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Registration No. 333-________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
US Diagnostic Inc.
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(Exact name of Registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation or organization)
11-3164389
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(I.R.S. Employer Identification No.)
777 South Flagler Drive, Suite 1201 East
West Palm Beach, Florida 33401 (561) 832-0006
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(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Francis J. Harkins, Jr.
777 South Flagler Drive, Suite 1201 East
West Palm Beach Florida 33401 (561) 832-0006
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(Name, address, including zip code and telephone number,
including area code, of agent for service)
Approximate date of commencement of proposed sale to the public:
At such time or times after the effective date of this Registration Statement
and after conversion of convertible notes
as the selling stockholders shall determine.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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Calculation of Registration Fee
<TABLE>
<CAPTION>
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Proposed maximum
Title of each class of Amount to be Proposed maximum aggregate offering Amount of
securities to be registered registered offering price per unit price(1) registration fee
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<S> <C> <C> <C> <C>
Common Stock, $.01 par value 1,176,472 100% $1,470,590.00 $408.82
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based upon the average of the high and low prices of
the common stock reported on November 20, 1998 on the Nasdaq SmallCap Market.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED NOVEMBER 25, 1998
PROSPECTUS
[LOGO]
US DIAGNOSTIC INC.
777 South Flagler Drive, Suite 1201 East
West Palm Beach, FL 33401
1,176,472 Shares
US Diagnostic Inc.
Common Stock
$.01 par value
The selling stockholders presently hold convertible notes issued by US
Diagnostic Inc. in the aggregate principal amount of $10,000,000. At each
selling stockholder's option, its note is convertible at any time into common
stock at a conversion price of $8.50 per share. The selling stockholders named
herein intend to offer and sell from time to time, after conversion of the
convertible notes, 1,176,472 shares of US Diagnostic Inc. common stock, par
value $.01 per share, under this prospectus.
Each selling stockholder may offer its US Diagnostic Inc. common stock through
public or private transactions, on or off the United States exchanges, at
prevailing market prices, or at privately negotiated prices. US Diagnostic's
common stock is listed on the Nasdaq SmallCap Market and trades with the ticker
symbol "USDL." On November 20, 1998, the closing price of one share of US
Diagnostic's common stock on the Nasdaq SmallCap Market was $1.25. US Diagnostic
will not receive any of the proceeds from the sale of the common stock pursuant
to this prospectus.
AN INVESTMENT IN THE COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 2.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
This prospectus is dated November __, 1998.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
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[Inside Front Cover]
Table of Contents
<TABLE>
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Special Note Regarding Forward-Looking Statements................................................ 1
The Company...................................................................................... 1
Risk Factors..................................................................................... 2
Use of Proceeds.................................................................................. 8
Selling Stockholders............................................................................. 8
Plan of Distribution............................................................................. 9
Description of Capital Stock..................................................................... 10
Legal Matters.................................................................................... 10
Experts.......................................................................................... 10
Where You Can Find More Information.............................................................. 11
SEC's Position on Indemnification................................................................ 11
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains certain forward-looking statements and
information relating to the Company that are based on the beliefs of
management, as well as assumptions made by and information currently available
to management. These forward-looking statements are principally contained in
the sections "Risk Factors" and "The Company" and include, without limitation,
management's expectations and estimates as to our business operations, including
future financial performance, financing plans, trends affecting the Company's
financial condition or results of operations, impact of competition, acquisition
opportunities and expansion of our operations. In addition, in those and other
portions of this prospectus, the words "believes," "may," "will," "could,"
"estimates," "continue," "anticipates," "intends," "expects" and words of
similar import, as they relate to the Company or our management, are intended to
identify forward-looking statements. Such statements reflect the current views
of the management with respect to future events and are subject to certain
risks, uncertainties and assumptions, including, among others, the following:
general economic and business conditions, both nationally and in the our
markets; competition; changes in business strategy; the significant leverage of
the Company; existing governmental regulations and changes in the governmental
regulations affecting the health care industry and reimbursement for health care
services generally and other risk factors set forth under "Risk Factors" in this
prospectus. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those described herein as anticipated, believed, estimated or
expected. We do not intend to update these forward-looking statements.
THE COMPANY
At US Diagnostic Inc., our goal is to create a network of fixed-site outpatient
diagnostic imaging facilities from which we can offer a full range of
diagnostic imaging services. We also strive to offer state-of-the-art
diagnostic equipment and high-quality clinical support at our centers because
we believe that it will enable us to maintain existing relationships with
referring physicians and hospitals, as well as to attract new relationships. We
believe that providing superior service and high-quality, cost effective care
generates value for our customers and our stockholders.
Our principal executive offices are located at 777 South Flagler Drive, Suite
1201 East, West Palm Beach, Florida 33401, and our telephone number is (561)
832-0006. Our web site is at http://www.usdl.com.
This prospectus provides information to a prospective investor in our common
stock. Specifically, the prospectus identifies the selling stockholders,
explains how the selling stockholders may offer shares of common stock,
identifies certain significant risks factors in the investment in our common
stock and provides information that could assist you in finding more
information about us.
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RISK FACTORS
You should carefully consider the following factors and other
information in this prospectus before deciding to invest in our common stock in
addition to any information that may assist you in understanding the risks
inherent in an investment in equity securities, in general.
LEVERAGE AND DEBT SERVICE. US Diagnostic is highly leveraged. As of
September 30, 1998, our total debt and stockholders' equity was $189.8 million
and $29.0 million, respectively, and our ratio of debt to stockholders' equity
was 6.5 to 1. We have a revolving credit facility with DVI Credit Corporation
(the "Revolving Credit Facility") under which we may borrow up to $35.0 million
on a secured basis (subject to the amount of accounts receivable determined,
from time to time, as eligible collateral under the defined borrowing base
calculation). Borrowings outstanding as of November 20, 1998 under the
Revolving Credit Facility were $15 million. Also, we are a party to an
acquisition and equipment line of credit with DVI Financial Services, Inc. under
which we may borrow up to $25 million, based on a review by DVIFS of the entity
acquired and/or a review of the assets securing the loan. In addition, in 1996
we issued $57,500,000 aggregate principal amount of 9% Subordinated Convertible
Debentures Due 2003 (the "Debentures").
Our level of debt will have several important effects on our future
operations and could have important consequences to investors, including:
- We must dedicate a substantial portion of our cash flow from
operations to the payment of interest and repayment of
principal on our debt, thus limiting the cash that is
available for other purposes;
- Covenants contained in our debt obligations require us to meet
certain financial tests, and other restrictions limit our
ability to borrow additional funds or to dispose of assets.
This may affect our flexibility in planning for, and reacting
to, changes in our business, including possible acquisition
opportunities;
- Our ability to obtain additional financing in the future for
working capital, capital expenditures, acquisitions or
general corporate purposes may be impaired; and
- The debt load presents potential difficulties in satisfying
the Company's obligations under such debt.
Our ability to meet our debt service obligations and financial tests
and to reduce our total debt depends on our future performance, which is
subject to general economic conditions and financial, business and other
factors affecting our operations, many of which are beyond our control. There
can be no assurance that our business will continue to generate cash flow at or
above current levels. If we are unable to generate sufficient cash flow from
operations in the future to service our debt, we may be required to refinance
all or a portion of our existing debt, to sell a portion of our assets or to
obtain additional financing. There can be no assurance that we could obtain any
such financing on terms acceptable to us in a sufficient amount or on an
appropriate time basis, if at all, nor can there be any assurance as to the
timing of any asset sales or the proceeds that the we could realize therefrom.
LIQUIDITY. During 1997, but for borrowings under the Revolving Credit
Facility, our cash position deteriorated as a result of extraordinary expenses
including higher legal and accounting fees related to the investigation and
litigation described in "Business -- Legal Proceedings" of our 1997 Annual
Report on Form 10- K, the repayment of $34.6 million in debt incurred to acquire
facilities and the payment of $18.9 million in capital
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expenditures to replace imaging equipment and to fund management information
system enhancements. In addition, our cash balances were negatively affected by
an increase in bad debt expense and accounts receivable resulting from a failure
to fully collect receivables from third-party payors, in part because of our
conversion to a new centralized billing and collection system and in part,
because of inefficiencies in collecting copayments and deductibles from
patients. This reduction in cash balances continued during the first three
quarters of 1998.
During the first quarter of 1998, we developed a strategy to reduce
debt and increase cash flows consisting of the following: (i) implementing a
cost reduction plan which includes a significant reduction in nonessential staff
and other consolidation synergy. The aggregate reduction of these
employee-related expenses is expected to save several million dollars in payroll
expense annually; (ii) divesting non-core assets and focus upon our core
business, and divesting core operating assets when deemed warranted. In addition
to the transactions described below, we are currently reviewing other non-core
and underperforming assets and will pursue other such sales as warranted; (iii)
seeking to refinance our long term debt; and (iv) once the first three steps
have been accomplished, instituting a sustained strategy of prudent acquisitions
and new center development.
In May 1998, we consummated the sale of certain non-core assets
consisting of our mobile imaging subsidiary, Medical Diagnostics, Inc. ("MDI"),
to Alliance Imaging Inc. for $35.5 million in cash less debt assumed of $5.9
million. Immediately upon the closing, we used $25 million of the cash proceeds
to repay a portion of the outstanding balance under the Revolving Credit
Facility. Also in May 1998, we consummated the sale of our 50.1% interest in
United States Cancer Care Inc., a non-core asset, and our 100% interest in a
subsidiary which held a 50% interest in a radiation oncology partnership. The
sale price consisted of $2.0 million in cash, a promissory note for $750,000 due
in twenty-four equal installments from May 1999 through April 2001 with interest
at 8% per annum, and the assumption by the purchaser of certain additional
liabilities aggregating approximately $1.4 million. In November 1998, we
consummated the sale of US Heartcare Management, Inc. ("US Heartcare"). US
Heartcare provides management services to several third party nuclear medicine
and diagnostic imaging centers in the New York City metropolitan area. The $12.5
million aggregate consideration received consisted of $3.7 million in cash and
notes receivable and the assumption and forgiveness of debt of $8.8 million.
We have devoted substantial additional resources to the collection of
accounts receivable and implemented intense remedial efforts thereof. If we
cannot continue to improve collections to the extent necessary, if any
additional litigation is filed or investigations commenced against us, or if the
strategies described above do not result in increased cash flows, we could be
materially adversely affected.
DEPENDENCE ON THIRD PARTY REIMBURSEMENT. Nearly all of our patients
rely on third-party payors (such as their private insurance company, health care
maintenance organization or government sponsored healthcare program such as
Medicare and Medicaid) to pay for our services. Healthcare maintenance
organizations, insurance companies and state and federal payors strive to lower
their costs through various methods that when combined with rising costs
associated with providing healthcare services results in reduced profitability
for us. Both the federal government and various states are considering imposing
limitations on the amount of funding available for various healthcare services.
If we cannot offset third party payor's reductions of our reimbursement rates by
reducing our costs, increasing our scan volume, or introducing new procedures,
it could materially affect our operating revenues and our ability to operate
profitably.
Members of Congress have proposed new Medicare rules that would require
the development of a resource-based system for determining practice expense
relative to value units. If Congress enacts the rules as proposed, our Medicare
reimbursements could be reduced and depending on the severity of the reductions
and our ability to offset these reductions with cost savings, the rule changes
could result in a reduction of our operating revenues and an adverse impact on
our ability to operate profitably.
In addition, rates paid by private third-party payors, including those
that provide Medicare supplemental insurance, are generally higher than Medicare
payment rates. Changes in the mix of our patients among the non-government
payors and government-sponsored healthcare programs, and among different types
of non-government payors and government sponsored healthcare programs, could
have a material adverse effect on us. Further reductions in payments to
physicians or other changes in reimbursement for healthcare services
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could have a material adverse effect on us as well, unless we are otherwise
able to offset any payment reductions through cost reductions, increased volume,
introduction of new procedures or otherwise.
RECENT LOSSES. For the years ended December 31, 1996 and 1997, we
reported net losses of $6.3 million and $116.7 million, respectively. The net
losses primarily reflect high levels of depreciation and amortization charges
relating to the depreciation of assets we obtained in acquisitions, high levels
of interest expense relating to debt incurred to finance these acquisitions and,
in 1997, a non-cash impairment charge related to the carrying value of certain
acquired assets of $92.9 million, an increase in bad debt expense of $9.1
million and high legal and professional fees related to the SEC and NASD
investigations and the settlement of stockholder class action litigation.
Interest expense and depreciation and amortization charges have continued at
high levels in 1998 and will continue at high levels in future years as a result
of debt incurred and goodwill recorded in connection with previously completed
acquisitions. For the three and nine months ended September 30, 1998, we had a
net loss of $1.4 million and net income of $2.7 million, respectively. Included
in the results for the three and nine months ended September 30, 1998 is a gain
before tax of $377,000 and $6.2 million, respectively, resulting from the sale
of certain subsidiaries. Although we have focused our efforts on improving our
operations, our efforts may not be successful and we may not be able to achieve
sustained profitability in the future.
EFFECT OF COST CONTAINMENT ON REFERRALS. In an effort to control costs,
non-governmental healthcare payors have implemented cost containment programs
that could limit the ability of physicians to refer patients to our centers.
For example, persons enrolled in prepaid healthcare plans, such as health
maintenance organizations, often are not free to choose where to obtain imaging
services. Instead, the health plan provides these services directly or
contracts for these services with providers at reduced rates and requires its
enrollees to obtain such services only from those providers. Many managed care
organizations and other private healthcare payors also limit testing services
to contracted providers. These "closed" payment systems are now common to
combat the rising cost of healthcare. As a result, we actively seek and have
obtained managed care contracts to provide imaging services.
RELIANCE AND RESTRICTIONS ON PATIENT REFERRALS. We are highly dependent
on referrals from physicians who have no contractual or economic obligation to
refer patients to our imaging centers. If a sufficiently large number of
physicians elect at any time to stop referring patients to us, it would have a
material adverse effect on us.
Federal and state laws generally restrict a physician from referring
such physician's patients to entities, including diagnostic imaging facilities,
in which the physician has a financial interest. This precludes physicians from
referring Medicare and Medicaid patients to the Company if the physician has
any financial relationship with the Company. If we were to violate these laws,
the result could be a denial of payments for the service, a requirement to
refund payment for the service, assessment of civil monetary penalties and/or
exclusion of the physicians from the Medicare, Medicaid and other federal
healthcare programs. Further, the federal anti-kickback statutes prohibit
persons or entities from offering or receiving remuneration for the referral of
patients or the inducement of the purchase of a service covered by Medicare,
Medicaid or other federal healthcare programs, including payments for the
referral of patients to clinical laboratories or imaging centers. In addition
to federal restrictions, which are generally applicable to Medicare, Medicaid
and other federal healthcare patients, a number of states in which we operate
imaging centers have enacted prohibitions against physicians referring patients
to entities with which they have a financial relationship (an ownership
interest or compensation arrangement). These laws generally apply to all
patients, not just participants in the Medicare and Medicaid programs. In the
past, Congress has considered legislation that could expand the self-referral
ban from Medicare and Medicaid to all payors. There can be no assurance that
such legislation will not be adopted or if adopted will not have a material
adverse effect on the Company.
Violations of the anti-kickback and other statutes could result in
significant civil or criminal penalties that could have a material adverse
effect on us. We are unaware of any current regulatory investigations or
material regulatory or judicial proceedings pending against us or any of our
facilities alleging violations of any such laws. Nevertheless, while we endeavor
to comply with all laws, regulations and other legal requirements applicable to
our operations, a regulatory or judicial authority could interpret the
applicable statutes and regulations in a manner that would adversely affect our
operations.
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SUBSTANTIAL COMPETITION. The market for imaging services is highly
fragmented, with over 2,400 outpatient diagnostic imaging centers nationwide and
no dominant national or regional imaging services provider. Competition varies
by market and is generally greater in large metropolitan areas where there is
likely to be more facilities and more managed care organizations putting pricing
pressure on the market. We compete with larger healthcare providers, such as
hospitals, as well as other private clinics and radiology practices that own
diagnostic imaging equipment. Competition often focuses on physician referrals
at the local market level. Successful competition for referrals is a result of
many factors, including participation in healthcare plans, quality and
timeliness of test results, type and quality of equipment, facility location,
convenience of scheduling and availability of patient appointment times. While
some competitors are larger and have greater financial resources than ours, we
compete primarily on the basis of our quality of equipment and service. There
can be no assurance that competition in our existing or new markets will not
have a material adverse effect on us. In addition, changes in the regulatory
environment in which we operate and governmental and private reimbursement
policies have increased competition in the industry and could thereby have a
material adverse effect on us.
INVESTIGATION BY THE SECURITIES AND EXCHANGE COMMISSION. In January
1997, the SEC initiated an investigation into our former relationship with
Coyote Consulting and Keith Greenberg, and the adequacy of our disclosure
concerning that relationship. We continue to fully cooperate with the SEC.
GOVERNMENTAL REGULATION, QUALITY ASSURANCE AND LICENSES. There are
numerous federal and state laws that regulate imaging centers and require
certification by the federal government and various state and local
instrumentalities. The Company believes that it is in material compliance with
all relevant federal and state rules and regulations. Imaging centers
performing mammography services must meet federal, and in some jurisdictions
state, standards for quality, as well as certification and accreditation
requirements, in order to receive reimbursement. Each of the Company's
facilities have received federal certification as well as any required state
certification.
In some instances, we are also subject to licensing and/or regulation
under federal and/or state laws relating to the handling and disposal of medical
specimens, infectious and hazardous waste and radioactive materials, as well as
to the safety and health of facility employees. In addition, we are subject to
state regulation, such as personnel licensing requirements, which may include
qualifying examinations and continuing education requirements. Our failure to
remain in compliance with applicable laws and regulations could have a material
adverse effect on us.
RISKS INHERENT IN THE PROVISION OF MEDICAL SERVICES. The physicians who
use our equipment are involved in the delivery of healthcare services to the
public and, therefore, are exposed to the risk of liability claims. Since we
typically operate equipment and provide the medical staff or radiology
technicians to assist the physicians in the use of the equipment, we may also be
named in a claim against a physician in connection with the performance of a
procedure at our facilities. Although we have not experienced any losses due to
claims for malpractice, such claims, if successful, could result in substantial
damage awards to the claimants that may exceed the limits of any applicable
insurance coverage. While we maintain professional liability insurance, there
can be no assurance that any such claims against us will not exceed the amount
of the insurance maintained. Successful malpractice claims asserted against us,
to the extent not covered by our liability insurance, could adversely affect us.
COMPUTER TECHNOLOGIES AND YEAR 2000 COMPLIANCE. We are aware of the
issues associated with the programming and embedded code that may exist in
computer systems as of January 1, 2000. Many existing computer programs use
only two digits to identify a year in the date field of software applications
and may recognize 2000 as 1900. The issue is whether such code exists in our
mission critical applications and/or computer hardware and if that code will
produce accurate date-sensitive calculations on or after January 1, 2000. We
have established a multi-phase plan and timetable consisting of a review phase,
a testing phase and an implementation phase for all Year 2000 compliance
issues. The review phase for all issues is approximately 80% complete. The
testing phase for the various plans is approximately 60% complete. The
implementation phase is approximately 40% complete. We have conducted a
thorough review of our material internal computer applications. In 1996, we
began installing a new state-of-the-art billing and collection system as well
as a new accounting system. The installation was completed in the first quarter
of 1998. We have received written confirmation from our vendors that their
computer applications are currently Year 2000 compliant or will be made Year
2000 compliant before the
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end of the fourth quarter of 1998. We are reviewing information obtained from a
survey conducted by General Electric Company to determine whether certain
embedded applications, which control certain medical and related equipment,
should be upgraded to ensure Year 2000 compliance and the cost of such
upgrades, if any. We expect to complete the review in the fourth quarter of
1998. We have incurred no additional costs as a result of GE's review of our
embedded applications, which GE performed as part of our national service
agreement with GE.
We are reviewing the computer applications of our significant
payers--Medicare and private insurance carriers--to determine whether these
applications will be upgraded before January 1, 2000. Medicare is becoming Year
2000 compliant as part of the federal government's upgrade of its computer
technologies. We are obtaining written confirmation from each of our insurance
carriers that the carrier's systems are Year 2000 compliant. As a result, we do
not expect any adverse impact on our cash flows from the non-compliance of our
payers' computer technologies. Our compliance policy requires that we verify
that the manufacturers of potential new hardware and software computer
applications that perform significant date-sensitive calculations warrant the
software or hardware to be Year 2000 compliant. We will complete testing of all
of our internal computer applications in the fourth quarter of 1998. We will do
all testing internally in the ordinary course of our business, and, as a
result, we are not expecting to incur extraordinary costs for such testing. We
will also perform testing of embedded applications in the fourth quarter of
1998. The cost to finalize the upgrade of Year 2000 issues pertaining to our
internal computer applications is estimated to be $30,000 which we will incur
in the fourth quarter of 1998. We expects to have completed the implementation
phase by the end of the fourth quarter of 1998. The most reasonably likely
worst case scenario of the impact of Year 2000 issues on our operations is that
our collection of cash could be disrupted if payers are unable to submit
payments to us because of their Year 2000 compliance issues. The financial
impact of such a disruption could adversely affect our ability to conduct normal
business operations. We are currently working on contingency plans to handle the
most reasonably likely worst case scenarios. We will discuss these contingency
plans in our Form 10-K for the fiscal year ending December 31, 1998. Because of
the uncertainty surrounding Year 2000 issues, there can be no assurance that our
assessment will be correct nor that a failure resulting from the impact of Year
2000 issues on our operations will not have a material adverse effect on its
financial condition.
PREFERRED STOCK; CERTAIN ANTI-TAKEOVER PROVISIONS. Our Certificate of
Incorporation authorizes the Board of Directors to issue up to 5,000,000 shares
of preferred stock. The Board of Directors may establish the rights and
preferences of any preferred stock issued which rights could adversely affect
the voting or other rights of the holders of our common stock. The issuance of
preferred stock could have the effect of delaying or preventing someone from
taking control of the Company, even if a change in control were in our
stockholders' best interests. As of the date of this offering, we have not yet
issued any preferred stock and do not presently intend to do so. However, we may
decide to issue preferred stock in the future. Our Certificate of Incorporation
and Bylaws also contain certain provisions which could discourage a takeover of
the Company. Further, the Company is subject to Delaware General Corporation Law
provisions that may discourage a non-negotiated takeover of the Company. These
provisions would generally prohibit us from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. These provisions, as
well as the other matters set forth above, could have the effect of deterring
certain takeovers or delaying or preventing certain changes in our control or
management, including transactions in which stockholders might otherwise receive
a premium for their shares over then current market prices. As a result,
potential acquirors may be discouraged from seeking to acquire control of the
Company through the purchase of common stock, which could have a negative effect
on the price of the Company's securities.
COVENANT LIMITATIONS. Our debt agreements contain numerous financial
and operating covenants that will limit our management's discretion with respect
to certain business matters. These covenants place significant restrictions on,
among other things, our ability to incur additional debt, to create liens or
other encumbrances, to pay dividends and make other investments and restricted
payments, and to sell or otherwise dispose of assets and to merge or consolidate
with other entities. The Revolving Credit Facility and the Debenture indenture
also require the Company to meet certain financial ratios and tests. A failure
to comply with these obligations could result in an event of default, which
could result in acceleration of the related debt and the acceleration of debt
under other instruments evidencing debt that may contain cross-acceleration or
cross-default provisions.
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RESTRICTIONS ON PAYMENTS OF DIVIDENDS ON COMMON STOCK. Our existing
debt agreements restrict our ability to pay dividends. We do not anticipate
paying any cash dividends on our shares in the foreseeable future but rather we
intend to retain any future earnings to fund the operation of our business.
EXERCISE OF OUTSTANDING WARRANTS, OPTIONS AND CONVERTIBLE NOTES AND
ISSUANCE OF RESTRICTED STOCK; DILUTION. At September 30, 1998, we had
various warrants, options and other securities outstanding which obligate us
upon their exercise or conversion to issue approximately 12,425,000 shares of
common stock (excluding the shares of common stock being sold pursuant to this
prospectus) and restricted stock awards aggregating 198,000 shares. The
exercise prices for the outstanding options and warrants range from $3.37 to
$13.63 per share. We are unable to predict the timing of the exercise or
conversion of any of these securities, although they are likely to be exercised
or converted if and when the market price of the Common Stock is above the
exercise or conversion price of these securities, which will result in dilution
to existing stockholders. Further, there can be no assurance that we will be
able to effectively utilize the proceeds from any of these exercises, which
proceeds could be substantial.
FUTURE SALES OF COMMON STOCK. In connection with acquisitions, we
have granted to certain stockholders piggyback registration rights with respect
to approximately 200,000 shares of common stock and approximately 1.3 million
shares underlying unit purchase options granted in 1994 and 1995 to
underwriters. The sale, or the availability for sale, of substantial amounts of
our securities in the public market at any time could adversely affect the
prevailing market price of those securities.
CHARGE TO EARNINGS FOR AMORTIZATION OF GOODWILL FROM ACQUISITIONS. A
major element of our business strategy was to acquire additional medical
service facilities. The consideration for these acquisitions involved cash,
notes and a significant number of shares of common stock, depending on the size
of the acquisition. In connection with acquisitions, at September 30, 1998, the
Company had approximately $80.1 million of goodwill and other intangibles on its
balance sheet, which will be amortized over varying periods of up to 20 years
and will result in annual charges to income of approximately $4.7 million for
the next two years and lesser amounts in future years. In 1997, we recorded a
$76 million non-cash impairment loss relating to the carrying value of certain
intangible assets (primarily goodwill). There can be no assurance that we will
ever realize the value of the goodwill.
POSSIBLE VOLATILITY OF STOCK PRICE. Market prices for our Common Stock
are influenced by a number of factors, including quarterly variations in our
financial results and any competitors, changes in earnings, estimates by
analysts, conditions in the health care industry, the overall economy and the
financial markets.
7
<PAGE> 12
USE OF PROCEEDS
All net proceeds from the sale of the our common stock pursuant to this
prospectus will go to the selling stockholder who offers and sells the shares.
Accordingly, we will not receive any proceeds upon the conversion of the
convertible notes or from sales of the underlying common stock.
SELLING STOCKHOLDERS
The selling stockholders presently hold convertible notes issued by US
Diagnostic Inc. in the aggregate principal amount of $10,000,000. At each
selling stockholder's option, its note is convertible at any time into common
stock at a conversion price of $8.50 per share. The following table sets forth
the names of the selling stockholders and certain information regarding the
number of shares of common stock beneficially owned by each of the selling
stockholders:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Shares and Percentage (1) Shares Beneficially
Beneficially Owned Prior Owned After
Selling Stockholder to Offering Shares Being Offered Offering(1)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Commonwealth Life 235,294 235,294 0
Insurance Co. Teamsters 1.03%
Camden Mon-Enhance
- -----------------------------------------------------------------------------------------------------------------------
Zazove Convertible Fund, L.P. 58,824 58,824 0
- -----------------------------------------------------------------------------------------------------------------------
Forum Capital Markets LLC(2) 452,975 133,530 319,445
1.99% 1.4%
- -----------------------------------------------------------------------------------------------------------------------
Corbel Investments 15,294 15,294 0
- -----------------------------------------------------------------------------------------------------------------------
Century National Insurance 88,235 88,235 0
Company Convertible
Account
- -----------------------------------------------------------------------------------------------------------------------
Catholic Mutual Relief 11,765 11,765 0
Society of America
- -----------------------------------------------------------------------------------------------------------------------
Dephaven Mkt. Neutral Trading L.P. 48,882 48,882 0
- -----------------------------------------------------------------------------------------------------------------------
Dephaven Mkt. Neutral Trading Ltd. 114,059 114,059 0
- -----------------------------------------------------------------------------------------------------------------------
Hicks Investments Ltd. 35,294 35,294 0
- -----------------------------------------------------------------------------------------------------------------------
Angelo Gordon & Co., L.P. 247,059 247,059 0
1.08%
- -----------------------------------------------------------------------------------------------------------------------
Michaelangelo, L.P. 35,294 35,294 0
- -----------------------------------------------------------------------------------------------------------------------
Raphael, L.P. 35,294 35,294 0
- -----------------------------------------------------------------------------------------------------------------------
Forest Fulcrum Ltd. 117,647 117,647 0
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Less than one percent (1%) unless otherwise stated.
(2) C. Keith Hartley, a director of US Diagnostic, is Managing Partner,
Corporate Finance, of Forum Capital Markets LLC. Forum is also the holder
of record of warrants to purchase 319,445 shares of common stock.
8
<PAGE> 13
PLAN OF DISTRIBUTION
Each selling stockholder, or pledgees, donees, transferees or other
successors in interest thereof, may sell shares of common stock from time to
time. Each selling stockholder may make sales in the over-the-counter market,
the Nasdaq SmallCap Market or on any stock exchange on which the common stock
of US Diagnostic may be listed at the time of sale or otherwise at prices and
terms then prevailing or at prices related to the then current market price, or
in negotiated transactions. A sale could take one or more of the following
forms:
- A block trade in which the broker or dealer so
engaged will attempt to sell the shares as agent but
may position and resell a portion of the block as
principal to facilitate the transaction;
- Purchases by a broker or dealer as principal and
resale by such broker or dealer for its account
pursuant to this prospectus;
- Ordinary brokerage transactions and transactions in
which the broker solicits purchasers; or
- Privately negotiated transactions between a selling
stockholder and a purchaser.
There is no underwriter or coordinating broker acting in connection
with this offering. The SEC could deem the selling stockholders "underwriters"
within the meaning of the Securities Act with respect to a selling
stockholder's offer of the shares of common stock. The Company and the selling
stockholders have agreed to indemnify one another against certain liabilities
including liabilities under the Securities Act.
Should a selling stockholder engage brokers or dealers, those brokers
or dealers may arrange for other brokers or dealers to participate. Brokers and
dealers will receive commissions or discounts from the selling stockholder in
an amount to be negotiated immediately prior to the sale. The SEC could deem
these brokers or dealers and any other participating brokers or dealers to be
"underwriters" within the meaning of the Securities Act, in connection with the
sales. In addition, any shares of common stock covered by this prospectus that
qualify for sale pursuant to Rule 144 or Rule 144A promulgated by the SEC under
the Securities Act may be sold under Rule 144 or Rule 144A rather than pursuant
to this prospectus.
Upon our receipt of notice from a selling stockholder that the selling
stockholder has entered into any material arrangement with a broker or dealer
for the sale of shares through a block trade, special offering or secondary
distribution or a broker or dealer purchase, we will file a supplement to this
prospectus with the SEC, if required, pursuant to Rule 424 under the Securities
Act disclosing: (a) the name of the participating broker(s) or dealer(s); (b)
the number of shares involved; (c) the sales price of the shares; (d) the
commissions the selling stockholder paid or concessions the selling stockholder
allowed to the broker(s) or dealer(s), where applicable; (e) that the broker(s)
or dealer(s) did not conduct any investigation to verify the information set
out in this prospectus; and (f) other facts material to the transactions.
We will pay all of our expenses in connection with this offering, and
each selling stockholder will be solely responsible for paying any sales or
brokerage commissions or discounts with respect to the sales of its shares
offered hereby as well as any expenses of counsel for such selling stockholder.
9
<PAGE> 14
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock presently consists of 50,000,000 shares of
common stock, par value $.01 per share, and 5,000,000 shares of preferred
stock, par value $1.00 per share. We may designate the authorized preferred
stock in series. Currently, we have not designated in series any authorized
preferred stock. As of November 11, 1998, there were 22,712,433 shares of
common stock issued and outstanding.
Common Stock
General. The holders of common stock have no preemptive, conversion or
redemption rights. The outstanding shares of common stock are fully paid and
nonassessable.
Dividends. The holders of common stock are entitled to receive
dividends as the Board of Directors may from time to time declare out of funds
legally available therefor. We have not paid cash dividends on common stock
since our inception, and the Board of Directors currently intends to retain
earnings for further development of our business and, therefore, does not
intend to pay cash dividends on common stock in the foreseeable future.
Voting Rights. The holders of common stock are entitled to one vote per
share on all matters submitted to a vote of the stockholders and do not possess
cumulative voting rights.
Registrar and Transfer Agent. The registrar and transfer agent for the
common stock is American Stock Transfer & Trust Company. American Stock
Transfer's address is 6201 15th Avenue, Brooklyn, New York 11219.
Authorized Preferred Stock
General. Our Articles of Incorporation grant the Board of Directors the
authority to designate one or more series of preferred stock and to issue
preferred stock from any series.
Rights and Preferences. Upon designation of a series of preferred
stock, the Board of Directors will establish the designations, powers,
preferences, rights, qualifications, limitations and restrictions of the
series.
LEGAL MATTERS
The law firm of Steel Hector & Davis LLP, West Palm Beach, Florida,
will pass upon the validity of the issuance of the shares of common stock
offered under this prospectus.
EXPERTS
We have incorporated in this prospectus and the registration statement
our financial statements for the year ended December 31, 1997 and December 31,
1996, as included in our Annual Report on Form 10-K for the fiscal year ended
December 31, 1997. These financial statements have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and are included herein in reliance upon the authority of that
firm as experts in accounting and auditing in giving said reports.
We have also incorporated in this prospectus and registration statement
our financial statements for the year ended December 31, 1995, as included in
our Annual Report on Form 10-K for the fiscal year ended December 31, 1997.
These financial statements have been audited by Moore Stephens, P.C.,
independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of that firm as
experts in accounting and auditing in giving said reports.
10
<PAGE> 15
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and file annual, quarterly and special
reports, proxy statements and other information with the SEC. You may read and
copy any document we file at the SEC's public reference room at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, or at the SEC's
regional office at Seven World Trade Center, Suite 1300, New York, New York
10007, and at its Chicago regional office at Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public from the SEC's Website at
"http://www.sec.gov."
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, including filings made subsequent to the
filing date of the registration statement of which this prospectus is a part
and prior to the effectiveness of the registration statement:
1. Annual Report on Form 10-K for the fiscal year ended December 31, 1997,
as amended by Form 10-K/A;
2. Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998,
June 30, 1998 and September 30, 1998;
3. Current Reports on Form 8-K dated April 1, 1998, May 27, 1998,
September 24, 1998 and October 30, 1998; and
4. Definitive Proxy Statement dated September 21, 1998, filed in
connection with our 1998 Annual Meeting of Stockholders.
You may request a copy of these filings (but not the exhibits of the
filings, unless the exhibits are specifically incorporated by reference into
this prospectus), at no cost, by writing or telephoning us at the following
address:
US Diagnostic Inc.
777 South Flagler Drive, Suite 1201 East
West Palm Beach, FL 33401
Attn: Corporate Secretary
Telephone: 1-800-787-3522
This prospectus is part of a registration statement we filed with the
SEC. You should rely only on the information or representations provided in
this prospectus. We have authorized no one to provide you with different
information. We are not making an offer of these securities in any state where
the offer is not permitted. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the front of the
document.
SEC'S POSITION ON INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the SEC has informed the
registrant that in its opinion such indemnification is against public policy.
11
<PAGE> 16
[Outside Back cover]
UNTIL [INSERT DATE], ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE
REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS'
OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH
RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
12
<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration Fee........................................................................ $ 408.82
Printing Expenses*...................................................................... $ 5,000.00
Legal Fees and Expenses*................................................................ $10,000.00
Accounting Fees and Expenses*........................................................... $10,000.00
Miscellaneous........................................................................... $ 2,000.00
----------
Total (1)............................................................................... $27,408.82
==========
</TABLE>
* Estimated
(1) We will pay all of the expenses.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Delaware General Corporation Law permits a corporation to indemnify its
directors, officers, employees and agents if the person acted in good faith and
in a manner the person reasonably believed to be in the best interests of the
corporation. Our Articles of Incorporation and By-laws each require that we
indemnify and advance expenses to each person who is or was a director or
officer of the corporation for all costs, expenses, liabilities or other matters
incurred by them because they were an officer or director of the Company to the
fullest extent permitted under Delaware corporate law.
ITEM 16. EXHIBITS.
4.1 Stock Purchase Agreement, dated as of June 20, 1996, by and among
MediTek Health Corporation, HEICO Corporation and the Company (filed as
Exhibit 10.39 to the Company's Current Report on Form 8-K dated July
24, 1996 and incorporated herein by reference, File No. 1-13392).
4.2 Registration and Sale Rights Agreement, dated as of July 1, 1996, by
and among HEICO Corporation and the Company (filed as Exhibit 10.40 to
the Company's Current Report on Form 8-K dated July 24, 1996 and
incorporated herein by reference, File No. 1-13392).
4.3 Form of US Diagnostic Inc. Amended and Restated 6 1/2% Convertible
Negotiable Note Due June 30, 2001 (filed as Exhibit 4.1 to the
Company's Quarterly Report on Form 10-Q dated September 30, 1997 and
incorporated herein by reference, File No. 1-13392).
5 Opinion of Steel Hector & Davis LLP*
23.1 Consent of Arthur Andersen LLP*
23.2 Consent of Moore Stephens, P.C.*
23.3 Consent of Steel Hector & Davis LLP (contained in opinion set forth in
Exhibit 5)*
24 Power of Attorney (set forth on signature page)*
- ------------------
* Filed herewith.
<PAGE> 18
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act; (ii) to
reflect in the prospectus any facts or events arising after the effective
date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration
statement; or (iii) to include any material information with respect to the
plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement,
provided, however, that the registrant need not file a post-effective
amendment to include the information required to be included by subsection
(i) or (ii) if such information is contained in periodic reports filed by
the registrants pursuant to Section 13 or Section 15(d) of the Exchange Act,
which are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the Securities Act,
each filing of U.S. Diagnostic's Annual Report pursuant to Section 13(a) of
the Exchange Act that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrants pursuant to the provisions described under Item 15 above, or
otherwise, the registrants have been advised that in the opinion of the SEC
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by either
registrant of expenses incurred or paid by a director, officer or controlling
person of such registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant against which
the claim is asserted will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, we certify
that we have reasonable grounds to believe that we meet all of the requirements
for filing on Form S-3 and have caused the undersigned to duly authorize and
sign this Registration Statement on Form S-3 on our behalf in the City of West
Palm Beach, Florida, on November 25, 1998.
US DIAGNOSTIC INC.
By: /s/ Joseph A. Paul
--------------------------------------------------
Joseph A. Paul, Chief Executive Officer, President
and Director
Pursuant to the requirements of the Securities Act of 1933, the
following persons have signed this Registration Statement in the capacities and
on the dates indicated. Each person whose signature to the Registration
Statement appears below hereby appoints Joseph A. Paul and Francis J. Harkins,
Jr., or either one of them, as his attorney-in-fact with capacities to sign on
that person's behalf, individually and in the capacities stated below, and to
file any and all amendments and post-effective amendments to this Registration
Statement, which amendment or amendments may make such changes and additions as
such attorney-in-fact may deem necessary or appropriate.
<TABLE>
<CAPTION>
Name Office Date
- ---- ------ ----
<S> <C> <C>
/s/ L.E. Richey, M.D.
- ----------------------------- Chairman of the Board and Director November 25, 1998
L.E. Richey, M.D.
/s/ Joseph A. Paul
- ----------------------------- Chief Executive Officer, President November 25, 1998
Joseph A. Paul and Director (Principal Executive Officer)
/s/ J. Wayne Moor
- ----------------------------- Executive Vice President, Chief Financial November 25, 1998
J. Wayne Moor Officer and Assistant Secretary (Principal
Financial Officer and Principal Accounting
Officer)
/s/ C. Keith Hartley
- ----------------------------- Director November 25, 1998
C. Keith Hartley
/s/ Kenneth R. Jennings
- ----------------------------- Director November 25, 1998
Kenneth R. Jennings
/s/ David McIntosh
- ----------------------------- Director November 25, 1998
David McIntosh
/s/ Michael A. O'Hanlon
- ----------------------------- Director November 25, 1998
Michael A. O'Hanlon
/s/ Gordon C. Rausser, Ph. D.
- ----------------------------- Director November 25, 1998
Gordon C. Rausser, Ph. D.
</TABLE>
<PAGE> 20
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
- ------- -----------------------
<S> <C>
4.1 Stock Purchase Agreement, dated as of June 20, 1996, by and among MediTek Health
Corporation, HEICO Corporation and the Company (filed as Exhibit 10.39 to the Company's
Current Report on Form 8-K dated July 24, 1996 and incorporated herein by reference, File No. 1-13392).
4.2 Registration and Sale Rights Agreement, dated as of July 1, 1996, by and among HEICO
Corporation and the Company (filed as Exhibit 10.40 to the Company's Current Report on Form
8-K dated July 24, 1996 and incorporated herein by reference, File No. 1-13392).
4.3 Form of US Diagnostic Inc. Amended and Restated 6 1/2% Convertible Negotiable Note Due
June 30, 2001 (filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q dated
September 30, 1997 and incorporated herein by reference, File No. 1-13392).
5 Opinion of Steel Hector & Davis LLP*
23.1 Consent of Arthur Andersen LLP*
23.2 Consent of Moore Stephens, P.C.*
23.3 Consent of Steel Hector & Davis LLP (contained in opinion set forth in Exhibit 5)*
24 Power of Attorney (set forth on signature page)*
- -----------------------------------
* Filed herewith.
</TABLE>
<PAGE> 1
EXHIBIT 5
November 25, 1998
U S Diagnostic Inc.
777 South Flagler Drive, Suite 1201 East
West Palm Beach, Florida 33401
Gentlemen:
As counsel for US Diagnostic Inc., a Delaware corporation
("USD"), we have participated in the preparation and filing of a registration
statement on Form S-3 to be filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, on or about the date hereof (the
"Registration Statement") in connection with the proposed offering on behalf of
selling stockholders of 1,176,472 shares of USD's Common Stock, $.01 par value
(the "Shares"). In connection therewith, we have reviewed such documents and
records as we have deemed necessary to enable us to express an opinion on the
matters covered thereby.
Based on the foregoing, we are of the opinion that the Shares,
when sold as contemplated by the Registration Statement, will be legally issued,
fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement. We also consent to the reference to us in the
Prospectus included in the Registration Statement under the captions "Legal
Opinions" and "Experts."
Very truly yours,
/s/ Steel Hector & Davis LLP
STEEL HECTOR & DAVIS LLP
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
As independent certified public accountants, we consent to
the incorporation by reference in this Registration Statement of US Diagnostic
Inc. on Form S-3 of our report dated April 13, 1998 for the years ended December
31, 1997 and December 31, 1996 appearing in the Annual Report on Form 10-K of US
Diagnostic Inc. for the year ended December 31, 1997 and to the reference to us
under the heading "Experts" in the Prospectus which is a part of this
Registration Statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
West Palm Beach, Florida
November 25, 1998
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this
Registration Statement of US Diagnostic Inc. on Form S-3 of our report dated
February 20, 1996 for the year ended December 31, 1995, appearing in the Annual
Report on Form 10-K of US Diagnostic Inc. for the year ended December 31, 1997
and to the reference to us under the heading "Experts" in the Prospectus which
is a part of this Registration Statement.
On July 1, 1996, the firm of Mortensen and Associates, P.C.
changed its name to Moore Stephens, P.C.
/s/ Moore Stephens, P.C.
MOORE STEPHENS, P.C.
Cranford, New Jersey
November 25, 1998
