InSight Health Services Holdings Corp. Reports Results for the First Quarter Fiscal 2009

Business Wire, Nov 13, 2008

LAKE FOREST, Calif. -- InSight Health Services Holdings Corp. ("InSight") (OTCBB: ISGT) today announced its financial results for the first quarter ended September 30, 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 three months ended September 30, 2007 combine the results of operations for the one month ended July 31, 2007 of the predecessor entity and the two months ended September 30, 2007 of the successor entity. The combined results of operations are then compared with three months ended September 30, 2008.

InSight believes the combined results of operations for the three months ended September 30, 2007 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 three months ended September 30, 2007.

Revenues decreased approximately 6.9% from approximately $67.8 million for the three months ended September 30, 2007, to approximately $63.1 million for the three months ended September 30, 2008. Revenues from our fixed operations decreased approximately 9.2% from approximately $43.2 million for the three months ended September 30, 2007, to approximately $39.2 million for the three months ended September 30, 2008. Revenues from our mobile operations decreased approximately 2.9% from approximately $24.6 million for the three months ended September 30, 2007, to approximately $23.9 million for the three months ended September 30, 2008.

Net cash provided by operating activities was approximately $3.0 million for the three months ended September 30, 2008 and resulted primarily from our net loss (approximately $7.2 million) before non-cash charges (approximately $12.3 million), partially offset by changes in certain assets and liabilities (approximately $2.0 million). Non-cash charges primarily include (1) depreciation and amortization (approximately $12.6 million) and (2) amortization of bond discount (approximately $1.3 million), partially offset by non-cash income of (1) gain on sales of centers (approximately $0.4 million) and (2) gain on purchase of notes payable (approximately $1.2 million). The changes in certain assets and liabilities primarily consist of a decrease in accounts payable and accrued expenses (approximately $3.3 million) offset by a decrease in accounts receivables, net (approximately $1.0 million).

At September 30, 2008, InSight had approximately $28.1 million in cash, cash equivalents and restricted cash (including approximately $8.1 million that was subject to the lien for the benefit of the senior secured floating rate notes), and approximately $20.8 million of availability under its revolving credit facility, based on its borrowing base. At September 30, 2008, there were no outstanding borrowings under the credit facility; however, there were letters of credit of approximately $2.2 million outstanding under the credit facility of which approximately $0.3 million are cash collateralized.

Adjusted EBITDA decreased approximately 15.7% from approximately $14.0 million for the three months ended September 30, 2007, to approximately $11.8 million for the three months ended September 30, 2008. Adjusted EBITDA increased 29.7% from approximately $9.1 million for the three months ended June 30, 2008; however, Adjusted EBITDA for three months ended June 30, 2008 was negatively affected by severance charges of $2.1 million. Adjusted EBITDA is defined as earnings before interest expense, income taxes, depreciation and amortization, excluding gain on sales of centers, reorganization items, net and gain on purchase of notes payable.

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.