Exhibit 99.1

       Dynacq Healthcare, Inc. Settles Class Action Litigation

    HOUSTON--(BUSINESS WIRE)--Aug. 11, 2006--Dynacq Healthcare, Inc.
(Nasdaq SmallCap:DYII) ("Dynacq") announced today that it has reached
an agreement in principle to settle the shareholder class action
lawsuit pending against it for the amount of $1.5 million. The amount
of the settlement will include payment of all administrative costs and
class attorneys' fees as well as the payout to the class. The $1.5
million will be paid $100,000 within 30 days of final approval of the
settlement by the court and the balance in 36 equal monthly interest
bearing installments beginning 30 days thereafter. The settlement will
fully release the Company, its two executive officers named as
defendants and its subsidiaries from liability and prohibits the
filing of any future claims by the members of the class relating to
this matter.
    The lawsuit was filed against Dynacq and certain current and
former officers and directors and alleged that the defendants violated
federal securities laws by publishing materially misleading financial
statements that did not comply with generally accepted accounting
principles, making materially false or misleading statements or
omissions regarding revenues and receivables, operations and financial
results, and engaging in an intentional fraudulent scheme aimed at
inflating the value of Dynacq's stock. The plaintiffs were persons who
purchased or otherwise acquired shares of the Company's common stock
during the period of November 27, 2002 through December 19, 2003. The
Court consolidated the actions under the procedures of the Private
Securities Litigation Reform Act. Dynacq and its current and former
officers and directors did not admit liability or fault for the
matters alleged in the lawsuit.
    Conditions to the effectiveness of the settlement are: no more
than 5% of the class (both in number of shareholders and in percentage
of total shares in the class) opting out, confirmation that the lead
plaintiffs are adequate class representatives for the proposed
settlement class, and the execution of definitive settlement and
release agreements acceptable to the Company's Board and the Company's
primary lender. In addition, acceptance of the settlement is subject
to approval of the United States District Court for the Southern
District of Texas.
    Dynacq Healthcare, Inc. (www.dynacq.com) is a holding company. Its
subsidiaries provide surgical healthcare services and related
ancillary services through hospital facilities and outpatient surgical
centers.

    CONTACT: Dynacq Healthcare, Inc., Houston
             Philip Chan, 713-378-2000