The ramp-up period of these de novos are pretty short. And we think after a couple of quarters, we should be at full maturity of these centers. It’s we — like our investors who are listening to this call, we have a portfolio of these types of opportunities and some will outperform our projections and our initial ramp up, some will lag behind. We’re not perfect every time. But we are, as Dr. Berger mentioned experiencing heavy volumes at virtually all of our local markets. And we’re struggling not with getting patient demand, but actually getting them in the door and servicing on them. And so that bodes well for a faster than typical ramp-up for a lot of these novo facilities.
Nathan Malewicki: Helpful. Thank you. And then just a follow-up on de novos and JVs. I’m just wondering if you could provide some color on kind of the makeup of the remaining pipeline or those 12 de novos to open next year, are those focus in California or the Mid-Atlantic? And then any color you can provide past 2024 on the strategy would be helpful.
Howard Berger: Yeah. I think for the sake of this conversation, about half of the de novos for next year are on the East Coast and the other half on the West Coast. Some of them are in joint ventures, particularly on the East Coast, where we’re expanding our relationship with the with RW Barnabas in our New Jersey Imaging Network division as well as the University of Maryland Medical System that could lead to statewide opportunities that we would pursue with the University of Merrill and Medical System. On the West Coast, most of the joint ventures are in areas that are also with some of our joint venture partners like in Orange County, with the Memorial Health System and some in more of the rural areas where the demand continues to grow and where RadNet currently and the entire market that we’re looking at is underserved from the standpoint of imaging services.
So I think de novos really should be taken into consideration for RadNet, not as just a greenfield or a start-up, where it may take two to three years to develop a significant contribution from that effort. But as Mark mentioned here, we expect within two to three quarters at the most to ramp up the performance of these centers, which means that most of the centers that we’re talking about, the dozen centers that we’re talking about will provide some EBITDA and significant revenue impact in 2024.
Nathan Malewicki: Awesome. Thanks, guys.
Operator: The next question comes from Larry Solow with CJS Securities. Please go ahead.
Larry Solow: Great. Thanks, guys. Just a follow-up on the — it sounds like, Howard, you mentioned you actually had your average revenue went up sequentially quarter-over-quarter and that kind of bucks the normal seasonality, which I think from most discussions with other healthcare companies, I think seasonality kind of did come back this year. Maybe we didn’t have it for a couple of years at COVID, but pretty impressive to go right through that. And my question is it sounds like you’re operating more at a supply constraint telling your centers just because of just not enough scheduling time in the day. It may be not a labor issue, but more just an absolute capacity and just filling in some of these areas with some of these de novos will alleviate that? Is that kind of a fair to say that really it sounds like the strategy of the de novos effect.
Howard Berger: Yes. I think that’s primarily correct, but I will tell you that the staffing shortage is still substantial enough where – if we can be more successful in our recruiting efforts, there is a lot of additional volume that we can push through our imaging centers. We currently don’t operate many of our centers, particularly for those procedures that are in highest demand. I’m talking about MRI, particularly in mammography. We can’t operate those — the current centers given the fact that we just don’t have enough staffing. We’ve made significant improvement and progress in that. And I think that is, in large part, due to the success in the third quarter and which we’re seeing accelerate even into the fourth quarter.
So I’d like to be more optimistic here, but it’s a slow process. Not only do we not — do we have to only find – find the staffing. We then have to integrate them into the RadNet system, which can take two, three months sometimes of training on our equipment and our procedures. So this is going to be an ongoing process. I think, really for the long-term here both because there’s a shortage. And given the shortage, there is a lot of demand, not just by us but by other providers in our markets. But I think our particular business model, and I think with the addition of all of the AI and generative AI tools that we will be implementing also next year, it will make the RadNet system, an even more attractive place for us to recruit employees, both at the professional and the non-professional level.
Larry Solow: Okay. I appreciate all that color. And just in terms of the expanded partnership or JV with Cedars-Sinai, it looks like, maybe, Mark, you can answer it looks like there was no cash in the deal, looks like its just structured as an asset swap. Can you maybe just give us a little more or an asset contribution, you’re both contributing a same amount of assets. Can you maybe just give us a little walk us through that in a real fast.
Mark Stolper: Yeah. Sure. I think that’s an accurate statement or premise in your question. We structured it with — when you contribute assets, whether its Cedars-Sinai contributing assets into the Joint Venture or RadNet contributing assets, we have an outside third-party valuation done to a value — at fair market value of the assets being contributed. And what we did with Cedars because we had two different joint ventures, one being expanded and one being created. We were able to equalize and the equity — the resulting equity stakes of each of the partners in terms of their membership interests in these — in order to essentially not have a lot of cash changing hands. In one situation, Cedars was buying up, in the other situation we were RadNet was buying up in another joint venture in such a way where less than $1 million of debt cash actually changed hands between the two parties.
Howard Berger: Yeah. I’d like to amplify on this because, in the joint ventures, particularly along with Cedars, which we’re extremely proud of. It’s not just really about how the joint venture comes together. It’s really about the partnership and the commitment that the health system, in this case, Cedars, is making to RadNet. RadNet Cedars has really looked to RadNet as their outpatient partner throughout Southern California. And with that, will come a lot of volume that they’ve currently be doing in the hospital and will be shifted over to the joint venture, so that they can accommodate more acute care medicine in the hospital and where the outpatient imaging is really done in a much more convenient and comfortable atmosphere for their patients.
So while, we initially put the partnership together or expanded in this case based on current activities, it’s really the prospects of moving the outpatient imaging for all of Cedars into the RadNet system, even in centers where they not — may not be part of the joint venture as Cedars looks to cast its shadow, way beyond the physical confines of their hospitals and become a major player in delivery of health care, throughout Southern California. So for us, this is a lot more of a strategic relationship than it was just looking at the current financial relationships. And as I said, we’re extremely proud of this given that Cedars was in U.S. News & World Report I think it was this year, noted as the number two health system in the country, only behind the clinic.
