InSight Health Services Holdings Corp. Reports Results for the Three and Nine Months...

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

LAKE FOREST, Calif.--(Business Wire)--
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.

Other risk factors are listed from time to time in InSight's SEC
registration statements and reports. If any of these risks or
uncertainties materializes, or if any of InSight's underlying
assumptions is incorrect, InSight's actual results may differ from the
results that InSight expresses or implies by any of its
forward-looking statements. InSight disclaims any intention or
obligation to update or revise any forward-looking statements whether
as a result of new information, future events or otherwise.

About InSight

InSight, headquartered in Lake Forest, California, is a nationwide
provider of diagnostic imaging services. It serves managed care
entities, hospitals and other contractual customers in over 30 states,
including the following targeted regional markets: California,
Arizona, New England, the Carolinas, Florida and the Mid-Atlantic
states. As of March 31, 2008, InSight's network consists of 92
fixed-site centers and 111 mobile facilities.

For more information, please visit www.insighthealth.com.

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INSIGHT HEALTH SERVICES HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands)

Nine Months Ended Three Months Ended
March 31, March 31,
------------------------ -------------------------
2008 2007 2008 2007
------------------------ -------------------------
(Combined) (Predecessor) (Successor) (Predecessor)
------------------------ -------------------------
(unaudited) (unaudited)
REVENUES:
Contract services $ 88,736 $ 96,864 $ 29,074 $ 31,627
Patient services 111,439 118,839 36,311 38,438
---------- ------------- ----------- -------------
Total revenues 200,175 215,703 65,385 70,065
---------- ------------- ----------- -------------
COSTS OF
OPERATIONS:
Costs of services 138,956 145,870 47,025 46,709
Provision for
doubtful accounts 4,718 4,169 1,984 1,351
Equipment leases 7,178 4,155 2,627 1,763
Depreciation and
amortization 44,125 43,493 15,106 13,352
---------- ------------- ----------- -------------
Total costs of
operations 194,977 197,687 66,742 63,175
---------- ------------- ----------- -------------
Gross profit
(loss) 5,198 18,016 (1,357) 6,890
CORPORATE OPERATING
EXPENSES (19,566) (16,742) (8,461) (5,524)
EQUITY IN EARNINGS
OF UNCONSOLIDATED
PARTNERSHIPS 1,337 2,510 485 878
INTEREST EXPENSE,
net (27,375) (40,891) (8,686) (13,568)
IMPAIRMENT OF
GOODWILL - (29,595) - -
---------- ------------- ----------- -------------
Loss before
reorganization
items and income
taxes (40,406) (66,702) (18,019) (11,324)
REORGANIZATION
ITEMS, net 198,998 - - -
---------- ------------- ----------- -------------
Income (loss)
before income
taxes 158,592 (66,702) (18,019) (11,324)
PROVISION FOR
INCOME TAXES 3,680 450 1,357 150
---------- ------------- ----------- -------------
Net income (loss) $ 154,912 $ (67,152) $ (19,376) $ (11,474)
========== ============= =========== =============

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INSIGHT HEALTH SERVICES HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)

Nine Months Ended Three Months Ended
------------------------ -------------------------
March 31, March 31,
------------------------ -------------------------
2008 2007 2008 2007
------------------------ -------------------------
(Combined) (Predecessor) (Successor) (Predecessor)
------------------------ -------------------------
(unaudited) (unaudited)
OPERATING
ACTIVITIES:
Net income (loss) $ 154,912 $ (67,152) $ (19,376) $ (11,474)
Adjustments to
reconcile net
income (loss) to
net cash (used
in) provided by
operating
activities:
Cash used for
reorganization
items 8,027 - 304 -
Noncash
reorganization
items (207,025) - - -
Depreciation and
amortization 44,125 43,493 15,106 13,352
Amortization of
bond discount 3,245 - 1,244 -
Amortization of
deferred
financing costs 145 2,369 - 790
Impairment of
goodwill - 29,595 - -
Equity in
earnings of
unconsolidated
partnerships (1,337) (2,510) (485) (878)
Distributions
from
unconsolidated
partnerships 2,043 2,131 781 591
Deferred income
taxes 3,122 - 1,171 -
Cash (used in)
provided by
changes in
operating assets
and liabilities:
Trade accounts
receivables, net 5,303 91 628 (2,270)
Other current
assets (1,625) (1,038) 767 482
Accounts payable
and other
accrued expenses (4,933) 4,253 (4,224) 1,118
---------- ------------- ----------- -------------
Net cash
provided by
(used in)
operating
activities
before
reorganization
items 6,002 11,232 (4,084) 1,711
Cash used for
reorganization
items (8,027) - (304) -
---------- ------------- ----------- -------------
Net cash (used
in) provided by
operating
activities (2,025) 11,232 (4,388) 1,711
---------- ------------- ----------- -------------
INVESTING
ACTIVITIES:
Additions to
property and
equipment (4,812) (11,211) (1,041) (2,378)
Other 68 (389) (26) 173
---------- ------------- ----------- -------------
Net cash used in
investing
activities (4,744) (11,600) (1,067) (2,205)
---------- ------------- ----------- -------------
FINANCING
ACTIVITIES:
Principal payments
of notes payable
and capital lease
obligations (3,378) (5,284) (587) (1,661)
Principal payments
on credit
facility (5,000) - - -
Proceeds from
issuance of notes
payable 12,768 1,145 - -
Other - (2,549) - (2,549)
---------- ------------- ----------- -------------
Net cash
provided by
(used in)
financing
activities 4,390 (6,688) (587) (4,210)
---------- ------------- ----------- -------------
DECREASE IN CASH
AND CASH
EQUIVALENTS: (2,379) (7,056) (6,042) (4,704)
Cash, beginning of
period 20,832 28,208 24,495 25,856
---------- ------------- ----------- -------------
Cash, end of
period $ 18,453 $ 21,152 $ 18,453 $ 21,152
--------------------==========-=============-===========-=============

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INSIGHT HEALTH SERVICES HOLDINGS CORP. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA
(Amounts in thousands)

Nine Months Ended Three Months Ended
March 31, March 31,
------------------------ -------------------------
2008 2007 2008 2007
------------------------ -------------------------
(Combined) (Predecessor) (Successor) (Predecessor)
------------------------ -------------------------
(unaudited) (unaudited)
Net cash (used in)
provided by
operating
activities $ (2,025) $ 11,232 $ (4,388) $ 1,711
Cash used for
reorganization
items 8,027 - 304 -
Provision for
income taxes 3,680 450 1,357 150
Interest expense,
net 27,375 40,891 8,686 13,568
Amortization of
bond discount (3,245) - (1,244) -
Amortization of
deferred
financing costs (145) (2,369) - (790)
Equity in
earnings of
unconsolidated
partnerships 1,337 2,510 485 878
Distributions
from
unconsolidated
partnerships (2,043) (2,131) (781) (591)
Net change in
operating assets
and liabilities 1,255 (3,306) 2,525 670
Net change in
deferred income
taxes (3,122) - (1,171) -
---------- ------------- ----------- -------------
Adjusted EBITDA $ 31,094 $ 47,277 $ 5,773 $ 15,596
========== ============= =========== =============

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INSIGHT HEALTH SERVICES HOLDINGS CORP. AND SUBSIDIARIES
SELECTED BALANCE SHEET INFORMATION
(Amounts in thousands)

Successor Predecessor
----------------------------
March 31, June 30,
2008 2007
----------------------------
(unaudited)

Cash and cash equivalents $ 18,453 $ 20,832
Trade accounts receivables, net 37,380 42,683
Property and equipment, net 129,333 144,823
Goodwill and other intangible assets, net 143,876 95,084
Total assets 350,529 323,051
Accounts payable and accrued expenses 33,685 38,619
Notes payable, including current
maturities 294,194 305,627
Capital leases, including current
maturities 6,817 6,229
Liabilities subject to compromise - 205,704
Total stockholders' deficit (2,640) (241,432)
*T

InSight
Kip Hallman, President & CEO
Mitch C. Hill, Executive Vice President & CFO
949-282-6000
or
Pairelations, LLC
Susan J. Lewis, 303-804-0494
slewis@pairelations.com

Copyright Business Wire 2008