Akumin Inc.

For Q2, Akumin reported revenue of $184.8 million, down 3.8% from $192.1 million a year ago. Adjusted EBITDA was $26.5 million, down $11.7 million year over year, and adjusted EBITDA margin was 14.4%, down 5.5 percentage points from Q2 2022 and down from 17.7% in Q1 2022. Same-store MRI volume increased 3.1%, same-store PET/CT volume increased 16.5%, and oncology patient starts increased 3.4% year over year. Accounts receivable were $115.8 million versus $114.7 million at Q1 end, or 57 days sales outstanding. Management lowered 2023 guidance to consolidated revenue of $740 million-$750 million and adjusted EBITDA of $120 million-$130 million, and reduced 2023 CapEx guidance to $40 million-$50 million, with $10 million-$20 million for growth CapEx. Secured leverage was 7.0x and unsecured leverage was 3.6x at quarter end. The company said it had incurred over $9.6 million of cash costs related to Port Charlotte repairs and restructuring, and cash decreased by about $21.5 million in the first half of 2023.

Riadh Zine framed the quarter as a demand story constrained by execution issues rather than weak end markets. He said demand in MRI, PET/CT, and oncology remains robust, but labor shortages, reopening delays at Port Charlotte, and equipment supply constraints limited the company’s ability to convert that demand into revenue. He also emphasized that the company is focusing on digitization, remote clinical capabilities, hospital partnerships, and a capital structure review, while warning that meaningful improvement is not expected before the end of 2023.

David Kretschmer walked through the pressure points behind the quarter’s weaker profitability, including lower volume growth, oncology revenue reversals tied to customer payment issues, and higher cash costs. He highlighted $9.6 million of cash costs tied to Port Charlotte repairs and restructuring, $21.5 million of cash decline in the first half, and said the company still had $55 million of revolver availability at quarter end. He also confirmed revised 2023 guidance of $740 million-$750 million in revenue, $120 million-$130 million in adjusted EBITDA, and $40 million-$50 million of total CapEx, while noting that the Stonepeak subordinated notes are expected to become cash pay on September 1, 2023.

Analysts focused on labor shortages, PET/CT demand and equipment delays, hospital revenue weakness, Port Charlotte insurance recovery, tracer costs, and liquidity. Management said labor shortages remain broad-based in radiology outside of specialized PET/CT, equipment bottlenecks are delaying revenue from signed customers, and new mobile PET/CT units are constrained by manufacturing delays. On liquidity, management said the revolver was entirely available at quarter end and that it had enough financial capacity to meet obligations through year-end and into next year, while also expecting additional insurance recoveries and some margin benefit from future cost recovery on tracers in new contracts.