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LOS ANGELES, Aug. 08, 2019 (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 340 owned and/or operated outpatient imaging centers, today reported financial results for its second quarter of 2019.
Dr. Howard Berger, President and Chief Executive Officer of RadNet, commented, “We continued the momentum we established in the first quarter of this year with a very strong second quarter. Our Revenue increased 18.3% and our Adjusted EBITDA(1) increased 13.0% from last year’s second quarter. Our improved performance was driven by strong contributions from recent acquisitions on both coasts, new and expanded joint ventures and overall same-center procedural volume growth of 3.5%.”
Dr. Berger continued, “During the quarter, we began the systematic integration of Kern Radiology and operationalized our second joint venture with Dignity Health in Ventura County, California. We also continued to make progress with our performance of our East Coast capitation contract with Emblem Health and further integrated our recently acquired Medical Arts Radiology acquisition in Long Island, New York.”
“We remain excited about the prospects for the second half of 2019 and have increased our guidance levels in anticipation of continued strength in our business. We have also begun to set the stage for exciting potential developments that could have a material positive impact on the accuracy, speed and cost structure of our future service offerings. Most notably, we announced the formation of our Artificial Intelligence division along with the acquisition of the 75% of Nulogix which we did not previously own. Through this new division, we intend to research, develop, test and invest in offerings using artificial intelligence for image interpretation and for improving our business processes,” added Dr. Berger.
Second Quarter Financial Results
For the second quarter of 2019, RadNet reported Revenue of $289.1 million and Adjusted EBITDA(1) of $43.1 million. Revenue increased $44.7 million (or 18.3%) and Adjusted EBITDA(1) increased $5.0 million (or 13.0%) from the second quarter of last year.
For the second quarter, RadNet reported Net Income Attributable to RadNet, Inc. Common Stockholders (“Net Income”) of $4.9 million, a decrease of approximately $507,000 over the second quarter of 2018. Adjusting for the impact of the financing transaction and legal settlements accounted for in Other Expenses during the quarter on a tax-effected basis of $912,000 (“Adjusted Net Income”), Adjusted Net Income was $5.8 million in the second quarter, an increase of $405,000 over the second quarter of 2018.
Per share diluted Net Income for the second quarter was $0.10, compared to $0.11 in the second quarter of 2018 (based upon a weighted average number of diluted shares outstanding of 50.1 million and 48.5 million for these periods in 2019 and 2018, respectively). Adjusting for the impact of the financing transaction and legal settlements accounted for in Other Expenses during the quarter on a tax-effected basis of $912,000, per share diluted Adjusted Net Income was $0.12 in the second quarter compared to $0.11 in the second quarter of 2018.
Affecting Net Income in the second quarter of 2019 were certain non-cash expenses and non-recurring items including: $1.0 million of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted stock; $371,000 of severance paid in connection with headcount reductions related to cost savings initiatives; $101,000 loss on the sale of certain capital equipment; $1.3 million of Other Expense related to the financing transaction and legal settlements; and $973,000 of non-cash amortization of deferred financing costs and loan discount on debt issuances.
For the second quarter of 2018, as compared with the prior year’s second quarter, MRI volume increased 9.7%, CT volume increased 14.1% and PET/CT volume increased 9.0%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 11.4% over the prior year’s second quarter. On a same-center basis, including only those centers which were part of RadNet for both the second quarters of 2019 and 2018, MRI volume increased 3.2%, CT volume increased 6.0% and PET/CT volume decreased 1.3%. Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 3.5% over the prior year’s same quarter.
Six Month Financial Results
For the six months ended June 30, 2019, RadNet reported Revenue of $560.6 million and Adjusted EBITDA(1) of $76.2 million. Revenue increased $84.9 million (or 17.8%) and Adjusted EBITDA(1) increased $17.0 million (or 28.7%) from the same six month period last year.
For the six month period in 2019, RadNet reported Net Income of $1.2 million, an increase of approximately $3.1 million over the first six months of of 2018. Adjusting for the impact of the financing transaction and legal settlements accounted for in Other Expenses during the six month period on a tax effected basis of $912,000, Adjusted Net Income was $2.1 million in the first six months of 2019, an increase of $4.1 million over the same period of 2018.
Per share diluted Net Income for the first six months of 2019 was $0.02, compared to a diluted Net Loss of $(0.04) in the same six month period of 2018 (based upon a weighted average number of diluted shares outstanding of 50.0 million and 47.9 million for these periods in 2019 and 2018, respectively). Adjusting for the impact of the financing transaction and legal settlements accounted for in Other Expenses during the six month period on a tax effected basis of $912,000, per share diluted Adjusted Net Income was $0.04 in the first half of 2019 compared to a diluted Net Loss of $(0.04) in the same period of 2018.
Affecting Net Loss for the six month period of 2019 were certain non-cash expenses and non-recurring items including: $5.6 million of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted stock; $1.0 million of severance paid in connection with headcount reductions related to cost savings initiatives; $1.3 million of Other Expense related to the financing transaction and legal settlements; and $2.0 million of combined non-cash amortization of deferred financing costs and loan discounts related to financing fees paid as part of our existing credit facilities.
2019 Guidance Update
RadNet amends its previously announced guidance levels as follows:
|Guidance Range after 1 st Quarter||Revised Guidance Range|
|Total Net Revenue||$1,050 million - $1,100 million||$1,100 million - $1,150 million|
|Adjusted EBITDA(1)||$155 million - $165 million||$158 million - $168 million|
|Free Cash Flow (a)||$45 million - $55 million||Unchanged|
|Capital Expenditures (b)||$60 million - $65 million||$63 million - $68 million|
|Cash Interest Expense||$43 million - $48 million||Unchanged|
|(a) Defined by the Company as Adjusted EBITDA(1) less total capital expenditures and cash paid for interest.|
|(b) Net of proceeds from the sale of equipment, imaging centers and joint venture interests.|
Dr. Berger highlighted, “Buoyed with confidence from the strong performance of the first and second quarters, we have elected to increase our 2019 full year guidance ranges for Revenue and Adjusted EBITDA(1). The consistent organic growth and the contribution from recent acquisitions and health system joint ventures are causing us to exceed our initial 2019 projections. We remain optimistic about the continuation of these trends through the end of the year and into 2020.”
Conference Call for Today
Dr. Howard Berger, President and Chief Executive Officer, and Mark Stolper, Executive Vice President and Chief Financial Officer, will host a conference call to discuss its second quarter 2019 results on Thursday, August 8th, 2019 at 7:30 a.m. Pacific Time (10:30 a.m. Eastern Time).
Conference Call Details:
Date: Thursday, August 8, 2019
Time: 10:30 a.m. Eastern Time
Dial In-Number: 888-208-1711
International Dial-In Number: 323-794-2577
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 http://public.viavid.com/index.php?id=135565 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 8531618.
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 340 owned and/or operated outpatient imaging centers. RadNet's core markets include California, Maryland, Delaware, New Jersey and New York. In addition, RadNet provides radiology information technology solutions, teleradiology professional services and other related products and services to customers in the diagnostic imaging industry. Together with affiliated radiologists, and inclusive of full-time and per diem employees and technicians, RadNet has a total of approximately 8,000 employees. For more information, visit http://www.radnet.com.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Specifically, statements concerning successfully integrating acquired operations, successfully achieving 2019 financial guidance, successfully developing and integrating 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 speaks 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.
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)|
|Cash and cash equivalents||$||30,504||$||10,389|
|Accounts receivable, net||159,323||148,919|
|Due from affiliates||649||595|
|Prepaid expenses and other current assets||41,957||46,288|
|Assets held for sale||2,041||2,499|
|Total current assets||234,474||208,690|
|PROPERTY, EQUIPMENT AND RIGHT-OF-USE ASSETS|
|Property and equipment, net||352,624||345,729|
|Operating lease right-of-use assets||432,557||-|
|Total property, equipment and right-of-use assets||785,181||345,729|
|Other intangible assets||40,800||40,593|
|Deferred financing costs||1,782||1,354|
|Investment in joint ventures||38,621||37,973|
|Deferred tax assets, net of current portion||34,013||31,506|
|Deposits and other||23,865||25,392|
|LIABILITIES AND EQUITY|
|Accounts payable, accrued expenses and other||$||168,815||181,028|
|Due to affiliates||13,543||13,089|
|Current portion of deferred rent||-||3,735|
|Current portion of finance lease||4,334||-|
|Current portion of operating lease||65,461||-|
|Current portion of notes payable and long term debt||39,364||33,653|
|Current portion of obligations under capital lease||-||5,614|
|Total current liabilities||293,249||239,517|
|Deferred rent, net of current portion||-||31,542|
|Finance lease, net of current portion||4,851||-|
|Operating lease, net of current portion||404,463||-|
|Notes payable, net of current portion||672,534||626,507|
|Obligations under capital lease, net of current portion||-||6,505|
|Other non-current liabilities||9,149||5,006|
|RadNet, Inc. stockholders' equity:|
|Common stock - $.0001 par value, 200,000,000 shares authorized; 50,127,234 and 48,977,485 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively||5||5|
|Accumulated other comprehensive income (loss)||(6,944||)||2,259|
|Total RadNet, Inc.'s stockholders' equity||133,918||127,184|
|Total liabilities and equity||$||1,596,676||$||1,109,330|
|RADNET, INC. AND SUBSIDIARIES|
|CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS|
|(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)|
|Three Months Ended June 30,||Six Months Ended June 30,|
|Service fee revenue||$||258,171||219,416||$||500,844||423,584|
|Revenue under capitation arrangements||30,926||24,979||59,803||52,203|
|Cost of operations, excluding depreciation and amortization||246,558||210,055||489,615||425,689|
|Depreciation and amortization||20,083||18,086||39,703||35,942|
|Loss (gain) on sale and disposal of equipment||101||105||1,073||(1,831||)|
|Total operating expenses||267,113||228,525||531,393||460,805|
|INCOME FROM OPERATIONS||21,984||15,870||29,254||14,982|
|OTHER INCOME AND EXPENSES|
|Equity in earnings of joint ventures||(2,244||)||(3,748||)||(4,117||)||(6,725||)|
|Other (income) expenses||1,269||5||1,269||6|
|Total other expenses||11,424||6,898||21,846||13,961|
|INCOME BEFORE INCOME TAXES||10,560||8,972||7,408||1,021|
|Provision for income taxes||(2,969||)||(2,505||)||(1,740||)||(8||)|
|Net income attributable to noncontrolling interests||2,692||1,061||4,503||2,945|
|NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS||$||4,899||$||5,406||$||1,165||$||(1,932||)|
|BASIC NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS||$||0.10||$||0.11||$||0.02||$||(0.04||)|
|DILUTED NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS||$||0.10||$||0.11||$||0.02||$||(0.04||)|
|WEIGHTED AVERAGE SHARES OUTSTANDING|
|RADNET, INC. AND SUBSIDIARIES|
|CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS|
|Six Months Ended June 30,|
|CASH FLOWS FROM OPERATING ACTIVITIES|
|Adjustments to reconcile net income to net cash provided by operating activities:|
|Depreciation and amortization||39,703||35,942|
|Amortization of operating lease assets||32,937||-|
|Equity in earnings of joint ventures||(4,117||)||(6,725||)|
|Distributions from joint ventures||3,438||7,083|
|Amortization deferred financing costs and loan discount||2,021||1,949|
|Loss (gain) on sale and disposal of equipment||1,073||(1,831||)|
|Noncash item in other expenses||(559||)||-|
|Change in fair value of contingent consideration||(1,953||)||-|
|Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions:|
|Other current assets||4,331||(568||)|
|Accounts payable, accrued expenses and other||2,860||11,345|
|Net cash provided by operating activities||44,535||46,948|
|CASH FLOWS FROM INVESTING ACTIVITIES|
|Purchase of imaging facilities||(27,149||)||(14,094||)|
|Equity investments at fair value||(143||)||(2,200||)|
|Purchase of property and equipment||(50,342||)||(45,133||)|
|Proceeds from sale of equipment||760||2,324|
|Proceeds from sale of equity interests in a joint venture||132||-|
|Proceeds from sale of imaging and medical practice assets||-||-|
|Cash distribution from new JV partner||-||-|
|Equity contributions in existing joint ventures||(103||)||(2,000||)|
|Net cash used in investing activities||(76,845||)||(61,103||)|
|CASH FLOWS FROM FINANCING ACTIVITIES|
|Principal payments on notes and leases payable||(3,320||)||(3,393||)|
|Payments on Term Loan Debt||(19,469||)||(16,540||)|
|Deferred Financing Costs due to New Debt||(683||)||-|
|Debt Discount due to new debt||(2,173||)||-|
|Proceeds from issuance of new debt||100,000||-|
|Distributions paid to noncontrolling interests||-||(913||)|
|Proceeds from sale of noncontrolling interest||5,275||-|
|Contribution from a noncontrolling partners||750||-|
|Proceeds from revolving credit facility||236,200||19,800|
|Payments on revolving credit facility||(264,200||)||(19,800||)|
|Proceeds from issuance of common stock upon exercise of options||50||-|
|Net cash provided by (used in) financing activities||52,430||(20,846||)|
|EFFECT OF EXCHANGE RATE CHANGES ON CASH||(5||)||(69||)|
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS||20,115||(35,070||)|
|CASH AND CASH EQUIVALENTS, beginning of period||10,389||51,322|
|CASH AND CASH EQUIVALENTS, end of period||$||30,504||$||16,252|
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION||$||23,292||$||17,509|
|RECONCILIATION OF GAAP NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC.|
|COMMON SHAREHOLDERS TO ADJUSTED EBITDA(1)|
|Three Months Ended|
|Net Income Attributable to RadNet, Inc. Common Shareholders||$||4,899||$||5,406|
|Plus Interest Expense||12,399||10,641|
|Plus Provision for Income Taxes||2,969||2,505|
|Plus Depreciation and Amortization||20,083||18,086|
|Plus Other Expenses||1,269||5|
|Plus Severance Costs||371||279|
|Plus Loss on Sale of Equipment||101||105|
|Plus Non Cash Employee Stock Compensation||1,044||1,146|
|Adjusted EBITDA (1)||$||43,135||$||38,173|
|Six Months Ended|
|Net (Loss) Income Attributable to RadNet, Inc. Common Shareholders||$||1,165||$||(1,932||)|
|Plus Interest Expense||24,694||20,680|
|Plus Provision for Income Taxes||1,740||8|
|Plus Depreciation and Amortization||39,703||35,942|
|Plus Other Expenses||1,269||6|
|Plus Severance Costs||1,002||1,005|
|Plus Gain on Sale of Equipment Attributable to Noncontrolling Interest||-||440|
|Plus (Gain) Loss on Sale of Equipment||1,072||(1,831||)|
|Plus Non Cash Employee Stock Compensation||5,583||4,890|
|Adjusted EBITDA (1)||$||76,228||$||59,208|
|PAYOR CLASS BREAKDOWN**|
|Workers Compensation/Personal Injury||3.8%|
|**Calculated as percentages of global payments received|
|from that period's dates of services.|
|RADNET PAYMENTS BY MODALITY *|
|Second Quarter||Full Year||Full Year||Full Year|
|* Based upon global payments received from that period's dates of service.|
(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.