RadNet Reports Fourth Quarter 2022 Results, Including Record Revenue and Adjusted EBITDA(1), and Releases 2023 Financial Guidance

• Revenue increased 15.2% to a record of $383.9 million in the fourth quarter of 2022 from $333.1 million in the fourth quarter of 2021; Excluding Revenue from the Artificial Intelligence (“AI”) reporting segment, Revenue from the Imaging Centers reporting segment in the fourth quarter of 2022 was $382.5 million, an increase of 15.1% from last year’s fourth quarter
• Excluding losses from our AI reporting segment and adjusting for Provider Relieve Funding Received in the fourth quarter of 2021, Adjusted EBITDA⁽¹⁾ from the Imaging Centers reporting segment was a record $61.6 million as compared with $52.0 million in the fourth quarter of 2021, an increase of 18.4%
• Adjusting for unusual or one-time items impacting Net Income in the quarter, Adjusted Earnings Per Share⁽³⁾ was $0.11 for the fourth quarter of 2022; This compares with Adjusted Earnings Per Share⁽³⁾ of $0.10 for the fourth quarter of 2021
• Aggregate procedural volumes increased 8.0% and same-center procedural volumes increased 3.6% compared to the fourth quarter of 2021
• After a successful pilot in Delaware, RadNet is implementing its Enhanced Breast Cancer Detection (EBCD) AI-powered mammography offering across all of its markets
• RadNet announces 2023 guidance ranges, anticipating increases in Revenue, Adjusted EBITDA⁽¹⁾ and Free Cash Flow⁽²⁾ for 2023 over 2022

LOS ANGELES, Feb. 28, 2023 (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 357 owned and/or operated outpatient imaging centers, today reported financial results for its fourth quarter and full year ended December 31, 2022.

Financial Results

Fourth Quarter Report:

Dr. Howard Berger, President and Chief Executive Officer of RadNet, commented, “I am very pleased with our strong performance in the fourth quarter, which enabled us to exceed our 2022 full-year revised guidance ranges for Revenue and Adjusted EBITDA⁽¹⁾. Contributing to our record Revenue and Adjusted EBITDA⁽¹⁾ in the quarter was a combination of high procedural demand for our services and improving conditions in our labor markets. Since September, we have been more successful in filling open positions and staffing our locations, enabling us to better meet the increasing demand we are experiencing for our services in virtually all markets in which we operate.”

“Throughout 2022, we carefully managed our liquidity and financial leverage. At year-end 2022, we had a cash balance of over $127 million and our net debt leverage ratio remained under 3.5 times Adjusted EBITDA⁽¹⁾. Our Days Sales Outstanding (DSOs) remained low at 39 days as of December 31, 2022, helping to contribute to our strong cash flow in the quarter and throughout 2022,” Dr. Berger noted.

“Moving into 2023, the demand for diagnostic imaging remains robust and is growing. Our solid financial position and operating model have presented us with targeted opportunities to expand our business, particularly through the construction of new centers to meet the growing demand and utilization in strategic markets. Currently, we have over a dozen centers in various stages of construction and development, and we believe these sites should be positive contributors to our performance in 2023. As the imaging center market further consolidates, we continue to see opportunities for tuck-in acquisitions in virtually all of RadNet markets at prices consistent with our historical discipline. Furthermore, throughout 2023, we expect to expand existing health system joint ventures and partnerships and establish new ones,” added Dr. Berger.

Dr. Berger concluded, “We are also making significant strides in commercializing and monetizing our AI investments. Specifically, in November 2022, we began an implementation of our Enhanced Breast Cancer Diagnostic (EBCD) mammography program, where we are offering novel AI-enhanced mammography services to women in conjunction with their annual breast cancer screening exams for an additional fee. We expect that this offering will be available in all RadNet mammography centers by the end of the summer of 2023. Based upon early adoption data from several of our east coast markets, we are anticipating our losses from AI in 2023 to significantly narrow as a result of EBCD revenue, and we project our AI segment to be profitable in 2024.”

For the fourth quarter of 2022, RadNet reported Revenue from its Imaging Center reporting segment of $382.5 million and Adjusted EBITDA⁽¹⁾ of $61.6 million, which excludes Revenue and Losses from the AI reporting segment. As compared with last year’s fourth quarter, Revenue increased $50.3 million (or 15.1%) and Adjusted EBITDA⁽¹⁾ increased $9.6 million (or 18.4%), also excluding $2.9 million of Provider Relief Funding received in the fourth quarter of 2021.

Including our AI reporting segment, Revenue was $383.9 million in the fourth quarter of 2022, an increase of 15.2% from $333.1 million in last year’s fourth quarter. Including the Adjusted EBITDA⁽¹⁾ losses of the AI reporting segment, Adjusted EBITDA⁽¹⁾ was $57.2 million in the fourth quarter of 2022 and $51.7 million in the fourth quarter of 2021 (also excluding the Provider Relief Funding received in the fourth quarter of 2021).

For the fourth quarter of 2022, RadNet reported a Net Loss of $934,000 as compared with a net loss of $3.8 million for the fourth quarter of 2021. Net Loss Per Share for the fourth quarter of 2022 was $(0.02), compared with a Net Loss per share of $(0.07) in the fourth quarter of 2021, based upon a weighted average number of diluted shares outstanding of 57.0 million shares in 2022 and 54.0 million shares in 2021.

There were a number of unusual or one-time items impacting the fourth quarter of 2022 including: $45,000 of non-cash gain from interest rate swaps (excluding the amortization of the accumulation of the changes in fair value out of Other Comprehensive Income); $450,000 of severance paid in connection with headcount reductions related to cost savings initiatives; $1.2 million expense related to leases for our de novo facilities under construction that have yet to open their operations; $927,000 acquisition transaction costs primarily related to the purchase of Heart and Lung Imaging Limited; $47,000 of valuation adjustment for contingent consideration related to acquisitions; $731,000 expenses related to debt restructuring and loss on extinguishment related to the refinancing of New Jersey Imaging Network’s credit facilities; and $6.1 million of pre-tax losses related to our AI reporting segment. Adjusting for the above items, Adjusted Earnings⁽³⁾ from the Imaging Centers reporting segment was $6.4 million and diluted Adjusted Earnings Per Share⁽³⁾ was $0.11 during the fourth quarter of 2022.

Also, affecting Net Income in the fourth quarter of 2022 were certain non-cash expenses and unusual items including: $4.7 million of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted stock; $1.6 million loss on the disposal of certain capital equipment; and $750,000 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 2022, as compared with the prior year’s fourth quarter, MRI volume increased 11.9%, CT volume increased 11.8% and PET/CT volume increased 20.7%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 8.0% 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 2022 and 2021, MRI volume increased 7.5%, CT volume increased 6.0% and PET/CT volume increased 16.9%. Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 3.6% over the prior year’s same quarter.

Annual Report:

For full-year 2022, RadNet reported Revenue from its Imaging Centers reporting segment of $1,426 million and Adjusted EBITDA⁽¹⁾ Excluding Losses from the AI reporting segment of $209.0 million. Revenue increased $112.0 million (or 8.5%) and Adjusted EBITDA⁽¹⁾ decreased $2.9 million (or 1.4%), excluding $9.1 million of Provider Relief Funding received in 2021.

Including our AI reporting segment Revenue of $4.4 million, Revenue was $1,430 million for full-year 2022, an increase of 8.7% from $1,315 million in 2021. Including Adjusted EBITDA⁽¹⁾ losses from the AI segment, Adjusted EBITDA⁽¹⁾ for 2022 was $192.5 million as compared with $209.8 million in 2021 (which includes a one-time $7.7 million benefit from the employee retention credit and excludes $9.1 million of Provider Relief Funding received in 2021).

For 2022, RadNet reported Net Income of $10.7 million, a decrease of approximately $14.1 million over 2021. Per share diluted Net Income for the full year of 2022 was $0.17, compared to a diluted Net Income per share of $0.46 in 2021 (based upon a weighted average number of diluted shares outstanding of 57.3 million in 2022 and 53.4 million in 2021).

Affecting Net Income in 2022 were certain non-cash expenses and unusual items including: $39.6 million of non-cash gain from interest rate swaps; $946,000 of severance paid in connection with headcount reductions related to cost savings initiatives; $4.3 million expense related to leases for our de novo facilities under construction that have yet to open their operations; $24.9 million of pre-tax losses related to our AI reporting segment; $23.8 million of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted stock; $731,000 expenses related to debt restructuring and loss on extinguishment related to the refinancing of New Jersey Imaging Network’s credit facilities; $2.2 million in legal settlements; $2.5 million loss on the disposal of certain capital equipment; $8.1 million change in estimate related to refund liability; and $2.7 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 2022 Results vs. 2022 Guidance:

The following compares the Company’s 2022 performance with previously announced revised guidance levels.

(a) Net of proceeds from the sale of equipment, imaging centers and joint venture interests, and excludes New Jersey Imaging Network capital expenditures (net of disposition proceeds) of $6.3 million.
(b) Defined by the Company as Adjusted EBITDA⁽¹⁾ less Capital Expenditures and Cash Paid for Interest.
(c) Excludes payments to and from counterparties of interest rate swaps.

Dr. Berger commented, “Our strong operating performance in the fourth quarter drove us to meet or exceed most all of our projected guidance ranges. Our 2022 results were above the high end of our revised Revenue and Adjusted EBITDA⁽¹⁾ guidance ranges. Additionally, our Free Cash Flow⁽²⁾ results fell within our revised guidance range, despite our higher than originally projected capital expenditures as a result of the construction of certain de novo locations. We are very pleased with these results in light of the difficult labor market we faced throughout most of 2022, impacting the availability and cost of staffing.”

2023 Fiscal Year Guidance

For its 2023 fiscal year, RadNet announces its guidance ranges as follows:

1. Net of proceeds from the sale of equipment, imaging centers and joint venture interests, and excludes New Jersey Imaging Network capital expenditures.
2. Defined by the Company as Adjusted EBITDA⁽¹⁾ from Imaging Center Segment less Capital Expenditures and Cash Paid for Interest.
3. Net of payments to and from counterparties on interest rate swaps.

Dr. Berger noted, “We are anticipating strong results in 2023, demonstrating improvement in all financial and operating metrics. We are projecting Revenue growth from imaging center operations of between 7% and 10% and Adjusted EBITDA⁽¹⁾ growth from imaging center operations of between 5% and 10%. The anticipated growth implicit in our guidance in 2023 is projected to result from same-center growth, the contribution of various de novo locations opened in the second half of 2022 and scheduled to open throughout 2023, reimbursement increases from private and capitated payers, new and expanded health system joint ventures and the further contribution from acquisitions completed at various times during 2022.”

Dr. Berger continued, “Our Adjusted EBITDA⁽¹⁾ guidance for 2023 excludes anticipated Adjusted EBITDA⁽¹⁾ losses of approximately $10 million from our AI division (DeepHealth, Aidence and Quantib). We estimate that these losses will be net of approximately $16 million to $18 million of anticipated Revenue from both the Enhanced Breast Cancer Detection (EBCD) mammography program currently being implemented and additional growth from Aidence and Quantib AI operations. We anticipate the AI operating segment to be profitable in 2024, and will continue to report the financial results of our AI and imaging center operating segments separately each quarter throughout 2023, providing transparency for our stakeholders to track our progress,” 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 today, at 10:30 a.m. Eastern Time. During the call, management will discuss the Company’s 2022 fourth quarter and year-end results.

Conference Call Details:

Date: Tuesday, February 28, 2023
Time: 10:30 a.m. ET
Dial In-Number: 877-407-0789
International Dial-In Number: 201-689-8562

There will also be simultaneous and archived webcasts available at https://viavid.webcasts.com/starthere.jsp?ei=1598450&tp_key=1aa3f92537 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 13736399.

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 357 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 9,000 employees. For more information, visit http://www.radnet.com.

Forward Looking Statements

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are expressions of our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, and anticipated future conditions, events and trends. Forward-looking statements can generally be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Forward-looking statements in this press release include, among others, statements we make regarding response to and the expected future impacts of COVID-19, including statements about our anticipated business results, balance sheet and liquidity and our future liquidity, burn rate and our continuing ability to service or refinance our current indebtedness.

Forward-looking statements are neither historical facts nor assurances of future performance. Because forward-looking statements relate to the future, they are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:

• the ongoing impact of the COVID-19 pandemic on our business, suppliers, payors, customers, referral sources, partners, patients and employees, including (i) government’s unprecedented action regarding existing and potential restrictions and/or obligations related to citizen and business activity to contain the virus; (ii) the consequences of an economic downturn resulting from the impacts of COVID-19 and the possibility of a global economic recession; (iii) the impact of the volume of canceled or rescheduled procedures, whether as a result of government action or patient choice; (iv) measures we are taking to respond to the COVID-19 pandemic, including changes to business practices; (v) the impact of government and administrative regulation, guidance and appropriations; (vi) changes in our revenues due to declining patient procedure volumes, changes in payor mix; (vii) potential increased expenses or workforce disruptions related to our employees that could lead to unavailability of key personnel; (viii) workforce disruptions related to our key partners, suppliers, vendors and others we do business with; (ix) the impact of return to work orders in certain states in which we operate; and (x) increased credit and collectability risks;
• the availability and terms of capital to fund our business;
• our ability to service our indebtedness, make principal and interest payments as those payments become due and remain in compliance with applicable debt covenants, in addition to our ability to refinance such indebtedness on acceptable terms;
• 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;
• 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

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.