Exhibit 99.1

 

 

FOR IMMEDIATE RELEASE

 

RadNet Reports Second Quarter Financial Results and Reaffirms Previously Announced 2016 Guidance Levels

 

·

Total Net Revenue, modified for working capital adjustments related to New York acquisitions, (“Adjusted Revenue”), increased 10.0% to $224.6 million in the second quarter of 2016 from $204.3 million in the second quarter of 2015

·

Adjusted EBITDA(1) increased 4.7% to $35.1 million in the second quarter of 2016 from $33.5 million in the second quarter of 2015

·

Sequentially, as compared to the first quarter of 2016, Adjusted Revenue increased 3.8%, and Adjusted EBITDA(1) increased 29.6%

·

Earnings Per Share was $0.09 per share, also modified for New York acquisition-related tax-effective adjustments (“Adjusted Earnings Per Share”), in the second quarter of 2016, an increase from $0.08 from the second quarter of 2015

·

Aggregate procedural volumes increased 9.6% and same center volumes increased 0.4% as compared with the second quarter of 2015

·

Completed successful refinancing of the majority of our debt facilities on July 1st, effectively extending maturities and providing additional operating flexibility

·

Commenced operations of our first health system joint venture in California with Dignity Health

 

 

LOS ANGELES, California, August 9, 2016 – RadNet, Inc. (NASDAQ: RDNT), a national leader in providing high-quality, cost-effective, fixed-site outpatient diagnostic imaging services through a network of 310 owned and/or operated outpatient imaging centers, today reported financial results for its second quarter of 2016.

 

Dr. Howard Berger, President and Chief Executive Officer of RadNet, commented, “I am very pleased with our operational results this quarter and the improvements we are making to our business. Normalizing our results for the one-time non-cash gains and losses in the quarter related to our New York acquisitions, our business produced double digit revenue growth, positive same store procedural growth for the ninth quarter in a row and higher EBITDA and Earnings as compared with last year’s second quarter. Additionally, sequentially from our first quarter of this year, our EBITDA increased almost 30%, raising EBITDA margins from 12.5% in the first quarter to 15.6% in the second quarter of 2016.”

 

Dr. Berger continued, “I’m excited about the opportunities we have in front of us to continue to expand and improve our business organically, particularly our ability to leverage best practices of the most successful aspects of our business on the east and west coasts. For example, we are pursuing several new health system partnerships on the west coast, a business model that has traditionally been a strength of our east coast operations, and we are looking to expand existing joint ventures on the east coast. During the quarter, we announced and commenced operations with our first California health system partnership with Dignity Health in the city of Glendale. This announcement and other initiatives we are working on in California with our Breastlink and oncology capabilities have created keen interest from other prominent health systems. We are more encouraged than ever that the joint venture partnership model that we’ve successfully demonstrated in the mid-Atlantic and New Jersey marketplaces will become more prominent for our west coast operations in the coming quarters.”

 

 

 

 

 

Dr. Berger added, “Another example of the sharing of best practices between our east and west coast operations is the opportunity to bring capitation and risk-based contracting outside of our California marketplace, where it has been such an integral aspect of how we’ve successfully grown our business. Diagnostic Imaging Group, which we acquired last year, had a small risk-based component of its business. With the combination of DIG’s assets with our other significant New York metropolitan operations which include Lenox Hill Radiology, New York Radiology Partners and our Mid-Rockland Imaging centers, we have begun to initiate meaningful conversations with medical groups on the east coast interested in our risk-based exclusive network contracting capabilities. I’m more confident than ever that this will be the successful model of the post-Affordable Care Act era, and that RadNet will be the first imaging center company to meaningfully align with major capitated medical groups, health systems and Accountable Care Organizations across all of our target markets. We expect to be in a position to discuss these opportunities more meaningfully before year end.”

 

“From a financial perspective, we’ve never been in a stronger position to grow our business. We completed the refinancing of our senior debt facilities on July 1^st, where we lengthened the maturities on our debt to 2023 (in the case of our first lien term loan) and 2021 in the case of our senior revolving credit facility. At the same time, we availed ourselves of additional operating flexibility to continue to grow our business and pursue the types of opportunities for expansion that we envision will be available to us over the next several years. We believe that securing our capital structure in a low interest rate environment was prudent and allows us to focus on operations without having concern about risks associated with the capital markets in years to come,” finished Dr. Berger.

 

Second Quarter Financial Results

 

For the second quarter of 2016, RadNet reported Adjusted Revenue of $224.6 million, after adding back $6.1 million of one-time non-cash working capital adjustments related to New York acquisitions which served to lower GAAP Revenue by such an amount during the quarter. Adjusted EBITDA⁽¹⁾ for the second quarter was $35.1 million. Adjusted Revenue increased $20.3 million (or 10.0%) and Adjusted EBITDA⁽¹⁾ increased $1.6 million (or 4.7%) from the second quarter of last year.

 

For the second quarter, RadNet reported Adjusted Net Income of $4.4 million, which is modified by removing certain tax effected non-cash items including (i) the $6.1 million of working capital adjustments mentioned above; (ii) a $5.0 million settlement gain on the return of common stock relating to the acquisition of Diagnostic Imaging Group; and (iii) a $221,000 one-time adjustment to depreciation in conjunction with the finalization of the purchase price allocation related to the Diagnostic Imaging Group acquisition. Adjusted Net Income increased $987,000 over the second quarter of 2015.

 

Per share Adjusted Net Income for the second quarter was $0.09, compared to per share Adjusted Net Income in the second quarter of 2015 of $0.08 (based upon a weighted average number of diluted shares outstanding of 46.9 million and 44.7 million for these periods in 2016 and 2015, respectively).

 

Affecting Net Income in the second quarter of 2016 were certain non-cash expenses and non-recurring items including: $5.0 million settlement gain related to the return of common stock in connection with our acquisition of Diagnostic Imaging Group; $6.1 million charge to Revenue related to working capital adjustments also pertaining to acquisitions we completed in New York; $221,000 of one-time depreciation expense related to the finalization of the purchase price allocation related to the Diagnostic Imaging Group acquisition; $1.0 million of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted stock; $173,000 of severance paid in connection with headcount reductions related to cost savings initiatives; $441,000 loss on the sale of certain capital equipment; and $1.4 million of non-cash amortization of deferred financing costs and discount on debt issuances.

 

For the second quarter of 2016, as compared with the prior year’s second quarter, MRI volume increased 7.5%, CT volume increased 8.9% and PET/CT volume increased 4.8%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 9.6% 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 2016 and 2015, MRI volume increased 3.0%, CT volume increased 4.4% and PET/CT volume increased 1.3%. Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 0.4% over the prior year’s same quarter.

 

 

 

 

Six Month Financial Results

 

For the six months ended June 30, 2016, RadNet reported Adjusted Revenue of $441.0 million, after adding back $6.1 million of one-time non-cash working capital adjustments related to NY acquisitions which served to lower GAAP Revenue by such an amount during the six month period. Adjusted EBITDA⁽¹⁾ for the six month period in 2016 was $62.2 million. Adjusted Revenue increased $55.4 million (or 14.4%) and Adjusted EBITDA⁽¹⁾ increased $8.5 million (or 15.8%) from the same six month period last year.

 

For the six month period in 2016, RadNet reported Adjusted Net Income of $2.6 million, which is modified by removing certain tax effected non-cash items including (i) the $6.1 million of working capital adjustments mentioned above; (ii) a $5.0 million settlement gain on the return of common stock relating to the acquisition of Diagnostic Imaging Group; and (iii) a $110,000 one-time adjustment to depreciation in conjunction with the finalization of the purchase price allocation related to the Diagnostic Imaging Group acquisition.

 

Adjusted Net Income increased $3.8 million over the six month period of 2015. Per share Adjusted Net Income for the six month period in 2016 was $0.06, compared to per share Adjusted Net Loss in the prior year’s same period of $(0.03) (based upon a weighted average number of diluted shares outstanding of 47.0 million and 43.1 million for these periods in 2016 and 2015, respectively).

 

Affecting operating results in the six months ended June 30, 2016 were certain non-cash expenses and non-recurring items including: $5.0 million settlement gain related to the return of common stock in connection with the acquisition of Diagnostic Imaging Group; $6.1 million charge to Revenue related to a working capital adjustment also pertaining to acquisitions we completed in New York; $110,000 of one-time depreciation expense related to the finalization of the purchase price allocation related to the Diagnostic Imaging Group acquisition; $3.8 million of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted stock; $340,000 of severance paid in connection with headcount reductions related to cost savings initiatives; $441,000 loss on the sale of certain capital equipment; and $2.7 million of non-cash amortization of deferred financing costs and discount on debt issuances.

 

2016 Guidance Update

 

RadNet reaffirms its previously announced 2016 guidance ranges as follows:

 

Total Net Revenue (a)		$870 million - $910 million
Adjusted EBITDA(1)		$130 million - $140 million
Capital Expenditures (b)		$50 million - $55 million
Cash Interest Expense		$37 million - $40 million
Free Cash Flow Generation (c)		$40 million - $50 million

 

(a)

Note the change from prior years. This metric is now presented after the subtraction of bad debt.

(b)

Net of proceeds from the sale of equipment, imaging centers and joint venture interests. Represents an increase of $5 million from originally announced guidance range.

(c)

Defined by the Company as Adjusted EBITDA(1) less total capital expenditures and cash paid for interest.

 

Dr. Berger added, “We are on track to meet our guidance ranges for the year. All ranges remain unchanged from what we announced earlier in the year with the exception of increasing our targeted capital expenditure range by $5 million. This increase is to fund a replacement program of our computed radiography (CR x-ray) scanners to provide them with digital wireless transmitting capabilities. This will improve quality, lower labor costs and comply with a new CMS ruling which would otherwise lower our x-ray reimbursement from traditional CR systems beginning in 2018.”

 

 

 

 

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 2016 results on Tuesday, August 9th, 2016 at 7:30 a.m. Pacific Time (10:30 a.m. Eastern Time).

 

Conference Call Details:

 

Date: Tuesday, August 9, 2016

Time: 10:30 a.m. Eastern Time

Dial In-Number: 888-471-3820

International Dial-In Number: 719-325-2388

 

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=120693 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 877-870-5176 from the U.S., or 858-384-5517 for international callers, and using the passcode 3424412.

 

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 310 owned and/or operated outpatient imaging centers. RadNet's core markets include California, Maryland, Delaware, New Jersey, New York and Rhode Island. 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 7,300 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 2015 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.

 

 

 

 

CONTACTS:

 

RadNet, Inc.

Mark Stolper, 310-445-2800

Executive Vice President and Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

 

		June 30,				December 31,
		2016				2015
		(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	433			$	446
Accounts receivable, net			165,086				162,843
Current portion of deferred tax assets			22,278				22,279
Due from affiliates			4,273				4,815
Prepaid expenses and other current assets			30,511				38,986
Total current assets			222,581				229,369
PROPERTY AND EQUIPMENT, NET			250,426				256,722
OTHER ASSETS
Goodwill			240,520				239,408
Other intangible assets			44,032				45,253
Deferred financing costs			2,012				2,841
Investment in joint ventures			39,483				33,584
Deferred tax assets, net of current portion			24,352				24,685
Deposits and other			4,935				4,565
Total assets		$	828,341			$	836,427
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable, accrued expenses and other		$	108,075			$	113,813
Due to affiliates			8,545				6,564
Deferred revenue			1,599				1,598
Current portion of notes payable			21,609				22,383
Current portion of deferred rent			2,551				2,563
Current portion of obligations under capital leases			7,713				10,038
Total current liabilities			150,092				156,959
LONG-TERM LIABILITIES
Deferred rent, net of current portion			27,929				26,865
Line of credit			13,800				–
Notes payable, net of current portion			589,177				599,914
Obligations under capital lease, net of current portion			4,710				6,385
Other non-current liabilities			5,667				9,843
Total liabilities			791,375				799,966
EQUITY
RadNet, Inc. stockholders' equity:
Common stock - $.0001 par value, 200,000,000 shares authorized; 46,432,404 and 46,281,189 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively			4				4
Additional paid-in-capital			196,026				197,297
Accumulated other comprehensive loss			(169	)			(153	)
Accumulated deficit			(162,669	)			(164,571	)
Total RadNet, Inc.'s stockholders' equity			33,192				32,577
Noncontrolling interests			3,774				3,884
Total equity			36,966				36,461
Total liabilities and equity		$	828,341			$	836,427

 

 

 

 

 

 

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS EXCEPT SHARE DATA)

(unaudited)

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2016				2015				2016				2015
NET REVENUE
Service fee revenue, net of contractual allowances and discounts		$	203,759			$	188,403			$	404,601			$	353,433
Provision for bad debts			(12,326	)			(8,387	)			(22,630	)			(15,862	)
Net service fee revenue			191,433				180,016				381,971				337,571
Revenue under capitation arrangements			27,132				24,273				52,982				47,985
Total net revenue			218,565				204,289				434,953				385,556
OPERATING EXPENSES
Cost of operations, excluding depreciation and amortization			194,062				175,796				390,888				344,717
Depreciation and amortization			15,811				14,941				32,223				29,235
Loss on sale and disposal of equipment			441				74				441				36
Severance costs			173				94				340				130
Total operating expenses			210,487				190,905				423,892				374,118
INCOME FROM OPERATIONS			8,078				13,384				11,061				11,438
OTHER INCOME AND EXPENSES
Interest expense			10,745				10,423				21,426				20,419
Meaningful use incentive			–				–				(2,808	)			(3,270	)
Equity in earnings of joint ventures			(3,274	)			(3,207	)			(5,553	)			(4,309	)
Gain from return of common stock			(5,032	)			–				(5,032	)			–
Other expenses			4				413				6				410
Total other expenses			2,443				7,629				8,039				13,250
INCOME (LOSS) BEFORE INCOME TAXES			5,635				5,755				3,022				(1,812	)
(Provision for) benefit from income taxes			(2,253	)			(2,192	)			(1,073	)			899
NET INCOME (LOSS)			3,382				3,563				1,949				(913	)
Net (loss) income attributable to noncontrolling interests			(243	)			168				47				246
NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC.
COMMON STOCKHOLDERS		$	3,625			$	3,395			$	1,902			$	(1,159	)
BASIC NET INCOME (LOSS) PER SHARE
ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS		$	0.08			$	0.08			$	0.04			$	(0.03	)
DILUTED NET INCOME (LOSS) PER SHARE
ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS		$	0.08			$	0.08			$	0.04			$	(0.03	)
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic			46,558,944				43,370,024				46,576,631				43,059,686
Diluted			46,882,383				44,685,599				46,960,226				43,059,686

 

 

 

 

 

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(unaudited)

 

		Six Months Ended June 30,
		2016				2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)		$	1,949			$	(913	)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization			32,223				29,235
Provision for bad debts			22,630				15,862
Gain from return of common stock			(5,032	)			–
Equity in earnings of joint ventures			(5,553	)			(4,309	)
Distributions from joint ventures			2,098				6,195
Amortization and write off of deferred financing costs and loan discount			2,738				2,631
Loss on sale and disposal of equipment			441	#			36
Stock-based compensation			3,761				5,571
Changes in operating assets and liabilities, net of assets
acquired and liabilities assumed in purchase transactions:
Accounts receivable			(24,873	)			(19,368	)
Other current assets			8,454				(3,058	)
Other assets			220				(3,687	)
Deferred taxes			333				(1,854	)
Deferred rent			1,052				4,602
Deferred revenue			–				(564	)
Accounts payable, accrued expenses and other			10,983				(2,423	)
Net cash provided by operating activities			51,424				27,956
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of imaging facilities			(6,603	)			(34,407	)
Purchase of property and equipment			(40,267	)			(31,649	)
Proceeds from sale of equipment			63				205
Cash distribution from existing JV partner			994				–
Equity contributions in existing and purchase of interest in joint ventures			(734	)			(265	)
Net cash used in investing activities			(46,547	)			(66,116	)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on notes and leases payable			(6,310	)			(3,969	)
Proceeds from borrowings			–				74,401
Payments on Term Loan Debt			(12,357	)			(11,369	)
Deferred financing costs			–				(531	)
Net proceeds on revolving credit facility			13,800				(15,300	)
Distributions paid to noncontrolling interests			(157	)			(613	)
Proceeds from issuance of common stock upon exercise of options/warrants			150				594
Net cash (used in) provided by financing activities			(4,874	)			43,213
EFFECT OF EXCHANGE RATE CHANGES ON CASH			(16	)			(41	)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS			(13	)			5,012
CASH AND CASH EQUIVALENTS, beginning of period			446				307
CASH AND CASH EQUIVALENTS, end of period		$	433			$	5,319
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest		$	18,545			$	18,283

 

 

 

RADNET, INC.

RECONCILIATION OF GAAP NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC.

COMMON SHAREHOLDERS TO ADJUSTED EBITDA⁽¹⁾

(IN THOUSANDS)

 

		Three Months Ended
		June 30,
		2016				2015
Net Income Attributable to RadNet, Inc. Common Shareholders		$	3,625		$	3,395
Plus Provision for Income Taxes			2,253			2,192
Plus Other Expenses (Income)			4			413
Less Gain on Acquisition-Related Return of Common Stock			(5,032	)		–
Plus Acquisition-Related Working Capital Adjustment			6,072			–
Plus Interest Expense			10,745			10,423
Plus Severance Costs			173			94
Plus Loss on Sale of Equipment			441			74
Plus Depreciation and Amortization			15,811			14,941
Plus Non Cash Employee Stock Compensation			1,028			2,017
Adjusted EBITDA(1)		$	35,120		$	33,549

 

		Six Months Ended
		June 30,
		2016				2015
Net Loss Attributable to RadNet, Inc. Common Shareholders		$	1,902		$	(1,159	)
Plus Provision for (Benefit From) Income Taxes			1,073			(899	)
Plus Other Expenses (Income)			6			410
Less Gain on Acquisition-Related Return of Common Stock			(5,032	)		-
Plus Acquisition-Related Working Capital Adjustment			6,072			-
Plus Interest Expense			21,426			20,419
Plus Severance Costs			340			130
Plus Loss on Sale of Equipment			441			36
Plus Depreciation and Amortization			32,223			29,235
Plus Non Cash Employee Stock Compensation			3,761			5,571
Adjusted EBITDA(1)		$	62,212		$	53,743

 

 

 

 

 

PAYOR CLASS BREAKDOWN**

 

	Second Quarter
	2016
Commercial Insurance	56.3%
Medicare	19.7%
Capitation	11.8%
Workers Compensation/Personal Injury	3.9%
Medicaid	3.0%
Other	5.4%
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.

 

RADNET PAYMENTS BY MODALITY *

 

		Second Quarter		Full Year		Full Year		Full Year
		2016		2015		2014		2013
MRI		34.7%		35.3%		36.1%		36.3%
CT		16.0%		15.7%		15.3%		15.5%
PET/CT		4.9%		5.1%		5.7%		5.6%
X-ray		9.5%		9.6%		10.2%		10.5%
Ultrasound		12.5%		11.5%		11.1%		11.0%
Mammography		16.1%		16.4%		16.5%		15.7%
Nuclear Medicine		1.2%		1.3%		1.4%		1.5%
Other		5.1%		5.1%		3.7%		3.9%
		100.0%		100.0%		100.0%		100.0%

 

Note

* Based upon global payments received from consolidated Imaging Centers from that year's dates of service.

Excludes payments from hospital contracts, Breastlink, Imaging on Call, eRAD, Center Management Fees and other miscellaneous operating activities.

 

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.