What changed in this filing

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Item 1. Financial Statements

2022-08-09 compared with 2022-05-10 · 233 added, 145 removed, 587 unchanged (39% of the section changed)

35 unchanged sentences

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

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

57,303,565 and 53,548,227 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

Additional paid-in-capital 419,136 342,592

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Service fee revenue $ 316,501 $ 295,494 $ 619,776 $ 575,071

8 unchanged sentences

Total operating expenses 334,817 306,283 678,302 610,195

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

INCOME FROM OPERATIONS 19,558 27,678 17,839 45,333

OTHER INCOME AND EXPENSES

1 unchanged sentence

Equity in earnings of joint ventures ( 2,748 ) ( 3,121 ) ( 5,266 ) ( 5,406 )

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

Other expenses 165 206

Total other income ( 11,578 ) ( 498 )

Non-cash change in fair value of interest rate swaps ( 6,306 ) ( 35 ) ( 27,125 ) ( 11,280 )

Debt restructuring and extinguishment expenses — 6,044 — 6,044

Other (income) expenses ( 7 ) 1,658 158 1,867

Total other expenses (income) 2,324 16,717 ( 9,255 ) 16,222

INCOME BEFORE INCOME TAXES 17,234 10,961 27,094 29,111

15 unchanged sentences

(IN THOUSANDS)

Three Months Ended March 31,

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

2022 2021 2022 2021

NET INCOME $ 13,831 $ 8,087 $ 22,194 $ 21,862

9 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 March 31, 2022 and March 31, 2021.

The following table summarizes changes in the Company’s consolidated stockholders' equity, including noncontrolling interest, during the three months ended June 30, 2022 and June 30, 2021.

Common Stock Additional Paid-In

7 unchanged sentences

Shares Amount

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

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

Issuance of common stock under the equity compensation plan 152,889 — — — — — — —

1 unchanged sentence

Stock-based compensation expense — — 4,693 — — 4,693 — 4,693

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

Sale of economic interests in majority owned subsidiary, net of taxes — — 4,582 — — 4,582 — 4,582

Contribution from noncontrolling partner — — — — — — 10,673 10,673

Change in cumulative foreign currency translation adjustment — — — ( 4,766 ) — ( 4,766 ) — ( 4,766 )

2 unchanged sentences

Net income — — — — 7,905 7,905 5,926 13,831

BALANCE-JUNE 30, 2022 57,303,565 $ 5 $ 419,136 $ ( 24,603 ) $ ( 82,355 ) $ 312,183 $ 139,202 $ 451,385

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

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 2,500 — 26 — — 26 — 26

2 unchanged sentences

Stock-based compensation expense — — 8,897 — — 8,897 — 8,897

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

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

Change in cumulative foreign currency translation adjustment — — — ( 9 ) — ( 9 ) — ( 9 )

Change in fair value of cash flow hedge from prior periods reclassified to earnings — — — 920 — 920 — 920

Other — — ( 1 ) — — ( 1 ) 1 —

Net income — — — — 2,873 2,873 5,214 8,087

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

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

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 six months ended June 30, 2022 and June 30, 2021.

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, 2021 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 683,077 — — — — — — —

Issuance of common stock under the DeepHealth equity compensation plan 965,969 — — — — — — —

Stock-based compensation expense — — 15,494 — — 15,494 — 15,494

Issuance of common stock for sale of unregistered securities for acquisition 2,106,292 — 56,470 — — 56,470 — 56,470

Contribution from noncontrolling partner — — — — — — 10,673 10,673

Sale of economic interests in majority owned subsidiary, net of taxes — — 4,582 — — 4,582 — 4,582

Change in cumulative foreign currency translation adjustment — — — ( 6,030 ) — ( 6,030 ) — ( 6,030 )

Change in fair value of cash flow hedge from prior periods reclassified to earnings, net of taxes — — — 1,847 — 1,847 — 1,847

Other — — ( 2 ) 1 ( 1 ) ( 2 ) — ( 2 )

Net income — — — — 10,918 10,918 11,276 22,194

BALANCE-JUNE 30, 2022 57,303,565 $ 5 $ 419,136 $ ( 24,603 ) $ ( 82,355 ) $ 312,183 $ 139,202 $ 451,385

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 1,033,358 — — — — — — —

Issuance of common stock under the DeepHealth equity compensation plan 1,635 — — — — — — —

Stock-based compensation expense — — 17,145 — — 17,145 — 17,145

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

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

Change in cumulative foreign currency translation adjustment — — — ( 21 ) — ( 21 ) — ( 21 )

Change in fair value of cash flow hedge from prior periods reclassified to earnings, net of taxes 1,845 1,845 — 1,845

Other — — ( 1 ) — — ( 1 ) 1 —

Net (loss) income — — — — 12,331 12,331 9,531 21,862

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

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

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES

6 unchanged sentences

Loss (gain) on sale and disposal of equipment and other 1,209 ( 2,874 )

Loss on extinguishment of debt — 1,496

Amortization of cash flow hedge, net of taxes 1,847 1,845

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

Non-cash change in fair value of interest rate swaps ( 27,125 ) ( 11,280 )

Stock-based compensation 15,795 17,145

Change in fair value of contingent consideration

( 1,287 ) 1,292

Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions:

6 unchanged sentences

Accounts payable, accrued expenses and other 32,092 17,765

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

Net cash provided by operating activities 65,744 58,701

CASH FLOWS FROM INVESTING ACTIVITIES

2 unchanged sentences

Proceeds from sale of equipment 4,121 500

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

Net cash used in investing activities ( 95,988 ) ( 119,658 )

2 unchanged sentences

Payments on term loan debt ( 6,625 ) ( 613,279 )

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

Proceeds from revolving credit facility — 128,300

Payments on revolving credit facility — ( 128,300 )

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

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

Net cash (used in) provided by financing activities ( 6,625 ) 99,812

EFFECT OF EXCHANGE RATE CHANGES ON CASH 1,433 ( 21 )

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

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ( 35,436 ) 38,834

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 $ 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.

We acquired equipment and certain leasehold improvements for approximately $ 60.8 million and $ 42.1 million during the six months ended June 30, 2022 and 2021, respectively, which were not paid for as of June 30, 2022 and 2021 , respectively.

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

On April 1, 2022 we received $ 8.4 million in fixed assets and equipment from our partner in Frederick County Radiology, LLC.

See Note 4, Facility Acquisitions contained herein.

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.

7 unchanged sentences

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.

At June 30, 2022, we operated directly or indirectly through joint ventures with hospitals, 353 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.

25 unchanged sentences

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 Group on a combined basis recognized $ 46.8 million and $ 45.1 million of revenue, net of management services fees to RadNet, for the three months ended June 30, 2022 and 2021, respectively and $ 46.8 million and $ 45.1 million of operating expenses for the three months ended June 30, 2022 and 2021, respectively.

RadNet recognized $ 202.4 million and $ 190.6 million of total billed net service fee revenue for the three months ended June 30, 2022, and 2021, respectively, for management services provided to the Group relating primarily to the technical portion of billed revenue.

The Group on a combined basis recognized $ 92.5 million and $ 91.2 million of revenue, net of management services fees to RadNet, for the six months ended June 30, 2022 and 2021, respectively and $ 92.5 million and $ 91.2 million of operating expenses for the six months ended June 30, 2022 and 2021, respectively.

RadNet recognized $ 393.4 million and $ 369.5 million of total billed net service fee revenue for the six months ended June 30, 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 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.

In our condensed consolidated balance sheets at June 30, 2022 and December 31, 2021, we have included approximately $ 100.6 million and $ 89.2 million, respectively, of accounts receivable and approximately $ 17.7 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.

8 unchanged sentences

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.

We paid operating expenses for the venture of $ 0.6 million in each of the three months ended June 30, 2022, and June 30, 2021, respectively and $ 1.0 million and $ 1.2 million for the six months ended June 30, 2022 and June 30, 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 March 31, 2022 and 2021 have been made.

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

10 unchanged sentences

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.

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.

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

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).

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.

1 unchanged sentence

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 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

Our total service fee revenues during the three and six months ended June 30, 2022 and 2021 are presented in the table below.

Our imaging review is based on an allocation of the estimated transaction price with the patient between the primary patient classification of insurance coverage.

Additional revenues are earned from our management services provided to joint ventures and our software and AI subsidiaries.

In Thousands Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Commercial insurance $ 195,066 $ 187,354 $ 383,615 $ 369,566

5 unchanged sentences

Software revenue 2,421 2,628 6,419 5,054

AI revenue 599 —

Other 3,577 3,788 8,623 6,409

Service fee revenue 303,276 279,577

Revenue under capitation arrangements 37,874 38,424 76,365 74,166

Imaging Center Segment Revenue 352,818 333,918 693,985 649,237

AI Segment Revenue 1,557 — 2,156 —

Total service revenue $ 354,375 $ 333,918 $ 696,141 $ 649,237

1 unchanged sentence

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 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.

Beginning in the second quarter of 2020 and through the six months ended June 30, 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 in the twelve months ended December 31, 2020 and $ 0.1 million in 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, 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.

• $ 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 $ 43.0 thousand received for the three months ended June 30, 2021 and $ 6.3 million received during the six months ended June 30, 2021.

The accelerated Medicare 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 June 30, 2022, $ 38.6 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.

2 unchanged sentences

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.

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.

Our remaining payroll tax liability balance of approximately $ 8.1 million at June 30, 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.

4 unchanged sentences

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

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

Amounts remaining to be collected on these agreement were $ 17.0 million and $ 17.7 million at June 30, 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 $ 2.0 million and $ 2.1 million, as of March 31, 2022 and December 31, 2021, respectively and related to our Barclays Revolving Credit Facility.

Deferred financing costs, net of accumulated amortization, were $ 1.9 million and $ 2.1 million, as of June 30, 2022 and December 31, 2021, respectively and related to our Barclays Revolving Credit Facility.

See Note 6, Credit Facilities and Notes Payable for more information.

8 unchanged sentences

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

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

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

GOODWILL AND INDEFINITE LIVED INTANGIBLES - Goodwill at June 30, 2022 totaled $ 577.8 million.

Indefinite lived intangible assets at June 30, 2022 were $ 12.7 million.

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

1 unchanged sentence

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

We considered the current and expected future economic and market conditions surrounding COVID-19 pandemic and did not identify an indication of goodwill impairment being more likely than not through March 31, 2022 .

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

We considered the current and expected future economic and market conditions including those resulting from the COVID-19 pandemic and did not identify an indication of goodwill impairment being more likely than not through June 30, 2022 .

Activity in goodwill for the six months ended June 30, 2022 is provided below (in thousands):

Balance as of December 31, 2021 $ 513,820

2 unchanged sentences

Currency translation ( 3,680 )

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.

Balance as of June 30, 2022 $ 577,781

Goodwill balances at June 30, 2022 reflect additional goodwill arising from deferred tax liabilities recorded on our acquisitions of Aidence Holding B.V.

and Quantib B.V.

6 unchanged sentences

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

We recorded income tax expense of $ 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;

We recorded income tax expense of $ 3.4 million, or an effective tax rate of 19.7 %, for the three months ended June 30, 2022 compared to income tax expense of $ 2.9 million, or an effective tax rate of 26.2 % for the three months ended June 30, 2021.

The income tax rates for the three and six months ended June 30, 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;

14 unchanged sentences

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 March 31, 2022.

No events have occurred such as fire, flood, or other acts which have impaired the integrity of our ROU assets as of June 30, 2022.

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

20 unchanged sentences

See Note 7, Stock-Based Compensation, for more information.

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 months ended March 31, 2022 and 2021 .

COMPREHENSIVE INCOME - 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 and swap agreements are included in comprehensive income and are included in the consolidated statements of comprehensive income for the three and six months ended June 30, 2022 and 2021 .

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.

19 unchanged sentences

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 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

For the three months ended June 30, 2022

Account March 31, 2022 Balance Amount of comprehensive loss recognized on derivative net of taxes Amount of loss reclassified out of accumulated OCI into income (prior period effective portion), net of taxes June 30, 2022 Balance Location

Accumulated Other Comprehensive Loss, net of taxes $ ( 17,963 ) $ — $ 924 $ ( 17,039 ) Equity

For the twelve months ended December 31, 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 December 31, 2021 Balance Location

For the six months ended June 30, 2022

Accumulated Other Comprehensive Loss, net of taxes $ ( 18,886 ) $ — $ 1,847 $ ( 17,039 ) 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 March 31, 2022

For the three months ended June 30, 2022

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 $ 6,306 Other income (expense) $ ( 1,245 ) Interest Expense

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.

For the the six months ended June 30, 2022

Interest rate contracts $ 27,125 Other income (expense) $ ( 2,490 ) Interest Expense

See Fair Value Measurements section below for the fair value of the 2019 Swaps at June 30, 2022.

CONTINGENT CONSIDERATION -

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.

As part of the purchase agreement, we will pay up to $ 10.0 million consideration upon the completion of two identified milestones in RadNet common shares.

This contingency had a third party valuation of approximately $ 6.7 million on June 30, 2022.

The amount is reviewed quarterly and adjusted to fair

value based on the yield rate of S&P B-rated corporate bonds and the probability of FDA approval, which has been currently determined by management to be 80 %.

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.

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.

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

For the three months ended June 30, 2022

Account March 31, 2022 Balance Amount of other non operating income recognized on contingent consideration Currency Translation June 30, 2022 Balance Location

Other Long Term Liabilities $ 10,268 $ ( 786 ) $ ( 1,045 ) $ 8,437 Liabilities and Non Operating Income

For the six months ended June 30, 2022

Account January 20, 2022 Balance Amount of other non operating income recognized on contingent consideration Currency Translation June 30, 2022 Balance Location

Other Long Term Liabilities $ 10,459 $ ( 1,287 ) $ ( 735 ) $ 8,437 Liabilities and Non Operating Income

See Fair Value Measurements section below for the fair value of contingent consideration at June 30, 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 March 31, 2022

As of June 30, 2022

Level 1 Level 2 Level 3 Total

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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

The table below summarize the estimated fair values of contingencies and holdback relating to our Aidence Holding B.V.

and Quantib B.V.

acquisitions on January 20, 2022, 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 June 30, 2022

Level 1 Level 2 Level 3 Total

Long term liabilities

113,303 shares of RadNet common stock

Aidence Holding B.V.

milestone consideration $ — $ — $ 6,686 $ 6,686

holdback of 113,303 shares of RadNet common stock

$ — $ — $ 1,751 $ 1,751

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.

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

For Aidence Holding B.V., the milestone contingent liability was adjusted to fair value based on the yield rate of S&P B-rated corporate bonds and the probability of FDA approval.

For the Quantib B.V holdback shares, the fair value was determined by calculating the value estimated shares issuable as of the reporting date (which was $ 17.28 ) translated at the current exchange rate at June 30, 2022, the time period related to the contractual settlement term, and the probability of issuing the shares.

As all the inputs for the contingent consideration of both Aidence Holding B.V and Quantib B.V.

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 March 31, 2022

As of June 30, 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 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.

At June 30, 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 June 30, 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.

We consider the carrying amounts of cash and cash equivalents, receivables, other current assets, current liabilities and other notes payables to approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization or payment.

Additionally, we consider the carrying amount of our finance lease obligations to approximate their fair value because the weighted average interest rate used to formulate the carrying amounts approximates current market rates.

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 March 31,

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

2022 2021 2022 2021

Net income attributable to RadNet, Inc.'s common stockholders $ 7,905 $ 2,873 $ 10,918 $ 12,331

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Weighted average number of common shares used in calculating diluted net income per share 56,966,548 53,133,091 56,666,290 52,890,561

Changes in FV associated with contingently issuable shares $ ( 468 ) $ — $ ( 863 ) $ —

Net income attributable to RadNet, Inc's common stockholders for diluted share calculation $ 7,437 $ — $ 10,055 $ —

Diluted net income per share attributable to RadNet, Inc.'s common stockholders $ 0.13 $ 0.05 $ 0.18 $ 0.23

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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 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:

As of June 30, 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 March 31, 2022.

No observable price changes or impairment in our investment was identified during the three and six months ended June 30,2022.

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.

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

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 during the three and six months ended June 30,2022.

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 March 31, 2022.

No observable price changes, impairment in our investment or impairment of the loan receivable was identified during the three and six months ended June 30,2022.

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 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.

No indicators of impairment existed as of June 30, 2022.

Acquisition by Equity Method Investee

During the first quarter of 2022, our joint venture with Calvert Medical Imaging Center, LLC, completed the acquisition of certain assets to strengthen its 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):

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Joint venture investment and financial information

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

The following table is a summary of our investment in joint ventures during the six months ended June 30, 2022 (in thousands):

Balance as of December 31, 2021 $ 42,229

Equity in earnings in these joint ventures 5,266

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):

Equity contributions in existing joint ventures 1,441

Balance as of June 30, 2022 $ 48,936

We charged management service fees from the centers underlying these joint ventures of approximately $ 5.6 million and $ 5.5 million for the three months ended June 30, 2022 and 2021 and $ 11.1 million and $ 10.8 million for the six months ended June 30, 2022 and 2021, respectively.

On June 24, 2022, we made an additional equity contribution to our joint venture in Arizona of $ 1.4 million.

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

The following table is a summary of key balance sheet data for these joint ventures as of June 30, 2022 and December 31, 2021 and income statement data for the six months ended June 30, 2022 and 2021 (in thousands):

Balance Sheet Data:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Current assets $ 39,840 $ 37,186

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Total value of RadNet joint venture interests $ 48,936 $ 42,229

Income statement data for the three months ended March 31,

Income statement data for the six months ended June 30,

Net revenue $ 69,757 $ 64,636

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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.

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

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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 initial accounting is preliminary as of June 30, 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.

Formation of majority owned subsidiary

Frederick County Radiology, LLC

On April 1, 2022 we formed Frederick County Radiology, LLC ("FCR"), a partnership with Frederick Health Hospital, Inc.

("Hospital").

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

We contributed the operations of 4 centers to the enterprise and Hospital contributed $ 5.5 million in fixed assets, $ 3.0 million in equipment, $ 10.8 million in goodwill.

As a result of the the transaction, we retain a 65 % controlling economic interest in FCR and Hospital retains a preliminary $10.7 million or 35 % noncontrolling economic interest in FCR.

Advanced Radiology at Capital Region, LLC

On June 15, 2022 we entered into Advanced Radiology at Capital Region, LLC, a partnership with Dimension Health Corporation.

("Dimension"), an affiliate of the University of Maryland.

The operation will provide multi-modality services out of two yet to be determined locations in the Largo, Maryland area.

The venture was initially capitalized with nominal amounts of $ 5.1 thousand for a 51 % economic interest from us and $ 4.9 thousand from Dimension for a 49 % economic interest.

NOTE 5 – SEGMENT REPORTING

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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,

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

2022 2021 2022 2021

Imaging Centers $ 352,818 $ 333,918 $ 693,985 $ 649,237

AI 1,557 — 2,156 —

Total revenue $ 354,375 $ 333,918 $ 696,141 $ 649,237

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Imaging Centers $ 27,100 $ 23,920 $ 52,906 $ 46,489

AI 1,762 91 3,074 178

Total depreciation and amortization $ 28,862 $ 24,011 $ 55,980 $ 46,667

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Total severance $ 99 $ 268 $ 300 $ 551

(Loss) Income from Operations

Income from Operations

Imaging Centers $ 26,233 $ 28,878 $ 30,130 $ 41,640

AI ( 6,675 ) ( 1,243 ) ( 12,291 ) ( 2,598 )

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.

Total income from operations $ 19,558 $ 27,635 $ 17,839 $ 39,042

For proper comparative purposes, Imaging Center segment revenue in 2021 excludes Provider Relief Funding of $ 43.0 thousand for the three months ended June 30, 2021 and $ 6.3 million for the six months ended June 30, 2021, as it represents a form of direct Government stimulus.

NOTE 6 – CREDIT FACILITIES AND NOTES PAYABLE

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

As of June 30, 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 $ 737,916 $ 743,498

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.

We had no outstanding balance under our $ 195.0 million Barclays Revolving Credit Facility at June 30, 2022 and have reserved $ 7.6 million for certain letters of credit.

The remaining $ 187.4 million of our Barclays Revolving Credit Facility was available to draw upon as of June 30, 2022.

We had no outstanding balance under our $ 30.0 million SunTrust Revolving Credit Facility at June 30, 2022.

As of June 30, 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 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.

At June 30, 2022 the effective Eurodollar Rate and the Alternate Base Rate for the First Lien Term Loans under the Restated Credit Agreement was 1.62 % and 4.75 %, respectively and the applicable margin for the Eurodollar Rate and Alternate Base Rate First Lien Term Loans under the Restated Credit Agreement was 3.00 % and 2.00 %, respectively.

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

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SunTrust Credit Facilities:

At 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").

At June 30, 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 $ 2.0 million at March 31, 2022.

Associated with the Barclays Revolving Credit Facility are deferred financing costs, net of accumulated amortization, of $ 1.9 million at June 30, 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:

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2.75 % 1.75 %

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

As of June 30, 2022, the effective interest rate payable on revolving loans under the Barclays Revolving Credit Facility was 6.75 %.

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.

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

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

Recent prior amendments to prior credit facilities:

Barclays Credit Facilities:

On August 28, 2020, RadNet Management, Inc.

and RadNet, Inc.

entered into Amendment No.

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

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.

6, Consent and Incremental Joinder Agreement to Credit and Guaranty Agreement (the “Sixth Amendment”);

and (ii) Amendment No.

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

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.

As of June 30, 2022, NJIN had no borrowings under the SunTrust Revolving Credit Facility.

NOTE 7 – STOCK-BASED COMPENSATION

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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 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:

As of June 30, 2022, we had outstanding options to acquire 703,914 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 six months ended June 30, 2022:

Outstanding Options

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Granted 229,975 28.36

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.

Balance, June 30, 2022 703,914 15.58 6.35 $ 3,904,038

Exercisable at June 30, 2022 508,969 11.05 5.18 3,899,706

Aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between our closing stock price on June 30, 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 June 30, 2022.

As of June 30, 2022, total unrecognized stock-based compensation expense related to non-vested employee awards was $ 2.7 million, which is expected to be recognized over a weighted average period of approximately 2.39 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 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

As of June 30, 2022, total unrecognized stock based compensation expense related to non-vested DeepHealth options was approximately $ 1.2 million, which is expected to be recognized over a weighted average period of approximately 1.06 years

Outstanding Options

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Exercised ( 183,910 ) —

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

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

Balance, June 30, 2022 136,750 — 7.28 $ 2,363,040

Exercisable at June 30, 2022 70,070 — 7.28 1,210,803

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.

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

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:

As of June 30, 2022, we have issued a total of 7,890,430 RSA’s of which 560,660 were unvested at June 30, 2022.

The following summarizes all unvested RSA’s activities during the six months ended June 30, 2022:

RSA's Weighted-Average

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Vested ( 542,816 ) $ 21.99

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

RSA's unvested at June 30, 2022 560,660 1.56 $ 23.81

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

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

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

During the six months ended June 30, 2022, awards totalling 1,000 shares with a value of approximately $ 19.0 thousand 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.

In January 2022, we 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.

In January 2022, we granted certain employees PSOs with a potential to option to purchase 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.

Long Term Incentive Plan shares ("LTIPs")

In addition, we issue stock-based compensation to certain employees in our AI segment in the form of Stock Units and Restricted Stock Awards, subject to certain restrictions.

The awards represent a form of long term incentive and are reflective of a general practice within the software industry.

The units and shares vest ratably over a 2 to 4 year period, conditioned on continued employment through the vesting periods.

We determine the fair value of all LTIPs based on the closing price of our

common stock on the award date.

The following summarizes all unvested LTIPs activities during the six months ended June 30, 2022:

LTIPs Weighted-Average

Term (Years) Weighted-Average

RSA's unvested at December 31, 2021 — $ —

Changes during the period

Granted 172,622 $ 19.52

RSA's unvested at June 30, 2022 172,622 3.22 $ 19.52

Restated Plan summary

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 .

In summary, of the 16,500,000 shares of common stock reserved for issuance under the Restated Plan, at June 30, 2022, there remain 2,039,963 shares available under the Restated Plan for future issuance.

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