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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended
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Dec. 31, 2022
Accounting Policies [Abstract] |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION – The operating activities of subsidiaries are included in the accompanying consolidated financial statements (“financial statements”) from the date of acquisition. Investments in companies in which we have the ability to exercise significant influence, but not control, are accounted for by the equity method. All intercompany transactions and balances, with our consolidated entities and the unsettled amount of intercompany transactions with our equity method investees, have been eliminated in consolidation. As stated in Note 1 above, the Group consists of VIEs and we consolidate the operating activities and balance sheets of each. Additionally, we determined that our unconsolidated joint venture, ScriptSender, LLC, is also a VIE as it is dependent on our operational funding but we are not a primary beneficiary since RadNet does not have the power to direct the activities of the entity that most significantly impact the entity’s economic performance. USE OF ESTIMATES - The financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP), which requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates and assumptions affect various matters, including our reported amounts of assets and liabilities in our consolidated balance sheets at the dates of the financial statements; our disclosure of contingent assets and liabilities at the dates of the financial statements; and our reported amounts of revenues and expenses in our consolidated statements of operations during the reporting periods. These estimates involve judgments with respect to numerous factors that are difficult to predict and are beyond management’s control. As a result, actual amounts could materially differ from these estimates. 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 transaction prices for the services provided are dependent upon the terms provided by Medicare and Medicaid, or negotiated with managed care health plans and commercial insurance companies. The payment arrangements with third-party payors for the services we provide to the related patients typically specify payments at amounts less than our standard charges and generally provide for payments based upon predetermined rates per diagnostic services or discounted fee-for-service rates. Management continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations and the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals. As it relates to the Group, this service fee revenue includes payments for both the professional medical interpretation revenue recognized by them as well as the payment for all other aspects related to our providing the imaging services, for which we earn management fees. As it relates to other centers, this service fee revenue is earned through providing the use of our diagnostic imaging equipment and the provision of technical services as well as providing administration services such as clerical and administrative personnel, bookkeeping and accounting services, billing and collection, provision of medical and office supplies, secretarial, reception and transcription services, maintenance of medical records, and advertising, marketing and promotional activities. Our revenues are based upon the estimated amounts we expect to be entitled to receive from patients and third-party payors. Estimates of contractual allowances under managed care and commercial insurance plans are based upon the payment terms specified in the related contractual agreements. Revenues related to uninsured patients and copayment and deductible amounts for patients who have health care coverage may have discounts applied (uninsured discounts and contractual discounts). 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 service fee revenues for the years ended December 31, 2022, 2021, and 2020 are presented in the table below. Our imaging center revenue is displayed as the estimated service fee, broken down by classification of insurance coverage type. Additional revenues are earned from our management services provided to joint ventures and our software and AI subsidiaries.
In Thousands | 2022 |  | 2021 |  | 2020
Commercial insurance | $ | 785,128 |  |  | $ | 743,462 |  |  | $ | 584,035 |
Medicare | 311,124 |  |  | 280,911 |  |  | 217,928 |
Medicaid | 38,279 |  |  | 34,731 |  |  | 25,619 |
Workers' compensation/personal injury | 51,339 |  |  | 44,235 |  |  | 33,478 |
Other patient revenue | 31,849 |  |  | 19,398 |  |  | 25,314 |
Management fee revenue | 22,235 |  |  | 19,630 |  |  | 11,253 |
Software and teleradiology | 14,238 |  |  | 10,525 |  |  | 10,798 |
Other | 19,428 |  |  | 12,436 |  |  | 23,297 |
Revenue under capitation arrangements | 152,045 |  |  | 148,334 |  |  | 140,118 |
Imaging center segment revenue | 1,425,665 |  |  | 1,313,662 |  |  | 1,071,840 |
AI segment revenue | 4,396 |  |  | 1,415 |  |  | — |
Total revenue | $ | 1,430,061 |  |  | $ | 1,315,077 |  |  | $ | 1,071,840 |
GOVERNMENT ASSISTANCE: COVID-19 PANDEMIC AND CARES ACT FUNDING - On March 11, 2020 the World Health Organization (WHO) designated COVID-19 as a global pandemic. To aid businesses and stimulate the national economy, Congress passed The Coronavirus Aid, Relief, and Economic Security ("CARES") Act, which was signed in to law on March 27, 2020. Beginning in the second quarter of 2020 and through the twelve months ended December 31, 2021, we received funding from the various programs established by the CARES Act as follows: •$39.6 million total of accelerated Medicare payments received, $39.5 million for the twelve months ended December 31, 2020 and $0.1 million for the twelve months ended December 31, 2021. •$4.0 million from the Paycheck Protection Program during the twelve months ended December 31, 2020. •$35.4 million total Provider Relief Funding, $26.3 million received for the twelve months ended December 31, 2020 and $9.1 million received for the twelve months ended December 31, 2021. The accelerated Medicare payments were recorded to deferred revenue in our consolidated balance sheet and are being applied to revenue as services are performed beginning in 2021. Based on terms released on October 1, 2020, through the Continuing Appropriations Act, 2021 and Other Extensions Act, such accelerated payments are interest free for inpatient acute care hospitals for 29 months (seven months for medical groups), and the program currently requires CMS to recoup the payments beginning one year after receipt by the provider, by withholding future Medicare fee-for-service payments for claims at a rate of 25% for the first 11 months, and 50% for the 6 months afterward, until the full accelerated payment has been recouped. The program currently requires any outstanding balance remaining after 29 months to be repaid by the provider or be subject to an interest rate currently set at 4%. We applied the accelerated Medicare payments to revenue in the amount of $8.4 million for the twelve months ended December 31, 2022 and $30.2 million for the twelve months ended December 31, 2021. As of December 31, 2022, approximately $1.0 million of Medicare payments received remain in deferred revenue. The $4.0 million secured from the Paycheck Protection Program was accounted for as debt and in December 2020 we met the eligibility requirements under the government guidelines for forgiveness and the loans were written off to gain on extinguishment of debt. The Provider Relief Funding is displayed as such on our consolidated statements of operations in the year received. The CARES Act also provides for the deferral of the employer-paid portion of the social security payroll tax with 50% due by December 31, 2021 and 50% due by December 31,2022. We elected to defer $16.3 million of this tax through December 31, 2020 which has been paid as of December 31, 2022. The CARES Act also provided a refundable employer tax credit ("ERC") equal to 50% of qualified wages, including certain health insurance costs, that can be used to offset payroll tax liabilities. In the year ending December 31, 2021, we recognized an employee retention credit as a reduction to cost of operations totaling of $7.7 million. 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 $15.4 million and $17.7 million at December 31, 2022 and December 31, 2021, respectively. We do not utilize factoring arrangements as an integral part of our financing for working capital. ACCOUNTS PAYABLE AND ACCRUED EXPENSES - Accounts payable and accrued expenses were comprised of the following (in thousands):
| December 31,
| 2022 |  | 2021
Accounts payable | $ | 102,678 |  |  | $ | 86,461 |
Accrued expenses | 181,574 |  |  | 93,420 |
Accrued salary and benefits | 62,072 |  |  | 62,425 |
Accrued professional fees | 23,271 |  |  | 21,631 |
Total | $ | 369,595 |  |  | $ | 263,937 |
SOFTWARE REVENUE RECOGNITION – We have developed and sell Picture Archiving Communications Systems (“PACS”) and related services. The PACS sales are made primarily through our sales force and generally include hardware, software, installation, training and first-year warranty support. Hardware which is not unique or special purpose, is purchased from a third-party and resold to customers with a small mark-up. We have determined that our core software products, such as PACS, are essential to most of our arrangements as hardware, software and related services are sold as an integrated package. Revenue is recognized when a performance obligation is satisfied by transferring a promised good or service to a customer. For the years ended December 31, 2022, 2021 and 2020, we recorded approximately $13.2 million, $10.5 million, and $8.6 million, respectively, in revenue related to our software business which is included in net service fee revenue in our consolidated statement of operations. At December 31, 2022 we had deferred revenue of approximately $0.9 million associated with these sales which we expect to recognize into revenue over the next 12 months. SOFTWARE DEVELOPMENT COSTS – When we develop our own software and artificial intelligence solutions we capitalize and amortize those costs over their useful life. Costs related to the research and development of new software products and enhancements to existing software intended for resale to our customers are expensed as incurred. CONCENTRATION OF CREDIT RISKS – Financial instruments that potentially subject us to credit risk are primarily cash equivalents and accounts receivable. We have placed our cash and cash equivalents with one major financial institution. At times, the cash in the financial institution is temporarily in excess of the amount insured by the Federal Deposit Insurance Corporation, or FDIC. 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. We continuously monitor collections and maintain an allowance for bad debts based upon our historical collection experience. In addition, we have notes receivable stemming from our factoring of accounts receivable as stated above. Companies with which we factor our receivables are well known established buyers of such instruments, have agreed to assume the full risk of their collection. CASH AND CASH EQUIVALENTS – We consider all highly liquid investments that mature in three months or less when purchased to be cash equivalents. The carrying amount of cash and cash equivalents approximates the fair market value. DEFERRED FINANCING COSTS – Costs of financing are deferred and amortized using the effective interest rate method. Deferred financing costs are related to our revolving credit facilities. Deferred financing costs, net of accumulated amortization, were $2.3 million and $2.1 million for the twelve months ended at December 31, 2022 and 2021, respectively. See Note 8, Credit Facilities and Notes Payable for more information on our revolving lines of credit. PROPERTY AND EQUIPMENT – Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization of property and equipment are provided using the straight-line method over the estimated useful lives, 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. BUSINESS COMBINATION – When the qualifications for business combination accounting treatment are met, it requires us to recognize separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values. 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 AND INDEFINITE LIVED INTANGIBLES – Goodwill totaled $677.7 million and $513.8 million at December 31, 2022 and December 31, 2021, respectively. Indefinite lived intangible assets at were $24.1 million at December 31, 2022 and $20.6 million at December 31, 2021 and are associated with the value of certain trade name intangibles and in process research and development (IPR&D). Goodwill, trade name intangibles and IPR&D are recorded as a result of business combinations. When we determine the carrying value of goodwill exceeds its fair value, an impairment charge would be recognized which should not exceed the total amount of goodwill allocated to that reporting unit. We determined fair values for each of the reporting units using the market approach, when available and appropriate, or the income approach, or a combination of both. We assess the valuation methodology based upon the relevance and availability of the data at the time we perform the valuation. If multiple valuation methodologies are used, the results are weighted appropriately. We tested goodwill, trade name and IPR&D for impairment on October 1, 2022. In 2020 we ceased employing certain indefinite lived trade names with a total value of $4.2 million and they were written off in full as of December 31, 2020. Our annual impairment test as of October 1, 2022 noted no other impairment, and we have not identified any indicators of impairment through December 31, 2022. LONG-LIVED ASSETS – We evaluate our long-lived assets (property and equipment) and intangibles, other than goodwill and indefinite lived intangible assets, for impairment when events or changes indicate the carrying amount of an asset may not be recoverable. Accounting standards requires that if the sum of the undiscounted expected future cash flows from a long-lived asset or definite-lived intangible is less than the carrying value of that asset, an asset impairment charge must be recognized. The amount of the impairment charge is calculated as the excess of the asset’s carrying value over its fair value, which generally represents the discounted future cash flows from that asset or in the case of assets we expect to sell, at fair value less costs to sell. At December 31, 2021 we recorded a write off charge of $7.1 million in leasehold improvements for facilities that we abandoned. See the Leases discussion below for more information. Other than this, we determined that there were no events or changes in circumstances that indicated our long-lived assets were impaired during any periods presented. 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. See Note 10, Income Taxes, for more information. 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 consolidated balance sheets. Finance leases are included in property and equipment, current finance lease liability, and long-term finance lease liability in our consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. 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, as permitted. For finance leases, interest expense on the lease liability is recognized using the effective interest method and amortization of the ROU asset is recognized on a straight-line basis over the shorter of the estimated useful life of the asset or the lease term. ROU assets are tested for impairment if circumstances suggest that the carrying amount may not be recoverable. No events have occurred such as fire, flood, or other acts which have impaired the integrity of our ROU assets as of December 31, 2022. 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. After a management review of post pandemic patient traffic to centers during the fourth quarter of 2021, it was noted that although overall volumes had returned to pre-pandemic levels, certain imaging locations did not experience the same levels of activity as beforehand. This was due in part to lower utilization rates of commercial space from telecommuting, accompanied by the migration of those workers out of congested urban centers to residential areas. Based on this analysis, management decided to consolidate volumes into fewer centers and reduce administrative office space in response to the demographic changes experienced. To complete the closure of these locations, we took a lease abandonment charge of approximately $12.6 million at December 31, 2021. UNINSURED RISKS – On November 1, 2013 we entered into a high-deductible workers’ compensation insurance policy. We have recorded liabilities of $3.9 million and $3.5 million at December 31, 2022 and December 31, 2021, respectively, for the estimated future cash obligations associated with the unpaid portion of the workers compensation claims incurred. We and our affiliated physicians carry an annual medical malpractice insurance policy that protects us for claims that are filed during the policy year and that fall within policy limits. The policy has a deductible which is $10,000 per incidence for all years covered by this report. In December 2008, in order to eliminate the exposure for claims not reported during the regular malpractice policy period, we purchased a medical malpractice claims made tail policy, which provides coverage for any claims reported in the event that our medical malpractice policy expires. As of December 31, 2022, this policy remains in effect. We have entered into an arrangement with Blue Shield to administer and process claims under a self-insured plan that provides health insurance coverage for our employees and dependents. We have recorded liabilities as of December 31, 2022 and 2021 of $7.4 million and $6.3 million, respectively, for the estimated future cash obligations associated with the unpaid portion of the medical and dental claims incurred by our participants. Additionally, we entered into an agreement with Blue Shield for a stop loss policy that provides coverage for any claims that exceed $250,000 up to a maximum of $1.0 million in order for us to limit our exposure for unusual or catastrophic claims. EMPLOYEE BENEFIT PLAN – We adopted a profit-sharing/savings plan pursuant to Section 401(k) of the Internal Revenue Code that covers substantially all non-professional employees. Eligible employees may contribute on a tax-deferred basis a percentage of compensation, up to the maximum allowable under tax law. Employee contributions vest immediately. We can elect to provide a matching contribution in the amount to a maximum of 1.0% per 4.0% of employee contribution, and have done so since 2017. We contributed $3.0 million in matching for each of the twelve months ended December 31, 2022 and December 31, 2021. For the year ended December 31, 2020, we elected not to provide a matching contribution. EQUITY BASED COMPENSATION – We have one long-term incentive plan that we adopted in 2006 and which we first amended and restated as of April 20, 2015, and again on March 9, 2017, and currently as of April 15, 2021 (the “Restated Plan”). The Restated Plan was approved by our stockholders at our annual stockholders meeting on June 10, 2021. We have reserved 16,500,000 shares of common stock for issuance under the Restated Plan which can be issued in the form of incentive and/or nonstatutory stock options, restricted and/or unrestricted stock, stock units, and stock appreciation rights. Terms and conditions of awards can be direct grants or based on achieving a performance metric and we also consider probability of achievement of performance conditions when determining expense recognition. For the awards where vesting is probable, equity-based compensation is recognized over the related vesting period. Stock options and warrants generally vest over three to five years and expire five to ten years from date of grant. 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 11, Stock-Based Compensation, for more information. FOREIGN CURRENCY TRANSLATION – For our operations in Canada, Europe and the United Kingdom, the functional currency of our foreign subsidiaries is the local currency. Assets and liabilities denominated in foreign currencies are translated using the exchange rate at the balance sheet dates. Revenues and expenses are translated using average exchange rates prevailing during the reporting period. Any translation adjustments resulting from this process are shown separately as a component of accumulated other comprehensive income (loss). Gains and losses related to the foreign currency portion of international transactions are included in the determination of net income. The following is a reconciliation of Foreign Currency Translation amounts for the years ended December 31, 2022, 2021 and 2020 is provided below (in thousands):
|  | Currency Translation |
Balance as of January 1, 2020 |  | $ | (276) |  |
Currency Translation Adjustments |  | (101) |  |
Balance as of December 31, 2020 |  | (377) |  |
Currency Translation Adjustments |  | (65) |  |
Balance as of December 31, 2021 |  | (442) |  |
Currency Translation Adjustments |  | (3,943) |  |
Balance as of December 31, 2022 |  | $ | (4,385) |  |
OTHER COMPREHENSIVE INCOME (LOSS) – Accounting guidance establishes rules for reporting and displaying other comprehensive income (loss) and its components. Our foreign currency translation adjustments, changes in the fair value of cash flow hedges, and the amortization of balances associated with derivatives previously classified as cash flow hedges are included in other comprehensive income (loss). The components of other comprehensive income (loss) for the twelve month periods ended December 31, 2022, December 31, 2021, and December 31, 2020 are included in the consolidated statements of comprehensive income (loss). 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. Therefore, 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 2016 CAPS In the fourth quarter of 2016, we entered into two forward interest rate cap agreements ("2016 Caps"). The 2016 Caps matured in September and October 2020. The 2016 Caps had notional amounts of $150,000,000 and $350,000,000, respectively, which were designated at inception as cash flow hedges of future cash interest payments associated with portions of our variable rate bank debt. Under these arrangements, we purchased a cap on 3 month LIBOR at 2.0%. We were liable for a $5.3 million premium to enter into the caps which accrued to current liabilities on our balance sheet and paid over the life of the 2016 Caps. The gain or loss of the hedge (i.e. change in fair value) was reported as a component of accumulated other comprehensive income (loss) in the consolidated statement of equity. A tabular presentation of the effect of derivative instruments on our consolidated statement of comprehensive (loss) income, net of taxes is as follows (amounts in thousands):
| Interest Rate Contracts |
For the twelve months ended | Amount of Gain (Loss) Recognized on Derivative, net of taxes | Location of Gain (Loss) Recognized in Income on Derivative
December 31, 2022 | $— |
December 31, 2021 | $— |
December 31, 2020 | $788 | Other Comprehensive Loss
2019 SWAPS In the second quarter of 2019, we entered into four forward interest rate agreements ("2019 swaps"). The 2019 swaps have total notional amounts of $500,000,000, consisting of two agreements of $50,000,000 each and two agreements of $200,000,000 each. The 2019 swaps will secure a constant interest rate associated with portions of our variable rate bank debt and have an effective date of October 13, 2020. They will mature in October 2023 for the two smaller notional and October 2025 for the two larger notional. Under these arrangements, we arranged the 2019 swaps with locked in 1 month LIBOR rates at 1.96% for the $100,000,000 notional and at 2.05% for the $400,000,000 notional. As of the effective date, we will be liable for premium payments if interest rates decline below arranged rates, but will receive interest payments if rates remain above the arranged rates. 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 accumulated comprehensive income (loss) in the consolidated statement of equity. The remaining gain or loss, if any, is recognized currently in earnings. The cash flows for both our $400,000,000 notional interest rate swap contract locked in at 2.05% due October 2025 and our $100,000,000 notional interest rate swap contract locked in at 1.96% do not match the cash flows for our First Lien Term Loans and so we have determined that they are not currently effective as cash flow hedges. Accordingly, all changes in their fair value after April 1, 2020 for the $400,000,000 notional and after July 1, 2020 for the $100,000,000 notional will be recognized in earnings. As of July 1, 2020, the total change in fair value relating to swaps included in other comprehensive income was approximately $24.4 million, net of taxes. This amount will be amortized to interest expense through October 2023 at approximately $0.4 million per month and continuing at approximately $0.3 million per month through October 2025. A tabular presentation of the effect of derivative instruments on our consolidated statement of comprehensive loss of the 2019 swaps is as follows (amounts in thousands):
Interest Rate Contracts - Effective Portion
For the twelve months ended | Amount of Loss Recognized on Derivative, net of taxes | Location of Loss Recognized in Income on Derivative
December 31, 2022 | $— |
December 31, 2021 | $— |
December 31, 2020 | $(20,160) | Other Comprehensive Loss
A tabular presentation of the effect of derivative instruments on our statement of operations of the 2019 Swaps for the Swaps that became ineffective in 2020 is as follows (amounts in thousands):
Interest Rate Contracts - Ineffective Portion
For the twelve months ended | Amount of gain (loss) recognized in income on derivative (current period ineffective portion) | Location of gain (loss) recognized in Income on derivative (current period ineffective portion) | Amount of loss reclassified from accumulated other comprehensive income (loss) into income (prior period effective portion) | Location of loss reclassified from accumulated other comprehensive income (loss) into income (prior period effective portion)
December 31, 2022 | $39,621 | Other Income (Expense) | $(3,687) | Interest Expense
December 31, 2021 | $21,670 | Other Income (Expense) | $(3,695) | Interest Expense
December 31, 2020 | $(2,528) | Other Income (Expense) | $(3,448) | Interest Expense
CONTINGENT CONSIDERATION - Aidence Holding B.V. On January 20, 2022, we completed our acquisition of all the equity interests of Aidence Holding B.V. ("Aidence") an artificial intelligence enterprise centered on lung cancer screening. As part of the purchase agreement, we will pay up to $10.0 million consideration upon the completion of two identified milestones in RadNet common shares or cash at our election. This contingency had a value of approximately $7.2 million on December 31, 2022. The amount is reviewed quarterly and adjusted to fair value based on the yield rate of S&P B-rated corporate bonds and the probability of FDA approval, which has been currently determined by management to be 80% for milestone one and 70% for milestone two. In addition, there is a remaining general holdback of $4.0 million to be issued in shares of our common stock subject to adjustment for any indemnification claims. Quantib B.V. On January 20, 2022, we completed our acquisition of all the equity interests of Quantib B.V. ("Quantib") an artificial intelligence enterprise centered on prostate cancer screening. As part of the purchase agreement, we will issue 18 months after acquisition, 113,303 shares of our common stock with an initial fair value at the date of close of $3.0 million subject to adjustment for any indemnification claims and will be adjusted to fair value in subsequent periods. This contingency had a value of approximately $2.1 million as of December 31, 2022. In addition, there is a general holdback of $1.6 million to be issued in cash subject to adjustment for any indemnification claims. Montclair On October 1, 2022, we completed our acquisition of Montclair Radiological Associates. As part of the purchase agreement, we recorded $1.2 million in contingent consideration to be determined by obtaining specific EBITDA targets within a defined time frame. Heart and Lung Imaging Limited On November 1, 2022, we completed our acquisition of 75% of the equity interests of Heart and Lung Imaging Limited. The purchase included $10.2 million in contingent milestone consideration and cash holdback of $0.6 million to be issued 24 months after acquisition subject to adjustment for any indemnification claims, which will be adjusted to fair value in subsequent periods. The milestone contingency had a value of approximately $11.1 million as of December 31, 2022. The contingent consideration is determined by the achievement of a specific number of physician reads. A tabular rollforward of contingent consideration is as follows (amounts in thousands):
For the twelve months ended December 31, 2022
Entity |  | Account |  | January 1, 2022 Balance |  | Issuance of contingent consideration |  | Amount of income (loss) recognized on contingent consideration |  | Currency Translation |  | December 31, 2022 Balance |  |
Aidence |  | Other Long Term Liabilities |  | $ | — |  |  | $ | 11,453 |  |  | $ | (362) |  |  | $ | 67 |  |  | $ | 11,158 |  |  |
Quantib |  | Accrued Expenses & Other Long Term Liabilities |  | $ | — |  |  | $ | 4,581 |  |  | $ | (903) |  |  | $ | 31 |  |  | $ | 3,709 |  |  |
Montclair |  | Accrued Expenses |  | $ | — |  |  | $ | 1,200 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,200 |  |  |
Heart and Lung Limited |  | Accrued Expenses & Other Long Term Liabilities |  | $ | — |  |  | $ | 10,814 |  |  | $ | 566 |  |  | $ | 276 |  |  | $ | 11,656 |  |  |
See Fair Value Measurements section below for the fair value of contingent consideration at December 31, 2022. 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 table below summarizes the estimated fair values of certain of our financial assets that are subject to fair value measurements, and the classification of these assets in our consolidated balance sheets, as follows (in thousands):
| As of December 31, 2022
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Other Current Assets and Deposits and Other |  |  |  |  |  |  |
2019 SWAPS - Interest Rate Contracts | $ | — |  |  | $ | 23,302 |  |  | $ | — |  |  | $ | 23,302 |
| As of December 31, 2021
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Accrued expenses and other non-current liabilities |  |  |  |  |  |  |
2019 SWAPS - Interest Rate Contracts | $ | — |  |  | $ | 16,319 |  |  | $ | — |  |  | $ | 16,319 |
The estimated fair value of these contracts was determined using Level 2 inputs. More specifically, the fair value was determined by calculating the value of the difference between the fixed interest rate of the interest rate swaps and the counterparty’s forward LIBOR curve. The forward LIBOR curve is readily available in the public markets or can be derived from information available in the public markets. Contingent Consideration: The table below summarizes the estimated fair values of contingencies and holdback relating to our Aidence Holding B.V. and Quantib B.V. acquisitions on January 20, 2022, and the Heart and Lung Imaging Limited acquisition on November 1, 2022 that are subject to fair value measurements and the classification of these liabilities on our consolidated balance sheets, as follows (in thousands):
| As of December 31, 2022
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Accrued expenses and other non-current liabilities |  |  |  |  |  |  |
Aidence Holding B.V. milestone consideration | $ | — |  |  | $ | — |  |  | $ | 11,158 |  |  | $ | 11,158 |
Quantib B.V. holdback of 113,303 shares of RadNet common stock | $ | — |  |  | $ | — |  |  | $ | 3,709 |  |  | $ | 3,709 |
Montclair Radiological Associates | $ | — |  |  | $ | — |  |  | $ | 1,200 |  |  | $ | 1,200 |
Heart and Lung Imaging Limited | $ | — |  |  | $ | — |  |  | $ | 11,656 |  |  | $ | 11,656 |
The estimated fair value of these liabilities was determined using Level 3 inputs. For Aidence Holding B.V., the milestone contingent liability was adjusted to fair value based on the yield rate of S&P B-rated corporate bonds and the probability of FDA approval. For the Quantib B.V holdback shares, the fair value was determined by calculating the value of estimated shares issuable as of the reporting date (which was $18.83) translated at the current exchange rate at December 31, 2022, the time period related to the contractual settlement term, and the probability of issuing the shares. For Montclair Radiological Associates the contingent consideration is determined by obtaining specific EBITDA targets within a defined time frame. For Heat Lung Imaging Limited the contingent consideration is determined by the achievement of a specific number of physician reads. As significant inputs for the contingent consideration of Aidence B.V., Quantib B.V., Montclair Radiological Associates and Heart Lung Imaging Limited are not observable and cannot be corroborated by observable market data they are classified as Level 3. Long Term Debt The table below summarizes the estimated fair value and carrying amount of our Truist (Term Loan Agreement) and Barclays (First Lien Term Loans) long-term debt as follows (in thousands):
| As of December 31, 2022
| Level 1 |  | Level 2 |  | Level 3 |  | Total Fair Value |  | Total Face Value
Term Loan Agreement and First Lien Term Loans | $ | — |  |  | $ | 843,594 |  |  | $ | — |  |  | $ | 843,594 |  |  | $ | 864,125 |
| As of December 31, 2021
| Level 1 |  | Level 2 |  | Level 3 |  | Total Fair Value |  | Total Face Value
Term Loan Agreement and First Lien Term Loans | $ | — |  |  | $ | 766,973 |  |  | $ | — |  |  | $ | 766,973 |  |  | $ | 767,875 |
Our Barclays revolving credit facility had no aggregate principal amount outstanding as of December 31, 2022 and December 31, 2021, respectively. Our Truist revolving credit facility had no aggregate principal amount outstanding as of December 31, 2022 and December 31, 2021, respectively. The estimated fair values of our long-term debt, which is discussed in Note 8, was determined using Level 2 inputs for the Barclays and Truist term loans. Level 2 inputs primarily related to comparable market prices. We consider the carrying amounts of cash and cash equivalents, receivables, other current assets, current liabilities and other notes payables to approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization or payment. Additionally, we consider the carrying amount of our capital lease obligations to approximate their fair value because the weighted average interest rate used to formulate the carrying amounts approximates current market rates. 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):
| Years Ended December 31,
| 2022 |  | 2021 |  | 2020
Net income (loss) attributable to RadNet, Inc. common stockholders | $ | 10,650 |  |  | $ | 24,727 |  |  | $ | (14,840) |
BASIC NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS |  |  |  |  |
Weighted average number of common shares outstanding during the period | 56,293,336 |  |  | 52,496,679 |  |  | 50,891,791 |
Basic net income (loss) per share attributable to RadNet, Inc. common stockholders | $ | 0.19 |  |  | $ | 0.47 |  |  | $ | (0.29) |
DILUTED NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS |  |  |  |  |
Weighted average number of common shares outstanding during the period | 56,293,336 |  |  | 52,496,679 |  |  | 50,891,791 |
Add nonvested restricted stock subject only to service vesting | 172,139 |  |  | 259,539 |  |  | — |
Add additional shares issuable upon exercise of stock options, warrants and holdback shares | 855,395 |  |  | 664,815 |  |  | — |
Weighted average number of common shares used in calculating diluted net income per share | 57,320,870 |  |  | 53,421,033 |  |  | 50,891,791 |
Changes in fair value associated with contingently issuable shares | $ | (724) |  |  | $ | — |  |  | $ | — |
Net income (loss) attributable to RadNet, Inc's common stockholders for diluted share calculation | $9,926 |  | $24,727 |  | $(14,840)
Diluted net income (loss) per share attributable to RadNet, Inc. common stockholders | $ | 0.17 |  |  | $ | 0.46 |  |  | $ | (0.29) |
Stock options and non-vested restricted awards excluded from the computation of diluted per share amounts as their effect would be antidilutive: |  |  |  |  |
Nonvested restricted stock subject to service vesting | — |  |  | — |  |  | 329,159 |
Shares issuable upon the exercise of stock options | 152,723 |  |  | 47,792 |  |  | 554,444 |
INVESTMENTS IN EQUITY SECURITIES- As of December 31, 2022, we have three equity investments for which a fair value is not readily determinable and we do not have significant influence and therefore the total amounts invested are recognized at cost. In accordance with accounting guidance, if there is no readily determinable fair value, the guidance allows entities the ability to measure investments at cost less impairment, whereby impairment is based on a qualitative assessment. Medic Vision, based in Israel, specializes in software packages that provide compliant radiation dose structured reporting and enhanced images from reduced dose CT scans. Our investment of $1.2 million, represents a 14.21% equity interest in the company. No observable price changes or impairment in our investment was noted as of the year ended December 31, 2022. Turner Imaging Systems, based in Utah, develops and markets portable X-ray imaging systems that provide a user the ability to acquire X-ray images wherever and whenever they are needed. On February 1, 2018, we purchased 2.1 million preferred shares in Turner Imaging Systems for $2.0 million. On January 1, 2019 we funded a convertible promissory note in the amount of $0.1 million that converted to an additional 80,000 preferred shares on October 11, 2019. No observable price changes or impairment in our investment was noted for the year ended December 31, 2022. WhiteRabbit.ai Inc., based in California, is currently developing an artificial intelligence suite which aims to improve the speed and accuracy of cancer detection in radiology and improve patient care. On November 5, 2019 we acquired an equity interest in the company for $1.0 million and also loaned the company $2.5 million in support of its operations. No observable price changes or impairment in our investment was noted for the year ended December 31, 2022. INVESTMENT IN JOINT VENTURES – We have 13 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, as we do not have a controlling financial 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 December 31, 2022. Joint venture investment and financial information The following table is a summary of our investment in joint ventures during the years ended December 31, 2022 and December 31, 2021 (in thousands):
Balance as of December 31, 2020 | $ | 34,528 |
Equity contributions in existing and purchase of interest in joint ventures | 1,441 |
Equity in earnings in these joint ventures | 10,967 |
Distribution of earnings | (4,707) |
Balance as of December 31, 2021 | $ | 42,229 |
Equity contributions in existing and purchase of interest in joint ventures | 9,712 |
Equity in earnings in these joint ventures | 10,390 |
Distribution of earnings | (4,438) |
Balance as of December 31, 2022 | $ | 57,893 |
We charged management service fees from the centers underlying these joint ventures of approximately $22.2 million, $19.6 million and $11.3 million for the years ended December 31, 2022, 2021 and 2020, respectively. We 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 in the ordinary course of business are disclosed on our balance sheet in the due from/to affiliate accounts. The following table is a summary of key unaudited financial data for these joint ventures as of December 31, 2022 and 2021, respectively, and for the years ended December 31, 2022, 2021 and 2020, respectively, (in thousands):
| December 31,
Balance Sheet Data: | 2022 |  | 2021
Current assets | $ | 39,304 |  |  | $ | 37,186 |
Noncurrent assets | 134,694 |  |  | 73,592 |
Current liabilities | (29,588) |  |  | (12,919) |
Noncurrent liabilities | (37,952) |  |  | (22,370) |
Total net assets | $ | 106,458 |  |  | $ | 75,489 |
Book value of RadNet joint venture interests | $ | 49,564 |  |  | $ | 34,930 |
Cost in excess of book value of acquired joint venture interests accounted for as equity method goodwill | 8,329 |  |  | 7,299 |
Total value of RadNet joint venture interests | $ | 57,893 |  |  | $ | 42,229 |
| 2022 |  | 2021 |  | 2020
Net revenue | $ | 145,256 |  |  | $ | 129,023 |  |  | $ | 101,921 |
Net income | $ | 21,169 |  |  | $ | 21,893 |  |  | $ | 16,850 |
During the years ended December 31, 2022 and 2021, we made an additional equity contributions of $1.4 million each year to Arizona Diagnostic Radiology Group ("ADRG", our joint venture with Dignity Health). On November 1, 2022, we contributed eight of our imaging centers to ADRG of $12.7 million and recorded a loss of $0.5 million which was calculated as the difference between the sale price and carrying value of such imaging centers which included equipment and other assets and an allocation of goodwill to such imaging centers. We recorded $4.5 million of the sale price as an offset to due to affiliates while the remaining $8.3 million was recorded as investment in joint venture on our balance sheet. We accounted for the transaction as an adjustment to our equity investment for the value of the assets contributed. To maintain our 49% economic interest in ADRG, we received a distribution from the partnership of $4.5 million to reduce our overall investment to $8.3 million.

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