Full Press Release Details
RadNet Reports Record Fourth Quarter and Full Year 2018 Results
and Releases 2019 Financial Guidance
LOS ANGELES, California, March 14, 2019
- RadNet, Inc. (NASDAQ: RDNT), a national leader in providing high-quality, cost-effective, fixed-site outpatient diagnostic
imaging services through a network of 344 owned and/or operated outpatient imaging centers, today reported financial results for
its fourth quarter and full year ended December 31, 2018.
Fourth Quarter Report:
For the fourth quarter of 2018, RadNet
reported Revenue of $257.2 million, Adjusted EBITDA(1) of $46.2 million and Net Income of $29.1 million. Revenue increased
$21.7 million (or 9.2%), Adjusted EBITDA(1) increased $5.5 million (or 13.5%) and Net Income increased $36.4 million
over the fourth quarter of 2017.
Net Income for the fourth quarter was $0.59
per diluted share, compared to a Net Loss of $(0.15) per diluted share in the fourth quarter of 2017. These per share values are
based upon a weighted average number of diluted shares outstanding of 49.3 million in the fourth quarter of 2018 and 47.9 million
of diluted shares outstanding in the fourth quarter of 2017.
Income in the fourth quarter of 2018 were certain non-cash expenses and non-recurring items including: $39.5 million gain from
the re-measurement of the Company's equity interest in New Jersey Imaging Network upon its consolidation, $19.1 loss from
changes in the organization of our east coast and international operations; $3.9 million loss on Goodwill/Trade Name impairment
related to our teleradiology business; $1.1 million of non-cash employee stock compensation expense resulting from the vesting
of certain options and restricted stock; $844,000 of severance paid in connection with headcount reductions related to cost
savings initiatives; $786,000 legal settlement; $1.7 million change in fair value of stock consideration related to the acquisition
of Medical Arts Radiology; $150,000 loss on the disposal of certain capital equipment; and $974,000
of amortization of deferred financing costs and loan discount related to our existing credit facilities.
For the fourth quarter of 2018, as compared
with the prior year's fourth quarter, MRI volume increased 9.6%, CT volume increased 12.0% and PET/CT volume increased 8.4%.
Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased
8.3% 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 2018 and 2017, MRI volume increased 2.2%, CT volume increased 2.7% and PET/CT volume decreased
7.8%. Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other
exams, increased 1.1% from the prior year's same quarter.
Dr. Howard Berger, President and Chief
Executive Officer of RadNet, commented "We completed significant changes in the organization of our east coast operations
during the quarter that positions us well for 2019 and beyond. This included obtaining control and thereby consolidating the operations
of our New Jersey Imaging Network joint venture effective October 1, 2019. We also added non-cash reserves for a doubtful receivable
related to our consulting operations in Qatar and impaired the goodwill associated with our non-core teleradiology business."
"Adjusting for these activities and
despite being impacted by the California wildfires in November, our business was very strong in the fourth quarter. Our key metrics
increased from last year's fourth quarter, including Revenue, Adjusted EBITDA(1) and aggregate and same-center
volumes. In particular, we grew our fourth quarter Adjusted EBITDA by over 13% and expanded our EBITDA margin by almost 70 basis
points compared with last year's fourth quarter," added Dr. Berger.
"We continue to execute all aspects
of our strategic plan. During the quarter, we operationalized our first east coast capitation contract with Emblem Health and will
ramp these operations throughout 2019. We also began the integration of our first Long Island acquisition, Medical Arts Radiology,"
For full year 2018, the Company reported
Revenue of $975.1 million, Adjusted EBITDA(1) of $143.5 million and Net Income of $32.2 million. Revenue increased $53.0
million (or 5.7%) and Adjusted EBITDA(1) increased $1.0 million (or 0.7%). Net Income for 2018 was $0.66 per diluted
share, compared to Net Income of $0.00 per diluted share in 2017 (based upon a weighted average number of diluted shares outstanding
of 48.7 million and 47.4 million in 2018 and 2017, respectively).
Income in 2018 were certain non-cash expenses and non-recurring items including: $39.5 million gain resulting from the re-measurement
of the Company's equity interest in New Jersey Imaging Network upon its consolidation, $19.1 loss from changes in the organization
of our east coast and international operations; $3.9 million loss on Goodwill/Trade Name impairment related to our teleradiology
business; $7.7 million of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted
stock; $1.9 million of severance paid in connection with headcount reductions related to cost savings initiatives; $786,000
legal settlement; $1.7 million change in fair value of stock consideration related to the acquisition of Medical Arts Radiology;
$2.1 million gain on the disposal of certain capital equipment; and $3.9 million of amortization of
deferred financing costs and loan discount related to our existing credit facilities.
For the year ended December 31, 2018, as
compared to 2017, MRI volume increased 6.3%, CT volume increased 9.1% 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 4.1% for the twelve
months of 2018 over 2017.
Dr. Berger remarked, "2018 was a
very active year for RadNet, one that sets the stage for future growth and success. During 2018 and subsequent to year end, we
completed several important transactions within existing core markets. In April, we completed the acquisition of five imaging centers
in Fresno, California. In October, we completed our first acquisition in Long Island, New York (Medical Arts Radiology) to coincide
with becoming operational with our first east coast capitation contract with Emblem Health. Subsequent to year end, we announced
signing a definitive agreement to acquire Kern Radiology, an operator of five imaging centers in Bakersfield, California and established
our second California-based joint venture with Dignity Health in Ventura County. The acquisitions and joint venture further our
strategy of geographic concentration, which brings operating efficiencies and establishes RadNet as the largest non-hospital imaging
center operator in all of the markets in which we operate. The Ventura County Dignity Health joint ventures is an example of our
continued interest to partner with progressive health systems that recognize the continuing shift of medical services towards ambulatory,
lower-cost settings. We now have over 25% of our facilities within joint ventures with leading health systems."
Actual Results vs. 2018 Guidance:
The following compares the Company's
actual 2018 performance with previously announced guidance levels.
| Guidance Range | Actual Results | |
| Total Net Revenue | $945 million - $970 million | $975.1 million |
| Adjusted EBITDA (1) | $140 million - $150 million | $143.8 million |
| Capital Expenditures (a) | $60 million - $65 million | $69.6 million |
| Cash Interest Expense | $33 million - $38 million | $37.0 million |
| Free Cash Flow Generation (b) | $45 million - $55 million | $36.9 million |
Dr. Berger commented, "We exceeded
our revenue guidance and finished the year towards the middle of our Adjusted EBITDA(1) range. Our capital expenditures
exceeded our initial guidance range primarily as a result of the more than $10 million one-time investment we made related to the
Emblem Health capitation contract, which became operational in October, as well as additional capital expenditures that were recorded
in the fourth quarter due to the financial statement consolidation our New Jersey Imaging Network joint venture. The higher capital
expenditures directly impacted our free cash flow, which otherwise would have been within our guidance range."
2019 Fiscal Year Guidance
For its 2019 fiscal year, RadNet announces
its guidance ranges as follows:
| Total Net Revenue | $1,050 million - $1,100 million |
| Adjusted EBITDA (1) | $155 million - $165 million |
| Capital Expenditures (a) | $60 million - $65 million |
| Cash Interest Expense | $38 million - $43 million |
| Free Cash Flow Generation (b) | $45 million - $55 million |
Dr. Berger noted, "We are optimistic
about 2019. First, we expect 2019 to have stable reimbursement. Medicare rates for 2019 are commensurate with 2018 reimbursement
and our relationships with private payors and capitated medical groups represent potential upside in our rates. Second, we expect
to benefit from the contributions of recent acquisitions and initiatives that either were part of RadNet for only a portion of
2018 or did not contribute at all during 2018. These include the acquisitions of Medical Arts Radiology and Kern Radiology (scheduled
to close on April 1st), the establishment of a new joint venture with Dignity Health in Ventura, California, the recently
operationalized capitation contract with Emblem Health and the consolidation, from a financial statement perspective, of New Jersey
Imaging Network. Third, we were impacted by adverse weather conditions in the first quarter of 2018 which decreased our Adjusted
EBITDA in 2018 by approximately $5.8 million. Thus far in 2019, adverse winter weather conditions in the northeast have been much
less of a factor in our performance. Lastly, we anticipate driving organic growth from significant capital spending in 2018, which
included a commitment to 3D mammography and the expansion of a number of our wholly-owned and joint venture centers."
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 2018 fourth quarter and year-end results.