RadNet fourth quarter revenues increase 10.2% to $13.5 million

• For the fourth quarter, RadNet reports record Revenue of $145.3 million and record Adjusted EBITDA of $30.2 million; increases of 10.2% and 11.8%, respectively, over the prior year's quarter
  
• Fourth quarter 2010 Net Income was $3.3 million as compared with Net Income of $637,000 from last year's fourth quarter; fourth quarter 2010 per share Net Income was $0.09 compared to a per share Net Income of $0.02 for the prior year's quarter
  
• For the year, RadNet reports record annual Revenue of $548.5 million and record annual Adjusted EBITDA of $106.2 million; increases of 4.6% and 0.3%, respectively, over the prior year's results
  
• For the year, RadNet reports a per share net loss of $(0.35) compared to a per share loss of $(0.06)in the prior year; 2010 per share loss would have been $(0.08), excluding the Loss on Extinguishment of Debt from RadNet's April 6, 2010 $585 million debt refinancing
  
• RadNet announces 2011 guidance, including expected increases in Revenue and Adjusted EBITDA

-(Nasdaq:RDNT), a national leader in providing high-quality, cost-effective, fixed-site outpatient diagnostic imaging services through a network of 201 owned and/or operated outpatient imaging centers (inclusive of 19 facilities held in Joint Ventures), today reported financial results for its fourth quarter and full year ended December 31, 2010.

Financial Results

Fourth Quarter Report:

For the fourth quarter of 2010, RadNet reported Revenue, Adjusted EBITDA and Net Income of $145.3 million, $30.2 million and $3.3 million, respectively. Revenue increased $13.5 million (or 10.2%), Adjusted EBITDA increased $3.2 million (or 11.8%) and Net Income increased $2.7 million (or 418.1%) over the fourth quarter of 2009. On a sequential year-over-year basis, compared with the first, second and third quarters of 2010, Revenue increased $21.1 million (or 17.0%), $6.4 million (or 4.6%) and $5.2 million (or 3.7%), respectively. On a sequential basis, compared with the first, second and third quarters of 2010, Adjusted EBITDA increased $9.7 million (or 47.1%), $2.8 million (or 10.0%) and $2.1 million (or 7.6%), respectively.

Net Income for the fourth quarter was $0.09 per share, compared with a Net Income of $0.02 per share in the fourth quarter of 2009 (based upon a weighted average number of fully diluted shares outstanding of 37.8 million and 37.4 million for these periods in 2010 and 2009, respectively). Excluding non-cash gains from the mark-to-market of our interest rate swaps of $1.8 million, a $306,000 non-cash charge to interest expense related to the amortization of accumulated unrealized losses on interest rate swaps, losses from the disposal of equipment of $530,000 and non-cash stock compensation of $898,000, RadNet would have reported Net Income of $3.2 million, or $0.08 per fully diluted share, for the fourth quarter of 2010 compared with a Net Income of $1.5 million, or $0.04 per share, for the fourth quarter of 2009 excluding those same non-cash losses and expenses.

Also affecting Net Income in the fourth quarter of 2010 were certain other non-cash expenses and non-recurring items, including $107,000 of severance paid in connection with employee reductions related to cost savings initiatives and $723,000 of non-cash Deferred Financing Expense related to the amortization of financing fees paid as part of our new credit facilities and senior unsecured notes.

For the fourth quarter of 2010, as compared with the prior year's fourth quarter, MRI volume increased 16.4%, CT volume increased 4.6% and PET/CT volume decreased 7.4%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 8.6% over the prior year's third quarter. On a same-center basis, including only those centers which were part of RadNet for both the fourth quarters of 2010 and 2009, MRI volume increased 7.9%, CT volume decreased 6.7% and PET/CT volume decreased 10.3%. Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 0.5% over the prior year's same quarter.

Dr. Howard Berger, President and Chief Executive Officer of RadNet, commented, "We are pleased to have ended 2010 with strong fourth quarter results. In the fourth quarter, we obtained record Revenues, Adjusted EBITDA and Net Income. Our results illustrate the strength of our operating model. Relative size and operating efficiency remain increasingly important in our industry, particularly in what is a very challenged economic and reimbursement climate. While we observe the struggles of many of our competitors, our multi-modality approach and geographic clustering operating model has made RadNet a resilient and stable operating force in our industry." 

"We are particularly excited about the future opportunities for RadNet. In the last few months, we have taken important strategic steps towards broadening the scope of our Company. Our entrances into the radiology software and teleradiology businesses have already begun to widen the scope of opportunities we are pursuing. In particular, we are excited about the potential for new partnerships with major hospital and health systems, where we are now able to offer a multi-disciplined approach of diversified radiology solutions. Furthermore, after experiencing an operating environment in 2010 where the general utilization of healthcare services was depressed, we have begun to see stabilization of procedural volumes at our centers. This provides us encouragement as we move further into 2011."

Annual Report:

For full year 2010, the Company reported Revenue, Adjusted EBITDA and Net Loss of $548.5 million, $106.2 million and $(12.9) million, respectively. Revenue increased $24.2 million (or 4.6%), Adjusted EBITDA increased $0.3 million (or 0.3%) and Net Loss increased $10.6 million, respectively, from full year 2009 results.

The increase in Net Loss in 2010 was primarily the result of a $9.9 million Loss on Debt Extinguishment related to our debt refinancing transaction we completed in April of 2010. Excluding the Loss on Debt Extinguishment, Net Loss for 2010 would have been $(0.08) per share, compared to a Net Loss of $(0.06) per share in 2009 (based upon a weighted average number of basic shares outstanding of 36.9 million and 36.0 million in 2010 and 2009, respectively). Affecting Net Loss in 2010 were certain non-cash expenses and non-recurring items including: $3.7 million of non-cash employee stock compensation expense resulting from the vesting of certain options and warrants; $2.8 million of non-cash Deferred Financing Expense related to the amortization of financing fees paid as part of our existing credit facilities; $0.8 million of severance paid in connection with the headcount reductions related to cost savings initiatives from previously announced acquisitions; $1.1 million loss on the disposal of certain capital equipment; and $917,000 non-cash charge to interest expense related to the amortization of accumulated unrealized losses on interest rate swaps related to the Company's credit facilities.

For the year ended December 31, 2010, as compared to 2009, MRI volume increased 7.9%, CT volume decreased 0.6% and PET/CT volume decreased 5.1%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 4.4% for the twelve months of 2010 over 2009.

2011 Fiscal Year Guidance

For its 2011 fiscal year, RadNet announces its guidance ranges as follows: 

"Our guidance reflects our belief that we will continue to grow both our revenue and EBITDA in 2011," said Dr. Berger. "Although we see a stabilization of procedural volumes and have reason to believe we could experience some volume increases in 2011, the midpoint of our guidance assumes flat same center revenue as compared with 2010. We are anticipating Revenue and Adjusted EBITDA contribution in 2011 from the several acquisitions we completed at various times during 2010, as well as the recently announced acquisitions of Imaging On Call and Diagnostic Health businesses in 2011. We are also anticipating that we will achieve certain cost reductions necessary to substantially mitigate reimbursement cuts to which we are subject in 2011," added Dr. Berger.

Actual 2010 Results vs. 2010 Guidance:

The following compares the Company's actual 2010 performance with previously announced guidance levels. 

Dr. Berger commented, "Despite a more challenged economy and operating environment than we could have predicted when we set our original guidance for 2010, our Revenue and Free Cash Flow Generation fell in-line with our guidance levels, while we benefited from a lower Cash Interest Expense than we had anticipated. Our Adjusted EBITDA performance was below our range by about $800,000, despite a larger than anticipated negative effect of severe weather in our first quarter and lower than expected utilization of healthcare services in 2010 which impacted our same center volumes. We were pleased that after the first quarter, we showed substantial sequential improvement in our Adjusted EBITDA and operating margins. We attribute much of this improvement throughout 2010 to our ability to closely manage and reduce operating costs, drive efficiencies from acquired entities and drive increased procedural volumes as the year progressed."