SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2019

Our total revenues during the three and nine months ended September 30, 2019 and 2018 are presented in the table below based on an allocation of the estimated transaction price with the patient between the primary patient classification of insurance coverage (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Commercial insurance	$	163,152	$	135,445	$	475,064	$	397,193
Medicare	61,599		48,243		175,825		141,348
Medicaid	7,128		6,323		21,564		19,129
Workers' compensation/personal injury	10,865		8,810		32,950		25,714
Other patient revenue	6,085		6,205		17,947		18,318
Management fee revenue	1,792		3,615		5,662		11,237
Teleradiology and Software revenue	4,412		4,063		12,861		11,879
Other	6,875		4,848		20,878		16,318
Service fee revenue	261,908		217,552		762,751		641,136
Revenue under capitation arrangements	30,784		24,596		90,587		76,799
Total revenue	$	292,692	$	242,148	$	853,338	$	717,935

Schedule of goodwill and other intangible assets

Activity in goodwill for the nine months ended September 30, 2019 is provided below (in thousands):



Balance as of December 31, 2018	$	418,093
Adjustments to our preliminary allocation of the purchase price of Medical Arts Radiological Group, P.C.	722
Goodwill acquired through the acquisition of certain assets of Dignity Health	1
Goodwill acquired through the acquisition of certain assets of West Valley Imaging Center, LLC	2,490
Goodwill disposed through sale of assets	(123		)
Goodwill acquired by Lenox Hill Radiology through the membership purchase of HVRA	3,125
Goodwill acquired through the acquisition of certain assets of Kern Radiology, Inc.	10,507
Goodwill acquired through the acquisition of certain assets of Zilkha Radiology, Inc.	2,577
Goodwill acquired through the acquisition of certain assets of Ramic Mahwah, LLC	231
Goodwill acquired through the acquisition of GSRN	887
Goodwill acquired through the acquisition of Nulogix	1,357
Balance as of September 30, 2019	$	439,867

Effect of derivative instruments on comprehensive income

A tabular presentation of the effect of derivative instruments on our consolidated statement of comprehensive loss of the 2016 Caps is as follows (amounts in thousands):



For the three months ended September 30, 2019
Account	July 1, 2019 Balance		Amount of comprehensive loss recognized on derivative net of taxes		September 30, 2019 Balance		Location
Accumulated Other Comprehensive Loss	(768	)	(251	)	(1,019	)	Liabilities and Equity



For the nine months ended September 30, 2019
Account	January 1, 2019 Balance	Amount of comprehensive loss recognized on derivative net of taxes		September 30, 2019 Balance		Location
Accumulated Other Comprehensive Income (Loss)	2,506	(3,525	)	(1,019	)	Liabilities and Equity

A tabular presentation of the effect of derivative instruments on our consolidated statement of comprehensive loss of the 2019 SWAPS is as follows (amounts in thousands):



For the three months ended September 30, 2019
Account	July 1, 2019 Balance			Amount of comprehensive loss recognized on derivative net of taxes			September 30, 2019 Balance			Location
Accumulated Other Comprehensive Loss	$	(5,924	)	$	(5,032	)	$	(10,956	)	Liabilities and Equity



For the nine months ended September 30, 2019
Account	January 1, 2019 Balance	Amount of comprehensive loss recognized on derivative net of taxes			September 30, 2019 Balance			Location
Accumulated Other Comprehensive Loss	—	$	(10,956	)	$	(10,956	)	Liabilities and Equity

Schedule of fair value of assets and liabilities

The table below summarizes the estimated fair value compared to our face value of our long-term debt as follows (in thousands):



	As of September 30, 2019
	Level 1		Level 2		Level 3		Total Fair Value		Total Face Value
First Lien Term Loans and SunTrust Term Loan	$	—	$	718,172	$	—	$	718,172	$	716,522



	As of December 31, 2018
	Level 1		Level 2		Level 3		Total		Total Face Value
First Lien Term Loans and SunTrust Term Loan	$	—	$	633,229	$	—	$	633,229	$	646,441

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



	As of September 30, 2019
	Level 1		Level 2		Level 3		Total
Current and long term liabilities
2016 Caps - Interest Rate Contracts	$	—	$	906	$	—	$	906
2019 SWAPS - Interest Rate Contracts	$	—	$	15,473	$	—	$	15,473



	As of December 31, 2018
	Level 1		Level 2		Level 3		Total
Current assets
2016 Caps - Interest Rate Contracts	$	—	$	3,316	$	—	$	3,316

Earnings per share

Earnings per share is based upon the weighted average number of shares of common stock and common stock equivalents outstanding, net of common stock held in treasury, as follows (in thousands except share and per share data):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Net income attributable to RadNet, Inc.'s common stockholders	$	3,195	$	5,039	$	4,360	$	3,107

BASIC NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC.'S COMMON STOCKHOLDERS
Weighted average number of common shares outstanding during the period	49,807,460		48,010,726		49,597,138		47,937,215
Basic net income per share attributable to RadNet, Inc.'s common stockholders	$	0.06	$	0.10	$	0.09	$	0.06

DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC.'S COMMON STOCKHOLDERS
Weighted average number of common shares outstanding during the period	49,807,460		48,010,726		49,597,138		47,937,215
Add nonvested restricted stock subject only to service vesting	200,567		180,269		191,375		171,627
Add additional shares issuable upon exercise of stock options and warrants	352,333		424,397		324,793		372,463
Weighted average number of common shares used in calculating diluted net income per share	50,360,360		48,615,392		50,113,306		48,481,305
Diluted net income per share attributable to RadNet, Inc.'s common stockholders	$	0.06	$	0.10	$	0.09	$	0.06

Stock options excluded from the computation of diluted per share amounts:
Weighted average shares for which the exercise price exceeds average market price of common stock	—		—		—		8,333

Investment in joint ventures

The following table is a summary of our investment in joint ventures during the nine months ended September 30, 2019 (in thousands):



Balance as of December 31, 2018	$	37,973
Equity in earnings in these joint ventures	6,072
Distribution of earnings	(3,924		)
Sale of ownership interest	(134		)
Dissolution of GRSN	(1,427		)
Nulogix change in control	(1,795		)
Equity contributions in existing joint ventures	103
Balance as of September 30, 2019	$	36,868

Joint venture investment and financial information

The following table is a summary of key balance sheet data for these joint ventures as of September 30, 2019 and December 31, 2018 and income statement data for the nine months ended September 30, 2019 and 2018 (in thousands):



Balance Sheet Data:	September 30, 2019			December 31, 2018
Current assets	$	32,401		$	28,317
Noncurrent assets	62,564			45,912
Current liabilities	(9,383		)	(4,300		)
Noncurrent liabilities	(20,113		)	(4,898		)
Total net assets	$	65,469		$	65,031

Book value of RadNet joint venture interests	$	30,421		$	30,030
Cost in excess of book value of acquired joint venture interests	6,447			7,943
Total value of Radnet joint venture interests	$	36,868		$	37,973

Total book value of other joint venture partner interests	$	35,048		$	35,001



Income statement data for the nine months ended September 30,	2019		2018
Net revenue	$	80,115	$	136,413
Net income	$	13,718	$	20,271