Full Press Release Details
RadNet Reports Record Fourth Quarter and Full Year 2017 Results
and Releases 2018 Financial Guidance
LOS ANGELES, California, March 8, 2018
- RadNet, Inc. (NASDAQ: RDNT), a national leader in providing high-quality, cost-effective, fixed-site outpatient diagnostic
imaging services through a network of 297 owned and/or operated outpatient imaging centers, today reported financial results for
its fourth quarter and full year ended December 31, 2017.
Fourth Quarter Report:
For the fourth quarter of 2017, RadNet
reported Revenue of $235.6 million, Adjusted EBITDA(1) of $40.7 million and Adjusted Net Income of $6.3 million. Revenue
increased $10.6 million (or 4.7%), Adjusted EBITDA(1) increased $5.8 million (or 16.6%) and Net Income increased $2.6
million over the fourth quarter of 2016.
Net Income (adjusted for a one-time $13.5 million non-cash increase to our income tax expense in the quarter as a result
of the Tax Cut and Jobs Act of 2017 and the revaluation of our deferred tax asset) for
the fourth quarter was $0.13 per diluted share, compared to a Net Income of $0.08 per diluted share in the fourth quarter of 2016.
These per share values are based upon a weighted average number of diluted shares outstanding of 47.9 million in the fourth quarter
of 2017 and 46.4 million of diluted shares outstanding in the fourth quarter of 2016.
Net Income in the fourth quarter of 2017 were certain non-cash expenses and non-recurring items including: $944,000 of non-cash
employee stock compensation expense resulting from the vesting of certain options and restricted stock; $255,000 of severance
paid in connection with headcount reductions related to cost savings initiatives; $314,000 loss on the disposal of certain capital
equipment; and $974,000 of amortization and write off of deferred financing costs and loan discount
related to our existing credit facilities.
quarter of 2017, as compared with the prior year's fourth quarter (and adjusting for the sale of our Rhode Island
subsidiary in the second quarter of 2017), MRI volume increased 4.7%, CT volume increased 8.1% and PET/CT
volume increased 11.6%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography
and other exams, increased 3.4% 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 2017 and 2016, MRI volume increased 3.1%, CT volume increased 7.2% and
PET/CT volume increased 9.9%. Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound,
mammography and other exams, increased 2.5% from the prior year's same quarter.
Dr. Howard Berger, President and Chief
Executive Officer of RadNet, commented "I am very pleased with our fourth quarter results. It was the best financial quarter
in our Company's history, and included record Revenue and Adjusted EBITDA. During 2017, we furthered our strategic plan in
all aspects of our business: drove same center growth; established new joint ventures; expanded existing joint ventures; completed
strategic acquisitions in our core markets; and grew our capitation business. Further, we completed the divestitures of some non-core
assets and made important investments in our infrastructure to position ourselves to be an effective and scalable platform from
which to grow. Healthcare is focused on migrating services towards ambulatory and lower cost settings. Not only do I believe RadNet
is well-positioned to capitalize on this trend, but I believe that we can continue to play a pivotal role with health plans, insurance
companies, large medical groups and progressive health systems to accelerate and improve the changing landscape of the healthcare
For full year 2017, the Company reported
Revenue of $922.2 million, Adjusted EBITDA(1) of $142.5 million and Adjusted Net Income of $13.6 million. Revenue increased
$37.7 million (or 4.3%) and Adjusted EBITDA(1) increased $9.5 million (or 7.1%). Adjusted Net Income for 2017 was $0.29
per diluted share, compared to Net Income of $0.15 per diluted share in 2016 (based upon a weighted average number of diluted shares
outstanding of 47.4 million and 46.7 million in 2017 and 2016, respectively).
Net Income in 2017 were certain non-cash expenses and non-recurring items including: $6.8 million of non-cash employee stock compensation
expense resulting from the vesting of certain options and restricted stock; $1.8 million of severance paid in connection
with headcount reductions related to cost savings initiatives; $1.1 million loss on the disposal of certain capital equipment;
$3.1 million gain on the sale of imaging centers; $3.2 million of expenses related to divested and closed operations; and $3.5
million of amortization and write off of deferred financing fees and discount on issuance of debt related to our existing credit
facilities and refinancing transaction.
For the year ended December 31, 2017, as
compared to 2016 (and adjusting for the sale of our Rhode Island centers from both periods), MRI volume increased 4.8%, CT volume
increased 6.7% and PET/CT volume increased 7.4%. Overall volume, taking into account routine imaging exams, inclusive of x-ray,
ultrasound, mammography and other exams, increased 3.1% for the twelve months of 2017 over 2016.
Dr. Berger remarked, "In 2017, we
demonstrated many of the aspects of our business that make RadNet unique within healthcare. We announced the establishment of significant
joint ventures in Southern California with two large and well-respected health systems, Cedars Sinai and MemorialCare and expanded
our existing joint venture with the RWJBarnabas health system in New Jersey as well as two of our venture partners in Maryland.
We divested non-core assets, which included our facilities in Rhode Island and our Breastlink and oncological operations in California
and redeployed the proceeds of the divestitures into highly strategic acquisitions in California, Maryland and Delaware. Our most
significant acquisition was the purchase of Diagnostic Imaging Associates, the other significant outpatient operator in Delaware,
which made us the largest outpatient provider of imaging services in that state. We also made strategic enhancements to the capabilities
of our eRAD information technology platform, which is now fully deployed across the RadNet facilities. In 2017, we also made important
investments in our infrastructure, particularly to our revenue cycle department by recruiting additional senior management talent,
expanding customer service and patient collection teams and investing in tools and technology to increase productivity."
Dr. Berger added, "2017 was also
notable for improving our balance sheet by lowering our financial leverage from 4.8x Net Debt to Adjusted EBITDA at year end 2016
to 4.0x at the end of 2017. We generated over $50 million of Free Cash Flow during 2017, ended the year undrawn on our $117 million
revolving credit facility and had a cash balance of over $50 million. In August of 2017, we completed an amendment to our Senior
Credit Facility which enabled us to retire the then existing Second Lien Term Loan, extend debt maturities and materially lower
our cost of capital."
Actual Results vs. 2017 Guidance:
The following compares the Company's
actual 2017 performance with previously announced revised guidance levels.
| Revised Guidance Range | Actual Results | |||||
| Total Net Revenue (a) | $895 million - $925 million | $922.2 million | ||||
| Adjusted EBITDA (1) | $135 million - $145 million | $142.5 million | ||||
| Capital Expenditures (b) | $55 million - $60 million | $57.6 million | ||||
| Cash Interest Expense | $35 million - $40 million | $34.2 million | ||||
| Free Cash Flow Generation (c) | $40 million - $50 million | $50.7 million |
Dr. Berger commented, "We met or
exceeded our 2017 guidance levels in all categories. Our Revenue and Adjusted EBITDA were at the high end of the guidance ranges.
Our strong Adjusted EBITDA performance, controlled capital spending and lower interest expense than projected contributed to our
exceeding Free Cash Flow guidance."
2018 Fiscal Year Guidance
For its 2018 fiscal year, RadNet announces
its guidance ranges as follows:
| Total Net Revenue | $950 million - $975 million |
| Adjusted EBITDA (1) | $145 million - $155 million |
| Capital Expenditures (a) | $50 million - $55 million |
| Cash Interest Expense | $33 million - $38 million |
| Free Cash Flow Generation (b) | $50 million - $60 million |
Dr. Berger noted, "We are optimistic
about 2018. First, Medicare rates for 2018 are commensurate with 2017 reimbursement. Second, we expect to benefit from some of
the capital expenditures, infrastructure investments and acquisitions we made during 2017. Third, in 2018, we have launched the
MemorialCare joint venture and expect to expand other joint ventures we currently operate on both costs. Fourth, we expect additional
Revenue in 2018 from our continued adoption of 3D breast imaging. Fifth, we expect to continue to benefit from the migration of
services from hospital settings to the outpatient marketplace. Lastly, we anticipate an ongoing earnings benefit from a significant
reduction in our overall effective tax rate from the Tax Cut and Jobs Act of 2017. It should also be noted that we are anticipating
spending less on capital expenditures in 2018 than we did during the last two fiscal years as a result of having substantially
completed the upgrade of our x-ray systems and the transition to 3D mammography."
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 2017 fourth quarter and year-end results.
Conference Call Details:
Date: Thursday, March 8, 2018
Dial In-Number: 800-239-9838
International Dial-In Number: 323-794-2551
There will also be simultaneous and archived webcasts available