RadNet (NASDAQ: RDNT) reported Q3 EPS of $0.12, $0.20 better than the analyst estimate of ($0.08). Revenue for the quarter came in at $256.73 million versus the consensus estimate of $259.89 million.

• Indicating a substantial recovery from the impact of COVID-19, Total Net Revenue (“Revenue”) was $291.8 million in the third quarter of 2020, a sequential increase of 53.1% from the second quarter of 2020 and a decrease of only 0.3% from last year’s third quarter of $292.7 million
• As a result of aggressive cost containment measures, Adjusted EBITDA(1) was $45.8 million in the third quarter of 2020, a sequential increase of 102.8% from the second quarter of 2020 and an increase of 11.7% from last year’s third quarter Adjusted EBITDA(1) of $41.0 million
• Adjusted EBITDA(1) margin was 15.7% during the quarter as compared to 14.0% in last year’s third quarter, an increase of 169 basis points (1.7%)
• Adjusting for the non-cash impact from the Company’s interest rate hedges on Net Income (“Adjusted Net Income”), Adjusted Net Income Per Share was $0.15 in this year’s third quarter, as compared to Adjusted Net Loss Per share of $(0.16) in the second quarter of this year and Net Income Per Share of $0.06 in last year’s third quarter; this is a sequential increase of $0.31 per share from the second quarter of 2020 and $0.09 per share from last year’s third quarter
• Aggregate procedural volumes increased 66.2% from the second quarter of 2020
• At third quarter end, RadNet had a cash balance of $89.7 million and was undrawn on its $195 million revolving line of credit
• Subsequent to quarter end, RadNet announced the formation of a joint venture with Adventist Health in Simi Valley, California and the creation of a new operating platform in Phoenix, Arizona with Dignity Health/CommonSpirit Health

Dr. Howard Berger, President and Chief Executive Officer of RadNet, commented, “I am very pleased with our performance during the quarter. Our sequential improvement from the second quarter of 2020 is illustrative of both a strong recovery of our procedural volumes and our focus on controlling costs. Compared to the second quarter of this year, our Revenue grew 53.1% and our aggregate procedural volumes increased 66.2%. Our Adjusted EBITDA increased 102.8% from the second quarter, and our Adjusted Net Income Per Share increased by $0.31, reversing an Adjusted Net Loss Per Share in the second quarter of $(0.16). Our Adjusted EBITDA margin increased by 169 basis points (1.7%) from last year’s third quarter. The improvement in Adjusted EBITDA, Adjusted EBITDA margin and Net Income Per Share as compared to the second quarter is even more notable since this year’s second quarter results were aided by $25.5 million of funds we received and recognized as income under the CARES Act Provider Relief Fund. This quarter, we received only $221,000 of Cares Act funds.”

Dr. Berger continued, “COVID-19 necessitated that we evaluate every part of our business to reduce expenses and conserve cash. In addition to staffing, we addressed costs associated with purchasing, pre-authorization, scheduling, revenue cycle management, equipment service, facility rent, insurance and center-level operating protocols. The adjustments we made over the last six months have materially improved how we are delivering our services and have significantly increased operating margins. These enhancements should favorably contribute to our performance in the coming quarters, as increasing procedural volumes are anticipated if our country continues to recover from COVID-19.”

Dr. Berger added, “During the COVID-19 period, we temporarily closed facilities, suspended certain modalities at some facilities which remained open, consolidated patient volume into the centers of excellence, negotiated and restructured agreements with vendors and landlords and reduced employee costs through furloughs and temporary salary cuts, among other actions. Not only did these actions prove to secure our business in this difficult period, but they resulted in enhanced liquidity. We completed the third quarter with a cash balance of $89.7 million, and we remain undrawn on our $195 million revolving line of credit. I am also pleased to report that, as of August 1st, we began bringing back substantially all of our employees from furloughs and restored the wages of those team members who took pay reductions as a result of COVID-19. This process was completed as of October 1st.”

“In October, we announced two partnerships that should further our strategic growth. First, we partnered with Adventist Health to create an outpatient imaging joint venture in Simi Valley, California to initially include three multimodality facilities and the management of the Nancy Reagan Breast Center. This affiliation with Adventist Health, one of the largest health systems on the West Coast and Hawaii, is scheduled to begin operations in January. Second, we created an operating platform in Phoenix, Arizona through a partnership with Dignity Health/CommonSpirit Health. Though this is our third partnership with Dignity, it is RadNet’s first entry into a new geography since we entered the New York City marketplace in 2013. We initially acquired eight Arizona facilities and, with Dignity, are committed to substantially growing the scope and breadth of this platform. Dignity will bring great value to the newly created partnership through its ownership of hospitals, medical groups and urgent care centers and its broad affiliations and relationships with physician practices in the Phoenix healthcare delivery system,” concluded Dr. Berger.

For earnings history and earnings-related data on RadNet (RDNT) click here.