EXHIBIT 99.1
FOR IMMEDIATE RELEASE
RadNet Reports Fourth Quarter and Full Year 2013 Results, Releases 2014 Financial Guidance and Announces a Proposed Refinancing Transaction of its $200 million 10 3/8% Senior Unsecured Notes
| · | For the fourth quarter, RadNet reports Total Net Revenue (“Revenue”) of $178.3 million and Adjusted EBITDA(1)of $31.9 million, increases of 11.9% and 30.0%, respectively, over the prior year’s fourth quarter |
| · | Net Income for the fourth quarter was $0.03 per diluted share, compared to a Net Loss of $(0.10) per share in the fourth quarter of 2012 (excluding the one-time $55.9 million non-cash income tax benefit recognized in the fourth quarter of 2012) |
| · | For the year, RadNet reports annual Revenue of $703.0 million and annual Adjusted EBITDA([1])of $112.8 million; Revenue increased 8.6% and Adjusted EBITDA(1) decreased 0.7% from 2012 |
| · | Annual results exceeded the high-end of the revised 2013 guidance ranges for Revenue and Adjusted EBITDA(1) |
| · | RadNet announces 2014 guidance ranges, which anticipates stability in Revenue and Adjusted EBTDA(1) despite the previously announced Medicare reimbursement cuts |
| · | RadNet announces a proposed refinancing transaction to replace its existing $200 million of 10 3/8% Senior Unsecured Notes with a Second Lien Term Loan and additional borrowings |
LOS ANGELES, California, March 3, 2014 – RadNet, Inc. (NASDAQ: RDNT), a national leader in providing high-quality, cost-effective, fixed-site outpatient diagnostic imaging services through a network of 250 owned and/or operated outpatient imaging centers, today reported financial results for its fourth quarter and full year ended December 31, 2013.
Financial Results
Fourth Quarter Report:
For the fourth quarter of 2013, RadNet reported Revenue, Adjusted EBITDA(1) and Net Income of $178.3 million, $31.9 million and $1.2 million, respectively. Revenueincreased $19.0 million (or 11.9%), Adjusted EBITDA(1) increased $7.3 million (or 30.0%) and Net Income increased $5.2 million over the fourth quarter of 2012 (excluding the $55.9 million non-cash income tax benefit recognized in the fourth quarter of 2012).
Net Income for the fourth quarter was $0.03 per diluted share, compared to a Net Loss of $(0.10) per share in the fourth quarter of 2012 (again adjusting for the $55.9 million non-cash income tax benefit recognized in the fourth quarter of 2012). These per share values are based upon a weighted average number of diluted shares outstanding of 39.6 million in the fourth quarter of 2013 and 38.3 million of basic shares outstanding in the fourth quarter of 2012.
Affecting Net Income in the fourth quarter of 2013 were certain non-cash expenses and non-recurring items including: $529,000 of non-cash employee stock compensation expense resulting from the vesting of certain options, warrants and restricted stock; $494,000 of severance paid in connection with headcount reductions related to cost savings initiatives; $675,000 loss on the disposal of certain capital equipment; and $1.2 million of amortization of deferred financing fees and discount on issuance of debt related to our existing credit facilities and 10 3/8% senior unsecured notes.
For the fourth quarter of 2013, as compared with the prior year’s fourth quarter, MRI volume increased 16.8%, CT volume increased 5.0% and PET/CT volume decreased 4.7%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 12.2% 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 2013 and 2012, MRI volume increased 5.5%, CT volume decreased 1.7% and PET/CT volume decreased 1.0%. Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 2.4% over the prior year’s same quarter.
Dr. Howard Berger, President and Chief Executive Officer of RadNet, commented “We are very pleased with our fourth quarter performance. As compared with the prior year’s fourth quarter performance, we had significant increases in aggregate Revenue and Adjusted EBITDA(1) and same center revenue and procedural volumes. Although on a comparison basis we were benefited by the impact of Hurricane Sandy in 2012’s fourth quarter, we experienced increasing volumes in the fourth quarter as compared to the prior quarters in 2013. While we cannot determine with certainty why volumes improved, we believe we may have benefited from the impact of increased procedures from patients in large-deductible health plans who sought to utilize medical services prior to these deductibles resetting in 2014. Also, we noted additional patient volume in our centers from those who were early enrollees in health exchanges under the Healthcare Reform Act. The strength of our 2013 fourth quarter provides us confidence about our business as we enter 2014.”
Annual Report:
For full year 2013, the Company reported Revenue, Adjusted EBITDA(1) and Net Income of $703.0 million, $112.8 million and $2.1 million, respectively. Revenueincreased $55.8 million (or 8.6%), Adjusted EBITDA(1) decreased $759,000 (or 0.7%) and Net Income decreased $2.5 million (excluding the $55.2 million non-cash income tax benefit recognized during 2012), respectively, from full year 2012 results. Net Income for 2013 was $0.05 per diluted share, compared to Net Income of $0.12 per diluted share in 2012 (based upon a weighted average number of diluted shares outstanding of 39.8 million and 39.2 million in 2013 and 2012, respectively and after excluding the $55.2 million non-cash income tax benefit recognized during 2012).
Affecting Net Income in 2013 were certain non-cash expenses and non-recurring items including: $2.6 million of non-cash employee stock compensation expense resulting from the vesting of certain options, warrants and restricted stock; $806,000 of severance paid in connection with headcount reductions related to cost savings initiatives; $1.0 million loss on the disposal of certain capital equipment; $2.1 million gain on the sale of imaging centers; and $4.6 million of amortization of deferred financing fees and discount on issuance of debt related to our existing credit facilities and 10 3/8% senior unsecured notes.
For the year ended December 31, 2013, as compared to 2012, MRI volume increased 12.2%, CT volume increased 1.2% and PET/CT volume decreased 2.4%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 9.3% for the twelve months of 2013 over 2012.
Actual 2013 Results vs. 2013 Revised Guidance:
The following compares the Company’s actual 2013 performance with previously announced revised guidance levels.
| | Guidance Range | Actual Results |
| Guidance Revenue (a) | $700 million - $730 million | $730.9 million |
| Adjusted EBITDA(1) | $105 million - $110 million | $112.8 million |
| Capital Expenditures (b) | $35 million - $40 million | $41.4 million |
| Cash Interest Expense | $40 million - $43 million | $41.8 million |
| Free Cash Flow Generation (c) | $20 million - $30 million | $29.6 million |
| (a) | Service Fee Revenue, net of contractual allowances plus Revenue under capitation arrangements. |
| (b) | Net of proceeds from the sale of equipment, imaging centers and joint venture interests. |
| (c) | Defined by the Company as Adjusted EBITDA(1) less total capital expenditures and cash paid for interest. |
Dr. Berger commented, “Our fourth quarter performance was stronger than that which was projected when we issued our revised full year 2013 guidance levels. As a result, we exceeded the high-end of our Revenue and EBITDA guidance levels. With respect to Free Cash Flow generation, I am also pleased that our actual results were at the top of our guidance range.”
2014 Fiscal Year Guidance
For its 2014 fiscal year, RadNet announces its guidance ranges as follows:
| | |
| Revenue (a) | $700 million - $730 million |
| Adjusted EBITDA(1) | $110 million - $120 million |
| Capital Expenditures (b) | $40 million - $45 million |
| Cash Interest Expense | $38 million - $42 million |
| Free Cash Flow Generation (c) | $30 million - $40 million |
| (a) | Service Fee Revenue, net of contractual allowances plus Revenue under capitation arrangements. |
| (b) | Net of proceeds from the sale of equipment, imaging centers and joint venture interests. |
| (c) | Defined by the Company as Adjusted EBITDA(1) less total capital expenditures and cash paid for interest. |
“As reflected in our 2014 guidance, we are optimistic about 2014. In December of last year, we announced a $20 million-$22 million negative impact to our 2014 revenue from the changes in the Medicare Physician Fee Schedule. In response to this, we launched a plan to eliminate $30 million of costs from our business. Our 2014 guidance reflects our confidence in achieving at least $20 million of these costs savings in 2014,” added Dr. Berger.
Dr. Berger continued, “Our guidance also incorporates what we are projecting to be a soft first quarter in 2014 due to the unusually severe winter weather conditions that have existed in the northeastern part of the United States in January and February of this year.”
Proposed Refinancing Transaction
The Company currently intends to pursue a refinancing of its 10 3/8% Senior Unsecured Notes due 2018. The proposed refinancing may include a tender offer for, or redemption of, the Company’s senior unsecured notes, which would be replaced by new senior secured second lien term loan debt and additional indebtedness under the Company’s senior secured first lien credit facility.
The potential refinancing transaction would be subject to negotiations with current lenders for the Company’s senior secured debt and market and other conditions. As such, there can be no assurance that the Company will complete a refinancing transaction on terms that are favorable to the Company or its investors. The Company may engage from time to time in discussions with creditors of the Company and holders of the senior unsecured notes, as well as their respective advisors, as the Company pursues such potential refinancing transaction.
Mark Stolper, Executive Vice President and Chief Financial Officer of RadNet, commented “We have publicly discussed in recent quarters the possibility of lowering our cost of capital through refinancing our 10 3/8% Senior Unsecured Notes with less expensive capital. After having consulted with our investment banking advisors, we expect to launch a refinancing transaction designed to replace our Senior Unsecured Notes with a Second Lien Term Loan and additional borrowings under our existing credit facility, subject to market and other conditions. Our objective is to lower our cash interest obligations, provide us with additional operating flexibility and lengthen the maturity of our most junior debt capital. If successful, we currently expect to consummate a transaction in April.”
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 2013 fourth quarter and year-end results.
Conference Call Details:
Date: Monday, March 3, 2014
Time: 10:30 a.m. EST
Dial In-Number: 888-710-4015
International Dial-In Number: 913-312-1437
There will also be simultaneous and archived webcasts available at http://public.viavid.com/index.php?id=108012 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 2931150.
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 250 owned and/or operated outpatient imaging centers. 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 the Company’s acquired operations, successfully achieving 2014 financial guidance, achieving cost savings, successfully developing and integrating its information technology operations as well as new lines of business, continuing to grow its business by generating patient referrals and contracts with radiology practices, receiving third-party reimbursement for diagnostic imaging services and successfully completing its intended refinancing of its $200 million 10 3/8% senior unsecured notes 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 speak 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.
CONTACTS:
RadNet, Inc.
Mark Stolper, 310-445-2800
Executive Vice President and Chief Financial Officer
RADNET, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
| | | December 31, | | | December 31, | |
| | | 2013 | | | 2012 | |
| | | | | | | |
| ASSETS |
| CURRENT ASSETS | | | | | | | | |
| Cash and cash equivalents | | $ | 8,412 | | | $ | 362 | |
| Accounts receivable, net | | | 133,599 | | | | 129,194 | |
| Current portion of deferred tax assets | | | 13,321 | | | | 7,607 | |
| Prepaid expenses and other current assets | | | 21,012 | | | | 18,737 | |
| Total current assets | | | 176,344 | | | | 155,900 | |
| PROPERTY AND EQUIPMENT, NET | | | 218,547 | | | | 216,560 | |
| OTHER ASSETS | | | | | | | | |
| Goodwill | | | 196,395 | | | | 193,871 | |
| Other intangible assets | | | 50,042 | | | | 51,674 | |
| Deferred financing costs, net of current portion | | | 8,735 | | | | 11,977 | |
| Investment in joint ventures | | | 28,949 | | | | 28,598 | |
| Deferred tax assets, net of current portion | | | 39,914 | | | | 48,535 | |
| Deposits and other | | | 3,650 | | | | 3,749 | |
| Total assets | | $ | 722,576 | | | $ | 710,864 | |
| |
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
| CURRENT LIABILITIES | | | | | | | | |
| Accounts payable, accrued expenses and other | | $ | 106,316 | | | $ | 106,357 | |
| Due to affiliates | | | 2,655 | | | | 1,602 | |
| Deferred revenue | | | 1,344 | | | | 1,273 | |
| Current portion of notes payable | | | 3,103 | | | | 4,703 | |
| Current portion of deferred rent | | | 1,896 | | | | 1,164 | |
| Current portion of obligations under capital leases | | | 3,075 | | | | 3,942 | |
| Total current liabilities | | | 118,389 | | | | 119,041 | |
| LONG-TERM LIABILITIES | | | | | | | | |
| Deferred rent, net of current portion | | | 18,989 | | | | 15,850 | |
| Line of credit | | | – | | | | 33,000 | |
| Notes payable, net of current portion | | | 572,669 | | | | 537,009 | |
| Obligations under capital lease, net of current portion | | | 2,779 | | | | 3,753 | |
| Other non-current liabilities | | | 7,540 | | | | 8,895 | |
| Total liabilities | | | 720,366 | | | | 717,548 | |
| | | | | | | | | |
| STOCKHOLDERS' EQUITY (DEFICIT) | | | | | | | | |
| Common stock - $.0001 par value, 200,000,000 shares authorized; 40,089,196, and 38,540,482 shares issued and outstanding at December 31, 2013 and 2012, respectively | | | 4 | | | | 4 | |
| Paid-in-capital | | | 173,622 | | | | 168,415 | |
| Accumulated other comprehensive (loss) income | | | (50 | ) | | | 39 | |
| Accumulated deficit | | | (173,656 | ) | | | (175,776 | ) |
| Total RadNet, Inc.'s stockholders' equity deficit | | | (80 | ) | | | (7,318 | ) |
| Noncontrolling interests | | | 2,290 | | | | 634 | |
| Total stockholders' equity (deficit) | | | 2,210 | | | | (6,684 | ) |
| Total liabilities and stockholders' equity | | $ | 722,576 | | | $ | 710,864 | |
RADNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT SHARE DATA)
| | Years Ended December 31, | |
| | | 2013 | | | 2012 | | | 2011 | |
| NET REVENUE | | | | | | | | | | | | |
| Service fee revenue, net of contractual allowances and discounts | | $ | 665,307 | | | $ | 617,982 | | | $ | 554,979 | |
| Provision for bad debts | | | (27,911 | ) | | | (25,904 | ) | | | (22,339 | ) |
| Net service fee revenue | | | 637,396 | | | | 592,078 | | | | 532,640 | |
| Revenue under capitation arrangements | | | 65,590 | | | | 55,075 | | | | 52,481 | |
| Total net revenue | | | 702,986 | | | | 647,153 | | | | 585,121 | |
| OPERATING EXPENSES | | | | | | | | | | | | |
| Cost of operations, excluding depreciation and amortization | | | 598,655 | | | | 542,993 | | | | 477,828 | |
| Depreciation and amortization | | | 58,890 | | | | 57,740 | | | | 57,481 | |
| Loss (gain) on sale and disposal of equipment | | | 1,032 | | | | 456 | | | | (2,240 | ) |
| Severance costs | | | 806 | | | | 736 | | | | 1,391 | |
| Total operating expenses | | | 659,383 | | | | 601,925 | | | | 534,460 | |
| INCOME FROM OPERATIONS | | | 43,603 | | | | 45,228 | | | | 50,661 | |
| OTHER INCOME AND EXPENSES | | | | | | | | | | | | |
| Interest expense | | | 45,791 | | | | 53,783 | | | | 52,798 | |
| Equity in earnings of joint ventures | | | (6,194 | ) | | | (6,476 | ) | | | (5,224 | ) |
| Gain on sale of imaging centers | | | (2,108 | ) | | | – | | | | – | |
| Gain on de-consolidation of joint venture | | | – | | | | (2,777 | ) | | | – | |
| Other expenses (income) | | | 228 | | | | (3,679 | ) | | | (5,075 | ) |
| Total other expenses | | | 37,717 | | | | 40,851 | | | | 42,499 | |
| INCOME BEFORE INCOME TAXES | | | 5,886 | | | | 4,377 | | | | 8,162 | |
| (Provision for) benefit from income taxes | | | (3,510 | ) | | | 55,227 | | | | (820 | ) |
| NET INCOME | | | 2,376 | | | | 59,604 | | | | 7,342 | |
| Net (loss) income attributable to noncontrolling interests | | | 256 | | | | (230 | ) | | | 111 | |
| NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | | $ | 2,120 | | | $ | 59,834 | | | $ | 7,231 | |
| | | | | | | | | | | | | |
| BASIC NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | | $ | 0.05 | | | $ | 1.58 | | | $ | 0.19 | |
| | | | | | | | | | | | | |
| DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | | $ | 0.05 | | | $ | 1.52 | | | $ | 0.19 | |
| | | | | | | | | | | | | |
| WEIGHTED AVERAGE SHARES OUTSTANDING | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Basic | | | 39,140,480 | | | | 37,751,170 | | | | 37,367,736 | |
| | | | | | | | | | | | | |
| Diluted | | | 39,814,535 | | | | 39,244,686 | | | | 38,785,675 | |
RADNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
| | | Years Ended December 31, | |
| | | 2013 | | | 2012 | | | 2011 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | | | | | |
| Net income | | $ | 2,376 | | | $ | 59,604 | | | $ | 7,342 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | | | | | |
| Depreciation and amortization | | | 58,890 | | | | 57,740 | | | | 57,481 | |
| Provision for bad debts | | | 27,911 | | | | 25,904 | | | | 22,339 | |
| Equity in earnings of joint ventures | | | (6,194 | ) | | | (6,476 | ) | | | (5,224 | ) |
| Distributions from joint ventures | | | 7,204 | | | | 6,477 | | | | 4,993 | |
| Deferred rent amortization | | | 3,871 | | | | 3,608 | | | | 2,282 | |
| Amortization of deferred financing cost | | | 2,286 | | | | 2,474 | | | | 2,940 | |
| Amortization of bond and term loan discounts | | | 2,279 | | | | 1,163 | | | | 244 | |
| Loss (gain) on sale and disposal of equipment | | | 1,032 | | | | 456 | | | | (2,240 | ) |
| Gain on bargain purchase | | | – | | | | (810 | ) | | | – | |
| Gain on Sale of Imaging Centers | | | (2,108 | ) | | | – | | | | – | |
| Gain on de-consolidation of joint venture | | | – | | | | (2,777 | ) | | | – | |
| Amortization of cash flow hedge | | | – | | | | 918 | | | | 1,225 | |
| Stock-based compensation | | | 2,574 | | | | 2,736 | | | | 3,110 | |
| Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions: | | | | | | | | | | | | |
| Accounts receivable | | | (31,531 | ) | | | (17,350 | ) | | | (45,014 | ) |
| Other current assets | | | (2,243 | ) | | | 3,565 | | | | (3,935 | ) |
| Other assets | | | 260 | | | | (578 | ) | | | 43 | |
| Deferred taxes | | | 2,907 | | | | (56,142 | ) | | | – | |
| Deferred revenue | | | 71 | | | | 197 | | | | (492 | ) |
| Accounts payable and accrued expenses | | | (3,163 | ) | | | (5,440 | ) | | | 12,542 | |
| Net cash provided by operating activities | | | 66,422 | | | | 75,269 | | | | 57,636 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | | | | | |
| Purchase of imaging facilities | | | (7,223 | ) | | | (45,493 | ) | | | (42,990 | ) |
| Purchase of property and equipment | | | (48,623 | ) | | | (44,448 | ) | | | (42,720 | ) |
| Proceeds from sale of equipment | | | 635 | | | | 1,549 | | | | 325 | |
| Proceeds from insurance claims on damaged equipment | | | – | | | | – | | | | 2,740 | |
| Proceeds from sale of imaging facilities | | | 3,920 | | | | 2,300 | | | | – | |
| Proceeds from sale of joint venture interests | | | 2,640 | | | | 1,800 | | | | – | |
| Purchase of equity interest in joint ventures | | | (2,009 | ) | | | (2,756 | ) | | | (5,094 | ) |
| Net cash used in investing activities | | | (50,660 | ) | | | (87,048 | ) | | | (87,739 | ) |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | | | | | |
| Principal payments on notes and leases payable | | | (9,764 | ) | | | (22,223 | ) | | | (18,756 | ) |
| Proceeds from borrowings upon refinancing | | | 35,122 | | | | 344,485 | | | | – | |
| Repayment of debt | | | – | | | | (277,875 | ) | | | – | |
| Deferred financing costs | | | (432 | ) | | | (3,753 | ) | | | (944 | ) |
| Proceeds from, net of payments on, line of credit | | | (33,000 | ) | | | (25,000 | ) | | | 58,000 | |
| Payments to counterparties of interest rate swaps, net of amounts received | | | – | | | | (5,823 | ) | | | (6,455 | ) |
| Distributions to noncontrolling interests | | | (18 | ) | | | (71 | ) | | | (154 | ) |
| Equity attributable to non-controlling interests | | | – | | | | (117 | ) | | | – | |
| Proceeds from issuance of common stock upon exercise of options/warrants | | | 469 | | | | – | | | | 242 | |
| Net cash (used in) provided by financing activities | | | (7,623 | ) | | | 9,623 | | | | 31,933 | |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH | | | (89 | ) | | | 63 | | | | (2 | ) |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | | 8,050 | | | | (2,093 | ) | | | 1,828 | |
| CASH AND CASH EQUIVALENTS, beginning of period | | | 362 | | | | 2,455 | | | | 627 | |
| CASH AND CASH EQUIVALENTS, end of period | | $ | 8,412 | | | $ | 362 | | | $ | 2,455 | |
| | | | | | | | | | | | | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | | | | | | | | | | | | |
| Cash paid during the period for interest | | $ | 41,841 | | | $ | 47,806 | | | $ | 47,310 | |
| Cash paid during the period for income taxes | | $ | 1,142 | | | $ | 918 | | | $ | 514 | |
RADNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT SHARE DATA)
| | Three Months Ended December 31, | |
| | | 2013 | | | 2012 | |
| NET REVENUE | | | | | | | | |
| Service fee revenue, net of contractual allowances and discounts | | $ | 168,883 | | | $ | 151,369 | |
| Provision for bad debts | | | (7,101 | ) | | | (6,451 | ) |
| Net service fee revenue | | | 161,782 | | | | 144,918 | |
| Revenue under capitation arrangements | | | 16,556 | | | | 14,415 | |
| Total net revenue | | | 178,338 | | | | 159,333 | |
| OPERATING EXPENSES | | | | | | | | |
| Cost of operations, excluding depreciation and amortization | | | 148,625 | | | | 137,816 | |
| Depreciation and amortization | | | 14,840 | | | | 14,586 | |
| Loss (gain) on sale and disposal of equipment | | | 675 | | | | 201 | |
| Severance costs | | | 494 | | | | 58 | |
| Total operating expenses | | | 164,634 | | | | 152,661 | |
| | | | | | | | | |
| INCOME FROM OPERATIONS | | | 13,704 | | | | 6,672 | |
| | | | | | | | | |
| OTHER INCOME AND EXPENSES | | | | | | | | |
| Interest expense | | | 11,249 | | | | 12,866 | |
| Equity in earnings of joint ventures | | | (1,713 | ) | | | (2,319 | ) |
| Gain on sale of imaging centers | | | – | | | | – | |
| Gain on de-consolidation of joint venture | | | – | | | | – | |
| Other (income) expenses | | | 76 | | | | 172 | |
| | | | | | | | | |
| Total other expenses | | | 9,612 | | | | 10,719 | |
| | | | | | | | | |
| INCOME (LOSS) BEFORE INCOME TAXES | | | 4,092 | | | | (4,047 | ) |
| (Provision for) benefit from income taxes | | | (2,744 | ) | | | 55,923 | |
| NET INCOME | | | 1,348 | | | | 51,876 | |
| Net income (loss) attributable to noncontrolling interests | | | 105 | | | | (70 | ) |
| NET INCOME ATTRIBUTABL TO RADNET, INC.E TO RADNET, INC. COMMON STOCKHOLDERS | | $ | 1,243 | | | $ | 51,946 | |
| | | | | | | | | |
| BASIC NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | | $ | 0.03 | | | $ | 1.35 | |
| | | | | | | | | |
| DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | | $ | 0.03 | | | $ | 1.31 | |
| | | | | | | | | |
| WEIGHTED AVERAGE SHARES OUTSTANDING | | | | | | | | |
| | | | | | | | | |
| Basic | | | 39,243,922 | | | | 38,348,541 | |
| | | | | | | | | |
| Diluted | | | 39,598,285 | | | | 39,796,132 | |
RADNET, INC.
RECONCILIATION OF GAAP NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. COMMON SHAREHOLDERS TO ADJUSTED EBITDA(1)
(IN THOUSANDS)
| | Three Months Ended | |
| | December 31, | |
| | | 2013 | | | 2012 | |
| Net Income Attributable to RadNet, Inc. Common Stockholders | | $ | 1,243 | | | $ | 51,946 | |
| Plus Provision for (Benefit From) Income Taxes | | | 2,744 | | | | (55,923 | ) |
| Plus Other Expenses | | | 76 | | | | 172 | |
| Plus Interest Expense | | | 11,249 | | | | 12,866 | |
| Plus Severence Costs | | | 494 | | | | 58 | |
| Plus Loss on Sale of Equipment | | | 675 | | | | 201 | |
| Plus Depreciation and Amortization | | | 14,840 | | | | 14,586 | |
| Plus Non Cash Employee Stock Compensation | | | 529 | | | | 597 | |
| Adjusted EBITDA(1) | | $ | 31,850 | | | $ | 24,503 | |
| | Fiscal Year Ended | |
| | December 31, | |
| | | 2013 | | | 2012 | |
| Net Income Attributable to RadNet, Inc. Common Stockholders | | $ | 2,120 | | | $ | 59,834 | |
| Plus Provision for (Benefit From) Income Taxes | | | 3,510 | | | | (55,227 | ) |
| Plus Other Expenses (Income) | | | 228 | | | | (3,679 | ) |
| Plus Interest Expense | | | 45,791 | | | | 53,783 | |
| Plus Severence Costs | | | 806 | | | | 736 | |
| Plus Loss on Sale of Equipment | | | 1,032 | | | | 456 | |
| Plus Loss (Gain) on Sale of Imaging Centers | | | (2,108 | ) | | | – | |
| Plus Depreciation and Amortization | | | 58,890 | | | | 57,740 | |
| Plus Loss (Gain) on Deconsolidation of Joint Venture | | | – | | | | (2,777 | ) |
| Plus Non Cash Employee Stock Compensation | | | 2,574 | | | | 2,736 | |
| Adjusted EBITDA(1) | | $ | 112,843 | | | $ | 113,602 | |
PAYOR CLASS BREAKDOWN**
| | | | Fourth Quarter | |
| | | | 2013 | |
| | | | | |
| Commercial Insurance | | | 58.2% | |
| Medicare | | | 23.3% | |
| Capitation | | | 9.3% | |
| Workers Compensation/Personal Injury | | | 3.9% | |
| Medicaid | | | 3.1% | |
| Other | | | 2.1% | |
| Total | | | 100.0% | |
**Capitation percentage has been calculated based upon its proportion of cash received in the period to total accrued revenue. After deducting the capitation percentage from 100%, all other payor class percentages are based upon a proportion to global paymnents received from consolidated imaging centers from that periods dates of services and excludes payments from hospital contracts, Breastlink, imaging center management fees, eRAD, Imaging on Call and other miscellaneous revenue.
RADNET PAYMENTS BY MODALITY *
| | | Fourth Quarter | | | Full Year | | | Full Year | | | Full Year | | | Full Year | |
| | | 2013 | | | 2013 | | | 2012 | | | 2011 | | | 2010 | |
| | | | | | | | | | | | | | | | | | | | | |
| MRI | | | 36.7% | | | | 36.3% | | | | 35.5% | | | | 35.1% | | | | 34.3% | |
| CT | | | 15.5% | | | | 15.5% | | | | 16.0% | | | | 16.1% | | | | 17.5% | |
| PET/CT | | | 5.4% | | | | 5.6% | | | | 5.9% | | | | 6.0% | | | | 6.1% | |
| X-ray | | | 10.5% | | | | 10.5% | | | | 10.3% | | | | 10.1% | | | | 10.1% | |
| Ultrasound | | | 10.9% | | | | 11.0% | | | | 10.9% | | | | 10.9% | | | | 11.0% | |
| Mammography | | | 15.8% | | | | 15.7% | | | | 16.0% | | | | 15.9% | | | | 16.0% | |
| Nuclear Medicine | | | 1.4% | | | | 1.5% | | | | 1.5% | | | | 1.6% | | | | 1.7% | |
| Other | | | 3.9% | | | | 3.9% | | | | 4.0% | | | | 4.2% | | | | 3.2% | |
| | | | 100.0% | | | | 100.0% | | | | 100.0% | | | | 100.0% | | | | 100.0% | |
Note
* Based upon global payments received from consolidated Imaging Centers from that year's dates of service.
Excludes payments from hospital contracts, Breastlink, Center Management Fees and other miscellaneous operating activities.
* ARS/TII included in 2012 figures.
* Lennox Hill Radiology included in 2013 figures.
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.
