Exhibit 99.1
FOR IMMEDIATE RELEASE
RadNet Reports Fourth Quarter and Record Full Year 2014 Results and Releases 2015 Financial Guidance
| · | For the fourth quarter, RadNet reports Total Net Revenue (“Revenue”) of $185.6 million and Adjusted EBITDA(1)of $32.0 million, increases of 4.0% and 0.5%, respectively, over the prior year’s fourth quarter |
| · | Net Income Attributable to RadNet, Inc. Common Stockholders (“Net Income”) for the fourth quarter was $4.2 million, or $0.10 per diluted share, compared to Net Income of $1.2 million, or $0.03 per share in the fourth quarter of 2013 |
| · | For the third consecutive quarter, same center procedural volumes increased |
| · | For full year 2014, RadNet reports Revenue of $717.6 million and Adjusted EBITDA(1)of $126.5 million; Revenue increased 2.1% and Adjusted EBITDA(1) increased 12.1% from 2013 |
| · | Excluding the Loss on Early Extinguishment of Senior Notes from our refinancing transaction, Income Before Income Taxes increased to $19.6 million for full-year 2014 from $5.9 million in 2013 |
| · | Annual results exceeded the original 2014 guidance ranges for Revenue and Adjusted EBITDA(1); Revenue exceeded the final revised 2014 guidance range and Adjusted EBITDA(1)was within the final revised guidance range |
| · | RadNet announces 2015 guidance ranges, anticipating increases in Revenue and Adjusted EBTDA(1) despite the previously announced Medicare reimbursement cuts |
LOS ANGELES, California, March 16, 2015 – RadNet, Inc. (NASDAQ: RDNT), a national leader in providing high-quality, cost-effective, fixed-site outpatient diagnostic imaging services through a network of 259 owned and/or operated outpatient imaging centers, today reported financial results for its fourth quarter and full year ended December 31, 2014.
Financial Results
Fourth Quarter Report:
For the fourth quarter of 2014, RadNet reported Revenue of $185.6 million, Adjusted EBITDA(1) of $32.0 million and Net Income of $4.2 million. Revenueincreased $7.2 million (or 4.0%), Adjusted EBITDA(1) increased $150,000 (or 0.5%) and Net Income increased $3.0 million (or 238.3%) over the fourth quarter of 2013.
Net Income for the fourth quarter was $0.10 per diluted share, compared to a Net Income of $0.03 per diluted share in the fourth quarter of 2013. These per share values are based upon a weighted average number of diluted shares outstanding of 44.2 million in the fourth quarter of 2014 and 39.6 million of diluted shares outstanding in the fourth quarter of 2013.
Affecting Net Income in the fourth quarter of 2014 were certain non-cash expenses and non-recurring items including: $431,000 of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted stock;$265,000 of severance paid in connection with headcount reductions related to cost savings initiatives; $468,000 gain on the disposal of certain capital equipment; and$1.3 million of amortization of deferred financing fees and discount on issuance of debt related to our existing credit facilities.
For the fourth quarter of 2014, as compared with the prior year’s fourth quarter, MRI volume increased 9.4%, CT volume increased 16.3% and PET/CT volume increased 3.9%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 10.5% 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 2014 and 2013, MRI volume increased 7.1%, CT volume increased 14.1% and PET/CT volume increased 3.8%. Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 7.3% 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. We had a very strong fourth quarter last year. And despite facing significant reimbursement cuts in 2014, we were able to exceed the Revenue and EBITDA performance of 2013’s fourth quarter. This year’s fourth quarter was a continuation of improved procedural volume performance and aggressive cost containment that we experienced throughout the year. Like last year’s fourth quarter, we benefited from increased procedures from patients in large-deductive health plans who sought to utilize medical services prior to these deductibles resetting in 2015. Also, we experienced improved patient volumes from additional enrollees in health exchanges under the Healthcare Reform Act.”
Annual Report:
For full year 2014, the Company reported Revenue of $717.6 million, Adjusted EBITDA(1) of $126.5 million and Net Income of $1.4 million. Revenueincreased $14.6 million (or 2.1%) and Adjusted EBITDA(1) increased $13.7 million (or 12.1%). Income Before Income Taxes (excluding the Loss on Early Extinguishment of Senior Notes related to our refinancing transaction completed in March 2014) was $19.6 million compared to $5.9 million in 2013. This was an increase of $13.7 million (or 233%). Net Income for 2014 (unadjusted for the $15.9 million Loss on Early Extinguishment of Senior Notes) was $0.03 per diluted share, compared to Net Income of $0.05 per diluted share in 2013 (based upon a weighted average number of diluted shares outstanding of 43.1 million and 39.8 million in 2014 and 2013, respectively).
Affecting Net Income in 2014 were certain non-cash expenses and non-recurring items including: $2.5 million of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted stock;$1.2 million of severance paid in connection with headcount reductions related to cost savings initiatives; $1.1 million loss on the disposal of certain capital equipment; and$5.7 million of amortization and write off of deferred financing fees and discount on issuance of debt related to our existing credit facilities and refinancing transaction.
For the year ended December 31, 2014, as compared to 2013, MRI volume increased 4.8%, CT volume increased 8.5% and PET/CT volume increased 0.4%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 6.4% for the twelve months of 2014 over 2013.
Dr. Berger commented, “I’m very proud of RadNet’s accomplishments in 2014. We faced approximately $22 million of Medicare reimbursement cuts throughout 2014. Our record Revenue and EBITDA were the result of a variety of factors including: (i) executing on a $30 million cost savings program commenced at the beginning of the year; (ii) increased revenue from signing several new capitation contracts during the year; (iii) larger patient volumes from state and privately run healthcare exchanges as a result of the Affordable Care act; and (iv) market share gains within a number of our regional operating subsidiaries.”
Dr. Berger added, “2014 was particularly noteworthy for us in that it marked the first time we had any material expansion outside of the United States. We recently announced significant contracts awarded to RadNet to provide national cancer screening services in Qatar and to provide a suite of information technology solutions to the largest private medical center company in Israel. In conjunction with winning these contracts and increasing RadNet’s corporate marketing presence in November 2014 at the principal radiology industry convention, we expensed investments in 2014 of over $1 million in advance of recognizing the associated revenue from these initiatives in 2015 and beyond.”
Actual 2014 Results vs. 2014 Guidance:
The following compares the Company’s actual 2014 performance with previously announced revised guidance levels.
| | Original Guidance Range | Final Revised Guidance Range | Actual Results |
| Guidance Revenue (a) | $700 million - $730 million | $730 million - $745 million | $747.4 million |
| Adjusted EBITDA(1) | $110 million - $120 million | $123 million - $128 million | $126.5 million |
| Capital Expenditures (b) | $38 million - $42 million | $50 million - $52 million | $53.2 million |
| Cash Interest Expense | $30 million - $40 million | $40 million - $42 million | $41.6 million |
| Free Cash Flow Generation (c) | $30 million - $40 million | $30 million - $36 million | $31.7 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, “I am pleased that we met or exceeded our 2014 financial and operating guidance in virtually all categories. This was the result of great efforts by my management team in an industry that remains challenged with reimbursement and utilization pressures. It is clear to me that our scale and breadth of capabilities continues to distinguish RadNet as the leader in fixed site imaging. The strength of our 2014 operating results gives me confidence as we move into 2015.”
2015 Fiscal Year Guidance
For its 2015 fiscal year, RadNet announces its guidance ranges as follows:
| | |
| Revenue (a) | $745 million - $765 million |
| Adjusted EBITDA(1) | $123 million - $133 million |
| Capital Expenditures (b) | $40 million - $45 million |
| Cash Interest Expense | $34 million - $38 million |
| Free Cash Flow Generation (c) | $40 million - $50 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 guidance, we are optimistic about 2015. Despite pricing cuts to Medicare, which we announced last November of approximately $6 million, we are anticipating increased Revenue, EBITDA and Free Cash Flow for 2015. We have significant growth drivers in our plan, including benefiting from capitation contracts we signed in late 2014, revenue from our recently announced breast disease management program in the nation of Qatar and continuing confidence about our ability to drive same-center procedural volumes. Our refinancing transaction in March of last year will result in lower cash interest expense for 2015 and our Capital Expenditures will be lower in 2015 than in 2014 (as 2014 included approximately $12 million of one-time spending related to the purchase of equipment we were previously renting). The combination of the lower cash interest expense and capital expenditures will increase our Free Cash Flow in 2015.” added Dr. Berger.
Dr. Berger continued, “Our guidance also incorporates what we are projecting to be a soft first quarter in 2015 due to the severe winter weather conditions that have existed in the northeastern and mid-Atlantic parts of the United States throughout January, February and into March of this 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 today, at 10:30 a.m. Eastern Standard Time. During the call, management will discuss the Company's 2014 fourth quarter and year-end results.
Conference Call Details:
Date: Monday, March 16, 2015
Time: 10:30 a.m. EST
Dial In-Number: 888-481-2844
International Dial-In Number: 719-325-2495
There will also be simultaneous and archived webcasts available at http://public.viavid.com/index.php?id=113466
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 dialing877-870-5176from the U.S., or858-384-5517for international callers, and using the passcode5811295.
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 259 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 2015 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 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 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 AND PER SHARE DATA)
| | | As of December 31, | |
| | | 2014 | | | 2013 | |
| ASSETS |
| CURRENT ASSETS | | | | | | | | |
| Cash and cash equivalents | | $ | 307 | | | $ | 8,412 | |
| Accounts receivable, net | | | 148,235 | | | | 133,599 | |
| Current portion of deferred tax assets | | | 17,246 | | | | 13,321 | |
| Due from affiliates | | | 1,561 | | | | – | |
| Prepaid expenses and other current assets | | | 24,671 | | | | 21,012 | |
| Total current assets | | | 192,020 | | | | 176,344 | |
| PROPERTY AND EQUIPMENT, NET | | | 223,127 | | | | 218,547 | |
| OTHER ASSETS | | | | | | | | |
| Goodwill | | | 200,304 | | | | 196,395 | |
| Other intangible assets | | | 47,624 | | | | 50,042 | |
| Deferred financing costs, net of current portion | | | 6,122 | | | | 8,735 | |
| Investment in joint ventures | | | 32,123 | | | | 28,949 | |
| Deferred tax assets, net of current portion | | | 35,334 | | | | 39,914 | |
| Deposits and other | | | 4,026 | | | | 3,650 | |
| Total assets | | $ | 740,680 | | | $ | 722,576 | |
| LIABILITIES AND EQUITY (DEFICIT) | |
| CURRENT LIABILITIES | | | | | | | | |
| Accounts payable, accrued expenses and other | | $ | 97,816 | | | $ | 106,316 | |
| Due to affiliates | | | 6,289 | | | | 2,655 | |
| Deferred revenue | | | 1,964 | | | | 1,344 | |
| Current portion of notes payable | | | 19,468 | | | | 3,103 | |
| Current portion of deferred rent | | | 2,100 | | | | 1,896 | |
| Current portion of obligations under capital leases | | | 5,637 | | | | 3,075 | |
| Total current liabilities | | | 133,274 | | | | 118,389 | |
| LONG-TERM LIABILITIES | | | | | | | | |
| Deferred rent, net of current portion | | | 20,965 | | | | 18,989 | |
| Line of credit | | | 15,300 | | | | – | |
| Notes payable, net of current portion | | | 551,059 | | | | 572,669 | |
| Obligations under capital lease, net of current portion | | | 6,143 | | | | 2,779 | |
| Other non-current liabilities | | | 6,241 | | | | 7,540 | |
| Total liabilities | | | 732,982 | | | | 720,366 | |
| EQUITY | | | | | | | | |
| RadNet, Inc. stockholders' equity (deficit): | | | | | | | | |
| Common stock - $.0001 par value, 200,000,000 shares authorized; | | | | | | | | |
| 42,825,676, and 40,089,196 shares issued and outstanding at | | | | | | | | |
| December 31, 2014 and 2013, respectively | | | 4 | | | | 4 | |
| Paid-in-capital | | | 177,750 | | | | 173,622 | |
| Accumulated other comprehensive loss | | | (112 | ) | | | (50 | ) |
| Accumulated deficit | | | (172,280 | ) | | | (173,656 | ) |
| Total RadNet, Inc.'s stockholders' equity (deficit) | | | 5,362 | | | | (80 | ) |
| Noncontrolling interests | | | 2,336 | | | | 2,290 | |
| Total equity | | | 7,698 | | | | 2,210 | |
| Total liabilities and equity | | $ | 740,680 | | | $ | 722,576 | |
RADNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
| | | Years Ended December 31, | |
| | | 2014 | | | 2013 | | | 2012 | |
| NET REVENUE | | | | | | | | | | | | |
| Service fee revenue, net of contractual allowances and discounts | | $ | 670,136 | | | $ | 665,307 | | | $ | 617,982 | |
| Provision for bad debts | | | (29,807 | ) | | | (27,911 | ) | | | (25,904 | ) |
| Net service fee revenue | | | 640,329 | | | | 637,396 | | | | 592,078 | |
| Revenue under capitation arrangements | | | 77,240 | | | | 65,590 | | | | 55,075 | |
| Total net revenue | | | 717,569 | | | | 702,986 | | | | 647,153 | |
| OPERATING EXPENSES | | | | | | | | | | | | |
| Cost of operations, excluding depreciation and amortization | | | 602,652 | | | | 598,655 | | | | 542,993 | |
| Depreciation and amortization | | | 59,258 | | | | 58,890 | | | | 57,740 | |
| Loss on sale and disposal of equipment | | | 1,113 | | | | 1,032 | | | | 456 | |
| Severance costs | | | 1,241 | | | | 806 | | | | 736 | |
| Total operating expenses | | | 664,264 | | | | 659,383 | | | | 601,925 | |
| INCOME FROM OPERATIONS | | | 53,305 | | | | 43,603 | | | | 45,228 | |
| OTHER INCOME AND EXPENSES | | | | | | | | | | | | |
| Interest expense | | | 42,727 | | | | 45,791 | | | | 53,783 | |
| Meaningful use incentive | | | (2,034 | ) | | | – | | | | – | |
| Equity in earnings of joint ventures | | | (6,970 | ) | | | (6,194 | ) | | | (6,476 | ) |
| Gain on sale of imaging centers | | | – | | | | (2,108 | ) | | | – | |
| Gain on de-consolidation of joint venture | | | – | | | | – | | | | (2,777 | ) |
| Loss on early extinguishment of Senior Notes | | | 15,927 | | | | – | | | | – | |
| Other expenses (income) | | | 3 | | | | 228 | | | | (3,679 | ) |
| Total other expenses | | | 49,653 | | | | 37,717 | | | | 40,851 | |
| INCOME BEFORE INCOME TAXES | | | 3,652 | | | | 5,886 | | | | 4,377 | |
| (Provision for) benefit from income taxes | | | (1,967 | ) | | | (3,510 | ) | | | 55,227 | |
| NET INCOME | | | 1,685 | | | | 2,376 | | | | 59,604 | |
| Net income (loss) attributable to noncontrolling interests | | | 309 | | | | 256 | | | | (230 | ) |
| NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | | $ | 1,376 | | | $ | 2,120 | | | $ | 59,834 | |
| BASIC NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | | $ | 0.03 | | | $ | 0.05 | | | $ | 1.58 | |
| DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | | $ | 0.03 | | | $ | 0.05 | | | $ | 1.52 | |
| WEIGHTED AVERAGE SHARES OUTSTANDING | | | | | | | | | | | | |
| Basic | | | 41,070,077 | | | | 39,140,480 | | | | 37,751,170 | |
| Diluted | | | 43,149,196 | | | | 39,814,535 | | | | 39,244,686 | |
RADNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
| | | Years Ended December 31, | |
| | | 2014 | | | 2013 | | | 2012 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Net income | | $ | 1,685 | | | $ | 2,376 | | | $ | 59,604 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | | | | | |
| Depreciation and amortization | | | 59,258 | | | | 58,890 | | | | 57,740 | |
| Provision for bad debts | | | 29,807 | | | | 27,911 | | | | 25,904 | |
| Equity in earnings of joint ventures | | | (6,970 | ) | | | (6,194 | ) | | | (6,476 | ) |
| Distributions from joint ventures | | | 7,358 | | | | 7,204 | | | | 6,477 | |
| Deferred rent amortization | | | 2,180 | | | | 3,871 | | | | 3,608 | |
| Amortization and write off of deferred financing costs and loan discount | | | 5,732 | | | | 4,565 | | | | 3,637 | |
| Loss on sale and disposal of equipment | | | 1,113 | # | | | 1,032 | | | | 456 | |
| Gain on bargain purchase | | | – | | | | – | | | | (810 | ) |
| Loss on early extinguishment of Senior Notes | | | 15,927 | | | | – | | | | – | |
| Gain on sale of imaging centers and de-consolidation of joint venture | | | – | | | | (2,108 | ) | | | (2,777 | ) |
| Amortization of cash flow hedge | | | – | | | | – | | | | 918 | |
| Stock-based compensation | | | 2,500 | | | | 2,574 | | | | 2,736 | |
| Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions: |
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| Accounts receivable | | | (43,973 | ) | | | (31,531 | ) | | | (17,350 | ) |
| Other current assets | | | (3,953 | ) | | | (2,243 | ) | | | 3,565 | |
| Other assets | | | (1,842 | ) | | | 260 | | | | (578 | ) |
| Deferred taxes | | | 655 | | | | 2,907 | | | | (56,142 | ) |
| Deferred revenue | | | 620 | | | | 71 | | | | 197 | |
| Accounts payable , accrued expenses and other | | | (9,093 | ) | | | (3,163 | ) | | | (5,440 | ) |
| Net cash provided by operating activities | | | 61,004 | | | | 66,422 | | | | 75,269 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | | | | | |
| Purchase of imaging facilities | | | (9,428 | ) | | | (7,223 | ) | | | (45,493 | ) |
| Purchase of property and equipment | | | (41,740 | ) | | | (48,623 | ) | | | (44,448 | ) |
| Proceeds from sale of equipment | | | 1,088 | | | | 635 | | | | 1,549 | |
| Proceeds from sale of imaging facilities | | | – | | | | 3,920 | | | | 2,300 | |
| Proceeds from sale of joint venture interests | | | – | | | | 2,640 | | | | 1,800 | |
| Equity contributions in existing and purchase of interest in joint ventures | | | (3,562 | ) | | | (2,009 | ) | | | (2,756 | ) |
| Net cash used in investing activities | | | (53,642 | ) | | | (50,660 | ) | | | (87,048 | ) |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | | | | | |
| Principal payments on notes and leases payable | | | (23,913 | ) | | | (9,764 | ) | | | (22,223 | ) |
| Proceeds from borrowings | | | 210,000 | | | | 35,122 | | | | 344,485 | |
| Payments on Senior Notes | | | (211,344 | ) | | | – | | | | (277,875 | ) |
| Deferred financing costs | | | (6,650 | ) | | | (432 | ) | | | (3,753 | ) |
| Net proceeds (payments) on revolving credit facility | | | 15,300 | | | | (33,000 | ) | | | (25,000 | ) |
| Payments on interest rate swaps, net of amounts received | | | – | | | | – | | | | (5,823 | ) |
| Dividends paid to noncontrolling interests | | | (148 | ) | | | (18 | ) | | | (71 | ) |
| Equity attributable to non-controlling interests | | | – | | | | – | | | | (117 | ) |
| Purchase on non-controlling interests | | | (196 | ) | | | – | | | | – | |
| Proceeds from issuance of common stock upon exercise of options/warrants | | | 1,546 | | | | 469 | | | | – | |
| Net cash (used in) provided by financing activities | | | (15,405 | ) | | | (7,623 | ) | | | 9,623 | |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH | | | (62 | ) | | | (89 | ) | | | 63 | |
| NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | | | (8,105 | ) | | | 8,050 | | | | (2,093 | ) |
| CASH AND CASH EQUIVALENTS, beginning of period | | | 8,412 | | | | 362 | | | | 2,455 | |
| CASH AND CASH EQUIVALENTS, end of period | | $ | 307 | | | $ | 8,412 | | | $ | 362 | |
| | | | | | | | | | | | | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | | | | | | | | | | | | |
| Cash paid during the period for interest | | $ | 41,584 | | | $ | 41,841 | | | | 47,806 | |
| Cash paid during the period for income taxes | | $ | 1,070 | | | $ | 1,142 | | | | 918 | |
RADNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
| | | Three Months Ended
December 31, | |
| | | 2014 | | | 2013 | |
| NET REVENUE | | | | | | | | |
| Service fee revenue, net of contractual allowances and discounts | | $ | 171,600 | | | $ | 168,883 | |
| Provision for bad debts | | | (7,862 | ) | | | (7,101 | ) |
| Net service fee revenue | | | 163,738 | | | | 161,782 | |
| Revenue under capitation arrangements | | | 21,814 | | | | 16,556 | |
| Total net revenue | | | 185,552 | | | | 178,338 | |
| OPERATING EXPENSES | | | | | | | | |
| Cost of operations, excluding depreciation and amortization | | | 156,814 | | | | 148,625 | |
| Depreciation and amortization | | | 14,065 | | | | 14,840 | |
| Loss on sale and disposal of equipment | | | (468 | ) | | | 675 | |
| Severance costs | | | 265 | | | | 494 | |
| Total operating expenses | | | 170,676 | | | | 164,634 | |
| INCOME FROM OPERATIONS | | | 14,876 | | | | 13,704 | |
| OTHER INCOME AND EXPENSES | | | | | | | | |
| Interest expense | | | 10,224 | | | | 11,249 | |
| Meaningful use incentive | | | (272 | ) | | | – | |
| Equity in earnings of joint ventures | | | (2,248 | ) | | | (1,713 | ) |
| Other expenses (income) | | | (1 | ) | | | 76 | |
| Total other expenses | | | 7,703 | | | | 9,612 | |
| INCOME BEFORE INCOME TAXES | | | 7,173 | | | | 4,092 | |
| Benefit from income taxes | | | (2,878 | ) | | | (2,744 | ) |
| NET INCOME | | | 4,295 | | | | 1,348 | |
| Net income attributable to noncontrolling interests | | | 90 | | | | 105 | |
| NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | | $ | 4,205 | | | $ | 1,243 | |
| BASIC NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | | $ | 0.10 | | | $ | 0.03 | |
| DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | | $ | 0.10 | | | $ | 0.03 | |
| WEIGHTED AVERAGE SHARES OUTSTANDING | | | | | | | | |
| Basic | | | 41,783,412 | | | | 39,243,922 | |
| Diluted | | | 44,181,838 | | | | 39,598,285 | |
RADNET, INC.
RECONCILIATION OF GAAP NET INCOME ATTRIBUTABLE TO RADNET, INC.
COMMON SHAREHOLDERS TO ADJUSTED EBITDA(1)
(IN THOUSANDS)
| | | Three Months Ended | |
| | | December 31, | |
| | | 2014 | | | 2013 | |
| | | | | | | |
| Net Income Attributable to RadNet, Inc. Common Stockholders | | $ | 4,205 | | | $ | 1,243 | |
| Plus Provision for Income Taxes | | | 2,878 | | | | 2,744 | |
| Plus Other Expenses | | | (1 | ) | | | 76 | |
| Plus Interest Expense | | | 10,224 | | | | 11,249 | |
| Plus Severence Costs | | | 265 | | | | 494 | |
| Plus Loss on Sale of Equipment | | | (468 | ) | | | 675 | |
| Plus Depreciation and Amortization | | | 14,065 | | | | 14,840 | |
| Plus Legal Settlement | | | 401 | | | | – | |
| Plus Non Cash Employee Stock Compensation | | | 431 | | | | 529 | |
| Adjusted EBITDA(1) | | $ | 32,000 | | | $ | 31,850 | |
| | | Fiscal Year Ended | |
| | | December 31, | |
| | | 2014 | | | 2013 | |
| | | | | | | |
| Net Income Attributable to RadNet, Inc. Common Stockholders | | $ | 1,376 | | | $ | 2,120 | |
| Plus Provision for Income Taxes | | | 1,967 | | | | 3,510 | |
| Plus Other Expenses | | | 3 | | | | 228 | |
| Plus Loss on Early Extinguishment of Senior Notes | | | 15,927 | | | | – | |
| Plus Loss (Gain) on Sale of Imaging Centers | | | – | | | | (2,108 | ) |
| Plus Interest Expense | | | 42,727 | | | | 45,791 | |
| Plus Severence Costs | | | 1,241 | | | | 806 | |
| Plus Loss on Sale of Equipment | | | 1,113 | | | | 1,032 | |
| Plus Depreciation and Amortization | | | 59,258 | | | | 58,890 | |
| Plus Legal Settlement | | | 401 | | | | – | |
| Plus Non Cash Employee Stock Compensation | | | 2,500 | | | | 2,574 | |
| Adjusted EBITDA(1) | | $ | 126,513 | | | $ | 112,843 | |
| | | | |
| | | | |
| | | Fourth Quarter | |
| | | 2014 | |
| | | | |
| Commercial Insurance | | | 55.4% | |
| Medicare | | | 20.8% | |
| Capitation | | | 11.3% | |
| Workers Compensation/Personal Injury | | | 4.1% | |
| Medicaid | | | 3.1% | |
| Other | | | 5.3% | |
| Total | | | 100.0% | |
**Capitation percentage has been calculated based upon its proportion of Revenue Under Capitation Arrangements in the period to Service Fee Revenue, Net of Contractual Allowances and Discounts plus Revenue Under Capitation Arrangements. 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 | |
| | | 2014 | | | 2014 | | | 2013 | | | 2012 | | | 2011 | |
| | | | | | | | | | | | | | | | |
| MRI | | | 35.8% | | | | 36.1% | | | | 36.3% | | | | 35.5% | | | | 35.1% | |
| CT | | | 15.5% | | | | 15.3% | | | | 15.5% | | | | 16.0% | | | | 16.1% | |
| PET/CT | | | 5.4% | | | | 5.7% | | | | 5.6% | | | | 5.9% | | | | 6.0% | |
| X-ray | | | 9.6% | | | | 10.2% | | | | 10.5% | | | | 10.3% | | | | 10.1% | |
| Ultrasound | | | 11.0% | | | | 11.1% | | | | 11.0% | | | | 10.9% | | | | 10.9% | |
| Mammography | | | 17.3% | | | | 16.5% | | | | 15.7% | | | | 16.0% | | | | 15.9% | |
| Nuclear Medicine | | | 1.4% | | | | 1.4% | | | | 1.5% | | | | 1.5% | | | | 1.6% | |
| Other | | | 4.0% | | | | 3.7% | | | | 3.9% | | | | 4.0% | | | | 4.2% | |
| | | | 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, Imaging on Call, eRAD, Center Management Fees and other miscellaneous operating activities.
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 and extraordinary events which took 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.
