Why RadNet Inc. (NASDAQ:RDNT) Rose?
RadNet Inc. (NASDAQ:RDNT) surged 18% rising a wave of investor interest after the company reported only half the expected loss in EPS in the first quarter of 2014, despite being negatively impacted by severe weather and Medicare reimbursement cuts. The Company’s revenue for the first quarter was less than impressive, but the big leap towards breaking even seems to have convinced investors that profitability is now just a quarter away.
RadNet Inc. First Quarter 2014 Financial Results
RadNet Inc. (NASDAQ:RDNT) which provides outpatient diagnostic imaging services through its network of 250 owned or operated outpatient imaging centers, reported generating revenue of $168.9 million for the first quarter of 2014. Adjusted EBITDA for the quarter was $27.7 million, and net loss was $1.1 million.
The loss per share for the first quarter was $0.03, which is the same as the EPS reported for the first quarter last year. It is also only half the $0.06 loss per share expected as per the analyst consensus estimate.
Statements by RadNet Leadership
Dr. Howard Berger, president and CEO of RadNet, said, “We overcame significant obstacles during the first quarter, including the most severe winter weather conditions we faced in the last decade and the impact beginning January 1st of the previously estimated $22 million of annual Medicare cuts. We estimate that these factors negatively impacted us by between $8 million and $10 million of revenue and between $5 million and $7 million of Adjusted EBITDA during the quarter.”
Despite all this, Berger said the Company managed to beat expectations because of the $30 million in cost-saving’s initiatives announced last year.
Another thing that may have boosted investor confidence is the refinancing transaction in the form of a $30 million increase to an existing senior secured first lien credit facility, and a new senior secured $180 million second lien term loan facility.
Mark Stolper, executive vice president and CFO of RadNet, said that, “As a result of the refinancing transaction, our first lien term loan matures in 2018, and our new second lien term loan matures in 2021. This allows our management focus to be dedicated to operating our business and driving strategic initiatives.”