8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) August 4, 2023

_______________________________________________

RadNet, Inc.

(Exact name of registrant as specified in its charter)

Delaware	001-33307	13-3326724
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1510 Cotner Avenue
Los Angeles, California	90025
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s Telephone Number, Including Area Code: (310) 478-7808

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value	RDNT	NASDAQ Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition

On August 8, 2023 RadNet, Inc. (the “Company”) issued a press release and held a conference call regarding its 2023 financial results for the second quarter ended June 30, 2023. A copy of the press release is furnished as Exhibit 99.1 and a copy of the transcript of the conference call is furnished as Exhibit 99.2 to this Current Report.

The information in this Item 2.02, including Exhibit 99.1 and Exhibit 99.2 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section. The information in this Item 2.02, including Exhibit 99.1 and Exhibit 99.2 shall not be incorporated by reference into any registration statement or other document filed with the Commission.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On August 4, 2023, the Company appointed Dr. Gregory Sorensen, M.D. (“Dr. Sorensen”) to the Board of Directors (the “Board”) and to serve as the Company’s Executive Vice President and Chief Science Officer, with such appointment effective August 8, 2023.

From 2017 to the present, Dr. Sorensen, age 61, has served as the Chief Executive Officer of DeepHealth, Inc. (“DeepHealth”), a subsidiary of the Company that is focused on using artificial intelligence and deep learning methods to advance medical care with a special emphasis on breast cancer imaging. The Company acquired DeepHealth in June 2020. Dr. Sorensen served as the President and Chief Executive Officer of Siemens Healthcare North America from 2011 to 2015. Prior to that, he served as a Professor at Harvard Medical School and as a neuroradiologist at Massachusetts General Hospital, where he worked from 1990 to 2011. Dr. Sorensen currently serves as: the Executive Chairman of the board of directors of IMRIS, Deerfield Imaging, Inc., which is focused on the integration of imaging technologies in a neurosurgical setting; a Board member for RealmIDX, Inc., an integrated diagnostics company wholly owned by KonicaMinolta; and a member of the Supervisory Board for Fresenius Medical Care AG & Co KGaA, a provider of products and services for people with chronic kidney failure. Dr. Sorensen served as a Supervisory Board Member at Siemens Healthineers from 2018 to 2023. Dr. Sorensen holds a B.S. in biology from the California Institute of Technology, an M.S. in computer science from Brigham Young University, and an M.D. degree from Harvard Medical School.

Dr. Sorensen entered into an Employment Agreement with RadNet Management, Inc., a Delaware corporation and wholly owned subsidiary of the Company on June 1, 2020. The Employment Agreement provides for an annual base salary of $600,000 and an annual restricted stock grant (“Restricted Stock Award”), pursuant to the Company’s Equity Incentive Plan, determined by dividing his Base Salary per calendar year by the grant price of such shares as determined by the board of directors of RadNet Management on the date of each grant. Subject to Dr. Sorensen’s continuous service, the annual award under his Employment Agreement incrementally vests by one third (1/3) on each of the three successive annual anniversaries of the Restricted Stock Award grant date. Since the beginning of the Company’s last fiscal year, Dr. Sorensen received a Restricted Stock Awards under his Employment Agreement for 29,240 and 20,155 shares of restricted stock in June 2022 and 2023, respectively, as well as an Restricted Stock Award for 31,579 shares or restricted stock in January 2023, each subject to continuous service with the Company and the other terms of the Equity Incentive Plan and his award agreement. If the Company terminates Dr. Sorensen’s employment without “Cause” or Dr. Sorensen resigns for “Good Reason” (each as defined in the Employment Agreement), then Dr. Sorensen is entitled to receive a severance payment equal to 12 months of his base salary.

The foregoing summary description of the Employment Agreement is not complete and is subject to and qualified in its entirety by the terms of the Employment Agreement, which is filed herewith as Exhibit 10.1 and incorporated herein by reference.

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Item 9.01.    Financial Statements and Exhibits.

(d)            Exhibits

Exhibit Number	Description of Exhibit
10.1	Employment Agreement between RadNet Management, Inc. and Gregory Sorensen, M.D., entered into on June 1, 2020.
99.1	Press Release dated August 8, 2023 relating to RadNet, Inc.’s financial results for the second quarter ended June 30, 2023.
99.2	Transcript of conference call.
104	Cover Page Interactive Data File (embedded within the inline XBRL document)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: August 9, 2023	RadNet, Inc.
	By:	/s/ Mark D. Stolper
	Name:	Mark D. Stolper
	Title:	Chief Financial Officer

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EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement ("Agreement") is entered into as of June 1, 2020, by and between RADNET MANAGEMENT, INC., a Delaware corporation (the "Company"), and Gregory Sorensen, M.D. (the "Employee").

In consideration of the mutual covenants and conditions set forth herein, and other good and valuable consideration, the parties hereby agree as follows:

1.Employment. The Company hereby agrees to employ Employee in the capacity of Senior Vice President of the Company and President of the Company's subsidiary, DeepHealth, Inc. Employee accepts such employment and agrees to perform such services as are customary to such offices and as shall from time to time be assigned to him by the Company.

2.Term. Employee's employment hereunder shall commence on June 1, 2020 (the "Commencement Date") and shall continue for a period of five (5) years thereafter unless earlier terminated as provided in Section 5 (the "Term"). Employee's employment will be on a full-time basis requiring the devotion of such amount of his professional time as is necessary for the efficient operation of the business of the Company. Notwithstanding the above, employee shall be permitted to hold directorships in companies not in competition with RadNet Management, Inc., and/or positions with charitable organizations, trusts, passive business interests and personal investments, provided that doing so does not create a conflict of interest, and as long as such services are not provided to any competitor of the Company and do not materially interfere with Employee's performance of services to the Company.

3. Compensation and Benefits.

3.1.Salary. For the performance of Employee's duties hereunder, the Company shall pay Employee an annual salary of Six Hundred Thousand Dollars ($600,000) ("Base Compensation"), payable (after deducting required withholdings) in accordance with the Company's ordinary payroll practices.

3.2.Annual Stock Grant. Subject to the approval of the Compensation Committee of the Board of Directors of RadNet, Inc., a Delaware corporation, which is the Company's parent entity ("RNI"), Employee shall receive a grant each calendar year during the initial Term equal to that number of restricted common shares of RNI ("RS Award") under RNI'S 2006 Equity Incentive Plan as amended ("Plan"), determined by dividing Six Hundred Thousand Dollars ($600,000) per calendar year by the grant price of such shares as determined by the Board of Directors of RNI on the date of each grant. Subject to Employee's continuous service, one third (1/3rd) of the RS Award shall incrementally vest on each of the three successive annual anniversaries of the RS Award grant date. The RS Award shall be governed by the Plan and the RS Award grant agreement which Employee must timely execute as a condition of grant.

3.3.Benefits. Employee shall be entitled to such medical, disability and life insurance coverage and such sick leave and holiday benefits, if any, and any other benefits as are made available to the Company's corporate officers, all in accordance with the Company's benefits policies and programs in effect from time to time and to be mutually agreed upon by Employee. Employee will accrue paid vacation on a pro-rata basis, in an amount equivalent to six (6) weeks per year, subject to any and all accrual caps and rules and procedures established by Company policy regarding the use and accrual of vacation. Employee shall also be covered by the Company's Directors and Officers insurance coverage during Employee's employment with the Company, as well as such other insurance coverage as the Company approves and/or is required by law.

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3.4.Reimbursement of Expenses. Employee shall be entitled to be reimbursed for all reasonable and necessary expenses, including but not limited to expenses for travel, meals and entertainment, incurred by Employee in connection with and reasonably related to the furtherance of the Company's business; provided, however, that the Company requires as a condition to such reimbursements, that Employee comply with the Company's expense reimbursement policies. Reasonable and necessary telephone and internet expenses will be reimbursed in accordance with Company policy.

3.5.Annual Review. The Company's Board of Directors (or, if delegated by the Board of Directors, the Company's Compensation Committee or Chief Executive Officer) will, on an annual basis, review Employee's performance and compensation hereunder (including salary, bonus and stock options and/or other equity incentives).

4. Change in Control.

4.1.In the event of a Change in Control of RNI (as defined below), all options, warrants and any other deferred equity compensation then granted to Employee by RNI which are unvested at the date of the Change in Control will vest.

4.2.Definition. As used herein, a "Change in Control" has the same meaning provided to it in the 2006 Equity Incentive Plan as amended.

5. Termination.

5.1.Termination Events. Employee's employment hereunder will terminate upon the occurrence of any of the following events:

(a) Employee dies;

(b)the Company, by written notice to Employee or his personal representative, discharges Employee due to Employee's Disability (as defined below);

As used in this Agreement, the term "Disability" shall mean that for a period of at least 120 days during any twelve consecutive month period on account of a mental or physical condition, Employee is unable to perform the essential functions of his job for the Company, with or without reasonable accommodation. The determination of Employee's Disability shall be made (a) by a medical physician selected or agreed to by the Company or (b) upon mutual agreement of the Company and Employee or his personal representative. All costs relating to the determination of whether Employee has incurred a Disability shall be paid by the Company. Employee shall submit to any examination that is reasonably required by an examining physician for purposes of determining whether a Disability exists.

(c) Employee is discharged by the Company for Cause (as defined below):

As used in this Agreement, the term "Cause" shall mean:

(i)Employee's conviction of (or plea of guilty or nolo contendere to) (A) any felony or (B) any misdemeanor involving fraud or dishonesty in connection with the performance of his duties hereunder or moral turpitude; or

(ii)the willful and continued failure of Employee for a total of 10 days (which need not be consecutive days) within any fiscal year of the Company to substantially perform his duties with the Company (other than any such failure resulting from illness or Disability) after a written demand for substantial performance from the Company is delivered to Employee, which demand specifically identifies the manner in which it is claimed Employee has not substantially performed his duties, or

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(iii)Employee has willfully engaged in misconduct which has, or can reasonably be expected to have, a direct and material adverse monetary effect on the Company.

For purposes of this Section, no act or failure to act on Employee's part shall be considered "willful" unless Employee acted in bad faith or without a reasonable belief that Employee's action or omission was in the best interest of the Company.

(d)Employee is discharged by the Company for any reason, other than for Cause or Disability, which the Company may do at any time. For the avoidance of doubt, a Change in Control, on its own, shall not constitute a termination, even if Employee's employer changes as a result of such Change in Control;

(e)Employee voluntarily terminates his employment due to either (i) a material default by the Company in the performance of any of its obligations hereunder, or (ii) an Adverse Change in Duties (as defined below), which default or Adverse Change in Duties remains unremedied by the Company for a period of thirty days following its receipt of written notice thereof from Employee (which notice must be provided to the Company within 45 days of the initial existence of the applicable event and which reasonably describes the facts claimed by Employee to constitute the default or Adverse Change in Duties) (the reasons described in items (i) and (ii) of this paragraph being referred to herein as "Good Reason") and such Good Reason termination is consummated by Employee within 30 business days after the expiration of the Company's 30 day remedy period; or

(f)Employee voluntarily terminates his employment for any reason other than Good Reason, which Employee may do at any time with at least 30 days' advance notice.

As used in this Agreement, "Adverse Change in Duties" means an action or series of actions taken by the Company and/or the Board of Directors of the Company, without Employee's prior written consent, which results in:

(i)A change in Employee's reporting structure, titles, job duties or job functions which results in a material diminution of his status, control, authority or level of responsibility; or

(ii)The assignment to Employee of any positions, duties or responsibilities which are materially inconsistent with Employee's positions, duties and responsibilities or status with the Company;

(iii)A requirement by the Company that Employee be based or perform his duties anywhere other than (i) where they are currently performed (or within a 25 mile radius of that location), or (ii) at the Company's corporate office location on the date of this Agreement; or

(iv) A reduction by the Company in Employee's Base Compensation.

5.2. Effects of Termination.

(a)Upon termination of Employee's employment hereunder for any reason, the Company will promptly pay Employee all compensation owed to Employee and unpaid through the effective date of termination (including without limitation Base Compensation and Employee's properly documented expense reimbursements).

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(b)In addition, if Employee's employment is terminated under Sections 5.1 (d) or (e) during the Term, and there has been a Change in Control within twelve (12) months prior to the termination, provided that Employee signs and does not revoke a complete and general release of claims in a form to be reasonably determined by the Company, and is in material compliance with this Agreement, then the Company shall also pay Employee, not later than the fifteenth day after the effective date of the release, a lump sum severance payment in an amount equal to twelve (12) months of Base Compensation ("Severance Pay"). If there has not been a Change in Control with the previous twelve months of the termination date, Employee shall receive the Severance Pay in substantially equal installments over the twelve month (12) month period following the termination date with the first installment commencing with the fifteenth day after the effective date the release and the last installment occurring on the second anniversary of the termination date. Notwithstanding the foregoing, with respect to the Severance Pay, (x) the timing of all payments hereunder is subject to Section 6.13 below and (y) the first such installment of any Severance Pay shall be in an amount covering the time period from the date of termination of employment through the time of such first installment and (z) the release of all claims agreement must be executed by Employee and become effective by its own terms within no more than 55 days after the date of termination. However, notwithstanding the foregoing, to the extent any portion (or all) of a severance payment that would be paid in a lump sum would violate Section 409A, then such amount shall instead be paid in installments pursuant to the installment payment provisions of this section.

5.3.Confidentiality After Termination. Immediately upon Employee's execution of this Agreement and on an on-going basis, the Company agrees that it shall provide to Employee confidential information and trade secrets of the Company and its business ("Confidential Information"). In consideration of, among other things, the Company's obligation to disclose confidential information to Employee and his receipt of that confidential information, as well as the compensation and benefits set forth in this Agreement, Employee agrees that during his employment with the Company and for the one year period following the termination of Employee's employment hereunder (the "Restricted Period"), Employee will not, directly or indirectly, whether as an individual, employee, director, consultant, investor, stockholder, partner, agent, principal, lender or advisor, or in any other capacity whatsoever, and whether personally or through other persons:

(a)provide services, to the extent any such services require his use of Confidential Information, to any person, firm, corporation or other business enterprise whose primary business involves (i) owning or operating diagnostic imaging centers or the provision of diagnostic imaging services, (ii) providing administrative, management or other information services to radiology practices or (iii) providing management services in the area of radiology, in each case unless he obtains the prior written consent of the Company.

(b)solicit, or attempt to encourage or solicit, any individual to leave the Company's employ for any reason or interfere in any other manner with the employment relationships between the Company and its current or prospective employees or any employee who has been employed by the Company within ninety days preceding Employee's termination.

(c)utilize Confidential Information to directly or indirectly induce or attempt to induce any provider, payor, customer, supplier,distributor, licensee or other business relation of the Company to cease doing, or curtail, business with the Company or in any way interfere with the existing business relationship between any such customer, supplier, distributor, licensee or other business relation and the Company.

If any restriction set forth in this paragraph is held to be unreasonable and/or unenforceable as written, Employee and the Company agree that the restriction may be reformed to make it enforceable, and the restriction shall remain in full force and effect as reformed.

Employee acknowledges that the restrictions contained in this paragraph in view of the nature of the Company's business, are reasonable and necessary to protect the Company's legitimate business interests and that any violation of this paragraph would result in irreparable injury to the Company, and that monetary damages may not be sufficient to compensate the Company for any economic loss which may be incurred by reason of breach of the foregoing restrictive covenants. In the event of a breach or a threatened breach by Employee of any provision in this paragraph, the Company shall be entitled to cease making any and all payments otherwise payable to Employee on termination under this Agreement and to seek a temporary restraining order and injunctive relief restraining Employee from the commission of any breach, and to recover the Company's attorneys' fees, costs and expenses related to the breach or threatened breach. Nothing contained in this paragraph shall be construed as prohibiting the Company from pursuing any other remedies available to it for any breach or threatened breach, including, without limitation, the recovery of money damages, attorneys' fees, and costs. The restrictions in this paragraph shall each be construed as independent of any other provisions in this Agreement, and the existence of any claim or cause of action by Employee against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement of this Agreement.

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If Employee violates any of the restrictions contained in this paragraph, the restrictive period will be suspended and will not run in favor of Employee from the time of the commencement of any violation until the time when Employee cures the violation to the Company's satisfaction.

Upon Termination, Employee shall return to the Company any and all Confidential Information relating to the Company and its Business.

6. General Provisions.

6.1.Assignment. Employee shall not assign or delegate any of his rights or obligations under this Agreement without the prior written consent of the Company, and any attempted assignment without the Company's consent shall be void ab initio. The Company may assign this Agreement to any successor of the Company or any purchaser of all or substantially all of the assets of the Company.

6.2.Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and supersedes any and all prior agreements between the parties relating to such subject matter. In the case of any conflict between the terms of this Agreement and any option agreement or similar instrument, the terms of this Agreement shall control.

6.3.Modifications. This Agreement may be changed or modified only by an agreement in writing signed by both parties hereto.

6.4.Successors and Assigns. The provisions of this Agreement shall inure to the benefit of, and be binding upon, the Company and its successors and permitted assigns and Employee and Employee's legal representatives, heirs, legatees, distributees, assigns and transferees by operation of law, whether or not any such person shall have become a party to this Agreement and have agreed in writing to join and be bound by the terms and conditions hereof.

6.5.Governing Law. This Agreement is performable in whole or in part in Los Angeles County, California wherein exclusive venue shall lie for any proceeding, claim or controversy. This Agreement and the rights of the parties hereunder shall be governed by and construed in accordance with the laws of the State of California, including all matters of construction, validity, performance and enforcement, and without giving effect to principles of conflict of laws. Notwithstanding the foregoing, the Parties represent and agree that the Company is engaged in interstate commerce, and as such Section 6.12 of this Agreement will be interpreted and enforced pursuant to the Federal Arbitration Act, 9 U.S.C. Section 1, et seq., and not any contrary state law.

6.6.Severability. If any provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions shall nevertheless continue in full force and effect.

6.7.Further Assurances. The parties will execute such further instruments and take such further actions as may be reasonably necessary to carry out the intent of this Agreement.

6.8.Notices. Any notices or other communications required or permitted hereunder shall be in writing and shall be deemed received by the recipient when delivered personally or, if mailed, five days after the date of deposit in the United States mail, certified or registered, postage prepaid and addressed, in the case of the Company, to Radnet Management, Inc., 1510 Cotner Ave., Los Angeles, CA 90025- 3303, attention: Mark Stolper; and in the case of Employee, to the address shown for Employee on the signature page hereof.

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6.9.No Waiver. The failure of either party to enforce any provision of this Agreement shall not be construed as a waiver of that provision, nor prevent that party thereafter from enforcing that provision of any other provision of this Agreement.

6.10.Legal Fees and Expenses. In the event of any disputes under this Agreement, each party shall be responsible for its own legal fees and expenses which it may incur in resolving such dispute, unless otherwise prohibited by applicable law or a court of competent jurisdiction.

6.11.Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

6.12.Arbitration. Any controversy, dispute or claim ("Claim") whatsoever between Employee, on the one hand, and Company, or any of its employees, directors, officers, and agents (collectively "Company Parties"), on the other hand, except as excluded below, shall be resolved by binding arbitration, at the request of either party, in accordance with the Employment Dispute Resolution Procedures of the American Arbitration Association or other similar organization agreed to by the parties. The claims covered by this Agreement include, but are not limited to, claims for wages and other compensation, claims for breach of contract (express or implied), tort claims, claims for discrimination or harassment (including, but not limited to, based on race, sex, sexual orientation, religion, national origin, age, marital status, medical condition, or disability), and claims for violation of any federal, state, or other government law, statute, regulation or ordinance, except for claims for worker's compensation or unemployment insurance benefits. Nothing contained in this Agreement shall prohibit Employee from filing a charge of discrimination with the Equal Employment Opportunity Commission and/or the Department of Fair Employment and Housing, and cooperating in the investigation of such.

This provision does not apply to or cover claims based upon a benefit plan that contains an arbitration or other dispute resolution procedure, in which case the provisions of such plan shall apply. Further, either Employee or the Company, in a court of competent jurisdiction, may seek to compel arbitration under this Agreement, to enforce an arbitration award or to obtain preliminary injunctive and/or other equitable relief in support of claims to be prosecuted in an arbitration to the extent allowed by California Code of Civil Procedure Section 1281.8.

The chosen arbitration administrator shall give each party a list of names drawn from its panel of employment arbitrators. The arbitrator shall apply California substantive law and the California Evidence Code to the proceeding. The demand for arbitration must be in writing and made within the applicable statute of limitations period. The arbitration shall take place in Los Angeles County, California. The parties shall be entitled to conduct reasonable discovery, including, without limitation, conducting depositions, requesting documents and propounding interrogatories. The arbitrator shall have the authority to resolve discovery disputes, including but not limited to determining what constitutes reasonable discovery. The arbitrator shall prepare in writing and provide to the parties a decision and award, which shall include factual findings and the reasons upon which a decision is based. Except as may be stated otherwise above, any and all arbitration proceedings shall be conducted in accordance with the Employment Dispute Resolution Procedures of the AAA.

Except as otherwise required by law, the decision of the arbitrator shall be binding and conclusive on the parties. Judgment upon the award rendered by the arbitrator may be entered in any court having proper jurisdiction. The fees for the arbitrator shall be paid by Company. Each party shall bear its or his own fees and costs incurred in connection with the arbitration except for any attorneys' fees or costs which are awarded to a party by the Arbitrator pursuant to a statute or contract which provides for recovery of such fees and/or costs from the other party.

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The arbitrator's authority to resolve disputes and make awards under this Agreement is limited to disputes between (1) Employee as an individual and the Company or any affiliates and (2) Employee as an individual and any past or present owner, shareholder, director, officer, partner, member, associate, employee, intern, service provider, consultant or agent of the Company or any affiliates. No arbitration award or decision will have any preclusive effect as to issues or arbitrable claims in any dispute with anyone who is not a named party to the arbitration. Employee and the Company agree that each may file claims against the other only in their individual capacities, and may not file claims as a plaintiff and/or participate as a class member in any pending or future class and/or collective action against the other. Employee and the Company agree that any class, collective, or representative claims that are found not subject to arbitration under this Agreement shall be resolved in court, and are stayed pending the outcome of the arbitration. Employee and the Company agree that a court, not an arbitrator, shall determine whether any claims must proceed on a class or collective basis.

Except as provided in this Agreement, arbitration shall be the sole, exclusive and final remedy for any dispute between Employee and the Company. Both Company and the Employee understand and agree that by using arbitration to resolve any Claims between Employee and Company or any or all the Company Parties they are giving up any right that they may have to a judge or jury trial with regard to those Claims.

6.13.Taxes and 409A. All payments made by the Company to Employee will be subject to tax withholding in amounts determined by the Company pursuant to applicable laws or regulations and Employee shall be solely responsible for any taxes, excise taxes, penalties and/or interest imposed on Employee as a result of this Agreement or due to any other payments or benefits provided by the Company or any Company affiliate.

To the maximum extent permitted, this Agreement is intended to not constitute a "nonqualified deferred compensation plan" within the meaning of Internal Revenue Code Section 409A ("Section 409A") but in any event will be interpreted to comply with Section 409A. In the event this Agreement or any benefit paid under this Agreement or otherwise by the Company or any Company affiliate to Employee is deemed to be subject to Section 409A, Employee consents to the Company's adoption of such conforming amendments as the Company deems advisable or necessary, in its sole discretion (but without an obligation to do so), to comply with Section 409A and avoid the imposition of taxes under Section 409A.

For purposes of this Agreement, a termination of employment means a "separation from service" as defined in Section 409A. Each payment made pursuant to any provision of this Agreement shall be considered a separate payment and not one of a series of payments for purposes of Section 409A. To the extent any nonqualified deferred compensation payment to Employee could be paid in one or more of Employee's taxable years depending upon Employee completing certain employment related actions, then any such payments will commence or occur in the later taxable year to the extent required by Section 409A.

If upon Employee's "separation from service" within the meaning of Section 409A, Employee is then a "specified employee" (as defined in Section 409A) of RNI, then solely to the extent necessary to comply with Section 409A and avoid the imposition of taxes under Section 409A, the Company (or RNI) shall defer payment of "nonqualified deferred compensation" subject to Section 409A payable as a result of and within six (6) months following such "separation from service" until the earlier of (i) the first business day of the seventh month following Employee's "separation from service," or (ii) ten (10) days after the Company receives written confirmation of Employee's death. Any such delayed payments shall be made without interest.

IN WITNESS WHEREOF, the Company and Employee have executed this Agreement, effective as of the day and year first above written.

COMPANY:	EMPLOYEE:
RADNET MANAGEMENT, INC.	Gregory Sorensen, M.D.
/s/ Howard G. Berger	/s/ Gregory Sorensen, M.D.
Howard G. Berger, M.D., President

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EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

RadNet Reports Second Quarter Financial Results, with Record Quarterly Revenue and Adjusted EBITDA⁽¹⁾, and Updates 2023 Financial Guidance Ranges

· Revenue increased 13.9% to a quarterly record of $403.7 million in the second quarter of 2023 from $354.4 million in the second quarter of 2022; Excluding Revenue from our Artificial Intelligence (“AI”) reporting segment, Revenue from the Imaging Centers reporting segment in the second quarter of 2023 was $401.3 million, an increase of 13.8% from last year’s second quarter of $352.8 million

· Excluding losses from our AI reporting segment, Adjusted EBITDA⁽¹⁾ from the Imaging Centers reporting segment was a quarterly record of $63.7 million in the second quarter of 2023 as compared with $55.5 million in the second quarter of 2022, an increase of 14.7%; Adjusted EBITDA⁽¹⁾, including losses from our AI reporting segment, was $60.4 million in the second quarter of 2023 as compared with $51.3 million in the second quarter of 2022, an increase of 17.7%

· After adjusting for certain unusual or one-time items impacting the quarter and AI losses, Adjusted Earnings⁽³⁾ was $14.9 million and diluted Adjusted Earnings Per Share⁽³⁾ was $0.24 for the second quarter of 2023 compared with Adjusted Earnings⁽³⁾ of $8.6 million and diluted Adjusted Earnings Per Share⁽³⁾ of $0.15 for the second quarter of 2022

· Aggregate procedural volumes increased 11.4% and same-center procedural volumes increased 7.1% compared with the second quarter of 2022

· On June 16^th, RadNet completed its upsized public offering of common stock, raising $246 million of net proceeds; At June 30, 2023, RadNet had a $357 million cash balance

· RadNet increases full-year 2023 guidance levels for Revenue and Adjusted EBITDA⁽¹⁾ from the Imaging Center Segment

LOS ANGELES, California, August 9, 2022 – RadNet, Inc. (NASDAQ: RDNT), a national leader in providing high-quality, cost-effective, fixed-site outpatient diagnostic imaging services through a network of 363 owned and operated outpatient imaging centers, today reported financial results for its second quarter of 2023.

Dr. Howard Berger, President and Chief Executive Officer of RadNet, commented, “I am very pleased with the continued strength of our core imaging center business. In our Imaging Center segment, Revenue increased 13.8% and Adjusted EBITDA⁽¹⁾ increased 14.7% from last year’s second quarter. Our record quarterly Revenue and Adjusted EBITDA⁽¹⁾ were driven by 11.4% aggregate and 7.1% same-center procedural volume growth relative to last year’s second quarter, along with effective expense management. We continue to benefit from the steady growth in the overall industry as well as the accelerating shift from hospital-based procedures to lower-cost, more convenient freestanding centers.”

“As a result of the positive trends we are experiencing in our core business and the strong financial performance of the first and second quarters, we have elected to revise upwards our 2023 full year Imaging Center segment Revenue and Adjusted EBITDA⁽¹⁾ guidance levels in anticipation of financial results that we believe will exceed both our original guidance ranges and those that were revised after our first quarter results,” added Dr. Berger.

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Dr. Berger continued, “Our AI segment has begun to demonstrate accelerated growth. Compared with last year’s second quarter, our AI revenue grew 52.8%. Additionally, for the first six months of 2023 compared with last year’s same six-month period, our AI division Revenue grew 109%. We are experiencing increasing enrollment as we roll-out our Enhanced Breast Cancer Detection program and we are encouraged about its future success. While this service offering continues to gain acceptance from our patients and referring physicians, we have spent a considerable amount time and effort in optimizing the educational benefits and pricing to achieve wider adoption and exposure. These efforts purposefully slowed the roll-out by 90-120 days, impacting the implementation and delaying the financial performance of the program.”

“To assist with the growth and commercialization of our digital health businesses, which in addition to our AI initiatives, includes our eRAD radiology informatics businesses, we are pleased to welcome the addition to our management team of Sham Sokka and Sanjog Misra, both with extensive experience in medical software and AI businesses. These senior management additions emphasize our commitment to, and confidence in our digital businesses. We believe these digital health initiatives will have a transformative impact on both RadNet’s AI and Imaging Center businesses, and positions us to be a significant agent of change in our dynamic industry, an industry that is driven by technology and innovation,” said Dr. Berger.

“In response to the heavy volume demands we are experiencing in many of our imaging center regions, we are growing capacity and access through the de novo strategy we embarked on last year. We opened one de novo facility during the second quarter, and anticipate opening five additional centers by year end as well as another six facilities planned in 2024. Our hospital and health system joint venture offerings continue to grow with new system partnerships and through expansion of existing relationships,” concluded Dr. Berger.

Second Quarter Financial Results

For the second quarter of 2023, RadNet reported Revenue from its Imaging Centers reporting segment of $401.3 million and Adjusted EBITDA⁽¹⁾ of $63.7 million, which exclude Revenue and Losses from the AI reporting segment. As compared with last year’s second quarter, Revenue increased $48.5 million (or 13.8%) and Adjusted EBITDA⁽¹⁾ increased $8.2 million (or 14.7%). Including our AI reporting segment, Revenue was $403.7 million in the second quarter of 2023, an increase of 13.9% from $354.4 million in last year’s second quarter. Including the losses of the AI reporting segment, Adjusted EBITDA⁽¹⁾ was $60.4 million in the second quarter of 2023 and $51.3 million in the second quarter of 2022, an increase of 17.7%.

For the second quarter of 2023, RadNet reported Net Income of $8.4 million as compared with $7.9 million for the second quarter of 2022. Diluted Net Income Per Share for the second quarter of 2023 was $0.12, compared with a Diluted Net Income Per Share of $0.13 in the second quarter of 2022, based upon a weighted average number of diluted shares outstanding of 60.9 million shares in 2023 and 57.0 million shares in 2022.

There were a number of unusual or one-time items impacting the second quarter including: $4.2 million of non-cash gain from interest rate swaps; $1.0 million expense related to the change in valuation of contingent consideration related to completed acquisitions; $759,000 expense related to leases for our de novo facilities under construction that have yet to open their operations; and $8.7 million of pre-tax losses related to our AI reporting segment. Adjusting for the above items, Adjusted Earnings⁽³⁾ from the Imaging Centers reporting segment was $14.9 million and diluted Adjusted Earnings Per Share⁽³⁾ was $0.24 during the second quarter of 2023. This compares with Adjusted Earnings⁽³⁾ of $8.6 million and diluted Adjusted Earnings Per Share⁽³⁾ of $0.15 during the second quarter of 2022.

2

Also, affecting Net Income in the second quarter of 2023 were certain non-cash expenses and unusual items including: $4.9 million of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted stock; $1.9 million of severance paid in connection with headcount reductions related to cost savings initiatives; $77,000 loss on the disposal of certain capital equipment; and $748,000 of non-cash amortization of deferred financing costs and loan discounts related to financing fees paid as part of our existing credit facilities.

For the second quarter of 2023, as compared with the prior year’s second quarter, MRI volume increased 11.8%, CT volume increased 11.3% and PET/CT volume increased 18.3%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 11.4% over the prior year’s second quarter. On a same-center basis, including only those centers which were part of RadNet for both the second quarters of 2023 and 2022, MRI volume increased 7.3%, CT volume increased 6.3% and PET/CT volume increased 18.8%. Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 7.1% over the prior year’s same quarter.

Six Month Financial Results

For the six month period of 2023, RadNet reported Revenue from its Imaging Centers reporting segment of $789.8 million and Adjusted EBITDA⁽¹⁾ Excluding Losses from the AI reporting segment of $116.4 million. Revenue increased $95.8 million (or 13.8%) and Adjusted EBITDA⁽¹⁾ increased $19.1 million (or 19.7%). Including our AI reporting segment Revenue of $4.5 million, Revenue was $794.3 million in the six months of 2023, an increase of 14.1% from $696.1 million in last year’s six-month period. Including the AI reporting segment Adjusted EBITDA⁽¹⁾ losses, Adjusted EBITDA⁽¹⁾ for the six month period of 2023 was $108.6 million as compared with $89.5 million in the same six month period of 2022.

For the six-month period in 2023, RadNet reported Net Loss of $12.6 million, compared with Net Income of $10.9 million in the first six months of 2022. Per share Net Loss for the first six months of 2023 was $(0.21), compared to a diluted Net Income per share of $0.18 in the same six-month period of 2022 (based upon a weighted average number of diluted shares outstanding of 59.2 million in 2023 and 56.7 million in 2022).

Affecting Net Income for the six month period of 2023 were certain non-cash expenses and non-recurring items including: $17.1 million of non-cash employee stock compensation expense; $16.2 million of pre-tax losses related to our AI reporting segment; $2.0 million of severance paid in connection with headcount reductions related to cost savings initiatives; $1.7 million of non-operational rent expense associated with certain un-opened de novo locations: $656,000 loss on the disposal of certain capital equipment; $66,000 of non-cash gain from interest rate swaps; and $1.5 million of amortization of deferred financing costs and loan discount related to our existing credit facilities.

3

2023 Guidance Update

RadNet amends its previously announced guidance levels as follows:

Imaging Center Segment

	Original Guidance Range	Revised Guidance Range After Q1 Results	Revised Guidance Range After Q2 Results
Total Net Revenue	$1,525 - $1,575 million	$1,550 - $1,600 million	$1,575 - $1,610 million
Adjusted EBITDA(1)	$220 - $230 million	$225 - $235 million	$232 - $242 million
Capital Expenditures(a)	$105 - $115 million	$110 - $120 million	Unchanged
Cash Interest Expense(c)	$35 - $40 million	$45 - $50 million	Unchanged
Free Cash Flow (b)(2)	$70 - $80 million	$65 - $70 million	Unchanged

Artificial Intelligence Segment

	Original Guidance Range	Revised Guidance Range After Q1 Results	Revised Guidance Range After Q2 Results
Total Net Revenue	$16 - $18 million	$16 - $18 million	$11 - $13 million
Adjusted EBITDA(1)	$(9) - $(11) million	$(9) - $(11) million	$(11) - $(13) million

(a)	Net of proceeds from the sale of equipment, imaging centers and joint venture interests, and excludes New Jersey Imaging Network capital expenditures.
(b)	Defined by the Company as Adjusted EBITDA(1) less Capital Expenditures and Cash Paid for Interest.
(c)	Excludes payments to counterparties on interest rate swaps and nets interest income from our cash balance recorded in Other Income.

“We have increased our guidance ranges in our core Imaging Center reporting segment for Revenue and Adjusted EBITDA⁽¹⁾ to reflect the strong financial results in the first half of 2023 as compared with our budget. Additionally, we have lowered our guidance ranges for Revenue and Adjusted EBITDA⁽¹⁾ for the AI Segment to reflect delays resulting from optimizing the implementation of our Enhanced Breast Cancer Detection program.”

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 2023 results on Tuesday, August 8th, 2023 at 7:30 a.m. Pacific Time (10:30 a.m. Eastern Time).

Conference Call Details:

Date: Tuesday, August 8, 2023

Time: 10:30 a.m. Eastern Time

Dial In-Number: 844-826-3035

International Dial-In Number: 412-317-5195

It is recommended that participants dial in approximately 5 to 10 minutes prior to the start of the 10:30 a.m. call. There will also be simultaneous and archived webcasts available at https://viavid.webcasts.com/starthere.jsp?ei=1626353&tp_key=fb76d167b0 or http://www.radnet.com under the “Investors” menu section and “News Releases” sub-menu of the website. An archived replay of the call will also be available and can be accessed by dialing 844-512-2921 from the U.S., or 412-317-6671 for international callers, and using the passcode 10181301.

4

About RadNet, Inc.

RadNet, Inc., is the leading national provider of freestanding, fixed-site diagnostic imaging services and related information technology solutions (including artificial intelligence) in the United States based on the number of locations and annual imaging revenue. RadNet has a network of 363 owned and/or operated outpatient imaging centers. RadNet's markets include Arizona, California, Delaware, Florida, Maryland, New Jersey and New York. Together with affiliated radiologists, inclusive of full-time and per diem employees and technicians, RadNet has a total of approximately 9,000 employees. For more information, visit http://www.radnet.com.

Forward Looking Statements

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are expressions of our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, and anticipated future conditions, events and trends. Forward-looking statements can generally be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Forward-looking statements in this press release include, among others, statements we make regarding response to and the expected future impacts of COVID-19, including statements about our anticipated business results, balance sheet and liquidity and our future liquidity, burn rate and our continuing ability to service or refinance our current indebtedness.

Forward-looking statements are neither historical facts nor assurances of future performance. Because forward-looking statements relate to the future, they are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:

· the availability and terms of capital to fund our business;

· our ability to service our indebtedness, make principal and interest payments as those payments become due and remain in compliance with applicable debt covenants, in addition to our ability to refinance such indebtedness on acceptable terms;

· changes in general economic conditions nationally and regionally in the markets in which we operate;

· the availability and terms of capital to fund the expansion of our business and improvements to our existing facilities;

· our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so;

· our ability to acquire, develop, implement and monetize technology, digital health initiatives, artificial intelligence algorithms and applications;

· volatility in interest and exchange rates, or credit markets;

· the adequacy of our cash flow and earnings to fund our current and future operations;

· changes in service mix, revenue mix and procedure volumes;

· delays in receiving payments for services provided;

· increased bankruptcies among our partner physicians or joint venture partners;

· the impact of the political environment and related developments on the current healthcare marketplace and on our business, including with respect to the future of the Affordable Care Act;

· the extent to which the ongoing implementation of healthcare reform, or changes in or new legislation, regulations or guidance, enforcement thereof by federal and state regulators or related litigation result in a reduction in coverage or reimbursement rates for our services, or other material impacts to our business;

· closures or slowdowns and changes in labor costs and labor difficulties, including stoppages affecting either our operations or our suppliers' abilities to deliver supplies needed in our facilities;

· the occurrence of hostilities, political instability or catastrophic events;

· the emergence or reemergence of and effects related to future pandemics, epidemics and infectious diseases; and

· noncompliance by us with any privacy or security laws or any cybersecurity incident or other security breach by us or a third party involving the misappropriation, loss or other unauthorized use or disclosure of confidential information.

5

Any forward-looking statement contained in this current report is based on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that we may make from time to time, whether as a result of changed circumstances, new information, future developments or otherwise, except as required by applicable law.

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.

CONTACTS:

RadNet, Inc.

Mark Stolper, 310-445-2800

Executive Vice President and Chief Financial Officer

6

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

	June 30, 2023			December 31, 2022
	(unaudited)
ASSETS
CURRENT ASSETS
Cash and Cash equivalents	$	356,651		$	127,834
Accounts receivable		174,481			166,357
Due from affiliates		22,240			18,971
Prepaid expenses and other current assets		49,319			54,022
Total current assets		602,691			367,184
PROPERTY, EQUIPMENT AND RIGHT-OF-USE ASSETS
Property and equipment, net		576,094			565,961
Operating lease right-of-use assets		627,130			603,524
Total property, plant, equipment and right-of-use assets		1,203,224			1,169,485
OTHER ASSETS
Goodwill		687,879			677,665
Other intangible assets		100,433			106,228
Deferred financing costs		1,962			2,280
Investment in joint ventures		52,492			57,893
Deposits and other		56,609			53,172
Total assets	$	2,705,290		$	2,433,907
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable, accrued expenses and other	$	333,224		$	369,595
Due to affiliates		20,463			23,100
Deferred revenue		5,054			4,021
Current operating lease liability		59,504			57,607
Current portion of notes payable		15,989			12,400
Total current liabilities		434,234			466,723
LONG-TERM LIABILITIES
Long-term operating lease liability		628,845			604,117
Notes payable, net of current portion		848,333			839,344
Deferred tax liability, net		10,005			9,256
Other non-current liabilities		22,869			23,015
Total liabilities		1,944,286			1,942,455
EQUITY
RadNet, Inc. stockholders' equity:
Common stock - $.0001 par value, 200,000,000 shares authorized; 67,669,564 and 57,723,125 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively		7			6
Additional paid-in-capital		703,593			436,288
Accumulated other comprehensive loss		(15,183	)		(20,677	)
Accumulated deficit		(95,258	)		(82,622	)
Total RadNet, Inc.'s stockholders equity		593,159			332,995
Noncontrolling interests		167,845			158,457
Total equity		761,004			491,452
Total liabilities and equity	$	2,705,290		$	2,433,907

7

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)

(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
REVENUE
Service fee revenue	$	363,918		$	316,501		$	716,338		$	619,776
Revenue under capitation arrangements		39,797			37,874			77,941			76,365
Total service revenue		403,715			354,375			794,279			696,141
OPERATING EXPENSES
Cost of operations, excluding depreciation and amortization		345,147			305,775			697,012			620,813
Depreciation and amortization		32,180			28,862			63,495			55,980
Loss (gain) on sale and disposal of equipment and other		77			81			656			1,209
Severance costs		1,870			99			2,004			300
Total operating expenses		379,274			334,817			763,167			678,302
INCOME (LOSS) FROM OPERATIONS		24,441			19,558			31,112			17,839
OTHER INCOME AND EXPENSES
Interest expense		16,039			11,385			31,761			22,978
Equity in earnings of joint ventures		(1,423	)		(2,748	)		(2,851	)		(5,266	)
Non-cash change in fair value of interest rate hedge		(4,159	)		(6,306	)		(66	)		(27,125	)
Other expenses (income)		40			(7	)		1,472			158
Total other expense (income)		10,497			2,324			30,316			(9,255	)
INCOME (LOSS) BEFORE INCOME TAXES		13,944			17,234			796			27,094
Benefit from (provision for) income taxes		614			(3,403	)		(521	)		(4,900	)
NET INCOME (LOSS)		14,558			13,831			275			22,194
Net income (loss) attributable to noncontrolling interests		6,189			5,926			12,911			11,276
NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS	$	8,369		$	7,905		$	(12,636	)	$	10,918
BASIC NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS	$	0.14		$	0.14		$	(0.21	)	$	0.20
DILUTED NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS	$	0.12		$	0.13		$	(0.21	)	$	0.18
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic		59,880,803			56,059,824			59,221,453			55,683,335
Diluted		60,916,985			56,966,548			59,221,453			56,666,290

8

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS

(IN THOUSANDS)

(unaudited)

	Six Months Ended June 30,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	275		$	22,194
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		63,495			55,980
Amortization of operating lease assets		31,601			34,055
Equity in earnings of joint ventures		(2,851	)		(5,266	)
Distributions from joint ventures		8,947			–
Amortization deferred financing costs and loan discount		1,494			1,295
Loss (Gain) non sale and disposal of equipment		656			1,209
Amortization of cash flow hedge		1,844			1,847
Non-cash change in fair value of interest rate hedge		(66	)		(27,125	)
Stock-based compensation		17,055			15,795
Change in fair value of contingent consideration		3,098			(1,287	)
Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions:
Accounts receivable		(8,124	)		(30,566	)
Other current assets		4,703			(709	)
Other assets		(6,590	)		1,282
Deferred taxes		(2,249	)		4,732
Operating lease liability		(28,582	)		(32,219	)
Deferred revenue		1,033			(7,565	)
Accounts payable, accrued expenses and other		14,952			32,092
Net cash provided by operating activities		100,691			65,744
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of imaging facilities and other acquisitions		(10,315	)		(26,009	)
Purchase of property and equipment and other		(95,380	)		(72,659	)
Proceeds from sale of equipment		73			4,121
Equity contributions in existing and purchase of interest in joint ventures		(288	)		(1,441	)
Net cash used in investing activities		(105,910	)		(95,988	)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on notes and leases payable		(1,051	)		–
Payments on Term Loan Debt		(7,376	)		(6,625	)
Distributions paid to noncontrolling interests		(3,523	)		–
Proceeds from issuance of common stock		246,201			–
Proceeds from issuance of common stock upon exercise of options		51			–
Net cash used in financing activities		234,302			(6,625	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH		(266	)		1,433
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		228,817			(35,436	)
CASH AND CASH EQUIVALENTS, beginning of period		127,834			134,606
CASH AND CASH EQUIVALENTS, end of period	$	356,651		$	99,170
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest	$	39,301		$	19,687
Cash paid during the period for income taxes	$	201		$	126
Cash received (paid) during the period from cash flow hedge	$	6,715		$	(4,248	)
Cash Interest Received on our Cash Balance	$	2,681		$	–

9

RADNET, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON SHAREHOLDERS TO ADJUSTED EBITDA

(IN THOUSANDS)

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Net income (loss) attributable to Radnet, Inc. common stockholders	$	8,369		$	7,905		$	(12,636	)	$	10,918
Income taxes		(614	)		3,403			521			4,900
Interest expense		16,039			11,385			31,761			22,978
Severance costs		1,870			99			2,004			300
Depreciation and amortization		32,180			28,862			63,495			55,980
Non-cash employee stock-based compensation		4,870			4,693			17,056			15,795
Loss (gain) on sale and disposal of equipment and other		77			81			656			1,209
Non-cash change in fair value of interest rate hedge		(4,159	)		(6,306	)		(66	)		(27,125	)
Other expenses		40			(7	)		1,472			158
Legal settlements		–			–			–			2,197
Contingent Consideration		1,014			–			2,630			–
Non-operational rent expenses		759			1,222			1,718			2,160
Adjusted EBITDA Including Losses from AI Segment	$	60,445		$	51,337		$	108,611		$	89,470
Losses from AI Segment		3,285			4,207			7,779			7,792
Adjusted EBITDA excluding Losses from AI Segment	$	63,730		$	55,544		$	116,390		$	97,262

10

PAYOR CLASS BREAKDOWN

	Second Quarter
	2023
Commercial Insurance		58.3%
Medicare		22.2%
Capitation		9.9%
Medicaid		2.5%
Workers Compensation/Personal Injury		3.2%
Other		4.1%
Total		100.0%

RADNET PAYMENTS BY MODALITY

	Second Quarter		Full Year		Full Year		Full Year
	2023		2022		2021		2020
MRI		36.7%		36.8%		36.0%		35.4%
CT		16.9%		17.5%		17.2%		17.6%
PET/CT		6.4%		5.8%		5.5%		6.0%
X-ray		6.6%		6.7%		3.9%		7.3%
Ultrasound		13.0%		12.6%		12.7%		12.3%
Mammography		15.6%		15.3%		16.1%		15.7%
Nuclear Medicine		0.8%		0.9%		1.0%		1.0%
Other		4.0%		4.5%		4.6%		4.7%
		100.0%		100.0%		100.0%		100.0%

PROCEDURES BY MODALITY*

	Second Quarter		Second Quarter
	2023		2022
MRI		387,619		346,598
CT		235,138		211,221
PET/CT		15,036		12,710
Nuclear Medicine		9,463		9,857
Ultrasound		620,660		552,941
Mammography		450,747		393,515
X-ray and Other		832,719		763,334
Total		2,551,382		2,290,176

  * Volumes include wholly owned and joint venture centers.

11

RADNET, INC. AND SUBSIDIARIES

SCHEDULE OF ADJUSTED EARNINGS AND EARNINGS PER SHARE ⁽³⁾

(IN THOUSANDS EXCEPT SHARE DATA)

(unaudited)

	Three Months Ended
	June 30,
	2023			2022
NET INCOME ATTRIBUTABLE TO RADNET, INC.
COMMON STOCKHOLDERS	$	8,369		$	7,905
Subtract non-cash change in fair value of interest rate swaps (i)		(4,159	)		(6,306	)
Non-operational rent expenses (iii)		759			1,222
Contingent Consideration		1,014			–
AI Segment Losses (iv)		8,655			5,892
Total adjustments - loss (gain)		6,269			808
Subtract tax impact of Adjustments (ii)		276			(160	)
Tax effected impact of adjustments		6,545			648
TOTAL ADJUSTMENT TO NET INCOME ATTRIBUTABLE
TO RADNET, INC. COMMON SHAREHOLDERS		6,545			648
ADJUSTED NET INCOME ATTRIBUTABLE TO RADNET, INC.		14,914			8,553
COMMON STOCKHOLDERS
WEIGHTED AVERAGE SHARES OUTSTANDING
Diluted		60,916,985			56,966,548
ADJUSTED DILUTED NET INCOME PER SHARE
ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS	$	0.24		$	0.15

(i)	Impact from the change in fair value of the swpas during the quarter. Excludes the amortization of the accumulation of the changes in fair value out of Other Comprehensive Income that existed prior to the hedges becoming ineffective.
(ii)	Tax effected using (4.40)% and 19.75% blended federal and state effective tax rate for the second quarter of 2023 and 2022, respectively.
(iii)	Represents rent expense associated with de novo sites under construction prior to them becoming operational.
(iv)	Represents losses before income taxes from Artificial Intelligence reporting segment.

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Footnotes

⁽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 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.

⁽³⁾ The Company defines Adjusted Earnings (Loss) Per Share as net income or loss attributable to RadNet, Inc. common stockholders and excludes losses or gains on the disposal of equipment, loss on debt extinguishments, bargain purchase gains, severance costs, loss on impairment, loss or gain on swap valuation, gain on extinguishment of debt, unusual or non-recurring entries that impact the Company’s tax provision and any other non-recurring or unusual transactions recorded during the period.

Adjusted Earnings (Loss) Per Share is reconciled to its nearest comparable GAAP financial measure. Adjusted Earnings (Loss) Per Share is a non-GAAP financial measure used as analytical indicator by RadNet management and the healthcare industry to assess business performance. Adjusted Earnings Per Share should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted Earnings Per Share 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 Earnings Per Share 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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EX-99.2

Exhibit 99.2

 

 

C O R P O R A T E P A R T I C I P A N T S

Howard Berger, President, Chief Executive Officer

Mark Stolper, Chief Financial Officer

C O N F E R E N C E C A L L P A R T I C I P A N T S

Brian Tanquilut, Jefferies

Nathan Malewicki, Raymond James

Yuan Zhi, B. Riley Securities

Mitra Ramgopal, Sidoti

P R E S E N T A T I O N

Operator

Good day, and welcome to the RadNet Second Quarter 2023 Financial Results Call.

(Operator Instructions) Please note today’s event is being recorded.

I would now like to turn the conference over to Mark Stolper, Chief Financial Officer. Please go ahead, sir.

Mark Stolper

Thank you. Good morning ladies and gentlemen, and thank you for joining Dr. Howard Berger and me today to discuss RadNet’s second quarter 2023 results.

Before we begin today, we'd like to remind everyone of the Safe Harbor statement under the Private Securities Litigation Reform Act of 1995. This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Specifically, statements concerning anticipated future financial and operating performance, RadNet’s ability to continue to grow the business by generating patient referrals and contracts with radiology practices, recruiting and retaining technologists, receiving third party reimbursement for diagnostic imaging services, successfully integrating acquired operations, generating revenue and Adjusted EBITDA for the acquired operations as estimated, among others, are forward-looking statements within the meaning of the Safe Harbor.

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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. These risks and uncertainties include those risks set forth in RadNet’s reports filed with the SEC from time to time, including RadNet's annual report on Form 10-K for the year ended December 31, 2022. Undue reliance should not be placed on forward-looking statements, especially guidance on future financial performance which speaks only as of the date it is made. RadNet undertakes no obligation to publicly update 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.

With that, I'd like to turn the call over to Dr. Berger.

Howard Berger

Thank you Mark. Good morning everyone, and thank you for joining us today.

On today's call, Mark and I plan to provide you with highlights from our second quarter 2023 results, give you more insight into factors which affected this performance and discuss our future strategy. After our prepared remarks, we will open the call to your questions. I'd like to thank all of you for your interest in our Company and for dedicating a portion of your day to participate in our conference call this morning.

I am very pleased with our performance in the second quarter. It was the strongest quarter in our Company’s history with record revenue and Adjusted EBITDA. Relative to last year’s second quarter, our core imaging center segment revenue increased 13.8% and imaging center Adjusted EBITDA increased 14.7%. This performance was driven in part by heavy demand in virtually all of our markets. Aggregate procedural volumes increased 11.4% and same center procedural volumes increased 7.1% compared with the second quarter of 2022. This heavy demand is being driven by a number of factors that we have highlighted in recent quarters which we believe will continue to create strong growth for years to come.

First within the healthcare delivery system, there is a growing focus on preventative non-invasive medicine with keen interest in the earlier and more accurate detection of diseases. As managed care grows, risk-based provider models become more common and population health screening becomes more prevalent, diagnostic imaging will grow in its importance. Second, as the population expands and ages, diagnostic imaging is used with greater frequency. In fact, Medicare lives utilize imaging two to three times more often than younger commercial lives. Third, technology in our industry continues to evolve and improve, creating additional medical indications for ordering diagnostic imaging tests. Advances in MRI technology and post-processing software have shortened scanning times, increased throughput and capacity, and improved imaging quality. New contrast materials and radioactive (inaudible) are driving novel applications such as PSMA, or prostate specific membrane antigen, PET scans and Alzheimer’s imaging.

While these factors explain the steady growth in our industry, there is also a market shift taking place within diagnostic imaging that is also working in RadNet’s favor. Increasingly, patient volumes are being directed away from expensive hospital-based imaging facilities towards more cost effective ambulatory outpatient settings. Freestanding outpatient centers offer more convenient and lower cost services that are preferred by patients, referring physicians and payors. We believe these favorable trends will continue to help drive our future same center performance and present growth opportunities for years to come.

To address these trends, we’ve opened one new facility and we currently have 12 de novo facilities in various stages of development which will open for operation in the second half of 2023 and throughout 2024. These facilities are located in markets where we have patient backlogs, require additional capacity, or where we currently lack access points to service patient populations in need. While these projects require us to make capital investments above our normal spending, we are confident these centers will be material contributors to our long-term performance and growth. While the labor market remains challenging, we have been more successful in filling open positions and have been reducing our reliance on expensive temporary staffing services and overtime hours of our existing team members.

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We continue our efforts to grow our hospital and health system partnership initiatives. Currently 120 of our 353 centers, or 33% are held within health system partnerships. Our partnerships are some of the largest and most successful systems in our geographies, including RWJBarnabas, Memorial Care, Dignity Health, Lifebridge, University of Maryland Medical System, the Adventist Health System, Cedars Sinai, and others. These and other health systems are seeking solutions for long term strategies around outpatient imaging and have recognized that cost effective and efficient freestanding imaging centers will continue to capture market share from hospitals as payors and patients migrate their site of care towards lower cost high quality solutions. We expect by year end, our JV centers could represent closer to 40% of our total center accounts.

Our hospital and health system partners have been instrumental in increasing our procedural volumes through their relationships with physician partners. Additionally, our JV partners are helpful in providing support, if needed, in establishing long term, equitable outpatient reimbursement rates for our services.

As a result of the strong performance in the first half of this year and the confidence we are feeling for the remainder of the 2023 period, we have elected to increase key financial guidance levels in our core imaging center operating segment for 2023. Mark in his prepared remarks will review the increases we made to our revenue and Adjusted EBITDA guidance levels upon releasing our financial results this morning.

Lastly, we continue to make progress with our AI and digital health initiatives. You may have seen a recent press release announcing two additions to our executive team who will be focused on driving growth in our digital health businesses to include both clinical and generative AI opportunities as well as opportunities in our eRADIMAGING, informatics and related software businesses. Sham Sokka and Sanjog Misra will be focused on commercialization partnerships, product development and operations in our digital health platform. While they assist us with continued progress in DeepHealth, Aidence and Quantib, Sham and Sanjog will also be launching a number of initiatives in generative AI designed to improve efficiency and lower cost of many of our core business processes, such as contact centers, scheduling, insurance verification, front office functions, reporting tools, revenue cycle, and many more.

Generative AI should be as transformative to the core functions of our imaging center business as clinical or predictive AI will be to the delivery of our professional radiology services and population health screening. In the coming quarters, we will share the initiatives that we are undertaking, a number of which we have been prioritizing to help us address the challenges of the current labor market.

I’m also pleased to announce that Dr. Greg Sorensen, the founder of DeepHealth, the first AI company we purchased over three years ago, has assumed the role of Chief Science Officer and has joined the Board of Directors at RadNet. The investments we are making in digital health technology and personnel underscore our commitment to our digital health initiatives and highlight their growing importance to RadNet’s future strategic direction and priorities.

We are experiencing strong growth with our digital health platform. In the first six months of this year, our AI revenue grew 109% from last year’s same period, driven predominantly by the launch of our enhanced breast cancer detection EBCD mammography offering, which we continue to implement across our networks. We expect this growth to accelerate in the second half of this year as we expand EBCD to more of our women’s centers throughout our markets, particularly within our west coast operations.

The results of the program and the feedback we are receiving from our patients, referring physicians and hospital partners have been excellent. Since the inception of the EBCD program, we have diagnosed over 450 breast cancers that without the intervention of artificial intelligence might have gone otherwise undetected. Detecting cancers sooner allows for better patient outcomes through earlier treatment and intervention and reduces cost to the healthcare system. Furthermore, we are reducing the callback rates for patients through the use of AI by being more definitive with the initial screening exam. We currently are experiencing approximately 30% enrolment in the EBCD mammography screening program and believe we will see greater uptake as we improve communicating and marketing the benefits to our patients and their referring physicians.

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Finally, I would like to comment on RadNet’s liquidity position and financial leverage. On June 16, we completed an equity offering where we raised $246 million of net proceeds to de-leverage our balance sheet and position us to accelerate growth. This offering along with strong operating performance resulted in a net debt to Adjusted EBITDA ratio of approximately two times at quarter end. We currently have the lowest leverage and strongest liquidity position in our Company’s history. As of June 30, we had $357 million of cash on our balance sheet and were undrawn on our $195 million revolving line of credit. Our days sales outstanding - DSOs at June was 35.4 days, which we believe to be one of the best in the industry.

While we are committed to growing and expanding our business, we will also continue to follow our methodical and disciplined approach to managing our financial leverage. Our low leverage, lower cost of capital and strong liquidity relative to many of our other industry operators positions us to capitalize on acquisition opportunities and other business opportunities where capitalization is advantageous. We remain patient and disciplined in our approach to acquisitions, focused first on our core markets where we bring unique synergies and cost savings.

At this time, I’d like to turn the call back over to Mark to discuss some of the highlights of our second quarter 2023 performance. When he is finished, I will make some closing remarks.

Mark Stolper

Thank you Howard. I’m now going to briefly review our second quarter 2023 performance and attempt to highlight what I believe to be some material items. I will also give some further explanation of certain items in our financial statement as well as provide some insights into some of the metrics that drove our second quarter performance. I will also provide an update to 2023 financial guidance levels which were released in conjunction with our 2022 year-end results in March, and which we amended in May upon releasing our first quarter financial results.

In my discussion, I will use the term Adjusted EBITDA, which is a non-GAAP financial measure. The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, and excludes losses or gains on the disposal of equipment, other income or loss, loss on debt extinguishments, and non-cash equity compensation. Adjusted EBITDA includes equity and earnings of unconsolidated operations and subtracts allocations of earnings to non-controlling interest and subsidiaries, and is adjusted for non-cash or extraordinary and one-time events taking place during the period. A full quantitative reconciliation of Adjusted EBITDA to net income or loss attributable to RadNet Inc. common shareholders is included in our earnings release.

With that said, I’d now like to review our second quarter 2023 results.

For the second quarter of 2023, RadNet reported revenue from its imaging centers reporting segment of $401.3 million and Adjusted EBITDA of $63.7 million, which excludes revenue and losses from the AI reporting segment. As compared with last year’s second quarter, RadNet revenue increased $48.5 million or 13.8% and Adjusted EBITDA increased $8.2 million or 14.7%. Including our AI reporting segment, revenue was $403.7 million in the second quarter of 2023, an increase of 13.9% from $354.4 million in last year’s second quarter. Including the losses of the AI reporting segment, Adjusted EBITDA was $60.4 million in the second quarter of 2023 and $51.3 million in the second quarter of 2022, an increase of 17.7%.

For the second quarter of 2023, RadNet reported net income of $8.4 million as compared with $7.9 million for the second quarter of 2022. Diluted net income per share for the second quarter of 2023 was $0.12 compared with a diluted net income per share of $0.13 in the second quarter of 2022, based upon a weighted average number of diluted shares outstanding of 60.9 million shares in 2023 and 57 million shares in 2022.

There were a number of unusual or one-time items impacting the second quarter, including the following: $4.2 million of non-cash gain from interest rate swaps, $1 million expense related to the change in valuation of contingent consideration related to completed acquisitions, $759,000 of expense related to leases for our de novo facilities under construction that have yet to open their operations, and $8.7 million of pre-tax losses related to our AI reporting segment. Adjusting for the above items, adjusted earnings from the imaging center reporting segment was $14.9 million and diluted adjusted earnings per share was $0.24 during the second quarter of ’23. This compares with adjusted earnings of $8.6 million and diluted adjusted earnings per share of $0.15 during the second quarter of 2022.

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Also affecting net income in the second quarter of 2023 were certain non-cash expenses and unusual items, including the following: $4.9 million of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted stock; $1.9 million of severance paid in connection with headcount reductions related to cost savings initiatives; $77,000 of disposal of certain capital equipment; and $748,000 of non-cash amortization of deferred financing costs and loan discounts related to financing fees as part of our existing credit facilities.

For the second quarter of 2023 as compared with the prior year second quarter, MRI volume increased 11.8%, CT volume increased 11.3%, and PET CT volume increased 18.3%. Overall volume taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and all other exams, increased 11.4% over the prior year second quarter. On a same center basis, including only those centers which were part of RadNet for both the second quarters of 2023 and 2022, MRI volume increased 7.3%, CT volume increased 6.3%, and PET CT volume increased 18.8%. Overall, same center volume taking into account all routine imaging exams increased 7.1% over the prior year same quarter.

In the second quarter of 2023, we performed 2,551,382 total procedures. The procedures were consistent with our multi-modality approach whereby 75% of all the work we did by volume was from routine imaging. Our procedures in the second quarter of 2023 were as follows: 387,619 MRIs as compared with 346,598 MRIs in the second quarter of 2022; 235,138 CTs as compared with 211,221 CTs in the second quarter of 2022; 15,036 PET CTs as compared with 12,710 PET CTs in the second quarter of 2022; and 1,913,589 routine imaging exams as compared with 1,719,647 of all these exams in the second quarter of 2022.

Overall GAAP interest expense for the second quarter of 2023 was $16 million. This compares with GAAP interest expense in the second quarter of 2021 of $11.4 million. The higher interest expense is predominantly the result of the upsized New Jersey Imaging Network credit facility completed in October of last year in conjunction with NJIN’s acquisition of Montclair Radiology. Cash paid for interest during the period, which excludes non-cash deferred financing expense and accrued interest, was $17.8 million. Cash paid for interest net of interest earned on our cash balance and interest rate swap payments received was $12.4 million for the three month period ended June 30, 2023, and $29.9 million for that same period last year.

With regards to our balance sheet, as of June 30, unadjusted for bond and term loan discounts, we had $518.9 million of net debt, which is our total debt at par value less our cash balance. This compares with $662.1 million of net debt at June 30, 2022. Note that this debt balance includes New Jersey Imaging Network’s debt of $146.3 million for which RadNet is neither a borrower nor guarantor. As of June 30, 2023, we were undrawn on our $195 million revolving line of credit and had a cash balance of $357 million.

At June 30, 2023, our accounts receivable balance was $174.5 million, an increase of $8.1 million from year end 2022. The increase in accounts receivable is mainly the result of the significant increase in our procedural volumes over the last quarter. Our days sales outstanding, or DSO remains near the lowest levels in our Company’s history at 35.4 days as of June 30, 2023.

Through June 30, 2023, we had cash capital expenditures net of asset dispositions and sales imaging center assets in joint venture interests of $86.9 million. This excludes $8.4 million of cash capital expenditures at our New Jersey Imaging Network joint venture.

At this time, I’d like to update and revise our 2023 fiscal year guidance levels, which we released in conjunction with our fourth quarter and year end 2022 results and amended after reporting our first quarter 2023 financial results.

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For total net revenue, we have increased our guidance range by $25 million at the low end and $10 million at the high end to $1.575 billion to $1.610 billion. For Adjusted EBITDA, we have increased both the low end and the high end of our guidance by $7 million to $232 million to $242 million. We have left our capital expenditure, cash interest expense and free cash flow guidance levels unchanged as amended after the first quarter results, and for the artificial intelligence segment, due to the delay that Dr. Berger spoke about in our implementation of that program, we have lowered the revenue guidance by $5 million both at the low end and the high end to $11 million to $13 million, and our Adjusted EBITDA loss projection for the year has increased by $2 million at both the low end and the high end to $11 million to $13 million loss for the year.

In our core imaging center reporting segment, we have increased our guidance ranges for revenue and Adjusted EBITDA to reflect the strong financial results of the first half of 2023 as compared with our initial budget. We have lowered our guidance ranges for revenue and Adjusted EBITDA for the AI segment and, as Dr. Berger mentioned, we have been refining the EBCD program and have been testing different levels of pricing, various service offerings, new marketing collateral, local market sales, and marketing strategies. We estimate that this optimization process has resulted in a 90 to 120-day delay in the progress of the program. Though the new revenue guidance levels fall short of our original estimates, it represents almost a tripling of our business from 2022 levels. We remain incredibly excited about the growth in AI and we continue to believe that we can breakeven in the AI segment before the end of 2024.

I’ll now take a few minutes to give you an update on 2024 reimbursement and discuss what we know with regards to 2024 anticipated Medicare rates. As a reminder, Medicare represents about 22% of our business mix.

With respect to Medicare reimbursement, several weeks ago we received a matrix for proposed rates by CPT code which is typical as part of the physician fee schedule proposal that is released about this time every year. We have completed an initial analysis and compared those rates to 2023 rates. We volume-weight our analysis using expected 2024 procedural volumes.

As you may recall, three years ago CMS moved forward with increased reimbursement for evaluation and management CPT codes which favor certain physician specialties that regularly bill for these services, particularly primary care doctors. CMS proposed doing so with budget neutrality, meaning that it proposed to reallocate reimbursement from physicians who rarely bill for E&M codes to physicians who regularly bill for these codes. As a result, radiology and most other specialties experienced cuts in reimbursement during 2021, 2022 and 2023, cuts meant to be phased in over a several year period. The cuts we faced in 2023 were substantially mitigated by legislation that was passed at the end of last year as part of the Consolidated Appropriations Act.

In this year’s proposed ruling governing 2024 reimbursement, Medicare appears to effectively be phasing in any remainder of the E&N code related cut avoided last year as a result of the Consolidated Appropriations Act. The cut proposed for 2024 results from a decrease in the conversion factor in the Medicare fee schedule by about 3.4% from $33.89 to $32.75, along with certain minor changes to the RVUs - the relative value units of certain radiology CPT codes. Our initial analysis of the proposal for next year implies that RadNet on roughly $1.6 billion in revenue would face an approximately $7 million to $9 million revenue hit in 2024 from its Medicare business.

Because the proposed decrease in the conversion factor affects all physicians, not just radiologists, there are many lobbying groups from the various medical specialties aggressively opposing the cut, including radiology’s two main lobbying forces, the Association for Quality Imaging, or AQI, and the American College of Radiology, the ACR. At this time, our experts believe there is a high probability that the final rule to be released in November will be less severe than the current proposal as a result of Congressional action that could take place later this year, similar to what happened last year.

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In November during our third quarter financial results call, we hope to have more of an update to give you about this matter. While the $7 million to $9 million cut to RadNet’s revenue next year is not insignificant, we have reimbursement increases completed or scheduled from capitated and commercial payors that will fully mitigate this Medicare reduction, which should go into effect in the currently proposed period.

I’d now like to turn the call back to Dr. Berger, who will make some closing remarks.

Howard Berger

Thank you Mark.

Technology has always been a driver for change in our industry. This appears to be truer today than ever before. Artificial intelligence, both clinical and generative, is in its nascent stage within the field of radiology. Everything that we do today will be impacted by technology innovation and artificial intelligence in the coming years.

Our business is an information technology business. Almost every process we perform, including collection of patient information, scheduling, preauthorization, insurance verification, creation of radiology reports, billing and collecting, medical coding, and processing the patient payments can be enhanced by data algorithms and management tools. Artificial intelligence and informatics either already play or will play important roles in all of these business processes.

RadNet has always been on the leading edge of technology, which has been a key to our success. In the past, we have both adopted solutions from others that benefited our business and created our own solution in areas we felt were imperative for us to control. This philosophy has not changed. In 2010, we began a journey to design our own radiology information system and image management system, which has become core to our data work flow. Much of what we do at the operating level and the efficiencies we have created in operating our 363 centers have been the result of our ability to control our IT infrastructure.

As we move into the next generation of innovation driven primarily by AI, we see even more opportunity to bring efficiencies, cost savings and improved margins to RadNet through investments in our digital health initiatives. As demonstrated by our second quarter results, our core operating business is healthy and growing, supported by heavy and expanding procedural volumes. The next stage of RadNet’s growth and development will be to bring these technological solutions to our business and to the broader radiology marketplace that makes servicing this accelerating demand possible.

I believe we have assembled many of the components, including the management talent to take our business and industry to the next level of innovation, elevating radiology and our diagnostic capabilities to an even more important and critical role in healthcare delivery. We’re excited to keep our stakeholders informed of our progress in these areas while continuing to execute on driving growth in our core business through our focus on same center performance, hospital and health system partnerships, tuck-in acquisitions and de novo expansion.

Operator, we are now ready for the question and answer portion of the call.

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Operator

Thank you. (Operator instructions)

Today’s first question comes from Brian Tanquilut with Jefferies. Please go ahead.

Brian Tanquilut

Hey, good morning guys. I guess my first question for Howard, and maybe Mark too, obviously the core business is strong and volume performance was really compelling. Just curious how you’re thinking about the sustainability of strong demand trends and your ability to maintain healthy organic growth rates going forward.

Howard Berger

Good morning Brian, thank you. I think the key to sustaining our growth is really the investment that I’ve talked about in our digital health platform. The advent of generative AI as well as the faster and easier development of new algorithms will allow us to transform all of the processes that we use to operate our imaging centers considerably more efficiently and with less dependence on the labor issues that we currently face, much as everybody in healthcare and, for that matter, the general economy. We expect the growth in the imaging sector of our business to continue to grow, but that the ability for us to scale up and perform the necessary tasks and demands that we have will be imperative for us to use these tools that can create these efficiencies and lessen our dependence on an already overstretched or stretched labor market.

As we move into the latter part of this year and certainly by the first quarter, we’ll be able to perhaps talk a little bit more specifically about these initiatives, but as we demonstrated in the press release that we made about a week or so ago, with the new executives added to this team, we feel that we are in excellent position to drive this transformational change and control the processes that have allowed us to operate all 363 of our centers on a single platform, regardless of what market that we’re in. While I like to think that we can be proud of what we’ve achieved to this point, I think the best is yet to come in terms of the technological innovation and transformation which radiology and imaging are probably better suited for than virtually any other specialty in the healthcare industry.

Mark Stolper

Brian, I’ll just add one other thing here. Another key to our continued growth and success is the ability to increase our capacity, and the 12 de novo centers that we have currently under construction, I think five of which will open by year end or should open by year end, the other seven sometime in 2024, will also be instrumental in our ability to create the capacity that we need to better service the heavy demand that we have right now in virtually all of our markets, where we’re experiencing significant backlogs, which is obviously a high class problem but one that is still indeed a problem as we try to get patients into our centers expeditiously and try to provide great service to our referring physician community.

I think the de novo strategy and driving that level of capacity in addition to the technology advances that Dr. Berger talked about, as well as some additional technology that we’ve licensed that allow for shorter scan times for MRI scanning with post-processing software that allows for greater throughput and obviously greater capacity at our centers. All these things are important to continue to be able to grow like we have been, because the demand for imaging services is there and that’s clear in all of our markets.

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Brian Tanquilut

Understand, appreciate that.

I guess my second question, as we think about AI, and I understand the reasons for the delay or the pushing some of the targets out, I guess two questions. As I think about—you know, Mark, you said you think you’ll still hit breakeven by the end of 2024. Maybe you can remind us, how does that compare to your original outlook for the business, and then second, maybe taking a step back, how are you thinking about or where does your confidence come from in your ability to get the AI side of the business where you want it to be in the time frame that you’ve outlined?

Howard Berger

Hi Brian, I’ll take that one and Mark can fill in if he thinks I’ve missed anything, like he did so nicely just in the question before this. I think we’re as confident and perhaps even more confident in our AI division for two reasons. Number one, we have been successful in about 30% of our screening mammography cases, having our patients enroll in what is increasingly being recognized as a very valuable addition to the breast screening process, and this is—since we’re going direct to consumer, since there is no reimbursement for AI at this point in time, this is a different strategy than most anything that we’ve attempted in the past, although our prior effort in this was also successful some eight years ago, I think it was, when 2D mammography got converted to 3D mammography, and we had a similar process that we implemented to have patients pay for this before it was reimbursed.

We expect a similar process to unfold here, so that the direct to consumer, we hope is just a stopgap here until it’s adopted by not only more and more of the payors, but more and more employees--employers, I should say, that recognize this kind of wellness screening can certainly benefit them, as well as their employees.

I’d like to pivot on that, that while that’s been a slow learning process for us, what I don’t think will be slow will be the generative AI side of the initiatives that we have already begun embarking on, that we think can be transformative in the way that radiology is practiced and managed. I think that in some respects may even become more important in the short term here, given a number of the issues that I mentioned in my opening remarks with difficulties that we have in the labor market. I think you’ll see from us in upcoming quarters more specifics about how these tools can be implemented, and perhaps one of the more exciting methods that the new AI tools on the generative side are capable of is that we don’t have to rewrite everything all at one time. We can take specific core needs that we have, like our contact centers and scheduling and insurance verification, and focus on them as segments that we can layer on when they’re ready, rather than have to retool the entire platform that we have. This is a huge difference from the way that we and others have operated in the past, that gives us a lot of enthusiasm about the impact that we can have on our operational processes here in the very near future. In fact, we hope that some of these may be implemented as early as the first quarter of 2024.

I think what you’ll hear more and more from us is the continued efforts that we make, not only in our breast screening program but also in lung screening and prostate screening, as we become more comfortable with the self-pay and direct-to-consumer marketing, as well as the initiatives to take control of our operational processes through generative AI algorithms to not only create efficiencies but to create a better patient experience for all of our people that choose to get their scans done in the RadNet locations.

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Brian Tanquilut

Got it. Then maybe Mark, last question from me, thank you for giving color on your view on reimbursement. Remind me, if I’m thinking of this correctly, this is about the same level that you see in terms of proposed cuts every year, and am I right in thinking that Congress has stepped in to kind of block or mitigate this over the last three or four years?

Mark Stolper

Yes, so this, we believe, is the result--the proposed cut is the result of a phase-in of the budget neutrality aspect of increasing the E&N codes that primary care docs and family practice medicine docs bill under, which occurred several years ago, and they’ve been phasing in this cut in not just radiology but every specialty in order to pay for those E&N increases. We’ve faced these cuts for the last few years. It was a little bit higher the last couple of years but then was ultimately mitigated by this Appropriations Act that was passed in December. In both December of last year and the December of the prior year, it was a bipartisan bill that was sponsored by two Congressmen, one Republican, one Democrat from both California and Indiana - this is Bera and Bucshon, and so a lot of our experts and lobbyists not only within radiology but within healthcare in general, because remember this cut is being faced not just by radiologists, it’s being faced by everybody, that there’s a lot of support to try to get these cuts either reversed or mitigated.

We have some level of confidence that again this year, some of the proposed cut here in the Medicare communication that we got several weeks ago will likely be mitigated. But regardless of whether it’s mitigated or not, and we’re estimating the total impact to be the $7 million to $9 million range in our revenue, we’ve got more than that in terms of reimbursement increases that have either already gone into place in 2023 that will increase our reimbursement in 2024, or that will be scheduled to go into place both within our capitation contracts, as well as our commercial contracts. Regardless, we’re not overly concerned about this level of reimbursement cut, but we do have some level of optimism that part of the Medicare cut will be mitigated.

Howard Berger

Brian, let me add one other thing, which I’m sure you’re aware of, which may make the drive away from hospitals even stronger than it is right now. As I’m sure you’re—as you’ve seen, that the new hospital outpatient prospective payment system has increased the reimbursement to hospitals for their Medicare patients, further widening the reimbursement that’s paid for hospitals for the same services that we provide on a freestanding outpatient basis. I think it’s interesting to see that the very thing that has been a big driver in moving the patients away from hospitals into outpatient centers, which was primarily from the commercial payors, in the extraordinary difference in reimbursement is now being seen also on the Medicare side of it, and in the times that we exist with inflation and expenses going up, it will be even more imperative for our patients to be very mindful of where they get their place of service.

Mark Stolper

To that point, Brian, the HOP schedule now has over a 30% premium relative to the outpatient Medicare fee schedule, which makes no sense whatsoever, particularly because Medicare supposedly is interested in site neutrality with respect to its reimbursement. As this spread widens, I think you’re going to have more and more Medicare patients, particularly ones that have a 20% co-pay, which is very typical in the Medicare fee-for-service landscape, start directing their business out of hospitals, just like the private payors and commercial insurance plans are doing.

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Brian Tanquilut

Got it, thank you guys.

Operator

Thank you. Our next question today comes from Nathan Malewicki with Raymond James. Please go ahead.

Nathan Malewicki

Hey, you’ve got on Nate here, stepping in for John. First on the labor environment, last we heard, contract labor costs were running at about 50% of last year’s levels, so any update on contract labor and anything you can quantify there? Just more broadly on the labor environment, has that and will that continue to improve in the second half and then in the foreseeable future?

Mark Stolper

Sure, hi Nate, I’ll take this one. What we’ve said in the first quarter, what we did say in the first quarter is that our reliance on contract labor as well as our reliance on paying our own employee base overtime is about at 50% of what it was last year. It’s not that the cost of outside labor, of these staffing companies has gone down by 50%, it’s just that we’re relying less on them as we’ve become more successful in filling open positions. If you remember, our number of open positions hit its height in September of last year, and throughout last year we were mightily struggling with filling staff at our facility—at the facility level and keeping our centers open long enough to service the heavy demand. We’ve been much more successful this year and there has been some stabilization in general in the labor market in being able to staff our centers appropriately, to keep the centers open to fill more of this backlog.

It’s not that the pricing has gone down, it’s just our reliance on outside services that’s gone down.

Nathan Malewicki

Got you, thanks for that.

Then just on seasonality here, is it safe to assume that this year features kind of similar trends as pre-pandemic periods, so maybe, I don’t know, 24%, 25% of total EBITDA in 3Q and then a bit of a step-up there in 4Q?

Mark Stolper

Well, we typically do see seasonality in our business. The first quarter tends to be our most challenged quarter primarily for two reasons, first being winter weather conditions in the northeastern United States where roughly 35% of our business is, and we’re impacted by storms that close facilities or power lines going down, power outages, things of that nature. The second reason the first quarter is a little slower is the reset of patient deductibles tends to create a phenomenon where patients utilize healthcare services less at the beginning of the year and then are more liberal with their spending as they move through their deductibles towards latter parts of the year. We tend to see the first quarter and the first half of the year a little lighter than what we see in the third and fourth quarters. Also, summer vacations tend to impact the second quarter, and in the fourth quarter as patients have moved through deductibles, tends to be a high utilization quarter, and then you also have higher utilization of mammography in the fourth quarter which coincides with the October month, which is breast cancer awareness.

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I would expect, all things being equal, although we can never really tell, that the second half of the year tends to be stronger than the first half, and 2023 should be no different.

Nathan Malewicki

Awesome, thanks. Then just to squeeze in one more here, on the equity earnings of joint ventures line, it looks like that came in lighter than our model, and it was about $1.5 million this quarter, kind of a bit of a deviation from historical trends. Anything to read through there in terms of JV consolidation or just the overall JV strategy, and then just how to think about that line item moving forward? That’s all I’ve got, thank you.

Mark Stolper

Yes, nothing I can think of that would be a trend. Obviously one quarter, a trend doesn’t make, so I would expect that line to even out. I have to go back to see what impacted the quarter in that respect at our unconsolidated JV level, which is what you’re talking about in terms of equity and earnings, but yes, I wouldn’t—there’s nothing that’s gone on there that would make that sustainable, that change.

Operator

Thank you, and our next question today comes from Yuan Zhi with B. Riley Securities. Please go ahead.

Yuan Zhi

Good morning. Congrats on another strong quarter, and thank you for taking our questions.

First, a follow-up on Brian’s question, maybe more for Mark. I noticed the same center volume year-over-year growth rate was 7.1% versus 9.3% last quarter. The overall volume growth was 11.4% versus 14% last quarter. This might be a repeat from the last question, but especially for your 2023 guidance, your modeling assumptions, do you anticipate the volume growth in the second half to be similar to what you have observed in 2Q, and it would be great if you can comment on what you have observed so far regarding the patient flow in July. Thank you.

Mark Stolper

Sure, sure. Thank you Yuan, nice to talk to you. We have had very strong same center performance for the first half of the year. We’ve always said historically that we felt over the long run, given the growth in the industry and our growth in our markets and taking share away from competitors, that we felt that we could sustainably grow in the 3% to 5% same store sales growth over the long period of time.

As there has been significant growth not only in the industry from some of the newer technologies, such as PSMA that Dr. Berger spoke about on the prostate side, and other things that are driving new applications and new indications for ordering these tests, the industry has been growing nicely and we’ve been growing faster, because we’re also benefiting from the shift in hospital-based—from hospital-based outpatient imaging to freestanding center imaging. Our growth over the last year or two has been exceeding that kind of 3% to 5% range that we’ve talked about.

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Now, in the first quarter, we had extraordinary growth, as you mentioned, at 9.3%, and we talked about it then and I’ll emphasize this now, we don’t believe 9.3% is necessarily a sustainable number. We were impacted positively by two things in the first quarter that was extraordinary, the first being that we had a much more mild winter this year relative to the winter in the first quarter of 2022, and that benefited us in the first quarter. The second extraordinary impact was that the first quarter of 2022 was impacted by the omnicron variant of COVID, where not only patients were impacted extensively but our employee base was also impacted, to the tune of having over 8% of our employee base on COVID leave for the first couple weeks of January of last year. The 9.3% this year in the first quarter was better than it normally would have been but for those two situations that I just described.

The second quarter here was a much cleaner, what I’d call same store sales comparison with last year, where we weren’t being impacted by weather, we weren’t being impacted by omnicron in 2022, and it was, I think, a more fair comparison. To your question directly about the second half of the year, I would hope that we could exceed or be towards the high end of that 3% to 5% growth—you know, same store sales growth that we’ve talked about in the past, and would hope that it would look more like the second quarter going forward because of all the reasons that I’ve talked about, which is driving our growth.

Yuan Zhi

Got it. Maybe a quick follow-up there, it would be great if you could comment on what you have observed so far of the patient flow in July.

Howard Berger

July was a good month for us. July is always a bit of a challenge, given the July 4th holiday and what day of the week it falls on, which this year it fell on a Tuesday, which is not necessarily most advantageous for us given that the Monday is almost like an extension of the holiday weekend, and also the vacation schedule. But relative to last year’s July volumes, we’re pleased with what the early results in July look like and where August appears, at least for the first week, it appears to be also holding well within our expectations.

Yuan Zhi

Got it, thanks for the additional color there. Maybe Howard or Mark, can you provide more color on your capacity right now for MRI and PET scans, the current procedure close to 90% of your capacity? I’m asking because the comments from Biogene and (inaudible) that are targeting to treat 10,000 Alzheimer disease patients by the end of March 2024. Assuming there is this increasing demand, I’m curious what do you view as the rate limiting factors for you to meet this demand, such as the numbers of imaging instruments you have, the staffing to support the procedure, or even the supply of imaging agents. Thank you.

Howard Berger

Great question. I’ll be happy to answer that one.

The demand that we have is not exceeding the capacity of our equipment, it’s exceeding the ability of us to staff up to levels that allow us to use our equipment on the extended hours and times when we can see these patients. That’s our biggest challenge and it’s particularly apparent in the MRI modalities. What we’re doing to address that, which again is somewhat novel to the RadNet core strategy and platform, is that there is new technology, called remote operation command centers, that allow a technologist to operate more than one MRI piece of equipment remotely, and what we have found is that in certain markets, for example in Florida or in Arizona, where the shortage is not as serious as it is, let’s say in New York, we are gaining better acceptance and hiring of technologists that can run those systems remotely from other of our markets. That is probably the near-term ability for us to address some of these additional capacity issues.

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As Mark mentioned, we’re also building more centers to add capacity, and in some cases we have begun to buy our own mobile scanners that allow us, particularly more so on the west coast, to move those around to areas that are being particularly challenged. We do have a lot of tools in the tool kit, not the least of which also is that the newer MRI scanners or upgrades that we can make to existing scanners have had a remarkable impact on reducing the scan time, which for many of our MRIs has been reduced from 20 to 30 minutes down to 10 minutes or, in some cases, even less, has allowed us to increase our throughput at capacity in that manner.

There’s a number of ways to address these problems, and all of it by and large is really driven by the use of technology, both from an artificial intelligence standpoint and some of these other remote tools and other algorithms that just help us increase our capacity without necessarily having to increase our staffing.

Mark Stolper

And Yuan, I’ll address the second part of your question, which was specifically about Alzheimer’s imaging and what you’re hearing out of Biogen and Lily and others. The initial PET CT, which is one of the key ways of detecting the presence of these amyloid plaques, which is necessary to get these patients onto the newer therapies that have come out by some of these pharmaceutical companies, that could be a huge opportunity for diagnostic imaging and obviously for us.

With respect to capacity, which I think was the question that you had asked as it relates to Alzheimer’s imaging, we currently have 67 PET scanners that are doing on average—well, doing in total 60,000 scans per year, give or take. When you do the math over 255 workdays, each PET CT scanner that we have is doing less than four PET CTs per day. The rest of the day, those scanners are very busy doing routine CT work. If we had--if there were a flood of PET CT demand in relation to these Alzheimer’s drugs, what we would do is to utilize our existing PET CT capacity and each PET CT—a busy PET CT can be doing 13, 14, 15 scans a day, so we have a lot of PET CT capacity in our existing installed base. The challenge we would have at that point is then moving routine CT work to either other scanners, expanding hours, or having to buy additional CTs to take over that level of volume, but we do have a fair bit of PET CT capacity even within our own installed base at this point.

Yuan Zhi

Got it. Appreciate all the helpful color there. Thank you.

Operator

Thank you, and our next question today comes from Mitra Ramgopal with Sidoti. Please go ahead.

Mitra Ramgopal

Yes, hi. Good morning. Thanks for taking the questions. Most of mine have already been answered, but I just had a quick one in terms of the cash on the balance sheet in light of the equity raise. How should we think of the capital allocation priorities in terms of growing the Company via M&A, de novos, investments in technology and personnel versus maybe looking to reduce debt, given the high interest rate environment?

Howard Berger

I would say all of the above might be the best way for me to answer that, Mitra. I think one of the benefits of the equity raise that we accomplished was giving us the opportunity to look at ways that we could deploy that capital in the best interests of the Company’s growth. As we said, one of our shorter term possibilities is the pay down of some of our debt, but given the Company’s projected cash flow for the rest of this year and next year, I think you’ll find that we’ll be investing in the de novos, upgrading technology of existing equipment, replacing older equipment with newer equipment. We used to use in the past operating leases as a way of minimizing the amount of cash outlay. We have essentially eliminated that and now are (inaudible) cash for virtually all of our capital equipment investment, so I think that will also help our margins and help the growth of the Company.

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Lastly, we are looking to use the capital we raised to invest in our new digital health initiatives, which we think may have the best returns on investment given the long term prospects that we’re tending towards a capital light business that can have substantially better margins than the imaging center sector. We’ll look to continue to utilize our capital in any way that can help the business grow, and we’ll look forward to discussing some of those with more detail as the rest of this year unfolds.

Mark Stolper

When we completed the equity offering, because you can imagine prospective investors were very interested in this very question, what we said was part of the reason why we were raising the money was that in October of this year, one of our interest rate swaps rolls off and gives us more exposure to floating rate debt, and we intend—and that’s $100 million of notional exposure that rolls off in October of this year, and so our intention is to take $100 million from our cash balance at that time and repay debt, so that we don’t have more floating rate exposure. That’s still our intention to do that, and the only reason why we wouldn’t do that is if there were some extraordinary use of proceeds before that time, like an M&A opportunity that would take its place, but that’s not the intention in terms of utilizing it for M&A at this point. There’s nothing that’s a foregone conclusion.

Mitra Ramgopal

Thanks, and congrats on a great quarter again.

Howard Berger

Thanks Mitra.

Operator

Thank you. Ladies and gentlemen, this concludes our question-and-answer session. I’d like to turn the conference back over to the Management Team for any final remarks.

Howard Berger

Again, I would like to take this opportunity to thank all of our shareholders for their continued support and the employees of RadNet for their dedication and hard work. Management will continue its endeavor to be a market leader that provides great services with an appropriate return on investment for all stakeholders. Thank you for your time today, and I look forward to our next call. Good day.

Operator

Thank you sir. This concludes today’s conference call. We thank you all for attending today’s presentation. You may now disconnect your lines and have a wonderful day.

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Cover [Abstract]
Document Type	8-K
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Entity Address, Address Line One	1510 Cotner Avenue
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