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Item 2. Management’s Discussion and Analysis

2025-08-11 compared with 2025-05-12 · 242 added, 97 removed, 280 unchanged (55% of the section changed)

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We are a national provider of 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.

At June 30, 2025, we operated directly or indirectly through joint ventures with hospitals, 405 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 and may reduce unnecessary invasive procedures, often reducing the cost and amount of care for patients.

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Our Digital Health segment provides these solutions to RadNet and to over 400 customers in the United States, Europe, and Israel.

As part of our continued strategic expansion in Digital Health, we recently completed two acquisitions:

iCAD, Inc., a provider of AI-powered breast health solutions, and See-Mode Technologies, a medical technology company focused on enhancing ultrasound-based diagnostics through artificial intelligence.

We are currently in the process of integrating both businesses into our Digital Health segment.

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 financial statements included in this report.

Prior period amounts in the financial statements included in this report have been adjusted retrospectively to reflect the change in reportable segment.

Recent Developments

The following table shows our imaging centers in operation and revenues for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

The following table shows our imaging centers in operation and revenues for the six months ended June 30, 2025 and 2024:

Six Months Ended June 30,

Centers in operation 405 375

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

Our total service fee revenue, net of contractual allowances and discounts, and implicit price concessions for the three months ended March 31, 2025 and 2024 received from our various payors is summarized in the following table (in thousands):

Our total service fee revenue, net of contractual allowances and discounts, and implicit price concessions for the three and six months ended June 30, 2025 and 2024 received from our various payors is summarized in the following table (in thousands):

Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Commercial insurance $ 278,902 $ 256,517 $ 541,410 $ 497,145

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

During the three months ended March 31, 2025, we completed the acquisition of certain assets of entities which engage directly in the practice of radiology or in associated businesses for an aggregate consideration of $4.9 million.

During the six months ended June 30, 2025, we completed the acquisition of certain assets of entities which engage directly in the practice of radiology or in associated businesses for an aggregate consideration of $16.4 million.

These acquisitions include:

HALO Centers LLC:

1 imaging centers in California;

1 imaging center in California;

Hillcroft Medical Clinic:

1 imaging center in Sugar Land, Texas;

North County Radiology Oceanside LLC:

1 imaging center in California;

Faculty Physicians and Surgeons of LLUSM (Palm Imaging):

1 imaging center in California;

California MSK MSO, LLC (OSS Burbank):

1 imaging center in California;

HALO Centers LLC (Indian Wells):

1 imaging center in California

See Note 4, Business Combinations and Related Activity, in the notes accompanying our financial statements in this report for additional information, including the fair value determination of the acquired assets and assumed liabilities, associated with these acquisitions.

Joint Venture Activity

At March 31, 2025, 38% of our imaging centers were operating as joint ventures with large health care providers.

We have joint venture arrangements.

At June 30, 2025, 38% of our imaging centers were operating as joint ventures with large health care providers.

We manage the day-to-day operations for these joint ventures and perform most management services in exchange for a management fee.

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, respectively.

We charged management service fees from the centers underlying these joint ventures of approximately $6.5 million and $6.1 million for the three months ended June 30, 2025 and 2024, respectively, and approximately $13.0 million and $12.0 million for the six months ended June 30, 2025 and 2024, respectively.

For information on our investment in unconsolidated joint ventures, key balance sheet data and income statement data for the unconsolidated joint ventures, see Note 2, Significant Accounting Policies – Investment in Joint Ventures in the notes accompanying our financial statements included in this report.

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Our service fee revenues are based upon our management's estimate of amounts we expect to be entitled to receive from patients and third-party payors.

Estimates of contractual allowances under Medicare, Medicaid, managed care and commercial insurance plans are based upon historical collection experience of the payments received from such payors in accordance with the underlying contractual agreements.

Estimates of contractual allowances under Medicare, Medicaid, managed care and commercial insurance plans are based upon historical collection experience of the payments received from such payors in

accordance with the underlying contractual agreements.

Revenues related to uninsured patients and uninsured copayment and deductible amounts for patients who have health care coverage may have price concessions applied.

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.

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 estimates and assumptions related to revenue recognition did not change materially for the quarter ended March 31, 2025.

Our estimates and assumptions related to revenue recognition did not change materially for the quarter ended June 30, 2025.

Accounts Receivable

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

Our estimates and assumptions for allowances on our account receivable did not change materially during the quarter ended March 31, 2025.

Our estimates and assumptions for allowances on our account receivable did not change materially during the quarter ended June 30, 2025.

Business Combination

We evaluate all acquisitions under the framework Clarifying the Definition of a Business in the accounting guidance.

We evaluate all acquisitions in accordance with the accounting guidance under ASC 805, Business Combinations.

Once a purchase has been determined to be the acquisition of a business, we are required to recognize the assets acquired and the liabilities assumed at their acquisition date fair values.

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Goodwill and Indefinite Lived Intangibles

Goodwill at March 31, 2025 totaled $717.5 million.

Indefinite Lived Intangible Assets at March 31, 2025 were $13.0 million and are associated with the value of certain trade name intangibles and in process research and development ("IPR&D").

Goodwill at June 30, 2025 totaled $751.5 million.

Indefinite Lived Intangible Assets at June 30, 2025 were $18.5 million and are associated with the value of certain trade name intangibles and in process research and development ("IPR&D").

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

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If multiple valuation methodologies are used, the results are weighted appropriately.

Our annual impairment test of goodwill and trade name noted no impairment as of October 1, 2024, and we have not identified any other indicators of impairment through March 31, 2025.

Our annual impairment test of goodwill, IPR&D and trade name noted no impairment as of October 1, 2024, and we have not identified any other indicators of impairment through June 30, 2025.

Recent Accounting Standards

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Results of Operations

Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024

Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024

Imaging Center Segment

We have developed our medical imaging centers segment through a combination of organic growth, acquisitions and joint venture formations.

In the discussion below same center metrics are based on imaging centers that were in operation throughout the period of January 1, 2025 through March 31, 2025.

Excluded amounts relate to imaging centers that were acquired or divested between January 1, 2025 through March 31, 2025.

In the discussion below same center metrics are based on imaging centers that were in operation throughout the period of April 1, 2024 through June 30, 2025.

Excluded amounts relate to imaging centers that were acquired or divested between April 1, 2024 through June 30, 2025.

Total Revenue

In Thousands Three Months Ended March 31,

In Thousands Three Months Ended June 30,

Revenue 2025 2024 $ Increase % Change

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Excluded $19,710 $5,264 — —

Same-center revenue increased 1.2% compared to the first quarter of 2024, primarily due to higher average fees per imaging procedure of approximately 2.2%, partially offset by a 0.9% decrease in procedure volume.

Routine imaging volume declined by 2.2%, driven by severe winter weather in our East Coast and Texas markets and fires in Southern California, which disrupted healthcare utilization.

Advanced modality imaging, which carries higher average fees, increased 3.0% and was less impacted by these events.

The higher contribution of advanced procedures helped offset the overall volume decline and contributed to the year-over-year revenue growth.

The procedural volume metrics presented herein reflect only those from consolidated centers.

These figures may differ from total procedural volumes discussed in other contexts, which may include volumes from non-consolidated joint ventures.

Our 4.4% increase in same center revenue over the same period last year was driven by increases in fees charged per imaging procedure and same center total procedure volume growth of 2.2%, inclusive of rises in routine and advanced modality imaging procedures of 0.8% and 6.2%, respectively.

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

Within advanced imaging, MRI increased by 6.5%, CT by 5.6%, and PET/CT by 17.6% on a same-store basis.

The Enhanced Breast Cancer Detection program, an AI-powered diagnostic solution, also contributed to revenue growth.

Including non-consolidated joint ventures where we are a minority owner, same center total procedure volume increased approximately 2.7%, inclusive of rises in routine and advanced modality imaging procedures of 1.4% and 6.6%, respectively.

We provide this additional information to reflect trends across all centers we operate or manage, consistent with how management evaluates overall business performance.

Operating Expenses

Total operating expenses for the three months ended March 31, 2025 increased approximately $67.5 million, or 16.8%, to $470.2 million for the three months ended March 31, 2025 from $402.7 million for the three months ended March 31, 2024.

The following table breaks down our cost of operations and total operating expenses for the three months ended March 31, 2025 and 2024 (in thousands):

Total operating expenses for the three months ended June 30, 2025 increased approximately $33.3 million, or 8.2%, to $439.5 million for the three months ended June 30, 2025 from $406.2 million for the three months ended June 30, 2024.

The following table breaks down our cost of operations and total operating expenses for the three months ended June 30, 2025 and 2024 (in thousands):

Three Months Ended

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

The discussion below provides additional information and analysis on changes in our various operating expenses for the three months ended March 31, 2025 and 2024 (in thousands):

The discussion below provides additional information and analysis on changes in our various operating expenses for the three months ended June 30, 2025 and 2024 (in thousands):

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

In Thousands Three Months Ended March 31,

In Thousands Three Months Ended June 30,

Salaries and Professional Fees 2025 2024 $ Increase/(Decrease) % Change

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In response to higher procedure volumes, we increased staffing levels across clinical, administrative, and technical functions to support the influx of patients.

This included permanent headcount growth as well as a significant number of temporary hires to keep our centers operating smoothly during the first quarter of 2025.

Compensation-related expenses were further impacted by increased 401K match contributions and more vacation and PTO taken during the period.

Compensation-related expenses were further impacted by increased 401K match contributions and more vacation and paid time off taken during the period.

We also continued to experience wage inflation across the board, driven by a competitive labor market and the October 2024 increase in California’s minimum wage for healthcare workers.

Additionally, higher workers’ compensation insurance premiums contributed to the overall rise in staffing costs.

Overall, the increase in compensation expenses remained generally in line with our same center revenue growth.

Stock-based compensation

Stock-based compensation for the three months ended March 31, 2025 increased approximately $14.2 million, or 127.9%, to $25.2 million from $11.1 million for the three months ended March 31, 2024.

Stock-based compensation for the three months ended June 30, 2025 increased approximately $1.7 million, or 40.1%, to $6.1 million from $4.3 million for the three months ended June 30, 2024.

The increase is primarily due to a greater number of shares granted and higher grant-date fair values compared to prior-year period.

Building and equipment rental

In Thousands Three Months Ended March 31,

In Thousands Three Months Ended June 30,

Building & Equipment Rental 2025 2024 $ Increase/(Decrease) % Change

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Excluded $2,024 $1,085 — —

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

Building and equipment rental expense on a same-center basis increased slightly, primarily due to higher rent and common area maintenance charges.

Medical supplies

In Thousands Three Months Ended March 31,

In Thousands Three Months Ended June 30,

Medical Supplies Expense 2025 2024 $ Increase/(Decrease) % Change

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In addition, price increases for these tracers further elevated medical supplies expense compared to the prior year.

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 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.

Other operating expenses

In Thousands Three Months Ended March 31,

In Thousands Three Months Ended June 30,

Other Operating Expenses 2025 2024 $ Increase/(Decrease) % Change

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Excluded $3,876 $1,019 — —

Other operating expenses increased primarily due to a $4.2 million rise in outside services and a $3.0 million increase in software license costs.

The increase in outside services was driven by expanded contact center support related to acquisitions and rising patient demand, as well as higher legal and consulting costs tied to transaction activities and operational initiatives.

The increase in software license costs reflects greater adoption of advanced medical AI technologies, cloud-based platforms, and performance optimization tools designed to improve clinical workflows and operational efficiency.

These initiatives represent upfront investments to support ongoing technology-driven enhancements across the organization.

Other operating expenses increased primarily due to a $5.4 million rise in outside services.

This increase was driven by expanded contact center support related to acquisitions and growing patient demand, as well as higher legal and consulting costs associated with transaction activities and operational initiatives.

The remaining increase was attributable to other operating expense categories.

The investments reflect our continued focus on technology-driven enhancements aimed at supporting long-term operational efficiency across the organization.

Additional segment operating and non-operating expenses

In Thousands Three Months Ended March 31,

In Thousands Three Months Ended June 30,

2025 2024 $ Increase/(Decrease) % Change

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

Other income for the three months ended March 31, 2025 included $7.7 million of money market interest income, an increase of approximately $3.3 million, or 74.3%, compared to $4.4 million for the same period in 2024.

The increase was primarily due to a higher average cash balance in our money market account.

In Thousands Three Months Ended March 31,

Other income for the three months ended June 30, 2025 included $7.8 million of money market interest income.

Other income for the three months ended June 30, 2024 included money market interest income of $8.7 million and other income of $0.2 million, substantially offset by debt extinguishment and restructuring charges of $8.8 million, which related to refinancing of our credit facilities with Barclays Bank Plc ("Barclays").

In Thousands Three Months Ended June 30,

2025 2024 $ Increase/(Decrease) % Change

Interest income (7,768) (8,673) $905 (10.4)%

Other non-operating losses (income) 0 (5) $5 (100.0)%

Debt restructuring and extinguishment expenses 0 8,586 $(8,586) (100.0)%

Total other income $(7,768) $(87) $(7,681) 8828.7%

Interest expense

In Thousands Three Months Ended March 31,

In Thousands Three Months Ended June 30,

Interest expense 2025 2024 $ Increase/(Decrease) % Change

Total interest expense $ 17,189 $ 26,082 $(8,893) (34.1) %

Interest expense related to derivatives* (1,018) (2,435)

Interest related to derivatives* (1,040) 4,837

Interest expense related to amortization** 743 793

Adjusted interest expense*** 17,486 20,009 (2,523) (12.6) %

*Includes payments from four forward interest rate agreements entered into in 2019 ("2019 Swaps")

*Includes payments from 2019 Swaps (as defined in the notes to our condensed consolidated financial statements) and Swaps amortization

**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 decrease in interest expense was primarily due to the repricing transaction of our Barclays credit facility in the fourth quarter of 2024, which resulted in lower interest rates compared to the same period in the prior year.

This benefit was partially offset by the refinancing transaction of our Barclays credit facility in the second quarter of 2024, which added $196.3 million in additional term loan debt to the facility.

During the three months ended March 31, 2025, interest rates were above the arranged rates in our 2019 Swaps for most of the year, and we received payment of $2.4 million in cash payments from our 2019 Swaps counterparties, which was reported as a component of interest expense.

See the Derivative Instruments section of Note 2, Significant Accounting Policies,

in the notes accompanying in our Annual Report and Part 1, Item 3 — "Quantitative and Qualitative Disclosure About Market Risk" below for more details on our derivative transactions.

The decrease in interest expense was primarily due to the repricing transaction of our Barclays Revolving Credit Facility (as defined in the notes to our condensed consolidated financial statements) in the fourth quarter of 2024, which resulted in lower interest rates compared to the same period in the prior year.

This benefit was partially offset by the $100.0 million of incremental term loan borrowings under our existing Barclays Revolving Credit Facility in the second quarter

See Note 6 Credit Facilities and Notes Payable included in the notes to our condensed consolidated financial statements.

During the three months ended June 30, 2025, interest rates were above the arranged rates in our 2019 Swaps for most of the year, and we received payment of $2.4 million in cash payments from our 2019 Swaps counterparties, which was reported as a component of interest expense.

See the Derivative Instruments section of Note 2, Significant Accounting Policies, in the notes accompanying in our Annual Report and Part 1, Item 3 — "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.

In 2020, we determined that the cash flows from the 2019 Swaps did not match the cash flows of our Barclays Term Loan (as defined in the notes to our condensed consolidated financial statements) and were therefore ineffective as cash flow hedges.

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

The fair value of the 2019 Swaps at March 31, 2025 was a net asset of $5.0 million compared to a net asset of $7.1 million at December 31, 2024, resulting in a loss of $2.1 million during the three months ended March 31, 2025.

The fair value of the 2019 Swaps at June 30, 2025 was a net asset of $3.1 million compared to a net asset of $5.0 million at March 31, 2025, resulting in a loss of $2.0 million during the three months ended June 30, 2025.

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 three months ended March 31, 2025 and 2024, we recognized equity in earnings from unconsolidated joint ventures in the amount of $2.6 million and $4.3 million, respectively, a decrease of $1.7 million or 39.9%, respectively.

The decrease was mainly due to the decrease in earnings from Santa Monica Imaging Group, LLC and Arizona Diagnostic Radiology Group compared to the three months ended March 31, 2024.

For the three months ended June 30, 2025 and 2024, we recognized equity in earnings from unconsolidated joint ventures in the amount of $4.4 million and $3.4 million, respectively, an increase of $1.0 million or 28.5%, respectively.

The decrease was mainly due to the increase in earnings from Santa Monica Imaging Group, LLC and Arizona Diagnostic Radiology Group compared to the three months ended June 30, 2024.

Net income attributable to noncontrolling interests

At March 31, 2025, our consolidated subsidiaries operated 401 imaging centers of which 154 were not wholly-owned and thus a portion of their operating results were attributable to noncontrolling interests.

At March 31, 2024, our consolidated subsidiaries included 323 centers of which 83 were not wholly-owned.

For the three months ended March 31, 2025, we recognized net income attributable to noncontrolling interests of $8.2 million versus $8.2 million for the three months ended March 31, 2024.

A decrease in earnings from Los Angeles Imaging Group, LLC and West Valley Imaging was substantially offset by increased earnings from The New Jersey Imaging Network, LLC and The HLH Imaging Group Limited.

At June 30, 2025, our consolidated subsidiaries operated 353 imaging centers of which 103 were not wholly-owned and thus a portion of their operating results were attributable to noncontrolling interests.

At June 30, 2024, our consolidated subsidiaries included 344 centers of which 95 were not wholly-owned.

For the three months ended June 30, 2025, we recognized net income attributable to noncontrolling interests of $8.6 million versus $9.9 million for the three months ended June 30, 2024.

A decrease in earnings from Beach Imaging Group, LLC and The New Jersey Imaging Network, LLC was partially offset by increased earnings from Ventura County Imaging Group, LLC.

As noncontrolling interests only represent a portion of our imaging center business, and excludes our Digital Health segment, which generated losses of $7.1 million for the three months ended June 30, 2024, we do not expect changes in net income attributable to noncontrolling interests to correlate with changes in consolidated operating income or pretax income.

Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024

In the discussion below, same center metrics are based on imaging centers that were in operation throughout the period of January 1, 2024 through June 30, 2025.

Excluded amounts relate to imaging centers that were acquired or divested between January 1, 2024 through June 30, 2025.

Total Revenue

In Thousands Six Months Ended June 30,

Revenue 2025 2024 $ Increase % Change

Total $929,682 $860,925 $68,757 8.0%

Same Center $895,046 $851,339 $43,707 5.1%

Excluded $34,636 $9,586 — —

Our 5.1% increase in same center revenue over the same period last year was driven by increases in fees charged per imaging procedure and same center total procedure volume growth of 0.5% inclusive of rises in advanced modality imaging

procedures of 4.53%, partially offset by a 0.9% decrease in routine modality imaging.

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

Within advanced imaging, MR increased by 4.5%, CT by 4.0%, and PET/CT by 13.3% on a same-store basis.

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

The Enhanced Breast Cancer Detection (EBCD) program, an AI-powered diagnostic solution, also contributed to revenue growth.

Including non-consolidated joint ventures in which we hold a minority interest, same-center total procedure volume increased approximately 1.1%, reflecting a slight decline of 0.2% in routine imaging procedures and a 4.9% increase in advanced modality imaging procedures.

We provide this information to present trends across all centers we operate or manage, consistent with how management evaluates overall business performance.

Operating Expenses

Total operating expenses for the six months ended June 30, 2025 increased approximately $100.8 million, or 12.5%, to $909.7 million for the six months ended June 30, 2025 from $808.8 million for the six months ended June 30, 2024.

The following table breaks down our cost of operations and total operating expenses for the six months ended June 30, 2025 and 2024 (in thousands):

Six Months Ended June 30,

Salaries and professional reading fees, excluding stock-based compensation $ 528,839 $ 488,065

Stock-based compensation 31,319 15,418

Building and equipment rental 62,930 58,722

Medical supplies 60,922 48,478

Lease abandonment charges 5,511 —

Other operating expenses *

151,456 135,064

Cost of operations 840,977 745,747

Depreciation and amortization 65,480 62,063

Loss on sale and disposal of equipment 2,211 586

Severance costs 1,005 450

Total operating expenses $ 909,673 $ 808,846

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

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

In Thousands Six Months Ended June 30,

Salaries and Professional Fees 2025 2024 $ Increase/(Decrease) % Change

Total $528,839 $488,065 $40,774 8.4%

Same Center $513,978 $484,083 $29,895 6.2%

Excluded $14,861 $3,982 — —

In response to higher procedure volumes, we increased staffing levels across clinical, administrative, and technical functions to support the influx of patients.

This included permanent headcount growth as well as a significant number of temporary hires to keep our centers operating smoothly during the first quarter of 2025.

Compensation-related expenses were further impacted by increased 401K match contributions and more vacation and paid time off taken during the period.

We also continued to experience wage inflation across the board, driven by a competitive labor market and the October 2024 increase in California’s minimum wage for healthcare workers.

Additionally, higher workers’ compensation insurance premiums contributed to the overall rise in staffing costs.

Stock-based compensation

Stock-based compensation for the six months ended June 30, 2025 increased approximately $15.9 million, or 103.1%, to $31.3 million from $15.4 million for the six months ended June 30, 2024.

The increase is primarily due to a greater number of shares granted and higher grant-date fair values compared to prior-year period.

Building and equipment rental

In Thousands Six Months Ended June 30,

Building & Equipment Rental 2025 2024 $ Increase/(Decrease) % Change

Total $62,930 $58,722 $4,208 7.2%

Same Center $59,287 $56,582 $2,705 4.8%

Excluded $3,643 $2,140 — —

Building and equipment rental expense on a same-center basis increased slightly, primarily due to higher rent and common area maintenance charges.

Medical supplies

In Thousands Six Months Ended June 30,

Medical Supplies Expense 2025 2024 $ Increase/(Decrease) % Change

Total $60,922 $48,478 $12,444 25.7%

Same Center $57,730 $48,211 $9,519 19.7%

Excluded $3,192 $267 — —

Consistent with the shift in our procedural mix toward more advanced imaging, medical supplies expense increased at a higher rate than revenue growth.

The growth in PET/CT procedures, particularly for prostate cancer and suspected Alzheimer’s studies, drove higher utilization of high-cost isotope tracers, contributing to the increase.

In addition, price increases for these tracers further elevated medical supplies expense compared to the prior year.

Lease abandonment charges

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 six months ended June 30, 2025, we closed several imaging centers with lower utilization and recognized lease abandonment charges of approximately $5.5 million in our Imaging Center segment.

Of these amounts, $4.8 million were related to right-of-use assets impairment and $0.7 million were related to the write-off of leasehold improvements for the six months ended June 30, 2025.

Other operating expenses

In Thousands Six Months Ended June 30,

Other Operating Expenses 2025 2024 $ Increase/(Decrease) % Change

Total $151,456 $135,064 $16,392 12.1%

Same Center $144,169 $133,157 $11,012 8.3%

Excluded Sites $7,287 $1,907 — —

Other operating expenses increased primarily due to a $9.8 million rise in outside services.

The remaining increase was attributable to other operating expense categories.

The investments reflect our continued focus on technology-driven enhancements aimed at supporting long-term operational efficiency across the organization.

Additional segment operating and non-operating expenses:

In Thousands Six Months Ended June 30,

2025 2024 $ Increase/(Decrease) % Change

Depreciation and amortization $65,480 $62,063 $3,417 5.5%

Loss on disposal of equipment and other $2,211 $586 $1,625 277.3%

Non-cash change in fair value of interest rate hedge $4,062 $674 $3,388 502.7%

Other income $(15,484) $(4,520) $(10,964) 242.6%

Severance $1,005 $450 $555 123.3%

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

The fair value of the 2019 Swaps at June 30, 2025 was a net asset of $3.1 million compared to a net asset of $7.1 million at December 31, 2024, resulting in a loss of $4.1 million during the six months ended June 30, 2025.

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

Other income for the six months ended June 30, 2025, included money market interest income of $15.5 million.

Other income for the six months ended June 30, 2024 included money market interest income of $13.1 million, partially offset by debt extinguishment and restructuring charges of $8.8 million, which related to refinancing of our credit facilities with Barclays.

See Note 6 Credit Facilities and Notes Payable included in the notes to our condensed consolidated financial statements.

In Thousands Six Months Ended June 30,

2025 2024 $ Increase/(Decrease) % Change

Interest income (15,484) (13,101) $(2,383) 18.2%

Debt restructuring and extinguishment expenses 0 8,581 $(8,581) (100.0)%

Total other income $(15,484) $(4,520) $(10,964) 242.6%

Interest income for the six months ended June 30, 2025 increased approximately $2.4 million, or 18.2%, to $15.5 million from $13.1 million for the six months ended June 30, 2025.

The increase is primarily due to higher average cash balance in our money market account for the six months ended June 30, 2025

Interest expense

In Thousands Six Months Ended June 30,

Interest Expense 2025 2024 $ Increase/(Decrease) % Change

Total Interest Expense $ 34,428 $ 42,349 $(7,921) (18.7) %

Interest expense related to derivatives* (2,058) 2,844

Interest expense related to amortization** 1,471 1,541

Adjusted Interest Expense*** 35,015 37,964 (2,949) (7.8) %

*Includes payments from 2019 Swaps and Swaps amortization

**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 due to the general increase in term loan debt as a result of refinancing of our Barclays Revolving Credit Facility, partially offset by lower interest rates compared to the same period in the prior year.

During the six months ended June 30, 2025, interest rates were above the arranged rates in our 2019 Swaps for most of the year and we received payment of $4.8 million in cash payments from our 2019 swap counterparties, which was reported as a component of interest expense.

See the Derivative Instruments section of Note 2, Significant Accounting Policies, in the notes accompanying in our annual report on Form 10-K for the fiscal year ended December 31, 2024 and Part 1, Item 3 — "Quantitative and Qualitative Disclosure About Market Risk" below for more details on our derivative transactions.

Equity in earnings from unconsolidated joint ventures

For the six months ended June 30, 2025 we recognized equity in earnings from unconsolidated joint ventures in the amount of $7.0 million compared to $7.7 million for the prior period, an decrease of $0.8 million or 9.8%.

The decrease was mainly due to the decrease in earnings from Santa Monica Imaging Group, LLC and St.

Joseph Medical Center, LLC compared to the six months ended June 30, 2024.

Net income attributable to noncontrolling interests

At June 30, 2024, our consolidated subsidiaries included 344 centers of which 95 were not wholly-owned.

For the six months ended June 30, 2025, we recognized net income attributable to noncontrolling interests of $16.8 million versus $18.1 million for the six months ended June 30, 2024, an decrease of $1.2 million.

A decrease in earnings from Beach Imaging Group, LLC and The New Jersey Imaging Network, LLC was partially offset by increased earnings from Ventura County Imaging Group, LLC and Advanced Radiology at Capital Region, LLC.

As noncontrolling interests only represent a portion of our imaging center business, and excludes our Digital Health segment which generated losses of $13.2 million for the six months ended June 30, 2025, we do not expect changes in net income attributable to noncontrolling interests to correlate with changes in consolidated operating income or pretax income.

Digital Health Segment

The breakdown of revenue and expenses of the segment for the three months ended March 31, 2025 and 2024 are as follows:

In Thousands Three Months Ended March 31,

2025 2024 $ Change % Change

The breakdown of revenue and expenses of the Digital Health segment for the three and six months ended June 30, 2025 and 2024 are as follows:

In Thousands Three Months Ended June 30, Six Months Ended June 30,

2025 2024 $ Change % Change 2025 2024 $ Change % Change

Statement of Operations

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Revenues for the Digital Health segment increased compared to the prior year period, primarily due to growth in our AI and informatics product lines.

AI-related revenue increased by approximately 33%, driven by continued growth in our clinical AI products and expanded use of the Enhanced Breast Cancer Detection solution, including direct-to-consumer offerings.

For the six months ended June 30, 2025, AI-related revenue increased by approximately 27%, driven by continued growth across key clinical AI products, including a 27% increase in Lung, 19% in Prostate/Neuro, and 22% in Breast.

The increase in Breast was partially driven by the ongoing commercialization of our Enhanced Breast Cancer Detection (EBCD) program.

Informatics revenue increased by approximately 33%, primarily due to increased volume on our eRad PICS platform.

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We expect the Digital Health segment to continue operating at a net loss in the near term as we expand these capabilities and scale adoption of our platforms.

In June 2025, we closed the acquisition of See-Mode Technologies, an AI company focused on ultrasound imaging solutions.

Subsequent to June 30, 2025 quarter-end, on July 17, 2025, we also closed the acquisition of iCAD, Inc., a provider of AI solutions for breast cancer detection.

We are currently in the process of integrating both companies into our Digital Health segment.

Non-GAAP Financial Measures

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

We use both U.S.

generally accepted accounting principles ("GAAP") and non-GAAP metrics to measure our financial results.

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

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We define Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, as adjusted to exclude income taxes, interest expense, severance costs, depreciation and amortization, non-cash employee stock-based compensation, loss on sale and disposal of equipment and other, non-cash change in fair value of interest rate hedge, other income, non-capitalized research and development expenses related to DeepHealth Cloud OS and Generative AI, lease abandonment charges, and acquisition transaction costs.

Adjusted EBITDA includes equity earnings in unconsolidated operations and

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

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

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

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

The following is a reconciliation of the nearest comparable GAAP financial measure, net income, to Adjusted EBITDA for the three months ended March 31, 2025 and 2024, respectively.

Three Months Ended March 31,

Net loss attributable to RadNet, Inc.

The following is a reconciliation of the nearest comparable GAAP financial measure, net income, to Adjusted EBITDA for the three and six months ended June 30, 2025 and 2024, respectively.

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Net income (loss) attributable to RadNet, Inc.

common stockholders $ 14,454 $ (2,982) $ (23,472) $ (5,761)

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Adjusted EBITDA - Digital Health Segment $ 3,403 $ 3,269 $ 7,114 $ 6,789

The following table is a reconciliation of GAAP net income for our Digital Health Segment to Adjusted EBITDA for the three months ended March 31, 2025 and 2024, respectively.

Three Months Ended March 31,

The following table is a reconciliation of GAAP net income for our Digital Health segment to Adjusted EBITDA for the three months ended June 30, 2025 and 2024, respectively.

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Segment net loss $ (4,871) $ (4,346) $ (10,258) $ (8,032)

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Depreciation & Amortization 3,053 2,386 5,997 4,780

Other operating loss (income) 3 (2)

Other operating (income) loss (88) 3 (85) 1

Other expense 4 949 8 2,448

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

The following table summarizes key balance sheet data related to our liquidity 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):

The following table summarizes key balance sheet data related to our liquidity as of June 30, 2025 and December 31, 2024 and income statement data for the six months ended June 30, 2025 and 2024 (in thousands):

Balance Sheet Data:

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Cash and cash equivalents $ 833,152 $ 740,020

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Stockholders' equity 1,179,261 1,133,410

Income statement data for the three months ended March 31,

Income statement data for the six months ended June 30,

Total net revenue $ 969,629 $ 891,421

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Sources and Uses of Cash

The following table summarizes key components of our sources and uses of cash for the three months ended March 31, 2025 and 2024 (in thousands):

Cash Flow Data March 31, 2025 March 31, 2024

The following table summarizes key components of our sources and uses of cash for the six months ended June 30, 2025 and 2024 (in thousands):

Cash Flow Data June 30, 2025 June 30, 2024

Cash provided by (used in) operating activities $ 161,829 $ 133,090

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Cash provided by (used in) financing activities 84,918 404,404

Cash provided by operating activities for the three months ended March 31, 2025 decreased by $24.4 million compared to March 31, 2024 primarily driven by a $31.2 million change in assets and liabilities, primarily due to the timing of payments for accounts payable and accrued expenses.

Cash used in investing activities for the three months ended March 31, 2025 decreased $4.2 million compared to the three months ended March 31, 2024.

The decrease was primarily due to a $8.6 million reduction in capital expenditures for property and equipment, partially offset by a $4.1 million increase in equity contributions to and purchases of interests in joint ventures, and a $0.3 million increase in purchases of imaging centers.

Cash used in financing activities for the three months ended March 31, 2025 increased $235.8 million compared to the three months ended March 31, 2024, and mainly represented payments on notes and term loan debt.

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.

As a result, cash used in financing activities was significantly lower in 2025 compared to 2024.

Cash provided by operating activities for the six months ended June 30, 2025 increased by $28.7 million compared to June 30, 2024 primarily driven by a $16.0 million change in assets and liabilities, primarily due to the timing of payments for accounts payable and accrued expenses.

Cash used in investing activities for the three months ended June 30, 2025 increased $15.9 million compared to the six months ended June 30, 2024.

The increase was primarily due to a $19.1 million increase in equity contributions to and purchases of interests in joint ventures, partially offset by a $2.3 million reduction in capital expenditures for property and equipment.

Cash provided financing activities for the six months ended June 30, 2025 decreased $319.5 million compared to the three months ended March 31, 2024.

Financing activity in 2024 included a public equity offering that generated $218.4 million in net proceeds and a refinancing of the Barclays Revolving Credit Facility that resulted in an additional $167.9 million of cash.

In 2025, financing activity primarily consisted of a $100.0 million incremental term loan under the Barclays Credit Agreement.

Secured Credit Facilities

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

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.

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

On June 11, 2025, we entered into Incremental Amendment No.

2 to the Barclays Credit Agreement, pursuant to which Barclays, as lender, provided an additional $100.0 million of incremental term loan borrowings under our existing senior secured term loan facility, all other terms remained the same.

$1.0 million recognized as discount and deferred finance cost.

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

Pursuant to the Second Amendment, we are required to make quarterly principal payments of approximately $2.4 million, compared to $2.2 million prior to the amendment.

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%.

On April 18, 2024, we refinanced our Barclays Revolving 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.

Our condensed consolidated balance sheets at March 31, 2025 include $1,000.6 million of total term loan debt (exclusive of unamortized discounts of $13.1 million) in thousands:

Our condensed consolidated balance sheets at June 30, 2025 include $1,095.4 million of total term loan debt (exclusive of unamortized discounts of $13.5 million) in thousands:

Face Value Discount Total Carrying

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Total Term Loans $ 1,095,373 $ (13,473) $ 1,081,900

At March 31, 2025, we had no borrowings under our Barclays or Truist revolving credit facilities.

At June 30, 2025, we had no borrowings under our Barclays or Truist revolving credit facilities.

After reserves for outstanding letters of credit of $7.4 million, we had $274.6 million available for borrowing under our Barclays Revolving Credit Facility and $50.0 million available under our Truist revolving credit facility.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis