RadNet Inc.
03/02/2026 | Press release | Distributed by Public on 03/02/2026 16:19
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
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Item 7.
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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. 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 freestanding, fixed-site outpatient diagnostic imaging services in the United States. As of December 31, 2025, we operated directly or indirectly through hospital and health system joint ventures, 418 centers located in Arizona, California, Delaware, Florida, Maryland, Virginia, New Jersey, New York, and Texas. 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. 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.
In addition to our imaging business, we established a Digital Health business segment during our 2024 fiscal year, which combines our former AI businesses with our eRad, Inc. business. Our Digital Health segment develops and delivers AI-powered health informatics solutions to improve quality, efficiency, and diagnostic outcomes in diagnostic imaging and radiology. We are using AI to develop solutions to assist radiologists and other clinicians in interpreting images and improving radiologist efficiency and patient care. The portfolio of AI and software solutions is anchored by Enterprise Operations solutions (traditionally knowns as RIS), Enterprise Imaging solutions (traditionally known as PACS), and Clinical AI solutions, enabled by the DeepHealth OS, a cloud-native operating system that connects critical aspects of the radiology service line from scheduling and patient preparation to technologist workflow to interpretation and referral management. Our Clinical AI solutions currently cover the fields of diagnosis and screening in the domain of breast, prostate, lung, thyroid, and brain. Across our portfolio of AI solutions, we have 22 FDA clearances and 15 CE marks. Our Digital Health segment provides these solutions to RadNet and to over 2000 customers in the U.S. and outside of the U.S.
As part of our continued strategic expansion in Digital Health, we recently completed three acquisitions: iCAD, Inc., an AI-powered breast health solutions company; See-Mode Technologies, which enhances ultrasound-based diagnostics through artificial intelligence; and CIMAR (UK) Limited, which provides cloud-based medical image storage, PACS, and AI-enabled imaging workflow solutions. We are currently integrating these businesses into our Digital Health segment
The following table presents the total number of imaging centers in operation at year end, including both consolidated and non-consolidated centers, and our consolidated revenues for the years ended December 31, 2025, 2024 and 2023. Revenue from non-consolidated centers is not included in consolidated revenues.
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Centers in operation | 418 | 398 | 366 | ||||||||||||||
| Total consolidated revenue | $ | 2,040 | $ | 1,830 | $ | 1,617 | |||||||||||
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. We believe our payor diversity mitigates our exposure to possible unfavorable reimbursement trends within any one payor class. Our total revenue for the years ended December 31, 2025, 2024 and 2023 is summarized in the following table (in thousands):
| In Thousands | 2025 | 2024 | 2023 | ||||||||||||||
| Commercial insurance | $ | 1,130,114 | $ | 1,018,327 | $ | 879,792 | |||||||||||
| Medicare | 476,987 | 410,072 | 356,506 | ||||||||||||||
| Medicaid | 51,736 | 44,736 | 42,302 | ||||||||||||||
| Workers' compensation/personal injury | 44,700 | 43,666 | 46,406 | ||||||||||||||
| Other payors | 118,599 | 104,888 | 87,675 | ||||||||||||||
| Management fee revenue | 27,516 | 24,676 | 17,936 | ||||||||||||||
| Other revenue | 65,021 | 46,724 | 32,580 | ||||||||||||||
| Revenue under capitation arrangements | 125,537 | 136,575 | 153,433 | ||||||||||||||
| Total revenue | $ | 2,040,210 | $ | 1,829,664 | $ | 1,616,630 | |||||||||||
Our revenue is not always consistent across each quarter. 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. It is common for snowstorms and other inclement weather to result in patient appointment cancellations and, in some cases, imaging center closures. Second, in recent years, we have observed greater participation in high deductible health plans by patients. As these high deductibles reset in January for most of these patients, we have observed that patients utilize medical services less during the first quarter, when securing medical care will result in significant out-of-pocket expenditures.
Acquisitions, Equity Investments and Joint Venture Activity
The following discussion summarizes certain details concerning our acquisition or disposition of centers, our equity investments, and our joint venture transactions. See Note 4, Business Combinations and Related Activity and Note 2, Summary of Significant Accounting Policies, in the notes accompanying our consolidated financial statements included in this report for further information.
Acquisitions
Imaging Center Segment
Radiology Imaging Center Asset Acquisitions:
During the years ended 2025 and 2024, we completed the acquisition of certain assets of the following entities, which 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. These acquisitions are reported as part of our Imaging Center segment. We made a fair value determination of the acquired assets and assumed liabilities and the following were recorded (in thousands):
2025:
| Entity | Date Acquired | Total Consideration | Property & Equipment | Right of Use Assets | Goodwill | Intangible Assets | Other Assets | Right of Use Liabilities | Finance lease | ||||||||||||||||||||
| HALO Centers LLC | 1/2/2025 | $ | 4,200 | 587 | 3,238 | 3,563 | 50 | - | (3,238) | - | |||||||||||||||||||
| Hillcroft Medical Clinic | 3/7/2025 | $ | 734 | 278 | - | 406 | 50 | - | - | - | |||||||||||||||||||
| North County Radiology Oceanside LLC | 4/1/2025 | $ | 1,702 | 238 | 599 | 1,307 | 150 | 7 | (599) | - | |||||||||||||||||||
| Faculty Physicians and Surgeons of LLUSM (Palm Imaging) | 5/1/2025 | $ | 1,400 | 648 | - | 702 | 50 | - | - | - | |||||||||||||||||||
| California MSK MSO, LLC (OSS Burbank) | 5/1/2025 | $ | 500 | 330 | - | 70 | 100 | - | - | - | |||||||||||||||||||
| HALO Centers LLC (Indian Wells) | 5/1/2025 | $ | 7,850 | 1,714 | 2,439 | 6,072 | 50 | 15 | (2,439) | - | |||||||||||||||||||
| Kolb Radiology P.C. | 7/1/2025 | $ | 26,659 | 6,887 | 5,355 | 22,396 | 79 | 155 | (6,125) | (2,088) | |||||||||||||||||||
| Schonholz and Drossman, LLP | 9/1/2025 | $ | 30,101 | 2,921 | 5,566 | 26,790 | 295 | 95 | (5,566) | - | |||||||||||||||||||
| Laser Assets, Inc.* | 11/1/2025 | $ | 29,058 | 7,145 | 4,529 | 22,170 | 134 | (32) | (4,889) | - | |||||||||||||||||||
| Woodburn Nuclear Medicine, Ltd.* | 11/1/2025 | $ | 29,705 | 1,658 | 4,292 | 27,902 | 1,105 | - | (5,252) | - | |||||||||||||||||||
| River Radiology, PLLC* | 11/3/2025 | $ | 1,200 | 798 | 1,908 | 244 | 150 | 8 | (1,908) | - | |||||||||||||||||||
| Total | 133,109 | 23,204 | 27,925 | 111,622 | 2,213 | 248 | (30,015) | (2,088) | |||||||||||||||||||||
*Fair Value Determination is preliminary and subject to change
2024:
| Entity | Date Acquired | Total Purchase Consideration | Property & Equipment | Right of Use Assets | Goodwill | Intangible Assets | Other | Right of Use Liabilities | Notes payable and other liabilities | ||||||||||||||||||||
| Antelope Valley Outpatient Imaging | 2/1/2024 | 3,530 | 2,793 | 563 | 687 | 50 | - | (563) | - | ||||||||||||||||||||
| Grossman Imaging Center of CMH, LLC | 3/31/2024 | 10,343 | 1,717 | 6,304 | 8,500 | 280 | 56 | (6,514) | - | ||||||||||||||||||||
| Providence Health System - Southern California | 3/31/2024 | 7,369 | 1,378 | 3,441 | 5,991 | - | - | (3,441) | - | ||||||||||||||||||||
| Houston Medical Imaging, LLC | 4/1/2024 | 22,703 | 15,826 | 7,929 | 11,584 | 1,660 | 90 | (8,089) | (6,297) | ||||||||||||||||||||
| U.S. 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) | |||||||||||||
Digital Health Segment
See-Mode Technologies
On June 2, 2025, through our wholly owned subsidiary DH AI International Holdings, B.V, we acquired all of the equity interest in See-Mode Technologies ("See-Mode"), a medical technology company focused on using artificial intelligence to enhance ultrasound-based diagnostics.
See-Mode's operations are included in our Digital Health segment for reporting purposes. The transaction was accounted for as the acquisition of a business with a total purchase consideration of approximately of $28.9 million, including: (i) cash of $17.9 million, (ii) a holdback of $2.0 million cash to be released 18 months after acquisition, and (iii) contingent consideration with a fair value of $9.0 million related to three performance milestones payable 50% in cash and 50% in shares of our common stock. We recorded $0.2 million in other net assets, $5.5 million in developed technology, $5.4 million in IPR&D, $20.0 million in goodwill, and $2.2 million in deferred tax liabilities in connection with this transaction.
In performing the purchase price allocation, we considered, among other factors, the intended future use of the acquired assets, the historical financial performance, and estimates of the future performance of the See-Mode business.
iCAD, Inc.
On July 17, 2025, we completed the acquisition of all of the outstanding equity interests of iCAD, Inc. ("iCAD"), a global leader in AI-powered breast health solutions. The acquisition integrates iCAD's commercial, technology, and regulatory capabilities with those of DeepHealth, our wholly owned subsidiary within the Digital Health segment. The transaction strengthens DeepHealth's position as an industry leader in AI-enabled breast cancer image interpretation and workflow optimization and expands its global market reach.
The transaction was accounted for as the acquisition of a business and was completed through an all-stock exchange, with total purchase consideration of approximately $110.7 million based on the fair value of our common stock issued to iCAD shareholders and the fair value of our options issued in exchange for outstanding iCAD options.
We allocated the purchase price to the assets acquired and liabilities assumed based on their estimated fair values, which resulted in the recognition of goodwill of approximately $36.6 million, primarily reflecting expected synergies from integrating iCAD's technology portfolio, established customer relationships, and assembled workforce. In addition, we recorded identifiable intangible assets related to backlog, developed technology, customer relationships, and trade name totaling
approximately $38.3 million, consisting of $1.8 million, $0.7 million, $6.8 million, and $29.0 million, respectively, deferred tax asset, net of $20.6 million, Cash, deposits and others of $14.2 million, and property and equipment of $1.1 million.
In connection with the iCAD acquisition, the Company identified and measured the fair values of acquired intangible assets, including backlog, trade names, developed technology, in-process research and development ("IPR&D"), and customer relationships. The valuations were performed using the income approach, consistent with market participant assumptions. The income approach incorporated assumptions such as projected revenues, estimated customer attrition, royalty rates, and discount rates reflecting market participant expectations. IPR&D projects were determined to have no material fair value as of the acquisition date. The identified intangible assets were assigned estimated useful lives as follows: backlog - approximately 4 years; trade names - approximately 1 year; developed technology - approximately 7 years; and customer relationships - approximately 15 years.
In performing the purchase price allocation, we considered, among other factors, the intended future use of the acquired assets, the historical financial performance, and the expected future contributions of the iCAD business. As of December 31, 2025, the valuation of assets acquired and liabilities assumed is preliminary and subject to change, primarily with respect to the valuation of deferred taxes. The fair value determination will be updated as additional information becomes available during the measurement period.
CIMAR UK Limited
On November 10, 2025, the Company completed the acquisition of all outstanding shares of CIMAR (UK) Limited ("CIMAR"), a United Kingdom-based provider of medical image storage and cloud-based PACS solutions. The acquisition was accounted for as a business combination.
The total purchase consideration was approximately $37.0 million, consisting of $13.2 million in cash, $14.8 million in RadNet common stock issued after year end, a holdback of $3.2 million, and contingent consideration with a fair value of approximately $5.8 million as of the acquisition date, payable upon the achievement of specified recurring revenue targets.
The purchase consideration was preliminarily allocated to the assets acquired and liabilities assumed based on their estimated fair values, resulting in the recognition of goodwill of approximately $20.1 million, which is primarily attributable to expected synergies from integrating CIMAR's technology and operations with the Company's Digital Health platform.
Identifiable intangible assets recognized totaled approximately $22.3 million, consisting primarily of customer relationships of approximately $19.7 million, National Health Service ("NHS") and International Organization for Standardization ("ISO") certifications of approximately $2.2 million, and trade names of approximately $0.5 million. In addition, the Company recorded current net liabilities of approximately $0.3 million. The Company also recognized deferred tax liabilities of approximately $5.7 million in connection with the acquisition..
The identifiable intangible assets were valued using income- and cost-based valuation methodologies in accordance with ASC 805. Customer relationships were valued using the multi-period excess earnings method, which considers projected revenues, customer attrition, contributory asset charges, and a market-based discount rate. Trade names were valued using the relief-from-royalty method, based on projected revenues, an estimated royalty rate, and a market-based discount rate. NHS and ISO certifications were valued using a cost approach based on estimated replacement cost. The estimated useful lives are approximately 21 years for customer relationships, 4 years for trade names, and 1 years for certifications.
As of December 31, 2025, the purchase price allocation is preliminary and subject to change during the measurement period, primarily related to refinements in the valuation of intangible assets, contingent consideration, deferred taxes, and other customary purchase accounting adjustments.
Kheiron Medical Technologies LTD
On October 14, 2024, we acquired all of the equity interest in Kheiron Medical Technologies LTD ("Kheiron"), which uses deep learning AI to help radiologists detect breast cancer.
Kheiron's operations are included in our Digital Health segment for reporting purposes. 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. We recorded $1.2 million in current assets, $2.6 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.
Formation of majority owned subsidiaries
Tri Valley Imaging Group, LLC.On February 23, 2024, we formed Tri Valley Imaging Group, LLC ("TVIG"), a partnership with Providence Health System - Southern California ("PHS"). The operation offers multi-modality services out of seven locations in Southern California. On March 29, 2024, we contributed the operations of four centers to the enterprise and PHS contributed a business comprising of three centers, including $1.4 million of fixed assets and $6.0 million in goodwill. Simultaneously, PHS purchased from us an additional economic interest in TVIG for cash payment of $9.6 million. 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.On March 31, 2024, Community Memorial Health System purchased an economic interest of Ventura County Imaging Group ("VGIC") for a consideration of $5.1 million. As a result of the transaction, we retained 47.5% controlling economic interest in VGIC.
Pacific Diagnostic Imaging Group, LLC.On March 21, 2025, we formed Pacific Diagnostic Imaging Group, LLC ("PDRG"), a Delaware limited liability company. On April 1, 2025, we entered into a partnership with Tri-City Healthcare District ("Tri-City") by selling a 20% membership interest in PDRG for cash consideration of $337,500. We retained an 80% controlling interest in PDRG. The joint venture operates outpatient imaging centers in Southern California. The transaction did not result in a change of control, and no gain or loss was recognized.
Joint venture investment contributions
Santa Monica Imaging Group, LLC
On April 1, 2017, we formed in conjunction with Cedars-Sinai Medical Center the Santa Monica Imaging Group, LLC ("SMIG"), consisting of two multi-modality imaging centers located in Santa Monica, California with RadNet holding a 40% economic interest and Cedars-Sinai Medical Center holding a 60% economic interest. We account for our share of the venture under the equity method. On January 1, 2019, Cedars-Sinai Medical Center purchased an additional 5% economic interest in SMIG from us and, as a result, our economic interest in SMIG was reduced to 35%.
On September 1, 2023, we contributed an additional multi-modality imaging center and a newly constructed imaging center located in Beverly Hills, California valued at $27.2 million and purchased an additional economic interest in SMIG for cash payment of $11.3 million. Simultaneously, Cedars-Sinai Medical Center contributed five additional multi-modality imaging centers located in Santa Monica, California. 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.
Arizona Diagnostic Radiology Group
During the years ended December 31, 2025 and 2024, we made additional equity contributions of $20.5 million and $1.4 million, respectively, to Arizona Diagnostic Radiology Group ("ADRG", our joint venture with Dignity Health).
On June 12, 2025, we executed a $17.0 million promissory note with Dignity Health, a related party and joint venture member of ADRG. Monthly principal payments of $0.9 million began July 1, 2025, with interest accruing at the Wall Street Journal Prime Rate plus 2%. Future distributions from ADRG to Dignity will be applied to the note balance until fully repaid. The note is expected to mature on December 1, 2026. As of December 31, 2025, we recorded the note balance of $11.4 million in Due from Affiliates on our Consolidated Balance Sheet.
On November 1, 2022 we contributed eight of our imaging centers to ADRG for $12.7 million and recorded a loss of $0.5 million which was calculated as the difference between the transaction price and carrying value of such imaging centers which included equipment and other assets and an allocation of goodwill to such imaging centers. We recorded $4.5 million of the transaction price as an offset 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. To maintain our 49% economic interest in ADRG, we received a distribution from the partnership of $4.5 million to reduce our overall investment to $8.3 million.
Results of Operations
The following table sets forth, for the periods indicated, the percentage that certain line items within the consolidated statements of operations bear to net revenue for the years 2025, 2024, and 2023.
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| REVENUE | |||||||||||||||||
| Service fee revenue | 93.8 | % | 92.5 | % | 90.5 | % | |||||||||||
| Revenue under capitation arrangements | 6.2 | % | 7.5 | % | 9.5 | % | |||||||||||
| Total service revenue | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||
| OPERATING EXPENSES | |||||||||||||||||
| Cost of operations, excluding depreciation and amortization | 88.5 | % | 86.4 | % | 86.3 | % | |||||||||||
| Lease abandonment charges | 0.4 | % | 0.1 | % | 0.3 | % | |||||||||||
| Depreciation and amortization | 7.5 | % | 7.5 | % | 7.9 | % | |||||||||||
| Gain on contribution of imaging centers into joint venture | - | % | - | % | (1.0) | % | |||||||||||
| Loss on sale and disposal of equipment | 0.5 | % | 0.1 | % | 0.1 | % | |||||||||||
| Severance costs | 0.2 | % | 0.1 | % | 0.2 | % | |||||||||||
| Total operating expenses | 97.0 | % | 94.3 | % | 93.9 | % | |||||||||||
| INCOME FROM OPERATIONS | 3.0 | % | 5.7 | % | 6.1 | % | |||||||||||
| OTHER INCOME AND EXPENSES | |||||||||||||||||
| Interest expense | 3.4 | % | 4.4 | % | 4.0 | % | |||||||||||
| Equity in earnings of joint ventures | (0.7) | % | (0.8) | % | (0.4) | % | |||||||||||
| Non-cash change in fair value of interest rate swaps | 0.3 | % | 0.4 | % | 0.5 | % | |||||||||||
| Debt restructuring and extinguishment expenses | - | % | 0.6 | % | - | % | |||||||||||
| Other income | (1.6) | % | (1.4) | % | (0.4) | % | |||||||||||
| Total other expenses | 1.5 | % | 3.3 | % | 3.8 | % | |||||||||||
| INCOME BEFORE INCOME TAXES | 1.6 | % | 2.5 | % | 2.4 | % | |||||||||||
| Provision for income taxes | (0.7) | % | (0.3) | % | (0.5) | % | |||||||||||
| NET INCOME | 0.8 | % | 2.0 | % | 1.8 | % | |||||||||||
| Net income attributable to noncontrolling interest | 1.7 | % | 2.0 | % | 1.7 | % | |||||||||||
| NET (LOSS) INCOME ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS | (0.9) | % | 0.2 | % | 0.1 | % | |||||||||||
Result Summary
The following table summarizes our consolidated revenue by segments:
| In Thousands | Years Ended December 31, | ||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Operating Revenue | |||||||||||||||||
| Imaging Center | $ | 1,988,193 | $ | 1,792,319 | $ | 1,415,513 | |||||||||||
| Digital Health | 92,691 | 65,706 | 38,058 | ||||||||||||||
| Intersegment eliminations | (40,674) | (28,361) | (23,510) | ||||||||||||||
| Total service revenue | $ | 2,040,210 | $ | 1,829,664 | $ | 1,430,061 | |||||||||||
Imaging Center Segment
Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024
Total Revenue
| In Thousands | Years Ended December 31, | |||||||||||||
| 2025 | 2024 | $ Increase/(Decrease) | % Change | |||||||||||
| Total Revenue | $1,988,193 | $1,792,319 | $195,874 | 10.9% | ||||||||||
Our 10.9% increase in Imaging Center revenue compared to the same period last year was driven by higher fees per imaging procedure and increased procedure volumes. This is a function of procedural volume growth at our consolidated centers. This growth reflects both organic increases at existing centers and incremental volumes from centers acquired since the prior-year period.
The increase in revenue was largely attributable to the procedural volume growth, increased reimbursement from commercial and capitated payors and favorable changes in product mix, as advanced imaging represented a greater proportion of total procedures. A significant contributor to this shift was the increase in PET CT procedures related to prostate cancer and Alzheimer's-related studies, which are included within advanced modality imaging procedures.
Operating Expenses
Total Imaging Center operating expenses for the year ended December 31, 2025 increased approximately $221.1 million, or 13.2%, from $1.67 billion for the year ended December 31, 2024 to $1.89 billion for the year ended December 31, 2025, primarily due to increase in procedures volumes. The following table sets forth our cost of operations and total operating expenses for the years ended December 31, 2025 and 2024 (in thousands):
| Years Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Salaries and professional reading fees, excluding stock-based compensation | $ | 1,083,550 | $ | 984,280 | |||||||
| Stock-based compensation | 44,674 | 26,863 | |||||||||
| Building and equipment rental | 127,798 | 121,514 | |||||||||
| Medical supplies | 126,126 | 103,189 | |||||||||
|
Other operating expenses*
|
355,225 | 303,952 | |||||||||
| Cost of operations | 1,737,373 | 1,539,798 | |||||||||
| Depreciation and amortization | 136,297 | 127,142 | |||||||||
| Lease abandonment charges | 8,563 | 2,478 | |||||||||
| Loss on sale and disposal of equipment | 9,821 | 2,257 | |||||||||
| Severance costs | 1,797 | 1,095 | |||||||||
| Total operating expenses | $ | 1,893,851 | $ | 1,672,770 | |||||||
*Includes billing fees, office supplies, repairs and maintenance, insurance, business tax and license, outside services, telecommunications, utilities, marketing, travel and other expenses.
Salaries and professional reading fees, excluding stock-based compensation and severance
| In Thousands | Years Ended December 31, | |||||||||||||
| 2025 | 2024 | $ Increase/(Decrease) | % Change | |||||||||||
| Salaries | $ | 775,640 | $ | 711,054 | $ | 64,586 | 9.1% | |||||||
| Professional Fees | 307,910 | 273,226 | 34,684 | 12.7% | ||||||||||
| Salaries and Professional Fees | $ | 1,083,550 | $ | 984,280 | 99,270 | 10.1% | ||||||||
In response to higher procedure volumes, we increased staffing levels across clinical, administrative, and technical functions to support the influx of patients. This included permanent headcount growth as well as a significant number of temporary hires to keep our centers operating smoothly during the first quarter of 2025. Compensation-related expenses were further impacted by increased 401K match contributions and more vacation and paid time off taken during the period. We also continued to experience wage inflation across the board, driven by a competitive labor market and the October 2024 increase in California's minimum wage for healthcare workers. Additionally, higher workers' compensation insurance premiums contributed to the overall rise in staffing costs.
Stock-based compensation
Stock-based compensation increased $17.8 million, or 66.3%, to approximately $44.7 million for the year ended December 31, 2025 compared to $26.9 million for the year ended December 31, 2024. The increase is primarily due to a greater number of shares granted and higher grant-date fair values compared to prior-year period.
Building and equipment rental
| In Thousands | Years Ended December 31, | |||||||||||||
| 2025 | 2024 | $ Increase/(Decrease) | % Change | |||||||||||
| Building rent and common area maintenance | $ | 125,459 | $ | 118,467 | $ | 6,992 | 5.9% | |||||||
| Equipment Rental | 2,340 | 3,047 | (707) | (23.2)% | ||||||||||
| Building & Equipment Rental | $127,798 | $121,514 | 6,284 | 5.2% | ||||||||||
Building and equipment rental expense increased primarily as a result of additional centers from openings and acquisitions. Equipment lease expense represents an immaterial portion of total rental expense.
Medical supplies
| In Thousands | Years Ended December 31, | |||||||||||||
| 2025 | 2024 | $ Increase/(Decrease) | % Change | |||||||||||
| Medical Supplies Expense | $126,126 | $103,189 | $22,937 | 22.2% | ||||||||||
Consistent with the shift in our procedural mix toward more advanced imaging, medical supplies expense increased at a higher rate than revenue growth. The growth in PET/CT procedures, particularly for prostate cancer and suspected Alzheimer's studies, drove higher utilization of high-cost isotope tracers, contributing to the increase. In addition, price increases for these tracers further elevated medical supplies expense compared to the prior year.
Other operating expenses
| In Thousands | Years Ended December 31, | |||||||||||||
| 2025 | 2024 | $ Increase/(Decrease) | % Change | |||||||||||
| Other Operating Expenses | $355,225 | $303,952 | $51,273 | 16.9% | ||||||||||
Other operating expenses, which include outside services, software licensing fees, repair and maintenance, and utilities, have increased $51.3 million, or 16.9%, to approximately $314.6 million for the year ended December 31, 2025 compared to $275.6 million for the year ended December 31, 2024. The increase was primarily attributable to higher professional fees associated with acquisition activity, increased contractor services, and higher equipment and maintenance costs. In addition, certain increases relate to intersegment software licensing fees from the Digital Health segment, which are eliminated in consolidation and therefore impact segment operating results but not consolidated operating income.
Additional segment operating and non-operating expenses:
| In Thousands | Years Ended December 31, | |||||||||||||
| 2025 | 2024 | $ Increase/(Decrease) | % Change | |||||||||||
| Depreciation and Amortization | $136,297 | $127,142 | $9,155 | 7.2% | ||||||||||
| Loss on disposal of equipment and other | $9,821 | $2,257 | $7,564 | 335.1% | ||||||||||
| Other income | ($32,066) | ($30,336) | ($1,730) | 5.7% | ||||||||||
| Debt restructuring and extinguishment expenses | $- | $11,292 | ($11,292) | (100.0)% | ||||||||||
| Severance | $1,797 | $1,095 | $702 | 64.1% | ||||||||||
The increase in depreciation expense was due to higher depreciable asset base, mainly driven by our expanded locations.
The increase in loss on disposal of equipment was primarily driven by a higher volume of fixed asset disposals during the period. These disposals reflect a strategic initiative to replace legacy imaging units with newer AI-enabled and other advanced technologies intended to enhance operational efficiency, clinical capabilities, and long-term productivity.
Other income primarily consists of interest income earned on our cash and cash equivalents.
Lease abandonment charges
| In Thousands | Years Ended December 31, | |||||||||||||
| 2025 | 2024 | $ Increase/(Decrease) | % Change | |||||||||||
| Lease abandonment charges | $8,563 | 2,478 | $6,085 | 246 | % | |||||||||
We closely monitor patient levels at our imaging centers and occasionally divest or shut down centers to maximize utilization rates. We may abandon low utilization leases and divert the patients to nearby centers.
During year ended 2025, we experienced lower utilization at seven imaging centers. As a result, we abandoned the leases related to these locations at the end of 2025 and diverted the patients to our other sites in the area. We recorded a charge of approximately $8.6 million in December 2025 related to lease facilities abandonment. The lease abandonment charges include the impairment of associated right-of-use assets of $6.7 million and write off of related leasehold improvements of approximately $1.9 million.
Digital Health Segment
Our Digital Health 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. The breakdown of revenue and expenses of the segment for the years ended December 31, 2025 and 2024 are as follows:
| In Thousands | Years Ended December 31, | ||||||||||
| 2025 | 2024 | $ change | |||||||||
| Revenue | $ | 92,691 | $ | 65,706 | $ | 26,985 | |||||
| Salaries and Wages | 45,207 | 26,569 | 18,638 | ||||||||
| Stock Compensation | 9,927 | 2,971 | 6,956 | ||||||||
| Other operating | 32,683 | 24,578 | 8,105 | ||||||||
| Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI | 20,155 | 14,995 | 5,160 | ||||||||
| Depreciation & Amort. | 15,831 | 10,696 | 5,135 | ||||||||
| Other operating (gain) loss | (163) | 19 | (182) | ||||||||
| Severance | 1,348 | 807 | 541 | ||||||||
| Total operating expenses | 124,988 | 80,635 | 44,353 | ||||||||
| Loss from operations | (32,297) | (14,929) | (17,368) | ||||||||
Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024
For the year ended December 31, 2025, Digital Health segment revenues increased $27.0 million or 41.1%, to $92.7 million, compared to $65.7 millionfor the year ended December 31, 2024. The growth was primarily driven by a 64.9% increase in AI-related revenue and a 29.0% increase in Enterprise Imaging revenue.
External revenue represented 55.3% of total segment revenue for 2025. During the year, the segment's customer base expanded from 486 to 2,075, and procedure volumes increased from 19.1 million to 24.1 million, primarily reflecting the addition of iCAD.
Annual Recurring Revenue or ARR, at the end of 2025 was $75 million. The Company defines Annual Recurring Revenue ("ARR") as a key subscription economy metric representing the predictable, normalized annualized value of contracted recurring revenue generated from customers from active customer contracts. ARR includes subscription fees,
recurring support fees, and contracted usage charges and excludes one-time, non-recurring fees such as, implementation, hardware sales, professional services, consulting and one-off training. ARR is a non-GAAP measure and does not represent GAAP revenue recognized over time.
For the year ended December 31, 2025, results reflect steady organic growth prior to the acquisition and a sharp acceleration in the third quarter following the inclusion of iCAD, highlighting that recent performance was driven primarily by external expansion rather than internal volume increases.
Segment operating expenses increased year over year due to the addition of new costs resulting from acquisitions (iCAD, SeeMode, and CIMAR); investments in the personnel, increased stock-based compensation commensurate with the growing organization, and higher non-capitalized R&D costs, reflecting continued investment in scaling our platforms for broader deployment. We expect the segment to continue operating at a net loss in the near term as integration of iCAD, Inc., See-Mode Technologies, and CIMAR UK progresses.
Consolidated
Interest expense
| In Thousands | Years Ended December 31, | |||||||||||||
| Interest Expense | 2025 | 2024 | $ Increase/(Decrease) | % Change | ||||||||||
| Total Interest Expense | $69,913 | $79,849 | ($9,936) | (12.4)% | ||||||||||
| Interest related to derivatives* | 5,004 | 762 | ||||||||||||
| Interest related to amortization** | (3,014) | (2,276) | ||||||||||||
| Adjusted Interest Expense*** | $71,903 | $78,335 | $(6,433) | (8.2)% | ||||||||||
*Includes payments from 2019 swaps, inclusive of amortization of other comprehensive income
**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 decrease in interest expense was primarily due to the repricing transaction of our Barclays Revolving Credit Facility (as defined in the notes to our consolidated financial statements) in the fourth quarter of 2024, which resulted in lower interest rates compared to the same period in the prior year. This benefit was partially offset by the $100.0 million of incremental term loan borrowings under our existing Barclays Revolving Credit Facility in the second quarter of 2025. See Note 8, Credit Facilities and Notes Payable, included in the notes to our consolidated financial statements.
During the year ended December 31, 2025, interest rates were above the arranged rates in our 2019 Swaps for most of the year and we received $7.9 million in cash payments from our 2019 swap counterparties, which were reported as a component of interest expense. Also, the 2019 Swaps for $100 million of notional value matured in October 2023, and were not in effect in 2024. 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.
Non-cash change in fair value of interest rate hedge
In 2020, we determined that the cash flows from the 2019 swaps did not match the cash flows of our Barclays Term Loan and were therefore ineffective as cash flow hedges. Since that time, in accordance with accounting guidelines, all changes in fair value are being recognized in other income and expense.
The fair value of the 2019 swaps as of December 31, 2025 was a net asset of $0.0 million compared to a net asset of $7.1 million as of December 31, 2024, resulting in a loss $7.1 million during the year ended December 31, 2025. The decrease in fair value was primarily attributable to the expiration of the 2019 swaps during 2025, which reduced the remaining contractual term to zero.
Equity in earnings from unconsolidated joint ventures
For the year ended December 31, 2025 we recognized equity in earnings from unconsolidated joint ventures of $14.9 million versus $14.5 million for the year ended December 31, 2024, an increase of $0.4 million or 2.8%.
Net income attributable to noncontrolling interests
As of December 31, 2025, our consolidated subsidiaries operated 368 imaging centers of which 101 were not wholly-owned and thus a portion of their operating results were attributable to noncontrolling interests. At December 31, 2024, our consolidated subsidiaries included 345 centers of which 100 were not wholly-owned. As noncontrolling interests only represent a portion of our imaging center business, and excludes our Digital Health segment which generated losses of $30.3 million in 2025, 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 year ended December 31, 2025, we recognized net income attributable to noncontrolling interests of $35.7 million versus $36.0 million for the year ended December 31, 2024, a decrease of $0.3 million.
Non-GAAP Financial Measures
We use both GAAP and non-GAAP metrics to measure our financial results. We believe that, in addition to GAAP metrics, non-GAAP metrics such as Adjusted EBITDA assist us in measuring our core operations from period to period.
Adjusted EBITDA
Our Adjusted EBITDA metric removes non-cash and non-recurring charges that occur in the affected period and provides a basis for measuring the Company's core financial performance against other periods.
We define Adjusted EBITDA as earnings before interest, taxes, depreciation, and amortization, as adjusted to exclude losses or gains on the disposal of equipment, other income or loss, loss on debt extinguishment, bargain purchase gains, loss on de-consolidation of joint ventures, gain on contribution of imaging centers into joint ventures, and non-cash equity compensation. Adjusted EBITDA includes equity earnings in unconsolidated operations and subtracts allocations of earnings to non-controlling interests in subsidiaries, and is adjusted for non-cash or one-time events that take place during the period.
Adjusted EBITDA is a non-GAAP financial measure used as an analytical indicator by us and the healthcare industry to assess business performance. Adjusted EBITDA should not be considered a measure of financial performance under GAAP, and Adjusted EBITDA should not be considered in isolation or as alternatives to net income, or other financial statement data presented in the consolidated financial statements as an indicator of financial performance. Adjusted 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.
The following is a reconciliation of the nearest comparable GAAP financial measure, net income, to Adjusted EBITDA for the years ended December 31, 2025, 2024, and 2023, respectively (in thousands):
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Net (Loss) Income Attributable To Radnet, Inc. Common Stockholders | $ | (18,652) | $ | 2,793 | $ | 3,044 | |||||||||||
| Income taxes | 14,862 | 6,026 | 8,473 | ||||||||||||||
| Interest expense | 69,913 | 79,849 | 64,483 | ||||||||||||||
| Severance costs | 3,145 | 1,902 | 3,778 | ||||||||||||||
| Depreciation and amortization | 152,127 | 137,838 | 128,391 | ||||||||||||||
| Non-cash employee stock-based compensation | 54,601 | 29,833 | 26,785 | ||||||||||||||
| Loss on sale and disposal of equipment and other | 9,658 | 2,276 | 2,187 | ||||||||||||||
| Non-cash change in fair value of interest rate hedge | 7,112 | 8,006 | 8,185 | ||||||||||||||
| Other (income) expenses | (32,066) | (24,916) | (6,354) | ||||||||||||||
| Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI | 20,155 | 14,995 | 1,308 | ||||||||||||||
| Lease abandonment charges | 8,563 | 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 | - | ||||||||||||||
| Non-cash change to contingent consideration | 110 | 1,974 | (4,075) | ||||||||||||||
| Acquisition related non-cash intangible adjustment | - | - | 3,950 | ||||||||||||||
| Non-operational rent expenses | 3,247 | 4,233 | 3,629 | ||||||||||||||
| Acquisition transaction costs | 7,446 | 880 | 222 | ||||||||||||||
| Adjusted EBITDA - Radnet, Inc. | $300,221 | $279,459 | $232,344 | ||||||||||||||
| NOTE | |||||||||||||||||
| Adjusted EBITDA - Imaging Center Segment | 284,710 | 264,901 | 225,846 | ||||||||||||||
| Adjusted EBITDA - Digital Health Segment | $ | 15,511 | $ | 14,558 | $ | 6,498 | |||||||||||
The following table is a reconciliation of GAAP net income for our Digital Health Segment to Adjusted EBITDA for the years ended December 31, 2025, 2024 and 2023 respectively.
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Segment net loss | $ | (30,299) | $ | (19,925) | $ | (5,154) | |||||||||||
| Stock Compensation | 9,927 | 2,971 | 2,211 | ||||||||||||||
| Depreciation & Amortization | 15,831 | 10,696 | 8,250 | ||||||||||||||
| Other operating loss | (163) | 19 | (4) | ||||||||||||||
| Other income | - | 5,419 | 4,537 | ||||||||||||||
| Severance | 1,348 | 807 | 1,805 | ||||||||||||||
| Income taxes | (2,011) | (424) | (1,906) | ||||||||||||||
| Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI | 20,155 | 14,995 | - | ||||||||||||||
| Non-cash change to contingent consideration | 710 | - | (7,191) | ||||||||||||||
| Acquisition related to non-cash intangible adjustment | - | - | 3,950 | ||||||||||||||
| Adjusted EBITDA - Digital Health Segment | $ | 15,511 | $ | 14,558 | $ | 6,498 | |||||||||||
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. 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. Accordingly, we believe that our current sources of funds will provide us with adequate liquidity during the 12-month period following December 31, 2025, as well as in the long-term.
The following table summarizes key balance sheet data as of December 31, 2025 and December 31, 2024 and income statement data for the years ended December 31, 2025, 2024 and 2023 (in thousands):
| Balance Sheet Data as of December 31, | 2025 | 2024 | |||||||||
| Cash and cash equivalents | $ | 767,215 | $ | 740,020 | |||||||
| Accounts receivable | 200,317 | 185,821 | |||||||||
| Working capital (exclusive of current operating lease liability) | 507,298 | 596,158 | |||||||||
| Stockholders' equity | 1,355,886 | 1,133,410 | |||||||||
| Income Statement data for the years ended December 31, | 2025 | 2024 | 2023 | ||||||||||||||
| Total revenue | $ | 2,040,210 | $ | 1,829,664 | $ | 1,616,630 | |||||||||||
|
Net (loss) income attributable to RadNet, Inc. common stockholders
|
(18,652) | 2,793 | 3,044 | ||||||||||||||
We operate in a capital intensive, high fixed-cost industry that requires significant amounts of capital to fund operations. In addition to ongoing operations, we invest in the purchase of imaging facilities, the acquisition of equipment, and the acquisition of technology to fund our growth. If economic or global business conditions slowed, we expect that we will be able to adjust the pace of our investment activities.
We continually evaluate our cash needs and may decide it is best to raise additional capital or seek alternative financing sources to fund the rapid growth of our business, including through draw-downs on existing or new debt facilities or financing funds.We expect to fund any future capital requirements primarily with cash flow from operations and borrowings, including borrowing from amounts available under our senior secured credit facilities or through new equity or debt issuances. We and our subsidiaries or affiliates may from time to time, in our sole discretion, purchase, repay, redeem, or retire any of our outstanding debt or equity securities in privately negotiated or open market transactions, by tender offer or otherwise.
Sources and Uses of Cash
The following table summarizes key components of our sources and uses of cash for the years ended December 31, 2025, 2024 and 2023, respectively, in thousands:
| Cash Flow Data | 2025 | 2024 | 2023 | ||||||||||||||
| Cash provided by operating activities | $ | 298,820 | $ | 233,023 | $ | 220,863 | |||||||||||
| Cash used in investing activities | (343,865) | (233,070) | (201,470) | ||||||||||||||
| Cash provided by financing activities | 72,207 | 397,950 | 195,635 | ||||||||||||||
Cash provided by operating activities for the year ended December 31, 2025 included $308.6 million of net income, adjusted for non-cash items such as depreciation and amortization, non-cash lease expense, stock-based compensation and deferred taxes, offset by a $9.8 million change in assets and liabilities. The $65.8 million increase in cash provided by operating activities for the year ended December 31, 2025 compared to December 31, 2024 was primarily driven by favorable changes in working capital.
Cash used in investing activities for the year ended December 31, 2025 increased from the year ended December 31, 2024 by $110.8 million. Purchases of imaging centers and other acquisitions during the period was $133.4 million, a $89.8 million increase from the prior period. Cash payments for capital expenditures on property and equipment during the period was $213.3 million, a $25.2 million increase from the prior period.
Cash provided by financing activities for the year ended December 31, 2025 decreased by $325.7 million compared to the year ended December 31, 2024. Financing activity in 2024 included a public equity offering that generated $218.4 million in net proceeds and a refinancing of the Barclays Revolving Credit Facility that resulted in an additional $167.9 million of cash. In 2025, financing activity primarily consisted of a $100.0 million incremental term loan under the Barclays Credit Agreement, partially offset by repayment of term loans, notes, and lease payables of $27.8 million.
Based on current operating performance, cash on hand and available borrowing capacity, management believes the Company has sufficient liquidity to meet its short-term working capital needs and contractual obligations.
Over the long term, the Company expects to fund operations, capital expenditures and acquisitions through a combination of cash generated from operations, available credit facilities and access to capital markets, as appropriate.
Senior Credit Facilities:
We maintain secured credit facilities with Barclays Bank PLC and Truist Bank.
On April 18, 2024, we refinanced our Barclays Credit Facility, replacing the prior facility with an $875.0 million term loan and a $282.0 million revolving credit facility. The refinance transaction reduced our interest rates on the Barclays Term Loan and Revolving Credit Facility and extended the maturity date for the term loan to April 18, 2031, and for the revolving credit facility to April 18, 2029. The new term loan calls for quarterly principal payments of $2.2 million, compared to $1.8 million under the prior credit facility.
Included in our consolidated balance sheet at December 31, 2025 are $1,072.6 million of total term loan debt (net of unamortized discounts of $12.2 million) displayed below in thousands:
| Face Value | Discount |
Total Carrying Value |
|||||||||||||||
| Barclays Term Loans | $ | 961,119 | $ | (11,759) | $ | 949,360 | |||||||||||
| Truist Term Loan | 123,750 | (462) | 123,288 | ||||||||||||||
| Total Term Loans | $ | 1,084,869 | $ | (12,221) | $ | 1,072,648 | |||||||||||
We had no outstanding balance under our $282.0 million Barclays Revolving Credit Facility as of December 31, 2025 and had reserved $9.0 million for certain letters of credit. The remaining $273.0 million of our Barclays Revolving Credit Facility was available to draw upon as of December 31, 2025. We also had no balance under our $50.0 million Truist Revolving Credit Facility as of December 31, 2025, and with no letters of credit reserved against the facility, the full amount was available to draw upon. 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.
Contractual Commitments
Our future obligations for notes payable, lines of credit, and equipment and building operating leases for the next five years and thereafter include (dollars in thousands):
| 2025 | 2026 | 2027 | 2028 | 2029 | Thereafter | Total | ||||||||||||||||||||||||||||||||||||||
| Notes payable | $ | 27,928 | $ | 129,447 | $ | 12,673 | $ | 10,003 | $ | 9,758 | $ | 912,331 | $ | 1,102,140 | ||||||||||||||||||||||||||||||
| Interest and fees on notes payable | 67,908 | 65,272 | 70,382 | 58,743 | 58,142 | 18,980 | 339,427 | |||||||||||||||||||||||||||||||||||||
| Operating leases (1) | 113,443 | 112,258 | 110,435 | 100,428 | 97,619 | 582,128 | 1,116,310 | |||||||||||||||||||||||||||||||||||||
| Total | $ | 209,279 | $ | 306,977 | $ | 193,490 | $ | 169,174 | $ | 165,519 | $ | 1,513,439 | $ | 2,557,877 | ||||||||||||||||||||||||||||||
(1)Includes interest component of operating lease obligations.
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 $34.0 million in 2026.
Critical Accounting Policies
The SEC defines critical accounting estimates as those that are both most important to the portrayal of a company's financial condition and results of operations and require management's most difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. In Note 2 to our consolidated financial statements in this annual report on Form 10-K, we discuss our significant accounting policies, including those that do not require management to make difficult, subjective, or complex judgments or estimates. The critical areas involving management's judgments and estimates are described below.
USE OF ESTIMATES - The financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP), which requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates and assumptions affect various matters, including our reported amounts of assets and liabilities in our consolidated balance sheets at the dates of the financial statements, our disclosure of contingent assets and liabilities at the dates of the financial statements, and our reported amounts of revenues and expenses in our consolidated statements of operations during the reporting periods. These estimates involve judgments with respect to numerous factors that are difficult to predict and are beyond management's control. As a result, actual amounts could materially differ from these estimates.
REVENUES - Our revenues generally relate to net patient fees that we receive from various payors and patients themselves under contracts in which our performance obligations are to provide diagnostic services to the patients. Revenues are recorded during the period when our obligations to provide diagnostic services are satisfied. Our performance obligations for diagnostic services are generally satisfied over a period of less than one day. The contractual relationships with patients, in most cases, also involve a third-party payor (Medicare, Medicaid, managed care health plans and commercial insurance companies, including plans offered through the health insurance exchanges) and the transaction prices for the services provided are dependent upon the terms provided by Medicare and Medicaid, or negotiated with managed care health plans and commercial insurance companies. The payment arrangements with third-party payors for the services we provide to the related patients typically specify payments at amounts less than our standard charges and generally provide for payments based upon predetermined rates per diagnostic services or discounted fee-for-service rates. Management continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations and the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals.
As it relates to the Group (as defined in Item 1 of this Form 10-K), this service fee revenue includes payments for both the professional medical interpretation revenue recognized by them as well as the payment for all other aspects related to our providing the imaging services, for which we earn management fees. As it relates to 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, digital health support services, and advertising, marketing, and promotional activities.
Our revenues are based upon the estimated amounts we expect to be entitled to receive from patients and third-party payors. Estimates of contractual allowances under managed care and commercial insurance plans are based upon the payment terms specified in the related contractual agreements. Revenues related to uninsured patients and copayment and deductible amounts for patients who have health care coverage may have discounts applied (uninsured discounts and contractual discounts). We also record estimated implicit price concessions (based primarily on historical collection experience) related to uninsured accounts to record self-pay revenues at the estimated amounts we expect to collect.
Under capitation arrangements with various health plans, we earn a per-enrollee amount each month for making available diagnostic imaging services to all plan enrollees under the capitation arrangement. Revenue under capitation arrangements is recognized in the period in which we are obligated to provide services to plan enrollees under contracts with various health plans.
ACCOUNTS RECEIVABLE - Substantially all of our accounts receivable are due under fee-for-service contracts from third-party payors, such as insurance companies and government-sponsored healthcare programs, or directly from patients. Services are generally provided pursuant to one-year contracts with healthcare providers. We continuously monitor
collections from our payors and maintain an allowance for credit losses based upon specific payor collection issues that we have identified and our historical experience.
BUSINESS COMBINATIONS - When the qualifications for business combination accounting treatment are met, it requires us to recognize separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations.
Recent Accounting Standards
See Note 3, Recent Accounting Standards, in the notes accompanying the consolidated financial statements included in this report for further information.
Additional Information
Additional information concerning RadNet, Inc., including our consolidated subsidiaries, for each of the years ended December 31, 2025, 2024, and 2023 is included in the consolidated financial statements and notes thereto in this report.
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