aku-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________

FORM 10-Q

___________________________


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from______________to______________

Commission file number: 333-261815

___________________________

AKUMIN INC.

(Exact name of registrant as specified in its charter)

___________________________


Delaware			88-4139425
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)


8300 W. Sunrise Boulevard
Plantation, Florida 33322
(844) 730-0050
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Not Applicable

(Former Name, Former Address and Former Fiscal Year,

if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 par value per share	AKU	The Nasdaq Stock Market
Common Stock, $0.01 par value per share	AKU	The Toronto Stock Exchange

___________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

As of May 8, 2023, there were 90,498,491 shares of common stock outstanding.

TABLE OF CONTENTS


		Page
PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	34

SIGNATURE		35

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q and the information incorporated by reference in this Quarterly Report on Form 10-Q contain or incorporate by reference “forward-looking information” or “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995, that involve substantial risks and uncertainties. Forward-looking statements describe Akumin Inc.’s (together with its subsidiaries, the “Company”) future plans, strategies, expectations and objectives, and are generally identifiable by use of the words “may”, “will”, “should”, “continue”, “expect”, “anticipate”, “estimate”, “believe”, “intend”, “plan” or “project” or the negative of these words or other variations on these words or comparable terminology. Forward-looking statements include, but are not limited to, statements about:

•expected performance and cash flows;

•changes in laws and regulations affecting the Company;

•expenses incurred by the Company as a public company;

•future growth of the outpatient diagnostic imaging and radiation oncology markets;

•changes in reimbursement rates by payors;

•remediation and effectiveness of the design and effectiveness of our disclosure controls and procedures and internal control over financial reporting;

•the outcome of litigation and payment obligations in respect of prior settlements;

•competition;

•acquisitions and divestitures of businesses;

•potential synergies from acquisitions;

•non-wholly owned and other business arrangements;

•access to capital and the terms relating thereto;

•technological changes in our industry;

•successful execution of internal plans;

•compliance with our debt covenants;

•anticipated costs of capital investments; and

•future compensation of our directors and executive officers.

Such statements may not prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. The following are some of the risks and other important factors that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements:

•our ability to successfully grow the market and sell our services;

•general market conditions in our industry;

•our ability to service existing debt;

•our ability to acquire new centers and, upon acquisition, to successfully integrate markets and sell new services that we acquire;

•our ability to achieve the financing necessary to complete our acquisitions;

•our ability to enforce any claims relating to breaches of indemnities or representations and warranties in connection with any acquisition;

•market conditions in the capital markets and our industry that make raising capital or consummating acquisitions difficult, expensive or both, or which may disrupt our annual operating budget and forecasts;

•inflation, labor shortages, and adverse market conditions in the healthcare industry that may force us to scale back operations, divest existing centers and put any new acquisitions on hold for an indefinite period of time;

•unanticipated cash requirements to support current operations, to expand our business or for capital expenditures;

•delays or setbacks with respect to governmental approvals or manufacturing or commercial activities;

•changes in laws and regulations;

•the loss of key management, personnel or customers;

•the risk the Company is not able to arrange sufficient cost-effective financing to repay maturing debt and to fund expenditures, future operational activities and acquisitions, and other obligations;

•the risks related to the additional costs and expenses associated with being a U.S. domestic issuer as opposed to a foreign private issuer;

•the risks associated with legislative and regulatory developments that may affect costs, revenues, the speed and degree of competition entering the market, global capital markets activity and general economic conditions in geographic areas where we operate (including the adverse impact of the coronavirus (“COVID-19”) pandemic on the Company);

•the risks associated with macroeconomic conditions, including inflation and the threat of recession;

•the risks associated with wage inflation and labor shortages among healthcare professionals;

•financial market volatility and declines in financial market prices of equity securities, including the risk of delisting from the Nasdaq Capital Market (“Nasdaq”);

•the risk that the potential delisting from the Nasdaq and other changes to the Company’s liquidity and capital resources will have a material adverse effect on the Company’s ability to borrow funds and access to private capital sources and public capital markets; and

•the impact of global events, including the ongoing Russian-Ukrainian conflict, on our business and the actions we may take in response thereto.

Various assumptions or factors are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking information. Those assumptions and factors are based on information currently available to us, including information obtained from third-party industry analysts and other third-party sources. In some instances, material assumptions and factors are presented or discussed elsewhere in this Quarterly Report on Form 10-Q in connection with the statements or disclosure containing the forward-looking information. The reader is cautioned that the following list of material factors and assumptions is not exhaustive. The factors and assumptions include, but are not limited to:

•no unforeseen changes in the legislative and operating framework for our business;

•no unforeseen changes in the prices for our services in markets where prices are regulated;

•no unforeseen changes in the regulatory environment for our services;

•a stable competitive environment; and

•no significant event occurring outside the ordinary course of business such as a foreign conflict, natural disaster, public health epidemic or other calamity.

Although we have attempted to identify important factors that could cause our actual results to differ materially from our plans, strategies, expectations and objectives, there may be other factors that could cause our results to differ from what we currently anticipate, estimate or intend. Forward-looking statements are provided to assist external stakeholders in understanding management’s expectations and plans relating to the future as of the date of the original document and may not be appropriate for other purposes. Readers are cautioned not to place undue reliance on forward-looking statements. Except as required under applicable securities laws, we undertake no obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise.

We qualify all the forward-looking statements contained in this Quarterly Report on Form 10-Q and the information incorporated by reference in this Quarterly Report on Form 10-Q by the foregoing cautionary statements.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

AKUMIN INC.

INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Condensed Consolidated Balance Sheets			4

Condensed Consolidated Statements of Operations and Comprehensive Loss			5

Condensed Consolidated Statements of Equity			6

Condensed Consolidated Statements of Cash Flows			7

Notes to Condensed Consolidated Financial Statements			9

AKUMIN INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in thousands, except share amounts)


	March 31, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	45,399	$	59,424
Accounts receivable	114,696		114,166
Prepaid expenses	8,325		8,003
Other current assets	8,097		10,352
Total current assets	176,517		191,945
Property and equipment, net	205,974		221,214
Operating lease right-of-use assets	160,250		166,823
Goodwill	769,110		769,110
Other intangible assets, net	387,354		392,095
Other assets	23,468		23,928
Total assets	$	1,722,673	$	1,765,115
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Current liabilities:
Accounts payable	$	25,458	$	36,618
Current portion of long-term debt	20,432		19,961
Current portion of obligations under finance leases	7,751		7,800
Current portion of obligations under operating leases	15,775		17,223
Accrued liabilities	92,948		86,916
Total current liabilities	162,364		168,518
Long-term debt, net of current portion	1,262,708		1,254,652
Obligations under finance leases, net of current portion	17,600		19,505
Obligations under operating leases, net of current portion	154,964		160,475
Other liabilities	21,178		20,674
Total liabilities	1,618,814		1,623,824
Redeemable noncontrolling interests	28,657		30,337
Stockholders’ deficit:
Preferred stock, $0.01 par value; 50,000,000 shares authorized; no shares issued and outstanding at March 31, 2023 and December 31, 2022	—		—
Common stock, $0.01 par value; 300,000,000 shares authorized; 90,498,491 shares issued and outstanding at March 31, 2023; 89,811,513 shares issued and outstanding at December 31, 2022	905		898
Additional paid-in capital	231,406		231,014
Accumulated other comprehensive income	45		73
Accumulated deficit	(315,333)		(280,185)
Total stockholders’ deficit	(82,977)		(48,200)
Noncontrolling interests	158,179		159,154
Total equity	75,202		110,954
Total liabilities, redeemable noncontrolling interests and equity	$	1,722,673	$	1,765,115

See accompanying notes to the condensed consolidated financial statements.

AKUMIN INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited; in thousands, except per share amounts)


	Three Months Ended March 31,
	2023		2022
Revenues	$	187,592	$	186,263
Operating expenses:
Cost of operations, excluding depreciation and amortization	155,567		155,161
Depreciation and amortization	22,993		24,731

Restructuring charges	5,736		80
Severance and related costs	(49)		2,238
Settlements, recoveries and related costs	1,448		(137)
Stock-based compensation	399		1,061
Other operating income, net	(751)		(7)
Total operating expenses	185,343		183,127
Income from operations	2,249		3,136
Other expense (income):
Interest expense	30,697		28,681
Other non-operating expense (income), net	(132)		324
Total other expense, net	30,565		29,005
Loss before income taxes	(28,316)		(25,869)
Income tax expense	874		563
Net loss	(29,190)		(26,432)
Less: Net income attributable to noncontrolling interests	5,958		4,379
Net loss attributable to common stockholders	$	(35,148)	$	(30,811)
Comprehensive loss, net of taxes:
Net loss	$	(29,190)	$	(26,432)
Other comprehensive income (loss):
Unrealized gain (loss) on hedging transactions, net of taxes	(14)		29
Reclassification adjustment for losses included in net loss, net of taxes	(14)		17
Other comprehensive income (loss)	(28)		46
Comprehensive loss, net of taxes	(29,218)		(26,386)
Less: Comprehensive income attributable to noncontrolling interests	5,958		4,379
Comprehensive loss attributable to common stockholders	$	(35,176)	$	(30,765)
Net loss per share attributable to common stockholders:
Basic and diluted	$	(0.39)	$	(0.35)

See accompanying notes to the condensed consolidated financial statements.

AKUMIN INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited; in thousands, except share amounts)

Common Stock

Additional Paid-In Capital

Accumulated
Other
Comprehensive
Income (Loss)

SEC Form 10-Q filed by Akumin Inc.