RadNet third quarter revenue increases 5.0% to record $140.1 million

• Revenue for the quarter was $140.1 million, RadNet's highest revenue quarter in its history; Revenue increased 5.0% over last year's third quarter
• Compared with the second quarter of 2010, Revenue and Adjusted EBITDA increased 0.8% and 2.2%, respectively
• Aggregate procedural volumes increased 4.7% over the prior year's quarter and 0.4% compared with the second quarter of 2010
• RadNet's per share Net Loss narrowed to $(0.01) for the quarter, compared with a per share loss of $(0.05) in the prior year's quarter
• Excluding non-cash losses from our interest rate swaps, disposal of equipment and stock compensation expense, RadNet would have reported Net Income of $1.8 million, or $0.05 per fully diluted share, compared with a Net Loss of $(943,000), or $(0.03) per share, in the third quarter of 2009
• As of the end of the third quarter, total availability of capital was approximately $200 million, inclusive of $24.5 million of cash balance, $100 million available revolving credit facility and the $75 million accordion feature of our senior secured loans
• Adjusted EBITDA was $28.0 million, an increase of 9.8% over the prior year's quarter
• Adjusted EBITDA margin increased to 20.0% as compared with Adjusted EBITDA margins of 19.1% from the prior year's third quarter and 19.7 % from the second quarter of 2010

RadNet, Inc. (Nasdaq:RDNT), a national leader in providing high-quality, cost-effective, fixed-site outpatient diagnostic imaging services through a network of 192 fully-owned and operated outpatient imaging centers, today reported financial results, including record revenues, for its third quarter of 2010.

Dr. Howard Berger, President and Chief Executive Officer of RadNet, commented, "We continue to improve our financial and operating performance. Our Revenue, Adjusted EBITDA and aggregate procedural volumes not only increased from last year's third quarter, but also illustrated sequential improvement when compared with the first and second quarters of this year. Based upon annualizing the financial results of our last two quarters, we are on a very strong run-rate as we approach the end of this year and the beginning of 2011. We are further encouraged by preliminary procedural volume reports we have reviewed from October, which suggest that our momentum is carrying strongly into the fourth quarter."

Dr. Berger continued, "We are continuing to find ways to improve the efficiency of our general operating activities and maintain growth, despite industry statistics reporting a decrease in physician office visits and a difficult economy in 2010. As a result, we were able to improve our Adjusted EBITDA margins in the quarter. I believe that this positions us for significant financial improvement when a more normalized utilization of healthcare services returns. Additionally, we believe that the strength of our unique operating model and scale will further distance ourselves from competitors, many of whom are struggling from the lower utilization levels in healthcare."

"More recently, we focused on expanding the scope of our business activities within the radiology industry. We endeavor to become a more diversified provider to the radiology industry, broadening our revenue streams beyond that which are derived from owning and operating imaging facilities. Most recently, this is illustrated by our acquisition of eRAD, a provider of Picture Archiving and Communications Systems (PACS) to the industry. We are pursuing further opportunities which we believe will result in our ability to offer certain core competencies of ours to hospitals, imaging centers and other participants in our industry. We also expect that, as compared with our core business of owning and operating outpatient medical imaging centers, these newer product and service offerings will require less ongoing capital investment," added Dr. Berger.

Third Quarter Financial Results

For the third quarter of 2010, RadNet reported Revenue, Adjusted EBITDA and Net Loss of $140.1 million, $28.0 million and $(285,000), respectively. Revenue increased $6.7 million (or 5.0%), Adjusted EBITDA increased $2.5 million (or 9.8%) and Net Loss decreased $1.4 million over the third quarter of 2009. On a sequential basis, compared with the first and second quarters of 2010, Revenue increased $15.9 million (or 12.8%) and $1.1 million (or 0.8%), respectively.  On a sequential basis, compared with the first and second quarter of 2010, Adjusted EBITDA increased $7.5 million (or 36.7%) and $0.6 million (or 2.2%), respectively. 

Net Loss for the third quarter was $(0.01) per share, compared with a Net Loss of $(0.05) per share in the third quarter of 2009 (based upon a weighted average number of fully diluted shares outstanding of 37.0 million and 36.1 million for these periods in 2010 and 2009, respectively). Excluding non-cash losses and expenses from the mark-to-market of our interest rate swaps of $821,000, disposal of equipment of $451,000 and stock compensation of $793,000, RadNet would have reported Net Income of $1.8 million, or $0.05 per fully diluted share, for the third quarter of 2010 compared with a Net Loss of $(943,000), or $(0.03) per share, for 2009 excluding those same non-cash losses and expenses.

In addition to the losses on interest rate swaps, disposal of equipment and stock compensation expense, affecting Net Loss in the third quarter of 2010 were certain other non-cash expenses and non-recurring items, including $164,000 of severance paid in connection with employee reductions related to cost savings initiatives and $710,000 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 third quarter of 2010, as compared with the prior year's third quarter, MRI volume increased 6.9%, CT volume increased 1.0% and PET/CT volume decreased 7.3%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 4.7% 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 2010 and 2009, MRI volume decreased 1.8%, CT volume decreased 8.2% and PET/CT volume decreased 10.1%. Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, decreased 3.3% over the prior year's same quarter.

Nine Month Financial Results

For the nine months ended September 30, 2010, RadNet reported Revenue, Adjusted EBITDA and Net Loss of $403.2 million, $76.0 million and $(16.2) million, respectively. Revenue increased $10.7 million (or 2.7%), Adjusted EBITDA decreased $2.9 million (or 3.6%) and Net Loss increased $13.2 million, respectively, over the first nine months of 2009.  Net Loss for the nine month period ended September 30, 2010 was $(0.44) per share, compared with a Net Loss of $(0.08) per share in corresponding nine month period of 2009 (based upon a weighted average number of fully diluted shares outstanding of 36.8 million and 36.0 million for these periods in 2010 and 2009, respectively).

Affecting Net Loss in the first nine months of 2010 were certain non-cash expenses and non-recurring items, including: $9.9 million loss on extinguishment of debt related to the write-off of deferred financing fees associated with our refinanced credit facilities; $2.0 million non-cash loss on the fair value adjustments and related amortization of interest rate swaps associated with the Company's credit facilities, $2.8 million of non-cash employee stock compensation expense resulting from the vesting of certain options and warrants; $731,000 of severance paid in connection with employee reductions; $606,000 loss on the disposal of certain capital equipment; and $2.1 million 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. The aggregate affect of these items totaled $(0.44) per share during the nine month period.