InSight Health Services Holdings Corp. Reports Second Quarter Fiscal 2009 Results

Business Wire, Feb 17, 2009

Adjusted EBITDA at $9.3 million on $59.1 million in revenues

$16.5 million of cash proceeds generated from the sale of centers and joint ventures at an average multiple of cash flow in excess of five times

At quarter end, $48.4 million of cash on hand and more than $17.6 million of borrowing availability on revolving credit facility

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

InSight believes the combined results of operations for the six months ended December 31, 2007 provide management and investors with a more meaningful perspective of its 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 six months ended December 31, 2007.

InSight further reported that revenues decreased 11.8% from approximately $67.0 million for the three months ended December 31, 2007, to approximately $59.1 million for the three months ended December 31, 2008. Revenues from fixed operations decreased approximately 16.5% from approximately $43.4 million for the three months ended December 31, 2007, to approximately $36.2 million for the three months ended December 31, 2008, principally due to sales of imaging centers. Revenues from mobile operations decreased approximately 3.2% from approximately $23.7 million for the three months ended December 31, 2007, to approximately $22.9 million for the three months ended December 31, 2008 principally due to a reduction in contractual rates upon contract renewals with certain customers.

Revenues decreased approximately 9.3% from approximately $134.8 million for the six months ended December 31, 2007, to approximately $122.2 million for the six months ended December 31, 2008. Revenues from fixed operations decreased approximately 12.8% from approximately $86.5 million for the six months ended December 31, 2007, to approximately $75.4 million for the six months ended December 31, 2008 primarily due to sales of imaging centers. Revenues from mobile operations decreased approximately 3.0% from approximately $48.3 million for the six months ended December 31, 2007, to approximately $46.8 million for the six months ended December 31, 2008 mainly due to a reduction in contractual rates upon contract renewals with certain customers.

Net cash provided by operating activities was approximately $9.1 million for the six months ended December 31, 2008 and resulted primarily from Adjusted EBITDA (see discussion of Adjusted EBITDA below) of approximately $21.1 million less approximately $13.1 million of cash paid for interest, offset by a net change in operating assets and liabilities of $1.4 million.

At December 31, 2008, InSight had approximately $48.4 million in cash, cash equivalents and restricted cash (including approximately $26.8 million that was subject to the lien for the benefit of the senior secured floating rate notes), and approximately $17.6 million of availability under its revolving credit facility, based on its borrowing base. At December 31, 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 were cash collateralized.

Adjusted EBITDA decreased approximately 18.1% from approximately $11.3 million for the three months ended December 31, 2007, to approximately $9.3 million for the three months ended December 31, 2008 and decreased 16.8% from approximately $25.3 million for the six months ended December 31, 2007 to $21.1 million for the six months ended December 31, 2008. Adjusted EBITDA for the three months ended December 31, 2008 decreased 21.2% from approximately $11.8 million for the three months ended September 30, 2008. Adjusted EBITDA is defined as earnings before interest expense, income taxes, depreciation and amortization, excluding impairment of intangible assets, gain on sales of centers, reorganization items, net and gain on purchase of notes payable.