RadNet Reports Third Quarter Financial Results and Reaffirms Previously Announced 2017 Guidance Levels

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Total Net Revenue (“Revenue”) increased 1.3% to $227.6 million in the third quarter of 2017 from $224.6 million in the third quarter of 2016: Adjusting for the sale of the Rhode Island facilities, Revenue increased 1.9% as compared with last year’s third quarterAdjusted EBITDA(1) increased 0.5% to $36.1 million in the third quarter of 2017 from $35.9 million in the third quarter of 2016; Adjusting for the sale of the Rhode Island facilities, Adjusted EBITDA(1) increased 1.3% as compared with last year’s third quarter Earnings Per Share adjusted for non-recurring events taken place in the quarters (“Adjusted Earnings Per Share”) is $0.12 per share in the third quarter of 2017 as compared with $0.11 from the third quarter of 2016Aggregate procedural volumes increased 2.4% (adjusting for the sale of the Rhode Island centers); same center procedural volumes increased 1.5%A successful refinancing transaction was completed during the quarter, retiring the second lien term loan, simplifying the capital structure, increasing financial flexibility and reducing interest expenseLOS ANGELES, Nov. 09, 2017 — RadNet, Inc. (NASDAQ:RDNT), a national leader in providing high-quality, cost-effective, fixed-site outpatient diagnostic imaging services through a network of 298 owned and/or operated outpatient imaging centers, today reported financial results for its third quarter of 2017.Dr. Howard Berger, President and Chief Executive Officer of RadNet, commented, “I am pleased with our results this quarter. We compared favorably in all metrics relative to last year’s third quarter despite having divested our Rhode Island assets in the second quarter, having one less workday in this year’s third quarter and having overcome a difficult hurricane season.  We demonstrated Revenue, Adjusted EBITDA(1) and earnings growth as well as positive same center revenue and procedural increases.  Our consistently improving financial metrics have contributed to material deleveraging since year end 2015.”  Dr. Berger continued, “I believe we are making great strides by executing on a focused multifaceted strategy.  First, we are streamlining our business through divesting non-core or lower margin operations.  For instance, we exited Breastlink and our other oncology assets in California as well as our imaging centers in Rhode Island.  Second, we are continuing to invest in expanding our core markets.  As an example, we doubled the size of our Delaware operating region through acquiring our principal outpatient competitor, Diagnostic Imaging Associates. Third, we are continuing to pursue our health system joint venture strategy.  We’ve both expanded existing joint ventures and established new joint ventures, most notably on the West Coast with Cedars Sinai.  And finally, we continue to grow our information technology platform, or eRAD, through acquiring more customers and purchasing or developing additional software capabilities.”“During the third quarter, on August 22nd, we completed an amendment to our senior secured first lien credit agreement and raised an additional $170 million of first lien term loans, the proceeds of which were used to repay and retire RadNet’s second lien term loan.  By completing this transaction, we were able to initially reduce our annual cash interest expense by almost $3 million. Based upon the pricing matrix in the amendment, if we continue to deleverage our balance sheet in the future, we could save up to an additional $3 million of cash interest expense annually.  Furthermore, we were able to extend the maturities on the $168.0 million portion of term debt which was formerly our second lien loan by over two years.   Lastly, we significantly improved our financial flexibility,” added Dr. Berger.Dr. Berger continued, “What I’m most excited about is that many of the recent trends in healthcare are supporting and validating our current operating strategy and positioning.  More and more services are leaving hospitals and being performed at lower cost ambulatory settings.  This is happening across the delivery system, not just in diagnostic imaging.  This will be a continuing trend as health plans and their patients seek lower cost alternatives to hospitals.  As an example, Anthem (one of America’s largest health insurers) recently announced that it will no longer reimburse outpatient imaging performed at hospitals, except under extraordinary circumstances.  We expect others to follow.  We’ve also noted that insurance companies in their efforts to control costs are purchasing freestanding, ambulatory providers such as surgery centers, urgent care locations, clinical laboratories, physical therapy centers, home health businesses, physician practices and perhaps even retail drug store locations.  I’m more convinced than ever that RadNet is well positioned to be a major force in the healthcare delivery continuum of the future.” Third Quarter Financial ResultsFor the third quarter of 2017, RadNet reported Revenue of $227.6 million, Adjusted EBITDA(1) of $36.1 million and Net Income of $3.2 million, respectively.  Revenue increased $3.0 million (or 1.3%) and Adjusted EBITDA(1) increased $188,000 (or 0.5%).  Adjusting for the sale of the Rhode Island facilities taken place on April 28, 2017, Revenue increased 1.9% and Adjusted EBITDA(1) increased 1.3% from the third quarter of 2016.Net Income increased $1.6 million over the third quarter of 2016.  Per share Net Income for the third quarter was $0.07, compared to per share Net Income in the third quarter of 2016 of $0.04 (based upon a weighted average number of diluted shares outstanding of 47.6 million and 46.3 million for these periods in 2017 and 2016, respectively).The comparison of Net Income is affected by certain unusual items which occurred in each of the third quarters of 2017 and 2016. During the third quarter of 2017, we had pre-tax losses related to (i) our divested/closed oncology operations of $2.0 million; (ii) severance from our sale of Breastlink of $1.0 million; and (iii) expenses from our refinancing transaction of $235,000.  Affecting the third quarter of 2016, we wrote-off $709,000 of deferred financing fees and expensed $606,000 of one-time rating agency and legal fees related to our refinancing transaction completed on July 1, 2016.  We also had a one-time $1.2 million adjustment to depreciation expense and $2.0 million of severance related to our NY acquisitions.Adjusting for these events on a tax affected basis in both quarters, Adjusted Earnings Per Share was $0.12 in the third quarter of 2017 as compared with $0.11 in the third quarter of 2016.Also affecting Net Income in the third quarter of 2017 (excluding the items mentioned immediately above in the Adjusted Earnings Calculation) were certain non-cash expenses or non-recurring items including:  $1.5 million of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted stock; $139,000 of additional severance paid in connection with headcount reductions related to cost savings initiatives; $420,000 loss on the sale or disposal of certain capital equipment; and $877,000 of amortization of deferred financing costs and loan discounts related to our credit facilities.For the third quarter of 2017, as compared with the prior year’s third quarter (and excluding Rhode Island from last year’s third quarter), MRI volume increased 5.1%, CT volume increased 6.3% and PET/CT volume increased 4.5%.  Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 2.4% over the prior year’s third quarter.  On a same-center basis, including only those centers which were part of RadNet for both the third quarters of 2017 and 2016, MRI volume increased 3.3%, CT volume increased 5.5% and PET/CT volume increased 2.8%.  Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 1.5% compared with the prior year’s same quarter.Nine Month Financial ResultsFor the nine months ended September 30, 2017, RadNet reported Revenue of $686.6 million, Adjusted EBITDA(1) of $101.8 million and Net Income of $7.3 million.  Revenue increased $27.0 million (or 4.1%), Adjusted EBITDA(1) increased $3.7 million (or 3.8%) and Net Income increased $3.5 million, respectively, over the first nine months of 2016.  Net Income Per Share for the nine month period ended September 30, 2017 was $0.16 per diluted share, compared to Net Income of $0.08 per diluted share in corresponding nine month period of 2016 (based upon a weighted average number of fully diluted shares outstanding of 47.2 million and 46.7 million for these periods in 2017 and 2016, respectively).Affecting operating results in the nine months ended September 30, 2017 were certain non-cash expenses or non-recurring items including:  $5.8 million of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted stock; $1.6 million of severance paid in connection with headcount reductions related to cost savings initiatives; $828,000 loss on the sale of certain capital equipment; $3.2 million of expenses related to divested or closed operations including oncology, Breastlink and Rhode Island; $235,000 of one-time rating agency and legal fees related to our refinancing transaction completed on August 22, 2017; $3.1 million gain on the sale of imaging and medical practice assets including Breastlink and Rhode Island; and $2.5 million of amortization of deferred financing costs and loan discounts related to our credit facilities.2017 Guidance UpdateRadNet reaffirms its previously announced 2017 guidance ranges as follows:(a) Net of proceeds from the sale of equipment, imaging centers and joint venture interests.Defined by the Company as Adjusted EBITDA(1) less total capital expenditures and cash paid for interest.Dr. Berger added, “We are on track to meet our guidance ranges for the year.  All ranges remain unchanged from what we announced earlier in the year.  Due to lower interest expense from the refinancing transaction, we may be below our Cash Interest Expense guidance level for the year.”Conference Call for TodayDr. Howard Berger, President and Chief Executive Officer, and Mark Stolper, Executive Vice President and Chief Financial Officer, will host a conference call to discuss its third quarter 2017 results on Thursday, November 9th, 2017 at 7:30 a.m. Pacific Time (10:30 a.m. Eastern Time).Conference Call Details:Date:  Thursday, November 9, 2017
Time:  10:30 a.m. Eastern Time
Dial In-Number:  800-289-0548
International Dial-In Number:  719-457-2627
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=127114 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 6529988.Regulation G: GAAP and Non-GAAP Financial InformationThis 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 298 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 7,300 employees. For more information, visit http://www.radnet.com.Forward Looking StatementsThis 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 2017 financial guidance, achieving cost savings, 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.CONTACTS:RadNet, Inc.
Mark Stolper, 310-445-2800
Executive Vice President and Chief Financial Officer                                                                                                                                                       

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Sarah Thompson

Sarah Thompson

Sarah is a financial reporter, focusing on technology, national security, and policing. Before joining Daily Telescope she worked as a staff writer at Fast Company and spent two years as a foreign correspondent in Turkey. Her work has been published in Al Jazeera America, The Nation, Vice News, Motherboard, and many other outlets.
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