InSight Health Services Holdings Corp., a Lake Forest-based medical imaging company, could emerge from bankruptcy reorganization as soon as this week.
“We’re just waiting to get all the paperwork finished so we can exit,” Chief Executive Kip Hallman said last week.
In December, InSight filed for bankruptcy reorganization for the second time since 2007.
The company filed for what’s called a prepackaged reorganization to eliminate about $290 million in debt due this year.
As of November, InSight had $320 million in debt.
“We’re going to be effectively debt-free, which is a really nice place to be,” Hallman said. “When we came out of the last one, we still had $300 million in debt.”
A bankruptcy judge confirmed InSight’s plan last month.
After the reorganization’s done, InSight’s bondholders are set to own 100% of the company, which will be privately held.
InSight’s shares now are lightly traded on the low-profile Pink Sheets exchange.
The vast majority of InSight—85% to 90%—will be in the hands of three undisclosed shareholders, according to Hallman, who will stay on as chief executive.
With such a small group of shareholders, “we won’t be required to be public,” Hallman said.
InSight was formed in 1996 through the combination of Newport Beach’s American Health Services Corp. and Texas-based Maxum Health Corp., two publicly held providers of diagnostic imaging services.
It went private in 2001 after being bought by J.W. Childs Associates LP of Boston and the Halifax Group LLC of Washington, D.C. InSight emerged as a public company again after its 2007 bankruptcy.
The company runs 60 imaging centers and 98 mobile facilities that call on hospitals and doctors. The mobile facilities offer magnetic resonance imaging and other diagnostic scans.
InSight employs about 1,500 workers companywide and has yearly revenue of about $200 million.
The company’s business has been hit by the soft economy, high unemployment and industry issues.
InSight seems to be following a similar course as in 2007, when it filed and quickly emerged from bankruptcy reorganization.
Back then, InSight traded 90% of its common stock to bondholders, who in turn forgave $195 million worth of debt that was due in 2011.
InSight is looking to grow the company on its own and through acquisitions, according to Hallman.
Growth areas include more imaging centers, more mobile scanning services and providing imaging services to hospitals on a contract basis.
Hallman said he doesn’t expect every part of InSight’s business to grow.
Its mobile MRI business has been in decline for years as hospitals have taken over those services.
“We want to focus on what we know we can grow,” Hallman said. “We’re not going to kid ourselves and think we can grow mobile MRI; it’s just not a growth business.”
InSight Health Services
• Headquarters: Lake Forest
• Business: medical scanning
• Yearly revenue: $200 million
• Notable: emerging from second bankruptcy since 2007
