What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-01 compared with 2021-03-16 · 271 added, 350 removed, 858 unchanged (42% of the section changed)

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We have audited the accompanying consolidated balance sheets of RadNet, Inc.

and subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive (loss) income, equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “consolidated financial statements”).

and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S.

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 1, 2022 expressed an unqualified opinion thereon.

Adoption of ASU No.

As discussed in Note 9 to the consolidated financial statements, the Company changed its method for accounting for leases in 2019 due to the adoption of Accounting Standards Update (ASU) No.

2016-02, Leases (Topic 842), and the related amendments.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Accounting for Revenue Recognition

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We also assessed the historical accuracy of management’s estimates as a source of potential corroborative or contrary evidence.

Acquisition of DeepHealth, Inc.

Description of

As discussed in Note 4 to the consolidated financial statements, the Company completed its acquisition of DeepHealth, Inc.

for net consideration of $34.6 million on June 1, 2020.

The transaction was accounted for as a business combination.

Auditing the Company’s accounting for its acquisition of DeepHealth, Inc.

was complex due to the significant estimation required by management in determining the fair value of in-process research and development (“IPR&D”) intangible assets of $14.5 million.

The significant estimation was primarily due to the complexity of the valuation models used by management to measure the fair value of the IPR&D intangible assets and the sensitivity of the fair value estimates to the significant underlying assumptions.

The Company used an income approach to measure the fair value of the IPR&D.

The significant assumptions used to estimate the value of the IPR&D intangible assets included discount rates and certain assumptions that form the basis of the forecasted results (e.g., revenue growth rates, EBITDA margin and obsolescence factors).

These significant assumptions are forward looking and could be affected by future economic and market conditions.

Acquisition of DeepHealth, Inc.

Addressed the Matter in Our

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s accounting for the acquisition.

We tested controls over the recognition and measurement of consideration transferred and IPR&D intangible assets, including the valuation model and underlying assumptions used to develop such estimates.

To test the estimated fair value of the IPR&D intangible assets, we performed audit procedures that included, among others, evaluating the completeness and accuracy of the underlying data and reasonableness of significant assumptions such as revenue growth rates, EBITDA margin and obsolescence factors.

For example, we compared the forecasted results, derived based on the significant assumptions discussed above, to current industry, market and economic trends, to the assumptions used in other acquisitions and to other guidelines used by companies within the same industry.

We involved our valuation specialists to assist in our evaluation of the methodology used and reasonableness of the significant assumptions.

/s/ Ernst & Young LLP

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Investment in joint ventures 42,229 34,528

Deferred tax assets 34,687 34,548

Deferred tax assets, net 14,853 34,687

Deposits and other 36,032 36,983

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Cost of operations, excluding depreciation and amortization 1,123,274 965,902 999,692

Lease abandonment charges 19,675 — —

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

Loss (gain) on sale and disposal of equipment and other 1,200 2,383 ( 2,054 )

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

Loss on impairment — 4,170 —

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

Gain on extinguishment of debt ( 4,047 ) — —

Other expenses (income) 120 1,283 ( 181 )

Total other expenses (income) 36,538 40,209 ( 7,641 )

(LOSS) INCOME BEFORE INCOME TAXES ( 854 ) 29,669 38,527

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

Other expenses 1,438 120 1,283

Total other expenses 23,675 36,538 40,209

INCOME (LOSS) BEFORE INCOME TAXES 58,879 ( 854 ) 29,669

Provision for income taxes ( 14,560 ) ( 895 ) ( 6,229 )

NET (LOSS) INCOME ( 1,749 ) 23,440 38,133

NET INCOME (LOSS) 44,319 ( 1,749 ) 23,440

Net income attributable to noncontrolling interests 19,592 13,091 8,684

NET (LOSS) INCOME ATTRIBUTABLE TO RADNET, INC.

NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC.

COMMON STOCKHOLDERS $ 24,727 $ ( 14,840 ) $ 14,756

BASIC NET (LOSS) INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC.

BASIC NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC.

COMMON STOCKHOLDERS $ 0.47 $ ( 0.29 ) $ 0.30

DILUTED NET (LOSS) INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC.

DILUTED NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC.

COMMON STOCKHOLDERS $ 0.46 $ ( 0.29 ) $ 0.29

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(IN THOUSANDS)

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2021 2020 2019

NET (LOSS) INCOME $ ( 1,749 ) $ 23,440 $ 38,133

NET INCOME (LOSS) $ 44,319 $ ( 1,749 ) $ 23,440

Foreign currency translation adjustments ( 65 ) ( 101 ) ( 32 )

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Change in fair value of cash flow hedge from prior periods reclassified to earnings 3,695 3,448 —

COMPREHENSIVE (LOSS) INCOME ( 17,774 ) 13,155 40,940

COMPREHENSIVE INCOME (LOSS) 47,949 ( 17,774 ) 13,155

Less comprehensive income attributable to noncontrolling interests 19,592 13,091 8,684

COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO RADNET, INC.

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC.

COMMON STOCKHOLDERS $ 28,357 $ ( 30,865 ) $ 4,471

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Forfeiture of restricted stock ( 1,500 ) — ( 5 ) — — ( 5 ) — ( 5 )

Non-cash severance 12,692 — 188 — — 188 — 188

Issuance of stock for acquisitions 542,109 — 7,500 — — 7,500 — 7,500

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Stock-based compensation 491,674 — — — — — — —

Forfeiture of restricted stock ( 1,500 ) ( 5 ) ( 5 ) ( 5 )

Non-cash severance 12,692 — 188 — — 188 — 188

Issuance of stock for acquisitions 542,109 — 7,500 — — 7,500 — 7,500

Sale to noncontrolling interests, net of taxes — — 3,537 — — 3,537 2,008 5,545

Contributions from noncontrolling interests — — — — — — 750 750

Issuance of common stock under the DeepHealth equipty compensation plan 10,920 — — — — — — —

Stock-based compensation expense — — 12,463 — — 12,463 — 12,463

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

Tax effect on gain on sale of noncontrolling interest — — ( 551 ) — — ( 551 ) — ( 551 )

Distributions paid to noncontrolling interests — — — — — — ( 1,985 ) ( 1,985 )

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Change in fair value cash flow hedge, net of taxes — — — ( 19,372 ) — ( 19,372 ) — ( 19,372 )

Net income — — — — 14,756 14,756 8,684 23,440

Change in fair value of cash flow hedge from prior periods reclassified to earnings — — — 3,448 — 3,448 — 3,448

Net (loss) income — — — — ( 14,840 ) ( 14,840 ) 13,091 ( 1,749 )

BALANCE - DECEMBER 31, 2020 51,640,537 $ 5 $ 307,788 $ ( 24,051 ) $ ( 117,999 ) $ 165,743 $ 92,560 $ 258,303

Issuance of stock upon exercise of options 53,960 — 488 — — 488 — 488

Shares issued under the equity compensation plan 1,212,758 — — — — — — —

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Stock-based compensation expense — — 25,284 — — 25,284 — 25,284

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

Tax effect on gain on sale of noncontrolling interest — — ( 551 ) — — ( 551 ) — ( 551 )

Issuance of common stock for sale of unregistered securities for acquisitions and asset purchases 82,658 — 2,498 — — 2,498 — 2,498

Release of holdback shares from the purchase of DeepHealth 91,517 — 2,413 — — 2,413 — 2,413

Forfeiture of restricted stock ( 4,365 ) — ( 81 ) — — ( 81 ) — ( 81 )

Gain on contribution of assets to majority owned subsidiary — — ( 4 ) — — ( 4 ) — ( 4 )

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

Sale of economic interests in majority owned subsidiary, net of taxes — — 4,206 — — 4,206 7,404 11,610

Distributions paid to noncontrolling interests — — — — — — ( 2,426 ) ( 2,426 )

Change in cumulative foreign currency translation adjustment — — — ( 65 ) — ( 65 ) — ( 65 )

Change in fair value cash flow hedge, net of taxes — — — ( 19,372 ) — ( 19,372 ) — ( 19,372 )

Change in fair value of cash flow hedge from prior periods reclassified to earnings — — — 3,695 — 3,695 — 3,695

Net loss — — — — ( 14,840 ) ( 14,840 ) 13,091 ( 1,749 )

Net income — — — — 24,727 24,727 19,592 44,319

BALANCE - DECEMBER 31, 2021 53,548,227 $ 5 $ 342,592 $ ( 20,421 ) $ ( 93,272 ) $ 228,904 $ 117,253 $ 346,157

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CASH FLOWS FROM OPERATING ACTIVITIES

Net (loss) income $ ( 1,749 ) $ 23,440 $ 38,133

Adjustments to reconcile net income to net cash provided by operating activities:

Net income (loss) $ 44,319 $ ( 1,749 ) $ 23,440

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

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

Amortization of operating lease right-of-use assets 73,967 67,915 66,842

Lease abandonment charges 19,675 — —

Equity in earnings of joint ventures, net of dividends ( 6,260 ) 1,577 248

Amortization and write off of deferred financing costs and loan discount 3,254 4,413 4,184

Loss (gain) on sale and disposal of equipment and other 1,200 2,383 ( 2,054 )

Gain on extinguishment of debt ( 4,047 ) — —

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

Loss (gain) on extinguishment of debt 1,496 ( 4,047 ) —

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

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Operating lease liability ( 72,553 ) ( 53,906 ) ( 66,831 )

Deferred rent — — 6,312

Deferred revenue ( 28,319 ) 37,941 ( 1,082 )

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Purchase of property and equipment ( 137,874 ) ( 94,172 ) ( 74,153 )

Purchase of intangible assets ( 5,130 ) — —

Proceeds from sale of equipment 625 828 1,160

Proceeds from the sale of equity interests in a joint venture — — 132

Proceeds from sale of internal use software — — 248

Nulogix return of capital — — 792

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Distributions paid to noncontrolling interests ( 2,426 ) ( 1,985 ) ( 3,057 )

Proceeds from sale of noncontrolling interest — 5,275 —

Proceeds from sale of economic interest in majority owned subsidiary 13,073 — 5,275

Contributions from noncontrolling partners — — 750

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Payments on revolving credit facility ( 128,300 ) ( 250,900 ) ( 289,200 )

Purchase of noncontrolling interests — — ( 200 )

Proceeds from issuance of common stock upon exercise of options 488 — 75

Net cash (used in) provided by financing activities ( 45,561 ) 24,951 ( 10,869 )

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

EFFECT OF EXCHANGE RATE CHANGES ON CASH ( 65 ) ( 101 ) ( 32 )

NET INCREASE (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS 61,853 29,776 ( 40,933 )

NET INCREASE IN CASH AND CASH EQUIVALENTS 32,588 61,853 29,776

CASH AND CASH EQUIVALENTS, beginning of period 102,018 40,165 10,389

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The offsetting amount due was recorded in our consolidated balance sheets under “accounts payable, accrued expenses and other.”

We executed inclusive of all acquisitions, finance lease liability/capital lease debt of approximately $ 20.0 thousand, $ 0.1 million, and $ 6.7 million during the twelve months ended December 31, 2020, 2019, and 2018.

We executed inclusive of all acquisitions, finance lease liability/capital lease debt of approximately $ 20.0 thousand, and $ 0.1 million during the twelve months ended December 31, 2020 and 2019.

On October 22, 2021 we completed our purchase of specific technology assets of DRT LLC by in part by issuing 15,000 shares of our common stock to complete the transaction.

The shares were ascribed a value of $ 0.4 million.

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").

Of the total combined assets of $ 0.4 million, RadNet transferred $ 0.3 million and Simi Adventist contributed the remaining $ 0.1 million.

On June 1, 2020, we completed our stock purchase of DeepHealth, Inc.

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See Note 4, Facility Acquisitions and Dispositions, to the consolidated financial statements contain herein for further information.

On October 1, 2018, we obtained control over the operations of New Jersey Imaging Network (NJIN) through an agreement with the other equity interest holder for no cash consideration.

As such, we consolidated the financial statements of NJIN effective as of that date and recognized fair value of non controlling interest of $ 44.3 million on the date of the transaction.

We remeasured our pre-existing 49 % equity interest in NJIN upon consolidation and recognized a non cash gain of $ 39.5 million.

We also obtained control of $ 5.4 million cash in NJIN as a result of such consolidation.

The economic interest of each party remained the same after consolidation.

See Note 4, Facility Acquisitions and Dispositions, to the consolidated financial statements contain herein for further information.

On October 1, 2018 we acquired Medical Arts Radiology for cash consideration of $ 50.9 million, the assumption of $ 2.7 million in equipment debt, and $ 8.0 million in RadNet common stock.

As part of the transaction, we recorded a contingent liability of approximately $ 0.7 million to guarantee the sellers stock price stability for a period of one year from the date of acquisition.

For the year ended December 31, 2018 we recorded a $ 1.7 million charge to record the contingent liability at fair market value.

For the year ended December 31, 2019, we recorded $ 2.4 million to income to resolve the fair market value charge recorded at December 31, 2019 and the original contingent liability at purchase.

See Note 4, Facility Acquisitions and Dispositions, to the consolidated financial statements contain herein for further information.

The Company received a one-time special distribution from a controlled subsidiary which resulted in a $ 9.2 million adjustment to noncontrolling interest and $ 3.0 million, net of taxes, to the Company’s additional paid in capital account in September 2018.

The Company received $ 15.0 million in fixed assets and assumed $ 4.0 million in capital lease debt in January 2018 from the Company’s partner in Beach Imaging LLC.

See Note 4, Facility Acquisitions and Dispositions contained herein for further information.

AND SUBSIDIARIES

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Our multi-modality strategy diversifies revenue streams, reduces exposure to reimbursement changes and provides patients and referring physicians one location to serve the needs of multiple procedures.

In addition to our imaging services, we have certain other software subsidiaries which design and sell computerized systems for the imaging industry and internally develop Artificial Intelligence suites to enhance interpretation of radiographic images.

Our operations comprise a single segment for financial reporting purposes.

In addition to our imaging services, we have certain other software subsidiaries which design and sell computerized systems for the imaging industry and internally develop Artificial Intelligence ("AI") suites to enhance interpretation of radiographic images.

Our operations comprise a single segment for financial reporting purposes for this reporting period.

The consolidated financial statements include the accounts of RadNet, Inc as well as its subsidiaries in which RadNet has a controlling financial interest.

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the design and activities of the VIE, the terms of the contracts the VIE has entered into, the nature of the VIE’s variable interests issued and how they were negotiated with or marketed to potential investors, and which parties participated significantly in the design or redesign of the entity.

VIEs that we consolidate as the primary beneficiary consist of professional corporations which are owned or controlled by individuals within our senior management, namely Howard G.

Berger, M.D., our President and Chief Executive Officer, and John V.

Crues, III, M.D., RadNet's Medical Director;

both of whom are members of our Board of Directors.

Berger owns, indirectly, 99 % of the equity interests in Beverly Radiology Medical Group III (BRMG) and a controlling interest in two professional corporations in New York City.

BRMG is responsible for the professional medical services at nearly all of our facilities located in California.

Crues owns six professional corporations which provide medical services in Delaware, Maryland, New Jersey and New York.

Additionally, Dr.

Crues is a 1 % owner of BRMG.

VIEs that we consolidate as the primary beneficiary consist of professional corporations which are owned or controlled by individuals within our senior management and provide professional medical services for centers in Arizona, California, Delaware, Maryland, New Jersey and New York.

These VIEs are collectively referred to as the consolidated medical group ("the Group").

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The Group has insignificant operating assets and liabilities, and de minimis equity.

Through management agreements with us, substantially all cash flows of the Group after expenses, including professional salaries, are transferred to us.

Substantially all cash flows of the Group after expenses, including professional salaries, are transferred to us.

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

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 behalf of the Group.

However, RadNet may be required to provide financial support to cover any operating expenses in excess of operating revenues.

The Group on a combined basis recognized $ 179.6 million, $ 147.6 million, and $ 157.4 million of revenue, net of management services fees to RadNet, for the years ended December 31, 2021, 2020, and 2019, respectively and $ 179.6 million, $ 147.6 million, and $ 157.4 million of operating expenses for the years ended December 31, 2021, 2020, and 2019, respectively.

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In our consolidated balance sheets at December 31, 2021 and December 31, 2020, we have included approximately $ 89.2 million and $ 82.3 million, respectively, of accounts receivable and approximately $ 14.4 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 behalf of them.

However, RadNet may be required to provide financial support to cover any operating expenses in excess of operating revenues.

We also own a 49 % economic interest in ScriptSender, LLC, which provides secure data transmission services of medical information.

At all of our centers not serviced by the Group we have entered into long-term contracts with medical groups to provide professional services at those centers, including supervision and interpretation of diagnostic imaging procedures.

The medical groups maintain full control over the physicians they employs.

Through our management agreements, we make available to the medical groups the imaging centers, including all furniture, fixtures and medical equipment therein.

The medical groups are compensated for their services from the professional component of the global net service fee revenue and after deducting management service fees paid to us, we have no economic controlling interest in these medical groups.

As such, the financial results of these groups are not consolidated in our financial statements.

We also own a 49 % economic interest in ScriptSender, LLC, which provides services for secure data transmission of medical information.

Through a management agreement, RadNet provides management and accounting services and receives an agreed upon fee.

ScriptSender LLC is dependent on the Company to finance its own activities, and as such we determined that it is a VIE but we are not a primary beneficiary since we do not have the power to direct the activities of the entity that most significantly impact the entity’s economic performance.

At all of our centers not serviced by the Group we have entered into long-term contracts (typically 10 to 40 years in length) with independent radiology groups to provide physician services at those centers.

These radiology practices provide professional services, including supervision and interpretation of diagnostic imaging procedures, in our diagnostic imaging centers.

The radiology practices maintain full control over the provision of professional services.

Under these arrangements, in addition to obtaining technical fees for the use of our diagnostic imaging equipment and the provision of technical services, we provide management services and receive a fee based on the value of the services we provide.

We own the diagnostic imaging equipment and, therefore, receive 100% of the technical reimbursements associated with imaging procedures.

The radiology practice groups retain the professional reimbursements associated with imaging procedures after deducting management service fees paid to us and we have no economic controlling interest in these radiology practices.

As such, the financial results of these practices are not consolidated in our financial statements.

ScriptSender LLC is dependent on us to finance its own activities, and as such we determined that it is a VIE but we are not a primary beneficiary since we do not have the power to direct the activities of the entity that most significantly impact the entity’s economic performance.

We have continued to finance ScriptSender during it's development phase and our maximum exposure to loss is $ 4.0 million, which represents our receivable balance from the entity.

Maximum exposure to loss is the loss that we would absorb in the event that all of the assets of ScriptSender are deemed worthless.

We paid operating expenses for the venture of $ 1.6 million and $ 1.8 million for the years ended December 31, 2021, and December 31, 2020, respectively.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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As a result, actual amounts could materially differ from these estimates.

RECLASSIFICATION - For the year 2019, we have reclassified certain amounts previously classified as held for sale related to property and equipment and goodwill to conform to our 2020 presentation.

REVENUES – Our revenues generally relate to net patient fees received from various payors and patients themselves under contracts in which our performance obligations are to provide diagnostic services to the patients.

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Our performance obligations for diagnostic services are generally satisfied over a period of less than one day.

The contractual relationships with patients, in most cases, also involve a third-party payor (Medicare, Medicaid, managed care health plans and commercial insurance companies, including plans offered through the health insurance exchanges) and the transaction prices for the services provided are dependent upon the terms provided by (Medicare and Medicaid) or negotiated with (managed care health plans and commercial

insurance companies) the third-party payors.

The payment arrangements with third-party payors for the services we provide to the related patients typically specify payments at amounts less than our standard charges and generally provide for payments based upon predetermined rates per diagnostic services or discounted fee-for-service rates.

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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.

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.

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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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.

On January 1, 2018, we adopted the new revenue recognition accounting standard issued by the Financial Accounting Standards Board (“FASB”) and codified in the ASC as topic 606 (“ASC 606”).

The revenue recognition standard in ASC 606 outlines a single comprehensive model for recognizing revenue as performance obligations, defined in a contract with a customer as goods or services transferred to the customer in exchange for consideration, are satisfied.

The standard also requires expanded disclosures regarding our revenue recognition policies and significant judgments employed in the determination of revenue.

Our total net revenues for the years ended December 31, 2021, 2020, and 2019 are presented in the table below (in thousands):

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COVID-19 PANDEMIC AND CARES ACT FUNDING - On March 11, 2020 the World Health Organization (WHO) designated COVID-19 as a global pandemic.

Patient volumes and the related revenues for our services were significantly impacted during the latter portion of the first quarter through the middle of the third quarter of 2020 as a result of federal, state and local government mandated restrictions requiring many people to remain at home and forced the closure of or limitations on certain businesses, as well as suspended elective procedures by health care facilities.

Many of these restrictions

have been eased or completely lifted across the states the Company operates in however, we are unable to predict the future impact of the pandemic on our operations.

During the twelve months ended December 31, 2020, we received $ 43.2 million of accelerated Medicare payments, $ 5.0 million from Blue Shield, $ 26.3 million from the general distribution and $ 4.0 million from the Paycheck Protection Program established through the Coronavirus Aid, Relief and Economic Security (“CARES”) Act.

The accelerated Medicare payments are recorded under the caption “ Deferred Revenue“ in our consolidated balance sheet and will be withheld from reimbursements for services in 2021 and 2022.

The general distribution funds were accounted for as government grants and recognized as other revenue, once reasonable assurance that the applicable terms and conditions required to retain the funds were met, under the caption “Provider relief funding” in our Consolidated Statements of Operations.

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, the Company had deferred $ 16.3 million of Social Security taxes.

These payment deferrals are recorded as payroll tax liability under the caption “Accounts payable, accrued expenses and other” in our consolidated balance sheet.

We believe the extent of the COVID-19 pandemic’s impact on our operating results and financial condition has been and will continue to be driven by many factors, most of which are beyond our control and ability to forecast.

Such factors include, but are not limited to, the scope and duration of stay-at-home practices, business closures and restrictions, suspensions of elective procedures and continued decline in procedure volumes for an indeterminable length of time and incremental expenses required for supplies and personal protective equipment.

Because of these uncertainties, we cannot estimate the length or impact of the pandemic on our business.

If we incur declines in cash flows and results of operations, such declines could have an impact on the inputs and assumptions used in significant accounting estimates, including implicit prices concessions related to uninsured patient accounts, and potential impairment of goodwill and long-lived assets.

During the fourth quarter of 2020, procedure volumes continued to increase and have had a positive impact on our patient revenue.

However, the impact of COVID-19 in future periods may vary and could adversely impact our results of operations.

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 twelve months ended December 31, 2021, we received funding from the various programs established by the CARES Act as follows:

• $ 39.6 million total of accelerated Medicare payments received, $ 39.5 million for the twelve months ended December 31, 2020 and $ 0.1 million for the twelve months ended December 31, 2021.

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

• $ 35.4 million total Provider Relief Funding, $ 26.3 million received for the twelve months ended December 31, 2020 and $ 9.1 million received for the twelve months ended December 31, 2021.

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

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

For the twelve months ended December 31, 2021, $ 30.2 million of the accelerated Medicare payments has been applied to revenue.

The total advance of $ 5.0 million from

Blue Shield has been repaid, with $ 1.3 million for the twelve months ended December 31, 2020 and $ 3.7 million for the twelve months ended December 31, 2021.

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.

The Provider Relief Funding is displayed as such on our consolidated statements of operations.

The CARES Act also provides for the deferral of the employer-paid portion of the social security payroll tax with 50% due by December 31, 2021 and 50% due December 31,2022.

We elected to defer $ 16.3 million of this tax through December 31, 2020.

Additionally, The CARES Act provided a refundable employer tax credit equal to 50 % of qualified wages, including certain health insurance costs, that can be used to offset payroll tax liabilities.

In the third quarter of 2021 we qualified for a portion of the credit and recorded a benefit of $ 7.7 million through a reduction of payroll tax expense.

Our remaining deferred tax liability balance of approximately $ 8.1 million at December 31, 2021, will be paid by December 31, 2022.

ACCOUNTS RECEIVABLE – Substantially all of our accounts receivable are due under fee-for-service contracts from third party payors, such as insurance companies and government-sponsored healthcare programs, or directly from patients.

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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.

The aggregate amounts factored under these facilities, net of discounts recorded to reflect market interest rates is $ 29.5 million.

Proceeds 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.

At December 31, 2020 we have $ 20.5 million remaining to be collected on these agreements.

Amounts remaining to be collected on these agreements were $ 17.7 million and $ 20.5 million at December 31, 2021 and December 31, 2020, respectively.

We do not utilize factoring arrangements as an integral part of our financing for working capital.

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In addition, we have notes receivable stemming from our factoring of accounts receivable as stated above.

Companies with which we factor our receivables are well known established buyers of such instruments, have agreed to assume the full risk of their collection, and to date have made all payments due to us in a timely manner.

Companies with which we factor our receivables are well known established buyers of such instruments, have agreed to assume the full risk of their collection.

CASH AND CASH EQUIVALENTS – We consider all highly liquid investments that mature in three months or less when purchased to be cash equivalents.

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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 were $ 7.1 million at December 31, 2021 and December 31, 2020 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 tested both goodwill and trade name intangibles for impairment on October 1, 2021.

However, 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.

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

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.

During the testing of goodwill and trade name intangibles at October 1, 2018, our Teleradiology reporting unit, Imaging On Call, (IOC), experienced a reduction of professional medical group clients and a loss of a contract with a major local health provider during 2018.

This affected its estimated fair value and resulted in impairment charges to our 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 its trade name of approximately $ 0.1 million.

The estimated fair value of IOC reporting unit was determined by using the discounted cash flow method.

LONG-LIVED ASSETS – We evaluate our long-lived assets (property and equipment) and intangibles, other than goodwill, for impairment when events or changes indicate the carrying amount of an asset may not be recoverable.

Accounting standards requires 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.

Accounting standards requires 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.

We determined that there were no events or changes in circumstances that indicated our long-lived assets were impaired during any periods presented.

At December 31, 2021 we recorded a write off charge of $ 7.1 million in leasehold improvements for facilities that we abandoned.

See the Leases discussion below for more information.

Other than this, we determined that there were no events or changes in circumstances that indicated our long-lived assets were impaired during any periods presented.

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

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Operating leases are included in operating lease right-of-use (“ROU”) assets, current operating lease liability, 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.

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.

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

No events have occurred which have impaired the integrity of our ROU assets in 2020.

After a management review of post pandemic patient traffic to centers, it was noted that although overall volumes had returned to pre-pandemic levels, certain imaging locations did not experience the same levels of activity as beforehand.

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 took a lease abandonment charge of approximately $ 12.6 million at December 31, 2021 to complete the closure of these locations.

Other than stated above, no events have occurred 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.

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See Note 9, Leases, for more information.

UNINSURED RISKS – On November 1, 2008 we obtained a fully funded and insured workers’ compensation policy, thereby eliminating any uninsured risks for employee injuries occurring on or after that date.

This fully funded policy remained in effect through November 1, 2013 and continues to cover any claims incurred through this date.

On November 1, 2013 we entered into a high-deductible workers’ compensation insurance policy.

UNINSURED RISKS – On November 1, 2013 we entered into a high-deductible workers’ compensation insurance policy.

We have recorded liabilities of $ 3.5 million and $ 4.1 million for each of the years ending December 31, 2021 and December 31, 2020, respectively, for the estimated future cash obligations associated with the unpaid portion of the workers compensation claims incurred.

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We have recorded liabilities as of December 31, 2021 and 2020 of $ 6.3 million and $ 6.6 million, respectively, for the estimated future cash obligations associated with the unpaid portion of the medical and dental claims incurred by our participants.

Additionally, we entered into an agreement with Blue

Shield for a stop loss policy that provides coverage for any claims that exceed $ 250,000 up to a maximum of $ 1.0 million in order for us to limit our exposure for unusual or catastrophic claims.

Additionally, we entered into an agreement with Blue Shield for a stop loss policy that provides coverage for any claims that exceed $ 250,000 up to a maximum of $ 1.0 million in order for us to limit our exposure for unusual or catastrophic claims.

EMPLOYEE BENEFIT PLAN – We adopted a profit-sharing/savings plan pursuant to Section 401(k) of the Internal Revenue Code that covers substantially all non-professional employees.

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We can elect to provide a matching contribution in the amount to a maximum of 1.0 % per 4.0 % of employee contribution, and have done so since 2017.

We contributed $ 2.9 million in matching for the year ended December 31, 2019 and have elected no t to fund a matching contribution for the plan year ended December 31, 2020.

We contributed $ 3.0 million in matching for the year ended December 31, 2021.

For the year ended December 31, 2020, we elected not to provide a matching contribution.

LOSS AND OTHER UNFAVORABLE CONTRACTS – We assess the profitability of our contracts to provide management services to our contracted physician groups and identify those contracts where current operating results or forecasts indicate probable future losses.

Anticipated future revenue is compared to anticipated costs and if the anticipated future cost exceeds the revenue, a loss contract accrual is recorded.

Anticipated future revenue is compared to anticipated costs and if the anticipated

future cost exceeds the revenue, a loss contract accrual is recorded.

In connection with the acquisition of Radiologix in November 2006, we acquired certain management service agreements which met this criterion and recorded to other non-current liabilities an $ 8.9 million loss contract accrual.

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See Note 4, Facility Acquisitions and Dispositions for further information on the purchase of HVRA.

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”).

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, 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.

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

FOREIGN CURRENCY TRANSLATION – The functional currency of our foreign subsidiaries is the local currency.

FOREIGN CURRENCY TRANSLATION – For our operations in Canada and Hungary, the functional currency of our foreign subsidiaries is the local currency.

Assets and liabilities denominated in foreign currencies are translated using the exchange rate at the balance sheet dates.

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Gains and losses related to the foreign currency portion of international transactions are included in the determination of net income.

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

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

Our unrealized gains or losses on foreign currency translation adjustments and our interest rate cap and swap agreements are included in comprehensive income (loss).

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Under these arrangements, we purchased a cap on 3 month LIBOR at 2.0 %.

We were liable for a $ 5.3 million premium to enter into the caps which accrued to current liabilities on our balance sheet and paid over the life of the 2016 Caps.

We were liable for a

$ 5.3 million premium to enter into the caps which accrued to current liabilities on our balance sheet and paid over the life of the 2016 Caps.

The gain or loss of the hedge (i.e.

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in Income on Derivative

December 31, 2020 $ 788 Other Comprehensive Income

December 31, 2021 $ —

December 31, 2020 788 Other Comprehensive Loss

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in Income on Derivative

December 31, 2021 $ —

December 31, 2020 $( 20,160 ) Other Comprehensive Loss

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Interest Rate Contracts - Ineffective Portion

For the twelve months ended Amount of loss recognized in income on derivative (current period ineffective portion) Location of loss recognized in Income on derivative (current period ineffective portion) 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)

For the twelve months ended Amount of gain (loss) recognized in income on derivative (current period ineffective portion) Location of gain (loss) recognized in Income on derivative (current period ineffective portion) 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)

December 31, 2021 $ 21,670 Other Income (Expense) $( 3,695 ) Equity and Interest Expense

December 31, 2020 $( 2,528 ) Other Income (Expense) $( 3,448 ) Equity and Interest Expense

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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Current and long term liabilities

2016 CAPS - Interest Rate Contracts $ — $ — $ — $ —

2019 SWAPS - Interest Rate Contracts $ — $ 16,319 $ — $ 16,319

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Current and long term liabilities

2016 CAPS - Interest Rate Contracts $ — $ 1,081 $ — $ 1,081

2019 SWAPS - Interest Rate Contracts $ — $ 37,989 $ — $ 37,989

The estimated fair value of these contracts was determined using Level 2 inputs.

More specifically, the fair value was determined by calculating the value of the difference between the fixed interest rate of the interest rate swaps and the

counterparty’s forward LIBOR curve.

More specifically, the fair value was determined by calculating the value of the difference between the fixed interest rate of the interest rate swaps and the counterparty’s forward LIBOR curve.

The forward LIBOR curve is readily available in the public markets or can be derived from information available in the public markets.

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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

BASIC NET (LOSS) INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC.

BASIC NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC.

COMMON STOCKHOLDERS

Weighted average number of common shares outstanding during the period 52,496,679 50,891,791 49,674,858

Basic net (loss) income per share attributable to RadNet, Inc.

Basic net income (income) per share attributable to RadNet, Inc.

common stockholders $ 0.47 $ ( 0.29 ) $ 0.30

DILUTED NET (LOSS) INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC.

DILUTED NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC.

COMMON STOCKHOLDERS

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Weighted average number of common shares used in calculating diluted net income per share 53,421,033 50,891,791 50,244,006

Diluted net (loss) income per share attributable to RadNet, Inc.

Diluted net income (loss) per share attributable to RadNet, Inc.

common stockholders $ 0.46 $ ( 0.29 ) $ 0.29

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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.

See Note 4, Facility Acquisitions and Dispositions, for further information.

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

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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.

See Note 4, Facility Acquisitions and Dispositions, for further information.

On October 1, 2018, we obtained control over the operations of NJIN through an agreement with the other equity interest holder for no cash consideration.

As such, we consolidated the financial statements of NJIN effective that date.

The economic interest of each party remained the same after consolidation.

Joint venture investment and financial information

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Equity in earnings in these joint ventures 7,945

Sale of ownership interest ( 134 )

Dissolution of GSRN ( 1,428 )

Nulogix return of capital ( 792 )

Nulogix change in control ( 1,004 )

Distribution of earnings ( 9,522 )

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Balance Sheet Data:

December 31, 2020 2019

Current assets $ 37,186 $ 27,085

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Accounting standards adopted

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

ASU 2021-01 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 expect to elect the optional expedients for eligible contract modifications as they occur through that date.

The application of these expedients is not expected to have a material impact on our consolidated financial statements.

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 .

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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

We expect to elect the optional expedients for eligible contract modifications as they occur through that date.

The application of these expedients is not expected to have a material impact on our consolidated financial statements.

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.

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

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

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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.

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.

NOTE 4 – FACILITY ACQUISITIONS AND DISPOSITIONS

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

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

Accounting standards not yet adopted

In November 2021, the FASB issued ASU 2021-10 ("ASU 2021-10"), Government Assistance (Topic 832), Disclosures by Business Entities about Government Assistance.

ASU 2021-10 requires entities to provide disclosures on material government assistance transactions for annual reporting periods.

The disclosures include information around the nature of the assistance, the related accounting policies used to account for government assistance, the effect of government assistance on the entity’s financial statements, and any significant terms and conditions of the agreements, including commitments and contingencies.

The new standard is effective for financial statements issued for annual reporting periods beginning after December 15, 2021.

As ASU 2021-10 only impacts annual financial statement footnote disclosures, the adoption will not have a material effect on our consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08 ("ASU 2021-08), Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.

ASU 2021-08 requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with Accounting Standards Codification Topic 606.

ASU 2021-08 is effective for fiscal years beginning after December 15, 2022 and early adoption is permitted.

We do not expect ASU 2021-08 to have a material effect, if any, on our consolidated financial statements.

NOTE 4 – ACQUISITIONS, DISPOSITIONS AND BUSINESS VENTURE ACTIVITY

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, California, New Jersey, and New York City 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 regulatory approval is obtained, but will be assessed for impairment annually, or more frequently if indicators of impairment become present.

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 VIE entities, 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.

Joint venture formations

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.

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.

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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.

NOTE 5 – GOODWILL AND OTHER INTANGIBLE ASSETS

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Balance as of December 31, 2019 $ 441,973

Adjustments to our preliminary allocation of the purchase price of Medical Arts Radiological Group, P.C.

Goodwill acquired through the acquisition of certain assets of Dignity Health 1

Goodwill acquired through the acquisition of certain assets of West Valley Imaging Center, LLC 2,490

Goodwill disposed through sale of assets ( 123 )

Goodwill acquired by Lenox Hill Radiology through the membership purchase of HVRA 3,125

Goodwill acquired through the acquisition of certain assets of Kern Radiology, Inc.

Goodwill acquired through the acquisition of certain assets of Zilkha Radiology, Inc.

Goodwill acquired through the acquisition of certain assets of Ramic Mahwah, LLC 231

Goodwill acquired through the acquisition of GSRN 2,021

Goodwill acquired through the acquisition of Nulogix 1,337

Goodwill transferred from assets held for sale 992

Goodwill from acquisitions 30,906

Balance as of December 31, 2020 $ 472,879

Goodwill acquired through the acquisition of Olney Open MRI, LLC 601

Goodwill acquired through the acquisition of MRI at Woodbridge, LLC 1,833

Goodwill acquired through the acquisition of DeepHealth, Inc.

Goodwill acquired through the acquisition of AZ-Tech Radiology & Open MRI, LLC 2,882

Goodwill acquired through the acquisition of ZP Ozone Park, LLC 828

Goodwill acquired through the acquisition of ZP Elmhurst LLC 1,463

Goodwill from acquisitions 40,864

Other Adjustments 77

Balance as of December 31, 2021 513,820

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Accounts payable and accrued expenses were comprised of the following (in thousands):

December 31, 2020 2019

Accounts payable $ 86,461 $ 70,071

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SunTrust Term Loan Agreement collateralized by NJIN's tangible and intangible assets 46,500 51,375

Equipment notes payable at interest rates ranging from 4.4 % to 5.6 %, due through 2020, collateralized by medical equipment

Total debt obligations 754,662 652,704

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2022 $ 13,250

Thereafter 685,125

Total notes payable obligations $ 767,875

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 debt for a combined total of $ 652.7 million (net of unamortized discounts of $ 9.7 million) in thousands:

Face Value Discount Total Carrying

First Lien Term Loans $ 611,028 $ ( 9,699 ) $ 601,329

SunTrust Term Loan Agreement 51,375 — 51,375

Total Term Loans $ 662,403 $ ( 9,699 ) $ 652,704

We had no outstanding balance under our $ 195.0 million Barclays Revolving Credit Facility at December 31, 2021 and had reserved an additional $ 7.8 million for certain letters of credit.

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At December 31, 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 (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.

Total costs of the Restated Credit Agreement amounted to approximately $ 14.9 million segregated as follows:

$ 8.8 million capitalized to discount and deferred finance cost, $ 4.5 million expensed to debt restructuring costs, $ 1.5 million charged to loss on early extinguishment of debt and $ 0.1 million written off to interest expense.

Amounts capitalized will be amortized over the remaining terms of the respective credit facilities under the Restated Credit Agreement.

Senior Credit Facilities:

Barclays Credit Facilities

At December 31, 2020, our Barclays credit facilities were comprised of one tranche of term loans (“First Lien Term Loans”) and a revolving credit facility of $ 195.0 million (the “Barclays Revolving Credit Facility”), both of which are provided pursuant to the Amended and Restated First Lien Credit and Guaranty Agreement dated July 1, 2016, among RadNet, Barclays Bank plc, as administrative agent, and the lenders identified therein (as amended, the "First Lien Credit Agreement").

Deferred financing costs at December 31, 2020, net of accumulated amortization, was $ 1.8 million and is specifically related to our Barclays Revolving Credit Facility.

Our First Lien Term Loans bear interest at either an Adjusted Eurodollar Rate or a Base Rate (each as defined in the First Lien Credit Agreement) plus an applicable margin according to the following schedule:

First Lien Leverage Ratio Eurodollar Rate Spread Base Rate Spread

> 5.50x 4.50 % 3.50 %

> 4.00x but ≤ 5.50x 3.75 % 2.75 %

>3.50x but ≤ 4.00x 3.50 % 2.50 %

≤ 3.50x 3.25 % 2.25 %

At December 31, 2020 the effective Adjusted Eurodollar Rate and the Base Rate for the First Lien Term Loans was 1.00 % and 3.25 %, respectively and the applicable margin for Adjusted Eurodollar Rate and Base Rate borrowings was 3.75 % and 2.75 %, respectively.

The First Lien Credit Agreement provides for quarterly payments of principal under the First Lien Term Loans in the amount of approximately $ 9.7 million.

The First Lien Term Loans will mature on July 1, 2023 unless otherwise accelerated under the terms of the First Lien Credit Agreement.

First Lien Term Loans:

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, with a reduction to 3.0 % per annum upon delivery by us of financial statements 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 December 31, 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.

The First Lien Term Loan will mature on April 23, 2028 unless otherwise accelerated under the terms of the Restated Credit Agreement.

SunTrust Credit Facilities:

At December 31, 2020, 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 (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 Rate or a Base Rate (each as defined in the SunTrust Credit Agreement), plus an applicable margin according to the following schedule:

At December 31, 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:

Pricing Level Leverage Ratio Applicable Margin for Eurodollar Loans Applicable Margin for Base Rate Loans Applicable Margin for Letter of Credit Fees Applicable Percentage for Commitment Fee

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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 0.22 % plus an applicable margin and fees based on Pricing Level III described above.

The scheduled amortization of the SunTrust Term Loan began December 31, 2018 with quarterly payments of $ 750,000 , representing annual amortization equal to 5.0 % of the original principal amount of the SunTrust Term Loan.

At scheduled intervals, the quarterly amortization increases by $ 375,000 , with the remaining balance to be paid at maturity.

The loans and other obligations outstanding under the SunTrust Credit Agreement currently bear interest at a three month LIBOR election at 0.13 % 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.

At scheduled intervals, the quarterly amortization increases by $ 0.4 million, with the remaining balance to be paid at maturity.

The SunTrust Term Loan will mature on August 31, 2023 unless otherwise accelerated under the terms of the SunTrust Credit Agreement.

Revolving Credit Facilities:

Barclays Revolving Credit Facility:

Revolving loans borrowed under the Barclays Revolving Credit Facility bear interest at either an Adjusted Eurodollar Rate or a Base Rate (in each case, as more fully defined in the First Lien Credit Agreement) plus an applicable margin.

The applicable margin for borrowing under the Barclays Revolving Credit Facility varies based on our leverage ratio in accordance with the same schedule set forth above for First Lien Term Loans.

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 $ 2.1 million at December 31, 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:

First Lien Leverage Ratio Eurodollar Rate Spread Base Rate Spread

> 3.00 x but ≤ 3.50 x

As of December 31, 2021, the effective interest rate payable on revolving loans under the Barclays Revolving Credit Facility was 5.0 %.

For letters of credit issued under the Barclays Revolving Credit Facility, letter of credit fees accrue at the applicable margin for Adjusted Eurodollar Rate revolving loans, currently 3.75 %, and fronting fees accrue at 0.25 % per annum, in each case on the average aggregate daily maximum amount available to be drawn under all letters of credit issued under the First Lien Credit Agreement.

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

The Barclays Revolving Credit Facility will terminate on the earlier to occur of July 1, 2023 or termination due to specific events of default pursuant to the First Lien Credit Agreement.

Our Barclays Revolving Credit Facility was amended in August 2020 to add $ 57.5 million of revolving commitments, which additional commitments increased the maximum borrowing capacity to $ 195.0 million.

Total issue costs added in relation to this amendment amounted to approximately $ 0.7 million and was capitalized as deferred financing costs and will be amortized over the remaining term of the First Lien Credit Agreement.

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.

The Barclays Revolving Credit Facility will terminate on April 23, 2026 unless otherwise accelerated in accordance with the terms of the Restated Credit Agreement.

SunTrust Revolving Credit Facility:

The SunTrust Credit Agreement established a $ 30.0 million revolving credit facility available to NJIN for funding requirements.

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).

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 December 31, 2021, NJIN had no borrowings under the SunTrust Revolving Credit Facility.

Recent Amendments to Credit Facilities

Recent Amendments to prior Credit Facilities

Barclays Credit Facilities:

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8, Consent and Incremental Joinder Agreement to Credit and Guaranty Agreement (the "Eighth Amendment").

The Eighth Amendment amends the First Lien Credit Agreement to add $ 57.5 million of revolving commitments to the Barclays Revolving Credit Facility increasing the maximum borrowing capacity under the Barclays Revolving Credit Facility to $ 195.0 million while leaving the maturity date of July 1, 2023 unchanged.

Total issue costs added in relation to the Eighth Amendment amounted to approximately $ 0.7 million and was capitalized as deferred financing costs and will be amortized over the remaining term of the First Lien Credit Agreement.

On April 18, 2019 we entered into the following two amendments to the First Lien Credit Agreement:

The Eighth Amendment amended the prior first lien credit agreement to add $ 57.5 million of revolving commitments to the prior Barclays revolving credit facility increasing the maximum borrowing capacity under the prior Barclays revolving credit facility to $ 195.0 million while leaving the maturity date of July 1, 2023 unchanged.

On April 18, 2019 we entered into the following two amendments to the prior first lien credit agreement:

(i) Amendment No.

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7 to Credit and Guaranty Agreement (the “Seventh Amendment”).

Among other things, the Sixth Amendment amended the First Lien Credit Agreement to issue $ 100.0 million in incremental First Lien Term Loans and to add an additional $ 20.0 million of revolving commitments to the Barclay's Revolving Credit Facility.

The Seventh Amendment amended the First Lien Credit Agreement to extend the maturity date of the Barclays Revolving Credit Facility by an additional two years to July 1, 2023, unless sooner terminated in accordance with the terms of the First Lien Credit Agreement.

Total issue costs added in relation to the Sixth and Seventh amendments in 2019 amounted to approximately $ 4.4 million.

Of this amount, $ 2.1 million was identified and capitalized as discount on debt, $ 0.7 million was capitalized as deferred financing costs, and $ 1.6 million was expensed.

Amounts capitalized will be amortized over the remaining term of the First Lien Credit Agreement.

Among other things, the Sixth Amendment amended the prior first lien credit agreement to issue $ 100.0 million in incremental first lien term loans and to add an additional $ 20.0 million of revolving commitments to the prior Barclays revolving credit facility.

The Seventh Amendment amended the prior first lien credit agreement to extend the maturity date of the prior Barclays revolving credit facility by an additional two years to July 1, 2023, unless sooner terminated in accordance with the terms of the prior first lien credit agreement.

The prior first lien credit agreement was amended and restated by the Restated Credit Agreement described above, and the prior first lien term loans and prior Barclays revolving credit facility under the prior first lien credit agreement were refinanced and replaced by the First Lien Term Loans and the Barclays Revolving Credit Facility provided under the Restated Credit Agreement described above.

Paycheck Protection Program

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NOTE 9 – LEASES

Adoption of Standard

In February 2016, the FASB issued a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet for all leases with terms in excess of twelve months.

Sufficient disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases.

The standard was effective for us beginning January 1, 2019.

We have elected the optional transition method to apply the standard as of the effective date and therefore, we will not apply the standard to the comparative periods presented in the consolidated financial statements.

We also elected the transition package of three practical expedients permitted within the standard, which eliminates the requirements to reassess prior conclusions about lease identification, lease classification, and initial direct costs.

The adoption of the standard had a material impact on our consolidated balance sheets, but did not have material impact on our consolidated income statements or cash flows.

Lease Liability

We have operating leases for medical facilities, administrative offices, warehouse space and major medical equipment.

We lease the premises at which these facilities are located and do not have options to purchase the facilities we rent.

Our most common initial term varies in length from 5 to 15 years.

Including renewal options negotiated with the landlord, we can have a total span of 10 to 35 years at the facilities we lease.

Our material lease contracts are for facilities and advanced radiology equipment.

In regards to our imaging, administrative and warehouse facilities, the most common initial lease term varies in length from 5 to 15 years.

Including renewal options negotiated with the landlord, we can have a total span of 10 to 35 years at these locations, and we do not enter into purchase options on the underlying property.

We also lease smaller satellite X-Ray locations on mutually renewable terms, usually lasting one year.

Additionally, we have operating and finance leases for certain medical and office equipment, with lease terms generally lasting from 5 to 8 years.

Leases for advanced radiology and office equipment have terms generally lasting from 5 to 8 years.

All leases are classified as operating or finance for accounting purposes, depending on the terms of the agreement.

Our Incremental Borrowing Rate ("IBR") used to discount the stream of lease payments is closely related to the interest rates charged on our collateralized debt obligations and our IBR is adjusted when those rates experience a substantial change.

During 2021, we satisfied all liabilities classified as finance leases, and only operating leases remain.

The components of lease expense were as follows:

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Operating lease cost (1)

$ 121,578 $ 99,323

Finance lease cost:

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Total finance lease cost $ 3,114 $ 3,332

1) Operating lease cost above for the year ended December 31, 2021 includes $ 12.6 million in lease abandonment charges.

Please see our discussion in the Leases section of Note 2, Summary of Significant Accounting Policies

Supplemental cash flow information related to leases was as follows:

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Operating cash flows from operating leases (1)

$ 110,288 $ 89,821

Operating cash flows from financing leases 46 210

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Operating leases 186,695 106,099

106,099 482,399

Financing leases — 24

(1) Amounts for the twelve months ended December 31, 2019 include the transition adjustment for the adoption of Topic 842.

As previously disclosed in our 2018 Annual Report on Form 10-K and under the previous lease accounting, rental expense for the year ended December 31, 2018 was $ 83.0 million.

1) On December 31, 2021 we reduced our liability and eliminated the related right-of-use assets for future lease options at facilities that we elected to abandon.

The amount of liability and right-of-use asset reduction amounted to approximately $ 3.3 million.

Supplemental balance sheet information related to leases was as follows:

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Equipment, net $ 4,697 $ 7,764

Current portion of finance lease $ 2,578 $ 3,283

Current portion of finance lease liability $ — $ 2,578

Finance lease liabilities — 743

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(In thousands)

Operating Financing

Year Ending December 31, Leases Leases

2021 $ 97,307 $ 2,654

2022 91,479 719

2023 83,648 14

2024 69,686 13

Year Ending December 31, Leases

2022 $ 103,831

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State franchise tax, net of federal benefit 4,198 779 3,891

Other non deductible expenses 301 674 471

Non deductible expenses 198 301 674

Noncontrolling interests in partnerships ( 4,114 ) ( 2,748 ) ( 1,824 )

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PPP Loan — ( 850 ) —

Gain on change in control — — ( 8,303 )

Deferred true-ups and other 5,013 4,839 ( 761 )

Uncertain tax provisions ( 321 ) 1,036 ( 217 )

Other reconciling items 2 21 ( 171 )

Income tax expense $ 14,560 $ 895 $ 6,229

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Net Deferred Tax Asset $ 14,853 $ 34,687

As of December 31, 2020, the Company had federal net operating loss carryforwards of approximately $ 251.6 million, which comprise of definite and indefinite net operating losses.

We had federal net operating loss carryforwards of approximately $ 186.2 million, which expire at various intervals from the years 2023 to 2037, and had carryforwards of $ 65.4 million of net operating losses which do not expire.

Federal net operating losses generated following December 31, 2017 carryover indefinitely and may generally be used to offset up to 80% of future taxable net income.

As of December 31, 2021, the we had federal net operating loss carryforwards of approximately $ 224.0 million, of which $ 152.1 million, which expire at various intervals from the years 2022 to 2037, and $ 71.9 million of net operating losses which do not expire.

Federal net operating losses generated following December 31, 2017 carryover indefinitely and may be used to offset up to 80% of future taxable net income.

The Company also had state net operating loss carryforwards of approximately $ 194.3 million, which expire at various intervals from the years 2021 through 2039.

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are subject to limitations related to their utilization under Section 382 of the Internal Revenue Code.

Future ownership changes as determined under Section 382 of the Internal Revenue Code could further limit the utilization of net operating loss carryforwards.

We considered all evidence available when determining whether deferred tax assets are more likely-than-not to be realized, including projected future taxable income, scheduled reversals of deferred tax liabilities, prudent tax planning strategies, and recent financial operations.

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We are currently under audit in the state of California for the tax years of 2016 and 2017.

It is too early to assess the impact such audits may have on the financial position of the Company, however we do not anticipate the results of any open examinations would result in a material change to our financial position.

At December 31, 2020, the Company has unrecognized tax benefits of $ 5.5 million of which $ 4.4 million will affect the effective tax rate if recognized.

A reconciliation of the total gross amounts of unrecognized tax benefits for the years ended are as follows (in thousands):

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Balance at end of year $ 5,088 $ 5,484 $ 4,320

At December 31, 2021, the Company has unrecognized tax benefits of $ 5.1 million of which $ 4.1 million will affect the effective tax rate if recognized.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense.

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As of December 31, 2021, accrued interest and penalties amounted to approximately $ 0.4 million.

We do not anticipate the uncertain tax position to change materially within the next 12 months.

On March 27, 2020, the United States enacted the Coronavirus Aid, Relief and Economic Security Act (CARES Act).

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In June 29, 2020, the state of California passed Assembly Bill 85 which suspends the California net operating loss deduction for the 2020-2022 tax years and the R&D credit usage for the same period (for credit usages in excess of $5M).

These suspensions were considered in preparation of the 2020 financial statements.

These suspensions were considered in preparation of the 2021 and 2020 financial statements.

NOTE 11 – STOCK-BASED COMPENSATION

Stock Incentive Plans

We have one long-term equity incentive plan which we refer to as the 2006 Equity Incentive Plan, 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 one long-term equity incentive plan, the RadNet, Inc.

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 most recently approved by our stockholders at our annual stockholders meeting on June 10, 2021.

We have reserved for issuance under the 2017 Restated Plan 16,500,000 shares of common stock.

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Balance, December 31, 2020 527,899 $ 9.34

Granted 48,948 20.43

Exercised ( 53,960 ) 9.04

Balance, December 31, 2021 473,939 9.38 5.29 $ 9,826,090

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Aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between our closing stock price on December 31, 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 December 31, 2021.

As of December 31, 2020, total unrecognized stock-based compensation expense related to non-vested employee awards was $ 0.6 million which is expected to be recognized over a weighted average period of approximately 1.50 years.

As of December 31, 2021, total unrecognized stock-based compensation expense related to non-vested employee awards was $ 0.2 million which is expected to be recognized over a weighted average period of approximately 1 year.

DeepHealth Options

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Balance, December 31, 2020 400,539

Granted, June 1, 2020 412,434 $ —

Exercised ( 79,879 ) —

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Vested ( 554,765 ) $ 18.00

Forfeited ( 4,365 ) $ 18.60

RSA's unvested at December 31, 2021 456,075 0.87 $ 20.06

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

During the twelve months ended December 31, 2020 we issued 66,078 shares relating to these awards, approximately amounting to $ 1.0 million of compensation expense.

In summary, of the 14,000,000 shares of common stock reserved for issuance under the Restated Plan, at December 31, 2020, we had issued 15,424,316 total shares between options, RSA’s and other stock awards.

With options cancelled and RSA’s forfeited amounting to 3,281,040 and 61,703 shares, respectively, there remain 1,918,427 shares available under the Restated Plan for future issuance.

During the twelve months ended December 31, 2021 we issued 415,968 shares relating to these awards, approximately amounting to $ 10.1 million of compensation expense, mainly pandemic related employee bonuses.

In summary, of the 16,500,000 shares of common stock reserved for issuance under the Restated Plan at December 31, 2021, there remain 3,236,903 shares available for future awards.

NOTE 12 – 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 is $ 95.0 million, with Aidence Holding B.V.

at $ 50.0 million, and Quantib B.V.

at $ 45.0 million .

Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data