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UK — Allied Healthcare Q1 revenues up by 12.8% and company hits acquisition trail

10 February 2010
Allied Healthcare International Inc. (AHCI:NSQ), the provider of flexible healthcare staffing services in the UK but quoted on NASDAQ, has issued financial results for its fiscal 2010 first quarter ended 31 December 2009.

For the first quarter of fiscal 2010 total revenue increased 8.8%, to $67.0 million, compared with $61.5 million reported during the same period in fiscal 2009.
 
Allied's Homecare revenue grew 17.3% to $56.6 million, while Nursing Homes revenue declined -32.2% to $5.1 million and Hospitals revenue declined -7.8% to $5.3 million. After the favourable impact of currency exchange of $2.4 million, revenue increased 12.8% year over year to the reported $69.4 million for the 2010 first fiscal quarter.

Total gross profit for the first fiscal quarter increased 7.1% to $20.2 million, from $18.8 million for the comparable quarter in fiscal 2009. Gross profit as a percentage of revenue was 30.1%, compared with 30.6% for the comparable prior-year period. Foreign exchange increased gross profit by $0.7 million to the reported $20.9 million for the 2010 first fiscal quarter.

Selling, General & Administrative Expenses (SG&A) for the first fiscal quarter was $16.5 million (24.7% of revenues), an increase of 6.1%, from $15.6 million (25.3% of revenues) reported last year. Foreign exchange increased costs by $0.6 million to the reported $17.1 million for the 2010 first fiscal quarter.

Operating income for the first quarter of fiscal 2010 increased 11.9% to $3.6 million from $3.3 million a year ago. Foreign exchange increased operating income by $0.2 million to the reported $3.8 million for the 2010 first fiscal quarter.

Net income for the first quarter of fiscal 2010 was $2.9 million, or $0.06 per diluted share, compared with $2.5 million, or $0.05 per diluted share, reported during the 2009 first fiscal quarter.
 
Sandy Young, Chief Executive Officer of Allied, commented "Allied's Homecare revenue increased by 17.3%, exceeding our expected growth range of 10-15%. We continue to believe the current market dynamics, such as an aging population, the lower cost of Homecare provision and the continued consolidation of local authority suppliers, all favour growth in demand for our Homecare services. We also remain positive about the opportunities ahead of our Continuing Care and Learning Disability businesses."

"We have noticed recently that some local authorities and Primary Care Trusts are using consultants to review pricing and margins. This is to be expected with the current public sector debt levels and anticipated controls on spending after this year's UK elections. We will continue to monitor this closely."

"The deterioration in our Nursing Homes business continues and although we have trialled some growth projects, there is no clear sign of any improvement to this business as the market for Nursing Homes services, in general, appears to be depressed."

"Our Hospitals business revenues decreased by -7.8%. However, our London hospital staffing branch, which represents over 70% of our Hospitals revenue, grew by over 50% and was successful in maintaining a gross profit percentage similar to that of the prior year. However, this was offset by significant declines in our regional Hospitals business, which traditionally was at higher margins. We believe that our plan to open a dedicated Hospitals branch in the Midlands region is a sensible approach to growing this regional business on a similar model as our London operation. If successful, we will consider extending this hub approach into other key cities."
 
"We continue to make investments to improve our service and quality, and our IT rollout continues as planned with a targeted completion date in the second half of 2011. At that stage, we will have a standard IT platform across our branches which will allow us to utilise technology to a much greater extent in the administration, management and control of our care services. To date we have over 30 branches utilising the new system and we incurred operating expenses associated with the Coldharbour project of $0.3 million in the first quarter of fiscal 2010 as compared to $0.1 million in the same quarter last year."

Mr. Young concluded, "following completion of the capital resources review by Piper Jaffray, the Board has concluded that the Company is well placed in an expanding market to pursue accretive strategic acquisitions in the near term. In addition to these acquisition opportunities, the Company continues to focus on organic growth and enhancing shareholder value."

Paul Weston, Chief Financial Officer of Allied, said "we are pleased with our financial performance during the quarter. Our strong financial condition with a cash balance at the end of the quarter of $35.8 million (22.5 million Pounds) and positive cash flow provides our Company with sufficient resources to fund our strategic initiatives and expand our market footprint."
 
At close of trading in New York yesterday Allied Healthcare's shares were down by -3.04% to $2.55.

 

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