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. 

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

                                                                                                 June 30, 2007

                                                                                                   (Guidance)        

                        Net sales (millions)                                       $         59.0 – 61.0

                        Earnings per diluted share                             $         0.03 – 0.05

 

 

 

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.

 

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.                                                               Corporate Communications Inc.

Jim Spencer, Chief Financial Officer                                           Scott Brittain

(631) 870-5126                                                                       (615) 254-3376

                                                                                                scott.brittain@cci-ir.com

 

 

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