RadNet, Inc. (NASDAQ: RDNT), a national leader in
providing high-quality, cost-effective, fixed-site outpatient
diagnostic imaging services through a network of 344 owned and/or
operated outpatient imaging centers, today reported financial
results for its fourth quarter and full year ended December 31,
2018.
Financial Results
Fourth Quarter Report:
For the fourth quarter of 2018, RadNet reported
Revenue of $257.2 million, Adjusted EBITDA(1) of $46.2 million and
Net Income of $29.1 million. Revenue increased $21.7 million (or
9.2%), Adjusted EBITDA(1) increased $5.5 million (or 13.5%) and Net
Income increased $36.4 million over the fourth quarter of 2017.
Net Income for the fourth quarter was $0.59 per
diluted share, compared to a Net Loss of $(0.15) per diluted share
in the fourth quarter of 2017. These per share values are based
upon a weighted average number of diluted shares outstanding of
49.3 million in the fourth quarter of 2018 and 47.9 million of
diluted shares outstanding in the fourth quarter of 2017.
Affecting Adjusted Net Income in the fourth
quarter of 2018 were certain non-cash expenses and non-recurring
items including: $39.5 million gain from the re-measurement of the
Company’s equity interest in New Jersey Imaging Network upon its
consolidation, $19.1 loss from changes in the organization of our
east coast and international operations; $3.9 million loss on
Goodwill/Trade Name impairment related to our teleradiology
business; $1.1 million of non-cash employee stock compensation
expense resulting from the vesting of certain options and
restricted stock; $844,000 of severance paid in connection with
headcount reductions related to cost savings initiatives; $786,000
legal settlement; $1.7 million change in fair value of stock
consideration related to the acquisition of Medical Arts Radiology;
$150,000 loss on the disposal of certain capital equipment; and
$974,000 of amortization of deferred financing costs and loan
discount related to our existing credit facilities.
For the fourth quarter of 2018, as compared with
the prior year’s fourth quarter, MRI volume increased 9.6%, CT
volume increased 12.0% and PET/CT volume increased 8.4%. Overall
volume, taking into account routine imaging exams, inclusive of
x-ray, ultrasound, mammography and other exams, increased 8.3% over
the prior year’s fourth quarter. On a same-center basis, including
only those centers which were part of RadNet for both the fourth
quarters of 2018 and 2017, MRI volume increased 2.2%, CT volume
increased 2.7% and PET/CT volume decreased 7.8%. Overall
same-center volume, taking into account routine imaging exams,
inclusive of x-ray, ultrasound, mammography and other exams,
increased 1.1% from the prior year’s same quarter.
Dr. Howard Berger, President and Chief Executive
Officer of RadNet, commented “We completed significant changes in
the organization of our east coast operations during the quarter
that positions us well for 2019 and beyond. This included obtaining
control and thereby consolidating the operations of our New Jersey
Imaging Network joint venture effective October 1, 2019. We also
added non-cash reserves for a doubtful receivable related to our
consulting operations in Qatar and impaired the goodwill associated
with our non-core teleradiology business.”
“Adjusting for these activities and despite
being impacted by the California wildfires in November, our
business was very strong in the fourth quarter. Our key metrics
increased from last year’s fourth quarter, including Revenue,
Adjusted EBITDA(1) and aggregate and same-center volumes. In
particular, we grew our fourth quarter Adjusted EBITDA by over 13%
and expanded our EBITDA margin by almost 70 basis points compared
with last year’s fourth quarter,” added Dr. Berger.
“We continue to execute all aspects of our
strategic plan. During the quarter, we operationalized our first
east coast capitation contract with Emblem Health and will ramp
these operations throughout 2019. We also began the integration of
our first Long Island acquisition, Medical Arts Radiology,” Dr.
Berger noted.
Annual Report:
For full year 2018, the Company reported Revenue
of $975.1 million, Adjusted EBITDA(1) of $143.5 million and Net
Income of $32.2 million. Revenue increased $53.0 million (or 5.7%)
and Adjusted EBITDA(1) increased $1.0 million (or 0.7%). Net Income
for 2018 was $0.66 per diluted share, compared to Net Income of
$0.00 per diluted share in 2017 (based upon a weighted average
number of diluted shares outstanding of 48.7 million and 47.4
million in 2018 and 2017, respectively).
Affecting Net Income in the fourth quarter of
2018 were certain non-cash expenses and non-recurring items
including: $39.5 million gain resulting from the re-measurement of
the Company’s equity interest in New Jersey Imaging Network upon
its consolidation, $19.1 loss from changes in the organization of
our east coast and international operations; $3.9 million loss on
Goodwill/Trade Name impairment related to our teleradiology
business; $7.7 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; $786,000
legal settlement; $1.7 million change in fair value of stock
consideration related to the acquisition of Medical Arts Radiology;
$2.1 million gain on the disposal of certain capital equipment; and
$3.9 million of amortization of deferred financing costs and loan
discount related to our existing credit facilities.
For the year ended December 31, 2018, as
compared to 2017, MRI volume increased 6.3%, CT volume increased
9.1% and PET/CT volume increased 11.6%. Overall volume, taking into
account routine imaging exams, inclusive of x-ray, ultrasound,
mammography and other exams, increased 4.1% for the twelve months
of 2018 over 2017.
Dr. Berger remarked, “2018 was a very active
year for RadNet, one that sets the stage for future growth and
success. During 2018 and subsequent to year end, we completed
several important transactions within existing core markets. In
April, we completed the acquisition of five imaging centers in
Fresno, California. In October, we completed our first acquisition
in Long Island, New York (Medical Arts Radiology) to coincide with
becoming operational with our first east coast capitation contract
with Emblem Health. Subsequent to year end, we announced signing a
definitive agreement to acquire Kern Radiology, an operator of five
imaging centers in Bakersfield, California and established our
second California-based joint venture with Dignity Health in
Ventura County. The acquisitions and joint venture further our
strategy of geographic concentration, which brings operating
efficiencies and establishes RadNet as the largest non-hospital
imaging center operator in all of the markets in which we operate.
The Ventura County Dignity Health joint ventures is an example of
our continued interest to partner with progressive health systems
that recognize the continuing shift of medical services towards
ambulatory, lower-cost settings. We now have over 25% of our
facilities within joint ventures with leading health systems.”
|
Actual Results vs. 2018 Guidance: |
|
The following compares the Company’s actual 2018
performance with previously announced guidance levels. |
|
|
|
Guidance Range |
|
Actual Results |
Total Net
Revenue |
|
$945
million - $970 million |
|
$975.1 million |
Adjusted
EBITDA(1) |
|
$140
million - $150 million |
|
$143.8 million |
Capital
Expenditures (a) |
|
$60
million - $65 million |
|
$69.6
million |
Cash
Interest Expense |
|
$33
million - $38 million |
|
$37.0
million |
Free Cash
Flow Generation (b) |
|
$45
million - $55 million |
|
$36.9
million |
|
(a) Net of proceeds from the sale of equipment,
imaging centers and joint venture interests. |
(b) Defined by the Company as Adjusted EBITDA(1)
less total capital expenditures and cash paid for interest. |
|
Dr. Berger commented, “We exceeded our revenue
guidance and finished the year towards the middle of our Adjusted
EBITDA(1) range. Our capital expenditures exceeded our initial
guidance range primarily as a result of the more than $10 million
one-time investment we made related to the Emblem Health capitation
contract, which became operational in October, as well as
additional capital expenditures that were recorded in the fourth
quarter due to the financial statement consolidation our New Jersey
Imaging Network joint venture. The higher capital expenditures
directly impacted our free cash flow, which otherwise would have
been within our guidance range.”
|
2019 Fiscal Year Guidance |
|
For its 2019 fiscal year, RadNet announces its guidance
ranges as follows: |
|
Total Net Revenue |
|
$1,050 million -
$1,100 million |
Adjusted
EBITDA(1) |
|
$155
million - $165 million |
Capital
Expenditures (a) |
|
$60
million - $65 million |
Cash
Interest Expense |
|
$38
million - $43 million |
Free Cash
Flow Generation (b) |
|
$45
million - $55 million |
|
(a) Net of proceeds from the sale of equipment,
imaging centers and joint venture interests. |
(b) Defined by the Company as Adjusted EBITDA(1)
less total capital expenditures and cash paid for interest. |
|
Dr. Berger noted, “We are optimistic about 2019.
First, we expect 2019 to have stable reimbursement. Medicare rates
for 2019 are commensurate with 2018 reimbursement and our
relationships with private payors and capitated medical groups
represent potential upside in our rates. Second, we expect to
benefit from the contributions of recent acquisitions and
initiatives that either were part of RadNet for only a portion of
2018 or did not contribute at all during 2018. These include the
acquisitions of Medical Arts Radiology and Kern Radiology
(scheduled to close on April 1st), the establishment of a new joint
venture with Dignity Health in Ventura, California, the recently
operationalized capitation contract with Emblem Health and the
consolidation, from a financial statement perspective, of New
Jersey Imaging Network. Third, we were impacted by adverse weather
conditions in the first quarter of 2018 which decreased our
Adjusted EBITDA in 2018 by approximately $5.8 million. Thus far in
2019, adverse winter weather conditions in the northeast have been
much less of a factor in our performance. Lastly, we anticipate
driving organic growth from significant capital spending in 2018,
which included a commitment to 3D mammography and the expansion of
a number of our wholly-owned and joint venture centers.”
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 today, at 10:30 a.m.
Eastern Time. During the call, management will discuss the
Company's 2018 fourth quarter and year-end results.
Conference Call Details:
Date: Thursday, March 14, 2019Time: 10:30 a.m.
ETDial In-Number: 888-204-4368International Dial-In Number:
323-794-2423
There will also be simultaneous and archived
webcasts available at
http://public.viavid.com/index.php?id=133557 or
http://www.radnet.com under the “About RadNet” menu section and
“News & Press 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 6441279.
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 in the United
States based on the number of locations and annual imaging revenue.
RadNet has a network of 344 owned and/or operated outpatient
imaging centers. RadNet's core markets include California,
Maryland, Delaware, New Jersey and New York. Together with
affiliated radiologists, and inclusive of full-time and per diem
employees and technicians, RadNet has a total of approximately
7,900 employees. For more information, visit
http://www.radnet.com.
Forward Looking Statements
This press release contains forward-looking
statements within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. Specifically, statements concerning
successfully integrating the Company’s acquired operations,
successfully achieving 2019 financial guidance, achieving cost
savings, successfully developing and integrating its information
technology operations as well as new lines of business, continuing
to grow its business by generating patient referrals and contracts
with radiology practices and receiving third-party reimbursement
for diagnostic imaging services are forward-looking statements
within the meaning of the Safe Harbor. Forward-looking statements
are based on management's current, preliminary expectations and are
subject to risks and uncertainties, which may cause the Company's
actual results to differ materially from the statements contained
herein. Further information on potential risk factors that could
affect RadNet's business and its financial results are detailed in
its most recent Annual Report on Form 10-K, as filed with the
Securities and Exchange Commission. Undue reliance should not be
placed on forward-looking statements, especially guidance on future
financial performance, which speak only as of the date they are
made. RadNet undertakes no obligation to update publicly any
forward-looking statements to reflect new information, events or
circumstances after the date they were made, or to reflect the
occurrence of unanticipated events.
CONTACTS:
RadNet,
Inc.Mark Stolper,
310-445-2800Executive Vice
President and Chief Financial Officer
|
RADNET, INC. AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
(IN THOUSANDS EXCEPT SHARE AND PER SHARE
DATA) |
|
|
|
|
|
|
|
As of December 31, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
ASSETS |
CURRENT
ASSETS |
|
|
|
|
Cash and
cash equivalents |
|
$ |
10,389 |
|
|
$ |
51,322 |
|
Accounts
receivable, net |
|
|
148,919 |
|
|
|
155,518 |
|
Due from
affiliates |
|
|
595 |
|
|
|
2,343 |
|
Prepaid
expenses and other current assets |
|
|
46,288 |
|
|
|
26,168 |
|
Assets
held for sale |
|
|
2,499 |
|
|
|
- |
|
Total
current assets |
|
|
208,690 |
|
|
|
235,351 |
|
PROPERTY AND
EQUIPMENT, NET |
|
|
345,729 |
|
|
|
244,301 |
|
OTHER
ASSETS |
|
|
|
|
Goodwill |
|
|
418,093 |
|
|
|
256,776 |
|
Other
intangible assets |
|
|
40,593 |
|
|
|
40,422 |
|
Deferred
financing costs, net of current portion |
|
|
1,354 |
|
|
|
1,895 |
|
Investment in joint ventures |
|
|
37,973 |
|
|
|
52,435 |
|
Deferred
tax assets, net of current portion |
|
|
31,506 |
|
|
|
30,852 |
|
Deposits
and other |
|
|
25,392 |
|
|
|
6,947 |
|
Total
assets |
|
$ |
1,109,330 |
|
|
$ |
868,979 |
|
LIABILITIES AND EQUITY |
CURRENT
LIABILITIES |
|
|
|
|
Accounts
payable, accrued expenses and other |
|
$ |
181,028 |
|
|
$ |
135,809 |
|
Due to
affiliates |
|
|
13,089 |
|
|
|
16,387 |
|
Deferred
revenue related to software sales |
|
|
2,398 |
|
|
|
2,606 |
|
Current
portion of deferred rent |
|
|
3,735 |
|
|
|
2,714 |
|
Current
portion of notes payable |
|
|
33,653 |
|
|
|
30,224 |
|
Current
portion of obligations under capital leases |
|
|
5,614 |
|
|
|
3,866 |
|
Total
current liabilities |
|
|
239,517 |
|
|
|
191,606 |
|
LONG-TERM
LIABILITIES |
|
|
|
|
Deferred
rent, net of current portion |
|
|
31,542 |
|
|
|
26,251 |
|
Notes
payable, net of current portion |
|
|
626,507 |
|
|
|
572,365 |
|
Obligations under capital lease, net of current portion |
|
|
6,505 |
|
|
|
2,672 |
|
Other
non-current liabilities |
|
|
5,006 |
|
|
|
6,160 |
|
Total
liabilities |
|
|
909,077 |
|
|
|
799,054 |
|
EQUITY |
|
|
|
|
RadNet,
Inc. stockholders' equity: |
|
|
|
|
Common stock - $.0001 par value, 200,000,000 shares
authorized; |
|
|
|
48,977,485 and 47,723,915 shares issued and outstanding at |
|
|
|
|
December
31, 2018 and 2017, respectively |
|
|
5 |
|
|
|
5 |
|
Additional paid-in-capital |
|
|
242,835 |
|
|
|
212,261 |
|
Accumulated other comprehensive gain (loss) |
|
|
2,259 |
|
|
|
(548 |
) |
Accumulated deficit |
|
|
(117,915 |
) |
|
|
(150,158 |
) |
Total
RadNet, Inc.'s stockholders' equity |
|
|
127,184 |
|
|
|
61,560 |
|
Non-controlling interests |
|
|
73,069 |
|
|
|
8,365 |
|
Total
equity |
|
|
200,253 |
|
|
|
69,925 |
|
Total
liabilities and equity |
|
$ |
1,109,330 |
|
|
$ |
868,979 |
|
RADNET, INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
(IN THOUSANDS EXCEPT SHARE AND PER SHARE
DATA) |
|
|
|
|
|
Years Ended December 31, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
NET
REVENUE |
|
|
|
|
|
|
Service fee revenue, net of contractual allowances and
discounts |
|
|
$ |
857,178 |
|
|
$ |
821,587 |
|
Provision
for bad debts |
|
|
|
|
(46,555 |
) |
|
|
(45,387 |
) |
Net
service fee revenue |
|
$ |
868,741 |
|
|
|
810,623 |
|
|
|
776,200 |
|
Revenue
under capitation arrangements |
|
|
106,405 |
|
|
|
111,563 |
|
|
|
108,335 |
|
Total net
revenue |
|
|
975,146 |
|
|
|
922,186 |
|
|
|
884,535 |
|
OPERATING
EXPENSES |
|
|
|
|
|
|
Cost of operations, excluding depreciation and
amortization |
|
867,547 |
|
|
|
802,380 |
|
|
|
775,801 |
|
Depreciation and amortization |
|
|
72,899 |
|
|
|
66,796 |
|
|
|
66,610 |
|
Gain on
sale and disposal of equipment |
|
|
(2,054 |
) |
|
|
1,142 |
|
|
|
767 |
|
Loss on IOC reporting unit goodwill and trade name
impairment |
|
3,937 |
|
|
|
- |
|
|
|
- |
|
Severance
costs |
|
|
1,931 |
|
|
|
1,821 |
|
|
|
2,877 |
|
Total
operating expenses |
|
|
944,260 |
|
|
|
872,139 |
|
|
|
846,055 |
|
INCOME FROM
OPERATIONS |
|
|
30,886 |
|
|
|
50,047 |
|
|
|
38,480 |
|
|
|
|
|
|
|
|
OTHER INCOME
AND EXPENSES |
|
|
|
|
|
|
Interest
expense |
|
|
43,456 |
|
|
|
40,623 |
|
|
|
43,455 |
|
Meaningful use incentive |
|
|
- |
|
|
|
- |
|
|
|
(2,808 |
) |
Equity in
earnings of joint ventures |
|
|
(11,377 |
) |
|
|
(13,554 |
) |
|
|
(9,767 |
) |
Gain on remeasurement of interest in NJIN upon
consolidation |
|
(39,539 |
) |
|
|
- |
|
|
|
- |
|
Gain on sale of imaging centers and medical practice |
|
- |
|
|
|
(3,146 |
) |
|
|
- |
|
Gain on
return of common stock |
|
|
- |
|
|
|
- |
|
|
|
(5,032 |
) |
Other
(income) expenses |
|
|
(181 |
) |
|
|
(258 |
) |
|
|
196 |
|
Total
other (income) expenses |
|
|
(7,641 |
) |
|
|
23,665 |
|
|
|
26,044 |
|
INCOME BEFORE
INCOME TAXES |
|
|
38,527 |
|
|
|
26,382 |
|
|
|
12,436 |
|
Provision
for income taxes |
|
|
(394 |
) |
|
|
(24,310 |
) |
|
|
(4,432 |
) |
NET
INCOME |
|
|
38,133 |
|
|
|
2,072 |
|
|
|
8,004 |
|
Net income attributable to noncontrolling interests |
|
5,890 |
|
|
|
2,022 |
|
|
|
774 |
|
NET
INCOME ATTRIBUTABLE TO RADNET,
INC. |
|
|
|
|
|
COMMON STOCKHOLDERS |
|
$ |
32,243 |
|
|
$ |
50 |
|
|
$ |
7,230 |
|
|
|
|
|
|
|
|
BASIC NET
INCOME PER SHARE |
|
|
|
|
|
|
ATTRIBUTABLE TO RADNET, INC. COMMON
STOCKHOLDERS |
$ |
0.67 |
|
|
$ |
0.00 |
|
|
$ |
0.16 |
|
DILUTED NET
INCOME PER SHARE |
|
|
|
|
|
|
ATTRIBUTABLE TO RADNET, INC. COMMON
STOCKHOLDERS |
$ |
0.66 |
|
|
$ |
0.00 |
|
|
$ |
0.15 |
|
WEIGHTED AVERAGE SHARES OUTSTANDING |
|
|
|
|
|
Basic |
|
|
48,114,275 |
|
|
|
46,880,775 |
|
|
|
46,244,188 |
|
Diluted |
|
|
48,678,999 |
|
|
|
47,401,921 |
|
|
|
46,655,032 |
|
RADNET, INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(IN THOUSANDS) |
|
|
|
Years Ended December 31, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2016 |
|
CASH FLOWS FROM OPERATING
ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
|
$ |
38,133 |
|
|
$ |
2,075 |
|
|
$ |
8,004 |
|
Adjustments to reconcile net income |
|
|
|
|
|
|
to net
cash provided by operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
72,899 |
|
|
|
66,796 |
|
|
|
66,610 |
|
Provision
for bad debts |
|
|
- |
|
|
|
46,555 |
|
|
|
45,387 |
|
Gain on
return from common stock |
|
|
- |
|
|
|
- |
|
|
|
(5,032 |
) |
Equity in
earnings of joint ventures |
|
|
(11,377 |
) |
|
|
(13,554 |
) |
|
|
(9,767 |
) |
Distributions from joint ventures |
|
|
24,846 |
|
|
|
8,690 |
|
|
|
2,926 |
|
Amortization and write off of deferred financing costs and loan
discount |
|
|
3,898 |
|
|
|
3,483 |
|
|
|
5,045 |
|
(Gain)
Loss on sale and disposal of equipment |
|
|
(2,054 |
) |
|
|
1,142 |
|
|
|
767 |
|
Gain on
sale of imaging centers |
|
|
- |
|
|
|
(3,146 |
) |
|
|
- |
|
Gain on
remeasurement of interest in NJIN upon consolidation |
|
|
(39,539 |
) |
|
|
- |
|
|
|
- |
|
Loss on
goodwill and trade impairment |
|
|
3,937 |
|
|
|
- |
|
|
|
- |
|
Stock-based compensation |
|
|
7,662 |
|
|
|
6,787 |
|
|
|
5,826 |
|
Non cash
severance |
|
|
- |
|
|
|
1,047 |
|
|
|
- |
|
Changes
in operating assets and liabilities, net of assets |
|
|
|
|
|
|
acquired
and liabilities assumed in purchase transactions: |
|
|
|
|
|
|
Accounts
receivable |
|
|
2,145 |
|
|
|
(37,164 |
) |
|
|
(47,055 |
) |
Other
current assets |
|
|
(9,248 |
) |
|
|
1,461 |
|
|
|
11,038 |
|
Other
assets |
|
|
(1,687 |
) |
|
|
(801 |
) |
|
|
1,267 |
|
Deferred
taxes |
|
|
(6,935 |
) |
|
|
19,504 |
|
|
|
3,446 |
|
Deferred
rent |
|
|
6,312 |
|
|
|
2,135 |
|
|
|
(1,668 |
) |
Deferred
revenue |
|
|
(208 |
) |
|
|
1,034 |
|
|
|
(82 |
) |
Accounts
payable, accrued expenses and other |
|
|
27,970 |
|
|
|
36,181 |
|
|
|
4,929 |
|
Net cash
provided by operating activities |
|
|
115,954 |
|
|
|
142,225 |
|
|
|
91,641 |
|
CASH FLOWS FROM INVESTING
ACTIVITIES |
|
|
|
|
|
|
Purchase
of imaging facilities |
|
|
(73,192 |
) |
|
|
(27,612 |
) |
|
|
(6,641 |
) |
Investment at cost |
|
|
(2,200 |
) |
|
|
(500 |
) |
|
|
- |
|
Purchase
of property and equipment |
|
|
(72,180 |
) |
|
|
(61,336 |
) |
|
|
(59,251 |
) |
Proceeds
from sale of equipment |
|
|
2,575 |
|
|
|
852 |
|
|
|
481 |
|
Cash
contribution from partner in JV formation |
|
|
- |
|
|
|
1,473 |
|
|
|
994 |
|
Equity
contributions in existing and purchase of interest in joint
ventures |
|
|
(2,000 |
) |
|
|
(1,118 |
) |
|
|
(1,374 |
) |
Net cash
used in investing activities |
|
|
(145,949 |
) |
|
|
(79,320 |
) |
|
|
(65,490 |
) |
CASH FLOWS FROM FINANCING
ACTIVITIES |
|
|
|
|
|
|
Principal
payments on notes and leases payable |
|
|
(6,072 |
) |
|
|
(6,836 |
) |
|
|
(11,880 |
) |
Proceeds
from borrowings |
|
|
- |
|
|
|
170,000 |
|
|
|
476,504 |
|
Payments
on senior notes |
|
|
(33,830 |
) |
|
|
(196,666 |
) |
|
|
(469,086 |
) |
Deferred
financing costs and debt discount |
|
|
- |
|
|
|
(5,062 |
) |
|
|
(945 |
) |
Distributions paid to noncontrolling interests |
|
|
(1,427 |
) |
|
|
(1,528 |
) |
|
|
(492 |
) |
Proceeds
from sale of noncontrolling interest, net of taxes |
|
|
- |
|
|
|
7,720 |
|
|
|
992 |
|
Contributions from noncontrolling partners |
|
|
2,640 |
|
|
|
125 |
|
|
|
- |
|
Proceeds
from revolving credit facility |
|
|
204,300 |
|
|
|
202,800 |
|
|
|
435,900 |
|
Payments
on revolving credit facility |
|
|
(176,300 |
) |
|
|
(202,800 |
) |
|
|
(435,900 |
) |
Purchase
of non-controlling interests |
|
|
(200 |
) |
|
|
- |
|
|
|
(1,153 |
) |
Proceeds
from issuance of common stock upon exercise of options |
|
|
20 |
|
|
|
- |
|
|
|
150 |
|
Net cash
used in financing activities |
|
|
(10,869 |
) |
|
|
(32,247 |
) |
|
|
(5,910 |
) |
EFFECT OF EXCHANGE RATE CHANGES ON
CASH |
|
|
(69 |
) |
|
|
26 |
|
|
|
(49 |
) |
NET INCREASE IN CASH AND CASH
EQUIVALENTS |
|
|
(40,933 |
) |
|
|
30,684 |
|
|
|
20,192 |
|
CASH AND CASH EQUIVALENTS, beginning of
period |
|
|
51,322 |
|
|
|
20,638 |
|
|
|
446 |
|
CASH AND CASH EQUIVALENTS, end of
period |
|
$ |
10,389 |
|
|
$ |
51,322 |
|
|
$ |
20,638 |
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION |
|
|
|
|
|
|
Cash paid
during the period for interest |
|
$ |
37,016 |
|
|
$ |
34,197 |
|
|
$ |
37,487 |
|
Cash paid
during the period for income taxes |
|
$ |
5,058 |
|
|
$ |
4,939 |
|
|
$ |
2,798 |
|
RADNET, INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(IN THOUSANDS EXCEPT SHARE DATA) |
(unaudited) |
|
|
|
Three Months Ended |
|
|
December 31, |
|
|
|
2018 |
|
|
|
2017 |
|
NET
REVENUE |
|
|
|
|
Service
fee revenue, net of contractual allowances and discounts |
|
|
|
$ |
219,059 |
|
Provision
for bad debts |
|
|
|
|
(11,368 |
) |
Net
service fee revenue |
|
$ |
227,605 |
|
|
|
207,691 |
|
Revenue
under capitation arrangements |
|
|
29,606 |
|
|
|
27,861 |
|
Total net
revenue |
|
|
257,211 |
|
|
|
235,552 |
|
OPERATING
EXPENSES |
|
|
|
|
Cost of
operations, excluding depreciation and amortization |
|
|
233,347 |
|
|
|
200,206 |
|
Depreciation and amortization |
|
|
19,477 |
|
|
|
16,477 |
|
Loss on
sale and disposal of equipment |
|
|
150 |
|
|
|
314 |
|
Loss on
IOC reporting unit goodwill and trade name impairment |
|
|
3,937 |
|
|
|
- |
|
Severance
costs |
|
|
844 |
|
|
|
255 |
|
Total
operating expenses |
|
|
257,755 |
|
|
|
217,252 |
|
INCOME FROM
OPERATIONS |
|
|
(544 |
) |
|
|
18,300 |
|
|
|
|
|
|
OTHER INCOME
AND EXPENSES |
|
|
|
|
Interest
expense |
|
|
12,113 |
|
|
|
9,911 |
|
Equity in
earnings of joint ventures |
|
|
(1,830 |
) |
|
|
(5,182 |
) |
Gain on
remeasurement of interest in NJIN upon consolidation |
|
|
(39,539 |
) |
|
|
- |
|
Other
(income) expenses |
|
|
(194 |
) |
|
|
(22 |
) |
Total
other expenses |
|
|
(29,450 |
) |
|
|
4,707 |
|
INCOME BEFORE
INCOME TAXES |
|
|
28,906 |
|
|
|
13,593 |
|
Benefit
from (provision for) income taxes |
|
|
2,441 |
|
|
|
(20,133 |
) |
NET INCOME
(LOSS) |
|
|
31,347 |
|
|
|
(6,540 |
) |
Net
income attributable to noncontrolling interests |
|
|
2,211 |
|
|
|
736 |
|
NET INCOME
(LOSS) ATTRIBUTABLE TO RADNET,
INC. |
|
|
|
|
COMMON STOCKHOLDERS |
|
$ |
29,136 |
|
|
$ |
(7,276 |
) |
|
|
|
|
|
BASIC NET
INCOME (LOSS) PER SHARE |
|
|
|
|
ATTRIBUTABLE TO RADNET, INC. COMMON
STOCKHOLDERS |
$ |
0.60 |
|
|
$ |
(0.15 |
) |
DILUTED NET
INCOME (LOSS) PER SHARE |
|
|
|
|
ATTRIBUTABLE TO RADNET, INC. COMMON
STOCKHOLDERS |
$ |
0.59 |
|
|
$ |
(0.15 |
) |
WEIGHTED
AVERAGE SHARES OUTSTANDING |
|
|
|
|
Basic |
|
|
48,632,531 |
|
|
|
47,237,431 |
|
Diluted |
|
|
49,259,156 |
|
|
|
47,885,681 |
|
RADNET, INC. |
RECONCILIATION OF GAAP NET INCOME ATTRIBUTABLE
TO RADNET, INC. COMMON SHAREHOLDERS TO ADJUSTED
EBITDA(1) |
(IN THOUSANDS) |
|
|
|
Three Months Ended |
|
|
December 31, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
Net Income (Loss)
Attributable to RadNet, Inc. Common Stockholders |
|
$ |
29,136 |
|
|
$ |
(7,273 |
) |
Plus Provision for
Income Taxes |
|
|
(2,441 |
) |
|
|
20,133 |
|
Plus Other
(Income) |
|
|
(194 |
) |
|
|
(22 |
) |
Plus Interest
Expense |
|
|
12,113 |
|
|
|
9,911 |
|
Plus Severance
Costs |
|
|
844 |
|
|
|
255 |
|
Plus Loss on Disposal
of Equipment |
|
|
150 |
|
|
|
314 |
|
Plus Depreciation and
Amortization |
|
|
19,477 |
|
|
|
16,477 |
|
Plus Non Cash Employee
Stock Compensation |
|
|
1,105 |
|
|
|
944 |
|
Plus Legal
Settlement |
|
|
786 |
|
|
|
- |
|
Plus (Gain) on
Re-measurement of Equity Interests in NJIN Upon Consolidation |
|
|
(39,539 |
) |
|
|
- |
|
Plus Loss on
Goodwill/Trade Name Impairment |
|
|
3,937 |
|
|
|
- |
|
Plus Changes in the
Organization of East Coast and International Operations |
|
|
19,101 |
|
|
|
- |
|
Plus
Revaluation of Stock Consideration Related to the Acquisition of
Medical Arts |
|
1,749 |
|
|
|
- |
|
Adjusted EBITDA(1) |
|
$ |
46,224 |
|
|
$ |
40,739 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended |
|
|
December 31, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
Net Income Attributable
to RadNet, Inc. Common Stockholders |
|
$ |
32,243 |
|
|
$ |
53 |
|
Plus Provision for
Income Taxes |
|
|
394 |
|
|
|
24,310 |
|
Plus Other
(Income) |
|
|
(181 |
) |
|
|
(8 |
) |
Plus (Gain) on Sale of
Imaging Centers |
|
|
- |
|
|
|
(3,146 |
) |
Plus Interest
Expense |
|
|
43,456 |
|
|
|
40,623 |
|
Plus Severance
Costs |
|
|
1,931 |
|
|
|
1,821 |
|
Plus Loss (Gain) on
Disposal of Equipment |
|
|
(2,054 |
) |
|
|
1,142 |
|
Plus Legal
Settlement |
|
|
786 |
|
|
|
Plus (Gain) on
Re-measurement of Equity Interests in NJIN Upon Consolidation |
|
|
(39,539 |
) |
|
|
- |
|
Plus Loss on
Goodwill/Trade Name Impairment |
|
|
3,937 |
|
|
|
- |
|
Plus Transaction Costs
- EmblemHealth/ACP |
|
|
681 |
|
|
|
- |
|
Plus Changes in the
Organization of East Coast and International Operations |
|
|
19,101 |
|
|
|
- |
|
Plus
Revaluation of Stock Consideration Related to the Acquisition of
Medical Arts |
|
1,749 |
|
|
|
- |
|
Plus Expenses of
Divested/Closed Operations |
|
|
- |
|
|
|
3,186 |
|
Plus Refinancing
Fees |
|
|
- |
|
|
|
235 |
|
Plus Reimbursable Legal
Expenses |
|
|
- |
|
|
|
723 |
|
Plus Gain on Sale of
Equipment Attributable to Noncontrolling Interest |
|
|
440 |
|
|
|
- |
|
Plus Depreciation and
Amortization |
|
|
72,899 |
|
|
|
66,796 |
|
Plus Non Cash Employee
Stock Compensation |
|
|
7,662 |
|
|
|
6,786 |
|
Adjusted EBITDA(1) |
|
$ |
143,505 |
|
|
$ |
142,521 |
|
PAYOR CLASS BREAKDOWN** |
|
|
|
|
|
|
|
|
Fourth Quarter |
|
|
2018 |
|
|
|
Commercial
Insurance |
|
59.3 |
% |
Medicare |
|
20.2 |
% |
Capitation |
|
11.5 |
% |
Workers
Compensation/Personal Injury |
|
2.5 |
% |
Medicaid |
|
3.3 |
% |
Other |
|
3.2 |
% |
Total |
|
100.0 |
% |
|
|
|
**Capitation percentage has been calculated based upon
its proportion of Revenue Under Capitation Arrangements in the
period to Service Fee Revenue, Net of Contractual Allowances
and Discounts plus Revenue Under Capitation
Arrangements. After deducting the capitation percentage from
100%, all other payor class percentages are based upon a proportion
to global payments received from consolidated imaging centers
from that periods dates of services and excludes payments from
hospital contracts, Breastlink, imaging center management fees,
eRAD, Imaging on Call and other miscellaneous revenue. |
RADNET PAYMENTS BY MODALITY * |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter |
|
Full Year |
|
Full Year |
|
Full Year |
|
Full Year |
|
|
2018 |
|
2018 |
|
2017 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
MRI |
|
35.0 |
% |
|
35.2 |
% |
|
34.9 |
% |
|
34.7 |
% |
|
35.3 |
% |
CT |
|
16.4 |
% |
|
16.5 |
% |
|
16.2 |
% |
|
15.8 |
% |
|
15.7 |
% |
PET/CT |
|
5.5 |
% |
|
5.7 |
% |
|
5.2 |
% |
|
5.0 |
% |
|
5.1 |
% |
X-ray |
|
7.9 |
% |
|
8.4 |
% |
|
8.9 |
% |
|
9.3 |
% |
|
9.6 |
% |
Ultrasound |
|
12.4 |
% |
|
12.2 |
% |
|
12.1 |
% |
|
12.3 |
% |
|
11.5 |
% |
Mammography |
|
16.7 |
% |
|
15.8 |
% |
|
16.3 |
% |
|
16.5 |
% |
|
16.4 |
% |
Nuclear Medicine |
|
1.1 |
% |
|
1.1 |
% |
|
1.1 |
% |
|
1.2 |
% |
|
1.3 |
% |
Other |
|
5.1 |
% |
|
5.1 |
% |
|
5.2 |
% |
|
5.2 |
% |
|
5.1 |
% |
|
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
Note |
* Based upon global payments received from
consolidated Imaging Centers from that year's dates of
service. |
Excludes payments from hospital contracts, Breastlink,
Imaging on Call, eRAD, Center Management Fees and other
miscellaneous operating activities. |
|
Footnotes |
|
(1) The Company defines Adjusted EBITDA as earnings
before interest, taxes, depreciation and amortization, each from
continuing operations and excludes losses or gains on the disposal
of equipment, other income or loss, loss on debt extinguishments,
bargain purchase gains 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 and extraordinary events
which took 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. |
|
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