Radiologix Reports Solid Second Quarter 2005 Results

DALLAS, Aug. 4  /PRNewswire-FirstCall/ -- Radiologix, Inc. (AMEX:RGX), a leading national provider of diagnostic imaging services, today announced second quarter and year to date financial results for the period ended June 30, 2005.

  Select Financial Information
  (in thousands of dollars)  For the Three Months     For the Six Months
                                Ended June 30,          Ended June 30,
                              2005        2004         2005         2004
  Service fee revenue,
   as reported               $64,311     $66,211     $127,062     $132,253
  Service fee revenue
   excluding terminated
   operations(A)             $64,272     $62,237     $126,093     $123,088

  EBITDA(A)                  $11,804     $12,535      $23,688      $24,835
  EBITDA from continuing
   operations excluding
   terminated operations(A)  $11,866     $11,114      $23,418      $21,555

  Net income (loss),
   as reported                  $649     $(2,109)      $1,167      $(4,816)
  Income from continuing
   operations, as reported      $629        $823       $1,416       $1,663
  Income (loss) from
   continuing operations
   excluding terminated
   operations(A)                $672     $(3,021)      $1,254      $(3,029)

   (A)  As defined and reconciled below


  Second Quarter 2005 Results


For the second quarter ended June 30, 2005, service fee revenue was $64.3 million, compared to $66.2 million for the second quarter 2004. Radiologix earned $649,000, or $0.03 per diluted share, compared to a net loss of $2.1 million or $0.09 per share for the second quarter 2004.

   *  Service fee revenue excluding terminated operations was $64.3 million
      compared to $62.2 million for the second quarter 2004, an increase of
      3.3%.

   *  Income from continuing operations was $629,000, or $0.03 per diluted
      share, compared to income from continuing operations of $823,000, or
      $0.04 per diluted share, for the second quarter 2004.

   *  Income from continuing operations excluding terminated operations
      (defined and reconciled below) was $672,000, or $0.03 per diluted
      share, compared to a loss of $3.0 million, or $0.14 per diluted share
      for the second quarter 2004.

   *  EBITDA (defined and reconciled below) was $11.8 million, compared to
      $12.5 million for the second quarter 2004.

   *  EBITDA from continuing operations excluding terminated operations
      (defined and reconciled below) was $11.9 million, compared to
      $11.1 million for the second quarter 2004.

  Year to Date June 30, 2005 Results


For the six months ended June 30, 2005, service fee revenue was $127.1 million, compared to $132.3 million for the same period last year. Radiologix earned $1.2 million, or $0.05 per diluted share, compared to a net loss of $4.8 million or $0.22 loss per share for the six months ended June 30, 2004.

   *  Service fee revenue excluding terminated operations was $126.1 million
      compared to $123.1 million for the six months ended June 30, 2004, a
      2.4% increase.

   *  Income from continuing operations was $1.4 million, or $0.06 per
      diluted share, compared to income from continuing operations of
      $1.7 million, or $0.07 per diluted share, for the six months ended
      June 30, 2004.

   *  Income from continuing operations excluding terminated operations was
      $1.3 million or $0.06 per diluted share, compared to a loss of
      $3.0 million, or $0.14 per diluted share for the six months ended
      June 30, 2004.

   *  EBITDA was $23.7 million, compared to $24.8 million for the six months
      ended June 30, 2004.

   *  EBITDA from continuing operations excluding terminated operations was
      $23.4 million, compared to $21.6 million for the six months ended
      June 30, 2004.

   Balance Sheet
   *  Cash and cash equivalents were $42.6 million at June 30, 2005,
      compared to $34.1 million at December 31, 2004.

   *  Net debt (total debt less cash and cash equivalents and restricted
      cash) was $122.1 million at June 30, 2005, compared to $130.9 million
      at December 31, 2004.  Total debt at June 30, 2005 was $170.4 million,
      compared to $170.5 million at December 31, 2004.

   *  Days sales outstanding (DSOs) were 46 days at June 30, 2005, compared
      to 48 days at December 31, 2004.



"This quarter, we continued to build on the solid operational and financial gains achieved in the first quarter 2005, and we have made significant progress from a year ago," said Sami S. Abbasi, president and chief executive officer of Radiologix.  "In the second quarter 2005, we grew EBITDA from continuing operations excluding terminated operations, generated strong positive cash flow from operations, and further improved our impressive DSO performance.  For the remainder of 2005, we will continue to focus on improving our primary operations -- with the help of our newly appointed chief operating officer, Carol Gleber -- implement and ensure the success of our Radiologix Enhanced Workflow And Record Distribution ("REWARD") Program, and continue to develop our future strategic direction."

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 six months of 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.

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.

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, that will be on Thursday, August 4, 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 4846080.  A replay of the call is available by dialing [phone] and entering code 4846080.

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 Second Quarter 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 8 states as of June 30, 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, 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 August 4, 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)

                                              June 30,     December 31,
                                                2005           2004
                       ASSETS                (Unaudited)
  CURRENT ASSETS:
    Cash and cash equivalents                   $42,645       $34,084
    Restricted cash                               5,594         5,539
    Accounts receivable, net of allowances       42,086        44,197
    Due from affiliates                           2,548         2,029
    Federal and state income tax receivables      6,983         3,905
    Assets held for sale                            ---           305
    Other current assets                          4,727         6,996
      Total current assets                      104,583        97,055
  Property and equipment, net                    60,365        58,627
  Investments in joint ventures                   9,247         8,137
  Goodwill                                        2,241         2,241
  Intangible assets, net                         69,148        71,200
  Deferred financing costs, net                   5,766         6,591
  Deferred income taxes                           3,639         8,892
  Other assets                                    1,275         1,328
      Total assets                             $256,264      $254,071

           LIABILITIES AND STOCKHOLDERS' EQUITY
  CURRENT LIABILITIES:
    Accounts payable and other
     accrued expenses                            $7,440       $11,342
    Accrued physician retention                   8,155         8,384
    Accrued salaries and benefits                10,535         7,339
    Deferred income taxes                         3,649         3,202
    Accrued interest                                687           708
    Current portion of capital
     lease obligations                               30            48
    Current portion of long-term debt               ---           109
    Other current liabilities                       644           536
      Total current liabilities                  31,140        31,668
  Long-term debt, net of current portion        158,270       158,270
  Convertible debt                               11,980        11,980
  Capital lease obligations,
   net of current portion                            83            92
  Deferred revenue                                6,699         6,903
  Other liabilities                               1,281         1,000
      Total liabilities                         209,453       209,913
  Commitments and contingencies
  Minority interests in consolidated
   subsidiaries                                   1,545         1,242
  STOCKHOLDERS' EQUITY:
    Common stock                                      2             2
    Treasury stock                                 (180)         (180)
    Additional paid-in capital                   15,393        14,210
    Retained earnings                            30,051        28,884
      Total stockholders' equity                 45,266        42,916
      Total liabilities and
       stockholders' equity                    $256,264      $254,071



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

                          For the Three Months       For the Six Months
                              Ended June 30,           Ended June 30,
                            2005         2004        2005         2004
  Service fee revenue     $64,311      $66,211     $127,062     $132,253
  Costs of operations:
      Cost of services     40,629       39,306       80,449       79,583
      Equipment leases      3,231        4,868        6,037        9,391
      Provision for
       doubtful accounts    4,659        5,364        9,126       10,856
      Depreciation and
       amortization         6,051        5,881       11,889       12,035
        Gross profit        9,741       10,792       19,561       20,388

  Corporate general and
   administrative           4,985        4,707        9,333        8,498
  Impairment of goodwill,
   intangible and
   long-lived assets          ---        5,752          ---        5,752
  Gain on sale of operations  ---       (4,669)         ---       (4,669)
  Interest expense, net,
   including amortization
   of deferred financing
   costs                    4,565        4,666        9,241        9,412

  Income before equity in
   earnings of unconsolidated
   affiliates,
    Minority interests in
     consolidated subsidiaries,
     income taxes and
     discontinued
     operations               191          336          987        1,395

  Equity in earnings of
   investments              1,039          758        1,661        1,354

  Minority interests in
   income of consolidated
   subsidiaries              (154)        (189)        (303)        (444)

  INCOME BEFORE INCOME
   TAXES AND DISCONTINUED
   OPERATIONS               1,076          905        2,345        2,305
  Income tax expense          447           82          929          642
  INCOME FROM CONTINUING
   OPERATIONS                 629          823        1,416        1,663

  Discontinued Operations:
      Income (loss) from
       discontinued
       operations before
       income taxes            30       (4,887)        (404)     (10,799)
      Income tax expense
       (benefit)               10       (1,955)        (155)      (4,320)
        Income (loss) from
         discontinued
         operations            20       (2,932)        (249)      (6,479)
  NET INCOME (LOSS)          $649      $(2,109)      $1,167      $(4,816)

  INCOME (LOSS) PER
   COMMON SHARE
      Income from continuing
       operations-basic     $0.03        $0.04        $0.06        $0.08
      Income (loss) from
       discontinued
       operations-basic       ---        (0.14)       (0.01)       (0.30)
        Net income
         (loss)-basic       $0.03       $(0.10)       $0.05       $(0.22)
      Income from continuing
       operations-diluted   $0.03        $0.04        $0.06        $0.07
      Income (loss) from
       discontinued
       operations-diluted     ---        (0.13)       (0.01)       (0.29)
        Net income
         (loss)-diluted     $0.03       $(0.09)       $0.05       $(0.22)

  WEIGHTED AVERAGE
   SHARES OUTSTANDING
      Basic            22,339,815   21,769,804   22,128,425   21,767,894
      Diluted          22,572,909   22,369,560   22,625,931   22,328,560



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

  Reconciliation of Income from
   Continuing Operations to EBITDA

                           For the Three Months       For the Six Months
                              Ended June 30,            Ended June 30,
                            2005         2004         2005         2004
  GAAP: Income from
   continuing operations     $629          823       $1,416        1,663
  Add: Income tax expense     447           82          929          642
  Add: Interest expense,
   net                      4,565        4,666        9,241        9,412
  Add: Depreciation and
   amortization             6,051        5,881       11,889       12,035
  Add: Impairment of
   goodwill, intangible,
   and long-lived assets      ---        5,752          ---        5,752
  Add: Gain on sale of
   operations                 ---       (4,669)         ---       (4,669)
  Add: Restricted stock
   compensation expense       112          ---          213          ---
  EBITDA                  $11,804      $12,535      $23,688      $24,835



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

  Reconciliation of Income from
   Continuing Operations to
   EBITDA from Continuing Operations
   Excluding Terminated Operations

                           For the Three Months       For the Six Months
                              Ended June 30,             Ended June 30,
                            2005         2004          2005         2004
  Income (loss) from
   continuing operations
   excluding terminated
   operations                $672      $(3,021)      $1,254      $(3,029)
  Add: Income tax expense
   (benefit)                  466       (1,924)         822       (1,841)
  Add: Interest expense,
   net                      4,565        4,620        9,241        9,262
  Add: Depreciation and
   amortization             6,051        5,687       11,888       11,411
  Add: Restricted stock
   compensation expense       112          ---          213          ---
  Add: Impairment of
   goodwill, intangible,
   and long-lived assets      ---        5,752          ---        5,752
  EBITDA from continuing
   operations excluding
   terminated operations  $11,866      $11,114      $23,418      $21,555



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

                                  For the Three Months Ended June 30, 2005
                                                              Radiologix
                                                              Excluding
                                                 Terminated   Terminated
                                    Radiologix   Operations   Operations

  Service fee revenue                $64,311         $39       $64,272
  Costs of operations:
    Cost of services                  40,629          84        40,545
    Equipment leases                   3,231          18         3,213
    Provision for doubtful accounts    4,659          (1)        4,660
    Depreciation and amortization      6,051         ---         6,051
      Gross profit                     9,741         (62)        9,803

  Corporate general and administrative 4,985         ---         4,985
  Interest expense, net, including
   amortization of deferred
   financing costs                     4,565         ---         4,565

  Income (loss) before equity in
   earnings of unconsolidated
   affiliates, minority interests in
   consolidated subsidiaries, income
   taxes and discontinued operations     191         (62)          253

  Equity in earnings of
   unconsolidated affiliates           1,039         ---         1,039

  Minority interests in income of
   consolidated subsidiaries            (154)        ---          (154)

  INCOME (LOSS) BEFORE INCOME TAXES
   AND DISCONTINUED OPERATIONS         1,076         (62)        1,138

  Income tax expense (benefit)           447         (19)          466

  INCOME (LOSS) FROM CONTINUING
   OPERATIONS                           $629        $(43)         $672



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

                                  For the Three Months Ended June 30, 2004
                                                              Radiologix
                                                              Excluding
                                                 Terminated   Terminated
                                   Radiologix    Operations   Operations

  Service fee revenue                $66,211      $3,974       $62,237
  Costs of operations:
    Cost of services                  39,306       1,784        37,522
    Equipment leases                   4,868         113         4,755
    Provision for doubtful accounts    5,364         636         4,728
    Depreciation and amortization      5,881         194         5,687
      Gross profit                    10,792       1,247         9,545

  Corporate general and administrative 4,707         ---         4,707
  Impairment of goodwill, intangible
   and long-lived assets               5,752         ---         5,752
  Gain on sale of operations          (4,669)     (4,669)          ---
  Interest expense, net, including
   amortization of deferred
   financing costs                     4,666          46         4,620

  Income (loss) before equity in
   earnings of unconsolidated
   affiliates, minority interests in
   consolidated subsidiaries, income
   taxes and discontinued operations     336       5,870        (5,534)

  Equity in earnings of
   unconsolidated affiliates             758           7           751

  Minority interests in income of
   consolidated subsidiaries            (189)        (27)         (162)

  INCOME (LOSS) BEFORE INCOME TAXES
   AND DISCONTINUED OPERATIONS           905       5,850        (4,945)

  Income tax expense (benefit)            82       2,006        (1,924)

  INCOME (LOSS) FROM CONTINUING
   OPERATIONS                           $823      $3,844       $(3,021)



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

                                  For the Six Months Ended June 30, 2005
                                                              Radiologix
                                                              Excluding
                                                 Terminated   Terminated
                                   Radiologix    Operations   Operations

  Service fee revenue               $127,062        $969      $126,093
  Costs of operations:
    Cost of services                  80,449         438        80,011
    Equipment leases                   6,037          18         6,019
    Provision for doubtful accounts    9,126         243         8,883
    Depreciation and amortization     11,889           1        11,888
      Gross profit                    19,561         269        19,292

  Corporate general and administrative 9,333         ---         9,333
  Interest expense, net, including
   amortization of deferred
   financing costs                     9,241         ---         9,241

  Income before equity in earnings
   of unconsolidated affiliates,
   minority interests in consolidated
   subsidiaries, income taxes and
   discontinued operations               987         269           718

  Equity in earnings of
   unconsolidated affiliates           1,661         ---         1,661

  Minority interests in income of
   consolidated subsidiaries            (303)        ---          (303)

  INCOME BEFORE INCOME TAXES AND
   DISCONTINUED OPERATIONS             2,345         269         2,076

  Income tax expense                     929         107           822

  INCOME FROM CONTINUING OPERATIONS   $1,416        $162        $1,254



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

                                  For the Six Months Ended June 30, 2004
                                                             Radiologix
                                                             Excluding
                                                Terminated   Terminated
                                   Radiologix   Operations   Operations

  Service fee revenue               $132,253      $9,165      $123,088
  Costs of operations:
    Cost of services                  79,583       4,415        75,168
    Equipment leases                   9,391         117         9,274
    Provision for doubtful accounts   10,856       1,339         9,517
    Depreciation and amortization     12,035         624        11,411
      Gross profit                    20,388       2,670        17,718

  Corporate general and administrative 8,498         ---         8,498
  Impairment of goodwill, intangible
   and long-lived assets               5,752         ---         5,752
  Gain on sale of operations          (4,669)     (4,669)          ---
  Interest expense, net, including
   amortization of deferred
   financing costs                     9,412         150         9,262

  Income (loss) before equity in
   earnings of unconsolidated
   affiliates, minority interests in
   consolidated subsidiaries, income
   taxes and discontinued operations   1,395       7,189        (5,794)

  Equity in earnings of
   unconsolidated affiliates           1,354         114         1,240

  Minority interests in income of
   consolidated subsidiaries            (444)       (128)         (316)

  INCOME (LOSS) BEFORE INCOME TAXES
   AND DISCONTINUED OPERATIONS         2,305       7,175        (4,870)

  Income tax expense (benefit)           642       2,483        (1,841)

  INCOME (LOSS) FROM CONTINUING
   OPERATIONS                         $1,663      $4,692       $(3,029)


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DATASOURCE: Radiologix, Inc.



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

[phone], or  



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

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