RadNet Reports 2007 Annual and Fourth Quarter Results

FOR IMMEDIATE RELEASE

• For the year, RadNet reports Adjusted Revenue^([1]) of $434.0 million and Adjusted EBITDA^([2])of $85.3 million; increases of 4.3% and 9.5%, respectively over the prior year’s pro forma results

• For the fourth quarter, RadNet reports Adjusted Revenue⁽¹⁾ of $110.9 million and Adjusted EBITDA⁽²⁾ of $20.4 million; increases of 8.4% and 18.7%, respectively over the prior year’s pro forma quarter

• RadNet reports increased volumes

• 2007 per share loss increased to $(0.52) compared to $(0.33) for the twelve month period ended October 31, 2006

• Radnet issues 2008 Guidance of $470-500 million of Revenue and $100-$115 of Adjusted EBITDA⁽²⁾

LOS ANGELES, Calif., March 31, 2008 – 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 fourth quarter and full year ended December 31, 2007.

Extended Filing Period

As previously announced, RadNet utilized a 15 day extension period to file its form 10-K in order to enable Management and its auditing firm, Ernst & Young LLP, to complete the audit of RadNet’s financial statements for the year ended December 31, 2007.

The identification, analysis and correction of certain accounting issues contributed to the delay in filing the 10-K. Among the accounting issues which principally contributed to the delay, were the following items which resulted in accrual (non-cash) adjustments made to RadNet’s financial statements for the period ended December 31, 2007, neither of which affected full-year 2007 Adjusted EBITDA⁽²⁾:

• The addition of a $1.7 million liability at December 31, 2007 related to Incurred-But-Not-Reported (“IBNR”) malpractice claims.  RadNet has a claims made policy and it was determined that RadNet was not adequately reserved for IBNR exposure.  Related to this issue, RadNet recorded a non-cash expense of $170 thousand for the year ended December 31, 2007 for medical malpractice, the portion of the liability associated with 2007; and

• The addition of an $8.5 million non-cash allowance recorded during the year to reserve for Accounts Receivable related to dates of service December 31, 2006 and prior that are estimated to be uncollectible.  In May of 2007, RadNet converted certain Accounts Receivable balances, including those for which the additional reserve is being recorded, to the Radiologix billing system and changed the personnel responsible for collecting these accounts.  Management believes this conversion materially contributed to slower than anticipated collections on these accounts, resulting in Management’s decision to revise its estimate of their future collectability.  After taking into account the additional reserve, as of December 31, 2007, RadNet had Accounts Receivable (net of allowances) of $87.3 million.

Annual Report

For the year ended December 31, 2007, RadNet reported Adjusted Revenue⁽¹⁾ and Adjusted EBITDA⁽²⁾ of $434.0 million and $85.3 million, respectively.  Adjusted Revenue⁽¹⁾ increased 4.3% (or $17.7 million) and Adjusted EBITDA⁽²⁾ increased 9.5% (or $7.4 million), respectively, over the prior year’s pro forma period (pro forma to reflect the combination with Radiologix which did not occur until November 15, 2006).

For the year ended December 31, 2007, as compared to the prior year’s pro forma period, MRI volume increased 5.6%, CT volume increased 3.5% and PET/CT volume increased 22.2%.  Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 6.6% for the twelve months of 2007 over the prior year’s pro forma period.

Net Loss for the year ended December 31, 2007 was $18.1 million, or $(0.52) per share, compared to a net loss of $6.9 million or $(0.33) per share, reported for the fiscal year ended October 31, 2006 (based upon a weighted average number of fully diluted shares outstanding of 34.6 million and 21.0 million in the those periods for 2007 and 2006, respectively).  Affecting net income in 2007 were certain non-cash expenses and one-time non-recurring items including:

• $8.5 million reduction of 2007 revenue related to increasing the allowance for Accounts Receivable from dates of service prior to December 31, 2006;

• $3.3 million of non-cash employee stock compensation expense resulting from the vesting of certain options and warrants;

• $1.9 million gain on the sale of a Joint Venture Interest;

• $1.6 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 $25 million term loan and revolving credit facility arranged in August 2007;

• $1.0 million of severance paid 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;

• $0.9 million of retention payments to key Radiologix employees per certain retention agreements entered into at the closing of the Radiologix acquisition;

• $0.8 million non-cash loss on the fair value of interest rate hedges related to the Company’s credit facilities;

• $0.6 million non-cash accrual for a stock compensation related bonus.

“We are extremely proud of all that we accomplished in 2007.  Our ability to integrate Radiologix, acquire other strategic operations, build and improve our existing facilities and decrease operating costs contributed to our success in overcoming the difficulties our industry is facing in the aftermath of the Deficit Reduction Act.  Our focus on operating regional multimodality networks and the consummation of important strategic transactions uniquely positioned us to absorb the $16 million impact to our revenue and Adjusted EBITDA⁽²⁾ from the DRA in 2007, while the vast majority of smaller operators struggled.” said Dr. Howard Berger, President and Chief Executive Officer.

“We have great confidence in our business as we progress through 2008.  We anticipate that we will benefit in 2008 from many of our accomplishments of 2007, which have yet to be fully realized in our financial statements.  These include items that occurred at various times throughout 2007 and subsequent to year end, such as the closing of certain acquisitions, our investment in digital mammography and many other initiatives.”

Dr. Berger added, “When we announced the Radiologix acquisition in July of 2007, we issued guidance for 2007 of $400 million of revenue and $85 million of pro forma Adjusted EBITDA⁽²⁾, which was pro forma for a full year’s effect of $11 million of identified cost savings we intended to achieve throughout 2007.  With full year 2007 results of $434 million of Adjusted Revenue⁽¹⁾ and $85.3 million of actual Adjusted EBITDA⁽²⁾ (not yet realizing a full year’s benefit of the cost savings initiatives), we have exceeded our own targets.”

Key Accomplishments:  15 Months from January 1, 2007 - Present

The accomplishments achieved by RadNet during the 15 month period from January 2007 through present include:

• Throughout 2007, successfully integrated the Radiologix acquisition, achieving the targeted $11 million of corporate cost savings by year end;

• Throughout 2007, absorbed reimbursement cuts of approximately $16 million caused by the Deficit Reduction Act;

• Throughout 2007 and subsequent to year end, installed ten PET/CT scanners and completed the full digitization of our centers in New York and Maryland, including the conversion to digital mammography;

• During 2007, successfully exited our non-core markets of Minnesota and Colorado through the sale of our imaging centers in those areas;

• In February 2007, successfully listed RadNet stock for trading on the NASDAQ Global Market under RDNT;

• In July 2007, acquired the Borg Imaging Group, a large outpatient operator in Rochester, NY, and successfully consolidated its operations with those of RadNet’s existing IDE operations, giving us a commanding presence in the Rochester market;

• In August 2007, contracted to provide certain management services to a group of 20 imaging centers, formally known as NYDIC Open MRI of America;

• In August 2007 and February 2008, increased our GE credit facilities by an aggregate $60 million of term debt and up to $50 million of additional revolver capacity or term debt;

• In September 2007, acquired three facilities in Victorville, California, making RadNet the largest operator in a fast growing market;

• In October 2007, acquired the Liberty Pacific imaging center in Encino, California, providing RadNet with unique consolidation opportunities in one of its strongest markets;

• During the third and fourth quarters of 2007, expanded four Women’s Imaging centers to accommodate greater demand in New City, New York and in our California markets of Beverly Hills, Orange and San Jose;

• During the third and fourth quarters of 2007, began construction to substantially replace three older Radiologix centers in Pleasanton and San Jose, California and Tuckahoe, New York; operations of replaced facilities should commence in the second quarter of 2008;

• During the second through fourth quarters of 2007, migrated operations onto one company-wide back-end billing system and general ledger accounting system;

• During the fourth quarter of 2007, successfully restructured and expanded two of RadNet’s larger hospital joint ventures in Maryland, which will result in increased management fees and revenue;

• During the fourth quarter of 2007, constructed our second California interventional radiology center in Rancho Mirage, California, which will commence operation during the second quarter of 2008;

• In February 2008, acquired Rolling Oaks Radiology Imaging Centers in the Westlake/Thousand Oaks market of Los Angeles; Together with the acquisition of certain centers from Insight Health Systems (described below), RadNet will become the only non-hospital outpatient imaging provider in this market;

• In February 2008, announced the acquisition of six Southern California imaging centers from Insight Health Systems, which will provide further consolidation opportunities with the RadNet centers in Westlake/Thousand Oaks and the San Fernando Valley;

• In March 2008, acquired Papastavros Imaging, a 12 center operator in Delaware, expanding RadNet’s Mid Atlantic presence and providing it a platform for growth in a new market; and

• In March 2008, announced the entry into Breast Disease Management through the acquisition of Breast Oncology and Breast Surgery practices in Southern California;  The initiative initially  has four locations and is operated in conjunction with RadNet’s largest Womens Imaging center in Orange County, California.

Fourth Quarter Report

For its fourth quarter of fiscal 2007, RadNet reported Adjusted Revenue⁽¹⁾ and Adjusted EBITDA⁽²⁾ of $110.9 million and $20.4 million, respectively.  Adjusted Revenue⁽¹⁾ increased 8.4% (or $8.6 million) and Adjusted EBITDA⁽²⁾increased 18.7% (or $3.2 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 the negative reimbursement effects of the federal Deficit Reduction Act.

For the fourth quarter of 2007, as compared to the prior year’s pro forma quarter, MRI volume increased 3.0%, CT volume increased 2.5% and PET/CT volume increased 31.0%.  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 pro forma quarter.

Net Loss for the fourth quarter was $11.7 million, or $(0.33) per share, compared to a net loss of $11.0 million or $(0.35) per share, reported for the two month period ended December 31, 2006 (based upon a weighted average number of fully diluted shares outstanding of 35.5 million and 31.0 million for these periods in 2007 and 2006, respectively).  Affecting net income in the fourth quarter of 2007 were certain non-cash expenses and one-time non-recurring items including:

• $8.5 million reduction of 2007 revenue related to increasing the allowance for Accounts Receivable from dates of service prior to December 31, 2006;

• $1.9 million gain on the sale of a Joint Venture Interest;

• $0.5 million non-cash loss on the fair value of interest rate hedges related to the Company’s credit facilities;

• $0.4 million of non-cash employee stock compensation expense resulting from the vesting of certain options and warrants;

• $0.4 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 $25 million term loan and revolving credit facility arranged in August 2007;

“We are pleased with our performance in the fourth quarter.” said Dr. Berger.  “Seasonality was a larger factor on our business this fourth quarter than in past years.  The timing of the holidays during the fourth quarter and harsh weather conditions on the east coast effectively decreased the number of actual workdays, affecting our procedural volume, but not impacting our costs.  We expect that the initiatives that we began in 2007 will contribute significantly to the performance of our base business throughout 2008.  Furthermore, we see opportunities with greater frequency for consolidation and growth, as many of the smaller players in our industry have continuing difficulty competing effectively while absorbing the DRA cuts.”

2008 Fiscal Year Guidance

For its 2008 fiscal year, RadNet announces its guidance ranges as follows:

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 155 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.

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