Allied Healthcare International Inc. Reports Fiscal 2009 Second Quarter Results
Diluted EPS, From Continuing Operation, Increases 23% to 4.8 Cents From 3.9 Cents in Second Quarter Fiscal 2008
NEW YORK, NY -- Allied Healthcare International Inc. (NasdaqGS:AHCI - News) (AIM:
AHI)
Fiscal 2009 Fiscal 2008
(In millions, except EPS) Second Quarter Second Quarter
-------------- --------------
Revenues, as reported $ 55.3 $ 73.8
Revenues, at constant exchange rates $ 76.1 $ 73.8
Gross Profit, as reported $ 17.2 $ 21.9
Gross Profit, at constant exchange rates $ 23.6 $ 21.9
Gross Margin % 31.0% 29.7%
Operating Income, as reported $ 2.8 $ 2.5
Operating Income, at constant exchange
rates $ 4.1 $ 2.5
Diluted EPS, continuing operations 4.8 Cents 3.9 Cents
============== ==============Allied Healthcare International Inc. (NasdaqGS:AHCI - News) (AIM:
AHI)
(http://www.alliedhealthcare.com),
a leading provider of flexible
healthcare staffing services in the United Kingdom, has
issued financial
results for its fiscal 2009 second quarter.
To provide investors with an increased understanding of
the Company's
business, as in previous quarters, Allied is providing a
breakdown of its
revenues and gross profits at constant exchange rates using
the comparable
prior period weighted average exchange rate. In addition,
as the Company's
revenues and gross profits are generated in the United Kingdom,
an analysis
is included, within the Management Discussion below, of
the last six
quarters' revenues and gross profits in pounds sterling
to enable investors
to fully understand the underlying trends over these periods
without the
effects of currency exchange rates. As noted in the reported
numbers,
recent fluctuations in foreign exchange rates have significantly
impacted
the Company's current period results. Fiscal Second Quarter Results:
Quarter Ended March 31, 2009
-----------------------------------------------------
Gross Gross
Revenue % Margin % Margin %
--------- --------- --------- --------- ---------
(Amounts in
thousands)
Homecare $ 61,066 80.2% $ 19,307 81.8% 31.6%
Nursing Homes 8,207 10.8% 2,562 10.9% 31.2%
Hospitals 6,817 9.0% 1,726 7.3% 25.3%
--------- ---------
Total, at constant
exchange rates 76,090 23,595 31.0%
Effect of foreign
exchange (20,756) (6,429)
--------- ---------
Total, as reported $ 55,334 $ 17,166
========= ---------
SG&A, at constant
exchange rates $ 19,511
Effect of foreign
exchange (5,122)
---------
SG&A, as reported $ 14,389
---------
Operating Income, at
constant exchange
rates $ 4,084
Effect of foreign
exchange (1,307)
---------
Operating Income, as
reported $ 2,777
=========
Quarter Ended March 31, 2008
------------------------------------------------------
Gross Gross
Revenue % Margin % Margin %
---------- --------- ---------- --------- ---------
(Amounts in
thousands)
Homecare $ 54,544 73.9% $ 16,772 76.5% 30.7%
Nursing Homes 10,622 14.4% 3,156 14.4% 29.7%
Hospitals 8,649 11.7% 2,003 9.1% 23.2%
---------- ----------
Total, at constant
exchange rates 73,815 21,931 29.7%
Effect of foreign
exchange - -
---------- ----------
Total, as reported $ 73,815 $ 21,931
========== ----------
SG&A, at constant
exchange rates $ 19,455
Effect of foreign
exchange -
----------
SG&A, as reported $ 19,455
----------
Operating Income, at
constant exchange
rates $ 2,476
Effect of foreign
exchange -
----------
Operating Income, as
reported $ 2,476
==========For the second quarter of fiscal 2009, at constant exchange
rates, revenues
increased by $2.3 million, or 3.1%, to $76.1 million, compared
with $73.8
million reported during the same period in fiscal 2008.
Contributing to the
increase in revenues was Allied's Homecare revenues, which
grew by 12.0% to
$61.1 million. Nursing Home revenues declined by 22.7% to
$8.2 million.
Hospitals revenues decreased by 21.2% to $6.8 million. After
the
unfavorable impact of currency exchange of $20.8 million,
revenues
decreased to $55.3 million. It should be noted that due
to the leap year
in 2008, this fiscal year's second quarter is one day shorter
than the
comparable prior year period which equates to just over
$0.6 million for a
day's sales, or 1.1% impact on increase in revenues. At constant exchange rates, total gross profit for the second
fiscal
quarter increased 7.6% to $23.6 million, compared with $21.9
million
reported for the comparable quarter in fiscal 2008. Gross
profit margin for
the second quarter increased to 31.0% from 29.7% for the
comparable prior
period. Foreign exchange decreased gross profit by $6.4
million to $17.2
million for the quarter. At constant exchange rates, SG&A for the second fiscal
quarter was $19.5
million, compared with $19.5 million reported last year.
Foreign exchange
decreased costs by $5.1 million to $14.4 million for the
quarter. At constant exchange rates, operating income for the second
quarter of
fiscal 2009 increased to $4.1 million, compared to operating
income of $2.5
million reported during the 2008 second fiscal quarter.
Foreign exchange
decreased operating income by $1.3 million to $2.8 million
for the quarter. Income from continuing operations for the second quarter
of fiscal 2009
increased to $2.1 million as compared with $1.8 million
reported during the
2008 second fiscal quarter. Diluted earnings per share from
continuing
operations was 4.8 cents for the quarter, compared to diluted
earnings per
share from continuing operations of 3.9 cents last year. Net income for the second quarter of fiscal 2009 increased
to $2.5 million
as compared with $1.8 million reported during the 2008 second
fiscal
quarter. Diluted earnings per share was 5.6 cents for the
quarter which
includes 0.8 cents from discontinued operations due to the
release of
reserves as a result of the warranty period within the sales
agreement,
related to the sale of the respiratory business in fiscal
2007, having
expired. Fiscal Six-Month Results:
Six Months Ended March 31, 2009
-----------------------------------------------------
Gross Gross
Revenue % Margin % Margin %
--------- --------- --------- --------- ---------
(Amounts in
thousands)
Homecare $ 123,687 79.3% $ 38,709 80.7% 31.3%
Nursing Homes 18,041 11.6% 5,583 11.6% 30.9%
Hospitals 14,204 9.1% 3,716 7.7% 26.2%
--------- ---------
Total, at constant
exchange rates 155,932 48,008 30.8%
Effect of foreign
exchange (39,070) (12,029)
--------- ---------
Total, as reported $ 116,862 $ 35,979
========= ---------
SG&A, at constant
exchange rates $ 39,524
Effect of foreign
exchange (9,576)
---------
SG&A, as reported $ 29,948
---------
Operating Income, at
constant exchange
rates $ 8,484
Effect of foreign
exchange (2,453)
---------
Operating Income, as
reported $ 6,031
=========
Six Months Ended March 31, 2008
------------------------------------------------------
Gross Gross
Revenue % Margin % Margin %
---------- --------- ---------- --------- ---------
(Amounts in
thousands)
Homecare $ 110,494 74.4% $ 34,139 77.0% 30.9%
Nursing Homes 22,340 15.0% 6,644 15.0% 29.7%
Hospitals 15,751 10.6% 3,571 8.0% 22.7%
---------- ----------
Total, at constant
exchange rates 148,585 44,354 29.9%
Effect of foreign
exchange - -
---------- ----------
Total, as reported $ 148,585 $ 44,354
========== ----------
SG&A, at constant
exchange rates $ 39,648
Effect of foreign
exchange -
----------
SG&A, as reported $ 39,648
----------
Operating Income, at
constant exchange
rates $ 4,706
Effect of foreign
exchange -
----------
Operating Income, as
reported $ 4,706
==========For the fiscal six months ended March 31, 2009, at constant
exchange rates,
revenues increased by $7.3 million, or 4.9%, to $155.9 million,
compared
with $148.6 million reported during the same period in fiscal
2008.
Contributing to the increase in revenues was Allied's Homecare
revenues,
which grew by 11.9% to $123.7 million. Nursing Home revenues
declined by
19.2% to $18.0 million. Hospitals revenues decreased by
9.8% to $14.2
million. After the unfavorable impact of currency exchange
of $39.0
million, revenues decreased to $116.9 million. At constant exchange rates, total gross profit for the fiscal
six months
ended March 31, 2009, increased 8.2% to $48.0 million, compared
with $44.4
million reported for the comparable period in fiscal 2008.
Gross profit
margin for the fiscal six months ended March 31, 2009, increased
to 30.8%
from 29.9% for the comparable prior period. Foreign exchange
decreased
gross profit by $12.0 million to $36.0 million for the quarter. At constant exchange rates, SG&A for the fiscal six
months ended March 31,
2009, was $39.5 million, compared with $39.6 million reported
last year.
Foreign exchange decreased costs by $9.6 million to $29.9
million for the
quarter. At constant exchange rates, operating income for the fiscal
six months
ended March 31, 2009, increased to $8.5 million, compared
to operating
income of $4.7 million reported during the 2008 six months
ended March 31.
Foreign exchange decreased operating income by $2.5 million
to $6.0 million
for the six-month period. Income from continuing operations for the six months ended
March 31, 2009,
increased to $4.6 million as compared with $3.4 million
reported during the
2008 fiscal six-month period. Diluted earnings per share
from continuing
operations was 10.2 cents for the six month period ended
March 31, 2009,
compared to diluted earnings per share from continuing operations
of 7.6
cents last year. At March 31, 2009, and September 30, 2008, Allied's cash
balance was $28.1
million (£19.7 million) and $26.2 million (£14.4
million), respectively,
representing an underlying increase in the cash balance
of £5.3 million. For the fiscal six months ended March 31, 2009, depreciation
and
amortization was $1.8 million and capital expenditures were
$1.6 million.
Day Sales Outstanding was eighteen days at March 31, 2009,
and twenty-two
days at March 31, 2008. The March 31, 2009, DSO was the
lowest level
achieved by our company and was due to timing of cash collections
mainly
from the local governmental bodies as a result of the end
of their fiscal
period as well as the timing of our invoicing. Management Discussion: "We are pleased with our continued growth in our homecare
business, which
showed an increase of 12% over the prior year period. With
approximately
80% of our revenues coming from the homecare business, the
key dynamics of
an aging population, the trend to provide more care in the
homecare
environment, and the scope for further consolidation of
the supplier base,
we believe we are well placed to continue our growth in
homecare as one of
the U.K.'s leading providers," commented Sandy Young, Chief
Executive
Officer of Allied. Mr. Young continued: "Our level of contract wins over the
last few months
has been strong. Our goal over the next few quarters will
be to recruit
and retain staff to fulfill new contracts, while ensuring
our quality of
service is maintained. Due to the current economic environment
in the U.K.
we have noted that it is becoming somewhat easier to recruit
staff and our
retention rates are improving." "In the second quarter of fiscal 2009, however, we experienced
reductions
in our nursing home revenues very similar to the reductions
we experienced
in the first quarter of fiscal 2009. We believe the use
of temporary staff
has reduced in nursing homes, but we also believe, that
in the short term,
the permanent staff in the nursing homes are working additional
shifts.
This is most likely a response to the problems in the economy." "While our Hospitals revenues this quarter were slightly
lower than the
first quarter, we believe this business, which does fluctuate
between
quarters, will remain at similar levels over the next few
quarters until
the next framework agreements, which are currently in the
formal re-tender
stage, are implemented. If we are successful in this re-tender,
there may
be future growth opportunities for this business." "As noted in our previous quarter's press release, with
nearly all our
operations in the United Kingdom, I believe it is important
for investors
to see the underlying revenues and gross profits in pound
currency as
detailed below. Our SG&A costs, excluding exchange effects,
are very
similar to the prior year despite the increase in revenues
that we have
generated."
Q1 2009 Q2 2009
----------------------- -----------------------
Gross Gross
Revenue Margin Revenue Margin
----------- ----------- ----------- -----------
(Amounts in thousands)
Homecare GBP 30,620 GBP 9,487 GBP 30,858 GBP 9,753
Nursing Homes 4,808 1,477 4,159 1,298
Hospital Staffing 3,612 973 3,448 874
----------- ----------- ----------- -----------
Total GBP 39,040 GBP 11,937 GBP 38,465 GBP 11,925
Foreign exchange rate 1.58 1.58 1.44 1.44
----------- ----------- ----------- -----------
Total $ 61,528 $ 18,813 $ 55,334 $ 17,166
=========== =========== =========== ===========
Q1 2008 Q2 2008
------------------------- -------------------------
Gross Gross
Revenue Margin Revenue Margin
------------ ------------ ------------ ------------
(Amounts in thousands)
Homecare GBP 27,358 GBP 8,491 GBP 27,561 GBP 8,476
Nursing Homes 5,730 1,706 5,373 1,596
Hospital Staffing 3,473 767 4,358 1,009
------------ ------------ ------------ ------------
Total GBP 36,561 GBP 10,964 GBP 37,292 GBP 11,081
Foreign exchange rate 2.05 2.05 1.98 1.98
------------ ------------ ------------ ------------
Total $ 74,770 $ 22,423 $ 73,815 $ 21,931
============ ============ ============ ============
Q3 2008 Q4 2008
------------------------- -------------------------
Gross Gross
Revenue Margin Revenue Margin
------------ ------------ ------------ ------------
(Amounts in thousands)
Homecare GBP 29,130 GBP 9,294 GBP 30,218 GBP 9,447
Nursing Homes 4,969 1,531 5,140 1,554
Hospital Staffing 3,926 888 4,088 1,050
------------ ------------ ------------ ------------
Total GBP 38,025 GBP 11,713 GBP 39,446 GBP 12,051
Foreign exchange rate 1.97 1.97 1.90 1.90
------------ ------------ ------------ ------------
Total $ 75,024 $ 23,120 $ 74,968 $ 22,911
============ ============ ============ ============
Mr. Young concluded: "Our operating income for the quarter
of $4.1 million,
excluding exchange, compares to $2.5 million for the same
prior year
quarter which is an increase of 65% and reflects the continued
improvements
we are making across the business to help us affirm our
position as one of
the leaders in the U.K. homecare market place."
Paul Weston, the Chief Financial Officer, also commented:
"The Board is
well advanced in its selection of a retained investment
banker to help
advise the Board on its capital deployment strategy to ensure
shareholder
value is maximized in the medium term." The Company also recently announced the implementation of
the Chief
Executive Officer's Long Term Incentive Plan, which targets
growth in
sales, earnings per share and earnings before interest,
taxes and
amortization. In finalizing the Long Term Incentive Plan,
the Board
commissioned external consultants to review the business
plan projections
of the Company. The conclusion of that exercise confirmed
that the Company
should continue to focus on providing services to the local
authority,
private homecare, individuals with learning disabilities,
and continuing
care as they are all growing business sectors where the
Company already has
market leading positions. The Company also noted that Jeffrey S. Peris, a board member
since 1998,
has been appointed interim non-executive chairman of the
Board in place of
H.J. Mark Tompkins who will leave the Board following the
annual
shareholders meeting on June 10, 2009. Conference Call Information -- May 5, 2009 at 10:00AM EDT
/ 3:00PM GMT: Allied invites all those interested in listening to management's
discussion
of the results to join the call by dialing 877-407-0778
for domestic
participants, and 201-689-8565 for international participants
today, May 5,
2009, at 10:00AM EDT / 3:00PM GMT. Participants may also
access a live
webcast of the conference call through the "Investors" section
of Allied
Healthcare's Website: www.alliedhealthcare.com.
A replay will be available
for one week following the call by dialing 877-660-6853
for domestic
participants, and 201-612-7415 for international participants.
When
prompted, please enter account number 286 and conference
ID number 321299.
The presentation will be available and archived on the Company's
website
for ninety days.
In addition to disclosing results of operations that are
determined in
accordance with generally accepted accounting principles
("GAAP"), this
press release also discloses non-GAAP results of operations
that exclude or
include certain charges. These non-GAAP measures adjust
for foreign
exchange effects. Management believes that the presentation
of these
non-GAAP measures provides useful information to investors
regarding the
Company's results of operations, as these non-GAAP measures
allow investors
to better evaluate ongoing business performance. Investors
should consider
non-GAAP measures in addition to, and not as a substitute
for, financial
measures prepared in accordance with GAAP. A reconciliation
of the non-GAAP
measures disclosed in this press release with the most comparable
GAAP
measures are included in the financial tables included in
this press
release. ABOUT ALLIED HEALTHCARE INTERNATIONAL INC. Allied Healthcare International Inc. (http://www.alliedhealthcare.com)
is a
leading provider of flexible healthcare staffing services
in the United
Kingdom. Allied operates a community-based network of approximately
one
hundred branches with the capacity to provide carers (known
as home health
aides in the U.S.), nurses, and specialized medical personnel
to locations
covering approximately 90% of the U.K. population. Allied
meets the needs
of private patients, community care, nursing and care homes,
and hospitals.
FORWARD-LOOKING STATEMENTS Certain statements contained in this news release may be
forward-looking
statements. These forward-looking statements are based on
current
expectations and projections about future events. Actual
results could
differ materially from those discussed in, or implied by,
these
forward-looking statements. Factors that could cause actual
results to
differ from those implied by the forward-looking statements
include:
general economic and market conditions; Allied's ability
to continue to
recruit and retain flexible healthcare staff; Allied's ability
to enter
into contracts with local government social services departments,
NHS
Trusts, hospitals and other healthcare facility clients
on terms attractive
to Allied; the general level of patient occupancy at our
clients' hospitals
and healthcare facilities; dependence on the proper functioning
of Allied's
information systems; the effect of existing or future government
regulation
of the healthcare industry, and Allied's ability to comply
with these
regulations; the impact of medical malpractice and other
claims asserted
against Allied; the effect of regulatory change that may
apply to Allied
and that may increase costs and reduce revenues and profitability;
Allied's
ability to use net operating loss carry forwards to offset
net income; the
effect that fluctuations in foreign currency exchange rates
may have on our
dollar-denominated results of operations; and the impairment
of goodwill,
of which Allied has a substantial amount on the balance
sheet, may have the
effect of decreasing earnings or increasing losses. Other
factors that
could cause actual results to differ from those implied
by the
forward-looking statements in this press release include
those described in
Allied's most recently filed SEC documents, such as its
most recent annual
report on Form 10-K, all quarterly reports on Form 10-Q
and any current
reports on Form
8-K filed since the date of the last Form 10-K. Allied undertakes
no
obligation to publicly update or revise any forward-looking
statements,
whether as a result of new information, future events, or
otherwise.
ALLIED HEALTHCARE INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
-------------------- --------------------
March 31, March 31, March 31, March 31,
2009 2008 2009 2008
--------- --------- --------- ---------
Revenues:
Net patient services $ 55,334 $ 73,815 $ 116,862 $ 148,585
--------- --------- --------- ---------
Cost of revenues:
Patient services 38,168 51,884 80,883 104,231
--------- --------- --------- ---------
Gross profit 17,166 21,931 35,979 44,354
Selling, general and
administrative expenses 14,389 19,455 29,948 39,648
--------- --------- --------- ---------
Operating income 2,777 2,476 6,031 4,706
Interest income 115 171 379 404
Interest expense (7) (47) (14) (103)
Foreign exchange loss (45) (12) (367) (149)
--------- --------- --------- ---------
Income before income
taxes and discontinued
operations 2,840 2,588 6,029 4,858
Provision for income taxes 696 824 1,418 1,416
--------- --------- --------- ---------
Income from continuing
operations 2,144 1,764 4,611 3,442
--------- --------- --------- ---------
Discontinued operations:
Income from discontinued
operations, net of taxes 367 - 367 -
--------- --------- --------- ---------
Net income $ 2,511 $ 1,764 $ 4,978 $ 3,442
========= ========= ========= =========
Basic and diluted net income
per share of common stock
Income from continuing
operations $ 0.05 $ 0.04 $ 0.10 $ 0.08
Income from discontinued
operations 0.01 - 0.01 -
--------- --------- --------- ---------
Net income per share of common
stock $ 0.06 $ 0.04 $ 0.11 $ 0.08
========= ========= ========= =========
Weighted average number of
common shares outstanding:
Basic 44,986 44,986 44,986 44,986
========= ========= ========= =========
Diluted 44,986 45,059 44,986 45,116
========= ========= ========= =========
ALLIED HEALTHCARE INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
March 31, September 30,
2009 2008
(Unaudited)
-------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $ 28,072 $ 26,199
Restricted Cash - 136
Accounts receivable, less allowance for
doubtful accounts of $632 and $823,
respectively 11,047 17,774
Unbilled accounts receivable 13,958 15,892
Deferred income taxes 2,383 474
Prepaid expenses and other assets 1,133 1,375
Taxes receivable 292 -
Assets of discontinued operations - 182
-------------- --------------
Total current assets 56,885 62,032
Property and equipment, net 7,055 8,574
Goodwill 85,975 109,292
Other intangible assets, net 2,043 3,345
Taxes receivable - 19
-------------- --------------
Total assets $ 151,958 $ 183,262
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,385 $ 1,614
Accrued expenses, inclusive of payroll and
related expenses 21,905 28,244
Taxes payable 15 -
Liabilities of discontinued operations - 624
-------------- --------------
Total current liabilities 23,305 30,482
Deferred income taxes 54 110
-------------- --------------
Total liabilities 23,359 30,592
-------------- --------------
Commitments and contingencies (Notes 7,
8 and 12)
Shareholders' equity:
Preferred stock, $.01 par value; authorized
10,000 shares, issued and outstanding -
none - -
Common stock, $.01 par value; authorized
80,000 shares, issued 45,571 and 45,571
shares, respectively 456 456
Additional paid-in capital 241,216 241,018
Accumulated other comprehensive (loss)
income (27,428) 1,819
Accumulated deficit (83,351) (88,329)
-------------- --------------
130,893 154,964
Less cost of treasury stock (585 shares) (2,294) (2,294)
-------------- --------------
Total shareholders' equity 128,599 152,670
-------------- --------------
Total liabilities and shareholders'
equity $ 151,958 $ 183,262
============== ==============
ALLIED HEALTHCARE INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
March 31, March 31,
2009 2008
-------------- --------------
Cash flows from operating activities:
Net income $ 4,978 $ 3,442
Adjustments to reconcile net income to
net cash provided by operating
activities:
Income from discontinued
operations (367) -
Depreciation and amortization 1,198 1,665
Amortization of intangible
assets 608 855
Foreign exchange loss 104 -
Provision for (reversal of)
allowance for doubtful
accounts 106 (516)
Loss (gain) on sale of fixed
assets 5 (23)
Stock based compensation 198 379
Deferred income taxes 1,403 (96)
Changes in operating assets and
liabilities, excluding the effect of
businesses acquired and sold:
Decrease in accounts receivable 2,920 3,131
Increase in prepaid expenses
and other assets (1,700) (4,632)
Decrease in accounts payable
and other liabilities (2) (3,941)
-------------- --------------
Net cash provided by
continuing operations 9,451 264
Net cash used in
discontinued operations - (572)
-------------- --------------
Net cash provided by (used
in) operating activities 9,451 (308)
-------------- --------------
Cash flows from investing activities:
Capital expenditures (1,574) (1,006)
Proceeds from sale of business 113 54,692
Proceeds from sale of property and
equipment 1 49
Payments on acquisitions payable (170) -
-------------- --------------
-------------- --------------
Net cash (used in) provided
by investing activities (1,630) 53,735
-------------- --------------
Cash flows from financing activities:
Payments on revolving loan - (25,149)
Payments on invoice discounting
facility - (4,546)
Payments on long-term debt - (24,143)
Proceeds from sale of interest rate
swap agreements - 629
-------------- --------------
Net cash used in financing
activities - (53,209)
-------------- --------------
Effect of exchange rate on cash (5,948) -
-------------- --------------
Increase in cash 1,873 218
Cash and cash equivalents, beginning of
period 26,199 20,241
-------------- --------------
Cash and cash equivalents, end of period $ 28,072 $ 20,459
============== ==============
Supplemental cash flow information:
Cash paid for interest $ 14 $ 1,117
============== ==============
Cash paid for income taxes, net $ - $ 3,128
============== ==============
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