847935--3/16/2006--ALLION_HEALTHCARE

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Risks Related to Our Company If demand for our products and services is reduced, our business and ability to grow would be harmed. Changes in reimbursement by third-party payors could harm our business. Our revenues could be adversely affected if our patients who are dual-eligible under the Medicare Modernization Act cease to use our services or if prescription drug plans, or PDPs, reduce reimbursement rates. We have a history of losses and may not be able to sustain profitability. f we do not continue to qualify for preferred reimbursement programs in California and New York, our net sales could decline. If we are not able to market our services effectively to HIV/AIDS clinics, their affiliated healthcare providers and PDPs, we may not be able to grow our patient base as rapidly as we have anticipated If we fail to manage our growth effectively, our business could be harmed. If our credit terms with AmerisourceBergen become unfavorable or our relationship with AmerisourceBergen is terminated our business could be adversely affected. If we do not meet our minimum purchase requirements under our prime vendor agreement with AmerisourceBergen, we will be required to make an additional payment based on the un-purchased volume. We will incur increased costs as a result of being a public company and, as a result, our financial results could be adversely affected. Our success in identifying and integrating acquisitions may impact our business and our ability to have effective disclosure controls. We may not be able to integrate successfully the software into our business or subscribers may choose not to use our services. We rely on third-party delivery services to deliver our products to the patients we serve. Price increases or service interruptions in our delivery services could adversely affect our results of operations and our ability to make deliveries on a timely basis. We rely on a few key employees whose absence or loss could adversely affect our business. A prolonged malfunction of our MOMSPak automated packaging system could hurt our relationships with the patients we serve and our ability to grow. Our financial results may suffer if we have to write-off intangible assets or goodwill. We do not have patent or trademark protection for our MOMSPak or our automated prescription packaging system, or for our trade name, MOMS Pharmacy. A disruption in our telephone system or our computer system could harm our business. We may not be able to obtain insurance that is sufficient to protect our business from liability. Risks Related To The Specialty Pharmacy Industry There is substantial competition in our industry, and we may not be able to compete successfully. If we are found to be in violation of Medicaid and Medicare reimbursement regulations, we could become subject to retroactive adjustments and recoupments. Our industry is subject to extensive government regulation, and noncompliance by us or our suppliers could harm our business. Recent changes in how Medicaid and other government payors calculate the amount we are paid for medications we sell could reduce our pricing and margins. Our business could be affected by reforms in the healthcare industry.

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847935--3/16/2006--ALLION_HEALTHCARE_INC