DIAGNOSTIC HEALTH SERVICES COMPLETES ACQUISITION OF MIDWEST DIAGNOSTIC OPERATIONS; ESTABLISHES CREDIT FACILITY WITH CHEMICAL BANK UNIT.

DALLAS--(BUSINESS WIRE)--August 1, 1995--Diagnostic Health Services, Inc. ("DHS") (NASDAQ:DHSM (Common Stock), DHSMW (Warrants)) today announced the completion of the acquisition of the Midwestern ultrasound and nuclear medicine operations of Medical Imaging Centers of America, Inc. ("MICA"). This division of MICA generates more than $5 million in annual revenues, primarily in the Illinois, Indiana, Iowa, Michigan and Ohio markets. DHS' annualized run rate now exceeds $20 million.

Max W. Batzer, Chairman and Chief Executive Officer, commented, "We are extremely enthusiastic about the impact of this acquisition on our organization. With its completion, we have succeeded in becoming the largest independent provider of our type of services in our Central U.S. operating area. As the nation's healthcare system continues to evolve, successful service providers must achieve dominant marketplace positions as we have in the markets we serve. As a result, DHS has had five consecutive quarters of record revenues, profits and earnings per share. Importantly, the MICA Division acquisition will permit us to continue to lower administrative costs per revenue dollar and effectively serve our broadening client base."

Mr. Batzer continued, "We are also proud to announce the establishment of a $5.8 million credit facility with the Texas Commerce Bank (TCB), a subsidiary of Chemical Bank. The endorsement of DHS by a major money center bank has made it possible to conclude the MICA transaction on extremely favorable terms with respect to both purchase price and the cost of financing. Access to the broad financial and support resources of TCB will permit us to continue our rapid growth necessary with an efficiency and flexibility that was previously unavailable to the Company. By lowering our cost of capital, we will be able to further positively impact our entire financial picture. The MICA Division has been operating profitably. As part of DHS, we will bring to it the same resources that have permitted us to achieve high internal growth rates with our previous acquisitions, while instituting the cost efficiencies of our administrative systems."

DHS is engaged in the management of radiology and cardiology departments, shared ultrasound and nuclear imaging services, temporary staffing of physical/occupational therapists, and other allied healthcare professionals. In addition, the Company performs consultant services to healthcare providers relating to the development of radiology and cardiology facilities. The Company is headquartered in Dallas, Texas, and additionally operates in Oklahoma, Louisiana, Mississippi, Missouri, Arkansas, Illinois, Indiana, Ohio, Michigan, Iowa and Mexico City.

CONTACT: COUNSEL: Max W. Baxter, Chairman & CEO 

Diagnostic Health Services

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DHS'INVESTOR RELATIONS

The Equity Group Inc.

Linda Latman

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Bob Goldstein

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