RGX Radiologix

Radiologix, Inc. Reports Fourth Quarter and FYE 2004 Results DALLAS, March 15 /PRNewswire-FirstCall/ -- 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 For the For the (in thousands of dollars) Three Months Ended Year Ended December 31, 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 operations(1) $262 $8,410 $25,542 $41,454 Adjusted EBITDA(1) $11,008 $10,705 $46,060 $45,529 Adjusted EBITDA excluding terminated operations(1) $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 operations(1) $283 $99 $2,730 $1,393 Adjusted income (loss) from continuing operations excluding terminated operations(1) $(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). 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. 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. 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 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. 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," "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. Radiologix, Inc. Consolidated Balance Sheets (In thousands) December 31, ASSETS 2004 2003 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 Radiologix, Inc. Consolidated Statements of Operations (In thousands, except per share data) For the For the Three Months Ended Year Ended December 31, 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 Radiologix, Inc. Reconciliation of Non-GAAP Financial Information (In thousands, except per share data) Reconciliation of Loss from For the For the Continuing Operations to Three Months Ended Year Ended Adjusted Income from December 31, December 31, Continuing Operations 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 For the For the Continuing Operations to Three Months Ended Year Ended EBITDA and adjusted EBITDA December 31, 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 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 For the For the Continuing Operations, Three Months Ended Year Ended excluding Terminated December 31, December 31, Operations 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 For the For the EBITDA, Adjusted EBITDA Three Months Ended Year Ended Excluding Terminated December 31, December 31, Operations 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 Radiologix, Inc. Reconciliation of Financial Information, Excluding Terminated Operations (In thousands, except per share data) For the Three Months Ended December 31, 2004 Terminated Radiologix Excluding Radiologix Operations 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) Radiologix, Inc. Reconciliation of Financial Information, Excluding Terminated Operations (In thousands, except per share data) For the Three Months Ended December 31, 2003 Terminated Radiologix Excluding Radiologix Operations 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) Radiologix, Inc. Reconciliation of Financial Information, Excluding Terminated Operations (In thousands, except per share data) For the Year Ended December 31, 2004 Terminated Radiologix Excluding Radiologix Operations 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) Radiologix, Inc. Reconciliation of Financial Information, Excluding Terminated Operations (In thousands, except per share data) For the Year Ended December 31, 2003 Terminated Radiologix Excluding Radiologix Operations 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) http://www.newscom.com/cgi-bin/prnh/19991026/RLGXLOGO http://photoarchive.ap.org/ DATASOURCE: Radiologix, Inc. CONTACT: Paul R. Streiber, Investor Relations of Radiologix, +1-214-303-2702, or Web site: http://www.radiologix.com/

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