 | Allion Healthcare, Inc. 1660 Walt Whitman Road, Suite 105 Melville, NY 11747 Tel: (631) 547-6520 |
Allion Healthcare Reports First Quarter Net Sales of $59.0 Million, Up 43%
First Quarter Earnings per Diluted Share of $0.01 and
Adjusted Earnings per Diluted Share of $0.03
MELVILLE, N.Y., May 9, 2007 - Allion Healthcare, Inc. (NASDAQ: ALLI), a national provider of specialty pharmacy and disease management services focused on HIV/AIDS patients, today announced financial results for the three months ended March 31, 2007.
First Quarter 2007 Highlights:
| | ü | Growth of 42.8% in net sales to $59.0 million. |
| | ü | Net income of $185,000, or $0.01 per diluted share, including a previously disclosed impairment charge of $599,000. Adjusted net income of $549,000, or $0.03 per diluted share, excluding the impairment charge. An explanation and reconciliation of net income and earnings per diluted share under generally accepted accounting principles (GAAP) to adjusted net income and adjusted earnings per diluted share is provided below. |
| | ü | Adjusted EBITDA of $1.7 million for the first quarter of 2007, which excludes impairment expense, compared with adjusted EBITDA of $733,000 for the first quarter of 2006, which excludes retroactive premium reimbursement. An explanation and reconciliation of net income under GAAP to adjusted EBITDA excluding impairment expense and adjusted EBITDA excluding retroactive premium adjustments is provided below. |
| | ü | Filled over 237,000 prescriptions in the first quarter 2007 and serviced a total of 15,775 patients in the month of March. |
| | ü | An increase in cash and short-term investments to $25.0 million at March 31, 2007, from $23.5 million at December 31, 2006. |
| | ü | Renewal of premium reimbursement in New York for HIV Specialty Pharmacy services as part of successful passage of the New York State 2007-2008 budget. |
First Quarter 2007 Financial Results
Net sales increased 42.8% to $59.0 million for the first quarter of 2007 from $41.3 million for the first quarter of 2006. Net sales for the first quarter of 2006 included retroactive premium reimbursement from prior periods of $858,000, reducing the growth rate by 310 basis points.
Allion’s gross profit was $8.4 million, or 14.3% of net sales, for the first quarter of 2007, compared with $6.7 million, or 16.1% of net sales, for the first quarter last year. For the first quarter of 2006, retroactive premium reimbursement contributed 180 basis points to the gross margin.
Selling, general and administrative expenses were $7.7 million, or 13.0% of net sales, for the first quarter of 2007 compared with $5.8 million, or 14.0% of net sales, for the first quarter of 2006.
ALLI Reports First Quarter Results
Page 2
May 9, 2007
As previously disclosed, Allion recorded a non-cash impairment to intangible assets for the first quarter of 2007, totaling $599,000, related to termination of the LabTracker software license agreement.
Net income for the first quarter of 2007 was $185,000, or $0.01 per diluted share, including the impairment expense of $599,000. Excluding the impairment expense, adjusted net income for the first quarter of 2007 was $549,000 and adjusted earnings per diluted share was $0.03. Net income for the first quarter of 2006 was $1.1 million, or $0.07 per diluted share, including the retroactive premium reimbursement of $858,000. Excluding the retroactive premium reimbursement, adjusted net income for the first quarter of 2006 was $364,000 and adjusted earnings per diluted share was $0.02. An explanation and reconciliation of net income and earnings per diluted share under GAAP to adjusted net income and adjusted earnings per diluted share is provided below.
“Allion produced solid results for the first quarter,” remarked Michael Moran, Chairman, President and Chief Executive Officer of Allion Healthcare. “In addition to strong revenue growth, which exceeded our guidance for the quarter, we achieved continued stability in our gross margin, and we met our earnings guidance. We also generated substantial cash flow from operations of $2.2 million for the quarter, which contributed to the strengthening of our financial position.
“Beyond our financial results, Allion continued to expand its prospects for growth during the first quarter. We announced our plans in mid-March to establish a pharmacy in Oakland, CA, and we are progressing as anticipated toward opening the pharmacy this summer. The support this pharmacy has received from Oakland’s Mayor, Ron Dellums, and his staff, has had a positive impact on our ongoing discussions with key decision makers in the Oakland market. As a result, we are encouraged about the Oakland pharmacy serving as a model for our ability to enter new markets in a low-cost manner and with the support of city government. The first-quarter release of the Bamberger evaluation has also supported the momentum of these discussions.
“Our discussions regarding expansion into new markets are consistent with our primary focus on organic growth during 2007. We also expect to drive organic growth through our sales efforts within markets served by our existing pharmacy network, as well as from our initiatives to expand the number of our patients using our Oris electronic prescription writing system. For the first quarter, we added 191 Oris patients subject to earn-out payments to the previous owners of Oris. At the end of the first quarter of 2007, a total of 533 Oris patients were subject to earn-out payments. Although we no longer have an exclusive relationship with LabTracker, we are looking forward to having a working relationship with them in the future.”
Guidance
The Company today provided financial guidance for the second quarter of 2007. This guidance assumes a 38-42% tax rate and does not include any future acquisitions.
| | | Three Months Ending | |
| | | June30, 2007 | |
| | | (Guidance) | |
| Net sales (millions) | | $ | 59.0 - 61.0 | |
| Earnings per diluted share | | $ | 0.03 - 0.05 | |
ALLI Reports First Quarter Results
Page 3
May 9, 2007
Operating Data
The following table sets forth the net sales and operating data for each of Allion’s distribution regions for the three months ended March 31, 2007 and 2006 (dollars in thousands):
| | | Three Months Ended March 31, | |
| | | 2007 | | 2006 | |
Distribution Region | | Net Sales | | Prescriptions | | Patient Months(1) | | Net Sales | | Prescriptions | | Patient Months(1) | |
| California | | $ | 37,630 | | | 155,903 | | | 34,037 | | $ | 27,731 | | | 117,319 | | | 25,730 | |
| New York | | $ | 19,824 | | | 74,118 | | | 11,208 | | $ | 12,310 | | | 45,834 | | | 6,333 | |
| Florida | | $ | 538 | | | 2,448 | | | 393 | | $ | 414 | | | 2,484 | | | 325 | |
| Seattle | | $ | 975 | | | 5,177 | | | 969 | | $ | 830 | | | 4,936 | | | 890 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | $ | 58,967 | | | 237,646 | | | 46,607 | | $ | 41,285 | | | 170,573 | | | 33,278 | |
| (1) | | Patient months represent 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 for a quarterly period, a count of three would be included in patient months irrespective of the number of prescriptions filled each month. |
Summary
Mr. Moran concluded, “We believe New York’s recent decision to maintain favorable reimbursement rates for HIV specialty pharmacies in its 2007-2008 budget further validates the benefits we provide HIV/AIDS patients and healthcare payors, as well as Allion’s potential for long-term growth. We are confident that the need for our services among the urban poor living with HIV is growing and that governmental authorities at all levels are becoming increasingly aware of the tremendous cost this population potentially represents. At the same time, we are continuing to work toward further third-party validation of the clinical and financial efficacy of our programs, consistent with and expanding on the Bamberger evaluation. Because of this growing market need and the demonstrated strength of our solutions, we expect continued opportunities to leverage our experience and performance in our existing markets to expand our business.”
Conference Call Information
A conference will be held at 5:00 p.m. EDT; 2:00 p.m. PST on May 9, 2007. To join the call, please dial (913) 981-5525 from the U.S. or abroad. The call will also be webcast on Allion’s website at www.allionhealthcare.com. To join the webcast, please go to the 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 call will be available from 8:00 p.m. EDT on Tuesday, May 9, 2007 through May 16, 2007 by dialing (719) 457-0820 from the U.S. or abroad and entering confirmation code 7422015. The audio webcast will also be available on the Company's website for one year.
About Allion Healthcare, Inc.
Allion Healthcare, Inc. is a national provider of specialty pharmacy and disease management services focused on HIV/AIDS patients. Allion Healthcare sells HIV/AIDS medications, ancillary drugs and nutritional supplies under the trade name MOMS Pharmacy. Allion offers nationwide pharmacy care from its pharmacies in California, New York, Washington, and Florida. 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.
ALLI Reports First Quarter Results
Page 4
May 9, 2007
Safe Harbor Statement
Certain statements included in this press release that are not historical facts are forward-looking statements, such as comments by our CEO and statements about our future growth and increased stockholder value, acquisitions, expansion into new markets, plans to open a new pharmacy, and guidance regarding our possible future financial performance. Such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent our expectations or beliefs and involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially include those set forth in Item 1A, Risk Factors, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006; and also include, but are not limited to, competitive pressures and our ability to compete successfully, demand for our products and services, changes in reimbursement and other changes in customer mix, changes in third party reimbursement rates or our qualification for preferred reimbursement rates in California and New York, changes in government regulations or the interpretation of these regulations, our ability to manage growth successfully, our ability to effectively market our services, our ability to successfully identify and integrate acquisitions, any or all of which could cause actual results to differ from those in the forward-looking statements. Except to the extent required by applicable securities laws, we are under no obligation, and expressly disclaim any obligation, to update the forward-looking statements, whether as a result of new information, future events, or otherwise. You are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date herein.
| Contact: | | |
Allion Healthcare, Inc. Jim Spencer, Chief Financial Officer (631) 870-5126 | | Corporate Communications Inc. Scott Brittain (615) 254-3376 scott.brittain@cci-ir.com |
ALLI Reports First Quarter Results
Page 5
May 9, 2007
ALLION HEALTHCARE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| | | | | | |
| | | As of March 31, | | As of December 31, | |
| (in thousands) | | 2007 | | 2006 | |
Assets | | | | | |
| Current Assets: | | | | | |
| Cash and cash equivalents | | $ | 16,659 | | $ | 17,062 | |
| Short term investments | | | 8,320 | | | 6,450 | |
| Accounts receivable, (net of allowance for doubtful accounts of $345 in 2007 and $425 in 2006) | | | 17,676 | | | 18,297 | |
| Inventories | | | 6,508 | | | 5,037 | |
| Prepaid expenses and other current assets | | | 447 | | | 634 | |
| Deferred tax asset | | | 425 | | | 402 | |
| Total Current Assets | | | 50,035 | | | 47,882 | |
| | | | | | | | |
| Property and equipment, net | | | 808 | | | 890 | |
| Goodwill | | | 42,068 | | | 42,067 | |
| Intangible assets, net | | | 29,424 | | | 30,683 | |
| Other assets | | | 80 | | | 81 | |
Total assets | | $ | 122,415 | | $ | 121,603 | |
| | | | | | | | |
Liabilities And Stockholders’ Equity | | | | | | | |
| Current Liabilities: | | | | | | | |
| Accounts payable | | $ | 16,914 | | $ | 16,339 | |
| Accrued expenses | | | 1,805 | | | 1,262 | |
| Notes payable-subordinated | | | — | | | 700 | |
| Current portion of capital lease obligations | | | 46 | | | 46 | |
| Total current liabilities | | | 18,765 | | | 18,347 | |
| | | | | | | | |
| Long Term Liabilities: | | | | | | | |
| Capital lease obligations | | | 36 | | | 47 | |
| Deferred tax liability | | | 1,418 | | | 1,343 | |
| Other | | | 55 | | | 59 | |
| Total liabilities | | | 20,274 | | | 19,796 | |
| | | | | | | | |
| Commitments And Contingencies | | | | | | | |
| Stockholders’ Equity | | | | | | | |
| Preferred stock, $.001 par value; shares authorized 20,000; issued and outstanding -0- at March 31, 2007 and December 31, 2006 | | | — | | | — | |
| Common stock, $.001 par value; shares authorized 80,000; issued and outstanding 16,204 at March 31, 2007 and December 31, 2006 | | | 16 | | | 16 | |
| Additional paid-in capital | | | 111,696 | | | 111,549 | |
| Accumulated deficit | | | (9,562 | ) | | (9,747 | ) |
| Accumulated other comprehensive income | | | (9 | ) | | (11 | ) |
| Total stockholders’ equity | | | 102,141 | | | 101,807 | |
Total liabilities and stockholders’ equity | | $ | 122,415 | | $ | 121,603 | |
ALLI Reports First Quarter Results
Page 6
May 9, 2007
ALLION HEALTHCARE, INC. AND SUBSIDIARIES | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |
| | | | | | |
| | | Three months ended | |
| (in thousands except per share data) | | March 31, | |
| | | 2007 | | 2006 | |
| Net sales | | $ | 58,967 | | $ | 41,285 | |
| Cost of goods sold | | | 50,539 | | | 34,631 | |
| Gross profit | | | 8,428 | | | 6,654 | |
| Operating expenses: | | | | | | | |
| Selling, general and administrative expenses | | | 7,690 | | | 5,800 | |
| Impairment of long-lived asset | | | 599 | | | — | |
| Operating income | | | 139 | | | 854 | |
| Interest income | | | 166 | | | 411 | |
| | | | | | | | |
| Income before taxes | | | 305 | | | 1,265 | |
| Provision for taxes | | | 120 | | | 132 | |
| | | | | | | | |
| Net income available to common shareholders | | $ | 185 | | $ | 1,133 | |
| | | | | | | | |
| Basic earnings per common share: | | $ | 0.01 | | $ | 0.07 | |
| Diluted earnings per common share: | | $ | 0.01 | | $ | 0.07 | |
| | | | | | | | |
| Basic weighted average of common shares outstanding | | | 16,204 | | | 15,192 | |
| Diluted weighted average of common shares outstanding | | | 17,003 | | | 16,649 | |
ALLI Reports First Quarter Results
Page 7
May 9, 2007
ALLION HEALTHCARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| (in thousands) | | Three Months Ended March 31, | |
| | | 2007 | | 2006 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | |
| Net income | | $ | 185 | | $ | 1,133 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | |
| Depreciation and amortization | | | 965 | | | 737 | |
| Impairment of long-lived asset | | | 599 | | | — | |
| Deferred rent | | | (4 | ) | | 18 | |
| Provision for doubtful accounts | | | 50 | | | 49 | |
| Amortization of debt discount on acquisition notes | | | — | | | 4 | |
| Non-cash stock compensation expense | | | 93 | | | 39 | |
| Deferred income taxes | | | 52 | | | 86 | |
| Changes in operating assets and liabilities: | | | | | | | |
| Accounts receivable | | | 571 | | | (1,624 | ) |
| Inventories | | | (1,471 | ) | | 274 | |
| Prepaid expenses and other assets | | | 188 | | | (353 | ) |
| Accounts payable and accrued expenses | | | 941 | | | (331 | ) |
| Net cash provided by operating activities: | | | 2,169 | | | 32 | |
| | | | | | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | |
| Purchase of property and equipment | | | (20 | ) | | (265 | ) |
| Purchases of short term securities | | | (18,028 | ) | | (31,332 | ) |
| Sales of short term securities | | | 16,160 | | | 38,756 | |
| Payments for acquisition of North American | | | — | | | (17 | ) |
| Payments for acquisition of Specialty Pharmacy | | | — | | | (9 | ) |
| Payments for acquisition of Oris Medical’s Assets | | | (26 | ) | | (153 | ) |
| Payments for acquisition of Priority’s Assets | | | — | | | (1,317 | ) |
| Payments for acquisition of Maiman’s Assets | | | — | | | (5,243 | ) |
| Payments for acquisition of H&H’s Assets | | | — | | | (3 | ) |
| Payments for acquisition of Whittier’s Assets | | | (1 | ) | | (27 | ) |
| Net cash (used in) provided by investing activities | | | (1,915 | ) | | 390 | |
| | | | | | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | |
| Net proceeds from secondary public offering | | | — | | | 28,987 | |
| Proceeds from exercise of employee stock options and warrants | | | — | | | 1,816 | |
| Tax benefit realized from the exercise of employee stock options | | | 54 | | | 46 | |
| Repayment of notes payable and capital leases | | | (711 | ) | | (711 | ) |
| | | | | | | | |
| Net cash (used in) provided by financing activities | | | (657 | ) | | 30,138 | |
| NET (DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS | | | (403 | ) | | 30,560 | |
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | | | 17,062 | | | 3,845 | |
| CASH AND CASH EQUIVALENTS, END OF PERIOD | | $ | 16,659 | | $ | 34,405 | |
ALLI Reports First Quarter Results
Page 8
May 9, 2007
ALLION HEALTHCARE, INC. | |
Reconciliation of Net Income to EBITDA and Adjusted EBITDA (excluding Impairment of long-lived asset and retroactive premium reimbursement) (UNAUDITED) | |
| | | | | | |
| (in thousands) | | Three months ended | |
| | | March 31, | |
| | | 2007 | | 2006 | |
| Net income | | $ | 185 | | $ | 1,133 | |
| Provision for taxes | | | 120 | | | 132 | |
| Interest income | | | (166 | ) | | (411 | ) |
| Depreciation and amortization | | | 965 | | | 737 | |
| EBITDA | | | 1,104 | | | 1,591 | |
| Impairment of long-lived asset | | | 599 | | | - | |
| Retroactive premium reimbursement | | | - | | | (858 | ) |
Adjusted EBITDA | | $ | 1,703 | | $ | 733 | |
ALLION HEALTHCARE, INC. | |
Reconciliation of Diluted EPS and Adjusted Diluted EPS (excluding Impairment of long-lived asset and retroactive premium reimbursement) (UNAUDITED) | |
| | | | | | |
| (in thousands except per share data) | | Three months ended | |
| | | March 31, | |
| | | 2007 | | 2006 | |
| Diluted earnings per common share | | $ | 0.01 | | $ | 0.07 | |
| | | | | | | | |
Diluted weighted average of common shares outstanding | | | 17,003 | | | 16,649 | |
| | | | | | | | |
| Net income | | $ | 185 | | $ | 1,133 | |
| | | | | | | | |
| Impairment of long-lived asset | | $ | 599 | | $ | - | |
| | | | | | | | |
| Retroactive premium reimbursement | | $ | - | | $ | (858 | ) |
| | | | | | | | |
| Effective tax rate | | | 39.3 | % | | 10.4 | % |
| | | | | | | | |
| After-tax adjustments | | $ | 364 | | $ | (769 | ) |
| | | | | | | | |
Adjusted net income | | $ | 549 | | $ | 364 | |
| | | | | | | | |
Adjusted diluted earnings per share | | $ | 0.03 | | $ | 0.02 | |
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