Update 2/27/2024:

S&P broke down the uses of that $720MM investment: $380MM to pay off the revolving credit line. $168MM for the company’s term loan. $68MM will cover its secured notes. $100MM to transactional costs and people’s pockets.

So that $500MM in “cash and liquidity” RP reported isn’t much cash. It’s mostly liquidity in that they can draw on the credit line again now that it’s been paid.

If RP invests in “growth” as promised, it won’t really be with this $720 million. That’s mostly spoken for. It will be with more freshly borrowed money from the revolver.

I’ve heard unverfied reports that the main investment here was apparently a $600MM rescue from venture firm NEA, RP’s first investor. If true, it represents a massive doubling down to prevent their initial investment from going to zero in a bankruptcy. Given the S&P breakdown, the amount they put in seems like the minimum required to get the refinancing deal done and not just a random doubling of previously published expectations due to high investor confidence.

If this all goes south one day, will make an excellent case study for the sunk cost fallacy.

They may not know how to run a radiology business, but they inarguably understand how to play the finance game: Radiology Partners completed its “comprehensive set of financing transactions to strengthen its financial position.”

In doing so, they ended up raising $720 million in preferred equity. They successfully used the promise of a substantial equity raise to get their debtholders to refinance, then used the promise of successful refinancing to further raise an additional ~$400 million.

This impressive fundraising success is going to be an even more substantial dilution of the current radiology shareholders. Radiologists now own less of this company, and because this preferred equity is reportedly paid in kind (as we discussed here), the dilution will increase over time. If you’re an RP shareholder, don’t worry though: you’ll also have the chance to participate in this fundraising round if you’d like to invest more of your money in the “leading radiology practice in the U.S.”

Of the new equity, $500 million will be used to “fund continued growth and investment in innovation.” That’s enough to buy a few more practices, but I suspect most of it will go to operational cash burn (particularly fluffing current practices negotiating for more money) and possibly some AI investments. In my view, doubling down on AI is RP’s real long-term hope and plan.

Last week, Radiology Partners released an announcement that it was “commencing a comprehensive set of financing transactions to strengthen its financial position.”

Setting the Stage

Going into 2024, RP was already cashflow negative (i.e. losing money) to say nothing of the massive debt payments due this year and next. For a reminder of what was coming, recall this slide:

But it’s more than that: In addition to having no ability to pay these loans back, RP told lenders they’re a month or two away from running out of money period. They’ve been trying to raise equity (i.e. sell a stake in the company) to pay off some of the debt including a big effort last summer, but even their own materials assume the need to refinance. (No big surprise there, it’s common practice in this high-leverage industry.)

However, there’s a chicken and egg problem. Recall that in a bankruptcy, debtholders get paid before equity holders get a dime. No one wants to put fresh money into a failing business about to go bankrupt, so no one in their right mind would invest if the current debtholders weren’t willing to “amend and extend.” But debtholders aren’t going to A&E unless they think their odds of getting money back are improved by pushing back the due date. They want to see a really healthy business or at least fresh capital coming in to keep things afloat.

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As you might recall, UnitedHealthcare sued Radiology Partners in April 2023 for an alleged pass-through billing scheme during an ongoing arbitration process about underpayment initiated by RP’s subsidiary group Singleton Associates in April 2022. RP called shenanigans. The judge made them fold that complaint into the ongoing arbitration process, in which there are currently three phases:

• Phase I: Determine which contract is active and should be used to determine charges: the original very lucrative 1998 one vs the 2020 one United started using (basically unilaterally)
• Phase II: If applicable, determine damages from Phase I
• Phase III: Evaluate the billing fraud accusation, which will be treated as a separate question from Phase I.

Last fall, RP won an interim award from the initial phase of that process to the tune of $153 million. United’s statement at the time: “We do not agree that Singleton will recover an award from UnitedHealthcare.”

In October, RP then quicky filed an application hoping to treat the “interim” award as a “final” award and get that money ASAP. United filed their own application to “vacate” that “interim arbitration award” (if you’re curious, the actual filing is linked from that page).

Their stated reason? Among other things, the arbitration panel might be vacating its own award itself. Err…what?

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I’ve recently added a couple more short entries on top of my initial 4-post series on radiology setups/hardware, ergonomics, and productivity.

For convenience, here are the articles:

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1. The Best Radiology Setup/Workstation Equipment

Here’s what I have idiosyncratically landed on as a stable happy set-up that balances efficiency and comfort (and an editorial selection of those favored by others).

Life is too short to use what comes with your computer.

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2. How I Use the Contour Shuttle for Radiology

This post could have been titled: Why and How to Use an Offhand Device for Radiology, Or maybe even: How to Make the Most of All Those Extra Buttons on Your Gaming Mouse or Similar Device

More buttons! Better scrolling! Save your wrist! Feel like a PACS ninja!

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3. AutoHotkey for Radiology

AutoHotkey is powerful free software you can use to control your computer and generate simple (or complex) macros to automate tedious or repetitive tasks.

Achieve frictionless hands-free dictation (and more!)

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4. Making the Most of PowerScribe

PowerScribe is ubiquitous in radiology practices across the country, and it’s the only dictation software I use in my job. It has many flaws, but there are plenty of things we can do to make the most of it…Here are some tips for making PowerScribe (360) suck less.

Don’t be a passive victim of bad corporate software.

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5. Radiology Toys (TL;DR)

For the use-with-your-hands part, here are some quick contexts and a single choice for each that you can implement wherever you work:

Quick highlights: Optimizing is a worthy investment of time/energy/money.

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6. Using the Zelotes C18 for Radiology

The Zelotes is the cheapest vertical mouse that doesn’t suck, and it has enough buttons that it’s useful for everyday PACS functionality no matter where you work.

How to think about mice for radiology with a special focus on a very inexpensive “vertical mouse” (along with some alternatives).

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Feel free to bookmark this post, because I’ll also add any follow-ups here.

The Zelotes C18 (aka TRELC Gaming Mouse with 5D Rocker aka ZLOT Vertical Mouse) is a solid very inexpensive productivity and ergonomics upgrade. If you’ve never used a mouse other than whatever’s plugged into the computer already, this currently sells for just $29.

It’s probably the best way to trial a vertical mouse for radiology without breaking the bank. A vertical mouse is like a regular mouse titled slightly on its side. It removes the pronation at the wrist by mimicking a “handshake” position, and many people (myself included) have found it helps with chronic wrist strain. That said, there’s zero data backing up those purported ergonomic benefits, and obviously vertical mice remain very niche. It’s intuitive that the form factor could help, and I think it does help (me), but I think even more strongly that there are probably idiosyncratic and personal preference factors (and placebo?) at play. There’s also a bit of a learning curve, so you need to stick with it for at least a couple of weeks.

The Zelotes is the cheapest vertical mouse that doesn’t suck, and it has enough buttons that it’s useful for everyday PACS functionality no matter where you work. Thanks to on-board memory–after initial setup/configuration at home–it will work on any other computer you plug it into without any software/drivers being installed. While the Logitech MX vertical feels slightly better in the hand, the Zelotes is better suited for most PACS due to its button configuration. It’s also a little smaller, which will help for those with smaller hands (a classic MX complaint is that’s a bit large for smaller hands).

Do I wish it had a few more buttons? Sure. But the 4-way joystick is perfect for window/level presets, and the additional two side buttons, joystick push click (hence “5D” rocker), mouse wheel click, and the extra top button give you several more presets to play with. How you map those buttons will obviously depend on your preferences, your PACS itself, and whether you want to use the mouse for dictation controls or just PACS shortcuts.

Here’s mine for the hospital, where we currently (but not for long!) use GE Centricity:

Recall that I use an off-hand device for the additional important controls (previous/next field, measuring tools, delete, etc) and AutoHotkey to control dictation without a dictaphone.

If you don’t want a rainbow glowing mouse (too much fun for me), the LED can be turned off easily in the settings.

The mouse can house two profiles in its memory at a time. You can save one button on the mouse to toggle between profiles if you need/want to switch between them on the fly. Alternatively, I personally find myself working with different PACS systems on different days, so I fully utilize every button on the mouse and then switch between the two stored profiles in the configuration software on my home computer. It only takes a second.

A Few More Expensive Conventional Alternatives

Gaming:

If you’re not interested in the slightly weird form factor but do want a solid mouse with a great but not overwhelming number of extra buttons for PACS control, try the G604 Lightspeed. It also has on-board memory so that it will work on any workstation after initial setup.

Pretty Cheap with Infinite Buttons:

If you want an inexpensive mouse with a 12-button thumb grid and on-board memory, try the UtechSmart VenusPro. To go totally nuts, you can map the accessory index finger button to a modifier key like ctrl or shift and add a whole layer of additional commands (though how you’ll memorize them and embed them in muscle memory is a serious question).

Conventional:

For a daily driver regular/non-gaming mouse, I think the Logitech MX Master 3 remains the best. It has amazing build quality with a best-in-class scroll wheel and feel for a conventional mouse. With the Logitech Options software installed, you can set up mouse button functions on a per-application basis.

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More mouse and workstation considerations are here.