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Company Announces 2017 Guidance

Alliance HealthCare Services, Inc. (NASDAQ: AIQ) (the “Company,” “Alliance,” “we” or “our”), a leading national provider of outsourced radiology, oncology and interventional services, announced today the results for the fourth quarter and full year ended December 31, 2016, and provided 2017 guidance.

Full Year 2016 Highlights

• The Company reported revenue totaling $505.5 million, a $32.5 million or 6.9% increase year-over-year.
• The Company generated $131.5 million of Adjusted EBITDA (as defined below), a $0.2 million or 0.2% increase year-over-year.
• The Company continued to generate strong cash flow with $108.8 million in operating cash flows for full year 2016, compared to $92.5 million in the prior year.
• Net Income Per Share before the impact of shareholder transaction expenses and one time step up gains from 2015 was $0.56 for full year 2016, compared to $0.15 in 2015. GAAP Net Income per share was $0.04 for the full year 2016, compared to $0.62 in 2015.
• Alliance Radiology revenue increased by 3.3% to $350.8 million with strong same-store volume growth of +1.6% for MRI and +6.7% for PET/CT for full year 2016.
• Alliance Oncology revenue increased 7.3% to $107.2 million for full year 2016 with same-store volume growth of +2.9% for LINAC and +0.4% for SRS.
• Alliance Interventional revenue increased 37.3% to $45.6 million for full year 2016.
• Our results for this year were in line with full-year 2016 guidance for revenue, which ranged from $505 million to $535 million, and Adjusted EBITDA, which ranged from $130 million to $150 million.

Fourth Quarter 2016 Highlights

• The Company reported revenue totaling $129.4 million for the fourth quarter, a $5.1 million or 4.1% increase over the fourth quarter of last year.
• The Company generated $31.5 million of Adjusted EBITDA (as defined below) for the quarter, a $1.7 million or 5.2% decrease from the fourth quarter of last year.
• Adjusted Net Income Per Share (as defined below) was $0.11, and GAAP net loss per share was $0.20 for the quarter.
• The Company continued to generate strong cash flow with $26.7 million of quarterly operating cash flow.

2016 Financial Results

“During 2016 we successfully executed a number of initiatives to position the Company for future accelerated growth. We continued to see positive same-store volume growth in our business segments in full year 2016. The heavy year-over-year price impact in our Radiology segment is largely behind us, having successfully renewed the majority of our contracts with customers over the last few years,” stated Tom Tomlinson, Chief Executive Officer and President of Alliance HealthCare Services. “Results for the fourth quarter trailed our internal expectations somewhat, driven primarily by continued physician capacity challenges in our Interventional business and some same-store volume softness across MRI and Stereotactic Radiosurgery. In addition, we began to absorb some impact from staff and resources we have added as we explore opportunities in China. Looking ahead, we expect our growth investments and improving execution to deliver strong growth in both revenue and earnings in 2017,” continued Mr. Tomlinson.

For full year 2016, revenue increased to $505.5 million, compared to $473.1 million in 2015. This increase was primarily due to an increase in Interventional, Radiology and Oncology revenue of $12.4 million, $11.2 million, and $7.3 million, respectively, when compared to 2015. Revenue for the fourth quarter of 2016 increased to $129.4 million, compared to $124.3 million in the fourth quarter of 2015. This increase was primarily due to increases in Radiology and Oncology revenue of $1.9 million and $3.8 million, respectively, partially offset by a decrease of $1.2 million in Interventional revenue.

For full year 2016, Adjusted EBITDA increased to $131.5 million, compared to $131.3 million in 2015. The year-over-year increase was primarily due to increases in earnings from Radiology and Oncology, partially offset by Corporate investments as well as a decline in the Interventional segment. Adjusted EBITDA growth in both Radiology and Oncology was driven by year-over-year same-store volume growth as well as the addition of new partnerships such as Pacific Cancer Institute and the Northern Alabama Cancer Care Network. Alliance’s Adjusted EBITDA for the fourth quarter of 2016 decreased 5.2% to $31.5 million from $33.3 million in the fourth quarter of 2015. The Radiology and Oncology segments continued to provide quarter-over-quarter growth in Adjusted EBITDA, offset, however, by Corporate investments as well as a decrease in Interventional earnings. Increases in Radiology and Oncology were attributable to strong continued same-store volume growth across both divisions and net new sales and partnerships. The declines in the Interventional business were driven by challenges in physician capacity as well as additional platform investments made to strengthen management and development capabilities. Corporate / Other Adjusted EBITDA decreased due to additional investments in organization, systems and infrastructure to support expanded workforce, entities and partnerships, and gains on asset sales that occurred in the fourth quarter of 2015 that did not recur in the fourth quarter of 2016.

For full year 2016, net income totaled $0.5 million, compared to $6.7 million in 2015. The $6.2 million decrease is largely due to the net impact of a $10.7 million non-cash gain in the second half of 2015 which did not recur in 2016, as well as a $6.6 million increase in certain expenses related to Tahoe Investment Group Co., Ltd.’s (“Tahoe’s”) majority ownership purchase of common stock from the Company’s former shareholders on March 29, 2016 (“Tahoe Transaction”). These expenses were borne by both the buyer and sellers involved in the Tahoe transaction and not by the Company. Excluding the one-time cash gain and the expenses related to the Tahoe transaction on a tax-effected basis, the net income attributable to Alliance would have been $1.7 million in 2015, compared to $6.1 million in the current year.

For full year 2016, GAAP net income per share on a diluted basis was $0.04 per share, compared to $0.62 in 2015. Excluding the impact of the one-time non-cash gain and the expenses related to the Tahoe Transaction, GAAP net income per share on a diluted basis would have been $0.56 for full year 2016, compared to $0.15 in 2015. Adjusted Net Income Per Share was $0.85 and $1.28 for full years 2016 and 2015, respectively. GAAP net income per share on a diluted basis was impacted by net charges of $0.81, compared to $0.66 in 2015, which were comprised of: severance and related costs; restructuring charges; transaction costs; shareholder transaction costs; deferred financing costs in connection with the Tahoe Transaction; impairment charges; legal matters expense, net; changes in fair value of contingent consideration related to acquisitions; non-cash gain on step acquisition; other non-cash (benefits) charges; and differences in the GAAP income tax rate from our historical income tax rate of 42.5%.

Cash flows provided by operating activities totaled $108.8 million for full year 2016, compared to $92.5 million in 2015. For the full year 2016, total capital expenditures, including cash paid for equipment purchases and deposits on equipment and including capital leases, totaled $74.7 million compared to $82.9 million in 2015. Growth capital expenditures totaled $33.2 million and maintenance capital expenditures totaled $41.5 million.

Alliance’s gross debt, defined as total long-term debt (including current maturities but excluding the impact of deferred financing costs), decreased $4.5 million to $573.2 million at December 31, 2016 from $577.7 million at December 31, 2015. Alliance’s net debt, defined as total long-term debt (including current maturities but excluding the impact of deferred financing costs) less cash and cash equivalents, increased $11.4 million to $551.0 million at December 31, 2016 from $539.6 million at December 31, 2015. Cash and cash equivalents were $22.2 million at December 31, 2016 and $38.1 million at December 31, 2015.

Alliance’s total debt, as defined above, divided by the last twelve months Consolidated Adjusted EBITDA was 4.03x for the twelve month period ended December 31, 2016, compared to 4.13x for the quarter ended September 30, 2016 and 4.10x for the year ended December 31, 2015. Alliance’s net debt, as defined above, divided by the last twelve months Consolidated Adjusted EBITDA was 3.87x for the twelve month period ended December 31, 2016, compared to 3.83x for the year ended December 31, 2015.

Full Year 2017 Guidance

“With respect to our guidance for 2017, we are looking for balanced growth in Revenue and Adjusted EBITDA. The revenue momentum that has been evident throughout the previous year will enable us to drive earnings growth as we leverage existing investments that have been made in new clinical sites and strengthening our team. We will also make meaningful progress towards our long-term goal of reducing leverage to the 3.5x Adjusted EBITDA range,” stated Mr. Tomlinson.

Alliance’s full year 2017 guidance ranges are as follows:

(in millions)   Ranges Revenue $529 - $540 Adjusted EBITDA $135 - $140 Capital expenditures $54 - $70 Maintenance $30 - $35 Growth $24 - $35

Decrease in long-term debt, net of the change in

cash and cash equivalents (before investments in

acquisitions), before growth capital expenditures

or “free cash flow before growth capital expenditures”

$50 - $55 Decrease in long-term debt, net of the change

in cash and cash equivalents (before investments in

acquisitions), after growth capital expenditures

or “free cash flow after growth capital expenditures”

$19 - $26  

Full Year 2016 Earnings and 2017 Guidance Conference Call

Investors and all others are invited to listen to a conference call discussing fourth quarter 2016 and full year 2016 results as well as 2017 guidance. The conference call is scheduled for Thursday, March 9, 2017 at 5 p.m. Eastern Time. Additionally, a live webcast of the call will be available on the Company’s website at www.alliancehealthcareservices-us.com. Click on “About Us,” then, “Investor Relations.” You will find the Audio Presentation in the “News & Events” section. A replay of the webcast will be available on the Company’s website until May 9, 2017.

The conference call can be accessed at 877.638.4550 (International callers can dial 443.961.0596). Interested parties should call at least five minutes prior to the call to register. A telephone replay will be available until May 3, 2017. The telephone replay can be accessed by calling 800.585.8367. The conference call identification number is 10068564.

Definition of Non-GAAP Measures

Total Adjusted EBITDA and Adjusted Net Income Per Share are not measures of financial performance under generally accepted accounting principles in the United States (“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 (NASDAQ: AIQ) is a leading national provider of outsourced medical services including radiology, oncology and interventional. We partner with healthcare providers and hospitals to provide a full continuum of services from mobile to fixed-site to comprehensive service line management and joint venture partnerships. We also operate freestanding clinics and Ambulatory Surgical Centers (“ASCs”) that are not owned by hospitals or providers.

As of December 31, 2016, Alliance operated 625 diagnostic radiology and radiation therapy systems, including 113 fixed-site radiology centers across the country, and 33 radiation therapy centers and SRS facilities. With a strategy of partnering with hospitals, health systems and physician practices, Alliance provides quality clinical services for over 1,100 hospitals and other healthcare partners in 46 states, where approximately 2,450 Alliance Team Members are committed to providing exceptional patient care and exceeding customer expectations. 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 long-term growth strategy and efforts to diversify its business model, the Company’s plans to expand its Interventional Division, both organically and through one or more acquisitions, the Company’s expectations regarding growth across the Company’s divisions, the expansion of its service footprint and revenue growth, maximizing shareholder value, and the Company’s Full Year 2017 Guidance, including its forecasts of revenue, Adjusted EBITDA, capital expenditures, and decrease (increase) 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 Company’s ability to comply with reporting obligations and other covenants under the Company’s debt instruments, the failure of which could cause the debt to become due; the accuracy of the Company’s estimates regarding its capital requirements; the effect of intense levels of competition and overcapacity in the Company’s industry; changes in the methods of third party reimbursements for medical imaging, oncology and interventional 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 radiology, oncology, interventional 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 and equity 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, costs, delays and impediments to completing the acquisitions, 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, 2016, 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.

      ALLIANCE HEALTHCARE SERVICES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (in thousands, except per share amounts)   Quarter Ended December 31,

(unaudited)

Year Ended December 31,

(audited)

2016   2015 2016   2015 Revenues $ 129,387 $ 124,337 $ 505,549 $ 473,054 Costs and expenses: Cost of revenues, excluding depreciation and amortization 73,761 72,676 285,746 269,104 Selling, general and administrative expenses 25,162 22,173 96,663 88,471 Transaction costs 900 1,332 1,886 3,296 Shareholder transaction costs 703 1,853 4,219 1,853 Severance and related costs 724 616 3,910 1,347 Impairment charges 632 — 632 6,817 Depreciation expense 14,295 12,643 54,972 48,595 Amortization expense 3,068 2,418 10,561 9,325 Interest expense, net 9,067 6,659 34,506 26,241 Other income, net   (337 )   (1,931 )   (6,586 )   (12,255 ) Total costs and expenses   127,975   118,439   486,509   442,794 Income before income taxes, earnings from unconsolidated

investees, and noncontrolling interest

1,412 5,898 19,040 30,260 Income tax (benefit) expense (285 ) 1,232 2,852 6,536 Earnings from unconsolidated investees   (363 )   (344 )   (1,290 )   (3,391 ) Net income 2,060 5,010 17,478 27,115 Less: Net income attributable to noncontrolling interest   (4,194 )   (5,262 )   (16,985 )   (20,373 ) Net (loss) income attributable to Alliance HealthCare Services, Inc. $ (2,134 ) $ (252 ) $ 493 $ 6,742   Comprehensive income (loss), net of taxes: Net income 2,060 5,010 17,478 27,115 Unrealized gain (loss) on hedging transactions, net of taxes 122 (29 ) 104 (178 )

Reclassification adjustment for losses included in net income, net

of taxes

  181   18   417   18 Comprehensive income, net of taxes 2,363 4,999 17,999 26,955 Less: Comprehensive income attributable to noncontrolling interest   (4,194 )   (5,262 )   (16,985 )   (20,373 ) Comprehensive (loss) income attributable to Alliance HealthCare

Services, Inc.

$ (1,831 ) $ (263 ) $ 1,014 $ 6,582

 

(Loss) income per common share attributable to Alliance HealthCare Services, Inc.: Basic $ (0.20 ) $ (0.02 ) $ 0.05 $ 0.63 Diluted $ (0.20 ) $ (0.02 ) $ 0.04 $ 0.62 Weighted average number of shares of common stock and

common stock equivalents:

Basic 10,897 10,742 10,866 10,741 Diluted 10,897 10,802 10,959 10,849     ALLIANCE HEALTHCARE SERVICES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Audited) (in thousands)   December 31, 2016   2015 ASSETS Current assets: Cash and cash equivalents $ 22,241 $ 38,070 Accounts receivable, net of allowance for doubtful accounts 77,496 73,208 Prepaid expenses 9,568 13,463 Other current assets   3,853   3,206 Total current assets 113,158 127,947 Plant, property and equipment, net 204,814 177,188 Goodwill 119,130 102,782 Other intangible assets, net 198,977 162,923 Other assets   23,785   32,820 Total assets $ 659,864 $ 603,660 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable $ 28,185 $ 20,796 Accrued compensation and related expenses 24,895 19,933 Accrued interest payable 3,308 3,323 Current portion of long-term debt 17,298 17,732 Current portion of obligations under capital leases 3,354 2,674 Other accrued liabilities   29,323   36,453 Total current liabilities 106,363 100,911 Long-term debt, net of current portion 515,407 540,353 Obligations under capital leases, net of current portion 12,686 10,332 Deferred income taxes 25,818 23,020 Other liabilities   9,093   6,664 Total liabilities 669,367 681,280   Stockholders’ deficit: Common stock 110 108 Treasury stock (3,138 ) (3,138 ) Additional paid-in capital 61,353 29,297 Accumulated comprehensive income (loss) 10 (511 ) Accumulated deficit   (197,900 )   (198,393 ) Total stockholders’ deficit attributable to Alliance HealthCare Services, Inc. (139,565 ) (172,637 ) Noncontrolling interest   130,062   95,017 Total stockholders’ deficit   (9,503 )   (77,620 ) Total liabilities and stockholders’ deficit $ 659,864 $ 603,660       ALLIANCE HEALTHCARE SERVICES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Audited) (in thousands)   Year Ended December 31, 2016   2015 Operating activities: Net income $ 17,478 $ 27,115 Adjustments to reconcile net income to net cash provided by operating activities: Provision for doubtful accounts 2,255 2,911 Share-based payment 2,713 1,701 Depreciation and amortization 65,533 57,920 Amortization of deferred financing costs 8,126 2,554 Accretion of discount on long-term debt 513 481 Adjustment of derivatives to fair value 727 29 Distributions from unconsolidated investees 1,335 3,880 Earnings from unconsolidated investees (1,290 ) (3,391 ) Deferred income taxes 1,780 6,350 Gain on sale of assets, net (1,133 ) (1,883 ) Changes in fair value of contingent consideration related to acquisitions (4,790 ) — Non-cash gain on step acquisition — (10,672 ) Other non-cash gain (423 ) (209 ) Impairment charges 632 6,817 Excess tax benefit from share-based payment arrangements (100 ) 5 Changes in operating assets and liabilities, net of the effects of acquisitions: Accounts receivable (6,270 ) (7,112 ) Prepaid expenses 3,567 (877 ) Other current assets 1,267 1,494 Other assets (881 ) 2,607 Accounts payable 8,040 3,442 Accrued compensation and related expenses 4,962 (1,363 ) Accrued interest payable (15 ) 168 Income taxes payable 868 40 Other accrued liabilities   3,888   454 Net cash provided by operating activities   108,782   92,461 Investing activities: Equipment purchases (56,401 ) (55,511 ) Increase in deposits on equipment (11,768 ) (15,751 ) Acquisitions, net of cash received (25,912 ) (49,140 ) Proceeds from sale of assets   1,830   1,941 Net cash used in investing activities   (92,251 )   (118,461 )       ALLIANCE HEALTHCARE SERVICES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (Audited) (in thousands)   Year Ended December 31, 2016   2015 Financing activities: Principal payments on equipment debt and capital lease obligations $ (16,925 ) $ (12,697 ) Proceeds from equipment debt 7,101 27,049 Principal payments on term loan facility (5,200 ) (9,951 ) Proceeds from term loan facility — 29,850 Principal payments on revolving loan facility (61,000 ) (33,000 ) Proceeds from revolving loan facility 63,000 50,500 Payments of debt issuance costs and deferred financing costs (25,741 ) (808 ) Distributions to noncontrolling interest in subsidiaries (23,526 ) (21,659 ) Contributions from noncontrolling interest in subsidiaries 1,411 1,732 Issuance of common stock 1 1 Excess tax benefit from share-based payment arrangements 100 (5 ) Proceeds from exercise of stock options 614 25 Settlement of contingent consideration related to acquisitions (825 ) — Proceeds from shareholder transaction   28,630   — Net cash (used in) provided by financing activities   (32,360 )     31,037 Net (decrease) increase in cash and cash equivalents (15,829 ) 5,037 Cash and cash equivalents, beginning of period   38,070   33,033 Cash and cash equivalents, end of period $ 22,241 $ 38,070 Supplemental disclosure of cash flow information: Interest paid $ 25,368 $ 23,373 Income taxes refunded, net (3,852 ) (664 ) Supplemental disclosure of non-cash investing and financing activities: Net book value of assets exchanged 170 199 Capital lease obligations related to the purchase of equipment 6,558 11,273 Changes in equipment purchases in accounts payable and accrued equipment (4,591 ) 3,700 Extinguishment of note receivable — 3,071 Transfer of equity investment as consideration in step acquisition — 721 Transfer of assets as consideration in acquisitions 9,900 477 Transfer of fair value of equity investment in step acquisition — 13,645 Noncontrolling interest assumed in connection with acquisitions 39,141 36,231 Mandatorily redeemable noncontrolling interest in connection with acquisition — 2,386 Fair value of contingent consideration related to acquisitions 420 5,750  

ALLIANCE HEALTHCARE SERVICES, INC.NON-GAAP MEASURES

Total 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 U.S. (“GAAP”).

Total Adjusted EBITDA, as defined by the Company’s management, is consistent with the definition in the Company’s Credit Agreement and represents net (loss) income before: income tax (benefit) expense; interest expense, net; depreciation expense; amortization expense; share-based payment; severance and related costs; net income attributable to noncontrolling interest; restructuring charges; transaction costs; shareholder transaction costs; impairment charges; legal matters expense, net; changes in fair value of contingent consideration related to acquisitions; non-cash gain on step acquisition; and other non-cash (benefits) charges, which include non-cash (gains) losses on sales of assets. The components used to reconcile net (loss) income to Total Adjusted EBITDA are consistent with our historical presentation of Total Adjusted EBITDA.

Adjusted Net Income Per Share, as defined by the Company’s management, represents net (loss) income before: severance and related costs; restructuring charges; transaction costs; shareholder transaction costs; deferred financing costs in connection with shareholder transaction; impairment charges; legal matters expenses, net; changes in fair value of contingent consideration related to acquisitions; non-cash gain on step acquisition; other non-cash (benefits) charges; and differences in the GAAP income tax rate compared to our historical income tax rate. The components used to reconcile net (loss) income 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 radiology, oncology and interventional 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 radiology, oncology and interventional 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 calculation of Adjusted EBITDA is shown below:

Quarter Ended December 31,   Year Ended December 31, (in thousands) 2016   2015 2016   2015 Net (loss) income attributable to Alliance HealthCare Services, Inc. $ (2,134 ) $ (252 ) $ 493 $ 6,742 Income tax (benefit) expense (285 ) 1,232 2,852 6,536 Interest expense, net 9,067 6,659 34,506 26,241 Depreciation expense 14,295 12,643 54,972 48,595 Amortization expense 3,068 2,418 10,561 9,325 Share-based payment (included in “Selling, general and

administrative expenses”)

526 459 3,176 1,701 Severance and related costs 724 616 3,910 1,347 Net income attributable to noncontrolling interest 4,194 5,262 16,985 20,373 Restructuring charges — 620 1,635 1,327 Transaction costs 900 1,332 1,886 3,296 Shareholder transaction costs 703 1,853 4,219 1,853 Impairment charges 632 — 632 6,817 Legal matters expense, net (included in “Selling, general and

administrative expenses”)

— 1,088 106 6,915 Changes in fair value of contingent consideration related to

acquisitions (included in “Other income, net”)

(150 ) — (4,790 ) — Non-cash gain on step acquisition (included in “Other income,

net”)

— (722 ) — (10,672 ) Other non-cash charges (included in “Other income, net”)   1   59   325   864 Adjusted EBITDA $ 31,541 $ 33,267 $ 131,468 $ 131,260  

Adjusted EBITDA by segment is shown below:

  Year Ended December 31, (in thousands) 2016   2015 Adjusted EBITDA: Radiology $ 96,828 $ 94,475 Oncology 46,609 43,112 Interventional 3,935 5,175 Corporate / Other   (15,904 )   (11,502 ) Total $ 131,468 $ 131,260  

The leverage ratio calculations as of December 31, 2016 are shown below:

(dollars in thousands)   Consolidated Total debt $ 573,247 Less: Cash and cash equivalents   (22,241 ) Net debt $ 551,006 Last 12 months’ Adjusted EBITDA 131,468 Pro-forma acquisitions in the last 12 month period(1)   10,784 Last 12 months’ Consolidated Adjusted EBITDA $ 142,252 Total leverage ratio 4.03 x Net leverage ratio 3.87 x (1)   Gives pro-forma effect to acquisitions occurring during the last twelve months, pursuant to the terms of the Credit Agreement.  

The reconciliation of (loss) income per diluted share attributable to Alliance HealthCare Services, Inc. – GAAP to Adjusted Net income Per Share is shown below:

    Quarter Ended December 31,   Year Ended December 31, 2016   2015 2016   2015 (Loss) income per diluted share – GAAP $ (0.20 ) $ (0.02 ) $ 0.04 $ 0.62 Reconciling charges (benefits) to arrive at Adjusted Net Income

Per Share – non-GAAP:

Severance and related costs, net of taxes 0.04 0.03 0.21 0.07 Restructuring charges, net of taxes — 0.03 0.09 0.07 Transaction costs, net of taxes 0.05 0.07 0.10 0.17 Shareholder transaction costs, net of taxes 0.04 0.10 0.22 0.10 Deferred financing costs in connection with shareholder

transaction, net of taxes

0.10 — 0.29 — Impairment charges, net of taxes 0.03 — 0.03 0.36 Legal matters expense, net, net of taxes — 0.06 0.01 0.37 Changes in fair value of contingent consideration related to

acquisitions, net of taxes

(0.01 ) — (0.25 ) — Non-cash gain on step acquisition, net of taxes — (0.04 ) — (0.57 ) Other non-cash charges, net of taxes — — 0.02 — GAAP income tax rate compared to our historical income

tax rate

  0.06   0.08   0.09   0.09 Total reconciling charges   0.31   0.33   0.81   0.66 Adjusted Net Income Per Share – non-GAAP $ 0.11 $ 0.31 $ 0.85 $ 1.28  

The reconciliation from net income to Adjusted EBITDA for the 2017 guidance range is shown below (in millions):

  2017 Full Year Guidance Range Net income $ 1     $ 2 Income tax benefit — (2 ) Interest expense and other, net; depreciation expense;

amortization expense; share-based payment and

other expenses; noncontrolling interest in subsidiaries

  134   140 Adjusted EBITDA $ 135 $ 140

  ALLIANCE HEALTHCARE SERVICES, INC. SELECTED STATISTICAL INFORMATION   Quarter Ended December 31, 2016     2015 MRI:   Average number of total systems 287.1 268.0 Average number of scan-based systems 220.8 218.5 Scans per system per day (scan-based systems) 9.25 9.33 Total number of scan-based MRI scans 137,068 138,395 Revenue per scan $ 313.22 $ 304.71 Scan-based MRI revenue (in thousands) $ 42,933 $ 42,171 Non-scan based MRI revenue (in thousands)   8,171     5,983 Total MRI revenue (in thousands) $ 51,104   $ 48,154 PET/CT: Average number of total systems 117.5 116.5 Average number of scan-based systems 111.5 108.3 Scans per system per day 5.55 5.44 Total number of PET/CT scans 34,637 35,315 Revenue per scan $ 873.85 $ 876.40 Scan-based PET/CT revenue (in thousands) $ 30,268 $ 30,950 Non-scan-based PET/CT revenue (in thousands)   958   1,014 Total PET/CT revenue (in thousands) $ 31,226 $ 31,964 Oncology: Linac treatments 28,096 20,134 Stereotactic radiosurgery patients 872 887 Total Oncology revenue (in thousands) $ 29,058 $ 25,217 Interventional: Visits 56,324 54,576 Total interventional revenue (in thousands) $ 10,990 $ 12,213 Revenue breakdown (in thousands): MRI revenue $ 51,104 $ 48,154 PET/CT revenue 31,226 31,964 Other radiology revenue   6,557   6,844 Radiology revenue 88,887 86,962 Oncology revenue 29,058 25,217 Interventional revenue 10,990 12,213 Corporate / Other   452     (55 ) Total revenues $ 129,387   $ 124,337  

ALLIANCE HEALTHCARE SERVICES, INC.SELECTED STATISTICAL INFORMATIONRADIOLOGY AND ONCOLOGY DIVISION 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 (“Linac”) treatment and stereotactic radiosurgery (“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, treatment or case volume totals is only 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 quarter. Alliance measures each of its major radiology and oncology modalities (MRI, PET/CT, Linac and SRS) separately.

The Radiology Division same-store volume (decline) growth for the last four calendar quarters ended December 31, 2016 is as follows:

Same-Store Volume MRI   PET/CT

2016

    Fourth Quarter (1.2 )% 5.8 % Third Quarter 1.1 % 5.3 % Second Quarter 2.0 % 5.8 % First Quarter 6.6 % 9.3 %  

The Oncology Division same-store volume growth (decline) for the last four calendar quarters ended December 31, 2016 is as follows:

Same-Store Volume Linac   SRS

2016

    Fourth Quarter 1.5 % (2.5 )% Third Quarter 5.7 % (4.6 )% Second Quarter (1.1 )% (0.2 )% First Quarter 5.6 % 9.0 %

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Alliance HealthCare Services, Inc.Rhonda Longmore-GrundExecutive Vice PresidentChief Financial Officer949.242.5300