Allion Healthcare Reports Fourth Quarter Results

Business Wire,  March 13, 2008  

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MELVILLE, N.Y. -- 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 and twelve months ended December 31, 2007.

Fourth Quarter and Full Year 2007 Highlights

* Net sales for the fourth quarter increased 10% to $63.6 million.

* Net income for the fourth quarter was $1.1 million, or $0.06 per diluted share, including a $0.05 per share impact of a prior period pre-tax premium reimbursement audit adjustment of $758,000 and pre-tax expenses related to the Oris litigation and the SEC's informal inquiry of $501,000.

* Net sales for full year 2007 increased to $246.7 million, up 18%.

* EBITDA increased to $7.9 million for 2007 compared with $6.5 million for 2006.

* Cash flow from operations increased 20% to $6.2 million for the full year.

Fourth Quarter 2007 Financial Results

Allion produced 9.8% growth in net sales for the fourth quarter of 2007 to $63.6 million from $57.9 million for the fourth quarter of 2006. Gross profit for the fourth quarter of 2007 was $9.0 million, or 14.1% of net sales, compared with $8.3 million, or 14.3% of net sales, for the fourth quarter of 2006. The fourth quarter 2007 results included a prior period reduction of $758,000 related to an audit of the California premium reimbursement program back to 2004, which reduced both net sales and gross profit.

Selling, general and administrative expenses declined to $7.6 million, or 12.0% of net sales, for the fourth quarter of 2007 from $8.1 million, or 13.9% of net sales, for the prior-year fourth quarter. Selling, general and administrative expenses included expenses related to the Oris litigation and the SEC's informal inquiry of $501,000, or 0.8% of revenues for the fourth quarter of 2007 and $368,000, or 0.6% of revenues for the fourth quarter of 2006.

Net income was $1.1 million or $0.06 per diluted share, for the fourth quarter of 2007 compared with $380,000 or $0.02 per diluted share for the fourth quarter of 2006. Earnings before interest, taxes, depreciation and amortization, (EBITDA), more than doubled to $2.2 million for the fourth quarter of 2007 from $1.1 million for the fourth quarter of 2006. Excluding the retroactive premium reimbursement and expenses related to the Oris litigation and the SEC's informal inquiry, Adjusted EBITDA would have been $3.5 million for the fourth quarter of 2007 as compared to $1.9 million for the fourth quarter of 2006. An explanation and reconciliation of net income under generally accepted accounting principles (GAAP) to EBITDA and Adjusted EBITDA is provided below.

"Allion produced strong results for the fourth quarter of 2007," remarked Michael Moran, Allion's Chairman, President and Chief Executive Officer. "We achieved our goal of double-digit organic sales growth for the quarter, with an improved gross margin on these sales and a decline in SG&A expenses both in dollars and as a percentage of net sales. We also completed 2007 with a stronger financial position, having produced cash flow from operations of $6.2 million for the full year. Cash and cash equivalents and short-term investments totaled $28.8 million at the end of 2007, total stockholders' equity was $106.2 million and we remained debt free. As a result, we are well positioned to continue implementing our growth strategies during 2008."

Guidance

The Company today provided financial guidance for the first quarter of 2008. This guidance assumes a 38% tax rate and does not include any future acquisitions.

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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 December 31, 2007 and 2006 (dollars in thousands):

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Summary

Mr. Moran concluded, "Through our primary focus on organic growth during 2007, we achieved a much greater level of integration among our sales, operations and pharmacy teams than we could when developing a critical mass of operations through acquisition. The benefits of better coordinating our efforts were reflected in stronger organic sales growth and improved profitability. We are greatly encouraged by the stability and growth evident in these results. Our progress during the year is the basis of our confidence in achieving further significant organic growth in 2008, both in our existing core California and New York markets and through expansion in secondary markets."

Conference Call Information

A conference call to discuss these results will be held today, March 13, 2008 at 5:00 p.m. ET; 2:00 p.m. PT. To join the call, please dial (719) 325-4870 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 website 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. ET on Thursday, March 13, 2008 through March 20, 2008 by dialing (719) 457-0820 from the U.S. or abroad and entering confirmation code 4305611. The audio webcast will also be available on the Company's website for one year.