RadNet Reports Third Quarter Financial Results with Record Quarterly Revenue and Adjusted EBITDA⁽¹⁾ and Revises Upwards 2024 Financial Guidance Ranges
Total Company Revenue increased 14.7% to $461.1 million in the third quarter of 2024 from $402.0 million in the third quarter of 2023; Revenue from the Digital Health reportable segment (inclusive of intersegment revenue) increased 34.3% to $16.4 million in the third quarter of 2024 from $12.2 million in the third quarter of 2023
Digital Health Revenue growth resulted in part from a $2.2 million (or 75.8%) increase in AI Revenue, which climbed to $5.1 million during the third quarter of 2024 from $2.9 million in the third quarter of 2023
Total Company Adjusted EBITDA(1) was $73.7 million in the third quarter of 2024 as compared with $57.9 million in the third quarter of 2023, an increase of 27.2%; Digital Health reportable segment Adjusted EBITDA(1) increased 41.7% to $3.3 million in the third quarter of 2024 from $2.3 million in the third quarter of 2023
Total Company Adjusted EBITDA(1) margins increased by 156 bps to 16.0% in the third quarter of 2024 as compared with 14.4% in the third quarter of 2023
Adjusting for unusual or one-time items in the quarter, Adjusted Diluted Earnings Per Share(3) was $0.18 for the third quarter of 2024; This compares with Adjusted Earnings Per Share(3) of $0.13 for the third quarter of 2023
Aggregate procedural volumes in the third quarter of 2024 increased 9.0% and same-center procedural volumes increased 5.5% compared with the third quarter of 2023
As of September 30, 2024, we had a cash balance of $748.9 million and Net Debt to Adjusted EBITDA(1) ratio of below 1.0x
On pace for the commercial launch of DeepHealth OS on December 1st at the Radiological Society of North America (RSNA) conference
RadNet revises full-year 2024 guidance levels to increase Revenue, Adjusted EBITDA(1) and Free Cash Flow(2) ranges
LOS ANGELES, Nov. 10, 2024 (GLOBE NEWSWIRE) -- RadNet, Inc. (NASDAQ:RDNT), a national leader in providing high-quality, cost-effective, fixed-site outpatient diagnostic imaging services through a network of 399 owned and operated outpatient imaging centers, today reported financial results for its third quarter of 2024.
Dr. Howard Berger, President and Chief Executive Officer of RadNet, commented, "We continue to demonstrate strong growth and record results in each of our Imaging Center and Digital Health reportable operating segments. Total Company Revenue grew 14.7% as compared with last year's third quarter to a record $461.1 million. The Digital Health segment Revenue of $16.4 million increased 34.3% from last year's same quarter. The strong growth in Digital Health was, in part, driven by the AI businesses, whose Revenue increased 75.8% as compared with last year's third quarter, mainly from the continuing success of the rollout of the Enhanced Breast Cancer Detection (EBCD) DeepHealth AI-powered screening mammography program."
"Despite continued inflation in staffing costs, improved reimbursement from commercial and capitated payors, strong demand for advanced imaging modalities, the growth of the Digital Health businesses and effective cost controls resulted in an increase to Adjusted EBITDA(1) margins. Total Company Adjusted EBITDA(1) margin of 16.0% during this third quarter increased by 156 basis points over last year's third quarter," added Dr. Berger.
"Given the positive trends we continue to experience in virtually all aspects of our business and the strong financial performance of the third quarter, we are revising upwards certain guidance levels in anticipation of financial results that we believe will exceed both our original expectations and the adjustments we made to the guidance ranges upon releasing our first and second quarter 2024 results. We have increased 2024 guidance ranges for Revenue, Adjusted EBITDA(1) and Free Cash Flow(2)," added Dr. Berger.
Dr. Berger continued, "In response to continued high demand for our services and notable patient backlogs in many of RadNet's local markets, we continue to expand capacity through the development and construction of new imaging centers. Since the start of the year, we have opened five new centers, and we anticipate opening an additional three centers before year end. Furthermore, we have 15 centers in various stages of construction and development which we intend to open during 2025."
"We remain on pace for the commercial launch of DeepHealth OS at the RSNA convention this year taking place December 1st through 4th in Chicago. At our DeepHealth booth, we will be demonstrating the capabilities of the DeepHealth OS integrated end-to-end workflow solutions as well as our clinical AI tools. Last week, we announced our first customer for the DeepHealth OS software platform, and we are eager to introduce our DeepHealth solutions to prospective customers and partners at the convention," explained Dr. Berger.
"RadNet's balance sheet continues to strengthen as our focus remains on driving same-center revenue performance and effective cost management. At quarter end, we had a cash balance of $748.9 million, and our leverage ratio of Net Debt to Adjusted EBITDA(1) was at a record low, slightly below 1.0," concluded Dr. Berger.
Third Quarter Financial Results
For the third quarter of 2024, RadNet reported Total Company Revenue of $461.1 million and Adjusted EBITDA(1) of $73.7 million. Revenue increased $59.2 million (or 14.7%) and Adjusted EBITDA(1) increased $15.7 million (or 27.2%) as compared with the third quarter of 2023.
For the third quarter of 2024, RadNet reported Digital Health Revenue (inclusive of intersegment revenue) of $16.4 million and Adjusted EBITDA(1) of $3.2 million. Revenue increased $4.2 million (or 34.3%) and Adjusted EBITDA(1) increased $950,000 (or 41.7%) as compared with the third quarter of 2023. Digital Health Revenue and Adjusted EBITDA(1) growth was due in part from a $2.2 million (or 75.8%) increase in AI Revenue, which climbed to $5.1 million during the third quarter of 2024.
Unadjusted for unusual or one-time items impacting the third quarter, Total Company Net Income for the third quarter of 2024 was $3.2 million as compared with a Total Company Net Income of $17.5 million for the third quarter of 2023. Fully diluted Net Income Per Share for the third quarter of 2024 was $0.04, compared with a fully diluted Net Income per share of $0.25 in the third quarter of 2023, based upon a weighted average number of diluted shares outstanding of 75.2 million shares in 2024 and 68.8 million shares in 2023.
There were a number of unusual or one-time items impacting the third quarter including: $8.1 million of non-cash loss from interest rate swaps; $304,000 in severance expense related to cost-savings initiatives; $1.3 million expense related to leases for de novo facilities under construction that have yet to open their operations; $3.3 million of non-capitalized research and development expenses related to the DeepHealth Cloud OS and generative AI; $417,000 of acquisition transaction costs; and $147,000 loss in conjunction with extinguishment of debt and related expenses. Adjusting for the above items, Total Company Adjusted Earnings(3) was $13.3 million and diluted Adjusted Earnings Per Share(3) was $0.18 during the third quarter of 2024. This compares with Total Company Adjusted Earnings(3) of $8.8 million and diluted Adjusted Earnings Per Share(3) of $0.13 during the third quarter of 2023.
For the third quarter of 2024, as compared with the prior year's third quarter, MRI volume increased 14.6%, CT volume increased 15.5% and PET/CT volume increased 23.8%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 9.0% over the prior year's third quarter. On a same-center basis, including only those centers which were part of RadNet for both the third quarters of 2024 and 2023, MRI volume increased 9.9%, CT volume increased 9.8% and PET/CT volume increased 16.8%. Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 5.5% over the prior year's same quarter
Nine Month Financial Results
For the first nine months of 2024, RadNet reported Total Company Revenue of $1,352.6 million and Adjusted EBITDA(1) of $204.5 million. Revenue increased $156.3 million (or 13.1%) and Adjusted EBITDA(1) increased $37.9 million (or 22.8%) as compared with the first nine months of 2023.
For the first nine months of 2024, RadNet reported Digital Health Revenue (inclusive of intersegment revenue) of $46.9 million and Adjusted EBITDA(1) of $10.0 million. Revenue increased $12.0 million (or 34.4%) and Adjusted EBITDA(1) increased $6.3 million (or 171.6%) as compared with the first nine months of 2023. Digital Health Revenue and Adjusted EBITDA(1) growth was due in part to a $8.0 million (or 107.8%) increase in AI Revenue, which climbed to $15.4 million during the nine month period of 2024.
Unadjusted for one-time or unusual items, Total Company Net Loss for the first nine months of 2024 was $2.6 million as compared with a Total Company Net Income of $4.9 million for the first nine months of 2023. Fully diluted Net Loss Per Share for the nine month period of 2024 was $(0.04), compared with a Net Income per share of $0.08 in the nine month period of 2023, based upon a weighted average number of diluted shares outstanding of 72.6 million shares in 2024 and 63.2 million shares in 2023.
2024 Guidance Update
RadNet amends its previously announced guidance levels as follows:
Imaging Center Segment
OriginalGuidance Range
Revised GuidanceRange After Q1 Results
Revised GuidanceRange After Q2 Results
Revised GuidanceRange After Q3 Results
Total Net Revenue
$1,650 - $1,700 million
$1,675 - $1,725 million
$1,685 - $1,735 million
$1,710 - $1,760 million
Adjusted EBITDA(1)
$250 - $260 million
$255 - $265 million
$257 - $267 million
$262 - $270 million
Capital Expenditures(a)
$125 - $135 million
$130 - $140 million
$135 - $145 million
$145 - $155 million
Cash Interest Expense(b)
$40 - $45 million
$37 - $42 million
$32 - $37 million
$25 - $30 million
Free Cash Flow(2)
$65 - $75 million
$68 - $78 million
$72 - $80 million
$83 - $93 million
(a) Net of proceeds from the sale of equipment, imaging centers and joint venture interests and New Jersey Imaging Network capital expenditures.(b) Includes payments to and from counterparties on interest rate swaps and nets interest income from our cash balance as recorded in Other Income.
Digital Health Segment
OriginalGuidance Range
RevisedGuidance Range AfterQ1 Results
RevisedGuidance Range AfterQ2 Results
RevisedGuidance Range AfterQ3 Results
Total Net Revenue (inclusive of intersegment revenue)
$60 - $70 million
$60 - $70 million
$60 - $70 million
$60 - $70 million
Adjusted EBITDA(1)Before Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI
$12 - $14 million
$13 - $15 million
$13 - $15 million
$13 - $15 million
Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI
$11 - $13 million
$12 - $14 million
$12 - $14 million
$13 - $15 million
Capital Expenditures(i)
$3 - $5 million
$3 - $5 million
$3 - $5 million
$3 - $5 million
Free Cash Flow(2)Before Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI
$8 - $10 million
$8 - $10 million
$8 - $10 million
$8 - $10 million
Free Cash Flow(2)After Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI
$(2) - $(5) million
$(2) - $(5) million
$(2) - $(5) million
$(2) - $(5) million
(i) Excludes a $9 million purchase of software code and other intellectual property from a vender.
"Based upon the consistent outperformance of the first three quarters of this year relative to our projections, we have increased guidance ranges of our core Imaging Center reporting segment for Revenue and Adjusted EBITDA(1). Furthermore, despite increasing the Capital Expenditures guidance range by $10 million, we are expecting Free Cash Flow(2) to be higher for the year. This is the result of the projected increase in Adjusted EBITDA(1) and lower Cash Interest Expense. With respect to the Digital Health reportable segment, we remain on track to meet our original guidance levels for Revenue, Adjusted EBITDA(1) and Free Cash Flow(2)."
Conference Call for Tomorrow
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 third quarter 2024 results on Monday, November 11th, 2024 at 7:30 a.m. Pacific Time (10:30 a.m. Eastern Time).
Conference Call Details:
Date: Monday, November 11, 2024Time: 10:30 a.m. Eastern TimeDial In-Number: 844-826-3035International Dial-In Number: 412-317-5195
It is recommended that participants dial in approximately 5 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=1691984&tp_key=8cbf05cc88 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 10193306.
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 399 owned and/or operated outpatient imaging centers. RadNet's markets include Arizona, California, Delaware, Florida, Maryland, New Jersey, New York and Texas. In addition, RadNet provides radiology information technology and artificial intelligence solutions marketed under the DeepHealth brand 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 technologists, RadNet has a total of over 10,000 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 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.
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, 310-445-2800Executive Vice President and Chief Financial Officer
RADNET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
September 30, 2024
December 31, 2023
(unaudited)
ASSETS
CURRENT ASSETS
Cash and Cash equivalents
$
748,916
$
342,570
Accounts receivable
199,076
163,707
Due from affiliates
30,210
25,342
Prepaid expenses and other current assets
38,051
47,657
Total current assets
1,016,253
579,276
PROPERTY, EQUIPMENT AND RIGHT-OF-USE ASSETS
Property and equipment, net
663,867
604,401
Operating lease right-of-use assets
646,750
596,032
Total property, plant, equipment and right-of-use assets
1,310,617
1,200,433
OTHER ASSETS
Goodwill
711,841
679,463
Other intangible assets
84,441
90,615
Deferred financing costs
2,416
1,643
Investment in joint ventures
104,514
92,710
Deposits and other
45,260
46,333
Total Assets
$
3,275,342
$
2,690,473
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable, accrued expenses and other
$
338,737
$
342,940
Due to affiliates
44,872
15,910
Deferred revenue
4,392
4,647
Current operating lease liability
58,751
55,981
Current portion of notes payable
23,378
17,974
Total current liabilities
470,130
437,452
LONG-TERM LIABILITIES
Long-term operating lease liability
658,434
605,097
Notes payable, net of current portion
996,272
812,068
Deferred tax liability, net
20,795
15,776
Other non-current liabilities
10,077
6,721
Total liabilities
2,155,708
1,877,114
EQUITY
RadNet, Inc. stockholders' equity:
Common stock - $0.0001 value, 200,000,000 shares authorized; 73,976,284 and 67,956,318 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively
7
7
Additional paid-in-capital
979,279
722,750
Accumulated other comprehensive loss
(1,843
)
(12,484
)
Accumulated deficit
(82,130
)
(79,578
)
Total RadNet, Inc.'s Stockholders' equity:
895,313
630,695
Noncontrolling interests
224,321
182,664
Total Equity
1,119,634
813,359
Total liabilities and equity
$
3,275,342
$
2,690,473
RADNET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)
(unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
