What changed in this filing

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Item 1. Financial Statements

2023-11-09 compared with 2023-08-09 · 202 added, 158 removed, 679 unchanged (35% of the section changed)

3 unchanged sentences

(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

September 30,

2023 December 31,

30 unchanged sentences

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

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

67,848,209 and 57,723,125 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

Additional paid-in-capital 714,910 436,288

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

5 unchanged sentences

Depreciation and amortization 32,210 29,229 95,705 85,209

Loss on sale and disposal of equipment and other 77 81 656 1,209

(Gain) on contribution of imaging centers into joint venture ( 16,808 ) — ( 16,808 ) —

Loss (gain) on sale and disposal of equipment and other 527 ( 247 ) 1,183 962

Severance costs 1,153 195 3,157 496

5 unchanged sentences

Non-cash change in fair value of interest rate hedge 1,015 ( 12,451 ) 949 ( 39,576 )

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

Other (income) expenses ( 4,081 ) 1,405 ( 2,609 ) 1,562

Total other expense (income) 11,965 ( 1,711 ) 42,281 ( 10,966 )

16 unchanged sentences

(IN THOUSANDS)

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

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

2023 2022 2023 2022

10 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 June 30, 2023 and June 30, 2022.

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

Common Stock Additional Paid-In

7 unchanged sentences

Shares Amount

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

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

Issuance of common stock upon exercise of options 3,424 — 21 — — 21 — 21

Issuance of common stock under the equity compensation plan 3,447 — — — — — — —

3 unchanged sentences

Issuance of common stock in connection with acquisitions 169,903 — 5,123 — — 5,123 — 5,123

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

Sale of economic interests in majority owned subsidiary, net of taxes — — 2,217 — — 2,217 — 2,217

Contribution from noncontrolling partner — — — — — — 2,885 2,885

Change in cumulative foreign currency translation adjustment — — — ( 4,035 ) — ( 4,035 ) — ( 4,035 )

2 unchanged sentences

Net income (loss) — — — — 17,540 17,540 6,526 24,066

BALANCE-SEPTEMBER 30, 2023 67,848,209 $ 7 $ 714,910 $ ( 18,297 ) $ ( 77,719 ) $ 618,901 $ 177,257 $ 796,158

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

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

Issuance of common stock under the equity compensation plan 2,500 — — — — — — —

1 unchanged sentence

Stock-based compensation expense — — 3,362 — — 3,362 — 3,362

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

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

Sale of noncontrolling interests, net of taxes — — 1,916 — — 1,916 — 1,916

Contributions from noncontrolling partner — — — — — — 404 404

3 unchanged sentences

Net income (loss) — — — — 668 668 5,779 6,447

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

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

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

2 unchanged sentences

(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.

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

Common Stock Additional Paid-In

14 unchanged sentences

Issuance of common stock in connection with acquisitions 314,130 — 9,123 — — 9,123 — 9,123

Contribution from noncontrolling partner — — — — — — 2,885 2,885

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

Sale of economic interests in majority owned subsidiary, net of taxes — — 2,217 — — 2,217 — 2,217

Change in cumulative foreign currency translation adjustment — — — ( 385 ) — ( 385 ) — ( 385 )

2 unchanged sentences

Net income (loss) — — — — 4,904 4,904 19,437 24,341

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

BALANCE-SEPTEMBER 30, 2023 67,848,209 $ 7 $ 714,910 $ ( 18,297 ) $ ( 77,719 ) $ 618,901 $ 177,257 $ 796,158

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

3 unchanged sentences

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

Forfeiture of restricted stock ( 22,484 ) — ( 45 ) — — ( 45 ) — ( 45 )

Sale of noncontrolling interests, net of taxes — — 6,498 — — 6,498 — 6,498

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

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

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

2 unchanged sentences

Net income (loss) — — — — 11,585 11,585 17,055 28,640

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

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

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

2 unchanged sentences

(IN THOUSANDS)

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

5 unchanged sentences

Amortization of deferred financing costs and loan discount 2,240 1,943

Loss on sale and disposal of equipment and other 656 1,209

(Gain) on contribution of imaging centers into joint venture ( 16,808 ) —

(Gain) loss on sale and disposal of equipment and other 1,183 962

Amortization of cash flow hedge, net of taxes 2,765 2,771

1 unchanged sentence

Stock-based compensation 21,380 19,112

Loss on impairment 3,949 —

Change in fair value of contingent consideration

18 unchanged sentences

Payments on term loan debt ( 11,062 ) ( 9,938 )

Proceeds from sale of economic interest in majority owned subsidiary, net of taxes 5,102 —

Distributions paid to noncontrolling interests ( 3,523 ) —

Payments on contingent consideration ( 3,390 ) —

Proceeds from issuance of common stock, net of issuance costs 245,831 —

12 unchanged sentences

Supplemental Schedule of Non-Cash Investing and Financing Activities

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.

We acquired equipment and certain leasehold improvements for approximately $ 50.2 million and $ 61.0 million during the nine months ended September 30, 2023 and 2022, respectively, which were not paid for as of September 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 September 20, 2023, we issued 56,600 shares to settle the stock contingent liabilities as part of our purchase of Heart & Lung Imaging Limited.

The shares were ascribed a value of $ 1.6 million.

On September 1, 2023, we made a contribution to our joint venture Santa Monica Imaging Group, LLC of $ 32.0 million in equipment and other assets.

We recorded an offset to due from affiliates of $ 9.8 million to reduce our overall investment to $ 22.2 million.

On July 7, 2023, we issued 113,303 shares to settle the stock holdback contingent liabilities as part of our purchase of Quantib B.V..

The shares were ascribed a value of $ 3.5 million.

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..

1 unchanged sentence

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 1,141,234 shares 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.

4 unchanged sentences

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

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.

At September 30, 2023, we operated directly or indirectly through joint ventures with hospitals, 366 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.

27 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 $ 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 Group on a combined basis recognized $ 51.3 million and $ 48.9 million of revenue, net of management services fees to RadNet, for the three months ended September 30, 2023 and 2022, respectively and $ 51.3 million and $ 48.9 million of operating expenses for the three months ended September 30, 2023 and 2022, respectively.

RadNet recognized $ 214.7 million and $ 190.6 million of total billed net service fee revenue for the three months ended September 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 $ 151.5 million and $ 141.4 million of revenue, net of management services fees to RadNet, for the nine months ended September 30, 2023 and 2022, respectively and $ 151.5 million and $ 141.4 million of operating expenses for the nine months ended September 30, 2023 and 2022, respectively.

RadNet recognized $ 638.3 million and $ 584.0 million of total billed net service fee revenue for the nine months ended September 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 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.

In our condensed consolidated balance sheets at September 30, 2023 and December 31, 2022, we have included approximately $ 95.6 million and $ 110.3 million, respectively, of accounts receivable and approximately $ 17.3 million and $ 14.4 million of accounts payable and accrued liabilities related to the Group, respectively.

At all of our centers not serviced by the Group we have entered into long-term contracts with medical groups to provide professional services at those centers, including supervision and interpretation of diagnostic imaging procedures.

8 unchanged sentences

Maximum exposure to loss is the loss that we would absorb in the event that all of the assets of ScriptSender are deemed worthless.

We paid operating expenses for the venture of $ 0.6 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.

We paid operating expenses for the venture of $ 0.8 million and $ 0.5 million for the three months ended September 30, 2023, and September 30, 2022, respectively and $ 1.9 million and $ 1.5 million for the nine months ended September 30, 2023 and September 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 June 30, 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.

6 unchanged sentences

Our performance obligations for diagnostic services are generally satisfied over a period of less than one day.

The contractual relationships with patients, in most cases, also involve a third-party payor (Medicare, Medicaid, managed care health plans and commercial insurance companies, including plans offered through the health insurance exchanges) and the transaction prices for the services provided are dependent upon the terms provided by Medicare and Medicaid, or negotiated with managed care health plans and commercial insurance companies.

The contractual relationships with patients, in most cases, also involve a third-party payor (Medicare, Medicaid, managed care health plans and commercial insurance companies, including plans offered through the health insurance exchanges) and the fees for the services provided are dependent upon the terms provided by Medicare and Medicaid, or negotiated with managed care health plans and commercial insurance companies.

The payment arrangements with third-party payors for the services we provide to the related patients typically specify payments at amounts less than our standard charges and generally provide for payments based upon predetermined rates per diagnostic services or discounted fee-for-service rates.

Management continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations and the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals.

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.

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

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.

4 unchanged sentences

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

Our total service revenues during the three and 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):

Our total service revenues during the three and nine months ended September 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

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

15 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 June 30, 2023, $ 38.6 million of the accelerated Medicare payments have been applied to revenue.

Through September 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 $ 15.0 million and $ 15.4 million at June 30, 2023 and December 31, 2022, respectively.

Amounts remaining to be collected on these agreements were $ 14.7 million and $ 15.4 million at September 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

1 unchanged sentence

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 $ 2.0 million and $ 2.3 million, as of June 30, 2023 and December 31, 2022, respectively.

Deferred financing costs, net of accumulated amortization, were $ 1.8 million and $ 2.3 million , as of September 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 June 30, 2023 totaled $ 687.9 million.

GOODWILL - Goodwill at September 30, 2023 totaled $ 676.4 million .

Goodwill is recorded as a result of business combinations.

1 unchanged sentence

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

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

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

Imaging Center Artificial Intelligence Total

3 unchanged sentences

Currency translation 223 ( 353 ) ( 130 )

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:

Contribution of imaging centers ( 9,235 ) — ( 9,235 )

Balance as of September 30, 2023 $ 605,547 $ 70,829 $ 676,376

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

As of September 30, 2023:

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

8 unchanged sentences

Total Annual Amortization $ 2,902 $ 11,480 $ 11,098 $ 10,652 $ 9,634 $ 46,067 $ 91,833

*Excluding the six months ended June 30, 2023

*Excluding the nine months ended September 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 $ 6.0 million and $ 4.8 million for the six months ended June 30, 2023 and June 30, 2022, respectively.

Total intangible asset amortization expense was $ 8.9 million and $ 7.5 million for the nine months ended September 30, 2023 and September 30, 2022, respectively.

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

2 unchanged sentences

Trade names are reviewed annually for impairment.

On September 30, 2023, we determined that an In-process Research and Development ("IPR&D") nonamortized intangible asset related to Aidence's Ai Veye Lung Nodule and Veye Clinic would not receive FDA approval for sale in the US without a new submission and additional expenditures for rework in the original projected timeline.

The additional expenditures, delay and reduction of US sales affected the estimated fair value of the related IPR&D intangible asset and resulted in impairment charges of $ 3.9 million within Cost of operations in our Consolidated Statements of Operation s.

The estimated fair value of the IPR&D intangible asset was determined using the multi-period excess earnings method under the income approach, which estimates the present value of the free cash flows associated with the asset and tax amortization benefit to arrive at the fair value of the asset.

We have not identified any other indicators of impairment through September 30, 2023.

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

3 unchanged sentences

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

We recorded income tax 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.

We recorded an income tax expense (benefit) of $ 7.2 million, or an effective tax rate of 23.1 %, for the three months ended September 30, 2023 and $ 2.2 million, or an effective tax rate of 25.3 % for the three months ended September 30, 2022.

We recorded income tax expense of $ 7.7 million, or an effective tax rate of 24.1 %, for the nine months ended September 30, 2023 and $ 7.1 million, or an effective tax rate of 19.8 % for the nine months ended September 30, 2022.

The income tax rates for the three and nine months ended September 30, 2023 diverge from the federal statutory rate due to benefits related to (i) noncontrolling interests from controlled partnerships, (ii) foreign tax rate differentials, (iii) reversal of uncertain tax positions due to statute of limitation expiration, and (iv) release of state valuation allowances, offset by (i) effects of state income taxes and related prior year adjustments, (ii) share-based compensation, (iii) officer's compensation limitations, and (v) partial valuation allowance on losses in foreign jurisdictions.

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

1 unchanged sentence

Finance leases are included in property and equipment, current finance lease liability, and long-term finance lease liability in our consolidated balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

ROU assets represent our right to use an underlying asset for the lease term

and lease liabilities represent our obligation to make lease payments arising from the lease.

Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

3 unchanged sentences

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

For a contract in which we are a lessee that contains fixed payments for both lease and non-lease components, we have elected to account for the components as a single lease component, as permitted.

For a contract in which we are a lessee that contains fixed payments for both lease and non-lease components, we have elected to account for the components as a single lease component.

For finance leases, interest expense on the lease liability is recognized using the effective interest method and amortization of the ROU asset is recognized on a straight-line basis over the shorter of the estimated useful life of the asset or the lease term.

1 unchanged sentence

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 June 30, 2023.

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

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

21 unchanged sentences

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

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).

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

The components of other comprehensive income (loss) for the three and nine months ended September 30, 2023 and September 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.

18 unchanged sentences

This amount will be amortized to interest expense through October 2023 at approximately $ 0.4 million per month and continuing at approximately $ 0.3 million through October 2025.

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 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

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

For the three months ended September 30, 2023

Account June 30, 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 September 30, 2023 Balance Location

Accumulated Other Comprehensive Loss, net of taxes $( 13,357 ) $ — $ 921 $( 12,436 ) Equity

For the six months ended June 30, 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 June 30, 2023 Balance Location

For the nine months ended September 30, 2023

Accumulated Other Comprehensive Loss, net of taxes $( 15,201 ) $ — $ 2,765 $( 12,436 ) 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 June 30, 2023

For the three months ended September 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 $ ( 1,015 ) Other income (expense) $ ( 921 ) Interest Expense

For the six months ended June 30, 2023

For the nine months ended September 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 $ ( 949 ) Other income (expense) $ ( 2,765 ) Interest Expense

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

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

CONTINGENT CONSIDERATION -

2 unchanged sentences

("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 or cash at our election.

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.

As part of the purchase agreement, we agreed to pay up to $ 10.0 million consideration upon the completion of two identified milestones in RadNet common shares or cash at our election.

This contingency had a value of approximately $ 7.2 million at June 30, 2023.

The amount was reviewed quarterly and adjusted to fair value based on the yield rate of S&P B-rated corporate bonds and the probability of meeting the milestones which were tied to FDA approval of artificial intelligence screening solutions.

On September 30, 2023, we determined that the milestones could not be achieved under the contractual terms of the stock purchase agreement because the original submissions of artificial intelligence screening solutions did not receive regulatory clearance.

A new submission would required;

and therefore, the probability of the milestones became zero.

Accordingly, management recorded a contingency gain of $ 7.2 million against Cost of operations in our Consolidated Statements of Operations .

In addition, there was a general holdback of $ 4.0 million for any indemnification claims, which was settled on April 30, 2023 by the issuance of 144,227 shares of our common stock.

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 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 $ 3.7 million as of June 30, 2023.

As part of the purchase agreement, we agreed to 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.

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 July 7, 2023, we settled the stock holdback contingent liabilities by issuing 113,303 shares of our common stock at an ascribed value of $ 3.5 million and also settled the general holdback for $ 1.6 million in cash.

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

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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 $ 14.4 million as of June 30, 2023.

The milestone contingency had a value of approximately $ 11.1 million as of September 30, 2023.

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

On September 20, 2023, we settled a milestone contingent liability by issuing 56,600 shares of our common stock at an ascribed value of $ 1.6 million and cash of $ 1.8 million.

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

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

For the three months ended September 30, 2023

Entity Account June 30, 2023 Balance Settlement of contingent consideration Change in valuation of Contingent Consideration Currency Translation September 30, 2023 Balance

Aidence Other Long Term Liabilities $ 7,191 $ — $ ( 7,191 ) $ — $ —

Quantib Accrued Expenses & Other Long Term Liabilities $ 5,271 $ ( 5,110 ) $ ( 161 ) $ — $ —

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

Heart and Lung Limited Accrued Expenses & Other Long Term Liabilities $ 14,358 $ ( 3,402 ) $ 915 $ ( 772 ) $ 11,099

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

For the nine months ended September 30, 2023

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

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

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Heart and Lung Limited Accrued Expenses & Other Long Term Liabilities 11,656 ( 3,402 ) $ 2,906 $ ( 61 ) $ 11,099

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

See Fair Value Measurements section below for the fair value of contingent consideration at September 30, 2023.

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

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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 June 30, 2023

As of September 30, 2023

Level 1 Level 2 Level 3 Total

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Contingent Consideration:

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

and Quantib B.V.

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 June 30, 2023

The table below summarizes the estimated fair values of contingencies and holdback relating to our 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 September 30, 2023

Level 1 Level 2 Level 3 Total

Accrued expenses and other non-current liabilities

Aidence Holding B.V.

milestone consideration $ — $ — $ 7,191 $ 7,191

holdback of 113,303 shares of RadNet common stock

$ — $ — $ 5,271 $ 5,271

Heart and Lung Imaging Limited $ — $ — $ 11,099 $ 11,099

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 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., 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 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 June 30, 2023

As of September 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 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 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

Net income attributable to RadNet, Inc.'s common stockholders $ 17,540 $ 668 $ 4,904 $ 11,585

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

Weighted average number of common shares outstanding during the period 67,793,404 56,744,419 62,113,707 56,041,017

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

Basic net income per share attributable to RadNet, Inc.'s common stockholders $ 0.26 $ 0.01 $ 0.08 $ 0.21

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

Weighted average number of common shares outstanding during the period 67,793,404 56,744,419 62,113,707 56,041,017

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

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

Net income attributable to RadNet, Inc's common stockholders for diluted share calculation $ 17,540 $ 668 $ 4,904 $ — $ 10,999

Diluted net income per share attributable to RadNet, Inc.'s common stockholders $ 0.25 $ 0.01 $ 0.08 $ 0.19

Earnings per share disclosures:

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

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Shares issuable upon the exercise of stock options 88,600 84,885 761,708 67,289

Shares issuable subject to satisfaction of certain contingencies — 113,303 — —

Weighted average shares for which the exercise price exceeds average market price of common stock — 83,972 94,346 73,094

Contingently issuable shares — — 193,207 —

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 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:

As of September 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 June 30, 2023.

No observable price changes or impairment in our investment was identified as of September 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 June 30, 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 September 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 June 30, 2023.

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

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

Joint venture investment and financial information

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

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

Balance as of December 31, 2022 $ 57,893

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Equity contributions in existing joint ventures 41,184

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 as of September 30, 2023 $ 94,472

We charged management service fees from the centers underlying these joint ventures of approximately $ 3.9 million and $ 6.1 million for the three months ended September 30, 2023 and 2022 and $ 12.2 million and $ 17.2 million for the nine months ended September 30, 2023 and 2022, respectively.

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

Balance Sheet Data:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Current assets $ 44,605 $ 39,304

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Total net assets $ 104,876 $ 106,458

Income statement data for the six months ended June 30,

Income statement data for the nine months ended September 30,

Net revenue $ 129,020 $ 107,241

Net income $ 7,906 $ 17,034

Formation of majority owned subsidiary and sale of economic interest

Los Angeles Imaging Group, LLC

On September 1, 2023 we formed a wholly-owned subsidiary, Los Angeles Imaging Group, LLC ("LAIG").

The operation offers multi-modality imaging services out of three locations in Los Angeles, California.

We contributed the operations of 3 centers to the subsidiary.

Cedars-Sinai Medical Center ("CSMC") purchased from us a 35 % noncontrolling economic interest in LAIG for a cash payment of $ 5.9 million.

As a result of the transaction, we retain a 65 % controlling economic interest in LAIG.

Joint venture Investment Contribution

Santa Monica Imaging Group, LLC

On April 1, 2017, we formed in conjunction with CSMC, the Santa Monica Imaging Group, LLC ("SMIG"), consisting of two multi-modality imaging centers located in Santa Monica, CA with RadNet holding a 40 % economic interest and CSMC holding a 60 % economic interest.

RadNet accounts for our share of the venture under the equity method.

On January 1, 2019, CSMC purchased from us an additional 5 % economic interest in SMIG and as a result our economic interest in SMIG was reduced to 35 %.

On September 1, 2023, RadNet contributed an additional multi-modality imaging center and a newly constructed imaging center located in Beverly Hills, CA valued at $ 27.2 million and purchased an additional 6 % interest economic interest in SMIG for cash payment of $ 5.2 million.

Simultaneously, CSMC contributed five additional multi-modality imaging centers located in Santa Monica, CA.

As a result of the transaction, our economic interest in SMIG has been increased to 49 %.

We recorded a gain of $ 16.8 million, within (Gain) on contribution of imaging centers into joint venture in our Consolidated Statements of Operations.

The related gain on disposal of business was calculated as the difference between the sales price and carrying value of such imaging centers which included equipment, other assets, accrued liabilities, and an allocation of goodwill to such imaging centers.

Concurrently, we made additional capital contributions of $ 8.5 million to the joint venture in the form of construction-in-progress.

We accounted for the transaction as an adjustment to our equity investment for the value of the assets contributed.

In determining the fair value of the imaging centers contributed to SMIG, we used an income approach which is considered a level 3 valuation technique.

See Fair Value Measurements above for further detail on the valuation hierarchy.

Key assumptions used in measuring the fair value are financial forecasts and a discount rate.

We also utilized the cash paid for an additional interest in the joint venture to substantiate the fair value of the contributed assets.

NOTE 3 – RECENT ACCOUNTING AND REPORTING STANDARDS

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Imaging Center Segment

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.

During the nine months ended September 30, 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, Delaware and New York markets.

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

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4/1/2023 $ 250 100 — 150 — — —

Delaware Diagnostic Imaging, P.A.

8/1/2023 600 401 337 149 50 — ( 337 )

Total 10,765 3,942 8,173 6,473 300 50 ( 8,173 )

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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 June 30, Six Months Ended June 30,

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

2023 2022 2023 2022

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Total depreciation and amortization $ 32,210 $ 29,229 $ 95,705 $ 85,209

Loss on Disposal of Equipment:

(Gain) Loss on contribution of imaging centers into joint venture:

Imaging Centers $ ( 16,808 ) $ — $ ( 16,808 ) $ —

Total (gain) loss on contribution of imaging centers into joint venture $ ( 16,808 ) $ — $ ( 16,808 ) $ —

(Gain) Loss on Disposal of Equipment:

Imaging Centers $ 524 $ ( 253 ) $ 1,185 $ 936

AI 3 6 ( 2 ) 26

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

Total (gain) loss on disposal of equipment $ 527 $ ( 247 ) $ 1,183 $ 962

Imaging Centers $ 1,141 $ 187 $ 1,417 $ 488

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NOTE 6 – CREDIT FACILITIES AND NOTES PAYABLE

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

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

September 30,

2023 December 31,

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Discount on First Lien Term Loans ( 9,563 ) ( 11,127 )

Term Loan Agreement collateralized by NJIN's tangible and intangible assets 146,250 150,000

Discount on NJIN Term Loan Agreement ( 1,122 ) ( 1,254 )

Truist Term Loan Agreement collateralized by NJIN's tangible and intangible assets 144,375 150,000

Discount on Truist Term Loan Agreement ( 1,056 ) ( 1,524 )

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

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Long term portion debt obligations $ 844,302 $ 839,074

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.

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

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

At September 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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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.

The proceeds 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.

$ 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.

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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.

Under the Amendment, effective March 31, 2023, the First Lien Term Loans under the Restated Credit Agreement bears 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 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.

At September 30, 2023, we have an effective SOFR of 8.32 % ,with an applicable credit spread adjustment of 0.11448 %, and an Alternate Base Rate of 10.5 %, respectively.

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

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The Truist Term Loan currently bears interest at a three month SOFR election of 5.33 % 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.

The scheduled amortization of the Truist Term Loan began 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.

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Revolving Credit Facilities

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.

Associated with both the Barclays and Truist Revolving Credit Facilities are deferred financing costs, net of

accumulated amortization, of $ 1.8 million at September 30, 2023.

Barclays Revolving Credit Facility

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2.75 % 1.75 %

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.

As of September 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 SOFR revolving loans which is currently 3.00 % 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.

In addition, a commitment fee of 0.50 % per annum accrues on the unused revolver commitments under the Barclays Revolving Credit Facility.

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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 June 30, 2023.

As of June 30, 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 September 30, 2023.

As of September 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.

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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 six months ended June 30, 2023:

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

Outstanding Options

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Exercised ( 8,424 ) 8.46

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.

Balance, September 30, 2023 931,710 16.61 6.47 $ 11,056,189

Exercisable at September 30, 2023 673,108 14.76 5.51 9,215,097

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

As of September 30, 2023, total unrecognized stock-based compensation expense related to non-vested employee awards was $ 1.9 million, which is expected to be recognized over a weighted average period of approximately 1.53 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 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

As of September 30, 2023, total unrecognized stock based compensation expense related to non-vested DeepHealth options was approximately $ 0.1 million, which is expected to be recognized over a weighted average period of approximately 0.35 years

Outstanding Options

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Exercised ( 21,956 ) —

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

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

Balance, September 30, 2023 95,026 — 6.04 $ 2,678,783

Exercisable at September 30, 2023 88,600 — 6.04 2,497,634

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 six months ended June 30, 2023:

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

RSAs Weighted-Average

Term (Years) Weighted-Average

Fair Value per Share

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

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Forfeited or Canceled ( 3,599 ) $ 26.44

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

RSAs unvested at September 30, 2023 567,534 1.30 $ 22.57

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

2 unchanged sentences

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

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

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

Performance based stock units ("PSUs")

4 unchanged sentences

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.

As of September 30, 2023, 121,370 shares are expected to vest.

Performance based stock options ("PSOs")

4 unchanged sentences

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.

As of September 30, 2023, 235,227 shares are expected to vest.

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

3 unchanged sentences

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:

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

AI LTIPs Weighted-Average

Term (Years) Weighted-Average

Fair Value per Share

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

3 unchanged sentences

Forfeited or Canceled ( 79,515 ) $ 19.86

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

AI LTIPs unvested at September 30, 2023 232,148 2.97 $ 19.96

Restated Plan summary

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.

In summary, of the 20,100,000 shares of common stock reserved for issuance under the Restated Plan, at September 30, 2023, there remain approximately 4,058,012 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