What changed in this filing

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Item 1. Financial Statements

2023-08-09 compared with 2023-05-10 · 230 added, 154 removed, 607 unchanged (39% of the section changed)

35 unchanged sentences

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

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

67,669,564 and 57,723,125 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

Additional paid-in-capital 703,593 436,288

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Service fee revenue $ 363,918 $ 316,501 $ 716,338 $ 619,776

12 unchanged sentences

Non-cash change in fair value of interest rate hedge ( 4,159 ) ( 6,306 ) ( 66 ) ( 27,125 )

Other expenses 1,432 165

Other expenses (income) 40 ( 7 ) 1,472 158

Total other expense (income) 10,497 2,324 30,316 ( 9,255 )

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

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

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

INCOME (LOSS) BEFORE INCOME TAXES 13,944 17,234 796 27,094

(Provision for) Benefit from income taxes 614 ( 3,403 ) ( 521 ) ( 4,900 )

NET INCOME (LOSS) 14,558 13,831 275 22,194

Net income attributable to noncontrolling interests 6,189 5,926 12,911 11,276

NET (LOSS) INCOME ATTRIBUTABLE TO RADNET, INC.

NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC.

COMMON STOCKHOLDERS $ 8,369 $ 7,905 $ ( 12,636 ) $ 10,918

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

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

COMMON STOCKHOLDERS $ 0.14 $ 0.14 $ ( 0.21 ) $ 0.20

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

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

COMMON STOCKHOLDERS $ 0.12 $ 0.13 $ ( 0.21 ) $ 0.18

4 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(IN THOUSANDS)

Three Months Ended March 31,

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

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

2023 2022 2023 2022

NET INCOME (LOSS) $ 14,558 $ 13,831 $ 275 $ 22,194

Foreign currency translation adjustments 873 ( 4,766 ) 3,650 ( 6,030 )

Change in fair value of cash flow hedge from prior periods reclassified to earnings, net of taxes 922 924 1,844 1,847

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

COMPREHENSIVE INCOME (LOSS) 16,353 9,989 5,769 18,011

Less comprehensive income attributable to noncontrolling interests 6,189 5,926 12,911 11,276

COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO

COMMON STOCKHOLDERS $ 10,164 $ 4,063 $ ( 7,142 ) $ 6,735

3 unchanged sentences

(IN THOUSANDS EXCEPT SHARE DATA)

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

The following table summarizes changes in the Company’s consolidated stockholders' equity, including noncontrolling interest, during the three months ended June 30, 2023 and June 30, 2022.

Common Stock Additional Paid-In

7 unchanged sentences

Shares Amount

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

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

Issuance of common stock under the equity compensation plan 538,185 — — — — — — —

1 unchanged sentence

Stock-based compensation expense — — 4,870 — — 4,870 — 4,870

Issuance of common stock, net of issuance costs 8,711,250 1 246,201 — — 246,202 — 246,202

Issuance of common stock in connection with acquisitions 144,227 — 4,000 — — 4,000 — 4,000

Distributions paid to noncontrolling interests — — — — — — ( 3,523 ) ( 3,523 )

Change in cumulative foreign currency translation adjustment — — — 873 — 873 — 873

1 unchanged sentence

Other — — — — 1 1 — 1

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

Net income (loss) — — — — 8,369 8,369 6,189 14,558

BALANCE-JUNE 30, 2023 67,669,564 $ 7 $ 703,593 $ ( 15,183 ) $ ( 95,258 ) $ 593,159 $ 167,845 $ 761,004

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

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 152,889 — — — — — — —

1 unchanged sentence

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

Issuance of common stock for acquisitions 2,106,292 — 56,470 — — 56,470 — 56,470

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

Contributions from noncontrolling partner — — — — — — 10,673 10,673

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

1 unchanged sentence

Other — — ( 2 ) — — ( 2 ) — ( 2 )

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

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

Net income (loss) — — — — 7,905 7,905 5,926 13,831

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

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

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(IN THOUSANDS EXCEPT SHARE DATA)

The following table summarizes changes in the Company’s consolidated stockholders' equity, including noncontrolling interest, during the six months ended June 30, 2023 and June 30, 2022.

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, 2022 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 1,065,877 — — — — — — —

Issuance of common stock under the DeepHealth equity compensation plan 20,085 — — — — — — —

Stock-based compensation expense — — 17,055 — — 17,055 — 17,055

Issuance of common stock, net of issuance costs 8,711,250 1 246,201 — — 246,202 — 246,202

Issuance of common stock in connection with acquisitions 144,227 — 4,000 — — 4,000 — 4,000

Distributions paid to noncontrolling interests — — — — — — ( 3,523 ) ( 3,523 )

Change in cumulative foreign currency translation adjustment — — — 3,650 — 3,650 — 3,650

Change in fair value of cash flow hedge from prior periods reclassified to earnings, net of taxes — — — 1,844 — 1,844 — 1,844

Other — — ( 2 ) — — ( 2 ) — ( 2 )

Net income (loss) — — — — ( 12,636 ) ( 12,636 ) 12,911 275

BALANCE-JUNE 30, 2023 67,669,564 $ 7 $ 703,593 $ ( 15,183 ) $ ( 95,258 ) $ 593,159 $ 167,845 $ 761,004

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

Issuance of common stock under the equity compensation plan 683,077 — — — — — — —

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

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

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

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

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

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

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

Other — — ( 2 ) 1 ( 1 ) ( 2 ) — ( 2 )

Net income (loss) — — — — 10,918 10,918 11,276 22,194

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

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

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES

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

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

Net income (loss) $ 275 $ 22,194

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

Depreciation and amortization 63,495 55,980

16 unchanged sentences

Accounts payable, accrued expenses and other 14,952 32,092

Net cash provided by operating activities 32,616 901

Net cash provided by (used in) operating activities 100,691 65,744

CASH FLOWS FROM INVESTING ACTIVITIES

2 unchanged sentences

Proceeds from sale of equipment 73 4,121

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

Equity contributions in existing and purchase of interest in joint ventures ( 288 ) ( 1,441 )

Net cash provided by (used in) investing activities ( 105,910 ) ( 95,988 )

CASH FLOWS FROM FINANCING ACTIVITIES

Principal payments on notes and leases payable ( 184 ) —

Principal payments on notes payable ( 1,052 ) —

Payments on term loan debt ( 7,376 ) ( 6,625 )

Distributions paid to noncontrolling interests ( 3,523 ) —

Proceeds from issuance of common stock, net of issuance costs 246,202 —

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

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

Net cash provided by (used in) financing activities 234,302 ( 6,625 )

EFFECT OF EXCHANGE RATE CHANGES ON CASH ( 266 ) 1,433

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

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 228,817 ( 35,436 )

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 $ 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.

We acquired equipment and certain leasehold improvements for approximately $ 61.3 million and $ 60.8 million during the six months ended June 30, 2023 and 2022, respectively, which were not paid for as of June 30, 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 30, 2023, we issued 144,227 shares to settle the general holdback contingent liabilities as part of our purchase of Aidence Holding B.V..

The shares were ascribed a value of $ 4.0 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.

6 unchanged sentences

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

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.

At June 30, 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.

5 unchanged sentences

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

In June 2023, we closed on a public offering of 8,711,250 shares of our common stock at a price to the public of $ 29.75 per share.

The gross proceeds as a result of this public offering was $ 259.2 million before underwriting discounts, commissions, and expenses totaling $ 13.0 million.

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

18 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 $ 48.8 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 Group on a combined basis recognized $ 51.4 million and $ 46.8 million of revenue, net of management services fees to RadNet, for the three months ended June 30, 2023 and 2022, respectively and $ 51.4 million and $ 46.8 million of operating expenses for the three months ended June 30, 2023 and 2022, respectively.

RadNet recognized $ 216.2 million and $ 202.4 million of total billed net service fee revenue for the three months ended June 30, 2023, and 2022, respectively, for management services provided to the Group relating primarily to the technical portion of billed revenue.

The Group on a combined basis recognized $ 100.2 million and $ 92.5 million of revenue, net of management services fees to RadNet, for the six months ended June 30, 2023 and 2022, respectively and $ 100.2 million and $ 92.5 million of operating expenses for the six months ended June 30, 2023 and 2022, respectively.

RadNet recognized $ 423.6 million and $ 393.4 million of total billed net service fee revenue for the six months ended June 30, 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 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.

In our condensed consolidated balance sheets at June 30, 2023 and December 31, 2022, we have included approximately $ 101.9 million and $ 100.4 million, respectively, of accounts receivable and approximately $ 16.3 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 $ 0.4 million for the three months ended March 31, 2023, and March 31, 2022, respectively.

We paid operating expenses for the venture of $ 0.6 million and $ 0.6 million for the three months ended June 30, 2023, and June 30, 2022, respectively and $ 1.1 million and $ 1.0 million for the six months ended June 30, 2023 and June 30, 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 March 31, 2023 and 2022 have been made.

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

10 unchanged sentences

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

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

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

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

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

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

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

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

1 unchanged sentence

Revenue under capitation arrangements is recognized in the period in which we are obligated to provide services to plan enrollees under contracts with various health plans.

Our total service revenues during the three months ended March 31, 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):

Our total service revenues during the three and six months ended June 30, 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

June 30, Six Months Ended

2023 2022 2023 2022

Commercial insurance $ 224,842 $ 195,066 $ 442,044 $ 383,615

14 unchanged sentences

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.

Through June 30, 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 $ 15.4 million and $ 15.4 million at March 31, 2023 and December 31, 2022, respectively.

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

Amounts remaining to be collected on these agreements were $ 15.0 million and $ 15.4 million at June 30, 2023 and December 31, 2022, respectively.

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

party's ability to pay upfront at the inception of the notes receivable and subsequently by reviewing their financial statements annually and reassessing any insolvency risk on a periodic basis.

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

Deferred financing costs, net of accumulated amortization, were $ 2.0 million and $ 2.3 million, as of June 30, 2023 and December 31, 2022, respectively.

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

8 unchanged sentences

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

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

GOODWILL - Goodwill at June 30, 2023 totaled $ 687.9 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.

If 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.

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

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

Activity in goodwill for the six months ended June 30, 2023 is provided below (in thousands):

Imaging Center Artificial Intelligence Total

3 unchanged sentences

Currency translation 1,171 1,116 2,287

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:

Balance as of June 30, 2023 $ 615,581 $ 72,298 $ 687,879

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 June 30, 2023 and December 31, 2022 are as follows (in thousands):

As of June 30, 2023:

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

8 unchanged sentences

Total Annual Amortization $ 6,867 $ 11,510 $ 11,130 $ 10,683 $ 9,665 $ 50,578 $ 100,433

*Excluding the three months ended March 31, 2023

*Excluding the six months ended June 30, 2023

As of December 31, 2022:

9 unchanged sentences

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.

Total intangible asset amortization expense was $ 6.0 million and $ 4.8 million for the six months ended June 30, 2023 and June 30, 2022, respectively.

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

7 unchanged sentences

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

We recorded 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;

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

We recorded income tax benefit of $ 0.6 million, or an effective tax rate of ( 4.4 )%, for the three months ended June 30, 2023 and $ 3.4 million, or an effective tax rate of 19.7 % for the three months ended June 30, 2022.

We recorded income tax expense of $ 0.5 million, or an effective tax rate of 65.5 %, for the six months ended June 30, 2023 and $ 4.9 million, or an effective tax rate of 18.1 % for the six months ended June 30, 2022.

The income tax rates for the three and six months ended June 30, 2023 diverge from the federal statutory rate due to (i) noncontrolling interests due to the controlled partnerships;

(ii) effects of state income taxes (iii) share-based compensation;

and (iv) officer's compensation limitations.

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

12 unchanged sentences

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

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

No events have occurred such as fire, flood, or other acts which have impaired the integrity of our ROU assets as of June 30, 2023.

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

2 unchanged sentences

EQUITY BASED COMPENSATION – We have one long-term incentive plan that we adopted in 2006 and which we have amended and restated at various points in time:

first on April 20, 2015, second on March 9, 2017, and currently as of April 15, 2021 (the “Restated Plan”).

first on April 20, 2015, second on March 9, 2017, third on April 15, 2021 and currently as of April 27, 2023 (the “Restated Plan”).

The Restated Plan was approved by our stockholders at our annual stockholders meeting on June 7, 2023.

15 unchanged sentences

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

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.

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

The components of other comprehensive income (loss) for the three and six months ended June 30, 2023 and June 30, 2022 are included in the consolidated statements of comprehensive income (loss).

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.

7 unchanged sentences

They will mature in October 2023 for the smaller notional and October 2025 for the larger notional.

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.

Under these arrangements, we arranged the 2019 Swaps with locked in 1 month Term SOFR rates at 1.89 % for the $ 100,000,000 notional and at 1.98 % for the $ 400,000,000 notional.

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.

9 unchanged sentences

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

For the three months ended March 31, 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

For the three months ended June 30, 2023

Account March 31, 2023 Balance Amount of comprehensive loss recognized on derivative net of taxes Amount of loss reclassified out of accumulated OCI into income (prior period effective portion), net of taxes June 30, 2023 Balance Location

Accumulated Other Comprehensive Loss, net of taxes $( 14,279 ) $ — $ 922 $( 13,357 ) Equity

For the three months ended March 31, 2022

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

For the six months ended June 30, 2023

Accumulated Other Comprehensive Loss, net of taxes $( 15,201 ) $ — $ 1,844 $( 13,357 ) Equity

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

For the three months ended March 31, 2023

For the three months ended June 30, 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 $ 4,158 Other income (expense) $ ( 922 ) Interest Expense

For the three months ended March 31, 2022

For the six months ended June 30, 2023

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 $ 66 Other income (expense) $ ( 1,844 ) Interest Expense

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

See Fair Value Measurements section below for the fair value of the 2019 Swaps at June 30, 2023.

CONTINGENT CONSIDERATION -

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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.

This contingency had a value of approximately $ 7.2 million on June 30, 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 April 30, 2023 we settled the General Holdback contingent liabilities by issuing 144,227 shares of our common stock.

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

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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.

This contingency had a value of approximately $ 3.7 million as of June 30, 2023.

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

Subsequently, on July 7, 2023, after the period covered by this report, we settled the Stock Holdback contingent liabilities by issuing 113,303 shares of our common stock at an ascribed a value of $ 3.2 million.

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.

On June 30, 2023 we settled the contingent consideration liability and recognized a gain of $ 1.2 million.

Heart and Lung Imaging Limited

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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 milestone contingency had a value of approximately $ 14.4 million as of June 30, 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

For the three months ended June 30, 2023

Entity Account March 31, 2023 Balance Issuance of contingent consideration Change in valuation of Contingent Consideration Currency Translation June 30, 2023 Balance

Aidence Other Long Term Liabilities $ 11,316 ( 4,000 ) $ ( 125 ) $ — $ 7,191

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Heart and Lung Limited Accrued Expenses & Other Long Term Liabilities $ 13,130 $ — $ 867 $ 361 $ 14,358

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

For the six months ended June 30, 2023

Entity Account January 1, 2023 Balance Issuance of contingent consideration Change in valuation of Contingent Consideration Currency Translation June 30, 2023 Balance

Aidence Other Long Term Liabilities 11,158 ( 4,000 ) $ 33 $ — $ 7,191

Quantib Accrued Expenses & Other Long Term Liabilities 3,709 $ — $ 1,562 $ — $ 5,271

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

Heart and Lung Limited Accrued Expenses & Other Long Term Liabilities 11,656 $ — $ 1,991 $ 711 $ 14,358

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

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

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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Level 2—Fair value is determined by using inputs other than Level 1 quoted prices that are directly or indirectly observable.

Inputs can include quoted prices for similar assets and liabilities in active markets or quoted prices for identical assets and liabilities in inactive markets.

Inputs can include quoted prices for similar assets and liabilities in active markets or quoted prices for identical

assets and liabilities in inactive markets.

Related inputs can also include those used in valuation or other pricing models such as interest rates and yield curves that can be corroborated by observable market data.

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

As of March 31, 2023

As of June 30, 2023

Level 1 Level 2 Level 3 Total

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

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

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

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

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

Contingent Consideration:

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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

As of June 30, 2023

Level 1 Level 2 Level 3 Total

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$ — $ — $ 5,271 $ 5,271

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

Heart and Lung Imaging Limited $ — $ — $ 14,358 $ 14,358

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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 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 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 $ 32.62 ) at June 30, 2023, the time period related to the contractual settlement term, and the probability of issuing the shares.

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.

As significant inputs for the contingent consideration of Aidence B.V., Quantib B.V., 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 March 31, 2023

As of June 30, 2023

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

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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.

At June 30, 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 June 30, 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.

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

Three Months Ended March 31,

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

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

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

2023 2022 2023 2022

Net income (loss) attributable to RadNet, Inc.'s common stockholders $ 8,369 $ 7,905 $ ( 12,636 ) $ 10,918

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

Weighted average number of common shares outstanding during the period 59,880,803 56,059,824 59,221,453 55,683,335

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

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

Basic net income (loss) per share attributable to RadNet, Inc.'s common stockholders $ 0.14 $ 0.14 $ ( 0.21 ) $ 0.20

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

Weighted average number of common shares outstanding during the period 59,880,803 56,059,824 59,221,453 55,683,335

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

Add non-vested restricted stock subject only to service vesting 205,413 47,652 — 122,781

Add additional shares issuable upon exercise of stock options and contingently issuable shares 830,769 859,072 — 860,174

Weighted average number of common shares used in calculating diluted net income per share 60,916,985 56,966,548 59,221,453 56,666,290

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

Changes in FV associated with contingently issuable shares $ ( 934 ) $ ( 468 ) $ — $ ( 863 )

Net income (loss) attributable to RadNet, Inc's common stockholders for diluted share calculation $ 7,435 $ 7,437 $ ( 12,636 ) $ — $ 10,055

Diluted net income (loss) per share attributable to RadNet, Inc.'s common stockholders $ 0.12 $ 0.13 $ ( 0.21 ) $ 0.18

Fair value change for contingently issuable shares excluded from the computation of diluted per share amounts as its effect would be antidilutive $ — $ — $ 1,696 $ —

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 —

Non-vested restricted stock subject to service vesting — — 644,623 —

Shares issuable upon the exercise of stock options 82,775 70,070 759,313 58,491

Contingently issuable shares — — 193,207 —

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.

For the six months ended June 30, 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 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:

As of June 30, 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.

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

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 June 30, 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 as of March 31, 2023.

No observable price changes, impairment in our investment or impairment of the loan receivable was identified as of June 30, 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 March 31, 2023.

No indicators of impairment existed as of June 30, 2023.

Joint venture investment and financial information

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

The following table is a summary of our investment in joint ventures during the six months ended June 30, 2023 (in thousands):

Balance as of December 31, 2022 $ 57,893

Equity in earnings in these joint ventures 2,851

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):

Distribution of earnings ( 8,540 )

Equity contributions in existing joint ventures 288

Balance as of June 30, 2023 $ 52,492

We charged management service fees from the centers underlying these joint ventures of approximately $ 4.0 million and $ 5.6 million for the three months ended June 30, 2023 and 2022 and $ 8.2 million and $ 11.1 million for the six months ended June 30, 2023 and 2022, respectively.

The following table is a summary of key balance sheet data for these joint ventures as of June 30, 2023 and December 31, 2022 and income statement data for the six months ended June 30, 2023 and 2022 (in thousands):

Balance Sheet Data:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Current assets $ 38,334 $ 39,304

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Total net assets $ 94,274 $ 106,458

Book value of RadNet joint venture interests $ 50,754 $ 49,564

Cost in excess of book value of acquired joint venture interests and other 8,567 8,329

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

Income statement data for the three months ended March 31,

Income statement data for the six months ended June 30,

Net revenue $ 84,699 $ 69,757

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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.

During the first and second quarters 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 California and New York markets.

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

Madison Radiology Medical Group, Inc.

4/1/2023 250 100 — 150 — — —

Total 10,165 3,541 7,836 6,324 250 50 ( 7,836 )

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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,

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

2023 2022 2023 2022

Imaging Centers $ 401,336 $ 352,818 $ 789,767 $ 693,985

AI 2,379 1,557 4,512 2,156

Total revenue $ 403,715 $ 354,375 $ 794,279 $ 696,141

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Imaging Centers $ 83 $ 36 $ 661 $ 1,189

AI ( 6 ) 45 ( 5 ) 20

Total loss on disposal of equipment $ 77 $ 81 $ 656 $ 1,209

Imaging Centers $ 153 $ 99 $ 276 $ 300

AI 1,717 — 1,728 —

Total severance $ 1,870 $ 99 $ 2,004 $ 300

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NOTE 6 – CREDIT FACILITIES AND NOTES PAYABLE

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

As of June 30, 2023 and December 31, 2022 our term loan debt and other obligations are as follows (in thousands):

2023 December 31,

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Long term portion debt obligations $ 848,333 $ 839,344

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.

We had no outstanding balance under our $ 195.0 million Barclays Revolving Credit Facility at June 30, 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 June 30, 2023.

We also had no balance under our $ 50.0 million Truist Revolving Credit Facility related to our consolidated subsidiary NJIN at June 30, 2023, and with no letters of credit reserved against the facility, the full amount was available to draw upon.

At June 30, 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.

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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.

The replacement of LIBOR with SOFR and the credit spread adjustments were effective as of March 31, 2023, which was 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.

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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.

At June 30, 2023, we have an effective SOFR of 8.10 % ,with an applicable credit spread adjustment of 0.11448 %, and an Alternate Base Rate of 10.3 %, 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.

The First Lien Term Loans 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 Truist Term Loan currently bears interest at a three month SOFR election of 5.07 % plus an applicable margin and fees based on Pricing Level IV 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 Truist Term Loan will mature on October 10, 2027 unless otherwise accelerated under the terms of the Credit Agreement.

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

Associated with both the Barclays and Truist Revolving Credit Facilities are deferred financing costs, net of accumulated amortization, of $ 2.0 million at June 30, 2023.

Barclays Revolving Credit Facility

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2.75 % 1.75 %

As of March 31, 2023, the effective interest rate payable on revolving loans under the Barclays Revolving Credit Facility was 5.25 %.

As of June 30, 2023, the effective interest rate payable on revolving loans under the Barclays Revolving Credit Facility was 5.50 %.

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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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.

Associated with the Truist Revolving Credit Facility of $ 50.0 million are deferred financing costs, net of accumulated amortization, of $ 0.6 million at June 30, 2023.

As of June 30, 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 one long-term equity incentive plan, the RadNet, Inc.

Equity Incentive Plan, which we first amended and restated April 20, 2015, again on March 9, 2017 and currently as of April 15, 2021 (the "Restated Plan”).

Equity Incentive Plan, which we first amended and restated April 20, 2015, second on March 9, 2017, third on April 15, 2021, and currently as of April 27, 2023 (the "Restated Plan”).

The Restated Plan was most recently approved by our stockholders at our annual stockholders meeting on June 7, 2023.

We have reserved for issuance under the Restated Plan 20,100,000 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.

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:

The following summarizes all of our option transactions for the six months ended June 30, 2023:

Outstanding Options

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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.

Balance, June 30, 2023 935,134 16.57 6.71 $ 15,012,103

Exercisable at June 30, 2023 676,532 14.72 5.74 12,111,044

Aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between our closing stock price on June 30, 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 June 30, 2023.

As of June 30, 2023, total unrecognized stock-based compensation expense related to non-vested employee awards was $ 2.2 million, which is expected to be recognized over a weighted average period of approximately 1.77 years.

DeepHealth Options

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

As of March 31, 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

As of June 30, 2023, total unrecognized stock based compensation expense related to non-vested DeepHealth options was approximately $ 0.2 million, which is expected to be recognized over a weighted average period of approximately 0.46 years

Outstanding Options

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Exercised ( 20,085 ) —

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

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

Balance, June 30, 2023 96,897 — 6.33 $ 3,160,780

Exercisable at June 30, 2023 82,775 — 6.33 2,700,121

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 ("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:

The Restated Plan permits the award of RSAs and the following summarizes all unvested RSA’s activities during the six months ended June 30, 2023:

RSAs Weighted-Average

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Forfeited or Canceled ( 1,099 ) $ 21.70

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

RSAs unvested at June 30, 2023 569,067 1.56 $ 22.45

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

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

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

During the six months ended June 30, 2023, 10,765 shares were issued with a value of $ 0.2 million.

Performance based stock units ("PSUs")

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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.

In January 2023, 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 ( 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, 2023 through December 31, 2023.

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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")

AI Long Term Incentive Plan shares ("AI LTIPs")

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

1 unchanged sentence

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

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

The following summarizes all unvested AI LTIPs activities during the six months ended June 30, 2023:

AI LTIPs Weighted-Average

Term (Years) Weighted-Average

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

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

Changes during the period

2 unchanged sentences

Forfeited or Canceled ( 13,182 ) $ 19.89

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

AI LTIPs unvested at June 30, 2023 300,851 3.22 $ 19.93

Restated Plan summary

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.

In summary, of the 20,100,000 shares of common stock reserved for issuance under the Restated Plan, at June 30, 2023, there remain approximately 4,056,699 shares available under the Restated Plan for future issuance.

NOTE 8 – SUBSEQUENT EVENTS

On August 1, 2023, we acquired Delaware Diagnostic Imaging, P.A.

for a purchase consideration of approximately $ 0.6 million.

Delaware Diagnostic Imaging costs of a single multi modality radiology center located in Wilmington, Delaware.

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 issued 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.

On July 7, 2023, we settled the Stock Holdback contingent liabilities by issuing 113,303 shares of our common stock at an ascribed a value of $ 3.2 million.

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