1198233--3/31/2006--MQ_ASSOCIATES

related topics

{regulation, government, change}

{debt, indebtedness, cash}

{financial, litigation, operation}

{customer, product, revenue}

{stock, price, operating}

{product, market, service}

{cost, regulation, environmental}

{loss, insurance, financial}

{personnel, key, retain}

{system, service, information}

{capital, credit, financial}

{acquisition, growth, future}

Risks related to our business Changes in the rates or methods of third-party reimbursement for diagnostic imaging services could result in downward pricing pressure, which would result in a decline in our revenue and harm our financial position. Our centers depend on physician referrals and contractual arrangements with insurance carriers for their business. Our net revenues are significantly impacted by estimates of contractual allowances and the collectibility of claims. We compete with other diagnostic imaging companies, referral physicians and hospitals and this competition could adversely affect our revenue and our business. An inability to meet our capital expenditure needs could adversely affect our ability to build and maintain our business. The time, effort and expense related to our Audit Committee review and the restatement of our historical financial statements may have an adverse effect on our business. Current and prospective patients, radiologists, referral physicians, investors and employees may react adversely to the restatement of our historical financial statements. Loss of key executives and failure to attract qualified management, technologists, radiologists and sales persons could limit our growth and negatively impact our operations. We are controlled by J.P. Morgan Partners, LLC, which has the ability to exert significant influence over matters requiring board of directors or stockholder approval. Any adverse outcome from the ongoing SEC inquiry and U.S. Attorney s Office investigation could have a material adverse effect on us. Because a high percentage of our operating expenses are fixed, a relatively small decrease in revenue could have a significant adverse impact on our financial results. We may be unable to effectively maintain our equipment or generate revenue when our equipment is not working. We may be subject to professional liability risks which could be costly and could negatively impact our business and financial results. We may not be able to achieve the expected benefits from any past or future acquisitions, which would adversely affect our financial condition and results. Technological change in our industry could reduce the demand for our services and require us to incur significant costs to upgrade or replace our equipment. Our revenue may fluctuate or be unpredictable and this may harm our financial results. Some of our imaging services involve the handling of hazardous materials and wastes, including the use and disposal of radioactive materials, which could subject us to regulation, related costs and delays and potential liabilities for violations of environmental, health and safety laws. Risks related to our high degree of indebtedness Our substantial level of indebtedness and limitations on our ability to incur additional debt could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry and prevent us from meeting our obligations under our debt instruments. We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful. Restrictive covenants in the indentures governing our notes and our senior credit facility may adversely affect our ability to operate our business, and if we breach the covenants in our senior credit facility, the lenders may foreclose on their collateral. Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly. Despite current indebtedness levels, we may still be able to incur substantially more debt. This could further exacerbate the risks described above. Risks related to government regulation of our business We conduct business in a heavily regulated industry and if we fail to comply with these laws and government regulations, we could suffer penalties or be required to make significant changes to our operations. Providers in the healthcare industry have been the subject of federal and state investigations, and we have been the subject of an investigation in the past. If we fail to comply with various licensure, certification and accreditation standards, we may be subject to loss of licensure, certification or accreditation, which would adversely affect our operations. Our inability to obtain certificates of need, as well as the application of state certificate of need regulations could harm our business and financial results. If we fail to successfully implement, integrate and secure our information systems at our facilities, we could suffer penalties, be required to make significant changes to our operations and our cash flows could be negatively affected.

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1198233--3/31/2006--MQ_ASSOCIATES_INC