- Revenue increased 9.5% to a record $420.4 million in the fourth quarter of 2023 from $383.9 million in the fourth quarter of 2022; Excluding Revenue from the Artificial Intelligence ("AI") reporting segment, Revenue from the Imaging Center reporting segment in the fourth quarter of 2023 was $415.3 million, an increase of 8.6% from last year's fourth quarter
- Excluding losses from the AI reporting segment, Adjusted EBITDA(1) from the Imaging Center reporting segment was a record $68.3 million as compared with $61.6 million in the fourth quarter of 2022, an increase of 11.0%
- Adjusting for unusual or one-time items impacting Net Income in the quarter, Adjusted Earnings Per Share(3) was $0.20 for the fourth quarter of 2023; This compares with Adjusted Earnings Per Share(3) of $0.11 for the fourth quarter of 2022
- Aggregate procedural volumes increased 7.9% and same-center procedural volumes increased 5.5% compared with the fourth quarter of 2022
- Fourth Quarter AI revenue was $5.1 million, an increase of 278.4% from the fourth quarter of 2022
- RadNet announces the formation of a Digital Health financial reporting segment by combining its software and informatics businesses with its AI operations
- Announced earlier this week, RadNet has signed a definitive agreement to enter the Houston, Texas market through a platform acquisition consisting of seven imaging centers
- RadNet announces 2024 guidance ranges, anticipating increases in Revenue, Adjusted EBITDA(1) and Free Cash Flow(2) for 2024 over 2023 in both the Imaging Center and Digital Health reporting segments; Within the Digital Health reporting segment, AI Revenue is expected to increase over 65% from 2023 and AI Adjusted EBITDA(1) is projected to achieve break-even by year end 2024
LOS ANGELES, Feb. 29, 2024 (GLOBE NEWSWIRE) -- RadNet, Inc. (NASDAQ: RDNT), a national leader in providing high-quality, cost-effective, fixed-site outpatient diagnostic imaging services through a network of 366 owned and/or operated outpatient imaging centers, today reported financial results for its fourth quarter and full year ended December 31, 2023.
Dr. Howard Berger, President and Chief Executive Officer of RadNet, commented, "Record Revenue and Adjusted EBITDA(1) in the fourth quarter enabled us to exceed our 2023 full-year revised guidance ranges, ranges that were increased several times throughout 2023. The performance was the result of a continuation of strong industry trends and execution on a multi-pronged growth strategy focused on driving same-center performance, the expansion of existing and establishment of new health system partnerships and investments made in de novo imaging centers and newer technologies (including equipment, software and AI that drive improved throughput and efficiency). In the fourth quarter, the core Imaging Center segment experienced same-center procedural volume growth of 5.5%, Revenue growth of 8.6% and Adjusted EBITDA(1) growth of 11.0% as compared with the fourth quarter of 2022. Adjusted EBITDA(1) margins in the Imaging Center segment improved in the fourth quarter of 2023 relative to 2022 by 30 basis points, from 16.1% to 16.4%."
"During 2023, we carefully managed liquidity and financial leverage. This was highlighted with our completion of a successful stock offering in June of 2023, adding approximately $245 million of net proceeds to our balance sheet and enabling a discretionary debt repayment of $30 million in October 2023. As a result of these actions and a focus on margins and Adjusted EBITDA(1) growth, at year-end 2023, net debt to Adjusted EBITDA(1) fell below 2.0x. Liquidity at the end of 2023 remained strong, with a $342 million cash balance and Days Sales Outstanding (DSO's) of 32.0, which we believe to be among the best in the industry," added Dr. Berger.
"The demand for diagnostic imaging remains robust moving into 2024. Our solid financial position and multifaceted operating model have presented us with opportunities to expand our business, particularly through the construction of new centers to meet the growing demand and utilization in our target markets. We project to open approximately a dozen new facilities during 2024, and believe these sites should be positive contributors to our performance. Additionally, we expect to continue expanding existing health system joint ventures and partnerships and establish new ones during 2024," explained Dr. Berger.
"Earlier this week, we were pleased to announce a new platform acquisition in Houston, which represents our first new geographic expansion since 2020. The Houston metropolitan marketplace, encompassing about 7.3 million people, is the fourth most populous city and the second fastest growing metropolitan area in the United States. In our commitment to improving and expanding patient access and services, we will look to grow in this market in various ways, including through de novo build-outs, health system partnerships and introducing our AI and leading edge clinical and operating digital health solutions. In the future, we may enter additional new markets when conditions and opportunities support such moves," added Dr. Berger.
Dr. Berger concluded, "We remain enthusiastic about the initiatives in information technology and digital health. These include migrating our proprietary software solutions to the cloud, creating the new DeepHealth OS suite of solutions, new projects leveraging generative AI to improve operating efficiency and lower costs and the expansion of AI-enhanced programs in breast, lung and prostate screening domestically and abroad. The AI Revenue almost tripled in 2023 as compared with 2022, and if the continued implementation of the Enhanced Breast Cancer Diagnostic (EBCD) screening mammography program progresses as planned, AI Revenue could almost double in 2024 relative to 2023."
Financial Results
Fourth Quarter Report:
For the fourth quarter of 2023, RadNet reported Revenue from its Imaging Center reporting segment of $415.3 million and Adjusted EBITDA(1) of $68.3 million, which excludes Revenue and Adjusted EBITDA(1) Losses from the AI reporting segment. As compared with last year's fourth quarter, Revenue increased $32.8 million (or 8.6%) and Adjusted EBITDA(1) increased $6.7 million (or 11.0%).
Including our AI reporting segment, total company Revenue was $420.4 million in the fourth quarter of 2023, an increase of 9.5% from $383.9 million in last year's fourth quarter. Including the Adjusted EBITDA(1) losses of the AI reporting segment of $2.5 million in the fourth quarter of 2023 and $4.3 million in the fourth quarter of 2022, total company Adjusted EBITDA(1) was $65.8 million in the fourth quarter of 2023 and $57.2 million in the fourth quarter of 2022, a growth of 15.0%.
On an unadjusted basis, for the fourth quarter of 2023, RadNet reported a Net Loss of $1.9 as compared with a net loss of $934,000 for the fourth quarter of 2022. Net Loss Per Share for the fourth quarter of 2023 was $(0.03), compared with a Net Loss per share of $(0.02) in the fourth quarter of 2022, based upon a weighted average number of diluted shares outstanding of 67.9 million shares in 2023 and 57.0 million shares in 2022.
Adjusting for a number of unusual or one-time items impacting the fourth quarter of 2023, Adjusted Earnings(3) from the Imaging Center reporting segment was $13.7 million and diluted Adjusted Earnings Per Share(3) was $0.20 during the fourth quarter of 2023 as compared with $0.11 during the fourth quarter of 2022.
The unusual or one-time items impacting the fourth quarter of 2023 excluded in calculating Adjusted Earnings(3) were as follows: $7.2 million of non-cash loss from interest rate swaps (excluding the amortization of the accumulation of the changes in fair value out of Other Comprehensive Income); $621,000 of severance paid in connection with headcount reductions related to cost savings initiatives; $880,000 expense related to leases for de novo facilities under construction that have yet to open their operations; $222,000 acquisition transaction costs; $429,000 gain from a valuation adjustment for contingent consideration related to acquisitions; $1.3 million of non-capitalized research and development investment in DeepHealth Cloud OS and generative AI; $5.1 million loss on lease abandonment; and $5.0 million of pre-tax losses related to our AI reporting segment.
Also, affecting Net Income in the fourth quarter of 2023 were certain non-cash expenses and unusual items including: $5.4 million of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted stock; $1.0 million loss on the disposal of certain capital equipment; and $747,000 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 fourth quarter of 2023, as compared with the prior year's fourth quarter, MRI volume increased 13.2%, CT volume increased 11.3% and PET/CT volume increased 18.5%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 7.9% 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 2023 and 2022, MRI volume increased 10.8%, CT volume increased 8.2% and PET/CT volume increased 17.4%. Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 5.5% over the prior year's same quarter.
Annual Report:
For full-year 2023, RadNet reported Revenue from its Imaging Center reporting segment of $1,604 million and Adjusted EBITDA(1) Excluding Losses from the AI reporting segment of $245.1 million. In 2023, Revenue increased $178.5 million (or 12.5%) and Adjusted EBITDA(1) increased $36.1 million (or 17.2%) as compared with 2022.
Including our AI reporting segment Revenue of $12.5 million, total company Revenue was $1,617 million for full-year 2023, an increase of 13.0% from $1,430 million in 2022. Including Adjusted EBITDA(1) losses from the AI segment of $12.8 million, total company Adjusted EBITDA(1) for 2023 was $232.3 million as compared with $192.5 million in 2022, an increase of 20.7%.
For 2023, RadNet reported Net Income of $3.0 million, a decrease of approximately $7.6 million over 2022. Per share diluted Net Income for the full year of 2023 was $0.05, compared to a diluted Net Income per share of $0.17 in 2022 (based upon a weighted average number of diluted shares outstanding of 64.7 million in 2023 and 57.3 million in 2022).
Affecting Net Income in 2023 were certain non-cash expenses and unusual items including: $8.2 million of non-cash loss from interest rate swaps; $3.8 million of severance paid in connection with headcount reductions related to cost savings initiatives; $3.6 million expense related to leases for our de novo facilities under construction that have yet to open their operations; $22.6 million of pre-tax losses related to our AI reporting segment; $26.8 million of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted stock; $2.2 million loss on the disposal of certain capital equipment; $5.1 million of lease abandonment charges; and $16.8 million gain from the contribution of imaging centers into a joint venture; $1.3 million of non-capitalized research and development investment in DeepHealth Cloud OS and generative AI; $4.0 million non-cash charge for intangible adjustments; $4.1 million non-cash gain on contingent consideration; $3.0 million of non-cash amortization of deferred financing costs and loan discounts related to financing fees paid as part of our existing credit facilities.
Actual 2023 Results vs. 2023 Guidance
The following compares the Company's 2023 performance with previously announced guidance levels:
| Imaging Center Segment | |||
| Original Guidance Range | Revised Guidance Range After Q3 Results | 2023 Actual Results | |
| Total Net Revenue | $1,525 - $1,575 million | $1,575 - $1,610 million | $1,604.2 million |
| Adjusted EBITDA(1) | $220 - $230 million | $235 - $245 million | $245.2 million |
| Capital Expenditures(a) | $105 - $115 million | $115 - $125 million | $153.0 million |
| Cash Interest Expense(c) | $35 - $40 million | $45 - $50 million | $38.3 million |
| Free Cash Flow (b)(2) | $70 - $80 million | $65 - $75 million | $53.9 million |
| Artificial Intelligence Segment | |||
| Original Guidance Range | Revised Guidance Range After Q3 Results | 2023 Actual Results | |
| Total Net Revenue | $16 - $18 million | $11 - $13 million | $12.5 million |
| Adjusted EBITDA(1) | $(9) - $(11) million | $(11) - $(13) million | $(12.8) million |
(a) Net of proceeds from the sale of equipment, imaging centers and joint venture interests, New Jersey Imaging Network capital expenditures of $18.6 million, 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 and from counterparties on interest rate swaps and nets interest income from our cash balance recorded in Other Income.
Formation of New Digital Health Reporting Segment
For its 2024 fiscal year, RadNet is changing its operating segments, which will impact reportable segments. Specifically, the eRAD Radiology Information Systems (RIS) and Picture Archiving and Communication Systems (PACS) and related health informatics businesses that were reported as part of the Imaging Center reportable segment through 2023, will now be combined with the Artificial Intelligence reportable segment through 2023 to form a new Digital Health financial reportable segment for 2024. With respect to 2023, the eRAD financial results embedded in the Imaging Center segment consisted of $37.1 million of Revenue, $16.4 million of Operating Expenses and $20.7 million of Adjusted EBITDA(1).
Below, we illustrate what 2023 selected operating results would have been if RadNet had operated under the two new reporting segments - Imaging Center and Digital Health:
| 2023 Imaging Center Segment Including eRAD Businesses | 2023 eRAD Businesses | 2023 Imaging Center Segment Excluding eRAD Businesses | |
| Total Net Revenue | $1,604.2 million | $37.1 million | $1,567.1 million |
| Adjusted EBITDA(1) | $245.2 million | $20.7 million | $224.5 million |
| Capital Expenditures(a) | $153.0 million | $1.2 million | $151.8 million |
| Cash Interest Expense(c) | $38.3 million | $0 million | $38.3 million |
| Free Cash Flow(b) | $53.9 million | $19.5 million | $34.4 million |
| 2023 AI Segment | 2023 eRAD Businesses | 2023 Digital Health Segment (AI+eRAD Businesses) | |
| Total Net Revenue | $12.5 million | $37.1 million | $49.6 million |
| Adjusted EBITDA(1) | $(12.8) million | $20.7 million | $7.9 million |
(a) Net of proceeds from the sale of equipment, imaging centers and joint venture interests, New Jersey Imaging Network capital expenditures of $18.6 million, a $19.8 million one-time purchase with a promissory note of equipment previously leased under operating leases in 2023 and a $5 million purchase of software and other intellectual property from a vender in 2023.
(b) Defined by the Company as Adjusted EBITDA(1) less Capital Expenditures and Cash Interest Expense.
(c) Excludes payments to and from counterparties on interest rate swaps and nets interest income from our cash balance recorded in Other Income.
2024 Guidance
RadNet reports 2024 guidance ranges as follows:
| Imaging Center Segment | ||||
| 2023 Actual Results Restated for New Imaging Center Segment | 2024 Guidance Range | 2023-2024 Implied Growth | ||
| Total Net Revenue | $1,567.1 million | $1,650 - $1,700 million | 5.3% - 8.5% | |
| Adjusted EBITDA(1) | $224.5 million | $250 - $260 million | 11.4% - 15.8% | |
| Capital Expenditures(a) | $151.8 million | $125 - $135 million | ||
| Cash Interest Expense(c) | $38.3 million | $40 - $45 million | ||
| Free Cash Flow(b) | $34.4 million | $65 - $75 million | ||
(a) Net of proceeds from the sale of equipment, imaging centers and joint venture interests and New Jersey Imaging Network capital expenditures.
(b) Defined by the Company as Adjusted EBITDA(1) less Capital Expenditures and Cash Interest Expense.
(c) Excludes payments to and from counterparties on interest rate swaps and nets interest income from our cash balance recorded in Other Income.
| Digital Health Segment | ||||
| 2023 Actual Results Restated For New Digital Health Segment | 2024 Guidance Range | 2023-2024 Implied Growth | ||
| Total Net Revenue | $49.6 million | $60 - $70 million | 21.0% - 41.2% | |
| Adjusted EBITDA(1) Before Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI | $7.9 million | $12 - $14 million | 51.4% - 76.6% | |
| Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI | $1.4 million | $11 - $13 million | ||
| Capital Expenditures | $1.2 million | $3 - $5 million | ||
| Free Cash Flow(a) Before Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI | $6.7 million | $8 - $10 million | ||
| Free Cash Flow(a) After Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI | $5.3 million | $(2) - $(5) million | ||
(a) Defined by the Company as Adjusted EBITDA(1) less Capital Expenditures and Cash Interest Expense.
Dr. Berger noted, "We are particularly excited to announce the formation of the Digital Health reporting segment. This new segment combines our informatics businesses (eRAD and related solutions) with our AI operations. While the software solutions of this operating segment are critical to the success of the imaging center business, the Digital Health segment has over 500 outside customers and has its own unique opportunities for growth and expansion. We have conviction that the Digital Health solutions can positively impact how radiology and imaging are practiced, and we have attracted experienced talent to lead this new segment who have successfully developed, commercialized and sold imaging-related information technology solutions in the past."
Dr Berger added, "Taking into account all the current initiatives in progress within both operating segments, our guidance reflects significant growth in 2024. Within the Imaging Center segment, we expect to benefit from a continued focus on same-center performance, tuck-in acquisitions, increased reimbursement, expanded and new health system joint ventures and de novo center openings. Combining these opportunities with diligent expense management, we are projecting to drive double digit growth in Imaging Center Adjusted EBITDA(1) in 2024. As a result, despite a continued commitment to capital expenditures in 2024, primarily on de novo center openings, we anticipate doubling our free cash flow as compared with 2023 results from our core Imaging Center segment."
"Within the new Digital Health segment, we are expecting significant growth in 2024 primarily from anticipated incremental AI revenue from both the continued Enhanced Breast Cancer Detection (EBCD) implementation and from our lung and prostate AI licensing business, particularly in Europe. We further anticipate that by year end 2024, our AI businesses will collectively be on a run-rate of positive Adjusted EBITDA(1). Our guidance also reflects the substantial investment we are making in the development of our DeepHealth OS cloud-based operating system and the generative AI modules that could lower our costs and increase efficiency in the areas of patient scheduling, pre-authorization, insurance verification and revenue cycle. We believe this research and development investment will pay dividends both in our core imaging center business and for the current and future customers outside of RadNet," concluded Dr. Berger.
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 tomorrow, March 1st, at 10:30 a.m. Eastern Time. During the call, management will discuss the Company's 2023 fourth quarter and year-end results.
Conference Call Details:
Date: Friday, March 1, 2024
Time: 10:30 a.m. ET
Dial In-Number: 844-826-3035
International Dial-In Number: 412-317-5195
There will also be simultaneous and archived webcasts available at https://viavid.webcasts.com/starthere.jsp?ei=1657167&tp_key=5b49295358 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 10186577.
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 California, Maryland, Delaware, New Jersey, New York, Florida and Arizona. Together with affiliated radiologists, and inclusive of full-time and per diem employees and technologists, RadNet has a total of approximately 9,700 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:
- changes in general economic conditions nationally and regionally in the markets in which we operate, including their effects on the cost and availability of labor;
- 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;
- 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;
- 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, 310-445-2800
Executive Vice President and Chief Financial Officer
| RADNET, INC. AND SUBSIDIARIES | |||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
| (IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA) | |||||||
| December 31, 2023 | December 31, 2022 | ||||||
| (unaudited) | |||||||
| ASSETS | |||||||
| CURRENT ASSETS | |||||||
| Cash and Cash equivalents | $ | 342,570 | $ | 127,834 | |||
| Accounts receivable | 163,707 | 166,357 | |||||
| Due from affiliates | 25,342 | 18,971 | |||||
| Prepaid expenses and other current assets | 47,657 | 54,022 | |||||
| Total current assets | 579,276 | 367,184 | |||||
| PROPERTY, EQUIPMENT AND RIGHT-OF-USE ASSETS | |||||||
| Property and equipment, net | 604,401 | 565,961 | |||||
| Operating lease right-of-use assets | 596,032 | 603,524 | |||||
| Total property, plant, equipment and right-of-use assets | 1,200,433 | 1,169,485 | |||||
| OTHER ASSETS | |||||||
| Goodwill | 679,463 | 677,665 | |||||
| Other intangible assets | 90,615 | 106,228 | |||||
| Deferred financing costs | 1,643 | 2,280 | |||||
| Investment in joint ventures | 92,710 | 57,893 | |||||
| Deposits and other | 46,333 | 53,172 | |||||
| Total assets | $ | 2,690,473 | $ | 2,433,907 | |||
| LIABILITIES AND EQUITY | |||||||
| CURRENT LIABILITIES | |||||||
| Accounts payable, accrued expenses and other | $ | 342,940 | $ | 369,595 | |||
| Due to affiliates | 15,910 | 23,100 | |||||
| Deferred revenue | 4,647 | 4,021 | |||||
| Current operating lease liability | 55,981 | 57,607 | |||||
| Current portion of notes payable | 17,974 | 12,400 | |||||
| Total current liabilities | 437,452 | 466,723 | |||||
| LONG-TERM LIABILITIES | |||||||
| Long-term operating lease liability | 605,097 | 604,117 | |||||
| Notes payable, net of current portion | 812,068 | 839,344 | |||||
| Deferred tax liability, net | 15,776 | 9,256 | |||||
| Other non-current liabilities | 6,721 | 23,015 | |||||
| Total liabilities | 1,877,114 | 1,942,455 | |||||
| EQUITY | |||||||
| RadNet, Inc. stockholders' equity: | |||||||
| Common stock - $.0001 par value, 200,000,000 shares authorized; 67,956,318 and 57,723,125 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively | 7 | 6 | |||||
| Additional paid-in-capital | 722,750 | 436,288 | |||||
| Accumulated other comprehensive loss | (12,484 | ) | (20,677 | ) | |||
| Accumulated deficit | (79,578 | ) | (82,622 | ) | |||
| Total RadNet, Inc.'s stockholders equity | 630,695 | 332,995 | |||||
| Noncontrolling interests | 182,664 | 158,457 | |||||
| Total equity | 813,359 | 491,452 | |||||
| Total liabilities and equity | $ | 2,690,473 | $ | 2,433,907 | |||
| RADNET, INC. AND SUBSIDIARIES | |||||||||||
| CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | |||||||||||
| (IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA) | |||||||||||
| (unaudited) | |||||||||||
| Years Ended December 31, | |||||||||||
| 2023 | 2022 | 2021 | |||||||||
| REVENUE | |||||||||||
| Service fee revenue | $ | 1,463,197 | $ | 1,278,016 | $ | 1,166,743 | |||||
| Revenue under capitation arrangements | 153,433 | 152,045 | 148,334 | ||||||||
| Total service revenue | 1,616,630 | 1,430,061 | 1,315,077 | ||||||||
| Provider relief funding | - | - | 9,110 | ||||||||
| OPERATING EXPENSES | |||||||||||
| Cost of operations, excluding depreciation and amortization | 1,395,239 | 1,264,346 | 1,123,274 | ||||||||
| Lease abandonment charges | 5,146 | - | 19,675 | ||||||||
| Depreciation and amortization | 128,391 | 115,877 | 96,694 | ||||||||
| (Gain) on contribution of imaging centers into joint venture | (16,808 | ) | - | - | |||||||
| Loss (gain) on sale and disposal of equipment and other | 2,187 | 2,529 | 1,246 | ||||||||
| Severance costs | 3,778 | 946 | 744 | ||||||||
| Total operating expenses | 1,517,933 | 1,383,698 | 1,241,633 | ||||||||
| INCOME (LOSS) FROM OPERATIONS | 98,697 | 46,363 | 82,554 | ||||||||
| OTHER INCOME AND EXPENSES | |||||||||||
| Interest expense | 64,483 | 50,841 | 48,830 | ||||||||
| Equity in earnings of joint ventures | (6,427 | ) | (10,390 | ) | (10,967 | ) | |||||
| Non-cash change in fair value of interest rate hedge | 8,185 | (39,621 | ) | (21,670 | ) | ||||||
| Debt restructuring and extinguishment expenses | - | 731 | 6,044 | ||||||||
| Other expenses (income) | (6,354 | ) | 1,833 | 1,438 | |||||||
| Total other expense (income) | 59,887 | 3,394 | 23,675 | ||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | 38,810 | 42,969 | 58,879 | ||||||||
| Provision for income taxes | (8,473 | ) | (9,361 | ) | (14,560 | ) | |||||
| NET INCOME (LOSS) | 30,337 | 33,608 | 44,319 | ||||||||
| Net income (loss) attributable to noncontrolling interests | 27,293 | 22,958 | 19,592 | ||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | $ | 3,044 | $ | 10,650 | $ | 24,727 | |||||
| BASIC NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | $ | 0.05 | $ | 0.19 | $ | 0.47 | |||||
| DILUTED NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | $ | 0.05 | $ | 0.17 | $ | 0.46 | |||||
| WEIGHTED AVERAGE SHARES OUTSTANDING | |||||||||||
| Basic | 63,580,059 | 56,293,336 | 52,496,679 | ||||||||
| Diluted | 64,658,299 | 57,320,870 | 53,421,033 | ||||||||
| RADNET, INC. AND SUBSIDIARIES | |||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS | |||||||||||
| (IN THOUSANDS) | |||||||||||
| (unaudited) | |||||||||||
| Years Ended December 31, | |||||||||||
| 2023 | 2022 | 2021 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
| Net income (loss) | $ | 30,337 | $ | 33,608 | $ | 44,319 | |||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 128,391 | 115,877 | 96,694 | ||||||||
| Amortization of operating right-of-use assets | 61,102 | 68,847 | 73,967 | ||||||||
| Non-cash portion for amortization of operating lease right-of-use assets and related charges due to facilities abandonment | 5,146 | - | 19,675 | ||||||||
| Equity in earnings of joint ventures | (6,427 | ) | (10,390 | ) | (10,967 | ) | |||||
| Distributions from joint ventures | 15,603 | 4,438 | 4,707 | ||||||||
| Amortization and write off of deferred financing costs and loan discount | 2,987 | 2,693 | 3,254 | ||||||||
| (Gain) on contribution of imaging centers into joint venture | (16,808 | ) | - | - | |||||||
| Loss on sale and disposal of equipment | 2,187 | 2,529 | 1,246 | ||||||||
| Gain on extinguishment of debt | - | - | 1,496 | ||||||||
| Loss on impairment | 3,949 | - | - | ||||||||
| Amortization of cash flow hedge | 3,576 | 3,687 | 3,695 | ||||||||
| Non-cash change in fair value of interest rate hedge | 8,185 | (39,621 | ) | (21,670 | ) | ||||||
| Stock-based compensation | 26,785 | 23,770 | 25,203 | ||||||||
| Change in value of contingent consideration | (3,880 | ) | (325 | ) | - | ||||||
| Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions: | |||||||||||
| Accounts receivable | 2,650 | (30,078 | ) | (5,890 | ) | ||||||
| Other current assets | (8,441 | ) | (3,327 | ) | (15,777 | ) | |||||
| Other assets | (1,484 | ) | (12,166 | ) | 662 | ||||||
| Deferred taxes | 6,056 | 13,356 | 19,834 | ||||||||
| Operating lease liability | (54,763 | ) | (68,943 | ) | (72,553 | ) | |||||
| Deferred revenue | 626 | (7,316 | ) | (28,319 | ) | ||||||
| Accounts payable, accrued expenses and other | 15,086 | 49,778 | 9,915 | ||||||||
| Net cash provided by operating activities | 220,863 | 146,417 | 149,491 | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
| Purchase of imaging centers and other operations | (10,918 | ) | (129,961 | ) | (77,691 | ) | |||||
| Purchase of property and equipment | (176,600 | ) | (119,451 | ) | (137,874 | ) | |||||
| Purchase of intangible assets | - | - | (5,130 | ) | |||||||
| Proceeds from sale of equipment | 83 | 3,904 | 625 | ||||||||
| Equity contributions in existing and purchase of interest in joint ventures | (14,035 | ) | (1,441 | ) | (1,441 | ) | |||||
| Net cash used in investing activities | (201,470 | ) | (246,949 | ) | (221,511 | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
| Principal payments on notes and leases payable | (2,930 | ) | - | (3,302 | ) | ||||||
| Payments on senior notes | (41,063 | ) | (53,750 | ) | (619,529 | ) | |||||
| Additional deferred finance costs on revolving loan amendment | - | - | (938 | ) | |||||||
| Proceeds from debt issuance, net of issuance costs | - | 147,996 | 717,307 | ||||||||
| Distributions paid to noncontrolling interests | (5,972 | ) | (893 | ) | (2,426 | ) | |||||
| Proceeds from sale of noncontrolling interest | - | - | 13,073 | ||||||||
| Proceeds from revolving credit facility | - | - | 128,300 | ||||||||
| Payments on revolving credit facility | - | - | (128,300 | ) | |||||||
| Sale of non-controlling interests | 5,121 | - | - | ||||||||
| Payments on contingent consideration | (5,495 | ) | - | - | |||||||
| Proceeds from issuance of stock | 245,832 | - | - | ||||||||
| Proceeds from issuance of common stock upon exercise of options | 142 | 294 | 488 | ||||||||
| Net cash provided by (used in) financing activities | 195,635 | 93,647 | 104,673 | ||||||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH | (292 | ) | 113 | (65 | ) | ||||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | 214,736 | (6,772 | ) | 32,588 | |||||||
| CASH AND CASH EQUIVALENTS, beginning of period | 127,834 | 134,606 | 102,018 | ||||||||
| CASH AND CASH EQUIVALENTS, end of period | $ | 342,570 | $ | 127,834 | $ | 134,606 | |||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | |||||||||||
| Cash paid during the period for interest | $ | 64,695 | $ | 39,151 | $ | 29,042 | |||||
| Cash paid during the period for income taxes | $ | 1,587 | $ | 587 | $ | 1,950 | |||||
| RADNET, INC. AND SUBSIDIARIES | |||||||
| CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | |||||||
| (IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA) | |||||||
| (unaudited) | |||||||
| Three Months Ended December 31, | |||||||
| 2023 | 2022 | ||||||
| REVENUE | |||||||
| Service fee revenue | $ | 384,932 | $ | 346,197 | |||
| Revenue under capitation arrangements | 35,451 | 37,679 | |||||
| Total service revenue | 420,383 | 383,876 | |||||
| OPERATING EXPENSES | |||||||
| Cost of operations, excluding depreciation and amortization | 356,592 | 329,589 | |||||
| Lease abandonment charges | 5,146 | - | |||||
| Depreciation and amortization | 32,686 | 30,668 | |||||
| (Gain) on contribution of imaging centers into joint venture | - | - | |||||
| Loss (gain) on sale and disposal of equipment and other | 1,002 | 1,567 | |||||
| Severance costs | 621 | 450 | |||||
| Total operating expenses | 396,047 | 362,274 | |||||
| INCOME (LOSS) FROM OPERATIONS | 24,336 | 21,602 | |||||
| OTHER INCOME AND EXPENSES | |||||||
| Interest expense | 16,607 | 15,443 | |||||
| Equity in earnings of joint ventures | (2,492 | ) | (2,040 | ) | |||
| Non-cash change in fair value of interest rate hedge | 7,236 | (45 | ) | ||||
| Debt restructuring and extinguishment expenses | - | 731 | |||||
| Other expenses (income) | (3,745 | ) | 269 | ||||
| Total other expense (income) | 17,606 | 14,358 | |||||
| INCOME (LOSS) BEFORE INCOME TAXES | 6,730 | 7,244 | |||||
| Provision for income taxes | (732 | ) | (2,274 | ) | |||
| NET INCOME (LOSS) | 5,998 | 4,970 | |||||
| Net income (loss) attributable to noncontrolling interests | 7,856 | 5,903 | |||||
| NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | $ | (1,858 | ) | $ | (933 | ) | |
| BASIC NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | $ | (0.03 | ) | $ | (0.02 | ) | |
| DILUTED NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | $ | (0.03 | ) | $ | (0.02 | ) | |
| WEIGHTED AVERAGE SHARES OUTSTANDING | |||||||
| Basic | 67,904,999 | 57,040,622 | |||||
| Diluted | 67,904,999 | 57,040,622 | |||||
| RADNET, INC. AND SUBSIDIARIES | |||||||||||||||
| RECONCILIATION OF GAAP NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON SHAREHOLDERS TO ADJUSTED EBITDA | |||||||||||||||
| (IN THOUSANDS) | |||||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Net income (loss) attributable to Radnet, Inc. common stockholders | $ | (1,858 | ) | $ | (933 | ) | $ | 3,044 | $ | 10,650 | |||||
| Income taxes | 732 | 2,274 | 8,473 | 9,361 | |||||||||||
| Interest expense | 16,607 | 15,443 | 64,483 | 50,841 | |||||||||||
| Severance costs | 621 | 450 | 3,778 | 946 | |||||||||||
| Depreciation and amortization | 32,686 | 30,668 | 128,391 | 115,877 | |||||||||||
| Non-cash employee stock-based compensation | 5,404 | 4,658 | 26,785 | 23,770 | |||||||||||
| (Gain) loss on sale and disposal of equipment and other | 1,002 | 1,567 | 2,187 | 2,529 | |||||||||||
| Non-cash change in fair value of interest rate hedge | 7,236 | (45 | ) | 8,185 | (39,621 | ) | |||||||||
| Debt restructuring and loss on extinguishment expenses | - | 731 | - | 731 | |||||||||||
| Gain on contribution of imaging centers into joint venture | - | - | (16,808 | ) | - | ||||||||||
| Other expenses | (3,745 | ) | 269 | (6,354 | ) | 1,833 | |||||||||
| Lease abandonment charges | 5,146 | - | 5,146 | - | |||||||||||
| Legal settlements | - | - | - | 2,197 | |||||||||||
| Non-cash change to contingent consideration | (429 | ) | 47 | (4,075 | ) | 47 | |||||||||
| Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI | 1,308 | - | 1,308 | - | |||||||||||
| Change in estimate related to refund liability | - | - | - | 8,089 | |||||||||||
| Acquisition transaction costs | 222 | 927 | 222 | 927 | |||||||||||
| Acquisition related non-cash intangible adjustment | - | - | 3,950 | - | |||||||||||
| Non-operational rent expenses | 880 | 1,177 | 3,629 | 4,297 | |||||||||||
| Adjusted EBITDA Including EBITDA Losses from AI Segment | $ | 65,812 | $ | 57,233 | $ | 232,344 | $ | 192,474 | |||||||
| EBITDA Losses from AI Segment | 2,483 | 4,320 | 12,764 | 16,575 | |||||||||||
| Adjusted EBITDA excluding EBITDA Losses from AI Segment | $ | 68,295 | $ | 61,553 | $ | 245,108 | $ | 209,049 | |||||||
| RADNET, INC. AND SUBSIDIARIES | |||||||
| SCHEDULE OF ADJUSTED EARNINGS AND EARNINGS PER SHARE (3) | |||||||
| (IN THOUSANDS EXCEPT SHARE DATA) | |||||||
| (unaudited) | |||||||
| Three Months Ended | |||||||
| December 31, | |||||||
| 2023 | 2022 | ||||||
| NET (LOSS) INCOME ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | $ | (1,858 | ) | $ | (933 | ) | |
| Add severance costs | 621 | 450 | |||||
| Add loss on lease abandonment/impairment | 5,146 | - | |||||
| Add debt restructuring and loss on extinguishment expenses | - | 731 | |||||
| Add non-operational rent expenses (i) | 880 | 1,177 | |||||
| Add AI Segment losses (iv) | 4,973 | 6,060 | |||||
| Add acquisition transaction costs | 222 | 927 | |||||
| Add valuation adjustment for contingent consideration | (429 | ) | 47 | ||||
| Add Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI | 1,308 | - | |||||
| Add/Subtract non-cash change in fair value of swap valuation (ii) | 7,236 | (45 | ) | ||||
| Total adjustments - loss (gain) | 19,957 | 9,347 | |||||
| Subtract tax impact of Adjustments (iii) | 4,357 | 2,031 | |||||
| TOTAL ADJUSTMENT TO NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON SHAREHOLDERS | 15,600 | 7,316 | |||||
| ADJUSTED NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | 13,742 | 6,383 | |||||
| WEIGHTED AVERAGE SHARES OUTSTANDING | |||||||
| Diluted | 68,895,322 | 58,164,555 | |||||
| ADJUSTED DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | $ | 0.20 | $ | 0.11 | |||
| (i) Represents rent expense associated with de novo sites under construction prior to them becoming operational. | |||||||
| (ii) 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. | |||||||
| (iii) Tax effected using 21.83% and 21.73% blended federal and state effective tax rate for 2023 and 2022, respectively. | |||||||
| (iv) Represents pre-tax net losses before income taxes from Artificial Intelligence reporting segment. | |||||||
| PAYOR CLASS BREAKDOWN | |||
| Fourth Quarter | |||
| 2023 | |||
| Commercial Insurance | 58.0 | % | |
| Medicare | 22.8 | % | |
| Capitation | 8.4 | % | |
| Medicaid | 2.9 | % | |
| Workers Compensation/Personal Injury | 2.8 | % | |
| Other | 5.0 | % | |
| Total | 100.0 | % | |
| RADNET PAYMENTS BY MODALITY | |||||||||||||||
| Fourth Quarter | Full Year | Full Year | Full Year | ||||||||||||
| 2023 | 2023 | 2022 | 2021 | ||||||||||||
| MRI | 36.9 | % | 36.8 | % | 36.8 | % | 36.0 | % | |||||||
| CT | 16.6 | % | 16.8 | % | 17.5 | % | 17.2 | % | |||||||
| PET/CT | 6.3 | % | 6.4 | % | 5.8 | % | 5.5 | % | |||||||
| X-ray | 6.3 | % | 6.5 | % | 6.7 | % | 3.9 | % | |||||||
| Ultrasound | 12.9 | % | 12.9 | % | 12.6 | % | 12.7 | % | |||||||
| Mammography | 16.5 | % | 16.0 | % | 15.3 | % | 16.1 | % | |||||||
| Nuclear Medicine | 0.7 | % | 0.8 | % | 0.9 | % | 1.0 | % | |||||||
| Other | 3.8 | % | 3.9 | % | 4.5 | % | 4.6 | % | |||||||
| 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
| PROCEDURES BY MODALITY* | |||||||
| Fourth Quarter | Fourth Quarter | ||||||
| 2023 | 2023 | ||||||
| MRI | 398,625 | 352,009 | |||||
| CT | 237,937 | 213,716 | |||||
| PET/CT | 15,825 | 13,359 | |||||
| Nuclear Medicine | 8,120 | 8,550 | |||||
| Ultrasound | 617,301 | 578,238 | |||||
| Mammography | 483,687 | 459,068 | |||||
| X-ray and Other | 804,225 | 752,055 | |||||
| Total | 2,565,720 | 2,376,995 | |||||
* 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 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.
(3) The Company defines Adjusted Earnings 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, pre-tax loss or gain from AI segment and any other non-recurring or unusual transactions recorded during the period.
Adjusted Earnings Per Share is reconciled to its nearest comparable GAAP financial measure. Adjusted Earnings 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.
