Alliance HealthCare Reports Q4 2010 Results; Reaffirms Guidance (AIQ)

Alliance HealthCare ServicesAIQ announced results for the fourth quarter and year ended December 31, 2010.

Fourth Quarter and Full Year 2010 Financial Results

Revenue for the fourth quarter of 2010 was $117.7 million compared to $119.5 million in the fourth quarter of 2009. For full year 2010, revenue was $478.9 million, which was within the Company's guidance range of $470 million to $500 million. Full year 2009 revenue was $505.5 million.

Alliance's Adjusted EBITDA (as defined below) was $35.0 million in the fourth quarter of 2010 compared to $38.2 million in the fourth quarter of 2009. For full year 2010, Adjusted EBITDA totaled $158.1 million, which was within the Company's guidance range of $155 million to $180 million. Full year 2009 Adjusted EBITDA was $180.3 million.

Alliance's net loss, computed in accordance with GAAP, totaled ($29.6) million in the fourth quarter of 2010 and ($11.0) million in the fourth quarter of 2009. Full year 2010 net loss totaled ($32.7) million compared to net income of $0.5 million for full year 2009.

Net loss per share on a diluted basis, computed in accordance with generally accepted accounting principles (“GAAP”), was ($0.56) per share in the fourth quarter of 2010 and ($0.21) per share in the fourth quarter of 2009. In the fourth quarter of 2010, net loss per share on a diluted basis was impacted by ($0.50) in the aggregate due to non-cash impairment charges, fair value adjustments related to interest rate swaps, severance and related costs and mergers and acquisitions transaction costs. In the fourth quarter of 2009, net loss per share on a diluted basis was impacted by ($0.18) in the aggregate due to costs related to the debt refinancing, fair value adjustments related to interest rate swaps, severance and related costs and mergers and acquisitions transaction costs.

Net loss per share on a diluted basis was ($0.62) per share for full year 2010 and earnings per share were $0.01 per share for full year 2009. For full year 2010 net loss per share on a diluted basis was impacted by ($0.55) in the aggregate due to non-cash impairment charges, fair value adjustments related to interest rate swaps, severance and related costs and mergers and acquisitions transaction costs. Full year 2009 net loss per share on a diluted basis was impacted by ($0.20) in the aggregate due to costs related to the debt refinancing, fair value adjustments related to interest rate swaps, severance and related costs and mergers and acquisitions transaction costs.

The fourth quarter and full year 2010 included non-cash impairment charges totaling $42.1 million, or $25.7 million net of tax. Alliance believes that the reduction in fair value which prompted the impairment charges is a result of sustained high unemployment rates, a reported decline in physician office visits, and other conditions in the United States arising from global economic conditions. These factors have had a sustained negative impact on the Company's stock price and on the fair value of its reporting units. As a result, Alliance recorded non-cash impairment charges in the fourth quarter and full year 2010. The fourth quarter and full year 2009 included $14.6 million, or $8.9 million net of tax, in loss on extinguishment related to the debt refinancing transaction completed in December 2009.

Paul S. Viviano, Chairman of the Board and Chief Executive Officer, stated, “Alliance continued its industry leading operating performance and cash flow generation while maintaining a strong balance sheet in 2010. With the completion of four acquisitions and the development of a strong professional radiology services and teleradiology presence, Alliance continues to evolve strategically to provide high-intensity outsourced clinical services to hospitals. These services include diagnostic imaging, women's breast health care, radiation therapy and related oncology services and professional radiology services. Alliance serves the needs of more than 1,000 hospitals nationally and remains committed to providing superior clinical care to the more than one million patients that we treat annually.”

Cash flows provided by operating activities were $19.8 million in the fourth quarter of 2010 compared to $30.5 million in the fourth quarter of 2009, and totaled $104.9 million and $139.1 million for full years 2010 and 2009, respectively. Capital expenditures in the fourth quarter of 2010 were $20.7 million compared to $22.4 million in the fourth quarter of 2009, and were $64.5 million and $73.8 million for full years 2010 and 2009, respectively. Alliance opened seven new fixed-site imaging centers in the fourth quarter of 2010 and a total of 18 new fixed-site imaging centers in the full year 2010. As previously announced, the Company acquired a radiation therapy center in the fourth quarter of 2010.

Alliance's net debt, defined as total long-term debt (including current maturities) less cash and cash equivalents, totaled $556.1 million at December 31, 2010 and $556.0 million at December 31, 2009. In the fourth quarter of 2010, the Company invested $2.1 million in acquisitions, and for the full year 2010, the Company invested $33.8 million in acquisitions. Cash and cash equivalents were $97.2 million at December 31, 2010 and $111.9 million at December 31, 2009. The Company's net debt, as defined above, divided by the last twelve months Adjusted EBITDA (pro forma for acquisitions during the period) was 3.5x for the twelve month period ended December 31, 2010.

The Company's total long-term debt (including current maturities) decreased to $653.3 million at December 31, 2010 from $667.9 million at December 31, 2009. The Company's total debt divided by last twelve months Adjusted EBITDA (pro forma for acquisitions during the period) was 4.1x for the twelve month period ended December 31, 2010.