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Allied Healthcare International Inc. a leading provider of flexible healthcare staffing services in the United Kingdom, has issued financial results for its fiscal 2009 fourth quarter and year-end. For the year ended September 30, 2009 revenues increased by $19.1 million, or 6.4%, to $317.7 million, compared with $298.6 million reported during the same period in fiscal 2008. Net income for the year ended September 30, 2009, increased to $10.3 million, as compared with $8.8 million reported during the 2008 fiscal year.

For the fourth quarter of fiscal 2009 revenues increased by $6.3 million, or 8.4%, to $81.2 million, compared with $75.0 million reported during the same period in fiscal 2008. Contributing to the increase in revenues was Allied's Homecare revenues, which grew by 18.5% to $68.1 million. Nursing Homes revenues declined by 22.5% to $7.5 million. Hospitals revenues decreased by 28.2% to $5.6 million.

After the unfavorable impact of currency exchange of $11.4 million, revenues decreased to the reported $69.8 million.

Total gross profit for the fourth fiscal quarter increased 7.5% to $24.6 million, compared with $22.9 million reported for the comparable quarter in fiscal 2008. Gross profit percent for the fourth quarter was 30.3%, as compared to 30.6% for the comparable prior period. Foreign exchange decreased gross profit by $3.4 million to the reported $21.2 million for the quarter.

SG&A for the fourth fiscal quarter was $19.6 million, compared with $18.6 million reported last year, an increase of 5.5%. As a percent of revenues, SG&A costs were 24.4%, compared to 24.8% in the comparable prior year period. Foreign exchange decreased costs by $2.6 million to the reported $17.0 million for the quarter.

Operating income for the fourth quarter of fiscal 2009 increased to $5.0 million, compared to operating income of $4.3 million reported during the 2008 fourth fiscal quarter. Foreign exchange decreased operating income by $0.8 million to the reported $4.2 million for the quarter.

Net income for the fourth quarter of fiscal 2009 was $2.9 million, as compared with $2.9 million reported during the 2008 fourth fiscal quarter. Diluted earnings per share was $0.07 for the quarter, compared to diluted earnings per share of $0.06 last year.

For the year ended September 30, 2009 revenues increased by $19.1 million, or 6.4%, to $317.7 million, compared with $298.6 million reported during the same period in fiscal 2008. Contributing to the increase in revenues was Allied's Homecare revenues, which grew by 15.0% to $259.3 million. Nursing Homes revenues declined by 21.4% to $32.9 million. Hospitals revenues decreased by 18.4% to $25.5 million. After the unfavorable impact of currency exchange of $67.9 million, revenues decreased to the reported $249.8 million.
Total gross profit for the year ended September 30, 2009, increased 7.4% to $97.1 million, compared with $90.4 million reported for the comparable period in fiscal 2008. Gross profit percent for the year ended September 30, 2009, increased to 30.6% from 30.3% for the comparable prior period. Foreign exchange decreased gross profit by $20.8 million to the reported $76.3 million for the year.

SG&A for the year ended September 30, 2009, was $79.6 million, compared with $77.7 million reported last year, an increase of 2.5%. As a percent of revenues, SG&A costs were 25.3% compared to 26.0% in the comparable prior year period. Foreign exchange decreased costs by $16.4 million to the reported $63.2 million for the year.

Operating income for the year ended September 30, 2009, increased to $17.5 million, compared to operating income of $12.7 million reported during the comparable prior year period, an increase of 37.5% over the prior year. Foreign exchange decreased operating income by $4.4 million to the reported $13.1 million for the year.

Income from continuing operations for the year ended September 30, 2009, increased to $9.9 million, as compared with $8.8 million reported for the year ended September 30, 2008. Diluted earnings per share from continuing operations was $0.22 for the fiscal year ended September 30, 2009, compared to diluted earnings per share from continuing operations of $0.19 last year.

Net income for the year ended September 30, 2009, increased to $10.3 million, as compared with $8.8 million reported during the 2008 fiscal year. Diluted earnings per share was $0.23 for the year ended September 30, 2009, which includes $0.01 from discontinued operations due to the release of reserves as a result of the warranty period within the sales agreement, related to the sale of the respiratory business in fiscal 2007, having expired. This compares to $0.19 for the year end September 30, 2008.

At September 30, 2009, and September 30, 2008, Allied's cash balance was $35.3 million (22.2 million) and $26.2 million (14.4 million), respectively, representing an underlying increase in the cash balance of $9.1 million (7.8 million).

For the year ended September 30, 2009, depreciation and amortization was $3.8 million (2.5 million) and capital expenditures were $2.9 million (1.8 million). Days Sales Outstanding was twenty-five days at September 30, 2009 (40 days including unbilled account receivables), and twenty-one days at September 30, 2008 (40 days including unbilled account receivables).

Management Discussion:
"We continue to see good growth in our homecare business, which now represents over 80% of our business," commented Sandy Young, Chief Executive Officer of Allied. "The homecare revenue growth in the quarter of 18.5% was particularly pleasing and was ahead of our 10-15% growth range expectation. The Company's homecare business should benefit from many favorable market dynamics. These include: an aging population continued shift from residential care to homecare the lower cost of private business homecare provision and continued consolidation of local authority suppliers. These factors all favor a growth in demand in our core homecare business."

Mr. Young continued: "Even the anticipated further tightening of the local government and National Health Service (NHS) budgets over the next few years, as the government addresses its financial deficit, provides an opportunity for us. We believe that the demonstrated financial benefits of lower costs that have and can continue to be achieved by homecare, as compared to institutional care, should be a strong incentive for local governments and NHS Primary Care Trusts, in addressing the ongoing financial challenges they face.

"While our nursing homes and hospital staffing business results were higher in the fourth quarter as compared to the third quarter, which is a similar trend as in the prior year, we continue to look for opportunities for these businesses. As previously reported, we were successfully awarded the new NHS framework agreements, which came into effect on October 1, 2009. We have started to enact the higher pay and charge rates under the new framework agreements which we believe are essential to effectively recruit and retain staff to service this business. Expanding upon our existing London operation, we have recently agreed to lease a Midlands regional office, from which we hope to start business from in 2010 to service the hospital staffing demand in the central regions of England.

"Our current period SG&A running costs of 24.4% of revenues compares to 25.8% in the prior quarter. We are continuing, as previously reported, to invest in certain areas of our business that include such items as continuing care, learning disabilities, IT systems, training, and business improvement projects to ensure that we support future growth in revenues. At the same time, we maintain tight controls over other areas of SG&A costs so as to maintain our objective of reducing SG&A costs as a percent of revenues. Our investment in training also allows us to qualify for currently available government training grants, which have given us a net financial benefit of $0.6 million as compared to the prior year.

"We are pleased with the progress we have made in the year in the key area of carer and branch staff retention, staff development and support, the progress of our coldharbour IT system rollout, and our attention to service and quality delivery, all of which, we believe, create a strong foundation for future growth for our business. As well as our focus in the quarter on service and quality, which we believe is essential and a key driver to increased revenue and profit growth, we have been actively looking at acquisition opportunities. Any such acquisitions will be reviewed in conjunction with our Capital Resources Review, which also includes looking at other opportunities to enhance shareholder value.
"We recently re-launched our website which includes details of our key service offerings and also gives case studies of some of the work the Company is currently involved in. In addition, our recent major contract wins, our network of branches, which include three new branches in the London region and one new branch in Scotland following our successful contract wins, our quality and governance standards, our investor relations links and our employee and recruitment information have all been updated and enhanced. We believe that our current and prospective customers, employees and investors will find our new website informative and helpful.

"We have also appointed ICR, LLC as our investor relations firm effective December 2009, which, we believe, will help us to develop further our relationships with existing and new shareholders."

Mr. Young concluded: "Overall, we are positive about the year ahead. The business has a more robust operating platform and many of the business improvement initiatives have yet to be fully implemented. We believe that the extra investment we have made this year in learning disabilities and continuing care will help support our top line growth in homecare."

Paul Weston, Chief Financial Officer of Allied, commented: "As noted in our previous quarter's press release, with nearly all our operations in the United Kingdom, we believe it is important for investors to see the underlying revenues and gross profits in pound currency as detailed below. This shows growth in our gross profits year to date of 7.4%, and our fourth quarter gross profit of 30.3% is in line with our expectations. Our SG&A costs year to date, excluding exchange effects, increased by 2.5% compared to the prior year which compares favorably with the revenue growth of 6.4% that we have generated."

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