RadNet Reports 2006 Fiscal Year Results with Record Revenue and EBITDA
FOR IMMEDIATE RELEASE
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For Its Fiscal 2006, Revenue Increases 10.6% and EBITDA Increases 6.2%
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Company Reiterates It is on-Track to Achieve Previously Announced $11 Million of Cost Savings from Integration of Radiologix
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Company Has Pending Application for Listing on NASDAQ Global Market
LOS ANGELES--(BUSINESS WIRE)--RadNet, Inc. (OTCBB:RDNT - News), 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 fiscal year and fourth quarter ended October 31, 2006.
For the twelve months ended October 31, 2006, the Company reported record net revenue of $161.0 million and record EBITDA (which RadNet defines as earnings before net interest expense, income taxes, depreciation and amortization, each from continuing operations and adjusted for losses or gains on the disposal of equipment, non-cash equity compensation and debt extinguishments, and including equity earnings in unconsolidated operations) of $33.6 million, as compared to net revenue of $145.6 million and EBITDA of $31.6 million for the same fiscal period last year. This is an increase in revenue and EBITDA for the fiscal period of 10.6% and 6.2%, respectively.
For the fiscal year ended October 31, 2006, after adjusting for one-time expenses in connection with debt extinguishment resulting from the Company's March refinancing (including a non-cash loss upon the mark-to-market of an interest rate swap transaction) and losses on disposal of equipment and non cash equity compensation, RadNet had a net loss of $3.0 million or $(0.14) per share. Without these adjustments, net loss for the twelve months was $6.9 million, or $(0.33) per share, compared to a net loss of $3.6 million, or $(0.17) per share, reported in the previous fiscal year.
"The end of 2006 begins a new chapter in our Company's journey. Fiscal 2006 was a transforming year. Completing the Radiologix acquisition and the $405 million financing has provided us with a unique platform and group of assets poised for future growth and expansion. While we continue to drive same-store revenue growth and invest in our existing facilities, we are pursuing accretive acquisition opportunities," said Dr. Howard Berger, President and Chief Executive Officer.
Revenue for the fourth quarter of fiscal 2006 was $42.5 million, an increase of 6.1% from $40.1 million recorded in the fourth quarter of fiscal 2005, primarily driven by new capitation contracts, improved performance from existing capitation contracts and contributions from existing and expanded imaging centers. For the fourth quarter of fiscal 2006, EBITDA was $8.2 million compared to $8.7 million in the same period last year, a decrease of 6.2%. EBITDA for the fourth quarter of 2006 was negatively affected by additional salaries related to staff employed for newly acquired facilities, expenses from the new site build-out of the San Fernando Interventional Radiology facility scheduled to open soon in Encino, CA and costs associated with the recent opening of our new and expanded Emeryville and Fresno facilities. The Company believes the decision to make these investments in the current period is integral to the future success of these sites.
For the fourth quarter, after adjusting for non-recurring expenses including a non-cash loss upon the mark-to-market of an interest rate swap transaction, non cash equity compensation and a loss on disposal of equipment, RadNet reported a net loss of $1.5 million or $(0.07) per share. Without these adjustments, net loss for the fourth quarter was $2.3 million, or $(0.11) per share, compared to a net loss of $0.4 million or $(0.02) per share, reported in the same period last year.
"We made numerous operational strides and important investments in the fourth quarter to prepare us for 2007," said Mark Stolper, Executive Vice President and Chief Financial Officer. "As we ramp-up our operational capabilities and performance in 2007, our focus will be on profitable penetration of our current markets." The Company also reiterates that it believes it will achieve the $11 million of operating synergies that it previously identified from corporate overhead by the end of 2007. "We are far-along in our cost savings plan, and expect to achieve the anticipated efficiencies from the integration of Radiologix into RadNet," Stolper added. Lastly, Mr. Stolper noted that like many of the other multi-location companies over the last 24 months such as Target, Starbucks and Toys "R" Us, RadNet has restated its financial reports for 2003, 2004 and 2005 to reflect a corrected depreciation of the lives of leasehold improvements in accordance with generally accepted accounting principals. The adjustments to certain prior period financial statements are all non-cash, and do not affect the Company's historical reported revenues, EBITDA, cash flows or cash position for any of the affected fiscal or quarterly periods. The adjustments resulted in:
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a one-time cumulative adjustment to decrease retained earnings as of October 31, 2003 by $2,859,595;
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an adjustment to increase fiscal 2004 depreciation expense and decrease retained earnings by $154,707;
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an adjustment to increase fiscal 2005 depreciation expense and decrease retained earnings by $434,442; and
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an adjustment to increase depreciation expense and decrease retained earnings by $33,215 for our first quarter ended January 31, 2006.
RadNet has a pending application to be listed on the NASDAQ Global Market. RadNet's management has determined that it is in the best interest of the Company's stockholders to apply for listing on the NASDAQ Global Market. The Company believes being listed on NASDAQ will create a more orderly and liquid market for the Company's securities, increase the visibility and profile of the Company and be beneficial in attracting equity research coverage.
Regulation G: GAAP and Non-GAAP Financial Information
This release contains certain financial information not derived 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 below.
About RadNet, Inc.
RadNet, Inc., is a national market leader providing high-quality, cost-effective diagnostic imaging services through a network of fully-owned and operated outpatient imaging centers. For its fiscal year ended October 31, 2006, RadNet and its subsidiaries (including Radiologix for the 12 months ended December 31, 2006) performed 2,336,814 diagnostic imaging procedures. At October 31, 2006, together with Beverly Radiology Medical Group and Radiologix, and inclusive of full-time and per diem employees, technicians and radiologists, the Company had a total of 3,911 employees.
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, 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 with its Radiologix acquisition, 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, 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 AFFILIATES CONSOLIDATED BALANCE SHEETS 2005 2006 OCTOBER 31, (as restated) ASSETS CURRENT ASSETS Cash and cash equivalents $ 2,000 $ 2,000 Accounts receivable, net 22,319,000 28,136,000 Unbilled receivables and other receivables 476,000 948,000 Other 1,799,000 3,603,000 Total current assets 24,596,000 32,689,000 PROPERTY AND EQUIPMENT, NET 64,658,000 64,566,000 OTHER ASSETS Accounts receivable, net 1,267,000 1,079,000 Goodwill 23,099,000 23,099,000 Debt issue costs, net 472,000 5,195,000 Trade name and other 3,692,000 4,738,000 Total other assets 28,530,000 34,111,000 Total assets $ 117,784,000 $ 131,366,000 LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES Cash disbursements in transit $ 3,425,000 $ 612,000 Line of credit 13,341,000 -- Accounts payable and accrued expenses 22,469,000 25,951,000 Short-term notes expected to be refinanced: Notes payable 69,066,000 -- Obligations under capital lease 56,927,000 -- Advance due to related party -- 737,000 Notes payable 1,101,000 1,162,000 Obligations under capital lease 1,697,000 2,410,000 Total current liabilities 168,026,000 30,872,000 LONG-TERM LIABILITIES Subordinated debentures payable 16,147,000 16,031,000 Line of credit -- 12,437,000 Notes payable to related party 3,533,000 -- Notes payable, net of current portion -- 145,987,000 Obligations under capital lease, net of current portion 4,129,000 3,889,000 Other non-current liabilities 31,000 944,000 Total long-term liabilities 23,840,000 179,288,000 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' DEFICIT Preferred stock - $.0001 par value, 30,000,000 shares authorized, none issued -- -- Common stock - $.0001 par value, 200,000,000 shares authorized; 21,615,906 and 22,985,252 shares issued; 20,703,406 and 22,072,752 shares outstanding at October 31, 2005 and 2006, respectively 433,000 460,000 Paid-in capital 100,590,000 102,745,000 (Accumulated deficit) (174,410,000) (181,304,000) (73,387,000) (78,099,000) Less: Treasury stock - 912,500 shares at cost (695,000) (695,000) Total stockholders' deficit (74,082,000) (78,794,000) Total liabilities and stockholders' deficit $ 117,784,000 $ 131,366,000
RADNET, INC. AND AFFILIATES CONSOLIDATED STATEMENTS OF OPERATIONS 2004 2005 2006 YEARS ENDED OCTOBER 31, (as restated) (as restated) ------------- ------------- ------------- NET REVENUE $137,277,000 $145,573,000 $161,005,000 OPERATING EXPENSES Operating expenses 105,828,000 109,012,000 120,342,000 Depreciation and amortization 17,917,000 17,536,000 16,394,000 Provision for bad debts 3,911,000 4,929,000 7,626,000 Loss on disposal of equipment, net - 696,000 373,000 ------------- ------------- ------------- Total operating expenses 127,656,000 132,173,000 144,735,000 ------------- ------------- ------------- INCOME FROM OPERATIONS 9,621,000 13,400,000 16,270,000 OTHER EXPENSE (INCOME) Interest expense 17,285,000 17,493,000 20,362,000 Loss (gain) on debt extinguishment, net - (515,000) 2,097,000 Other income (176,000) (357,000) - Other expense 1,657,000 349,000 788,000 ------------- ------------- ------------- Total other expense 18,766,000 16,970,000 23,247,000 ------------- ------------- ------------- LOSS BEFORE EQUITY IN INCOME OF INVESTEE, INCOME TAXES AND MINORITY INTEREST (9,145,000) (3,570,000) (6,977,000) EQUITY IN INCOME OF INVESTEE - - 83,000 ------------- ------------- ------------- LOSS BEFORE INCOME TAXES AND MINORITY INTEREST (9,145,000) (3,570,000) (6,894,000) INCOME TAX EXPENSE (5,235,000) --- --- ------------- ------------- ------------- LOSS BEFORE MINORITY INTEREST (14,380,000) (3,570,000) (6,894,000) MINORITY INTEREST IN EARNINGS OF SUBSIDIARIES 351,000 --- --- ------------- ------------- ------------- NET LOSS (14,731,000) (3,570,000) (6,894,000) ------------- ------------- ------------- BASIC NET LOSS PER SHARE (1) (0.72) (0.17) (0.33) ------------- ------------- ------------- DILUTED NET LOSS PER SHARE (1) (0.72) (0.17) (0.33) ------------- ------------- ------------- WEIGHTED AVERAGE SHARES OUTSTANDING (1) Basic 20,553,406 20,603,955 21,013,957 ------------- ------------- ------------- Diluted 20,553,406 20,603,955 21,013,957 ------------- ------------- ------------- (1) All share information is restated for all periods presented to reflect the decrease in common shares outstanding resulting from the one-for-two reverse common stock split effected November 28, 2006.
RADNET, INC. RECONCILIATION OF GAAP NET INCOME TO EBITDA FOR THE FISCAL YEARS ENDED 2005 2006 October 31, ------------------------------------------ GAAP: Net Income (Loss) $(3,570,000) $(6,894,000) Add: Interest expense, net 17,493,000 20,362,000 Depreciation and amortization 17,536,000 16,394,000 Loss (gain) on disposal of equipment, net 696,000 373,000 Loss (gain) on debt extinguishments, net (515,000) 2,097,000 Non-cash equity compensation - 459,000 Other expense (income) 349,000 788,000 - - Subtract: - - Other Income 357,000 - -------------- ------------ EBITDA $31,633,000 $33,579,000 FOR THE 3 MONTHS ENDED OCT, 2005 2006 GAAP: Net Income (Loss) $(413,000) $(2,288,000) Add: Interest expense, net 4,705,000 5,976,000 Depreciation and amortization 4,305,000 4,185,000 Loss (gain) on disposal of equipment, net 2,000 163,000 Loss (gain) on debt extinguishments, net - - Non-cash equity compensation - - Other expense (income) 263,000 - - - Subtract: - - Other Income 172,000 - -------------- ------------ EBITDA $8,690,000 $8,150,000
Note:
EBITDA is defined as earnings before interest, taxes, depreciation and amortization, each from continuing operations and is adjusted for losses or gains on the disposal of equipment, debt extinguishments and non-cash equity compensation, and includes equity earnings in unconsolidated operations, and is reconciled to its nearest comparable GAAP financial measure. EBITDA is a non-GAAP financial measure used as analytical indicator by Primedex management and the healthcare industry to assess business performance, and as a measure of leverage capacity and ability to service debt. EBITDA should not be considered a measure of financial performance under GAAP, and the items excluded from EBITDA should not be considered in isolation or as an alternative 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 EBITDA is not a measurement determined in accordance with GAAP and are therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies.
RadNet, Inc.
Mark Stolper
Chief Financial Officer
310-445-2800
Integrated Corporate Relations, Inc.
John Mills
310-954-1105 jmills@icrinc.com