RadNet(RDNT) - 2021 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION ITEM 1. Financial Statements RadNet's unaudited condensed consolidated financial statements for Q2 2021 reflect significant recovery, increased revenues, and a shift to net income Condensed Consolidated Balance Sheets The balance sheet reflects increased total assets, cash, and receivables, alongside higher liabilities and a notable rise in total equity | Metric | June 30, 2021 (in thousands) | December 31, 2020 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Total Assets | $2,032,198 | $1,786,657 | | Cash and cash equivalents | $140,852 | $102,018 | | Accounts receivable | $157,328 | $129,585 | | Total Liabilities | $1,732,919 | $1,528,354 | | Total Equity | $299,279 | $258,303 | Condensed Consolidated Statements of Operations Statements of operations reflect a strong Q2 2021 revenue and profitability rebound, with increased service fees, positive net income, and diluted EPS Total Service Revenue | Period | 2021 (in thousands) | 2020 (in thousands) | Change (YoY) | | :---------------------- | :------------------ | :------------------ | :----------- | | 3 Months Ended Jun 30 | $333,918 | $190,566 | +75.2% | | 6 Months Ended Jun 30 | $649,237 | $472,130 | +37.5% | Net Income (Loss) Attributable to RadNet, Inc. Common Stockholders | Period | 2021 (in thousands) | 2020 (in thousands) | Change (YoY) | | :---------------------- | :------------------ | :------------------ | :----------- | | 3 Months Ended Jun 30 | $2,873 | $(10,594) | N/A (swing to profit) | | 6 Months Ended Jun 30 | $12,331 | $(26,952) | N/A (swing to profit) | Diluted Net Income (Loss) Per Share | Period | 2021 | 2020 | | :---------------------- | :--- | :--- | | 3 Months Ended Jun 30 | $0.05 | $(0.21) | | 6 Months Ended Jun 30 | $0.23 | $(0.53) | Condensed Consolidated Statements of Comprehensive Income (Loss) Comprehensive income statements indicate a positive shift to comprehensive income for Q2 2021, reflecting improved overall financial performance compared to prior year losses Comprehensive Income (Loss) Attributable to RadNet, Inc. Common Stockholders | Period | 2021 (in thousands) | 2020 (in thousands) | Change (YoY) | | :---------------------- | :------------------ | :------------------ | :----------- | | 3 Months Ended Jun 30 | $3,784 | $(10,118) | N/A (swing to profit) | | 6 Months Ended Jun 30 | $14,155 | $(45,024) | N/A (swing to profit) | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity significantly increased from December 2020 to June 2021, driven by net income, stock-based compensation, and additional paid-in capital Total RadNet, Inc.'s Stockholders' Equity | Date | Amount (in thousands) | | :---------------- | :-------------------- | | June 30, 2021 | $197,064 | | December 31, 2020 | $165,743 | | June 30, 2020 | $147,808 | - Issuance of common stock for DeepHealth acquisition (June 1, 2020): 823,615 shares, valued at $33,011 thousand[16][19][26] Stock-Based Compensation Expense | Period | 2021 (in thousands) | 2020 (in thousands) | | :---------------------- | :------------------ | :------------------ | | 3 Months Ended Jun 30 | $8,897 | $1,540 | | 6 Months Ended Jun 30 | $17,145 | $8,136 | Condensed Consolidated Statements of Cash Flows Operating cash flows decreased in H1 2021, while investing activities saw increased cash use for acquisitions and equipment, and financing activities shifted to a net cash provision due to debt refinancing Net Cash Provided by Operating Activities | Period | 2021 (in thousands) | 2020 (in thousands) | Change (YoY) | | :---------------------- | :------------------ | :------------------ | :----------- | | 6 Months Ended Jun 30 | $58,701 | $131,465 | -55.4% | Net Cash Used in Investing Activities | Period | 2021 (in thousands) | 2020 (in thousands) | Change (YoY) | | :---------------------- | :------------------ | :------------------ | :----------- | | 6 Months Ended Jun 30 | $(119,658) | $(67,602) | +76.9% (increased use) | Net Cash Provided by (Used in) Financing Activities | Period | 2021 (in thousands) | 2020 (in thousands) | Change (YoY) | | :---------------------- | :------------------ | :------------------ | :----------- | | 6 Months Ended Jun 30 | $99,812 | $(19,439) | N/A (swing to provision) | Cash and Cash Equivalents, End of Period | Date | Amount (in thousands) | | :---------------- | :-------------------- | | June 30, 2021 | $140,852 | | June 30, 2020 | $84,583 | - Non-cash investing activities included the acquisition of equipment and leasehold improvements for approximately $42.1 million in 2021 and $31.8 million in 2020, which were not paid for as of the respective period ends[24] - On June 1, 2020, the company completed the stock purchase of DeepHealth, Inc. by issuing 823,615 shares of common stock, ascribed a value of $13.9 million[26] Notes to Condensed Consolidated Financial Statements These notes detail RadNet's business, accounting policies, acquisitions, debt, and equity compensation, clarifying revenue recognition, CARES Act impact, and strategic investments NOTE 1 – NATURE OF BUSINESS AND BASIS OF PRESENTATION RadNet is a national provider of outpatient diagnostic imaging services, operating 353 centers across seven states, developing software and AI tools, and consolidating Variable Interest Entities - Operates 353 freestanding, fixed-site outpatient diagnostic imaging centers across seven U.S. states (Arizona, California, Delaware, Florida, Maryland, New Jersey, and New York) as of June 30, 2021[29] - Services include magnetic resonance imaging (MRI), computed tomography (CT), positron emission tomography (PET), nuclear medicine, mammography, ultrasound, diagnostic radiology (X-ray), and fluoroscopy[29] - Designs and develops software applications, artificial intelligence tools, and other computerized systems for the diagnostic imaging industry[29] - Consolidates Variable Interest Entities (VIEs), which are professional corporations owned or controlled by senior management, where RadNet is the primary beneficiary due to its power to direct activities and absorb losses/receive benefits[31][32][33] Group (VIEs) Revenue and Operating Expenses (Net of Management Fees to RadNet) | Period | Revenue (in thousands) | Operating Expenses (in thousands) | | :---------------------- | :--------------------- | :-------------------------- | | 3 Months Ended Jun 30, 2021 | $45,100 | $45,100 | | 3 Months Ended Jun 30, 2020 | $26,900 | $26,900 | | 6 Months Ended Jun 30, 2021 | $91,200 | $91,200 | | 6 Months Ended Jun 30, 2020 | $66,400 | $66,400 | RadNet's Billed Net Service Fee Revenue for Management Services to the Group | Period | Amount (in thousands) | | :---------------------- | :-------------------- | | 3 Months Ended Jun 30, 2021 | $190,600 | | 3 Months Ended Jun 30, 2020 | $116,400 | | 6 Months Ended Jun 30, 2021 | $369,500 | | 6 Months Ended Jun 30, 2020 | $264,300 | NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES This note details RadNet's key accounting policies, covering revenue recognition, CARES Act funding, goodwill valuation, income taxes, leases, equity compensation, derivatives, fair value, and EPS - Revenues are primarily derived from net patient fees for diagnostic services, recognized when performance obligations are satisfied (typically less than one day), and from capitation arrangements where a per-enrollee amount is earned monthly[43][46] CARES Act Funding Received | Funding Type | Amount (in millions) | Period | | :-------------------------- | :------------------- | :-------------------------------- | | Provider Relief Funding | $6.3 | 6 months ended June 30, 2021 | | Accelerated Medicare Payments | $39.5 | 12 months ended December 31, 2020 | | Paycheck Protection Program | $4.0 | 12 months ended December 31, 2020 | | Blue Shield Advance Payments | $5.0 | 12 months ended December 31, 2020 | - For the six months ended June 30, 2021, $10.3 million of accelerated Medicare and $3.8 million of Blue Shield funds were applied to revenue. The $4.0 million PPP loan was forgiven in December 2020[49][50] - Total deferred Social Security taxes under the CARES Act amounted to $16.3 million at June 30, 2021[52] Goodwill Activity (in thousands) | Item | Amount | | :------------------------------------------ | :------- | | Balance as of December 31, 2020 | $472,879 | | Goodwill acquired through acquisitions | $29,375 | | Goodwill attributable to Simi Valley Imaging Group LLC formation | $105 | | Other Adjustments | $(28) | | Balance as of June 30, 2021 | $502,331 | Effective Income Tax Rates | Period | 2021 Effective Tax Rate | 2020 Effective Tax Rate | | :---------------------- | :---------------------- | :---------------------- | | 3 Months Ended Jun 30 | 26.2% (expense) | 33.3% (benefit) | | 6 Months Ended Jun 30 | 24.9% (expense) | 27.8% (benefit) | - Entered into four forward interest rate agreements (2019 Swaps) with a total notional amount of $500 million to secure constant interest rates on variable rate bank debt, with effective dates from October 2020 and maturities in October 2023 and October 2025[67] Fair Value of 2019 Swaps - Interest Rate Contracts (in thousands) | Date | Fair Value | | :---------------- | :----------- | | June 30, 2021 | $26,709 | | December 31, 2020 | $37,989 | Fair Value vs. Face Value of Long-Term Debt (in thousands) | Date | Total Fair Value | Total Face Value | | :---------------- | :--------------- | :--------------- | | June 30, 2021 | $772,313 | $774,125 | | December 31, 2020 | $661,640 | $662,403 | Diluted Net Income (Loss) Per Share Attributable to RadNet, Inc. Common Stockholders | Period | 2021 | 2020 | | :---------------------- | :--- | :--- | | 3 Months Ended Jun 30 | $0.05 | $(0.21) | | 6 Months Ended Jun 30 | $0.23 | $(0.53) | - Equity investments for which fair value is not readily determinable are recognized at cost, including $1.2 million in Medic Vision Imaging Solutions Ltd., $2.0 million in Turner Imaging Systems, and $1.0 million in WhiteRabbit.ai Inc. (plus a $2.5 million loan to WhiteRabbit.ai)[81][82][83] NOTE 3 – RECENT ACCOUNTING AND REPORTING STANDARD RadNet is evaluating ASU 2021-01 and ASU 2020-04 (Reference Rate Reform) impacts, while prior ASU adoptions (2020-01, 2019-12) had no material effect - Currently evaluating the potential impact of ASU 2021-01 and ASU 2020-04 (Reference Rate Reform) on financial statements[87][88] - Adoption of ASU 2020-01 (Equity Securities, Equity Method, and Derivatives) and ASU 2019-12 (Income Taxes) in Q1 2021 did not have a material impact[89][90] NOTE 4 – FACILITY ACQUISITIONS RadNet acquired assets from 15 entities in Q1 and Q2 2021 for $64.9 million cash, adding $29.375 million in goodwill, to expand in key markets, and formed Simi Valley Imaging Group, LLC - Acquired assets of 15 entities during Q1 and Q2 2021 for a total cash consideration of $64.9 million, primarily to strengthen market presence in New York City, New Jersey, and California[91] - These acquisitions resulted in the recognition of $29.375 million in goodwill[91] - Formed Simi Valley Imaging Group, LLC on January 1, 2021, contributing $0.3 million in assets for a 60% economic interest[92] NOTE 5 – CREDIT FACILITIES AND NOTES PAYABLE RadNet refinanced its credit agreement on April 23, 2021, with a new $725.0 million First Lien Term Loan and a $195.0 million Barclays Revolving Credit Facility, increasing total term loan debt while maintaining compliance and significant borrowing capacity Total Term Loan Debt Obligations (in thousands) | Date | Amount | | :---------------- | :------- | | June 30, 2021 | $759,868 | | December 31, 2020 | $652,704 | - Refinanced prior first lien credit agreement on April 23, 2021, with a new $725.0 million First Lien Term Loan and a $195.0 million Barclays Revolving Credit Facility[94] - Total costs of the Restated Credit Agreement amounted to approximately $14.9 million, including capitalized discounts/deferred finance costs, debt restructuring expenses, loss on early extinguishment of debt, and interest expense[94] - First Lien Term Loans mature on April 23, 2028, with quarterly principal payments of approximately $1.8 million[96] - SunTrust Term Loan: $49.125 million outstanding at June 30, 2021, matures August 31, 2023, with scheduled quarterly payments of $0.8 million, increasing at intervals[93][99] - Available borrowing capacity at June 30, 2021: $187.2 million under Barclays Revolving Credit Facility (after $7.8 million reserved for letters of credit) and $30.0 million under SunTrust Revolving Credit Facility (no outstanding balance)[93][104][211] NOTE 6 – STOCK-BASED COMPENSATION RadNet's Restated Equity Incentive Plan, approved June 2021, reserves 16,500,000 shares for awards, with stock-based compensation significantly increasing in Q2 2021 due to higher RSA fair value and COVID-19 bonuses - The RadNet, Inc. Equity Incentive Plan (Restated Plan) was approved on June 10, 2021, reserving 16,500,000 shares of common stock for issuance[108] - As of June 30, 2021, there were 525,399 outstanding options to acquire common stock (430,702 exercisable) under the 2006 Plan, and 399,398 outstanding options (37,713 exercisable) under the DeepHealth Plan[110][112] - Unvested Restricted Stock Awards (RSAs) totaled 427,688 shares at June 30, 2021[113] Stock-Based Compensation Expense | Period | 2021 (in thousands) | 2020 (in thousands) | | :---------------------- | :------------------ | :------------------ | | 3 Months Ended Jun 30 | $8,897 | $1,456 | | 6 Months Ended Jun 30 | $17,145 | $8,078 | - During the six months ended June 30, 2021, awards amounting to $6.5 million in compensation expense were issued as employee COVID-19 related bonuses[115][182] NOTE 7 – SUBSEQUENT EVENTS On July 30, 2021, RadNet sold a 24.9% ownership interest in a subsidiary for $13.1 million and acquired business assets for approximately $5.2 million - On July 30, 2021, sold a 24.9% ownership interest in a majority-owned subsidiary for $13.1 million, retaining a 50.1% interest[118] - On July 30, 2021, acquired certain business assets for approximately $5.2 million[119] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses RadNet's financial performance, highlighting strong 2021 recovery in volumes and revenue, strategic acquisitions, joint ventures, critical accounting policies, results, Adjusted EBITDA, and liquidity Overview RadNet is a leading national provider of outpatient diagnostic imaging services, operating 353 centers across seven states, developing AI tools, and diversifying revenue through various payors and capitation arrangements - Operates 353 freestanding, fixed-site outpatient diagnostic imaging centers in Arizona, California, Delaware, Florida, Maryland, New Jersey, and New York as of June 30, 2021[126] - Investments in Artificial Intelligence (AI) through Nulogix, DeepHealth, Whiterabbit.ai, and a collaboration with Hologic, focusing on developing solutions to assist radiologists in interpreting images and improving patient care, initially in mammography[126] Net Revenues (in millions) | Period | 2021 | 2020 | | :---------------------- | :--- | :--- | | 6 Months Ended Jun 30 | $649 | $472 | Total Service Revenue by Primary Patient Classification (Six Months Ended June 30, 2021, in thousands) | Payor Type | Amount | | :-------------------------------- | :------- | | Commercial insurance | $369,566 | | Medicare | $134,877 | | Medicaid | $17,486 | | Workers' compensation/personal injury | $20,966 | | Other patient revenue | $9,961 | | Management fee revenue | $10,752 | | Teleradiology and Software revenue | $5,047 | | Other | $6,416 | | Service fee revenue | $575,071 | | Revenue under capitation arrangements | $74,166 | | Total service revenue | $649,237 | Recent Developments By mid-2021, RadNet's procedure volumes returned to pre-COVID-19 levels, operations normalized, and the company acquired 19 new centers year-to-date, expecting continued benefits from 2020 cost-saving measures - Procedure volume returned to pre-COVID-19 levels by mid-2021, and business operations have resumed normal status[131] - Acquired 19 new centers in California, New Jersey, and New York year-to-date[131] Equity Investments, Acquisitions and Dispositions, and Joint Venture Activity RadNet continues growth via equity investments, facility acquisitions, and joint ventures, acquiring 15 entities for $64.9 million in Q1/Q2 2021, adding $29.375 million goodwill, forming Simi Valley Imaging Group, LLC, and significantly increasing joint venture earnings - Equity investments (recognized at cost due to no readily determinable fair value) include: $1.2 million in Medic Vision Imaging Solutions Ltd. (14.21% equity), $2.0 million in preferred shares of Turner Imaging Systems (plus a $0.1 million convertible note), and $1.0 million equity interest in WhiteRabbit.ai Inc. (plus a $2.5 million loan)[133][134][135] - Completed the acquisition of assets from 15 entities during Q1 and Q2 2021 for a total cash consideration of $64.9 million, resulting in $29.375 million in goodwill. These acquisitions aimed to strengthen market presence in New York City, New Jersey, and California[136] - Formed Simi Valley Imaging Group, LLC on January 1, 2021, contributing $0.3 million in assets for a 60% economic interest[137] Joint Venture Investment and Financial Information (Six Months Ended June 30, in thousands) | Metric | 2021 | 2020 | | :------------------------------------------ | :------- | :------- | | Equity in earnings in these joint ventures | $5,406 | $2,900 | | Net revenue (JV data) | $64,636 | $43,849 | | Net income (JV data) | $10,258 | $6,001 | - Made an additional equity contribution of $1.4 million to an Arizona joint venture on June 23, 2021, without changing the ownership interest percentage[139] Critical Accounting Policies This section outlines RadNet's critical accounting policies involving significant management judgment and estimates, including revenue recognition, Provider Relief Fund compliance, accounts receivable allowances, fair value in business combinations, and annual impairment testing for goodwill and indefinite-lived intangibles - Revenue recognition involves management's estimates of amounts expected from patients and third-party payors, including contractual allowances and implicit price concessions for uninsured accounts[145] - Recognition of Provider Relief Fund revenue requires management to assess compliance with HHS requirements, with potential for recoupment if conditions are not met[147] - Accounts receivable allowances are maintained based on specific payor collection issues and historical experience[148] - Business combinations require estimates of the fair values of acquired assets and assumed liabilities, with any excess consideration allocated to goodwill, subject to refinement during the measurement period[149] - Goodwill and indefinite-lived intangibles are reviewed annually for impairment, requiring management assessments of business and financial prospects, with no impairment identified through June 30, 2021[151] Results of Operations RadNet's Q2 2021 results show significant recovery and growth, driven by higher procedure volumes and effective cost management, leading to a return to profitability despite rising operating expenses Three Months Ended June 30, 2021 Compared to the Three Months Ended June 30, 2020 For Q2 2021, total revenue increased by 54.6%, driven by 80.5% growth in same-center procedure volumes, reflecting a strong recovery. Operating expenses rose, but adjusted interest expense decreased, and equity in joint venture earnings significantly increased Total Revenue (inclusive of Provider Relief funding) | Period | 2021 (in thousands) | 2020 (in thousands) | $ Increase/(Decrease) | % Change | | :---------------------- | :------------------ | :------------------ | :-------------------- | :--------- | | 3 Months Ended Jun 30 | $333,961 | $216,041 | $117,921 | 54.6% | - Same Center Revenue increased by 44.3%, driven by an 80.5% growth in total procedure volumes, including 106.3% in Mammography and 154.4% in advanced radiology procedures (MRI, PET, CT)[158] - Total operating expenses increased by $90.4 million, or 41.9%, to $306.3 million[159] Salaries and Professional Reading Fees (excluding stock-based compensation and severance) | Category | 2021 (in thousands) | 2020 (in thousands) | $ Increase/(Decrease) | % Change | | :---------------------- | :------------------ | :------------------ | :-------------------- | :--------- | | Total Salaries | $172,904 | $111,794 | $61,110 | 54.7% | | Same Center Salaries | $160,092 | $109,799 | $50,293 | 45.8% | - Stock-based compensation increased by $7.4 million (511.1%) to $8.9 million, driven by higher fair value of RSAs and $6.5 million in employee COVID-19 related bonuses[162] Medical Supplies Expense | Category | 2021 (in thousands) | 2020 (in thousands) | $ Increase/(Decrease) | % Change | | :---------------------- | :------------------ | :------------------ | :-------------------- | :--------- | | Total | $14,268 | $8,566 | $5,702 | 66.6% | | Same Center | $13,394 | $8,450 | $4,944 | 58.5% | - Adjusted Interest Expense (excluding derivatives and amortization) decreased by $1.0 million (11.8%) due to lowered variable LIBOR and Prime interest rates[171][174] - Equity in earnings from unconsolidated joint ventures increased by $2.2 million (230.3%) to $3.1 million, mainly from the Arizona Diagnostic Radiology Group joint venture[176] - Income tax expense was $2.9 million (26.2% effective rate) in 2021, compared to a benefit of $4.5 million (33.3% effective rate) in 2020[177] Six Months Ended June 30, 2021 Compared to the Six Months Ended June 30, 2020 For H1 2021, total revenue increased by 31.7%, with same-center revenue up 25.3%, reflecting 36.1% growth in procedure volumes. Operating expenses rose, but adjusted interest expense decreased by 16.5%, and equity in joint venture earnings increased by 86.4% Total Revenue (inclusive of Provider Relief funding) | Period | 2021 (in thousands) | 2020 (in thousands) | $ Increase/(Decrease) | % Change | | :---------------------- | :------------------ | :------------------ | :-------------------- | :--------- | | 6 Months Ended Jun 30 | $655,528 | $497,605 | $157,923 | 31.7% | - Same Center Revenue increased by 25.3%, reflecting an overall same center 36.1% growth in total procedure volumes[178] - Total operating expenses increased by $104.0 million, or 20.5%, to $610.2 million[179] Salaries and Professional Reading Fees (excluding stock-based compensation and severance) | Category | 2021 (in thousands) | 2020 (in thousands) | $ Increase/(Decrease) | % Change | | :---------------------- | :------------------ | :------------------ | :-------------------- | :--------- | | Total Salaries | $350,765 | $279,322 | $71,443 | 25.6% | | Same Center Salaries | $328,605 | $273,159 | $55,446 | 20.3% | - Stock-based compensation increased by $9.1 million (112.2%) to $17.1 million, due to higher fair value of RSAs and $6.5 million in employee COVID-19 related bonuses[182] Medical Supplies Expense | Category | 2021 (in thousands) | 2020 (in thousands) | $ Increase/(Decrease) | % Change | | :---------------------- | :------------------ | :------------------ | :-------------------- | :--------- | | Total | $28,238 | $21,314 | $6,924 | 32.5% | | Same Center | $26,737 | $20,944 | $5,793 | 27.7% | - Adjusted Interest Expense (excluding derivatives and amortization) decreased by $3.1 million (16.5%) due to lowered variable LIBOR and Prime interest rates[191][193] - Equity in earnings from unconsolidated joint ventures increased by $2.5 million (86.4%) to $5.4 million, mainly from the Arizona Diagnostic Radiology Group joint venture[194] - Income tax expense was $7.2 million (24.9% effective rate) in 2021, compared to a benefit of $8.9 million (27.8% effective rate) in 2020[195] Adjusted EBITDA Adjusted EBITDA significantly increased for both Q2 2021 and H1 2021, reflecting improved business performance and recovery from the prior year's pandemic impact, and includes Provider Relief Fund revenue Adjusted EBITDA (in thousands) | Period | 2021 | 2020 | Change (YoY) | | :---------------------- | :------- | :------- | :----------- | | 3 Months Ended Jun 30 | $56,629 | $22,591 | +150.7% | | 6 Months Ended Jun 30 | $102,132 | $42,954 | +137.8% | - Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, excluding losses/gains on equipment disposal, other income/loss, debt extinguishment loss, bargain purchase gains, and non-cash equity compensation. It includes equity earnings in unconsolidated operations and subtracts allocations to noncontrolling interests[197] - Adjusted EBITDA includes Provider Relief Fund revenue of $6.2 million for the six months ended June 30, 2021, and $25.5 million for the six months ended June 30, 2020[198] Liquidity and Capital Resources RadNet's liquidity significantly improved by June 30, 2021, with increased cash and positive working capital, driven by accelerated procedure volumes and credit facility refinancing. Operating cash flow decreased, but financing activities provided substantial cash, ensuring sufficient capital for the foreseeable future Key Balance Sheet Data Related to Liquidity (in thousands) | Metric | June 30, 2021 | December 31, 2020 | | :------------------------------------------ | :------------ | :---------------- | | Cash and cash equivalents | $140,852 | $102,018 | | Accounts receivable | $157,328 | $129,585 | | Working capital (exclusive of current operating lease liabilities) | $25,051 | $(61,896) | | Stockholders' equity | $299,279 | $258,303 | Cash Flow Data (Six Months Ended June 30, in thousands) | Activity | 2021 | 2020 | | :-------------------------------- | :------- | :------- | | Cash provided by operating activities | $58,701 | $131,465 | | Cash used in investing activities | $(119,658) | $(67,602) | | Cash provided by (used in) financing activities | $99,812 | $(19,439) | - Cash provided by operating activities for the six months ended June 30, 2020, was benefited by the receipt of $39.5 million in CMS advances[206] - Cash used in investing activities for the six months ended June 30, 2021, included $53.8 million for property and equipment and $64.9 million for imaging business acquisitions[207] - Cash provided by financing activities of $99.8 million for the six months ended June 30, 2021, was primarily due to the refinancing of term loan obligations[208] Total Term Loan Debt (Face Value, in thousands) | Item | June 30, 2021 | | :------------------ | :------------ | | First Lien Term Loans | $725,000 | | SunTrust Term Loan | $49,125 | | Total Term Loans | $774,125 | - Available borrowing capacity at June 30, 2021: $187.2 million under the Barclays Revolving Credit Facility (after $7.8 million reserved for letters of credit) and $30.0 million under the SunTrust Revolving Credit Facility[211] ITEM 3. Quantitative and Qualitative Disclosures About Market Risk RadNet is primarily exposed to interest rate risk from its variable-rate debt. A hypothetical 1% increase in Eurodollar rates would significantly increase annual interest expense, which the company mitigates through interest rate swap agreements - Primary market risk is interest rate sensitivity on variable-rate debt, including First Lien Term Loans ($725.0 million outstanding) and SunTrust Term Loan ($49.1 million outstanding)[213][214][215] - A hypothetical 1% increase in adjusted Eurodollar rates would result in an increase of $7.3 million in annual interest expense for First Lien Term Loans and approximately $0.5 million for the SunTrust Term Loan[214][215] - Mitigates future interest expense exposure through four forward interest rate agreements (2019 Swaps) with a total notional amount of $500 million, locking in 1-month LIBOR rates at 1.96% and 2.05%[216] ITEM 4. Controls and Procedures RadNet's management concluded that the company's disclosure controls and procedures were effective as of June 30, 2021, with no material changes in internal control over financial reporting during the quarter - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective as of June 30, 2021[218] - No material changes in internal control over financial reporting occurred during the three months ended June 30, 2021[219] PART II – OTHER INFORMATION ITEM 1. Legal Proceedings RadNet is involved in various legal proceedings arising in the ordinary course of business, but does not believe their outcome will materially adversely impact its business, financial condition, or results of operations - Engaged in lawsuits arising from the ordinary course and conduct of business[222] - Does not believe the outcome of any current litigation will have a material adverse impact on business, financial condition, and results of operations[222] ITEM 1A. Risk Factors This section refers readers to the comprehensive list of risk factors detailed in RadNet's annual report on Form 10-K for the year ended December 31, 2020, and acknowledges potential additional unknown or currently immaterial risks - Refers to the risk factors described in the annual report on Form 10-K for the year ended December 31, 2020[223] - Acknowledges that additional unknown or currently immaterial risks may materially adversely affect the business[223] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported for the period - None[224] ITEM 3. Defaults Upon Senior Securities No defaults upon senior securities were reported for the period - None[225] ITEM 4. Mine Safety Disclosures This item is not applicable to RadNet's operations - Not applicable[226] ITEM 5. Other Information No other information was reported for the period - None[227] ITEM 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including indemnification agreements, CEO and CFO certifications, and interactive data files in Inline XBRL for financial statements - Includes certifications of Howard G. Berger, M.D. (CEO) and Mark D. Stolper (CFO) pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[230] - Financial information from the Quarterly Report on Form 10-Q is formatted in Inline XBRL (Extensible Business Reporting Language) as Exhibit 101 and 104[230][231] SIGNATURES The report is officially signed by Howard G. Berger, M.D. (CEO) and Mark D. Stolper (CFO) on behalf of RadNet, Inc. on August 9, 2021 - Signed by Howard G. Berger, M.D., President and Chief Executive Officer, and Mark D. Stolper, Chief Financial Officer, on August 9, 2021[233]