RadNet Reports Third Quarter Financial Results and Reaffirms Previously Announced 2016 Guidance Levels
FOR IMMEDIATE RELEASE
- Total Net Revenue increased 7.8% to $224.6 million in the third quarter of 2016 from $208.4 million in the third quarter of 2015
- Adjusted EBITDA(1) increased 1.6% to $35.9 million in the third quarter of 2016 from $35.3 million in the third quarter of 2015
- Earnings Per Share adjusted for unusual events taken place in the quarters (“Adjusted Earnings Per Share”) is $0.11 per share in the third quarter of 2016 as compared with $0.10 from the third quarter of 2015
- Aggregate procedural volumes increased 6.7%; same center revenue increase 0.4% and same center procedural volumes increased 0.1%
- Completed a successful refinancing transaction during the quarter, extending debt maturities, increasing financial flexibility and eliminating concerns over access to capital for the near future
LOS ANGELES, California, November 9, 2016 – RadNet, Inc. (NASDAQ: RDNT), a national leader in providing high-quality, cost-effective, fixed-site outpatient diagnostic imaging services through a network of 306 owned and/or operated outpatient imaging centers, today reported financial results for its third quarter of 2016.
Dr. Howard Berger, President and Chief Executive Officer of RadNet, commented, “I am pleased with our results and the progress we made this quarter. As compared with last year’s third quarter, our business demonstrated Revenue and EBITDA growth as well as positive same center revenue and procedural increases. This is the tenth quarter in a row where we’ve experienced same center procedural growth, our industry’s best indicator of organic expansion. Additionally, sequentially from our first and second quarters of this year, we have been able to methodically improve our Revenue and EBITDA performance. This improvement is an indication, in a year where we completed no material acquisitions, that our focus on operational excellence is paying dividends.”
Dr. Berger continued, “We continue to pursue several new health system partnerships on the west coast, a business model that has traditionally been a strength of our east coast operations, and we are looking to expand existing joint ventures on the east coast. We are also aggressively pursuing network contracting and capitation opportunities on the east coast. Furthermore, we are in the process of expanding our Breastlink breast disease management capabilities to our east coast markets. We are optimistic about the progress we are making on these fronts and expect to be in a position later this year or early next year to announce the successful completion some of these initiatives.
“On July 1st, we completed a refinancing transaction of our senior secured first lien term loan and revolving credit facility. The transaction extends the maturity of these facilities to 2021 and increases our financial flexibility. The refinancing also affords us the ability to continue to grow our business without having concerns about near term maturities and uncertainty around access to capital over the coming several years.”
Third Quarter Financial Results
For the third quarter of 2016, RadNet reported Revenue of $224.6 million, Adjusted EBITDA(1) of $35.9 million and Net Income of $1.6 million, respectively. Revenue increased $16.3 million (or 7.8%), Adjusted EBITDA(1) increased $557,000 (or 1.6%) and Net Income decreased $6.3 million, respectively, over the third quarter of 2015. Per share Net Income for the third quarter was $0.04, compared to per share Net Income in the third quarter of 2015 of $0.18 (based upon a weighted average number of diluted shares outstanding of 46.3 million and 44.8 million for these periods in 2016 and 2015, respectively).
The comparison of Net Income is affected by certain unusual items which occurred in each of the third quarters of 2016 and 2015. During the third quarter of 2016, we wrote-off $709,000 of deferred financing fees and expensed $606,000 of one-time rating agency and legal fees related to our refinancing transaction completed on July 1, 2016. We also had a one-time $1.2 million adjustment to depreciation expense and $2.0 million of severance related to our NY acquisitions. Affecting the third quarter of 2015, we recorded a $4.8 million gain from the sale of our New Jersey facilities to our joint venture with Barnabas Health and $2.0 million of implementation revenue from the commencement of operations of our management service contract in Qatar. Adjusting for these events in both quarters, Adjusted Earnings Per Share was $0.11 in the third quarter of 2016 as compared with $0.10 in the third quarter of 2015.
Also affecting Net Income in the third quarter of 2016 (excluding the items mentioned immediately above in the Adjusted Earnings Calculation) were certain non-cash expenses or non-recurring items including: $1.2 million of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted stock; $188,000 of severance paid in connection with headcount reductions related to cost savings initiatives; $66,000 gain on the sale of certain capital equipment; and $799,000 of amortization of deferred financing costs and loan discounts related to our credit facilities.
For the third quarter of 2016, as compared with the prior year’s third quarter, MRI volume increased 4.7%, CT volume increased 6.6% and PET/CT volume increased 9.0%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 6.7% over the prior year’s third quarter. On a same-center basis, including only those centers which were part of RadNet for both the third quarters of 2016 and 2015, MRI volume increased 2.0%, CT volume increased 3.9% and PET/CT volume increased 6.3%. Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 0.1% compared with the prior year’s same quarter.
Nine Month Financial Results
For the nine months ended September 30, 2016, RadNet reported Revenue of $659.6 million, Adjusted EBITDA(1) of $98.1 million and Net Income of $3.5 million. Revenue increased $65.7 million (or 11.1%), Adjusted EBITDA(1) increased $9.0 million (or 10.1%) and Net Income decreased $3.3 million, respectively, over the first nine months of 2015. Net Income Per Share for the nine month period ended September 30, 2016 was $0.08 per diluted share, compared to Net Income of $0.15 per diluted share in corresponding nine month period of 2015 (based upon a weighted average number of fully diluted shares outstanding of 46.7 million and 44.7 million for these periods in 2016 and 2015, respectively).
Affecting operating results in the nine months ended September 30, 2016 were certain non-cash expenses or non-recurring items including: $4.9 million of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted stock; $2.5 million of severance paid in connection with headcount reductions related to cost savings initiatives; $375,000 loss on the sale of certain capital equipment; $606,000 of one-time rating agency and legal fees related to our refinancing transaction completed on July 1, 2016; $5.0 million settlement gain related to the return of common stock in connection with our acquisition of Diagnostic Imaging Group; $6.1 million charge to Revenue related to working capital adjustments also pertaining to acquisitions we completed in New York; and $4.3 million of amortization of deferred financing costs and loan discounts related to our credit facilities.
2016 Guidance Update
RadNet reaffirms its previously announced 2016 guidance ranges as follows:
|Total Net Revenue (a)||$870 million - $910 million|
|Adjusted EBITDA(1)||$130 million - $140 million|
|Capital Expenditures (b)||$55 million - $58 million|
|Cash Interest Expense||$37 million - $40 million|
|Free Cash Flow Generation (c)||$40 million - $50 million|
(a) Note the change from prior years. This metric is now presented after the subtraction of bad debt.
(b) Net of proceeds from the sale of equipment, imaging centers and joint venture interests. Represents an increase of $2 million from revised guidance range released in conjunction with our second quarter results.
(c) Defined by the Company as Adjusted EBITDA(1) less total capital expenditures and cash paid for interest.
Dr. Berger added, “We are on track to meet our guidance ranges for the year. All ranges remain unchanged from what we announced previously with the exception of increasing and narrowing our targeted capital expenditure range by $3 million. This increase is to continue to fund a replacement program of our computed radiography (CR x-ray) scanners to provide them with digital wireless transmitting capabilities as well as fund certain center expansions in several of our markets.”
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 306 owned and/or operated outpatient imaging centers. RadNet's core markets include California, Maryland, Delaware, New Jersey, New York and Rhode Island. 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.