In 2000, total healthcare expenditures in the United States were estimated at $1.3 trillion, representing 13.1% of the U.S. gross domestic product and an increase of 8.0% over 1999, according to the Centers for Medicare and Medicaid Services, or CMS. An aging U.S. population and advances in medical technology are expected to drive increases in hospital patient populations and the consumption of healthcare services. CMS estimates that total healthcare expenditures will grow by 8.6% in 2001 and by 7.1% compounded annually from 2001 through 2010. According to these estimates, healthcare expenditures will account for approximately $2.6 trillion, or 15.9%, of U.S. gross domestic product by 2010.

In recent years, particularly following the enactment of the Balanced Budget Act of 1997, acute care hospitals and alternate site providers have faced increasing pressure due to a reduction in resources and the increased complexity in delivering healthcare services. Reimbursement pressure from government payors, such as Medicare and Medicaid, and private insurers are forcing healthcare providers to contain costs. The national shortage of medical support staff, including nurses, has placed greater constraints on such individuals, requiring them to perform more tasks in less time.

As a result of these pressures, acute care hospitals and alternate site providers have increasingly turned to equipment outsourcing. It is believed the market potential for movable medical equipment outsourcing is greater than $2.3 billion.

The Company has expanded the scope of its relationship with some of its largest customers into the most comprehensive outsourcing program, referred to as the Asset Management Partnership Program, or AMPP. Through this program, the Company provides, maintains, manages, documents and tracks substantially all, or a significant portion of, a customer’s movable medical equipment within the customer’s organization. The Company also provides detailed equipment reports that comply with the standards of accreditation organizations.

To supplement its outsourcing programs, the Company sells disposable medical supplies used in conjunction with its medical equipment.

In addition to servicing the equipment it outsources, the Company also provides repair, inspection, preventive maintenance and logistic services for the movable medical equipment that its customers and vendors own. The Company’s certified technicians are available during business hours to answer questions about equipment or accessories.

The Company has service facilities located nationwide, and it offers a large inventory of repair and replacement parts and backup inventory in addition to an extensive library of operator and service manuals. The Company provides documentation for all services performed, detailed test procedures, notification for scheduled service, data accumulated for historical information, and comprehensive inventory and other reports.

The Company emphasizes the full-service features of its equipment outsourcing programs. The Company also offers an optional software package that enables a particular customer to track location, productivity and availability of all equipment used by that customer.

Total gross profit for the six months ended June 30, 2001 was $28.9 million, representing a $4.3 million, or 17.7%, increase from gross profit of $24.6 million for the same period of 2000.

Adjusted EBITDA for the six months ended June 30, 2001 was $25.5 million, representing a $4.5 million, or 21.7%, increase from $21.0 million for the same period of 2000.

Interest expense for the six months ended June 30, 2001 was $10.1 million, representing a $0.1 million, or 1.2%, decrease from interest expense of $10.2 million for the same period of 2000.

Net loss for the six months ended June 30, 2001 was $1.7 million, compared to a net loss of $2.6 million in the same period of 2000.