MELVILLE, N.Y., Aug. 11 /PRNewswire-FirstCall/ -- Allion Healthcare, Inc. , a national provider of specialty pharmacy and disease management services focused on HIV/AIDS patients, today announced financial results for the second quarter ended June 30, 2005.
Net sales for the second quarter of 2005 increased 97.5% to $28.6 million from $14.5 million in the second quarter of 2004. Gross profit for the quarter was $4.1 million or 14.5% of net sales. Operating income for the second quarter 2005 increased to $153,531 from a loss of $919,561 in the second quarter of 2004. Earnings before interest, taxes, depreciation and amortization (EBITDA) excluding other income in the second quarter of 2005 was $542,004. An explanation and reconciliation of net income under generally accepted accounting principles (GAAP) to EBITDA excluding other income is provided below.
The net income and basic and diluted loss per share available to common shareholders for the second quarter of 2005 was $70,431 and ($0.31), respectively. Included in the basic and diluted loss per share available to common shareholders for the second quarter was a deemed dividend of $1,338,047 which reduced basic and diluted earnings per share available to common shareholders by $0.33 per share. The deemed dividend was recognized in connection with the conversion of our preferred stock at the initial public offering.
Net sales for the six months ended June 30, 2005 increased 84.2% to $51.3 million from $27.8 million in the six months ended June 30, 2004. Gross profit for the six months ended June 30, 2005 was $7.7 million or 15.0% of net sales. Operating income for the six months ended June 30, 2005 increased to $278,906 from a loss of $1,461,774 in the six months ended June 30, 2004. Earnings before interest, taxes, depreciation and amortization (EBITDA) excluding other income in the first six months of 2005 was $964,033. An explanation and reconciliation of net income under generally accepted accounting principles (GAAP) to EBITDA excluding other income is provided below.
The net income and basic and diluted loss per share available to common shareholders for the six months ended June 30, 2005 was $83,527 and ($0.35), respectively. Included in the basic and diluted loss per share available to common shareholders for the six months ended June 30, 2005 was a deemed dividend of $1,338,047 which reduced basic and diluted earnings per share available to common shareholders by $0.37 per share. The deemed dividend was recognized in connection with the conversion of our preferred stock at the initial public offering.
During the quarter, Allion recognized net sales of $87,000 from New York Medicaid’s preferred reimbursement for specialized HIV pharmacies for the first time. Of this amount, $44,000 related to the period from January 1, 2005 until March 31, 2005. Allion did not recognize any net sales relating to the California Pilot Program, but anticipates that it will begin recognizing these payments in the third quarter of 2005.
Allion incurred some selling, general and administrative expenses and recognized some other income in the second quarter that will not be recurring in the long-term. In the second quarter of 2005, Allion extinguished $2.0 million of convertible subordinated notes with proceeds from the initial public offering. As a result, Allion recognized $176,000 of deferred financing costs for fees paid to the placement agent. In the second quarter of 2005, Allion accrued $150,000 of compensation expense for one of the former owners of the San Francisco pharmacy acquired during the first quarter of 2005. Allion will accrue an additional $150,000 per quarter for a one-year period through March 2006, as long as this former owner remains an Allion employee. The Company repurchased 175,719 warrants with proceeds from the initial public offering at a price of $9.00 per warrant, which resulted in a gain on extinguishment of mandatory redeemable warrants of $316,744.
On August 5, 2005, Allion purchased selected assets from Frontier Pharmacy & Nutrition, Inc., a California corporation doing business as PMW Pharmacy, Inc. As a result of the acquisition, Allion expects to provide specialty pharmacy and disease management services to PMW Pharmacy’s customers. Allion acquired PMW Pharmacy for a total consideration of approximately $9.7 million in cash in an asset acquisition and will service the former PMW Pharmacy patients out of Allion’s Torrance, California facility. PMW Pharmacy reported unaudited revenue of approximately $24.0 million for the twelve months ended December 31, 2004.
“We are very pleased with our quarterly results,” said Michael Moran, President and Chief Executive Officer of Allion Healthcare. “We achieved record revenues, growing in excess of 97%. We continue to provide a high level of service to our patients while improving our operating margins.”
Reconciliation of Net Income Under GAAP to EBITDA (Excluding Other Income)
EBITDA excluding other income refers to income before discontinued operations, interest, income tax expense, and depreciation and amortization excluding other income. Allion considers EBITDA excluding other income a good indication of the company’s ability to generate cash flow in order to liquidate liabilities and reinvest in the company. EBITDA excluding other income is not a measurement of financial performance under GAAP and should not be considered a substitute for net income as a measure of performance. A reconciliation of income before discontinued operations under GAAP to EBITDA excluding other income for the six and three months ended June 30, 2005 and 2004 is as follows:
Six Months Ended Three Months Ended June 30, June 30, 2005 2004 2005 2004 Income (loss) before discontinued operations $94,077 $(1,638,569) $75,641 $(1,012,411) Interest expense 558,573 176,795 451,634 92,850 Other expense (income) (373,744) 0 (373,744) 0 Depreciation and amortization 685,127 359,448 388,473 181,037 EBITDA excluding other income $964,033 $(1,102,326) $542,004 $(738,524) Guidance
Allion is providing guidance for the third and fourth quarter of 2005. The guidance includes the effect of the acquisition of PMW Pharmacy. This guidance for earnings per share, or EPS, includes the $150,000 compensation expense that will be incurred in each of the next 3 quarters relating to a former owner of the San Francisco pharmacy acquired in the first quarter of 2005. The guidance for EPS assumes a 40% tax rate in each quarter. Allion is currently reviewing its ability to recognize historical net operating losses to offset taxes on taxable income in future periods. The projections assume that Allion recognizes revenue for the California Pilot Program in the third quarter of 2005, but excludes the retroactive payment under the program for previous quarters. The projections are as follows:
Q3 2005 Q4 2005 Net Sales (in millions) $30.0-32.0 $32.5-34.5 EPS $0.02-0.04 $0.04-0.06 Use of Non-GAAP Financial Measures
The non-GAAP financial measures discussed in this press release and accompanying non-GAAP supplemental information represent financial measures used by Allion’s management to evaluate the operating performance of the company and to conduct its business operations. Non-GAAP financial measures discussed in this press release include EBITDA excluding other income. Management uses the non-GAAP financial measures for planning purposes, including the preparation of operating budgets and to determine appropriate levels of operating and capital investments. Management also believes that the non-GAAP financial measures provide additional insight for analysts and investors in evaluating the company’s financial and operational performance and in assisting investors in comparing the company’s financial performance to those of other companies in the company’s industry. However, these non-GAAP financial measures are not intended to be an alternative to financial measures prepared in accordance with GAAP. Pursuant to the requirements of SEC Regulation G, a detailed reconciliation between the company’s GAAP and non-GAAP financial results is provided in this press release and investors are advised to carefully review and consider this information as well as the GAAP financial results that are disclosed in the company’s SEC filings.
Conference Call Information
A conference call to discuss its second quarter results will be held at 4:45 p.m. Eastern Daylight Time on August 11, 2005. To join the call, please dial 800-289-0496 from the U.S., or 913-981-5519 for international callers. The conference call will also be webcast on Allion Healthcare’s website at http://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 through 11:59 p.m. Eastern Daylight Time on August 18, 2005 by dialing 888-203-1112 from the U.S., or 719-457-0820 for international callers, and entering confirmation code 2311040. A replay of the conference call will also be available on the company’s website, http://www.allionhealthcare.com, for 30 days through September 9, 2005. Questions during the live call will be taken from investment professionals only.
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 for patients.
Safe Harbor Statement
Certain statements included in this press release, which are not historical facts, are forward-looking statements. 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, including those described in our public filings with the United States Securities and Exchange Commission; also including, but not limited to, competitive pressures, changes in customer mix, changes in third party reimbursement rates, changes in government regulations or the interpretation of these regulations, growth opportunities, cost savings, revenue enhancements, synergies and other benefits anticipated from acquisition transactions, difficulties relative to integrating acquired businesses, the accounting and tax treatment of acquisitions, and asserted and unasserted claims, which could cause actual results to differ from those in the forward-looking statements. The forward-looking statements by their nature involve substantial risks and uncertainties, certain of which are beyond our control, and actual results may differ materially depending on a variety of important factors. You are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date herein.
Operating Data
Allion serviced 8,423 patients in June 2005. The following tables set forth the net sales and operating data for each of our distribution centers for the six months and three months ended June 30, 2005 and 2004:
Six Months Ended June 30, 2005 2004 Prescrip- Prescrip- Distribution Net tions Patient Net tions Patient Region Sales(2) Filled Months Sales(2) Filled Months California(1) $28,267,954 139,985 32,111 $10,327,836 44,756 6,657 New York $20,881,566 81,292 11,484 $16,672,283 67,349 10,149 Florida $1,134,194 7,091 831 $825,890 4,623 545 Seattle(1) $994,134 6,659 1,136 $- - - Total $51,277,848 235,027 45,562 $27,826,009 116,728 17,351 Three Months Ended June 30, 2005 2004 Prescrip- Prescrip- Distribution Net tions Patient Net tions Patient Region Sales(2) Filled Months Sales(2) Filled Months California(1) $16,576,342 84,544 18,004 $5,361,732 22,910 3,368 New York $10,731,771 41,287 5,774 $8,661,800 34,789 5,226 Florida $583,277 3,515 409 $451,998 2,588 299 Seattle(1) $690,709 4,923 843 $- - - Total $28,582,099 134,269 25,030 $14,475,530 60,287 8,893 (1) California and Seattle operations for the six months ended June 30, 2005 included six months contribution from North American Home Health Supply, Inc. and four months of contribution from Specialty Pharmacies, Inc. California and Seattle operations for the three months ended June 30, 2005 included three months contribution from North American Home Health Supply, Inc. and one month of contribution from Specialty Pharmacies, Inc. All information about Austin, Texas has been excluded, because of the termination of operations in that distribution center. (2) As required by generally accepted accounting principles, we have restated prior periods to reflect the presentation of the Austin, Texas facility as “discontinued operations,” so that period-to-period results are comparable. ALLION HEALTHCARE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS At June 30, At December 31, 2005 2004 (UNAUDITED) CURRENT ASSETS: Cash and cash equivalents $23,964,641 $6,979,630 Investment in short term securities 13,387,000 0 Accounts receivable, (net of allowance for doubtful accounts of $400,032 in 2005 and $437,032 in 2004) 9,000,283 4,678,596 Inventories 1,770,591 733,581 Prepaid expenses and other current assets 1,261,829 722,984 Total current assets $49,384,344 $13,114,791 Property and equipment, net 603,001 561,732 Goodwill 12,189,156 4,472,068 Intangible assets 11,388,404 1,643,449 Other assets 75,190 203,622 TOTAL ASSETS $73,640,095 $19,995,662 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses $12,540,413 $6,784,658 Revolving credit line 59,240 1,154 Notes payable-subordinated 1,557,721 1,250,000 Current portion of capital lease obligations 133,658 130,640 Other current liabilities 100,000 100,000 Total current liabilities 14,391,032 8,266,452 LONG TERM LIABILITIES: Notes payable 673,994 - Capital lease obligations 136,249 193,306 Other 24,189 21,409 Total liabilities 15,225,464 8,481,167 CONTINGENCIES STOCKHOLDERS’ EQUITY Preferred stock, $.001 par value, shares authorized 20,000,000; issued and outstanding 0 at June 30, 2005 and 4,570,009 at December 31, 2004. - 4,570 Common stock, $.001 par value; shares authorized 80,000,000; issued and outstanding 11,992,067 at June 30, 2005 and 3,100,000 at December 31, 2004. 11,992 3,100 Additional paid-in capital 70,211,067 22,060,733 Accumulated deficit (11,808,428) (10,553,908) Total stockholders’ equity 58,414,631 11,514,495 Total liabilities and stockholders’ equity $73,640,095 $19,995,662 ALLION HEALTHCARE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three months ended Six months ended June 30, June 30, 2005 2004 2005 2004 Net sales $28,582,099 $14,475,530 $51,277,848 $27,826,009 Cost of goods sold 24,440,885 12,959,826 43,563,031 24,746,639 Gross profit 4,141,214 1,515,704 7,714,817 3,079,370 Operating expenses: Selling, general and administrative expenses 3,987,683 2,435,265 7,435,911 4,541,144 Operating income (loss) 153,531 (919,561) 278,906 (1,461,774) Interest expense (451,634) (92,850) (558,573) (176,795) Other income 373,744 - 373,744 - Income (loss) before discontinued operations 75,641 (1,012,411) 94,077 (1,638,569) Loss from discontinued operations (5,210) (90,455) (10,550) (141,213) Net Income (loss) 70,431 (1,102,866) 83,527 (1,779,782) Deemed dividend on preferred stock 1,338,047 - 1,338,047 - Net loss available to common shareholders $(1,267,616) $(1,102,866) $(1,254,520) $(1,779,782) Basic and Diluted loss per common share: Loss before discontinued operations (0.31) (0.33) (0.35) (0.53) Loss on discontinued operations - (0.03) - (0.04) Loss per share $(0.31) $(0.36) $(0.35) $(0.57) Basic and Diluted weighted average of common shares outstanding 4,069,802 3,100,000 3,587,580 3,100,000
Allion Healthcare, Inc.
CONTACT: Jim Spencer, Chief Financial Officer of Allion Healthcare, Inc.,+1-631-870-5126; or Francesca DeMartino of The Ruth Group, InvestorRelations Consultant to Allion Healthcare, Inc., +1-646-536-7024,fdemartino@theruthgroup.com
Web site: http://www.allionhealthcare.com/
