EX-99 2 ex99.htm EXHIBIT 99 ex99.htm

 


allion logo
Allion Healthcare, Inc.
1660 Walt Whitman Road, Suite 105
Melville, NY 11747
Tel: (631) 547-6520

Allion Healthcare Reports Record Second quarter 2009 Revenues of $100 million and Adjusted EPS of $0.14



Second Quarter Highlights
•  
Net sales increased 15.3% to $100 million from $86 million
•  
Specialty HIV net sales increased 9.4% to $75 million
•  
Specialty Infusion net sales increased 38.0% to $25 million
•  
Adjusted EBITDA grew 25.7% to $9.2 million, or 9.3% of sales
•  
Adjusted diluted earnings per share increased to $0.14 from $0.11

MELVILLE, NY – August 6, 2009 – Allion Healthcare (NASDAQ: ALLI) today announced second quarter net income of $3.2 million, or $0.11 per share.  Second quarter results include expenses totaling $954,000, or $0.03 per share,  related to the Company’s adoption of  EITF 07-05, which requires the Company to “mark to market” its outstanding stock warrants, and stock-based compensation expense from the issuance of phantom stock units.  Second quarter results also include the full effect of the 2,624,990 shares issued as a result of the Biomed earn out.

Summary of Results
 
Consolidated net sales increased 15.3% to $99.7 million for the quarter ended June 30, 2009 when compared to the second quarter of 2008.  Sales from the Company’s Specialty HIV segment grew 9.4% to $75.2 million based on an increase in the number of patients served, which resulted in a 6.8% increase in prescription volume.  Net sales in the Company’s Specialty Infusion segment were up 38.0% over the second quarter of 2008 to $24.5 million.  The increase in Specialty Infusion revenues is primarily due to volume growth in both the Company’s Blood Clotting Factor and IVIG therapy products, principally as a result of the addition of new patients.

Excluding the impact of charges related to the new mark to market accounting of the Company’s outstanding warrants and stock-based compensation expense from the issuance of phantom stock units, consolidated Adjusted EBITDA increased 25.7% to $9.2 million, or 9.3% of revenues, for the quarter ended June 30, 3009 when compared to the second quarter of 2008, as the Company’s lower legal expenses and increased operating efficiencies in the second quarter of 2009 were offset by the decline in Gross profit and increased bad debt expense.  An explanation and reconciliation of Net income under GAAP to EBITDA and Adjusted EBITDA is provided below.

The Company incurred other expenses of $577,000 during the second quarter of 2009, related to a change in fair value of warrants as a result of the Company’s adoption of EITF 07-05 on January 1, 2009.   Approximately 80% of the $577,000 charge relates to one series of warrants that expire in January 2010.

 
 

 
 
 
The Company’s effective tax rate for the second quarter of 2009 was 47% and reflects an increase from 39% reported for the same period in 2008.  The higher tax rate is attributable to an increase in non-deductible expenses related to the new mark to market accounting of the Company’s outstanding warrants and stock-based compensation expense.  Excluding the impact of the warrant and the stock-based compensation expense, the adjusted effective tax rate was 42%.  An explanation and reconciliation of the effective tax rate to the adjusted effective tax rate is provided below.
 
Net income for the second quarter of 2009 increased to $3.2 million, compared to $2.9 million for the same period in 2008. Adjusted diluted earnings per share for the second quarter of 2009 increased to $0.14 from $0.11 for the second quarter of 2008.  An explanation and reconciliation of Diluted earnings per share under GAAP to Adjusted diluted earnings per share is provided below.

“Despite economic and state budgetary pressures, we have continued our strong organic growth performance and improved our operating margins” said Michael Moran, Chairman, President and Chief Executive Officer of Allion Healthcare. “We recently announced our partnership with Being Alive, the San Diego-based Aids Service Organization serving 6,000 clients in San Diego County.  Together with our collaborations with Under One Roof in San Francisco and Lifelong in Seattle, Washington, we now have the opportunity to provide vital support and services to almost 20,000 additional west coast clients.”

Fully diluted shares outstanding for the three-month period ended June 30, 2009 includes 2,624,990 shares related to the component of the Biomed earn out payment settled in stock.  Based on the Specialty Infusion operating results through April 30, 2009, the Company finalized the earn out payment to the former Biomed stockholders, with total consideration valued at $44.4 million, including $7.5 million in cash, $22.3 million in subordinated promissory notes and $14.6 million in common stock.


Guidance

The Company maintains its Net Sales and Adjusted Earnings per Diluted Share guidance for the full year 2009. Guidance of Adjusted Earnings Per Diluted Share includes the effect of the additional shares issued as a result of the Biomed earn out, but does not include charges related to the Company’s stock-based compensation expense related to the issuance of phantom stock units and the future impact of 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.

Twelve Months Ending December 31, 2009 Guidance
 
Net Sales (millions)
$400 - $415
Adjusted Earnings Per Diluted Share
$0.50 - $0.52


 
 

 



Operating Data
 
Specialty HIV
 
(In thousands, except patient months and prescription data)
   
Three Months Ended June 30,
 
   
2009
   
2008
 
Distribution Region
 
Net Sales
   
Prescriptions
   
Patient Months
   
Net Sales
   
Prescriptions
   
Patient Months
 
California
  $ 48,694       188,777       37,357     $ 46,026       179,008       36,810  
New York
    23,547       79,489       11,715       21,071       75,505       11,141  
Washington
    2,386       9,461       1,738       1,132       5,331       979  
Florida
    547       2,227       323       464       2,180       302  
Total
  $ 75,174       279,954       51,133     $ 68,693       262,024       49,232  

 
 


(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 5:00 p.m. ET on Thursday, August 6, 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 6:00 p.m. ET on Thursday, August 6, 2009, through 11:59 p.m. ET on Thursday, August 20, 2009 by dialing (800) 642-1687 from the U.S. or (706) 645-9291 from abroad and entering confirmation code 22072043. 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.  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, competitive pressures, demand for the Company’s products and services and its ability to effectively market its services, declining general economic conditions and restrictions in the credit market, changes in third party reimbursement rates or the Company’s qualification for preferred reimbursement rates in California and New York, changes in government regulations or the interpretation of these regulations, the Company’s ability to manage growth successfully,  maintenance 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
CONDENSED CONSOLIDATED BALANCE SHEETS
 
(in thousands)
 
At June 30,
2009
(Unaudited)
   
At December 31, 2008
 
Assets
           
Current assets:
           
Cash and cash equivalents
  $ 14,739     $ 18,385  
Short term investments
    259       259  
Accounts receivable (net of allowance for doubtful accounts of $3,135 in 2009 and $2,248 in 2008)
    49,428       44,706  
Inventories
    13,118       12,897  
Prepaid expenses and other current assets
    1,074       655  
Deferred tax asset
    1,528       1,305  
Total current assets
    80,146       78,207  
                 
Property and equipment, net
    1,775       1,647  
Goodwill
    178,713       134,298  
Intangible assets, net
    51,043       53,655  
Marketable securities, non-current
    2,125       2,155  
Other assets
    966       1,027  
Total assets
  $ 314,768     $ 270,989  
                 
Liabilities and Stockholders’ Equity
               
Current liabilities:
               
Accounts payable
  $ 23,660     $ 24,617  
Accrued expenses
    3,012       2,822  
Income taxes payable
          1,648  
Current maturities of long term debt
    1,872       1,698  
Total current liabilities
    28,544       30,785  
                 
Long term liabilities:
               
Long-term debt
    31,181       32,204  
Revolving credit facility
    20,000       17,821  
Notes payable - affiliates
    25,936       3,644  
Deferred tax liability
    16,675       17,085  
Other
    2,599       41  
Total liabilities
    124,935       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 28,669 in 2009 and 25,946 in 2008
    29       26  
Additional paid-in capital
    182,307       168,386  
Accumulated earnings
    7,544       1,033  
Accumulated other comprehensive loss
    (47 )     (36 )
Total stockholders’ equity
    189,833       169,409  
Total liabilities and stockholders’ equity
  $ 314,768     $ 270,989  
 

 

 
 

 


ALLION HEALTHCARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
 

 (in thousands, except per share data)
 
Three Months Ended
   
Six Months Ended
 
   
June 30,
   
June 30,
 
   
2009
   
2008 (1)
   
2009
   
2008 (1)
 
                         
Net sales
  $ 99,658     $ 86,430     $ 196,242     $ 151,687  
Cost of goods sold
    81,009       69,344       159,351       124,948  
Gross profit
    18,649       17,086       36,891       26,739  
                                 
Operating expenses:
                               
Selling, general and administrative expenses
    9,805       9,752       19,476       16,811  
Depreciation and amortization
    1,502       1,710       2,991       2,585  
Litigation settlement
                      3,950  
Operating income
    7,342       5,624       14,424       3,393  
                                 
Interest expense (income), net
    725       836       1,425       621  
Other expense – Change in fair value of warrants
    577             784        
Income before taxes
    6,040       4,788       12,215       2,772  
                                 
Provision for taxes
    2,858       1,875       5,514       1,129  
Net income
  $ 3,182     $ 2,913     $ 6,701     $ 1,643  
                                 
Basic earnings per common share
  $ 0.11     $ 0.15     $ 0.25     $ 0.09  
                                 
Diluted earnings per common share
  $ 0.11     $ 0.11     $ 0.23     $ 0.08  
                                 
Basic weighted average of common shares outstanding
    27,832       19,899       26,928       18,052  
Diluted weighted average of common shares outstanding
    29,089       26,333       29,050       21,664  

(1)  The Company has adjusted its basic and diluted weighted average shares for the three and six month periods ended June 30, 2008 and its basic and diluted earnings per common share for the six months ended June 30, 2008.  The effect of this adjustment is not material, either quantitatively or qualitatively, to the Company’s 2008 consolidated financial statements taken as a whole.

 

ALLION HEALTHCARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
(in thousands)
 
Six Months Ended June 30,
 
CASH FLOWS FROM OPERATING ACTIVITIES
 
2009
   
2008
 
  Net Income
  $ 6,701     $ 1,643  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
    2,991       2,585  
Deferred rent
    7       (14 )
Amortization of deferred financing costs
    93       45  
Amortization of debt discount on acquisition notes
    26       13  
Change in fair value of warrants
    784        
Change in fair value of interest rate cap contract
    (8 )     5  
Provision for doubtful accounts
    1,445       550  
Non-cash stock compensation expense
    702       94  
Deferred income taxes
    (554 )     (22 )
Changes in operating assets and liabilities:
               
Accounts receivable
    (6,167 )     (1,000 )
Inventories
    (221 )     (2,619 )
Prepaid expenses and other assets
    (407 )     165  
Accounts payable, accrued expenses and income taxes payable
    (2,413 )     (887 )
Net cash provided by operating activities
    2,979       558  
                 
CASH FLOWS FROM INVESTING ACTIVITIES
               
Purchase of property and equipment
    (507 )     (226 )
Purchases of short term investments
          (300 )
Sales of short term investments and non-current marketable securities
    19       7,398  
Payment for investment in Biomed, net of cash acquired
    (7,502 )     (50,143 )
Net cash used in investing activities
    (7,990 )     (43,271 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES
               
Net proceeds from exercise of employee stock options
    9        
Proceeds from CIT revolver note
    2,179       12,821  
Net proceeds from CIT term loan
          34,738  
Payment for CIT interest rate cap contract
          (112 )
Payment for deferred financing costs
    (35 )     (907 )
Payment for Biomed loans assumed
          (14,925 )
Tax benefit from exercise of employee stock options
    89       960  
Repayment of CIT term loan and capital leases
    (877 )     (24 )
Net cash provided by financing activities
    1,365       32,551  
                 
NET DECREASE IN CASH AND CASH EQUIVALENTS
    (3,646 )     (10,162 )
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    18,385       19,557  
CASH AND CASH EQUIVALENTS, END OF PERIOD
  $ 14,739     $ 9,395  
                 
SUPPLEMENTAL DISCLOSURE
               
    Income taxes paid
    7,948       297  
    Interest paid
    1,070       121  
 

 

 
 

 

 

 
 
Allion Healthcare, Inc.
Selected Operating Segment Information (Unaudited)



(in thousands)
 
Three Months Ended
   
Six Months Ended
 
   
June 30,
   
June 30,
 
   
2009
   
2008
   
2009
   
2008
 
Net Sales:
                       
Specialty HIV
  $ 75,174     $ 68,693     $ 146,193     $ 133,950  
Specialty Infusion
    24,484       17,737       50,049       17,737  
Total Net Sales
  $ 99,658     $ 86,430     $ 196,242     $ 151,687  
                                 
Operating Income:
                               
Specialty HIV (1)
  $ 2,757     $ 2,337     $ 4,814     $ 106  
Specialty Infusion
    4,585       3,287       9,610       3,287  
Total Operating Income
  $ 7,342     $ 5,624     $ 14,424     $ 3,393  
                                 
Depreciation & Amortization Expense:
                               
Specialty HIV
  $ 703     $ 823     $ 1,401     $ 1,698  
Specialty Infusion
    799       887       1,590       887  
    Total Depreciation & Amortization Expense
  $ 1,502     $ 1,710     $ 2,991     $ 2,585  
                                 

________________
(1)  
Includes a $3,950 charge related to the Company’s litigation settlement with Oris Medical Systems, Inc. for the six months ended June 30, 2008.

 
 

 


Allion Healthcare, Inc.
Reconciliation of Effective Tax Rate to Adjusted Effective Tax Rate
       
($ in thousands)
Income Before
Provision for
Effective
 
Taxes
Income Taxes
Tax Rate
       
As reported
$  6,040
$ 2,858
47%
       
       
    Change in fair value of warrants
      577
 
       
    Phantom stock units
     377
      46
 
       
As adjusted
$  6,994
$ 2,904
42%
       

The adjusted Effective Tax Rate excludes the effect of the change in fair value of warrants and stock-based compensation expense from the issuance of phantom stock units to provide investors with supplemental information to assess the effective tax rate without regard to these items.


 
 

 


Allion Healthcare, Inc.
Reconciliation of Net Income to EBITDA and Adjusted EBITDA  (UNAUDITED)


 (in thousands)
 
Three Months Ended
   
Six Months Ended
 
   
June 30,
   
June 30,
 
   
2009
   
2008
   
2009
   
2008
 
                         
Net income
  $ 3,182     $ 2,913     $ 6,701     $ 1,643  
Income tax provision
    2,858       1,875       5,514       1,129  
Interest expense (income)
    725       836       1,425       621  
Depreciation and amortization
    1,502       1,710       2,991       2,585  
EBITDA
  $ 8,267     $ 7,334     $ 16,631     $ 5,978  
                                 
Change in fair value of warrants
    577             784        
Phantom stock units
    377             545        
Oris litigation settlement
                      3,950  
Adjusted EBITDA
  $ 9,221     $ 7,334     $ 17,960     $ 9,928  
                                 
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, stock-based compensation expense from phantom stock units 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 operating performance without regard to these items. 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.


 
 

 



Allion Healthcare, Inc.
 
Reconciliation of Diluted EPS and Adjusted Diluted EPS
(UNAUDITED)
 
             
 (in thousands, except per share data)
 
Three Months Ended
   
Six Months Ended
 
   
June 30,
   
June 30,
 
   
2009
   
2008 (1)
   
2009
   
2008 (1)
 
                         
Diluted earnings per common share
  $ 0.11     $ 0.11     $ 0.23     $ 0.08  
                                 
Net income
  $ 3,182     $ 2,913     $ 6,701     $ 1,643  
Adjustments (net of tax):
                               
  Change in fair value of warrants
    577             784        
  Phantom stock units
    331             479        
  Oris litigation settlement
                      2,327  
                                 
Adjusted net income
  $ 4,090     $ 2,913     $ 7,964     $ 3,970  
                                 
Adjusted diluted earnings per common share
  $ 0.14     $ 0.11     $ 0.27     $ 0.18  
Diluted weighted average of common shares outstanding
    29,089       26,333       29,050       21,664  

        
Adjusted Diluted EPS excludes the change in fair value of warrants, stock-based compensation expense from the issuance of phantom stock units (net of tax) and the litigation settlement with Oris Medical Systems, Inc. (net of tax) to reflect comparable year over year Diluted EPS and to provide investors with supplemental information to assess Diluted EPS performance without regard to these items.

(1)  The Company has adjusted its basic and diluted weighted average shares for the three and six month periods ended June 30, 2008 and its basic earnings per common share for the six months ended June 30, 2008.  The adjustments were made to correct an error in the calculation of weighted average shares outstanding and its related impact on basic earnings per share for the six months ended June 30, 2008.  The effect of this adjustment is not material, either quantitatively or qualitatively, to the Company’s 2008 consolidated financial statements.