Alliance Imaging Reports Results for the Fourth Quarter and Year Ended December 31, 2007 and Reaffirms Full Year 2008 Guidance.

ANAHEIM, Calif. -- Alliance Imaging, Inc. (NYSE:AIQ), a leading national provider of diagnostic imaging services, announced results for the fourth quarter and year ended December 31, 2007.

Fourth Quarter and Full Year 2007 Financial Results

Revenue for the fourth quarter of 2007 increased 1.7% to $113.6 million from $111.7 million in the comparable 2006 quarter. For full year 2007, revenue was $444.9 million, which was above the Company's guidance range of $439 million to $443 million. Full year 2007 revenue decreased 2.4% to $444.9 million from $455.8 million in 2006.

Alliance's Adjusted EBITDA was $39.7 million in the fourth quarter of 2007, a 3.0% decrease compared to $40.9 million in the same quarter a year ago. For full year 2007, Adjusted EBITDA totaled $165.6 million, which was above the Company's guidance range of $162 million to $164 million. Full year 2007 Adjusted EBITDA decreased 3.5% to $165.6 million compared to $171.6 million for full year 2006.

Alliance's revenue and Adjusted EBITDA (as defined below) were negatively impacted by the Medicare reimbursement reductions related to the Deficit Reduction Act of 2005 ("DRA") and Medicare Part B HOPPS reimbursement rate reduction for positron emission tomography and positron emission tomography/computed tomography ("PET and PET/CT") imaging procedures which came into effect for services furnished on or after January 1, 2007. The full year 2007 revenue and Adjusted EBITDA impact of the DRA and PET and PET/CT HOPPS reimbursement rate reductions totaled approximately $14 million.

Earnings per share on a diluted basis, in accordance with generally accepted accounting principles, was $0.04 per share in the fourth quarter of 2007 and $0.08 per share in the fourth quarter of 2006. In the fourth quarter of 2007, the Company incurred a pretax charge of $1.0 million, or ($0.01) diluted earnings per share, related to the write-off of deferred financing costs related to a bridge loan financing retired in the fourth quarter of 2007.

Earnings per share on a diluted basis were $0.31 and $0.37 per share for the full year of 2007 and 2006, respectively.

Cash flows provided by operating activities were $37.7 million in the fourth quarter of 2007 compared to $38.7 million in the corresponding quarter of 2006, and totaled $118.0 million and $115.8 million for the full year of 2007 and 2006, respectively. Cash capital expenditures in the fourth quarter of 2007 were $20.1 million compared to $18.5 million in the fourth quarter of 2006, and were $65.3 million and $75.0 million for the full year of 2007 and 2006, respectively. Alliance opened seven new fixed-site imaging centers and one radiation therapy center in the fourth quarter of 2007 and opened a total of 16 new fixed-site imaging centers and two radiation therapy centers in 2007.

Alliance's net debt, defined as total long-term debt (including current maturities) less cash and cash equivalents, totaled $549.9 million at December 31, 2007 and $513.0 million at December 31, 2006. Cash and cash equivalents increased to $120.9 million at December 31, 2007 from $16.4 million at December 31, 2006.

The Company's total long-term debt (including current maturities) increased to $670.8 million as of December 31, 2007 from $529.4 million as of December 31, 2006. In the fourth quarter of 2007, the Company completed a $150 million senior subordinated note offering.

Excluding 2007 investments in acquisitions and assuming that these funds would have been otherwise available for debt reduction, the Company's increase in cash and cash equivalents, net of the increase in long-term debt, totaled $54.3 million for the full year 2007. The Company's decrease in long term debt, net of the increase in cash and cash equivalents, totaled $53.2 million for the full year 2006.

Paul S. Viviano, Chairman of the Board and Chief Executive Officer, stated, "Alliance has delivered performance above the high end of the Company's full year guidance ranges, despite a very challenging environment. We opened 16 fixed-site imaging centers and our second de novo radiation therapy center in 2007, and as previously announced, completed the acquisition of seven fixed-site imaging centers from New England Health Enterprises and eight radiation therapy centers from Bethesda Resources in the fourth quarter of 2007. In addition, we successfully raised $150 million in a senior subordinated note offering in the fourth quarter of 2007, which will provide liquidity for intended acquisitions in the future. Alliance is well positioned for the future and we will continue to invest capital in a highly disciplined manner, which is expected to continue to positively impact our performance."

Full Year 2008 Guidance

Alliance is reaffirming its full year 2008 guidance ranges as follows:

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Fourth Quarter and Full Year 2007 Earnings Conference Call

Investors and all others are invited to listen to a conference call discussing fourth quarter and full year 2007 results. The conference call is scheduled for Thursday, February 21 at 8:30 a.m. Eastern Time. The call will be broadcast live on the Internet and can be accessed by visiting the Company's website at www.allianceimaging.com. Click on Audio Presentations in the Investors section of the website to access the link.

The conference call can also be accessed at [phone] (United States) or [phone] (International). Interested parties should call at least five minutes prior to the conference call to register. A replay of the call can be accessed until May 21, 2008 by visiting the Company's website or by calling [phone] (United States) or [phone] (International). The conference call identification number is 34510328.

Definition of Adjusted EBITDA

"Adjusted EBITDA" as defined under the terms of Alliance's Credit Agreement, is earnings before interest expense, net of interest income; income taxes; depreciation expense; amortization expense; minority interest expense; non-cash share-based compensation; a maximum of $750,000 of severance and related costs in each fiscal year; non-recurring shareholder expense; lawsuit settlements and other non-cash charges. For a more detailed discussion of Adjusted EBITDA and reconciliation to net income, see the table entitled "Adjusted EBITDA" included in the tables following this release.

About Alliance Imaging

Alliance Imaging is a leading national provider of shared-service and fixed-site diagnostic imaging services, based upon annual revenue and number of diagnostic imaging systems deployed. Alliance provides imaging and therapeutic services primarily to hospitals and other healthcare providers on a shared and full-time service basis, in addition to operating a growing number of fixed-site imaging centers. The Company had 488 diagnostic imaging systems, including 310 MRI systems and 79 PET or PET/CT systems, and served over 1,000 clients in 44 states at December 31, 2007. The Company operated 88 fixed-site imaging centers (five in unconsolidated joint ventures), which includes systems installed in hospitals or other buildings on or near hospital campuses, medical groups' offices, or medical buildings and retail sites. The Company also operated 12 radiation therapy centers (two in unconsolidated joint ventures) as of December 31, 2007.

Forward-Looking Statements 

This press release contains forward-looking statements relating to future, not past, events. In this context, forward-looking statements often address our expected future business and financial results and often contain words such as "expects," "anticipates," "intends," "plans," "believes," "seeks" or "will." Forward-looking statements by their nature address matters that are uncertain and subject to risks. Such uncertainties and risks include: changes in the preliminary financial results and estimates due to the restatement or review of the Company's financial statements; the nature, timing and amount of any restatement or other adjustments; the Company's ability to make timely filings of its required periodic reports under the Securities Exchange Act of 1934; issues relating to the Company's ability to maintain effective internal control over financial reporting and disclosure controls and procedures; difficulties the Company may face in connection with recent, pending or future acquisitions, including unexpected costs or liabilities resulting from the acquisitions, diversion of management's attention from the operation of the Company's business, and risks associated with integration of the acquisitions; and other risks and uncertainties identified in the Risk Factors section of the Company's Form 10-K/A for the year ended December 31, 2006 and Form 10-Q for the quarter ended September 30, 2007, in each case filed with the Securities and Exchange Commission. These uncertainties may cause actual future results or outcomes to differ materially from those expressed in the Company's forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company does not undertake to update its forward-looking statements except as required under the federal securities laws.

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The reconciliation from net income to Adjusted EBITDA for the 2008 guidance range is shown below:

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