RadNet secures $250M new loan, gets downgrade from Moody’s

RadNet Inc. has secured a new term loan to fuel expansion, days after the company received a downgrade from Moody’s. 

The Los Angeles-based imaging center operator is entering a new credit agreement, which is slated to mature on April 18, 2031. That’s the same due date for its existing term loan with an outstanding balance totaling nearly $959 million, RadNet said in an announcement Wednesday. 

Quarterly loan payments will be about $3.1 million under the new agreement, compared to the previous outlay of $2.4 million. 

“We appreciate the continued support of Barclays and our other relationship banks and term loan lenders,” Chief Financial Officer Mark Stolper said in a statement June 10. “This amendment provides us with additional flexibility to pursue strategic growth opportunities across RadNet’s national imaging center network and technology platforms, while reducing the interest rate on our credit facilities.”

RadNet first announced it was seeking the new loan on June 4, prompting a response from Moody’s. The agency said June 4 it was downgrading the rating for RadNet’s senior secured first-lien credit line from B1 to Ba3, indicating higher potential risk for lenders. In the news announcement, analysts said the revised rating reflects the “reduced relative cushion” in RadNet’s capital structure, previously provided by the company’s “significant unsecured trade payables and lease rejection claims.” 

Experts contend that RadNet is “constrained” by its geographic concentration in 11 states, with most of its more than 440 centers located in California, New York and Maryland. Leverage was approximately 4.5x as of March 31 on an adjusted basis and 5x prior to securing the loan. 

“The rating is also constrained by the company's high fixed costs, including significant capital expenditures and sizable interest expenses after adjusting for operating lease expense,” credit analysts Adam Chaim and Ola Hannoun-Costa wrote for Moody’s. 

However, RadNet is supported by its “strong" competitive position in those primary markets, they added. Its rating also benefits from the long-term trend of imaging volumes migrating away from hospitals and into lower cost care settings. Plus, RadNet boasts a diversification of revenues through its multimodality capabilities and “good payer mix,” Moody’s noted. It also has “very good liquidity,” with a “significant cash balance that we expect to be used for acquisitions.” 

RadNet is supported by more than $100 million of annual free cash flow over the next 12 to 18 months, analysts estimated. It held about $455 million of cash as of March 31, which is expected to grow to over $600 million following the loan offering. The company also has $332 million in undrawn funds across 2 separate revolving credit lines, Moody’s noted.  

S&P Global issued its own bulletin about the RadNet debt raise on June 3, with its ratings remaining unchanged. This includes a B+ issue-level and a 3 recovery rating on the company’s first-lien debt, indicating expectation for a “meaningful” (50% to 70%) chance of recovering the obligations, in the event of a payment default. Analysts said they expect RadNet to use the proceeds to increase its balance sheet cash, most of which will be used to fund acquisitions, rather than for debt reduction.

“Our 'B+' issuer credit rating and stable outlook on RadNet continue to reflect its elevated gross debt leverage (generally in the 4x-5x range), aggressive growth strategy (involving substantial growth capital expenditure), and the limited barriers to competition in its industry,” wrote S&P analysts David A. Kaplan and Arthur C. Wong. “These risks are partially offset by the company's decent scale (about $2.1 billion in annual revenue), good profitability (EBITDA margins of about 20%), strong revenue growth (above 10% annually), and high cash balance.”

In addition to successfully completing the loan amendment, the interest rate also was reduced by 0.25%. RadNet had originally sought $200 million but saw the loan total boosted by $50 million amid high interest from lenders. Following the deal, it now has approximately $1.4 billion in debt and $700 million in cash on hand, the company estimates. The cash infusion comes as RadNet has executed several deals already in 2026, including buying French AI firm Gleamer for $270 million and 13 Florida imaging centers from LucidHealth for $65 million.