RadNet, Inc. 10-Q

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk Foreign Currency Exchange Risk: We are exposed to foreign exchange risk with respect to revenues and expenses denominated in the Pound Sterling, Euro, Canadian Dollar, Hungarian Forint and Indian Rupee. We provide radiological services in the United Kingdom, conduct AI operations in the Netherlands, and maintain research and development centers in Canada, Hungary and India. We do not have any foreign currency exchange contracts to mitigate this risk. At September 30, 2025, a hypothetical 1% decline in the currency exchange rates between the U.S. dollar against these currencies, would have resulted in an annual increase of approximately $0.4 million in operating expenses. Interest Rate Sensitivity : Our debt instruments, including borrowings under our Barclays Revolving Credit Facility and our Truist Revolving Credit Facility, bear interest at variable rates. Accordingly, our interest expense and our earnings are affected by changes in short term interest rates. To mitigate our future floating rate interest expense exposure, we entered into the 2019 Swaps with a locked-in interest rate for one-month Term SOFR of 1.98% for $400 million of notional value. We are liable for premium payments to the 2019 swap counterparties if interest rates are below the arranged rate and receive payments from the counterparties if interest rates exceed the arranged rate. Payments under the 2019 Swaps are settled in cash on a monthly basis. The 2019 Swaps for the $400 million notional amount will expire in October 2025. We can elect SOFR or Alternative Base Rate interest options on amounts outstanding under the Barclays Term Loan. At September 30, 2025, we had $963.6 million outstanding subject to an SOFR election on the Barclays Term Loan. At September 30, 2025, our effective SOFR interest rate plus applicable margin was 6.45%. The 2019 Swaps secure a $1.98% 51 Table of Contents SOFR rate for a $400 million notional amount. After giving effect to our 2019 Swaps, we had $563.6 million outstanding under the Barclays Term Loan that is unprotected by the 2019 Swaps at September 30, 2025. Consequently, a hypothetical 1% increase in the SOFR rates under the Barclay's credit facility would result in an increase of $5.6 million in annual interest expense and a corresponding decrease in income before taxes. The 2019 Swaps will mature in October 2025. We can elect SOFR or Base Rate interest rate options on amounts outstanding under the Truist Revolving Credit Facility. At September 30, 2025, we had $126.6 million outstanding subject to an adjusted SOFR election on the Truist Term Loan (as defined in the notes to our condensed consolidated financial statements). At September 30, 2025, our effective SOFR rate plus applicable margin was 5.60%. A hypothetical 1% increase in the adjusted Eurodollar rates under the Truist Revolving Credit Facility would result in an increase of approximately $1.3 million in annual interest expense and a corresponding decrease in income before taxes.