Shares of RadNet $RDNT ( ▲ 6.16% ) tumbled after Hunterbrook Media published a sharply critical report branding the radiology company “the AI story that doesn’t add up.” The investigation, led by veteran journalist Bethany McLean, questioned whether RadNet’s AI narrative justifies the valuation investors have been paying up for.
Hunterbrook Capital, the investment firm affiliated with the outlet, disclosed that it was short RadNet at the time of publication. That detail did little to blunt the impact. The stock slid as investors digested a report that challenged both RadNet’s growth metrics and the substance behind its AI ambitions.
An AI story under the microscope
Hunterbrook argues that RadNet’s Digital Health business is less of an external growth engine than it appears. According to the report, a meaningful portion of that segment’s growth comes from billing other RadNet business lines, rather than selling AI products into a broader market.
The authors also took aim at RadNet’s same center sales growth, claiming the metric is inflated by quietly consolidating volumes from shuttered imaging centers into nearby locations. That kind of reshuffling, they say, makes growth look stronger than it really is.
In the report’s words, what emerged was “a gap between story and substance,” citing disclosures that do not fully reconcile and insider selling that coincided with the stock’s run higher.
Valuation meets reality
RadNet’s market cap peaked north of $6.5 billion last month and sat around $5.6 billion heading into Tuesday. At one point in 2023, the company’s forward price to earnings ratio surged above 160x after management leaned into the AI narrative. Even after the recent pullback, the multiple was still around 95x as of Monday’s close.
Much of that enthusiasm traces back to RadNet’s acquisition of DeepHealth and its pitch that owning one of the world’s largest imaging data repositories gives it a major edge in training AI models. CFO Mark Stolper previously described the company as early to the AI wave, emphasizing its ability to develop algorithms in house using proprietary data.
Why this one hits differently
Bethany McLean’s name carries weight. She is best known for helping expose Enron’s fraud, a track record that tends to sharpen investor attention when she publishes a skeptical deep dive.
For now, RadNet finds itself in a familiar modern market drama: a company wrapped in an AI growth story colliding with a short seller willing to challenge the numbers. Whether the selloff sticks will depend on how convincingly RadNet can defend the gap between its AI vision and its financial reality.