UPDATE 1-Virtual Radiologic cuts '08 view

(Recasts; adds details, share movement)

Sept 29 (Reuters) - Virtual Radiologic Corp (VRAD.O), which provides teleradiology solutions, cut its 2008 outlook for the second time in a row, citing a drop in volumes of its procedure counts in September, sending its shares down nearly 18 percent.

The company also said it was in the process of establishing a captive insurance company to self-insure its medical malpractice liability and sees a charge of 9 cents to 10 cents a share in the fourth quarter.

The captive insurance company is expected to reduce the cost of insurance and ensure the long-term availability of medical malpractice coverage, Virtual Radiologic said in a statement.

For 2008, the company expects to earn 46 cents to 52 cents a share, before the impact of establishing actuarial reserves in the captive insurance company. It was previously expecting earnings of 70 cents to 74 cents a share.

It expects 2008 revenue of $102 million to $104 million, down from its prior view of $108 million to $111 million. Analysts were expecting earnings of 71 cents a share, before items, on revenue of $109.5 million, according to Reuters Estimates.

Shares of the company were trading down more than $2 at $9.65 in early morning trade on Nasdaq. (Reporting by Esha Dey in Bangalore; Editing by Anil D'Silva)