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SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2022

Our total service fee revenues during the three and nine months ended September 30, 2022 and 2021 are presented in the table below. Our imaging center revenue is displayed as the estimated service fee, broken down by classification of insurance coverage type. Additional revenues are earned from our management services provided to joint ventures and our software and AI subsidiaries.


In Thousands	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Commercial insurance	$	189,634	$	185,723	$	573,259	$	555,355
Medicare	78,034		73,163		226,827		207,977
Medicaid	9,669		8,707		28,456		26,198
Workers' compensation/personal injury	13,200		11,554		38,785		32,507
Other patient revenue	7,646		4,800		22,334		14,766
Management fee revenue	6,099		5,255		17,199		16,007
Software revenue	3,430		2,068		9,849		7,115
Other	3,431		3,641		12,054		10,058
Revenue under capitation arrangements	38,001		37,283		114,366		111,449
Imaging Center Segment Revenue	349,144		332,194		1,043,129		981,432
AI Segment Revenue	900		496		3,056		496
Total service revenue	$	350,044	$	332,690	$	1,046,185	$	981,928

Schedule of Goodwill and Other Intangible Assets

Activity in goodwill for the nine months ended September 30, 2022 is provided below (in thousands):


Balance as of December 31, 2021	$	513,820
Goodwill from acquisitions	67,979
Valuation adjustment	(338)
Currency translation	(6,369)










Balance as of September 30, 2022	$	575,092

Schedule of Effect of Derivative Instruments on Comprehensive Loss

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


For the three months ended September 30, 2022
Account	June 30, 2022 Balance		Amount of comprehensive loss recognized on derivative net of taxes		Amount of loss reclassified out of accumulated OCI into income (prior period effective portion), net of taxes		September 30, 2022 Balance		Location
Accumulated Other Comprehensive Loss, net of taxes	$	(17,039)	$	—	$	924	$	(16,115)	Equity


For the nine months ended September 30, 2022
Account	December 31, 2021 Balance		Amount of comprehensive loss recognized on derivative net of taxes		Amount of loss reclassified out of accumulated OCI into income (prior period effective portion), net of taxes		September 30, 2022 Balance		Location
Accumulated Other Comprehensive Loss, net of taxes	$	(18,886)	$	—	$	2,771	$	(16,115)	Equity

A tabular presentation of the effect of derivative instruments on our statement of operations of the 2019 Swaps which remain ineffective is as follows (amounts in thousands):

For the three months ended September 30, 2022

Ineffective interest rate swap

Amount of gain recognized in income on derivative (current period ineffective portion)

Location of gain recognized in Income on derivative (current period ineffective portion)

Gross amount of loss reclassified from accumulated OCI into income (prior period effective portion)

Location of loss reclassified from accumulated OCI into income (prior period effective portion)

Interest rate contracts

12,451

Non-cash change in fair value of interest rate swaps

(1,245)

Interest Expense

For the nine months ended September 30, 2022

Ineffective interest rate swap

Amount of gain recognized in income on derivative (current period ineffective portion)

Location of gain recognized in Income on derivative (current period ineffective portion)

Gross amount of loss reclassified from accumulated OCI into income (prior period effective portion)

Location of loss reclassified from accumulated OCI into income (prior period effective portion)

Interest rate contracts

39,576

Non-cash change in fair value of interest rate swaps

(3,735)

Interest Expense

Schedule of Business Acquisitions by Acquisition, Contingent Consideration

A tabular presentation of the effect of the combined Aidence and Quantib contingent consideration on our condensed consolidated balance sheet is as follows (amounts in thousands):


For the three months ended September 30, 2022
Account	June 30, 2022 Balance		Amount of other non operating income recognized on contingent consideration		Currency Translation		September 30, 2022 Balance		Location
Other Long Term Liabilities	$	8,437	$	958	$	833	$	10,228	Liabilities and Non Operating Income


For the nine months ended September 30, 2022
Account	January 1, 2022 Balance		Issuance of contingent consideration		Amount of other non operating income recognized on contingent consideration		Currency Translation		September 30, 2022 Balance		Location
Other Long Term Liabilities	$	—	$	10,459	$	(329)	$	98	$	10,228	Liabilities and Non Operating Income

Schedule of Fair Value of Assets and Liabilities

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


	As of September 30, 2022
	Level 1		Level 2		Level 3		Total
Current and long term assets

2019 Swaps - Interest Rate Contracts	$	—	$	23,258	$	—	$	23,258


	As of December 31, 2021
	Level 1		Level 2		Level 3		Total
Current and long term liabilities

2019 Swaps - Interest Rate Contracts	$	—	$	16,319	$	—	$	16,319

The table below summarizes the estimated fair values of contingencies and holdback relating to our Aidence Holding B.V. and Quantib B.V. acquisitions on January 20, 2022, that are subject to fair value measurements and the classification of these liabilities on our condensed consolidated balance sheets, as follows (in thousands):


	As of September 30, 2022
	Level 1		Level 2		Level 3		Total
Long term liabilities
Aidence Holding B.V. milestone consideration	$	—	$	—	$	7,922	$	7,922
Quantib B.V. holdback of 113,303 shares of RadNet common stock	$	—	$	—	$	2,306	$	2,306

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, 2022
	Level 1		Level 2		Level 3		Total Fair Value		Total Face Value
First Lien Term Loans and SunTrust Term Loan	$	—	$	727,510	$	—	$	727,510	$	757,938


	As of December 31, 2021
	Level 1		Level 2		Level 3		Total Fair Value		Total Face Value
First Lien Term Loans and SunTrust Term Loan	$	—	$	766,973	$	—	$	766,973	$	767,875

Schedule of Earnings Per Share

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net income attributable to RadNet, Inc.'s common stockholders	$	668	$	16,220	$	11,585	$	28,550

BASIC NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC.'S COMMON STOCKHOLDERS
Weighted average number of common shares outstanding during the period	56,744,419		52,810,644		56,041,017		52,323,360
Basic net income per share attributable to RadNet, Inc.'s common stockholders	$	0.01	$	0.31	$	0.21	$	0.55

DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC.'S COMMON STOCKHOLDERS
Weighted average number of common shares outstanding during the period	56,744,419		52,810,644		56,041,017		52,323,360
Add nonvested restricted stock subject only to service vesting	179,268		271,964		141,492		242,523
Add additional shares issuable upon exercise of stock options and contingently issuable shares	728,074		735,232		853,908		683,815
Weighted average number of common shares used in calculating diluted net income per share	57,651,761		53,817,840		57,036,417		53,249,698
Changes in FV associated with contingently issuable shares	$	—	$	—	$	(586)	$	—
Net income attributable to RadNet, Inc's common stockholders for diluted share calculation	$	668	$	—	$	10,999	$	—
Diluted net income per share attributable to RadNet, Inc.'s common stockholders	$	0.01	$	0.30	$	0.19	$	0.54

Fair value change for contingently available shares excluded from the computation of diluted per share amounts as its effect would be antidilutive	$	278	$	—	$	—	$	—
Stock options and other non vested shares excluded from the computation of diluted per share amounts as their effect would be antidilutive:

Shares issuable subject to satisfaction of certain contingencies	113,303		—		—		—
Shares issuable upon the exercise of stock options:	84,885		—		67,289		—
Weighted average shares for which the exercise price exceeds average market price of common stock	83,972		—		73,094		—

Schedule of Business Acquisitions

We made a fair value determination of the acquired assets and assumed liabilities and the following were recorded (in thousands):

Entity

Date Acquired

Total Consideration

Property & Equipment

Right of Use Assets

Goodwill

Right of Use Liabilities

IFRC LLC *^

1/1/2022

3,922

2,121

1,295

1,801

(1,295)

*Fair Value Determination is Final

^ IFRC LLC acquisitions consisted of three subsidiaries of IFRC, two of which were purchased separately by wholly owned RadNet subsidiaries.

We made a fair value determination of the acquired assets and assumed liabilities and the following were recorded (in thousands):


Entity	Date Acquired	Total Consideration	Property & Equipment	Right of Use Assets	Goodwill	Other Assets	Right of Use Liabilities
IFRC LLC*^	1/1/2022	4,800	2,103	857	2,697	—	(857)
IFRC LLC*^	1/1/2022	8,200	2,910	1,703	5,271	19	(1,703)
Total		13,000	5,013	2,560	7,968	19	(2,560)

*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.

Schedule of Investment in Joint Ventures

The following table is a summary of our investment in joint ventures during the nine months ended September 30, 2022 (in thousands):


Balance as of December 31, 2021	$	42,229
Equity in earnings in these joint ventures	8,350




Equity contributions in existing joint ventures	1,441
Balance as of September 30, 2022	$	52,020

Schedule of Joint Venture Investment and Financial Information

The following table is a summary of key balance sheet data for these joint ventures as of September 30, 2022 and December 31, 2021 and income statement data for the nine months ended September 30, 2022 and 2021 (in thousands):


Balance Sheet Data:	September 30, 2022		December 31, 2021
Current assets	$	48,154	$	37,186
Noncurrent assets	86,123		73,592
Current liabilities	(12,211)		(12,919)
Noncurrent liabilities	(26,619)		(22,370)
Total net assets	$	95,447	$	75,489

Book value of RadNet joint venture interests	$	43,947	$	34,930
Cost in excess of book value of acquired joint venture interests and other	8,073		7,299
Total value of RadNet joint venture interests	$	52,020	$	42,229


Income statement data for the nine months ended September 30,	2022		2021
Net revenue	$	107,241	$	98,193
Net income	$	17,034	$	16,007