InSight Health Services exploring refinancing, possible Chapter 11 filing

By Caroline Salls

Pittsburgh, Feb. 14 - InSight Health Services Holdings Corp. has hired Lazard Freres & Co. LLC as its financial adviser to explore a refinancing or restructuring of its debt, and the company doubts its ability to continue as a going concern, according to a 10-Q filed with the Securities and Exchange Commission.

If its net cash provided by operating activities declines further than anticipated, InSight said it may be unable to maintain a sufficient level of liquidity, which could cause it to default on its debt.

If the company can maintain a sufficient level of liquidity, the company said it may still decide to proceed with alternative approaches, including a sale of all or a portion of its business; entering into a negotiated settlement with debtholders; making a prepackaged Chapter 11 bankruptcy filing; or restructuring all or a portion of its debt in a Chapter 11 bankruptcy case.

According to the 10-Q, during recent years, InSight has experienced many adverse market conditions and its financial performance has deteriorated, and it reported a net loss of $55.7 million for the six months ended Dec. 31.

Though non-cash goodwill impairment charges made up a significant component of the net loss, InSight said it has experienced and expects to continue to experience decreases in revenues and increases in cost of operations, corporate operating expenses and interest expense.

Since June 30, 2006, the decrease in revenues and increases in costs and expenses were greater than the company expected.

Currently, the company said it believes that future net cash provided by operating activities, existing cash and cash equivalents on hand and its revolving credit facility should be adequate to meet liquidity requirements for at least the next 12 months; however, it cannot be sure that its financial performance and liquidity will not deteriorate further.

For now, the company said it is continuing to operate its business under its current capitalization structure while trying to maximize net cash provided by operating activities and minimize discretionary use of cash for capital projects.

InSight is a Lake Forest, Calif., provider of diagnostic imaging services.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.