<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) May 14, 1998
------------------------------
InSight Health Services Corp.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Delaware 0-28622 33-0702770
- -------------------------------------------------------------------------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) file number) Identification No.)
4400 MacArthur Boulevard, Suite 800, Newport Beach, CA 92660
-----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(949) 476-0733
-----------------------------------------------------------------
Registrant's telephone number, including area code
N/A
--------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS
On May 14, 1998, InSight Health Services Corp., a Delaware corporation
("Registrant"), issued a press release pursuant to Rule 135c under the
Securities Act of 1933, as amended, announcing that it intended to raise
approximately $100 million pursuant to a private placement of senior
subordinated notes, subject to market and other conditions. A copy of the
press release is attached hereto as Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a)-(b) Not applicable
(c) Exhibits.
99.1 Press Release dated May 14, 1998 (filed herewith).
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: June 3, 1998
INSIGHT HEALTH SERVICES CORP.
By: /s/ E. Larry Atkins
-------------------------------------
E. Larry Atkins
President and Chief Executive Officer
3
<PAGE>
EXHIBIT INDEX
SEQUENTIALLY
EXHIBIT NO. DOCUMENT DESCRIPTION NUMBERED PAGE
- ----------- -------------------- -------------
99.1 Press Release dated May 14, 1998.
<PAGE>
[INSIGHT LETTERHEAD]
Contacts
At Lippert/Heilshorn & Assoc.:
Lillian Armstrong/Adam Aron
415-433-3777
At InSight:
Tom Croal
Executive Vice President/
Chief Financial Officer
949-476-0733
INSIGHT HEALTH SERVICES CORP. ANNOUNCES
24% INCREASE IN THIRD QUARTER REVENUE
- COMPANY REPORTS EARNINGS PER SHARE OF $0.20 VS. $0.07 -
- COMPANY ANNOUNCES PROPOSED $100 MILLION PRIVATE PLACEMENT -
NEWPORT BEACH, CALIFORNIA, May 14, 1998 - InSight Health Services
Corp. (""InSight") (NASDAQ: IHSC) today reported results of operations for
its third fiscal quarter ended March 31, 1998.
Total revenues for the quarter increased 24% to $28,559,000 from
$23,033,000 in the quarter ended March 31, 1997. Net income grew to
$1,930,000 or $0.20 per share (diluted) compared with $380,000 or $0.07 per
share for the same period last year.
Total revenues for the nine months ended March 31, 1998 increased 26%
to $85,673,000 from $68,129,000 for the nine months ended March 31, 1997.
In the quarter ended December 31, 1997, InSight recorded a one-time charge
of approximately $6,309,000 associated with the termination, as part of
InSight's 1997 capital infusion, of its supplemental service fee agreement
with General Electric Company ("GE"), which entitled GE to receive payments
equal to 14% of InSight's pretax income. Net income exclusive of the one-
time charge was $4,856,000 or $0.62 per share (diluted) for the first nine
months ended March 31, 1998, compared to net income of $748,000 or $0.14
per share for the same period last year. Giving effect to the one-time
charge, InSight reported a net loss of $1,453,000 or ($0.19) per share for
the nine months ended March 31, 1998.
Commenting on the quarter, E. Larry Atkins, InSight's President and
Chief Executive Officer stated, "We continue to see increased benefits from
the recent capital infusion. Interest rates have been reduced, margins
have increased, and our acquisition strategy remains on track. As
previously announced, in April 1998, InSight signed a definitive agreement
to acquire Signal Medical Services, Inc, which generated revenues of
approximately $21 million in 1997.
- MORE -
<PAGE>
InSight Health Services
Page 2
Upon completion, the transaction will significantly expand and strengthen our
geographic coverage on the East Coast."
Atkins continued, "Also during the quarter, we signed an agreement
with The Memorial Hermann Health System in Houston, Texas to provide MRI
services and manage Hermann Hospital's freestanding imaging centers, a
multi-modality co-source agreement with Catholic Healthcare West to provide
all outpatient radiology services on the campus of St. John's Regional
Medical Center in Oxnard, California, and a national contract with
Community Health Systems to be the sole preferred provider for mobile MRI
services to its affiliated hospitals. We also placed into service an Open
MRI system at the imaging center in Murfreesboro, Tennessee, which we
acquired in November 1997. In addition, we are aggressively pursuing our
regional diagnostic imaging network strategy to support the continued
growth of our core business."
Thomas V. Croal, InSight's Chief Financial Officer, added, "We have
completed seven acquisitions since July 1996. Our ability to effectively
integrate acquisitions into our existing networks continues to improve our
operating results."
Private Placement
The Company also announced that it intends to raise approximately $100
million pursuant to a private placement of senior subordinated notes,
subject to market and other conditions. The securities to be offered in
the private placement will not be registered under the Securities Act of
1933, as amended, or applicable state securities laws, and may not be
offered or sold absent registration under the Securities Act and applicable
state securities laws or applicable exemptions from registration
requirements.
The Company intends to use the net proceeds of the proposed private
placement to pay certain indebtedness outstanding under its existing bank
credit facility. Amounts used to pay such indebtedness may be reborrowed
for general corporate purposes, including, future acquisitions.
Safe Harbor Statement
Statements made in this news release that state the Company's or
management's intentions, hopes, beliefs, expectations or predictions for
the future are forward-looking statements that involve risks and
uncertainties. It is important to note that the Company's actual
- MORE -
<PAGE>
InSight Health Services
Page 3
results and experience could differ materially from the anticipated results
or other expectations expressed in such forward-looking statements. The risks
and uncertainties that may affect the operations, performance, developments
and results of the Company's and Signal's business include, but are not
limited to changing regulatory environment, limitations and delays in
reimbursement by third party payers, contract renewals, financial stability
of customers, aggressive competition, industry-wide market factors and other
risk factors detailed in the Company's SEC filings.
About InSight Health Services
InSight, headquartered in Newport Beach, California, provides diagnostic
imaging and information, treatment and related management services. It serves
managed care, hospitals and other contractual customers in 25 US states,
including five major US markets: California, the Southwest, including a major
presence in Texas, the Midwest, the Northeast and the Southeast.
- TABLES TO FOLLOW -
<PAGE>
InSight Health Services
Page 4
INSIGHT HEALTH SERVICES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except share and per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
-------------------- -------------------
1998 1997 1998 1997
---------- -------- -------- --------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Contract services $ 12,846 $ 11,596 $ 39,186 $ 35,186
Patient services 15,056 10,695 43,855 31,153
Other 657 742 2,632 1,790
---------- --------- --------- ---------
Total revenues 28,559 23,033 85,673 68,129
Costs of operations
Costs of services 14,745 12,647 44,513 37,386
Provision for doubtful accounts 480 258 1,525 1,116
Equipment leases 3,981 4,732 12,983 13,822
Depreciation and amortization 3,905 2,471 10,670 7,203
---------- --------- --------- ---------
Total costs of operations 23,111 20,108 69,691 59,527
---------- --------- --------- ---------
Gross profit 5,448 2,925 15,982 8,602
Corporate operating expenses 2,254 1,688 6,510 5,343
Provision for supplemental service fee termination - - 6,309 -
---------- --------- --------- ---------
Income from company operations 3,194 1,237 3,163 3,259
Equity in earnings of unconsolidated partnerships 156 120 480 364
---------- --------- --------- ---------
Operating Income 3,350 1,357 3,643 3,623
Interest expense, net (1,420) (947) (4,665) (2,741)
---------- --------- --------- ---------
Income (loss) before provision for income taxes 1,930 410 (1,022) 882
Provision for income taxes - 30 431 134
---------- --------- --------- ---------
Net income (loss) $ 1,930 $ 380 $ (1,453) $ 748
---------- --------- --------- ---------
---------- --------- --------- ---------
Income (loss) per common and preferred share:
Basic $ 0.21 $ 0.07 $ (0.19) $ 0.14
---------- --------- --------- ---------
---------- --------- --------- ---------
Diluted $ 0.20 $ 0.07 $ (0.19) $ 0.14
---------- --------- --------- ---------
---------- --------- --------- ---------
Weighted average number of common and
preferred shares outstanding:
Basic 9,075,693 5,216,485 7,589,549 5,213,882
---------- --------- --------- ---------
---------- --------- --------- ---------
Diluted 9,493,304 5,438,545 7,589,549 5,444,308
---------- --------- --------- ---------
---------- --------- --------- ---------
BALANCE SHEET DATA:
Total Assets $ 126,787
Total Stockholders' Equity $ 35,844
</TABLE>
###
