Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 10, 2016 | Jun. 30, 2015 | |
NonPlanOutstandingWarrantsMember | |||
Entity Registrant Name | RadNet, Inc. | ||
Entity Central Index Key | 790,526 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer | No | ||
Is Entity a Voluntary Filer | No | ||
Is Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 47,193,286 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 | ||
Entity Public Float | $ 266,105,775 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 446 | $ 307 |
Accounts receivable, net | 162,843 | 148,235 |
Current portion of deferred tax assets | 22,279 | 17,246 |
Due from affiliates | 4,815 | 1,561 |
Prepaid expenses and other current assets | 40,139 | 24,671 |
Total current assets | 230,522 | 192,020 |
PROPERTY AND EQUIPMENT, NET | 256,722 | 223,127 |
OTHER ASSETS | ||
Goodwill | 239,408 | 200,304 |
Other intangible assets | 45,253 | 47,624 |
Deferred financing costs, net of current portion | 3,696 | 6,122 |
Investment in joint ventures | 33,584 | 32,123 |
Deferred tax assets, net of current portion | 24,685 | 35,334 |
Deposits and other | 4,565 | 4,026 |
Total assets | 838,435 | 740,680 |
CURRENT LIABILITIES | ||
Accounts payable, accrued expenses and other | 113,813 | 97,816 |
Due to affiliates | 6,564 | 6,289 |
Deferred revenue | 1,598 | 1,964 |
Current portion of notes payable | 23,076 | 19,468 |
Current portion of deferred rent | 2,563 | 2,100 |
Current portion of obligations under capital leases | 10,038 | 5,637 |
Total current liabilities | 157,652 | 133,274 |
LONG-TERM LIABILITIES | ||
Deferred rent, net of current portion | 26,865 | 20,965 |
Line of credit | 0 | 15,300 |
Notes payable, net of current portion | 601,229 | 551,059 |
Obligations under capital lease, net of current portion | 6,385 | 6,143 |
Other non-current liabilities | 9,843 | 6,241 |
Total liabilities | 801,974 | 732,982 |
EQUITY | ||
Common stock - $.0001 par value, 200,000,000 shares authorized; 46,281,189 and 42,825,676 shares issued and outstanding at December 31, 2015 and 2014, respectively | 4 | 4 |
Paid-in-capital | 197,297 | 177,750 |
Accumulated other comprehensive loss | (153) | (112) |
Accumulated deficit | (164,571) | (172,280) |
Total Radnet, Inc.'s stockholders' equity | 32,577 | 5,362 |
Noncontrolling interests | 3,884 | 2,336 |
Total equity | 36,461 | 7,698 |
Total liabilities and equity | $ 838,435 | $ 740,680 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Common stock - par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock - shares authorized | 200,000,000 | 200,000,000 |
Common stock - shares issued | 46,281,189 | 42,825,676 |
Common stock - shares outstanding | 46,281,189 | 42,825,676 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
NET REVENUE | |||
Service fee revenue, net of contractual allowances and discounts | $ 746,756 | $ 670,136 | $ 665,307 |
Provision for bad debts | (36,033) | (29,807) | (27,911) |
Net service fee revenue | 710,723 | 640,329 | 637,396 |
Revenue under capitation arrangements | 98,905 | 77,240 | 65,590 |
Total net revenue | 809,628 | 717,569 | 702,986 |
OPERATING EXPENSES | |||
Cost of operations, excluding depreciation and amortization | 708,289 | 602,652 | 598,655 |
Depreciation and amortization | 60,611 | 59,258 | 58,890 |
Loss on sale and disposal of equipment | 866 | 1,113 | 1,032 |
Severance costs | 745 | 1,241 | 806 |
Total operating expenses | 770,511 | 664,264 | 659,383 |
INCOME FROM OPERATIONS | 39,117 | 53,305 | 43,603 |
OTHER INCOME AND EXPENSES | |||
Interest expense | 41,684 | 42,727 | 45,791 |
Meaningful use incentive | (3,270) | (2,034) | 0 |
Equity in earnings of joint ventures | (8,927) | (6,970) | (6,194) |
Gain on sale of imaging centers | (5,434) | 0 | (2,108) |
Loss on early extinguishment of senior notes | 0 | 15,927 | 0 |
Other expenses | 419 | 3 | 228 |
Total other expenses | 24,472 | 49,653 | 37,717 |
INCOME BEFORE INCOME TAXES | 14,645 | 3,652 | 5,886 |
Provision for income taxes | (6,007) | (1,967) | (3,510) |
NET INCOME | 8,638 | 1,685 | 2,376 |
Net income attributable to noncontrolling interests | 929 | 309 | 256 |
NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | $ 7,709 | $ 1,376 | $ 2,120 |
BASIC NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | $ 0.18 | $ 0.03 | $ .05 |
DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | $ .17 | $ 0.03 | $ .05 |
Weighted average shares outstanding - Basic | 43,805,794 | 41,070,077 | 39,140,480 |
Weighted average shares outstanding - Diluted | 45,171,372 | 43,149,196 | 39,814,535 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Statement of Comprehensive Income [Abstract] | |||
NET INCOME | $ 8,638 | $ 1,685 | $ 2,376 |
Foreign currency translation adjustments | (153) | (62) | (89) |
COMPREHENSIVE INCOME | 8,485 | 1,623 | 2,287 |
Less comprehensive income attributable to non-controlling interests | 929 | 309 | 256 |
COMPREHENSIVE INCOME ATTRIBUTIBLE TO RADNET, INC. COMMON STOCKHOLDERS | $ 7,556 | $ 1,314 | $ 2,031 |
CONSOLIDATED STATEMENT OF EQUIT
CONSOLIDATED STATEMENT OF EQUITY (DEFICIT) - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings / Accumulated Deficit [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Total Radnet, Inc. Stockholders (Deficit) Equity [Member] | Noncontrolling Interest [Member] | Total |
Beginning balance, shares at Dec. 31, 2012 | 38,540,482 | ||||||
Beginning balance, value at Dec. 31, 2012 | $ 4 | $ 168,415 | $ (175,776) | $ 39 | $ (7,318) | $ 634 | $ (6,684) |
Issuance of common stock upon exercise of options/warrants, shares | 898,714 | ||||||
Issuance of common stock upon exercise of options/warrants | $ 0 | 469 | 469 | 469 | |||
Stock-based compensation | 2,537 | 2,537 | 2,537 | ||||
Sale of a noncontrolling interests | 2,201 | 2,201 | 439 | 2,640 | |||
Purchase of non-controlling interests | 979 | 979 | |||||
Issuance of restricted stock, shares | 650,000 | ||||||
Dividends paid to noncontrolling interests | (18) | (18) | |||||
Change in cumulative foreign currency translation adjustment | (89) | (89) | (89) | ||||
Net income | 2,120 | 2,120 | 256 | 2,376 | |||
Ending balance, shares at Dec. 31, 2013 | 40,089,196 | ||||||
Ending balance, value at Dec. 31, 2013 | $ 4 | 173,622 | (173,656) | (50) | (80) | 2,290 | 2,210 |
Issuance of common stock upon exercise of options/warrants, shares | 1,579,695 | ||||||
Issuance of common stock upon exercise of options/warrants | 1,546 | 1,546 | 1,546 | ||||
Stock-based compensation | 2,463 | 2,463 | 2,463 | ||||
Sale of a noncontrolling interests | 200 | 200 | |||||
Purchase of non-controlling interests | 119 | 119 | (315) | (196) | |||
Issuance of restricted stock, shares | 1,156,785 | ||||||
Dividends paid to noncontrolling interests | (148) | (148) | |||||
Change in cumulative foreign currency translation adjustment | (62) | (62) | (62) | ||||
Net income | 1,376 | 1,376 | 309 | 1,685 | |||
Ending balance, shares at Dec. 31, 2014 | 42,825,676 | ||||||
Ending balance, value at Dec. 31, 2014 | $ 4 | 177,750 | (172,280) | (112) | 5,362 | 2,336 | 7,698 |
Issuance of common stock upon exercise of options/warrants, shares | 835,098 | ||||||
Issuance of common stock upon exercise of options/warrants | 594 | 594 | 594 | ||||
Stock-based compensation | 7,635 | 7,635 | 7,635 | ||||
Sale of a noncontrolling interests | 2,077 | 2,077 | 1,348 | 3,425 | |||
Purchase of non-controlling interests | (196) | ||||||
Issuance of restricted stock, shares | 1,014,423 | ||||||
Forfeiture of restricted stock | (59,053) | ||||||
Issuance of stock for acquisition, shares | 1,665,045 | ||||||
Issuance of stock for acquisition, value | 9,241 | 9,241 | 9,241 | ||||
Dividends paid to noncontrolling interests | (729) | (729) | |||||
Change in cumulative foreign currency translation adjustment | (41) | (41) | (41) | ||||
Net income | 7,709 | 7,709 | 929 | 8,638 | |||
Ending balance, shares at Dec. 31, 2015 | 46,281,189 | ||||||
Ending balance, value at Dec. 31, 2015 | $ 4 | $ 197,297 | $ (164,571) | $ (153) | $ 32,577 | $ 3,884 | $ 36,461 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income | $ 8,638 | $ 1,685 | $ 2,376 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 60,611 | 59,258 | 58,890 |
Provision for bad debts | 36,033 | 29,807 | 27,911 |
Equity in earnings of joint ventures | (8,927) | (6,970) | (6,194) |
Distributions from joint ventures | 7,731 | 7,358 | 7,204 |
Amortization and write off of deferred financing costs and loan discount | 5,369 | 5,732 | 4,565 |
Loss on sale and disposal of equipment | 866 | 1,113 | 1,032 |
Loss on early extinguishment of Senior Notes | 0 | 15,927 | 0 |
Gain on sale of imaging centers | (5,434) | 0 | (2,108) |
Stock-based compensation | 7,647 | 2,500 | 2,574 |
Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions: | |||
Accounts receivable | (34,514) | (43,973) | (31,531) |
Other current assets | (14,198) | (5,514) | (2,243) |
Other assets | (3,813) | (281) | 260 |
Deferred taxes | 4,036 | 655 | 2,907 |
Deferred rent | 7,011 | 2,180 | 3,871 |
Deferred revenue | (366) | 620 | 71 |
Accounts payable and accrued expenses and other | (3,653) | (9,093) | (3,163) |
Net cash provided by operating activities | 67,037 | 61,004 | 66,422 |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Purchase of imaging facilities | (90,792) | (9,428) | (7,223) |
Purchase of property and equipment | (42,964) | (41,740) | (48,623) |
Proceeds from sale of equipment | 1,282 | 1,088 | 635 |
Proceeds from sale of imaging facilities | 35,500 | 0 | 3,920 |
Proceeds from sale of joint venture interests | 0 | 0 | 2,640 |
Proceeds from sale of internal use software | 443 | 0 | 0 |
Equity contributions in existing and purchase of interest in joint ventures | (265) | (3,562) | (2,009) |
Net cash used in investing activities | (96,796) | (53,642) | (50,660) |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Principal payments on notes and leases payable | (9,773) | (23,913) | (9,764) |
Proceeds from borrowings | 74,400 | 210,000 | 35,122 |
Payments on Senior Notes | (23,727) | (211,344) | 0 |
Deferred financing costs | (531) | (6,650) | (432) |
Net (payments) proceeds on revolving credit facility | (15,300) | 15,300 | (33,000) |
Dividends paid to noncontrolling interests | (729) | (148) | (18) |
Proceeds from the sale of non-controlling interests | 5,005 | 0 | 0 |
Purchase on non-controlling interests | 0 | (196) | 0 |
Proceeds from issuance of common stock upon exercise of options/warrants | 594 | 1,546 | 469 |
Net cash provided by (used in) financing activities | 29,939 | (15,405) | (7,623) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | (41) | (62) | (89) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 139 | (8,105) | 8,050 |
CASH AND CASH EQUIVALENTS, beginning of period | 307 | 8,412 | 362 |
CASH AND CASH EQUIVALENTS, end of period | 446 | 307 | 8,412 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | |||
Cash paid during the period for interest | 36,028 | 41,584 | 41,841 |
Cash paid during the period for income taxes | 1,781 | 1,070 | 1,142 |
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | |||
Purchase of equipment and leasehold improvements not yet paid for | 32,400 | $ 19,400 | $ 16,700 |
Capital lease debt related to radiology equipment | $ 7,800 |
1. NATURE OF BUSINESS
1. NATURE OF BUSINESS | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF BUSINESS | We are a national provider of freestanding, fixed-site outpatient diagnostic imaging services. At December 31, 2015, we operated directly or indirectly through joint ventures with hospitals, 300 centers located in California, Delaware, Flordia, Maryland, New Jersey, New York and Rhode Island. Our centers provide physicians with imaging capabilities to facilitate the diagnosis and treatment of diseases and disorders. Our services include magnetic resonance imaging (MRI), computed tomography (CT), positron emission tomography (PET), nuclear medicine, mammography, ultrasound, diagnostic radiology (X-ray), fluoroscopy and other related procedures. The vast majority of our centers offer multi-modality imaging services. Our multi-modality strategy diversifies revenue streams, reduces exposure to reimbursement changes and provides patients and referring physicians one location to serve the needs of multiple procedures. Our operations comprise a single segment for financial reporting purposes. The consolidated financial statements include the accounts of Radnet Management, Inc. (or “Radnet Management”) and Beverly Radiology Medical Group III, a professional partnership (“BRMG”). BRMG is a partnership of ProNet Imaging Medical Group, Inc., Breastlink Medical Group, Inc. and Beverly Radiology Medical Group, Inc. The consolidated financial statements also include Radnet Management I, Inc., Radnet Management II, Inc., Radiologix, Inc., Radnet Managed Imaging Services, Inc., Delaware Imaging Partners, Inc., New Jersey Imaging Partners, Inc. and Diagnostic Imaging Services, Inc. (“DIS”), all wholly owned subsidiaries of Radnet Management. All of these affiliated entities are referred to collectively as “RadNet”, “we”, “us”, “our” or the “Company” in this report. Accounting Standards Codification (“ASC”) 810-10-15-14, Consolidation Howard G. Berger, M.D., is our President and Chief Executive Officer, a member of our Board of Directors, and also owns, indirectly, 99% of the equity interests in BRMG. BRMG provides all of the professional medical services at nearly all of our facilities located in California under a management agreement with us, and employs physicians or contracts with various other independent physicians and physician groups to provide the professional medical services at most of our other California facilities. We generally obtain professional medical services from BRMG in California, rather than provide such services directly or through subsidiaries, in order to comply with California’s prohibition against the corporate practice of medicine. However, as a result of our close relationship with Dr. Berger and BRMG, we believe that we are able to better ensure that medical service is provided at our California facilities in a manner consistent with our needs and expectations and those of our referring physicians, patients and payors than if we obtained these services from unaffiliated physician groups. We contract with eight medical groups which provide professional medical services at all of our facilities in Manhattan and Brooklyn, New York. These contracts are similar to our contract with BRMG. Four of these groups are owned by John V Crues, III, M.D., Radnet’s Medical Director, a member of our Board of Directors, and a 1% owner of BRMG. Dr Berger owns a controlling interest in two of these medical groups which provide professional medical services at one of our Manhattan facilities. RadNet provides non-medical, technical and administrative services to BRMG and the eight medical groups mentioned above (“NY Groups”) for which it receives a management fee, pursuant to the related management agreements. Through the management agreements we have exclusive authority over all non-medical decision making related to the ongoing business operations of BRMG and the NY Groups and we determine the annual budget of BRMG and the NY Groups. BRMG and the NY Groups both have insignificant operating assets and liabilities, and de minimis equity. Through the management agreement with us, all cash flows of BRMG and the NY Groups are transferred to us. We have determined that BRMG and the NY Groups are variable interest entities, and that we are the primary beneficiary, and consequently, we consolidate the revenue and expenses, assets and liabilities of each. BRMG and the NY Groups on a combined basis recognized $113.1 million, $89.3 million and $76.7 million of revenue, net of management service fees to RadNet, for the years ended December 31, 2015, 2014 and 2013, respectively, and $113.1 million, $89.3 million and $76.7 million of operating expenses for the years ended December 31, 2015, 2014 and 2013, respectively. RadNet recognized $343.9 million, $287.4 million and $267.6 million of net revenues for the years ended December 31, 2015, 2014 and 2013, respectively, for management services provided to BRMG and the NY Groups relating primarily to the technical portion of total billed revenue. The cash flows of BRMG and the NY Groups are included in the accompanying consolidated statements of cash flows. All intercompany balances and transactions have been eliminated in consolidation. In our consolidated balance sheets at December 31, 2015 and 2014, we have included approximately $89.8 million and $79.7 million, respectively, of accounts receivable and approximately $8.5 million and $9.0 million of accounts payable and accrued liabilities related to BRMG and the NY Groups. The creditors of BRMG and the NY Groups do not have recourse to our general credit and there are no other arrangements that could expose us to losses on behalf of BRMG and the NY Groups. However, both BRMG and the NY Groups are managed to recognize no net income or net loss and, therefore, RadNet may be required to provide financial support to cover any operating expenses in excess of operating revenues. Aside from centers in California where we contract with BRMG for the provision of professional medical services and centers in New York, New York, where we contract with the NY Groups for the provision of professional medical services, at the remaining centers in California and at all of the centers which are located outside of California and New York, New York, we have entered into long-term contracts with independent radiology groups in the area to provide physician services at those facilities. These third party radiology practices provide professional services, including supervision and interpretation of diagnostic imaging procedures, in our diagnostic imaging centers. The radiology practices maintain full control over the provision of professional services. In these facilities we enter into long-term agreements with radiology practice groups (typically 40 years). Under these arrangements, in addition to obtaining technical fees for the use of our diagnostic imaging equipment and the provision of technical services, we provide management services and receive a fee based on the practice group’s professional revenue, including revenue derived outside of our diagnostic imaging centers. We own the diagnostic imaging equipment and, therefore, receive 100% of the technical reimbursements associated with imaging procedures. The radiology practice groups retain the professional reimbursements associated with imaging procedures after deducting management service fees paid to us. We have no financial controlling interest in the independent (non-BRMG or non-NY Groups) radiology practices; accordingly, we do not consolidate the financial statements of those practices in our consolidated financial statements. |
2. SUMMARY OF SIGNIFICANT ACCOU
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | PRINCIPLES OF CONSOLIDATION - The operating activities of subsidiaries are included in the accompanying consolidated financial statements from the date of acquisition. Investments in companies in which the Company has the ability to exercise significant influence, but not control, are accounted for by the equity method. All intercompany transactions and balances, with our consolidated entities and the unsettled amount of intercompany transactions with our equity method investees, have been eliminated in consolidation. As stated in Note 1 above, the BRMG and NY Groups are variable interest entities and we consolidate the operating activities and balance sheets of each. USE OF ESTIMATES - The preparation of the financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates and assumptions affect various matters, including our reported amounts of assets and liabilities in our consolidated balance sheets at the dates of the financial statements; our disclosure of contingent assets and liabilities at the dates of the financial statements; and our reported amounts of revenues and expenses in our consolidated statements of operations during the reporting periods. These estimates involve judgments with respect to numerous factors that are difficult to predict and are beyond management’s control. As a result, actual amounts could materially differ from these estimates. REVENUES - Service fee revenue, net of contractual allowances and discounts, consists of net patient fees received from various payors and patients themselves based mainly upon established contractual billing rates, less allowances for contractual adjustments and discounts. As it relates to BRMG and the NY Groups centers, this service fee revenue includes payments for both the professional medical interpretation revenue recognized by BRMG and the NY Groups as well as the payment for all other aspects related to our providing the imaging services, for which we earn management fees from BRMG and the NY Groups. As it relates to non-BRMG and NY Groups centers, namely the affiliated physician groups, this service fee revenue is earned through providing the use of our diagnostic imaging equipment and the provision of technical services as well as providing administration services such as clerical and administrative personnel, bookkeeping and accounting services, billing and collection, provision of medical and office supplies, secretarial, reception and transcription services, maintenance of medical records, and advertising, marketing and promotional activities. Service fee revenues are recorded during the period the services are provided based upon the estimated amounts due from the patients and third-party payors. Third-party payors include federal and state agencies (under the Medicare and Medicaid programs), managed care health plans, commercial insurance companies and employers. Estimates of contractual allowances are based on historical collection rates of payor reimbursement contract agreements. We also record a provision for doubtful accounts based primarily on historical collection rates from related to patient copayments and deductible amounts for patients who have health care coverage under one of our third-party payors. Under capitation arrangements with various health plans, we earn a per-enrollee amount each month for making available diagnostic imaging services to all plan enrollees under the capitation arrangement. Revenue under capitation arrangements is recognized in the period which we are obligated to provide services to plan enrollees under contracts with various health plans. Our service fee revenue, net of contractual allowances and discounts, the provision for bad debts, and revenue under capitation arrangements for the years ended December 31, are summarized in the following table (in thousands) : Years Ended December 31, 2015 2014 2013 Commercial insurance (1) $ 486,489 $ 437,525 $ 430,735 Medicare 168,545 159,562 156,066 Medicaid 23,948 24,499 24,017 Workers' compensation/personal injury 32,728 30,543 34,821 Other (2) 35,046 18,007 19,668 Service fee revenue, net of contractual allowances and discounts 746,756 670,136 665,307 Provision for bad debts (36,033 ) (29,807 ) (27,911 ) Net service fee revenue 710,723 640,329 637,396 Revenue under capitation arrangements 98,905 77,240 65,590 Total net revenue $ 809,628 $ 717,569 $ 702,986 _________________ (1) (2) PROVISION FOR BAD DEBTS - We provide for an allowance against accounts receivable that could become uncollectible to reduce the carrying value of such receivables to their estimated net realizable value. We estimate this allowance based on the aging of our accounts receivable by the historical payment pattern of each type of payor, write-off trends, and other relevant factors. A significant portion of our provision for bad debt relates to co-payments and deductibles owed to us from patients with insurance. Although we attempt to collect deductibles and co-payments due from patients with insurance at the time of service, this attempt to collect at the time of service is not an assessment of the patient’s ability to pay nor are revenues recognized based on an assessment of the patient’s ability to pay. There are various factors that can impact collection trends, such as changes in the economy, which in turn have an impact on the increased burden of co-payments and deductibles to be made by patients with insurance. These factors continuously change and can have an impact on collection trends and our estimation process. Our allowance for bad debts at December 31, 2015 and 2014 was $20.8 million and $15.1 million, respectively. MEANINGFUL USE INCENTIVE - Under the American Recovery and Reinvestment Act of 2009, a program was enacted that provides financial incentives for providers that successfully implement and utilize electronic health record technology to improve patient care. Our software development team in Canada established an objective to build a Radiology Information System (RIS) software platform that has been awarded Meaningful Use certification. As this certified RIS system is implemented throughout our imaging centers, the radiologists that utilize this software can be eligible for the available financial incentives. In order to receive such incentive payments providers must attest that they have demonstrated meaningful use of the certified RIS in each stage of the program. We account for this meaningful use incentive under the Gain Contingency Model outlined in ASC 450-30. Under this model, we record within non-operating income, meaningful use incentive only after Medicare accepts an attestation from the qualified eligible professional demonstrating meaningful use. We recorded approximately $3.3 million and $2.0 million during the twelve months ended December 31, 2015 and 2014 relating to this incentive. ACCOUNTS RECEIVABLE - Substantially all of our accounts receivable are due under fee-for-service contracts from third party payors, such as insurance companies and government-sponsored healthcare programs, or directly from patients. Services are generally provided pursuant to one-year contracts with healthcare providers. We continuously monitor collections from our payors and maintain an allowance for bad debts based upon specific payor collection issues that we have identified and our historical experience. SOFTWARE REVENUE RECOGNITION – Our subsidiary, eRAD, Inc., sells Picture Archiving Communications Systems (“PACS”) and related services, primarily in the United States. The PACS systems sold by eRAD are primarily composed of certain elements: hardware, software, installation and training, and support. Sales are made primarily through eRAD’s sales force. These sales are multiple-element arrangements that generally include hardware, software, software installation, configuration, system installation, training and first-year warranty support. Hardware, which is not unique or special purpose, is purchased from a third-party and resold to eRAD’s customers with a small mark-up. We have determined that our core software products, such as PACS, are essential to most of our arrangements as hardware, software and related services are sold as an integrated package. Therefore, these transactions are accounted for under ASC 605-25, Multiple-Element Arrangements Software. We recognize revenue for four units of accounting, hardware, software, installation (including manufacturing and configuration, training, implementation and project management) and post-contract support (“ PCS”) · Hardware o The hardware has standalone value as it is sold separately by other vendors and the customer could resell the hardware on a standalone basis; and o Delivery or performance of the undelivered items is probable and substantially within our control. · Software · Installation · Post-Contract Support Our transactions do not generally contain refund provisions. We allocate the transaction price to each unit of accounting using relative selling price. We consider historical pricing, list price and market considerations in determining estimated selling price in the allocation. For the years ended December 31, 2015, 2014 and 2013, we recorded approximately $6.1 million, $5.5 million and $4.9 million, respectively, in revenue related to our eRAD business which is included in net service fee revenue in our consolidated statement of operations. At December 31, 2015 we had a deferred revenue liability of approximately $1.5 million associated with eRAD sales which we expect to recognize into revenue over the next 12 months. SOFTWARE DEVELOPMENT COSTS - Costs related to the research and development of new software products and enhancements to existing software products all for resale to our customers are expensed as incurred. We utilize a variety of computerized information systems in the day to day operation of our diagnostic imaging facilities. One such system is our front desk patient tracking system or Radiology Information System (“RIS”). We have historically utilized third party RIS software solutions and pay monthly fees to outside third party software vendors for the use of this software. We have developed our own RIS solution from the ground up through our wholly owned subsidiary, Radnet Management Information Systems (“RMIS”) and began utilizing this system beginning in the first quarter of 2015. In accordance with ASC 350-40, Accounting for the Costs of Computer Software Developed for Internal Use, During the twelve months ended December 31, 2015, we entered into an agreement to license our RIS system to an outside customer. As of December 31, 2015, we received approximately $443,000 with respect to this licensing agreement. In accordance with ASC 350-40, we recorded the receipt of these funds against the capitalized software costs explained above. We intend to record any future proceeds in the same manner until the carrying value of our capitalized software costs are brought to zero. As of December 31, 2015, the net carrying value of our capitalized software costs was approximately $4.7 million. CONCENTRATION OF CREDIT RISKS - Financial instruments that potentially subject us to credit risk are primarily cash equivalents and accounts receivable. We have placed our cash and cash equivalents with one major financial institution. At times, the cash in the financial institution is temporarily in excess of the amount insured by the Federal Deposit Insurance Corporation, or FDIC. Substantially all of our accounts receivable are due under fee-for-service contracts from third party payors, such as insurance companies and government-sponsored healthcare programs, or directly from patients. Services are generally provided pursuant to one-year contracts with healthcare providers. We continuously monitor collections from our clients and maintain an allowance for bad debts based upon our historical collection experience. CASH AND CASH EQUIVALENTS - We consider all highly liquid investments that mature in three months or less when purchased to be cash equivalents. The carrying amount of cash and cash equivalents approximates their fair market value. DEFERRED FINANCING COSTS - Costs of financing are deferred and amortized on a straight-line basis over the life of the associated loan, which approximates the effective interest rate method. Deferred financing costs, net of accumulated amortization, were $4.9 million and $6.7 million, as of December 31, 2015 and 2014, respectively. In conjunction with our 2015 Incremental First Lien Supplemental term loan borrowing, approximately $531,000 was added to deferred financing costs. As part of our early extinguishment of senior notes during March and April of 2014, approximately $3.4 million of deferred financing costs were written off. See Note 8, Notes Payable, Line of Credit, and Capital Leases for more information. INVENTORIES - Inventories, consisting mainly of medical supplies, are stated at the lower of cost or market with cost determined by the first-in, first-out method. PROPERTY AND EQUIPMENT - Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization of property and equipment are provided using the straight-line method over the estimated useful lives, which range from 3 to 15 years. Leasehold improvements are amortized at the lesser of lease term or their estimated useful lives, whichever is shorter, which range from 3 to 30 years. Maintenance and repairs are charged to expense as incurred. BUSINESS COMBINATION - Accounting for acquisitions requires us to recognize separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations. GOODWILL AND INDEFINITE LIVED INTANGIBLES - Goodwill at December 31, 2015 totaled $239.4 million. Indefinite lived intangible assets at December 31, 2015 totaled $7.9 million and are associated with the value of certain trade name intangibles. Goodwill and trade name intangibles are recorded as a result of business combinations. Management evaluates goodwill and trade name intangibles, at a minimum, on an annual basis and whenever events and changes in circumstances suggest that the carrying amount may not be recoverable. Impairment of goodwill is tested at the reporting unit level by comparing the reporting unit’s carrying amount, including goodwill, to the fair value of the reporting unit. The fair value of a reporting unit is estimated using a combination of the income or discounted cash flows approach and the market approach, which uses comparable market data. If the carrying amount of the reporting unit exceeds its fair value, goodwill is considered impaired and a second step is performed to measure the amount of impairment loss, if any. Impairment of trade name intangibles is tested at the subsidiary level by comparing the subsidiary’s trade name carrying amount to its respective fair value. We tested both goodwill and trade name intangibles for impairment on October 1, 2015, noting no impairment, and have not identified any indicators of impairment through December 31, 2015. LONG-LIVED ASSETS - We evaluate our long-lived assets (property and equipment) and intangibles, other than goodwill, for impairment whenever indicators of impairment exist. Generally accepted accounting principles (GAAP) requires that if the sum of the undiscounted expected future cash flows from a long-lived asset or definite-lived intangible is less than the carrying value of that asset, an asset impairment charge must be recognized. The amount of the impairment charge is calculated as the excess of the asset’s carrying value over its fair value, which generally represents the discounted future cash flows from that asset or in the case of assets we expect to sell, at fair value less costs to sell. No indicators of impairment were identified with respect to our long-lived assets as of December 31, 2015. INCOME TAXES - Income tax expense is computed using an asset and liability method and using expected annual effective tax rates. Under this method, deferred income tax assets and liabilities result from temporary differences in the financial reporting bases and the income tax reporting bases of assets and liabilities. The measurement of deferred tax assets is reduced, if necessary, by the amount of any tax benefit that, based on available evidence, is not expected to be realized. When it appears more likely than not that deferred taxes will not be realized, a valuation allowance is recorded to reduce the deferred tax asset to its estimated realizable value. For net deferred tax assets we consider estimates of future taxable income in determining whether our net deferred tax assets are more likely than not to be realized. Income taxes are further explained in Note 10. UNINSURED RISKS - On November 1, 2008 we obtained a fully funded and insured workers’ compensation policy, thereby eliminating any uninsured risks for employee injuries occurring on or after that date. This fully funded policy remained in effect through November 1, 2013 and continues to cover any claims incurred through this date. On November 1, 2013 we entered into a high-deductible workers’ compensation insurance policy. We have recorded liabilities as of December 31, 2015, and 2014 of $2.2 million and $1.0 million, respectively for the estimated future cash obligations associated with the unpaid portion of the workers compensation claims incurred. We and our affiliated physicians carry an annual medical malpractice insurance policy that protects us for claims that are filed during the policy year and that fall within policy limits. The policy has a deductible for which we have recorded liabilities and included it in our consolidated balance sheets at December 31, 2015 and December 31, 2014 of approximately $24,000 and $88,000, respectively. In December 2008, in order to eliminate the exposure for claims not reported during the regular malpractice policy period, we purchased a medical malpractice tail policy, which provides coverage for any claims reported in the event that our medical malpractice policy expires. As of December 31, 2015, this policy remains in effect. We have entered into an arrangement with Blue Shield to administer and process claims under a self-insured plan that provides health insurance coverage for our employees and dependents. We have recorded liabilities as of December 31, 2015 and 2014 of $1.8 million and $2.0 million, respectively, for the estimated future cash obligations associated with the unpaid portion of the medical and dental claims incurred by our participants. Additionally, we entered into an agreement with Blue Shield for a stop loss policy that provides coverage for any claims that exceed $250,000 up to a maximum of $1.0 million in order for us to limit our exposure for unusual or catastrophic claims. LOSS AND OTHER UNFAVORABLE CONTRACTS – We assess the profitability of our contracts to provide management services to our contracted physician groups and identify those contracts where current operating results or forecasts indicate probable future losses. Anticipated future revenue is compared to anticipated costs. If the anticipated future cost exceeds the revenue, a loss contract accrual is recorded. In connection with the acquisition of Radiologix in November 2006, we acquired certain management service agreements for which forecasted costs exceeds forecasted revenue. As such, an $8.9 million loss contract accrual was established in purchase accounting, and is included in other non-current liabilities. The recorded loss contract accrual is being accreted into operations over the remaining term of the acquired management service agreements. As of December 31, 2015 and 2014, the remaining accrual balance is $5.7 million, and $6.1 million, respectively. As part of our ongoing acquisition activities, we have certain operating lease commitments for facilities that are not in use. Accordingly, we have recorded a loss contract accrual related to the remaining payments under these lease commitments. As of December 31, 2015 and 2014, the remaining loss contract accrual for these leases is $85,000 and $218,000, respectively. In addition and related to acquisition activity, we have certain operating lease commitments for facilities where the fair market rent differs from the lease contract rate. We have recorded an unfavorable contract liability representing the difference between the total value of the fair market rent and the contract rent over the current term of the lease applicable from the date of acquisition. As of December 31, 2015 and 2014, the unfavorable contract liability on these leases is $581,000 and $1.2 million, respectively. EQUITY BASED COMPENSATION – We have one long-term incentive plan which we refer to as the 2006 Plan, which we amended and restated as of April 20, 2015 (the “Restated Plan”). The Restated Plan was approved by our stockholders at our annual stockholders meeting on June 11, 2015. As of December 31, 2015, we have reserved for issuance under the Restated Plan 12,000,000 shares of common stock. We can issue options, stock awards, stock appreciation rights and cash awards under the Restated Plan. Certain options granted under the Restated Plan to employees are intended to qualify as incentive stock options under existing tax regulations. Stock options and warrants generally vest over two to five years and expire five to ten years from date of grant. The compensation expense recognized for all equity-based awards is net of estimated forfeitures and is recognized over the awards’ service periods. Equity-based compensation is classified in operating expenses within the same line item as the majority of the cash compensation paid to employees. FOREIGN CURRENCY TRANSLATION - The functional currency of our foreign subsidiaries is the local currency. In accordance with ASC 830, Foreign Currency Matters COMPREHENSIVE INCOME - ASC 220, Comprehensive Income, FAIR VALUE MEASUREMENTS – Assets and liabilities subject to fair value measurements are required to be disclosed within a fair value hierarchy. The fair value hierarchy ranks the quality and reliability of inputs used to determine fair value. Accordingly, assets and liabilities carried at, or permitted to be carried at, fair value are classified within the fair value hierarchy in one of the following categories based on the lowest level input that is significant to a fair value measurement: Level 1—Fair value is determined by using unadjusted quoted prices that are available in active markets for identical assets and liabilities. Level 2—Fair value is determined by using inputs other than Level 1 quoted prices that are directly or indirectly observable. Inputs can include quoted prices for similar assets and liabilities in active markets or quoted prices for identical assets and liabilities in inactive markets. Related inputs can also include those used in valuation or other pricing models such as interest rates and yield curves that can be corroborated by observable market data. Level 3—Fair value is determined by using inputs that are unobservable and not corroborated by market data. Use of these inputs involves significant and subjective judgment. The table below summarizes the estimated fair value and carrying amount of our long-term debt as follows (in thousands): As of December 31, 2015 Level 1 Level 2 Level 3 Total Fair Value Total Face Value First Lien Term Loans $ – $ 444,258 $ – $ 444,258 $ 451,023 Second Lien Term Loans $ – $ 173,700 $ – 173,700 $ 180,000 As of December 31, 2014 Level 1 Level 2 Level 3 Total Total Face Value First Lien Term Loans $ – $ 394,753 $ – $ 394,753 $ 399,750 Second Lien Term Loans – 178,200 – 178,200 180,000 Our revolving credit facility had no aggregate principal amount outstanding as of December 31, 2015. The estimated fair value of our long-term debt, which is discussed in Note 8, was determined using Level 2 inputs primarily related to comparable market prices. We consider the carrying amounts of cash and cash equivalents, receivables, other current assets, current liabilities and other notes payables to approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization or payment. Additionally, we consider the carrying amount of our capital lease obligations to approximate their fair value because the weighted average interest rate used to formulate the carrying amounts approximates current market rates. EARNINGS PER SHARE - Earnings per share is based upon the weighted average number of shares of common stock and common stock equivalents outstanding, net of common stock held in treasury, as follows (in thousands except share and per share data): Years Ended December 31, 2015 2014 2013 Net income attributable to RadNet, Inc. common stockholders $ 7,709 $ 1,376 $ 2,120 BASIC NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS Weighted average number of common shares outstanding during the period 43,805,794 41,070,077 39,140,480 Basic net income per share attributable to RadNet, Inc. common stockholders $ 0.18 $ 0.03 $ 0.05 DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS Weighted average number of common shares outstanding during the period 43,805,794 41,070,077 39,140,480 Add nonvested restricted stock subject only to service vesting 865,326 994,610 316,905 Add additional shares issuable upon exercise of stock options and warrants 500,252 1,084,509 357,150 Weighted average number of common shares used in calculating diluted net income per share 45,171,372 43,149,196 39,814,535 Diluted net income per share attributable to RadNet, Inc. common stockholders $ 0.17 $ 0.03 $ 0.05 For the years ended December 31, 2015, 2014 and 2013 we excluded 265,000, 245,000, and 4,663,750, respectively, outstanding options, in the calculation of diluted earnings per share because their effect would be antidilutive. INVESTMENT IN JOINT VENTURES – We have ten unconsolidated joint ventures with ownership interests ranging from 35% to 50%. These joint ventures represent partnerships with hospitals, health systems or radiology practices and were formed for the purpose of owning and operating diagnostic imaging centers. Professional services at the joint venture diagnostic imaging centers are performed by contracted radiology practices or a radiology practice that participates in the joint venture. Our investment in these joint ventures is accounted for under the equity method. We evaluate our investment in joint ventures, including cost in excess of book value (equity method goodwill) for impairment whenever indicators of impairment exist. No indicators of impairment existed as of December 31, 2015. Activity in investment in joint ventures for the years ended December 31, 2014 and 2015, is provided below (in thousands): Balance as of December 31, 2013 $ 28,949 Purchase of a 49% interest in a new joint venture 2,168 Equity contributions in existing joint ventures 1,394 Equity in earnings in these joint ventures 6,970 Distribution of earnings (7,358 ) Balance as of December 31, 2014 $ 32,123 Equity contributions in existing joint ventures 265 Equity in earnings in these joint ventures 8,927 Distribution of earnings (7,731 ) Balance as of December 31, 2015 $ 33,584 We received management service fees from the centers underlying these joint ventures of approximately $9.3 million per year for the years ended December 31, 2015, 2014 and 2013. We eliminate any unrealized portion of our management service fees with our equity in earnings of joint ventures. The following table is a summary of key financial data for these joint ventures as of December 31, 2015 and 2014, respectively, and for the years ended December 31, 2015, 2014 and 2013, respectively, (in thousands): December 31, 2015 2014 Balance Sheet Data: Current assets $ 28,186 $ 23,636 Noncurrent assets 91,660 49,347 Current liabilities (15,258 ) (9,534 ) Noncurrent liabilities (44,059 ) (6,386 ) Total net assets $ 60,529 $ 57,063 Book value of RadNet joint venture interests $ 28,397 $ 26,791 Cost in excess of book value of acquired joint venture interests 4,970 4,970 Elimination of intercompany profit remaining on Radnet's consolidated balance sheet 217 362 Total value of Radnet joint venture interests $ 33,584 $ 32,123 Total book value of other joint venture partner interests $ 32,132 $ 30,272 2015 2014 2013 Net revenue $ 125,544 $ 101,189 $ 93,134 Net income $ 19,485 $ 14,854 $ 13,633 |
3. RECENT ACCOUNTING STANDARDS
3. RECENT ACCOUNTING STANDARDS | 12 Months Ended |
Dec. 31, 2015 | |
Recent Accounting Standards | |
RECENT ACCOUNTING STANDARDS | In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02 (“ASU 2016-02”), Leases, In November 2015, the FASB issued ASU No. 2015-17 (“ASU 2015-17), Income Taxes In September 2015, the FASB issued ASU No. 2015-16 (“ASU 2015-16”), Business Combinations, In August 2015, the FASB issued ASU No. 2015-15 (“ASU 2015-15”), Interest – Imputation of Interest In April 2015, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2015-03 (“ASU 2015-03”), Interest – Imputation of Interest In February 2015, the FASB issued ASU No. 2015-02 (“ASU 2015-02”), Consolidation – Amendments to the Consolidation Analysis, In May 2014, the FASB issued ASU No. 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers |
4. FACILITY ACQUISITIONS AND DI
4. FACILITY ACQUISITIONS AND DISPOSITIONS | 12 Months Ended |
Dec. 31, 2015 | |
Business Combinations [Abstract] | |
FACILITY ACQUISITIONS AND DISPOSITIONS | Acquisitions On October 1, 2015 we completed our acquisition of certain assets of Diagnostic Imaging Group, LLC (DIG), consisting of seventeen multi-modality imaging centers located in the boroughs of Brooklyn and Queens, New York, for the following: Cash consideration of $54.6 million ($49.6 million paid at execution, $5 million to be paid 18 months after acquisition or earlier if certain conditions are met), the assumption of $2.1 million in equipment debt, and issuance of 1.5 million RadNet common shares valued at $8.3 million on the acquisition date. The facilities provide a full range of radiology services including MRI, PET/CT, Mammography, Ultrasound, X-ray and other related services. The transaction also includes contingent consideration that is payable equal to five times the amount by which collections on the sellers’ historical revenue exceeds a defined threshold. The estimated fair value of the liability on the acquisition date and as of December 31, 2015 is zero which is based on the probability of collections exceeding defined thresholds. The total purchase price for the above business is as follows (in thousands): Cash $ 54,555 1.5 million shares of Radnet common stock 8,325 Total combined purchase price $ 62,880 The determination of the net tangible and intangible assets acquired and liabilities assumed is based on the estimated fair values of the acquired assets and liabilities assumed as of the date of acquisition. The following table summarizes the preliminary fair value determination (in thousands) : Accounts receivable, net $ 12,346 Prepaid expenses and other current assets 377 Property and equipment 17,959 Goodwill 40,035 Other intangibles 50 Accounts payable, accrued expenses and other (4,939 ) Obligations under capital lease (2,948 ) $ 62,880 The final fair value determination is expected to be completed in the first quarter of 2016 upon receipt of a final valuation report from an external valuation firm. The revenue and earnings of DIG included in our consolidated statement of operations from the acquisition date to December 31, 2015 are as follows (in thousands): Net revenue $ 17,498 Pretax income 1,880 Net income 1,166 The following unaudited pro-forma financial information for the years ended December 31, 2015 and 2014 represents the combined results of operations of RadNet and DIG as if DIG’s acquisition had occurred on January 1, 2014. The unaudited pro-forma financial information does not necessarily reflect the results of operations that would have occurred had the entities comprising DIG constituted a single entity during such periods (in thousands, except per share data). (unaudited) 2015 2014 Net revenue $ 882,478 $ 795,620 Net income 7,329 3,644 Pro-forma diluted net income per share $ 0.16 $ 0.08 46,421 44,649 On October 1, 2015 we completed our acquisition of certain assets of Philip L. Chatham, M.D., Inc., an oncology practice with offices in the Los Angeles, CA area, for consideration of $916,000, paid in shares of equal value of the common stock of RadNet, Inc. and $300,000 in cash. We have made a fair value determination of the acquired assets and approximately $26,000 of fixed assets, $100,000 covenant not to compete intangible asset, $300,000 of medical supplies and $790,000 of goodwill were recorded with respect to this transaction. On September 1, 2015 we completed our acquisition of certain assets of Murray Hill Radiology and Mammography, P.C. and Murray Hill MRI Holding, LLC, consisting of a single multi-modality imaging center located in Manhattan, New York for a cash consideration of $5.8 million. The facility provides MRI, CT, Ultrasound and X-ray services. We have made a fair value determination of the acquired assets and approximately $1.6 million of fixed assets, $95,000 of prepaid assets and $4.1 million of goodwill were recorded. On August 3, 2015 we completed our acquisition of certain assets of Hanford Imaging, LP, consisting of a single multi-modality imaging center located in Hanford, CA for cash consideration of $1.0 million. The facility provides MRI, CT, Ultrasound and X-ray services. We have made a fair value determination of the acquired assets and approximately $215,000 of fixed asset and $785,000 of goodwill were recorded. On June 1, 2015 we completed our acquisition of certain assets of Healthcare Radiology and Diagnostic systems, PLLC, consisting of a single multi-modality imaging center located in the Bronx, NY area for cash consideration of $425,000. The facility provides MRI, CT, Ultrasound and X-ray services. We have made a fair value determination of assets acquired and approximately $134,500 of fixed assets and $290,500 of leasehold improvements were recorded. On May 1, 2015 we completed our acquisition of certain assets of California Radiology consisting of six multi-modality imaging centers located in Los Angeles, California for cash consideration of $4.2 million. The facilities provide MRI, PET/CT, Ultrasound and X-ray services. We have made a fair value determination of the acquired assets and approximately $217,000 of equipment, $1.7 million of leasehold improvements, $34,000 in other assets, $100,000 of other intangible assets relating to a covenant not to compete contract and $2.1 million of goodwill were recorded with respect to this transaction. On April 15, 2015 we completed our acquisition of certain assets of New York Radiology Partners, consisting of eleven multi-modality imaging centers located in Manhattan, New York for cash consideration of $29.8 million, a note to seller of $1.5 million, and the assumption of equipment debt of $2.3 million. The facilities provide a full range of radiology services including MRI, PET/CT, Mammography, Ultrasound, X-ray and other related services. With the use of an outside valuation expert, we have made a fair value determination of the acquired assets and assumed liabilities. In total, RadNet acquired assets of $34.5 million and assumed current liabilities of $891,000. Asset amounts acquired were $6.9 million in equipment, $11.6 million in leasehold improvements, $9.9 million in goodwill, $1.2 million in intangible assets, and $4.9 million of accounts receivable and other assets. Current liabilities assumed related to accounts payable, payroll and other related short term obligations. On September 1, 2014 we completed our acquisition of certain assets of Hematology Oncology Consultants located in Van Nuys, CA for cash consideration of $553,000. We have made a fair value determination of the acquired assets and approximately $15,000 of fixed assets, $164,000 of medical supplies inventory, $39,000 of other assets, $100,000 covenant not to compete intangible asset, and $235,000 of goodwill were recorded with respect to this transaction. On September 1, 2014 we completed our acquisition of certain assets of Imaging Centers of Pasadena consisting of a single multi-modality imaging center located in Pasadena, CA for cash consideration of $1.8 million. The facility provides MRI, PET/CT, Ultrasound and X-ray services. We have made a fair value determination of the acquired assets and approximately $1.7 million of fixed assets and $105,000 of a covenant not to compete intangible asset were recorded with respect to this transaction. On July 3, 2014 we completed our acquisition of certain imaging center equipment from Healthcare Partners for which we agreed to pay $2.1 million. We paid cash of $300,000 and signed a promissory note for the remainder of $1.8 million. On July 1, 2014 we completed our acquisition of certain assets of Moreno Valley Imaging consisting of a single multi-modality imaging center located in Moreno Valley, CA for cash consideration of $700,000. The facility provides MRI, CT, Ultrasound and X-ray services. We have made a fair value determination of the acquired assets and approximately $285,000 of fixed assets, $3,000 of other assets, $50,000 for a non compete covenant and $362,000 of goodwill were recorded with respect to this transaction. On July 1, 2014 we completed our acquisition of certain assets of Liberty Pacific Imaging Long Beach consisting of a single multi-modality imaging center located in Signal Hill, CA for cash consideration of $1.9 million and assumed capital lease debt of $65,000. The facility provides MRI, CT, Ultrasound and X-ray services. We have made a fair value determination of the acquired assets and assumed liabilities and $577,000 of fixed assets, $100,000 for a covenant not to compete and $1.3 million of goodwill were recorded with respect to this transaction. On July 1, 2014 we completed our acquisition of certain assets of Medical Imaging of Manhattan consisting of a single modality mammography center located in New York, New York for cash consideration of $2.4 million. We have made a fair value determination of the acquired assets and approximately $672,000 of fixed assets, $139,000 of other assets, a covenant not to compete of $150,000 and $1.4 million of goodwill were recorded with respect to this transaction. On April 1, 2014, we acquired the diagnostic imaging practice of certain assets of Sidney Friedman, M.D. located in Westchester, CA for $1.4 million. We have made a fair value determination of the assets acquired and have allocated $600,000 to Imaging equipment, $470,000 to accounts receivable, a covenant not to compete of $100,000 and $231,000 to goodwill. On January 2, 2014, we acquired the diagnostic imaging practice of Leslie A. Saint-Louis, M.D. located in New York, New York for $360,000. Upon acquisition, we relocated the practice to a nearby existing center in New York, New York. We have made a fair value determination of the assets acquired and have allocated $310,000 to goodwill and $50,000 to other intangible assets related to a covenant not to compete contract with Dr. Saint-Louis. Dispositions On September 30, 2015 we completed a sale of 10 wholly owned imaging centers to one of our non-consolidated joint ventures for which we hold a 49% non-controlling interest, The New Jersey Imaging Network, L.L.C., for approximately $35.5 million. We recorded a gain of $5.4 million with respect to this transaction. On August 3, 2015 we sold a 25% non-controlling interest in one of our wholly owned entities, Baltimore County Radiology, LLC (“BCR”) to Lifebridge Health for $5.0 million. On the date of sale, the net book value of this 25% interest was $1.3 million. In accordance with ASC 810-10-45-23, the proceeds in excess of this net book value amounting to $3.7 million was recorded to equity. In addition to the proceeds already received, RadNet has the opportunity to receive approximately $1.2 million in additional proceeds if certain operating performance targets of BCR are achieved within the next 12 months. Any additional amounts received under these contingent performance provisions will be recorded to equity accordingly. |
5. GOODWILL AND OTHER INTANGIBL
5. GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | Goodwill is recorded as a result of business combinations. Activity in goodwill for the years ended December 31, 2014 and 2015, is provided below (in thousands): Balance as of December 31, 2013 196,395 Goodwill acquired through the acquisition of Corinthian 310 Goodwill acquired through the acquisition of Westchester Imaging 231 Goodwill acquired through the acquisition of Garden State Radiology 50 Goodwill acquired through the acquisition of Medical Imaging of Manhattan 1,433 Goodwill acquired through the acquisition of Liberty Pacific 1,288 Goodwill acquired through the acquisition of Moreno Valley 362 Goodwill acquired through the acquisition of Hematology-Oncology 235 Balance as of December 31, 2014 200,304 Adjustment to our allocation of goodwill for the acquisition of Liberty Pacific 200 Goodwill acquired through the acquisition of California Radiology 2,107 Goodwill acquired through the acquisition of New York Radiology Partners 9,897 Goodwill disposed through the sale of New Jersey Imaging Partners (18,833 ) Goodwill acquired through the acquisition of Hanford Imaging, LP 785 Goodwill acquired through the acquisition of Murry Hill Radiology and MRI 4,123 Goodwill acquired through the acquisition of Phillip L Chatam, M.D., Inc. 790 Goodwill acquired through the acquisition of Diagnostic Imaging Group, LLC 40,035 Balance as of December 31, 2015 $ 239,408 The amount of goodwill from these acquisitions that is deductible for tax purposes as of December 31, 2015 is $109.9 million. Other intangible assets are primarily related to the value of management service agreements obtained through our acquisition of Radiologix, Inc. in 2006 and are recorded at a cost of $57.5 million less accumulated amortization of $21.1 million at December 31, 2015. Also included in other intangible assets is the value of covenant not to compete contracts associated with our facility acquisitions totaling $5.8 million less accumulated amortization of $4.9 million, as well as the value of trade names associated with acquired imaging facilities totaling $10.2 million less accumulated amortization of $1.5 million and dispositions of $750,000. Also in connection with our purchase of eRAD and included in other intangible assets is the value of eRAD’s developed technology and its customer relationships. Total amortization expense for the years ended December 31, 2015, 2014 and 2013 was $3.0 million, $3.1 million, and $3.1 million, respectively. Intangible assets are amortized using the straight-line method. Management service agreements are amortized over 25 years using the straight line method. Developed technology and customer relationships are amortized over 5 years using the straight line method. The following table shows annual amortization expense, by asset classes that will be recorded over the next five years (in thousands): 2016 2017 2018 2019 2020 Thereafter Total Weighted average amortization period remaining in years Management Service Contracts $ 2,309 $ 2,309 $ 2,309 $ 2,309 $ 2,309 $ 24,861 $ 36,406 15.7 Covenant not to compete contracts 304 241 198 112 30 – 885 3.4 Customer relationships 1 – – – – – 1 – Developed technology and in-process R&D 24 – – – – – 24 0.8 Trade Names* – – – – – 7,937 7,937 – Total Annual Amortization $ 2,638 $ 2,550 $ 2,507 $ 2,421 $ 2,339 $ 32,798 $ 45,253 * These trade name intangibles have an indefinite life |
6. PROPERTY AND EQUIPMENT
6. PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | Property and equipment and accumulated depreciation and amortization are as follows (in thousands): December 31, 2015 2014 Land $ 250 $ 250 Medical equipment 352,005 334,893 Computer and office equipment, furniture and fixtures 107,014 90,031 Software development costs 6,391 6,391 Leasehold improvements 232,550 206,224 Equipment under capital lease 29,796 22,753 728,006 660,542 Accumulated depreciation and amortization (471,284 ) (437,415 ) $ 256,722 $ 223,127 Depreciation and amortization expense of property and equipment, including amortization of equipment under capital leases, for the years ended December 31, 2015, 2014 and 2013 was $57.6, $56.2 million, and $55.8 million, respectively. |
7. ACCOUNTS PAYABLE AND ACCRUED
7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2015 | |
Payables and Accruals [Abstract] | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (IN THOUSANDS) | December 31, 2015 2014 Accounts payable $ 52,296 $ 46,855 Accrued expenses 32,950 28,809 Accrued payroll and vacation 17,692 11,937 Accrued professional fees 10,875 10,215 Total $ 113,813 $ 97,816 |
8. NOTES PAYABLE, LINE OF CREDI
8. NOTES PAYABLE, LINE OF CREDIT AND CAPITAL LEASES | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE, LINE OF CREDIT AND CAPITAL LEASES | Our notes payable, long-term debt, line of credit and capital lease obligations consist of the following (in thousands): December 31, 2015 2014 Revolving lines of credit $ – $ 15,300 First Lien Term Loans 451,023 399,750 Second Lien Term Loans 180,000 180,000 Discounts on term loans (9,542 ) (11,966 ) Promissory note payable to the former owner of a practice acquired at an interest rate of 1.5% due through 2019 1,361 – Promissory note payable to Healthcare Partners for imaging equipment acquired through acquisition at an interrest rate of 5.25% 431 1,590 Equipment notes payable at interest rates ranging from 3.3% to 10.2%, due through 2020, collateralized by medical equipment 1,032 1,153 Obligations under capital leases at interest rates ranging from 2.5% to 10.8%, due through 2022, collateralized by medical and office equipment 16,423 11,780 Total debt obligations 640,728 597,607 Less: current portion (33,114 ) (25,105 ) Long term portion debt obligations $ 607,614 $ 572,502 The following is a listing of annual principal maturities of notes payable exclusive of all related discounts, capital leases and repayments on our revolving credit facilities for years ending December 31 (in thousands): 2016 $ 26,217 2017 25,247 2018 402,097 2019 276 2020 11 Thereafter 180,000 Total notes payable obligations $ 633,848 We lease equipment under capital lease arrangements. Future minimum lease payments under capital leases for years ending December 31 (in thousands) is as follows: 2016 $ 10,660 2017 4,325 2018 1,713 2019 246 2020 201 Thereafter 98 Total minimum payments 17,243 Amount representing interest (820 ) Present value of net minimum lease payments 16,423 Less current portion (10,038 ) Long-term portion lease obligations $ 6,385 Term Loans and Financing Activity Information Included in our consolidated balance sheet at December 31, 2015 are $621.5 million of senior secured term loan debt (net of unamortized discounts of $9.5 million), broken down by loan agreement as follows (in thousands): As of December 31, 2015 Face Value Discount Total Carrying Value First Lien Term Loans $ 451,023 $ (7,305 ) $ 443,718 Second Lien Term Loans $ 180,000 $ (2,237 ) $ 177,763 Total $ 631,023 $ (9,542 ) $ 621,481 Our revolving credit facility had no aggregate principal amount outstanding as of December 31, 2015. Our credit facilities are comprised of a Credit and Guaranty Agreement that we entered into on October 10, 2012 (the “Original Credit Agreement” and as amended by the 2013 Amendment (as defined below) and the 2014 Amendment (as defined below), (the “Credit Agreement”), as subsequently amended by a first amendment dated April 3, 2013 (the “2013 Amendment”), and a second amendment dated March 25, 2014 (the “2014 Amendment”). We also entered into a Second Lien Credit and Guaranty Agreement dated March 25, 2014 (the “Second Lien Credit Agreement”). On April 30, 2015 we entered into a joinder agreement to the Credit Agreement (the “2015 Joinder”). Each of the foregoing is described in more detail below. As of December 31, 2015, we were in compliance with all covenants under the Original Credit Agreement (as amended by the 2013 Amendment, the 2014 Amendment, and the 2015 Joinder) and the Second Lien Credit Agreement. The following describes our 2015 financing activities: 2015 Incremental First Lien Term Loans: On April 30, 2015, we entered into the 2015 Joinder to the Credit Agreement to provide for the borrowing of $75.0 million of incremental first lien term loans (“2015 Incremental First Lien Term Loans”). The 2015 Incremental First Lien Term Loans are treated as part of the same class as the existing tranche B term loans currently outstanding under the Credit Agreement. We used the proceeds from the 2015 Incremental First Lien Term Loans to repay all of the borrowings outstanding under the first lien revolving loan facility and to pay approximately $1.1 million of fees and expenses associated with the transaction. Interest. Payments. Maturity Date. Guarantees and Collateral. Restrictive Covenants. Financial Covenants. Events of Default. The following describes our 2014 financing activities: 2014 Amendment to the Original Credit Agreement and Second Lien Credit and Guaranty Agreement On March 25, 2014, we simultaneously entered into two agreements which resulted in the creation of a direct financial obligation as follows: 2014 Amendment of the Original Credit Agreement. Second Lien Credit and Guaranty Agreement. Revolving Credit Facility. The 2014 Amendment provided for the following: Interest. Payments. The Second Lien Credit Agreement provides for the following: Interest. Payments. Termination. Restrictive Covenants. Events of Default. Senior Notes On April 6, 2010, we issued and sold $200 million of 10 3/8% senior unsecured notes due 2018 at a price of 98.680% (the “Senior Notes”). All payments of the Senior Notes, including principal and interest, were guaranteed jointly and severally on a senior secured basis by RadNet, Inc., and all of Radnet Management’s current and future domestic wholly owned restricted subsidiaries. The Senior Notes were issued under an indenture dated April 6, 2010 (the “Indenture”), by and among Radnet Management, Inc., as issuer, RadNet, Inc., as parent guarantor, the subsidiary guarantors thereof and U.S. Bank National Association, as trustee. We paid interest on the senior notes on April 1 We completed the retirement of our $200 million in Senior Notes on April 24, 2014 and following such retirement the Company completed the satisfaction and discharge of the Indenture. The transactions leading to the retirement of the Senior Notes are described below: Tender Offer and Exercise of Optional Redemption on March 7, 2014. Tender Offer and Exercise on Optional Redemption of March 25, 2014. The following describes our key financing activities prior to 2014: 2013 Amendment to the Credit Agreement On April 3, 2013, we entered into a first amendment to the Original Credit Agreement. Pursuant to this amendment, we re-priced the balance of our term loan of $348.3 million and borrowed an additional $40.0 million for a new senior secured term loan total of $388.3 million. The proceeds from the amendment were used to: (i) repay in full all existing term loans under the Original Credit Agreement; (ii) repay outstanding revolving loans; (iii) repay premium, fees and expenses incurred; and (iv) general corporate purposes. 2012 Refinancing and Original Credit Agreement On October 10, 2012 we completed the refinancing of our then existing credit facilities by entering into the Original Credit Agreement with a syndicate of banks and other financial institutions. The total amount of refinancing was $451.25 million, consisting of (i) a $350 million senior secured term loan and (ii) a $101.25 million senior secured revolving credit facility. The obligations under the Original Credit Agreement are guaranteed by RadNet, Inc. and our current and future domestic subsidiaries and certain of our affiliates (other than certain excluded foreign subsidiaries). The obligations under the Original Credit Agreement, including the guarantees, are secured by a perfected first-priority security interest in all of our tangible and intangible assets, including, but not limited to, pledges of equity interests of Radnet Management and all of our current and future domestic subsidiaries. We used the net proceeds of the Original Credit Agreement to repay in full our then existing six year term loan facility for $277.9 million in principal amount outstanding, which would have matured on April 6, 2016, and our revolving credit facility for $59.8 million in principal amount outstanding, which would have matured on April 6, 2015. |
9. COMMITMENTS AND CONTINGENCIE
9. COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Leases Facilities Equipment Total 2016 $ 57,899 $ 8,688 $ 66,587 2017 49,755 8,389 58,144 2018 42,497 6,136 48,633 2019 36,581 2,589 39,170 2020 29,037 896 29,933 Thereafter 80,289 14 80,303 $ 296,058 $ 26,712 $ 322,770 Total rent expense, including equipment rentals, for the years ended December 31, 2015, 2014 and 2013 was $61.5 million, $64.5 million and $65.0 million, respectively. Litigation |
10. INCOME TAXES
10. INCOME TAXES | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | For the years ended December 31, 2015, 2014 and 2013, we recognized income tax expense comprised of the following (in thousands): December 31, 2015 2014 2013 Federal current tax $ 237 $ – $ – State current tax 1,705 1,283 643 Other current tax 28 29 (39 ) Federal deferred tax 3,625 869 3,794 State deferred tax 412 (214 ) (888 ) Income tax expense $ 6,007 $ 1,967 $ 3,510 A reconciliation of the statutory U.S. federal rate and effective rates is as follows (in thousands): Years Ended 2015 2014 2013 Federal tax 34.00% 34.00% 34.00% State franchise tax, net of federal benefit 8.50% -3.64% -14.20% Other Non deductible expenses -0.01% 0.00% 0.07% Meals and entertainment 1.75% 4.85% 1.98% Noncontrolling Interest in Partnerships -2.16% -2.88% -1.48% Equity compensation -1.74% -8.72% 35.39% Changes in valuation allowance -17.32% 24.52% -17.88% Return-to-provision 3.29% -9.57% -1.96% Deferred true-ups and other 13.41% 16.34% 0.00% Uncertain tax positions 0.01% -3.67% -2.92% Expiring net operating losses 1.28% 2.61% 26.64% Income tax expense 41.01% 53.85% 59.64% Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial and income tax reporting purposes and operating loss carryforwards. Our deferred tax assets and liabilities comprise the following (in thousands): December 31, 2015 2014 Deferred tax assets: Net operating losses $ 78,912 $ 87,709 Accrued expenses 4,125 3,594 Straight-Line Rent Adjustment 11,263 8,897 Unfavorable contract liability 2,142 2,811 Equity compensation 846 253 Allowance for doubtful accounts 4,341 2,124 Other 1,092 1,891 Valuation Allowance (3,841 ) (6,378 ) Total Deferred Tax Assets $ 98,880 $ 100,901 Deferred tax liabilities: Property Plant & Equipment (8,582 ) (7,755 ) Goodwill (18,617 ) (17,833 ) Intangibles (12,088 ) (12,105 ) NAEM Reserve (7,882 ) (6,441 ) Other (4,747 ) (4,189 ) Total Deferred Tax Liabilities $ (51,916 ) $ (48,323 ) Net Deferred Tax Asset $ 46,964 $ 52,578 As of December 31, 2015, the Company had federal net operating loss carryforwards of approximately $233.9 million, which expire at various intervals from the years 2017 to 2035. The Company also had state net operating loss carryforwards of approximately $123.3 million, which expire at various intervals from the years 2016 through 2035. As of December 31, 2015, $40.6 million of our federal net operating loss carryforwards acquired in connection with business combinations are subject to limitations related to their utilization under Section 382 of the Internal Revenue Code. Future ownership changes as determined under Section 382 of the Internal Revenue Code could further limit the utilization of net operating loss carryforwards. Cumulative excess tax benefits of $7.1 million, related to the exercise of stock options, will be recorded in equity when realized. We considered all evidence available when determining whether deferred tax assets are more likely-than-not to be realized, including projected future taxable income, scheduled reversals of deferred tax liabilities, prudent tax planning strategies, and recent financial operations. The evaluation of this evidence requires significant judgment about the forecasts of future taxable income, based on the plans and estimates we are using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, we consider three years of cumulative operating income. As of December 31, 2015, we have determined that deferred tax assets of $98.9 million are more likely-than-not to be realized. For the next five years, and thereafter, federal net operating loss carryforwards expire as follows (in thousands): Year Ended Total Net Operating Loss Carryforwards Amount Subject to 382 limitation 2017 3,356 – 2018 12,284 – 2019 7,178 – 2020 – – Thereafter 211,094 40,610 $ 233,912 $ 40,610 For the next five years, and thereafter, California net operating loss carryforwards expire as follows (in thousands): Year Ended Total Net Operating Loss Carryforwards 2016 3,683 2017 9,292 2018 – 2019 – 2020 – Thereafter 18,247 $ 31,222 We file consolidated income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. With limited exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2011. We do not anticipate the results of any open examinations would result in a material change to its financial position. A reconciliation of the total gross amounts of unrecognized tax benefits for the years ended December 31, 2015, 2014 and 2013 is as follows (in thousands): December 31, 2015 2014 2013 Balance at beginning of year $ 3,761 $ 3,970 $ 4,184 Decreases related to prior year tax positions (3,667 ) – (214 ) Expiration of the statute of limitations for the assessment of taxes – (209 ) – Balance at end of year $ 94 $ 3,761 $ 3,970 We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense. During the year ended December 31, 2015 we accrued an insignificant amount of interest expense. As of December 31, 2015, accrued interest and penalties were insignificant. |
11. STOCK-BASED COMPENSATION
11. STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | Stock Incentive Plans Options We have one long-term equity incentive plan which we refer to as the 2006 Equity Incentive Plan, which we amended and restated as of April 20, 2015 (the “Restated Plan”). The Restated Plan was approved by our stockholders at our annual stockholders meeting on June 11, 2015. As of December 31, 2015, we have reserved for issuance under the Restated Plan 12,000,000 shares of common stock. We can issue options, stock awards, stock appreciation rights and cash awards under the Restated Plan. Certain options granted under the Restated Plan to employees are intended to qualify as incentive stock options under existing tax regulations. Stock options generally vest over two to five years and expire five to ten years from the date of grant. As of December 31, 2015, we had outstanding options to acquire 931,667 shares of our Common Stock, of which options to acquire 918,334 shares were exercisable. During the twelve months ended December 31, 2015, we did not grant any stock options under our Restated Plan. The following summarizes all of our option transactions during the year ended December 31, 2015: Outstanding Options Under the 2006 Plan Shares Weighted Average Exercise price Per Common Share Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value Balance, December 31, 2014 2,092,509 $ 3.58 Exercised (1,135,833 ) 2.69 Canceled, forfeited or expired (25,009 ) 2.22 Balance, December 31, 2015 931,667 4.69 0.82 $ 2,109,751 Exercisable at December 31, 2015 918,334 4.73 0.79 2,054,551 Aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between our closing stock price on December 31, 2015 and the exercise price, multiplied by the number of in-the-money options as applicable) that would have been received by the holder had all holders exercised their options on December 31, 2015. Total intrinsic value of options exercised during the year ended December 31, 2015 and 2014 was approximately $6.2 million and $7.3 million, respectively. As of December 31, 2015, total unrecognized stock-based compensation expense related to non-vested employee awards was $9,815, which is expected to be recognized over a weighted average period of approximately 0.87 years. Restricted Stock Awards (“RSA’s”) The Restated Plan permits the award of restricted stock awards (“RSA’s”). As of December 31, 2015, we have issued a total of 3,461,208 RSA’s of which 771,342 were unvested at December 31, 2015. The following summarizes all unvested RSA’s activities during the year ended December 31, 2015: Weighted-Average Remaining Contractual Weighted-Average RSA's Term (Years) Fair Value RSA's unvested at December 31, 2014 942,024 $ 1.96 Changes during the period Granted 744,423 $ 8.60 Vested (856,052 ) $ 4.59 Forfeited (59,053 ) $ 5.59 RSA's unvested at December 31, 2015 771,342 0.71 $ 5.17 We determine the fair value of all RSA’s based of the closing price of our common stock on award date. Other stock bonus awards The Restated Plan also permits the award of stock bonuses not subject to any future service period. These awards are valued and expensed based on the closing price of our common stock on the date of award. During the year ended December 31, 2015 we issued 170,000 shares relating to these awards. In sum, of the 12,000,000 shares of common stock reserved for issuance under the Restated Plan, at December 31, 2015, we had issued 11,059,958 total shares between options, RSA’s and other stock awards. With options cancelled and RSA’s forfeited amounting to 2,825,009 and 59,053 shares, respectively, there remain 3,824,104 shares available under the Restated Plan for future issuance. |
12. EMPLOYEE BENEFIT PLAN
12. EMPLOYEE BENEFIT PLAN | 12 Months Ended |
Dec. 31, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
EMPLOYEE BENEFIT PLAN | We adopted a profit-sharing/savings plan pursuant to Section 401(k) of the Internal Revenue Code that covers substantially all non-professional employees. Eligible employees may contribute on a tax-deferred basis a percentage of compensation, up to the maximum allowable under tax law. Employee contributions vest immediately. The plan does not require a matching contribution by us. There was no expense for any periods presented in the report. |
13. QUARTERLY RESULTS OF OPERAT
13. QUARTERLY RESULTS OF OPERATIONS | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
QUARTERLY RESULTS OF OPERATIONS | The following table sets forth a summary of our unaudited quarterly operating results for each of the last eight quarters in the years ended December 31, 2015 and 2014. This quarterly data has been derived from our unaudited consolidated interim financial statements which, in our opinion, have been prepared on substantially the same basis as the audited financial statements contained elsewhere in this report and include all normal recurring adjustments necessary for a fair presentation of the financial information for the periods presented. These unaudited quarterly results should be read in conjunction with our financial statements and notes thereto, included elsewhere in this report. The operating results in any quarter are not necessarily indicative of the results that may be expected for any future period (in thousands except for share and per share data). 2015 Quarter Ended 2014 Quarter Ended Mar 31 June 30 Sept 30 Dec 31 Mar 31 June 30 Sept 30 Dec 31 Statement of Operations Data: Net revenue $ 181,267 $ 204,289 $ 208,366 $ 215,706 $ 168,876 $ 179,082 $ 184,059 $ 185,552 Total operating expenses 183,213 190,905 191,137 205,256 161,328 163,436 168,824 170,676 Total other expenses 6,723 10,836 5,731 10,109 25,468 10,803 10,401 9,951 Equity in earnings of joint ventures (1,102 ) (3,207 ) (1,992 ) (2,626 ) (1,067 ) (1,646 ) (2,009 ) (2,248 ) Benefit from (provision for) income taxes 3,091 (2,192 ) (5,199 ) (1,707 ) 4,478 (1,233 ) (2,334 ) (2,878 ) Net (loss) income (4,476 ) 3,563 8,291 1,260 (12,375 ) 5,256 4,509 4,295 Net income attributable to noncontrolling interests 78 168 304 379 49 112 58 90 Net (loss) income attributable to Radnet, Inc. common stockholders $ (4,554 ) $ 3,395 $ 7,987 $ 881 $ (12,424 ) $ 5,144 $ 4,451 $ 4,205 Basic net (loss) income attributable to Radnet, Inc. common stockholders (loss) earnings per share: $ (0.11 ) $ 0.08 $ 0.18 $ 0.02 $ (0.31 ) $ 0.13 $ 0.11 $ 0.10 Diluted net (loss) income attributable to Radnet, Inc. common stockholders (loss) earnings per share: $ (0.11 ) $ 0.08 $ 0.18 $ 0.02 $ (0.31 ) $ 0.12 $ 0.10 $ 0.10 Weighted average shares outstanding Basic 42,747 43,370 43,637 45,454 40,010 40,817 41,645 41,783 Diluted 42,747 44,686 44,752 46,545 40,010 43,263 44,034 44,182 |
14. RELATED PARTY TRANSACTIONS
14. RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | We use World Wide Express, a package delivery company owned by our western operations chief operating officer, to provide delivery services for us. For the years ended December 31, 2015, 2014 and 2013, we paid approximately $693,000, $833,000, $955,000, and respectively, to World Wide Express for those services. At December 31, 2015 and 2014, we had outstanding amounts due to World Wide Express of $116,000 and $61,000, respectively. |
15. SUBSEQUENT EVENTS
15. SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | On March 1, 2016 we completed our acquisition of certain assets of Advanced Radiological Imaging – Astoria P.C. consisting of a three multi-modality imaging centers located in Astoria, NY for cash consideration of $5.0 million. The facility provides MRI, PET/CT, Ultrasound and X-ray services. |
2. SUMMARY OF SIGNIFICANT ACC23
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | PRINCIPLES OF CONSOLIDATION - The operating activities of subsidiaries are included in the accompanying consolidated financial statements from the date of acquisition. Investments in companies in which the Company has the ability to exercise significant influence, but not control, are accounted for by the equity method. All intercompany transactions and balances, with our consolidated entities and the unsettled amount of intercompany transactions with our equity method investees, have been eliminated in consolidation. As stated in Note 1 above, the BRMG and NY Groups are variable interest entities and we consolidate the operating activities and balance sheets of each. |
Use of Estimates | USE OF ESTIMATES - The preparation of the financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates and assumptions affect various matters, including our reported amounts of assets and liabilities in our consolidated balance sheets at the dates of the financial statements; our disclosure of contingent assets and liabilities at the dates of the financial statements; and our reported amounts of revenues and expenses in our consolidated statements of operations during the reporting periods. These estimates involve judgments with respect to numerous factors that are difficult to predict and are beyond managementÂ’s control. As a result, actual amounts could materially differ from these estimates. |
Revenues | REVENUES - Service fee revenue, net of contractual allowances and discounts, consists of net patient fees received from various payors and patients themselves based mainly upon established contractual billing rates, less allowances for contractual adjustments and discounts. As it relates to BRMG and the NY Groups centers, this service fee revenue includes payments for both the professional medical interpretation revenue recognized by BRMG and the NY Groups as well as the payment for all other aspects related to our providing the imaging services, for which we earn management fees from BRMG and the NY Groups. As it relates to non-BRMG and NY Groups centers, namely the affiliated physician groups, this service fee revenue is earned through providing the use of our diagnostic imaging equipment and the provision of technical services as well as providing administration services such as clerical and administrative personnel, bookkeeping and accounting services, billing and collection, provision of medical and office supplies, secretarial, reception and transcription services, maintenance of medical records, and advertising, marketing and promotional activities. Service fee revenues are recorded during the period the services are provided based upon the estimated amounts due from the patients and third-party payors. Third-party payors include federal and state agencies (under the Medicare and Medicaid programs), managed care health plans, commercial insurance companies and employers. Estimates of contractual allowances are based on historical collection rates of payor reimbursement contract agreements. We also record a provision for doubtful accounts based primarily on historical collection rates from related to patient copayments and deductible amounts for patients who have health care coverage under one of our third-party payors. Under capitation arrangements with various health plans, we earn a per-enrollee amount each month for making available diagnostic imaging services to all plan enrollees under the capitation arrangement. Revenue under capitation arrangements is recognized in the period which we are obligated to provide services to plan enrollees under contracts with various health plans. Our service fee revenue, net of contractual allowances and discounts, the provision for bad debts, and revenue under capitation arrangements for the years ended December 31, are summarized in the following table (in thousands) : Years Ended December 31, 2015 2014 2013 Commercial insurance (1) $ 486,489 $ 437,525 $ 430,735 Medicare 168,545 159,562 156,066 Medicaid 23,948 24,499 24,017 Workers' compensation/personal injury 32,728 30,543 34,821 Other (2) 35,046 18,007 19,668 Service fee revenue, net of contractual allowances and discounts 746,756 670,136 665,307 Provision for bad debts (36,033 ) (29,807 ) (27,911 ) Net service fee revenue 710,723 640,329 637,396 Revenue under capitation arrangements 98,905 77,240 65,590 Total net revenue $ 809,628 $ 717,569 $ 702,986 _________________ (1) (2) |
Provision for Bad Debts | PROVISION FOR BAD DEBTS - We provide for an allowance against accounts receivable that could become uncollectible to reduce the carrying value of such receivables to their estimated net realizable value. We estimate this allowance based on the aging of our accounts receivable by the historical payment pattern of each type of payor, write-off trends, and other relevant factors. A significant portion of our provision for bad debt relates to co-payments and deductibles owed to us from patients with insurance. Although we attempt to collect deductibles and co-payments due from patients with insurance at the time of service, this attempt to collect at the time of service is not an assessment of the patientÂ’s ability to pay nor are revenues recognized based on an assessment of the patientÂ’s ability to pay. There are various factors that can impact collection trends, such as changes in the economy, which in turn have an impact on the increased burden of co-payments and deductibles to be made by patients with insurance. These factors continuously change and can have an impact on collection trends and our estimation process. Our allowance for bad debts at December 31, 2015 and 2014 was $20.8 million and $15.1 million, respectively. |
Meaningful Use Incentive | MEANINGFUL USE INCENTIVE - Under the American Recovery and Reinvestment Act of 2009, a program was enacted that provides financial incentives for providers that successfully implement and utilize electronic health record technology to improve patient care. Our software development team in Canada established an objective to build a Radiology Information System (RIS) software platform that has been awarded Meaningful Use certification. As this certified RIS system is implemented throughout our imaging centers, the radiologists that utilize this software can be eligible for the available financial incentives. In order to receive such incentive payments providers must attest that they have demonstrated meaningful use of the certified RIS in each stage of the program. We account for this meaningful use incentive under the Gain Contingency Model outlined in ASC 450-30. Under this model, we record within non-operating income, meaningful use incentive only after Medicare accepts an attestation from the qualified eligible professional demonstrating meaningful use. We recorded approximately $3.3 million and $2.0 million during the twelve months ended December 31, 2015 and 2014 relating to this incentive. |
Accounts Receivable | ACCOUNTS RECEIVABLE - Substantially all of our accounts receivable are due under fee-for-service contracts from third party payors, such as insurance companies and government-sponsored healthcare programs, or directly from patients. Services are generally provided pursuant to one-year contracts with healthcare providers. We continuously monitor collections from our payors and maintain an allowance for bad debts based upon specific payor collection issues that we have identified and our historical experience. |
Software Revenue Recognition | SOFTWARE REVENUE RECOGNITION – Our subsidiary, eRAD, Inc., sells Picture Archiving Communications Systems (“PACS”) and related services, primarily in the United States. The PACS systems sold by eRAD are primarily composed of certain elements: hardware, software, installation and training, and support. Sales are made primarily through eRAD’s sales force. These sales are multiple-element arrangements that generally include hardware, software, software installation, configuration, system installation, training and first-year warranty support. Hardware, which is not unique or special purpose, is purchased from a third-party and resold to eRAD’s customers with a small mark-up. We have determined that our core software products, such as PACS, are essential to most of our arrangements as hardware, software and related services are sold as an integrated package. Therefore, these transactions are accounted for under ASC 605-25, Multiple-Element Arrangements Software. We recognize revenue for four units of accounting, hardware, software, installation (including manufacturing and configuration, training, implementation and project management) and post-contract support (“ PCS”) · Hardware o The hardware has standalone value as it is sold separately by other vendors and the customer could resell the hardware on a standalone basis; and o Delivery or performance of the undelivered items is probable and substantially within our control. · Software · Installation · Post-Contract Support Our transactions do not generally contain refund provisions. We allocate the transaction price to each unit of accounting using relative selling price. We consider historical pricing, list price and market considerations in determining estimated selling price in the allocation. For the years ended December 31, 2015, 2014 and 2013, we recorded approximately $6.1 million, $5.5 million and $4.9 million, respectively, in revenue related to our eRAD business which is included in net service fee revenue in our consolidated statement of operations. At December 31, 2015 we had a deferred revenue liability of approximately $1.5 million associated with eRAD sales which we expect to recognize into revenue over the next 12 months. |
Software Development Costs | SOFTWARE DEVELOPMENT COSTS - Costs related to the research and development of new software products and enhancements to existing software products all for resale to our customers are expensed as incurred. We utilize a variety of computerized information systems in the day to day operation of our diagnostic imaging facilities. One such system is our front desk patient tracking system or Radiology Information System (“RIS”). We have historically utilized third party RIS software solutions and pay monthly fees to outside third party software vendors for the use of this software. We have developed our own RIS solution from the ground up through our wholly owned subsidiary, Radnet Management Information Systems (“RMIS”) and began utilizing this system beginning in the first quarter of 2015. In accordance with ASC 350-40, Accounting for the Costs of Computer Software Developed for Internal Use, During the twelve months ended December 31, 2015, we entered into an agreement to license our RIS system to an outside customer. As of December 31, 2015, we received approximately $443,000 with respect to this licensing agreement. In accordance with ASC 350-40, we recorded the receipt of these funds against the capitalized software costs explained above. We intend to record any future proceeds in the same manner until the carrying value of our capitalized software costs are brought to zero. As of December 31, 2015, the net carrying value of our capitalized software costs was approximately $4.7 million. |
Concentration of Credit Risks | CONCENTRATION OF CREDIT RISKS - Financial instruments that potentially subject us to credit risk are primarily cash equivalents and accounts receivable. We have placed our cash and cash equivalents with one major financial institution. At times, the cash in the financial institution is temporarily in excess of the amount insured by the Federal Deposit Insurance Corporation, or FDIC. Substantially all of our accounts receivable are due under fee-for-service contracts from third party payors, such as insurance companies and government-sponsored healthcare programs, or directly from patients. Services are generally provided pursuant to one-year contracts with healthcare providers. We continuously monitor collections from our clients and maintain an allowance for bad debts based upon our historical collection experience. |
Cash and Cash Equivalents | CASH AND CASH EQUIVALENTS - We consider all highly liquid investments that mature in three months or less when purchased to be cash equivalents. The carrying amount of cash and cash equivalents approximates their fair market value. |
Deferred Financing Costs | DEFERRED FINANCING COSTS - Costs of financing are deferred and amortized on a straight-line basis over the life of the associated loan, which approximates the effective interest rate method. Deferred financing costs, net of accumulated amortization, were $4.9 million and $6.7 million, as of December 31, 2015 and 2014, respectively. In conjunction with our 2015 Incremental First Lien Supplemental term loan borrowing, approximately $531,000 was added to deferred financing costs. As part of our early extinguishment of senior notes during March and April of 2014, approximately $3.4 million of deferred financing costs were written off. See Note 8, Notes Payable, Line of Credit, and Capital Leases for more information. |
Inventories | INVENTORIES - Inventories, consisting mainly of medical supplies, are stated at the lower of cost or market with cost determined by the first-in, first-out method. |
Property and Equipment | PROPERTY AND EQUIPMENT - Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization of property and equipment are provided using the straight-line method over the estimated useful lives, which range from 3 to 15 years. Leasehold improvements are amortized at the lesser of lease term or their estimated useful lives, whichever is shorter, which range from 3 to 30 years. Maintenance and repairs are charged to expense as incurred. |
Business Combination | BUSINESS COMBINATION - Accounting for acquisitions requires us to recognize separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations. |
Goodwill and Indefinite Lived Intangibles | GOODWILL AND INDEFINITE LIVED INTANGIBLES - Goodwill at December 31, 2015 totaled $239.4 million. Indefinite lived intangible assets at December 31, 2015 totaled $7.9 million and are associated with the value of certain trade name intangibles. Goodwill and trade name intangibles are recorded as a result of business combinations. Management evaluates goodwill and trade name intangibles, at a minimum, on an annual basis and whenever events and changes in circumstances suggest that the carrying amount may not be recoverable. Impairment of goodwill is tested at the reporting unit level by comparing the reporting unitÂ’s carrying amount, including goodwill, to the fair value of the reporting unit. The fair value of a reporting unit is estimated using a combination of the income or discounted cash flows approach and the market approach, which uses comparable market data. If the carrying amount of the reporting unit exceeds its fair value, goodwill is considered impaired and a second step is performed to measure the amount of impairment loss, if any. Impairment of trade name intangibles is tested at the subsidiary level by comparing the subsidiaryÂ’s trade name carrying amount to its respective fair value. We tested both goodwill and trade name intangibles for impairment on October 1, 2015, noting no impairment, and have not identified any indicators of impairment through December 31, 2015. |
Long-Lived Assets | LONG-LIVED ASSETS - We evaluate our long-lived assets (property and equipment) and intangibles, other than goodwill, for impairment whenever indicators of impairment exist. Generally accepted accounting principles (GAAP) requires that if the sum of the undiscounted expected future cash flows from a long-lived asset or definite-lived intangible is less than the carrying value of that asset, an asset impairment charge must be recognized. The amount of the impairment charge is calculated as the excess of the assetÂ’s carrying value over its fair value, which generally represents the discounted future cash flows from that asset or in the case of assets we expect to sell, at fair value less costs to sell. No indicators of impairment were identified with respect to our long-lived assets as of December 31, 2015. |
Income Taxes | INCOME TAXES - Income tax expense is computed using an asset and liability method and using expected annual effective tax rates. Under this method, deferred income tax assets and liabilities result from temporary differences in the financial reporting bases and the income tax reporting bases of assets and liabilities. The measurement of deferred tax assets is reduced, if necessary, by the amount of any tax benefit that, based on available evidence, is not expected to be realized. When it appears more likely than not that deferred taxes will not be realized, a valuation allowance is recorded to reduce the deferred tax asset to its estimated realizable value. For net deferred tax assets we consider estimates of future taxable income in determining whether our net deferred tax assets are more likely than not to be realized. Income taxes are further explained in Note 10. |
Uninsured Risks | UNINSURED RISKS - On November 1, 2008 we obtained a fully funded and insured workersÂ’ compensation policy, thereby eliminating any uninsured risks for employee injuries occurring on or after that date. This fully funded policy remained in effect through November 1, 2013 and continues to cover any claims incurred through this date. On November 1, 2013 we entered into a high-deductible workersÂ’ compensation insurance policy. We have recorded liabilities as of December 31, 2015, and 2014 of $2.2 million and $1.0 million, respectively for the estimated future cash obligations associated with the unpaid portion of the workers compensation claims incurred. We and our affiliated physicians carry an annual medical malpractice insurance policy that protects us for claims that are filed during the policy year and that fall within policy limits. The policy has a deductible for which we have recorded liabilities and included it in our consolidated balance sheets at December 31, 2015 and December 31, 2014 of approximately $24,000 and $88,000, respectively. In December 2008, in order to eliminate the exposure for claims not reported during the regular malpractice policy period, we purchased a medical malpractice tail policy, which provides coverage for any claims reported in the event that our medical malpractice policy expires. As of December 31, 2015, this policy remains in effect. We have entered into an arrangement with Blue Shield to administer and process claims under a self-insured plan that provides health insurance coverage for our employees and dependents. We have recorded liabilities as of December 31, 2015 and 2014 of $1.8 million and $2.0 million, respectively, for the estimated future cash obligations associated with the unpaid portion of the medical and dental claims incurred by our participants. Additionally, we entered into an agreement with Blue Shield for a stop loss policy that provides coverage for any claims that exceed $250,000 up to a maximum of $1.0 million in order for us to limit our exposure for unusual or catastrophic claims. |
Loss and Other Unfavorable Contracts | LOSS AND OTHER UNFAVORABLE CONTRACTS – We assess the profitability of our contracts to provide management services to our contracted physician groups and identify those contracts where current operating results or forecasts indicate probable future losses. Anticipated future revenue is compared to anticipated costs. If the anticipated future cost exceeds the revenue, a loss contract accrual is recorded. In connection with the acquisition of Radiologix in November 2006, we acquired certain management service agreements for which forecasted costs exceeds forecasted revenue. As such, an $8.9 million loss contract accrual was established in purchase accounting, and is included in other non-current liabilities. The recorded loss contract accrual is being accreted into operations over the remaining term of the acquired management service agreements. As of December 31, 2015 and 2014, the remaining accrual balance is $5.7 million, and $6.1 million, respectively. As part of our ongoing acquisition activities, we have certain operating lease commitments for facilities that are not in use. Accordingly, we have recorded a loss contract accrual related to the remaining payments under these lease commitments. As of December 31, 2015 and 2014, the remaining loss contract accrual for these leases is $85,000 and $218,000, respectively. In addition and related to acquisition activity, we have certain operating lease commitments for facilities where the fair market rent differs from the lease contract rate. We have recorded an unfavorable contract liability representing the difference between the total value of the fair market rent and the contract rent over the current term of the lease applicable from the date of acquisition. As of December 31, 2015 and 2014, the unfavorable contract liability on these leases is $581,000 and $1.2 million, respectively. |
Equity Based Compensation | EQUITY BASED COMPENSATION – We have one long-term incentive plan which we refer to as the 2006 Plan, which we amended and restated as of April 20, 2015 (the “Restated Plan”). The Restated Plan was approved by our stockholders at our annual stockholders meeting on June 11, 2015. As of December 31, 2015, we have reserved for issuance under the Restated Plan 12,000,000 shares of common stock. We can issue options, stock awards, stock appreciation rights and cash awards under the Restated Plan. Certain options granted under the Restated Plan to employees are intended to qualify as incentive stock options under existing tax regulations. Stock options and warrants generally vest over two to five years and expire five to ten years from date of grant. The compensation expense recognized for all equity-based awards is net of estimated forfeitures and is recognized over the awards’ service periods. Equity-based compensation is classified in operating expenses within the same line item as the majority of the cash compensation paid to employees. |
Foreign Currency Translation | FOREIGN CURRENCY TRANSLATION - The functional currency of our foreign subsidiaries is the local currency. In accordance with ASC 830, Foreign Currency Matters |
Comprehensive Income | COMPREHENSIVE INCOME - ASC 220, Comprehensive Income, |
Fair Value Measurements | FAIR VALUE MEASUREMENTS – Assets and liabilities subject to fair value measurements are required to be disclosed within a fair value hierarchy. The fair value hierarchy ranks the quality and reliability of inputs used to determine fair value. Accordingly, assets and liabilities carried at, or permitted to be carried at, fair value are classified within the fair value hierarchy in one of the following categories based on the lowest level input that is significant to a fair value measurement: Level 1—Fair value is determined by using unadjusted quoted prices that are available in active markets for identical assets and liabilities. Level 2—Fair value is determined by using inputs other than Level 1 quoted prices that are directly or indirectly observable. Inputs can include quoted prices for similar assets and liabilities in active markets or quoted prices for identical assets and liabilities in inactive markets. Related inputs can also include those used in valuation or other pricing models such as interest rates and yield curves that can be corroborated by observable market data. Level 3—Fair value is determined by using inputs that are unobservable and not corroborated by market data. Use of these inputs involves significant and subjective judgment. The table below summarizes the estimated fair value and carrying amount of our long-term debt as follows (in thousands): As of December 31, 2015 Level 1 Level 2 Level 3 Total Fair Value Total Face Value First Lien Term Loans $ – $ 444,258 $ – $ 444,258 $ 451,023 Second Lien Term Loans $ – $ 173,700 $ – 173,700 $ 180,000 As of December 31, 2014 Level 1 Level 2 Level 3 Total Total Face Value First Lien Term Loans $ – $ 394,753 $ – $ 394,753 $ 399,750 Second Lien Term Loans – 178,200 – 178,200 180,000 Our revolving credit facility had no aggregate principal amount outstanding as of December 31, 2015. The estimated fair value of our long-term debt, which is discussed in Note 8, was determined using Level 2 inputs primarily related to comparable market prices. We consider the carrying amounts of cash and cash equivalents, receivables, other current assets, current liabilities and other notes payables to approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization or payment. Additionally, we consider the carrying amount of our capital lease obligations to approximate their fair value because the weighted average interest rate used to formulate the carrying amounts approximates current market rates. |
Earnings Per Share | EARNINGS PER SHARE - Earnings per share is based upon the weighted average number of shares of common stock and common stock equivalents outstanding, net of common stock held in treasury, as follows (in thousands except share and per share data): Years Ended December 31, 2015 2014 2013 Net income attributable to RadNet, Inc. common stockholders $ 7,709 $ 1,376 $ 2,120 BASIC NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS Weighted average number of common shares outstanding during the period 43,805,794 41,070,077 39,140,480 Basic net income per share attributable to RadNet, Inc. common stockholders $ 0.18 $ 0.03 $ 0.05 DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS Weighted average number of common shares outstanding during the period 43,805,794 41,070,077 39,140,480 Add nonvested restricted stock subject only to service vesting 865,326 994,610 316,905 Add additional shares issuable upon exercise of stock options and warrants 500,252 1,084,509 357,150 Weighted average number of common shares used in calculating diluted net income per share 45,171,372 43,149,196 39,814,535 Diluted net income per share attributable to RadNet, Inc. common stockholders $ 0.17 $ 0.03 $ 0.05 For the years ended December 31, 2015, 2014 and 2013 we excluded 265,000, 245,000, and 4,663,750, respectively, outstanding options, in the calculation of diluted earnings per share because their effect would be antidilutive. |
Investment in Joint Ventures | INVESTMENT IN JOINT VENTURES – We have ten unconsolidated joint ventures with ownership interests ranging from 35% to 50%. These joint ventures represent partnerships with hospitals, health systems or radiology practices and were formed for the purpose of owning and operating diagnostic imaging centers. Professional services at the joint venture diagnostic imaging centers are performed by contracted radiology practices or a radiology practice that participates in the joint venture. Our investment in these joint ventures is accounted for under the equity method. We evaluate our investment in joint ventures, including cost in excess of book value (equity method goodwill) for impairment whenever indicators of impairment exist. No indicators of impairment existed as of December 31, 2015. Activity in investment in joint ventures for the years ended December 31, 2014 and 2015, is provided below (in thousands): Balance as of December 31, 2013 $ 28,949 Purchase of a 49% interest in a new joint venture 2,168 Equity contributions in existing joint ventures 1,394 Equity in earnings in these joint ventures 6,970 Distribution of earnings (7,358 ) Balance as of December 31, 2014 $ 32,123 Equity contributions in existing joint ventures 265 Equity in earnings in these joint ventures 8,927 Distribution of earnings (7,731 ) Balance as of December 31, 2015 $ 33,584 We received management service fees from the centers underlying these joint ventures of approximately $9.3 million per year for the years ended December 31, 2015, 2014 and 2013. We eliminate any unrealized portion of our management service fees with our equity in earnings of joint ventures. The following table is a summary of key financial data for these joint ventures as of December 31, 2015 and 2014, respectively, and for the years ended December 31, 2015, 2014 and 2013, respectively, (in thousands): December 31, 2015 2014 Balance Sheet Data: Current assets $ 28,186 $ 23,636 Noncurrent assets 91,660 49,347 Current liabilities (15,258 ) (9,534 ) Noncurrent liabilities (44,059 ) (6,386 ) Total net assets $ 60,529 $ 57,063 Book value of RadNet joint venture interests $ 28,397 $ 26,791 Cost in excess of book value of acquired joint venture interests 4,970 4,970 Elimination of intercompany profit remaining on Radnet's consolidated balance sheet 217 362 Total value of Radnet joint venture interests $ 33,584 $ 32,123 Total book value of other joint venture partner interests $ 32,132 $ 30,272 2015 2014 2013 Net revenue $ 125,544 $ 101,189 $ 93,134 Net income $ 19,485 $ 14,854 $ 13,633 |
2. SUMMARY OF SIGNIFICANT ACC24
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Service Fee Revenue | Our service fee revenue, net of contractual allowances and discounts, the provision for bad debts, and revenue under capitation arrangements for the years ended December 31, are summarized in the following table (in thousands) : Years Ended December 31, 2015 2014 2013 Commercial insurance (1) $ 486,489 $ 437,525 $ 430,735 Medicare 168,545 159,562 156,066 Medicaid 23,948 24,499 24,017 Workers' compensation/personal injury 32,728 30,543 34,821 Other (2) 35,046 18,007 19,668 Service fee revenue, net of contractual allowances and discounts 746,756 670,136 665,307 Provision for bad debts (36,033 ) (29,807 ) (27,911 ) Net service fee revenue 710,723 640,329 637,396 Revenue under capitation arrangements 98,905 77,240 65,590 Total net revenue $ 809,628 $ 717,569 $ 702,986 _________________ (1) (2) |
Fair Value of long-term debt | The table below summarizes the estimated fair value and carrying amount of our long-term debt as follows (in thousands): As of December 31, 2015 Level 1 Level 2 Level 3 Total Fair Value Total Face Value First Lien Term Loans $ – $ 444,258 $ – $ 444,258 $ 451,023 Second Lien Term Loans $ – $ 173,700 $ – 173,700 $ 180,000 As of December 31, 2014 Level 1 Level 2 Level 3 Total Total Face Value First Lien Term Loans $ – $ 394,753 $ – $ 394,753 $ 399,750 Second Lien Term Loans – 178,200 – 178,200 180,000 |
Earnings per share | Years Ended December 31, 2015 2014 2013 Net income attributable to RadNet, Inc. common stockholders $ 7,709 $ 1,376 $ 2,120 BASIC NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS Weighted average number of common shares outstanding during the period 43,805,794 41,070,077 39,140,480 Basic net income per share attributable to RadNet, Inc. common stockholders $ 0.18 $ 0.03 $ 0.05 DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS Weighted average number of common shares outstanding during the period 43,805,794 41,070,077 39,140,480 Add nonvested restricted stock subject only to service vesting 865,326 994,610 316,905 Add additional shares issuable upon exercise of stock options and warrants 500,252 1,084,509 357,150 Weighted average number of common shares used in calculating diluted net income per share 45,171,372 43,149,196 39,814,535 Diluted net income per share attributable to RadNet, Inc. common stockholders $ 0.17 $ 0.03 $ 0.05 |
Investment in joint ventures | Balance as of December 31, 2013 $ 28,949 Purchase of a 49% interest in a new joint venture 2,168 Equity contributions in existing joint ventures 1,394 Equity in earnings in these joint ventures 6,970 Distribution of earnings (7,358 ) Balance as of December 31, 2014 $ 32,123 Equity contributions in existing joint ventures 265 Equity in earnings in these joint ventures 8,927 Distribution of earnings (7,731 ) Balance as of December 31, 2015 $ 33,584 |
Key financial data on joint ventures | The following table is a summary of key financial data for these joint ventures as of December 31, 2015 and 2014, respectively, and for the years ended December 31, 2015, 2014 and 2013, respectively, (in thousands): December 31, 2015 2014 Balance Sheet Data: Current assets $ 28,186 $ 23,636 Noncurrent assets 91,660 49,347 Current liabilities (15,258 ) (9,534 ) Noncurrent liabilities (44,059 ) (6,386 ) Total net assets $ 60,529 $ 57,063 Book value of RadNet joint venture interests $ 28,397 $ 26,791 Cost in excess of book value of acquired joint venture interests 4,970 4,970 Elimination of intercompany profit remaining on Radnet's consolidated balance sheet 217 362 Total value of Radnet joint venture interests $ 33,584 $ 32,123 Total book value of other joint venture partner interests $ 32,132 $ 30,272 2015 2014 2013 Net revenue $ 125,544 $ 101,189 $ 93,134 Net income $ 19,485 $ 14,854 $ 13,633 |
4. FACILITY ACQUISITIONS AND 25
4. FACILITY ACQUISITIONS AND DISPOSITIONS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Proforma financial information | (unaudited) 2015 2014 Net revenue $ 882,478 $ 795,620 Net income 7,329 3,644 Pro-forma diluted net income per share $ 0.16 $ 0.08 46,421 44,649 |
Diagnostic Imaging Group, LLC [Member] | |
Purchase price allocation | Cash $ 54,555 1.5 million shares of Radnet common stock 8,325 Total combined purchase price $ 62,880 |
Schedule of net tangible and intangible assets acquired and liabilities assumed | Accounts receivable, net $ 12,346 Prepaid expenses and other current assets 377 Property and equipment 17,959 Goodwill 40,035 Other intangibles 50 Accounts payable, accrued expenses and other (4,939 ) Obligations under capital lease (2,948 ) $ 62,880 |
5. GOODWILL AND OTHER INTANGI26
5. GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill and other intangible assets | Balance as of December 31, 2013 196,395 Goodwill acquired through the acquisition of Corinthian 310 Goodwill acquired through the acquisition of Westchester Imaging 231 Goodwill acquired through the acquisition of Garden State Radiology 50 Goodwill acquired through the acquisition of Medical Imaging of Manhattan 1,433 Goodwill acquired through the acquisition of Liberty Pacific 1,288 Goodwill acquired through the acquisition of Moreno Valley 362 Goodwill acquired through the acquisition of Hematology-Oncology 235 Balance as of December 31, 2014 200,304 Adjustment to our allocation of goodwill for the acquisition of Liberty Pacific 200 Goodwill acquired through the acquisition of California Radiology 2,107 Goodwill acquired through the acquisition of New York Radiology Partners 9,897 Goodwill disposed through the sale of New Jersey Imaging Partners (18,833 ) Goodwill acquired through the acquisition of Hanford Imaging, LP 785 Goodwill acquired through the acquisition of Murry Hill Radiology and MRI 4,123 Goodwill acquired through the acquisition of Phillip L Chatam, M.D., Inc. 790 Goodwill acquired through the acquisition of Diagnostic Imaging Group, LLC 40,035 Balance as of December 31, 2015 $ 239,408 |
Annual amortization expense | 2016 2017 2018 2019 2020 Thereafter Total Weighted average amortization period remaining in years Management Service Contracts $ 2,309 $ 2,309 $ 2,309 $ 2,309 $ 2,309 $ 24,861 $ 36,406 15.7 Covenant not to compete contracts 304 241 198 112 30 – 885 3.4 Customer relationships 1 – – – – – 1 – Developed technology and in-process R&D 24 – – – – – 24 0.8 Trade Names* – – – – – 7,937 7,937 – Total Annual Amortization $ 2,638 $ 2,550 $ 2,507 $ 2,421 $ 2,339 $ 32,798 $ 45,253 |
6. PROPERTY AND EQUIPMENT (Tabl
6. PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | December 31, 2015 2014 Land $ 250 $ 250 Medical equipment 352,005 334,893 Computer and office equipment, furniture and fixtures 107,014 90,031 Software development costs 6,391 6,391 Leasehold improvements 232,550 206,224 Equipment under capital lease 29,796 22,753 728,006 660,542 Accumulated depreciation and amortization (471,284 ) (437,415 ) $ 256,722 $ 223,127 |
7. ACCOUNTS PAYABLE AND ACCRU28
7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Payables and Accruals [Abstract] | |
Schedule of accounts payable and accrued expenses | December 31, 2015 2014 Accounts payable $ 52,296 $ 46,855 Accrued expenses 32,950 28,809 Accrued payroll and vacation 17,692 11,937 Accrued professional fees 10,875 10,215 Total $ 113,813 $ 97,816 |
8. NOTES PAYABLE, LINE OF CRE29
8. NOTES PAYABLE, LINE OF CREDIT AND CAPITAL LEASES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of notes payable, line of credit and capital lease obligations | December 31, 2015 2014 Revolving lines of credit $ – $ 15,300 First Lien Term Loans 451,023 399,750 Second Lien Term Loans 180,000 180,000 Discounts on term loans (9,542 ) (11,966 ) Promissory note payable to the former owner of a practice acquired at an interest rate of 1.5% due through 2019 1,361 – Promissory note payable to Healthcare Partners for imaging equipment acquired through acquisition at an interest rate of 5.25% 431 1,590 Equipment notes payable at interest rates ranging from 3.3% to 10.2%, due through 2020, collateralized by medical equipment 1,032 1,153 Obligations under capital leases at interest rates ranging from 2.5% to 10.8%, due through 2022, collateralized by medical and office equipment 16,423 11,780 Total debt obligations 640,728 597,607 Less: current portion (33,114 ) (25,105 ) Long term portion debt obligations $ 607,614 $ 572,502 |
Annual principal maturities of notes payable | 2016 $ 26,217 2017 25,247 2018 402,097 2019 276 2020 11 Thereafter 180,000 Total notes payable obligations $ 633,848 |
Schedule of capital lease minimum payments | 2016 $ 10,660 2017 4,325 2018 1,713 2019 246 2020 201 Thereafter 98 Total minimum payments 17,243 Amount representing interest (820 ) Present value of net minimum lease payments 16,423 Less current portion (10,038 ) Long-term portion lease obligations $ 6,385 |
Term loans and financing activity | As of December 31, 2015 Face Value Discount Total Carrying Value First Lien Term Loans $ 451,023 $ (7,305 ) $ 443,718 Second Lien Term Loans $ 180,000 $ (2,237 ) $ 177,763 Total $ 631,023 $ (9,542 ) $ 621,481 |
9. COMMITMENTS AND CONTINGENC30
9. COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of operating lease payments | Facilities Equipment Total 2016 $ 57,899 $ 8,688 $ 66,587 2017 49,755 8,389 58,144 2018 42,497 6,136 48,633 2019 36,581 2,589 39,170 2020 29,037 896 29,933 Thereafter 80,289 14 80,303 $ 296,058 $ 26,712 $ 322,770 |
10. INCOME TAXES (Tables)
10. INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Schedule of components of income tax expense | December 31, 2015 2014 2013 Federal current tax $ 237 $ – $ – State current tax 1,705 1,283 643 Other current tax 28 29 (39 ) Federal deferred tax 3,625 869 3,794 State deferred tax 412 (214 ) (888 ) Income tax expense $ 6,007 $ 1,967 $ 3,510 |
Reconciliation of income tax expense | Years Ended 2015 2014 2013 Federal tax 34.00% 34.00% 34.00% State franchise tax, net of federal benefit 8.50% -3.64% -14.20% Other Non deductible expenses -0.01% 0.00% 0.07% Meals and entertainment 1.75% 4.85% 1.98% Noncontrolling Interest in Partnerships -2.16% -2.88% -1.48% Equity compensation -1.74% -8.72% 35.39% Changes in valuation allowance -17.32% 24.52% -17.88% Return-to-provision 3.29% -9.57% -1.96% Deferred true-ups and other 13.41% 16.34% 0.00% Uncertain tax positions 0.01% -3.67% -2.92% Expiring net operating losses 1.28% 2.61% 26.64% Income tax expense 41.01% 53.85% 59.64% |
Schedule of deferred tax assets and liabilities | December 31, 2015 2014 Deferred tax assets: Net operating losses $ 78,912 $ 87,709 Accrued expenses 4,125 3,594 Straight-Line Rent Adjustment 11,263 8,897 Unfavorable contract liability 2,142 2,811 Equity compensation 846 253 Allowance for doubtful accounts 4,341 2,124 Other 1,092 1,891 Valuation Allowance (3,841 ) (6,378 ) Total Deferred Tax Assets $ 98,880 $ 100,901 Deferred tax liabilities: Property Plant & Equipment (8,582 ) (7,755 ) Goodwill (18,617 ) (17,833 ) Intangibles (12,088 ) (12,105 ) NAEM Reserve (7,882 ) (6,441 ) Other (4,747 ) (4,189 ) Total Deferred Tax Liabilities $ (51,916 ) $ (48,323 ) Net Deferred Tax Asset $ 46,964 $ 52,578 |
Schedule of unrecognized tax benefits | A reconciliation of the total gross amounts of unrecognized tax benefits for the years ended December 31, 2015, 2014 and 2013 is as follows (in thousands): December 31, 2015 2014 2013 Balance at beginning of year $ 3,761 $ 3,970 $ 4,184 Decreases related to prior year tax positions (3,667 ) – (214 ) Expiration of the statute of limitations for the assessment of taxes – (209 ) – Balance at end of year $ 94 $ 3,761 $ 3,970 |
Federal [Member] | |
Schedule of net operating loss carryforwards | Year Ended Total Net Operating Loss Carryforwards Amount Subject to 382 limitation 2017 3,356 – 2018 12,284 – 2019 7,178 – 2020 – – Thereafter 211,094 40,610 $ 233,912 $ 40,610 |
California [Member] | |
Schedule of net operating loss carryforwards | Year Ended Total Net Operating Loss Carryforwards 2016 3,683 2017 9,292 2018 – 2019 – 2020 – Thereafter 18,247 $ 31,222 |
11. STOCK-BASED COMPENSATION (T
11. STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of options activity | Outstanding Options Under the 2006 Plan Shares Weighted Average Exercise price Per Common Share Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value Balance, December 31, 2014 2,092,509 $ 3.58 Exercised (1,135,833 ) 2.69 Canceled, forfeited or expired (25,009 ) 2.22 Balance, December 31, 2015 931,667 4.69 0.82 $ 2,109,751 Exercisable at December 31, 2015 918,334 4.73 0.79 2,054,551 |
Schedule of RSA activity | Weighted-Average Remaining Contractual Weighted-Average RSA's Term (Years) Fair Value RSA's unvested at December 31, 2014 942,024 $ 1.96 Changes during the period Granted 744,423 $ 8.60 Vested (856,052 ) $ 4.59 Forfeited (59,053 ) $ 5.59 RSA's unvested at December 31, 2015 771,342 0.71 $ 5.17 |
13. QUARTERLY RESULTS OF OPER33
13. QUARTERLY RESULTS OF OPERATIONS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Information | 2015 Quarter Ended 2014 Quarter Ended Mar 31 June 30 Sept 30 Dec 31 Mar 31 June 30 Sept 30 Dec 31 Statement of Operations Data: Net revenue $ 181,267 $ 204,289 $ 208,366 $ 215,706 $ 168,876 $ 179,082 $ 184,059 $ 185,552 Total operating expenses 183,213 190,905 191,137 205,256 161,328 163,436 168,824 170,676 Total other expenses 6,723 10,836 5,731 10,109 25,468 10,803 10,401 9,951 Equity in earnings of joint ventures (1,102 ) (3,207 ) (1,992 ) (2,626 ) (1,067 ) (1,646 ) (2,009 ) (2,248 ) Benefit from (provision for) income taxes 3,091 (2,192 ) (5,199 ) (1,707 ) 4,478 (1,233 ) (2,334 ) (2,878 ) Net (loss) income (4,476 ) 3,563 8,291 1,260 (12,375 ) 5,256 4,509 4,295 Net income attributable to noncontrolling interests 78 168 304 379 49 112 58 90 Net (loss) income attributable to Radnet, Inc. common stockholders $ (4,554 ) $ 3,395 $ 7,987 $ 881 $ (12,424 ) $ 5,144 $ 4,451 $ 4,205 Basic net (loss) income attributable to Radnet, Inc. common stockholders (loss) earnings per share: $ (0.11 ) $ 0.08 $ 0.18 $ 0.02 $ (0.31 ) $ 0.13 $ 0.11 $ 0.10 Diluted net (loss) income attributable to Radnet, Inc. common stockholders (loss) earnings per share: $ (0.11 ) $ 0.08 $ 0.18 $ 0.02 $ (0.31 ) $ 0.12 $ 0.10 $ 0.10 Weighted average shares outstanding Basic 42,747 43,370 43,637 45,454 40,010 40,817 41,645 41,783 Diluted 42,747 44,686 44,752 46,545 40,010 43,263 44,034 44,182 |
1. NATURE OF BUSINESS (Details
1. NATURE OF BUSINESS (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
BRMG and NY Groups revenues | $ 113,100 | $ 89,300 | $ 76,700 |
BRMG and NY Groups operating expenses | 113,100 | 89,300 | 76,700 |
Management services provided to BRMG and NY Groups | 343,900 | 287,400 | $ 267,600 |
BRMG and NY Groups accounts receivable | 89,800 | 79,700 | |
BRMG and NY Groups accounts payable | $ 8,500 | $ 9,000 |
2. SUMMARY OF ACCOUNTING POLICI
2. SUMMARY OF ACCOUNTING POLICIES (Details - Summary of net revenue) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Accounting Policies [Abstract] | ||||||||||||
Commercial Insurance | [1] | $ 486,489 | $ 437,525 | $ 430,735 | ||||||||
Medicare | 168,545 | 159,562 | 156,066 | |||||||||
Medicaid | 23,948 | 24,499 | 24,017 | |||||||||
Workers Compensation/Personal Injury | 32,728 | 30,543 | 34,821 | |||||||||
Other | [2] | 35,046 | 18,007 | 19,668 | ||||||||
Service fee revenue, net of contractual allowances and discounts | 746,756 | 670,136 | 665,307 | |||||||||
Provision for bad debts | (36,033) | (29,807) | (27,911) | |||||||||
Net service fee revenue | 710,723 | 640,329 | 637,396 | |||||||||
Revenue under capitation arrangements | 98,905 | 77,240 | 65,590 | |||||||||
Total net revenue | $ 215,706 | $ 208,366 | $ 204,289 | $ 181,267 | $ 185,552 | $ 184,059 | $ 179,082 | $ 168,876 | $ 809,628 | $ 717,569 | $ 702,986 | |
[1] | 20% of our net service fees revenue for each of the years ended December 31, 2015, 2014 and 2013 were earned from a single payor. | |||||||||||
[2] | Other consists of revenue from teleradiology services, consulting fees and software revenue. |
2. SUMMARY OF ACCOUNTING POLI36
2. SUMMARY OF ACCOUNTING POLICIES (Details - Fair Value Measurements) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
FAIR VALUE MEASUREMENTS | ||
First Lien Term Loans | $ 451,023 | $ 399,750 |
Second Lien Term Loans | 180,000 | 180,000 |
Level 1 [Member] | ||
FAIR VALUE MEASUREMENTS | ||
First Lien Term Loans | 0 | 0 |
Second Lien Term Loans | 0 | 0 |
Level 2 [Member] | ||
FAIR VALUE MEASUREMENTS | ||
First Lien Term Loans | 444,258 | 394,753 |
Second Lien Term Loans | 173,700 | 178,200 |
Level 3 [Member] | ||
FAIR VALUE MEASUREMENTS | ||
First Lien Term Loans | 0 | 0 |
Second Lien Term Loans | 0 | 0 |
Total Fair Value [Member] | ||
FAIR VALUE MEASUREMENTS | ||
First Lien Term Loans | 444,258 | 394,753 |
Second Lien Term Loans | $ 173,700 | $ 178,200 |
2. SUMMARY OF ACCOUNTING POLI37
2. SUMMARY OF ACCOUNTING POLICIES (Details - Earnings Per Share) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Earnings Per Share [Abstract] | |||||||||||
Net income attributable to Radnet, Inc.'s common stockholders | $ 881 | $ 7,987 | $ 3,395 | $ (4,554) | $ 4,205 | $ 4,451 | $ 5,144 | $ (12,424) | $ 7,709 | $ 1,376 | $ 2,120 |
BASIC NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC.'S COMMON STOCKHOLDERS | |||||||||||
Weighted average shares outstanding - Basic | 45,454,000 | 43,637,000 | 43,370,000 | 42,747,000 | 41,783,000 | 41,645,000 | 40,817,000 | 40,010,000 | 43,805,794 | 41,070,077 | 39,140,480 |
Basic net income per share attributable to Radnet, Inc.'s common stockholders | $ .02 | $ .18 | $ .08 | $ (.11) | $ 0.10 | $ 0.11 | $ 0.13 | $ (0.31) | $ 0.18 | $ 0.03 | $ .05 |
DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC.'S COMMON STOCKHOLDERS | |||||||||||
Weighted average shares outstanding during the period | 45,454,000 | 43,637,000 | 43,370,000 | 42,747,000 | 41,783,000 | 41,645,000 | 40,817,000 | 40,010,000 | 43,805,794 | 41,070,077 | 39,140,480 |
Add nonvested restricted stock subject only to service vesting | 865,326 | 994,610 | 316,905 | ||||||||
Add additional shares issuable upon exercise of stock options and warrants | 500,252 | 1,084,509 | 357,150 | ||||||||
Weighted average shares outstanding - Diluted | 46,545,000 | 44,752,000 | 44,686,000 | 42,747,000 | 44,182,000 | 44,034,000 | 43,263,000 | 40,010,000 | 45,171,372 | 43,149,196 | 39,814,535 |
Diluted net income per share attributable to RadNet, Inc.'s common stockholders | $ .02 | $ .18 | $ .08 | $ (.11) | $ 0.10 | $ 0.10 | $ 0.13 | $ (0.31) | $ .17 | $ 0.03 | $ .05 |
2. SUMMARY OF ACCOUNTING POLI38
2. SUMMARY OF ACCOUNTING POLICIES (Details - Investment in Joint Ventures) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Equity Method Investments and Joint Ventures [Abstract] | |||||||||||
Beginning balance | $ 32,123 | $ 28,949 | $ 32,123 | $ 28,949 | |||||||
Purchase of a 49% interest in a new joint venture | 2,168 | ||||||||||
Equity contributions in existing joint ventures | 265 | 1,394 | |||||||||
Equity earnings in these joint ventures | $ 2,626 | $ 1,992 | $ 3,207 | $ 1,102 | $ 2,248 | $ 2,009 | $ 1,646 | $ 1,067 | 8,927 | 6,970 | $ 6,194 |
Distribution of earnings | (7,731) | (7,358) | (7,204) | ||||||||
Ending balance | $ 33,584 | $ 32,123 | $ 33,584 | $ 32,123 | $ 28,949 |
2. SUMMARY OF ACCOUNTING POLI39
2. SUMMARY OF ACCOUNTING POLICIES (Details - Key Financial Data on Joint Ventures) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Key financial data for joint ventures | |||
Current assets | $ 28,186 | $ 23,636 | |
Noncurrent assets | 91,660 | 49,347 | |
Current liabilities | (15,258) | (9,534) | |
Noncurrent liabilities | (44,059) | (6,386) | |
Total net assets | 60,529 | 57,063 | |
Book value of Radnet joint venture interests | 28,397 | 26,791 | |
Cost in excess of book value of acquired joint venture interests | 4,970 | 4,970 | |
Elimination of intercompany profit remaining on Radnet's consolidated balance sheet | 217 | 362 | |
Total value of Radnet joint venture interests | 33,584 | 32,123 | $ 28,949 |
Total book value of other joint venture partner interests | 32,132 | 30,272 | |
Net revenue | 125,544 | 101,189 | 93,134 |
Net income | $ 19,485 | $ 14,854 | $ 13,633 |
2. SUMMARY OF ACCOUNTING POLI40
2. SUMMARY OF ACCOUNTING POLICIES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Allowance for bad debts | $ 20,800 | $ 15,100 | |
Meaningful use incentive income | 3,270 | 2,034 | $ 0 |
Service Fee Revenue net of contractual allowances and discounts | 746,756 | 670,136 | 665,307 |
Deferred revenue | 1,598 | 1,964 | |
Capitalized software costs, gross | 6,400 | ||
Software licensing revenue | 443 | ||
Capitalized software costs, net | 4,700 | ||
Deferred financing costs, net of accumulated amortization | 4,900 | 6,700 | |
Deferred financing costs written off | 3,400 | ||
Goodwill | 239,408 | 200,304 | 196,395 |
Indefinite lived intangible assets | 7,508 | ||
Malpractice contingency liability | 24 | 88 | |
Contract loss accrual | 5,700 | 6,100 | |
Lease commitment loss accrual | 85 | 218 | |
Unfavorable contract liability | $ 581 | 1,200 | |
Shares reserved for issuance | 12,000,000 | ||
Carrying value of line of credit | $ 0 | 15,300 | |
Management service fees | $ 9,300 | 9,300 | 9,300 |
Options [Member] | |||
Shares excluded from diluted earnings per share calculation | 265,000 | ||
Warrants [Member] | |||
Shares excluded from diluted earnings per share calculation | 245,000 | ||
Restricted Stock Awards [Member] | |||
Shares excluded from diluted earnings per share calculation | 4,663,750 | ||
Workers Compensation [Member] | |||
Self-insurance accrual | $ 2,200 | 1,000 | |
Health Insurance [Member] | |||
Self-insurance accrual | 1,800 | 2,000 | |
eRAD [Member] | |||
Service Fee Revenue net of contractual allowances and discounts | 6,100 | $ 5,500 | $ 4,900 |
Deferred revenue | $ 1,500 |
4. FACILITY ACQUISITIONS (Detai
4. FACILITY ACQUISITIONS (Details - Purchase allocation) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Stock issued for acquisition, value | $ 9,241 | |||
Goodwill | $ 239,408 | $ 200,304 | $ 196,395 | |
Diagnostic Imaging Group, LLC [Member] | ||||
Cash consideration paid | $ 54,555 | |||
Stock issued for acquisition, value | 8,325 | |||
Consideration transferred | 62,880 | |||
Accounts receivable, net | 12,346 | |||
Prepaid assets and other current assets | 377 | |||
Property and equipment | 17,959 | |||
Goodwill | 40,035 | |||
Other intangibles | 50 | |||
Obligations under capital lease | $ (2,948) |
4. FACILITY ACQUISITIONS (Det42
4. FACILITY ACQUISITIONS (Details - Revenue) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Net revenue | $ 215,706 | $ 208,366 | $ 204,289 | $ 181,267 | $ 185,552 | $ 184,059 | $ 179,082 | $ 168,876 | $ 809,628 | $ 717,569 | $ 702,986 |
Net income | $ 881 | $ 7,987 | $ 3,395 | $ (4,554) | $ 4,205 | $ 4,451 | $ 5,144 | $ (12,424) | 7,709 | $ 1,376 | $ 2,120 |
Diagnostic Imaging Group, LLC [Member] | |||||||||||
Net revenue | 17,498 | ||||||||||
Pretax income | 1,880 | ||||||||||
Net income | $ 1,166 |
4. FACILITY ACQUISITIONS (Det43
4. FACILITY ACQUISITIONS (Details - Pro-forma) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Business Combinations [Abstract] | ||
Pro forma net revenue | $ 882,478 | $ 795,620 |
Pro forma net income | $ 7,329 | $ 3,644 |
Pro forma diluted net income per share | $ .16 | $ .08 |
Pro forma weighted average shares outstanding | 46,421,000 | 44,649,000 |
4. FACILITY ACQUISITIONS (Det44
4. FACILITY ACQUISITIONS (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
New Jersey Imaging Powers, Inc. [Member] | ||
Divestiture, cash received | $ 35,500 | |
Gain on sale of investment | 5,400 | |
Baltimore County Radiology, LLC [Member] | ||
Divestiture, cash received | 5,000 | |
Gain on sale of investment | 3,700 | |
Philip L. Chatham, M.D., Inc. [Member] | ||
Acquisition, cash paid | 300 | |
Fixed assets acquired | 26 | |
Goodwill acquired | 790 | |
Intangible assets acquired | 100 | |
Other assets acquired | 300 | |
Total consideration transferred | 916 | |
Murray Hill Radiology [Member] | ||
Acquisition, cash paid | 5,800 | |
Fixed assets acquired | 1,600 | |
Goodwill acquired | 4,100 | |
Other assets acquired | 95 | |
Total consideration transferred | 5,800 | |
Hanford Imaging, L.P. [Member] | ||
Acquisition, cash paid | 1,000 | |
Fixed assets acquired | 215 | |
Goodwill acquired | 785 | |
Total consideration transferred | 1,000 | |
Healthcare Radiology [Member] | ||
Acquisition, cash paid | 425 | |
Fixed assets acquired | 135 | |
Leasehold improvements acquired | 290 | |
California Radiology [Member] | ||
Acquisition, cash paid | 4,200 | |
Fixed assets acquired | 217 | |
Goodwill acquired | 2,100 | |
Intangible assets acquired | 100 | |
Other assets acquired | 34 | |
Leasehold improvements acquired | 1,700 | |
Total consideration transferred | 4,200 | |
New York Radiology Partners [Member] | ||
Acquisition, cash paid | 29,800 | |
Fixed assets acquired | 6,900 | |
Accounts receivable acquired | 4,900 | |
Goodwill acquired | 9,900 | |
Intangible assets acquired | 1,200 | |
Other assets acquired | 34,500 | |
Leasehold improvements acquired | 11,600 | |
Notes payable assumed | 2,300 | |
Current liabilities assumed | 891 | |
Note payable issued | $ 1,500 | |
Hematology Oncology Consultants [Member] | ||
Acquisition, cash paid | $ 553 | |
Fixed assets acquired | 15 | |
Inventory acquired | 164 | |
Goodwill acquired | 235 | |
Intangible assets acquired | 100 | |
Other assets acquired | 39 | |
Imaging Centers of Pasadena [Member] | ||
Acquisition, cash paid | 1,800 | |
Fixed assets acquired | 1,700 | |
Intangible assets acquired | 105 | |
Healthcare Partners [Member] | ||
Acquisition, cash paid | 300 | |
Note payable issued | 1,800 | |
Total consideration transferred | 2,100 | |
Moreno Valley Imaging [Member] | ||
Acquisition, cash paid | 700 | |
Fixed assets acquired | 285 | |
Goodwill acquired | 362 | |
Intangible assets acquired | 50 | |
Other assets acquired | 3 | |
Liberty Pacific Imaging Long Beach [Member] | ||
Acquisition, cash paid | 1,900 | |
Fixed assets acquired | 577 | |
Goodwill acquired | 1,300 | |
Intangible assets acquired | 100 | |
Medical Imaging of Manhattan [Member] | ||
Acquisition, cash paid | 2,400 | |
Fixed assets acquired | 672 | |
Goodwill acquired | 1,400 | |
Intangible assets acquired | 150 | |
Other assets acquired | 139 | |
Sidney Friedman [Member] | ||
Acquisition, cash paid | 1,400 | |
Accounts receivable acquired | 470 | |
Inventory acquired | 600 | |
Goodwill acquired | 231 | |
Intangible assets acquired | 100 | |
Leslie A. Saint-Louis [Member] | ||
Acquisition, cash paid | 360 | |
Goodwill acquired | 310 | |
Intangible assets acquired | $ 50 |
5. GOODWILL AND OTHER INTANGI45
5. GOODWILL AND OTHER INTANGIBLE ASSETS (Details - Schedule of Goodwill) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Goodwill, beginning balance | $ 200,304 | $ 196,395 |
Adjustments to preliminary allocations of purchase price | 200 | |
Goodwill, ending balance | 239,408 | 200,304 |
New Jersey Imaging Powers, Inc. [Member] | ||
Adjustments to preliminary allocations of purchase price | (18,833) | |
Corinthian [Member] | ||
Goodwill acquired through acquisitions | 310 | |
Westchester Imaging [Member] | ||
Goodwill acquired through acquisitions | 231 | |
Garden State Radiology, LLC [Member] | ||
Goodwill acquired through acquisitions | 50 | |
Medical Imaging of Manhattan [Member] | ||
Goodwill acquired through acquisitions | 1,433 | |
Liberty Pacific Imaging Long Beach [Member] | ||
Goodwill acquired through acquisitions | 1,288 | |
Moreno Valley Imaging [Member] | ||
Goodwill acquired through acquisitions | 362 | |
Hematology Oncology Consultants [Member] | ||
Goodwill acquired through acquisitions | $ 235 | |
California Radiology [Member] | ||
Goodwill acquired through acquisitions | 2,107 | |
New York Radiology Partners [Member] | ||
Goodwill acquired through acquisitions | 9,897 | |
Hanford Imaging, L.P. [Member] | ||
Goodwill acquired through acquisitions | 785 | |
Murray Hill Radiology [Member] | ||
Goodwill acquired through acquisitions | 4,123 | |
Philip L. Chatham, M.D., Inc. [Member] | ||
Goodwill acquired through acquisitions | 790 | |
Diagnostic Imaging Group, LLC [Member] | ||
Goodwill acquired through acquisitions | $ 40,035 |
5. GOODWILL AND OTHER INTANGI46
5. GOODWILL AND OTHER INTANGIBLE ASSETS (Details - Annual Amortization Schedule) $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Amortization next twelve months | $ 2,638 |
Amortization year 2017 | 2,550 |
Amortization year 2018 | 2,507 |
Amortization year 2019 | 2,421 |
Amortization year 2020 | 2,339 |
Amortization year thereafter | 32,798 |
Amortiztion total | 45,253 |
Management Service Contracts [Member] | |
Amortization next twelve months | 2,309 |
Amortization year 2017 | 2,309 |
Amortization year 2018 | 2,309 |
Amortization year 2019 | 2,309 |
Amortization year 2020 | 2,309 |
Amortization year thereafter | 36,406 |
Amortiztion total | $ 36,406 |
Weighted average amortization period remaining in years | 15 years 8 months 12 days |
Covenant Not To Compete [Member] | |
Amortization next twelve months | $ 304 |
Amortization year 2017 | 241 |
Amortization year 2018 | 198 |
Amortization year 2019 | 112 |
Amortization year 2020 | 30 |
Amortization year thereafter | 0 |
Amortiztion total | $ 885 |
Weighted average amortization period remaining in years | 3 years 4 months 24 days |
Customer Relationships [Member] | |
Amortization next twelve months | $ 1 |
Amortization year 2017 | 0 |
Amortization year 2018 | 0 |
Amortization year 2019 | 0 |
Amortization year 2020 | 0 |
Amortization year thereafter | 0 |
Amortiztion total | 1 |
Developed technology and in-process R and D [Member] | |
Amortization next twelve months | 24 |
Amortization year 2017 | 0 |
Amortization year 2018 | 0 |
Amortization year 2019 | 0 |
Amortization year 2020 | 0 |
Amortization year thereafter | 0 |
Amortiztion total | $ 24 |
Weighted average amortization period remaining in years | 9 months 18 days |
Trade Names [Member] | |
Amortization next twelve months | $ 0 |
Amortization year 2017 | 0 |
Amortization year 2018 | 0 |
Amortization year 2019 | 0 |
Amortization year 2020 | 0 |
Amortization year thereafter | 7,937 |
Amortiztion total | $ 7,937 |
5. GOODWILL AND OTHER INTANGI47
5. GOODWILL AND OTHER INTANGIBLE ASSETS (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Other intangible assets, gross | $ 57,500 | ||
Accumulated amortization | 21,100 | ||
Dispositions of intangibles | 750 | ||
Amortization expense | 3,000 | $ 3,100 | $ 3,100 |
Goodwill deductible for tax purposes | 109,900 | ||
Noncompete Agreements [Member] | |||
Other intangible assets, gross | 5,800 | ||
Accumulated amortization | 4,900 | ||
Trade Names [Member] | |||
Other intangible assets, gross | 10,200 | ||
Accumulated amortization | $ 1,500 |
6. PROPERTY AND EQUIPMENT (Deta
6. PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Property and equipment, gross | $ 728,006 | $ 660,542 |
Accumulated depreciation and amortization | (471,284) | (437,415) |
Property and equipment, net | 256,722 | 223,127 |
Land [Member] | ||
Property and equipment, gross | 250 | 250 |
Medical equipment [Member] | ||
Property and equipment, gross | 352,005 | 334,893 |
Computer and office equipment, furniture and fixtures [Member] | ||
Property and equipment, gross | 107,014 | 90,031 |
Software development costs [Member] | ||
Property and equipment, gross | 6,391 | 6,391 |
Leasehold improvements [Member] | ||
Property and equipment, gross | 232,550 | 206,224 |
Equipment under capital lease [Member] | ||
Property and equipment, gross | $ 29,796 | $ 22,753 |
6. PROPERTY AND EQUIPMENT (De49
6. PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Property And Equipment Details Narrative | |||
Depreciation and amortization expense | $ 57,600 | $ 56,200 | $ 55,800 |
7. ACCOUNTS PAYABLE AND ACCRU50
7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Payables and Accruals [Abstract] | ||
Accounts payable | $ 52,296 | $ 46,855 |
Accrued expenses | 32,950 | 28,809 |
Accrued payroll and vacation | 17,692 | 11,937 |
Accrued professional fees | 10,875 | 10,215 |
Accounts payable and accrued expenses | $ 113,813 | $ 97,816 |
8. NOTES PAYABLE, LINE OF CRE51
8. NOTES PAYABLE, LINE OF CREDIT AND CAPITAL LEASES (Details - Schedule of debt) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Revolving lines of credit | $ 0 | $ 15,300 |
Discounts on term loan and notes | (9,542) | (11,966) |
Equipment notes payable | 1,032 | 1,153 |
Obligations under capital leases | 16,423 | 11,780 |
Total notes payable, line of credit and capital lease obligations | 640,728 | 597,607 |
Less: current portion | (33,114) | (25,105) |
Total notes payable, line of credit and capital lease obligations, long-term | 607,614 | 572,502 |
Former owner of an acquired practice [Member] | ||
Promissory notes payable | 1,361 | 0 |
Healthcare Partners [Member] | ||
Promissory notes payable | 431 | 1,590 |
First Lien Term Loan [Member] | ||
Term loans | 451,023 | 399,750 |
Second Lien Term Loans [Member] | ||
Term loans | $ 180,000 | $ 180,000 |
8. NOTES PAYABLE (Details - An
8. NOTES PAYABLE (Details - Annual note payable maturities) $ in Thousands | Dec. 31, 2015USD ($) |
Debt Disclosure [Abstract] | |
2,016 | $ 26,217 |
2,017 | 25,247 |
2,018 | 402,097 |
2,019 | 276 |
2,020 | 11 |
Thereafter | 180,000 |
Annual principal maturities | $ 633,848 |
8. NOTES PAYABLE (Details - Min
8. NOTES PAYABLE (Details - Minimum capital lease payments) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Debt Disclosure [Abstract] | ||
2,016 | $ 10,660 | |
2,017 | 4,325 | |
2,018 | 1,713 | |
2,019 | 246 | |
2,020 | 201 | |
Thereafter | 98 | |
Total minimum payments | 17,243 | |
Amount representing interest | (820) | |
Present value of net minimum lease payments | 16,423 | |
Less current portion | (10,038) | $ (5,637) |
Long-term portion | $ 6,385 | $ 6,143 |
8. NOTES PAYABLE (Details - Ter
8. NOTES PAYABLE (Details - Term Loans) $ in Thousands | Dec. 31, 2015USD ($) |
First Lien Term Loan [Member] | |
Term loans face value | $ 451,023 |
Term loans discount | (7,305) |
Term loan carrying value | 443,718 |
Second Lien Term Loans [Member] | |
Term loans face value | 180,000 |
Term loans discount | (2,237) |
Term loan carrying value | 17,763 |
Short-term Debt [Member] | |
Term loans face value | 631,023 |
Term loans discount | (9,542) |
Term loan carrying value | $ 621,481 |
9. COMMITMENTS AND CONTINGENC55
9. COMMITMENTS AND CONTINGENCIES (Details - Operating leases) $ in Thousands | Dec. 31, 2015USD ($) |
2,016 | $ 66,587 |
2,017 | 58,144 |
2,018 | 48,633 |
2,019 | 39,170 |
2,020 | 29,933 |
Thereafter | 80,303 |
Total operating lease payments | 322,770 |
Facilities [Member] | |
2,016 | 57,899 |
2,017 | 49,755 |
2,018 | 42,497 |
2,019 | 36,581 |
2,020 | 29,037 |
Thereafter | 80,289 |
Total operating lease payments | 296,058 |
Medical equipment [Member] | |
2,016 | 8,688 |
2,017 | 8,389 |
2,018 | 6,136 |
2,019 | 2,589 |
2,020 | 896 |
Thereafter | 14 |
Total operating lease payments | $ 26,712 |
9. COMMITMENTS AND CONTINGENC56
9. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Rent expense | $ 61,500 | $ 64,500 | $ 65,000 |
10. INCOME TAXES (Details - Inc
10. INCOME TAXES (Details - Income tax expense (benefit)) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Tax Disclosure [Abstract] | |||||||||||
Federal current tax | $ 237 | $ 0 | $ 0 | ||||||||
State current tax | 1,705 | 1,283 | 643 | ||||||||
Other current tax | 28 | 29 | (39) | ||||||||
Federal deferred tax | 3,625 | 869 | 3,794 | ||||||||
State deferred tax | 412 | (214) | (888) | ||||||||
Income tax expense | $ 1,707 | $ 5,199 | $ 2,192 | $ (3,091) | $ 2,878 | $ 2,334 | $ 1,233 | $ (4,478) | $ 6,007 | $ 1,967 | $ 3,510 |
10. INCOME TAXES (Details - Eff
10. INCOME TAXES (Details - Effective tax rates) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Tax Disclosure [Abstract] | |||
Federal tax | 34.00% | 34.00% | 34.00% |
State franchise tax, net of federal benefit | 8.50% | (3.64%) | (14.20%) |
Other Non deductible expenses | (0.01%) | 0.00% | 0.07% |
Meals and entertainment | 1.75% | 4.85% | 1.98% |
Noncontrolling interest in partnerships | (2.16%) | (2.88%) | (1.48%) |
Equity compensation | (1.74%) | (8.72%) | 35.39% |
Changes in valuation allowance | (17.32%) | 24.52% | (17.88%) |
Return-to-provision | 3.29% | (9.57%) | (1.96%) |
Deferred tru-ups and other | 13.41% | 16.34% | 0.00% |
Uncertain tax positions | 0.01% | (3.67%) | (2.92%) |
Expiring net operating losses | 1.28% | 2.61% | 26.64% |
Income tax expense (benefit) | 41.01% | 53.85% | 59.64% |
10. INCOME TAXES (Details - Def
10. INCOME TAXES (Details - Deferred tax assets and liabilities) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Income Tax Disclosure [Abstract] | ||
Net operating losses | $ 78,912 | $ 87,709 |
Accrued expenses | 4,125 | 3,594 |
Straight-Line Rent Adjustment | 11,263 | 8,897 |
Unfavorable contract liability | 2,142 | 2,811 |
Equity compensation | 846 | 253 |
Allowance for doubtful accounts | 4,341 | 2,124 |
Other | 1,092 | 1,891 |
Valuation allowance | (3,841) | (6,378) |
Total Deferred Tax Assets | 98,880 | 100,901 |
Deferred tax liabilities: | ||
Property & equipment | (8,582) | (7,755) |
Goodwill | (18,617) | (17,833) |
Intangibles | (12,088) | (12,105) |
NAEM Reserve | (7,882) | (6,441) |
Other | (4,747) | (4,189) |
Total Deferred Tax Liabilities | (51,916) | (48,323) |
Net Deferred Tax Asset | $ 46,964 | $ 52,578 |
10. INCOME TAXES (Details - Net
10. INCOME TAXES (Details - Net operating loss carryforward) $ in Thousands | Dec. 31, 2015USD ($) |
Net operating loss carryforward | $ 233,912 |
NOL carryforward subject to 382 limitation | 40,610 |
California Operating Loss Carryforward | 31,222 |
2016 [Member] | |
California Operating Loss Carryforward | 3,683 |
2017 [Member] | |
Net operating loss carryforward | 3,356 |
NOL carryforward subject to 382 limitation | 0 |
California Operating Loss Carryforward | 9,292 |
2018 [Member] | |
Net operating loss carryforward | 12,284 |
NOL carryforward subject to 382 limitation | 0 |
California Operating Loss Carryforward | 0 |
2019 [Member] | |
Net operating loss carryforward | 7,178 |
NOL carryforward subject to 382 limitation | 0 |
California Operating Loss Carryforward | 0 |
2020 [Member] | |
Net operating loss carryforward | 0 |
NOL carryforward subject to 382 limitation | 0 |
California Operating Loss Carryforward | 0 |
Thereafter [Member] | |
Net operating loss carryforward | 211,094 |
NOL carryforward subject to 382 limitation | 40,610 |
California Operating Loss Carryforward | $ 18,247 |
10. INCOME TAXES (Details - Unr
10. INCOME TAXES (Details - Unrecognized tax benefit) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Tax Disclosure [Abstract] | |||
Unrecognized tax benefit, beginning balance | $ 3,761 | $ 3,970 | $ 4,184 |
Increases resulting from prior period tax positions | 0 | ||
Decreases resulting from prior period tax positions | (3,667) | (214) | |
Expiration of the statute of limitations for the assessment of taxes | (209) | ||
Unrecognized tax benefit, ending balance | $ 94 | $ 3,761 | $ 3,970 |
10. INCOME TAXES (Details Narra
10. INCOME TAXES (Details Narrative) $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Net operating loss carryforward | $ 233,912 |
Excess tax benefits related to exercise of stock options | 7,100 |
State [Member] | |
Net operating loss carryforward | $ 123,300 |
Operating loss ending expiration date | Dec. 31, 2035 |
Federal [Member] | |
Net operating loss carryforward | $ 233,900 |
Operating loss ending expiration date | Dec. 31, 2035 |
11. STOCK-BASED COMPENSATION (D
11. STOCK-BASED COMPENSATION (Details - Outstanding options and warrants) - Stock Options [Member] $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($)$ / sharesshares | |
Shares Outstanding, beginning balance | shares | 2,092,509 |
Shares exercised | shares | (1,135,833) |
Shares forfeited or expired | shares | (25,009) |
Shares outstanding, ending blance | shares | 931,667 |
Exercisable, ending balance | shares | 918,334 |
Weighted average exercise price, beginning balance | $ / shares | $ 3.58 |
Weighted average exercise price, exercised | $ / shares | 2.69 |
Weighted average exercise price, forfeited or expired | $ / shares | 2.22 |
Weighted average exercise price, ending balance | $ / shares | 4.69 |
Weighted average exercise price, exercisable | $ / shares | $ 4.73 |
Weighted average remaining contractual life, ending balance | 9 months 25 days |
Weighted average remaining contractual life, exercisable | 9 months 14 days |
Aggregate intrinsic value, ending balance | $ | $ 2,109,751 |
Aggregate intrinsic value, exercisable | $ | $ 2,054,551 |
11. STOCK-BASED COMPENSATION 64
11. STOCK-BASED COMPENSATION (Details - RSU's) - Restricted Stock Awards [Member] | 12 Months Ended |
Dec. 31, 2015$ / sharesshares | |
RSA's outstanding, beginning balance | shares | 942,024 |
RSA's granted | shares | 744,423 |
RSA's vested | shares | (856,052) |
RSA's forfeited | shares | (59,053) |
RSA's outstanding, ending balance | shares | 771,342 |
Weighted-Average Remaining Contractual Term | 8 months 16 days |
Weighted-average fair value, beginning balance | $ / shares | $ 1.96 |
Weighted-average fair value, granted | $ / shares | 8.60 |
Weighted-average fair value, vested | $ / shares | 4.59 |
Weighted-average fair value, forfeited | $ / shares | 5.59 |
Weighted-average fair value, ending balance | $ / shares | $ 5.17 |
11. STOCK-BASED COMPENSATION 65
11. STOCK-BASED COMPENSATION (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Intrinsic value of options and warrants exercised | $ 6,200,000 | $ 7,300,000 |
Unrecognized stock-based compensation expense | $ 9,815 | |
Unrecognized expense weighted average period | 10 months 13 days | |
Shares available for future issuance, options, warrants, shares of restricted stock and other bonus awards | 12,000,000 | |
RSA's available for future issuance | 3,461,208 | |
Restated Plan [Member] | ||
Shares available for future issuance, options, warrants, shares of restricted stock and other bonus awards | 12,000,000 | |
Total shares issued | 11,059,958 | |
Options cancelled | 2,825,009 | |
RSA's forfeited | 59,053 | |
Future Service [Member] | ||
Options granted | 170,000 |
13. QUARTERLY RESULTS OF OPER66
13. QUARTERLY RESULTS OF OPERATIONS (Details-Statements of Operations) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Quarterly Results Of Operations Details-statements Of Operations | |||||||||||
Net service fee revenue | $ 215,706 | $ 208,366 | $ 204,289 | $ 181,267 | $ 185,552 | $ 184,059 | $ 179,082 | $ 168,876 | $ 809,628 | $ 717,569 | $ 702,986 |
Total operating expenses | 205,256 | 191,137 | 190,905 | 183,213 | 170,676 | 168,824 | 163,436 | 161,328 | 770,511 | 664,264 | 659,383 |
Total other expenses | 10,109 | 5,731 | 10,836 | 6,723 | 9,951 | 10,401 | 10,803 | 25,468 | 56,623 | 43,911 | |
Equity in earnings of joint ventures | (2,626) | (1,992) | (3,207) | (1,102) | (2,248) | (2,009) | (1,646) | (1,067) | (8,927) | (6,970) | (6,194) |
Benefit from (provision for) income taxes | (1,707) | (5,199) | (2,192) | 3,091 | (2,878) | (2,334) | (1,233) | 4,478 | (6,007) | (1,967) | (3,510) |
Net (loss) income | 1,260 | 8,291 | 3,563 | (4,476) | 4,295 | 4,509 | 5,256 | (12,375) | 8,638 | 1,685 | 2,376 |
Net income attributable to noncontrolling intersts | 379 | 304 | 168 | 78 | 90 | 58 | 112 | 49 | 929 | 309 | 256 |
Net (loss) income attributable to Radnet, Inc. common stockholders | $ 881 | $ 7,987 | $ 3,395 | $ (4,554) | $ 4,205 | $ 4,451 | $ 5,144 | $ (12,424) | $ 7,709 | $ 1,376 | $ 2,120 |
Basic net (loss) income attributable to Radnet, Inc. common stockholders (loss) earnings per share: | $ .02 | $ .18 | $ .08 | $ (.11) | $ 0.10 | $ 0.11 | $ 0.13 | $ (0.31) | $ 0.18 | $ 0.03 | $ .05 |
Diluted net (loss) income attributable to Radnet, Inc. common stockholders (loss) earnings per share: | $ .02 | $ .18 | $ .08 | $ (.11) | $ 0.10 | $ 0.10 | $ 0.13 | $ (0.31) | $ .17 | $ 0.03 | $ .05 |
Weighted average shares outstanding - Basic | 45,454,000 | 43,637,000 | 43,370,000 | 42,747,000 | 41,783,000 | 41,645,000 | 40,817,000 | 40,010,000 | 43,805,794 | 41,070,077 | 39,140,480 |
Weighted average shares outstanding - Diluted | 46,545,000 | 44,752,000 | 44,686,000 | 42,747,000 | 44,182,000 | 44,034,000 | 43,263,000 | 40,010,000 | 45,171,372 | 43,149,196 | 39,814,535 |
14. RELATED PARTY TRANSACTIONS
14. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Related Party Transactions [Abstract] | |||
Delivery services paid to related party | $ 693 | $ 833 | $ 955 |
Due to related party | $ 116 | $ 61 |
15. SUBSEQUENT EVENTS (Details
15. SUBSEQUENT EVENTS (Details Narrative) $ in Thousands | 2 Months Ended |
Mar. 01, 2016USD ($) | |
Advanced Radiological Imaging [Member] | Subsequent Event [Member] | |
Cash consideration paid | $ 5,000 |