271 28,702 62,395 55,358
Aggregate unconsolidated affiliates operating expenses, excluding depreciation and amortization $ 102,710 $ 93,398 $ 199,398 $ 182,534
Unconsolidated affiliates net income:
BTDI net income $ 31,391 $ 28,474 $ 57,068 $ 52,261
All other unconsolidated affiliates net income 8,429 7,311 15,761 16,467
Aggregate unconsolidated affiliates net income $ 39,820 $ 35,785 $ 72,829 $ 68,728
One of our unconsolidated affiliates, BTDI, is considered significant to our consolidated financial statements under Regulation S-X. As a result, the audited consolidated financial statements and related notes of BTDI were included in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2025.
Three Months Ended June 30, 2026 Compared to the Three Months Ended June 30, 2025
Revenue
As described above, our earnings from an outpatient imaging center, whether consolidated or accounted for using the equity method of accounting, are driven by the same factors: the center’s underlying profits and revenue and our ownership percentage in that center. Accordingly, to assess our overall operating results, we often utilize system-wide and same-center measures, which include both consolidated centers and unconsolidated affiliates. Our consolidated revenue growth and system-wide revenue growth were 5.1% and 6.0%, respectively, between the three months ended June 30, 2026 and the three months ended June 30, 2025. Our system-wide revenue includes all centers and physician practices that we operate; our GAAP revenue (or consolidated revenue) only includes consolidated centers, which represented 54% of our centers as of both June 30, 2026 and June 30, 2025, respectively, and all physician practices that we operate.
Net patient service revenue increased by $5.6 million, or 2.9%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The increase was largely due to an increase in consolidated same-center revenues of 2.2%, which was driven by volume growth of 1.6% and an increase in net revenue per scan of 0.6%. Net patient service revenue also increased $1.5 million related to 11 consolidated de novo centers added during 2024, 2025 and 2026.
Management fee and other revenue increased by $3.9 million, or 80.6%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The increase was primarily due to an increase in stipend revenue due to new and renegotiated contracts.
Management fee and other revenue, related party increased by $3.3 million, or 6.9%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The increase was primarily due to increased pass-through costs at the joint ventures we manage related to information technology and leased employees and growth in the business.
Operating Expenses
Cost of operations, excluding depreciation and amortization, is comprised of costs incurred to operate outpatient imaging centers and physician practices, primarily salaries, wages and benefits for clinicians and direct patient support personnel, occupancy costs, such as rent and utilities, medical supplies and other operating expenses. Cost of operations, excluding depreciation and amortization increased by $13.0 million, or 6.1%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025,
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driven by increased volumes. The increase was primarily due to a $3.5 million increase in salaries and wages, a $1.3 million increase in medical supplies and a $5.1 million increase in physician compensation.
General and administrative expenses include salaries, wages and benefits of executive leadership, finance and accounting, human resources, legal, information technology, professional fees, transaction costs, severance and other overhead and corporate expenses. General and administrative expenses increased by $5.7 million, or 30.5%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The increase is primarily due to an increase in stock-based compensation as a result of resetting some of our legacy stock-based compensation plans after our IPO. We expect general and administrative expenses to increase in the near term as a result of operating as a public company. That increase in expenses will be associated with compliance with the rules and regulations of the SEC, and an increase in legal, audit, insurance, investor relations, professional services and other administrative expenses.
Depreciation and amortization expense consists of depreciation of property and equipment assets (medical office equipment, computer and software, and furniture and fixtures) and amortization of acquired intangible assets, such as facility contracts and trade names. Depreciation and amortization expense increased by $0.8 million, or 8.7%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The increase is primarily driven by additions to property and equipment during the period.
Equity in earnings of unconsolidated affiliates
Equity in earnings of unconsolidated affiliates is our share of the net income or loss of each unconsolidated outpatient imaging center, which is based on that center’s net income or loss and the percentage of that center’s outstanding equity interests owned by us. Equity in earnings of unconsolidated affiliates increased by $2.1 million, or 12.7%, for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. The increase was due to increased profitability of our investments in unconsolidated affiliates.
Other expenses
Interest expense decreased by $13.9 million, or 46.1%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, primarily due to our refinancing of our Existing Credit Agreement (as further described below) in December 2025.
Loss on extinguishment and modification of debt for the three months ended June 30, 2026 was due to fees associated with the amendment which repriced our Refinancing Term Loan in June 2026. The interest rate decreased from SOFR plus 3.0% to SOFR plus 2.5%.
Income Tax Provision
We recorded an income tax provision of $3.0 million and $4.8 million for the three months ended June 30, 2026 and 2025, respectively. Despite having a pretax loss in 2025, the impact of non-deductible stock-based compensation and the increase in the valuation allowance recorded against certain of our deferred tax assets resulted in tax expense for the period. The primary items impacting tax expense in 2026 are non-deductible compensation and the change in the valuation allowance.
Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025
Revenue
As described above, our earnings from an outpatient imaging center, whether consolidated or accounted for using the equity method of accounting, are driven by the same factors: the center’s underlying profits and revenue and our ownership percentage in that center. Accordingly, to assess our overall operating results, we often utilize system-wide and same-center measures, which include both consolidated centers and unconsolidated affiliates. Our consolidated revenue growth and system-wide revenue growth were 4.1% and 5.0%, respectively, between the six months ended June 30, 2026 and the six months ended June 30, 2025. Our system-wide revenue includes all centers and physician practices that we operate; our GAAP revenue (or consolidated revenue) only includes consolidated centers, which represented 54% of our centers as of both June 30, 2026 and June 30, 2025, respectively, and all physician practices that we operate.
Net patient service revenue increased by $10.3 million, or 2.8%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The increase was largely due to an increase in consolidated same-center revenues of 2.5%, which was driven by volume growth of 1.0% and an increase in net revenue per scan of 1.5%. Net patient service revenue also increased $4.0 million related to 11 consolidated de novo centers added during 2024, 2025 and 2026.
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Management fee and other revenue increased by $4.2 million, or 41.8%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The increase was primarily due to an increase in stipend revenue due to new and renegotiated contracts.
Management fee and other revenue, related party increased by $5.5 million, or 5.7%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The increase was primarily due to increased pass-through costs at the joint ventures we manage related to information technology and leased employees and growth in the business.
Operating Expenses
Cost of operations, excluding depreciation and amortization, is comprised of costs incurred to operate outpatient imaging centers and physician practices, primarily salaries, wages and benefits for clinicians and direct patient support personnel, occupancy costs, such as rent and utilities, medical supplies and other operating expenses. Cost of operations, excluding depreciation and amortization increased by $22.4 million, or 5.3%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, driven by increased volumes. The increase was primarily due to an $8.3 million increase in salaries and wages, a $2.8 million increase in medical supplies and a $4.5 million increase in physician compensation.
General and administrative expenses include salaries, wages and benefits of executive leadership, finance and accounting, human resources, legal, information technology, professional fees, transaction costs, severance and other overhead and corporate expenses. General and administrative expenses increased by $8.6 million, or 23.6%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The increase is primarily due to an increase in stock-based compensation as a result of resetting some of our legacy stock-based compensation plans after our IPO. We expect general and administrative expenses to increase in the near term as a result of operating as a public company. That increase in expenses will be associated with compliance with the rules and regulations of the SEC, and an increase in legal, audit, insurance, investor relations, professional services and other administrative expenses.
Depreciation and amortization expense consists of depreciation of property and equipment assets (medical office equipment, computer and software, and furniture and fixtures) and amortization of acquired intangible assets, such as facility contracts and trade names. Depreciation and amortization expense increased by $1.7 million, or 9.1%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The increase is primarily driven by additions to property and equipment during the period.
Equity in earnings of unconsolidated affiliates
Equity in earnings of unconsolidated affiliates is our share of the net income or loss of each unconsolidated outpatient imaging center, which is based on that center’s net income or loss and the percentage of that center’s outstanding equity interests owned by us. Equity in earnings of unconsolidated affiliates increased by $1.8 million, or 5.6%, for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. The increase was due to increased profitability of our investments in unconsolidated affiliates.
Other expenses
Interest expense decreased by $27.4 million, or 45.7%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, primarily due to our refinancing of our Existing Credit Agreement (as further described below) in December 2025.
Loss on extinguishment and modification of debt for the six months ended June 30, 2026 was due to fees associated with the amendment which repriced our Refinancing Term Loan in June 2026. The interest rate decreased from SOFR plus 3.0% to SOFR plus 2.5%.
Income Tax Provision
We recorded an income tax provision of $4.4 million and $8.2 million for the six months ended June 30, 2026 and 2025, respectively. Despite having a pretax loss in 2025, the impact of non-deductible stock-based compensation and the increase in the valuation allowance recorded against certain of our deferred tax assets resulted in tax expense for the period. The primary items impacting tax expense in 2026 are non-deductible compensation and the change in the valuation allowance.
Results of Operations—Segment Results
We organize our business into two reportable segments: (1) outpatient imaging centers and (2) professional services. This segment structure reflects the financial information and reports used by our management to make decisions regarding our business, including resource allocation and performance assessments.
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Outpatient Imaging Center Segment
Our outpatient imaging center segment generates revenue by performing imaging studies and providing radiologists’ interpretations of those studies. The following tables show our outpatient imaging center segment’s revenue and Adjusted EBITDA for the periods indicated (in thousands):
THREE MONTHS ENDED JUNE 30,
2026 2025 $ CHANGE % CHANGE
Net patient service revenue $ 143,747 $ 138,909 $ 4,838 3.5 %
Management fee and other revenue 52,462 48,289 4,173 8.6 %
Adjusted EBITDA 46,365 46,982 (617 ) (1.3 )%
SIX MONTHS ENDED JUNE 30,
2026 2025 $ CHANGE % CHANGE
Net patient service revenue $ 281,839 $ 272,339 $ 9,500 3.5 %
Management fee and other revenue 102,269 95,660 6,609 6.9 %
Adjusted EBITDA 84,738 88,803 (4,065 ) (4.6 )%
The following table shows the outpatient imaging center segment’s system-wide same-center growth rates for the following metrics for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025 and six months ended June 30, 2026, as compared to the six months ended June 30, 2025:
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
2026 2026
Net revenue 4.4% 3.6%
Volume 2.2% 2.0%
Net revenue per scan 2.2% 1.6%
Our outpatient imaging center segment’s operating results for the three months ended June 30, 2026 and six months ended June 30, 2026 reflect a 4.4% and 3.6% system-wide same-center revenue growth, respectively. The segment’s consolidated GAAP revenue growth for the three months ended June 30, 2026 and six months ended June 30, 2026 was 4.8% and 4.4%, respectively.
Net patient service revenue for the outpatient imaging center segment increased by $4.8 million, or 3.5%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, primarily driven by an increase in consolidated same-center revenues of 2.2%, which was comprised of volume growth of 1.6% and an increase in net revenue per scan of 0.6%. Net patient service revenue for the outpatient imaging center segment also increased $1.5 million related to 11 consolidated de novo centers added during 2024, 2025 and 2026.
Net patient service revenue for the outpatient imaging center segment increased by $9.5 million, or 3.5%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, primarily driven by an increase in consolidated same-center revenues of 2.5%, which was comprised of volume growth of 1.0% and an increase in net revenue per scan of 1.5%. Net patient service revenue for the outpatient imaging center segment also increased $4.0 million related to 11 consolidated de novo centers added during 2024, 2025 and 2026.
Management fee and other revenue for the outpatient imaging center segment increased by $4.2 million, or 8.6%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The increase was primarily due to increased pass-through costs at BTDI related to information technology and leased employees and improved financial performance. Our management fees are usually quantified as a percentage of the unconsolidated affiliate’s net revenue.
Management fee and other revenue for the outpatient imaging center segment increased by $6.6 million, or 6.9%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The increase was primarily due to increased pass-through costs at BTDI related to information technology and leased employees and improved financial performance. Our management fees are usually quantified as a percentage of the unconsolidated affiliate’s net revenue.
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As further discussed below, Adjusted EBITDA removes non-cash and non-recurring charges that occur in the affected period and provides a basis for management to measure our core financial performance against other periods. Adjusted EBITDA for the outpatient imaging center segment decreased by $4.1 million, or 4.6%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The decrease in Adjusted EBITDA was driven by an increase in salaries and wages and medical supplies.
Professional Services Segment
Our professional services segment earns revenue solely from the interpretation of imaging studies. The related imaging studies are performed by other parties, primarily the imaging department of a hospital with whom we have a broader strategy that includes our outpatient business, such as through a joint venture for outpatient centers that we operate. The following table shows our professional services segment’s revenue and Adjusted EBITDA for the periods indicated (in thousands):
THREE MONTHS ENDED JUNE 30,
2026 2025 $ CHANGE % CHANGE
Net patient service revenue $ 64,280 $ 61,400 $ 2,880 4.7 %
Management fee and other revenue 7,965 4,928 3,037 61.6 %
Adjusted EBITDA 10,080 9,292 788 8.5 %
SIX MONTHS ENDED JUNE 30,
2026 2025 $ CHANGE % CHANGE
Net patient service revenue $ 127,026 $ 121,954 $ 5,072 4.2 %
Management fee and other revenue 13,377 10,260 3,117 30.4 %
Adjusted EBITDA 22,906 18,471 4,435 24.0 %
The following table shows the professional services segment’s consolidated same-practice growth rates for the following metrics for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025 and six months ended June 30, 2026, as compared to the six months ended June 30, 2025:
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
2026 2026
Net revenue 5.1% 4.8%
Volume 4.6% 3.5%
Net revenue per read 0.6% 1.3%
Our professional services segment’s operating results for the three months ended June 30, 2026, reflects a 5.1% consolidated professional same-practice revenue growth. The segment’s consolidated GAAP revenue growth for the three months ended June 30, 2026 was 8.9%.
Our professional services segment’s operating results for the six months ended June 30, 2026, reflects a 4.8% consolidated professional same-practice revenue growth. The segment’s consolidated GAAP revenue growth for the six months ended June 30, 2026 was 6.2%.
Net patient service revenue for the professional services segment increased by $2.9 million, or 4.7%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025 due to year-over-year increase in volumes.
Net patient service revenue for the professional services segment increased by $5.1 million, or 4.2%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025 due to year-over-year increase in volumes.
Management fee and other revenue for the professional services segment increased $3.0 million, or 61.6% for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The increase was due to an increase in stipend revenue due to new and renegotiated contracts.
Management fee and other revenue for the professional services segment increased $3.1 million, or 30.4% for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The increase was due to an increase in stipend revenue due to new and renegotiated contracts.
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As further discussed below, Adjusted EBITDA removes non-cash and non-recurring charges that occur in the affected period and provides a basis for management to measure our core financial performance against other periods. Adjusted EBITDA for the professional services segment increased by $4.4 million, or 24.0%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, primarily due to increased volumes.
Key Operating Metrics and Non-GAAP Financial Measures
We regularly review key operating metrics and certain non-GAAP financial measures, including Adjusted EBITDA and Adjusted EBITDA margin, to evaluate our business, measure our performance, identify trends in our business, prepare financial projections and make strategic decisions. Given the number of unconsolidated affiliates we have, to analyze our results of operations, we also measure and track certain supplemental operating metrics that include both consolidated and unconsolidated affiliates. Although revenue of our unconsolidated affiliates is not recorded as revenue in our consolidated financial statements, we believe it is important in understanding our financial performance because that revenue is the basis for calculating our management services revenue and, together with the expenses of our unconsolidated affiliates, is the basis for our equity in earnings of unconsolidated affiliates. In addition, we measure volume, revenue and growth rates (both consolidated and unconsolidated) for the centers that were operational in both the current and prior year periods, a group we refer to as “same-center.”
The financial information for our unconsolidated affiliates is presented in this Quarterly Report on Form 10-Q on an aggregated basis as part of our system-wide key operating metrics. Not all of the financial information for our unconsolidated affiliates is prepared by the Company’s management or audited. We believe including our unconsolidated affiliates in the Company’s system-wide financial information is useful for investors to understand the size and performance of our joint venture relationships. However, the system-wide financial information presented in this Quarterly Report on Form 10-Q does not adjust for our economic ownership percentage in its joint ventures.
The following tables summarize our key operating metrics for both the three months ended and the six months ended June 30, 2026, as compared to the three months ended and six months ended June 30, 2025:
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
2026 2026
Consolidated revenue growth(1) 5.1% 4.1%
Consolidated outpatient same-center revenue growth(2) 2.2% 2.5%
Consolidated outpatient same-center volume growth(3) 1.6% 1.0%
Consolidated outpatient same-center net revenue per scan growth(4) 0.6% 1.5%
Consolidated professional same-practice revenue growth(5) 5.1% 4.8%
Consolidated professional same-practice volume growth(6) 4.6% 3.5%
Consolidated professional same-practice net revenue per read growth(7) 0.6% 1.3%
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
2026 2026
System-wide revenue growth(8) 6.0% 5.0%
System-wide outpatient same-center revenue growth(9) 4.4% 3.6%
System-wide outpatient same-center volume growth(10) 2.2% 2.0%
System-wide outpatient same-center net revenue per scan growth(11) 2.2% 1.6%
Notes (1)-(11): “Outpatient same-center” metrics refer to services performed at sites we operate and which have been in operation for more than one year, excluding new acquisitions or divested outpatient imaging centers, and consist of a scan of the patient and a read, for which services we issue a global bill. “Professional same-practice” metrics refer to services performed by practices that have been in operation for more than one year, excluding new or terminated practice relationships, and consist of reads by our radiologists, for which we issue a bill solely for the read. “Professional” services are most often performed in the imaging department of a hospital. See the definitions below for an explanation of calculations of Consolidated revenue growth, Consolidated outpatient same-center revenue growth, Consolidated outpatient same-center volume growth, Consolidated outpatient same-center net revenue per scan growth, Consolidated professional same-practice revenue growth, Consolidated professional same-practice volume growth, Consolidated
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professional same-practice net revenue per read growth, System-wide revenue growth, System-wide outpatient same-center revenue growth, System-wide outpatient same-center volume growth and System-wide outpatient same-center net revenue per scan growth.
The following table summarizes our non-GAAP financial metrics for the periods indicated:
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
(in thousands, unless otherwise indicated) 2026 2025 2026 2025
Adjusted EBITDA $ 56,445 $ 56,274 $ 107,644 $ 107,274
Adjusted EBITDA margin 21.4 % 22.4 % 20.8 % 21.6 %
Refer to “—Non-GAAP Financial Measures” below for details on how Adjusted EBITDA and Adjusted EBITDA margin are defined and reconciled to the most directly comparable financial measure calculated and presented in accordance with GAAP, which is net income (loss).
Consolidated Key Operating Metrics:
We refer to numbers and metrics relating to or deriving from only those outpatient imaging centers and managed physician practices (the source of our professional services revenue) that we consolidate for financial reporting purposes: our wholly owned centers and our centers owned by and practices managed through VIEs, as “consolidated.”
(1)Consolidated revenue growth
We define consolidated revenue growth as the percentage change in total GAAP revenue, as compared to the prior year period.
(2)Consolidated outpatient same-center revenue growth
We define consolidated outpatient same-center revenue growth as the percentage change in consolidated outpatient same-center revenue, as compared to the prior year period. We define consolidated outpatient same-center revenue as the total revenue generated by the outpatient imaging centers which we consolidate for financial reporting purposes under GAAP and which have been in operation for more than one year, excluding new acquisitions or divested outpatient imaging centers. This metric does not reflect professional services revenue.
(3)Consolidated outpatient same-center volume growth
We define consolidated outpatient same-center volume growth as the percentage change in consolidated outpatient same-center volume, as compared to the prior year period. We define consolidated outpatient same-center volume as the total number of scans or comparable services for each of our imaging modalities which were performed in the given period at centers which we consolidate for financial reporting purposes under GAAP. This metric does not reflect professional services volume.
(4)Consolidated outpatient same-center net revenue per scan growth
We define consolidated outpatient same-center net revenue per scan growth as the percentage change in consolidated outpatient same-center net revenue per scan, as compared to the prior year period. We define same-center net revenue per scan as consolidated outpatient same-center revenue divided by consolidated same-center volume for the respective period. This metric does not reflect professional services revenue or volume.
(5)Consolidated professional same-practice revenue growth
We define consolidated professional same-practice revenue growth as the percentage change in consolidated professional same-practice total revenue, as compared to the prior year period. We consolidate all of these entities. This metric does not reflect revenue from our outpatient imaging centers.
(6)Consolidated professional same-practice volume growth
We define consolidated professional same-practice volume growth as the percentage change in consolidated professional same-practice volume, as compared to the prior year period. We consolidate all of these entities. This metric does not reflect volume from our outpatient imaging centers.
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(7)Consolidated professional same-practice net revenue per read growth
We define consolidated professional same-practice net revenue per read growth as the percentage change in consolidated professional same-practice net revenue per read, as compared to the prior year period. We define consolidated professional same-practice net revenue per read as consolidated professional same-practice revenue divided by consolidated professional same-practice volume for the respective period. This metric does not reflect revenue or volume from our outpatient imaging centers.
System-wide Key Operating Metrics:
We refer to numbers and metrics relating to or deriving from our managed physician practices (the source of our professional services revenue) and all of our outpatient imaging centers, including our wholly owned centers and our centers owned by and practices managed through our VIEs, which we consolidate for financial reporting purposes, plus those centers owned by our unconsolidated affiliates, which are not included in our consolidated GAAP total revenue but which we report using the equity method of accounting, collectively, as “system-wide.” Portions of the financial results of our unconsolidated affiliates that are included in our system-wide metrics are unaudited and/or not prepared by our management.
(8)System-wide revenue growth
System-wide revenue is equal to consolidated revenue plus the revenue from our unconsolidated affiliates, which is not included in our consolidated GAAP total revenue but for which we report results using the equity method of accounting. In our consolidated financial statements, only the net income or net loss from our unconsolidated affiliates is reported in the line item equity in earnings of unconsolidated affiliates. Because of this, management supplementally focuses on system-wide revenues as an operating metric, which measures revenues from all of our centers and managed physician practices, including revenues from our unconsolidated affiliates (without adjustment based on our percentage of ownership therein), after eliminating transactions between the consolidated Lumexa Imaging entities and our unconsolidated affiliates. We define system-wide revenue growth as the percentage change in system-wide revenue, as compared to the prior year period.
(9)System-wide outpatient same-center revenue growth
We define system-wide outpatient same-center revenue growth as the percentage change in system-wide outpatient same-center revenue, as compared to the prior year period. We define system-wide outpatient same-center revenue as the total revenue generated by all of our outpatient imaging centers, including outpatient imaging centers which we consolidate for financial reporting purposes under GAAP and those which we report using the equity method of accounting. This metric does not reflect professional services revenue.
(10)System-wide outpatient same-center volume growth
We define system-wide outpatient same-center volume growth as the percentage change in system-wide outpatient same-center volume, as compared to the prior year period. We define system-wide outpatient same-center volume as the total number of scans or comparable services for each of our imaging modalities which were performed in the given period, including outpatient imaging centers which we consolidate for financial reporting purposes under GAAP and those which we report using the equity method of accounting. This metric does not reflect professional services volume.
(11)System-wide outpatient same-center net revenue per scan growth
We define system-wide outpatient same-center net revenue per scan growth as the percentage change in system-wide outpatient same-center net revenue per scan, as compared to the prior year period. We define system-wide outpatient same-center net revenue per scan as system-wide outpatient same-center revenue divided by system-wide outpatient same-center volume for the respective period. This metric does not reflect professional services revenue or volume.
Sources of Revenue
Our revenue is primarily generated by providing diagnostic imaging services and radiology services to patients. Most of the revenue generated from patient services is derived from a diverse mix of payors, including commercial insurance companies with whom we have over 600 contracts, government payors such as Medicare and Medicaid, and private payors. We believe our payor diversity mitigates our exposure to possible unfavorable reimbursement trends within any one payor class.
Additionally, we earn management fee revenue from managing the centers we do not consolidate for financial reporting purposes under GAAP and from providing administrative and radiology support for third-party hospitals. The management fee for an unconsolidated affiliate is calculated using a contractually defined formula based on the revenue of such center. We are also reimbursed for certain costs of providing management services. The amount recognized for the recovery of pass-through costs is based on the actual
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costs of contracted providers providing the related services. Our consolidated revenue and expenses do not include the management fees we earn from physician practices because those fees are eliminated in consolidation.
The following table summarizes our consolidated revenue by type and as a percentage of total revenue for the periods indicated:
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
2026 2025 2026 2025
Net patient service revenue 73.8 % 75.3 % 74.3 % 75.3 %
Net patient service revenue, related party 3.3 3.5 3.3 3.4
Management fee and other revenue 3.3 1.9 2.8 2.0
Management fee and other revenue, related party 19.6 19.3 19.6 19.3
Total revenues 100.0 % 100.0 % 100.0 % 100.0 %
Our consolidated net patient service revenue by payor is summarized in the following table for the periods indicated (in thousands):
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
2026 2025 2026 2025
Commercial insurance $ 114,361 $ 111,691 $ 221,913 $ 216,768
Government—Medicare 48,472 45,367 93,981 89,221
Government—Medicaid 7,916 9,467 15,595 19,148
Attorney liens 6,022 9,286 12,549 18,226
Self-pay 7,648 6,627 15,474 12,089
Other third-party payors 10,483 6,909 24,382 18,112
Total net patient service revenue, unrelated party 194,902 189,347 383,894 373,564
Net patient service revenue, related party 8,833 8,838 17,159 16,919
Total net patient service revenue $ 203,735 $ 198,185 $ 401,053 $ 390,483
Non-GAAP Financial Measures
We use non-GAAP financial measures, in conjunction with GAAP financial measures, as an integral part of managing our business and to, among other things: (i) monitor and evaluate the performance of our business operations and financial performance; (ii) facilitate internal comparisons of the historical operating performance of our business operations; (iii) review and assess the operating performance of our management team; (iv) analyze and evaluate financial and strategic planning decisions regarding future operations and annual operating budgets.
Adjusted EBITDA
Adjusted EBITDA removes non-cash and non-recurring charges that occur in the affected period and provides a basis for measuring our core financial performance against other periods. We define Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, as adjusted to exclude loss or gain on the disposal of property and equipment, other income or losses, loss on debt extinguishment and modification, gain on sale of outpatient imaging centers and non-cash stock compensation. Adjusted EBITDA includes equity in earnings of unconsolidated affiliates (and adds back our proportional share of depreciation and amortization, interest expense and losses on the disposal of assets at unconsolidated affiliates) and is adjusted for non-cash or non-recurring events that take place during the period that, in our judgment, significantly impact the period-over-period assessment of performance and operating results.
Adjusted EBITDA is a non-GAAP financial measure used as an analytical indicator to assess business performance. Adjusted EBITDA should not be construed as a measure of financial performance, liquidity, or cash flows provided by or (used) in operating, investing, and financing activities, as there may be significant factors or trends that it fails to address. Adjusted EBITDA should not be considered in isolation or as an alternative to net income (loss), or other financial statement data presented in our consolidated financial statements as an indicator of financial performance. Adjusted EBITDA is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation and this metric, as presented, may not be comparable to other similarly titled measures of other companies. We caution investors that non-GAAP financial information departs from traditional accounting conventions. Therefore, its use can make it difficult to compare our results with the results of other companies.
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Adjusted EBITDA Margin
We define Adjusted EBITDA margin as Adjusted EBITDA divided by total consolidated revenue.
We believe that the use of non-GAAP measures such as Adjusted EBITDA and Adjusted EBITDA margin assist investors in understanding our ongoing operating performance by presenting comparable financial results between periods. We believe that, by removing the impact of depreciation and amortization, amounts spent on interest and taxes and certain other non-recurring income and charges that are highly variable from period to period, Adjusted EBITDA provides investors with a performance measure that reflects the impact on operations from changes in revenue and operating expenses, providing a perspective not immediately apparent from net income (loss). The adjustments we make to derive Adjusted EBITDA exclude items which may cause short-term fluctuations in net income (loss) that we do not consider to be fundamental attributes or primary drivers of our business.
The following table illustrates the reconciliations from net income (loss) under GAAP to Adjusted EBITDA for the periods indicated (in thousands):
THREE MONTHS ENDED JUNE 30,
2026 2025
GAAP net income (loss) $ 2,745 $ (7,226 )
Depreciation and amortization expense 10,083 9,279
Income tax provision 3,020 4,809
Amortization of basis difference 573 500
Interest expense 16,222 30,097
Loss on extinguishment and modification of debt 1,053 —
Non-cash stock-based compensation 12,737 8,346
Loss (gain) on disposal of property and equipment (24 ) 16
Severance and executive recruiting(1) 686 803
Strategic initiatives and implementation(2) 2,659 1,018
Transaction costs(3) 707 3,875
Litigation and settlements(4) 1,173 —
Other(5) 87 142
Depreciation and amortization–unconsolidated affiliates(6) 3,995 4,031
Interest expense–unconsolidated affiliates(6) 526 507
Losses on asset disposal or sale—unconsolidated affiliates(6) 153 219
Other adjustments—unconsolidated affiliates(6) 50 (142 )
Adjusted EBITDA $ 56,445 $ 56,274
SIX MONTHS ENDED JUNE 30,
2026 2025
GAAP net income (loss) $ 4,462 $ (14,913 )
Depreciation and amortization expense 20,005 18,330
Income tax provision 4,384 8,188
Amortization of basis difference 1,105 1,000
Interest expense 32,553 59,946
Loss on extinguishment and modification of debt 1,053 —
Non-cash stock-based compensation 25,011 14,720
Loss (gain) on disposal of property and equipment 113 (146 )
Severance and executive recruiting(1) 1,631 2,173
Strategic initiatives and implementation(2) 3,484 1,886
Transaction costs(3) 3,289 7,464
Litigation and settlements(4) 1,202 (128 )
Other(5) 82 158
Depreciation and amortization–unconsolidated affiliates(6) 7,628 7,595
Interest expense–unconsolidated affiliates(6) 1,043 946
Losses on asset disposal or sale—unconsolidated affiliates(6) 740 214
Other adjustments—unconsolidated affiliates(6) (141 ) (159 )
Adjusted EBITDA $ 107,644 $ 107,274
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(1)Includes severance and recruiting expenses for executive leadership departures as part of strategic organizational changes. These amounts are included in general and administrative expenses in our condensed consolidated statements of operations and comprehensive income (loss).
(2)Includes third-party consulting, implementation, and integration expenses incurred as part of our strategic transformation and optimization initiatives, specifically related to the deployment of a new technology system, as well as the development, customization, and integration of a new enterprise resource planning system. For the three months ended June 30, 2026 and 2025, $2.7 million and $0.6 million of these costs, respectively, are included in general and administrative expense in our condensed consolidated statements of operations and comprehensive income (loss). For the three months ended 2025, $0.4 million of these costs are included in cost of operations, excluding depreciation and amortization expense in our condensed consolidated statements of operations and comprehensive income (loss). For the six months ended June 30, 2026 and 2025, $3.4 million and $1.1 million of these costs, respectively, are included in general and administrative expense in our condensed consolidated statements of operations and comprehensive income (loss). For the six months ended June 30, 2026 and 2025, $0.1 million and $0.8 million of these costs, respectively, are included in cost of operations, excluding depreciation and amortization expense in our condensed consolidated statements of operations and comprehensive income (loss).
(3)Includes costs for third party non-recurring IPO costs, buy-side and sell-side due diligence activities to evaluate and execute potential mergers and acquisitions, integrate acquired businesses and one-time employee retention bonuses related to potential mergers and acquisitions. For the three months ended June 30, 2026 and 2025, $0.7 million and $3.8 million of these costs, respectively, are included in general and administrative expense in our condensed consolidated statements of operations and comprehensive income (loss). For the three months ended June 30, 2025, $0.1 million of these costs are included in cost of operations, excluding depreciation and amortization expense in our condensed consolidated statements of operations and comprehensive income (loss). For the six months ended June 30, 2026 and 2025, $3.3 million and $7.2 million of these costs, respectively, are included in general and administrative expense in our condensed consolidated statements of operations and comprehensive income (loss). For the six months ended June 30, 2025, $0.3 million of these costs was included in cost of operations, excluding depreciation and amortization expense in our condensed consolidated statements of operations and comprehensive income (loss).
(4)Consists of litigation and settlement costs for matters not related to core operations.
(5)Consists of other costs related to debt financing, certain de novo start-up costs related to outpatient imaging centers and certain exit costs related to closed outpatient imaging centers.
(6)To adjust for Lumexa Imaging’s proportional share of these expenses, which are included in equity in earnings from unconsolidated affiliates.
Liquidity and Capital Resources
We finance our operations through cash provided by operating activities along with long term debt, including senior secured credit facilities and equipment promissory notes. Our principal uses of cash and cash equivalents in recent periods have been to fund our operations. During the six months ended June 30, 2026, we earned net income of $4.5 million and net cash provided by operations was $35.7 million. During the six months ended June 30, 2025, we incurred a net loss of $14.9 million and net cash used in operations was $11.9 million. We expect our existing capital resources, anticipated cash from operations and our borrowing capacity under the Amended Revolving Credit Facility will be sufficient to sustain our operations for the next twelve months and the foreseeable future.
Our principal capital requirements are for the development of de novo centers, the acquisition of new imaging equipment, the implementation of new technology and the acquisition of additional outpatient imaging centers. On a continuing basis, we evaluate various transactions to increase stockholder value and enhance our business results, including acquisitions, divestitures and joint ventures. We expect to fund any future acquisitions primarily with cash flow from operations and debt financing, including borrowings available under the Amended Revolving Credit Facility, or through new equity or debt issuances. The incurrence of debt financing would result in additional debt service obligations, and any future instruments governing such debt could provide for operating and financing covenants that could restrict our operations.
We and our subsidiaries or affiliates may from time to time, in our sole discretion, purchase, repay, redeem or retire any of our outstanding debt or equity securities in privately negotiated or open market transactions, by tender offer or otherwise.
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Sources and Uses of Cash
The following table summarizes our cash flows for the periods indicated (in thousands):
SIX MONTHS ENDED JUNE 30,
2026 2025
Net cash provided by (used in) operating activities $ 35,733 $ (11,889 )
Net cash used in investing activities $ (18,911 ) $ (4,889 )
Net cash used in financing activities $ (5,945 ) $ (4,608 )
Operating Activities
During the six months ended June 30, 2026, our operating activities provided $35.7 million of net cash as compared to net cash used in operating activities of $11.9 million during the six months ended June 30, 2025. The increase in net cash provided by operating activities of $47.6 million during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, was primarily driven by a reduction in interest payments. The interest payment reduction was the result of the paydown and refinancing of our Existing Term Loan (defined below) in December 2025. We anticipate that the paydown and refinancing of the Existing Term Loan will benefit operating cash flows in 2026, given that our term loan borrowings were reduced from $1.2 billion under the Existing Term Loan as of December 17, 2025 (the date of refinancing) to $825.0 million under the Refinancing Term Loan (defined below) and our interest rate decreased from SOFR plus 4.75% per annum under the Existing Term Loan to SOFR plus 3.0% per annum under the Refinancing Term Loan. Our interest rate was further reduced to SOFR plus 2.5% as a result of the debt repricing that was finalized on June 30, 2026.
During the six months ended June 30, 2026 and 2025, our operating cash flows were reduced by $9.6 million and $11.4 million, respectively, primarily due to transaction costs, severance and executive recruiting, litigation and settlements and strategic initiatives and implementation costs. We expect that some of these activities, including our ERP and other IT implementations, as well as executive recruiting, will continue through part of 2026.
Investing Activities
During the six months ended June 30, 2026 and 2025, our investing activities used $18.9 million and $4.9 million of net cash, respectively. The cash used in investing activities was attributable to purchases of property and equipment in the amounts of $15.0 million and $5.6 million during the six months ended June 30, 2026 and 2025, respectively. We also finance acquisitions of equipment using finance lease arrangements as described below in Noncash Equipment Purchases.
Noncash Equipment Purchases
We seek to optimize our use of cash to advance our growth strategy while also reducing the size of our debt relative to our Adjusted EBITDA. As part of this strategy, we make cash purchases for equipment, which for our wholly owned centers are classified within investing activities, as described above. We also acquire equipment under finance lease arrangements. Assets acquired by our wholly owned centers under finance lease arrangements, which do not involve an up-front cash outlay, totaled $18.0 million and $4.4 million during the six months ended June 30, 2026 and 2025, respectively. Purchases of property and equipment in accounts payable and accrued expenses was $4.8 million and $4.0 million for the six months ended June 30, 2026 and 2025, respectively.
Cash From Unconsolidated Affiliates
The centers we operate in partnership with health systems, which we often call JV centers, are accounted for as unconsolidated affiliates, due to our minority ownership position in them. These centers generally distribute cash quarterly, and our pro rata share of these distributions was $36.9 million and $32.8 million during the six months ended June 30, 2026 and 2025, respectively. Distributions from the joint ventures received by us are made from the actual cash flow of the joint ventures after their cash capital expenditures, equipment lease payments, net working capital changes and interest expense, if any. These distributions are included in our condensed consolidated statements of cash flows from operating activities as one line item: “Distributions from investments in unconsolidated affiliates.”
Our earnings from JVs are also shown in one line on our condensed consolidated statements of operations and comprehensive income (loss): “Equity in earnings of unconsolidated affiliates.” These earnings were $33.6 million and $31.8 million for the six months ended June 30, 2026 and 2025, respectively. While the timing of our distributions from our JV centers can vary based on capital and other planning of JV level cash needs, and there were timing differences in 2026 and 2025, the total distributions from investments in
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unconsolidated affiliates that we received during these two periods together, were approximately $4.2 million higher than our equity in earnings from unconsolidated affiliates as shown in the table below (in thousands):
SIX MONTHS ENDED JUNE 30,
2026 2025 Total
Equity in earnings of unconsolidated affiliates $ 33,643 $ 31,845 $ 65,488
Distributions from investments in unconsolidated affiliates 36,869 32,820 69,689
As with our wholly owned centers, our JV centers add equipment and fund de novo centers through a combination of cash purchases and finance lease arrangements, which do not involve an up-front cash outlay. Equipment purchases under both methods totaled $30.7 million and $20.0 million for our JV centers during the six months ended June 30, 2026 and 2025, respectively, of which our pro rata ownership share was $13.9 million and $9.5 million, respectively.
Financing Activities
During the six months ended June 30, 2026 and 2025, our financing activities used $5.9 million and $4.6 million of net cash, respectively. The primary use of cash in financing activities was payments on long-term debt and finance leases.
Long Term Debt
On December 15, 2020, Lumexa Imaging, Inc. (“LII”) and Lumexa Imaging Outpatient, Inc. (“LIOI”) entered into a senior secured credit agreement (as amended from time to time prior to the date of the Credit Agreement, the “Existing Credit Agreement”) with Barclays Bank PLC, as administrative agent, collateral agent, an issuing bank and swing line lender, and the other lenders party thereto, providing for a secured term loan facility (the “Existing Term Loan”) and a secured revolving line of credit (the “Existing Revolving Credit Facility” and, together with the Existing Term Loan, the “Existing Senior Secured Credit Facility”).
In December 2025, LII and LIOI entered into Amendment No. 5 to the Existing Senior Secured Credit Facility with Barclays Bank PLC, as administrative agent and collateral agent, and the other lenders party thereto. Our “Amended Credit Agreement” provides for (i) a secured term loan facility of $825.0 million (the “Refinancing Term Loan”) and (ii) a secured revolving line of credit of $250.0 million (the “Amended Revolving Credit Facility” and, together with the Refinancing Term Loan, the “Refinancing Senior Secured Credit Facility”). The Refinancing Senior Secured Credit Facility’s initial interest rate per annum was equal to SOFR plus 3.0%. The Refinancing Term Loan is to mature in December 2032. The Amended Revolving Credit Facility matures in December 2030. As of June 30, 2026, $822.9 million was outstanding on the Refinancing Term Loan. No amounts were outstanding under the Amended Revolving Credit Facility as of June 30, 2026. On June 30, 2026, we entered into Amendment No. 7 (the “7th Amendment”). The 7th Amendment reduced the Refinancing Term Loan’s and Amended Revolving Credit Facility’s interest rates from SOFR plus 3.0% to SOFR plus 2.5%.
We have also financed the acquisition of certain medical equipment and leasehold improvements under promissory notes which are collateralized by property and equipment, which mature at various times through 2031.
For more information on our long-term debt, see Note 6 in the notes accompanying our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
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Off-Balance Sheet Arrangements
As a result of our strategy of partnering with health systems, we do not own controlling interests (and are also not the primary beneficiary) in a number of our outpatient imaging centers. As of June 30, 2026, we accounted for 88 of our 192 outpatient imaging centers under the equity method of accounting. As of June 30, 2025, we accounted for 85 of our 184 outpatient imaging centers under the equity method of accounting. Similar to our consolidated outpatient imaging centers, our unconsolidated imaging centers have debts, including finance lease obligations, that are generally non-recourse to us. The debts of our unconsolidated outpatient imaging centers are not included in our consolidated financial statements. As of June 30, 2026 and December 31, 2025, the total debt on the balance sheets of our unconsolidated affiliates was $81.2 million and $69.1 million, respectively.
Vendor Data Disclosure
As previously disclosed, on April 15, 2026, we became aware that certain electronic patient data, including protected health information, was extracted from the information technology systems of a vendor contracted by us to provide non-clinical, administrative services to us and our affiliated entities.
We promptly notified relevant law enforcement and began an investigation into the nature and scope of the breach. That investigation did not find placement of malicious code on any of our systems and there has been no material interruption to our systems, services or business operations. We have taken steps to further strengthen our security environment, including with respect to the vendor at issue and based on the recommended actions of its incident response firm.
Although we are continuing to evaluate the impact of this incident, including remediation expenses and other potential liabilities, we do not currently believe this incident will have a material adverse effect on our business, operations or financial results. We are in the process of identifying and notifying individuals whose information may have been involved in accordance with applicable regulatory requirements.
In May 2026, plaintiffs filed putative class actions against the Company, alleging claims arising from this incident. These cases have since been consolidated into a single proceeding in the U.S. District Court for the Eastern District of North Carolina.
Critical Accounting Policies and Estimates
For information regarding our Critical Accounting Policies and Estimates, see the “Critical Accounting Policies and Estimates” section of “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K.
Recent Accounting Pronouncements
See Note 2 in the notes accompanying our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for further information.
Cautionary Statement Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
In some cases, you can identify forward-looking statements by terms such as “may,” “would,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, results of operations, liquidity and stock price. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2025. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially
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from those projected in the forward-looking statements. Some of the key factors that could cause actual results to differ from our expectations include:
•Our ability to generate revenue depends in large part on referrals from physicians and other healthcare providers;
•Because many of our costs are fixed, lower scan volumes or other decreases to revenues could adversely affect the profitability of our business;
•Our ability to maintain and attract new business depends upon the quality of our services, our reputation and the professional reputations of our radiologists, joint venture partners and the third-party providers with whom we contract;
•If our contracted radiology practices terminate their agreements with us, our business could be negatively impacted;
•We are dependent on our and our contracted radiology practices’ ability to hire and retain qualified radiologists and radiologic technologists, as well as our ability to hire and retain key personnel;
•Our labor costs have been, and we expect they will continue to be, adversely affected by competition for staffing, the nationwide shortage of radiologists and experienced and skilled healthcare professionals and regulatory activity, including changes in minimum wage laws;
•Our joint ventures depend on existing relationships with key health system partners. If we are unable to maintain synergistic relationships with these health systems, or enter into new relationships with health systems, we may be unable to implement our business strategies successfully;
•Adverse changes in general domestic and worldwide economic conditions could adversely affect our business, financial condition, results of operations, liquidity and stock price;
•We rely on third-party suppliers, vendors and service providers for the provision of services and supplies, and any operational disruptions or service interruptions affecting these third parties could adversely affect our business;
•We experience competition from other diagnostic imaging companies, hospitals and physician practices, and this competition could adversely affect our revenue and business;
•If reimbursement rates paid by third-party governmental or commercial payors are reduced or if we fail to successfully manage the reimbursement and collections processes, our business, financial condition, results of operations, liquidity and stock price could be harmed;
•There are risks associated with our current and potential future use of AI;
•Cybersecurity threats and other disruption or malfunctions in our (or our third-party suppliers’, vendors’ or service providers’) information technology systems could adversely affect our business;
•The regulatory framework in which we operate is uncertain and continually evolving and complying with federal and state regulations is an expensive and time-consuming process;
•Legal claims or proceedings against us could exceed the amount of our insurance coverage limits, and the scope of our insurance coverage, with respect thereto;
•If the trading price of our common stock exceeds certain levels at the time of a distribution from or liquidation of Holdings LLC, substantial dilution may result from the issuance of additional shares of our common stock in respect of certain outstanding Holdings LLC incentive units, which may adversely affect the trading price of our common stock; and
•The other factors discussed in the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025.
In addition, statements such as “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q and, although we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted a thorough inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise.
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