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SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended
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Sep. 30, 2023
Accounting Policies [Abstract] |
Schedule of Service Fee Revenue | Our total service revenues during the three and nine months ended September 30, 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 September 30, |  | Nine Months Ended September 30,
2023 |  | 2022 |  | 2023 |  | 2022
Commercial insurance | $ | 223,555 |  |  | $ | 189,634 |  |  | $ | 665,604 |  |  | $ | 573,259 |
Medicare | 91,886 |  |  | 78,034 |  |  | 267,955 |  |  | 226,827 |
Medicaid | 10,742 |  |  | 9,669 |  |  | 30,882 |  |  | 28,456 |
Workers' compensation/personal injury | 9,952 |  |  | 13,200 |  |  | 35,478 |  |  | 38,785 |
Other patient revenue | 10,664 |  |  | 7,646 |  |  | 30,793 |  |  | 22,334 |
Management fee revenue | 3,957 |  |  | 6,099 |  |  | 12,203 |  |  | 17,199 |
Teleradiology and Software revenue | 2,111 |  |  | 3,430 |  |  | 7,327 |  |  | 9,849 |
Other | 6,173 |  |  | 3,431 |  |  | 20,625 |  |  | 12,054 |
Revenue under capitation arrangements | 40,041 |  |  | 38,001 |  |  | 117,982 |  |  | 114,366 |
Imaging Center Segment Revenue | 399,081 |  |  | 349,144 |  |  | 1,188,849 |  | 1188849000 | 1,043,129 |
AI Segment Revenue | 2,887 |  |  | 900 |  |  | 7,398 |  |  | 3,056 |
Total service revenue | $ | 401,968 |  |  | $ | 350,044 |  |  | $ | 1,196,247 |  |  | $ | 1,046,185 |
Schedule of Goodwill | Activity in goodwill for the nine months ended September 30, 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 | 6,473 |  |  | — |  |  | 6,473 |
Valuation adjustment | 1,603 |  |  | — |  |  | 1,603 |
Currency translation | 223 |  |  | (353) |  |  | (130) |
Contribution of imaging centers | (9,235) |  |  | — |  |  | (9,235) |
Balance as of September 30, 2023 | $ | 605,547 |  |  | $ | 70,829 |  |  | $ | 676,376 |
Schedule of Annual Amortization Expense | As of September 30, 2023:
| 2023* |  | 2024 |  | 2025 |  | 2026 |  | 2027 |  | Thereafter |  | Total |  | Weighted average amortization period remaining in years
Management Service Contracts | $ | 572 |  |  | $ | 2,287 |  |  | $ | 2,287 |  |  | $ | 2,287 |  |  | $ | 2,287 |  |  | $ | 8,958 |  |  | $ | 18,678 |  |  | 8.2
Covenant not to compete and other contracts | 339 |  |  | 941 |  |  | 692 |  |  | 406 |  |  | 122 |  |  | 42 |  |  | 2,542 |  |  | 3.4
Customer Relationships | 181 |  |  | 1,202 |  |  | 1,070 |  |  | 949 |  |  | 749 |  |  | 10,966 |  |  | 15,117 |  |  | 17.8
Patent and Trademarks | 77 |  |  | 316 |  |  | 315 |  |  | 316 |  |  | 316 |  |  | 398 |  |  | 1,738 |  |  | 5.6
Developed Technology & Software | 1,714 |  |  | 6,657 |  |  | 6,657 |  |  | 6,617 |  |  | 6,083 |  |  | 5,392 |  |  | 33,120 |  |  | 5.8
Trade Names amortized | 19 |  |  | 77 |  |  | 77 |  |  | 77 |  |  | 77 |  |  | 89 |  |  | 416 |  |  | 5.5
Trade Names indefinite life | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 7,100 |  |  | 7,100 |  |  | — |
IPR&D | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 13,122 |  |  | 13,122 |  |  | — |
Total Annual Amortization | $ | 2,902 |  |  | $ | 11,480 |  |  | $ | 11,098 |  |  | $ | 10,652 |  |  | $ | 9,634 |  |  | $ | 46,067 |  |  | $ | 91,833 |  |  |
*Excluding the nine months ended September 30, 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 Income( Loss) | A tabular presentation of the effect of derivative instruments on our consolidated statement of comprehensive income (loss) of the 2019 Swaps which remain ineffective is as follows (amounts in thousands):
For the three months ended September 30, 2023
Account |  | June 30, 2023 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 |  | September 30, 2023 Balance |  | Location
Accumulated Other Comprehensive Loss, net of taxes |  | $(13,357) |  | $— |  | $921 |  | $(12,436) |  | Equity
For the nine months ended September 30, 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 |  | September 30, 2023 Balance |  | Location
Accumulated Other Comprehensive Loss, net of taxes |  | $(15,201) |  | $— |  | $2,765 |  | $(12,436) |  | 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 September 30, 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 |  | $ | (1,015) |  |  | Other income (expense) |  | $ | (921) |  |  | Interest Expense
For the nine months ended September 30, 2023
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 |  | $ | (949) |  |  | Other income (expense) |  | $ | (2,765) |  |  | 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 September 30, 2023
Entity |  | Account |  | June 30, 2023 Balance |  | Settlement of contingent consideration |  | Change in valuation of Contingent Consideration |  | Currency Translation |  | September 30, 2023 Balance |  |
Aidence |  | Other Long Term Liabilities |  | $ | 7,191 |  |  | $ | — |  |  | $ | (7,191) |  |  | $ | — |  |  | $ | — |  |  |
Quantib |  | Accrued Expenses & Other Long Term Liabilities |  | $ | 5,271 |  |  | $ | (5,110) |  |  | $ | (161) |  |  | $ | — |  |  | $ | — |  |  |
Heart and Lung Limited |  | Accrued Expenses & Other Long Term Liabilities |  | $ | 14,358 |  |  | $ | (3,402) |  |  | $ | 915 |  |  | $ | (772) |  |  | $ | 11,099 |  |  |
For the nine months ended September 30, 2023
Entity |  | Account |  | January 1, 2023 Balance |  | Settlement of contingent consideration |  | Change in valuation of Contingent Consideration |  | Currency Translation |  | September 30, 2023 Balance |  |
Aidence |  | Other Long Term Liabilities |  | 11,158 |  |  | (4,000) |  |  | $ | (7,158) |  |  | $ | — |  |  | $ | — |  |  |
Quantib |  | Accrued Expenses & Other Long Term Liabilities |  | 3,709 |  |  | (5,110) |  |  | $ | 1,401 |  |  | $ | — |  |  | $ | — |  |  |
Montclair |  | Accrued Expenses |  | 1,200 |  |  | — |  |  | $ | (1,200) |  |  | $ | — |  |  | $ | — |  |  |
Heart and Lung Limited |  | Accrued Expenses & Other Long Term Liabilities |  | 11,656 |  |  | (3,402) |  |  | $ | 2,906 |  |  | $ | (61) |  |  | $ | 11,099 |  |  |
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 September 30, 2023
Level 1 |  | Level 2 |  | Level 3 |  | Total
Current and long term assets |  |  |  |  |  |  |
2019 Swaps - Interest Rate Contracts | $ | — |  |  | $ | 22,354 |  |  | $ | — |  |  | $ | 22,354 |
| 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 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 September 30, 2023
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Accrued expenses and other non-current liabilities |  |  |  |  |  |  |
Heart and Lung Imaging Limited | $ | — |  |  | $ | — |  |  | $ | 11,099 |  |  | $ | 11,099 |
The table below summarizes the estimated fair value compared to our face value of our long-term debt as follows (in thousands):
| As of September 30, 2023
Level 1 |  | Level 2 |  | Level 3 |  | Total Fair Value |  | Total Face Value
First Lien Term Loans and Truist Term Loan | $ | — |  |  | $ | 850,405 |  |  | $ | — |  |  | $ | 850,405 |  |  | $ | 853,063 |
| 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 September 30, |  | Nine Months Ended September 30,
2023 |  | 2022 |  | 2023 |  | 2022
Net income attributable to RadNet, Inc.'s common stockholders | $ | 17,540 |  |  | $ | 668 |  |  | $ | 4,904 |  |  | $ | 11,585 |
BASIC NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC.'S COMMON STOCKHOLDERS |  |  |  |  |  |  |
Weighted average number of common shares outstanding during the period | 67,793,404 |  |  | 56,744,419 |  |  | 62,113,707 |  |  | 56,041,017 |
Basic net income per share attributable to RadNet, Inc.'s common stockholders | $ | 0.26 |  |  | $ | 0.01 |  |  | $ | 0.08 |  |  | $ | 0.21 |
DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC.'S COMMON STOCKHOLDERS |  |  |  |  |  |  |
Weighted average number of common shares outstanding during the period | 67,793,404 |  |  | 56,744,419 |  |  | 62,113,707 |  |  | 56,041,017 |
Add non-vested restricted stock subject only to service vesting | 217,238 |  |  | 179,268 |  |  | 202,082 |  |  | 141,492 |
Add additional shares issuable upon exercise of stock options and contingently issuable shares | 799,176 |  |  | 728,074 |  |  | 905,462 |  |  | 853,908 |
Weighted average number of common shares used in calculating diluted net income per share | 68,809,818 |  |  | 57,651,761 |  |  | 63,221,251 |  |  | 57,036,417 |
Changes in FV associated with contingently issuable shares | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (586) |
Net income attributable to RadNet, Inc's common stockholders for diluted share calculation | $ | 17,540 |  |  | $ | 668 |  |  | $ | 4,904 |  | $ | — |  | $ | 10,999 |
Diluted net income per share attributable to RadNet, Inc.'s common stockholders | $ | 0.25 |  |  | $ | 0.01 |  |  | $ | 0.08 |  |  | $ | 0.19 |
Earnings per share disclosures: |  |  |  |  |  |  |
Fair value change for contingently issuable shares excluded from the computation of diluted per share amounts as its effect would be antidilutive | $ | — |  |  | $ | 278 |  |  | $ | — |  |  | $ | — |
Stock options and non-vested restricted awards excluded from the computation of diluted per share amounts as their effect would be antidilutive: |  |  |  |  |  |  |
Non-vested restricted stock subject to service vesting | — |  |  | — |  |  | — |  |  | — |
Shares issuable upon the exercise of stock options | 88,600 |  |  | 84,885 |  |  | 761,708 |  |  | 67,289 |
Shares issuable subject to satisfaction of certain contingencies | — |  |  | 113,303 |  |  | — |  |  | — |
Weighted average shares for which the exercise price exceeds average market price of common stock | — |  |  | 83,972 |  |  | 94,346 |  |  | 73,094 |
Contingently issuable shares | — |  |  | — |  |  | 193,207 |  |  | — |
Schedule of Investment in Joint Ventures | The following table is a summary of our investment in joint ventures during the nine months ended September 30, 2023 (in thousands):
Balance as of December 31, 2022 | $ | 57,893 |
Equity in earnings in these joint ventures | 3,935 |
Distribution of earnings | (8,540) |
Equity contributions in existing joint ventures | 41,184 |
Balance as of September 30, 2023 | $ | 94,472 |
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 September 30, 2023 and December 31, 2022 and income statement data for the nine months ended September 30, 2023 and 2022 (in thousands):
Balance Sheet Data: | September 30, 2023 |  | December 31, 2022
Current assets | $ | 44,605 |  |  | $ | 39,304 |
Noncurrent assets | 176,527 |  |  | 134,694 |
Current liabilities | (42,486) |  |  | (29,588) |
Noncurrent liabilities | (73,770) |  |  | (37,952) |
Total net assets | $ | 104,876 |  |  | $ | 106,458 |
Income statement data for the nine months ended September 30, | 2023 |  | 2022
Net revenue | $ | 129,020 |  |  | $ | 107,241 |
Net income | $ | 7,906 |  |  | $ | 17,034 |

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