RGX Radiologix

Radiologix, Inc. Posts Strong Revenue Growth in Third Quarter 2004 Service Fee Revenue Grew 5.1% From Third Quarter 2003; 8.3% From Nine Months 2003 DALLAS, Nov. 4 /PRNewswire-FirstCall/ -- Radiologix, Inc. (AMEX:RGX), a leading national provider of diagnostic imaging services, today announced financial results for its third quarter and nine months ended September 30, 2004. Radiologix reported a net loss of $5.4 million, or $0.25 per diluted share for the third quarter 2004, compared to a net loss of $646,000, or $0.03 per diluted share for the third quarter 2003. For the nine months ended September 30, 2004, Radiologix reported a net loss of $10.2 million, or $0.47 per diluted share, compared to a net loss of $5.0 million, or $0.23 per diluted share for the same period last year. Income from continuing operations, excluding charges and San Antonio operations, was $621,000, or $0.03 per diluted share for the third quarter 2004, compared to a loss of $705,000, or $0.03 loss per diluted share, for the third quarter 2003. Income from continuing operations, excluding charges, a gain on sale of operations, and San Antonio operations, was $1.4 million, or $0.06 per diluted share for the nine months ended September 30, 2004, compared to a loss of $1.2 million, or $0.06 per diluted share, for the nine months ended September 30, 2003. Other financial results for the third quarter and nine months ended September 30, 2004 included: -- service fee revenue growth of 5.1% to $64.7 million, compared to $61.5 million for the third quarter 2003, -- income from continuing operations, excluding charges, of $0, or $0.00 per diluted share, compared to $81,000, or $0.00 per diluted share, for the third quarter 2003, -- EBITDA from continuing operations, excluding charges, of $10.2 million, or 15.8% of service fee revenue, compared to $10.9 million, or 17.8% of service fee revenue, for the third quarter 2003, -- service fee revenue growth of 8.3% to $199.2 million, compared to $183.9 million for the nine months ended September 30, 2003, -- growth in income from continuing operations, excluding charges and a gain on sale of operations, to $1.8 million, or $0.08 per diluted share, from $1.2 million, or $0.06 per diluted share, for the nine months ended September 30, 2003, -- EBITDA from continuing operations, excluding charges and a gain on sale of operations, of $34.9 million, or 17.5% of service fee revenue, compared to $35.0 million, or 19.0% of service fee revenue, for the nine months ended September 30, 2003, -- cash and cash equivalents of $52.5 million at September 30, 2004, compared to $36.8 million at December 31, 2003, -- net debt (total debt less cash and cash equivalents) at September 30, 2004, was $118.1 million, compared to net debt of $137.3 million at December 31, 2003. Total debt at September 30, 2004 was $170.6 million, compared to total debt of $174.1 million at December 31, 2003, and -- days sales outstanding (DSOs) of 61 days at September 30, 2004, compared to 63 days at December 31, 2003. EBITDA, or earning before interest, taxes, depreciation and amortization, including equity in earnings of unconsolidated affiliates and minority interests, is a non-GAAP financial measure that is defined, discussed and reconciled below. Results from the third quarter and nine months ended September 30, 2004, excluding San Antonio operations, included: -- service fee revenue growth of 12.4% to $64.9 million, from $57.7 million for the third quarter 2003, -- growth in income from continuing operations, excluding charges, to $621,000, or $0.03 per diluted share, from a loss of $705,000, or $0.03 loss per diluted share, for the third quarter 2003, -- EBITDA from continuing operations, excluding charges, of $11.2 million, or 17.2% of service fee revenue, compared to $9.3 million, or 16.1% of service fee revenue, for the third quarter 2003, -- service fee revenue growth of 12.2% to $193.3 million, from $172.3 million for the nine months ended September 30, 2003, -- growth in income from continuing operations, excluding charges, to $1.4 million, or $0.06 per diluted share, from a loss of $1.2 million, or $0.06 loss per diluted share, for the nine months ended September 30, 2003, and -- EBITDA from continuing operations, excluding charges and a gain on sale of operations, of $33.7 million, or 17.4% of service fee revenue, compared to $29.9 million, or 17.4% of service fee revenue, for the nine months ended September 30, 2003. "Radiologix is in the midst of a major undertaking to improve operational and financial results, and we accelerated this effort in the third quarter by making and executing critical decisions. These decisions are reflected in the charges and special items recorded in our third quarter as well as our nine month results," said Marvin S. Cadwell, chairman of the board of directors of Radiologix and interim CEO. "However, in analyzing these results, you will note that Radiologix reported a strong third quarter and nine months this year. Our service fee revenue continues to show solid growth, we continue to generate cash with stable DSOs, and we continue to make tangible strides in rationalizing our operations. We believe we are seeing the results of improving operations in our core markets and disposing of non-core and unprofitable operations." Cash Flow Cash flow from operating activities was $9.8 million for the third quarter 2004, compared to $12.9 million for the third quarter 2003. Cash flow from operating activities was $26.4 million for the nine months ended September 30, 2004, compared to $22.6 million for the nine months ended September 30, 2003. Discontinued Operations Radiologix continues to pursue its goal of either improving or disposing of imaging centers that do not meet its strategic or profitability requirements. During the third quarter 2004, Radiologix sold three Questar imaging centers previously placed in discontinued operations, closed two other unprofitable Questar imaging centers, and closed one unprofitable imaging center in New York State. Also during the third quarter 2004, Radiologix initiated discussions to sell its 80% joint venture interest in its Questar Tampa operations. Charges and Costs During the third quarter 2004, Radiologix recorded the following pre-tax amounts: -- a $6.5 million impairment to write off the unamortized portion of intangible assets related to the previously announced termination of a medical services agreement with a radiology practice in its Mid- Atlantic market, -- an $800,000 impairment to write off long-lived assets related to the previously announced closing of unprofitable three centers in its Mid- Atlantic market, -- a $300,000 impairment to write off assets damaged from the impact of hurricanes on its Southeastern operations, -- $405,000 for severance and other related costs related to the resignation in September 2004 of the company's former president and CEO, -- $315,000 for a lease termination related to diagnostic equipment no longer in use, -- $295,000 for costs associated with a litigation settlement, and -- $200,000 to write off software costs associated with canceling a software contract. Guidance Radiologix has assessed the radiology sector of the healthcare industry, the competitive landscape for radiology services, its operations, and its opportunities for growth. Radiologix believes that it can achieve diluted earnings per share from continuing operations excluding charges and a gain on sale of operations of $0.08 to $0.10 for 2004. Radiologix currently anticipates capital expenditures for 2004 to range between $40 million and $50 million, and that approximately one-third of this amount would be funded by cash and two-thirds would be funded through lease lines. Forward looking statements concerning fiscal year 2004 guidance relate to future financial results or business expectations and, therefore, may prove to be inaccurate due to changing or unexpected circumstances. Fiscal year 2004 guidance is made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. Please read the "Forward-Looking Statements" section below. CEO Search The Radiologix Board of Directors retained Korn/Ferry International to assist with the previously discussed search for a chief executive officer for Radiologix. The Board of Directors anticipates that this search could take 90 to 180 days to complete. GAAP and Non-GAAP Financial Information This release contains certain financial information not derived in accordance with GAAP, including EBITDA, and EBITDA from continuing operations. Radiologix believes this information is useful to investors and other interested parties. 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. Reconciliation of this information to the most comparable GAAP measures is included in this release. Conference Call In connection with this press release, you are invited to listen to our conference call with Marvin S. Cadwell, chairman and interim CEO, Sami S. Abbasi, executive vice president and COO, and Richard J. Sabolik, senior vice president and CFO, that will be broadcast live over the Internet on Thursday, November 4, 2004, at 8:00 a.m., Central Time / 9:00 a.m. Eastern Time. 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 Third Quarter 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 88 diagnostic imaging centers located in 13 states as of September 30, 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; and -- interruption of operations due to severe weather or other extraordinary events. A more comprehensive list of such factors is set forth in the Company's Annual Report on Form 10-K, as amended, for the year ended December 31, 2003, 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 November 4, 2004. 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) September 30, December 31, 2004 2003 ASSETS (Unaudited) CURRENT ASSETS: Cash and cash equivalents $52,532 $36,766 Restricted cash 4,820 -- Accounts receivable, net of allowances 56,396 58,746 Due from affiliates 2,386 4,104 Assets held for sale 620 251 Other current assets 7,333 7,571 Total current assets 124,087 107,438 PROPERTY AND EQUIPMENT, net 57,676 62,655 INVESTMENTS IN JOINT VENTURES 8,698 10,665 GOODWILL 3,651 20,110 INTANGIBLE ASSETS, net 58,215 67,917 DEFERRED FINANCING COSTS, net 6,936 8,151 DEFERRED INCOME TAXES 8,647 -- OTHER ASSETS 1,443 2,200 Total assets $269,353 $279,136 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and other accrued expenses $13,399 $11,986 Accrued physician retention 8,785 8,821 Accrued salaries and benefits 7,484 7,788 Accrued interest 4,959 815 Deferred income taxes 3,891 1,797 Current portion of capital lease obligations 314 1,438 Current portion of long-term debt -- 261 Other current liabilities 693 482 Total current liabilities 39,525 33,388 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 -- 376 DEFERRED REVENUE 7,005 7,312 OTHER LIABILITIES 900 319 Total liabilities 217,680 217,635 COMMITMENTS AND CONTINGENCIES MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES 979 817 STOCKHOLDERS' EQUITY: Common stock 2 2 Treasury stock (180) (180) Additional paid-in capital 14,155 13,942 Retained earnings 36,717 46,920 Total stockholders' equity 50,694 60,684 Total liabilities and stockholders' equity $269,353 $279,136 Radiologix, Inc. Consolidated Statements of Operations (In thousands, except per share data) For the Three For the Nine Months Ended Months Ended September 30, September 30, 2004 2003 2004 2003 SERVICE FEE REVENUE $64,669 $61,508 $199,224 $183,913 COSTS OF OPERATIONS: Cost of services 40,819 37,863 123,111 112,489 Equipment lease 4,576 4,318 14,005 13,030 Provision for doubtful accounts 5,462 5,272 16,637 15,730 Depreciation and amortization 5,914 6,418 18,905 19,450 Gross profit 7,898 7,637 26,566 23,214 SEVERANCE AND OTHER RELATED COSTS 405 -- 405 1,280 CORPORATE GENERAL AND ADMINISTRATIVE 5,179 3,560 13,075 10,576 IMPAIRMENT OF GOODWILL, INTANGIBLE AND LONG-LIVED ASSETS 7,612 -- 19,317 -- GAIN ON SALE OF OPERATIONS -- -- (4,669) -- INTEREST EXPENSE, NET 4,214 4,389 12,858 13,510 LOSS BEFORE EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES, MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES, INCOME TAXES AND DISCONTINUED OPERATIONS (9,512) (312) (14,420) (2,152) Equity In Earnings of Unconsolidated Affiliates 983 647 2,336 3,159 Minority Interests In Income of Consolidated Subsidiaries (195) (200) (639) (730) INCOME (LOSS) BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS (8,724) 135 (12,723) 277 Income Tax Expense (Benefit) (3,428) 54 (5,308) 111 INCOME (LOSS) FROM CONTINUING OPERATIONS (5,296) 81 (7,415) 166 Discontinued Operations: Loss from discontinued operations before income taxes (150) (1,211) (4,646) (8,577) Income tax benefit (60) (484) (1,858) (3,431) Loss from discontinued operations (90) (727) (2,788) (5,146) NET LOSS $(5,386) $(646) $(10,203) $(4,980) INCOME (LOSS) PER COMMON SHARE Income (loss) from continuing operations - basic $(0.24) $0.00 $(0.34) $0.01 Income (loss) from discontinued operations - basic (0.01) (0.03) (0.13) (0.24) Net income (loss)-basic $(0.25) $(0.03) $(0.47) $(0.23) Income (loss) from continuing operations - diluted $(0.24) $0.00 $(0.34) $0.01 Income (loss) from discontinued operations-diluted (0.01) (0.03) (0.13) (0.24) Net income (loss) - diluted $(0.25) $(0.03) $(0.47) $(0.23) WEIGHTED AVERAGE SHARES OUTSTANDING Basic 21,805,607 21,741,317 21,780,557 21,710,702 Diluted 21,805,607 22,223,909 21,780,557 21,906,781 Radiologix, Inc. Reconciliation of Non-GAAP Financial Information (In thousands, except per share data) For the Three For the Nine Months Ended Months Ended September 30, September 30, 2004 2003 2004 2003 Service fee revenue $64,669 $61,508 $199,224 $183,913 Income (loss) from continuing operations (5,296) 81 (7,415) 166 Less: Income tax expense (benefit) (3,428) 54 (5,308) 111 Add: Interest expense, net 4,214 4,389 12,858 13,510 Add: Depreciation and amortization 5,914 6,418 18,905 19,450 EBITDA from continuing operations 1,404 10,942 19,040 33,237 Add: Severance and other related costs 405 -- 405 1,280 Add: Imp. of goodwill, intangible and long-lived assets 7,612 -- 19,317 -- Add: Litigation settlement 295 -- 295 500 Add: Charges related to contract cancellations 515 -- 515 -- Less: Gain on sale of operations -- -- (4,669) -- EBITDA from continuing operations excluding charges $10,231 $10,942 $34,903 $35,017 EBITDA from continuing operations excluding charges as a percent of service fee revenue 15.8 % 17.8 % 17.5 % 19.0 % EBITDA EBITDA (earnings before interest, taxes, depreciation and amortization, including equity in earnings of unconsolidated affiliates and minority interests) and EBITDA from continuing 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 and EBITDA from continuing operations should not be considered measures of financial performance under GAAP, and the items excluded from EBITDA and EBITDA from continuing 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 and EBITDA from continuing 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. For the Three For the Nine Months Ended Months Ended September 30, September 30, 2004 2003 2004 2003 Net Income (loss) $(5,386) $(646) $(10,203) $(4,980) Less: Income tax benefit from discontinued ops. 60 484 1,858 3,431 Add: Loss from discontinued operations 150 1,211 4,646 8,577 Income (loss) from continuing operations (5,296) 81 (7,415) 166 Add: Severance and other related costs(1) 243 -- 243 768 Add: Imp. of goodwill and long-lived assets(1) 4,567 -- 11,590 -- Add: Litigation settlement(1) 177 -- 177 300 Add: Charges related to contract cancellations(1) 309 -- 309 -- Add: Gain on sale of operations(1) -- -- (3,081) -- Income from continuing operations excluding charges and gain -- 81 1,823 1,234 Fully diluted shares outstanding 21,806 22,224 21,781 21,907 Income from continuing operations excluding charges and gain per share - diluted $0.00 $0.00 $0.08 $0.06 (1) Net of taxes Radiologix, Inc. Reconciliation of Non-GAAP Financial Information, Excluding San Antonio Operations (In thousands, except per share data) For the Three For the Nine Months Ended Months Ended September 30, September 30, 2004 2003 2004 2003 Service fee revenue $64,907 $57,731 $193,342 $172,310 Loss from continuing operations (4,675) (705) (7,826) (2,291) Less: Income tax benefit (3,108) (350) (5,520) (1,154) Add: Interest expense, net 4,214 4,303 12,743 13,225 Add: Depreciation and amortization 5,914 6,062 18,395 18,381 EBITDA from continuing operations 2,345 9,310 17,791 28,161 Add: Severance and other related costs 405 -- 405 1,280 Add: Imp. of goodwill, intangible and long-lived assets 7,612 -- 19,317 -- Add: Litigation settlement 295 -- 295 500 Add: Charges related to contract cancellations 515 -- 515 -- Less: Gain on sale of operations -- -- (4,669) -- EBITDA from continuing operations excluding charges $11,172 $9,310 $33,655 $29,941 EBITDA from continuing operations excluding charges as a percent of service fee revenue 17.2 % 16.1 % 17.4 % 17.4 % For the Three For the Nine Months Ended Months Ended September 30, September 30, 2004 2003 2004 2003 Net Income (loss) $(4,765) $(1,432) $(10,614) $(7,437) Less: Income tax benefit from discontinued ops. 60 484 1,858 3,431 Add: Loss from discontinued operations 150 1,211 4,646 8,577 Loss from continuing operations (4,675) (705) (7,826) (2,291) Add: Severance and other related costs(1) 243 -- 243 768 Add: Imp. of goodwill and long-lived assets(1) 4,567 -- 11,590 -- Add: Litigation settlement(1) 177 -- 177 300 Add: Charges related to contract cancellations(1) 309 -- 309 -- Less: Gain on sale of operations(1) -- -- (3,081) -- Income (loss) from continuing operations excluding charges and gain $621 $(705) $1,412 (1,223) Fully diluted shares outstanding 21,806 22,224 21,781 21,907 Income (loss) from continuing operations excluding charges and gain per share - diluted $ 0.03 $ (0.03) $ 0.06 $ (0.06) (1) Net of taxes Radiologix, Inc. Reconciliation of Financial Information, Excluding San Antonio Operations (In thousands, except per share data) For the Three Months Ended September 30, 2004 Radiologix Excluding San San Percent Antonio Antonio of Radiologix Operations Operations Revenue SERVICE FEE REVENUE $64,669 $(238) $64,907 100% COSTS OF OPERATIONS: Cost of services 40,819 496 40,323 62.1 Equipment lease 4,576 -- 4,576 7.1 Provision for doubtful accounts 5,462 207 5,255 8.1 Depreciation and amortization 5,914 -- 5,914 9.1 Gross profit 7,898 (941) 8,839 13.6 SEVERANCE AND OTHER RELATED COSTS 405 -- 405 0.6 CORPORATE GENERAL AND ADMINISTRATIVE 5,179 -- 5,179 8.0 IMPAIRMENT OF GOODWILL, INTANGIBLE AND LONG-LIVED ASSETS 7,612 -- 7,612 11.7 INTEREST EXPENSE, NET 4,214 -- 4,214 6.5 LOSS BEFORE EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES, MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES, INCOME TAXES AND DISCONTINUED OPERATIONS (9,512) (941) (8,571) (13.2) Equity In Earnings of Unconsolidated Affiliates 983 -- 983 1.5 Minority Interests In Income of Consolidated Subsidiaries (195) -- (195) (0.3) INCOME (LOSS) BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS (8,724) (941) (7,783) (12.0) Income Tax Expense (Benefit) (3,428) (320) (3,108) (4.8) INCOME (LOSS) FROM CONTINUING OPERATIONS (5,296) (621) (4,675) (7.2) Discontinued Operations: Loss from discontinued operations before income taxes (150) -- (150) (0.2) Income tax benefit (60) -- (60) (0.1) Loss from discontinued operations (90) -- (90) (0.1) NET LOSS $(5,386) $(621) $(4,765) (7.3) INCOME (LOSS) PER COMMON SHARE Income (loss) from continuing operations - basic $(0.24) $(0.03) $(0.21) Income (loss) from discontinued operations - basic (0.01) -- (0.01) Net income (loss)-basic $(0.25) $(0.03) $(0.22) Income (loss) from continuing operations - diluted $(0.24) $(0.03) $(0.21) Income (loss) from discontinued operations-diluted (0.01) -- (0.01) Net income (loss) - diluted $(0.25) $(0.03) $(0.22) WEIGHTED AVERAGE SHARES OUTSTANDING Basic 21,805,607 21,805,607 21,805,607 Diluted 21,805,607 21,805,607 21,805,607 Radiologix, Inc. Reconciliation of Financial Information, Excluding San Antonio Operations (In thousands, except per share data) For the Three Months Ended September 30, 2003 Radiologix Excluding San San Percent Antonio Antonio of Radiologix Operations Operations Revenue SERVICE FEE REVENUE $61,508 $3,777 $57,731 100% COSTS OF OPERATIONS: Cost of services 37,863 1,319 36,544 63.3 Equipment lease 4,318 4 4,314 7.5 Provision for doubtful accounts 5,272 567 4,705 8.1 Depreciation and amortization 6,418 356 6,062 10.5 Gross profit 7,637 1,531 6,106 10.6 SEVERANCE AND OTHER RELATED COSTS -- -- -- -- CORPORATE GENERAL AND ADMINISTRATIVE 3,560 -- 3,560 6.2 IMPAIRMENT OF GOODWILL, INTANGIBLE AND LONG-LIVED ASSETS -- -- -- -- INTEREST EXPENSE, NET 4,389 86 4,303 7.5 LOSS BEFORE EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES, MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES, INCOME TAXES AND DISCONTINUED OPERATIONS (312) 1,445 (1,757) (3.0) Equity In Earnings of Unconsolidated Affiliates 647 (211) 858 1.5 Minority Interests In Income of Consolidated Subsidiaries (200) (44) (156) (0.3) INCOME (LOSS) BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS 135 1,190 (1,055) (1.8) Income Tax Expense (Benefit) 54 404 (350) (0.6) INCOME (LOSS) FROM CONTINUING OPERATIONS 81 786 (705) (1.2) Discontinued Operations: Loss from discontinued operations before income taxes (1,211) -- (1,211) (2.1) Income tax benefit (484) -- (484) (0.8) Loss from discontinued operations (727) -- (727) (1.3) NET LOSS $(646) $786 $(1,432) (2.5) INCOME (LOSS) PER COMMON SHARE Income (loss) from continuing operations-basic $ -- $0.03 $(0.03) Income (loss) from discontinued operations - basic (0.03) -- -- Net income (loss)-basic $(0.03) $0.03 $(0.06) Income (loss) from continuing operations - diluted $ -- $0.03 $(0.03) Income (loss) from discontinued operations - diluted (0.03) -- -- Net income (loss)- diluted $(0.03) $0.03 $(0.06) WEIGHTED AVERAGE SHARES OUTSTANDING Basic 21,741,317 21,741,317 21,741,317 Diluted 22,223,909 22,223,909 22,223,909 Radiologix, Inc. Reconciliation of Financial Information, Excluding San Antonio Operations (In thousands, except per share data) For the Nine Months Ended September 30, 2004 Radiologix Excluding San San Percent Antonio Antonio of Radiologix Operations Operations Revenue SERVICE FEE REVENUE $199,224 $5,882 $193,342 100% COSTS OF OPERATIONS: Cost of services 123,111 3,443 119,668 61.9 Equipment lease 14,005 5 14,000 7.2 Provision for doubtful accounts 16,637 1,171 15,466 8.0 Depreciation and amortization 18,905 510 18,395 9.5 Gross profit 26,566 753 25,813 13.4 SEVERANCE AND OTHER RELATED COSTS 405 -- 405 0.2 CORPORATE GENERAL AND ADMINISTRATIVE 13,075 -- 13,075 6.8 IMPAIRMENT OF GOODWILL, INTANGIBLE AND LONG-LIVED ASSETS 19,317 -- 19,317 10.0 GAIN ON SALE OF OPERATIONS (4,669) -- (4,669) (2.4) INTEREST EXPENSE, NET 12,858 115 12,743 6.6 LOSS BEFORE EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES, MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES, INCOME TAXES AND DISCONTINUED OPERATIONS (14,420) 638 (15,058) (7.8) Equity In Earnings of Unconsolidated Affiliates 2,336 114 2,222 1.1 Minority Interests In Income of Consolidated Subsidiaries (639) (129) (510) (0.3) INCOME (LOSS) BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS (12,723) 623 (13,346) (6.9) Income Tax Expense (Benefit) (5,308) 212 (5,520) (2.9) INCOME (LOSS) FROM CONTINUING OPERATIONS (7,415) 411 (7,826) (4.0) Discontinued Operations: Loss from discontinued operations before income taxes (4,646) -- (4,646) (2.4) Income tax benefit (1,858) -- (1,858) (1.0) Loss from discontinued operations (2,788) -- (2,788) (1.4) NET LOSS $(10,203) $411 $(10,614) (5.5) INCOME (LOSS) PER COMMON SHARE Income (loss) from continuing operations-basic $(0.34) $0.02 $(0.36) Income (loss) from discontinued operations - basic (0.13) -- (0.13) Net income (loss) - basic $(0.47) $0.02 $(0.49) Income (loss) from continuing operations - diluted $(0.34) $0.02 $(0.36) Income (loss) from discontinued operations - diluted (0.13) -- (0.13) Net income (loss)-diluted $(0.47) $0.02 $(0.49) WEIGHTED AVERAGE SHARES OUTSTANDING Basic 21,780,557 21,780,557 21,780,557 Diluted 21,780,557 21,780,557 21,780,557 Radiologix, Inc. Reconciliation of Financial Information, Excluding San Antonio Operations (In thousands, except per share data) For the Nine Months Ended September 30, 2003 Radiologix Excluding San San Percent Antonio Antonio of Radiologix Operations Operations Revenue SERVICE FEE REVENUE $183,913 $11,603 $172,310 100% COSTS OF OPERATIONS: Cost of services 112,489 4,875 107,614 62.5 Equipment lease 13,030 11 13,019 7.6 Provision for doubtful accounts 15,730 1,694 14,036 8.1 Depreciation and amortization 19,450 1,069 18,381 10.7 Gross profit 23,214 3,954 19,260 11.2 SEVERANCE AND OTHER RELATED COSTS 1,280 -- 1,280 0.7 CORPORATE GENERAL AND ADMINISTRATIVE 10,576 -- 10,576 6.1 IMPAIRMENT OF GOODWILL, INTANGIBLE AND LONG-LIVED ASSETS -- -- -- -- INTEREST EXPENSE, NET 13,510 285 13,225 7.7 LOSS BEFORE EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES, MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES, INCOME TAXES AND DISCONTINUED OPERATIONS (2,152) 3,669 (5,821) (3.4) Equity In Earnings of Unconsolidated Affiliates 3,159 293 2,866 1.7 Minority Interests In Income of Consolidated Subsidiaries (730) (240) (490) (0.3) INCOME (LOSS) BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS 277 3,722 (3,445) (2.0) Income Tax Expense (Benefit) 111 1,265 (1,154) (0.7) INCOME (LOSS) FROM CONTINUING OPERATIONS 166 2,457 (2,291) (1.3) Discontinued Operations: Loss from discontinued operations before income taxes (8,577) -- (8,577) (5.0) Income tax benefit (3,431) -- (3,431) (2.0) Loss from discontinued operations (5,146) -- (5,146) (3.0) NET LOSS $(4,980) $2,457 $(7,437) (4.3) INCOME (LOSS) PER COMMON SHARE Income (loss) from continuing operations - basic $0.01 $0.11 $(0.10) Income (loss) from discontinued operations - basic (0.24) -- (0.24) Net income (loss) - basic $(0.23) $0.11 $(0.34) Income (loss) from continuing operations - diluted $0.01 $0.11 $(0.10) Income (loss) from discontinued operations - diluted (0.24) -- (0.24) Net income (loss) - diluted $(0.23) $0.11 $(0.34) WEIGHTED AVERAGE SHARES OUTSTANDING Basic 21,710,702 21,710,702 21,710,702 Diluted 21,906,781 21,906,781 21,906,781 DATASOURCE: Radiologix, Inc. CONTACT: Paul R. Streiber of Radiologix, Inc., Investor Relations, +1-214-303-2702, Web site: http://www.radiologix.com/

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