UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~September 30, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-33307

RadNet, Inc.

(Exact name of registrant as specified in charter)


Delaware		13-3326724
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1510 Cotner Avenue
Los Angeles,	California	90025
(Address of principal executive offices)		(Zip Code)

(310) 478-7808

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Class Title

Trading Symbol

Registered Exchange

Common Stock

RDNT

NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

The number of shares of the registrant’s common stock outstanding on ~~May 6,~~November 4, 2021 was ~~52,700,039~~53,436,698 shares.

Table of Contents

RADNET, INC.

TABLE OF CONTENTS


			Page

PART I – FINANCIAL INFORMATION			1

ITEM 1. Financial Statements			1

Condensed Consolidated Balance Sheets at ~~March 31,~~September 30, 2021 and December 31, 2020			1

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended ~~March 31,~~September 30, 2021 and 2020			2

Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months ~~Ended March 31,~~September 30, 2021 and 2020			3

Condensed Consolidated Statement of Stockholders' Equity for the Three Months Ended ~~March 31,~~September 30, 2021 and 2020			4

Condensed Consolidated Statement of Stockholders’ Equity for the Nine Months Ended September 30, 2021 and 2020			6

Condensed Consolidated Statements of Cash Flows for the ~~Three~~Nine Months Ended ~~March 31,~~September 30, 2021 and 2020			58

Notes to Condensed Consolidated Financial Statements			710

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2226

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk			3643

ITEM 4. Controls and Procedures			3643

PART II – OTHER INFORMATION			3845

ITEM 1. Legal Proceedings			3845

ITEM 1A. Risk Factors			3845

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds			3845

ITEM 3. Defaults Upon Senior Securities			3845

ITEM 4. Mine Safety Disclosures			3845

ITEM 5. Other Information			3845

ITEM 6. Exhibits			3946

SIGNATURES			4047

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1 – Financial Statements

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)


		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020
		(unaudited)					(unaudited)
ASSETS	ASSETS					ASSETS
CURRENT ASSETS	CURRENT ASSETS					CURRENT ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	31,091	$	102,018	Cash and cash equivalents	$	151,253	$	102,018
Accounts receivable	Accounts receivable	146,665		129,585		Accounts receivable	152,409		129,585
Due from affiliates	Due from affiliates	7,521		5,836		Due from affiliates	6,280		5,836
Prepaid expenses and other current assets	Prepaid expenses and other current assets	37,720		32,985		Prepaid expenses and other current assets	30,054		32,985

Total current assets	Total current assets	222,997		270,424		Total current assets	339,996		270,424
PROPERTY, EQUIPMENT AND RIGHT-OF-USE ASSETS	PROPERTY, EQUIPMENT AND RIGHT-OF-USE ASSETS					PROPERTY, EQUIPMENT AND RIGHT-OF-USE ASSETS
Property and equipment, net	Property and equipment, net	412,711		399,335		Property and equipment, net	452,145		399,335
Operating lease right-of-use assets	Operating lease right-of-use assets	529,563		483,661		Operating lease right-of-use assets	577,712		483,661
Total property, equipment and right-of-use assets	Total property, equipment and right-of-use assets	942,274		882,996		Total property, equipment and right-of-use assets	1,029,857		882,996
OTHER ASSETS	OTHER ASSETS					OTHER ASSETS
Goodwill	Goodwill	502,566		472,879		Goodwill	502,710		472,879
Other intangible assets	Other intangible assets	52,198		52,393		Other intangible assets	57,499		52,393
Deferred financing costs	Deferred financing costs	1,590		1,767		Deferred financing costs	2,260		1,767
Investment in joint ventures	Investment in joint ventures	36,813		34,528		Investment in joint ventures	44,228		34,528
Deferred tax assets, net of current portion		31,554		34,687
Deferred tax assets						Deferred tax assets	24,563		34,687
Deposits and other	Deposits and other	38,794		36,983		Deposits and other	41,250		36,983
Total assets	Total assets	$	1,828,786	$	1,786,657	Total assets	$	2,042,363	$	1,786,657
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
CURRENT LIABILITIES	CURRENT LIABILITIES					CURRENT LIABILITIES
Accounts payable, accrued expenses and other	Accounts payable, accrued expenses and other	$	231,700	$	236,684	Accounts payable, accrued expenses and other	$	240,837	$	236,684
Due to affiliates	Due to affiliates	18,133		14,010		Due to affiliates	29,261		14,010
Deferred revenue	Deferred revenue	40,648		39,257		Deferred revenue	19,619		39,257
Current finance lease liability	Current finance lease liability	2,080		2,578		Current finance lease liability	—		2,578
Current operating lease liability	Current operating lease liability	69,890		65,794		Current operating lease liability	70,613		65,794
Current portion of notes payable	Current portion of notes payable	40,166		39,791		Current portion of notes payable	11,165		39,791
Total current liabilities	Total current liabilities	402,617		398,114		Total current liabilities	371,495		398,114
LONG-TERM LIABILITIES	LONG-TERM LIABILITIES					LONG-TERM LIABILITIES
Long-term finance lease liability	Long-term finance lease liability	414		743		Long-term finance lease liability	—		743
Long-term operating lease liability	Long-term operating lease liability	504,474		463,096		Long-term operating lease liability	553,173		463,096
Notes payable, net of current portion	Notes payable, net of current portion	602,684		612,913		Notes payable, net of current portion	746,288		612,913
Other non-current liabilities	Other non-current liabilities	37,239		53,488		Other non-current liabilities	32,028		53,488
Total liabilities	Total liabilities	1,547,428		1,528,354		Total liabilities	1,702,984		1,528,354
EQUITY	EQUITY					EQUITY
Common stock - $0.0001 par value, 200,000,000 shares authorized; 52,340,856 and 51,640,537 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively		5		5
Common stock - $0.0001 par value, 200,000,000 shares authorized; 53,301,816 and 51,640,537 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively						Common stock - $0.0001 par value, 200,000,000 shares authorized; 53,301,816 and 51,640,537 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively	5		5
Additional paid-in-capital	Additional paid-in-capital	316,032		307,788		Additional paid-in-capital	335,599		307,788
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(23,138)		(24,051)		Accumulated other comprehensive loss	(21,317)		(24,051)
Accumulated deficit	Accumulated deficit	(108,541)		(117,999)		Accumulated deficit	(89,450)		(117,999)
Total RadNet, Inc.'s stockholders' equity	Total RadNet, Inc.'s stockholders' equity	184,358		165,743		Total RadNet, Inc.'s stockholders' equity	224,837		165,743
Noncontrolling interests	Noncontrolling interests	97,000		92,560		Noncontrolling interests	114,542		92,560
Total equity	Total equity	281,358		258,303		Total equity	339,379		258,303
Total liabilities and equity	Total liabilities and equity	$	1,828,786	$	1,786,657	Total liabilities and equity	$	2,042,363	$	1,786,657

The accompanying notes are an integral part of these financial statements.

Table of Contents

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

(unaudited)


		Three Months Ended March 31,				Three Months Ended September 30,					Nine Months Ended September 30,
		2021		2020			2021			2020			2021			2020
REVENUE	REVENUE
Service fee revenue	Service fee revenue	$	279,577	$	248,333		Service fee revenue	$	295,407		$	256,730		$	870,479		$	660,760
Revenue under capitation arrangements	Revenue under capitation arrangements	35,742		33,231			Revenue under capitation arrangements	37,283			35,046			111,449			103,145
Total service revenue	Total service revenue	315,319		281,564			Total service revenue	332,690			291,776			981,928			763,905
Provider relief funding	Provider relief funding	6,248		0			Provider relief funding	—			221			6,291			25,696
OPERATING EXPENSES	OPERATING EXPENSES						OPERATING EXPENSES
Cost of operations, excluding depreciation and amortization	Cost of operations, excluding depreciation and amortization	282,280		267,417			Cost of operations, excluding depreciation and amortization	272,756			246,462			838,609			708,095
Depreciation and amortization	Depreciation and amortization	22,656		21,934			Depreciation and amortization	24,606			21,247			71,272			64,536
(Gain) loss on sale and disposal of equipment and other		(1,307)		771
Loss (gain) on sale and disposal of equipment and other							Loss (gain) on sale and disposal of equipment and other	2,595			342			(279)			543
Severance costs	Severance costs	285		218			Severance costs	163			571			715			1,647
Total operating expenses	Total operating expenses	303,914		290,340			Total operating expenses	300,120			268,622			910,317			774,821
INCOME (LOSS) FROM OPERATIONS		17,653		(8,776)
INCOME FROM OPERATIONS							INCOME FROM OPERATIONS	32,570			23,375			77,902			14,780

OTHER INCOME AND EXPENSES	OTHER INCOME AND EXPENSES						OTHER INCOME AND EXPENSES
Interest expense	Interest expense	12,826		11,552			Interest expense	12,032			11,061			37,028			33,443
Equity in earnings of joint ventures	Equity in earnings of joint ventures	(2,285)		(1,955)			Equity in earnings of joint ventures	(2,853)			(2,276)			(8,259)			(5,176)
Non-cash change in fair value of interest rate hedge	Non-cash change in fair value of interest rate hedge	(11,245)		0			Non-cash change in fair value of interest rate hedge	(2,870)			679			(14,149)			4,523
Other expenses		206		6
Total other (income) expenses		(498)		9,603
Debt restructuring and extinguishment expenses							Debt restructuring and extinguishment expenses	—			—			6,044			—
Other (income) expenses							Other (income) expenses	(167)			(139)			1,699			(247)
Total other expenses							Total other expenses	6,142			9,325			22,363			32,543
INCOME (LOSS) BEFORE INCOME TAXES	INCOME (LOSS) BEFORE INCOME TAXES	18,151		(18,379)			INCOME (LOSS) BEFORE INCOME TAXES	26,428			14,050			55,539			(17,763)
(Provision for) benefit from income taxes	(Provision for) benefit from income taxes	(4,376)		4,381			(Provision for) benefit from income taxes	(5,284)			(3,825)			(12,534)			5,029
NET INCOME (LOSS)	NET INCOME (LOSS)	13,775		(13,998)			NET INCOME (LOSS)	21,144			10,225			43,005			(12,734)
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	4,317		2,360			Net income attributable to noncontrolling interests	4,924			4,069			14,455			8,063
NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS	NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS	$	9,458	$	(16,358)		NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS	$	16,220		$	6,156		$	28,550		$	(20,797)

BASIC NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS	BASIC NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS	$	0.18	$	(0.33)		BASIC NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS	$	0.31		$	0.12		$	0.55		$	(0.41)

DILUTED NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS	DILUTED NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS	$	0.18	$	(0.33)		DILUTED NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS	$	0.30		$	0.12		$	0.54		$	(0.41)
WEIGHTED AVERAGE SHARES OUTSTANDING	WEIGHTED AVERAGE SHARES OUTSTANDING						WEIGHTED AVERAGE SHARES OUTSTANDING
Basic	Basic	51,951,506		50,294,329			Basic	52,810,644			51,358,603			52,323,360			50,746,380
Diluted	Diluted	52,828,941		50,294,329			Diluted	53,817,840			51,955,815			53,249,698			50,746,380

The accompanying notes are an integral part of these financial statements.

Table of Contents

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(IN THOUSANDS)

(unaudited)


		Three Months Ended March 31,				Three Months Ended September 30,							Nine Months Ended September 30,
		2021		2020			2021				2020				2021				2020
NET INCOME (LOSS)	NET INCOME (LOSS)	$	13,775	$	(13,998)		$	21,144			$	10,225			$	43,005			$	(12,734)
Foreign currency translation adjustments	Foreign currency translation adjustments	(12)		1			Foreign currency translation adjustments		(11)				11				(32)				6
Change in fair value of cash flow hedge, net of taxes	Change in fair value of cash flow hedge, net of taxes	0		(18,549)			Change in fair value of cash flow hedge, net of taxes		2,870				195				14,149				(18,764)
Change in fair value of cash flow hedge from prior periods reclassified to earnings, net of taxes	Change in fair value of cash flow hedge from prior periods reclassified to earnings, net of taxes	925		0			Change in fair value of cash flow hedge from prior periods reclassified to earnings, net of taxes		920				969				2,765				1,861
COMPREHENSIVE INCOME (LOSS)	COMPREHENSIVE INCOME (LOSS)	14,688		(32,546)			COMPREHENSIVE INCOME (LOSS)		24,923				11,400				59,887				(29,631)
Less comprehensive income attributable to noncontrolling interests	Less comprehensive income attributable to noncontrolling interests	4,317		2,360			Less comprehensive income attributable to noncontrolling interests		4,924				4,069				14,455				8,063
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO	COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO						COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO
RADNET, INC. COMMON STOCKHOLDERS	RADNET, INC. COMMON STOCKHOLDERS	$	10,371	$	(34,906)		RADNET, INC. COMMON STOCKHOLDERS		$	19,999			$	7,331			$	45,432			$	(37,694)

The accompanying notes are an integral part of these financial statements.

Table of Contents

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(IN THOUSANDS EXCEPT SHARE DATA)

(unaudited)

The following table summarizes changes in the Company’s consolidated stockholders' equity, including noncontrolling interest, during the three months ended ~~March 31,~~September 30, 2021 and ~~March 31,~~September 30, 2020.

Common Stock Additional Paid-In
Capital Accumulated Other
Comprehensive
Income (Loss) Accumulated
Deficit Total
Radnet, Inc.'s
Equity Noncontrolling
Interests Total
Equity
Shares Amount
BALANCE - January 1, 2021 51,640,537 $ 5 $ 307,788 $ (24,051) $ (117,999) $ 165,743 $ 92,560 $ 258,303
Issuance of common stock under the equity compensation plan 699,825 — — — — — — 0
Issuance of common stock under the DeepHealth equity compensation plan 494 — — — — — — 0
Stock-based compensation expense — — 8,248 — — 8,248 — 8,248
Purchase of noncontrolling interests — — (4) — — (4) — (4)
Contribution from noncontrolling partner — — — — — — 123 123
Change in cumulative foreign currency translation adjustment — — — (12) — (12) — (12)
Change in fair value of cash flow hedge from prior periods reclassified to earnings, net of taxes — — — 925 — 925 — 925
Net income — — — — 9,458 9,458 4,317 13,775
BALANCE-MARCH 31, 2021 52,340,856 $ 5 $ 316,032 $ (23,138) $ (108,541) $ 184,358 $ 97,000 $ 281,358
BALANCE - January 1, 2020 50,314,328 $ 5 $ 262,865 $ (8,026) $ (103,159) $ 151,685 $ 81,454 $ 233,139
Issuance of common stock under the equity compensation plan 380,047 — — — — — — 0
Stock-based compensation expense — — 6,596 — — 6,596 — 6,596
Change in cumulative foreign currency translation adjustment — — — 1 — 1 — 1
Change in fair value cash flow hedge, net of taxes — — — (18,549) — (18,549) — (18,549)
Net (loss) income — — — — (16,358) (16,358) 2,360 (13,998)
BALANCE-MARCH 31, 2020 50,694,375 $ 5 $ 269,461 $ (26,574) $ (119,517) $ 123,375 $ 83,814 $ 207,189

Table of Contents


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Radnet, Inc.'s Equity		Noncontrolling Interests		Total Equity
	Shares	Amount
BALANCE - JUNE 30, 2021	52,678,030	$	5	$	324,954	$	(22,227)	$	(105,668)	$	197,064	$	102,215	$	299,279


Issuance of common stock under the equity compensation plan	94,638	—		—		—		—		—		—		—
Issuance of common stock under the DeepHealth equity compensation plan	464,855	—		—		—		—		—		—		—
Stock-based compensation expense	—	—		4,463		—		—		4,463		—		4,463

Issuance of common stock for sale of unregistered securities for acquisition	67,658	—		2,025		—		—		2,025		—		2,025
Forfeiture of restricted stock	(3,365)	—		(42)		—		—		(42)		—		(42)
Sale of economic interests in majority owned subsidiary, net of taxes	—	—		4,198		—		—		4,198		7,404		11,602





Change in cumulative foreign currency translation adjustment	—	—		—		(11)		—		(11)		—		(11)

Change in fair value of cash flow hedge from prior periods reclassified to earnings, net of taxes	—	—		—		920		—		920		—		920
Other	—	—		1		1		(2)		—		(1)		(1)
Net income	—	—		—		—		16,220		16,220		4,924		21,144
BALANCE-SEPTEMBER 30, 2021	53,301,816	$	5	$	335,599	$	(21,317)	$	(89,450)	$	224,837	$	114,542	$	339,379

BALANCE - JUNE 30, 2020	51,554,760	$	5	$	304,012	$	(26,098)	$	(130,111)	$	147,808	$	85,448	$	233,256
Issuance of common stock upon exercise of options	—	—		—		—		—		—		—		—
Issuance of common stock under the equity compensation plan	37,000	—		—		—		—		—		—		—
Issuance of common stock under the DeepHealth equity compensation plan	4,338	—		—		—		—		—		—		—
Stock-based compensation expense	—	—		2,067		—		—		2,067		—		2,067





Purchase of noncontrolling interests	—	—		—		—		—		—		(601)		(601)
Change in cumulative foreign currency translation adjustment	—	—		—		11		—		11		—		11
Change in fair value cash flow hedge, net of taxes	—	—		—		195		—		195		—		195
Change in fair value of cash flow hedge from prior periods reclassified to earnings	—	—		—		969		—		969				969
Other	—	—		—		—		(1)		(1)		—		(1)
Net income	—	—		—		—		6,156		6,156		4,069		10,225
BALANCE-SEPTEMBER 30, 2020	51,596,098	$	5	$	306,079	$	(24,923)	$	(123,956)	$	157,205	$	88,916	$	246,121

The accompanying notes are an integral part of these financial statements.

Table of Contents

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(IN THOUSANDS EXCEPT SHARE DATA)

(unaudited)

The following table summarizes changes in the Company’s consolidated stockholders' equity, including noncontrolling interest, during the nine months ended September 30, 2021 and September 30, 2020.

Table of Contents


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Radnet, Inc.'s Equity		Noncontrolling Interests		Total Equity
	Shares	Amount
BALANCE - DECEMBER 31, 2020	51,640,537	$	5	$	307,788	$	(24,051)	$	(117,999)	$	165,743	$	92,560	$	258,303

Issuance of common stock upon exercise of options	2,500	—		26		—		—		26		—		26
Issuance of common stock under the equity compensation plan	1,127,996	—		—		—		—		—		—		—
Issuance of common stock under the DeepHealth equity compensation plan	466,490	—		—		—		—		—		—		—
Stock-based compensation expense	—	—		21,608		—		—		21,608		—		21,608
Issuance of common stock for sale of unregistered securities for acquisition	67,658	—		2,025		—		—		2,025		—		2,025
Forfeiture of restricted stock	(3,365)	—		(42)		—		—		(42)		—		(42)
Purchase of noncontrolling interests by third party	—	—		(4)		—		—		(4)		—		(4)
Contribution from noncontrolling partner	—	—		—		—		—		—		123		123

Sale of economic interests in majority owned subsidiary, net of taxes	—	—		4,198		—		—		4,198		7,404		11,602
Change in cumulative foreign currency translation adjustment	—	—		—		(32)		—		(32)		—		(32)

Change in fair value of cash flow hedge from prior periods reclassified to earnings, net of taxes	—	—		—		2,765		—		2,765		—		2,765
Other	—	—		—		1		(1)		—		—		—
Net income	—	—		—		—		28,550		28,550		14,455		43,005
BALANCE-SEPTEMBER 30, 2021	53,301,816	$	5	$	335,599	$	(21,317)	$	(89,450)	$	224,837	$	114,542	$	339,379

BALANCE - DECEMBER 31, 2019	50,314,328	$	5	$	262,865	$	(8,026)	$	(103,159)	$	151,685	$	81,454	$	233,139

Issuance of common stock under the equity compensation plan	453,817	—		—		—		—		—		—		—
Issuance of common stock under the DeepHealth equity compensation plan	4,338	—		—		—		—		—		—		—
Stock-based compensation expense	—	—		10,203		—		—		10,203		—		10,203

Issuance of common stock for sale of unregistered securities for the DeepHealth acquisition	823,615	—		33,011		—		—		33,011		—		33,011



Distributions paid to noncontrolling interests	—	—		—		—		—		—		(601)		(601)



Change in cumulative foreign currency translation adjustment	—	—		—		6		—		6		—		6
Change in fair value cash flow hedge, net of taxes	—	—		—		(18,764)		—		(18,764)		—		(18,764)
Change in fair value of cash flow hedge from prior periods reclassified to earnings, net of taxes						1,861				1,861		—		1,861
Net (loss) income	—	—		—		—		(20,797)		(20,797)		8,063		(12,734)
BALANCE-SEPTEMBER 30, 2020	51,596,098	$	5	$	306,079	$	(24,923)	$	(123,956)	$	157,205	$	88,916	$	246,121

Sale of noncontrolling interests, net of taxes

The accompanying notes are an integral part of these financial statements.

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RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(unaudited)


		Three Months Ended March 31,					Nine Months Ended September 30,
		2021		2020			2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES	CASH FLOWS FROM OPERATING ACTIVITIES					CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	Net income (loss)	$	13,775	$	(13,998)	Net income (loss)	$	43,005	$	(12,734)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:	Adjustments to reconcile net income (loss) to net cash provided by operating activities:					Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	22,656		21,934		Depreciation and amortization	71,272		64,536
Amortization of operating lease right-of-use assets	Amortization of operating lease right-of-use assets	17,863		17,259		Amortization of operating lease right-of-use assets	55,880		50,769
Equity in earnings of joint ventures, net of dividends	Equity in earnings of joint ventures, net of dividends	(2,285)		(1,955)		Equity in earnings of joint ventures, net of dividends	(8,259)		530

Amortization of deferred financing costs and loan discount	Amortization of deferred financing costs and loan discount	1,147		1,081		Amortization of deferred financing costs and loan discount	2,608		3,266
(Gain) loss on sale and disposal of equipment and other	(Gain) loss on sale and disposal of equipment and other	(1,307)		771		(Gain) loss on sale and disposal of equipment and other	(279)		543
Amortization of cash flow hedge		925		0
Loss on extinguishment of debt						Loss on extinguishment of debt	1,496		—
Amortization of cash flow hedge, net of taxes						Amortization of cash flow hedge, net of taxes	2,765		2,204
Non-cash change in fair value of interest rate hedge	Non-cash change in fair value of interest rate hedge	(11,245)		0		Non-cash change in fair value of interest rate hedge	(14,149)		4,523
Stock-based compensation	Stock-based compensation	8,248		6,622		Stock-based compensation	21,566		10,144

Change in fair value of contingent consideration	Change in fair value of contingent consideration	200		0		Change in fair value of contingent consideration	891		(145)
Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions:	Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions:					Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions:
Accounts receivable	Accounts receivable	(17,493)		10,504		Accounts receivable	(23,237)		17,380
Other current assets	Other current assets	(4,308)		5,164		Other current assets	3,358		13,522
Other assets	Other assets	(3,507)		677		Other assets	(4,998)		(700)
Deferred taxes	Deferred taxes	3,133		(11,413)		Deferred taxes	10,124		(7,640)
Operating lease liability	Operating lease liability	(18,291)		(17,345)		Operating lease liability	(55,035)		(43,351)
Deferred revenue	Deferred revenue	1,416		28		Deferred revenue	(19,438)		44,530
Accounts payable, accrued expenses and other	Accounts payable, accrued expenses and other	17,157		21,584		Accounts payable, accrued expenses and other	12,725		22,966
Net cash provided by operating activities	Net cash provided by operating activities	28,084		40,913		Net cash provided by operating activities	100,295		170,343
CASH FLOWS FROM INVESTING ACTIVITIES	CASH FLOWS FROM INVESTING ACTIVITIES					CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of imaging facilities and other acquisitions	Purchase of imaging facilities and other acquisitions	(57,075)		(4,300)		Purchase of imaging facilities and other acquisitions	(70,108)		(10,125)

Purchase of property and equipment	Purchase of property and equipment	(30,424)		(51,538)		Purchase of property and equipment	(88,478)		(77,303)
Proceeds from sale of equipment	Proceeds from sale of equipment	151		779		Proceeds from sale of equipment	521		779

Equity contributions in existing and purchase of interest in joint ventures						Equity contributions in existing and purchase of interest in joint ventures	(1,441)		(1,631)
Net cash used in investing activities	Net cash used in investing activities	(87,348)		(55,059)		Net cash used in investing activities	(159,506)		(88,280)
CASH FLOWS FROM FINANCING ACTIVITIES	CASH FLOWS FROM FINANCING ACTIVITIES					CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on notes and leases payable	Principal payments on notes and leases payable	(827)		(914)		Principal payments on notes and leases payable	(3,302)		(2,704)
Payments on term loan debt	Payments on term loan debt	(10,824)		(10,824)		Payments on term loan debt	(616,217)		(33,472)
Additional deferred finance costs on revolving loan amendment						Additional deferred finance costs on revolving loan amendment	—		(741)
Proceeds from debt refinancing, net of issuing costs						Proceeds from debt refinancing, net of issuing costs	716,369		—
Proceeds from sale of economic interest in majority owned subsidiary, net of taxes						Proceeds from sale of economic interest in majority owned subsidiary, net of taxes	11,602		—

Distributions paid to noncontrolling interests						Distributions paid to noncontrolling interests	—		(601)

Proceeds from paycheck protection program loans						Proceeds from paycheck protection program loans	—		4,023
Proceeds from revolving credit facility	Proceeds from revolving credit facility	87,100		215,900		Proceeds from revolving credit facility	128,300		250,900
Payments on revolving credit facility	Payments on revolving credit facility	(87,100)		(135,900)		Payments on revolving credit facility	(128,300)		(250,900)

Net cash (used in) provided by financing activities		(11,651)		68,262
Proceeds from issuance of common stock upon exercise of options						Proceeds from issuance of common stock upon exercise of options	26		—
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	108,478		(33,495)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	EFFECT OF EXCHANGE RATE CHANGES ON CASH	(12)		1		EFFECT OF EXCHANGE RATE CHANGES ON CASH	(32)		6
NET INCREASE IN CASH AND CASH EQUIVALENTS	NET INCREASE IN CASH AND CASH EQUIVALENTS	(70,927)		54,117		NET INCREASE IN CASH AND CASH EQUIVALENTS	49,235		48,574
CASH AND CASH EQUIVALENTS, beginning of period	CASH AND CASH EQUIVALENTS, beginning of period	102,018		40,165		CASH AND CASH EQUIVALENTS, beginning of period	102,018		40,165
CASH AND CASH EQUIVALENTS, end of period	CASH AND CASH EQUIVALENTS, end of period	$	31,091	$	94,282	CASH AND CASH EQUIVALENTS, end of period	$	151,253	$	88,739

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION	SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION					SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest	Cash paid during the period for interest	$	8,267	$	9,934	Cash paid during the period for interest	$	21,408	$	31,210
Cash paid during the period for income taxes						Cash paid during the period for income taxes	$	1,913	$	5,036

The accompanying notes are an integral part of these financial statements.

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RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(unaudited)

Supplemental Schedule of Non-Cash Investing and Financing Activities

We acquired equipment and certain leasehold improvements for approximately ~~$28.8~~$50.5 million and ~~$30.8~~$28.1 million during the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020, respectively, which were not paid for as of ~~March 31,~~September 30, 2021 and 2020, respectively. The offsetting amounts due were recorded in our condensed consolidated balance sheet under accounts payable, accrued expenses and other.

On August 24, 2021, we completed our stock purchase of Tangent Associates LLC by issuing 67,658 shares of our common stock to complete the transaction. The shares were ascribed a value of $2.0 million.

On January 1, 2021 we entered into the Simi Valley Imaging Group, LLC, partnership agreement with Simi Valley Hospital and Health Services ("Simi Adventist"). Of the total combined assets of $0.4 million, RadNet transferred $0.3 million and Simi Adventist contributed the remaining $0.1 million.

On June 1, 2020, we completed our stock purchase of DeepHealth, Inc. by issuing 823,615 shares of our common stock to purchase all of Deep Health's shares and share equivalents. The shares were ascribed a value of $13.9 million.

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RADNET, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1 – NATURE OF BUSINESS AND BASIS OF PRESENTATION

We are a national provider of freestanding, fixed-site outpatient diagnostic imaging services with operations in 7 U.S. states. At ~~March 31,~~September 30, 2021, we operated, directly or indirectly through joint ventures with hospitals, ~~346~~350 centers located in Arizona, California, Delaware, Florida, Maryland, New Jersey, and New York. Our centers provide physicians with imaging capabilities to facilitate the diagnosis and treatment of diseases and disorders. Our services include magnetic resonance imaging (MRI), computed tomography (CT), positron emission tomography (PET), nuclear medicine, mammography, ultrasound, diagnostic radiology (X-ray), fluoroscopy and other related procedures. The vast majority of our centers offer multi-modality imaging services. Our multi-modality strategy diversifies revenue streams, reduces exposure to reimbursement changes and provides patients and referring physicians the convenience of a single location to serve the needs of multiple procedures. In addition to our imaging services, we design and develop software applications, artificial intelligence tools and other computerized systems for the diagnostic imaging industry. Our operations comprise a single segment for financial reporting purposes.

The consolidated financial statements include the accounts of RadNet, Inc as well as its subsidiaries in which RadNet has a controlling financial interest. The consolidated financial statements also include certain variable interest entities in which we are the primary beneficiary (as described in more detail below). All material intercompany transactions and balances have been eliminated upon consolidation. All of these affiliated entities are referred to collectively as “RadNet”, “we”, “us”, “our” or the “Company” in this report.

Accounting regulations stipulate that generally any entity with a) insufficient equity to finance its activities without additional subordinated financial support provided by any parties, or b) equity holders that, as a group, lack the characteristics which evidence a controlling financial interest, is considered a variable interest entity (“VIE”). We consolidate all VIEs in which we are the primary beneficiary. We determine whether we are the primary beneficiary of a VIE through a qualitative analysis that identifies which variable interest holder has the controlling financial interest in the VIE. The variable interest holder who has both of the following has the controlling financial interest and is the primary beneficiary: (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE. In performing our analysis, we consider all relevant facts and circumstances, including: the design and activities of the VIE, the terms of the contracts the VIE has entered into, the nature of the VIE’s variable interests issued and how they were negotiated with or marketed to potential investors, and which parties participated significantly in the design or redesign of the entity.

VIEs that we consolidate as the primary beneficiary consist of professional corporations which are owned or controlled by individuals within our senior management, namely Howard G. Berger, M.D., our President and Chief Executive Officer and a member of our Board of Directors, and John V. Crues, III, M.D., RadNet's Medical ~~Director, both of whom are members of our Board of Directors.~~Director. Dr. Berger owns, indirectly, 99% of the equity interests in Beverly Radiology Medical Group III (BRMG) and a controlling interest in ~~two~~2 professional corporations in New York City. BRMG is responsible for the professional medical services at nearly all of our facilities located in California. Dr. Crues owns ~~six~~6 professional corporations which provide medical services in Delaware, Maryland, New Jersey and New York. Additionally, Dr. Crues is a 1% owner of BRMG. These VIEs are collectively referred to as the ~~consolidated medical group ("the Group").~~Group.

RadNet provides non-medical, technical and administrative services to the Group for which it receives a management fee, pursuant to the related management agreements. Through the management agreements we have exclusive authority over all non-medical decision making related to the ongoing business operations and we determine the annual budget. The Group has insignificant operating assets and liabilities, and de minimis equity. Through management agreements with us, substantially all cash flows of the Group after expenses, including professional salaries, are transferred to us. We consolidate the revenue and expenses, assets and liabilities of the Group.

The Group on a combined basis recognized ~~$46.1~~$43.8 million and ~~$39.6~~$38.3 million of revenue, net of management services fees to RadNet, for the three months ended ~~March 31,~~September 30, 2021 and 2020, respectively and ~~$46.1~~$43.8 million and ~~$39.6~~$38.3 million of operating expenses for the three months ended ~~March 31,~~September 30, 2021 and 2020, respectively. RadNet recognized ~~$179.0~~$186.8 million and ~~$147.9~~$169.0 million of total billed net service fee revenue for the three months ended ~~March 31,~~September 30, 2021, and 2020, respectively, for management services provided to the Group relating primarily to the technical portion of billed revenue.

The Group on a combined basis recognized $135.0 million and $104.8 million of revenue, net of management services fees to RadNet, for the nine months ended September 30, 2021 and 2020, respectively and $135.0 million and $104.8 million of operating expenses for the nine months ended September 30, 2021 and 2020, respectively. RadNet recognized $556.4 million

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and $433.3 million of total billed net service fee revenue for the nine months ended September 30, 2021, and 2020, respectively, for management services provided to the Group relating primarily to the technical portion of billed revenue.

The cash flows of the Group are included in the accompanying condensed consolidated statements of cash flows. All intercompany balances and transactions have been eliminated in consolidation. In our condensed consolidated balance sheets at ~~March 31,~~September 30, 2021 and December 31, 2020, we have included approximately ~~$89.9~~$102.7 million and $82.3 million, respectively, of

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accounts receivable and approximately ~~$20.5~~$19.2 million and $15.2 million of accounts payable and accrued liabilities related to the Group, respectively.

The creditors of the Group do not have recourse to our general credit and there are no other arrangements that could expose us to losses on their behalf. However, we may be required to provide financial support to cover any operating expenses in excess of operating revenues.

We also own a 49% economic interest in ScriptSender, LLC, which provides secure data transmission services of medical information. Through a management agreement, RadNet provides management and accounting services and receives an agreed upon fee. ScriptSender, LLC is dependent on RadNet to finance its own activities, and as such we determined that it is a VIE but we are not a primary beneficiary since we do not have the power to direct the activities of the entity that most significantly impact the entity’s economic performance.

At all of our centers not serviced by the Group we have entered into long-term contracts (typically up to 40 years) with independent radiology groups to provide physician services at those centers. These radiology practices provide professional services, including supervision and interpretation of diagnostic imaging procedures, in our diagnostic imaging centers. The radiology practices maintain full control over the provision of professional services. Under these arrangements, in addition to obtaining technical fees for the use of our diagnostic imaging equipment and the provision of technical services, we provide management services and receive a fee based on the value of the services we provide. We own the diagnostic imaging equipment and, therefore, receive 100% of the technical reimbursements associated with imaging procedures. The radiology practice groups retain the professional reimbursements associated with imaging procedures after deducting management service fees paid to us and we have no economic controlling interest in these radiology practices as such, the financial results of these practices are not consolidated in our financial statements.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and, therefore, do not include all information and footnotes necessary for conformity with U.S. generally accepted accounting principles for complete financial statements; however, in the opinion of management, all adjustments consisting of normal recurring adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods ended ~~March 31,~~September 30, 2021 and 2020 have been made. The results of operations for any interim period are not necessarily indicative of the results for a full year. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto contained in our annual report on Form 10-K for the year ended December 31, 2020.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

During the period covered in this report, there have been no material changes to the significant accounting policies we use and have explained, in our annual report on Form 10-K for the fiscal year ended December 31, 2020. The information below is intended only to supplement the disclosure in our annual report on Form 10-K for the fiscal year ended December 31, 2020.

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 third-party payors. 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.

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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 others centers, this service fee revenue is earned through providing the use of our diagnostic imaging equipment and the provision of technical services as well as providing administration services such as clerical and administrative personnel, bookkeeping and accounting services, billing and collection, provision of medical and

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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 revenues during the three and nine months ended ~~March 31,~~September 30, 2021 and 2020 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,				Three Months Ended September 30,							Nine Months Ended September 30,
		2021		2020			2021				2020				2021				2020
Commercial insurance	Commercial insurance	$	182,096	$	155,461		$	185,723			$	160,524			$	555,355			$	412,415
Medicare	Medicare	63,589		57,749			Medicare		73,163				62,704				207,977				154,847
Medicaid	Medicaid	8,451		6,628			Medicaid		8,707				7,098				26,198				18,072
Workers' compensation/personal injury	Workers' compensation/personal injury	10,399		10,274			Workers' compensation/personal injury		11,554				7,183				32,507				25,705
Other patient revenue	Other patient revenue	4,775		5,662			Other patient revenue		4,800				8,328				14,766				17,211
Management fee revenue	Management fee revenue	5,219		2,567			Management fee revenue		5,255				2,675				16,007				8,574
Teleradiology and Software revenue	Teleradiology and Software revenue	2,426		3,770			Teleradiology and Software revenue		2,564				2,349				7,611				8,319
Other	Other	2,622		6,222			Other		3,641				5,869				10,058				15,617
Service fee revenue	Service fee revenue	279,577		248,333			Service fee revenue		295,407				256,730				870,479				660,760
Revenue under capitation arrangements	Revenue under capitation arrangements	35,742		33,231			Revenue under capitation arrangements		37,283				35,046				111,449				103,145
Total service revenue	Total service revenue	$	315,319	$	281,564		Total service revenue		$	332,690			$	291,776			$	981,928			$	763,905

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~~ The Coronavirus Aid, Relief, and Economic Security ("CARES") Act, which was signed in to law on March 27, 2020.

~~Through March 31,~~Beginning in the second quarter of 2020 and through the nine months ended September 30, 2021, we ~~have~~ received ~~since inception of~~funding from the various programs established by the CARES Act ~~$39.5~~as follows:

•$39.5 million of accelerated Medicare payments ~~$32.5 million from general distribution and $4.0~~through the twelve months ended December 31, 2020

•$4.0 million from the Paycheck Protection ~~Program.~~ Program through the twelve months ended December 31, 2020

•$32.6 million total Provider Relief Funding, $26.3 million received for the twelve months ended December 31, 2020 and $6.3 million for the nine months ended September 30, 2021

In addition, we have received for the 12 months ended December 31, 2020, $5.0 million in advance payments from insurer Blue Shield.

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The accelerated Medicare and Blue Shield payments are recorded to Deferred Revenue in our condensed consolidated balance sheet and ~~will be~~are being applied to revenue as services are performed beginning in 2021. For the ~~three~~nine months ended ~~March 31,~~September 30, 2021, ~~$2.5~~$21.2 million of the accelerated Medicare payments and ~~$2.5~~the total advance of $5.0 million ~~of the~~from Blue Shield ~~funds~~ have been applied to revenue.

The amounts obtained from general distribution were accounted for as government grants and recognized as other revenue and displayed as Provider relief funding in our condensed consolidated statements of operations, of which $6.2 million of the total $32.5 million was received in the three months ended March 31, 2021.

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 condensed consolidated statements of operations.

The CARES Act also provides for a payment deferral of the employer portion of Social Security tax incurred during the pandemic, allowing half of such payroll taxes to be deferred until December 2021 and the remaining half until December 2022. At ~~March~~December 31, ~~2021, the Company~~2020, we had in total $16.3 million of deferred Social Security ~~taxes. These~~taxes and at September 30, 2021, we had $8.6 million. The reduction was related to a one time benefit of $7.7 million in federal payroll tax forgiveness. The current portion of payment deferrals

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are recorded as payroll tax liability under the caption “Accounts payable, accrued expenses and other”, while the long term portion is recorded to Other Long Term Liabilities in our condensed consolidated balance sheet.

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. ~~At March 31, 2021 we have $20.5 million~~Amounts remaining to be collected on these ~~agreements.~~agreement were $18.3 million and $20.5 million at September 30, 2021 and December 31, 2020, respectively. We do not utilize factoring arrangements as an integral part of our financing for working capital and assess the party's ability to pay upfront at the inception of the notes receivable and subsequently by reviewing their financial statements annually and reassessing any insolvency risk on a periodic basis.

DEFERRED FINANCING COSTS - Costs of financing are deferred and amortized using the effective interest rate method. Deferred financing costs, net of accumulated amortization, were ~~$1.6~~$2.3 million and $1.8 million, as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively and related to our Barclays Revolving Credit Facility. See Note 5, Credit Facilities and Notes Payable for more information.

PROPERTY AND EQUIPMENT - Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation of property and equipment is performed using the straight-line method over the estimated useful lives of the assets acquired, which range from 3 to 15 years. Leasehold improvements are amortized at the lesser of lease term or their estimated useful lives, which range from 3 to 15 years. Maintenance and repairs are charged to expense as incurred.

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 at ~~March 31,~~September 30, 2021 totaled ~~$502.6~~$502.7 million. Indefinite lived intangible assets at ~~March 31,~~September 30, 2021 were $7.1 million. Goodwill and Indefinite Lived Intangibles are recorded as a result of business combinations. When we determine the carrying value of reporting unit exceeds its fair value an impairment charge would be recognized and should not exceed the total amount of goodwill allocated to that reporting unit. We tested goodwill and indefinite lived intangibles for impairment on October 1, 2020, noting no impairment. However, during 2020 we ceased employing certain indefinite lived trade names with a total value of $4.2 million and they were written

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off in full. In addition to the annual impairment test, we regularly assess if an event has occurred which would require interim impairment testing. We considered the current and expected future economic and market conditions surrounding COVID-19 pandemic and did not identify an indication of goodwill impairment being more likely than not through ~~March 31,~~September 30, 2021. Activity in goodwill for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 is provided below (in thousands):


Balance as of December 31, 2020	$	472,879
Goodwill acquired through acquisitions	~~29,609~~29,754
Goodwill attributable to formation of Simi Valley Imaging Group LLC	105
Other Adjustments	~~(27)~~(28)










Balance as of ~~March 31,~~September 30, 2021	$	~~502,566~~502,710

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

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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.

We recorded income tax expense of ~~$4.4~~$5.3 million, or an effective tax rate of ~~24.1%~~20.0%, for the three months ended ~~March 31,~~September 30, 2021 compared to income tax expense of $3.8 million, or an effective tax rate of 27.2% for the three months ended September 30, 2020. We recorded income tax expense of $12.5 million, or an effective tax rate of 22.6%, for the nine months ended September 30, 2021 compared to a benefit from income taxes of ~~$4.4~~$5.0 million, or an effective tax rate of ~~23.8%~~28.3% for the ~~three~~nine months ended ~~March 31,~~September 30, 2020. The income tax rates for the three and nine months ended ~~March 31,~~September 30, 2021 diverge from the federal statutory rate due to (i) noncontrolling interests due to the controlled partnerships; (ii) effects of state income taxes; and (iii) excess tax benefits attributable to share-based compensation.

We believe no significant changes in the unrecognized tax benefits will occur within the next 12 months.

On March 27, 2020, the President of the United States signed into law the CARES Act, which among other things, includes certain income tax provisions for individuals and corporations; however, these benefits do not impact the Company’s current tax provision.

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. Our ROU assets consist of facility and equipment assets on operating leases. No events have occurred such as fire, flood, or other acts which have impaired the integrity of our ROU assets as of ~~March 31,~~September 30, 2021. 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.

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EQUITY BASED COMPENSATION – We have ~~one~~1 long-term incentive plan that we adopted in 2006 and which we ~~first~~have amended and restated ~~as of~~at various points in time: first on April 20, 2015, ~~and again~~second 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 ~~8, 2017.~~10, 2021. We have reserved ~~14,000,000~~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, ~~awards, stock appreciation rights,~~ stock units, and ~~cash awards.~~stock appreciation rights. Stock options generally vest over three years to five years and expire five years to ten years from date of grant. We determine the compensation expense for each stock option award using the Black Scholes, or similar valuation model. Those models require that our management make certain estimates concerning risk free interest rates and volatility in the trading price of our common stock. The compensation expense recognized for all equity-based awards is recognized over the awards’ service periods. Equity-based compensation is classified in operating expenses within the same line item as the majority of the cash compensation paid to employees. In connection with our acquisition of DeepHealth Inc. on June 1, 2020, we assumed the DeepHealth, Inc. 2017 ~~Stock~~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 6, Stock-Based Compensation, for more information.

COMPREHENSIVE INCOME (LOSS) - ~~ASC 220~~Accounting guidance establishes rules for reporting and displaying comprehensive income or loss and its components. Our unrealized gains or losses on foreign currency translation adjustments, interest rate cap and swap agreements are included in comprehensive loss and are included in the consolidated statements of comprehensive income (loss) for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020.

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

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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

~~2019 SWAPS~~

- In the second quarter of 2019, we entered into 4 forward interest rate agreements ("2019 Swaps"). The 2019 Swaps have total notional amounts of $500,000,000, consisting of 2two agreements of $50,000,000 each and 2two 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 smaller notional and October 2025 for the 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~~are above the arranged rates.

At inception, we designated our 2019 Swaps as cash flow hedges of floating-rate borrowings. In accordance with accounting guidance, derivatives that have been designated and qualify as cash flow hedging instruments are reported at fair value. The gain or loss on the effective portion of the hedge (i.e. change in fair value) is reported as a component of comprehensive 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~~are being 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 through October 2025.

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, 2021
Account January 1, 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, 2021 Balance Location
Accumulated Other Comprehensive Loss, net of taxes $ (22,581) $ 0 $ 925 $ (21,656) Equity

For the twelve months ended December 31, 2020
Account January 1, 2020 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 December 31, 2020 Location
Accumulated Other Comprehensive Loss, net of taxes $ (5,870) $ (19,352) $ 2,641 $ (22,581) Equity

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For the three months ended September 30, 2021
Account	June 30, 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		September 30, 2021 Balance		Location
Accumulated Other Comprehensive Loss, net of taxes	$	(20,736)	$	—	$	920	$	(19,816)	Equity


For the nine months ended September 30, 2021
Account	December 31, 2020 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, 2021 Balance		Location
Accumulated Other Comprehensive Loss, net of taxes	$	(22,581)	$	—	$	2,765	$	(19,816)	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, 2021

For the three months ended September 30, 2021

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)

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)

Gross 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

11,245

Other income (expense)

(925)

Interest Expense

Interest rate contracts

2,870

Other income (expense)

(1,245)

Interest Expense

For the nine months ended September 30, 2021

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)

Gross 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

14,149

Other income (expense)

(3,735)

Interest Expense

See Fair Value Measurements section below for the fair value of the 2019 Swaps at ~~March 31,~~September 30, 2021.

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.

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Level 2—Fair value is determined by using inputs other than Level 1 quoted prices that are directly or indirectly observable. Inputs can include quoted prices for similar assets and liabilities in active markets or quoted prices for identical assets and liabilities in inactive markets. Related inputs can also include those used in valuation or other pricing models such as interest rates and yield curves that can be corroborated by observable market data.

Level 3—Fair value is determined by using inputs that are unobservable and not corroborated by market data. Use of these inputs involves significant and subjective judgment.

Derivatives:

The tables below summarize the estimated fair values of certain of our financial assets that are subject to fair value measurements, and the classification of these assets on our condensed consolidated balance sheets, as follows (in thousands):


		As of March 31, 2021									As of September 30, 2021
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Current and long term liabilities	Current and long term liabilities									Current and long term liabilities

2019 Swaps - Interest Rate Contracts	2019 Swaps - Interest Rate Contracts	$	0	$	26,744	$	0	$	26,744	2019 Swaps - Interest Rate Contracts	$	—	$	23,839	$	—	$	23,839


		As of December 31, 2020									As of December 31, 2020
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Current and long term liabilities	Current and long term liabilities									Current and long term liabilities

2019 Swaps - Interest Rate Contracts	2019 Swaps - Interest Rate Contracts	$	0	$	37,989	$	0	$	37,989	2019 Swaps - Interest Rate Contracts	$	—	$	37,989	$	—	$	37,989

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.

Long Term Debt:

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, 2021											As of September 30, 2021
		Level 1		Level 2		Level 3		Total Fair Value		Total Face Value			Level 1		Level 2		Level 3		Total Fair Value		Total Face Value
First Lien Term Loans and SunTrust Term Loan	First Lien Term Loans and SunTrust Term Loan	$	0	$	652,331	$	0	$	652,331	$	651,580	First Lien Term Loans and SunTrust Term Loan	$	—	$	769,380	$	—	$	769,380	$	771,188

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	As of December 31, 2020
	Level 1		Level 2		Level 3		Total Fair Value		Total Face Value
First Lien Term Loans and SunTrust Term Loan	$	—	$	661,640	$	—	$	661,640	$	662,403

As of December 31, 2020
Level 1 Level 2 Level 3 Total Fair Value Total Face Value
First Lien Term Loans and SunTrust Term Loan $ 0 $ 661,640 $ 0 $ 661,640 $ 662,403

~~As of March 31,~~At September 30, 2021 and at December 31, 2020 our Barclays revolving credit facility had 0no balance outstanding. Our SunTrust revolving credit facility relating to our consolidated subsidiary The New Jersey Imaging Network ("NJIN"), had 0no principal amount outstanding at ~~March 31,~~September 30, 2021 and at December 31, 2020.

The estimated fair value of our long-term debt, which is discussed in Note 5, Credit Facilities and Notes Payable, was determined using Level 2 inputs primarily related to comparable market prices.

We consider the carrying amounts of cash and cash equivalents, receivables, other current assets, current liabilities and other notes payables to approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization or payment. Additionally, we consider the carrying amount of our finance 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):

Three Months Ended March 31,
2021 2020
Net income (loss) attributable to RadNet, Inc.'s common stockholders $ 9,458 $ (16,358)
BASIC NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC.'S COMMON STOCKHOLDERS
Weighted average number of common shares outstanding during the period 51,951,506 50,294,329
Basic net income (loss) per share attributable to RadNet, Inc.'s common stockholders $ 0.18 $ (0.33)
DILUTED NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC.'S COMMON STOCKHOLDERS
Weighted average number of common shares outstanding during the period 51,951,506 50,294,329
Add nonvested restricted stock subject only to service vesting 253,265 0
Add additional shares issuable upon exercise of stock options and warrants 624,170 0
Weighted average number of common shares used in calculating diluted net income per share 52,828,941 50,294,329
Diluted net income (loss) per share attributable to RadNet, Inc.'s common stockholders $ 0.18 $ (0.33)
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 0 314,962
Shares issuable upon the exercise of stock options: 82,595 527,899

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	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net income (loss) attributable to RadNet, Inc.'s common stockholders	$	16,220	$	6,156	$	28,550	$	(20,797)

BASIC NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC.'S COMMON STOCKHOLDERS
Weighted average number of common shares outstanding during the period	52,810,644		51,358,603		52,323,360		50,746,380
Basic net income (loss) per share attributable to RadNet, Inc.'s common stockholders	$	0.31	$	0.12	$	0.55	$	(0.41)

DILUTED NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC.'S COMMON STOCKHOLDERS
Weighted average number of common shares outstanding during the period	52,810,644		51,358,603		52,323,360		50,746,380
Add nonvested restricted stock subject only to service vesting	271,964		120,605		242,523		—
Add additional shares issuable upon exercise of stock options and warrants	735,232		476,607		683,815		—
Weighted average number of common shares used in calculating diluted net income per share	53,817,840		51,955,815		53,249,698		50,746,380
Diluted net income (loss) per share attributable to RadNet, Inc.'s common stockholders	$	0.30	$	0.12	$	0.54	$	(0.41)

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	—		—		—		331,659
Shares issuable upon the exercise of stock options:	—		48,948		—		933,370

EQUITY INVESTMENTS AT FAIR VALUE–Accounting guidance requires entities to measure equity investments at fair value, with any changes in fair value recognized in net income. If there is no readily determinable fair value, the guidance allows entities the ability to measure investments at cost, adjusted for observable price changes and impairments, with changes recognized in net income.

As of ~~March 31,~~September 30, 2021, we have 3three equity investments for which a fair value is not readily determinable and therefore the total amounts invested are recognized at cost as follows:

Medic Vision Imaging Solutions Ltd., 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 identified as of ~~March 31,~~September 30, 2021.

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 tointo an additional 80,000 shares effective December 21, 2019. No observable price changes or impairment in our investment was identified as of ~~March 31,~~September 30, 2021.

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, impairment in our investment or impairment of the loan receivable was identified as of ~~March 31,~~September 30, 2021.

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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, since RadNet does 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 ~~March 31,~~September 30, 2021.

Joint venture investment and financial information

The following table is a summary of our investment in joint ventures during the ~~three~~nine months ended ~~March 31,~~September 30, 2021 (in thousands):


Balance as of December 31, 2020	$	34,528
Equity in earnings in these joint ventures	~~2,285~~8,259




Equity contributions in existing joint ventures	1,441
Balance as of ~~March 31,~~September 30, 2021	$	~~36,813~~44,228

We charged management service fees from the centers underlying these joint ventures of approximately ~~$5.2~~$5.3 million and ~~$2.6~~$2.7 million for the three months ended ~~March 31,~~September 30, 2021 and 2020 and $16.0 million and $8.6 million for the nine months ended September 30, 2021 and 2020, respectively.

~~Table~~On June 23, 2021, we made an additional equity contribution to our joint venture in Arizona of ~~Contents~~

$1.4 million. Our equity ownership interest percentage in the venture did not change.

The following table is a summary of key balance sheet data for these joint ventures as of ~~March 31,~~September 30, 2021 and December 31, 2020 and income statement data for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020 (in thousands):


Balance Sheet Data:	Balance Sheet Data:	March 31, 2021		December 31, 2020		Balance Sheet Data:	September 30, 2021		December 31, 2020
Current assets	Current assets	$	33,265	$	27,085	Current assets	$	46,186	$	27,085
Noncurrent assets	Noncurrent assets	68,493		68,686		Noncurrent assets	67,514		68,686
Current liabilities	Current liabilities	(13,929)		(12,545)		Current liabilities	(12,182)		(12,545)
Noncurrent liabilities	Noncurrent liabilities	(21,371)		(21,582)		Noncurrent liabilities	(20,914)		(21,582)
Total net assets	Total net assets	$	66,458	$	61,644	Total net assets	$	80,604	$	61,644

Book value of RadNet joint venture interests	Book value of RadNet joint venture interests	$	30,351	$	28,079	Book value of RadNet joint venture interests	$	36,940	$	28,079
Cost in excess of book value of acquired joint venture interests and other	Cost in excess of book value of acquired joint venture interests and other	6,462		6,449		Cost in excess of book value of acquired joint venture interests and other	7,288		6,449
Total value of RadNet joint venture interests	Total value of RadNet joint venture interests	$	36,813	$	34,528	Total value of RadNet joint venture interests	$	44,228	$	34,528


Income statement data for the three months ended March 31,		2021		2020
Income statement data for the nine months ended September 30,						Income statement data for the nine months ended September 30,	2021		2020
Net revenue	Net revenue	$	31,718	$	26,341	Net revenue	$	98,193	$	78,988
Net income	Net income	$	4,803	$	4,245	Net income	$	16,007	$	13,651

NOTE 3 – RECENT ACCOUNTING AND REPORTING STANDARD

Accounting standards adopted

In January 2021, the FASB issued ASU 2021-01 ("ASU 2021-01"), Reference Rate Reform (Topic 848), Scope. ASU 2021-01 ~~provides~~ clarifies the scope of Topic 848 so that derivatives affected by the discounting transition are explicitly eligible for certain option expedients and exceptions in Topic 848. The guidance is effective upon issuance and generally can be applied through December 31, 2022. We are currently evaluating the potential impact of ASU 2021-01 on our financial statements.

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In March 2020, the FASB issued ASU 2020-04 ("ASU 2020-04"), Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional expedients and exceptions for applying generally accepted accounting principles to certain contract modifications and hedging relationships that reference London Inter-bank Offered Rate (LIBOR) or another reference rate expected to be discontinued. The guidance is effective upon issuance and generally can be applied through December 31, 2022. We are currently evaluating the potential impact of ASU 2020-04 on our financial statements.

In January 2020, the FASB issued ASU 2020-01 ("ASU 2020-01"), Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), clarifying the interaction between accounting standards related to equity securities, equity method investments, and certain derivatives. ASU 2020-01 is effective for fiscal years beginning after December 15, 2020. The adoption did not have a material impact on our financial statements.

In December 2019, the FASB issued ASU 2019-12 ("ASU 2019-12"), Income Taxes (Topic 740). ASU 2019-12 removes certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other areas of the standard. ASU 2019-12 is effective beginning in the first quarter of 2021. The adoption did not have a material impact on our financial statements.

NOTE 4 – ~~FACILITY ACQUISITIONS~~BUSINESS COMBINATIONS AND RELATED ACTIVITY

Acquisitions

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During ~~the first quarter of~~ 2021, we completed the acquisition of certain assets of the following entities, ~~all located~~which either engage directly in the practice of radiology or associated businesses. The primary reason for these acquisitions was to strengthen our presence in the New York ~~city area.~~City, New Jersey and California markets. We made a ~~preliminary~~ fair value determination of the acquired assets and assumed liabilities and the following were recorded (in thousands):

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Entity Acquired Total Purchase Consideration Property & Equipment Right of Use Assets Goodwill Intangible Assets Other Assets Right of Use Liabilities
Personal Health Imaging PLLC $ 2,995 $ 576 $ 608 $ 2,355 $ 50 $ 14 $ (608)
ZP Elmont LLC 2,194 1,112 1,695 1,005 50 27 (1,695)
ZP Freeport LLC 6,065 3,968 2,361 2,018 50 29 (2,361)
Broadway Medical Imaging LLC 1,155 1,076 1,791 6 50 23 (1,791)
3235 Hempstead LLC 9,386 4,304 10,115 5,032 50 0 (10,115)
SLZM Realty LLC 13,671 3,862 7,715 9,759 50 0 (7,715)
2012 Sunrise Merrick LLC 11,428 2,363 5,919 9,015 50 0 (5,919)
ZP Bayside LLC 3,545 3,385 9,393 40 50 70 (9,393)
ZP Laurelton LLC 2,658 2,530 5,157 32 50 46 (5,157)
ZP Smith LLC 3,978 3,581 10,558 347 50 0 (10,558)
Total $ 57,075 $ 26,757 $ 55,312 $ 29,609 $ 500 $ 209 $ (55,312)


Entity	Date Acquired	Total Consideration	Property & Equipment	Right of Use Assets	Goodwill	Intangible Assets	Other Assets	Right of Use Liabilities
Personal Health Imaging PLLC*	2/1/2021	2,995	576	608	2,355	50	14	(608)
ZP Elmont LLC*	2/1/2021	2,194	1,112	—	1,005	50	27	—
ZP Freeport LLC*	2/1/2021	6,065	4,668	—	1,328	40	29	—
Broadway Medical Imaging LLC*	2/1/2021	1,155	1,076	446	6	50	23	(446)
3235 Hempstead LLC*	2/1/2021	9,386	5,667	—	3,649	70	—	—
SLZM Realty LLC*	2/1/2021	13,671	4,617	—	8,974	80	—	—
2012 Sunrise Merrick LLC*	2/1/2021	11,428	2,741	335	8,617	70	—	(335)
ZP Bayside LLC*	3/1/2021	3,545	3,385	2,191	40	50	70	(2,191)
ZP Laurelton LLC*	3/1/2021	2,658	2,530	1,418	32	50	46	(1,418)
ZP Smith LLC*	3/1/2021	3,978	3,581	2,214	347	50	—	(2,214)
ZP 907 Northern LLC	4/1/2021	562	507	1,817	5	50	—	(1,817)
William M. Kelly MD, Inc.	5/1/2021	3,750	990	1,379	2,710	50	—	(1,379)
60th Street MRI, LLC	5/1/2021	400	85	—	290	25	—	—
ZP Parkchester LLC	5/1/2021	263	213	311	—	50	—	(311)
ZP Eastern LLC	6/1/2021	2,868	2,801	1,951	17	50	—	(1,951)
Tangent Associates LLC**	8/24/2021	2,025	10	—	379	1,636	—	—
Total		66,943	34,559	12,670	29,754	2,421	209	(12,670)

*Fair Value Determination is Final

** All stock purchase through issuing 67,658 shares of our common stock.

Formation of majority owned subsidiary

On January 1, 2021 we entered into the Simi Valley Imaging Group, LLC, a partnership with Simi Valley Hospital and Health Services ("Simi Adventist"). The operation will offer multi-modality imaging services out of two locations in Ventura County, California. Total investment in the venture is $0.4 million. RadNet contributed $0.3 million in assets for a 60% economic interest and Simi Adventist contributed assets totaling $0.1 million for a 40% economic interest.

Sale of ownership interest in a majority owned subsidiary

Effective September 1, 2021 we completed the sale of a 24.9% ownership interest in our majority owned subsidiary West Valley Imaging Group, LLC for $13.1 million to Tarzana Medical Center, LLC. After the sale, our ownership interest in the subsidiary has reduced from 75.0% to 50.1% and we retain a controlling financial interest in the subsidiary. We recognized in additional paid in capital on our condensed consolidated balance sheets, $4.2 million excess in consideration over the carrying value of the sold economic interest. Post the sale of our ownership interest we acquired from Tarzana Medical Center, LLC, certain intangible business assets for purchase consideration of approximately $5.2 million.

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NOTE 5 – CREDIT FACILITIES AND NOTES PAYABLE

As of ~~March 31,~~September 30, 2021 and December 31, 2020 our term loan debt obligations ~~consisted of the following~~are as follows (in thousands):

March 31,
2021 December 31,
2020
First Lien Term Loans collateralized by RadNet's tangible and intangible assets $ 601,330 $ 611,028
Discounts on First Lien Term Loans (8,730) (9,699)
SunTrust Term Loan Agreement collateralized by NJIN's tangible and intangible assets 50,250 51,375
Total debt obligations 642,850 652,704
Less: current portion (40,166) (39,791)
Long term portion debt obligations $ 602,684 $ 612,913

Included in our condensed consolidated balance sheets at March 31, 2021 are $601.3 million of First Lien Term Loans and $50.3 million of SunTrust Term Loan debt for a combined total of $651.6 million of total term loan debt (exclusive of unamortized discounts of $8.7 million) in thousands:

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Face Value Discount Total Carrying
Value
First Lien Term Loans $ 601,330 $ (8,730) $ 592,600
SunTrust Term Loan 50,250 0 50,250
Total Term Loans $ 651,580 $ (8,730) $ 642,850



	September 30, 2021		December 31, 2020
First Lien Term Loans collateralized by RadNet's tangible and intangible assets	$	723,188	$	611,028
Discount on First Lien Term Loans	(13,735)		(9,699)
SunTrust Term Loan collateralized by NJIN's tangible and intangible assets	48,000		51,375



Total debt obligations	757,453		652,704
Less: current portion	(11,165)		(39,791)
Long term portion debt obligations	$	746,288	$	612,913

We had 0no outstanding balance under our $195.0 million Barclays Revolving Credit Facility at ~~March 31,~~September 30, 2021 and have reserved ~~$7.9~~$7.8 million for certain letters of credit. The remaining ~~$187.1~~$187.2 million of our Barclays Revolving Credit Facility was available to draw upon as of ~~March 31,~~September 30, 2021. We had 0no outstanding balance under our $30.0 million SunTrust Revolving Credit Facility at ~~March 31,~~September 30, 2021. As of ~~March 31,~~September 30, 2021, we were in compliance with all covenants under our credit facilities.

~~Senior Secured Credit Facilities~~

~~Barclays Credit Facilities:~~

At March 31, 2021, our Barclays credit facilities were comprised of one tranche of term loans (“First Lien Term Loans”) in the principal amount described in the table above and a revolving credit facility of $195.0 million (the “Barclays Revolving Credit Facility”) both of which are provided pursuant to theSecond Amended and Restated First Lien Credit and Guaranty Agreement ~~dated July 1, 2016, among RadNet, Barclays Bank plc, as administrative agent,~~

On April 23, 2021, we entered into the Second Amended and ~~the lenders identified therein (as amended, the~~Restated First Lien Credit and Guaranty Agreement (the "Restated Credit Agreement") which provides for $725.0 million of senior secured first lien term loans (the "First Lien ~~Credit Agreement"~~Term Loans")~~. Deferred financing costs at March 31, 2021, net of accumulated amortization, was $1.6~~ and a $195.0 million ~~and is specifically related to our Barclays~~senior secured revolving credit facility (the "Barclays Revolving Credit ~~Facility.~~

~~Our~~Facility"). The proceeds of the First Lien Term Loans were used to refinance loans outstanding under our prior first lien credit agreement and provide funding for current and future operations. Total costs of the Restated Credit Agreement amounted to approximately $14.9 million segregated as follows: $8.8 million capitalized to discount and deferred finance cost, $4.5 million expensed to debt restructuring costs, $1.5 million charged to loss on early extinguishment of debt and $0.1 million written off to interest expense. Amounts capitalized will be amortized over the remaining terms of the respective credit facilities under the Restated Credit Agreement.

Senior Secured Credit Facilities

First Lien Term Loans:

The First Lien Term Loans under the Restated Credit Agreement bear interest at either ~~an Adjusted~~a Eurodollar Rate or aan Alternate Base Rate (in each case, as defined in the Restated Credit Agreement), plus an applicable margin. The applicable margin ~~according~~for Eurodollar Rate term loans under the Restated Credit Agreement is 3.25% per annum, with a reduction to 3.00% per annum upon delivery by us of financial statements for the ~~following schedule:~~

First Lien Leverage Ratio Eurodollar Rate Spread Base Rate Spread
> 5.50x 4.50% 3.50%
> 4.00x but ≤ 5.50x 3.75% 2.75%
>3.50x but ≤ 4.00x 3.50% 2.50%
≤ 3.50x 3.25% 2.25%

Atperiod ending March 31, 2021 evidencing a first lien net leverage ratio of 3.50 to 1.00 or less. Such statements were delivered by us on May 27, 2021. At September 30, 2021 the effective ~~Adjusted~~ Eurodollar Rate and the Alternate Base Rate for the First Lien Term Loans under the Restated Credit Agreement was ~~1.00%~~0.75% and 3.25%, respectively and the applicable margin for ~~Adjusted~~the Eurodollar Rate and Alternate Base Rate ~~borrowings~~First Lien Term Loans under the Restated Credit Agreement was ~~3.50%~~3.00% and ~~2.50%~~2.00%, respectively.

The ~~First Lien~~Restated Credit Agreement provides for quarterly payments of principal ~~under~~for the First Lien Term ~~Loans~~Loan in the amount of approximately ~~$9.7~~$1.8 million. The First Lien Term ~~Loans~~Loan will mature on ~~July 1, 2023~~April 23, 2028 unless otherwise accelerated under the terms of the ~~First Lien~~Restated Credit Agreement.

SunTrust Credit Facilities:

At ~~March 31,~~September 30, 2021, our SunTrust credit facilities, which relate to our consolidated subsidiary ~~NJIN,~~The New Jersey Imaging Network, L.L.C.("NJIN"), were comprised of one term loan in the principal amount described in the table above (the "SunTrust Term Loan") and a revolving credit facility of $30.0 million (the "SunTrust Revolving Credit Facility") both of which are provided pursuant to the Amended and Restated Revolving Credit and Term Loan Agreement dated August 31, 2018, among NJIN, as borrower, with SunTrust Bank, as administrative agent, and the lenders identified therein (as amended, the "SunTrust Credit Agreement"). Our SunTrust Term Loan bears interest at either an Adjusted LIBOR or a Base Rate (each as defined in the SunTrust Credit Agreement), plus an applicable margin according to the following schedule:

1822

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Pricing Level

Leverage Ratio

Applicable Margin for Eurodollar Loans

Applicable Margin for Base Rate Loans

Applicable Margin for Letter of Credit Fees

Applicable Percentage for Commitment Fee

Greater than or equal to 3.00:1.00

2.75%

per annum

1.75%

per annum

2.75%

per annum

0.45%

per annum

Less than 3.00:1.00 but greater than or equal to 2.50:1.00

2.25%

per annum

1.25%

per annum

2.25%

per annum

0.40%

per annum

III

Less than 2.50:1.00 but greater than or equal to

2.00:1.00

2.00%

per annum

1.00%

per annum

2.00%

per annum

0.35%

per annum

Less than 2.00:1.00 but greater than or equal to 1.50:1.00

1.75%

per annum

0.75%

per annum

1.75%

per annum

0.30%

per annum

Less than 1.50:1.00

1.50%

per annum

0.50%

per annum

1.50%

per annum

0.30%

per annum

The loans and other obligations outstanding under the SunTrust Credit Agreement currently bear interest at a three month LIBOR election at ~~0.25%~~0.15% plus an applicable margin and fees based on Pricing Level ~~III~~V described above.

The scheduled amortization of the SunTrust Term Loan began December 31, 2018 with quarterly payments of $0.8 million, representing annual amortization equal to 5.0% of the original principal amount of the SunTrust Term Loan. At scheduled intervals, the quarterly amortization increases by $0.4 million, with the remaining balance to be paid at maturity. The SunTrust Term Loan will mature on August 31, 2023 unless otherwise accelerated under the terms of the SunTrust Credit ~~Facility.~~Agreement.

Revolving Credit Facilities

Barclays Revolving Credit Facility

The Barclays Revolving Credit Facility under the Restated Credit Agreement is a $195.0 million senior secured revolving credit facility. Associated with the Barclays Revolving Credit Facility are deferred financing costs, net of accumulated amortization, of $2.3 million at September 30, 2021.

Revolving loans borrowed under the Barclays Revolving Credit Facility bear interest at either ~~an Adjusted~~a Eurodollar Rate or aan Alternate Base Rate (in each case, as ~~more fully~~ defined in the ~~First Lien~~Restated Credit Agreement) plus an applicable ~~margin. The applicable~~ margin ~~for borrowing under the Barclays Revolving Credit Facility varies based~~which adjusts depending on our first lien net leverage ratio, ~~in accordance with~~according to the ~~same schedule set forth above for First Lien Term Loans.~~ following schedule:


First Lien Net Leverage Ratio	Eurodollar Rate Spread	Alternate Base Rate Spread
> 3.50x	3.25%	2.25%
> 3.00x but ≤ 3.50x	3.00%	2.00%
≤ 3.00x	2.75%	1.75%

As of ~~March 31,~~September 30, 2021, the effective interest rate payable on revolving loans under the Barclays Revolving Credit Facility was ~~5.75%~~5.00%.

For letters of credit issued under the Barclays Revolving Credit Facility, letter of credit fees accrue at the applicable margin for ~~Adjusted~~ Eurodollar ~~Rate,~~rate revolving loans which is currently ~~3.50% ,~~2.75% and fronting fees accrue at ~~0.25%~~0.125% per annum, in each case on the average aggregate daily maximum amount available to be drawn under all letters of credit issued under the ~~First Lien~~Restated Credit Agreement. In addition, a commitment fee of 0.50% per annum accrues on the unused revolver commitments under the Barclays Revolving Credit Facility.

The Barclays Revolving Credit Facility will terminate on April 23, 2026 unless otherwise accelerated in accordance with the ~~earlier~~terms of ~~July 1, 2023 or termination due to specific events of default pursuant to~~ the ~~First Lien~~Restated Credit Agreement.

~~Our Barclays Revolving Credit Facility was amended in August 2020 to add $57.5 million~~

Table of revolving commitments, which additional commitments increased the maximum borrowing capacity to $195.0 million. Total issue costs added in relation to the eighth amendment amounted to approximately $0.7 million and was capitalized as deferred financing costs and will be amortized over the remaining term of the First Lien Credit Agreement.Contents

SunTrust Revolving Credit Facility

The SunTrust Credit Agreement established a $30.0 million revolving credit facility available to NJIN for funding requirements. The SunTrust Revolving Credit Facility terminates on the earliest of (i) August 31, 2023, (ii) the voluntary termination thereof by NJIN pursuant to Section 2.8 of the SunTrust Credit Agreement, or (iii) the date on which all amounts outstanding under the SunTrust Credit Agreement have been declared or have automatically become due and payable (whether

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by acceleration or otherwise). As of ~~March 31,~~September 30, 2021, NJIN had no borrowings under the SunTrust Revolving Credit Facility.

Recent ~~Amendments~~prior amendments to prior credit facilities:

Barclays Credit Facilities:

On April 23, 2021, after the period covered by this report, we entered into the Second Amended and Restated First Lien Credit and Guaranty Agreement which provides for $725.0 million of senior secured first lien term loans and a $195.0 million senior secured revolving credit facility. See Note 7, Subsequent Events, for more information.

On August 28, 2020, RadNet Management, Inc. and RadNet, Inc. entered into Amendment No. 8, Consent and Incremental Joinder Agreement to Credit and Guaranty Agreement (the "Eighth Amendment"). The Eighth Amendment ~~amends~~amended the ~~First Lien Credit Agreement~~prior first lien credit agreement to add $57.5 million of revolving commitments to the prior Barclays ~~Revolving Credit Facility~~revolving credit facility increasing the maximum borrowing capacity under the prior Barclays revolving credit facility to $195.0 million while leaving the maturity date of July 1, 2023 unchanged. Total issue costs added in relation to the Eighth Amendment amounted to approximately $0.7 million and was capitalized as deferred financing costs and will be amortized over the remaining term of the First Lien Credit Agreement.

On April 18, 2019 we entered into the following ~~two~~2 amendments to the ~~First Lien Credit Agreement:~~prior first lien credit agreement: (i) Amendment No. 6, Consent and Incremental Joinder Agreement to Credit and Guaranty Agreement (the “Sixth Amendment”); and (ii) Amendment No. 7 to Credit and Guaranty Agreement (the “Seventh Amendment”). Among other things, ~~The~~the Sixth Amendment amended the ~~First Lien Credit Agreement~~prior first lien credit agreement to issue $100.0 million in incremental ~~First Lien Term Loans~~first lien term loans and to add an additional $20.0 million of revolving commitments to the prior Barclays ~~Revolving Credit Facility.~~revolving credit facility. The Seventh Amendment amended the ~~First Lien Credit Agreement~~prior first lien credit agreement to extend the maturity date of the prior Barclays ~~Revolving Credit Facility~~revolving credit facility by an additional two years to July 1, 2023, unless sooner terminated in accordance with the terms of the ~~First Lien~~prior first lien credit agreement.

The prior first lien credit agreement was amended and restated by the Restated Credit ~~Agreement. Total issue costs added in relation to~~Agreement described above, and the ~~Sixth~~prior first lien term loans and ~~Seventh Amendments in 2019 amounted to approximately $4.4 million. Of this amount, $2.1 million was identified~~prior Barclays revolving credit facility under the prior first lien credit agreement were refinanced and ~~capitalized as discount on debt, $0.7 million was capitalized as deferred financing costs, and $1.6 million was expensed. Amounts capitalized will be amortized over the remaining term of~~replaced by the First Lien Term Loans and the Barclays Revolving Credit ~~Agreement.~~Facility provided under the Restated Credit Agreement described above.

NOTE 6 – STOCK-BASED COMPENSATION

Stock Incentive Plans

We have one long-term equity incentive plan, ~~which we refer to as~~ the ~~2006~~RadNet, Inc. Equity Incentive Plan, 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 most recently approved by our stockholders at our annual stockholders meeting on June ~~8, 2017.~~10, 2021. We have reserved for issuance under the Restated Plan ~~14,000,000~~16,500,000 shares of common stock. We can issue options (incentive and ~~non-qualified)~~nonstatutory), stock awards ~~stock appreciation rights,~~(restricted or unrestricted), stock units, and ~~cash awards~~stock appreciation rights under the Restated Plan.

Options

~~Certain options granted under the Restated Plan to employees are intended to qualify as~~Stock option grants, whether incentive ~~stock options under existing tax regulations. Stock options~~or nonstatutory, generally vest over 3 to 5 years and expire 5 to 10 years from the date of grant. Under the Restated Plan, stock options may not be granted at a per share exercise price below the fair market value of a share of our common stock on the date of grant, may not be repriced or exchanged without stockholder approval, and the maximum exercisable term of the option may not exceed 10 years.

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As of ~~March 31,~~September 30, 2021, we had outstanding options to acquire ~~527,899~~525,399 shares of our common stock, of which options to acquire ~~433,202~~430,702 shares were exercisable. The following summarizes all of our option transactions for the ~~three~~nine months ended ~~March 31,~~September 30, 2021:

Outstanding Options
Under the 2006 Plan Shares Weighted Average
Exercise price
Per Common Share Weighted Average
Remaining
Contractual Life
(in years) Aggregate
Intrinsic
Value
Balance, December 31, 2020 527,899 $ 9.34
Granted 0 0
Balance, March 31, 2021 527,899 9.34 6.09 $ 6,549,853
Exercisable at March 31, 2021 433,202 8.35 5.72 5,806,804

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Outstanding Options Under the 2006 Plan	Shares	Weighted Average Exercise price Per Common Share		Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value
Balance, December 31, 2020	527,899	$	9.34

Exercised	(2,500)	10.10

Balance, September 30, 2021	525,399	9.34		5.61	$	10,492,744
Exercisable at September 30, 2021	430,702	8.34		5.24	9,033,783

Aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between our closing stock price on ~~March 31,~~September 30, 2021 and the exercise price, multiplied by the number of in-the-money options as applicable) that would have been received by the holder had all holders exercised their options on ~~March 31,~~September 30, 2021. ~~NaN options~~Options for 2,500 shares of our common stock were exercised during the ~~three~~nine months ended ~~March 31,~~September 30, 2021. As of ~~March 31,~~September 30, 2021, total unrecognized stock-based compensation expense related to non-vested employee awards was ~~$0.5~~$0.3 million, which is expected to be recognized over a weighted average period of approximately ~~1.30~~0.98 years.

DeepHealth Options

During the second quarter of fiscal 2020, in connection with the completion of the DeepHealth acquisition, we granted options to acquire 412,434 ~~options~~shares at a grant date fair value of $16.93 per share unit to DeepHealth employees in replacement of their stock options that were outstanding as of the closing date. As of ~~March 31,~~September 30, 2021, total unrecognized stock based compensation expense related to non-vested DeepHealth options was approximately ~~$3.4~~$2.5 million, which is expected to be recognized over a weighted average period of approximately ~~2.07 years.~~1.62 years


Outstanding Options Under the Deep Health Plan	Outstanding Options Under the Deep Health Plan	Shares	Weighted Average Exercise price Per Common Share		Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value		Outstanding Options Under the Deep Health Plan	Shares	Weighted Average Exercise price Per Common Share		Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value
Balance December 31, 2020	Balance December 31, 2020	400,539	$	—				Balance December 31, 2020	400,539	$	—
Exercised	Exercised	0	—					Exercised	(75,207)	—
Balance, March 31, 2021		400,539	—		8.16	$	8,711,723
Exercisable at March 31, 2021		33,647	—		8.16	731,822
Balance, September 30, 2021								Balance, September 30, 2021	325,332	—		7.66	$	9,535,481
Exercisable at September 30, 2021								Exercisable at September 30, 2021	40,708	—		7.66	1,193,150

Options issued in replacement of original DeepHealth options as a result of our acquisition are not included in the share count under the Restated Plan.

Restricted Stock Awards

The Restated Plan permits the award of restricted stock awards (“RSA’s”). As of ~~March 31,~~September 30, 2021, we have issued a total of ~~7,152,934~~7,724,428 RSA’s of which ~~410,352~~413,075 were unvested at ~~March 31,~~September 30, 2021. The following summarizes all unvested RSA’s activities during the ~~three~~nine months ended ~~March 31,~~September 30, 2021:


		RSA's	Weighted-Average Remaining Contractual Term (Years)	Weighted-Average Fair Value			RSA's	Weighted-Average Remaining Contractual Term (Years)	Weighted-Average Fair Value
RSA's unvested at December 31, 2020	RSA's unvested at December 31, 2020	329,159		$	16.69	RSA's unvested at December 31, 2020	329,159		$	16.69
Changes during the period	Changes during the period					Changes during the period
Granted	Granted	601,061		$	18.77	Granted	642,046		$	19.40
Vested	Vested	(519,868)		$	17.59	Vested	(554,765)		$	18.00

RSA's unvested at March 31, 2021		410,352	1.20	$	17.71
Forfeited or Canceled						Forfeited or Canceled	(3,365)		$	18.60
RSA's unvested at September 30, 2021						RSA's unvested at September 30, 2021	413,075	0.90	$	18.89

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We determine the fair value of all RSA’s based on the closing price of our common stock on the award date.

Other stock bonus awards

The Restated Plan also permits ~~the award of stock bonuses~~share awards not subject to any future service period. These ~~awards~~ are valued and expensed based on the closing price of our common stock on the date of award. During the ~~three~~nine months ended ~~March 31,~~September 30, 2021, ~~0 such~~awards amounting to 375,186 shares valued at approximately $8.9 million in compensation expense were ~~granted.~~issued in employee COVID-19 related bonuses.

Restated Plan summary

In summary, of the ~~14,000,000~~16,500,000 shares of common stock reserved for issuance under the Restated Plan, at ~~March 31,~~September 30, 2021, we had issued ~~16,109,252~~16,525,443 total shares between options, RSA’s and other stock awards. With options canceled and RSA’s forfeited amounting to 3,281,040 and ~~61,703~~65,068 shares, respectively, there remain ~~1,233,491~~3,320,665 shares available under the Restated Plan for future issuance.

~~The DeepHealth options were issued outside of the Restated Plan and are a direct result of our acquisition and not included in the share count of the Restated Plan.~~

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~~NOTE 7 – SUBSEQUENT EVENTS~~

~~Refinancing of Barclays Credit Facilities:~~

~~The Second Amended and Restated First Lien Credit and Guaranty Agreement (the "Restated Credit Agreement"):~~

On April 23, 2021, we entered into the Restated Credit Agreement which provides for $725.0 million of senior secured first lien term loans and a $195.0 million senior secured revolving credit facility. The proceeds of the loans are being used to refinance the outstanding $611.0 million term and revolving loans, to pay fees and expenses associated with the refinancing transaction, to pay accrued interest on the previously existing facilities through the date of closing and to fund approximately $102.0 million to our balance sheet. The key terms of the Restated Credit Agreement are:

•Interest Rates: Borrowings under the Restated Credit Agreement bear interest at either the Eurodollar Rate or the Alternate Base Rate and the floor for the term loans bearing interest at the Eurodollar Rate was reduced from a minimum of 1.00% to a minimum of 0.75%.

•Maturity Dates: The maturity date for the term loans is April 23, 2028, and the maturity date for the revolving credit facility is April 23, 2026, in each case unless accelerated in accordance with the terms of the Restated Credit Agreement.

•Payments: We will be required to make quarterly payments of principal on the terms loans in the amount of approximately $1.8 million compared to approximately $9.7 million under the prior credit agreement.

~~Acquisitions:~~

~~In the months of April and May, 2021 we acquired certain business assets for purchase consideration of approximately $5.0 million.~~

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and notes thereto for the year ended December 31, 2020 included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the U.S. Securities and Exchange Commission (SEC) on March 15, 2021.

Forward-Looking Statements

This quarterly report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements reflect current views about future events and are based on our currently available financial, economic and competitive data and on current business plans. Actual events or results may differ materially depending on risks and uncertainties that may affect our operations, markets, services, prices and other factors.

In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” “assumption” or the negative of these terms or other comparable terminology. Forward-looking statements in this current report include, among others, statements we make regarding

• our ability to successfully integrate new operations, to our business and the anticipated benefits to be derived from our investments, acquisitions, and joint ventures;

•anticipated trends in our revenues, operating expenses and liquidity and cash flows, including our financial guidance and anticipated effects of cost-savings efforts;

•the ongoing impact of the COVID-19 pandemic on our business, suppliers, payors, customers, referral sources, partners, patients and employees, including (i) government’s unprecedented action regarding existing

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and potential restrictions and/or obligations related to citizen and business activity to contain the virus; (ii) the consequences of an economic downturn resulting from the impacts of COVID-19 and the possibility of a global economic recession; (iii) the impact of the volume of canceled or rescheduled procedures, whether as a result of government action or patient choice; (iv) measures we are taking to respond to the COVID-19 pandemic, including changes to business practices; (v) the impact of government and administrative regulation, guidance and appropriations; (vi) changes in our revenues due to declining patient procedure volumes, changes in payor mix; (vii) potential increased expenses or workforce disruptions related to our employees that could lead to unavailability of key personnel; (viii) workforce disruptions related to our key partners, suppliers, vendors and others we do business with; (ix) the impact of return to work orders in certain states in which we operate; and (x) increased credit and collectability risks; and

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•our future liquidity and our continuing ability to service and remain in compliance with applicable debt covenants or refinance our current indebtedness.

Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, the factors included in “Risk Factors,” in our annual report on Form 10-K for the fiscal year ended December 31, 2020 or supplemented by the information in Part II– Item 1A below. You should consider the inherent limitations on, and risks associated with, forward-looking statements and not unduly rely on the accuracy of predictions contained in such forward-looking statements.

These forward-looking statements speak only as of the date when they are made. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Overview

We are a leading national provider of freestanding, fixed-site outpatient diagnostic imaging services in the United States based on number of locations and annual imaging revenue. At ~~March 31,~~September 30, 2021, we operated, directly or indirectly through joint ventures with hospitals, ~~346~~350 centers located in Arizona, California, Delaware, Florida, Maryland, New Jersey, and New York. 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. Our services include magnetic resonance imaging (MRI), computed tomography (CT), positron emission tomography (PET), nuclear medicine, mammography, ultrasound, diagnostic radiology (X-ray), fluoroscopy and other related procedures.

In addition to our imaging services, we own and operate a number of technology businesses that are complementary to our imaging business. Our subsidiary eRAD, Inc., develops and sells computerized systems for the diagnostic imaging industry, which provide the technology to distribute, display, store and retrieve digital images. We have made a number of investments in Artificial Intelligence (AI) with our purchases of Nulogix and DeepHealth, combined with our investment in Whiterabbit.ai and our collaborative arrangement with Hologic. Our current AI focus is to develop solutions in machine learning to assist radiologists and other clinicians in interpreting images and improving patient care, initially in the field of mammography.

We derive substantially all of our revenue, directly or indirectly, from fees charged for the diagnostic imaging services performed at our facilities. The following table shows our facilities in operation and revenues for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and ~~March 31,~~September 30, 2020:


		Three Months Ended March 31,					Nine Months Ended September 30,
		2021		2020			2021		2020
Facilities in operation	Facilities in operation	346		335		Facilities in operation	350		334
Net revenues (millions)	Net revenues (millions)	$	315	$	282	Net revenues (millions)	$	982	$	764

Our revenue is derived from a diverse mix of payors, including private, managed care capitated and government payors. We believe our payor diversity mitigates our exposure to possible unfavorable reimbursement trends within any one payor class. In addition, our experience with capitation arrangements over the last several years has provided us with the expertise to manage utilization and pricing effectively, resulting in a predictable stream of revenue.

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Our total service revenue during the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020 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,
2021 2020
Commercial insurance $ 182,096 $ 155,461
Medicare 63,589 57,749
Medicaid 8,451 6,628
Workers' compensation/personal injury 10,399 10,274
Other patient revenue 4,775 5,662
Management fee revenue 5,219 2,567
Teleradiology and Software revenue 2,426 3,770
Other 2,622 6,222
Service fee revenue 279,577 248,333
Revenue under capitation arrangements 35,742 33,231
Total service revenue $ 315,319 $ 281,564

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We typically experience some seasonality to our revenue stream. Although we had a resurgence in procedure volumes for the first quarter ended March 31, 2021, it is in this time period that we generally experience the lowest volumes of procedures and the lowest level of revenue for any quarter during the year. It is common for inclement weather to result in patient appointment cancellations and, in some cases, imaging center closures. Also, in recent years, we have observed greater participation in high deductible health plans by patients. 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.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Commercial insurance	$	185,723	$	160,524	$	555,355	$	412,415
Medicare	73,163		62,704		207,977		154,847
Medicaid	8,707		7,098		26,198		18,072
Workers' compensation/personal injury	11,554		7,183		32,507		25,705
Other patient revenue	4,800		8,328		14,766		17,211
Management fee revenue	5,255		2,675		16,007		8,574
Teleradiology and Software revenue	2,564		2,349		7,611		8,319
Other	3,641		5,869		10,058		15,617
Service fee revenue	295,407		256,730		870,479		660,760
Revenue under capitation arrangements	37,283		35,046		111,449		103,145
Total service revenue	$	332,690	$	291,776	$	981,928	$	763,905

Recent Developments

The discussion of our results below centers on our performance inthrough the ~~first~~third quarter ~~ending March 31,~~ended September 30, 2021. During the same period in 2020, with the onset of the novel strain of the coronavirus ("COVID-19") ~~and related responses,~~, we began experiencing reduced procedure volumes at the end of the first quarter which intensified through mid year. ~~Procedure volumes returned to 90% of pre-COVID-19 pace in the third quarter and remained consistent at that level through the fourth quarter. During 2020, in~~In response to the pandemic, we adjusted our business operations, inclusive of concentrating patient traffic to larger imaging centers, negotiating payment terms with vendors and landlords, initiating employee furloughs, compensation reductions, and telecommuting.

As ~~we enter~~ 2021 ~~the arrival of the mRNA vaccine to protect against the virus is a welcome development. As inoculations ramp up across the country and other mitigation procedures continue, we can begin to look forward~~comes to a ~~return of~~close, our procedure volume has returned to pre-COVID-19 levels and our business has resumed normal ~~business~~ operations. We expect that the cost saving measures implemented in 2020 will continue to be beneficial to our financial position in ~~2021, provided that procedure volumes continue to ramp back up to historic levels. Despite the impact of COVID-19,~~2021. In addition, we have continued to invest and position for future growth. WeYear to date, we have acquired 1019 new radiology centers in ~~the~~California, New ~~York City area during the quarter ended March 31, 2021.~~Jersey and New York.

Equity Investments, Acquisitions and Dispositions, and Joint Venture Activity

We have developed our medical imaging business through a combination of organic growth, equity investments, acquisitions and joint venture formations. The information below updates our activity of such matters contained in our annual report on Form 10-K for the year ended December 31, 2020.

Equity Investments

As of ~~March 31,~~September 30, 2021, we have three equity investments for which a fair value is not readily determinable and therefore the total amounts invested are recognized at cost as follows:

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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 it operations. No observable price changes, impairment in our investment or impairment of the loan receivable was identified as of ~~March 31,~~September 30, 2021.

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Facility acquisitions

Entity Acquired Total Purchase Consideration Property & Equipment Right of Use Assets Goodwill Intangible Assets Other Assets Right of Use Liabilities
Personal Health Imaging PLLC $ 2,995 $ 576 $ 608 $ 2,355 $ 50 $ 14 $ (608)
ZP Elmont LLC 2,194 1,112 1,695 1,005 50 27 (1,695)
ZP Freeport LLC 6,065 3,968 2,361 2,018 50 29 (2,361)
Broadway Medical Imaging LLC 1,155 1,076 1,791 6 50 23 (1,791)
3235 Hempstead LLC 9,386 4,304 10,115 5,032 50 — (10,115)
SLZM Realty LLC 13,671 3,862 7,715 9,759 50 — (7,715)
2012 Sunrise Merrick LLC 11,428 2,363 5,919 9,015 50 — (5,919)
ZP Bayside LLC 3,545 3,385 9,393 40 50 70 (9,393)
ZP Laurelton LLC 2,658 2,530 5,157 32 50 46 (5,157)
ZP Smith LLC 3,978 3,581 10,558 347 50 — (10,558)
Total $ 57,075 $ 26,757 $ 55,312 $ 29,609 $ 500 $ 209 $ (55,312)


Entity	Date Acquired	Total Consideration	Property & Equipment	Right of Use Assets	Goodwill	Intangible Assets	Other Assets	Right of Use Liabilities
Personal Health Imaging PLLC*	2/1/2021	2,995	576	608	2,355	50	14	(608)
ZP Elmont LLC*	2/1/2021	2,194	1,112	—	1,005	50	27	—
ZP Freeport LLC*	2/1/2021	6,065	4,668	—	1,328	40	29	—
Broadway Medical Imaging LLC*	2/1/2021	1,155	1,076	446	6	50	23	(446)
3235 Hempstead LLC*	2/1/2021	9,386	5,667	—	3,649	70	—	—
SLZM Realty LLC*	2/1/2021	13,671	4,617	—	8,974	80	—	—
2012 Sunrise Merrick LLC*	2/1/2021	11,428	2,741	335	8,617	70	—	(335)
ZP Bayside LLC*	3/1/2021	3,545	3,385	2,191	40	50	70	(2,191)
ZP Laurelton LLC*	3/1/2021	2,658	2,530	1,418	32	50	46	(1,418)
ZP Smith LLC*	3/1/2021	3,978	3,581	2,214	347	50	—	(2,214)
ZP 907 Northern LLC	4/1/2021	562	507	1,817	5	50	—	(1,817)
William M. Kelly MD, Inc.	5/1/2021	3,750	990	1,379	2,710	50	—	(1,379)
60th Street MRI, LLC	5/1/2021	400	85	—	290	25	—	—
ZP Parkchester LLC	5/1/2021	263	213	311	—	50	—	(311)
ZP Eastern LLC	6/1/2021	2,868	2,801	1,951	17	50	—	(1,951)
Tangent Associates LLC**	8/24/2021	2,025	10	—	379	1,636	—	—
Total		66,943	34,559	12,670	29,754	2,421	209	(12,670)

*Fair Value Determination is Final

** All stock purchase through issuing 67,658 shares of our common stock

Formation of majority owned subsidiary

~~Joint Venture Activity~~Sale of ownership interest in a majority owned subsidiary

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Joint Venture Activity

The following table is a summary of our investment in joint ventures during the ~~three~~nine months ended ~~March 31,~~September 30, 2021 (in thousands):


Balance as of December 31, 2020	$	34,528
Equity in earnings in these joint ventures	~~2,285~~8,259




Equity contributions in existing joint ventures	1,441
Balance as of ~~March 31,~~September 30, 2021	$	~~36,813~~44,228

On June 23, 2021, we made an additional equity contribution to our joint venture in Arizona of $1.4 million. Our equity ownership interest percentage in the venture did not change.


Balance Sheet Data:	Balance Sheet Data:	March 31, 2021		December 31, 2020		Balance Sheet Data:	September 30, 2021		December 31, 2020
Current assets	Current assets	$	33,265	$	27,085	Current assets	$	46,186	$	27,085
Noncurrent assets	Noncurrent assets	68,493		68,686		Noncurrent assets	67,514		68,686
Current liabilities	Current liabilities	(13,929)		(12,545)		Current liabilities	(12,182)		(12,545)
Noncurrent liabilities	Noncurrent liabilities	(21,371)		(21,582)		Noncurrent liabilities	(20,914)		(21,582)
Total net assets	Total net assets	$	66,458	$	61,644	Total net assets	$	80,604	$	61,644

Book value of RadNet joint venture interests	Book value of RadNet joint venture interests	$	30,351	$	28,079	Book value of RadNet joint venture interests	$	36,940	$	28,079
Cost in excess of book value of acquired joint venture interests	Cost in excess of book value of acquired joint venture interests	6,462		6,449		Cost in excess of book value of acquired joint venture interests	7,288		6,449
Total value of RadNet joint venture interests	Total value of RadNet joint venture interests	$	36,813	$	34,528	Total value of RadNet joint venture interests	$	44,228	$	34,528


Income statement data for the three months ended March 31, 2021		2021		2020
Income statement data for the nine months ended September 30,						Income statement data for the nine months ended September 30,	2021		2020
Net revenue	Net revenue	$	31,718	$	26,341	Net revenue	$	98,193	$	78,988
Net income	Net income	$	4,803	$	4,245	Net income	$	16,007	$	13,651

Critical Accounting Policies

The Securities and Exchange Commission defines critical accounting estimates as those that are both most important to the portrayal of a company’s financial condition and results of operations and require management’s most difficult, subjective or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. In Note 2 to our consolidated financial statements in this quarterly report and in our annual report on Form 10-K for the year ended December 31, 2020, we discuss our significant accounting policies, including those that do not require management to make difficult, subjective or complex judgments or estimates. The most significant areas involving management’s judgments and estimates are described below.

Use of Estimates

The financial statements were 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

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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

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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 third-party payors. 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, changes in business and economic conditions, and the frequent changes in managed care contractual terms resulting from contract re-negotiations and renewals.

Our 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. 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.

Provider Relief Fund (COVID-19 Stimulus Funding)

The Provider Relief Fund offers government assistance to eligible providers throughout the healthcare system in support of certain expenses or lost revenue attributable to the coronavirus pandemic. We have recorded provider relief funding in our condensed Consolidated Statements of Operations in the amount of ~~$6.2~~$6.3 million for ~~three~~the nine months ended ~~March 31,~~September 30, 2021. Generally, the department of Health and Human Services ("HHS") does not intend to recoup funds as long as a provider's lost revenue and increased expenses exceed the amount of provider relief funding one has received. HHS reserves the right to audit Relief Fund recipients in the future to ensure that this requirement is met and collect any Relief Fund amounts that were made in error or exceed lost revenue or increased expenses due to the pandemic. Failure to comply with the terms and conditions may be grounds for recoupment. In recognizing revenue associated with provider relief funding our management is required to assess whether our operations have meet the applicable requirements for the funding received. During the quarter ended ~~March 31,~~September 30, 2021, we continued to evaluate our operating results in light of the most recent government guidance and based on our assessment, the amount of revenue recognized is appropriate.

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. Receivables generally are collected within industry norms for ~~third-party~~third-

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party payors. 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,~~September 30, 2021.

Business Combination

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We evaluate all acquisitions under the framework Clarifying the Definition of a Business in the accounting ~~guidance..~~guidance. 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. Any portion of the purchase consideration transferred in excess of the net of the acquisition date fair values of the assets acquired and the liabilities assumed, is allocated to goodwill. The allocation requires our management to make estimates of the value of various assets acquired and 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 at ~~March 31,~~September 30, 2021 totaled ~~$502.6~~$502.7 million. Indefinite Lived Intangible Assets at ~~March 31,~~September 30, 2021 were $7.1 million and are associated with the value of certain trade name intangibles. Our management reviews the fair value of our reporting units on an annual basis to determine if an event has occurred which suggest that the fair value of a reporting unit may be impaired. When we determine the carrying value of a reporting unit exceeds its fair value, an impairment charge would be recognized and should not exceed the total amount of goodwill allocated to that reporting unit. The review of fair value requires our management to make assessments of the business and financial prospects for a particular reporting unit. We tested goodwill for impairment on October 1, 2020. We also continue at regular intervals to consider the current and expected future economic and market conditions surrounding the COVID-19 pandemic and to date have not had an indication of goodwill impairment being more likely than not through ~~March 31,~~September 30, 2021.

Recent Accounting Standards

See Note 3, Recent Accounting and Reporting Standards to the financial statements included in this report for further information.

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Results of Operations

The following table sets forth, for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020, the percentage that certain items in the statements of operations bears to total service revenue, inclusive of revenue under capitation contracts.

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS EXCEPT SHARE DATA)

(unaudited)


		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020				2021		2020		2021		2020
REVENUE	REVENUE						REVENUE
Service fee revenue	Service fee revenue	88.7	%	88.2	%		Service fee revenue	88.8	%	88.0	%	88.6	%	86.5	%
Revenue under capitation arrangements	Revenue under capitation arrangements	11.3	%	11.8	%		Revenue under capitation arrangements	11.2	%	12.0	%	11.4	%	13.5	%
Total service revenue	Total service revenue	100.0	%	100.0	%		Total service revenue	100.0	%	100.0	%	100.0	%	100.0	%
Provider relief funding	Provider relief funding	2.0	%	—	%		Provider relief funding	—	%	0.1	%	0.6	%	3.4	%
OPERATING EXPENSES	OPERATING EXPENSES						OPERATING EXPENSES
Cost of operations, excluding depreciation and amortization	Cost of operations, excluding depreciation and amortization	89.5	%	95.0	%		Cost of operations, excluding depreciation and amortization	82.0	%	84.5	%	85.4	%	92.7	%
Depreciation and amortization	Depreciation and amortization	7.2	%	7.8	%		Depreciation and amortization	7.4	%	7.3	%	7.3	%	8.4	%
(Gain) loss on sale and disposal of equipment and other		(0.4)	%	0.3	%
Loss (gain) on sale and disposal of equipment and other							Loss (gain) on sale and disposal of equipment and other	0.8	%	0.1	%	—	%	0.1	%
Severance costs	Severance costs	0.1	%	0.1	%		Severance costs	—	%	0.2	%	0.1	%	0.2	%
Total operating expenses	Total operating expenses	96.4	%	103.1	%		Total operating expenses	90.2	%	92.1	%	92.7	%	101.4	%

INCOME (LOSS) FROM OPERATIONS		5.6	%	(3.1)	%
INCOME FROM OPERATIONS							INCOME FROM OPERATIONS	9.8	%	8.0	%	7.9	%	1.9	%

OTHER INCOME AND EXPENSES	OTHER INCOME AND EXPENSES						OTHER INCOME AND EXPENSES
Interest expense	Interest expense	4.1	%	4.1	%		Interest expense	3.6	%	3.8	%	3.8	%	4.4	%
Equity in earnings of joint ventures	Equity in earnings of joint ventures	(0.7)	%	(0.7)	%		Equity in earnings of joint ventures	(0.9)	%	(0.8)	%	(0.8)	%	(0.7)	%
Non-cash change in fair value of interest rate hedge	Non-cash change in fair value of interest rate hedge	(3.6)	%	—	%		Non-cash change in fair value of interest rate hedge	(0.9)	%	0.2	%	(1.4)	%	0.6	%
Other expenses		0.1	%	—	%
Total other (income) expenses		(0.2)	%	3.4	%
Debt restructuring and extinguishment expenses							Debt restructuring and extinguishment expenses	—	%	—	%	0.6	%	—	%
Other (income) expenses							Other (income) expenses	(0.1)	%	—	%	0.2	%	—	%
Total other expenses							Total other expenses	1.8	%	3.2	%	2.3	%	4.3	%
INCOME (LOSS) BEFORE INCOME TAXES	INCOME (LOSS) BEFORE INCOME TAXES	5.8	%	(6.5)	%		INCOME (LOSS) BEFORE INCOME TAXES	7.9	%	4.8	%	5.7	%	(2.3)	%
(Provision for) benefit from income taxes	(Provision for) benefit from income taxes	(1.4)	%	1.6	%		(Provision for) benefit from income taxes	(1.6)	%	(1.3)	%	(1.3)	%	0.7	%
NET INCOME (LOSS)	NET INCOME (LOSS)	4.4	%	(5.0)	%		NET INCOME (LOSS)	6.4	%	3.5	%	4.4	%	(1.7)	%
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	1.4	%	0.8	%		Net income attributable to noncontrolling interests	1.5	%	1.4	%	1.5	%	1.1	%
NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS	NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS	3.0	%	(5.8)	%		NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS	4.9	%	2.1	%	2.9	%	(2.6)	%

We have developed our medical imaging business through a combination of organic growth, equity investments, acquisitions and joint venture formations. We have segregated some of our information to demonstrate which is attributable to centers that were in operation through the entirety of the comparison period, and which is attributable to those that were acquired or disposed of during the period. The discussion below shows a breakdown and analysis of revenue and expenses for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020 for our operations at a total company and same center level.

Three Months Ended ~~March 31,~~September 30, 2021 Compared to the Three Months Ended ~~March 31,~~September 30, 2020

Total Revenue inclusive of Provider Relief funding where applicable for 2021 and 2020

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In Thousands	In Thousands	Three Months Ended March 31,				In Thousands	Three Months Ended September 30,
Revenue	Revenue	2021	2020	$ Increase/(Decrease)	% Change	Revenue	2021	2020	$ Increase/(Decrease)	% Change
Total Revenue	Total Revenue	$321,567	$281,564	$40,003	14.2%	Total Revenue	$332,691	$291,997	$40,694	13.9%
Same Center Revenue	Same Center Revenue	$304,696	$277,990	$26,706	9.6%	Same Center Revenue	$308,243	$287,274	$20,969	7.3%

~~Increased~~Upswing in revenue ~~was spurred by~~reflects an overall same center ~~5.1%~~10.0% growth in total procedure volumes over the same period in the prior ~~year.~~year as business continues to return to pre-COVID-19 levels. On a same center basis, with Mammography procedures ~~rose 15.1%~~rising 6.4%, ~~followed by~~and advanced radiology procedures of MRI, PET and CT, ~~which expanded~~expanding at a combined ~~8.7%. The growth in Mammography procedures was precipitated by our investment~~23.6%, revenue increased over the same period in the use of artificial intelligence, which is employed to keep track of patient data, catalog findings, and drive patient notification so a regular exam schedule is maintained. Assisting in the revenue increase was $6.2 million received in Provider Relief funding and annual contractual rate increases in capitation and fee for service plans.prior year. This same center comparison excludes revenue contributions from centers that were acquired or divested subsequent to ~~January~~July 1, 2020. For the three months ended ~~March 31,~~September 30, 2021, net service fee revenue from centers that were acquired or divested subsequent to ~~January~~July 1, 2020 and excluded from the above comparison was ~~$16.9~~$24.4 million. For the three months ended ~~March 31,~~September 30, 2020, net service fee revenue from centers that were acquired or divested subsequent to ~~January~~July 1, 2020 and excluded from the above comparison was ~~$3.6~~$4.7 million.

Operating Expenses

Total operating expenses for the three months ended ~~March 31,~~September 30, 2021 increased approximately ~~$13.6~~$31.5 million, or ~~4.7%~~11.7%, from ~~$290.3~~$268.6 million for the three months ended ~~March 31,~~September 30, 2020 to ~~$303.9~~$300.1 million for the three months ended ~~March 31,~~September 30, 2021. The following table sets forth a breakdown of our cost of operations and total operating expenses for the three months ended ~~March 31,~~September 30, 2021 and 2020 (in thousands):


		Three Months Ended March 31,					Three Months Ended September 30,
		2021		2020			2021		2020
Salaries and professional reading fees, excluding stock-based compensation	Salaries and professional reading fees, excluding stock-based compensation	$	177,861	$	167,528	Salaries and professional reading fees, excluding stock-based compensation	$	164,462	$	149,970
Stock-based compensation	Stock-based compensation	8,248		6,622		Stock-based compensation	4,422		2,067
Building and equipment rental	Building and equipment rental	28,711		26,896		Building and equipment rental	31,403		26,703
Medical supplies	Medical supplies	13,970		12,748		Medical supplies	14,008		12,498
Other operating expenses *	Other operating expenses *	53,491		53,623		Other operating expenses *	58,461		55,225
Cost of operations	Cost of operations	282,281		267,417		Cost of operations	272,756		246,463

Depreciation and amortization	Depreciation and amortization	22,656		21,934		Depreciation and amortization	24,606		21,247
(Gain) loss on sale and disposal of equipment		(1,307)		771
Loss on sale and disposal of equipment						Loss on sale and disposal of equipment	2,595		342
Severance costs	Severance costs	285		218		Severance costs	163		571
Total operating expenses	Total operating expenses	$	303,915	$	290,340	Total operating expenses	$	300,120	$	268,623

*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,~~September 30, 2021 and 2020 (in thousands):

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


In Thousands	In Thousands	Three Months Ended March 31,				In Thousands	Three Months Ended September 30,
Salaries and Professional Fees	Salaries and Professional Fees	2021	2020	$ Increase/(Decrease)	% Change	Salaries and Professional Fees	2021	2020	$ Increase/(Decrease)	% Change
Total Salaries	Total Salaries	$177,861	$167,528	$10,334	6.2%	Total Salaries	$164,462	$149,970	$14,492	9.7%
Same Center Salaries	Same Center Salaries	$168,803	$164,287	$4,516	2.8%	Same Center Salaries	$151,321	$146,307	$5,014	3.4%

~~The moderate rise in same center salaries expense corresponded to~~Stemming from the ~~added professional staff requisite for radiology study interpretation that stemmed from~~ higher procedure ~~volumes.~~volumes noted above, our staffing levels were adjusted to support the influx of patients seeking radiology procedures, resulting in a nominal increase in salaries and professional fee expense over the same period in the prior year. This same center comparison excludes expenses from

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centers that were acquired or divested subsequent to ~~January~~July 1, 2020. For the three months ended ~~March 31,~~September 30, 2021, salaries and professional reading fees from centers that were acquired or divested subsequent to ~~January~~July 1, 2020 and excluded from the above comparison was ~~$9.1~~$13.1 million. For the

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three months ended ~~March 31,~~September 30, 2020, salaries and professional reading fees from centers that were acquired or divested subsequent to ~~January~~July 1, 2020 and excluded from the above comparison was approximately ~~$3.2~~$3.7 million.

Stock-based compensation

Stock-based compensation increased ~~$1.6~~$2.4 million, or ~~24.6%~~114.0% to approximately ~~$8.2~~$4.4 million for the three months ended ~~March 31,~~September 30, 2021 compared to ~~$6.6~~$2.1 million for three months ended ~~March 31,~~September 30, 2020. This increase was ~~driven by the~~a combination of awards valued at $8.9 million in stock compensation expense for employee COVID-19 related bonuses and higher fair value of RSA’s awarded and vested in the first quarter of 2021 as compared to RSA’s awarded and vested in the prior year’s first quarter.

Building and equipment rental


In Thousands	In Thousands	Three Months Ended March 31,				In Thousands	Three Months Ended September 30,
Building & Equipment Rental	Building & Equipment Rental	2021	2020	$ Increase/(Decrease)	% Change	Building & Equipment Rental	2021	2020	$ Increase/(Decrease)	% Change
Total	Total	$28,711	$26,896	$1,815	6.8%	Total	$31,403	$26,703	$4,700	17.6%
Same Center	Same Center	$25,685	$25,671	$14	0.1%	Same Center	$25,056	$25,235	$(179)	(0.7)%

The overall increase in building and equipment rental expenses was related to centers acquired through our business combinations, as same center expense remained stable. This same center comparison excludes expenses from centers that were acquired or divested subsequent to ~~January~~July 1, 2020. For the three months ended ~~March 31,~~September 30, 2021, building and equipment rental expenses from centers that were acquired or divested subsequent to ~~January~~July 1, 2020 and excluded from the above comparison was ~~$3.0~~$6.3 million. For the three months ended ~~March 31,~~September 30, 2020, building and equipment rental expenses from centers that were acquired or divested subsequent to ~~January~~July 1, 2020 and excluded from the above comparison was approximately ~~$1.2~~$1.5 million.

Medical supplies


In Thousands	In Thousands	Three Months Ended March 31,				In Thousands	Three Months Ended September 30,
Medical Supplies Expense	Medical Supplies Expense	2021	2020	$ Increase/(Decrease)	% Change	Medical Supplies Expense	2021	2020	$ Increase/(Decrease)	% Change
Total	Total	$13,970	$12,748	$1,222	9.6%	Total	$14,008	$12,498	$1,510	12.1%
Same Center	Same Center	$13,370	$12,596	$774	6.2%	Same Center	$13,059	$12,275	$784	6.4%

~~Higher same center medical~~Medical supplies expense ~~related~~increase relates to ~~additional consumption of contrast agents~~the growth in ~~our advanced imaging modalities driven by volume increases of CT~~overall procedural volumes noted above compared to the same period in the prior year and ~~PET procedures and cost of personal protective equipment~~is consistent with the percentage increase in ~~support of staff and patient safety.~~revenue over the same period in the prior year. This same center comparison excludes expenses from centers that were acquired or divested subsequent to ~~January~~July 1, 2020. For the three months ended ~~March 31,~~September 30, 2021, medical supplies expenses from centers that were acquired or divested subsequent to ~~January~~July 1, 2020 and excluded from the above comparison was ~~$0.6~~$0.9 million. For the three months ended ~~March 31,~~September 30, 2020, medical supplies expense from centers that were acquired or divested subsequent to ~~January~~July 1, 2020 and excluded from the above comparison was $0.2 million.

Other operating expenses


In Thousands	In Thousands	Three Months Ended March 31,				In Thousands	Three Months Ended September 30,
Other Operating Expenses	Other Operating Expenses	2021	2020	$ Increase/(Decrease)	% Change	Other Operating Expenses	2021	2020	$ Increase/(Decrease)	% Change
Total	Total	$53,491	$53,623	$(133)	(0.3)%	Total	$58,461	$55,225	$3,236	5.9%
Same Center	Same Center	$49,900	$52,594	$(2,694)	(5.1)%	Same Center	$53,337	$53,952	$(615)	(1.1)%

~~Savings in same center other~~Other operating expenses ~~reflects~~remained flat due to the cumulative effect of successful contract re-negotiations in the prior year aimed to reduce charges across a range of vendors from repair and maintenance to professional services. This same center comparison excludes expenses from centers that were acquired or divested subsequent to ~~January~~July 1, 2020. For the three months ended ~~March 31,~~September 30, 2021, other operating expense from centers that were acquired or divested subsequent ~~January~~July 1, 2020 and excluded from the above comparison was ~~$3.6~~$5.1 million. For the three months ended ~~March 31,~~September 30, 2020, other operating expense from centers that were acquired or divested subsequent to ~~January~~July 1, 2020 was ~~$1.0~~$1.3 million.

Depreciation and amortization

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In Thousands	In Thousands	Three Months Ended March 31,				In Thousands	Three Months Ended September 30,
Depreciation & Amortization	Depreciation & Amortization	2021	2020	$ Increase/(Decrease)	% Change	Depreciation & Amortization	2021	2020	$ Increase/(Decrease)	% Change
Total	Total	$22,656	$21,934	$723	3.3%	Total	$24,606	$21,247	$3,359	15.8%
Same Center	Same Center	$20,952	$21,470	$(518)	(2.4)%	Same Center	$21,749	$20,443	$1,306	6.4%

This same center comparison excludes expenses from centers that were acquired or divested subsequent to ~~January~~July 1, 2020. For the three months ended ~~March 31,~~September 30, 2021, depreciation expense from centers that were acquired or divested subsequent to ~~January~~July 1, 2020 and excluded from the above comparison was ~~$1.7~~$2.9 million. For the three months ended ~~March 31,~~September 30, 2020, depreciation and amortization from centers that were acquired or divested subsequent to ~~January~~July 1, 2020 and excluded from the above comparison was ~~$0.5~~$0.8 million.

Gain on sale and disposal of equipment and other

We recorded ~~gains~~losses on the disposal of equipment and other items of approximately ~~$1.3~~$2.6 million for the three months ended ~~March 31,~~September 30, 2021 and ~~a loss on sale and disposal of equipment of~~ approximately ~~$0.8~~$0.3 million for the three months ended ~~March 31,~~September 30, 2020.

Non-cash change in fair value of interest rate hedge

We recorded a gain of ~~$11.2~~$2.9 million for the ineffective portion of our 2019 Swaps for the three months ended ~~March 31, 2021.~~September 30, 2021 and a expense of $0.7 million for three months ended September 30, 2020.

Other ~~(income) expenses~~income

We recorded other ~~expenses~~income of approximately $0.2 million for the three months ended ~~March 31, 2021. Amounts~~September 30, 2021 and $0.1 million for the corresponding period ending ~~March 31, 2020 were immaterial.~~September 30, 2020.

Severance ~~Costs~~costs

We incurred severance expenses of ~~$0.3 million for the three months ended March 31, 2021 and~~ $0.2 million for the three months ended ~~March 31,~~September 30, 2021 and $0.6 million for the three months ended September 30, 2020.

Interest expense


In Thousands	In Thousands	Three Months Ended March 31,					In Thousands	Three Months Ended September 30,
Interest Expense	Interest Expense	2021	2020	$ Increase/(Decrease)	% Change		Interest Expense	2021	2020	$ Increase/(Decrease)	% Change
Total Interest Expense	Total Interest Expense	$12,826	$11,552	$1,274	11.0	%	Total Interest Expense	$12,032	$11,061	$971	8.8	%
Interest related to derivatives*	Interest related to derivatives*	$3,650	$362				Interest related to derivatives*	$3,700	$1,603

Interest related to amortization**	Interest related to amortization**	$1,147	$1,081				Interest related to amortization**	$647	$1,103
Adjusted Interest Expense***	Adjusted Interest Expense***	$8,029	$10,109	$(2,080)	(20.6)	%	Adjusted Interest Expense***	$7,685	$8,355	$(670)	(8.0)	%

* Includes interest on current and prior derivative instruments not related to debt obligations.

** Includes combined noncash amortization of deferred loan costs and discount on issuance of debt.

***Includes interest related to our term loans, revolving credit line,notes, finance leases and other.

Excluding the effect of interest expense related to derivatives and amortization for the three months ended ~~March 31,~~September 30, 2021 compared to the three months ended ~~March 31,~~September 30, 2020, interest expense decreased ~~$2.1~~$0.7 million, or ~~20.6%~~8.0%. The reduction in interest expense corresponds to lowered variable LIBOR and Prime interest rates paid on our term loan and revolving debt based on market conditions. See “Liquidity and Capital Resources” below for more details on our credit facilities.

To mitigate our future interest expense exposure we have entered into certain interest rate swap agreements. See the Derivative Instruments section of Note 2, Significant Accounting Policies, to the condensed consolidated financial statements included in this report for more details on our derivative transactions.

Equity in earnings from unconsolidated joint ventures

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For the three months ended ~~March 31,~~September 30, 2021 we recognized equity in earnings from unconsolidated joint ventures in the amount of ~~$2.3~~$2.9 million and for three months ended ~~March 31,~~September 30, 2020 we recognized equity in earnings from unconsolidated joint ventures of ~~$2.0~~$2.3 million, an increase of ~~$0.3~~$0.6 million or ~~16.9%~~25.4%. The increase was mainly related to the equity in earnings received from our interest in the Arizona Diagnostic Radiology Group joint venture, which was formed in the fourth quarter of 2020.

Income tax provision

We recorded income tax expense of ~~$4.4~~$5.3 million, or an effective tax rate of ~~24.1%~~20.0%, for the three months ended ~~March 31,~~September 30, 2021 compared to ~~a benefit from~~ income ~~taxes~~tax expense of ~~$4.4~~$3.8 million, or an effective tax rate of ~~23.8%~~27.2% for the three months ended ~~March 31,~~September 30, 2020. The income tax rates for the three and nine months ended ~~March 31,~~September 30, 2021 diverge from the federal statutory rate due to (i) noncontrolling interests due to the controlled partnerships; (ii) effects of state income taxes; and (iii) excess tax benefits attributable to share-based compensation.

Nine Months Ended September 30, 2021 Compared to the Nine Months Ended September 30, 2020

Total Revenue inclusive of Provider Relief funding for 2020


In Thousands	Nine Months Ended September 30,
Revenue	2021	2020	$ Increase/(Decrease)	% Change
Total Revenue	$988,219	$789,601	$198,618	25.2%
Same Center Revenue	$913,503	$768,383	$145,120	18.9%

Increased revenue reflects an overall same center 25.0% growth in total procedure volumes over the same period in the prior year as business returned to pre-COVID-19 levels. Total Provider Relief funding used to offset lost revenue due to the pandemic and included in the above amounts was $6.2 million for the nine months ended September 30, 2021 and $25.7 million for the nine months ended September 30, 2020. This comparison excludes revenue contributions from centers that were acquired or divested subsequent to January 1, 2020. For the nine months ended September 30, 2021, net service fee revenue from centers that were acquired or divested subsequent to January 1, 2020 and excluded from the above comparison was $74.7 million. For the nine months ended September 30, 2020, net service fee revenue from centers that were acquired or divested subsequent to January 1, 2020 and excluded from the above comparison was $21.2 million.

Operating Expenses

Total operating expenses for the nine months ended September 30, 2021 increased approximately $135.5 million, or 17.5%, from $774.8 million for the nine months ended September 30, 2021 to $910.3 million for the nine months ended September 30, 2020. The following table sets forth a breakdown of our cost of operations and total operating expenses for the nine months ended September 30, 2021 and 2020 (in thousands):

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	Nine Months Ended September 30,
	2021		2020
Salaries and professional reading fees, excluding stock-based compensation	$	515,227	$	429,292
Stock-based compensation	21,566		10,144
Building and equipment rental	91,253		80,148
Medical supplies	42,246		33,812
Other operating expenses *	168,316		154,700
Cost of operations	838,608		708,096

Depreciation and amortization	71,273		64,536
(Gain) loss on sale and disposal of equipment	(279)		543
Severance costs	715		1,647
Total operating expenses	$	910,317	$	774,822

*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	Nine Months Ended September 30,
Salaries and Professional Fees	2021	2020	$ Increase/(Decrease)	% Change
Total Salaries	$515,227	$429,292	$85,935	20.0%
Same Center Salaries	$478,215	$417,280	$60,935	14.6%

The increase in salaries expense was a result of a return to normal pre-Covid19 levels of business. Staffing levels have been adjusted to support higher patient volumes with the corresponding rise in salaries and professional fee expense. This comparison excludes expenses from centers that were acquired or divested subsequent to January 1, 2020. For the nine months ended September 30, 2021, salaries and professional reading fees from centers that were acquired or divested subsequent to January 1, 2020 and excluded from the above comparison was $37.0 million. For the nine months ended September 30, 2020, salaries and professional reading fees from centers that were acquired or divested subsequent to January 1, 2020 and excluded from the above comparison was approximately $12.0 million.

Stock-based compensation

Stock-based compensation increased $11.4 million, or 112.6% to approximately $21.6 million for the nine months ended September 30, 2021 compared to $10.1 million for nine months ended September 30, 2020. This increase was driven by the higher fair value of RSA’s awarded and vested in the nine months of 2021 as compared to RSA’s awarded and vested in the prior year’s same period. In addition, we granted awards valued at $8.9 million in compensation expense in employee COVID-19 related bonuses during the first nine months of 2021.

Building and equipment rental


In Thousands	Nine Months Ended September 30,
Building & Equipment Rental	2021	2020	$ Increase/(Decrease)	% Change
Total	$91,253	$80,148	$11,105	13.9%
Same Center	$75,434	$74,877	$557	0.7%

The increase in building and equipment rental expenses was related to centers acquired through our business combinations, as same center expense remained steady. This comparison excludes expenses from centers that were acquired or divested subsequent to January 1, 2020. For the nine months ended September 30, 2021, building and equipment rental expenses from centers that were acquired or divested subsequent to January 1, 2020 and excluded from the above comparison was $15.8 million. For the nine months ended September 30, 2020, building and equipment rental expenses from centers that

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were acquired or divested subsequent to January 1, 2020 and excluded from the above comparison was approximately $5.3 million.

Medical supplies


In Thousands	Nine Months Ended September 30,
Medical Supplies Expense	2021	2020	$ Increase/(Decrease)	% Change
Total	$42,246	$33,812	$8,434	24.9%
Same Center	$39,752	$33,019	$6,733	20.4%

Medical supplies expense increase stems from the overall procedural volumes noted above compared to the same period in the prior year and is consistent with the percentage increase in revenue. This comparison excludes expenses from centers that were acquired or divested subsequent to January 1, 2020. For the nine months ended September 30, 2021, medical supplies expenses from centers that were acquired or divested subsequent to January 1, 2020 and excluded from the above comparison was $2.5 million. For the nine months ended September 30, 2020, medical supplies expense from centers that were acquired or divested subsequent to January 1, 2020 and excluded from the above comparison was $0.8 million.

Other operating expenses


In Thousands	Nine Months Ended September 30,
Other Operating Expenses	2021	2020	$ Increase/(Decrease)	% Change
Total	$168,316	$154,700	$13,616	8.8%
Same Center	$152,932	$148,840	$4,092	2.8%

The minimal increase in other operating expenses were mitigated by the cumulative effect of successful contract re-negotiations in the prior year aimed to reduce charges across a range of vendors. This comparison excludes expenses from centers that were acquired or divested subsequent to January 1, 2020. For the nine months ended September 30, 2021, other operating expense from centers that were acquired or divested subsequent January 1, 2020 and excluded from the above comparison was $15.4 million. For the nine months ended September 30, 2020, other operating expense from centers that were acquired or divested subsequent to January 1, 2020 was $5.9 million.

Depreciation and amortization


In Thousands	Nine Months Ended September 30,
Depreciation & Amortization	2021	2020	$ Increase/(Decrease)	% Change
Total	$71,273	$64,536	$6,737	10.4%
Same Center	$63,957	$62,267	$1,690	2.7%

This comparison excludes expenses from centers that were acquired or divested subsequent to January 1, 2020. For the nine months ended September 30, 2021, depreciation expense from centers that were acquired or divested subsequent to January 1, 2020 and excluded from the above comparison was $7.3 million. For the nine months ended September 30, 2020, depreciation and amortization from centers that were acquired or divested subsequent to January 1, 2020 and excluded from the above comparison was $2.3 million.

Loss on sale and disposal of equipment and other

We recorded a gain on the disposal of equipment and other items of approximately $0.3 million for the nine months ended September 30, 2021 and a loss on the disposal of equipment of approximately $0.5 million for the nine months ended September 30, 2020.

Non-cash change in fair value of interest rate hedge

We recorded a gain of $14.1 million for the ineffective portion of our 2019 Swaps for the nine months ended September 30, 2021 and an expense of $4.5 million for the nine months ended September 30, 2020.

Other (income) expenses

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We recorded other expense of approximately $7.7 million for the nine months ended September 30, 2021 mainly related to our refinancing of our term loan debt and the change in fair value of contingent consideration. We recorded other income of approximately $0.2 million for the nine months ended September 30, 2020

Severance Costs

We incurred severance expenses of $0.7 million for the nine months ended September 30, 2021 and $1.6 million for the nine months ended September 30, 2020.

Interest expense


In Thousands	Nine Months Ended September 30,
Interest Expense	2021	2020	$ Increase/(Decrease)	% Change
Total Interest Expense	$37,028	$33,443	$3,585	10.7	%
Interest related to derivatives*	$11,034	$3,152

Interest related to amortization***	$2,725	$3,266
Adjusted Interest Expense	$23,269	$27,025	$(3,756)	(13.9)	%

* Includes interest on derivatives not related to debt obligations.

** Includes interest related to our term loans, revolving credit line, notes, finance leases, and other

***Includes combined noncash amortization of deferred loan costs and discount on issuance of debt.

Excluding interest expense for derivatives and amortization for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, interest expense decreased $3.8 million, or 13.9% and relates to lowered variable LIBOR and Prime interest rates paid on our term loan and revolving debt. See “Liquidity and Capital Resources” below for more details on our credit facilities.

Equity in earnings from unconsolidated joint ventures

For the nine months ended September 30, 2021 we recognized equity in earnings from unconsolidated joint ventures in the amount of $8.3 million and for the nine months ended September 30, 2020 we recognized equity in earnings from unconsolidated joint ventures of $5.2 million, an increase of $3.1 million or 59.6%. The increase was mainly related to the equity in earnings received from our interest in the Arizona Diagnostic Radiology Group joint venture, which was formed in the fourth quarter of 2020.

Income tax expense

We recorded a provision for income tax of $12.5 million, or an effective tax rate of 22.6%, for the nine months ended September 30, 2021 compared to a benefit for income tax of $5.0 million , or an effective tax rate of 28.3% for the nine months ended September 30, 2020. The income tax rates for the three and nine months ended September 30, 2021 diverge from the federal statutory rate due to (i) noncontrolling interests due to the controlled partnerships; (ii) effects of state income taxes; and (iii) excess tax benefits attributable to share-based compensation.

Adjusted EBITDA

We use both GAAP and non-GAAP metrics to measure our financial results. We believe that, in addition to GAAP metrics, certain non-GAAP metrics, such as Adjusted EBITDA assist us in measuring our business performance, cash generated from operations, leverage capacity and ability to service our debt obligations. We believe this information is useful to investors and other interested parties because we are highly leveraged and our non-GAAP metrics remove non-cash and certain other charges that occur in the affected period and provide a basis for measuring the Company's financial condition against other quarters.

We define Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, each from continuing operations and excluding losses or gains on the disposal of equipment, other income or loss, loss on debt extinguishment, bargain purchase gains and non-cash equity compensation. Adjusted EBITDA includes equity earnings in unconsolidated operations and subtracts allocations of earnings to noncontrolling interests in subsidiaries, and is adjusted for non-cash or

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extraordinary and one-time events taking place during the period. We have not made specific adjustments to our calculation of Adjusted EBITDA in response to COVID 19. Our net income (loss) reflected below includes the effect of ~~the $6.2 million in other~~ revenue received under the Provider Relief ~~Fund.~~Fund of $6.2 million and $25.7 million for the nine months ended September 30, 2021 and 2020, respectively.

Adjusted EBITDA should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA should not be considered in isolation or as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As Adjusted EBITDA is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies.

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Adjusted EBITDA is most comparable to the GAAP financial measure, net income (loss) attributable to RadNet, Inc. common stockholders. The following is a reconciliation of GAAP net income (loss) attributable to RadNet, Inc. common stockholders to Adjusted EBITDA for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020, respectively.

Three Months Ended March 31,
2021 2020
Net income (loss) attributable to RadNet, Inc. common stockholders $ 9,458 $ (16,358)
Provision for (benefit from) income taxes 4,376 (4,381)
Interest expense 12,826 11,552
Severance costs 285 218
Depreciation and amortization 22,656 21,934
Non-cash employee stock-based compensation 8,248 6,622
(Gain) loss on sale and disposal of equipment and other (1,307) 771
Non-cash change in fair value of interest rate hedge (11,245) —
Other expenses 206 6
Legal settlements — —
Adjusted EBITDA $ 45,503 $ 20,364


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net income (loss) attributable to RadNet, Inc. common stockholders	$	16,220	$	6,156	$	28,550	$	(20,797)
Provision for (benefit from) income taxes	5,284		3,825		12,534		(5,029)
Interest expense	12,032		11,061		37,028		33,443
Severance costs	163		571		715		1,647
Depreciation and amortization	24,606		21,247		71,272		64,536
Non-cash employee stock-based compensation	4,422		2,067		21,566		10,144
Loss (gain) on sale and disposal of equipment and other	2,595		342		(279)		543
Debt restructuring and loss on extinguishment expenses	—		—		6,044		—
Non-cash change in fair value of interest rate hedge	(2,870)		679		(14,149)		4,523
Other adjustment to joint venture investment	—		—		(565)		—
Other expenses	(167)		(139)		1,699		(247)



Adjusted EBITDA	$	62,285	$	45,809	$	164,415	$	88,763

Liquidity and Capital Resources

The following table summarizes of key balance sheet data related to our liquidity as of ~~March 31,~~September 30, 2021 and December 31, 2020 and income statement data for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020 (in thousands):


Balance Sheet Data:	Balance Sheet Data:	March 31, 2021		December 31, 2020		Balance Sheet Data:	September 30, 2021		December 31, 2020
Cash and cash equivalents	Cash and cash equivalents	$	31,091	$	102,018	Cash and cash equivalents	$	151,253	$	102,018
Accounts receivable	Accounts receivable	146,665		129,585		Accounts receivable	152,409		129,585
Working capital (exclusive of current operating lease liabilities)	Working capital (exclusive of current operating lease liabilities)	(109,730)		(61,896)		Working capital (exclusive of current operating lease liabilities)	39,114		(61,896)
Stockholders' equity	Stockholders' equity	281,358		258,303		Stockholders' equity	339,379		258,303

Income statement data for the three months ended March 31 2021 2020
Total net revenue $ 315,319 $ 281,564
Net income (loss) attributable to RadNet common stockholders 9,458 (16,358)


Income statement data for the nine months ended September 30,	2021		2020
Total net revenue	$	981,928	$	763,905
Net income (loss) attributable to RadNet common stockholders	28,550		(20,797)

We operate in a capital intensive, high fixed-cost industry that requires significant amounts of capital to fund operations. In addition to operations, we require a significant amount of capital for the initial start-up and development of new diagnostic imaging facilities, the acquisition of additional facilities and new diagnostic imaging equipment. Because our cash flows from operations have been insufficient to fund all of these capital requirements, we have depended on the availability of financing under credit arrangements with third parties.

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During the nine months ended September 30, 2021 we had a substantial acceleration of procedure volumes compared to the prior year. Net income from the period, together with proceeds from the refinance of our credit facility has resulted in substantial improvement of our working capital position compared to December 31, 2020. However, as noted in our forward looking statements, we are uncertain of the duration and ultimate severity of the effects of the COVID 19 pandemic on our business. Although we have received government stimulus funding and are undertaking measures to reduce operating expenses, we may again experience operating losses as a result of the pandemic which can impact both the consumption and cost of our medical imaging services. We have credit available from our current credit facilities and borrowing under those facilities is subject to continued compliance with lending covenants. We currently meet those requirements, and expect that we will continue to do so for the foreseeable future, but substantial and sustained operating losses could impact our ability to borrow under those facilities. If we are not able to meet such requirements, we may be required to seek additional financing and there can be no assurance that we will be able to obtain financing from other sources on terms acceptable to us, if at all.

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On a continuing basis, we also consider various transactions to increase shareholder value and enhance our business results, including acquisitions, divestitures and joint ventures. These types of transactions may result in future cash proceeds or payments but the general timing, size or success of any acquisition, divestiture or joint venture effort and the related potential capital commitments cannot be predicted. We expect to fund any future acquisitions primarily with cash flow from operations and borrowings, including borrowing from amounts available under our senior secured credit facilities or through new equity or debt issuances.

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.

Sources and Uses of Cash

The following table summarizes key components of our sources and uses of cash for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020:


Cash Flow Data	Cash Flow Data	March 31, 2021		March 31, 2020		Cash Flow Data	September 30, 2021		September 30, 2020
Cash provided by operating activities	Cash provided by operating activities	$	28,084	$	40,913	Cash provided by operating activities	$	100,295	$	170,343
Cash used in investing activities	Cash used in investing activities	(87,348)		(55,059)		Cash used in investing activities	(159,506)		(88,280)
Cash (used in) provided by financing activities		(11,651)		68,262
Cash provided by (used in) financing activities						Cash provided by (used in) financing activities	108,478		(33,495)

Cash provided by operating activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 was ~~$28.1~~$100.3 million and ~~$40.9~~$170.3 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2020. Our cash provided by operating activities for the period ended ~~March 31,~~September 30, 2020 was benefited by the receipt of $39.5 million in CMS advances recorded as deferred revenue.

Cash used in investing activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2021, included purchases of property and equipment for approximately ~~$30.4~~$88.5 million and the acquisition of imaging business and ~~software business~~other assets for ~~$57.1~~$70.1 million. As part of our business operations we continually evaluate investment opportunities. ~~As noted in Note 7, Subsequent Events, we have purchase commitments for acquisitions of $5.0 million.~~

Cash ~~used in~~provided by financing activities of $108.5 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021, was due to ~~principal payments on~~refinancing of our term ~~loans~~loan obligations with the Second Amended and ~~equipment debt obligations.~~Restated First Lien Credit and Guaranty Agreement on April 23, 2021. Please see Note 5, Credit Facilities and Notes Payable in the notes to consolidated financials statements for more information.

We have entered into factoring agreements with various institutions and sold certain accounts receivable under non-recourse agreements. 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. Payments on the associated notes receivables will be 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. At ~~March 31,~~September 30, 2021 we have ~~$20.5~~$18.3 million, net of discount, remaining to be collected on these agreements. We do not utilize factoring arrangements as an integral part of our financing for working capital.

Senior Secured Credit Facilities

We maintain secured credit facilities with Barclays Bank PLC and with SunTrust Bank. The Barclays credit facilities are comprised of first lien term loans and a revolving credit ~~facility. On August 28, 2020 we amended the Barclays credit facilities which extended and increased the amount available under the revolving line~~facility of ~~credit to~~ $195.0 million. The SunTrust credit facilities are

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comprised of a term loan and a revolving credit facility of $30.0 million. As of ~~March 31,~~September 30, 2021, we were in compliance with all covenants under our credit facilities. Deferred financing costs at ~~March 31,~~September 30, 2021, net of accumulated amortization, was ~~$1.6~~$2.3 million and is specifically related to our Barclays revolving credit facility.

Included in our condensed consolidated balance sheets at ~~March 31,~~September 30, 2021 are ~~$651.6~~$771.2 million of total term loan debt (exclusive of unamortized discounts of ~~$8.7~~$14.3 million) in thousands:

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		Face Value		Discount		Total Carrying Value			Face Value		Discount		Total Carrying Value
First Lien Term Loans	First Lien Term Loans	$	601,330	$	(8,730)	$	592,600	First Lien Term Loans	$	723,188	$	(13,735)	$	709,453
SunTrust Term Loan	SunTrust Term Loan	50,250		—		50,250		SunTrust Term Loan	48,000		—		48,000
Total Term Loans	Total Term Loans	$	651,580	$	(8,730)	$	642,850	Total Term Loans	$	771,188	$	(13,735)	$	757,453

At ~~March 31,~~September 30, 2021, we had no borrowings under our Barclays or SunTrust revolving credit facilities. After reserves for outstanding letters of credit of ~~$7.9~~$7.8 million on our Barclays Revolving Credit Facility, we have ~~$187.1~~$187.2 million available for borrowing and $30.0 million available under our SunTrust Revolving Credit Facility. ~~For more information on our secured credit facilities see Note 5 to our condensed consolidated financial statements in this quarterly report.~~

On April 23, 2021, after the period covered by this report, we entered into the Restated Credit Agreement which provides for $725.0 million of senior secured first lien term loans and a $195.0 million senior secured revolving credit facility. The proceeds of the loan were used to refinance the outstanding $611.0 million term and revolving loans, to pay fees and expenses associated with the refinancing transaction, to pay accrued interest on the previously existing facilities through the date of closing and to fund approximately $102.0 million to our balance sheet. In addition, the Restated Credit Agreement lowered our interest rates and reduced our principal payments from $9.7 million to $1.8 million per quarter. We expect our existing capital resources, anticipated cash from operations and our borrowing capacity under our credit facilities will be sufficient to sustain our operations for the next twelve months and the foreseeable future.

Please see Note 5, Credit Facilities and Notes Payable in the notes to consolidated financials statements for more information on our secured credit facilities and refinancing activity of April 23, 2021.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Sensitivity: We pay interest on various types of debt instruments to our suppliers and lending institutions. The agreements entail either fixed or variable interest rates. Instruments which have fixed rates are mainly leases on radiology equipment. Variable rate interest obligations relate primarily to amounts borrowed under our outstanding credit facilities. Accordingly, our interest expense and consequently, our earnings, are affected by changes in short term interest rates. However due to our purchase of caps, described below, the effects of interest rate changes are limited.

We can elect Eurodollar or Base Rate (Prime) interest rate options on amounts outstanding under the First Lien Term Loans. At ~~March 31,~~September 30, 2021, we had ~~$601.3~~$723.2 million outstanding subject to ~~an adjusted~~a Eurodollar election on First Lien Term Loans and our effective 63 month LIBOR rate plus applicable margin was ~~4.75%~~3.75%. A hypothetical 1% increase in the adjusted Eurodollar rates under the ~~First Lien~~Restated Credit Agreement over the current Eurodollar rate would result in an increase of ~~$6.0~~$7.2 million in annual interest expense and a corresponding decrease in income before taxes. At ~~March 31,~~September 30, 2021, we had ~~$6.0~~$1.8 million loan amount principal outstanding subject to an ~~adjusted prime~~alternate base rate election on First Lien Term Loans ~~and our~~with an effective ~~prime~~ rate ~~was 5.75%~~of 5.25%. A hypothetical 1% increase in the ~~adjusted Prime rates~~alternative base rate under the First Lien Credit Agreement over the current ~~Prime~~alternative base rate would result in an increase of ~~$0.1 million~~$18.1 thousand in annual interest expense and a corresponding decrease in income before taxes.

At ~~March 31,~~September 30, 2021, we had ~~$50.3~~$48.0 million outstanding subject to an adjusted Eurodollar election on the SunTrust Restated Credit Agreement. We can elect Eurodollar or Base Rate (Prime) interest rate options on amounts outstanding under the SunTrust Restated Credit Agreement. At ~~March 31,~~September 30, 2021, our effective LIBOR rate plus applicable margin was ~~2.25%~~1.65%. A hypothetical 1% increase in the adjusted Eurodollar rates under the SunTrust Restated Credit Agreement would result in an increase of approximately $0.5 million in annual interest expense and a corresponding decrease in income before taxes.

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 smaller notional and October 2025 for the 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 payments under the 2019 Swaps if interest ~~payments if~~ rates ~~remain~~rise above the arranged rates.

ITEM 4. Controls and Procedures

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Evaluation of Disclosure Controls and Procedures

We maintain controls and procedures designed to ensure that we are able to collect the information we are required to disclose in the reports we file with the SEC, and to process, summarize and disclose this information within the time periods specified in the rules of the SEC. Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has conducted an evaluation of the design and operation of our “disclosure controls and procedures” as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures are effective as of the end of the period covered by this report for the purposes set forth above.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting during three months ended ~~March 31,~~September 30, 2021 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1. Legal Proceedings

We are engaged from time to time in the defense of lawsuits arising out of the ordinary course and conduct of our business. We do not believe that the outcome of any of our current litigation will have a material adverse impact on our business, financial condition and results of operations. However, we could be subsequently named as a defendant in other lawsuits that could adversely affect us.

ITEM 1A. Risk Factors

For information about the risks and uncertainties related to our business, please see the risk factors described in our annual report on Form 10-K for the year ended December 31, 2020. The risks described in our Form 10-K and Form 10-Q are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~None.~~

On September 24, 2021 we issued 67,658 shares of our common stock to complete our purchase of Tangent Associates Group LLC. The shares were ascribed a value of $2.0 million and and were issued pursuant to the private placement exemption contained in Section 4(a)(2) of the Securities Act.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

None.

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INDEX TO EXHIBITS


Exhibit Number						Description

~~10.17~~10.1						~~Second Amended and Restated First Lien Credit and Guaranty~~Severance Agreement dated ~~as of April 23,~~August 11, 2021 by and among RadNet Management, Inc., a California corporation, RadNet, Inc., a Delaware corporation, certain subsidiaries and affiliates of RadNet Management, Inc., as Guarantors, the Lenders and other financial institutions from time to time party thereto, and Barclays Bank PLC, as Administrative Agent and Collateral Agent (incorporated by reference to exhibit filed with ~~Form 8-K on April 26, 2021).~~Ruth Wilson**

10.2						Severance Agreement dated November 25, 2019 with Christine Gordon**

31.1						Certification of Howard G. Berger, M.D. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2						Certification of Mark D. Stolper pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1						Certification of Howard G. Berger, M.D. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *

32.2						Certification of Mark D. Stolper pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *

101						The following financial information from RadNet, Inc.'s Quarterly Report on Form 10-Q for the quarter ended ~~March~~September 30, 2021 formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Loss, (iv) the Condensed Consolidated Statements of Changes in Stockholders Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Condensed Consolidated Financial Statements.

104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* This certification is being furnished solely to accompany this report pursuant to 18 U.S.C. 1350, and is not being filed for purposes of Section 18 of the Exchange Act and is not to be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

** Indicates management contract or compensatory plan.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	RADNET, INC.
	(Registrant)

Date: ~~May 10,~~November 9, 2021	By:	/s/ Howard G. Berger, M.D.
		Howard G. Berger, M.D., President and Chief Executive Officer (Principal Executive Officer)


Date: ~~May 10,~~November 9, 2021	By:	/s/ Mark D. Stolper
		Mark D. Stolper, Chief Financial Officer (Principal Financial and Accounting Officer)

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	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Radnet, Inc.'s Equity		Noncontrolling Interests		Total Equity
	Shares	Amount
BALANCE - January 1, 2021	51,640,537	$	5	$	307,788	$	(24,051)	$	(117,999)	$	165,743	$	92,560	$	258,303


Issuance of common stock under the equity compensation plan	699,825	—		—		—		—		—		—		0
Issuance of common stock under the DeepHealth equity compensation plan	494	—		—		—		—		—		—		0
Stock-based compensation expense	—	—		8,248		—		—		8,248		—		8,248






Purchase of noncontrolling interests	—	—		(4)		—		—		(4)		—		(4)
Contribution from noncontrolling partner	—	—		—		—		—		—		123		123

Change in cumulative foreign currency translation adjustment	—	—		—		(12)		—		(12)		—		(12)

Change in fair value of cash flow hedge from prior periods reclassified to earnings, net of taxes	—	—		—		925		—		925		—		925

Net income	—	—		—		—		9,458		9,458		4,317		13,775
BALANCE-MARCH 31, 2021	52,340,856	$	5	$	316,032	$	(23,138)	$	(108,541)	$	184,358	$	97,000	$	281,358

BALANCE - January 1, 2020	50,314,328	$	5	$	262,865	$	(8,026)	$	(103,159)	$	151,685	$	81,454	$	233,139

Issuance of common stock under the equity compensation plan	380,047	—		—		—		—		—		—		0
Stock-based compensation expense	—	—		6,596		—		—		6,596		—		6,596






Change in cumulative foreign currency translation adjustment	—	—		—		1		—		1		—		1
Change in fair value cash flow hedge, net of taxes	—	—		—		(18,549)		—		(18,549)		—		(18,549)

Net (loss) income	—	—		—		—		(16,358)		(16,358)		2,360		(13,998)
BALANCE-MARCH 31, 2020	50,694,375	$	5	$	269,461	$	(26,574)	$	(119,517)	$	123,375	$	83,814	$	207,189


For the three months ended March 31, 2021
Account	January 1, 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, 2021 Balance		Location
Accumulated Other Comprehensive Loss, net of taxes	$	(22,581)	$	0	$	925	$	(21,656)	Equity


For the twelve months ended December 31, 2020
Account	January 1, 2020 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		December 31, 2020		Location
Accumulated Other Comprehensive Loss, net of taxes	$	(5,870)	$	(19,352)	$	2,641	$	(22,581)	Equity


Entity Acquired	Total Purchase Consideration		Property & Equipment		Right of Use Assets		Goodwill		Intangible Assets		Other Assets		Right of Use Liabilities

Personal Health Imaging PLLC	$	2,995	$	576	$	608	$	2,355	$	50	$	14	$	(608)
ZP Elmont LLC	2,194		1,112		1,695		1,005		50		27		(1,695)
ZP Freeport LLC	6,065		3,968		2,361		2,018		50		29		(2,361)
Broadway Medical Imaging LLC	1,155		1,076		1,791		6		50		23		(1,791)
3235 Hempstead LLC	9,386		4,304		10,115		5,032		50		0		(10,115)
SLZM Realty LLC	13,671		3,862		7,715		9,759		50		0		(7,715)
2012 Sunrise Merrick LLC	11,428		2,363		5,919		9,015		50		0		(5,919)
ZP Bayside LLC	3,545		3,385		9,393		40		50		70		(9,393)
ZP Laurelton LLC	2,658		2,530		5,157		32		50		46		(5,157)
ZP Smith LLC	3,978		3,581		10,558		347		50		0		(10,558)
Total	$	57,075	$	26,757	$	55,312	$	29,609	$	500	$	209	$	(55,312)


First Lien Leverage Ratio	Eurodollar Rate Spread	Base Rate Spread
> 5.50x	4.50%	3.50%
> 4.00x but ≤ 5.50x	3.75%	2.75%
>3.50x but ≤ 4.00x	3.50%	2.50%
≤ 3.50x	3.25%	2.25%