What changed in this filing

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Item 1. Financial Statements

2021-11-09 compared with 2021-08-09 · 141 added, 115 removed, 605 unchanged (30% of the section changed)

3 unchanged sentences

(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

September 30,

2021 December 31,

13 unchanged sentences

Investment in joint ventures 44,228 34,528

Deferred tax assets, net of current portion 29,390 34,687

Deferred tax assets 24,563 34,687

Deposits and other 41,250 36,983

16 unchanged sentences

Common stock - $ 0.0001 par value, 200,000,000 shares authorized;

52,678,030 and 51,640,537 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

53,301,816 and 51,640,537 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

Additional paid-in-capital 335,599 307,788

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

6 unchanged sentences

Depreciation and amortization 24,606 21,247 71,272 64,536

(Gain) loss on sale and disposal of equipment and other ( 1,567 ) ( 569 ) ( 2,874 ) 202

Loss (gain) on sale and disposal of equipment and other 2,595 342 ( 279 ) 543

Severance costs 163 571 715 1,647

Total operating expenses 300,120 268,622 910,317 774,821

INCOME (LOSS) FROM OPERATIONS 27,678 179 45,333 ( 8,597 )

INCOME FROM OPERATIONS 32,570 23,375 77,902 14,780

OTHER INCOME AND EXPENSES

3 unchanged sentences

Debt restructuring and extinguishment expenses — — 6,044 —

Other expenses (income) 1,658 ( 115 ) 1,867 ( 108 )

Total other (income) expenses 16,717 13,614 16,222 23,217

Other (income) expenses ( 167 ) ( 139 ) 1,699 ( 247 )

Total other expenses 6,142 9,325 22,363 32,543

INCOME (LOSS) BEFORE INCOME TAXES 26,428 14,050 55,539 ( 17,763 )

15 unchanged sentences

(IN THOUSANDS)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

11 unchanged sentences

(IN THOUSANDS EXCEPT SHARE DATA)

The following table summarizes changes in the Company’s consolidated stockholders' equity, including noncontrolling interest, during the three months ended June 30, 2021 and June 30, 2020.

The following table summarizes changes in the Company’s consolidated stockholders' equity, including noncontrolling interest, during the three months ended September 30, 2021 and September 30, 2020.

Common Stock Additional Paid-In

7 unchanged sentences

Shares Amount

BALANCE - March 31, 2021 52,340,856 $ 5 $ 316,032 $ ( 23,138 ) $ ( 108,541 ) $ 184,358 $ 97,000 $ 281,358

Issuance of common stock upon exercise of options 2,500 — 26 — — 26 — 26

BALANCE - JUNE 30, 2021 52,678,030 $ 5 $ 324,954 $ ( 22,227 ) $ ( 105,668 ) $ 197,064 $ 102,215 $ 299,279

Issuance of common stock under the equity compensation plan 94,638 — — — — — — —

1 unchanged sentence

Stock-based compensation expense — — 4,463 — — 4,463 — 4,463

Issuance of common stock for sale of unregistered securities for acquisition 67,658 — 2,025 — — 2,025 — 2,025

Forfeiture of restricted stock ( 3,365 ) — ( 42 ) — — ( 42 ) — ( 42 )

Sale of economic interests in majority owned subsidiary, net of taxes — — 4,198 — — 4,198 7,404 11,602

Change in cumulative foreign currency translation adjustment — — — ( 11 ) — ( 11 ) — ( 11 )

2 unchanged sentences

Net income — — — — 16,220 16,220 4,924 21,144

BALANCE-SEPTEMBER 30, 2021 53,301,816 $ 5 $ 335,599 $ ( 21,317 ) $ ( 89,450 ) $ 224,837 $ 114,542 $ 339,379

BALANCE - JUNE 30, 2020 51,554,760 $ 5 $ 304,012 $ ( 26,098 ) $ ( 130,111 ) $ 147,808 $ 85,448 $ 233,256

BALANCE - March 31, 2020 50,694,375 $ 5 $ 269,461 $ ( 26,574 ) $ ( 119,517 ) $ 123,375 $ 83,814 $ 207,189

Issuance of common stock upon exercise of options — — — — — — — —

Issuance of common stock under the equity compensation plan 37,000 — — — — — — —

Issuance of common stock under the DeepHealth equity compensation plan 4,338 — — — — — — —

Stock-based compensation expense — — 2,067 — — 2,067 — 2,067

Issuance of common stock for sale of unregistered securities for the DeepHealth acquisition 823,615 — 33,011 — — 33,011 — 33,011

Purchase of noncontrolling interests — — — — — — ( 601 ) ( 601 )

Change in cumulative foreign currency translation adjustment — — — 11 — 11 — 11

1 unchanged sentence

Change in fair value of cash flow hedge from prior periods reclassified to earnings — — — 969 — 969 969

Net (loss) income — — — — ( 10,594 ) ( 10,594 ) 1,634 ( 8,960 )

BALANCE-JUNE 30, 2020 51,554,760 $ 5 $ 304,012 $ ( 26,098 ) $ ( 130,111 ) $ 147,808 $ 85,448 $ 233,256

Other — — — — ( 1 ) ( 1 ) — ( 1 )

Net income — — — — 6,156 6,156 4,069 10,225

BALANCE-SEPTEMBER 30, 2020 51,596,098 $ 5 $ 306,079 $ ( 24,923 ) $ ( 123,956 ) $ 157,205 $ 88,916 $ 246,121

The accompanying notes are an integral part of these financial statements.

2 unchanged sentences

(IN THOUSANDS EXCEPT SHARE DATA)

The following table summarizes changes in the Company’s consolidated stockholders' equity, including noncontrolling interest, during the six months ended June 30, 2021 and June 30, 2020.

The following table summarizes changes in the Company’s consolidated stockholders' equity, including noncontrolling interest, during the nine months ended September 30, 2021 and September 30, 2020.

Common Stock Additional Paid-In

12 unchanged sentences

Stock-based compensation expense — — 21,608 — — 21,608 — 21,608

Purchase of noncontrolling interests — — ( 4 ) — — ( 4 ) — ( 4 )

Issuance of common stock for sale of unregistered securities for acquisition 67,658 — 2,025 — — 2,025 — 2,025

Forfeiture of restricted stock ( 3,365 ) — ( 42 ) — — ( 42 ) — ( 42 )

Purchase of noncontrolling interests by third party — — ( 4 ) — — ( 4 ) — ( 4 )

Contribution from noncontrolling partner — — — — — — 123 123

Sale of economic interests in majority owned subsidiary, net of taxes — — 4,198 — — 4,198 7,404 11,602

Change in cumulative foreign currency translation adjustment — — — ( 32 ) — ( 32 ) — ( 32 )

2 unchanged sentences

Net income — — — — 28,550 28,550 14,455 43,005

BALANCE-JUNE 30, 2021 52,678,030 $ 5 $ 324,954 $ ( 22,227 ) $ ( 105,668 ) $ 197,064 $ 102,215 $ 299,279

BALANCE-SEPTEMBER 30, 2021 53,301,816 $ 5 $ 335,599 $ ( 21,317 ) $ ( 89,450 ) $ 224,837 $ 114,542 $ 339,379

BALANCE - DECEMBER 31, 2019 50,314,328 $ 5 $ 262,865 $ ( 8,026 ) $ ( 103,159 ) $ 151,685 $ 81,454 $ 233,139

Issuance of common stock under the equity compensation plan 453,817 — — — — — — —

Issuance of common stock under the DeepHealth equity compensation plan 4,338 — — — — — — —

Stock-based compensation expense — — 10,203 — — 10,203 — 10,203

Issuance of common stock for sale of unregistered securities for the DeepHealth acquisition 823,615 — 33,011 — — 33,011 — 33,011

Distributions paid to noncontrolling interests — — — — — — ( 601 ) ( 601 )

Change in cumulative foreign currency translation adjustment — — — 6 — 6 — 6

2 unchanged sentences

Net (loss) income — — — — ( 20,797 ) ( 20,797 ) 8,063 ( 12,734 )

BALANCE-JUNE 30, 2020 51,554,760 $ 5 $ 304,012 $ ( 26,098 ) $ ( 130,111 ) $ 147,808 $ 85,448 $ 233,256

BALANCE-SEPTEMBER 30, 2020 51,596,098 $ 5 $ 306,079 $ ( 24,923 ) $ ( 123,956 ) $ 157,205 $ 88,916 $ 246,121

Sale of noncontrolling interests, net of taxes

The accompanying notes are an integral part of these financial statements.

2 unchanged sentences

(IN THOUSANDS)

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

29 unchanged sentences

Payments on term loan debt ( 616,217 ) ( 33,472 )

Additional deferred finance costs on revolving loan amendment — ( 741 )

Proceeds from debt refinancing, net of issuing costs 716,369 —

Proceeds from sale of economic interest in majority owned subsidiary, net of taxes 11,602 —

Distributions paid to noncontrolling interests — ( 601 )

Proceeds from paycheck protection program loans — 4,023

9 unchanged sentences

Cash paid during the period for interest $ 21,408 $ 31,210

Cash paid during the period for income taxes $ 1,913 $ 5,036

The accompanying notes are an integral part of these financial statements.

2 unchanged sentences

Supplemental Schedule of Non-Cash Investing and Financing Activities

We acquired equipment and certain leasehold improvements for approximately $ 42.1 million and $ 31.8 million during the six months ended June 30, 2021 and 2020, respectively, which were not paid for as of June 30, 2021 and 2020 , respectively.

We acquired equipment and certain leasehold improvements for approximately $ 50.5 million and $ 28.1 million during the nine months ended September 30, 2021 and 2020, respectively, which were not paid for as of September 30, 2021 and 2020 , respectively.

The offsetting amounts due were recorded in our condensed consolidated balance sheet under accounts payable, accrued expenses and other.

On August 24, 2021, we completed our stock purchase of Tangent Associates LLC by issuing 67,658 shares of our common stock to complete the transaction.

The shares were ascribed a value of $ 2.0 million.

On January 1, 2021 we entered into the Simi Valley Imaging Group, LLC, partnership agreement with Simi Valley Hospital and Health Services ("Simi Adventist").

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We are a national provider of freestanding, fixed-site outpatient diagnostic imaging services with operations in seven U.S.

At June 30, 2021, we operated, directly or indirectly through joint ventures with hospitals, 353 centers located in Arizona, California, Delaware, Florida, Maryland, New Jersey, and New York.

At September 30, 2021, we operated, directly or indirectly through joint ventures with hospitals, 350 centers located in Arizona, California, Delaware, Florida, Maryland, New Jersey, and New York.

Our centers provide physicians with imaging capabilities to facilitate the diagnosis and treatment of diseases and disorders.

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We consolidate the revenue and expenses, assets and liabilities of the Group.

The Group on a combined basis recognized $ 45.1 million and $ 26.9 million of revenue, net of management services fees to RadNet, for the three months ended June 30, 2021 and 2020, respectively and $ 45.1 million and $ 26.9 million of operating expenses for the three months ended June 30, 2021 and 2020, respectively.

RadNet recognized $ 190.6 million and $ 116.4 million of total billed net service fee revenue for the three months ended June 30, 2021, and 2020, respectively, for management services provided to the Group relating primarily to the technical portion of billed revenue.

The Group on a combined basis recognized $ 91.2 million and $ 66.4 million of revenue, net of management services fees to RadNet, for the six months ended June 30, 2021 and 2020, respectively and $ 91.2 million and $ 66.4 million of operating expenses for the six months ended June 30, 2021 and 2020, respectively.

RadNet recognized $ 369.5 million and $ 264.3 million

of total billed net service fee revenue for the six months ended June 30, 2021, and 2020, respectively, for management services provided to the Group relating primarily to the technical portion of billed revenue.

The Group on a combined basis recognized $ 43.8 million and $ 38.3 million of revenue, net of management services fees to RadNet, for the three months ended September 30, 2021 and 2020, respectively and $ 43.8 million and $ 38.3 million of operating expenses for the three months ended September 30, 2021 and 2020, respectively.

RadNet recognized $ 186.8 million and $ 169.0 million of total billed net service fee revenue for the three months ended September 30, 2021, and 2020, respectively, for management services provided to the Group relating primarily to the technical portion of billed revenue.

The Group on a combined basis recognized $ 135.0 million and $ 104.8 million of revenue, net of management services fees to RadNet, for the nine months ended September 30, 2021 and 2020, respectively and $ 135.0 million and $ 104.8 million of operating expenses for the nine months ended September 30, 2021 and 2020, respectively.

RadNet recognized $ 556.4 million

and $ 433.3 million of total billed net service fee revenue for the nine months ended September 30, 2021, and 2020, respectively, for management services provided to the Group relating primarily to the technical portion of billed revenue.

The cash flows of the Group are included in the accompanying condensed consolidated statements of cash flows.

All intercompany balances and transactions have been eliminated in consolidation.

In our condensed consolidated balance sheets at June 30, 2021 and December 31, 2020, we have included approximately $ 102.4 million and $ 82.3 million, respectively, of accounts receivable and approximately $ 21.8 million and $ 15.2 million of accounts payable and accrued liabilities related to the Group, respectively.

In our condensed consolidated balance sheets at September 30, 2021 and December 31, 2020, we have included approximately $ 102.7 million and $ 82.3 million, respectively, of accounts receivable and approximately $ 19.2 million and $ 15.2 million of accounts payable and accrued liabilities related to the Group, respectively.

The creditors of the Group do not have recourse to our general credit and there are no other arrangements that could expose us to losses on their behalf.

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generally accepted accounting principles for complete financial statements;

however, in the opinion of management, all adjustments consisting of normal recurring adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods ended June 30, 2021 and 2020 have been made.

The results of operations for any interim period are not necessarily indicative of the results for a full year.

17 unchanged sentences

Revenue under capitation arrangements is recognized in the period in which we are obligated to provide services to plan enrollees under contracts with various health plans.

Our total service revenues during the three and six months ended June 30, 2021 and 2020 are presented in the table below based on an allocation of the estimated transaction price with the patient between the primary patient classification of insurance coverage (in thousands):

Our total service revenues during the three and nine months ended September 30, 2021 and 2020 are presented in the table below based on an allocation of the estimated transaction price with the patient between the primary patient classification of insurance coverage (in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

12 unchanged sentences

To aid businesses and stimulate the national economy, Congress passed The Coronavirus Aid, Relief, and Economic Security ("CARES") Act, which was signed in to law on March 27, 2020.

Beginning in the second quarter of 2020 and through the six months ended June 30, 2021, we received funding from the various programs established by the CARES Act as follows:

Beginning in the second quarter of 2020 and through the nine months ended September 30, 2021, we received funding from the various programs established by the CARES Act as follows:

• $ 39.5 million of accelerated Medicare payments through the twelve months ended December 31, 2020

• $ 4.0 million from the Paycheck Protection Program through the twelve months ended December 31, 2020

• $ 32.6 million total Provider Relief Funding, $ 26.3 million received for the 12 months ended December 31, 2020 and $ 6.3 million for the 6 months ended June 30, 2021

• $ 32.6 million total Provider Relief Funding, $ 26.3 million received for the twelve months ended December 31, 2020 and $ 6.3 million for the nine months ended September 30, 2021

In addition, we have received for the 12 months ended December 31, 2020, $ 5.0 million in advance payments from insurer Blue Shield.

The accelerated Medicare and Blue Shield payments are recorded to Deferred Revenue in our condensed consolidated balance sheet and are being applied to revenue as services are performed beginning in 2021.

For the six months ended June 30, 2021, $ 10.3 million of the accelerated Medicare and $ 3.8 million of the Blue Shield funds have been applied to revenue.

For the nine months ended September 30, 2021, $ 21.2 million of the accelerated Medicare payments and the total advance of $ 5.0 million from Blue Shield have been applied to revenue.

The $ 4.0 million secured from the Paycheck Protection Program was accounted for as debt and in December 2020 we met the eligibility requirements under the government guidelines for forgiveness and the loans were written off to gain on extinguishment of debt.

1 unchanged sentence

The CARES Act also provides for a payment deferral of the employer portion of Social Security tax incurred during the pandemic, allowing half of such payroll taxes to be deferred until December 2021 and the remaining half until December 2022.

At December 31, 2020 and at June 30, 2021, the Company had in total $ 16.3 million of deferred Social Security taxes.

At December 31, 2020, we had in total $ 16.3 million of deferred Social Security taxes and at September 30, 2021, we had $ 8.6 million.

The reduction was related to a one time benefit of $ 7.7 million in federal payroll tax forgiveness.

The current portion of payment deferrals are recorded as payroll tax liability under the caption “Accounts payable, accrued expenses and other”, while the long term portion is recorded to Other Long Term Liabilities in our condensed consolidated balance sheet.

5 unchanged sentences

Proceeds on notes receivables are reflected as operating activities on our statement of cash flows and on our balance sheet as prepaid expenses and other current assets for the current portion and deposits and other for the long term portion.

Amounts remaining to be collected on these agreement were $ 19.8 million and $ 20.5 million at June 30, 2021 and December 31, 2020, respectively.

Amounts remaining to be collected on these agreement were $ 18.3 million and $ 20.5 million at September 30, 2021 and December 31, 2020, respectively.

We do not utilize factoring arrangements as an integral part of our financing for working capital and assess the party's ability to pay upfront at the inception of the notes receivable and subsequently by reviewing their financial statements annually and reassessing any insolvency risk on a periodic basis.

DEFERRED FINANCING COSTS - Costs of financing are deferred and amortized using the effective interest rate method.

Deferred financing costs, net of accumulated amortization, were $ 2.4 million and $ 1.8 million, as of June 30, 2021 and December 31, 2020, respectively and related to our Barclays Revolving Credit Facility.

Deferred financing costs, net of accumulated amortization, were $ 2.3 million and $ 1.8 million, as of September 30, 2021 and December 31, 2020, respectively and related to our Barclays Revolving Credit Facility.

See Note 5, Credit Facilities and Notes Payable for more information.

8 unchanged sentences

Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations.

GOODWILL AND INDEFINITE LIVED INTANGIBLES - Goodwill at June 30, 2021 totaled $ 502.3 million.

Indefinite lived intangible assets at June 30, 2021 were $ 7.1 million.

GOODWILL AND INDEFINITE LIVED INTANGIBLES - Goodwill at September 30, 2021 totaled $ 502.7 million.

Indefinite lived intangible assets at September 30, 2021 were $ 7.1 million.

Goodwill and Indefinite Lived Intangibles are recorded as a result of business combinations.

1 unchanged sentence

We tested goodwill and indefinite lived intangibles for impairment on October 1, 2020, noting no impairment.

However, during 2020 we ceased employing certain indefinite lived trade names with a total value of $ 4.2 million and they were written off in full.

In addition to the annual impairment test, we regularly assess if an event has occurred which would require interim impairment

We considered the current and expected future economic and market conditions surrounding COVID-19 pandemic and did not identify an indication of goodwill impairment being more likely than not through June 30, 2021.

Activity in goodwill for the six months ended June 30, 2021 is provided below (in thousands):

However, during 2020 we ceased employing certain indefinite lived trade names with a total value of $ 4.2 million and they were written

In addition to the annual impairment test, we regularly assess if an event has occurred which would require interim impairment testing.

Activity in goodwill for the nine months ended September 30, 2021 is provided below (in thousands):

Balance as of December 31, 2020 $ 472,879

2 unchanged sentences

Other Adjustments ( 28 )

Balance as of June 30, 2021 $ 502,331

Balance as of September 30, 2021 $ 502,710

INCOME TAXES - Income tax expense is computed using an asset and liability method and using expected annual effective tax rates.

3 unchanged sentences

For net deferred tax assets we consider estimates of future taxable income in determining whether our net deferred tax assets are more likely than not to be realized.

We recorded income tax expense of $ 2.9 million, or an effective tax rate of 26.2 %, for the three months ended June 30, 2021 compared to a benefit from income taxes of $ 4.5 million, or an effective tax rate of 33.3 % for the three months ended June 30, 2020.

We recorded income tax expense of $ 7.2 million, or an effective tax rate of 24.9 %, for the six months ended June 30, 2021 compared to a benefit from income taxes of $ 8.9 million, or an effective tax rate of 27.8 % for the six months ended June 30, 2020.

The income tax rates for the three and six months ended June 30, 2021 diverge from the federal statutory rate due to (i) noncontrolling interests due to the controlled partnerships;

We recorded income tax expense of $ 5.3 million, or an effective tax rate of 20.0 %, for the three months ended September 30, 2021 compared to income tax expense of $ 3.8 million, or an effective tax rate of 27.2 % for the three months ended September 30, 2020.

We recorded income tax expense of $ 12.5 million, or an effective tax rate of 22.6 %, for the nine months ended September 30, 2021 compared to a benefit from income taxes of $ 5.0 million, or an effective tax rate of 28.3 % for the nine months ended September 30, 2020.

The income tax rates for the three and nine months ended September 30, 2021 diverge from the federal statutory rate due to (i) noncontrolling interests due to the controlled partnerships;

(ii) effects of state income taxes;

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Our ROU assets consist of facility and equipment assets on operating leases.

No events have occurred such as fire, flood, or other acts which have impaired the integrity of our ROU assets as of June 30, 2021.

No events have occurred such as fire, flood, or other acts which have impaired the integrity of our ROU assets as of September 30, 2021.

Our facility leases require us to maintain insurance policies which would cover major damage to our facilities.

12 unchanged sentences

on June 1, 2020, we assumed the DeepHealth, Inc.

2017 Stock Incentive Plan, including outstanding options awards that can be exercised for our common stock.

2017 Equity Incentive Plan, including outstanding options awards that can be exercised for our common stock.

No additional awards will be granted under the DeepHealth, Inc.

2 unchanged sentences

COMPREHENSIVE INCOME (LOSS) - Accounting guidance establishes rules for reporting and displaying comprehensive income or loss and its components.

Our unrealized gains or losses on foreign currency translation adjustments, interest rate cap and swap agreements are included in comprehensive loss and are included in the consolidated statements of comprehensive income (loss) for the three and six months ended June 30, 2021 and 2020 .

COMMITMENTS AND CONTINGENCIES - We are party to various legal proceedings, claims, and regulatory, tax or government inquiries and investigations that arise in the ordinary course of business.

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A tabular presentation of the effect of derivative instruments on our consolidated statement of comprehensive loss of the 2019 Swaps which remain ineffective is as follows (amounts in thousands):

For the three months ended June 30, 2021

Account March 31, 2021 Balance Amount of comprehensive loss recognized on derivative net of taxes Amount of loss reclassified out of accumulated OCI into income (prior period effective portion), net of taxes June 30, 2021 Balance Location

For the three months ended September 30, 2021

Account June 30, 2021 Balance Amount of comprehensive loss recognized on derivative net of taxes Amount of loss reclassified out of accumulated OCI into income (prior period effective portion), net of taxes September 30, 2021 Balance Location

Accumulated Other Comprehensive Loss, net of taxes $ ( 20,736 ) $ — $ 920 $ ( 19,816 ) Equity

For the six months ended June 30, 2021

Account December 31, 2020 Balance Amount of comprehensive loss recognized on derivative net of taxes Amount of loss reclassified out of accumulated OCI into income (prior period effective portion), net of taxes June 30, 2021 Balance Location

For the nine months ended September 30, 2021

Accumulated Other Comprehensive Loss, net of taxes $ ( 22,581 ) $ — $ 2,765 $ ( 19,816 ) Equity

A tabular presentation of the effect of derivative instruments on our statement of operations of the 2019 Swaps which remain ineffective is as follows (amounts in thousands):

For the three months ended June 30, 2021

For the three months ended September 30, 2021

Ineffective interest rate swap Amount of gain recognized in income on derivative (current period ineffective portion) Location of gain recognized in Income on derivative (current period ineffective portion) Gross amount of loss reclassified from accumulated OCI into income (prior period effective portion) Location of loss reclassified from accumulated OCI into income (prior period effective portion)

Interest rate contracts $ 2,870 Other income (expense) $ ( 1,245 ) Interest Expense

For the six months ended June 30, 2021

For the nine months ended September 30, 2021

Interest rate contracts $ 14,149 Other income (expense) $ ( 3,735 ) Interest Expense

See Fair Value Measurements section below for the fair value of the 2019 Swaps at June 30, 2021.

See Fair Value Measurements section below for the fair value of the 2019 Swaps at September 30, 2021.

FAIR VALUE MEASUREMENTS – Assets and liabilities subject to fair value measurements are required to be disclosed within a fair value hierarchy.

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The tables below summarize the estimated fair values of certain of our financial assets that are subject to fair value measurements, and the classification of these assets on our condensed consolidated balance sheets, as follows (in thousands):

As of June 30, 2021

As of September 30, 2021

Level 1 Level 2 Level 3 Total

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The table below summarizes the estimated fair value compared to our face value of our long-term debt as follows (in thousands):

As of June 30, 2021

As of September 30, 2021

Level 1 Level 2 Level 3 Total Fair Value Total Face Value

3 unchanged sentences

First Lien Term Loans and SunTrust Term Loan $ — $ 661,640 $ — $ 661,640 $ 662,403

As of June 30, 2021 and at December 31, 2020 our Barclays revolving credit facility had no balance outstanding.

Our SunTrust revolving credit facility relating to our consolidated subsidiary The New Jersey Imaging Network ("NJIN"), had no principal amount outstanding at June 30, 2021 and at December 31, 2020.

At September 30, 2021 and at December 31, 2020 our Barclays revolving credit facility had no balance outstanding.

Our SunTrust revolving credit facility relating to our consolidated subsidiary The New Jersey Imaging Network ("NJIN"), had no principal amount outstanding at September 30, 2021 and at December 31, 2020.

The estimated fair value of our long-term debt, which is discussed in Note 5, Credit Facilities and Notes Payable, was determined using Level 2 inputs primarily related to comparable market prices.

2 unchanged sentences

EARNINGS PER SHARE - Earnings per share is based upon the weighted average number of shares of common stock and common stock equivalents outstanding, net of common stock held in treasury, as follows (in thousands except share and per share data):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

15 unchanged sentences

If there is no readily determinable fair value, the guidance allows entities the ability to measure investments at cost, adjusted for observable price changes and impairments, with changes recognized in net income.

As of June 30, 2021, we have three equity investments for which a fair value is not readily determinable and therefore the total amounts invested are recognized at cost as follows:

As of September 30, 2021, we have three equity investments for which a fair value is not readily determinable and therefore the total amounts invested are recognized at cost as follows:

Medic Vision Imaging Solutions Ltd., based in Israel, specializes in software packages that provide compliant radiation dose structured reporting and enhanced images from reduced dose CT scans.

Our investment of $ 1.2 million represents a 14.21 % equity interest in the company.

No observable price changes or impairment in our investment was identified as of June 30, 2021.

No observable price changes or impairment in our investment was identified as of September 30, 2021.

Turner Imaging Systems, based in Utah, develops and markets portable X-ray imaging systems that provide a user the ability to acquire X-ray images wherever and whenever they are needed.

On February 1, 2018, we purchased 2.1 million preferred shares in Turner Imaging Systems for $ 2.0 million.

On January 1, 2019 we funded a convertible promissory note in the amount of $ 0.1 million that converted to additional 80,000 shares December 21, 2019.

No observable price changes or impairment in our investment was identified as of June 30, 2021.

On January 1, 2019 we funded a convertible promissory note in the amount of $ 0.1 million that converted into an additional 80,000 shares effective December 21, 2019.

No observable price changes or impairment in our investment was identified as of September 30, 2021.

WhiteRabbit.ai Inc., based in California, is currently developing an artificial intelligence suite which aims to improve the speed and accuracy of cancer detection in radiology and improve patient care.

On November 5, 2019 we acquired an equity interest in the company for $ 1.0 million and also loaned the company $ 2.5 million in support of its operations.

No observable price changes, impairment in our investment or impairment of the loan receivable was identified as of June 30, 2021.

No observable price changes, impairment in our investment or impairment of the loan receivable was identified as of September 30, 2021.

INVESTMENT IN JOINT VENTURES – We have 13 unconsolidated joint ventures with ownership interests ranging from 35 % to 55 %.

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We evaluate our investment in joint ventures, including cost in excess of book value (equity method goodwill) for impairment whenever indicators of impairment exist.

No indicators of impairment existed as of June 30, 2021.

No indicators of impairment existed as of September 30, 2021.

Joint venture investment and financial information

The following table is a summary of our investment in joint ventures during the six months ended June 30, 2021 (in thousands):

The following table is a summary of our investment in joint ventures during the nine months ended September 30, 2021 (in thousands):

Balance as of December 31, 2020 $ 34,528

1 unchanged sentence

Equity contributions in existing joint ventures 1,441

Balance as of June 30, 2021 $ 41,375

We charged management service fees from the centers underlying these joint ventures of approximately $ 5.5 million and $ 3.3 million for the three months ended June 30, 2021 and 2020 and $ 10.8 million and $ 5.9 million for the six months ended June 30, 2021 and 2020, respectively.

Balance as of September 30, 2021 $ 44,228

We charged management service fees from the centers underlying these joint ventures of approximately $ 5.3 million and $ 2.7 million for the three months ended September 30, 2021 and 2020 and $ 16.0 million and $ 8.6 million for the nine months ended September 30, 2021 and 2020, respectively.

On June 23, 2021, we made an additional equity contribution to our joint venture in Arizona of $ 1.4 million.

Our equity ownership interest percentage in the venture did not change.

The following table is a summary of key balance sheet data for these joint ventures as of June 30, 2021 and December 31, 2020 and income statement data for the six months ended June 30, 2021 and 2020 (in thousands):

The following table is a summary of key balance sheet data for these joint ventures as of September 30, 2021 and December 31, 2020 and income statement data for the nine months ended September 30, 2021 and 2020 (in thousands):

Balance Sheet Data:

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Current assets $ 46,186 $ 27,085

6 unchanged sentences

Total value of RadNet joint venture interests $ 44,228 $ 34,528

Income statement data for the six months ended June 30, 2021 2020

Income statement data for the nine months ended September 30,

Net revenue $ 98,193 $ 78,988

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The adoption did not have a material impact on our financial statements.

NOTE 4 – FACILITY ACQUISITIONS

During the first and second quarters of 2021, we completed the acquisition of certain assets of the following entities, all of which engage in the practice of radiology.

NOTE 4 – BUSINESS COMBINATIONS AND RELATED ACTIVITY

During 2021, we completed the acquisition of certain assets of the following entities, which either engage directly in the practice of radiology or associated businesses.

The primary reason for these acquisitions was to strengthen our presence in the New York City, New Jersey and California markets.

We made a fair value determination of the acquired assets and assumed liabilities and the following were recorded (in thousands):

Entity Date Acquired Total Cash Consideration Property & Equipment Right of Use Assets Goodwill Intangible Assets Other Assets Right of Use Liabilities

Entity Date Acquired Total Consideration Property & Equipment Right of Use Assets Goodwill Intangible Assets Other Assets Right of Use Liabilities

Personal Health Imaging PLLC* 2/1/2021 2,995 576 608 2,355 50 14 ( 608 )

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ZP Eastern LLC 6/1/2021 2,868 2,801 1,951 17 50 — ( 1,951 )

Tangent Associates LLC** 8/24/2021 2,025 10 — 379 1,636 — —

Total 66,943 34,559 12,670 29,754 2,421 209 ( 12,670 )

*Fair Value Determination is Final

** All stock purchase through issuing 67,658 shares of our common stock.

Formation of majority owned subsidiary

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RadNet contributed $ 0.3 million in assets for a 60 % economic interest and Simi Adventist contributed assets totaling $ 0.1 million for a 40 % economic interest.

Sale of ownership interest in a majority owned subsidiary

Effective September 1, 2021 we completed the sale of a 24.9 % ownership interest in our majority owned subsidiary West Valley Imaging Group, LLC for $ 13.1 million to Tarzana Medical Center, LLC.

After the sale, our ownership interest in the subsidiary has reduced from 75.0 % to 50.1 % and we retain a controlling financial interest in the subsidiary.

We recognized in additional paid in capital on our condensed consolidated balance sheets, $ 4.2 million excess in consideration over the carrying value of the sold economic interest.

Post the sale of our ownership interest we acquired from Tarzana Medical Center, LLC, certain intangible business assets for purchase consideration of approximately $ 5.2 million.

NOTE 5 – CREDIT FACILITIES AND NOTES PAYABLE

As of June 30, 2021 and December 31, 2020 our term loan debt obligations are as follows (in thousands):

As of September 30, 2021 and December 31, 2020 our term loan debt obligations are as follows (in thousands):

September 30,

2021 December 31,

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Discount on First Lien Term Loans ( 13,735 ) ( 9,699 )

SunTrust Term Loan Agreement collateralized by NJIN's tangible and intangible assets 49,125 51,375

SunTrust Term Loan collateralized by NJIN's tangible and intangible assets 48,000 51,375

Total debt obligations 757,453 652,704

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Long term portion debt obligations $ 746,288 $ 612,913

We had no outstanding balance under our $ 195.0 million Barclays Revolving Credit Facility at June 30, 2021 and have reserved $ 7.8 million for certain letters of credit.

The remaining $ 187.2 million of our Barclays Revolving Credit Facility was available to draw upon as of June 30, 2021.

We had no outstanding balance under our $ 30.0 million SunTrust Revolving Credit Facility at June 30, 2021.

As of June 30, 2021, we were in compliance with all covenants under our credit facilities.

We had no outstanding balance under our $ 195.0 million Barclays Revolving Credit Facility at September 30, 2021 and have reserved $ 7.8 million for certain letters of credit.

The remaining $ 187.2 million of our Barclays Revolving Credit Facility was available to draw upon as of September 30, 2021.

We had no outstanding balance under our $ 30.0 million SunTrust Revolving Credit Facility at September 30, 2021.

As of September 30, 2021, we were in compliance with all covenants under our credit facilities.

Second Amended and Restated First Lien Credit and Guaranty Agreement

On April 23, 2021, we entered into the Second Amended and Restated First Lien Credit and Guaranty Agreement (the "Restated Credit Agreement") which provides for $ 725.0 million of senior secured First Lien Term Loans and a $ 195.0 million senior secured revolving credit facility (the "Barclays Revolving Credit Facility").

On April 23, 2021, we entered into the Second Amended and Restated First Lien Credit and Guaranty Agreement (the "Restated Credit Agreement") which provides for $ 725.0 million of senior secured first lien term loans (the "First Lien Term Loans") and a $ 195.0 million senior secured revolving credit facility (the "Barclays Revolving Credit Facility").

The proceeds of the First Lien Term Loans were used to refinance loans outstanding under our prior first lien credit agreement and provide funding for current and future operations.

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The First Lien Term Loans under the Restated Credit Agreement bear interest at either a Eurodollar Rate or an Alternate Base Rate (in each case, as defined in the Restated Credit Agreement), plus an applicable margin.

The applicable margin for Eurodollar Rate term loans under the Restated Credit Agreement is 3.25 % per annum, which a reduction to 3.00 % per annum upon delivery by us of financial statements for the period ending March 31, 2021 evidencing a first lien net leverage ratio of 3.00 to 1.00 or less.

The applicable margin for Eurodollar Rate term loans under the Restated Credit Agreement is 3.25 % per annum, with a reduction to 3.00 % per annum upon delivery by us of financial statements for the period ending March 31, 2021 evidencing a first lien net leverage ratio of 3.50 to 1.00 or less.

Such statements were delivered by us on May 27, 2021.

At June 30, 2021 the effective Eurodollar Rate and the Alternate Base Rate for the First Lien Term Loans under the Restated Agreement was 0.75 % and 3.25 %, respectively and the applicable margin for the Eurodollar Rate and Alternate Base Rate borrowings was 3.00 % and 2.00 %, respectively.

At September 30, 2021 the effective Eurodollar Rate and the Alternate Base Rate for the First Lien Term Loans under the Restated Credit Agreement was 0.75 % and 3.25 %, respectively and the applicable margin for the Eurodollar Rate and Alternate Base Rate First Lien Term Loans under the Restated Credit Agreement was 3.00 % and 2.00 %, respectively.

The Restated Credit Agreement provides for quarterly payments of principal for the First Lien Term Loan in the amount of approximately $ 1.8 million.

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SunTrust Credit Facilities:

At June 30, 2021, our SunTrust credit facilities, which relate to our consolidated subsidiary The New Jersey Imaging Network, L.L.C.("NJIN"), were comprised of one term loan in the principal amount described in the table above (the "SunTrust Term Loan") and a revolving credit facility of $ 30.0 million (the "SunTrust Revolving Credit Facility") both of which are provided pursuant to the Amended and Restated Revolving Credit and Term Loan Agreement dated August 31, 2018, among NJIN, as borrower, with SunTrust Bank, as administrative agent, and the lenders identified therein (as amended, the "SunTrust Credit Agreement").

At September 30, 2021, our SunTrust credit facilities, which relate to our consolidated subsidiary The New Jersey Imaging Network, L.L.C.("NJIN"), were comprised of one term loan in the principal amount described in the table above (the "SunTrust Term Loan") and a revolving credit facility of $ 30.0 million (the "SunTrust Revolving Credit Facility") both of which are provided pursuant to the Amended and Restated Revolving Credit and Term Loan Agreement dated August 31, 2018, among NJIN, as borrower, with SunTrust Bank, as administrative agent, and the lenders identified therein (as amended, the "SunTrust Credit Agreement").

Our SunTrust Term Loan bears interest at either an Adjusted LIBOR or a Base Rate (each as defined in the SunTrust Credit Agreement), plus an applicable margin according to the following schedule:

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V Less than 1.50 :1.00

The loans and other obligations outstanding under the SunTrust Credit Agreement currently bear interest at a three month LIBOR election at 0.20 % plus an applicable margin and fees based on Pricing Level III described above.

The loans and other obligations outstanding under the SunTrust Credit Agreement currently bear interest at a three month LIBOR election at 0.15 % plus an applicable margin and fees based on Pricing Level V described above.

The scheduled amortization of the SunTrust Term Loan began December 31, 2018 with quarterly payments of $ 0.8 million, representing annual amortization equal to 5.0 % of the original principal amount of the SunTrust Term Loan.

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The Barclays Revolving Credit Facility under the Restated Credit Agreement is a $ 195.0 million senior secured revolving credit facility.

Associated with the Barclays Revolving Credit Facility are deferred financing costs, net of accumulated amortization, of $ 2.4 million at June 30, 2021.

Associated with the Barclays Revolving Credit Facility are deferred financing costs, net of accumulated amortization, of $ 2.3 million at September 30, 2021.

Revolving loans borrowed under the Barclays Revolving Credit Facility bear interest at either a Eurodollar Rate or an Alternate Base Rate (in each case, as defined in the Restated Credit Agreement) plus an applicable margin which adjusts depending on our first lien net leverage ratio, according to the following schedule:

4 unchanged sentences

2.75 % 1.75 %

As of June 30, 2021, the effective interest rate payable on revolving loans under the Barclays Revolving Credit Facility was 5.25 %.

For letters of credit issued under the Barclays Revolving Credit Facility, letter of credit fees accrue at the applicable margin of the Eurodollar Rate, currently 3.00 %, and fronting fees accrue at 0.125 % per annum, in each case on the average aggregate daily maximum amount available to be drawn under all letters of credit issued under the Restated Credit Agreement.

As of September 30, 2021, the effective interest rate payable on revolving loans under the Barclays Revolving Credit Facility was 5.00 %.

For letters of credit issued under the Barclays Revolving Credit Facility, letter of credit fees accrue at the applicable margin for Eurodollar rate revolving loans which is currently 2.75 % and fronting fees accrue at 0.125 % per annum, in each case on the average aggregate daily maximum amount available to be drawn under all letters of credit issued under the Restated Credit Agreement.

In addition, a commitment fee of 0.50 % per annum accrues on the unused revolver commitments under the Barclays Revolving Credit Facility.

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The SunTrust Revolving Credit Facility terminates on the earliest of (i) August 31, 2023, (ii) the voluntary termination thereof by NJIN pursuant to Section 2.8 of the SunTrust Credit Agreement, or (iii) the date on which all amounts outstanding under the SunTrust Credit Agreement have been declared or have automatically become due and payable (whether by acceleration or otherwise).

As of June 30, 2021, NJIN had no borrowings under the SunTrust Revolving Credit Facility.

As of September 30, 2021, NJIN had no borrowings under the SunTrust Revolving Credit Facility.

Recent prior amendments to prior credit facilities:

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Equity Incentive Plan, which we first amended and restated April 20, 2015, again on March 9, 2017 and currently as of April 15, 2021 (the "Restated Plan”).

The Restated Plan was approved by our stockholders at our annual stockholders meeting on June 10, 2021.

The Restated Plan was most recently approved by our stockholders at our annual stockholders meeting on June 10, 2021.

We have reserved for issuance under the Restated Plan 16,500,000 shares of common stock.

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Stock option grants, whether incentive or nonstatutory, generally vest over 3 to 5 years and expire 5 to 10 years from the date of grant.

Under the Restated Plan, stock options may not be granted at a per share exercise price below the fair market value of a share of our common stock on the date of grant, may not be repriced or exchanged without stockholder approval, and the maximum exercisable term of the option may not exceed ten years.

As of June 30, 2021, we had outstanding options to acquire 525,399 shares of our common stock, of which options to acquire 430,702 shares were exercisable.

The following summarizes all of our option transactions for the six months ended June 30, 2021:

As of September 30, 2021, we had outstanding options to acquire 525,399 shares of our common stock, of which options to acquire 430,702 shares were exercisable.

The following summarizes all of our option transactions for the nine months ended September 30, 2021:

Outstanding Options

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Exercised ( 2,500 ) 10.10

Balance, June 30, 2021 525,399 9.34 5.86 $ 12,793,992

Exercisable at June 30, 2021 430,702 8.34 5.50 10,920,256

Aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between our closing stock price on June 30, 2021 and the exercise price, multiplied by the number of in-the-money options as applicable) that would have been received by the holder had all holders exercised their options on June 30, 2021.

Options for 2,500 shares of our common stock were exercised during the six months ended June 30, 2021.

As of June 30, 2021, total unrecognized stock-based compensation expense related to non-vested employee awards was $ 0.4 million, which is expected to be recognized over a weighted average period of approximately 1.11 years.

Balance, September 30, 2021 525,399 9.34 5.61 $ 10,492,744

Exercisable at September 30, 2021 430,702 8.34 5.24 9,033,783

Aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between our closing stock price on September 30, 2021 and the exercise price, multiplied by the number of in-the-money options as applicable) that would have been received by the holder had all holders exercised their options on September 30, 2021.

Options for 2,500 shares of our common stock were exercised during the nine months ended September 30, 2021.

As of September 30, 2021, total unrecognized stock-based compensation expense related to non-vested employee awards was $ 0.3 million, which is expected to be recognized over a weighted average period of approximately 0.98 years.

DeepHealth Options

During the second quarter of fiscal 2020, in connection with the completion of the DeepHealth acquisition, we granted options to acquire 412,434 shares at a grant date fair value of $ 16.93 per share unit to DeepHealth employees in replacement of their stock options that were outstanding as of the closing date.

As of June 30, 2021, total unrecognized stock based compensation expense related to non-vested DeepHealth options was approximately $ 3.0 million, which is expected to be recognized over a weighted average period of approximately 1.84 years.

As of September 30, 2021, total unrecognized stock based compensation expense related to non-vested DeepHealth options was approximately $ 2.5 million, which is expected to be recognized over a weighted average period of approximately 1.62 years

Outstanding Options

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Exercised ( 75,207 ) —

Balance, June 30, 2021 399,398 — 7.91 $ 13,455,719

Exercisable at June 30, 2021 37,713 — 7.91 1,270,551

Balance, September 30, 2021 325,332 — 7.66 $ 9,535,481

Exercisable at September 30, 2021 40,708 — 7.66 1,193,150

Options issued in replacement of original DeepHealth options as a result of our acquisition are not included in the share count under the Restated Plan.

Restricted Stock Awards

The Restated Plan permits the award of restricted stock awards (“RSA’s”).

As of June 30, 2021, we have issued a total of 7,699,439 RSA’s of which 427,688 were unvested at June 30, 2021.

The following summarizes all unvested RSA’s activities during the six months ended June 30, 2021:

As of September 30, 2021, we have issued a total of 7,724,428 RSA’s of which 413,075 were unvested at September 30, 2021.

The following summarizes all unvested RSA’s activities during the nine months ended September 30, 2021:

RSA's Weighted-Average

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Vested ( 554,765 ) $ 18.00

RSA's unvested at June 30, 2021 427,688 1.12 $ 18.75

Forfeited or Canceled ( 3,365 ) $ 18.60

RSA's unvested at September 30, 2021 413,075 0.90 $ 18.89

We determine the fair value of all RSA’s based on the closing price of our common stock on the award date.

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These are valued and expensed based on the closing price of our common stock on the date of award.

During the six months ended June 30, 2021, awards amounting to 294,048 shares valued at $ 6.5 million in compensation expense were issued in employee COVID-19 related bonuses.

In summary, of the 16,500,000 shares of common stock reserved for issuance under the Restated Plan, at June 30, 2021, we had issued 16,419,296 total shares between options, RSA’s and other stock awards.

During the nine months ended September 30, 2021, awards amounting to 375,186 shares valued at approximately $ 8.9 million in compensation expense were issued in employee COVID-19 related bonuses.

Restated Plan summary

In summary, of the 16,500,000 shares of common stock reserved for issuance under the Restated Plan, at September 30, 2021, we had issued 16,525,443 total shares between options, RSA’s and other stock awards.

With options canceled and RSA’s forfeited amounting to 3,281,040 and 65,068 shares, respectively, there remain 3,320,665 shares available under the Restated Plan for future issuance.

Options issued in replacement of original DeepHealth options as a result of our acquisition are not included in the share count under the Restated Plan.

NOTE 7 – SUBSEQUENT EVENTS

Business Combinations/Dispositions:

On July 30, 2021, we completed the sale of a 24.9 % portion of our 75.0 % ownership interest in one of our majority owned subsidiaries for $ 13.1 million.

After the sale, we retain a 50.1 % ownership interest in this subsidiary.

On July 30, 2021, we acquired certain business assets for purchase consideration of approximately $ 5.2 million.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements