What changed in this filing

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Item 1. Financial Statements

2023-05-10 compared with 2022-11-09 · 275 added, 371 removed, 486 unchanged (57% of the section changed)

3 unchanged sentences

(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

September 30,

2023 December 31,

13 unchanged sentences

Investment in joint ventures 59,321 57,893

Deferred tax assets 3,512 14,853

Deposits and other 51,052 53,172

11 unchanged sentences

Notes payable, net of current portion 852,354 839,344

Deferred tax liability, net 10,410 9,256

Other non-current liabilities 27,523 23,015

1 unchanged sentence

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

57,290,756 and 53,548,227 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

58,270,290 and 57,723,125 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

Additional paid-in-capital 448,522 436,288

10 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Service fee revenue $ 352,420 $ 303,276

1 unchanged sentence

Total service revenue 390,564 341,767

Provider relief funding — — — 6,291

OPERATING EXPENSES

1 unchanged sentence

Depreciation and amortization 31,315 27,118

(Gain) loss on sale and disposal of equipment and other ( 247 ) 2,595 962 ( 279 )

Loss on sale and disposal of equipment and other 579 1,128

Severance costs 134 201

Total operating expenses 383,893 343,486

INCOME FROM OPERATIONS 6,924 32,570 24,761 77,902

INCOME (LOSS) FROM OPERATIONS 6,671 ( 1,719 )

OTHER INCOME AND EXPENSES

1 unchanged sentence

Equity in earnings of joint ventures ( 1,428 ) ( 2,517 )

Non-cash change in fair value of interest rate swaps ( 12,451 ) ( 2,870 ) ( 39,576 ) ( 14,149 )

Debt restructuring and extinguishment expenses — — — 6,044

Other expenses (income) 1,405 ( 167 ) 1,562 1,699

Total other (income) expenses ( 1,711 ) 6,142 ( 10,966 ) 22,363

INCOME BEFORE INCOME TAXES 8,635 26,428 35,727 55,539

Non-cash change in fair value of interest rate hedge 4,093 ( 20,819 )

Other expenses 1,432 165

Total other expense (income) 19,819 ( 11,578 )

(LOSS) INCOME BEFORE INCOME TAXES ( 13,148 ) 9,859

Provision for income taxes ( 1,135 ) ( 1,496 )

NET INCOME 6,447 21,144 28,640 43,005

NET (LOSS) INCOME ( 14,283 ) 8,363

Net income attributable to noncontrolling interests 6,722 5,350

NET INCOME ATTRIBUTABLE TO RADNET, INC.

NET (LOSS) INCOME ATTRIBUTABLE TO RADNET, INC.

COMMON STOCKHOLDERS $ ( 21,005 ) $ 3,013

BASIC NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC.

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

COMMON STOCKHOLDERS $ ( 0.36 ) $ 0.05

DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC.

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

COMMON STOCKHOLDERS $ ( 0.36 ) $ 0.05

6 unchanged sentences

(IN THOUSANDS)

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

2022 2021 2022 2021

NET INCOME $ 6,447 $ 21,144 $ 28,640 $ 43,005

Three Months Ended March 31,

NET (LOSS) INCOME $ ( 14,283 ) $ 8,363

Foreign currency translation adjustments 2,777 ( 1,264 )

Change in fair value of cash flow hedge from prior periods reclassified to earnings, net of taxes 922 923

COMPREHENSIVE INCOME 1,371 22,053 19,380 45,738

COMPREHENSIVE (LOSS) INCOME ( 10,584 ) 8,022

Less comprehensive income attributable to noncontrolling interests 6,722 5,350

5 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, 2022 and September 30, 2021.

The following table summarizes changes in the Company’s consolidated stockholders' equity, including noncontrolling interest, during the three months ended March 31, 2023 and March 31, 2022.

Common Stock Additional Paid-In

7 unchanged sentences

Shares Amount

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

BALANCE - JANUARY 1, 2023 57,723,125 $ 6 $ 436,288 $ ( 20,677 ) $ ( 82,622 ) $ 332,995 $ 158,457 $ 491,452

Issuance of common stock upon exercise of options 5,000 — 51 — — 51 — 51

Issuance of common stock under the equity compensation plan 527,692 — — — — — — —

1 unchanged sentence

Stock-based compensation expense — — 12,185 — — 12,185 — 12,185

Adjustment for shares returned/forfeited ( 22,484 ) — ( 45 ) — — ( 45 ) — ( 45 )

Sale of economic interests in majority owned subsidiary, net of taxes — — 1,916 — — 1,916 — 1,916

Contribution from noncontrolling partner — — — — — — 404 404

Change in cumulative foreign currency translation adjustment — — — 2,777 — 2,777 — 2,777

1 unchanged sentence

Other — — ( 2 ) — ( 1 ) ( 3 ) — ( 3 )

Net income — — — — 668 668 5,779 6,447

BALANCE-SEPTEMBER 30, 2022 57,290,756 $ 5 $ 424,369 $ ( 29,680 ) $ ( 81,688 ) $ 313,006 $ 145,384 $ 458,390

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

Net (loss) income — — — — ( 21,005 ) ( 21,005 ) 6,722 ( 14,283 )

BALANCE-MARCH 31, 2023 58,270,290 $ 6 $ 448,522 $ ( 16,978 ) $ ( 103,628 ) $ 327,922 $ 165,179 $ 493,101

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 noncontrolling interests, net of taxes — — 4,198 — — 4,198 7,404 11,602

Issuance of common stock for 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

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, 2022 and September 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 685,577 — — — — — — —

Issuance of common stock under the DeepHealth equity compensation plan 973,144 — — — — — — —

Stock-based compensation expense — — 18,856 — — 18,856 — 18,856

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

Adjustment for shares returned/forfeited ( 22,484 ) — ( 45 ) — — ( 45 ) — ( 45 )

Contribution from noncontrolling partner — — — — — — 11,077 11,077

Sale of economic interests in majority owned subsidiary, net of taxes — — 6,498 — — 6,498 — 6,498

Change in cumulative foreign currency translation adjustment — — — ( 12,031 ) — ( 12,031 ) — ( 12,031 )

Change in fair value of cash flow hedge from prior periods reclassified to earnings, net of taxes — — — 2,771 — 2,771 — 2,771

Other — — ( 2 ) 1 ( 1 ) ( 2 ) ( 1 ) ( 3 )

Net income — — — — 11,585 11,585 17,055 28,640

BALANCE-SEPTEMBER 30, 2022 57,290,756 $ 5 $ 424,369 $ ( 29,680 ) $ ( 81,688 ) $ 313,006 $ 145,384 $ 458,390

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

Adjustment for shares returned/forfeited ( 3,365 ) — ( 42 ) — — ( 42 ) — ( 42 )

Sale of noncontrolling interests, net of taxes — — 4,198 — — 4,198 7,404 11,602

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

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

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

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 $ 28,640 $ 43,005

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

Net (loss) income $ ( 14,283 ) $ 8,363

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

Depreciation and amortization 31,315 27,118

2 unchanged sentences

Amortization of deferred financing costs and loan discount 746 648

Loss (gain) on sale and disposal of equipment and other 962 ( 279 )

Loss on extinguishment of debt — 1,496

Loss on sale and disposal of equipment and other 579 1,128

Amortization of cash flow hedge, net of taxes 922 923

Non-cash change in fair value of interest rate swaps ( 39,576 ) ( 14,149 )

Non-cash change in fair value of interest rate hedge 4,093 ( 20,819 )

Stock-based compensation 12,185 11,102

Change in fair value of contingent consideration

2,335 ( 501 )

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

11 unchanged sentences

Proceeds from sale of equipment 3 117

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

Net cash used in investing activities ( 65,556 ) ( 61,564 )

2 unchanged sentences

Payments on term loan debt ( 3,688 ) ( 3,313 )

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

Proceeds from revolving credit facility — 128,300

Payments on revolving credit facility — ( 128,300 )

Proceeds from issuance of common stock upon exercise of options 51 —

Net cash (used in) provided by financing activities ( 9,938 ) 108,478

Net cash used in financing activities ( 3,821 ) ( 3,313 )

EFFECT OF EXCHANGE RATE CHANGES ON CASH ( 229 ) 83

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ( 39,600 ) 49,235

NET DECREASE IN CASH AND CASH EQUIVALENTS ( 36,990 ) ( 63,893 )

CASH AND CASH EQUIVALENTS, beginning of period 127,834 134,606

7 unchanged sentences

Supplemental Schedule of Non-Cash Investing and Financing Activities

We acquired equipment and certain leasehold improvements for approximately $ 61.0 million and $ 50.5 million during the nine months ended September 30, 2022 and 2021, respectively, which were not paid for as of September 30, 2022 and 2021 , respectively.

We acquired equipment and certain leasehold improvements for approximately $ 40.8 million and $ 42.2 million during the three months ended March 31, 2023 and 2022, respectively, which were not paid for as of March 31, 2023 and 2022 , 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.

On February 1, 2023, we issued a promissory note in the amount of $ 19.8 million to acquire radiology equipment previously leased under operating leases.

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.

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

The shares were ascribed a value of $ 2.0 million.

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

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

AND SUBSIDIARIES

2 unchanged sentences

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

At September 30, 2022, we operated directly or indirectly through joint ventures with hospitals, 349 centers located in Arizona, California, Delaware, Florida, Maryland, New Jersey, and New York.

At March 31, 2023, we operated directly or indirectly through joint ventures with hospitals, 363 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.

17 unchanged sentences

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 Group.

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.

5 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 $ 48.9 million and $ 43.8 million of revenue, net of management services fees to RadNet, for the three months ended September 30, 2022 and 2021, respectively and $ 48.9 million and $ 43.8 million of operating expenses for the three months ended September 30, 2022 and 2021, respectively.

RadNet recognized $ 190.6 million and $ 186.8 million of total billed net service fee revenue for the three months ended September 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 $ 141.4 million and $ 135.0 million of revenue, net of management services fees to RadNet, for the nine months ended September 30, 2022 and 2021, respectively and $ 141.4 million and $ 135.0 million of operating expenses for the nine months ended September 30, 2022 and 2021, respectively.

RadNet recognized $ 584.0 million and $ 556.4 million of total billed net service fee revenue for the nine months ended September 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 $ 48.8 million and $ 45.7 million of revenue, net of management services fees to RadNet, for the three months ended March 31, 2023 and 2022, respectively and $ 48.8 million and $ 45.7 million of operating expenses for the three months ended March 31, 2023 and 2022, respectively.

RadNet recognized $ 207.4 million and $ 191.0 million of total billed net service fee revenue for the three months ended March 31, 2023, and 2022, 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, 2022 and December 31, 2021, we have included approximately $ 102.1 million and $ 89.2 million, respectively, of accounts receivable and approximately $ 14.8 million and $ 14.4 million of accounts payable and accrued liabilities related to the Group, respectively.

In our condensed consolidated balance sheets at March 31, 2023 and December 31, 2022, we have included approximately $ 103.1 million and $ 100.4 million, respectively, of accounts receivable and approximately $ 18.8 million and $ 16.9 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 $ 0.5 million and $ 0.6 million for the three months ended September 30, 2022 and September 30, 2021, respectively and $ 1.5 million and $ 1.8 million for the nine months ended September 30, 2022 and September 30, 2021, respectively.

We paid operating expenses for the venture of $ 0.5 million and $ 0.4 million for the three months ended March 31, 2023, and March 31, 2022, 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, 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 other centers, this service fee revenue is earned through providing the use of our diagnostic imaging equipment and the provision of technical services as well as providing administration services such as

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

As it relates to others centers, this service fee revenue is earned through providing the use of our diagnostic imaging equipment and the provision of technical services as well as providing administration services such as clerical and administrative personnel, bookkeeping and accounting services, billing and collection, provision of medical and office supplies, secretarial, reception and transcription services, maintenance of medical records, and advertising, marketing and promotional activities.

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

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.

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 fee revenues during the three and nine months ended September 30, 2022 and 2021 are presented in the table below.

Our imaging center revenue is displayed as the estimated service fee, broken down by classification of insurance coverage type.

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

In Thousands Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Our total service revenues during the three months ended March 31, 2023 and 2022 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

Commercial insurance $ 217,209 $ 188,465

4 unchanged sentences

Management fee revenue 4,248 5,508

Software revenue 3,430 2,068 9,849 7,115

Teleradiology and Software revenue 4,333 3,399

Other 5,300 5,647

3 unchanged sentences

Total service revenue $ 390,564 $ 341,767

GOVERNMENT ASSISTANCE:

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

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, 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 no funds received for the three months ended September 30, 2021 and $ 6.3 million received during the nine months ended September 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 September 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.

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 payroll tax liability balance of approximately $ 8.1 million at September 30, 2022, will be paid by December 31, 2022.

As part of the CARES act, we received $ 39.6 million total of accelerated Medicare payments which were recorded to deferred revenue in our consolidated balance sheet and are being applied to revenue as services are performed.

Through the three months ended March 31, 2023, $ 38.6 million of the accelerated Medicare payments have been applied to revenue.

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 agreements were $ 15.5 million and $ 17.7 million at September 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 reassess 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 $ 1.8 million and $ 2.1 million, as of September 30, 2022 and December 31, 2021, respectively and related to our Barclays Revolving Credit Facility.

Amounts remaining to be collected on these agreements were $ 15.4 million and $ 15.4 million at March 31, 2023 and December 31, 2022, respectively.

DEFERRED FINANCING COSTS - Costs of financing are deferred and amortized using the effective interest rate method and are related to our revolving credit facilities.

Deferred financing costs, net of accumulated amortization, were $ 2.1 million and $ 2.3 million, as of March 31, 2023 and December 31, 2022, respectively.

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

1 unchanged sentence

Depreciation of property and equipment is performed using the straight-line method over the estimated useful lives of the assets acquired, which range from 3 to 15 years.

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

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

Maintenance and repairs are charged to expense as incurred.

4 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 September 30, 2022 totaled $ 575.1 million.

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

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

When we determine the carrying value of a reporting unit exceeds its fair value an impairment charge would be recognized and should not exceed the total amount of goodwill allocated to that reporting unit.

GOODWILL - Goodwill at March 31, 2023 totaled $ 687.1 million.

Goodwill is recorded as a result of business combinations.

When we determine the carrying value of reporting unit exceeds its fair value an impairment charge would be recognized and should not exceed the total amount of goodwill allocated to that reporting unit.

We tested goodwill and indefinite lived intangibles for impairment on October 1, 2022, noting no impairment.

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 September 30, 2022 .

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

Activity in goodwill for the three months ended March 31, 2023 is provided below (in thousands):

Imaging Center Artificial Intelligence Total

Balance as of December 31, 2022 606,483 $ 71,182 $ 677,665

2 unchanged sentences

Currency translation 576 1,067 1,643

Balance as of September 30, 2022 $ 575,092

Goodwill balances at September 30, 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.

Balance as of March 31, 2023 $ 614,836 $ 72,249 $ 687,085

INTANGIBLE ASSETS - The components of intangible assets, both finite and indefinite, along with annual amortization expense that will be recorded over the next five years at March 31, 2023 and December 31, 2022 are as follows (in thousands):

As of March 31, 2023:

2024 2025 2026 2027 Thereafter Total Weighted average amortization period remaining in years

Management Service Contracts $ 1,717 $ 2,287 $ 2,287 $ 2,287 $ 2,287 $ 8,959 $ 19,824 8.7

Covenant not to compete and other contracts 1,013 941 692 406 122 41 3,215 3.7

Customer Relationships 924 1,219 1,088 966 767 10,984 15,948 18.1

Patent and Trademarks 280 313 313 313 313 399 1,931 6.3

Developed Technology & Software 5,810 6,657 6,657 6,617 6,083 5,392 37,216 6.5

Trade Names amortized 208 77 77 77 77 89 605 4.6

Trade Names indefinite life — — — — — 7,100 7,100 —

IPR&D — — — — — 17,164 17,164 —

Total Annual Amortization $ 9,952 $ 11,494 $ 11,114 $ 10,666 $ 9,649 $ 50,128 $ 103,003

*Excluding the three months ended March 31, 2023

As of December 31, 2022:

2023 2024 2025 2026 2027 Thereafter Total Weighted average amortization period remaining in years

Management Service Contracts $ 2,287 $ 2,287 $ 2,287 $ 2,287 $ 2,287 $ 8,958 $ 20,393 8.9

Covenant not to compete and other contracts 1,319 891 642 356 72 40 3,320 3.1

Customer Relationships 1,244 1,244 1,112 991 816 12,396 17,803 18.6

Patent and Trademarks 298 298 298 298 298 322 1,812 6.4

Developed Technology & Software 6,297 6,297 6,297 6,257 5,722 7,196 38,066 6.7

Trade Names amortized 305 77 77 77 77 89 702 4.5

Trade Names indefinite life — — — — — 7,100 7,100 —

IPR&D — — — — — 17,032 17,032 —

Total Annual Amortization $ 11,750 $ 11,094 $ 10,713 $ 10,266 $ 9,272 $ 53,133 $ 106,228

Total intangible asset amortization expense was $ 3.0 million and $ 2.1 million for the three months ended March 31, 2023 and March 31, 2022, respectively.

Intangible assets are amortized using the straight-line method over their useful life determined at acquisition.

Management service agreements are amortized over 25 years using the straight line method.

Software development is capitalized and amortized over the useful life of the software when placed into service.

Trade names are reviewed annually for impairment.

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 $ 2.2 million, or an effective tax rate of 25.3 %, for the three months ended September 30, 2022 compared to income tax expense of $ 5.3 million, or an effective tax rate of 20.0 % for the three months ended September 30, 2021.

We recorded income tax expense of $ 7.1 million, or an effective tax rate of 19.8 %, for the nine months ended September 30, 2022 compared to income tax expense of $ 12.5 million or an effective tax rate of 22.6 % for the nine months ended September 31, 2021.

The income tax rates for the three and nine months ended September 30, 2022 diverge from the federal statutory rate due to (i) noncontrolling interests due to the controlled partnerships;

We recorded a provision to income taxes of $ 1.1 million, or an effective tax rate of ( 8.6 )%, for the three months ended March 31, 2023 and $ 1.5 million, or an effective tax rate of 15.2 % for the three months ended March 31, 2022.

The income tax rates for the three months ended March 31, 2023 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;

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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, 2022.

No events have occurred such as fire, flood, or other acts which have impaired the integrity of our ROU assets as of March 31, 2023.

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

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

COMPREHENSIVE (LOSS) 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 (loss) income and are included in the consolidated statements of comprehensive (loss) income for the three and nine months ended September 30, 2022 and 2021 .

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

Our foreign currency translation adjustments, changes in the fair value of cash flow hedges, and the amortization of balances associated with derivatives previously classified as cash flow hedges are included in other comprehensive (loss) income.

The components of other comprehensive (loss) income for the twelve month periods ended March 31, 2023 and March 31, 2022 are included in the consolidated statements of comprehensive (loss) income.

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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Under these arrangements, we arranged the 2019 Swaps with locked in 1 month LIBOR rates at 1.96 % for the $ 100,000,000 notional and at 2.05 % for the $ 400,000,000 notional.

As of the effective date, we are liable for premium payments if interest rates decline below the arranged rates, but will receive interest payments if rates are above the arranged rates.

As of the effective date, we are liable for premium payments if interest rates decline below arranged rates, but will receive interest payments if rates are above the arranged rates.

At inception, we designated our 2019 Swaps as cash flow hedges of floating-rate borrowings.

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The gain or loss on the effective portion of the hedge (i.e.

change in fair value) is reported as a component of comprehensive loss in the consolidated statement of equity.

change in fair value) is reported as a component of comprehensive gain or loss in the consolidated statement of equity.

The remaining gain or loss, if any, is recognized currently in earnings.

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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, 2022

Account June 30, 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 September 30, 2022 Balance Location

For the three months ended March 31, 2023

Account December 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 March 31, 2023 Balance Location

Accumulated Other Comprehensive Loss, net of taxes $( 15,201 ) $ — $ 922 $( 14,279 ) Equity

For the nine months ended September 30, 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 September 30, 2022 Balance Location

For the three months ended March 31, 2022

Accumulated Other Comprehensive Loss, net of taxes $( 18,887 ) $ — $ 924 $( 17,963 ) 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, 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 $ 12,451 Non-cash change in fair value of interest rate swaps $ ( 1,245 ) Interest Expense

For the nine months ended September 30, 2022

Interest rate contracts $ 39,576 Non-cash change in fair value of interest rate swaps $ ( 3,735 ) Interest Expense

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

For the three months ended March 31, 2023

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

Interest rate contracts $ ( 4,093 ) Other income (expense) $ ( 922 ) Interest Expense

For the three months ended March 31, 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) 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 $ 20,819 Other income (expense) $ ( 923 ) Interest Expense

See Fair Value Measurements section below for the fair value of the 2019 Swaps at March 31, 2023.

CONTINGENT CONSIDERATION -

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("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 value of approximately $ 7.9 million on September 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 90 % for milestone one and 80 % for milestone two.

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 or cash at our election.

contingency had a value of approximately $ 7.3 million on March 31, 2023.

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 % for milestone one and 70 % for milestone two.

In addition, there is a remaining general holdback of $ 4.0 million to be issued in shares of our common stock subject to adjustment for any indemnification claims.

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

For the three months ended September 30, 2022

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

Other Long Term Liabilities $ 8,437 $ 958 $ 833 $ 10,228 Liabilities and Non Operating Income

For the nine months ended September 30, 2022

Account January 1, 2022 Balance Issuance of contingent consideration Amount of other non operating income recognized on contingent consideration Currency Translation September 30, 2022 Balance Location

Other Long Term Liabilities $ — $ 10,459 $ ( 329 ) $ 98 $ 10,228 Liabilities and Non Operating Income

See Fair Value Measurements section below for the fair value of contingent consideration at September 30, 2022.

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

This contingency had a value of approximately $ 2.8 million as of March 31, 2023.

In addition, there is a general holdback of $ 1.6 million to be issued in cash subject to adjustment for any indemnification claims.

On October 1, 2022, we completed our acquisition of Montclair Radiological Associates.

As part of the purchase agreement, we recorded $ 1.2 million in contingent consideration to be determined by obtaining specific EBITDA targets within a defined time frame.

Heart and Lung Imaging Limited

On November 1, 2022, we completed our acquisition of 75 % of the equity interests of Heart and Lung Imaging Limited.

The purchase included $ 10.2 million in contingent milestone consideration and cash holdback of $ 0.6 million to be issued 24 months after acquisition subject to adjustment for any indemnification claims, which will be adjusted to fair value in subsequent periods.

The milestone contingency had a value of approximately $ 13.1 million as of March 31, 2023.

The contingent consideration is determined by the achievement of a specific number of physician reads.

A tabular rollforward of contingent consideration is as follows (amounts in thousands):

For the three months ended March 31, 2023

Entity Account January 1, 2023 Balance Issuance of contingent consideration Change in valuation of Contingent Consideration Currency Translation March 31, 2023 Balance

Aidence Other Long Term Liabilities $ 11,158 $ — $ 158 $ — $ 11,316

Quantib Accrued Expenses & Other Long Term Liabilities $ 3,709 $ — $ 702 $ — $ 4,411

Montclair Accrued Expenses $ 1,200 $ — $ — $ — $ 1,200

Heart and Lung Limited Accrued Expenses & Other Long Term Liabilities $ 11,656 $ — $ 1,124 $ 350 $ 13,130

See Fair Value Measurements section below for the fair value of contingent consideration at March 31, 2023.

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

The fair value hierarchy ranks the quality and reliability of inputs used to determine fair value.

The fair value hierarchy ranks the quality and reliability of inputs used to determine fair

Accordingly, assets and liabilities carried at, or permitted to be carried at, fair value are classified within the fair value hierarchy in one of the following categories based on the lowest level input that is significant to a fair value measurement:

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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, 2022

As of March 31, 2023

Level 1 Level 2 Level 3 Total

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Level 1 Level 2 Level 3 Total

Current and long term liabilities

Current and long term assets

2019 Swaps - Interest Rate Contracts $ — $ 23,302 $ — $ 23,302

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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 September 30, 2022

acquisitions on January 20, 2022, the Montclair Radiological Associates acquisition on October 1, 2022 and the Heart and Lung Imaging Limited acquisition on November 1, 2022 that are subject to fair value measurements and the classification of these liabilities on our consolidated balance sheets, as follows (in thousands):

As of March 31, 2023

Level 1 Level 2 Level 3 Total

Long term liabilities

Accrued expenses and other non-current liabilities

Aidence Holding B.V.

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$ — $ — $ 4,411 $ 4,411

Montclair Radiological Associates $ — $ — $ 1,200 $ 1,200

Heart and Lung Imaging Limited $ — $ — $ 13,130 $ 13,130

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 $ 20.35 ) translated at the current exchange rate at September 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.

For the Quantib B.V holdback shares, the fair value was determined by calculating the value of estimated shares issuable as of the reporting date (which was $ 25.03 ) at March 31, 2023, the time period related to the contractual settlement term, and the probability of issuing the shares.

For Montclair Radiological Associates the contingent consideration is determined by obtaining specific EBITDA targets within a defined time frame.

For Heart Lung Imaging Limited the contingent consideration is determined by the achievement of a specific number of physician reads.

As significant

inputs for the contingent consideration of Aidence B.V., Quantib B.V., Montclair Radiological Associates and Heart Lung Imaging Limited are not observable and cannot be corroborated by observable market data they are classified as Level 3.

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, 2022

As of March 31, 2023

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

First Lien Term Loans and SunTrust Term Loan $ — $ 727,510 $ — $ 727,510 $ 757,938

First Lien Term Loans and Truist Term Loan $ — $ 856,876 $ — $ 856,876 $ 860,438

As of December 31, 2022

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

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

At September 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 September 30, 2022 and at December 31, 2021.

First Lien Term Loans and Truist Term Loan $ — $ 843,594 $ — $ 843,594 $ 864,125

At March 31, 2023 and at December 31, 2022 our Barclays revolving credit facility had no balance outstanding.

Our Truist revolving credit facility relating to our consolidated subsidiary The New Jersey Imaging Network ("NJIN"), had no principal amount outstanding at March 31, 2023 and at December 31, 2022.

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 September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Net income attributable to RadNet, Inc.'s common stockholders $ ( 21,005 ) $ 3,013

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Weighted average number of common shares used in calculating diluted net income per share 57,701,439 56,362,193

Changes in FV associated with contingently issuable shares $ — $ — $ ( 586 ) $ —

Net income attributable to RadNet, Inc's common stockholders for diluted share calculation $ 668 $ — $ 10,999 $ —

Diluted net income per share attributable to RadNet, Inc.'s common stockholders $ ( 0.36 ) $ 0.05

Fair value change for contingently available shares excluded from the computation of diluted per share amounts as its effect would be antidilutive $ 278 $ — $ — $ —

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

Shares issuable subject to satisfaction of certain contingencies

113,303 — — —

Fair value change for contingently issuable shares excluded from the computation of diluted per share amounts as its effect would be antidilutive $ 769 $ —

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 594,758 —

Shares issuable upon the exercise of stock options 750,075 46,912

84,885 — 67,289 —

Weighted average shares for which the exercise price exceeds average market price of common stock 83,972 — 73,094 —

EQUITY INVESTMENTS AT FAIR VALUE–Accounting guidance requires entities to measure equity investments at fair value, with any changes in fair value recognized in net income.

Contingently issuable shares 273,111 —

For the three months ended March 31, 2023 we excluded all outstanding options, restricted stock awards and other requisite shares in the calculation of diluted earnings per share because their effect would be antidilutive.

INVESTMENTS IN EQUITY SECURITIES–Accounting guidance requires entities to measure equity investments at fair value, with any changes in fair value recognized in net income.

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, 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 during the three and nine months ended September 30, 2022.

As of March 31, 2023, 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, 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, 2023.

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 during the three and nine months ended September 30, 2022.

On January 1, 2019 we funded a convertible promissory note in

the amount of $ 0.1 million that converted to an additional 80,000 preferred shares on October 11, 2019.No observable price changes or impairment in our investment was identified as of March 31, 2023.

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 during the three and nine months ended September 30, 2022.

No observable price changes, impairment in our investment or impairment of the loan receivable was identified as of March 31, 2023.

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, 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):

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.

No indicators of impairment existed as of March 31, 2023.

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, 2022 (in thousands):

The following table is a summary of our investment in joint ventures during the three months ended March 31, 2023 (in thousands):

Balance as of December 31, 2022 $ 57,893

Equity in earnings in these joint ventures 1,428

Equity contributions in existing joint ventures 1,441

Balance as of September 30, 2022 $ 52,020

We charged management service fees from the centers underlying these joint ventures of approximately $ 6.1 million and $ 5.3 million for the three months ended September 30, 2022 and 2021 and $ 17.2 million and $ 16.0 million for the nine months ended September 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 September 30, 2022 and December 31, 2021 and income statement data for the nine months ended September 30, 2022 and 2021 (in thousands):

Balance as of March 31, 2023 $ 59,321

We charged management service fees from the centers underlying these joint ventures of approximately $ 4.2 million and $ 5.5 million for the three months ended March 31, 2023 and 2022, respectively.

The following table is a summary of key balance sheet data for these joint ventures as of March 31, 2023 and December 31, 2022 and income statement data for the three months ended March 31, 2023 and 2022 (in thousands):

Balance Sheet Data:

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Current assets $ 49,091 $ 39,304

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Total value of RadNet joint venture interests $ 59,321 $ 57,893

Income statement data for the nine months ended September 30,

Income statement data for the three months ended March 31,

Net revenue $ 42,086 $ 34,411

Net income $ 2,909 $ 5,035

NOTE 3 – RECENT ACCOUNTING AND REPORTING STANDARD

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 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 .

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

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

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 .

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

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

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 3 – RECENT ACCOUNTING AND REPORTING STANDARDS

Recently Issued Accounting Pronouncements

We monitor new accounting pronouncements issued by the FASB and do not believe any accounting pronouncements issued through the date of this report will have a material impact on our financial statements.

NOTE 4 – BUSINESS COMBINATIONS AND RELATED ACTIVITY

Imaging Center

Imaging Center Segment

During the first quarter of 2023, 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.

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

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 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 )

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

& S Services Inc.

1/1/2023 3,500 435 1,689 3,015 50 — ( 1,689 )

Southern California Diagnostic Imaging, Inc.

1/1/2023 $ 1,815 466 1,184 1,272 50 27 ( 1,184 )

Inglewood Imaging Center, LLC 2/1/2023 2,600 877 1,188 1,658 50 15 ( 1,188 )

Ramapo Radiology Associates, P.C.

2/1/2023 $ 2,000 1,663 3,775 229 100 8 ( 3,775 )

Total 9,915 3,441 7,836 6,174 250 50 ( 7,836 )

*Fair Value Determination is Final

^ 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 recorded $ 1.0 million in current assets, $ 0.2 million in property plant and equipment, $ 27.7 million in intangible assets, $ 3.2 million in liabilities and $ 19.0 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 released 18 months after acquisition subject to adjustment for any indemnification claims and will be marked to market in subsequent periods.

We 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.

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 $ 5.4 million in fixed assets, $ 3.0 million in equipment, and $ 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 $ 11.1 million or 35 % noncontrolling economic interest in FCR.

The initial accounting is preliminary as of September 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

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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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 September 30, Nine Months Ended September 30,

2022 2021 2022 2021

The table below presents 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 $ 388,431 $ 341,168

AI 900 496 3,056 496

Total revenue $ 390,564 $ 341,767

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Total depreciation and amortization $ 31,315 $ 27,118

Loss (Gain) on Disposal of Equipment

Loss on Disposal of Equipment:

Imaging Centers $ 577 $ 1,154

Total loss (gain) $ ( 247 ) $ 2,595 $ 962 $ ( 279 )

Total loss on disposal of equipment $ 579 $ 1,128

Imaging Centers $ 122 $ 201

Total severance $ 134 $ 201

Income from Operations

Income (Loss) from Operations

Imaging Centers $ 13,561 $ 3,898

AI ( 6,890 ) ( 5,617 )

Total income from operations $ 6,924 $ 32,570 $ 24,761 $ 71,611

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

No such funds were received for the three months ended September 30, 2021.

Total income (loss) from operations $ 6,671 $ ( 1,719 )

NOTE 6 – CREDIT FACILITIES AND NOTES PAYABLE

As of September 30, 2022 and December 31, 2021 our term loan debt obligations are as follows (in thousands):

September 30,

As of March 31, 2023 and December 31, 2022 our term loan debt and other obligations are as follows (in thousands):

2023 December 31,

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Discount on First Lien Term Loans ( 10,606 ) ( 11,127 )

SunTrust Term Loan collateralized by NJIN's tangible and intangible assets 42,000 46,500

Term Loan Agreement collateralized by NJIN's tangible and intangible assets 148,125 150,000

Discount on NJIN Term Loan Agreement ( 1,188 ) ( 1,254 )

Equipment notes payable at 6.0 %, due 2028, collateralized by medical equipment

Total debt obligations 868,289 851,744

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Long term portion debt obligations $ 852,354 $ 839,344

We had no outstanding balance under our $ 195.0 million Barclays Revolving Credit Facility at September 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 September 30, 2022.

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

As of September 30, 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 March 31, 2023 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 March 31, 2023.

We also had no balance under our $ 50.0 million Truist Revolving Credit Facility related to our consolidated subsidiary NJIN at March 31, 2023, and with no letters of credit reserved against the facility, the full amount was available to draw upon.

At March 31, 2023, we were in compliance with all covenants under our credit facilities.

On February 1, 2023, we issued a promissory note in the amount of $ 19.8 million to acquire radiology equipment previously leased under operating leases.

Amendments to Credit Facilities

First Amendment to Second Amended and Restated First Lien Credit and Guaranty Agreement

On March 27, 2023, we entered into the First Amendment to Second Amended and Restated First Lien Credit and Guaranty Agreement (the “Amendment”).

The Amendment replaces the interest rate benchmark, from the London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Financing Rate (“SOFR”) and includes applicable credit spread adjustments of 0.11448 %, 0.26161 %, and 0.42826 % for interest periods of one month, three months, and six months, respectively.

The replacement of LIBOR with SOFR and the credit spread adjustments shall be effective as of March 31, 2023, which is the last day of the last-ending existing interest period of currently outstanding loans bearing interest at LIBOR.

Other than the foregoing, the material terms of the Credit Agreement remain unchanged.

Second Amended and Restated First Lien Credit and Guaranty Agreement

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

Senior Secured Credit Facilities

First Lien Term Loans:

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

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

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

At September 30, 2022 the effective Eurodollar Rate and the Alternate Base Rate for the First Lien Term Loans under the Restated Credit Agreement was 2.49 % and 6.25 %, respectively and the applicable margin for the Eurodollar Rate and Alternate Base Rate First Lien Term Loans under the Restated Credit Agreement was 3.00 % and 2.00 %, respectively.

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

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

SunTrust Credit Facilities:

At September 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:

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

Second Amended and Restated Revolving Credit and Term Loan Agreement

On October 7, 2022, we entered into the Second Amended and Restated Revolving Credit and Term Loan Agreement (the "Restated Credit and Term Loan Agreement") which provides for a $ 150.0 million of a secured term loan (the "Truist Term Loan") and a $ 50.0 million secured revolving credit facility (the "Truist Revolving Credit Facility").

Both loans were secured by our simultaneous entry into the Second Amended and Restated Guaranty and Security Agreement on the same date.

The proceeds were were used to refinance the outstanding balance under our prior term loan agreement and provide funding for current and future operations.

Total costs of the Restated Credit and Term Loan Agreement amounted to approximately $ 2.7 million segregated as follows:

$ 2.0 million capitalized to discount and deferred finance cost and $ 0.7 million expensed to loss

on extinguishment of debt and related expenses in other expense.

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

All obligations under the Second Amended and Restated Credit and Term Loan Agreement bear interest at either a SOFR or a Base Rate (each as defined in the Restated Credit and Term Loan Agreement), plus an applicable margin according to the following schedule:

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

I Greater than or equal to 3.00 :1.00

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V Less than 1.50 :1.00

The loans and other obligations outstanding under the SunTrust Credit Agreement currently bear interest at a three month LIBOR election at 2.88 % plus an applicable margin and fees based on Pricing Level V described above.

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

Senior Secured Credit Facilities

First Lien Term Loans:

Through March 31, 2023, the First Lien Term Loans under the Restated Credit Agreement bore interest at either a Eurodollar Rate or an Alternate Base Rate (in each case, as defined in the Restated Credit Agreement), plus an applicable margin.

The applicable margin for Eurodollar Rate and Alternate Base Rate First Lien Term Loans under the Restated Credit Agreement was 3.00 % and 2.00 %, respectively, with an effective Eurodollar Rate and the Alternate Base Rate of 4.63 % and 8.00 %, respectively.

Under the Amendment, effective March 31, 2023, the First Lien Term Loans under the Restated Credit Agreement will bear interest either at a SOFR or an Alternate Base Rate (in each case, as defined in the Amendment) plus an applicable margin.

The applicable margin for the SOFR and Alternate Base Rate First Lien Term Loans under the Amendment is 3.00 % and 2.00 %, respectively.

At March 31, 2023, we have an effective SOFR of 7.81 % ,with an applicable credit spread adjustment of 0.11448 %, and an Alternate Base Rate of 10 %, respectively.

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

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

Truist Term Loan:

The Truist Term Loan currently bears interest at a three month SOFR election of 4.69 % plus an applicable margin and fees based on Pricing Level III described above.

The scheduled amortization of the Truist Term Loan begins March 31, 2023 with quarterly payments of $ 1.9 million, representing 1.00 % of the original principal balance.

At scheduled intervals, the quarterly amortization increases by $ 0.9 million, with the remaining balance to be paid at maturity.

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

The Truist Term Loan will mature on October 10, 2027 unless otherwise accelerated under the terms of the Credit Agreement.

Revolving Credit Facilities

Associated with both the Barclays and Truist Revolving Credit Facilities are deferred financing costs, net of accumulated amortization, of $ 2.1 million at March 31, 2023.

Barclays Revolving Credit Facility

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 $ 1.8 million at September 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:

First Lien Net Leverage Ratio Eurodollar Rate Spread Alternate Base Rate Spread

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

First Lien Net Leverage Ratio Term SOFR Loans Alternate Base Rate Spread

3.25 % 2.25 %

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2.75 % 1.75 %

As of September 30, 2022, the effective interest rate payable on revolving loans under the Barclays Revolving Credit Facility was 8.25 %.

As of March 31, 2023, 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.

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

SunTrust Revolving Credit Facility

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

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

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

Truist Revolving Credit Facility:

Associated with the Truist Revolving Credit Facility of $ 50.0 million are deferred financing costs, net of accumulated amortization, of $ 0.6 million at March 31, 2023.

As of March 31, 2023, NJIN had no borrowings under the Truist Revolving Credit Facility.

The Truist Revolving Credit Facility bears interest with different margins based on types of borrowings at a Pricing Level III as noted in the pricing grid above.

The Truist Revolving Credit Facility terminates on the earliest of (i) October 7, 2027, (ii) the date on which the Revolving Commitments are terminated pursuant to Section 2.8 of the Truist Restated Credit Agreement, or (iii) the date on which all amounts outstanding under the Truist Restated Credit Agreement have been declared or have automatically become due and payable (whether by acceleration or otherwise).

Recent prior amendments to prior credit facilities:

Truist Credit Facilities:

On August 31, 2018, under the Amended and Restated Revolving Credit and Term Loan Agreement, NJIN secured a term loan commitment of $ 60.0 million and established revolving credit facility of $ 30.0 million.

The agreement had a maturity date of August 31, 2023 and was refinanced on October 10, 2022 by the Second Amended and Restated Revolving Credit and Term Loan Agreement.

NOTE 7 – STOCK-BASED COMPENSATION

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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), 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, 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 nine months ended September 30, 2022:

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.

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

Stock options generally vest over 3 to 5 years and expire 5 to 10 years from the date of grant.

The following summarizes all of our option transactions for the three months ended March 31, 2023:

Outstanding Options

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Granted 261,220 18.64

Balance, September 30, 2022 703,914 15.58 6.10 $ 5,270,161

Exercisable at September 30, 2022 508,969 11.05 4.93 5,204,446

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

As of September 30, 2022, total unrecognized stock-based compensation expense related to non-vested employee awards was $ 1.4 million, which is expected to be recognized over a weighted average period of approximately 2.20 years.

Exercised ( 5,000 ) 10.10

Balance, March 31, 2023 935,134 16.57 6.96 $ 8,840,425

Exercisable at March 31, 2023 672,538 14.70 5.98 7,568,342

Aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between our closing stock price on March 31, 2023 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, 2023.

As of March 31, 2023, total unrecognized stock-based compensation expense related to non-vested employee awards was $ 2.5 million, which is expected to be recognized over a weighted average period of approximately 2.11 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, 2022, total unrecognized stock based compensation expense related to non-vested DeepHealth options was approximately $ 0.9 million, which is expected to be recognized over a weighted average period of approximately 0.89 years

As of March 31, 2023, total unrecognized stock based compensation expense related to non-vested DeepHealth options was approximately $ 0.3 million, which is expected to be recognized over a weighted average period of approximately 0.60 years

Outstanding Options

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Exercised ( 14,473 ) —

Balance, September 30, 2022 129,575 — 7.03 $ 2,636,851

Exercisable at September 30, 2022 84,885 — 7.03 1,727,406

Balance, March 31, 2023 102,509 — 6.55 $ 2,565,800

Exercisable at March 31, 2023 77,537 — 6.55 1,940,758

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

Restricted Stock Awards

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

As of September 30, 2022, we have issued a total of 7,892,930 RSA’s of which 554,476 were unvested at September 30, 2022.

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

RSA's Weighted-Average

Restricted Stock Awards ("RSAs")

The Restated Plan permits the award of RSAs and the following summarizes all unvested RSA’s activities during the three months ended March 31, 2023:

RSAs Weighted-Average

Term (Years) Weighted-Average

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

RSAs unvested at December 31, 2022 536,767 $ 23.84

Changes during the period

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Forfeited or Canceled ( 667 ) $ 22.80

RSA's unvested at September 30, 2022 554,476 1.29 $ 23.84

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

RSAs unvested at March 31, 2023 526,405 1.51 $ 20.77

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

Other stock bonus awards

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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 nine months ended September 30, 2022, awards totaling 1,000 shares with a value of approximately $ 19.0 thousand were granted.

During the three months ended March 31, 2023, 10,765 shares were issued with a value of $ 0.2 million.

Performance based stock units ("PSUs")

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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.

In January of 2023, based on the performance condition achieved, the board of directors issued 12,843 units with a fair value of $ 29.44 per unit.

In January 2023, the we granted certain employees PSUs with a target award of 60,685 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 ( — % 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, 2023 through December 31, 2023.

Performance based stock options ("PSOs")

In January 2022, we granted certain employees PSOs 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 by the board of directors over the period from January 1, 2022 through December 31, 2022.

In January 2022, we 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.

In January of 2023, based on the performance condition achieved, the board of directors issued 27,981 options with a strike price of $ 29.44 per share.

In January 2023, we granted certain employees PSOs with a potential to option a maximum of 235,227 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 235,227 shares) depending upon the extent to which we achieve a performance condition as determined the board of directors over the period from January 1, 2023 through December 31, 2023.

Long Term Incentive Plan shares ("LTIPs")

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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 nine months ended September 30, 2022:

The units and shares vest ratably over a two to four 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 three months ended March 31, 2023:

LTIPs Weighted-Average

Term (Years) Weighted-Average

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

LTIPs unvested at December 31, 2022 169,471 $ 19.56

Changes during the period

Granted 209,643 $ 20.03

Vested ( 48,395 ) $ 19.55

Forfeited or Canceled ( 13,476 ) $ 19.72

RSA's unvested at September 30, 2022 173,269 2.98 $ 19.56

LTIPs unvested at March 31, 2023 317,243 3.43 $ 19.87

Restated Plan summary

In summary, of the 16,500,000 shares of common stock reserved for issuance under the Restated Plan, at September 30, 2022, there remain 2,037,463 shares available under the Restated Plan for future issuance.

NOTE 8 – SUBSEQUENT EVENTS

Refinancing of SunTrust (Now Truist) Credit Facilities:

On October 7, 2022, our subsidiary, NJIN, entered into a Second Amended and Restated Credit and Term Loan Agreement which provides for a single term loan of $ 150.0 million and a $ 50.0 million revolving credit facility.

The proceeds of the term loan were used to partially fund the acquisition of Montclair Radiological Associates, refinance the outstanding $ 42.0 million term loan and pay fees and expenses associated with the refinancing transaction.

The key terms of the Restated Credit and Term Loan Agreement are:

• Interest Rates:

Borrowings bear interest at either the SOFR or Base Rate as defined in the agreement, plus an applicable margin.

• Maturity Dates:

The maturity date for both the term loan and revolving loans is October 7, 2027, unless accelerated in accordance with the terms of the agreement.

Beginning March 31, 2023, we will be required to make quarterly principal amortization payments on the term loan in the amount of $ 1.9 million, which will increase to $ 3.8 million, with the balance paid at maturity.

Acquisitions:

On October 1, 2022, through our NJIN subsidiary, we acquired Montclair Radiological Associates for purchase consideration of approximately $ 112.6 million.

Montclair consists of six multi modality radiology centers located in New Jersey.

On November 1, 2022, we acquired a 75 % controlling share interest in London-based Heart & Lung Imaging Limited ("HLH").

HLH was founded to improve lung cancer outcomes through early detection and accurate diagnosis.

HLH will be integrated into our AI operations.

Total combined purchase consideration, including contingencies, consists of RadNet common stock and cash up to a potential $ 27.6 million.

In summary, of the 16,500,000 shares of common stock reserved for issuance under the Restated Plan, at March 31, 2023, there remain approximately 740,000 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