VIASYS Healthcare Inc. Reports First Quarter 2007 Results

Business Wire, May 7, 2007

CONSHOHOCKEN, Pa. -- VIASYS Healthcare Inc. (NYSE: VAS), a leading healthcare technology company, today reported results for the quarter ended March 31, 2007. All information is inclusive of the results of all acquisitions unless otherwise indicated.

Revenues for the first quarter of 2007 increased to $161.4 million compared to $135.5 million in the comparable quarter last year. Excluding the impact of special items(1), adjusted operating income increased to $13.6 million compared to $9.4 million in the same period last year, and net income increased to $7.7 million, or $.23 per diluted share, compared to $5.5 million, or $.17 per diluted share, for the same period last year. Foreign currency translation had a positive impact of 2.5% on revenues for the quarter.

Including the impact of special items(1), an operating loss of $1.1 million was incurred compared to operating income of $9.4 million in the same period last year, and the net loss was $1.2 million, or a loss of $.04 per diluted share, compared to net income of $5.5 million, or $.17 per diluted share, for the same period last year.

Chairman, President and CEO Comments

Randy Thurman, Chairman, President and CEO, commented on VIASYS' performance:

"We are pleased to announce that for the 10th sequential quarter our adjusted operating results have achieved or exceeded our expectations. Our performance reflects the continued strong global demand for VIASYS' products, the operational leverage provided by our 2006 restructuring and the successful integration of our recent acquisitions. As a result, we are reiterating our previously stated guidance for earnings per diluted share in the range of $1.29 to $1.33 for 2007 and 20 to 25% earnings growth for 2008. In keeping with prior practice, these amounts exclude the impact of special items and acquisitions.

"Total revenue in the first quarter exceeded the prior year's quarter by 19% while adjusted net income increased by over 40%. Strong revenue performance in our core business resulted in growth of 16% which was complemented by the contribution from our strategic acquisitions in our sleep division which accounted for the remaining 3% of revenue growth.

"We also experienced strong revenue growth in both our domestic and international markets. Domestically, growth of 23% was driven by strong sales of our ventilator products, including the shipment of our LTV-1200 ventilators to the California Department of Homeland Security, as well as our sleep business. Internationally, growth of 14% resulted from increased sales in Respiratory Care, particularly of our ventilators, and in NeuroCare, due to neurophysiology and consumable products.

"I'd like to further comment on a few specific areas of our business. In NeuroCare, we continue to be encouraged by our operating results. Adjusted operating income grew by nearly 50%, reflecting the benefits of the 2006 restructuring. Although revenue was essentially flat over 2006, this can largely be attributed to unusually large vascular sales in the prior year. In addition, we anticipate revenue growth as a result of the release of new products in the second quarter.

"In Orthopedics, we had previously expressed optimism that the industry dynamics, which had depressed revenue and operating income growth in 2006 would start to turn around in 2007. We are pleased that in the first quarter we believe we are seeing this begin. With the first quarter of 2007 revenue and operating income exceeding the fourth quarter of 2006, we experienced our first consecutive quarter increase in over a year. In addition, we resolved a previously disclosed legal matter and recorded a charge of $7.5 million, net of insurance recoveries.

"In the first quarter, we announced our intention to implement a $13 to $16 million strategic restructuring plan, specifically related to the consolidation and further integration of eight acquisitions that we completed since the beginning of 2005. The restructuring plan was launched at the end of the quarter and is proceeding as expected. We remain confident that the costs associated with this plan will be largely recovered by the end of next year.

"Furthermore, we remain very pleased with the continued promise of our R&D pipeline and believe that we will be seeing exciting results from these efforts later this year and into the early part of 2008. These efforts will enhance our leadership positions across our business units."

In conclusion, Mr. Thurman further commented on the outlook for VIASYS:

"We remain confident in the positive outlook for VIASYS in 2007 and beyond. We believe the continued strong demand for our products is indicative of customer recognition of our superior product and service performance. A good example of this is in our ventilator business, which we believe has made us the fastest growing critical care company for several years in a row. We continue to leverage our strong balance sheet and cash flow to invest in R&D projects and strategic acquisitions that we expect will further strengthen our performance."