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IPS HEALTH CARE REPORTS ON CASH FLOW

 IPS HEALTH CARE REPORTS ON CASH FLOW
 IRVINE, Calif., Feb. 13 /PRNewswire/ -- IPS Health Care Inc.


(NASDAQ: IPSI) announced today it was continuing to experience its previously reported cash flow problems and taking a charge of approximately $3 million for the quarter ended Jan. 31, 1992. The company's cash flow problems are caused by slower than anticipated collections and a high level of debt and lease payments with respect to its equipment. The $3 million charge includes approximately $1,900,000 relating to receivable reserves or write-offs, $900,000 for certain equipment write-downs and $200,000 for other operational charges. All figures reflect management's best estimate and are subject to change.
 The company is in default under various leases with its major equipment financing source and owes approximately $500,000 in federal payroll taxes, interest and penalties. The company is negotiating to restructure approximately $7 million of its equipment lease obligations and a payment plan with the IRS. There can be no assurance as to the success of either negotiation although preliminary discussions are encouraging. The company will also seek to sell some assets to raise cash.
 The company's financial problems have been compounded by significant delays in billing and collections as a result of the conversion to a new billing system in October 1991. These delays have had a material impact on collections for the quarter ended Jan. 31, 1992, and will continue to impact future collections. The company believes that it has identified the problems in the billing system and expects to have them resolved by year end (April 30). The company believes that part of its collections problem has been caused by changes in the amount and timing of certain third-party payor reimbursements which account for a majority of the company's collections.
 Without regard to the $3 million charge, the company expects that its revenues and profits for the third fiscal quarter will be disappointing as a result of reduced utilization of the company's equipment because of seasonal factors and cash restraints on the company's ability to compete for new business and maintain its current business.
 The company also announced the appointment of Andrew Galligan as vice


president of finance and chief financial officer. Galligan has had extensive experience in the Magnetic Resonance Imaging ("MRI") field with both Toshiba America MRI Inc., and its predecessor, the MRI division of Diasonics Inc.
 IPS Health Care Inc. is a medical technical service company which primarily provides mobile and fixed site MRI services to health care providers and their patients.
 -0- 2/13/92
 /CONTACT: Andrew Galligan, VP-finance and CFO of IPS Health Care, 714-251-1300/
 (IPSI) CO: IPS Health Care Inc. ST: California IN: HEA SU:


DM-JL -- LA041 -- 0038 02/13/92 20:38 EST
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Date:Feb 13, 1992
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