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Item 7. Management’s Discussion and Analysis

2024-02-29 compared with 2023-03-01 · 208 added, 205 removed, 313 unchanged (57% of the section changed)

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At December 31, 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.

Internationally, our subsidiary Heart & Lung Imaging Limited, provides teleradiology services for remote interpretation of images on behalf of providers within the framework of the United Kingdom's National Health Service.

Our operations comprise two segments for financial reporting purposes for this reporting period, Imaging Centers and Artificial Intelligence.

For further financial information about these segments, see Note 5, Segment Reporting, in the notes accompanying our consolidated financial statement included in this annual report on Form 10-K..

Our centers provide physicians with imaging capabilities to facilitate the diagnosis and treatment of diseases and disorders and may reduce unnecessary invasive procedures, often reducing the cost and amount of care for patients.

For further financial information about these segments, see Note 5, Segment Reporting, in the notes accompanying our consolidated financial statements included in this report.

Our imaging centers centers provide physicians with imaging capabilities to facilitate the diagnosis and treatment of diseases and disorders and may reduce unnecessary invasive procedures, often reducing the cost and amount of care for patients.

Integral to the imaging center business is our software arm headed by eRad, Inc., which sells computerized systems that distribute, display, store and retrieve digital images.

Internationally, our subsidiary Heart and Lung Imaging LLC, provides teleradiology services for remote interpretation of images on behalf of providers within the framework of the United Kingdom's National Health Service.

We have also established an Artificial Intelligence (AI) division, that develops and deploys AI suites to enhance radiologist interpretations of breast, lung and prostate images.

The division is led by DeepHealth, and includes our acquisitions of Aidence Holding B.V.

We have also established an Artificial Intelligence (AI) business, that develops and deploys AI suites to enhance radiologist interpretations of breast, lung and prostate images.

The division is led by our DeepHealth, Inc.

subsidiary and includes our acquisitions of Aidence Holding B.V.

and Quantib B.V., both based in the Netherlands.

The following table shows our centers in operation at year end and revenues for the years ended December 31, 2022, 2021 and 2020:

The following table shows our imaging centers in operation at year end and revenues for the years ended December 31, 2023, 2022 and 2021:

Years Ended December 31,

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Total revenue (millions) $ 1,617 $ 1,430 $ 1,315

Our revenue is derived from a diverse mix of payors, including private payors, managed care capitated payors and government payors.

Our revenue is derived from a diverse mix of payors, including private payors and commercial insurance companies, managed care capitated payors, and government payors such as Medicare and Medicaid.

We believe our payor diversity mitigates our exposure to possible unfavorable reimbursement trends within any one payor class.

In addition, our experience with capitation arrangements over the last several years has provided us with the expertise to manage utilization and pricing effectively, resulting in a predictable stream of revenue.

Our service fee revenue, net of contractual allowances and discounts, implicit price concessions, and revenue under capitation arrangements for the years ended December 31, 2023, 2022 and 2021 are summarized in the following table (in thousands):

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As these high deductibles reset in January for most of these patients, we have observed that patients utilize medical services less during the first quarter, when securing medical care will result in significant out-of-pocket expenditures.

Our services include magnetic resonance imaging (MRI), computed tomography (CT), positron emission tomography (PET), nuclear medicine, mammography, ultrasound, diagnostic radiology (X-ray), fluoroscopy and other related procedures.

The following table shows the number of systems that we had in operation as of the years ended December 31, 2022, 2021 and 2020:

Years Ended December 31,

2022 2021 2020

MRI 340 323 293

CT 208 192 175

PET/CT 67 68 67

Mammography 387 358 315

Ultrasound 818 760 689

X-ray 440 415 376

Nuclear Medicine 57 55 57

Fluoroscopy 116 105 117

Total equipment 2,433 2,276 2,089

Acquisitions, Equity Investments and Joint Venture Activity

The following discussion summarizes certain details concerning our acquisition or disposition of centers, our equity investment and our joint venture transaction.

See Note 4, Acquisitions, Dispositions and Business Venture Activity and Note 2, Summary of Significant Accounting Policies to our consolidated financial statements included in this annual report on Form 10-K for further information.

The following discussion summarizes certain details concerning our acquisition or disposition of centers, our equity investments and our joint venture transactions.

See Note 4, Business Combinations and Related Activity and Note 2, Summary of Significant Accounting Policies, in the notes accompanying our consolidated financial statements included in this report for further information.

Imaging Center Segment

Radiology Practice Acquisitions:

During 2022 and 2021, 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 Delaware, Maryland, New Jersey and New York markets.

Radiology Imaging Center Asset Acquisitions:

During the years ended 2023, 2022 and 2021, 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 many of our markets.

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

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

IFRC LLC*^ 1/1/2022 8,200 2,910 1,703 5,271 — 19 (1,703)

IFRC LLC*^ 1/1/2022 4,800 2,103 857 2,697 — — (857)

Heart and Lung Imaging Limited+ 11/1/2022 32,000 — — 16,200 15,800 — —

& S Services Inc.* 1/1/2023 3,500 435 1,689 3,015 50 — (1,689)

Southern California Diagnostic Imaging, Inc.* 1/1/2023 1,815 466 1,184 1,272 50 27 (1,184)

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

Ramapo Radiology Associates, P.C.* 2/1/2023 2,000 1,663 3,775 229 100 8 (3,775)

Madison Radiology Medical Group, Inc.* 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)

*Fair Value Determination is Final

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

IFRC LLC*^

1/1/2022 8,200 2,910 1,703 5,271 — 19 (1,703)

IFRC LLC*^

1/1/2022 4,800 2,103 857 2,697 — — (857)

Heart & Lung Imaging Limited+ 11/1/2022 32,000 — — 16,200 15,800 — —

Montclair Radiological Associates, P.A.*# 10/1/2022 94,877 16,414 4,665 79,690 400 (2,168) (4,124)

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North Jersey Imaging Center, LLC* 12/9/2022 104 20 — 55 25 4 —

$142,781 $22,015 $7,225 $106,045 $16,325 $(2,145) $(6,684)

Total $142,781 $22,015 $7,225 $106,045 $16,325 $(2,145) $(6,684)

*Fair Value Determination is Final

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# Montclair Radiological Associates includes a liability for $1.2 million in contingent consideration.

+See detailed description of the Heart and Lung Imaging Limited acquisition below.

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

Personal Health Imaging PLLC* 2/1/2021 2,995 576 608 2,355 50 14 (608)

ZP Elmont LLC* 2/1/2021 2,194 1,112 — 1,005 50 27 —

ZP Freeport LLC* 2/1/2021 6,065 4,668 — 1,328 40 29 —

Broadway Medical Imaging LLC* 2/1/2021 1,155 1,076 446 6 50 23 (446)

3235 Hempstead LLC* 2/1/2021 9,386 5,667 — 3,649 70 — —

SLZM Realty LLC* 2/1/2021 13,671 4,617 — 8,974 80 — —

2012 Sunrise Merrick LLC* 2/1/2021 11,428 2,741 335 8,617 70 — (335)

ZP Bayside LLC* 3/1/2021 3,545 3,385 2,191 40 50 70 (2,191)

ZP Laurelton LLC* 3/1/2021 2,658 2,530 1,418 32 50 46 (1,418)

ZP Smith LLC* 3/1/2021 3,978 3,581 2,214 347 50 — (2,214)

ZP 907 Northern LLC* 4/1/2021 562 507 1,817 5 50 — (1,817)

Kelly MD, Inc.* ^ 5/1/2021 3,750 990 1,379 2,710 50 — (1,379)

60th Street MRI, LLC* 5/1/2021 400 85 — 290 25 — —

ZP Parkchester LLC* 5/1/2021 263 213 311 — 50 — (311)

ZP Eastern LLC* 6/1/2021 2,868 2,801 1,951 17 50 — (1,951)

Tangent Associates LLC** 8/24/2021 2,025 10 — 379 1,636 — —

Mid Delaware Imaging P.A.

12/1/2021 6,023 590 — 5,260 150 23 —

Kelly MD, Inc.* ^ 12/6/2021 4,404 701 — 3,653 50 — —

Kelly MD, Inc.* ^ 12/31/2021 2,346 99 323 2,197 50 — (323)

79,716 35,949 12,993 40,864 2,671 232 (12,993)

*Fair Value Determination is Final

** All stock purchase through issuing 67,658 shares of our common stock.

Kelly MD acquisitions consisted of various subsidiaries purchased separately.

Heart and Lung Imaging Limited

On November 1, 2022, we acquired a 75% controlling interest in Heart and Lung Imaging Limited (“HLI”).

+See detailed description of the Heart & Lung Imaging Limited acquisition below.

Heart & Lung Imaging Limited.

On November 1, 2022, we acquired a 75% controlling interest in Heart & Lung Imaging Limited (“HLI”).

HLI is a teleradiology concern which operates in the United Kingdom with the National Healthcare Service to screen high risk populations for cardiac and lung conditions.

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The transaction was accounted for as the acquisition of a business with a total purchase consideration of approximately $31.9 million, including:

i) shares with a fair value of $6.8 million (359,002 shares issued at $19.06 per share), ii) cash of $6.3 million and iii) contingent consideration of $10.8 million ($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) and iv) noncontrolling interest of $8.0 million.

(a) shares of our common stock with a fair value of $6.8 million

(359,002 shares issued at $19.06 per share), (b) cash of $6.3 million, (c) contingent consideration of $10.8 million ($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) and (d) noncontrolling interest of $8.0 million.

We recorded $0.6 million in current assets, $15.8 million in intangible assets, $0.6 million current liabilities and $16.2 million in goodwill in connection with this transaction.

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Aidence Holding B.V.

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

("Aidence") an artificial intelligence enterprise focused on lung cancer screening.

Aidence is reported as part of our artificial intelligence segment and was acquired to enhance our AI capabilities.

The transaction was accounted for as an acquisition of a business and total purchase consideration was determined to be approximately $45.2 million including i) 1,117,872 shares issued at $26.80 per share with a fair value of $30.0 million ii) cash of $1.8 million and iii) contingent consideration of $11.9 million ($7.4 million in milestones to be settled in shares or cash at our election and a share holdback of $4.5 million) and iv) a settlement of a loan from RadNet of $1.5 million.

On January 20, 2022, we acquired all the equity interests of Aidence Holding B.V.

("Aidence") an artificial intelligence enterprise focused on developing artificial intelligence powered applications for lung nodule management and early lung cancer diagnosis and reporting.

The transaction was accounted for as an acquisition of a business and total purchase consideration was determined to be approximately $45.2 million including (a) 1,117,872 shares of our common stock issued at $26.80 per share with a fair value of $30.0 million (b) cash of $1.8 million, (c) contingent consideration of $11.9 million ($7.4 million in milestones to be settled in shares or cash at our election and a share holdback of $4.5 million) and (d) a settlement of a loan from RadNet of $1.5 million.

In addition we paid certain seller closing costs through the issuance of 23,362 shares at a fair value of $0.6 million.

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The cash flows were based on estimates used to price the transaction, and the discount rates applied were benchmarked with reference to the implied rate of return from the transaction model and the weighted average cost of capital.

The developed technology consists of artificial intelligence powered applications for lung nodule management and early lung cancer diagnosis and reporting.

The IPR&D asset relates primarily to an in-process project for a customer relationship management offering to manage patients that are found with Incidental Pulmonary Nodules and has not reached technological feasibility as of the acquisition date.

The asset recorded relates to one project, and the Company expects to complete the project in the next twelve months.

The asset recorded relates to one project, and the Company originally expected to complete the project following twelve months of acquisition.

Subsequently, in September 2023, we determined that the IPR&D related to Aidence's Ai Veye Lung Nodule and Veye Clinic would not achieve FDA approval for sale in the US without a new submission and additional expenditures for rework.

The additional expenditures, delay and reduction of US sales affected the estimated fair value of the associated IPR&D intangible asset and resulted in an impairment charge of $3.9 million within Cost of operations in our Consolidated Statements of Operations in the consolidated financial statements included with this report.

The useful lives for the developed technology asset was set at 7 years, for customer relationships 5.4 years, and trade names was 7 years.

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Factors contributing to the recognition of the amount of goodwill were primarily based on anticipated strategic and synergistic benefits that are expected to be realized from the acquisition.

These benefits include expanding the Company's AI capabilities to drive revenue growth.

These benefits include expanding our AI capabilities to drive revenue growth.

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

("Quantib") an artificial intelligence enterprise focused on prostate cancer screening.

Quantib is reported as part of our artificial intelligence segment, and was acquired to enhance our AI capabilities.

The transaction was accounted for as an acquisition of a business and total purchase consideration was determined to be approximately $42.3 million including i) 965,058 shares issued at $26.80 per share with a fair value of $25.9 million ii) cash of $11.8 million and iii) contingent consideration consisting of 113,303 shares with a fair value at the date of close of $3.0 million and cash of $1.6 million both to be released 18 months after acquisition subject to adjustment for any indemnification claims.

("Quantib") an artificial intelligence enterprise focused on developing artificial intelligence powered applications for neurological and prostate imaging scans and reporting.

The transaction was accounted for as an acquisition of a business and total purchase consideration was determined to be approximately $42.3 million including (a) 965,058 shares of our common stock issued at $26.80 per share with a fair value of $25.9 million (b) cash of $11.8 million and (c) contingent consideration consisting of 113,303 shares with a fair value at the date of close of $3.0 million and cash of $1.6 million both to be released 18 months after acquisition subject to adjustment for any indemnification claims.

As a result of this transaction, we recorded $2.4 million in current assets, $0.1 million in property and equipment, $21.3 million in intangible assets (including developed technology of $19.6 million and IPR&D of $0.7 million), $0.7 million in current liabilities, $6.7 million in long-term debt and deferred tax liabilities, and $26.4 million in goodwill.

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The fair value of the intangible assets was estimated using the income approach, and the cash flow projections were discounted using rates ranging from 50% to 55%.

The cash flows were based on

estimates used to price the transaction, and the discount rates applied were benchmarked with reference to the implied rate of return from the transaction model and the weighted average cost of capital.

The developed technology consists of artificial intelligence powered applications for neurological and prostate imaging scans and reporting.

The useful lives for the developed technology asset was set at seven years, customer relationships three years, and trade names seven years.

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Factors contributing to the recognition of the amount of goodwill were primarily based on anticipated strategic and synergistic benefits that are expected to be realized from the acquisition.

These benefits include expanding the Company's AI capabilities to drive revenue growth.

As disclosed above, for the acquisitions of Aidence and Quantib, the Company used the income approach to determine the fair value of developed technology and IPR&D acquired in business combinations.

This approach determines fair value by estimating the after-tax cash flows attributable to the respective assets over their useful lives and then discounting these after-tax cash flows back to a present value.

The Company bases its revenue assumptions on estimates of relevant market sizes, expected market growth rates, expected trends in technology and expected product introductions by competitors.

The value of the in-process projects is based on the project's stage of completion, the complexity of the work completed as of the acquisition date, the projected costs to complete, the expected introduction date, the estimated cash flows to be generated upon commercial release and the estimated useful life of the technology.

The Company believes that the estimated developed technology and IPR&D amounts represent the fair value at the date of acquisition and do not exceed the amount a third-party would pay for the assets.

The significant assumptions used to estimate the fair value of intangible assets include discount rates and certain assumptions that form the basis of the forecasted results, specifically, revenue growth rates, EBITDA margins and obsolescence factors.

These significant assumptions are forward looking and could be affected by future economic and market conditions.

These benefits include expanding our AI capabilities to drive revenue growth.

Subsidiary activity

Formation of majority owned subsidiaries

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 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.

Frederick County Radiology, LLC.

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

("Hospital").

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

We contributed the operations of four centers to the enterprise and Hospital contributed $5.4 million in fixed assets, $3.0 million in equipment, and $11.0 million in goodwill.

As a result of the transaction, we recognized a gain of $6.6 million to additional paid in capital and retained a 65% controlling economic interest in FCR and Hospital retains an $11.1 million or 35% noncontrolling economic interest in FCR.

We contributed the operations of four centers to the enterprise and Frederick Health Hospital, Inc.

contributed $5.4 million in fixed assets, $3.0 million in equipment, and $11.0 million in goodwill.

As a result of the transaction, we recognized a gain of $6.6 million to additional paid in capital and retained a 65% controlling economic interest in FCR and Frederick Health Hospital, Inc.

retains an $11.1 million or 35% noncontrolling economic interest in FCR.

Advanced Radiology at Capital Region, LLC.

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

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

On June 15, 2022 we formed Advanced Radiology at Capital Region, LLC, a partnership with Dimension Health Corporation, an affiliate of the University of Maryland.

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

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

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

Simi Valley Imaging Group, LLC.

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

On January 1, 2021 we formed the Simi Valley Imaging Group, LLC, a partnership with Simi Valley Hospital and Health Services.

The operation will offer multi-modality imaging services out of two locations in Ventura County, California.

Total investment in the venture is $0.4 million.

RadNet contributed $0.3 million in assets for a 60.0% economic interest and Simi Adventist contributed assets totaling $0.1 million for a 40.0% economic interest.

We contributed $0.3 million in assets for a 60.0% economic interest and Simi Valley Hospital and Health Services contributed assets totaling $0.1 million for a 40.0% economic interest.

Joint venture investment contribution

Santa Monica Imaging Group, LLC

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

We account for our share of the venture under the equity method.

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

On September 1, 2023, we contributed an additional multi-modality imaging center and a newly constructed imaging center located in Beverly Hills, California valued at $27.2 million and purchased an additional economic interest in SMIG for cash payment of $11.3 million.

Simultaneously, Cedars-Sinai Medical Center contributed five additional multi-modality imaging centers located in Santa Monica, California.

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 statement of operations representing the difference between the fair value and carrying value of the business contributed.

Sale of ownership interest in a majority owned subsidiary

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We recognized in additional paid in capital on our consolidated balance sheets, $4.2 million excess in consideration over the carrying value of the sold economic interest.

Post the sale of our ownership interest we acquired from Tarzana Medical Center, LLC, certain tangible and intangible business assets for purchase consideration of approximately $5.2 million.

Equity Investments

Medic Vision, based in Israel, specializes in software packages that provide compliant radiation dose structured reporting and enhanced images from reduced dose CT scans.

On March 24, 2017, we acquired an initial 12.50% equity interest in Medic Vision - Imaging Solutions Ltd for $1.0 million.

We also received an option to exercise warrants to acquire up to an additional 12.50% equity interest for $1.4 million within one year from the initial share purchase date, if exercised in full.

On March 1, 2018 we exercised our warrant in part and acquired an additional 1.96% for $0.2 million.

Our initial equity interest has been diluted to 12.25% and our total equity investment stands at 14.21%.

In accordance with accounting guidance , as we exercise no significant influence over Medic Vision’s operations, the investment is recorded at its cost of $1.2 million, given that the fair value is not readily determinable.

No observable price changes or impairment in our investment was noted as of the year ended December 31, 2022.

Turner Imaging Systems, based in Utah, develops and markets portable X-ray imaging systems that provide a user the ability to acquire X-ray images wherever and whenever they are needed.

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 $143,000 that converted to an additional 80,000 preferred shares on October 11, 2019.

No observable price changes or impairment in our investment was noted for the year ended December 31, 2022.

WhiteRabbit.ai Inc., based in California, is currently developing an artificial intelligence suite which aims to improve the speed and accuracy of cancer detection in radiology and improve patient care.

On November 5, 2019 we acquired an equity interest in the company for $1.0 million and also loaned the company $2.5 million in support of its operations.

No observable price changes or impairment in our investment was noted for the year ended December 31, 2022.

Following the sale of our ownership interest we acquired from Tarzana Medical Center, LLC, certain tangible and intangible business assets for purchase consideration of approximately $5.2 million.

Joint venture investment contributions to Arizona Diagnostic Radiology Group

During the years ended December 31, 2022 and 2021, we made an additional equity contributions of $1.4 million each year to Arizona Diagnostic Radiology Group ("ADRG", our joint venture with Dignity Health).

On November 1, 2022 we contributed eight of our imaging centers to ADRG with a carrying value of $12.7 million and recorded a loss of $0.5 million which was calculated as the difference between the fair value and carrying value of such imaging centers which included equipment and other assets and an allocation of goodwill to such imaging centers.

During the years ended December 31, 2023 and 2022, we made additional equity contributions of $2.4 million and $1.4 million, respectively, to Arizona Diagnostic Radiology Group ("ADRG", our joint venture with Dignity Health).

On November 1, 2022 we contributed eight of our imaging centers to ADRG of $12.7 million and recorded a loss of $0.5 million which was calculated as the difference between the transaction price and carrying value of such imaging centers which included equipment and other assets and an allocation of goodwill to such imaging centers.

We recorded $4.5 million of the transaction price as an offset to due to affiliates while the remaining $8.3 million was recorded as investment in joint venture on our balance sheet.

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

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Cost of operations, excluding depreciation and amortization 86.3 % 88.4 % 85.4 %

Gain on contribution of imaging centers into joint venture (1.0) % — % — %

Lease abandonment charges 0.3 % — % 1.5 %

Depreciation and amortization 7.9 % 8.1 % 7.4 %

Loss on sale and disposal of equipment 0.2 % 0.1 % 0.1 %

Loss on impairment — % — % 0.4 %

Loss on sale and disposal of equipment and other 0.1 % 0.2 % 0.1 %

Severance costs 0.2 % 0.1 % 0.1 %

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Equity in earnings of joint ventures (0.4) % (0.7) % (0.8) %

Non-cash change in fair value of interest rate hedge (2.8) % (1.6) % 0.2 %

Loss (gain) on extinguishment of debt 0.1 % 0.5 % (0.4) %

Other expenses 0.1 % 0.1 % — %

Non-cash change in fair value of interest rate swaps 0.5 % (2.8) % (1.6) %

Loss on extinguishment of debt and related expenses — % 0.1 % 0.5 %

Other (income) expenses (0.4) % 0.1 % 0.1 %

Total other expenses 3.7 % 0.2 % 1.9 %

INCOME (LOSS) BEFORE INCOME TAXES 3.0 % 4.5 % (0.1) %

INCOME BEFORE INCOME TAXES 2.4 % 3.0 % 4.5 %

Provision for income taxes (0.5) % (0.7) % (1.1) %

NET INCOME (LOSS) 2.3 % 3.3 % (0.2) %

NET INCOME 1.9 % 2.3 % 3.3 %

Net income attributable to noncontrolling interests 1.7 % 1.6 % 1.5 %

NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC.

NET INCOME ATTRIBUTABLE TO RADNET, INC.

COMMON STOCKHOLDERS 0.2 % 0.7 % 1.8 %

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Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022

We grow through a combination of organic growth as well as acquisitions and joint ventures.

We grow our imaging center business through a combination of organic growth as well as acquisitions and joint ventures.

In the discussion below same center metrics are based on imaging centers that were in operation throughout the period of January 1, 2022 through December 31, 2023.

Excluded amounts relate to imaging centers that were acquired or divested between January 1, 2022 through December 31, 2023.

Total Revenue inclusive of Provider Relief Funding for 2021

Total Revenue

In Thousands Year Ended December 31,

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Depreciation and amortization 120,776 109,524

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

Lease abandonment charges 5,147 —

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Excluded $55,368 $20,597 — —

Similar to the prior year, growth in procedure volumes precipitated increases in salary expenses both to meet additional professional staffing needs and retain our skilled work force in the current tight labor market.

Similar to the prior year, growth in procedure volumes precipitated increases in salary expenses to meet additional professional staffing needs and we increased salaries as we seek to retain our skilled work force in the current tight labor market.

Stock-based compensation

Stock-based compensation decreased $3.6 million, or 17.1%, to approximately $24.6 million for the twelve months ended December 31, 2023 compared to $21.0 million for the twelve months ended December 31, 2022.

The decrease was a result of a series of pandemic related one time employee bonus stock awards amounting to $8.9 million that were awarded in the second quarter of 2021.

There were no similar one time awards granted in 2022.

Building and equipment rental

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Excluded $13,403 $9,873 — —

Overall building and rental remained flat year over year.

On a same center basis, the decrease in building and equipment rent was reflective of savings from facilities that were abandoned in Dec 2021 and buyout of radiology equipment lease contracts during the year.

The decrease in building and equipment rental was the result of our contribution of Phoenix, AZ imaging centers in connection with the formation of the Arizona Diagnostic Radiology Group joint venture in November 2022 and from the buyout of radiology equipment lease contracts during the year.

Medical supplies

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Excluded $6,663 $3,840 — —

Increased medical supplies expense corresponds to the 5.5% growth in advanced radiology volumes as noted above combined with price increases for contrast agents and higher utilization of isotopes employed in PET and CT procedures.

Increased medical supplies expense was related to the 7.2% growth in advanced radiology volumes noted above, combined with price increases for contrast agents and higher utilization of isotopes employed in PET and CT procedures.

Other operating expenses

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Excluded $22,960 $9,073 — —

The rise in other operating expenses is attributable to additional professional fees associated with our acquisition activity, contractor services, equipment and maintenance and software upgrades all in support of our expansion accompanied with increased procedure volumes.

Additional segment operating and non operating expenses:

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Depreciation and Amortization $120,776 $109,524 $11,252 10.3%

Loss on disposal of equipment and other $2,506 $1,246 $1,260 nm

Non-cash change in fair value of interest rate swaps ($39,621) ($21,670) $(17,951) nm

Other expenses* $3,467 $6,859 $(3,393) nm

Loss on disposal of equipment and other $2,191 $2,506 ($315) (12.6)%

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

Non-cash change in fair value of interest rate swaps $8,185 ($39,621) $47,806 (120.7)%

Other (income) expenses ($7,756) $3,467 ($11,223) (323.7)%

Severance $1,972 $926 $1,046 113.0%

nm=not meaningful

* Other expenses in 2022 and 2021 included approximately $0.7 million and $6.0 million of debt extinguishment and restructuring charges, respectively, which related to refinancing of our credit facilities with Truist in 2022 and Barclays in 2021.

See Note 8 Credit Facilities and Notes Payable included in the notes to our consolidated financial statements.

The increase in depreciation expense was the result of our higher depreciable asset base.

For the year ended December 31, 2023, we recognized a gain on the contribution of assets into our Santa Monica Imaging Group LLC joint venture.

The non-cash expense associated with the change in fair value of our interest rate swaps for the year ended December

31, 2023 related to the expiration of our notional $100 million in 2019 swaps and the shorter term on our remaining $400 million notional 2019 swaps.

The gain associated with the non-cash change in fair value of interest rate swaps during the year ended December 31, 2022 was driven by the significant increase in interest rates experienced during the period.

Other income for the year ended December 31, 2023 included money market interest income of $10.9 million, offset by an eRad loss on investments of $3.1 million.

Other expenses in 2022 included approximately $0.7 million of debt restructuring charges related to the refinancing of our credit facilities with Truist in 2022 and an eRad loss on investments of $2.9 million.

See Note 8, Credit Facilities and Notes Payable, in the notes accompanying our consolidated financial statements included in this report.

Lease abandonment charges

We closely monitor patient levels at our imaging centers and occasionally divest or shut down centers in an effort to maximize utilization rates.

In the post-pandemic period of 2021, while overall procedure volumes had returned to pre-pandemic levels, we experienced lower utilization rates at imaging centers that were based in urban centers as a result of increased telecommuting and migration of the work force to spending more time in residential areas.

In response we terminated leases at some centers, consolidating procedural volumes into fewer more active imaging centers, and reduced administrative office space.

We recorded a one-time charge of approximately $19.7 million at December 31, 2021 related to leased facilities abandonment.

We closely monitor patient levels at our imaging centers and occasionally divest or shut down centers to maximize utilization rates.

During the end of 2023, we experienced lower utilization at two imaging centers.

As a result, we abandoned the leases related to these locations at the end of 2023 and diverted the patients to our other sites in the area.

We recorded a charge of approximately $5.1 million in December 2023 related to lease facilities abandonment.

The lease abandonment charges include the impairment of associated right-of-use assets of $2.7 million and write off of related leasehold improvements of approximately $2.5 million.

In Thousands Year Ended December 31,

Lease abandonment charges 2023 2022 $ Increase/(Decrease) % Change

Total $5,147 — $5,147 —

Same Center $5,147 — $5,147 —

Excluded — — — —

Impairment Charges

During 2020, we ceased employing certain indefinite lived trade names with a total value of $4.2 million and they were written off in full.

In September 2023, we determined that an IPR&D indefinite-lived 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.

Interest expense

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Total Interest Expense $64,483 $50,841 $13,642 26.8%

Cash Paid for Interest $39,151 $29,042 $10,109 34.8%

The rise in adjusted interest expense is attributable to a higher overall loan balances in combination with increased variable interest rates paid on those balances compared to the same period in the prior year.

Interest related to derivatives* $(9,752) $7,806

Interest related to amortization** $2,987 $2,693

Adjusted Interest Expense*** $71,248 $40,342 $30,906 76.6%

*Includes payments from 2019 swaps

**Includes noncash amortization of deferred loan costs and discount on issuance of debt

***Includes interest related to our term loans, revolving credit line, notes, and other

The rise in adjusted interest expense is attributable to higher overall loan balances in combination with increased variable interest rates paid on those balances in comparison to the same period in the prior year.

During 2022 we refinanced our Truist term loan which added an additional $108.0 million in obligations to our balance sheet in the fourth quarter.

Based on recent increases in global interests rates, we expect the effective interest rates on our senior credit facilities, and our related interest expense, to continue to rise in the near term.

Based on recent Federal Reserve interest rate decisions, we expect the effective interest rates on our senior credit facilities, and the related interest expense, to stabilize in the near term.

See “Liquidity and Capital Resources” below for more details on our credit facilities.

See the Derivative Instruments section of Note 2 to the consolidated financial statements included in this annual report on Form 10-K and Item 7A, Quantitative and Qualitative Disclosure About Market Risk below for more details on our derivative transactions.

To mitigate our future floating rate interest expense exposure we entered into the 2019 swaps with locked in interest rates for one-month Term SOFR of 1.89% for $100 million of notional value and 1.98% for $400 million of notional value.

We are liable for premium payments to the 2019 swap counterparties if interests rates are below the arranged rates, and receive payments from the 2019 swap counterparties if interest rates exceed the arranged rates.

If interest rates were to theoretically

reduce to 0%, our maximum premium payment would be the difference between the two swapped rates and 0% then multiplied by the notional value of the swaps, or $1.89 million per year for the $100 million swap and $8.0 million per year for the $400 million swap.

Payments under the 2019 swaps are settled in cash on a monthly basis.

During the year ended December 31, 2023, interest rates were above the arranged rates for most of the year and we received payment of $14.5 million in cash payments from our 2019 swap counterparties, which was reported a component of interest expense.

See the Derivative Instruments section of Note 2, Summary of Significant Accounting Policies, in the notes accompanying the consolidated financial statements included in this report and Item 7A — "Quantitative and Qualitative Disclosure About Market Risk" below for more details on our derivative transactions.

Non-cash change in fair value of interest rate hedge

In 2020, we determined that the cash flows from the 2019 swaps did not match the cash flows of our Barclays term loan and were therefore ineffective as cash flow hedges.

Since that time, in accordance with accounting guidelines, all changes in fair value are being recognized in other income and expense.

The fair value of the 2019 swaps at December 31, 2023 was a net asset of $15.1 million compared to a net asset of $23.3 million December 31, 2022, resulting in a loss of $8.2 million during the year ended December 31, 2023, which decreased the Company’s tax provision by $2.1 million.

The significant change in fair value was caused by the expiration of the $100 million swap in October 2023 and the shorter remaining term on the $400 million swap, which offset the increase in market interest rates and the steepening of the yield curve.

The one-month Term SOFR rate at December 31, 2023 was approximately 5.47%, higher than the 4.33% one-month Term SOFR rate at December 31, 2022 and significantly above the 1.98% arranged rate for the $400 million portion of the 2019 swaps.

Equity in earnings from unconsolidated joint ventures

For the twelve months ended December 31, 2023 we recognized equity in earnings from unconsolidated joint ventures of $6.4 million versus $10.4 million for the twelve months ended December 31, 2022, a decrease of $4.0 million or 38.1%.

Gain on extinguishment of debt and related expenses

During 2020, we received a loan in the amount of $4.0 million through the Paycheck Protection Program.

The Program has provisions that if met, allow the loan to be forgiven.

In December 2020, we met the eligibility requirements for forgiveness of loans and recorded a gain on extinguishment of debt of approximately $4.0 million.

See Note 8 Credit Facilities and Notes Payable included in this annual report on Form 10-K.

Our AI segment develops and deploys clinical applications to enhance interpretation of medical images and improve patient outcomes with a current emphasis on brain, breast, prostate, and pulmonary diagnostics.

We are developing our AI segment initially through acquisition activity.

The operations of Nulogix and Deephealth comprise the results for 2021.

Our 2022 results include our recent additions of Aidence and Quantib.

The decrease in equity in earnings from unconsolidated joint ventures was due to the formation of Arizona Diagnostic Radiology Group in November 2022, which operated at a net loss in 2023.

Net income attributable to noncontrolling interests

At December 31, 2023, our consolidated subsidiaries operated 321 imaging centers of which 85 were not wholly-owned and thus a portion of their operating results were attributable to noncontrolling interests.

At December 31, 2022, our consolidated subsidiaries included 318 centers of which 81 were not wholly-owned.

As noncontrolling interests only represent a portion of our imaging center business, and excludes our AI segment which generated losses of $21.2 million in 2023, we do not expect changes in net income attributable to noncontrolling interests to correlate with changes in consolidated operating income or pretax income.

For the twelve months ended December 31, 2023, we recognized net income attributable to noncontrolling interests of $27.3 million versus $23.0 million for the twelve months ended December 31, 2022, an increase of $4.3 million.

The increase in net income attributable to noncontrolling interests was primarily due to the formation of a new majority owned subsidiary, Los Angeles Imaging Group, LLC in September 2023 as described in Note 4 to the consolidated financial statements.

We contributed the operations of three centers to Los Angeles Imaging Group, LLC, and Cedars-Sinai Medical Center contributed cash.

Net income attributable to noncontrolling interests was also improved as a result of our acquisition of various interests in 2022, which were able to operate for full twelve months in 2023.

In October 2022, our consolidated joint venture New Jersey Imaging Network, LLC, acquired the assets of Montclair Radiological associates, P.A.

In November 2022 we acquired a 75% controlling interest in Heart & Lung Imaging Limited.

Additionally in April 2022 we formed a new majority owned subsidiary, Frederick County Radiology, LLC.

See Note 4, Business Combinations and Related Activity, in the notes accompanying our consolidated financial statements included in this report, for a more detailed discussion of these acquisitions.

Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022

Our AI segment develops and deploys clinical applications to enhance interpretation of medical images and improve patient outcomes with a current emphasis on breast, prostate, and lung cancer diagnostics.

The breakdown of revenue and expenses of the segment for the twelve months ended December 31, 2023 and 2022 are as follows:

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Other (income) expense 1,402 (903) 2,305

Income before taxes (24,850) (5,060) (19,790)

Loss before taxes (22,552) (24,851) 2,299

Income taxes (1,955) (3,395) 1,440

Segment net loss ($20,597) ($21,456) $859

The increase in revenues for the AI segment was driven by the launch of new imaging products, including our Enhanced Breast Cancer Detection product which was initially released in 2022 and is being rolled out in certain of our imaging centers.

The increase in operating expenses for the AI segment was primarily related to salary expense as we increased headcount in connection with the commercialization of our initial AI products.

Our net loss for the segment was consistent with the prior year.

We expect that our AI segment will continue to generate net losses over the next several years.

Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021

For the comparison of results of operations for the year ended December 31, 2021 to the year ended December 31, 2020, please see Item 7, Management's Discussion and Analysis of Financial Condition and Operations in our Form 10-K for the year ended December 31, 2021, filed with the SEC on March 1, 2022.

For the comparison of results of operations for the year ended December 31, 2022 to the year ended December 31, 2021, for both out Imaging Center and AI segments, please see Item 7 — "Management's Discussion and Analysis of Financial Condition and Operations" in our Form 10-K for the year ended December 31, 2022, filed with the SEC on March 1, 2023.

Non-GAAP Financial Measures

We use both GAAP and non-GAAP metrics to measure our financial results.

We believe that, in addition to GAAP metrics, non-GAAP metrics such as Adjusted EBITDA and Free Cash Flow assist us in measuring our core operations from period to period as well as our cash generated from operations and ability to service our debt obligations.

We believe that, in addition to GAAP metrics, non-GAAP metrics such as Adjusted EBITDA assist us in measuring our core operations from period to period.

Adjusted EBITDA

Our Adjusted EBITDA metric removes non-cash and non-recurring charges that occur in the affected period and provides a basis for measuring the Company’s core financial performance against other periods.

We define Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, as adjusted to exclude losses or gains on the disposal of equipment, other income or loss, loss on debt extinguishment, bargain purchase gains, loss on de-consolidation of joint ventures and non-cash equity compensation.

Adjusted EBITDA includes equity earnings in unconsolidated operations and subtracts allocations of earnings to non-controlling interests in subsidiaries, and is adjusted for non-cash or one-time events that take place during the period.

Adjusted EBITDA is a non-GAAP financial measure used as an analytical indicator by us and the healthcare industry to assess business performance, and is a measure of leverage capacity and ability to service debt.

Adjusted EBITDA should not be considered a measure of financial performance under GAAP, and Adjusted EBITDA should not be considered in isolation or

as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity.

Adjusted EBITDA is a non-GAAP financial measure used as an analytical indicator by us and the healthcare industry to assess business performance.

Adjusted EBITDA should not be considered a measure of financial performance under GAAP, and Adjusted EBITDA should not be considered in isolation or as alternatives to net income, or other financial statement data presented in the consolidated financial statements as an indicator of financial performance.

Adjusted EBITDA is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation and this metric, as presented, may not be comparable to other similarly titled measures of other companies.

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2023 2022 2021

Net income (loss) attributable to RadNet, Inc.

Net income attributable to RadNet, Inc.

common stockholders $ 3,044 $ 10,650 $ 24,727

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Loss on impairment 3,950 — —

Loss (gain) on extinguishment of debt and related expenses 731 6,044 (4,047)

Other expenses 1,833 1,438 120

Loss on extinguishment of debt and related expenses — 731 6,044

Other (income) expenses (6,354) 1,833 1,438

Non-cash change in fair value of interest rate hedge 8,185 (39,621) (21,670)

Other adjustment to joint venture investment — (565) —

(Gain) loss on contribution of imaging centers into joint venture (16,808) — (565)

Legal settlement and related expenses — 2,197 831

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Non operational rent expenses 3,628 4,297 —

Transaction costs HLH, Aidence Holding B.V.

& Quantib B.V 927 1,171 —

Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI 1,308

Transaction costs HLH, Aidence Holding B.V., Quantib B.V, and WhiteRabbit 222 927 1,171

Valuation adjustment for contingent consideration (4,075) 47 —

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Income taxes (1,955) (3,395) —

Non-cash change to contingent consideration (7,191) — —

Impairment of IPR&D intangible asset 3,950 — —

Adjusted EBITDA AI Segment $ (12,765) $ (16,575) $ (2,122)

Liquidity and Capital Resources

The following table is a summary of key balance sheet data as of December 31, 2022 and December 31, 2021 and income statement data for the twelve months ended December 31, 2022, 2021 and 2020 (in thousands):

The cash we generate from our core operations enables us to fund ongoing operations, our research and development for new products and technologies including our investment in AI, and acquisition or expansion of imaging centers.

We expect to continue to generate positive cash flows from operations for the foreseeable future.

In June 2023, we closed on a public offering of our common stock raising net proceeds, after deducting underwriting discounts, commissions, and expenses, of $245.8 million.

Accordingly, we believe that our current sources of funds will provide us with adequate liquidity during the 12-month period following December 31, 2023, as well as in the long-term.

The following table summarizes key balance sheet data as of December 31, 2023 and December 31, 2022 and income statement data for the twelve months ended December 31, 2023, 2022 and 2021 (in thousands):

Balance Sheet Data for the period ended December 31, 2023 2022 2021

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Total revenue $ 1,616,630 $ 1,430,061 $ 1,315,077

Net income (loss) attributable to RadNet common stockholders 10,650 24,727 (14,840)

Net income attributable to RadNet common stockholders 3,044 10,650 24,727

We operate in a capital intensive, high fixed-cost industry that requires significant amounts of capital to fund operations.

In addition to operations, we require a significant amount of capital for the initial start-up and development of new diagnostic imaging centers, the acquisition of additional centers and new diagnostic imaging equipment.

Because our cash flows from operations have been insufficient to fund all of these capital requirements, we have depended on the availability of financing under credit arrangements with third parties.

The COVID-19 pandemic initially resulted in a reduction of procedure volumes as people "sheltered in place" and deferred elective procedures, resulting in a corresponding decrease in operating revenues for the year ended December 31, 2020.

For 2021 our procedural volumes returned to pre-pandemic levels.

However, the COVID-19 pandemic continues to evolve and significant additional outbreaks could again result in periods where we experience decreased procedural volumes.

Any suspended reduction in procedures would negatively affect our revenues, profitability and working capital position.

We have credit available from our current credit facilities and borrowing under those facilities is subject to continued compliance with lending covenants.

We currently meet those requirements, but substantial and sustained operating losses could impact our ability to borrow under those facilities.

If we are not able to meet such requirements, we may be required to seek additional financing and there can be no assurance that we will be able to obtain financing from other sources on terms acceptable to us, if at all.

On a continuing basis, we also consider various transactions to increase shareholder value and enhance our business results, including acquisitions, divestitures and joint ventures.

These types of transactions may result in future cash proceeds or payments but the general timing, size or success of any acquisition, divestiture or joint venture effort and the related potential capital commitments cannot be predicted.

We expect to fund any future acquisitions primarily with cash flow from operations and borrowings, including borrowing from amounts available under our senior secured credit facilities or through new equity or debt issuances.

In addition to ongoing operations, we invest in the purchase of imaging facilities, the acquisition of equipment, and the acquisition of technology to fund our growth.

If economic or global business conditions slowed, we expect that we will be able to adjust the pace of our investment activities.

We continually evaluate our cash needs and may decide it is best to raise additional capital or seek alternative financing sources to fund the rapid growth of our business, including through draw-downs on existing or new debt facilities or financing funds.

We expect to fund any future capital requirements primarily with cash flow from operations and borrowings, including borrowing from amounts available under our senior secured credit facilities or through new equity or debt issuances.

We and our subsidiaries or affiliates may from time to time, in our sole discretion, purchase, repay, redeem or retire any of our outstanding debt or equity securities in privately negotiated or open market transactions, by tender offer or otherwise.

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The following table summarizes key components of our sources and uses of cash for the twelve months ended December 31, in thousands:

Cash Flow Data December 31, 2022 December 31, 2021 December 31, 2020

Cash Flow Data 2023 2022 2021

Cash provided by operating activities $ 220,863 $ 146,417 $ 149,491

Cash used in investing activities (201,470) (246,949) (221,511)

Cash provided by (used in) financing activities 93,647 104,673 (45,561)

Cash provided by operating activities for the period ended December 31, 2020 was benefited by the receipt of $39.5 million in CMS advances recorded as deferred revenue.

Cash used in investing activities for the twelve months ended December 31, 2022, included purchases of property and equipment for approximately $119.5 million, acquired imaging businesses and other operations for $130.0 million and an equity contribution to a joint venture operation of $1.4 million.

As part of our business operations we continually evaluate investment opportunities.

Cash provided by financing activities for the twelve months ended December 31, 2022 was related mainly to the refinancing of our Truist term loan obligations with the Second Amended and Restated Revolving Credit and Term Loan Agreement on October 10, 2023.

Please see Note 8, Credit Facilities and Notes Payable in the notes to consolidated financial statements included in this annual report on Form 10-K for more information.

Cash provided by financing activities 195,635 93,647 104,673

Cash provided by operating activities for the period ended December 31, 2023 included $261.1 million in net income reconciling adjustments and $40.3 million change in assets and liabilities.

The $68.3 million increase in cash provided by operating activities for the year ended December 31, 2023 compared to December 31, 2022 was primarily driven by an increase in income from operations and timing of payment.

Cash used in investing activities for the twelve months ended December 31, 2023 decreased from December 31, 2022 by $45.5 million.

The changes included a $119.0 million reduction in purchases of imaging centers and other AI operations compared to 2022 which included our acquisition of Aidence Holding B.V.

and Quantib B.V.

for net consideration of $45.2 million and $42.3 million, respectively.

This decrease was offset by an increase in the level of capital expenditures for property and equipment of $57.1 million.

Cash provided by financing activities for the twelve months ended December 31, 2023 related primarily to a secondary public offering of our common stock, offset by payments including prepayments on our term loan, and payments of contingent consideration on recent acquisition transactions.

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, resulting in net proceeds, after deducting underwriting discounts, commissions, and expenses, of $245.8 million.

Payments on term loan debt for the twelve months ended December 31, 2023 were $41.1million.

In addition, we made a prepayment of $30.0 million on our term loan to mitigate our exposure on variable interest debt as $100 million of notional value of our 2019 swaps matured in October 2023.

On July 7, 2023, September 20, 2023 and December 12, 2023, we settled contingent liabilities associated with the acquisition related holdbacks and milestones for Quantib B.V.

and Heart & Lung Imaging Limited with cash payments totaling $5.5 million.

We have entered into factoring agreements with various institutions and sold certain accounts receivable under non-recourse agreements in exchange for notes receivables from the buyers.

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Senior Credit Facilities:

We maintain secured credit facilities with Barclays Bank PLC and with Truist.

The Barclays credit facilities are comprised of first lien term loans and a revolving credit facility of $195.0 million.

The Truist credit facilities are comprised of a term loan and a revolving credit facility of $50.0 million.

We maintain secured credit facilities with Barclays Bank PLC and with Truist Bank.

The Barclays credit facilities are comprised of term loans and a revolving credit facility of $195.0 million.

The Truist credit facilities relate to our subsidiary New Jersey Imaging Network LLC, and are comprised of a term loan and a revolving credit facility of $50.0 million.

As of December 31, 2023, we were in compliance with all covenants under our credit facilities.

Deferred financing costs on our revolving credit lines at December 31, 2022, net of accumulated amortization, totaled $2.3 million, with $1.7 million related to Barclays and $0.6 million related to Truist.

Deferred financing costs on our revolving credit lines at December 31, 2023, net of accumulated amortization, totaled $1.6 million, with $1.1 million related to the Barclays revolving credit facility and $0.5 million related to the Truist revolving credit facility.

Included in our consolidated balance sheets at December 31, 2023 are $813.0 million of total term loan debt (net of unamortized discounts of $10.0 million) displayed below in thousands:

Face Value Discount Total Carrying

Barclays First Lien Term Loans $ 714,125 $ (11,127) $ 702,998

Truist Term Loan Agreement 150,000 (1,254) 148,746

Barclays Term Loans $ 678,687 $ (9,041) $ 669,646

Truist Term Loan 144,375 (990) 143,385

Total Term Loans $ 823,062 $ (10,031) $ 813,031

We had no outstanding balance under our $195.0 million Barclays revolving credit facility at December 31, 2023 and had 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 December 31, 2022.

We also had no balance under our $50.0 million Truist

Revolving Credit Facility related to our consolidated subsidiary NJIN at December 31, 2022, and with no letters of credit reserved against the facility, the full amount was available to draw upon.

For more information on our secured credit facilities see Note 8 to our consolidated financial statements in this annual report.

The remaining $187.4 million of our Barclays revolving credit facility

was available to draw upon as of December 31, 2023.

We also had no balance under our $50.0 million Truist revolving credit facility at December 31, 2023, and with no letters of credit reserved against the facility, the full amount was available to draw upon.

For more information on our secured credit facilities see Note 8, Credit Facilities and Notes Payable, in the notes accompanying our consolidated financial statements in this report.

Contractual Commitments

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As a result, actual amounts could materially differ from these estimates.

REVENUES – Our revenues generally relate to net patient fees received from various payors and patients themselves under contracts in which our performance obligations are to provide diagnostic services to the patients.

REVENUES – Our revenues generally relate to net patient fees that we receive from various payors and patients themselves under contracts in which our performance obligations are to provide diagnostic services to the patients.

Revenues are recorded during the period when our obligations to provide diagnostic services are satisfied.

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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 other centers, this service fee revenue is earned through providing the use of our diagnostic imaging equipment and the provision of technical services as well as providing administration services such as clerical and administrative personnel, bookkeeping and accounting services, billing and collection, provision of medical and

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

As it relates to the Group (as defined in Note 1 Nature of Business included in the notes to our consolidated financial statements), this service fee revenue includes payments for both the professional medical interpretation revenue recognized by them as well as the payment for all other aspects related to our providing the imaging services, for which we earn management fees.

As it relates to other centers, this service fee revenue is earned through providing the use of our diagnostic imaging

equipment and the provision of technical services as well as providing administration services such as clerical and administrative personnel, bookkeeping and accounting services, billing and collection, provision of medical and office supplies, secretarial, reception and transcription services, maintenance of medical records, and advertising, marketing and promotional activities.

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

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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.

PROVIDER RELIEF FUND ( COVID-19 STIMULUS FUNDING ) - The Provider Relief Fund offers government assistance to eligible providers throughout the healthcare system in support of certain expenses or lost revenue attributable to the coronavirus pandemic.

We received $9.1 million and $26.3 million in Provider Relief funding for the years ended December 31, 2021 and 2020, respectively.

Generally, the department of Health and Human Services ("HHS") does not intend to recoup funds as long as a provider's lost revenue and increased expenses exceed the amount of provider relief funding one has received.

HHS reserves the right to audit Relief Fund recipients in the future to ensure that this requirement is met and collect any Relief Fund amounts that were made in error or exceed lost revenue or increased expenses due to the pandemic.

Failure to comply with the terms and conditions may be grounds for recoupment.

Based on our assessment recognition of the revenue previously recognized remained appropriate.

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.

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We continuously monitor collections from our payors and maintain an allowance for bad debts based upon specific payor collection issues that we have identified and our historical experience.

BUSINESS COMBINATION – When the qualifications for business combination accounting treatment are met, it requires us to recognize separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values.

BUSINESS COMBINATIONS – When the qualifications for business combination accounting treatment are met, it requires us to recognize separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values.

Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed.

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GOODWILL AND INDEFINITE LIVED INTANGIBLES – Goodwill totaled $679.5 million and $677.7 million at December 31, 2023 and December 31, 2022, respectively.

Indefinite lived intangible assets were $24.1 million at December 31, 2022 and $20.6 million at December 31, 2021 and are associated with the value of certain trade name intangibles and in process research and development (IPR&D).

Indefinite lived intangible assets were $9.0 million at December 31, 2023 and $24.1 million at December 31, 2022 and are associated with the value of certain trade name intangibles and IPR&D.

Goodwill, trade name intangibles and IPR&D are recorded as a result of business combinations.

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We tested goodwill, trade name and IPR&D for impairment on October 1, 2023.

In 2020 we ceased employing certain indefinite lived trade names with a total value of $4.2 million and they were written off in full as of December 31, 2020.

On September 2023, we determined that an IPR&D indefinite-lived 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 Operations .

Our annual impairment test as of October 1, 2023 noted no other impairment, and we have not identified any indicators of impairment through December 31, 2023.

Recent Accounting Standards

See Note 3, Recent Accounting and Reporting Standards to the consolidated financial statements included in this annual report for further information.

See Note 3, Recent Accounting Standards, in the notes accompanying the consolidated financial statements included in this report for further information.

Additional Information

Additional information concerning RadNet, Inc., including our consolidated subsidiaries, for each of the years ended December 31, 2022, 2021 and 2020 is included in the consolidated financial statements and notes thereto in this annual report.

Additional information concerning RadNet, Inc., including our consolidated subsidiaries, for each of the years ended December 31, 2023, 2022 and 2021 is included in the consolidated financial statements and notes thereto in this report.

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-K

Item 7. Management’s Discussion and Analysis