Full Press Release Details
RadNet Reports Third Quarter Financial Results and Reaffirms
Previously Announced 2016 Guidance Levels
LOS ANGELES, California, November 9,
2016 - RadNet, Inc. (NASDAQ: RDNT), a national leader in providing high-quality, cost-effective,
fixed-site outpatient diagnostic imaging services through a network of 306 owned and/or operated outpatient imaging centers,
today reported financial results for its third quarter of 2016.
Dr. Howard Berger, President and Chief
Executive Officer of RadNet, commented, "I am pleased with our results and the progress we made this quarter. As compared
with last year's third quarter, our business demonstrated Revenue and EBITDA growth as well as positive same center revenue
and procedural increases. This is the tenth quarter in a row where we've experienced same center procedural growth, our industry's
best indicator of organic expansion. Additionally, sequentially from our first and second quarters of this year, we have been able
to methodically improve our Revenue and EBITDA performance. This improvement is an indication, in a year where we completed no
material acquisitions, that our focus on operational excellence is paying dividends."
Dr. Berger continued, "We continue
to pursue several new health system partnerships on the west coast, a business model that has traditionally been a strength of
our east coast operations, and we are looking to expand existing joint ventures on the east coast. We are also aggressively pursuing
network contracting and capitation opportunities on the east coast. Furthermore, we are in the process of expanding our Breastlink
breast disease management capabilities to our east coast markets. We are optimistic about the progress we are making on these fronts
and expect to be in a position later this year or early next year to announce the successful completion some of these initiatives.
"On July 1st, we completed
a refinancing transaction of our senior secured first lien term loan and revolving credit facility. The transaction extends the
maturity of these facilities to 2021 and increases our financial flexibility. The refinancing also affords us the ability to continue
to grow our business without having concerns about near term maturities and uncertainty around access to capital over the coming
Third Quarter Financial Results
For the third quarter of 2016, RadNet reported
Revenue of $224.6 million, Adjusted EBITDA(1) of $35.9 million and Net Income of $1.6 million, respectively. Revenue
increased $16.3 million (or 7.8%), Adjusted EBITDA(1) increased $557,000 (or 1.6%) and Net Income decreased $6.3 million,
respectively, over the third quarter of 2015. Per share Net Income for the third quarter was $0.04,
compared to per share Net Income in the third quarter of 2015 of $0.18 (based upon a weighted average number of diluted shares
outstanding of 46.3 million and 44.8 million for these periods in 2016 and 2015, respectively).
The comparison of Net Income is affected
by certain unusual items which occurred in each of the third quarters of 2016 and 2015. During 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. Affecting the third quarter of 2015, we recorded a $4.8 million gain from the sale of our New Jersey
facilities to our joint venture with Barnabas Health and $2.0 million of implementation revenue from the commencement of operations
of our management service contract in Qatar. Adjusting for these events in both quarters, Adjusted Earnings Per Share was $0.11
in the third quarter of 2016 as compared with $0.10 in the third quarter of 2015.
Net Income in the third quarter of 2016 (excluding the items mentioned immediately above in the Adjusted Earnings Calculation)
were certain non-cash expenses or non-recurring items including: $1.2 million of non-cash employee stock compensation expense resulting
from the vesting of certain options and restricted stock; $188,000 of severance paid in connection with headcount reductions
related to cost savings initiatives; $66,000 gain on the sale of certain capital equipment; and $799,000
of amortization of deferred financing costs and loan discounts related to our credit facilities.
For the third quarter of 2016, as compared
with the prior year's third quarter, MRI volume increased 4.7%, CT volume increased 6.6% and PET/CT volume increased 9.0%.
Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased
6.7% 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 2016 and 2015, MRI volume increased 2.0%, CT volume increased 3.9% and PET/CT volume increased 6.3%.
Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams,
increased 0.1% compared with the prior year's same quarter.
Nine Month Financial Results
For the nine months ended September 30,
2016, RadNet reported Revenue of $659.6 million, Adjusted EBITDA(1) of $98.1 million and Net Income of $3.5 million.
Revenue increased $65.7 million (or 11.1%), Adjusted EBITDA(1) increased $9.0 million (or 10.1%) and Net Income decreased
$3.3 million, respectively, over the first nine months of 2015. Net Income Per Share for the nine month
period ended September 30, 2016 was $0.08 per diluted share, compared to Net Income of $0.15 per diluted share in corresponding
nine month period of 2015 (based upon a weighted average number of fully diluted shares outstanding of 46.7 million and 44.7 million
for these periods in 2016 and 2015, respectively).
results in the nine months ended September 30, 2016 were certain non-cash expenses or non-recurring
items including: $4.9 million of non-cash employee stock compensation expense resulting from the vesting of certain options and
restricted stock; $2.5 million of severance paid in connection with headcount reductions related to cost savings initiatives;
$375,000 loss on the sale of certain capital equipment; $606,000 of one-time rating agency and legal
fees related to our refinancing transaction completed on July 1, 2016; $5.0 million settlement gain related to the return of common
stock in connection with our acquisition of Diagnostic Imaging Group; $6.1 million charge to
Revenue related to working capital adjustments also pertaining to acquisitions we completed in New York; and $4.3
million of amortization of deferred financing costs and loan discounts related to our credit facilities.
2016 Guidance Update
RadNet reaffirms its previously announced
2016 guidance ranges as follows:
| Total Net Revenue (a) | $870 million - $910 million | |
| Adjusted EBITDA (1) | $130 million - $140 million | |
| Capital Expenditures (b) | $55 million - $58 million | |
| Cash Interest Expense | $37 million - $40 million | |
| Free Cash Flow Generation (c) | $40 million - $50 million |
Dr. Berger added, "We are on track
to meet our guidance ranges for the year. All ranges remain unchanged from what we announced previously with the exception of increasing
and narrowing our targeted capital expenditure range by $3 million. This increase is to continue to fund a replacement program
of our computed radiography (CR x-ray) scanners to provide them with digital wireless transmitting capabilities as well as fund
certain center expansions in several of our markets."
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 to discuss
its third quarter 2016 results on Wednesday, November 9th, 2016 at 7:30 a.m. Pacific Time (10:30 a.m. Eastern Time).
Conference Call Details:
Date: Wednesday, November 9, 2016
Time: 10:30 a.m. Eastern Time
Dial In-Number: 888-417-8531
International Dial-In Number: 719-457-1517
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=121830
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 5168653.
Regulation G: GAAP and Non-GAAP Financial
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.