updated 11/9/2010 6:15:58 AM ET 2010-11-09T11:15:58

  • Revenue for the quarter was $140.1 million, RadNet's highest revenue quarter in its history; Revenue increased 5.0% over last year's third quarter

  • Compared with the second quarter of 2010, Revenue and Adjusted EBITDA(1) increased 0.8% and 2.2%, respectively

  • Aggregate procedural volumes increased 4.7% over the prior year's quarter and 0.4% compared with the second quarter of 2010

  • RadNet's per share Net Loss narrowed to $(0.01) for the quarter, compared with a per share loss of $(0.05) in the prior year's quarter

  • Excluding non-cash losses from our interest rate swaps, disposal of equipment and stock compensation expense, RadNet would have reported Net Income of $1.8 million, or $0.05 per fully diluted share, compared with a Net Loss of $(943,000), or $(0.03) per share, in the third quarter of 2009

  • As of the end of the third quarter, total availability of capital was approximately $200 million, inclusive of $24.5 million of cash balance, $100 million available revolving credit facility and the $75 million accordion feature of our senior secured loans

  • Adjusted EBITDA(1) was $28.0 million, an increase of 9.8% over the prior year's quarter

  • Adjusted EBITDA(1) margin increased to 20.0% as compared with Adjusted EBITDA(1) margins of 19.1% from the prior year's third quarter and 19.7 % from the second quarter of 2010

LOS ANGELES, Nov. 9, 2010 (GLOBE NEWSWIRE) -- RadNet, Inc. (Nasdaq:RDNT), a national leader in providing high-quality, cost-effective, fixed-site outpatient diagnostic imaging services through a network of 192 fully-owned and operated outpatient imaging centers, today reported financial results, including record revenues, for its third quarter of 2010.

Dr. Howard Berger, President and Chief Executive Officer of RadNet, commented, "We continue to improve our financial and operating performance. Our Revenue, Adjusted EBITDA(1) and aggregate procedural volumes not only increased from last year's third quarter, but also illustrated sequential improvement when compared with the first and second quarters of this year. Based upon annualizing the financial results of our last two quarters, we are on a very strong run-rate as we approach the end of this year and the beginning of 2011. We are further encouraged by preliminary procedural volume reports we have reviewed from October, which suggest that our momentum is carrying strongly into the fourth quarter."

Dr. Berger continued, "We are continuing to find ways to improve the efficiency of our general operating activities and maintain growth, despite industry statistics reporting a decrease in physician office visits and a difficult economy in 2010. As a result, we were able to improve our Adjusted EBITDA(1) margins in the quarter. I believe that this positions us for significant financial improvement when a more normalized utilization of healthcare services returns. Additionally, we believe that the strength of our unique operating model and scale will further distance ourselves from competitors, many of whom are struggling from the lower utilization levels in healthcare."

"More recently, we focused on expanding the scope of our business activities within the radiology industry. We endeavor to become a more diversified provider to the radiology industry, broadening our revenue streams beyond that which are derived from owning and operating imaging facilities. Most recently, this is illustrated by our acquisition of eRAD, a provider of Picture Archiving and Communications Systems (PACS) to the industry. We are pursuing further opportunities which we believe will result in our ability to offer certain core competencies of ours to hospitals, imaging centers and other participants in our industry. We also expect that, as compared with our core business of owning and operating outpatient medical imaging centers, these newer product and service offerings will require less ongoing capital investment," added Dr. Berger.

Third Quarter Financial Results

For the third quarter of 2010, RadNet reported Revenue, Adjusted EBITDA(1) and Net Loss of $140.1 million, $28.0 million and $(285,000), respectively. Revenue increased $6.7 million (or 5.0%), Adjusted EBITDA(1) increased $2.5 million (or 9.8%) and Net Loss decreased $1.4 million over the third quarter of 2009. On a sequential basis, compared with the first and second quarters of 2010, Revenue increased $15.9 million (or 12.8%) and $1.1 million (or 0.8%), respectively.  On a sequential basis, compared with the first and second quarter of 2010, Adjusted EBITDA(1) increased $7.5 million (or 36.7%) and $0.6 million (or 2.2%), respectively. 

Net Loss for the third quarter was $(0.01) per share, compared with a Net Loss of $(0.05) per share in the third quarter of 2009 (based upon a weighted average number of fully diluted shares outstanding of 37.0 million and 36.1 million for these periods in 2010 and 2009, respectively). Excluding non-cash losses and expenses from the mark-to-market of our interest rate swaps of $821,000, disposal of equipment of $451,000 and stock compensation of $793,000, RadNet would have reported Net Income of $1.8 million, or $0.05 per fully diluted share, for the third quarter of 2010 compared with a Net Loss of $(943,000), or $(0.03) per share, for 2009 excluding those same non-cash losses and expenses.

In addition to the losses on interest rate swaps, disposal of equipment and stock compensation expense, affecting Net Loss in the third quarter of 2010 were certain other non-cash expenses and non-recurring items, including $164,000 of severance paid in connection with employee reductions related to cost savings initiatives and $710,000 of non-cash Deferred Financing Expense related to the amortization of financing fees paid as part of our new credit facilities and senior unsecured notes.

For the third quarter of 2010, as compared with the prior year's third quarter, MRI volume increased 6.9%, CT volume increased 1.0% and PET/CT volume decreased 7.3%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 4.7% over the prior year's third quarter.  On a same-center basis, including only those centers which were part of RadNet for both the third quarters of 2010 and 2009, MRI volume decreased 1.8%, CT volume decreased 8.2% and PET/CT volume decreased 10.1%. Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, decreased 3.3% over the prior year's same quarter.

Nine Month Financial Results

For the nine months ended September 30, 2010, RadNet reported Revenue, Adjusted EBITDA(1) and Net Loss of $403.2 million, $76.0 million and $(16.2) million, respectively. Revenue increased $10.7 million (or 2.7%), Adjusted EBITDA(1) decreased $2.9 million (or 3.6%) and Net Loss increased $13.2 million, respectively, over the first nine months of 2009.  Net Loss for the nine month period ended September 30, 2010 was $(0.44) per share, compared with a Net Loss of $(0.08) per share in corresponding nine month period of 2009 (based upon a weighted average number of fully diluted shares outstanding of 36.8 million and 36.0 million for these periods in 2010 and 2009, respectively).

Affecting Net Loss in the first nine months of 2010 were certain non-cash expenses and non-recurring items, including: $9.9 million loss on extinguishment of debt related to the write-off of deferred financing fees associated with our refinanced credit facilities; $2.0 million non-cash loss on the fair value adjustments and related amortization of interest rate swaps associated with the Company's credit facilities, $2.8 million of non-cash employee stock compensation expense resulting from the vesting of certain options and warrants; $731,000 of severance paid in connection with employee reductions; $606,000 loss on the disposal of certain capital equipment; and $2.1 million of non-cash Deferred Financing Expense related to the amortization of financing fees paid as part of our new credit facilities and senior unsecured notes. The aggregate affect of these items totaled $(0.44) per share during the nine month period.

Conference Call for Today

Dr. Howard Berger, President and Chief Executive Officer, and Mark Stolper, Executive Vice President and Chief Financial Officer, will host a conference call today at 10:30 a.m. Eastern Standard Time.  During the call, management will discuss the Company's 2010 third quarter financial results.

Conference Call Details:

Date: Tuesday, November 9, 2010

Time: 10:30 a.m. EST

Dial In-Number: 1-888-539-3679

International Dial-In Number: 1-719-457-2621

It is recommended that participants dial in approximately five to ten minutes prior to the start of the 10:30 a.m. call.  A telephonic replay of the conference call may be accessed approximately two hours after the call through November 16, 2010, by dialing 1-877-870-5176 or 1-858-384-5517 for international callers and entering the replay access code 5662954.

There will also be a simultaneous live webcast of the conference call which can be accessed under "News" in the RadNet Investor Relations section of the company website at www.radnet.com or you may use the link audio feed and archived recording of the conference call available at http://viavid.net/dce.aspx?sid=00007D0B.

Regulation G: GAAP and Non-GAAP Financial Information

This release contains certain financial information not reported in accordance with GAAP. The Company uses both GAAP and non-GAAP metrics to measure its financial results.  The Company believes that, in addition to GAAP metrics, these non-GAAP metrics assist the Company in measuring its cash-based performance.  The Company believes this information is useful to investors and other interested parties because it removes unusual and nonrecurring charges that occur in the affected period and provides a basis for measuring the Company's financial condition against other quarters.  Such information should not be considered as a substitute for any measures calculated in accordance with GAAP, and may not be comparable to other similarly titled measures of other companies.  Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.  Reconciliation of this information to the most comparable GAAP measures is included in this release in the tables which follow.

About RadNet, Inc.

RadNet, Inc. is a national market leader providing high-quality, cost-effective diagnostic imaging services through a network of 192 fully-owned and operated outpatient imaging centers.  RadNet's core markets include California, Maryland, Delaware, New Jersey and New York.  Together with affiliated radiologists, and inclusive of full-time and per diem employees and technicians, RadNet has a total of approximately 4,300 employees.  For more information, visit http://www.radnet.com.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Specifically, statements concerning successfully integrating acquired operations, successfully achieving 2010 financial guidance, achieving cost savings, successfully developing and integrating new lines of business, continuing to grow its business by generating patient referrals and contracts with radiology practices, and receiving third-party reimbursement for diagnostic imaging services, are forward-looking statements within the meaning of the Safe Harbor. Forward-looking statements are based on management's current, preliminary expectations and are subject to risks and uncertainties, which may cause the Company's actual results to differ materially from the statements contained herein. Further information on potential risk factors that could affect RadNet's business and its financial results are detailed in its most recent Annual Report on Form 10-K, as filed with the Securities and Exchange Commission. Undue reliance should not be placed on forward-looking statements, especially guidance on future financial performance, which speaks only as of the date they are made. RadNet undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made, or to reflect the occurrence of unanticipated events.

 

Footnotes

(1) The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, each from continuing operations and excludes losses or gains on the disposal of equipment, other income or loss, loss on debt extinguishments, bargain purchase gains and non-cash equity compensation. Adjusted EBITDA includes equity earnings in unconsolidated operations and subtracts allocations of earnings to non-controlling interests in subsidiaries, and is adjusted for non-cash or extraordinary and one-time events taken place during the period.

Adjusted EBITDA is reconciled to its nearest comparable GAAP financial measure. Adjusted EBITDA is a non-GAAP financial measure used as analytical indicator by RadNet management and the healthcare industry to assess business performance, and is a measure of leverage capacity and ability to service debt. Adjusted EBITDA should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA should not be considered in isolation or as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As Adjusted EBITDA is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies.

(2) As noted above, the Company defines Free Cash Flow as Adjusted EBITDA less total Capital Expenditures (whether completed with cash or financed) and Cash Interest paid. Free Cash Flow is a non-GAAP financial measure. The Company uses Free Cash Flow because the Company believes it provides useful information for investors and management because it measures our capacity to generate cash from our operating activities. Free Cash Flow does not represent total cash flow since it does not include the cash flows generated by or used in financing activities. In addition, our definition of Free Cash Flow may differ from definitions used by other companies.

Free Cash Flow should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA should not be considered in isolation or as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As Adjusted EBITDA is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies.

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