RadNet Reports Third Quarter Financial Results
- Service Fee Revenue, net of contractual allowances and discounts ("Revenue") was $167.0 million, an increase of 12.4% from $148.6 million in the third quarter of 2011
- Adjusted EBITDA(1) was $28.6 million, an increase of 6.0% from $27.0 million in the prior year's third quarter; RadNet's trailing twelve month Adjusted EBITDA(1) rises to $121.4 million
- RadNet reports diluted per share Net Income of $0.13 compared to diluted per share Net Income of $0.00 in the prior year's third quarter
- Aggregate procedural volumes increased 10.2% as compared with the third quarter of 2011
LOS ANGELES, Nov. 9, 2012 (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 236 owned and/or operated outpatient imaging centers (inclusive of 21 facilities held in Joint Ventures), today reported financial results for its third quarter of 2012.
Third Quarter Financial Results
For the third quarter of 2012, RadNet reported Revenue, Adjusted EBITDA(1) and Net Income Attributable to RadNet, Inc. Common Stockholders ("Net Income") of $167.0 million, $28.6 million and $5.1 million, respectively. Revenue increased $18.4 million (or 12.4%), Adjusted EBITDA(1) increased $1.6 million (or 6.0%) and Net Income increased $5.0 million over the third quarter of 2011. Net Income for the third quarter was $0.13 per diluted share, compared to a Net Income of $0.00 per diluted share in the third quarter of 2011 (based upon a weighted average number of diluted shares outstanding of 39.9 million and 38.5 million for these periods in 2012 and 2011, respectively). Excluding a $2.8 million gain in the third quarter of 2012 from the de-consolidation of a joint venture, net income increased from $0.00 per share in the third quarter of 2011 to $0.06 per share in the third quarter of 2012.
Affecting operating results in the third quarter of 2012 were certain non-cash expenses and non-recurring items including: $2.8 million gain from the de-consolidation of a joint venture, $433,000 of non-cash employee stock compensation expense resulting from the vesting of certain options, warrants and restricted stock; $66,000 of severance paid in connection with headcount reductions related to cost savings initiatives from previously announced acquisitions; $45,000 gain on the disposal of certain capital equipment; $767,000 of non-cash Deferred Financing Expense related to the amortization of financing fees paid as part of our existing credit facilities; and $1.2 million fair value gain from our interest rate swaps, net of the amortization of an Accumulated Comprehensive Loss existing prior to April 6, 2010.
For the third quarter of 2012, as compared to the prior year's third quarter, MRI volume increased 16.0%, CT volume increased 15.3% and PET/CT volume increased 15.9%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 10.2% 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 2012 and 2011, MRI volume increased 2.7%, CT volume was flat and PET/CT volume decreased 0.1%. Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, decreased 2.2% over the prior year's same quarter.
Dr. Howard Berger, President and Chief Executive Officer of RadNet, commented "Our business remains steady and continues to consistently perform in a difficult economic environment. During the third quarter, we drove significant increases in Revenue, Adjusted EBITDA(1) and Net Income. In particular, we achieved Net Income of $5 million in the quarter as compared to a breakeven quarter last year."
Dr. Berger continued, "Furthermore, during the third quarter of 2012, we had 63 business days of operation compared with 64 work days during last year's third quarter. Our metrics have always been very sensitive to the number of business days of operation in the calendar quarters. While our same center volumes and revenue on a per day basis were very consistent with last year's third quarter, having one less business day of operation this quarter affected these metrics by an estimated 1.5% in aggregate for the quarter. The impact on the quarter's Adjusted EBITDA(1) from this issue is even more pronounced since many of our costs are fixed. Fortunately, this phenomena reverses in the fourth quarter of this year, where we have one additional business day as compared with the fourth quarter of 2011."
Dr. Berger continued, "Shortly after the close of the third quarter, on October 10th, we completed a very successful refinancing of our senior term loan and revolving credit facility. Not only were we able to slightly reduce the cost of these facilities and push-out their maturities until 2017 and 2018, but the credit agreement provides us with materially more flexibility to continue to grow our business into the future. The refinancing further positions us to remain the principal consolidator in our markets, while allowing us to drive strong free cash flow to further grow and to deleverage our balance sheet. The combination of the lower cost of our new facilities along with the expiration of our interest rate swaps in less than a week should provide us with over $7 million of additional free cash flow in 2013 relative to 2012."
Nine Month Financial Results
For the nine months ended September 30, 2012, RadNet reported Revenue, Adjusted EBITDA(1) and Net Income of $507.3 million, $89.1 million and $7.9 million, respectively. Revenue increased $61.2 million (or 13.7%), Adjusted EBITDA(1) increased $5.9 million (or 7.1%) and Net Income increased $5.2 million over the first nine months of 2011. Net Income for the nine month period ended September 30, 2012 was $0.20 per diluted share, compared to Net Income of $0.07 per diluted share in corresponding nine month period of 2011 (based upon a weighted average number of fully diluted shares outstanding of 39.2 million and 39.1 million for these periods in 2012 and 2011, respectively).
Affecting operating results in the first nine months of 2012 were certain non-cash expenses and non-recurring items including: $2.8 million gain from the de-consolidation of a joint venture, $2.1 million of non-cash employee stock compensation expense resulting from the vesting of certain options, warrants and restricted stock; $678,000 of severance paid in connection with headcount reductions related to cost savings initiatives from previously announced acquisitions; $255,000 loss on the disposal of certain capital equipment; $2.3 million of non-cash Deferred Financing Expense related to the amortization of financing fees paid as part of our existing credit facilities; and $3.4 million fair value gain from our interest rate swaps, net of the amortization of an Accumulated Comprehensive Loss existing prior to April 6, 2010.
Dr. Berger added, "Hurricane Sandy has had an impact on the lives of millions of Americans. We are pleased to report that all of our East Coast operations are now back online. During the storm and for many days after it, our business suffered from site closures, loss of power and the disruption of normal patient flows because of difficult travel conditions for patients and the impact that the storm had on our referring physician communities. We continue to assess the effects of Hurricane Sandy on our Eastern operations and are hopeful that the extra business day in this year's fourth quarter along with the potential for insurance proceeds will help to soften the impact. Regardless of Sandy's ultimate impact on our business, it should be recognized that the effects are one-time and non-recurring in nature. Our operations teams have responded wonderfully, causing our facilities to be some of the first medical operations to return to normalcy in their respective local healthcare communities."
Dr. Berger continued, "Many RadNet employees were personally affected by the trauma of the storm, including those who are facing extensive personal property damage and disruption in their daily living conditions. I am very proud that our other employees, including many RadNet employees in California, have responded by making significant financial donations (which were matched by RadNet) that are earmarked to assist those affected members of the RadNet family. Our hearts and prayers go out to those RadNet team members and their families who were affected by the storm."
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 to discuss its second quarter 2012 results on Friday, November 9th, 2011 at 7:30 a.m. Pacific Time (10:30 a.m. Eastern Daylight Time).
Conference Call Details:
Date: Friday, November 9, 2012
Time: 10:30 a.m. Eastern Time
Dial In-Number: 888-265-9075
International Dial-In Number: 913-312-0859
It is recommended that participants dial in approximately 5 to 10 minutes prior to the start of the 10:30 a.m. call. An archived replay of the call will also be available and can be accessed by dialing 877-870-5176 from the U.S., or 858-384-5517 for international callers, and using the passcode 6493675.
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 http://www.radnet.com/ or you may use the link audio feed and archived recording of the conference call available at http://public.viavid.com/index.php?id=102365.
Regulation G: GAAP and Non-GAAP Financial Information
This release contains certain financial information not reported in accordance with GAAP. The Company uses both GAAP and non-GAAP metrics to measure its financial results. The Company believes that, in addition to GAAP metrics, these non-GAAP metrics assist the Company in measuring its cash-based performance. The Company believes this information is useful to investors and other interested parties because it removes unusual and nonrecurring charges that occur in the affected period and provides a basis for measuring the Company's financial condition against other quarters. Such information should not be considered as a substitute for any measures calculated in accordance with GAAP, and may not be comparable to other similarly titled measures of other companies. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Reconciliation of this information to the most comparable GAAP measures is included in this release in the tables which follow.
About RadNet, Inc.
RadNet, Inc. is the largest national provider of high-quality, cost-effective fixed-site diagnostic imaging services in the United States through a network of 236 owned and/or operated outpatient imaging centers (inclusive of 21 facilities held in Joint Ventures). RadNet's core markets include California, Maryland, Delaware, New Jersey, New York and Rhode Island. Together with affiliated radiologists, and inclusive of full-time and per diem employees and technicians, RadNet has a total of approximately 6,300 employees. For more information, visit http://www.radnet.com.
The RadNet, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7212
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 2012 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.
|RADNET, INC. AND SUBSIDIARIES|
|CONDENSED CONSOLIDATED BALANCE SHEETS|
|(IN THOUSANDS EXCEPT SHARE DATA)|
|September 30,||December 31,|
|Cash and cash equivalents||$ 388||$ 2,455|
|Accounts receivable, net||128,637||128,432|
|Asset held for sale||--||2,300|
|Prepaid expenses and other current assets||20,243||19,140|
|Total current assets||149,268||152,327|
|PROPERTY AND EQUIPMENT, NET||208,040||215,527|
|Other intangible assets||52,800||53,105|
|Deferred financing costs, net||11,181||13,490|
|Investment in joint ventures||26,582||22,326|
|Deposits and other||3,029||2,906|
|Total assets||$ 625,008||$ 619,188|
|LIABILITIES AND EQUITY DEFICIT|
|Accounts payable, accrued expenses and other||$ 102,784||$ 103,101|
|Due to affiliates||3,196||3,762|
|Current portion of notes payable||6,017||6,608|
|Current portion of deferred rent||1,078||999|
|Current portion of obligations under capital leases||3,709||6,834|
|Total current liabilities||117,932||122,380|
|Deferred rent, net of current portion||15,318||12,407|
|Line of credit||59,800||58,000|
|Notes payable, net of current portion||479,962||484,046|
|Obligations under capital lease, net of current portion||1,789||3,338|
|Other non-current liabilities||9,179||8,547|
|Common stock -- $.0001 par value, 200,000,000 shares authorized; 38,340,482, and 37,426,460 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively||4||4|
|Accumulated other comprehensive loss||(57)||(946)|
|Total RadNet, Inc.'s equity deficit||(59,957)||(70,756)|
|Total equity deficit||(59,249)||(69,807)|
|Total liabilities and equity deficit||$ 625,008||$ 619,188|
|RADNET, INC. AND SUBSIDIARIES|
|CONDENSED CONSOLIDATED STATEMENTS OF INCOME|
|(IN THOUSANDS EXCEPT SHARE DATA)|
|Three Months Ended||Nine Months Ended|
|September 30,||September 30,|
|NET SERVICE FEE REVENUE|
|Service fee revenue, net of contractual allowances and discounts||$ 167,027||$ 148,579||$ 507,273||$ 446,032|
|Provision for bad debts||(6,574)||(5,558)||(19,453)||(16,260)|
|Net service fee revenue||160,453||143,021||487,820||429,772|
|Cost of operations||133,223||117,747||405,177||352,688|
|Depreciation and amortization||13,369||14,309||43,154||42,526|
|Loss (gain) on sale and disposal of equipment||(45)||(331)||255||(1,928)|
|Total operating expenses||146,613||132,041||449,264||394,256|
|INCOME FROM OPERATIONS||13,840||10,980||38,556||35,516|
|OTHER INCOME AND EXPENSES|
|Gain on de-consolidation of joint venture||(2,777)||--||(2,777)||--|
|Total other expenses||9,738||11,736||34,289||35,741|
|INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF JOINT VENTURES||4,102||(756)||4,267||(225)|
|Provision for income taxes||(30)||(234)||(696)||(718)|
|Equity in earnings of joint ventures||909||1,038||4,157||3,789|
|Net (loss) income attributable to noncontrolling interests||(72)||9||(160)||162|
|NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS||$ 5,053||$ 39||$ 7,888||$ 2,684|
|BASIC NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS||$ 0.13||$ 0.00||$ 0.21||$ 0.07|
|DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS||$ 0.13||$ 0.00||$ 0.20||$ 0.07|
|WEIGHTED AVERAGE SHARES OUTSTANDING|
|RADNET, INC. AND SUBSIDIARIES|
|CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)|
|Nine Months Ended|
|CASH FLOWS FROM OPERATING ACTIVITIES|
|Net income||$ 7,728||$ 2,846|
|Adjustments to reconcile net income to net cash provided by operating activities:|
|Depreciation and amortization||43,154||42,526|
|Provision for bad debt||19,453||16,260|
|Equity in earnings of joint ventures||(4,157)||(3,789)|
|Distributions from joint ventures||5,526||4,068|
|Deferred rent amortization||2,990||1,919|
|Amortization of deferred financing cost||2,309||2,186|
|Amortization of bond discount||200||180|
|Loss (gain) on sale and disposal of equipment||255||(1,928)|
|Gain on de-consolidation of joint venture||(2,777)||--|
|Amortization of cash flow hedge||827||918|
|Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions:|
|Other current assets||(433)||(2,312)|
|Accounts payable, accrued expenses and other||(3,255)||10,384|
|Net cash provided by operating activities||55,618||34,052|
|CASH FLOWS FROM INVESTING ACTIVITIES|
|Purchase of imaging facilities||(10,617)||(13,686)|
|Purchase of property and equipment||(35,279)||(34,283)|
|Proceeds from insurance claims on damaged equipment||--||2,740|
|Proceeds from sale of equipment||841||310|
|Proceeds from sale of imaging facilities||2,300||--|
|Proceeds from sale of joint venture interests||1,800||--|
|Purchase of equity interest in joint ventures||(2,756)||(1,500)|
|Net cash used in investing activities||(43,711)||(46,419)|
|CASH FLOWS FROM FINANCING ACTIVITIES|
|Principal payments on notes and leases payable||(11,180)||(14,397)|
|Deferred financing costs||--||(217)|
|Proceeds from, net of payments on, line of credit||1,800||31,300|
|Payments to counterparties of interest rate swaps, net of amounts received||(4,587)||(4,874)|
|Distributions to noncontrolling interests||(67)||(111)|
|Proceeds from issuance of common stock upon exercise of options/warrants||--||242|
|Net cash (used in) provided by financing activities||(14,034)||11,943|
|EFFECT OF EXCHANGE RATE CHANGES ON CASH||60||51|
|NET DECREASE IN CASH AND CASH EQUIVALENTS||(2,067)||(373)|
|CASH AND CASH EQUIVALENTS, beginning of period||2,455||627|
|CASH AND CASH EQUIVALENTS, end of period||$ 388||$ 254|
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION|
|Cash paid during the period for interest||$ 32,074||$ 30,847|
|RECONCILIATION OF GAAP NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC.|
|COMMON SHAREHOLDERS TO ADJUSTED EBITDA(1)|
|Three Months Ended|
|Net Income Attributable to RadNet, Inc. Common Shareholders||$ 5,053||$ 39|
|Plus Provision for Income Taxes||30||234|
|Less Other Income||(1,360)||(1,506)|
|Plus Interest Expense||13,875||13,242|
|Plus Severence Costs||66||316|
|Less Gain on Sale of Equipment||(45)||(331)|
|Plus Depreciation and Amortization||13,369||14,309|
|Less Gain on Sale of JV||(2,777)||--|
|Plus Non Cash Employee Stock Compensation||433||709|
|Adjusted EBITDA(1)||$ 28,644||$ 27,012|
|Nine Months Ended|
|Net Income Attributable to RadNet, Inc. Common Shareholders||$ 7,888||$ 2,684|
|Plus Provision for Income Taxes||696||718|
|Less Other Income||(3,851)||(3,566)|
|Plus Interest Expense||40,917||39,307|
|Plus Severence Costs||678||970|
|Plus Loss (Gain) on Sale of Equipment||255||(1,928)|
|Plus Depreciation and Amortization||43,154||42,526|
|Plus Non Cash Employee Stock Compensation||2,139||2,499|
|Less Gain on Sale of JV||(2,777)||--|
|Adjusted EBITDA||$ 89,099||$ 83,210|
|RADNET PAYMENTS BY PAYORS *|
|Third Quarter||Full Year||Full Year|
|Workers Compensation/Personal Injury||4.3%||4.5%||4.1%|
|RADNET PAYMENTS BY MODALITY *|
|Third Quarter||Full Year||Full Year|
|RADNET AVERAGE PAYMENTS BY MODALITY *|
|Third Quarter||Full Year||Full Year|
|MRI||$ 494||$ 497||$ 501|
|* Based upon global payments received from consolidated Imaging Centers from that year's dates of service.|
|Excludes payments from hospital contracts, Breastlink, Center Management Fees and other miscellaneous|
(1) The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, each from continuing operations and adjusted for losses or gains on the sale of equipment, other income or loss, debt extinguishments 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 that have 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 an 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.