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 second quarter ended June 30, 2008.

Three Month Report

For its second quarter of fiscal 2008, RadNet reported Revenue and Adjusted EBITDA⁽¹⁾ of $127.4 million and $25.7 million, respectively. Revenue increased 19.1% (or $20.4 million) and Adjusted EBITDA⁽¹⁾ increased 15.6% (or $3.5 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 second quarter of 2008, as compared to the prior year’s quarter, MRI volume increased 13.5%, CT volume increased 10.4% and PET/CT volume increased 16.3%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 14.8% over the prior year’s quarter.

On a same-center basis, including only those centers which were part of RadNet for both the second quarters of 2008 and 2007, MRI volume increased 4.9%, CT volume increased 0.7% 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 3.1% over the prior year’s quarter.

Net Loss for the second quarter was $2.1 million, or $(0.06) per share, compared to net income of $1.2 million or $0.04 per share, reported for the three month period ended June 30, 2007 (based upon a weighted average number of diluted shares outstanding of 35.7 million and 37.0 million for these periods in 2008 and 2007, respectively). Affecting net loss in the second quarter of 2008 were certain non-cash expenses and non-recurring items including:

• $0.7 million non-cash gain on the fair value of interest rate hedges related to the Company’s credit facilities;
• $0.7 million expense related to payments to settle business disputes;
• $0.6 million 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;
• $0.6 million of non-cash employee stock compensation expense resulting from the vesting of certain options and warrants; and
• $0.6 million non-cash expense from impairment on the disposal of end-of-life equipment.

“Our operating results were a substantial improvement from both those of the first quarter of 2008 and the corresponding quarter in 2007. We are beginning to see contributions from many of our recent initiatives. Contributing to our improved performance were initial results from our digital mammography program and breast oncology operations, as well as our recent acquisitions of the Papastavros facilities in Delaware and certain Southern California centers from Insight Health. We are pleased that, as we continue to execute our operating plan, our operating trends are tracking towards our full-year 2008 financial guidance. Our volumes are increasing both in aggregate and on a same-center basis, which gives us great encouragement about future quarters,” said Dr. Howard Berger, Chairman and Chief Executive Officer of RadNet.

“While our Revenue and EBITDA growth continues to be strong, we remain focused on exploring opportunities to optimize our capital structure in an attempt to lower our cost of capital, provide more financial flexibility and contribute favorably to net income performance. We continue to recognize that today, more than ever before, there is the opportunity for both organic growth and for expansion through highly accretive tuck-in transactions within our markets. Our ability to grow and become consistently profitable will be enhanced and accelerated by opportunities we will have in the future to improve our balance sheet,” added Dr. Berger.

During the second quarter, RadNet’s accomplishments included the following:

• Completed the integration of digital mammography into RadNet’s Maryland and Delaware operations, focusing on training and protocols designed to increase procedural throughput and capture higher reimbursement;
• Completed the acquisition of six California centers purchased from InSight Health Corp., which expanded RadNet’s presence in the San Fernando, Simi, Conejo and Santa Clarita Valleys of Southern California;
• Acquired the assets and business of Ellicott Open MRI in Ellicott City, MD, providing RadNet new capabilities in this market;
• Acquired the assets and business of Simi Valley Advanced Medical, a Southern California based multi-modality imaging center, into which RadNet consolidated one of the newly acquired centers purchased from InSight Health;
• Acquired a successful mammography practice in Van Nuys, CA which was relocated into one of the newly acquired centers from InSight Health in Encino, CA; and
• Joined the broad-market Russell 3000® Index.

“We continue to see attractive opportunities to grow and improve our operations within our markets. Positive trends continue in this post Deficit Reduction Act era including, (i) increased financial pressure on small operators, (ii) the availability of attractive opportunities to purchase capital equipment at lower prices than in the past and (iii) the growing importance of imaging in the medical delivery system. Furthermore, recent trends in reimbursement have been favorable, including the reversal of the scheduled Medicare Physician Fee Schedule cut which would have gone into effect in July and proposed increases in both the Medicare Physician Fee Schedule and Hospital Outpatient Prospective Payment System for 2009,” said Dr. Berger.

RadNet reaffirms its 2008 Fiscal Year Guidance as follows:

2008 Fiscal Year Guidance

RadNet is reaffirming its 2008 guidance ranges as follows:

Six Month Report

For the six month period ended June 30, 2008, RadNet reported Revenue and Adjusted EBITDA⁽¹⁾ of $242.1 million and $47.8 million, respectively. Revenue increased 13.8% (or $29.3 million) and Adjusted EBITDA⁽¹⁾ increased 12.2% (or $5.2 million), respectively over the prior year’s six month period. The results reflect improved volume in existing centers as well as the contribution of acquisitions and operating initiatives.

For the six months of 2008, as compared to the prior year’s six month period, MRI volume increased 8.4%, CT volume increased 5.2% and PET/CT volume increased 15.4%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 9.5% over the prior year’s quarter.

Net Loss for the six months of 2008 was $7.6 million, or $(0.21) per share, compared to $4.3 million or $(0.13) per share, reported for the six month period ended June 30, 2007 (based upon a weighted average number of diluted shares outstanding of 35.6 million and 34.5 million for these periods in 2008 and 2007, respectively). Affecting net loss in the six months of 2008 were certain non-cash expenses and non-recurring items including:

• $0.3 million non-cash loss on the fair value of interest rate hedges related to the Company’s credit facilities;
• $1.4 million expense related payments to settle business disputes;
• $1.2 million 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;
• $0.4 million in bonus compensation paid to some of our physician groups for their assistance with our transition to digital mammography; and
• $1.1 million of non-cash employee stock compensation expense resulting from the vesting of certain options and warrants.

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 164 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 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, 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.

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.