RadNet Reports Second Quarter Financial Results to Include Record Revenue and Reaffirms Guidance Ranges
- Total Net Revenue increased 6.3% to $244.4 million in the second quarter of 2018 from $230.0 million in the second quarter of 2017
- Adjusted EBITDA(1) increased 3.0% to $38.2 million in the second quarter of 2018 from $37.0 million in the second quarter of 2017
- Earnings Per Share was $0.11 in the second quarter of 2018, flat from the second quarter of 2017
- Aggregate procedural volumes increased 3.7% and same center volumes increased 1.0% as compared with the second quarter of 2017
- RadNet enters into its first east coast capitation arrangement with EmblemHealth
- RadNet reaffirms previously announced 2018 guidance levels
LOS ANGELES, California, August 9, 2018 – RadNet, Inc. (NASDAQ: RDNT), a national leader in providing high-quality, cost-effective, fixed-site outpatient diagnostic imaging services through a network of 304 owned and/or operated outpatient imaging centers, today reported financial results for its second quarter of 2018.
Dr. Howard Berger, Chairman and Chief Executive Officer of RadNet, commented, “After being severely impacting by adverse weather conditions during the first quarter, I am pleased that our performance has recovered so effectively. During the second quarter, we had strong revenue and EBITDA performance that is in line with our initial 2018 projections.
We again are demonstrating steady and consistent revenue growth, positive same store procedural gains and higher EBITDA as compared with prior year periods.”
Dr. Berger continued, “We are excited about the remainder of 2018. We expect to be very active during the second half of this year in some of our largest joint ventures. We commenced operations with our partner MemorialCare in Southern California and will be looking to expand that joint venture beyond its current 34 centers. We will also look to grow our New Jersey Imaging Networks JV with RWJ Barnabas during the second half of this year through expanding its access to capital and evaluating strategic acquisition opportunities. For our consolidated operations, we will continue to focus on regional market business development, cost containment and evaluating strategic acquisitions.”
Dr. Berger added, “On October 1st, we are scheduled to commence operations for our recently announced capitation partnership with EmblemHealth in the New York Metropolitan area in 26 new locations. We will be investing into and expanding the size and capabilities of many of these locations to initially service about 200,000 patients who are part of Emblem’s AdvantageCare medical group as well as position us to provide imaging services to other Emblem and non-Emblem patient populations. This is an important strategic relationship for our company and we are excited to bring an alternative payment model to the east coast for diagnostic imaging. We expect to enjoy the same success with capitation on the east coast as we’ve had for over two decades with similar partnerships in California. We believe we are on the forefront of performance-based payment models and will look to grow these arrangements in the coming quarters.”
Second Quarter Financial Results
For the second quarter of 2018, RadNet reported Revenue of $244.4 million and Adjusted EBITDA(1) of $38.2 million. Revenue increased $14.4 million (or 6.3%) and Adjusted EBITDA(1) increased $1.1 million (or 3.0%) from the second quarter of last year.
For the second quarter, RadNet reported Net Income of $5.4 million, an increase of approximately $100,000 over the second quarter of 2017. Per share diluted Net Income for the second quarter was $0.11, compared to the same amount in the second quarter of 2017 (based upon a weighted average number of diluted shares outstanding of 48.5 million and 47.2 million for these periods in 2018 and 2017, respectively).
Affecting Net Income in the second quarter of 2018 were certain non-cash expenses and non-recurring items including: $1.1 million of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted stock; $279,000 of severance paid in connection with headcount reductions related to cost savings initiatives; $105,000 loss on the sale of certain capital equipment; and $976,000 of non-cash amortization of deferred financing costs and loan discount on debt issuances.
For the second quarter of 2018, as compared with the prior year’s second quarter, MRI volume increased 6.4%, CT volume increased 8.7% and PET/CT volume increased 13.3%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 3.7% 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 2018 and 2017, MRI volume increased 1.2%, CT volume increased 3.2% and PET/CT volume increased 0.1%. Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 1.0% over the prior year’s same quarter.
Six Month Financial Results
For the six months ended June 30, 2018, RadNet reported Revenue of $475.8 million and Adjusted EBITDA(1) of $59.2 million. Revenue increased $16.8 million (or 3.7%) and Adjusted EBITDA(1) decreased $6.5 million (or -9.9%) from the same six month period last year. The decline in Adjusted EBITDA(1) for the six month period was mainly due to a significant loss of Revenue during the first quarter as a result of adverse weather conditions in the northeast.
For the six month period in 2018, RadNet reported a Net Loss of $(1.9) million as compared with Net Income of $4.1 million for the six month period in 2017. Per share Net Loss for the six month period in 2018 was $(0.04), compared to per share Net Income in the prior year’s same period of $0.09 (based upon a weighted average number of basic shares outstanding of 47.9 million and fully diluted shares outstanding of 47.1 million for these periods in 2018 and 2017, respectively).
Affecting Net Loss for the six month period of 2018 were certain non-cash expenses and non-recurring items including: $4.9 million of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted stock; $1.0 million of severance paid in connection with headcount reductions related to cost savings initiatives; and $1.9 million of combined non-cash amortization of deferred financing costs and loan discounts related to financing fees paid as part of our existing credit facilities.
2018 Guidance Update:
RadNet reaffirms its previously announced 2018 guidance ranges, as amended after its first quarter results, as follows:
| Total Net Revenue | $945 million – $970 million |
| Adjusted EBITDA(1) | $140 million – $150 million |
| Cash Interest Expense | $33 million – $38 million |
| Free Cash Flow Generation (a) | $45 million – $55 million |
(a) Defined by the Company as Adjusted EBITDA(1) less total capital expenditures and cash paid for interest.
RadNet has revised its Capital Expenditure guidance level upwards by $10 million to reflect additional investment it will make in conjunction with the recently announced EmblemHealth partnership in New York:
| Original Guidance Range | Revised Guidance Range | |
|---|---|---|
| Capital Expenditures (b) | $50 million – $55 million | $60 million – $65 million |
(b) Net of proceeds from the sale of equipment, imaging centers and joint venture interests.
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 2018 results on Thursday, August 9th, 2018 at 7:30 a.m. Pacific Time (10:30 a.m. Eastern Time).
Conference Call Details:
Date: Thursday, August 9, 2018
Time: 10:30 a.m. Eastern Time
Dial In-Number: 866-575-6539
International Dial-In Number: 323-794-2575
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=130839 or http://www.radnet.com under the “About RadNet” menu section and “News and Press 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 3215507.
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 304 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 7,400 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 2018 financial guidance, achieving cost savings, successfully developing and integrating new lines of business, continuing to grow its business by generating patient referrals and contracts with radiology practices, and receiving third-party reimbursement for diagnostic imaging services, are forward-looking statements within the meaning of the Safe Harbor. Forward-looking statements are based on management’s current, preliminary expectations and are subject to risks and uncertainties, which may cause the Company’s actual results to differ materially from the statements contained herein. Further information on potential risk factors that could affect RadNet’s business and its financial results are detailed in its most recent Annual Report on Form 10-K, as filed with the Securities and Exchange Commission. Undue reliance should not be placed on forward-looking statements, especially guidance on future financial performance, which speaks only as of the date they are made. RadNet undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made, or to reflect the occurrence of unanticipated events.
Contact:
RadNet, Inc.
Mark Stolper, 310-445-2800
Executive Vice President and Chief Financial Officer