What changed in this filing

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Item 1. Financial Statements

2022-05-10 compared with 2021-11-09 · 262 added, 276 removed, 470 unchanged (53% of the section changed)

3 unchanged sentences

(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

September 30,

2022 December 31,

21 unchanged sentences

Deferred revenue 6,930 10,701

Current finance lease liability — 2,578

Current operating lease liability 64,906 65,452

2 unchanged sentences

LONG-TERM LIABILITIES

Long-term finance lease liability — 743

Long-term operating lease liability 590,665 577,675

3 unchanged sentences

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

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

56,197,826 and 53,548,227 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

Additional paid-in-capital 409,863 342,592

10 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Service fee revenue $ 303,276 $ 279,577

8 unchanged sentences

Total operating expenses 343,486 303,914

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

(LOSS) INCOME FROM OPERATIONS ( 1,719 ) 17,653

OTHER INCOME AND EXPENSES

2 unchanged sentences

Non-cash change in fair value of interest rate hedge ( 20,819 ) ( 11,245 )

Debt restructuring and extinguishment expenses — — 6,044 —

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

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

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

(Provision for) benefit from income taxes ( 5,284 ) ( 3,825 ) ( 12,534 ) 5,029

NET INCOME (LOSS) 21,144 10,225 43,005 ( 12,734 )

Other expenses 165 206

Total other income ( 11,578 ) ( 498 )

INCOME BEFORE INCOME TAXES 9,859 18,151

Provision for income taxes ( 1,496 ) ( 4,376 )

NET INCOME 8,363 13,775

Net income attributable to noncontrolling interests 5,350 4,317

NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC.

NET INCOME ATTRIBUTABLE TO RADNET, INC.

COMMON STOCKHOLDERS $ 3,013 $ 9,458

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

BASIC NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC.

COMMON STOCKHOLDERS $ 0.05 $ 0.18

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

DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC.

COMMON STOCKHOLDERS $ 0.05 $ 0.18

4 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(IN THOUSANDS)

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

2021 2020 2021 2020

NET INCOME (LOSS) $ 21,144 $ 10,225 $ 43,005 $ ( 12,734 )

Three Months Ended March 31,

NET INCOME $ 8,363 $ 13,775

Foreign currency translation adjustments ( 1,264 ) ( 12 )

Change in fair value of cash flow hedge, net of taxes 2,870 195 14,149 ( 18,764 )

Change in fair value of cash flow hedge from prior periods reclassified to earnings, net of taxes 923 925

COMPREHENSIVE INCOME (LOSS) 24,923 11,400 59,887 ( 29,631 )

COMPREHENSIVE INCOME 8,022 14,688

Less comprehensive income attributable to noncontrolling interests 5,350 4,317

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO

COMPREHENSIVE INCOME ATTRIBUTABLE TO

COMMON STOCKHOLDERS $ 2,672 $ 10,371

3 unchanged sentences

(IN THOUSANDS EXCEPT SHARE DATA)

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

The following table summarizes changes in the Company’s consolidated stockholders' equity, including noncontrolling interest, during the three months ended March 31, 2022 and March 31, 2021.

Common Stock Additional Paid-In

7 unchanged sentences

Shares Amount

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

BALANCE - JANUARY 1, 2022 53,548,227 $ 5 $ 342,592 $ ( 20,421 ) $ ( 93,272 ) $ 228,904 $ 117,253 $ 346,157

Issuance of common stock under the equity compensation plan 530,188 — — — — — — —

1 unchanged sentence

Stock-based compensation expense — — 10,801 — — 10,801 — 10,801

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

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

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

Issuance of common stock in connection with acquisitions 2,106,292 — 56,470 — — 56,470 — 56,470

Change in cumulative foreign currency translation adjustment — — — ( 1,264 ) — ( 1,264 ) — ( 1,264 )

2 unchanged sentences

Net income — — — — 3,013 3,013 5,350 8,363

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

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

BALANCE-MARCH 31, 2022 56,197,826 $ 5 $ 409,863 $ ( 20,761 ) $ ( 90,260 ) $ 298,847 $ 122,603 $ 421,450

BALANCE - JANUARY 1, 2021 51,640,537 $ 5 $ 307,788 $ ( 24,051 ) $ ( 117,999 ) $ 165,743 $ 92,560 $ 258,303

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

2 unchanged sentences

Stock-based compensation expense — — 8,248 — — 8,248 — 8,248

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

Purchase of noncontorlling interests — — ( 4 ) — — ( 4 ) — ( 4 )

Contributions from noncontrolling partner — — — — — — 123 123

Change in cumulative foreign currency translation adjustment — — — ( 12 ) — ( 12 ) — ( 12 )

Change in fair value cash flow hedge, net of taxes — — — 195 — 195 — 195

Change in fair value of cash flow hedge from prior periods reclassified to earnings — — — 925 — 925 — 925

Other — — — — ( 1 ) ( 1 ) — ( 1 )

Net income — — — — 9,458 9,458 4,317 13,775

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

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

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(IN THOUSANDS EXCEPT SHARE DATA)

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

Common Stock Additional Paid-In

Capital Accumulated Other

Comprehensive

Loss Accumulated

Deficit Total

Radnet, Inc.'s

Equity Noncontrolling

Interests Total

Shares Amount

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

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

Issuance of common stock under the equity compensation plan 1,127,996 — — — — — — —

Issuance of common stock under the DeepHealth equity compensation plan 466,490 — — — — — — —

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

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

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

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

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

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

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

Change in fair value of cash flow hedge from prior periods reclassified to earnings, net of taxes — — — 2,765 — 2,765 — 2,765

Other — — — 1 ( 1 ) — — —

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

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

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

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

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

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

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

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

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

Change in fair value cash flow hedge, net of taxes — — — ( 18,764 ) — ( 18,764 ) — ( 18,764 )

Change in fair value of cash flow hedge from prior periods reclassified to earnings, net of taxes 1,861 1,861 — 1,861

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

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

Sale of noncontrolling interests, net of taxes

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

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

2 unchanged sentences

(IN THOUSANDS)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss) $ 43,005 $ ( 12,734 )

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

Net income $ 8,363 $ 13,775

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

Depreciation and amortization 27,118 22,656

2 unchanged sentences

Amortization of deferred financing costs and loan discount 648 1,147

(Gain) loss on sale and disposal of equipment and other ( 279 ) 543

Loss on extinguishment of debt 1,496 —

Loss (gain) on sale and disposal of equipment and other 1,128 ( 1,307 )

Amortization of cash flow hedge, net of taxes 923 925

10 unchanged sentences

Accounts payable, accrued expenses and other 7,031 17,157

Net cash provided by operating activities 100,295 170,343

Net cash (used in) provided by operating activities 901 28,084

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of imaging facilities and other acquisitions ( 70,108 ) ( 10,125 )

Purchase of imaging centers and other acquisitions ( 25,123 ) ( 57,075 )

Purchase of property and equipment ( 36,558 ) ( 30,424 )

Proceeds from sale of equipment 117 151

Equity contributions in existing and purchase of interest in joint ventures ( 1,441 ) ( 1,631 )

Net cash used in investing activities ( 61,564 ) ( 87,348 )

2 unchanged sentences

Payments on term loan debt ( 3,313 ) ( 10,824 )

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

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

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

Distributions paid to noncontrolling interests — ( 601 )

Proceeds from paycheck protection program loans — 4,023

Proceeds from revolving credit facility — 87,100

Payments on revolving credit facility — ( 87,100 )

Proceeds from issuance of common stock upon exercise of options 26 —

Net cash provided by (used in) financing activities 108,478 ( 33,495 )

Net cash used in financing activities ( 3,313 ) ( 11,651 )

EFFECT OF EXCHANGE RATE CHANGES ON CASH 83 ( 12 )

NET INCREASE IN CASH AND CASH EQUIVALENTS 49,235 48,574

NET DECREASE IN CASH AND CASH EQUIVALENTS ( 63,893 ) ( 70,927 )

CASH AND CASH EQUIVALENTS, beginning of period 134,606 102,018

7 unchanged sentences

Supplemental Schedule of Non-Cash Investing and Financing Activities

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

We acquired equipment and certain leasehold improvements for approximately $ 42.2 million and $ 28.8 million during the three months ended March 31, 2022 and 2021, respectively, which were not paid for as of March 31, 2022 and 2021 , respectively.

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

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

On January 20, 2022, we issued 1,141,234 shares of our common stock to complete our purchase of Aidence Holding B.V..The shares were ascribed a value of $ 30.6 million.

On January 20, 2022, we issued 965,058 shares to complete our purchase of Quantib B.V..

The shares were ascribed a value of $ 25.9 million.

1 unchanged sentence

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.

by issuing 823,615 shares of our common stock to purchase all of Deep Health's shares and share equivalents.

The shares were ascribed a value of $ 13.9 million.

AND SUBSIDIARIES

1 unchanged sentence

NOTE 1 – NATURE OF BUSINESS AND BASIS OF PRESENTATION

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

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

We are a national provider of freestanding, fixed-site outpatient diagnostic imaging services in the United States.

At March 31, 2022, we operated directly or indirectly through joint ventures with hospitals, 351 centers located in Arizona, California, Delaware, Florida, Maryland, New Jersey, and New York.

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

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The vast majority of our centers offer multi-modality imaging services.

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

In addition to our imaging services, we design and develop software applications, artificial intelligence tools and other computerized systems for the diagnostic imaging industry.

Our operations comprise a single segment for financial reporting purposes.

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 center operations, we have certain other subsidiaries that develop Artificial Intelligence ("AI") products and solutions that are designed to enhance interpretation of radiographic images.

Our operations comprise two segments for financial reporting purposes for this reporting period, Imaging Centers and Artificial Intelligence.

For further financial information about these segments, see Note 5, Segment Reporting.

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 a member of our Board of Directors, and John V.

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

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.

These VIEs are collectively referred to as the Group.

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").

RadNet provides non-medical, technical and administrative services to the Group for which it receives a management fee, pursuant to the related management agreements.

1 unchanged sentence

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

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

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

RadNet recognized $ 556.4 million

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

The 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 $ 45.7 million and $ 46.1 million of revenue, net of management services fees to RadNet, for the three months ended March 31, 2022 and 2021, respectively and $ 45.7 million and $ 46.1 million of operating expenses for the three months ended March 31, 2022 and 2021, respectively.

RadNet recognized $ 191.0 million and $ 179.0 million of total billed net service fee revenue for the three months ended March 31, 2022, and 2021, respectively, for management services provided to the Group relating primarily to the technical portion of billed revenue.

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

All intercompany balances and transactions have been eliminated in consolidation.

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

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

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

In our condensed consolidated balance sheets at March 31, 2022 and December 31, 2021, we have included approximately $ 100.4 million and $ 89.2 million, respectively, of accounts receivable and approximately $ 16.9 million and $ 14.4 million of accounts payable and accrued liabilities related to the Group, respectively.

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 employ.

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 secure data transmission services of medical information.

1 unchanged sentence

ScriptSender, LLC is dependent on RadNet 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 up to 40 years) 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.

We have continued to finance ScriptSender during it's development phase and our maximum exposure to loss is $ 3.9 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 $ 0.4 million and $ 0.6 million for the three months ended March 31, 2022, and March 31, 2021, respectively.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and, therefore, do not include all information and footnotes necessary for conformity with U.S.

generally accepted accounting principles for complete financial statements;

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

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

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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 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 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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Estimates of contractual allowances under managed care and commercial insurance plans are based upon the payment terms specified in the related contractual agreements.

Revenues related to uninsured patients and copayment and deductible amounts for patients who have health care coverage may have discounts applied (uninsured discounts and contractual discounts).

Revenues related to uninsured patients and copayment and deductible amounts for patients who have health care coverage may have discounts applied (uninsured discounts and contractual

We also record estimated implicit price concessions (based primarily on historical collection experience) related to uninsured accounts to record self-pay revenues at the estimated amounts we expect to collect.

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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.

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

Our total service revenues during the three months ended March 31, 2022 and 2021 are presented in the table below based on an allocation of the estimated transaction price with the patient between the primary patient classification of insurance coverage (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Commercial insurance $ 188,465 $ 182,096

4 unchanged sentences

Management fee revenue 5,508 5,219

Teleradiology and Software revenue 2,564 2,349 7,611 8,319

Software revenue 3,399 2,426

AI revenue 599 —

Other 5,647 2,622

4 unchanged sentences

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

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

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

Beginning in the second quarter of 2020 and through the three months ended March 31, 2022, 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.

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

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

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

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

• $ 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, with $ 6.2 million of it received during the three months ended March 31, 2021.

No Provider Relief Funding was received for the three months ended March 31, 2022.

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.

Through the three months ended March 31, 2022, $ 36.0 million of the accelerated Medicare payments has been applied to revenue.

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

The Provider Relief Funding is displayed as such on our condensed 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, we had in total $ 16.3 million of deferred Social Security taxes and at September 30, 2021, we had $ 8.6 million.

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

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

The Provider Relief Funding from 2021 is displayed as such on our condensed 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 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 March 31, 2022, 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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Proceeds on notes receivables are reflected as operating activities on our statement of cash flows and on our balance sheet as prepaid expenses and other current assets for the current portion and deposits and other for the long term portion.

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

Amounts remaining to be collected on these agreement were $ 17.0 million and $ 17.7 million at March 31, 2022 and December 31, 2021, respectively.

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

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

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

Deferred financing costs, net of accumulated amortization, were $ 2.0 million and $ 2.1 million, as of March 31, 2022 and December 31, 2021, respectively and related to our Barclays Revolving Credit Facility.

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

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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 at September 30, 2021 totaled $ 502.7 million.

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

GOODWILL AND INDEFINITE LIVED INTANGIBLES - Goodwill at March 31, 2022 totaled $ 570.2 million.

Indefinite lived intangible assets at March 31, 2022 were $ 13.2 million.

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

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We tested goodwill and indefinite lived intangibles for impairment on October 1, 2021, noting no impairment.

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

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

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

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

Activity in goodwill for the three months ended March 31, 2022 is provided below (in thousands):

Balance as of December 31, 2021 $ 513,820

Goodwill acquired through acquisitions 29,754

Goodwill attributable to formation of Simi Valley Imaging Group LLC 105

Other Adjustments ( 28 )

Balance as of September 30, 2021 $ 502,710

Goodwill from acquisitions 57,215

Valuation adjustment ( 296 )

Currency translation ( 551 )

Balance as of March 31, 2022 $ 570,188

Goodwill balances at March 31, 2022 reflect additional goodwill arising from deferred tax liabilities recorded on our acquisitions of Aidence Holding B.V.

and Quantib B.V.

of $ 7.3 million.

See Note 4, Business Combinations and Related Activity for more information.

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

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

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

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

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

(ii) effects of state income taxes;

and (iii) excess tax benefits attributable to share-based compensation.

We recorded income tax expense of $ 1.5 million, or an effective tax rate of 15.2 %, for the three months ended March 31, 2022 compared to income tax expense of $ 4.4 million, or an effective tax rate of 24.1 % for the three months ended March 31, 2021.

The income tax rates for the three months ended March 31, 2022 diverge from the federal statutory rate due to (i) noncontrolling interests due to the controlled partnerships;

(ii) effects of state income taxes (iii) effects of foreign income taxes;

and (iv) excess tax benefits attributable to share-based compensation.

We believe no significant changes in the unrecognized tax benefits will occur within the next 12 months.

On March 27, 2020, the President of the United States signed into law the CARES Act, which among other things, includes certain income tax provisions for individuals and corporations;

however, these benefits do not impact the Company’s current tax provision.

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

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

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

No events have occurred such as fire, flood, or other acts which have impaired the integrity of our ROU assets as of March 31, 2022.

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

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We have reserved 16,500,000 shares of common stock for issuance under the Restated Plan which can be issued in the form of incentive and/or nonstatutory stock options, restricted and/or unrestricted stock, stock units, and stock appreciation rights.

Terms and conditions of awards can be direct grants or based on achieving a performance metric.

We evaluate performance-based awards to determine if it is probable that the vesting conditions will be met.

We also consider probability of achievement of performance conditions when determining expense recognition.

For the awards where vesting is probable, equity-based compensation is recognized over the related vesting period.

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

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

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

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

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

For the three months ended September 30, 2021

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

For the three months ended March 31, 2022

Account December 31, 2021 Balance Amount of comprehensive loss recognized on derivative net of taxes Amount of loss reclassified out of accumulated OCI into income (prior period effective portion), net of taxes March 31, 2022 Balance Location

Accumulated Other Comprehensive Loss, net of taxes $ ( 18,886 ) $ — $ 923 $ ( 17,963 ) Equity

For the nine months ended September 30, 2021

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

For the twelve months ended December 31, 2021

Accumulated Other Comprehensive Loss, net of taxes $ ( 22,581 ) $ — $ 3,695 $ ( 18,886 ) Equity

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

For the three months ended September 30, 2021

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

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

For the nine months ended September 30, 2021

For the three months ended March 31, 2022

Interest rate contracts $ 20,819 Other income (expense) $ ( 923 ) Interest Expense

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

See Fair Value Measurements section below for the fair value of the 2019 Swaps at March 31, 2022.

CONTINGENT CONSIDERATION - On January 20, 2022, we completed our acquisition of all the equity interests of Quantib B.V.

("Quantib") an artificial intelligence enterprise centered on prostate cancer screening, in a combination stock and cash purchase.

As part of the purchase agreement, we will issue 18 months after acquisition, 113,303 shares with an initial fair value at the date of close of $ 3.0 million subject to adjustment for any indemnification claims and will be marked to market in subsequent periods.

See Note 4, Business Combinations and Related Activity for more information on the Quantib acquisition.

A tabular presentation of the effect of contingent consideration on our condensed consolidated balance sheet is as follows (amounts in thousands):

For the three months ended March 31, 2022

Account January 20, 2022 Balance Amount of other non operating income recognized on contingent consideration March 31, 2022 Balance Location

Accrued Expenses $ — $ ( 501 ) $ 501 Liabilities and Non Operating Income

See Fair Value Measurements section below for the fair value of contingent consideration at March 31, 2022.

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

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

As of September 30, 2021

As of March 31, 2022

Level 1 Level 2 Level 3 Total

Current and long term liabilities

Current and long term assets

2019 Swaps - Interest Rate Contracts $ — $ 4,500 $ — $ 4,500

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

Contingent Consideration:

The table below summarize the estimated fair values of certain of our shares of common stock issued in our Quantib B.V.

acquisition on January 20, 2022, and held back for indemnification purposes that are subject to fair value measurements and the classification of these liabilities on our condensed consolidated balance sheets, as follows (in thousands):

As of March 31, 2022

Level 1 Level 2 Level 3 Total

Long term liabilities

113,303 shares of RadNet common stock

$ — $ — $ 2,535 $ 2,535

The estimated fair value of these contracts was determined using Level 3 inputs.

More specifically, the fair value was determined by calculating the value estimated shares issuable as of the reporting date (which was $ 22.37 ), the time period related to the contractual settlement term, and the probability of issuing the shares.

As all the inputs are not observable (excluding our closing share price) and cannot be corroborated by observable market data, we employ a Level 3 category.

Long Term Debt:

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

As of September 30, 2021

As of March 31, 2022

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

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First Lien Term Loans and SunTrust Term Loan $ — $ 766,973 $ — $ 766,973 $ 767,875

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

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

At March 31, 2022 and at December 31, 2021 our Barclays revolving credit facility had no balance outstanding.

Our SunTrust revolving credit facility relating to our consolidated subsidiary The New Jersey Imaging Network ("NJIN"), had no principal amount outstanding at March 31, 2022 and at December 31, 2021.

The estimated fair value of our long-term debt, which is discussed in Note 6, Credit Facilities and Notes Payable, was determined using Level 2 inputs primarily related to comparable market prices.

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

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

2021 2020 2021 2020

Net income (loss) attributable to RadNet, Inc.'s common stockholders $ 16,220 $ 6,156 $ 28,550 $ ( 20,797 )

BASIC NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC.'S COMMON STOCKHOLDERS

Three Months Ended March 31,

Net income attributable to RadNet, Inc.'s common stockholders $ 3,013 $ 9,458

BASIC NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC.'S COMMON STOCKHOLDERS

Weighted average number of common shares outstanding during the period 55,303,007 51,951,506

Basic net income (loss) per share attributable to RadNet, Inc.'s common stockholders $ 0.31 $ 0.12 $ 0.55 $ ( 0.41 )

DILUTED NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC.'S COMMON STOCKHOLDERS

Basic net income per share attributable to RadNet, Inc.'s common stockholders $ 0.05 $ 0.18

DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC.'S COMMON STOCKHOLDERS

Weighted average number of common shares outstanding during the period 55,303,007 51,951,506

Add nonvested restricted stock subject only to service vesting 197,911 253,265

Add additional shares issuable upon exercise of stock options and warrants 735,232 476,607 683,815 —

Add additional shares issuable upon exercise of stock options and contingently issuable shares 861,275 624,170

Weighted average number of common shares used in calculating diluted net income per share 56,362,193 52,828,941

Diluted net income (loss) per share attributable to RadNet, Inc.'s common stockholders $ 0.30 $ 0.12 $ 0.54 $ ( 0.41 )

Diluted net income per share attributable to RadNet, Inc.'s common stockholders $ 0.05 $ 0.18

Stock options and non vested restricted awards excluded from the computation of diluted per share amounts as their effect would be antidilutive:

Nonvested restricted stock subject to service vesting — — — 331,659

Shares issuable upon the exercise of stock options:

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

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

As of March 31, 2022, we have three equity investments for which a fair value is not readily determinable and therefore the total amounts invested are recognized at cost as follows:

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

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

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

No observable price changes or impairment in our investment was identified as of March 31, 2022.

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

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

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

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

No observable price changes or impairment in our investment was identified as of March 31, 2022.

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

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

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

No observable price changes, impairment in our investment or impairment of the loan receivable was identified as of March 31, 2022.

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

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

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

No indicators of impairment existed as of March 31, 2022.

Acquisition by Equity Method Investments

During the first quarter of 2022, our joint venture with Calvert Medical Imaging Center, LLC, completed the acquisition of certain assets to strengthen our presence in the Maryland market.

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

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

IFRC LLC *^ 1/1/2022 3,922 2,121 1,295 1,801 ( 1,295 )

*Fair Value Determination is Final

^ IFRC LLC acquisitions consisted of three subsidiaries of IFRC, two of which were purchased separately by wholly owned RadNet subsidiaries.

Joint venture investment and financial information

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

The following table is a summary of our investment in joint ventures during the three months ended March 31, 2022 (in thousands):

Balance as of December 31, 2021 $ 42,229

Equity in earnings in these joint ventures 2,517

Equity contributions in existing joint ventures 1,441

Balance as of September 30, 2021 $ 44,228

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

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

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

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

Balance as of March 31, 2022 $ 44,746

We charged management service fees from the centers underlying these joint ventures of approximately $ 5.5 million and $ 5.2 million for the three months ended March 31, 2022 and 2021, respectively.

The following table is a summary of key balance sheet data for these joint ventures as of March 31, 2022 and December 31, 2021 and income statement data for the three months ended March 31, 2022 and 2021 (in thousands):

Balance Sheet Data:

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Current assets $ 37,119 $ 37,186

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Total value of RadNet joint venture interests $ 44,746 $ 42,229

Income statement data for the nine months ended September 30,

Income statement data for the three months ended March 31,

Net revenue $ 34,411 $ 31,718

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Accounting standards 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 was 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 did not have a material effect on our consolidated financial statements.

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

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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 2021-01 on our financial statements.

The adoption did not have a material effect 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 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).

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

It also clarifies and simplifies other areas of the standard.

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

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

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

Accounting standards not yet adopted

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 – BUSINESS COMBINATIONS AND RELATED ACTIVITY

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

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

Imaging Center

During the first quarter of 2022, 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 Maryland market.

These acquisitions are reported as part of our Imaging Center segment.

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

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 — —

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

IFRC LLC*^ 1/1/2022 4,800 2,103 857 2,697 — ( 857 )

IFRC LLC*^ 1/1/2022 8,200 2,910 1,703 5,271 19 ( 1,703 )

Total 13,000 5,013 2,560 7,968 19 ( 2,560 )

*Fair Value Determination is Final

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

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

Sale of ownership interest in a majority owned subsidiary

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

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

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

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

^ IFRC LLC acquisitions consisted of three subsidiaries of IFRC, one of which was purchased separately by a joint venture with Calvert Medical Imaging Centers, LLC.

Artificial Intelligence

Aidence Holding B.V.

On January 20, 2022, we completed our acquisition of all the equity interests of Aidence Holding B.V.

("Aidence") an artificial intelligence enterprise centered on lung cancer screening, in an combination stock and cash purchase.

Aidence is reported as part of our artificial intelligence segment and was acquired to enhance our AI capabilities.

The transaction was accounted for as an acquisition of a business and total purchase consideration was determined to be approximately $ 45.2 million including i) 1,117,872 shares issued at $ 26.80 per share with a fair value of $ 30.0 million ii) cash of $ 1.8 million and iii) assuming liabilities of $ 11.9 million, $ 7.4 million in milestone contingent consideration and cash holdback of $ 4.5 million and iv) a settlement of a loan from RadNet of $ 1.5 million.

In addition we paid certain seller closing costs through the issuance of 23,362 shares at a fair value of $ 0.6 million.

We preliminarily recorded $ 1.0 million in current assets, $ 0.2 million in property plant and equipment, $ 27.5 million in intangible assets, $ 3.2 million in liabilities and $ 19.2 million in goodwill.

On January 20, 2022, we completed our acquisition of all the equity interests of Quantib B.V.

("Quantib") an artificial intelligence enterprise centered on prostate cancer screening, in a combination stock and cash purchase.

Quantib is reported as part of our artificial intelligence segment, and was acquired to enhance our AI capabilities.

The transaction was accounted for as an acquisition of a business and total purchase consideration was determined to be approximately $ 42.3 million including i) 965,058 shares issued at $ 26.80 per share with a fair value of $ 25.9 million ii) cash of $ 11.8 million and iii) 113,303 shares with a fair value at the date of close of $ 3.0 million and cash holdback of $ 1.6 million to be issued 18 months after acquisition subject to adjustment for any indemnification claims and will be marked to market in subsequent periods.

We preliminarily recorded $ 2.4 million in current assets, $ 0.1 million in property plant and equipment, $ 21.3 million in intangible assets, $ 3.7 million in liabilities and $ 22.2 million in goodwill.

As noted above, our acquisitions of Aidence and Quantib are preliminary.

As we finalize our estimation of the fair value of the assets acquired and liabilities assumed, additional adjustments may be recorded during the measurement period (a period not to exceed 12 months).

The initial accounting is preliminary as of March 31, 2022 for the acquired assets and liabilities as we are currently in the process of completing the assessment of valuation inputs and assumptions as well as completing the assessment of the tax attributes of the business combination.

The finalization of the acquisition accounting valuation assessment may result in a change in the valuation of the deferred tax assets and liabilities and intangible assets, along with the opening working capital accounts, which could have a material impact on our results of operations and financial position.

NOTE 5 – SEGMENT REPORTING

Our reportable segments are described below:

Imaging Center

Our Imaging Center segment provides physicians with imaging capabilities to facilitate the diagnosis and treatment of diseases and disorders.

Services include magnetic resonance imaging (MRI), computed tomography (CT), positron emission tomography (PET), nuclear medicine, mammography, ultrasound, diagnostic radiology (X-ray), fluoroscopy and other related procedures.

The vast majority of our centers offer multi-modality imaging services, a strategy that diversifies revenue streams, reduces exposure to reimbursement changes and provides patients and referring physicians one location to serve the needs of multiple procedures.

Included in the segment is our eRad subsidiary, which designs the underlying critical scheduling, data storage and retrieval systems necessary for imaging center operation.

Artificial Intelligence ("AI")

Our AI segment develops and deploys clinical applications to enhance interpretation of medical images and improve patient outcomes with an emphasis on brain, breast, prostate, and pulmonary diagnostics.

Our chief operating decision maker ("CODM"), who is also our CEO, evaluates the financial performance of our segments based upon their respective revenue and segmented internal profit and loss statements prepared on a basis not consistent with GAAP.

We do not report balance sheet information by segment since it is not reviewed by our CODM.

The table below present segment information reconciled to our financial results, with segment operating income or loss including revenue less cost of operations, depreciation and amortization, and other operating expenses to the extent specifically identified by segment (in thousands):

Three Months Ended March 31,

Imaging Centers $ 341,168 $ 315,319

Total revenue $ 341,767 $ 315,319

Cost of Operations

Imaging Centers $ 310,110 $ 281,013

AI 4,929 1,267

Total cost of operations $ 315,039 $ 282,280

Depreciation and Amortization:

Imaging Centers $ 25,805 $ 22,569

Total depreciation and amortization $ 27,118 $ 22,656

Loss (Gain) on Disposal of Equipment:

Imaging Centers $ 1,154 $ ( 1,307 )

Total loss (gain) $ 1,128 $ ( 1,307 )

Imaging Centers $ 201 $ 285

Total severance $ 201 $ 285

(Loss) Income from Operations

Imaging Centers $ 3,898 $ 12,759

AI ( 5,617 ) ( 1,354 )

Total (loss) income from operations $ ( 1,719 ) $ 11,405

For proper comparative purposes, Imaging Center segment revenue in 2021 excludes $ 6.2 million in Provider Relief Funding, as it represents a form of direct Government stimulus.

NOTE 6 – CREDIT FACILITIES AND NOTES PAYABLE

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

September 30,

As of March 31, 2022 and December 31, 2021 our term loan debt obligations are as follows (in thousands):

2022 December 31,

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Long term portion debt obligations $ 740,707 $ 743,498

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

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

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

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

We had no outstanding balance under our $ 195.0 million Barclays Revolving Credit Facility at March 31, 2022 and have reserved $ 7.8 million for certain letters of credit.

The remaining $ 187.2 million of our Barclays Revolving Credit Facility was available to draw upon as of March 31, 2022.

We had no outstanding balance under our $ 30.0 million SunTrust Revolving Credit Facility at March 31, 2022.

As of March 31, 2022, we were in compliance with all covenants under our credit facilities.

Second Amended and Restated First Lien Credit and Guaranty Agreement

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

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

At March 31, 2022 the effective Eurodollar Rate and the Alternate Base Rate for the First Lien Term Loans under the Restated Credit Agreement was 0.75 % and 3.50 %, 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.

1 unchanged sentence

SunTrust Credit Facilities:

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

At March 31, 2022, our SunTrust credit facilities, which relate to our consolidated subsidiary The New Jersey Imaging Network, L.L.C.("NJIN"), were comprised of one term loan in the principal amount described in the table above (the "SunTrust Term Loan") and a revolving credit facility of $ 30.0 million (the "SunTrust Revolving Credit Facility") both of which are provided pursuant to the Amended and Restated Revolving Credit and Term Loan Agreement dated August 31, 2018, among NJIN, as borrower, with SunTrust Bank, as administrative agent, and the lenders identified therein (as amended, the "SunTrust Credit Agreement").

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

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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 $ 2.3 million at September 30, 2021.

Associated with the Barclays Revolving Credit Facility are deferred financing costs, net of accumulated amortization, of $ 2.0 million at March 31, 2022.

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

4 unchanged sentences

2.75 % 1.75 %

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

As of March 31, 2022, the effective interest rate payable on revolving loans under the Barclays Revolving Credit Facility was 5.25 %.

For letters of credit issued under the Barclays Revolving Credit Facility, letter of credit fees accrue at the applicable margin 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.

4 unchanged sentences

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

As of March 31, 2022, NJIN had no borrowings under the SunTrust Revolving Credit Facility.

Recent prior amendments to prior credit facilities:

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

We can issue options (incentive and nonstatutory), stock awards (restricted or unrestricted), stock units, and stock appreciation rights under the Restated Plan.

We can issue options (incentive and nonstatutory), performance based options, stock awards (restricted or unrestricted), stock units, performance based stock units, and stock appreciation rights under the Restated Plan.

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

Under the Restated Plan, stock options may not be granted at a per share exercise price below the fair market value of a share of our common stock on the date of grant, may not be repriced or exchanged without stockholder approval, and the maximum exercisable term of the option may not exceed 10 years.

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

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

As of March 31, 2022, we had outstanding options to acquire 683,914 shares of our common stock, of which options to acquire 508,969 shares were exercisable.

The following summarizes all of our option transactions for the three months ended March 31, 2022:

Outstanding Options

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Balance, December 31, 2021 473,939 $ 9.38

Exercised ( 2,500 ) 10.10

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

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

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

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

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

Granted 209,975 29.44

Balance, March 31, 2022 683,914 15.54 6.49 $ 6,157,802

Exercisable at March 31, 2022 508,969 11.05 5.43 6,126,246

Aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between our closing stock price on March 31, 2022 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 March 31, 2022.

As of March 31, 2022, total unrecognized stock-based compensation expense related to non-vested employee awards was $ 2.6 million, which is expected to be recognized over a weighted average period of approximately 2.24 years.

DeepHealth Options

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

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

As of March 31, 2022, total unrecognized stock based compensation expense related to non-vested DeepHealth options was approximately $ 1.6 million, which is expected to be recognized over a weighted average period of approximately 1.23 years

Outstanding Options

6 unchanged sentences

Exercised ( 12,637 ) —

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

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

Balance, March 31, 2022 308,023 — 7.18 $ 6,890,475

Exercisable at March 31, 2022 46,912 — 7.18 1,049,413

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

1 unchanged sentence

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

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

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

As of March 31, 2022, we have issued a total of 7,743,651 RSA’s of which 438,786 were unvested at March 31, 2022.

The following summarizes all unvested RSA’s activities during the three months ended March 31, 2022:

RSA's Weighted-Average

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Vested ( 517,911 ) $ 21.63

Forfeited or Canceled ( 3,365 ) $ 18.60

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

RSA's unvested at March 31, 2022 438,786 1.16 $ 25.96

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

2 unchanged sentences

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

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

During the three months ended March 31, 2022, no such awards were granted.

Performance based stock units ("PSUs")

In January 2022, the company granted certain employees PSUs with a target award of 25,683 shares of our common stock.

The PSUs will vest in two equal parts, starting three years from the grant date based on continuous service, with the number of shares earned ( 0 % to 200 % of the target award) depending upon the extent to which we achieve a performance condition as determined by the board of directors over the period from January 1, 2022 through December 31, 2022.

Performance based stock options ("PSOs")

In January 2022, the company granted certain employees PSOs with a potential to option a maximum of 111,925 shares of our common stock.

The PSOs will vest in three equal parts, starting three years from the grant date based on continuous service, with the number of shares earned ( 0 shares to 111,925 shares) depending upon the extent to which we achieve a performance condition as determined the board of directors over the period from January 1, 2022 through December 31, 2022.

Restated Plan summary

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

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

In summary, of the 16,500,000 shares of common stock reserved for issuance under the Restated Plan, at March 31, 2022, there remain 2,380,364 shares available under the Restated Plan for future issuance.

NOTE 8 – SUBSEQUENT EVENTS

Formation of majority owned subsidiary

On April 1, 2022 we entered into Frederick County Radiology, LLC, a partnership with Frederick Health Hospital, Inc.

("Hospital").

The operation will offer multi-modality services out of six locations in Frederick, Maryland.

RadNet will have a 65 % economic interest and Hospital will have a 35 % economic interest .

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

What changed 10-Q

Item 1. Financial Statements