Radiologix, Inc. Reports Fourth Quarter and FYE 2005 Results

DALLAS, March 9  /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, 2005.  Radiologix also announced that it is restating the financial statements for FYE December 31, 2004 and the nine months ended September 30, 2005, as discussed below.

  Select Financial Information
  (in thousands of dollars)    For the Three Months      For the Year
                                Ended December 31,     Ended December 31,
                                2005         2004      2005         2004

  Service fee revenue         $62,120      $55,425   $251,440     $251,291
  Service fee revenue excluding
   terminated operations      $62,120      $54,140   $250,472     $239,393

  EBITDA from continuing
   operations(1)              $10,602      $11,008    $45,455      $46,060
  EBITDA from continuing
   operations excluding
   terminated operations(1)   $10,727      $10,203    $45,366      $41,976

  Net loss                    $(3,080)    $(21,653)   $(1,531)    $(31,855)
  Loss from continuing
   operations                 $(2,559)    $(20,641)     $(400)    $(24,153)
  Loss from continuing
   operations excluding
   terminated operations(1)   $(2,433)    $(20,744)     $(317)    $(24,127)

  (1) As defined and reconciled below


  Fourth Quarter 2005 Results


For the fourth quarter ended December 31, 2005, service fee revenue was $62.1 million, compared to $55.4 million for the fourth quarter 2004. Radiologix incurred a net loss of $3.1 million, or $0.14 per diluted share, compared to a net loss of $21.7 million or $0.99 per diluted share for the fourth quarter 2004.

  - Service fee revenue excluding terminated operations was $62.1 million,
    compared to $54.1 million for the fourth quarter 2004. Fourth quarter
    2004 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. $0.7 million of the $9.1 million is
    included in terminated operations.  Excluding the fourth quarter 2004
    $9.1 million reduction, service fee revenue excluding terminated
    operations for the fourth quarter 2005 was $62.1 million, compared to
    $62.5 million for the fourth quarter 2004.
  - Loss from continuing operations was $2.6 million, compared to a loss
    from continuing operations of $20.6 million for the fourth quarter 2004.
  - Loss from continuing operations, excluding terminated operations was
    $2.4 million, compared to a loss of $20.7 million for the fourth quarter
    2004.
  - EBITDA was $10.6 million, compared to $11.0 million for the fourth
    quarter 2004.
  - EBITDA excluding terminated operations was $10.7 million, compared to
    $10.2 million for the fourth quarter 2004.

  FYE 2005 Results


For the fiscal year ended December 31, 2005, service fee revenue was $251.4 million, compared to $251.3 million for fiscal year 2004.  Radiologix incurred a net loss of $1.5 million, or $0.07 per diluted share, compared to a net loss of $31.9 million or $1.46 per diluted share for fiscal year 2004.

  - Service fee revenue excluding terminated operations was $250.5 million,
    compared to $239.4 million for the year ended December 31, 2004.
    Excluding the fourth quarter 2004 $9.1 million reduction, service fee
    revenue excluding terminated operations for the year ended December 31,
    2005 was $250.5 million, compared to $247.8 million in 2004.
  - Loss from continuing operations was $0.4 million, compared to a loss of
    $24.2 million for FYE 2004.
  - Loss from continuing operations excluding terminated operations was $0.3
    million, compared to a loss of $24.1 million for FYE 2004.
  - EBITDA was $45.5 million, compared to $46.1 million for FYE 2004.
  - EBITDA excluding terminated operations grew 8.1% to $45.4 million,
    compared to $42.0 million for FYE 2004.

  Restated 2004 Results


As part of its normal review cycle, the Securities and Exchange Commission (SEC) sent Radiologix a comment letter concerning its Form 10-K for the year ended December 31, 2004.  The Company had discussions with the SEC concerning the accounting treatment of the PresGar equipment lease contract acquired on October 31, 2004, for $13.9 million.  Upon our further review of the transaction, we determined that the $13.9 million should not have been capitalized as an intangible asset but should have been expensed as a lease termination.

Under the equipment lease contract, PresGar Companies, LLC acquired a long-term perpetual right to provide certain MRI systems to a Radiologix subsidiary in Rochester, New York (and the obligation to service the equipment and replace that equipment as it became obsolete), and to charge Radiologix under a sublease, usage-based rent on these pieces of equipment.  The retirement of the equipment lease contract eliminated expenses that previously varied based on volume resulting in incremental reductions in equipment lease expense as volume increased.  Radiologix estimated that this transaction would reduce operating expenses (excluding depreciation and amortization) by $4.8 million annually.  The transaction increased the value of the management services agreement with the Ide Group, P.C. (the physician group in Rochester, New York).

Neither Radiologix nor any of its subsidiaries or affiliates are a party to any similar equipment lease contracts.

The effect of the restatement to the financial statements is as follows: in 2004, operating expenses increase by $13.9 million; depreciation and amortization expense decreases by $0.1 million; and net loss increases by $13.8 million.  In 2005, depreciation and amortization expense decreases by $0.8 million and net loss decreases by $0.8 million. The financial information contained in this press release reflects these restated amounts.

Due to the restatement of the 2004 Form 10-K, the filing of Radiologix's Form 10-K for the year ended December 31, 2005 may be delayed.  The Form 10-K filing deadline is March 16, 2006, and an automatic fifteen-day extension period is available.

Charges

Radiologix recorded the following pre-tax charges to continuing operations during 2005:

  - $2.2 million for impairment related to the write-off of the remaining
    goodwill on imaging centers operated by Radiologix's Questar subsidiary;
  - $557,000 to record compensation expense for restricted stock awards
    outstanding; and
  - $670,000 for severance and other related costs in the fourth quarter of
    2005.

  Income Taxes


Due to losses for the last three years, it is uncertain if our deferred tax assets will be realized.  Valuation allowances for net deferred tax assets were recorded in the fourth quarter of 2005.  The tax provision of $0.7 million for the year ended December 31, 2005, is for state income taxes and federal alternative minimum tax.  No federal or state tax benefits were recorded for the full year 2005.  Tax benefits, which had been recorded for the nine months ended September 30, 2005, were reversed in the fourth quarter of 2005.

Balance Sheet

Cash and cash equivalents were $36.0 million at December 31, 2005, compared to $34.1 million at December 31, 2004, primarily reflecting continued strong cash collections in 2005.

Net debt (total debt less cash and cash equivalents and restricted cash) was $128.7 million at December 31, 2005, compared to net debt of $130.9 million at December 31, 2004.  Total debt at December 31, 2005 was $170.3 million, compared to total debt of $170.5 million at December 31, 2004.

Days sales outstanding (DSOs) was 48 days for December 31, 2005 and December 31, 2004.

Sarbanes-Oxley 404

As noted in our 2004 Form 10-K, subsequent to December 31, 2004, but prior to the finalization of our 2004 consolidated financial statements, Radiologix placed into operation new controls to address the material weakness we identified in our accounts receivable estimation process.  These new controls include a retrospective collection analysis that matches cash collections to billed charges by month of service.

We believe these new controls have remediated the material weakness that existed as of December 31, 2004, and that these controls operated effectively during the twelve months ended December 31, 2005.

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.

As 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.

Income from continuing operations is defined as income from continuing operations calculated in accordance with GAAP.

Income from continuing operations excluding terminated operations is defined as income from continuing operations, excluding terminated San Antonio and certain Mid-Atlantic operations.

EBITDA is defined as earnings before interest, taxes, depreciation and amortization, each from continuing operations, plus restricted stock compensation expense, and is reconciled to its nearest comparable GAAP financial measure.

EBITDA from continuing operations excluding terminated operations is defined as EBITDA, excluding terminated San Antonio and certain Mid-Atlantic operations.

EBITDA and EBITDA from continuing operations 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 and EBITDA from continuing operations excluding terminated operations should not be considered measures of financial performance under GAAP, and the items excluded from EBITDA and EBITDA from continuing operations 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 and EBITDA from continuing operations 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, on Thursday, March 9, 2006, at 8:00 a.m. Central Time / 9:00 a.m. Eastern Time.

You may access the call by dialing [phone] and entering code 6904462.  A replay of the call will be available by dialing [phone] and entering code 6904462.

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 FYE 2005 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 72 diagnostic imaging centers located in 7 states as of December 31, 2005.

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, 2005, 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 9, 2006.  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,
                                                     2005           2004
                                  ASSETS
  CURRENT ASSETS:
   Cash and cash equivalents                       $36,004        $34,084
   Restricted cash                                   5,662          5,539
   Accounts receivable, net of allowances           40,815         44,197
   Due from affiliates                               1,737          2,404
   Federal and state income tax receivable           6,189          3,905
   Assets held for sale                                  -            305
   Other current assets                              5,491          6,621
    Total current assets                            95,898         97,055
  Property and equipment, net                       67,965         58,627
  Investments in joint ventures                     10,597          8,137
  Goodwill                                               -          2,241
  Intangible assets, net                            54,050         57,381
  Deferred financing costs, net                      4,942          6,591
  Deferred income taxes                                  -          8,892
  Other assets                                       1,076          1,328
    Total assets                                  $234,528       $240,252

                   LIABILITIES AND STOCKHOLDERS' EQUITY
  CURRENT LIABILITIES:
   Accounts payable and other accrued expenses     $10,158        $11,343
   Accrued physician retention                       7,051          8,384
   Accrued salaries and benefits                     6,987          7,339
   Deferred income taxes                                 -          3,202
   Accrued interest                                    685            708
   Current maturities of capital lease obligations      32             48
   Current maturities of long-term debt                  -            109
   Other current liabilities                           477            536
    Total current liabilities                       25,390         31,669
  Long-term debt, net of current portion           158,270        158,270
  Convertible debt                                  11,980         11,980
  Capital lease obligations, net of current portion     62             92
  Deferred revenue                                   6,494          6,903
  Other liabilities                                  1,488          1,000
    Total liabilities                              203,684        209,914

  Commitments and contingencies
  Minority interests in consolidated subsidiaries    1,874          1,242
  STOCKHOLDERS' EQUITY:
   Common stock                                          2              2
   Treasury stock                                     (180)          (180)
   Additional paid-in capital                       15,615         14,210
   Retained earnings                                13,533         15,064
    Total stockholders' equity                      28,970         29,096
    Total liabilities and stockholders' equity    $234,528       $240,252



                             Radiologix, Inc.
                  Consolidated Statements of Operations
                  (In thousands, except per share data)

                                For the Three Months        For the Year
                                  Ended December 31,      Ended December 31,
                                  2005         2004       2005       2004

  Service fee revenue           $62,120      $55,425   $251,440    $251,291
  Costs of operations:
   Cost of services              40,060       39,268    160,898     158,613
   Equipment lease                3,453        3,655     13,035      17,660
   Provision for doubtful
    accounts                      5,386        6,151     19,033      22,337
   Depreciation and
    amortization                  5,997       5,516      23,430      22,999
     Gross profit                $7,224        $835     $35,044     $29,682

  Severance and other related
   costs                            670           -         670         405
  Lease termination expense           -      13,948           -      13,948
  Corporate general and
   administrative                 3,677       5,134      16,872      18,919
  Impairment of goodwill,
   intangible and long-lived
   assets                         2,241       1,332       2,241      14,558
  Gain on sale of operations          -           -           -      (4,669)
  Interest expense, net, including
   amortization of deferred
   financing costs                4,493       4,581      18,295      18,596

  Loss before equity in earnings of
   unconsolidated affiliates,
   minority interests in
   consolidated subsidiaries,
   income taxes and
   discontinued operations      $(3,857)   $(24,160)    $(3,034)   $(32,075)

  Equity in earnings of
   investments                    1,040         529       3,928       2,865
  Minority interests in income
   of consolidated subsidiaries    (145)       (152)       (632)       (791)

  INCOME (LOSS) BEFORE INCOME
   TAXES AND DISCONTINUED
   OPERATIONS                   $(2,962)   $(23,783)       $262    $(30,001)
  Income tax expense (benefit)     (403)     (3,142)        662      (5,848)
  LOSS FROM CONTINUING
   OPERATIONS                   $(2,559)   $(20,641)      $(400)   $(24,153)

  Discontinued Operations:
   Loss from discontinued
    operations before
    income taxes                   (145)     (1,977)     (1,131)    (13,128)
   Income tax expense (benefit)     376        (965)          -      (5,426)
    Loss from discontinued
     operations                   $(521)    $(1,012)    $(1,131)    $(7,702)

  NET LOSS                      $(3,080)   $(21,653)    $(1,531)   $(31,855)

  LOSS PER COMMON SHARE
   Loss from continuing
    operations-basic             $(0.12)     $(0.94)     $(0.02)     $(1.11)
   Loss from discontinued
    operations-basic             $(0.02)     $(0.05)     $(0.05)     $(0.35)
    Net loss-basic               $(0.14)     $(0.99)     $(0.07)     $(1.46)
   Loss from continuing
    operations-diluted           $(0.12)     $(0.94)     $(0.02)     $(1.11)
   Loss from discontinued
    operations-diluted           $(0.02)     $(0.05)     $(0.05)     $(0.35)
    Net loss-diluted             $(0.14)     $(0.99)     $(0.07)     $(1.46)

  WEIGHTED AVERAGE SHARES
   OUTSTANDING
    Basic                    22,176,113  21,816,204  22,067,445  21,789,517
    Diluted                  22,176,113  21,816,204  22,067,445  21,789,517



                             Radiologix, Inc.
             Reconciliation of Non-GAAP Financial Information
                              (In thousands)

  Reconciliation of Loss from
  Continuing Operations to
  EBITDA from Continuing
  Operations                   For the Three Months         For the Year
                                Ended December 31,        Ended December 31,

                                2005         2004        2005        2004
  GAAP: Loss from continuing
         operations          $(2,559)     $(20,641)     $(400)    $(24,153)
  Add: Income tax expense
       (benefit)                (403)       (3,142)       662       (5,848)
  Add: Interest expense, net   4,493         4,581     18,295       18,596
  Add: Depreciation and
        amortization           5,997         5,516     23,430       22,999
  Add: Severance and other
        related costs            670             -        670          405
  Add: Lease termination
        expense                    -        13,948          -       13,948
  Add: Impairment of goodwill
        and long-lived assets  2,241         1,332      2,241       14,558
  Add: Restricted stock
        expense                  163             -        557            -
  Add: Litigation settlement       -             -          -          295
  Add: Charges related to contract
        cancellations              -             -          -          515
  Add: Professional fees           -             -          -            -
  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
  EBITDA from continuing
   operations                $10,602       $11,008    $45,455      $46,060



                             Radiologix, Inc.
  Reconciliation of Non-GAAP Financial Information Excluding Terminated
                                Operations
                              (In thousands)

  Reconciliation of Loss from
   Continuing Operations to
   EBITDA from Continuing
   Operations Excluding
   Terminated Operations        For the Three Months       For the Year
                                 Ended December 31,      Ended December 31,
                                  2005        2004       2005        2004
  GAAP: Loss from continuing
        operations excluding
        terminated operations  $(2,433)    $(20,744)    $(317)    $(24,127)
  Add: Income tax expense
       (benefit)                  (404)      (3,131)      491       (5,532)
  Add: Interest expense, net     4,493        4,576    18,294       18,421
  Add: Depreciation and
        amortization             5,997        5,514    23,430       22,311
  Add: Severance and other
        related costs              670            -       670          405
  Add: Lease termination expense     -       13,948         -       13,948
  Add: Impairment of goodwill and
        long-lived assets        2,241        1,332     2,241        7,347
  Add: Restricted stock
        expense                    163            -       557            -
  Add: Litigation settlement         -            -         -          295
  Add: Charges related to contract
        cancellations                -            -         -          200
  Add: Professional fees             -            -         -            -
  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
  EBITDA from continuing
   operations excluding
   terminated operations       $10,727      $10,203   $45,366      $41,976



                             Radiologix, Inc.
 Reconciliation of Financial Information Excluding Terminated Operations
                              (In thousands)

                               For the Three Months Ended December 31, 2005
                                                              Radiologix
                                                              Excluding
                                 Radiologix   Terminated      Terminated
                                              Operations      Operations

  Service fee revenue               $62,120       $-           $62,120
  Costs of operations:
   Cost of services                  40,060      127            39,933
   Equipment lease                    3,453        4             3,449
   Provision for doubtful accounts    5,386       (6)            5,392
   Depreciation and amortization      5,997        -             5,997
    Gross profit                     $7,224     (125)           $7,349

  Severance and other related costs     670        -               670
  Corporate general and
   administrative                     3,677        -             3,677
  Impairment of Goodwill              2,241        -             2,241
  Interest expense, net, including
   amortization of deferred
   financing costs                    4,493        -             4,493

  Loss before equity in earnings
   of unconsolidated affiliates,
   minority interests in consolidated
   subsidiaries, income taxes and
   discontinued operations          $(3,857)   $(125)          $(3,732)

  Equity in earnings of
   unconsolidated affiliates          1,040        -             1,040

  Minority interests in income of
   consolidated subsidiaries           (145)       -              (145)

  LOSS BEFORE INCOME TAXES AND
   DISCONTINUED OPERATIONS          $(2,962)   $(125)          $(2,837)

  Income tax expense (benefit)         (403)       1              (404)

  LOSS FROM CONTINUING OPERATIONS   $(2,559)   $(126)          $(2,433)



                             Radiologix, Inc.
 Reconciliation of Financial Information Excluding Terminated Operations
                              (In thousands)

                                For the Three Months Ended December 31, 2004
                                                              Radiologix
                                                              Excluding
                                 Radiologix   Terminated      Terminated
                                              Operations      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     5,516            2           5,514
    Gross profit                      $835          $97            $738

  Severance and other related costs      -            -               -
  Lease termination expense         13,948            -          13,948
  Corporate general and
   administrative                    5,134            -           5,134
  Impairment of Goodwill             1,332            -           1,332
  Interest expense, net, including
   amortization of deferred
   financing costs                   4,581            5           4,576

  Income (loss) before equity in
   earnings of unconsolidated
   affiliates, minority interests
   in consolidated subsidiaries,
   income taxes and discontinued
   operations                     $(24,160)         $92        $(24,252)

  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    $(23,783)         $92        $(23,875)

  Income tax expense (benefit)      (3,142)         (11)         (3,131)

  INCOME (LOSS) FROM CONTINUING
   OPERATIONS                     $(20,641)        $103        $(20,744)



                             Radiologix, Inc.
 Reconciliation of Financial Information Excluding Terminated Operations
                              (In thousands)

                                   For the Year Ended December 31, 2005
                                                              Radiologix
                                                              Excluding
                                 Radiologix   Terminated      Terminated
                                              Operations      Operations

  Service fee revenue             $251,440         $968         $250,472
  Costs of operations:
   Cost of services                160,898          607          160,291
   Equipment lease                  13,035           36           12,999
   Provision for doubtful accounts  19,033          236           18,797
   Depreciation and amortization    23,430            -           23,430
    Gross profit                   $35,044          $89          $34,955

  Severance and other related costs    670            -              670
  Corporate general and
   administrative                   16,872            -           16,872
  Impairment of goodwill, intangible
   and long-lived assets             2,241            -            2,241
  Interest expense, net, including
   amortization of deferred
   financing costs                  18,295            1           18,294

  Income (loss) before equity in
   earnings of unconsolidated
   affiliates, minority interests
   in consolidated subsidiaries,
   income taxes and discontinued
   operations                      $(3,034)         $88          $(3,122)

  Equity in earnings of
   unconsolidated affiliates         3,928            -            3,928

  Minority interests in income of
   consolidated subsidiaries          (632)           -             (632)

  INCOME BEFORE INCOME TAXES AND
   DISCONTINUED OPERATIONS            $262          $88             $174

  Income tax expense                   662          171              491

  LOSS FROM CONTINUING OPERATIONS    $(400)        $(83)           $(317)



                             Radiologix, Inc.
 Reconciliation of Financial Information Excluding Terminated Operations
                              (In thousands)

                                    For the Year Ended December 31, 2004
                                                              Radiologix
                                                              Excluding
                                 Radiologix   Terminated      Terminated
                                              Operations      Operations
  Service fee revenue             $251,291      $11,898         $239,393
  Costs of operations:
   Cost of services                158,613        6,084          152,529
   Equipment lease                  17,660          114           17,546
   Provision for doubtful accounts  22,337        2,623           19,714
   Depreciation and amortization    22,999          688           22,311
    Gross profit                   $29,682       $2,389          $27,293

  Severance and other related costs    405            -              405
  Lease termination expense         13,948            -           13,948
  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, including
   amortization of deferred
   financing costs                  18,596          175           18,421

  Income (loss) before equity in
   earnings of unconsolidated
   affiliates, minority interests
   in consolidated subsidiaries,
   income taxes and discontinued
   operations                     $(32,075)       $(328)        $(31,747)

  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    $(30,001)       $(342)        $(29,659)

  Income tax expense (benefit)      (5,848)        (316)          (5,532)

  INCOME (LOSS) FROM CONTINUING
   OPERATIONS                     $(24,153)        $(26)        $(24,127)


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DATASOURCE: Radiologix, Inc.



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

[phone],  



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

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