Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 05, 2018 | Jun. 30, 2017 | |
Document and Entity Information | |||
Entity Registrant Name | RadNet, Inc. | ||
Entity Central Index Key | 790,526 | ||
Document Type | 10-K | ||
Trading Symbol | RDNT | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 335,616,695 | ||
Entity Common Stock, Shares Outstanding | 48,232,117 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 51,322 | $ 20,638 |
Accounts receivable, net | 155,518 | 164,210 |
Due from affiliates | 2,343 | 2,428 |
Prepaid expenses and other current assets | 26,168 | 28,435 |
Assets held for sale | 0 | 2,203 |
Total current assets | 235,351 | 217,914 |
PROPERTY AND EQUIPMENT, NET | 244,301 | 247,725 |
OTHER ASSETS | ||
Goodwill | 256,776 | 239,553 |
Other intangible assets | 40,422 | 42,682 |
Deferred financing costs, net of current portion | 1,895 | 2,004 |
Investment in joint ventures | 52,435 | 43,509 |
Deferred tax assets, net of current portion | 30,852 | 50,356 |
Deposits and other | 6,947 | 5,733 |
Total assets | 868,979 | 849,476 |
CURRENT LIABILITIES | ||
Accounts payable, accrued expenses and other | 135,809 | 111,166 |
Due to affiliates | 16,387 | 13,141 |
Deferred revenue related to software sales | 2,606 | 1,516 |
Current portion of deferred rent | 2,714 | 2,961 |
Current portion of notes payable | 30,224 | 22,031 |
Current portion of obligations under capital leases | 3,866 | 4,526 |
Total current liabilities | 191,606 | 155,341 |
LONG-TERM LIABILITIES | ||
Deferred rent, net of current portion | 26,251 | 24,799 |
Notes payable, net of current portion | 572,365 | 609,445 |
Obligations under capital lease, net of current portion | 2,672 | 2,730 |
Other non-current liabilities | 6,160 | 5,108 |
Total liabilities | 799,054 | 797,423 |
EQUITY | ||
Common stock - $.0001 par value, 200,000,000 shares authorized; 47,723,915 and 46,574,904 shares issued and outstanding at December 31, 2017 and 2016, respectively | 5 | 4 |
Additional paid-in-capital | 212,261 | 198,387 |
Accumulated other comprehensive (loss) gain | (548) | 306 |
Accumulated deficit | (150,158) | (150,211) |
Total RadNet, Inc.'s stockholders' equity | 61,560 | 48,486 |
Non-controlling interests | 8,365 | 3,567 |
Total equity | 69,925 | 52,053 |
Total liabilities and equity | $ 868,979 | $ 849,476 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Common stock - par value (in Dollars per share) | $ .0001 | $ .0001 |
Common stock - authorized | 200,000,000 | 200,000,000 |
Common stock - issued | 47,723,915 | 46,574,904 |
Common stock - outstanding | 47,723,915 | 46,574,904 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
NET REVENUE | |||
Service fee revenue, net of contractual allowances and discounts | $ 857,178 | $ 821,587 | $ 746,756 |
Provision for bad debts | (46,555) | (45,387) | (36,033) |
Net service fee revenue | 810,623 | 776,200 | 710,723 |
Revenue under capitation arrangements | 111,563 | 108,335 | 98,905 |
Total net revenue | 922,186 | 884,535 | 809,628 |
OPERATING EXPENSES | |||
Cost of operations, excluding depreciation and amortization | 802,377 | 775,801 | 708,289 |
Depreciation and amortization | 66,796 | 66,610 | 60,611 |
Loss on sale and disposal of equipment | 1,142 | 767 | 866 |
Severance costs | 1,821 | 2,877 | 745 |
Total operating expenses | 872,136 | 846,055 | 770,511 |
INCOME FROM OPERATIONS | 50,050 | 38,480 | 39,117 |
OTHER INCOME AND EXPENSES | |||
Interest expense | 40,623 | 43,455 | 41,684 |
Meaningful use incentive | (250) | (2,808) | (3,270) |
Equity in earnings of joint ventures | (13,554) | (9,767) | (8,927) |
Gain on sale of imaging centers and medical practice | (3,146) | 0 | (5,434) |
Gain on return of common stock | 0 | (5,032) | 0 |
Other (income) expenses | (8) | 196 | 419 |
Total other expenses | 23,665 | 26,044 | 24,472 |
INCOME BEFORE INCOME TAXES | 26,385 | 12,436 | 14,645 |
Provision for income taxes | (24,310) | (4,432) | (6,007) |
NET INCOME | 2,075 | 8,004 | 8,638 |
Net income attributable to noncontrolling interests | 2,022 | 774 | 929 |
NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | $ 53 | $ 7,230 | $ 7,709 |
BASIC NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | $ 0 | $ 0.16 | $ 0.18 |
DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | $ 0 | $ 0.15 | $ 0.17 |
WEIGHTED AVERAGE SHARES OUTSTANDING - Basic | 46,880,775 | 46,244,188 | 43,805,794 |
WEIGHTED AVERAGE SHARES OUTSTANDING - Diluted | 47,401,921 | 46,655,032 | 45,171,372 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | |||
NET INCOME | $ 2,075 | $ 8,004 | $ 8,638 |
Foreign currency translation adjustments | 26 | (49) | (41) |
Change in fair value of cash flow hedge, net of taxes | (880) | 508 | 0 |
COMPREHENSIVE INCOME | 1,221 | 8,463 | 8,597 |
Less comprehensive income attributable to non-controlling interests | 2,022 | 774 | 929 |
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | $ (801) | $ 7,689 | $ 7,668 |
CONSOLIDATED STATEMENT OF EQUIT
CONSOLIDATED STATEMENT OF EQUITY - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive (Loss) Income [Member] | Accumulated Deficit [Member] | Radnet, Inc. Stockholders Equity [Member] | Noncontrolling Interests [Member] | Total |
Beginning balance, shares at Dec. 31, 2014 | 42,825,676 | ||||||
Beginning balance, value at Dec. 31, 2014 | $ 4 | $ 177,750 | $ (112) | $ (172,280) | $ 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, value | 594 | 594 | 594 | ||||
Stock-based compensation, value | 7,635 | 7,635 | 7,635 | ||||
Issuance of restricted stock and other awards, shares | 1,014,423 | ||||||
Forfeiture of restricted stock, shares | (59,053) | ||||||
Issuance of stock for acquisition, shares | 1,665,045 | ||||||
Issuance of stock for acquisition, value | 9,241 | 9,241 | 9,241 | ||||
Sale to noncontrolling interests, net of taxes | 2,077 | 2,077 | 1,348 | 3,425 | |||
Distributions paid to noncontrolling interests | (729) | (729) | |||||
Change in cumulative foreign currency translation adjustment | (41) | (41) | (41) | ||||
Change in fair value of cash flow hedge, net of taxes | 0 | ||||||
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 | (153) | (164,571) | 32,577 | 3,884 | 36,461 |
Cumulative effect of accounting change due to adoption of ASU 2016-09 | 7,130 | 7,130 | 7,130 | ||||
Issuance of common stock upon exercise of options/warrants, shares | 314,448 | ||||||
Issuance of common stock upon exercise of options/warrants, value | 150 | 150 | 150 | ||||
Stock-based compensation, value | 5,767 | 5,767 | 5,767 | ||||
Issuance of restricted stock and other awards, shares | 937,803 | ||||||
Return of common stock, shares | (958,536) | ||||||
Return of common stock, value | (5,032) | (5,032) | (5,032) | ||||
Purchase of non-controlling interests | (495) | (495) | (599) | (1,094) | |||
Sale to noncontrolling interests, net of taxes | 700 | 700 | 700 | ||||
Distributions paid to noncontrolling interests | (492) | (492) | |||||
Change in cumulative foreign currency translation adjustment | (49) | (49) | (49) | ||||
Change in fair value of cash flow hedge, net of taxes | 508 | 508 | 508 | ||||
Net income | 7,230 | 7,230 | 774 | 8,004 | |||
Ending balance, shares at Dec. 31, 2016 | 46,574,904 | ||||||
Ending balance, value at Dec. 31, 2016 | $ 4 | 198,387 | 306 | (150,211) | 48,486 | 3,567 | 52,053 |
Stock-based compensation, shares | 867,248 | ||||||
Stock-based compensation, value | $ 1 | 7,833 | 7,834 | 7,834 | |||
Issuance of stock for acquisition, shares | 281,763 | ||||||
Issuance of stock for acquisition, value | 2,500 | 2,500 | 2,500 | ||||
Sale to noncontrolling interests, net of taxes | 3,541 | 3,541 | 3,541 | ||||
Contributions from noncontrolling interests | 4,304 | 4,304 | |||||
Distributions paid to noncontrolling interests | (1,528) | (1,528) | |||||
Change in cumulative foreign currency translation adjustment | 26 | 26 | 26 | ||||
Change in fair value of cash flow hedge, net of taxes | (880) | (880) | (880) | ||||
Net income | 53 | 53 | 2,022 | 2,075 | |||
Ending balance, shares at Dec. 31, 2017 | 47,723,915 | ||||||
Ending balance, value at Dec. 31, 2017 | $ 5 | $ 212,262 | $ (548) | $ (150,158) | $ 61,561 | $ 8,365 | $ 69,925 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income | $ 2,075 | $ 8,004 | $ 8,638 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 66,796 | 66,610 | 60,611 |
Provision for bad debts | 46,555 | 45,387 | 36,033 |
Gain on return from common stock | 0 | (5,032) | 0 |
Equity in earnings of joint ventures | (13,554) | (9,767) | (8,927) |
Distributions from joint ventures | 8,690 | 2,926 | 7,731 |
Amortization and write off of deferred financing costs and loan discount | 3,483 | 5,045 | 5,369 |
Loss on sale and disposal of equipment | 1,142 | 767 | 866 |
Gain on sale of imaging centers | (3,146) | 0 | (5,434) |
Stock-based compensation | 6,787 | 5,826 | 7,647 |
Non cash severance | 1,047 | 0 | 0 |
Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions: | |||
Accounts receivable | (37,164) | (47,055) | (34,514) |
Other current assets | 1,461 | 11,038 | (14,198) |
Other assets | (801) | 1,267 | (3,813) |
Deferred taxes | 19,504 | 3,446 | 4,036 |
Deferred rent | 2,135 | (1,668) | 7,011 |
Deferred revenue | 1,034 | (82) | (366) |
Accounts payable, accrued expenses and other | 36,181 | 4,929 | (3,653) |
Net cash provided by operating activities | 142,225 | 91,641 | 67,037 |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Purchase of imaging facilities | (27,612) | (6,641) | (90,792) |
Investment at cost | (500) | ||
Purchase of property and equipment | (61,336) | (59,251) | (42,964) |
Proceeds from sale of equipment | 852 | 481 | 1,282 |
Proceeds from sale of imaging and medical practice assets | 8,429 | 0 | 35,500 |
Proceeds from sale of internal use software | 492 | 301 | 443 |
Cash contribution from partner in JV formation | 1,473 | 994 | 0 |
Equity contributions in existing and purchase of interest in joint ventures | (1,118) | (1,374) | (265) |
Net cash used in investing activities | (79,320) | (65,490) | (96,796) |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Principal payments on notes and leases payable | (6,836) | (11,880) | (9,773) |
Proceeds from borrowings | 170,000 | 476,504 | 73,869 |
Payments on senior notes | (196,666) | (469,086) | (23,727) |
Payments on deferred financing costs and debt discount | (5,062) | (945) | 0 |
Distributions paid to noncontrolling interests | (1,528) | (492) | (729) |
Proceeds from sale of noncontrolling interest, net of taxes | 7,720 | 992 | 5,005 |
Contributions from noncontrolling partners | 125 | 0 | 0 |
Proceeds from revolving credit facility | 200,800 | 435,900 | 248,400 |
Payments on revolving credit facility | (200,800) | (435,900) | (263,700) |
Purchase of non-controlling interests | 0 | (1,153) | 0 |
Proceeds from issuance of common stock upon exercise of options | 0 | 150 | 594 |
Net cash (used in) provided by financing activities | (32,247) | (5,910) | 29,939 |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | 26 | (49) | (41) |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 30,684 | 20,192 | 139 |
CASH AND CASH EQUIVALENTS, beginning of period | 20,638 | 446 | 307 |
CASH AND CASH EQUIVALENTS, end of period | 51,322 | 20,638 | 446 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | |||
Cash paid during the period for interest | 34,197 | 37,487 | 36,028 |
Cash paid during the period for income taxes | 4,939 | 2,798 | 1,781 |
Equipment acquired and leasehold improvements | 18,500 | 28,800 | 32,400 |
Capital lease debt | 5,500 | 1,300 | $ 7,800 |
Investment in joint venture, ScriptSender, LLC | 2,000 | ||
Assets transferred to Santa Monica Imaging Group LLC | 2,500 | ||
Assets transferred to Advanced Imaging at Timonium Crossing, LLC | 4,600 | ||
Acquisition of Diagnostic Imaging Associates, cash | 13,000 | ||
Acquisition of Diagnostic Imaging Associates, for RadNet common stock | 1,500 | ||
Acquisition of RadSite, LLC, for common stock | 1,000 | ||
Acquisition of RadSite, LLC, cash | $ 856 | ||
Non-cash gain on return of common stock | 5,000 | ||
Fixed Assets transferred to Glendale Advanced Imaging, LLC | $ 2,700 |
1. NATURE OF BUSINESS
1. NATURE OF BUSINESS | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF BUSINESS | NOTE 1 – NATURE OF BUSINESS We are a leading national provider of freestanding, fixed-site outpatient diagnostic imaging services in the United States based on number of locations and annual imaging revenue. At December 31, 2017, we operated directly or indirectly through joint ventures with hospitals, 297 centers located in California, Delaware, Florida, Maryland, New Jersey, and New York. 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. In addition to our imaging services, we have two other subsidiaries, eRAD, Inc and Imaging On Call LLC. eRAD, Inc., develops and sells computerized systems for the imaging industry. Imaging On Call LLC, provides teleradiology services for remote interpretation of images. The capabilities of both eRAD and Imaging On Call are designed to make the RadNet imaging center operations more efficient and cost effective. As such, 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. 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. Seven 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 variable interest entities, 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 $134.6 million, $135.7 million, and $113.1 million of revenue, net of management services fees to RadNet, for the years ended December 31, 2017, 2016, and 2015, respectively and $134.6 million, $135.7 million, and $113.1 million of operating expenses for the years ended December 31, 2017, 2016, and 2015, respectively. RadNet, Inc. recognized $435.5 million, $430.4 million, and $343.9 million of total billed net service fee revenue for the years ended December 31, 2017, 2016 and 2015, respectively, for management services provided to BRMG and the NY Groups relating primarily to the technical portion of 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, 2017 and December 31, 2016, we have included approximately $96.3 million and $100.0 million, respectively, of accounts receivable and approximately $7.4 million and $9.0 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 and we have no financial controlling interest in the radiology practices. |
2. SUMMARY OF SIGNIFICANT ACCOU
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | PRINCIPLES OF CONSOLIDATION – The operating activities of subsidiaries are included in the accompanying consolidated financial statements (“financial statements”) from the date of acquisition. Investments in companies in which we have 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. Additionally, we determined that our unconsolidated joint venture, ScriptSender, LLC, is also a VIE as it is dependent on our operational funding but we are not a primary beneficiary since RadNet does not have the power to direct the activities of the entity that most significantly impact the entity’s economic performance. See Investment in Joint Ventures section of Note 2 for further explanation. USE OF ESTIMATES - The financial statements were prepared in accordance with U.S. generally accepted accounting principles (GAAP), which 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. RECLASSIFICATION – We have reclassified certain amounts within accrued expenses for 2016 to conform to our 2017 presentation. 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 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 in 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, 2017 2016 2015 Commercial insurance $ 571,369 $ 539,793 $ 486,489 Medicare 193,166 187,941 168,545 Medicaid 25,821 28,170 23,948 Workers' compensation/personal injury 35,195 36,548 32,728 Other (1) 31,627 29,135 35,046 Service fee revenue, net of contractual allowances and discounts 857,178 821,587 746,756 Provision for bad debts (46,555 ) (45,387 ) (36,033 ) Net service fee revenue 810,623 776,200 710,723 Revenue under capitation arrangements 111,563 108,335 98,905 Total net revenue $ 922,186 $ 884,535 $ 809,628 (1) 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. Our allowance for bad debts at December 31, 2017 and 2016 was $34.6 million and $20.7 million, respectively. 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. 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. 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. 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, and record the meaningful use incentive within non-operating income only after Medicare accepts an attestation from the qualified eligible professional demonstrating meaningful use. We recorded approximately $250,000, $2.8 million and $3.3 million during the twelve months ended December 31, 2017, 2016 and 2015, respectively, relating to this incentive. GAIN ON 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 on return of common stock in our statement of operations. 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. For the years ended December 31, 2017, 2016 and 2015, we recorded approximately $6.1 million, $6.2 million and $6.1 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, 2017 we had a deferred revenue liability of approximately $2.5 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 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, We have entered into multiple agreements to license our RIS system to outside customers. For the twelve months December 31, 2017 and December 31, 2016, we received approximately $492,000 and $301,000 with respect to this licensing agreement, respectively. In accordance with ASC 350-40, we recorded the receipt of these funds against the capitalized software costs explained above. As of December 31, 2017, the net carrying value of our capitalized software costs was approximately $1.3 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. We continuously monitor collections 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 $1.9 million for the twelve month period ended December 31, 2017, and $2.0 million for the twelve month period ended December 31, 2016. Deferred financing costs are solely related to our Revolving Credit Facility. In conjunction with our Fourth Amendment and Fifth Amendment to our First Lien Credit Agreement, a net addition of approximately $371,000 was added to deferred financing costs for the twelve months ended December 31, 2017. See Note 8, Revolving Credit Facility, Notes Payable, and Capital Leases for more information. INVENTORIES – Inventories, consisting mainly of medical supplies, are stated at the lower of cost or net realizable value 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, 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, 2017 totaled $256.8 million and $239.6 million at December 31, 2016. Indefinite lived intangible assets at December 31, 2017 and 2016 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, 2017, noting no impairment, and have not identified any indicators of impairment through December 31, 2017. LONG-LIVED ASSETS – We evaluate our long-lived assets (property and equipment) and intangibles, other than goodwill, for impairment when events or changes indicate the carrying amount of an asset may not be recoverable. U.S. 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. We determined that there were no events or changes in circumstances that indicated our long-lived assets were impaired during any periods presented. 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 of $2.8 million for the year ending December 31, 2017 and $2.9 million for the year ended December 31, 2016, 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 is $10,000 per incidence at for the years ending December 31, 2017 and December 31, 2016, 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, 2017, 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, 2017 and 2016 of $4.5 million and $2.4 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, which ends in 2031. As of December 31, 2017 and 2016, the remaining accrual balance is $5.0 million, and $5.6 million, 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, 2017 and 2016, the unfavorable contract liability on these leases is $1.4 million and $1.6 million, respectively. EQUITY BASED COMPENSATION – We have one long-term incentive plan that we adopted in 2006 and which we first amended and restated as of April 20, 2015, and again on March 9, 2017 (the “Restated Plan”). The Restated Plan was approved by our stockholders at our annual stockholders meeting on June 8, 2017. We have reserved for issuance under the Restated Plan 14,000,000 shares of common stock. We can issue options, stock awards, stock appreciation rights, stock units 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 three to five years and expire five to ten years from date of grant. The compensation expense recognized for all equity-based awards 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. See Note 11 Stock-Based Compensation for more information. FOREIGN CURRENCY TRANSLATION – The functional currency of our foreign subsidiaries is the local currency. In accordance with ASC 830, Foreign Currency Matters COMPREHENSIVE (LOSS) INCOME – ASC 220, Comprehensive Income, DERIVATIVE INSTRUMENTS – In the fourth quarter of 2016, we entered into two forward interest rate cap agreements ("2016 Caps"). The 2016 Caps will mature in September and October 2020. The 2016 Caps had notional amounts of $150,000,000 and $350,000,000, respectively, which were designated at inception as cash flow hedges of future cash interest payments associated with portions of our variable rate bank debt. Under these arrangements, we purchased a cap on 3 month LIBOR at 2.0%. We are liable for a $5.3 million premium to enter into the caps which is being accrued over the life of the 2016 Caps. ADOPTION of ASU 2017-12 – Targeted Improvements to Accounting for Hedging Activities - In August 2017, the FASB issued ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities At inception, we designated our 2016 Caps as cash flow hedges of floating-rate borrowings. In accordance with ASC Topic 815, derivatives that have been designated and qualify as cash flow hedging instruments are reported at fair value. The gain or loss of the hedge (i.e., change in fair value) is reported as a component of accumulated other comprehensive (loss) income in the consolidated statement of equity. Below represents the fair value of our 2016 Caps and loss (gain) recognized: For the twelve months ended December 31, 2017 Derivatives Balance Sheet Location Fair Value – Liabilities Interest rate contracts Current and other non-current liabilities $ (595 ) For the twelve months ended December 31, 2016 Derivatives Balance Sheet Location Fair Value – Asset Derivatives Interest rate contracts Current assets $ 818 A tabular presentation of the effect of derivative instruments on our consolidated statement of comprehensive (loss) income, net of taxes is as follows (amounts in thousands): For the twelve months ended December 31, 2017 Effective Interest Rate Cap Amount of Loss Recognized on Derivative Location of Loss Recognized in Income on Derivative Interest rate contracts ($880) Other Comprehensive Loss For the twelve months ended December 31, 2016 Effective Interest Rate Cap Amount of Gain Recognized on Derivative Location of Gain Recognized in Income on Derivative Interest rate contracts $508 Other 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 values of certain of our financial assets that are subject to fair value measurements, and the classification of these assets in our consolidated balance sheets, as follows (in thousands): As of December 31, 2017 Level 1 Level 2 Level 3 Total Current and other non-current liabilities Interest Rate Contracts $ – $ (595 ) $ – $ (595 ) As of December 31, 2016 Level 1 Level 2 Level 3 Total Current assets Interest Rate Contracts $ – $ 818 $ – $ 818 The estimated fair value of these contracts was determined using Level 2 inputs. More specifically, the fair value was determined by calculating the value of the difference between the fixed interest rate of the interest rate swaps and the counterparty’s forward LIBOR curve. The forward LIBOR curve is readily available in the public markets or can be derived from information available in the public markets. The table below summarizes the estimated fair value and carrying amount of our long-term debt as follows (in thousands): As of December 31, 2017 Level 1 Level 2 Level 3 Total Fair Value Total Face Value First Lien Term Loans $ – $ 628,801 $ – $ 628,801 $ 620,272 As of December 31, 2016 Level 1 Level 2 Level 3 Total Total Face Value First Lien Term Loans $ – $ 483,129 $ – $ 483,129 $ 478,938 Second Lien Term Loans $ – $ 167,580 $ – $ 167,580 $ 168,000 Our revolving credit facility had no aggregate principal amount outstanding as of December 31, 2017. 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, 2017 2016 2015 Net income attributable to RadNet, Inc. common stockholders $ 53 $ 7,230 $ 7,709 BASIC NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS Weighted average number of common shares outstanding during the period 46,880,775 46,244,188 43,805,794 Basic net income per share attributable to RadNet, Inc. common stockholders $ 0.00 $ 0.16 $ 0.18 DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS Weighted average number of common shares outstanding during the period 46,880,775 46,244,188 43,805,794 Add nonvested restricted stock subject only to service vesting 274,940 220,416 865,326 Add additional shares issuable upon exercise of stock options and warrants 246,206 190,428 500,252 Weighted average number of common shares used in calculating diluted net income per share 47,401,921 46,655,032 45,171,372 Diluted net income per share attributable to RadNet, Inc. common stockholders $ 0.00 $ 0.15 $ 0.17 Stock options excluded from the computation of diluted per share amounts: Weighted average shares for which the exercise price exceeds average market price of common stock 175,037 245,313 260,000 INVESTMENT AT COST – On March 24, 2017, we acquired a 12.5% equity interest in Medic Vision – Imaging Solutions Ltd. for $1.0 million. We also have an option to acquire an additional 12.5% equity interest for $1.4 million exercisable within one year from the initial share purchase date. Medic Vision, based in Israel, specializes in software packages that provide compliant radiation dose structured reporting and enhanced images from reduced dose CT scans. In accordance with ASC 325-20, Cost Method Investments, INVESTMENT IN JOINT VENTURES – We have fourteen 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. 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, 2017. 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, 2017, we formed in conjuncture with Cedars Sinai Medical Center (“CSMC”) the Santa Monica Imaging Group, LLC (“SMIG”), consisting of two multi-modality imaging centers located in Santa Monica, CA. Total agreed contribution was $2.7 million of cash and assets with RadNet contributing $1.1 million for a 40% economic interest and CSMC contributing $1.6 million for a 60% economic interest. For its contribution, RadNet transferred $80,000 in cash and the net assets acquired in the acquisition of Resolution Imaging of $2.5 million. CSMC contributed $120,000 in cash and paid RadNet $1.5 million for the Resolution Imaging assets transferred to the venture. RadNet does not have controlling economic interest in SMIG and the investment is accounted for under the equity method. On January 6, 2017, Image Medical Inc. (“Image Medical”), a wholly owned subsidiary of RadNet, acquired a 49% economic interest ScriptSender, LLC, a partnership he |
3. RECENT ACCOUNTING STANDARDS
3. RECENT ACCOUNTING STANDARDS | 12 Months Ended |
Dec. 31, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
RECENT ACCOUNTING STANDARDS | Accounting standards adopted In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09 (“ASU 2016-09”), Compensation—Stock Compensation Accounting standards not yet adopted In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, (Topic 606). ASU 2014-09 requires an entity to recognize as revenue the amount that reflects the consideration to which it expects to be entitled in exchange for goods or services as it transfers control to its customers. It also requires more detailed disclosures to enable users of the financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company’s current revenue recognition policies for our most significant revenue streams, materially comply with the amended guidance. The primary change for healthcare providers under the new guidance is the requirement to report the allowance for uncollectible accounts associated with patient responsibility amounts as a reduction in net revenue as opposed to bad debt expense as a component of operating expenses. The new standard supersedes most current revenue guidance, including industry-specific guidance, and may be applied retrospectively with cumulative effect recognized in retained earnings as of the date of adoption (modified retrospective method). The guidance became effective for the Company on January 1, 2018 and the Company adopted the new standard using the modified retrospective approach. As part of adopting the standard, the Company identified revenue streams of like contracts to allow for ease of implementation. The Company used primarily a portfolio approach to apply the new model to classes of customers with similar characteristics. The impact of adopting the new standard on our total revenue; and income from operations is not material. The immaterial impact of adopting Topic 606 primarily relates to recognizing certain credit and collection issues not known at the date of service, including bankruptcy, in the provision for uncollectible accounts included in expenses on the consolidated statement of operations, which previously were netted against service revenue. In addition, the number of our performance obligations under the new standard is not materially different from our contract segments under the existing standard. Lastly, the accounting for the estimate of variable consideration is not materially different compared to our current practice. As such, the adoption of this guidance is not expected to have a material impact on our Consolidated Financial Statements. In February 2016, the FASB issued ASU No. 2016-02, Leases, In February 2018, the FASB issued ASU No. 2018-02 (“ASU 2018-02”), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In January 2017, the FASB issued ASU No. 2017-04 (“ASU 2017-04”), Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued ASU No. 2017-01 (“ASU 2017-01”), Clarifying the Definition of a Business |
4. FACILITY ACQUISITIONS, ASSET
4. FACILITY ACQUISITIONS, ASSETS HELD FOR SALE AND DISPOSITIONS | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
FACILITY ACQUISITIONS, ASSETS HELD FOR SALE AND DISPOSITIONS | Acquisitions On October 5, 2017 we completed our acquisition of all of the outstanding equity interests in RadSite, LLC, for $1.0 million in common stock and $856,000 in cash. RadSite provides both quality certification and accreditation programs for imaging providers in accordance with standards of private insurance payors and federal regulations under Medicare. We have made a fair value determination of the acquired assets and approximately $91,000 of current assets, $25,000 in fixed assets, a $150,000 covenant not to compete, $75,000 in liabilities and $1.7 million in goodwill were recorded. On October 1, 2017 we completed our acquisition of certain assets of Remote Diagnostic Imaging P.L.L.C., consisting of a single multi-modality center located in New York, New York, for purchase consideration of $3.9 million. We have made a fair value determination of the acquired assets and approximately $2.6 million in fixed assets, a $50,000 covenant not to compete, and $1.2 million in goodwill were recorded. On August 7, 2017 we acquired Diagnostic Imaging Associates (“DIA”) for $13.0 million in cash and $1.5 million in RadNet common stock. Located in the state of Delaware, DIA operates five multi-modality imaging locations which provide MRI, CT, Ultrasound, Mammography and X-Ray services. We have made a fair value determination of the acquired assets and approximately $3.1 million of fixed assets and equipment, $1.2 million in current assets, and $10.2 million in goodwill were recorded. On June 1, 2017 we completed our acquisition of certain assets of Stockton MRI and Molecular Imaging Medical Center Inc., consisting of a multi-modality center located in Stockton, CA, for consideration of $4.4 million. The facility provides MRI, CT, Ultrasound, X-Ray and Nuclear Medicine services. We have made a fair value determination of the acquired assets and approximately $1.2 million of fixed assets and equipment, a $50,000 covenant not to compete, and $3.1 million of goodwill were recorded. On May 3, 2017 we completed our acquisition of certain assets of D&D Diagnostics Inc., consisting of a single multi-modality imaging center located in Silver Spring, Maryland, for total purchase consideration of $2.4 million, including cash consideration of $1.2 million and settlement of liabilities of $1.2 million. We have made a fair value determination of the acquired assets and approximately $820,000 of fixed assets, $16,000 of other assets, and $1.5 million of goodwill were recorded. The facility provides MRI, CT, X-Ray and related services. On February 1, 2017, we completed our acquisition of certain assets of MRI Centers, Inc., consisting of one single-modality imaging center located in Torrance, CA providing MRI and sports medicine services, for cash consideration of $800,000 and the payoff of $81,000 in debt. We have made a fair value determination of the acquired assets and approximately $289,000 of fixed assets, $9,800 of other assets, $100,000 covenant not to compete and $401,000 of goodwill were recorded. On January 13, 2017, we completed our acquisition of certain assets of Resolution Medical Imaging Corporation for consideration of $4.0 million. The purchase of Resolution was enacted to contribute its assets to a joint venture with Cedars Sinai Medical Corporation which was effective April 1, 2017. See the formation of new joint ventures section in Note 2 above for further information. In separate purchases occurring on July 1 and October 1 2016, we acquired for approximately $1.2 million the remaining non-controlling interest of 47.6% in the Park West joint venture, thus increasing our ownership percentage from 52.4% to 100%. The difference between the consideration paid and the carrying value of the non-controlling interest purchased was recorded as additional paid-in capital. 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 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. Dispositions and Sales of Noncontrolling Interest On September 1, 2017 we completed the equity sale of a wholly owned breast oncology practice, Breastlink Medical Group, Inc., to Verity Medical Foundation for approximately $2.8 million. We recorded a gain of approximately $845,000 and incurred severance expense of approximately $1.2 million on this transaction. On July 1, 2017 we formed a majority owned subsidiary, Advanced Imaging at Timonium Crossing, LLC, in conjunction with the University of Maryland St. Joseph Medical Center. As part of that transaction, we sold a 25% noncontrolling interest in an imaging center of our wholly owned subsidiary, Advanced Imaging Partners, Inc., to the University of Maryland St. Joseph Medical Center for $3.9 million. On the date of sale, the net book value of the 25% interest was $1.1 million and the proceeds in excess of net book value amounting to $2.8 million were recorded to equity. On April 28, 2017 we completed the sale of five imaging centers operating in Rhode Island to Rhode Island Medical Imaging, Inc. for approximately $4.5 million. We recorded a gain of approximately $1.9 million in the second quarter with regard to this transaction and have no remaining imaging centers in the state. On April 1, 2017 we received from Cedars Sinai Medical Center $5.9 million in exchange for a 25% noncontrolling interest in the West Valley Imaging Group, LLC (“WVI”). The determined net book value of the 25% interest was approximately $3.0 million. The proceeds in excess of the net book value, amounting to $1.8 million net of taxes, were recorded to equity. On April 1, 2017 we completed the sale of 2 wholly owned oncology practices to Cedars Sinai Medical Center in connection with the sale of non-controlling interest of the WVI subsidiary described above for approximately $1.2 million. We recorded a gain of approximately $361,000 on this transaction. On November 4, 2016, the Board of Directors resolved to sell the ownership interest in all five of its Rhode Island imaging centers operating under the name The Imaging Institute within the upcoming 12 months. The following table summarizes the major categories of assets classified as held for sale in the accompanying Consolidated Balance Sheets at December 31, 2016 (in thousands): Property and equipment, net $ 1,056 Other assets 21 Goodwill 1,126 Total assets held for sale $ 2,203 As the sale of these assets does not represent a strategic shift that will have a major effect on the Company’s operations and financial results, it is not classified as a discontinued operation. The disposition occurred on April 28, 2017. |
5. GOODWILL AND OTHER INTANGIBL
5. GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE 5 – GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill is recorded as a result of business combinations. Activity in goodwill for the years ended December 31, 2016 and 2017 is provided below (in thousands): Balance as of December 31, 2015 $ 239,408 Goodwill acquired through the acquisition of Advanced Radiological Imaging 1,280 Adjustments to our preliminary allocation of the purchase price of Diagnostic Imaging Group, LLC (47 ) Goodwill acquired through the acquisition of Landmark Imaging, LLC 38 Goodwill held for sale (1,126 ) Balance as of December 31, 2016 239,553 Goodwill acquired through the acquisition of Resolution Imaging Medical Corp 1,901 Goodwill acquired through the acquisition of MRI Centers Inc. 401 Goodwill disposed through the transfer to Santa Monica Imaging Group JV (1,901 ) Goodwill acquired through the acquisition of D&D Diagnostics, Inc. 1,519 Goodwill acquired through the acquisition of Stockton MRI, Inc. 3,101 Goodwill disposed through the sale of Hematology Oncology (110 ) Goodwill acquired through the acquisition of DIA, Inc. 9,185 Goodwill disposed through the sale of Breastlink Medical Group, Inc. (509 ) Goodwill acquired through the acquisition of RDI, Inc. 1,202 Adjustments to our preliminary allocation of the purchase price of DIA, Inc. 1,058 Goodwill acquired through the acquisition of RadSite, LLC 1,665 Goodwill transferred to other assets (289 ) Balance as of December 31, 2017 $ 256,776 The amount of goodwill from these acquisitions that is deductible for tax purposes as of December 31, 2017 is $110.1 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 $25.7 million at December 31, 2017. Also included in other intangible assets is the value of covenant not to compete contracts associated with our facility acquisitions totaling $6.4 million less accumulated amortization of $5.8 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. Total amortization expense was $2.6 million for each of the years ended December 31, 2017 and 2016 and $3.0 million for the year ended December 31, 2015. Intangible assets are amortized using the straight-line method. Management service agreements are amortized over 25 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): 2018 2019 2020 2021 2022 Thereafter Total Weighted average amortization period remaining in years Management Service Contracts $ 2,287 $ 2,287 $ 2,287 $ 2,287 $ 2,287 $ 20,396 $ 31,831 13.9 Covenant not to compete contracts 279 199 119 43 14 – 654 2.8 Trade Names* – – – – – 7,937 7,937 – Total Annual Amortization $ 2,566 $ 2,486 $ 2,406 $ 2,330 $ 2,301 $ 28,333 $ 40,422 * These trade name intangibles have an indefinite life |
6. PROPERTY AND EQUIPMENT
6. PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | Property and equipment and accumulated depreciation and amortization are as follows (in thousands): December 31, 2017 2016 Land $ 250 $ 250 Medical equipment 380,439 393,001 Computer and office equipment, furniture and fixtures 96,382 99,434 Software development costs 6,391 6,391 Leasehold improvements 273,436 252,595 Equipment under capital lease 17,180 26,758 Total property and equipment cost 774,078 778,429 Accumulated depreciation (529,511 ) (529,648 ) Total net property and equipment 244,567 248,781 Equipment transferred to other assets (266 ) (1,056 ) Total property and equipment $ 244,301 $ 247,725 Depreciation and amortization expense of property and equipment, including amortization of equipment under capital leases, for the years ended December 31, 2017, 2016 and 2015 was $64.2 million, $64.0 million, and $57.6 million, respectively. |
7. ACCOUNTS PAYABLE AND ACCRUED
7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2017 | |
Payables and Accruals [Abstract] | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | NOTE 7 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses were comprised of the following (in thousands): December 31, 2017 2016 Accounts payable $ 28,538 $ 40,952 Accrued expenses 67,298 36,993 Accrued salary and benefits 30,670 25,009 Accrued professional fees 9,303 8,212 Total $ 135,809 $ 111,166 |
8. NOTES PAYABLE, REVOLVING CRE
8. NOTES PAYABLE, REVOLVING CREDIT FACILITY AND CAPITAL LEASES | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE, REVOLVING CREDIT FACILITY AND CAPITAL LEASES | NOTE 8 - NOTES PAYABLE, REVOLVING CREDIT FACILITY AND CAPITAL LEASES Revolving credit facility, notes payable, and capital lease obligations December 31, December 31, 2017 2016 First Lien Term Loans $ 620,272 $ 478,938 Second Lien Term Loans – 168,000 Discounts on term loans (18,470 ) (16,783 ) Promissory note payable to the former owner of a practice acquired at an interest rate of 1.5% due through 2019 592 980 Equipment notes payable at interest rates ranging from 3.3% to 5.6%, due through 2020, collateralized by medical equipment 195 341 Obligations under capital leases at interest rates ranging from 4.3% to 11.2%, due through 2022, collateralized by medical and office equipment 6,538 7,256 Total debt obligations 609,127 638,732 Less current portion (34,090 ) (26,557 ) Long-term portion debt obligations $ 575,037 $ 612,175 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): 2018 $ 33,582 2019 33,357 2020 33,092 2021 33,081 2022 33,081 Thereafter 454,866 Total notes payable obligations $ 621,059 We lease equipment under capital lease arrangements. Future minimum lease payments under capital leases for years ending December 31 (in thousands) is as follows: 2018 $ 4,080 2019 2,276 2020 282 2021 162 2022 60 Thereafter – Total minimum payments 6,860 Amount representing interest (322 ) Present value of net minimum lease payments 6,538 Less current portion (3,866 ) Long-term portion lease obligations $ 2,672 Term Loans, Revolving Credit Facility and Financing Activity Information At December 31, 2017, our credit facilities were comprised of one tranche of term loans (“First Lien Term Loans”) and a revolving credit facility of $117.5 million (the “Revolving Credit Facility”). As of December 31, 2017, we were in compliance with all covenants under our credit facilities. Included in our consolidated balance sheets at December 31, 2017 are $601.8 million of senior secured term loan debt (net of unamortized discounts of $18.5 million) in thousands: Face Value Discount Total Carrying Total First Lien Term Loans $ 620,272 $ (18,470 ) $ 601,802 We had no balance under our $117.5 million Revolving Credit Facility at December 31, 2017. The following describes our 2017 financing activities: Amendment No. 5, Consent and Incremental Joinder Agreement to Credit and Guaranty Agreement On August 22, 2017, we entered into Amendment No. 5, Consent and Incremental Joinder Agreement to Credit and Guaranty Agreement (the “Fifth Amendment”) with respect to our First Lien Credit Agreement. Pursuant to the Fifth Amendment, we issued $170.0 million in incremental First Lien Term Loans, the proceeds of which were used to repay in full all outstanding Second Lien Term Loans and all other obligations under the Second Lien Credit Agreement. Pursuant to the Fifth Amendment, we also changed the interest rate margin applicable to borrowings under the First Lien Credit Agreement. While borrowings under the First Lien Credit Agreement continue to bear interest at either an Adjusted Eurodollar Rate or a Base Rate (in each case, as more fully defined in the First Lien Credit Agreement) or a combination of both, at the election of the Company, plus an applicable margin. The applicable margin for Adjusted Eurodollar Rate borrowings and Base Rate borrowings was changed from 3.25% and 2.25%, respectively, to 3.75% and 2.75%, respectively, through an initial period which ends when financial reporting is delivered for the period ending September 30, 2017. Thereafter, the rates of the applicable margin for borrowing under the First Lien Credit Agreement will adjust depending on our leverage ratio, according to the following schedule: First Lien Leverage Ratio Eurodollar Rate Spread Base Rate Spread > 5.50x 4.50% 3.50% > 4.00x but ≤ 5.50x 3.75% 2.75% >3.50x but ≤ 4.00x 3.50% 2.50% ≤ 3.50x 3.25% 2.25% At December 31, 2017 the effective Adjusted Eurodollar Rate and the Base Rate for the First Lien Term Loans was 1.36% and 4.50%, respectively and the applicable margin for Adjusted Eurodollar Rate and Base Rate borrowings remained at 3.75% and 2.75%, respectively. Pursuant to the Fifth Amendment, the First Lien Credit Agreement was amended so that we can elect to request 1) an increase to the existing Revolving Credit Facility and/or 2) additional First Lien Term Loans, provided that the aggregate amount of such increases and additions does not exceed (a) $100.0 million and (b) as long as the First Lien Leverage Ratio (as defined in the First Lien Credit Agreement) would not exceed 4.00:1.00 after giving effect to such incremental facilities, an uncapped amount of incremental facilities, in each case subject to the conditions and limitations set forth in the First Lien Credit Agreement. Each lender approached to provide all or a portion of any incremental facility may elect or decline, in its sole discretion, to provide an incremental commitment or loan. Pursuant to the Fifth Amendment, the First Lien Credit Agreement was also amended to (i) provide for quarterly payments of principal of the First Lien Term Loans in the amount of approximately $8.3 million, as compared to approximately $6.1 million prior to the Fifth Amendment, (ii) extend the call protection provided to the holders of the First Lien Term Loans for a period of twelve months following the date of the Fifth Amendment and (iii) provide us with additional operating flexibility, including the ability to incur certain additional debt and to make certain additional restricted payments, investments and dispositions, in each case as more fully set forth in the Fifth Amendment. Total issue costs for the Fifth Amendment aggregated to approximately $4.7 million. Of this amount, $4.1 million was identified and capitalized as discount on debt, $350,000 was capitalized as deferred financing costs and the remaining $235,000 was expensed. Amounts capitalized will be amortized over the remaining term of the agreement. Fourth Amendment to First Lien Credit Agreement On February 2, 2017, we entered into Amendment No. 4 to Credit and Guaranty Agreement (the “Fourth Amendment”) with respect to our First Lien Credit Agreement. Pursuant to the Fourth Amendment, the interest rate margin per annum on the First Lien Term Loans and the Revolving Credit Facility was reduced by 50 basis points, from 3.75% to 3.25%. Except for such reduction in the interest rate on credit extensions, the Fourth Amendment did not result in any other material modifications to the First Lien Credit Agreement. RadNet incurred expenses for the transaction in the amount of $543,000, which was recorded to discount on debt and will be amortized over the remaining term of the agreement. The following describes our applicable financing prior to giving effect to the Fourth Amendment and Fifth Amendment discussed above. First Lien Credit Agreement On July 1, 2016, we entered into the First Lien Credit Agreement pursuant to which we amended and restated our then existing first lien credit facilities. Pursuant to the First Lien Credit Agreement, we originally issued $485 million of First Lien Term Loans and established the $117.5 million Revolving Credit Facility. Proceeds from the First Lien Credit Agreement were used to repay the previously outstanding first lien loans under the 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. Revolving Credit Facility: First Lien Leverage Ratio Eurodollar Rate Spread Base Rate Spread > 5.50x 4.50% 3.50% > 4.00x but ≤ 5.50x 3.75% 2.75% >3.50x but ≤ 4.00x 3.50% 2.50% ≤ 3.50x 3.25% 2.25% For letters of credit issued under the Revolving Credit Facility, letter of credit fees accrue at the applicable margin (see table above) for Adjusted Eurodollar Rate revolving loans and fronting fees accrue at 0.25% per annum, in each case on the average aggregate daily maximum amount available to be drawn under all letters of credit issued under the First Lien Credit Agreement. In addition a commitment fee of 0.5% per annum accrues on the unused revolver commitments under the Revolving Credit Facility. As of December 31, 2017, the interest rate payable on revolving loans was 7.0% and the amount available to borrow under the Revolving Credit Facility was $117.5 million. The Revolving Credit Facility will terminate on the earliest to occur of (i) July 1, 2021, (ii) the date we voluntarily agree to permanently reduce the Revolving Credit Facility to zero pursuant to section 2.13(b) of the First Lien Credit Agreement, and (iii) the date the Revolving Credit Facility is terminated due to specific events of default pursuant to section 8.01 of the First Lien Credit Agreement. Second Lien Credit Agreement On March 25, 2014, we entered into the Second Lien Credit and Guaranty Agreement (the “Second Lien Credit Agreement”) pursuant to which we issued $180 million of second lien term loans (the “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 restated First Lien Credit Agreement, a $12.0 million principal payment was made on the Second Lien Term Loans. On August 22, 2017 the Second Lien Credit Agreement was repaid in full with the proceeds of First Lien Term Loans issued under the Fifth Amendment, as described above. |
9. COMMITMENTS AND CONTINGENCIE
9. COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 9 – COMMITMENTS AND CONTINGENCIES Leases Facilities Equipment Total 2018 $ 58,907 $ 9,551 $ 68,458 2019 51,177 8,950 60,127 2020 43,237 7,836 51,073 2021 36,089 5,986 42,075 2022 28,287 3,667 31,954 Thereafter 102,837 3,118 105,955 $ 320,534 $ 39,108 $ 359,642 Total rent expense, including equipment rentals, for the years ended December 31, 2017, 2016 and 2015 was $67.2 million, $74.2 million and $71.7 million, respectively. Litigation |
10. INCOME TAXES
10. INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (“Tax Act”). Among other items, the Tax Act reduced the U.S. federal corporate tax rate to 21%, effective for tax years beginning after December 31, 2017, and established a one-time deemed repatriation transition tax on earnings of certain foreign subsidiaries that were previously tax deferred. Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, the SEC issued guidance on December 22, 2017 to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. In accordance with this guidance, we have made reasonable estimates below of the effects of the Tax Act and recorded provisional amounts in our financial statements as of December 31, 2017. For the items for which we were able to determine a reasonable estimate, we recognized a provisional amount of $13.6 million, which is included as a component of income tax expense from continuing operations. As we collect and prepare necessary data, and interpret the Tax Act and any additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, we may make adjustments to the provisional amounts. Those adjustments may materially impact our provision for income taxes and effective tax rate in the period in which the adjustments are made. The accounting for the tax effects of the Tax Act will be completed in 2018. For the year ended December 31, 2017, the Company recorded a provisional net tax provision of $13.5 million related to the remeasurement of its net deferred tax assets using the new U.S. federal corporate tax rate of 21%, which is estimated to result in significantly lower federal cash taxes for the Company in 2018 and beyond. Although the tax rate reduction is known, we have not collected the necessary data to complete our analysis of the effect of the Tax Act on the underlying deferred taxes and as such, the amounts recorded as of December 31, 2017 are provisional. The Tax Act requires the Company to pay U.S. income taxes on accumulated foreign subsidiary earnings not previously subject to U.S. income tax at a rate of 15.5% to the extent of foreign cash and certain other net current assets and 8% on the remaining earnings. Given that the transition tax analysis requires significant data from our foreign subsidiaries that is not regularly collected or analyzed, we recorded a provisional amount for the one-time transitional tax liability for our foreign subsidiaries of approximately $0.1 million. Additional work is necessary for a more detailed analysis of the Company’s deferred tax assets and liabilities and its historical foreign earnings as well as potential correlative adjustments. If the final tax outcome of these matters is different than the provisional amounts recorded by the Company, then adjustments to the provisional amounts will impact the tax provision and effective tax rate in the period recorded. Tax Act includes new anti-deferral, anti-base erosion, and base broadening provisions. Given the complexity of these provisions, we are still evaluating the effects and impact of these provisions. For the years ended December 31, 2017, 2016 and 2015, we recognized income tax expense comprised of the following (in thousands): December 31, 2017 2016 2015 Federal current tax $ 871 $ 88 $ 237 State current tax 4,906 914 1,705 Other current tax 23 28 28 Federal deferred tax 21,389 2,539 3,625 State deferred tax (2,879 ) 863 412 Income tax expense (benefit) $ 24,310 $ 4,432 $ 6,007 A reconciliation of the statutory U.S. federal rate and effective rates is as follows: Years Ended December 31, 2017 2016 2015 Federal tax $ 8,971 34.00 % $ 4,229 34.00 % $ 4,979 34.00 % State franchise tax, net of federal benefit 1,799 6.82 % 224 1.80 % 1,245 8.50 % Other Non deductible expenses 91 0.35 % (11 ) -0.09 % (1 ) -0.01 % Changes in valuation allowance (1,045 ) -3.96 % 585 4.70 % (2,536 ) -17.32 % Tax Cuts and Jobs Act 13,527 51.27 % – 0.00 % – 0.00 % Deferred true-ups and other (194 ) -0.74 % (3,142 ) -25.25 % 1,964 13.41 % Other reconciling items 1,161 4.39 % 2,547 20.47 % 356 2.43 % Income tax expense (benefit) $ 24,310 92.13 % $ 4,432 35.64 % $ 6,007 41.02 % 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, Deferred tax assets: 2017 2016 Net operating losses $ 47,212 $ 84,509 Accrued expenses 3,242 4,400 Straight-Line rent adjustment 7,749 10,750 Unfavorable contract liability 1,288 2,114 Equity compensation 871 950 Allowance for doubtful accounts 8,720 6,033 Other 2,504 1,357 Valuation allowance (4,049 ) (4,428 ) Total Deferred Tax Assets $ 67,537 $ 105,685 Deferred tax liabilities: Property and equipment (373 ) (6,994 ) Goodwill (17,568 ) (23,350 ) Intangibles (7,839 ) (12,066 ) Non accrual experience method reserve (2,778 ) (8,483 ) Other (8,127 ) (4,436 ) Total Deferred Tax Liabilities $ (36,685 ) $ (55,329 ) Net Deferred Tax Asset $ 30,852 $ 50,356 As of December 31, 2017, the Company had federal net operating loss carryforwards of approximately $191.6 million, which expire at various intervals from the years 2018 to 2034 if not utilized. The Company also had state net operating loss carryforwards of approximately $132.3 million, which expire at various intervals from the years 2018 through 2037. As of December 31, 2017, $23.5 million of our federal net operating loss carryforwards acquired in connection with the 2011 acquisition of Raven Holdings U.S., Inc. 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. 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, 2017, we have determined that deferred tax assets of $67.5 million are more likely-than-not to be realized. We have also determined that deferred tax liabilities of $17.6 million are required related to book basis in goodwill that has an indefinite life. We file consolidated income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. We continue to reinvest earnings of the non-US entities for the foreseeable future and therefore have not recognized any U.S. tax expense on these earnings. 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 2013. We do not anticipate the results of any open examinations would result in a material change to its financial position. At December 31, 2017, the Company has unrecognized tax benefits of $3.6 million of which $2.9 million will affect the effective tax rate if recognized. A reconciliation of the total gross amounts of unrecognized tax benefits for the years ended as follows (in thousands): December 31, 2017 2016 2015 Balance at beginning of year $ 3,861 $ 94 $ 3,761 Increases (Decreases) related to prior year tax positions 1 3,861 (3,667 ) Expiration of the statute of limitations for the assessment of taxes – (94 ) – Increase (Decreases) related to change in rate (247 ) – – Balance at end of year $ 3,615 $ 3,861 $ 94 The Company believes it is reasonably possible it will not materially reduce its unrecognized tax benefits within the next twelve months. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. During the year ended December 31, 2017 the Company accrued an insignificant amount of interest expense. As of December 31, 2017, accrued interest and penalties were insignificant. |
11. STOCK-BASED COMPENSATION
11. STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | NOTE 11 – 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 first amended and restated as of April 20, 2015 and again on March 9, 2017 (“the Restated Plan”). The Restated Plan was approved by our stockholders at our annual stockholders meeting on June 8, 2017. We have reserved for issuance under the 2017 Restated Plan 14,000,000 shares of common stock. We can issue options, stock awards, stock appreciation rights, stock units and cash awards under the 2017 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 three to five years and expire five to ten years from the date of grant. As of December 31, 2017, we had outstanding options to acquire 420,149 shares of our common stock, of which options to acquire 43,334 shares were exercisable. The following summarizes all of our option transactions for the twelve months ended December 31, 2017: 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, 2016 375,626 $ 6.82 Granted 209,523 6.95 Exercised – – Canceled, forfeited or expired (165,000 ) 8.83 Balance, December 31, 2017 420,149 6.10 7.74 $ 1,722,210 Exercisable at December 31, 2017 43,334 2.27 0.97 339,503 Aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between our closing stock price on December 31, 2017 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, 2017. No options were exercised during the twelve months ended December 31, 2017. As of December 31, 2017, total unrecognized stock-based compensation expense related to non-vested employee awards was $842,343 which is expected to be recognized over a weighted average period of approximately 2.6 years. Restricted Stock Awards (“RSA’s”) The Restated Plan permits the award of restricted stock awards (“RSA’s”). As of December 31, 2017, we have issued a total of 4,945,460 RSA’s of which 447,351 were unvested at December 31, 2017. The following summarizes all unvested RSA’s activities during the twelve months ended December 31, 2017: Weighted-Average Remaining Contractual Weighted-Average RSA's Term (Years) Fair Value RSA's unvested at December 31, 2016 573,145 $ 6.18 Changes during the period Granted 681,448 $ 5.98 Vested (807,242 ) $ 6.02 RSA's unvested at December 31, 2017 447,351 0.32 $ 6.17 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 twelve months ended December 31, 2017 we issued 35,800 shares relating to these awards, amounting to $361,370 of compensation expense. Plan summary In summary, of the 14,000,000 shares of common stock reserved for issuance under the Restated Plan, at December 31, 2017, we had issued 13,195,159 total shares between options, RSA’s and other stock awards. With options cancelled and RSA’s forfeited amounting to 3,140,009 and 59,053 shares, respectively, there remain 4,003,903 shares available under the Restated Plan for future issuance. |
12. EMPLOYEE BENEFIT PLAN
12. EMPLOYEE BENEFIT PLAN | 12 Months Ended |
Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |
EMPLOYEE BENEFIT PLAN | NOTE 12 – 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. As of January 1, 2017, RadNet provides a matching contribution in the amount to a maximum of 1.0% per 4.0% of employee contribution and is expected to contribute approximately $2.5 million for the year ended December 31, 2017. |
13. QUARTERLY RESULTS OF OPERAT
13. QUARTERLY RESULTS OF OPERATIONS (unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
QUARTERLY RESULTS OF OPERATIONS (unaudited) | NOTE 13 – QUARTERLY RESULTS OF OPERATIONS (unaudited) 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, 2017 and 2016. 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 per share data). 2017 Quarter Ended 2016 Quarter Ended Mar 31 June 30 Sept 30 Dec 31 Mar 31 June 30 Sept 30 Dec 31 Statement of Operations Data: Net revenue $ 229,013 $ 230,014 $ 227,607 $ 235,552 $ 216,388 $ 218,565 $ 224,643 $ 224,939 Total operating expenses 222,266 215,853 216,765 217,252 213,405 210,487 212,192 209,971 Total other expenses 9,993 8,009 9,328 9,889 7,875 5,717 11,578 10,641 Equity in earnings of joint ventures (1,928 ) (2,994 ) (3,450 ) (5,182 ) (2,279 ) (3,274 ) (2,576 ) (1,638 ) Benefit from (provision for) income taxes 458 (3,523 ) (1,112 ) (20,133 ) 1,180 (2,253 ) (1,458 ) (1,901 ) Net (loss) income (860 ) 5,623 3,852 (6,540 ) (1,433 ) 3,382 1,991 4,064 Net income (loss) attributable to noncontrolling interests 350 313 623 736 290 (243 ) 344 383 Net (loss) income attributable to Radnet, Inc. common stockholders $ (1,210 ) $ 5,310 $ 3,229 $ (7,276 ) $ (1,723 ) $ 3,625 $ 1,647 $ 3,681 Basic net (loss) income attributable to Radnet, Inc. common stockholders (loss) earnings per share: $ (0.03 ) $ 0.11 $ 0.07 $ (0.15 ) $ (0.04 ) $ 0.08 $ 0.04 $ 0.08 Diluted net (loss) income attributable to Radnet, Inc. common stockholders (loss) earnings per share: $ (0.03 ) $ 0.11 $ 0.07 $ (0.15 ) $ (0.04 ) $ 0.08 $ 0.04 $ 0.08 Weighted average shares outstanding Basic 46,560 46,756 46,954 47,237 46,581 46,559 45,869 45,967 Diluted 46,560 47,196 47,578 47,886 46,581 46,882 46,334 46,389 |
14. RELATED PARTY TRANSACTIONS
14. RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | We used World Wide Express, a package delivery company formerly owned by our western operations chief operating officer, to provide delivery services for us. For the years ended December 31, 2016 and 2015, we paid approximately $670,000 and $693,000 respectively, to World Wide Express for those services. At December 31, 2016, we had outstanding amounts due to World Wide Express of $273,000. World Wide Express is no longer affiliated with the Company as a related party for the year ended December 31, 2017. |
15. SUBSEQUENT EVENTS
15. SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | On January 1, 2018 we completed our acquisition of certain assets of Imaging Services Company of New York, LLC, consisting of a single multi-modality center located in New York, New York, for purchase consideration of $5.8 million. On January 1, 2018, we formed Beach Imaging Group, LLC (“Beach Imaging”) and contributed the operations of 24 imaging facilities spread across southern Los Angeles and Orange Counties in exchange for a 60% economic interest. MemorialCare Medical Foundation (MCMF), a hospital system in southern California, contributed $22.9 million in cash along with the operations of 10 of its imaging facilities in southern California to receive a 40% economic interest in Beach Imaging. In connection with the same transaction, Beach Imaging agreed to sell one of its newly acquired imaging center from RadNet to MCMF for $1.7 million. |
2. SUMMARY OF SIGNIFICANT ACC23
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
PRINCIPLES OF CONSOLIDATION | PRINCIPLES OF CONSOLIDATION – The operating activities of subsidiaries are included in the accompanying consolidated financial statements (“financial statements”) from the date of acquisition. Investments in companies in which we have 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. Additionally, we determined that our unconsolidated joint venture, ScriptSender, LLC, is also a VIE as it is dependent on our operational funding but we are not a primary beneficiary since RadNet does not have the power to direct the activities of the entity that most significantly impact the entity’s economic performance. See Investment in Joint Ventures section of Note 2 for further explanation. |
USE OF ESTIMATES | USE OF ESTIMATES - The financial statements were prepared in accordance with U.S. generally accepted accounting principles (GAAP), which 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. |
RECLASSIFICATION | RECLASSIFICATION – We have reclassified certain amounts within accrued expenses for 2016 to conform to our 2017 presentation. |
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 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 in 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, 2017 2016 2015 Commercial insurance $ 571,369 $ 539,793 $ 486,489 Medicare 193,166 187,941 168,545 Medicaid 25,821 28,170 23,948 Workers' compensation/personal injury 35,195 36,548 32,728 Other (1) 31,627 29,135 35,046 Service fee revenue, net of contractual allowances and discounts 857,178 821,587 746,756 Provision for bad debts (46,555 ) (45,387 ) (36,033 ) Net service fee revenue 810,623 776,200 710,723 Revenue under capitation arrangements 111,563 108,335 98,905 Total net revenue $ 922,186 $ 884,535 $ 809,628 (1) |
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. Our allowance for bad debts at December 31, 2017 and 2016 was $34.6 million and $20.7 million, respectively. |
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. 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. |
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. 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, and record the meaningful use incentive within non-operating income only after Medicare accepts an attestation from the qualified eligible professional demonstrating meaningful use. We recorded approximately $250,000, $2.8 million and $3.3 million during the twelve months ended December 31, 2017, 2016 and 2015, respectively, relating to this incentive. |
GAIN ON RETURN OF COMMON STOCK | GAIN ON 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 on return of common stock in our statement of operations. |
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. For the years ended December 31, 2017, 2016 and 2015, we recorded approximately $6.1 million, $6.2 million and $6.1 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, 2017 we had a deferred revenue liability of approximately $2.5 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 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, We have entered into multiple agreements to license our RIS system to outside customers. For the twelve months December 31, 2017 and December 31, 2016, we received approximately $492,000 and $301,000 with respect to this licensing agreement, respectively. In accordance with ASC 350-40, we recorded the receipt of these funds against the capitalized software costs explained above. As of December 31, 2017, the net carrying value of our capitalized software costs was approximately $1.3 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. We continuously monitor collections 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 $1.9 million for the twelve month period ended December 31, 2017, and $2.0 million for the twelve month period ended December 31, 2016. Deferred financing costs are solely related to our Revolving Credit Facility. In conjunction with our Fourth Amendment and Fifth Amendment to our First Lien Credit Agreement, a net addition of approximately $371,000 was added to deferred financing costs for the twelve months ended December 31, 2017. See Note 8, Revolving Credit Facility, Notes Payable, and Capital Leases for more information. |
INVENTORIES | INVENTORIES - Inventories, consisting mainly of medical supplies, are stated at the lower of cost or net realizable value 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, 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, 2017 totaled $256.8 million and $239.6 million at December 31, 2016. Indefinite lived intangible assets at December 31, 2017 and 2016 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, 2017, noting no impairment, and have not identified any indicators of impairment through December 31, 2017. |
LONG-LIVED ASSETS | LONG-LIVED ASSETS – We evaluate our long-lived assets (property and equipment) and intangibles, other than goodwill, for impairment when events or changes indicate the carrying amount of an asset may not be recoverable. U.S. 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. We determined that there were no events or changes in circumstances that indicated our long-lived assets were impaired during any periods presented. |
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 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 of $2.8 million for the year ending December 31, 2017 and $2.9 million for the year ended December 31, 2016, 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 is $10,000 per incidence at for the years ending December 31, 2017 and December 31, 2016, 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, 2017, 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, 2017 and 2016 of $4.5 million and $2.4 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, which ends in 2031. As of December 31, 2017 and 2016, the remaining accrual balance is $5.0 million, and $5.6 million, 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. 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, 2017 and 2016, the unfavorable contract liability on these leases is $1.4 million and $1.6 million respectively. |
EQUITY BASED COMPENSATION | EQUITY BASED COMPENSATION – We have one long-term incentive plan that we adopted in 2006 and which we first amended and restated as of April 20, 2015, and again on March 9, 2017 (the “Restated Plan”). The Restated Plan was approved by our stockholders at our annual stockholders meeting on June 8, 2017. We have reserved for issuance under the Restated Plan 14,000,000 shares of common stock. We can issue options, stock awards, stock appreciation rights, stock units 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 three to five years and expire five to ten years from date of grant. The compensation expense recognized for all equity-based awards 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. See Note 11 Stock-Based Compensation for more information. |
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 (LOSS) INCOME | COMPREHENSIVE (LOSS) INCOME – ASC 220, Comprehensive Income, |
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS - In the fourth quarter of 2016, we entered into two forward interest rate cap agreements ("2016 Caps"). The 2016 Caps will mature in September and October 2020. The 2016 Caps had notional amounts of $150,000,000 and $350,000,000, respectively, which were designated at inception as cash flow hedges of future cash interest payments associated with portions of our variable rate bank debt. Under these arrangements, we purchased a cap on 3 month LIBOR at 2.0%. We are liable for a $5.3 million premium to enter into the caps which is being accrued over the life of the 2016 Caps. ADOPTION of ASU 2017-12 – Targeted Improvements to Accounting for Hedging Activities - In August 2017, the FASB issued ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities At inception, we designated our 2016 Caps as cash flow hedges of floating-rate borrowings. In accordance with ASC Topic 815, derivatives that have been designated and qualify as cash flow hedging instruments are reported at fair value. The gain or loss of the hedge (i.e., change in fair value) is reported as a component of accumulated other comprehensive (loss) income in the consolidated statement of equity. Below represents the fair value of our 2016 Caps and loss (gain) recognized: For the twelve months ended December 31, 2017 Derivatives Balance Sheet Location Fair Value – Liabilities Interest rate contracts Current and other non-current liabilities $ (595 ) For the twelve months ended December 31, 2016 Derivatives Balance Sheet Location Fair Value – Asset Derivatives Interest rate contracts Current assets $ 818 A tabular presentation of the effect of derivative instruments on our consolidated statement of comprehensive (loss) income, net of taxes is as follows (amounts in thousands): For the twelve months ended December 31, 2017 Effective Interest Rate Cap Amount of Loss Recognized on Derivative Location of Loss Recognized in Income on Derivative Interest rate contracts ($880) Other Comprehensive Loss For the twelve months ended December 31, 2016 Effective Interest Rate Cap Amount of Gain Recognized on Derivative Location of Gain Recognized in Income on Derivative Interest rate contracts $508 Other 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 values of certain of our financial assets that are subject to fair value measurements, and the classification of these assets in our consolidated balance sheets, as follows (in thousands): As of December 31, 2017 Level 1 Level 2 Level 3 Total Current and other non-current liabilities Interest Rate Contracts $ – $ (595 ) $ – $ (595 ) As of December 31, 2016 Level 1 Level 2 Level 3 Total Current assets Interest Rate Contracts $ – $ 818 $ – $ 818 The estimated fair value of these contracts was determined using Level 2 inputs. More specifically, the fair value was determined by calculating the value of the difference between the fixed interest rate of the interest rate swaps and the counterparty’s forward LIBOR curve. The forward LIBOR curve is readily available in the public markets or can be derived from information available in the public markets. The table below summarizes the estimated fair value and carrying amount of our long-term debt as follows (in thousands): As of December 31, 2017 Level 1 Level 2 Level 3 Total Fair Value Total Face Value First Lien Term Loans $ – $ 628,801 $ – $ 628,801 $ 620,272 As of December 31, 2016 Level 1 Level 2 Level 3 Total Total Face Value First Lien Term Loans $ – $ 483,129 $ – $ 483,129 $ 478,938 Second Lien Term Loans $ – $ 167,580 $ – $ 167,580 $ 168,000 Our revolving credit facility had no aggregate principal amount outstanding as of December 31, 2017. 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, 2017 2016 2015 Net income attributable to RadNet, Inc. common stockholders $ 53 $ 7,230 $ 7,709 BASIC NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS Weighted average number of common shares outstanding during the period 46,880,775 46,244,188 43,805,794 Basic net income per share attributable to RadNet, Inc. common stockholders $ 0.00 $ 0.16 $ 0.18 DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS Weighted average number of common shares outstanding during the period 46,880,775 46,244,188 43,805,794 Add nonvested restricted stock subject only to service vesting 274,940 220,416 865,326 Add additional shares issuable upon exercise of stock options and warrants 246,206 190,428 500,252 Weighted average number of common shares used in calculating diluted net income per share 47,401,921 46,655,032 45,171,372 Diluted net income per share attributable to RadNet, Inc. common stockholders $ 0.00 $ 0.15 $ 0.17 Stock options excluded from the computation of diluted per share amounts: Weighted average shares for which the exercise price exceeds average market price of common stock 175,037 245,313 260,000 |
INVESTMENT AT COST | INVESTMENT AT COST - On March 24, 2017, we acquired a 12.5% equity interest in Medic Vision – Imaging Solutions Ltd. for $1.0 million. We also have an option to acquire an additional 12.5% equity interest for $1.4 million exercisable within one year from the initial share purchase date. Medic Vision, based in Israel, specializes in software packages that provide compliant radiation dose structured reporting and enhanced images from reduced dose CT scans. In accordance with ASC 325-20, Cost Method Investments, |
INVESTMENT IN JOINT VENTURES | INVESTMENT IN JOINT VENTURES – We have fourteen 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. 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, 2017. 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, 2017, we formed in conjuncture with Cedars Sinai Medical Center (“CSMC”) the Santa Monica Imaging Group, LLC (“SMIG”), consisting of two multi-modality imaging centers located in Santa Monica, CA. Total agreed contribution was $2.7 million of cash and assets with RadNet contributing $1.1 million for a 40% economic interest and CSMC contributing $1.6 million for a 60% economic interest. For its contribution, RadNet transferred $80,000 in cash and the net assets acquired in the acquisition of Resolution Imaging of $2.5 million. CSMC contributed $120,000 in cash and paid RadNet $1.5 million for the Resolution Imaging assets transferred to the venture. RadNet does not have controlling economic interest in SMIG and the investment is accounted for under the equity method. On January 6, 2017, Image Medical Inc. (“Image Medical”), a wholly owned subsidiary of RadNet, acquired a 49% economic interest ScriptSender, LLC, a partnership held by two individuals which provides secure data transmission services of medical information. Through a management agreement, RadNet provides management and accounting services and receives an agreed upon fee. Image Medical will contribute $3.0 million to the partnership for its 49% ownership stake over a three year period representing the maximum risk in the venture. ScriptSender LLC is dependent on this contribution to finance its own activities, and as such we determined that it is a VIE, but we are not a primary beneficiary since we do not have the power to direct the activities of the entity that most significantly impact the entity’s economic performance. As of December 31, 2017, the carrying amount of the investment is $2.5 million. 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 years ended December 31, 2017 and December 31, 2016 (in thousands): Balance as of December 31, 2015 $ 33,584 Equity contributions in existing and purchase of interest in joint ventures 3,084 Equity in earnings in these joint ventures 9,767 Distribution of earnings (2,926 ) Balance as of December 31, 2016 $ 43,509 Equity contributions in existing and purchase of interest in joint ventures 4,062 Equity in earnings in these joint ventures 13,554 Distribution of earnings (8,690 ) Balance as of December 31, 2017 $ 52,435 We received management service fees from the centers underlying these joint ventures of approximately $13.1 million for the year ended December 31, 2017, $11.9 million for the year ended December 31, 2016 and $9.3 million per year for the year ended December 31, 2015. 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 unaudited financial data for these joint ventures as of December 31, 2017 and 2016, respectively, and for the years ended December 31, 2017, 2016 and 2015, respectively, (in thousands): December 31, Balance Sheet Data: 2017 2016 Current assets $ 47,813 $ 40,093 Noncurrent assets 107,481 100,146 Current liabilities (16,655 ) (14,077 ) Noncurrent liabilities (42,072 ) (44,405 ) Total net assets $ 96,567 $ 81,757 Book value of RadNet joint venture interests $ 45,935 $ 38,539 Cost in excess of book value of acquired joint venture interests accounted for as equity method goodwill 6,500 4,970 Total value of RadNet joint venture interests $ 52,435 $ 43,509 Total book value of other joint venture partner interests $ 50,632 $ 43,218 2017 2016 2015 Net revenue $ 188,849 $ 160,134 $ 125,544 Net income $ 28,644 $ 21,933 $ 19,485 |
2. SUMMARY OF SIGNIFICANT ACC24
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedule of 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, 2017 2016 2015 Commercial insurance $ 571,369 $ 539,793 $ 486,489 Medicare 193,166 187,941 168,545 Medicaid 25,821 28,170 23,948 Workers' compensation/personal injury 35,195 36,548 32,728 Other (1) 31,627 29,135 35,046 Service fee revenue, net of contractual allowances and discounts 857,178 821,587 746,756 Provision for bad debts (46,555 ) (45,387 ) (36,033 ) Net service fee revenue 810,623 776,200 710,723 Revenue under capitation arrangements 111,563 108,335 98,905 Total net revenue $ 922,186 $ 884,535 $ 809,628 (1) |
Schedule of fair value of derivatives | Below represents the fair value of our 2016 Caps and loss (gain) recognized: For the twelve months ended December 31, 2017 Derivatives Balance Sheet Location Fair Value – Liabilities Interest rate contracts Current and other non-current liabilities $ (595 ) For the twelve months ended December 31, 2016 Derivatives Balance Sheet Location Fair Value – Asset Derivatives Interest rate contracts Current assets $ 818 |
Schedule of effect of derivative instruments on comprehensive income | A tabular presentation of the effect of derivative instruments on our consolidated statement of comprehensive (loss) income, net of taxes is as follows (amounts in thousands): For the twelve months ended December 31, 2017 Effective Interest Rate Cap Amount of Loss Recognized on Derivative Location of Loss Recognized in Income on Derivative Interest rate contracts ($880) Other Comprehensive Loss For the twelve months ended December 31, 2016 Effective Interest Rate Cap Amount of Gain Recognized on Derivative Location of Gain Recognized in Income on Derivative Interest rate contracts $508 Other Comprehensive Income |
Schedule of fair value of assets and liabilities | The table below summarizes the estimated fair values of certain of our financial assets that are subject to fair value measurements, and the classification of these assets in our consolidated balance sheets, as follows (in thousands): As of December 31, 2017 Level 1 Level 2 Level 3 Total Current and other non-current liabilities Interest Rate Contracts $ – $ (595 ) $ – $ (595 ) As of December 31, 2016 Level 1 Level 2 Level 3 Total Current assets Interest Rate Contracts $ – $ 818 $ – $ 818 The table below summarizes the estimated fair value and carrying amount of our long-term debt as follows (in thousands): As of December 31, 2017 Level 1 Level 2 Level 3 Total Fair Value Total Face Value First Lien Term Loans $ – $ 628,801 $ – $ 628,801 $ 620,272 As of December 31, 2016 Level 1 Level 2 Level 3 Total Total Face Value First Lien Term Loans $ – $ 483,129 $ – $ 483,129 $ 478,938 Second Lien Term Loans $ – $ 167,580 $ – $ 167,580 $ 168,000 |
Schedule of 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, 2017 2016 2015 Net income attributable to RadNet, Inc. common stockholders $ 53 $ 7,230 $ 7,709 BASIC NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS Weighted average number of common shares outstanding during the period 46,880,775 46,244,188 43,805,794 Basic net income per share attributable to RadNet, Inc. common stockholders $ 0.00 $ 0.16 $ 0.18 DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS Weighted average number of common shares outstanding during the period 46,880,775 46,244,188 43,805,794 Add nonvested restricted stock subject only to service vesting 274,940 220,416 865,326 Add additional shares issuable upon exercise of stock options and warrants 246,206 190,428 500,252 Weighted average number of common shares used in calculating diluted net income per share 47,401,921 46,655,032 45,171,372 Diluted net income per share attributable to RadNet, Inc. common stockholders $ 0.00 $ 0.15 $ 0.17 Stock options excluded from the computation of diluted per share amounts: Weighted average shares for which the exercise price exceeds average market price of common stock 175,037 245,313 260,000 |
Schedule of investment in joint ventures | The following table is a summary of our investment in joint ventures during the years ended December 31, 2017 and December 31, 2016 (in thousands): Balance as of December 31, 2015 $ 33,584 Equity contributions in existing and purchase of interest in joint ventures 3,084 Equity in earnings in these joint ventures 9,767 Distribution of earnings (2,926 ) Balance as of December 31, 2016 $ 43,509 Equity contributions in existing and purchase of interest in joint ventures 4,062 Equity in earnings in these joint ventures 13,554 Distribution of earnings (8,690 ) Balance as of December 31, 2017 $ 52,435 |
Schedule of Joint venture investment and financial information | The following table is a summary of key unaudited financial data for these joint ventures as of December 31, 2017 and 2016, respectively, and for the years ended December 31, 2017, 2016 and 2015, respectively, (in thousands): December 31, Balance Sheet Data: 2017 2016 Current assets $ 47,813 $ 40,093 Noncurrent assets 107,481 100,146 Current liabilities (16,655 ) (14,077 ) Noncurrent liabilities (42,072 ) (44,405 ) Total net assets $ 96,567 $ 81,757 Book value of RadNet joint venture interests $ 45,935 $ 38,539 Cost in excess of book value of acquired joint venture interests accounted for as equity method goodwill 6,500 4,970 Total value of RadNet joint venture interests $ 52,435 $ 43,509 Total book value of other joint venture partner interests $ 50,632 $ 43,218 2017 2016 2015 Net revenue $ 188,849 $ 160,134 $ 125,544 Net income $ 28,644 $ 21,933 $ 19,485 |
4. FACILITY ACQUISITIONS AND DI
4. FACILITY ACQUISITIONS AND DISPOSITIONS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Schedule of assets held for sale | The following table summarizes the major categories of assets classified as held for sale in the accompanying Consolidated Balance Sheets at December 31, 2016 (in thousands): Property and equipment, net $ 1,056 Other assets 21 Goodwill 1,126 Total assets held for sale $ 2,203 |
5. GOODWILL AND OTHER INTANGI26
5. GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill and other intangible assets | Goodwill is recorded as a result of business combinations. Activity in goodwill for the years ended December 31, 2016 and 2017 is provided below (in thousands): Balance as of December 31, 2015 $ 239,408 Goodwill acquired through the acquisition of Advanced Radiological Imaging 1,280 Adjustments to our preliminary allocation of the purchase price of Diagnostic Imaging Group, LLC (47 ) Goodwill acquired through the acquisition of Landmark Imaging, LLC 38 Goodwill held for sale (1,126 ) Balance as of December 31, 2016 239,553 Goodwill acquired through the acquisition of Resolution Imaging Medical Corp 1,901 Goodwill acquired through the acquisition of MRI Centers Inc. 401 Goodwill disposed through the transfer to Santa Monica Imaging Group JV (1,901 ) Goodwill acquired through the acquisition of D&D Diagnostics, Inc. 1,519 Goodwill acquired through the acquisition of Stockton MRI, Inc. 3,101 Goodwill disposed through the sale of Hematology Oncology (110 ) Goodwill acquired through the acquisition of DIA, Inc. 9,185 Goodwill disposed through the sale of Breastlink Medical Group, Inc. (509 ) Goodwill acquired through the acquisition of RDI, Inc. 1,202 Adjustments to our preliminary allocation of the purchase price of DIA, Inc. 1,058 Goodwill acquired through the acquisition of RadSite, LLC 1,665 Goodwill transferred to other assets (289 ) Balance as of December 31, 2017 $ 256,776 |
Schedule of annual amortization expense | The following table shows annual amortization expense, by asset classes that will be recorded over the next five years (in thousands): 2018 2019 2020 2021 2022 Thereafter Total Weighted average amortization period remaining in years Management Service Contracts $ 2,287 $ 2,287 $ 2,287 $ 2,287 $ 2,287 $ 20,396 $ 31,831 13.9 Covenant not to compete contracts 279 199 119 43 14 – 654 2.8 Trade Names* – – – – – 7,937 7,937 – Total Annual Amortization $ 2,566 $ 2,486 $ 2,406 $ 2,330 $ 2,301 $ 28,333 $ 40,422 * These trade name intangibles have an indefinite life |
6. PROPERTY AND EQUIPMENT (Tabl
6. PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | December 31, 2017 2016 Land $ 250 $ 250 Medical equipment 380,439 393,001 Computer and office equipment, furniture and fixtures 96,382 99,434 Software development costs 6,391 6,391 Leasehold improvements 273,436 252,595 Equipment under capital lease 17,180 26,758 Total property and equipment cost 774,078 778,429 Accumulated depreciation (529,511 ) (529,648 ) Total net property and equipment 244,567 248,781 Equipment transferred to other assets (266 ) (1,056 ) Total property and equipment $ 244,301 $ 247,725 |
7. ACCOUNTS PAYABLE AND ACCRU28
7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Payables and Accruals [Abstract] | |
Schedule of accounts payable and accrued expenses | December 31, 2017 2016 Accounts payable $ 28,538 $ 40,952 Accrued expenses 67,298 36,993 Accrued salary and benefits 30,670 25,009 Accrued professional fees 9,303 8,212 Total $ 135,809 $ 111,166 |
8. NOTES PAYABLE, REVOLVING C29
8. NOTES PAYABLE, REVOLVING CREDIT FACILITY AND CAPITAL LEASES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of notes payable, line of credit and capital lease obligations | Revolving credit facility, notes payable, and capital lease obligations December 31, December 31, 2017 2016 First Lien Term Loans $ 620,272 $ 478,938 Second Lien Term Loans – 168,000 Discounts on term loans (18,470 ) (16,783 ) Promissory note payable to the former owner of a practice acquired at an interest rate of 1.5% due through 2019 592 980 Equipment notes payable at interest rates ranging from 3.3% to 5.6%, due through 2020, collateralized by medical equipment 195 341 Obligations under capital leases at interest rates ranging from 4.3% to 11.2%, due through 2022, collateralized by medical and office equipment 6,538 7,256 Total debt obligations 609,127 638,732 Less current portion (34,090 ) (26,557 ) Long-term portion debt obligations $ 575,037 $ 612,175 |
Schedule of annual principal maturities of notes payable | 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): 2018 $ 33,582 2019 33,357 2020 33,092 2021 33,081 2022 33,081 Thereafter 454,866 Total notes payable obligations $ 621,059 |
Schedule of capital lease minimum payments | We lease equipment under capital lease arrangements. Future minimum lease payments under capital leases for years ending December 31 (in thousands) is as follows: 2018 $ 4,080 2019 2,276 2020 282 2021 162 2022 60 Thereafter – Total minimum payments 6,860 Amount representing interest (322 ) Present value of net minimum lease payments 6,538 Less current portion (3,866 ) Long-term portion lease obligations $ 2,672 |
Schedule of term loans and financing activity | Included in our consolidated balance sheets at December 31, 2017 are $601.8 million of senior secured term loan debt (net of unamortized discounts of $18.5 million) in thousands: Face Value Discount Total Carrying Total First Lien Term Loans $ 620,272 $ (18,470 ) $ 601,802 |
9. COMMITMENTS AND CONTINGENC30
9. COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of operating lease payments | Minimum annual payments under operating leases for future years ending December 31 are as follows (in thousands): Facilities Equipment Total 2018 $ 58,907 $ 9,551 $ 68,458 2019 51,177 8,950 60,127 2020 43,237 7,836 51,073 2021 36,089 5,986 42,075 2022 28,287 3,667 31,954 Thereafter 102,837 3,118 105,955 $ 320,534 $ 39,108 $ 359,642 |
10. INCOME TAXES (Tables)
10. INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of components of income tax expense | For the years ended December 31, 2017, 2016 and 2015, we recognized income tax expense comprised of the following (in thousands): December 31, 2017 2016 2015 Federal current tax $ 871 $ 88 $ 237 State current tax 4,906 914 1,705 Other current tax 23 28 28 Federal deferred tax 21,389 2,539 3,625 State deferred tax (2,879 ) 863 412 Income tax expense (benefit) $ 24,310 $ 4,432 $ 6,007 |
Schedule of reconciliation of income tax expense | Years Ended December 31, 2017 2016 2015 Federal tax $ 8,971 34.00 % $ 4,229 34.00 % $ 4,979 34.00 % State franchise tax, net of federal benefit 1,799 6.82 % 224 1.80 % 1,245 8.50 % Other Non deductible expenses 91 0.35 % (11 ) -0.09 % (1 ) -0.01 % Changes in valuation allowance (1,045 ) -3.96 % 585 4.70 % (2,536 ) -17.32 % Tax Cuts and Jobs Act 13,527 51.27 % – 0.00 % – 0.00 % Deferred true-ups and other (194 ) -0.74 % (3,142 ) -25.25 % 1,964 13.41 % Other reconciling items 1,161 4.39 % 2,547 20.47 % 356 2.43 % Income tax expense (benefit) $ 24,310 92.13 % $ 4,432 35.64 % $ 6,007 41.02 % |
Schedule of deferred tax assets and liabilities | Our deferred tax assets and liabilities comprise the following (in thousands): December 31, Deferred tax assets: 2017 2016 Net operating losses $ 47,212 $ 84,509 Accrued expenses 3,242 4,400 Straight-Line rent adjustment 7,749 10,750 Unfavorable contract liability 1,288 2,114 Equity compensation 871 950 Allowance for doubtful accounts 8,720 6,033 Other 2,504 1,357 Valuation allowance (4,049 ) (4,428 ) Total Deferred Tax Assets $ 67,537 $ 105,685 Deferred tax liabilities: Property and equipment (373 ) (6,994 ) Goodwill (17,568 ) (23,350 ) Intangibles (7,839 ) (12,066 ) Non accrual experience method reserve (2,778 ) (8,483 ) Other (8,127 ) (4,436 ) Total Deferred Tax Liabilities $ (36,685 ) $ (55,329 ) Net Deferred Tax Asset $ 30,852 $ 50,356 |
Schedule of unrecognized tax benefits | A reconciliation of the total gross amounts of unrecognized tax benefits for the years ended as follows (in thousands): December 31, 2017 2016 2015 Balance at beginning of year $ 3,861 $ 94 $ 3,761 Increases (Decreases) related to prior year tax positions 1 3,861 (3,667 ) Expiration of the statute of limitations for the assessment of taxes – (94 ) – Increase (Decreases) related to change in rate (247 ) – – Balance at end of year $ 3,615 $ 3,861 $ 94 |
11. STOCK-BASED COMPENSATION (T
11. STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of options activity | As of December 31, 2017, we had outstanding options to acquire 420,149 shares of our common stock, of which options to acquire 43,334 shares were exercisable. The following summarizes all of our option transactions for the twelve months ended December 31, 2017: 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, 2016 375,626 $ 6.82 Granted 209,523 6.95 Exercised – – Canceled, forfeited or expired (165,000 ) 8.83 Balance, December 31, 2017 420,149 6.10 7.74 $ 1,722,210 Exercisable at December 31, 2017 43,334 2.27 0.97 339,503 |
Schedule of RSA activity | Weighted-Average Remaining Contractual Weighted-Average RSA's Term (Years) Fair Value RSA's unvested at December 31, 2016 573,145 $ 6.18 Changes during the period Granted 681,448 $ 5.98 Vested (807,242 ) $ 6.02 RSA's unvested at December 31, 2017 447,351 0.32 $ 6.17 |
13. QUARTERLY RESULTS OF OPER33
13. QUARTERLY RESULTS OF OPERATIONS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of quarterly financial information | The operating results in any quarter are not necessarily indicative of the results that may be expected for any future period (in thousands except per share data). 2017 Quarter Ended 2016 Quarter Ended Mar 31 June 30 Sept 30 Dec 31 Mar 31 June 30 Sept 30 Dec 31 Statement of Operations Data: Net revenue $ 229,013 $ 230,014 $ 227,607 $ 235,552 $ 216,388 $ 218,565 $ 224,643 $ 224,939 Total operating expenses 222,266 215,853 216,765 217,252 213,405 210,487 212,192 209,971 Total other expenses 9,993 8,009 9,328 9,889 7,875 5,717 11,578 10,641 Equity in earnings of joint ventures (1,928 ) (2,994 ) (3,450 ) (5,182 ) (2,279 ) (3,274 ) (2,576 ) (1,638 ) Benefit from (provision for) income taxes 458 (3,523 ) (1,112 ) (20,133 ) 1,180 (2,253 ) (1,458 ) (1,901 ) Net (loss) income (860 ) 5,623 3,852 (6,540 ) (1,433 ) 3,382 1,991 4,064 Net income (loss) attributable to noncontrolling interests 350 313 623 736 290 (243 ) 344 383 Net (loss) income attributable to Radnet, Inc. common stockholders $ (1,210 ) $ 5,310 $ 3,229 $ (7,276 ) $ (1,723 ) $ 3,625 $ 1,647 $ 3,681 Basic net (loss) income attributable to Radnet, Inc. common stockholders (loss) earnings per share: $ (0.03 ) $ 0.11 $ 0.07 $ (0.15 ) $ (0.04 ) $ 0.08 $ 0.04 $ 0.08 Diluted net (loss) income attributable to Radnet, Inc. common stockholders (loss) earnings per share: $ (0.03 ) $ 0.11 $ 0.07 $ (0.15 ) $ (0.04 ) $ 0.08 $ 0.04 $ 0.08 Weighted average shares outstanding Basic 46,560 46,756 46,954 47,237 46,581 46,559 45,869 45,967 Diluted 46,560 47,196 47,578 47,886 46,581 46,882 46,334 46,389 |
1. NATURE OF BUSINESS (Details
1. NATURE OF BUSINESS (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
BRMG and NY Groups revenues | $ 134,600 | $ 135,700 | $ 113,100 |
BRMG and NY Groups operating expenses | 134,600 | 135,700 | 113,100 |
Management services provided to BRMG and NY Groups | 435,500 | 430,400 | $ 343,900 |
BRMG and NY Groups accounts receivable | 963,000 | 100,000 | |
BRMG and NY Groups accounts payable | $ 7,400 | $ 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, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Accounting Policies [Abstract] | ||||||||||||
Commercial Insurance | $ 571,369 | $ 539,793 | $ 486,489 | |||||||||
Medicare | 193,166 | 187,941 | 168,545 | |||||||||
Medicaid | 25,821 | 28,170 | 23,948 | |||||||||
Workers compensation/personal injury | 35,195 | 36,548 | 32,728 | |||||||||
Other (1) | [1] | 31,627 | 29,135 | 35,046 | ||||||||
Service fee revenue, net of contractual allowances and discounts | 857,178 | 821,587 | 746,756 | |||||||||
Provision for bad debts | (46,555) | (45,387) | (36,033) | |||||||||
Net service fee revenue | 810,623 | 776,200 | 710,723 | |||||||||
Revenue under capitation arrangements | 111,563 | 108,335 | 98,905 | |||||||||
Total net revenue | $ 235,552 | $ 227,607 | $ 230,014 | $ 229,013 | $ 224,939 | $ 224,643 | $ 218,565 | $ 216,388 | $ 922,186 | $ 884,535 | $ 809,628 | |
[1] | 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, 2017 | Dec. 31, 2016 |
FAIR VALUE MEASUREMENTS | ||
Interest rate contracts | $ 818 | |
First Lien Term Loans | $ 620,272 | 478,938 |
Second Lien Term Loans | 168,000 | |
Total Fair Value [Member] | ||
FAIR VALUE MEASUREMENTS | ||
Interest rate contracts | 818 | |
Interest rate contracts | (595) | |
First Lien Term Loans | 628,801 | 483,129 |
Second Lien Term Loans | 167,580 | |
Level 1 [Member] | ||
FAIR VALUE MEASUREMENTS | ||
Interest rate contracts | 0 | |
Interest rate contracts | 0 | |
First Lien Term Loans | 0 | 0 |
Second Lien Term Loans | 0 | |
Level 2 [Member] | ||
FAIR VALUE MEASUREMENTS | ||
Interest rate contracts | 818 | |
Interest rate contracts | (595) | |
First Lien Term Loans | 628,801 | 483,129 |
Second Lien Term Loans | 167,580 | |
Level 3 [Member] | ||
FAIR VALUE MEASUREMENTS | ||
Interest rate contracts | 0 | |
Interest rate contracts | 0 | |
First Lien Term Loans | $ 0 | 0 |
Second Lien Term Loans | $ 0 |
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, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Accounting Policies [Abstract] | |||||||||||
Net income attributable to Radnet, Inc.'s common stockholders | $ (7,276) | $ 3,229 | $ 5,310 | $ (1,210) | $ 3,681 | $ 1,647 | $ 3,625 | $ (1,723) | $ 53 | $ 7,230 | $ 7,709 |
BASIC NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | |||||||||||
Weighted average shares outstanding - basic | 47,237 | 46,954 | 46,756 | 46,560 | 45,967 | 45,869 | 46,559 | 46,581 | 46,880,775 | 46,244,188 | 43,805,794 |
Basic net income per share attributable to Radnet, Inc. common stockholders | $ (0.15) | $ 0.07 | $ 0.11 | $ (0.03) | $ 0.08 | $ 0.04 | $ 0.08 | $ (0.04) | $ 0 | $ 0.16 | $ 0.18 |
DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | |||||||||||
Weighted average shares outstanding - basic | 47,237 | 46,954 | 46,756 | 46,560 | 45,967 | 45,869 | 46,559 | 46,581 | 46,880,775 | 46,244,188 | 43,805,794 |
Add nonvested restricted stock subject only to service vesting | 274,940 | 220,416 | 865,326 | ||||||||
Add additional shares issuable upon exercise of stock options and warrants | 246,206 | 190,428 | 500,252 | ||||||||
Weighted average number of shares used in calculating diluted net income per share | 47,886 | 47,578 | 47,196 | 46,560 | 46,389 | 46,334 | 46,882 | 46,581 | 47,401,921 | 46,655,032 | 45,171,372 |
Diluted net income per share attributable to RadNet, Inc. common stockholders | $ (0.15) | $ 0.07 | $ 0.11 | $ (0.03) | $ 0.08 | $ 0.04 | $ 0.08 | $ (0.04) | $ 0 | $ 0.15 | $ 0.17 |
Stock options excluded from the computation of diluted per share amounts: | |||||||||||
Weighted average shares for which the exercise price exceeds average market price of common stock | 175,037 | 245,313 | 260,000 |
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, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Accounting Policies [Abstract] | |||||||||||
Beginning balance | $ 43,509 | $ 33,584 | $ 43,509 | $ 33,584 | |||||||
Equity contributions in existing and purchase of interest in joint ventures | 4,062 | 3,084 | |||||||||
Equity earnings in these joint ventures | $ 5,182 | $ 3,450 | $ 2,994 | $ 1,928 | $ 1,638 | $ 2,576 | $ 3,274 | $ 2,279 | 13,554 | 9,767 | $ 8,927 |
Distribution of earnings | (8,690) | (2,926) | (7,731) | ||||||||
Ending balance | $ 52,435 | $ 43,509 | $ 52,435 | $ 43,509 | $ 33,584 |
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, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Key financial data for joint ventures | |||
Current assets | $ 47,813 | $ 40,093 | |
Noncurrent assets | 107,481 | 100,146 | |
Current liabilities | (16,655) | (14,077) | |
Noncurrent liabilities | (42,072) | (44,405) | |
Total net assets | 96,567 | 81,757 | |
Book value of RadNet joint venture interests | 45,935 | 38,539 | |
Cost in excess of book value of acquired joint venture interests accounted for as equity method goodwill | 6,500 | 4,970 | |
Total value of RadNet joint venture interests | 52,435 | 43,509 | $ 33,584 |
Total book value of other joint venture partner interests | 50,632 | 43,218 | |
Net revenue | 188,849 | 160,134 | 125,544 |
Net income | $ 28,644 | $ 21,933 | $ 19,485 |
2. SUMMARY OF ACCOUNTING POLI40
2. SUMMARY OF ACCOUNTING POLICIES (Details Narrative) - USD ($) $ in Thousands | 7 Months Ended | 12 Months Ended | |||
Aug. 15, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Mar. 24, 2017 | |
Allowance for bad debts | $ 34,600 | $ 20,700 | |||
Meaningful use incentive income | $ 250 | 2,808 | $ 3,270 | ||
Common stock returned from acquisition, shares | 958,536 | ||||
Gain on return of common stock | $ 0 | 5,032 | 0 | ||
Service Fee Revenue net of contractual allowances and discounts | 857,178 | 821,587 | 746,756 | ||
Deferred revenue | 2,606 | 1,516 | |||
Capitalized software costs, gross | 6,400 | ||||
Software licensing revenue | 492 | 301 | |||
Capitalized software costs, net | 1,300 | ||||
Deferred financing costs, net of accumulated amortization | 1,900 | 2,000 | |||
Goodwill | 256,776 | 239,553 | $ 239,408 | ||
Indefinite lived intangible assets | 7,900 | ||||
Medical malpractice deductible per incidence | 10 | 10 | |||
Contract loss accrual | $ 5,000 | $ 5,600 | |||
Shares excluded from diluted earnings per share calculation | 175,037 | 245,313 | 260,000 | ||
Unfavorable contract liability | $ 1,400 | $ 1,600 | |||
Management service fees | 13,100 | 11,900 | $ 9,300 | ||
Common stock issued for acquisition | 2,500 | 9,241 | |||
West Valley Imaging Center [Member] | |||||
Transfer of fixed assets to new joint venture | 3,000 | ||||
Medic Vision [Member] | |||||
Investment at cost | $ 1,000 | ||||
Equity interest percentage | 12.50% | ||||
October 2020 [Member] | |||||
Notional amounts | 350,000 | ||||
September 2020 [Member] | |||||
Notional amounts | 150,000 | ||||
Community Imaging Partners [Member] | Joint Venture [Member] | Mt. Airy Health Services [Member] | |||||
Funds contributed | $ 640,000 | ||||
Economic interest | 40.00% | ||||
Glendale Advanced Imaging [Member] | Joint Venture [Member] | Dignity Health [Member] | |||||
Economic interest | 55.00% | ||||
Assets contributed | $ 2,200 | ||||
Radiologix [Member] | |||||
Contract loss accrual | 8,900 | ||||
Franklin Imaging [Member] | |||||
Goodwill | $ 648 | ||||
Consideration transfered | 1,000 | ||||
Capital lease assumed | 241 | ||||
Fixed assets acquired | 600 | ||||
Other assets acquired | $ 30 | ||||
Santa Monica Imaging Group [Member] | |||||
Consideration transfered | 80 | ||||
Funds contributed | $ 2,700 | ||||
Equity interest percentage | 40.00% | ||||
Transfer of fixed assets to new joint venture | $ 2,500 | ||||
ScriptSender LLC [Member] | |||||
Equity interest percentage | 49.00% | ||||
Carrying amount of investment | $ 2,500 | ||||
Workers Compensation [Member] | |||||
Self-insurance accrual | 2,800 | 2,900 | |||
Health Insurance [Member] | |||||
Self-insurance accrual | 4,500 | 2,400 | |||
eRAD [Member] | |||||
Service Fee Revenue net of contractual allowances and discounts | 6,100 | $ 6,200 | $ 6,100 | ||
Deferred revenue | $ 2,500 |
4. FACILITY ACQUISITIONS, ASS41
4. FACILITY ACQUISITIONS, ASSETS HELD FOR SALE AND DISPOSITIONS (Details - Assets held for sale) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Assets held for sale | $ 0 | $ 2,203 |
Propery and equipment, net [Member] | ||
Assets held for sale | 1,056 | |
Other assets [Member] | ||
Assets held for sale | 21 | |
Goodwill [Member] | ||
Assets held for sale | $ 1,126 |
4. FACILITY ACQUISITIONS, ASS42
4. FACILITY ACQUISITIONS, ASSETS HELD FOR SALE AND DISPOSITIONS (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Common stock issued for acquisition | $ 2,500 | $ 9,241 | |
Goodwill acquired | 256,776 | $ 239,553 | 239,408 |
Proceeds from sale of business | 8,429 | 0 | 35,500 |
Severance costs | 1,821 | 2,877 | $ 745 |
Joint Venture [Member] | Park West [Member] | |||
Payments to acquire business | $ 1,200 | ||
Non-controlling interest percenatge | 47.60% | ||
Ownership percentage | 100.00% | 52.40% | |
Advanced Imaging at Timonium [Member] | |||
Proceeds from sale of business | 3,900 | ||
Proceeds in excess of book value | 2,800 | ||
Transfer of fixed assets to new joint venture | 1,100 | ||
Rhode Island Medical Imaging, Inc [Member] | |||
Proceeds from sale of business | 4,500 | ||
Gain on sale of investment | 1,900 | ||
West Valley Imaging Center [Member] | |||
Proceeds from sale of business | 5,900 | ||
Proceeds in excess of book value | 1,800 | ||
Transfer of fixed assets to new joint venture | 3,000 | ||
Oncology practices [Member] | |||
Proceeds from sale of business | 1,200 | ||
Gain on sale of investment | 361 | ||
RadSite, LLC [Member] | |||
Payments to acquire business | 856 | ||
Common stock issued for acquisition | 1,000 | ||
Fixed assets acquired | 91 | ||
Current assets acquired | 25 | ||
Liabilities acquired | 75 | ||
Intangible assets acquired | 150 | ||
Remote Diagnostic Imaging P.L.L.C. [Member] | |||
Consideration transferred | 3,900 | ||
Fixed assets acquired | 2,600 | ||
Goodwill acquired | 1,200 | ||
Intangible assets acquired | 50 | ||
Diagnostic Imaging Associates [Member] | |||
Payments to acquire business | 13,000 | ||
Common stock issued for acquisition | 1,500 | ||
Fixed assets acquired | 3,100 | ||
Current assets acquired | 1,200 | ||
Goodwill acquired | 10,200 | ||
Stockton MRI, Inc [Member] | |||
Consideration transferred | 4,400 | ||
Fixed assets acquired | 1,200 | ||
Goodwill acquired | 3,100 | ||
Intangible assets acquired | 50 | ||
D&D Diagnostics, Inc [Member] | |||
Consideration transferred | 2,400 | ||
Payments to acquire business | 1,200 | ||
Payoff of debt | 1,200 | ||
Fixed assets acquired | 820 | ||
Other assets acquired | 16 | ||
Goodwill acquired | 1,500 | ||
MRI Centers, Inc. [Member] | |||
Consideration transferred | 800 | ||
Payoff of debt | 81 | ||
Fixed assets acquired | 289 | ||
Other assets acquired | 9,800 | ||
Goodwill acquired | 401 | ||
Intangible assets acquired | 100 | ||
Resolution Imaging Medical Corp [Member] | |||
Consideration transferred | 4,000 | ||
Advanced Radiological Imaging - Astoria P.C. [Member] | |||
Consideration transferred | 5,000 | ||
Fixed assets acquired | 3,600 | ||
Other assets acquired | 47 | ||
Goodwill acquired | 1,300 | ||
Intangible assets acquired | 100 | ||
Breastlink Medical [Member] | |||
Proceeds from sale of business | 2,800 | ||
Gain on sale of investment | 845 | ||
Severance costs | $ 1,200 |
5. GOODWILL AND OTHER INTANGI43
5. GOODWILL AND OTHER INTANGIBLE ASSETS (Details - Schedule of Goodwill) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill, beginning balance | $ 239,553 | $ 239,408 |
Goodwill allocated to assets held for sale | (1,126) | |
Goodwill transferred to other assets | (289) | |
Goodwill, ending balance | 256,776 | 239,553 |
Advanced Radiological Imaging [Member] | ||
Goodwill acquired through acquisitions | 1,280 | |
Diagnostic Imaging Group, LLC [Member] | ||
Adjustments to preliminary allocations of purchase price | (47) | |
Landmark Imaging [Member] | ||
Goodwill acquired through acquisitions | $ 38 | |
Resolution Imaging Medical Corp [Member] | ||
Goodwill acquired through acquisitions | 1,901 | |
MRI Centers, Inc. [Member] | ||
Goodwill acquired through acquisitions | 401 | |
Goodwill, ending balance | 401 | |
Santa Monica Imaging Group JV [Member] | ||
Goodwill acquired through acquisitions | (1,901) | |
D&D Diagnostics, Inc [Member] | ||
Goodwill acquired through acquisitions | 1,519 | |
Goodwill, ending balance | 1,500 | |
Stockton MRI, Inc [Member] | ||
Goodwill acquired through acquisitions | 3,101 | |
Goodwill, ending balance | 3,100 | |
Hematology Oncology [Member] | ||
Goodwill acquired through acquisitions | (110) | |
DIA, Inc [Member] | ||
Goodwill acquired through acquisitions | 9,185 | |
Adjustments to preliminary allocations of purchase price | 1,058 | |
Breastlink Medical [Member] | ||
Goodwill acquired through acquisitions | (509) | |
RDI, Inc. [Member] | ||
Goodwill acquired through acquisitions | 1,202 | |
RadSite, LLC [Member] | ||
Goodwill acquired through acquisitions | $ 1,665 |
5. GOODWILL AND OTHER INTANGI44
5. GOODWILL AND OTHER INTANGIBLE ASSETS (Details - Annual Amortization Schedule) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017USD ($) | ||
Amortization year 2018 | $ 2,566 | |
Amortization year 2019 | 2,486 | |
Amortization year 2020 | 2,406 | |
Amortization year 2021 | 2,330 | |
Amortization year 2022 | 2,301 | |
Amortization year thereafter | 28,333 | |
Amortiztion total | 40,422 | |
Management Service Contracts [Member] | ||
Amortization year 2018 | 2,287 | |
Amortization year 2019 | 2,287 | |
Amortization year 2020 | 2,287 | |
Amortization year 2021 | 2,287 | |
Amortization year 2022 | 2,287 | |
Amortization year thereafter | 20,396 | |
Amortiztion total | $ 31,831 | |
Weighted average amortization period remaining in years | 13 years 10 months 24 days | |
Covenant Not To Compete [Member] | ||
Amortization year 2018 | $ 279 | |
Amortization year 2019 | 199 | |
Amortization year 2020 | 119 | |
Amortization year 2021 | 43 | |
Amortization year 2022 | 14 | |
Amortization year thereafter | 0 | |
Amortiztion total | $ 654 | |
Weighted average amortization period remaining in years | 2 years 9 months 18 days | |
Trade Names [Member] | ||
Amortization year 2018 | $ 0 | [1] |
Amortization year 2019 | 0 | [1] |
Amortization year 2020 | 0 | [1] |
Amortization year 2021 | 0 | [1] |
Amortization year 2022 | 0 | [1] |
Amortization year thereafter | 7,937 | [1] |
Amortiztion total | $ 7,937 | [1] |
[1] | These trade name intangibles have an indefinite life |
5. GOODWILL AND OTHER INTANGI45
5. GOODWILL AND OTHER INTANGIBLE ASSETS (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Other intangible assets, gross | $ 57,500 | ||
Accumulated amortization | 25,700 | ||
Amortization expense | 2,600 | $ 2,600 | $ 3,000 |
Goodwill deductible for tax purposes | 110,100 | ||
Noncompete Agreements [Member] | |||
Other intangible assets, gross | 6,400 | ||
Accumulated amortization | 5,800 | ||
Trade Names [Member] | |||
Other intangible assets, gross | 10,200 | ||
Accumulated amortization | 1,500 | ||
Dispositions of intangibles | $ 750 | ||
Management Service Contracts [Member] | |||
Amortization period | 25 years |
6. PROPERTY AND EQUIPMENT (Deta
6. PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Property and equipment, gross | $ 774,078 | $ 778,429 |
Accumulated depreciation | (529,511) | (529,648) |
Property and equipment, net | 244,567 | 248,781 |
Equipment transferred to other assets | (266) | (1,056) |
Property and equipment, net | 244,301 | 247,725 |
Land [Member] | ||
Property and equipment, gross | 250 | 250 |
Medical equipment [Member] | ||
Property and equipment, gross | 380,439 | 393,001 |
Computer and office equipment, furniture and fixtures [Member] | ||
Property and equipment, gross | 96,382 | 99,434 |
Software development costs [Member] | ||
Property and equipment, gross | 6,391 | 6,391 |
Leasehold improvements [Member] | ||
Property and equipment, gross | 273,436 | 252,595 |
Equipment under capital lease [Member] | ||
Property and equipment, gross | $ 17,180 | $ 26,758 |
6. PROPERTY AND EQUIPMENT (De47
6. PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation and amortization expense | $ 64,200 | $ 64,000 | $ 57,600 |
7. ACCOUNTS PAYABLE AND ACCRU48
7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Payables and Accruals [Abstract] | ||
Accounts payable | $ 28,538 | $ 40,952 |
Accrued expenses | 67,298 | 36,993 |
Accrued salary and benefits | 30,670 | 25,009 |
Accrued professional fees | 9,303 | 8,212 |
Accounts payable and accrued expenses | $ 135,809 | $ 111,166 |
8. NOTES PAYABLE, REVOLVING C49
8. NOTES PAYABLE, REVOLVING CREDIT FACILITY AND CAPITAL LEASES (Details - Schedule of debt) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Discounts on term loan and notes | $ (18,470) | $ (16,783) |
Promissory notes payable | 592 | 980 |
Equipment notes payable | 195 | 341 |
Obligations under capital leases | 6,538 | 7,256 |
Total notes payable, line of credit and capital lease obligations | 609,127 | 638,732 |
Less: current portion | (34,090) | (26,557) |
Total notes payable, line of credit and capital lease obligations, long-term | 575,037 | 612,175 |
First Lien Term Loan [Member] | ||
Term loans | 620,272 | 478,938 |
Second Lien Term Loans [Member] | ||
Term loans | $ 0 | $ 168,000 |
8. NOTES PAYABLE, REVOLVING C50
8. NOTES PAYABLE, REVOLVING CREDIT FACILITY AND CAPITAL LEASES (Details - Annual note payable maturities) $ in Thousands | Dec. 31, 2017USD ($) |
Debt Disclosure [Abstract] | |
2,018 | $ 33,582 |
2,019 | 33,357 |
2,020 | 33,092 |
2,021 | 33,081 |
2,022 | 33,081 |
Thereafter | 454,866 |
Total notes payable obligations | $ 621,059 |
8. NOTES PAYABLE, REVOLVING C51
8. NOTES PAYABLE, REVOLVING CREDIT FACILITY AND CAPITAL LEASES (Details - Minimum capital lease payments) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Debt Disclosure [Abstract] | ||
2,018 | $ 4,080 | |
2,019 | 2,276 | |
2,020 | 282 | |
2,021 | 162 | |
2,022 | 60 | |
Thereafter | 0 | |
Total minimum payments | 6,860 | |
Amount representing interest | (322) | |
Present value of net minimum lease payments | 6,538 | |
Less current portion | (3,866) | $ (4,526) |
Long-term portion lease obligations | $ 2,672 | $ 2,730 |
8. NOTES PAYABLE, REVOLVING C52
8. NOTES PAYABLE, REVOLVING CREDIT FACILITY AND CAPITAL LEASES (Details - Term Loans) - First Lien Term Loans [Member] $ in Thousands | Dec. 31, 2017USD ($) |
Term loans face value | $ 620,272 |
Term loans discount | (18,470) |
Term loan carrying value | $ 601,802 |
8. NOTES PAYABLE, REVOLVING C53
8. NOTES PAYABLE, REVOLVING CREDIT FACILITY AND CAPITAL LEASES (Details Narrative) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Total credit facilities outstanding | $ 0 |
Total line of credit available | $ 117,500 |
Equipment Note [Member] | |
Debt maturity date | Dec. 31, 2020 |
Debt interest rate range | 3.3% to 5.6% |
Obligations under Capital Lease [Member] | |
Debt maturity date | Dec. 31, 2022 |
Debt interest rate range | 4.3% to 11.2% |
Promissory Note [Member] | |
Debt interest rate | 1.50% |
Debt maturity date | Dec. 31, 2019 |
Fourth Amendment to First Lien [Member] | |
Discount on debt | $ 543,000 |
First Lien Credit Agreement [Member] | Term Loan [Member] | |
Debt maturity date | Sep. 25, 2020 |
Debt face amount | $ 485,000 |
Interest rate description | Adjusted Eurodollar Rate (as defined in the First Lien Credit Agreement) plus 3.75% per annum or (b) the Base Rate (as defined in the First Lien Credit Agreement) plus 2.75% per annum. |
Debt periodic payment frequency | quarterly |
Debt periodic payment | $ 6,100 |
Payment on debt | 6,200 |
First Lien Credit Agreement [Member] | Revolving Credit Facility [Member] | |
Total line of credit available | $ 117,500 |
Debt maturity date | Jul. 1, 2021 |
Interest rate description | Adjusted Eurodollar Rate revolving loans and fronting fees accrue at 0.25% per annum, in each case on the average aggregate daily maximum amount available to be drawn under all letters of credit issued under the First Lien Credit Agreement. In addition a commitment fee of 0.5% per annum accrues on the unused revolver commitments under the Revolving Credit Facility. |
Second Lien Credit Agreement [Member] | Term Loan [Member] | |
Debt maturity date | Mar. 25, 2021 |
Debt face amount | $ 180,000 |
Effective interest rate | 7.00% |
9. COMMITMENTS AND CONTINGENC54
9. COMMITMENTS AND CONTINGENCIES (Details - Operating leases) $ in Thousands | Dec. 31, 2017USD ($) |
2,018 | $ 68,458 |
2,019 | 60,127 |
2,020 | 51,073 |
2,021 | 42,075 |
2,022 | 31,954 |
Thereafter | 105,955 |
Total operating lease payments | 359,642 |
Medical equipment [Member] | |
2,018 | 9,551 |
2,019 | 8,950 |
2,020 | 7,836 |
2,021 | 5,986 |
2,022 | 3,667 |
Thereafter | 3,118 |
Total operating lease payments | 39,108 |
Facilities [Member] | |
2,018 | 58,907 |
2,019 | 51,177 |
2,020 | 43,237 |
2,021 | 36,089 |
2,022 | 28,287 |
Thereafter | 102,837 |
Total operating lease payments | $ 320,534 |
9. COMMITMENTS AND CONTINGENC55
9. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Rent expense | $ 67,200 | $ 74,200 | $ 71,700 |
10. INCOME TAXES (Details - Inc
10. INCOME TAXES (Details - Income tax expense) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||||||||||
Federal current tax | $ 871 | $ 88 | $ 237 | ||||||||
State current tax | 4,906 | 914 | 1,705 | ||||||||
Other current tax | 23 | 28 | 28 | ||||||||
Federal deferred tax | 21,389 | 2,539 | 3,625 | ||||||||
State deferred tax | (2,879) | 863 | 412 | ||||||||
Income tax expense (benefit) | $ 20,133 | $ 1,112 | $ 3,523 | $ (458) | $ 1,901 | $ 1,458 | $ 2,253 | $ (1,180) | $ 24,310 | $ 4,432 | $ 6,007 |
10. INCOME TAXES (Details - Rec
10. INCOME TAXES (Details - Reconciliation of the statutory U.S. federal rate and effective rates) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||||||||||
Federal tax | $ 8,971 | $ 4,229 | $ 4,979 | ||||||||
State franchise tax, net of federal benefit | 1,799 | 224 | 1,245 | ||||||||
Other Non deductible expenses | 91 | (11) | (1) | ||||||||
Changes in valuation allowance | (1,045) | 585 | (2,536) | ||||||||
Tax Cuts and Jobs Act | 13,527 | 0 | 0 | ||||||||
Deferred true-ups and other | (194) | (3,142) | 1,964 | ||||||||
Other reconciling items | 1,161 | 2,547 | 356 | ||||||||
Income tax expense (benefit) | $ 20,133 | $ 1,112 | $ 3,523 | $ (458) | $ 1,901 | $ 1,458 | $ 2,253 | $ (1,180) | $ 24,310 | $ 4,432 | $ 6,007 |
Federal tax | 34.00% | 34.00% | 34.00% | ||||||||
State franchise tax, net of federal benefit | 6.82% | 1.80% | 8.50% | ||||||||
Other Non deductible expenses | 0.35% | (0.09%) | (0.01%) | ||||||||
Changes in valuation allowance | (3.96%) | 4.70% | (17.32%) | ||||||||
Tax Cuts and Jobs Act | 51.27% | 0.00% | 0.00% | ||||||||
Deferred true-ups and other | (0.74%) | (25.25%) | 13.41% | ||||||||
Other reconciling items | 4.39% | 20.47% | 2.43% | ||||||||
Income tax expense (benefit) | 92.13% | 35.64% | 41.02% |
10. INCOME TAXES (Details - Def
10. INCOME TAXES (Details - Deferred tax assets and liabilities) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets: | ||
Net operating losses | $ 47,212 | $ 84,509 |
Accrued expenses | 3,242 | 4,400 |
Straight-Line rent adjustment | 7,749 | 10,750 |
Unfavorable contract liability | 1,288 | 2,114 |
Equity compensation | 871 | 950 |
Allowance for doubtful accounts | 8,720 | 6,033 |
Other | 2,504 | 1,357 |
Valuation allowance | (4,049) | (4,428) |
Total Deferred Tax Assets | 67,537 | 105,685 |
Deferred tax liabilities: | ||
Property and equipment | (373) | (6,994) |
Goodwill | (17,568) | (23,350) |
Intangibles | (7,839) | (12,066) |
Non accrual experience method reserve | (2,778) | (8,483) |
Other | (8,127) | (4,436) |
Total Deferred Tax Liabilities | (36,685) | (55,329) |
Net Deferred Tax Asset | $ 30,852 | $ 50,356 |
10. INCOME TAXES (Details - Unr
10. INCOME TAXES (Details - Unrecognized tax benefit) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
Unrecognized tax benefit, Balance at beginning of year | $ 3,861 | $ 94 | $ 3,761 |
Increases related to prior year tax positions | 1 | 3,861 | |
(Decreases) related to prior year tax positions | (3,667) | ||
Expiration of the statute of limitations for the assessment of taxes | 0 | (94) | 0 |
Decrease related to change in rate | (247) | ||
Unrecognized tax benefit, Balance at end of year | $ 3,615 | $ 3,861 | $ 94 |
10. INCOME TAXES (Details Narra
10. INCOME TAXES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Unrecognized tax benefits | $ 3,615 | $ 3,861 | $ 94 | $ 3,761 |
U.S. federal corporate tax rate | 21.00% | |||
Income tax expense from continuing operations | $ 13,600 | |||
Remeasurement of its net deferred tax assets | $ 13,500 | |||
U.S. income tax at a rate | 15.50% | |||
Other net current assets on remaining earnings | 8.00% | |||
OneTimeTransitionalTaxLiability | $ 100 | |||
Federal [Member] | ||||
Net operating loss carryforward | $ 191,600 | |||
Operating loss ending expiration date | Dec. 31, 2034 | |||
California [Member] | ||||
Net operating loss carryforward | $ 132,300 | |||
Operating loss ending expiration date | Dec. 31, 2037 |
11. STOCK-BASED COMPENSATION (D
11. STOCK-BASED COMPENSATION (Details-Outstanding options and warrants) - Options [Member] $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($)$ / sharesshares | |
STOCK BASED COMPENSATION | |
Begining Balance | shares | 375,626 |
Granted | shares | 209,523 |
Exercised | shares | 0 |
Canceled, forfeited or expired | shares | (165,000) |
Ending Balance | shares | 420,149 |
Exercisable at the end | shares | 43,334 |
Weighted Average Exercise price Per Common Share | |
Begining Balance | $ / shares | $ 6.82 |
Granted | $ / shares | 6.95 |
Exercised | $ / shares | 0 |
Canceled, forfeited or expired | $ / shares | 8.83 |
Ending Balance | $ / shares | 6.10 |
Exercisable at the end | $ / shares | $ 2.27 |
Weighted Average Remaining Contractual Life | |
Ending Balance | 7 years 8 months 26 days |
Exercisable at the end | 11 months 19 days |
Aggregate Intrinsic Value | |
Aggregate value outstanding | $ | $ 1,722,210 |
Aggregate value exercisable | $ | $ 339,503 |
11. STOCK-BASED COMPENSATION 62
11. STOCK-BASED COMPENSATION (Details - RSU's) - Restricted Stock Awards [Member] | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
RSA's outstanding, beginning balance | shares | 573,145 |
RSA's granted | shares | 681,448 |
RSA's vested | shares | (807,242) |
RSA's outstanding, ending balance | shares | 447,351 |
Weighted-Average Remaining Contractual Term | 3 months 25 days |
Weighted-average fair value, beginning balance | $ 6.18 |
Weighted-average fair value, granted | 5.98 |
Weighted-average fair value, vested | 6.02 |
Weighted-average fair value, forfeited | 0 |
Weighted-average fair value, ending balance | $ 6.17 |
11. STOCK-BASED COMPENSATION 63
11. STOCK-BASED COMPENSATION (Details Narrative) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($)shares | |
Unrecognized stock-based compensation expense | $ | $ 842,343 |
Unrecognized expense weighted average period | 2 years 7 months 6 days |
Restated Plan [Member] | |
Shares authorized | 14,000,000 |
Shares available for future issuance, options, warrants, shares of restricted stock and other bonus awards | 4,003,903 |
Awards issued to date | 13,195,159 |
Options cancelled | 3,140,009 |
RSA's forfeited | 59,053 |
Restricted Stock Awards [Member] | |
Awards issued to date | 4,945,460 |
RSA's unvested | 447,351 |
Future Service [Member] | |
Options granted | 35,800 |
Compensation expense | $ | $ 361,370 |
12. EMPLOYEE BENEFIT PLAN (Deta
12. EMPLOYEE BENEFIT PLAN (Details Narrative) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Employee Benefit Plan Details Narrative | |
Matching contribution | matching contribution in the amount to a maximum of 1.0% per 4.0% of employee contribution |
Expected employee contribution | $ 2,500 |
13. QUARTERLY RESULTS OF OPER65
13. QUARTERLY RESULTS OF OPERATIONS (unaudited) (Details-Statements of Operations) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Net revenue | $ 235,552 | $ 227,607 | $ 230,014 | $ 229,013 | $ 224,939 | $ 224,643 | $ 218,565 | $ 216,388 | $ 922,186 | $ 884,535 | $ 809,628 |
Total operating expenses | 217,252 | 216,765 | 215,853 | 222,266 | 209,971 | 212,192 | 210,487 | 213,405 | 872,136 | 846,055 | 770,511 |
Total other expenses | 9,889 | 9,328 | 8,009 | 9,993 | 10,641 | 11,578 | 5,717 | 7,875 | 10,111 | 16,277 | 15,545 |
Equity in earnings of joint ventures | (5,182) | (3,450) | (2,994) | (1,928) | (1,638) | (2,576) | (3,274) | (2,279) | (13,554) | (9,767) | (8,927) |
Benefit from (provision for) income taxes | (20,133) | (1,112) | (3,523) | 458 | (1,901) | (1,458) | (2,253) | 1,180 | (24,310) | (4,432) | (6,007) |
Net (loss) income | (6,540) | 3,852 | 5,623 | (860) | 4,064 | 1,991 | 3,382 | (1,433) | 2,075 | 8,004 | 8,638 |
Net income (loss) attributable to noncontrolling intersts | 736 | 623 | 313 | 350 | 383 | 344 | (243) | 290 | 2,022 | 774 | 929 |
Net (loss) income attributable to Radnet, Inc. common stockholders | $ (7,276) | $ 3,229 | $ 5,310 | $ (1,210) | $ 3,681 | $ 1,647 | $ 3,625 | $ (1,723) | $ 53 | $ 7,230 | $ 7,709 |
Basic net (loss) income attributable to Radnet, Inc. common stockholders (loss) earnings per share: | $ (0.15) | $ 0.07 | $ 0.11 | $ (0.03) | $ 0.08 | $ 0.04 | $ 0.08 | $ (0.04) | $ 0 | $ 0.16 | $ 0.18 |
Diluted net (loss) income attributable to Radnet, Inc. common stockholders (loss) earnings per share: | $ (0.15) | $ 0.07 | $ 0.11 | $ (0.03) | $ 0.08 | $ 0.04 | $ 0.08 | $ (0.04) | $ 0 | $ 0.15 | $ 0.17 |
Weighted average shares outstanding - basic | 47,237 | 46,954 | 46,756 | 46,560 | 45,967 | 45,869 | 46,559 | 46,581 | 46,880,775 | 46,244,188 | 43,805,794 |
Weighted average shares outstanding - Diluted (in shares) | 47,886 | 47,578 | 47,196 | 46,560 | 46,389 | 46,334 | 46,882 | 46,581 | 47,401,921 | 46,655,032 | 45,171,372 |
14. RELATED PARTY TRANSACTIONS
14. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Related Party Transactions [Abstract] | ||
Delivery services paid to related party | $ 670 | $ 693 |
Due to related party | $ 273 |