Full Press Release Details
RadNet Reports Second Quarter Financial Results to Include Record
Revenue and EBITDA, the Acquisition of Diagnostic Imaging Associates of Delaware and a Refinancing Transaction
LOS ANGELES, California, August 8, 2017
- RadNet, Inc. (NASDAQ: RDNT), a national leader in providing high-quality, cost-effective,
fixed-site outpatient diagnostic imaging services through a network of 295 owned and/or operated outpatient imaging centers,
today reported financial results for its second quarter of 2017.
Dr. Howard Berger, Chairman and Chief Executive
Officer of RadNet, commented, "I am pleased with our operational results this quarter and the improvements we are making
to our business. We continue to demonstrate steady and consistent revenue growth, positive same store procedural gains and higher
EBITDA and Earnings as compared prior year periods."
Dr. Berger continued, "Our improved financial
performance combined with reducing our net debt by over $12 million during the quarter is contributing to the continued deleveraging
of our balance sheet. In the last year and a half, we have reduced leverage by almost three quarters of a turn of EBITDA. This
focus is provides us more financial and operating flexibility and reduces financial risk."
Dr. Berger concluded, "During the quarter,
we accomplished a number of important operating milestones. First, we commenced operations with Cedars Sinai of two joint ventures
in the Los Angeles area. We are proud of our affiliation with one of the most well-known and high-quality health systems in California.
Second, we exited the Rhode Island marketplace with the sale of our five imaging centers. We concluded that we were highly unlikely
to ever build the scale or breadth of operations we would strategically desire in that market and that we were more advantaged
by redeploying that capital in the Delaware marketplace (where we are now the clear outpatient imaging leader). Third, we began
operations of Breastlink New York, opening an integrated breast disease management facility in the Columbus Circle area of Manhattan,
where we are now offering breast surgery in addition to our traditional women's imaging. These are just a few of the opportunities
we are pursuing to expand our business, and I look forward to discussing more business development initiatives as the year progresses."
Second Quarter Financial Results
For the second quarter of 2017, RadNet reported
Revenue of $230.0 million. Adjusted EBITDA(1) for the second quarter was $37.0 million. Revenue increased $11.4 million
(or 5.2%) and Adjusted EBITDA(1) increased $1.9 million (or 5.5%) from the second quarter of last year.
For the second quarter, RadNet reported Net
Income of $5.3 million, an increase of $1.7 million over the second quarter of 2016. Per share diluted Net
Income for the second quarter was $0.11, compared to per share diluted Net Income in the second quarter of 2016 of $0.08 (based
upon a weighted average number of diluted shares outstanding of 47.2 million and 46.9 million for these periods in 2017 and 2016,
Affecting Net Income
in the second quarter of 2017 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; $177,000 of severance paid
in connection with headcount reductions related to cost savings initiatives; $453,000 loss on the sale of certain capital equipment;
$2.3 million gain on the sale of five imaging centers in Rhode Island and two oncology operations in California; $1.2 million of
expenses of divested and closed operations in Rhode Island and California; $723,000 of legal expenses that are the subject of a
judgement for which we receive reimbursement; and $822,000 of non-cash amortization of deferred financing
costs and loan discount on debt issuances.
For the second quarter of 2017, as compared
with the prior year's second quarter (and excluding Rhode Island from each period), MRI volume increased 4.3%, CT volume
increased 5.9% and PET/CT volume increased 7.2%. Overall volume, taking into account routine imaging exams, inclusive of x-ray,
ultrasound, mammography and other exams, increased 1.9% 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 2017 and 2016, MRI volume increased 3.5%, CT volume
increased 5.9% and PET/CT volume increased 6.5%. Overall same-center volume, taking into account routine imaging exams, inclusive
of x-ray, ultrasound, mammography and other exams, increased 2.4% over the prior year's same quarter.
Six Month Financial Results
For the six months ended June 30, 2017, RadNet
reported Revenue of $459.0 million. Adjusted EBITDA(1) for the six month period in 2017 was $65.7 million. Revenue increased
$24.1 million (or 5.5%) and Adjusted EBITDA(1) increased $3.5 million (or 5.6%) from the same six month period last
For the six month period in 2017, RadNet reported
Net Income of $4.1 million. Net Income increased $1.9 million over the six month period of 2016. Per share Net
Income for the six month period in 2017 was $0.09, compared to per share Net Income in the prior year's same period of $0.05
(based upon a weighted average number of diluted shares outstanding of 47.1 million and 47.0 million for these periods in 2017
and 2016, respectively).
Affecting Net Income
in the six month period of 2017 were certain non-cash expenses and non-recurring items including: $4.3 million of non-cash employee
stock compensation expense resulting from the vesting of certain options and restricted stock; $380,000 of severance paid
in connection with headcount reductions related to cost savings initiatives; $408,000 loss on the sale of certain capital equipment;
$2.3 million gain on the sale of five imaging centers in Rhode Island and two oncology operations in California; $1.2 million of
expenses of divested and closed operations in Rhode Island and California; $723,000 of legal expenses that are the subject of a
judgement for which we receive reimbursement; and $1.6 million of non-cash amortization of deferred
financing costs and discount on debt issuances.
Acquisition of Diagnostic Imaging Associates
RadNet today reported it acquired Diagnostic
Imaging Associates ("DIA"), RadNet's principal non-hospital outpatient competitor in Delaware. The acquisition
should provide RadNet with approximately $14 million of additional revenue on an annual basis and transforms RadNet into the clear
non-hospital based outpatient imaging leader in Delaware.
Founded in 1984, DIA owns and operates seven
imaging centers in Northern Delaware and performs approximately 85,000 imaging procedures per year, including MRI, CT, Ultrasound,
Mammography and x-Ray. DIA's centers are multimodality and are accredited by the American College of Radiology ("ACR").
Dr. Howard Berger, Chairman and Chief Executive
Officer of RadNet, noted, "We are delighted to complete this significant transaction. DIA has been a respected competitor
of ours since we entered the Delaware marketplace in 2008. DIA operates high quality facilities and enjoys a well-respected professional
reputation. Through the combination of RadNet's existing eight facilities with DIA's, we become the clear leader of
non-hospital outpatient imaging operators in Delaware. We expect there will be unique cost savings and revenue efficiencies we
will be able to achieve through this consolidation, and we welcome the employees and radiologists of DIA into the RadNet family."
"It is our stated goal to be the number
one provider in every market in which we operate. With this transaction, we achieve this objective. We are transforming into the
principal low-cost alternative to hospital based operations in Delaware. Hospital outpatient imaging rates in Delaware are typically
two to four times higher than our rates. Access to our conveniently located 15 locations will provide Delaware residents and employers
the option to choose to obtain high quality outpatient diagnostic imaging at a fraction of the cost they would otherwise experience
at hospital-owned and operated facilities. We expect that this combination will significantly benefit patients, referring physicians
and health plans alike in the Delaware marketplace," added Dr. Berger.
Refinancing Transaction
RadNet today reports that it will be soliciting
a refinancing transaction. RadNet's intention is to amend its Amended and Restated First Lien Credit and Guaranty Agreement
dated July 1, 2016 (the "First Lien Agreement") and to raise $170 million of incremental first lien term debt under
the First Lien Agreement. The proceeds of the offering will be to repay in its entirety the $168 million of principal amount that
RadNet has outstanding under its Second Lien Credit and Guaranty Agreement dated March 25, 2014. If successful, after such a transaction,
RadNet expects to continue to have available to it $117.5 million of revolving credit facility capacity under the First Lien Agreement,
which was undrawn upon as of June 30th, 2017. In addition, RadNet would have approximately $637 million par value term
loans outstanding under its amended First Lien Agreement.
The potential refinancing transaction would
be subject to negotiations with lenders and market and other conditions. As such, there can be no assurance that RadNet will complete
a refinancing transaction, at all, or on terms that are favorable to RadNet or its investors. RadNet may engage from time to time
in discussions with creditors of RadNet, as well as their respective advisors, as RadNet pursues such potential refinancing transaction.
Mark Stolper, Executive Vice President and
Chief Financial Officer of RadNet, commented "We have successfully deleveraged the company from approximately 5.25x Net Debt
to EBITDA as of the end of 2015 to approximately 4.6x currently. We are striving to continue our deleveraging both through the