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10 May, 2017

RadNet Reports First Quarter Financial Results and Reaffirms 2017 Guidance Ranges

FOR IMMEDIATE RELEASE                                                                                      

RadNet Reports First Quarter Financial Results and Reaffirms 2017 Guidance Ranges

  • Total Net Revenue (“Revenue”) increased 5.8% to $229.0 million in the first quarter of 2017 from $216.4 million in the first quarter of 2016

  • Adjusted EBITDA(1) increased 5.8% to $28.7 in the first quarter of 2017 from $27.1 million in the first quarter of 2016 

  • Diluted loss per share was $(0.03) per share in the first quarter of 2017, flat from the prior year’s first quarter

  • Aggregate procedural volumes increased 2.5% and same center volumes increased 2.1% as compared with the first quarter of 2016

  • Established two joint ventures with Cedars-Sinai in the greater Los Angeles area

  • Exited the Rhode Island marketplace through the sale of its five imaging centers

LOS ANGELES, California, May 10, 2017 – RadNet, Inc. (NASDAQ: RDNT), a national leader in providing high-quality, cost-effective, fixed-site outpatient diagnostic imaging services through a network of 303 owned and/or operated outpatient imaging centers, today reported financial results for its first quarter of 2017.

Dr. Howard Berger, President and Chief Executive Officer of RadNet, commented, “I’m very pleased with the improvement of our base imaging center business in this first quarter as compared with last year’s first quarter, particularly when adjusting for year-over-year changes in two items that more favorably benefited last year’s first quarter.  In the first quarter of last year, we recognized $2.8 million of Other Income from Meaningful Use incentives as a result of our adoption of eRAD software and $825,000 of Revenue from our management contract in the sovereign nation of Qatar.  In this year’s first quarter, we recognized only $600,000, combined, for these two sources.  Adjusting both quarters by removing contributions from Meaningful Use and Qatar activities, Revenue from core operations increased 6.1% in this year’s first quarter and EBITDA increased 19.5%.”

“The performance of our imaging business is benefiting from a number of factors.  First, our investment in new technologies is beginning to pay dividends, especially 3D digital mammography – which is now being reimbursed by many of the large national payors in addition to Medicare.  Second, our performance benefited from successful pricing negotiations with private payors in several of our regions and with a number of our capitated medical groups.  Third, we continue to effectively control and reduce expenses.  Lastly, we are experiencing continuing improvement in our New York City marketplace from the integration of our acquisitions of New York Radiology Partners and Diagnostic Imaging Group,” added Dr. Berger. 

Financial Results

For the first quarter of 2017, RadNet reported Revenue of $229.0 million, Adjusted EBITDA(1) of $28.7 million and Net Loss  of $1.2 million.  Revenue increased $12.6 million (or 5.8%), Adjusted EBITDA(1) increased $1.6 million (or 5.8%) and Net Loss decreased $187,000, over the first quarter of 2016.  Per share Net Loss for the first quarter was $(0.03), compared to the same in the first quarter of 2016, based upon a weighted average number of basic and diluted shares outstanding of 46.6 million for both periods in 2017 and 2016.

Affecting Net Loss in the first quarter of 2017 were certain non-cash expenses and non-recurring items including:  $3.3 million of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted stock; $203,000 of severance paid in connection with headcount reductions related to cost savings initiatives; and $814,000 of combined non-cash amortization of deferred financing costs and loan discounts related to financing fees paid as part of our existing credit facilities.

For the first quarter of 2017, as compared to the prior year’s first quarter, MRI volume increased 5.1%, CT volume increased 6.0% and PET/CT volume increased 5.7%.  Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 2.5% over the prior year’s first quarter.  On a same-center basis, including only those centers which were part of RadNet for both the first quarters of 2017 and 2016, MRI volume increased 3.3%, CT volume increased 4.4% and PET/CT volume increased 5.7%.  Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 2.1% over the prior year’s same quarter.

Subsequent to the end of the quarter, on April 1st, RadNet established two imaging joint ventures with Cedars-Sinai, one of the premier academic medical centers in the country. The joint venture agreement in Santa Monica consists initially of one multi-modality imaging center (Resolution Imaging), which was contributed to the joint venture by RadNet.  Under the terms of the joint venture in the San Fernando Valley, Cedars-Sinai has purchased an interest in four imaging centers previously owned by RadNet.  RadNet will continue to manage the operations of the imaging centers of both joint ventures on a day-to-day basis.

Additionally, subsequent to quarter end, on April 1st, RadNet sold the assets of its five locations in Rhode Island comprising The Imaging Institute to a strategic buyer for $5.0 million.  The five centers were originally part of RadNet’s acquisition completed in November 2011 of the United States operations of CML Healthcare. The divestiture is consistent with RadNet’s core operating strategy of being the leading outpatient imaging provider in all the geographies in which it operates.  It was concluded that these Rhode Island assets were better suited under the ownership of another local operator who seeks to aggressively expand its presence in that marketplace.

Total Net Revenue$895 million – $925 million
Adjusted EBITDA(1)$135 million – $145 million
Capital Expenditures (a)$55 million – $60 million
Cash Interest Expense$35 million – $40 million
Free Cash Flow Generation (b)$40 million – $50 million

(a)  Net of proceeds from the sale of equipment, imaging centers and joint venture interests.
(b)  Defined by the Company as Adjusted EBITDA(1) less total capital expenditures and cash paid for interest.

Dr. Berger highlighted, “We remain confident about our previously announced guidance levels.  When we set our guidance levels upon the release of our fourth quarter 2016 earnings, we incorporated normal seasonality that we experience in our business.  This seasonality considers the typical front-loading of our capital spending in the first half of the year and lower first quarter Revenue and profitability from weaker utilization of services as a result of winter weather on the east coast and from patients in high deductible programs seeking to avoid or delay services.  Comparing the first quarter results with our internal projections, we are on track to meet our objectives for the year.”  

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 to discuss its first quarter 2017 results on Wednesday, May 10th, 2017 at 7:30 a.m. Pacific Time (10:30 a.m. Eastern Time).

Conference Call Details:

Date:  Wednesday, May 10, 2017
Time:  10:30 a.m. Eastern Time
Dial In-Number:  888-596-2573
International Dial-In Number:  913-312-0379

It is recommended that participants dial in approximately 5 to 10 minutes prior to the start of the 10:30 a.m. call.  There will also be simultaneous and archived webcasts available at http://public.viavid.com/index.php?id=124224 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 844-512-2921 from the U.S., or 412-317-6671 for international callers, and using the passcode 3102466.

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 the leading national provider of freestanding, fixed-site diagnostic imaging services in the United States based on the number of locations and annual imaging revenue. RadNet has a network of 303 owned and/or operated outpatient imaging centers. RadNet's core markets include California, Maryland, Delaware, New Jersey and New York. In addition, RadNet provides radiology information technology solutions, teleradiology professional services and other related products and services to customers in the diagnostic imaging industry.  Together with affiliated radiologists, and inclusive of full-time and per diem employees and technicians, RadNet has a total of approximately 7,300 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 2017 financial guidance, 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. 

Contact: 

RadNet, Inc.
Mark Stolper, 310-445-2800
Executive Vice President and Chief Financial Officer

10 May, 2017 | Financial News, Earnings Report