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What changed in RadNet, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of RadNet, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+338 added−244 removedSource: 10-K (2025-03-03) vs 10-K (2024-02-29)

Top changes in RadNet, Inc.'s 2024 10-K

338 paragraphs added · 244 removed · 187 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

47 edited+8 added−2 removed168 unchanged
Biggest changeAlthough full compliance with these provisions ensures against prosecution under the federal Anti-kickback Statute, the failure of a transaction or arrangement to fit within a specific safe harbor does not necessarily mean that the transaction or arrangement is illegal or that prosecution under the federal Anti-kickback Statute will be pursued. 11 Although some of our arrangements may not fall within a safe harbor, we believe that such business arrangements do not violate the Anti-kickback Statute because we are careful to structure them to reflect fair value and ensure that the reasons underlying our decision to enter into a business arrangement comport with reasonable interpretations of the Anti-kickback Statute.
Biggest changeAlthough some of our arrangements may not fall within a safe harbor, we believe that such business arrangements do not violate the Anti-kickback Statute because we are careful to structure them to reflect fair value and ensure that the reasons underlying our decision to enter into a business arrangement comport with reasonable interpretations of the Anti-kickback Statute.
The number of MRI and CT scans performed annually in the United States continues to grow due to their wider acceptance by physicians and payors, an increasing number of applications for their use and a general increase in demand due to the aging population. 1 In recent years, there has been rapid development of AI tools for the radiology field.
The number of MRI and CT scans performed annually in the 1 United States continues to grow due to their wider acceptance by physicians and payors, an increasing number of applications for their use and a general increase in demand due to the aging population. In recent years, there has been rapid development of AI tools for the radiology field.
This technology has created cost reductions for our centers in areas such as image storage, support personnel and financial management and has further allowed us to optimize the productivity of all aspects of our business by enabling us to: • capture patient demographic, history and billing information at point-of-service; • automatically generate bills and electronically file claims with third-party payors; • record and store diagnostic report images in digital format; • digitally transmit in real-time diagnostic images from one location to another, thus enabling networked radiologists to cover larger geographic markets by using the specialized training of other networked radiologists; • perform claims, rejection and collection analysis; and 8 • perform sophisticated financial analysis, such as analyzing cost and profitability, volume, charges, current activity and patient case mix, with respect to each of our managed care contracts.
This technology has created cost reductions for our centers in areas such as image storage, support personnel and financial management and has further allowed us to optimize the productivity of all aspects of our business by enabling us to: • capture patient demographic, history and billing information at point-of-service; 8 • automatically generate bills and electronically file claims with third-party payors; • record and store diagnostic report images in digital format; • digitally transmit in real-time diagnostic images from one location to another, thus enabling networked radiologists to cover larger geographic markets by using the specialized training of other networked radiologists; • perform claims, rejection and collection analysis; and • perform sophisticated financial analysis, such as analyzing cost and profitability, volume, charges, current activity and patient case mix, with respect to each of our managed care contracts.
HIPAA, among other things, amends existing crimes and criminal penalties for Medicare fraud and enacts new federal healthcare fraud crimes, including actions affecting non-government healthcare benefit programs. Under HIPAA, a healthcare benefit program includes any private plan or contract affecting interstate 13 commerce under which any medical benefit, item or service is provided.
HIPAA, among other things, amends existing crimes and criminal penalties 13 for Medicare fraud and enacts new federal healthcare fraud crimes, including actions affecting non-government healthcare benefit programs. Under HIPAA, a healthcare benefit program includes any private plan or contract affecting interstate commerce under which any medical benefit, item or service is provided.
We do not believe that such laws and regulations will either prohibit or require licensure approval of our business operations, although no assurances can be made that such laws and regulations will not be interpreted to extend such prohibitions or requirements to our operations. 14 Insurance Laws and Regulation.
We do not believe that such laws and 14 regulations will either prohibit or require licensure approval of our business operations, although no assurances can be made that such laws and regulations will not be interpreted to extend such prohibitions or requirements to our operations. Insurance Laws and Regulation.
At each of our multi-modality centers, we offer patients and referring physicians one location to serve their needs for multiple procedures. This prevents multiple patient visits or unnecessary travel between locations, increasing patient throughput and decreasing costs and time delays. Our revenue is generated by a broad mix of modalities.
At each of our multi-modality centers, we offer patients and referring physicians one location to serve their needs for multiple procedures. This prevents multiple patient visits or unnecessary travel between locations, thus increasing patient throughput and decreasing costs and time delays. Our revenue is generated by a broad mix of modalities.
California places a $250,000 limit on non-economic damages for medical malpractice cases. The cap applies whether the case is for injury or death, and it allows only one $250,000 recovery in a wrongful death case. Non-economic damages are defined as compensation for pain, suffering, inconvenience, physical impairment, disfigurement and other non-pecuniary injury. No cap applies to economic damages.
California places a $250,000 limit on non-economic damages for medical malpractice cases. The cap applies whether the case is 10 for injury or death, and it allows only one $250,000 recovery in a wrongful death case. Non-economic damages are defined as compensation for pain, suffering, inconvenience, physical impairment, disfigurement and other non-pecuniary injury. No cap applies to economic damages.
We believe the use of equipment upgrades rather than 3 equipment replacements will continue, as we do not foresee new imaging technologies on the near-term horizon that will displace MRI, CT or PET as the principal advanced diagnostic imaging modalities. Impact of Artificial Intelligence. AI has the potential to significantly change the medical imaging industry.
We believe the use of equipment upgrades rather than equipment replacements will continue, as we do not foresee new imaging technologies on the near-term horizon that will displace MRI, CT or PET as the principal advanced diagnostic imaging modalities. Impact of Artificial Intelligence. AI has the potential to significantly change the medical imaging industry.
For performing these management services, which include billing, collecting, transcription and medical coding, we receive management fees, that depending on the agreement are calculated at a fixed or variable rate. 6 Payors The fees charged for diagnostic imaging services performed at our centers are paid by a diverse mix of payors: Commercial Insurance.
For performing these management services, which include billing, collecting, transcription and medical coding, we receive management fees, that depending on the agreement are calculated at a fixed or variable rate. Payors The fees charged for diagnostic imaging services performed at our centers are paid by a diverse mix of payors: Commercial Insurance.
PET technology has been found highly effective and appropriate in certain clinical circumstances for the detection and assessment of tumors throughout the body, the evaluation of some cardiac conditions and the assessment of epilepsy seizure sites. The information provided by PET technology often obviates the need to perform further highly invasive or diagnostic surgical procedures.
PET technology has been found highly effective and appropriate in certain clinical circumstances for the detection and assessment of tumors throughout the body, the evaluation of some cardiac conditions and 2 the assessment of epilepsy seizure sites. The information provided by PET technology often obviates the need to perform further highly invasive or diagnostic surgical procedures.
We believe that third-party payors representing large groups of patients often 4 prefer to enter into managed care contracts with providers that offer a broad array of diagnostic imaging services at convenient locations throughout a geographic area. Our Strong Relationships with Experienced and Highly Regarded Radiologists.
We believe that third-party payors representing large groups of patients often prefer to enter into managed care contracts with providers that offer a broad array of diagnostic imaging services at convenient locations throughout a geographic area. Our Strong Relationships with Experienced and Highly Regarded Radiologists.
We believe our networks of centers and tailored service offerings for geographic areas drive local physician referrals, make us an attractive candidate for selection as a preferred provider by third-party payors and create economies of scale. Our Strong Relationships with Payors and Diversified Payor Mix.
We believe our networks of centers and tailored service offerings for geographic areas drive local physician referrals, make us an attractive candidate for selection as a preferred provider by third-party payors and create economies of scale. 4 Our Strong Relationships with Payors and Diversified Payor Mix.
We believe that the use of the diagnostic capabilities of MRI and other imaging services will continue to increase because they are cost-effective, time-efficient and non-invasive, as compared to alternative procedures, including surgery, and that newer technologies and future technological advancements will further increase the use of imaging services.
We believe that the use of the diagnostic capabilities of MRI and other imaging services will continue to increase because they are cost-effective, time-efficient and non- 3 invasive, as compared to alternative procedures, including surgery, and that newer technologies and future technological advancements will further increase the use of imaging services.
The Stark Law also prohibits the entity from billing for any such prohibited referral. The penalties for violating the Stark Law include a prohibition on payment by these governmental programs and civil penalties of as much as $15,000 for each violation referral and $100,000 for participation in a circumvention scheme.
The Stark Law also prohibits the entity from billing for any such prohibited referral. The penalties for violating the Stark Law include a prohibition on payment by these governmental programs and civil monetary penalties of as much as $15,000 for each violation referral and $100,000 for participation in a circumvention scheme.
Other states in which we now operate do not have similar limitations and in those states we believe our insurance coverage to be sufficient. 10 Regulation The healthcare industry is highly regulated, and changes in the regulatory environment could significantly affect our operations in the future.
Other states in which we now operate do not have similar limitations and in those states we believe our insurance coverage to be sufficient. Regulation The healthcare industry is highly regulated, and changes in the regulatory environment could significantly affect our operations in the future.
We intend to continue to expand in established markets through additional joint ventures, particularly with hospital systems. We believe that these joint ventures deepen and expand our strength in markets where we are already established. 5 Leverage our investment in AI and technology to improve services and operating efficiency .
We intend to continue to expand in established markets through additional joint ventures, particularly with hospital systems. We believe that these joint ventures deepen and expand our strength in markets where we are already established. Leverage our investment in AI and technology to improve services and operating efficiency .
We contract with a consolidated medical group (the "Group") which consists of professional corporations owned or controlled by individuals within our senior management that provide professional medical services in Arizona, California, Delaware, Maryland, New Jersey and New York.
We contract with a Consolidated Medical Group (the “Group”) which consists of professional corporations owned or controlled by individuals within our senior management that provide professional medical services in Arizona, California, Delaware, Maryland, New Jersey and New York.
The majority of our centers are multi-modality sites, offering various combinations of MRI, CT, PET, nuclear medicine, ultrasound, X-ray, fluoroscopy services and other related procedures. A portion of our centers are single-modality sites, offering either X-ray or MRI services.
The majority of our centers are multi-modality sites, offering various combinations of MRI, CT, PET, nuclear medicine, ultrasound, X-ray, fluoroscopy 7 services and other related procedures. A portion of our centers are single-modality sites, offering either X-ray or MRI services.
We also provide radiology services at select imaging centers for the Anaheim Ducks, Los Angeles Angels, Los Angeles Rams, Oakland Athletics, San Francisco 49ers and student athletes of the University of Southern California.
We also provide radiology services at select imaging centers for the Anaheim Ducks, Los Angeles Angels, Los Angeles Rams, Athletics, San Francisco 49ers and student athletes of the University of Southern California.
Our current plans are to strengthen our market presence in geographic areas where we currently have existing operations and to expand into neighboring and other areas where we believe we can compete effectively.
Our current plans are to strengthen our market presence in geographic areas where 5 we currently have existing operations and to expand into neighboring and other areas where we believe we can compete effectively.
Federal law known as the Anti-kickback Statute prohibits the knowing and willful offer, payment, solicitation or receipt of any form of remuneration in return for, or to induce, (i) the referral of a person, (ii) the furnishing or arranging for the furnishing of items or services reimbursable under the Medicare, Medicaid or other governmental programs or (iii) the purchase, lease or order or arranging or recommending purchasing, leasing or ordering of any item or service reimbursable under the Medicare, Medicaid or other governmental programs.
Federal law known as the Anti-kickback Statute prohibits the knowing and willful offer, payment, solicitation or receipt of any form of remuneration in return for, or to induce, (i) the referral of a person, (ii) the furnishing or arranging for the furnishing of items or services or (iii) the purchase, lease or order (or arranging or recommending purchasing, leasing or ordering) of any item or service, which is reimbursable under the Medicare, Medicaid or other governmental programs.
Department of Health and Human Services that, among other things, established new "safe harbors" under the Anti-kickback Statute for certain value-based compensation arrangements.
Department of Health and 11 Human Services that, among other things, established new "safe harbors" under the Anti-kickback Statute for certain value-based compensation arrangements.
Noncompliance also may result in exclusion from participation in government programs, including Medicare and Medicaid. These actions could have a material adverse effect on our business, financial condition, and results of operations. U.S. Food and Drug Administration or FDA. The FDA has issued the requisite pre-market approval for all of the MRI and CT systems we use.
Noncompliance also may result in exclusion from participation in government programs, including Medicare and Medicaid. These actions could have a material adverse effect on our business, financial condition, and results of operations. U.S. Food and Drug Administration or FDA. The FDA has issued the requisite pre-market authorization for all of the MRI and CT systems we use.
Available Information All reports we file with the Securities and Exchange Commission are available free of charge via EDGAR through the SEC website at www.sec.gov .
Available Information All reports we file with the Securities and Exchange Commission (the “SEC”) are available free of charge via EDGAR through the SEC website at www.sec.gov .
Our diagnostic imaging centers are strategically organized into regional networks concentrated in major population centers in seven states, providing a density that offers unique benefits to our patients, our referring physicians, our payors and us. We are able to increase the convenience of our services to patients by implementing scheduling systems within geographic regions, where practical.
Our diagnostic imaging centers are strategically organized into regional networks concentrated in major population centers in eight states, providing a density that offers unique benefits to our patients, our referring physicians, our payors and us. We are able to increase the convenience of our services to patients by implementing scheduling systems within geographic regions, where practical.
Under the Protecting Access to Medicare Act of 2014, Congress introduced a new quality incentive program that, effective January 1, 2016, reduces Medicare payments for certain CT services reimbursed through the Medicare Physician Fee Schedule that are furnished using equipment that does not meet certain dose optimization and management standards.
Under the Protecting Access to Medicare Act of 2014, Congress introduced a new quality incentive program that, effective January 1, 2016, reduced Medicare payments for certain CT services reimbursed through the Medicare Physician Fee Schedule that are furnished using equipment that does not meet certain dose optimization and management standards.
Each medical group maintains control over the physicians it employs, and is responsible for staffing the facility with qualified professional medical personnel.
Each medical group 6 maintains control over the physicians it employs and is responsible for staffing the facility with qualified professional medical personnel.
In addition, we employ combined PET/CT systems that blend the PET and CT imaging modalities into one scanner. 2 Nuclear Medicine.
In addition, we employ combined PET/CT systems that blend the PET and CT imaging modalities into one scanner. Nuclear Medicine.
We provide training programs, standardized policies and procedures, and sharing of best practices among the physicians in our regional networks. Internationally, our majority-owned subsidiary Heart & Lung Imaging Limited, provides teleradiology services for remote interpretation of images on behalf of providers within the framework of the United Kingdom's National Health Service.
We provide training programs, standardized policies and procedures, and sharing of best practices among the physicians in our regional networks. Internationally, our majority-owned subsidiary, The HLH Imaging Group Limited fka Heart & Lung Imaging Limited, provides teleradiology services for remote interpretation of images on behalf of providers within the framework of the United Kingdom's National Health Service.
We also maintain a website at www.radnet.com where we make available, free of charge, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after the material is electronically filed with, or furnished to, the Securities and Exchange Commission.
We also maintain a website at www.radnet.com where we make available, free of charge, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports, as soon as reasonably practicable after the material is electronically filed with, or furnished to, the SEC.
References to our website in this report are provided as a convenience and the information contained on, or otherwise accessible through, the website is not incorporated by reference into, nor does it form a part of this annual report on Form 10-K or any other document that we file with the Securities and Exchange Commission.
References to our website in this report are provided as a convenience and the information contained on, or otherwise accessible through, the website is not incorporated by reference into, nor does it form a part of this annual report on Form 10-K or any other document that we file with the SEC.
Our Scale and Reputation. As of December 31, 2023, we operated, directly or indirectly through joint ventures with hospitals, 366 centers in Arizona, California, Delaware, Florida, Maryland, New Jersey, and New York. We are the largest operator of freestanding, fixed-site outpatient diagnostic imaging service centers in the United States, based on number of centers and revenue.
Our Scale and Reputation. As of December 31, 2024, we operated, directly or indirectly through joint ventures with hospitals, 398 centers in Arizona, California, Delaware, Florida, Maryland, New Jersey, New York, and Texas. We are the largest operator of freestanding, fixed-site outpatient diagnostic imaging service centers in the United States, based on number of centers and revenue.
Pursuant to the accreditation process, each facility providing mammography services must comply with certain standards that include, among other things, annual inspection of the facility's equipment, personnel (interpreting physicians, technologists and medical physicists) and practices.
Pursuant to the accreditation process, each facility providing mammography services must comply with certain standards that include, among other things, annual inspection of the facility's equipment, personnel (interpreting physicians, technologists and medical physicists), equipment, radiation dose, quality assurance programs, and practices, among others.
Alongside our established subsidiary eRad, Inc., which develops and sells computerized imaging data storage and retrieval systems, we have assembled an industry leading team of software developers to create radiology workflow solutions that improve patient care. Business Strategy Maximize Performance at Our Existing Centers.
Alongside our established subsidiary eRad, Inc., which develops and sells computerized imaging data storage and retrieval systems, we have assembled an industry leading team of software developers to create radiology workflow solutions that improve patient care.
During the year ended December 31, 2023, approximately 23% of our net service revenue generated at our diagnostic imaging centers was derived from federal government sponsored healthcare programs (Medicare) and 3% from state sponsored programs (Medicaid).
During the year ended December 31, 2024, approximately 22% of our net service revenue generated at our diagnostic imaging centers was derived from federal government sponsored healthcare programs (Medicare) and 2% from state sponsored programs (Medicaid).
All mammography centers are required to meet the applicable MQSA requirements, including quality standards, be accredited by an approved accreditation body or state agency and certified by the FDA or an FDA-approved certifying state agency.
All mammography centers are required to meet the applicable MQSA requirements under such laws and regulations, including quality standards, being accredited by an approved accreditation body or state agency and certified by the FDA or an FDA-approved certifying state agency.
The following table sets forth the number of our centers operated directly or managed through joint ventures for each year during the three-year period ended December 31, 2023: 7 Years Ended December 31, 2023 2022 2021 Total centers owned or managed (at beginning of the year) 357 347 331 Centers added by: Acquisition 10 8 27 Internal development 11 14 1 Centers closed or sold (12) (12) (12) Total centers owned or managed (at year end) 366 357 347 Diagnostic Imaging Equipment The following table indicates, as of December 31, 2023, the quantity of principal diagnostic equipment available at our imaging centers operated directly or through joint venture investments: Equipment Count Years Ended December 31, 2023 2022 2021 MRI 353 340 323 CT 208 208 192 PET/CT 63 67 68 Mammography 405 387 358 Ultrasound 861 818 760 X-ray 363 440 415 Nuclear Medicine 55 57 55 Fluoroscopy 121 116 105 Total equipment 2,429 2,433 2,276 The average age of our MRI and CT units is less than five years, and the average age of our PET units is less than four years.
The following table sets forth the number of our centers operated directly or managed through joint ventures for each year during the three-year period ended December 31, 2024: Years Ended December 31, 2024 2023 2022 Total centers owned or managed (at beginning of the year) 366 357 347 Centers added by: Acquisition 28 10 8 Internal development 44 11 14 Centers closed or sold (40) (12) (12) Total centers owned or managed (at year end) 398 366 357 Diagnostic Imaging Equipment The following table indicates, as of December 31, 2024, the quantity of principal diagnostic equipment available at our imaging centers operated directly or through joint venture investments: Equipment Count Years Ended December 31, 2024 2023 2022 MRI 382 353 340 CT 220 208 208 PET/CT 66 63 67 Mammography 427 405 387 Ultrasound 907 861 818 X-ray 380 363 440 Nuclear Medicine 56 55 57 Fluoroscopy 120 121 116 Total equipment 2,558 2,429 2,433 The average age of our MRI and CT units is less than five years, and the average age of our PET units is less than four years.
These numbers include 220 full-time and 89 part-time physicians and 2,429 full-time, 397 part-time and 1,190 per-diem technologists. Diversity, Equity, Inclusion, & Belonging . We are committed to creating an inclusive work environment where team members can be their best and authentic selves.
These numbers include 218 full-time and 91 part-time physicians and 2,725 full-time, 296 part-time and 1,321 per-diem technologists. Diversity, Equity, Inclusion, & Belonging . We are committed to creating an inclusive work environment where team members can be their best and authentic selves.
At December 31, 2023, we operated, directly or indirectly through joint ventures with hospitals, 366 imaging centers located in Arizona, California, Delaware, Florida, Maryland, New Jersey, and New York.
As of December 31, 2024, we operated, directly or indirectly through joint ventures with hospitals, 398 imaging centers located in Arizona, California, Delaware, Florida, Maryland, New Jersey, Texas and New York.
Our mammography systems are regulated by the FDA pursuant to the Mammography Quality Standards Act of 1992, as amended by the Mammography Quality Standards Reauthorization Acts of 1998 and 2004 (collectively, the “MQSA”).
Our mammography systems are regulated by the FDA pursuant to the Mammography Quality Standards Act of 1992, as amended by the Mammography Quality Standards Reauthorization Acts of 1998 and 2004 (collectively, the “MQSA”), and implementing regulations promulgated by the FDA, including the regulations that the FDA finalized in 2023.
We strive to care for our team members and are concerned about their total well-being. Headcount and Labor Representation . At December 31, 2023, we had a total of 7,872 full-time, 569 part-time and 1,847 per diem employees, including those employed by the Group.
We strive to care for our team members and are concerned about their total well-being. Headcount and Labor Representation . As of December 31, 2024, we had a total of 8,546 full-time, 454 part-time and 2,021 per diem employees, including those employed by the Group.
With a heightened focus on upskilling our existing workforce, our investment in new training and development platforms and piloting a coaching capabilities builder program for our leaders, we are promoting timely and effective feedback that fosters trust, respect, teamwork, growth, and excellence. Furthermore, our tuition reimbursement program encourages team members at all levels of the enterprise to seek additional skills.
With a heightened focus on upskilling our existing workforce, our investment in new training and development platforms and piloting a coaching capabilities builder program for our leaders, we are promoting timely and effective feedback that fosters trust, respect, teamwork, growth, and excellence.
In October 2023, the United States Food & Drug Administration reported it had granted marketing clearance to 405 radiology software products since January 2020. Modern AI is built by training on large databases to recognize patterns with much higher performance than previously.
By August 2024, the United States Food & Drug Administration (“FDA”) reported that it had granted marketing clearance to over 700 artificial intelligence and machine learning (“AI/ML”)-enabled radiology software products. Modern AI is built by training on large databases to recognize patterns with much higher performance than previously.
An unsatisfactory audit of any of our diagnostic imaging centers or contracted radiology practices could result in any or all of the following: significant repayment obligations, exclusion from Medicare, Medicaid or other governmental programs, and civil and criminal penalties.
An unsatisfactory audit of any of our diagnostic imaging centers or contracted radiology practices could result in any or all of the following: significant repayment obligations, exclusion from Medicare, Medicaid or other governmental programs, and civil and criminal penalties. 12 Federal regulatory and law enforcement authorities have increased enforcement activities with respect to Medicare and Medicaid fraud and abuse regulations and other reimbursement laws and rules, including laws and regulations that govern our activities and the activities of the radiology practices.
We believe that, other than self-referred patients, all of the services covered by the Stark Law provided by the contracted radiology practices derive from requests for consultation by non-affiliated physicians. Therefore, we believe that the Stark Law is not implicated by the financial relationships between our operations and the contracted radiology practices.
Although we receive fees under our service agreements for management and administrative services, we are not in a position to make or influence referrals of patients. We believe that, other than self-referred patients, all of the services covered by the Stark Law provided by the contracted radiology practices derive from requests for consultation by non-affiliated physicians.
Sales and Marketing Our sales and marketing team employs a multi-pronged approach to marketing, including physician, payor and sports marketing programs, each of which are described below: 9 Physician Marketing. Each customer service representative on our physician marketing team is responsible for marketing activity on behalf of one or more centers.
Each customer service representative on our physician marketing team is responsible for marketing activity on behalf of one or more centers.
We believe that, although we receive fees under our service agreements for management and administrative services, we are not in a position to make or influence referrals of patients. Under the Stark Law, radiology and certain other imaging services and radiation therapy services and supplies are services included in the designated health services subject to the self-referral prohibition.
Under the Stark Law, radiology and certain other imaging services and radiation therapy services and supplies are services included in the designated health services subject to the self-referral prohibition.
Removed
The regulations governing the Stark Law were also recently amended as part of the Regulatory Sprint to Coordinated Care initiative. These new regulations, which among other things establish new exceptions for value-based arrangements, were published by the Centers for Medicare & Medicaid Services (CMS) on November 20, 2020.
Added
The portfolio of software solutions is anchored by eRad, Inc.'s RIS/PACS, informatics designed specifically for outpatient radiology and DeepHealth OS, a cloud-native operating system that helps operate all aspects of the radiology service line from scheduling and patient preparation to technologist workflow to interpretation and referral management.
Removed
Federal regulatory and law enforcement authorities have increased enforcement activities with respect to Medicare and Medicaid fraud and abuse regulations and other reimbursement laws and rules, including laws and regulations that govern our 12 activities and the activities of the radiology practices.
Added
The portfolio of software solutions are anchored by eRad, Inc.'s RIS/PACS, informatics designed specifically for outpatient radiology and DeepHealth OS, a cloud-native operating system that helps operate all aspects of the radiology service line from scheduling and patient preparation to technologist workflow to interpretation and referral management.
Added
Our DeepHealth, Inc. subsidiary has received FDA clearance for use of its SaigeQ “triage”/workflow product, SaigeDX advanced diagnostic product and Saige-Density breast density assessment software for screening breast mammography, which we have begun to roll out in certain markets as an Enhanced Breast Cancer Detection solution.
Added
Our Aidence Holding B.V. subsidiary is developing solutions for interpretation of chest and lung CT scans for lung cancer screening. It has received the CE mark for its solution and has existing customers in seven European countries, with its largest concentration in the United Kingdom, and plans to submit an application for FDA clearance to sell in the United States.
Added
Our Quantib B.V. subsidiary is primarily focused on interpretation of prostate MRI for widespread prostate cancer screening. Quantib’s prostate MRI post-processing software has both FDA clearances and European CE marking. Our digital health segment provides these solutions to us and to over 400 customers in the United States, Europe, and Israel. Business Strategy Maximize Performance at Our Existing Centers.
Added
Furthermore, our tuition reimbursement program encourages team members at all levels of the enterprise to seek additional skills. 9 Sales and Marketing Our sales and marketing team employs a multi-pronged approach to marketing, including physician, payor and sports marketing programs, each of which are described below: Physician Marketing.
Added
Although full compliance with these provisions ensures against prosecution under the federal Anti-kickback Statute, the failure of a transaction or arrangement to fit within a specific safe harbor does not necessarily mean that the transaction or arrangement is illegal or that prosecution under the federal Anti-kickback Statute will be pursued.
Added
Therefore, we believe that the Stark Law is not implicated by the financial relationships between our operations and the contracted radiology practices.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

53 edited+80 added−3 removed114 unchanged
Biggest changeSome of our imaging modalities use radioactive materials, which generate regulated waste and could subject us to liabilities for injuries or violations of environmental and health and safety laws. Some of our imaging procedures use radioactive materials, which generate medical and other regulated wastes. For example, patients are injected with a radioactive substance before undergoing a PET scan.
Biggest changeSome of our imaging procedures use radioactive materials, which generate medical and other regulated wastes. For example, patients are injected with a radioactive substance before undergoing a PET scan. Storage, use and disposal of these materials and waste products present the risk of accidental environmental contamination and physical injury.
Although we believe our operations do not violate the Stark Law, our activities may be challenged. If a 22 challenge is successful, it could have an adverse effect on our operations. In addition, legislation may be enacted in the future that further addresses Medicare and Medicaid fraud and abuse or imposes additional regulatory burdens on us.
Although we believe our operations do not violate the Stark Law, our activities may be challenged. If a challenge is successful, it could have an adverse effect on our operations. In addition, legislation may be enacted in the future that further addresses Medicare and Medicaid fraud and abuse or imposes additional regulatory burdens on us.
If a sufficiently large number of these physicians and other third parties were to discontinue referring patients to us, our imaging procedure volume would decrease, which would reduce our net revenue and operating margins. Further, commercial third-party payors have implemented managed care programs that could limit the ability of physicians to refer patients to us.
If a sufficiently large number of these physicians and other third parties were to discontinue referring patients to us, our imaging procedure volume would decrease, which would reduce our net revenue and operating margins. 19 Further, commercial third-party payors have implemented managed care programs that could limit the ability of physicians to refer patients to us.
To the extent we are unable to generate sufficient cash from our operations, funds are not available under our credit facilities or we are unable to structure or obtain financing through operating leases, finance leases or long-term installment notes, we may be unable to meet the capital expenditure requirements necessary to support the maintenance and continued growth of our operations.
To the extent we are unable to generate sufficient cash from our operations, funds are not available under our credit facilities or we are unable to structure or obtain financing through operating leases or long-term installment notes, we may be unable to meet the capital expenditure requirements necessary to support the maintenance and continued growth of our operations.
For example, health maintenance organizations sometimes contract directly with providers 18 and require their enrollees to obtain these services exclusively from those contracted providers. Some insurance companies and self-insured employers also limit these services to contracted providers. These “closed panel” systems are now common in the managed care environment.
For example, health maintenance organizations sometimes contract directly with providers and require their enrollees to obtain these services exclusively from those contracted providers. Some insurance companies and self-insured employers also limit these services to contracted providers. These “closed panel” systems are now common in the managed care environment.
Our centers are subject to periodic inspection by governmental and other authorities to assure continued compliance with the various standards necessary for licensure and certification. If any facility loses its certification under the Medicare program, then the facility will be ineligible to receive reimbursement from the Medicare and Medicaid programs.
Our centers are subject to periodic inspection by governmental and other authorities to assure continued compliance with the various standards necessary for licensure and certification. If any facility loses its certification under the Medicare 25 program, then the facility will be ineligible to receive reimbursement from the Medicare and Medicaid programs.
If other states adopt similar minimum wage increases, the effect on our cost of operations would be compounded. In addition, we expect that inflationary pressures will continue to impact our salaries, wages, benefits and other costs.
If other states 16 adopt similar minimum wage increases, the effect on our cost of operations would be compounded. In addition, we expect that inflationary pressures will continue to impact our salaries, wages, benefits and other costs.
We incur capital expenditures to, among other things, upgrade and replace equipment for existing centers and expand within our existing markets and enter new markets. If we open or acquire 24 additional imaging centers, we may have to incur material capital lease obligations.
We incur capital expenditures to, among other things, upgrade and replace equipment for existing centers and expand within our existing markets and enter new markets. If we open or acquire additional imaging centers, we may have to incur material capital lease obligations.
Integrating operations requires significant efforts and expense on our part. Our 20 management may have its attention diverted while trying to integrate an acquisition. Personnel may leave or be terminated because of an acquisition.
Integrating operations requires significant efforts and expense on our part. Our management may have its attention diverted while trying to integrate an acquisition. Personnel may leave or be terminated because of an acquisition.
However, the success of our AI investments will depend upon a number of factors, some of which are out of our control, such as: • our ability to effectively integrate the operations of the acquired companies, including retaining key personnel; • the timeline and related expenses associated with applying for regulatory approvals necessary for commercialization; • whether any of our existing or future AI products will receive European CE or U.S.
However, the success of our AI investments will depend upon a number of factors, some of which are out of our control, such as: • our ability to effectively integrate the operations of the acquired companies, including retaining key personnel; • the timeline and related expenses associated with applying for regulatory authorizations necessary for commercialization; • whether any of our existing or future AI products will receive European CE or U.S.
During the past three fiscal years, we have completed acquisitions that have added 45 centers to our fixed-site outpatient diagnostic imaging services. We may never realize expected synergies or capitalize on expected business opportunities in connection with an acquisition. Moreover, assumptions underlying estimates of expected cost savings may be inaccurate, or general industry and business conditions may deteriorate.
During the past three fiscal years, we have completed acquisitions that have added 63 centers to our fixed-site outpatient diagnostic imaging services. We may never realize expected synergies or capitalize on expected business opportunities in connection with an acquisition. Moreover, assumptions underlying estimates of expected cost savings may be inaccurate, or general industry and business conditions may deteriorate.
FDA 510(k) clearance or other clearances and or regulatory approvals necessary for commercialization; • whether our AI solutions will prove effective for improving health care quality, patient services or business procedures; • our ability to successfully commercialize and secure market acceptance of our AI solutions from patients and health care providers; and • the development of competing technologies by other companies, and the relative efficacy, cost and ease of use of those technologies.
FDA 510(k) clearance or other clearances and or regulatory authorizations necessary for commercialization; • whether our AI solutions will prove effective for improving health care quality, patient services or business procedures; • our ability to successfully commercialize and secure market acceptance of our AI solutions from patients and health care providers; and • the development of competing technologies by other companies, and the relative efficacy, cost and ease of use of those technologies.
In September 2023, we determined that an In-process Research and Development ("IPR&D") indefinite-lived intangible asset related to Aidence Holding B.V.'s Ai Veye Lung Nodule and Veye Clinic would not receive FDA approval for sale in the US without a new submission and additional expenditures for rework in the original projected timeline.
In September 2023, we determined that an In-process Research and Development ("IPR&D") indefinite-lived intangible asset related to Aidence Holding B.V.'s Ai Veye Lung Nodule and Veye Clinic would not receive FDA authorization for sale in the US without a new submission and additional expenditures for rework in the original projected timeline.
Our MRI, CT, nuclear medicine, ultrasound and mammography centers are currently accredited by the American College of Radiology. We may not be able to receive the required regulatory approvals or accreditation for any future acquisitions, expansions or replacements, and the failure to obtain these approvals could limit the opportunity to expand our services.
Our MRI, CT, nuclear medicine, ultrasound and mammography centers are currently accredited by the American College of Radiology. We may not be able to receive the required regulatory authorizations or accreditation for any future acquisitions, expansions or replacements, and the failure to obtain these authorizations could limit the opportunity to expand our services.
We have a substantial number of employees who are paid on a part-time or per diem basis. In 2023, California mandated minimum wage increases for certain industries, including ours. As a result, we will experience increased compensation costs for certain of our employees and vendors beginning in 2024.
We have a substantial number of employees who are paid on a part-time or per diem basis. In 2024, California mandated minimum wage increases for certain industries, including ours. As a result, we will experience increased compensation costs for certain of our employees and vendors beginning in 2025.
Our substantial indebtedness could also: • make it difficult for us to satisfy our payment obligations with respect to our outstanding indebtedness; • require us to dedicate a substantial portion of our cash flow from operations to payments on our debt, reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes; • expose us to the risk of interest rate increases on our variable rate borrowings, including borrowings under our Barclays and Truist credit facilities; • increase our vulnerability to adverse general economic and industry conditions; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • place us at a competitive disadvantage compared to our competitors that have less debt; and • limit our ability to borrow additional funds on terms that are satisfactory to us, or at all.
Our substantial indebtedness could also: • make it difficult for us to satisfy our payment obligations with respect to our outstanding indebtedness; • require us to dedicate a substantial portion of our cash flow from operations to payments on our debt, reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes; • expose us to the risk of interest rate increases on our variable rate borrowings, including borrowings under our Barclays and Truist credit facilities; • increase our vulnerability to adverse general economic and industry conditions; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • place us at a competitive disadvantage compared to our competitors that have less debt; and • limit our ability to borrow additional funds on terms that are satisfactory to us, or at all. 27 A restriction in our ability to make capital expenditures would restrict our growth and could adversely affect our business.
Hames or Stephen M. Forthuber, our Presidents and Chief Operating Officers, West Coast and East Coast, respectively, could hinder our ability to execute our business strategy and have a significant negative impact on our operations. We believe that they could not easily be replaced with executives of equal experience and capabilities, which would adversely affect our business.
Forthuber, our Presidents and Chief Operating Officers, West Coast and East Coast, respectively, could hinder our ability to execute our business strategy and have a significant negative impact on our operations. We believe that they could not easily be replaced with executives of equal experience and capabilities, which would adversely affect our business.
For the year ended December 31, 2023, approximately 23% and 3% of our net service fee revenue came from Medicare and various state Medicaid programs, respectively. A change in the applicable certification status of one of our centers could adversely affect our other centers and, in turn, us as a whole.
For the year ended December 31, 2024, approximately 24% and 3% of our net service fee revenue came from Medicare and various state Medicaid programs, respectively. A change in the applicable certification status of one of our centers could adversely affect our other centers and, in turn, us as a whole.
For the year ended December 31, 2023, we derived approximately 9% of our total net revenue from capitation arrangements, and we expect to continue to derive a significant portion of our revenue from capitation arrangements in the future.
For the year ended December 31, 2024, we derived approximately 7% of our total net revenue from capitation arrangements, and we expect to continue to derive a significant portion of our revenue from capitation arrangements in the future.
The market for diagnostic imaging services is highly competitive. We compete for patients principally on the basis of our reputation, our ability to provide multiple modalities at many of our centers, the location of our centers and the quality of our diagnostic imaging services.
We compete for patients principally on the basis of our reputation, our ability to provide multiple modalities at many of our centers, the location of our centers and the quality of our diagnostic imaging services.
The price of our common stock could also be subject to wide fluctuations in the future as a result of a number of other factors, including the following: • changes in expectations as to future financial performance or buy/sell recommendations of securities analysts; • our, or a competitor’s, announcement of new services, or significant acquisitions, strategic partnerships, joint ventures or capital commitments; and • the operating and stock price performance of other comparable companies. 25 In addition, the U.S. securities markets periodically experience significant price and volume fluctuations.
The price of our common stock could also be subject to wide fluctuations in the future as a result of a number of other factors, including the following: • changes in expectations as to future financial performance or buy/sell recommendations of securities analysts; • our, or a competitor’s, announcement of new services, or significant acquisitions, strategic partnerships, joint ventures or capital commitments; and • the operating and stock price performance of other comparable companies.
In the future we may acquire companies that create a new line of business. The process of integrating the acquired business, technology, service and research and development component into our business and operations and entry into a new line of business in which we are inexperienced may result in unforeseen operating difficulties and expenditures.
The process of integrating the acquired business, technology, service and research and development component into our business and operations and entry into a new line of business in which we are inexperienced may result in unforeseen operating difficulties and expenditures.
Any such interruption in access, improper access, disclosure, modification, or other loss of information could result in legal claims or proceedings, liability or penalties under laws and regulations that protect the privacy of personal information, such as HIPAA, European data privacy regulations, such as the General Data Protection Regulation, or GDPR, or state privacy regulations, such as the California Consumer Privacy Act.
Any such interruption in access, improper access, disclosure, modification, or other loss of information could result in legal claims or proceedings, liability or penalties under laws and regulations that protect the privacy of personal information, such as HIPAA, European data privacy regulations, such as the General Data Protection Regulation, or GDPR, US state privacy regulations, such as the California Consumer Privacy Act, or newly emerging US state health information privacy laws, such as those in Washington, Oregon, and Texas.
Our information technology system is vulnerable to damage or interruption from: 19 • Cybersecurity attacks and breaches, ransomware and computer viruses, coordinated attacks by hackers, activist entities, organized criminal threat actors, and nation-state sponsored actors, seeking to disrupt operations or misappropriate information; • technology service provider outages and technology supply chain cyber-security weaknesses; • power losses, computer systems failures, internet and telecommunications or data network failures, operator negligence, improper operation by or supervision of employees, physical and electronic losses of data and similar events; • earthquakes, fires, floods and other natural disasters; and • acts of vandalism or theft, misplaced or lost data, programming or human errors and similar events.
The future success and growth of our business depends on streamlined processes made available through information systems, global communications, internet activity and other network processes. 20 Our information technology system is vulnerable to damage or interruption from: • Cybersecurity attacks and breaches, ransomware and computer viruses, coordinated attacks by hackers, activist entities, organized criminal threat actors, and nation-state sponsored actors, seeking to disrupt operations or misappropriate information; • technology service provider outages and technology supply chain cyber-security weaknesses; • power losses, computer systems failures, internet and telecommunications or data network failures, operator negligence, improper operation by or supervision of employees, physical and electronic losses of data and similar events; • earthquakes, fires, floods and other natural disasters; and • acts of vandalism or theft, misplaced or lost data, programming or human errors and similar events.
Relatedly, reimbursement rate cuts may be pursued as a cost-saving measure by third party payors resulting from the implementation of the federal No Surprises Act (H.R. 133) and similar insurer-provider payment dispute laws, which also may negatively impact our revenue.
Relatedly, reimbursement rate cuts may be pursued as a cost-saving measure by third party payors resulting from the implementation of 17 the federal No Surprises Act (H.R. 133) and similar insurer-provider payment dispute laws, which also may negatively impact our revenue. Certain of our services may require patients to pay out-of-pocket fees.
These fluctuations often have been unrelated to the operating performance of companies in these markets. Broad market and industry factors may lead to volatility in the price of our common stock, regardless of our operating performance.
In addition, the U.S. securities markets periodically experience significant price and volume fluctuations. These fluctuations often have been unrelated to the operating performance of companies in these markets. Broad market and industry factors may lead to volatility in the price of our common stock, regardless of our operating performance.
Concerns about the systemic impact of potential long-term and wide-spread recession, inflation, energy costs, geopolitical issues, the availability and cost of credit have contributed to increased market volatility and diminished expectations for near-term growth in the United States and many global economies. Continued turbulence in domestic and international markets and economies may adversely affect our liquidity and financial condition.
Concerns about the systemic impact of potential long-term and wide-spread recession, inflation, energy costs, geopolitical issues, the availability and cost of credit have contributed to increased market volatility and diminished expectations for near-term growth in the United States and many global economies.
Our success depends in part on our key personnel and loss of key executives could adversely affect our operations. Our success depends in part on our ability to attract and retain qualified senior and executive management, and managerial and technical personnel. The loss of the services of Dr. Howard G. Berger, our President and Chief Executive Officer, and Norman R.
Our success depends in part on our ability to attract and retain qualified senior and executive management, and managerial and technical personnel. The loss of the services of Dr. Howard G. Berger, our President and Chief Executive Officer, and Norman R. Hames or Stephen M.
Our current substantial indebtedness and any future indebtedness we incur could adversely affect our financial condition. We are highly leveraged. As of December 31, 2023 term loan indebtedness, excluding related discount, was $823.1 million, of which the Barclays credit facility term loans were $678.7 million and the Truist credit facility term loan was $144.4 million.
Our current substantial indebtedness and any future indebtedness we incur could adversely affect our financial condition. We are highly leveraged. As of December 31, 2024 term loan indebtedness, excluding related discount, was $1,005.6 million, of which the Barclays credit facility term loans were $870.6 million and the Truist credit facility term loan was $135.0 million.
A restriction in our ability to make capital expenditures would restrict our growth and could adversely affect our business. We operate in a capital intensive, high fixed-cost industry that requires significant amounts of capital to fund operations, particularly the initial start-up and development expenses of new diagnostic imaging centers and the acquisition of additional centers and new diagnostic imaging equipment.
We operate in a capital intensive, high fixed-cost industry that requires significant amounts of capital to fund operations, particularly the initial start-up and development expenses of new diagnostic imaging centers and the acquisition of additional centers and new diagnostic imaging equipment.
To meet these capital requirements, we have incurred various indebtedness including senior secured credit facilities and equipment leases. 15 Most of our indebtedness is borrowed under terms with variable interest rates. We have purchased, and may in the future purchase, forward swaps or other derivative instruments designed to mitigate the risk of changes in interest rates.
Most of our indebtedness is borrowed under terms with variable interest rates. We have purchased, and may in the future purchase, forward swaps or other derivative instruments designed to mitigate the risk of changes in interest rates.
Any action brought against us for violation of these laws or regulations, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business. State and federal anti-kickback and anti-self-referral laws may adversely affect income. Various federal and state laws govern financial arrangements among healthcare providers.
Any action brought against us for violation of these laws or regulations, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business.
We operate in an industry that requires significant amounts of capital to fund operations, particularly in the development or acquisition of diagnostic imaging centers and the acquisition of diagnostic imaging equipment.
We operate in an industry that requires significant amounts of capital to fund operations, particularly in the development or acquisition of diagnostic imaging centers and the acquisition of diagnostic imaging equipment. To meet these capital requirements, we have incurred various indebtedness including senior secured credit facilities and equipment leases.
Business interruptions due to natural disasters or other external events beyond our control can adversely affect our business, financial condition or results of operations.
Business interruptions due to natural disasters to include but not limited to earthquakes, floods, fires hurricanes and severe winter storms or other external events beyond our control can adversely affect our business, financial condition or results of operations.
If we fail to comply with federal and state privacy and information security laws mandating protection of certain confidential data against disclosure, including cybersecurity attacks, we may be subject to government or private actions. 23 We must comply with numerous federal and state laws and regulations governing the collection, dissemination, access, use, security and privacy of PHI, including HIPAA and its implementing privacy and security regulations, as amended by the federal HITECH Act.
If we fail to comply with federal and state privacy and information security laws mandating protection of certain confidential data against disclosure, including cybersecurity attacks, we may be subject to government or private actions.
We could also be required to disclose the breach publicly, which may damage our business reputation with our patients and vendors and cause a further material adverse effect on our results of operations, financial position, and cash flows.
We could also be required to disclose the breach publicly, which may damage our business reputation with our patients and vendors and cause a further material adverse effect on our results of operations, financial position, and cash flows. 26 Some of our imaging modalities use radioactive materials, which generate regulated waste and could subject us to liabilities for injuries or violations of environmental and health and safety laws.
Unless we can secure additional procedure volumes, increase utilization of our equipment, or change the overall mix of service procedures that we provide, a decline in reimbursement rates will reduce our net revenues and results of operations. We experience competition from other diagnostic imaging companies and hospitals, and this competition could adversely affect our revenue and business.
Unless we can secure additional procedure volumes, increase utilization of our equipment, or change the overall mix of service procedures that we provide, a decline in reimbursement rates will reduce our net revenues and results of operations. If we fail to manage the complex and lengthy reimbursement process, our revenue, financial condition and results of operations could suffer.
The failure to successfully manage these risks in the development and implementation of new lines of business could have a material, adverse effect on our business, financial condition, and results of operations. Healthcare and Regulatory Risks The regulatory framework in which we operate is continually evolving.
The failure to successfully manage these risks in the development and implementation of new lines of business could have a material, adverse effect on our business, financial condition, and results of operations. Additionally, we and our third parties leverage AI and machine learning tools to increase productivity and innovation.
There is no guarantee that we will receive the anticipated benefits from the investments we have made and may continue to make in the area of AI. Any failure would result in reduced operating profits and the potential impairment of goodwill related to those investments, which would further impact our profitability.
There is no guarantee that we will receive the anticipated benefits from the investments we have made and may continue to make in the area of AI.
From time to time those programs implement changes designed to contain healthcare costs, some of which have resulted in decreased reimbursement rates for diagnostic imaging services that impact our business.
From time to time those programs implement changes designed to contain healthcare costs, some of which have resulted in decreased reimbursement rates for diagnostic imaging services that impact our business. On November 1, 2024, CMS released the calendar year 2025 Medicare Physician Fee Schedule final rule, which governs Medicare payment for Radnet's services in CY 2025.
In the past, we have experienced a drop in stock price following an announcement of disappointing earnings or earnings guidance. Any such announcement in the future could lead to a similar drop in stock price.
Any such announcement in the future could lead to a similar drop in stock price.
Healthcare reform legislation will increase the participation of individuals in the Medicaid program in states that elect to participate in the expanded Medicaid coverage.
Due to potential decreased availability of healthcare through private employers, the number of patients who are uninsured or participate in governmental programs may increase. Healthcare reform legislation will increase the participation of individuals in the Medicaid program in states that elect to participate in the expanded Medicaid coverage.
The trading price of our common stock on the NASDAQ Global Market has fluctuated significantly in the past. During the period from January 1, 2021 through December 31, 2023, the trading price of our common stock fluctuated from a high of $38.84 per share to a low of $12.03 per share.
During the period from January 1, 2021 through December 31, 2024, the trading price of our common stock fluctuated from a high of $93.65 per share to a low of $12.03 per share. In the past, we have experienced a drop in stock price following an announcement of disappointing earnings or earnings guidance.
Provisions of the Delaware General Corporation Law and our organizational documents may discourage an acquisition of us. In the future, we could become the subject of an unsolicited attempted takeover of our company.
In the future, we could become the subject of an unsolicited attempted takeover of our company.
We also use information technology systems and networks in our operations and supporting departments such as research and development, marketing, accounting, finance, and human resources. The future success and growth of our business depends on streamlined processes made available through information systems, global communications, internet activity and other network processes.
We also use information technology systems and networks in our operations and supporting departments such as research and development, marketing, accounting, finance, and human resources.
We may not generate the expected benefits from our investment in AI technologies or other new lines of business. We believe that technology advancements including AI will significantly impact diagnostic imaging services in the future.
We believe that technology advancements including AI will significantly impact diagnostic imaging services in the future.
Item 1A. Risk Factors General Economic and Industry Risks Adverse changes in general domestic and worldwide economic conditions could adversely affect our operating results, financial condition, and liquidity. We are subject to risk arising from adverse changes in general domestic and global economic conditions, including recession or economic slowdown and disruption of credit markets.
General Economic and Industry Risks Adverse changes in general domestic and worldwide economic conditions could adversely affect our operating results, financial condition, and liquidity.
These or other similar events could cause disruption or interruption to our operations and significantly impact our employees. 16 Any disruption to our services may result in decreases in revenues or increased operating and capital expenses.
If any of the circumstances described above, or other similar events, occur, our business, financial condition or results of operations could be adversely affected. Any disruption to our services may result in decreases in revenues or increased operating and capital expenses.
One of the principal objectives of health maintenance organizations and preferred provider organizations is to control the cost of healthcare services. Managed care contracting has become very competitive, and reimbursement schedules are at or below Medicare reimbursement levels.
Managed care contracting has become very competitive, and reimbursement schedules are at or below Medicare reimbursement levels.
We may not have the financial ability to acquire the new or improved equipment and may not be able to maintain a competitive equipment base. 17 Business Risks If our contracted radiology practices terminate their agreements with us, our business could substantially diminish.
We may not have the financial ability to acquire the new or improved equipment and may not be able to maintain a competitive equipment base. Business Risks Our results of operations may fluctuate significantly from period to period and can be difficult to predict.
If the indebtedness under our credit facilities is accelerated, we may not have sufficient assets to repay amounts due under the credit facilities or on other indebtedness then outstanding. Capital Markets Risks Possible volatility in our stock price could negatively affect us and our stockholders.
If the indebtedness under our credit facilities is accelerated, we may not have sufficient assets to repay amounts due under the credit facilities or on other indebtedness then outstanding. If we are unable to obtain insurance, or if insurance becomes more costly for us to obtain, our business may be adversely affected.
Increasing interest rates or disruption of credit markets could adversely affect our financial condition and liquidity. In response to recent macroeconomic concerns, the United States and other western countries have implemented monetary policies focused on suppressing inflation, including increasing interest rates.
Current and future inflationary effects may be driven by, among other things, supply chain disruptions and governmental stimulus or fiscal policies, and geopolitical instability. In response to recent macroeconomic concerns, the United States and other western countries have implemented monetary policies focused on suppressing inflation, including increasing interest rates.
Storage, use and disposal of these materials and waste products present the risk of accidental environmental contamination and physical injury. We are subject to federal, state and local regulations governing storage, handling and disposal of these materials.
We cannot eliminate the risk of contamination or injury, and any liability imposed on us for any resulting damages or injury could exceed our resources or any applicable insurance coverage. We are subject to federal, state and local regulations governing storage, handling and disposal of these materials.
Removed
On November 16, 2023, Centers for Medicare and Medicaid Services (“CMS”) released the 2023 Medicare Physician Fee Schedule final rule, which contained significant payment reductions for radiology services, effective January 1, 2024, largely as a result of changes to relative value units, redistributive effects of the CMS proposed clinical labor pricing update and statutorily mandated budget neutrality rules.
Added
Item 1A. Risk Factors You should consider and read carefully all of the risks and uncertainties described below, as well as the other information included in this Annual Report, including our consolidated financial statements and related notes.
Removed
The January 18, 2024 continuing resolution passed by Congress and signed into law by President Biden did not contain provisions to stop or mitigate these reimbursement cuts. Furthermore, absent further and more permanent intervention from Congress, CMS could propose and impose similar or more significant reimbursement cuts in the months and years ahead .
Added
The risks described below have been organized under headings that are provided for convenience and intended to organize the risks and uncertainties into related categories to improve readability for investors; no inference should be drawn, however, that the placement of a risk factor under a particular category means that it is not applicable to another category of risks or that it may be more or less material than another risk factor.
Removed
We may be impacted by eligibility changes to government and private insurance programs. 21 Due to potential decreased availability of healthcare through private employers, the number of patients who are uninsured or participate in governmental programs may increase.
Added
Regardless, they are also not the only risks and uncertainties facing us. The occurrence of any of the following risks or additional risks and uncertainties not presently known to us or that we currently believe to be immaterial could materially and adversely affect our business, financial condition and results of operations.
Added
This Annual Report also contains forward-looking statements and estimates that involve risks and uncertainties, as discussed above under the caption “Cautionary Note Regarding Forward-Looking Statements.” Our actual results could differ materially from those anticipated in any forward‑looking statements as a result of many factors, including the risk factors and uncertainties described below.
Added
Our business has in the past been, and may continue to be, affected by a number of factors that are beyond our control, such as general macroeconomic conditions, conditions in the financial services markets, geopolitical conditions and other general political and economic developments, and can continue to be affected by such factors in the future.
Added
Additionally, general political uncertainty, including any actions from a new administration in the United States could impact the healthcare industries in the United States. 15 Continued turbulence in domestic and international markets and economies may adversely affect our liquidity and financial condition.
Added
A worsening of the economic and employment conditions in the geographies in which we operate could materially affect our business and future results of operations. During periods of high unemployment, governmental entities often experience budget deficits as a result of increased costs and lower than expected tax collections.
Added
These budget deficits at the federal, state and local levels have decreased, and may continue to decrease, spending for health and human service programs, including Medicare and Medicaid, which are significant payor sources for our facilities.
Added
In periods of high unemployment, we have faced and could continue to face the risk of potential declines in the population covered under private insurance, patient decisions to postpone or decide against receiving services, potential increases in the uninsured and underinsured populations we serve and further difficulties in collecting patient co-payment and deductible receivables.
Added
Increases in inflation and rising interest rates or disruption of credit markets could adversely affect our financial condition and liquidity. Inflation in the U.S. has recently accelerated and is currently expected to continue at an elevated level in the near-term.
Added
These or other similar events could cause disruption or interruption to our operations and significantly impact our employees. Additionally, long-term adverse weather conditions, whether caused by global climate change or otherwise, could cause an outmigration of people from the communities where our facilities are located.
Added
Medicare payment and coverage policies in the final rule could result in reimbursement reductions or reduced volume of diagnostic imaging services at our imaging centers. One of the principal objectives of health maintenance organizations and preferred provider organizations is to control the cost of healthcare services.
Added
Our ability to collect these out-of-pocket fees is subject to various coverage and reimbursement policies of third-party payors that may change over time and may be open to a variety of interpretations and applications. Changes in coverage policies or errors in our billing and collections procedures could adversely affect our revenue and business.
Added
Because our business depends upon reimbursement from Medicare, Medicaid and third-party payors for a significant majority of its revenues, our revenue, financial condition and results of operations may be affected by the reimbursement process, which in the healthcare industry is complex and can involve lengthy delays between the time that services are rendered and the time that the reimbursement amounts are settled.
Added
Depending on the payor, we may be required to obtain certain payor-specific documentation from physicians and other healthcare providers before submitting claims for reimbursement. Certain payors have filing deadlines and will not pay claims submitted after such deadlines.
Added
We cannot ensure that we will be able to effectively manage the reimbursement process and collect payments for its equipment and services promptly. We experience competition from other diagnostic imaging companies and hospitals, and this competition could adversely affect our revenue and business. The market for diagnostic imaging services is highly competitive.
Added
Our results of operations have experienced fluctuations from period to period, which we expect may continue in the future.
Added
These fluctuations can occur because of a variety of factors, including, among others, the prices we charge for our services, customer or payor mix, the rate and timing of our billings and collections, our ability to obtain reimbursement for our services from third-party payors, the timing and amount of our commitments and other payments, as well as the other risk factors discussed in this report.
Added
The fluctuations in our operating results may render period-to-period comparisons less meaningful, and investors should not rely on the results of any one period as an indicator of future performance.
Added
These fluctuations in our 18 operating results could cause our performance in any particular period to fall below the expectations of securities analysts or investors or guidance we have provided to the public, which could negatively affect the price of our common stock. If our contracted radiology practices terminate their agreements with us, our business could substantially diminish.
Added
Recent cyberattacks in the healthcare sector, such as the February 2024 incident affecting Change Healthcare, have underscored critical cybersecurity risks which extend beyond internal systems to encompass third-party service providers and interconnected supply chains. Attacks targeting these areas can lead to significant disruptions in critical healthcare functions, exposure of sensitive patient data, and substantial financial losses.
Added
The impact of such breaches can be severe and are similar to those we face with ransomware. Our organization prioritizes comprehensive risk management strategies that include robust vetting and monitoring of third-party vendors, regular security assessments of supply chain partners, and implementation of strong authentication and access control measures throughout the entire ecosystem.
Added
However, while management is not aware of a cybersecurity incident through third-party service providers that has had a material effect on our operations, there can be no assurances that a cybersecurity incident through third-party service providers that could have a material impact on us will not occur in the future.
Added
Additionally, if and as our business grows, we will need to continually improve and expand the scope of our technology systems in order to maintain their adequacy for the scale of our operations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe use these resources and partnerships, along with our internal expertise, to develop specialized insights pertinent to our business’s cyber-risk, and tailor our cybersecurity strategy to best safeguard our systems and data. We staff an internal cybersecurity team and maintain a third-party managed security operations center which in-concert provide 24x7x365 real-time detection and response.
Biggest changeWe use these resources and 30 partnerships, along with our internal expertise, to develop specialized insights pertinent to our business’s cyber-risk, and tailor our cybersecurity strategy to best safeguard our systems and data. We staff an internal cybersecurity team and maintain a third-party managed security operations center which in-concert provide 24x7x365 real-time detection and response.
These teams are always connected and routinely respond to 26 perceived threats within minutes. Time to detect and respond metrics are continuously evaluated for opportunities to enhance our program. Cyber-awareness training and testing is a key component of RadNet’s Cybersecurity and Data Protection Program.
These teams are always connected and routinely respond to perceived threats within minutes. Time to detect and respond metrics are continuously evaluated for opportunities to enhance our program. Cyber-awareness training and testing is a key component of RadNet’s Cybersecurity and Data Protection Program.

Item 2. Properties

Properties — owned and leased real estate

5 edited+1 added−1 removed0 unchanged
Biggest changeIn addition, we lease approximately 36,700 square feet of warehouse space nationwide, which expire at various dates, including options, through December 31, 2028. 27 At December 31, 2023, we operated directly or indirectly through joint ventures with hospitals, 366 centers located in Arizona, California, Delaware, Florida, Maryland, New Jersey, and New York.
Biggest changeAt December 31, 2024, we operated directly or indirectly through joint ventures with hospitals, 398 centers located in Arizona, California, Delaware, Florida, Maryland, New Jersey, and New York. We lease the premises at which these facilities are located and do not have options to purchase the facilities we rent.
Item 2. Properties Our corporate headquarters is located in adjoining premises at 1508, 1510 and 1516 Cotner Avenue, Los Angeles, California 90025, and approximately 21,500 square feet is occupied under these leases, which including options, expire June 30, 2027.
Item 2. Properties 31 Our corporate headquarters is located in adjoining premises at 1508, 1510 and 1516 Cotner Avenue, Los Angeles, California 90025, and approximately 21,500 square feet is occupied under these leases, which including options, expire June 30, 2027.
We also have a regional office of approximately 39,000 square feet in Baltimore, Maryland under a lease, which including options, expires September 30, 2028.
We also have a regional office of approximately 39,000 square feet in Baltimore, Maryland under a lease, which including options, expires September 30, 2028. In addition, we lease approximately 36,700 square feet of warehouse space nationwide, which expire at various dates, including options, through December 31, 2028.
We lease the premises at which these facilities are located and do not have options to purchase the facilities we rent. Our most common initial lease term varies in length from 5 to 15 years. Factoring in renewal options, we can have a total span of 10 to 35 years at the facilities we lease.
Our most common initial lease term varies in length from 5 to 15 years. Factoring in renewal options, we can have a total span of 10 to 35 years at the facilities we lease. We also lease smaller satellite X-Ray locations, usually for one year terms, that are renewable on mutual consent with the landlord.
As of December 31, 2023, total square footage operated directly or indirectly under lease, including medical office, administrative and warehouse locations, was approximately 2.7 million square feet. All leasing activity described relates solely to our Imaging Center segment, as our AI segment leasing activity is currently immaterial.
Rental increases can range from 1% to 10% on an annual basis, depending on the location and market conditions where we do business. As of December 31, 2024, total square footage operated directly or indirectly under lease, including medical office, administrative and warehouse locations, was approximately 2.7 million square feet.
Removed
We also lease smaller satellite X-Ray locations, usually for one year terms, that are renewable on mutual consent with the landlord. Rental increases can range from 1% to 10% on an annual basis, depending on the location and market conditions where we do business.
Added
All leasing activity described relates solely to our Imaging Center segment, as our Digital Health leasing activity is currently immaterial.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeIf one or more legal matters were resolved against us in a reporting period for amounts above management’s expectations, our financial condition and operating results could be materially adversely affected. Item 4. Mine Safety Disclosures Not applicable. 28 PART II
Biggest changeIf one or more legal matters were resolved against us in a reporting period for amounts above management’s expectations, our financial condition and operating results could be materially adversely affected. Item 4. Mine Safety Disclosures Not applicable. 32 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThis graph shall not be deemed incorporated by reference by any general statement incorporating by reference this Form 10-K into any filing under the Securities Act or under the Exchange Act, except to the extent that RadNet specifically incorporates this information by reference, and shall not otherwise be deemed filed under the Securities Act or the Exchange Act. 29 ANNUAL RETURN PERCENTAGE Years Ending Company / Index 12/31/19 12/31/20 12/31/21 12/30/22 12/29/23 RadNet, Inc. 99.61 (3.60) 53.86 (37.46) 84.65 S&P 500 Index 31.49 18.40 28.71 (18.11) 26.29 S&P Health Care Sector 20.82 13.45 26.13 (1.96) 2.06 Base INDEXED RETURNS Years Ending Period Company / Index 12/31/18 12/31/19 12/31/20 12/31/21 12/30/22 12/29/23 RadNet, Inc. 100 199.61 192.43 296.07 185.15 341.89 S&P 500 Index 100 131.49 155.68 200.37 164.08 207.21 S&P Health Care Sector 100 120.82 137.07 172.89 169.51 173.00 Recent Sales of Unregistered Securities On December 12, 2023, we issued 64,569 shares of common stock to settle a milestone contingent liability as part of our purchase of Heart & Lung Imaging Limited.
Biggest change(3.60) 53.86 (37.46) 84.65 100.86 S&P 500 Index 16.26 26.89 (19.44) 24.23 23.31 S&P Health Care Sector 33.67 9.76 (19.87) 5.15 1.76 Base INDEXED RETURNS Years Ending Period Company / Index 12/31/19 12/31/20 12/31/21 12/30/22 12/29/23 12/31/24 RadNet, Inc. 100 96.40 148.33 92.76 171.28 344.04 S&P 500 Index 100 116.26 147.52 118.84 147.64 182.05 S&P Health Care Sector 100 133.67 146.72 117.56 123.62 125.79 Recent Sales of Unregistered Securities On March 27, 2024, we issued 95,019 shares of common stock to settle a milestone contingent liability as part of our purchase of Heart & Lung Imaging Limited.
Stock Performance Graph The following graph compares the yearly percentage change in cumulative total stockholder return of our common stock during the period from 2018 to 2023 with (i) the cumulative total return of the S&P 500 index and (ii) the cumulative total return of the S&P 500 – Healthcare Sector index.
Stock Performance Graph The following graph compares the yearly percentage change in cumulative total stockholder return of our common stock during the period from 2019 to 2024 with (i) the cumulative total return of the S&P 500 index and (ii) the cumulative total return of the S&P 500 – Healthcare Sector index.
The comparison assumes $100 was invested on December 31, 2018 in our common stock and in each of the foregoing indices and the reinvestment of dividends through December 29, 2023. The stock price performance on the following graph is not necessarily indicative of future stock price performance.
The comparison assumes $100 was invested on December 31, 2019 in our common stock and in each of the foregoing indices and the reinvestment of dividends through December 31, 2024. The stock price performance on the following graph is not necessarily indicative of future stock price performance.
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Principal Trading Market Our common stock is quoted on the NASDAQ Global Market under the symbol “RDNT”. Holders As of February 27, 2024, the number of holders of record of our common stock was 1,001.
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Principal Trading Market Our common stock is quoted on the NASDAQ Global Market under the symbol “RDNT”. Holders As of February 24, 2025, the number of holders of record of our common stock was 865.
In each of the foregoing transactions, the shares of common stock issued without registration on the basis of the exemption for private placement transactions provided by Section 4(a)(2) of the Securities Act.
The shares were ascribed a value of $4.6 million. The shares were issued without registration on the basis of the exemption for private placements provided by Section 4(a)(2) under the Securities Act. 34
Removed
The shares were ascribed a value of $2.3 million. On September 20, 2023, we issued 56,600 shares of common stock to settle a milestone contingent liability as part of our purchase of Heart & Lung Imaging Limited. The shares were ascribed a value of $1.6 million.
Added
This graph shall not be deemed incorporated by reference by any general statement incorporating by reference this Form 10-K into any filing under the Securities Act or under the Exchange Act, except to the extent that RadNet specifically incorporates this information by reference, and shall not otherwise be deemed filed under the Securities Act or the Exchange Act. 33 ANNUAL RETURN PERCENTAGE Years Ending Company / Index 12/31/20 12/31/21 12/30/22 12/29/23 12/31/24 RadNet, Inc.
Removed
On July 7, 2023, we issued 113,303 shares of common stock to settle the stock portion of a holdback contingent liability as part of our purchase of Quantib B.V.
Removed
The shares were ascribed a value of $3.5 million. 30 On April 30, 2023, we issued 114,227 shares of common stock to settle a holdback contingent liability as part of our purchase of Aidence Holding B.V. The shares were ascribed a value of $4.0 million.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

67 edited+61 added−48 removed46 unchanged
Biggest changeAdjusted EBITDA is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation and this metric, as presented, may not be comparable to other similarly titled measures of other companies. 43 The following is a reconciliation of the nearest comparable GAAP financial measure, net income, to Adjusted EBITDA for the years ended December 31, 2023, 2022, and 2021, respectively (in thousands): Years Ended December 31, 2023 2022 2021 Net income attributable to RadNet, Inc. common stockholders $ 3,044 $ 10,650 $ 24,727 Income Taxes 8,473 9,361 14,560 Interest Expense 64,483 50,841 48,830 Severance costs 3,778 946 744 Depreciation and amortization 128,391 115,877 96,694 Non-cash employee stock-based compensation 26,785 23,770 25,203 Loss on sale and disposal of equipment 2,187 2,529 1,246 Loss on impairment 3,950 — — Loss on extinguishment of debt and related expenses — 731 6,044 Other (income) expenses (6,354) 1,833 1,438 Non-cash change in fair value of interest rate hedge 8,185 (39,621) (21,670) (Gain) loss on contribution of imaging centers into joint venture (16,808) — (565) Legal settlement and related expenses — 2,197 831 Lease abandonment charges 5,146 — 19,675 Non operational rent expenses 3,628 4,297 — Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI 1,308 Transaction costs HLH, Aidence Holding B.V., Quantib B.V, and WhiteRabbit 222 927 1,171 Valuation adjustment for contingent consideration (4,075) 47 — Change in estimate related to refund liability — 8,089 — Adjusted EBITDA Including Losses from AI Segment and Provider Relief Funding $232,343 $192,474 $218,928 Provider relief funding — — (9,110) Adjusted EBITDA including losses from AI Segment and excluding benefit from Provider Relief Funding $232,343 $192,474 $ 209,818 Adjusted EBITDA Losses from AI segment 12,765 16,575 2,122 Adjusted EBITDA excluding Losses from AI Segment and Provider Relief Funding $245,108 $209,049 $211,940 The following table is a reconciliation of GAAP net income for our AI Segment to Adjusted EBITDA for the years ended December 31, 2023, 2022 and 2021 respectively. 44 Twelve Months Ended December 31, 2023 2022 2021 Segment net loss $ (20,597) $ (21,456) $ (5,060) Stock Compensation 2,211 2,782 1,796 Depreciation & Amortization 7,615 6,354 520 Other operating loss (4) 23 — Other expense (income) 1,402 (903) 622 Severance 1,805 20 — Income taxes (1,955) (3,395) — Non-cash change to contingent consideration (7,191) — — Impairment of IPR&D intangible asset 3,950 — — Adjusted EBITDA AI Segment $ (12,765) $ (16,575) $ (2,122) Liquidity and Capital Resources The cash we generate from our core operations enables us to fund ongoing operations, our research and development for new products and technologies including our investment in AI, and acquisition or expansion of imaging centers.
Biggest changeCommon Stockholders $ 2,793 $ 3,044 $ 10,650 Income taxes 6,026 8,473 9,361 Interest expense 79,849 64,483 50,841 Severance costs 1,902 3,778 946 Depreciation and amortization 137,838 128,391 115,877 Non-cash employee stock-based compensation 29,833 26,785 23,770 Loss on sale and disposal of equipment and other 2,276 2,187 2,529 Non-cash change in fair value of interest rate hedge 8,006 8,185 (39,621) Other (income) expenses (24,916) (6,354) 1,833 Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI 14,995 1,308 — Lease abandonment charges 2,478 5,146 — Gain on contribution of imaging centers into joint venture — (16,808) — Loss on extinguishment of debt and related expenses 11,292 — 731 Legal settlements — — 2,197 Change in estimate related to refund liability — — 8,089 Non-cash change to contingent consideration 1,974 (4,075) 47 Acquisition related non-cash intangible adjustment — 3,950 — Non-operational rent expenses 4,233 3,629 4,297 Acquisition transaction costs 880 222 927 Adjusted EBITDA - Radnet, Inc. $279,459 $232,344 $192,474 NOTE Adjusted EBITDA - Imaging Center Segment 264,901 225,846 190,695 Adjusted EBITDA - Digital Health Segment $ 14,558 $ 6,498 $ 1,779 The following table is a reconciliation of GAAP net income for our Digital Health Segment to Adjusted EBITDA for the years ended December 31, 2024, 2023 and 2022 respectively. 51 Year Ended December 31, 2024 2023 2022 Segment net loss $ (19,925) $ (5,154) $ (6,476) Stock Compensation 2,971 2,211 2,782 Depreciation & Amortization 10,696 8,250 6,852 Other operating loss 19 (4) 23 Other income 5,419 4,537 1,920 Severance 807 1,805 20 Income taxes (424) (1,906) (3,342) Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI 14,995 — — Non-cash change to contingent consideration — (7,191) — Acquisition related to non-cash intangible adjustment — 3,950 — Adjusted EBITDA - Digital Health Segment $ 14,558 $ 6,498 $ 1,779 Liquidity and Capital Resources The cash we generate from our core operations enables us to fund ongoing operations, our research and development for new products and technologies including our investment in AI, and acquisition or expansion of imaging centers.
MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying notes included in this annual report on Form 10-K. Overview We are a national provider of diagnostic imaging services in the United States.
The MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying notes included in this annual report on Form 10-K. Overview We are a national provider of diagnostic imaging services in the United States.
Medical supplies In Thousands Year Ended December 31, Medical Supplies Expense 2023 2022 $ Increase/(Decrease) % Change Total $86,213 $68,712 $17,501 25.5% Same Center $79,550 $64,872 $14,678 22.6% Excluded $6,663 $3,840 — — Increased medical supplies expense was related to the 7.2% growth in advanced radiology volumes noted above, combined with price increases for contrast agents and higher utilization of isotopes employed in PET and CT procedures.
Medical supplies In Thousands Year Ended December 31, Medical Supplies Expense 2023 2022 $ Increase/(Decrease) % Change Total $86,213 $68,712 $17,501 25.5% Same Center $79,550 $64,872 $14,678 22.6% Excluded $6,663 $3,840 — — The increased medical supplies expense was related to the 7.2% growth in advanced radiology volumes noted above, combined with price increases for contrast agents and higher utilization of isotopes employed in PET and CT procedures.
If interest rates were to theoretically 41 reduce to 0%, our maximum premium payment would be the difference between the two swapped rates and 0% then multiplied by the notional value of the swaps, or $1.89 million per year for the $100 million swap and $8.0 million per year for the $400 million swap.
If interest rates were to theoretically reduce to 0%, our maximum premium payment would be the difference between the two swapped rates and 0% then multiplied by the notional value of the swaps, or $1.89 million per year for the $100 million swap and $8.0 million per year for the $400 million swap.
We recorded $4.5 million of the transaction price as an offset to due to affiliates while the remaining $8.3 million was recorded as investment in joint venture on our balance sheet. We accounted for the transaction as an adjustment to our equity investment for the value of the assets contributed.
We recorded $4.5 million of the transaction price as an offset to due to affiliates while the remaining $8.3 million was recorded as investment in joint venture on our balance sheet. We accounted for the transaction as an adjustment to our equity investment for the value of the 39 assets contributed.
The non-cash expense associated with the change in fair value of our interest rate swaps for the year ended December 40 31, 2023 related to the expiration of our notional $100 million in 2019 swaps and the shorter term on our remaining $400 million notional 2019 swaps.
The non-cash expense associated with the change in fair value of our interest rate swaps for the year ended December 31, 2023 related to the expiration of our notional $100 million in 2019 swaps and the shorter term on our remaining $400 million notional 2019 swaps.
The one-month Term SOFR rate at December 31, 2023 was approximately 5.47%, higher than the 4.33% one-month Term SOFR rate at December 31, 2022 and significantly above the 1.98% arranged rate for the $400 million portion of the 2019 swaps.
The one-month Term SOFR rate as of December 31, 2023 was approximately 5.47%, higher than the 4.33% one-month Term SOFR rate at December 31, 2022 and significantly above the 1.98% arranged rate for the $400 million portion of the 2019 swaps.
We are liable for premium payments to the 2019 swap counterparties if interests rates are below the arranged rates, and receive payments from the 2019 swap counterparties if interest rates exceed the arranged rates.
We are liable for premium payments to the 2019 swap counterparties if interest rates are below the arranged rates, and receive payments from the 2019 swap counterparties if interest rates exceed the arranged rates.
The increase in operating expenses for the AI segment was primarily related to salary expense as we increased headcount in connection with the commercialization of our initial AI products. Our net loss for the segment was consistent with the prior year. We expect that our AI segment will continue to generate net losses over the next several years.
The increase in operating expenses for the Digital Health segment was primarily related to salary expense as we increased headcount in connection with the commercialization of our initial AI products. Our net loss for the segment was consistent with the prior year. We expect that our Digital Health segment will continue to generate net losses over the next several years.
Our annual impairment test as of October 1, 2023 noted no other impairment, and we have not identified any indicators of impairment through December 31, 2023. Recent Accounting Standards See Note 3, Recent Accounting Standards, in the notes accompanying the consolidated financial statements included in this report for further information.
Our annual impairment test as of October 1, 2024 noted no other impairment, and we have not identified any indicators of impairment through December 31, 2024. Recent Accounting Standards See Note 3, Recent Accounting Standards, in the notes accompanying the consolidated financial statements included in this report for further information.
The fair value of the 2019 swaps at December 31, 2023 was a net asset of $15.1 million compared to a net asset of $23.3 million December 31, 2022, resulting in a loss of $8.2 million during the year ended December 31, 2023, which decreased the Company’s tax provision by $2.1 million.
The fair value of the 2019 swaps as of December 31, 2023 was a net asset of $15.1 million compared to a net asset of $23.3 million December 31, 2022, resulting in a loss of $8.2 million during the year ended December 31, 2023, which decreased the Company’s tax provision by $2.1 million.
We assess the valuation methodology based upon the relevance and availability of the data at the time we perform the valuation. If multiple valuation methodologies are used, the results are weighted appropriately. We tested goodwill, trade name and IPR&D for impairment on October 1, 2023.
We assess the valuation methodology based upon the relevance and availability of the data at the time we perform the valuation. If multiple valuation methodologies are used, the results are weighted appropriately. We tested goodwill, trade name and IPR&D for impairment on October 1, 2024.
During the first quarter of each year we generally experience the lowest volumes of procedures and the lowest level of revenue for any quarter during the year. This is primarily the result of two factors. First, our volumes and revenue are typically impacted by winter weather conditions in our northeastern operations.
We generally experience the lowest volumes of procedures and the lowest level of revenue during the first quarter of each year. This is primarily the result of two factors. First, our volumes and revenue are typically impacted by winter weather conditions in our northeastern operations.
Joint venture investment contributions to Arizona Diagnostic Radiology Group During the years ended December 31, 2023 and 2022, we made additional equity contributions of $2.4 million and $1.4 million, respectively, to Arizona Diagnostic Radiology Group ("ADRG", our joint venture with Dignity Health).
Joint venture investment contributions to Arizona Diagnostic Radiology Group During the years ended December 31, 2024 and 2023, we made additional equity contributions of $1.4 million and $2.4 million, respectively, to Arizona Diagnostic Radiology Group ("ADRG", our joint venture with Dignity Health).
Accordingly, we believe that our current sources of funds will provide us with adequate liquidity during the 12-month period following December 31, 2023, as well as in the long-term.
Accordingly, we believe that our current sources of funds will provide us with adequate liquidity during the 12-month period following December 31, 2024, as well as in the long-term.
Item 6. Reserved Not Required. 31 Item 7 . Management’s Discussion and Analysis of Financial Condition and Results of Operations The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the results of operations and financial condition of RadNet, Inc.
Item 6. Reserved Not Required. 35 Item 7 . Management’s Discussion and Analysis of Financial Condition and Results of Operations The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the results of operations and financial condition of RadNet, Inc.
On September 2023, we determined that an IPR&D indefinite-lived intangible asset related to Aidence's Ai Veye Lung Nodule and Veye Clinic would not receive FDA approval for sale in the US without a new submission and additional expenditures for rework in the original projected timeline.
In September 2023, we determined that an IPR&D indefinite-lived intangible asset related to Aidence's Ai Veye Lung Nodule and Veye Clinic would not receive FDA authorizations for sale in the US without a new submission and additional expenditures for rework in the original projected timeline.
For the year ended December 31, 2023, we recognized a gain on the contribution of assets into our Santa Monica Imaging Group LLC joint venture.
For the year ended December 31, 2023, we recognized a non-recurring gain on the contribution of assets into our Santa Monica Imaging Group LLC joint venture.
Interest expense In Thousands Year Ended December 31, Interest Expense 2023 2022 $ Increase/(Decrease) % Change Total Interest Expense $64,483 $50,841 $13,642 26.8% Interest related to derivatives* $(9,752) $7,806 Interest related to amortization** $2,987 $2,693 Adjusted Interest Expense*** $71,248 $40,342 $30,906 76.6% *Includes payments from 2019 swaps **Includes noncash amortization of deferred loan costs and discount on issuance of debt ***Includes interest related to our term loans, revolving credit line, notes, and other The rise in adjusted interest expense is attributable to higher overall loan balances in combination with increased variable interest rates paid on those balances in comparison to the same period in the prior year.
In Thousands Year Ended December 31, Lease abandonment charges 2023 2022 $ Increase/(Decrease) % Change Total $5,147 — $5,147 — Same Center $5,147 — $5,147 — Excluded — — — — Interest expense In Thousands Year Ended December 31, Interest Expense 2023 2022 $ Increase/(Decrease) % Change Total Interest Expense $64,483 $50,841 $13,642 26.8% Interest related to derivatives* $(9,752) $7,806 Interest related to amortization** $2,987 $2,693 Adjusted Interest Expense*** $71,248 $40,342 $30,906 76.6% *Includes payments from 2019 swaps **Includes noncash amortization of deferred loan costs and discount on issuance of debt ***Includes interest related to our term loans, revolving credit line, notes, and other 47 The rise in adjusted interest expense is attributable to higher overall loan balances in combination with increased variable interest rates paid on those balances in comparison to the same period in the prior year.
Acquisitions Imaging Center Segment Radiology Imaging Center Asset Acquisitions: During the years ended 2023, 2022 and 2021, we completed the acquisition of certain assets of the following entities, which either engage directly in the practice of radiology or associated businesses. The primary reason for these acquisitions was to strengthen our presence in many of our markets.
Acquisitions Imaging Center Segment Radiology Imaging Center Asset Acquisitions: During the years ended 2024 and 2023, we completed the acquisition of certain assets of the following entities, which either engage directly in the practice of radiology or associated businesses. The primary reason for these acquisitions was to strengthen our presence in many of our geographic markets.
Net income attributable to noncontrolling interests was also improved as a result of our acquisition of various interests in 2022, which were able to operate for full twelve months in 2023. In October 2022, our consolidated joint venture New Jersey Imaging Network, LLC, acquired the assets of Montclair Radiological associates, P.A.
Net income attributable to noncontrolling interests also improved as a result of our acquisition of various interests in 2022, which were able to operate for full year in 2023. In October 2022, our consolidated joint venture New Jersey Imaging Network, LLC, acquired the assets of Montclair Radiological associates, P.A.
Additional Information 48 Additional information concerning RadNet, Inc., including our consolidated subsidiaries, for each of the years ended December 31, 2023, 2022 and 2021 is included in the consolidated financial statements and notes thereto in this report.
Additional Information Additional information concerning RadNet, Inc., including our consolidated subsidiaries, for each of the years ended December 31, 2024, 2023 and 2022 is included in the consolidated financial statements and notes thereto in this report.
Equity in earnings from unconsolidated joint ventures For the twelve months ended December 31, 2023 we recognized equity in earnings from unconsolidated joint ventures of $6.4 million versus $10.4 million for the twelve months ended December 31, 2022, a decrease of $4.0 million or 38.1%.
Equity in earnings from unconsolidated joint ventures For the year ended December 31, 2023 we recognized equity in earnings from unconsolidated joint ventures of $6.4 million versus $10.4 million for the year ended December 31, 2022, a decrease of $4.0 million or 38.1%.
As noncontrolling interests only represent a portion of our imaging center business, and excludes our AI segment which generated losses of $21.2 million in 2023, we do not expect changes in net income attributable to noncontrolling interests to correlate with changes in consolidated operating income or pretax income.
As noncontrolling interests only represent a portion of our imaging center business, and excludes our Digital Health which generated losses of $21.2 million in 2023, we do not expect changes in net income attributable to noncontrolling interests to correlate with changes in consolidated operating income or pretax income.
For the twelve months ended December 31, 2023, we recognized net income attributable to noncontrolling interests of $27.3 million versus $23.0 million for the twelve months ended December 31, 2022, an increase of $4.3 million.
For the year ended December 31, 2023, we recognized net income attributable to noncontrolling interests of $27.3 million versus $23.0 million for the year ended December 31, 2022, an increase of $4.3 million.
Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations. GOODWILL AND INDEFINITE LIVED INTANGIBLES – Goodwill totaled $679.5 million and $677.7 million at December 31, 2023 and December 31, 2022, respectively.
Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations. GOODWILL AND INDEFINITE LIVED INTANGIBLES – Goodwill totaled $710.7 million and $679.5 million as of December 31, 2024 and December 31, 2023, respectively.
We have service agreements with various vendors under which they have agreed to be responsible for the maintenance and repair of a majority of our equipment for a fee that is based on the type and age of the equipment. Under these agreements, we are committed to minimum payments of approximately $30.5 million in 2024.
We have service agreements with various vendors under which they have agreed to be responsible for the maintenance and repair of a majority of our equipment for a fee that is based on the type and age of the equipment. Under these agreements, we are committed to minimum payments of approximately $35.4 million in 2025.
The following table shows our imaging centers in operation at year end and revenues for the years ended December 31, 2023, 2022 and 2021: Years Ended December 31, 2023 2022 2021 Centers in operation 366 357 347 Total revenue (millions) $ 1,617 $ 1,430 $ 1,315 Our revenue is derived from a diverse mix of payors, including private payors and commercial insurance companies, managed care capitated payors, and government payors such as Medicare and Medicaid.
The following table shows our imaging centers in operation at year end and revenues for the years ended December 31, 2024, 2023 and 2022: Years Ended December 31, 2024 2023 2022 Centers in operation 398 366 357 Imaging Center revenue (millions) $ 1,830 $ 1,617 $ 1,430 Our revenue is derived from a diverse mix of payors, including private payors and commercial insurance companies, managed care capitated payors, and government payors such as Medicare and Medicaid.
The remaining $187.4 million of our Barclays revolving credit facility 46 was available to draw upon as of December 31, 2023. We also had no balance under our $50.0 million Truist revolving credit facility at December 31, 2023, and with no letters of credit reserved against the facility, the full amount was available to draw upon.
The remaining $274.4 million of our Barclays revolving credit facility was available to draw upon as of December 31, 2024. We also had no balance under our $50.0 million Truist revolving credit facility as of December 31, 2024, and with no letters of credit reserved against the facility, the full amount was available to draw upon.
COMMON STOCKHOLDERS 0.2 % 0.7 % 1.8 % Imaging Center Segment Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 We grow our imaging center business through a combination of organic growth as well as acquisitions and joint ventures.
COMMON STOCKHOLDERS 0.2 % 0.2 % 0.6 % Imaging Center Segment Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023 We grow our imaging center business through a combination of organic growth as well as acquisitions and joint ventures.
Indefinite lived intangible assets were $9.0 million at December 31, 2023 and $24.1 million at December 31, 2022 and are associated with the value of certain trade name intangibles and IPR&D. Goodwill, trade name intangibles and IPR&D are recorded as a result of business combinations.
Indefinite lived intangible assets were $13.0 million as of December 31, 2024 and $9.0 million as of December 31, 2023 and are associated with the value of certain trade name intangibles and IPR&D. Goodwill, trade name intangibles and IPR&D are recorded as a result of business combinations.
Net income attributable to noncontrolling interests At December 31, 2023, our consolidated subsidiaries operated 321 imaging centers of which 85 were not wholly-owned and thus a portion of their operating results were attributable to noncontrolling interests. At December 31, 2022, our consolidated subsidiaries included 318 centers of which 81 were not wholly-owned.
Net income attributable to noncontrolling interests As of December 31, 2024, our consolidated subsidiaries operated 348 imaging centers of which 100 were not wholly-owned and thus a portion of their operating results were attributable to noncontrolling interests. At December 31, 2023, our consolidated subsidiaries included 321 centers of which 85 were not wholly-owned.
We expect to continue to generate positive cash flows from operations for the foreseeable future. In June 2023, we closed on a public offering of our common stock raising net proceeds, after deducting underwriting discounts, commissions, and expenses, of $245.8 million.
We expect to continue to generate positive cash flows from operations for the foreseeable future. In March 2024, we closed on a public offering of our common stock raising net proceeds, after deducting underwriting discounts, commissions, and expenses, of $230.2 million.
Results of Operations The following table sets forth, for the periods indicated, the percentage that certain items in the statements of operations bears to net revenue for the years 2023, 2022 and 2021. 37 Years Ended December 31, 2023 2022 2021 REVENUE Service fee revenue 90.5 % 89.4 % 88.7 % Revenue under capitation arrangements 9.5 % 10.6 % 11.3 % Total Revenue 100.0 % 100.0 % 100.0 % Provider relief funding — % — % 0.7 % OPERATING EXPENSES Cost of operations, excluding depreciation and amortization 86.3 % 88.4 % 85.4 % Gain on contribution of imaging centers into joint venture (1.0) % — % — % Lease abandonment charges 0.3 % — % 1.5 % Depreciation and amortization 7.9 % 8.1 % 7.4 % Loss on sale and disposal of equipment and other 0.1 % 0.2 % 0.1 % Severance costs 0.2 % 0.1 % 0.1 % Total operating expenses 93.9 % 96.8 % 94.4 % INCOME FROM OPERATIONS 6.1 % 3.2 % 6.3 % OTHER INCOME AND EXPENSES Interest expense 4.0 % 3.6 % 3.7 % Equity in earnings of joint ventures (0.4) % (0.7) % (0.8) % Non-cash change in fair value of interest rate swaps 0.5 % (2.8) % (1.6) % Loss on extinguishment of debt and related expenses — % 0.1 % 0.5 % Other (income) expenses (0.4) % 0.1 % 0.1 % Total other expenses 3.7 % 0.2 % 1.9 % INCOME BEFORE INCOME TAXES 2.4 % 3.0 % 4.5 % Provision for income taxes (0.5) % (0.7) % (1.1) % NET INCOME 1.9 % 2.3 % 3.3 % Net income attributable to noncontrolling interests 1.7 % 1.6 % 1.5 % NET INCOME ATTRIBUTABLE TO RADNET, INC.
Years Ended December 31, 2024 2023 2022 REVENUE Service fee revenue 92.5 % 90.5 % 89.4 % Revenue under capitation arrangements 7.5 % 9.5 % 10.6 % Total service revenue 100.0 % 100.0 % 100.0 % OPERATING EXPENSES Cost of operations, excluding depreciation and amortization 86.4 % 86.3 % 88.4 % Lease abandonment charges 0.1 % 0.3 % — % Depreciation and amortization 7.5 % 7.9 % 8.1 % Gain on contribution of imaging centers into joint venture — % (1.0) % — % Loss on sale and disposal of equipment 0.1 % 0.1 % 0.2 % Severance costs 0.1 % 0.2 % 0.1 % Total operating expenses 94.3 % 93.9 % 96.8 % INCOME FROM OPERATIONS 5.7 % 6.1 % 3.2 % OTHER INCOME AND EXPENSES Interest expense 4.4 % 4.0 % 3.6 % Equity in earnings of joint ventures (0.8) % (0.4) % (0.7) % Non-cash change in fair value of interest rate swaps 0.4 % 0.5 % (2.8) % Debt restructuring and extinguishment expenses 0.6 % — % 0.1 % Other income (1.4) % (0.4) % 0.1 % Total other expenses 3.3 % 3.7 % 0.3 % INCOME BEFORE INCOME TAXES 2.5 % 2.4 % 3.0 % Provision for income taxes (0.3) % (0.5) % (0.7) % NET INCOME 2.1 % 1.8 % 2.3 % Net income attributable to noncontrolling interest 2.0 % 1.7 % 1.6 % NET INCOME ATTRIBUTABLE TO RADNET, INC.
As it relates to other centers, this service fee revenue is earned through providing the use of our diagnostic imaging 47 equipment and the provision of technical services as well as providing administration services such as clerical and administrative personnel, bookkeeping and accounting services, billing and collection, provision of medical and office supplies, secretarial, reception and transcription services, maintenance of medical records, and advertising, marketing and promotional activities.
As it relates to other centers, this service fee revenue is earned through providing the use of our diagnostic imaging equipment and the provision of technical services as well as providing administration services such as clerical and administrative personnel, bookkeeping and accounting services, billing and collection, provision of medical and office supplies, secretarial, reception and transcription services, maintenance of medical records, and advertising, marketing and promotional activities. 54 Our revenues are based upon the estimated amounts we expect to be entitled to receive from patients and third-party payors.
The gain associated with the non-cash change in fair value of interest rate swaps during the year ended December 31, 2022 was driven by the significant increase in interest rates experienced during the period.
The gain associated with the non-cash change in fair value of interest rate swaps during the year ended December 31, 2022 was driven by the significant increase in interest rates experienced during the time period. Other income for the year ended December 31, 2023 included money market interest income of $10.9 million.
Salaries and professional reading fees, excluding stock-based compensation and severance In Thousands Year Ended December 31, Salaries and Professional Fees 2023 2022 $ Increase/(Decrease) % Change Total $860,464 $778,586 $81,878 10.5% Same Center $805,096 $757,989 $47,107 6.2% Excluded $55,368 $20,597 — — Similar to the prior year, growth in procedure volumes precipitated increases in salary expenses to meet additional professional staffing needs and we increased salaries as we seek to retain our skilled work force in the current tight labor market.
Salaries and professional reading fees, excluding stock-based compensation and severance 45 In Thousands Year Ended December 31, Salaries and Professional Fees 2023 2022 $ Increase/(Decrease) % Change Total $853,327 $771,952 $81,375 10.5% Same Center $797,959 $751,355 $46,604 6.2% Excluded $55,368 $20,597 — — Similar to the prior year, growth in procedure volumes precipitated increases in salary expenses to meet additional professional staffing needs and we increased salaries to retain our skilled work force in the current tight labor market.
The following table summarizes key balance sheet data as of December 31, 2023 and December 31, 2022 and income statement data for the twelve months ended December 31, 2023, 2022 and 2021 (in thousands): Balance Sheet Data for the period ended December 31, 2023 2022 2021 Cash and cash equivalents $ 342,570 $ 127,834 Accounts receivable 163,707 166,357 Working capital (exclusive of current operating lease liability) 197,805 (41,932) Stockholders' equity 813,359 491,452 Income Statement data for the twelve months ended December 31, Total revenue $ 1,616,630 $ 1,430,061 $ 1,315,077 Net income attributable to RadNet common stockholders 3,044 10,650 24,727 We operate in a capital intensive, high fixed-cost industry that requires significant amounts of capital to fund operations.
The following table summarizes key balance sheet data as of December 31, 2024 and December 31, 2023 and income statement data for the year ended December 31, 2024, 2023 and 2022 (in thousands): Balance Sheet Data as of December 31, 2024 2023 2022 Cash and cash equivalents $ 740,020 $ 342,570 Accounts receivable 185,821 163,707 Working capital (exclusive of current operating lease liability) 596,158 197,805 Stockholders' equity 1,133,410 813,359 Income Statement data for the years ended December 31, Total revenue $ 1,829,664 $ 1,616,630 $ 1,430,061 Net income attributable to RadNet common stockholders 2,793 3,044 10,650 We operate in a capital intensive, high fixed-cost industry that requires significant amounts of capital to fund operations.
Additional segment operating and non operating expenses: In Thousands Year Ended December 31, 2023 2022 $ Increase/(Decrease) % Change Depreciation and Amortization $120,776 $109,524 $11,252 10.3% Loss on disposal of equipment and other $2,191 $2,506 ($315) (12.6)% (Gain) Loss on contribution of imaging centers into joint venture ($16,808) — ($16,808) nm Non-cash change in fair value of interest rate swaps $8,185 ($39,621) $47,806 (120.7)% Other (income) expenses ($7,756) $3,467 ($11,223) (323.7)% Severance $1,972 $926 $1,046 113.0% nm=not meaningful The increase in depreciation expense was the result of our higher depreciable asset base.
Additional segment operating and non-operating expenses: 46 In Thousands Year Ended December 31, 2023 2022 $ Increase/(Decrease) % Change Depreciation and Amortization $120,141 $109,025 $11,116 10.2% Loss on disposal of equipment and other $2,191 $2,506 ($315) (12.6)% Gain on contribution of imaging centers into joint venture ($16,808) — ($16,808) * Non-cash change in fair value of interest rate swaps $8,185 ($39,621) $47,806 (120.7)% Other (income) expenses ($10,891) $644 ($11,535) (1791.1)% Severance $1,973 $926 $1,047 113.1% * The percent change in contribution of imaging centers into joint venture was not meaningful.
We contributed the operations of 3 centers to the subsidiary. Cedars-Sinai Medical Center purchased from us a 35% noncontrolling economic interest in LAIG for a cash payment of $5.9 million. As a result of the transaction, we retain a 65% controlling economic interest in LAIG. Frederick County Radiology, LLC.
The operation offers multi-modality imaging services out of three locations in Los Angeles, California. We contributed the operations of 3 centers to the subsidiary. Cedars-Sinai Medical Center purchased from us a 35% noncontrolling economic interest in LAIG for a cash payment of $5.9 million. As a result of the transaction, we retain a 65% controlling economic interest in LAIG.
The following table sets forth our cost of operations and total operating expenses for the twelve months ended December 31, 2023 and 2022 (in thousands): Years Ended December 31, 2023 2022 Salaries and professional reading fees, excluding stock-based compensation $ 860,464 $ 778,586 Stock-based compensation 24,575 20,988 Building and equipment rental 117,660 123,150 Medical supplies 86,213 68,712 Other operating expenses * 282,124 249,157 Cost of operations 1,371,036 1,240,593 Depreciation and amortization 120,776 109,524 Gain on contribution of imaging centers into joint venture (16,808) — Lease abandonment charges 5,147 — Loss on sale and disposal of equipment 2,191 2,506 Severance costs 1,972 926 Total operating expenses $ 1,484,314 $ 1,353,549 * Includes billing fees, office supplies, repairs and maintenance, insurance, business tax and license, outside services, telecommunications, utilities, marketing, travel and other expenses.
The following table sets forth our cost of operations and total operating expenses for the year ended December 31, 2023 and 2022 (in thousands): Years Ended December 31, 2023 2022 Salaries and professional reading fees, excluding stock-based compensation $ 853,327 $ 771,952 Stock-based compensation 24,574 20,988 Building and equipment rental 117,405 122,894 Medical supplies 86,213 68,712 Other operating expenses * 271,672 240,739 Cost of operations 1,353,191 1,225,285 Depreciation and amortization 120,141 109,025 Gain on contribution of imaging centers into joint venture (16,808) — Lease abandonment charges 5,146 — Loss on sale and disposal of equipment 2,191 2,506 Severance costs 1,973 926 Total operating expenses $ 1,465,834 $ 1,337,742 * Includes billing fees, office supplies, repairs and maintenance, insurance, business tax and license, outside services, telecommunications, utilities, marketing, travel and other expenses.
Other operating expenses In Thousands Year Ended December 31, Other Operating Expenses 2023 2022 $ Increase/(Decrease) % Change Total $282,124 $249,157 $32,967 13.2% Same Center $259,164 $240,084 $19,078 7.9% Excluded $22,960 $9,073 — — The rise in other operating expenses is attributable to additional professional fees associated with our acquisition activity, contractor services, equipment and maintenance and software upgrades all in support of our expansion and increase in procedure volumes.
Other operating expenses In Thousands Year Ended December 31, Other Operating Expenses 2023 2022 $ Increase/(Decrease) % Change Total $271,672 $240,739 $30,933 12.8% Same Center $249,232 $235,289 $13,943 5.9% Excluded $22,440 $5,450 — — The rise in other operating expenses is attributable to additional professional fees associated with our acquisition activity, contractor services, equipment and maintenance, and software upgrades all in support of our expansion and increase in procedure volumes.
Stock-based compensation Stock-based compensation decreased $3.6 million, or 17.1%, to approximately $24.6 million for the twelve months ended December 31, 2023 compared to $21.0 million for the twelve months ended December 31, 2022. 39 Building and equipment rental In Thousands Year Ended December 31, Building & Equipment Rental 2023 2022 $ Increase/(Decrease) % Change Total $117,660 $123,150 ($5,490) (4.5)% Same Center $104,257 $113,277 ($9,020) (8.0)% Excluded $13,403 $9,873 — — The decrease in building and equipment rental was the result of our contribution of Phoenix, AZ imaging centers in connection with the formation of the Arizona Diagnostic Radiology Group joint venture in November 2022 and from the buyout of radiology equipment lease contracts during the year.
Building and equipment rental In Thousands Year Ended December 31, Building & Equipment Rental 2023 2022 $ Increase/(Decrease) % Change Total $117,405 $122,894 ($5,489) (4.5)% Same Center $104,002 $113,021 ($9,019) (8.0)% Excluded $13,403 $9,873 — — The decrease in building and equipment rental was the result of our contribution of Phoenix, AZ imaging centers in connection with the formation of the Arizona Diagnostic Radiology Group joint venture in November 2022 and from the buyout of radiology equipment lease contracts during the year.
Operating Expenses Total operating expenses for the twelve months ended December 31, 2023 increased approximately $130.8 million, or 9.7%, from $1.35 billion for the twelve months ended December 31, 2022 to $1.48 billion for the twelve months ended December 31, 2023.
Operating Expenses Total operating expenses for the year ended December 31, 2023 increased approximately $128.1 million, or 9.6%, from $1.3 billion for the year ended December 31, 2022 to $1.5 billion for the year ended December 31, 2023.
The $68.3 million increase in cash provided by operating activities for the year ended December 31, 2023 compared to December 31, 2022 was primarily driven by an increase in income from operations and timing of payment. Cash used in investing activities for the twelve months ended December 31, 2023 decreased from December 31, 2022 by $45.5 million.
The $12.2 million increase in cash provided by operating activities for the year ended December 31, 2024 compared to December 31, 2023 was primarily driven by an increase in income from operations. Cash used in investing activities for the year ended December 31, 2024 increased from December 31, 2023 by $31.6 million.
Our imaging centers 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.
For further financial information about these segments, see Note 5, Segment Reporting, in the notes accompanying our consolidated financial statements included in this report. Our imaging 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.
See Note 8, Credit Facilities and Notes Payable, in the notes accompanying our consolidated financial statements included in this report. Lease abandonment charges We closely monitor patient levels at our imaging centers and occasionally divest or shut down centers to maximize utilization rates. During the end of 2023, we experienced lower utilization at two imaging centers.
Lease abandonment charges We closely monitor patient levels at our imaging centers and occasionally divest or shut down centers to maximize utilization rates. During the end of 2024, we experienced lower utilization at seven imaging centers.
Total Revenue In Thousands Year Ended December 31, Revenue 2023 2022 $ Increase/(Decrease) % Change Total Revenue $1,604,161 $1,425,665 $178,496 12.5% Same Center Revenue $1,465,076 $1,372,134 $92,942 6.8% Excluded $139,085 $53,531 — — 38 Overall revenue change was driven by procedure volume growth of 5.7% compared to the same period in the prior year.
Total Revenue In Thousands Year Ended December 31, Revenue 2023 2022 $ Increase/(Decrease) % Change Total Revenue $1,567,054 $1,392,003 $175,051 12.6% Same Center Revenue $1,427,969 $1,338,472 $89,497 6.7% Excluded $139,085 $53,531 — — Overall revenue change was driven by procedure volume growth of 5.7% compared to the same period in the prior year.
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.
Services are generally provided pursuant to one-year contracts with healthcare providers. We continuously monitor collections from our payors and maintain an allowance for credit losses based upon specific payor collection issues that we have identified and our historical experience.
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.
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. 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.
As a result of this transaction, we recorded $2.4 million in current assets, $0.1 million in property and equipment, $21.3 million in intangible assets (including developed technology of $19.6 million and IPR&D of $0.7 million), $0.7 million in current liabilities, $6.7 million in long-term debt and deferred tax liabilities, and $26.4 million in goodwill. 35 In performing the purchase price allocation, we considered, among other factors, the intended future use of acquired assets, analysis of historical financial performance and estimates of future performance of the Quantib business.
We recorded $1.2 million in current assets, $2.7 million of IPR&D in intangible assets, and $1.5 million in current liabilities in connection with this transaction. In performing the purchase price allocation, we considered, among other factors, the intended future use of acquired assets, analysis of historical financial performance and estimates of future performance of the Kheiron business.
We recorded a gain of $16.8 million, within (gain) on contribution of imaging centers into joint venture in our consolidated statement of operations representing the difference between the fair value and carrying value of the business contributed. 36 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.
As a result of the transaction, our economic interest in SMIG increased to 49%. We recorded a gain of $16.8 million, within gain on contribution of imaging centers into joint venture in our consolidated statement of operations representing the difference between the fair value and carrying value of the business contributed.
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.
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).
The decrease in equity in earnings from unconsolidated joint ventures was due to the formation of Arizona Diagnostic Radiology Group in November 2022, which operated at a net loss in 2023.
The decrease in equity in earnings from unconsolidated joint ventures was due to the formation of Arizona Diagnostic Radiology Group in November 2022, which operated at a net loss in 2023. 48 Net income attributable to noncontrolling interests At December 31, 2023, our consolidated subsidiaries operated 321 imaging centers of which 85 were not wholly-owned and thus a portion of their operating results were attributable to noncontrolling interests.
Included in our consolidated balance sheets at December 31, 2023 are $813.0 million of total term loan debt (net of unamortized discounts of $10.0 million) displayed below in thousands: Face Value Discount Total Carrying Value Barclays Term Loans $ 678,687 $ (9,041) $ 669,646 Truist Term Loan 144,375 (990) 143,385 Total Term Loans $ 823,062 $ (10,031) $ 813,031 We had no outstanding balance under our $195.0 million Barclays revolving credit facility at December 31, 2023 and had reserved $7.6 million for certain letters of credit.
Included in our consolidated balance sheet at December 31, 2024 are $992.0 million of total term loan debt (net of unamortized discounts of $13.7 million) displayed below in thousands: Face Value Discount Total Carrying Value Barclays Term Loans $ 870,625 $ (12,929) $ 857,696 Truist Term Loan 135,000 (726) 134,274 Total Term Loans $ 1,005,625 $ (13,655) $ 991,970 We had no outstanding balance under our $282.0 million Barclays revolving credit facility as of December 31, 2024 and had reserved $7.6 million for certain letters of credit.
In November 2022 we acquired a 75% controlling interest in Heart & Lung Imaging Limited. Additionally in April 2022 we formed a new majority owned subsidiary, Frederick County Radiology, LLC. See Note 4, Business Combinations and Related Activity, in the notes accompanying our consolidated financial statements included in this report, for a more detailed discussion of these acquisitions.
In November 2022 we acquired a 75% controlling interest in the HLH Imaging Group Limited fka Heart & Lung Imaging Limited. Additionally in April 2022 we formed a new majority owned subsidiary, Frederick County Radiology, LLC.
Other income for the year ended December 31, 2023 included money market interest income of $10.9 million, offset by an eRad loss on investments of $3.1 million. Other expenses in 2022 included approximately $0.7 million of debt restructuring charges related to the refinancing of our credit facilities with Truist in 2022 and an eRad loss on investments of $2.9 million.
Other expenses in 2022 included approximately $0.7 million of debt restructuring charges related to the refinancing of our credit facilities with Truist in 2022 and an eRad loss on investments of $2.9 million. Lease abandonment charges We closely monitor patient levels at our imaging centers and occasionally divest or shut down centers to maximize utilization rates.
Sources and Uses of Cash The following table summarizes key components of our sources and uses of cash for the twelve months ended December 31, in thousands: 45 Cash Flow Data 2023 2022 2021 Cash provided by operating activities $ 220,863 $ 146,417 $ 149,491 Cash used in investing activities (201,470) (246,949) (221,511) Cash provided by financing activities 195,635 93,647 104,673 Cash provided by operating activities for the period ended December 31, 2023 included $261.1 million in net income reconciling adjustments and $40.3 million change in assets and liabilities.
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. 52 Sources and Uses of Cash The following table summarizes key components of our sources and uses of cash for the years ended December 31, 2024, 2023 and 2022, respectively, in thousands: Cash Flow Data 2024 2023 2022 Cash provided by operating activities $ 233,023 $ 220,863 $ 146,417 Cash used in investing activities (233,070) (201,470) (246,949) Cash provided by financing activities 397,950 195,635 93,647 Cash provided by operating activities for the year ended December 31, 2024 included $289.5 million in net income reconciling adjustments offset by a $56.5 million change in assets and liabilities.
AI Segment Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 Our AI segment develops and deploys clinical applications to enhance interpretation of medical images and improve patient outcomes with a current emphasis on breast, prostate, and lung cancer diagnostics.
See Note 4, Business Combinations and Related Activity, in the notes accompanying our consolidated financial statements included in this report, for a more detailed discussion of these acquisitions. Digital Health Segment Our Digital segment develops and deploys clinical applications to enhance interpretation of medical images and improve patient outcomes with a current emphasis on breast, prostate, and lung cancer diagnostics.
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.
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.
As a result of the transaction, we recognized a gain of $6.6 million to additional paid in capital and retained a 65% controlling economic interest in FCR and Frederick Health Hospital, Inc. retains an $11.1 million or 35% noncontrolling economic interest in FCR. Advanced Radiology at Capital Region, LLC.
As a result of the transaction, we recognized a gain of $7.9 million to additional paid in capital and retained a 52% controlling economic interest in TVIG and PHS retained a $7.8 million or 48% noncontrolling economic interest in TVIG. Ventura County Imaging Group.
At December 31, 2023, we operated directly or indirectly through joint ventures with hospitals, 366 centers located in Arizona, California, Delaware, Florida, Maryland, New Jersey, and New York. Internationally, our subsidiary Heart & Lung Imaging Limited, provides teleradiology services for remote interpretation of images on behalf of providers within the framework of the United Kingdom's National Health Service.
As of December 31, 2024, we operated directly or indirectly through joint ventures with hospitals, 398 centers located in Arizona, California, Delaware, Florida, Maryland, New Jersey, New York and Texas.
The transaction was accounted for as an acquisition of a business and total purchase consideration was determined to be approximately $45.2 million including (a) 1,117,872 shares of our common stock issued at $26.80 per share with a fair value of $30.0 million (b) cash of $1.8 million, (c) contingent consideration of $11.9 million ($7.4 million in milestones to be settled in shares or cash at our election and a share holdback of $4.5 million) and (d) a settlement of a loan from RadNet of $1.5 million.
The transaction was accounted for as the acquisition of a business with a total purchase consideration of approximately $2.3 million, including: i) cash of $0.4 million, ii) cash holdback of $0.5 million to be issued 18 months after acquisition, (iii) acquisition costs incurred by the seller of $0.4 million and (iv) a settlement of a loan from RadNet of $1.0 million.
Cash provided by financing activities for the twelve months ended December 31, 2023 related primarily to a secondary public offering of our common stock, offset by payments including prepayments on our term loan, and payments of contingent consideration on recent acquisition transactions.
Cash provided by financing activities for the year ended December 31, 2024 resulted from a secondary public offering of our common stock and a refinancing of our Barclays credit facility.
We made a fair value determination of the acquired assets and assumed liabilities and the following were recorded (in thousands): 33 2023: Entity Date Acquired Total Consideration Property & Equipment Right of Use Assets Goodwill Intangible Assets Other Right of Use Liabilities C.C.D.G.L.R. & S Services Inc.* 1/1/2023 3,500 435 1,689 3,015 50 — (1,689) Southern California Diagnostic Imaging, Inc.* 1/1/2023 1,815 466 1,184 1,272 50 27 (1,184) Inglewood Imaging Center, LLC* 2/1/2023 2,600 877 1,188 1,658 50 15 (1,188) Ramapo Radiology Associates, P.C.* 2/1/2023 2,000 1,663 3,775 229 100 8 (3,775) Madison Radiology Medical Group, Inc.* 4/1/2023 250 100 — 150 — — — Delaware Diagnostic Imaging, P.A.* 8/1/2023 600 401 337 149 50 — (337) Total $10,765 $3,942 $8,173 $6,473 $300 $50 $(8,173) *Fair Value Determination is Final 2022: Entity Date Acquired Total Consideration Property & Equipment Right of Use Assets Goodwill Intangible Assets Other Right of Use Liabilities IFRC LLC*^ 1/1/2022 8,200 2,910 1,703 5,271 — 19 (1,703) IFRC LLC*^ 1/1/2022 4,800 2,103 857 2,697 — — (857) Heart & Lung Imaging Limited+ 11/1/2022 32,000 — — 16,200 15,800 — — Montclair Radiological Associates, P.A.*# 10/1/2022 94,877 16,414 4,665 79,690 400 (2,168) (4,124) Chelsea Dignostic Radiology, P.C.* 12/1/2022 2,800 568 — 2,132 100 — — North Jersey Imaging Center, LLC* 12/9/2022 104 20 — 55 25 4 — Total $142,781 $22,015 $7,225 $106,045 $16,325 $(2,145) $(6,684) *Fair Value Determination is Final ^ IFRC LLC acquisitions consisted of three subsidiaries of IFRC, one of which was purchased separately by a joint venture with Calvert Medical Imaging Centers, LLC. # Montclair Radiological Associates includes a liability for $1.2 million in contingent consideration. +See detailed description of the Heart & Lung Imaging Limited acquisition below.
Imaging, Inc.* 6/1/2024 4,200 4,025 5,597 — 175 — (5,597) — Global Imaging LLP* 9/1/2024 2,900 1,266 — 1,584 50 — — — Stanislaus Surgical Hospital, LLC* 9/16/2024 3,000 503 1,468 2,382 100 15 (1,468) — Pink Perception, LLC* 10/7/2024 4,000 494 407 3,306 200 — (407) — AV Imaging PLLC* 11/1/2024 1,000 287 — 663 50 — — — Total $ 59,045 $ 28,289 $ 25,709 $ 34,697 $ 2,565 $ 161 $ (26,079) $ (6,297) *Fair Value Determination is Final 2023 : Entity Date Acquired Total Consideration Property & Equipment Right of Use Assets Goodwill Intangible Assets Other Right of Use Liabilities C.C.D.G.L.R. & S Services Inc.* 1/1/2023 3,500 435 1,689 3,015 50 — (1,689) Southern California Diagnostic Imaging, Inc.* 1/1/2023 1,815 466 1,184 1,272 50 27 (1,184) Inglewood Imaging Center, LLC* 2/1/2023 2,600 877 1,188 1,658 50 15 (1,188) Ramapo Radiology Associates, P.C.* 2/1/2023 2,000 1,663 3,775 229 100 8 (3,775) Madison Radiology Medical Group, Inc.* 4/1/2023 250 100 — 150 — — — Delaware Diagnostic Imaging, P.A.* 8/1/2023 600 401 337 149 50 — (337) Total $10,765 $3,942 $8,173 $6,473 $300 $50 $(8,173) *Fair Value Determination is Final Digital Health Segment Kheiron Medical Technologies LTD On October 14, 2024, we acquired a all of the equity interest in Kheiron Medical Technologies LTD (“Kheiron”), which uses deep learning AI to help radiologists detect breast cancer. 38 Kheiron’s operations are included in our Digital Health segment for reporting purposes.
In June 2023, we closed on a public offering of 8,711,250 shares of our common stock at a price to the public of $29.75 per share, resulting in net proceeds, after deducting underwriting discounts, commissions, and expenses, of $245.8 million. Payments on term loan debt for the twelve months ended December 31, 2023 were $41.1million.
In March 2024, we completed a public offering of 5,232,500 shares of our common stock, which included 682,500 shares sold pursuant to an underwriters overallotment option, at a price to the public of $44.00 per share, resulting in net proceeds after underwriting discounts, commissions, and expenses of $218.4 million.
For more information on our secured credit facilities see Note 8, Credit Facilities and Notes Payable, in the notes accompanying our consolidated financial statements in this report.
See the Derivative Instruments section of Note 2, Summary of Significant Accounting Policies, in the notes accompanying the consolidated financial statements included in this report and Item 7A — "Quantitative and Qualitative Disclosure About Market Risk" below for more details on our derivative transactions.
Removed
Our operations comprise two segments for financial reporting purposes for this reporting period, Imaging Centers and Artificial Intelligence. For further financial information about these segments, see Note 5, Segment Reporting, in the notes accompanying our consolidated financial statements included in this report.
Added
Internationally, our subsidiary, The HLH Imaging Group Limited fka Heart & Lung Imaging Limited, provides teleradiology services for remote interpretation of images on behalf of providers within the framework of the United Kingdom's National Health Service. Our operations comprise two segments for financial reporting purposes for this reporting period, Imaging Centers and Digital Health.
Removed
Integral to the imaging center business is our software arm headed by eRad, Inc., which sells computerized systems that distribute, display, store and retrieve digital images. We have also established an Artificial Intelligence (AI) business, that develops and deploys AI suites to enhance radiologist interpretations of breast, lung and prostate images.
Added
In addition to our imaging business, we established a Digital Health business segment in our 2024 fiscal year, which combines our former Artificial Intelligence (“AI”) business segment with our eRad, Inc. business. Our digital health segment develops and delivers AI-powered health informatics solutions to drive quality, efficiency, and outcomes in imaging and radiology.
Removed
The division is led by our DeepHealth, Inc. subsidiary and includes our acquisitions of Aidence Holding B.V. and Quantib B.V., both based in the Netherlands.
Added
The portfolio of software solutions is anchored by eRad, Inc.'s RIS/PACS, informatics designed specifically for outpatient radiology and DeepHealth OS, a cloud-native operating system that helps operate all aspects of the radiology service line from scheduling and patient preparation to technologist workflow to interpretation and referral management.
Removed
Our service fee revenue, net of contractual allowances and discounts, implicit price concessions, and revenue under capitation arrangements for the years ended December 31, 2023, 2022 and 2021 are summarized in the following table (in thousands): 32 In Thousands 2023 2022 2021 Commercial insurance $ 897,948 $ 785,128 $ 743,462 Medicare 363,863 311,124 280,911 Medicaid 43,175 38,279 34,731 Workers' compensation/personal injury 47,364 51,339 44,235 Other patient revenue 42,249 31,849 19,398 Management fee revenue 17,936 22,235 19,630 Software and teleradiology 18,082 14,238 10,525 Other 20,111 19,428 12,436 Revenue under capitation arrangements 153,433 152,045 148,334 Imaging center segment revenue 1,604,161 1,425,665 1,313,662 AI segment revenue 12,469 4,396 1,415 Total revenue $ 1,616,630 $ 1,430,061 $ 1,315,077 We typically experience some seasonality to our business.
Added
Further, we are using AI to develop solutions that employ machine learning to assist radiologists and other clinicians in interpreting images and improving radiologist efficiency and patient care. These AI solutions will initially be focused in the fields of screening for breast, prostate, lung and colon cancers.
Removed
Heart & Lung Imaging Limited. On November 1, 2022, we acquired a 75% controlling interest in Heart & Lung Imaging Limited (“HLI”). HLI is a teleradiology concern which operates in the United Kingdom with the National Healthcare Service to screen high risk populations for cardiac and lung conditions. HLI’s operations are included in our imaging center segment for reporting purposes.
Added
Our DeepHealth, Inc. subsidiary received FDA clearance for use of its SaigeQ "triage"/workflow product, SaigeDX advanced diagnostic product and Saige-Density breast density assessment software for screening breast mammography, which we have begun to roll out in certain markets as an Enhanced Breast Cancer Detection solution.
Removed
The transaction was accounted for as the acquisition of a business with a total purchase consideration of approximately $31.9 million, including: (a) shares of our common stock with a fair value of $6.8 million 34 (359,002 shares issued at $19.06 per share), (b) cash of $6.3 million, (c) contingent consideration of $10.8 million ($10.2 million in contingent milestone consideration and cash holdback of $0.6 million to be issued 24 months after acquisition subject to adjustment for any indemnification claims) and (d) noncontrolling interest of $8.0 million.
Added
Our Aidence Holding B.V. subsidiary is developing solutions for interpretation of chest and lung CT scans for lung cancer screening.
Removed
We recorded $0.6 million in current assets, $15.8 million in intangible assets, $0.6 million current liabilities and $16.2 million in goodwill in connection with this transaction. As part of the purchase price allocation, we determined the identifiable intangible assets are customer relationships and trade names.

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeItem 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 32 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 49 Item 8. Financial Statements and Supplementary Data 50 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 92
Biggest changeItem 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 36 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 55 Item 8. Financial Statements and Supplementary Data 57 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 97

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAt December 31, 2023, we had $144.4 million outstanding subject to an adjusted SOFR election on our Trust term loan. At December 31, 2023, our effective SOFR rate plus applicable margin was 7.24%.
Biggest changeAt December 31, 2024, we had $135.0 million outstanding subject to an adjusted SOFR election on our Trust term loan. At December 31, 2024, our effective SOFR rate plus applicable margin was 5.93%.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Foreign Currency Exchange Risk. We generate substantially all of our revenues and incur substantially all of our expenses in United States dollars. As a result, our financial results are unlikely to be materially affected by changes in foreign currency exchange rates or weak economic conditions in foreign markets.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 55 Foreign Currency Exchange Risk. We generate substantially all of our revenues and incur substantially all of our expenses in United States dollars. As a result, our financial results are unlikely to be materially affected by changes in foreign currency exchange rates or weak economic conditions in foreign markets.
A hypothetical 1% increase in the adjusted SOFR rates under the Truist credit facility would result in an increase of approximately $1.4 million in annual interest expense and a corresponding decrease in income before taxes. 49
A hypothetical 1% increase in the adjusted SOFR rates under the Truist credit facility would result in an increase of approximately $1.4 million in annual interest expense and a corresponding decrease in income before taxes. 56
At the present time, we do not have any foreign currency exchange contracts to mitigate this risk. At December 31, 2023, a hypothetical 1% decline in the currency exchange rates between the U.S. dollar against these currencies, would have resulted in an annual increase of approximately $0.3 million in operating expenses. Interest Rate Sensitivity.
At the present time, we do not have any foreign currency exchange contracts to mitigate this risk. At December 31, 2024, a hypothetical 1% decline in the currency exchange rates between the U.S. dollar against these currencies, would have resulted in an annual increase of approximately $0.4 million in operating expenses. Interest Rate Sensitivity.
A hypothetical 1% increase in the SOFR rates under the Barclay's credit facility would result in an increase of $2.8 million in annual interest expense and a corresponding decrease in income before taxes. We can elect SOFR or Base Rate interest rate options on amounts outstanding under the Truist credit facility.
A hypothetical 1% increase in the SOFR rates under the Barclay's credit facility would result in an increase of $4.7 million in annual interest expense and a corresponding decrease in income before taxes. We can elect SOFR or Base Rate interest rate options on amounts outstanding under the Truist credit facility.
At December 31, 2023, after giving effect to the $400 million notional amount of our 2019 swaps, we had $279.0 million outstanding subject to a SOFR election on our Barclay's term loan, at an effective rate plus applicable margin of 5.38%.
At December 31, 2024, after giving effect to the $400 million notional amount of our 2019 swaps, we had $470.6 million outstanding subject to a SOFR election on our Barclay's term loan, at an effective rate plus applicable margin of 6.77%.

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