Oct. 28, 2009 (Business Wire) -- Alliance HealthCare Services, Inc. (NYSE:AIQ) (the “Company” or “Alliance”), a leading national provider of outpatient diagnostic imaging and radiation therapy services, announced results for the third quarter and nine months ended September 30, 2009.

Third Quarter and First Nine Months 2009 Financial Results

Revenue for the third quarter of 2009 decreased 3.0% to $124.2 million from $128.1 million in the third quarter of 2008. For the first nine months of 2009, revenue was $386.0 million compared to $370.0 million in the same period of 2008, an increase of 4.3%.

Alliance’s Adjusted EBITDA (as defined below) was $46.2 million in the third quarter of 2009, a 3.4% decrease, compared to $47.9 million in the same quarter a year ago. For the first nine months of 2009, Adjusted EBITDA totaled $142.1 million compared to $138.1 million in the first nine months of 2008, an increase of 2.9%.

In the third quarter of 2009, the Company recorded $0.5 million of severance and related costs compared to $0.1 million in the third quarter of 2008. For the first nine months of 2009, the Company recorded $0.8 million of severance and related costs compared to $0.5 million in the same period of 2008. These severance and related costs negatively impacted diluted earnings per share by $0.01 in the third quarter of 2009.

Alliance’s net income was $3.0 million in the third quarter of 2009 compared to $6.3 million in the third quarter 2008. For the first nine months of 2009, net income totaled $11.5 million compared to $14.9 million in the first nine months of 2008.

Earnings per share on a diluted basis, computed in accordance with generally accepted accounting principles, was $0.06 per share in the third quarter of 2009 and $0.12 per share in the third quarter of 2008. Earnings per share on a diluted basis were $0.22 per share in the first nine months of 2009 and $0.29 per share in the first nine months of 2008. Beginning January 1, 2009, costs related to mergers and acquisitions must be expensed as incurred. In the first nine months of 2009, the Company recorded $0.9 million in acquisition related costs (included in Transaction costs) which negatively impacted diluted earnings per share by $0.01.

Cash flows provided by operating activities was $46.3 million in the third quarter of 2009 compared to $44.1 million in the corresponding quarter of 2008, and totaled $105.1 million and $96.7 million in the first nine months of 2009 and 2008, respectively. Capital expenditures in the third quarter of 2009 were $17.5 million compared to $14.6 million in the third quarter of 2008, and were $51.4 million and $41.2 million for the first nine months of 2009 and 2008, respectively. Alliance opened four new fixed-site imaging centers in the third quarter of 2009. Alliance opened 18 new fixed-site imaging centers and opened two radiation oncology centers in the first nine months of 2009.

Alliance’s net debt, defined as total long-term debt (including current maturities) less cash and cash equivalents, decreased $54.3 million to $535.0 million at September 30, 2009 from $589.3 million at December 31, 2008. Cash and cash equivalents were $129.7 million at September 30, 2009 and $73.3 million at December 31, 2008.

The Company’s total long-term debt (including current maturities) increased to $664.7 million at September 30, 2009 from $662.6 million as of December 31, 2008.

Paul S. Viviano, Chairman of the Board and Chief Executive Officer, stated, “Alliance HealthCare Services continues to be focused on renewals with existing customers, building de novo projects for MRI, PET/CT, and radiation oncology, optimizing operating efficiencies and implementing cost savings, and strengthening our balance sheet while diligently evaluating selective acquisitions. Alliance is committed to continuing the diversification of our clinical service lines, emphasizing the development of fixed-site imaging centers and de novo radiation therapy cancer centers.”

Full Year 2009 Guidance

Alliance is reaffirming its full year 2009 guidance ranges as follows:

Third Quarter 2009 Earnings Conference Call

Investors and all others are invited to listen to a conference call discussing third quarter 2009 results. The conference call is scheduled for Thursday, October 29 at 8:30 a.m. Eastern Time. The call will be broadcast live on the Internet and can be accessed by visiting the Company’s website at www.alliancehealthcareservices-us.com. Click on Audio Presentations in the Investors section of the website to access the link.

The conference call can be accessed at (888) 694-4676 (United States) or (973) 582-2737 (International). Interested parties should call at least 5 minutes prior to the call to register. A telephone replay will be available until January 29, 2010. The telephone replay can be accessed by calling (800) 642-1687 (United States) or (706) 645-9291 (International). The conference call identification number is 37544375.

Definition of Adjusted EBITDA

Adjusted EBITDA is included because the Company’s amended credit agreement uses a measure similar to this to calculate the Company’s compliance with specified covenants. Adjusted EBITDA as defined under the terms of Alliance’s Credit Agreement, is earnings before interest expense and other, net; income tax expense; depreciation expense; amortization expense; noncontrolling interest in subsidiaries; share-based payment; a maximum of $750,000 of severance and related costs in each fiscal year; transaction costs; and other non-cash charges. For a more detailed discussion of Adjusted EBITDA and reconciliation to net income, see the table entitled “Adjusted EBITDA” included in the tables following this release.

About Alliance HealthCare Services

Alliance HealthCare Services is a leading national provider of shared-service and fixed-site diagnostic imaging services, based upon annual revenue and number of diagnostic imaging systems deployed, and a provider of radiation therapy services. Alliance provides imaging and therapeutic services primarily to hospitals and other healthcare providers on a shared and full-time service basis, in addition to operating a growing number of fixed-site imaging and radiation therapy centers. The Company had 493 diagnostic imaging and radiation therapy systems, including 288 MRI systems and 126 PET or PET/CT systems, and served over 1,000 clients in 45 states at September 30, 2009. The Company operated 110 fixed-site imaging centers (three in unconsolidated joint ventures), which includes systems installed in hospitals or other buildings on or near hospital campuses, medical groups’ offices, or medical buildings and retail sites. The Company also operated 23 radiation therapy centers and stereotactic radiosurgery facilities (two radiation therapy centers are in unconsolidated joint ventures) as of September 30, 2009.

Forward-Looking Statements

This press release contains forward-looking statements relating to future events, including statements related to investment, development and acquisition activity, the integration of acquired businesses into the Company and the Company’s full year 2009 guidance. In this context, forward-looking statements often address the Company’s expected future business and financial results and often contain words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks” or “will.” Forward-looking statements by their nature address matters that are uncertain and subject to risks. Such uncertainties and risks include: changes in the preliminary financial results and estimates due to the restatement or review of the Company’s financial statements; the nature, timing and amount of any restatement or other adjustments; the Company’s ability to make timely filings of its required periodic reports under the Securities Exchange Act of 1934; issues relating to the Company’s ability to maintain effective internal control over financial reporting and disclosure controls and procedures; the Company’s high degree of leverage and its ability to service its debt; factors affecting the Company’s leverage, including interest rates; the risk that the counterparties to the Company’s interest rate swap agreements fail to satisfy their obligations under these agreements; the Company’s ability to obtain financing; the effect of operating and financial restrictions in the Company’s debt instruments; the accuracy of the Company’s estimates regarding its capital requirements; the effect of intense levels of competition in the Company’s industry; changes in the rates or methods of third party reimbursements for diagnostic imaging and radiation oncology services; fluctuations or unpredictability of the Company’s revenues, including as a result of seasonality; changes in the rates or methods of third party reimbursements for diagnostic imaging and radiation oncology services; changes in the healthcare regulatory environment; the Company’s ability to keep pace with technological developments within its industry; the growth in the market for MRI and other services; the disruptive effect of hurricanes and other natural disasters; adverse changes in general domestic and worldwide economic conditions and instability and disruption of credit markets; difficulties the Company may face in connection with recent, pending or future acquisitions, including unexpected costs or liabilities resulting from the acquisitions, diversion of management’s attention from the operation of the Company’s business, and risks associated with integration of the acquisitions; and other risks and uncertainties identified in the Risk Factors section of the Company’s Form 10-K for the year ended December 31, 2008, filed with the Securities and Exchange Commission (the “SEC”) as may be modified or supplemented by our subsequent filings with the SEC. These uncertainties may cause actual future results or outcomes to differ materially from those expressed in the Company’s forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company does not undertake to update its forward-looking statements except as required under the federal securities laws.

Consolidated senior leverage ratio, as of the last day of any fiscal quarter, is defined under the Company’s credit agreement as the ratio of the consolidated senior debt as of that date to the consolidated Adjusted EBITDA for the four fiscal quarters ending on that date. The Company is required under its amended credit agreement to maintain a maximum consolidated senior leverage ratio not to exceed 3.00 to 1.00. As of September 30, 2008 and 2009, the Company’s consolidated senior leverage ratio was as follows:

Interest coverage ratio is defined under the Company’s credit agreement as the ratio of consolidated Adjusted EBITDA to consolidated cash interest expense for the four fiscal quarter period ending on the last day of any fiscal quarter. The Company is required under its amended credit agreement to maintain a minimum consolidated interest coverage ratio of 2.75 to 1.00. As of September 30, 2008 and 2009, the Company’s interest coverage ratio was as follows:

The reconciliation from net income to Adjusted EBITDA for the 2009 guidance range is shown below: