EXHIBIT 99.1
[Primedex Logo] [Radiologix Logo]
PRESS RELEASE
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Contacts: Mark Stolper FOR IMMEDIATE RELEASE
Primedex Health Systems, Inc. JULY 7, 2006
Phone: (310) 445-2800
Michael Murdock
Radiologix, Inc.
Phone: (214) 303-2717
John Mills
Integrated Corporate Relations, Inc.
Phone: (310) 954-1105
Email: jmills@icrinc.com
PRIMEDEX HEALTH SYSTEMS ANNOUNCES AGREEMENT TO ACQUIRE RADIOLOGIX;
WILL CREATE A $400 MILLION NATIONAL PROVIDER OF IMAGING SERVICES
Los Angeles, California and Dallas, Texas. July 7, 2006. Primedex Health
Systems, Inc. (OTCBB: PMDX.OB) and Radiologix, Inc. (AMEX: RGX) jointly
announced today that they have signed a definitive merger agreement under which
Primedex will acquire Radiologix in a cash and stock transaction valued at the
time of announcement at approximately $208 million, including net debt. The
transaction will create the largest owner and operator of fixed-site diagnostic
imaging centers in the United States, with 132 locations. After the acquisition,
Primedex will have 80 centers in California, 32 centers in Maryland, 12 centers
in New York and 8 centers in other states, including Florida, Kansas, Colorado
and Minnesota.
Under the terms of the agreement, Radiologix shareholders will receive an
aggregate consideration of 22,621,922 shares of Primedex common stock and
$42,950,000 in cash. Based upon the July 6 closing price of Primedex common
stock of $1.75, each Radiologix shareholder would receive $1.84 in cash for each
Radiologix share, plus one share of Primedex common stock for a total
consideration of $3.59. The exact value of the consideration per share to be
issued to Radiologix's shareholders will depend on Primedex's share price at
closing and the corresponding number of Radiologix options that are in the
money. Based upon the July 6 closing price of Primedex common stock of $1.75,
Radiologix shareholders will collectively own approximately 33% of the Primedex
shares on a fully diluted basis.
The Boards of Directors of both companies have unanimously approved the proposed
transaction, which is subject to customary conditions, including Radiologix and
Primedex shareholder approval and antitrust clearance. Additionally, Contrarian
Capital Management L.L.C., the largest shareholder of Radiologix, has agreed to
vote 3,699,098 of its Radiologix shares in favor of the merger, representing a
total of approximately 16.4% of the outstanding shares.
GE Healthcare Financial Services has provided a commitment for $405.0 million of
senior debt financing, which includes a $45 million revolving credit facility
for working capital and general corporate purposes that will be substantially
undrawn and available to Primedex at the close of the transaction. The remaining
$360 million will fund the cash purchase price of Radiologix and refinance
substantially all the existing debt of Primedex and Radiologix. The transaction
is expected to close in the second half of 2006.
The acquisition of Radiologix, a national provider of imaging services
headquartered in Dallas, Texas, will not only allow Primedex to expand its
presence in California, but will also give Primedex a concentrated platform
outside of California that it plans to optimize and grow. After the acquisition,
Primedex will further its strategies of geographic clustering, exclusive
capitation contracting and multi-modality product offerings, which it will now
be able to pursue on a national scale.
After closing the transaction, Primedex will have over $400 million of annual
revenues. Additionally, an initial $11 million of near-term synergies have been
identified, which will be executed during the 12-month period following the
closing of the transaction. Primedex expects that, after taking into account the
2007 effects of the Deficit Reduction Act and the Contiguous Scan reimbursement
reductions (estimated at $16.8 million for the combined companies) and assuming
the full year effect of the anticipated near-term synergies, it will have EBITDA
(which Primedex defines as earnings before net interest expense, income taxes,
depreciation and amortization, each from continuing operations and adjusted for
non-recurring items such as losses or gains on the disposal of equipment) that
exceeds $85 million on an annual basis.
Commenting on the transaction, Dr. Howard Berger, Chairman and CEO of Primedex,
said, "We are excited about the acquisition and the significant growth
opportunities created by joining these two companies. With truly complementary
geographic operations and management systems, we are ideally positioned to
strengthen what will be the leading provider in the fixed center imaging
services arena, and to expand aspects of the unique Primedex business model on a
national scale. We believe this strategic combination will provide value for our
shareholders and benefits for our physicians and patients alike."
Dr. Berger added, "We are committed to exploring ways to work with physicians to
better deliver services to patients in what has become one of the largest and
fastest growing segments of healthcare. As such, we look forward to working with
the physician partners and team members at Radiologix." Dr. Berger continued,
"Sami Abbasi and his team at Radiologix bring great knowledge and experience to
our management group. I look forward to working with them and believe their
contributions will greatly benefit Primedex."
Sami Abbasi, CEO of Radiologix, who will become the Vice Chairman of Primedex
following the closing of the transaction, said, "Our vision is to be the leading
provider and manager of diagnostic imaging services and related treatments in
every community we serve. The combination of Primedex and Radiologix furthers
our pursuit of this vision and firmly establishes us as an industry leader. We
have a great opportunity to build a special company and to significantly enhance
shareholder value. I look forward to seizing this opportunity and working with
the Primedex team members to achieve our goals and objectives."
In conjunction with the transaction, Primedex intends to change its corporate
name, subject to shareholder approval, to Radnet, Inc., which borrows its name
from the operating entity in which Primedex currently conducts its operations.
Additionally, shortly after closing the transaction, Radnet plans to submit an
application for listing on the American Stock Exchange. Bear, Stearns & Co. Inc.
acted as exclusive financial advisor to Radiologix with respect to the
transaction. Jefferies & Company, Inc. acted as exclusive financial advisor to
Primedex with respect to the transaction.
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ABOUT PRIMEDEX HEALTH SYSTEMS, INC.
Primedex Health Systems, Inc., is the California market leader in providing
high-quality, cost-effective diagnostic imaging services through a network of
fully-owned and operated outpatient imaging centers. As of April 30, 2006,
Primedex owned and operated 62 facilities. For its fiscal year ended October 31,
2005, Primedex and its subsidiaries performed 958,414 diagnostic imaging
procedures. At October 31, 2005, together with Beverly Radiology Medical Group,
the medical group that provides medical services to the majority of the
Company's locations, the Company had a total of 951 full-time and 340 part-time
and per-diem employees. For more information, visit www.radnetonline.com.
ABOUT RADIOLOGIX, INC.
Radiologix, Inc. is a leading national provider of diagnostic imaging services,
owning and operating multi-modality diagnostic imaging centers that use advanced
imaging technologies such as positron emission tomography (PET), magnetic
resonance imaging (MRI), computed tomography (CT) and nuclear medicine, as well
as x-ray, general radiography, mammography, ultrasound and fluoroscopy. The
diagnostic images created, and the radiology reports based on these images,
enable more accurate diagnosis and more efficient management of illness for
ordering physicians. Radiologix owns or operates 70 diagnostic imaging centers
located in 7 states. For more information, visit www.radiologix.com.
ABOUT GE HEALTHCARE FINANCIAL SERVICES
GE Healthcare Financial Services is a provider of capital, financial solutions,
and related services for the global healthcare market. With over $16 billion of
capital committed to the healthcare industry, GE Healthcare Financial Services
offers a full range of capabilities from equipment financing and real estate
financing to working capital lending, vendor programs, and practice acquisition
financing. With its knowledge of all aspects of healthcare from hospitals and
long-term care facilities to physicians' practices and life sciences, GE
Healthcare Financial Services works with customers to create tailored financial
solutions that help them meet their business goals. For more information, visit
www.gehealthcarefinance.com.
FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements within the meaning of the
U.S. Private Securities Litigation Reform Act of 1995. Specifically, statements
concerning the benefits of the proposed transaction, expected synergies,
anticipated future financial and operating performance, Radiologix, Inc.'s and
Primedex Health Systems' ability to continue to grow the business by generating
patient referrals and contracts with radiology practices, recruiting and
retaining technologists, and receiving third-party reimbursement for diagnostic
imaging services, as well as Radiologix's and Primedex's financial guidance, are
forward-looking statements within the meaning of the Safe Harbor.
Forward-looking statements are based on management's current, preliminary
expectations and are subject to risks and uncertainties which may cause
Radiologix's and Primedex's actual results to differ materially from the
statements contained herein. These risks and uncertainties include, among
others, the possibility that the companies are unable to obtain stockholder or
regulatory approvals required for the transaction; problems that may arise in
successfully integrating the businesses of the two companies; unexpected costs
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involved in the transaction; the inability of the combined companies to achieve
cost-cutting synergies; uncertainty surrounding the transaction; future
regulatory or legislative actions in the industry; as well as those set forth in
Primedex's and Radiologix's respective reports filed with the SEC, including
each company's annual report on Form 10-K, for the year ended December 31, 2005
in the case of Radiologix and for the year ended October 31, 2005 in the case of
Primedex, and Primedex's Quarterly Reports on Form 10-Q for the quarters ended
January 31, 2006 and April 30, 2006. Undue reliance should not be placed on
forward-looking statements, especially guidance on future financial performance,
which speaks only as of the date it is made. Radiologix and Primedex undertake
no obligation to update publicly any forward-looking statements to reflect new
information, events or circumstances after the date they were made, or to
reflect the occurrence of unanticipated events.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed transaction, Primedex Health Systems and
Radiologix intend to file relevant materials with the Securities and Exchange
Commission (SEC), including one or more registration statement(s) that contain a
prospectus and proxy statement. Because those documents will contain important
information, holders of Primedex and Radiologix common stock are urged to read
them, if and when they become available. When filed with the SEC, they will be
available for free (along with any other documents and reports filed by Primedex
and Radiologix with the SEC) at the SEC's Web site, www.sec.gov, and Primedex
and Radiologix stockholders will receive information at an appropriate time on
how to obtain transaction-related documents for free from Primedex and
Radiologix, respectively. Such documents are not currently available.
Primedex and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from the holders of Primedex and
Radiologix common stock in connection with the proposed transactions.
Information about the directors and executive officers of Primedex is set forth
in its most recent annual report on Form 10-K, which was filed with the SEC on
February 14, 2006. Investors may obtain additional information regarding the
interest of such participants by reading the prospectus and proxy solicitation
statement if and when it becomes available.
Radiologix and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from the holders of Radiologix and
Primedex common stock in connection with the proposed transaction. Information
about the directors and executive officers of Radiologix and their ownership of
Radiologix common stock is set forth in the proxy statement of Radiologix's 2006
Annual Meeting of Stockholders, which was filed with the SEC on April 21, 2006.
Investors may obtain additional information regarding the interests of such
participants by reading the prospectus and proxy solicitation statement if and
when it becomes available.
This communication shall not constitute an offer to sell or the solicitation of
an offer to buy any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities Act of 1933,
as amended.
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