RadNet, Inc.

RadNet, Inc. Headlines

RadNet Reports First Quarter 2008 Results

For the quarter, RadNet reports Revenue of $114.7 million and Adjusted EBITDA⁽¹⁾ of $22.1 million; increases of 8.4% and 8.5%, respectively over the prior year’s quarterly results
RadNet reports increased procedural volumes
First quarter per share loss was $(0.15) compared to $(0.16) for three month period ended March 31, 2007
RadNet reaffirms its previously announced 2008 Guidance of $470-500 million of Revenue and $100-$115 of Adjusted EBITDA⁽¹⁾

LOS ANGELES--(BUSINESS WIRE)-- 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 first quarter ended March 31, 2008.

For its first quarter of fiscal 2008, RadNet reported Revenue and Adjusted EBITDA⁽¹⁾ of $114.7 million and $22.1 million, respectively. Revenue increased 8.4% (or $8.9 million) and Adjusted EBITDA⁽¹⁾ increased 8.5% (or $1.7 million), respectively over the prior year’s quarter. The results reflect improved volume in existing centers as well as the contribution of acquisitions and operating initiatives.

For the first quarter of 2008, as compared to the prior year’s quarter, MRI volume increased 3.3%, CT volume decreased 1.6% and PET/CT volume increased 33.1%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 4.2% over the prior year’s quarter.

Net Loss for the first quarter was $5.5 million, or $(0.15) per share, compared to a net loss of $5.6 million or $(0.16) per share, reported for the three month period ended March 31, 2007 (based upon a weighted average number of fully diluted shares outstanding of 35.7 million and 34.4 million for these periods in 2008 and 2007, respectively). Affecting net income in the first quarter of 2008 were certain non-cash expenses and non-recurring items including:

$951,000 non-cash loss on the fair value of interest rate hedges related to the Company’s credit facilities;
$700,000 expense related to a payment to the settlement of a business dispute
$532,000 of 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 term loans and revolving credit facility arranged in August 2007 and February 2008;
$454,000 of non-cash employee stock compensation expense resulting from the vesting of certain options and warrants;
Approximately $400,000 in bonus compensation paid to some of our physician groups for their assistance with our transition to digital mammography.

During this first quarter, RadNet’s accomplishments included the following:

Substantially completing the transition of its Maryland operations to digital mammography;
Completing the construction of its second interventional radiology and imaging center. This facility, located in Rancho Mirage, CA, opened for business during the first week in May. It complements RadNet’s portfolio of multi-modality services in the Palm Springs/Palm Desert market, a market where RadNet has six other imaging facilities and where it has substantial procedural backlogs;
Replacing two centers that were acquired as part of Radiologix in Yonkers, NY and Pleasanton, CA. These centers opened for business in May;
Completing the acquisition of the Papastavros Group of imaging centers in the middle of March. RadNet also began the transition of Papastavros’ operations to digital mammography;
Acquiring the Rolling Oaks imaging centers in Westlake/Thousand Oaks, CA in February;
Expanding two newly restructured joint ventures with Carroll County and St. Joe’s hospitals in Maryland; and
Installing five additional MRI systems within RadNet’s existing operating centers.

“We are pleased with our progress in the first quarter of 2008, not only because the financial results reflect increasing volumes, revenue and EBITDA from the prior year’s quarter, but also because of our completion of a number of key operational accomplishments. I believe these operational accomplishments will set the stage for significant improvement in our financial performance during the rest of the year,” said Dr. Howard Berger, Chairman and Chief Executive Officer of RadNet.

“Although we have made the investments and incurred operating costs associated with many of the acquisitions and initiatives we recently completed, our first quarter results did not include the financial contribution from most of them. Our reported results do not yet include full-quarter contributions from our acquisitions of Rolling Oaks and Papastavros, nor do they include a significant portion of the anticipated benefit from our conversion to digital mammography, expanded joint venture relationships and five new MRI systems. Additionally, our results exclude contributions from the acquisition of five imaging centers from Insight Health, our Breastlink breast oncology acquisitions and related initiatives and our new interventional radiology and imaging center in Rancho Mirage, CA,” said Dr. Berger. "All of these acquisitions and initiatives should contribute materially to our second quarter and subsequent quarters.”

Dr. Berger added, “Our industry continues to present us with growth opportunities at an accelerating pace. We remain highly selective regarding the opportunities we pursue, which we require to be consistent with our focused multi-modality and geographic clustering approach. We continue to believe that we are extremely well positioned to capitalize on opportunities to grow our business significantly.”

2008 Fiscal Year Guidance

RadNet is reaffirming its 2008 guidance ranges as follows:

Revenue		$470 million - $500 million
Adjusted EBITDA⁽¹⁾		$100 million - $115 million
Capital Expenditures		$15-$20 million maintenance level (plus growth Capital Expenditure of up to $25 million)
Cash Interest Expense		$46-$52 million

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 160 fully-owned and operated outpatient imaging centers. RadNet’s core markets include California, Maryland, Delaware 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 RadNet's 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, 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 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.

RADNET, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)

				March 31,			December 31,
				2008			2007
				(unaudited)
ASSETS
CURRENT ASSETS
	Cash and cash equivalents			$	-		$	18
	Restricted cash				8,046			-
	Accounts receivable, net				96,963			87,285
	Refundable income taxes				103			105
	Prepaid expenses and other current assets				11,356			10,273
			Total current assets		116,468			97,681
PROPERTY AND EQUIPMENT, NET					194,599			164,097
OTHER ASSETS
	Goodwill				94,040			84,395
	Other intangible assets				59,064			58,908
	Deferred financing costs, net				12,825			9,161
	Investment in joint ventures				16,011			15,036
	Deposits and other				4,916			4,342
			Total other assets		186,856			171,842
			Total assets	$	497,923		$	433,620
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
	Accounts payable and accrued expenses			$	73,684		$	59,965
	Due to affiliates				809			1,350
	Notes payable				4,802			3,536
	Current portion of deferred rent				195			195
	Obligations under capital leases				11,780			9,455
			Total current liabilities		91,270			74,501
LONG-TERM LIABILITIES
	Line of credit				12,379			4,222
	Deferred rent, net of current portion				4,684			4,394
	Deferred taxes				277			277
	Notes payable, net of current portion				420,050			382,064
	Obligations under capital lease, net of current portion				27,268			22,527
	Other non-current liabilities				20,357			15,259
			Total long-term liabilities		485,015			428,743
COMMITMENTS AND CONTINGENCIES

MINORITY INTERESTS					220			206
STOCKHOLDERS' DEFICIT
	Common stock - $.0001 par value, 200,000,000 shares authorized; 35,667,891 and 35,239,558 shares issued and outstanding at March 31, 2008 and December 31, 2007, respectively				4			4
	Paid-in-capital				150,346			149,631
	Accumulated other comprehensive loss				(8,571	)		(4,579	)
	Accumulated deficit				(220,361	)		(214,886	)
		Total stockholders' deficit			(78,582	)		(69,830	)
	Total liabilities and stockholders' deficit			$	497,923		$	433,620

The accompanying notes are an integral part of these financial statements.

RADNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT SHARE DATA)
(unaudited)

			Three Months Ended
			March 31,
			2008			2007

NET REVENUE			$	114,698		$	105,815

OPERATING EXPENSES
	Operating expenses			88,966			82,405
	Depreciation and amortization			12,469			10,910
	Provision for bad debts			6,487			7,553
	Loss on sale of equipment			8			-
	Severance costs			31			538
		Total operating expenses		107,961			101,406

INCOME FROM OPERATIONS				6,737			4,409

OTHER EXPENSES (INCOME)
	Interest expense			13,588			10,837
	Other income			(32	)		-
		Total other expense		13,556			10,837

LOSS BEFORE INCOME TAXES, MINORITY INTERESTS AND EARNINGS FROM JOINT VENTURES				(6,819	)		(6,428	)

	Provision for income taxes			(123	)		(16	)
	Minority interest in income of subsidiaries			(24	)		(115	)
	Equity in earnings of joint ventures			1,491			995
NET LOSS			$	(5,475	)	$	(5,564	)

BASIC AND DILUTED NET LOSS PER SHARE			$	(0.15	)	$	(0.16	)

WEIGHTED AVERAGE SHARES OUTSTANDING
	Basic and diluted			35,667,891			34,386,915

The accompanying notes are an integral part of these financial statements.

RADNET, INC.
RECONCILIATION OF GAAP INCOME FROM OPERATIONS TO Adjusted EBITDA⁽¹⁾
(IN THOUSANDS)

	Three Months Ended
	March 31,
	2008			2007

Income from Operations ^(a)	$	6,737		$	4,409
Plus Depreciation and Amortization		12,469			10,910
Plus Equity in Earnings of Joint Ventures		1,491			995
Plus Non Cash Employee Stock Compensation + Equity Bonus Accrual^(b)		454			2,820
Plus Loss on Sale of Equipment		8			-
Less Minority Interest in (Income) Loss of Subsidiaries		(24	)		(115	)
Subtotal		21,135			19,019
Plus Severance: Elimination of Corporate Personnel		31			538
Plus One Time Expense Related to Business Dispute Settlement		700
Plus One Time Consulting Fees Related to Review of 2006 Accounts Receivables		200			250
Plus One Time Payment and Covenant Not to Compete		-			120
Plus One Time NASDAQ Listing Fee		-			362
Plus Non-Cash SAB 108 Adjustment		-			43
Adjusted EBITDA⁽¹⁾	$	22,066		$	20,332

^(a) Includes loss or gain on sale of equipment.

^(b) Includes both FAS123 compensation and restricted stock compensation.

RADNET, INC.
REVENUE COMPARISON
(IN THOUSANDS)

	Three Months Ended
	March 31,
	2008		2007

Revenue	$	114,698	$	105,815

Footnote

⁽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 or extraordinary and one-time 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.

Contacts

RadNet, Inc.
Mark Stolper, 310-445-2800
Executive Vice President and Chief Financial Officer
or
Integrated Corporate Relations, Inc.
John Mills, 310-954-1105
jmills@icrinc.com

Source: RadNet, Inc.

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