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Allied Healthcare Products Inc. Reports Operating Results (10-Q)

May 12, 2009 | About:

Allied Healthcare Products Inc. (AHPI) filed Quarterly Report for the period ended 2009-03-31.

Allied Healthcare Products Inc. manufactures respiratory products used in the health care industry in a wide range of hospital and alternate site settings including sub-acute care facilities home health care and emergency medical care. Their product lines include respiratory care products medical gas equipment and emergency medical products. Their products are marketed under well-recognized and respected brand names to hospitals hospital equipment dealers hospital construction contractors home health care dealers emergency medical products dealers and others. Allied Healthcare Products Inc. has a market cap of $31 million; its shares were traded at around $3.92 with a P/E ratio of 65.3 and P/S ratio of 0.5.

Highlight of Business Operations:

Allied had net sales of $12.4 million for the three months ended March 31, 2009, down $1.5 million, or 10.8%, from net sales of $13.9 million in the prior year same quarter. Customer orders were $0.8 million lower than the prior year same quarter. Purchase order releases were $1.9 million lower than in the prior year same quarter. Purchase order release times depend on the scheduling practices of individual customers, and do vary over time. Releases for the quarter are also impacted by year to date orders which are $2.1 million lower than in the prior year. At this time, the Company believes this decrease in orders and releases is due to broad economic conditions and does not represent a decrease in the Company s market share.

Loss from operations was $0.7 million for the three months ended March 31, 2009 compared to income from operations of $0.2 million for the three months ended March 31, 2008. Interest income was $5,041 for the three months ended March 31, 2009 compared to interest income of $13,928 for the three months ended March 31, 2008. Allied had loss before benefit from income taxes in the third quarter of fiscal 2009 of $0.7 million, compared to income before provision for income taxes in the third quarter of fiscal 2008 of $0.2 million. The Company recorded a tax benefit of $0.3 million for the three-months ended March 31, 2009 compared to a tax provision of $0.1 million for the three months ended March 31, 2008.

Allied had net sales of $39.4 million for the nine months ended March 31, 2009, down $2.3 million, or 5.5%, from net sales of $41.7 million in the prior year same period. Customer orders were $2.1 million lower than in the prior year same period, and customer purchase order releases were $2.7 million lower than in the prior year same period. Purchase order release times depend on the scheduling practices of individual customers and do vary over time. At this time, the Company believes this decrease in orders and releases is due to broad economic conditions and does not represent a decrease in market share.

Selling, general and administrative expenses for the nine months ended March 31, 2009 were $9.8 million, a net increase of $0.8 million, or 8.9%, from $9.0 million for the nine months ended March 31, 2008. Salaries and benefits increased by $0.6 million from the prior year primarily due to open employee positions in the prior fiscal year and normal increases in the cost of fringe benefits. There have not been changes in staffing levels over the prior year. Also, outside services increased approximately $139,000 primarily for the testing of the Company s new EPV100 and MCV ventilators designed to meet the needs of the mass casualty and pandemic markets. Additionally, legal expenses increased by approximately $0.1 million, as a result of product liability claims. Selling, general and administrative expenses also include approximately $92,000 in product development cost for the new carbon dioxide absorption product being developed. In the prior year all development cost for this product were reimbursed. These development costs will continue for the remainder of the fiscal year and are estimated to be an additional $300,000.

Loss from operations was $1.1 million for the nine months ended March 31, 2009 compared to income from operations of $0.3 million for the nine months ended March 31, 2008. Interest income was $54,155 for the nine months ended March 31, 2009 compared to interest income of $92,874 for the nine months ended March 31, 2008. Allied had loss before benefit for income taxes for the first nine months of fiscal 2009 of $1.1 million, compared to income before provision for income taxes for the first nine months of fiscal 2008 of $0.3 million. The Company recorded a tax benefit of $0.4 million for the nine-month period ended March 31, 2009, versus a tax provision of $0.1 million for the nine-month period ended March 31, 2008.

The Company s working capital was $16.9 million at March 31, 2009 compared to $18.3 million at June 30, 2008. Accrued liabilities decreased $1.4 million and accounts payable decreased $0.3 million. Inventory increased $1.6 million, and other current assets increased $0.1 million. At March 31, 2009 these increases in working capital were more than offset by a decrease in Cash and cash equivalents of $4.1 million and a decrease of $0.7 million in accounts receivable to $5.8 million at March 31, 2009. Accounts receivable as measured in days of sales outstanding (“DSO”) increased to 39 DSO at March 31, 2009; up from 34 DSO at June 30, 2008.

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Rating: 3.0/5 (1 vote)

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