American HomePatient Reports Financial Results For The Fourth Quarter and Year Ended December 31, 2008

BRENTWOOD, Tenn.--(BUSINESS WIRE)--American HomePatient, Inc. (OTCBB: AHOM), one of the nation’s largest home health care providers, today announced its financial results for the fourth quarter and year ended December 31, 2008.

Revenues for the fourth quarter of 2008 were $67.8 million compared to $71.5 million for the fourth quarter of 2007, representing a decrease of $3.7 million, or 5.2%. Revenues for the year ended December 31, 2008 were $266.9 million compared to $293.0 million for the same period in 2007, representing a decrease of $26.1 million, or 8.9%. The revenue decreases for the fourth quarter and year were primarily attributable to a change in inhalation drug product mix and the Company’s de-emphasis of less profitable product lines such as non-respiratory durable medical equipment and infusion therapy.

Operating expenses declined in the fourth quarter of 2008 compared to the fourth quarter of 2007 by approximately $3.1 million, or 8.6%. Operating expenses for the year ended December 31, 2008 compared to the same period in 2007 declined by $7.1 million, or 5.1%. The decreases in operating expenses for the fourth quarter and year were primarily the result of improved operating efficiencies associated with the Company’s branches and billing centers, resulting in reduced operating costs. Areas of focus have included centralization of certain customer service functions, consolidation of branches and branch functions, improved routing and delivery systems, and more effective utilization of leased space.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) is a non-GAAP financial measurement that is calculated as net income excluding interest, taxes, depreciation and amortization. Adjusted EBITDA (EBITDA excluding discontinued operations and change of control expense) was $14.2 million, or 20.9% of net revenue, for the fourth quarter of 2008 compared to $13.7 million, or 19.2% of net revenue, for the same period of 2007. Adjusted EBITDA was $51.5 million, or 19.3% of net revenue for the year ended December 31, 2008 compared to $52.7 million, or 18.0% of net revenue, for the same period of 2007. The improvement in adjusted EBITDA as a percentage of net revenue in the fourth quarter and current year is attributable to improved operating efficiencies resulting in reduced operating costs and improved accounts receivable collection processes resulting in reduced bad debt expense.

Net income for the fourth quarter of 2008 was $1.5 million, or $0.09 per diluted share, compared to a net loss of $(0.3) million, or $(0.02) per diluted share, for the fourth quarter of 2007. Net income for the year ended December 31, 2008 was $0.5 million, or $0.03 per diluted share, compared to a net loss of $(5.5) million, or $(0.31) per diluted share, for the same period of 2007. The comparison of net income for the year ended December 31, 2008 to the same period in 2007 was affected by the recording in 2007 of a change of control expense of $5.6 million, partially offset by a gain on discontinued operations of $1.8 million. The improvement in net income in the fourth quarter and current year, excluding the change of control expense and gain on discontinued operations in 2007, is primarily the result of the improved operating efficiencies and improved accounts receivable collection processes, as mentioned above.

American HomePatient, Inc. is one of the nation’s largest home health care providers with operations in 33 states. Its product and service offerings include respiratory services, infusion therapy, parenteral and enteral nutrition, and medical equipment for patients in their home. American HomePatient, Inc.’s common stock is currently traded in the over-the-counter market or, on application by broker-dealers, in the NASD’s Electronic Bulletin Board under the symbol AHOM or AHOM.OB.

American HomePatient, Inc. prepares its financial statements in accordance with U.S. generally accepted accounting principles (GAAP). American HomePatient, Inc. also provides information related to non-GAAP financial measurements such as EBITDA, and from time to time, other non-GAAP financial measurements that adjust for certain items outside of the ordinary course of its business. To enable interested parties to reconcile non-GAAP measures to the Company’s GAAP financial statements, the Company clearly defines EBITDA and quantifies all other adjustments to GAAP measurements (see Schedule B). The Company provides EBITDA information, a widely used non-GAAP financial measurement, as a performance measure to assist in analyzing the Company’s operations and in comparing the Company to its competitors. The Company provides other non-GAAP financial measurements that adjust for certain items outside of the ordinary course of business in order to assist in comparing the Company’s current operating performance to its historical performance. These adjustments typically reflect non-recurring items but sometimes reflect items, such as dispositions of assets and restructuring charges that are not technically non-recurring but are outside of the ordinary course of operations. Investors should note that such measures may not be comparable to similarly titled measures used by other companies, and investors are encouraged to use this information only in connection with the information contained in the Company’s GAAP financial statements.

Certain statements made in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management’s current expectations and include known and unknown risks, uncertainties and other factors, many of which the Company is unable to predict or control, that may cause the Company’s actual results or performance to materially differ from any future results or performance expressed or implied by such forward-looking statements. These statements involve risks and uncertainties, including, without limitation, risks and uncertainties regarding the upcoming maturity of the Company’s secured debt, current and future reimbursement rates, and reimbursement reductions and the Company’s ability to mitigate the impact of the reductions. These risks and uncertainties are in addition to risks, uncertainties, and other factors detailed from time to time in the Company’s filings with the Securities and Exchange Commission. The Company cautions investors that any forward-looking statements made by the Company are not necessarily indicative of future performance. The Company is not responsible for updating the information contained in this press release beyond the published date, or for changes made to this document by wire services or Internet services.

American HomePatient, Inc.													Schedule A
Summary Financial Data
(In thousands, except per share data)
	Three Months Ended December 31,								Twelve Months Ended December 31,
		2008				2007				2008				2007
	(unaudited)								(unaudited)
Revenues, net	$	67,805			$	71,469			$	266,854			$	293,027
Cost of sales and related services		15,299				15,529				56,612				70,601
Cost of rentals and other revenues, including rental equipment depreciation		8,217				10,040				34,682				41,412
Operating expenses		32,617				35,681				132,931				140,028
Bad debt expense		614				1,250				4,635				8,164
General and administrative expenses		5,320				5,218				19,841				19,194
Depreciation, excluding rental equipment, and amortization		1,012				986				4,102				3,361
Interest expense, net		3,860				3,755				15,618				15,828
Other income, net		(389	)			(721	)			(1,040	)			(2,249	)
Change of control (income) expense		(3	)			60				(77	)			5,637
Earnings from unconsolidated joint ventures		(1,795	)			(1,540	)			(6,201	)			(5,754	)
Income (loss) from continuing operations before income taxes		3,053				1,211				5,751				(3,195	)
Provision for income taxes		1,362				1,196				5,054				4,097
Net income (loss) from continuing operations		1,691				15				697				(7,292	)
Discontinued operations:
(Loss) income from discontinued operations, including gain on disposal		(183	)			(360	)			(183	)			1,770
Net income (loss)	$	1,508			$	(345	)		$	514			$	(5,522	)
Basic income (loss) per common share - Continuing operations	$	0.10			$	-			$	0.04			$	(0.41	)
Basic (loss) income per common share - Discontinued operations		(0.01	)			(0.02	)			(0.01	)			0.10
Basic income (loss) per common share	$	0.09			$	(0.02	)		$	0.03			$	(0.31	)
Diluted income (loss) per common share - Continuing operations	$	0.10			$	-			$	0.04			$	(0.41	)
Diluted (loss) income per common share - Discontinued operations		(0.01	)			(0.02	)			(0.01	)			0.10
Diluted income (loss) per common share	$	0.09			$	(0.02	)		$	0.03			$	(0.31	)
	December 31,				December 31,
		2008				2007
	(unaudited)
Cash and cash equivalents	$	13,488			$	11,018
Restricted cash		250				250
Net patient receivables		38,284				44,549
Other receivables		777				593
Total receivables		39,061				45,142
Net inventories		10,789				11,616
Other current assets		9,863				13,099
Total current assets		73,451				81,125
Property and equipment, net		32,042				40,731
Goodwill		122,093				122,093
Other assets		26,940				26,179
Total Assets	$	254,526			$	270,128
Current portion of long-term debt and capital leases	$	234,259			$	8,221
Accounts payable		11,989				16,558
Other current liabilities		24,535				31,500
Total current liabilities		270,783				56,279
Long-term debt and capital leases, less current portion		51				236,189
Deferred tax liability		7,841				3,474
Other noncurrent liabilities		8				51
Total liabilities		278,683				295,993
Minority interest		462				550
Total shareholders' deficit		(24,619	)			(26,415	)
Total Liabilities and Shareholders' Deficit	$	254,526			$	270,128

American HomePatient, Inc.													Schedule B
Reconciliation of Non-GAAP Financial Measurements to GAAP Financial Statements
(In thousands)
	Three Months Ended December 31,								Twelve Months Ended December 31,
		2008				2007				2008				2007
	(unaudited)								(unaudited)
Net income (loss)	$	1,508			$	(345	)		$	514			$	(5,522	)
Add:
Provision for income taxes		1,362				1,196				5,054				4,097
Interest expense, net		3,860				3,755				15,618				15,828
Rental equipment depreciation		6,263				7,718				26,085				31,055
Other depreciation and amortization (Note A)		1,012				986				4,102				3,361
Earnings before interest, taxes, depreciation, and amortization (EBITDA)	$	14,005			$	13,310			$	51,373			$	48,819
Change of control (income) expense (Note B)		(3	)			60				(77	)			5,637
Discontinued operations (Note C)		183				360				183				(1,770	)
Adjusted EBITDA	$	14,185			$	13,730			$	51,479			$	52,686
Note A: Includes depreciation expense related to discontinued operations for three months and twelve months ended December 31, 2007. No depreciation expense related to discontinued operations for the three months and twelve months ended December 31, 2008.
Note B: Change of control (income) expense is excluded to determine adjusted EBITDA, as the (income) expense is non-recurring.
Note C: Discontinued operations are excluded to determine adjusted EBITDA, as the gain on disposal and related operations are non-recurring.