What changed in this filing

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Item 7. Management’s Discussion and Analysis

2022-03-01 compared with 2021-03-16 · 175 added, 251 removed, 331 unchanged (56% of the section changed)

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Our centers provide physicians with imaging capabilities to facilitate the diagnosis and treatment of diseases and disorders and may reduce unnecessary invasive procedures, often reducing the cost and amount of care for patients.

We have developed our medical imaging business through a combination of organic growth, acquisitions and joint venture formations, and derive substantially all of our revenue from fees charged for the diagnostic imaging services performed at our facilities.

During 2020, facing the novel strain of the coronavirus ("COVID-19"), we began experiencing reduced procedure volumes at the end of the first quarter which intensified through mid year but did return to 90% of pre-COVID-19 pace in the third quarter and remained consistent throughout the fourth quarter.

To respond to the pandemic during the year we adjusted our business operations, inclusive of concentrating patient traffic to larger imaging centers, negotiating payment terms with vendors and landlords, initiating employee furloughs, compensation reductions, and telecommuting.

The arrival of the mRNA vaccine to protect against the virus is a welcome development.

As inoculations ramp up across the country and other mitigation procedures continue, we can begin to look forward to a return of normal business operations.

Despite the impact of COVID, we continued to invest and position for future growth.

We continued to grow through acquisition, being a new entrant in Arizona marketplace and on the east coast adding to our presence in New Jersey and the New York city area.

In our related businesses we increased our focus on Artificial Intelligence with our acquisition of DeepHealth Inc.

while exiting our Imaging on Call teleradiology operations.

The following table shows our facilities in operation at year end and revenues for the years ended December 31, 2020, 2019 and 2018:

In addition to our imaging services, we have an AI/Software division.

Our focus on Artificial Intelligence (AI), comes through the contributions from our acquisitions of Nulogix and DeepHealth plus our investment in Whiterabbit.ai, to develop and deploy AI suites to enhance radiologic image interpretations.

Through our subsidiary eRAD, Inc., we sell computerized systems that distribute, display, store and retrieve digital images.

The discussion of our results below centers on our performance during 2021.

During the same period in 2020, due to the onset of the novel strain of the coronavirus, we began experiencing reduced procedure volumes at the end of the first quarter which intensified through mid year.

In response to the pandemic, we adjusted our business operations, inclusive of concentrating patient traffic to larger imaging centers, negotiating payment terms with vendors and landlords, initiating employee furloughs, temporary compensation reductions, and telecommuting.

By the end of 2021, our procedure volume has returned to pre-COVID-19 levels and our business has resumed normal operations.

We expect that the cost saving measures implemented in 2020 will continue to be beneficial to our financial position in 2021 and beyond.

In addition, we have continued to invest and position for future growth.

Through acquisitions, we have added 27 new radiology centers in California, Delaware, New Jersey and New York.

The following table shows our centers in operation at year end and revenues for the years ended December 31, 2021, 2020 and 2019:

Years Ended December 31,

2021 2020 2019

Facilities in operation 331 335 344

Centers in operation 347 331 335

Total revenue (millions) $ 1,315 $ 1,072 $ 1,154

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In addition, our experience with capitation arrangements over the last several years has provided us with the expertise to manage utilization and pricing effectively, resulting in a predictable stream of revenue.

Our service fee revenue, net of contractual allowances and discounts, implicit price concessions, and revenue under capitation arrangements for the years ended December 31, are summarized in the following table (in thousands):

Our service fee revenue, net of contractual allowances and discounts, implicit price concessions, and revenue under capitation arrangements for the years ended December 31, 2021, 2020 and 2019 are summarized in the following table (in thousands):

Years Ended December 31,

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Total equipment 2,276 2,089 1,996

Facility Acquisitions, Dispositions, Equity Investments and Formation of Joint Ventures

The following discussion summarizes certain details concerning our acquisition or disposition of facilities, our equity investment and our joint venture transaction.

See Note 4, Facility Acquisitions and Dispositions to our consolidated financial statements included in this annual report on Form 10-K for further information.

Facility acquisitions

In October and November 2020, we completed our acquisition of certain assets of ZP Atlantic LLC, and ZP Elmhurst LLC.

Acquisitions, Dispositions, Equity Investments and Business Venture Activity

The following discussion summarizes certain details concerning our acquisition or disposition of centers, our equity investment and our joint venture transaction.

See Note 4, Acquisitions, Dispositions and Business Venture Activity and Note 2, Summary of Significant Accounting Policies to our consolidated financial statements included in this annual report on Form 10-K for further information.

Radiology Practice Acquisitions:

During 2021 and 2020, 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 Arizona, 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):

ZP Atlantic ZP Elmhurst

Property and Equipment $ 7,931 $ 10,681

Right of Use Assets 6,181 12,571

Other Assets 62 75

Intangible Assets 50 50

Right of Use Liabilities (6,181) (12,571)

Goodwill 828 1,463

TOTAL $ 8,871 $ 12,269

On August 31, 2020 we completed our acquisition of certain assets of AZ-Tech Radiology & Open MRI, LLC, consisting of eight multi-modality imaging centers located in the Phoenix, Arizona area for purchase consideration of $5.5 million.

We made a fair value determination of the acquired assets and assumed liabilities and approximately $2.5 million in property and equipment, $7.6 million in right-of-use assets, $0.1 million in other assets, $7.6 million in operating lease liabilities, and $2.9 million in goodwill were recorded.

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)

ZP Elmont LLC* 2/1/2021 2,194 1,112 — 1,005 50 27 —

ZP Freeport LLC* 2/1/2021 6,065 4,668 — 1,328 40 29 —

Broadway Medical Imaging LLC* 2/1/2021 1,155 1,076 446 6 50 23 (446)

3235 Hempstead LLC* 2/1/2021 9,386 5,667 — 3,649 70 — —

SLZM Realty LLC* 2/1/2021 13,671 4,617 — 8,974 80 — —

2012 Sunrise Merrick LLC* 2/1/2021 11,428 2,741 335 8,617 70 — (335)

ZP Bayside LLC* 3/1/2021 3,545 3,385 2,191 40 50 70 (2,191)

ZP Laurelton LLC* 3/1/2021 2,658 2,530 1,418 32 50 46 (1,418)

ZP Smith LLC* 3/1/2021 3,978 3,581 2,214 347 50 — (2,214)

ZP 907 Northern LLC* 4/1/2021 562 507 1,817 5 50 — (1,817)

Kelly MD, Inc.* ^ 5/1/2021 3,750 990 1,379 2,710 50 — (1,379)

60th Street MRI, LLC* 5/1/2021 400 85 — 290 25 — —

ZP Parkchester LLC* 5/1/2021 263 213 311 — 50 — (311)

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 — —

Mid Delaware Imaging P.A.

12/1/2021 6,023 590 — 5,260 150 23 —

Kelly MD, Inc.* ^ 12/6/2021 4,404 701 — 3,653 50 — —

Kelly MD, Inc.* ^ 12/31/2021 2,346 99 323 2,197 50 — (323)

79,716 35,949 12,993 40,864 2,671 232 (12,993)

*Fair Value Determination is Final

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

Kelly MD acquisitions consisted of various subsidiaries purchased separately.

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

Olney Open MRI, LLC* 1/2/2020 1,751 849 1,300 602 300 — (1,300)

MRI of Woodbridge LLC* 3/2/2020 2,608 464 1,081 1,833 300 11 (1,081)

AZ-Tech Radiology and Open MRI, LLC* 8/31/2020 5,462 2,532 7,552 2,882 — 48 (7,552)

ZP Atlantic LLC* 11/1/2020 8,871 7,931 6,181 828 50 62 (6,181)

ZP Elmhurst LLC* 11/1/2020 12,269 10,681 12,571 1,463 50 75 (12,571)

30,961 22,457 28,685 7,608 700 196 (28,685)

*Fair Value Determination is Final

Software Company Acquisitions:

On June 1, 2020, we completed our acquisition of all the equity interests of DeepHealth Inc., ("DeepHealth") an artificial intelligence and machine learning company in an all stock purchase.

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The fair value of the contingent consideration was estimated at the date of acquisition based on our share price and estimated probability of the achievement of the respective milestones.

We preliminarily recorded $0.1 million in current assets, $3.5 million in deferred tax liabilities, $14.8 million in intangible assets, primarily in-process research and development ("IPR&D'), and $23.3 million in goodwill.

We recorded $0.1 million in current assets, $3.5 million in deferred tax liabilities, $14.8 million in intangible assets, primarily in-process research and development ("IPR&D"'), and $23.3 million in goodwill.

The goodwill is primarily attributable to expected post-acquisition synergies from integrating DeepHealth’s assembled workforce and IPR&D technologies.

The fair values of the identifiable intangible assets related to IPR&D were determined by the income method and the assets will not be amortized until completion.

On March 2, 2020 our consolidated subsidiary New Jersey Imaging Networks ("NJIN") completed the acquisition of certain assets of MRI at Woodbridge, LLC consisting of a single multi-modality imaging center located in Avenel, New Jersey for cash consideration of $2.6 million.

NJIN made a fair value determination of the acquired assets and assumed liabilities and approximately $0.5 million in property and equipment, $1.1 million in right-of-use assets, $0.3 million in intangible assets, $1.1 million in operating lease liabilities, $0.1 million in finance lease liabilities, and $1.8 million in goodwill were recorded.

On January 2, 2020 we completed our acquisition of certain assets of Olney Open MRI, LLC, consisting of a single multi-modality imaging center located in Columbia, Maryland for cash consideration of $1.8 million.

We have made a fair value determination of the acquired assets and assumed liabilities and approximately $0.8 million in property and equipment, $1.3 million in right-of-use assets, $0.3 million in intangible assets, $1.3 million in operating lease liabilities and $0.6 million in goodwill were recorded.

On August 1, 2019 we completed a step-up acquisition upon the dissolution of our former 49% owned joint venture, Garden State Radiology LLC ("GSRN").

GSRN consisted of two multi-modality centers operating in New Jersey.

GSRN became our wholly owned subsidiary with the withdrawal of the 51% majority partner for the full ownership of one center with no other consideration.

We made a fair value determination of our original 49% interest which resulted in a step-up gain of approximately $1.3 million.

We determined a fair value of the remaining acquired imaging center of $3.1 million in assets and $0.4 million in liabilities were recognized.

We recorded $1.0 thousand in other assets, $0.7 million in fixed assets, $0.4 million in right-of-use assets, $0.4 million in operating lease liabilities, and $2.0 million in goodwill.

On August 1, 2019 we completed a step-up acquisition of our former 25% owned joint venture, Nulogix, via a stock issuance of RadNet common shares valued at $1.5 million to obtain the remaining 75% outstanding Nulogix shares.

We made a fair value determination of the acquired assets and approximately $0.2 million in fixed assets, $0.7 million in intangible assets, $0.3 million in deferred tax liability and goodwill of $1.3 million were recorded.

We also made a fair value determination of our 25% pre-existing interest in the business and recognized a loss of $0.5 million which is included in operating expenses within the consolidated statements of operations.

On April 1, 2019 we completed our acquisition of certain assets of Kern Radiology Imaging Systems Inc., consisting of four multi-modality imaging centers located in Bakersfield, California for purchase consideration of $19.3 million.

We made a fair value determination of the acquired assets and assumed liabilities and approximately $10.1 million in property and equipment, $9.7 million in right-of-use assets, $36.0 thousand in other assets, $3.4 million in intangible assets, $14.5 million in operating lease liabilities, and $10.5 million in goodwill were recorded.

On April 1, 2019 we completed our acquisition of certain assets of Zilkha Radiology Inc.

consisting of two multi-modality centers located in Islip, New York for purchase consideration of $4.5 million.

We made a fair value determination of the acquired assets and assumed liabilities and approximately $2.2 million in property and equipment, $5.1 million in right-of-use assets, $0.1 million in intangible assets, $5.1 million in operating lease liabilities, $0.3 million in finance lease liabilities and $2.6 million in goodwill were recorded.

On February 28, 2019, one of our Variable Interest Entities (VIEs), Lenox Hill Radiology and Medical Imaging Associates, P.C.

("LHR"), purchased the membership interest of Hudson Valley Radiology Associates, P.L.L.C.

("HVRA") for $6.0 million of RadNet common stock and contingent consideration valued at $0.7 million to guarantee the share value issued for a period of six months post acquisition date.

LHR has performed a fair value purchase price allocation and recorded equipment of $10.0 thousand, a covenant not to compete of $50.0 thousand, trade name of $0.4 million, other intangible assets of $0.3 million and goodwill of $3.1 million from the transaction.

In connection with the acquisition, RadNet also settled against the purchase consideration, $2.8 million, net of taxes, of an unfavorable vendor contract with HVRA stemming from the previous acquisition of Radiologix, Inc.

in November 2006.

On February 1, 2019, our majority owned subsidiary, West Valley Imaging Group, LLC ("WVIG") completed its acquisition of certain assets of West Valley Imaging Center, LLC ("West Valley"), consisting of a single multi-modality imaging center located in West Hills, CA for purchase consideration of $3.0 million all of which was initially funded by the Company.

We have made a fair value determination of the acquired assets and approximately $0.3 million in equipment and fixed assets, $7.0 thousand in other assets, $0.2 million in intangible assets and $2.5 million in goodwill were recorded.

Subsequent to the transaction, our partner in WVIG, Cedars Sinai Medical Center, contributed $0.8 million in cash to maintain its 25% economic interest in the venture.

On June 1, 2020 we completed our sale of certain assets of our Imaging On Call subsidiary for approximately $1.0 thousand.

The fair values of the identifiable intangible assets related to IPR&D were determined by the income method and the assets will not be amortized until regulatory approval is obtained, but will be assessed for impairment annually, or more frequently if indicators of impairment become present.

On July 2, 2021, management determined DeepHealth had achieved its first specific milestone per the purchase contract and we issued the related fixed shares.

In addition, we released the shares retained for any indemnification adjustments in full on December 1, 2021.

On June 1, 2020 we completed our sale of certain assets of our Imaging On Call subsidiary to RadVantage P.C.

(an unrelated corporation) for approximately $1.0 thousand.

With this transaction, we have exited the teleradiology business.

Subsidiary activity

Formation of majority owned subsidiary

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

The operation will offer multi-modality imaging services out of two locations in Ventura County, California.

Total investment in the venture is $0.4 million.

RadNet contributed $0.3 million in assets for a 60.0% economic interest and Simi Adventist contributed assets totaling $0.1 million for a 40.0% 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 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 tangible and intangible business assets for purchase consideration of approximately $5.2 million.

Equity Investments

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No observable price changes or impairment in our investment was noted for the year ended December 31, 2021.

Formation of new joint ventures

Joint venture formations

Effective November 1, 2020, Arizona Diagnostic Radiology Group LLC ("ADRG"), an entity we formed in conjunction with CHI National Services Inc.

("CHI"), assumed operational and managerial oversight of our Arizona centers.

We hold a 49% economic interest and CHI holds 51% economic interest in ADRG and we account for the venture under the equity method.

("CHI"), assumed operational and managerial control of our Arizona centers.

We hold a 49% economic interest and CHI holds the majority 51% economic interest, respectively in ADRG and account for the venture under the equity method .

The entity was formed in part to leverage CHI's established presence in the Phoenix, Arizona market as a major health care provider.

On February 13, 2019 we formed a wholly owned subsidiary, Ventura County Imaging Group, LLC ("VCIG").

On March 1, 2019, Dignity Health joined as a venture partner.

Total agreed contribution of both parties was $10.4 million of cash and assets with RadNet contributing net assets with a book value of $4.3 million for a 60% economic interest and Dignity Health contributing $6.1 million in cash and assets for a 40% economic interest.

For its contribution, RadNet transferred net assets of three wholly owned multi-modality imaging centers.

Dignity Health contributed approximately $0.8 million in assets to acquire 5% economic interest and paid RadNet $5.3 million for an additional 35% economic interest.

We maintain controlling economic interest in VCIG and fully consolidate the results into our financial statements.

Joint venture investment contribution

In the month of August 2020, we made additional cash contributions to our Santa Monica Imaging Group, LLC partnership in the amount of $1.6 million in support of its expanded operations.

We maintain our 35% economic interest in the partnership.

Sale of joint venture interest:

On April 1, 2017, we formed in conjunction with Cedars Sinai Medical Center (“CSMC”) the Santa Monica Imaging Group, LLC (“SMIG”), consisting of two multi-modality imaging centers located in Santa Monica, CA.

Upon formation, RadNet held a 40% economic interest and CSMC held a 60% economic interest.

RadNet accounts for our share of the venture under the equity method.

On January 1, 2019, CSMC purchased from us an additional 5% percent economic interest in SMIG valued at $0.1 million.

On January 1, 2019, CSMC purchased from the us an additional 5% economic interest in SMIG valued at $134,000.

As a result of the transaction, our economic interest in SMIG has been reduced to 35%.

We recorded a loss of $2.0 thousand on the transaction.

We recorded a loss of $2,000 on the transaction.

Change in control of existing joint ventures

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The venture consisted of two imaging centers located in New Jersey.

On August 1, 2019, the entity was dissolved by transferring ownership of the assets of the centers to the partners for no consideration, with each partner receiving full ownership of one center.

On August 1, 2019, the entity was dissolved by transferring ownership of the assets of the centers with each partner receiving full ownership of one center.

On April 12, 2018 we acquired 25% share capital in Nulogix, Inc.

for cash consideration of $2.0 million.

On August 1, 2019 we completed via the issuance of RadNet common stock valued at $1.5 million, the acquisition of the remaining 75% economic interest and we now consolidate the financial statements of Nulogix as a wholly owned subsidiary.

Results of Operations

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Cost of operations, excluding depreciation and amortization 85.4 % 90.1 % 86.6 %

Lease abandonment charges 1.5 % — % — %

Depreciation and amortization 7.4 % 8.1 % 7.0 %

Loss (gain) on sale and disposal of equipment 0.1 % 0.2 % (0.2) %

Loss on sale and disposal of equipment 0.1 % 0.1 % 0.2 %

Loss on impairment — % 0.4 % — %

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Equity in earnings of joint ventures (0.8) % (0.7) % (0.7) %

Non-cash change in fair value of interest rate hedge (1.6) % 0.2 % — %

Gain on re-measurement of pre-existing interest — % — % (0.1) %

Gain on extinguishment of debt (0.4) % — % — %

Loss (gain) on extinguishment of debt 0.5 % (0.4) % — %

Other expenses 0.1 % — % 0.1 %

Total other expenses (income) 3.4 % 3.5 % (0.8) %

Total other expenses 1.9 % 3.4 % 3.5 %

INCOME BEFORE INCOME TAXES 4.4 % (0.1) % 2.6 %

Benefit from (provision for) income taxes (0.1) % (0.5) % — %

Provision for income taxes (1.1) % (0.1) % (0.5) %

NET INCOME 3.3 % (0.2) % 2.0 %

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Same Center Revenue $1,209,749 $1,053,339 $156,410 14.9%

Our procedure volumes for the year ended December 31, 2020 were affected by the COVID-19 pandemic, which precipitated an approximate 12.3% decrease in same center procedural volumes year over year.

Mitigating the income decline is $26.3 million received in Provider Relief funding, which, per the official designation of the program, was used to offset lost revenues and incremental expenses.

Increased revenue reflects an overall same center 20.0% growth in total procedure volumes over the prior year as business returned to pre-COVID-19 levels.

Total Provider Relief funding used to offset lost revenue due to the pandemic and included in the above amounts was $9.1 million for the twelve months ended December 31, 2021 and $26.3 million for the twelve months ended December 31, 2020.

This comparison excludes revenue contributions from centers that were acquired or divested subsequent to January 1, 2020.

For the twelve months ended December 31, 2020, net service fee revenue from centers

that were acquired or divested subsequent to January 1, 2019 and excluded from the above comparison was $59.3 million.

For the twelve months ended December 31, 2021, net service fee revenue from centers that were acquired or divested subsequent to January 1, 2020 and excluded from the above comparison was $114.4 million.

For the twelve months ended December 31, 2020, net service fee revenue from centers that were acquired or divested subsequent to January 1, 2020 and excluded from the above comparison was $44.8 million.

Operating Expenses

Total operating expenses for the twelve months ended December 31, 2020 decreased approximately $21.9 million, or 2.0%, from $1.08 billion for the twelve months ended December 31, 2019 to $1.06 billion for the twelve months ended December 31, 2020.

Total operating expenses for the twelve months ended December 31, 2021 increased approximately $179.2 million, or 16.9%, from $1.06 billion for the twelve months ended December 31, 2020 to $1.24 billion for the twelve months ended December 31, 2021.

The following table sets forth our cost of operations and total operating expenses for the twelve months ended December 31, 2021 and 2020 (in thousands):

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Depreciation and amortization 96,694 86,795

Lease abandonment charges 19,675 —

Loss on sale and disposal of equipment 1,246 1,200

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Same Center $628,577 $568,013 $60,564 10.7%

The decrease in salaries expense was a result of staff furloughs and payroll reductions initiated in response to the COVID-19 crisis and later sustained by the implementation of efficiencies garnered from a review of operational workflows.

Salary expense increased as we ramped up staffing levels to address the increased procedure volumes in 2021, compared to 2020 when we implemented staff reductions and furloughs in response to decline in business precipitated by the onset of the COVID-19 pandemic.

This comparison excludes expenses from centers that were acquired or divested subsequent to January 1, 2020.

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Stock-based compensation increased $12.8 million, or 103.2%, to approximately $25.2 million for the twelve months ended December 31, 2021 compared to $12.4 million for the twelve months ended December 31, 2020.

This increase

was driven by the higher fair value of RSA’s awarded and vested in the year ended December 31, 2020 as compared to RSA’s awarded and vested in the same period in 2019.

Of this increase, $8.9 million was attributable to special employee bonus awards related to COVID-19 and the remaining $3.9 million was driven by the higher fair value of RSA’s awarded and vested in the year ended December 31, 2021 as compared to RSA’s awarded and vested in the same period in 2020.

Building and equipment rental

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Same Center $95,856 $98,900 ($3,044) (3.1)%

On a same center basis, the decrease in building and equipment rental mainly relates to operating expense savings from the buyout of radiology equipment lease contracts during the year.

This comparison excludes expenses from centers that were acquired or divested subsequent to January 1, 2020.

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Same Center $52,157 $43,365 $8,792 20.3%

The drop in medical supplies expense was related to decreased use of contrast agents driven by volume reduction in our advanced imaging modalities of CT and PET, which were reduced a combined 10% year over year due to COVID-19.

Medical supplies expense increase stems from the overall procedural volumes noted above compared to the same period in the prior year and is consistent with the percentage increase in revenue.

This comparison excludes expenses from centers that were acquired or divested subsequent to January 1, 2020.

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Same Center $209,376 $202,731 $6,645 3.3%

The increase in other operating expenses relates to higher billing fees and charges for outside services.

The increase in other operating expenses is attributable to additional professional service fees associated with our acquisitions of Aidence and Quantib, additional contractor services in support of our increased procedure volumes as well as a one time settlement.

This comparison excludes expenses from centers that were acquired or divested subsequent to January 1, 2020.

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For the twelve months ended December 31, 2020, depreciation and amortization from centers that were acquired or divested subsequent to January 1, 2020 and excluded from the above comparison was $5.0 million.

Lease abandonment charges

After a management review of post pandemic patient traffic to centers, it was noted that although overall volumes had returned to pre-pandemic levels, the increase was not uniform across our centers.

This was due in part to lower utilization rates of commercial space from telecommuting, accompanied by the migration of those workers out of congested urban centers to residential areas.

Based on this analysis, management decided to consolidate volumes into fewer centers and reduce administrative office space in response to the demographic changes experienced.

We recorded a one time charge of approximately $19.7 million at December 31, 2021 related to leased facilities abandonment.

The lease abandonment charges include the impairment of associated right of use assets of $12.6 million and write off of related leasehold improvements of approximately $7.1 million

Loss on sale and disposal of equipment

We recorded a loss on the sale of equipment of approximately $1.2 million and $2.4 million for each of the twelve months ended December 31, 2020 and 2019, respectively.

We recorded a loss on the sale and disposal of equipment, separate from the lease abandonment portion, of approximately $1.2 million for each of the twelve months ended December 31, 2021 and 2020, respectively.

Severance Costs

We incurred total severance expense of $4.4 million and $1.6 million for each of the twelve months ended December 31, 2020 and 2019, respectively, an increase of $2.7 million or 168.9%, which was related to payroll reduction charges.

We incurred total severance expense of $0.7 million and $4.4 million for each of the twelve months ended December 31, 2021 and 2020, respectively, a decrease of $3.7 million or (84.1)%, and was related reduced severance charges as part of the recovery from the pandemic.

Impairment Charges

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

We recorded impairment charges to our Imaging On Call reporting unit of $3.9 million for the twelve months ended December 31, 2018, with goodwill representing $3.8 million of the total and the remainder being a write off the Imaging On Call trade name of approximately $100,000.

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.

Interest expense

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*Includes interest on 2016 caps and 2019 swaps.

**Includes combined noncash amortization of deferred loan coasts and discount on issuance of debt

**Includes combined noncash amortization of deferred loan costs and discount on issuance of debt

***Includes interest related to our term loans, revolving credit line,notes, finance leases and other

The reduction in interest expense solely paid on our debt and lease obligations corresponds to lowered variable LIBOR and Prime interest rates paid on our term loan and revolving debt in reaction to market conditions surrounding COVID-19.

The reduction in interest expense solely paid on our debt and lease obligations corresponds to lowered variable LIBOR and Prime interest rates paid on our term loan and revolving debt and reduced borrowing on our revolving loan compared to the prior year.

See “Liquidity and Capital Resources” below for more details on our credit facilities.

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Equity in earnings from unconsolidated joint ventures

For the twelve months ended December 31, 2020 we recognized equity in earnings from unconsolidated joint ventures of $7.9 million versus $8.3 million for the twelve months ended December 31, 2019, a decrease of $0.4 million or 4.9%, related to market conditions stemming from the COVID-19 pandemic.

For the twelve months ended December 31, 2021 we recognized equity in earnings from unconsolidated joint ventures of $11.0 million versus $7.9 million for the twelve months ended December 31, 2020, an increase of $3.1 million or 39.2%.

The increase was mainly related to the equity in earnings from our interest in the Arizona Diagnostic Radiology Group joint venture, which was formed in the fourth quarter of 2020.

Non-cash change in fair value of interest rate hedge

We recorded expense of approximately $2.5 million for the ineffective portion of our 2019 swaps for the year ended December 31, 2020.

We recorded income of approximately $21.7 million for the ineffective portion of our 2019 swaps for the year ended December 31, 2021 and expense of approximately $2.5 million for the twelve months ended December 31, 2020.

See the Derivative Instruments section of Note 2 to the consolidated financial statements included in this annual report on Form 10-K.

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Upon the fair value determination of our interests in both ventures, we recognized a step-up gain of $0.8 million for the year ended December 31, 2019.

Gain on extinguishment of debt

In December 2020, we met the eligibility requirements for forgiveness of loans received under The Paycheck Protection Program and recorded a gain on extinguishment of debt of approximately $4.0 million.

Loss (gain) on extinguishment of debt and related expenses

We recorded expenses of approximately $6.0 million for the twelve months ended December 31, 2021 mainly related to our refinancing of our term loan debt.

During 2020, we received a loan in the amount of $4.0 million through the Paycheck Protection Program.

The Program has provisions that if met, allow the loan to be forgiven.

In December 2020, we met the eligibility requirements for forgiveness of loans and recorded a gain on extinguishment of debt of approximately $4.0 million.

See Note 8 Credit Facilities and Notes Payable included in this annual report on Form 10-K.

Other expenses

For the years ended ended December 31, 2020 and December 31, 2019 we recorded approximately $0.1 million and $1.3 million of other expenses respectively.

For the years ended December 31, 2021 and December 31, 2020 we recorded approximately $1.4 million and $0.1 million of other expenses respectively.

Provision for income taxes

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Income tax decreased in 2020 primarily due to the economic effects of the COVID-19 pandemic on our operations.

The income tax rates for the twelve months ended December 31, 2020 diverge from the federal statutory rate due to adjustments for leasehold improvements, equity method investments, and other liabilities.

The income tax rates for the twelve months ended December 31, 2021 diverge from the federal statutory rate due to state taxes and joint venture tax basis adjustments partially offset by noncontrolling interest in partnerships.

Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019

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2021 2020 2019

Net (loss) income attributable to RadNet, Inc.

Net income (loss) attributable to RadNet, Inc.

common stockholders $ 24,727 $ (14,840) $ 14,756

Plus provision for income taxes 895 6,229 394

Plus interest expense 45,882 48,044 43,456

Plus severance costs 4,353 1,619 1,931

Plus depreciation and amortization 86,795 80,607 72,899

Plus non-cash employee stock-based compensation 12,405 8,730 7,662

Plus loss on sale and disposal of equipment 1,200 2,383 —

Plus other expenses 120 1,283 —

Plus non-cash change in swap valuation 2,528 — —

Plus legal settlement and related expenses — 1,248 —

Plus gain on sale of equipment attributable to noncontroling interest — — 440

Plus transaction costs EmblemHealth/ACP — — 681

Plus one time legal settlement — — 786

Plus changes in the organization of east coast and international operations — — 19,101

Plus loss on impairment 4,170 — 3,937

Less gain on extinguishment of debt (4,047) — —

Less gain on sale and disposal of equipment — — (2,054)

Less other income — — (181)

Less gain on re-measurement of pre-existing interest — (768) (39,539)

Income Taxes 14,560 895 6,229

Interest Expense 48,830 45,882 48,044

Severance costs 744 4,353 1,619

Depreciation and amortization 96,694 86,795 80,607

Non-cash employee stock-based compensation 25,203 12,405 8,730

Loss on sale and disposal of equipment 1,246 1,200 2,383

Loss on impairment — 4,170 —

Loss (gain) on extinguishment of debt and related expenses 6,044 (4,047) —

Other expenses 1,438 120 1,283

Non-cash change in fair value of interest rate hedge (21,670) 2,528 —

Other adjustment to joint venture investment (565) — —

Legal settlement and related expenses 831 — 1,248

Lease abandonment charges 19,675 — —

Transaction costs Aidence Holding B.V.

& Quantib B.V 1,171

Gain on re-measurement of pre-existing interest — — (768)

Adjusted EBITDA $218,928 $139,461 $164,131

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cash flow from operations 43.5 % 6.0 % 45.5 %

(1) Purchase of Property Plant & Equipment is adjusted for capital purchases of NJIN, which is excluded from our debt covenant calculation.

(1) Purchase of Property Plant & Equipment is adjusted for capital purchases of NJIN.

Liquidity and Capital Resources

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Total revenue $ 1,315,077 $ 1,071,840 $ 1,154,179

Net (loss) income attributable to RadNet common stockholders (14,840) 14,756 32,243

Net income (loss) attributable to RadNet common stockholders 24,727 (14,840) 14,756

We operate in a capital intensive, high fixed-cost industry that requires significant amounts of capital to fund operations.

In addition to operations, we require a significant amount of capital for the initial start-up and development of new diagnostic imaging facilities, the acquisition of additional facilities and new diagnostic imaging equipment.

In addition to operations, we require a significant amount of capital for the initial start-up and development of new diagnostic imaging centers, the acquisition of additional centers and new diagnostic imaging equipment.

Because our cash flows from operations have been insufficient to fund all of these capital requirements, we have depended on the availability of financing under credit arrangements with third parties.

The COVID 19 pandemic has resulted in a reduction of procedure volumes and corresponding operating revenues for the year ended December 31, 2020.

We are uncertain of the duration and ultimate severity of its effects.

Although we took measures to reduce operating expenses and have received government stimulus funding, we may continue to experience decreased procedure volumes during the duration of the pandemic.

The COVID 19 pandemic initially resulted in a reduction of procedure volumes as people "sheltered in place" and deferred elective procedures, resulting in a corresponding decrease in operating revenues for the year ended December 31, 2020.

For 2021 our procedural volumes returned to pre-pandemic levels.

However, the COVID-19 pandemic continues to evolve and significant additional outbreaks could again result in periods where we experience decreased procedural volumes.

Any suspended reduction in procedures would negatively affect our revenues, profitability and working capital position.

We have credit available from our current credit facilities and borrowing under those facilities is subject to continued compliance with lending covenants.

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Sources and Uses of Cash

The following table summarizes key components of our sources and uses of cash for the twelve months ended December 31, 2020 and 2019:

Cash Flow Data December 31, 2020 December 31, 2019

The following table summarizes key components of our sources and uses of cash for the twelve months ended December 31,

Cash Flow Data December 31, 2021 December 31, 2020 December 31, 2019

Cash provided by operating activities $ 149,491 $ 233,759 $ 104,322

Cash used in investing activities (221,511) (126,244) (99,465)

Cash (used in) provided by financing activities (45,561) 24,951

For cash used in investing activities for the twelve months ended December 31, 2020, we purchased property and equipment for approximately $94.2 million, acquired imaging facilities for $31.3 million, made an equity contributions to joint venture of $1.6 million.

We received proceeds from the sale of equipment of $0.8 million.

The cash used in financing activities for the twelve months ended December 31, 2020 was mainly due to principal payments on our term loans.

In 2018 and 2019 we entered into factoring agreements with various institutions and sold certain accounts receivable under non-recourse agreements.

Cash provided by (used in) financing activities 104,673 (45,561) 24,951

Cash provided by operating activities for the period ended December 31, 2020 was benefited by the receipt of $39.5 million in CMS advances recorded as deferred revenue.

Cash used in investing activities for the twelve months ended December 31, 2021, included purchases of property and equipment for approximately $137.9 million, acquired imaging businesses and intangible assets for $77.7 million and 5.1 million respectively, and an equity contribution to a joint venture operation of $1.4 million.

As part of our business operations we continually evaluate investment opportunities.

The increase in cash provided by financing activities for the twelve months ended December 31, 2021 was due to refinancing of our term loan obligations with the Second Amended and Restated First Lien Credit and Guaranty Agreement on April 23, 2021.

Please see Note 5, Credit Facilities and Notes Payable in the notes to consolidated financial statements for more information.

We have entered into factoring agreements with various institutions and sold certain accounts receivable under non-recourse agreements.

These transactions are accounted for as a reduction in accounts receivable as the agreements transfer effective control over and risk related to the receivables to the buyers.

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Senior Credit Facilities:

We maintain secured credit facilities with Barclays Bank PLC and with SunTrust.

The Barclays credit facilities are comprised of first lien term loans and a revolving credit facility.

On August 28, 2020 we amended the Barclays credit facilities to increase the amount available under the revolving line of credit to $195.0 million.

We maintain secured credit facilities with Barclays Bank PLC and with SunTrust Bank.

The Barclays credit facilities are comprised of first lien term loans and a revolving credit facility of $195.0 million.

The SunTrust credit facilities are comprised of a term loan and a revolving credit facility of $30.0 million.

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Deferred financing costs at December 31, 2021, net of accumulated amortization, was $2.1 million and is specifically related to our Barclays revolving credit facility.

Included in our consolidated balance sheets at December 31, 2020 are $601.3 million of First Lien Term Loans and $51.4 million of SunTrust Term Loan Agreement debt for a combined total of $652.7 million (net of unamortized discounts of $9.7 million) in thousands:

Included in our consolidated balance sheets at December 31, 2021 are $754.7 million of total term loan debt (net of unamortized discounts of $13.2 million) displayed below in thousands:

Face Value Discount Total Carrying

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Total Term Loans $ 767,875 $ (13,213) $ 754,662

We had no outstanding balance under our $195.0 million Barclays Revolving Credit Facility at December 31, 2020 and had reserved an additional $7.3 million for certain letters of credit.

We had no outstanding balance under our $195.0 million Barclays Revolving Credit Facility at December 31, 2021 and had 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 December 31, 2021.

We also had no balance under our $30.0 million SunTrust Revolving Credit Facility related to our consolidated subsidiary NJIN at December 31, 2020, and with no letters of credit reserved against the facility, the full amount was available to draw upon.

At December 31, 2020 we were in compliance with all covenants under our credit facilities.

We also had no balance under our $30.0 million SunTrust Revolving Credit Facility related to our consolidated subsidiary NJIN at December 31, 2021, and with no letters of credit

reserved against the facility, the full amount was available to draw upon.

For more information on our secured credit facilities see Note 8 to our consolidated financial statements in this annual report.

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Notes payable $ 13,250 $ 47,750 $ 7,250 $ 7,250 $ 7,250 $ 685,125 $ 767,875

Finance leases (2) 2,654 719 14 13 4 2 3,406

Interest and fees on notes payable 29,594 29,031 28,249 27,899 26,767 34,119 175,659

Operating leases (1) 103,831 96,894 88,682 79,409 73,912 457,425 900,153

Total $ 146,675 $ 173,675 $ 124,181 $ 114,558 $ 107,929 $ 1,176,669 $ 1,843,687

(1) Includes variable rate debt for which the contractual obligation was estimated using the applicable rate at December 31, 2020.

(2) Includes interest component of finance lease obligations.

(1) Includes interest component of operating lease obligations.

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Management continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations, changes in business and economic conditions, and the frequent changes in managed care contractual terms resulting from contract re-negotiations and renewals.

As it relates to the Group, this service fee revenue includes payments for both the professional medical interpretation revenue recognized by them as well as the payment for all other aspects related to our providing the imaging services, for which we earn management fees.

clerical and administrative personnel, bookkeeping and accounting services, billing and collection, provision of medical and office supplies, secretarial, reception and transcription services, maintenance of medical records, and advertising, marketing and promotional activities.

As it relates to the Group, this service fee revenue includes payments for both the professional medical interpretation revenue recognized by them as well as the payment for all other technical aspects related to our providing the imaging services, for which we earn management fees.

As it relates to others centers, this service fee revenue is earned through providing the use of our diagnostic imaging equipment and the provision of technical services as well as providing administration services such as clerical and administrative personnel, bookkeeping and accounting services, billing and collection, provision of medical and

office supplies, secretarial, reception and transcription services, maintenance of medical records, and advertising, marketing and promotional activities.

Our revenues are based upon the estimated amounts we expect to be entitled to receive from patients and third-party payors.

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PROVIDER RELIEF FUND ( COVID-19 STIMULUS FUNDING ) - The Provider Relief Fund offers government assistance to eligible providers throughout the healthcare system in support of certain expenses or lost revenue attributable to the coronavirus pandemic.

In the fourth quarter of 2020, we received approximately $0.6 million in funding and for twelve months ended December 31, 2020 we have received funding of $26.3 million.

We received $9.1 million and $26.3 million in Provider Relief funding for the years ended December 31, 2021 and 2020, respectively.

Generally, the department of Health and Human Services ("HHS") does not intend to recoup funds as long as a provider's lost revenue and increased expenses exceed the amount of provider relief funding one has received.

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Failure to comply with the terms and conditions may be grounds for recoupment.

During the year ended December 31, 2020, we continued to evaluate our operating results and gave consideration to the updated reporting guidelines issued in January 2021 by the U.S.

Department of Health and Human Services that significantly changed the measurement of Provider Relief Fund distributions providers are able to retain.

Based on our assessment recognition of the revenue previously recognized remained appropriate.

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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 totaled $472.9 million and $442.0 million million at December 31, 2020 and December 31, 2019, respectively.

Indefinite lived intangible assets at December 31, 2020 were $7.1 million and $11.3 million at December 31, 2019 and are associated with the value of certain trade name intangibles.

GOODWILL AND INDEFINITE LIVED INTANGIBLES – Goodwill totaled $513.8 million and $472.9 million at December 31, 2021 and December 31, 2020, respectively.

Indefinite lived intangible assets at December 31, 2021 and December 31, 2020 were $7.1 million and are associated with the value of certain trade name intangibles.

Goodwill and trade name intangibles are recorded as a result of business combinations.

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We considered the current and expected future economic and market conditions surrounding the novel strain of coronavirus ("COVID-19") pandemic and during the year did not identify an indication of goodwill or trade name impairment due that event.

During the year we ceased employing certain indefinite lived trade names with a total value of $4.2 million and they were written off in full.

Separate from this, our annual impairment

test as of October 1, 2020 noted no other impairment, and we have not identified any indicators of impairment through December 31, 2020.

Significant Accounting Policies

DEFERRED REVENUE - In April of 2020, we received approximately $39.4 million in advanced Medicare payments from the Centers for Medicare and Medicaid Services ("CMS") as part of the expanded Accelerated and Advance Payment Program under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

As these payments are required to be repaid to CMS beginning 120 days after their receipt through offsets from new Medicare claims over a three month period, we have recorded amounts received to deferred revenue which will be amortized as Medicare reimbursements are earned.

In addition, in May of 2020 we received $5.0 million in advance payments from an insurance carrier with similar repayment terms as the CMS.

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

Under this method, deferred income tax assets and liabilities result from temporary differences in the financial reporting bases and the income tax reporting bases of assets and liabilities.

The measurement of deferred tax assets is reduced, if necessary, by the amount of any tax benefit that, based on available evidence, is not expected to be realized.

When it appears more likely than not that deferred taxes will not be realized, a valuation allowance is recorded to reduce the deferred tax asset to its estimated realizable value.

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

LONG-LIVED ASSETS - We evaluate our long-lived assets (property and equipment) and intangibles, other than goodwill and indefinite lived intangibles, for impairment whenever indicators of impairment exist.

To evaluate the long-lived assets our management estimates the undiscounted future cash flows expected to be derived from the asset.

The accounting standards require that if the sum of the undiscounted expected future cash flows from a long-lived asset or definite-lived intangible is less than the carrying value of that asset, an asset impairment charge must be recognized.

The amount of the impairment charge is calculated as the excess of the asset’s carrying value over its fair value, which generally represents the discounted future cash flows from that asset or in the case of assets we expect to sell, at fair value less costs to sell.

No indicators of impairment were identified with respect to our long-lived assets as of December 31, 2020.

DEPRECIATION AND AMORTIZATION OF LONG-LIVED ASSETS - We depreciate our long-lived assets over their estimated economic useful lives with the exception of leasehold improvements where we use the shorter of the assets useful lives or the lease term of the facility for which these assets are associated.

We estimate the economic useful lives of assets, other than leasehold improvements, to be between 3 and 15 years depending on the type of asset.

PROPERTY AND EQUIPMENT – Property and equipment are stated at cost, less accumulated depreciation and amortization.

Depreciation and amortization of property and equipment are provided using the straight-line method over the estimated useful lives, which range from 3 to 15 years.

Leasehold improvements are amortized at the lesser of lease term or their estimated useful lives, which range from 3 to 15 years.

Maintenance and repairs are charged to expense as incurred.

LEASES - We determine if an arrangement is a lease at inception.

Operating leases are included in operating lease right-of-use (“ROU”) assets, current operating lease liabilities, and long term operating lease liability in our consolidated balance sheets.

Finance leases are included in property and equipment, current finance lease liability, and long-term finance lease liability in our consolidated balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

We use the implicit rate when readily determinable.

We include options to extend a lease when it is reasonably certain that we will exercise that option.

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

For a contract in which we are a lessee that contains fixed payments for both lease and non-lease components, we have elected to account for the components as a single lease component, as permitted.

For finance leases, interest expense on the lease liability is recognized using the effective interest method and amortization of the ROU asset is recognized on a straight-line basis over the shorter of the estimated useful life of the asset or the lease term.

ROU assets are tested for impairment if circumstances suggest that the carrying amount may not be recoverable.

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 in 2020.

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

We maintain business interruption insurance to cover loss of business due to a facility becoming non-operational under certain circumstances.

Our equipment leases are covered by warranty and service contracts which cover repairs and provide regular maintenance to keep the equipment in functioning order.

EQUITY BASED COMPENSATION – We have one long-term incentive plan that we adopted in 2006 and which we first amended and restated as of April 20, 2015, and again on March 9, 2017 (the “Restated Plan”).

The Restated Plan was approved by our stockholders at our annual stockholders meeting on June 8, 2017.

We have reserved for issuance under the Restated Plan 14,000,000 shares of common stock.

We can issue options, stock awards, stock appreciation rights, stock units and cash awards under the Restated Plan.

Certain options granted under the Restated Plan to employees are intended to qualify as incentive stock options under existing tax regulations.

Stock options and warrants generally vest over three to five years and expire five to ten years from date of grant.

The compensation expense associated with option grants is calculated based on a valuation model, typically the Black–Scholes model, which requires certain management assumptions with respect to volatility.

The compensation expense recognized for all equity-based awards is recognized over the awards’ service periods.

Equity-based compensation is classified in operating expenses within the same line item as the majority of the cash compensation paid to employees.

In connection with our acquisition of DeepHealth Inc.

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.

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

2017 Equity Incentive Plan.

See Note 4, Facility Acquisitions and Note 11, Stock-Based Compensation, for more information.

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.

With respect to these matters, we evaluate the developments on a regular basis and accrue a liability when we believe a loss is probable and the amount can be reasonably estimated.

We believe that the amount or any estimable range of reasonably possible or probable loss will not, either individually or in the aggregate, have a material adverse effect on our business and consolidated financial statements.

However, the outcome of these matters is inherently uncertain.

Therefore, if one or more of these matters were resolved against us for amounts in excess of management's expectations, our results of operations and financial condition, including in a particular reporting period in which any such outcome becomes probable and estimable, could be materially adversely affected.

During the year ended December 31, 2020 we ceased employing certain indefinite lived trade names with a total value of $4.2 million and they were written off in full.

Separate from this, our annual impairment test as of October 1, 2021 noted no other impairment, and we have not identified any indicators of impairment through December 31, 2021.

Recent Accounting Standards

Accounting standards adopted

In March 2020, the FASB issued ASU 2020-04 ("ASU 2020-04"), Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting .

ASU 2020-04 provides optional expedients and exceptions for applying generally accepted accounting principles to certain contract modifications and hedging relationships that reference London Inter-bank Offered Rate (LIBOR) or another reference rate expected to be discontinued.

The guidance is effective upon issuance and generally can be applied through December 31, 2022.

We are currently evaluating the potential impact of ASU 2020-04 on our financial statements.

In June 2016, the FASB issued ASU No.

2016-13 ("ASU 2016-13), Financial Instruments - Credit Losses.

ASU 2016-13 replaces the incurred loss methodology previously utilized for valuing financial instruments with an expected loss methodology that is referred to as the current expected credit loss (CECL) methodology.

We adopted the standard on January 1, 2020 using the modified retrospective approach.

See the Accounts Receivable section to Note 2 for further information on our allowances for credit losses.

In August 2018, the FASB issued ASU No.

2018-15 (“ASU 2018-15”), Intangibles-Goodwill and Other-Internal-Use Software.

ASU 2018-15 aligns the requirements for deferring implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.

This ASU was effective in the first quarter of 2020 with early adoption permitted and can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption.

The adoption of this standard did not have a material impact on our consolidated balance sheet.

In March 2020, the FASB issued ASU 2020-03 ("ASU 2020-03"), Codification Improvements to Financial Instruments .

The amendments in this update represent changes to clarify or improve the codification and correct unintended application.

ASU 2020-03 was effective immediately upon issuance and its adoption did not have a material impact on our financial statements.

In August 2018, the FASB issued ASU No.

2018-13 ("ASU 2018-13"), Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurements .

This standard removes, modifies and adds certain disclosures related to recurring and nonrecurring fair value measurements.

We adopted ASC 2018-13 effective January 1, 2020 and it had no effect on our disclosures.

Accounting standards not yet adopted

In December 2019, the FASB issued ASU 2019-12 ("ASU 2019-12"), Income Taxes (Topic 740).

ASU 2019-12 removes certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences.

It also clarifies and simplifies other areas of the standard.

ASU 2019-12 is effective beginning in the first quarter of 2021.

Early adoption is permitted.

Certain amendments in this update must be applied on a prospective basis, certain amendments must be applied on a retrospective basis, and certain amendments must be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings/(deficit) in the period of adoption.

We are currently evaluating the impact this ASU will have on our financial statements and related disclosures.

In January 2020, the FASB issued ASU 2020-01 ("ASU 2020-01"), Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), clarifying the interaction between accounting standards related to equity securities, equity method investments, and certain derivatives.

ASU 2020-01 is effective for fiscal years beginning after December 15, 2020.

We do not expect the adoption of this guidance will have a material impact on our financial statements.

In January 2021, the FASB issued ASU 2021-01 ("ASU 2021-01"), Reference Rate Reform (Topic 848), Scope .

ASU 2021-01 provides clarifies the scope of Topic 848 so that derivatives affected by the discounting transition are explicitly eligible for certain option expedients and exceptions in Topic 848.

The guidance is effective upon issuance and generally can be applied through December 31, 2022.

We are currently evaluating the potential impact of ASU 2021-01 on our financial statements.

See Note 3, Recent Accounting and Reporting Standards to the consolidated financial statements included in this report for further information.

Subsequent Events

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

The operation will offer multi-modality imaging services out of two locations in Ventura County, California.

Total investment in the venture is $0.5 million.

RadNet contributed $0.3 million in assets for a 60% economic interest and Simi Adventist contributed assets totaling $0.2 million for a 40% economic interest.

Over January and February 2021, we completed additional acquisitions of ZP companies in the New York City area for total purchase consideration of approximately $53.4 million.

In March 2021, we received $6.2 million in general distribution funds under the CARES Act.

On January 1, 2022 we acquired certain radiology practice business assets for purchase consideration of $13.0 million.

On January 20, 2022, we completed our stock acquisitions of two unrelated technology companies located in the Netherlands.

Aidence Holding B.V.

and Quantib B.V.

are AI companies with a focus on clinical solutions for lung and prostate cancer, respectively.

Total combined investment by is $95.0 million, being a combination of issuance of our common shares and cash consideration to purchase the outstanding shares of both companies.

Additional Information

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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-K

Item 7. Management’s Discussion and Analysis