NightHawk Radiology 8-K NightHawk Radiology Holdings, Inc. Announces Third Quarter 2008 Results

Exhibit 99.1

Press Contact:

Robert Minicucci, Warner Communications

Phone: (603) 488-5856

Mobile: (339) 206-1722

robert@warnerpr.com

Investor Inquiries:

Andrea Clegg, NightHawk Radiology Holdings, Inc.

(866) 402-4295

(208) 292-2818

aclegg@nighthawkrad.net

NightHawk Radiology Holdings, Inc. Announces Third Quarter 2008 Results

COEUR D’ALENE, Idaho, October 29, 2008—NightHawk Radiology Holdings, Inc. (Nasdaq: NHWK), the leading provider of radiology solutions to radiology groups and hospitals throughout the United States, today announced financial results for its third quarter ended September 30, 2008.

Third Quarter 2008 Highlights

• Revenue was $43.4 million compared with $45.2 million in the year-ago quarter. Scan volume grew 1% to 792,000 scans while pricing declined 3%.

• Revenue from new service offerings, including final reads and business services, was $8.9 million, or 20% of total revenue. Final reads revenue increased 34% to $4.9 million, or 11% of total revenue.

• Adjusted net income was $6.2 million, or $0.21 per diluted share, compared with $8.0 million, or $0.26 per diluted share, in the year-ago quarter. Adjusted net income excludes non-cash charges for stock compensation, amortization of intangible assets and malpractice reserve adjustments. In addition, adjusted net income in the third quarter of 2008 also excludes a pre-tax restructuring charge of $0.7 million ($0.4 million after-tax) related to the closure of redundant facilities.

• GAAP net income was $3.3 million, or $0.11 per diluted share, compared to $3.8 million, or $0.12 per diluted share, in the third quarter of 2007. A reconciliation of adjusted net income to GAAP net income is included in the tables attached to this press release.

• Cash flow from operations increased 100% to a record $9.6 million, up from $4.8 million in the third quarter of 2007. Free cash flow was also a record $8.8 million during the quarter, up 144% from $3.6 million in the third quarter of 2007.

• Cash and cash equivalents on-hand at September 30, 2008 totaled $55.2 million.

“Considering the modest sequential increase in scan volume and revenue, we were able to increase adjusted earnings sequentially by 13% through improved productivity and prudently focusing on our costs. Importantly, our overall financial position remains very strong with $55.2 million in cash on hand and record cash flow from operations of $9.6 million during the third quarter and $22.9 million for the first nine months of 2008. We also saw encouraging results from our initiatives focused on improving our customer service and sales execution.” said Dr. Paul Berger, Chairman and Chief Executive Officer.

2008 Outlook

Dr. Berger continued, “In light of the lower than expected volumes we are seeing and the highly uncertain economic outlook, we are revising our full-year outlook and now expect full-year revenues to be in the range of $165 to $168 million and adjusted earnings per share of $0.64 to $0.67. However, I am confident that the solutions and value we provide to our customers remain a solid proposition and position us well for future growth.”

Earnings Conference Call

The third quarter 2008 conference call will be held today, October 29, 2008 at 4:15 p.m. (ET). A live webcast of the conference call, as well as a replay, will be available online on the company’s corporate website athttp://www.nighthawkrad.net. Participants can also access the call by dialing 800-257-2182 (or

303-262-2175 for international callers). A replay of the call will be available approximately two hours after the conclusion of the call and will remain available until midnight (EDT) on Thursday November 20, 2008. To access the replay, dial 800-405-2236 or 303-590-3000 (for international callers) and enter the conference ID number: 11121223.

About NightHawk

NightHawk Radiology (Nasdaq: NHWK), headquartered in Coeur d’Alene, Idaho, is leading the transformation of the practice of radiology by providing high-quality, cost-effective solutions to radiology groups and hospitals throughout the United States. NightHawk provides the most complete suite of solutions, including professional services, business services, and its advanced, proprietary clinical workflow technology, all designed to increase efficiencies and improve the quality of patient care and the lives of physicians who provide it. NightHawk’s team of U.S. board-certified, state-licensed, and hospital-privileged physicians located in the United States, Australia, and Switzerland, provides services 24 hours a day, seven days a week, to approximately 1,500 sites, representing approximately 26% of all hospitals in the United States. For more information, visithttp://www.nighthawkrad.net.

Forward Looking Statements

This press release contains statements that are forward-looking statements as defined within the Private Securities Litigation Reform Act of 1995. These include statements regarding the company’s outlook on its full-year revenue and adjusted earnings per share and its outlook for future growth opportunities. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made, including the risks associated with general economic conditions, competitive conditions in the radiology industry, and regulatory risks. Other factors that could cause operating and financial results to differ are described in the company’s prospectus and periodic reports filed with the Securities and Exchange Commission (SEC). Other risks may be detailed from time to time in reports to be filed with the SEC. NightHawk does not undertake any obligation to publicly update its forward- looking statements based on events or circumstances after the date hereof.

Presentation of Non-GAAP Financial Information

The presentation of adjusted net income and adjusted earnings per diluted share are not measures of financial performance under GAAP and should not be considered a substitute for or superior to GAAP. Management believes these non-GAAP financial measures provide useful information to both management and investors by excluding certain expenses that may not be indicative of our core results and provide consistency in financial reporting. Specifically, the company’s non-GAAP adjusted net income measure, and related adjusted earnings per diluted share, described in this release exclude (i) the non-cash charges related to our stock-based compensation, (ii) the non-cash expense associated with the amortization of intangibles associated with acquisitions, and (iii) the non-cash expense associated with changes to our IBNR reserve (incurred but not reported medical liability reserves), and (iv) restructuring charges related to facilities closures. We exclude the non-cash charges related to our stock-based compensation due to the varying valuation methodologies, subjective assumptions and the variety of types of awards that companies can use when applying FAS 123R along with the fact that a substantial portion of our outstanding options and restricted stock units are held by our independent contractor physicians and require accounting treatment that differs from the accounting treatment for options and restricted stock units held by employees.

The company provides non-GAAP adjusted net income and related adjusted earnings per diluted share as financial measures because management believes these measures provide greater transparency with respect to information used by management in its financial and operational decision making and to enhance investors’ overall understanding of our current financial performance and our future prospects. For reconciliation of our non-GAAP financial measures to the most applicable GAAP financial measure, please refer to the information included in the attached tables of this press release and in the Investor Room section of our corporate website.

“NHWKF”

NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (unaudited)

	September 30, 2008			December 31, 2007
	(in thousands, except per share amts)
ASSETS
Current assets:
Cash and cash equivalents	$	55,239		$	31,956
Marketable securities		—			30,625
Trade accounts receivable, net		26,399			25,665
Deferred income taxes		615			655
Prepaids and other current assets		2,826			2,812
Total current assets		85,079			91,713
Property and equipment, net		11,018			10,555
Goodwill		68,839			68,601
Intangible assets, net		81,485			87,133
Deferred income taxes		2,022			1,251
Other assets, net		3,724			4,213
Total	$	252,167		$	263,466
LIABILITIES
Current liabilities:
Accounts payable	$	6,063		$	6,071
Accrued expenses and other liabilities		4,245			12,881
Accrued payroll and related benefits		2,830			4,570
Long-term debt, due within one year		1,000			1,000
Total current liabilities		14,138			24,522
Insurance reserve		4,037			3,038
Long-term debt		97,750			98,500
Other liabilities		3,007			2,717
Total liabilities		118,932			128,777
STOCKHOLDERS’ EQUITY
Common stock-150,000,000 shares authorized; $.001 par value; 28,605,767 and 30,312,322 shares issued and outstanding at September 30, 2008 and December 31, 2007, respectively		29			30
Additional paid-in capital		241,007			249,274
Retained earnings (deficit)		(106,173	)		(112,957	)
Accumulated other comprehensive income (deficit)		(1,628	)		(1,658	)
Total stockholders’ equity		133,235			134,689
Total	$	252,167		$	263,466

NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

	Three months ended September 30,						Nine months ended September 30,
	2008			2007			2008			2007
	(in thousands, except per share amts)						(in thousands, except per share amts)
Service revenue	$	43,441		$	45,151		$	127,887		$	108,956
Operating costs and expenses:
Professional services (includes non-cash compensation expense of $537, $1,536, $1,513 and $3,567)		18,340			19,069			53,243			46,844
Sales, general, and administrative (includes non-cash compensation expense of $1,361, $3,160, $5,549 and $5,843)		15,367			15,754			50,002			36,861
Depreciation and amortization		2,829			2,608			8,585			5,251
Total operating costs and expenses		36,536			37,431			111,830			88,956
Operating income		6,905			7,720			16,057			20,000
Other income (expense):
Interest expense		(2,090	)		(2,389	)		(6,466	)		(3,665	)
Interest income		307			746			1,210			2,468
Other, net		114			(27	)		102			(59	)
Total other income (expense)		(1,669	)		(1,670	)		(5,154	)		(1,256	)
Income before income taxes		5,236			6,050			10,903			18,744
Income tax expense		1,953			2,262			4,119			7,111
Net income	$	3,283		$	3,788		$	6,784		$	11,633
Earnings per common share:
Basic	$	0.11		$	0.13		$	0.23		$	0.39
Diluted	$	0.11		$	0.12		$	0.22		$	0.38
Weighted averages of common shares outstanding:
Basic		28,573,349			30,111,156			29,810,161			30,023,122
Diluted		29,733,210			31,170,449			30,852,398			31,012,036

NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

	Three months ended September 30,						Nine months ended September 30,
	2008			2007			2008			2007
	(in thousands, except per share amts)						(in thousands, except per share amts)
Cash flows from operating activities:
Net income	$	3,283		$	3,788		$	6,784		$	11,633
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,829			2,608			8,585			5,251
Accretion of discounts (premiums) on marketable securities		—			(69	)		(21	)		(285	)
Amortization of debt issuance costs		162			163			486			234
Loss (gain) on disposal of fixed assets and other, net		238			—			582			(23	)
Deferred income taxes		(563	)		(2,767	)		(574	)		(4,795	)
Non-cash stock compensation expense		1,898			4,696			7,062			9,410
Excess tax benefit from exercise of stock options		4			(985	)		(234	)		(1,325	)
Provision for doubtful accounts		270			211			469			347
Changes in operating assets and liabilities (excluding effects of acquisitions):
Trade accounts receivable, net		(117	)		(4,167	)		(1,272	)		(7,573	)
Prepaid expenses and other assets		1,495			442			(11	)		(95	)
Accounts payable		(516	)		672			99			2,983
Accrued expenses and other liabilities		1,353			(365	)		756			352
Accrued payroll and related benefits		(725	)		571			219			1,343
Net cash provided by operating activities		9,611			4,798			22,930			17,457
Cash flows from investing activities:
Purchase of marketable securities		—			(10,621	)		(26,390	)		(26,491	)
Proceeds from maturities of marketable securities		—			6,950			33,755			36,128
Proceeds from the sale of marketable securities		10,000			—			23,302			—
Purchase of property and equipment		(817	)		(1,124	)		(4,112	)		(3,499	)
Cash and cash equivalents from acquisitions, net		—			252			—			339
Cash paid for acquisitions		(1,150	)		(63,242	)		(7,650	)		(125,736	)
Net cash provided by (used in) investing activities		8,033			(67,785	)		18,905			(119,259	)
Cash flows from financing activities:
Repayment of debt		(250	)		(250	)		(750	)		(11,116	)
Proceeds from exercise of stock options		156			629			556			962
Excess tax benefit from exercise of stock options		(4	)		985			234			1,325
Purchase of common stock shares		(552	)		—			(18,592	)		—
Proceeds from debt		—			47,000			—			100,000
Payment on line of credit		—			—			—			(1,679	)
Debt issuance costs paid		—			(2,652	)		—			(4,479	)
Net cash (used in) provided by financing activities		(650	)		45,712			(18,552	)		85,013
Net increase in cash and cash equivalents		16,994			(17,275	)		23,283			(16,789	)
Cash and cash equivalents—beginning of period		38,245			46,987			31,956			46,501
Cash and cash equivalents—end of period	$	55,239		$	29,712		$	55,239		$	29,712

NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

RECONCILIATION BETWEEN GAAP AND ADJUSTED NET INCOME

	Three Months Ended
	September 30, 2008									September 30, 2007
	(in thousands, except per share amts)									(in thousands, except per share amts)
	GAAP			Adjustments			As Adjusted			GAAP			Adjustments			As Adjusted
Service revenue	$	43,441					$	43,441		$	45,151					$	45,151
Operating costs and expenses:
Professional services (1)		18,340			(839	)		17,501		$	19,069			(1,990	)		17,079
Sales, general, and administrative (2)		15,367			(2,064	)		13,303			15,754			(3,160	)		12,594
Depreciation and amortization (3)		2,829			(1,883	)		946			2,608			(1,740	)		868
Total operating costs and expenses		36,536			(4,786	)		31,750			37,431			(6,890	)		30,541
Operating income		6,905			4,786			11,691			7,720			6,890			14,610
Other income (expense):
Interest expense		(2,090	)					(2,090	)		(2,389	)					(2,389	)
Interest income		307						307			746						746
Other, net		114						114			(27	)					(27	)
Total other income (expense)		(1,669	)					(1,669	)		(1,670	)					(1,670	)
Income before income taxes		5,236			4,786			10,022			6,050			6,890			12,940
Income tax expense(4)		1,953			1,855			3,808			2,262			2,687			4,949
Net income	$	3,283		$	2,931		$	6,214		$	3,788		$	4,203		$	7,991
Earnings per share:
Basic	$	0.11					$	0.22		$	0.13					$	0.27
Diluted	$	0.11					$	0.21		$	0.12					$	0.26
Weighted average shares outstanding:
Basic		28,573,349						28,573,349			30,111,156						30,111,156
Diluted		29,733,210						29,733,210			31,170,449						31,170,449

(1) Adjustments to the 2008 GAAP amounts represent $537 of non-cash stock compensation expense and $302 of non-cash malpractice reserve changes. The 2007 adjustments to GAAP amounts represent $1,536 of non-cash stock compensation expense and $454 of non-cash malpractice reserve changes.

(2) Adjustments to the 2008 GAAP amounts represent $1,361 of non-cash stock compensation expense and $703 of restructuring charges. The 2007 adjustments to GAAP amounts represent $3,160 of non-cash stock compensation expense.

(3) Adjustment to GAAP amounts represents non-cash amortization of intangible assets

(4) Represents the tax effect on the adjustments to GAAP.

NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

RECONCILIATION BETWEEN GAAP AND ADJUSTED NET INCOME

	Nine Months Ended
	September 30, 2008									September 30, 2007
	(in thousands, except per share amts)									(in thousands, except per share amts)
	GAAP			Adjustments			As Adjusted			GAAP			Adjustments			As Adjusted
Service revenue	$	127,887					$	127,887		$	108,956					$	108,956
Operating costs and expenses:
Professional services(1)		53,243			(2,512	)		50,731		$	46,844			(5,016	)		41,828
Sales, general, and administrative(2)		50,002			(6,731	)		43,271			36,861			(5,843	)		31,018
Depreciation and amortization(3)		8,585			(5,645	)		2,940			5,251			(3,219	)		2,032
Total operating costs and expenses		111,830			(14,888	)		96,942			88,956			(14,078	)		74,878
Operating income		16,057			14,888			30,945			20,000			14,078			34,078
Other income (expense):
Interest expense		(6,466	)					(6,466	)		(3,665	)					(3,665	)
Interest income		1,210						1,210			2,468						2,468
Other, net		102						102			(59	)					(59	)
Total other income (expense)		(5,154	)					(5,154	)		(1,256	)					(1,256	)
Income before income taxes		10,903			14,888			25,791			18,744			14,078			32,822
Income tax expense(4)		4,119			5,697			9,816			7,111			5,490			12,601
Net income	$	6,784		$	9,191		$	15,975		$	11,633		$	8,588		$	20,221
Earnings per share:
Basic	$	0.23					$	0.54		$	0.39					$	0.67
Diluted	$	0.22					$	0.52		$	0.38					$	0.65
Weighted average shares outstanding:
Basic		29,810,161						29,810,161			30,023,122						30,023,122
Diluted		30,852,398						30,852,398			31,012,036						31,012,036

(1) Adjustments to the 2008 GAAP amounts represent $1,513 of non-cash stock compensation expense and $999 of non-cash malpractice reserve changes. The 2007 adjustments to GAAP amounts represent $3,567 of non-cash stock compensation expense and $1,449 of non-cash malpractice reserve changes.

(2) Adjustments to the 2008 GAAP amounts represent $5,549 of non-cash stock compensation expense, $703 of restructuring charges, $164 of employee severance expenses and $315 of non-cash fixed asset charges. The 2007 adjustments to GAAP amounts represent $5,843 of non-cash stock compensation expense.

(3) Adjustment to GAAP amounts represents non-cash amortization of intangible assets

(4) Represents the tax effect on the adjustments to GAAP.

NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES

HISTORICAL VOLUMES

			Growth Rates				Acquisition Contribution - First 12 months
Quarter	Year	Total Volumes	Sequential		Year over Year		DayHawk	ATN	TDS	Radlinx	ERS
Q1	2004	120,554	36	%	210	%	—	—	—	—	—
Q2	2004	152,640	27	%	178	%	—	—	—	—	—
Q3	2004	182,737	20	%	133	%	—	—	—	—	—
Q4	2004	193,883	6	%	119	%	8,316	—	—	—	—
FY	2004	649,814	149	%	149	%
Q1	2005	222,341	15	%	84	%	15,850	—	—	—	—
Q2	2005	266,023	20	%	74	%	17,355	—	—	—	—
Q3	2005	298,759	12	%	63	%	18,905	—	—	—	—
Q4	2005	328,815	10	%	70	%	8,480	29,640	—	—	—
FY	2005	1,115,938	72	%	72	%
Q1	2006	364,155	11	%	64	%	—	32,130	—	—	—
Q2	2006	417,269	15	%	57	%	—	32,622	—	—	—
Q3	2006	463,028	11	%	55	%	—	32,086	—	—	—
Q4	2006	448,084	(3	)%	36	%	—	—	—	—	—
FY	2006	1,692,536	52	%	52	%
Q1	2007	484,477	8	%	33	%	—	—	27,089	—	—
Q2	2007	731,418	51	%	75	%	—	—	51,095	137,611	—
Q3	2007	787,673	8	%	70	%	—	—	52,708	143,339	—
Q4	2007	730,992	(7	)%	63	%	—	—	51,644	124,394	—
FY	2007	2,734,560	62	%	62	%
Q1	2008	745,075	2	%	54	%	—	—	23,147	117,693	17,457
Q2	2008	780,108	5	%	7	%	—	—	—	4,817	26,010
Q3	2008	791,613	1	%	1	%	—	—	—	—	23,655