* Adjusting for a non-cash charge from prior fiscal years,
RadNet reports quarterly Revenue of $134.9 million and
Adjusted EBITDA(1)of $27.0 million (Revenue of $133.4 million
and EBITDA of $25.5 million prior to adjusting for the charge)
* Overall procedure volumes increased 4.9% over the prior year's
same quarter
* Per share loss, adjusting for the non-cash charge, was $(0.01)
per share compared to $0.0 per share for the three month period
ended September 30, 2008 (Per share loss was $(0.05) for the
third quarter of 2009 prior to adjusting for the charge)
LOS ANGELES, Nov. 9, 2009 (GLOBE NEWSWIRE) -- RadNet, Inc. (Nasdaq:RDNT), a national leader in providing high-quality, cost-effective diagnostic imaging services through a network of fully-owned and operated outpatient imaging centers, today reported financial results for its third quarter ended September 30, 2009.
Three Month Report
For the three months ended September 30, 2009, RadNet reported Revenue and Adjusted EBITDA(1) of $133.4 million and $25.5 million, respectively. The results included a $1.5 million non-cash charge for increasing the contractual allowance on Accounts Receivable from services provided in 2008 and prior fiscal years. Adjusting for this $1.5 million addition to the contractual allowance which lowered Revenue and Adjusted EBITDA(1) in the quarter by $1.5 million, Revenue would have been $134.9 million, an increase of 3.1% (or $4.0 million) over the prior year's same quarter and Adjusted EBITDA(1) would have been $27.0 million, a decrease of 4.0% (or $1.1 million) over the prior year's same quarter.
Additionally, the quarter reflects decreased Revenue and Adjusted EBITDA(1) as a result of the completion of RadNet's contract with twenty facilities that it managed, but did not own. This contract, which expired during the second quarter of 2009, contributed to the results of the third quarter of 2008, but did not contribute to the results of the third quarter of 2009.
For the third quarter of 2009, as compared to the prior year's same quarter, MRI volume increased 6.8%, CT volume increased 5.8% and PET/CT volume increased 4.3%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 4.9% over the prior year's quarter.
On a same-center basis, including only those centers which were part of RadNet for both the third quarters of 2009 and 2008, MRI volume increased 5.4%, CT volume increased 4.0% and PET/CT volume increased 4.3%. Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 3.2% over the prior year's same quarter.
Net Loss for the third quarter of 2009 was $1.7 million, or $(0.05) per share, compared to Net Income of $138,000 or $0.0 per share, reported for the three month period ended September 30, 2008 (based upon a weighted average number of shares outstanding of 36.1 million and 37.0 million for these periods in 2009 and 2008, respectively). Adjusting for the $1.5 million increase to the contractual allowance which lowered Net Income in the quarter by $1.5 million, Net Loss for the third quarter of 2009 would have been $0.2 million, or $(0.01) per share. Affecting Net Loss in the third quarter of 2009 were certain non-cash expenses or non-recurring items including:
* $1.5 million non-cash charge to increase our allowance reserve
for uncollectible accounts receivable;
* $1.8 million non-cash amortization expense with respect to
interest rate swaps related to the Company's credit
facilities;
* $670,000 of Deferred Financing Expense related to the
amortization of financing fees paid as part of the Company's
$405 million credit facilities drawn down in November 2006 in
connection with the Radiologix acquisition and the incremental
term loans and revolving credit facility arranged in August
2007 and February 2008; and
* $713,000 of non-cash employee stock compensation expense
resulting from the vesting of certain options and warrants.
"We are encouraged by our increased volumes and revenue for the third quarter of 2009 when compared to the third quarter of 2008, despite a very challenging economic environment," said Dr. Howard Berger, Chairman and Chief Executive Officer of RadNet. "Our profitability suffered during the quarter from a $1.5 million non-cash reserve we recorded against the collectability of receivables from prior fiscal years and the termination of our RadNet Imaging Management Services management contract. But for these two issues, we would have had both increasing EBITDA and Net Income when compared to the third quarter of last year."
"Our strong cash flow during the quarter enabled us to repay the $1.4 million outstanding balance on our revolving credit facility in addition to repaying $6.0 million of term debt, capital leases and other notes. Even after such repayments, we had $1.2 million of cash on our balance sheet as of the end of the quarter," added Dr. Berger.
Dr. Berger noted, "The final rule regarding Medicare pricing for 2010 as released by the Centers for Medicare and Medicaid Services (CMS) on October 30th will result in a smaller than anticipated reduction in our 2010 Medicare reimbursement, which is considerably more favorable to us than that which CMS originally proposed in July of this year. We anticipate being able to fully mitigate the reimbursement reduction through several cost savings initiatives which we had already planned to implement in 2010."
"We continue to see opportunities for consolidation. The uncertainty of healthcare reform, the continuing tight credit markets and the lower Medicare rates for 2010 will further apply pressure to the smaller, less capitalized operators in our industry. We continue to believe that we will benefit from the types of consolidation opportunities on which we have been capitalizing in recent quarters" added Dr. Berger.
2009 Fiscal Year Guidance
-------------------------
RadNet is updating its guidance ranges as follows:
Previous Guidance Range Updated Guidance Range
--------------------------- ---------------------------
Revenue $515 million - $545 million $515 million - $535 million
Adjusted
EBITDA(1) $105 million - $115 million $105 million - $110 million
Capital
Expenditures $30 million - $35 million $38 million - $40 million
Cash
Interest
Expense $41 million - $45 million $41 million - $45 million
Free Cash
Flow
Generation
(a) $25 million - $35 million $20 million - $30 million
End of Year
Net Debt
Balance(b) $438 million - $448 million $445 million - $450 million
a) Defined by the Company as Adjusted EBITDA(1) less total
capital expenditures and cash interest paid
b) Total Debt net of Cash.
Nine Month Report
For the nine months ended September 30, 2009, RadNet reported Revenue and Adjusted EBITDA(1) of $392.6 million and $78.9 million, respectively. Adjusting for the $1.5 million of additional contractual allowance we recorded in the third quarter of 2009 which lowered Revenue and Adjusted EBITDA(1) by $1.5 million, Revenue would have been $394.1 million, an increase of 6.1% (or $22.7 million) over the prior year's same nine months and Adjusted EBITDA(1) would have been $80.4 million, an increase of 5.9% (or $4.5 million) over the prior year's same nine months.
For the nine months of 2009, as compared to the prior year's same nine months, MRI volume increased 9.9%, CT volume increased 7.5% and PET/CT volume increased 5.1%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 6.2% over the prior year's nine months.
Net Loss for the nine months of 2009 was $2.9 million, or $(0.08) per share, compared to a net loss of $7.5 million or $(0.21) per share, reported for the nine month period ended September 30, 2008 (based upon a weighted average number of shares outstanding of 36.0 million and 35.7 million for these periods in 2009 and 2008, respectively). Adjusting for the $1.5 million increase to the contractual allowance which lowered Net Income in the nine month period by $1.5 million, Net Loss for the nine months of 2009 would have been $1.4 million, or $(0.04) per share. Affecting Net Loss in the nine months of 2009 were certain non-cash expenses or non-recurring items including:
* $1.5 million non-cash charge to increase our allowance
reserve for uncollectible accounts receivable;
* $4.8 million non-cash amortization expense with respect to
interest rate swaps related to the Company's credit facilities;
* $2.0 million of Deferred Financing Expense related to the
amortization of financing fees paid as part of the Company's
$405 million credit facilities drawn down in November 2006 in
connection with the Radiologix acquisition and the incremental
term loans and revolving credit facility arranged in August
2007 and February 2008;
* $2.9 million of non-cash employee stock compensation expense
resulting from the vesting of certain options and warrants;
* $1.4 million bargain purchase gain on the acquisition of
acquired centers in New Jersey; and
* $1.0 million loss related to the resolution of legal disputes.
Third Quarter 2009 Earnings Conference Call
RadNet will host a conference call to discuss its third quarter 2009 results on Monday, November 9th, 2009 at 7:30 a.m. Pacific Time (10:30 a.m. Eastern Time).
Investors are invited to listen to RadNet's conference call by dialing 877-548-7901. International callers can dial 719-325-4896. There will also be simultaneous and archived webcasts available at 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 until November 16th and can be accessed by dialing 888-203-1112 from the U.S., or 719-457-0820 for international callers, and using the passcode 6413789.
Regulation G: GAAP and Non-GAAP Financial Information
This release contains certain financial information not reported in accordance with GAAP. RadNet 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 RadNet in measuring its performance. RadNet 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.
About RadNet, Inc.
RadNet, Inc. is a national market leader providing high-quality, cost-effective diagnostic imaging services through a network of 175 fully-owned and operated outpatient imaging centers. RadNet's core markets include California, Maryland, Delaware, New Jersey and New York. Together with affiliated radiologists, and inclusive of full-time and per diem employees and technicians, RadNet has a total of approximately 4,000 employees. For more information, visit http://www.radnet.com.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Specifically, statements concerning RadNets' ability to continue to grow its business by generating patient referrals and contracts with radiology practices, future acquisitions, cost savings, successful integration of acquired operations, the impact of government programs, and receiving third-party reimbursement for diagnostic imaging services, as well as RadNet's financial guidance, its statements regarding increased business from new operations, are forward-looking statements within the meaning of the Safe Harbor. Forward-looking statements are based on management's current, preliminary expectations and are subject to risks and uncertainties, which may cause RadNet's actual results to differ materially from the statements contained herein. Further information on potential risk factors that could affect RadNet's business and its financial results are detailed in its most recent Annual Report on Form 10-K and Form 10Q, as filed with the Securities and Exchange Commission. Undue reliance should not be placed on forward-looking statements, especially guidance on future financial performance, which speaks only as of the date they are made. RadNet undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made, or to reflect the occurrence of unanticipated events.
(1) Definition of Adjusted EBITDA, a non-GAAP measure, is found on the last page of this release.
RADNET, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
Sept. 30, Dec. 31,
2009 2008
--------- --------
(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,198 $ --
Accounts receivable, net 92,264 96,097
Refundable income taxes 154 103
Prepaid expenses and
other current assets 9,528 12,370
--------- ---------
Total current assets 103,144 108,570
PROPERTY AND EQUIPMENT, NET 182,945 193,104
OTHER ASSETS
Goodwill 105,378 105,278
Other intangible assets 54,703 56,861
Deferred financing costs, net 8,898 10,907
Investment in joint ventures 17,939 17,637
Deposits and other 3,160 3,752
--------- ---------
Total assets $ 476,167 $ 496,109
========= =========
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable and accrued
expenses $ 66,565 $ 81,175
Due to affiliates 3,061 5,015
Notes payable 7,103 5,501
Current portion of deferred rent 506 390
Obligations under capital leases 14,851 15,064
--------- ---------
Total current liabilities 92,086 107,145
--------- ---------
LONG-TERM LIABILITIES
Line of credit -- 1,742
Deferred rent, net of current
portion 8,494 7,996
Deferred taxes 277 277
Notes payable, net of current
portion 418,248 419,735
Obligations under capital lease,
net of current portion 17,089 24,238
Other non-current liabilities 18,434 16,006
--------- ---------
Total liabilities 554,628 577,139
--------- ---------
COMMITMENTS AND CONTINGENCIES
EQUITY DEFICIT
Common stock - $.0001 par value,
200,000,000 shares authorized;
36,184,279 and 35,911,474 shares
issued and outstanding at
September 30, 2009 and
December 31, 2008, respectively 4 4
Paid-in-capital 155,943 153,006
Accumulated other comprehensive
loss (3,841) (6,396)
Accumulated deficit (230,626) (227,722)
--------- ---------
Total Radnet, Inc.'s equity
deficit (78,520) (81,108)
Noncontrolling interests 59 78
--------- ---------
Total equity deficit (78,461) (81,030)
--------- ---------
Total liabilities and equity
deficit $ 476,167 $ 496,109
--------- ---------
RADNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT SHARE DATA)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- -----------------------
2009 2008 2009 2008
--------- --------- --------- ---------
NET REVENUE $ 133,404 $ 130,902 $ 392,553 $ 371,358
OPERATING EXPENSES
Operating expenses 101,924 99,552 298,653 286,404
Depreciation and
amortization 13,593 13,083 39,979 39,623
Provision for
bad debts 8,386 7,065 24,729 20,640
Loss on sale of
equipment 72 1,525 375 1,495
Severance costs 286 137 643 172
--------- --------- --------- ---------
Total operating
expenses 124,261 121,362 364,379 348,334
--------- --------- --------- ---------
INCOME FROM
OPERATIONS 9,143 9,540 28,174 23,024
OTHER EXPENSES
(INCOME)
Interest expense 12,367 12,126 37,715 38,230
Gain on bargain
purchase -- -- (1,387) --
Other (income)
expense (2) (79) 1,239 (132)
--------- --------- --------- ---------
Total other
expense 12,365 12,047 37,567 38,098
--------- --------- --------- ---------
LOSS BEFORE INCOME
TAXES AND EQUITY IN
EARNINGS OF JOINT
VENTURES (3,222) (2,507) (9,393) (15,074)
Provision for
income taxes (231) (14) (281) (151)
Equity in earnings
of joint ventures 1,751 2,686 6,839 7,815
NET INCOME LOSS (1,702) 165 (2,835) (7,410)
Net income
attributable to
noncontrolling
interests 24 27 69 76
--------- --------- --------- ---------
NET LOSS
ATTRIBUTABLE
TO RADNET, INC.
COMMON
SHAREHOLDERS $ (1,726) $ 138 $ (2,904) $ (7,486)
========= ========= ========= =========
BASIC NET INCOME
(LOSS) PER SHARE
ATTRIBUTABLE TO
RADNET, INC. COMMON
SHAREHOLDERS $ (0.05) $ 0.00 $ (0.08) $ (0.21)
========= ========= ========= =========
DILUTED NET INCOME
(LOSS) PER SHARE
ATTRIBUTABLE TO
RADNET, INC. COMMON
SHAREHOLDERS $ (0.05) $ 0.00 $ (0.08) $ (0.21)
========= ========= ========= =========
WEIGHTED AVERAGE
SHARES OUTSTANDING
Basic 36,105,149 35,759,779 35,982,558 35,669,400
========== ========== ========== ==========
Diluted 36,105,149 37,014,784 35,982,558 35,669,400
---------- ---------- ---------- ----------
RADNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
(unaudited)
Nine Months Ended
September 30,
2009 2008
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (2,835) $ (7,410)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Depreciation and amortization 39,979 39,623
Provision for bad debts 24,729 20,640
Equity in earnings of joint ventures (6,839) (7,815)
Distributions from joint ventures 6,852 4,286
Deferred rent amortization 614 3,071
Amortization of deferred financing cost 2,009 1,862
Net loss on disposal of assets 375 1,495
Gain on bargain purchase (1,387) --
Amortization of cash flow hedge 4,895 --
Share-based compensation 2,937 1,887
Changes in operating assets and
liabilities, net of assets acquired
and liabilities assumed in purchase
transactions:
Accounts receivable (20,896) (37,619)
Other current assets 3,213 810
Other assets 592 (282)
Accounts payable and accrued expenses (3,988) 1,793
-------- --------
Net cash provided by operating
activities 50,250 22,341
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of imaging facilities (3,917) (28,649)
Proceeds from sale of imaging facilities 650 --
Purchase of property and equipment (22,805) (20,950)
Proceeds from sale of equipment -- 166
Purchase of equity interest in joint
ventures (315) (728)
-------- --------
Net cash used in investing
activities (26,387) (50,161)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on notes and leases
payable (17,684) (13,976)
Proceeds from borrowings on notes
payable -- 35,000
Deferred financing costs -- (4,277)
Net (payments) proceeds on line of
credit (1,742) 10,877
Distributions to counterparties of
cash flow hedges (3,151) --
Distributions to noncontrolling
interests (88) (205)
Proceeds from issuance of common stock -- 383
-------- --------
Net cash (used in) provided by
financing activities (22,665) 27,802
-------- --------
NET INCREASE (DECREASE) IN CASH 1,198 (18)
CASH AND CASH EQUIVALENTS, beginning
of period -- 18
-------- --------
CASH AND CASH EQUIVALENTS, end of
period $ 1,198 $ --
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the period for interest $ 32,046 $ 36,529
RADNET, INC.
RECONCILIATION OF GAAP INCOME FROM OPERATIONS TO Adjusted EBITDA(1)
(IN THOUSANDS)
Three Months Ended
September 30,
------------------
2009 2008
------- -------
Income from Operations $ 9,143 $ 9,540
Plus Depreciation and Amortization 13,593 13,083
Plus Equity in Earnings of Joint Ventures 1,751 2,686
Plus Non Cash Employee Stock Compensation 713 831
Plus Loss on Disposal of Equipment 72 1,525
Plus One-Time Adjustment to Acquired Accounts
Receivable of Breastlink -- 383
Less Net Income Attributable to Noncontrolling
Interests (24) (27)
------- -------
Subtotal 25,248 28,021
Plus Severance: Elimination of Corporate Personnel 286 137
------- -------
Adjusted EBITDA(1) $25,534 $28,158
------- -------
Nine Months Ended
September 30,
------------------
2009 2008
------- -------
Income from Operations $28,174 $23,024
Plus Depreciation and Amortization 39,979 39,623
Plus Equity in Earnings of Joint Ventures 6,839 7,815
Plus Non Cash Employee Stock Compensation 2,936 1,887
Plus Loss on Disposal of Equipment 375 1,495
Plus One-Time Adjustment to Acquired Accounts
Receivable of Breastlink -- 383
Less Net Income Attributable to Noncontrolling
Interests (69) (76)
------- -------
Subtotal 78,234 74,151
Plus Severance: Elimination of Corporate Personnel 643 172
Plus One Time Consulting Fees Related to Review
of 2006 Accounts Receivables -- 200
Plus One Time Expense Related to Business Dispute
Settlements -- 1,393
------- -------
Adjusted EBITDA(1) $78,877 $75,916
------- -------
RADNET PAYMENTS BY PAYORS
Third Quarter Full Year
2009 2008
------------- -------------
Commercial Insurance 55.5% 56.6%
Medicare 19.9% 19.6%
Capitation 15.6% 15.0%
Workers Compensation/Personal Injury 3.5% 3.7%
Medicaid 3.3% 3.1%
Other 2.2% 2.0%
------------- -------------
100.00% 100.0%
Note
----
Based upon global payments received from consolidated Imaging Centers
from that period's dates of service. Excludes payments from hospital
contracts, Breastlink, Center Management Fees and other miscellaneous
operating activities.
RADNET PAYMENTS BY MODALITY
Third Quarter Full Year
2009 2008
------------- -------------
MRI 34.0% 34.2%
CT 19.1% 19.0%
PET/CT 6.0% 6.2%
X-ray 9.6% 10.8%
Ultrasound 10.2% 10.2%
Mammography 16.3% 14.9%
Nuclear Medicine 1.7% 1.6%
Other 3.0% 3.1%
------------- -------------
100.00% 100.0%
Note
----
Based upon global payments received from consolidated Imaging Centers
from that period's dates of service. Excludes payments from hospital
contracts, Breastlink, Center Management Fees and other miscellaneous
operations.
RADNET AVERAGE PAYMENTS BY MODALITY
Third Quarter Full Year
2009 2008
------------- -------------
MRI $ 503 $ 505
CT 308 310
PET/CT 1,496 1,494
X-ray 38 37
Ultrasound 108 107
Mammography 134 134
Nuclear Medicine 322 327
Other 126 129
Note
----
Based upon global payments received from consolidated Imaging Centers
from that period's dates of service. Excludes payments from hospital
contracts, Breastlink, Center Management Fees and other miscellaneous
operating activities.
Footnotes
(1) The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, each from continuing operations and adjusted for losses or gains on the disposal of equipment, debt extinguishments and non-cash equity compensation. Adjusted EBITDA includes equity earnings in unconsolidated operations and subtracts minority interests in subsidiaries, and is adjusted for non-cash, unusual or infrequent events taken 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.