What changed in this filing

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Item 1. Financial Statements

2024-05-10 compared with 2023-11-09 · 231 added, 395 removed, 486 unchanged (56% of the section changed)

3 unchanged sentences

(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

September 30,

2024 December 31,

30 unchanged sentences

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

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

73,901,654 and 67,956,318 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

Additional paid-in-capital 969,248 722,750

10 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Service fee revenue $ 397,189 $ 352,420

4 unchanged sentences

Depreciation and amortization 32,368 31,315

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

Loss (gain) on sale and disposal of equipment and other 186 579

1 unchanged sentence

Total operating expenses 420,368 383,893

INCOME (LOSS) FROM OPERATIONS 43,251 6,924 74,363 24,761

INCOME FROM OPERATIONS 11,339 6,671

OTHER INCOME AND EXPENSES

2 unchanged sentences

Non-cash change in fair value of interest rate hedge ( 1,216 ) 4,093

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

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

Other (income) expense ( 2,934 ) 1,432

Total other expense 7,793 19,819

INCOME (LOSS) BEFORE INCOME TAXES 3,546 ( 13,148 )

(Provision for) Benefit from income taxes ( 7,220 ) ( 2,188 ) ( 7,741 ) ( 7,087 )

Benefit from (provision for) income taxes 1,864 ( 1,135 )

NET INCOME (LOSS) 5,410 ( 14,283 )

Net income attributable to noncontrolling interests 8,189 6,722

NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC.

COMMON STOCKHOLDERS $ 17,540 $ 668 $ 4,904 $ 11,585

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

NET LOSS ATTRIBUTABLE TO RADNET, INC.

COMMON STOCKHOLDERS $ ( 2,779 ) $ ( 21,005 )

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

BASIC AND DILUTED NET LOSS PER SHARE ATTRIBUTABLE TO RADNET, INC.

COMMON STOCKHOLDERS $ ( 0.04 ) $ ( 0.36 )

WEIGHTED AVERAGE SHARES OUTSTANDING

Basic 67,793,404 56,744,419 62,113,707 56,041,017

Diluted 68,809,818 57,651,761 63,221,251 57,036,417

Basic and Diluted 69,307,078 57,701,439

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

2 unchanged sentences

(IN THOUSANDS)

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

2023 2022 2023 2022

Three Months Ended March 31,

NET INCOME (LOSS) $ 5,410 $ ( 14,283 )

3 unchanged sentences

Less comprehensive income attributable to noncontrolling interests 8,189 6,722

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO

COMPREHENSIVE LOSS ATTRIBUTABLE TO RADNET, INC.

COMMON STOCKHOLDERS $ ( 4,238 ) $ ( 17,306 )

3 unchanged sentences

(IN THOUSANDS EXCEPT SHARE DATA)

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

The following table summarizes changes in the Company’s consolidated stockholders' equity, including noncontrolling interest, during the three months ended March 31, 2024 and March 31, 2023.

Common Stock Additional Paid-In

7 unchanged sentences

Shares Amount

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

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

Issuance of common stock upon exercise of options 1,299 — 8 — — 8 — 8

4 unchanged sentences

Issuance of common stock in connection with acquisitions 95,019 — 4,607 — — 4,607 — 4,607

Forfeiture of restricted stock ( 4,642 ) — ( 9 ) — — ( 9 ) — ( 9 )

Sale of economic interests in majority owned subsidiary, net of taxes — — 11,601 — — 11,601 9,590 21,191

2 unchanged sentences

Change in fair value of cash flow hedge from prior periods reclassified to earnings, net of taxes — — — 739 — 739 — 739

Other — — — — ( 1 ) ( 1 ) 1 —

Net income (loss) — — — — ( 2,779 ) ( 2,779 ) 8,189 5,410

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

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

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

Issuance of common stock under the DeepHealth equity compensation plan 7,175 — — — — — — —

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

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

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

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

Change in cumulative foreign currency translation adjustment — — — ( 6,000 ) — ( 6,000 ) — ( 6,000 )

Change in fair value of cash flow hedge from prior periods reclassified to earnings — — — 924 — 924 — 924

Other — — — ( 1 ) ( 1 ) ( 2 ) ( 1 ) ( 3 )

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

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

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

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(IN THOUSANDS EXCEPT SHARE DATA)

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

Common Stock Additional Paid-In

Capital Accumulated Other

Comprehensive

Loss Accumulated

Deficit Total

Radnet, Inc.'s

Equity Noncontrolling

Interests Total

Shares Amount

BALANCE-MARCH 31, 2024 73,901,654 $ 7 $ 969,248 $ ( 13,943 ) $ ( 82,357 ) $ 872,955 $ 204,370 $ 1,077,325

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

3 unchanged sentences

Stock-based compensation expense — — 12,185 — — 12,185 — 12,185

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 314,130 — 9,123 — — 9,123 — 9,123

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

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

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

Change in cumulative foreign currency translation adjustment — — — 2,777 — 2,777 — 2,777

Change in fair value of cash flow hedge from prior periods reclassified to earnings, net of taxes — — — 2,765 — 2,765 — 2,765

Other — — ( 2 ) — ( 1 ) ( 3 ) 1 ( 2 )

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

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

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

Issuance of common stock under the equity compensation plan 685,577 — — — — — — —

Issuance of common stock under the DeepHealth equity compensation plan 973,144 — — — — — — —

Stock-based compensation expense — — 18,856 — — 18,856 — 18,856

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

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

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

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

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

Change in fair value of cash flow hedge from prior periods reclassified to earnings, net of taxes 2,771 2,771 — 2,771

Change in fair value cash flow hedge, net of taxes — — — — — — — —

Change in fair value of cash flow hedge from prior periods reclassified to earnings — — — 922 — 922 — 922

Other — — ( 2 ) — ( 1 ) ( 3 ) — ( 3 )

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

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

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

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

2 unchanged sentences

(IN THOUSANDS)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES

5 unchanged sentences

Amortization of deferred financing costs and loan discount 748 746

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

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

Loss on sale and disposal of equipment and other 186 579

Amortization of cash flow hedge, net of taxes 739 922

1 unchanged sentence

Stock-based compensation 11,897 12,185

Loss on impairment 3,949 —

Change in fair value of contingent consideration 1,974 2,335

( 4,112 ) ( 329 )

Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions:

6 unchanged sentences

Accounts payable, accrued expenses and other 6,839 9,077

Net cash provided by (used in) operating activities 131,943 92,770

Net cash provided by operating activities 17,085 32,616

CASH FLOWS FROM INVESTING ACTIVITIES

2 unchanged sentences

Proceeds from sale of equipment 2 3

Equity contributions in existing and purchase of interest in joint ventures ( 5,453 ) ( 1,441 )

Net cash provided by (used in) investing activities ( 152,823 ) ( 123,048 )

Net cash used in investing activities ( 60,937 ) ( 65,556 )

CASH FLOWS FROM FINANCING ACTIVITIES

1 unchanged sentence

Payments on term loan debt ( 1,875 ) ( 3,688 )

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

Distributions paid to noncontrolling interests ( 3,523 ) —

Payments on contingent consideration ( 3,390 ) —

Contributions from noncontrolling interests 4,169 —

Proceeds from sale of economic interest of majority owned subsidiary 8,713 —

Proceeds from issuance of common stock, net of issuance costs 218,385 —

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Supplemental Schedule of Non-Cash Investing and Financing Activities

We acquired equipment and certain leasehold improvements for approximately $ 50.2 million and $ 61.0 million during the nine months ended September 30, 2023 and 2022, respectively, which were not paid for as of September 30, 2023 and 2022 , respectively.

The offsetting amounts due were recorded in our condensed consolidated balance sheet under accounts payable, accrued expenses and other.

On September 20, 2023, we issued 56,600 shares to settle the stock contingent liabilities as part of our purchase of Heart & Lung Imaging Limited.

The shares were ascribed a value of $ 1.6 million.

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

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

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

The shares were ascribed a value of $ 3.5 million.

On April 30, 2023, we issued 144,227 shares to settle the general holdback contingent liabilities as part of our purchase of Aidence Holding B.V..

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

The shares were ascribed a value of $ 30.6 million.

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

We acquired equipment and certain leasehold improvements for approximately $ 44.1 million and $ 40.8 million during the three months ended March 31, 2024 and 2023, respectively, which were not paid for as of March 31, 2024 and 2023 , respectively.

The amounts due were recorded in our condensed consolidated balance sheet under accounts payable, accrued expenses and other.

We acquired Grossman Imaging Center of CMH, LLC for approximately $ 10.5 million during the three months ended March 31, 2024 which was not paid for as of March 31, 2024.

The amounts due were recorded in our condensed consolidated balance sheet under accounts payable, accrued expenses and other.

On March 31, 2024, we issued an additional 12.5 % in noncontrolling interest in our Ventura County Imaging Group, LLC joint venture in exchange for $ 5.1 million which was not paid for as of March 31, 2024.

The amounts due were recorded in our condensed consolidated balance sheet under accounts payable, accrued expenses and other.

On March 29, 2024, we received $ 0.6 million in fixed assets, imaging equipment, and $ 6.5 million in goodwill from our partner in Tri Valley Imaging Group, LLC.

See Note 4, Business combinations and related activity contained herein.

On March 27, 2024, we issued 95,019 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 $ 4.6 million.

On January 15, 2024, we issued promissory notes in the amount of $ 6.9 million to acquire radiology equipment previously leased under operating leases.

AND SUBSIDIARIES

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

At September 30, 2023, we operated directly or indirectly through joint ventures with hospitals, 366 centers located in Arizona, California, Delaware, Florida, Maryland, New Jersey, and New York.

At March 31, 2024, we operated directly or indirectly through joint ventures with hospitals, 375 centers located in Arizona, California, Delaware, Florida, Maryland, New Jersey, and New York.

Our centers provide physicians with imaging capabilities to facilitate the diagnosis and treatment of diseases and disorders.

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Our multi-modality strategy diversifies revenue streams, reduces exposure to reimbursement changes and provides patients and referring physicians one location to serve the needs of multiple procedures.

In addition to our center operations, we have certain other subsidiaries that develop Artificial Intelligence ("AI") products and solutions that are designed to enhance interpretation of radiographic images.

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

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.

Prior period amounts were adjusted retrospectively to reflect the change in reportable segment.

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

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

In March 2024, we closed on a public offering of 5,232,500 shares of our common stock, including 682,500 shares sold pursuant to the exercise of an underwriter's overallotment option, at a price to the public of $ 44.00 per share.

The gross proceeds as a result of this public offering was $ 230.2 million before underwriting discounts, commissions, and expenses totaling $ 11.8 million.

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the design and activities of the VIE, the terms of the contracts the VIE has entered into, the nature of the VIE’s variable interests issued and how they were negotiated with or marketed to potential investors, and which parties participated significantly in the design or redesign of the entity.

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.

VIEs that we consolidate as the primary beneficiary include 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 consolidated medical group ("the Group").

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However, RadNet may be required to provide financial support to cover any operating expenses in excess of operating revenues.

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

RadNet recognized $ 214.7 million and $ 190.6 million of total billed net service fee revenue for the three months ended September 30, 2023, and 2022, respectively, for management services provided to the Group relating primarily to the technical portion of billed revenue.

The Group on a combined basis recognized $ 151.5 million and $ 141.4 million of revenue, net of management services fees to RadNet, for the nine months ended September 30, 2023 and 2022, respectively and $ 151.5 million and $ 141.4 million of operating expenses for the nine months ended September 30, 2023 and 2022, respectively.

RadNet recognized $ 638.3 million and $ 584.0 million of total billed net service fee revenue for the nine months ended September 30, 2023, and 2022, respectively, for management services provided to the Group relating primarily to the technical portion of billed revenue.

The Group on a combined basis recognized $ 52.3 million and $ 48.8 million of revenue, net of management services fees to RadNet, for the three months ended March 31, 2024 and 2023, respectively and $ 52.3 million and $ 48.8 million of operating expenses for the three months ended March 31, 2024 and 2023, respectively.

RadNet recognized $ 234.8 million and $ 207.4 million of total billed net service fee revenue for the three months ended March 31, 2024, and 2023, respectively, for management services provided to the Group relating primarily to the technical portion of billed revenue.

The cash flows of the Group are included in the accompanying condensed consolidated statements of cash flows.

All intercompany balances and transactions have been eliminated in consolidation.

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

In our condensed consolidated balance sheets at March 31, 2024 and December 31, 2023, we have included approximately $ 108.9 million and $ 94.1 million, respectively, of

accounts receivable and approximately $ 16.0 million and $ 16.7 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 secure data transmission services of medical information.

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

ScriptSender, LLC is dependent on RadNet 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 $ 2.8 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 $ 0.8 million and $ 0.5 million for the three months ended September 30, 2023, and September 30, 2022, respectively and $ 1.9 million and $ 1.5 million for the nine months ended September 30, 2023 and September 30, 2022, respectively.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and, therefore, do not include all information and footnotes necessary for conformity with U.S.

generally accepted accounting principles for complete financial statements;

however, in the opinion of management, all adjustments consisting of normal recurring adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods ended September 30, 2023 and 2022 have been made.

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

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

clerical and administrative personnel, bookkeeping and accounting services, billing and collection, provision of medical and office supplies, secretarial, reception and transcription services, maintenance of medical records, and advertising, marketing and promotional activities.

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

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

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

Our total service revenues during the three and nine months ended September 30, 2023 and 2022 are presented in the table below based on an allocation of the estimated transaction price with the patient between the primary patient classification of insurance coverage (in thousands):

Our total service revenues during the three months ended March 31, 2024 and 2023 are presented in the table below based on an allocation of the estimated transaction price with the patient between the primary patient classification of insurance coverage (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Commercial insurance $ 240,628 $ 213,061

4 unchanged sentences

Management fee revenue 5,908 4,248

Teleradiology and Software revenue 2,111 3,430 7,327 9,849

Heart and lung 3,921 1,813

Other 4,395 5,300

1 unchanged sentence

Imaging Center Segment Revenue 417,046 379,487

AI Segment Revenue 2,887 900 7,398 3,056

Digital Health Segment Revenue

14,661 11,077

Total service revenue $ 431,707 $ 390,564

GOVERNMENT ASSISTANCE:

COVID-19 PANDEMIC AND CARES ACT FUNDING - On March 11, 2020 the World Health Organization (WHO) designated COVID-19 as a global pandemic.

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.

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

ACCOUNTS RECEIVABLE - Substantially all of our accounts receivable are due under fee-for-service contracts from third party payors, such as insurance companies and government-sponsored healthcare programs, or directly from patients.

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Proceeds on notes receivables are reflected as operating activities on our statement of cash flows and on our balance sheet as prepaid expenses and other current assets for the current portion and deposits and other for the long term portion.

Amounts remaining to be collected on these agreements were $ 14.7 million and $ 15.4 million at September 30, 2023 and December 31, 2022, respectively.

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

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

Amounts remaining to be collected on these agreements were $ 12.1 million and $ 14.3 million at March 31, 2024 and December 31, 2023, respectively.

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

DEFERRED FINANCING COSTS - Costs of financing are deferred and amortized using the effective interest rate method and are related to our revolving credit facilities.

Deferred financing costs, net of accumulated amortization, were $ 1.8 million and $ 2.3 million , as of September 30, 2023 and December 31, 2022, respectively.

Deferred financing costs, net of accumulated amortization, were $ 1.5 million and $ 1.6 million, as of March 31, 2024 and December 31, 2023, respectively.

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

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

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

GOODWILL - Goodwill at March 31, 2024 totaled $ 694.3 million.

Goodwill is recorded as a result of business combinations.

1 unchanged sentence

We tested goodwill and indefinite lived intangibles for impairment on October 1, 2023, noting no impairment.

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

Imaging Center Artificial Intelligence Total

Activity in goodwill for the three months ended March 31, 2024 is provided below (in thousands):

Imaging Center Digital Health

Balance as of December 31, 2023 606,557 $ 72,906 $ 679,463

Goodwill from acquisitions 16,156 — 16,156

Valuation adjustment 1,603 — 1,603

Currency translation — ( 1,327 ) ( 1,327 )

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

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

INTANGIBLE ASSETS - The components of intangible assets, both finite and indefinite, along with annual amortization expense that will be recorded over the next five years at September 30, 2023 and December 31, 2022 are as follows (in thousands):

As of September 30, 2023:

Segment reorganization ( 12,300 ) 12,300 —

Balance as of March 31, 2024 $ 610,413 $ 83,879 $ 694,292

INTANGIBLE ASSETS - Intangible assets are primarily related to our business combinations and software development.

They include the estimated fair values of such items as service agreements, customer lists, covenants not to compete, acquired technologies, and trade names.

The components of intangible assets, both finite and indefinite, along with annual amortization expense that will be recorded over the next five years at March 31, 2024 and December 31, 2023 are as follows (in thousands):

As of March 31, 2024:

2024 2025 2026 2027 2028 Thereafter Total Weighted average amortization period remaining in years

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Total Annual Amortization $ 9,253 $ 12,068 $ 11,619 $ 10,613 $ 10,472 $ 32,858 $ 86,883

*Excluding the nine months ended September 30, 2023

*Excluding the three months ended March 31, 2024

As of December 31, 2023:

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Total Annual Amortization $ 12,645 $ 12,283 $ 11,833 $ 10,818 $ 10,505 $ 32,531 $ 90,615

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

Total intangible asset amortization expense was $ 3.2 million and $ 3.0 million for the three months ended March 31, 2024 and March 31, 2023, respectively.

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

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Trade names are reviewed annually for impairment.

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

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

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

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

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

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

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

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

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

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 support certain components of Pillar Two Model Rules beginning 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.

The model rules provide a framework for applying the minimum tax, countries may enact Pillar Two Model Rules slightly differently than the model rules and on different timelines and may adjust domestic tax incentives in response to Pillar Two Model Rules.

On a long-term basis, we will continue to evaluate the impacts of enacted legislation and pending legislation to enact Pillar Two Model Rules in all countries applicable to us.

For 2024, we expect that we will meet one or more transactional safe harbor rules, and as such, we do not believe Pillar Two model will have an impact on our annual effective tax rate for the year ending December 31, 2024.

We recorded an income tax expense (benefit) of $( 1.9 ) million, or an effective tax rate of ( 52.6 )%, for the three months ended March 31, 2024 and $ 1.1 million, or an effective tax rate of ( 8.6 )% for the three months ended March 31, 2023.

The income tax rates for the three months ended March 31, 2024 diverge from the federal statutory rate due to (i) effects of state income taxes ;

(ii) officer's compensation limitations;

(iii) partial valuation allowance on losses in foreign jurisdictions, partially offset by (iv) excess tax benefits attributable to share based compensation;

and (v) noncontrolling interests from controlled partnerships.

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

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

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

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

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

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

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

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

For a contract in which we are a lessee that contains fixed

payments for both lease and non-lease components, we have elected to account for the components as a single lease component.

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

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

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

No events have occurred such as fire, flood, or other acts which have impaired the integrity of our ROU assets as of March 31, 2024.

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

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

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

The components of other comprehensive income (loss) for the three months ended March 31, 2024 and March 31, 2023 are included in the consolidated statements of comprehensive income (loss).

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

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DERIVATIVE INSTRUMENTS - In the second quarter of 2019, we entered into four forward interest rate agreements ("2019 Swaps").

The 2019 Swaps have total notional amounts of $ 500,000,000 , consisting of two agreements of $ 50,000,000 each and two agreements of $ 200,000,000 each.

The 2019 Swaps have total notional amounts of $ 500.0 million, consisting of two agreements of $ 50.0 million each and two agreements of $ 200.0 million each.

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 smaller notional and October 2025 for the 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.

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

Under these arrangements, we arranged the 2019 Swaps with locked in 1 month Term SOFR rates at 1.89 % for the $ 100.0 million notional and at 1.98 % for the $ 400.0 million notional.

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

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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 1.98 % due October 2025 and our $ 100,000,000 notional interest rate swap contract locked in at 1.89 % 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 are being recognized in earnings.

The cash flows for both our $ 400.0 million notional interest rate swap contract locked in at 1.98 % due October 2025 and our $ 100.0 million notional interest rate swap contract locked in at 1.89 % do not match the cash flows for our Term

Loans (the “Barclays Term Loans”) under our Second Amended and Restated First Lien Credit and Guaranty Agreement with Barclays (the “Restated Credit Agreement”), 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 $ 400.0 million notional and after July 1, 2020 for the $ 100.0 million notional are being 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 through October 2025.

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

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

For the three months ended September 30, 2023

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

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

For the nine months ended September 30, 2023

Account December 31, 2022 Balance Amount of comprehensive loss recognized on derivative net of taxes Amount of loss reclassified out of accumulated OCI into income (prior period effective portion), net of taxes September 30, 2023 Balance Location

For the three months ended March 31, 2024

Account December 31, 2023 Balance Amount of comprehensive loss recognized on derivative net of taxes Amount of loss reclassified out of accumulated OCI into income (prior period effective portion), net of taxes March 31, 2024 Balance Location

Accumulated Other Comprehensive Loss, net of taxes $( 11,625 ) $ — $ 739 $( 10,886 ) Equity

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

For the three months ended September 30, 2023

Ineffective interest rate swap Amount of loss recognized in income on derivative (current period ineffective portion) Location of loss recognized in Income on derivative (current period ineffective portion) Amount of loss reclassified from accumulated OCI into income (prior period effective portion) Location of loss reclassified from accumulated OCI into income (prior period effective portion)

Interest rate contracts $ ( 1,015 ) Other income (expense) $ ( 921 ) Interest Expense

For the nine months ended September 30, 2023

Ineffective interest rate swap Amount of gain recognized in income on derivative (current period ineffective portion) Location of gain recognized in Income on derivative (current period ineffective portion) Amount of loss reclassified from accumulated OCI into income (prior period effective portion) Location of loss reclassified from accumulated OCI into income (prior period effective portion)

For the three months ended March 31, 2024

Ineffective interest rate swap Amount of gain recognized in income on derivative (current period ineffective portion) Location of loss recognized in Income on derivative (current period ineffective portion) Amount of loss reclassified from accumulated OCI into income (prior period effective portion) Location of loss reclassified from accumulated OCI into income (prior period effective portion)

Interest rate contracts $ 1,216 Other income (expense) $ ( 739 ) Interest Expense

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

See Fair Value Measurements section below for the fair value of the 2019 Swaps at March 31, 2024.

CONTINGENT CONSIDERATION -

Aidence Holding B.V.

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

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

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

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

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

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

A new submission would required;

and therefore, the probability of the milestones became zero.

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

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

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

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

As part of the purchase agreement, we 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.

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

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 September 30, 2023.

The purchase included up to $ 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 $ 4.2 million as of March 31, 2024.

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

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

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.

On March 27, 2024, we partially settled a milestone contingent liability by issuing 95,019 shares of our common stock at an ascribed value of $ 4.6 million.

Subsequently on April 1, 2024, we settled the remaining milestone contingent liability in cash of $ 3.6 million.

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

For the three months ended September 30, 2023

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

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

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

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

For the nine months ended September 30, 2023

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

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

Quantib Accrued Expenses & Other Long Term Liabilities 3,709 ( 5,110 ) $ 1,401 $ — $ —

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

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

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

For the three months ended March 31, 2024

Entity Account December 31, 2023 Balance Settlement of contingent consideration Change in valuation of Contingent Consideration Currency Translation March 31, 2024 Balance

Heart and Lung Limited Accrued Expenses 6,879 $ ( 4,607 ) $ 1,060 $ 914 $ 4,246

See Fair Value Measurements section below for the fair value of contingent consideration at March 31, 2024.

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

As of September 30, 2023

As of March 31, 2024

Level 1 Level 2 Level 3 Total

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The table below summarizes the estimated fair values of contingencies and holdback relating to our Heart and Lung Imaging Limited acquisition on November 1, 2022 that are subject to fair value measurements and the classification of these liabilities on our consolidated balance sheets, as follows (in thousands):

As of September 30, 2023

As of March 31, 2024

Level 1 Level 2 Level 3 Total

Accrued expenses and other non-current liabilities

Accrued expenses:liabilities

Heart and Lung Imaging Limited $ — $ — $ 4,246 $ 4,246

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The table below summarizes the estimated fair value compared to our face value of our long-term debt as follows (in thousands):

As of September 30, 2023

As of March 31, 2024

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

First Lien Term Loans and Truist Term Loan $ — $ 850,405 $ — $ 850,405 $ 853,063

Barclays Term Loans and Truist Term Loan $ — $ 822,884 $ — $ 822,884 $ 821,187

As of December 31, 2023

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

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

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

The estimated fair value of our long-term debt, which is discussed in Note 6, Credit Facilities and Notes Payable, was determined using Level 2 inputs primarily related to comparable market prices.

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 finance lease obligations 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):

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

Three Months Ended March 31,

Net loss attributable to RadNet, Inc.'s common stockholders

$ ( 2,779 ) $ ( 21,005 )

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

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

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

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

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

BASIC AND DILUTED NET LOSS PER SHARE ATTRIBUTABLE TO RADNET, INC.'S COMMON STOCKHOLDERS

Weighted average number of common shares outstanding during the period 69,307,078 57,701,439

Add non-vested restricted stock subject only to service vesting 217,238 179,268 202,082 141,492

Add additional shares issuable upon exercise of stock options and contingently issuable shares 799,176 728,074 905,462 853,908

Weighted average number of common shares used in calculating diluted net income per share 68,809,818 57,651,761 63,221,251 57,036,417

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

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

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

Basic and diluted net loss per share attributable to RadNet, Inc.'s common stockholders $ ( 0.04 ) $ ( 0.36 )

Earnings per share disclosures:

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Shares issuable upon the exercise of stock options 863,792 750,075

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

Weighted average shares for which the exercise price exceeds average market price of common stock — 273,111

Contingently issuable shares — — 193,207 —

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 September 30, 2023, we have three equity investments for which a fair value is not readily determinable and therefore the total amounts invested are recognized at cost as follows:

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

Our investment of $ 1.2 million represents a 14.21 % equity interest in the company.

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

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

On February 1, 2018, we purchased 2.1 million preferred shares in Turner Imaging Systems for $ 2.0 million.

On January 1, 2019 we funded a convertible promissory note in the amount of $ 0.1 million that converted to an additional 80,000 preferred shares on October 11, 2019.

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

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

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

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

As of March 31, 2024, we have four equity investments for an aggregate of $ 9.2 million.

No observable price changes or impairments in our investments were identified as of March 31, 2024.

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

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We evaluate our investment in joint ventures, including cost in excess of book value (equity method goodwill) for impairment whenever indicators of impairment exist.

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

No indicators of impairment existed as of March 31, 2024.

Joint venture investment and financial information

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

The following table is a summary of our investment in joint ventures during the three months ended March 31, 2024 (in thousands):

Balance as of December 31, 2023 $ 92,710

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Distribution of earnings —

Equity contributions in existing joint ventures 41,184

Balance as of September 30, 2023 $ 94,472

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

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

Balance as of March 31, 2024 $ 97,034

We charged management service fees to the centers underlying these joint ventures of approximately $ 5.9 million and $ 4.2 million for the three months ended March 31, 2024 and 2023.

The following table is a summary of key balance sheet data for these joint ventures as of March 31, 2024 and December 31, 2023 and income statement data for the three months ended March 31, 2024 and 2023 (in thousands):

Balance Sheet Data:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Current assets $ 51,292 $ 39,819

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Total net assets $ 155,565 $ 147,334

Income statement data for the nine months ended September 30,

Income statement data for the three months ended March 31,

Net revenue $ 61,208 $ 42,086

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Formation of majority owned subsidiary and sale of economic interest

Los Angeles Imaging Group, LLC

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

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

We contributed the operations of 3 centers to the subsidiary.

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

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

On February 23, 2024, we formed Tri Valley Imaging Group, LLC ("TVIG"), a partnership with Providence Health System - Southern California ("PHS").

The operation offers multi-modality services out of seven locations in Southern California.

On March 29, 2024, we contributed the operations of four centers to the enterprise and PHS contributed a business comprising three centers included $ 0.5 million fixed assets, $ 0.1 million in equipment and $ 6.5 million in goodwill.

Simultaneously, PHS purchased from us an additional economic interest in TVIG for cash payment of $ 9.6 million.

As a result of the transaction, we recognized a gain of $ 7.6 million to additional paid in capital and retained a 52 % controlling economic interest in TVIG and PHS retains and $ 7.8 million or 48 % noncontrolling economic interest in TVIG.

Joint venture investment contribution

Santa Monica Imaging Group, LLC

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

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

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

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

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

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

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

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

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

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

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

In determining the fair value of the imaging centers contributed to TVIG, 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.

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Recently Issued Accounting Pronouncements

We monitor new accounting pronouncements issued by the FASB and do not believe any accounting pronouncements issued through the date of this report will have a material impact on our financial statements.

We monitor new accounting pronouncements issued by the Financial Accounting Standards Board ("FASB") and do not believe any accounting pronouncements issued through the date of this report will have a material impact on our financial statements.

NOTE 4 – BUSINESS COMBINATIONS AND RELATED ACTIVITY

Imaging Center Segment

During the nine months ended September 30, 2023, we completed the acquisition of certain assets of the following entities, which either engage directly in the practice of radiology or associated businesses.

The primary reason for these acquisitions was to strengthen our presence in the California, Delaware and New York markets.

During the three months ended March 31, 2024, 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 market.

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

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

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

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

& 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 )

Grossman Imaging Center of CMH, LLC* 3/31/2024 10,500 1,178 6,404 9,016 250 56 ( 6,404 )

Providence Health System - Southern California* 3/31/2024 $ 7,096 643 3,441 6,453 — — ( 3,441 )

Antelope Valley Outpatient Imaging* 2/1/2024 $ 3,530 2,794 563 687 50 — ( 563 )

Total 21,126 4,614 10,408 16,156 300 56 ( 10,408 )

*The valuation of assets acquired and liabilities assumed has not yet been finalized as of March 31, 2024, fair value determination is preliminary and subject to change.

NOTE 5 – SEGMENT REPORTING

Prior period amounts were adjusted retrospectively to reflect the change in reportable segment.

Our reportable segments are described below:

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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.

Digital Health

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

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

Artificial Intelligence ("AI")

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

Our chief operating decision maker ("CODM"), who is also our CEO, evaluates the financial performance of our segments based upon their respective revenue and segmented internal profit and loss statements prepared on a basis not consistent with GAAP.

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.

Three Months Ended March 31, 2024

Imaging Centers Digital Health

Intersegment Elimination Consolidated Total

Third Party $ 423,209 $ 8,498 $ — $ 431,707

Intersegment — 6,163 ( 6,163 ) —

Total revenue $ 423,209 $ 14,661 $ ( 6,163 ) $ 431,707

Three months ended March 31, 2023

Imaging Centers Digital Health Intersegment Elimination Consolidated Total

Third Party $ 385,251 $ 5,313 $ — $ 390,564

Intersegment — 5,764 ( 5,764 ) —

Total revenue $ 385,251 $ 11,077 $ ( 5,764 ) $ 390,564

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

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

2023 2022 2023 2022

Three months ended March 31,

Imaging Centers $ 417,046 $ 379,487

AI 2,887 900 7,398 3,056

Digital Health 14,661 11,077

Total revenue $ 431,707 $ 390,564

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Imaging Centers $ 372,305 $ 340,151

AI 2,533 6,075 16,337 17,428

Digital Health 15,284 11,714

Total cost of operations $ 387,589 $ 351,865

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Imaging Centers $ 29,974 $ 29,448

AI 1,831 1,639 5,501 4,713

Digital Health 2,394 1,867

Total depreciation and amortization $ 32,368 $ 31,315

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

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

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

(Gain) Loss on Disposal of Equipment:

Imaging Centers $ 188 $ 577

AI 3 6 ( 2 ) 26

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

Digital Health ( 2 ) 2

Total loss on disposal of equipment $ 186 $ 579

Imaging Centers $ 225 $ 122

AI 12 8 1,740 8

Digital Health — 12

Total severance $ 225 $ 134

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Imaging Centers $ 14,354 $ 9,189

AI ( 1,492 ) ( 6,828 ) ( 16,178 ) ( 19,119 )

Total income (loss) from operations $ 43,251 $ 6,924 $ 74,363 $ 24,761

Digital Health ( 3,015 ) ( 2,518 )

Total income from operations $ 11,339 $ 6,671

NOTE 6 – CREDIT FACILITIES AND NOTES PAYABLE

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

September 30,

As of March 31, 2024 and December 31, 2023 our term loan debt and other obligations are as follows (in thousands):

2024 December 31,

First Lien Term Loans collateralized by RadNet's tangible and intangible assets $ 708,688 $ 714,125

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

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

Discount on Barclays Term Loans ( 8,519 ) ( 9,041 )

Truist Term Loan Agreement collateralized by NJIN's tangible and intangible assets 142,500 144,375

Discount on Truist Term Loan Agreement ( 924 ) ( 990 )

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

Equipment notes payable at 6.0 % to 6.7 %, due through 2029, collateralized by medical equipment

22,900 17,011

Total debt obligations 834,644 830,042

current portion ( 20,202 ) ( 17,974 )

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

We had no outstanding balance under our $ 195.0 million Barclays Revolving Credit Facility at September 30, 2023 and have reserved $ 7.6 million for certain letters of credit.

The remaining $ 187.4 million of our Barclays Revolving Credit Facility was available to draw upon as of September 30, 2023.

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

At September 30, 2023, we were in compliance with all covenants under our credit facilities.

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

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 (the “Amendment”).

The Amendment replaces the interest rate benchmark, from the London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Financing Rate (“SOFR”) and includes applicable credit spread adjustments of 0.11448 %, 0.26161 %, and 0.42826 % for interest periods of one month, three months, and six months, respectively.

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

Other than the foregoing, the material terms of the Credit Agreement remain unchanged.

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, $ 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 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").

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

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

$ 2.0 million capitalized to discount and deferred finance cost and $ 0.7 million expensed to loss on

extinguishment of debt and related expenses in other expense.

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:

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

I Greater than or equal to 3.00 :1.00

II Less than 3.00 :1.00 but greater than or equal to 2.50 :1.00

III Less than 2.50 :1.00 but greater than or equal to

IV Less than 2.00 :1.00 but greater than or equal to 1.50 :1.00

V Less than 1.50 :1.00

Senior Secured Credit Facilities

First Lien Term Loans:

Through March 31, 2023, the First Lien Term Loans under the Restated Credit Agreement bore 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.

Long term portion of debt obligations $ 814,442 $ 812,068

We had no outstanding balance under our $ 195.0 million Barclays Revolving Credit Facility at March 31, 2024 and have reserved $ 7.6 million for certain letters of credit.

The remaining $ 187.4 million of our Barclays Revolving Credit Facility was available to draw upon as of March 31, 2024.

We also had no balance under our $ 50.0 million Truist Revolving Credit Facility related to our consolidated subsidiary NJIN at March 31, 2024, with no letters of credit reserved against the facility, the full amount was available to draw upon.

At March 31, 2024, we were in compliance with all covenants under our credit facilities.

On January 15, 2024 and February 1, 2023, we issued promissory notes in the amount of $ 6.9 million and $ 19.8 million, respectively, to acquire radiology equipment previously leased under operating leases.

Secured Credit Facilities

Barclays Term Loans:

Through March 31, 2023, the Barclays Term Loans bore 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 and Alternate Base Rate First Lien Term Loans under the Restated Credit Agreement was 3.00 % and 2.00 %, respectively, with an effective Eurodollar Rate and the Alternate Base Rate of 4.63 % and 8.00 %, respectively.

Under the Amendment, effective March 31, 2023, the First Lien Term Loans under the Restated Credit Agreement bears interest either at a SOFR or an Alternate Base Rate (in each case, as defined in the Amendment) plus an applicable margin.

The applicable margin for the SOFR and Alternate Base Rate First Lien Term Loans under the Amendment is 3.00 % and 2.00 %, respectively.

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

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

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

Effective March 31, 2023, the Barclays credit agreement was amended so that the term loan bears interest either at a SOFR or Alternative Base Rate (in each such case, as defined in the Barclays credit agreement) plus an applicable margin.The applicable margin for the SOFR and Alternate Base Rate is 3.00 % and 2.00 %, respectively.

At March 31, 2024, we have an effective SOFR of 8.33 %, with an applicable credit spread adjustment of 0.11448 %, and an Alternate 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.

The Barclays credit agreement was amended after the period covered by this report.

See Note 8, Subsequent Events, below.

Truist Term Loan:

The Truist Term Loan currently bears interest at a three month SOFR election of 5.33 % plus an applicable margin and fees based on Pricing Level IV described above.

The Truist Term Loan currently bears interest at a three month SOFR election of 5.33 % plus an applicable margin and fees based on based a leverage ratio.

At March 31, 2024 the applicable margin was 1.75 %.

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.

1 unchanged sentence

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

Revolving Credit Facilities

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

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

Barclays Revolving Credit Facility

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

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 Restated Credit Agreement) plus an applicable margin which adjusts depending on our first lien net leverage ratio, according to the following schedule:

First Lien Net Leverage Ratio Term SOFR Loans Alternate Base Rate Spread

3.25 % 2.25 %

> 3.00 x but ≤ 3.50 x

3.00 % 2.00 %

2.75 % 1.75 %

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

For letters of credit issued under the Barclays Revolving Credit Facility, letter of credit fees accrue at the applicable margin for SOFR revolving loans which is currently 3.00 % and fronting fees accrue at 0.125 % per annum, in each case on the average aggregate daily maximum amount available to be drawn under all letters of credit issued under the Restated Credit Agreement.

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

At March 31, 2024, we had no borrowings under the Barclays revolving credit facility.

Associated with the Barclays revolving credit facility is deferred financing costs, net of accumulated amortization, of $ 1.0 million at March 31, 2024.

Amounts 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 credit agreement) plus an applicable margin which adjusts depending on our first lien net leverage ratio.

As of March 31, 2024, the effective interest rate payable on revolving loans under the Barclays revolving credit facility was 10.50 %.

For letters of credit issued under the Barclays revolving credit facility, letter of credit fees accrue at the applicable margin for SOFR revolving loans which is currently 3.00 % and fronting fees accrue at 0.125 % per annum, in each case on the average aggregate daily maximum amount available to be drawn under all letters of credit issued under the Barclays 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 credit agreement was amended after the period covered by this report.

See Note 8, Subsequent Events, below.

Truist Revolving Credit Facility:

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

As of September 30, 2023, NJIN had no borrowings under the Truist Revolving Credit Facility.

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

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).

Associated with the Truist Revolving Credit Facility of $ 50.0 million are deferred financing costs, net of accumulated amortization, of $ 0.5 million at March 31, 2024.

As of March 31, 2024, NJIN had no borrowings under the Truist Revolving Credit Facility.

Amounts borrowed under the Truist revolving credit facility bear interest at either a base rate plus an applicable margin which adjusts depending on our leverage ratio.

The Truist Revolving Credit Facility bears interest with different margins based on types of borrowings and pricing level.

The Truist revolving credit facility terminates on October 7, 2027, unless otherwise accelerated under the terms of the Truist credit agreement.

NOTE 7 – STOCK-BASED COMPENSATION

7 unchanged sentences

Stock options generally vest over 3 to 5 years and expire 5 to 10 years from the date of grant.

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

The following summarizes all of our option transactions for the three months ended March 31, 2024:

Outstanding Options

5 unchanged sentences

Balance, December 31, 2023 911,411 $ 16.60

Granted 261,220 18.64

Exercised ( 1,000 ) 6.30

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

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

Aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between our closing stock price on September 30, 2023 and the exercise price, multiplied by the number of in-the-money options as applicable) that would have been received by the holder had all holders exercised their options on September 30, 2023.

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

Balance, March 31, 2024 910,411 16.61 5.93 $ 29,178,798

Exercisable at March 31, 2024 789,112 15.83 5.53 25,907,138

Aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between our closing stock price on March 31, 2024 and the exercise price, multiplied by the number of in-the-money options as applicable) that would have been received by the holder had all holders exercised their options on March 31, 2024.

As of March 31, 2024, total unrecognized stock-based compensation expense related to non-vested employee awards was $ 1.1 million, which is expected to be recognized over a weighted average period of approximately 0.88 years.

DeepHealth Options

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

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

As of March 31, 2024, total unrecognized stock based compensation expense related to non-vested DeepHealth options was insignificant.

Outstanding Options

6 unchanged sentences

Exercised ( 4,393 ) —

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

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

Balance, March 31, 2024 74,680 — 5.5 $ 3,633,929

Exercisable at March 31, 2024 74,680 — 5.5 3,633,929

Options issued in replacement of original DeepHealth options as a result of our acquisition are not included in the share count under the Restated Plan.

Restricted Stock Awards ("RSAs")

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

RSAs Weighted-Average

Restricted Stock Awards ("RSAs") and Restricted Stock Units ("RSUs")

The Restated Plan permits the award of RSAs and RSUs.

The following summarizes all unvested RSA's and RSU's activities during the three months ended March 31, 2024:

RSAs and RSUs Weighted-Average

Term (Years) Weighted-Average

Fair Value per Share

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

RSAs and RSUs unvested at December 31, 2023 762,083 $ 22.13

Changes during the period

2 unchanged sentences

Forfeited or Canceled ( 549 ) $ 20.00

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

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

Other stock bonus awards

The Restated Plan also permits share awards not subject to any future service period.

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

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

RSAs and RSUs unvested at March 31, 2024 699,721 2.09 $ 29.96

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

Performance based stock units ("PSUs")

1 unchanged sentence

The PSUs will vest in two equal parts, starting three years from the grant date based on continuous service, with the number of shares earned ( 0 % to 200 % of the target award) depending upon the extent to which we achieve a performance condition as determined by the board of directors over the period from January 1, 2023 through December 31, 2023.

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

In March of 2024, based on the performance condition achieved, the board of directors issued 121,370 units with a fair value of $ 18.64 per unit.

Performance based stock options ("PSOs")

1 unchanged sentence

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

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 option a maximum of 235,227 shares of our common stock.

As of September 30, 2023, 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.

The awards represent a form of long term incentive and are reflective of a general practice within the software industry.

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 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 nine months ended September 30, 2023:

AI LTIPs Weighted-Average

Term (Years) Weighted-Average

Fair Value per Share

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

Changes during the period

Granted 213,409 $ 20.12

Vested ( 71,217 ) $ 19.78

Forfeited or Canceled ( 79,515 ) $ 19.86

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

2024, based on the performance condition achieved, the board of directors issued 235,227 options with a strike price of $ 18.64 per share.

Restated Plan summary

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

In summary, of the 20,100,000 shares of common stock reserved for issuance under the Restated Plan, at March 31, 2024, there remain approximately 3,323,670 shares available under the Restated Plan for future issuance.

NOTE 8 – SUBSEQUENT EVENTS

Houston Medical Imaging, LLC

On February 16, 2024, we entered into an agreement to acquire 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.

We expect to close the acquisition in the second quarter of 2024.

Imaging, Inc.

On February 26, 2024 we entered into an agreement to acquire U.S.

Imaging, Inc.

for a purchase consideration of approximately $ 4.2 million.

Imaging, Inc consists of eight multi-modality imaging centers located in Texas.

We expect to close the acquisition in the second quarter of 2024.

Refinancing of Barclays Credit Facilities:

On April 18, 2024, we entered into a Third Amended and Restated First Lien Credit and Guaranty Agreement (the “Third Restated Credit Agreement”), with Barclays Bank Plc and the lenders and financial institutions named therein, which provides for $ 875.0 million of senior secured term loans and a $ 282.0 million senior secured revolving credit facility.

The proceeds of the loans are being used to refinance the outstanding $ 678.7 million of term loans outstanding under the prior credit facility along with accrued interest through the date of closing, to pay fees and expenses associated with the refinancing transaction.

The key terms of the Third Restated Credit Agreement are:

• Interest Rates.

The interest rate on the term loan is either, at our election, (i) Term SOFR plus 2.5 % or (ii) the prime rate plus 1.5 %.

The interest rate on the revolving credit facility is either (i) Term SOFR plus 3 % or (ii) the prime rate plus 2 % (with step-downs based on attainment of certain first lien net leverage ratio benchmarks).

The maturity date for the term loan is April 18, 2031 and the maturity date is April 18, 2029 for the revolving credit facility.

Under the Restated Credit Agreement, we are required to make quarterly payments of principal on the term loan in the amount of approximately $ 2.2 million.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements