NightHawk Radiology 8-K NightHawk Radiology Holdings, Inc. Announces Second Quarter 2009 Results

Exhibit 99.1

Press Contact:

Christen Graham, Warner Communications

Phone: (207) 829-6336

Christen@warnerpr.com

Investor Inquiries:

Andrea Clegg, NightHawk Radiology Holdings, Inc.

(866) 400-4295

(208) 292-2818

aclegg@nighthawkrad.net

NightHawk Radiology Holdings, Inc. Announces Second Quarter 2009 Results

COEUR D’ALENE, Idaho, August 5, 2009 – NightHawk Radiology Holdings, Inc. (NASDAQ: NHWK), the leading provider of radiology solutions to radiology groups across the United States, today announced financial results for second quarter 2009.

Second Quarter 2009 Highlights

• Revenue grew $3.5 million sequentially, or 9%, to $42.3 million driven by robust same site volume growth, improved customer retention and healthy revenue growth from new customers.

• Final scan revenue increased 18% sequentially to $5.9 million, and now represents 14% of total revenue.

• Total scan volume reached a record high of approximately 817,000 scans during the quarter.

• Adjusted net income was $4.4 million, or $0.16 per diluted share. Adjusted net income excludes non-cash charges for stock compensation, amortization of intangible assets, losses on cancelled interest rate swap contracts, mark to market gains on interest rate hedge contracts and malpractice reserve adjustments.

• GAAP net income was $2.1 million, or $0.08 per share. A reconciliation of adjusted net income to GAAP net income is included in the tables attached to this press release.

• Cash flow from operations grew 11% to $8.3 million, up from $7.5 million in the year-ago quarter. Free cash flow was $7.2 million during the quarter, an increase of 22% from $5.9 million in the year-ago quarter.

• Cash and investments at June 30, 2009 totaled $52.1 million.

“We are very pleased with our second quarter operating results and continued strong cash flow. Looking ahead, we are confident that the initiatives on which we are focused will continue to enhance long term shareholder value. These initiatives leverage our position as the leading provider of high quality, high value solutions to the radiology marketplace,” said David Engert, the company’s president and chief executive officer.

Third Quarter 2009 Outlook

The company expects scan volume and revenue for the third quarter of 2009 to increase sequentially from the second quarter, with revenue expected to be in the range of $42 to $43 million. The company also expects third quarter 2009 adjusted earnings per share to be in the range of 15 to 16 cents.

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 scan volume, revenue and adjusted earnings per share for the third quarter of 2009 and statements regarding our ability to enhance shareholder value in the future. 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 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.

Earnings Conference Call

The second quarter conference call will be held today, August 5, 2009 at 4:30 p.m. eastern. 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 (877)941-6013 or (480)629-9770 (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 (ET) on Wednesday, August 26, 2009. To access the replay, dial (800)406-7325 or (303)590-3030 (for international callers) and enter the conference ID number: 4123256.

About NightHawk

NightHawk Radiology (Nasdaq: NHWK) 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 1,590 sites, representing approximately 28% of all hospitals in the United States. For more information, visithttp://www.nighthawkrad.net.

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, (iii) the non-cash expenses (or credits) associated with adjustments to our IBNR reserve (incurred but not reported medical liability reserves), (iv) the non-cash charges for goodwill impairment, (v) the non-cash charge for the amortization of losses incurred on cancelled interest rate swap contracts, and (vi) the non-cash gain (or loss) resulting from mark to market adjustments of our interest rate hedge contracts. 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 Relations section of our corporate website.

“NHWKF”

NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (unaudited)

	June 30, 2009			December 31, 2008
	(in thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents	$	47,132		$	47,160
Marketable securities		4,996			—
Trade accounts receivable, net		23,142			24,393
Deferred income taxes		267			855
Prepaid expenses and other current assets		7,042			6,231
Total current assets		82,579			78,639
Property and equipment, net		11,239			10,528
Goodwill		—			68,718
Intangible assets, net		76,009			79,616
Deferred income taxes		16,967			4,082
Other assets, net		5,923			3,566
Total	$	192,717		$	245,149
LIABILITIES
Current liabilities:
Accounts payable	$	7,111		$	6,327
Accrued expenses and other liabilities		2,836			3,617
Accrued payroll and related benefits		4,163			3,783
Long-term debt, due within one year		955			955
Total current liabilities		15,065			14,682
Insurance reserve		4,097			3,705
Long-term debt		92,667			93,145
Other liabilities		2,476			3,850
Total liabilities		114,305			115,382
STOCKHOLDERS’ EQUITY
Common stock-150,000,000 shares authorized; $.001 par value; 26,503,033 and 27,590,774 shares issued and outstanding at June 30, 2009 and December 31, 2008, respectively		27			28
Additional paid-in capital		233,523			237,429
Retained earnings (deficit)		(154,035	)		(103,516	)
Accumulated other comprehensive loss		(1,103	)		(4,174	)
Total stockholders’ equity		78,412			129,767
Total	$	192,717		$	245,149

NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

	Three months ended June 30,						Six months ended June 30,
	2009			2008			2009			2008
	(in thousands, except per share data)						(in thousands, except per share data)
Service revenue	$	42,340		$	42,758		$	81,139		$	84,446
Operating costs and expenses:
Professional services (includes non-cash compensation expense of $225, $386, $296 and $976)		18,305			17,036			34,961			34,903
Sales, general, and administrative (includes non-cash compensation expense of $1,325, $1,832, $2,299 and $4,188)		15,984			16,463			30,718			34,634
Depreciation and amortization		2,715			2,959			5,513			5,757
Goodwill impairment		—			—			68,718			—
Total operating costs and expenses		37,004			36,458			139,910			75,294
Operating income (loss)		5,336			6,300			(58,771	)		9,152
Other income (expense):
Interest expense		(1,925	)		(2,189	)		(4,226	)		(4,376	)
Interest income		50			376			105			903
Other, net		(16	)		(41	)		(8	)		(13	)
Total other income (expense)		(1,891	)		(1,854	)		(4,129	)		(3,486	)
Income (loss) before income taxes		3,445			4,446			(62,900	)		5,666
Income tax expense (benefit)		1,351			1,675			(12,381	)		2,165
Net income (loss)	$	2,094		$	2,771		$	(50,519	)	$	3,501
Earnings (loss) per common share:
Basic	$	0.08		$	0.09		$	(1.90	)	$	0.12
Diluted	$	0.08		$	0.09		$	(1.90	)	$	0.11
Weighted averages of common shares outstanding:
Basic		26,490,880			30,426,531			26,569,576			30,435,363
Diluted		26,958,693			31,442,818			26,569,576			31,411,253

NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

	Three months ended June 30,						Six months ended June 30,
	2009			2008			2009			2008
	(in thousands)						(in thousands)
Cash flows from operating activities:
Net income (loss)	$	2,094		$	2,771		$	(50,519	)	$	3,501
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		2,715			2,959			5,513			5,757
Goodwill impairment		—			—			68,718			—
Amortization of debt issuance costs and interest rate swaps		183			162			2,114			324
Deferred income taxes		92			159			(14,195	)		(11	)
Non-cash stock compensation expense		1,550			2,217			2,594			5,164
Other, net		711			173			245			284
Changes in operating assets and liabilities (excluding effects of acquisitions):
Trade accounts receivable, net		(503	)		(1,379	)		844			(1,155	)
Prepaid expenses and other assets		145			971			(952	)		(1,507	)
Accounts payable		1,038			294			389			615
Accrued expenses and other liabilities		(771	)		(1,176	)		(568	)		(597	)
Accrued payroll and related benefits		1,028			364			294			943
Net cash provided by operating activities		8,282			7,515			14,477			13,318
Cash flows from investing activities:
Purchase of marketable securities		—			(16,085	)		(4,990	)		(26,390	)
Purchase of property and equipment		(1,044	)		(1,661	)		(2,156	)		(3,296	)
Proceeds from maturities of marketable securities		—			25,990			—			33,755
Proceeds from sale of marketable securities		—			13,303			—			13,303
Cash paid for acquisitions		—			(6,500	)		—			(6,500	)
Net cash provided by (used in) investing activities		(1,044	)		15,047			(7,146	)		10,872
Cash flows from financing activities:
Repayment of debt		(239	)		(250	)		(478	)		(500	)
Proceeds from exercise of stock options		20			194			50			400
Excess tax benefit from exercise of stock options		3			158			8			238
Purchase and retirement of common stock shares		—			(18,039	)		(6,452	)		(18,039	)
Debt amendment costs		(434	)		—			(434	)		—
Cash exchange for stock options		(53	)		—			(53	)		—
Net cash used in financing activities		(703	)		(17,937	)		(7,359	)		(17,901	)
Net increase (decrease) in cash and cash equivalents		6,535			4,625			(28	)		6,289
Cash and cash equivalents—beginning of period		40,597			33,620			47,160			31,956
Cash and cash equivalents—end of period	$	47,132		$	38,245		$	47,132		$	38,245

NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

RECONCILIATION BETWEEN GAAP AND ADJUSTED NET INCOME

	Three months ended
	June 30, 2009									June 30, 2008
	(in thousands, except share data)									(in thousands, except share data)
	GAAP			Adjustments			As Adjusted			GAAP			Adjustments			As Adjusted
Service revenue	$	42,340					$	42,340		$	42,758					$	42,758
Operating costs and expenses:
Professional services (1)		18,305			(225	)		18,080		$	17,036			(213	)		16,823
Sales, general, and administrative (2)		15,984			(1,325	)		14,659			16,463			(2,311	)		14,152
Depreciation and amortization (3)		2,715			(1,738	)		977			2,959			(1,883	)		1,076
Goodwill impairment		—			—			—			—			—			—
Total operating costs and expenses		37,004			(3,288	)		33,716			36,458			(4,407	)		32,051
Operating income		5,336			3,288			8,624			6,300			4,407			10,707
Other income (expense):
Interest expense (4)		(1,925	)		553			(1,372	)		(2,189	)		—			(2,189	)
Interest income		50			—			50			376			—			376
Other, net		(16	)		—			(16	)		(41	)		—			(41	)
Total other income (expense)		(1,891	)		553			(1,338	)		(1,854	)		—			(1,854	)
Income before income taxes		3,445			3,841			7,286			4,446			4,407			8,853
Income tax expense(5)		1,351			1,498			2,849			1,675			1,661			3,336
Net income	$	2,094		$	2,343		$	4,437		$	2,771		$	2,746		$	5,517
Earnings per share:
Basic	$	0.08					$	0.17		$	0.09					$	0.18
Diluted	$	0.08					$	0.16		$	0.09					$	0.18
Weighted average of shares outstanding:
Basic		26,490,880						26,490,880			30,426,531						30,426,531
Diluted		26,958,693						26,958,693			31,442,818						31,442,818

(1) Adjustments to the 2009 GAAP amounts represent $225 of non-cash stock compensation expense. The 2008 adjustments to GAAP amounts represent $386 of non-cash stock compensation expense and a credit of $173 of non-cash malpractice reserve changes.

(2) Adjustments to the 2009 GAAP amounts represent $1,325 of non-cash stock compensation expense. The 2008 adjustments represent $1,832 of non-cash stock compensation expense, $164 of employee severance expenses and $315 of non-cash fixed asset charges

(3) Adjustment to GAAP amounts represent non-cash expense associated with the amortization of intangibles associated with acquisitions.

(4) Represents $885 of amortization of losses incurred on interest rate swap contracts canceled in 2008 and $332 gain on interest rate hedge contract.

(5) 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

	Six months ended
	June 30, 2009									June 30, 2008
	(in thousands, except share data)									(in thousands, except share data)
	GAAP			Adjustments			As Adjusted			GAAP			Adjustments			As Adjusted
Service revenue	$	81,139					$	81,139		$	84,446					$	84,446
Operating costs and expenses:
Professional services (1)		34,961			(688	)		34,273		$	34,903			(1,672	)		33,231
Sales, general, and administrative (2)		30,718			(2,299	)		28,419			34,634			(4,667	)		29,967
Depreciation and amortization (3)		5,513			(3,607	)		1,906			5,757			(3,765	)		1,992
Goodwill impairment		68,718			(68,718	)		—			—			—			—
Total operating costs and expenses		139,910			(75,312	)		64,598			75,294			(10,104	)		65,190
Operating income (loss)		(58,771	)		75,312			16,541			9,152			10,104			19,256
Other income (expense):
Interest expense (4)		(4,226	)		1,438			(2,788	)		(4,376	)		—			(4,376	)
Interest income		105			—			105			903			—			903
Other, net		(8	)		—			(8	)		(13	)		—			(13	)
Total other income (expense)		(4,129	)		1,438			(2,691	)		(3,486	)		—			(3,486	)
Income (loss) before income taxes		(62,900	)		76,750			13,850			5,666			10,104			15,770
Income tax expense (benefit)(5)		(12,381	)		17,797			5,416			2,165			3,857			6,022
Net income (loss)	$	(50,519	)	$	58,953		$	8,434		$	3,501		$	6,247		$	9,748
Earnings (loss) per share:
Basic	$	(1.90	)				$	0.32		$	0.12					$	0.32
Diluted	$	(1.90	)				$	0.31		$	0.11					$	0.31
Weighted average of shares outstanding:
Basic		26,569,576						26,569,576			30,435,363						30,435,363
Diluted		26,569,576						26,929,172			31,411,253						31,411,253

(1) Adjustments to the 2009 GAAP amounts represent $296 of non-cash stock compensation expense and $392 of non-cash malpractice reserve changes. The 2008 adjustments to GAAP amounts represent $976 of non-cash stock compensation expense and $696 of non-cash malpractice reserve changes.

(2) Adjustments to the 2009 GAAP amounts represent $2,299 of non-cash stock compensation expense. The 2008 adjustments to GAAP amounts represent $4,188 of non-cash stock compensation expense, $164 of employee severance expenses and $315 of non-cash fixed asset charges.

(3) Adjustment to GAAP amounts represent non-cash expense associated with the amortization of intangibles associated with acquisitions.

(4) Represents $1,770 of amortization of losses incurred on interest rate swap contracts canceled in 2008 and $332 gain on interest rate hedge contract.

(5) Represents the tax effect on the adjustments to GAAP. In addition, in 2009 we adjusted our tax expense amount to properly reflect the impact of the non-deductible portions of our goodwill impairment.

NIGHTHAWK RADIOLOGY HOLDINGS, INC. AND SUBSIDIARIES

HISTORICAL VOLUMES

			Growth Rates
Quarter	Year	Total Volumes	Sequential		Year over Year
Q1	2008	745,075	2	%	54	%
Q2	2008	780,108	5	%	7	%
Q3	2008	791,613	1	%	1	%
Q4	2008	718,299	(9	)%	(2	)%
FY	2008	3,035,095	11	%	11	%
Q1	2009	722,321	1	%	(3	)%
Q2	2009	817,315	13	%	5	%