ST. LOUIS, Sept. 25 /PRNewswire-FirstCall/ -- Allied Healthcare Products, Inc., reported that recession-driven budget cuts in its healthcare markets led to a $4.3 million, or 7.6 percent, decrease in sales for 2009 and a net loss for the fiscal year of $2.12 per share, compared to a profit of 11 cents per share in fiscal year 2008. This includes the effect of a non-cash accounting charge of $16.0 million relating to the impairment of goodwill in the fourth quarter ended June 30, 2009.
The impairment was identified during the company's annual evaluation of the carrying value of goodwill and reflects the decline of the Allied stock price during the past year and a general downturn in orders, operating profits and cash flows as a result of the current recession. This non-cash charge does not affect operations or cash flow. After this impairment charge, Allied will no longer have a goodwill balance and will not record any additional goodwill impairment.
For the quarter ended June 30, 2009, Allied reported a net loss of $16.1 million, or $2.04 per diluted share, on sales of $12.7 million, compared to net income of $0.7 million, or 8 cents per diluted share, for the prior year period. Results for the fourth quarter of 2009 include the $16.0 million charge for impairment of goodwill.
Allied sales in domestic hospital and emergency markets suffered most in 2009. The domestic hospital construction market remained flat, reflecting lead times that preceded the recession. Sales to international markets fell less than 3 percent, reflecting the relative strength of emerging economies.
Allied studies indicate that lower sales did not reflect loss of market share to competitors. Instead, lower sales represented a decrease in overall market demand caused by the recession in the United States and global markets.
Allied believes that its new line of mass casualty ventilators represents a potential boost to future sales. These products are specifically designed for use in pandemics like the current H1N1 pandemic, natural disasters like Katrina and terrorist attacks such as 9/11. Introduced late in fiscal 2009, these products did not affect sales in the fiscal year. However, "Allied mass casualty ventilators have attracted strong interest wherever we have had an audience because the H1N1 pandemic has heightened awareness among planners that ventilators represent a weak link in our preparedness to address mass casualty events," said Earl Refsland, president and chief executive officer.
Allied ventilators solve not only the problem of a lack of ventilators but also the corollary problem of a lack of respiratory care therapists, Refsland said, because they cost a fraction of the price of full-featured ventilators and were designed to be operated by non-professionals after brief instruction. Allied ventilators also were designed for harsh field conditions outside hospital environments and can operate off-the-grid on batteries, making them viable, affordable back-ups for natural disasters, terrorist incidents and use in remote areas, Refsland said.
Allied also announced that earnings in the first quarter of fiscal year 2010 will be affected by a non-cash charge attributable to the company's grant to its chief executive officer of an option to purchase 320,000 shares of common stock in the next six years. The option is subject to shareholder approval at the next annual meeting of shareholders but is otherwise fully vested. Assuming approval is obtained, generally accepted accounting principles will require Allied to recognize the full fair value of this option as a compensation related expense in the first quarter of fiscal 2010. The company currently estimates fair value of the option to be approximately $610,000.
Allied Healthcare Products, Inc. manufactures a variety of respiratory products used in the healthcare industry in a range of hospital and alternate care settings including sub-acute facilities, home healthcare and emergency medical care. Allied's product lines include respiratory care products, medical gas equipment and emergency medical products. Allied products are marketed to hospitals, hospital equipment dealers, hospital construction contractors, home healthcare dealers and emergency medical products dealers.
"SAFE HARBOR" STATEMENT: Statements contained in this release that are not historical facts or information are "forward-looking statements." Words such as "believe," "expect," "intend," "will," "should," and other expressions that indicate future events and trends identify such forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause the outcome and future results of operations and financial condition to be materially different than stated or anticipated based on the forward-looking statements. Such risks and uncertainties include both general economic risks and uncertainties, risks and uncertainties affecting the demand for and economic factors affecting the delivery of health care services, and specific matters which relate directly to the Company's operations and properties as discussed in its periodic filings with the Securities and Exchange Commission. The Company cautions that any forward-looking statement contained in this report reflects only the belief of the Company or its management at the time the statement was made. Although the Company believes such forward-looking statements are based upon reasonable assumptions, such assumptions may ultimately prove inaccurate or incomplete. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement was made.
ALLIED HEALTHCARE PRODUCTS, INC. CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) Three months ended, Twelve months ended, June 30, June 30, 2009 2008 2009 2008 Net sales $12,710,683 $14,692,626 $52,072,676 $56,364,111 Cost of sales 9,595,502 10,577,599 40,273,089 43,006,007 Gross profit 3,115,181 4,115,027 11,799,587 13,358,104 Selling General and administrative expenses 3,259,500 3,096,161 13,041,564 12,084,971 Impairment of goodwill 15,979,830 - 15,979,830 - Income (loss) from operations (16,124,149) 1,018,866 (17,221,807) 1,273,133 Interest income (11,971) (25,245) (60,277) (118,119) Other, net 13,479 24,501 50,062 60,005 1,508 (744) (10,215) (58,114) Income (loss) before provision for (benefit from) income taxes (16,125,657) 1,019,610 (17,211,592) 1,331,247 Provision for (benefit from) income taxes (41,854) 330,327 (449,779) 448,748 Net income (loss) ($16,083,803) $689,283 ($16,761,813) $882,499 Net income (loss) per share - Basic ($2.04) $0.09 ($2.12) $0.11 Net income (loss) per share - Diluted ($2.04) $0.08 ($2.12) $0.11 Weighted average common shares Outstanding - Basic 7,901,327 7,883,907 7,898,782 7,883,659 Weighted average common shares Outstanding - Diluted 7,901,327 8,124,826 7,898,782 8,119,776 ALLIED HEALTHCARE PRODUCTS, INC. CONSOLIDATED BALANCE SHEET (UNAUDITED) June 30, 2009 June 30, 2008 ASSETS Current assets: Cash and cash equivalents $1,943,364 $6,149,015 Accounts receivable, net of allowances of $300,000 6,172,437 6,441,683 Inventories, net 12,663,938 12,046,450 Income tax receivable 937,273 - Other current assets 327,203 394,975 Total current assets 22,044,215 25,032,123 Property, plant and equipment, net 10,799,089 10,542,573 Goodwill - 15,979,830 Other assets, net 390,627 703,328 Total assets $33,233,931 $52,257,854 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $1,633,568 $2,590,804 Other accrued liabilities 2,316,558 2,960,334 Deferred income taxes 419,213 500,238 Deferred revenue 688,200 690,000 Total current liabilities 5,057,539 6,741,376 Deferred revenue 1,491,100 2,177,500 Commitments and contingencies Stockholders' equity: Preferred stock; $0.01 par value; 1,500,000 shares authorized; no shares issued and outstanding - - Series A preferred stock; $0.01 par value; 200,000 shares authorized; no shares issued and outstanding - - Common stock; $0.01 par value; 30,000,000 shares authorized; 10,204,819 and 10,188,569 shares issued at June 30, 2009 and June 30, 2008, respectively; 7,901,327 and 7,885,077 shares outstanding at June 30, 2009 and June 30, 2008, respectively 102,048 101,886 Additional paid-in capital 47,632,049 47,524,084 Retained earnings (deficit) (317,377) 16,444,436 Less treasury stock, at cost; 2,303,492 shares at June 30, 2009 and June 30, 2008, respectively (20,731,428) (20,731,428) Total stockholders' equity 26,685,292 43,338,978 Total liabilities and stockholders' equity $33,233,931 $52,257,854
Allied Healthcare Products, Inc.
CONTACT: Daniel C. Dunn, Chief Financial Officer of Allied Healthcare
Products, Inc., +1-314-771-2400
Web Site: http://www.alliedhpi.com/
