Allied Healthcare International Inc. Reports Fiscal 2006 Second Quarter Results.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Allied Healthcare International Inc.:
Fiscal 2006 Fiscal 2005
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Second quarter Second quarter
Revenue ($m) 71.1 90.8
Gross Profit ($m) 21.5 26.2
Gross Margin % 30.3% 28.8%
Diluted EPS ($) 0.06 0.11
Year to date Year to date
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Cash flows from operations ($m) 15.7 9.2
Allied Healthcare International Inc. (Nasdaq: AHCI AHCI Advanced Host Controller Interface AHCI Art and Humanities Index ; AIM: AHI AHI, n.pr See Aviation Health Institute. ), a leading provider of flexible healthcare staffing services in the United Kingdom, has reported results for the fiscal 2006 second quarter ended March 31, 2006. Allied's revenue for the second quarter of 2006 was $71.1 million, a decrease of 21.7% compared to $90.8 million during the same period in 2005. Gross profit decreased by 17.8% to $21.5 million this quarter, compared to $26.2 million for the comparable period last year. In both of the results, more than 6% of the reduction can be attributed to currency exchange rates. Gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. remained strong at 30.3% in the quarter, compared with 28.8% during the same period last year. Net income for the quarter ended March 31, 2006 was $2.6 million, or $0.06 per diluted share, compared with net income of $5.1 million, or $0.11 per diluted share, during the comparable period in fiscal 2005. Cash flows from operations for the year to date increased 71% from $9.2 million to $15.7 million. Allied's core Social Services social services Noun, pl welfare services provided by local authorities or a state agency for people with particular social needs social services npl → servicios mpl sociales business continued to expand during the second quarter, showing a growth in gross profit of 6.3% for the year to date. The expansion of the Social Services sector is due to a greater demand from the elderly population and increased contracting activity with local governments. During the second quarter, Allied was awarded contracts from a London Borough
Allied's National Health Services health services Managed care The benefits covered under a health contract (NHS NHS abbr. National Health Service NHS (in Britain) National Health Service ) revenue declined 36% for the year to date. As a result, the Company's gross profit mix is currently as follows: NHS 16%; Nursing Homes 16%; Social Services, including private clients, 64%; and Oxygen 4%. The reduction in NHS business was driven by a decrease in expenditures and downward price pressure for agency nurses by the NHS. Allied will continue to emphasize the Social Services sector and expanding its long-term care long-term care (LTC), n the provision of medical, social, and personal care services on a recurring or continuing basis to persons with chronic physical or mental disorders. services. This favorable flexible staffing mix is reflected in Allied's 30.3% gross margin for the quarter verses 28.8% for the second quarter last year. Timothy Aitken, Allied Chairman and Chief Executive Officer, commented: "Allied's network of branches is delivering more social-care and home-care visits through its existing branch network. The challenge now, in the second half of 2006, is for the Company to capture increased market share through social services tenders with local authorities while simultaneously maintaining our reputation for clinical excellence." On February 1, 2006, Allied began delivering at-home respiratory therapy respiratory therapy Medical profession concerned with assisting the respiratory function of individuals who have severe lung disorders. Practices include suctioning to clear secretions from the airway, use of aerosol mists (sometimes medicated) or gases to ease breathing, to patients through its new five-year oxygen contract. The Company had anticipated a census of 12,000 initial oxygen patients, with a transition rate of 200 per day; however, it received 20,000-plus calls within the first week of the contract. As a consequence, the Company incurred higher-than-anticipated implementation expenses for building the infrastructure and distribution network required to absorb the accelerated transition of oxygen patients from community-based pharmacies. This investment in Allied Respiratory equated to approximately 1.5 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. in the second quarter. Management believes this incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. investment will ensure patient care with the goal of increasing earnings from respiratory therapy to historical levels by the fourth quarter. During the second quarter, the Company also conducted a comprehensive staffing and expenditure review throughout its branch network, as well as within its administrative head office in Staffordshire. This effort led to a headcount reduction of more than 60 full-time equivalents Full-time equivalent (FTE) is a way to measure a worker's involvement in a project, or a student's enrollment at an educational institution. An FTE of 1.0 means that the person is equivalent to a full-time worker, while an FTE of 0.5 signals that the worker is only half-time. and is expected to generate annual savings of approximately $3.6 million, which should be realized by the fourth quarter. As a result of this downsizing (1) Converting mainframe and mini-based systems to client/server LANs. (2) To reduce equipment and associated costs by switching to a less-expensive system. (jargon) downsizing , however, the Company paid approximately $200,000 in severance charges for terminated employment contracts. Allied is focused on reducing Selling, General and Administrative, which represented approximately 24.6% of gross revenues in the second quarter, compared to 19.8% during the same period the year before. The increase in expenses is mainly attributable to higher depreciation ($0.4 million) for the new Information Technology system and a $0.8 million investment in the Company's respiratory-distribution business. Allied invites all those interested in hearing management's discussion of the second-quarter results to join the conference call by dialing 877-407-9205 on Thursday, May 11, 2006, at 10:00 AM EST EST electroshock therapy. EST abbr. electroshock therapy . International participants may access the call by dialing 201-689-8054. A replay will be available for one week following the day of the call by dialing 877-660-6853 for domestic participants and 201-612-7415 for international participants. Refer to replay passcode account number 286 and conference ID number 200986 when prompted. Participants may also access a live webcast of the conference call through the "Investors" section of Allied Healthcare's website, www.alliedhealthcare.com. The presentation will be available and archived for 90 days. 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 100 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 Homes and Hospitals. The company also supplies medical-grade oxygen for use in respiratory therapy to the U.K. pharmacy market and Northern Ireland Northern Ireland: see Ireland, Northern. Northern Ireland Part of the United Kingdom of Great Britain and Northern Ireland occupying the northeastern portion of the island of Ireland. Area: 5,461 sq mi (14,144 sq km). Population (2001): 1,685,267. and oxygen concentrators An oxygen concentrator, also called an oxygen generator, is a device used to provide oxygen therapy to a patient at substantially higher concentrations than those of ambient air, used as an alternative to tanks of compressed oxygen. to customers in Northern Ireland. Following the award of the new oxygen contracts, the Company now also provides unified oxygen services directly to customers in the South East of England The East of England is one of the nine official regions of England. It was created in 1994 and was adopted for statistics from 1999. It includes the ceremonial counties of Essex, Hertfordshire, Bedfordshire, Cambridgeshire, Norfolk and Suffolk. . FORWARD-LOOKING STATEMENTS forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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: Allied's ability to continue to recruit and retain qualified flexible healthcare staff; ability to enter into contracts with hospitals and other healthcare facility customers on terms attractive to Allied; the general level of patient occupancy at hospital and healthcare facilities of Allied's customers demand for the services provided by Allied; the ability to successfully implement acquisition and integration strategies; dependence on the proper functioning of Allied's information systems; the effect of existing or future government regulation of the healthcare industry, and ability to comply with these regulations; the impact of medical malpractice Improper, unskilled, or negligent treatment of a patient by a physician, dentist, nurse, pharmacist, or other health care professional. and other claims asserted against Allied; the effect of regulatory change that may apply to Allied and that may increase costs and reduce revenue and profitability; the ability to use net operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. carry forwards to offset net income; and the impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , all quarterly reports on form 10-Q Form 10-Q See 10-Q. and any current reports on Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 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
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March 31, March 31, March 31, March 31,
2006 2005 2006 2005
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Total revenues $ 71,098 $ 90,815 $146,953 $ 177,378
Gross profit 21,537 26,196 45,262 51,410
Selling, general and
administrative expenses 17,460 18,023 35,591 35,250
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Operating income 4,077 8,173 9,671 16,160
Interest and other
expense, net 940 734 1,876 1,943
Foreign exchange (income)
loss (15) 18 26 11
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Income before income
taxes 3,152 7,421 7,769 14,206
Provision for income taxes 583 2,366 1,794 4,324
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Net income $ 2,569 $ 5,055 $ 5,975 $ 9,882
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Basic and diluted net
income per share of
common stock $ 0.06 $ 0.11 $ 0.13 $ 0.22
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Weighted average number of
common shares outstanding:
Basic 44,944 44,593 44,903 44,529
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Diluted 45,152 45,172 45,184 45,056
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