Allied Healthcare International inc. acquires shareholding in Homecare independent living group

Allied Healthcare International Inc, a leading provider of flexible healthcare staffing services in the United Kingdom, announced today that its UK subsidiary, Allied Healthcare Group Limited, has acquired a shareholding in a group of businesses commonly known as Homecare Independent Living Group ("Homecare").

The Homecare business, with over 620 staff members, is a leading provider of social care to the elderly, physically disabled and mentally disabled with four operating divisions in Northern Ireland and an increasing presence in the Republic of Ireland (Eire). The transaction will provide Allied with a market-leading position in Northern Ireland as well as a strategic footprint in the Republic of Ireland market. Both are new territories for the Company with strong growth potential. Allied expects this acquisition to be earnings enhancing. Further, the two vendors of Homecare (the "Vendors") will remain in their existing roles as directors of the Homecare business to be joined by directors appointed by Allied to this business.

Since its formation in 1994, Homecare has built a market-leading domiciliary care business, in partnership with all five Health and Social Care Trusts in Northern Ireland as well as the Health Service Executive in Eire. It also operates three specialist divisions. The Housing and Support Services divisions provide fully furnished temporary housing and tailored support to vulnerable members of the community in line with the U.K. Government's policy of supporting people in their local communities. The recently added Peripatetic Services division combines domiciliary care, housing and support for individuals with a high complexity of need. These specialist services are not currently provided by Allied in its home market and the transaction offers the opportunity for the Company to capitalize on Homecare's experience.

Allied has acquired a 50.1% shareholding in L&B (No. 182) Limited, the holding company of the five entities that make up the Homecare business, from the Vendors for a consideration of GBP 3.9 million ($5.8 million). Such consideration may be adjusted based on the final value of the net assets. This was funded through Allied's cash on hand. In addition, Allied has also entered into call option agreements giving Allied the right to buy the remaining shares between March 2013 and March 2020. The Vendors have also entered into put option agreements giving the Vendors the right to sell the remaining shares between March 2011 and March 2020. The maximum amount payable by Allied for 100% of the Homecare business will be GBP 11.2 million ($16.5 million) during this period and is subject to Homecare achieving certain annual earnings before interest, taxes, depreciation and amortization ("EBITDA") targets. It is anticipated that the purchase of the additional shareholdings in L&B (No.182) Limited will be funded through cash on hand.

Sandy Young, Chief Executive Officer of Allied, commented, "Where Great Britain has outsourced approximately 80% of home care services to the independent sector, Northern Ireland and Eire are at approximately 50% and 5%, respectively. We see these markets following the same trends of outsourcing and rapidly aging populations as we have seen in Great Britain and, therefore, they are of great strategic value to Allied. Furthermore, Homecare is a well-respected and established business with an excellent platform for future growth across the region. I am delighted to welcome Homecare's employees into the Allied Healthcare Group and we look forward to working closely with the existing directors to realize our shared vision for growth and quality of care over the coming years."

The Directors of Homecare said, "This is an exciting milestone in our business growth strategy and believe Allied to be the right team to grow this business with. We view this as a major vote of confidence in the Northern Ireland and Republic of Ireland economies and expect this to create new local job opportunities. It gives Homecare the financial strength to both expand our services in Northern Ireland as well as put into action our plans to aggressively grow our presence in the underdeveloped and high potential private care market in the Republic of Ireland."

The following disclosure is made pursuant to the AIM rules. The unaudited statutory accounts of the five entities that make up the Homecare business for the year ended March 31, 2009 showed aggregated revenues of GBP 9.4 million ($13.9 million), profit before tax of GBP 0.3 million ($0.4 million) and net assets of approximately GBP 0.2 million ($0.3 million) at March 31, 2009.