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Item 7. Management’s Discussion and Analysis

2025-03-03 compared with 2024-02-29 · 276 added, 203 removed, 318 unchanged (60% of the section changed)

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The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the results of operations and financial condition of RadNet, Inc.

MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying notes included in this annual report on Form 10-K.

The MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying notes included in this annual report on Form 10-K.

We are a national provider of diagnostic imaging services in the United States.

At December 31, 2023, we operated directly or indirectly through joint ventures with hospitals, 366 centers located in Arizona, California, Delaware, Florida, Maryland, New Jersey, and New York.

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

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

As of December 31, 2024, we operated directly or indirectly through joint ventures with hospitals, 398 centers located in Arizona, California, Delaware, Florida, Maryland, New Jersey, New York and Texas.

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

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

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

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

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

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

The division is led by our DeepHealth, Inc.

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

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

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

In addition to our imaging business, we established a Digital Health business segment in our 2024 fiscal year, which combines our former Artificial Intelligence (“AI”) business segment with our eRad, Inc.

Our digital health segment develops and delivers AI-powered health informatics solutions to drive quality, efficiency, and outcomes in imaging and radiology.

The portfolio of software solutions is anchored by eRad, Inc.'s RIS/PACS, informatics designed specifically for outpatient radiology and DeepHealth OS, a cloud-native operating system that helps operate all aspects of the radiology service line from scheduling and patient preparation to technologist workflow to interpretation and referral management.

Further, we are using AI to develop solutions that employ machine learning to assist radiologists and other clinicians in interpreting images and improving radiologist efficiency and patient care.

These AI solutions will initially be focused in the fields of screening for breast, prostate, lung and colon cancers.

Our DeepHealth, Inc.

subsidiary received FDA clearance for use of its SaigeQ "triage"/workflow product, SaigeDX advanced diagnostic product and Saige-Density breast density assessment software for screening breast mammography, which we have begun to roll out in certain markets as an Enhanced Breast Cancer Detection solution.

Our Aidence Holding B.V.

subsidiary is developing solutions for interpretation of chest and lung CT scans for lung cancer screening.

The Aidence Holding B.V.

subsidiary has received the CE marking for these solutions and has existing customers in seven European countries, with its largest concentration in the United Kingdom, and plans to submit an application for FDA clearance to sell in the United States.

Our Quantib B.V.

subsidiary is primarily focused on interpretation of prostate MRI for widespread prostate cancer screening.

Quantib’s prostate MRI post-processing software has both FDA clearances and European CE marking.

Our digital health segment provides these solutions to RadNet and to over 400 customers in the United States and Europe.

The following table shows our imaging centers in operation at year end and revenues for the years ended December 31, 2024, 2023 and 2022:

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Centers in operation 398 366 357

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

Imaging Center revenue (millions) $ 1,830 $ 1,617 $ 1,430

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

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Workers' compensation/personal injury 43,666 46,406 50,333

Other patient revenue 42,249 31,849 19,398

Other payors 104,888 87,675 65,911

Management fee revenue 24,676 17,936 22,235

Software and teleradiology 18,082 14,238 10,525

Other 20,111 19,428 12,436

Other revenue 46,724 32,580 27,223

Revenue under capitation arrangements 136,575 153,433 152,045

Imaging center segment revenue 1,604,161 1,425,665 1,313,662

AI segment revenue 12,469 4,396 1,415

Total revenue $ 1,829,664 $ 1,616,630 $ 1,430,061

We typically experience some seasonality to our business.

During the first quarter of each year we generally experience the lowest volumes of procedures and the lowest level of revenue for any quarter during the year.

Our revenue is not always consistent across each quarter .

We generally experience the lowest volumes of procedures and the lowest level of revenue during the first quarter of each year.

This is primarily the result of two factors.

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During the years ended 2024 and 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 many of our markets.

The primary reason for these acquisitions was to strengthen our presence in many of our geographic markets.

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):

Entity Date Acquired Total Purchase Consideration Property & Equipment Right of Use Assets Goodwill Intangible Assets Other Right of Use Liabilities Notes payable and other liabilities

Antelope Valley Outpatient Imaging* 2/1/2024 3,530 2,793 563 687 50 — (563) —

Grossman Imaging Center of CMH, LLC* 3/31/2024 10,343 1,717 6,304 8,500 280 56 (6,514) —

Providence Health System - Southern California* 3/31/2024 7,369 1,378 3,441 5,991 — — (3,441) —

Houston Medical Imaging, LLC* 4/1/2024 22,703 15,826 7,929 11,584 1,660 90 (8,089) (6,297)

Imaging, Inc.* 6/1/2024 4,200 4,025 5,597 — 175 — (5,597) —

Global Imaging LLP* 9/1/2024 2,900 1,266 — 1,584 50 — — —

Stanislaus Surgical Hospital, LLC* 9/16/2024 3,000 503 1,468 2,382 100 15 (1,468) —

Pink Perception, LLC* 10/7/2024 4,000 494 407 3,306 200 — (407) —

AV Imaging PLLC* 11/1/2024 1,000 287 — 663 50 — — —

Total $ 59,045 $ 28,289 $ 25,709 $ 34,697 $ 2,565 $ 161 $ (26,079) $ (6,297)

*Fair Value Determination is Final

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

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*Fair Value Determination is Final

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

IFRC LLC*^

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

IFRC LLC*^

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

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

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

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

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

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

*Fair Value Determination is Final

IFRC LLC acquisitions consisted of three subsidiaries of IFRC, one of which was purchased separately by a joint venture with Calvert Medical Imaging Centers, LLC.

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

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

Heart & Lung Imaging Limited.

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

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

HLI’s operations are included in our imaging center segment for reporting purposes.

Digital Health Segment

Kheiron Medical Technologies LTD

On October 14, 2024, we acquired a all of the equity interest in Kheiron Medical Technologies LTD (“Kheiron”), which uses deep learning AI to help radiologists detect breast cancer.

Kheiron’s operations are included in our Digital Health segment for reporting purposes.

The transaction was accounted for as the acquisition of a business with a total purchase consideration of approximately $2.3 million, including:

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

(359,002 shares issued at $19.06 per share), (b) cash of $6.3 million, (c) contingent consideration of $10.8 million ($10.2 million in contingent milestone consideration and cash holdback of $0.6 million to be issued 24 months after acquisition subject to adjustment for any indemnification claims) and (d) noncontrolling interest of $8.0 million.

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

As part of the purchase price allocation, we determined the identifiable intangible assets are customer relationships and trade names.

The fair value of the intangible assets was estimated using the income approach, and the cash flow projections were discounted using a rate of 19.0%.

The cash flows were based on estimated earnings from existing customers, and the discount rate applied was benchmarked with reference to the implied rate of return from the transaction model and the weighted average cost of capital.

Artificial Intelligence Segment

Aidence Holding B.V.

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

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

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

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

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

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

As part of the purchase price allocation, we determined the identifiable intangible assets are developed technology, IPR&D, trade names, and customer relationships.

The fair value of the intangible assets was estimated using the income approach, and the cash flow projections were discounted using rates ranging from 15% to 17%.

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

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

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

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

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

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

The calculation of the excess of the purchase price over the estimated fair value of the tangible net assets and intangible assets acquired was recorded to goodwill.

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

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

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

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

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

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

As part of the purchase price allocation, we determined the identifiable intangible assets are developed technology, IPR&D, trade names, and customer relationships.

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

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

The calculation of the excess of the purchase price over the estimated fair value of the tangible net assets and intangible assets acquired was recorded to goodwill.

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

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

i) cash of $0.4 million, ii) cash holdback of $0.5 million to be issued 18 months after acquisition, (iii) acquisition costs incurred by the seller of $0.4 million and (iv) a settlement of a loan from RadNet of $1.0 million.

We recorded $1.2 million in current assets, $2.7 million of IPR&D in intangible assets, and $1.5 million in current liabilities in connection with this transaction.

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

Subsidiary activity

Formation of majority owned subsidiaries

Tri Valley Imaging Group, LLC.

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 of three centers, including $1.4 million of fixed assets and $6.0 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 $7.9 million to additional paid in capital and retained a 52% controlling economic interest in TVIG and PHS retained a $7.8 million or 48% noncontrolling economic interest in TVIG.

Ventura County Imaging Group.

On March 31, 2024, Community Memorial Health System purchased an economic interest of Ventura County Imaging Group ("VGIC") for a consideration of $5.1 million.

As a result of the transaction, we retained 47.5% controlling economic interest in VGIC.

Los Angeles Imaging Group, LLC.

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

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

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

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

Frederick County Radiology, LLC.

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

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

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

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

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

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

Advanced Radiology at Capital Region, LLC.

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

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

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

Simi Valley Imaging Group, LLC.

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

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

Total investment in the venture is $0.4 million.

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

Joint venture investment contribution

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

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

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

We recorded a gain of $16.8 million, within gain on contribution of imaging centers into joint venture in our consolidated statement of operations representing the difference between the fair value and carrying value of the business contributed.

Sale of ownership interest in a majority owned subsidiary

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

After the sale, our ownership interest in the subsidiary has reduced from 75.0% to 50.1% and we retain a controlling financial interest in the subsidiary.

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

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

Joint venture investment contributions to Arizona Diagnostic Radiology Group

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

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

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

assets contributed.

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

Results of Operations

The following table sets forth, for the periods indicated, the percentage that certain items in the statements of operations bears to net revenue for the years 2023, 2022 and 2021.

The following table sets forth, for the periods indicated, the percentage that certain line items within the consolidated statements of operations bear to net revenue for the years 2024, 2023 and 2022.

Years Ended December 31,

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Revenue under capitation arrangements 7.5 % 9.5 % 10.6 %

Total Revenue 100.0 % 100.0 % 100.0 %

Provider relief funding — % — % 0.7 %

Total service revenue 100.0 % 100.0 % 100.0 %

OPERATING EXPENSES

Cost of operations, excluding depreciation and amortization 86.4 % 86.3 % 88.4 %

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

Lease abandonment charges 0.1 % 0.3 % — %

Depreciation and amortization 7.5 % 7.9 % 8.1 %

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

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

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

Severance costs 0.1 % 0.2 % 0.1 %

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Non-cash change in fair value of interest rate swaps 0.4 % 0.5 % (2.8) %

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

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

Debt restructuring and extinguishment expenses 0.6 % — % 0.1 %

Other income (1.4) % (0.4) % 0.1 %

Total other expenses 3.3 % 3.7 % 0.3 %

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NET INCOME 2.1 % 1.8 % 2.3 %

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

Net income attributable to noncontrolling interest 2.0 % 1.7 % 1.6 %

NET INCOME ATTRIBUTABLE TO RADNET, INC.

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

In the discussion below, the "same center" metrics are based on imaging centers that were in operation throughout the period of January 1, 2023 through December 31, 2024.

Excluded amounts relate to imaging centers that were acquired or divested between January 1, 2023 through December 31, 2024.

Total Revenue

In Thousands Year Ended December 31,

Revenue 2024 2023 $ Increase/(Decrease) % Change

Total Revenue $1,763,958 $1,567,054 $196,904 12.6%

Same Center Revenue $1,644,721 $1,498,160 $146,561 9.8%

Excluded $119,237 $68,894 — —

Our 9.8% increase in same center revenue over the same period last year was driven by increases in fees charged per imaging procedure and an increase in procedures volumes.

Same center total procedure volume grew at an overall rate of 3.2% which was comprised of a 1.7% increase in routine imaging and an 8.1% increase in advanced modality imaging procedures.

The increase in revenue was largely attributable to product mix, as advanced imaging was a greater portion of overall procedures.

A significant contributor to the change in product mix was the increase in PETHC procedures related to prostate cancer and suspect Alzheimer’s studies, which are included in advanced modality imaging procedures.

Operating Expenses

Total operating expenses for the year ended December 31, 2024 increased approximately $178.6 million, or 12.2%, from $1.47 billion for the year ended December 31, 2023 to $1.64 billion for the year ended December 31, 2024, primarily due to increase in procedures volumes.

The following table sets forth our cost of operations and total operating expenses for the year ended December 31, 2024 and 2023 (in thousands):

Years Ended December 31,

Salaries and professional reading fees, excluding stock-based compensation $ 984,281 $ 853,327

Stock-based compensation 26,863 24,574

Building and equipment rental 121,514 117,405

Medical supplies 103,189 86,213

Other operating expenses *

275,587 271,672

Cost of operations 1,511,434 1,353,191

Depreciation and amortization 127,142 120,141

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

Lease abandonment charges 2,478 5,146

Loss on sale and disposal of equipment 2,257 2,191

Severance costs 1,095 1,973

Total operating expenses $ 1,644,406 $ 1,465,834

* Includes billing fees, office supplies, repairs and maintenance, insurance, business tax and license, outside services, telecommunications, utilities, marketing, travel and other expenses.

Salaries and professional reading fees, excluding stock-based compensation and severance

In Thousands Year Ended December 31,

Salaries and Professional Fees 2024 2023 $ Increase/(Decrease) % Change

Total $984,281 $853,327 $130,954 15.3%

Same Center $929,364 $823,015 $106,349 12.9%

Excluded $54,917 $30,312 — —

Consistent with the higher procedure volumes noted above, our staffing levels were adjusted to support the influx of patients seeking radiology procedures.

Additionally, we are continuing to face inflation in employee wage rates as we compete for talent in a tight labor market, further impacted by the October 2024 increase in California's minimum wage for healthcare workers.

Stock-based compensation

Stock-based compensation increased $2.3 million, or 9.3%, to approximately $26.9 million for the year ended December 31, 2024 compared to $24.6 million for the year ended December 31, 2023.

The increase is primarily due to higher fair value of stock awards granted in the first quarter of 2024.

Building and equipment rental

In Thousands Year Ended December 31,

Building & Equipment Rental 2024 2023 $ Increase/(Decrease) % Change

Total $121,514 $117,405 $4,109 3.5%

Same Center $107,013 $107,226 ($213) (0.2)%

Excluded $14,501 $10,179 — —

Building and equipment rental expense on a same center basis was relatively unchanged from the prior period.

Medical supplies

In Thousands Year Ended December 31,

Medical Supplies Expense 2024 2023 $ Increase/(Decrease) % Change

Total $103,189 $86,213 $16,976 19.7%

Same Center $96,330 $83,068 $13,262 16.0%

Excluded $6,859 $3,145 — —

The increase in medical supplies expense was driven by our higher patient volume and product shift towards more advanced imaging modalities.

The increase in PETHC procedures related to prostate cancer and suspected Alzheimer studies also raised medical supplies expense due to the requirement for high-cost isotope tracers.

Other operating expenses

In Thousands Year Ended December 31,

Other Operating Expenses 2024 2023 $ Increase/(Decrease) % Change

Total $275,587 $271,672 $3,915 1.4%

Same Center $255,254 $260,815 $(5,561) (2.1)%

Excluded $20,333 $10,857 — —

Other operating expenses was relatively unchanged compared to the same period in the prior year and lower as a percentage of overall revenues.

Additional segment operating and non-operating expenses:

In Thousands Year Ended December 31,

2024 2023 $ Increase/(Decrease) % Change

Depreciation and Amortization $127,142 $120,141 $7,001 5.8%

Loss on disposal of equipment and other $2,257 $2,191 $66 3.0%

Gain on contribution of imaging centers into joint venture $0 (16,808) $16,808 nm

Non-cash change in fair value of interest rate swaps $8,006 $8,185 ($179) (2.2)%

Other income ($19,043) ($10,891) ($8,152) 74.9%

Severance $1,095 $1,973 ($878) (44.5)%

nm=not meaningful

The increase in depreciation expense was due to higher depreciable asset base, mainly driven by our expanded locations.

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

Other income for the year ended December 31, 2024 included money market interest income of $31.4 million, partially offset by an impairment of investment in non-marketable securities of $1.2 million and debt restructuring and extinguishment expenses of $11.3 million.

Interest income for the year ended December 31, 2024 increased approximately $20.6 million, or 190%, to $31.4 million from $10.9 million for the year ended December 31, 2023.

The increase is primarily due to higher average cash balance in our money market account for the year ended December 31, 2024.

Lease abandonment charges

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

During the end of 2024, we experienced lower utilization at seven imaging centers.

As a result, we abandoned the leases related to these locations at the end of 2024 and diverted the patients to our other sites in the area.

We recorded a charge of approximately $2.5 million in December 2024 related to lease facilities abandonment.

The lease abandonment charges include the impairment of associated right-of-use assets of $1.8 million and write off of related leasehold improvements of approximately $0.7 million.

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

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

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

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

In Thousands Year Ended December 31,

Lease abandonment charges 2024 2023 $ Increase/(Decrease) % Change

Total $2,478 5,146 $(2,668) —

Same Center $1,518 4,089 $(2,571) —

Excluded 960 1,057 — —

Interest expense

In Thousands Year Ended December 31,

Interest Expense 2024 2023 $ Increase/(Decrease) % Change

Total Interest Expense $79,849 $64,483 $15,366 23.8%

Interest related to derivatives* $(762) $(9,752)

Interest related to amortization** $2,276 $2,987

Adjusted Interest Expense*** $78,335 $71,248 $7,087 9.9%

*Includes payments from 2019 swaps

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

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

The increase in interest expense was the result in the general increase in term loan debt due to the refinancing of our Barclays credit facility in April 2024, partially offset by lower interest rates compared to the same period in the prior year.

During the year ended December 31, 2024, interest rates were above the arranged rates in our 2019 Swaps for most of the year and we received $13.1 million in cash payments from our 2019 swap counterparties, which were reported as a component of interest expense.

Also, the 2019 Swaps for $100 million of notional value matured in October 2023, and were not in effect in 2024.

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

Non-cash change in fair value of interest rate hedge

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

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

The fair value of the 2019 swaps as of December 31, 2024 was a net asset of $7.1 million compared to a net asset of $15.1 million December 31, 2023, resulting in a loss $8.0 million during the year ended December 31, 2024.

This change in fair value was driven by market expectations of continued declines in interest rates over the remaining term of the 2019 Swaps.

Equity in earnings from unconsolidated joint ventures

for the year ended December 31, 2024 we recognized equity in earnings from unconsolidated joint ventures of $14.5 million versus $6.4 million for the year ended December 31, 2023, an increase of $8.0 million or 125.2%.

The increase was mainly due to the additional contribution made to SMIG in September 2023.

SMIG operated at a net income for the December 31, 2024, which positively impacted our equity in earnings from unconsolidated joint ventures during the period.

Additionally, the increase was supported by improved earnings from our interest in the Arizona Diagnostic Radiology Group joint venture, reflecting continuing operational improvements and revenue growth.

Net income attributable to noncontrolling interests

As of December 31, 2024, our consolidated subsidiaries operated 348 imaging centers of which 100 were not wholly-owned and thus a portion of their operating results were attributable to noncontrolling interests.

At December 31, 2023, our consolidated subsidiaries included 321 centers of which 85 were not wholly-owned.

As noncontrolling interests only represent a portion of our imaging center business, and excludes our Digital Health segment which generated losses of $21.2 million in 2024, we do not expect changes in net income attributable to noncontrolling interests to correlate with changes in consolidated operating income or pretax income.

for the year ended December 31, 2024, we recognized net income attributable to noncontrolling interests of $36.0 million versus $27.3 million for the year ended December 31, 2023, an increase of $8.8 million.

The increase in net income attributable to noncontrolling interests was primarily due to the formation of new majority owned subsidiaries, Los Angeles Imaging Group, LLC, in September 2023 and Tri Valley Imaging Group, LLC in March 2024.

Net income attributable to noncontrolling interests was also impacted by an increase in patient volumes for advanced modalities in 2024 and the closure of two underperforming centers in a majority owned subsidiary, Beach Imaging Group, LLC in 2023.

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

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

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

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Operating Expenses

Total operating expenses for the twelve months ended December 31, 2023 increased approximately $130.8 million, or 9.7%, from $1.35 billion for the twelve months ended December 31, 2022 to $1.48 billion for the twelve months ended December 31, 2023.

The following table sets forth our cost of operations and total operating expenses for the twelve months ended December 31, 2023 and 2022 (in thousands):

Total operating expenses for the year ended December 31, 2023 increased approximately $128.1 million, or 9.6%, from $1.3 billion for the year ended December 31, 2022 to $1.5 billion for the year ended December 31, 2023.

The following table sets forth our cost of operations and total operating expenses for the year ended December 31, 2023 and 2022 (in thousands):

Years Ended December 31,

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Excluded $55,368 $20,597 — —

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

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

Stock-based compensation

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

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

Building and equipment rental

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Excluded $6,663 $3,840 — —

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

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

Other operating expenses

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

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

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

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

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Severance $1,973 $926 $1,047 113.1%

nm=not meaningful

* The percent change in contribution of imaging centers into joint venture was not meaningful.

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

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

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

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

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

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

The non-cash expense associated with the change in fair value of our interest rate swaps for the year ended December 31, 2023 related to the expiration of our notional $100 million in 2019 swaps and the shorter term on our remaining $400 million notional 2019 swaps.

Other income for the year ended December 31, 2023 included money market interest income of $10.9 million.

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

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

Lease abandonment charges

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Excluded — — — —

Impairment Charges

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

The additional expenditures, delay and reduction of US sales affected the estimated fair value of the related IPR&D intangible asset and resulted in impairment charges of $3.9 million.

Interest expense

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

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

If interest rates were to theoretically

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

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

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

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

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

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

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

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

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

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

Equity in earnings from unconsolidated joint ventures

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

In Thousands Twelve Months Ended December 31,

2023 2022 $ Increase/(Decrease)

Statement of Operations

Digital Health Segment

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

The breakdown of revenue and expenses of the segment for the year ended December 31, 2024, 2023 and 2022 are as follows:

In Thousands Year Ended December 31,

2024 2023 2022 2024 vs 2023

$ change 2023 vs 2022

Revenue $ 65,706 $ 49,576 $ 38,058 $ 16,130 $ 11,518

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Other operating 24,579 14,565 14,467 10,014 98

Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI 14,995 — — 14,995 —

Depreciation & Amort.

10,696 8,250 6,852 2,446 1,398

Other operating loss (4) 23 (27)

Other operating loss (gain) 19 (4) 23 23 (27)

Severance 807 1,805 20 (998) 1,785

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Loss from operations (14,930) (2,523) (7,898) (12,407) 5,375

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

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

Other expense (income) 5,419 4,537 1,920 882 2,617

Income before taxes (20,349) (7,060) (9,818) (13,289) 2,758

Income taxes (424) (1,906) (3,342) 1,482 1,436

Segment net loss (19,925) (5,154) (6,476) (14,771) 1,322

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

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

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

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

Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023

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

Revenues for the Digital Health segment increased as a result of core growth in our eRad PICS business, the rollout in 2023 of our Deephealth OS, and continued rollout of our Enhanced Breast Cancer Detection solutions across additional facilities.

The increase in operating expenses was primarily related to salary expense as we increased headcount in connection with the commercialization of our initial AI products and higher non-capitalized research and development expenses with respect to our new DeepHealth cloud OS and generative AI.

Aside from the effect of increased non-capitalized research and development expenses, our net loss for the segment was consistent with the prior year.

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

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

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

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

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

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

Non-GAAP Financial Measures

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Non-cash employee stock-based compensation 29,833 26,785 23,770

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

Loss on impairment 3,950 — —

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

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

Loss on sale and disposal of equipment and other 2,276 2,187 2,529

Non-cash change in fair value of interest rate hedge 8,006 8,185 (39,621)

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

Legal settlement and related expenses — 2,197 831

Lease abandonment charges 5,146 — 19,675

Non operational rent expenses 3,628 4,297 —

Other (income) expenses (24,916) (6,354) 1,833

Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI 14,995 1,308 —

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

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

Lease abandonment charges 2,478 5,146 —

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

Loss on extinguishment of debt and related expenses 11,292 — 731

Legal settlements — — 2,197

Change in estimate related to refund liability — — 8,089

Adjusted EBITDA Including Losses from AI Segment and Provider Relief Funding $232,343 $192,474 $218,928

Provider relief funding — — (9,110)

Adjusted EBITDA including losses from AI Segment and excluding benefit from Provider Relief Funding $232,343 $192,474 $ 209,818

Adjusted EBITDA Losses from AI segment 12,765 16,575 2,122

Adjusted EBITDA excluding Losses from AI Segment and Provider Relief Funding $245,108 $209,049 $211,940

The following table is a reconciliation of GAAP net income for our AI Segment to Adjusted EBITDA for the years ended December 31, 2023, 2022 and 2021 respectively.

Twelve Months Ended December 31,

Non-cash change to contingent consideration 1,974 (4,075) 47

Acquisition related non-cash intangible adjustment — 3,950 —

Non-operational rent expenses 4,233 3,629 4,297

Acquisition transaction costs 880 222 927

Adjusted EBITDA - Radnet, Inc.

$279,459 $232,344 $192,474

Adjusted EBITDA - Imaging Center Segment 264,901 225,846 190,695

Adjusted EBITDA - Digital Health Segment $ 14,558 $ 6,498 $ 1,779

The following table is a reconciliation of GAAP net income for our Digital Health Segment to Adjusted EBITDA for the years ended December 31, 2024, 2023 and 2022 respectively.

Year Ended December 31,

2024 2023 2022

Segment net loss $ (19,925) $ (5,154) $ (6,476)

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Other operating loss 19 (4) 23

Other expense (income) 1,402 (903) 622

Other income 5,419 4,537 1,920

Severance 807 1,805 20

Income taxes (424) (1,906) (3,342)

Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI 14,995 — —

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

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

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

Acquisition related to non-cash intangible adjustment — 3,950 —

Adjusted EBITDA - Digital Health Segment $ 14,558 $ 6,498 $ 1,779

Liquidity and Capital Resources

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

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

In March 2024, we closed on a public offering of our common stock raising net proceeds, after deducting underwriting discounts, commissions, and expenses, of $230.2 million.

Accordingly, we believe that our current sources of funds will provide us with adequate liquidity during the 12-month period following December 31, 2024, as well as in the long-term.

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

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

The following table summarizes key balance sheet data as of December 31, 2024 and December 31, 2023 and income statement data for the year ended December 31, 2024, 2023 and 2022 (in thousands):

Balance Sheet Data as of December 31, 2024 2023 2022

Cash and cash equivalents $ 740,020 $ 342,570

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Stockholders' equity 1,133,410 813,359

Income Statement data for the twelve months ended December 31,

Income Statement data for the years ended December 31,

Total revenue $ 1,829,664 $ 1,616,630 $ 1,430,061

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Sources and Uses of Cash

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

The following table summarizes key components of our sources and uses of cash for the years ended December 31, 2024, 2023 and 2022, respectively, in thousands:

Cash Flow Data 2024 2023 2022

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Cash provided by financing activities 397,950 195,635 93,647

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

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

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

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

and Quantib B.V.

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

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

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

In June 2023, we closed on a public offering of 8,711,250 shares of our common stock at a price to the public of $29.75 per share, resulting in net proceeds, after deducting underwriting discounts, commissions, and expenses, of $245.8 million.

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

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

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

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

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

These transactions are accounted for as a reduction in accounts receivable as the agreements transfer effective control over and risk related to the receivables to the buyers.

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 $14.3 million and $15.4 million at December 31, 2023 and December 31, 2022, respectively.

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

Cash provided by operating activities for the year ended December 31, 2024 included $289.5 million in net income reconciling adjustments offset by a $56.5 million change in assets and liabilities.

The $12.2 million increase in cash provided by operating activities for the year ended December 31, 2024 compared to December 31, 2023 was primarily driven by an increase in income from operations.

Cash used in investing activities for the year ended December 31, 2024 increased from December 31, 2023 by $31.6 million.

Purchases of imaging centers during the period was $43.7 million, a $31.6 million increase from the prior period.

Capital expenditures for property and equipment during the period was $188.1 million, a $11.5 million increase from the prior period.

Cash provided by financing activities for the year ended December 31, 2024 resulted from a secondary public offering of our common stock and a refinancing of our Barclays credit facility.

In March 2024, we completed a public offering of 5,232,500 shares of our common stock, which included 682,500 shares sold pursuant to an underwriters overallotment option, at a price to the public of $44.00 per share, resulting in net proceeds after underwriting discounts, commissions, and expenses of $218.4 million.

In April 2024, we refinanced our Barclays credit facility replacing the prior facility with an $875 million term loan.

After paying off the balance on the prior facility, payment of accrued interest through the closing of the refinance transaction, and payment of transaction fees and expenses, we added approximately $167.9 million in cash to the balance sheet.

Senior Credit Facilities:

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

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

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

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

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

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

On April 18, 2024, we refinanced our Barclays credit facility, replacing the prior facility with an $875.0 million term loan and a $282.0 million revolving credit facility.

The refinance transaction reduced our interest rates on the Barclays term loan and revolving credit facility and extended the maturity date for the term loan to April 18, 2031 and for the revolving credit facility to April 18, 2029.

The new term loan calls for quarterly principal payments of $2.2 million, compared to $1.8 million under the prior credit facility.

Included in our consolidated balance sheet at December 31, 2024 are $992.0 million of total term loan debt (net of unamortized discounts of $13.7 million) displayed below in thousands:

Face Value Discount Total Carrying

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Total Term Loans $ 1,005,625 $ (13,655) $ 991,970

We had no outstanding balance under our $195.0 million Barclays revolving credit facility at December 31, 2023 and had reserved $7.6 million for certain letters of credit.

The remaining $187.4 million of our Barclays revolving credit facility

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

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

We had no outstanding balance under our $282.0 million Barclays revolving credit facility as of December 31, 2024 and had reserved $7.6 million for certain letters of credit.

The remaining $274.4 million of our Barclays revolving credit facility was available to draw upon as of December 31, 2024.

We also had no balance under our $50.0 million Truist revolving credit facility as of December 31, 2024, and with no letters of credit reserved against the facility, the full amount was available to draw upon.

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

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

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

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

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

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

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Services are generally provided pursuant to one-year contracts with healthcare providers.

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

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

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

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

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

GOODWILL AND INDEFINITE LIVED INTANGIBLES – Goodwill totaled $710.7 million and $679.5 million as of December 31, 2024 and December 31, 2023, respectively.

Indefinite lived intangible assets were $13.0 million as of December 31, 2024 and $9.0 million as of December 31, 2023 and are associated with the value of certain trade name intangibles and IPR&D.

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

4 unchanged sentences

We tested goodwill, trade name and IPR&D for impairment on October 1, 2024.

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

In September 2023, we determined that an IPR&D indefinite-lived intangible asset related to Aidence's Ai Veye Lung Nodule and Veye Clinic would not receive FDA authorizations for sale in the US without a new submission and additional expenditures for rework in the original projected timeline.

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

5 unchanged sentences

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

What changed 10-K

Item 7. Management’s Discussion and Analysis