· RadNet reports revenue of $110.2 million and EBITDA([1]) of $22.4 million; increases of 6.3% and 12.7%, respectively over the prior year’s pro forma quarter
· RadNet reports increased volumes and improved operating margins
· Third quarter per share loss narrows to $(0.6) from prior year’s loss of $(0.12)
LOS ANGELES, Calif., November 14, 2007 – 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, 2007.
Three Month Report
For its third quarter of fiscal 2007, RadNet reported revenue and EBITDA(1) of $110.2 million and $22.4 million, respectively. Revenue increased 6.3% (or $6.5 million) and EBITDA increased 12.7% (or $2.5 million), respectively over the prior year’s pro forma quarter (pro forma to reflect the combination with Radiologix which did not occur until November 15, 2006). The results reflect improved volume and margin performance from existing imaging centers as well as cost saving measures, the combination of which helped to offset both the negative reimbursement effects of the federal Deficit Reduction Act and the effect of having one less business day in the quarter.
For the third quarter of 2007, as compared to the prior year’s pro forma quarter, MRI volume increased 6.4%, CT volume increased 5.0% and PET/CT volume increased 13.8%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 8.0% over the prior year’s pro forma quarter.
Net Loss for the third quarter was $2.0 million, or $(0.06) per share, compared to a net loss of $2.5 million or $(0.12) per share, reported in the same period last year (based upon a weighted average number of fully diluted shares outstanding of 34.7 million and 21.2 million in the quarters for 2007 and 2006, respectively). Affecting net income were certain non-cash expenses and one-time non-recurring items including:
- $0.3 million of non-cash employee stock compensation expense resulting from the vesting of certain options and warrants;
- $0.8 million of retention expense to key Radiologix employees per certain retention agreements entered into at the closing of the Radiologix acquisition;
- $0.1 million of payments related to settling an employment-related dispute and severance associated with the termination of certain employees related to achieving the previously announced cost savings during the Radiologix integration;
- $0.5 million of non-cash Deferred Financing Expense related to the amortization of financing fees paid as part of our $405 million credit facilities drawn down in November 2006 in connection with the Radiologix acquisition and the incremental $35 million term loan and revolving credit facility arranged in August 2007; and
- $0.7 million non-cash loss on the fair value of interest rate hedges related to the Company’s credit facilities.
“Despite the traditionally slower summer months and this quarter having one less business day (63 days) as compared with last year’s third quarter and the second quarter of this year (each with 64 business days), we managed to improve our operating performance through driving volume growth and managing our costs.” said Dr. Howard Berger, President and Chief Executive Officer. “We had key accomplishments announced within the quarter including the acquisition of three centers in Victorville, CA, the establishment of the RadNet Managed Imaging Services business and the exiting of our non-core Colorado market. In the fourth quarter, we have already announced the acquisition of Liberty Pacific in Encino, CA, the launching of our digital mammography program in Maryland, the entry into 64 slice CT and PET/CT scanning and this morning’s acquisition of Papastavros Imaging. We look forward to realizing the full financial impact and operational benefits of all these accomplishments in quarters to come.”
“We continue to operate in a dynamic industry that is experiencing great change as a result of the DRA reimbursement cuts and legislation.” added Dr. Berger. “We believe this changing landscape will continue to provide us with attractive consolidation opportunities and new exciting niches that will drive our future performance.”
Consistent with its strategy of focusing on its core markets, RadNet exited the Colorado market during the third quarter through the sale of assets it had acquired in the Radiologix transaction. As a result of exiting Colorado, RadNet now operates only two centers in Topeka, KS which are outside of its core markets of California, Maryland, New York and Florida.
Nine Month Report
For the nine month period ending September 30, 2007, RadNet reported revenue and EBITDA(1) of $323.1 million and $64.9 million, respectively. Revenue increased 2.9% (or $9.1 million) and EBITDA increased 6.9% (or $4.2 million), respectively, over the prior year’s pro forma nine month period.
For the nine month period ending September 30, 2007, as compared to the prior year’s pro forma period, MRI volume increased 6.5%, CT volume increased 3.8% and PET/CT volume increased 19.1%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 5.7% for the nine months of 2007 over the prior year’s pro forma nine month period.
Net Loss for the nine month period ending September 30, 2007 was $5.4 million, or $(0.16) per share, compared to a net loss of $6.0 million or $(0.29) per share, reported in the same period last year (based upon a weighted average number of fully diluted shares outstanding of 34.6 million and 21.0 million in the same nine month periods for 2007 and 2006, respectively). Affecting net income were certain non-cash expenses and one-time non-recurring items including:
- $2.9 million of non-cash employee stock compensation expense resulting from the vesting of certain options and warrants;
- $0.8 million retention expense to key Radiologix employees per certain retention agreements entered into at the closing of the Radiologix acquisition;
- $0.8 million of severance associated with the termination of certain employees related to achieving the previously announced cost savings during the Radiologix integration and a payment to an employee to settle an employment-related dispute;
- $1.5 million of non-cash Deferred Financing Expense related to the amortization of financing fees paid as part of our $405 million credit facilities drawn down in November 2006 in connection with the Radiologix acquisition; and
- $0.3 million payment to two physicians in conjunction with our affiliated radiology group assuming professional responsibilities for one of Radiologix’s regions in Northern California;
- $0.1 million initial listing fee to NASDAQ; and
- $0.2 million loss on the fair value of interest rate hedges related to the Company’s credit facilities.
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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 cash-based 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 143 fully-owned and operated outpatient imaging centers. RadNet’s core markets include California, Maryland, New York and Florida. At December 31, 2006, together with affiliated radiologists, and inclusive of full-time and per diem employees and technicians, RadNet had a total of 3,937 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, recruiting and retaining technologists, and receiving third-party reimbursement for diagnostic imaging services, as well as RadNet's financial guidance, its statements regarding cost savings, 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 Forms 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.
CONTACTS:
RadNet, Inc.
Mark Stolper, 310-445-2800
Executive Vice President and Chief Financial Officer
Integrated Corporate Relations, Inc.
John Mills, 310-954-1105
jmills@icrinc.com
