Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 04, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | RadNet, Inc. | |
Entity Central Index Key | 790,526 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
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 | 46,467,404 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,016 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 358 | $ 446 |
Accounts receivable, net | 183,229 | 162,843 |
Current portion of deferred tax assets | 22,279 | 22,279 |
Due from affiliates | 3,249 | 4,815 |
Prepaid expenses and other current assets | 28,566 | 38,986 |
Total current assets | 237,681 | 229,369 |
PROPERTY AND EQUIPMENT, NET | 249,397 | 256,722 |
OTHER ASSETS | ||
Goodwill | 240,640 | 239,408 |
Other intangible assets | 43,330 | 45,253 |
Deferred financing costs | 2,116 | 2,841 |
Investment in joint ventures | 41,868 | 33,584 |
Deferred tax assets, net of current portion | 22,939 | 24,685 |
Deposits and other | 5,428 | 4,565 |
Total assets | 843,399 | 836,427 |
CURRENT LIABILITIES | ||
Accounts payable, accrued expenses and other | 114,716 | 113,813 |
Due to affiliates | 5,243 | 6,564 |
Deferred revenue | 1,658 | 1,598 |
Current portion of notes payable | 22,047 | 22,383 |
Current portion of deferred rent | 2,861 | 2,563 |
Current portion of obligations under capital leases | 6,047 | 10,038 |
Total current liabilities | 152,572 | 156,959 |
LONG-TERM LIABILITIES | ||
Deferred rent, net of current portion | 25,889 | 26,865 |
Line of credit | 1,600 | 0 |
Notes payable, net of current portion | 614,982 | 599,914 |
Obligations under capital lease, net of current portion | 3,719 | 6,385 |
Other non-current liabilities | 4,292 | 9,843 |
Total liabilities | 803,054 | 799,966 |
STOCKHOLDERS' EQUITY | ||
RadNet, Inc. stockholders' equity: Common stock - $.0001 par value, 200,000,000 shares authorized; 46,467,404 and 46,281,189 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively | 4 | 4 |
Additional paid-in-capital | 197,881 | 197,297 |
Accumulated other comprehensive loss | (166) | (153) |
Accumulated deficit | (161,022) | (164,571) |
Total RadNet, Inc.'s stockholders' equity | 36,697 | 32,577 |
Non-controlling interests | 3,648 | 3,884 |
Total equity | 40,345 | 36,461 |
Total liabilities and equity | $ 843,399 | $ 836,427 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Common stock - par value (in Dollars per share) | $ 0.0001 | $ .0001 |
Common stock - shares authorized | 200,000,000 | 200,000,000 |
Common stock - shares issued | 46,467,404 | 46,281,189 |
Common stock - shares outstanding | 46,467,404 | 46,281,189 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
NET REVENUE | ||||
Service fee revenue, net of contractual allowances and discounts | $ 208,430 | $ 192,904 | $ 613,031 | $ 546,337 |
Provision for bad debts | (11,253) | (9,433) | (33,883) | (25,295) |
Net service fee revenue | 197,177 | 183,471 | 579,148 | 521,042 |
Revenue under capitation arrangements | 27,466 | 24,895 | 80,448 | 72,880 |
Total net revenue | 224,643 | 208,366 | 659,596 | 593,922 |
OPERATING EXPENSES | ||||
Cost of operations, excluding depreciation and amortization | 192,752 | 175,631 | 583,640 | 520,348 |
Depreciation and amortization | 17,318 | 14,601 | 49,541 | 43,836 |
Loss on sale and disposal of equipment | (66) | 738 | 375 | 774 |
Severance costs | 2,188 | 167 | 2,528 | 297 |
Total operating expenses | 212,192 | 191,137 | 636,084 | 565,255 |
INCOME FROM OPERATIONS | 12,451 | 17,229 | 23,512 | 28,667 |
OTHER INCOME AND EXPENSES | ||||
Interest expense | 11,404 | 10,546 | 32,830 | 30,965 |
Meaningful use incentive | 0 | 0 | (2,808) | (3,270) |
Equity in earnings of joint ventures | (2,576) | (1,992) | (8,129) | (6,301) |
Gain on sale of imaging centers | 0 | (4,823) | 0 | (4,823) |
Gain from return of common stock | 0 | 0 | (5,032) | 0 |
Other expenses | 174 | 8 | 180 | 418 |
Total other expenses | 9,002 | 3,739 | 17,041 | 16,989 |
INCOME BEFORE INCOME TAXES | 3,449 | 13,490 | 6,471 | 11,678 |
Provision for income taxes | (1,458) | (5,199) | (2,531) | (4,300) |
NET INCOME | 1,991 | 8,291 | 3,940 | 7,378 |
Net income attributable to noncontrolling interests | 344 | 304 | 391 | 550 |
NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | $ 1,647 | $ 7,987 | $ 3,549 | $ 6,828 |
BASIC NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | $ .04 | $ .18 | $ .08 | $ .16 |
DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | $ .04 | $ .18 | $ .08 | $ .15 |
WEIGHTED AVERAGE SHARES OUTSTANDING - Basic | 45,868,629 | 43,637,022 | 46,337,993 | 43,247,002 |
WEIGHTED AVERAGE SHARES OUTSTANDING - Diluted | 46,333,970 | 44,751,936 | 46,748,836 | 44,704,323 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Statement of Comprehensive Income [Abstract] | ||||
NET INCOME | $ 1,991 | $ 8,291 | $ 3,940 | $ 7,378 |
Foreign currency translation adjustments | 3 | 7 | (166) | (34) |
COMPREHENSIVE INCOME | 1,994 | 8,298 | 3,774 | 7,344 |
Less comprehensive income attributable to non-controlling interests | 344 | 304 | 391 | 550 |
COMPREHENSIVE INCOME ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | $ 1,650 | $ 7,994 | $ 3,383 | $ 6,794 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENT OF EQUITY (Unaudited) - 9 months ended Sep. 30, 2016 - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income / Loss | Accumulated Deficit | Total Radnet Inc Equity | Noncontrolling Interest | Total |
Beginning balance, shares at Dec. 31, 2015 | 46,281,189 | ||||||
Beginning balance, value at Dec. 31, 2015 | $ 4 | $ 197,297 | $ (153) | $ (164,571) | $ 32,577 | $ 3,884 | $ 36,461 |
Issuance of common stock upon exercise of options/warrants, shares issued | 314,448 | ||||||
Issuance of common stock upon exercise of options/warrants, value | 150 | 150 | 150 | ||||
Stock-based compensation | 4,659 | 4,659 | 4,659 | ||||
Issuance of restricted stock and other awards, shares | 830,303 | ||||||
Return of common stock, shares | (958,536) | ||||||
Return of common stock, value | (5,032) | (5,032) | 5,032 | ||||
Purchase of noncontrolling interests | (185) | (185) | (135) | (320) | |||
Sale of non-controlling interest | 992 | 992 | 992 | ||||
Distributions paid to noncontrolling interest | (492) | (492) | |||||
Change in cumulative foreign currency translation adjustment | (13) | (13) | (13) | ||||
Net income | 3,549 | 3,549 | 391 | 3,940 | |||
Ending balance, shares at Sep. 30, 2016 | 46,467,404 | ||||||
Ending balance, value at Sep. 30, 2016 | $ 4 | $ 197,881 | $ (166) | $ (161,022) | $ 36,697 | $ 3,648 | $ 40,345 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 3,940 | $ 7,378 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 49,541 | 43,836 |
Provision for bad debts | 33,883 | 25,295 |
Gain from return of common stock | (5,032) | 0 |
Equity in earnings of joint ventures | (8,129) | (6,301) |
Distributions from joint ventures | 2,929 | 6,255 |
Amortization and write off of deferred financing costs and loan discount | 4,244 | 4,000 |
Loss on sale and disposal of equipment | 375 | 774 |
Gain on sale of imaging centers | 0 | (4,823) |
Stock-based compensation | 4,918 | 6,477 |
Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions: | ||
Accounts receivable | (53,277) | (32,485) |
Other current assets | 10,420 | (15,628) |
Other assets | 751 | (1,254) |
Deferred taxes | 1,746 | 2,750 |
Deferred rent | (678) | 6,034 |
Deferred revenue | 60 | (641) |
Accounts payable, accrued expenses and other | 9,039 | (1,602) |
Net cash provided by operating activities | 54,730 | 40,065 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of imaging facilities | (6,603) | (41,237) |
Purchase of property and equipment | (52,110) | (38,736) |
Proceeds from sale of equipment | 63 | 648 |
Proceeds from sale of imaging facilities | 0 | 35,500 |
Cash distribution from existing JV partner | 994 | 443 |
Equity contributions in existing and purchase of interest in joint ventures | (1,374) | (265) |
Net cash used in investing activities | (59,030) | (43,647) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Principal payments on notes and leases payable | (9,219) | (6,645) |
Proceeds from borrowings | 476,503 | 74,401 |
Payments on Term Loan Debt | (463,022) | (17,548) |
Deferred financing costs | (945) | (531) |
Net proceeds (payments) on revolving credit facility | 1,600 | (15,300) |
Distributions paid to non-controlling interests | (492) | (613) |
Proceeds from sale of non-controlling interests | 0 | 5,005 |
Purchase of non-controlling interests | (350) | 0 |
Proceeds from issuance of common stock upon exercise of options/warrants | 150 | 594 |
Net cash provided by financing activities | 4,225 | 39,363 |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | (13) | (34) |
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (88) | 35,747 |
CASH AND CASH EQUIVALENTS, beginning of period | 446 | 307 |
CASH AND CASH EQUIVALENTS, end of period | 358 | 36,054 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Cash paid during the period for income taxes | 26,819 | 26,543 |
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Purchase of equipment and leasehold improvements not yet paid for | 14,700 | 15,700 |
Capital lease debt | 1,300 | 0 |
Noncash gain from return of common stock | 5,000 | 0 |
Assets transferred to joint venture | 2,700 | 0 |
Gain from earn out provision from sale of controlling interest | $ 992 | $ 0 |
1. NATURE OF BUSINESS AND BASIS
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF BUSINESS AND BASIS OF PRESENTATION | We are a national provider of freestanding, fixed-site outpatient diagnostic imaging services. At September 30, 2016, we operated directly or indirectly through joint ventures with hospitals, 306 centers located in California, Delaware, Florida, 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 for 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 is responsible for 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 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 nine 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. Six 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 nine 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 management agreements with us, substantially all cash flows of BRMG and the NY Groups after expenses including professional salaries, are transferred to us. We have determined that BRMG and the NY Groups are VIEs, 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 $34.2 million and $29.4 million of revenue, net of management service fees to RadNet, for the three months ended September 30, 2016 and 2015, respectively, and $34.2 million and $29.4 million of operating expenses for the three months ended September 30, 2016 and 2015, respectively. RadNet, Inc. recognized in its condensed consolidated statement of operations $147.3 million and $106.7 million of total billed net service fee revenue relating to these VIEs for the three months ended September 30, 2016 and 2015, respectively, of which $113.1 million and $77.3 million was for management services provided to these VIEs relating primarily to the technical portion of total billed net service fee revenue for the three months ended September 30, 2016 and 2015, respectively. For the nine months ended September 30, 2016 and 2015, respectively, the VIEs recognized $101.2 million and $83.1 million of revenue, net of management services fees to RadNet, respectively, and $101.2 million and $83.1 million of operating expenses. RadNet, Inc. recognized in its condensed consolidated statement of operations $422.2 million and $320.6 million of total billed net service fee revenue relating to these VIEs for the nine months ended September 30, 2016 and 2015, respectively, of which $321.1 million and $237.5 million was for management services provided to these VIEs relating primarily to the technical portion of total billed net service fee revenue for the nine months ended September 30, 2016 and 2015, respectively. 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 September 30, 2016 and December 31, 2015, we have included approximately $104.7 million and $89.8 million, respectively, of accounts receivable and approximately $8.7 million and $8.5 million of accounts payable and accrued liabilities related to BRMG and the NY Groups, respectively. 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, RadNet may be required to provide financial support to cover any operating expenses in excess of operating revenues. At all of our centers we have entered into long-term contracts with radiology groups in the area to provide physician services at those facilities. These 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 value of the services we provide. Except in New York City, the fee is based on the practice group’s professional revenue, including revenue derived outside of our diagnostic imaging centers. In New York City we are paid a fixed fee set in advance for our services. 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 radiology practices; accordingly, we do not consolidate the financial statements of those practices in our consolidated financial statements. Because of the controlling relationship of Dr. Berger and Dr. Crues in the California and New York City practices we consolidate that income. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and, therefore, do not include all information and footnotes necessary for conformity with U.S. generally accepted accounting principles for complete financial statements; however, in the opinion of our management, all adjustments consisting of normal recurring adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods ended September 30, 2016 and 2015 have been made. The results of operations for any interim period are not necessarily indicative of the results for a full year. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto contained in our annual report on Form 10-K for the year ended December 31, 2015 filed on March 15, 2016, as amended. |
2. SIGNIFICANT ACCOUNTING POLIC
2. SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | During the period covered in this report, there have been no material changes to the significant accounting policies we use and have explained, in our annual report on Form 10-K for the fiscal year ended December 31, 2015, as amended. The information below is intended only to supplement the disclosure in our annual report on Form 10-K for the fiscal year ended December 31, 2015, as amended. 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 administrative 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. 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 are summarized in the following table (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Commercial insurance $ 130,036 $ 114,827 $ 386,383 $ 331,670 Medicare 48,740 40,840 140,089 120,039 Medicaid 7,554 6,117 21,461 17,582 Workers' compensation/personal injury 9,449 7,712 27,935 23,287 Other 12,651 23,408 37,163 53,759 Service fee revenue, net of contractual allowances and discounts 208,430 192,904 613,031 546,337 Provision for bad debts (11,253 ) (9,433 ) (33,883 ) (25,295 ) Net service fee revenue 197,177 183,471 579,148 521,042 Revenue under capitation arrangements 27,466 24,895 80,448 72,880 Total net revenue $ 224,643 $ 208,366 $ 659,596 $ 593,922 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 patterns 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. Deferred Tax Assets 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, including tax planning strategies, in determining whether our net deferred tax assets are more likely than not to be realized. 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. Presentation of Deferred Financing Costs In the first quarter of 2016, we adopted Accounting Standards Update (“ASU”) 2015-03, Simplifying the Presentation of Debt Issuance Costs Impact of new accounting pronouncement In thousands As previously Impact of As currently Prepaid expenses and other current assets $ 40,139 (1,153 ) 38,986 Deferred financing costs, net of current portion 3,696 (855 ) 2,841 Others 794,600 – 794,600 Total assets $ 838,435 $ (2,008 ) $ 836,427 Current portion of notes payable 23,076 (693 ) 22,383 Notes payable, net of current portion 601,229 (1,315 ) 599,914 Others 177,669 – 177,669 Total liabilities 801,974 (2,008 ) 799,966 Total equity 36,461 – 36,461 Total liabilities and equity $ 838,435 $ (2,008 ) $ 836,427 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 developed a Radiology Information System (RIS) software platform that has been awarded Meaningful Use certification. 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 $2.8 million and $3.3 million during the nine months ended September 30, 2016, and 2015, respectively, relating to this incentive. Gain from Return of Common Stock In the second quarter of 2016, we determined that certain pre-acquisition financial information of Diagnostic Imaging Group (“DIG”) provided to us by the sellers contained errors. As a result of this, we negotiated and reached a settlement with the sellers of DIG in June 2016 for the return of 958,536 shares of common stock which had a fair value of $5.0 million on the date of return. Such return has been recognized as a gain from return of common stock in our statement of operations. Liquidity and Capital Resources We had cash and cash equivalents of $358,000 and accounts receivable of $183.2 million at September 30, 2016, compared to cash and cash equivalents of $446,000 and accounts receivable of $162.8 million at December 31, 2015. We had a working capital balance of $85.1 million and $72.4 million at September 30, 2016 and December 31, 2015, respectively. We had net income attributable to RadNet, Inc. common stockholders for the three months ended September 30, 2016 and 2015 of $1.6 million and $8.0 million, respectively. We had net income attributable to RadNet, Inc. common stockholders for the nine months ended September 30, 2016 and 2015 of $3.5 million and $6.8 million, respectively. We also had stockholders’ equity of $36.7 million and $32.6 million at September 30, 2016 and December 31, 2015, respectively. We operate in a capital intensive, high fixed-cost industry that requires significant amounts of capital to fund operations. In addition to operations, we require a significant amount of capital for the initial start-up and development of new diagnostic imaging facilities, the acquisition of additional facilities and new diagnostic imaging equipment. Because our cash flows from operations have been insufficient to fund all of these capital requirements, we have depended on the availability of financing under credit arrangements with third parties. Based on our current level of operations, we believe that cash flow from operations and available cash, together with available borrowings from our senior secured credit facilities, will be adequate to meet our liquidity needs. Our future liquidity requirements will be for working capital, capital expenditures, debt service and general corporate purposes. Our ability to meet our working capital and debt service requirements, however, is subject to future economic conditions and to financial, business and other factors, many of which are beyond our control. If we are not able to meet such requirements, we may be required to seek additional financing. There can be no assurance that we will be able to obtain financing from other sources on terms acceptable to us, if at all. On a continuing basis, we also consider various transactions to increase shareholder value and enhance our business results, including acquisitions, divestitures and joint ventures. These types of transactions may result in future cash proceeds or payments but the general timing, size or success of any acquisition, divestiture or joint venture effort and the related potential capital commitments cannot be predicted. We expect to fund any future acquisitions primarily with cash flow from operations and borrowings, including borrowing from amounts available under our senior secured credit facilities or through new equity or debt issuances. We and our subsidiaries or affiliates may from time to time, in our or their sole discretion, purchase, repay, redeem or retire any of our outstanding debt or equity securities in privately negotiated or open market transactions, by tender offer or otherwise. At September 30, 2016, our credit facilities were comprised of two tranches of term loans and a revolving credit facility. On July 1, 2016 (the “Restatement Effective Date”), we entered into Amendment No. 3 to Credit and Guaranty Agreement (the “Restatement Amendment”) pursuant to which we amended and restated our then existing credit facilities on the terms set forth in the Amended and Restated First Lien Credit and Guaranty Agreement dated July 1, 2016 (as amended from time to time, the “First Lien Credit Agreement”). Pursuant to the First Lien Credit Agreement, we have issued $485 million of senior secured term loans (the “First Lien Term Loans”) and established a $117.5 million senior secured revolving credit facility (the “Revolving Credit Facility”). We have also entered into a Second Lien Credit and Guaranty Agreement dated March 25, 2014 (as amended from time to time, the “Second Lien Credit Agreement”) pursuant to which we issued $180 million of secured term loans (the “Second Lien Term Loans”). Included in our condensed consolidated balance sheet at September 30, 2016 is $635.5 million of senior secured term loan debt (net of unamortized discounts of $17.5 million), broken down by loan agreement as follows (in thousands): As of September 30, 2016 Face Value Discount Total First Lien Term Loans $ 485,000 $ (15,278 ) $ 469,722 Second Lien Term Loans $ 168,000 $ (2,193 ) $ 165,807 Total $ 653,000 $ (17,471 ) $ 635,529 Our $117.5 million Revolving Credit Facility had a $1.6 million aggregate principal amount outstanding as of September 30, 2016. As of September 30, 2016, we were in compliance with all covenants under our First Lien Credit Agreement and our Second Lien Credit Agreement. Details on the First Lien Credit Agreement and the Second Lien Credit Agreement follow. Restatement Amendment and the First Lien Credit Agreement On July 1, 2016, we entered into the Restatement Amendment pursuant to which we amended and restated our then existing credit facilities on the terms set forth in the First Lien Credit Agreement. As of the Restatement Effective Date, our first lien credit facilities consisted of a Credit and Guaranty Agreement that we entered into on October 10, 2012 (the “Original First Lien Credit Agreement”), as subsequently amended by a first amendment dated April 3, 2013 (the “2013 Amendment”), a second amendment dated March 25, 2014 (the “2014 Amendment”), and a joinder agreement dated April 30, 2015 (the “2015 Joinder” and collectively with the Original First Lien Credit Agreement, the 2013 Amendment and the 2014 Amendment, the “Prior First Lien Credit Agreement”). The First Lien Credit Agreement increased the aggregate principal amount of First Lien Term Loans to $485.0 million and increased the Revolving Credit Facility to $117.5 million. Proceeds from the First Lien Credit Agreement were used to repay the previously outstanding first lien loans under the Prior First Lien Credit Agreement, make a $12.0 million principal payment of the Second Lien Term Loans, pay costs and expenses related to the First Lien Credit Agreement and provide approximately $10.0 million for general corporate purposes. Interest. Payments. Maturity Date. Incremental Feature: minus Revolving Credit Facility: Second Lien Credit Agreement On March 25, 2014, we entered into the Second Lien Credit Agreement to provide for, among other things, the borrowing of $180.0 million of Second Lien Term Loans. The proceeds from the Second Lien Term Loans were used to redeem our 10 3/8% senior unsecured notes, due 2018, to pay the expenses related to the transaction and for general corporate purposes. On July 1, 2016, in conjunction with the Restatement Amendment, a $12.0 million principal payment was made on the Second Lien Term Loans. The Second Lien Credit Agreement provides for the following: Interest. Payments. Termination. |
3. RECENT ACCOUNTING STANDARDS
3. RECENT ACCOUNTING STANDARDS | 9 Months Ended |
Sep. 30, 2016 | |
Recent Accounting Standards | |
RECENT ACCOUNTING STANDARDS | In August 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-15, Statement of Cash Flows (Topic 230) – Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 clarifies how entities should classify certain cash receipts and cash payments in the statement of cash flows and amends certain disclosure requirements. The update is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after 15 December 2019. Early adoption is permitted, including adoption in an interim period. We are currently evaluating the impact of the GAAP update on our results of operations and cash flows. In March 2016, the FASB issued ASU No. 2016-09 (“ASU 2016-09”), Compensation—Stock Compensation In February 2016, the FASB issued 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 2014, the FASB issued ASU No. 2014-15 (“ASU 2014-15”), Presentation of Financial Statements In May 2014, the FASB issued ASU No. 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers |
4. EARNINGS PER SHARE
4. EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | Earnings per share is based upon the weighted average number of shares of common stock and common stock equivalents outstanding, as follows (in thousands except share and per share data): Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Net income attributable to RadNet, Inc.'s common stockholders $ 1,647 $ 7,987 $ 3,549 $ 6,828 BASIC NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC.'S COMMON STOCKHOLDERS Weighted average number of common shares outstanding during the period 45,868,629 43,637,022 46,337,993 43,247,002 Basic net income per share attributable to RadNet, Inc.'s common stockholders $ 0.04 $ 0.18 $ 0.08 $ 0.16 DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC.'S COMMON STOCKHOLDERS Weighted average number of common shares outstanding during the period 45,868,629 43,637,022 46,337,993 43,247,002 Add nonvested restricted stock subject only to service vesting 260,389 437,689 190,428 484,810 Add additional shares issuable upon exercise of stock options and warrants 204,952 677,225 220,415 972,511 Weighted average number of common shares used in calculating diluted net income per share 46,333,970 44,751,936 46,748,836 44,704,323 Diluted net income per share attributable to RadNet, Inc.'s common stockholders $ 0.04 $ 0.18 $ 0.08 $ 0.15 |
5. ACQUISITIONS
5. ACQUISITIONS | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
ACQUISITIONS | In the third quarter of 2016, we recorded a measurement period adjustment associated with our acquisition of DIG on October 1, 2015. This adjustment stemmed from the final valuation report received from a third party valuation expert and amounted to a decrease to our intangible and fixed assets of approximately $121,000. On July 1, 2016, we purchased for approximately $320,000 an additional 10.8% interest in the Park West joint venture, a concern which was part of the Lenox Hill 2012 acquisition, increasing our ownership percentage from 52.4% to 63.2%. The difference between the consideration paid and the fair value of the non-controlling interest purchased was recorded as an adjustment to additional paid-in capital. In the second quarter of 2016, we recorded certain measurement period adjustments associated with our acquisition of DIG on October 1, 2015. These adjustments were the result of a preliminary valuation report received from a third party and resulted in an increase to fixed assets acquired by $1.2 million and the recognition of an unfavorable lease contract liability of $1.0 million. The recognition of these adjustments also resulted in related depreciation expense of $123,000 in the second quarter relating to the period from October 1, 2015 to December 31, 2015 and $123,000 related to the period from January 1, 2016 to March 31, 2016. Also, amounts previously owed to DIG of $5.0 million were reduced to $3.4 million on June 15, 2016 when we remitted a payment of $1.6 million to a payor on behalf of DIG. On March 1, 2016 we completed our acquisition of certain assets of Advanced Radiological Imaging – Astoria P.C. consisting of two 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. We have made a preliminary fair value determination of the acquired assets and approximately $3.6 million of fixed assets, $47,000 of prepaid assets, $100,000 covenant not to compete, and $1.3 million of goodwill were recorded. |
6. INVESTMENT IN JOINT VENTURES
6. INVESTMENT IN JOINT VENTURES | 9 Months Ended |
Sep. 30, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | |
INVESTMENT IN JOINT VENTURES | We have twelve unconsolidated joint ventures with ownership interests ranging from 35% to 55%. 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, since RadNet does not have a controlling financial interest in such ventures. Acquisition of new facilities On August 15, 2016 our joint venture, Franklin Imaging, LLC, acquired a single multi-modality imaging center located in Rosedale, Maryland for cash consideration of $1.0 million and the assumption of capital lease debt of $241,000. Franklin Imaging, LLC made a fair value determination of the acquired assets and approximately $600,000 of fixed assets, $30,000 of other assets and goodwill of $648,000 was recorded in respect to the transaction. Formation of new joint ventures On April 1, 2016, Community Imaging Partners Inc., a wholly owned subsidiary of RadNet, entered into a joint venture with Mt. Airy Health Services, LLC, a partnership of Frederick Memorial Hospital and Carroll Hospital Center. On August 31, 2016, Community Imaging Partners Inc. contributed $200,000 for a 40% economic interest in the partnership and funded an additional $440,000 in relation to a capital call. Mt. Airy Health Services, LLC, contributed $300,000 for a 60% economic interest and an additional $660,000 in relation to the capital call. On May 9, 2016, RadNet, through a newly formed subsidiary, Glendale Advanced Imaging LLC, entered into a joint venture with Dignity Health, a California nonprofit public benefit corporation. On June 1, 2016, RadNet contributed net assets of $2.2 million for a 55% economic interest and Dignity Health contributed net assets of $1.8 million for a 45% economic interest. Joint Venture investment and financial information The following table is a summary of our investment in joint ventures during the nine months ended September 30, 2016 (in thousands): Balance as of December 31, 2015 $ 33,584 Equity in earnings in these joint ventures 8,129 Distribution of earnings (2,929 ) Equity contributions in existing joint ventures 3,084 Balance as of September 30, 2016 $ 41,868 We earned management service fees from the centers underlying these joint ventures of approximately $2.9 million and $2.6 million for the three months ended September 30, 2016 and 2015, respectively, and $8.7 million and $6.4 million for the nine months ended September 30, 2016 and 2015 respectively. At the end of the period we eliminate from total fees recorded the uncollected portion of these fees that are associated with our ownership interests and offset this with an increase to our equity earnings. The following table is a summary of key financial data for these joint ventures as of September 30, 2016 and for the nine months ended September 30, 2016 and 2015 (in thousands): Balance Sheet Data: September 30, 2016 December 31, 2015 Current assets $ 33,452 $ 28,186 Noncurrent assets 96,766 91,660 Current liabilities (9,786 ) (15,258 ) Noncurrent liabilities (42,633 ) (44,059 ) Total net assets $ 77,799 $ 60,529 Book value of RadNet joint venture interests $ 36,873 $ 28,397 Cost in excess of book value of acquired joint venture interests 4,995 4,970 Elimination of intercompany profit remaining on Radnet's consolidated balance sheet 217 Total value of Radnet joint venture interests $ 41,868 $ 33,584 Total book value of other joint venture partner interests $ 40,926 $ 32,132 Income statement data for the nine months ended September 30, 2016 2015 Net revenue $ 119,920 $ 85,305 Net income $ 18,001 $ 13,489 |
7. STOCK-BASED COMPENSATION
7. STOCK-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | Stock Incentive Plans Options We have one long-term equity incentive plan, 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 September 30, 2016, 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 September 30, 2016, we had outstanding options to acquire 375,626 shares of our common stock, of which options to acquire 191,667 shares were exercisable. During the nine months ended September 30, 2016, we granted additional options under our Restated Plan conferring the right to acquire 170,626 shares of common stock. The following summarizes all of our option transactions for the nine months ended September 30, 2016: 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, 2015 931,667 $ 4.69 Granted 170,626 6.01 Exercised (526,667 ) 2.96 Canceled, forfeited or expired (150,000 ) 7.51 Balance, September 30, 2016 375,626 6.82 4.70 $ 452,333 Exercisable at September 30, 2016 191,667 7.89 1.11 142,933 Aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between our closing stock price on September 30, 2016 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the holder had all holders exercised their options on September 30, 2016. Total intrinsic value of options exercised during the nine months ended September 30, 2016 and 2015 was approximately $1.7 million and $6.1 million, respectively. As of September 30, 2016, total unrecognized stock-based compensation expense related to non-vested employee option awards was approximately $477,000, which is expected to be recognized over a weighted average period of approximately 3.2 years. Restricted Stock Awards (“RSA’s”) The Restated Plan permits the award of restricted stock. As of September 30, 2016, we have issued a total of 4,256,511 RSA’s, of which 568,145 were unvested. The following summarizes the activity related to all unvested RSA’s during the nine months ended September 30, 2016: RSA's Weighted-Average Weighted-Average RSA's unvested at December 31, 2015 771,342 $ 5.17 Changes during the period Granted 795,303 $ 6.16 Vested (998,499 ) $ 5.13 Forfeited – $ 0.00 RSA's unvested at September 30, 2016 568,145 0.81 $ 6.19 We determine the fair value of all RSA’s based on the closing price of our common stock on the 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 nine months ended September 30, 2016, stock bonus awards issued under the Restated Plan amounted to 35,000 shares of common stock with an intrinsic value of approximately $246,000. Restated Plan Summary In sum, of the 12,000,000 shares of common stock reserved for issuance under the Restated Plan, at September 30, 2016, we had issued 12,060,887 total shares between options, RSA’s and other stock awards. With options cancelled and RSA’s forfeited amounting to 2,975,009 and 59,053 shares, respectively, there remain 2,973,175 shares available under the Restated Plan for future issuance. Nonqualified Deferred Compensation Plan On May 5, 2016, RadNet, Inc. adopted a Nonqualified Deferred Compensation Plan that is intended to provide nonqualified deferred compensation for selected participants. As part of the plan, selected participants may defer stock units granted. |
8. FAIR VALUE MEASUREMENTS
8. FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
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 of our long-term debt as follows (in thousands): As of September 30, 2016 Level 1 Level 2 Level 3 Total Fair Total Face First Lien Term Loans $ – $ 484,394 $ – $ 484,394 $ 485,000 Second Lien Term Loans $ – 166,320 $ – 166,320 $ 168,000 As of December 31, 2015 Level 1 Level 2 Level 3 Total Total Face Value First Lien Term Loans $ – $ 444,258 $ – $ 444,258 $ 451,023 Second Lien Term Loans – 173,700 – 173,700 180,000 The carrying value of our Revolving Credit Facility at September 30, 2016 was $1.6 million, which approximated its fair value. There was no balance outstanding under the Revolving Credit Facility at December 31, 2015. We consider the carrying amounts of cash and cash equivalents, receivables, other current assets and current liabilities 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. |
2. SIGNIFICANT ACCOUNTING POL16
2. SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
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 administrative 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. 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 are summarized in the following table (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Commercial insurance $ 130,036 $ 114,827 $ 386,383 $ 331,670 Medicare 48,740 40,840 140,089 120,039 Medicaid 7,554 6,117 21,461 17,582 Workers' compensation/personal injury 9,449 7,712 27,935 23,287 Other 12,651 23,408 37,163 53,759 Service fee revenue, net of contractual allowances and discounts 208,430 192,904 613,031 546,337 Provision for bad debts (11,253 ) (9,433 ) (33,883 ) (25,295 ) Net service fee revenue 197,177 183,471 579,148 521,042 Revenue under capitation arrangements 27,466 24,895 80,448 72,880 Total net revenue $ 224,643 $ 208,366 $ 659,596 $ 593,922 |
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 patterns 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. |
Deferred Tax Assets | Deferred Tax Assets 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, including tax planning strategies, in determining whether our net deferred tax assets are more likely than not to be realized. |
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. |
Presentation of Deferred Financing Costs | Presentation of Deferred Financing Costs In the first quarter of 2016, we adopted Accounting Standards Update (“ASU”) 2015-03, Simplifying the Presentation of Debt Issuance Costs Impact of new accounting pronouncement In thousands As previously Impact of As currently Prepaid expenses and other current assets $ 40,139 (1,153 ) 38,986 Deferred financing costs, net of current portion 3,696 (855 ) 2,841 Others 794,600 – 794,600 Total assets $ 838,435 $ (2,008 ) $ 836,427 Current portion of notes payable 23,076 (693 ) 22,383 Notes payable, net of current portion 601,229 (1,315 ) 599,914 Others 177,669 – 177,669 Total liabilities 801,974 (2,008 ) 799,966 Total equity 36,461 – 36,461 Total liabilities and equity $ 838,435 $ (2,008 ) $ 836,427 |
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 developed a Radiology Information System (RIS) software platform that has been awarded Meaningful Use certification. 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 $2.8 million and $3.3 million during the nine months ended September 30, 2016, and 2015, respectively, relating to this incentive. |
Gain from return of Common Stock | Gain from Return of Common Stock In the second quarter of 2016, we determined that certain pre-acquisition financial information of Diagnostic Imaging Group (“DIG”) provided to us by the sellers contained errors. As a result of this, we negotiated and reached a settlement with the sellers of DIG in June 2016 for the return of 958,536 shares of common stock which had a fair value of $5.0 million on the date of return. Such return has been recognized as a gain from return of common stock in our statement of operations. |
Liquidity and Capital Resources | Liquidity and Capital Resources We had cash and cash equivalents of $358,000 and accounts receivable of $183.2 million at September 30, 2016, compared to cash and cash equivalents of $446,000 and accounts receivable of $162.8 million at December 31, 2015. We had a working capital balance of $85.1 million and $72.4 million at September 30, 2016 and December 31, 2015, respectively. We had net income attributable to RadNet, Inc. common stockholders for the three months ended September 30, 2016 and 2015 of $1.6 million and $8.0 million, respectively. We had net income attributable to RadNet, Inc. common stockholders for the nine months ended September 30, 2016 and 2015 of $3.5 million and $6.8 million, respectively. We also had stockholders’ equity of $36.7 million and $32.6 million at September 30, 2016 and December 31, 2015, respectively. We operate in a capital intensive, high fixed-cost industry that requires significant amounts of capital to fund operations. In addition to operations, we require a significant amount of capital for the initial start-up and development of new diagnostic imaging facilities, the acquisition of additional facilities and new diagnostic imaging equipment. Because our cash flows from operations have been insufficient to fund all of these capital requirements, we have depended on the availability of financing under credit arrangements with third parties. Based on our current level of operations, we believe that cash flow from operations and available cash, together with available borrowings from our senior secured credit facilities, will be adequate to meet our liquidity needs. Our future liquidity requirements will be for working capital, capital expenditures, debt service and general corporate purposes. Our ability to meet our working capital and debt service requirements, however, is subject to future economic conditions and to financial, business and other factors, many of which are beyond our control. If we are not able to meet such requirements, we may be required to seek additional financing. There can be no assurance that we will be able to obtain financing from other sources on terms acceptable to us, if at all. On a continuing basis, we also consider various transactions to increase shareholder value and enhance our business results, including acquisitions, divestitures and joint ventures. These types of transactions may result in future cash proceeds or payments but the general timing, size or success of any acquisition, divestiture or joint venture effort and the related potential capital commitments cannot be predicted. We expect to fund any future acquisitions primarily with cash flow from operations and borrowings, including borrowing from amounts available under our senior secured credit facilities or through new equity or debt issuances. We and our subsidiaries or affiliates may from time to time, in our or their sole discretion, purchase, repay, redeem or retire any of our outstanding debt or equity securities in privately negotiated or open market transactions, by tender offer or otherwise. At September 30, 2016, our credit facilities were comprised of two tranches of term loans and a revolving credit facility. On July 1, 2016 (the “Restatement Effective Date”), we entered into Amendment No. 3 to Credit and Guaranty Agreement (the “Restatement Amendment”) pursuant to which we amended and restated our then existing credit facilities on the terms set forth in the Amended and Restated First Lien Credit and Guaranty Agreement dated July 1, 2016 (as amended from time to time, the “First Lien Credit Agreement”). Pursuant to the First Lien Credit Agreement, we have issued $485 million of senior secured term loans (the “First Lien Term Loans”) and established a $117.5 million senior secured revolving credit facility (the “Revolving Credit Facility”). We have also entered into a Second Lien Credit and Guaranty Agreement dated March 25, 2014 (as amended from time to time, the “Second Lien Credit Agreement”) pursuant to which we issued $180 million of secured term loans (the “Second Lien Term Loans”). Included in our condensed consolidated balance sheet at September 30, 2016 is $635.5 million of senior secured term loan debt (net of unamortized discounts of $17.5 million), broken down by loan agreement as follows (in thousands): As of September 30, 2016 Face Value Discount Total First Lien Term Loans $ 485,000 $ (15,278 ) $ 469,722 Second Lien Term Loans $ 168,000 $ (2,193 ) $ 165,807 Total $ 653,000 $ (17,471 ) $ 635,529 Our $117.5 million Revolving Credit Facility had a $1.6 million aggregate principal amount outstanding as of September 30, 2016. As of September 30, 2016, we were in compliance with all covenants under our First Lien Credit Agreement and our Second Lien Credit Agreement. Details on the First Lien Credit Agreement and the Second Lien Credit Agreement follow. Restatement Amendment and the First Lien Credit Agreement On July 1, 2016, we entered into the Restatement Amendment pursuant to which we amended and restated our then existing credit facilities on the terms set forth in the First Lien Credit Agreement. As of the Restatement Effective Date, our first lien credit facilities consisted of a Credit and Guaranty Agreement that we entered into on October 10, 2012 (the “Original First Lien Credit Agreement”), as subsequently amended by a first amendment dated April 3, 2013 (the “2013 Amendment”), a second amendment dated March 25, 2014 (the “2014 Amendment”), and a joinder agreement dated April 30, 2015 (the “2015 Joinder” and collectively with the Original First Lien Credit Agreement, the 2013 Amendment and the 2014 Amendment, the “Prior First Lien Credit Agreement”). The First Lien Credit Agreement increased the aggregate principal amount of First Lien Term Loans to $485.0 million and increased the Revolving Credit Facility to $117.5 million. Proceeds from the First Lien Credit Agreement were used to repay the previously outstanding first lien loans under the Prior First Lien Credit Agreement, make a $12.0 million principal payment of the Second Lien Term Loans, pay costs and expenses related to the First Lien Credit Agreement and provide approximately $10.0 million for general corporate purposes. Interest. Payments. Maturity Date. Incremental Feature: minus Revolving Credit Facility: Second Lien Credit Agreement On March 25, 2014, we entered into the Second Lien Credit Agreement to provide for, among other things, the borrowing of $180.0 million of Second Lien Term Loans. The proceeds from the Second Lien Term Loans were used to redeem our 10 3/8% senior unsecured notes, due 2018, to pay the expenses related to the transaction and for general corporate purposes. On July 1, 2016, in conjunction with the Restatement Amendment, a $12.0 million principal payment was made on the Second Lien Term Loans. The Second Lien Credit Agreement provides for the following: Interest. Payments. Termination. |
2. SIGNIFICANT ACCOUNTING POL17
2. SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Schedule of service fee revenue | Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Commercial insurance $ 130,036 $ 114,827 $ 386,383 $ 331,670 Medicare 48,740 40,840 140,089 120,039 Medicaid 7,554 6,117 21,461 17,582 Workers' compensation/personal injury 9,449 7,712 27,935 23,287 Other 12,651 23,408 37,163 53,759 Service fee revenue, net of contractual allowances and discounts 208,430 192,904 613,031 546,337 Provision for bad debts (11,253 ) (9,433 ) (33,883 ) (25,295 ) Net service fee revenue 197,177 183,471 579,148 521,042 Revenue under capitation arrangements 27,466 24,895 80,448 72,880 Total net revenue $ 224,643 $ 208,366 $ 659,596 $ 593,922 |
Impact of new accounting pronouncement | Impact of new accounting pronouncement In thousands As previously Impact of As currently Prepaid expenses and other current assets $ 40,139 (1,153 ) 38,986 Deferred financing costs, net of current portion 3,696 (855 ) 2,841 Others 794,600 – 794,600 Total assets $ 838,435 $ (2,008 ) $ 836,427 Current portion of notes payable 23,076 (693 ) 22,383 Notes payable, net of current portion 601,229 (1,315 ) 599,914 Others 177,669 – 177,669 Total liabilities 801,974 (2,008 ) 799,966 Total equity 36,461 – 36,461 Total liabilities and equity $ 838,435 $ (2,008 ) $ 836,427 |
Schedule of secured term debt | As of September 30, 2016 Face Value Discount Total First Lien Term Loans $ 485,000 $ (15,278 ) $ 469,722 Second Lien Term Loans $ 168,000 $ (2,193 ) $ 165,807 Total $ 653,000 $ (17,471 ) $ 635,529 |
4. EARNINGS PER SHARE (Tables)
4. EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Net income attributable to RadNet, Inc.'s common stockholders $ 1,647 $ 7,987 $ 3,549 $ 6,828 BASIC NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC.'S COMMON STOCKHOLDERS Weighted average number of common shares outstanding during the period 45,868,629 43,637,022 46,337,993 43,247,002 Basic net income per share attributable to RadNet, Inc.'s common stockholders $ 0.04 $ 0.18 $ 0.08 $ 0.16 DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC.'S COMMON STOCKHOLDERS Weighted average number of common shares outstanding during the period 45,868,629 43,637,022 46,337,993 43,247,002 Add nonvested restricted stock subject only to service vesting 260,389 437,689 190,428 484,810 Add additional shares issuable upon exercise of stock options and warrants 204,952 677,225 220,415 972,511 Weighted average number of common shares used in calculating diluted net income per share 46,333,970 44,751,936 46,748,836 44,704,323 Diluted net income per share attributable to RadNet, Inc.'s common stockholders $ 0.04 $ 0.18 $ 0.08 $ 0.15 |
6. INVESTMENT IN JOINT VENTUR19
6. INVESTMENT IN JOINT VENTURES (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investment in joint ventures | The following table is a summary of our investment in joint ventures during the nine months ended September 30, 2016 (in thousands): Balance as of December 31, 2015 $ 33,584 Equity in earnings in these joint ventures 8,129 Distribution of earnings (2,929 ) Equity contributions in existing joint ventures 3,084 Balance as of September 30, 2016 $ 41,868 |
Key financial data in joint ventures | Balance Sheet Data: September 30, 2016 December 31, 2015 Current assets $ 33,452 $ 28,186 Noncurrent assets 96,766 91,660 Current liabilities (9,786 ) (15,258 ) Noncurrent liabilities (42,633 ) (44,059 ) Total net assets $ 77,799 $ 60,529 Book value of RadNet joint venture interests $ 36,873 $ 28,397 Cost in excess of book value of acquired joint venture interests 4,995 4,970 Elimination of intercompany profit remaining on Radnet's consolidated balance sheet 217 Total value of Radnet joint venture interests $ 41,868 $ 33,584 Total book value of other joint venture partner interests $ 40,926 $ 32,132 Income statement data for the nine months ended September 30, 2016 2015 Net revenue $ 119,920 $ 85,305 Net income $ 18,001 $ 13,489 |
7. STOCK-BASED COMPENSATION (Ta
7. STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock option 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, 2015 931,667 $ 4.69 Granted 170,626 6.01 Exercised (526,667 ) 2.96 Canceled, forfeited or expired (150,000 ) 7.51 Balance, September 30, 2016 375,626 6.82 4.70 $ 452,333 Exercisable at September 30, 2016 191,667 7.89 1.11 142,933 |
Restricted Stock Awards activity | RSA's Weighted-Average Weighted-Average RSA's unvested at December 31, 2015 771,342 $ 5.17 Changes during the period Granted 795,303 $ 6.16 Vested (998,499 ) $ 5.13 Forfeited – $ 0.00 RSA's unvested at September 30, 2016 568,145 0.81 $ 6.19 |
8. FAIR VALUE MEASUREMENTS (Tab
8. FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value assets and liabilities | As of September 30, 2016 Level 1 Level 2 Level 3 Total Fair Total Face First Lien Term Loans $ – $ 484,394 $ – $ 484,394 $ 485,000 Second Lien Term Loans $ – 166,320 $ – 166,320 $ 168,000 As of December 31, 2015 Level 1 Level 2 Level 3 Total Total Face Value First Lien Term Loans $ – $ 444,258 $ – $ 444,258 $ 451,023 Second Lien Term Loans – 173,700 – 173,700 180,000 |
1. NATURE OF BUSINESS AND BAS22
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
BRMG and NY Groups revenues | $ 34,200 | $ 29,400 | $ 101,200 | $ 83,100 | |
BRMG and NY Groups operating expenses | 34,200 | 29,400 | 101,200 | 83,100 | |
Total billed net service fee revenue | 147,300 | 106,700 | 422,200 | 320,600 | |
Management services provided to BRMG and NY Groups | 113,100 | $ 77,300 | 321,100 | $ 237,500 | |
BRMG and NY Groups accounts receivable | 104,700 | 104,700 | $ 89,800 | ||
BRMG and NY Groups accounts payable | $ 8,700 | $ 8,700 | $ 8,500 |
2. SIGNIFICANT ACCOUNTING POL23
2. SIGNIFICANT ACCOUNTING POLICIES (Details - Revenue summary) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Commercial Insurance | $ 130,036 | $ 114,827 | $ 386,383 | $ 331,670 |
Medicare | 48,740 | 40,840 | 140,089 | 120,039 |
Medicaid | 7,554 | 6,117 | 21,461 | 17,582 |
Workers Compensation/Personal Injury | 9,449 | 7,712 | 27,935 | 23,287 |
Other | 12,651 | 23,408 | 37,163 | 53,759 |
Service fee revenue, net of contractual allowances and discounts | 208,430 | 192,904 | 613,031 | 546,337 |
Provision for bad debts | (11,253) | (9,433) | (33,883) | (25,295) |
Net service fee revenue | 197,177 | 183,471 | 579,148 | 521,042 |
Revenue under capitation arrangements | 27,466 | 24,895 | 80,448 | 72,880 |
Total net revenue | $ 224,643 | $ 208,366 | $ 659,596 | $ 593,922 |
2. SIGNIFICANT ACCOUNTING POL24
2. SIGNIFICANT ACCOUNTING POLICIES (Details - Impact of new pronouncemtn) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Prepaid expenses and other current assets | $ 28,566 | $ 38,986 |
Deferred financing costs, net of current portion | 2,116 | 2,841 |
Others | 794,600 | |
Total assets | 843,399 | 836,427 |
Current portion of notes payable | 22,047 | 22,383 |
Notes payable, net of current portion | 614,982 | 599,914 |
Others | 177,669 | |
Total liabilities | 803,054 | 799,966 |
Total equity | 40,345 | 36,461 |
Total liabilities and equity | $ 843,399 | 836,427 |
Scenario, Previously Reported [Member] | ||
Prepaid expenses and other current assets | 40,139 | |
Deferred financing costs, net of current portion | 3,696 | |
Others | 794,600 | |
Total assets | 838,435 | |
Current portion of notes payable | 23,076 | |
Notes payable, net of current portion | 601,229 | |
Others | 177,669 | |
Total liabilities | 801,974 | |
Total equity | 36,461 | |
Total liabilities and equity | 838,435 | |
Restatement Adjustment [Member] | ||
Prepaid expenses and other current assets | (1,153) | |
Deferred financing costs, net of current portion | (855) | |
Others | 0 | |
Total assets | (2,008) | |
Current portion of notes payable | (693) | |
Notes payable, net of current portion | (1,315) | |
Others | 0 | |
Total liabilities | (2,008) | |
Total equity | 0 | |
Total liabilities and equity | $ (2,008) |
2. SIGNIFICANT ACCOUNTING POL25
2. SIGNIFICANT ACCOUNTING POLICIES (Details - Notes payable) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
First Lien Term Loan | ||
Term loans face value | $ 485,000 | $ 451,023 |
Term loans discount | (15,278) | |
Term loan carrying value | 469,722 | |
Second Lien Term Loans | ||
Term loans face value | 168,000 | $ 180,000 |
Term loans discount | (2,193) | |
Term loan carrying value | 165,807 | |
Short-term Debt [Member] | ||
Term loans face value | 653,000 | |
Term loans discount | (17,471) | |
Term loan carrying value | $ 635,529 |
2. SIGNIFICANT ACCOUNTING POL26
2. SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Meaningful use incentive | $ 0 | $ 0 | $ 2,808 | $ 3,270 | ||
Gain on return of common stock, value | 0 | 0 | 5,032 | 0 | ||
Cash and cash equivalents | 358 | 36,054 | 358 | 36,054 | $ 446 | $ 307 |
Accounts receivable | 183,229 | 183,229 | 162,843 | |||
Working capital | 85,100 | 85,100 | 72,400 | |||
Net income (loss) attributable to Radnet | 1,647 | $ 7,987 | 3,549 | $ 6,828 | ||
Stockholders' equity | 36,697 | 36,697 | 32,577 | |||
Revolving credit facility amount outstanding | 1,600 | 1,600 | 0 | |||
Revolving Credit Facility [Member] | ||||||
Revolving credit facility maximum borrowing amount | 117,500 | 117,500 | ||||
First Lien Term Loan | ||||||
Debt face amount | $ 485,000 | $ 485,000 | $ 451,023 | |||
Debt payment frequency | quarterly | |||||
Debt periodic payment | $ 6,100 | |||||
Diagnostic Imaging Group [Member] | ||||||
Return of common stock, shares | 958,536 | |||||
Gain on return of common stock, value | $ 5,032 |
4. EARNINGS PER SHARE (Details)
4. EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Earnings Per Share [Abstract] | ||||
Net income (loss) attributable to RadNet, Inc.'s common stockholders | $ 1,647 | $ 7,987 | $ 3,549 | $ 6,828 |
BASIC NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC.'S COMMON STOCKHOLDERS | ||||
Weighted average number of common shares outstanding during the period | 45,868,629 | 43,637,022 | 46,337,993 | 43,247,002 |
Basic net income per share attributable to RadNet, Inc.'s common stockholders | $ .04 | $ .18 | $ .08 | $ .16 |
DILUTED NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC.'S COMMON STOCKHOLDERS | ||||
Weighted average number of common shares outstanding during the period | 45,868,629 | 43,637,022 | 46,337,993 | 43,247,002 |
Add nonvested restricted stock subject only to service vesting | 260,389 | 437,689 | 190,428 | 484,810 |
Add additional shares issuable upon exercise of stock options and warrants | 204,952 | 677,225 | 220,415 | 972,511 |
Weighted average number of common shares used in calculating diluted net income per share | 46,333,970 | 44,751,936 | 46,748,836 | 44,704,323 |
Diluted net income per share attributable to RadNet, Inc.'s common stockholders | $ .04 | $ .18 | $ .08 | $ .15 |
5. ACQUISITIONS (Details Narrat
5. ACQUISITIONS (Details Narrative) - USD ($) $ in Thousands | 2 Months Ended | 3 Months Ended | 9 Months Ended | ||
Mar. 01, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Sep. 30, 2016 | Dec. 31, 2015 | |
Goodwill | $ 240,640 | $ 240,640 | $ 239,408 | ||
Park West [Member] | |||||
Additional payment made for acquisition | $ 320 | ||||
Ownership percentage | 63.20% | 63.20% | |||
Diagnostic Imaging Group [Member] | |||||
Additional payment made for acquisition | $ 1,600 | ||||
Amounts owed for previous acquisition | $ 3,400 | $ 3,400 | |||
Diagnostic Imaging Group [Member] | Restatement Adjustment [Member] | October 1, 2015 to December 31, 2015 [Member] | |||||
Increase (decrease) in depreciation due to adjustment in valuations | $ 123 | ||||
Diagnostic Imaging Group [Member] | Restatement Adjustment [Member] | January 1, 2016 to March 31, 2016 [Member] | |||||
Increase (decrease) in depreciation due to adjustment in valuations | 123 | ||||
Diagnostic Imaging Group [Member] | Restatement Adjustment [Member] | Intangible and Fixed Assets [Member] | |||||
Increase (decrease) in acquisition valuation amounts | $ (121) | ||||
Diagnostic Imaging Group [Member] | Restatement Adjustment [Member] | Fixed Assets [Member] | |||||
Increase (decrease) in acquisition valuation amounts | 1,200 | ||||
Diagnostic Imaging Group [Member] | Restatement Adjustment [Member] | Unfavorable Lease Contract Liability [Member] | |||||
Increase (decrease) in acquisition valuation amounts | $ 1,000 | ||||
Advanced Radiological Imaging [Member] | |||||
Cash paid for acquisition | $ 5,000 | ||||
Fixed asset allocation | 3,600 | ||||
Prepaid expense allocation | 47 | ||||
Covenant not to compete allocation | 100 | ||||
Goodwill | $ 1,300 |
6. INVESTMENT IN JOINT VENTUR29
6. INVESTMENT IN JOINT VENTURES (Details-Joint ventures) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Equity Method Investments and Joint Ventures [Abstract] | ||||
Beginning balance | $ 33,584 | |||
Equity earnings in these joint ventures | $ 2,576 | $ 1,992 | 8,129 | $ 6,301 |
Distribution of earnings | (2,929) | $ (6,255) | ||
Equity contributions in existing joint ventures | 3,084 | |||
Ending balance | $ 41,868 | $ 41,868 |
6. INVESTMENT IN JOINT VENTUR30
6. INVESTMENT IN JOINT VENTURES (Details-Key financial data) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Key financial data for joint ventures | |||
Current assets - joint ventures | $ 33,452 | $ 28,186 | |
Noncurrent assets - joint ventures | 96,766 | 91,660 | |
Current liabilities - joint ventures | (9,786) | (15,258) | |
Noncurrent liabilities - joint ventures | (42,633) | (44,059) | |
Total net assets -joint ventures | 77,799 | 60,529 | |
Book value of Radnet joint venture interests | 36,873 | 28,397 | |
Cost in excess of book value of acquired joint venture interests | 4,995 | 4,970 | |
Elimination of intercompany profit | 217 | ||
Total value of Radnet joint venture interests | 41,868 | 33,584 | |
Total book value of other joint venture partner interests | 40,926 | $ 32,132 | |
Net revenue | 119,920 | $ 85,305 | |
Net income | $ 18,001 | $ 13,489 |
6. INVESTMENT IN JOINT VENTUR31
6. INVESTMENT IN JOINT VENTURES (Details Narrative) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)Integer | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) | |
Number of unconsolidated joint ventures owned | Integer | 12 | ||||
Ownership percentage ranges in joint ventures | 35% to 55% | ||||
Management service fees from centers underlying joint ventures | $ 2,900 | $ 2,600 | $ 8,700 | $ 6,400 | |
Net assets contributed to joint venture | 41,868 | 41,868 | $ 33,584 | ||
Goodwill | 240,640 | 240,640 | $ 239,408 | ||
Franklin Imaging [Member] | |||||
Cash paid for acquisition | 1,000 | ||||
Assumption of capital lease debt | 241 | 241 | |||
Fixed asset allocation | 600 | 600 | |||
Other assets allocation | 30 | 30 | |||
Goodwill | 648 | 648 | |||
Glendale Advanced Imaging LLC [Member] | |||||
Net assets contributed to joint venture | $ 2,200 | $ 2,200 | |||
Equity interest owned | 55.00% | 55.00% | |||
Community Imaging Partners [Member] | |||||
Equity interest owned | 40.00% | 40.00% | |||
Cash paid for acquisition | $ 200 | ||||
Capital requirement paid | $ 440 |
7. STOCK-BASED COMPENSATION (De
7. STOCK-BASED COMPENSATION (Details-Outstanding options and warrants) - Stock Options $ / shares in Units, $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($)$ / sharesshares | |
STOCK BASED COMPENSATION | |
Begining Balance | shares | 931,667 |
Granted | shares | 170,626 |
Exercised | shares | (576,667) |
Canceled or expired | shares | (150,000) |
Ending Balance | shares | 375,626 |
Exercisable at the end | shares | 191,667 |
Weighted Average Exercise price Per Common Share | |
Begining Balance | $ / shares | $ 4.69 |
Granted | $ / shares | 6.01 |
Exercised | $ / shares | 2.96 |
Canceled or expired | $ / shares | 7.51 |
Ending Balance | $ / shares | 6.82 |
Exercisable at the end | $ / shares | $ 7.89 |
Weighted Average Remaining Contractual Life | |
Ending Balance | 4 years 9 months 15 days |
Exercisable at the end | 1 year 1 month 10 days |
Aggregate Intrinsic Value | |
Aggregate value outstanding | $ | $ 452,333 |
Aggregate value exercisable | $ | $ 142,933 |
7. STOCK-BASED COMPENSATION (33
7. STOCK-BASED COMPENSATION (Details - RSU's) - Restricted Stock [Member] | 9 Months Ended |
Sep. 30, 2016$ / sharesshares | |
RSA's outstanding, beginning balance | 771,342 |
RSA's granted | 795,303 |
RSA's vested | (998,499) |
RSA's forfeited | 0 |
RSA's outstanding, ending balance | 568,145 |
Weighted-Average Remaining Contractual Term | 9 months 22 days |
Weighted-average fair value, beginning balance | $ / shares | $ 5.17 |
Weighted-average fair value, granted | $ / shares | 6.16 |
Weighted-average fair value, vested | $ / shares | 5.13 |
Weighted-average fair value, ending balance | $ / shares | $ 6.19 |
7. STOCK-BASED COMPENSATION (34
7. STOCK-BASED COMPENSATION (Details Narrative) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Stock Options | |||
Aggregate intrinsic value of options exercised | $ 1,700 | $ 6,100 | |
Unrecognized stock-based compensation expense | $ 477 | ||
Unrecognized expense weighted average period | 3 years 2 months 12 days | ||
Restricted Stock [Member] | |||
Total shares issued | 4,256,511 | ||
RSA's outstanding | 4,256,511 | ||
RSA's unvested | 568,145 | 771,342 | |
Stock awards issued, shares | 795,303 | ||
Stock Bonus Awards [Member] | |||
Stock awards issued, shares | 35,000 | ||
Intrinsic value of stock awards | $ 246 | ||
2006 Equity Incentive Plan | |||
Shares authorized under plan | 12,000,000 | ||
Total shares issued | 12,025,887 | ||
Options cancelled | 2,975,009 | ||
RSA's forfeited | 59,053 | ||
Shares available for future issuance | 2,973,175 |
8. FAIR VALUE MEASUREMENTS (Det
8. FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
First Lien Term Loan | ||
FAIR VALUE MEASUREMENTS | ||
Term loans face value | $ 485,000 | $ 451,023 |
Second Lien Term Loans | ||
FAIR VALUE MEASUREMENTS | ||
Term loans face value | 168,000 | 180,000 |
2015 Incremental First [Member] | ||
FAIR VALUE MEASUREMENTS | ||
Term loans face value | 70,066 | 72,039 |
Level 1 | First Lien Term Loans | ||
FAIR VALUE MEASUREMENTS | ||
Long-Term Debt fair value | 0 | 0 |
Level 1 | Second Lien Term Loans | ||
FAIR VALUE MEASUREMENTS | ||
Long-Term Debt fair value | 0 | 0 |
Level 1 | 2015 Incremental First [Member] | ||
FAIR VALUE MEASUREMENTS | ||
Long-Term Debt fair value | 0 | 0 |
Level 2 | First Lien Term Loans | ||
FAIR VALUE MEASUREMENTS | ||
Long-Term Debt fair value | 484,394 | 444,258 |
Level 2 | Second Lien Term Loans | ||
FAIR VALUE MEASUREMENTS | ||
Long-Term Debt fair value | 166,320 | 173,700 |
Level 2 | 2015 Incremental First [Member] | ||
FAIR VALUE MEASUREMENTS | ||
Long-Term Debt fair value | 70,066 | 70,958 |
Level 3 | First Lien Term Loans | ||
FAIR VALUE MEASUREMENTS | ||
Long-Term Debt fair value | 0 | 0 |
Level 3 | Second Lien Term Loans | ||
FAIR VALUE MEASUREMENTS | ||
Long-Term Debt fair value | 0 | 0 |
Level 3 | 2015 Incremental First [Member] | ||
FAIR VALUE MEASUREMENTS | ||
Long-Term Debt fair value | 0 | 0 |
Total Fair Value | First Lien Term Loans | ||
FAIR VALUE MEASUREMENTS | ||
Long-Term Debt fair value | 484,394 | 444,258 |
Total Fair Value | Second Lien Term Loans | ||
FAIR VALUE MEASUREMENTS | ||
Long-Term Debt fair value | 166,320 | 173,700 |
Total Fair Value | 2015 Incremental First [Member] | ||
FAIR VALUE MEASUREMENTS | ||
Long-Term Debt fair value | $ 70,066 | $ 70,958 |
8. FAIR VALUE MEASUREMENTS (D36
8. FAIR VALUE MEASUREMENTS (Details Narrative) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Fair Value Disclosures [Abstract] | ||
Line of credit | $ 1,600 | $ 0 |