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LOS ANGELES, Nov. 09, 2022 (GLOBE NEWSWIRE) -- RadNet, Inc. (NASDAQ: RDNT), a national leader in providing high-quality, cost-effective, fixed-site outpatient diagnostic imaging services through a network of 349 owned and operated outpatient imaging centers, today reported financial results for its third quarter of 2022.
Dr. Howard Berger, President and Chief Executive Officer of RadNet, commented, “While I am pleased with our Revenue performance in the quarter, which continues to outpace our original projections, managing costs remains a significant challenge. Primarily, the higher costs and shortage of labor are impacting our Adjusted EBITDA(1) and profitability more than we anticipated at the beginning of the year. Though aggregate Revenue increased over 5% and same-center Revenue increased almost 4%, this performance would have been significantly better but for staffing shortages that impacted our ability to service the increasing demand for imaging in our markets. More recently, our hiring efforts have become more productive, which has allowed us to expand center operations, which should result in improved Revenue in the fourth quarter of this year and into 2023.”
“As we discussed throughout the year, a significant aspect of our growth strategy in the coming quarters is from expansion through de novo facilities. With respect to the 15 de novo centers in development we discussed earlier in the year, three locations have become operational and eight additional centers should begin generating Revenue by the end of the second quarter of next year. While some of these centers will require a ramp-up period, we anticipate that these facilities will be positive contributors to 2023,” added Dr. Berger.
Dr. Berger continued, “We continue to expand our outpatient, free-standing joint ventures with the objective of holding 50% of our imaging centers in partnership with community hospitals and large regional health systems. To that end, subsequent to the end of this quarter, our New Jersey Imaging Network (NJIN) joint venture acquired the outpatient radiology assets of Montclair Radiology, the owner of six imaging centers in northern New Jersey. For more than 75 years, Montclair Radiology has been a leading provider of diagnostic imaging, and the addition of Montclair should add more than 200,000 procedural exams and over $40 million of Revenue to NJIN. Additionally, on November 1st, we completed the expansion of our Arizona Diagnostic Radiology joint venture with Dignity Health, a member of CommonSpirit Health. In conjunction with the expansion, Dignity Health in Arizona contributed three hospital-affiliated outpatient imaging centers into our existing partnership. The centers provide vital coverage and access to patients of targeted geographies within the greater Phoenix area, including desired capacity for women’s imaging. In addition to these newly contributed locations, by year-end 2022, the joint venture plans to open its 11th location, a 30,000 square foot multimodality facility called Park Central in proximity to downtown Phoenix.”
Dr. Berger added, “I’m also very pleased to announce that we have initiated a pilot of our new Enhanced Breast Cancer Detection (EBCD) service ( https://myEBCDmammo.com ) in Delaware. For an additional fee, patients can elect to enroll in a suite of premium mammography-related services, including the use of DeepHealth Saige-DX AI, personalized lifetime risk assessment, an additional AI-driven review for certain exams and access to a dedicated 1-800 support line. The innovative EBCD program is one of the most important endeavors the Company has pursued for our patients and we anticipate expanding this program to all RadNet markets during the first half of next year.”
Dr. Berger continued, “We recently announced the acquisition of a controlling interest in Heart&Lung Health (HLH), a London-based teleradiology network focused on lung cancer screening. HLH has established itself as the leading provider of lung cancer screening services to the UK National Health Service’s Targeted Lung Health Check (TLHC) program, which mandates the combined use of AI and expert radiologist interpretation for widespread population health lung cancer screening. HLH utilizes software from RadNet’s AI subsidiary, Aidence, and it is anticipated that the program could drive over one million lung scans in England alone when the program becomes fully implemented, which is targeted by the end of 2026. This is RadNet’s first example of combining specialty teleradiology interpretation services with AI algorithms to enable a comprehensive cancer screening program.”
Dr. Berger added, “We believe the opportunities for continuing consolidation could accelerate as a result of reimbursement pressures, challenged labor markets and rising interest rates. Our low financial leverage, less expensive cost of capital and greater liquidity places us in a favorable position to complete accretive acquisitions which may arise. Our cash balance at the end of the third quarter was over $95 million. We are undrawn upon our $195 million revolving credit facility. And, we are producing a substantial amount of free cash flow. In many instances, our scale and operating expertise provide us unique synergy and cost savings opportunities resulting from local market consolidation.”
Dr. Berger concluded, “As a result of all the above, we are extremely optimistic and excited about the remainder of the year and our positioning as we move into 2023. We look forward to updating our stakeholders about our progress in relation to all of these growth and expansion initiatives in the coming quarters.”
Third Quarter Financial Results
For the third quarter of 2022, RadNet reported Revenue from its Imaging Centers reporting segment of $349.1 million and Adjusted EBITDA(1) of $50.2 million, which excludes Revenue and Losses from the AI reporting segment. As compared with last year’s third quarter, Revenue increased $17.0 million (or 5.1%) and Adjusted EBITDA(1) decreased $4.7 million (or 8.5%), also excluding a one-time benefit for the forgiveness of deferred federal payroll taxes in the third quarter of 2021.
Including our AI reporting segment, Revenue was $350.0 million in the third quarter of 2022, an increase of 5.2% from $332.7 million in last year’s third quarter. Including the losses of the AI reporting segment, Adjusted EBITDA(1) was $45.8 million in the third quarter of 2022 and $54.6 million in the third quarter of 2021 (also excluding the one-time benefit from the forgiveness of deferred federal payroll taxes in the third quarter of 2021).
For the third quarter of 2022, RadNet reported Net Income of $668,000 as compared with $16.2 million for the third quarter of 2021. Diluted Net Income Per Share for the third quarter of 2022 was $0.01, compared with a Diluted Net Income per share of $0.30 in the third quarter of 2021, based upon a weighted average number of diluted shares outstanding of 57.7 million shares in 2022 and 53.8 million shares in 2021.
There were a number of unusual or one-time items impacting the third quarter including: $11.2 million of non-cash gain from interest rate swaps (net of the amortization of the accumulation of the changes in fair value out of Other Comprehensive Income); $8.1 million change in estimate related to refund liability; $195,000 of severance paid in connection with headcount reductions related to cost savings initiatives; $959,000 expense related to leases for our de novo facilities under construction that have yet to open their operations; and $7.8 million of pre-tax losses related to our AI reporting segment. Adjusting for the above items, Adjusted Earnings(3) from the Imaging Centers reporting segment was $5.3 million and diluted Adjusted Earnings Per Share(3) was $0.09 during the third quarter of 2022.
Also, affecting Net Income in the third quarter of 2022 were certain non-cash expenses and unusual items including: $3.3 million of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted stock; $247,000 gain on the disposal of certain capital equipment; $959,000 of non-operational rent expense associated with certain un-opened de novo locations; and $648,000 of non-cash amortization of deferred financing costs and loan discounts related to financing fees paid as part of our existing credit facilities.
For the third quarter of 2022, as compared with the prior year’s third quarter, MRI volume increased 10.8%, CT volume increased 9.6% and PET/CT volume increased 11.5%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 5.7% over the prior year’s third quarter. On a same-center basis, including only those centers which were part of RadNet for both the third quarters of 2022 and 2021, MRI volume increased 9.2%, CT volume increased 6.0% and PET/CT volume increased 9.5%. Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 3.9% over the prior year’s same quarter.
Nine Month Financial Results
For the nine month period of 2022, RadNet reported Revenue from its Imaging Centers reporting segment of $1,043.1 million and Adjusted EBITDA(1) Excluding Losses from the AI reporting segment of $147.5 million. Revenue increased $61.7 million (or 6.3%) and Adjusted EBITDA(1), also excluding Losses from Provider Relief Funding of $6.3 million received in 2021 and a one-time benefit the forgiveness of deferred federal payroll taxes in 2021 of $7.7 million, increased $1.5 million (or 1.1%). Including our AI reporting segment Revenue of $3.1 million, Revenue was $1,046.2 million in the nine months of 2022, an increase of 6.5% from $981.9 million in last year’s nine month period. Including the AI reporting segment Adjusted EBITDA(1) losses, the one-time benefit the forgiveness of deferred federal payroll taxes in 2021 and Provider Relief Funding received in 2021, Adjusted EBITDA(1) for the nine month period of 2022 was $135.2 million as compared with $164.4 million in the same nine month period of 2021.
For the nine month period in 2022, RadNet reported Net Income of $11.6 million, a decrease of approximately $17.0 million over the first nine months of 2021. Per share diluted Net Income for the first nine months of 2022 was $0.19, compared to a diluted Net Income per share of $0.54 in the same nine month period of 2021 (based upon a weighted average number of diluted shares outstanding of 57.0 million in 2022 and 53.2 million in 2021).
Affecting Net Income in the nine months of 2022 were certain non-cash expenses and unusual items including: $39.6 million of non-cash gain from interest rate swaps; $8.1 million change in estimate related to refund liability; $496,000 of severance paid in connection with headcount reductions related to cost savings initiatives; $3.1 million expense related to leases for our de novo facilities under construction that have yet to open their operations; $18.8 million of pre-tax losses related to our AI reporting segment; $19.1 million of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted stock; $962,000 loss on the disposal of certain capital equipment; $3.1 million of non-operational rent expense associated with certain un-opened de novo locations; and $1.9 million of non-cash amortization of deferred financing costs and loan discounts related to financing fees paid as part of our existing credit facilities.
2022 Guidance Update
RadNet amends its previously announced guidance levels as follows:
| Original Guidance Range | Revised Guidance Range After Q2 Results | Revised Guidance Range After Q3 Results | |||||
| Revenue – Imaging Ctr Operations | $1,350 - $1,400 million | $1,360 - $1,410 million | Unchanged | ||||
| Adjusted EBITDA(1) Excluding Losses from AI Segment | $205 - $215 million | $208 - $218 million | $203 - $208 million | ||||
| Capital Expenditures(a) | $85 - $90 million | $90 - $95 million | $100 - $105 million | ||||
| Cash Interest Expense(c) | $27 - $32 million | Unchanged | $35 - $40 million | ||||
| Free Cash Flow (b)(2) | $80 - $90 million | Unchanged | $60 - $70 million | ||||
(a) Net of proceeds from the sale of equipment, imaging centers and joint venture interests, and excludes New Jersey Imaging Network capital expenditures.
(b) Defined by the Company as Adjusted EBITDA(1) less Capital Expenditures and Cash Paid for Interest.
(c) Excludes payments to and from counterparties on interest rate swaps.
Dr. Berger highlighted, “We are adjusting our guidance levels to reflect the challenges that an extremely difficult labor market had on our third quarter results and to reflect anticipated performance for the remainder of 2022. We are executing on a multitude of growth and cost savings initiatives that make me very optimistic and exciting about how we are positioned for the upcoming fourth quarter of 2022 and for full-year 2023.”
Conference Call for Today
Dr. Howard Berger, President and Chief Executive Officer, and Mark Stolper, Executive Vice President and Chief Financial Officer, will host a conference call to discuss its third quarter 2022 results on Wednesday, November 9th, 2022 at 7:30 a.m. Pacific Time (10:30 a.m. Eastern Time).
Conference Call Details:
Date: Wednesday, November 9, 2022
Time: 10:30 a.m. Eastern Time
Dial In-Number: 800-239-9838
International Dial-In Number: 929-477-0448
It is recommended that participants dial in approximately 5 to 10 minutes prior to the start of the 10:30 a.m. call. There will also be simultaneous and archived webcasts available at https://viavid.webcasts.com/starthere.jsp?ei=1580747&tp_key=2de3ec516e or http://www.radnet.com under the “Investors” menu section and “News Releases” sub-menu of the website. An archived replay of the call will also be available and can be accessed by dialing 844-512-2921 from the U.S., or 412-317-6671 for international callers, and using the passcode 2849600.
Forward Looking Statements
This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are expressions of our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, and anticipated future conditions, events and trends. Forward-looking statements can generally be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Forward-looking statements in this press release include, among others, statements we make regarding response to and the expected future impacts of COVID-19, including statements about our anticipated business results, balance sheet and liquidity and our future liquidity, burn rate and our continuing ability to service or refinance our current indebtedness.
Forward-looking statements are neither historical facts nor assurances of future performance. Because forward-looking statements relate to the future, they are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:
Any forward-looking statement contained in this current report is based on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that we may make from time to time, whether as a result of changed circumstances, new information, future developments or otherwise, except as required by applicable law.
Regulation G: GAAP and Non-GAAP Financial Information
This release contains certain financial information not reported in accordance with GAAP. The Company uses both GAAP and non-GAAP metrics to measure its financial results. The Company believes that, in addition to GAAP metrics, these non-GAAP metrics assist the Company in measuring its cash-based performance. The Company believes this information is useful to investors and other interested parties because it removes unusual and nonrecurring charges that occur in the affected period and provides a basis for measuring the Company's financial condition against other quarters. Such information should not be considered as a substitute for any measures calculated in accordance with GAAP, and may not be comparable to other similarly titled measures of other companies. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Reconciliation of this information to the most comparable GAAP measures is included in this release in the tables which follow.
About RadNet, Inc.
RadNet, Inc., is the leading national provider of freestanding, fixed-site diagnostic imaging services and related information technology solutions (including artificial intelligence) in the United States based on the number of locations and annual imaging revenue. RadNet has a network of 349 owned and/or operated outpatient imaging centers. RadNet's markets include Arizona, California, Delaware, Florida, Maryland, New Jersey and New York. Together with affiliated radiologists, inclusive of full-time and per diem employees and technicians, RadNet has a total of approximately 9,000 employees. For more information, visit http://www.radnet.com.
CONTACTS:
RadNet, Inc.
Mark Stolper, 310-445-2800
Executive Vice President and Chief Financial Officer
| RADNET, INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA) | ||||||||
| September 30, 2022 | December 31, 2021 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 95,006 | $ | 134,606 | ||||
| Accounts receivable | 172,507 | 135,062 | ||||||
| Due from affiliates | 3,648 | 5,384 | ||||||
| Prepaid expenses and other current assets | 53,344 | 49,212 | ||||||
| Total current assets | 324,505 | 324,264 | ||||||
| PROPERTY, EQUIPMENT AND RIGHT-OF-USE ASSETS | ||||||||
| Property and equipment, net | 515,569 | 484,247 | ||||||
| Operating lease right-of-use assets | 631,338 | 584,291 | ||||||
| Total property, equipment and right-of-use assets | 1,146,907 | 1,068,538 | ||||||
| OTHER ASSETS | ||||||||
| Goodwill | 575,092 | 513,820 | ||||||
| Other intangible assets | 88,640 | 56,603 | ||||||
| Deferred financing costs | 1,758 | 2,135 | ||||||
| Investment in joint ventures | 52,020 | 42,229 | ||||||
| Deferred tax assets | 3,512 | 14,853 | ||||||
| Deposits and other | 54,730 | 36,032 | ||||||
| Total assets | $ | 2,247,164 | $ | 2,058,474 | ||||
| LIABILITIES AND EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable, accrued expenses and other | $ | 296,333 | 263,937 | |||||
| Due to affiliates | 31,664 | 23,530 | ||||||
| Deferred revenue | 3,565 | 10,701 | ||||||
| Current operating lease liability | 66,872 | 65,452 | ||||||
| Current portion of notes payable | 10,789 | 11,164 | ||||||
| Total current liabilities | 409,223 | 374,784 | ||||||
| LONG-TERM LIABILITIES | ||||||||
| Long-term operating lease liability | 625,278 | 577,675 | ||||||
| Notes payable, net of current portion | 735,500 | 743,498 | ||||||
| Other non-current liabilities | 18,773 | 16,360 | ||||||
| Total liabilities | 1,788,774 | 1,712,317 | ||||||
| EQUITY | ||||||||
| RadNet, Inc. stockholders' equity: | ||||||||
| Common stock - $0.0001 par value, 200,000,000 shares authorized; 57,290,756 and 53,548,227 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively | 5 | 5 | ||||||
| Additional paid-in-capital | 424,369 | 342,592 | ||||||
| Accumulated other comprehensive loss | (29,680 | ) | (20,421 | ) | ||||
| Accumulated deficit | (81,688 | ) | (93,272 | ) | ||||
| Total RadNet, Inc.'s stockholders' equity | 313,006 | 228,904 | ||||||
| Noncontrolling interests | 145,384 | 117,253 | ||||||
| Total equity | 458,390 | 346,157 | ||||||
| Total liabilities and equity | $ | 2,247,164 | $ | 2,058,474 | ||||
| RADNET, INC. AND SUBSIDIARIES | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA) | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| REVENUE | ||||||||||||||||
| Provision for bad debts | ||||||||||||||||
| Service fee revenue | $ | 312,043 | $ | 295,407 | $ | 931,819 | $ | 870,479 | ||||||||
| Revenue under capitation arrangements | 38,001 | 37,283 | 114,366 | 111,449 | ||||||||||||
| Total service revenue | 350,044 | 332,690 | 1,046,185 | 981,928 | ||||||||||||
| Provider relief funding | — | — | — | 6,291 | ||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Cost of operations, excluding depreciation and amortization | 313,943 | 272,756 | 934,757 | 838,609 | ||||||||||||
| Depreciation and amortization | 29,229 | 24,606 | 85,209 | 71,272 | ||||||||||||
| (Gain) loss on sale and disposal of equipment and other | (247 | ) | 2,595 | 962 | (279 | ) | ||||||||||
| Severance costs | 195 | 163 | 496 | 715 | ||||||||||||
| Total operating expenses | 343,120 | 300,120 | 1,021,424 | 910,317 | ||||||||||||
| INCOME FROM OPERATIONS | 6,924 | 32,570 | 24,761 | 77,902 | ||||||||||||
| OTHER INCOME AND EXPENSES | ||||||||||||||||
| Interest expense | 12,420 | 12,032 | 35,398 | 37,028 | ||||||||||||
| Equity in earnings of joint ventures | (3,085 | ) | (2,853 | ) | (8,350 | ) | (8,259 | ) | ||||||||
| Non-cash change in fair value of interest rate swaps | (12,451 | ) | (2,870 | ) | (39,576 | ) | (14,149 | ) | ||||||||
| Debt restructuring and extinguishment expenses | — | — | — | 6,044 | ||||||||||||
| Other expenses (income) | 1,405 | (167 | ) | 1,562 | 1,699 | |||||||||||
| Total other (income) expenses | (1,711 | ) | 6,142 | (10,966 | ) | 22,363 | ||||||||||
| INCOME BEFORE INCOME TAXES | 8,635 | 26,428 | 35,727 | 55,539 | ||||||||||||
| Provision for income taxes | (2,188 | ) | (5,284 | ) | (7,087 | ) | (12,534 | ) | ||||||||
| NET INCOME | 6,447 | 21,144 | 28,640 | 43,005 | ||||||||||||
| Net income attributable to noncontrolling interests | 5,779 | 4,924 | 17,055 | 14,455 | ||||||||||||
| NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | $ | 668 | $ | 16,220 | $ | 11,585 | $ | 28,550 | ||||||||
| BASIC NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | $ | 0.01 | $ | 0.31 | $ | 0.21 | $ | 0.55 | ||||||||
| DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | $ | 0.01 | $ | 0.30 | $ | 0.19 | $ | 0.54 | ||||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING | ||||||||||||||||
| Basic | 56,744,419 | 52,810,644 | 56,041,017 | 52,323,360 | ||||||||||||
| Diluted | 57,651,761 | 53,817,840 | 57,036,417 | 53,249,698 | ||||||||||||
| RADNET, INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS | ||||||||
| (IN THOUSANDS) | ||||||||
| (unaudited) | ||||||||
| Nine Months Ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income | $ | 28,640 | $ | 43,005 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 85,209 | 71,272 | ||||||
| Amortization of operating lease assets | 51,573 | 55,880 | ||||||
| Equity in earnings of joint ventures | (8,350 | ) | (8,259 | ) | ||||
| Amortization deferred financing costs and loan discount | 1,943 | 2,608 | ||||||
| Loss (Gain) non sale and disposal of equipment | 962 | (279 | ) | |||||
| Loss on extinguishment of debt | — | 1,496 | ||||||
| Amortization of cash flow hedge | 2,771 | 2,765 | ||||||
| Non-cash change in fair value of interest rate hedge | (39,576 | ) | (14,149 | ) | ||||
| Stock-based compensation | 19,112 | 21,566 | ||||||
| Change in fair value of contingent consideration | (329 | ) | 891 | |||||
| Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions: | ||||||||
| Accounts receivable | (36,686 | ) | (23,237 | ) | ||||
| Other current assets | (4,934 | ) | 3,358 | |||||
| Other assets | 3,738 | (4,998 | ) | |||||
| Deferred taxes | 8,955 | 10,124 | ||||||
| Operating leases | (49,597 | ) | (55,035 | ) | ||||
| Deferred revenue | (7,809 | ) | (19,438 | ) | ||||
| Accounts payable, accrued expenses and other | 37,148 | 12,725 | ||||||
| Net cash provided by operating activities | 92,770 | 100,295 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchase of imaging facilities and other acquisitions | (26,009 | ) | (70,108 | ) | ||||
| Purchase of property and equipment | (98,606 | ) | (88,478 | ) | ||||
| Proceeds from sale of equipment | 3,008 | 521 | ||||||
| Equity contributions in existing joint ventures | (1,441 | ) | (1,441 | ) | ||||
| Net cash used in investing activities | (123,048 | ) | (159,506 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Principal payments on notes and leases payable | — | (3,302 | ) | |||||
| Payments on Term Loan Debt | (9,938 | ) | (616,217 | ) | ||||
| Proceeds from issuance of new debt, net of issuing costs | — | 716,369 | ||||||
| Purchase of noncontrolling interests by third party | — | 11,602 | ||||||
| Proceeds from revolving credit facility | — | 128,300 | ||||||
| Payments on revolving credit facility | — | (128,300 | ) | |||||
| Proceeds from issuance of common stock upon exercise of options | — | 26 | ||||||
| Net cash (used in) provided by financing activities | (9,938 | ) | 108,478 | |||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH | 616 | (32 | ) | |||||
| NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (39,600 | ) | 49,235 | |||||
| CASH AND CASH EQUIVALENTS, beginning of period | 134,606 | 102,018 | ||||||
| CASH AND CASH EQUIVALENTS, end of period | $ | 95,006 | $ | 151,253 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
| Cash paid during the period for interest | $ | 30,251 | $ | 21,408 | ||||
| Cash paid during the period for income taxes | $ | 560 | $ | 1,913 | ||||
| RADNET, INC. AND SUBSIDIARIES | ||||||||||||||||
| RECONCILIATION OF GAAP NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON SHAREHOLDERS TO ADJUSTED EBITDA | ||||||||||||||||
| (IN THOUSANDS) | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Net income attributable to RadNet, Inc. common stockholders | $ | 668 | $ | 16,220 | $ | 11,585 | $ | 28,550 | ||||||||
| Income taxes | 2,188 | 5,284 | 7,087 | 12,534 | ||||||||||||
| Interest expense | 12,420 | 12,032 | 35,398 | 37,028 | ||||||||||||
| Severance costs | 195 | 163 | 496 | 715 | ||||||||||||
| Depreciation and amortization | 29,229 | 24,606 | 85,209 | 71,272 | ||||||||||||
| Non-cash employee stock-based compensation | 3,317 | 4,422 | 19,112 | 21,566 | ||||||||||||
| (Gain) loss on sale and disposal of equipment and other | (247 | ) | 2,595 | 962 | (279 | ) | ||||||||||
| Debt restructuring and loss on extinguishment expenses | — | — | — | 6,044 | ||||||||||||
| Non-cash change in fair value of interest rate hedge | (12,451 | ) | (2,870 | ) | (39,576 | ) | (14,149 | ) | ||||||||
| Other adjustment to joint venture investment | — | — | — | (565 | ) | |||||||||||
| Other expenses | 1,405 | (167 | ) | 1,562 | 1,699 | |||||||||||
| Legal settlements | — | — | 2,197 | — | ||||||||||||
| Change in estimate relating to refund liability | 8,089 | — | 8,089 | — | ||||||||||||
| Non operational rent expenses | 959 | — | 3,120 | — | ||||||||||||
| Adjusted EBITDA Including Losses from AI Segment and Provider relief funding | $ | 45,772 | $ | 62,285 | $ | 135,241 | $ | 164,415 | ||||||||
| Provider relief funding | — | — | — | (6,291 | ) | |||||||||||
| Adjusted EBITDA Including Losses from AI Segment and excluding benefit from Provider Relief Funding | $ | 45,772 | $ | 62,285 | $ | 135,241 | $ | 158,124 | ||||||||
| Adjusted EBITDA losses from AI Segment | 4,462 | 306 | 12,253 | 1,816 | ||||||||||||
| Adjusted EBITDA excluding Losses from AI Segment and Provider relief funding | $ | 50,234 | $ | 62,591 | $ | 147,494 | $ | 159,940 | ||||||||
| PAYOR CLASS BREAKDOWN | ||||
| Third Quarter | ||||
| 2022 | ||||
| Commercial Insurance | 56.4 | % | ||
| Medicare | 22.3 | % | ||
| Capitation | 10.9 | % | ||
| Medicaid | 2.8 | % | ||
| Workers Compensation/Personal Injury | 3.8 | % | ||
| Other | 4.0 | % | ||
| Total | 100.0 | % | ||
| RADNET PAYMENTS BY MODALITY | ||||||||||||||||
| Third Quarter | Full Year | Full Year | Full Year | |||||||||||||
| 2022 | 2021 | 2020 | 2019 | |||||||||||||
| MRI | 37.2 | % | 36.0 | % | 35.4 | % | 35.8 | % | ||||||||
| CT | 17.3 | % | 17.2 | % | 17.6 | % | 16.9 | % | ||||||||
| PET/CT | 5.8 | % | 5.5 | % | 6.0 | % | 5.6 | % | ||||||||
| X-ray | 6.8 | % | 6.9 | % | 7.3 | % | 8.1 | % | ||||||||
| Ultrasound | 12.6 | % | 12.7 | % | 12.3 | % | 12.4 | % | ||||||||
| Mammography | 15.0 | % | 16.1 | % | 15.7 | % | 15.2 | % | ||||||||
| Nuclear Medicine | 0.9 | % | 1.0 | % | 1.0 | % | 1.0 | % | ||||||||
| Other | 4.5 | % | 4.6 | % | 4.7 | % | 4.9 | % | ||||||||
| 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||
Footnotes
(1) The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, each from continuing operations and adjusted for losses or gains on the sale of equipment, other income or loss, debt extinguishments and non-cash equity compensation. Adjusted EBITDA includes equity earnings in unconsolidated operations and subtracts allocations of earnings to non-controlling interests in subsidiaries, and is adjusted for non-cash or extraordinary and one-time events taken place during the period.
Adjusted EBITDA is reconciled to its nearest comparable GAAP financial measure. Adjusted EBITDA is a non-GAAP financial measure used as analytical indicator by RadNet management and the healthcare industry to assess business performance, and is a measure of leverage capacity and ability to service debt. Adjusted EBITDA should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA should not be considered in isolation or as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As Adjusted EBITDA is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies.
(2) As noted above, the Company defines Free Cash Flow as Adjusted EBITDA less total Capital Expenditures (whether completed with cash or financed) and Cash Interest paid. Free Cash Flow is a non-GAAP financial measure. The Company uses Free Cash Flow because the Company believes it provides useful information for investors and management because it measures our capacity to generate cash from our operating activities. Free Cash Flow does not represent total cash flow since it does not include the cash flows generated by or used in financing activities. In addition, our definition of Free Cash Flow may differ from definitions used by other companies.
Free Cash Flow should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA should not be considered in isolation or as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As Adjusted EBITDA is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies.
| RADNET, INC. AND SUBSIDIARIES | ||||||||
| SCHEDULE OF ADJUSTED EARNINGS AND EARNINGS PER SHARE(3) | ||||||||
| (IN THOUSANDS EXCEPT SHARE DATA) | ||||||||
| (unaudited) | ||||||||
| Three Months Ended | ||||||||
| September 30, | September 30, | |||||||
| 2022 | 2021 | |||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. | ||||||||
| COMMON STOCKHOLDERS | $ | 668 | $ | 16,220 | ||||
| Add COVID-19-related awards to employees | - | 2,832 | ||||||
| Add non-cash impact of cash flow hedges (i) | (11,206 | ) | (1,625 | ) | ||||
| Add increase in reserve for patient refunds | 8,089 | - | ||||||
| Add severance costs | 195 | 163 | ||||||
| Non-operational rent expenses (iii) | 959 | - | ||||||
| AI Segment Losses (iv) | 7,787 | 519 | ||||||
| Subtract forgiveness of deferred payroll taxes | - | (7,703 | ) | |||||
| Total adjustments - loss (gain) | 5,824 | (5,814 | ) | |||||
| Subtract tax impact of Adjustments (ii) | (1,153 | ) | 1,162 | |||||
| Tax effected impact of adjustments | 4,671 | (4,652 | ) | |||||
| TOTAL ADJUSTMENT TO NET INCOME ATTRIBUTABLE | ||||||||
| TO RADNET, INC. COMMON SHAREHOLDERS | 4,671 | (4,652 | ) | |||||
| ADJUSTED NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. | 5,339 | 11,568 | ||||||
| COMMON STOCKHOLDERS | ||||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING | ||||||||
| Diluted | 57,651,761 | 53,817,840 | ||||||
| ADJUSTED DILUTED NET INCOME PER SHARE | ||||||||
| ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | $ | 0.09 | $ | 0.21 | ||||
| (i) Impact is the combination of (a) the gain in fair value of the hedges during the quarter of $12,451 in 2022 and gain of $2,870 in 2021 and (b) the amortization of the accumulation of the changes in fair value out of Other Comprehensive Income that existed prior to the hedges becoming ineffective of $1,245 in 2022 and $1,245 in 2021. | ||||||||
| (ii) Tax effected using 19.80% blended federal and state effective tax rate for 2022 and 19.99% for 2021. | ||||||||
| (iii) Represents rent expense associated with de novo sites under construction prior to them becoming operational. | ||||||||
| (iv) Represents pre-tax net income losses before income taxes from Artificial Intelligence reporting segment. | ||||||||