Imaging services provider InSight Health Services said that its accounting firm has issued a statement expressing "substantial doubt" about its ability to continue as a going concern.
The opinion was included in an explanatory paragraph relating to the Lake Forest, CA-based company's financial statements for its 2010 fiscal year (end-June 30). In its fourth quarter, InSight had revenues of $46.8 million, down 12.1% from the $53.2 million reported last year. The company had a quarterly net loss of $10.5 million, compared with a net loss of $2.2 million a year ago.
For the fiscal year, InSight reported revenues of $190.9 million, down 16.2% from the $227.8 million turned in last year. The firm had a net loss for the year of $29.5 million, compared with a net loss of $23.3 million in fiscal 2009.
The "going concern" opinion resulted in an amendment to the firm's revolving credit facility, which had required InSight to deliver audited financial statements without that explanatory paragraph within 120 days following the end of the fiscal year. Because InSight would not be able to comply, it executed an amendment with the lender to agree to forbear enforcing default under the agreement and allow full access to the credit line until December 1.
If InSight has not remedied this noncompliance by then, its lenders could terminate their commitments and cause all amounts outstanding to become immediately due and payable. The amendment reduced the total facility size from $30 million to $20 million and reduced the letter of credit limit from $15 million to $5 million. It also increased the interest rate and unused line fee.
While the company does not currently have any outstanding borrowings on the revolver, it does have $1.6 million in outstanding letters of credit under the facility, InSight said.
InSight said it has engaged global investment bank Jefferies & Company to develop and finalize a restructuring and refinancing plan, which will seek to significantly reduce the firm's outstanding debt and improve its cash and liquidity position.
Related Reading
InSight completes center buy, July 26, 2010
InSight chooses MobileMD for IT services, May 13, 2010
InSight's Q2 revenues slide, February 17, 2010
InSight Imaging taps VP, November 12, 2009
InSight's revenues slip in FY09, September 18, 2009
Copyright © 2010 AuntMinnie.com
