RadNet Reports 2007 Annual and Fourth Quarter Results

Business Wire, March 31, 2008

* For the year, RadNet reports Adjusted Revenue((1)) of $434.0 million and Adjusted EBITDA((2))of $85.3 million; increases of 4.3% and 9.5%, respectively over the prior year's pro forma results

* For the fourth quarter, RadNet reports Adjusted Revenue((1)) of $110.9 million and Adjusted EBITDA((2)) of $20.4 million; increases of 8.4% and 18.7%, respectively over the prior year's pro forma quarter

* RadNet reports increased volumes

* 2007 per share loss increased to $(0.52) compared to $(0.33) for the twelve month period ended October 31, 2006

* RadNet issues 2008 Guidance of $470-500 million of Revenue and $100-$115 of Adjusted EBITDA((2))

LOS ANGELES -- RadNet, Inc. (NASDAQ:RDNT), a national leader in providing high-quality, cost-effective diagnostic imaging services through a network of fully-owned and operated outpatient imaging centers, today reported financial results for its fourth quarter and full year ended December 31, 2007.

Extended Filing Period

As previously announced, RadNet utilized a 15 day extension period to file its form 10-K in order to enable Management and its auditing firm, Ernst & Young LLP, to complete the audit of RadNet's financial statements for the year ended December 31, 2007.

The identification, analysis and correction of certain accounting issues contributed to the delay in filing the 10-K. Among the accounting issues which principally contributed to the delay, were the following items which resulted in accrual (non-cash) adjustments made to RadNet's financial statements for the period ended December 31, 2007, neither of which affected full-year 2007 Adjusted EBITDA((2)):

* The addition of a $1.7 million liability at December 31, 2007 related to Incurred-But-Not-Reported ("IBNR") malpractice claims. RadNet has a claims made policy and it was determined that RadNet was not adequately reserved for IBNR exposure. Related to this issue, RadNet recorded a non-cash expense of $170 thousand for the year ended December 31, 2007 for medical malpractice, the portion of the liability associated with 2007; and

* The addition of an $8.5 million non-cash allowance recorded during the year to reserve for Accounts Receivable related to dates of service December 31, 2006 and prior that are estimated to be uncollectible. In May of 2007, RadNet converted certain Accounts Receivable balances, including those for which the additional reserve is being recorded, to the Radiologix billing system and changed the personnel responsible for collecting these accounts. Management believes this conversion materially contributed to slower than anticipated collections on these accounts, resulting in Management's decision to revise its estimate of their future collectability. After taking into account the additional reserve, as of December 31, 2007, RadNet had Accounts Receivable (net of allowances) of $87.3 million.

1 Definition of Adjusted Revenue, a non-GAAP measure, is found on the last page of this release.

2 Definition of EBITDA, a non-GAAP measure, is found on the last page of this release.

Annual Report

For the year ended December 31, 2007, RadNet reported Adjusted Revenue(1) and Adjusted EBITDA(2) of $434.0 million and $85.3 million, respectively. Adjusted Revenue(1) increased 4.3% (or $17.7 million) and Adjusted EBITDA(2) increased 9.5% (or $7.4 million), respectively, over the prior year's pro forma period (pro forma to reflect the combination with Radiologix which did not occur until November 15, 2006).

For the year ended December 31, 2007, as compared to the prior year's pro forma period, MRI volume increased 5.6%, CT volume increased 3.5% and PET/CT volume increased 22.2%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 6.6% for the twelve months of 2007 over the prior year's pro forma period.

Net Loss for the year ended December 31, 2007 was $18.1 million, or $(0.52) per share, compared to a net loss of $6.9 million or $(0.33) per share, reported for the fiscal year ended October 31, 2006 (based upon a weighted average number of fully diluted shares outstanding of 34.6 million and 21.0 million in the those periods for 2007 and 2006, respectively). Affecting net income in 2007 were certain non-cash expenses and one-time non-recurring items including:

* $8.5 million reduction of 2007 revenue related to increasing the allowance for Accounts Receivable from dates of service prior to December 31, 2006;

* $3.3 million of non-cash employee stock compensation expense resulting from the vesting of certain options and warrants;

* $1.9 million gain on the sale of a Joint Venture Interest;

* $1.6 million of non-cash Deferred Financing Expense related to the amortization of financing fees paid as part of our $405 million credit facilities drawn down in November 2006 in connection with the Radiologix acquisition and the incremental $25 million term loan and revolving credit facility arranged in August 2007;

* $1.0 million of severance paid associated with the termination of certain employees related to achieving the previously announced cost savings during the Radiologix integration and a payment to an employee to settle an employment-related dispute;