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15 May, 2018

RadNet Reports First Quarter Financial Results

  • Severe weather in the Northeast impacted Total Net Revenue (“Revenue”) by an estimated $5.9 million and Adjusted EBITDA(1) by $5.8 million in the first quarter, significantly decreasing profitability

  • Despite same center volume declines, Revenue increased 1.0% to $­­231.4 million in the first quarter of 2018 from $229.0 million in the first quarter of 2017 as a result of strong west coast operations

  • Adjusted EBITDA(1) decreased 26.6% to $21.0 in the first quarter of 2018 from $28.7 million in the first quarter of 2017

  • Diluted loss per share was $(0.15) per share in the first quarter of 2018 as compared with diluted loss per share of $(0.03) from the prior year’s first quarter

  • Full-year 2018 guidance adjusted to incorporate the first quarter’s weather impact

LOS ANGELES, California, May 9, 2018 – RadNet, Inc. (NASDAQ: RDNT), a national leader in providing high-quality, cost-effective, fixed-site outpatient diagnostic imaging services through a network of 300 owned and/or operated outpatient imaging centers, today reported financial results for its first quarter of 2018.

Dr. Howard Berger, President and Chief Executive Officer of RadNet, commented, “During the quarter, we faced unusually severe winter weather conditions in our northeastern and mid-Atlantic operations, which represent slightly over 50% of our total Revenue.  Not only were we unable to see patients when our sites were forced to close, our referring physicians had their businesses similarly negatively affected which further impacted patient flow.  We estimate that we lost almost $6 million of Revenue during the quarter, representing approximately 45,000 unperformed procedures.  And because most of our costs are fixed, we lost the majority percentage of this Revenue in EBITDA.  Further, our EBITDA was impacted from receiving decreased management fees from our joint venture partners, which are calculated as a percentage of Revenue, and from lower EBITDA-flow-through resulting from the significantly depressed profitability of our non-consolidated joint ventures.  The weather impact was further highlighted when comparing our results to last year’s first quarter results, which were produced in one of the mildest winters in recent history. Also negatively impacting the EBITDA comparison between last year’s and this year’s quarters were the sales of non-controlling interests in four of our centers to Cedars Sinai and 24 centers to MemorialCare, for which we received almost $30 million in transactions that closed subsequent to the end of last year’s first quarter.”

Dr. Berger continued, “Had it not been for the loss of Revenue from bad weather in the quarter, we would have been on target with our initial 2018 projections and internal budgets.  From past experience, the lost scanning slots in our schedules are not made-up during the same quarter or in subsequent ones.  As a result, we’ve adjusted our 2018 guidance for the lost Revenue and EBITDA in the first quarter, while leaving our projections for the next three quarters intact.”

“Despite the difficult weather, we had continued strong performance from west coast operations, whose aggregate procedural volumes increased by 2.8%.  We also benefited from the contribution from some acquired and newly opened centers.  During the quarter, we commenced operations of our joint venture with MemorialCare in Southern California.  We are in the process of making operational improvements to the facilities MemorialCare contributed to the venture and have completed integrating these 10 sites onto the eRAD information technology platform.  We begin a capitation arrangement with MemorialCare managed lives on June 1st and expect a second capitation contract to commence later this summer,” added Dr. Berger. 

Financial Results

For the first quarter of 2018, RadNet reported Revenue of $231.4 million, Adjusted EBITDA(1) of $21.0 million and Net Loss  of $7.3 million.  Revenue increased $2.4 million (or 1.0%), Adjusted EBITDA(1) decreased $7.6 million (or 26.6%) and Net Loss increased $6.1 million, over the first quarter of 2017.  Per share Net Loss for the first quarter was $(0.15), compared to $(0.03) in the first quarter of 2017, based upon a weighted average number of basic and diluted shares outstanding of 47.8 million shares in 2018 and 46.6 million shares in 2017.

Affecting Net Loss in the first quarter of 2018 were certain non-cash expenses and non-recurring items including:  $3.7 million of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted stock; $726,000 of severance paid in connection with headcount reductions related to cost savings initiatives; and $974,000 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 2018, as compared to the prior year’s first quarter, MRI volume increased 3.5%, CT volume increased 6.5% and PET/CT volume increased 10.9%.  Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 2.1% 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 2018 and 2017, MRI volume decreased 1.7%, CT volume increased 3.3% and PET/CT volume increased 8.7%.  Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, decreased 1.0% over the prior year’s same quarter.

2018 Guidance:

Incorporating the negative impact on our financial results in the first quarter of 2018 from the adverse weather conditions, RadNet amends its previously announced 2018 guidance ranges as follows:

 Original Guidance RangeRevised Guidance Range
Total Net Revenue$950 million – $975 million$945 million – $970 million
Adjusted EBITDA(1)$145 million – $155 million$140 million – $150 million
Free Cash Flow Generation (a)$50 million – $60 million$45 million – $55 million
   
Capital Expenditures (b)$50 million – $55 millionUnchanged
Cash Interest Expense$33 million – $38 millionUnchanged

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

Dr. Berger highlighted, “While the changes we made to our guidance incorporates the negative impact we faced in the first quarter, our revised guidance levels leave our original projections unchanged for the remainder of the year.  We are looking forward to continuing to execute on our strategies of regional concentration, multimodality offerings, health system partnerships and creative contracting opportunities.”

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 2018 results on Wednesday, May 9th, 2018 at 7:30 a.m. Pacific Time (10:30 a.m. Eastern Time).

Conference Call Details:

Date:  Wednesday, May 9, 2018
Time:  10:30 a.m. Eastern Time
Dial In-Number:  800-239-9838
International Dial-In Number:  323-794-2551

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=129658 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 300 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 7,400 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 2018 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

15 May, 2018 | Financial News, Earnings Report