Radiologix Reports Fourth Quarter and Fiscal Year 2002 Results

		RADIOLOGIX LOGO Based in Dallas, Texas, Radiologix is a leading radiology services company that develops, consolidates and manages radiology service networks. These networks consist primarily of free-standing radiology centers and locations at which the company provides radiology services that have been outsourced by hospitals. The company's objective is to develop and operate networks of radiology facilities to provide a full spectrum of radiology services and extensive geographic coverage in existing market areas and in selected new markets. (PRNewsFoto) [JL] DALLAS, TX USA

EPS of $0.03 and $0.57, Excluding Special Charges, Meets Guidance DALLAS, March 12 /PRNewswire-FirstCall/ -- Radiologix, Inc. (Amex: RGX), a leading national provider of diagnostic imaging services, today announced financial results for the fourth quarter and fiscal year ended December 31, 2002. For the fourth quarter and fiscal year 2002, Radiologix earned $0.03 and $0.57 per diluted share, respectively, excluding two special charges taken in the fourth quarter of 2002. Earnings per share ("EPS") met guidance set by Radiologix last year. (Logo: http://www.newscom.com/cgi-bin/prnh/19991026/RLGXLOGO ) Fourth Quarter 2002 Results For the fourth quarter 2002, Radiologix reported service fee revenue of $66.5 million versus $73.3 million for the fourth quarter of 2001. EBITDA (defined below) was $9.1 million compared to $12.7 million for the fourth quarter of 2001. Net loss was $1.6 million compared to net income of $2.6 million for the fourth quarter of 2001. Diluted loss per share was $0.08 compared to diluted EPS of $0.12 for the fourth quarter of 2001. The following discussion excludes special charges and non-operating income recorded in the fourth quarters of 2001 and 2002. The special charges and non-operating income were: i) a $4.7 million pre-tax ($2.8 million after-tax) loss on the early extinguishment of debt in 2001; ii) a $615,000 pre-tax ($369,000 after-tax) charge for supplemental incentive compensation in 2001; iii) a $978,000 pre-tax ($587,000 after-tax) charge for severance and other related costs in 2002; iv) a $2.7 million pre-tax ($1.6 million after-tax) charge for the impairment of long-lived assets in 2002, and v) $1.3 million of pre-tax ($780,000 after-tax) non-operating income as partial consideration for early termination of management services (2001). Each of these items is explained in greater detail below. EBITDA was $12.7 million compared to $18.0 million for the fourth quarter of 2001. Net income was $571,000 compared to $5.0 million for the fourth quarter of 2001. Diluted EPS was $0.03 compared to $0.22 diluted EPS for the fourth quarter of 2001. Cash flow from operations was $14.8 million compared to $10.9 million for the fourth quarter of 2001. Days sales outstanding (DSOs) was 73 days at December 31, 2002, compared to 69 days at December 31, 2001. Fiscal Year 2002 Results For the fiscal year 2002, Radiologix reported record service fee revenue of $283.9 million, a 2.6% increase from the $276.7 million reported for fiscal year 2001. EBITDA was $63.3 million compared to $60.8 million for fiscal year 2001, a 4.1% increase. Net income was $10.8 million compared to $13.8 million for fiscal year 2001. Diluted EPS was $0.48 compared to diluted EPS of $0.66 for fiscal year 2001. The following discussion excludes special charges and non-operating income recorded in fiscal years 2001 and 2002 as noted above in addition to $1.0 million pre-tax ($600,000 after-tax) merger related costs recorded in the third quarter of 2001. EBITDA was $66.9 million compared to $67.1 million for fiscal year 2001. Net income was $13.0 million compared to $16.9 million for fiscal year 2001. Diluted EPS was $0.57 compared to diluted EPS of $0.79 for fiscal year 2001. Cash flow from operations was $45.5 million compared to $41.0 million for fiscal year 2001. Balance Sheet Cash and cash equivalents grew to $19.2 million at December 31, 2002, from $10.8 million at December 31, 2001. Radiologix's liquidity reached $54.2 million, including its $35.0 million line of credit. Total debt at December 31, 2002, was $178.2 million, or 2.7x 2002 EBITDA, excluding special charges. Net debt (net of cash) at December 31, 2002, stood at $159.1 million, 2.4x 2002 EBITDA, excluding special charges. Total debt and net debt were down from $197.2 million and $186.4 million, respectively, at December 31, 2001. Radiologix remains in compliance with all covenants related to its debt instruments. Special charges and non-operating income In the fourth quarter of 2002, Radiologix incurred two special charges. Radiologix incurred a $978,000 pre-tax charge for severance and other costs related to the resignation of the former chairman and CEO on December 4, 2002. Radiologix incurred a non-cash pre-tax charge of $2.7 million for the impairment of long-lived assets in accordance with Statement of Financial Accounting Standards No. 144. During the third quarter of 2001, Radiologix recorded $1.0 million in merger related pre-tax costs. The charge was our share of transaction costs incurred by Saunders Karp & Megrue, L.P. and its affiliates in connection with the proposed merger between Radiologix and SKM-RD Acquisition Corp. The proposed merger was terminated in April 2001. In the fourth quarter of 2001, Radiologix recognized $1.3 million of pre-tax non-operating income as partial consideration for early termination of management services provided at certain imaging sites not owned or operated by Radiologix. In the fourth quarter of 2001, upon the successful completion of the Senior Notes offering, Radiologix incurred $615,000 in pre-tax supplemental incentive compensation. In the fourth quarter of 2001, Radiologix incurred a pre-tax loss on the early extinguishment of debt of $4.7 million in relation to fully repaying and terminating its senior credit facility with the proceeds from its Senior Notes issuance in December 2001. GAAP and Non-GAAP Financial Information This release contains certain financial information not derived in accordance with generally accepted accounting principles (GAAP), including EBITDA, net income excluding certain items, and diluted EPS excluding certain items; the Company believes this information is useful to investors and other interested parties. Such information should not be considered as a substitute for any measures derived in accordance with GAAP, and may not be comparable to other similarly titled measures of other companies. Reconciliation of this information to the most comparable GAAP measures is included as an attachment to this release. Earnings Before Interest, Taxes and Depreciation and Amortization ("EBITDA") EBITDA is defined as earnings before interest expense, income taxes and depreciation, amortization, including equity in earnings of investments and minority interests and excluding non-operating income. EBITDA is commonly used as an analytical indicator within the healthcare industry, and also serves as a measure of leverage capacity and debt service ability. EBITDA should not be considered as a measure of financial performance under generally accepted accounting principles, and the items excluded from EBITDA 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. Because EBITDA is not a measurement determined in accordance with generally accepted accounting principles and is thus susceptible to varying calculations, EBITDA as presented may not be comparable to other similarly titled measures of other companies. Conference Call In connection with this earnings press release, you are invited to listen to our conference call with Steve D. Linehan, President and CEO, and Sami Abbasi, Executive Vice President and CFO, that will be broadcast live over the Internet on Wednesday, March 12, 2003, at 8:00 AM, Central Time, 9:00 AM Eastern Time. You may listen to the call via the Internet by navigating to Radiologix's Web site (http://www.radiologix.com) and clicking on "Stock" from the home page top navigation and then clicking on "Conference Call" on the left navigation. If you are unable to participate during the live Webcast, the fourth quarter and fiscal year end results conference call will be archived on Radiologix's Web site, http://www.radiologix.com. To access the replay, click on "Stock" from the home page top navigation and then click on "Conference Call" on the left navigation. About Radiologix Radiologix (http://www.radiologix.com) is a leading national provider of diagnostic imaging services through (i) its ownership and operation of technologically advanced, multi-modality diagnostic imaging centers, and (ii) its provision of administrative, management and other information services to certain radiology business partners. Radiologix derives the majority of its revenues from the production and management of diagnostic imaging procedures utilizing technologies such as x-ray, magnetic resonance imaging ("MRI"), computed tomography ("CT"), mammography, ultrasound, nuclear medicine and positron emission tomography ("PET"), as well as general radiography and fluoroscopy. These images, and the radiology reports that are based on these images, permit ordering physicians to diagnose and manage diseases and injuries more accurately and effectively than would be possible without this clinical information. Radiologix owns or operates 117 imaging centers located in 17 states, with concentrated geographic coverage in markets located in California, Florida, Kansas, Maryland, New York, Texas and Virginia. Safe Harbor Statement This press release contains forward-looking statements that relate to future financial results or business expectations and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that exist in the Company's operations and business environment. Business plans may change as circumstances warrant and actual results may differ materially from any forward-looking statements, which reflect the management's opinion only as of the date hereof. Such risks and uncertainties include, but are not limited to, those associated with the Company's acquisition and expansion strategy; integration of the Company's affiliated physician practices and newly-acquired imaging centers; the Company's ability to achieve operating efficiencies and engage in successful new development efforts; regulatory changes; reimbursement trends; governmental policies; and general economic and business conditions. Such risks and uncertainties, as well as additional risk factors which could affect the forward-looking statements made in this press release, are included in the Company's filings with the Securities and Exchange Commission, including its Form 10-K dated March 28, 2002. Any forward-looking statement speaks only as of the date on which such statement is made. Radiologix undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made. Radiologix, Inc. Summary Income Statements (In thousands, except per share data) Three Months Ended FYE Ended Dec. 31, Dec. 31, 2001 2002 2001 2002 Service fee revenue $73,328 $66,533 $276,650 $283,889 Salaries and benefits 19,869 21,289 75,667 83,986 Field supplies 4,432 4,289 16,514 17,493 Field rent and lease expense 8,973 8,445 34,378 32,867 Other field expenses 12,414 11,760 47,339 46,927 Bad debt expense 6,608 5,841 25,682 24,390 Merger-related costs --- --- 1,000 --- Supplemental incentive compensation 615 --- 615 --- Severance and other related costs --- 978 --- 978 Corporate general and administrative 3,838 3,097 13,855 14,674 Impairment charge on long-lived assets --- 2,700 --- 2,700 Loss on early extinguishment of debt 4,730 --- 4,730 --- Total costs and expenses $61,479 $58,399 $219,780 $224,015 Equity in earnings of investments 1,110 1,149 5,017 4,568 Minority interests in consolidated subsidiaries (275) (230) (1,092) (1,185) Non-operating income 1,300 --- 1,300 --- Depreciation and amortization 6,209 7,189 23,504 26,472 Interest expense, net 3,445 4,591 15,540 18,858 Income (loss) before taxes $4,330 ($2,727) $23,051 $17,927 Income tax expense (benefit) 1,731 (1,091) 9,220 7,171 Net income (loss) $2,599 ($1,636) $13,831 $10,756 Basic earnings (loss) per share $0.13 ($0.08) $0.71 $0.51 Weighted average shares - basic 19,643 21,581 19,559 20,957 Diluted earnings (loss) per share $0.12 ($0.08) $0.66 $0.48 Weighted average shares - diluted 23,584 21,808 22,652 23,970 Radiologix, Inc. Reconciliation of Non-GAAP Financial Information (In thousands, except per share data) Three Months Ended FYE Ended Dec. 31, Dec. 31, 2001 2002 2001 2002 Net income $2,599 ($1,636) $13,831 $10,756 Add: Interest expense, net 3,445 4,591 15,540 18,858 Add: Income tax expense (benefit) 1,731 (1,091) 9,220 7,171 Add: Depreciation and amortization 6,209 7,189 23,504 26,472 Less: Non-operating income 1,300 --- 1,300 --- EBITDA $12,684 $9,053 $60,795 $63,257 Basic earnings (loss) per share $0.13 ($0.08) $0.71 $0.51 Weighted average shares - basic 19,643 21,581 19,559 20,957 Diluted earnings (loss) per share $0.12 ($0.08) $0.66 $0.48 Weighted average shares - diluted 23,584 21,808 22,652 23,970 Net income $2,599 ($1,636) $13,831 $10,756 Add: Loss on early extinguishment of debt 2,838 --- 2,838 --- Add: Supplemental incentive compensation 369 --- 369 --- Add: Merger related costs --- --- 600 --- Add: Severance and other related costs --- 587 --- 587 Add: Impairment charge on long-lived assets --- 1,620 --- 1,620 Less: Non-operating income 780 --- 780 --- Net income, excluding special charges and non-operating income $5,026 $571 $16,858 $12,963 EPS, excluding special charges and non-operating income: Basic EPS $0.26 $0.03 $0.86 $0.62 Weighted average shares - basic 19,643 21,581 19,559 20,957 Diluted EPS $0.22 $0.03 $0.79 0.57 Weighted average shares - diluted 23,584 23,401 22,652 23,970 Net income $2,599 ($1,636) $13,831 $10,756 Add: Interest expense, net 3,445 4,591 15,540 18,858 Add: Income tax expense (benefit) 1,731 (1,091) 9,220 7,171 Add: Depreciation and amortization 6,209 7,189 23,504 26,472 Add: Loss on early extinguishment of debt 4,730 --- 4,730 --- Add: Supplemental incentive compensation 615 --- 615 --- Add: Merger related costs --- --- 1,000 --- Add: Severance and other related costs --- 978 --- 978 Add: Impairment charge on long-lived assets --- 2,700 --- 2,700 Less: Non-operating income 1,300 --- 1,300 --- EBITDA, excluding special charges $18,029 $12,731 $67,140 $66,935 Radiologix, Inc. Summary Balance Sheets (In thousands) December 31, 2001 December 31, 2002 CURRENT ASSETS Cash and cash equivalents $10,761 19,153 Accounts receivable, net of allowances 71,325 69,377 Due from affiliates 2,673 5,100 Income tax receivable 350 --- Other current assets 10,517 7,225 Total current assets 95,626 100,855 Property and equipment, net 60,339 62,103 Investment in joint ventures 7,095 10,149 Goodwill 28,510 28,510 Intangible assets, net 69,583 72,151 Deferred financing cost, net 10,837 9,719 Other assets 12,735 12,604 Total assets 284,725 296,091 CURRENT LIABILITIES Accounts payable and accrued expenses 17,743 19,145 Accrued physician retention 8,832 8,216 Accrued salaries and benefits 8,318 8,268 Current portion of long-term debt 398 266 Current portion of capital lease obligation 5,066 4,052 Other current liabilities 55 458 Total current liabilities 40,412 40,405 Deferred income taxes 6,619 4,200 Long-term debt, net of current portion 160,700 160,412 Convertible debt 24,205 11,980 Capital lease obligations, net of current portion 6,783 1,519 Deferred revenue --- 7,721 Other liabilities 348 147 Total liabilities 239,067 226,384 Minority interests in consolidated subsidiaries 1,182 1,340 Total stockholders' equity 44,476 68,367 Total liabilities and stockholders' equity 284,725 296,091