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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934FOR THE FISCAL YEAR ENDED JUNE
    30,
    2010ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934FOR THE TRANSITION PERIOD
    FROM          TO   COMMISSION FILE NUMBER
    333-75984-12
  INSIGHT HEALTH SERVICES
    HOLDINGS CORP. (Exact name of
    Registrant as specified in its charter)
  DELAWARE(State or other jurisdiction
    of
    incorporation or organization)

04-3570028(I.R.S. Employer
    Identification No.)26250 ENTERPRISE COURT, SUITE 100,
    LAKE FOREST, CA(Address of principal
    executive offices)

92630(Zip code)   (949) 282-6000 (Registrants telephone
    number including area code)
  SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE
    ACT: NONE
    SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
    NONE (Title of Class)
  o þ
  þ o
  o þ
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  Large accelerated
    filer o

Accelerated
    filer o

Non-accelerated
    filer o

Smaller reporting
    company þ(Do not check if a smaller
    reporting company)   Rule 12b-2 o þ
  Over-The-Counter
  þ o




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##### 





INSIGHT
    HEALTH SERVICES HOLDINGS CORP.
    ANNUAL REPORT ON
    FORM 10-K
  TABLE OF
    CONTENTS
  PagePART IItem 1.

Business


1Item 1A.

Risk Factors


13Item 2.

Properties


24Item 3.

Legal Proceedings


24Item 4.

Removed and Reserved


24PART IIItem 5.

Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


25Item 6.

Selected Financial Data


26Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


28Item 7A.

Quantitative and Qualitative Disclosures About
    Market Risk


56Item 8.

Financial Statements and Supplementary Data


58Item 9.

Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


103Item 9A.

Controls and Procedures


103Item 9B.

Other Information


104PART IIIItem 10.

Directors, Executive Officers and Corporate
    Governance


104Item 11.

Executive Compensation


108Item 12.

Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


113Item 13.

Certain Relationships and Related Transactions,
    and Director Independence


116Item 14.

Principal Accounting Fees and Services


117PART IVItem 15.

Exhibits, Financial Statement Schedules


118SIGNATURES


121EX-10.15EX-21.1EX-31.1EX-31.2EX-32.1EX-32.2




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PART I  ITEM 1.
    BUSINESS  OVERVIEW
  All references to we, us,
    our, our company the
    Company in this annual report on
    Form 10-K,
    or
    Form 10-K,
    mean Insight Health Services Holdings Corp., a Delaware
    corporation incorporated in 2001, and all entities and
    subsidiaries owned or controlled by Insight Health Services
    Holdings Corp. All references to Holdings in this
    Form 10-K
    mean Insight Health Services Holdings Corp. by itself. All
    references to Insight in this
    Form 10-K
    mean Insight Health Services Corp., a Delaware corporation and a
    wholly owned subsidiary of Holdings, by itself. All references
    to fiscal 2010 mean our fiscal year ended
    June 30, 2010.
          (949) 282-6000. Form 10-K Form 10-K
      1-800-SEC-0330 http://www.sec.gov.
  Reorganization
  No. 07-10700).
 1




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2




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Segments
    Contract Services. fee-for-service fee-for-service
      Patient Services. fee-for-service day-to-day
  Other Operations.
 3




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Additional Information.
  DIAGNOSTIC
    IMAGING TECHNOLOGY
  x-ray,
  Magnetic
    Resonance Imaging or MRI
    Computed
    Tomography or CT
    Positron
    Emission Tomography or PET
    Other
    Imaging Technologies
  
    Ultrasound systems use, detect and process high frequency sound
    waves to generate images of soft tissues and internal body
    organs.
    X-ray is the most common energy source used in imaging the body
    and is now employed in conventional
    x-ray
    systems, CT and digital x-ray systems.
    Mammography is a low-level conventional examination of the
    breasts, primarily for detecting lesions in the breast that may
    be too small or deeply buried to be felt in a regular breast
    examination. 4




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
    Bone densitometry uses an advanced technology called dual-energy
    x-ray absorptiometry, or DEXA, which safely, accurately and
    painlessly measures bone density and the mineral content of bone
    for the diagnosis of osteoporosis.  STRATEGY
  Patient
    Services Strategy
    
    During fiscal 2009, we sold eight fixed-site centers (six in
    California, one in Illinois and one in Tennessee), and equity
    interests in three joint ventures that operated five fixed-site
    centers (four in New York and one in California and we closed
    three fixed-site centers (two in California and one in Arizona).
    During fiscal 2009, we acquired two fixed-site centers in
    Boston, Massachusetts and two fixed-site centers in Phoenix,
    Arizona.
    During fiscal 2010, we expanded our presence in two regional
    markets: Texas and the Mid-Atlantic states. In March, 2010 we
    acquired an equity interest in a joint venture that operates a
    fixed-site center in the
    Dallas/Fort Worth,
    Texas area. In May, 2010 we acquired two fixed-site centers
    through a joint venture in the Toms River, New Jersey area.
    During fiscal 2010, we sold three fixed-site centers (two in
    Pennsylvania and one in California), and closed two fixed-site
    centers (one in California and one in Arizona).
    In August, 2010 we expanded our presence in the Southwest market
    by acquiring eight fixed-site centers in the areas of Phoenix,
    Arizona, El Paso, Texas, and Las Cruces, New Mexico. Also,
    we sold one fixed-site center in California.  Contract
    Services Strategy
      and/or
 5




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BUSINESS
    DEVELOPMENT
      
    broadening our physician referral base and generating new
    sources of revenues through selective marketing activities;
    focusing our marketing efforts on attracting additional managed
    care customers;
    emphasizing quality of care and convenience to our
    customers; and
    expanding current imaging applications of existing modalities to
    increase overall procedure volume.    
    seeking to develop new fixed-site centers, mobile routes, and
    joint ventures with hospitals or radiologists and making
    disciplined acquisitions where attractive returns on investment
    can be achieved and sustained; and
    seeking opportunities to exit underperforming businesses or
    businesses in non-core markets and redeploying such capital to
    achieve more attractive returns.    GOVERNMENT
    REGULATION
    Federal False Claims Act:
 6




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
    Failure to comply with the many technical billing requirements
    applicable to our Medicare and Medicaid business.
    Failure to comply with Medicare requirements concerning the
    circumstances in which a hospital, rather than we, must bill
    Medicare for diagnostic imaging services we provide to
    outpatients treated by the hospital.
    Failure of our hospital customers to accurately identify and
    report our reimbursable and allowable services to Medicare.
    Failure to comply with the prohibition against billing for
    services ordered or supervised by a physician who is excluded
    from any federal healthcare program, or the prohibition against
    employing or contracting with any person or entity excluded from
    any federal healthcare program.
    Failure to comply with the Medicare physician supervision
    requirements for the services we provide, or the Medicare
    documentation requirements concerning physician supervision.
    The past conduct of the businesses we have acquired.      Anti-kickback Statutes:
 7




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Civil Money Penalty Law and Other Federal
    Statutes:
      Health Insurance Portability and Accountability
    Act:
  Stark and State Physician Self-Referral
    Laws:
   8




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and/or
        FDA:
    Radiologist and Facility Licensing:
 9




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Liability Insurance:
  Independent Diagnostic Treatment
    Facilities:
  Certificates of Need: and/or
  Environmental, Health and Safety Laws:
  SALES AND
    MARKETING
    COMPETITION
   10




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on-site
  CUSTOMERS
    AND CONTRACTS
  fee-for-service fee-for-service
    DIAGNOSTIC
    IMAGING AND OTHER EQUIPMENT
    and/or
   11




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INFORMATION
    SYSTEMS
    COMPLIANCE
    PROGRAM
    EMPLOYEES
    FORWARD-LOOKING
    STATEMENTS DISCLOSURE
  Form 10-K Form 10-K
  Form 10-K. Form 10-K Form 10-K,
  
    our ability to successfully implement our core market strategy;
    overcapacity and competition in our markets;
    reductions, limitations and delays in reimbursement by
    third-party payors;
    contract renewals and financial stability of customers; 12




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
    changes in the nature of commercial health care insurance
    arrangements, so that individuals bear greater financial
    responsibility through high deductible plans, co-insurance and
    co-payments;
    conditions within the healthcare environment;
    the potential for rapid and significant changes in technology
    and their effect on our operations;
    operating, legal, governmental and regulatory risks;
    conditions within the capital markets, including liquidity and
    interest rates; and
    economic (including financial and employment markets), political
    and competitive forces affecting our business, and the
    countrys economic condition as a whole.    ITEM 1A.
    RISK
    FACTORS  Form 10-K,
  RISKS
    RELATING TO OUR INDEBTEDNESS AND FINANCIAL
    CONDITION
  Our
    recurring losses from operations and net capital deficiency
    raise substantial doubt as to our ability to continue as a going
    concern.
  Form 10-K,
  Our
    substantial indebtedness could adversely affect our financial
    condition.
    
    making it more difficult for us to satisfy our obligations with
    respect to the floating rate notes and our other debt;
    limiting our ability to obtain additional financing to fund
    future working capital, capital projects, acquisitions or other
    general corporate requirements; 13




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
    requiring a substantial portion of our cash flows to be
    dedicated to debt service payments instead of other purposes;
    increasing our vulnerability to general adverse economic and
    industry conditions;
    limiting our flexibility in planning for, or reacting to,
    changes in our business and the markets in which we operate;
    placing us at a competitive disadvantage compared to our
    competitors that have stronger capital structures, more
    flexibility in operating their businesses and greater access to
    capital; and
    increasing our cost of borrowing.    We may
    be unable to service our debt.
      If our
    cash provided by operating and financing activities continues to
    be insufficient to fund our cash requirements, we will face
    substantial liquidity problems without a
    restructuring.
     14




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Our
    operations may be restricted by the terms of our debt, which
    could adversely affect us and increase our credit
    risk.
    
    incur more debt;
    create liens;
    pay dividends and make distributions or repurchase stock;
    make certain investments;
    merge, consolidate or transfer or sell assets; and
    engage in transactions with affiliates.    We may
    not have sufficient funds to purchase all outstanding floating
    rate notes and our other debt upon a change of
    control.
   15




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If
    there is a default under the agreements governing our material
    indebtedness, the value of our assets may not be sufficient to
    repay our creditors.
        We may
    be unable to obtain necessary capital to finance certain
    projects or refinance our existing indebtedness because of
    conditions in the financial markets and economic conditions
    generally.
    A
    refinancing or restructuring of our floating rate notes may
    require a
    debt-for-equity
    exchange in which case we may be required to issue a substantial
    number of shares of our common stock and substantially dilute
    the equity ownership of existing stockholders, as well as
    possibly cause a change in control under the indenture governing
    our floating rate notes.
  debt-for-equity debt-for-equity
 16




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Increases
    in interest rates could adversely affect our financial condition
    and results of operations.
    RISKS
    RELATING TO OUR BUSINESS
  Our
    efforts to implement initiatives to enhance revenues and reduce
    costs may not be adequate or successful.
    Because
    a high percentage of our operating expenses are fixed, a
    relatively small decrease in revenues could have a significant
    negative impact on our financial condition and results of
    operations.
    Technological
    change in our industry could reduce the demand for our services
    and our ability to maintain a competitive
    position.
   17




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Changes
    in the rates or methods of third-party reimbursements for our
    services could result in reduced demand for our services or
    create downward pricing pressure, which would result in a
    decline in our revenues and adversely affect our financial
    condition and results of operations.
    Negative
    trends could continue to adversely affect our financial
    condition and results of operations.
    If we
    are unable to renew our existing customer contracts on favorable
    terms or at all, our financial condition and results of
    operations would be adversely affected.
   18




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We
    have experienced, and will continue to experience, competition
    from hospitals, physician groups and other diagnostic imaging
    companies and this competition could adversely affect our
    financial condition and results of operations.
    Our
    failure to effectively integrate acquisitions and establish
    joint venture arrangements through partnerships with hospitals
    and other healthcare providers could impair our
    business.
      
    demands on management related to the increase in our size after
    an acquisition;
    the diversion of our managements attention from daily
    operations to the integration of operations;
    integration of information systems;
    risks associated with unanticipated events or liabilities;
    difficulties in the assimilation and retention of employees;
    potential adverse effects on operating results;
    challenges in retaining customers and referral sources; and
    amortization or write-offs of acquired intangible assets.   19




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Our
    efforts to implement initiatives to enhance revenues and reduce
    costs may not be adequate or successful
    Consolidation
    in the imaging industry could adversely affect our financial
    condition and results of operations.
  state-of-the-art
  Failure
    to attract and retain qualified employees and contracted
    radiologists could hinder our business strategy and negatively
    impact our financial condition and results of
    operations.
    Managed
    care organizations may limit healthcare providers from using our
    services, causing us to lose procedural volume.
    We may
    be subject to professional liability risks which could be costly
    and negatively impact our financial condition and results of
    operations.
   20




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Our
    PET/CT service and some of our other imaging services require
    the use of radioactive materials, which could subject us to
    regulation, related costs and delays and potential liabilities
    for injuries or violations of environmental, health and safety
    laws.
    We may
    not receive payment from some of our healthcare provider
    customers because of their financial
    circumstances.
    We may
    be unable to generate revenue when our equipment is not
    operational.
    Natural
    disasters and harsh weather conditions could adversely affect
    our business and operations.
   21




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High
    fuel costs would adversely affect our financial condition and
    results of operations.
    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
    financial condition and results of operations.
      RISKS
    RELATING TO GOVERNMENT REGULATION OF OUR
    BUSINESS
  Complying
    with federal and state regulations pertaining to our business is
    an expensive and time-consuming process, and any failure to
    comply could result in substantial penalties and adversely
    affect our ability to operate our business and our financial
    condition and results of operations.
    
    the federal False Claims Act;
    the federal Medicare and Medicaid Anti-kickback Law, and state
    anti-kickback prohibitions;
    the federal Civil Money Penalty law;
    the Health Insurance Portability and Accountability Act of 1996
    and other state and federal legislation dealing with patient
    privacy;
    the federal physician self-referral prohibition commonly known
    as the Stark Law and the state law equivalents of the Stark Law;
    state laws that prohibit the practice of medicine by
    non-physicians, and prohibit fee-splitting arrangements
    involving physicians; 22




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
    Food and Drug Administration requirements;
    state licensing and certification requirements, including
    certificates of need; and
    federal and state laws governing the diagnostic imaging
    equipment used in our business concerning patient safety,
    equipment operating specifications and radiation exposure levels.    The
    regulatory and political framework is uncertain and
    evolving.
      RISKS
    RELATED TO RELATIONSHIPS WITH STOCKHOLDERS, AFFILIATES AND
    RELATED PARTIES
  A
    small number of stockholders control a significant portion of
    Holdings common stock.
    
    authorize additional shares of Holdings capital stock; 23




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
    amend Holdings certificate of incorporation or bylaws;
    elect Holdings directors; or
    effect or reject a merger, sale of assets or other fundamental
    transaction.    ITEM 2.
    PROPERTIES      ITEM 3.
    LEGAL
    PROCEEDINGS  Kevin Harold and Denise Langhoff, on their own behalf and on
    behalf of others similarly situated v. InSight Health
    Services Holdings Corp., et al
  ITEM 4.
    Removed
    and Reserved 24




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PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES  Over-The-Counter
  mark-up,
  2010

2009Fiscal Quarter

Low

High

Low

HighFirst Quarter

$
0.05


$
0.40


$
0.08


$
0.63Second Quarter


0.11



0.40



0.01



0.20Third Quarter


0.08



0.21



0.02



0.55Fourth Quarter


0.10



0.55



0.03



0.28  25




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ITEM 6.
    SELECTED
    FINANCIAL DATA  Form 10-K,
  Form 10-K.
      Successor


PredecessorYear

Year

Eleven Months


One MonthEnded

Ended

Ended


EndedJune 30,

June 30,

June 30,


July 31,

Years Ended June 30,2010

2009

2008


2007

2007

2006(Amounts in thousands)STATEMENT OF OPERATIONS DATA:Revenues

$
190,938


$
227,782


$
240,744



$
22,187


$
286,914


$
306,298Costs of operations


176,106



214,046



234,409




20,311



261,426



271,272Interest expense, net


25,599



30,164



32,480




2,918



52,780



50,754Net (loss) income attributable to Holdings(1)(2)(3)


(31,802
)


(19,754
)


(169,185
)



196,326



(99,041
)


(210,218
)Net (loss) income per common share:Basic

$
(3.68
)

$
(2.29
)

$
(19.57
)


$
227.23


$
(114.63
)

$
(243.31
)Diluted


(3.68
)


(2.29
)


(19.57
)



227.23



(114.63
)


(243.31
)   26




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June 30,


June 30,2010

2009

2008


2007

2006BALANCE SHEET DATA:Working capital

$
12,787


$
17,475


$
28,207



$
24,567


$
34,550Property and equipment, net


73,315



79,837



113,684




144,823



181,026Goodwill and other intangible assets


20,002



24,878



24,370




95,084



125,936Total assets


140,681



176,124



217,691




323,051



408,204Total long-term liabilities


294,629



290,515



312,915




517,200



504,360Stockholders deficit


(180,656
)


(152,138
)


(130,712
)



(241,432
)


(141,893
)     (1)
    
    No cash dividends have been paid on Holdings common stock
    for the periods indicated above.(2)
    
    Includes impairment charges related to our other long-lived
    assets of $4.4 million and $5.3 million for fiscal
    years ended June 30, 2010 and 2009, respectively, and
    $12.4 million for the eleven months ended June 30,
    2008, and impairment of goodwill of $107.4 million for the
    eleven months ended June 30, 2008 and $29.6 million
    for the year ended June 30, 2007.(3)
    
    Includes reorganization items, net of approximately
    $199.0 million of income for the one month ended
    July 31, 2007 and approximately $17.5 million of
    expense for the year ended June 30, 2007, respectively. 27




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ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Form 10-K. Form 10-K,
  Overview
            Core Market Strategy.
 28




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
    During fiscal 2009, we sold eight fixed-site centers (six in
    California, one in Illinois and one in Tennessee), and equity
    interests in three joint ventures that operated five fixed-site
    centers (four in New York and one in California and we closed
    three fixed-site centers (two in California and one in Arizona).
    During fiscal 2009, we acquired two fixed-site centers in
    Boston, Massachusetts and two fixed-site centers in Phoenix,
    Arizona.
    During fiscal 2010, we expanded our presence in two regional
    markets: Texas and the Mid-Atlantic states. In March, 2010 we
    acquired an equity interest in a joint venture that operates a
    fixed-site center in the
    Dallas/Fort Worth,
    Texas area. In May, 2010 we acquired two fixed-site centers
    through a joint venture in the Toms River, New Jersey area.
    During fiscal 2010, we sold three fixed-site centers (two in
    Pennsylvania and one in California), and closed two fixed-site
    centers (one in California and one in Arizona).
    In August, 2010 we expanded our presence in the Southwest market
    by acquiring eight fixed-site centers in the areas of Phoenix,
    Arizona, El Paso, Texas, and Las Cruces, New Mexico. Also,
    we sold one fixed-site center in California.  Contract
    Services Strategy
        Initiatives.
  
    Revenue enhancement initiatives have focused and will focus on
    our sales and marketing efforts to maintain or improve our
    procedural volumes and contractual rates, and our solutions
    initiatives discussed below.
    Receivables and collections management initiatives have focused
    and will continue to focus on collections at point of service,
    technology improvements to create greater efficiency in the
    gathering of patient and claim information when a procedure is
    scheduled or completed, and the initiative with Dell Perot
    Systems discussed below.
    Cost reduction initiatives have focused and will continue to
    focus on streamlining our organizational structure and expenses
    including enhancing and leveraging our technology to create
    greater efficiencies, and leveraging relationships with
    strategic vendors.   29




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start-up
    Reorganization
  No. 07-10700).
     30




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Segments
    Negative
    Trends
    
    overcapacity in the diagnostic imaging industry;
    reductions in reimbursement from certain third-party payors
    including Medicare;
    reductions in compensation paid by our wholesale customers;
    shifting of health care costs from private insurers and
    employers to patients with high deductible plans, who may elect
    to delay or forego medical procedures;
    limited capital to invest in our business, especially for new or
    upgraded medical equipment;
    lower revenues due to our aging equipment in our patient and
    contract services segments;
    competition from other wholesale and retail providers;
    competition from equipment manufacturers;
    loss of revenues from former referral sources that invested in
    their own diagnostic imaging equipment; and
    loss of revenues from former wholesale customers that invested
    in their own diagnostic imaging equipment. 31




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Reimbursement
  Medicare.
             32




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Medicaid.
 33




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Managed Care and Private Insurance. and/or
          Revenues
   34




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Percentage
    of Total Revenues
  Hospitals, physician groups and other healthcare providers(1)(2)


53
%Managed care and insurance


33
%Medicare / Medicaid


12
%Other, including workers compensation and self-pay patients


2
%     (1)
    
    We have one healthcare provider that accounted for approximately
    6% of our total revenues during the year ended June 30,
    2010. No other single hospital, physician group or other
    healthcare provider accounted for more than 5% of our total
    revenues.(2)
    
    These payors principally represent our contract services or
    wholesale operations. 35




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120 DaysCurrent


30 Days


60 Days


90 Days


and Older


Total(Unaudited)Hospitals, physician groups and other healthcare providers

$
7,799


$
3,264


$
737


$
537


$
542


$
12,879Managed care and insurance


11,680



3,344



1,874



1,131



2,158



20,187Medicare/Medicaid


4,368



647



469



297



703



6,484Workers compensation


837



496



326



226



268



2,153Other, including self-pay patients


77



42



25



31



43



218Trade accounts receivables


24,761



7,793



3,431



2,222



3,714



41,921Less: Allowances for professional fees


(2,710
)


(675
)


(395
)


(262
)


(485
)


(4,527
)Allowances for contractual adjustments


(8,065
)


(2,056
)


(1,182
)


(46
)


(80
)


(11,429
)Allowances for doubtful accounts


(181
)


(79
)


(74
)


(1,100
)


(1,937
)


(3,371
)Trade accounts receivables, net

$
13,805


$
4,983


$
1,780


$
814


$
1,212


$
22,59461
%


22
%


8
%


4
%


5
%


100
%     Operating
    Expenses
    Results
    of Operations
  SOP 90-7
   36




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##### Table of Contents



Years Ended June 30,2010


2009


2008(Successor)


(Successor)


(Combined)REVENUES:Contract services

$
96,066


$
115,055


$
120,601Patient services


92,898



110,557



140,401Other operations


1,974



2,170



1,929Total revenues


190,938



227,782



262,931COSTS OF OPERATIONS:Costs of services


127,856



153,491



180,369Provision for doubtful accounts


4,390



4,021



6,179Equipment leases


10,641



10,950



10,006Depreciation and amortization


33,219



45,584



58,166Total costs of operations


176,106



214,046



254,720CORPORATE OPERATING EXPENSES


(20,191
)


(21,564
)


(27,422
)EQUITY IN EARNINGS OF UNCONSOLIDATED PARTNERSHIPS


2,358



2,642



2,065INTEREST EXPENSE, net


(25,599
)


(30,164
)


(35,398
)GAIN (LOSS) ON SALES OF CENTERS


118



7,885



(644
)GAIN ON PURCHASE OF NOTES PAYABLE






12,065



IMPAIRMENT OF GOODWILL










(107,405
)IMPAIRMENT OF OTHER LONG-LIVED ASSETS


(4,414
)


(5,308
)


(12,366
)Loss before reorganization items and income taxes


(32,896
)


(20,708
)


(172,959
)REORGANIZATION ITEMS, net










198,998Income (loss) before income taxes


(32,896
)


(20,708
)


26,039BENEFIT FOR INCOME TAXES


(1,832
)


(1,652
)


(1,947
)Net income (loss)


(31,064
)


(19,056
)


27,986Less: net income attributable to noncontrolling interests


738



698



845Net loss attributable to InSight Health Services Holdings Corp

$
(31,802
)

$
(19,754
)

$
27,141  37




---



##### Table of Contents



Years Ended June 30,2010


2009


2008(Successor)


(Successor)


(Combined)REVENUES


100.0
%


100.0
%


100.0
%COSTS OF OPERATIONS:Costs of services


67.0



67.4



68.6Provision for doubtful accounts


2.3



1.8



2.4Equipment leases


5.6



4.8



3.8Depreciation and amortization


17.4



20.0



22.1Total costs of operations


92.3



94.0



96.9CORPORATE OPERATING EXPENSES


(10.6
)


(9.5
)


(10.4
)EQUITY IN EARNINGS OF UNCONSOLIDATED PARTNERSHIPS


1.2



1.2



0.8INTEREST EXPENSE, net


(13.4
)


(13.2
)


(13.5
)GAIN (LOSS) ON SALES OF CENTERS


0.1



3.5



(0.2
)GAIN ON PURCHASE OF NOTES PAYABLE






5.3



IMPAIRMENT OF GOODWILL










(40.8
)IMPAIRMENT OF OTHER LONG-LIVED ASSETS


(2.3
)


(2.3
)


(4.7
)Loss before reorganization items and income taxes


(17.3
)


(9.0
)


(65.7
)REORGANIZATION ITEMS, net










75.7Income (loss) before income taxes


(17.3
)


(9.0
)


10.0BENEFIT FOR INCOME TAXES


(1.0
)


(0.7
)


(0.7
)Net income (loss)


(16.3
)


(8.3
)


10.7Less: net income attributable to noncontrolling interests


0.4



0.3



0.3Net loss attributable to InSight Health Services Holdings Corp


(16.7
)%


(8.6
)%


10.4
%   Years
    ended June 30, 2010 and 2009
    Years Ended June 30,2010


% of Revenue


2009


% of Revenue


Variance


Variance(Unaudited)RevenuesPatient services(1)

$
92,898



48.7
%

$
110,557



48.5
%

$
(17,659
)


(16.0
)%Contract services


96,066



50.3
%


115,055



50.5
%


(18,989
)


(16.5
)%Other operations


1,974



1.0
%


2,170



1.0
%


(196
)


(9.0
)%Total

$
190,938



100.0
%

$
227,782



100.0
%

$
(36,844
)


(16.2
)%Costs of ServicesPatient services(2)

$
73,786



38.6
%

$
90,946



39.9
%

$
(17,160
)


(18.9
)%Contract services


53,307



27.9
%


61,857



27.2
%


(8,550
)


(13.8
)%Other operations


763



0.4
%


688



0.3
%


75



10.9
%Total

$
127,856



67.0
%

$
153,491



67.4
%

$
(25,635
)


(16.7
)%     (1)
    
    Patient services revenues for the year ended June 30, 2009
    include $17.5 million related to patient services centers
    that were sold or closed in fiscal 2009 and 2010. Patient
    services revenues for the year ended June 30, 2010 include
    $2.0 million related to centers that were sold or closed in
    fiscal year 2010. Patient services revenues for the year ended
    June 30, 2009 include $2.2 million from centers
    acquired in fiscal 2009. Patient services revenues for the year
    ended June 30, 2010 include $7.9 million in revenues
    from acquired patient services centers that were not in
    operation for all of fiscal 2009. 38




---



##### Table of Contents



(2)
    
    Patient services cost of services for the year ended
    June 30, 2009 include $15.3 million related to patient
    services centers that were sold or closed in fiscal 2009 and
    2010. Patient services cost of services for the year ended
    June 30, 2010 include $2.5 million related to patient
    services centers that were sold or closed in fiscal 2010.
    Patient services costs of services for the year ended
    June 30, 2009 include $1.3 million in costs from
    acquired patient services centers were acquired in fiscal year
    2009. Patient services costs of services for the year ended
    June 30, 2010 include $4.7 million in costs from
    acquired patient services centers in fiscal year 2009 and 2010
    that were not in operation for all of fiscal 2009 and patient
    services for the year ended June 30, 2009, included
    $1.3 million in cost of services from patient services
    centers acquired during fiscal 2009.  Non-GAAP Measure
  Revenues:
    multi-year
    Costs of services:
 39




---



##### Table of Contents



Provision for doubtful accounts:
  Equipment leases:
  Depreciation and amortization:
  Corporate Operating Expenses:
  Equity in Earnings of Unconsolidated
    Partnerships:
 40




---



##### Table of Contents



Interest Expense,
  Gain on Sales of Centers:
  Gain on Purchase of Notes Payable:
  Impairment of Other Long-Lived
    Assets.
  Loss before Income Taxes:
  ConsolidatedLoss before income taxes 
    Year ended June 30, 2009

$
(20,708
)Decrease in existing centers revenues


(21,898
)Decrease in existing centers costs of services


14,056Decrease in existing centers equipment leases


200Increase in existing centers provision for doubtful accounts


(630
)Decrease in existing centers depreciation and amortization


8,875Decrease in existing centers interest expense, net


4,366Impact of centers sold, closed or acquired


511Decrease in corporate operating expenses


1,373Decrease in equity in earnings of unconsolidated partnerships


(284
)Gain on sales of centers


(7,585
)Gain on purchase of notes payable


(12,065
)Decrease in impairment of other long-lived assets


894Loss before income taxes 
    Year ended June 30, 2010

$
(32,896
)  41




---



##### Table of Contents



Benefit for Income Taxes:
  Years
    Ended June 30, 2009 and 2008
    Years Ended June 30,2009





2008Successor


% of Revenue


Combined


% of Revenue


Variance


Variance(Unaudited)RevenuesPatient services(1)

$
110,557



48.5
%

$
140,401



53.4
%

$
(29,844
)


(21.3
)%Contract services


115,055



50.5
%


120,601



45.9
%

$
(5,546
)


(4.6
)%Other operations


2,170



1.0
%


1,929



0.7
%


241



12.5
%Total

$
227,782



100.0
%

$
262,931



100.0
%

$
(35,149
)


(13.4
)%Costs of ServicesPatient services(2)

$
90,946



39.9
%

$
111,408



42.4
%

$
(20,462
)


(18.4
)%Contract services


61,857



27.2
%


68,282



26.0
%


(6,425
)


(9.4
)%Other operations


688



0.3
%


679



0.3
%


9



1.3
%Total

$
153,491



67.4
%

$
180,369



68.6
%

$
(26,878
)


14.9
%     (1)
    
    Patient services revenues for the year ended June 30, 2008
    include $38.6 million related to patient services centers
    that were sold or closed in fiscal 2008 and 2009. Patient
    services revenues for the year ended June 30, 2009 include
    $10.5 million related to patient services centers that were
    sold or closed in fiscal 2009. Patient services revenues for the
    year ended June 30, 2009 include $2.5 million in
    revenues from acquired patient services centers that were not in
    operation during fiscal 2008.(2)
    
    Patient services cost of services for the year ended
    June 30, 2008 include $32.7 million related to patient
    services centers that were sold or closed in fiscal 2008 and
    2009. Patient services cost of services for the year ended
    June 30, 2009 include $9.2 million related to patient
    services centers that were sold or closed in fiscal 2009.
    Patient services costs of services for the year ended
    June 30, 2009 include $1.7 million in costs from
    acquired patient services centers that were not in operation
    during fiscal 2008.  Revenues:
     42




---



##### Table of Contents



Costs of services:
  start-up start-up
    Provision for doubtful accounts:
  Equipment leases:
  Depreciation and amortization:
  Corporate Operating Expenses:
 43




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##### Table of Contents



Equity in Earnings of Unconsolidated
    Partnerships:
  Interest Expense, net:
  Gain (Loss) on Sales of Centers:
  Impairment of Goodwill:
  Impairment of Other Long-Lived
    Assets:
 44




---



##### Table of Contents



Loss Before Reorganization Items, net and Income
    Taxes:
  ConsolidatedLoss before reorganization items, net and income taxes 
    
    Year ended June 30, 2008

$
(172,959
)Decrease in existing centers revenues


(6,943
)Decrease in existing centers costs of services


4,588Increase in existing centers equipment leases


(1,497
)Decrease in existing centers and facilities depreciation and
    amortization


6,851Decrease in existing centers and facilities provision for
    doubtful accounts


1,202Decrease in interest expense, net


4,545Impact of centers sold, closed or acquired


2,013Impairment of goodwill


107,405Impairment of other long-lived assets


7,058Decrease in corporate operating expenses


5,858Increase in equity in earnings of unconsolidated partnerships


577Gain on sales of centers


8,529Gain on purchase of notes payable


12,065Loss before reorganization items, net and income taxes 
    
    Year ended June 30, 2009

$
(20,708
)   Reorganization Items, net:
  Benefit for Income Taxes:
  Financial
    Condition, Liquidity and Capital Resources
    
    a reduction in our borrowing base, and therefore a decline in
    the amounts available under our credit facility;
    difficulty funding our capital projects;
    more stringent financing from equipment manufacturers and other
    financing resources; and
    an inability to meet our interest payment obligations on the
    floating rate notes, refinance or restructure our floating rate
    notes or redeem or retire the floating rate notes when due.  Liquidity:
   45




---



##### Table of Contents




    Revenue enhancement initiatives have focused and will continue
    to focus on our sales and marketing efforts to maintain or
    improve our procedural volumes and contractual rates, and our
    solutions initiative.
    Receivables and collections management initiatives have focused
    and will continue to focus on collections at point of service,
    technology improvements to create greater efficiency in the
    gathering of patient and claim information when a procedure is
    scheduled or completed, and our initiative with Dell Perot
    Systems. 46




---



##### Table of Contents




    Cost reduction initiatives have focused and will continue to
    focus on streamlining our organizational structure and expenses
    including enhancing and leveraging our technology to create
    greater efficiencies, and leveraging relationships with
    strategic vendors.      
    interest payments relating to the floating rate notes;
    capital projects;
    working capital requirements;
    potential acquisitions; and        
    the procedure volume of patients at our patient services centers
    for our retail operations;
    the reimbursement we receive for our services;
    the demand for our wholesale operations, our ability to renew
    mobile contracts
    and/or
    efficiently utilize our mobile equipment in the contract
    services segment;
    our ability to control expenses;
    our ability to collect our trade accounts receivables from
    third-party payors, hospitals, physician groups, other
    healthcare providers and patients; and
    our ability to implement steps to improve our financial
    performance.    Years Ended June 30,2010


2009


2008(Successor)


(Successor)


(Combined)Net cash provided by operating activities

$
5,342


$
17,713


$
2,961Net cash used in investing activities


(14,241
)


(7,400
)


(5,565
)Net cash provided by (used in) financing activities


(1,685
)


(11,675
)


2,774Increase (decrease) in cash and cash equivalents

$
(10,584
)

$
(1,362
)

$
170  47




---



##### Table of Contents



Years Ended June 30,2010


2009


2008(Successor)


(Successor)


(Combined)Net cash provided by operating activities

$
5,342


$
17,713


$
2,961Cash used for reorganization items










8,027(Benefit) provision for income taxes


(1,832
)


(1,652
)


(1,947
)Interest expense, net


25,599



30,164



35,398Amortization of bond discount


(5,881
)


(5,375
)


(4,522
)Share-based compensation


(73
)


(73
)


(15
)Amortization of deferred financing costs










(145
)Equity in earnings of unconsolidated partnerships


2,358



2,642



2,065Distributions from unconsolidated partnerships


(2,485
)


(2,645
)


(2,621
)Gain on sales of equipment


1,125



1,000



772Net change in operating assets and liabilities


4,091



(3,599
)


(817
)Effect of noncontrolling interests


(738
)


(698
)


(845
)Net change in deferred income taxes


1,974



2,223



1,864Adjusted EBITDA

$
29,480


$
39,700


$
40,175  48




---



##### Table of Contents



Patient Services


Contract Services


Other Operations


ConsolidatedYear Ended June 30, 2010 (Successor)Income (loss) before income taxes

$
322


$
12,606


$
(45,824
)

$
(32,896
)Interest expense, net


471



580



24,548



25,599Depreciation and amortization


12,473



18,424



2,322



33,219Effect of noncontrolling interest


(738
)










(738
)Gain on sales of centers


(118
)










(118
)Impairment of other long-lived assets


1,577



2,837







4,414Adjusted EBITDA

$
13,987


$
34,447


$
(18,954
)

$
29,480Year Ended June 30, 2009 (Successor)Loss before reorganization items andincome taxes

$
5,307


$
12,662


$
(38,677
)

$
(20,708
)Interest expense, net


1,203



1,345



27,616



30,164Depreciation and amortization


16,777



25,793



3,014



45,584Effect of noncontrolling interest


(698
)










(698
)Gain on sales of centers


(7,885
)










(7,885
)Gain on purchase of notes payable










(12,065
)


(12,065
)Impairment of other long-lived assets


708



4,600







5,308Adjusted EBITDA

$
15,412


$
44,400


$
(20,112
)

$
39,700Year Ended June 30, 2008 (Combined)Loss before reorganization items andincome taxes

$
(3,486
)

$
10,843


$
(180,316
)

$
(172,959
)Interest expense, net


2,392



2,603



30,403



35,398Depreciation and amortization


24,731



29,465



3,970



58,166Effect of noncontrolling interest


(845
)










(845
)Loss on sales of centers


644











644Impairment of goodwill










107,405



107,405Impairment of long-lived assets










12,366



12,366Adjusted EBITDA

$
23,436


$
42,911


$
(26,172
)

$
40,175   Years
    Ended June 30, 2010 and 2009
     49




---



##### Table of Contents



Years
    Ended June 30, 2009 and 2008
        Capital Projects:
  Floating Rate Notes and Credit Facility:
   50




---



##### Table of Contents



51




---



##### Table of Contents



Contractual Commitments:
  Payments Due by PeriodLess Than


1-3


3-5


More ThanTotal


1 Year


Years


Years


5 YearsLong-term debt obligations

$
294,635


$
154


$
293,842


$
328


$
311Capital lease obligations


3,889



1,517



2,291



81



Operating lease obligations


35,716



13,845



16,236



4,020



1,615Other contractual obligations


63,374



18,079



31,184



14,111



Purchase commitments


2,517



2,517











Total contractual obligations

$
400,131


$
36,112


$
343,553


$
18,540


$
1,926     Off-Balance
    Sheet Arrangements
    Critical
    Accounting Policies and Estimates
  Form 10-K Form 10-K.
  Reorganization value and equity value:
    
    the market value of Holdings 8,644,444 shares of
    common stock from August 3, 2007, the date the shares first
    traded after consummation of the confirmed plan of
    reorganization, through September 30, 2007. The value range
    of Holdings common stock was estimated from a low of
    $35 million (based on $4 per share) to a high of
    $61 million (based on $7 per share). The range of
    enterprise value to correspond with the foregoing range would be
    from a low of $357 million to a high of $383 million.
    Management recognized that the common stock valuation approach
    may have been somewhat limited because the shares of common
    stock issued after the consummation of the confirmed plan of
    reorganization did not necessarily have the same liquidity as
    shares issued in connection with an underwritten public
    offering. Nevertheless, management primarily relied on this
    valuation method because (i) orderly observable trading
    activity in the common stock, though limited in volume, did take
    place, (ii) the trading activity did not indicate that the
    transactions were forced or distressed sales, and (iii) as
    articulated by the hierarchy of inputs set forth in ASC 820,
    observable inputs (regardless as to whether an active market
    exists) generally are more useful in calculating fair value than
    unobservable inputs, which require a reporting entity to develop
    its own assumptions. 52




---



##### Table of Contents




    the market value of the $194.5 million of senior
    subordinated notes for a period of time leading up to
    cancellation of such debt on the date of the consummation of the
    confirmed plan of reorganization. The value range of
    Insights senior subordinated notes was estimated from a
    low of $65 million to a high of $74 million during an
    approximately 30 day period of time leading up to the date
    of consummation of the plan. The range of enterprise value to
    correspond with the foregoing range would be from a low of
    $387 million to a high of $396 million.      Form 10-K.
  Form 10-K.
  Goodwill and Other Intangible Assets:
 53




---



##### Table of Contents



Revenue recognition:
 54




---



##### Table of Contents



New
    Pronouncements
              2009-05
     55




---



##### Table of Contents



2009-13, 2009-13 2009-13 2009-13
  ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK      Interest
    Rate Risk
    pari passu
   56




---



##### Table of Contents



Inflation
    Risk
   57




---



##### 



PART II
  ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  INSIGHT
    HEALTH SERVICES HOLDINGS CORP. AND SUBSIDIARIES
  Index to
    Consolidated Financial Statements
    For the Years Ended June 30, 2010, 2009 and 2008
   
 Page NumberREPORTS OF INDEPENDENT REGISTERED PUBLIC
    ACCOUNTING FIRM


59CONSOLIDATED BALANCE SHEETS


61CONSOLIDATED STATEMENTS OF OPERATIONS


62CONSOLIDATED STATEMENTS OF STOCKHOLDERS
    EQUITY (DEFICIT)


63CONSOLIDATED STATEMENTS OF CASH FLOWS


64NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


65SCHEDULE II  VALUATION AND
    QUALIFYING ACCOUNTS


122    Rule 3-10 Regulation S-X,
 58




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm                59




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
            60




---



##### Table of Contents



INSIGHT
    HEALTH SERVICES HOLDINGS CORP. AND SUBSIDIARIES
 CONSOLIDATED
    BALANCE SHEETSAS OF JUNE 30, 2010 AND 2009
    (Amounts in thousands, except share data)  2010


2009ASSETSCURRENT ASSETS:Cash and cash equivalents

$
9,056


$
19,640Trade accounts receivables, net


22,594



25,594Other current assets


7,845



9,988Total current assets


39,495



55,222ASSETS HELD FOR SALE






2,700PROPERTY AND EQUIPMENT, net


73,315



79,837CASH, restricted


319



6,488INVESTMENTS IN PARTNERSHIPS


7,254



6,791OTHER ASSETS


296



208GOODWILL AND OTHER INTANGIBLE ASSETS, net


20,002



24,878$
140,681


$
176,124LIABILITIES AND STOCKHOLDERS DEFICITCURRENT LIABILITIES:Current portion of notes payable

$
154


$
242Current portion of capital lease obligations


1,279



1,468Accounts payable and other accrued expenses


25,275



36,037Total current liabilities


26,708



37,747LONG-TERM LIABILITIES:Notes payable, less current portion


286,199



279,726Capital lease obligations, less current portion


2,204



2,589Other long-term liabilities


764



1,408Deferred income taxes


5,462



6,792Total long-term liabilities


294,629



290,515COMMITMENTS AND CONTINGENCIES (Note 13)STOCKHOLDERS DEFICIT:Common stock, $.001 par value, 10,000,000 shares
    authorized, 8,644,444 shares issued and outstanding


9



9Additional paid-in capital


37,609



37,536Accumulated other comprehensive income


(212
)


(2,528
)Accumulated deficit


(220,741
)


(188,939
)Total stockholders equity (deficit) attributable to
    InSight Health Services Holdings Corp.


(183,335
)


(153,922
)Noncontrolling interest


2,679



1,784Total stockholders deficit


(180,656
)


(152,138
)$
140,681


$
176,124    61




---



##### Table of Contents



INSIGHT
    HEALTH SERVICES HOLDINGS CORP. AND SUBSIDIARIES
 CONSOLIDATED
    STATEMENTS OF OPERATIONSFOR THE YEARS ENDED JUNE 30, 2010 AND 2009,
    THE ELEVEN MONTHS ENDED 
    JUNE 30, 2008 AND THE ONE MONTH ENDED JULY 31, 2007
    (Amounts in thousands, except per share data)  Successor



PredecessorYear


Year


Eleven Months



One MonthEnded


Ended


Ended



EndedJune 30,


June 30,


June 30,



July 31,2010


2009


2008



2007REVENUES:Contract services

$
96,066


$
115,055


$
110,476



$
10,125Patient services


92,898



110,557



128,519




11,882Other operations


1,974



2,170



1,749




180Total revenues


190,938



227,782



240,744




22,187COSTS OF OPERATIONS:Costs of services


127,856



153,491



165,675




14,694Provision for doubtful accounts


4,390



4,021



5,790




389Equipment leases


10,641



10,950



9,246




760Depreciation and amortization


33,219



45,584



53,698




4,468Total costs of operations


176,106



214,046



234,409




20,311CORPORATE OPERATING EXPENSES


(20,191
)


(21,564
)


(25,744
)



(1,678
)EQUITY IN EARNINGS OF UNCONSOLIDATED PARTNERSHIPS


2,358



2,642



1,891




174INTEREST EXPENSE, net


(25,599
)


(30,164
)


(32,480
)



(2,918
)GAIN (LOSS) ON SALES OF CENTERS


118



7,885



(644
)



GAIN ON PURCHASE OF NOTES PAYABLE






12,065








IMPAIRMENT OF GOODWILL










(107,405
)



IMPAIRMENT OF OTHER LONG-LIVED ASSETS


(4,414
)


(5,308
)


(12,366
)



Loss before reorganization items and income taxes


(32,896
)


(20,708
)


(170,413
)



(2,546
)REORGANIZATION ITEMS, net















198,998(Loss) income before income taxes


(32,896
)


(20,708
)


(170,413
)



196,452(BENEFIT) PROVISION FOR INCOME TAXES


(1,832
)


(1,652
)


(2,009
)



62Net (loss) income


(31,064
)


(19,056
)


(168,404
)



196,390Less: net income attributable to noncontrolling interests


738



698



781




64Net loss attributable to InSight Health Services Holdings Corp

$
(31,802
)

$
(19,754
)

$
(169,185
)


$
196,326Basic and diluted (loss) income per common share

$
(3.68
)

$
(2.29
)

$
(19.57
)


$
227.23Weighted average number of basic and diluted common shares
    outstanding


8,644



8,644



8,644




864    62




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##### Table of Contents



INSIGHT
    HEALTH SERVICES HOLDINGS CORP. AND SUBSIDIARIES
 CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)FOR THE YEARS ENDED JUNE 30, 2010 AND 2009,
    THE ELEVEN MONTHS ENDED
    JUNE 30, 2008 AND THE ONE MONTH ENDED JULY 31, 2007
    (Amounts in thousands, except share data)  AccumulatedAdditional


Other





InSight





TotalCommon Stock


Paid-In


Comprehensive


Retained


Health Services


Noncontrolling


StockholdersShares


Amount


Capital


Gain (Loss)


Deficit


Holdings Corp.


Interest


EquityBALANCE AT JUNE 30, 2007


864,444


$
1


$
87,085


$
103


$
(328,621
)

$
(241,432
)

$
3,310


$
(238,122
)Net income from July 1 to July 31, 2007


















196,326



196,326



64



196,390Net contributions






























Fresh-start adjustments:Elimination of Predecessor common stock, additional paid-in
    capital, accumulated other comprehensive income and accumulated
    deficit


(864,444
)


(1
)


(87,085
)


(103
)


132,295



45,106







45,106Reorganization value ascribed to Successor










37,456











37,456







37,456BALANCE AT JULY 31, 2007 (PREDECESSOR)










37,456











37,456



3,374



40,830Issuance of 864,444 shares of common stock to existing
    stockholders


864,444



1















1







1Issuance of 7,780,000 shares of common stock to holders of
    senior subordinated notes


7,780,000



8



(8
)


















Share-based compensation










15











15







15Net loss from August 1, 2007 to June 30, 2008


















(169,185
)


(169,185
)


781



(168,404
)Net contributions


























(1,050
)


(1,050
)Other comprehensive income:Unrealized gain attributable to change in fair value of
    derivative














1,001







1,001







1,001Comprehensive loss






















(168,184
)






(168,184
)BALANCE AT JUNE 30, 2008 (SUCCESSOR)


8,644,444



9



37,463



1,001



(169,185
)


(130,712
)


3,105



(127,607
)Net loss


















(19,754
)


(19,754
)


698



(19,056
)Net contributions


























(2,019
)


(2,019
)Share-based compensation










73











73







73Other comprehensive income:Unrealized loss attributable to change in fair value of
    derivative














(3,529
)






(3,529
)






(3,529
)Comprehensive loss






















(23,283
)






(23,283
)BALANCE AT JUNE 30, 2009


8,644,444



9



37,536



(2,528
)


(188,939
)


(153,922
)


1,784



(152,138
)Net income (loss)


















(31,802
)


(31,802
)


738



(31,064
)Share-based compensation










73











73







73Net contributions


























157



157Other comprehensive income:Unrealized income attributable to change in fair value of
    interest rate contracts














2,316







2,316







2,316Comprehensive loss






















(29,486
)






(29,486
)BALANCE AT JUNE 30, 2010


8,644,444


$
9


$
37,609


$
(212
)

$
(220,741
)

$
(183,335
)

$
2,679


$
(180,656
)    63




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##### Table of Contents



INSIGHT
    HEALTH SERVICES HOLDINGS CORP. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED JUNE 30, 2010
    AND 2009, THE ELEVEN MONTHS
    ENDED JUNE 30, 2008 AND THE
    ONE MONTH ENDED JULY 31, 2007
  Successor



PredecessorYear


Year


Eleven Months



One MonthEnded


Ended


Ended



EndedJune 30,


June 30,


June 30,



July 31,2010


2009


2008



2007OPERATING ACTIVITIES:Net (loss) income

$
(31,064
)

$
(19,056
)

$
(168,404
)


$
196,390Adjustments to reconcile net (loss) income to net cash provided
    by (used in) operating activities:Cash used for reorganization items










4,764




3,263Noncash reorganization items















(207,025
)Depreciation and amortization


33,219



45,584



53,698




4,468Amortization of bond discount


5,881



5,375



4,522




Amortization of deferred financing costs















145Share-based compensation


73



73



15




Equity in earnings of unconsolidated partnerships


(2,358
)


(2,642
)


(1,891
)



(174
)Distributions from unconsolidated partnerships


2,485



2,645



2,563




58(Gain) loss on sales of centers


(118
)


(7,885
)


644




Gain on purchase of notes payable






(12,065
)







Gain on sales of equipment


(1,125
)


(1,000
)


(436
)



(336
)Impairment of goodwill










107,405




Impairment of other long-lived assets


4,414



5,308



12,366




Income tax related liabilities


(1,974
)


(2,223
)


(1,864
)



Changes in operating assets and liabilities:Trade accounts receivables, net


3,000



7,854



7,679




510Other current assets


1,949



(2,639
)


(798
)



387Accounts payable, other accrued expenses and accrued interest
    subject to compromise















(1,634
)Accounts payable, other accrued expenses and accrued interest


(9,040
)


(1,616
)


(5,327
)



Net cash provided by (used in) operating activities before
    reorganization items


5,342



17,713



14,936




(3,948
)Cash used for reorganization items










(4,764
)



(3,263
)Net cash provided by (used in) operating activities


5,342



17,713



10,172




(7,211
)INVESTING ACTIVITIES:Acquisition of fixed-site centers, net of cash acquired


(918
)


(8,400
)







Proceeds from sales of centers


2,861



19,987



9,050




Proceeds from sales of equipment


1,797



1,322



1,012




436Decrease (increase) in restricted cash


6,169



1,584



(8,072
)



Additions to property and equipment


(23,483
)


(21,893
)


(8,262
)



Cash contribution into joint venture


(692
)











Other


25







154




117Net cash provided by (used in) investing activities


(14,241
)


(7,400
)


(6,118
)



553FINANCING ACTIVITIES:Principal payments of notes payable and capital lease obligations


(2,560
)


(2,303
)


(3,474
)



(470
)Purchase of floating rate notes






(8,438
)Proceeds from issuance of notes payable


1,215












12,768Principal borrowings (payments) on credit facility















(5,000
)Cash contributions from non-controlling interests


88












Distributions to non-controlling interests


(237
)


(934
)


(1,050
)



Other


(191
)











Net cash (used in) provided by financing activities


(1,685
)


(11,675
)


(4,524
)



7,298(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS:


(10,584
)


(1,362
)


(470
)



640Cash, beginning of period


19,640



21,002



21,472




20,832Cash, end of period

$
9,056


$
19,640


$
21,002



$
21,472SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Interest paid

$
19,954


$
25,271


$
24,004



$
8,184Income taxes paid


182



436



581




Equipment additions under capital leases










3,338




Non-cash acquisition


975



884








Non-cash contributions from non-controlling interests


306












    64




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##### Table of Contents



INSIGHT
    HEALTH SERVICES HOLDINGS CORP. AND SUBSIDIARIES
    NOTES TO CONSOLIDATED FINANCIALS STATEMENTS
    JUNE 30, 2010
  1.
    NATURE
    OF BUSINESS  Form 10-K, Form 10-K,
    2.
    REORGANIZATION  General
    Information
  No. 07-10700).
     65




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##### Table of Contents



Reorganization
    Items, net
      PredecessorOne MonthEndedJuly 31,2007Gain on discharge of debt

$
168,248Revaluation of assets and liabilities


38,674Professional fees


(4,962
)Consent fees


(2,954
)Other


(8
)$
198,998   Condensed
    Consolidated Fresh-Start Balance Sheet
          
    the market value of Holdings 8,644,444 shares of
    common stock from August 3, 2007, the date the shares first
    traded after consummation of the confirmed plan of
    reorganization, through September 30, 2007. The value range
    of Holdings common stock was estimated from a low of
    $35 million (based on $4 per share) to a 66




---



##### Table of Contents



high of $61 million (based on $7 per share). The range of
    enterprise value to correspond with the foregoing range would be
    from a low of $357 million to a high of $383 million.
    Management recognized that the common stock valuation approach
    may have been somewhat limited because the shares of common
    stock issued after the consummation of the confirmed plan of
    reorganization did not necessarily have the same liquidity as
    shares issued in connection with an underwritten public
    offering. Nevertheless, management primarily relied on this
    valuation method because (i) orderly observable trading
    activity in the common stock, though limited in volume, did take
    place, (ii) the trading activity did not indicate that the
    transactions were forced or distressed sales, and (iii) as
    articulated by the hierarchy of inputs set forth in ASC 820,
    observable inputs (regardless as to whether an active market
    exists) generally are more useful in calculating fair value than
    unobservable inputs, which require a reporting entity to develop
    its own assumptions.  
    the market value of the $194.5 million of senior
    subordinated notes for a period of time leading up to
    cancellation of such debt on the date of the consummation of the
    confirmed plan of reorganization. The value range of
    Insights senior subordinated notes was estimated from a
    low of $65 million to a high of $74 million during an
    approximate 30 day period of time leading up to the date of
    consummation of the plan. The range of enterprise value to
    correspond with the foregoing range would be from a low of
    $387 million to a high of $396 million.       67




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##### Table of Contents



Predecessor


Fresh-Start Adjustments


SuccessorReorganizedRevaluation


Balanceof Assets


SheetJuly 31,


Debt


and


August 1,2007


Discharge(a)


Liabilities(b)


2007ASSETSCurrent assets:Cash and cash equivalents

$
21,472


$



$



$
21,472Trade accounts receivables, net


42,173











42,173Other current assets


7,948







(195
)


7,753Total current assets


71,593







(195
)


71,398Property and equipment, net


140,345







18,295



158,640Investments in partnerships


3,529







7,698



11,227Other assets


7,731







(7,587
)


144Other intangible assets, net


30,111







5,889



36,000Goodwill


64,868







45,208



110,076$
318,177


$



$
69,308


$
387,485LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)Current liabilities:Current portion of notes payable and capital lease obligations

$
3,359


$



$



$
3,359Accounts payable and other accrued expenses


37,084











37,084Total current liabilities


40,443











40,443Long-term liabilities:Notes payable and capital lease obligations, less current portion


315,795







(21,818
)


293,977Liabilities subject to compromise


205,704



(205,704
)






Other long-term liabilities


8,365







7,243



15,608Total long-term liabilities


529,864



(205,704
)


(14,575
)


309,585Stockholders equity (deficit)PredecessorCommon stock


1







(1
)


Additional paid-in capital


87,085







(87,085
)


Accumulated other comprehensive income


103







(103
)


Accumulated deficit


(339,319
)


168,248



171,071



SuccessorCommon stock






8



1



9Additional paid-in capital






37,448







37,448Total stockholders equity (deficit)


(252,130
)


205,704



83,883



37,457$
318,177


$



$
69,308


$
387,485     (a)
    
    Debt Discharge. This reflects the cancellation of $205,704 of
    liabilities subject to compromise pursuant to the terms of the
    confirmed plan of reorganization. The holders of senior
    subordinated notes received 7,780 shares of Holdings
    common stock in satisfaction of such claims. 68




---



##### Table of Contents



(b)
    
    Revaluation of Assets and Liabilities. Fresh-start adjustments
    made to reflect asset and liability values at estimated fair
    value are summarized as follows:  
    Other current assets.  An adjustment of $195
    was recorded to decrease the value of deferred tax benefit.
    Property and equipment, net.  An adjustment of
    $18,295 was recorded to increase the net book value of property
    and equipment, net.
    Investments in partnerships.  An adjustment of
    $7,698 was recorded to recognize the estimated fair value of our
    investments in partnerships.
    Other assets.  Adjustments of $7,587 were
    recorded to reduce the value of deferred financing costs and the
    value of the interest rate cap contract.
    Other intangible assets, net.  An adjustment of
    $5,889 was recorded to recognize identifiable intangible assets.
    These intangible assets reflect the estimated fair value of our
    trademark, wholesale contracts and certificates of need. These
    assets will be subject to an annual impairment review (see
    Note 10).
    Goodwill.  An adjustment of $45,208 was
    recorded to reflect reorganization value of the successor equity
    in excess of the fair value of tangible and identified
    intangible assets and liabilities. This amount was determined as
    the stockholders deficit immediately prior to
    Holdings and Insights emergence from bankruptcy
    ($252,130), offset by the gain on discharge of debt ($168,248)
    and revaluation of assets and liabilities ($38,674). This amount
    was subsequently impaired as of June 30, 2008 (see
    Note 10).
    Notes payable.  An adjustment of $21,818 was
    recorded to reflect a net fair value discount associated with
    Insights senior secured floating rate notes due 2011, to
    be amortized in interest expense over the remaining life of such
    notes. The fair market value of the notes was determined based
    on the quoted market value as of August 1, 2007, which
    represented the present value of amounts to be paid at
    appropriate current interest rates.
    Other long-term liabilities.  An adjustment of
    $7,243 was recorded to increase the value of deferred tax
    liabilities related to the increase in value of our other
    indefinite-lived intangible assets.
    Total stockholders deficit.  The adoption
    of fresh-start reporting resulted in a new entity with no
    beginning retained earnings or accumulated deficit. The
    condensed consolidated balance sheet reflected initial
    stockholders equity value of approximately $37,457
    estimated as described above.  3.
    LIQUIDITY
    AND CAPITAL RESOURCES   69




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##### Table of Contents



4.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES  a.
    CONSOLIDATED
    FINANCIAL STATEMENTS   70




---



##### Table of Contents



b.
    USE OF
    ESTIMATES    c.
    REVENUE
    RECOGNITION    d.
    CASH,
    CASH EQUIVALENTS AND RESTRICTED CASH    e.
    TRADE
    ACCOUNTS RECEIVABLES   71




---



##### Table of Contents



f.
    LONG-LIVED
    ASSETS  Property and Equipment.
  Vehicles

3 to 8 yearsBuildings

7 to 20 yearsLeasehold improvements

Lesser of the useful life or term of leaseComputer and office equipment

3 to 5 yearsDiagnostic and related equipment

5 to 8 yearsEquipment and vehicles under capital leases

Lesser of the useful life or term of lease     Capitalized Internal Use Software Costs:
  Long-lived Asset Impairment.
  g.
    DEFERRED
    FINANCING COSTS    h.
    GOODWILL
    AND OTHER INTANGIBLE ASSETS   72




---



##### Table of Contents



i.
    INCOME
    TAXES    j.
    COMPREHENSIVE
    INCOME (LOSS)   73




---



##### Table of Contents



k.
    NEW
    PRONOUNCEMENTS              2009-05
     74




---



##### Table of Contents



2009-13, 2009-13 2009-13 2009-13
  5.
    TRADE
    ACCOUNTS RECEIVABLES    June 30,2010


2009Trade accounts receivables

$
41,922


$
48,571Less: Allowances for professional fees


(4,527
)


(5,654
)Allowances for contractual adjustments


(11,430
)


(12,919
)Allowances for doubtful accounts


(3,371
)


(4,404
)Trade accounts receivables, net

$
22,594


$
25,594       6.
    OTHER
    CURRENT ASSETS    June 30,2010


2009Prepaid expenses

$
4,696


$
6,789Amounts due from our unconsolidated partnerships(1)


2,216



2,844Other


933



355$
7,845


$
9,988  75




---



##### Table of Contents



(1)
    
    For the year ended June 30, 2010 we recorded a
    $0.1 million bad debt charge to write down a receivable due
    from an unconsolidated partnership to its estimated realizable
    value.  7.
    ASSETS
    HELD FOR SALE      Other current assets

$
122Property and equipment, net


2,578Total assets held for sale

$
2,700   8.
    PROPERTY
    AND EQUIPMENT    June 30,2010


2009Vehicles

$
2,237


$
1,927Land, building and leasehold improvements


19,659



12,577Computer and office equipment


19,599



15,370Diagnostic and related equipment


128,907



113,149Equipment and vehicles under capital leases


6,104



5,775Construction in progress


8,245



10,593184,751



159,391Less: Accumulated depreciation and amortization


(111,436
)


(79,554
)Property and equipment, net

$
73,315


$
79,837     9.
    ACQUISITIONS   76




---



##### Table of Contents



10.
    GOODWILL
    AND OTHER INTANGIBLE ASSETS    Goodwill


Trademark


Certificates of Need (CON)Contract


Patient





Contract


Contract


PatientServices


Services


Consolidated


Services


Services


Services


ConsolidatedPredecessorBalance at June 30, 2007

$
44,172


$
20,696


$
64,868


$
8,680


$



$



$
Fresh-start reporting adjustment(1)


18,676



26,532



45,208



220



5,600



5,000



10,600Balance at July 31, 2007


62,848



47,228



110,076



8,900



5,600



5,000



10,600SuccessorSales of centers(2)






(2,671
)


(2,671
)














Impairment(3)


(62,848
)


(44,557
)


(107,405
)


(1,500
)










Balance at June 30, 2008














7,400



5,600



5,000



10,600Impairment(4)














(2,200
)


(2,400
)






(2,400
)Disposition






















(935
)


(935
)Acquisition(5)






1,403



1,403











3,400



3,400Other(6)


















176



(176
)


Balance at June 30, 2009






1,403



1,403



5,200



3,376



7,289



10,665Impairment(7)














(1,600
)


(1,236
)


(1,577
)


(2,813
)Disposition


























Acquisition(8)






214



214















Other(9)


















470



(470
)


Balance at June 30, 2010

$



$
1,617


$
1,617


$
3,600


$
2,610


$
5,242


$
7,852     (1)
    
    See Note 2.(2)
    
    During the eleven months ended June 30, 2008 we sold seven
    fixed-site centers and our controlling interest in a joint
    venture that operated a fixed-site center. Goodwill associated
    with these centers was written-off and is included in loss on
    sales of centers in the consolidated statement of operations.(3)
    
    During the fourth quarter of fiscal 2008, we recorded goodwill
    impairment charges discussed below.(4)
    
    During the second quarter of fiscal 2009, we recorded impairment
    charge relating to our indefinite-lived assets discussed below.(5)
    
    During the fourth quarter of fiscal 2009, we acquired two
    fixed-site imaging centers in the Boston-metropolitan area.(6)
    
    During the fourth quarter of fiscal 2009, we discovered an error
    in the calculation of the value of our certificates of need, or
    CONs, for our mobile and fixed segments. We completed a
    quantitative and qualitative assessment of the error and
    determined that it was not material to either the second fiscal
    quarter or the fiscal year ended June 30, 2009. The
    adjustment of this error resulted in an increase in the value of
    our mobile CONs and an offsetting decrease in our fixed CONs.(7)
    
    During the second and fourth quarters of fiscal 2010, we
    recorded impairment charge relating to our indefinite-lived
    assets discussed below. 77




---



##### Table of Contents



(8)
    
    During the third quarter of fiscal 2010, we acquired a
    controlling equity interest in a joint venture with a prominent
    radiology group in the Dallas/Fort Worth, Texas area.(9)
    
    Reclassification adjustment resulting from re-defining our
    business segments. See Note 19.  Impairment
    Testing
  Fiscal year 2010:
  Fiscal year 2009:
  Fiscal year 2008:
   78




---



##### Table of Contents



June 30, 2010


June 30, 2009Gross





GrossCarrying


Accumulated


Carrying


AccumulatedValue


Amortization


Value


AmortizationAmortized intangible assets:Wholesale contracts

$
7,800


$
4,550


$
7,800


$
2,990Customer relationships(1)


3,800



117



2,800



Total

$
11,600


$
4,667


$
10,600


$
2,990     (1)
    
    During the third quarter of fiscal 2010, we acquired an equity
    interest in a joint venture with a prominent radiology group in
    the Dallas/Fort Worth, Texas area. See
    Note 9  Acquisitions.    Wholesale contracts

5 yearsCustomer relationships

30 years       2011

$
1,6832012


1,6832013


2532014


1232015


123Thereafter


3,069  79




---



##### Table of Contents



11.
    ACCOUNTS
    PAYABLE AND OTHER ACCRUED EXPENSES    June 30,2010


2009Accounts payable

$
2,126


$
4,664Accrued equipment related costs


1,487



1,717Accrued payroll and related costs


10,200



10,737Accrued interest expense


2,798



3,639Accrued professional and legal fees


1,646



2,015Asset retirement obligations & other center closure
    costs


779



1,483Accrued interest rate collar obligation


212



2,528Deferred revenue


440



737Other accrued expenses


5,587



8,517$
25,275


$
36,037   12.
    NOTES PAYABLE    June 30,2010


2009Senior secured floating rate notes payable (floating rate
    notes), bearing interest at three month LIBOR plus 5.25% (5.59%
    and 6.28% at June 30, 2010 and 2009, respectively),
    interest payable quarterly, principal due in November 2011. At
    June 30, 2010 and 2009, the fair value of the notes was
    approximately $123.3 million and $124.0 million,
    respectively

$
293,500


$
293,500Other notes payable


1,135



630Total notes payable


294,635



294,130Less: Unamortized discount on floating rate notes


(8,282
)


(14,162
)Less: Current portion


(154
)


(242
)Long-term notes payable

$
286,199


$
279,726      80




---



##### Table of Contents



letter-of-credit
      2011

$
1542012


293,6652013


1772014


1722015


156Thereafter


311$
294,635  81




---



##### Table of Contents



13.
    LEASE
    OBLIGATIONS, COMMITMENTS AND CONTINGENCIES    Capital


Operating2011

$
1,517


$
13,8452012


1,484



10,5082013


807



5,7282014


81



2,8292015






1,191Thereafter






1,615Total minimum lease payments


3,889


$
35,716Less: Amounts representing interest


(406
)Present value of capital lease obligations


3,483Less: Current portion


(1,279
)Long-term capital lease obligations

$
2,204           Kevin Harold and Denise Langhoff, on their own behalf and on
    behalf of others similarly situated v. InSight Health
    Services Holdings Corp., et al
    14.
    EQUITY
    AND SHARE-BASED COMPENSATION  Equity
  Common stock:
 82




---



##### Table of Contents



Stock options:
          WeightedWeighted


AverageWeighted


Average


RemainingNumber of


Average


Grant Date


ContractualOptions


Exercise Price


Fair Value


Term (years)SuccessorOutstanding, August 1, 2007










Granted


192,096



1.09



1.01Outstanding, June 30, 2008


192,096



1.09



1.01



9.83Granted


587,000



0.31



0.31Outstanding, June 30, 2009


779,096



0.50



0.48



8.95Granted


135,000



0.15



0.14



9.85Forfeited


(125,000
)


0.14



0.15



9.17Outstanding, June 30, 2010


789,096



0.50



0.48



8.18Exercisable at June 30, 2008






Exercisable at June 30, 2009


64,032



1.09Exercisable at June 30, 2010


128,064



1.09 83




---



##### Table of Contents



WeightedWeighted


AverageWeighted


Average


RemainingNumber of


Average


Grant Date


ContractualOptions


Exercise Price


Fair Value


Term (years)PredecessorOutstanding, June 30, 2007


124,830



111.85



42.13Forfeited


(124,830
)


111.85



42.13Outstanding, July 31, 2007









$
Exercisable at June 30, 2007


46,010



92.56     Exercise Price

Weighted Average

Options

Total Options

Remaining ContractualRange

Exercise Price

Exercisable

Outstanding

Life$
0.15


$
0.15







40,000


9.5 years0.14



0.14







40,000


9.5 years0.15



0.15







70,000


8.42 years0.36



0.36







447,000


8.17 years1.01



1.01



64,032



96,048


7.83 years1.16



1.16



64,032



96,048


7.83 years128,064



789,096   Share-based
    compensation
      Year EndedJune 30,Assumptions

2010Weighted average extimated fair value per option granted

$
1.01Risk-free interest rate


2.16
%Volatility


113.00
%Expected dividend yield


0.00
%Estimated life


10.00 years  84




---



##### Table of Contents



15.
    INCOME
    TAXES    Successor



PredecessorYear


Year


Eleven Months



One MonthEnded


Ended


Ended



EndedJune 30,


June 30,


June 30,



July 31,2010


2009


2008



2007Current provision:Federal

$



$



$




$
State


(502
)


110



(72
)



62(502
)


110



(72
)



62Deferred taxes arising from temporary differences:Federal


(1,288
)


(1,429
)


(2,059
)



(11
)State


(42
)


(333
)


122




11Total deferred taxes arising from temporary differences


(1,330
)


(1,762
)


(1,937
)



Total (benefit) provision for income taxes

$
(1,832
)

$
(1,652
)

$
(2,009
)


$
62     Successor


PredecessorYear

Year

Eleven Months


One MonthEnded

Ended

Ended


EndedJune 30,

June 30,

June 30,


July 31,2010

2009

2008


2007Federal statutory tax rate


34.00
%


34.0
%


34.0
%



34.0
%State income taxes


8.5



(1.1
)







Permanent items and Other


0.0



(0.8
)







Impairment of goodwill and other intangible assets










1.1




Changes in valuation allowance


(38.9
)


(24.4
)


(33.9
)



(34.0
)Contingency Reserves


2.0












Net effective tax rate


5.6
%


7.7
%


1.1
%




%    85




---



##### Table of Contents



June 30,2010


2009Accrued expenses

$
1,408


$
1,756Property and equipment


(2,802
)


(780
)Other intangible assets


17,034



9,541Reserves


1,839



1,542Investments in partnerships


710



6,143State income taxes






346NOL carryforwards


61,739



52,180Other


127



102Net deferred asset


80,055



70,830Valuation allowance


(85,517
)


(77,622
)$
(5,462
)

$
(6,792
)         16.
    RETIREMENT
    SAVINGS PLAN   86




---



##### Table of Contents



17.
    INVESTMENTS
    IN AND TRANSACTIONS WITH PARTNERSHIPS      June 30,2010


2009Combined financial position:Current assets:Cash

$
4,206


$
4,267Trade accounts receivables, net


4,026



3,659Due from Insight


20



132Other


155



111Property and equipment, net


3,561



2,305Other assets


400



400Intangible assets, net


1,000



Total assets


13,368



10,874Current liabilities


(1,888
)


(1,587
)Due to Insight


(2,352
)


(2,976
)Long-term liabilities


(2,181
)


(337
)Net assets

$
6,947


$
5,974     Successor



PredecessorYear


Year


Eleven Months



One MonthEnded


Ended


Ended



EndedJune 30,


June 30,


June 30,



July 31,2010


2009


2008



2007Operating Results:Revenues

$
30,362


$
24,466


$
24,940



$
2,159Expenses


24,598



19,117



20,133




1,730Net income

$
5,764


$
5,349


$
4,807



$
429Equity in earnings of unconsolidated partnerships

$
2,358


$
2,642


$
1,891



$
174   18.
    RELATED
    PARTY TRANSACTIONS    19.
    SEGMENT
    INFORMATION  fee-for-service
 87




---



##### Table of Contents



fee-for-service
    Successor

Patient Services

Contract Services

Other Operations

ConsolidatedYear ended June 30, 2010Total revenues

$
92,898


$
96,066


$
1,974


$
190,938Equipment leases


2,150



8,491







10,641Depreciation and amortization


12,473



18,424



2,322



33,219Total costs of operations


92,436



80,611



3,059



176,106Corporate operating expenses










(20,191
)


(20,191
)Equity in earnings of unconsolidated partnerships


1,790



568







2,358Interest expense, net


(471
)


(580
)


(24,548
)


(25,599
)Gain on sales of centers


118











118Impairment of other long-lived
    assets


(1,577
)


(2,837
)






(4,414
)Income (loss) before income taxes


322



12,606



(45,824
)


(32,896
)Net Change in property and equipment


13,147



13,759



(1,885
)


25,021   Successor

Patient Services

Contract Services

Other Operations

ConsolidatedYear ended June 30, 2009Total revenues

$
110,557


$
115,055


$
2,170


$
227,782Equipment leases


1,896



9,023



31



10,950Depreciation and amortization


16,777



25,793



3,014



45,584Total costs of operations


113,264



97,050



3,732



214,046Corporate operating expenses










(21,564
)


(21,564
)Equity in earnings of unconsolidated partnerships


2,040



602







2,642Interest expense, net


(1,203
)


(1,345
)


(27,616
)


(30,164
)Gain on purchase of notes payable










12,065



12,065Gain on sales of centers


7,885











7,885Impairment of other long-lived
    assets


(708
)


(4,600
)






(5,308
)Income (loss) before income taxes


5,307



12,662



(38,677
)


(20,708
)Net Change in property and equipment


(4,434
)


9,898



4,714



10,178   88




---



##### Table of Contents



Successor

Patient Services

Contract Services

Other Operations

ConsolidatedEleven months ended June 30, 2008:Total revenues

$
128,519


$
110,476


$
1,749


$
240,744Equipment leases


1,649



7,597







9,246Depreciation and amortization


22,900



27,179



3,619



53,698Total costs of operations


130,963



99,210



4,236



234,409Corporate operating expenses










(25,744
)


(25,744
)Equity in earnings of unconsolidated partnerships


1,741



150







1,891Interest expense, net


(2,150
)


(2,313
)


(28,017
)


(32,480
)Gain on sales of centers


(644
)










(644
)Impairment of goodwill










(107,405
)


(107,405
)Impairment of other long-lived assets










(12,366
)


(12,366
)Income (loss) before income taxes


(3,497
)


9,103



(176,019
)


(170,413
)Net Change in property and equipment


4,463



1,093



2,704



8,260   Predecessor

Patient Services

Contract Services

Other Operations

ConsolidatedOne month ended July 31, 2007:Total revenues

$
11,882


$
10,125


$
180


$
22,187Equipment leases


113



647







760Depreciation and amortization


1,831



2,286



351



4,468Total costs of operations


11,803



8,095



413



20,311Corporate operating expenses










(1,678
)


(1,678
)Equity in earnings of unconsolidated partnerships


174











174Interest expense, net


(242
)


(290
)


(2,386
)


(2,918
)Income (loss) before income taxes


11



1,740



(4,297
)


(2,546
)Net Change in property and equipment














   20.
    HEDGING
    ACTIVITIES    pari passu
   89




---



##### Table of Contents



marked-to-market
  21.
    COMPREHENSIVE
    (LOSS) INCOME    Successor



PredecessorYear


Year


Eleven Months



One MonthEnded


Ended


Ended



EndedJune 30,


June 30,


June 30,



July 31,2010


2009


2008



2007Net (loss) income

$
(31,802
)

$
(19,754
)

$
(169,185
)


$
196,326Unrealized gain (loss) attributable to change in fair value of
    interest rate contracts


2,316



(3,529
)


1,001




Comprehensive (loss) income

$
(29,486
)

$
(23,283
)

$
(168,184
)


$
196,326   22.
    (LOSS)
    INCOME PER COMMON SHARE    23.
    FAIR
    VALUE MEASUREMENTS       90




---



##### Table of Contents



Fair Value Measurements UsingQuoted Price

Significant

Significantin Active

Other

OtherMarkets for

Observable

UnobservableIdentical Assets

Inputs

Inputs

ValuationAmount

(Level 1)

(Level 2)

(Level 3)(1)

TechniqueBalance at June 30, 2010:Interest rate cap  liability position

$
212


$



$
212


$




(c
)Balance at June 30, 2009:Interest rate collar  liability position


2,528







2,528







(c
)     Fair Value Measurements UsingQuoted Price


Significant


Significantin Active


Other


OtherMarkets for


Observable


UnobservableIdentical Assets


Inputs


Inputs


ValuationAmounts


(Level 1)


(Level 2)


(Level 3)(1)


TechniqueBalance as of December 31, 2009Indefinite-lived intangible assets(2)

$
13,916


$



$



$
13,916



(c
)Goodwill


1,403











1,403



(c
)Balance as of December 31, 2008Indefinite-lived intangible assets(2)


12,465











12,465



(c
)Trademarks


















(c
)       Fair Value Measurements UsingQuoted Price

Significant

Significantin Active

Other

OtherMarkets for

Observable

UnobservableJune 30,

Identical Assets

Inputs

Inputs

Valuation2010

(Level 1)

(Level 2)

(Level 3)(1)

TechniqueIndefinite-lived intangible assets

$
11,452


$



$



$
11,452



(c
)Goodwill


1,617











1,617



(c
)  91




---



##### Table of Contents



Fair Value Measurements UsingQuoted Price

Significant

Significantin Active

Other

OtherMarkets for

Observable

UnobservableAugust 1,

Identical Assets

Inputs

Inputs

Total

Valuation2007

(Level 1)

(Level 2)

(Level 3)(1)

Gain (Loss)

TechniqueProperty and equipment

$
158,640


$



$



$
158,640


$
18,295



(b
)Investments in partnerships


11,227











11,227



7,698



(b
)(c)Interest rate cap contract


144



144











(11
)


(a
)Indefinite-lived intangible assets(2)


19,500











19,500



(4,931
)


(c
)Definite-lived intangible assets(2)


16,500











16,500



10,820



(c
)Floating rate notes


289,800



289,800











21,981



(a
)Capital lease obligations and othernotes payable


7,536







7,536











(b
)     (1)
    
    These valuations were based on the present value of future cash
    flows for specific assets derived from our projections of future
    revenues, cash flows and market conditions. These cash flows
    were then discounted to their present value using a rate of
    return that considers the relative risk of not realizing the
    estimated annual cash flows and time value of money (see
    Note 4).(2)
    
    Note 10.  24.
    RESULTS
    OF QUARTERLY OPERATIONS (unaudited)  SuccessorFirst

Second

Third

FourthQuarter

Quarter

Quarter

Quarter

Total(Amounts in thousands, except per share data)2010:Revenues

$
50,141


$
47,612


$
46,359


$
46,826


$
190,938Costs of operations


45,392



43,610



43,191



43,913



176,106Net loss


(6,326
)


(8,437
)


(5,932
)


(10,369
)


(31,064
)Net loss attributable to Holdings


(6,592
)


(8,556
)


(6,057
)


(10,597
)


(31,802
)Basic and diluted net loss per common share


(0.76
)


(0.99
)


(0.70
)


(1.23
)


(3.68
)   SuccessorFirst

Second

Third

FourthQuarter

Quarter

Quarter

Quarter

Total(Amounts in thousands, except per share data)2009:Revenues

$
62,585


$
58,746


$
53,206


$
53,245



227,782Costs of operations


57,848



56,474



49,772



49,952



214,046Net loss


(6,965
)


(6,667
)


(3,242
)


(2,182
)


(19,056
)Net loss attributable to Holdings


(7,229
)


(6,773
)


(3,406
)


(2,346
)


(19,754
)Basic and diluted net loss per common share


(0.84
)


(0.78
)


(0.39
)


(0.27
)


(2.29
)   25.
    SUBSEQUENT
    EVENTS   92




---



##### Table of Contents



26.
    SUPPLEMENTAL
    CONDENSED CONSOLIDATED FINANCIAL INFORMATION  Regulation S-X Rule 3-10
  SUPPLEMENTAL
    CONDENSED CONSOLIDATING BALANCE SHEET
    JUNE 30, 2010
  Non-Guarantor


GuarantorHoldings


Insight


Subsidiaries


Subsidiaries


Eliminations


Consolidated(Amounts in thousands)(Successor)ASSETSCurrent assets:Cash and cash equivalents

$



$



$
6,706


$
2,350


$



$
9,056Trade accounts receivables, net










19,999



2,595







22,594Other current assets










7,689



156







7,845Intercompany accounts receivable


37,617



285,318



2,892







(325,827
)


Total current assets


37,617



285,318



37,286



5,101



(325,827
)


39,495Assets held for sale






















Property and equipment, net










67,379



5,936







73,315Cash, restricted










319











319Investments in partnerships










7,254











7,254Investments in consolidated subsidiaries


(220,952
)


(220,952
)


6,168







435,736



Other assets










296











296Goodwill and other intangible assets, net










15,142



4,860







20,002$
(183,335
)

$
64,366


$
133,844


$
15,897


$
109,909


$
140,681LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)Current liabilities:Current portion of notes payable and capital lease obligations

$



$



$
487


$
946


$



$
1,433Accounts payable and other accrued expenses










24,153



1,122







25,275Intercompany accounts payable










322,934



2,893



(325,827
)


Total current liabilities










347,574



4,961



(325,827
)


26,708Notes payable and capital lease obligations, less current portion






285,318



996



2,089







288,403Other long-term liabilities










6,226











6,226Total stockholders equity (deficit) attributable to
    InSight Health Services


(183,335
)


(220,952
)


(220,952
)


6,168



435,736



(183,335
)Noncontrolling interest














2,679







2,679Total stockholders equity (deficit)


(183,335
)


(220,952
)


(220,952
)


8,847



435,736



(180,656
)$
(183,335
)

$
64,366


$
133,844


$
15,897


$
109,909


$
140,681  93




---



##### Table of Contents



SUPPLEMENTAL
    CONDENSED CONSOLIDATING BALANCE SHEET
    JUNE 30, 2009
  Non-Guarantor


GuarantorHoldings


Insight


Subsidiaries


Subsidiaries


Eliminations


Consolidated(Amounts in thousands)(Successor)ASSETSCurrent assets:Cash and cash equivalents

$



$



$
17,443


$
2,197


$



$
19,640Trade accounts receivables, net










23,429



2,165







25,594Other current assets










9,766



222







9,988Intercompany accounts receivable


37,544



291,403



3,101







(332,048
)


Total current assets


37,544



291,403



53,739



4,584



(332,048
)


55,222Assets held for sale










2,700











2,700Property and equipment, net










74,820



5,017







79,837Cash, restricted










6,488











6,488Investments in partnerships










6,791











6,791Investments in consolidated subsidiaries


(191,466
)


(203,532
)


4,308







390,690



Other assets










208











208Goodwill and other intangible assets, net










21,233



3,645







24,878$
(153,922
)

$
87,871


$
170,287


$
13,246


$
58,642


$
176,124LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)Current liabilities:Current portion of notes payable and capital lease obligations

$



$



$
732


$
978


$



$
1,710Accounts payable and other accrued expenses










35,380



657







36,037Intercompany accounts payable










328,948



3,100



(332,048
)


Total current liabilities










365,060



4,735



(332,048
)


37,747Notes payable and capital lease obligations, less current portion






279,337



559



2,419







282,315Other long-term liabilities










8,200











8,200Total stockholders equity (deficit) attributable to
    InSight HealthServices Holdings Corp


(153,922
)


(191,466
)


(203,532
)


4,308



390,690



(153,922
)Noncontrolling interest














1,784







1,784Total stockholders equity (deficit)


(153,922
)


(191,466
)


(203,532
)


6,092



390,690



(152,138
)$
(153,922
)

$
87,871


$
170,287


$
13,246


$
58,642


$
176,124  94




---



##### Table of Contents



SUPPLEMENTAL
    CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
    FOR THE YEAR ENDED JUNE 30, 2010
  Non-Guarantor


GuarantorHoldings


Insight


Subsidiaries


Subsidiaries


Elimination


Consolidated(Amounts in thousands)(Successor)Total revenues

$



$



$
173,023


$
17,915


$



$
190,938Costs of services










116,586



11,270







127,856Provision for doubtful accounts










3,687



703







4,390Equipment leases










9,780



861







10,641Depreciation and amortization










30,711



2,508







33,219Total costs of operations










160,764



15,342







176,106Corporate operating expenses


(73
)






(20,118
)










(20,191
)Equity in earnings of unconsolidated partnerships










2,358











2,358Interest expense, net










(25,340
)


(259
)






(25,599
)Gain on sales of centers










118











118Gain on purchase of notes payable






















Impairment of long-lived assets










(4,414
)










(4,414
)Income (loss) before income taxes


(73
)






(35,137
)


2,314







(32,896
)Benefit for income taxes










(1,832
)










(1,832
)Income (loss) before equity in loss of consolidated subsidiaries


(73
)






(33,305
)


2,314







(31,064
)Equity in income (loss) of consolidated subsidiaries


(31,729
)


(31,729
)


1,576







61,882



Net income (loss)


(31,802
)


(31,729
)


(31,729
)


2,314



61,882



(31,064
)Less: net income attributable to noncontrolling interests














738







738Net loss attributable to InSight Health Services Corp

$
(31,802
)

$
(31,729
)

$
(31,729
)

$
1,576


$
61,882


$
(31,802
)  95




---



##### Table of Contents



SUPPLEMENTAL
    CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
    FOR THE YEAR ENDED JUNE 30, 2009
  Non-Guarantor


GuarantorHoldings


Insight


Subsidiaries


Subsidiaries


Elimination


Consolidated(Amounts in thousands)(Successor)Total revenues

$



$



$
202,919


$
24,863


$



$
227,782Costs of services










137,656



15,835







153,491Provision for doubtful accounts










3,219



802







4,021Equipment leases










9,626



1,324







10,950Depreciation and amortization










41,520



4,064







45,584Total costs of operations










192,021



22,025







214,046Corporate operating expenses


(73
)






(21,491
)










(21,564
)Equity in earnings of unconsolidated partnerships










2,642











2,642Interest expense, net










(29,712
)


(452
)






(30,164
)Gain on sales of centers










7,885











7,885Gain on purchase of notes payable






12,065















12,065Inpairment of long-lived assets










(5,308
)










(5,308
)Income (loss) before income taxes


(73
)


12,065



(35,086
)


2,386







(20,708
)Benefit for income taxes










(1,652
)










(1,652
)Income (loss) before equity in loss of consolidated subsidiaries


(73
)


12,065



(33,434
)


2,386







(19,056
)Equity in income (loss) of consolidated subsidiaries


(19,681
)


(31,746
)


1,688







49,739



Net income (loss)


(19,754
)


(19,681
)


(31,746
)


2,386



49,739



(19,056
)Less: net income attributable to noncontrolling interests














698







698Net loss attributable to InSight Health Services Corp

$
(19,754
)

$
(19,681
)

$
(31,746
)

$
1,688


$
49,739


$
(19,754
)  96




---



##### Table of Contents



SUPPLEMENTAL
    CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
    FOR THE ELEVEN MONTHS ENDED JUNE 30, 2008
  Non-Guarantor


GuarantorHoldings


Insight


Subsidiaries


Subsidiaries


Elimination


Consolidated(Amounts in thousands) (Successor)Total revenues

$



$



$
209,907


$
30,837


$



$
240,744Costs of services










145,103



20,572







165,675Provision for doubtful accounts










4,278



1,512







5,790Equipment leases










7,919



1,327







9,246Depreciation and amortization










46,817



6,881







53,698Total costs of operations










204,117



30,292







234,409Corporate operating expenses










(25,744
)










(25,744
)Equity in earnings of unconsolidated partnerships










1,891











1,891Interest expense, net










(31,888
)


(592
)






(32,480
)Loss on sales of centers










(644
)










(644
)Impairment of goodwill










(107,405
)










(107,405
)Impairment of other long-lived assets










(12,366
)










(12,366
)Loss before income taxes










(170,366
)


(47
)






(170,413
)Benefit for income taxes










(2,009
)










(2,009
)Loss before equity in loss of consolidated subsidiaries










(168,357
)


(47
)






(168,404
)Equity in loss of consolidated subsidiaries


(169,185
)


(169,185
)


(828
)






339,198



Net loss


(169,185
)


(169,185
)


(169,185
)


(47
)


339,198



(168,404
)Less: net income attributable to noncontrolling interests














781







781Net loss attributable to InSight Health Services Corp

$
(169,185
)

$
(169,185
)

$
(169,185
)

$
(828
)

$
339,198


$
(169,185
)  97




---



##### Table of Contents



SUPPLEMENTAL
    CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
    FOR THE ONE MONTH ENDED JULY 31, 2007
  Non-Guarantor


GuarantorHoldings


Insight


Subsidiaries


Subsidiaries


Elimination


Consolidated(Amounts in thousands) (Predecessor)Total revenues

$



$



$
19,422


$
2,765


$



$
22,187Costs of services










12,865



1,829







14,694Provision for doubtful accounts










323



66







389Equipment leases










658



102







760Depreciation and amortization










3,956



512







4,468Total costs of operations










17,802



2,509







20,311Gross profit










1,620



256







1,876Corporate operating expenses










(1,678
)










(1,678
)Equity in earnings of unconsolidated partnerships










174











174Interest expense, net










(2,854
)


(64
)






(2,918
)(Loss) income before reorganization items and income taxes










(2,738
)


192







(2,546
)Reorganization items, net






168,248



30,750











198,998Income before income taxes






168,248



28,012



192







196,452Provision for income taxes










62











62Income before equity in income of consolidated subsidiaries






168,248



27,950



192







196,390Equity in income of consolidated subsidiaries


196,326



28,078



128







(224,532
)


Net income


196,326



196,326



28,078



192



(224,532
)


196,390Less: net income attributable to noncontrolling interests














64







64Net loss attributable to InSight Health Services Corp

$
196,326


$
196,326


$
28,078


$
128


$
(224,532
)

$
196,326  98




---



##### Table of Contents



SUPPLEMENTAL
    CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
    FOR THE YEAR ENDED JUNE 30, 2010
  Non-Guarantor


GuarantorHoldings


Insight


Subsidiaries


Subsidiaries


Eliminations


Consolidated(Amounts in thousands)OPERATING ACTIVITIES:Net loss

$
(31,802
)

$
(31,729
)

$
(31,729
)

$
2,314


$
61,882


$
(31,064
)Adjustments to reconcile net loss to net cash provided by
    operating activities:Depreciation and amortization










30,711



2,508







33,219Amortization of bond discount










5,881











5,881Share-based compensation


73



















73Equity in earnings of unconsolidated partnerships










(2,358
)










(2,358
)Distributions from unconsolidated partnerships










2,485











2,485Gain on sales of equipment










(1,125
)










(1,125
)Gain on sales of centers










(118
)










(118
)Impairment of other long-lived assets










4,414











4,414Deferred income taxes










(1,974
)










(1,974
)Equity in loss of consolidated subsidiaries


31,729



31,729



(1,576
)






(61,882
)


Changes in operating assets and liabilities:Trade accounts receivables, net










3,430



(430
)






3,000Intercompany receivables, net










22



(22
)






Other current assets










2,067



(118
)






1,949Accounts payable and other accrued expenses










(9,124
)


84







(9,040
)Net cash provided by operating activities










1,006



4,336







5,342INVESTING ACTIVITIES:Proceeds from sales of centers










2,861











2,861Proceeds from sales of equipment










1,797











1,797Additions to property and equipment










(20,546
)


(2,937
)






(23,483
)Acquisition of fixed-site centers










(275
)


(643
)






(918
)Cash contribution to Joint Venture










(692
)










(692
)Decrease (increase) in restricted cash










6,169











6,169Other










25











25Net cash used in investing activities










(10,661
)


(3,580
)






(14,241
)FINANCING ACTIVITIES:Principal payments of notes payable and capital lease obligations










(1,082
)


(1,478
)






(2,560
)Proceeds from issuance of notes payable














1,215







1,215Cash contributions from non-controlling interest














88







88Distributions to non-controlling interest














(237
)






(237
)Other














(191
)






(191
)Net cash used in financing activities










(1,082
)


(603
)






(1,685
)INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS










(10,737
)


153







(10,584
)Cash, beginning of period










14,653



4,987







19,640Cash, end of period

$



$



$
3,916


$
5,140


$



$
9,056  99




---



##### Table of Contents



SUPPLEMENTAL
    CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
    FOR THE YEAR ENDED JUNE 30, 2009
  Non-Guarantor


GuarantorHoldings


Insight


Subsidiaries


Subsidiaries


Eliminations


Consolidated(Amounts in thousands)(Successor)OPERATING ACTIVITIES:Net loss

$
(19,754
)

$
(19,681
)

$
(31,746
)

$
2,386


$
49,739


$
(19,056
)Adjustments to reconcile net loss to net cash provided by
    operating activities:Depreciation and amortization










41,520



4,064







45,584Amortization of bond discount










5,375











5,375Share-based compensation


73



















73Equity in earnings of unconsolidated partnerships










(2,642
)










(2,642
)Distributions from unconsolidated partnerships










2,645











2,645Gain on sales of centers










(5,033
)


(2,852
)






(7,885
)Gain on purchase of notes payable






(12,065
)














(12,065
)Impairment of other long-lived assets










5,308











5,308Gain on sales of equipment










(1,000
)










(1,000
)Deferred income taxes










(2,223
)










(2,223
)Equity in loss of consolidated subsidiaries


19,681



31,746



(1,688
)






(49,739
)


Changes in operating assets and liabilities:Trade accounts receivables, net










6,088



1,766







7,854Intercompany receivables, net










10,536



(10,536
)






Other current assets










(2,368
)


(271
)






(2,639
)Accounts payable and other accrued expenses










533



(2,149
)






(1,616
)Net cash provided by (used in) operating activities










25,305



(7,592
)






17,713INVESTING ACTIVITIES:Acquisition of fixed-site centers










(8,400
)










(8,400
)Proceeds from sales of centers










10,909



9,078







19,987Proceeds from sales of equipment










1,322











1,322Increase in restricted cash










1,584











1,584Additions to property and equipment










(20,943
)


(950
)






(21,893
)Other










(2,163
)


2,163







Net cash provided by (used in) investing activities










(17,691
)


10,291







(7,400
)FINANCING ACTIVITIES:Principal payments of notes payable and capital lease obligations










(438
)


(1,865
)






(2,303
)Purchase of floating rate notes










(8,438
)










(8,438
)Distributions to non-controlling interests














(934
)






(934
)Net cash used in financing activities










(8,876
)


(2,799
)






(11,675
)INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS










(1,262
)


(100
)






(1,362
)Cash, beginning of period










15,915



5,087







21,002Cash, end of period

$



$



$
14,653


$
4,987


$



$
19,640  100




---



##### Table of Contents



SUPPLEMENTAL
    CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
    FOR THE ELEVEN MONTHS ENDED JUNE 30, 2008
  Non-Guarantor


GuarantorHoldings


Insight


Subsidiaries


Subsidiaries


Eliminations


Consolidated(Amounts in thousands)(Successor)OPERATING ACTIVITIES:Net loss

$
(169,185
)

$
(169,185
)

$
(169,185
)

$
(47
)

$
339,198


$
(168,404
)Adjustments to reconcile net loss to net cash provided by
    operating activities:Cash used for reorganization items










4,764











4,764Depreciation and amortization










47,623



6,075







53,698Amortization of bond discount










4,522











4,522Share-based compensation










15











15Equity in earnings of unconsolidated partnerships










(1,891
)










(1,891
)Distributions from unconsolidated partnerships










2,563











2,563Loss on sales of centers










644











644Gain on sales of equipments










(436
)










(436
)Impairment of goodwill










107,405











107,405Impairment of other long-lived assets










12,366











12,366Deferred income taxes










(1,864
)










(1,864
)Equity in loss of consolidated subsidiaries


169,185



169,185



828







(339,198
)


Changes in operating assets and liabilities:






















Trade accounts receivables, net










6,785



894







7,679Intercompany receivables, net










1,893



(1,893
)






Other current assets










(742
)


(56
)






(798
)Accounts payable and other accrued expenses










(5,471
)


144







(5,327
)Net cash provided by operating activities before reorganization
    items










9,819



5,117







14,936Cash used for reorganization items










(4,764
)










(4,764
)Net cash provided by operating activities










5,055



5,117







10,172INVESTING ACTIVITIES:Proceeds from sales of centers










9,050











9,050Proceeds from sales of equipment










1,012











1,012Increase in restricted cash










(8,072
)










(8,072
)Additions to property and equipment










(7,798
)


(464
)






(8,262
)Other










132



22







154Net cash used in investing activities










(5,676
)


(442
)






(6,118
)FINANCING ACTIVITIES:Principal payments of notes payable and capital lease obligations










(1,689
)


(1,785
)






(3,474
)Distributions to noncontrolling interest














(1,050
)






(1,050
)Net cash used in financing activities










(1,689
)


(2,835
)






(4,524
)INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS










(2,310
)


1,840







(470
)Cash, beginning of period










18,225



3,247







21,472Cash, end of period

$



$



$
15,915


$
5,087


$



$
21,002  101




---



##### Table of Contents



SUPPLEMENTAL
    CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
    FOR THE ONE MONTH ENDED JULY 31, 2007
  Non-Guarantor


GuarantorHoldings


Insight


Subsidiaries


Subsidiaries


Eliminations


Consolidated(Amounts in thousands)(Predecessor)OPERATING ACTIVITIES:Net income

$
196,326


$
196,326


$
28,078


$
192


$
(224,532
)

$
196,390Adjustments to reconcile net income to net cash (used in)
    provided by operating activities:Cash used for reorganization items










3,263











3,263Noncash reorganization items






(168,248
)


(38,777
)










(207,025
)Depreciation and amortization










3,956



512







4,468Amortization of deferred financing costs










145











145Equity in earnings of unconsolidated partnerships










(174
)










(174
)Distributions from unconsolidated partnerships










58











58Equity in loss income of consolidated subsidiaries


(196,326
)


(28,078
)


(128
)






224,532



Gain on sales of equipment










(336
)










(336
)Changes in operating assets and liabilities:Trade accounts receivables, net










223



287







510Intercompany receivables, net






(7,768
)


8,208



(440
)






Other current assets










425



(38
)






387Accounts payable and other accrued expenses










(1,714
)


80







(1,634
)Net cash (used in) provided by operating activities before
    reorganization items






(7,768
)


3,227



593







(3,948
)Cash used for reorganization items










(3,263
)










(3,263
)Net cash (used in) provided by operating activities






(7,768
)


(36
)


593







(7,211
)INVESTING ACTIVITIES:Proceeds from sales of equipment










436











436Other










171



(54
)






117Net cash provided by investing activities










607



(54
)






553FINANCING ACTIVITIES:Principal payments of notes payable and capital lease obligations










(306
)


(164
)






(470
)Principal payments on credit facility






(5,000
)














(5,000
)Proceeds from issuance of notes payable






12,768















12,768Net cash provided by (used in) financing activities






7,768



(306
)


(164
)






7,298INCREASE IN CASH AND CASH EQUIVALENTS










265



375







640Cash, beginning of period










17,960



2,872







20,832Cash, end of period

$



$



$
18,225


$
3,247


$



$
21,472  102




---



##### Table of Contents



ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  Rule 13a-15(b) Rules 13a-15(e) 15d-15(e)
  Internal
    Control over Financial Reporting
  Rules 13a-15(f) 15d-15(f)
    Form 10-K
 103




---



##### Table of Contents



ITEM 9B.
    OTHER
    INFORMATION   PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  Board
    Structure
    Directors
    and Executive Officers
  Rule 3b-7
  Name

Age

TitleWayne B. Lowell


55


Chairman of the Board and DirectorEugene Linden


63


DirectorRichard Nevins


63


DirectorKeith E. Rechner


52


DirectorSteven G. Segal


50


DirectorJames A. Ovenden


47


DirectorLouis E. Hallman, III


51


President and Chief Executive Officer and DirectorPatricia R. Blank


60


Executive Vice President  Business Process ManagementDonald F. Hankus


56


Executive Vice President and Chief Information Officer of InsightBernard J. ORourke


50


Executive Vice President and Chief Operating OfficerKeith S. Kelson


43


Executive Vice President and Chief Financial OfficerMichael Jones


60


Senior Vice President, General Counsel and SecretaryClark Nielsen


56


Senior Vice President  Sales and MarketingScott A.
    McKee


35


Senior Vice President  Strategic Development   Wayne B. Lowell
 104




---



##### Table of Contents



Eugene Linden
  Richard Nevins
  Keith E. Rechner
  Steven G. Segal Executive-in-Residence/Lecturer
  James A. Ovenden
 105




---



##### Table of Contents



Louis E. Hallman, III
  Patricia R. Blank
  Donald F. Hankus
  Bernard J. O Rourke
  Keith S. Kelson
  Michael C. Jones
 106




---



##### Table of Contents



Clark Nielsen
  Scott A.
    McKee
  Audit
    Committee
    http:
    //www.Insighthealth.com/articles/boarddocs/Audit%20Committee%20Charter.pdf. Form 10-K.
  
    Prepare the audit committee report required by SEC rules to be
    included in the Companys annual proxy statement.
    Assist the Board of Directors in fulfilling its responsibility
    to oversee management regarding:  
    the conduct and integrity of the Companys financial
    reporting to any governmental or regulatory body, stockholders,
    other users of the Companys financial reports, and the
    public;
    the Companys legal and regulatory compliance;
    the qualifications, engagement, compensation, independence, and
    performance of the Companys independent registered public
    accounting firm, its conduct of the annual audit of the
    Companys consolidated financial statements, and its
    engagement to provide any other services; and
    the performance of the Companys internal audit function
    and systems of internal control over financial reporting and
    disclosure controls and procedures.
    Maintain through regularly-scheduled meetings, a line of
    communication between the Board of Directors and the
    Companys management, internal auditor and the independent
    registered public accounting firm.   107




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Compensation
    Committee
  http://www.Insighthealth.com/articles/boarddocs/Compensation%20Committee%20Charter.pdf. Form 10-K.
  
    review and recommend to the Board of Directors the compensation
    of the Chief Executive Officer;
    administer the Companys stock option or other equity-based
    compensation plans and programs; and
    oversee the Companys management compensation and benefits
    policies, including both qualified and non-qualified plans.  Nomination
    of Directors
    Code of
    Ethical Conduct
    ITEM 11.
    EXECUTIVE
    COMPENSATION  Summary
    Compensation Table
    FiscalYear



Non-EquityEnded



Incentive Plan

All Other

TotalName and Principal Position

June 30,

Salary

Compensation(1)

Compensation(2)

CompensationLouis E. Hallman, III


2010


$
435,000


$
41,054


$
36,579


$
512,633President and Chief Executive


2009



424,231



52,153



34,524



510,908OfficerPatricia R. Blank


2010



295,405



25,242



32,271



352,918Executive Vice President 


2009



293,193



25,843



43,157



362,193Business Process ManagementBernard ORourke


2010



288,393



21,040



31,482



340,915Executive Vice President 


2009



266,747



29,809



51,486



348,042Chief Operating OfficerKeith S. Kelson


2010



261,500



25,822



15,209



302,531Executive Vice President 


2009



168,000



19,283



10,991



198,274Chief Financial Officer     (1)
    
    The components of Non-Equity Incentive Plan Compensation are
    annual cash incentive awards, which are based on our financial
    performance and a named executives performance of his or
    her personal management objectives. These are earned and accrued
    during the fiscal year and paid subsequent to the end of each
    fiscal year. 108




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(2)
    
    Amounts of All Other Compensation are comprised of the following
    perquisites: (i) automobile allowances,
    (ii) automobile operating expenses, (iii) the
    Companys contributions to our 401(k) Savings Plan,
    (iv) specified premiums on executive life insurance
    arrangements, (v) specified premiums on executive health
    and disability insurance arrangements, and (vi) certain
    professional membership dues.  Annual Base Salary.
  Annual Cash Incentive Awards.
  
    80% based on the executive officers participation in
    Company PACC, and
    20% based on the executive officers performance relative
    to quarterly personal management objectives (PMOs).         109




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Long-Term Equity Awards.
  Additional Benefits and Perquisites.
  
    Medical Insurance.  At our sole cost, we
    provide to each named executive officer and certain other
    officers and their eligible dependents such health, dental and
    vision insurance as we may from time to time make available.
    Life and Long-Term Disability Insurance.  At
    our sole cost, we provide each named executive officer and
    certain other officers such long-term disability
    and/or life
    insurance as we in our sole discretion may from time to time
    make available.
    401(k) Savings Plan. Until May 2009, we made matching
    contributions to our 401(k) Savings Plan in an amount equal to
    fifty cents for each dollar of participant contributions, up to
    a maximum of 6% of the participants compensation for each
    pay period and subject to certain other limits. In May 2009, we
    made the match discretionary at the Companys election.
    Participation is not limited to officers, and all full-time
    employees are eligible to participate in the 401(k) Savings Plan.
    Automobile Allowance and Operating
    Expenses.  Mr. Hallman receives an automobile
    allowance of $1,000 per month, and the other named executive
    officers and certain other officers receive an automobile
    allowance of $750 per month. We pay the named executive
    officers and certain other officers expenses
    incidental to the operation of an automobile.  Employment
    Agreements
     110




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
    the executive has been convicted or pled guilty or no contest to
    any crime or offense (other than any crime or offense relating
    to the operation of an automobile) which is likely to have a
    material adverse impact on the business operations or financial
    or other condition of our business, or any felony offense;
    the executive has committed fraud or embezzlement;
    the executive has breached any of his or her obligations under
    the employment agreement and failed to cure the breach within 30
    business days following receipt of written notice of such breach;
    we, after reasonable investigation, find that the executive has
    violated our material written policies and procedures, including
    but not necessarily limited to, policies and procedures
    pertaining to harassment and discrimination;
    the executive has failed to obey a specific written direction
    from our Board of Directors (unless such specific written
    instruction represents an illegal act), provided that
    (i) such failure continues for a period of 30 business days
    after receipt of such specific written direction, and
    (ii) such specific written direction includes a statement
    that the failure to comply therewith will be a basis for
    termination hereunder; or
    any willful act or omission on the executives part which
    is materially injurious to our financial condition or business
    reputation.    
    the relocation by us, without the executives consent, of
    the executives principal place of employment to a site
    that is more than a specified number of miles from the
    executives principal residence;
    a reduction by us, without the executives consent, in the
    executives annual salary, duties and responsibilities, and
    title, as they may exist from time to time; or
    our failure to comply with any material provision of the
    employment agreement which is not cured within 30 days
    after notice of such noncompliance has been given by the
    executive, or if such failure is not capable of being cured in
    such time, for which a cure shall not have been diligently
    initiated by us within the 30 day period.    
    any person, or any two or more persons acting as a group, and
    all affiliates of such person or persons (a Group),
    who prior to such time beneficially owned less than 50% of our
    then outstanding capital stock shall acquire shares of our
    capital stock in one or more transactions or series of
    transactions, including by merger, and after such transaction or
    transactions such person or group and affiliates beneficially
    own 50% or more of our outstanding capital stock; or 111




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
    we sell all or substantially all of its assets to any Group
    which, immediately prior to the time of such transaction,
    beneficially owned less than 50% of our then outstanding capital
    stock.      Outstanding
    Equity Awards at Year End
    Number of

Number ofSecurities

SecuritiesUnderlying

UnderlyingUnexercised

Unexercised

Option

OptionOptions (#)

Options (#)

Exercise

Expiration

MarketNamed Executive Officer

Exercisable

Unexercisable(1)

Price

Date

ValueLouis E. Hallman, III






192,000


$
0.36



8/19/2018



Patricia R. Blank






65,000



0.36



8/19/2018



Bernard ORourke






85,000



0.36



8/19/2018



Keith S. Kelson






70,000



0.15



11/11/2018



     (1)
    
    The options will vest and become exercisable, if and only if, a
    refinancing event (as defined in the stock option agreements) is
    achieved prior to the expiration of the options.  Equity
    Compensation Plan Information
    Number of Securitiesto be Issued upon

Weighted-Average

Number of SecuritiesExercise of

Exercise Price of

Remaining Available forPlan Category

Outstanding Options

Outstanding Options

Future Issuance Under PlansEquity compensation plans approved by security holders


779,096


$
0.50



181,000Equity compensation plans not approved by security holders


0



0



0   Compensation
    of Directors
   112




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Fees Earnedor Paid

Option Awards

All OtherName

In Cash

(1)(2)

Compensation

TotalEugene Linden

$
46,000


$
12,192






$
58,192Wayne B. Lowell


73,504



12,192







85,696Richard Nevins


52,500



12,192







64,692James A. Ovenden


67,496



12,192







74,688Keith E. Rechner


57,004



12,192







69,196Steven G. Segal(3)


47,500



12,192







59,692     (1)
    
    Represents the dollar amount we recognized for financial
    statement reporting purposes in fiscal 2010 in accordance with
    Financial Accounting Standards Board Statement No. 123R.
    See Note 14 in our consolidated financial statements
    included in this
    Form 10-K.(2)
    
    On April 14, 2008, each of the non-employee directors was
    granted nonstatutory options to purchase 16,008 shares of
    common stock at $1.01 per share and 16,008 shares of common
    stock at $1.16 per share pursuant to the Director Plan subject
    to approval of the Director Plan by the Companys
    stockholders. Each set of options becomes exercisable in
    increments of one third (1/3) (5,366 per set) on
    December 31, 2008, 2009 and 2010. The options become
    immediately exercisable prior to a change of control of the
    Company. The options are scheduled to expire on August 14,
    2018.(3)
    
    Mr. Segals director/committee and meeting fees are
    paid to J.W. Childs Equity Partners II, L.P.  ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS  Rule 3b-7
 113




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c/o Insight
  Amount and Nature

Percent ofof Beneficial

Common StockOwnership of

BeneficiallyNames and Addresses of Beneficial Owners

Common Stock(1)

Owned(1)James D. Bennett(2)


2,040,000



23.6
%2 Stamford Plaza, Suite 1501 
    Stamford, Connecticut 06901Bennett Restructuring Fund, L.P.(3)


1,206,000



14.0
%2 Stamford Plaza, Suite 1501 
    Stamford, Connecticut 06901Bennett Offshore Restructuring Fund, Inc.(4)


730,000



8.4
%2 Stamford Plaza, Suite 1501 
    Stamford, Connecticut 06901Cohanzick Absolute Return Master Fund, Limited


994,564



11.5
%c/o Cohanzick
    Offshore Advisors, L.P.
    427 Bedsford Road 
    New York, New York 10022JPMorgan Chase & Co.(5)


741,220



8.5
%4 New York Plaza, 16th Floor 
    New York, NY 10004J.W. Childs Equity Partners II, L.P.(6)


687,641



8.0
%111 Huntington Avenue, Suite 2900 
    Boston, Massachusetts 02199Eugene Linden(7)


21,344



0.1
%Wayne B. Lowell(8)


21,344



0.1
%Richard Nevins(9)


21,344



0.1
%James A. Ovenden(10)


21,344



0.1
%Keith E. Rechner(11)


21,344



0.1
%Steven G. Segal(12)


21,344



0.1
%Louis E. Hallman, III(13)






Patricia R. Blank(14)






Bernard ORourke(15)






Keith S. Kelson(16)






All directors and executive officers as a group
    (14 persons)(17)






     (1)
    
    For purposes of this table, a person is deemed to have
    beneficial ownership of any security that such
    person has the right to acquire within 60 days of
    September 23, 2010.(2)
    
    Includes 1,206,000 shares of common stock owned directly by
    Bennett Restructuring Fund, L.P., 104,000 shares of common
    stock owned directly by affiliate BRF High Value, L.P. and
    730,000 shares of common stock owned directly by affiliate
    Bennett Offshore Restructuring Fund, Inc. The general partner of
    Bennett Restructuring Fund, L.P. and BRF High Value, L.P. is
    Restructuring Capital Associates, L.P., a Delaware limited
    partnership, and the general partner of Restructuring Capital
    Associates, L.P. is Bennett Capital Corporation, a Delaware
    corporation, of which James D. Bennett is President and sole
    stockholder. Mr. Bennett, Bennett Capital Corporation and
    Restructuring Capital Associates, L.P. may be deemed to
    beneficially own an aggregate of 1,310,000 shares of common
    stock held by Bennett Restructuring Fund, L.P. and BRF High
    Value, L.P. together. The investment manager of Bennett Offshore
    Restructuring Fund, Inc. is Bennett Offshore Investment
    Corporation, a Connecticut corporation, of which James D.
    Bennett is the President and, together with the BT
    Trust U/D 12/9/2004, the owner. Mr. Bennett, BT
    Trust U/D 12/9/2004 and Bennett Offshore Investment
    Corporation may be deemed to beneficially own the
    730,000 shares of common stock held by Bennett Offshore
    Restructuring Fund, Inc. Each of Mr. Bennett, BT Trust, 114




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Restructuring Capital Associates, L.P., Bennett Capital
    Corporation and Bennett Offshore Investment Corporation
    specifically disclaim beneficial ownership of the shares of
    common stock deemed to be beneficially owned except to the
    extent of his or its pecuniary interest therein.(3)
    
    Includes 1,206,000 shares of common stock owned directly by
    Bennett Restructuring Fund, L.P. The general partner of Bennett
    Restructuring Fund, L.P. is Restructuring Capital Associates,
    L.P., a Delaware limited partnership, and the general partner of
    Restructuring Capital Associates, L.P. is Bennett Capital
    Corporation, a Delaware corporation, of which James D. Bennett
    is President and sole stockholder. Mr. Bennett, Bennett
    Capital Corporation and Restructuring Capital Associates, L.P.
    may be deemed to beneficially own an aggregate of
    1,206,000 shares of common stock held by Bennett
    Restructuring Fund, L.P. Each of Mr. Bennett, Restructuring
    Capital Associates, L.P., and Bennett Capital Corporation
    specifically disclaim beneficial ownership of the shares of
    common stock deemed to be beneficially owned except to the
    extent of his or its pecuniary interest therein.(4)
    
    Includes 730,000 shares of common stock owned directly by
    Bennett Offshore Restructuring Fund, Inc. The investment manager
    of Bennett Offshore Restructuring Fund, Inc. is Bennett Offshore
    Investment Corporation, a Connecticut corporation, of which
    James D. Bennett is the President and, together with the BT
    Trust U/D 12/9/2004, the owner. Mr. Bennett, BT
    Trust U/D 12/9/2004 and Bennett Offshore Investment
    Corporation may be deemed to beneficially own the
    730,000 shares of common stock held by Bennett Offshore
    Restructuring Fund, Inc. Each of Mr. Bennett, BT
    Trust U/D 12/9/2004 and Bennett Offshore Investment
    Corporation specifically disclaim beneficial ownership of the
    shares of common stock deemed to be beneficially owned except to
    the extent of his or its pecuniary interest therein.(5)
    
    Includes 741,220 shares of common stock owned directly by
    J.P. Morgan Securities Inc., whose parent corporation is
    JPMorgan Chase & Co.(6)
    
    Includes 634,130 shares of common stock owned directly by
    J.W. Childs Equity Partners II, L.P. and 53,511 shares of
    our common stock owned directly by JWC-Insight Co-invest LLC, an
    affiliate of J.W. Childs Equity Partners II, L.P. The general
    partner of J.W. Childs Equity Partners II, L.P. is J.W. Childs
    Advisors II, L.P., a Delaware limited partnership. The general
    partner of J.W. Childs Advisors II, L.P. is J.W. Childs
    Associates, L.P., a Delaware limited partnership. The general
    partner of J.W. Childs Associates, L.P. is J.W. Childs
    Associates, Inc., a Delaware corporation. J.W. Childs Advisors
    II, L.P., J.W. Childs Associates, L.P. and J.W. Childs
    Associates, Inc. may be deemed to beneficially own the
    687,641 shares of our common stock held by J.W. Childs
    Equity Partners II, L.P. and JWC-Insight Co-invest LLC. John W.
    Childs, Glenn A. Hopkins, Adam L. Suttin, William E. Watts, and
    David Fiorentino, as well as Steven G. Segal (as indicated in
    footnote 12), share voting and investment control over, and
    therefore may be deemed to beneficially own, the shares of
    common stock held by these entities.(7)
    
    As the Chief Investment Strategist of Bennett Management
    Corporation, an affiliate of James D. Bennett, Mr. Linden
    may be deemed to beneficially own the shares of common stock
    beneficially held by Mr. Bennett and his affiliated
    entities. Mr. Linden disclaims beneficial ownership of such
    shares. Does not include (i) an option to purchase
    10,672 shares of our common stock at an exercise price of
    $1.01 per share and (ii) an option to purchase
    10,672 shares of our common stock at an exercise price of
    $1.16 per share, which are not yet exercisable. See
    Director Compensation for details regarding the
    grant of these options.(8)
    
    Does not include (i) an option to purchase
    10,672 shares of our common stock at an exercise price of
    $1.01 per share and (ii) an option to purchase
    10,672 shares of our common stock at an exercise price of
    $1.16 per share, which are not currently exercisable. See
    Director Compensation for details regarding the
    grant of these options.(9)
    
    Does not include (i) an option to purchase
    10,672 shares of our common stock at an exercise price of
    $1.01 per share and (ii) an option to purchase
    10,672 shares of our common stock at an exercise price of
    $1.16 per share, which are not yet exercisable. See
    Director Compensation for details regarding the
    grant of these options.(10)
    
    Does not include (i) an option to purchase
    10,672 shares of our common stock at an exercise price of
    $1.01 per share and (ii) an option to purchase
    10,672 shares of our common stock at an exercise price of
    $1.16 per share, which are not yet exercisable. See
    Director Compensation for details regarding the
    grant of these options.(11)
    
    Does not include (i) an option to purchase
    10,672 shares of our common stock at an exercise price of
    $1.01 per share and (ii) an option to purchase
    10,672 shares of our common stock at an exercise price of
    $1.16 per share, which are not yet exercisable. See
    Director Compensation for details regarding the
    grant of these options. 115




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##### Table of Contents



(12)
    
    As a Special Limited Partner of J.W. Childs Associates, L.P.,
    which manages
    J.W. Childs Equity Partners II, L.P.,
    and a member of JWC-Insight Co-invest LLC, Mr. Segal may be
    deemed to beneficially own the 634,130 shares of our common
    stock owned by
    J.W. Childs Equity Partners II, L.P.
    and the 53,511 shares of our common stock held directly by
    JWC-Insight Co-invest LLC. Mr. Segal disclaims beneficial
    ownership of such shares. Does not include (i) an option to
    purchase 10,672 shares of our common stock at an exercise
    price of $1.01 per share and (ii) an option to purchase
    10,672 shares of our common stock at an exercise price of
    $1.16 per share, which are not yet exercisable. See
    Director Compensation for details regarding the
    grant of these options.(13)
    
    Does not include an option to purchase 192,000 shares of
    our common stock at an exercise price of $0.36 per share, which
    is not yet exercisable. See Outstanding Equity Awards at
    Year End for details regarding the grant of these options.(14)
    
    Does not include an option to purchase 65,000 shares of our
    common stock at an exercise price of $0.36 per share, which is
    not yet exercisable. See Outstanding Equity Awards at Year
    End for details regarding the grant of these options.(15)
    
    Does not include an option to purchase 85,000 shares of our
    common stock at an exercise price of $0.36 per share, which is
    not yet exercisable. See Outstanding Equity Awards at Year
    End for details regarding the grant of these options.(16)
    
    Does not include an option to purchase 70,000 shares of our
    common stock at an exercise price of $0.15 per share, which
    is not yet exercisable. See Outstanding Equity Awards at
    Year End for details regarding the grant of these options.(17)
    
    Does not include options to 715,064 shares of our common
    stock at various exercise prices, which are not yet exercisable.  ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE  Compensation
    Committee Interlocks and Insider Participation
    Family-Member
    Relationship
  sister-in-law
  Policies
    and Procedures Regarding Related Persons and Code of Ethical
    Conduct
   116




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Form 8-K
  Director
    Independence
    ITEM 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES    2010


2009Audit Fees(1)

$
462,560


$
424,500Audit Related Fees






Tax Fees(2)


62,000



159,000Subtotal

$
524,560


$
583,500All Other Fees






Total Fees

$
524,560


$
583,500     (1)
    
    Audit Fees fees for auditing our annual
    consolidated financial statements, reviewing the condensed
    consolidated financial statements included in our quarterly
    reports on
    Form 10-Q
    and registration statement related to an exchange offer and
    other SEC filings.(2)
    
    Tax Fees fees for reviewing federal, state,
    and local income and franchise tax returns, tax research and
    other tax planning services.   117




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PART IV  ITEM 15.
    EXHIBITS,
    FINANCIAL STATEMENT SCHEDULES  ITEM 15
    (a) (1).
    FINANCIAL STATEMENTS    Reports of Independent Registered Public Accounting Firm


59Consolidated Balance Sheets


61Consolidated Statements of Operations


62Consolidated Statements of Stockholders Equity


63Consolidated Statements of Cash Flows


64Notes to Consolidated Financial Statements


65   ITEM 15  (a)
    (2).
    FINANCIAL
    STATEMENT SCHEDULES      ITEM 15  (a)
    (3).
    EXHIBITS  ExhibitNumber

Description and References*2
.1

Second Amended Joint Prepackaged Plan of Reorganization of
    Insight Health Services Holdings Corp. (the
    Company), et al. dated May 29, 2007, previously
    filed and incorporated herein by reference from the
    Companys Annual Report on
    Form 10-K,
    filed on September 21, 2007.*2
.2

Amended Plan Supplement of the Company, et al. dated
    July 7, 2007, previously filed and incorporated herein by
    reference from the Companys Annual Report on
    Form 10-K,
    filed on September 21, 2007.*3
.1

Amended and Restated Certificate of Incorporation of the
    Company, previously filed and incorporated herein by reference
    from the Companys Annual Report on
    Form 10-K,
    filed on September 21, 2007.*3
.2

Second Amended and Restated Bylaws of the Company, previously
    filed and incorporated herein by reference from the
    Companys Annual Report on
    Form 10-K,
    filed on September 21, 2007.*4
.1

Indenture, dated September 22, 2005, by and among Insight
    Health Services Corp. (Insight), the Company, the
    subsidiary guarantors (named therein) and U.S. Bank National
    Association, with respect to Senior Secured Floating Rate Notes
    due 2011, previously filed and incorporated herein by reference
    from Insights Registration Statement on
    Form S-4,
    filed on October 28, 2005.*4
.2

First Supplemental Indenture, dated as of May 18, 2006, to
    the Indenture dated September 22, 2005, previously filed
    and incorporated herein by reference from the Companys
    Annual Report on
    Form 10-K,
    filed on September 27, 2006.*4
.3

Second Supplemental Indenture, dated as of May 29, 2007, to
    the Indenture dated September 22, 2005, previously filed
    and incorporated herein by reference from the Companys
    Current Report on
    Form 8-K,
    filed on June 4, 2007.*4
.4

Third Supplemental Indenture, dated as of July 9, 2007, to
    the Indenture dated September 22, 2005, previously filed
    and incorporated herein by reference from the Companys
    Annual Report on
    Form 10-K,
    filed on September 21, 2007.*4
.5

Fourth Supplemental Indenture, dated as of December 16,
    2009, to the Indenture dated September 22, 2005, previously
    filed and incorporated herein by reference from the
    Companys Annual Report on
    Form 10-Q,
    filed on February 17, 2009.*4
.6

Security Agreement, dated September 22, 2005, by and among
    the Loan Parties (as defined therein) and U.S. Bank National
    Association, as Collateral Agent, previously filed and
    incorporated herein by reference from Insights
    Registration Statement on
    Form S-4,
    filed on October 28, 2005. 118




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##### Table of Contents



ExhibitNumber

Description and References*4
.7

Pledge Agreement, dated September 22, 2005, by and among
    the Loan Parties (as defined therein) and U.S. Bank National
    Association, as Collateral Agent, previously filed and
    incorporated herein by reference from Insights
    Registration Statement on
    Form S-4,
    filed on October 28, 2005.*4
.8

Collateral Agency Agreement, dated September 22, 2005,
    among the Loan Parties (as defined therein) and U.S. Bank
    National Association, as Trustee and Collateral Agent,
    previously filed and incorporated herein by reference from
    Insights Registration Statement on
    Form S-4,
    filed on October 28, 2005.*4
.9

Registration Rights Agreement, dated as of August 1, 2007,
    by and among the Company and certain holders of the
    Companys common stock, previously filed and incorporated
    herein by reference from the Companys Annual Report on
    Form 10-K,
    filed on September 21, 2007.*10
.1

Second Amended and Restated Loan and Security Agreement, dated
    August 31, 2007, by and among Insights subsidiaries
    listed therein, the lenders named therein and Bank of America,
    N.A. as collateral and administrative agent, previously filed
    and incorporated herein by reference from the Companys
    Current Report on
    Form 8-K,
    filed on August 7, 2007.*10
.2

Executive Employment Agreement, dated October 22, 2004,
    among Insight, the Company and Patricia R. Blank, previously
    filed and incorporated herein by reference from the
    Companys Current Report on
    Form 8-K,
    filed on January 26, 2005.*10
.3

Executive Employment Agreement, dated April 7, 2008, among
    Insight, and Louis E. Hallman, III, previously filed and
    incorporated herein by reference from the Companys Current
    Report on
    Form 8-K,
    filed on April 14, 2008.*10
.4

Executive Employment Agreement, dated August 10, 2005,
    among Insight, the Company and Donald F. Hankus, previously
    filed and incorporated herein by reference from the
    Companys Current Report on
    Form 8-K,
    filed on September 30, 2005.*10
.5

Form of Amended and Restated Indemnification Agreement,
    previously filed and incorporated herein by reference from the
    Companys Annual Report on
    Form 10-K,
    filed on September 22, 2005.*10
.6

Form of the Companys and Insights Indemnification
    Agreement, previously filed and incorporated herein by reference
    from the Companys Annual Report
    Form 10-K
    filed on September 21, 2007.*10
.7

The Companys 2008 Director Stock Option Plan,
    previously filed and incorporated herein by reference from the
    Companys Current Report on
    Form 8-K,
    filed on April 18, 2008.*10
.8

Form of the Companys 2008 Director Stock Option Plan
    Nonstatutory Stock Option Grant Agreement with an exercise price
    of $1.01 per share, previously filed and incorporated herein by
    reference from the Companys Current Report on
    Form 8-K,
    filed on April 18, 2008.*10
.9

Form of the Companys 2008 Director Stock Option Plan
    Nonstatutory Stock Option Grant Agreement with an exercise price
    of $1.16 per share, previously filed and incorporated herein by
    reference from the Companys Current Report on
    Form 8-K,
    filed on April 18, 2008.*10
.10

The Companys 2008 Employee Stock Option Plan previously
    filed and incorporated herein by reference from the
    Companys Current Report on
    Form 8-K,
    filed on April 18, 2008.*10
.11

Form of the Companys 2008 Employee Stock Option Plan
    Nonstatutory Stock Option Grant Agreement, previously filed and
    incorporated herein by reference from the Companys Current
    Report on
    Form 8-K,
    filed on April 18, 2008.*10
.12

Executive Employment Agreement dated May 15, 2008, by and
    between Insight and Bernard J. ORourke, previously filed
    and incorporated herein by reference from the Companys
    Current Report on
    Form 8-K,
    filed on May 21, 2008.*10
.13

Executive Employment Agreement dated October 27, 2008, by
    and between Insight and Keith S. Kelson, previously filed and
    incorporated herein by reference from the Companys Current
    Report on
    Form 8-K,
    filed on November 4, 2008.*10
.14

Executive Employment Agreement dated October 27, 2008, by
    and between Insight and Steven M. King, previously filed and
    incorporated herein by reference from the Companys Current
    Report on
    Form 8-K,
    filed on November 4, 2008.10
.15

First Amendment to Second Amended and Restated Loan and Security
    Agreement, dated September 20, 2010, by and among Insights
    subsidiaries listed therein, the lenders named therein and Bank
    of America, N.A. as collateral and administrative agent. 119




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##### Table of Contents



ExhibitNumber

Description and References21
.1

Subsidiaries of Company, filed herewith.31
.1

Certification of Louis E. Hallman, III, the Companys
    Chief Executive Officer, pursuant to
    Rule 15d-14
    of the Securities Exchange Act of 1934, filed herewith.31
.2

Certification of Keith S. Kelson, the Companys Chief
    Financial Officer, pursuant to
    Rule 15d-14
    of the Securities Exchange Act of 1934, filed herewith.32
.1

Certification of Louis E. Hallman, III, the Companys
    Chief Executive Officer, pursuant to 18 U.S.C.
    Section 1350, as adopted pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002, filed herewith.32
.2

Certification of Keith S. Kelson, the Companys Chief
    Financial Officer, pursuant to 18 U.S.C. Section 1350,
    as adopted pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002, filed herewith.     *
    
    Previously filed  ITEM 15(b).
    The
    Exhibits described above in Item 15(a)(3) are attached
    hereto or incorporated by reference herein, as
    noted.  ITEM 15(c).
    Not
    applicable. 120




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##### Table of Contents



SIGNATURES      By
    /s/  Louis
    E. Hallman, III  
      Signature

Title

Date/s/  Louis
    E. Hallman, IIILouis
    E. Hallman, III

President and Chief Executive Officer and Director 
    (Principal Executive Officer)

September 23, 2010/s/  Keith
    S. KelsonKeith
    S. Kelson

Executive Vice President and Chief Financial Officer 
    (Principal Financial and Accounting Officer)

September 23, 2010/s/  Wayne
    B. LowellWayne
    B. Lowell

Chairman of the Board and Director

September 23, 2010/s/  Eugene
    LindenEugene
    Linden

Director

September 23, 2010/s/  Richard
    NevinsRichard
    Nevins

Director

September 23, 2010/s/  James
    A. OvendenJames
    A. Ovenden

Director

September 23, 2010/s/  Keith
    E. RechnerKeith
    E. Rechner

Director

September 23, 2010/s/  Steven
    G. SegalSteven
    G. Segal

Director

September 23, 2010  121




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##### Table of Contents



SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED
    PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH
    HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF
    THE ACT.
  Form 10-K,
 SCHEDULE II
    INSIGHT HEALTH SERVICES HOLDINGS CORP. AND SUBSIDIARIES
    VALUATION AND QUALIFYING ACCOUNTS
    FOR THE YEARS ENDED JUNE 30, 2010 AND 2009,
    ELEVEN MONTHS ENDED JUNE 30, 2008 AND ONE MONTH ENDED JULY 31,
    2007  Balance at











Balance atBeginning of


Charges to


Charges to





End ofPeriod


Expenses


Revenues


Other


Period(Amounts in thousands)SuccessorYear ended June 30, 2010:Allowance for doubtful accounts

$
4,404


$
4,390


$



$
(5,423
)(A)

$
3,371Allowance for contractual adjustments


12,919







154,145



(155,634
)(B)


11,430Valuation Allowance on Deferred Taxes


77,622











7,895
(C)


85,517$
94,945


$
4,390


$
154,145


$
(153,162
)

$
100,318Year ended June 30, 2009:Allowance for doubtful accounts

$
8,518


$
3,986


$



$
(8,100
)(A)

$
4,404Allowance for contractual adjustments


15,401







125,694



(128,176
)(B)


12,919Valuation Allowance on Deferred Taxes


72,174











5,448
(C)


77,622$
96,093


$
3,986


$
125,694


$
(130,828
)

$
94,945Eleven months ended June 30, 2008:Allowance for doubtful accounts

$
12,515


$
5,790


$



$
(9,787
)(A)

$
8,518Allowance for contractual adjustments


21,518







153,002



(159,119
)(B)


15,401Valuation Allowance on Deferred Taxes


89,441











(17,267
)(C)


72,174$
123,474


$
5,790


$
153,002


$
(186,173
)

$
96,093PredecessorOne month ended July 31, 2007:Allowance for doubtful accounts

$
12,648


$
389


$



$
(522
)(A)

$
12,515Allowance for contractual adjustments


21,454







14,585



(14,521
)(B)


21,518Valuation Allowance on Deferred Taxes


89,441















89,441$
123,543


$
389


$
14,585


$
(15,043
)

$
123,474     (A)
    
    Write-off of uncollectible accounts.(B)
    
    Write-off of contractual adjustments, representing the
    difference between our charge for a procedure and what we
    receive from payors.(C)
    
    Changes due to increase or decreases in deferred tax assets and
    liabilities. 122




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber

Description and References*2
.1

Second Amended Joint Prepackaged Plan of Reorganization of
    Insight Health Services Holdings Corp. (the
    Company), et al. dated May 29, 2007, previously
    filed and incorporated herein by reference from the
    Companys Annual Report on
    Form 10-K,
    filed on September 21, 2007.*2
.2

Amended Plan Supplement of the Company, et al. dated
    July 7, 2007, previously filed and incorporated herein by
    reference from the Companys Annual Report on
    Form 10-K,
    filed on September 21, 2007.*3
.1

Amended and Restated Certificate of Incorporation of the
    Company, previously filed and incorporated herein by reference
    from the Companys Annual Report on
    Form 10-K,
    filed on September 21, 2007.*3
.2

Second Amended and Restated Bylaws of the Company, previously
    filed and incorporated herein by reference from the
    Companys Annual Report on
    Form 10-K,
    filed on September 21, 2007.*4
.1

Indenture, dated September 22, 2005, by and among Insight
    Health Services Corp. (Insight), the Company, the
    subsidiary guarantors (named therein) and U.S. Bank National
    Association, with respect to Senior Secured Floating Rate Notes
    due 2011, previously filed and incorporated herein by reference
    from Insights Registration Statement on
    Form S-4,
    filed on October 28, 2005.*4
.2

First Supplemental Indenture, dated as of May 18, 2006, to
    the Indenture dated September 22, 2005, previously filed
    and incorporated herein by reference from the Companys
    Annual Report on
    Form 10-K,
    filed on September 27, 2006.*4
.3

Second Supplemental Indenture, dated as of May 29, 2007, to
    the Indenture dated September 22, 2005, previously filed
    and incorporated herein by reference from the Companys
    Current Report on
    Form 8-K,
    filed on June 4, 2007.*4
.4

Third Supplemental Indenture, dated as of July 9, 2007, to
    the Indenture dated September 22, 2005, previously filed
    and incorporated herein by reference from the Companys
    Annual Report on
    Form 10-K,
    filed on September 21, 2007.*4
.5

Fourth Supplemental Indenture, dated as of December 16,
    2009, to the Indenture dated September 22, 2005, previously
    filed and incorporated herein by reference from the
    Companys Annual Report on
    Form 10-Q,
    filed on February 17, 2009.*4
.6

Security Agreement, dated September 22, 2005, by and among
    the Loan Parties (as defined therein) and U.S. Bank National
    Association, as Collateral Agent, previously filed and
    incorporated herein by reference from Insights
    Registration Statement on
    Form S-4,
    filed on October 28, 2005.*4
.7

Pledge Agreement, dated September 22, 2005, by and among
    the Loan Parties (as defined therein) and U.S. Bank National
    Association, as Collateral Agent, previously filed and
    incorporated herein by reference from Insights
    Registration Statement on
    Form S-4,
    filed on October 28, 2005.*4
.8

Collateral Agency Agreement, dated September 22, 2005,
    among the Loan Parties (as defined therein) and U.S. Bank
    National Association, as Trustee and Collateral Agent,
    previously filed and incorporated herein by reference from
    Insights Registration Statement on
    Form S-4,
    filed on October 28, 2005.*4
.9

Registration Rights Agreement, dated as of August 1, 2007,
    by and among the Company and certain holders of the
    Companys common stock, previously filed and incorporated
    herein by reference from the Companys Annual Report on
    Form 10-K,
    filed on September 21, 2007.*10
.1

Second Amended and Restated Loan and Security Agreement, dated
    August 31, 2007, by and among Insights subsidiaries
    listed therein, the lenders named therein and Bank of America,
    N.A. as collateral and administrative agent, previously filed
    and incorporated herein by reference from the Companys
    Current Report on
    Form 8-K,
    filed on August 7, 2007.*10
.2

Executive Employment Agreement, dated October 22, 2004,
    among Insight, the Company and Patricia R. Blank, previously
    filed and incorporated herein by reference from the
    Companys Current Report on
    Form 8-K,
    filed on January 26, 2005.*10
.3

Executive Employment Agreement, dated April 7, 2008, among
    Insight, and Louis E. Hallman, III, previously filed and
    incorporated herein by reference from the Companys Current
    Report on
    Form 8-K,
    filed on April 14, 2008.*10
.4

Executive Employment Agreement, dated August 10, 2005,
    among Insight, the Company and Donald F. Hankus, previously
    filed and incorporated herein by reference from the
    Companys Current Report on
    Form 8-K,
    filed on September 30, 2005. 123




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##### Table of Contents



ExhibitNumber

Description and References*10
.5

Form of Amended and Restated Indemnification Agreement,
    previously filed and incorporated herein by reference from the
    Companys Annual Report on
    Form 10-K,
    filed on September 22, 2005.*10
.6

Form of the Companys and Insights Indemnification
    Agreement, previously filed and incorporated herein by reference
    from the Companys Annual Report
    Form 10-K
    filed on September 21, 2007.*10
.7

The Companys 2008 Director Stock Option Plan,
    previously filed and incorporated herein by reference from the
    Companys Current Report on
    Form 8-K,
    filed on April 18, 2008.*10
.8

Form of the Companys 2008 Director Stock Option Plan
    Nonstatutory Stock Option Grant Agreement with an exercise price
    of $1.01 per share, previously filed and incorporated herein by
    reference from the Companys Current Report on
    Form 8-K,
    filed on April 18, 2008.*10
.9

Form of the Companys 2008 Director Stock Option Plan
    Nonstatutory Stock Option Grant Agreement with an exercise price
    of $1.16 per share, previously filed and incorporated herein by
    reference from the Companys Current Report on
    Form 8-K,
    filed on April 18, 2008.*10
.10

The Companys 2008 Employee Stock Option Plan previously
    filed and incorporated herein by reference from the
    Companys Current Report on
    Form 8-K,
    filed on April 18, 2008.*10
.11

Form of the Companys 2008 Employee Stock Option Plan
    Nonstatutory Stock Option Grant Agreement, previously filed and
    incorporated herein by reference from the Companys Current
    Report on
    Form 8-K,
    filed on April 18, 2008.*10
.12

Executive Employment Agreement dated May 15, 2008, by and
    between Insight and Bernard J. ORourke, previously filed
    and incorporated herein by reference from the Companys
    Current Report on
    Form 8-K,
    filed on May 21, 2008.*10
.13

Executive Employment Agreement dated October 27, 2008, by
    and between Insight and Keith S. Kelson, previously filed and
    incorporated herein by reference from the Companys Current
    Report on
    Form 8-K,
    filed on November 4, 2008.*10
.14

Executive Employment Agreement dated October 27, 2008, by
    and between Insight and Steven M. King, previously filed and
    incorporated herein by reference from the Companys Current
    Report on
    Form 8-K,
    filed on November 4, 2008.10
.15

First Amendment to Second Amended and Restated Loan and Security
    Agreement, dated September 20, 2010, by and among
    Insights subsidiaries listed therein, the lenders named
    therein and Bank of America, N.A. as collateral and
    administrative agent.21
.1

Subsidiaries of Company, filed herewith31
.1

Certification of Louis E. Hallman, III, the Companys
    Chief Executive Officer, pursuant to
    Rule 15d-14
    of the Securities Exchange Act of 1934, filed herewith.31
.2

Certification of Keith S. Kelson, the Companys Chief
    Financial Officer, pursuant to
    Rule 15d-14
    of the Securities Exchange Act of 1934, filed herewith.32
.1

Certification of Louis E. Hallman, III, the Companys
    Chief Executive Officer, pursuant to 18 U.S.C.
    Section 1350, as adopted pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002, filed herewith.32
.2

Certification of Keith S. Kelson, the Companys Chief
    Financial Officer, pursuant to 18 U.S.C. Section 1350,
    as adopted pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002, filed herewith.     *
    
    Previously filed 124