UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

|(Mark One) |                                                                                                                                                  
|---------- | -------------------------------------------------------------------------------------------------------------------------------------------------
|ý          | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2007             
|o          | 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: 000-20086

UNIVERSAL HOSPITAL SERVICES, INC.(Exact name of registrant as specified in its charter)

|Delaware                                                       |  | 41-0760940                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)

7700 France Avenue South, Suite 275
Edina, Minnesota 55435-5228(Address of principal executive offices, including zip code)

(952) 893-3200(Registrant's telephone number, including area code)

Not Applicable(Former name, former address and former fiscal year, if changed since last report)

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 o No ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

Larger
accelerated filer o                Accelerated
filer o                Non-accelerated filer ý

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

Number of shares of common stock outstanding as of July 31, 2007: 1,000.00



---





PART IFINANCIAL INFORMATION

Item 1. Financial StatementsUnaudited

Universal Hospital Services, Inc.        Balance Sheets(in thousands, except share and per share information)(unaudited)

|                                                  |                                                                                                                                                | June 30,
2007
(Successor)                               |         |         |         | December 31,
2006
(Predecessor) | 
|------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------- | ------- | ------- | ------- | ------------------------------- | 
|Assets                                            |                                                                                                                                                |                                                         |         |         |         |                                 | 
|Current assets:                                   |                                                                                                                                                |                                                         |         |         |         |                                 | 
|                                                  | Cash and cash equivalents                                                                                                                      |                                                         | $       | 3,483   |         |                                 | 
|                                                  | Accounts receivable, less allowance for doubtful accounts of $1,250 at June 30, 2007 (Successor) and $1,350 at December 31, 2006 (Predecessor) |                                                         |         | 45,693  |         |                                 | 
|                                                  | Inventories                                                                                                                                    |                                                         |         | 4,659   |         |                                 | 
|                                                  | Deferred income taxes                                                                                                                          |                                                         |         | 5,715   |         |                                 | 
|                                                  | Other current assets                                                                                                                           |                                                         |         | 2,863   |         |                                 | 
|                                                  |                                                                                                                                                |                                                         |         |         |         |                                 | 
|                                                  |                                                                                                                                                | Total current assets                                    |         |         | 62,413  |                                 | 
|Property and equipment, net:                      |                                                                                                                                                |                                                         |         |         |         |                                 | 
|                                                  | Movable medical equipment, net                                                                                                                 |                                                         |         | 210,450 |         |                                 | 
|                                                  | Property and office equipment, net                                                                                                             |                                                         |         | 18,057  |         |                                 | 
|                                                  |                                                                                                                                                |                                                         |         |         |         |                                 | 
|                                                  |                                                                                                                                                | Total property and equipment, net                       |         |         | 228,507 |                                 | 
|Other long-term assets:                           |                                                                                                                                                |                                                         |         |         |         |                                 | 
|                                                  | Goodwill                                                                                                                                       |                                                         |         | 291,970 |         |                                 | 
|                                                  | Other intangibles, net                                                                                                                         |                                                         |         | 290,455 |         |                                 | 
|                                                  | Other, primarily deferred financing costs, net                                                                                                 |                                                         |         | 17,964  |         |                                 | 
|                                                  |                                                                                                                                                |                                                         |         |         |         |                                 | 
|                                                  |                                                                                                                                                | Total assets                                            |         | $       | 891,309 |                                 | 
|                                                  |                                                                                                                                                |                                                         |         |         |         |                                 | 
|Liabilities and Shareholders' Equity (Deficiency) |                                                                                                                                                |                                                         |         |         |         |                                 | 
|Current liabilities:                              |                                                                                                                                                |                                                         |         |         |         |                                 | 
|                                                  | Current portion of long-term debt                                                                                                              |                                                         | $       | 3,334   |         |                                 | 
|                                                  | Book overdrafts                                                                                                                                |                                                         |         |        |         |                                 | 
|                                                  | Accounts payable                                                                                                                               |                                                         |         | 12,181  |         |                                 | 
|                                                  | Accrued compensation                                                                                                                           |                                                         |         | 10,713  |         |                                 | 
|                                                  | Accrued interest                                                                                                                               |                                                         |         | 3,729   |         |                                 | 
|                                                  | Other accrued expenses                                                                                                                         |                                                         |         | 4,660   |         |                                 | 
|                                                  |                                                                                                                                                |                                                         |         |         |         |                                 | 
|                                                  |                                                                                                                                                | Total current liabilities                               |         |         | 34,617  |                                 | 
|Long-term debt, less current portion              |                                                                                                                                                |                                                         | 486,408 |         |         |                                 | 
|Pension and other long-term liabilities           |                                                                                                                                                |                                                         | 5,495   |         |         |                                 | 
|Payable to Parent                                 |                                                                                                                                                |                                                         | 350     |         |         |                                 | 
|Deferred income taxes                             |                                                                                                                                                |                                                         | 120,652 |         |         |                                 | 
|Commitments and contingencies (Note 10)           |                                                                                                                                                |                                                         |         |         |         |                                 | 
|Shareholders' equity (deficiency):                |                                                                                                                                                |                                                         |         |         |         |                                 | 
|Predecessor:                                      |                                                                                                                                                |                                                         |         |         |         |                                 | 
|                                                  | Common stock, $0.01 par value; 500,000,000 shares authorized, 123,463,600.21 shares issued and outstanding at December 31, 2006                |                                                         |         |        |         |                                 | 
|Successor:                                        |                                                                                                                                                |                                                         |         |         |         |                                 | 
|                                                  | Common stock, $0.01 par value; 1,000 shares authorized, issued and outstanding at June 30, 2007                                                |                                                         |         |        |         |                                 | 
|                                                  | Additional paid-in capital                                                                                                                     |                                                         |         | 248,794 |         |                                 | 
|                                                  | Accumulated deficit                                                                                                                            |                                                         |         | (2,548  | )       |                                 | 
|                                                  | Accumulated other comprehensive loss                                                                                                           |                                                         |         | (2,459  | )       |                                 | 
|                                                  |                                                                                                                                                |                                                         |         |         |         |                                 | 
|                                                  |                                                                                                                                                | Total shareholders' equity (deficiency)                 |         |         | 243,787 |                                 | 
|                                                  |                                                                                                                                                |                                                         |         |         |         |                                 | 
|                                                  |                                                                                                                                                | Total liabilities and shareholders' equity (deficiency) |         | $       | 891,309 |                                 | 
|                                                  |                                                                                                                                                |                                                         |         |         |         |                                 | 

The
accompanying notes are an integral part of the unaudited financial statements.

1

---



Universal Hospital Services, Inc.        Statements of Operations(in thousands)(unaudited)

|                                                |                                                                                                                               | Month
Ended
June 30,
2007
(Successor) |        |        |   | Two
Months
Ended
May 31,
2007
(Predecessor) |   | Three
Months
Ended
June 30,
2006
(Predecessor) |        
|----------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------- | ------------------------------------- | ------ | ------ | - | ------------------------------------------- | - | ---------------------------------------------- | -------
|Revenue                                         |                                                                                                                               |                                       |        |        |   |                                             |   |                                                |        
|Medical equipment outsourcing                   |                                                                                                                               | $                                     | 16,695 |        |   |                                             | $ | 33,866                                         |        
|Technical and professional services             |                                                                                                                               |                                       | 3,630  |        |   |                                             |   | 6,748                                          |        
|Medical equipment sales and remarketing         |                                                                                                                               |                                       | 1,277  |        |   |                                             |   | 3,359                                          |        
|                                                |                                                                                                                               |                                       |        |        |   |                                             |   |                                                |        
|                                                | Total revenues                                                                                                                |                                       |        | 21,602 |   |                                             |   |                                                | 43,973 
|Cost of Sales                                   |                                                                                                                               |                                       |        |        |   |                                             |   |                                                |        
|Cost of medical equipment outsourcing           |                                                                                                                               |                                       | 5,916  |        |   |                                             |   | 11,193                                         |        
|Cost of technical and professional services     |                                                                                                                               |                                       | 2,526  |        |   |                                             |   | 4,801                                          |        
|Cost of medical equipment sales and remarketing |                                                                                                                               |                                       | 1,212  |        |   |                                             |   | 2,677                                          |        
|Movable medical equipment depreciation          |                                                                                                                               |                                       | 4,632  |        |   |                                             |   | 8,250                                          |        
|                                                |                                                                                                                               |                                       |        |        |   |                                             |   |                                                |        
|                                                | Total costs of medical equipment outsourcing, technical and professional services and medical equipment sales and remarketing |                                       |        | 14,286 |   |                                             |   |                                                | 26,921 
|                                                |                                                                                                                               |                                       |        |        |   |                                             |   |                                                |        
|Gross margin                                    |                                                                                                                               |                                       | 7,316  |        |   |                                             |   | 17,052                                         |        
|Selling, general and administrative             |                                                                                                                               |                                       | 6,604  |        |   |                                             |   | 12,892                                         |        
|Transaction and related costs                   |                                                                                                                               |                                       |       |        |   |                                             |   | 26,379                                         |        
|                                                |                                                                                                                               |                                       |        |        |   |                                             |   |                                                |        
|                                                | Operating income (loss)                                                                                                       |                                       |        | 712    |   |                                             |   |                                                | (22,219
|Interest expense                                |                                                                                                                               |                                       | 3,800  |        |   |                                             |   | 5,747                                          |        
|Loss on extinguishment of debt                  |                                                                                                                               |                                       | 1,041  |        |   |                                             |   | 22,396                                         |        
|                                                |                                                                                                                               |                                       |        |        |   |                                             |   |                                                |        
|                                                | Income (loss) before income taxes                                                                                             |                                       |        | (4,129 | ) |                                             |   |                                                | (50,362
|Provision (benefit) for income taxes            |                                                                                                                               |                                       | (1,581 | )      |   |                                             |   | 304                                            |        
|                                                |                                                                                                                               |                                       |        |        |   |                                             |   |                                                |        
|                                                | Net loss                                                                                                                      |                                       | $      | (2,548 | ) |                                             |   | $                                              | (50,666
|                                                |                                                                                                                               |                                       |        |        |   |                                             |   |                                                |        

The
accompanying notes are an integral part of the unaudited financial statements.

2

---





Universal Hospital Services, Inc.        Statements of Operations(in thousands)(unaudited)

|                                                |                                                                                                                               | Month
Ended
June 30,
2007
(Successor) |        |        |   | Five
Months
Ended
May 31,
2007
(Predecessor) |   | Six
Months
Ended
June 30,
2006
(Predecessor)
|----------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------- | ------------------------------------- | ------ | ------ | - | -------------------------------------------- | - | --------------------------------------------
|Revenue                                         |                                                                                                                               |                                       |        |        |   |                                              |   |                                             
|Medical equipment outsourcing                   |                                                                                                                               | $                                     | 16,695 |        |   |                                              | $ | 84,855                                      
|Technical and professi onal services            |                                                                                                                               |                                       | 3,630  |        |   |                                              |   | 14,800                                      
|Medical equipment sales and remarketing         |                                                                                                                               |                                       | 1,277  |        |   |                                              |   | 7,867                                       
|                                                |                                                                                                                               |                                       |        |        |   |                                              |   |                                             
|                                                | Total revenues                                                                                                                |                                       |        | 21,602 |   |                                              |   |                                             
|Cost of Sales                                   |                                                                                                                               |                                       |        |        |   |                                              |   |                                             
|Cost of medical equipment outsourcing           |                                                                                                                               |                                       | 5,916  |        |   |                                              |   | 27,694                                      
|Cost of technical and professional services     |                                                                                                                               |                                       | 2,526  |        |   |                                              |   | 10,124                                      
|Cost of medical equipment sales and remarketing |                                                                                                                               |                                       | 1,212  |        |   |                                              |   | 6,366                                       
|Movable medical equipment depreciation          |                                                                                                                               |                                       | 4,632  |        |   |                                              |   | 18,512                                      
|                                                |                                                                                                                               |                                       |        |        |   |                                              |   |                                             
|                                                | Total costs of medical equipment outsourcing, technical and professional services and medical equipment sales and remarketing |                                       |        | 14,286 |   |                                              |   |                                             
|                                                |                                                                                                                               |                                       |        |        |   |                                              |   |                                             
|Gross margin                                    |                                                                                                                               |                                       | 7,316  |        |   |                                              |   | 44,826                                      
|Selling, general and administrative             |                                                                                                                               |                                       | 6,604  |        |   |                                              |   | 28,692                                      
|Transaction and related costs                   |                                                                                                                               |                                       |       |        |   |                                              |   | 26,891                                      
|                                                |                                                                                                                               |                                       |        |        |   |                                              |   |                                             
|                                                | Operating income (loss)                                                                                                       |                                       |        | 712    |   |                                              |   |                                             
|Interest expense                                |                                                                                                                               |                                       | 3,800  |        |   |                                              |   | 13,829                                      
|Loss on extinguishment of debt                  |                                                                                                                               |                                       | 1,041  |        |   |                                              |   | 22,396                                      
|                                                |                                                                                                                               |                                       |        |        |   |                                              |   |                                             
|                                                | Income (loss) before income taxes                                                                                             |                                       |        | (4,129 | ) |                                              |   |                                             
|Provision (benefit) for income taxes            |                                                                                                                               |                                       | (1,581 | )      |   |                                              |   | 492                                         
|                                                |                                                                                                                               |                                       |        |        |   |                                              |   |                                             
|                                                | Net income (loss)                                                                                                             |                                       | $      | (2,548 | ) |                                              |   | $                                           
|                                                |                                                                                                                               |                                       |        |        |   |                                              |   |                                             

The
accompanying notes are an integral part of the unaudited financial statements.

3

---



Universal Hospital Services, Inc.        Statements of Cash Flows(in thousands)(unaudited)

|                                                     |                                                                                   | Month
Ended
June 30,
2007
(Successor)                              |                                                     |          |         | Five Months
Ended
May 31,
2007
(Predecessor) |   | Six Months
Ended
June 30,
2006
(Predecessor) |        
|---------------------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------------------------------ | --------------------------------------------------- | -------- | ------- | -------------------------------------------- | - | -------------------------------------------- | -------
|Cash flows from operating activities:                |                                                                                   |                                                                    |                                                     |          |         |                                              |   |                                              |        
|                                                     | Net income (loss)                                                                 |                                                                    | $                                                   | (2,548   | )       |                                              |   | $                                            | (47,474
|                                                     | Adjustments to reconcile net income to net cash provided by operating activities: |                                                                    |                                                     |          |         |                                              |   |                                              |        
|                                                     |                                                                                   | Depreciation                                                       |                                                     |          | 5,301   |                                              |   |                                              |        
|                                                     |                                                                                   | Amortization of intangibles and deferred financing costs           |                                                     |          | 1,542   |                                              |   |                                              |        
|                                                     |                                                                                   | Non-cash write-off of deferred financing cost                      |                                                     |          | 290     |                                              |   |                                              |        
|                                                     |                                                                                   | Tender premium for purchase of 10.125% senior notes                |                                                     |          | 751     |                                              |   |                                              |        
|                                                     |                                                                                   | Provision for doubtful accounts                                    |                                                     |          | 18      |                                              |   |                                              |        
|                                                     |                                                                                   | Provision for inventory obsolescence                               |                                                     |          | 11      |                                              |   |                                              |        
|                                                     |                                                                                   | Non-cash charges related to step-up in carrying value of inventory |                                                     |          | 100     |                                              |   |                                              |        
|                                                     |                                                                                   | Non-cash stock-based compensation expense                          |                                                     |          | 350     |                                              |   |                                              |        
|                                                     |                                                                                   | Loss (gain) on sales and disposals of equipment                    |                                                     |          | 34      |                                              |   |                                              |        
|                                                     |                                                                                   | Deferred income taxes                                              |                                                     |          | (1,613  | )                                            |   |                                              |        
|                                                     | Changes in operating assets and liabilities:                                      |                                                                    |                                                     |          |         |                                              |   |                                              |        
|                                                     |                                                                                   | Accounts receivable                                                |                                                     |          | 592     |                                              |   |                                              |        
|                                                     |                                                                                   | Inventories                                                        |                                                     |          | 394     |                                              |   |                                              |        
|                                                     |                                                                                   | Other operating assets                                             |                                                     |          | (587    | )                                            |   |                                              |        
|                                                     |                                                                                   | Accounts payable                                                   |                                                     |          | 380     |                                              |   |                                              |        
|                                                     |                                                                                   | Other accrued expenses                                             |                                                     |          | (31,028 | )                                            |   |                                              |        
|                                                     |                                                                                   |                                                                    |                                                     |          |         |                                              |   |                                              |        
|                                                     |                                                                                   |                                                                    | Net cash provided by (used in) operating activities |          |         | (26,013                                      | ) |                                              |        
|                                                     |                                                                                   |                                                                    |                                                     |          |         |                                              |   |                                              |        
|Cash flows from investing activities:                |                                                                                   |                                                                    |                                                     |          |         |                                              |   |                                              |        
|                                                     | Movable medical equipment purchases                                               |                                                                    |                                                     | (2,593   | )       |                                              |   |                                              | (34,040
|                                                     | Property and office equipment purchases                                           |                                                                    |                                                     | (153     | )       |                                              |   |                                              | (1,720 
|                                                     | Proceeds from disposition of movable medical equipment                            |                                                                    |                                                     | 126      |         |                                              |   |                                              | 2,290  
|                                                     | Acquisition of the ICMS division of Intellamed, Inc.                              |                                                                    |                                                     |         |         |                                              |   |                                              | (14,590
|                                                     | Acquisition of Universal Hospital Services, Inc. by Parent                        |                                                                    |                                                     | (335,069 | )       |                                              |   |                                              |       
|                                                     |                                                                                   |                                                                    |                                                     |          |         |                                              |   |                                              |        
|                                                     |                                                                                   |                                                                    | Net cash used in investing activities               |          |         | (337,689                                     | ) |                                              |        
|                                                     |                                                                                   |                                                                    |                                                     |          |         |                                              |   |                                              |        
|Cash flows from financing activities:                |                                                                                   |                                                                    |                                                     |          |         |                                              |   |                                              |        
|                                                     | Proceeds under amended credit agreement                                           |                                                                    |                                                     |         |         |                                              |   |                                              | 73,625 
|                                                     | Payments under amended credit agreement                                           |                                                                    |                                                     | (74,550  | )       |                                              |   |                                              | (42,075
|                                                     | Proceeds under senior secured credit facility                                     |                                                                    |                                                     | 12,550   |         |                                              |   |                                              |       
|                                                     | Payments under senior secured credit facility                                     |                                                                    |                                                     | (550     | )       |                                              |   |                                              |       
|                                                     | Payments of principal under capital lease obligations                             |                                                                    |                                                     | (274     | )       |                                              |   |                                              | (1,618 
|                                                     | Proceeds from issuance of bonds                                                   |                                                                    |                                                     | 460,000  |         |                                              |   |                                              |       
|                                                     | Payment of deferred financing costs                                               |                                                                    |                                                     | (17,270  | )       |                                              |   |                                              |       
|                                                     | Repayment of 10.125% senior notes                                                 |                                                                    |                                                     | (250,055 | )       |                                              |   |                                              |       
|                                                     | Tender premium for purchase of 10.125% senior notes                               |                                                                    |                                                     | (751     | )       |                                              |   |                                              | (16,090
|                                                     | Cash equity contributions                                                         |                                                                    |                                                     | 239,754  |         |                                              |   |                                              |       
|                                                     | Change in book overdrafts                                                         |                                                                    |                                                     | (1,669   | )       |                                              |   |                                              | (119   
|                                                     | Proceeds from issuance of common stock                                            |                                                                    |                                                     |         |         |                                              |   |                                              | 19     
|                                                     |                                                                                   |                                                                    |                                                     |          |         |                                              |   |                                              |        
|                                                     |                                                                                   |                                                                    | Net cash provided by (used in) financing activities |          |         | 367,185                                      |   |                                              |        
|                                                     |                                                                                   |                                                                    |                                                     |          |         |                                              |   |                                              |        
|                                                     |                                                                                   | Net change in cash and cash equivalents                            |                                                     |          | 3,483   |                                              |   |                                              |        
|                                                     |                                                                                   |                                                                    |                                                     |          |         |                                              |   |                                              |        
|Cash and cash equivalents at the beginning of period |                                                                                   |                                                                    |                                                    |          |         |                                              |   |                                             |        
|                                                     |                                                                                   |                                                                    |                                                     |          |         |                                              |   |                                              |        
|Cash and cash equivalents at the end of period       |                                                                                   | $                                                                  | 3,483                                               |          |         |                                              | $ |                                             |        
|                                                     |                                                                                   |                                                                    |                                                     |          |         |                                              |   |                                              |        
|Supplemental cash flow information:                  |                                                                                   |                                                                    |                                                     |          |         |                                              |   |                                              |        
|                                                     | Interest paid                                                                     |                                                                    | $                                                   | 200      |         |                                              |   | $                                            | 17,599 
|                                                     |                                                                                   |                                                                    |                                                     |          |         |                                              |   |                                              |        
|                                                     | Movable medical equipment purchases included in accounts payable                  |                                                                    | $                                                   | 4,062    |         |                                              |   | $                                            | 5,103  
|                                                     |                                                                                   |                                                                    |                                                     |          |         |                                              |   |                                              |        
|                                                     | Deferred financing costs included in accounts payable                             |                                                                    | $                                                   | 300      |         |                                              |   | $                                            |       
|                                                     |                                                                                   |                                                                    |                                                     |          |         |                                              |   |                                              |        
|                                                     | Income taxes paid                                                                 |                                                                    | $                                                   | 34       |         |                                              |   | $                                            | 61     
|                                                     |                                                                                   |                                                                    |                                                     |          |         |                                              |   |                                              |        
|Non-cash activities:                                 |                                                                                   |                                                                    |                                                     |          |         |                                              |   |                                              |        
|                                                     | Equity contribution from management shareholders                                  |                                                                    | $                                                   | 9,039    |         |                                              |   | $                                            |       
|                                                     |                                                                                   |                                                                    |                                                     |          |         |                                              |   |                                              |        
|                                                     | Capital lease additions                                                           |                                                                    | $                                                   | 345      |         |                                              |   | $                                            | 2,142  
|                                                     |                                                                                   |                                                                    |                                                     |          |         |                                              |   |                                              |        

The accompanying notes are an integral part of the unaudited financial statements.

4

---





Universal Hospital Services, Inc.        NOTES TO UNAUDITED QUARTERLY FINANCIAL STATEMENTS

1.     Basis of Presentation

On May 31, 2007, UHS Holdco, Inc. ("Parent") acquired all of the outstanding capital stock of Universal Hospital Services, Inc. ("we", "our",
"the Company", or "UHS") for approximately $712.0 million in cash less debt, tender premium and accrued interest and capitalized leases. Parent is owned by affiliates of Bear Stearns Merchant
Manager III (Cayman), L.P. (together with its investing affiliates, "BSMB") and certain members of our management, whom we collectively refer to as the "equity investors." Parent and UHS Merger
Sub, Inc., a wholly owned subsidiary of Parent ("Merger Sub"), were corporations formed by BSMB solely for the purpose of completing the above-mentioned acquisition.

Before
the closing of the acquisition, the Company initiated a cash tender offer to purchase its $260.0 million outstanding aggregate principal amount of its 10.125% Senior Notes
due 2011, which the Company completed for $235.0 million of such notes on May 31, 2007, and Merger Sub issued $230.0 million in aggregate principal amount of its Second Lien
Senior Secured Floating Rate Notes due 2015 (the "Floating Rate Notes") and $230.0 million in aggregate principal amount of its 8.50% / 9.25% Second Lien Senior Secured PIK Toggle Notes due
2015 (the "PIK Toggle Notes" and together with the Floating Rate Notes, the "Notes"). The Notes were issued pursuant to a second lien senior indenture. Concurrently with the closing of the
acquisition, Merger Sub merged with and into the Company, which was the surviving corporation and the Company assumed Merger Sub's obligations with respect to the Notes.

The
Agreement and Plan of Merger, dated as of April 15, 2007, by and among the Company, Parent and Merger Sub and related documents resulted in the occurrence of the events
outlined in Note 5, which we collectively refer to as the "Transaction" or the "Acquisition."

Although
the Company continued as the same legal entity after the Acquisition, the accompanying statements of operations and cash flows present our results of operations and cash flows
for the periods preceding the Acquisition ("predecessor") and the periods succeeding the Acquisition ("successor"), respectively.

All
references to the second quarter of 2007 relate to the combined three-month period ended June 30, 2007. All references to the second quarter of 2006 relate to the three months
ended June 30, 2006 of the predecessor. All references to year-to-date 2007 refer to the combined six-month period ended June 30, 2007. All references
to year-to-date 2006 refer to the six months ended June 30, 2006 of the predecessor.

The
Acquisition and the allocation of the purchase price to the opening balance sheet accounts of the successor have been recorded as of the beginning of the first day of our new
accounting period (June 1, 2007).

The
interim financial statements included in this Form 10-Q have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United
States of America have been condensed or omitted, pursuant to such rules and regulations. These condensed financial statements should be read in conjunction with the financial statements and related
notes included in the Company's 2006 Annual Report on Form 10-K filed with the Securities and Exchange Commission.

The
interim financial statements presented herein as of June 30, 2007, reflect, in the opinion of management, all adjustments necessary for a fair presentation of the financial
position and the results of operations and cash flows for the periods presented. These adjustments are all of a normal,

5

---



recurring
nature. The results of operations for any interim period are not necessarily indicative of results for the full year.

The
December 31, 2006 balance sheet amounts were derived from audited financial statements, but do not include all disclosures required by accounting principles generally accepted
in the United States of America.

We
are required to make estimates and assumptions about future events in preparing financial statements in conformity with generally accepted accounting principles ("GAAP"). These
estimates and
assumptions affect the amounts of assets, liabilities, revenues and expenses at the date of the unaudited condensed consolidated financial statements. While we believe that our past estimates and
assumptions have been materially accurate, our current estimates are subject to change if different assumptions as to the outcome of future events are made. We evaluate our estimates and judgments on
an ongoing basis and predicate those estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances. We make adjustments to our
assumptions and judgments when facts and circumstances dictate. Since future events and their effects cannot be determined with absolute certainty, actual results may differ from the estimates used in
preparing the accompanying unaudited condensed financial statements.

A
description of our critical accounting policies is included in our Annual Report on Form 10-K for the year ended December 31, 2006.

Certain
prior period amounts have been reclassified to conform to current period presentation. We previously included transaction and related costs as a component of selling, general and
administrative expense. The reclassifications had no impact on gross margin, operating income (loss), income (loss) before income taxes or net income (loss) as previously reported.

2.     Comprehensive Income (Loss)

Comprehensive income is comprised of net income (loss) and other comprehensive loss. Other comprehensive loss includes unrealized gains and losses from
derivatives designated as cash flow hedges. Other comprehensive loss is displayed separately on the balance sheets. A reconciliation of net income (loss) to comprehensive income (loss) is provided
below:

Month Ended
June 30,
2007
(Successor)



Two Months
Ended
May 31,
2007
(Predecessor)

Three Months
Ended
June 30,
2006
(Predecessor)(in thousands)Net loss

$
(2,548
)


$
(50,666
)
$
(181
)Unrealized loss on cash flow hedge


(2,459
)






Comprehensive loss

$
(5,007
)


$
(50,666
)
$
(181
)


Month Ended
June 30,
2007
(Successor)



Five Months
Ended
May 31,
2007
(Predecessor)

Six Months
Ended
June 30,
2006
(Predecessor)(in thousands)Net income (loss)

$
(2,548
)


$
(47,474
)
$
3,373Unrealized loss on cash flow hedge


(2,459
)






Comprehensive income (loss)

$
(5,007
)


$
(47,474
)
$
3,373


6

---



3.     Common Stock

On May 31, 2007, in conjunction with the Transaction, predecessor retired all 123,480,264.21 of common shares and the successor authorized and issued 1,000
new shares of common stock with a par value of $0.01 per share.

4.     Recent Accounting Pronouncements

In February 2007, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 159, The Fair Value
Option for Financial Assets and Financial Liabilities("SFAS 159"), which permits entities to elect to measure many financial
instruments and certain other items at fair value that are not currently required to be measured at fair value. This election is irrevocable. The provisions of SFAS No. 159 are effective for
fiscal years beginning after November 15, 2007. We are currently evaluating the impact of this statement, but believe the adoption of SFAS 159 will not have a material impact on our
financial position or results of operations.

In
September 2006, the FASB issued SFAS No. 158,Employers Accounting for Defined Benefit Pension and Other Postretirement
Plans,an Amendment of FASB Statements No. 87, 88, 106 and 123(R). SFAS No. 158 requires employers to recognize the under funded or over funded status of a
defined benefit post retirement plan as an asset or liability in its statements of financial position and to recognize changes in the funded status in the year in which the changes occur through
accumulated other comprehensive income. Additionally, SFAS No. 158 requires employers to measure the funded status of a plan as of the date of its year-end statement of financial
position. The provisions of SFAS No. 158 are effective as of the end of the fiscal year ending after June 15, 2007. We are currently evaluating the impact of this statement, but believe
the adoption of SFAS No. 158 will not have a material impact on our financial position or results of operations.

In
September 2006, the FASB issued SFAS No. 157,Fair Value Measurements.SFAS No. 157 clarifies the principle that
fair value should be based on the assumptions that market participants would use when pricing an asset or liability. Additionally, it establishes a fair value hierarchy that prioritizes the
information used to develop those assumptions. The provisions of SFAS No. 157 are effective for fiscal years beginning after November 15, 2007. We believe the adoption of SFAS
No. 157 will not have a material impact on our financial position or results of operations.

5.     The Transaction

The Acquisition was completed on May 31, 2007 and was comprised of:



7

---





The
Acquisition occurred simultaneously with:



Transaction and Related Costs.During the five months ended May 31, 2007, we incurred
$26.9 million of expenses in connection with the Transaction. These expenses consisted primarily of:



Loss on Extinguishment of Debt.In connection with the Transaction, as detailed above, predeccessor
incurred $22.4 million of expense associated with the purchase of $235.0 million of our 10.125% Senior Notes in May 2007. The expense consisted of a call premium of
$16.1 million and the write-off of $6.3 million of unamortized deferred financing costs related to our repurchased 10.125% Senior Notes and Amended Credit Agreement.

Purchase Accounting

We have accounted for the Acquisition in accordance with the provisions of Statement of Financial Accounting Standards (SFAS) No. 141, Business
Combinations, whereby the purchase price paid to effect the Acquisition is allocated to state the acquired assets and liabilities at fair
value. The Acquisition and the allocation of the purchase price to the opening balance sheet accounts of the successor has been recorded as of the beginning of the first day of our new accounting
period (June 1, 2007). The purchase price was approximately $344.1 million (including non-cash management rollover

8

---



and
direct costs). The sources and uses of funds in connection with the Transaction and the partial redemption of our 10.125% Senior Notes are summarized below:

(in millions)Sources:Existing 10.125% Senior Notes

$
25.0Floating Rate Notes


230.0PIK Toggle Notes


230.0Capitalized leases


7.7Equity contribution (cash)


239.8Equity contribution (non-cash)


9.0Cash on hand


1.4Total Sources

$
742.9Uses:Consideration paid (including non-cash consideration of $9.0)

$
342.9Payment of existing debt


309.6Tender premium and accured interest


18.6Capitalized leases


7.7Existing 10.125% Senior Notes


25.0Buyer fees (including direct costs of $1.2)


30.9Seller fees


8.2Total Uses

$
742.9


In
connection with the preliminary purchase price allocation, we have engaged independent valuation firms to assist the Company in estimating the fair values of our
long-lived and intangible assets, inventories and liabilities based upon assumptions related to the future cash flows, discount rates and asset lives utilizing currently available
information. We have recorded preliminary purchase accounting adjustments to increase the carrying value of our property and equipment and inventory, to establish intangible assets for our customer
relationships, supply agreement, trade names and trademarks, technology database, non-compete agreements, favorable lease commitments and to revalue our long-term benefit plan
obligations, among other things. This allocation of the purchase price is preliminary and subject to our review and finalization.

Further
revisions to the purchase price allocation, including the tax impact of our valuation adjustments and final assessments of the transaction costs, will be made as additional
information becomes available and such revisions could be material.

9

---



The
purchase price has been preliminarily allocated as follows:

(in millions)Cash Consideration:Paid to shareholders and option holders




$
333.9Direct costs





1.2335.1Non-Cash Consideration





9.0Total Consideration




$
344.1Net assets acquired at historical cost




$
(132.5
)Adjustments to state acquired assets at fair value:Increase carrying value of inventories

$
0.2Increase carrying value of moveable medical equipment


60.4Increase in carrying value of property and office equipment


2.3Write-off of historical goodwill and other intangibles


(59.8
)Record intangible assets acquired:Customer relationships


87.0Supply agreement


26.0Trade names and trademarks


170.0Technology database


7.0Non-compete agreements


1.8Write-off of historical deferred rent credits


2.4Record favorable lease commitments


0.1Decrease in long-term pension liability


0.8Tax impact of valuation adjustments


(113.6
)184.6Net assets acquired at fair value





52.1Excess purchase price recorded as goodwill




$
292.0


Our
trade names and trademarks have indefinite lives and are not subject to amortization. Our trade names and trademarks and goodwill will be reviewed at least annually for impairment.
Our goodwill is generally not deductible for income tax purposes.

A
condensed balance sheet of the preliminary fair value of the acquired assets and liabilities as of May 31, 2007 follows:

(in millions)Current assets

$
90.7Property and equipment


231.9Goodwill


292.0Other intangible assets


291.8Other long-term assets


18.4Current liabilities


(61.4
)Long-term debt


(489.4
)Other long-term liabilities


(125.2
)$
248.8


10

---





Total estimated amortization of all Acquisition-related intangible assets during the period from July 1, 2007 through December 31, 2007 and for each of our fiscal years
ending December 31, 2008 to 2012 is currently estimated as follows:

(in thousands)July 1, 2007 to December 31, 2007

$
8,0682008


15,6352009


14,2532010


13,0212011


12,1642012


10,490Thereafter


46,824$
120,455


Pro Forma Financial Information.The following unaudited pro forma results of operations assume that
the Transaction closed on January 1, 2006. This unaudited pro forma information should not be relied upon as necessarily being indicative of the historical results that would have been obtained
if the Transaction had actually closed on that date, nor the results that may be obtained in the future.

|         |  | Three Months
Ended June 30,
2007 |         | Three Months
Ended June 30,
2006 |   | Six Months
Ended June 30,
2007 |   | Six Months
Ended June 30,
2006 |        
|-------- |  | -------------------------------- | ------- | -------------------------------- | - | ------------------------------ | - | ------------------------------ | -------
|
|Revenue  |  | $                                | 65,575  |                                  | $ | 55,128                         |   | $                              | 129,124
|Net loss |  | $                                | (10,865 | )                                | $ | (6,944                         | ) | $                              | (14,141

Included
in the determination of pro forma net loss for three and six months ended June 30, 2006 and the three and six months ended June 30, 2007 are pro forma charges for
various purchase accounting adjustments. These pro forma adjustments resulted in pro forma decreases to gross margin and higher interest and selling, general and administrative expenses in the three
and six months ended June 30, 2006 and the three and six months ended June 30, 2007 primarily from the increase in carrying value of movable medical equipment, property and office
equipment and the amortization of intangible assets acquired. Income taxes are provided at the estimated statutory rate.

6.     Acquisition by the Predecessor

As part of our strategy of growing our Technical and Professional Services segment, we completed the acquisition of customer contracts and other assets of the
ICMS division of Intellamed, Inc. ("Intellamed"), located in Bryan, Texas, on April 1, 2007. The purchase price was $14.6 million including direct costs and the assumption of
certain liabilities, having taken into account certain adjustments and a holdback. The purchase agreement provided for additional consideration to be paid if certain revenue targets are obtained
during the two years following the acquisition. We have not recorded any such additional consideration and will not unless we consider it probable of being paid. We financed this
purchase from borrowings under our predecessor Amended Credit Agreement. A condensed balance sheet of the acquired assets and liabilities as of April 1, 2007 is presented below.

(in millions)Current assets

$
0.1Property and equipment


0.1Goodwill


2.7Other intangible assets


13.3Current liabilities


(1.6
)$
14.6


11

---



The
above condensed balance sheet amounts were revalued at May 31, 2007 in conjunction with the Transaction (see Note 5).

Operating
results for the acquisition of the ICMS division of Intellamed are included in the Company's Statements of Operations from the date of acquisition. Pro forma results are not
presented as this acquisition is not considered material to the Company's financial statements.

7.     Stock-Based Compensation

Predecessor Stock-Based Compensation.We recorded non-cash charges for stock-based
compensation expense of approximately $8.0 million during the first five months of 2007 in relation to our 2003 Stock Option Plan, $6.7 of which resulted from the accelerated vesting of all
outstanding predecessor stock options in connection with the Transaction. During the first six months of 2006 we expensed $0.8 million related to the 2003 Stock Option Plan. In June 2007
we paid $23.9 million to our option holders for their remaining interests related to the 2003 Stock Option Plan.

Successor Stock-Based Compensation.On May 31, 2007, and in connection with the Transaction,
our Parent's board of directors adopted a new stock option plan ("2007 Stock Option Plan"). The 2007 Stock Option Plan provides for the issuance of 43.9 million nonqualified stock options of
our Parent to any of our and Parent's executives, other key employees and to consultants and certain directors of Parent, in each case, who have substantial responsibility for our or our Parent's
management and growth. On June 18, 2007 Parent issued 35.9 million options. All issued options were outstanding as of June 30, 2007. The options allow for the purchase of shares
of common stock of our Parent at prices equal to the stock's fair market value at the date of grant. Our Parent's compensation committee determined the exercise price by reference to the recent per
share valuation of the Parent resulting from the Transaction. The exercise price was approved by Parent's board of directors.

Options
granted have a ten-year contractual term and vest over approximately 5.5 years. The options are comprised of 50% in each of the following categories:
(1) options with fixed vesting schedules and (2) options that vest upon the achievement of established performance targets. Upon a sale of Parent or the Company, all of the unvested
options with fixed vesting schedules will vest and become exercisable, and the unvested options that vest upon the achievement of established performance targets will vest and become exercisable upon
BSMB's achievement of a certain internal rate of return on its investment in the Company, subject to certain conditions. The issued shares purchased by a grantee upon the exercise of such grantee's
options will be subject to certain restrictions on transferability as provided in the 2007 Stock Option Plan. Grantees are subject to non-competition, non-solicitation and
confidentiality requirements as set forth in their stock option grant agreements.

Using
the Black-Scholes option-pricing model, the per-share fair value of these options was approximately $0.42. In estimating the fair value of the options, the following
assumptions were made: Expected option life of 6.5 years; expected volatility of 30.50%; risk-free interest rate of 4.97%; and no dividend yield. Expected volatility is based on an
independent valuation of the stock of companies within our peer group. Given the lack of a true comparable company, the peer group consists of selected public health care companies representing our
suppliers, customers and competitors within certain product lines. The risk free-interest rate is based on the U.S. Treasury yield curve in effect at the grant date based on the expected
option life.

Although
Parent grants stock options, the Company recognizes compensation expense related to these options since the services are performed for its benefit. For the month ended
June 30, 2007, we recognized non-cash stock compensation expense of $0.4 million, which is primarily included in selling, general and administrative expenses. At
June 30, 2007, unearned non-cash stock-based compensation that we expect to recognize as expense over the next 5.5 years totals approximately $13.3 million, net of our
estimated forfeitures of 3.00%.

12

---



8.     Related Party Transaction

In connection with the Transaction, we and BSMB entered into a professional services agreement pursuant to which general advisory and management services are to
be provided to us with respect to financial and operating matters. The agreement requires us to pay: (i) an annual fee for ongoing advisory and management services equal to the greater of
$500,000 or 0.75% of our Adjusted EBITDA (as defined in the agreement) for the immediately preceding fiscal year, payable in quarterly installments, provided that the annual advisory fee for the
fiscal year ending December 31, 2007 shall be $500,000, as adjusted for the partial year; and (ii) a transaction fee in the amount of $10.0 million for services rendered in
connection with the Transaction, $3.5 million of which is included in deferred financing costs on the balance sheet and the remaining portion was expensed. The $10.0 million fee was paid
at the consummation thereof on May 31, 2007. The professional services agreement provides that BSMB will be reimbursed for its reasonable out-of-pocket expenses in
connection with certain activities undertaken pursuant to the agreement and will be indemnified for liabilities incurred in connection with its role under the agreement, other than for liabilities
resulting from its gross negligence or willful misconduct. The term of the professional services agreement commenced on May 31, 2007 and will remain in effect unless and until (i) either
party notifies the other of its desire to terminate, (ii) we are sold to a third-party purchaser or (iii) we consummate a qualified initial public offering.

The
Parent established the 2007 Stock Option Plan. Compensation expense related to service provided by the Company's employees is recognized in the accompanying Statements of Operations
with an offsetting Payable to Parent liability, which is not expected to be settled within the next twelve months.

9.     Long-Term Debt

Long-term debt consists of the following:

June 30,
2007
(Successor)



December 31,
2006
(Predecessor)(in thousands)PIK Toggle Notes

$
230,000



$
Floating Rate Notes


230,000




Senior secured credit facility


12,000




10.125% Senior Notes


9,945




260,000Amended Credit Agreement







43,000Capital lease obligations


7,797




7,191489,742




310,191Less: Current portion of long-term debt


(3,334
)



(3,056
)Total long-term debt

$
486,408



$
307,135


PIK Toggle Notes.On May 31, 2007, Merger Sub issued $230.0 million aggregate original
principal amount of 8.50% / 9.25% PIK Toggle Notes under the Second Lien Senior Indenture with Wells Fargo Bank, National Association, as trustee (the "Second Lien Senior Indenture"). See
"Second Lien Senior Indenture" below. At the closing of the Transaction, as the surviving corporation in the Acquisition, we assumed all the obligations of Merger Sub under the Second Lien Senior
Indenture.

For
any interest payment period through June 1, 2011, the Company may, at its option, elect to pay interest on the PIK Toggle Notes entirely in cash ("Cash Interest"), entirely by
increasing the principal amount of the outstanding PIK Toggle Notes, by issuing additional PIK Toggle Notes ("PIK Interest") or 50% Cash Interest and 50% PIK Interest. Cash Interest on the PIK Toggle
Notes accrues at the rate of 8.50% per annum. PIK Interest on the PIK Toggle Notes accrues at the rate of 9.25%

13

---



per
annum. After June 1, 2011, the Company is required to make all interest payments on the PIK Toggle Notes entirely as Cash Interest. All PIK Toggle Notes mature on June 1, 2015.
Interest on the PIK Toggle Notes is payable semiannually in arrears on each June 1 and December 1, commencing on December 1, 2007.

We
may redeem some or all of the PIK Toggle Notes at any time prior to June 1, 2011, at a price equal to 100% of the principal amount thereof, plus the applicable premium (as
defined by the Second Lien Senior Indenture), plus accrued and unpaid interest, if any, to the date of redemption. In addition, on or before June 1, 2010, we may redeem up to 40% of the
aggregate principal amount of the PIK Toggle Notes with the net proceeds of certain equity offerings.

Except
as noted above, we cannot redeem the PIK Toggle Notes until June 1, 2011. Thereafter we may redeem some or all of the PIK Toggle Notes at the redemption prices (expressed
as percentages of principal amount) set forth below plus accrued and unpaid interest, if any, on the PIK Toggle Notes redeemed, to the applicable redemption date, if redeemed during the twelve-month
period beginning on June 1 of the years indicated below, subject to the rights of noteholders:

Year

Percentage2011

104.250
%2012

102.125
%2013 and thereafter

100.000
%


Upon
the occurrence of a change of control, each holder of the PIK Toggle Notes has the right to require the Company to repurchase some or all of such holder's PIK Toggle Notes at a
price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, and PIK Interest, if any, to the date of purchase.

Floating Rate Notes.On May 31, 2007, Merger Sub issued $230.0 million aggregate
original principal amount of Floating Rate Notes under the Second Lien Senior Indenture with Wells Fargo Bank, National Association, as trustee. See "Second Lien Senior Indenture" below. Interest on
the Floating Rate Notes is reset for each semi-annual interest period and is calculated at the current LIBOR rate plus 3.375%. At June 30, 2007, our LIBOR-based rate was 8.760%,
which includes the credit spread noted above. Interest on the Floating Rate Notes is payable semiannually, in arrears, on each June 1 and December 1, commencing on December 1,
2007. At the closing of the Transaction, as the surviving corporation in the Acquisition, we assumed all the obligations of Merger Sub under the Second Lien Senior Indenture. The Floating Rate Notes
mature on June 1, 2015.

We
may redeem some or all of the Floating Rate Notes at any time prior to June 1, 2009, at a price equal to 100% of the principal amount thereof, plus the applicable premium (as
defined by the Second Lien Senior Indenture), plus accrued and unpaid interest, if any, to the date of redemption. In addition, on or before June 1, 2009, we may redeem up to 40% of the
aggregate principal amount of the Floating Rate Notes with the net proceeds of certain equity offerings.

Except
as noted above, we cannot redeem the Floating Rate Notes until June 1, 2009. Thereafter we may redeem some or all of the Floating Rate Notes at the redemption prices
(expressed as percentages of principal amount) set forth below plus accrued and unpaid interest, if any, on the Floating Rate
Notes redeemed, to the applicable redemption date, if redeemed during the twelve-month period beginning on June 1 of the years indicated below, subject to the rights of noteholders:

Year

Percentage2009

102.000
%2010

101.000
%2011 and thereafter

100.000
%


14

---



Upon
the occurrence of a change of control, each holder of the Floating Rate Notes has the right to require the Company to repurchase some or all of such holder's Floating Rate Notes at
a price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase.

Interest Rate Swap.In June 2007 we entered into an interest rate swap agreement for
$230.0 million, which has the effect of converting our $230.0 of Floating Rate Notes to fixed interest rates. The effective date for the swap agreement is December 2007, the beginning of
the next semi-annual interest rate period; the expiration date is May 2012.

The
interest rate swap agreement qualifies for cash flow hedge accounting under SFAS 133,Accounting for Derivative Instruments and Hedging
Activities. Both at inception and on an on-going basis we must perform an effectiveness test. In accordance with SFAS 133 the fair value of the swap
agreement at June 30, 2007 is included as a cash flow hedge on our balance sheet. The change in fair value was recorded as a component of accumulated other comprehensive loss on our balance
sheet since the instrument was determined to be an effective hedge at June 30, 2007. We do not expect any amounts to be reclassified into current earnings in the future due to ineffectiveness.

As
a result of our swap agreement, we expect the effective interest rate on our $230.0 million Floating Rate Notes to be 9.065% from December 2007 through May 2012.

Second Lien Senior Indenture.Our PIK Toggle Notes and Floating Rate Notes (collectively, the
"Notes") are guaranteed, jointly and severally, on a second priority senior secured basis, by certain of our future domestic subsidiaries. We do not currently have any subsidiaries. The Notes are our
second priority senior secured obligations and rank (i) equal in right of payment with all of our existing and future unsecured and unsubordinated indebtedness, and effectively senior to any
such unsecured indebtedness to the extent of the value of collateral; (ii) senior in right of payment to all of our and our guarantor's existing and future subordinated indebtedness;
(iii) effectively junior to our senior secured credit facility and other obligations that are secured by first priority liens on the collateral securing the Notes or that are secured by a lien
on assets that are not part of the collateral securing the Notes, in each case, to the extent of the value of such collateral or assets; and (iv) structurally subordinated to any indebtedness
and other liabilities (including trade payables) of any of our future subsidiaries that are not guarantors.

The
Second Lien Senior Indenture governing the Notes contains covenants that limit our and our guarantors' ability, subject to certain definitions and exceptions, and certain of our
future subsidiaries' ability to:



Senior Secured Credit Facility.In connection with the Transaction, the Company and Parent entered
into a new first lien senior secured asset-based revolving credit facility providing for loans in an amount of up to $135.0 million pursuant to a credit agreement, dated as of May 31,
2007, with a group

15

---



of
financial institutions. The senior secured credit facility is available for working capital and general corporate purposes, including permitted investments, capital expenditures and debt
repayments, on a fully revolving basis, subject to the terms and conditions set forth in the credit documents in the form of revolving loans, swing line loans and letters of credit.

The
senior secured credit facility provides financing of up to $135.0 million, subject to a borrowing base calculated on the basis of certain of our eligible accounts receivable,
inventory and equipment. As of June 30, 2007, we had $120.7 million of unused borrowing availability under our senior secured credit facility based on a borrowing base of
$135.0 million, net of borrowings of $12.0 million and after giving effect to $2.3 million used for letters of credit.

The
senior secured credit facility matures on May 31, 2013. Our obligations under the senior secured credit facility are secured by a first priority security interest in
substantially all of our assets, excluding a pledge of our (and our parent company's) stock, any joint ventures and certain other exceptions. Our obligations under the senior secured credit facility
are unconditionally guaranteed by our Parent.

The
senior secured credit facility provides that we have the right at any time to request up to $50.0 million of additional commitments, but the lenders are under no obligation to
provide any such additional commitments, and any increase in commitments will be subject to customary conditions precedent, such as an absence of any default or events of default. If we were to
request any such
additional commitments and the existing lenders or new lenders were to agree to provide such commitments, the senior secured credit facility size could be increased to up to $185.0 million, but
our ability to borrow would still be limited by the amount of the borrowing base.

Borrowings
under the senior secured credit facility accrue interest at our option:



At
June 30, 2007 we have elected the LIBOR rate option, and our interest rate was 7.07%, which includes the credit spread noted above.

Overdue
principal, interest and other amounts will bear interest at a rate per annum equal to 2% in excess of the applicable interest rate. The applicable margins of the senior secured
credit facility will be subject to adjustment based upon leverage ratios. The senior secured credit facility also provides for customary letter of credit fees, closing fees, unused line fees and other
fees.

The
senior secured credit facility requires our compliance with various affirmative and negative covenants. Pursuant to the affirmative covenants, we and Parent will, among other things,
deliver financial and other information to the agent, provide notice of certain events (including events of default), pay our obligations, maintain our properties, maintain the security interest in
the collateral for the benefit of the agent and the lenders and maintain insurance.

Among
other restrictions, and subject to certain definitions and exceptions, the senior secured credit facility restricts our ability to:



16

---





The
senior secured credit facility also contains a financial covenant that is calculated if our available borrowing capacity is less than $15.0 million for a certain period. Such
covenant consists of a minimum ratio of trailing four-quarter EBITDA to cash interest expense, as defined.

The
senior secured credit facility specifies certain events of default, including among others, failure to pay principal, interest or fees, violation of covenants, inaccuracy of
representations or warranties, bankruptcy events, certain ERISA-related events, cross-defaults to other material agreements, change of control events, and invalidity of guarantees or security
documents. Some events of default will be triggered only after certain cure periods have expired, or will provide for materiality thresholds. If such
a default occurs, the lenders under the senior secured credit facility would be entitled to take various actions, including all actions permitted to be taken by a secured creditor and the acceleration
of amounts due under the senior secured credit facility.

10.125% Senior Notes.The 10.125% Senior Notes ("Senior Notes") mature on November 1, 2011.
Interest on the Senior Notes accrues at the rate of 10.125% per annum and is payable semiannually on each May 1 and November 1. The Senior Notes are redeemable, at the Company's option,
in whole or in part of, on or after November 1, 2007, at specified redemption prices plus accrued interest to the date of redemption.

On
May 17, 2007, we entered into a supplemental indenture to our Indenture governing our Senior Notes, dated as of October 17, 2003, between the Company and Wells Fargo
Bank, National Association, as trustee. The Indenture governs the terms of the Senior Notes. The supplemental indenture amended the Indenture.

In
May 2007, in connection with the Transaction, we tendered for all of our outstanding Senior Notes, pursuant to their terms. On May 31, 2007, $235.0 million of our
Senior Notes were purchased. We paid $253.1 million including a call premium of $16.1 million and accrued interest of $2.0 million to complete the purchase. We used proceeds from
the issuance of our Notes to redeem a portion of our Senior Notes.

The
amendments set forth in the supplemental indenture (the "Amendments") became operative after the Company purchased all of its Senior Notes validly tendered and not withdrawn pursuant
to its tender offer and consent solicitation. As of May 11, 2007, holders of Senior Notes representing an amount greater than a majority of the principal amount of outstanding Senior Notes had
validly tendered their Senior Notes and consented to the execution of the supplemental indenture. The Amendments eliminated from the Indenture: (i) requirements to file reports with the
Securities and Exchange Commission, (ii) requirements to pay taxes, (iii) limitations on the Company to use defenses against usury; (iv) limitation on restricted payments,
(v) limitation on payment of dividends and other payment restrictions affecting subsidiaries, (vi) limitations on incurrence of indebtedness and issuance of preferred stock,
(vii) limitations on asset sales and requirements to repurchase the Senior Notes with excess proceeds thereof; (viii) limitations on affiliate transactions, (ix) limitations on
liens, (x) limitations on the businesses in which the Company and its subsidiaries may engage, (xi) requirements to preserve corporate existence, (xii) requirements to purchase
the Senior Notes upon a change of control, (xiii) limitation on issuance of guarantees of indebtedness, (xiv) limitations on payments for consent from holders of Senior Notes,
(xv) limitations on mergers, consolidation and sale of assets with respect to the Company, (xvi) limitations on mergers or consolidation of, or transfer of assets of, guarantors, and
(xvii) certain events of default.

On
June 13, 2007 we purchased an additional $15.1 million of our remaining Senior Notes pursuant to their terms. We paid $15.9 million of cash including a call
premium of $0.7 million and accrued interest of $0.1 million to complete the purchase.

17

---



The
Company has the right to redeem some or all of the remaining $9.9 million of Senior Notes at the redemption prices (expressed as a percentage of principal amount) set forth
below, plus accrued and unpaid interest, if any, if redeemed during the twelve-month period beginning on November 1 of the years indicated below, subject to the rights of the noteholders:

Year

Percentage2007

105.063
%2008

102.531
%2009 and thereafter

100.000
%


Termination of Our Amended Credit Agreement.In connection with the Transaction, we repaid all
outstanding balances and terminated our Amended Credit Agreement.

Maturities of Long-Term Debt.At June 30, 2007, maturities of
long-term debt during the next five years and thereafter are as follows:

(in thousands)July 1, 2007 to December 31, 2007

$
1,7562008


2,9152009


1,8502010


1,0342011


10,1872012


Thereafter


472,000$
489,742


10.   Commitments and Contingencies

The Company, in the ordinary course of business, could be subject to liability claims related to employees and the equipment that it rents and services. Asserted
claims are subject to many uncertainties and the outcome of individual matters is not predictable with assurance. While the ultimate resolution of these actions may have an impact on the Company's
financial results for a particular reporting period, management believes that any such resolution would not have a material adverse effect on the financial position, results of operations or cash
flows of the Company.

18

---



11.   Income Taxes

The components of the Company's overall deferred tax assets and liabilities as of June 30, 2007 and December 31, 2006 are as follows:

June 30, 2007
(Successor)



December 31,
2006
(Predeccessor)(in thousands)Deferred tax assetsAccounts receivable

$
498



$
533Accrued compensation and pension


4,058




3,807Inventories


227




314Other assets


1,683




804Net operating loss carryforwards


45,913




29,293Deferred tax assets


52,379




34,751Valuation allowance







(9,945
)Net deferred tax asset


52,379




24,806Deferred tax liabilitiesAccelerated depreciation and amortization


167,316




27,233Total deferred tax liabiliites


167,316




27,233Net deferred tax liability

$
(114,937
)


$
(2,427
)


The
Company's deferred income taxes are recorded at an effective rate of 39.8%, which is not materially different than the statutory rate.

We
adopted the provisions of FASB Interpretation No 48,Accounting for Uncertainty in Income Taxesan interpretation of
FASB No. 109"("FIN 48"), on January 1, 2007. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's
financial statements in accordance with FASB Statement 109,Accounting for Income Taxes,and prescribes a recognition threshold and measurement
process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosure and transition.

Based
on our evaluation, we have concluded that there are no significant unrecognized tax benefits. Our evaluation was performed for the tax years ended December 31, 2003, 2004,
2005 and 2006, the tax years that remain subject to examination by major tax jurisdictions as of June 30, 2007. We do not believe there will be any material changes in our unrecognized tax
positions over the next twelve months.

We
may from time to time be assessed interest or penalties by major tax jurisdictions, although any such assessments historically have been minimal and immaterial to our financial
results. In accordance with FIN 48, paragraph 19, the Company has elected to classify interest and penalties as a component of income tax expense.

19

---



12.   Segment Information

Our operating segments consist of Medical Equipment Outsourcing, Technical and Professional Services, and Medical Equipment Sales and Remarketing. Certain
operating information for our segments as well as a reconciliation of total Company gross margin to income (loss) before income tax follows:

Medical Equipment Outsourcing(in thousands)

|                                       |              | Quarter-to-date |        | Year-to-date
|-------------------------------------- | ------------ | --------------- | ------ | ------------
|
|
|Revenues                               |              | $               | 16,695 |             
|Cost of revenue                        |              |                 | 5,916  |             
|Movable medical equipment depreciation |              |                 | 4,632  |             
|                                       |              |                 |        |             
|                                       | Gross margin |                 | $      | 6,147       
|                                       |              |                 |        |             

Technical and Professional Services(in thousands)

|                |              | Quarter-to-date |       | Year-to-date
|--------------- | ------------ | --------------- | ----- | ------------
|
|
|Revenues        |              | $               | 3,630 |             
|Cost of revenue |              |                 | 2,526 |             
|                |              |                 |       |             
|                | Gross margin |                 | $     | 1,104       
|                |              |                 |       |             

Medical Equipment Sales and Remarketing(in thousands)

|                |              | Quarter-to-date |       | Year-to-date
|--------------- | ------------ | --------------- | ----- | ------------
|
|
|Revenues        |              | $               | 1,277 |             
|Cost of revenue |              |                 | 1,212 |             
|                |              |                 |       |             
|                | Gross margin |                 | $     | 65          
|                |              |                 |       |             

20

---



Total Gross Margin and Reconciliation to Income (Loss) Before Income Taxes(in thousands)

|                                            |                                 | Quarter-to-date |       | Year-to-date
|------------------------------------------- | ------------------------------- | --------------- | ----- | ------------
|
|
|Total gross margin                          |                                 | $               | 7,316 |             
|Selling, general and administrative expense |                                 |                 | 6,604 |             
|Transaction and related costs               |                                 |                 |      |             
|Interest expense                            |                                 |                 | 3,800 |             
|Loss on extinguishment of debt              |                                 |                 | 1,041 |             
|                                            |                                 |                 |       |             
|                                            | Income (loss) before income tax |                 | $     | (4,129      
|                                            |                                 |                 |       |             

13.   Pension Plan

The components of net periodic pension costs are as follows:

|                               |            | Quarter-to-date |     | Year-to-date |  
|------------------------------ | ---------- | --------------- | --- | ------------ | -
|
|
|Interest cost                  |            | $               | 85  |              |  
|Expected return on plan assets |            |                 | (98 | )            |  
|Recognized net actuarial loss  |            |                 |    |              |  
|Service cost                   |            |                 |    |              |  
|                               |            |                 |     |              |  
|                               | Total cost |                 | $   | (13          | )
|                               |            |                 |     |              |  

In connection with the Acquisition, the obligations and assets related to our pension plan were valued at fair value as of the date of the
Acquisition, using a discount rate of 6.15%, as follows:

(in thousands)Benefit obligations at fair value

$
16,902Assets held by defined benefit pension plan, at fair value


14,603Excess of benefit obligations over assets


2,299Less: previously recorded benefit plan obligations recorded by predecessor


(3,061
)Adjustment to benefit plan obligations

$
(762
)


Future
benefit accruals for all participants were frozen as of December 31, 2002.

21

---





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

The following should be read in conjunction with the accompanying financial statements and notes.

BUSINESS OVERVIEW

Our Company

Universal Hospital Services, Inc. ("we", "our", the "Company", or "UHS") is the leading nationwide provider of medical equipment outsourcing and lifecycle
services to the health care industry. Our customers include national, regional and local acute care hospitals, alternate site providers (such as nursing homes and home care providers) and medical
equipment manufacturers. Our diverse medical equipment outsourcing customer base includes more than 3,825 acute care hospitals and approximately 3,450 alternate site providers. We also have
relationships with more than 200 medical equipment manufacturers and many of the nation's largest group purchasing organizations ("GPOs") and integrated delivery networks ("IDNs"). All of our services
leverage our nationwide network of offices and our more than 65 years of experience managing and servicing all aspects of movable medical equipment. Our fees are paid directly by our customers
rather than from direct reimbursement from third party payors, such as private insurers or Medicare and Medicaid.

On
May 31, 2007, UHS Holdco, Inc. ("Parent") acquired all of the outstanding capital stock of the Company for approximately $712.0 million in cash less debt, tender
premium and accrued interest and capitalized leases. Parent is owned by affiliates of Bear Stearns Merchant Manager III (Cayman), L.P. (together with its investing affiliates, "BSMB") and
certain members of our management, whom we collectively refer to as the "equity investors." Parent and Merger Sub, a wholly owned subsidiary of Parent, were corporations formed by BSMB solely for the
purpose of completing the Acquisition.

Before
the closing of the Acquisition, the Company initiated a cash tender offer to purchase its $260.0 million outstanding aggregate principal amount of its 10.125% Senior Notes
due 2011, which the Company completed for $235.0 million of such notes on May 31, 2007, and Merger Sub issued $230.0 million in aggregate principal amount of its Floating Rate
Notes due 2015 and $230.0 million in aggregate principal amount of its PIK Toggle Notes due 2015 (The PIK Toggle Notes and the Floating Rate Notes are collectively referred to as the "Notes").
Concurrently with the closing of the Acquisition, Merger Sub merged with and into the Company, which was the surviving corporation and the Company assumed Merger Sub's obligations with respect to the
Notes and related Second Lien Senior Indenture.

The
Agreement and Plan of Merger, dated as of April 15, 2007, by and among the Company, Parent and Merger Sub and related documents resulted in the occurrence of the events
outlined in Note 5 in Part I of this Form 10-Q, which we collectively refer to as the "Transaction" or the "Acquisition."

Although
the Company continued as the same legal entity after the Acquisition, the accompanying statements of operations and cash flows present our results of operations and cash flows
for the periods

22

---



preceding
the Acquisition ("predecessor") and the periods succeeding the Acquisition ("successor"), respectively.

|Technical and Professional
Services Segment
Medical Equipment Sales and
Remarketing Segment | CHART | Medical Equipment    
Outsourcing Segment    
Technical and Professional
Service Segment
|------------------------------------------------------------------------------------------- | ----- | ----------------------------------------------------------------------------------------

Our
operating segments consist of Medical Equipment Outsourcing, Technical and Professional Services and Medical Equipment Sales and Remarketing. We evaluate the performance of our
operating segments based on gross margin and gross margin before purchase accounting adjustments. The accounting policies of the individual operating segments are the same as those of the entire
Company.

We
present the non-GAAP financial measure gross margin, before purchase accounting adjustments, because we use this measure to monitor and evaluate the performance of our
business and believe the presentation of this measure will enhance users' ability to analyze trends in our business and evaluate our performance relative to other companies in our industry.

We
have prepared our discussion of the results of operations for the three and six months ended June 30, 2007 and 2006 by comparing the result of operations of the predecessor for
the three months and six months ended June 30, 2006 to the combined amounts obtained by adding the earnings and cash flows for the predecessor two-month and five-month
period ending
May 31, 2007 and the successor one-month period ending June 30, 2007. Although this combined presentation does not comply with the generally accepted accounting principles
("GAAP"), we believe that it provides a meaningful method of comparison. The GAAP presentation and combined results are presented in the results of operations section of the management's discussion
and analysis. The combined operating results have not been prepared on a pro forma basis under applicable regulations and may not reflect the actual results we would have achieved absent the
Transaction and may not be predictive of future results from operations.

All
references to the second quarter of 2007 relate to the combined three-month period ended June 30, 2007. All references to the second quarter of 2006 related to the three
months ended June 30, 2006 of the predecessor. All references to year-to-date 2007 refer to the combined six-month period ended June 30, 2007. All
references to year-to-date 2006 refer to the six months ended June 30, 2006 of the predecessor.

Medical Equipment Outsourcing SegmentManage & Utilize

Our flagship business is our Medical Equipment Outsourcing segment, which accounted for $50.6 million, or approximately 77.1%, of our revenues for the
second quarter of 2007 and $101.6 million, or approximately 78.6% for the first half of 2007. We own approximately 186,000 pieces of movable medical equipment, primarily in the categories of
respiratory therapy, newborn care, critical care, patient monitors, and specialty beds and pressure area management. In our outsourcing programs, we provide our customers with the use of movable
medical equipment for patient care use. We perform

23

---



regular
and preventative maintenance on the equipment and retain detailed records for documentation. We are responsible for all repairs, testing and cleaning of the equipment. Our service includes
prompt replacement of any non-working equipment and the flexibility to upgrade technology as a customer's product of choice changes. We have three primary outsourcing programs:
Supplemental (Peak Needs) Outsourcing; Long-Term Outsourcing; and the Asset Management Partnership Program ("AMPP").

In
March 2007, we entered into an agreement with Stryker Medical ("Stryker"), a division of Stryker Corporation, a major manufacturer of beds, stretchers and support surfaces, to
provide their equipment to our customers for rent. Under this exclusive arrangement, Stryker retains ownership of the equipment and we share with Stryker the rental revenues we generate from our
customers. Given our scale and rental infrastructure, we believe that other equipment manufacturers may seek to enter into similar arrangements with us in the future enabling additional opportunities
for growth with existing as well as new customers.

We
have contracts in place with many of the leading national GPOs for both the acute care and alternate site markets. We also have agreements directly with national acute care and
alternate site providers. We expect much of our future growth in this segment to be driven by our customers outsourcing more of their movable medical equipment needs and taking full advantage of our
expanded offering of Long-Term Outsourcing agreements and AMPPs.

Technical and Professional Services SegmentPlan & Acquire; Maintain & Repair

Our Technical and Professional Services segment accounted for $10.4 million, or approximately 15.8%, of our revenues for the second quarter of 2007 and
$18.4 million, or approximately 14.3% of our revenues for the first half of 2007. We leverage our more than 65 years of experience and our extensive equipment database in repairing and
maintaining medical equipment. We offer a broad range of inspection, preventative maintenance, repair, logistic and consulting services through our team of over 300 technicians and professionals
located in our nationwide network of district offices and service centers. Our technical and professional service offerings are less capital intensive than our Medical Equipment Outsourcing segment,
and provide a complementary alternative for customers that wish to own their medical equipment, but lack the expertise, funding or scale to perform maintenance, repair and analytical functions. As
part of our strategy to grow our Technical and Professional Services segment, we acquired the assets of the ICMS division of Intellamed on April 1, 2007.

Medical Equipment Sales and Remarketing SegmentRedeploy & Remarket

Our Medical Equipment Sales and Remarketing segment accounted for $4.6 million, or approximately 7.1%, of our revenues for the second quarter of 2007 and
$9.1 million, or approximately 7.1% for the first half of 2007. This segment includes three business activities:

Medical Equipment Remarketing and Disposal.We are one of the nation's largest buyers and sellers of
pre-owned movable medical equipment. We also remarket used medical equipment to hospitals, alternate care providers, veterinarians and equipment brokers. We offer a wide range of equipment
from our standard movable medical equipment to diagnostic, ultrasound and x-ray equipment.

Specialty Medical Equipment Sales and Distribution.We use our national infrastructure to provide
sales and distribution for manufacturers of specialty medical equipment on a limited and exclusive basis. We currently sell equipment in many product lines including, but not limited to, percussion
vests, continuous passive motion machines, patient monitors, patient transfer systems and infant security systems.

Sales of Disposables.We offer our customers single use disposable items. Most of these items are
used in connection with our outsourced equipment. Although we do not view this as a core growth business, we offer these products as a convenience to customers and to complement our full medical
equipment lifecycle offerings.

24

---





RESULTS OF OPERATIONS

The following discussion addresses our financial condition as of June 30, 2007, and the results of operations for the three months and six months ended
June 30, 2007, and 2006; and the cash flows for the six months ended June 30, 2007, and 2006. This discussion should be read in conjunction with the financial statements included
elsewhere in this Form 10-Q and the Management's Discussion and Analysis of Financial Condition and Results of Operations section included in our 2006 Annual Report on
Form 10-K filed with the Securities and Exchange Commission.

In
connection with the Transaction, the Company incurred significant indebtedness and is highly leveraged. See "Liquidity and Capital Resources." In addition, the purchase price paid in
connection with the Acquisition has been preliminarily allocated to state the acquired assets and liabilities at fair value. The preliminary accounting adjustments increased the carrying value our
property and equipment and inventory, established intangible assets for our customer relationships, supply agreement, trade names and trademarks, technology database and non-compete
agreements and revalued our long-term benefit plan obligations, among other things. Subsequent to the Transaction, interest expense, non-cash depreciation and amortization
charges have significantly increased. As a result, our successor financial statements subsequent to the Transaction are not comparable to our predecessor financial statements.

25

---



The
following tables provide a summary of selected financial data as a percentage of total revenues and also indicate the percentage increase or decrease of this data over the prior
comparable period:

Quarter-to-Date

|                                                |                                                                                                                               | Percent of Total Revenues |       | Percent Increase
(Decrease)
Three Months
Ended June 30,
2006
(Combined)
over Three
Months Ended
June 30, 2006
(Predecessor) | 
|----------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------- | ------------------------- | ----- | --------------------------------------------------------------------------------------------------------------------------- | 
|
|
|
|
|Revenue                                         |                                                                                                                               |                           |       |                                                                                                                             | 
|Medical equipment outsourcing                   |                                                                                                                               | 77.3                      | %     |                                                                                                                             | 
|Technical and professional services             |                                                                                                                               | 16.8                      |       |                                                                                                                             | 
|Medical equipment sales and remarketing         |                                                                                                                               | 5.9                       |       |                                                                                                                             | 
|                                                |                                                                                                                               |                           |       |                                                                                                                             | 
|                                                | Total revenues                                                                                                                |                           | 100.0 | %                                                                                                                           | 
|Cost of Revenue                                 |                                                                                                                               |                           |       |                                                                                                                             | 
|Cost of medical equipment outsourcing           |                                                                                                                               | 27.4                      |       |                                                                                                                             | 
|Cost of technical and professional services     |                                                                                                                               | 11.7                      |       |                                                                                                                             | 
|Cost of medical equipment sales and remarketing |                                                                                                                               | 5.6                       |       |                                                                                                                             | 
|Movable medical equipment depreciation          |                                                                                                                               | 21.4                      |       |                                                                                                                             | 
|                                                |                                                                                                                               |                           |       |                                                                                                                             | 
|                                                | Total costs of medical equipment outsourcing, technical and professional services and medical equipment sales and remarketing |                           | 66.1  |                                                                                                                             | 
|                                                |                                                                                                                               |                           |       |                                                                                                                             | 
|Gross margin                                    |                                                                                                                               | 33.9                      |       |                                                                                                                             | 
|                                                |                                                                                                                               |                           |       |                                                                                                                             | 
|Selling, general and administrative             |                                                                                                                               | 30.6                      |       |                                                                                                                             | 
|Transaction and related costs                   |                                                                                                                               |                          |       |                                                                                                                             | 
|                                                |                                                                                                                               |                           |       |                                                                                                                             | 
|                                                | Operating income (loss)                                                                                                       |                           | 3.3   |                                                                                                                             | 
|Interest expense                                |                                                                                                                               | 17.6                      |       |                                                                                                                             | 
|Loss on extinguishment of debt                  |                                                                                                                               | 4.8                       |       |                                                                                                                             | 
|                                                |                                                                                                                               |                           |       |                                                                                                                             | 
|                                                | Income (loss) before income taxes                                                                                             |                           | (19.1 | )                                                                                                                           | 
|Provision (benefit) for income taxes            |                                                                                                                               | (7.3                      | )     |                                                                                                                             | 
|                                                |                                                                                                                               |                           |       |                                                                                                                             | 
|                                                | Net loss                                                                                                                      |                           | (11.8 | )%                                                                                                                          | 
|                                                |                                                                                                                               |                           |       |                                                                                                                             | 

---

26

---



Year-to-Date

|                                                |                                                                                                                               | Percent of Total Revenues |       | Percent Increase
(Decrease)
Six Months
Ended June 30,
2006
(Combined)
over Six
Months Ended
June 30, 2006
(Predecessor) | 
|----------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------- | ------------------------- | ----- | ----------------------------------------------------------------------------------------------------------------------- | 
|
|
|
|
|Revenue                                         |                                                                                                                               |                           |       |                                                                                                                         | 
|Medical equipment outsourcing                   |                                                                                                                               | 77.3                      | %     |                                                                                                                         | 
|Technical and professional services             |                                                                                                                               | 16.8                      |       |                                                                                                                         | 
|Medical equipment sales and remarketing         |                                                                                                                               | 5.9                       |       |                                                                                                                         | 
|                                                |                                                                                                                               |                           |       |                                                                                                                         | 
|                                                | Total revenues                                                                                                                |                           | 100.0 | %                                                                                                                       | 
|Cost of Revenue                                 |                                                                                                                               |                           |       |                                                                                                                         | 
|Cost of medical equipment outsourcing           |                                                                                                                               | 27.4                      |       |                                                                                                                         | 
|Cost of technical and professional services     |                                                                                                                               | 11.7                      |       |                                                                                                                         | 
|Cost of medical equipment sales and remarketing |                                                                                                                               | 5.6                       |       |                                                                                                                         | 
|Movable medical equipment depreciation          |                                                                                                                               | 21.4                      |       |                                                                                                                         | 
|                                                |                                                                                                                               |                           |       |                                                                                                                         | 
|                                                | Total costs of medical equipment outsourcing, technical and professional services and medical equipment sales and remarketing |                           | 66.1  |                                                                                                                         | 
|                                                |                                                                                                                               |                           |       |                                                                                                                         | 
|Gross margin                                    |                                                                                                                               | 33.9                      |       |                                                                                                                         | 
|                                                |                                                                                                                               |                           |       |                                                                                                                         | 
|Selling, general and administrative             |                                                                                                                               | 30.6                      |       |                                                                                                                         | 
|Transaction and related costs                   |                                                                                                                               |                          |       |                                                                                                                         | 
|                                                |                                                                                                                               |                           |       |                                                                                                                         | 
|                                                | Operating income (loss)                                                                                                       |                           | 3.3   |                                                                                                                         | 
|Interest expense                                |                                                                                                                               | 17.6                      |       |                                                                                                                         | 
|Loss on extinguishment of debt                  |                                                                                                                               | 4.8                       |       |                                                                                                                         | 
|                                                |                                                                                                                               |                           |       |                                                                                                                         | 
|                                                | Income (loss) before income taxes                                                                                             |                           | (19.1 | )                                                                                                                       | 
|Provision (benefit) for income taxes            |                                                                                                                               | (7.3                      | )     |                                                                                                                         | 
|                                                |                                                                                                                               |                           |       |                                                                                                                         | 
|                                                | Net income (loss)                                                                                                             |                           | (11.8 | )%                                                                                                                      | 
|                                                |                                                                                                                               |                           |       |                                                                                                                         | 

---

27

---





Comparison of Second Quarter 2007 to Second Quarter 2006

Medical Equipment Outsourcing SegmentManage & Utilize(in thousands)

|                                                                                                                               |                                                      |   |        |       |  |  |   | Three Months Ended June 30, |        |   |        |        |  
|------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------- | - | ------ | ----- |  |  | - | --------------------------- | ------ | - | ------ | ------ | -
|
|Total revenue                                                                                                                  |                                                      | $ | 16,695 |       |  |  | $ | 33,866                      |        | $ | 50,561 |        | $
|Cost of revenue                                                                                                                |                                                      |   | 5,916  |       |  |  |   | 11,193                      |        |   | 17,109 |        |  
|Movable medical equipment depreciation                                                                                         |                                                      |   | 4,632  |       |  |  |   | 8,250                       |        |   | 12,882 |        |  
|                                                                                                                               |                                                      |   |        |       |  |  |   |                             |        |   |        |        |  
|                                                                                                                               | Gross margin                                         |   | $      | 6,147 |  |  |   | $                           | 14,423 |   | $      | 20,570 |  
|                                                                                                                               |                                                      |   |        |       |  |  |   |                             |        |   |        |        |  
|Gross margin %                                                                                                                 |                                                      |   | 36.8   | %     |  |  |   | 42.6                        | %      |   | 40.7   | %      |  
|Gross margin                                                                                                                   |                                                      | $ | 6,147  |       |  |  | $ | 14,423                      |        | $ | 20,570 |        | $
|Purchase accounting adjustments, primarily non-cash charges related to step-up in carrying value of moveable medical equipment |                                                      |   | 1,510  |       |  |  |   |                            |        |   | 1,510  |        |  
|                                                                                                                               |                                                      |   |        |       |  |  |   |                             |        |   |        |        |  
|                                                                                                                               | Gross margin, before purchase accounting adjustments |   | $      | 7,657 |  |  |   | $                           | 14,423 |   | $      | 22,080 |  
|                                                                                                                               |                                                      |   |        |       |  |  |   |                             |        |   |        |        |  
|Gross margin %, before purchase accounting adjustments                                                                         |                                                      |   | 45.9   | %     |  |  |   | 42.6                        | %      |   | 43.7   | %      |  

Total
revenue in the Medical Equipment Outsourcing segment rose $7.4 million, or 17.2%, to $50.6 million in the second quarter of 2007. This increase was driven by organic
and competitive takeaway growth in our acute care and AMPP customer base and incremental business from new and existing technology in our fleet.

Total
cost of revenue in the segment rose $2.9 million, or 20.8%, to $17.1 million in the second quarter of 2007. This increase is primarily attributable to higher
maintenance expense related to our movable medical equipment, increased labor expense, increased freight expense and other costs associated with increased revenues and a larger movable medical
equipment fleet.

Movable
medical equipment depreciation increased $3.7 million, or 40.5%, to $12.9 million in the second quarter of 2007. The increase is primarily attributable to purchase
accounting adjustments resulting from the increase in carrying value of our movable medical equipment and an increase in the size of our movable medical equipment fleet. Additionally, in
May 2007, we determined that certain pieces of respiratory equipment in our movable medical equipment fleet were impaired as defined by SFAS 144,Accounting for
the Disposal of Long-Lived Assets,and we wrote-off all $0.9 million of this equipment's remaining net book value.

Gross
margin percentage for the Medical Equipment Outsourcing segment decreased from 45.9% in the second quarter of 2006 to 40.7% in the second quarter of 2007. This decrease is
primarily due to the increased cost of maintenance and depreciation related to our larger movable medical equipment fleet, lower pricing related to new GPO contracts and higher labor costs partially
offset by increased revenues. Gross margin percentage, before purchase accounting adjustments decreased from 45.9% in the second quarter of 2006 to 43.7% in the second quarter of 2007. This decrease
is primarily due to the increased cost of maintenance and depreciation related to our larger movable medical equipment

28

---



fleet,
lower pricing related to new GPO contracts and higher labor costs partially offset by increased revenues.

Technical and Professional Services SegmentPlan & Acquire; Maintain & Repair(in thousands)

|                                                                                                   |                                                      |   |       |       |  |  |   | Three Months Ended June 30, |       |   |        |       |  
|-------------------------------------------------------------------------------------------------- | ---------------------------------------------------- | - | ----- | ----- |  |  | - | --------------------------- | ----- | - | ------ | ----- | -
|
|Total revenue                                                                                      |                                                      | $ | 3,630 |       |  |  | $ | 6,748                       |       | $ | 10,378 |       | $
|Cost of revenue                                                                                    |                                                      |   | 2,526 |       |  |  |   | 4,801                       |       |   | 7,327  |       |  
|                                                                                                   |                                                      |   |       |       |  |  |   |                             |       |   |        |       |  
|                                                                                                   | Gross margin                                         |   | $     | 1,104 |  |  |   | $                           | 1,947 |   | $      | 3,051 |  
|                                                                                                   |                                                      |   |       |       |  |  |   |                             |       |   |        |       |  
|Gross margin %                                                                                     |                                                      |   | 30.4  | %     |  |  |   | 28.9                        | %     |   | 29.4   | %     |  
|Gross margin                                                                                       |                                                      | $ | 1,104 |       |  |  | $ | 1,947                       |       | $ | 3,051  |       | $
|Purchase accounting adjustments, primarily non-cash charges related to favorable lease commitments |                                                      |   | 5     |       |  |  |   |                            |       |   | 5      |       |  
|                                                                                                   |                                                      |   |       |       |  |  |   |                             |       |   |        |       |  
|                                                                                                   | Gross margin, before purchase accounting adjustments |   | $     | 1,109 |  |  |   | $                           | 1,947 |   | $      | 3,056 |  
|                                                                                                   |                                                      |   |       |       |  |  |   |                             |       |   |        |       |  
|Gross margin %, before purchase accounting adjustments                                             |                                                      |   | 30.5  | %     |  |  |   | 28.9                        | %     |   | 29.4   | %     |  

Total
revenue in the Technical and Professional Services segment increased $2.7 million, or 34.6% to $10.4 million in the second quarter of 2007 as compared to the same
period of 2006. Revenue increases resulted from our acquisition of the assets of the ICMS division of Intellamed on April 1, 2007. Comparable revenues, excluding the Intellamed acquisition,
remained relatively flat during the second quarter of 2007 due to continued sales force attention on converting new customers in our Medical Equipment Outsourcing segment, as well as selected contract
terminations.

Total
cost of revenue in the segment increased $2.1 million, or 39.6% to $7.3 million in the second quarter of 2007. This increase is primarily attributable to the expenses
related to new business from the acquisition of the ICMS division of Intellamed of $1.8 and increased expenses in our resident biomedical programs of $0.3 million.

Gross
margin percentage for the Technical and Professional Services segment decreased from 31.9% in the second quarter of 2006 to 29.4% in the second quarter of 2007. Gross margin
percentage decreased primarily as a result of increased expenses in our resident biomedical programs.

29

---



Medical Equipment Sales and Remarketing SegmentRedeploy & Remarket(in thousands)

|                                                                                                                |                                                      |   |       |     |  |  |   | Three Months Ended June 30, |     |   |       |     |  
|--------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------- | - | ----- | --- |  |  | - | --------------------------- | --- | - | ----- | --- | -
|
|Total revenue                                                                                                   |                                                      | $ | 1,277 |     |  |  | $ | 3,359                       |     | $ | 4,636 |     | $
|Cost of revenue                                                                                                 |                                                      |   | 1,212 |     |  |  |   | 2,677                       |     |   | 3,889 |     |  
|                                                                                                                |                                                      |   |       |     |  |  |   |                             |     |   |       |     |  
|                                                                                                                | Gross margin                                         |   | $     | 65  |  |  |   | $                           | 682 |   | $     | 747 |  
|                                                                                                                |                                                      |   |       |     |  |  |   |                             |     |   |       |     |  
|Gross margin %                                                                                                  |                                                      |   | 5.1   | %   |  |  |   | 20.3                        | %   |   | 16.1  | %   |  
|Gross margin                                                                                                    |                                                      | $ | 65    |     |  |  | $ | 682                         |     | $ | 747   |     | $
|Purchase accounting adjustments, primarily non-cash charges related to step-up in carrying value of inventories |                                                      |   | 143   |     |  |  |   |                            |     |   | 143   |     |  
|                                                                                                                |                                                      |   |       |     |  |  |   |                             |     |   |       |     |  
|                                                                                                                | Gross margin, before purchase accounting adjustments |   | $     | 208 |  |  |   | $                           | 682 |   | $     | 890 |  
|                                                                                                                |                                                      |   |       |     |  |  |   |                             |     |   |       |     |  
|Gross margin %, before purchase accounting adjustments                                                          |                                                      |   | 16.3  | %   |  |  |   | 20.3                        | %   |   | 19.2  | %   |  

Total
revenue in the Medical Equipment Sales and Remarketing segment increased $0.4 million, or 8.8%, to $4.6 million in the second quarter of 2007 as compared to the same
period of 2006. Revenue increases resulted primarily from increased new equipment and brokerage sales of $0.7, partially offset by a decrease in disposable sales of $0.2 million and used
equipment of $0.1 million. Robust rental demand in the Medical Equipment Outsourcing segment has limited access to equipment for sale.

Total
cost of revenue in the segment increased $0.6 million, or 19.3%, to $3.9 million in the second quarter of 2007. This increase is primarily attributable to the
increased cost of new equipment and used equipment of $0.4 and $0.3 million, respectively, partially offset by a decreased cost of disposable sales of $0.1 million. Purchase accounting
adjustments, primarily related to the increase in the carrying amount in inventory, resulted in $0.1 million of the increase in the cost of new and used equipment sold.

Gross
margin percentage for the Medical Equipment Sales and Remarketing segment decreased from 23.5% in the second quarter of 2006 to 16.1% in the second quarter of 2007. This decrease
is primarily a result of larger individual sales with lower margins and the impact of purchase accounting adjustments. The gross margin percentage before purchase accounting adjustments decreased from
23.5% in the second quarter of 2006 to 19.2% in the second quarter of 2007. Margins and activity in this segment will fluctuate based on the transactional nature of the business.

30

---



Selling, General and Administrative, Transaction and Related Costs, Interest Expense and Loss on Extinguishment of Debt(in thousands)

|                                    |  |   |       |  |  |  |   | Three Months Ended June 30, |  |   |        |  |  
|----------------------------------- |  | - | ----- |  |  |  | - | --------------------------- |  | - | ------ |  | -
|
|Selling, general and administrative |  | $ | 6,604 |  |  |  | $ | 12,892                      |  | $ | 19,496 |  | $
|Transaction and related costs       |  |   |      |  |  |  |   | 26,379                      |  |   | 26,379 |  |  
|Interest expense                    |  |   | 3,800 |  |  |  |   | 5,747                       |  |   | 9,547  |  |  
|Loss on extinguishment of debt      |  |   | 1,041 |  |  |  |   | 22,396                      |  |   | 23,437 |  |  

Selling, General and Administrative

Selling, general and administrative expenses increased $4.1 million, or 26.8%, to $19.5 million for the second quarter of 2007. The increase was
primarily due to higher intangible amortization expense (primarily related to purchase accounting adjustments) of $1.7 million, employee related expenses of $1.6 million, stock option
expense of $0.7 million, personal property taxes of $0.6 million, and other expense increases of $0.2 million, partially offset by a gain on the sale of our Minneapolis, Minnesota
district office of $0.7 million. Selling, general and administrative expenses as a percentage of total revenue for the second quarter of 2007 increased to 29.7% from 27.9% for the same period
of 2006.

Transaction and Related Costs

We incurred $26.4 million of expenses in connection with the Transaction during the second quarter of 2007. These expenses consisted primarily of
accounting, legal, investment banking advisory and restructuring expenses totaling $13.2 million, BSMB fees expensed of $6.5 million (see Note 8 to the unaudited financial
statements in Part I of this Form 10-Q) and stock-based compensation expense related to the accelerated vesting of options under our 2003 Stock Option Plan of
$6.7 million.

Interest Expense

Interest expense increased $1.7 million, or 21.0%, to $9.5 million for the second quarter of 2007 as compared to the same period of 2006. The
increase is due to the increased debt assumed in association with the Transaction, partially offset by a lower average interest rate.

Loss on Extinguishment of Debt

We incurred $23.4 million of expense related to the purchase of $250.0 million of our 10.125% Senior Notes during the second quarter of 2007. The
expense consisted of call premiums of $16.8 million related to our 10.125% Senior Notes and the write-off of $6.6 million of unamortized deferred financing costs related to
our 10.125% Senior Notes and Amended Credit Agreement.

Income Taxes

Income tax expense decreased $1.5 million for the second quarter of 2007 as compared to the same period of 2006. The decrease resulted from the Company
moving from a net deferred tax asset position prior to the Transaction, where tax expense related primarily to minimum state taxes due to valuation allowances established for net operating losses not
recognized, to a net deferred tax liability position after the Transaction. Management believes the valuation allowance is no longer necessary as

31

---



we
determined that it was more likely than not that the benefits of these deferred tax assets will be realized.

Net Loss

For the second quarter of 2007, net loss increased $53.0 million to $53.2 million as compared to the same period of 2006. The increase is primarily
attributable to Transaction related expenses of $26.4 million, loss on extinguishment of debt expenses of $23.4 million, an increase in selling, general and administrative expenses of
$4.1 million and an increase in interest expense of $1.7 million, partially offset by a decrease in our provision for income taxes of $1.5 million and an increased gross margin of
$1.1 million.

Comparison of the First Six Months of 2007 to the First Six Months of 2006

Medical Equipment Outsourcing SegmentManage & Utilize(in thousands)

|                                                                                                                               |                                                      |   |        |       |  |  |   | Six Months Ended June 30, |        |   |         |        |  
|------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------- | - | ------ | ----- |  |  | - | ------------------------- | ------ | - | ------- | ------ | -
|
|Total revenue                                                                                                                  |                                                      | $ | 16,695 |       |  |  | $ | 84,855                    |        | $ | 101,550 |        | $
|Cost of revenue                                                                                                                |                                                      |   | 5,916  |       |  |  |   | 27,694                    |        |   | 33,610  |        |  
|Movable medical equipment depreciation                                                                                         |                                                      |   | 4,632  |       |  |  |   | 18,512                    |        |   | 23,144  |        |  
|                                                                                                                               |                                                      |   |        |       |  |  |   |                           |        |   |         |        |  
|                                                                                                                               | Gross margin                                         |   | $      | 6,147 |  |  |   | $                         | 38,649 |   | $       | 44,796 |  
|                                                                                                                               |                                                      |   |        |       |  |  |   |                           |        |   |         |        |  
|Gross margin %                                                                                                                 |                                                      |   | 36.8   | %     |  |  |   | 45.5                      | %      |   | 44.1    | %      |  
|Gross margin                                                                                                                   |                                                      | $ | 6,147  |       |  |  | $ | 38,649                    |        | $ | 44,796  |        | $
|Purchase accounting adjustments, primarily non-cash charges related to step-up in carrying value of moveable medical equipment |                                                      |   | 1,510  |       |  |  |   |                          |        |   | 1,510   |        |  
|                                                                                                                               |                                                      |   |        |       |  |  |   |                           |        |   |         |        |  
|                                                                                                                               | Gross margin, before purchase accounting adjustments |   | $      | 7,657 |  |  |   | $                         | 38,649 |   | $       | 46,306 |  
|                                                                                                                               |                                                      |   |        |       |  |  |   |                           |        |   |         |        |  
|Gross margin %, before purchase accounting adjustments                                                                         |                                                      |   | 45.9   | %     |  |  |   | 45.5                      | %      |   | 45.6    | %      |  

Total
revenue in the Medical Equipment Outsourcing segment rose $12.8 million, or 14.5%, to $101.6 million in the first six months of 2007. This increase was driven by
organic and competitive takeaway growth in our acute care and AMPP customer base and incremental business from new and existing technology in our fleet.

Total
cost of revenue in the segment rose $5.7 million, or 20.3%, to $33.6 million in the first six months of 2007. This increase is primarily attributable to higher
maintenance expense related to our movable medical equipment, increased labor expense, increased freight expense and other costs associated with increased revenues and a larger movable medical
equipment fleet.

Movable
medical equipment depreciation increased $4.9 million, or 27.2%, to $23.1 million in the first six months of 2007. The increase is primarily attributable to
purchase accounting adjustments resulting from the increase in carrying value of our movable medical equipment and an increase in the size of our movable medical equipment fleet. Additionally, in
May 2007, we determined that certain

32

---



pieces
of respiratory equipment in our movable medical equipment fleet were impaired as defined by SFAS 144 and we wrote-off all $0.9 million of this equipment's remaining
net book value.

Gross
margin percentage for the Medical Equipment Outsourcing segment decreased from 48.0% in the first six months of 2006 to 44.1% in the first six months of 2007. This decrease is
primarily due to the increased cost of maintenance and depreciation on our larger movable medical equipment fleet, lower pricing related to new GPO contracts and higher labor costs partially offset by
increased revenues. Gross margin percentage, before purchase accounting adjustments, decreased from 48.0% in the first six months of 2006 to 45.6% in the first six months of 2007. This decrease is
primarily due to the increased cost of maintenance and depreciation related to our larger movable medical equipment fleet, lower pricing related to new GPO contracts and higher labor costs partially
offset by increased revenues.

Technical and Professional Services SegmentPlan & Acquire; Maintain & Repair(in thousands)

|                                                                                                   |                                                      |   |       |       |  |  |   | Six Months Ended June 30, |       |   |        |       |  
|-------------------------------------------------------------------------------------------------- | ---------------------------------------------------- | - | ----- | ----- |  |  | - | ------------------------- | ----- | - | ------ | ----- | -
|
|Total revenue                                                                                      |                                                      | $ | 3,630 |       |  |  | $ | 14,800                    |       | $ | 18,430 |       | $
|Cost of revenue                                                                                    |                                                      |   | 2,526 |       |  |  |   | 10,124                    |       |   | 12,650 |       |  
|                                                                                                   |                                                      |   |       |       |  |  |   |                           |       |   |        |       |  
|                                                                                                   | Gross margin                                         |   | $     | 1,104 |  |  |   | $                         | 4,676 |   | $      | 5,780 |  
|                                                                                                   |                                                      |   |       |       |  |  |   |                           |       |   |        |       |  
|Gross margin %                                                                                     |                                                      |   | 30.4  | %     |  |  |   | 31.6                      | %     |   | 31.4   | %     |  
|Gross margin                                                                                       |                                                      | $ | 1,104 |       |  |  | $ | 4,676                     |       | $ | 5,780  |       | $
|Purchase accounting adjustments, primarily non-cash charges related to favorable lease commitments |                                                      |   | 5     |       |  |  |   |                          |       |   | 5      |       |  
|                                                                                                   |                                                      |   |       |       |  |  |   |                           |       |   |        |       |  
|                                                                                                   | Gross margin, before purchase accounting adjustments |   | $     | 1,109 |  |  |   | $                         | 4,676 |   | $      | 5,785 |  
|                                                                                                   |                                                      |   |       |       |  |  |   |                           |       |   |        |       |  
|Gross margin %, before purchase accounting adjustments                                             |                                                      |   | 30.6  | %     |  |  |   | 31.6                      | %     |   | 31.4   | %     |  

Total
revenue in the Technical and Professional Services segment increased $2.8 million, or 17.6% to $18.4 million in the first six months of 2007 as compared to the same
period of 2006. Revenue increases
resulted from our acquisition of the assets of the ICMS division of Intellamed, which occurred on April 1, 2007. Comparable revenues excluding the Intellamed acquisition remained relatively
flat during the first six months of 2007 due to increased sales force attention on converting new customers in our Medical Equipment Outsourcing segment, as well as selected contract terminations.

Total
cost of revenue in the segment increased $1.9 million, or 18.1% to $12.7 million in the first six months of 2007. This increase is primarily attributable to increased
expenses related to new business from the acquisition of the ICMS division of Intellamed of $1.8 million and other expense increases of $0.1 million.

Gross
margin percentage for the Technical and Professional Services segment decreased slightly from 31.7% in the first six months of 2006 to 31.4% in the first six months of 2007.

33

---



Medical Equipment Sales and Remarketing SegmentRedeploy & Remarket(in thousands)

|                                                                                                                |                                                      |   |       |     |  |  |   | Six Months Ended June 30, |       |   |       |       |  
|--------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------- | - | ----- | --- |  |  | - | ------------------------- | ----- | - | ----- | ----- | -
|
|Total revenue                                                                                                   |                                                      | $ | 1,277 |     |  |  | $ | 7,867                     |       | $ | 9,144 |       | $
|Cost of revenue                                                                                                 |                                                      |   | 1,212 |     |  |  |   | 6,366                     |       |   | 7,578 |       |  
|                                                                                                                |                                                      |   |       |     |  |  |   |                           |       |   |       |       |  
|                                                                                                                | Gross margin                                         |   | $     | 65  |  |  |   | $                         | 1,501 |   | $     | 1,566 |  
|                                                                                                                |                                                      |   |       |     |  |  |   |                           |       |   |       |       |  
|Gross margin %                                                                                                  |                                                      |   | 5.1   | %   |  |  |   | 19.1                      | %     |   | 17.1  | %     |  
|Gross margin                                                                                                    |                                                      | $ | 65    |     |  |  | $ | 1,501                     |       | $ | 1,566 |       | $
|Purchase accounting adjustments, primarily non-cash charges related to step-up in carrying value of inventories |                                                      |   | 143   |     |  |  |   |                          |       |   | 143   |       |  
|                                                                                                                |                                                      |   |       |     |  |  |   |                           |       |   |       |       |  
|                                                                                                                | Gross margin, before purchase accounting adjustments |   | $     | 208 |  |  |   | $                         | 1,501 |   | $     | 1,709 |  
|                                                                                                                |                                                      |   |       |     |  |  |   |                           |       |   |       |       |  
|Gross margin %, before purchase accounting adjustments                                                          |                                                      |   | 16.3  | %   |  |  |   | 19.1                      | %     |   | 18.7  | %     |  

Total
revenue in the Medical Equipment Sales and Remarketing segment increased $0.4 million, or 4.8%, to $9.1 million in the first six months of 2007 as compared to the
same period of 2006. Revenue increases resulted primarily from increased sales of new equipment and brokerage equipment of $1.2 million, partially offset by a decrease in disposable sales of
$0.4 million and a decrease in used equipment sales of $0.4 million. Robust rental demand in the Medical Equipment Outsourcing segment has limited access to equipment for sale.

Total
cost of revenue in the segment increased $1.1 million, or 17.7%, to $7.6 million in the first six months of 2007. This increase is primarily attributable to the
increased cost of used equipment and new equipment of $0.9 and $0.5 million, respectively, partially offset by a decreased cost of disposable sales of $0.3 million. Purchase accounting
adjustments, primarily related to the increase in the carrying amount in inventory, resulted in $0.1 million of the increase in the cost of new and used equipment sold.

Gross
margin percentage for the Medical Equipment Sales and Remarketing segment decreased from 26.2% in the first six months of 2006 to 17.1% in the first six months of 2007. This
decrease is primarily a result of larger individual sales with lower margins and the impact of purchase accounting
adjustments. Gross margin percentage before purchase accounting adjustments decreased from 26.2% in the first six months of 2006 to 18.7% in the first six months of 2007. Margins and activity in this
segment will fluctuate based on the transactional nature of the business.

34

---





Selling, General and Administrative, Transaction and Related Costs, Interest Expense and Loss on Extinguishment of Debt(in thousands)

|                                    |  |   |       |  |  |  |   | Six Months Ended
June 30, |  |   |        |  |  
|----------------------------------- |  | - | ----- |  |  |  | - | ------------------------- |  | - | ------ |  | -
|
|
|
|
|Selling, general and administrative |  | $ | 6,604 |  |  |  | $ | 28,692                    |  | $ | 35,296 |  | $
|Transaction and related costs       |  |   |      |  |  |  |   | 26,891                    |  |   | 26,891 |  |  
|Interest expense                    |  |   | 3,800 |  |  |  |   | 13,829                    |  |   | 17,629 |  |  
|Loss on extinguishment of debt      |  |   | 1,041 |  |  |  |   | 22,396                    |  |   | 23,437 |  |  

---

Selling, General and Administrative

Selling, general and administrative expenses increased $5.0 million, or 16.3%, to $35.3 million for the first six months of 2007. The increase was
primarily due to higher intangible amortization expense (primarily related to purchase accounting adjustments) of $1.6 million, employee-related expenses of $2.4 million, stock option
expense of $0.8 million, personal property taxes of $0.8 million, and other expense increases of $0.1 million, partially offset by a gain on the sale of our Minneapolis, Minnesota
district office of $0.7 million. Selling, general and administrative expenses as a percentage of total revenue for the first six months of 2007 increased to 27.3% from 26.8% for the same period
of 2006.

Transaction and Related Costs

We incurred $26.9 million of expenses in connection with the Transaction during the first six months of 2007. These expenses consisted primarily of
accounting, legal, investment banking advisory and restructuring expenses totaling $13.7 million, BSMB fee expensed of $6.5 million (see Note 8 to the unaudited financial
statements in Part I) and stock-based compensation expense related to the accelerated vesting of options under our 2003 Stock Option Plan of $6.7 million.

Interest Expense

Interest expense increased $1.9 million, or 12.3%, to $17.6 million for the first six months of 2007 as compared to the same period of 2006. The
increase is due to the increased debt assumed in association with the Transaction, partially offset by a lower average interest rate.

Loss on Extinguishment of Debt

We incurred $23.4 million of expense related to the purchase of $250.0 million of our 10.125% Senior Notes during the first six months of 2007. The
expense consisted of a call premium of $16.8 million related to our 10.125% Senior Notes and the write-off of $6.6 million of unamortized deferred financing costs related to
our 10.125% Senior Notes and Amended Credit Agreement.

Income Taxes

Income tax expense decreased $1.5 million for the first six months of 2007 as compared to the same period of 2006. The decrease resulted from the Company
moving from a net deferred tax asset position prior to the Transaction, where tax expense related primarily to minimum state taxes due to valuation allowances established for net operating losses not
recognized, to a net deferred tax liability position after the Transaction. Management believes the valuation allowance is no longer necessary as

35

---



we
determined that it was more likely than not that the benefits of these deferred tax assets will be realized.

Net Income (Loss)

For the six months of 2007, net income (loss) decreased $53.4 million to a net loss of $50.0 million as compared to the same period of 2006. The
decrease is primarily attributable to Transaction related expenses of $26.9 million, loss on extinguishment of debt expenses of $23.4 million, an increase in selling, general and
administrative expenses of $5.0 million and an increase in interest expense of $1.9 million, partially offset by a decrease in our provision for income taxes of $1.5 million and
an increased gross margin of $2.3 million.

EBITDA

Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") for the six months ended June 30, 2007 was a loss of $4.0 million,
representing a $45.1 million decrease from $41.1 million for the same period of 2006. This decrease is primarily due to Transaction and related costs of $26.9 million, loss on
extinguishment of debt of $23.4 million, higher selling, general and administrative costs, excluding depreciation and amortization, of $3.1 million offsetting revenue growth resulting in
an increased gross margin before depreciation of $8.3 million.

EBITDA
is not intended to represent an alternative to operating income or cash flows from operating, financing or investing activities (as determined in accordance with generally
accepted accounting principles ("GAAP")) as a measure of performance, and is not representative of funds available for discretionary use due to our financing obligations. EBITDA, as defined by us, may
not be calculated consistently among other companies applying similar reporting measures. EBITDA is included because it is a widely accepted financial indicator used by certain investors and financial
analysts to assess and compare companies, and a version of EBITDA is an integral part of our debt covenant calculations. Management believes that EBITDA provides an important perspective on our
ability to service our long-term obligations, our ability to fund continuing growth, and our ability to continue as a going concern. A reconciliation of operating cash flows to EBITDA is
included below:

|                                            |        |   |         |       |  |  |   | Six Months Ended
June 30, |        
|------------------------------------------- | ------ | - | ------- | ----- |  |  | - | ------------------------- | -------
|
|
|Net cash provided by operating activities   |        | $ | (26,013 | )     |  |  | $ | 34,318                    |        
|Changes in operating assets and liabilities |        |   | 30,249  |       |  |  |   | (27,711                   | )      
|Other and non-cash expenses                 |        |   | (137    | )     |  |  |   | (31,258                   | )      
|Income tax expense                          |        |   | (1,581  | )     |  |  |   | 492                       |        
|Interest expense                            |        |   | 3,800   |       |  |  |   | 13,829                    |        
|                                            |        |   |         |       |  |  |   |                           |        
|                                            | EBITDA |   | $       | 6,318 |  |  |   | $                         | (10,330
|                                            |        |   |         |       |  |  |   |                           |        

36

---



Supplemental Information:(dollars in thousands)

|                                                                               |  |   |          |   |  |  |   | Six Months Ended
June 30, |  
|------------------------------------------------------------------------------ |  | - | -------- | - |  |  | - | ------------------------- | -
|
|EBITDA                                                                         |  | $ | 6,318    |   |  |  | $ | (10,330                   | )
|Net cash provided by (used in) operating activities                            |  | $ | (26,013  | ) |  |  | $ | 34,318                    |  
|Net cash used in investing activities                                          |  |   | (337,689 | ) |  |  |   | (48,060                   | )
|Net cash provided by (used in) financing activities                            |  |   | 367,185  |   |  |  |   | 13,742                    |  
|Movable medical equipment depreciation                                         |  |   | 4,632    |   |  |  |   | 18,512                    |  
|Non-movable medical equipment depreciation                                     |  | $ | 669      |   |  |  | $ | 3,113                     |  
|Other operating data:                                                          |  |   |          |   |  |  |   |                           |  
|Movable medical equipment owned (approximate units at end of period)           |  |   | 186,000  |   |  |  |   | 185,000                   |  
|Offices (at end of period)                                                     |  |   | 79       |   |  |  |   | 79                        |  
|Number of outsourcing hospital customers (approximate number at end of period) |  |   | 3,825    |   |  |  |   | 3,800                     |  
|Number of total outsourcing customers (approximate number at end of period)    |  |   | 7,275    |   |  |  |   | 7,200                     |  

SEASONALITY

Quarterly operating results are typically affected by seasonal factors. Historically, our first and fourth quarters are the strongest, reflecting increased
customer utilization during the fall and winter months.

LIQUIDITY AND CAPITAL RESOURCES

Our principal sources of liquidity are expected to be cash flows from operating activities and borrowings under our senior secured credit facility which matures
in May 2013. It is anticipated that our principal uses of liquidity will be to fund capital expenditures related to purchases of movable medical equipment, provide working capital, meet debt
service requirements and finance our strategic plans.

We
require substantial cash to operate our Medical Equipment Outsourcing programs and service our debt. Our outsourcing programs require us to invest a significant amount of cash in
movable medical equipment purchases. To the extent that such expenditures cannot be funded from our operating cash flow, borrowing under our senior secured credit facility or other financing sources,
we may not be able to conduct our business or grow as currently planned.

If
we are unable to generate sufficient cash flow from operations in order to service our debt, we will be forced to take actions such as reducing or delaying capital expenditures,
selling assets, restructuring or refinancing our debt or seeking additional equity capital. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory
and other factors that are beyond our control. If we are unable to repay our debt at maturity, we may have to obtain alternative financing, which may not be available to us.

Net
cash provided by operating activities during the six months ended June 30, 2007, was $8.3 million, compared to $24.8 million in the same period of 2006. This
decrease is primarily

37

---



attributable
to transaction and related expenses of $26.9 million. Net cash used in investing activities during the six months ended June 30, 2007, was $385.7 million, compared to
$21.0 million in the same period of 2006. This increase was primarily attributable to the Acquisition of Universal Hospital Services, Inc. by Parent and the acquisition of the assets of
the ICMS division of Intellamed, resulting in cash outlays of $335.1 and $14.6 million, respectively, and increased purchases of movable medical equipment of $16.4 million to meet
customer demand. Net cash provided by financing activities during the six months ended June 30, 2007 was $380.9 million, compared to net cash used in financing activities of
$3.8 million in 2006, the primary difference relating to the issuance of $460.0 million of Notes and equity contribution of $239.8 related to the Transaction, partially offset by $266.9
of cash outlays related to the purchase of a portion of our Senior Notes and the net payoff of our Amended Credit Agreement of $43.0 million.

Based
on the level of operating performance expected in 2007, we believe our cash from operations, together with additional borrowings under our Senior Secured Credit Facility, will meet
our liquidity needs for the foreseeable future, exclusive of any borrowings that we may make to finance potential acquisitions. However, if during that period or thereafter we are not successful in
generating sufficient cash flows from operations or in raising additional capital when required in sufficient amounts and on terms acceptable to us, our business could be adversely affected. As of
June 30, 2007, we had $120.7 million of unused borrowing availability under our senior secured credit facility based on a borrowing base of $135.0 million, net of borrowings of
$12.0 million and after giving effect to $2.3 million used for letters of credit. Our levels of borrowing are further restricted by the financial covenants set forth in our senior
secured credit facility agreement and the Second Lien Senior Indenture governing our Notes, which covenants are summarized below. As of June 30, 2007, the Company was in compliance with all
covenants under the senior secured credit facility.

Contractual Obligations.The following is a summary as of June 30, 2007, of our future contractual obligations:

|                              |                               | Payments due by period
|----------------------------- | ----------------------------- | ----------------------
|
|
|                              | Long-term debt obligations    |                       
|                              | Interest on Senior Notes      |                       
|                              | Interest on Notes(1)          |                       
|                              | Operating lease obligations   |                       
|                              | Purchase obligations          |                       
|                              | Pension obligations(2)        |                       
|                              |                               |                       
|                              | Total contractual obligations |                       
|                              |                               |                       
|Other commercial commitments: |                               |                       
|                              | Stand by letter of credit     |                       
|                              |                               |                       

---

38

---



Financing Structure.Our major sources of funds are comprised of $230.0 million PIK Toggle Notes,
$230.0 million Floating Rate Notes, $135.0 million senior secured credit facility and $9.9 million 10.125% Senior Notes. In connection with the Transaction, we purchased a portion
of our 10.125% Senior Notes and terminated our Amended Credit Agreement.

PIK Toggle Notes.On May 31, 2007, Merger Sub issued $230.0 million aggregate original
principal amount of 8.50% / 9.25% PIK Toggle Notes under the Second Lien Senior Indenture with Wells Fargo Bank, National Association, as trustee. See "Second Lien Senior Indenture" below. At the
closing of the Transaction, as the surviving corporation in the Acquisition, we assumed all the obligations of Merger Sub under the Second Lien Senior Indenture.

For
any interest payment period through June 1, 2011, the Company may, at its option, elect to pay Cash Interest, PIK Interest or 50% Cash Interest and 50% PIK Interest. Cash
Interest on the PIK Toggle Notes accrues at the rate of 8.50% per annum. PIK Interest on the PIK Toggle Notes accrues at the rate of 9.25% per annum. After June 1, 2011, the Company is required
to make all interest payments on the PIK Toggle Notes entirely as Cash Interest. All PIK Toggle Notes mature on June 1, 2015. Interest on the PIK Toggle Notes is payable semiannually in arrears
on each June 1 and December 1, commencing on December 1, 2007.

We
may redeem some or all of the PIK Toggle Notes at any time prior to June 1, 2011, at a price equal to 100% of the principal amount thereof, plus the applicable premium (as
defined by the Second Lien Senior Indenture), plus accrued and unpaid interest, if any, to the date of redemption. In addition, on or before June 1, 2010, we may redeem up to 40% of the
aggregate principal amount of the PIK Toggle Notes with the net proceeds of certain equity offerings.

Except
as noted above, we cannot redeem the PIK Toggle Notes until June 1, 2011. Thereafter we may redeem some or all of the PIK Toggle Notes at the redemption prices (expressed
as percentages of principal amount) set forth below plus accrued and unpaid interest, if any, on the PIK Toggle Notes redeemed, to the applicable redemption date, if redeemed during the twelve-month
period beginning on June 1 of the years indicated below, subject to the rights of noteholders:

Year

Percentage2011

104.250
%2012

102.125
%2013 and thereafter

100.000
%


Upon
the occurrence of a change of control, each holder of the PIK Toggle Notes has the right to require the Company to repurchase some or all of such holder's PIK Toggle Notes at a
price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, and PIK Interest, if any, to the date of purchase.

Floating Rate Notes.On May 31, 2007, Merger Sub issued $230.0 million aggregate
original principal amount of Floating Rate Notes under the Second Lien Senior Indenture with Wells Fargo Bank, National Association, as trustee. See "Second Lien Senior Indenture" below. Interest on
the Floating Rate Notes is reset for each semi-annual interest period and is calculated at the current LIBOR rate plus 3.375%. At June 30, 2007, our LIBOR-based rate was 8.760%,
which includes the credit spread noted above. Interest on the Floating Rate Notes is payable semiannually, in arrears, on each June 1 and December 1, commencing on December 1,
2007. At the closing of the Transaction, as the surviving corporation in the Acquisition, we assumed all the obligations of Merger Sub under the Second Lien Senior Indenture. The Floating Rate Notes
mature on June 1, 2015.

39

---



We
may redeem some or all of the Floating Rate Notes at any time prior to June 1, 2009, at a price equal to 100% of the principal amount thereof, plus the applicable premium (as
defined by the Second Lien Senior Indenture), plus accrued and unpaid interest, if any, to the date of redemption. In addition, on or before June 1, 2009, we may redeem up to 40% of the
aggregate principal amount of the Floating Rate Notes with the net proceeds of certain equity offerings.

Except
as noted above, we cannot redeem the Floating Rate Notes until June 1, 2009. Thereafter we may redeem some or all of the Floating Rate Notes at the redemption prices
(expressed as percentages of principal amount) set forth below plus accrued and unpaid interest, if any, on the Floating Rate Notes redeemed, to the applicable redemption date, if redeemed during the
twelve-month period beginning on June 1 of the years indicated below, subject to the rights of noteholders:

Year

Percentage2009

102.000
%2010

101.000
%2011 and thereafter

100.000
%


Upon
the occurrence of a change of control each holder of the Floating Rate Notes has the right to require the Company to repurchase some or all of such holder's Floating Rate Notes at a
price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase.

Interest Rate Swap.In June 2007 we entered into an interest rate swap agreement for
$230.0 million, which has the effect of converting our $230.0 of Floating Rate Notes to fixed interest rates. The effective date for the swap agreement is December 2007, the beginning of
the next semi-annual interest rate period; the expiration date is May 2012.

The
interest rate swap agreement qualifies for cash flow hedge accounting under SFAS 133,Accounting for Derivative Instruments and Hedging
Activities. Both at inception and on an on-going basis we must perform an effectiveness test. In accordance with SFAS 133, the fair value of the swap
agreement at June 30, 2007 is included as a cash flow hedge on our balance sheet. The change in fair value was recorded as a component of accumulated other comprehensive loss on our balance
sheet since the instrument was determined to be an effective hedge at June 30, 2007. We do not expect any amounts to be reclassified into current earnings in the future due to ineffectiveness.

As
a result of our swap agreement, we expect the effective interest rate on our $230.0 million Floating Rate Notes to be 9.065% from December 2007 through May 2012.

Second Lien Senior Indenture.Our Notes are guaranteed, jointly and severally, on a second priority
senior secured basis, by certain of our future domestic subsidiaries. We do not currently have any subsidiaries. The Notes are our second priority senior secured obligations and rank (i) equal
in right of payment with all of our existing and future unsecured and unsubordinated indebtedness, and effectively senior to any such unsecured indebtedness to the extent of the value of collateral;
(ii) senior in right of payment to all of our and our guarantor's existing and future subordinated indebtedness; (iii) effectively junior to our senior secured credit facility and other
obligations that are secured by first priority liens on the collateral securing the Notes or that are secured by a lien on assets that are not part of the collateral securing the Notes, in each case,
to the extent of the value of such collateral or assets; and (iv) structurally subordinated to any indebtedness and other liabilities (including trade payables) of any of our future
subsidiaries that are not guarantors.

The
Second Lien Senior Indenture governing the Notes contains covenants that limit our and our guarantors' ability, subject to certain definitions and exceptions, and certain of our
future subsidiaries' ability to:



40

---





Senior Secured Credit Facility.In connection with the Transaction, the Company and Parent entered
into a new first lien senior secured asset-based revolving credit facility providing for loans in an amount of up to $135.0 million pursuant to a credit agreement, dated as of May 31,
2007 with a group of financial institutions. The senior secured credit facility is available for working capital and general corporate purposes, including permitted investments, capital expenditures
and debt repayments, on a fully revolving basis, subject to the terms and conditions set forth in the credit documents in the form of revolving loans, swing line loans and letters of credit.

The
senior secured credit facility provides financing of up to $135.0 million, subject to a borrowing base calculated on the basis of certain of our eligible accounts receivable,
inventory and equipment. As of June 30, 2007, we had $120.7 million of unused borrowing availability under our senior secured credit facility based on a borrowing base of
$135.0 million, net of borrowings of $12.0 million and after giving effect to $2.3 million used for letters of credit.

The
senior secured credit facility matures on May 31, 2013. Our obligations under the senior secured credit facility are secured by a first priority security interest in
substantially all of our assets, excluding a pledge of our (and our Parent's) stock, any joint ventures and certain other exceptions. Our obligations under the senior secured credit facility are
unconditionally guaranteed by our Parent.

The
senior secured credit facility provides that we have the right at any time to request up to $50.0 million of additional commitments, but the lenders are under no obligation to
provide any such additional commitments, and any increase in commitments will be subject to customary conditions precedent, such as an absence of any default or events of default. If we were to
request any such additional commitments and the existing lenders or new lenders were to agree to provide such commitments, the senior secured credit facility size could be increased to up to
$185.0 million, but our ability to borrow would still be limited by the amount of the borrowing base.

Borrowings
under the senior secured credit facility accrue interest at our option:



At
June 30, 2007 we have elected the LIBOR rate option, and our interest rate was 7.07%, which includes the credit spread noted above.

Overdue
principal, interest and other amounts will bear interest at a rate per annum equal to 2% in excess of the applicable interest rate. The applicable margins of the senior secured
credit facility will be subject to adjustment based upon leverage ratios. The senior secured credit facility also provides for customary letter of credit fees, closing fees, unused line fees and other
fees.

The
senior secured credit facility requires our compliance with various affirmative and negative covenants. Pursuant to the affirmative covenants, we and Parent will, among other things,
deliver financial and other information to the agent, provide notice of certain events (including events of default), pay our obligations, maintain our properties, maintain the security interest in
the collateral for the benefit of the agent and the lenders and maintain insurance.

41

---





Among other restrictions, and subject to certain definitions and exceptions, the senior secured credit facility restricts our ability to:



The
senior secured credit facility also contains a financial covenant that is calculated if our available borrowing capacity is less than $15.0 million for a certain period. Such
covenant consists of a minimum ratio of trailing four-quarter EBITDA to cash interest expense, as defined.

The
senior secured credit facility specifies certain events of default, including among others, failure to pay principal, interest or fees, violation of covenants, inaccuracy of
representations or warranties, bankruptcy events, certain ERISA-related events, cross-defaults to other material agreements, change of control events, and invalidity of guarantees or security
documents. Some events of default will be triggered only after certain cure periods have expired, or will provide for materiality thresholds. If such a default occurs, the lenders under the senior
secured credit facility would be entitled to take various actions, including all actions permitted to be taken by a secured creditor and the acceleration of amounts due under the senior secured credit
facility.

10.125% Senior Notes.The Senior Notes Senior Notes mature on November 1, 2011. Interest on
the Senior Notes accrues at the rate of 10.125% per annum and is payable semiannually on each May 1 and November 1. The Senior Notes are redeemable, at the Company's option, in whole or
in part of, on or after November 1, 2007, at specified redemption prices plus accrued interest to the date of redemption.

On
May 17, 2007, we entered into a supplemental indenture to our Indenture governing our Senior Notes, dated as of October 17, 2003, between the Company and Wells Fargo
Bank, National Association, as trustee. The Indenture governs the terms of the Senior Notes. The supplemental indenture amended the Indenture.

In
May 2007, in connection with the Transaction, we tendered for all of our outstanding Senior Notes, pursuant to their terms. On May 31, 2007, $235.0 million of our
Senior Notes were purchased. We paid $253.1 million including a call premium of $16.1 million and accrued interest of $2.0 million to complete the purchase. We used proceeds from
the issuance of our Notes to redeem a portion of our Senior Notes.

The
amendments set forth in the supplemental indenture (the "Amendments") became operative after the Company purchased all of its Senior Notes validly tendered and not withdrawn pursuant
to its tender offer and consent solicitation. As of May 11, 2007, holders of Senior Notes representing an amount greater than a majority of the principal amount of outstanding Senior Notes had
validly tendered their Senior Notes and consented to the execution of the supplemental indenture. The Amendments eliminated from the Indenture: (i) requirements to file reports with the
Securities and Exchange Commission, (ii) requirements to pay taxes, (iii) limitations on the Company to use defenses

42

---



against
usury; (iv) limitation on restricted payments, (v) limitation on payment of dividends and other payment restrictions affecting subsidiaries, (vi) limitations on incurrence
of indebtedness and issuance of preferred stock, (vii) limitations on asset sales and requirements to repurchase the Senior Notes with excess proceeds thereof; (viii) limitations on
affiliate transactions, (ix) limitations on liens, (x) limitations on the businesses in which the Company and its subsidiaries may engage, (xi) requirements to preserve corporate
existence, (xii) requirements to purchase the Senior Notes upon a change of control, (xiii) limitation on issuance of guarantees of indebtedness, (xiv) limitations on payments for
consent from holders of Senior Notes, (xv) limitations on mergers, consolidation and sale of assets with respect to the Company, (xvi) limitations on mergers or consolidation of, or
transfer of assets of, guarantors, and (xvii) certain events of default.

On
June 13, 2007 we purchased an additional $15.1 million of our remaining Senior Notes pursuant to their terms. We paid $15.9 million of cash including a call
premium of $0.7 million and accrued interest of $0.1 million to complete the purchase.

The
Company has the right to redeem some or all of the remaining $9.9 million of Senior Notes at the redemption prices (expressed as a percentage of principal amount) set forth
below, plus accrued and unpaid interest, if any, if redeemed during the twelve-month period beginning on November 1 of the years indicated below, subject to the rights of the noteholders:

Year

Percentage2007

105.063
%2008

102.531
%2009 and thereafter

100.000
%


Termination of Our Amended Credit Agreement.In connection with the Transaction, we repaid all
outstanding balances and terminated our Amended Credit Agreement.

RECENT ACCOUNTING PRONOUNCEMENTS

In February 2007, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 159, The Fair Value
Option for Financial Assets and Financial Liabilities("SFAS 159"), which permits entities to elect to measure many financial
instruments and certain other items at fair value that are not currently required to be measured at fair value. This election is irrevocable. The provisions of SFAS No. 159 are effective for
fiscal years beginning after November 15, 2007. We are currently evaluating the impact of this statement, but believe the adoption of SFAS 159 will not have a material impact on our
financial position or results of operations.

In
September 2006, the FASB issued SFAS No. 158,Employers Accounting for Defined Benefit Pension and Other Postretirement
Plans,an Amendment of FASB Statements No. 87, 88, 106 and 123(R). SFAS No. 158 requires employers to recognize the under funded or over funded status of a
defined benefit post retirement plan as an asset or liability in its statements of financial position and to recognize changes in the funded status in the year in which the changes occur through
accumulated other comprehensive income. Additionally, SFAS No. 158 requires employers to measure the funded status of a plan as of the date of its year-end statement of financial
position. The provisions of SFAS No. 158 are effective as of the end of the fiscal year ending after June 15, 2007. We are currently evaluating the impact of this statement, but believe
the adoption of SFAS No. 158 will not have a material impact on our financial position or results of operations.

In
September 2006, the FASB issued SFAS No. 157,Fair Value Measurements.SFAS No. 157 clarifies the principle that
fair value should be based on the assumptions that market participants would use when pricing an asset or liability. Additionally, it establishes a fair value hierarchy that prioritizes the
information used to develop those assumptions. The provisions of SFAS No. 157 are effective for

43

---



fiscal
years beginning after November 15, 2007. We believe the adoption of SFAS No. 157 will not have a material impact on our financial position or results of operations.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:We believe statements in this quarterly
report looking forward in time involve risks and uncertainties. The following factors, among others, could adversely affect our business, operations and financial condition causing our actual results
to differ materially from those expressed in any forward-looking statements: our history of net losses and substantial interest expense; our need for substantial cash to operate and expand our
business as planned; our substantial outstanding debt and debt service obligations; restrictions imposed by the terms of our debt; a decrease in the number of patients our customers are serving; our
ability to effect change in the manner in which healthcare providers traditionally procure medical equipment; the absence of long-term commitments with customers; our ability to renew
contracts with GPOs and IDNs; changes in reimbursement rates and policies by third-party payors; the impact of health care reform initiatives; the impact of significant regulation of the health care
industry and the need to comply with those regulations; difficulties or delays in our continued expansion into certain of our businesses/geographic markets and developments of new
businesses/geographic markets; additional credit risks in increasing business with home care providers and nursing homes; impacts of equipment product recalls or obsolescence; and increases in vendor
costs that cannot be passed through to our customers. See the risk factors discussed under Part II, Item 1A of this Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our primary exposure to market risk is interest rate risk associated with our debt. We use both fixed and variable rate debt as sources of financing. At
June 30, 2007, we had approximately $489.7 million of total debt outstanding. After taking into account the effect of our swap agreement, $12.0 million was bearing interest at
variable rates averaging approximately 7.1%; a one percentage point change in interest rates on our variable rate debt would have resulted in annual interest expense fluctuating approximately
$0.1 million.

In
June 2007 we entered into an interest rate swap agreement for $230.0 million, which has the effect of converting our $230.0 of Floating Rate Notes to fixed interest
rates. The effective date for the swap agreement is December 2007, the beginning of the next semi-annual interest rate period; the expiration date is May 2012.

The
interest rate swap agreement qualifies for cash flow hedge accounting under SFAS 133,Accounting for Derivative Instruments and Hedging
Activities. Both at inception and on an on-going basis we must perform an effectiveness test. In accordance with SFAS 133 the fair value of the swap
agreement at June 30, 2007 is included as a cash flow hedge on our balance sheet. The change in fair value was recorded as a component of accumulated other comprehensive loss on our balance
sheet since the instrument was determined to be an effective hedge at June 30, 2007. We do not expect any amounts to be reclassified into current earnings in the future due to ineffectiveness.

As
a result of our swap agreement, we expect the effective interest rate on our $230.0 million Floating Rate Notes to be 9.065% from December 2007 through May 2012.

As
of June 30, 2007 we have no other material exposure to market risk.

Item 4. Controls and Procedures



Under
the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and
operation of our disclosure controls and procedures (as defined in Rule 15d-15(e) under the Securities Exchange Act of 1934 as amended (the "Exchange Act")). Based upon that
evaluation, our Chief

44

---



Executive
Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.



During
the first six months of 2007, there has been no change in our internal control over financial reporting (as defined in Rule 15d-15(f) under the Exchange Act)
that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART IIOTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may become involved in litigation arising out of operations in the normal course of business. As of June 30, 2007, we were not a
party to any pending legal proceedings the adverse outcome of which could reasonably be expected to have a material adverse effect on our operating results, financial position, or cash flows.

Item 1A. Risk Factors

Our business faces many risks. Any of the risks discussed below, elsewhere in this Form 10-Q or our other filings with the SEC, including our
risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2006, could have a material impact on our business, financial condition or results of
operations. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business operations.

Our substantial indebtedness could adversely affect our financial health and prevent us from fulfilling our obligations under the Notes.

We have a significant amount of indebtedness which could have important consequences. For example, it could:



Our
ability to satisfy our debt obligations will depend on our future operating performance. This, to a certain extent, is subject to general economic, financial, competitive,
legislative, regulatory and other factors that are beyond our control. Our business may not continue to generate sufficient cash flow from operations and future borrowings may not be available to us
in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. If we are unable to make our interest payments or to repay our debt at maturity, we may have to
obtain alternative financing, which may not be available to us.

45

---



If the patient census of our customers decreases, the revenues generated by our business could decrease.

Our operating results are dependent in part upon the amount and types of equipment necessary to service our customers' needs, which are heavily influenced by the
total number of patients our customers are serving at any time (which we refer to as "patient census"). At times of lower patient census, our customers have a decreased need for our services on a
supplemental or peak needs basis. Our operating results can vary depending on, for example, the timing and severity of the cold and flu season, local, regional or national epidemics, and the impact of
national catastrophes, as well as other factors affecting patient census.

If we are unable to fund our significant cash needs, we may be unable to expand our business as planned or to service our debt.

We require substantial cash to operate our Medical Equipment Outsourcing programs and service our debt. Our outsourcing programs require us to invest a
significant amount of cash in medical equipment purchases. To the extent that such expenditures cannot be funded from our operating cash flow, borrowings under our new senior secured credit facility
or other financing sources, we may not be able to grow as currently planned. We currently expect that over the next twelve months we will invest approximately $60.0 million in new and used
medical equipment and other capital expenditures. This estimate is subject to numerous assumptions, including revenue growth, the number of AMPP signings, and any significant changes in GPO contracts.
In addition, a substantial portion of our cash flow from operations must be dedicated to servicing our debt and there are significant restrictions on our ability to incur additional indebtedness under
the Second Lien Senior Indenture governing the Notes and the credit agreement governing our senior secured credit facility.

Primarily
because of our debt service obligations and debt refinancing charges, we have had a history of net losses. If we consistently incur net losses, it could result in our inability
to finance our business in the future. We had net income of $0.1 million in 2006, and net losses of $1.6 million and $3.6 million for
the years ended 2005 and 2004, respectively. Our ability to use our United States federal income tax net operating loss carryforwards to offset our future taxable income may be limited. If we are
limited in our ability to use our net operating loss carryforwards in future years in which we have taxable income, we will pay more current taxes than if we were able to utilize our net operating
loss carryforwards without limitation, which could harm our results of operations and liquidity.

If we are unable to change the manner in which health care providers traditionally procure medical equipment, we may not be able to achieve significant
revenue growth.

We believe that the strongest competition to our outsourcing programs is the traditional purchase or lease alternative for obtaining medical equipment. Currently,
many acute care hospitals and alternate site providers view outsourcing primarily as a means of meeting short-term or peak supplemental needs, rather than as a long-term,
effective and cost efficient alternative to purchasing or leasing equipment. Many health care providers may continue to purchase or lease a substantial portion of their medical equipment and to manage
and maintain it on their own.

Our competitors may engage in significant price competition or liquidate significant amounts of surplus equipment, thereby decreasing the demand for
outsourcing services and possibly causing us to reduce the rates we charge for our services.

Our competition may engage in competitive practices that may undercut our pricing. In addition, a competitor may liquidate significant amounts of surplus
equipment, thereby decreasing the demand for outsourcing services and possibly causing us to reduce the rates we may charge for our services.

46

---



We have relationships with certain key suppliers, and adverse developments concerning these suppliers could delay our ability to procure equipment or
increase our cost of purchasing equipment.

We purchased medical equipment from over 165 manufacturers in 2006. Our ten largest manufacturers of medical equipment accounted for approximately 62% of our
direct medical equipment purchases in 2006. Adverse developments concerning key suppliers or our relationships with them could force us to seek alternative sources for our medical equipment or to
purchase such equipment on unfavorable terms. A delay in procuring equipment or an increase in the cost to purchase equipment could limit our ability to provide equipment to our customers on a timely
and cost-effective basis. If
we are unable to have access to parts or if manufacturers do not provide access to equipment manuals or training, we may not be able to provide certain technical and professional services.

A substantial portion of our revenues comes from customers with whom we do not have long-term commitments, and cancellations by or disputes
with customers could decrease the amount of revenues we generate, thereby reducing our ability to operate and expand our business.

For the year ended December 31, 2006, approximately 61% of our outsourcing revenue was derived from customers or customers affiliated with a GPO with whom
we have contractual commitments. The source of the remaining 39% of revenue was from customers with no such contractual commitment. Our customers are generally not obligated to outsource our equipment
under long-term commitments. In addition, many of our customers do not sign written agreements with us fixing the rights and obligations of the parties regarding matters such as billing,
liability, warranty or use. Therefore, we face risks such as fluctuations in usage, inaccurate or false reporting of usage by customers and disputes over liabilities related to equipment use. We do
not have written agreements with some of our AMPP customers for which we provide a substantial portion of the movable medical equipment that they use and provide substantial staffing resources. These
arrangements could be terminated by the health care customer without notice or payment of any termination fee. A large number of such terminations may adversely affect our ability to generate revenue
growth and sufficient cash flows to support our growth plans.

If we are unable to renew our contracts with GPOs or IDNs, we may lose existing customers, thereby reducing the amount of revenues we generate.

Our past revenue growth and our strategy for future growth depends, in part, on access to the new customers granted by our major contracts with GPOs and IDNs. In
the past, we have been able to renew such contracts when they are up for renewal. If we are unable to renew our current GPO or IDN contracts, we may lose a portion of existing business with the
customers who are members of such GPOs and IDNs.

Although we do not manufacture any medical equipment, our business entails the risk of claims related to the medical equipment that we outsource and
service. We may not have adequate insurance to cover a claim, and it may be more expensive or difficult for us to obtain adequate insurance in the future.

We may be liable for claims related to the use of our medical equipment or to our maintenance or repair of a customer's medical equipment. Any such claims, if
made and upheld, could make our business more expensive to operate and therefore less profitable. We may be subject to claims exceeding our insurance coverage or we may not be able to continue to
obtain liability insurance at acceptable levels of cost and coverage. If we are found liable for any significant claims that are not covered by insurance, our liquidity and operating results could be
materially adversely affected. In addition, litigation relating to a claim could adversely affect our existing and potential customer relationships, create adverse public relations and divert
management's time and resources from the operation of the business.

47

---



Our growth strategy depends in part on our ability to successfully identify and manage our acquisitions and a failure to do so could impede our future
revenue growth, thereby weakening our position in the industry with respect to our competitors.

As part of our growth strategy, we intend to pursue acquisitions or other strategic relationships within the health care industry that we believe will enable us
to generate revenue growth and enhance our competitive position. Future acquisitions may involve significant cash expenditures that could impede our future revenue growth. In addition, our efforts to
execute our acquisition strategy may be affected by our ability to identify suitable candidates and negotiate and close acquisitions. We regularly evaluate potential acquisitions. We may not be
successful in acquiring other businesses, and the businesses we do acquire in the future may not ultimately produce returns that justify our related investment.

Acquisitions
may involve numerous risks, including:



If
we are unable to continue to grow through acquisitions, our ability to generate revenue growth and enhance our competitive position may be impaired.

We depend on our sales professionals and sales specialists and may lose customers when any of our sales professionals or sales specialists leave us.

Our revenue growth has been supported by hiring and developing new sales professionals and sales specialists and adding, through acquisitions, established sales
professionals and sales specialists whose existing customers generally have become our customers. We have experienced and will continue to experience intense competition for these resources. The
success of our programs depends on the relationships developed between our sales professionals and sales specialists and our customers.

Our cash flow fluctuates during the year because operating income as a percentage of revenue fluctuates with our quarterly operating results and we make
semi-annual debt service payments.

Our results of operations have been and can be expected to be subject to quarterly fluctuations. We may experience increased revenues in the first and fourth
quarters of the year, depending upon the timing and severity of the cold and flu season and the related increased hospital census and medical equipment usage during that season. Because a significant
portion of our expenses are relatively fixed over these periods, our operating income as a percentage of revenue tends to increase during the first and fourth quarter of each year. If the cold and flu
season is delayed by as little as one month, or is less severe than in prior periods, our quarterly operating results for a current period can vary significantly from prior periods. Our quarterly
results can also fluctuate as a result of other factors such as the timing of acquisitions, new AMPP agreements or new office openings.

Changes in reimbursement rates and policies by third-party payors for health care items and services may reduce the rates that providers can pay for our
services, thereby requiring us to reduce our rates or putting our ability to collect payments at risk.

Our health care provider customers that pay us directly for the services we provide to them rely on reimbursement from third-party payors for a substantial
portion of their operating revenue. These third-party payors include both governmental payors such as Medicare and Medicaid and private payors such as insurance companies and managed care
organizations. There are widespread efforts to control

48

---



health
care costs in the United States by all of these payor groups. These cost containment initiatives include reimbursement policies based on fixed rates for a particular patient treatment that are
unrelated to the providers' actual costs and requiring health care providers to provide services on a discounted basis. Consequently, these reimbursement policies have a direct effect on health care
providers' ability to pay us for our services and an indirect effect on our level of charges. Ongoing concerns about rising health care costs may cause more restrictive reimbursement policies to be
implemented in the future. Restrictions on the amounts or manner of reimbursements to health care providers may affect the financial strength of our customers and amount our customers are able to pay
for our services.

In periods when significant health care reform initiatives were under consideration and uncertainty remained as to their likely outcome, our profits
decreased as the cost of doing business increased. If other significant health care reform initiatives occur, they may have a similar, negative effect.

Because the regulatory and political environment for health care significantly influences the capital equipment procurement decisions of health care providers,
our ability to generate profits has historically been adversely affected in periods when significant health care reform initiatives were under consideration and uncertainty remained as to their likely
outcome.

A portion of our revenues are derived from home care providers and nursing homes, and these health care providers may pose additional credit risks.

Our nursing home and home care customers may pose additional credit risks since they are generally less financially sound than hospitals. Nursing homes in
particular have experienced significant financial problems since the implementation of the Balanced Budget Act of 1997. We may incur losses in the future due to the credit risks, including potential
bankruptcy filings, associated with any of these customers.

Consolidation in the health care industry may lead to a reduction in the outsourcing rates we charge, thereby decreasing our revenues.

In recent years, many acute care hospitals and alternate site providers have consolidated to create larger health care organizations. We believe this
consolidation trend may continue. Any resulting consolidated health care organization may have greater bargaining power over us, which could lead to a reduction in the outsourcing rates that we are
able to charge. A reduction in our outsourcing rates may decrease our revenues.

Our competitors may bundle products and services offered to customers, some of which we do not offer.

If competitors offer their products and services to customers on a combined basis with reduced prices, and we do not offer some of these products or cannot offer
them on comparable terms, we may have a competitive disadvantage that will lower the demand for our services.

Our customers operate in a highly regulated environment. Regulations affecting them could cause us to incur additional expenses associated with
compliance and licensing. We could be assessed fines and face possible exclusion from participation in state and federal health care programs if we violate laws or regulations applicable to our
business.

The health care industry is required to comply with extensive and complex laws and regulations at the federal, state and local government levels. While the
majority of these regulations do not directly apply to us, there are some that do, including the Food, Drug and Cosmetic Act ("FDCA") and certain state pharmaceutical licensing requirements. Although
we believe we are in compliance with the FDCA, if the Food and Drug Administration ("FDA") expands the reporting requirements under the

49

---



FDCA,
we may be required to comply with the expanded requirements and may incur substantial additional expenses in doing so. With respect to state requirements, we currently maintain 33 licenses,
permits and registrations in 15 states and may be required to obtain additional licenses, permits and registrations as state requirements change. Our failure to possess such licenses for our existing
operations may subject us to certain additional expenses.

In
addition to the FDCA and state licensing requirements, we are impacted by federal and state laws and regulations aimed at protecting the privacy of individually identifiable health
information and detecting and preventing fraud, abuse and waste with respect to federal and state health care programs. Many of our customers require us to abide by their policies relating to patient
privacy, state and federal anti-kickback acts, and state and federal false claim acts and whistleblower protections.

Given
that our industry is heavily regulated, we may be subject to additional regulatory requirements. If our operations are found to be in violation of any governmental regulations to
which we or our customers are subject, we may be subject to the applicable penalty associated with the violation. Any penalties, damages, fines or curtailment of our operations would significantly
increase our costs of doing business, thereby leading to difficulty generating sufficient income to support our business. Also, if we are found to have violated certain federal or state laws or
regulations regarding Medicare, Medicaid or other governmental funding sources, we could be subject to fines and possible exclusion from participation in federal and state health care programs.

Although we do not manufacture any medical equipment, we own a large fleet of medical equipment, which may be subject to equipment recalls or
obsolescence.

We are required to incur significant expenditures in order to maintain a large and modern equipment fleet. Our equipment may be subject to recalls that could be
expensive to implement. We may be required to incur additional costs to repair or replace the equipment at our own expense or we may choose to purchase incremental new equipment from a supplier not
affected by the recall. Additionally, our relationship with our customers may be damaged if we cannot promptly replace the equipment that has been recalled.

Our
success is dependent, in part, on our ability to respond effectively to changes in technology. Since we maintain a large fleet of equipment, we are subject to the risk of equipment
obsolescence. If advancements in technology render a substantial portion of our equipment fleet obsolete, we may experience a decrease in demand for our products which could adversely affect our
operating results and cause us to invest in new technology to maintain our market share and operating margins.

We may incur increased vendor costs that we cannot pass through to our customers.

Our customer agreements may include limitations on our ability to increase prices over the term of the agreement. On the other hand, we rely on subcontractors to
provide some of the services and we do not always have fixed pricing agreements with these subcontractors. Therefore, we are at risk of incurring increased costs that we are unable to pass through to
our customer.

We depend heavily on key management personnel and the departure of one or more of our key executives or a significant portion of our local hospital
management personnel could harm our business.

The expertise and efforts of our senior executives and key members of our local hospital management personnel are critical to the success of our business. The
loss of the services of one or more of our senior executives or of a significant portion of our local hospital management personnel could significantly undermine our management expertise and our
ability to provide efficient, quality health care services at our facilities, which could harm our business.

50

---





Any failure of our management information systems could harm our business and results of operations.

We depend on our management information systems to actively manage our medical equipment fleet, control capital spending and provide fleet information, including
rental history, condition and availability of our medical equipment. These functions enhance our ability to optimize fleet utilization and redeployment. The inability of our management information
systems to operate as we anticipate could damage our reputation with our customers, disrupt our business or result in, among other things, decreased revenues and increased overhead costs. Any such
failure could harm our business and results of operations.

To comply with the Sarbanes-Oxley Act of 2002, we could incur significant costs without assurance that the internal control procedures we implement will
be effective.

We are required to comply with, among other things, the internal control over financial reporting procedures required by Section 404 of the Sarbanes-Oxley
Act of 2002. These procedures require us to have and maintain effective internal controls over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and
preparation of financial statements. On an annual basis, our management is required to assess the effectiveness of our internal controls over financial reporting, and our independent auditor is
required to attest to, and report on, management's assessment. We may not be able to complete the work necessary for our management to evaluate our controls and prepare its assessment in a timely
manner. The assessment could result in the discovery of one or more material weaknesses in internal controls over financial reporting and result in our management being unable to conclude that our
internal controls over financial reporting are effective.

The interests of our principal equity holder may not be aligned with the interests of the holders of the Notes.

BSMB beneficially owns securities representing approximately 96% of the voting equity interests of Parent, and therefore indirectly controls our affairs and
policies. Circumstances may occur in which the interests of our principal equity holder could be in conflict with the interests of the holders of the Notes. In addition, our principal equity holder
may have an interest in pursuing acquisitions, divestitures, capital expenditures or other transactions that, in its judgment, could enhance its equity investment, even though these transactions might
involve risks to the holders of the Notes.

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

Successor

As a result of the Transaction we issued 1,000 shares of common stock to Parent. The funds were used to complete the Transaction (see Note 5 to the
unaudited financial statements in Part I of this Form 10-Q).

Predecessor

On April 11, 2007, pursuant to the exercise of outstanding options, we sold 11,666 shares of common stock to a departing employee in the amount of
$13,999.20.

The
sale was completed pursuant to the exemption from registration provided under Rule 701 of the regulations of the Securities Act of 1933, as amended. The proceeds from the sale
were added to our general funds and used for general corporate purposes.

Item 3. Defaults upon Senior Securities

Not applicable.

51

---



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



Item 5. Other Information

Not applicable.

Item 6. Exhibits

|Number |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1    |  | Agreement and Plan of Merger, dated as of April 15, 2007, by and among UHS Holdco, Inc., UHS Merger Sub, Inc., Universal Hospital Services, Inc. and J.W. Childs Equity Partners III, L.P., as
representative.*                                                                                                                                                                                                                                                 
|3.1    |  | Amended and Restated Certificate of Incorporation of Universal Hospital Services, Inc.                                                                                                                                                                                                                                                                                                                                                                          
|3.2    |  | Amended and Restated By-laws of Universal Hospital Services, Inc.                                                                                                                                                                                                                                                                                                                                                                                               
|4.1    |  | Indenture, dated as of May 31, 2007, relating to the Second Lien Senior Secured Floating Rate Notes due 2015 and the 8.50%/9.25% Second Lien Senior Secured PIK Toggle Notes due 2015, between UHS Merger Sub, Inc. and Wells Fargo Bank,
National Association, as trustee.                                                                                                                                                                                     
|4.2    |  | Supplemental Indenture, dated as of May 31, 2007, relating to the Second Lien Senior Secured Floating Rate Notes due 2015 and the 8.50%/9.25% Second Lien Senior Secured PIK Toggle Notes due 2015, between Universal Hospital Services, Inc.
and Wells Fargo Bank, National Association, as trustee.                                                                                                                                                           
|4.3    |  | First Supplemental Indenture, dated as of May 16, 2007, relating to the 10.125% Senior Notes due 2011, between Universal Hospital Services, Inc. and Wells Fargo Bank, National Association, as trustee.                                                                                                                                                                                                                                                        
|4.4    |  | Registration Rights Agreement, dated as of May 31, 2007, among UHS Merger Sub, Inc. and the initial purchasers named therein.                                                                                                                                                                                                                                                                                                                                   
|4.5    |  | Joinder to Registration Rights Agreement, dated as of May 31, 2007, among Universal Hospital Services, Inc. and the initial purchasers named therein.                                                                                                                                                                                                                                                                                                           
|4.6    |  | Form of Second Lien Senior Secured Floating Rate Note due 2015 (included in Exhibit 4.1).                                                                                                                                                                                                                                                                                                                                                                       
|4.7    |  | Form of 8.50% / 9.25% Second Lien Senior Secured PIK Toggle Note due 2015 (included in Exhibit 4.1).                                                                                                                                                                                                                                                                                                                                                            
|10.1   |  | Credit Agreement, dated as of May 31, 2007, among UHS Merger Sub, Inc., Universal Hospital Services, Inc., UHS Holdco, Inc., the lenders party thereto, Merrill Lynch Capital, a division of Merrill Lynch Business Financial Services,
 Inc. ("ML Capital"), as administrative agent, Bank of America, N.A., as documentation agent, and ML Capital, Bear, Stearns & Co. Inc. and Wachovia Capital Markets, LLC, as joint lead arrangers and joint bookrunners.
|10.2   |  | Guaranty, dated as of May 31, 2007, among UHS Holdco, Inc. and the secured parties named therein.                                                                                                                                                                                                                                                                                                                                                               
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

52

---



|10.3  |  | First Lien Security Agreement, dated May 31, 2007, among UHS Merger Sub, Inc., Universal Hospital Services, Inc. and ML Capital, as collateral agent.                                                                            
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.4  |  | Trademark Security Agreement, dated May 31, 2007, among UHS Merger Sub, Inc., Universal Hospital Services, Inc., UHS Holdco, Inc. and ML Capital, as collateral agent.                                                           
|10.5  |  | Second Lien Security Agreement, dated May 31, 2007, among UHS Merger Sub, Inc., Universal Hospital Services, Inc. and Wells Fargo Bank, National Association, as collateral agent.                                               
|10.6  |  | Second Lien Trademark Security Agreement, dated May 31, 2007, among UHS Merger Sub, Inc., Universal Hospital Services, Inc., UHS Holdco, Inc. and Wells Fargo Bank, National Association, as collateral agent.                   
|10.7  |  | Second Lien Copyright Security Agreement, dated May 31, 2007, among UHS Merger Sub, Inc., Universal Hospital Services, Inc., UHS Holdco, Inc. and Wells Fargo Bank, National Association, as collateral agent.                   
|10.8  |  | Second Lien Patent Security Agreement, dated May 31, 2007, among UHS Merger Sub, Inc., Universal Hospital Services, Inc., UHS Holdco, Inc. and Wells Fargo Bank, National Association, as collateral agent.                      
|10.9  |  | Securityholders Agreement, dated as of May 31, 2007, by and among UHS Holdco, Inc., BSMB/UHS L.P. and BSMB/UHS Co-Investment Partners, L.P., Gary D. Blackford and Kathy Blackford, and each of the other persons listed
therein.
|10.10 |  | Professional Services Agreement, dated as of May 31, 2007, by and between Universal Hospital Services, Inc. and Bear Stearns Merchant Manager III (Cayman), L.P.                                                                 
|10.11 |  | Employment Agreement, dated as of May 31, 2007, between Universal Hospital Services, Inc. and Gary D. Blackford.                                                                                                                
|10.12 |  | Letter Agreement, dated July 27, 2007, between Universal Hospital Services, Inc. and Gary D. Blackford.                                                                                                                         
|10.13 |  | Employment Agreement, dated as of May 31, 2007, between Universal Hospital Services, Inc. and Rex T. Clevenger.                                                                                                                 
|10.14 |  | Letter Agreement, dated July 27, 2007, between Universal Hospital Services, Inc. and Rex T. Clevenger.                                                                                                                          
|10.15 |  | Employment Agreement, dated as of July 17, 2007, between Universal Hospital Services, Inc. and Walter T. Chesley.                                                                                                               
|10.16 |  | Executive Severance Pay Plan, dated June 1, 2007.                                                                                                                                                                               
|10.17 |  | Stock Option Plan of UHS Holdco, Inc.                                                                                                                                                                                           
|10.18 |  | Form of Option Agreement with UHS Holdco, Inc.                                                                                                                                                                                  
|31.1  |  | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002.                                                                                                                          
|31.2  |  | Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002.                                                                                                                          
|32.1  |  | Certification of Gary D. Blackford Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                     
|32.2  |  | Certification of Rex T. Clevenger Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                      

---

*    Previously
filed as an Exhibit to the Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2007.

    Management
contracts or compensatory plans or arrangements.

53

---





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.

Date:
August 14, 2007

| |  | Universal Hospital Services, Inc.
| |  | ---------------------------------
| |  | By                               
| |  | By                               

54

---



QuickLinks