BETHESDA, Md., Nov. 9 /PRNewswire-Asia/ -- Chindex International, Inc.
("Chindex") (Nasdaq: CHDX), a leading independent American provider of Western
healthcare products and services in the People's Republic of China, today
announced results for the second quarter and first half of fiscal 2010, which
ended September 30, 2009.
Financial Highlights:
-- Revenue in the second quarter of fiscal 2010 was $38.1 million, flat on
a year over year basis;
-- Net income in the second quarter of fiscal 2010 was $538,000, or $0.03
per diluted share, compared to net income of $862,000, or $0.05 per
diluted share, in the second quarter of fiscal 2009;
-- Revenue in the first half of fiscal 2010 increased 19% to $83.5 million
from $70.2 million during the first half of fiscal 2009;
-- Net income in the first half of fiscal 2010 increased to $3.8 million,
or $0.24 per diluted share, from $700,000, or $0.04 per diluted share,
in the year over year period;
Roberta Lipson, President and CEO of Chindex stated, "We are pleased with
our financial results for the first half of fiscal year 2010, which puts us on
track to meet our full year expectations. Our second quarter reflects
continued growth in the Healthcare Services division, offset by disruption
related to construction at our Beijing facility. The Medical Products division
is always subject to quarterly variations, and this quarter we encountered
regulatory delays on high-value medical equipment purchases, although this
does not undermine the significant excitement we see in the marketplace for
our products, particularly for daVinci. As we enter the back half of the
fiscal year, we remain extremely well-positioned to capitalize on China's
premium-quality healthcare services market, continued economic vibrancy and
opportunities created by healthcare reform."
Second Quarter Fiscal 2010 Financial Results
Revenue for the second quarter of fiscal 2010 was flat on a year over year
basis at $38.1 million. Revenue from the Healthcare Services division
increased 10% to $21.0 million from $19.1 million in the prior year period,
and reflects continued growth of inpatient and outpatient volume offset by
disruption due to construction of the expanded facility in Beijing. Revenue
from the Medical Products division decreased 10% to $17.1 million from $19.0
million in the prior year period, and reflects delays in the order cycle for
high value capital medical equipment, particularly robotic surgical systems,
resulting from the Chinese government's review of import approvals and the
timing of the tender process.
During the quarter, the Company recorded income from operations of $1.4
million, compared to $1.6 million in the same quarter of last year. Total
operating costs and expenses were flat year over year at $36.7 million and
reflect expense controls as well as normalized salary costs in the Healthcare
Services division. Additionally, Chindex recognized development and startup
expenses of approximately $313,000, equivalent to approximately $0.02 per
diluted share, and non-cash stock compensation expense of $852,000, equivalent
to approximately $0.05 per diluted share, in the second quarter of fiscal 2010.
In the prior year period, the Company's development and startup expenses in
the Healthcare Services division were $645,000, roughly $0.04 per diluted
share, and non-cash stock compensation expense was $646,000 or roughly $0.04
per diluted share.
The Company's tax expense was approximately $1.0 million in the second
quarter of fiscal 2010, an effective tax rate of 65.2%. The tax rate reflects
losses in entities for which the Company cannot yet recognize benefit. In the
prior year period, tax expense was approximately $251,000.
Net income in the second quarter of fiscal 2010 was $538,000, or $0.03 per
diluted share. This compares to net income of $862,000, or $0.05 per diluted
share, in the second quarter of fiscal 2009.
Healthcare Services division business results:
Revenue in the second quarter of the fiscal year 2010 was $21.0 million,
an increase of 10% from $19.1 million in the prior year quarter. Operating
costs increased by 4% to $18.7 million from $18.0 million in the prior year's
second quarter. Salary expense represented 48% of divisional revenue, down
from 51% in the prior year period, and reflects the normalization of physician
salary costs as well as increased staffing compared to the year before. Income
from operations before foreign exchange gains increased to $2.3 million from
$1.1 million in the prior year period.
Lipson stated, "Continued growth in patient volume throughout our hospital
and clinic network during the second fiscal quarter demonstrates our unique
offering, proven operating history and the continued growing demand for
premium quality care in China. While on-site construction in Beijing caused
some disruption in our existing offerings such as pediatrics, we remain
extremely confident that high-end healthcare services in China address an
increasingly affluent and growing, underserved market. Our sights remain set
on our long-term goal to substantially grow our network in the coming years."
Medical Products division business results:
For the second quarter of fiscal 2010, revenue decreased 10% to $17.1
million from $19.0 million in the prior year period. The Company did not
realize any sales of robotic surgical systems during the quarter and sales of
diagnostic ultrasound, women's health imaging, clinical chemistry and cosmetic
laser systems products increased at lower than expected rates. Revenue
performance reflects delays in the order cycle for high value capital medical
equipment, particularly for robotic surgical systems, resulting from the
Chinese government's review of import approvals, and also reflects the overall
timing of the tender process in China. Gross profit margin was 28% and was in
line with historical averages. The division had a loss from operations before
foreign exchange gains of $1.5 million compared with income from operations of
approximately $582,000 in the prior year period.
"The government's review of importing high value technologies into public
hospitals is a routine process impacting new, big ticket medical products. We
believe that the review itself substantiates the continued demand we see for
premium medical technology in China, and bodes well for future sales across
our portfolio despite causing disruptions to daVinci sales this quarter. Our
expectation for the order flow for daVinci's has not changed and we continue
to expect sales of one to two systems per quarter on average, over time. We
also see excitement in the market for the other new technologies we have
introduced recently, including in ultrasound and digital mammography, for
example. In addition, over the first and second quarters this year we have
shipped products under our KfW Development Bank and U.S. Export Import Bank
contracts and expect to execute additional government backed contracts in the
future," concluded Lipson.
Conference Call
Management will host a conference call today at 8:00 am ET today to
discuss financial results. To participate in the conference call,
international callers dial 1-913-312-1510 and domestic callers dial 1-888-724-
9518 approximately 10 minutes before the conference call is scheduled to begin.
The telephone replay will be available from the day of the call until
November 23, 2009 by dialing (international) 1-719-457-0820 and (domestic) 1-
888-203-1112, passcode 9542409.
A webcast will be accessible via Chindex's website at
http://ir.chindex.com/events.cfm .
About Chindex International, Inc.
Chindex is an American healthcare company that provides healthcare
services and supplies medical capital equipment, instrumentation and products
to the Chinese marketplace, including Hong Kong. Healthcare services are
provided through the operations of its United Family Hospitals and Clinics, a
network of private primary care hospitals and affiliated ambulatory clinics in
China. The Company's hospital network currently operates in the Beijing,
Shanghai, Guangzhou and Wuxi. The Company sells medical products manufactured
by various major multinational companies, including Siemens AG and Intuitive
Surgical, for which the Company is the exclusive distribution partner for the
sale and servicing of color ultrasound systems and surgical robotic systems
respectively. It also arranges financing packages for the supply of medical
products to hospitals in China utilizing the export loan and loan guarantee
programs of both the U.S. Export-Import Bank and the German KfW Development
Bank. With twenty-seven years of experience, approximately 1,300 employees,
and operations in China, Hong Kong, the United States and Germany, the
Company's strategy is to expand its cross-cultural reach by providing leading
edge healthcare technologies, quality products and services to Greater China's
professional communities. Further company information may be found at the
Company's websites http://www.chindex.com and
http://www.unitedfamilyhospitals.com .
For further information, please contact:
Integrated Corporate Relations
Ashley M. Ammon
Tel: +1-203-682-8200
CHINDEX INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in thousands except share and per share data)
(Unaudited)
Three months ended Six months ended
September 30, September 30,
2009 2008 2009 2008
Product sales $17,120 $19,041 $40,404 $31,538
Healthcare services
revenue 20,999 19,069 43,047 38,641
Total revenue 38,119 38,110 83,451 70,179
Costs and expenses
Product sales costs 12,384 13,187 29,853 23,083
Healthcare services costs 17,352 16,666 34,102 32,401
Selling and marketing
expenses 3,608 3,265 6,768 5,724
General and administrative
expenses 3,362 3,344 6,040 6,570
Income from operations 1,413 1,648 6,688 2,401
Other (expenses) and
income
Interest expense (281) (253) (554) (479)
Interest income 400 321 872 789
Miscellaneous (expense)
income - net 15 (603) (632) (596)
Income before income taxes 1,547 1,113 6,374 2,115
Provision for income taxes (1,009) (251) (2,583) (1,415)
Net income $538 $862 $3,791 $700
Net income per common
share - basic $.04 $.06 $.26 $.05
Weighted average shares
outstanding - basic 14,525,528 14,400,655 14,514,453 14,360,758
Net income per common
share - diluted $.03 $.05 $.24 $.04
Weighted average shares
outstanding - diluted 16,143,679 16,042,327 16,072,536 16,126,008
CHINDEX INTERNATIONAL, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands except share data)
(Unaudited)
September 30, 2009 March 31, 2009
ASSETS
Current assets:
Cash and cash equivalents $16,207 $20,293
Restricted cash 734 1,854
Investments 55,494 51,502
Accounts receivable, less
allowance for doubtful accounts
of $5,381 and
$5,041, respectively
Product sales receivables 31,689 37,994
Patient service receivables 9,971 8,837
Inventories, net 13,182 11,346
Deferred income taxes 2,845 2,410
Other current assets 3,327 3,239
Total current assets 133,449 137,475
Restricted cash 2,445 1,437
Property and equipment, net 21,434 20,633
Noncurrent deferred income taxes 1,019 1,031
Other assets 2,896 2,061
Total assets $161,243 $162,637
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt, current portion of
long-term debt and vendor financing $2,441 $1,631
Current portion of capitalized leases 3 22
Accounts payable 11,626 12,259
Accrued expenses 10,537 20,607
Other current liabilities 6,265 4,148
Deferred revenue 2,458 1,539
Income taxes payable 1,970 1,568
Total current liabilities 35,300 41,774
Long-term debt, vendor financing and
convertible debentures 22,465 23,709
Long-term deferred revenue 1,396 595
Long-term deferred tax liability 119 119
Total liabilities 59,280 66,197
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value,
500,000 shares authorized, none
issued -- --
Common stock, $.01 par value,
28,200,000 shares authorized,
including 3,200,000 designated
Class B:
Common stock - 13,605,960 and
13,452,007 shares issued and
outstanding at September 30,
2009 and March 31, 2009,
respectively 136 135
Class B stock - 1,162,500 shares
issued and outstanding at
September 30, 2009 and March 31,
2009, respectively 12 12
Additional paid-in capital 97,684 95,808
Accumulated other comprehensive
income 3,068 3,072
Retained earnings (accumulated
deficit) 1,063 (2,587)
Total stockholders' equity 101,963 96,440
Total liabilities and
stockholders' equity $161,243 $162,637
CHINDEX INTERNATIONAL, INC.
SEGMENT INFORMATION
The Company operates in two businesses: Healthcare Services and Medical
Products. The Company evaluates performance and allocates resources based on
profit or loss from operations before income taxes, not including foreign
exchange gains or losses. The following segment information has been provided
per Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information" (included in ASC 280).
(in thousands except percentages)
Healthcare Medical
Services Products Total
For the three months ended September
30, 2009:
Sales and service revenue $20,999 $17,120 $38,119
Gross Profit n/a * 4,736 n/a
Gross Profit % n/a * 28% n/a
Income (loss) from operations before
foreign exchange $2,281 $(1,481) $800
Foreign exchange gain 613
Income from operations $1,413
Other income, net 134
Income before income taxes $1,547
Assets as of September 30, 2009 $99,595 $61,648 $161,243
Healthcare Medical
Services Products Total
For the three months ended September
30, 2008:
Sales and service revenue $19,069 $19,041 $38,110
Gross Profit n/a * 5,854 n/a
Gross Profit % n/a * 31% n/a
Income from operations before foreign
exchange $1,052 $582 $1,634
Foreign exchange gain 14
Income from operations $1,648
Other (expense), net (535)
Income before income taxes $1,113
Assets as of March 31, 2009 $94,675 $67,962 $162,637
Healthcare Medical
Services Products Total
For the six months ended September
30, 2009:
Sales and service revenue $43,047 $40,404 $83,451
Gross Profit n/a * 10,551 n/a
Gross Profit % n/a * 26% n/a
Income (loss) from operations before
foreign exchange $6,406 $(1,237) $5,169
Foreign exchange gain 1,519
Income from operations $6,688
Other (expense), net (314)
Income before income taxes $6,374
Assets as of September 30, 2009 $99,595 $61,648 $161,243
Healthcare Medical
Services Products Total
For the six months ended September
30, 2008:
Sales and service revenue $38,641 $31,538 $70,179
Gross Profit n/a * 8,455 n/a
Gross Profit % n/a * 27% n/a
Income (loss) from operations before
foreign exchange $3,827 $(1,554) $2,273
Foreign exchange gain 128
Income from operations $2,401
Other (expense), net (286)
Income before income taxes $2,115
Assets as of March 31, 2009 $94,675 $67,962 $162,637
* Gross profit margins are not routinely calculated in the healthcare
industry.
