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SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended
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Mar. 31, 2023
Accounting Policies [Abstract] |
Schedule of Service Fee Revenue | Our total service revenues during the three months ended March 31, 2023 and 2022 are presented in the table below based on an allocation of the estimated transaction price with the patient between the primary patient classification of insurance coverage (in thousands):
| Three Months Ended March 31, |  |
2023 |  | 2022 |  |  |  |
Commercial insurance | $ | 217,209 |  |  | $ | 188,465 |  |  |  |  |
Medicare | 86,624 |  |  | 70,999 |  |  |  |  |
Medicaid | 10,153 |  |  | 9,087 |  |  |  |  |
Workers' compensation/personal injury | 12,675 |  |  | 12,449 |  |  |  |  |
Other patient revenue | 9,745 |  |  | 7,123 |  |  |  |  |
Management fee revenue | 4,248 |  |  | 5,508 |  |  |  |  |
Teleradiology and Software revenue | 4,333 |  |  | 3,399 |  |  |  |  |
Other | 5,300 |  |  | 5,647 |  |  |  |  |
Revenue under capitation arrangements | 38,144 |  |  | 38,491 |  |  |  |  |
Imaging Center Segment Revenue | 388,431 |  |  | 341,168 |  |  |  |  |
AI Segment Revenue | 2,133 |  |  | 599 |  |  |  |  |
Total service revenue | $ | 390,564 |  |  | $ | 341,767 |  |  |  |  |
Schedule of Goodwill | Activity in goodwill for the three months ended March 31, 2023 is provided below (in thousands):
| Imaging Center |  | Artificial Intelligence |  | Total
Balance as of December 31, 2022 | 606,483 |  |  | $ | 71,182 |  |  | $ | 677,665 |
Goodwill from acquisitions | 6,174 |  |  | — |  |  | 6,174 |
Valuation adjustment | 1,603 |  |  | — |  |  | 1,603 |
Currency translation | 576 |  |  | 1,067 |  |  | 1,643 |
Balance as of March 31, 2023 | $ | 614,836 |  |  | $ | 72,249 |  |  | $ | 687,085 |
Schedule of Annual Amortization Expense | As of March 31, 2023:
| 2023* |  | 2024 |  | 2025 |  | 2026 |  | 2027 |  | Thereafter |  | Total |  | Weighted average amortization period remaining in years
Management Service Contracts | $ | 1,717 |  |  | $ | 2,287 |  |  | $ | 2,287 |  |  | $ | 2,287 |  |  | $ | 2,287 |  |  | $ | 8,959 |  |  | $ | 19,824 |  |  | 8.7
Covenant not to compete and other contracts | 1,013 |  |  | 941 |  |  | 692 |  |  | 406 |  |  | 122 |  |  | 41 |  |  | 3,215 |  |  | 3.7
Customer Relationships | 924 |  |  | 1,219 |  |  | 1,088 |  |  | 966 |  |  | 767 |  |  | 10,984 |  |  | 15,948 |  |  | 18.1
Patent and Trademarks | 280 |  |  | 313 |  |  | 313 |  |  | 313 |  |  | 313 |  |  | 399 |  |  | 1,931 |  |  | 6.3
Developed Technology & Software | 5,810 |  |  | 6,657 |  |  | 6,657 |  |  | 6,617 |  |  | 6,083 |  |  | 5,392 |  |  | 37,216 |  |  | 6.5
Trade Names amortized | 208 |  |  | 77 |  |  | 77 |  |  | 77 |  |  | 77 |  |  | 89 |  |  | 605 |  |  | 4.6
Trade Names indefinite life | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 7,100 |  |  | 7,100 |  |  | — |
IPR&D | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 17,164 |  |  | 17,164 |  |  | — |
Total Annual Amortization | $ | 9,952 |  |  | $ | 11,494 |  |  | $ | 11,114 |  |  | $ | 10,666 |  |  | $ | 9,649 |  |  | $ | 50,128 |  |  | $ | 103,003 |  |  |
*Excluding the three months ended March 31, 2023 As of December 31, 2022:
| 2023 |  | 2024 |  | 2025 |  | 2026 |  | 2027 |  | Thereafter |  | Total |  | Weighted average amortization period remaining in years
Management Service Contracts | $ | 2,287 |  |  | $ | 2,287 |  |  | $ | 2,287 |  |  | $ | 2,287 |  |  | $ | 2,287 |  |  | $ | 8,958 |  |  | $ | 20,393 |  |  | 8.9
Covenant not to compete and other contracts | 1,319 |  |  | 891 |  |  | 642 |  |  | 356 |  |  | 72 |  |  | 40 |  |  | 3,320 |  |  | 3.1
Customer Relationships | 1,244 |  |  | 1,244 |  |  | 1,112 |  |  | 991 |  |  | 816 |  |  | 12,396 |  |  | 17,803 |  |  | 18.6
Patent and Trademarks | 298 |  |  | 298 |  |  | 298 |  |  | 298 |  |  | 298 |  |  | 322 |  |  | 1,812 |  |  | 6.4
Developed Technology & Software | 6,297 |  |  | 6,297 |  |  | 6,297 |  |  | 6,257 |  |  | 5,722 |  |  | 7,196 |  |  | 38,066 |  |  | 6.7
Trade Names amortized | 305 |  |  | 77 |  |  | 77 |  |  | 77 |  |  | 77 |  |  | 89 |  |  | 702 |  |  | 4.5
Trade Names indefinite life | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 7,100 |  |  | 7,100 |  |  | — |
IPR&D | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 17,032 |  |  | 17,032 |  |  | — |
Total Annual Amortization | $ | 11,750 |  |  | $ | 11,094 |  |  | $ | 10,713 |  |  | $ | 10,266 |  |  | $ | 9,272 |  |  | $ | 53,133 |  |  | $ | 106,228 |  |  |
Schedule of Effect of Derivative Instruments on Comprehensive Loss | A tabular presentation of the effect of derivative instruments on our consolidated statement of comprehensive loss of the 2019 Swaps which remain ineffective is as follows (amounts in thousands):
For the three months ended March 31, 2023
Account |  | December 31, 2022 Balance |  | Amount of comprehensive loss recognized on derivative net of taxes |  | Amount of loss reclassified out of accumulated OCI into income (prior period effective portion), net of taxes |  | March 31, 2023 Balance |  | Location
Accumulated Other Comprehensive Loss, net of taxes |  | $(15,201) |  | $— |  | $922 |  | $(14,279) |  | Equity
For the three months ended March 31, 2022
Account |  | December 31, 2021 Balance |  | Amount of comprehensive loss recognized on derivative net of taxes |  | Amount of loss reclassified out of accumulated OCI into income (prior period effective portion), net of taxes |  | March 31, 2022 Balance |  | Location
Accumulated Other Comprehensive Loss, net of taxes |  | $(18,887) |  | $— |  | $924 |  | $(17,963) |  | Equity
A tabular presentation of the effect of derivative instruments on our statement of operations of the 2019 Swaps which remain ineffective is as follows (amounts in thousands):
For the three months ended March 31, 2023
Ineffective interest rate swap |  | Amount of loss recognized in income on derivative (current period ineffective portion) |  | Location of loss recognized in Income on derivative (current period ineffective portion) |  | Amount of loss reclassified from accumulated OCI into income (prior period effective portion) |  | Location of loss reclassified from accumulated OCI into income (prior period effective portion)
Interest rate contracts |  | $ | (4,093) |  |  | Other income (expense) |  | $ | (922) |  |  | Interest Expense
For the three months ended March 31, 2022
Ineffective interest rate swap |  | Amount of gain recognized in income on derivative (current period ineffective portion) |  | Location of gain recognized in Income on derivative (current period ineffective portion) |  | Amount of loss reclassified from accumulated OCI into income (prior period effective portion) |  | Location of loss reclassified from accumulated OCI into income (prior period effective portion)
Interest rate contracts |  | $ | 20,819 |  |  | Other income (expense) |  | $ | (923) |  |  | Interest Expense
Schedule of Business Acquisitions by Acquisition, Contingent Consideration | A tabular rollforward of contingent consideration is as follows (amounts in thousands):
For the three months ended March 31, 2023
Entity |  | Account |  | January 1, 2023 Balance |  | Issuance of contingent consideration |  | Change in valuation of Contingent Consideration |  | Currency Translation |  | March 31, 2023 Balance |  |
Aidence |  | Other Long Term Liabilities |  | $ | 11,158 |  |  | $ | — |  |  | $ | 158 |  |  | $ | — |  |  | $ | 11,316 |  |  |
Quantib |  | Accrued Expenses & Other Long Term Liabilities |  | $ | 3,709 |  |  | $ | — |  |  | $ | 702 |  |  | $ | — |  |  | $ | 4,411 |  |  |
Montclair |  | Accrued Expenses |  | $ | 1,200 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1,200 |  |  |
Heart and Lung Limited |  | Accrued Expenses & Other Long Term Liabilities |  | $ | 11,656 |  |  | $ | — |  |  | $ | 1,124 |  |  | $ | 350 |  |  | $ | 13,130 |  |  |
Schedule of Fair Value of Assets and Liabilities | The tables below summarize the estimated fair values of certain of our financial assets that are subject to fair value measurements, and the classification of these assets on our condensed consolidated balance sheets, as follows (in thousands):
| As of March 31, 2023
Level 1 |  | Level 2 |  | Level 3 |  | Total
Current and long term assets |  |  |  |  |  |  |
2019 Swaps - Interest Rate Contracts | $ | — |  |  | $ | 19,209 |  |  | $ | — |  |  | $ | 19,209 |
| As of December 31, 2022
Level 1 |  | Level 2 |  | Level 3 |  | Total
Current and long term assets |  |  |  |  |  |  |
2019 Swaps - Interest Rate Contracts | $ | — |  |  | $ | 23,302 |  |  | $ | — |  |  | $ | 23,302 |
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, the Montclair Radiological Associates acquisition on October 1, 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 March 31, 2023
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Accrued expenses and other non-current liabilities |  |  |  |  |  |  |
Aidence Holding B.V. milestone consideration | $ | — |  |  | $ | — |  |  | $ | 11,316 |  |  | $ | 11,316 |
Quantib B.V. holdback of 113,303 shares of RadNet common stock | $ | — |  |  | $ | — |  |  | $ | 4,411 |  |  | $ | 4,411 |
Montclair Radiological Associates | $ | — |  |  | $ | — |  |  | $ | 1,200 |  |  | $ | 1,200 |
Heart and Lung Imaging Limited | $ | — |  |  | $ | — |  |  | $ | 13,130 |  |  | $ | 13,130 |
The table below summarizes the estimated fair value compared to our face value of our long-term debt as follows (in thousands):
| As of March 31, 2023
Level 1 |  | Level 2 |  | Level 3 |  | Total Fair Value |  | Total Face Value
First Lien Term Loans and Truist Term Loan | $ | — |  |  | $ | 856,876 |  |  | $ | — |  |  | $ | 856,876 |  |  | $ | 860,438 |
| As of December 31, 2022
Level 1 |  | Level 2 |  | Level 3 |  | Total Fair Value |  | Total Face Value
First Lien Term Loans and Truist Term Loan | $ | — |  |  | $ | 843,594 |  |  | $ | — |  |  | $ | 843,594 |  |  | $ | 864,125 |
Schedule of Earnings Per Share | Earnings per share is based upon the weighted average number of shares of common stock and common stock equivalents outstanding, net of common stock held in treasury, as follows (in thousands except share and per share data):
| Three Months Ended March 31, |  |
2023 |  | 2022 |  |  |  |
Net income attributable to RadNet, Inc.'s common stockholders | $ | (21,005) |  |  | $ | 3,013 |  |  |  |  |
BASIC NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC.'S COMMON STOCKHOLDERS |  |  |  |  |  |  |
Weighted average number of common shares outstanding during the period | 57,701,439 |  |  | 55,303,007 |  |  |  |  |
Basic net income per share attributable to RadNet, Inc.'s common stockholders | $ | (0.36) |  |  | $ | 0.05 |  |  |  |  |
DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC.'S COMMON STOCKHOLDERS |  |  |  |  |  |  |
Weighted average number of common shares outstanding during the period | 57,701,439 |  |  | 55,303,007 |  |  |  |  |
Add nonvested restricted stock subject only to service vesting | — |  |  | 197,911 |  |  |  |  |
Add additional shares issuable upon exercise of stock options and contingently issuable shares | — |  |  | 861,275 |  |  |  |  |
Weighted average number of common shares used in calculating diluted net income per share | 57,701,439 |  |  | 56,362,193 |  |  |  |  |
Diluted net income per share attributable to RadNet, Inc.'s common stockholders | $ | (0.36) |  |  | $ | 0.05 |  |  |  |  |
Fair value change for contingently issuable shares excluded from the computation of diluted per share amounts as its effect would be antidilutive | $ | 769 |  |  | $ | — |  |  |  |  |
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 | 594,758 |  |  | — |  |  |  |  |
Shares issuable upon the exercise of stock options | 750,075 |  |  | 46,912 |  |  |  |  |
Contingently issuable shares | 273,111 |  |  | — |  |  |  |  |
For the three months ended March 31, 2023 we excluded all outstanding options, restricted stock awards and other requisite shares in the calculation of diluted earnings per share because their effect would be antidilutive.
Schedule of Investment in Joint Ventures | The following table is a summary of our investment in joint ventures during the three months ended March 31, 2023 (in thousands):
Balance as of December 31, 2022 | $ | 57,893 |
Equity in earnings in these joint ventures | 1,428 |
Balance as of March 31, 2023 | $ | 59,321 |
Schedule of Joint Venture Investment and Financial Information | The following table is a summary of key balance sheet data for these joint ventures as of March 31, 2023 and December 31, 2022 and income statement data for the three months ended March 31, 2023 and 2022 (in thousands):
Balance Sheet Data: | March 31, 2023 |  | December 31, 2022
Current assets | $ | 49,091 |  |  | $ | 39,304 |
Noncurrent assets | 142,144 |  |  | 134,694 |
Current liabilities | (32,995) |  |  | (29,588) |
Noncurrent liabilities | (48,872) |  |  | (37,952) |
Total net assets | $ | 109,368 |  |  | $ | 106,458 |
Book value of RadNet joint venture interests | $ | 50,754 |  |  | $ | 49,564 |
Cost in excess of book value of acquired joint venture interests and other | 8,567 |  |  | 8,329 |
Total value of RadNet joint venture interests | $ | 59,321 |  |  | $ | 57,893 |
Income statement data for the three months ended March 31, | 2023 |  | 2022
Net revenue | $ | 42,086 |  |  | $ | 34,411 |
Net income | $ | 2,909 |  |  | $ | 5,035 |

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