InSight Health Services Holdings Corp. Reports Results for the Three and Nine Months Ended March 31, 2008

Business Wire, May 20, 2008

LAKE FOREST, Calif. -- InSight Health Services Holdings Corp. ("InSight") (OTCBB:ISGT) today announced its financial results for the three and nine months ended March 31, 2008.

Upon its emergence from chapter 11, InSight adopted fresh-start reporting in accordance with American Institute of Certified Public Accountants' Statement of Position 90-7. The adoption of fresh-start reporting results in InSight becoming a new entity for financial reporting purposes. Accordingly, InSight's condensed consolidated financial statements on or after August 1, 2007 are not comparable to InSight's condensed consolidated financial statements prior to that date. The adoption of fresh-start reporting primarily affected depreciation and amortization and interest expense in the condensed consolidated statements of operations. The accompanying condensed consolidated statements of operations for the nine months ended March 31, 2008 combine the results of operations for the one month ended July 31, 2007 of the predecessor entity and the eight months ended March 31, 2008 of the successor entity. The combined results of operations are then compared with the corresponding period in the prior year.

InSight believes the combined results of operations for the nine months ended March 31, 2008 provide management and investors with a more meaningful perspective of InSight's financial performance and operating trends than if it did not combine the results of operations of the predecessor entity and the successor entity in this manner. Similarly, InSight combines the financial results of the predecessor entity and the successor entity when discussing sources and uses of cash for the nine months ended March 31, 2008.

Revenues decreased approximately 7.2% from $215.7 million for the nine months ended March 31, 2007 to $200.2 million for the nine months ended March 31, 2008. Revenues decreased approximately 6.7% from $70.1 million for the three months ended March 31, 2007 to $65.4 million for the three months ended March 31, 2008.

Net cash used in operating activities was approximately $2.0 million for the nine months ended March 31, 2008 and resulted primarily from a decrease in accounts payable and accrued expenses and an increase in other current assets, partially offset by a decrease in accounts receivables, net. At March 31, 2008, InSight had approximately $18.5 million in cash and approximately $24.8 million of availability under InSight's credit facility, based on its borrowing base. At May 15, 2008 there were no outstanding borrowings under the credit facility; however, at March 31, 2008, there were letters of credit of approximately $2.3 million outstanding under the credit facility of which approximately $0.3 million are cash collateralized.

Adjusted EBITDA decreased 34.2% from approximately $47.3 million for the nine months ended March 31, 2007 to approximately $31.1 million for the nine months ended March 31, 2008. Adjusted EBITDA decreased 62.8% from approximately $15.6 million for the three months ended March 31, 2007 to approximately $5.8 million for the three months ended March 31, 2008. Adjusted EBITDA is defined as earnings before interest expense, incomes taxes, depreciation and amortization, excluding the impairment of goodwill and reorganization items, net.

InSight's net loss and Adjusted EBITDA for the third quarter were negatively affected by a $2.2 million charge for legal and consulting fees related to certain litigation and a $400,000 charge for an unconsolidated fixed-site center.

Following up on recent organizational announcements naming Louis "Kip" Hallman, III as President and Chief Executive Officer and Bernard O'Rourke as Chief Operating Officer, InSight announced field and corporate organizational changes that will result in estimated annual savings of approximately $5.0 million. These organizational changes will be fully implemented by December 31, 2008.

Adjusted EBITDA has been included because InSight believes that it is a useful tool for it and its investors to measure its ability to provide cash flows to meet debt service, capital projects and working capital requirements. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, income from company operations or other traditional indicators of operating performance and cash flow from operating activities determined in accordance with accounting principles generally accepted in the United States. InSight presents the discussion of Adjusted EBITDA because covenants in the agreements governing its material indebtedness contain ratios based on this measure. While Adjusted EBITDA is used as a measure of liquidity and the ability to meet debt service requirements, it is not necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculations. For a reconciliation of net cash provided by operating activities to Adjusted EBITDA, see the table below.

Safe Harbor

The foregoing contains forward-looking statements regarding InSight. They reflect InSight's current views with respect to current events and financial performance, are subject to many risks, uncertainties and factors relating to InSight's operations and business environment which may cause the actual results of InSight to be materially different from any future results, express or implied by such forward-looking statements. InSight intends that such forward-looking statements be subject to the Safe Harbor created by Section 27(a) of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. The words and phrases "expect," "estimate," and "anticipate" and similar expressions identify forward-looking statements. Certain factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the following: (i) InSight's ability to successfully implement its core market strategy; (ii) overcapacity and competition in InSight's markets; (iii) reductions, limitations and delays in reimbursement by third-party payors; (iv) contract renewals and financial stability of customers; (v) conditions within the healthcare environment; (vi) the potential for rapid and significant changes in technology and their effect on InSight's operations; (vii) operating, legal, governmental and regulatory risks; and (viii) economic, political and competitive forces affecting InSight's business.