RadNet, Inc. (NASDAQ: RDNT), a national leader in
providing high-quality, cost-effective, fixed-site outpatient
diagnostic imaging services through a network of 363 owned and
operated outpatient imaging centers, today reported financial
results for its second quarter of 2023.
Dr. Howard Berger, President and Chief Executive
Officer of RadNet, commented, “I am very pleased with the continued
strength of our core imaging center business. In our Imaging Center
segment, Revenue increased 13.8% and Adjusted EBITDA(1) increased
14.7% from last year’s second quarter. Our record quarterly Revenue
and Adjusted EBITDA(1) were driven by 11.4% aggregate and 7.1%
same-center procedural volume growth relative to last year’s second
quarter, along with effective expense management. We continue to
benefit from the steady growth in the overall industry as well as
the accelerating shift from hospital-based procedures to
lower-cost, more convenient freestanding centers.”
“As a result of the positive trends we are
experiencing in our core business and the strong financial
performance of the first and second quarters, we have elected to
revise upwards our 2023 full year Imaging Center segment Revenue
and Adjusted EBITDA(1) guidance levels in anticipation of financial
results that we believe will exceed both our original guidance
ranges and those that were revised after our first quarter
results,” added Dr. Berger.
Dr. Berger continued, “Our AI segment has begun
to demonstrate accelerated growth. Compared with last year’s second
quarter, our AI revenue grew 52.8%. Additionally, for the first six
months of 2023 compared with last year’s same six-month period, our
AI division Revenue grew 109%. We are experiencing increasing
enrollment as we roll-out our Enhanced Breast Cancer Detection
program and we are encouraged about its future success. While this
service offering continues to gain acceptance from our patients and
referring physicians, we have spent a considerable amount time and
effort in optimizing the educational benefits and pricing to
achieve wider adoption and exposure. These efforts purposefully
slowed the roll-out by 90-120 days, impacting the implementation
and delaying the financial performance of the
program.”
“To assist with the growth and commercialization
of our digital health businesses, which in addition to our AI
initiatives, includes our eRAD radiology informatics businesses, we
are pleased to welcome the addition to our management team of Sham
Sokka and Sanjog Misra, both with extensive experience in medical
software and AI businesses. These senior management additions
emphasize our commitment to, and confidence in our digital
businesses. We believe these digital health initiatives will have a
transformative impact on both RadNet’s AI and Imaging Center
businesses, and positions us to be a significant agent of change in
our dynamic industry, an industry that is driven by technology and
innovation,” said Dr. Berger.
“In response to the heavy volume demands we are
experiencing in many of our imaging center regions, we are growing
capacity and access through the de novo strategy we embarked on
last year. We opened one de novo facility during the second
quarter, and anticipate opening five additional centers by year end
as well as another six facilities planned in 2024. Our hospital and
health system joint venture offerings continue to grow with new
system partnerships and through expansion of existing
relationships,” concluded Dr. Berger.
Second Quarter Financial
Results
For the second quarter of 2023, RadNet reported
Revenue from its Imaging Centers reporting segment of $401.3
million and Adjusted EBITDA(1) of $63.7 million, which exclude
Revenue and Losses from the AI reporting segment. As compared with
last year’s second quarter, Revenue increased $48.5 million (or
13.8%) and Adjusted EBITDA(1) increased $8.2 million (or 14.7%).
Including our AI reporting segment, Revenue was $403.7 million in
the second quarter of 2023, an increase of 13.9% from $354.4
million in last year’s second quarter. Including the losses of the
AI reporting segment, Adjusted EBITDA(1) was $60.4 million in the
second quarter of 2023 and $51.3 million in the second quarter of
2022, an increase of 17.7%.
For the second quarter of 2023, RadNet reported
Net Income of $8.4 million as compared with $7.9 million for the
second quarter of 2022. Diluted Net Income Per Share for the second
quarter of 2023 was $0.12, compared with a Diluted Net Income Per
Share of $0.13 in the second quarter of 2022, based upon a weighted
average number of diluted shares outstanding of 60.9 million shares
in 2023 and 57.0 million shares in 2022.
There were a number of unusual or one-time items
impacting the second quarter including: $4.2 million of non-cash
gain from interest rate swaps; $1.0 million expense related to the
change in valuation of contingent consideration related to
completed acquisitions; $759,000 expense related to leases for our
de novo facilities under construction that have yet to open their
operations; and $8.7 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 $14.9
million and diluted Adjusted Earnings Per Share(3) was $0.24 during
the second quarter of 2023. This compares with Adjusted Earnings(3)
of $8.6 million and diluted Adjusted Earnings Per Share(3) of $0.15
during the second quarter of 2022.
Also, affecting Net Income in the second quarter
of 2023 were certain non-cash expenses and unusual items including:
$4.9 million of non-cash employee stock compensation expense
resulting from the vesting of certain options and restricted stock;
$1.9 million of severance paid in connection with headcount
reductions related to cost savings initiatives; $77,000 loss on the
disposal of certain capital equipment; and $748,000 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 second quarter of 2023, as compared with
the prior year’s second quarter, MRI volume increased 11.8%, CT
volume increased 11.3% and PET/CT volume increased 18.3%. Overall
volume, taking into account routine imaging exams, inclusive of
x-ray, ultrasound, mammography and other exams, increased 11.4%
over the prior year’s second quarter. On a same-center basis,
including only those centers which were part of RadNet for both the
second quarters of 2023 and 2022, MRI volume increased 7.3%, CT
volume increased 6.3% and PET/CT volume increased 18.8%. Overall
same-center volume, taking into account routine imaging exams,
inclusive of x-ray, ultrasound, mammography and other exams,
increased 7.1% over the prior year’s same quarter.
Six Month Financial Results
For the six month period of 2023, RadNet
reported Revenue from its Imaging Centers reporting segment of
$789.8 million and Adjusted EBITDA(1) Excluding Losses from the AI
reporting segment of $116.4 million. Revenue increased $95.8
million (or 13.8%) and Adjusted EBITDA(1) increased $19.1 million
(or 19.7%). Including our AI reporting segment Revenue of $4.5
million, Revenue was $794.3 million in the six months of 2023, an
increase of 14.1% from $696.1 million in last year’s six-month
period. Including the AI reporting segment Adjusted EBITDA(1)
losses, Adjusted EBITDA(1) for the six month period of 2023 was
$108.6 million as compared with $89.5 million in the same six month
period of 2022.
For the six-month period in 2023, RadNet
reported Net Loss of $12.6 million, compared with Net Income of
$10.9 million in the first six months of 2022. Per share Net Loss
for the first six months of 2023 was $(0.21), compared to a diluted
Net Income per share of $0.18 in the same six-month period of 2022
(based upon a weighted average number of diluted shares outstanding
of 59.2 million in 2023 and 56.7 million in 2022).
Affecting Net Income for the six month period of
2023 were certain non-cash expenses and non-recurring items
including: $17.1 million of non-cash employee stock compensation
expense; $16.2 million of pre-tax losses related to our AI
reporting segment; $2.0 million of severance paid in connection
with headcount reductions related to cost savings initiatives; $1.7
million of non-operational rent expense associated with certain
un-opened de novo locations: $656,000 loss on the disposal of
certain capital equipment; $66,000 of non-cash gain from interest
rate swaps; and $1.5 million of amortization of deferred financing
costs and loan discount related to our existing credit
facilities.
2023 Guidance Update
RadNet amends its previously announced guidance
levels as follows:
|
Imaging Center Segment |
|
|
|
|
|
Original Guidance Range |
Revised GuidanceRange After Q1 Results |
Revised Guidance Range After Q2 Results |
Total Net Revenue |
$1,525 - $1,575 million |
$1,550 - $1,600 million |
$1,575 - $1,610 million |
Adjusted EBITDA(1) |
$220 - $230 million |
$225 - $235 million |
$232 - $242 million |
Capital Expenditures(a) |
$105 - $115 million |
$110 - $120 million |
Unchanged |
Cash Interest Expense(c) |
$35 - $40 million |
$45 - $50 million |
Unchanged |
Free Cash Flow (b)(2) |
$70 - $80 million |
$65 - $70 million |
Unchanged |
|
Artificial Intelligence Segment |
|
|
Original Guidance Range |
Revised Guidance Range After Q1 Results |
Revised Guidance Range After Q2 Results |
Total Net Revenue |
$16 - $18 million |
$16 - $18 million |
$11 - $13 million |
Adjusted EBITDA(1) |
$(9) - $(11) million |
$(9) - $(11) million |
$(11) - $(13) 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 counterparties
on interest rate swaps and nets interest income from our cash
balance recorded in Other Income.
“We have increased our guidance ranges in our
core Imaging Center reporting segment for Revenue and Adjusted
EBITDA(1) to reflect the strong financial results in the first half
of 2023 as compared with our budget. Additionally, we have lowered
our guidance ranges for Revenue and Adjusted EBITDA(1) for the AI
Segment to reflect delays resulting from optimizing the
implementation of our Enhanced Breast Cancer Detection
program.”
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
second quarter 2023 results on Tuesday, August 8th, 2023 at 7:30
a.m. Pacific Time (10:30 a.m. Eastern Time).
Conference Call Details:
Date: Tuesday, August 8, 2023Time: 10:30 a.m.
Eastern TimeDial In-Number: 844-826-3035International Dial-In
Number: 412-317-5195
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=1626353&tp_key=fb76d167b0
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 10181301.
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 363 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.
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:
-
the availability and terms of capital to fund our business;
-
our ability to service our indebtedness, make principal and
interest payments as those payments become due and remain in
compliance with applicable debt covenants, in addition to our
ability to refinance such indebtedness on acceptable terms;
-
changes in general economic conditions nationally and regionally in
the markets in which we operate;
-
the availability and terms of capital to fund the expansion of our
business and improvements to our existing facilities;
-
our ability to maintain our current credit rating and the impact on
our funding costs and competitive position if we do not do so;
- our ability to acquire, develop,
implement and monetize technology, digital health initiatives,
artificial intelligence algorithms and applications;
-
volatility in interest and exchange rates, or credit markets;
-
the adequacy of our cash flow and earnings to fund our current and
future operations;
-
changes in service mix, revenue mix and procedure volumes;
-
delays in receiving payments for services provided;
-
increased bankruptcies among our partner physicians or joint
venture partners;
-
the impact of the political environment and related developments on
the current healthcare marketplace and on our business, including
with respect to the future of the Affordable Care Act;
-
the extent to which the ongoing implementation of healthcare
reform, or changes in or new legislation, regulations or guidance,
enforcement thereof by federal and state regulators or related
litigation result in a reduction in coverage or reimbursement rates
for our services, or other material impacts to our business;
-
closures or slowdowns and changes in labor costs and labor
difficulties, including stoppages affecting either our operations
or our suppliers' abilities to deliver supplies needed in our
facilities;
-
the occurrence of hostilities, political instability or
catastrophic events;
-
the emergence or reemergence of and effects related to future
pandemics, epidemics and infectious diseases; and
-
noncompliance by us with any privacy or security laws or any
cybersecurity incident or other security breach by us or a third
party involving the misappropriation, loss or other unauthorized
use or disclosure of confidential information.
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.
CONTACTS:
RadNet, Inc.Mark
Stolper, 310-445-2800Executive Vice President and
Chief Financial Officer
|
|
RADNET, INC.
AND SUBSIDIARIES |
|
CONDENSED
CONSOLIDATED BALANCE SHEETS |
|
(IN
THOUSANDS EXCEPT SHARE AND PER SHARE DATA) |
|
|
|
|
|
|
|
June 30, 2023 |
|
December 31, 2022 |
|
|
(unaudited) |
|
|
|
ASSETS |
|
|
|
|
CURRENT ASSETS |
|
|
|
|
Cash and Cash equivalents |
$ |
356,651 |
|
|
$ |
127,834 |
|
|
Accounts receivable |
|
174,481 |
|
|
|
166,357 |
|
|
Due from affiliates |
|
22,240 |
|
|
|
18,971 |
|
|
Prepaid expenses and other current assets |
|
49,319 |
|
|
|
54,022 |
|
|
Total current assets |
|
602,691 |
|
|
|
367,184 |
|
|
PROPERTY, EQUIPMENT AND RIGHT-OF-USE ASSETS |
|
|
|
|
Property and equipment, net |
|
576,094 |
|
|
|
565,961 |
|
|
Operating lease right-of-use assets |
|
627,130 |
|
|
|
603,524 |
|
|
Total property, plant, equipment and right-of-use assets |
|
1,203,224 |
|
|
|
1,169,485 |
|
|
OTHER ASSETS |
|
|
|
|
Goodwill |
|
687,879 |
|
|
|
677,665 |
|
|
Other intangible assets |
|
100,433 |
|
|
|
106,228 |
|
|
Deferred financing costs |
|
1,962 |
|
|
|
2,280 |
|
|
Investment in joint ventures |
|
52,492 |
|
|
|
57,893 |
|
|
Deposits and other |
|
56,609 |
|
|
|
53,172 |
|
|
Total assets |
$ |
2,705,290 |
|
|
$ |
2,433,907 |
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
Accounts payable, accrued expenses and other |
$ |
333,224 |
|
|
$ |
369,595 |
|
|
Due to affiliates |
|
20,463 |
|
|
|
23,100 |
|
|
Deferred revenue |
|
5,054 |
|
|
|
4,021 |
|
|
Current operating lease liability |
|
59,504 |
|
|
|
57,607 |
|
|
Current portion of notes payable |
|
15,989 |
|
|
|
12,400 |
|
|
Total current liabilities |
|
434,234 |
|
|
|
466,723 |
|
|
LONG-TERM LIABILITIES |
|
|
|
|
Long-term operating lease liability |
|
628,845 |
|
|
|
604,117 |
|
|
Notes payable, net of current portion |
|
848,333 |
|
|
|
839,344 |
|
|
Deferred tax liability, net |
|
10,005 |
|
|
|
9,256 |
|
|
Other non-current liabilities |
|
22,869 |
|
|
|
23,015 |
|
|
Total liabilities |
|
1,944,286 |
|
|
|
1,942,455 |
|
|
EQUITY |
|
|
|
|
RadNet, Inc.
stockholders' equity: |
|
|
|
|
Common stock
- $.0001 par value, 200,000,000 shares authorized; 67,669,564 and
57,723,125 shares issued and outstanding at June 30, 2023 and
December 31, 2022, respectively |
|
7 |
|
|
|
6 |
|
|
Additional paid-in-capital |
|
703,593 |
|
|
|
436,288 |
|
|
Accumulated other comprehensive loss |
|
(15,183 |
) |
|
|
(20,677 |
) |
|
Accumulated deficit |
|
(95,258 |
) |
|
|
(82,622 |
) |
|
Total RadNet, Inc.'s stockholders equity |
|
593,159 |
|
|
|
332,995 |
|
|
Noncontrolling interests |
|
167,845 |
|
|
|
158,457 |
|
|
Total equity |
|
761,004 |
|
|
|
491,452 |
|
|
Total liabilities and equity |
$ |
2,705,290 |
|
|
$ |
2,433,907 |
|
|
|
|
|
|
|
|
|
RADNET, INC.
AND SUBSIDIARIES |
|
CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS |
|
(IN
THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA) |
|
(unaudited) |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
REVENUE |
|
|
|
|
|
|
|
|
Service fee
revenue |
$ |
363,918 |
|
|
$ |
316,501 |
|
|
$ |
716,338 |
|
|
$ |
619,776 |
|
|
Revenue
under capitation arrangements |
|
39,797 |
|
|
|
37,874 |
|
|
|
77,941 |
|
|
|
76,365 |
|
|
Total
service revenue |
|
403,715 |
|
|
|
354,375 |
|
|
|
794,279 |
|
|
|
696,141 |
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
Cost of
operations, excluding depreciation and amortization |
|
345,147 |
|
|
|
305,775 |
|
|
|
697,012 |
|
|
|
620,813 |
|
|
Depreciation
and amortization |
|
32,180 |
|
|
|
28,862 |
|
|
|
63,495 |
|
|
|
55,980 |
|
|
Loss (gain)
on sale and disposal of equipment and other |
|
77 |
|
|
|
81 |
|
|
|
656 |
|
|
|
1,209 |
|
|
Severance
costs |
|
1,870 |
|
|
|
99 |
|
|
|
2,004 |
|
|
|
300 |
|
|
Total
operating expenses |
|
379,274 |
|
|
|
334,817 |
|
|
|
763,167 |
|
|
|
678,302 |
|
|
INCOME (LOSS) FROM OPERATIONS |
|
24,441 |
|
|
|
19,558 |
|
|
|
31,112 |
|
|
|
17,839 |
|
|
OTHER INCOME AND EXPENSES |
|
|
|
|
|
|
|
|
Interest
expense |
|
16,039 |
|
|
|
11,385 |
|
|
|
31,761 |
|
|
|
22,978 |
|
|
Equity in
earnings of joint ventures |
|
(1,423 |
) |
|
|
(2,748 |
) |
|
|
(2,851 |
) |
|
|
(5,266 |
) |
|
Non-cash
change in fair value of interest rate hedge |
|
(4,159 |
) |
|
|
(6,306 |
) |
|
|
(66 |
) |
|
|
(27,125 |
) |
|
Other
expenses (income) |
|
40 |
|
|
|
(7 |
) |
|
|
1,472 |
|
|
|
158 |
|
|
Total other
expense (income) |
|
10,497 |
|
|
|
2,324 |
|
|
|
30,316 |
|
|
|
(9,255 |
) |
|
INCOME (LOSS) BEFORE INCOME TAXES |
|
13,944 |
|
|
|
17,234 |
|
|
|
796 |
|
|
|
27,094 |
|
|
Benefit from
(provision for) income taxes |
|
614 |
|
|
|
(3,403 |
) |
|
|
(521 |
) |
|
|
(4,900 |
) |
|
NET
INCOME (LOSS) |
|
14,558 |
|
|
|
13,831 |
|
|
|
275 |
|
|
|
22,194 |
|
|
Net income
(loss) attributable to noncontrolling interests |
|
6,189 |
|
|
|
5,926 |
|
|
|
12,911 |
|
|
|
11,276 |
|
|
NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. COMMON
STOCKHOLDERS |
$ |
8,369 |
|
|
$ |
7,905 |
|
|
$ |
(12,636 |
) |
|
$ |
10,918 |
|
|
|
|
|
|
|
|
|
|
|
BASIC NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET,
INC. COMMON STOCKHOLDERS |
$ |
0.14 |
|
|
$ |
0.14 |
|
|
$ |
(0.21 |
) |
|
$ |
0.20 |
|
|
|
|
|
|
|
|
|
|
|
DILUTED NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET,
INC. COMMON STOCKHOLDERS |
$ |
0.12 |
|
|
$ |
0.13 |
|
|
$ |
(0.21 |
) |
|
$ |
0.18 |
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING |
|
|
|
|
|
|
|
|
Basic |
|
59,880,803 |
|
|
|
56,059,824 |
|
|
|
59,221,453 |
|
|
|
55,683,335 |
|
|
Diluted |
|
60,916,985 |
|
|
|
56,966,548 |
|
|
|
59,221,453 |
|
|
|
56,666,290 |
|
|
|
|
|
|
|
|
|
|
|
|
RADNET, INC.
AND SUBSIDIARIES |
CONDENSED
CONSOLIDATED STATEMENTS OF CASHFLOWS |
(IN
THOUSANDS) |
(unaudited) |
|
Six Months Ended June 30, |
|
|
2023 |
|
|
|
2022 |
|
CASH
FLOWS FROM OPERATING ACTIVITIES |
|
|
|
Net income |
$ |
275 |
|
|
$ |
22,194 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
|
63,495 |
|
|
|
55,980 |
|
Amortization of operating lease assets |
|
31,601 |
|
|
|
34,055 |
|
Equity in earnings of joint ventures |
|
(2,851 |
) |
|
|
(5,266 |
) |
Distributions from joint ventures |
|
8,947 |
|
|
|
- |
|
Amortization deferred financing costs and loan discount |
|
1,494 |
|
|
|
1,295 |
|
Loss (Gain) non sale and disposal of equipment |
|
656 |
|
|
|
1,209 |
|
Amortization of cash flow hedge |
|
1,844 |
|
|
|
1,847 |
|
Non-cash change in fair value of interest rate hedge |
|
(66 |
) |
|
|
(27,125 |
) |
Stock-based compensation |
|
17,055 |
|
|
|
15,795 |
|
Change in fair value of contingent consideration |
|
3,098 |
|
|
|
(1,287 |
) |
Changes in operating assets and liabilities, net of assets acquired
and liabilities assumed in purchase transactions: |
|
|
|
Accounts receivable |
|
(8,124 |
) |
|
|
(30,566 |
) |
Other current assets |
|
4,703 |
|
|
|
(709 |
) |
Other assets |
|
(6,590 |
) |
|
|
1,282 |
|
Deferred taxes |
|
(2,249 |
) |
|
|
4,732 |
|
Operating lease liability |
|
(28,582 |
) |
|
|
(32,219 |
) |
Deferred revenue |
|
1,033 |
|
|
|
(7,565 |
) |
Accounts payable, accrued expenses and other |
|
14,952 |
|
|
|
32,092 |
|
Net cash provided by operating activities |
|
100,691 |
|
|
|
65,744 |
|
CASH
FLOWS FROM INVESTING ACTIVITIES |
|
|
|
Purchase of imaging facilities and other acquisitions |
|
(10,315 |
) |
|
|
(26,009 |
) |
Purchase of property and equipment and other |
|
(95,380 |
) |
|
|
(72,659 |
) |
Proceeds from sale of equipment |
|
73 |
|
|
|
4,121 |
|
Equity contributions in existing and purchase of interest in joint
ventures |
|
(288 |
) |
|
|
(1,441 |
) |
Net cash used in investing activities |
|
(105,910 |
) |
|
|
(95,988 |
) |
CASH
FLOWS FROM FINANCING ACTIVITIES |
|
|
|
Principal payments on notes and leases payable |
|
(1,051 |
) |
|
|
- |
|
Payments on Term Loan Debt |
|
(7,376 |
) |
|
|
(6,625 |
) |
Distributions paid to noncontrolling interests |
|
(3,523 |
) |
|
|
- |
|
Proceeds from issuance of common stock |
|
246,201 |
|
|
|
- |
|
Proceeds from issuance of common stock upon exercise of
options |
|
51 |
|
|
|
- |
|
Net cash used in financing activities |
|
234,302 |
|
|
|
(6,625 |
) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH |
|
(266 |
) |
|
|
1,433 |
|
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
|
228,817 |
|
|
|
(35,436 |
) |
CASH
AND CASH EQUIVALENTS, beginning of period |
|
127,834 |
|
|
|
134,606 |
|
CASH
AND CASH EQUIVALENTS, end of period |
$ |
356,651 |
|
|
$ |
99,170 |
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION |
|
|
|
Cash paid during the period for interest |
$ |
39,301 |
|
|
$ |
19,687 |
|
Cash paid during the period for income taxes |
$ |
201 |
|
|
$ |
126 |
|
Cash received (paid) during the period from cash flow hedge |
$ |
6,715 |
|
|
$ |
(4,248 |
) |
Cash Interest Received on our Cash Balance |
$ |
2,681 |
|
|
$ |
- |
|
|
|
|
|
|
|
RADNET, INC.
AND SUBSIDIARIES |
|
RECONCILIATION OF GAAP NET INCOME ATTRIBUTABLE TO RADNET,
INC. COMMON SHAREHOLDERS TO ADJUSTED EBITDA |
|
(IN
THOUSANDS) |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) attributable to Radnet, Inc. common stockholders |
$ |
8,369 |
|
|
$ |
7,905 |
|
|
$ |
(12,636 |
) |
|
$ |
10,918 |
|
|
Income
taxes |
|
(614 |
) |
|
|
3,403 |
|
|
|
521 |
|
|
|
4,900 |
|
|
Interest
expense |
|
16,039 |
|
|
|
11,385 |
|
|
|
31,761 |
|
|
|
22,978 |
|
|
Severance
costs |
|
1,870 |
|
|
|
99 |
|
|
|
2,004 |
|
|
|
300 |
|
|
Depreciation
and amortization |
|
32,180 |
|
|
|
28,862 |
|
|
|
63,495 |
|
|
|
55,980 |
|
|
Non-cash
employee stock-based compensation |
|
4,870 |
|
|
|
4,693 |
|
|
|
17,056 |
|
|
|
15,795 |
|
|
Loss (gain)
on sale and disposal of equipment and other |
|
77 |
|
|
|
81 |
|
|
|
656 |
|
|
|
1,209 |
|
|
Non-cash
change in fair value of interest rate hedge |
|
(4,159 |
) |
|
|
(6,306 |
) |
|
|
(66 |
) |
|
|
(27,125 |
) |
|
Other
expenses |
|
40 |
|
|
|
(7 |
) |
|
|
1,472 |
|
|
|
158 |
|
|
Legal
settlements |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,197 |
|
|
Contingent
Consideration |
|
1,014 |
|
|
|
- |
|
|
|
2,630 |
|
|
|
- |
|
|
Non-operational rent expenses |
|
759 |
|
|
|
1,222 |
|
|
|
1,718 |
|
|
|
2,160 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Including Losses from AI
Segment |
$ |
60,445 |
|
|
$ |
51,337 |
|
|
$ |
108,611 |
|
|
$ |
89,470 |
|
|
|
|
|
|
|
|
|
|
|
Losses from
AI Segment |
|
3,285 |
|
|
|
4,207 |
|
|
|
7,779 |
|
|
|
7,792 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA excluding Losses from AI
Segment |
$ |
63,730 |
|
|
$ |
55,544 |
|
|
$ |
116,390 |
|
|
$ |
97,262 |
|
|
|
|
|
|
|
|
|
|
|
PAYOR CLASS
BREAKDOWN |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter |
|
|
|
|
|
|
|
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
Insurance |
|
58.3 |
% |
|
|
|
|
|
|
Medicare |
|
22.2 |
% |
|
|
|
|
|
|
Capitation |
|
9.9 |
% |
|
|
|
|
|
|
Medicaid |
|
2.5 |
% |
|
|
|
|
|
|
Workers Compensation/Personal Injury |
3.2 |
% |
|
|
|
|
|
|
Other |
|
4.1 |
% |
|
|
|
|
|
|
Total |
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RADNET
PAYMENTS BY MODALITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second
Quarter |
|
|
Full Year |
|
Full Year |
|
Full Year |
|
|
|
2023 |
|
|
2022 |
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
MRI |
|
36.7 |
% |
|
36.8 |
% |
|
36.0 |
% |
|
35.4 |
% |
|
CT |
|
16.9 |
% |
|
17.5 |
% |
|
17.2 |
% |
|
17.6 |
% |
|
PET/CT |
|
6.4 |
% |
|
5.8 |
% |
|
5.5 |
% |
|
6.0 |
% |
|
X-ray |
|
6.6 |
% |
|
6.7 |
% |
|
3.9 |
% |
|
7.3 |
% |
|
Ultrasound |
|
13.0 |
% |
|
12.6 |
% |
|
12.7 |
% |
|
12.3 |
% |
|
Mammography |
|
15.6 |
% |
|
15.3 |
% |
|
16.1 |
% |
|
15.7 |
% |
|
Nuclear
Medicine |
|
0.8 |
% |
|
0.9 |
% |
|
1.0 |
% |
|
1.0 |
% |
|
Other |
|
4.0 |
% |
|
4.5 |
% |
|
4.6 |
% |
|
4.7 |
% |
|
|
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
PROCEDURES
BY MODALITY* |
|
|
|
|
|
|
|
|
|
|
|
|
|
Second
Quarter |
|
Second
Quarter |
|
|
|
|
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
|
|
MRI |
|
387,619 |
|
346,598 |
|
|
CT |
|
|
235,138 |
|
211,221 |
|
|
PET/CT |
|
15,036 |
|
12,710 |
|
|
Nuclear Medicine |
9,463 |
|
9,857 |
|
|
Ultrasound |
|
620,660 |
|
552,941 |
|
|
Mammography |
450,747 |
|
393,515 |
|
|
X-ray and Other |
832,719 |
|
763,334 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
2,551,382 |
|
2,290,176 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Volumes include wholly owned and joint venture centers. |
|
|
|
|
|
|
|
|
|
|
|
RADNET, INC.
AND SUBSIDIARIES |
SCHEDULE OF
ADJUSTED EARNINGS AND EARNINGS PER SHARE
(3) |
(IN
THOUSANDS EXCEPT SHARE DATA) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
|
|
|
|
|
|
June 30, |
|
|
|
|
|
|
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME ATTRIBUTABLE TO RADNET, INC. |
|
|
|
|
COMMON STOCKHOLDERS |
|
|
$ |
8,369 |
|
|
$ |
7,905 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtract non-cash change in fair value of interest
rate swaps (i) |
|
(4,159 |
) |
|
|
(6,306 |
) |
|
Non-operational rent expenses (iii) |
|
|
|
759 |
|
|
|
1,222 |
|
|
Contingent Consideration |
|
|
|
1,014 |
|
|
|
- |
|
|
AI Segment Losses (iv) |
|
|
|
|
8,655 |
|
|
|
5,892 |
|
|
|
Total adjustments - loss (gain) |
|
|
|
6,269 |
|
|
|
808 |
|
|
Subtract tax impact of Adjustments (ii) |
|
|
|
276 |
|
|
|
(160 |
) |
|
|
Tax effected impact of adjustments |
|
|
|
6,545 |
|
|
|
648 |
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ADJUSTMENT TO NET INCOME ATTRIBUTABLE |
|
|
|
|
TO RADNET, INC. COMMON SHAREHOLDERS |
|
6,545 |
|
|
|
648 |
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET INCOME ATTRIBUTABLE TO RADNET,
INC. |
|
14,914 |
|
|
|
8,553 |
|
|
COMMON STOCKHOLDERS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING |
|
|
|
|
Diluted |
|
|
|
|
|
60,916,985 |
|
|
|
56,966,548 |
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED DILUTED NET INCOME PER SHARE |
|
|
|
|
ATTRIBUTABLE TO RADNET, INC. COMMON
STOCKHOLDERS |
$ |
0.24 |
|
|
$ |
0.15 |
|
|
|
|
|
|
|
|
|
|
|
|
(i) Impact from the
change in fair value of the swaps during the quarter. Excludes the
amortization |
|
|
of the accumulation of
the changes in fair value out of Other Comprehensive Income that
existed prior to the hedges |
becoming ineffective. |
|
|
|
|
|
|
(ii) Tax effected
using (4.40)% and 19.75% blended federal and state effective tax
rate for the second quarter of 2023 and 2022, respectively. |
(iii) Represents rent
expense associated with de novo sites under construction prior to
them becoming operational. |
|
(iv) Represents
losses before income taxes from Artificial Intelligence reporting
segment. |
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
(3) The Company defines Adjusted Earnings (Loss)
Per Share as net income or loss attributable to RadNet, Inc. common
stockholders and excludes losses or gains on the disposal of
equipment, loss on debt extinguishments, bargain purchase gains,
severance costs, loss on impairment, loss or gain on swap
valuation, gain on extinguishment of debt, unusual or non-recurring
entries that impact the Company’s tax provision and any other
non-recurring or unusual transactions recorded during the
period.
Adjusted Earnings (Loss) Per Share is reconciled
to its nearest comparable GAAP financial measure. Adjusted Earnings
(Loss) Per Share is a non-GAAP financial measure used as analytical
indicator by RadNet management and the healthcare industry to
assess business performance. Adjusted Earnings Per Share should not
be considered a measure of financial performance under GAAP, and
the items excluded from Adjusted Earnings Per Share 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 Earnings Per Share 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.
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