RadNet, Inc. (NASDAQ: RDNT), a national leader in
providing high-quality, cost-effective, fixed-site outpatient
diagnostic imaging services through a network of 366 owned and
operated outpatient imaging centers, today reported financial
results for its third quarter of 2023.
Dr. Howard Berger, President and Chief Executive
Officer of RadNet, commented, “I am very pleased with our
performance in the third quarter. We continue to experience strong
procedural volumes, contributing to the highest third quarter
Revenue in our Company’s history. Compared with last year’s third
quarter, our Imaging Center segment Revenue increased 14.3%, driven
by 8.6% aggregate and 4.2% same center procedural volume growth.
Additionally, taking into account one less work day in the third
quarter of 2023 as compared with the second quarter of this year,
our Revenue per work day increased sequentially, a trend which has
continued thus far into this year’s fourth quarter.”
Dr. Berger continued, “Despite a challenging
labor market and other inflationary pressures, we were effective in
managing expenses during the quarter. Our Imaging Center segment
Adjusted EBITDA(1) increased 20.3% as compared with last year’s
third quarter, which resulted in Imaging Center margin expansion
from 14.4% in last year’s third quarter to 15.1% in this year’s
same quarter. As a result of the strong operating performance and
our confident outlook for the fourth quarter, we have elected to
increase our 2023 guidance range for Adjusted EBITDA(1) for the
third time this year.”
“Our AI segment continues to steadily grow,
increasing by 221% from last year’s third quarter. This was driven
by the launch of our Enhanced Breast Cancer Detection (“EBCD”)
mammography offering. We are now fully rolled-out with this service
to all of our mammography centers on the east coast, and we have
begun program implementation in California, which we anticipate
will be completed by the end of the first quarter of 2024. We are
experiencing close to a 35% adoption rate on the east coast, a
metric we expect to increase as we continue to educate patients and
referring physicians about the significant advantages of electing
EBCD. We are on target to meet our AI segment guidance for 2023 and
continue to work towards break-even Adjusted EBITDA(1) from the AI
segment by the end of next year,” continued Dr. Berger.
Dr. Berger added, “I am very pleased to announce
that during the quarter, we expanded our outpatient radiology
partnership with Cedars-Sinai. This includes establishing a new
joint venture called Los Angeles Imaging Group, initially with
three locations, as well as broadening our existing three-center
joint venture, Santa Monica Imaging Group, to include the
contribution of seven additional centers -- five of which were
contributed by Cedars-Sinai. The expanded relationship with
Cedars-Sinai is designed to increase patient access to outpatient
radiology by broadening the ambulatory network of imaging centers
throughout Los Angeles, including certain underserved communities.
The ventures will streamline and improve patient care by improving
workflow, providing better access to records and producing more
timely and accurate results for patients and referring physicians.
After giving effect to the expanded Cedars-Sinai relationship, we
now have almost 36% of our imaging centers held within health
system partnerships.”
Dr. Berger concluded, “We are well-positioned
with low financial leverage and strong liquidity to continue to
accelerating growth. We ended the third quarter with a cash balance
of $338 million, a ratio of Net Debt to Adjusted EBITDA(1) slightly
above two and an undrawn $195 million revolving credit
facility. While we will continue to execute on a de
novo strategy we began almost two years ago, we are being presented
with acquisition opportunities and health system partnerships with
greater frequency. We look forward to being in a position to
discuss some of these opportunities in the coming quarters.”
Third Quarter Financial
Results
For the third quarter of 2023, RadNet reported
Revenue from its Imaging Centers reporting segment of $399.1
million and Adjusted EBITDA(1) of $60.4 million, which excludes
Revenue and Adjusted EBITDA(1) losses from the AI reporting
segment. As compared with last year’s third quarter, Revenue
increased $49.9 million (or 14.3%) and Adjusted EBITDA(1) increased
$10.2 million (or 20.3%).
Including our AI reporting segment, Revenue was
$402.0 million in the third quarter of 2023, an increase of 14.8%
from $350.0 million in last year’s third quarter. Including the
Adjusted EBITDA(1) losses of the AI reporting segment, Adjusted
EBITDA(1) was $57.9 million in the third quarter of 2023 and $45.8
million in the third quarter of 2022, an increase of 26.5%.
For the third quarter of 2023, RadNet reported
Net Income of $17.5 million as compared with $668,000 for the third
quarter of 2022. Diluted Net Income Per Share for the third quarter
of 2023 was $0.25, compared with a Diluted Net Income per share of
$0.01 in the third quarter of 2022, based upon a weighted average
number of diluted shares outstanding of 68.8 million shares in 2023
and 57.7 million shares in 2022.
There were a number of unusual or one-time items
impacting the third quarter including: $2.3 million of non-cash
loss from interest rate swaps (net of the amortization of the
accumulation of the changes in fair value from Other Comprehensive
Income); $1.2 million of severance paid in connection with
headcount reductions related to cost savings initiatives; $16.8
million gain on the contribution of imaging centers into the Santa
Monica Imaging Group joint venture with Cedars-Sinai; $1.0 million
expense related to leases for our de novo facilities under
construction that have yet to open their operations; $1.3 million
of pre-tax losses related to our AI reporting segment (net of
non-cash adjustments to contingent consideration and intangible AI
assets); and $915,000 loss from revaluation of certain acquisition
contingent consideration. Adjusting for the above items, Adjusted
Earnings(3) from the Imaging Centers reporting segment was $9.9
million and diluted Adjusted Earnings Per Share(3) was $0.14 during
the third quarter of 2023.
Also, affecting Net Income in the third quarter
of 2023 were certain non-cash expenses and unusual items, including
$4.3 million of non-cash employee stock compensation expense
resulting from the vesting of certain options and restricted stock
and $746,000 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 2023, as compared with
the prior year’s third quarter, MRI volume increased 11.7%, CT
volume increased 10.9% and PET/CT volume increased 17.7%. Overall
volume, taking into account routine imaging exams, inclusive of
x-ray, ultrasound, mammography and other exams, increased 8.6% 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 2023 and 2022, MRI volume increased 6.9%, CT volume
increased 6.0% and PET/CT volume increased 15.2%. Overall
same-center volume, taking into account routine imaging exams,
inclusive of x-ray, ultrasound, mammography and other exams,
increased 4.2% over the prior year’s same quarter.
Nine Month Financial
Results
For the nine month period of 2023, RadNet
reported Revenue from its Imaging Centers reporting segment of
$1,189 million and Adjusted EBITDA(1) of $176.8 million. Revenue
increased $145.7 million (or 14.0%) and Adjusted EBITDA(1)
increased $29.3 million (or 19.9%). Including our AI reporting
segment Revenue of $7.4 million, Revenue was $1,196 million in the
nine months of 2023, an increase of 14.3% from $1,046.2 million in
last year’s nine month period. Including the AI reporting segment
Adjusted EBITDA(1) losses, Adjusted EBITDA(1) for the nine month
period of 2023 was $166.5 million as compared with $135.2 million
in the same nine month period of 2022.
For the nine month period in 2023, RadNet
reported Net Income of $4.9 million as compared with $11.6 million
over the first nine months of 2022. Per share diluted Net Income
for the first nine months of 2023 was $0.08, compared to a diluted
Net Income per share of $0.19 in the same nine month period of 2022
(based upon a weighted average number of diluted shares outstanding
of 63.2 million in 2023 and 57.0 million in 2022).
Affecting Net Income in the nine months of 2023
were certain non-cash expenses and unusual items including: $3.2
million of severance paid in connection with headcount reductions
related to cost savings initiatives; $2.7 million expense related
to leases for our de novo facilities under construction that have
yet to open their operations; $17.6 million of pre-tax losses
related to our AI reporting segment (net of non-cash adjustments
related to contingent consideration and intangible AI assets);
$915,000 loss from revaluation of certain acquisition contingent
consideration; $21.4 million of non-cash employee stock
compensation expense resulting from the vesting of certain options
and restricted stock; $16.8 million gain on the contribution of
imaging centers into the Santa Monica Imaging Group joint venture
with Cedars-Sinai; and $746,000 of non-cash amortization of
deferred financing costs and loan discounts related to financing
fees paid as part of our existing credit facilities.
2023 Guidance Update
RadNet amends its previously announced guidance
levels as follows:
Imaging Center Segment |
|
|
|
|
|
Original Guidance Range |
Revised Guidance Range After Q2 Results |
Revised Guidance Range After Q3 Results |
Total Net Revenue |
$1,525 - $1,575 million |
$1,575 - $1,610 million |
Unchanged |
Adjusted EBITDA(1) |
$220 - $230 million |
$232 - $242 million |
$235 - $245 million |
Capital Expenditures(a) |
$105 - $115 million |
$110 - $120 million |
$115 - $125 million |
Cash Interest Expense(c) |
$35 - $40 million |
$45 - $50 million |
Unchanged |
Free Cash Flow(b)(2) |
$70 - $80 million |
$65 - $75 million |
Unchanged |
|
|
|
|
Artificial Intelligence Segment |
|
|
|
|
|
Original Guidance Range |
Revised Guidance Range After Q2 Results |
Revised Guidance Range After Q3 Results |
Total Net Revenue |
$16 - $18 million |
$11 - $13 million |
Unchanged |
Adjusted EBITDA(1) |
$(9) - $(11) million |
$(11) - $(13) million |
Unchanged |
|
|
|
|
(a) Net of proceeds from the sale of equipment,
imaging centers and joint venture interests, New Jersey Imaging
Network capital expenditures, a $19.8 million one-time purchase
with a promissory note of equipment previously leased under
operating leases and a $5 million purchase of software and other
intellectual property from a vender.(b) Defined by the Company as
Adjusted EBITDA(1) less Capital Expenditures and Cash Interest
Expense. (c) Excludes payments to or from counterparties on
interest rate swaps and nets interest income from our cash balance
recorded in Other Income.
Dr. Berger highlighted, “We elected to increase
our guidance level for Adjusted EBITDA(1) to reflect our continued
strong operating performance. We have been consistently
outperforming our internal budget, which is a result of strong
procedural volumes and Revenue and improved margins through active
expense management. We also raised our capital expenditure guidance
range to account for the continued aggressive reinvestment of our
cash flow into expanding capacity, de novo facilities, hospital
joint ventures and information technology
solutions.”
Financial Results Conference
Call
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 2023 results on Thursday, November 9th, 2023 at 7:30 a.m.
Pacific Time (10:30 a.m. Eastern Time).
Conference Call Details:
Date: Thursday, November 9, 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=1639730&tp_key=c810ee0866
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 10183631.
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;
-
regulatory changes that increase minimum wage thresholds;
-
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.
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 366 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 technologists,
RadNet has a total of over 9,000 employees. For more information,
visit http://www.radnet.com.
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) |
|
|
|
|
|
September 30, 2023 |
|
December 31, 2022 |
|
(unaudited) |
|
|
ASSETS |
|
|
|
CURRENT ASSETS |
|
|
|
Cash and Cash equivalents |
$ |
337,884 |
|
|
$ |
127,834 |
|
Accounts receivable |
|
167,736 |
|
|
|
166,357 |
|
Due from affiliates |
|
24,848 |
|
|
|
18,971 |
|
Prepaid expenses and other current assets |
|
48,204 |
|
|
|
54,022 |
|
Total current assets |
|
578,672 |
|
|
|
367,184 |
|
PROPERTY, EQUIPMENT AND RIGHT-OF-USE ASSETS |
|
|
|
Property and equipment, net |
|
577,227 |
|
|
|
565,961 |
|
Operating lease right-of-use assets |
|
613,164 |
|
|
|
603,524 |
|
Total property, plant, equipment and right-of-use assets |
|
1,190,391 |
|
|
|
1,169,485 |
|
OTHER ASSETS |
|
|
|
Goodwill |
|
676,376 |
|
|
|
677,665 |
|
Other intangible assets |
|
91,833 |
|
|
|
106,228 |
|
Deferred financing costs |
|
1,803 |
|
|
|
2,280 |
|
Investment in joint ventures |
|
94,472 |
|
|
|
57,893 |
|
Deposits and other |
|
54,478 |
|
|
|
53,172 |
|
Total assets |
$ |
2,688,025 |
|
|
$ |
2,433,907 |
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
CURRENT LIABILITIES |
|
|
|
Accounts payable, accrued expenses and other |
$ |
302,086 |
|
|
$ |
369,595 |
|
Due to affiliates |
|
24,448 |
|
|
|
23,100 |
|
Deferred revenue |
|
5,176 |
|
|
|
4,021 |
|
Current operating lease liability |
|
59,324 |
|
|
|
57,607 |
|
Current portion of notes payable |
|
16,043 |
|
|
|
12,400 |
|
Total current liabilities |
|
407,077 |
|
|
|
466,723 |
|
LONG-TERM LIABILITIES |
|
|
|
Long-term operating lease liability |
|
614,038 |
|
|
|
604,117 |
|
Notes payable, net of current portion |
|
844,302 |
|
|
|
839,344 |
|
Deferred tax liability, net |
|
16,645 |
|
|
|
9,256 |
|
Other non-current liabilities |
|
9,805 |
|
|
|
23,015 |
|
Total liabilities |
|
1,891,867 |
|
|
|
1,942,455 |
|
EQUITY |
|
|
|
RadNet, Inc.
stockholders' equity: |
|
|
|
Common stock
- $.0001 par value, 200,000,000 shares authorized; 67,848,209 and
57,723,125 shares issued and outstanding at September 30, 2023 and
December 31, 2022, respectively |
|
7 |
|
|
|
6 |
|
Additional paid-in-capital |
|
714,910 |
|
|
|
436,288 |
|
Accumulated other comprehensive loss |
|
(18,297 |
) |
|
|
(20,677 |
) |
Accumulated deficit |
|
(77,719 |
) |
|
|
(82,622 |
) |
Total RadNet, Inc.'s stockholders equity |
|
618,901 |
|
|
|
332,995 |
|
Noncontrolling interests |
|
177,257 |
|
|
|
158,457 |
|
Total equity |
|
796,158 |
|
|
|
491,452 |
|
Total liabilities and equity |
$ |
2,688,025 |
|
|
$ |
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 September 30, |
|
Nine Months Ended September 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
REVENUE |
|
|
|
|
|
|
|
Service fee revenue |
$ |
361,927 |
|
|
$ |
312,043 |
|
|
$ |
1,078,265 |
|
|
$ |
931,819 |
|
Revenue under capitation arrangements |
|
40,041 |
|
|
|
38,001 |
|
|
|
117,982 |
|
|
|
114,366 |
|
Total service revenue |
|
401,968 |
|
|
|
350,044 |
|
|
|
1,196,247 |
|
|
|
1,046,185 |
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
Cost of operations, excluding depreciation and amortization |
|
341,635 |
|
|
|
313,943 |
|
|
|
1,038,647 |
|
|
|
934,757 |
|
Depreciation and amortization |
|
32,210 |
|
|
|
29,229 |
|
|
|
95,705 |
|
|
|
85,209 |
|
Loss (gain) on sale and disposal of equipment and other |
|
527 |
|
|
|
(247 |
) |
|
|
1,183 |
|
|
|
962 |
|
Gain on contribution of imaging centers into joint venture |
|
(16,808 |
) |
|
$ |
- |
|
|
|
(16,808 |
) |
|
$ |
- |
|
Severance costs |
|
1,153 |
|
|
|
195 |
|
|
|
3,157 |
|
|
|
496 |
|
Total operating expenses |
|
358,717 |
|
|
|
343,120 |
|
|
|
1,121,884 |
|
|
|
1,021,424 |
|
INCOME (LOSS) FROM OPERATIONS |
|
43,251 |
|
|
|
6,924 |
|
|
|
74,363 |
|
|
|
24,761 |
|
OTHER INCOME AND EXPENSES |
|
|
|
|
|
|
|
Interest expense |
|
16,115 |
|
|
|
12,420 |
|
|
|
47,876 |
|
|
|
35,398 |
|
Equity in earnings of joint ventures |
|
(1,084 |
) |
|
|
(3,085 |
) |
|
|
(3,935 |
) |
|
|
(8,350 |
) |
Non-cash change in fair value of interest rate hedge |
|
1,015 |
|
|
|
(12,451 |
) |
|
|
949 |
|
|
|
(39,576 |
) |
Other expenses (income) |
|
(4,081 |
) |
|
|
1,405 |
|
|
|
(2,609 |
) |
|
|
1,562 |
|
Total other expense (income) |
|
11,965 |
|
|
|
(1,711 |
) |
|
|
42,281 |
|
|
|
(10,966 |
) |
INCOME (LOSS) BEFORE INCOME TAXES |
|
31,286 |
|
|
|
8,635 |
|
|
|
32,082 |
|
|
|
35,727 |
|
Provision for income taxes |
|
(7,220 |
) |
|
|
(2,188 |
) |
|
|
(7,741 |
) |
|
|
(7,087 |
) |
NET INCOME (LOSS) |
|
24,066 |
|
|
|
6,447 |
|
|
|
24,341 |
|
|
|
28,640 |
|
Net income (loss) attributable to noncontrolling interests |
|
6,526 |
|
|
|
5,779 |
|
|
|
19,437 |
|
|
|
17,055 |
|
NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. COMMON
STOCKHOLDERS |
$ |
17,540 |
|
|
$ |
668 |
|
|
$ |
4,904 |
|
|
$ |
11,585 |
|
|
|
|
|
|
|
|
|
BASIC NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET,
INC. COMMON STOCKHOLDERS |
$ |
0.26 |
|
|
$ |
0.01 |
|
|
$ |
0.08 |
|
|
$ |
0.21 |
|
|
|
|
|
|
|
|
|
DILUTED NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET,
INC. COMMON STOCKHOLDERS |
$ |
0.25 |
|
|
$ |
0.01 |
|
|
$ |
0.08 |
|
|
$ |
0.19 |
|
WEIGHTED AVERAGE SHARES OUTSTANDING |
|
|
|
|
|
|
|
Basic |
|
67,793,404 |
|
|
|
56,744,419 |
|
|
|
62,113,707 |
|
|
|
56,041,017 |
|
Diluted |
|
68,809,818 |
|
|
|
57,651,761 |
|
|
|
63,221,251 |
|
|
|
57,036,417 |
|
RADNET, INC.
AND SUBSIDIARIES |
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(IN
THOUSANDS) |
(unaudited) |
|
Nine Months Ended September 30, |
|
2023 |
|
2022 |
CASH
FLOWS FROM OPERATING ACTIVITIES |
|
|
|
Net income |
$ |
24,341 |
|
|
$ |
28,640 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
|
95,705 |
|
|
|
85,209 |
|
Amortization of operating lease assets |
|
47,542 |
|
|
|
51,573 |
|
Equity in earnings of joint ventures |
|
(3,935 |
) |
|
|
(8,350 |
) |
Distributions from joint ventures |
|
8,947 |
|
|
|
- |
|
Amortization deferred financing costs and loan discount |
|
2,240 |
|
|
|
1,943 |
|
Loss (Gain) non sale and disposal of equipment |
|
1,183 |
|
|
|
962 |
|
Gain on contribution of imaging centers into joint venture |
|
(16,808 |
) |
|
|
- |
|
Amortization of cash flow hedge |
|
2,765 |
|
|
|
2,771 |
|
Non-cash change in fair value of interest rate hedge |
|
948 |
|
|
|
(39,576 |
) |
Stock-based compensation |
|
21,380 |
|
|
|
19,112 |
|
Other noncash item included in cost of operations |
|
3,949 |
|
|
|
- |
|
Change in fair value of contingent consideration |
|
(4,112 |
) |
|
|
(329 |
) |
Changes in operating assets and liabilities, net of assets acquired
and liabilities assumed in purchase transactions: |
|
|
|
Accounts receivable |
|
(1,379 |
) |
|
|
(36,686 |
) |
Other current assets |
|
5,754 |
|
|
|
(4,934 |
) |
Other assets |
|
(16,641 |
) |
|
|
3,738 |
|
Deferred taxes |
|
7,389 |
|
|
|
8,955 |
|
Operating lease liability |
|
(43,390 |
) |
|
|
(49,597 |
) |
Deferred revenue |
|
1,155 |
|
|
|
(7,809 |
) |
Accounts payable, accrued expenses and other |
|
(5,090 |
) |
|
|
37,148 |
|
Net cash provided by operating activities |
|
131,943 |
|
|
|
92,770 |
|
CASH
FLOWS FROM INVESTING ACTIVITIES |
|
|
|
Purchase of imaging facilities and other acquisitions |
|
(10,915 |
) |
|
|
(26,009 |
) |
Purchase of property and equipment and other |
|
(136,537 |
) |
|
|
(98,606 |
) |
Proceeds from sale of equipment |
|
82 |
|
|
|
3,008 |
|
Equity contributions in existing and purchase of interest in joint
ventures |
|
(5,453 |
) |
|
|
(1,441 |
) |
Net cash used in investing activities |
|
(152,823 |
) |
|
|
(123,048 |
) |
CASH
FLOWS FROM FINANCING ACTIVITIES |
|
|
|
Principal payments on notes and leases payable |
|
(1,929 |
) |
|
|
- |
|
Payments on Term Loan Debt |
|
(11,062 |
) |
|
|
(9,938 |
) |
Purchase of noncontrolling interests by third party |
|
5,102 |
|
|
|
- |
|
Payments on contingent consideration |
|
(3,390 |
) |
|
|
- |
|
Distributions paid to noncontrolling interests |
|
(3,523 |
) |
|
|
- |
|
Proceeds from issuance of common stock |
|
245,831 |
|
|
|
- |
|
Proceeds from issuance of common stock upon exercise of
options |
|
72 |
|
|
|
- |
|
Net cash used in financing activities |
|
231,101 |
|
|
|
(9,938 |
) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH |
|
(171 |
) |
|
|
616 |
|
NET
DECREASE IN CASH AND CASH EQUIVALENTS |
|
210,050 |
|
|
|
(39,600 |
) |
CASH
AND CASH EQUIVALENTS, beginning of period |
|
127,834 |
|
|
|
134,606 |
|
CASH
AND CASH EQUIVALENTS, end of period |
$ |
337,884 |
|
|
$ |
95,006 |
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION |
|
|
|
Cash paid during the period for interest |
$ |
58,825 |
|
|
$ |
30,251 |
|
Cash paid during the period for income taxes |
$ |
225 |
|
|
$ |
560 |
|
RADNET,
INC. |
RECONCILIATION OF GAAP NET INCOME (LOSS) ATTRIBUTABLE TO
RADNET, INC. COMMON SHAREHOLDERS TO ADJUSTED
EBITDA(1) |
(IN
THOUSANDS) |
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
Net income (loss) attributable to Radnet, Inc. common
stockholders |
$ |
17,540 |
|
|
$ |
668 |
|
|
$ |
4,904 |
|
|
$ |
11,585 |
|
Income
taxes |
|
7,220 |
|
|
|
2,188 |
|
|
|
7,741 |
|
|
|
7,087 |
|
Interest
expense |
|
16,115 |
|
|
|
12,420 |
|
|
|
47,876 |
|
|
|
35,398 |
|
Severance
costs |
|
1,153 |
|
|
|
195 |
|
|
|
3,157 |
|
|
|
496 |
|
Depreciation
and amortization |
|
32,210 |
|
|
|
29,229 |
|
|
|
95,705 |
|
|
|
85,209 |
|
Non-cash
employee stock-based compensation |
|
4,325 |
|
|
|
3,317 |
|
|
|
21,381 |
|
|
|
19,112 |
|
Loss (gain)
on sale and disposal of equipment and other |
|
527 |
|
|
|
(247 |
) |
|
|
1,183 |
|
|
|
962 |
|
Non-cash
change in fair value of interest rate hedge |
|
1,015 |
|
|
|
(12,451 |
) |
|
|
949 |
|
|
|
(39,576 |
) |
Other
expenses |
|
(4,081 |
) |
|
|
1,405 |
|
|
|
(2,609 |
) |
|
|
1,562 |
|
Legal
settlements |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,197 |
|
Change in
estimate related to refund liability |
|
- |
|
|
|
8,089 |
|
|
|
- |
|
|
|
8,089 |
|
Gain on
contribution of imaging centers into joint venture |
|
(16,808 |
) |
|
|
- |
|
|
|
(16,808 |
) |
|
|
- |
|
Non-cash
change to contingent consideration |
|
(6,276 |
) |
|
|
- |
|
|
|
(3,646 |
) |
|
|
- |
|
Acquisition
related non-cash intangible adjustment |
|
3,950 |
|
|
|
- |
|
|
|
3,950 |
|
|
|
- |
|
Non-operational rent expenses |
|
1,030 |
|
|
|
959 |
|
|
|
2,748 |
|
|
|
3,120 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Including EBITDA Losses from AI
Segment |
$ |
57,920 |
|
|
$ |
45,772 |
|
|
$ |
166,531 |
|
|
$ |
135,241 |
|
|
|
|
|
|
|
|
|
EBITDA
Losses from AI Segment |
|
2,499 |
|
|
|
4,462 |
|
|
|
10,283 |
|
|
|
12,253 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA excluding EBITDA Losses from AI
Segment |
$ |
60,419 |
|
|
$ |
50,234 |
|
|
$ |
176,814 |
|
|
$ |
147,494 |
|
PAYOR CLASS
BREAKDOWN |
|
|
|
|
|
Third Quarter |
|
2023 |
|
|
Commercial Insurance |
58.3 |
% |
Medicare |
22.9 |
% |
Capitation |
10.0 |
% |
Medicaid |
2.7 |
% |
Workers
Compensation/Personal Injury |
2.5 |
% |
Other |
3.8 |
% |
Total |
100.0 |
% |
RADNET
PAYMENTS BY MODALITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
Full Year |
|
Full Year |
|
Full Year |
|
2023 |
|
2022 |
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
MRI |
37.2 |
% |
|
36.8 |
% |
|
36.0 |
% |
|
35.4 |
% |
CT |
16.6 |
% |
|
17.5 |
% |
|
17.2 |
% |
|
17.6 |
% |
PET/CT |
6.5 |
% |
|
5.8 |
% |
|
5.5 |
% |
|
6.0 |
% |
X-ray |
6.5 |
% |
|
6.7 |
% |
|
3.9 |
% |
|
7.3 |
% |
Ultrasound |
12.9 |
% |
|
12.6 |
% |
|
12.7 |
% |
|
12.3 |
% |
Mammography |
15.7 |
% |
|
15.3 |
% |
|
16.1 |
% |
|
15.7 |
% |
Nuclear
Medicine |
0.8 |
% |
|
0.9 |
% |
|
1.0 |
% |
|
1.0 |
% |
Other |
3.8 |
% |
|
4.5 |
% |
|
4.6 |
% |
|
4.7 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
PROCEDURES
BY MODALITY* |
|
|
|
|
|
Third
Quarter |
|
Third
Quarter |
|
2023 |
|
2022 |
|
|
|
|
MRI |
389,566 |
|
348,912 |
CT |
230,276 |
|
207,554 |
PET/CT |
15,216 |
|
12,932 |
Nuclear
Medicine |
8,533 |
|
9,387 |
Ultrasound |
607,995 |
|
554,782 |
Mammography |
452,756 |
|
418,335 |
X-ray and
Other |
806,677 |
|
759,546 |
|
|
|
|
Total |
2,511,019 |
|
2,311,448 |
|
|
|
|
|
|
|
|
* Volumes include wholy owned and joint venture centers. |
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, |
|
|
2023 |
|
2022 |
|
|
|
|
|
NET INCOME (LOSS) ATTRIBUTABLE TO RADNET,
INC. |
|
|
|
|
COMMON STOCKHOLDERS |
$ |
17,540 |
|
|
$ |
668 |
|
|
|
|
|
|
|
|
|
|
|
|
Add non-cash impact of cash flow hedges (i) |
|
2,260 |
|
|
|
(11,206 |
) |
|
Add increase in reserve for patient refunds |
|
- |
|
|
|
8,089 |
|
|
Add severance costs |
|
1,153 |
|
|
|
195 |
|
|
Subtract gain on contribution of imaging centers into joint
venture |
|
(16,808 |
) |
|
|
- |
|
|
Add non-operational rent expenses (iii) |
|
1,030 |
|
|
|
959 |
|
|
AI Segment losses (iv) |
|
1,331 |
|
|
|
7,787 |
|
|
Subtract non-cash change to contingent consideration - Heart Lung
Health |
|
915 |
|
|
|
|
Total adjustments - loss (gain) |
|
(10,119 |
) |
|
|
5,824 |
|
|
Subtract tax impact of Adjustments (ii) |
|
2,439 |
|
|
|
(1,153 |
) |
|
Tax effected impact of adjustments |
|
(7,680 |
) |
|
|
4,671 |
|
|
|
|
|
|
TOTAL ADJUSTMENT TO NET INCOME ATTRIBUTABLE |
|
|
|
|
TO RADNET, INC. COMMON SHAREHOLDERS |
|
(7,680 |
) |
|
|
4,671 |
|
|
|
|
|
|
ADJUSTED NET INCOME (LOSS) ATTRIBUTABLE TO RADNET,
INC. |
|
9,860 |
|
|
|
5,339 |
|
|
COMMON STOCKHOLDERS |
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING |
|
|
|
|
Diluted |
|
68,809,818 |
|
|
|
57,651,761 |
|
|
|
|
|
|
ADJUSTED DILUTED NET INCOME PER SHARE |
|
|
|
|
ATTRIBUTABLE TO RADNET, INC. COMMON
STOCKHOLDERS |
$ |
0.14 |
|
|
$ |
0.09 |
|
|
|
|
|
|
(i) Impact is the combination of (a) the loss in fair value of the
hedges during the quarter of $1,015 in 2023 and gain of
$12,451 in 2022 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 2023
and $1,245 in 2022. |
(ii) Tax effected using 24.1% blended federal and state effective
tax rate for 2023 and 19.8% for 2022. |
|
|
(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. |
|
|
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