EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

LOGO

 

         Press Release
Contact:   Paul R. Streiber    FOR RELEASE
    Investor Relations    March 15, 2005
    (214) 303-2702    6:00 AM CT
    paul.streiber@radiologix.com     

 

RADIOLOGIX, INC. REPORTS FOURTH QUARTER AND FYE 2004 RESULTS

 

DALLAS, Mar. 15 — Radiologix, Inc. (Amex: RGX), a leading national provider of diagnostic imaging services, today announced financial results for its fourth quarter and fiscal year ended (“FYE”) December 31, 2004.

 

Select Financial Information

(in thousands of dollars)

    For the Three Months
Ended December 31,
     For the Year Ended
December 31,
  
   2004
     2003
     2004
     2003
  

Service fee revenue, as reported

    $ 55,425     $ 62,498     $ 251,291     $ 242,038  

Service fee revenue excluding terminated operations

    $ 54,140     $ 57,466     $ 239,393     $ 220,925  

EBITDA from continuing operations1

    $ 262     $ 8,410     $ 25,542     $ 41,454  

Adjusted EBITDA1

    $ 11,008     $ 10,705     $ 46,060     $ 45,529  

Adjusted EBITDA excluding terminated operations1

    $ 10,203     $ 9,036     $ 41,976     $ 36,704  

Income (loss) from continuing operations, as reported

    $ (6,822 )   $ (1,278 )   $ (10,334 )   $ (1,052 )

Adjusted income (loss) from continuing operations1

    $ 283     $ 99     $ 2,730     $ 1,393  

Adjusted income (loss) from continuing operations excluding terminated operations1

    $ (256 )   $ (607 )   $ 690     $ (2,898 )
1 As defined and reconciled below

 

GAAP Results

 

For the fourth quarter ended December 31, 2004, service fee revenue was $55.4 million compared to $62.5 million for the fourth quarter 2003. Radiologix incurred a net loss of $7.8 million, or $0.36 per diluted share, compared to a net loss of $3.0 million or $0.14 per diluted share for the fourth quarter 2003.

 

For the fiscal year ended December 31, 2004, service fee revenue was $251.3 million compared to $242.0 million for fiscal year 2003. Radiologix incurred a net loss of $18.0 million, or $0.83 per diluted share, compared to a net loss of $8.0 million or $0.37 per diluted share for fiscal year 2003.

 

Fourth quarter and FYE 2004 results reflect a $9.1 million increase to contractual adjustments, resulting in a corresponding decrease in service fee revenue and accounts receivable (see “Charges and Gain on Sale of Operations” below).

 

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Radiologix, Inc. Reports Fourth Quarter and FYE 2004 Results

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Excluding the $9.1 million reduction, service fee revenue for the fourth quarter 2004 would have been $64.5 million, a 3.2% increase from the fourth quarter 2003; and FYE 2004 service fee revenue would have been $260.4 million, a 7.6% increase from FYE 2003.

 

“2004 was a watershed year for our company. We focused our efforts on stabilizing our operations, building our leadership team, and strengthening our internal controls. As such, we made many difficult operational, financial and personnel decisions that resulted in significant but primarily non-cash financial charges. These decisions challenged our team, tested our resolve, and blurred our true underlying performance,” said Sami S. Abbasi, president and chief executive officer of Radiologix. “However, by making these decisions and acting on them, we left 2004 stronger, healthier financially, and better positioned for the future. I am confident in our operations and in our potential to create long-term sustainable shareholder value.”

 

Fourth Quarter 2004 Results

 

Radiologix posted the following results for the fourth quarter 2004.

 

•   Adjusted income from continuing operations (defined and reconciled below), was $283,000, or $0.01 per diluted share, compared to adjusted income from continuing operations of $99,000 or less than $0.01 per diluted share, for the fourth quarter 2003.

 

•   Adjusted EBITDA (defined and reconciled below), was $11.0 million, compared to $10.7 million for the fourth quarter 2003.

 

•   Adjusted loss from continuing operations, excluding terminated operations (defined and reconciled below), was $256,000, compared to adjusted loss from continuing operations of $607,000 for the fourth quarter 2003.

 

•   Adjusted EBITDA, excluding terminated operations (defined and reconciled below), was $10.2 million, compared to $9.0 million for the fourth quarter 2003.

 

FYE 2004 Results

 

Radiologix posted the following results for FYE 2004.

 

•   Adjusted income from continuing operations was $2.7 million, or $0.13 per diluted share, compared to $1.4 million, or $0.06 per diluted share, for FYE 2003.

 

•   Adjusted EBITDA grew 1.3% to $46.1 million, compared to $45.5 million, for FYE 2003.

 

•   Adjusted income from continuing operations, excluding terminated operations, was $690,000, compared to adjusted loss from continuing operations, excluding terminated operations, of $2.9 million for FYE 2003.

 

•   Adjusted EBITDA, excluding terminated operations, grew 14.4% to $42.0 million, compared to $36.7 million, for FYE 2003.

 

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Balance Sheet

 

Cash and cash equivalents were $34.1 million at December 31, 2004, compared to $36.8 million at December 31, 2003, primarily reflecting continued strong cash collections in 2004 and $14.1 million in proceeds from the sales of operations and imaging centers offset by the $15.5 million payment for the acquisition of an Equipment Financing Right (described below).

 

Net debt (total debt less cash and cash equivalents and restricted cash) was $130.9 million at December 31, 2004, compared to net debt of $137.3 million at December 31, 2003. Total debt at December 31, 2004 was $170.5 million, compared to total debt of $174.1 million at December 31, 2003.

 

Days sales outstanding (DSOs) was 48 days at December 31, 2004, compared to 63 days at December 31, 2003. The $9.1 million increase to contractual adjustments (and corresponding decrease in service fee revenue) accounts for a decrease of 10 DSOs at December 31, 2004.

 

Purchase of Equipment Financing Right

 

Effective October 31, 2004, Radiologix purchased for $15.5 million in cash diagnostic imaging equipment and an equipment financing right that was granted prior to the formation of Radiologix and assumed certain equipment leases.

 

Under this financing right, the seller had a perpetual right to finance certain types of equipment on behalf of Radiologix and to charge Radiologix usage-based rent on these pieces of equipment. Service fee revenue is not affected as a result of this purchase. Instead, this acquisition eliminates expenses that previously varied based on volume, resulting in incremental reductions in equipment lease expense as volume increased.

 

If this transaction had been effective on January 1, 2004, instead of October 31, 2004, Radiologix estimates that cost of services and depreciation and amortization would have increased by $500,000 and $1.4 million, respectively, and equipment lease expense would have decreased by $4.5 million, having the net affect of reducing costs by $2.6 million for the 10 months ended October 31, 2004.

 

Discontinued Operations

 

During the fourth quarter 2004, Radiologix sold or closed several imaging centers, bringing to 76 the number of imaging centers that Radiologix owns or operates at December 31, 2004. Fourth quarter 2004 dispositions included Radiologix’s interest in five Questar imaging centers that resulted in a $591,000 loss.

 

For FYE 2004, Radiologix recorded a $13.1 million pre-tax loss in discontinued operations, which included impairment charges of $10.2 million primarily related to the write-down of goodwill associated with Questar operations, and a net pre-tax loss on dispositions of assets of $1.5 million.

 

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Charges and Gain on Sale of Operations

 

In connection with our fiscal year-end 2004 close process, Radiologix implemented a new retrospective collection analysis of accounts receivable that provided an enhanced methodology for estimating the amount of contractual adjustments and provision for doubtful accounts necessary to reduce gross revenues and gross receivables to net amounts.

 

As a result of using this new analytical tool, Radiologix recorded a $9.1 million increase to contractual adjustments, resulting in a corresponding decrease in service fee revenue and accounts receivable.

 

In the fourth quarter 2004, Radiologix incurred charges aggregating $1.3 million related to i) an impairment of goodwill for a certain Questar center, and ii) costs associated with writing off software that was replaced.

 

In addition to the $9.1 million reduction in service fee revenue in the fourth quarter 2004 discussed above, Radiologix recorded the following pre-tax charges to continuing operations during 2004:

 

•   $14.6 million for impairment primarily related to i) the write-off of goodwill on imaging centers operated by Radiologix’s Questar subsidiary and ii) the write-off of the unamortized portion of intangible and long-lived assets related to the previously announced termination of a medical services agreement with a radiology practice in its Mid-Atlantic market, that was effective January 31, 2005;

 

•   $515,000 to i) write off software costs associated with canceling a software contract and ii) record lease termination costs;

 

•   $405,000 for severance and other related costs related to the resignation in September 2004 of Radiologix’s former president and CEO (compared to $1.6 million for FY 2003);

 

•   $378,000 to reserve for an estimated tax refund receivable;

 

•   $295,000 for costs associated with a litigation settlement; and

 

•   $286,000 to reduce equity in earnings of investments.

 

In 2004, Radiologix recorded a $4.7 million gain on the sale of its San Antonio operations.

 

Results of Sarbanes-Oxley 404 Review

 

During the fourth quarter 2004, management recognized the need to improve its methodology to match cash collections to billed charges. This methodology is used to estimate contractual adjustments and doubtful accounts, which reduce gross revenue and gross accounts receivable to their net realizable amounts.

 

We were unable to complete remediation of this weakness before the end of the fourth quarter. Instead, during our 2004 financial close process, we conducted additional procedures to

 

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enable us to assure the accuracy of the financial statements for the fourth quarter and fiscal year ended December 31, 2004. As a result, we recorded a $9.1 million increase to contractual adjustments.

 

After year-end, we finalized and placed into operation a retrospective collection analysis that enhances our methodology for estimating the amount of contractual adjustments and provisions for doubtful accounts. We believe that this new control has remedied the material weakness in our internal controls over financial reporting that existed as of December 31, 2004.

 

Regulation G: GAAP and Non-GAAP Financial Information

 

This release contains certain financial information not derived in accordance with GAAP. Radiologix uses both GAAP and non-GAAP metrics to measure its financial results. We believe that, in addition to GAAP metrics, these non-GAAP metrics assist Radiologix in measuring its cash-based performance.

 

Radiologix believes this information is useful to investors and other interested parties because it removes unusual and nonrecurring charges that occur in the affected period and provides a basis for measuring the Company’s financial condition against other quarters.

 

Since Radiologix has historically reported non-GAAP results to the investment community, management also believes the inclusion of non-GAAP measures provides consistency in its financial reporting.

 

Such information should not be considered as a substitute for any measures calculated in accordance with GAAP, and may not be comparable to other similarly titled measures of other companies. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Reconciliation of this information to the most comparable GAAP measures is included in this release in the tables below.

 

Adjusted loss from continuing operations is defined as income (loss) from continuing operations calculated in accordance with GAAP, excluding charges, adjustments and gain on sale of operations.

 

Adjusted loss from continuing operations, excluding terminated operations, is defined as income (loss) from continuing operations, excluding charges, adjustments, gain on sale of operations, and terminated San Antonio and Mid-Atlantic operations.

 

EBITDA is defined as earnings before interest, taxes, depreciation and amortization, each from continuing operations.

 

Adjusted EBITDA is defined as EBITDA, which has been reconciled to its nearest comparable GAAP financial measure, excluding charges, adjustments and gain on sale of operations.

 

Adjusted EBITDA excluding terminated operations, is defined as EBITDA, which has been reconciled to its nearest comparable GAAP financial measure, excluding charges, adjustments, gain on sale of operations, and terminated San Antonio and Mid-Atlantic operations.

 

EBITDA, Adjusted EBITDA and Adjusted EBITDA excluding terminated operations are non-GAAP financial measures used as analytical indicators by Radiologix management and the healthcare industry to assess business performance. They also serve as measures of leverage capacity and ability to service debt.

 

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EBITDA, Adjusted EBITDA and Adjusted EBITDA excluding terminated operations should not be considered measures of financial performance under GAAP, and the items excluded from EBITDA, Adjusted EBITDA and Adjusted EBITDA excluding terminated operations should not be considered in isolation or as an alternative to net income, cash flows generated by operating, investing, or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity.

 

As EBITDA, Adjusted EBITDA and Adjusted EBITDA excluding terminated operations are not measurements determined in accordance with GAAP and are therefore susceptible to varying methods of calculation, these metrics, as presented, may not be comparable to other similarly titled measures of other companies.

 

Conference Call

 

In connection with this press release, you are invited to listen to our conference call with Sami S. Abbasi, president and chief executive officer, and Michael N. Murdock, senior vice president and chief financial officer, that will be on Tuesday, March 15, 2005, at 8:00 a.m., Central Time / 9:00 a.m. Eastern Time.

 

You may access the call by dialing (800) 289-0569 and entering code 8474100. A replay of the call is available by dialing (888) 203-1112 and entering code 8474100.

 

In addition, the conference call will be broadcast live over the Internet. You may listen to the call via the Internet by navigating to Radiologix’s Web site (http://www.radiologix.com) and from the “Investor Relations” drop-down menu, click on “Conference Calls & Presentations.”

 

If you are unable to participate during the live Webcast, the Fourth Quarter and Fiscal Year End 2004 Results Conference Call will be archived on Radiologix’s Web site (http://www.radiologix.com). To access the replay, from the “Investor Relations” drop-down menu, click on “Conference Calls & Presentations.”

 

About Radiologix

 

Radiologix (http://www.radiologix.com) is a leading national provider of diagnostic imaging services, owning and operating multi-modality diagnostic imaging centers that use advanced imaging technologies such as positron emission tomography (“PET”), magnetic resonance imaging (“MRI”), computed tomography (“CT”) and nuclear medicine, as well as x-ray, general radiography, mammography, ultrasound and fluoroscopy. The diagnostic images created, and the radiology reports based on these images, enable more accurate diagnosis and more efficient management of illness for ordering physicians. Radiologix owned or operated 76 diagnostic imaging centers located in 10 states as of December 31, 2004.

 

Forward-Looking Statements

 

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include words such as “may,” “will,” “would,” “could,” “likely,”

 

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“estimate,” “intend,” “plan,” “continue,” “believe,” “expect” or “anticipate” and other similar words, and include all discussions about our acquisition and development plans. We do not guarantee that the events described in this press release will occur as described, or that any positive trends noted in this press release will continue.

 

These forward-looking statements generally relate to our plans, objectives and expectations for future operations and are based upon management’s reasonable estimates of future results or trends. Although we believe that our plans and objectives reflected in, or suggested by, such forward-looking statements are reasonable, we may not achieve such plans or objectives. You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in this press release. You should read this press release completely and with the understanding that actual future results may be materially different from what we expect. We will not update forward-looking statements even though our situation may change in the future.

 

Specific factors that might cause actual results to differ from our expectations include, but are not limited to:

 

•   economic, demographic, business and other conditions in our markets;

 

•   the highly competitive nature of the healthcare business;

 

•   changes in patient referral patterns;

 

•   changes in the rates or methods of third-party reimbursement for diagnostic imaging services;

 

•   changes in our contracts with radiology practice groups;

 

•   changes in the number of radiologists operating in our contracted radiology practice groups;

 

•   the ability to recruit and retain technologists;

 

•   the availability of additional capital to fund capital expenditure requirements;

 

•   lawsuits against Radiologix and our contracted radiology practice groups;

 

•   changes in operating margins, particularly changes due to our managed care contracts and capitated fee arrangements;

 

•   failure by Radiologix to comply with state and federal anti-kickback and anti-self referral laws or any other applicable healthcare regulations;

 

•   changes in business strategy and development plans;

 

•   changes in federal, state or local regulations affecting the healthcare industry;

 

•   our indebtedness, debt service requirements and liquidity constraints;

 

•   risks related to our Senior Notes and healthcare securities generally;

 

•   interruption of operations due to severe weather or other extraordinary events; and

 

•   charges for unusual or infrequent (non-recurring) matters.

 

A more comprehensive list of such factors is set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004, and our other filings with the Securities and Exchange Commission.

 

Any forward-looking statement speaks only as of the date on which such statement is made. The information in this press release is as of March 15, 2005. Radiologix undertakes no obligation to update any forward-looking statement or statements to reflect new events or circumstances or future developments.

 

 

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Radiologix, Inc.

Consolidated Balance Sheets

(In thousands)

 

     December 31,
  
     2004
     2003
  
ASSETS                 

CURRENT ASSETS:

                 

Cash and cash equivalents

    $ 34,084     $ 36,766  

Restricted cash

      5,539       —    

Accounts receivable, net of allowances

      44,197       58,746  

Due from affiliates

      2,029       4,104  

Federal and state income tax receivable

      3,905       378  

Assets held for sale

      305       251  

Other current assets

      6,996       7,571  

Total current assets

      97,055       107,816  

PROPERTY AND EQUIPMENT, net

      58,627       62,655  

INVESTMENTS IN JOINT VENTURES

      8,137       10,665  

GOODWILL

      2,241       20,110  

INTANGIBLE ASSETS, net

      71,200       67,917  

DEFERRED FINANCING COSTS, net

      6,591       8,151  

DEFERRED INCOME TAXES

      8,892       —    

OTHER ASSETS

      1,328       2,200  

Total assets

    $ 254,071     $ 279,514  
LIABILITIES AND STOCKHOLDERS’ EQUITY                 

CURRENT LIABILITIES:

                 

Accounts payable and other accrued expenses

    $ 11,342     $ 12,364  

Accrued physician retention

      8,384       8,821  

Accrued salaries and benefits

      7,339       7,788  

Deferred income taxes

      3,202       1,797  

Accrued interest

      708       815  

Current maturities of capital lease obligations

      48       1,438  

Current maturities of long-term debt

      109       261  

Other current liabilities

      536       482  

Total current liabilities

      31,668       33,766  

DEFERRED INCOME TAXES

      —         4,260  

LONG-TERM DEBT, net of current portion

      158,270       160,000  

CONVERTIBLE DEBT

      11,980       11,980  

CAPITAL LEASE OBLIGATIONS, net of current portion

      92       376  

DEFERRED REVENUE

      6,903       7,312  

OTHER LIABILITIES

      1,000       319  

Total liabilities

      209,913       218,013  
COMMITMENTS AND CONTINGENCIES                 

MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES

      1,242       817  

STOCKHOLDERS’ EQUITY:

                 

Common stock

      2       2  

Treasury stock

      (180 )     (180 )

Additional paid-in capital

      14,210       13,942  

Retained earnings

      28,884       46,920  

Total stockholders’ equity

      42,916       60,684  

Total liabilities and stockholders’ equity

    $ 254,071     $ 279,514  

 

 

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Radiologix, Inc.

Consolidated Statements of Operations

(In thousands, except per share data)

 

    

For the Three Months

Ended December 31,

    

For the Year

Ended December 31,

  
     2004
     2003
     2004
     2003
  

SERVICE FEE REVENUE

    $ 55,425     $ 62,498     $ 251,291     $ 242,038  

COSTS OF OPERATIONS:

                                 

Cost of services

      39,268       40,027       158,613       149,034  

Equipment lease

      3,655       4,800       17,660       17,230  

Provision for doubtful accounts

      6,151       5,011       22,337       20,228  

Depreciation and amortization

      6,052       6,323       24,750       25,537  

Gross profit

    $ 299     $ 6,337     $ 27,931     $ 30,009  

SEVERANCE AND OTHER RELATED COSTS

      —         288       405       1,568  

CORPORATE GENERAL AND ADMINISTRATIVE

      5,134       4,344       18,919       15,335  

IMPAIRMENT OF GOODWILL, INTANGIBLE AND LONG-LIVED ASSETS

      1,332       523       14,558       523  

INTEREST EXPENSE, NET

      4,174       4,218       16,974       17,670  

GAIN ON SALE OF OPERATIONS

      —         —         (4,669 )     —    

LOSS BEFORE EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES, MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES, INCOME TAXES AND DISCONTINUED OPERATIONS

    $ (10,341 )   $ (3,036 )   $ (18,256 )   $ (5,087 )

Equity In Earnings of Unconsolidated Affiliates

      529       923       2,865       4,082  

Minority Interests In Income of Consolidated Subsidiaries

      (152 )     (18 )     (791 )     (748 )

INCOME (LOSS) BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS

    $ (9,964 )   $ (2,131 )   $ (16,182 )   $ (1,753 )

Income Tax Expense (Benefit)

      (3,142 )     (853 )     (5,848 )     (701 )

INCOME (LOSS) FROM CONTINUING OPERATIONS

    $ (6,822 )   $ (1,278 )   $ (10,334 )   $ (1,052 )

Discontinued Operations:

                                 

Loss from discontinued operations before income taxes

      (1,977 )     (2,841 )     (13,128 )     (11,519 )

Income tax benefit

      (965 )     (1,136 )     (5,426 )     (4,608 )

Loss from discontinued operations

    $ (1,012 )   $ (1,705 )   $ (7,702 )   $ (6,911 )

NET INCOME (LOSS)

    $ (7,834 )   $ (2,983 )   $ (18,036 )   $ (7,963 )

INCOME (LOSS) PER COMMON SHARE

                                 

Income (loss) from continuing operations—basic

    $ (0.31 )   $ (0.06 )   $ (0.48 )   $ (0.05 )

Income (loss) from discontinued operations—basic

    $ (0.05 )   $ (0.08 )   $ (0.35 )   $ (0.32 )

Net income (loss)—basic

    $ (0.36 )   $ (0.14 )   $ (0.83 )   $ (0.37 )

Income (loss) from continuing operations—diluted

    $ (0.31 )   $ (0.06 )   $ (0.48 )   $ (0.05 )

Income (loss) from discontinued operations—diluted

    $ (0.05 )   $ (0.08 )   $ (0.35 )   $ (0.32 )

Net income (loss)—diluted

    $ (0.36 )   $ (0.14 )   $ (0.83 )   $ (0.37 )

WEIGHTED AVERAGE SHARES OUTSTANDING

                                 

Basic

      21,816,204       21,764,115       21,789,517       21,724,165  

Diluted

      21,816,204       21,764,115       21,789,517       21,724,165  

 

 

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Radiologix, Inc.

Reconciliation of Non-GAAP Financial Information

(In thousands, except per share data)

 

Reconciliation of Loss from Continuing Operations to

Adjusted Income from Continuing Operations

   

For the Three Months

Ended December 31,

    

For the Year

Ended December 31,

  
   2004
     2003
     2004
     2003
  

GAAP: Income (loss) from continuing operations

    $ (6,822 )     (1,278 )   $ (10,334 )   $ (1,052 )

Add: Severance and other related costs

      —         173       254       941  

Add: Impairment of goodwill and long-lived assets

      834       314       9,114       314  

Add: Litigation settlement

      —         672       185       972  

Add: Charges related to contract cancellations

      —         —         322       —    

Add: Professional fees

      —         218       —         218  

Add: Gain on sale of operations

      —         —         (3,082 )     —    

Add: Increase in contractual adjustments

      5,714       —         5,714       —    

Add: Decrease in equity in earnings of unconsolidated Affiliates

      179       —         179       —    

Add: Tax adjustments

      378       —         378       —    

Adjusted income from continuing operations

    $ 283     $ 99     $ 2,730     $ 1,393  

Fully diluted shares outstanding

      21,816,204       21,764,115       21,789,517       21,724,165  

Adjusted income from continuing operations per share – diluted

    $ 0.01     $ 0.00     $ 0.13     $ 0.06  
Note: all addbacks are net of taxes                                 

Reconciliation of Loss from Continuing Operations to

EBITDA and adjusted EBITDA

   

For the Three Months

Ended December 31,

    

For the Year

Ended December 31,

  
   2004
     2003
     2004
     2003
  

GAAP: Income (loss) from continuing operations

    $ (6,822 )   $ (1,278 )   $ (10,334 )     (1,052 )

Add: Income tax expense (benefit)

      (3,142 )     (853 )     (5,848 )     (701 )

Add: Interest expense, net

      4,174       4,218       16,974       17,670  

Add: Depreciation and amortization

      6,052       6,323       24,750       25,537  

EBITDA

    $ 262     $ 8,410     $ 25,542     $ 41,454  

Add: Severance and other related costs

      —         288       405       1,568  

Add: Impairment of goodwill and long-lived assets

      1,332       523       14,558       —    

Add: Litigation settlement

      —         1,121       295       1,621  

Add: Charges related to contract cancellations

      —         —         515       523  

Add: Professional fees

      —         363       —         363  

Add: Gain on sale of operations

      —         —         (4,669 )     —    

Add: Increase in contractual adjustments

      9,128       —         9,128       —    

Add: Decrease in equity in earnings of unconsolidated Affiliates

      286       —         286       —    

Adjusted EBITDA

    $ 11,008     $ 10,705     $ 46,060     $ 45,529  

 

 

-more-

Radiologix, Inc. Reports Fourth Quarter and FYE 2004 Results

March 15, 2005

Page 11

 

Radiologix, Inc.

Reconciliation of Non-GAAP Financial Information, Excluding Terminated Operations

(In thousands, except per share data)

 

Reconciliation of Loss from Continuing Operations to

Adjusted Income from Continuing Operations,

excluding Terminated Operations

   

For the Three Months

Ended December 31,

    

For the Year

Ended December 31,

  
   2004
     2003
     2004
     2003
  

GAAP: Income (loss) from continuing operations

    $ (6,925 )   $ (1,984 )   $ (10,308 )   $ (5,343 )

Add: Severance and other related costs

      —         173       254       941  

Add: Impairment of goodwill and long-lived assets

      834       314       4,599       314  

Add: Litigation settlement

      —         672       185       972  

Add: Charges related to contract cancellations

      —         —         125       —    

Add: Professional fees

      —         218       —         218  

Add: Gain on sale of operations

      —         —         —         —    

Add: Increase in contractual adjustments

      5,278       —         5,278       —    

Add: Decrease in equity in earnings of unconsolidated Affiliates

      179       —         179       —    

Add: Tax adjustments

      378       —         378       —    

Adjusted income (loss) from continuing operations

    $ (256 )   $ (607 )   $ 690     $ (2,898 )
Note: all addbacks are net of taxes                                 

Reconciliation of Loss from Continuing Operations to

EBITDA, Adjusted EBITDA Excluding Terminated Operations

   

For the Three Months

Ended December 31,

    

For the Year

Ended December 31,

  
   2004
     2003
     2004
     2003
  

GAAP: Income (loss) from continuing operations

    $ (6,925 )   $ (1,984 )   $ (10,308 )   $ (5,343 )

Add: Income tax expense (benefit)

      (3,131 )     (1,256 )     (5,532 )     (3,122 )

Add: Interest expense, net

      4,169       4,119       16,799       17,242  

Add: Depreciation and amortization

      6,050       5,862       24,062       23,852  

EBITDA

    $ 163     $ 6,741     $ 25,021     $ 32,629  

Add: Severance and other related costs

      —         288       405       1,568  

Add: Impairment of goodwill and long-lived assets

      1,332       523       7,347       523  

Add: Litigation settlement

      —         1,121       295       1,621  

Add: Charges related to contract cancellations

      —         —         200       —    

Add: Professional fees

      —         363       —         363  

Add: Gain on sale of operations

      —         —         —         —    

Add: Increase in contractual adjustments

      8,422       —         8,422       —    

Add: Decrease in equity in earnings of unconsolidated Affiliates

      286       —         286       —    

Adjusted EBITDA

    $ 10,203     $ 9,036     $ 41,976     $ 36,704  

 

-more-

Radiologix, Inc. Reports Fourth Quarter and FYE 2004 Results

March 15, 2005

Page 12

 

Radiologix, Inc.

Reconciliation of Financial Information, Excluding Terminated Operations

(In thousands, except per share data)

 

     For the Three Months Ended December 31, 2004
  
     Radiologix
    

Terminated

Operations

     Radiologix
Excluding
Terminated
Operations
  

SERVICE FEE REVENUE

    $ 55,425     $ 1,285     $ 54,140  

COSTS OF OPERATIONS:

                         

Cost of services

      39,268       484       38,784  

Equipment lease

      3,655       6       3,649  

Provision for doubtful accounts

      6,151       696       5,455  

Depreciation and amortization

      6,052       2       6,050  

Gross profit

    $ 299     $ 97     $ 202  

SEVERANCE AND OTHER RELATED COSTS

      —         —         —    

CORPORATE GENERAL AND ADMINISTRATIVE

      5,134       —         5,134  

IMPAIRMENT OF GOODWILL, INTANGIBLE AND LONG-LIVED ASSETS

      1,332       —         1,332  

INTEREST EXPENSE, NET

      4,174       5       4,169  

INCOME (LOSS) BEFORE EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES, MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES, INCOME TAXES AND DISCONTINUED OPERATIONS

    $ (10,341 )   $ 92     $ (10,433 )

Equity In Earnings of Unconsolidated Affiliates

      529       —         529  

Minority Interests In Income of Consolidated Subsidiaries

      (152 )     —         (152 )

INCOME (LOSS) BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS

    $ (9,964 )   $ 92     $ (10,056 )

Income Tax Expense (Benefit)

      (3,142 )     (11 )     (3,131 )

INCOME (LOSS) FROM CONTINUING OPERATIONS

    $ (6,822 )   $ 103     $ (6,925 )

 

-more-

Radiologix, Inc. Reports Fourth Quarter and FYE 2004 Results

March 15, 2005

Page 13

 

Radiologix, Inc.

Reconciliation of Financial Information, Excluding Terminated Operations

(In thousands, except per share data)

 

     For the Three Months Ended December 31, 2003
  
     Radiologix
    

Terminated

Operations

    

Radiologix

Excluding
Terminated

Operations

  

SERVICE FEE REVENUE

    $ 62,498     $ 5,032     $ 57,466  

COSTS OF OPERATIONS:

                         

Cost of services

      40,027       2,606       37,421  

Equipment lease

      4,800       42       4,758  

Provision for doubtful accounts

      5,011       718       4,293  

Depreciation and amortization

      6,323       461       5,862  

Gross profit

    $ 6,337     $ 1,205     $ 5,132  

SEVERANCE AND OTHER RELATED COSTS

      288       —         288  

CORPORATE GENERAL AND ADMINISTRATIVE

      4,344       —         4,344  

IMPAIRMENT OF GOODWILL, INTANGIBLE AND LONG-LIVED ASSETS

      523       —         523  

INTEREST EXPENSE, NET

      4,218       99       4,119  

INCOME (LOSS) BEFORE EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES, MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES, INCOME TAXES AND DISCONTINUED OPERATIONS

    $ (3,036 )   $ 1,106     $ (4,142 )

Equity In Earnings of Unconsolidated Affiliates

      923       78       845  

Minority Interests In Income of Consolidated Subsidiaries

      (18 )     (75 )     57  

INCOME (LOSS) BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS

    $ (2,131 )   $ 1,109     $ (3,240 )

Income Tax Expense (Benefit)

      (853 )     403       (1,256 )

INCOME (LOSS) FROM CONTINUING OPERATIONS

    $ (1,278 )   $ 706     $ (1,984 )

 

-more-

Radiologix, Inc. Reports Fourth Quarter and FYE 2004 Results

March 15, 2005

Page 14

 

Radiologix, Inc.

Reconciliation of Financial Information, Excluding Terminated Operations

(In thousands, except per share data)

 

     For the Year Ended December 31, 2004
  
     Radiologix
    

Terminated

Operations

     Radiologix
Excluding
Terminated
Operations
  

SERVICE FEE REVENUE

    $ 251,291     $ 11,898     $ 239,393  

COSTS OF OPERATIONS:

                         

Cost of services

      158,613       6,083       152,530  

Equipment lease

      17,660       114       17,546  

Provision for doubtful accounts

      22,337       2,624       19,713  

Depreciation and amortization

      24,750       688       24,062  

Gross profit

    $ 27,931     $ 2,389     $ 25,542  

SEVERANCE AND OTHER RELATED COSTS

      405       —         405  

CORPORATE GENERAL AND ADMINISTRATIVE

      18,919       —         18,919  

IMPAIRMENT OF GOODWILL, INTANGIBLE AND LONG-LIVED ASSETS

      14,558       7,211       7,347  

GAIN ON SALE OF OPERATIONS

      (4,669 )     (4,669 )     —    

INTEREST EXPENSE, NET

      16,974       175       16,799  

LOSS BEFORE EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES, MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES, INCOME TAXES AND DISCONTINUED OPERATIONS

    $ (18,256 )   $ (328 )   $ (17,928 )

Equity In Earnings of Unconsolidated Affiliates

      2,865       114       2,751  

Minority Interests In Income of Consolidated Subsidiaries

      (791 )     (128 )     (663 )

INCOME (LOSS) BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS

    $ (16,182 )   $ (342 )   $ (15,840 )

Income Tax Expense (Benefit)

      (5,848 )     (316 )     (5,532 )

INCOME (LOSS) FROM CONTINUING OPERATIONS

    $ (10,334 )   $ (26 )   $ (10,308 )

 

-more-

Radiologix, Inc. Reports Fourth Quarter and FYE 2004 Results

March 15, 2005

Page 15

 

Radiologix, Inc.

Reconciliation of Financial Information, Excluding Terminated Operations

(In thousands, except per share data)

 

     For the Year Ended December 31, 2003
  
     Radiologix
    

Terminated

Operations

     Radiologix
Excluding
Terminated
Operations
  

SERVICE FEE REVENUE

    $ 242,038     $ 21,113     $ 220,925  

COSTS OF OPERATIONS:

                         

Cost of services

      149,034       9,231       139,803  

Equipment lease

      17,230       176       17,054  

Provision for doubtful accounts

      20,228       2,937       17,291  

Depreciation and amortization

      25,537       1,685       23,852  

Gross profit

    $ 30,009     $ 7,084     $ 22,925  

SEVERANCE AND OTHER RELATED COSTS

      1,568       —         1,568  

CORPORATE GENERAL AND ADMINISTRATIVE

      15,335       —         15,335  

IMPAIRMENT OF GOODWILL, INTANGIBLE AND LONG-LIVED ASSETS

      523       —         523  

GAIN ON SALE OF OPERATIONS

      —         —         —    

INTEREST EXPENSE, NET

      17,670       428       17,242  

LOSS BEFORE EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES, MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES, INCOME TAXES AND DISCONTINUED OPERATIONS

    $ (5,087 )   $ 6,656     $ (11,743 )

Equity In Earnings of Unconsolidated Affiliates

      4,082       371       3,711  

Minority Interests In Income of Consolidated Subsidiaries

      (748 )     (315 )     (433 )

INCOME (LOSS) BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS

    $ (1,753 )     6,712     $ (8,465 )

Income Tax Expense (Benefit)

      (701 )     2,421       (3,122 )

INCOME (LOSS) FROM CONTINUING OPERATIONS

    $ (1,052 )   $ 4,291     $ (5,343 )

 

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