RadNet quadrupled in eight years via acquisitions, will use free cash flow to repay debt, says CFO

By Lisa Kerner

Charlotte, N.C., May 14 - RadNet, Inc. has quadrupled its business since 2006, mainly through acquisitions, said executive vice president and chief financial officer Mark Stolper during a presentation Wednesday at the at the Barclays High Yield and Syndicated Loan Conference in Phoenix.

"Since 2007, we have significantly grown the business both in terms of procedural volume, revenue and EBITDA," Stolper said. "We believe that we can continue to do this going forward."

RadNet now has a little more than $700 million of revenue, and Stolper is predicting that within five years, RadNet could be a $1 billion company.

Reaching the $1 billion mark would not require going outside of the company's current markets in New York, New Jersey, the Mid-Atlantic region or California, according to the CFO.

Stolper said he was pleased with the company's first-quarter results, which were impacted by weather conditions. The 8.2% increase in EBITDA was attributed to RadNet's cost-savings initiatives as well as to patient volumes in California and some benefit from the affordable care act.

Refinancing and debt repayment

Also during the first quarter, RadNet refinanced $200 million of its 10 3/8% bonds with a second-lien term loan, pushing out maturities to 2021. The refinancing also provided the company with annualized interest expense savings of about $5 million, according to Stolper.

In addition to the refinancing, RadNet has a $100 million revolving credit facility at its disposal.

RadNet, as a result of the financing, raised its guidance for free cash flow by "several million dollars" and raised its EBITDA guidance ranges by "a couple million dollars," Stolper said.

The company has no near-term debt maturities, and its blended cost of debt is 5.4%.

Free cash flow totaled $30 million last year, and Stolper anticipates free cash flow of between $35 million and $45 million for 2014, a large portion of which is earmarked for debt repayment.

Debt totaled $625 million at the end of the first quarter.

RadNet is a Los Angeles-based provider of diagnostic imaging services.

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