Radiologix, Inc. Reports Fourth Quarter and FYE 2004 Results

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 [phone] and entering code 8474100.  A
replay of the call is available by dialing [phone] 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)


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DATASOURCE: Radiologix, Inc.



CONTACT:  Paul R. Streiber, Investor Relations of Radiologix,

[phone], or  



Web site:  http://www.radiologix.com/ 

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