S&P: Radiologix unaffected

Standard & Poor's said Monday that the ratings and outlook on Radiologix Inc. (B+/negative/--) would not be affected by the company's announcement that it has sold one of its wholly owned diagnostic imaging centers and five of its joint-venture centers to an affiliate of Vanguard Health Systems Inc. for $10.5 million in cash.

S&P said the company had previously indicated it would sell these facilities, which generated only a small share of operating cash flow. Although the divestiture will lead to a modest improvement in Radiologix's credit profile, the company still faces difficult competition in most of its markets, and it must maintain its liquidity profile to insulate itself against these competitive risks.

In addition to the proceeds from this and another small, pending asset sale, at March 31, 2004, Radiologix had $42 million in cash and about $50 million in vendor finance lines to buy new imaging equipment. The company also had full availability of a $35 million senior secured credit facility with GE Healthcare Financial Services that contains no financial covenants.

Radiologix has no significant debt maturities before 2008, although it can redeem its $160 million 10.5% senior unsecured notes on or after Dec. 15, 2005.

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