RadNet, Inc. (NASDAQ: RDNT), a national leader in
providing high-quality, cost-effective, fixed-site outpatient
diagnostic imaging services through a network of 335 owned and/or
operated outpatient imaging centers, today reported financial
results for its first quarter of 2019.
Dr. Howard Berger, President and Chief Executive
Officer of RadNet, commented, “We had the strongest first quarter
in our Company’s history, recording record Revenue and
EBITDA. Our Revenue increased 17.4% and our EBITDA increased
57.3% from last year’s first quarter. While we benefited by
more favorable winter weather conditions during this year’s
quarter, our improved performance was also driven by strong
contributions from our recent acquisitions and initiatives on the
East Coast and overall same-center procedural volume growth of
2.3%.”
Dr. Berger continued, “We continue to grow our
core markets through driving patient volumes with effective
marketing programs, offering differentiated services, deploying
cutting-edge technologies, encouraging alternate payment models
(such as capitation) and establishing joint ventures with strong
and entrepreneurial health systems. During the quarter, we
announced the formation of our second California joint venture with
Dignity Health in Ventura County, California. We also made
progress with operationalizing our first East Coast capitation
contract with Emblem Health and integrating our recently acquired
Medical Arts Radiology acquisition in Long Island, New York.”
“Subsequent to quarter’s end, on April 1st, we
completed the acquisition of Kern Radiology in Kern County,
California. Kern operates 5 multimodality imaging centers,
performs over 200,000 exams per year and earns over $25 million of
Revenue on an annual basis. Additionally, on April 18th, we
completed a financing which raised an incremental term loan of $100
million and added $20 million of additional capacity under our
revolving credit facility. The financing affords us
additional financial and operating flexibility to complete future
tuck-in acquisitions and to establish new health system joint
ventures in the future. We are very appreciative of the
support and confidence we received from our long-standing lending
group,” added Dr. Berger.
Financial Results
For the first quarter of 2019, RadNet reported
Revenue of $271.5 million, Adjusted EBITDA(1) of $33.1 million and
Net Loss of $3.7 million. Revenue increased $40.2 million (or
17.4%), Adjusted EBITDA(1) increased $12.1 million (or 57.3%) and
Net Loss decreased $3.6 million, over the first quarter of
2018. Per share Net Loss for the first quarter was $(0.08),
compared to $(0.15) in the first quarter of 2018, based upon a
weighted average number of basic and diluted shares outstanding of
49.6 million shares in 2019 and 47.8 million shares in 2018.
Affecting Net Loss in the first quarter of 2019
were certain non-cash expenses and non-recurring items
including: $4.5 million of non-cash employee stock
compensation expense resulting from the vesting of certain options
and restricted stock; $631,000 of severance paid in connection with
headcount reductions related to cost savings initiatives; and
$975,000 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 first quarter of 2019, as compared to
the prior year’s first quarter, MRI volume increased 7.3%, CT
volume increased 10.4% and PET/CT volume increased 7.2%.
Overall volume, taking into account routine imaging exams,
inclusive of x-ray, ultrasound, mammography and other exams,
increased 7.6% over the prior year’s first quarter. On a
same-center basis, including only those centers which were part of
RadNet for both the first quarters of 2019 and 2018, MRI volume
increased 3.2%, CT volume increased 4.5% and PET/CT volume
decreased 3.7%. Overall same-center volume, taking into
account routine imaging exams, inclusive of x-ray, ultrasound,
mammography and other exams, increased 2.3% over the prior year’s
same quarter.
2019 Guidance Update
RadNet affirms its previously announced guidance
levels and amends its cash interest expense guidance levels
follows:
|
|
|
|
Original Guidance
Range |
Revised Guidance Range |
Total Net Revenue |
$1,050 million - $1,100 million |
Unchanged |
Adjusted EBITDA(1) |
$155 million - $165 million |
Unchanged |
Free Cash Flow Generation (a) |
$45 million - $55 million |
Unchanged |
Capital Expenditures (b) |
$60 million - $65 million |
Unchanged |
Cash Interest Expense |
$38 million - $43 million |
$43 million - $48 million |
|
|
|
(a) Defined by the Company as Adjusted EBITDA(1) less
total capital expenditures and cash paid for interest.(b) Net
of proceeds from the sale of equipment, imaging centers and joint
venture interests.
Dr. Berger highlighted, “We are on track to meet
our guidance levels that we established upon reporting our 2018
fourth quarter and full-year financial results. We adjusted
our cash interest expenses to properly incorporate the expected
interest expense of New Jersey Imaging Network, which became a
consolidated entity in the fourth quarter, and the recently
completed incremental Term Loan.”
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 first
quarter 2019 results on Thursday, May 9th, 2019 at 7:30 a.m.
Pacific Time (10:30 a.m. Eastern Time).
Conference Call Details:
Date: Thursday, May 9, 2019Time:
10:30 a.m. Eastern TimeDial In-Number:
855-327-6837International Dial-In Number: 631-891-4304
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 http://public.viavid.com/index.php?id=134511 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 10006819.
Regulation G: GAAP and Non-GAAP
Financial Information
This release contains certain financial
information not reported in accordance with GAAP. The Company uses
both GAAP and non-GAAP metrics to measure its financial
results. The Company believes that, in addition to GAAP
metrics, these non-GAAP metrics assist the Company in measuring its
cash-based performance. The Company believes this information
is useful to investors and other interested parties because it
removes unusual and nonrecurring charges that occur in the affected
period and provides a basis for measuring the Company's financial
condition against other quarters. Such information should not
be considered as a substitute for any measures calculated in
accordance with GAAP, and may not be comparable to other similarly
titled measures of other companies. Non-GAAP financial
measures should not be considered in isolation from, or as a
substitute for, financial information prepared in accordance with
GAAP. Reconciliation of this information to the most
comparable GAAP measures is included in this release in the tables
which follow.
About RadNet, Inc.
RadNet, Inc. is the leading national provider of
freestanding, fixed-site diagnostic imaging services in the United
States based on the number of locations and annual imaging revenue.
RadNet has a network of 335 owned and/or operated outpatient
imaging centers. RadNet's core markets include California,
Maryland, Delaware, New Jersey and New York. In addition, RadNet
provides radiology information technology solutions, teleradiology
professional services and other related products and services to
customers in the diagnostic imaging industry. Together with
affiliated radiologists, and inclusive of full-time and per diem
employees and technicians, RadNet has a total of approximately
7,800 employees. For more information, visit
http://www.radnet.com.
Forward Looking Statements
This press release contains forward-looking
statements within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. Specifically, statements concerning
successfully integrating acquired operations, successfully
achieving 2019 financial guidance, successfully developing and
integrating new lines of business, continuing to grow its business
by generating patient referrals and contracts with radiology
practices, and receiving third-party reimbursement for diagnostic
imaging services, are forward-looking statements within the meaning
of the Safe Harbor. Forward-looking statements are based on
management's current, preliminary expectations and are subject to
risks and uncertainties, which may cause the Company's actual
results to differ materially from the statements contained herein.
Further information on potential risk factors that could affect
RadNet's business and its financial results are detailed in its
most recent Annual Report on Form 10-K, as filed with the
Securities and Exchange Commission. Undue reliance should not be
placed on forward-looking statements, especially guidance on future
financial performance, which speaks only as of the date they are
made. RadNet undertakes no obligation to update publicly any
forward-looking statements to reflect new information, events or
circumstances after the date they were made, or to reflect the
occurrence of unanticipated events.
CONTACTS:
RadNet,
Inc.Mark Stolper,
310-445-2800Executive Vice
President and Chief Financial Officer
|
|
RADNET, INC. AND SUBSIDIARIES |
|
CONDENSED CONSOLIDATED BALANCE
SHEETS |
|
(IN THOUSANDS EXCEPT SHARE AND PER SHARE
DATA) |
|
|
|
|
|
March 31, 2019 |
|
December 31, 2018 |
|
ASSETS |
(unaudited) |
|
|
|
CURRENT ASSETS |
|
|
|
Cash and cash equivalents |
$ |
10,428 |
|
|
$ |
10,389 |
|
|
Accounts receivable, net |
|
156,767 |
|
|
|
148,919 |
|
|
Due from affiliates |
|
619 |
|
|
|
595 |
|
|
Prepaid expenses and other current assets |
|
46,276 |
|
|
|
46,288 |
|
|
Assets held for sale |
|
2,041 |
|
|
|
2,499 |
|
|
Total current assets |
|
216,131 |
|
|
|
208,690 |
|
|
PROPERTY, EQUIPMENT AND RIGHT-OF-USE ASSETS |
|
|
|
Property and equipment, net |
|
343,964 |
|
|
|
345,729 |
|
|
Operating lease right-of-use assets |
|
403,066 |
|
|
|
- |
|
|
Total property, equipment and right-of-use assets |
|
747,030 |
|
|
|
345,729 |
|
|
OTHER ASSETS |
|
|
|
Goodwill |
|
424,308 |
|
|
|
418,093 |
|
|
Other intangible assets |
|
40,872 |
|
|
|
40,593 |
|
|
Deferred financing costs |
|
1,218 |
|
|
|
1,354 |
|
|
Investment in joint ventures |
|
39,712 |
|
|
|
37,973 |
|
|
Deferred tax assets, net of current portion |
|
31,952 |
|
|
|
31,506 |
|
|
Deposits and other |
|
24,845 |
|
|
|
25,392 |
|
|
Total assets |
$ |
1,526,068 |
|
|
$ |
1,109,330 |
|
|
LIABILITIES AND EQUITY |
|
|
|
|
CURRENT LIABILITIES |
|
|
|
Accounts payable, accrued expenses and other |
$ |
177,659 |
|
|
|
181,028 |
|
|
Due to affiliates |
|
17,583 |
|
|
|
13,089 |
|
|
Deferred revenue |
|
1,958 |
|
|
|
2,398 |
|
|
Current portion of deferred rent |
|
- |
|
|
|
3,735 |
|
|
Current portion of finance lease |
|
4,936 |
|
|
|
- |
|
|
Current portion of operating lease |
|
64,538 |
|
|
|
- |
|
|
Current portion of notes payable and long term debt |
|
33,912 |
|
|
|
33,653 |
|
|
Current portion of obligations under capital lease |
|
- |
|
|
|
5,614 |
|
|
Total current liabilities |
|
300,586 |
|
|
|
239,517 |
|
|
LONG-TERM LIABILITIES |
|
|
|
|
Deferred rent, net of current portion |
|
- |
|
|
|
31,542 |
|
|
Long-term finance lease liability |
|
5,663 |
|
|
|
- |
|
|
Long-term operating lease liability |
|
375,363 |
|
|
|
- |
|
|
Notes payable, net of current portion |
|
630,874 |
|
|
|
626,507 |
|
|
Obligations under capital lease, net of current portion |
|
- |
|
|
|
6,505 |
|
|
Other non-current liabilities |
|
44 |
|
|
|
5,006 |
|
|
Total liabilities |
|
1,312,530 |
|
|
|
909,077 |
|
|
EQUITY |
|
|
|
|
RadNet, Inc. stockholders' equity: |
|
|
|
Common stock - $.0001 par value, 200,000,000 shares authorized;
50,081,478 and 48,977,485 shares issued and outstanding at March
31, 2019 and December 31, 2018, respectively |
|
5 |
|
|
|
5 |
|
|
Additional paid-in-capital |
|
256,488 |
|
|
|
242,835 |
|
|
Accumulated other comprehensive income (loss) |
|
1,055 |
|
|
|
2,259 |
|
|
Accumulated deficit |
|
(121,648 |
) |
|
|
(117,915 |
) |
|
Total RadNet, Inc.'s stockholders' equity |
|
135,900 |
|
|
|
127,184 |
|
|
Noncontrolling interests |
|
77,638 |
|
|
|
73,069 |
|
|
Total equity |
|
213,538 |
|
|
|
200,253 |
|
|
Total liabilities and equity |
$ |
1,526,068 |
|
|
$ |
1,109,330 |
|
|
|
|
|
|
|
|
RADNET, INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(IN THOUSANDS EXCEPT SHARE AND PER SHARE
DATA) |
(unaudited) |
|
Three Months Ended March 31, |
|
|
2019 |
|
|
|
|
2018 |
|
REVENUE |
|
|
|
|
Service Fee Revenue |
$ |
242,672 |
|
|
|
|
204,168 |
|
Revenue under capitation arrangements |
|
28,877 |
|
|
|
|
27,224 |
|
Total revenue |
|
271,549 |
|
|
|
|
231,392 |
|
OPERATING EXPENSES |
|
|
|
|
Cost of operations, excluding depreciation and
amortization |
|
243,057 |
|
|
|
|
215,634 |
|
Depreciation and amortization |
|
19,620 |
|
|
|
|
17,856 |
|
Loss (gain) on sale and disposal of equipment |
|
971 |
|
|
|
|
(1,936 |
) |
Severance costs |
|
631 |
|
|
|
|
726 |
|
Total operating expenses |
|
264,279 |
|
|
|
|
232,280 |
|
INCOME (LOSS) FROM OPERATIONS |
|
7,270 |
|
|
|
|
(888 |
) |
|
|
|
|
|
OTHER INCOME AND EXPENSES |
|
|
|
|
Interest expense |
|
12,295 |
|
|
|
|
10,039 |
|
Equity in earnings of joint ventures |
|
(1,873 |
) |
|
|
|
(2,977 |
) |
Other expenses (income) |
|
- |
|
|
|
|
1 |
|
Total other expenses |
|
10,422 |
|
|
|
|
7,063 |
|
LOSS BEFORE INCOME TAXES |
|
(3,152 |
) |
|
|
|
(7,951 |
) |
Benefit from income taxes |
|
1,230 |
|
|
|
|
2,497 |
|
NET LOSS |
|
(1,922 |
) |
|
|
|
(5,454 |
) |
Net income attributable to noncontrolling interests |
|
1,811 |
|
|
|
|
1,884 |
|
NET LOSS ATTRIBUTABLE TO RADNET, INC. COMMON
STOCKHOLDERS |
$ |
(3,733 |
) |
|
|
$ |
(7,338 |
) |
|
|
|
|
|
BASIC NET LOSS PER SHARE ATTRIBUTABLE TO RADNET, INC.
COMMON STOCKHOLDERS |
$ |
(0.08 |
) |
|
|
$ |
(0.15 |
) |
DILUTED NET LOSS PER SHARE |
|
|
|
|
ATTRIBUTABLE TO RADNET, INC. COMMON
STOCKHOLDERS |
$ |
(0.08 |
) |
|
|
$ |
(0.15 |
) |
WEIGHTED AVERAGE SHARES OUTSTANDING |
|
|
|
|
Basic and Diluted |
|
49,553,694 |
|
|
|
|
47,822,618 |
|
|
|
|
|
|
|
|
RADNET, INC. AND SUBSIDIARIES |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
(IN THOUSANDS) |
|
(unaudited) |
|
|
Three Months Ended March 31, |
|
|
|
2019 |
|
|
2018 |
|
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
Net loss |
$ |
(1,922 |
) |
$ |
(5,454 |
) |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
|
19,620 |
|
|
17,856 |
|
|
Amortization of operating lease right-of-use assets |
|
16,000 |
|
|
|
Equity in earnings of joint ventures |
|
(1,873 |
) |
|
(2,977 |
) |
|
Distributions from joint ventures |
|
- |
|
|
2,821 |
|
|
Amortization deferred financing costs and loan discount |
|
975 |
|
|
974 |
|
|
Loss (gain) on sale and disposal of equipment |
|
971 |
|
|
(1,936 |
) |
|
Stock-based compensation |
|
4,538 |
|
|
3,745 |
|
|
Noncash item in other expenses |
|
(559 |
) |
|
|
Change in fair value of contingent consideration |
|
(639 |
) |
|
|
Changes in operating assets and liabilities, net of assets acquired
and liabilities assumed in purchase transactions: |
|
|
|
Accounts receivable |
|
(9,486 |
) |
|
(6,132 |
) |
|
Other current assets |
|
(1,184 |
) |
|
1,003 |
|
|
Other assets |
|
1,254 |
|
|
(2,715 |
) |
|
Deferred taxes |
|
(1,481 |
) |
|
(2,759 |
) |
|
Operating leases |
|
(15,863 |
) |
|
- |
|
|
Deferred rent |
|
- |
|
|
1,302 |
|
|
Deferred revenue |
|
(440 |
) |
|
105 |
|
|
Accounts payable, accrued expenses and other |
|
16,989 |
|
|
18,480 |
|
|
Net cash provided by operating activities |
|
26,900 |
|
|
24,313 |
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
Purchase of imaging facilities |
|
(3,000 |
) |
|
(5,819 |
) |
|
Equity investments at fair value |
|
(143 |
) |
|
(2,200 |
) |
|
Purchase of property and equipment |
|
(32,940 |
) |
|
(23,946 |
) |
|
Proceeds from sale of equipment |
|
756 |
|
|
2,116 |
|
|
Proceeds from equity interests in a joint venture |
|
132 |
|
|
- |
|
|
Net cash used in investing activities |
|
(35,195 |
) |
|
(29,849 |
) |
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
Principal payments on notes and leases payable |
|
(1,713 |
) |
|
(1,736 |
) |
|
Payments on Term Loan Debt |
|
(9,020 |
) |
|
(8,270 |
) |
|
Distributions paid to noncontrolling interests |
|
- |
|
|
(759 |
) |
|
Proceeds from sale of noncontrolling interest |
|
5,275 |
|
|
- |
|
|
Contribution from a noncontrolling partner |
|
750 |
|
|
- |
|
|
Proceeds from revolving credit facility |
|
144,900 |
|
|
- |
|
|
Payments on revolving credit facility |
|
(131,900 |
) |
|
- |
|
|
Proceeds from issuance of common stock upon exercise of
options |
|
50 |
|
|
- |
|
|
Net cash provided by (used in) financing activities |
|
8,342 |
|
|
(10,765 |
) |
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH |
|
(8 |
) |
|
22 |
|
|
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS |
|
39 |
|
|
(16,279 |
) |
|
CASH AND CASH EQUIVALENTS, beginning of
period |
|
10,389 |
|
|
51,322 |
|
|
CASH AND CASH EQUIVALENTS, end of period |
$ |
10,428 |
|
$ |
35,043 |
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION |
|
|
|
Cash paid during the period for interest |
$ |
10,296 |
|
$ |
9,050 |
|
|
|
|
|
|
|
|
RADNET, INC.RECONCILIATION OF GAAP NET
INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. COMMON SHAREHOLDERS TO
ADJUSTED EBITDA(1)(IN THOUSANDS) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
March 31, |
|
|
|
|
|
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
Attributable to RadNet, Inc. Common Shareholders |
|
$ |
(3,733 |
) |
|
$ |
(7,338 |
) |
|
Less Benefit From
Income Taxes |
|
|
|
|
|
(1,230 |
) |
|
|
(2,497 |
) |
|
Plus Other
Expenses |
|
|
|
|
|
|
- |
|
|
|
1 |
|
|
Plus Interest
Expense |
|
|
|
|
|
|
12,295 |
|
|
|
10,039 |
|
|
Plus Severance
Costs |
|
|
|
|
|
|
631 |
|
|
|
726 |
|
|
Plus Loss (Gain)
on Sale of Equipment |
|
|
|
|
971 |
|
|
|
(1,936 |
) |
|
Plus Gain on Sale
of Equipment Attributable to Non Controlling Interests |
|
|
- |
|
|
|
440 |
|
|
Plus Depreciation
and Amortization |
|
|
|
|
|
19,620 |
|
|
|
17,856 |
|
|
Plus Non Cash
Employee Stock Compensation |
|
|
|
|
4,538 |
|
|
|
3,745 |
|
|
|
Adjusted
EBITDA(1) |
|
|
|
$ |
33,092 |
|
|
$ |
21,036 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PAYOR CLASS BREAKDOWN** |
|
|
|
|
|
First Quarter |
|
2019 |
|
|
Commercial Insurance/Other
Patient Revenue |
58.0% |
Medicare |
20.0% |
Capitation |
10.6% |
Workers Compensation/Personal
Injury |
4.1% |
Medicaid |
2.6% |
Other/Non Patient |
4.7% |
Total |
100.0% |
|
|
**Capitation
percentage has been calculated based upon its proportion of Revenue
Under Capitation Arrangements in the period to Service
Fee Revenue, Net of Contractual Allowances and Discounts plus
Revenue Under Capitation Arrangements. After deducting the
capitation percentage from 100%, all other payor class percentages
are based upon a proportion to global payments received from
consolidated imaging centers from that periods dates of services
and excludes payments from hospital contracts, Breastlink,
imaging center management fees, eRAD, Imaging on Call and other
miscellaneous revenue. |
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|
|
|
|
|
|
|
RADNET PAYMENTS BY MODALITY * |
|
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|
First Quarter |
|
Full Year |
|
Full Year |
|
Full Year |
|
Full Year |
|
2019 |
|
2018 |
|
2017 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
MRI |
35.6% |
|
35.2% |
|
34.9% |
|
34.7% |
|
35.3% |
|
CT |
17.1% |
|
16.5% |
|
16.2% |
|
15.8% |
|
15.7% |
|
PET/CT |
5.7% |
|
5.7% |
|
5.2% |
|
5.0% |
|
5.1% |
|
X-ray |
8.5% |
|
8.4% |
|
8.9% |
|
9.3% |
|
9.6% |
|
Ultrasound |
12.5% |
|
12.2% |
|
12.1% |
|
12.3% |
|
11.5% |
|
Mammography |
14.8% |
|
15.8% |
|
16.3% |
|
16.5% |
|
16.4% |
|
Nuclear Medicine |
1.0% |
|
1.1% |
|
1.1% |
|
1.2% |
|
1.3% |
|
Other |
4.8% |
|
5.1% |
|
5.2% |
|
5.2% |
|
5.1% |
|
|
100.0% |
|
100.0% |
|
100.0% |
|
100.0% |
|
100.0% |
|
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Note |
|
|
|
|
|
|
|
|
|
* Based upon
global payments received from consolidated Imaging Centers from
that period's dates of service. |
|
|
|
|
Excludes payments
from hospital contracts, Breastlink, Imaging on Call, eRAD, Center
Management Fees and other miscellaneous operating activities. |
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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.
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