| Allion Healthcare, Inc. 1660 Walt Whitman Road, Suite 105 Melville, NY 11747 Tel: (631) 547-6520 |
Allion Healthcare Reports Record First quarter 2009 Revenues of $97 million and Fully Diluted EPS of $0.13 and Increases Annual EPS Guidance to $0.50 - $0.52
| • | Fully Diluted EPS Guidance increased to $0.50 to $ 0.52 per share |
| • | Net sales increased 48% to $96.6 million from $65.3 million |
| • | Net income increased to $3.5 million compared to a net loss of $1.3 million |
| • | Earnings per diluted share increased to $0.13 compared to a net loss of $0.08 |
| • | Specialty HIV net sales increased 9% to $71.0 million |
| • | Specialty Infusion net sales increased 6% sequentially to $25.6 million over the fourth quarter of 2008 |
MELVILLE, NY – May 7, 2009 – Allion Healthcare (NASDAQ: ALLI) today announced financial results for the first quarter ended March 31, 2009. Results for the period include the Company’s expansion into the Specialty Infusion market as a result of the April 4, 2008 acquisition of Biomed America, Inc. (“Biomed”). Allion Healthcare now operates its business in two segments: Specialty HIV, which is the Company’s legacy specialty pharmacy and disease management business focused on HIV/AIDS patients, and Specialty Infusion, which is the Company’s recently acquired Biomed business specializing in biopharmaceutical medications and services for chronically ill patients.
Summary of Results
Consolidated net sales increased 48% to $97 million for the quarter ended March 31, 2009 when compared to the first quarter of 2008. Both business segments grew organically with Specialty HIV up 9% to $71 million when compared to the first quarter of 2008 and Specialty Infusion up sequentially 6% over the fourth quarter of 2008.
Adjusted EBITDA more than tripled to $8.8 million in the first quarter of 2009, compared to $2.7 million during the first quarter of 2008. The increase in Adjusted EBITDA primarily resulted from the $5.8 million contribution from the Biomed acquisition. An explanation and reconciliation of Net income under GAAP to EBITDA and Adjusted EBITDA is provided below.
Net income for the first quarter of 2009 increased to $3.5 million, compared to a net loss of $1.3 million for the same period in 2008. Earnings per diluted share for the first quarter of 2009 were $0.13, compared to loss per diluted share of $0.08 for the first quarter of 2008.
Fully diluted shares outstanding for the three-month period ended March 31, 2009 include 1,719,000 contingently issuable shares related to the component of the Biomed earn out estimated to be settled in stock. Based on the Specialty Infusion operating results through March 31, 2009, the Company included an estimate of its total obligations under the Biomed earn out and recorded a long-term liability and an addition to goodwill of $50.0 million. The final amount paid, which is expected to be made some time in the third quarter of 2009, will be made in a combination of the Company’s common stock, subordinated debt and/or cash.
“The significant contribution to earnings made by our Specialty Infusion division in its first year of operations more than validates our expectations of a year ago,” said Michael Moran, Chairman, President and Chief Executive Officer of Allion Healthcare. “We believe that our diversified, national specialty pharmacy platform will continue to provide strong organic growth in our existing business lines.”
Guidance
The Company today increased its Fully Diluted EPS guidance for the full year 2009. Guidance of Earnings Per Diluted Share includes the effect of the additional shares to be issued as a result of the Biomed earn out, but does not include charges related to the Company’s executive stock based compensation plan and the future impact of any non-cash charges related to the Company’s adoption of the provisions of EITF 07-05, which requires the Company to now “Mark to Market” its outstanding stock warrants as derivative liability instruments.
Twelve Months Ending December 31, 2009 Guidance | |
| Net Sales (millions) | | | $400 - $415 | |
| Earnings Per Diluted Share | | | $0.50 - $0.52 | |
Operating Data – Specialty HIV
(in thousands, except patient months & prescriptions data)
| | | Three Months Ended March 31, | |
| | | 2009 | | | 2008 | |
| Distribution Region | | Net Sales | | | Prescriptions | | | Patient Months (1) | | | Net Sales | | | Prescriptions | | | Patient Months (1) | |
| California | | $ | 46,902 | | | | 181,496 | | | | 36,613 | | | $ | 43,043 | | | | 174,113 | | | | 36,633 | |
| New York | | | 21,858 | | | | 74,482 | | | | 11,389 | | | | 20,673 | | | | 74,414 | | | | 11,199 | |
| Washington | | | 1,749 | | | | 7,337 | | | | 1,478 | | | | 1,048 | | | | 5,168 | | | | 942 | |
| Florida | | | 510 | | | | 2,140 | | | | 306 | | | | 494 | | | | 2,184 | | | | 290 | |
| Total | | $ | 71,019 | | | | 265,455 | | | | 49,786 | | | $ | 65,258 | | | | 255,879 | | | | 49,064 | |
(1) “Patient months” represents a count of the number of months during a period that a patient received at least one prescription. If an individual patient received multiple medications during each month of a three month period, a count of three would be included in patient months irrespective of the number of medications filled in each month.
Conference Call Information
The conference call to discuss the results will be held at 9:00 a.m. ET on Thursday, May 7, 2009. To access the call, please dial (888) 279–0822. International participants may dial (706) 902-0355. The conference call will also be webcast on Allion Healthcare’s website at www.allionhealthcare.com. To join the webcast, please go to Allion Healthcare’s web site at least 15 minutes prior to the start of the conference call to register, download, and install any necessary audio software.
An audio replay of the conference call will be available from 12:00 p.m. ET on Thursday, May 7, 2009, through 11:59 p.m. ET on Thursday, May 21, 2009 by dialing (800) 642-1687 from the U.S. or (706) 645-9291 from abroad and entering confirmation code 97180455. The audio webcast will also be available on the company's website, www.allionhealthcare.com, for one year.
Questions during the live call will be taken from investment professionals only.
About Allion Healthcare
Allion Healthcare, Inc. is a national provider of specialty pharmacy and disease management services focused on HIV/AIDS patients, as well as specialized biopharmaceutical medications and services to chronically ill patients. Allion Healthcare sells HIV/AIDS medications, ancillary drugs and nutritional supplies under the trade name MOMS Pharmacy. Allion Healthcare provides services for the intravenous immunoglobulin, Blood Clotting Factor and other therapies through its Specialty Infusion division. Allion Healthcare works closely with physicians, nurses, clinics, AIDS Service Organizations, and with government and private payors to improve clinical outcomes and reduce treatment costs.
Safe Harbor Statement
This press release contains certain “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements about the Company’s future financial performance and growth, and the amount, timing of and mix of consideration used for the payment of the Biomed earn out obligation. Words such as "continue," "will," "believe," “estimate,” and similar expressions identify forward-looking statements. Such forward-looking statements represent Allion Healthcare’s expectations and beliefs and involve a number of known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, successful integration of the Biomed acquisition, competitive pressures, demand for Allion Healthcare’s products and services, declining general economic conditions and restrictions in the credit market, changes in third party reimbursement rates or Allion Healthcare’s qualification for preferred reimbursement rates in California and New York, changes in government regulations or the interpretation of these regulations, Allion Healthcare’s ability to manage growth successfully, Allion Healthcare’s ability to effectively market its services, receipt of licensing and regulatory approvals, successful identification of strategic alliances and satellite facilities, and other risks set forth in Item 1A. Risk Factors in Allion Healthcare’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. Except to the extent required by applicable securities laws, Allion Healthcare undertakes no obligation to update any forward-looking statement contained herein, whether as a result of new information, future events, or otherwise.
| Company Contact: | Investor Contact: |
| Allion Healthcare, Inc. | The Cockrell Group |
| Russ Fichera, Chief Financial Officer | Rich Cockrell |
| (631) 547-6520 | (404) 942-3369 |
| | rich.cockrell@thecockrellgroup.com |
| | www.thecockrellgroup.com |
ALLION HEALTHCARE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands) | | At March 31, 2009 (Unaudited) | | | At December 31, 2008 | |
| Assets | | | | | | |
| Current assets: | | | | | | |
| Cash and cash equivalents | | $ | 17,392 | | | $ | 18,385 | |
| Short term investments | | | 259 | | | | 259 | |
| Accounts receivable (net of allowance for doubtful accounts of $2,670 in 2009 and $2,248 in 2008) | | | 50,732 | | | | 44,706 | |
| Inventories | | | 14,123 | | | | 12,897 | |
| Prepaid expenses and other current assets | | | 537 | | | | 655 | |
| Deferred tax asset | | | 1,524 | | | | 1,305 | |
| Total current assets | | | 84,567 | | | | 78,207 | |
| | | | | | | | | |
| Property and equipment, net | | | 1,565 | | | | 1,647 | |
| Goodwill | | | 184,300 | | | | 134,298 | |
| Intangible assets, net | | | 52,349 | | | | 53,655 | |
| Marketable securities, non-current | | | 2,147 | | | | 2,155 | |
| Other assets | | | 970 | | | | 1,027 | |
| Total assets | | $ | 325,898 | | | $ | 270,989 | |
| | | | | | | | | |
| Liabilities and Stockholders’ Equity | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts payable | | $ | 25,644 | | | $ | 24,617 | |
| Accrued expenses | | | 2,921 | | | | 2,819 | |
| Income taxes payable | | | 1,913 | | | | 1,648 | |
| Current maturities of long term debt | | | 1,698 | | | | 1,698 | |
| Current portion of capital lease obligations | | | 3 | | | | 3 | |
| Total current liabilities | | | 32,179 | | | | 30,785 | |
| | | | | | | | | |
| Long term liabilities: | | | | | | | | |
| Long term debt | | | 31,780 | | | | 32,204 | |
| Revolving credit facility | | | 17,821 | | | | 17,821 | |
| Notes payable - affiliates | | | 3,644 | | | | 3,644 | |
| Deferred tax liability | | | 16,863 | | | | 17,085 | |
| Capital lease obligations | | | 3 | | | | 4 | |
| Earn out obligation | | | 50,000 | | | | — | |
| Other | | | 1,639 | | | | 37 | |
| Total liabilities | | | 153,929 | | | | 101,580 | |
| | | | | | | | | |
| Commitments and Contingencies | | | | | | | | |
| | | | | | | | | |
| Stockholders’ Equity: | | | | | | | | |
| Convertible preferred stock, $.001 par value, shares authorized 20,000; issued and outstanding -0- in 2009 and 2008 | | | — | | | | — | |
| Common stock, $.001 par value, shares authorized 80,000; issued and outstanding 26,044 in 2009 and 25,946 in 2008 | | | 26 | | | | 26 | |
| Additional paid-in capital | | | 167,617 | | | | 168,386 | |
| Accumulated earnings | | | 4,362 | | | | 1,033 | |
| Accumulated other comprehensive loss | | | (36 | ) | | | (36 | ) |
| Total stockholders’ equity | | | 171,969 | | | | 169,409 | |
| Total liabilities and stockholders’ equity | | $ | 325,898 | | | $ | 270,989 | |
| ALLION HEALTHCARE, INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) |
(in thousands, except per share data) | | Three months ended | |
| | | March 31, | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| Net sales | | $ | 96,584 | | | $ | 65,258 | |
| Cost of goods sold | | | 78,342 | | | | 55,604 | |
| Gross profit | | | 18,242 | | | | 9,654 | |
| | | | | | | | | |
| Operating expenses: | | | | | | | | |
| Selling, general and administrative expenses | | | 9,671 | | | | 7,060 | |
| Depreciation and amortization | | | 1,489 | | | | 875 | |
| Litigation settlement | | | — | | | | 3,950 | |
| Operating income (loss) | | | 7,082 | | | | (2,231 | ) |
| | | | | | | | | |
| Interest expense (income), net | | | 700 | | | | (215 | ) |
| Other expense – Change in fair value of warrants | | | 207 | | | | — | |
| Income (loss) before taxes | | | 6,175 | | | | (2,016 | ) |
| | | | | | | | | |
| Provision for (benefit from) taxes | | | 2,656 | | | | (746 | ) |
| Net income (loss) | | $ | 3,519 | | | $ | (1,270 | ) |
| | | | | | | | | |
| Basic earnings (loss) per common share | | $ | 0.14 | | | $ | (0.08 | ) |
| | | | | | | | | |
| Diluted earnings (loss) per common share | | $ | 0.13 | | | $ | (0.08 | ) |
| | | | | | | | | |
| Basic weighted average of common shares outstanding | | | 25,997 | | | | 16,204 | |
| Diluted weighted average of common shares outstanding | | | 28,088 | | | | 16,204 | |
ALLION HEALTHCARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| (in thousands) | | Three Months ended March 31, | |
| CASH FLOWS FROM OPERATING ACTIVITIES | | 2009 | | | 2008 | |
| Net income (loss) | | $ | 3,519 | | | $ | (1,270 | ) |
| Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | | | | | | | | |
| Depreciation and amortization | | | 1,489 | | | | 875 | |
| Deferred rent | | | 4 | | | | (7 | ) |
| Amortization of deferred financing costs | | | 45 | | | | — | |
| Amortization of debt discount on acquisition notes | | | 13 | | | | — | |
| Change in fair value of warrants | | | 207 | | | | — | |
| Change in fair value of interest rate cap contract | | | (1 | ) | | | — | |
| Provision for doubtful accounts | | | 589 | | | | 44 | |
| Stock based compensation expense | | | 254 | | | | 59 | |
| Deferred taxes | | | (363 | ) | | | (1,459 | ) |
| Changes in operating assets and liabilities exclusive of acquisitions: | | | | | | | | |
| Accounts receivable | | | (6,615 | ) | | | 553 | |
| Inventories | | | (1,225 | ) | | | (614 | ) |
| Prepaid expenses and other assets | | | 131 | | | | 162 | |
| Accounts payable, accrued expenses and income taxes payable | | | 1,395 | | | | 3,578 | |
| Net cash (used in) provided by operating activities | | | (558 | ) | | | 1,921 | |
| | | | | | | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | |
| Purchase of property and equipment | | | (101 | ) | | | (78 | ) |
| Purchase of short term investments | | | — | | | | (300 | ) |
| Sales of short term investments | | | 8 | | | | 7,359 | |
| Payments for investment in Biomed, net of cash acquired | | | (2 | ) | | | (117 | ) |
| Net cash (used in) provided by investing activities | | | (95 | ) | | | 6,864 | |
| | | | | | | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | |
| Net proceeds from exercise of employee stock options | | | 9 | | | | — | |
| Tax benefit from exercise of employee stock options | | | 89 | | | | 638 | |
| Repayment of CIT term loan, & capital leases | | | (438 | ) | | | (11 | ) |
| Net cash (used in) provided by financing activities | | | (340 | ) | | | 627 | |
| | | | | | | | | |
| NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | | | (993 | ) | | | 9,412 | |
| CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | | | 18,385 | | | | 19,557 | |
| CASH AND CASH EQUIVALENTS, END OF YEAR | | $ | 17,392 | | | $ | 28,969 | |
| | | | | | | | | |
| SUPPLEMENTAL DISCLOSURE | | | | | | | | |
| Income taxes paid | | $ | 2,723 | | | $ | 228 | |
| Interest paid | | $ | 696 | | | $ | 1 | |
| | Allion Healthcare, Inc. |
| Selected Operating Segment Information (Unaudited) |
| (in thousands) | | Three months ended | |
| | | March 31, | |
| | | 2009 | | | 2008 | |
| Net Sales | | | | | | |
| Specialty HIV | | $ | 71,019 | | | $ | 65,258 | |
| Specialty Infusion | | | 25,565 | | | | - | |
| Total Net Sales | | $ | 96,584 | | | $ | 65,258 | |
| | | | | | | | | |
| Operating Income (Loss): | | | | | | | | |
| Specialty HIV (1) | | $ | 2,057 | | | $ | (2,231 | ) |
| Specialty Infusion | | | 5,025 | | | | - | |
| Total Operating Income (Loss) | | $ | 7,082 | | | $ | (2,231 | ) |
| Depreciation & Amortization: | | | | | | |
| Specialty HIV | | $ | 698 | | | $ | 875 | |
| Specialty Infusion | | | 791 | | | | - | |
| Total Depreciation & Amortization | | $ | 1,489 | | | $ | 875 | |
________________
| (1) | Includes a $3,950 charge related to the Company’s litigation settlement with Oris Medical Systems, Inc. for the three months ended March 31, 2008. |
| Allion Healthcare, Inc. |
| Reconciliation of Net Income to EBITDA and Adjusted EBITDA (Excluding Change in Fair Value of Warrants, Non-Cash Stock Compensation and Litigation Settlement) (UNAUDITED) |
| (in thousands) | | Three months ended | |
| | | March 31, | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| Net income | | $ | 3,519 | | | $ | (1,270 | ) |
| Income tax provision | | | 2,656 | | | | (746 | ) |
| Interest expense (income), net | | | 700 | | | | (215 | ) |
| Depreciation and amortization | | | 1,489 | | | | 875 | |
| EBITDA | | $ | 8,364 | | | $ | (1,356 | ) |
| | | | | | | | | |
| Change in fair value of warrants | | | 207 | | | | — | |
| Non-cash stock based compensation | | | 254 | | | | 59 | |
| Oris litigation settlement | | | — | | | | 3,950 | |
| Adjusted EBITDA | | $ | 8,825 | | | $ | 2,653 | |
| | | | | | | | | |
EBITDA refers to net income before interest, income tax expense, and depreciation and amortization. Allion considers EBITDA to be a good indication of the Company's ability to generate cash flow in order to liquidate liabilities and reinvest in the Company. Adjusted EBITDA excludes the change in fair value of warrants, non-cash stock compensation expense and the litigation settlement related to the Company’s litigation with Oris Medical Systems, Inc., to reflect comparable year over year EBITDA performance and provide investors with supplemental information to assess recurring EBITDA performance. EBITDA and Adjusted EBITDA are not measurements of financial performance under GAAP and should not be considered a substitute for net income as a measure of performance.
