Allion Healthcare Reports First Quarter 2008 Results

Business Wire,  May 8, 2008  

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* Net sales for the quarter increased 10.7% to a record $65.3 million

* Announces Opening of New Pharmacy in Seattle with Lifelong Aids Alliance

* Announces settlement of Oris Litigation

MELVILLE, N.Y. -- Allion Healthcare (NASDAQ: ALLI) today announced financial results for the three months ended March 31, 2008.

Financial Summary of Results

Net sales for the first quarter 2008 increased 10.7% to a record $65.3 million, compared to $59 million reported during the first quarter of 2007. The strong net sales were primarily driven by higher prescription sales in California, which increased 14% over the same period in 2007. Gross profit for the period was $9.7 million, or 14.8% of sales, compared to $8.4 million, or 14.3% of sales, for the same period in 2007.

Selling, general and administrative expenses increased slightly for the first quarter of 2008 to $7.9 million, or 12.2% of net sales, compared to $7.7 million, or 13.0% of net sales, reported during the first quarter of 2007. The increase was primarily due to increased legal expenses related to Allion Healthcare's litigation with Oris Medical Systems, Inc., or Oris, of $456,000 for the first quarter of 2008, compared to $170,000 for the first quarter of 2007.

The Company reported a net loss for the period of $1.3 million compared to net income of $185,000 reported during the first quarter of 2007. Results for the first quarter of 2008 included a $3.9 million pre-tax charge associated with settling the Oris litigation and $456,000 in related legal expenses and, for the first quarter of 2007, included a $599,000 pre-tax impairment charge associated with the termination of the Labtracker license agreement and $170,000 in Oris-related legal expenses (the "Non-recurring Charges"). Adjusted net income, which excludes the impact of the Non-recurring Charges, more than doubled in the first quarter of 2008 to $1.5 million from $652,000 in the first quarter of 2007. An explanation and reconciliation of Net (loss) income under generally accepted accounting principles (GAAP) to Adjusted net income is provided below.

Adjusted earnings per diluted share for the first quarter of 2008, which excludes the impact of the Non-recurring Charges, would have been $0.09 as compared to the Adjusted earnings per diluted share of $0.04 for the first quarter of 2007. An explanation and reconciliation of Diluted loss per share under GAAP to Adjusted earnings per diluted share is provided below.

Adjusted EBITDA, which excludes the impact of the Non-recurring Charges, increased 63% to $3.1 million for the first quarter of 2008, from $1.9 million for the first quarter of 2007. An explanation and reconciliation of Net (loss) income under GAAP to EBITDA and adjusted EBITDA are provided below.

"The Company continues to execute well on its operational and strategic plan while delivering solid results," said Mike Moran, Chairman and Chief Executive Officer of Allion Healthcare. "Excluding the impact of the Oris litigation settlement, we more than doubled our earnings for the period, which exceeded our expectations. We are pleased that the Oris litigation is now behind us. We are also pleased with the performance and effort by all our senior management team and field managers as they continued to execute on our operating plan while the Company completed the Biomed acquisition which closed on April 4, 2008," added Mr. Moran.

The Company also announced that it is opening a new pharmacy with Lifelong AIDS Alliance, a leading provider of practical support services and advocacy for those with HIV/AIDS in Washington State, where it services over 3,000 clients annually. Mike Moran added, "We are excited to work with such a quality organization as Lifelong and look forward to developing an enhanced service model for Lifelong's clients in Washington State."

Second Quarter Guidance

The Company today provided financial guidance for the second quarter of 2008. This guidance assumes a 41% effective tax rate and includes the fully diluted effect of the proposed conversion into common of the preferred shares issued with the Biomed acquisition.

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Operating Data

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Conference Call Information

A conference call to discuss the results will be held at 5:00 p.m. ET; on Thursday, May 8, 2008. To join the call, please dial (913) 312-0863 from the U.S. or abroad. 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 8:00 p.m. ET on Thursday, May 8, 2008, through 8:00 p.m. ET on Thursday, May 15, 2008, by dialing (719) 457-0820 from the U.S. or abroad and entering confirmation code 8255945. 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 reserved for investment professionals only.