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Item 8. Financial Statements and Supplementary Data

2024-02-29 compared with 2023-03-01 · 365 added, 385 removed, 914 unchanged (45% of the section changed)

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We have audited the accompanying consolidated balance sheets of RadNet, Inc.

and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss) , equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income , equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 1, 2023 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 29, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Accounting for Revenue Recognition

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Estimates of contractual allowances and implicit price concessions associated with third-party payors and any amounts due directly from patients are based upon historical collection experience from such payors.

The contractual allowance estimation process is periodically reviewed to consider and incorporate updates to laws and regulations, changes in business and economic conditions and contractual terms resulting from contract negotiations and renewals.

The contractual allowance estimation process is periodically reviewed to consider and incorporate updates to the laws and regulations, changes in business and economic conditions and contractual terms resulting from contract negotiations and renewals.

The Company also records estimated implicit price concessions (based primarily on historical collection experience) related to amounts due directly from patients to record these revenues and accounts receivable at the estimated amounts the Company expects to collect.

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To test the estimated contractual allowances and implicit price concessions, we performed audit procedures that included, among others, assessing methodologies and evaluating the significant assumptions discussed above and testing the completeness and accuracy of the underlying data used by the Company in its estimates.

We compared the significant assumptions used by management to current industry and economic trends and considered changes, if any, to the Company’s business and other relevant factors.

We also assessed the historical accuracy of management’s estimates as a source of potential corroborative or contrary evidence.

Acquisition of Aidence Holding B.V.

& Quantib B.V.:

Valuation of Developed Technology & IPR&D

Description of

As discussed in Note 4 to the consolidated financial statements, the Company completed its acquisitions of Aidence Holding B.V.

(“Aidence”) and Quantib B.V.

(“Quantib”) for net consideration of $45.2 million and $42.3 million, respectively, on January 20, 2022.

The transactions were accounted for as business combinations.

Auditing the Company’s accounting for its acquisitions of Aidence and Quantib was complex due to the significant estimation required by management in determining the fair value of developed technology and in-process research and development (“IPR&D”) intangible assets of $26.6 million for Aidence and $20.3 million for Quantib.

The significant estimation uncertainty was primarily due to the complexity of the valuation models used and the sensitivity of the fair value estimates to the significant underlying assumptions.

The Company used an income approach to measure the fair value of the developed technology and IPR&D intangible assets.

The significant assumptions used to estimate the value of the intangible assets included discount rates and certain assumptions that form the basis of the forecasted results (e.g., revenue growth rates, EBITDA margin and obsolescence factors).

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

Addressed the

Matter in Our

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s accounting for the acquisitions.

We tested controls over the recognition and measurement of developed technology and IPR&D intangible assets, including management’s review of the valuation model and underlying assumptions used to develop such estimates.

To test the estimated fair value of the developed technology and IPR&D intangible assets, we performed audit procedures that included, among others, evaluating the Company's selection of the valuation methodology, evaluating the completeness and accuracy of the underlying data and reasonableness of significant assumptions such as revenue growth rates, EBITDA margin and obsolescence factors.

For example, we compared the forecasted results, which were derived based on the significant assumptions discussed above, to current industry, market and economic trends, to the assumptions used in other acquisitions and to other guideline companies within the same industry.

We involved our valuation specialists to assist in our evaluation of the methodology used and reasonableness of the significant assumptions including the discount rate.

/s/ Ernst & Young LLP

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Los Angeles, California

March 1, 2023

February 29, 2024

AND SUBSIDIARIES

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Investment in joint ventures 92,710 57,893

Deferred tax assets, net — 14,853

Deposits and other 46,333 53,172

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Cost of operations, excluding depreciation and amortization 1,395,239 1,264,346 1,123,274

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

Lease abandonment charges 5,146 — 19,675

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Loss on sale and disposal of equipment and other 2,187 2,529 1,246

Loss on impairment — — 4,170

Severance costs 3,778 946 744

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

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

Total other expenses 59,887 3,394 23,675

INCOME (LOSS) BEFORE INCOME TAXES 42,969 58,879 ( 854 )

INCOME BEFORE INCOME TAXES 38,810 42,969 58,879

Provision for income taxes ( 8,473 ) ( 9,361 ) ( 14,560 )

NET INCOME (LOSS) 33,608 44,319 ( 1,749 )

NET INCOME 30,337 33,608 44,319

Net income attributable to noncontrolling interests 27,293 22,958 19,592

NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC.

NET INCOME ATTRIBUTABLE TO RADNET, INC.

COMMON STOCKHOLDERS $ 3,044 $ 10,650 $ 24,727

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

BASIC NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC.

COMMON STOCKHOLDERS $ 0.05 $ 0.19 $ 0.47

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

DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC.

COMMON STOCKHOLDERS $ 0.05 $ 0.17 $ 0.46

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(IN THOUSANDS)

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2023 2022 2021

NET INCOME (LOSS) $ 33,608 $ 44,319 $ ( 1,749 )

NET INCOME $ 30,337 $ 33,608 $ 44,319

Currency translation adjustments 4,617 ( 3,943 ) ( 65 )

Change in fair value of cash flow hedge, net of taxes — — ( 19,372 )

Change in fair value of cash flow hedge from prior periods reclassified to earnings 3,576 3,687 3,695

COMPREHENSIVE INCOME (LOSS) 33,352 47,949 ( 17,774 )

COMPREHENSIVE INCOME 38,530 33,352 47,949

Less comprehensive income attributable to noncontrolling interests 27,293 22,958 19,592

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC.

COMPREHENSIVE INCOME ATTRIBUTABLE TO RADNET, INC.

COMMON STOCKHOLDERS $ 11,237 $ 10,394 $ 28,357

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Shares Amount Capital (Loss) Income Deficit Equity Interests Equity

BALANCE - JANUARY 1, 2020 50,314,328 $ 5 $ 262,865 $ ( 8,026 ) $ ( 103,159 ) $ 151,685 $ 81,454 $ 233,139

Shares issued under the equity compensation plan 491,674 — — — — — — —

Issuance of common stock under the DeepHealth equity compensation plan 10,920 — — — — — — —

Stock-based compensation expense — — 12,463 — — 12,463 — 12,463

Issuance of common stock for acquisitions 823,615 — 33,011 — — 33,011 — 33,011

Tax effect on gain on sale of noncontrolling interest — — ( 551 ) — — ( 551 ) — ( 551 )

Distributions paid to noncontrolling interests — — — — — — ( 1,985 ) ( 1,985 )

Change in cumulative foreign currency translation adjustment — — — ( 101 ) — ( 101 ) — ( 101 )

Change in fair value cash flow hedge, net of taxes — — — ( 19,372 ) — ( 19,372 ) — ( 19,372 )

Change in fair value of cash flow hedge from prior periods reclassified to earnings — — — 3,448 — 3,448 — 3,448

Net (loss) income — — — — ( 14,840 ) ( 14,840 ) 13,091 ( 1,749 )

BALANCE - DECEMBER 31, 2020 51,640,537 $ 5 $ 307,788 $ ( 24,051 ) $ ( 117,999 ) $ 165,743 $ 92,560 $ 258,303

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Change in fair value of cash flow hedge from prior periods reclassified to earnings — — — 3,695 — 3,695 — 3,695

Net income — — — — 24,727 24,727 19,592 44,319

Net income (loss) — — — — 24,727 24,727 19,592 44,319

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

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Change in fair value of cash flow hedge from prior periods reclassified to earnings — — — 3,687 — 3,687 — 3,687

Net income — — — — 10,650 10,650 22,958 33,608

Net income (loss) — — — — 10,650 10,650 22,958 33,608

BALANCE - DECEMBER 31, 2022 57,723,125 $ 6 $ 436,288 $ ( 20,677 ) $ ( 82,622 ) $ 332,995 $ 158,457 $ 491,452

Issuance of stock upon exercise of options 12,424 — 142 — — 142 — 142

Shares issued under the equity compensation plan 1,128,453 — — — — — — —

Issuance of common stock under the DeepHealth equity compensation plan 37,909 — — — — — — —

Stock-based compensation expense — — 26,785 — — 26,785 — 26,785

Issuance of common stock, net of issuance costs 8,711,250 1 245,831 — — 245,832 — 245,832

Issuance of common stock in connection with acquisitions 378,699 — 11,470 — — 11,470 — 11,470

Forfeiture of restricted stock ( 35,542 ) — — — — — — —

Sale of economic interests in majority owned subsidiary, net of taxes — — 2,236 — — 2,236 — 2,236

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

Distributions paid to noncontrolling interests — — — — — — ( 5,972 ) ( 5,972 )

Change in cumulative foreign currency translation adjustment — — — 4,617 — 4,617 — 4,617

Change in fair value of cash flow hedge from prior periods reclassified to earnings — — — 3,576 — 3,576 — 3,576

Other — — ( 2 ) — — ( 2 ) 1 ( 1 )

Net income (loss) — — — — 3,044 3,044 27,293 30,337

BALANCE - DECEMBER 31, 2023 67,956,318 $ 7 $ 722,750 $ ( 12,484 ) $ ( 79,578 ) $ 630,695 $ 182,664 $ 813,359

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

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CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss) $ 33,608 $ 44,319 $ ( 1,749 )

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

Net income $ 30,337 $ 33,608 $ 44,319

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

Depreciation and amortization 128,391 115,877 96,694

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Amortization and write off of deferred financing costs and loan discount 2,987 2,693 3,254

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

Loss on sale and disposal of equipment and other 2,187 2,529 1,246

Loss (gain) on extinguishment of debt — 1,496 ( 4,047 )

Loss on extinguishment of debt — — 1,496

Loss on impairment 3,949 — —

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Stock-based compensation 26,785 23,770 25,203

Non cash item in other expenses — — 242

Change in value of contingent consideration ( 3,880 ) ( 325 ) —

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Proceeds from debt issuance, net of issuance costs — 147,996 717,307

Proceeds from paycheck protection program loans — — 4,023

Distributions paid to noncontrolling interests ( 5,972 ) ( 893 ) ( 2,426 )

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Payments on revolving credit facility — — ( 128,300 )

Sale of noncontrolling interests 5,121 — —

Payments on contingent consideration ( 5,495 ) — —

Proceeds from issuance of common stock, net of issuance costs 245,832 — —

Proceeds from issuance of common stock upon exercise of options 142 294 488

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

Net cash provided by financing activities 195,635 93,647 104,673

EFFECT OF EXCHANGE RATE CHANGES ON CASH ( 292 ) 113 ( 65 )

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ( 6,772 ) 32,588 61,853

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 214,736 ( 6,772 ) 32,588

CASH AND CASH EQUIVALENTS, beginning of period 127,834 134,606 102,018

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The offsetting amount due was recorded in our consolidated balance sheets under accounts payable, accrued expenses and other.

On November 1, 2022, we issued 359,002 shares of our common stock to complete our purchase of Heart and Lung Imaging Limited.

On December 12, 2023, we issued 64,569 shares of common stock to settle the stock contingent liabilities as part of our purchase of Heart & Lung Imaging Limited.

The shares were ascribed a value of $ 2.3 million.

On September 20, 2023, we issued 56,600 shares of common stock 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 of a business with a fair value of $ 27.2 million to our Santa Monica Imaging Group, LLC joint venture.

On July 7, 2023, we issued 113,303 shares of common stock 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 13, 2023, we issued 144,227 shares of common stock to settle the general holdback contingent liabilities as part of our purchase of Aidence Holding B.V..

The shares were ascribed a value of $ 4.0 million.

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

On November 1, 2022, we issued 359,002 shares of common stock to complete our purchase of Heart & Lung Imaging Limited.

The shares were ascribed a value of $ 6.8 million.

On November 1, 2022 we made a contribution to our joint venture Arizona Diagnostic Radiology Group of $ 12.7 million in equipment and other assets.

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On April 1, 2022 we received $ 8.4 million in fixed assets and equipment from our partner in Frederick County Radiology, LLC.

See Note 4, Facility Acquisitions contained herein.

On January 20, 2022, we issued 1,141,234 shares of our common stock to complete our purchase of Aidence Holding B.V.

On January 20, 2022, we issued 1,141,234 shares of common stock to complete our purchase of Aidence Holding B.V.

The shares were ascribed a value of $ 30.6 million.

On January 20, 2022, we issued 965,058 shares to complete our purchase of Quantib B.V.

On January 20, 2022, we issued 965,058 shares of common stock to complete our purchase of Quantib B.V.

The shares were ascribed a value of $ 25.9 million.

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The shares were ascribed a value of $ 2.0 million.

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

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

We entered into finance lease debt of approximately $ 20.0 thousand during the twelve months ended December 31, 2020.

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

Of the total combined assets of $ 0.4 million, we transferred $ 0.3 million and Simi Valley Hospital and Health Services contributed the remaining $ 0.1 million.

AND SUBSIDIARIES

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

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

The gross proceeds as a result of this public offering was $ 259.2 million before underwriting discounts, commissions, and expenses totaling $ 13.4 million.

The consolidated financial statements include the accounts of RadNet, Inc.

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VIEs that we consolidate as the primary beneficiary consist of professional corporations which are owned or controlled by individuals within our senior management and provide professional medical services for centers in Arizona, California, Delaware, Maryland, New Jersey and New York.

These VIEs are collectively referred to as the Group.

These VIEs are collectively referred to as the consolidated medical group (the "Group").

RadNet provides non-medical, technical and administrative services to the Group for which it receives a management fee, pursuant to the related management agreements.

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All intercompany balances and transactions have been eliminated in consolidation.

In our consolidated balance sheets at December 31, 2022 and December 31, 2021, we have included approximately $ 110.3 million and $ 89.2 million, respectively, of accounts

receivable and approximately $ 16.2 million and $ 14.4 million of accounts payable and accrued liabilities related to the Group, respectively.

In our consolidated balance sheets at December

31, 2023 and December 31, 2022, we have included approximately $ 94.1 million and $ 110.3 million, respectively, of accounts receivable and approximately $ 16.7 million and $ 16.2 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.

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As such, the financial results of these groups are not consolidated in our financial statements.

We also own a 49 % economic interest in ScriptSender, LLC, which provides services for secure data transmission of medical information.

Through a management agreement, RadNet provides management and accounting services and receives an agreed upon fee.

ScriptSender LLC is dependent on us to finance its own activities, and as such we determined that it is a VIE but we are not a primary beneficiary since we do not have the power to direct the activities of the entity that most significantly impact the entity’s economic performance.

We have continued to finance ScriptSender during it's development phase and our maximum exposure to loss is $ 3.3 million, which represents our receivable balance from the entity.

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 $ 2.1 million and $ 1.6 million for the years ended December 31, 2022, and December 31, 2021, respectively.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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As stated in Note 1 above, the Group consists of VIEs and we consolidate the operating activities and balance sheets of each.

Additionally, we determined that our unconsolidated joint venture, ScriptSender, LLC, is also a VIE as it is dependent on our operational funding but we are not a primary beneficiary since RadNet does not have the power to direct the activities of the entity that most significantly impact the entity’s economic performance.

USE OF ESTIMATES - The financial statements have been prepared in accordance with U.S.

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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 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, 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.

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.

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

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

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

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

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To aid businesses and stimulate the national economy, Congress passed The Coronavirus Aid, Relief, and Economic Security ("CARES") Act, which was signed in to law on March 27, 2020.

Beginning in the second quarter of 2020 and through the twelve months ended December 31, 2021, we received funding from the various programs established by the CARES Act as follows:

• $ 39.6 million total of accelerated Medicare payments received, $ 39.5 million for the twelve months ended December 31, 2020 and $ 0.1 million for the twelve months ended December 31, 2021.

• $ 4.0 million from the Paycheck Protection Program during the twelve months ended December 31, 2020.

• $ 35.4 million total Provider Relief Funding, $ 26.3 million received for the twelve months ended December 31, 2020 and $ 9.1 million received for the twelve months ended December 31, 2021.

The accelerated Medicare payments were recorded to deferred revenue in our consolidated balance sheet and are being applied to revenue as services are performed beginning in 2021.

Based on terms released on October 1, 2020, through the Continuing Appropriations Act, 2021 and Other Extensions Act, such accelerated payments are interest free for inpatient acute care hospitals for 29 months (seven months for medical groups), and the program currently requires CMS to recoup the payments

beginning one year after receipt by the provider, by withholding future Medicare fee-for-service payments for claims at a rate of 25% for the first 11 months, and 50% for the 6 months afterward, until the full accelerated payment has been recouped.

The program currently requires any outstanding balance remaining after 29 months to be repaid by the provider or be subject to an interest rate currently set at 4%.

We applied the accelerated Medicare payments to revenue in the amount of $ 8.4 million for the twelve months ended December 31, 2022 and $ 30.2 million for the twelve months ended December 31, 2021.

As of December 31, 2022, approximately $ 1.0 million of Medicare payments received remain in d eferred revenue .

The $ 4.0 million secured from the Paycheck Protection Program was accounted for as debt and in December 2020 we met the eligibility requirements under the government guidelines for forgiveness and the loans were written off to gain on extinguishment of debt.

The Provider Relief Funding is displayed as such on our consolidated statements of operations in the year received.

The CARES Act also provides for the deferral of the employer-paid portion of the social security payroll tax with 50 % due by December 31, 2021 and 50 % due by December 31,2022.

We elected to defer $ 16.3 million of this tax through December 31, 2020 which has been paid as of December 31, 2022.

The CARES Act also provided a refundable employer tax credit ("ERC") equal to 50 % of qualified wages, including certain health insurance costs, that can be used to offset payroll tax liabilities.

In the year ending December 31, 2021, we recognized an employee retention credit as a reduction to cost of operations totaling of $ 7.7 million.

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 December 31, 2023, all 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.

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Amounts remaining to be collected on these agreements were $ 14.3 million and $ 15.4 million at December 31, 2023 and December 31, 2022, respectively.

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

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

ACCOUNTS PAYABLE AND ACCRUED EXPENSES - Accounts payable and accrued expenses were comprised of the following (in thousands):

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Revenue is recognized when a performance obligation is satisfied by transferring a promised good or service to a customer.

For the years ended December 31, 2022, 2021 and 2020, we recorded approximately $ 13.2 million, $ 10.5 million, and $ 8.6 million, respectively, in revenue related to our software business which is included in net service fee revenue in our consolidated statement of operations.

For the years ended December 31, 2023, 2022 and 2021, we recorded approximately $ 20.2 million, $ 13.2 million, and $ 10.5 million, respectively, in revenue related to our software business which is included in net service fee revenue in our consolidated statements of operations.

At December 31, 2023 we had deferred revenue of approximately $ 1.3 million associated with these sales which we expect to recognize into revenue over the next 12 months.

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We have placed our cash and cash equivalents with one major financial institution.

At times, the cash in the financial institution is temporarily in excess of the amount insured by the Federal Deposit Insurance Corporation, or FDIC.

The cash in the financial institution is in excess of the amount insured by the Federal Deposit Insurance Corporation, or FDIC.

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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Maintenance and repairs are charged to expense as incurred.

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 at 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 in process research and development ("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.

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 within Cost of operations in our Consolidated Statements of Operations .

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.

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.

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The amount of the impairment charge is calculated as the excess of the asset’s carrying value over its fair value, which generally represents the discounted future cash flows from that asset or in the case of assets we expect to sell, at fair value less costs to sell.

At December 31, 2021 we recorded a write off charge of $ 7.1 million in leasehold improvements for

facilities that we abandoned.

At December 31, 2023 and December 31, 2021 we recorded lease abandonment of $ 2.5 million and $ 7.1 million, respectively in leasehold improvements for facilities that we abandoned.

See the Leases discussion below for more information.

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

We maintain business interruption insurance to cover loss of business due to a facility becoming non-operational under certain circumstances.

We maintain business interruption insurance to cover loss of business due to a facility becoming non-operational under certain

circumstances.

Our equipment leases are covered by warranty and service contracts which cover repairs and provide regular maintenance to keep the equipment in functioning order.

After a management review of post pandemic patient traffic to centers during the fourth quarter of 2021, it was noted that although overall volumes had returned to pre-pandemic levels, certain imaging locations did not experience the same levels of activity as beforehand.

This was due in part to lower utilization rates of commercial space from telecommuting, accompanied by the migration of those workers out of congested urban centers to residential areas.

Based on this analysis, management decided to consolidate volumes into fewer centers and reduce administrative office space in response to the demographic changes experienced.

To complete the closure of these locations, we took a lease abandonment charge of approximately $ 12.6 million at December 31, 2021.

UNINSURED RISKS – On November 1, 2013 we entered into a high-deductible workers’ compensation insurance policy.

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

We may abandon low utilization leases and divert the patients to nearby centers.

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

To complete the closure of these locations, we took a lease abandonment charge of approximately $ 5.1 million and $ 19.7 million at December 31, 2023 and December 31, 2021, respectively.

Of these amounts, $ 2.7 million and $ 12.6 million were related to right-of-use assets impairment and $ 2.5 million and $ 7.1 million were related to the write-off of leasehold improvements for the years ending December 31, 2023 and December 31, 2021.

UNINSURED RISKS – We maintain a high-deductible workers’ compensation insurance policy.

We have recorded liabilities of $ 3.4 million and $ 3.9 million at December 31, 2023 and December 31, 2022, respectively, for the estimated future cash obligations associated with the unpaid portion of the workers compensation claims incurred.

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We have recorded liabilities as of December 31, 2023 and 2022 of $ 7.2 million and $ 7.4 million, respectively, for the estimated future cash obligations associated with the unpaid portion of the medical and dental claims incurred by our participants.

Additionally, we entered into an agreement with Blue

Shield for a stop loss policy that provides coverage for any claims that exceed $ 250,000 up to a maximum of $ 1.0 million in order for us to limit our exposure for unusual or catastrophic claims.

Additionally, we entered into an agreement with Blue Shield for a stop loss policy that provides coverage for any claims that exceed $ 250,000 up to a maximum of $ 1.0 million in order for us to limit our exposure for unusual or catastrophic claims.

EMPLOYEE BENEFIT PLAN – We adopted a profit-sharing/savings plan pursuant to Section 401(k) of the Internal Revenue Code that covers substantially all non-professional employees.

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Employee contributions vest immediately.

We can elect to provide a matching contribution in the amount to a maximum of 1.0 % per 4.0 % of employee contribution, and have done so since 2017.

We contributed $ 3.0 million in matching for each of the twelve months ended December 31, 2022 and December 31, 2021.

For the year ended December 31, 2020, we elected not to provide a matching contribution.

EQUITY BASED COMPENSATION – We have one long-term incentive plan that we adopted in 2006 and which we first amended and restated as of April 20, 2015, and again on March 9, 2017, and currently as of April 15, 2021 (the “Restated Plan”).

The Restated Plan was approved by our stockholders at our annual stockholders meeting on June 10, 2021.

We can elect to provide a matching contribution in the amount to a maximum of 1.0 % per 4.0 % of employee contributions.

We contributed $ 0.0 million and $ 3.0 million in matching for each of the twelve months ended December 31, 2023 and December 31, 2022.

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

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

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

We have reserved 20,100,000 shares of common stock for issuance under the Restated Plan which can be issued in the form of incentive and/or nonstatutory stock options, restricted and/or unrestricted stock, stock units, and stock appreciation rights.

Terms and conditions of awards can be direct grants or based on achieving a performance metric and we also consider probability of achievement of performance conditions when determining expense recognition.

Terms and conditions of awards can be direct grants or based on achieving a performance metric.

We evaluate performance-based awards to determine if it is probable that the vesting conditions will be met.

We also consider probability of achievement of performance conditions when determining expense recognition.

For the awards where vesting is probable, equity-based compensation is recognized over the related vesting period.

Stock options and warrants generally vest over three to five years and expire five to ten years from date of grant.

Stock options generally vest over three years to five years and expire five years to ten years from date of grant.

We determine the compensation expense for each stock option award using the Black Scholes, or similar, valuation model.

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Revenues and expenses are translated using average exchange rates prevailing during the reporting period.

Any translation adjustments resulting from this process are shown separately as a component of accumulated other comprehensive income (loss).

Any translation adjustments resulting from this process are shown separately as a

component of accumulated other comprehensive income (loss).

Gains and losses related to the foreign currency portion of international transactions are included in the determination of net income.

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Currency Translation

Balance as of January 1, 2020 $ ( 276 )

Balance as of December 31, 2020 ( 377 )

Currency Translation Adjustments ( 65 )

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OTHER 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 twelve month periods ended December 31, 2022, December 31, 2021, and December 31, 2020 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 twelve month periods ended December 31, 2023, December 31, 2022, and December 31, 2021 are included in the consolidated statements of comprehensive income.

COMMITMENTS AND CONTINGENCIES - We are party to various legal proceedings, claims, and regulatory, tax or government inquiries and investigations that arise in the ordinary course of business.

With respect to these matters, we evaluate the developments on a regular basis and accrue a liability when we believe a loss is probable and the amount can be reasonably estimated.

Based on current information, we do not believe that reasonably possible or probable losses associated with pending legal proceedings would either individually or in the aggregate, have a material adverse effect on our business and

consolidated financial statements.

However, the outcome of these matters is inherently uncertain.

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DERIVATIVE INSTRUMENTS

In the fourth quarter of 2016, we entered into two forward interest rate cap agreements ("2016 Caps").

The 2016 Caps matured in September and October 2020.

The 2016 Caps had notional amounts of $ 150,000,000 and $ 350,000,000 , respectively, which were designated at inception as cash flow hedges of future cash interest payments associated with portions of our variable rate bank debt.

Under these arrangements, we purchased a cap on 3 month LIBOR at 2.0 %.

We were liable for a $ 5.3 million premium to enter into the caps which accrued to current liabilities on our balance sheet and paid over the life of the 2016 Caps.

The gain or loss of the hedge (i.e.

change in fair value) was reported as a component of accumulated other comprehensive income (loss) in the consolidated statement of equity.

A tabular presentation of the effect of derivative instruments on our consolidated statement of comprehensive (loss) income, net of taxes is as follows (amounts in thousands):

Interest Rate Contracts

For the twelve months ended Amount of Gain (Loss) Recognized on Derivative, net of taxes Location of Gain (Loss) Recognized

in Income on Derivative

December 31, 2022 $ —

December 31, 2021 $ —

December 31, 2020 $ 788 Other Comprehensive Loss

In the second quarter of 2019, we entered into four forward interest rate agreements ("2019 swaps").

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The 2019 swaps will secure a constant interest rate associated with portions of our variable rate bank debt and have an effective date of October 13, 2020.

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

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

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

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

In October of 2023, the two agreements of $ 50,000,000 each matured and the remaining 2019 swaps have a total notional amount of $ 400,000,000 as of December 31, 2023.

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

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

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

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

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

The cash flows for both our $ 400,000,000 notional interest rate swap contract locked in at 2.05 % due October 2025 and our $ 100,000,000 notional interest rate swap contract locked in at 1.96 % do not match the cash flows for our First Lien Term Loans and so we have determined that they are not currently effective as cash flow hedges.

Accordingly, all changes in their fair value after April 1, 2020 for the $ 400,000,000 notional and after July 1, 2020 for the $ 100,000,000 notional will be recognized in earnings.

The cash flows for both our $ 400,000,000 notional interest rate swap contract locked in at 1.98 % due October 2025 and our $ 100,000,000 notional interest rate swap contract locked in at 1.89 % did not match the cash flows for our Barclays term loans and so we determined that they were not currently effective as cash flow hedges.

Accordingly, all changes in their fair value after April 1, 2020 for the $ 400,000,000 notional and after July 1, 2020 for the $ 100,000,000 notional was recognized in earnings.

As of July 1, 2020, the total change in fair value relating to swaps included in other comprehensive income was approximately $ 24.4 million, net of taxes.

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 per month through October 2025.

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

Interest Rate Contracts - Effective Portion

For the twelve months ended Amount of Loss Recognized on Derivative, net of taxes Location of Loss Recognized

in Income on Derivative

December 31, 2022 $ —

December 31, 2021 $ —

December 31, 2020 $( 20,160 ) Other Comprehensive Loss

A tabular presentation of the effect of derivative instruments on our statement of operations of the 2019 Swaps for the Swaps that became ineffective in 2020 is as follows (amounts in thousands):

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

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

This contingency had a value of approximately $ 7.2 million on December 31, 2022.

The amount is reviewed quarterly and adjusted to fair value based on the yield rate of S&P B-rated corporate bonds and the probability of FDA approval, which has been currently determined by management to be 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.

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.

The contingency had a fair value of approximately $ 7.2 million on December 31, 2022.

The fair value is 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.

In September 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 be required;

and therefore, the probability of the milestones being achieved became zero.

Accordingly, management recognized a gain of $ 7.2 million in 2023 representing the change in fair value of contingent consideration within 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 $ 2.1 million as of December 31, 2022.

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.

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.

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

Heart and Lung Imaging Limited

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

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

subsequent periods.

The milestone contingency had a value of approximately $ 11.1 million as of December 31, 2022.

As part of the purchase agreement, we recorded $ 1.2 million in contingent consideration which was based on the anticipated achievement of specific EBITDA targets within a defined time frame.

In June 2023, we determined that the contingent consideration thresholds were not achieved and, as such, we recognized a gain of $ 1.2 million representing the change in fair value of the contingent consideration within Cost of operations in our Consolidated Statements of Operations .

Heart & Lung Imaging Limited.

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

The milestone contingencies had a value of approximately $ 6.2 million and $ 11.1 million as of December 31, 2023 and 2022, respectively.

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

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

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.

On December 12, 2023, we settled a milestone contingent liability by issuing 64,569 shares of our common stock at an ascribed value of $ 2.3 million and cash of $ 2.1 million.

A tabular roll-forward of contingent consideration is as follows (amounts in thousands):

For the twelve months ended December 31, 2023

Entity Account January 1, 2022 Balance Issuance of contingent consideration Amount of income (loss) recognized on contingent consideration Currency Translation December 31, 2022 Balance

Entity Account January 1, 2023 Balance Settlement of Contingent Consideration Change in Valuation of Contingent Consideration Currency Translation December 31, 2023 Balance

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

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

Heart and Lung Limited Accrued Expenses & Other Long Term Liabilities $ — $ 10,814 $ 566 $ 276 $ 11,656

See Fair Value Measurements section below for the fair value of contingent consideration at December 31, 2022.

Heart & Lung Limited Accrued Expenses & Other Long Term Liabilities $ 11,656 $ ( 7,854 ) $ 2,477 $ 600 $ 6,879

For the twelve months ended December 31, 2022

Entity Account January 1, 2022 Balance Settlement of Contingent Consideration Change in Valuation of Contingent Consideration Currency Translation December 31, 2022 Balance

Aidence Other Long Term Liabilities $ — $ 11,453 $ ( 362 ) $ 67 $ 11,158

Quantib Accrued Expenses & Other Long Term Liabilities $ — $ 4,581 $ ( 903 ) $ 31 $ 3,709

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

Heart & Lung Limited Accrued Expenses & Other Long Term Liabilities $ — $ 10,814 $ 566 $ 276 $ 11,656

See Fair Value Measurements section below for the fair value of contingent consideration at December 31, 2023 and 2022.

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 1 Level 2 Level 3 Total

Accrued expenses and other non-current liabilities

Other Current Assets and Deposits and Other

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

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

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

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

More specifically, the fair value was determined by calculating the value of the difference between the fixed interest rate of the interest rate swaps and the counterparty’s forward SOFR curve in 2023 and forward LIBOR curve in 2022.

respectively.

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

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, 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):

The tables below summarize the estimated fair values of contingencies and holdback relating to our acquisitions that are subject to fair value measurements and the classification of these liabilities on our consolidated balance sheets, as follows (in thousands):

As of December 31, 2023

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Accrued expenses and other non-current liabilities

Heart & Lung Imaging Limited $ — $ — $ 6,879 $ 6,879

The estimated fair value of these liabilities was determined using Level 3 inputs.

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 Heart & Lung Imaging Limited are not observable and cannot be corroborated by observable market data they are classified as Level 3.

As of December 31, 2022

Level 1 Level 2 Level 3 Total

Accrued expenses and other non-current liabilities

Aidence Holding B.V.

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

Heart and Lung Imaging Limited $ — $ — $ 11,656 $ 11,656

Heart & Lung Imaging Limited $ — $ — $ 11,656 $ 11,656

The estimated fair value of these liabilities was determined using Level 3 inputs.

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

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

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

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

Long Term Debt

The table below summarizes the estimated fair value and carrying amount of our Truist (Term Loan Agreement) and Barclays (First Lien Term Loans) long-term debt as follows (in thousands):

The table below summarizes the estimated fair value and carrying amount of our Barclays Term Loans and Trust Term Loan long-term debt as follows (in thousands):

As of December 31, 2023

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

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

Barclays Term Loans and Truist Term Loan $ — $ 824,759 $ — $ 824,759 $ 823,063

As of December 31, 2022

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

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

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

Our Barclays revolving credit facility had no aggregate principal amount outstanding as of December 31, 2023 and December 31, 2022, respectively.

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The estimated fair values of our long-term debt, which is discussed in Note 8, was determined using Level 2 inputs for the Barclays and Truist term loans.

Level 2 inputs primarily related to comparable market prices.

We consider the carrying amounts of cash and cash equivalents, receivables, other current assets, current liabilities and other notes payables to approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization or payment.

Additionally, we consider the carrying amount of our capital lease obligations to approximate their fair value because the weighted average interest rate used to formulate the carrying amounts approximates current market rates.

Level 2 inputs primarily relate to comparable market prices.

We consider the carrying amounts of cash and cash equivalents, receivables, other current assets, and current liabilities to approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization or payment.

Additionally, we consider the carrying amount of our finance lease obligations and other notes payable to approximate their fair value because the weighted average interest rate used to formulate the carrying amounts approximates current market rates.

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

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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

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

BASIC NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC.

COMMON STOCKHOLDERS

Weighted average number of common shares outstanding during the period 63,580,059 56,293,336 52,496,679

Basic net income (loss) per share attributable to RadNet, Inc.

Basic net income per share attributable to RadNet, Inc.

common stockholders $ 0.05 $ 0.19 $ 0.47

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

DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC.

COMMON STOCKHOLDERS

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Changes in fair value associated with contingently issuable shares $ — $ ( 724 ) $ —

Net income (loss) attributable to RadNet, Inc's common stockholders for diluted share calculation $ 9,926 $ 24,727 $( 14,840 )

Diluted net income (loss) per share attributable to RadNet, Inc.

Net income attributable to RadNet, Inc's common stockholders for diluted share calculation $ 3,044 $ 9,926 $ 24,727

Diluted net income per share attributable to RadNet, Inc.

common stockholders $ 0.05 $ 0.17 $ 0.46

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

Nonvested restricted stock subject to service vesting — — 329,159

Shares issuable upon the exercise of stock options 754,131 152,723 47,792

INVESTMENTS IN EQUITY SECURITIES- As of December 31, 2022, we have three equity investments for which a fair value is not readily determinable and we do not have significant influence and therefore the total amounts invested are recognized at cost.

In accordance with accounting guidance , if there is no readily determinable fair value, the guidance allows entities the ability to measure investments at cost less impairment, whereby impairment is based on a qualitative assessment.

Weight average shares for which the exercise price exceeds the average market price of common stock 70,760 — —

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 December 31, 2023, we have three equity investments for which a fair value is not readily determinable and we do not have significant influence 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 noted as of the year ended December 31, 2022.

No observable price changes or impairment in our investment was identified as of December 31, 2023.

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

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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 noted for the year ended December 31, 2022.

No observable price changes or impairment in our investment was identified as of December 31, 2023.

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

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

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

On November 5, 2019 we acquired 2,315,350 shares of Series A Preferred Stock interest at a cost of $ 1.0 million and also loaned the company $ 2.5 million in support of its operations.

On October 6, 2023, WhiteRabbit.ai Inc.

commenced another offering of preferred shares and the Company converted its note receivable outstanding principal and accrued interest in exchange for 20,325,203 shares of Series C-1 Preferred Stock at an exchange rate of $ 0.123 per share.

No observable price changes or impairment in our investment was identified as of December 31, 2023.

INVESTMENT IN JOINT VENTURES – We have 13 unconsolidated joint ventures with ownership interests ranging from 35 % to 55 %.

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Balance as of December 31, 2022 $ 57,893

Equity contributions in existing and purchase of interest in joint ventures 9,712

Equity in earnings in these joint ventures 6,427

Equity contributions in existing and purchase of interest in joint ventures 43,993

Distribution of earnings ( 15,603 )

Balance as of December 31, 2023 $ 92,710

We charged management service fees from the centers underlying these joint ventures of approximately $ 22.2 million, $ 19.6 million and $ 11.3 million for the years ended December 31, 2022, 2021 and 2020, respectively.

We charged management service fees from the imaging centers underlying these joint ventures of approximately $ 17.9 million , $ 22.2 million, and $ 19.6 million for the years ended December 31, 2023, 2022 and 2021, respectively.

We eliminate any unrealized portion of our management service fees with our equity in earnings of joint ventures.

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Amounts transacted between ourselves and the entities in the ordinary course of business are disclosed on our balance sheet in the due from/to affiliate accounts.

The following table is a summary of key unaudited financial data for these joint ventures as of December 31, 2022 and 2021, respectively, and for the years ended December 31, 2022, 2021 and 2020, respectively, (in thousands):

The following table is a summary of key financial data for these joint ventures as of December 31, 2023 and 2022, respectively, and for the years ended December 31, 2023, 2022 and 2021, respectively, (in thousands):

Balance Sheet Data:

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Total net assets $ 147,334 $ 106,458

Book value of RadNet joint venture interests $ 49,564 $ 34,930

Cost in excess of book value of acquired joint venture interests accounted for as equity method goodwill 8,329 7,299

Total value of RadNet joint venture interests $ 57,893 $ 42,229

2023 2022 2021

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Net income $ 12,968 $ 21,169 $ 21,893

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).

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 sale price and carrying value of such imaging centers which included equipment and other assets and an allocation of goodwill to such imaging centers.

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To maintain our 49 % economic interest in ADRG, we received a distribution from the partnership of $ 4.5 million to reduce our overall investment to $ 8.3 million.

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 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 Cedars-Sinai Medical Center ("CSMC") 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 CSMC holding a 60 % economic interest.

RadNet accounted for its share of the venture under the equity method.

On January 1, 2019, CSMC purchased an additional 5 % economic interest in SMIG from us and, as a result, of 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, California valued at $ 27.2 million and purchased an additional economic interest in SMIG for cash payment of $ 11.3 million.

Simultaneously, CSMC 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 Statements of Operations , representing the difference between the fair value and carrying value of the business contributed.

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

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 STANDARDS

Accounting standards adopted

Over the course of 2020 through 2022, the FASB issued different Accounting Standards Updates (ASUs) in regards to Reference Rate Reform (Topic 848).

ASU 2020-04 and ASU 2021-01 addressed optional expedients and exceptions for applying generally accepted accounting principals to certain contract modifications, hedging relationships, and derivatives that referenced London Inter-bank Offered Rate (LIBOR) or another reference rate expected to be discontinued.

The provisions originally were set to expire on December 31, 2022.

The date of LIBOR cessation was finalized as June 30, 2023, which is beyond the current sunset date of Topic 848 and hence the need to extend the time allotted for accounting relief.

ASU 2022-06 deferred the sunset date of the provision out to December 31, 2024.

The adoption of the provisions under these ASUs did not have a material effect on our consolidated financial statements.

In November 2021, the FASB issued ASU 2021-10 ("ASU 2021-10"), Government Assistance (Topic 832), Disclosures by Business Entities about Government Assistance.

ASU 2021-10 requires entities to provide disclosures on material government assistance transactions for annual reporting periods.

The disclosures include information around the nature of the assistance, the related accounting policies used to account for government assistance, the effect of government assistance on the entity’s financial statements, and any significant terms and conditions of the agreements, including commitments and contingencies.

The new standard was effective for financial statements issued for annual reporting periods beginning after December 15, 2021.

As ASU 2021-10 only impacts annual financial statement footnote disclosures, the adoption did not have a material effect on our consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08 ("ASU 2021-08"), Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.

ASU 2021-08 requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with Accounting Standards

Codification Topic 606.

ASU 2021-08 is effective for fiscal years beginning after December 15, 2022 and early adoption is permitted.

The adoption did not have a material effect on our consolidated financial statements.

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Updates (ASUs) 2023-07 ("ASU 2023-07"), Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures .

The guidance requires entities to provide enhanced disclosures about significant segment expenses.

For entities that have adopted the amendments in ASU 2023-07, the updated guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and is applicable to the Company in fiscal 2025.

Early adoption is permitted.

The Company is currently evaluating the impact of the adoption of ASU 2023-07 on its consolidated financial position and results of operations.

In December 2023, the FASB issued Accounting Standards Updates (ASUs) 2023-09 ("ASU 2023-09"), Income Tax (Topic 740) Improvements to Income Tax Disclosures primarily related to the rate reconciliation and income taxes paid information.

The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2024, and is applicable to the Company in fiscal 2025.

Early adoption is permitted.

Company is currently evaluating the impact of the adoption of ASU 2023-09 on its consolidated financial position and results of operations.

NOTE 4 – BUSINESS COMBINATIONS AND RELATED ACTIVITY

Imaging Center Segment

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.

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 the California, Delaware, Maryland, New Jersey and New York markets.

We made a fair value determination of the acquired assets and assumed liabilities and the following were recorded (in thousands):

Entity Date Acquired Total Purchase 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 )

& 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 Purchase 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 )

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

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

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

Chelsea Diagnostic Radiology, P.C.* 12/1/2022 2,800 568 — 2,132 100 — —

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 Purchase Consideration Property & Equipment Right of Use Assets Goodwill Intangible Assets Other 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.

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, 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.

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 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.

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, 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.

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

As a result of this transaction, we recorded $ 1.0 million in current assets, $ 0.2 million in property and equipment, $ 27.7 million in intangible assets (including developed technology of $ 21.1 million and IPR&D of $ 5.5 million), $ 3.2 million in current liabilities, a deferred tax liability of $ 3.5 million, and $ 22.9 million in goodwill.

As a result of this transaction, we recorded $ 1.0 million in current assets, $ 0.2 million in property and equipment, $ 27.7 million in intangible assets (including developed technology of

$ 21.1 million and IPR&D of $ 5.5 million), $ 3.2 million in current liabilities, a deferred tax liability of $ 3.5 million, and $ 22.9 million in goodwill.

In performing the purchase price allocation, we considered, among other factors, the intended future use of acquired assets, analysis of historical financial performance and estimates of future performance of the Aidence business.

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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 In-process Research and Development ("IPR&D") related to Aidence's Ai Veye Lung 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 impairment charges of $ 3.9 million within Cost of operations in our Consolidated Statements of Operations .

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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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 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.

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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.

Advanced Radiology at Capital Region, LLC

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

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

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

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

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").

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 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.

Formation of majority owned subsidiary and sale of ownership 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 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.

Sale of ownership interest in a majority owned subsidiary

Tarzana Medical Center, LLC.

Effective September 1, 2021 we completed the sale of a 24.9 % ownership interest in our majority owned subsidiary West Valley Imaging Group, LLC for $ 13.1 million to Tarzana Medical Center, LLC.

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The vast majority of our centers offer multi-modality imaging services, a strategy that diversifies revenue streams, reduces exposure to reimbursement changes and provides patients and referring physicians one location to serve the needs of multiple procedures.

We also provide teleradiolgy services in the United Kingdom though our Heart&Lung Health subsidiary.

We also provide teleradiology services in the United Kingdom though our majority-owned Heart & Lung Imaging Limited subsidiary.

Included in the segment is our eRad subsidiary, which designs the underlying critical scheduling, data storage and retrieval systems necessary for imaging center operation.

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We do not report balance sheet information by segment since it is not reviewed by our CODM.

In the normal course of business, our reportable segments enter into transactions with each other.

While intersegment transactions are treated like third-party transactions to determine segment performance, the revenues recognized by a segment and expenses incurred by the counterparty are eliminated in consolidation and do not affect consolidated results.

Twelve Months Ended December 31, 2023

Imaging Centers AI Intersegment Elimination Consolidated Total

Third Party $ 1,610,707 $ 5,923 $ — $ 1,616,630

Intersegment — 6,546 ( 6,546 ) —

Total revenue $ 1,610,707 $ 12,469 $ ( 6,546 ) $ 1,616,630

Twelve Months Ended December 31, 2022

Imaging Centers AI Intersegment Elimination Consolidated Total

Third Party $ 1,425,665 $ 4,396 $ — $ 1,430,061

Intersegment — — — —

Total revenue $ 1,425,665 $ 4,396 $ — $ 1,430,061

The table below present segment information reconciled to our financial results, with segment operating income or loss including revenue less cost of operations, depreciation and amortization, and other operating expenses to the extent specifically identified by segment (in thousands):

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Total cost of operations $ 1,395,239 $ 1,264,346 $ 1,123,274

Gain on contribution of imaging centers into joint venture

Imaging Centers $ ( 16,808 ) $ — $ —

Total cost of operations $ ( 16,808 ) $ — $ —

Lease abandonment charges

Imaging Centers $ 5,146 $ — $ 19,675

Total depreciation and amortization $ 5,146 $ — $ 19,675

Depreciation and Amortization

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Imaging Centers $ 2,191 $ 2,506 $ 1,246

AI ( 4 ) 23 —

Total loss (gain) $ 2,187 $ 2,529 $ 1,246

Imaging Centers $ 1,973 $ 926 $ 744

AI 1,805 20 —

Total severance $ 3,778 $ 946 $ 744

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Total income from operations $ 98,697 $ 46,363 $ 73,444

For proper comparative purposes, Imaging Center segment revenue for the years 2021 and 2020 exclude Provider Relief Funding of $ 9.1 million and $ 26.3 million for the twelve months ended December 31, 2021 and 2020, respectively as it represents a form of direct Government stimulus.

No such funds were received for the twelve months ended December 31, 2022.

In the first quarter of 2024, we revised our reportable segments to combine our eRad business, which was included in the Imaging Center segment, with our AI segment to form a new Digital Health reportable segment.

As a result of the change, beginning with our Quarterly Report on Form 10-Q for the quarter ending March 31, 2024, we will report our results in these two reportable segments.

The change in reportable segments will be reflected retrospectively.

NOTE 6 – GOODWILL AND OTHER INTANGIBLE ASSETS

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Additions 120,551 48,697 169,248

Disposals ( 4,200 ) — ( 4,200 )

Measurement period and other adjustments ( 106 ) 147 41

Currency translation 1,028 ( 2,272 ) ( 1,244 )

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

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Computer and office equipment, furniture and fixtures 127,540 119,467

Software development costs 36,015 —

Software costs 47,286 36,015

Leasehold improvements 537,853 501,963

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Total property and equipment $ 604,401 $ 565,961

Included in our property and equipment at December 31, 2022 is approximately $ 73.4 million total of construction in process amounts consisting of $ 26.6 million in medical equipment, $ 5.3 million in computer and office equipment, $ 0.4 million in software development and $ 41.1 million in leasehold improvements.

Included in our property and equipment at December 31, 2021 is approximately $ 18.1 million total of construction in process amounts consisting of $ 2.6 million in medical equipment, $ 6.1 million in computer and office equipment, and $ 9.3 million in leasehold improvements.

Included in our property and equipment at December 31, 2023 is approximately $ 42.7 million total of construction in process amounts consisting of $ 12.2 million in medical equipment, $ 1.9 million in computer and office equipment, $ 6.0 million in software costs and $ 22.6 million in leasehold improvements.

Included in our property and equipment at December 31, 2022 is approximately $ 73.4 million total of construction in process amounts consisting of $ 26.6 million in medical equipment, $ 5.3 million in computer and office equipment, $ 0.4 million in software costs and $ 41.1 million in leasehold improvements.

Depreciation and amortization expense of property and equipment, including amortization of equipment under finance leases, for the years ended December 31, 2023, 2022 and 2021 was $ 116.2 million, $ 105.6 million, and $ 92.3 million, respectively.

NOTE 8 - CREDIT FACILITIES AND NOTES PAYABLE

As of December 31, 2022 and December 31, 2021 our debt obligations consisted of the following (in thousands):

As of December 31, 2023 and December 31, 2022 our term loan debt and other obligations consisted of the following (in thousands):

December 31, 2023 December 31, 2022

First Lien Term Loans collateralized by RadNet's tangible and intangible assets $ 714,125 $ 721,375

Discount on First Lien Term Loans ( 11,127 ) ( 13,213 )

Term Loan Agreement collateralized by NJIN's tangible and intangible assets 150,000 46,500

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

Barclays Term Loans collateralized by RadNet's tangible and intangible assets $ 678,687 $ 714,125

Discount on Barclays Term Loans ( 9,041 ) ( 11,127 )

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

Discount on Truist Term Loan ( 990 ) ( 1,254 )

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

Total debt obligations 830,042 851,744

Less current portion ( 17,974 ) ( 12,400 )

Long-term portion debt obligations $ 839,344 $ 743,498

Long-term portion of debt obligations $ 812,068 $ 839,344

The following is a listing of annual principal maturities of notes payable exclusive of all related discounts and repayments on our revolving credit facilities for years ending December 31 (in thousands)

2024 $ 20,324

Thereafter 677,875

Total notes payable obligations $ 840,073

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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 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.

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

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

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

Amendments to Credit Facilities

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

On March 27, 2023, we entered into the First Amendment to Second Amended and Restated First Lien Credit and Guaranty Agreement related to our Barclays credit facility (the "Barclays Amendment"), which replaces the interest rate benchmark, from the London Interbank Offered Rate ("LIBOR") to the Secured Overnight Financing Rate ("SOFR") and includes applicable credit spread adjustments of 0.11448 %, 0.26161 %, and 0.42826 % for interest periods of one month, three months, and six months, respectively.

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

Other than the foregoing, the material terms of the Barclays credit facility remained unchanged.

Second Amended and Restated First Lien Credit and Guaranty Agreement

On April 23, 2021, we entered into the Second Amended and Restated First Lien Credit and Guaranty Agreement (the "Restated Credit Agreement") which provides for $ 725.0 million of senior secured first lien term loans (the "First Lien Term Loans") and a $ 195.0 million senior secured revolving credit facility (the "Barclays Revolving Credit Facility").

The proceeds of the First Lien Term Loans were used to refinance loans outstanding under our prior first lien credit agreement and provide funding for current and future operations.

Total costs of the Restated Credit Agreement amounted to approximately $ 14.9 million segregated as follows:

$ 8.8 million capitalized to discount and deferred finance cost, $ 6.0 million charged to loss on early extinguishment of debt and related expenses and $ 0.1 million written off to interest expense.

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

On April 23, 2021, we entered into the Second Amended and Restated First Lien Credit and Guaranty Agreement (the "Barclays Restated Credit Agreement") which provides for $ 725.0 million of senior secured first lien term loans (the "Barclays Term Loans") and a $ 195.0 million senior secured revolving credit facility (the "Barclays Revolving Credit Facility").

The proceeds of the Barclays Term Loans were used to refinance loans outstanding under our prior Barclays credit agreement and provide funding for current and future operations.

Total costs of the Barclays Restated Credit Agreement amounted to approximately $ 14.9 million segregated as follows:

$ 8.8 million capitalized to discount and deferred finance cost, $ 4.5 million expensed to debt restructuring costs, $ 1.5 million charged to loss on early extinguishment of debt and $ 0.1 million written off to interest expense.

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

Second Amended and Restated Revolving Credit and Term Loan Agreement

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

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

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

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

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

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

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

$ 2.0 million capitalized to discount and deferred finance cost and $ 0.7 million expensed to loss on extinguishment of debt and related expenses in other expense.

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

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

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

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

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

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Senior Credit Facilities:

First Lien Term Loans:

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

The applicable

margin for Eurodollar Rate term loans under the Restated Credit Agreement is 3.25 % per annum, with a reduction to 3.0 % per annum upon delivery by us of financial statements evidencing a first lien net leverage ratio of 3.50 to 1.00 or less.

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

At December 31, 2022 the effective Eurodollar Rate and the Alternate Base Rate for the First Lien Term Loans under the Restated Credit Agreement was 4.73 % and 7.50 %, respectively and the applicable margin for the Eurodollar Rate and Alternate Base Rate First Lien Term Loans under the Restated Credit Agreement was 3.00 % and 2.00 %, respectively.

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

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

Barclays Term Loans:

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

The applicable margin for Eurodollar Rate and Alternative Base Rate was 3 % and 2 %, respectively, with an effective Eurodollar Rate and the Alternative Base Rate of 4.63 % and 8.00 %, respectively.

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

The applicable margin for Eurodollar Rate and Alternative Base Rate was 3 % and 2 %, respectively.

At December 31, 2023, we have an effective SOFR of 8.38 %, with an applicable credit spread adjustment of 0.26161 %, and an Alternative Base Rate of 10.5 %, respectively.

The Barclays Restated Credit Agreement provides for quarterly payments of principal for the Barclays Term Loans in the amount of approximately $ 1.8 million.

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

Truist Term Loan:

The Truist Term Loan currently bears interest at a three month SOFR election of 4.28 % plus an applicable margin and fees based on Pricing Level III described above.

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

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 V described above.

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.

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

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

Revolving Credit Facilities:

Barclays Revolving Credit Facility:

The Barclays Revolving Credit Facility under the Restated Credit Agreement is a $ 195.0 million senior secured revolving credit facility.

The Barclays Revolving Credit Facility is a $ 195.0 million senior secured revolving credit facility.

Associated with the Barclays Revolving Credit Facility are deferred financing costs, net of accumulated amortization, of $ 1.1 million at December 31, 2023.

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

First Lien Leverage Ratio Eurodollar Rate Spread Base Rate Spread

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

Net Leverage Ratio Term SOFR Loans Alternative Base Rate Spread

> 3.00 x but ≤ 3.50 x

As of December 31, 2022, the effective interest rate for borrowings on revolving loans under the Barclays Revolving Credit Facility stood at 9.5 %.

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 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.

As of December 31, 2023, the effective interest rate for borrowings on revolving loans under the Barclays Revolving Credit Facility was 10.3 %.

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 Barclays 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.

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

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

Truist Revolving Credit Facility:

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

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

The Truist Revolving Credit Facility terminates on the earliest of (i)

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

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

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

Recent Amendments to prior Credit Facilities

Barclays Credit Facilities:

On August 28, 2020, RadNet Management, Inc.

and RadNet, Inc.

entered into Amendment No.

8, Consent and Incremental Joinder Agreement to Credit and Guaranty Agreement (the "Eighth Amendment").

The Eighth Amendment amended the prior first lien credit agreement to add $ 57.5 million of revolving commitments to the prior Barclays revolving credit facility increasing the maximum borrowing capacity under the prior Barclays revolving credit facility to $ 195.0 million while leaving the maturity date of July 1, 2023 unchanged.

On April 18, 2019 we entered into the following two amendments to the prior first lien credit agreement:

(i) Amendment No.

6, Consent and Incremental Joinder Agreement to Credit and Guaranty Agreement (the “Sixth Amendment”);

and (ii) Amendment No.

7 to Credit and Guaranty Agreement (the “Seventh Amendment”).

Among other things, the Sixth Amendment amended the prior first lien credit agreement to issue $ 100.0 million in incremental first lien term loans and to add an additional $ 20.0 million of revolving commitments to the prior Barclays revolving credit facility.

The Seventh Amendment amended the prior first lien credit agreement to extend the maturity date of the prior Barclays revolving credit facility by an additional two years to July 1, 2023, unless sooner terminated in accordance with the terms of the prior first lien credit agreement.

The prior first lien credit agreement was amended and restated by the Restated Credit Agreement described above, and the prior first lien term loans and prior Barclays revolving credit facility under the prior first lien credit agreement were refinanced and replaced by the First Lien Term Loans and the Barclays Revolving Credit Facility provided under the Restated Credit Agreement described above.

Truist Credit Facilities:

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

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

Paycheck Protection Program

The Paycheck Protection Program (PPP) includes funds available for loans to small business and Medicare providers to support operations during the COVID-19 pandemic.

The funds are administered by the Small Business Administration (SBA), through approved lenders and do not require collateral or personal guarantees.

We received our loans based on being a Medicare provider.

The terms and conditions for participation require entities to certify that economic uncertainty related to the COVID-19 pandemic makes the loan necessary to support their current operations, and that they will use the funds to retain workers (e.g., by paying salaries, providing paid sick/medical leave and health insurance benefits) and pay certain debts (mortgage obligations) and expenses (e.g.

rent, utilities, telephone).

The loans have a 1.0 % fixed interest rate and are due in 2 years.

The loans are eligible for forgiveness subject to salary limitations and employee retention levels.

Certain of our consolidated subsidiaries received four loans totaling $ 4.0 million.

We accounted for the funds received as debt and recorded a liability for the full amount of proceeds received and accrued interest over the term of the loans.

In December 2020 we met the eligibility requirements for forgiveness and the loans were written off to gain on debt extinguishment.

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

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

NOTE 9 – LEASES

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All leases are classified as operating or finance for accounting purposes, depending on the terms of the agreement.

Our Incremental Borrowing Rate ("IBR") used to discount the stream of lease payments is closely related to the interest rates

charged on our collateralized debt obligations and our IBR is adjusted when those rates experience a substantial change.

Our incremental borrowing rate used to discount the stream of lease payments is closely related to the interest rates charged on our collateralized debt obligations and our incremental borrowing rate is adjusted when those rates experience a substantial change.

During 2021, we satisfied all liabilities classified as finance leases, and only operating leases remain.

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Total finance lease cost $ 1,204 $ 2,896 $ 3,114

1) Operating lease cost above for the year ended December 31, 2021 included $ 12.6 million in lease abandonment charges.

1) Operating lease cost above for the year ended December 31, 2023 and 2021 included $ 2.7 million and $ 12.6 million, respectively in lease abandonment charges.

Please see our discussion in the Leases section of Note 2, Summary of Significant Accounting Policies.

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Operating cash flows from operating leases $ 101,516 $ 108,004 $ 110,288

$ 108,004 $ 110,288

Operating cash flows from financing leases — — 46

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Operating leases 55,852 88,080 186,695

1) On December 31, 2021 we reduced our liability and eliminated the related right-of-use assets for future lease options at facilities that we elected to abandon.

The amount of liability and right-of-use asset reduction amounted to approximately $ 3.3 million.

Supplemental balance sheet information related to leases was as follows:

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Current portion of operating lease liability 55,981 57,607

Operating lease liabilities 604,117 577,675

Long-term operating lease liability 605,097 604,117

Total operating lease liabilities $ 661,078 $ 661,724

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2024 $ 97,603

2025 $ 92,092

Thereafter 482,594

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Foreign current tax 638 87 18

Other current tax — — —

Federal deferred tax 8,960 6,470 9,831

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Foreign deferred tax ( 1,843 ) ( 3,430 ) —

Currency translation — — —

Income tax expense 8,473 9,361 14,560

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Return to provision 5,987 234 ( 2,530 )

PPP Loan — — ( 850 )

Deferred true-ups and other 483 ( 1,451 ) 5,009

1 unchanged sentence

Uncertain tax provisions ( 884 ) ( 749 ) ( 321 )

Tax rate adjustment ( 984 ) — —

Other differences — 79 —

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Total Deferred Tax Liabilities $ ( 211,996 ) $ ( 225,572 )

Net Deferred Tax (Liability) Asset $ ( 9,256 ) $ 14,853

Net Deferred Tax Liability $ ( 15,776 ) $ ( 9,256 )

As of December 31, 2023, we had federal net operating loss carryforwards of approximately $ 128.9 million, which is comprised of definite and indefinite net operating losses.

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are subject to limitations related to their utilization under Section 382 of the Internal Revenue Code.

We also had foreign net operating loss carryforwards of approximately $ 19.8 million, which begin to expire from years 2023 to 2027, in addition to $ 11.0 million which do not expire and are carried over indefinitely.

We also had foreign net operating loss carryforwards of approximately $ 45.8 million, which do not expire and are carried over indefinitely.

We considered all evidence available when determining whether deferred tax assets are more likely-than-not to be realized, including projected future taxable income, scheduled reversals of deferred tax liabilities, prudent tax planning strategies, and recent financial operations.

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Expiration of the statute of limitations for the assessment of taxes ( 1,180 ) ( 999 ) ( 713 )

Increase (decrease) related to change in rate — — —

Increase related to change in rate 2 — —

Balance at end of year $ 3,082 $ 4,144 $ 5,088

4 unchanged sentences

We do not anticipate the uncertain tax position to change materially within the next 12 months.

On March 27, 2020, the United States enacted the Coronavirus Aid, Relief and Economic Security Act (CARES Act).

The Cares Act is an emergency economic stimulus package that includes spending and tax breaks to strengthen the United States economy and fund a nationwide effort to curtail the effect of COVID-19.

The CARES Act provides sweeping tax changes in response to the COVID-19 pandemic, some of the more significant provisions are removal of certain limitations on utilization of net operating losses, increasing the loss carryback period for certain losses to five years, and increasing the ability to deduct interest expense, as well as amending certain provisions of the previously enacted Tax Cuts and Jobs Act.

At December 31, 2020, we have taken advantage of the accelerated tax depreciation related to qualified improvement property and the Paycheck Protection Program loan allowed under the CARES Act.

On December 27, 2020, the United States enacted the Consolidated Appropriations Act of 2021 (“CAA”).

The CAA includes provisions extending certain CARES Act provisions and adds coronavirus relief, tax and health extenders.

The Inflation Reduction Act 2022 which incorporates a Corporate Alternative Minimum Tax (CAMT) was signed on August 16, 2022.

The changes will affect for the tax years beginning after December 31, 2022.

The new tax will require companies to compute two separate calculations for federal income tax purposes and pay the greater of the new minimum tax or their regular tax liability.

We will be monitoring the impacts of the act to determine if this will have a impact on us for years beginning after December 31, 2022.

As of year-end it is not expected to have a material impact for us.

In 2021, the Organization for Economic Co-operation and Development ("OECD") announced an inclusive framework on base erosion and profit shifting including Pillar Two Model Rules defining the global minimum tax, which calls for taxation of large multinational corporations at a minimum rate of 15%.

Subsequently multiple sets of administrative guidance have been issued.

Many non-US tax jurisdictions have either recently enacted legislation to adopt certain components of Pillar Two Model Rules beginning in 2024 (including the European Union Member States) with the adoption of additional components in later years or announced their plans to enact legislation in future years.

We are continuing to evaluate the impacts of enacted legislation and pending legislation to enact Pillar Two Model Rules in the jurisdictions that we operate in outside of the US.

The Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act of 2022 was signed into law on August 9, 2022 to boost domestic semiconductor manufacturing and encourage US research activities.

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This act is not expected to have a material impact for us.

The Tax Cuts and Jobs Act of 2017 subjects a U.S.

shareholder to tax on global intangible low-taxed income ("GILTI") earned by certain foreign subsidiaries.

An entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only.

We have elected to account for GILTI in the year the tax is incurred.

NOTE 11 – STOCK-BASED COMPENSATION

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We have one long-term equity incentive plan, the RadNet, Inc.

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

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

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

We have reserved for issuance under the Restated Plan 20,100,000 shares of common stock.

We can issue options (incentive and non-qualified), stock awards, stock appreciation rights, stock units and cash awards under the Restated Plan.

We can issue options (incentive and nonstatutory), performance based options, stock awards (restricted or unrestricted), stock units, performance based stock units, and stock appreciation rights under the Restated Plan.

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

Stock options generally vest over three to five years and expire five to ten years from the date of grant.

Stock options generally vest over one to five years and expire five to ten years from the date of grant.

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

Outstanding Options

Under the 2006 Plan Shares Weighted Average

Under the Restated Plan Shares Weighted Average

Exercise price

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Exercised ( 12,723 ) 11.11

Canceled, forfeited or expired ( 16,000 ) 17.06

Balance, December 31, 2023 911,411 16.60 6.22 $ 16,561,659

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During the second quarter of fiscal 2020, in connection with the completion of the DeepHealth acquisition, we granted 412,434 options 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 December 31, 2022, total unrecognized stock based compensation expense related to non-vested DeepHealth options was approximately $ 0.6 million which is expected to be recognized over a weighted average period of approximately 0.74 years.

As of December 31, 2023, total unrecognized stock based compensation expense related to non-vested DeepHealth options was insignificant.

Outstanding Options

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Exercisable at December 31, 2023 76,612 — 5.75 2,663,803

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 (“RSA’s”)

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RSA's unvested at December 31, 2023 537,358 0.90 $ 22.99

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

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

Other stock bonus awards

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

During the twelve months ended December 31, 2022 we issued 41,000 shares relating to these awards, approximately amounting to $ 0.8 million of compensation expense.

During the twelve months ended December 31, 2023 we issued 50,765 shares relating to these awards, amounting to approximately $ 1.3 million of compensation expense.

Performance based stock units ("PSUs")

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The PSUs will vest in two equal parts, starting three years from the grant date based on continuous service, with the number of shares earned ( 0 % to 200 % of the target award) depending upon the extent to which we achieve a performance condition as determined by the board of directors over the period from January 1, 2022 through December 31, 2022.

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

In January 2023, we granted certain employees PSUs with a target award of 60,685 shares of our common stock.

As of December 31, 2023, 121,370 shares are expected to vest.

Performance based stock options ("PSOs")

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The PSOs will vest in three equal parts, starting three years from the grant date based on continuous service, with the number of shares earned ( 0 shares to 111,925 shares) depending upon the extent to which we achieve a performance condition as determined by the board of directors over the period from January 1, 2022 through December 31, 2022.

Long Term Incentive Plan shares ("LTIPs")

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

In January 2023, we granted certain employees PSOs with a potential to purchase a maximum of 235,227 shares of our common stock.

The PSOs will vest in three equal parts, starting three years from the grant date based on continuous service, with the number of shares earned ( 0 shares to 235,227 shares) depending upon the extent to which we achieve a performance condition as determined by the board of directors over the period January 1, 2023 through December 31, 2023.

As of December 31, 2023, all 235,227 shares are expected to vest.

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

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

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The units and shares vest ratably over a two to four year period, conditioned on continued employment through the vesting periods.

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

The following summarizes all unvested LTIPs activities during the twelve months ended December 31, 2022:

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 twelve months ended December 31, 2023:

LTIPs Weighted-Average

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Granted 216,460 $ 20.24

Vested ( 66,309 ) $ 19.62

Forfeited or Canceled ( 94,897 ) $ 19.82

LTIPs unvested at December 31, 2023 224,725 2.73 $ 20.08

In summary, of the 16,500,000 shares of common stock reserved for issuance under the Restated Plan at December 31, 2022, there remain 2,017,233 shares available for future awards.

In summary, of the 20,100,000 shares of common stock reserved for issuance under the Restated Plan at December 31, 2023, there remain 4,069,349 shares available for future issuance.

NOTE 12 – SUBSEQUENT EVENTS

Proposed acquisitions of imaging centers

On February 16, 2023, we acquired Houston Medical Imaging, LLC for a purchase consideration of approximately $ 29.0 million.

Houston Medical Imaging consists of seven multi modality imaging centers located in Houston, Texas.

On February 1, 2024, we acquired Antelope Valley Outpatient Imaging Center, LLC for a purchase consideration of approximately $ 3.5 million.

Antelope Valley Outpatient Imaging consists of four multi modality imaging centers located in Palmdale, California.

Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data