Alliance Imaging, Inc. Q2 2008 Earnings Call Transcript

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2008-09-05 07:25:29.0

Tags: Alliance Imaging Inc.

Question-and-Answer Session

Operator

Thank you. (Operator instructions) Your first question comes from Mark Arnold. Please go ahead.

Mark Arnold Piper Jaffray

Good morning, guys. Very, very nice quarter. I guess just to start with, PET/CT utilization looked really strong in the quarter. Is that sustainable in terms of the days of service and the scans per system per day, or are you guys going to have to add even more systems to meet this demand growth?

Howard Aihara

Mark, this is Howard. The PET/CT utilization or PET/CT volumes were strong in the second quarter. I think this is in part due to the fact that – and I'll let Paul comment on this – the – basically, seasonality we're seeing in healthcare services, a fact that increased patient cost sharing, meaning higher deductibles for patients, kind of pulled volumes down in the first quarter. And once those deductibles tend to burn off a bit, we see a volume increase in the second quarter and that's just generally speaking for MRI and PET services, so we saw a strong volume growth. I think that in terms of the scans per system per day, we continue to hold our – probably about double the national averages of our scan volumes from – we're well over six scans per system a day, which are about double the national average. We continue to sell – see quite a sales pipeline for new customers that we haven't serviced before, which actually also helps drive scan volumes. So in essence, we will be adding a number of systems throughout the second half of the year to satisfy this demand.

Mark Arnold Piper Jaffray

And it looks like you guys are –

Paul Viviano

I'm sorry, Mark, just to follow on this – this is Paul – just a couple of comments about this. Howard referenced this seasonality and we do see some artificial constraints on volume and utilization and demand. In the first quarter that demand used to be constrained for a shorter period of time but as deductibles and cost share having grown so dramatically for patients, we do see a longer extension of that into the New Year. So we see anecdotally that hospital volumes and our customers reporting increases and help patient admission activity specifically beginning in the second quarter, and we saw that increase in April, which we were able to sustain through to the second quarter. And our guidance incorporates the continuation of those trends through the balance of the year. Relative specifically to PET/CT, as well, we do see a decrease of new providers entering the market, given the last couple of years of pressure from DRA and HOPPS-related pricing pressure on PET/CT specifically. So we do see fewer providers in many markets. We see almost no new entrants into many of these markets, which allows us to continue to gain market share and to grow along with the market.

 

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