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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-Q







|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ending March 31, 2008

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission file number: 333-132913





MSCMedical Services Company

(Exact name of registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Florida                                                        |  | 59-2997634                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                                 |  |           
|------------------------------------------------ |  | ----------
|841 Prudential Drive, Suite 900 Jacksonville, FL |  | 32207     
|(Address of principal executive offices)         |  | (Zip Code)

(904) 646-0199

(Registrants telephone number, including area code)





The registrant has no
securities registered pursuant to Sections 12(b) or 12(g). The registrant files periodic reports under the Securities Exchange Act of 1934 solely to comply with requirements under that certain Indenture related to its Senior Secured Floating Rate
Notes due 2011. The Indenture and form of note are filed with the Securities and Exchange Commission as part of the registrant's Registration Statement on Form S-4, amended as of May 17, 2006.

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes  x    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of larger accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



| |  |                            |  |                              |  | 
| |  | -------------------------- |  | ---------------------------- |  | 
| |  | Large accelerated filer   ̈ |  | Accelerated filer   ̈         |  | 
| |  |                            | 
| |  | Non-accelerated filer  x   |  | Smaller reporting company   ̈ |  | 



Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ̈    No  x

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.



|                                        |  |                              
|--------------------------------------- |  | -----------------------------
|Class                                   |  | Outstanding at April 30, 2008
|Common Stock, $1.00 par value per share |  | 100 shares                   









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Table of Contents



|     |  |                                                                                                                |  |   
|---- |  | -------------------------------------------------------------------------------------------------------------- |  | --
|Item |  |                                                                                                                |  |   
|     |  |                                                                                                               
|     |  | Forward-Looking Statements                                                                                     |  | 3 
|     |  |                                                                                                               
|     |  | Part I  Financial Information                                                                                 |  |   
|     |  |                                                                                                               
|1.   |  | Financial Statements:                                                                                          |  |   
|     |  |                                                                                                               
|     |  | Condensed Consolidated Balance Sheets As of March 31, 2008 (Unaudited) and December 31, 2007                   |  | 6 
|     |  | Condensed Consolidated Statements of Operations (Unaudited) For the Three Months Ended March 31, 2008 and 2007 |  | 8 
|     |  | Condensed Consolidated Statements of Cash Flows (Unaudited) For the Three Months Ended March 31, 2008 and 2007 |  | 9 
|     |  | Notes to Condensed Consolidated Financial Statements                                                           |  | 10
|     |  |                                                                                                               
|2.   |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                          |  | 20
|     |  |                                                                                                               
|3.   |  | Quantitative and Qualitative Disclosures About Market Risk                                                     |  | 25
|     |  |                                                                                                               
|4.   |  | Controls and Procedures                                                                                        |  | 25
|     |  |                                                                                                               
|     |  | Part II  Other Information                                                                                    |  |   
|     |  |                                                                                                               
|1.   |  | Legal Proceedings                                                                                              |  | 25
|     |  |                                                                                                               
|1A.  |  | Risk Factors                                                                                                   |  | 25
|     |  |                                                                                                               
|2.   |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                    |  | 26
|     |  |                                                                                                               
|3.   |  | Defaults Upon Senior Securities                                                                                |  | 26
|     |  |                                                                                                               
|4.   |  | Submission of Matters to a Vote of Security Holders                                                            |  | 26
|     |  |                                                                                                               
|5.   |  | Other Information                                                                                              |  | 26
|     |  |                                                                                                               
|6.   |  | Exhibits                                                                                                       |  | 26
|     |  |                                                                                                               
|     |  | Signatures                                                                                                     |  | 27



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FORWARD-LOOKING STATEMENTS

Management may from time-to-time make written or oral forward-looking statements with respect to
the Companys annual or long-term goals, including statements contained in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K, and our Current Reports on Form 8-K filed with the Securities and Exchange Commission (the
SEC), and our press releases and other communications. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical earnings and those currently anticipated or projected.
Management cautions readers not to place undue reliance on any of the Companys forward-looking statements, which speak only as of the date made.

Words such as anticipates, expects, intends, plans, believes, seeks, estimates, may, could, and similar expressions identify
forward-looking statements. Forward-looking statements contained in this Quarterly Report on Form 10-Q that involve risks and uncertainties include, without limitation:



| |  |  | Managements expectation that gross margin and gross profit may be positively or adversely affected as a result of completed or ongoing requests for proposals;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Managements expectation that as the average wholesale price of pharmaceuticals move up or down, revenue and cost of revenue move correspondingly, leaving
gross profit margins largely unaffected, or that the use of generic drug pricing will improve profit margins;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Managements expectation that tax benefits will be utilized through the reversal of deferred tax liabilities in future periods; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | Managements expectation that current levels of operation and anticipated growth, cash from operations, together with other available sources of liquidity,
including borrowings available under its senior secured revolving credit facility, will be sufficient to fund its operations, anticipated capital expenditures and required payments on its debt for at least the next 12 months.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, management is
identifying important factors that could affect the Companys financial performance and could cause actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current
statements. The Companys future results could be adversely affected by a variety of factors, including:



| |  | the Companys dependence on sophisticated data processing software and hardware may impact business operations if they fail to operate properly or not as
anticipated;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the Companys net sales and operating results may fluctuate quarterly;
|- |  | ----------------------------------------------------------------------



| |  | operational disruptions due to natural disasters, particularly in regions susceptible to hurricanes;
|- |  | ----------------------------------------------------------------------------------------------------



| |  | the Companys inability to obtain certain medical supplies and pharmaceuticals, due to vendor supply disruptions;
|- |  | -----------------------------------------------------------------------------------------------------------------



| |  | increasing competitive pricing pressures on its sales to companys who are self-insured for workers compensation insurance and workers compensation
provider groups;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | government legislation or changes in government regulations that reduce workers compensation reimbursement rates that may have an adverse impact on the
Companys revenues in the Pharmaceutical and Medical Products and Services product lines;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the Companys dependence upon workers compensation claims volumes (which claims require the Companys products and services) either
maintaining their current levels or increasing;
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



3



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| |  | the Company has a growing dependency on its outsourcing partner to provide systems and support staff and a failure to perform by the partner could adversely impact
service and revenue as well as data reported in our financial statements;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the Companys dependence on a limited number of large customers;
|- |  | ----------------------------------------------------------------



| |  | the Companys ability to successfully restructure operations to remove operational and other costs associated with revenue declines due to the loss of a large
customer;
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the Company may not be able to continue to compete successfully with other medical supply companies and direct manufacturers;
|- |  | -----------------------------------------------------------------------------------------------------------------------------



| |  | continued consolidation within the healthcare industry may lead to increased competition;
|- |  | -----------------------------------------------------------------------------------------



| |  | the expansion of the multi-tiered pricing structure may place the Company at a competitive disadvantage;
|- |  | --------------------------------------------------------------------------------------------------------



| |  | the Companys dependence on the availability of lower cost, multi-tiered pricing of products;
|- |  | ---------------------------------------------------------------------------------------------



| |  | cost of goods sold may increase due to fuel surcharges from third parties;
|- |  | --------------------------------------------------------------------------



| |  | the Companys dependence on its ability to maintain good relations with customers and vendors;
|- |  | ----------------------------------------------------------------------------------------------



| |  | the loss of any significant agreements or the renegotiation of terms and conditions of existing agreements;
|- |  | -----------------------------------------------------------------------------------------------------------



| |  | the Companys ability to hire and retain qualified sales representatives to continue its sales growth;
|- |  | ------------------------------------------------------------------------------------------------------



| |  | the Companys ability to retain the services of senior management;
|- |  | ------------------------------------------------------------------



| |  | the Companys failure to execute its business plan and strategies for growth;
|- |  | -----------------------------------------------------------------------------



| |  | failure to successfully integrate acquisitions, which may lead to loss of key customers, employees, and failure to reach the returns necessary to justify the
investment;
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the Companys level of indebtedness, which may limit its ability to obtain financing in the future and may limit flexibility to react to market conditions;
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | tax legislative initiatives and potential interest and penalty exposure related to existing and future tax audits;
|- |  | ------------------------------------------------------------------------------------------------------------------



| |  | litigation and liability exposure for existing and potential claims;
|- |  | --------------------------------------------------------------------



| |  | failure to maintain an effective system of internal controls may impact the Companys ability to accurately report its financial results;
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------



| |  | failure to comply with Federal and state regulations pertaining to physical security, record-keeping, and required reporting related to the purchase, sale, and
distribution of controlled and legend drugs;
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | failure to comply with Federal and state regulations pertaining to filing claims for health care reimbursement or changes in the interpretation of those
requirements;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | willful circumvention of Federal and state regulations pertaining to filing claims for health care reimbursement by Company employees;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  | the adoption of new accounting pronouncements or Securities and Exchange Commission rules and regulations; and
|- |  | --------------------------------------------------------------------------------------------------------------



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| |  | the ongoing costs of complying with the provisions of Section 404 of the Sarbanes-Oxley Act.
|- |  | --------------------------------------------------------------------------------------------

In addition, all forward-looking statements are qualified by and should be read in conjunction with the risks described or referred to under the heading Risk
Factors included in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2007 filed with the SEC. We undertake no obligation to revise or publicly release the results of any revision to these
forward-looking statements.



5



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Part I  Financial Information

Item 1  Consolidated Financial Statements

MSC-Medical Services Company

Condensed Balance Sheets

(Dollars in thousands, except share data)



|                                                                                                                    |  |               |         |                  |   |        
|------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | ---------------- | - | -------
|                                                                                                                    |  | March 31,2008 |         | December 31,2007
|                                                                                                                    |  | (Unaudited)   |         |                 
|Assets                                                                                                              |  |               |         |                  |   |        
|Current assets:                                                                                                     |  |               |         |                  |   |        
|Cash                                                                                                                |  | $             | 9,075   |                  | $ | 5,750  
|Accounts receivable, less allowance of $19,814 at March 31, 2008 and $19,553 at December 31, 2007                   |  |               | 63,161  |                  |   | 57,858 
|Income tax receivable                                                                                               |  |               |        |                  |   | 398    
|Other current assets                                                                                                |  |               | 744     |                  |   | 734    
|Current deferred income taxes                                                                                       |  |               | 7,641   |                  |   | 7,642  
|                                                                                                                    |  |               |         |                  |   |        
|Total current assets                                                                                                |  |               | 80,621  |                  |   | 72,382 
|                                                                                                                    |  |              
|Property and equipment, net of accumulated depreciation of $8,452 at March 31, 2008 and $7,485 at December 31, 2007 |  |               | 8,600   |                  |   | 8,034  
|                                                                                                                    |  |              
|Intangible assets:                                                                                                  |  |               |         |                  |   |        
|Goodwill                                                                                                            |  |               | 218,620 |                  |   | 196,091
|Trademarks                                                                                                          |  |               | 16,500  |                  |   | 15,700 
|Vendor contracts, net                                                                                               |  |               | 17,776  |                  |   | 18,053 
|Customer relationships, net                                                                                         |  |               | 68,682  |                  |   | 63,509 
|Non-competes, net                                                                                                   |  |               | 900     |                  |   |       
|                                                                                                                    |  |               |         |                  |   |        
|Total intangible assets                                                                                             |  |               | 322,478 |                  |   | 293,353
|                                                                                                                    |  |              
|Other assets:                                                                                                       |  |               |         |                  |   |        
|Deferred debt issuance costs, net                                                                                   |  |               | 3,749   |                  |   | 3,820  
|Other                                                                                                               |  |               | 8       |                  |   | 154    
|                                                                                                                    |  |               |         |                  |   |        
|Total other assets                                                                                                  |  |               | 3,757   |                  |   | 3,974  
|                                                                                                                    |  |               |         |                  |   |        
|Total assets                                                                                                        |  | $             | 415,456 |                  | $ | 377,743
|                                                                                                                    |  |               |         |                  |   |        

See notes to condensed financial statements.



6



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MSC-Medical Services Company

Condensed Balance SheetsContinued

(Dollars in thousands, except share
data)



|                                                                                          |  |               |         |   |                  |   |         |  
|----------------------------------------------------------------------------------------- |  | ------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                          |  | March 31,2008 |         |   | December 31,2007 |  
|                                                                                          |  | (Unaudited)   |         |   |                  |  
|Liabilities and stockholders equity                                                      |  |               |         |   |                  |   |         |  
|Current liabilities:                                                                      |  |               |         |   |                  |   |         |  
|Short-term debt                                                                           |  | $             | 18,620  |   |                  | $ | 18,620  |  
|Accounts payable                                                                          |  |               | 13,960  |   |                  |   | 6,328   |  
|Accrued expenses                                                                          |  |               | 42,140  |   |                  |   | 39,205  |  
|Deferred revenue                                                                          |  |               | 366     |   |                  |   | 373     |  
|Income taxes payable                                                                      |  |               | 152     |   |                  |   |        |  
|                                                                                          |  |               |         |   |                  |   |         |  
|Total current liabilities                                                                 |  |               | 75,238  |   |                  |   | 64,526  |  
|                                                                                          |  |              
|Non-current liabilities:                                                                  |  |               |         |   |                  |   |         |  
|Long-term debt, less current portion                                                      |  |               | 149,208 |   |                  |   | 149,145 |  
|Other liabilities                                                                         |  |               | 824     |   |                  |   | 797     |  
|Deferred income taxes                                                                     |  |               | 18,511  |   |                  |   | 20,865  |  
|                                                                                          |  |               |         |   |                  |   |         |  
|Total non-current liabilities                                                             |  |               | 168,543 |   |                  |   | 170,807 |  
|                                                                                          |  |               |         |   |                  |   |         |  
|Total liabilities                                                                         |  |               | 243,781 |   |                  |   | 235,333 |  
|Stockholders equity:                                                                     |  |               |         |   |                  |   |         |  
|Common stock, $1.00 par value, 1,000 shares authorized, 100 shares issued and outstanding |  |               |        |   |                  |   |        |  
|Additional paid-in capital                                                                |  |               | 248,876 |   |                  |   | 216,090 |  
|Accumulated other comprehensive loss                                                      |  |               | (1,713  | ) |                  |   | (778    | )
|Accumulated Deficit                                                                       |  |               | (75,488 | ) |                  |   | (72,902 | )
|                                                                                          |  |               |         |   |                  |   |         |  
|Total stockholders equity                                                                |  |               | 171,675 |   |                  |   | 142,410 |  
|                                                                                          |  |               |         |   |                  |   |         |  
|Total liabilities and stockholders equity                                                |  | $             | 415,456 |   |                  | $ | 377,743 |  
|                                                                                          |  |               |         |   |                  |   |         |  

See notes to condensed financial statements.



7



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MSC-Medical Services Company

Condensed Statements of Operations

For the Three Months Ended March 31, 2008 and 2007

(Unaudited)

(Dollars in thousands)



|                               |  |                              |        |   |      |   |        |  
|------------------------------ |  | ---------------------------- | ------ | - | ---- | - | ------ | -
|                               |  | Three Months Ended March 31, |       
|                               |  | 2008                         |        |   | 2007 |  
|Net Revenue:                   |  |                              |        |   |      |   |        |  
|Pharmaceutical                 |  | $                            | 44,681 |   |      | $ | 45,952 |  
|Medical Products & Services    |  |                              | 40,386 |   |      |   | 39,439 |  
|                               |  |                              |        |   |      |   |        |  
|Total net revenue              |  |                              | 85,067 |   |      |   | 85,391 |  
|Cost of Revenue:               |  |                              |        |   |      |   |        |  
|Pharmaceutical                 |  |                              | 37,539 |   |      |   | 37,871 |  
|Medical Products & Services    |  |                              | 30,536 |   |      |   | 30,280 |  
|                               |  |                              |        |   |      |   |        |  
|Total cost of revenue          |  |                              | 68,075 |   |      |   | 68,151 |  
|                               |  |                              |        |   |      |   |        |  
|Gross profit                   |  |                              | 16,992 |   |      |   | 17,240 |  
|                               |  |                             
|Operating expenses             |  |                              | 12,401 |   |      |   | 11,810 |  
|Depreciation and amortization  |  |                              | 3,246  |   |      |   | 2,931  |  
|                               |  |                              |        |   |      |   |        |  
|Total expenses                 |  |                              | 15,647 |   |      |   | 14,741 |  
|                               |  |                              |        |   |      |   |        |  
|Operating income               |  |                              | 1,345  |   |      |   | 2,499  |  
|Interest expense               |  |                              | 5,127  |   |      |   | 5,294  |  
|                               |  |                              |        |   |      |   |        |  
|Loss before income tax benefit |  |                              | (3,782 | ) |      |   | (2,795 | )
|Income tax benefit             |  |                              | 1,196  |   |      |   | 1,051  |  
|                               |  |                              |        |   |      |   |        |  
|Net loss                       |  | $                            | (2,586 | ) |      | $ | (1,744 | )
|                               |  |                              |        |   |      |   |        |  

See notes to condensed financial statements.



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MSC-Medical Services Company

Condensed Statements of Cash Flows

For the Three Months Ended March 31, 2008 and 2007

(Unaudited)

(Dollars in thousands)



|                                                                                          |  |                              |         |   |      |   |        |  
|----------------------------------------------------------------------------------------- |  | ---------------------------- | ------- | - | ---- | - | ------ | -
|                                                                                          |  | Three Months Ended March 31, |        
|                                                                                          |  | 2008                         |         |   | 2007 |  
|Operating activities                                                                      |  |                              |         |   |      |   |        |  
|Net loss                                                                                  |  | $                            | (2,586  | ) |      | $ | (1,744 | )
|Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |  |                              |         |   |      |   |        |  
|Depreciation                                                                              |  |                              | 982     |   |      |   | 765    |  
|Amortization of intangibles                                                               |  |                              | 2,264   |   |      |   | 2,166  |  
|Amortization of debt issuance costs and debt discount                                     |  |                              | 71      |   |      |   | 344    |  
|Provision for deferred income taxes                                                       |  |                              | (1,780  | ) |      |   | (1,051 | )
|Provision for bad debts                                                                   |  |                              | 1,690   |   |      |   | 2,134  |  
|Stock-based compensation                                                                  |  |                              | 286     |   |      |   | 382    |  
|Changes in operating assets and liabilities:                                              |  |                              |         |   |      |   |        |  
|Accounts receivable                                                                       |  |                              | (3,178  | ) |      |   | (2,891 | )
|Other current assets                                                                      |  |                              | 214     |   |      |   | (103   | )
|Other non-current assets                                                                  |  |                              | 163     |   |      |   |       |  
|Accounts payable & accrued expenses                                                       |  |                              | 4,742   |   |      |   | (1,093 | )
|Deferred revenue                                                                          |  |                              | (7      | ) |      |   | 27     |  
|Income taxes payable/receivable                                                           |  |                              | 550     |   |      |   | (22    | )
|                                                                                          |  |                              |         |   |      |   |        |  
|Net cash provided by (used in) operating activities                                       |  |                              | 3,411   |   |      |   | (1,086 | )
|                                                                                          |  |                              |         |   |      |   |        |  
|Investing activities                                                                      |  |                              |         |   |      |   |        |  
|Purchases of property and equipment                                                       |  |                              | (848    | ) |      |   | (617   | )
|Acquisitions, net of cash acquired                                                        |  |                              | (31,738 | ) |      |   |       |  
|                                                                                          |  |                              |         |   |      |   |        |  
|Net cash used in investing activities                                                     |  |                              | (32,586 | ) |      |   | (617   | )
|                                                                                          |  |                              |         |   |      |   |        |  
|Financing activities                                                                      |  |                              |         |   |      |   |        |  
|Capital contributions from parent                                                         |  |                              | 32,500  |   |      |   |       |  
|                                                                                          |  |                              |         |   |      |   |        |  
|Net cash provided by financing activities                                                 |  |                              | 32,500  |   |      |   |       |  
|                                                                                          |  |                              |         |   |      |   |        |  
|Net increase (decrease) in cash                                                           |  |                              | 3,325   |   |      |   | (1,703 | )
|Cash, beginning of period                                                                 |  |                              | 5,750   |   |      |   | 6,101  |  
|                                                                                          |  |                              |         |   |      |   |        |  
|Cash, end of period                                                                       |  | $                            | 9,075   |   |      | $ | 4,398  |  
|                                                                                          |  |                              |         |   |      |   |        |  

See notes to condensed financial statements.



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MSC-Medical Services Company

Notes to Condensed Consolidated Financial Statements

March 31, 2008

(Dollar amounts in
thousands except per share data, unless otherwise stated)

1. Summary of Significant Accounting Policies

Description of Business

MSC- Medical Services Company (the
Company or MSC) is a provider of healthcare products and services for the workers compensation industry in the United States. The Company provides workers compensation payors, such as insurers and third-party
administrators, with a quality alternative to the costly and time-consuming process of coordinating the logistics for the delivery of non-acute care needs to their claimants. MSC currently manages relationships with over 7,000 vendors, enabling it
to provide over 20,000 healthcare products and services to workers compensation patients throughout the United States.

Basis of Presentation

The accompanying condensed consolidated unaudited interim financial statements have been prepared in accordance with the rules and regulations of the
United States Securities and Exchange Commission (the SEC). Accordingly, certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. generally accepted accounting
principles (GAAP) have been omitted pursuant to the SEC rules and regulations for interim reporting. The consolidated financial statements reflect, in the opinion of management, all adjustments necessary to present fairly the
consolidated financial position and consolidated results of operations for the periods indicated. All such adjustments are of a normal, recurring nature. The preparation of consolidated financial statements in conformity with GAAP requires
management to make estimates and assumptions about future events that affect the reported amounts of consolidated assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. Consolidated operating results for the interim period reported are not necessarily indicative of the results that may be expected for the year ending December 31, 2008.

The consolidated balance sheet at December 31, 2007 has been derived from the audited financial statements at that date but does not include all of
the information and footnotes required by GAAP for complete financial statements. The accompanying fiscal year to date 2007 consolidated financial statements contained in this Quarterly Report on Form 10-Q include the activities of the
Companys new wholly owned subsidiaries as discussed below. All intercompany transactions have been eliminated in consolidation.

On January 28,
2008, the Company acquired 100% of the outstanding membership interests of ZoneCare USA of Delray, LLC, a Florida limited liability company (ZoneCare), and Speedy Re-employment, LLC, a Florida limited liability company
(Speedy), and substantially all of the assets of SelectMRI, LLC, a Florida limited liability company (Select MRI and together with ZoneCare and Speedy, the Acquisition Entities) for $25,000,000, $7,000,000, and
$500,000, respectively, paid in cash subject to escrows and holdbacks. In connection with the purchase of the assets of SelectMRI, the Company formed a wholly-owned subsidiary, SelectMRI Acquisition, LLC, a Delaware limited liability company
(Select Acquisition), which actually acquired the assets of SelectMRI.

For further information, refer to the consolidated financial statements
and footnotes thereto included in the Companys Annual Report on Form 10-K for the year ended December 31, 2007 filed with the SEC.

Allowance
for Doubtful Accounts

Additions to the allowance for doubtful accounts are made by means of the provision for bad debts which is based upon
managements assessment of historical and expected collections and other collection indicators. The provision for bad debts includes reserves for specific high-collection risk customer accounts and reserves for other customer collection risks.
Such reserves and estimation factors are reviewed and updated periodically as uncollectible accounts are deducted from the allowance, and subsequent recoveries are added.



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MSC-Medical Services Company

Notes to Condensed Consolidated Financial Statements

March 31, 2008

(Dollar amounts in thousands except per share data, unless otherwise stated)



Included in the allowance for doubtful accounts are provisions for sales allowances totaling $0.6 million at
March 31, 2008 and $0.4 million at March 31, 2007.

Bad debt expense for the three months ended March 31, 2008 and 2007 was approximately
$1.7 million and $2.1 million, respectively.

Impairment of Long-Lived Assets

Goodwill represents the excess purchase price paid over net assets acquired resulting from the application of the purchase method of accounting. Goodwill is tested annually for impairment.

Under Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, goodwill and intangible assets with
indefinite lives are no longer amortized but are reviewed at least annually for impairment. The Company performed its annual impairment review of goodwill and trademarks as of the measurement date, October 31, for fiscal year 2007, which
indicated that goodwill and trademarks were impaired. Goodwill of $40.1 million and trademarks of $8.4 million were charged to expense in the fourth quarter of 2007. No impairment indicators were noted during the three months ended March 31,
2008 and 2007.

The Company evaluates its long-lived assets for impairment whenever circumstances indicate that the carrying amount of the asset may not be
recoverable from estimated future cash flows, in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. There were no impairment losses recognized in the three months ended March 31, 2008 or
2007.

Recently Issued Accounting Standards

In
September 2006, the Financial Accounting Standards Board (FASB) issued SFAS No. 157, Fair Value Measurements.This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles
(GAAP), and expands disclosures about fair value measurements. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. On February 12,
2008 the FASB approved the Financial Staff Position (FSP) No. SFAS 157-2 Effective Date of FASB Statement No. 157 (FSP FAS 157-2), which delays the effective date of SFAS 157 to fiscal years beginning after November 15,
2008, and interim periods within those fiscal years for non-financial assets and non-financial liabilities, except for those items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually).
The adoption of SFAS No. 157 did not have a material impact on the Companys financial statements.

In February 2007, the FASB issued
SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities  Including an Amendment of FASB Statement No. 115(SFAS 159), which became effective for fiscal years beginning
after November 15, 2007. SFAS 159 permits companies to choose to measure many financial instruments and certain other items at fair value on a per instrument basis, with changes in fair value recognized in earnings each reporting period.
The Company did not elect to apply the fair value option.

In December 2007 the FASB issued SFAS No. 141(R), Business Combinations,
(SFAS 141(R)) which replaces SFAS No. 141, Business Combinations, (SFAS 141). SFAS 141(R) establishes principles and requirements for how an acquirer recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. The Statement also establishes disclosure requirements which will enable users of the financial statements
to evaluate the nature and financial effects of the business combination. SFAS 141(R) applies prospectively to business combinations



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##### Table of Contents

MSC-Medical Services Company

Notes to Condensed Consolidated Financial Statements

March 31, 2008

(Dollar amounts in thousands except per share data, unless otherwise stated)



for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, except for
certain tax adjustments for prior business combinations. The Company will adopt the provisions of this pronouncement effective as of January 1, 2009 since it is prospective only.

In March 2008, the Financial Accounting Standards Board (the FASB) issued Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities 
an amendment of FASB Statement No. 133 (SFAS 161). SFAS 161 requires enhanced disclosures for derivative instruments and hedging activities. This statement is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008. The Company is currently evaluating the requirements of SFAS 161 and has not yet determined the impact of adoption.

2. Acquisitions

On January 28, 2008, the Company acquired 100% of the outstanding membership interests of
ZoneCare USA of Delray, LLC, a Florida limited liability company (ZoneCare), and Speedy Re-employment, LLC, a Florida limited liability company (Speedy), and substantially all of the assets of SelectMRI, LLC, a Florida
limited liability company (Select MRI and together with ZoneCare and Speedy, the Acquisition Entities) for $25,000,000, $7,000,000, and $500,000, respectively, paid in cash subject to escrows and holdbacks. In connection with
the purchase of the assets of SelectMRI, the Company formed a wholly-owned subsidiary, SelectMRI Acquisition, LLC, a Delaware limited liability company (Select Acquisition), which actually acquired the assets of SelectMRI. The purchase
of the Acquisition Entities was funded through a combination of equity instruments issued to investors by MCP-MSC Acquisition (the Parent). The equity instruments consisted of 32,500,000 Class A Common shares and 6,605,366
warrants issued at a par value of .001 for each share and warrant. The proceeds from the sale of each share amounted to .88 per share and .57 per warrant. The funds generated through the issuance were pushed down by the Parent to the
Company to purchase the Acquisition Entities, which are now wholly owned subsidiaries of the Company.

The purchase of ZoneCare expands the Companys
presence in the Medical Products and Services market, primarily in transportation and translation services. The purchase of Speedy provides the addition of Medicare Set-aside (MSA) services to existing MSC pharmaceutical customers as well as
customers acquired through the Speedy acquisition. Medicare Set-aside services are services provided to clients to determine that the workers compensation cases are handled in accordance with the Medicare Secondary Payer laws and that
appropriate amounts are set aside and reported to Medicare. The purchase of SelectMRI expands the Companys current service offerings in the Medical Products and Services product line by providing diagnostic imaging services to new and existing
customers.

The total purchase price of the acquisition entities is as follows:



|                                        |  |   |       
|--------------------------------------- |  | - | ------
|Cash paid for ZoneCare and subsidiaries |  | $ | 25,000
|Cash paid for Speedy                    |  |   | 7,000 
|Cash paid for SelectMRI                 |  |   | 500   
|Transaction costs                       |  |   | 407   
|                                        |  |   |       
|                                        |  | $ | 32,907
|                                        |  |   |       



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##### Table of Contents

MSC-Medical Services Company

Notes to Condensed Consolidated Financial Statements

March 31, 2008

(Dollar amounts in thousands except per share data, unless otherwise stated)



The purchase price of the acquisition entities is allocated as follows:



|                       |  |   |        |  
|---------------------- |  | - | ------ | -
|Cash                   |  | $ | 1,169  |  
|Accounts receivable    |  |   | 3,817  |  
|Other current assets   |  |   | 241    |  
|Property and equipment |  |   | 698    |  
|Goodwill               |  |   | 22,529 |  
|Customer relationships |  |   | 6,800  |  
|Trademarks             |  |   | 800    |  
|Vendor contracts       |  |   | 360    |  
|Non-competes           |  |   | 900    |  
|Liabilities assumed    |  |   | (4,407 | )
|                       |  |   |        |  
|                       |  | $ | 32,907 |  
|                       |  |   |        |  

The allocation of the purchase price to intangible assets is based on preliminary valuations. The Company is still
assessing the economic characteristics of certain customer relationships and other intangible assets. The Company expects to complete this assessment during the second quarter of 2008 and will adjust the amounts recorded as of June 30, 2008 to
reflect our revised evaluations.

All liabilities assumed in the acquisition are classified as current liabilities as they relate to ongoing business
operations.

The following table summarizes the pro forma results for the periods ending March 31, 2008 and 2007, respectively, as if the acquisition
occurred on January 1, 2008 and 2007, respectively:



|                 |  |      |        |   |      |   |        |  
|---------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                 |  | 2008 |        |   | 2007 |  
|Total revenues   |  | $    | 87,163 |   |      | $ | 92,160 |  
|Operating income |  | $    | 1,091  |   |      | $ | 3,081  |  
|Net loss         |  | $    | (2,264 | ) |      | $ | (884   | )

The unaudited pro forma results have been prepared for comparative purposes only and include certain adjustments
to retrospectively apply certain MSC accounting policies to the results of the acquisition entities. The unaudited pro forma results are not indicative either of the results of operations that actually would have resulted had the acquisition been in
effect at the beginning of the period or of future results.

3. Stock Based Compensation

The fair value of restricted shares is determined by the number of shares granted and the grant date fair value of the Companys Common Shares. The compensation
expense recognized for all equity-based awards is net of estimated forfeitures and is recognized over the awards service period. In accordance with Staff Accounting Bulletin (SAB) No. 107, the Company classified equity-based
compensation within operating expenses to correspond with the same line item as the majority of the cash compensation paid to employees.

The impact of the
equity-based compensation is reflected in cash flow from operations on the Condensed Statement of Cash Flows.



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##### Table of Contents

MSC-Medical Services Company

Notes to Condensed Consolidated Financial Statements

March 31, 2008

(Dollar amounts in thousands except per share data, unless otherwise stated)



Activity relative to the Companys common stock options is as follows:



|                                         |  |                 |   |  |                                         |       |   |                                                    |      |                             |   |      
|---------------------------------------- |  | --------------- | - |  | --------------------------------------- | ----- | - | -------------------------------------------------- | ---- | --------------------------- | - | -----
|                                         |  | Numberof Shares |   |  | WeightedAverage ExercisePrice Per Share |       |   | Weighted AverageRemaining ContractualLife in
Years |      | Intrinsic Value($ in 000s)
|Options outstanding at December 31, 2007 |  | 30,028,610      |   |  | $                                       | 1.35  |   |                                                    | 7.75 |                             | $ | 1,750
|Options granted  time vesting           |  | 7,101,339       |   |  | $                                       | 1.50  |   |                                                    |      |                             |   |      
|Options granted  performance vesting    |  | 3,550,670       |   |  | $                                       | 1.50  |   |                                                    |      |                             |   |      
|Options forfeited                        |  | (4,308,419      | ) |  | $                                       | (1.49 | ) |                                                    |      |                             |   |      
|                                         |  |                 |   |  |                                         |       |   |                                                    |      |                             |   |      
|Options outstanding at March 31, 2008    |  | 36,372,200      |   |  | $                                       | 1.38  |   |                                                    | 8.19 |                             |   |      
|                                         |  |                 |   |  |                                         |       |   |                                                    |      |                             |   |      
|Exercisable at March 31, 2008            |  | 16,084,126      |   |  | $                                       | 1.10  |   |                                                    | 7.29 |                             | $ | 832  
|                                         |  |                 |   |  |                                         |       |   |                                                    |      |                             |   |      

Two-thirds of options granted vest over a three-year period, with an exercise price ranging from $1.00 to $3.00.
The remaining one-third vest only upon change in control and also have exercise prices ranging from $1.00 to $3.00. Any portion of the stock options not then vested shall immediately vest. The 16.1 million vested shares at March 31, 2008
have exercise prices between $0.29 and $3.00.

The fair value of options granted during the three months ended March 31, 2008 was approximately $0.3
million and is expected to be expensed over a period of 36 months.

The estimated fair value of each option is calculated using the Black-Scholes option
pricing model. The assumptions used for calculating fair value of grants issued during the three months ended March 31, 2008 varied in range as follows: expected life of 2.5 years, risk-free interest rate of 1.8%  3.1%, expected
volatility of 33.1%  37.0% and no expected dividend yield.

An estimated expected life of 3 years before exercise was used for the grants during the
three months ended March 31, 2008, based on the typical investment holding period of the shareholder with a controlling interest in MSC. A targeted holding period range of three to six years is cited in Monitor Clipper Equity Partners II,
L.P. Private Placement Memorandumat which time all shares would be expected to be vested and then exercised. Implicit in this assumption is that option-holders would not likely exercise before a transaction date as they would become the holders
of minority interest shares subject to marketability discounts should they wish to sell their shares. The expected change in control will likely provide a liquidity event for option-holders.

In order to calculate volatility, the Company analyzed the publicly traded stock options of guideline companies with respect to implied volatility. Implied volatilities
were calculated using an average of the 10-day trailing 720-day term to expiration on at the money options as of the valuation date. The Company relied exclusively on the median implied volatility as a proxy for expected volatility in
the Black-Scholes model as the Company believes it provides the best indication of expected volatility over the expected lives of the options.

Activity
relative to the Companys restricted stock is as follows:



|                                                   |  |                  |  |                         |    
|-------------------------------------------------- |  | ---------------- |  | ----------------------- | ---
|                                                   |  | Number of Shares |  | Fair value atgrant date
|Restricted shares outstanding at December 31, 2007 |  | 1,150,000        |  | $                       | .85
|Issued/Vested                                      |  | 483,333          |  | $                       | .85
|                                                   |  |                  |  |                         |    
|Restricted shares outstanding at March 31, 2008    |  | 666,667          |  | $                       | .85
|                                                   |  |                  |  |                         |    



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##### Table of Contents

MSC-Medical Services Company

Notes to Condensed Consolidated Financial Statements

March 31, 2008

(Dollar amounts in thousands except per share data, unless otherwise stated)



4. Comprehensive Loss

Comprehensive loss represents all changes in equity of the enterprise that results from recognized transactions and other economic events during the period. Other comprehensive (loss) income refers to revenues, expenses, gains, and losses
that under GAAP are included in comprehensive income but excluded from net income, such as the unrealized gain or loss on the Companys interest rate swap. The following table details the components of comprehensive (loss) for the periods
presented.



|                                                         |  |                             |        |   |      |   |        |  
|-------------------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------ | -
|                                                         |  | Three Months EndedMarch 31, |       
|                                                         |  | 2008                        |        |   | 2007 |  
|                                                         |  | ($ in 000s)                |       
|Net loss                                                 |  | $                           | (2,586 | ) |      | $ | (1,744 | )
|Other comprehensive (loss) income:                       |  |                             |        |   |      |   |        |  
|Unrealized gain (loss) on interest rate swap, net of tax |  |                             | (935   | ) |      |   | (256   | )
|                                                         |  |                             |        |   |      |   |        |  
|Comprehensive loss                                       |  | $                           | (3,521 | ) |      | $ | (2,000 | )
|                                                         |  |                             |        |   |      |   |        |  

5. Commitments and Contingencies

The Company is a party to various other legal and administrative proceedings and claims arising in the normal course of business. While any litigation contains an element of uncertainty, the Company, after
consultation with outside legal counsel, believes that the outcome of such other proceedings or claims which are pending or known to be threatened will not have a material adverse effect on the Companys financial position, liquidity, or
results of operations.

6. Income Taxes

The
Companys effective income tax rate for the quarter ended March 31, 2008 decreased 6.2% to 31.4%, which was primarily the result of a $0.2 million correction to deferred tax liabilities.

As of March 31, 2008, the unrecognized tax benefit amount recorded was $0.1 million of which $0.1 would affect income tax expense if recognized.

Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. As of March 31, 2008, the Company
did not recognize interest or penalties associated with any unrecognized tax benefits in the statement of operations. It is reasonably possible that the total amount of unrecognized tax benefits will change within the next 12 months.

7. Guarantor Financial Statements

The Companys senior secured
floating rate notes are guaranteed by the Parent (also referred to as the Guarantor) on a senior secured basis. The notes are the Companys and the Guarantors senior secured obligation and will rank equally in right of payment
with all of the Companys and Guarantors existing and future unsubordinated indebtedness. The notes are effectively junior to the Companys and Guarantors indebtedness under the Companys senior secured revolving credit
facility to the extent of the value of the assets securing such facility. The notes are secured by a second priority lien on substantially all of the Companys and Guarantors existing and future assets, as well as capital stock. The
senior secured revolving credit facility is secured by a first priority lien on all such assets.

The Company has not presented separate financial
statements for the Guarantor because it has deemed that such financial statements would not provide investors with any material additional information. Included in the tables below are the consolidating balance sheets as of March 31, 2008 and
December 31, 2007, the consolidating statements of operations for the three months ended March 31, 2008 and 2007, and consolidating statements of cash flows for the three months ended March 31, 2008 and 2007 of: (a) the Parent
(Guarantor), (b) the Company, (c) elimination entries necessary to consolidate the Parent with the Company, and (d) the consolidated company, MCPMSC Acquisition, Inc.



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##### Table of Contents

MSC-Medical Services Company

Notes to Condensed Consolidated Financial Statements

March 31, 2008

(Dollar amounts in thousands except per share data, unless otherwise stated)



On January 28, 2008, the Parent issued 32,500,000 Class A Common shares and 6,605,366 warrants in
connection with the acquisitions of ZoneCare, Speedy, and Select (See Footnote No. 2 of the Notes to the Condensed Consolidated Financial Statements for discussion of the acquisitions). The shares and warrants each were issued at a $.001 par
value and generated $32.5 million in combined proceeds. The Class A Common shares have preference in terms of dividends and liquidation rights. Each share pays cumulative dividends at a rate of 20% per share, per annum on a quarterly
basis. Each warrant is exercisable at $.01 per share (adjusted for stock splits, business combinations, etc.) for one share of the Parents common stock. Each warrant expires at the earlier of (a) 2018, (b) the consummation of an
Initial Public Offering, or (c) a change in control.

MCP-MSC Acquisition, Inc.

Condensed Consolidating Balance Sheets



|                                      |  |                                          |         |                                          |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        
|------------------------------------- |  | ---------------------------------------- | ------- | ---------------------------------------- | - | ------------ |  | - | ------------ | - | -------- | - | ------------ |  | ------------ | ------- |  | ------------ | ------- |  | - | -------- | - |  | - | -------
|                                      |  | March 31, 2008                           |         | December 31, 2007                       
|                                      |  | (Parent)                                 |         | (Subsidiary)                             |   | Eliminations |  |   | Consolidated |   | (Parent) |   | (Subsidiary) |  | Eliminations |         |  | Consolidated
|                                      |  | (Dollars in thousands except share data) |         | (Dollars in thousands except share data)
|Assets                                |  |                                          |         |                                          |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        
|Current assets:                       |  |                                          |         |                                          |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        
|Cash                                  |  | $                                        |        |                                          | $ | 9,075        |  | $ |             |   |          | $ | 9,075        |  | $            |        |  | $            | 5,750   |  | $ |         |   |  | $ | 5,750  
|Accounts receivable, net              |  |                                          |        |                                          |   | 63,161       |  |   |             |   |          |   | 63,161       |  |              |        |  |              | 57,858  |  |   |         |   |  |   | 57,858 
|Income tax receivable                 |  |                                          |        |                                          |   |             |  |   |             |   |          |   |             |  |              |        |  |              | 398     |  |   |         |   |  |   | 398    
|Other current assets                  |  |                                          |        |                                          |   | 744          |  |   |             |   |          |   | 744          |  |              |        |  |              | 734     |  |   |         |   |  |   | 734    
|Deferred income taxes                 |  |                                          | 5,497   |                                          |   | 7,641        |  |   |             |   |          |   | 13,138       |  |              |        |  |              | 7,642   |  |   |         |   |  |   | 7,642  
|                                      |  |                                          |         |                                          |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        
|Total current assets                  |  |                                          | 5,497   |                                          |   | 80,621       |  |   |             |   |          |   | 86,118       |  |              |        |  |              | 72,382  |  |   |         |   |  |   | 72,382 
|                                      |  |                                          |         |                                          |   |              |  |  
|Property and equipment, net           |  |                                          |        |                                          |   | 8,600        |  |   |             |   |          |   | 8,600        |  |              |        |  |              | 8,034   |  |   |         |   |  |   | 8,034  
|                                      |  |                                          |         |                                          |   |              |  |  
|Intangible assets:                    |  |                                          |         |                                          |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        
|Goodwill                              |  |                                          |        |                                          |   | 218,620      |  |   |             |   |          |   | 218,620      |  |              |        |  |              | 196,091 |  |   |         |   |  |   | 196,091
|Trademarks                            |  |                                          |        |                                          |   | 16,500       |  |   |             |   |          |   | 16,500       |  |              |        |  |              | 15,700  |  |   |         |   |  |   | 15,700 
|Vendor contracts                      |  |                                          |        |                                          |   | 17,776       |  |   |             |   |          |   | 17,776       |  |              |        |  |              | 18,053  |  |   |         |   |  |   | 18,053 
|Customer relationships, net           |  |                                          |        |                                          |   | 68,682       |  |   |             |   |          |   | 68,682       |  |              |        |  |              | 63,509  |  |   |         |   |  |   | 63,509 
|Non-competes, net                     |  |                                          |        |                                          |   | 900          |  |   |             |   |          |   | 900          |  |              |        |  |              |        |  |   |         |   |  |   |       
|                                      |  |                                          |         |                                          |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        
|Total intangible assets               |  |                                          |        |                                          |   | 322,478      |  |   |             |   |          |   | 322,478      |  |              |        |  |              | 293,353 |  |   |         |   |  |   | 293,353
|                                      |  |                                          |         |                                          |   |              |  |  
|Other assets:                         |  |                                          |         |                                          |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        
|Investment in consolidated subsidiary |  |                                          | 171,675 |                                          |   |             |  |   | (171,675     | ) |          |   |             |  |              | 142,410 |  |              |        |  |   | (142,410 | ) |  |   |       
|Deferred debt issuance costs, net     |  |                                          | 533     |                                          |   | 3,749        |  |   |             |   |          |   | 4,282        |  |              | 560     |  |              | 3,820   |  |   |         |   |  |   | 4,380  
|Deferred income taxes/other           |  |                                          |        |                                          |   | 8            |  |   |             |   |          |   | 8            |  |              | 4,944   |  |              | 154     |  |   |         |   |  |   | 5,098  
|                                      |  |                                          |         |                                          |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        
|Total other assets                    |  |                                          | 172,208 |                                          |   | 3,757        |  |   | (171,675     | ) |          |   | 4,290        |  |              | 147,914 |  |              | 3,974   |  |   | (142,410 | ) |  |   | 9,478  
|                                      |  |                                          |         |                                          |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        
|Total assets                          |  | $                                        | 177,705 |                                          | $ | 415,456      |  | $ | (171,675     | ) |          | $ | 421,486      |  | $            | 147,914 |  | $            | 377,743 |  | $ | (142,410 | ) |  | $ | 383,247
|                                      |  |                                          |         |                                          |   |              |  |   |              |   |          |   |              |  |              |         |  |              |         |  |   |          |   |  |   |        



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##### Table of Contents

MSC-Medical Services Company

Notes to Condensed Consolidated Financial Statements

March 31, 2008

(Dollar amounts in thousands except per share data, unless otherwise stated)



MCP-MSC Acquisition, Inc.

Condensed Consolidating Balance Sheets - Continued



|                                                                                                                                                                        |  |                                          |         |   |                                          |   |         |              |  |   |              |   |  |          |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------- | ------- | - | ---------------------------------------- | - | ------- | ------------ |  | - | ------------ | - |  | -------- | ------- | - | ------------ | - | ------- | ------------ |  | - | ------------ | - |  | - | -------- | - |  | - | ------- | -
|                                                                                                                                                                        |  | March 31, 2008                           |         |   | December 31, 2007                        |  
|                                                                                                                                                                        |  | (Parent)                                 |         |   | (Subsidiary)                             |   |         | Eliminations |  |   | Consolidated |   |  | (Parent) |         |   | (Subsidiary) |   |         | Eliminations |  |   | Consolidated |  
|                                                                                                                                                                        |  | (Dollars in thousands except share data) |         |   | (Dollars in thousands except share data) |  
|Liabilities and stockholders equity                                                                                                                                    |  |                                          |         |   |                                          |   |         |              |  |   |              |   |  |          |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|                                                                                                                                                                        |  |                                          |         |   |                                          |   |         |             
|Current liabilities:                                                                                                                                                    |  |                                          |         |   |                                          |   |         |              |  |   |              |   |  |          |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Short-term debt                                                                                                                                                         |  | $                                        |        |   |                                          | $ | 18,620  |              |  | $ |             |   |  | $        | 18,620  |   |              | $ |        |              |  | $ | 18,620       |   |  | $ |         |   |  | $ | 18,620  |  
|Accounts payable                                                                                                                                                        |  |                                          |        |   |                                          |   | 13,960  |              |  |   |             |   |  |          | 13,960  |   |              |   |        |              |  |   | 6,328        |   |  |   |         |   |  |   | 6,328   |  
|Accrued expenses                                                                                                                                                        |  |                                          | 2,325   |   |                                          |   | 42,140  |              |  |   |             |   |  |          | 44,465  |   |              |   | 918     |              |  |   | 39,205       |   |  |   |         |   |  |   | 40,123  |  
|Deferred revenue                                                                                                                                                        |  |                                          |        |   |                                          |   | 366     |              |  |   |             |   |  |          | 366     |   |              |   |        |              |  |   | 373          |   |  |   |         |   |  |   | 373     |  
|Income taxes payable                                                                                                                                                    |  |                                          |        |   |                                          |   | 152     |              |  |   |             |   |  |          | 152     |   |              |   |        |              |  |   |             |   |  |   |         |   |  |   |        |  
|                                                                                                                                                                        |  |                                          |         |   |                                          |   |         |              |  |   |              |   |  |          |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Total current liabilities                                                                                                                                               |  |                                          | 2,325   |   |                                          |   | 75,238  |              |  |   |             |   |  |          | 77,563  |   |              |   | 918     |              |  |   | 64,526       |   |  |   |         |   |  |   | 65,444  |  
|                                                                                                                                                                        |  |                                          |         |   |                                          |   |         |             
|Non-current liabilities:                                                                                                                                                |  |                                          |         |   |                                          |   |         |              |  |   |              |   |  |          |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Long-term debt                                                                                                                                                          |  |                                          | 41,311  |   |                                          |   | 149,208 |              |  |   |             |   |  |          | 190,519 |   |              |   | 41,311  |              |  |   | 149,145      |   |  |   |         |   |  |   | 190,456 |  
|Other liabilities                                                                                                                                                       |  |                                          |        |   |                                          |   | 824     |              |  |   |             |   |  |          | 824     |   |              |   |        |              |  |   | 797          |   |  |   |         |   |  |   | 797     |  
|Deferred income taxes                                                                                                                                                   |  |                                          |        |   |                                          |   | 18,511  |              |  |   |             |   |  |          | 18,511  |   |              |   |        |              |  |   | 20,865       |   |  |   |         |   |  |   | 20,865  |  
|                                                                                                                                                                        |  |                                          |         |   |                                          |   |         |              |  |   |              |   |  |          |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Total non-current liabilities                                                                                                                                           |  |                                          | 41,311  |   |                                          |   | 168,543 |              |  |   |             |   |  |          | 209,854 |   |              |   | 41,311  |              |  |   | 170,807      |   |  |   |         |   |  |   | 212,118 |  
|                                                                                                                                                                        |  |                                          |         |   |                                          |   |         |             
|Total liabilities                                                                                                                                                       |  |                                          | 43,636  |   |                                          |   | 243,781 |              |  |   |             |   |  |          | 287,417 |   |              |   | 42,229  |              |  |   | 235,333      |   |  |   |         |   |  |   | 277,562 |  
|Stockholders equity:                                                                                                                                                   |  |                                          |         |   |                                          |   |         |              |  |   |              |   |  |          |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Common stock, $0.001 par value; 234,000,000 shares authorized; 181,375,000 shares issued and outstanding at March 31, 2008 and
December 31, 2007                        |  |                                          | 185     |   |                                          |   |        |              |  |   |             |   |  |          | 185     |   |              |   | 185     |              |  |   |             |   |  |   |         |   |  |   | 185     |  
|                                                                                                                                                                        |  |                                          |         |   |                                          |   |         |             
|Class A Common stock, $0.001 par value; 35,000 shares authorized; 32,500,000 and no shares issued and outstanding at March 31, 2008
and December 31, 2007, respectively |  |                                          | 33      |   |                                          |   |        |              |  |   |             |   |  |          | 33      |   |              |   |        |              |  |   |             |   |  |   |         |   |  |   |        |  
|                                                                                                                                                                        |  |                                          |         |   |                                          |   |         |             
|Preferred stock, $0.001 par value; 1,000,000 shares authorized; no shares issued and outstanding as of March 31, 2008 and
December 31, 2007                             |  |                                          |        |   |                                          |   |        |              |  |   |             |   |  |          |        |   |              |   |        |              |  |   |             |   |  |   |         |   |  |   |        |  
|                                                                                                                                                                        |  |                                          |         |   |                                          |   |         |             
|Warrants                                                                                                                                                                |  |                                          | 6       |   |                                          |   |        |              |  |   |             |   |  |          | 6       |   |              |   |        |              |  |   |             |   |  |   |         |   |  |   |        |  
|Additional paid-in capital                                                                                                                                              |  |                                          | 219,782 |   |                                          |   | 248,876 |              |  |   | (248,876     | ) |  |          | 219,782 |   |              |   | 187,035 |              |  |   | 216,090      |   |  |   | (216,090 | ) |  |   | 187,035 |  
|Accumulated other comprehensive income                                                                                                                                  |  |                                          | (1,713  | ) |                                          |   | (1,713  | )            |  |   | 1,713        |   |  |          | (1,713  | ) |              |   | (778    | )            |  |   | (778         | ) |  |   | 778      |   |  |   | (778    | )
|Accumulated deficit                                                                                                                                                     |  |                                          | (84,224 | ) |                                          |   | (75,488 | )            |  |   | 75,488       |   |  |          | (84,224 | ) |              |   | (80,757 | )            |  |   | (72,902      | ) |  |   | 72,902   |   |  |   | (80,757 | )
|                                                                                                                                                                        |  |                                          |         |   |                                          |   |         |              |  |   |              |   |  |          |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Total stockholders equity                                                                                                                                              |  |                                          | 134,069 |   |                                          |   | 171,675 |              |  |   | (171,675     | ) |  |          | 134,069 |   |              |   | 105,685 |              |  |   | 142,410      |   |  |   | (142,410 | ) |  |   | 105,685 |  
|                                                                                                                                                                        |  |                                          |         |   |                                          |   |         |              |  |   |              |   |  |          |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  
|Total liabilities and stockholders equity                                                                                                                              |  | $                                        | 177,705 |   |                                          | $ | 415,456 |              |  | $ | (171,675     | ) |  | $        | 421,486 |   |              | $ | 147,914 |              |  | $ | 377,743      |   |  | $ | (142,410 | ) |  | $ | 383,247 |  
|                                                                                                                                                                        |  |                                          |         |   |                                          |   |         |              |  |   |              |   |  |          |         |   |              |   |         |              |  |   |              |   |  |   |          |   |  |   |         |  



17



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##### Table of Contents

MSC-Medical Services Company

Notes to Condensed Consolidated Financial Statements

March 31, 2008

(Dollar amounts in thousands except per share data, unless otherwise stated)



MCP - MSC Acquisition, Inc.

Condensed Consolidating Statement of Operations

For the three months ended



|                                          |  |                        |        |   |                        |   |        |              |  |              |       |  |          |        |   |              |   |        |              |  |              |        |   |  |   |       |  |   |        |  
|----------------------------------------- |  | ---------------------- | ------ | - | ---------------------- | - | ------ | ------------ |  | ------------ | ----- |  | -------- | ------ | - | ------------ | - | ------ | ------------ |  | ------------ | ------ | - |  | - | ----- |  | - | ------ | -
|                                          |  | March 31, 2008         |        |   | March 31, 2007         |  
|                                          |  | (Parent)               |        |   | (Subsidiary)           |   |        | Eliminations |  | Consolidated |       |  | (Parent) |        |   | (Subsidiary) |   |        | Eliminations |  | Consolidated |       
|                                          |  | (Dollars in thousands) |        |   | (Dollars in thousands) |  
|Net revenue                               |  | $                      |       |   |                        | $ | 85,067 |              |  | $            |      |  | $        | 85,067 |   |              | $ |       |              |  | $            | 85,391 |   |  | $ |      |  | $ | 85,391 |  
|Cost of revenue                           |  |                        |       |   |                        |   | 68,075 |              |  |              |       |  |          | 68,075 |   |              |   |       |              |  |              | 68,151 |   |  |   |      |  |   | 68,151 |  
|                                          |  |                        |        |   |                        |   |        |             
|Gross profit                              |  |                        |       |   |                        |   | 16,992 |              |  |              |      |  |          | 16,992 |   |              |   |       |              |  |              | 17,240 |   |  |   |      |  |   | 17,240 |  
|Operating expenses                        |  |                        |       |   |                        |   | 12,401 |              |  |              |      |  |          | 12,401 |   |              |   |       |              |  |              | 11,810 |   |  |   |      |  |   | 11,810 |  
|Depreciation and amortization             |  |                        |       |   |                        |   | 3,246  |              |  |              |      |  |          | 3,246  |   |              |   |       |              |  |              | 2,931  |   |  |   |      |  |   | 2,931  |  
|                                          |  |                        |        |   |                        |   |        |              |  |              |       |  |          |        |   |              |   |        |              |  |              |        |   |  |   |       |  |   |        |  
|Total expenses                            |  |                        |       |   |                        |   | 15,647 |              |  |              |      |  |          | 15,647 |   |              |   |       |              |  |              | 14,741 |   |  |   |      |  |   | 14,741 |  
|                                          |  |                        |        |   |                        |   |        |              |  |              |       |  |          |        |   |              |   |        |              |  |              |        |   |  |   |       |  |   |        |  
|Operating income                          |  |                        |       |   |                        |   | 1,345  |              |  |              |      |  |          | 1,345  |   |              |   |       |              |  |              | 2,499  |   |  |   |      |  |   | 2,499  |  
|Equity in loss of consolidated subsidiary |  |                        | (2,586 | ) |                        |   |        |              |  |              | 2,586 |  |          |       |   |              |   | (1,744 | )            |  |              |        |   |  |   | 1,744 |  |   |       |  
|Other (expense) income:                   |  |                        |        |   |                        |   |        |              |  |              |       |  |          |        |   |              |   |        |              |  |              |        |   |  |   |       |  |   |        |  
|Interest expense                          |  |                        | 1,434  |   |                        |   | 5,127  |              |  |              |      |  |          | 6,561  |   |              |   | 1,284  |              |  |              | 5,294  |   |  |   |      |  |   | 6,578  |  
|                                          |  |                        |        |   |                        |   |        |              |  |              |       |  |          |        |   |              |   |        |              |  |              |        |   |  |   |       |  |   |        |  
|Loss before income tax benefit            |  |                        | (4,020 | ) |                        |   | (3,782 | )            |  |              | 2,586 |  |          | (5,216 | ) |              |   | (3,028 | )            |  |              | (2,795 | ) |  |   | 1,744 |  |   | (4,079 | )
|Income tax benefit                        |  |                        | 553    |   |                        |   | 1,196  |              |  |              |      |  |          | 1,749  |   |              |   | 482    |              |  |              | 1,051  |   |  |   |      |  |   | 1,533  |  
|                                          |  |                        |        |   |                        |   |        |              |  |              |       |  |          |        |   |              |   |        |              |  |              |        |   |  |   |       |  |   |        |  
|Net loss                                  |  | $                      | (3,467 | ) |                        | $ | (2,586 | )            |  | $            | 2,586 |  | $        | (3,467 | ) |              | $ | (2,546 | )            |  | $            | (1,744 | ) |  | $ | 1,744 |  | $ | (2,546 | )
|                                          |  |                        |        |   |                        |   |        |              |  |              |       |  |          |        |   |              |   |        |              |  |              |        |   |  |   |       |  |   |        |  



18



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##### Table of Contents

MSC-Medical Services Company

Notes to Condensed Consolidated Financial Statements

March 31, 2008

(Dollar amounts in thousands except per share data, unless otherwise stated)



MCP-MSC Acquisition, Inc.

Consolidating Statement of Cash Flows

For the three months ended



|                                                                                          |  |                        |         |   |                        |   |         |              |  |   |              |   |  |          |         |   |              |   |        |              |  |   |              |   |  |   |        |   |  |   |        |  
|----------------------------------------------------------------------------------------- |  | ---------------------- | ------- | - | ---------------------- | - | ------- | ------------ |  | - | ------------ | - |  | -------- | ------- | - | ------------ | - | ------ | ------------ |  | - | ------------ | - |  | - | ------ | - |  | - | ------ | -
|                                                                                          |  | March 31, 2008         |         |   | March 31, 2007         |  
|                                                                                          |  | (Parent)               |         |   | (Subsidiary)           |   |         | Eliminations |  |   | Consolidated |   |  | (Parent) |         |   | (Subsidiary) |   |        | Eliminations |  |   | Consolidated |  
|                                                                                          |  | (Dollars in thousands) |         |   | (Dollars in thousands) |  
|Operating activities                                                                      |  |                        |         |   |                        |   |         |              |  |   |              |   |  |          |         |   |              |   |        |              |  |   |              |   |  |   |        |   |  |   |        |  
|Net loss                                                                                  |  | $                      | (3,467  | ) |                        | $ | (2,586  | )            |  | $ | 2,586        |   |  | $        | (3,467  | ) |              | $ | (2,546 | )            |  | $ | (1,744       | ) |  | $ | 1,744  |   |  | $ | (2,546 | )
|Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |  |                        |         |   |                        |   |         |              |  |   |              |   |  |          |         |   |              |   |        |              |  |   |              |   |  |   |        |   |  |   |        |  
|Equity in loss of consolidated subsidiary                                                 |  |                        | 2,586   |   |                        |   |        |              |  |   | (2,586       | ) |  |          |        |   |              |   | 1,744  |              |  |   |             |   |  |   | (1,744 | ) |  |   |       |  
|Depreciation                                                                              |  |                        |        |   |                        |   | 982     |              |  |   |             |   |  |          | 982     |   |              |   |       |              |  |   | 765          |   |  |   |       |   |  |   | 765    |  
|Amortization of intangibles                                                               |  |                        |        |   |                        |   | 2,264   |              |  |   |             |   |  |          | 2,264   |   |              |   |       |              |  |   | 2,166        |   |  |   |       |   |  |   | 2,166  |  
|Amortization of debt issuance costs and debt discount                                     |  |                        | 143     |   |                        |   | 71      |              |  |   |             |   |  |          | 214     |   |              |   | 62     |              |  |   | 344          |   |  |   |       |   |  |   | 406    |  
|Provision for deferred income taxes                                                       |  |                        | 2,145   |   |                        |   | (1,780  | )            |  |   |             |   |  |          | 365     |   |              |   | (482   | )            |  |   | (1,051       | ) |  |   |       |   |  |   | (1,533 | )
|Provision for bad debts                                                                   |  |                        |        |   |                        |   | 1,690   |              |  |   |             |   |  |          | 1,690   |   |              |   |       |              |  |   | 2,134        |   |  |   |       |   |  |   | 2,134  |  
|Stock-based compensation                                                                  |  |                        |        |   |                        |   | 286     |              |  |   |             |   |  |          | 286     |   |              |   |       |              |  |   | 382          |   |  |   |       |   |  |   | 382    |  
|Changes in operating assets and liabilities:                                              |  |                        |         |   |                        |   |         |              |  |   |              |   |  |          |         |   |              |   |        |              |  |   |              |   |  |   |        |   |  |   |        |  
|Accounts receivable                                                                       |  |                        |        |   |                        |   | (3,178  | )            |  |   |             |   |  |          | (3,178  | ) |              |   |       |              |  |   | (2,891       | ) |  |   |       |   |  |   | (2,891 | )
|Other current assets                                                                      |  |                        |        |   |                        |   | 214     |              |  |   |             |   |  |          | 214     |   |              |   |       |              |  |   | (103         | ) |  |   |       |   |  |   | (103   | )
|Other non-current assets                                                                  |  |                        |        |   |                        |   | 163     |              |  |   |             |   |  |          | 163     |   |              |   |       |              |  |   |             |   |  |   |       |   |  |   |       |  
|Accounts payable & accrued expenses                                                       |  |                        | (1,407  | ) |                        |   | 4,742   |              |  |   |             |   |  |          | 3,335   |   |              |   | 1,222  |              |  |   | (1,093       | ) |  |   |       |   |  |   | 129    |  
|Deferred revenue                                                                          |  |                        |        |   |                        |   | (7      | )            |  |   |             |   |  |          | (7      | ) |              |   |       |              |  |   | 27           |   |  |   |       |   |  |   | 27     |  
|Income taxes payable/receivable                                                           |  |                        |        |   |                        |   | 550     |              |  |   |             |   |  |          | 550     |   |              |   |       |              |  |   | (22          | ) |  |   |       |   |  |   | (22    | )
|                                                                                          |  |                        |         |   |                        |   |         |              |  |   |              |   |  |          |         |   |              |   |        |              |  |   |              |   |  |   |        |   |  |   |        |  
|Net cash provided by (used in) operating activities                                       |  |                        |        |   |                        |   | 3,411   |              |  |   |             |   |  |          | 3,411   |   |              |   |       |              |  |   | (1,086       | ) |  |   |       |   |  |   | (1,086 | )
|                                                                                          |  |                        |         |   |                        |   |         |              |  |   |              |   |  |          |         |   |              |   |        |              |  |   |              |   |  |   |        |   |  |   |        |  
|Investing activities                                                                      |  |                        |         |   |                        |   |         |              |  |   |              |   |  |          |         |   |              |   |        |              |  |   |              |   |  |   |        |   |  |   |        |  
|Purchases of property and equipment                                                       |  |                        |        |   |                        |   | (848    | )            |  |   |             |   |  |          | (848    | ) |              |   |       |              |  |   | (617         | ) |  |   |       |   |  |   | (617   | )
|Acquisitions, net of cash acquired                                                        |  |                        |        |   |                        |   | (31,738 | )            |  |   |             |   |  |          | (31,738 | ) |              |   |       |              |  |   |             |   |  |   |       |   |  |   |       |  
|                                                                                          |  |                        |         |   |                        |   |         |              |  |   |              |   |  |          |         |   |              |   |        |              |  |   |              |   |  |   |        |   |  |   |        |  
|Net cash used in investing activities                                                     |  |                        |        |   |                        |   | (32,586 | )            |  |   |             |   |  |          | (32,586 | ) |              |   |       |              |  |   | (617         | ) |  |   |       |   |  |   | (617   | )
|                                                                                          |  |                        |         |   |                        |   |         |              |  |   |              |   |  |          |         |   |              |   |        |              |  |   |              |   |  |   |        |   |  |   |        |  
|Financing activities                                                                      |  |                        |         |   |                        |   |         |              |  |   |              |   |  |          |         |   |              |   |        |              |  |   |              |   |  |   |        |   |  |   |        |  
|Capital contribution from Parent company                                                  |  |                        | (32,500 | ) |                        |   | 32,500  |              |  |   |             |   |  |          |        |   |              |   |       |              |  |   |             |   |  |   |       |   |  |   |       |  
|Issuance of Class A Common Stock                                                          |  |                        | 28,717  |   |                        |   |         |              |  |   |             |   |  |          | 28,717  |   |              |   |       |              |  |   |             |   |  |   |       |   |  |   |       |  
|Issuance of warrants                                                                      |  |                        | 3,783   |   |                        |   |         |              |  |   |             |   |  |          | 3,783   |   |              |   |       |              |  |   |             |   |  |   |       |   |  |   |       |  
|                                                                                          |  |                        |         |   |                        |   |         |              |  |   |              |   |  |          |         |   |              |   |        |              |  |   |              |   |  |   |        |   |  |   |        |  
|Net cash provided by financing activities                                                 |  |                        |        |   |                        |   | 32,500  |              |  |   |             |   |  |          | 32,500  |   |              |   |       |              |  |   |             |   |  |   |       |   |  |   |       |  
|                                                                                          |  |                        |         |   |                        |   |         |              |  |   |              |   |  |          |         |   |              |   |        |              |  |   |              |   |  |   |        |   |  |   |        |  
|Net increase (decrease) in cash                                                           |  |                        |        |   |                        |   | 3,325   |              |  |   |             |   |  |          | 3,325   |   |              |   |       |              |  |   | (1,703       | ) |  |   |       |   |  |   | (1,703 | )
|Cash, beginning of period                                                                 |  |                        |        |   |                        |   | 5,750   |              |  |   |             |   |  |          | 5,750   |   |              |   |       |              |  |   | 6,101        |   |  |   |       |   |  |   | 6,101  |  
|                                                                                          |  |                        |         |   |                        |   |         |              |  |   |              |   |  |          |         |   |              |   |        |              |  |   |              |   |  |   |        |   |  |   |        |  
|Cash, end of period                                                                       |  | $                      |        |   |                        | $ | 9,075   |              |  | $ |             |   |  | $        | 9,075   |   |              | $ |       |              |  | $ | 4,398        |   |  | $ |       |   |  | $ | 4,398  |  
|                                                                                          |  |                        |         |   |                        |   |         |              |  |   |              |   |  |          |         |   |              |   |        |              |  |   |              |   |  |   |        |   |  |   |        |  



19



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##### Table of Contents

Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations.

The following
should be read in conjunction with the financial statements and related notes included elsewhere in this report, as well as the financial statements and related notes included in the Companys Annual Report on Form 10-K for the year ended
December 31, 2007 as filed with the SEC. In addition, all forward-looking statements are qualified by and should be read in conjunction with the risks described under the heading Forward-Looking Statements of this Form 10-Q and
under the heading Risk Factors included in Part I, Item 1A of the Annual Report on Form 10-K for the year ended December 31, 2007.

Overview

MSC  Medical Services Company (the Company, we, us or our) is one of the
largest procurement providers, based on its knowledge of the industry, of health care products and services to workers compensation payors in the United States. We coordinate the delivery of these products and services from our vendor network
to workers compensation patients on behalf of our customers, which include payors such as insurers and third party administrators.

Workers
compensation state legislation in the United States generally requires employers to fund the total cost of an employees medical treatment, lost wages and other costs associated with a work-related injury or illness. Employers are generally
required to provide coverage of costs with no co-payment or deductible from the ill or injured employee, and there is typically no lifetime limit on medical expenses. Workers compensation programs vary across jurisdictions; each state
separately determines the level of wage replacement that must be paid and the level of medical care to be provided.

Factors affecting our financial
results

Revenue. Revenue consists of amounts charged to customers for the products and services we provide. Overall, revenue is affected by the
size of the workers compensation market for pharmaceutical and medical products and services, federal and state fee schedules mandating maximum billable amounts, the extent of outsourcing in the industry and any market share changes resulting
from shifts with existing customers and new customer wins. These factors combine to affect the number of patients served and revenue per patient.

We have
identified two distinct product lines consisting of Pharmaceutical products, comprised primarily of prescription medication, and Medical Products and Services, which describes all other components of revenue. In our Pharmaceuticals product line,
revenue per patient reflects costs of new and existing medications, drug prescribing patterns and drug utilization controls, for example, generic substitution as well as fees for medicare set-aside or MSA services. In our Medical
Products and Services product line, revenue per patient is largely driven by the nature and quantity of products and services used by patients and the prices we are able to charge our customers for the provision of such products and services.

We operate in a competitive market place where revenue may be affected by the competitive bidding process among other service providers. In addition, our
customers may also periodically engage in formal requests for proposals (RFP) on non-contracted, as well as contracted business. We may decide to offer reduced pricing in certain situations given the overall economics of the proposed
business identified in the RFP and the competitive environment.

Cost of Revenue. Cost of revenue consists of payments to vendors for delivery of
products and services, customer service representative costs, inventory carrying costs and shipping costs. In our Pharmaceuticals product line, cost of revenue also includes credits for vendor rebates, as well as costs related to other service
providers (e.g. retail card distributor and MSA). We negotiate prices for the provision of services and products with vendors in our network. In many cases, prices are pre-negotiated under a contract or pre-agreed price list with vendors. Prior to
procuring products or services, we typically obtain written or verbal authorization and pricing approval from customers to minimize reimbursement risk. We also typically finalize the cost of products and services with our vendors before delivery.



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Gross Profit. Gross profit reflects the differential between the price at which we sell our products and services
and the cost of revenue. Margins are positively affected when we negotiate lower costs from our vendors without a change in pricing to our customers. Conversely, margins are negatively affected when we lower prices charged to customers without
receiving a reduction in costs from vendors. Examples of this include customer negotiations where we agree to lower prices (for example, volume purchases or length of contracts) as well as certain legislative changes which result in a decrease in
pharmaceutical prices that can be charged. Fluctuations in revenue or the cost of revenue do not necessarily result in corresponding changes in gross profit margins. For example, in the Pharmaceuticals product line, the price at which we are able to
procure pharmaceuticals and the prices we charge customers are frequently tied to a common measurement, such as average wholesale price (AWP). As the benchmark moves up or down, revenue and cost of revenue move correspondingly, leaving
gross profit margins largely unaffected. Recently, the proportion of generic drugs dispensed has increased. This has generally reduced revenue while improving overall gross margins.

Significant customers.For the three months ended March 31, 2008, our largest customer, Sedgwick Claims Management Services, Inc., and its affiliates, accounted for approximately 17.0% of our billings for
the period versus 9.8% for the three months ended March 31, 2007. Billings to our top ten customers for the three month period ended March 31, 2008 represented 43% of total billings for this period and 49% for the three months ended
March 31, 2007.

Operating Expenses. Operating expenses include cash compensation, as well as non-cash compensation associated with stock
compensation, other costs associated with our sales force and general and administrative expenses, including expenses related to information technology, accounting, human resources, travel, professional fees, corporate overhead and bad debt
expenses.

Results of Operations

Three Months Ended
March 31, 2008 compared to Three Months Ended March 31, 2007.

Total Revenue



|                              |  |                                      |        |      |   |                    |  |   |               |   |  |      |   
|----------------------------- |  | ------------------------------------ | ------ | ---- | - | ------------------ |  | - | ------------- | - |  | ---- | --
|                              |  | For the Three Months Ended March 31, |       
|                              |  | (dollars in thousands)               |        |      |   |                    |  |  
|                              |  | 2008                                 |        | 2007 |   | Increase(Decrease) |  |   | PercentChange |  
|Pharmaceutical                |  | $                                    | 44,681 |      | $ | 45,952             |  | $ | (1,271        | ) |  | (2.8 | )%
|Medical Products and Services |  | $                                    | 40,386 |      | $ | 39,439             |  | $ | 947           |   |  | 2.4  | % 
|                              |  |                                      |        |      |   |                    |  |   |               |   |  |      |   
|Total Net Revenue             |  | $                                    | 85,067 |      | $ | 85,391             |  | $ | (324          | ) |  | (.3  | )%
|                              |  |                                      |        |      |   |                    |  |   |               |   |  |      |   

This overall decrease in revenue resulted from the loss of the Liberty Mutual PBM Agreement and the loss of a
non-contracted ancillary customer, partially offset by additional revenue generated by acquisitions during the quarter as well as new customer wins in the fourth quarter of 2007 and in the current quarter.

Excluding the impact of the recent acquisitions, during the three months ended March 31, 2008, we served 4.0% fewer individual patients as compared to the same
period in 2007. This decline in patients served is primarily the result of the loss of the Liberty Mutual PBM Agreement and the loss of a non-contracted ancillary customer.

Pharmaceutical Revenue



|                                     |  |                                      |        |      |   |                    |  |   |               |   |  |       |   
|------------------------------------ |  | ------------------------------------ | ------ | ---- | - | ------------------ |  | - | ------------- | - |  | ----- | --
|                                     |  | For the Three Months Ended March 31, |       
|                                     |  | 2008                                 |        | 2007 |   | Increase(Decrease) |  |   | PercentChange |  
|                                     |  | (dollars in thousands)               |        |      |   |                   
|Pharmacy Benefit Management Services |  | $                                    | 42,231 |      | $ | 43,396             |  | $ | (1,165        | ) |  | (2.7  | )%
|Mail Order Services                  |  | $                                    | 1,974  |      | $ | 2,556              |  | $ | (582          | ) |  | (22.8 | )%
|MSAs                                 |  | $                                    | 476    |      | $ | 0                  |  | $ | 476           |   |  |       |   
|                                     |  |                                      |        |      |   |                    |  |   |               |   |  |       |   
|Total Net Revenue                    |  | $                                    | 44,681 |      | $ | 45,952             |  | $ | (1,271        | ) |  | (2.8  | )%
|                                     |  |                                      |        |      |   |                    |  |   |               |   |  |       |   



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The decrease in Pharmacy Benefit Management Services revenue for the three month period ended March 31, 2008, as
compared to the same period in 2007, is due primarily to the impact of the loss of the Liberty Mutual PBM Agreement in 2007, which was partially offset by new PBM customers as well as MSA revenue from the Speedy acquisition. Excluding the loss of
the Liberty Mutual PBM Agreement, PBM revenue increased by 23% for the period ending March 31, 2008 as compared to the same period of the prior year. The overall decline is also partially attributable to the decline in customer claims volume,
which is partially offset by the increase in the Companys share of these claims. The decline in Mail Order Services revenues period over period was due primarily to attrition of long-term mail order patients who have been in the mail order
program since the inception of our retail pharmaceutical services program, combined with a shift in the focus of management toward driving retail pharmacy network penetration. All of these factors combined have resulted in less mail order conversion
opportunities despite the economic benefit to the customer. The addition of MSA revenue in the first quarter of 2008 is due solely to the acquisition of Speedy on January 27, 2008 as the related revenue is attributable to the partial period
from January 28, 2008 through March 31, 2008.

Total prescription fills decreased by 2.5% for the three months ended March 31, 2008 as
compared to the same period in 2007 due primarily to the loss of the Liberty Mutual PBM Agreement, which was partially offset by new customers. Excluding the loss of the Liberty Mutual PBM Agreement, total prescription fills increased by 25.8%.

Excluding the revenue generated from ZoneCare, first quarter PBM revenue decreased $1.7 million compared to the same period in 2007 primarily due to the
loss of the Liberty Mutual PBM Agreement, which was offset by new customers; the decrease in revenue reflects a decline related to prescription fills of $1.1 million, and a shift in mix from brand to generic of $1.4 million, partially offset by the
impact of favorable pricing of $0.8 million.

The shift to generic fills is due primarily to industry-wide carrier initiatives that specify a generic fill
if available. Generic prescription fills, when compared to Brand, typically result in lower revenue, but higher margin for the Company. Generic fills as a percent of total fills was 69.4% of all fills for the three months ended March 31, 2008
versus 67.2% as compared to the same period in 2007.

Medical Products and Services Revenue



|                  |  |                                      |        |      |   |                    |  |   |               |   |  |      |   
|----------------- |  | ------------------------------------ | ------ | ---- | - | ------------------ |  | - | ------------- | - |  | ---- | --
|                  |  | For the Three Months Ended March 31, |       
|                  |  | (dollars in thousands)               |        |      |   |                    |  |  
|                  |  | 2008                                 |        | 2007 |   | Increase(Decrease) |  |   | PercentChange |  
|Medical Products  |  | $                                    | 21,281 |      | $ | 23,716             |  | $ | (2,435        | ) |  | (9.9 | )%
|Medical Services  |  | $                                    | 19,105 |      | $ | 15,723             |  | $ | 3,382         |   |  | 21.5 | % 
|                  |  |                                      |        |      |   |                    |  |   |               |   |  |      |   
|Total Net Revenue |  | $                                    | 40,386 |      | $ | 39,439             |  | $ | 947           |   |  | 2.4  | % 
|                  |  |                                      |        |      |   |                    |  |   |               |   |  |      |   

The increase in total Medical Products and Services revenue is primarily due to an increase in Medical Services
due to the addition of revenue from ZoneCare which was offset by the decline in Medical Products revenue as a result of the loss of a non-contracted ancillary customer in mid-2007. The non-contracted ancillary customer accounted for approximately
$2.8 million of revenue for the period ended March 31, 2007. The acquisition of Speedy contributed $3.7 million of Medical Services revenue from the date of acquisition through the end of the quarter.

Total orders decreased by approximately 1.1% while the average billing per order increased 3.3% for the period ended March 31,



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2008 when compared to the same period of the prior year. Excluding the acquisition of ZoneCare, total orders decreased by fifteen thousand, whereas billings
per order increased by 9.4% for the period ended March 31, 2008 when compared to the same period of the prior year. The decline in orders is primarily the result of the loss of the non-contracted ancillary customer as discussed previously.

Cost of Revenue



|                              |  |                                      |        |      |   |                    |  |   |               |   |  |      |   
|----------------------------- |  | ------------------------------------ | ------ | ---- | - | ------------------ |  | - | ------------- | - |  | ---- | --
|                              |  | For the Three Months Ended March 31, |       
|                              |  | (dollars in thousands)               |        |      |   |                    |  |  
|                              |  | 2008                                 |        | 2007 |   | Increase(Decrease) |  |   | PercentChange |  
|Pharmaceutical                |  | $                                    | 37,539 |      | $ | 37,871             |  | $ | (332          | ) |  | (0.9 | )%
|Medical Products and Services |  | $                                    | 30,536 |      | $ | 30,280             |  | $ | 256           |   |  | 0.8  | % 
|                              |  |                                      |        |      |   |                    |  |   |               |   |  |      |   
|Total Cost of Revenue         |  | $                                    | 68,075 |      | $ | 68,151             |  | $ | (76           | ) |  | (0.1 | )%
|                              |  |                                      |        |      |   |                    |  |   |               |   |  |      |   

Cost of revenue, as a percentage of revenue, was 80.0% for the three month period ended March 31, 2008, an
increase of 0.2% as compared to the same period in 2007. This increase as a percentage of revenue is primarily due to the decrease in pharmaceutical margin offsetting the improvement in Medical Products and Services driven by the acquisitions
earlier this year.

Pharmaceutical cost of revenue decreases are a result of decreases in the total number of prescription fills for the three month period
offset by an increase in the average cost per fill which increased 3.0% per fill, for the three months ended March 31, 2008 as compared to the same period in 2007. The overall decrease in PBM margin as a percentage of revenue is due to the
average increase in cost per fill of 3.0% whereas average revenue per fill remained flat when compared to the same period in 2007.

Medical Products and
Services cost of revenue increases are primarily a result of increased revenue. Medical Products and Services gross margin was 24.4% for the three month period ended March 31, 2008, an absolute improvement of 1.2%, as compared to the same
period in 2007. The improvement in Medical Products and Services gross margin is associated with revenue growth in higher margin product and service lines combined with favorable vendor pricing actions. Specifically, the acquisitions in the first
quarter of fiscal 2008 add revenue from predominantly higher margin product lines such as transportation and translation, which has positively affected the overall product mix.

Operating Expenses. Total operating expenses of $12.4 million include $1.0 million of operating expenses relating to acquired entities in the first quarter of 2008 as compared to $11.8 million of operating
expenses for the same period in 2007. Excluding the acquired entities, operating expenses decreased $0.4 for the three months ended March 31, 2008 as compared to the same period in 2007. The $0.4 million decrease is primarily attributable to a
$0.4 million decrease in bad debt expense and a $0.1 million decrease in personnel costs from a reduction in headcount, which was partially offset by a $0.1 increase in rent related to the new corporate facility. The $1.0 operating expenses of the
acquired entities include $0.7 million of personnel expenses, $0.1 million of rent expense, and $0.2 of general office expenses.

Bad debt expense, which
is included as a component of operating expense, was $1.7 million in the three months ended March 31, 2008 as compared with $2.1 million in the same period in 2007. This decrease is due to improved collections as a result of process improvement
initiatives.

Depreciation and Amortization. For the three month period ended March 31, 2008, depreciation and amortization amounted to $3.2
million as compared to $2.9 million in the same period in 2007. The increase over the three month period in the prior year is due to the increase in capitalized leasehold improvements during the third quarter of 2007 related to the new leased
facility as well as the amortization of the intangible assets acquired during the quarter.

Operating Income. For the three month period ended
March 31, 2008, operating income decreased to $1.5 million when compared to $2.4 million



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in the same period last year, primarily due to: (a) the loss of the Liberty Mutual PBM Agreement (b) the loss of a non-contracted ancillary
customer and (c) increase in PBM costs, which is partially offset by: (a) additional new customers and (b) the additional margin added from the recent acquisitions.

Interest Expense. Interest expense decreased by $0.2 million for the three month period ended March 31, 2008 as compared to the same period in 2007. The decrease in interest expense is a result of a
decrease in the LIBOR rate of approximately 230 basis points, which primarily affects the debt not associated with the interest rate swap.

Income Tax
Benefit. For the three month period ended March 31, 2008, the income tax benefit increased $0.1 million as compared to the same period in 2007, as a result of the higher pre-tax loss as well as the $0.2 million adjustment described in
Footnote No. 6 of the Notes to the Condensed Consolidated Financial Statements. We currently expect to be able to utilize the tax benefit through the reversal of deferred tax liabilities in future periods. However, continuing operating losses
may result in the inability to use some or all of the Companys tax benefits.

Liquidity and Capital Resources

Operating activities provided $3.5 million of cash flow for the three month period ended March 31, 2008 compared to a use of $1.1 million in the same period in 2007.
The increase in cash provided by operating cash flow activities is due primarily to an increase in accounts payable and accrued expenses of approximately $4.8 million as compared to a decrease of $1.1 million for the same period in the prior year,
which was partially offset by a net loss of $2.5 million as compared to a net loss of $1.7 million for the same period in the prior year. Days sales outstanding (DSO) was 67 days for the three month period ended March 31,
2008, as compared to 68 days for the three months ended December 31, 2007 and 66 days for the three months ended March 31, 2007.

Investing
activities used cash of $32.6 million in the three month period ended March 31, 2008 as compared to $0.6 million for the same period in 2007. The increase in cash used is due to the acquisitions of ZoneCare, Speedy, and Select, which used $31.8
million net of cash acquired. Capital expenditures of $0.8 million were incurred in the three month period ended March 31, 2008 as compared to $0.6 million in the same period in 2007. Capital expenditures incurred in the three months ended
March 31, 2008 as well as the same period in the prior year predominately related to software development costs and computer equipment improvements.

Cash provided by financing activities related to the acquisitions described above. $32.6 million was contributed by the parent to fund the acquisitions of ZoneCare, Speedy, and SelectMRI during the three month period ended March 31,
2008. There were no cash transactions related to financing activities for the three month period ended March 31, 2007.

Our senior secured revolving
credit facility consists of a $40 million revolving loan, subject to a borrowing base test. Based on the covenant levels under the senior secured revolving credit facility, we had, as of March 31, 2008, $9.4 million of available borrowing
capacity under the revolving credit facility, a $5.3 million increase from December 31, 2007, and had no additional borrowings on its revolving line of credit during the three month period ended March 31, 2008.

The senior secured revolving credit facility is guaranteed by the Parent, and secured by a first priority lien on substantially all of the Companys and the
Parents current and future assets, including all of the capital stock of the Company.

We believe that, based on current levels of operations and
anticipated growth, cash from operations, together with other available sources of liquidity, including borrowings available under our senior secured revolving credit facility, will be sufficient to fund operations, anticipated capital expenditures
and required payments on our debt for at least the next 12 months. In connection with our borrowings, we made interest payments totaling $5.1 million in the three month period ended March 31, 2008. Our available sources of liquidity are
dependent upon future operating performance, which, in turn, is subject to factors beyond our control, including the conditions of the workers compensation industry. The Company cannot assure that its business will generate cash from
operations, or that it will be able to obtain financing from other sources, sufficient to satisfy its debt service or other requirements.



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As of March 31, 2008, the Company was compliant with all debt covenants.

Critical Accounting Estimates and Policies

There has been no change
in the Companys Critical Accounting Estimates and Policies, as disclosed in the Annual Report on Form 10-K for the year ended December 31, 2007.

The Company has long term contractual obligations that were summarized in a table of aggregate contractual obligations in our Form 10-K for fiscal year ended December 31, 2007. There have been no material changes to those obligations since
December 31, 2007.

Item 3  Quantitative and Qualitative Disclosures About Market Risk

Due to the significant amount of indebtedness
that we have incurred in connection with the Transactions, we are exposed to interest rate risk. Pursuant to the terms of our senior secured revolving credit facility, we are required to enter into interest rate swap contracts such that at least 50%
of all of our and our parents indebtedness is subject to fixed interest rate protection. Based on our current hedging positions, under which we have secured a fixed rate for over 50% of our indebtedness, and outstanding debt at March 31,
2008, a 1% increase in interest rates would result in an increase in interest expense of $0.4 million.

Item 4  Controls and Procedures

Managements Evaluation of the Companys Disclosure Controls and
Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are intended to ensure that information required to be disclosed in the Companys reports submitted under the Securities Exchange Act of 1934, as
amended (the Exchange Act), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. These controls and procedures also are intended to ensure that information required to be
disclosed in such reports is accumulated and communicated to management to allow timely decisions regarding required disclosures.

The Companys Chief
Executive Officer and Chief Financial Officer, with the participation of other members of the Companys management, have evaluated the effectiveness of the Companys disclosure controls and procedures (as such term is defined in Rules 13a
 15(e) and 15d  15(e) under the Exchange Act) and have concluded that the Companys disclosure controls and procedures were effective for their intended purposes as of the end of the period covered by this report.

Changes in Internal Control Over Financial Reporting

There
were no changes in the Companys internal control over financial reporting that occurred during the quarter ended March 31, 2008 that materially affected, or are reasonably likely to materially affect, the Companys internal control
over financial reporting.

Part II  Other Information

Item 1  Legal Proceedings

We are from time to time involved in litigation incidental to the conduct of our
business. We believe that no litigation currently pending against us, if adversely decided, would have a material adverse effect on our financial position or results of operations.

Item 1A  Risk Factors

There have been no material changes to the risk factors previously disclosed in the
Companys Annual Report on Form 10-K for the year ended December 31, 2007.



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Item 2  Unregistered Sales of Equity Securities and Use of Proceeds

The Company did not have any sales of
unregistered equity securities during the first quarter of 2008. See Note 2 to the Notes to Condensed Consolidated Financial Statements in this report for sales of equity securities by the Companys Parent in connection with the Companys
acquisitions during the first quarter of 2008.

Item 3  Defaults upon Senior Securities

None

Item 4  Submission of Matters to a Vote of Security Holders

None

Item 5  Other Information

None

Item 6  Exhibits

Pursuant to the terms of the Indenture dated as of June 21, 2005, among the Registrant,
MCP-MSC Acquisition, Inc. and U.S. Bank National Association relating to the Senior Secured Floating Rate Notes Due 2011, the Registrant is not required to provide the certifications contained in exhibits 31.1, 31.2, 32.1 and 32.2.



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly authorized.



|                   |  |  |  |                              |  |                                             
|------------------ |  |  |  | ---------------------------- |  | --------------------------------------------
|                   |  |  |  | MSCMedical Services Company
|                   |  |  | 
|Date: May 15, 2008 |  |  |  | By:                          |  | /s/ JOSEPH P. DELANEY                       
|                   |  |  |  |                              |  | Joseph P. Delaney                           
|                   |  |  |  |                              |  | President and Chief Executive Officer       
|                   |  |  |  |                              |  | (principal executive officer)               
|                   |  |  | 
|Date: May 15, 2008 |  |  |  | By:                          |  | /s/ ROBERT A. DIPROVA                       
|                   |  |  |  |                              |  | Robert A. DiProva, Chief Financial Officer  
|                   |  |  |  |                              |  | (principal financial and accounting officer)



27