RadNet Reports Record Full Year 2011 and Fourth Quarter Results and Releases 2012 Financial Guidance

FOR IMMEDIATE RELEASE

• For the year, RadNet reports record annual Revenue of $619.8 million and record annual Adjusted EBITDA⁽¹⁾ of $115.5 million; increases of 12.3% and 8.8%, respectively, over the prior year’s results

• For the year, RadNet reports per share net income of $0.19 compared to prior year per share loss of $(0.35)

• For the fourth quarter, RadNet reports record Revenue of $164.8 million and record Adjusted EBITDA⁽¹⁾ of $32.3 million; increases of 12.8% and 7.0%, respectively, over the prior year’s fourth quarter

• Fourth quarter 2011 Net Income was $4.5 million as compared with Net Income of $3.3 million from last year’s fourth quarter;  fourth quarter 2011 per share Net Income was $0.12 compared to a per share Net Income of $0.09 for the prior year’s quarter

• RadNet announces 2012 guidance, including expected increases in Revenue and Adjusted EBITDA⁽¹⁾

LOS ANGELES, California., March 8, 2012 – RadNet, Inc. (NASDAQ: RDNT), a national leader in providing high-quality, cost-effective, fixed-site outpatient diagnostic imaging services through a network of 233 owned and/or operated outpatient imaging centers (inclusive of 20 facilities held in Joint Ventures), today reported financial results for its fourth quarter and full year ended December 31, 2011.

Financial Results

Annual Report:
For full year 2011, the Company reported Revenue, Adjusted EBITDA⁽¹⁾ and Net Income of $619.8 million, $115.5 million and $7.2 million, respectively.  Revenue increased $68.0 million (or 12.3%), Adjusted EBITDA⁽¹⁾ increased $9.3 million (or 8.8%) and Net Income increased $20.1 million, respectively, from full year 2010 results.

Net Income for 2011 was $0.19 per share, compared to a Net Loss of $(0.35) per share in 2010 (based upon a weighted average number of diluted shares outstanding of 38.8 million and 36.9 million in 2011 and 2010, respectively).  Affecting Net Income in 2011 were certain non-cash expenses and non-recurring items including:  non-cash gains from the mark-to-market of our interest rate swaps of $5.4 million; $3.1 million of non-cash employee stock compensation expense resulting from the vesting of certain options and warrants; $2.9 million of non-cash Deferred Financing Expense related to the amortization of financing fees paid as part of our existing credit facilities; $1.4 million of severance paid in connection with the headcount reductions related to cost savings initiatives from previously announced acquisitions; $2.2 million gain on the disposal or sale of certain capital equipment; and a $1.2 million non-cash charge to interest expense related to the amortization of accumulated unrealized losses on interest rate swaps related to the Company’s credit facilities.

For the year ended December 31, 2011, as compared to 2010, MRI volume increased 17.6%, CT volume increased 11.0% and PET/CT volume increased 3.2%.  Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 13.1% for the twelve months of 2011 over 2010.

Fourth Quarter Report:
For the fourth quarter of 2011, RadNet reported Revenue, Adjusted EBITDA⁽¹⁾ and Net Income of $164.8 million, $32.3 million and $4.5 million, respectively.  Revenue increased $18.6 million (or 12.8%), Adjusted EBITDA⁽¹⁾increased $2.1 million (or 7.0%) and Net Income increased $1.2 million (or 37.8%) over the fourth quarter of 2010.

Net Income for the fourth quarter of 2011 was $0.12 per share, compared with a Net Income of $0.09 per share in the fourth quarter of 2010 (based upon a weighted average number of diluted shares outstanding of 38.1 million and 37.8 million for these periods in 2011 and 2010, respectively).  Excluding non-cash gains from the mark-to-market of our interest rate swaps of $1.7 million, a $306,00 non-cash charge to interest expense related to the amortization of accumulated unrealized losses on interest rate swaps, gains from the disposal or sale of equipment of $312,000 and non-cash stock compensation of $611,000, RadNet would have reported Net Income of $3.5 million, or $0.09 per fully diluted share, for the fourth quarter of 2011 compared with a Net Income of $3.2 million, or $0.08 per share, for the fourth quarter of 2010 excluding those same non-cash losses and expenses.

Also affecting Net Income in the fourth quarter of 2011 were certain other non-cash expenses and non-recurring items, including $421,000 of severance paid in connection with employee reductions related to cost savings initiatives and $754,000 of non-cash Deferred Financing Expense related to the amortization of financing fees paid as part of our new credit facilities and senior unsecured notes.

For the fourth quarter of 2011, as compared with the prior year’s fourth quarter, MRI volume increased 19.7%, CT volume increased 18.8% and PET/CT volume increased 7.6%.  Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 18.2% over the prior year’s fourth quarter.  On a same-center basis, including only those centers which were part of RadNet for both the fourth quarters of 2011 and 2010, MRI volume increased 4.0%, CT volume increased 2.4% and PET/CT volume decreased 2.9%. Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 4.6% over the prior year’s same quarter.

Dr. Howard Berger, President and Chief Executive Officer of RadNet, commented “We are pleased to report record fourth quarter and full-year 2011 results.  Our fourth quarter and full-year Revenue, EBITDA, Net Income and procedural volumes were at their highest levels in our Company’s history.  I’m proud we were able to achieve these metrics, particularly our positive same-center volume growth, in what remains a difficult operating environment, challenged by lower utilization of healthcare services, pressured reimbursement and large patient populations who have seen their healthcare benefits eliminated or reduced.”

“I believe our results illustrate the strength of our operating model, which has allowed us to take market share aware from competitors at the local and regional levels.  Our relative size, operating efficiency, depth of management talent and continued access to capital remain important advantages.  We believe our multi-modality approach and geographic clustering operating model is necessary for long-term success in the diagnostic imaging industry.”

Dr. Berger continued, “We took important steps in 2011 to further our growth and long-term prospects.  In November, we completed the acquisition of 21 facilities from CML Healthcare, an acquisition which added 15 facilities in Maryland and a new local market for RadNet in Rhode Island.  We also completed the development of our eRAD Radiology Information System which we will be implementing throughout the RadNet network during 2012.  Also in 2011, we established a focused effort on partnering with health systems and hospitals to become the outsourced imaging provider of choice.  Finally, we established several cost savings and operational productivity programs designed to increase the efficiency with which we operate and deliver better service to our patients and referring physician communities.”

Actual 2011 Results vs. 2011 Guidance:

The following compares the Company’s actual 2011 performance with previously announced guidance levels.

(a) Net of proceeds from the sale of equipment and from insurance claims on damaged equipment.
(b) Defined by the Company as Adjusted EBITDA⁽¹⁾ less total capital expenditures and cash paid for interest.

Dr. Berger commented, “We are pleased to have met or exceeded each guidance level we set for 2011.  While we exceeded our revenue projections, our EBITDA, Capital Expenditures, Cash Interest Expense and Free Cash Flow metrics fell within the guidance ranges we set a year ago.  We believe these 2011 performance objectives, which were set at levels above 2010 results, were accomplished partly through capturing market share from our competitors, most of which are single-center or small-group operators.  I believe our size, access to capital, economies of scale and efficiency have continued to separate us from much of the rest of the industry.”

Conference Call for Today

Dr. Howard Berger, President and Chief Executive Officer, and Mark Stolper, Executive Vice President and Chief Financial Officer, will host a conference call today, at 10:30 a.m. Eastern Standard Time.  During the call, management will discuss the Company's 2011 fourth quarter and year-end results.

Conference Call Details:

Date:  Thursday, March 8, 2012
Time:  10:30 a.m. EST
Dial In-Number:  800-753-0487
International Dial-In Number:  913-312-0689

There will also be simultaneous and archived webcasts available at http://viavid.net/dce.aspx?sid=00009416 or http://www.radnet.com under the “Investors” menu section and “News Releases” sub-menu of the website.  An archived replay of the call will also be available and can be accessed by dialing 877-870-5176 from the U.S., or 858-384-5517 for international callers, and using the passcode 6034578.

Regulation G: GAAP and Non-GAAP Financial Information

This release contains certain financial information not reported in accordance with GAAP. The Company 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 the Company in measuring its cash-based performance.  The Company 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 233 owned and/or operated outpatient imaging centers (inclusive of 20 facilities held in Joint Ventures).  RadNet's core markets include California, Maryland, Delaware, New Jersey, New York and Rhode Island. Together with affiliated radiologists, and inclusive of full-time and per diem employees and technicians, RadNet has a total of approximately 6,300 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 successfully integrating acquired operations, successfully achieving 2012 financial guidance, achieving cost savings, successfully developing and integrating new lines of business, continuing to grow its business by generating patient referrals and contracts with radiology practices, and receiving third-party reimbursement for diagnostic imaging services, 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 the Company'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.
Mark Stolper, 310-445-2800
Executive Vice President and Chief Financial Officer

Footnotes
⁽¹⁾ The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, each from continuing operations and excludes losses or gains on the disposal of equipment, other income or loss, loss on debt extinguishments, bargain purchase gains and non-cash equity compensation.  Adjusted EBITDA includes equity earnings in unconsolidated operations and subtracts allocations of earnings to non-controlling 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.

⁽²⁾ As noted above, the Company defines Free Cash Flow as Adjusted EBITDA less total Capital Expenditures (whether completed with cash or financed) and Cash Interest paid.  Free Cash Flow is a non-GAAP financial measure.  The Company uses Free Cash Flow because the Company believes it provides useful information for investors and management because it measures our capacity to generate cash from our operating activities. Free Cash Flow does not represent total cash flow since it does not include the cash flows generated by or used in financing activities. In addition, our definition of Free Cash Flow may differ from definitions used by other companies.

Free Cash Flow 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.