Allied Healthcare Products Returns to Profitability By Offsetting Depressed Sales with Cost Reductions

ST. LOUIS, Feb. 8 /PRNewswire-FirstCall/ -- Cost reductions offset a recession-driven sales decline to move Allied Healthcare Products (Nasdaq: AHPI) narrowly back into profitability in the second quarter of fiscal year 2010.

Sales for the quarter ended December 31, 2009 declined almost 9 percent, from approximately $12.5 million during the same quarter last year to $11.4 million in the current quarter. However, Allied's costs of sales were reduced even more sharply, from approximately $9.8 million to less than $8.5 million, or almost 14 percent.  Also, selling, general and administrative costs for the quarter were reduced to $2.9 million from $3.4 million, a reduction of almost 15 percent.  The result was a break-even quarter with net income of about $22,000, equating to zero cents per share, versus a loss of $436,000, or negative six cents per share, in the same quarter last year.

Cost reductions were achieved throughout the company, including operations, personnel and other overhead.  

Allied's sales in U.S. markets for hospital and emergency equipment have been particularly hard hit by recession-driven budget cuts by hospitals and municipalities.  "At some point, this basic equipment must be replaced, so sales in these markets are expected to return to normal levels.  What we do not, and cannot, know is when that will be," said Earl Refsland, Allied president and chief executive officer.    

In the meantime, Allied has made preparations to begin manufacturing a formerly outsourced product in the second half of fiscal 2010, realizing a significant new cost reduction, Refsland said.

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, emergency medical products and mass casualty ventilators.  Allied's 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,            Six months ended,
                             December 31,                 December 31,
                        ---------------------         --------------------
                        2009             2008         2009            2008
                        ----             ----         ----            ----
    
    Net sales       $11,414,908      $12,531,342  $22,738,584     $26,972,353
    Cost of sales     8,470,169        9,821,746   17,390,969      20,761,703
                      ---------        ---------   ----------      ----------
    Gross profit      2,944,739        2,709,596    5,347,615       6,210,650
    
    
    Selling General
     and
     administrative
     expenses         2,900,113        3,400,342    6,491,891       6,583,929
                      ---------        ---------    ---------       ---------
    Income (loss)
     from
     operations          44,626         (690,746)  (1,144,276)       (373,279)
    
    
    Interest income        (464)         (18,455)      (1,448)        (49,114)
    Interest expense        162            5,849        2,574           5,849
    Other, net           11,785           11,112       22,798          23,179
                         ------           ------       ------          ------
                         11,483           (1,494)      23,924         (20,086)
                         ------           ------       ------         -------
    
    Income (loss)
     before
     provision for
     (benefit from)
     income taxes        33,143         (689,252)  (1,168,200)       (353,193)
    
    Provision for
     (benefit from)
     income taxes        11,573         (253,158)    (444,832)       (125,456)
                         ------         --------     --------        --------
    Net income (loss)   $21,570        ($436,094)   ($723,368)      ($227,737)
                        =======        =========    =========       =========
    
    Net income
     (loss) per
     share -Basic
     and diluted          $0.00           ($0.06)      ($0.09)         ($0.03)
                          =====           ======       ======          ======
    
    
    Weighted
     average common
     shares
     Outstanding -
     Basic            8,092,734        7,901,327    8,040,528       7,896,279
    
    Weighted
     average common
     shares
     Outstanding -
     Diluted          8,217,103        7,901,327    8,040,528       7,896,279
    

    
    
    
    
                           ALLIED HEALTHCARE PRODUCTS, INC.
                              CONSOLIDATED BALANCE SHEET
                                     (UNAUDITED)
    
                                               December 31, 2009 June 30, 2009
    ASSETS
    Current assets:
      Cash and cash equivalents                     $2,492,160     $1,943,364
      Accounts receivable,
       net of allowances of $300,000                 5,283,980      6,172,437
      Inventories, net                              12,736,488     12,663,938
      Income tax receivable                          1,653,573        937,273
      Other current assets                             308,451        327,203
                                                       -------        -------
          Total current assets                      22,474,652     22,044,215
                                                    ----------     ----------
      Property, plant and
       equipment, net                               10,209,764     10,799,089
      Other assets, net                                189,132        390,627
                                                       -------        -------
          Total assets                             $32,873,548    $33,233,931
                                                   ===========    ===========
    
    LIABILITIES AND
     STOCKHOLDERS' EQUITY
    Current liabilities:
      Accounts payable                              $2,315,688     $1,633,568
      Other accrued liabilities                      1,880,039      2,316,558
      Deferred income taxes                            168,136        419,213
      Deferred revenue                                 688,200        688,200
                                                       -------        -------
          Total current liabilities                  5,052,063      5,057,539
                                                     ---------      ---------
    
    Deferred revenue                                 1,147,000      1,491,100
                                                     ---------      ---------
    
    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; 10,396,878
       and 10,204,819 shares issued
       at December 31, 2009 and 
       June 30, 2009, respectively;
       8,093,386 and 7,901,327
       shares outstanding at
       December 31, 2009 and
       June 30, 2009,
       respectively                                    103,969        102,048
      Additional paid-in
       capital                                      48,342,689     47,632,049
      Accumulated deficit                           (1,040,745)      (317,377)
      Less treasury stock, at
       cost; 2,303,492 shares
       at December 31, 2009 and
       June 30, 2009,
       respectively                                (20,731,428)    20,731,428)
                                                   -----------    -----------
          Total stockholders' equity                26,674,485     26,685,292
                                                    ----------     ----------
          Total liabilities and
           stockholders' equity                    $32,873,548    $33,233,931
                                                   ===========    ===========

SOURCE Allied Healthcare Products, Inc.