UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934


Date of Report (Date of earliest event reported): August 7, 2014

ALLIANCE HEALTHCARE SERVICES, INC.
(Exact Name of Registrant as Specified in Charter)

DELAWARE
001-16609
33-0239910
(State or Other Jurisdiction of
Incorporation)
(Commission
File Number)
(I.R.S. Employer
Identification No.)


100 Bayview Circle, Suite 400
Newport Beach, CA 92660
(Address of principal executive offices, including zip code)

(949) 242-5300
(Registrant's telephone number, including area code)

Not Applicable
(Former address of principal executive offices)
_______________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

( ) Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

( ) Soliciting material pursuant to Rule 14a - 12 under the Exchange Act (17 CFR 240.14a-12)

( ) Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

( ) Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Item 2.02: Results of Operations and Financial Condition

On August 7, 2014, Alliance HealthCare Services, Inc. (the “Company”) issued a press release announcing its results for the quarter and six months ended June 30, 2014. A copy of the Company's press release is furnished as Exhibit 99.1 hereto.

The information in Item 2.02 of this Current Report on Form 8-K, including the information in Exhibit 99.1 hereto, is furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed “filed” for any purpose, including for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in Item 2.02 of this Current Report on Form 8-K, including the information in Exhibit 99.1 hereto, shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act regardless of any general incorporation language in such filing.

Item 9.01: Financial Statements, Pro Forma Financial Information and Exhibits

(d)    Exhibits
    
99.1    Press Release dated August 7, 2014.






SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


Date: August 7, 2014
/s/ Howard K. Aiahra
Name: Howard K. Aihara
Title: Executive Vice President
and Chief Financial Officer







Exhibit Index

Exhibit No. Description

Exhibit 99.1 Press Release dated August 7, 2014.




Exhibit 99.1 2Q 2014
Exhibit 99.1



NEWS RELEASE

Contact:
Alliance HealthCare Services
Howard Aihara
Executive Vice President
Chief Financial Officer
(949) 242-5300

ALLIANCE HEALTHCARE SERVICES REPORTS RESULTS
FOR SECOND QUARTER 2014
Alliance Oncology Delivers Strong Revenue Growth

NEWPORT BEACH, CA-August 7, 2014-Alliance HealthCare Services, Inc. (NASDAQ:AIQ) (the “Company” or “Alliance”), a leading national provider of outsourced radiology services through its Alliance HealthCare Radiology (“Alliance Radiology”) Division and radiation therapy services through its Alliance Oncology Division, announced results for the second quarter ended June 30, 2014.

Second Quarter 2014 Highlights

•
Generated $36.7 million of Adjusted EBITDA (as defined below), consistent with 2Q13, when adjusted for planned investments outlined below.
•
Second quarter revenue grew 0.6% to $111.2 million over the same quarter last year, after adjustments outlined below.
•
Alliance Oncology revenue grew by 21% in the second quarter of 2014, to $23.9 million, when compared to the second quarter of 2013.
•
Continued to generate strong cash flow, with $44.4 million reduction in net debt in the last twelve month period, after adjusting for acquisitions and fees paid in connection with debt refinancing.
•
Alliance Oncology same store volume growth was 4.2% for Linear Accelerator and 4.1% for Stereotactic Radiosurgery in 2Q14 compared to 2Q13.
•
Alliance Radiology’s MRI same store volume growth improved to 5.3% in the second quarter of 2014 compared to the same quarter last year.
•
Adjusted Net Income Per Share (as defined below) increased 126% to $0.52 compared to the second quarter of the prior year.
•
Company confirms 2014 guidance ranges.

Second Quarter 2014 Financial Results

“Alliance Oncology delivered double-digit growth for the second straight quarter, with revenues up 21% over the prior year period,” commented Tom Tomlinson, Chief Executive Officer and President of Alliance HealthCare Services. “Solid increases in same store volumes for both linear accelerator and stereotactic radiosurgery, up 4.2% and 4.1%, respectively, over the prior year, along with new revenue generated from Alliance Oncology’s relationship with the Medical University of South Carolina (MUSC) were the primary drivers of this strong growth. Alliance Radiology revenues rebounded as expected following the impact of severe weather challenges experienced in the first quarter, but trailed prior year due largely to the impact of the sale of the professional radiology services business and some weakness in PET/CT. MRI same-store volume was up 5.3%, aided partly by the Medicaid


Exhibit 99.1

expansion and new Affordable Care Act (ACA) enrollees entering the healthcare system, but PET/CT volume continues to trail prior year due to payor changes and RBM’s moving patients from PET/CT to CT.”

Tomlinson continued, “We are just beginning to see the fruits of investments made to build our sales and business development teams across both divisions. We have also made strategic investments to build our Alliance RAD360™ Program (“RAD360”) capabilities within our Radiology Division. This quarter we acquired two fixed site imaging centers on behalf of a new joint venture partnership with a for-profit health system. New hospital and health system partnerships like MUSC, along with a strong pipeline of radiation oncology and RAD360 growth opportunities provide us increased confidence that the steps we are taking to transform Alliance into the outsourced partner of choice is resonating well in the market. Additionally, we are optimistic that we will continue to see improvement in healthcare services volumes, including increased patient flow, due to Medicaid expansion and ACA enrollees utilizing the healthcare system in the remaining portion of the year.”

Revenue for the second quarter of 2014, computed in accordance with generally accepted accounting principles (“GAAP”), was $111.2 million compared to $114.4 million in the second quarter of 2013. This decrease was primarily due to the sale of our Professional Radiology Services business line in December 2013, and pruning of unprofitable business in our Radiology Division, which impacted the total by $3.8 million. This was partially offset by growth in the Alliance Oncology Division as a result of revenue generated from the new partnership with MUSC.

Alliance’s Adjusted EBITDA (as defined below) decreased 5.0% to $36.7 million from $38.6 million in the second quarter of 2013. During the second quarter of 2014, we invested approximately $1.5 million to build our consultative, sales, marketing, and strategic business development capabilities to support our Alliance RAD360 Program, and continue to invest in this initiative. These costs are primarily part of our selling, general and administrative expenses. In the first half of 2014, we invested approximately $2.5 million in building our consultative, sales, marketing, and strategic business development capabilities to support RAD360 and expect to invest a total of $5 million for the full year of 2014.

Alliance’s net income (loss), computed in accordance with GAAP, totaled $2.8 million in the second quarter of 2014 and ($13.0) million in the second quarter of 2013.

Alliance’s historical income tax rate has been 42%, compared to the GAAP income tax rate of 39.3% in the second quarter of 2014 and 35.7% in the second quarter of 2013.

Net income (loss) on a diluted basis, computed in accordance with GAAP, increased to $0.26 per share in the second quarter of 2014 compared to ($1.22) per share for the same quarter of 2013. Net income (loss) per share on a diluted basis was impacted by ($0.26) in the second quarter of 2014 and ($1.45) in the second quarter of 2013 in the aggregate due to restructuring charges, severance and related costs, transaction costs, legal matter expenses and differences in the GAAP income tax rate from our historical income tax rate.

Cash flows provided by operating activities totaled $23.9 million in the second quarter of 2014 compared to $22.0 million in the second quarter of 2013. In the second quarter of 2014, capital expenditures were $7.5 million compared to $4.8 million in the second quarter of 2013.

Alliance's net debt, defined as total long-term debt (including current maturities), less cash and cash equivalents, decreased $18.3 million to $476.7 million at June 30, 2014 from $495.0 million at December 31, 2013. Cash and cash equivalents were $31.3 million at June 30, 2014 and $34.7 million at December 31, 2013. During the second quarter of 2014, the Company used approximately $1.5 million cash in connection with the acquisition of two radiology centers in a new joint venture partnership with a for-profit health care system as part of our Alliance RAD360 Program, and the acquisition of OnPoint Medical Diagnostics, a healthcare IT start-up commercializing medical imaging quality assurance technologies. In addition, as a result of the Company’s successful term loan refinancing in 2013, the Company’s net debt was increased by $7.5 million related to fees and expenses incurred and the change in the unamortized discount related to the Company’s debt refinancing activities during 2013. The Company's net debt, as defined above, divided by the last twelve months Consolidated Adjusted EBITDA was


Exhibit 99.1

3.33x for the twelve month period ended June 30, 2014 compared to 3.39x for the twelve month period ended a year ago. The Company's total debt, as defined above, divided by the last twelve months Consolidated Adjusted EBITDA was 3.55x for the twelve month period ended June 30, 2014 compared to 3.70x for the twelve month period last year.

Full Year 2014 Guidance

Tomlinson added, “The strong performance in our Alliance Oncology Division during the second quarter, along with the momentum from the new partnerships we’ve announced, plus our growing pipeline of new opportunities, validate our full service line outsourced partnership model.. We are on track with our strategic transformation, and on target with our growth strategy. Looking ahead, I am confident that we have the right pieces in place to achieve our full year guidance by driving service line growth for our customers, strategic growth for our divisions, and long-term growth for our shareholders.”


Alliance is confirming its full year 2014 guidance ranges as follows:
 
Guidance Ranges
 
(dollars in millions)
Revenue
$437 - $462
Adjusted EBITDA
$140 - $160
Capital expenditures
$52 - $62
Decrease in long-term debt, net of the change in cash and cash equivalents (before investment in acquisitions and debt refinancing costs)
$27 - $37


Second Quarter 2014 Earnings Conference Call

Investors and all others are invited to listen to a conference call discussing second quarter 2014 results. The conference call is scheduled for Thursday, August 7, 2014 at 5:00 p.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. Interested parties should call at least five minutes prior to the call to register. A telephone replay will be available until November 6, 2014. The telephone replay can be accessed by calling (855) 859-2056 or (404) 537-3406. The conference call identification number is 81504718.

Definition of Non-GAAP Measures

Adjusted EBITDA and Adjusted Net Income Per Share are not measures of financial performance under generally accepted accounting principles in the United States, or “GAAP.”

For a more detailed discussion of these non-GAAP financial measures and a reconciliation to the most directly comparable GAAP financial measure, see the section entitled “Non-GAAP Measures” included in the tables following this release.

About Alliance HealthCare Services
Alliance HealthCare Services is a leading national provider of comprehensive radiology and radiation therapy services based upon annual revenue and number of systems deployed. Alliance focuses on MRI, PET/CT and CT through its Radiology Division (Alliance HealthCare Radiology) and radiation therapy through its Oncology


Exhibit 99.1

Division (Alliance Oncology). With approximately 1,800 team members committed to providing exceptional patient care and exceeding customer expectations, Alliance provides quality clinical services for over 1,000 hospitals and other healthcare partners in 43 states. Operating 499 diagnostic imaging and radiation therapy systems, the Company is the nation’s largest provider of advanced diagnostic mobile imaging services and one of the leading operators of fixed-site imaging centers, with 124 locations across the country. Additionally, with 29 radiation therapy centers providing treatment and care for cancer patients, including 18 stereotactic radiosurgery (SRS) facilities, Alliance is among the leading providers of stereotactic radiosurgery nationwide. For more information, visit www.alliancehealthcareservices-us.com.
Forward-Looking Statements
This press release contains forward-looking statements relating to future events, including statements related to the Company’s cost savings plan and long-term growth, including its efforts to expand the Radiation Oncology Division and hospital and healthcare group partnerships; the Company’s expectations with respect to customer retention, new sales and growth in radiology services volume, and their impact on 2014 results, the Company’s Full Year 2014 Guidance, including its forecasts of revenue, Adjusted EBITDA, cash capital expenditures, cost savings due to refinancing of the Company’s credit facility and decrease in long-term debt. 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 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 healthcare regulatory environment; the Company’s ability to keep pace with technological developments within its industry; the growth or lack thereof in the market for imaging, radiation oncology 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, 2013, 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.


Exhibit 99.1

ALLIANCE HEALTHCARE SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(in thousands, except per share amounts)
 
Quarter Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2013
 
2014
 
2013
 
2014
Revenues
$
114,418

 
$
111,238

 
$
224,800

 
$
216,603

Costs and expenses:
 
 

 
 
 
 
Cost of revenues, excluding depreciation and amortization
60,094

 
59,627

 
120,733

 
116,567

Selling, general and administrative expenses
20,247

 
19,384

 
39,342

 
38,123

Transaction costs
—

 
937

 
80

 
939

Severance and related costs
298

 
1,727

 
646

 
1,860

Impairment charges
4,867

 
236

 
4,867

 
236

Loss on extinguishment of debt
17,069

 
—

 
17,069

 
—

Depreciation expense
16,322

 
14,274

 
32,838

 
30,069

Amortization expense
2,911

 
1,957

 
6,705

 
3,909

Interest expense and other, net
11,053

 
6,124

 
23,325

 
12,362

Other income, net
(385
)
 
(408
)
 
(1,287
)
 
(331
)
Total costs and expenses
132,476

 
103,858

 
244,318

 
203,734

(Loss) income before income taxes, earnings from unconsolidated investees, and noncontrolling interest
(18,058
)
 
7,380

 
(19,518
)
 
12,869

Income tax (benefit) expense
(7,195
)
 
1,802

 
(7,333
)
 
3,309

Earnings from unconsolidated investees
(1,408
)
 
(1,242
)
 
(3,142
)
 
(2,240
)
Net (loss) income
(9,455
)
 
6,820

 
(9,043
)
 
11,800

Less: Net income attributable to noncontrolling interest
(3,509
)
 
(4,036
)
 
(6,339
)
 
(7,085
)
Net (loss) income attributable to Alliance HealthCare Services, Inc.
$
(12,964
)
 
$
2,784

 
$
(15,382
)
 
$
4,715

Comprehensive (loss) income, net of taxes:
 
 
 
 
 
 
 
Net (loss) income attributable to Alliance HealthCare Services, Inc.
$
(12,964
)
 
$
2,784

 
$
(15,382
)
 
$
4,715

Unrealized loss on hedging transactions, net of taxes
(192
)
 
(235
)
 
(272
)
 
(215
)
Comprehensive (loss) income, net of taxes
$
(13,156
)
 
$
2,549

 
$
(15,654
)
 
$
4,500

(Loss) income per common share attributable to Alliance HealthCare Services, Inc.:
 
 
 
 
 
 
 
Basic
$
(1.22
)
 
$
0.26

 
$
(1.45
)
 
$
0.44

Diluted
$
(1.22
)
 
$
0.26

 
$
(1.45
)
 
$
0.43

Weighted-average number of shares of common stock and common stock equivalents:
 
 
 
 
 
 
 
Basic
10,629

 
10,671

 
10,629

 
10,669

Diluted
10,629

 
10,854

 
10,629

 
10,872




Exhibit 99.1

ALLIANCE HEALTHCARE SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
 
December 31,
2013
 
June 30,
2014
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
34,702

 
$
31,317

Accounts receivable, net of allowance for doubtful accounts
63,713

 
64,133

Deferred income taxes
21,849

 
21,849

Prepaid expenses
7,553

 
6,625

Other receivables
2,796

 
2,734

Total current assets
130,613

 
126,658

Equipment, at cost
824,103

 
825,089

Less accumulated depreciation
(654,350
)
 
(671,964
)
Equipment, net
169,753

 
153,125

Goodwill
56,975

 
56,975

Other intangible assets, net
101,801

 
98,158

Deferred financing costs, net
9,873

 
9,047

Other assets
20,832

 
24,122

Total assets
$
489,847

 
$
468,085

LIABILITIES AND STOCKHOLDERS’ DEFICIT
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
11,990

 
$
9,399

Accrued compensation and related expenses
21,166

 
17,693

Accrued interest payable
1,645

 
3,110

Other accrued liabilities
22,002

 
23,463

Current portion of long-term debt
15,066

 
13,292

Total current liabilities
71,869

 
66,957

Long-term debt, net of current portion
514,608

 
494,704

Other liabilities
4,714

 
4,826

Deferred income taxes
35,273

 
32,618

Total liabilities
626,464

 
599,105

Commitments and contingencies (Note 12)

 

Stockholders’ deficit:
 
 
 
Common stock
524

 
525

Treasury stock
(2,998
)
 
(3,138
)
Additional paid-in capital
23,521

 
26,588

Accumulated comprehensive loss
(82
)
 
(297
)
Accumulated deficit
(204,709
)
 
(199,994
)
Total stockholders’ deficit attributable to Alliance HealthCare Services, Inc.
(183,744
)
 
(176,316
)
Noncontrolling interest
47,127

 
45,296

Total stockholders’ deficit
(136,617
)
 
(131,020
)
Total liabilities and stockholders’ deficit
$
489,847

 
$
468,085




Exhibit 99.1

ALLIANCE HEALTHCARE SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
 
Six Months Ended
 
June 30,
Operating activities:
2013
 
2014
Net (loss) income
$
(9,043
)
 
$
11,800

Adjustments to reconcile net (loss) income to net cash provided by operating activities:
 
 
 
Provision for doubtful accounts
1,577

 
1,146

Share-based payment
735

 
710

Depreciation and amortization
39,543

 
33,978

Amortization of deferred financing costs
2,051

 
948

Accretion of discount on long-term debt
754

 
222

Adjustment of derivatives to fair value
340

 
355

Distributions (less) more than undistributed earnings from investees
(19
)
 
224

Deferred income taxes
(7,341
)
 
(2,655
)
Gain on sale of assets
(1,109
)
 
(185
)
Loss on extinguishment of debt
17,069

 
—

Impairment charges
4,867

 
236

Excess tax benefit from share-based payment arrangements
—

 
(515
)
Changes in operating assets and liabilities, net of the effects of acquisitions:
 
 
 
Accounts receivable
(3,067
)
 
(1,566
)
Prepaid expenses
(2,378
)
 
1,109

Other receivables
(337
)
 
62

Other assets
172

 
(26
)
Accounts payable
(1,885
)
 
(2,485
)
Accrued compensation and related expenses
(3,512
)
 
(3,473
)
Accrued interest payable
(2,574
)
 
1,465

Income taxes payable
—

 
6

Other accrued liabilities
(3,330
)
 
1,488

Net cash provided by operating activities
32,513

 
42,844

Investing activities:
 
 
 
Equipment purchases
(10,357
)
 
(13,256
)
Decrease (increase) in deposits on equipment
3,884

 
(3,628
)
Acquisitions, net of cash received
—

 
(1,529
)
Proceeds from sale of assets
2,258

 
570

Net cash used in investing activities
(4,215
)
 
(17,843
)


Exhibit 99.1


ALLIANCE HEALTHCARE SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Unaudited)
(in thousands)
 
 
Six Months Ended
 
June 30,
 
2013
 
2014
Financing activities:
 
 
 
Principal payments on equipment debt
(7,269
)
 
(5,450
)
Proceeds from equipment debt
4,845

 
—

Proceeds from term loan facility
337,900

 
—

Principal payments on term loan facility
(340,435
)
 
(2,450
)
Principal payments on revolving loan facility
—

 
(32,000
)
Proceeds from revolving loan facility
—

 
18,000

Payments of debt issuance costs
(9,494
)
 
—

Payments of contingent consideration
—

 
—

Noncontrolling interest in subsidiaries
(6,848
)
 
(6,573
)
Equity purchase of noncontrolling interest
—

 
(691
)
Excess tax benefit from share-based payment arrangements
—

 
515

Proceeds from shared-based payment arrangements
29

 
403

Purchase of treasury stock
—

 
(140
)
Net cash used in financing activities
(21,272
)
 
(28,386
)
Net increase (decrease) in cash and cash equivalents
7,026

 
(3,385
)
Cash and cash equivalents, beginning of period
39,977

 
34,702

Cash and cash equivalents, end of period
$
47,003

 
$
31,317

 
 
 
 
Supplemental disclosure of cash flow information:
 
 
 
Interest paid
$
23,528

 
$
9,877

Income taxes paid, net of refunds
1,927

 
4,991

Supplemental disclosure of non-cash investing and financing activities:
 
 
 
Comprehensive (loss) gain from hedging transactions, net of taxes
(272
)
 
(215
)
Equipment purchases in accounts payable
634

 
666

Adjustment to equity of noncontrolling interest
—

 
1,700



Exhibit 99.1

ALLIANCE HEALTHCARE SERVICES, INC.
NON-GAAP MEASURES
(in thousands)

Adjusted EBITDA and Adjusted Net Income Per Share (the “Non-GAAP Measures”) are not measures of financial performance under generally accepted accounting principles in the United States, or “GAAP.”

Adjusted EBITDA, as defined by the Company’s management, represents net income (loss) before: interest expense, net of interest income; income taxes; depreciation expense; amortization expense; net income (loss) attributable to noncontrolling interests; non-cash share-based compensation; severance and related costs; restructuring charges; fees and expenses related to acquisitions, costs related to debt financing, legal matter expenses, non-cash impairment charges, and other non-cash charges included in other (income) expense, net, which includes non-cash losses on sales of equipment. The components used to reconcile net income (loss) to Adjusted EBITDA are consistent with our historical presentation of Adjusted EBITDA.

Adjusted Net Income Per Share, as defined by the Company’s management, represents net income (loss) before: restructuring charges; fees and expenses related to acquisitions; legal matter expenses; and differences in the GAAP income tax rate compared to our historical income tax rate. The components used to reconcile net income (loss) per share to Adjusted Net Income Per Share are consistent with our historical presentation of Adjusted Net Income Per Share.

Management uses the Non-GAAP Measures, and believes they are useful measures for investors, for a variety of reasons. Management regularly communicates the results of its Non-GAAP Measures and management’s interpretation of such results to its board of directors. Management also compares the Company’s results of its Non-GAAP Measures against internal targets as a key factor in determining cash incentive compensation for executives and other employees, largely because management feels that these measures are indicative of how our diagnostic imaging and radiation oncology businesses are performing and are being managed. The diagnostic imaging and radiation oncology industry continues to experience significant consolidation. These activities have led to significant charges to earnings, such as those resulting from acquisition costs, and to significant variations among companies with respect to capital structures and cost of capital (which affect interest expense) and differences in taxation and book depreciation of facilities and equipment (which affect relative depreciation expense), including significant differences in the depreciable lives of similar assets among various companies. In addition, management believes that because of the variety of equity awards used by companies, the varying methodologies for determining non-cash share-based compensation expense among companies and from period to period, and the subjective assumptions involved in that determination, excluding non-cash share-based compensation from Adjusted EBITDA enhances company-to-company comparisons over multiple fiscal periods and enhances the Company’s ability to analyze the performance of its diagnostic imaging and radiation oncology businesses.

In the future, the Company expects that it may incur expenses similar to the excluded items discussed above. Accordingly, the exclusion of these and other similar items in the Company’s non-GAAP presentation should not be interpreted as implying that these items are non-recurring, infrequent or unusual. The Non-GAAP Measures have certain limitations as analytical financial measures, which management compensates for by relying on the Company’s GAAP results to evaluate its operating performance and by considering independently the economic effects of the items that are or are not reflected in the Non-GAAP Measures. Management also compensates for these limitations by providing GAAP-based disclosures concerning the excluded items in the Company’s financial disclosures. As a result of these limitations and because the Non-GAAP Measures may not be directly comparable to similarly titled measures reported by other companies, however, the Non-GAAP Measures should not be considered as an alternative to the most directly comparable GAAP measure, or as an alternative to any other GAAP measure of operating performance.



The reconciliation of Adjusted EBITDA to net income (loss) is shown below:



Exhibit 99.1

 
Quarter Ended
 
Six Months Ended
 
Twelve Months Ended
 
June 30,
 
June 30,
 
June 30,
 
2013
 
2014
 
2013
 
2014
 
2014
Net income (loss) income attributable to Alliance HealthCare Services, Inc.
$
(12,964
)
 
$
2,784

 
$
(15,382
)
 
$
4,715

 
$
(1,386
)
Income tax (benefit) expense
(7,195
)
 
1,802

 
(7,333
)
 
3,309

 
(1,756
)
Interest expense and other, net
11,053

 
6,124

 
23,325

 
12,362

 
28,207

Amortization expense
2,911

 
1,957

 
6,705

 
3,909

 
8,177

Depreciation expense
16,322

 
14,274

 
32,838

 
30,069

 
63,550

Share-based payment (included in selling, general and administrative expenses)
329

 
376

 
735

 
710

 
1,462

Severance and related costs
—

 
1,727

 
—

 
1,860

 
1,860

Noncontrolling interest in subsidiaries
3,509

 
4,036

 
6,339

 
7,085

 
13,787

Restructuring charges (Note 2)
1,890

 
1,563

 
3,363

 
2,455

 
6,274

Transaction costs
—

 
937

 
80

 
939

 
1,324

Impairment charges
4,867

 
236

 
4,867

 
236

 
8,400

Loss on extinguishment of debt
17,069

 
—

 
17,069

 
—

 
8,949

Other non-recurring charges (included in selling, general and administrative expenses
633

 
822

 
950

 
1,621

 
3,738

Other non-cash charges (included in other income and expense, net)
161

 
31

 
190

 
351

 
710

Total segment income
$
38,585

 
$
36,669

 
$
73,746

 
$
69,621

 
$
143,296



The leverage ratio calculations as of June 30, 2014 are shown below:
 
Consolidated
Total debt
$
507,996

Less: Cash and cash equivalents
(31,317
)
Net debt
476,679

 
 
Last 12 months Adjusted EBITDA
143,296

 
 
Total leverage ratio
3.55x

Net leverage ratio
3.33x


The reconciliation of (loss) earnings per diluted share - GAAP to adjusted net income per diluted share non-GAAP is shown below:
 
Second Quarter Ended June 30,
 
2013
 
2014
 (Loss) earnings per diluted share- GAAP
$
(1.22
)
 
$
0.26

   Restructuring charges, net of taxes
0.18

 
0.30

   Transaction costs, net of taxes
—

 
0.09

   Impairment charges, net of taxes
0.46

 
0.02

   Loss on extinguishment of debt, net of taxes
1.61

 
—

   Legal matter expenses, net of taxes
0.06

 
0.08

   GAAP income tax rate compared to our historical income tax rate
(0.85
)
 
(0.22
)
 Adjusted Net (Loss) Income Per Share
$
0.23

 
$
0.52




Exhibit 99.1



The reconciliation from net income to Adjusted EBITDA for the 2014 guidance range is shown below (in millions):
 
2014 Full Year
 
Guidance Range
Net income
$
20

 
$
28

Income tax expense
15

 
17

Depreciation expense; amortization expense; interest expense and other, net; noncontrolling interest in subsidiaries; share-based payment and other expenses
105

 
115

Adjusted EBITDA
$
140

 
$
160



Exhibit 99.1

ALLIANCE HEALTHCARE SERVICES, INC.
SELECTED STATISTICAL INFORMATION

 
Quarter Ended
March 31,
 
2013
 
2014
MRI
 
 
 
Average number of total systems
255.3

 
250.7

Average number of scan-based systems
213.2

 
210.8

Scans per system per day (scan-based systems)
8.48

 
8.69

Total number of scan-based MRI scans
120,680

 
120,475

Price per scan
$
352.81

 
$
340.20

 
 
 
 
Scan-based MRI revenue (in millions)
$
42.6

 
$
41.0

Non-scan based MRI revenue (in millions)
4.8

 
4.7

Total MRI revenue
$
47.4

 
$
45.7

 
 
 
 
PET/CT
 
 
 
Average number of systems
111.5

 
113.3

Scans per system per day
5.59

 
5.36

Total number of PET and PET/CT scans
38,152

 
34,919

Price per scan
$
963

 
$
950

 
 
 
 
PET/CT revenue
$
37.7

 
$
34.2

 
 
 
 
Radiation oncology
 
 
 
Linac treatments
15,462

 
21,005

Stereotactic radiosurgery patients
721

 
808

 
 
 
 
Radiation oncology revenue
$
19.8

 
$
23.9

 
 
 
 
Revenue breakdown
 
 
 
Total MRI revenue
$
47.4

 
$
45.7

PET/CT revenue
37.7

 
34.2

Radiation oncology revenue
19.8

 
23.9

Other modalities and other revenue
9.5

 
7.4

Total revenues
$
114.4

 
$
111.2

 
 
 
 
 
 
 
 
Total fixed-site revenue (in millions)
2013
 
2014
Second quarter ended June 30
$
30.7

 
$
29.0



Exhibit 99.1

ALLIANCE HEALTHCARE SERVICES, INC.
SELECTED STATISTICAL INFORMATION
SAME STORE VOLUME

The Company utilizes same store volume growth as a historical statistical measure of the MRI and PET/CT imaging procedure, linear accelerator treatment and SRS case growth at its customers in a specified period on a year-over-year basis. Same store volume growth is calculated by comparing the cumulative scan, treatment or case volume at all locations in the current year quarter to the same quarter in the prior year. The group of customers whose volume is included in the scan or treatment volume totals is those that received service from Alliance for the full quarter in each of the comparison periods. A positive percentage represents growth over the prior year quarter and a negative percentage represents a decline over the prior year period. Alliance measures each of its major imaging and oncology modalities, MRI, PET/CT, linear accelerator and SRS, separately.

The radiology division same store volume growth/(decline) for the last four calendar quarters ended June 30, 2014 is as follows:

 
Same Store Volume
 
MRI
 
PET/CT
2013
 
 
 
  Third Quarter
1.2
 %
 
1.6
 %
  Fourth Quarter
2.1
 %
 
(0.6
)%
 
 
 
 
2014
 
 
 
  First Quarter
(0.6
)%
 
(6.1
)%
  Second Quarter
5.3
 %
 
(4.9
)%

The oncology division same store volume growth for the last two quarters ended June 30, 2014 is as follows:

 
Same Store Volume
 
Linac
 
SRS
2014
 
 
 
  First Quarter
13.7
%
 
4.4
%
  Second Quarter
4.2
%
 
4.1
%