Attached files
| file | filename |
|---|---|
| 8-K/A - RadNet, Inc. | v208005_8ka.htm |
Exhibit
99.2
Unaudited
Pro Forma Condensed Consolidated Financial Statements
On
October 1, 2010, Radnet, Inc. (“RadNet”) completed its acquisition of Image
Medical Corporation, parent of eRAD Inc. (“eRAD”). The following unaudited pro
forma condensed consolidated financial statements have been prepared to give
effect to the completed acquisition, which was accounted for as an
acquisition.
The
unaudited pro forma condensed consolidated balance sheet as of September 30,
2010, and the unaudited pro forma condensed consolidated statements of
operations for the nine months ended September 30, 2010 and the year ended
December 31, 2009, are presented herein. The unaudited pro forma condensed
consolidated balance sheet was prepared using the historical balance sheets of
RadNet and eRAD as of September 30, 2010. The unaudited pro forma condensed
consolidated statements of operations were prepared using the historical
statements of operations of RadNet and eRAD for the nine months ended September
30, 2010 and for the year ended December 31, 2009.
The
unaudited pro forma condensed consolidated balance sheet gives effect to the
acquisition as if it had been completed on September 30, 2010, and consolidates
the unaudited condensed balance sheet of RadNet and eRAD. The unaudited pro
forma condensed consolidated statements of operations for the nine months ended
September 30, 2010 and for the year ended December 31, 2009 give effect to
the acquisition as if it had occurred on January 1, 2009.
The
unaudited pro forma condensed consolidated financial statements presented are
based on the assumptions and adjustments described in the accompanying notes.
The unaudited pro forma condensed consolidated financial statements are
presented for illustrative purposes and do not purport to represent what the
financial position or results of operations actually would have been if the
events described above occurred as of the dates indicated or what such financial
position or results would be for any future periods. The unaudited pro forma
condensed consolidated financial statements, and the accompanying notes, are
based upon the respective historical consolidated financial statements of RadNet
and eRAD, and should be read in conjunction with RadNet’s historical financial
statements and related notes, RadNet’s “Management’s Discussion and Analysis of
Financial Condition and Results of Operation” contained in RadNet’s Annual
Report on Form 10-K for the year ended December 31, 2009, and eRAD’s
financial statements presented herein.
RADNET,
INC.
UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(IN
THOUSANDS)
As
of September 30, 2010
|
Pro
forma
|
Pro
forma
|
|||||||||||||||
|
RadNet
|
eRAD
|
adjustments
|
combined
|
|||||||||||||
|
ASSETS
|
||||||||||||||||
|
CURRENT
ASSETS
|
||||||||||||||||
|
Cash
and cash equivalents
|
$ | 24,462 | $ | 51 | $ | (8,500 | )(a) | $ | 16,013 | |||||||
|
Accounts
receivable, net
|
94,604 | 733 | - | 95,337 | ||||||||||||
|
Prepaid
expenses and other current assets
|
16,472 | 57 | - | 16,529 | ||||||||||||
|
Total
current assets
|
135,538 | 841 | (8,500 | ) | 127,879 | |||||||||||
|
PROPERTY
AND EQUIPMENT, NET
|
190,031 | 291 | - | (i) | 190,322 | |||||||||||
|
OTHER
ASSETS
|
||||||||||||||||
|
Goodwill
|
125,011 | - | 7,287 | (b) | 132,298 | |||||||||||
|
Other
intangible assets
|
52,569 | - | 4,343 | (b) | 56,912 | |||||||||||
|
Deferred
financing costs, net
|
16,003 | - | - | 16,003 | ||||||||||||
|
Investment
in joint ventures
|
16,020 | - | - | 16,020 | ||||||||||||
|
Deposits
and other
|
2,478 | 6 | - | 2,484 | ||||||||||||
|
Total
assets
|
$ | 537,650 | $ | 1,138 | $ | 3,130 | $ | 541,919 | ||||||||
|
LIABILITIES
AND EQUITY DEFICIT
|
||||||||||||||||
|
CURRENT
LIABILITIES
|
||||||||||||||||
|
Accounts
payable and accrued expenses
|
$ | 84,640 | $ | 628 | $ | - | $ | 85,268 | ||||||||
|
Deferred
compensation payable
|
- | 2,031 | (2,031 | )(c) | - | |||||||||||
|
Deferred
revenue
|
- | 1,361 | - | 1,361 | ||||||||||||
|
Due
to affiliates
|
2,382 | - | - | 2,382 | ||||||||||||
|
Current
portion of notes payable
|
8,043 | 6,118 | (6,118 | )(d) | 8,043 | |||||||||||
|
Current
portion of deferred rent
|
717 | 4 | - | 721 | ||||||||||||
|
Obligations
under capital leases, current portion
|
10,227 | 9 | - | 10,236 | ||||||||||||
|
Total
current liabilities
|
106,009 | 10,150 | (8,148 | ) | 108,010 | |||||||||||
|
LONG-TERM
LIABILITIES
|
||||||||||||||||
|
Deferred
rent, net of current portion
|
10,638 | 10 | - | 10,648 | ||||||||||||
|
Deferred
taxes
|
277 | - | - | 277 | ||||||||||||
|
Notes
payable, net of current portion
|
480,684 | - | - | 480,684 | ||||||||||||
|
Notes
payable to eRAD shareholders
|
- | - | 2,250 | (e) | 2,250 | |||||||||||
|
Obligations
under capital leases, net of current portion
|
6,565 | 7 | - | 6,572 | ||||||||||||
|
Other
non-current liabilities
|
21,004 | - | - | 21,004 | ||||||||||||
|
Total
liabilities
|
625,177 | 10,167 | (5,898 | ) | 629,446 | |||||||||||
|
COMMITMENTS
AND CONTINGENCIES
|
||||||||||||||||
|
EQUITY
DEFICIT
|
||||||||||||||||
|
Common
stock
|
4 | - | - | 4 | ||||||||||||
|
Paid-in-capital
|
161,018 | 4,460 | (4,460 | )(f) | 161,018 | |||||||||||
|
Accumulated
other comprehensive loss
|
(2,453 | ) | - | - | (2,453 | ) | ||||||||||
|
Accumulated
deficit
|
(246,141 | ) | (13,489 | ) | 13,489 | (g) | (246,141 | ) | ||||||||
|
Total
Radnet, Inc.'s equity deficit
|
(87,572 | ) | (9,029 | ) | 9,029 | (87,572 | ) | |||||||||
|
Noncontrolling
interests
|
45 | - | - | 45 | ||||||||||||
|
Total
equity deficit
|
(87,527 | ) | (9,029 | ) | 9,029 | (87,527 | ) | |||||||||
|
Total
liabilities and equity deficit
|
$ | 537,650 | $ | 1,138 | $ | 3,130 | $ | 541,919 | ||||||||
See
accompanying notes to the unaudited pro forma condensed consolidated financial
statements.
RADNET,
INC.
UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN
THOUSANDS EXCEPT SHARE DATA)
For
the nine months ended September 30, 2010
|
Pro
forma
|
Pro
forma
|
|||||||||||||||
|
RadNet
|
eRAD
|
adjustments
|
combined
|
|||||||||||||
|
NET
REVENUE
|
$ | 403,222 | $ | 3,761 | $ | - | $ | 406,983 | ||||||||
|
OPERATING
EXPENSES
|
||||||||||||||||
|
Cost
of operations
|
311,478 | 3,576 | - | 315,054 | ||||||||||||
|
Depreciation
and amortization
|
40,153 | 57 | 693 | (i) | 40,903 | |||||||||||
|
Provision
for bad debts
|
24,603 | - | - | 24,603 | ||||||||||||
|
Loss
on sale of equipment
|
606 | - | - | 606 | ||||||||||||
|
Severance
costs
|
731 | - | - | 731 | ||||||||||||
|
Total
operating expenses
|
377,571 | 3,633 | 693 | 381,897 | ||||||||||||
|
INCOME
FROM OPERATIONS
|
25,651 | 128 | (693 | ) | 25,086 | |||||||||||
|
OTHER
EXPENSES
|
||||||||||||||||
|
Interest
expense
|
35,477 | 48 | 386 | (h) | 35,911 | |||||||||||
|
Loss
on extinguishment of debt
|
9,871 | - | - | 9,871 | ||||||||||||
|
Other
expenses
|
1,971 | 6 | - | 1,977 | ||||||||||||
|
Total
other expenses
|
47,319 | 54 | 386 | 47,759 | ||||||||||||
|
INCOME
(LOSS) BEFORE INCOME TAXES AND EQUITY
|
||||||||||||||||
|
IN
EARNINGS OF JOINT VENTURES
|
(21,668 | ) | 74 | (1,079 | ) | (22,673 | ) | |||||||||
|
Benefit
from (provision for) income taxes
|
(523 | ) | 2 | - | (521 | ) | ||||||||||
|
Equity
in earnings of joint ventures
|
6,114 | - | 6,114 | |||||||||||||
|
NET
INCOME (LOSS)
|
(16,077 | ) | 76 | (1,079 | ) | (17,080 | ) | |||||||||
|
Net
income attributable to noncontrolling interests
|
75 | - | - | 75 | ||||||||||||
|
NET INCOME
(LOSS) ATTRIBUTABLE TO RADNET, INC.
|
||||||||||||||||
|
COMMON
STOCKHOLDERS
|
$ | (16,152 | ) | $ | 76 | $ | (1,079 | ) | $ | (17,155 | ) | |||||
|
BASIC
AND DILUTED NET LOSS PER SHARE
|
||||||||||||||||
|
ATTRIBUTABLE
TO RADNET, INC.
|
||||||||||||||||
|
COMMON
STOCKHOLDERS
|
$ | (0.44 | ) | $ | (0.47 | ) | ||||||||||
|
WEIGHTED
AVERAGE SHARES OUTSTANDING
|
||||||||||||||||
|
Basic
and diluted
|
36,755,781 | 36,755,781 | ||||||||||||||
See
accompanying notes to the unaudited pro forma condensed consolidated financial
statements.
RADNET,
INC.
UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN
THOUSANDS EXCEPT SHARE DATA)
For
the year ended December 31, 2009
|
Pro
forma
|
Pro
forma
|
|||||||||||||||
|
RadNet
|
eRAD
|
adjustments
|
combined
|
|||||||||||||
|
NET
REVENUE
|
$ | 524,368 | $ | 4,771 | $ | - | $ | 529,139 | ||||||||
|
OPERATING
EXPENSES
|
||||||||||||||||
|
Cost
of operations
|
397,753 | 5,220 | - | 402,973 | ||||||||||||
|
Depreciation
and amortization
|
53,800 | 62 | 924 | (i) | 54,786 | |||||||||||
|
Provision
for bad debts
|
32,704 | - | - | 32,704 | ||||||||||||
|
Loss
on sale of equipment
|
523 | - | - | 523 | ||||||||||||
|
Severance
costs
|
731 | - | - | 731 | ||||||||||||
|
Total
operating expenses
|
485,511 | 5,282 | 924 | 491,717 | ||||||||||||
|
INCOME
(LOSS) FROM OPERATIONS
|
38,857 | (511 | ) | (924 | ) | 37,422 | ||||||||||
|
OTHER
EXPENSES
|
||||||||||||||||
|
Interest
expense
|
49,193 | 197 | 505 | (h) | 49,895 | |||||||||||
|
Gain
on bargain purchase
|
(1,387 | ) | - | - | (1,387 | ) | ||||||||||
|
Other
expenses (income)
|
1,239 | (4 | ) | - | 1,235 | |||||||||||
|
Total
other expenses
|
49,045 | 193 | 505 | 49,743 | ||||||||||||
|
LOSS
BEFORE INCOME TAXES AND EQUITY
|
||||||||||||||||
|
IN
EARNINGS OF JOINT VENTURES
|
(10,188 | ) | (704 | ) | (1,429 | ) | (12,321 | ) | ||||||||
|
Provision
for income taxes
|
(443 | ) | (12 | ) | - | (455 | ) | |||||||||
|
Equity
in earnings of joint ventures
|
8,456 | - | 8,456 | |||||||||||||
|
NET
LOSS
|
(2,175 | ) | (716 | ) | (1,429 | ) | (4,320 | ) | ||||||||
|
Net
income attributable to noncontrolling interests
|
92 | - | 92 | |||||||||||||
|
NET
LOSS ATTRIBUTABLE TO RADNET, INC.
|
||||||||||||||||
|
COMMON
STOCKHOLDERS
|
$ | (2,267 | ) | $ | (716 | ) | $ | (1,429 | ) | $ | (4,412 | ) | ||||
|
BASIC
AND DILUTED NET LOSS PER SHARE
|
||||||||||||||||
|
ATTRIBUTABLE
TO RADNET, INC.
|
||||||||||||||||
|
COMMON
STOCKHOLDERS
|
$ | (0.06 | ) | $ | (0.12 | ) | ||||||||||
|
WEIGHTED
AVERAGE SHARES OUTSTANDING
|
||||||||||||||||
|
Basic
and diluted
|
36,047,033 | 36,047,033 | ||||||||||||||
See
accompanying notes to the unaudited pro forma condensed consolidated financial
statements.
RadNet,
Inc.
Notes
to Unaudited Pro Forma Condensed Consolidated Financial Statements
Note
1. Basis
of Presentation
The unaudited pro forma condensed
consolidated statements of operations of RadNet, Inc. (“RadNet”) for the nine
months ended September 30, 2010 and the year ended December 31, 2009 give
effect to the acquisition of Image Medical Corporation, parent of eRAD, Inc.
(“eRAD”) as if it had been completed on January 1, 2009. The unaudited pro
forma condensed consolidated balance sheet as of September 30, 2010 gives effect
to the acquisition of eRAD as if it had occurred on September 30,
2010.
The
unaudited pro forma condensed consolidated statements of operations and
unaudited pro forma condensed consolidated balance sheet were derived by
adjusting RadNet’s historical financial statements for the acquisition of eRAD.
The unaudited pro forma condensed consolidated balance sheet and unaudited pro
forma condensed consolidated statement of operations are provided for
informational purposes only and should not be construed to be indicative of
RadNet’s financial position or results of operations had the transaction been
consummated on the dates indicated and do not project RadNet’s financial
position or results of operations for any future period or date.
The
unaudited pro forma condensed consolidated balance sheet and unaudited condensed
consolidated statements of operations and accompanying notes should be read in
conjunction with RadNet’s historical financial statements and related notes,
RadNet’s “Management’s Discussion and Analysis of Financial Condition and
Results of Operation” contained in RadNet’s Annual Report on Form 10-K for the
year ended December 31, 2009, and eRAD’s financial statements presented
herein.
Note
2. Preliminary
Purchase Price
The
unaudited pro forma condensed consolidated financial statements reflect a
purchase price of $10,750,000. RadNet paid $8,500,000 of the purchase price in
cash, and paid the remainder of the purchase price through the issuance of
promissory notes to the shareholders of eRAD totaling $2,250,000.
The
preliminary purchase price allocation as of September 30, 2010, subject to
change pending completion of the final valuation and analysis, is as follows (in
thousands):
|
Tangible
assets
|
$
|
1,138
|
||
|
Goodwill
|
7,287
|
|||
|
Developed
technology and in-process R&D
|
2,688
|
|||
|
Trade
name and customer relationships
|
1,655
|
|||
|
Total
assets acquired
|
12,768
|
|||
|
Liabilities
assumed
|
(2,018
|
)
|
||
|
Net
assets acquired
|
$
|
10,750
|
Goodwill
represents the excess of the purchase price over the fair value of the net
assets acquired. Developed technology is being amortized on a straight-line
basis over five years.
Note
3. Pro
Forma Adjustments
The
following pro forma adjustments are based upon management’s preliminary
estimates of the value of the tangible and intangible assets acquired. These
estimates are subject to finalization.
|
|
(a)
|
Represents the funds used for the
acquisition.
|
|
|
(b)
|
Represents $7,287,000 of goodwill
and $4,343,000 of other intangible assets resulting from the transaction,
as if the acquisition had been completed on October 1, 2010. The final
valuation of the purchase price allocation between goodwill and
identifiable intangible assets has not yet been completed. These amounts
represent RadNet’s best estimates and are subject to change pending
completion of the final valuation and
analysis.
|
|
|
(c)
|
Represents obligations under a
deferred compensation policy that were settled using part of the
$10,750,000 purchase price.
|
|
|
(d)
|
Represents loans payable to
certain shareholders of eRAD that were settled using part of the
$10,750,000 purchase price.
|
|
|
(e)
|
Represents promissory notes
issued to the shareholders of eRAD as explained in Note 2
above.
|
|
|
(f)
|
Represents the elimination of the
capital stock of eRAD upon RadNet’s purchase of
eRAD.
|
|
|
(g)
|
Represents the elimination of
eRAD’s accumulated deficit upon RadNet’s purchase of
eRAD.
|