EX-99.1 2 radnet_8k-ex9901.txt PRESS RELEASE Exhibit 99.1 [LOGO APPEARS HERE] FOR IMMEDIATE RELEASE RADNET REPORTS RECORD THIRD QUARTER REVENUE AND ADJUSTED EBITDA(1) o FOR THE QUARTER, RADNET REPORTS REVENUE OF $131.7 MILLION AND ADJUSTED EBITDA((1))OF $28.2 MILLION; INCREASES OF 19.5% AND 25.8%, RESPECTIVELY OVER THE PRIOR YEAR'S QUARTERLY RESULTS o THIRD QUARTER NET EARNINGS WERE $138,000 (OR $0.0 PER SHARE) COMPARED TO A NET LOSS OF $2.1 MILLION (OR A NET LOSS OF $0.06 PER SHARE) FROM THE PRIOR YEAR'S QUARTERLY RESULTS o THIRD QUARTER REVENUE AND ADJUSTED EBITDA(1) ARE SEQUENTIAL QUARTERLY IMPROVEMENTS FROM FIRST AND SECOND QUARTER 2008 RESULTS o RADNET REPORTS INCREASED AGGREGATE AND SAME-CENTER PROCEDURAL VOLUMES o RADNET IS ON TRACK TO MEET OR EXCEED ITS PREVIOUSLY ANNOUNCED 2008 REVENUE GUIDANCE OF $470-500 MILLION AND IS ON PACE TO ACHIEVE ITS ADJUSTED EBITDA((1)) GUIDANCE OF $100-$115 MILLION LOS ANGELES, CALIF., NOVEMBER 10, 2008 - RADNET, INC. (NASDAQ: RDNT), a national leader in providing high-quality, cost-effective diagnostic imaging services through a network of 165 owned and operated outpatient imaging centers, today reported financial results for its third quarter ended September 30, 2008. THREE MONTH REPORT For its third quarter of fiscal 2008, RadNet reported Revenue and Adjusted EBITDA(1) of $131.7 million and $28.2 million, respectively. Revenue increased 19.5% (or $21.5 million) and Adjusted EBITDA(1) increased 25.8% (or $5.8 million), respectively over the prior year's quarter. Adjusted EBITDA(1) margins increased to 21.4% for the third fiscal quarter of 2008, from 20.3% in the third fiscal quarter of 2007. The results reflect improved volume in existing centers as well as the contributions of acquisitions and operating initiatives. For the third quarter of 2008, as compared to the prior year's quarter, MRI volume increased 18.4%, CT volume increased 9.1% and PET/CT volume increased 16.8%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 15.1% over the prior year's quarter. On a same-center basis, including only those centers which were part of RadNet for both the third quarters of 2008 and 2007, MRI volume increased 9.0%, CT volume increased 0.3% and PET/CT volume increased 3.9%. Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 5.0% over the prior year's quarter. Net Income for the third quarter was $138,000, or $0.0 per share, compared to net loss of $2.1 million or $(0.06) per share, reported for the three month period ended September 30, 2007 (based upon a weighted average number of diluted shares outstanding of 37.0 million and 34.7 million for these periods in 2008 and 2007, respectively). Affecting net income in the third quarter of 2008 were certain non-cash expenses and non-recurring items including: o $1.3 million non-cash gain on the fair value of interest rate hedges related to the Company's credit facilities; o $0.7 million of Deferred Financing Expense related to the amortization of financing fees paid as part of our $405 million credit facilities drawn down in November 2006 in connection with the Radiologix acquisition and the incremental term loans and revolving credit facility arranged in August 2007 and February 2008; 1 o $1.5 million loss on the disposal of equipment, primarily related to assets acquired in our November 2006 purchase of Radiologix; and o $0.8 million of non-cash employee stock compensation expense resulting from the vesting of certain options and warrants. "We are very gratified with the results of this quarter. Our results reflect the contributions of many of our recent initiatives, including our recent aggressive expansion into digital mammography and breast oncology as well as our recent acquisitions in Delaware and California." said Dr. Howard Berger, Chairman and Chief Executive Officer of RadNet. "Despite the recent challenges in the economic environment, demand for our services continues to grow. Our record revenue of $131.7 million this quarter is indicative of the essential, non-elective nature of the vast majority of our diagnostic services. Early detection and diagnostics of disease has been shown to reduce the overall cost of the medical delivery system by identifying disease when it can be more effectively treated, by decreasing the incidence of incorrect diagnoses and by reducing expensive or unnecessary invasive procedures. We believe our strong performance has been further enhanced by the comprehensive multimodality offerings of our regionally concentrated networks, which are highly valued by our patients, referring physician communities and payors." "We remain very optimistic about our future opportunities. We have achieved increasing revenues and EBITDA throughout the quarters of 2008, which has been driven in part by growing volumes both in aggregate and on a same-center basis. We are further encouraged by the opportunities for continued margin expansion in the future as we scale our business and continue to focus on refining operating expenses." added Dr. Berger. "On the acquisition front, we are seeing increased opportunities to consolidate smaller operators in our markets. The difficult credit markets have only increased both the number and attractiveness of these opportunities. We will continue to fund these opportunities with our cash flow and availability from our $55 million revolver. We believe we are positioned to capitalize on these opportunities, as our credit facilities do not mature until 2012 and 2013." added Dr. Berger. RadNet reaffirms its 2008 Fiscal Year Guidance as follows: 2008 FISCAL YEAR GUIDANCE RadNet is reaffirming its 2008 guidance ranges as follows: Revenue $470 - $500 million Adjusted EBITDA((1)) $100 - $115 million Capital Expenditures $15-$20 million maintenance level (plus growth Capital Expenditure of up to $25 million) Cash Interest Expense $46-$52 million 2 NINE MONTH REPORT For the nine month period ended September 30, 2008, RadNet reported Revenue and Adjusted EBITDA(1) of $373.9 million and $75.9 million, respectively. Revenue increased 15.7% (or $50.8 million) and Adjusted EBITDA(1) increased 16.9% (or $11.0 million), respectively over the prior year's nine month period. For the nine months of 2008, as compared to the prior year's nine month period, MRI volume increased 11.8%, CT volume increased 6.5% 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 11.3% over the prior year's nine month period. Net Loss for the nine months of 2008 was $7.5 million, or $(0.21) per share, compared to $6.4 million or $(0.19) per share, reported for the nine month period ended September 30, 2007 (based upon a weighted average number of diluted shares outstanding of 35.7 million and 34.6 million for these periods in 2008 and 2007, respectively). Affecting net loss in the nine months of 2008 were certain non-cash expenses and non-recurring items including: o $1.0 million non-cash gain on the fair value of interest rate hedges related to the Company's credit facilities; o $1.4 million of expense related to the settlement of business disputes; o $1.5 million of Deferred Financing Expense related to the amortization of financing fees paid as part of our $405 million credit facilities drawn down in November 2006 in connection with the Radiologix acquisition and the incremental term loans and revolving credit facility arranged in August 2007 and February 2008; o $1.5 million loss on the disposal of equipment, primarily related to assets acquired in our November 2006 purchase of Radiologix; and o $1.9 million of non-cash employee stock compensation expense resulting from the vesting of certain options and warrants. REGULATION G: GAAP AND NON-GAAP FINANCIAL INFORMATION This release contains certain financial information not reported in accordance with GAAP. RadNet 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 RadNet in measuring its performance. RadNet 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 165 fully-owned and operated outpatient imaging centers. RadNet's core markets include California, Maryland, Delaware and New York. Together with affiliated radiologists, and inclusive of full-time and per diem employees and technicians, RadNet has a total of approximately 4,000 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 RADNETS' ABILITY TO CONTINUE TO GROW ITS BUSINESS BY GENERATING PATIENT REFERRALS AND CONTRACTS WITH RADIOLOGY PRACTICES, FUTURE ACQUISITIONS, COST SAVINGS, SUCCESSFUL INTEGRATION OF ACQUIRED OPERATIONS, AND RECEIVING THIRD-PARTY REIMBURSEMENT FOR DIAGNOSTIC IMAGING SERVICES, AS WELL AS RADNET'S FINANCIAL GUIDANCE, ITS STATEMENTS REGARDING INCREASED BUSINESS FROM NEW OPERATIONS, 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 RADNET'S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE STATEMENTS CONTAINED HEREIN. FURTHER INFORMATION ON POTENTIAL RISK FACTORS THAT COULD AFFECT RADNET'S 3 BUSINESS AND ITS FINANCIAL RESULTS ARE DETAILED IN ITS MOST RECENT ANNUAL REPORT ON FORM 10-K AND FORMS 10Q, 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. CONTACTS: RADNET, INC. MARK STOLPER, 310-445-2800 EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER INTEGRATED CORPORATE RELATIONS, INC. JOHN MILLS, 310-954-1105 JMILLS@ICRINC.COM 4
RADNET, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS EXCEPT SHARE DATA) SEPTEMBER 30, DECEMBER 31, 2008 2007 --------- --------- (UNAUDITED) ASSETS CURRENT ASSETS Cash and cash equivalents $ -- $ 18 Accounts receivable, net 107,611 87,285 Refundable income taxes 103 105 Prepaid expenses and other current assets 10,881 10,273 --------- --------- Total current assets 118,595 97,681 PROPERTY AND EQUIPMENT, NET 201,514 164,097 OTHER ASSETS Goodwill 105,604 84,395 Other intangible assets 56,878 58,908 Deferred financing costs, net 11,576 9,161 Investment in joint ventures 18,595 15,036 Deposits and other 4,865 4,342 --------- --------- Total other assets 197,518 171,842 --------- --------- Total assets $ 517,627 $ 433,620 ========= ========= LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES Accounts payable and accrued expenses $ 87,316 $ 59,965 Due to affiliates 2,323 1,350 Notes payable 5,427 3,536 Current portion of deferred rent -- 195 Obligations under capital leases 14,393 9,455 --------- --------- Total current liabilities 109,459 74,501 --------- --------- LONG -TERM LIABILITIES Line of credit 13,894 4,222 Deferred rent, net of current portion 7,943 4,394 Deferred taxes 277 277 Notes payable, net of current portion 420,935 382,064 Obligations under capital lease, net of current portion 25,443 22,527 Other non-current liabilities 13,832 15,259 --------- --------- Total long-term liabilities 482,324 428,743 --------- --------- COMMITMENTS AND CONTINGENCIES MINORITY INTERESTS 77 206 STOCKHOLDERS' DEFICIT Common stock - $.0001 par value, 200,000,000 shares authorized; 35,786,474 and 35,239,558 shares issued and 4 4 outstanding at September 30, 2008 and December 31, 2007, respectively Paid-in-capital 151,901 149,631 Accumulated other comprehensive loss (3,766) (4,579) Accumulated deficit (222,372) (214,886) --------- --------- Total stockholders' deficit (74,233) (69,830) --------- --------- Total liabilities and stockholders' deficit $ 517,627 $ 433,620 --------- --------- 5 RADNET, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS EXCEPT SHARE DATA) (UNAUDITED) THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------ ------------------------------ 2008 2007 2008 2007 ------------ ------------ ------------ ------------ NET REVENUE $ 131,717 $ 110,209 $ 373,861 $ 323,051 OPERATING EXPENSES Operating expenses 99,552 83,546 286,404 245,134 Depreciation and amortization 13,083 11,395 39,623 32,352 Provision for bad debts 7,065 6,395 20,640 20,810 Loss on disposal of equipment 1,525 180 1,495 716 Severance costs 137 30 172 815 ------------ ------------ ------------ ------------ Total operating expenses 121,362 101,546 348,334 299,827 INCOME FROM OPERATIONS 10,355 8,663 25,527 23,224 OTHER EXPENSES (INCOME) Interest expense 12,126 11,596 38,230 32,212 Other income (79) (21) (132) (72) ------------ ------------ ------------ ------------ Total other expense 12,047 11,575 38,098 32,140 INCOME (LOSS) BEFORE INCOME TAXES, MINORITY INTERESTS AND EARNINGS FROM JOINT VENTURES (1,692) (2,912) (12,571) (8,916) Provision for income taxes (14) (86) (151) (115) Minority interest in income of subsidiaries (27) (198) (76) (483) Equity in earnings of joint ventures 1,871 1,103 5,312 3,080 ------------ ------------ ------------ ------------ NET INCOME (LOSS) $ 138 $ (2,093) $ (7,486) $ (6,434) ============ ============ ============ ============ BASIC NET INCOME (LOSS) PER SHARE $ 0.00 $ (0.06) $ (0.21) $ (0.19) ============ ============ ============ ============ DILUTED NET INCOME (LOSS) PER SHARE $ 0.00 $ (0.06) $ (0.21) $ (0.19) ============ ============ ============ ============ WEIGHTED AVERAGE SHARES OUTSTANDING Basic 35,759,779 34,748,844 35,669,400 34,566,725 ============ ============ ============ ============ Diluted 37,014,784 34,748,844 35,669,400 34,566,725 ============ ============ ============ ============ 6 RADNET, INC. RECONCILIATION OF GAAP INCOME FROM OPERATIONS TO ADJUSTED EBITDA(1) (IN THOUSANDS) Three Months Ended September 30, ---------------------- 2008 2007 -------- -------- Income from Operations $ 10,355 $ 8,663 Plus Depreciation and Amortization 13,083 11,395 Plus Equity in Earnings of Joint Ventures 1,871 1,103 Plus Non Cash Employee Stock Compensation(a) 831 281 Plus Loss on Disposal of Equipment 1,525 180 Plus Non Cash Malpractice IBNR Adjustment -- 43 Plus One-Time Adjustment to Acquired Accounts Receivable of Breastlink 383 -- Less Minority Interest in (Income) Loss of Subsidiaries (27) (198) -------- -------- Subtotal 28,021 21,467 Plus Severance: Elimination of Corporate Personnel 137 30 Plus Retention Payments to Radiologix Employees -- 785 Payment for Employee Termination -- 95 -------- -------- ADJUSTED EBITDA(1) $ 28,158 $ 22,377 -------- -------- (a) Includes FAS123 compensation. Nine Months Ended September 30, ---------------------- 2008 2007 -------- -------- Income from Operations $ 25,527 $ 23,224 Plus Depreciation and Amortization 39,623 32,352 Plus Equity in Earnings of Joint Ventures 5,312 3,080 Plus Non Cash Employee Stock Compensation(a) 1,887 3,483 Plus Loss on Disposal of Equipment 1,495 716 Plus Non Cash Malpractice IBNR Adjustment -- 129 Plus One-Time Adjustment to Acquired Accounts Receivable of Breastlink 383 -- Less Minority Interest in (Income) Loss of Subsidiaries (76) (483) -------- -------- Subtotal 74,151 62,501 Plus Severance: Elimination of Corporate Personnel 172 815 Plus One-Time Payment Physician Payment -- 250 Plus Nasdaq One-Time Listing Fee -- 120 Plus One Time Consulting Fees Related to Review of 2006 Accounts Receivables 200 -- Plus SAB 108 Accounting Adjustment -- 362 Plus Retention Payments to Radiologix Employees -- 785 Payment for Employee Termination -- 95 Plus One Time Expense Related to Business Dispute Settlements 1,393 -- -------- -------- ADJUSTED EBITDA(1) $ 75,916 $ 64,928 ======== ========
(a) Includes FAS123 compensation and one-time non-cash bonus accrual. 7