RadNet(US:RDNT)2021-05-10 20:41PART I – FINANCIAL INFORMATION Financial Statements RadNet reported total assets of $1.83 billion, total liabilities of $1.55 billion, and net income of $13.8 million for Q1 2021 Condensed Consolidated Balance Sheets Total assets reached $1.829 billion, liabilities $1.547 billion, and equity $281.4 million as of March 31, 2021 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total current assets | $222,997 | $270,424 | | Total assets | $1,828,786 | $1,786,657 | | Total current liabilities | $402,617 | $398,114 | | Total liabilities | $1,547,428 | $1,528,354 | | Total equity | $281,358 | $258,303 | Condensed Consolidated Statements of Operations RadNet reported total service revenue of $315.3 million and net income of $13.8 million for Q1 2021, with diluted EPS of $0.18 Condensed Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Total service revenue | $315,319 | $281,564 | | Provider relief funding | $6,248 | $— | | Income (Loss) from Operations | $17,653 | $(8,776) | | Net Income (Loss) | $13,775 | $(13,998) | | Net Income (Loss) Attributable to RadNet, Inc. | $9,458 | $(16,358) | | Diluted EPS | $0.18 | $(0.33) | Condensed Consolidated Statements of Comprehensive Income (Loss) Comprehensive income reached $14.7 million in Q1 2021, a significant improvement from a $32.5 million loss in Q1 2020 Comprehensive Income (Loss) (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net Income (Loss) | $13,775 | $(13,998) | | Comprehensive Income (Loss) | $14,688 | $(32,546) | | Comprehensive Income (Loss) Attributable to RadNet, Inc. | $10,371 | $(34,906) | Condensed Consolidated Statement of Stockholders' Equity Total stockholders' equity increased from $258.3 million to $281.4 million in Q1 2021, primarily due to net income - Total equity increased by $23.1 million during the first quarter of 2021, from a beginning balance of $258.3 million to an ending balance of $281.4 million14 Condensed Consolidated Statements of Cash Flows Net cash from operations was $28.1 million, with $87.3 million used in investing, leading to a $70.9 million decrease in cash for Q1 2021 Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $28,084 | $40,913 | | Net cash used in investing activities | $(87,348) | $(55,059) | | Net cash (used in) provided by financing activities | $(11,651) | $68,262 | | Net Increase (Decrease) in Cash | $(70,927) | $54,117 | | Cash and cash equivalents, end of period | $31,091 | $94,282 | Notes to Condensed Consolidated Financial Statements Notes detail business operations, accounting policies, recent acquisitions, debt structure, and subsequent events, including $6.2 million in relief funding - As of March 31, 2021, the company operated 346 outpatient diagnostic imaging centers in seven U.S. states20 - The company recognized $6.2 million from CARES Act general distribution as 'Provider relief funding' revenue in the three months ended March 31, 202140 - During Q1 2021, the company acquired several entities in the New York City area for a total purchase consideration of $57.1 million, which added $29.6 million to goodwill89 - Subsequent to the quarter end, on April 23, 2021, the company refinanced its debt, securing $725.0 million in new term loans and a $195.0 million revolving credit facility, which was used to refinance existing debt and add approximately $102.0 million in cash to the balance sheet117 Management's Discussion and Analysis of Financial Condition and Results of Operations Management reported Q1 2021 total revenue growth of 14.2% to $321.6 million, net income of $9.5 million, and Adjusted EBITDA doubling to $45.5 million Overview RadNet operates 346 imaging centers, focusing on AI and growth through acquisitions, with procedure volumes recovering - As of March 31, 2021, RadNet operated 346 centers, an increase from 335 in the prior year125126 - The company is focusing on Artificial Intelligence (AI) to assist in image interpretation and improve patient care, particularly in mammography, through acquisitions like DeepHealth and investments in Whiterabbit.ai125 - During Q1 2021, the company acquired several imaging center assets in the New York City area for a total of $57.1 million135 Results of Operations Total revenue increased 14.2% to $321.6 million in Q1 2021, with operating income of $17.7 million and Adjusted EBITDA of $45.5 million Revenue Comparison (in thousands) | Revenue Type | Q1 2021 | Q1 2020 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $321,567 | $281,564 | $40,003 | 14.2% | | Same Center Revenue | $304,696 | $277,990 | $26,706 | 9.6% | - The revenue increase was driven by a 5.1% growth in same-center procedure volumes, with mammography procedures rising 15.1% and advanced radiology (PET/CT) expanding by a combined 8.7%158 Adjusted EBITDA Reconciliation (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net income (loss) attributable to RadNet, Inc. | $9,458 | $(16,358) | | Provision for (benefit from) income taxes | $4,376 | $(4,381) | | Interest expense | $12,826 | $11,552 | | Depreciation and amortization | $22,656 | $21,934 | | Non-cash employee stock-based compensation | $8,248 | $6,622 | | Non-cash change in fair value of interest rate hedge | $(11,245) | $— | | Adjusted EBITDA | $45,503 | $20,364 | Liquidity and Capital Resources Q1 2021 ended with $31.1 million cash, $28.1 million from operations, and $87.3 million used in investing, with a major debt refinancing in April 2021 Key Cash Flow Data (in thousands) | Cash Flow Activity | March 31, 2021 | March 31, 2020 | | :--- | :--- | :--- | | Cash provided by operating activities | $28,084 | $40,913 | | Cash used in investing activities | $(87,348) | $(55,059) | | Cash (used in) provided by financing activities | $(11,651) | $68,262 | - A debt refinancing on April 23, 2021, provided $725.0 million in new term loans, adding approximately $102.0 million to the balance sheet and reducing quarterly principal payments from $9.7 million to $1.8 million118196 - As of March 31, 2021, the company had $187.1 million available for borrowing under its Barclays Revolving Credit Facility and $30.0 million under its SunTrust Revolving Credit Facility195 Quantitative and Qualitative Disclosures About Market Risk Primary market risk is interest rate sensitivity on variable-rate debt, mitigated by $500 million in interest rate swap agreements - The company is exposed to variable interest rates on its credit facilities. A hypothetical 1% increase in the adjusted Eurodollar rates would result in an increase of $6.0 million in annual interest expense on the First Lien Term Loans198 - To manage interest rate risk, the company entered into four forward interest rate swap agreements with a total notional amount of $500 million, effective October 13, 2020. These swaps lock in 1-month LIBOR rates at 1.96% for $100 million and 2.05% for $400 million200 Controls and Procedures Disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal controls - Management, including the Chief Executive Officer and Chief Financial Officer, concluded that the company's disclosure controls and procedures are effective as of the end of the period covered by this report202 - There were no changes in internal control over financial reporting during the quarter ended March 31, 2021, that have materially affected, or are reasonably likely to materially affect, internal controls203 PART II – OTHER INFORMATION Legal Proceedings The company is involved in ordinary course lawsuits, with no material adverse impact expected on its financial condition - The company is engaged in lawsuits arising from the ordinary course of business but does not expect them to have a material adverse impact206 Risk Factors This section refers to risk factors from the Annual Report on Form 10-K, with no material updates - For information about risks and uncertainties, the report refers to the risk factors described in the Annual Report on Form 10-K for the year ended December 31, 2020207 Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds to report for the period - None208 Defaults Upon Senior Securities There were no defaults upon senior securities to report for the period - None209 Other Information There was no other information to report for the period - None211 Exhibits This section lists the exhibits filed with the Form 10-Q, including credit agreements and SOX certifications