RadNet, Inc. 10-Q

Item 1 – Financial Statements RADNET, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS EXCEPT SHARE DATA) March 31, 2025 December 31, 2024 (unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 717,323 $ 740,020 Accounts receivable 200,127 185,821 Due from affiliates 34,885 41,869 Prepaid expenses and other current assets 63,526 51,542 Total current assets 1,015,861 1,019,252 PROPERTY, EQUIPMENT AND RIGHT-OF-USE ASSETS Property and equipment, net 708,248 694,791 Operating lease right-of-use assets 665,754 639,740 Total property, equipment and right-of-use assets 1,374,002 1,334,531 OTHER ASSETS Goodwill 717,480 710,663 Other intangible assets 79,736 81,351 Deferred financing costs 2,120 2,265 Investment in joint ventures 110,803 104,057 Deposits and other 36,262 34,571 Total assets $ 3,336,264 $ 3,286,690 LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payable, accrued expenses and other $ 368,000 $ 351,464 Due to affiliates 51,410 43,650 Deferred revenue 3,416 3,288 Current operating lease liability 57,896 56,618 Current portion of notes payable 24,677 24,692 Total current liabilities 505,399 479,712 LONG-TERM LIABILITIES Long-term operating lease liability 678,029 655,979 Notes payable, net of current portion 985,454 991,574 Deferred tax liability, net 27,555 22,230 Other non-current liabilities 3,310 3,785 Total liabilities 2,199,747 2,153,280 EQUITY Common stock - $ 0.0001 par value, 200,000,000 shares authorized; 74,956,566 and 74,036,993 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively 7 7 Additional paid-in-capital 1,016,762 988,147 Accumulated other comprehensive loss ( 3,919 ) ( 9,061 ) Accumulated deficit ( 114,711 ) ( 76,785 ) Total RadNet, Inc.'s Stockholders' equity: 898,139 902,308 Noncontrolling interests 238,378 231,102 Total equity 1,136,517 1,133,410 Total liabilities and equity $ 3,336,264 $ 3,286,690 The accompanying notes are an integral part of these financial statements. 1 Table of Contents RADNET, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA) (unaudited) Three Months Ended March 31, 2025 2024 REVENUE Service fee revenue $ 439,349 $ 397,189 Revenue under capitation arrangements 32,050 34,518 Total service revenue 471,399 431,707 OPERATING EXPENSES Cost of operations, excluding depreciation and amortization 453,480 387,589 Lease abandonment charges 5,388 — Depreciation and amortization 35,483 32,368 Loss on sale and disposal of equipment and other 402 186 Severance costs 747 225 Total operating expenses 495,500 420,368 (LOSS) INCOME FROM OPERATIONS ( 24,101 ) 11,339 OTHER INCOME AND EXPENSES Interest expense 17,239 16,267 Equity in earnings of joint ventures ( 2,599 ) ( 4,324 ) Non-cash change in fair value of interest rate swap 2,106 ( 1,216 ) Other income ( 7,712 ) ( 2,934 ) Total other expenses 9,034 7,793 (LOSS) INCOME BEFORE INCOME TAXES ( 33,135 ) 3,546 Benefit from income taxes 3,398 1,864 NET (LOSS) INCOME ( 29,737 ) 5,410 Net income attributable to noncontrolling interest 8,189 8,189 NET LOSS ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $ ( 37,926 ) $ ( 2,779 ) BASIC AND DILUTED NET LOSS PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $ ( 0.51 ) $ ( 0.04 ) WEIGHTED AVERAGE SHARES OUTSTANDING Basic and Diluted 74,382,356 69,307,078 The accompanying notes are an integral part of these financial statements. 2 Table of Contents RADNET, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (IN THOUSANDS) (unaudited) Three Months Ended March 31, 2025 2024 NET (LOSS) INCOME $ ( 29,737 ) $ 5,410 Foreign currency translation adjustments 4,109 ( 2,198 ) Change in fair value of cash flow hedge from prior periods reclassified to earnings, net of taxes 1,033 739 COMPREHENSIVE (LOSS) INCOME ( 24,595 ) 3,951 Less comprehensive income attributable to noncontrolling interests 8,189 8,189 COMPREHENSIVE LOSS ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $ ( 32,784 ) $ ( 4,238 ) The accompanying notes are an integral part of these financial statements. 3 Table of Contents RADNET, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (IN THOUSANDS EXCEPT SHARE DATA) (unaudited) The following table summarizes changes in the Company’s consolidated stockholders' equity, including noncontrolling interest, during the three months ended March 31, 2025 and March 31, 2024. Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total RadNet, Inc.'s Equity Noncontrolling Interests Total Equity Shares Amount BALANCE - DECEMBER 31, 2024 74,036,993 $ 7 $ 988,147 $ ( 9,061 ) $ ( 76,785 ) $ 902,308 $ 231,102 $ 1,133,410 Issuance of common stock upon exercise of options 11,956 — 121 — — 121 — 121 Issuance of common stock under the equity compensation plan 906,835 — — — — — — — Issuance of common stock under the DeepHealth equity compensation plan 3,438 — — — — — — — Stock-based compensation expense — — 28,514 — — 28,514 — 28,514 Forfeiture of restricted stock and share cancellation ( 2,656 ) — ( 20 ) — — ( 20 ) — ( 20 ) Distributions paid to noncontrolling interests — — — — — — ( 913 ) ( 913 ) Change in cumulative foreign currency translation adjustment — — — 4,109 — 4,109 — 4,109 Change in fair value of cash flow hedge from prior periods reclassified to earnings — — — 1,033 — 1,033 — 1,033 Net (loss) income — — — — ( 37,926 ) ( 37,926 ) 8,189 ( 29,737 ) BALANCE - MARCH 31, 2025 74,956,566 $ 7 $ 1,016,762 $ ( 3,919 ) $ ( 114,711 ) $ 898,139 $ 238,378 $ 1,136,517 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 Issuance of common stock under the equity compensation plan 616,767 — — — — — — — Issuance of common stock under the DeepHealth equity compensation plan 4,393 — — — — — — — Stock-based compensation expense — — 11,906 — — 11,906 — 11,906 Issuance of common stock, net of issuance costs 5,232,500 — 218,385 — — 218,385 — 218,385 Issuance of common stock in connection with acquisitions 95,019 — 4,607 — — 4,607 — 4,607 Forfeiture of restricted stock and share cancellation ( 4,642 ) — ( 9 ) — — ( 9 ) — ( 9 ) Contribution from noncontrolling partner — — 11,601 — — 11,601 — 11,601 Sale of economic interests in majority owned subsidiary, net of taxes — — — — — — 13,517 13,517 Change in cumulative foreign currency translation adjustment — — — ( 2,198 ) — ( 2,198 ) — ( 2,198 ) Change in fair value of cash flow hedge from prior periods reclassifed to earnings — — — 739 — 739 — 739 Net (loss) income — — — — ( 2,779 ) ( 2,779 ) 8,189 5,410 BALANCE - MARCH 31, 2024 73,901,654 $ 7 $ 969,248 $ ( 13,943 ) $ ( 82,357 ) $ 872,955 $ 204,370 $ 1,077,325 The accompanying notes are an integral part of these financial statements. 4 Table of Contents RADNET, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (unaudited) Three Months Ended March 31, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) income $ ( 29,737 ) $ 5,410 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 35,483 32,368 Noncash operating lease expense 14,431 14,711 Equity in earnings of joint ventures, net of dividends ( 2,599 ) ( 4,324 ) Amortization of deferred financing costs and loan discount 728 748 Loss on sale and disposal of equipment 402 187 Lease abandonment charges 5,388 — Amortization of cash flow hedge, net of taxes 1,033 739 Non-cash change in fair value of interest rate swap 2,106 ( 1,216 ) Stock-based compensation 28,494 11,897 Change in fair value of contingent consideration — 1,974 Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions: Accounts receivable ( 14,306 ) ( 25,865 ) Other current assets ( 7,206 ) ( 6,277 ) Other assets ( 1,691 ) ( 5,892 ) Deferred taxes 5,137 ( 1,158 ) Operating leases ( 21,968 ) ( 12,883 ) Deferred revenue 128 ( 172 ) Accounts payable, accrued expenses and other 25,658 6,841 Net cash provided by operating activities 41,481 17,088 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of imaging facilities and other acquisitions ( 3,794 ) ( 3,531 ) Purchase of property and equipment and other ( 48,833 ) ( 57,409 ) Proceeds from sale of equipment 23 2 Equity contributions in existing joint ventures ( 4,147 ) — Net cash used in investing activities ( 56,751 ) ( 60,938 ) CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on notes and leases payable ( 1,718 ) ( 1,102 ) Payments on term loan debt ( 5,000 ) ( 1,875 ) Contribution from noncontrolling partners — 4,169 Distributions paid to noncontrolling interests ( 913 ) — Proceeds from sale of economic interests in majority owned subsidiary, net of taxes — 8,713 Proceeds from issuance of common stock — 218,383 Proceeds from issuance of common stock upon exercise of options 121 8 Net cash (used in) provided by financing activities ( 7,510 ) 228,296 EFFECT OF EXCHANGE RATE CHANGES ON CASH 83 ( 36 ) NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ( 22,697 ) 184,410 CASH AND CASH EQUIVALENTS, beginning of period 740,020 342,570 CASH AND CASH EQUIVALENTS, end of period $ 717,323 $ 526,980 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for interest $ 18,010 $ 18,285 Cash paid during the period for income taxes $ 272 $ 1 The accompanying notes are an integral part of these financial statements. 5 Table of Contents RADNET, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (unaudited) Supplemental Schedule of Non-Cash Investing and Financing Activities We acquired equipment and certain leasehold improvements for approximately $ 62.5 million and $ 44.1 million during the three months ended March 31, 2025 and 2024, respectively, which were not paid for as of March 31, 2025 and 2024 , respectively. The amounts due were recorded in our condensed consolidated balance sheet under accounts payable, accrued expenses and other. During the three months ended March 31, 2025, we acquired certain assets from entities engaged in the practice of radiology or related businesses. These acquisitions included holdbacks and other liabilities totaling $ 1.1 million that we had not paid for as of March 31, 2025. The accrued amounts are reflected in our consolidated balance sheets under accrued expenses and other non-current liabilities. 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. 6 Table of Contents RADNET, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE 1 – NATURE OF BUSINESS AND BASIS OF PRESENTATION We are a national provider of freestanding, fixed-site outpatient diagnostic imaging services in the United States. At March 31, 2025, we operated directly or indirectly through joint ventures with hospitals, 401 centers located in Arizona, California, Delaware, Florida, Maryland, New Jersey, New York and Texas. Our centers provide physicians with imaging capabilities to facilitate the diagnosis and treatment of diseases and disorders. Our services include magnetic resonance imaging (MRI), computed tomography (CT), positron emission tomography (PET), nuclear medicine, mammography, ultrasound, diagnostic radiology (X-ray), fluoroscopy and other related procedures. The consolidated financial statements include the accounts of RadNet, Inc as well as its subsidiaries in which RadNet has a controlling financial interest. The consolidated financial statements also include certain variable interest entities in which we are the primary beneficiary (as described in more detail below). All material intercompany transactions and balances have been eliminated upon consolidation. All of these affiliated entities are referred to collectively as “RadNet,” “we,” “us,” “our” or the “Company” in this report. Accounting regulations stipulate that generally any entity with a) insufficient equity to finance its activities without additional subordinated financial support provided by any parties, or b) equity holders that, as a group, lack the characteristics which evidence a controlling financial interest, is considered a Variable Interest Entity (“VIE”). We consolidate all VIEs in which we are the primary beneficiary. We determine whether we are the primary beneficiary of a VIE through a qualitative analysis that identifies which variable interest holder has the controlling financial interest in the VIE. The variable interest holder who has both of the following has the controlling financial interest and is the primary beneficiary: (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE. In performing our analysis, we consider all relevant facts and circumstances, including: 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 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". RadNet provides non-medical, technical and administrative services to the Consolidated Medical Group for which it receives a management fee, pursuant to the related management agreements. Through the management agreements we have exclusive authority over all non-medical decision making related to the ongoing business operations and we determine the annual budget. The Consolidated Medical Group has insignificant operating assets and liabilities, and de minimis equity. Substantially all cash flows of the Consolidated Medical Group after expenses, including professional salaries, are transferred to us. We consolidate the revenue and expenses, assets and liabilities of the Consolidated Medical Group. The creditors of the Consolidated Medical Group do not have recourse to our general credit and there are no other arrangements that could expose us to losses on behalf of the Consolidated Medical Group. However, RadNet may be required to provide financial support to cover any operating expenses in excess of operating revenues. The Consolidated Medical Group on a combined basis recognized $ 58.2 million and $ 52.3 million of revenue, net of management services fees to RadNet, for the three months ended March 31, 2025 and 2024, respectively. RadNet recognized $ 238.6 million and $ 234.8 million of total billed net service fee revenue for the three months ended March 31, 2025, and 2024, respectively, for management services provided to the Consolidated Medical Group relating primarily to the technical portion of billed revenue. In our condensed consolidated balance sheets at March 31, 2025 and December 31, 2024, we have included approximately $ 117.5 million and $ 103.0 million, respectively, of accounts receivable and approximately $ 31.5 million and $ 22.7 million of accounts payable and accrued liabilities related to the Consolidated Medical Group, respectively. The cash flows of the Consolidated Medical Group are included in the accompanying condensed consolidated statements of cash flows. All intercompany balances and transactions have been eliminated in consolidation. At all of our centers not serviced by the Consolidated Medical 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. The medical groups maintain full control over the physicians they employ. Through our management agreements, we make available to the medical groups the imaging centers, including all furniture, fixtures and medical equipment therein. The medical groups are compensated for their services from the professional component of the global net service fee revenue 7 Table of Contents and after deducting management service fees paid to us, we have no economic controlling interest in these medical groups. As such, the financial results of these groups are not consolidated in our financial statements. 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 March 31, 2025 and 2024 have been made. The results of operations for any interim period are not necessarily indicative of the results for a full year. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto contained in our annual report on Form 10-K for the year ended December 31, 2024. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES There have been no material changes to the significant accounting policies we use and have explained in our annual report on Form 10-K for the fiscal year ended December 31, 2024. The information below is intended only to supplement the disclosure in our annual report on Form 10-K for the fiscal year ended December 31, 2024. REVENUES - Our revenues generally relate to net patient fees received from various payors and patients themselves under contracts in which our performance obligations are to provide diagnostic services to the patients. Revenues are recorded during the period when our obligations to provide diagnostic services are satisfied. Our performance obligations for diagnostic services are generally satisfied over a period of less than one day. The contractual relationships with patients, in most cases, also involve a third-party payor (Medicare, Medicaid, managed care health plans and commercial insurance companies, including plans offered through the health insurance exchanges) and the fees for the services provided are dependent upon the terms provided by Medicare and Medicaid, or negotiated with managed care health plans and commercial insurance companies. The payment arrangements with third-party payors for the services we provide to the related patients typically specify payments at amounts less than our standard charges and generally provide for payments based upon predetermined rates per diagnostic services or discounted fee-for-service rates. Management continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations and the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals. As it relates to the Consolidated Medical Group, this service fee revenue includes payments for both the professional medical interpretation revenue recognized by the Consolidated Medical Group as well as the payment for all other aspects related to our providing the imaging services, for which we earn management fees. As it relates to 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 service fee revenues are based upon the estimated amounts we expect to be entitled to receive from patients and third-party payors. Estimates of contractual allowances under managed care and commercial insurance plans are based upon the payment terms specified in the related contractual agreements. Revenues related to uninsured patients and copayment and deductible amounts for patients who have health care coverage may have discounts applied (uninsured discounts and contractual discounts). We also record estimated implicit price concessions (based primarily on historical collection experience) related to uninsured accounts to record self-pay revenues at the estimated amounts we expect to collect. Under capitation arrangements with various health plans, we earn a per-enrollee amount each month for making available diagnostic imaging services to all plan enrollees under the capitation arrangement. 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 revenues during the three months ended March 31, 2025 and 2024 are presented in the table below. Our revenue is displayed as the estimated service fee, broken down by classification of insurance coverage type. We generate revenues through the provision of management services provided to joint ventures. We also generate revenues through our software and AI subsidiaries which are included within other revenue. patient service revenue is displayed as the estimated service fee, broken down by classification of insurance coverage type, along with revenue generated from our management services and other sources such as software and AI. 8 Table of Contents In Thousands Three Months Ended March 31, 2025 2024 Commercial insurance $ 262,488 $ 240,629 Medicare 108,199 93,525 Medicaid 11,690 10,887 Workers' compensation/personal injury 10,459 11,794 Other payors 27,691 25,385 Management fee revenue 6,279 5,908 Other revenue 12,543 9,061 Revenue under capitation arrangements 32,050 34,518 Total service revenue $ 471,399 $ 431,707 EQUITY BASED COMPENSATION – We have one long-term incentive plan, which has been amended and restated on April 20, 2015, March 9, 2017, April 15, 2021, April 27, 2023, and most recently following approval by our stockholders at our annual stockholders meeting on June 7, 2023 (the “Restated Plan”). We have reserved 20,100,000 shares of common stock for issuance under the Restated Plan which can be issued in the form of incentive and/or nonstatutory stock options, restricted and/or unrestricted stock, stock units, and stock appreciation rights. Terms and conditions of awards can be direct grants or based on achieving a performance metric. We evaluate performance-based awards to determine if it is probable that the vesting conditions will be met. We also consider probability of achievement of performance conditions when determining expense recognition. For the awards where vesting is probable, equity-based compensation is recognized over the related vesting period. Stock options generally vest over three years to five years and expire five years to ten years from date of grant. We determine the compensation expense for each stock option award using the Black Scholes, or similar, valuation model. Those models require that our management make certain estimates concerning risk free interest rates and volatility in the trading price of our common stock. The compensation expense recognized for all equity-based awards is recognized over the awards’ service periods. Equity-based compensation is classified in operating expenses within the same line item as the majority of the cash compensation paid to employees. In connection with our acquisition of DeepHealth Inc. on June 1, 2020, we assumed the DeepHealth, Inc. 2017 Equity Incentive Plan, including outstanding options awards that can be exercised for our common stock. No additional awards will be granted under the DeepHealth, Inc. 2017 Equity Incentive Plan. See Note 7, Stock-Based Compensation, for more information. 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. 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 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 $ 4.1 million and $ 4.2 million at March 31, 2025 and December 31, 2024, 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 $ 2.1 million and $ 2.3 million as of March 31, 2025 and December 31, 2024, respectively. See Note 6, Credit Facilities and Notes Payable for more information. PROPERTY AND EQUIPMENT - Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation of property and equipment is performed using the straight-line method over the estimated useful lives of the assets acquired, which range from 3 to 15 years. Leasehold improvements are amortized at the lesser of lease term or their estimated useful lives, which range from 3 to 15 years. Maintenance and repairs are charged to expense as incurred. 9 Table of Contents BUSINESS COMBINATIONS - When the qualifications for business combination accounting treatment are met, it requires us to recognize, separately from goodwill, the assets acquired and the liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. 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 March 31, 2025 totaled $ 717.5 million. Goodwill is recorded as a result of business combinations. If we determine the carrying value of a reporting unit exceeds its fair value an impairment charge would be recognized and should not exceed the total amount of goodwill allocated to that reporting unit. We tested goodwill and indefinite lived intangibles for impairment on October 1, 2024 noting no impairment, and we have not identified any indicators of impairment through March 31, 2025. Activity in goodwill for the three months ended March 31, 2025 is provided below (in thousands): Imaging Center segment Digital Health segment Total Balance as of December 31, 2024 628,537 $ 82,126 $ 710,663 Goodwill from acquisitions 3,969 — 3,969 Measurement period and other adjustments — 87 87 Currency translation — 2,761 2,761 Balance as of March 31, 2025 $ 632,506 $ 84,974 $ 717,480 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 lived, along with annual amortization expense that will be recorded over the next five years at March 31, 2025 and December 31, 2024 are as follows (in thousands): As of March 31, 2025: 2025* 2026 2027 2028 2029 Thereafter Total Weighted average amortization period remaining in years Management service contracts $ 1,715 $ 2,287 $ 2,287 $ 2,287 $ 2,287 $ 4,386 $ 15,249 6.7 Covenant not to compete and other contracts 705 679 385 295 126 3 2,193 3.1 Customer lists 822 988 813 774 774 9,931 14,102 17.0 Patent and trademarks 289 386 365 303 64 124 1,531 4.2 Developed technology 5,627 7,463 6,928 6,928 2,123 4,611 33,680 5.3 Trade names amortized 58 77 77 63 19 7 301 4.0 Trade names indefinite life — — — — — 8,500 8,500 IPR&D — — — — — 4,180 4,180 Total annual amortization $ 9,216 $ 11,880 $ 10,855 $ 10,650 $ 5,393 $ 31,742 $ 79,736 *Excluding the three months ended March 31, 2025 10 Table of Contents As of December 31, 2024: 2025 2026 2027 2028 2029 Thereafter Total Weighted average amortization period remaining in years Management service contracts $ 2,287 $ 2,287 $ 2,287 $ 2,287 $ 2,291 $ 4,384 $ 15,823 6.9 Covenant not to compete and other contracts 947 660 365 275 106 — 2,353 3.2 Customer lists 1,084 962 786 750 750 9,628 13,960 17.2 Patent and trademarks 293 293 293 293 51 121 1,344 5.0 Developed technology 7,329 7,289 6,755 6,755 1,848 4,610 34,586 5.4 Trade names amortized 77 77 77 63 19 8 321 4.3 Trade names indefinite life — — — — — 8,500 8,500 IPR&D — — — — — 4,464 4,464 Total annual amortization $ 12,017 $ 11,568 $ 10,563 $ 10,423 $ 5,065 $ 31,715 $ 81,351 Total intangible asset amortization expense was $ 3.1 million and $ 3.2 million for the three months ended March 31, 2025 and March 31, 2024, respectively. Intangible assets are amortized using the straight-line method over their useful life determined at acquisition. Management services agreements are amortized over 25 years using the straight-line method. Developed technology is capitalized and amortized over the useful life of the software when placed into service. Trade names and IPR&D are reviewed annually for impairment. INCOME TAXES - Income tax expense is computed using an asset and liability method and using expected annual effective tax rates. Under this method, deferred income tax assets and liabilities result from temporary differences in the financial reporting bases and the income tax reporting bases of assets and liabilities. The measurement of deferred tax assets is reduced, if necessary, by the amount of any tax benefit that, based on available evidence, is not expected to be realized. When it appears more likely than not that deferred taxes will not be realized, a valuation allowance is recorded to reduce the deferred tax asset to its estimated realizable value. 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. 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 2025, 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, 2025. We recorded an income tax benefit of $ 3.4 million, or an effective tax rate of 10.3 %, for the three months ended March 31, 2025, and a benefit of $ 1.9 million, or an effective tax rate of ( 52.6 )% for the three months ended March 31, 2024. The income tax rates for the three months ended March 31, 2025 diverge from the federal statutory rate due to (i) officer's compensation limitations; (ii) nondeductible stock compensation expense; (iii) partial valuation allowance on losses in foreign jurisdictions, partially offset by (iv) noncontrolling interests from controlled partnerships. LEASES - We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current operating lease liabilities, and long-term operating lease liability in our condensed consolidated balance sheets. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. We include options to extend a lease when it is reasonably certain that we will exercise that option. 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. 11 Table of Contents ROU assets are tested for impairment if circumstances suggest that the carrying amount may not be recoverable. 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 March 31, 2025. Our facility leases require us to maintain insurance policies which would cover major damage to our facilities. We maintain business interruption insurance to cover loss of business due to a facility becoming non-operational under certain circumstances. Our equipment leases are covered by warranty and service contracts which cover repairs and provide regular maintenance to keep the equipment in functioning order. We closely monitor patient levels at our imaging centers and occasionally divest or shut down centers to maximize utilization rates. We may abandon low utilization leases and divert the patients to nearby centers. During the three months ended March 31, 2025, we closed several imaging centers with lower utilization and recognized lease abandonment charges of approximately $ 5.4 million in our Imaging Center segment. Of these amounts, $ 4.8 million were related to right-of-use assets impairment and $ 0.6 million were related to the write-off of leasehold improvements for the three months ended March 31, 2025. COMPREHENSIVE LOSS - Accounting guidance establishes rules for reporting and displaying other comprehensive income (loss) ("OCI") and its components. Our foreign currency translation adjustments and the amortization of balances associated with derivatives previously classified as cash flow hedges are included in OCI. The components of OCI for the three months ended March 31, 2025 and 2024 are included in the Consolidated Statements of Comprehensive Loss . INTEREST ON SECURITIES - We recognized income from interest on securities of approximately $ 7.7 million and $ 4.4 million for the three months ended March 31, 2025 and 2024, respectively. This income is recorded within Other non-operating income in our Consolidated Statements of Operations . COMMITMENTS AND CONTINGENCIES - We are party to various legal proceedings, claims, and regulatory, tax or government inquiries and investigations that arise in the ordinary course of business. With respect to these matters, we evaluate the developments on a regular basis and accrue a liability when we believe a loss is probable and the amount can be reasonably estimated. Based on current information, we do not believe that reasonably possible or probable losses associated with pending legal proceedings would either individually or in the aggregate, have a material adverse effect on our business and consolidated financial statements. However, the outcome of these matters is inherently uncertain. If one or more of these matters were resolved against us for amounts in excess of management's expectations, our results of operations and financial condition, including in a particular reporting period in which any such outcome becomes probable and estimable, could be materially adversely affected. 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 $ 500.0 million, consisting of two agreements of $ 50.0 million each and two agreements of $ 200.0 million each. The 2019 Swaps secure a constant interest rate associated with portions of our variable rate bank debt and have an effective date of October 13, 2020. 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 Secured Overnight Financing Rate ("SOFR") rates at 1.89 % for the $ 100.0 million notional and at 1.98 % for the $ 400.0 million notional. In October of 2023, the two agreements of $ 50,000,000 each matured and the remaining 2019 swaps have a total notional amount of $ 400,000,000 as of March 31, 2025. 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. At inception, we designated our 2019 Swaps as cash flow hedges of floating-rate borrowings. In accordance with accounting guidance, derivatives that have been designated and qualify as cash flow hedging instruments are reported at fair value. The gain or loss on the effective portion of the hedge (i.e. change in fair value) is reported as a component of other accumulated comprehensive loss in the consolidated statement of equity. The remaining gain or loss, if any, is recognized currently in earnings. The cash flows for our $ 400.0 million and $ 100.0 million notional interest rate swap contract, both locked in at 1.98 %, did not match the cash flows for our term loans under our Barclays Credit Facility. As a result, we determined that they are not effective as cash flow hedges. Accordingly, all changes in their fair value for the $ 400.0 million notional and $ 100.0 million notional interest rate swaps are being recognized in earnings. Prior to this determination, effective 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 was amortized to interest expense through October 2023 at approximately $ 0.4 million per month and continues at approximately $ 0.3 million per month through October 2025. 12 Table of Contents A tabular presentation of the effect of derivative instruments on our consolidated statement of comprehensive loss of the 2019 Swaps which remain ineffective is as follows (amounts in thousands): For the three months ended March 31, 2025 Account December 31, 2024 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, 2025 Balance Location Accumulated Other Comprehensive Loss, net of taxes $( 2,273 ) $ — $ 1,033 $( 1,240 ) Equity *Net of taxes of $ 0.3 million for the three months ended March 31, 2025. 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 March 31, 2025 Ineffective interest rate swap Amount recognized (current period ineffective portion) Location recognized in profit and loss (current period ineffective portion) Amount reclassified from accumulated OCI (prior period effective portion) Location reclassified from accumulated OCI into profit and loss (prior period effective portion) Interest rate contracts $ 2,106 Other income (expense) $ 1,033 Interest Expense See Fair Value Measurements below for the fair value of the 2019 Swaps at March 31, 2025. FAIR VALUE MEASUREMENTS – Assets and liabilities subject to fair value measurements are required to be disclosed within a fair value hierarchy. The fair value hierarchy ranks the quality and reliability of inputs used to determine fair value. Accordingly, assets and liabilities carried at, or permitted to be carried at, fair value are classified within the fair value hierarchy in one of the following categories based on the lowest level input that is significant to a fair value measurement: Level 1—Fair value is determined by using unadjusted quoted prices that are available in active markets for identical assets and liabilities. Level 2—Fair value is determined by using inputs other than Level 1 quoted prices that are directly or indirectly observable. Inputs can include quoted prices for similar assets and liabilities in active markets or quoted prices for identical assets and liabilities in inactive markets. Related inputs can also include those used in valuation or other pricing models such as interest rates and yield curves that can be corroborated by observable market data. Level 3—Fair value is determined by using inputs that are unobservable and not corroborated by market data. Use of these inputs involves significant and subjective judgment. Derivatives: 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): 13 Table of Contents As of March 31, 2025 Level 1 Level 2 Level 3 Total Current assets 2019 Swaps - Interest Rate Contracts $ — $ 5,006 $ — $ 5,006 As of December 31, 2024 Level 1 Level 2 Level 3 Total Current assets 2019 Swaps - Interest Rate Contracts $ — $ 7,112 $ — $ 7,112 The estimated fair value of these contracts was determined using Level 2 inputs. More specifically, the fair value was determined by calculating the value of the difference between the fixed interest rate of the interest rate swaps and the counterparty’s forward SOFR curve. The forward SOFR curve is readily available in the public markets or can be derived from information available in the public markets. Long Term Debt: The table below summarizes the estimated fair value compared to the face value of our long-term debt as follows (in thousands): As of March 31, 2025 Level 1 Level 2 Level 3 Total Fair Value Total Face Value Barclays Term Loan and Truist Term Loan $ — $ 998,454 $ — $ 998,454 $ 1,000,625 As of December 31, 2024 Level 1 Level 2 Level 3 Total Fair Value Total Face Value Barclays Term Loan and Truist Term Loan $ — $ 1,006,713 $ — $ 1,006,713 $ 1,005,625 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 other notes payable to approximate their fair value because the weighted average interest rate used to formulate the carrying amounts approximates current market rates. EARNINGS PER SHARE - Earnings per share is based upon the weighted average number of shares of common stock and common stock equivalents outstanding, net of common stock held in treasury, as follows (in thousands except share and per share data): 14 Table of Contents Three Months Ended March 31, 2025 2024 NET LOSS ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $ ( 37,926 ) $ ( 2,779 ) BASIC AND DILUTED NET LOSS PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS Weighted average number of common shares outstanding during the period 74,382,356 69,307,078 Basic and diluted net loss per share attributable to RadNet, Inc.'s common stockholders $ ( 0.51 ) $ ( 0.04 ) Stock options and non-vested restricted awards excluded from the computation of diluted per share amounts as their effect would be antidilutive: Non-vested restricted stock subject to service vesting 910,334 699,721 Shares issuable upon the exercise of stock options 894,169 863,792 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 March 31, 2025, we have three equity investments with an aggregate carrying value of $ 8.3 million. No other observable price changes or impairments in our investments were identified as of March 31, 2025. INVESTMENT IN JOINT VENTURES – We have 12 unconsolidated joint ventures with ownership interests ranging from 35 % to 55 %. These joint ventures represent partnerships with hospitals, health systems or radiology practices and were formed for the purpose of owning and operating diagnostic imaging centers. Professional services at the joint venture diagnostic imaging centers are performed by contracted radiology practices or a radiology practice that participates in the joint venture. Our investment in these joint ventures is accounted for under the equity method, since RadNet does not have a controlling interest in such ventures. 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 March 31, 2025. Joint venture investment and financial information The following table is a summary of our investment in joint ventures during the three months ended March 31, 2025 (in thousands): Balance as of December 31, 2024 $ 104,057 Equity in earnings in these joint ventures 2,599 Equity contributions in existing joint ventures 4,147 Balance as of March 31, 2025 $ 110,803 We charged management service fees from the centers underlying these joint ventures of approximately $ 6.1 million and $ 5.9 million for the three months ended March 31, 2025 and 2024. We eliminate any unrealized portion of our management service fees with our equity in earnings of joint ventures. As we have the ability to exercise significant influence over our joint venture entities, we consider them related parties. Amounts transacted between ourselves and the entities are in the ordinary course of business and are disclosed on our balance sheet in the due from/to affiliate accounts. 15 Table of Contents The following table is a summary of key balance sheet data for these joint ventures as of March 31, 2025 and December 31, 2024 and income statement data for the three months ended March 31, 2025 and 2024 (in thousands): Balance Sheet Data: March 31, 2025 December 31, 2024 Current assets $ 66,970 $ 61,158 Noncurrent assets 236,265 232,750 Current liabilities ( 45,309 ) ( 53,182 ) Noncurrent liabilities ( 73,328 ) ( 70,241 ) Total net assets $ 184,598 $ 170,485 Income statement data for the three months ended March 31, 2025 2024 Net revenue $ 66,274 $ 61,208 Net income $ 5,628 $ 5,810 NOTE 3 – RECENT ACCOUNTING AND REPORTING STANDARDS Recently Issued Accounting Pronouncements In November 2023, the FASB issued Accounting Standards Updates (ASUs) 2023-07 ("ASU 2023-07"), Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures . The guidance requires entities to provide enhanced disclosures about significant segment expenses. For entities that have adopted the amendments in ASU 2023-07, the updated guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and is applicable to the Company in fiscal 2024. Early adoption is permitted. We adopted this ASU for the year ended December 31, 2024, and applied the amendments retrospectively to all prior periods presented in our consolidated financial statements. In December 2023, the FASB issued Accounting Standards Updates (ASUs) 2023-09 ("ASU 2023-09"), Income Tax (Topic 740) Improvements to Income Tax Disclosures primarily related to the rate reconciliation and income taxes paid information. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2024, and is applicable to the Company in fiscal 2025. Early adoption is permitted. We will adopt this ASU prospectively for the period ending December 31, 2025, and it will impact only our disclosures with no impact to our financial condition and results of operations. In November 2024, the FASB issued Accounting Standards Update (ASU) 2024-03 (“ASU 2024-03”), Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures, to enhance the transparency of certain expense disclosures. The amendments in this Update require disclosure of specific expense categories in the notes to the financial statements for both interim and annual reporting periods. The Update also requires disaggregated information about certain prescribed expense categories underlying any relevant income statement expense caption. The amendments in this Update are effective for public entities for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted, and the amendments may be adopted either prospectively or retrospectively. We are currently evaluating the impact of this ASU on our consolidated financial statements. NOTE 4 – BUSINESS COMBINATIONS AND RELATED ACTIVITY Imaging Center Segment Acquisitions During the three months ended March 31, 2025, we completed the acquisition of certain assets of the following entities, which either engage directly in the practice of radiology or associated businesses. The primary reason for these acquisitions was to strengthen our presence in the California and Texas market. These acquisitions are reported as part of our Imaging Center segment. As of March 31, 2025, we made a preliminary fair value determination of the acquired assets and 16 Table of Contents assumed liabilities and the following were recorded (in thousands). The valuation of assets acquired and liabilities assumed has not yet been finalized as of March 31, 2025; and the fair value determination is preliminary and may be subject to change: Entity Date Acquired Total Consideration Property & Equipment Right of Use Assets Goodwill Intangible Assets Other Assets Right of Use Liabilities HALO Centers LLC 1/2/2025 4,201 587 3,238 3,563 50 — ( 3,238 ) Hillcroft Medical Clinic 3/7/2025 $ 735 278 — 406 50 — — Total 4,936 865 3,238 3,969 100 — ( 3,238 ) NOTE 5 – SEGMENT REPORTING 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. The CODM considers actual to budget and current year actual to prior year actual for revenue and other profit and loss measures on a monthly basis for evaluating performance of each segment and making decisions about allocating capital and other resources to each segment. We do not report balance sheet information by segment since it is not reviewed by our CODM to evaluate segment performance or to make resource allocation decisions. Our Imaging Center segment provides physicians with imaging capabilities to facilitate the diagnosis and treatment of diseases and disorders. Services include magnetic resonance imaging (MRI), computed tomography (CT), positron emission tomography (PET), nuclear medicine, mammography, ultrasound, diagnostic radiology (X-ray), fluoroscopy and other related procedures. The 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. 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. In the normal course of business, our Imaging Center and Digital Health 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. The following tables reflect certain financial data for each reportable segment: 17 Table of Contents Three Months Ended March 31, 2025 Imaging Center Digital health Total Revenues from external customers $ 461,378 $ 10,021 $ 471,399 Intersegment revenues — 9,200 9,200 $ 461,378 $ 19,221 $ 480,599 Reconciliation of revenue Elimination of intersegment revenues ( 9,200 ) Total consolidated revenues $ 471,399 Less: Other segment items* $ 436,531 $ 22,338 $ 458,868 Segment profit (loss) 15,648 ( 3,117 ) 12,531 Reconciliation of segment profit Depreciation and amortization $ ( 35,483 ) Loss on sale and disposal of equipment and other ( 402 ) Severance costs ( 747 ) Interest expense ( 17,239 ) Equity in earnings of joint ventures 2,599 Non-cash change in fair value of interest rate swaps ( 2,106 ) Other income 7,712 Loss before income taxes $ ( 33,135 ) *Other segment items include operating expenses, inclusive of cost of operations and lease abandonment charges. 18 Table of Contents Three Months Ended March 31, 2024 Imaging Center Digital health Total Revenues from external customers $ 423,209 $ 8,498 $ 431,707 Intersegment revenues — 6,163 6,163 423,209 14,661 437,870 Reconciliation of revenue Elimination of intersegment revenues ( 6,163 ) Total consolidated revenues $ 431,707 Less: Other segment items* $ 372,323 $ 15,266 $ 387,589 Segment profit (loss) 44,723 ( 605 ) 44,118 Reconciliation of segment profit Depreciation and amortization ( 32,368 ) Loss on sale and disposal of equipment and other ( 186 ) Severance costs ( 225 ) Interest expense ( 16,267 ) Equity in earnings of joint ventures 4,324 Non-cash change in fair value of interest rate swaps 1,216 Other income 2,934 Income before income taxes $ 3,546 *Other segment items include cost of operations. NOTE 6 – CREDIT FACILITIES AND NOTES PAYABLE At March 31, 2025 we had two principal secured credit facilities consisting of our Barclays credit facility and our Truist credit facility. Each facility includes a term loan component and a revolving credit facility. At March 31, 2025, we were in compliance with all covenants under our credit facilities. Barclays Credit Facility On April 18, 2024, we entered into a Third Amended and Restated First Lien Credit and Guaranty Agreement (the “Barclays 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 (the “Barclays Term Loan”) and a $ 282.0 million senior secured revolving credit facility (the “Barclays Revolving Credit Facility”). Our borrowing under the Barclays Revolving Credit Facility is secured by a lien on all of our assets. The proceeds from the April 18, 2024 restatement of the Barclays Credit Agreement were used to refinance the $ 870.6 million of term loans outstanding under the prior credit facility, to pay accrued interest through the date of closing, and to pay fees and expenses associated with the refinancing transaction. Total costs incurred in connection with the restatement amounted to approximately $ 19.9 million segregated as follows: $ 11.1 million recognized as discount and deferred finance cost, $ 2.1 million charged to loss on early extinguishment of debt and $ 6.7 million to related expenses. Amounts capitalized will be amortized over the remaining terms of the respective credit facilities under the Barclays Credit Agreement. On November 26, 2024, we entered into Amendment No. 1 to the Barclays Credit Agreement (the “First Amendment”) with the Barclays Bank Plc and the lenders and financial institutions named therein. Pursuant to the First Amendment, the interest rates on the term loans and revolving credit facility provided under the Restated Credit Agreement have been reduced by 0.25 %. Total costs incurred in connection with the first amendment amounted to approximately $ 2.4 million segregated as follows: $ 0.6 million recognized as discount, $ 1.8 million charged to loss on early extinguishment of debt 19 Table of Contents and $ 0.1 million to related expenses. Amounts capitalized will be amortized over the remaining terms of the respective credit facilities under the Barclays Credit Agreement. Barclays Term Loan: The Barclays Term Loan provides for interest payments based on a base rate, plus an applicable margin. During the periods covered by this report, the base rates, margins and effective interest rates (without giving effect to our 2019 Swaps) were as follows for the periods indicated: Period Base Rate plus Margin Effective Rate Before April 18, 2024 SOFR plus 3.00 % Alternative Base Rate plus 2.00 % 8.33 % (credit spread adjustment of 0.11 %) 10.5 % After April 18, 2024 to November 26, 2024 SOFR plus 2.5 % Prime Rate plus 1.5 % 7.78 % (credit spread adjustment of 0.00 % ) 9.5 % After November 26, 2024 SOFR plus 2.25 % Prime Rate plus 1.25 % 6.6 % (credit spread adjustment of 0.00 % ) 8.8 % With the recent restatement, we are required to make quarterly principal payments of $ 2.2 million (up from $ 1.8 million under the prior credit agreement). The Barclays Term Loan will mature on April 18, 2031 unless otherwise accelerated under the terms of the Barclays Credit Agreement. Barclays Revolving Credit Facility: The Barclays Revolving Credit Facility is a $ 282.0 million senior secured revolving credit facility. Associated with the Barclays Revolving Credit Facility is deferred financing costs, net of accumulated amortization, of $ 1.8 million at March 31, 2025. After we entered the first amendment on November 26, 2024, amounts borrowed under the Barclays Revolving Credit Facility bear interest at either SOFR plus 2.75 % or the Prime Rate plus 1.8 % (with step-downs based on attainment of certain first lien net leverage ratio benchmarks). As of March 31, 2025, the effective interest rate payable on revolving loans under the Barclays Revolving Credit Facility was 9.25 %. In addition, a commitment fee of 0.50 % per annum accrues on the unused revolver commitments under the Barclays Revolving Credit Facility. We had no outstanding balance under our $ 282.0 million Barclays Revolving Credit Facility at March 31, 2025. After reserves of $ 7.6 million for certain letters of credit, $ 274.4 million was available to draw upon as of March 31, 2025. The Barclays Revolving Credit Facility terminates on April 18, 2029, unless otherwise accelerated under the terms of the Barclays Credit Agreement. Truist Credit Facility On October 7, 2022, our subsidiary New Jersey Imaging Network, Inc.("NJIN") entered into Second Amended and Restated Revolving Credit and Term Loan Agreement (the “Truist Credit Agreement”), with Truist Bank and the lenders and financial institutions named therein, which provides for a $ 150.0 million term loan (the "Truist Term Loan") and a $ 50.0 million revolving credit facility (the “Truist Revolving Credit Facility”). The Truist Credit agreement is secured by the assets of NJIN. Truist Term Loan: The Truist Term Loan currently bears interest at SOFR or a Base Rate plus an applicable margin and fees which step down based on a leverage ratio. At March 31, 2025 the applicable margin for SOFR was 1.5 %. We are required to make quarterly principal payments of $ 2.8 million, which increases by $ 0.9 million at scheduled intervals, with the remaining balance to be paid at maturity. The Truist Term Loan will mature on October 10, 2027 unless otherwise accelerated under the terms of the Truist Credit Agreement. Truist Revolving Credit Facility: 20 Table of Contents The Truist Revolving Credit Facility is a $ 50.0 million secured revolving credit facility. Associated with the Truist Revolving Credit Facility are deferred financing costs, net of accumulated amortization, of $ 0.3 million at March 31, 2025. Amounts borrowed under the Truist Revolving Credit Facility bear interest at either SOFR or a Base Rate plus an applicable margin and fees which step down based on a leverage ratio. In addition, a commitment fee of 0.30 % per annum accrues on the unused revolver commitments under the Truist Revolving Credit Facility. We had no balance outstanding under our $ 50.0 million Truist Revolving Credit Facility at March 31, 2025. With no letters of credit reserved against the facility, the full $ 50.0 million was available to draw upon as of March 31, 2025. The Truist Revolving Credit Facility terminates on October 7, 2027, unless otherwise accelerated under the terms of the Truist Credit Agreement. Equipment Notes Payable We have issued certain notes payable in connection with the purchase of equipment previously leased under operating leases. Debt Obligations As of March 31, 2025 and December 31, 2024 our term loan debt and other obligations are as follows (in thousands): March 31, 2025 December 31, 2024 Barclays Term Loans collateralized by RadNet's tangible and intangible assets $ 868,438 $ 870,625 Discount on Barclays Term Loans ( 12,412 ) ( 12,929 ) Truist Term Loan Agreement collateralized by NJIN's tangible and intangible assets 132,187 135,000 Discount on Truist Term Loan Agreement ( 660 ) ( 726 ) Equipment notes payable at 3.6 % to 7.2 %, due through 2029, collateralized by medical equipment 22,578 24,296 Total debt obligations 1,010,131 1,016,266 Less: current portion ( 24,677 ) ( 24,692 ) Long term portion of debt obligations $ 985,454 $ 991,574 NOTE 7 – STOCK-BASED COMPENSATION Stock Incentive Plans We have one long-term equity incentive plan, the RadNet, Inc. Equity Incentive Plan, which has been amended and restated on April 20, 2015, March 9, 2017, April 15, 2021, April 27, 2023, and most recently following approval by our stockholders at our annual stockholders meeting on June 7, 2023 (the “Restated Plan”). We have reserved for issuance under the Restated Plan 20,100,000 shares of common stock for issuance under the Restated Plan which can be issued in the form of incentive and/or nonstatutory stock options, restricted and/or unrestricted stock, stock units and stock appreciation rights. Our stock-based compensation consists of various types of awards, each accounted for separately. There is no overlap between Options, DeepHealth options, Restricted stock awards (RSAs) and Restricted stock units (RSUs), performance stock units (PSUs), and performance stock options (PSOs). Options Certain options granted under the Restated Plan to employees are intended to qualify as incentive stock options under existing tax regulations. Stock options generally vest over 3 to 5 years and expire 5 to 10 years from the date of grant. 21 Table of Contents The following summarizes all of our option transactions for the three months ended March 31, 2025: Outstanding Options Under the 2006 Plan Shares Weighted Average Exercise price Per Common Share Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (in thousands) Balance, December 31, 2024 840,917 $ 17.19 Granted — — Exercised ( 11,956 ) 10.11 Balance, March 31, 2025 828,961 17.29 5.21 $ 26,880 Exercisable at March 31, 2025 828,961 17.29 5.21 26,880 Aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between our closing stock price on March 31, 2025 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, 2025. 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 March 31, 2025, total unrecognized stock based compensation expense related to non-vested DeepHealth options was insignificant. Outstanding Options Under the Deep Health Plan Shares Weighted Average Exercise price Per Common Share Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (in thousands) Balance, December 31, 2024 68,646 $ — Exercised ( 3,438 ) — Balance, March 31, 2025 65,208 — 4.5 $ 3,242 Exercisable at March 31, 2025 65,208 — 4.5 3,242 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") 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, 2025: RSAs and RSUs Weighted-Average Remaining Contractual Term (Years) Weighted-Average Fair Value per Share RSAs and RSUs unvested at December 31, 2024 687,655 $ 35.31 Changes during the period Granted 834,243 $ 72.23 Vested ( 606,091 ) $ 52.63 Forfeited or Canceled ( 5,473 ) $ 48.05 RSAs and RSUs unvested at March 31, 2025 910,334 2.19 $ 36.42 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") 22 Table of Contents In October 2024, we granted certain employees PSUs with a target award of 35,522 shares of our common stock. The PSUs will vest in five equal parts, on each anniversary of the grant date based on continuous service, with the number of shares earned ( 0 % to 100 % of the target award) depending upon the extent to which we achieve a performance condition determined by the management no later than the seventh anniversary of the grant date. As of December 31, 2024, based on the performance to date, all 35,522 shares are expected to vest. In January 2023, we granted certain employees PSUs with a target award of 60,685 shares of our common stock with a fair value of $ 18.64 . 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 March of 2024, based on the performance condition being achieved, the board of directors issued 121,370 shares. Performance based stock options ("PSOs") In January 2023, we granted certain employees PSOs with a potential to option a maximum of 235,227 shares of our common stock with a strike price of $ 18.64 . 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 % to 100 % of the target award) 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 March 2024, based on the performance condition being achieved, the board of directors issued 235,227 options. Shares available Of the 20,100,000 shares of common stock reserved for issuance under the Restated Plan, at March 31, 2025, there remain approximately 2,320,287 shares available under the Restated Plan for future issuance. NOTE 8 – SUBSEQUENT EVENTS North County Radiology – Oceanside, LLC On April 2, 2025, we acquired North County Radiology – Oceanside, LLC for purchase consideration of approximately $ 1.7 million. North County Radiology – Oceanside, LLC consists of one imaging center located in California. iCAD, Inc. On April 15, 2025, RadNet entered into a definitive agreement to acquire iCAD, Inc. ("iCAD"), a provider of AI-powered breast health solutions. Under the terms of the merger agreement, iCAD stockholders will receive 0.0677 shares of RadNet common stock for each share of iCAD common stock they hold at the closing of the merger. The merger is subject to iCAD, Inc. stockholders' approval and customary closing conditions and is expected to close in the second or third quarter of 2025.