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BETHESDA,
MARYLAND - November 10, 2004 -
Chindex International, Inc. (NASDAQ: CHDX), an independent American
provider of Western healthcare products and medical services in the
People's Republic of China, today announced results for the quarter
ended September 30, 2004. The Company will report a 30% increase in
revenue over the same quarter of the prior fiscal year, profitable
operating results and a small after-tax loss.
Revenue
for the quarter ended September 30, 2004 was $27.6 million with income
from operations of $46,000 and a net loss of $89,000 or a loss per
share of $0.02. This compares to revenue of $21.2 million with income
from operations of $453,000 and net income of $219,000, or earnings
per share of $0.06, for the quarter ended September 30, 2003 .
Revenue
for the six months ended September 30, 2004 was $54.2 million with
income from operations of $548,000 and net income of $155,000, or
earnings per share of $0.03. This compares to revenue of $41.5 million
with a loss on operations of $1.3 million and net loss of $1.1 million,
or a loss per share of $0.30, for the six months ended September 30,
2003.
Roberta
Lipson, President and CEO of Chindex, commented from the Company's
newly-opened Shanghai United Family Hospital : "During the recent
quarter we saw continued revenue growth in all divisions and particularly
strong results from both our Medical Capital Equipment division and
the existing healthcare services business in Beijing . Operations
in the quarter were substantially impacted by a large increase in
pre-opening development expenses here at our new hospital in Shanghai
. We were pleased to host the formal opening ceremony of the facility
last month."
The
Medical Capital Equipment division contributed to operating income
in the recent quarter based on a 46% increase in revenue over the
same quarter of the prior year. Revenue growth was based on the development
of new sales channels for capital medical equipment, involving greater
use of local Chinese sub-distributors. In addition, a portion of this
increase in revenue is attributable to the fact that SARS was a significant
negative factor in the prior period. Finally, the new range of ultrasound
products from Siemens contributed to increased sales. The division
recently announced an exclusive distribution agreement with Candela
Lasers which will further broaden its portfolio of products.
The
Healthcare Services division reported a loss on operations in the
recent quarter. Revenue during the quarter for healthcare services
in Beijing grew 50% over revenue for the same quarter of the prior
year, primarily as a result of an increased number of patients at
the hospital and clinic operations in Beijing . Existing hospital
operations in Beijing reported strong growth and significant income
on operations; this was offset by substantial pre-opening development
expense at our hospital in Shanghai which impacted the overall results
of the division. The hospital in Shanghai received its operating license
from the Chinese government on October 14, 2004 and held its opening
ceremony on October 21, 2004 . The hospital will provide medical services
on a phased basis over the next few months.
The
Healthcare Products Distribution division also reported a loss on
operations during the recent quarter. Revenue from third party logistics
services continued to decline as planned, while personal healthcare
product and medical consumable sales increased as compared with the
prior period. This resulted in an overall increase in revenue of 3%
for the division compared to the same quarter in the prior year. The
division has continued the rollout of previously launched personal
care products in the retail pharmacy business unit as well as growth
in sales of new products, including the Automatic External Defibrillator
(AED) unit made by Cardiac Science, in the hospital products group.
Chindex
is an American company operating in several healthcare sectors of
the Chinese marketplace, including Hong Kong . It provides representative
and distribution services to a number of major multinational companies
including Siemens AG (ultrasound systems) and Guidant (interventional
cardiology products including stents, balloon catheters and guide
wires). Its distribution channels to the retail pharmacy industry
in China have been developed through a relationship with a major multinational
cosmetics manufacturer. It also provides healthcare services through
the operations of its private hospital corporation in China . With
twenty-three years of experience, over 800 employees, and operations
in the United States , China and Hong Kong , the Company's strategy
is to expand its cross-cultural reach by providing leading edge technologies,
quality products and services to Greater China's professional communities.
Further company information may be found at the Company's websites,
www.chindex.com
and www.unitedfamilyhospitals.com..
Some
of the information in this release may contain statements regarding
future expectations, plans, prospects for performance of the Company
that constitute forward-looking statements for purposes of the safe
harbor provisions of The Private Securities Litigation Reform Act
of 1995. The Company cannot guarantee future results, levels of activity,
performance or achievements. The numbers discussed in this release
also involve risks and uncertainties. The following factors, among
others, could cause actual results to differ materially from those
described by such statements: our ability to manage our growth and
maintain adequate controls, the loss of services of key personnel,
general market conditions including inflation or foreign currency
fluctuations, our dependence on relationships with suppliers, the
timing of our revenues and fluctuations in financial performance,
the availability to our customers of third-party financings, product
liability claims and product recalls, competition, hiring and retaining
qualified sales and service personnel, management of inventory, relations
with foreign trade corporations, dependence on sub-distributors and
dealers, completion and opening of healthcare facilities, attracting
and retaining qualified physicians and other hospital personnel, regulatory
compliance, the cost of malpractice , our dependence on our information
systems, the economic policies of the Chinese government, the newness
and undeveloped nature of the Chinese legal system, the regulation
of the conversion of Chinese currency, future epidemics in China such
as SARS, the control over our operation by insiders, continuity of
relationships with existing suppliers, and those other factors contained
in the section titled "Risk Factors" as set forth on page
7 of the Company's Registration Statement on Form S-1 (File No. 333-114299)
declared effective by the Securities and Exchange Commission on July
30, 2004, as well as other documents that may be filed by the Company
from time to time with the Securities and Exchange Commission. The
forward-looking statements and numbers contained herein represent
the judgment of the Company, as of the date of this press release
and the Company disclaims any intent or obligation to update such
forward-looking statements to reflect any change in the Company's
expectations with regard thereto or any change in events, conditions,
circumstances on which such statements are based.
#
# # #
Financial
Summary Attached
CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
(thousands
except share and per share data)
(Unaudited
)
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|
|
Three
months ended September 30, |
Six
months ended September 30, |
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|
|
2004
|
2003
|
2004
|
2003
|
| |
|
|
|
|
|
|
Product
sales |
$22,490
|
$17,786
|
$43,368
|
$34,592
|
Healthcare
services revenue |
5,065
|
3,369
|
10,862
|
6,937
|
Total
revenue |
27,555
|
21,155
|
54,230
|
41,529
|
| |
|
|
|
|
Cost
and expenses |
|
|
|
|
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Product
sales costs |
17,977
|
13,645
|
34,875
|
27,987
|
| |
Healthcare
services costs |
5,094
|
3,388
|
9,990
|
7,072
|
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Selling
and marketing expenses |
2,839
|
2,273
|
5,665
|
4,786
|
| |
General
and administrative |
1,599
|
1,396
|
3,152
|
2,958
|
Income
(loss) from operations |
46
|
453
|
548
|
(1,274)
|
Minority
interest |
(56)
|
0
|
(56)
|
0
|
Other
(expenses) and income |
|
|
|
|
| |
Interest
expense |
(30)
|
(63)
|
(72)
|
(119)
|
| |
Interest
income |
18
|
14
|
33
|
29
|
| |
Miscellaneous
(expense) income - net |
(18)
|
(27)
|
(64)
|
14
|
(Loss)
income before income taxes |
(40)
|
377
|
389
|
(1,350)
|
(Provision
for) benefit from income taxes |
(49)
|
(158)
|
(234)
|
230
|
Net
(loss) income |
$(89)
|
$
219 |
$155
|
$(1,120)
|
Net
(loss) income per common share - basic |
$
(0.02) |
$
0.06 |
$
0.03 |
$
(0.30) |
Weighted
average shares outstanding - basic |
5,346,720
|
3,742,178
|
5,172,274
|
3,725,192
|
Net
(loss) income per common share - diluted |
$(
0.02) |
$
0.05 |
$
0.03 |
$
(0.30) |
Weighted
average shares outstanding - diluted |
5,346,720
|
4,440,510
|
5,875,007
|
3,725,192
|
CONSOLIDATED
CONDENSED BALANCE SHEETS
(thousands
except share data)
(Unaudited)
| |
September
30, 2004 |
March
31, 2004 |
ASSETS
|
Current
assets: |
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Cash
and cash equivalents |
$6,193
|
$
6,791 |
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Trade
accounts receivable, less allowance for doubtful accounts of
$1,357 and $1,131, respectively |
|
|
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Equipment
sales receivables |
19,236
|
15,039
|
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|
Patient
service receivables |
2,771
|
2,335
|
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Inventories
|
11,392
|
9,537
|
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Deferred
income tax |
653
|
467
|
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Other
current assets |
3,955
|
2,235
|
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Total
current assets |
44,200
|
36,404
|
Property
and equipment, net |
14,559
|
9,727
|
Long-term
deferred income taxes |
1,334
|
1,334
|
Other
assets |
346
|
386
|
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Total
assets |
$60,439
|
$
47,851 |
LIABILITIES,
MINORITY INTEREST AND STOCKHOLDERS' EQUITY |
Current
liabilities: |
|
|
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Accounts
payable and accrued expenses |
$27,295
|
$
24,338 |
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Short-term
portion of capitalized leases |
192
|
123
|
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Short-term
debt and vendor financing |
4,681
|
5,668
|
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Income
taxes payable |
335
|
381
|
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|
Total
current liabilities |
32,503
|
30,510
|
Long-term
portion of capitalized leases |
201
|
125
|
Long-term
debt |
3,008
|
0
|
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|
Total
liabilities |
35,712
|
30,635
|
Minority
interest |
56
|
18
|
Stockholders'
equity: |
|
|
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Preferred
stock, $.01 par value, 500,000 shares authorized, none issued
|
0
|
0
|
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Common
stock, $.01 par value, 13,600,000 shares authorized, including
1,600,000 designated Class B: |
|
|
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|
Common
stock - 4,622,512 and 3,643,152 shares issued and outstanding
at September 30 and March 31, respectively |
46
|
36
|
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|
Class
B stock - 775,000 shares issued and outstanding at September
30 and March 31 |
8
|
8
|
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Additional
capital |
29,799
|
22,488
|
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Accumulated
other comprehensive income |
8
|
11
|
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Accumulated
deficit |
(5,190)
|
(5,345)
|
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|
Total
stockholders' equity |
24,671
|
17,198
|
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|
Total
liabilities, minority interest and stockholders' equity |
$60,439
|
$
47,851 |
SEGMENT
INFORMATION
We
have three reportable segments: Medical Capital Equipment, Healthcare
Products Distribution, and Healthcare Services. We evaluate performance
and allocate resources based on profit or loss from operations before
income taxes, not including gains or losses on our investment portfolio.
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Medical
Capital Equipment |
Healthcare
Products Distribution |
Healthcare
Services |
Total
|
As
of September 30, 2004: |
|
|
|
|
Assets
|
$24,938,000
|
$17,172,000
|
$18,329,000
|
$60,439,000
|
For
the three months ended September 30, 2004: |
|
|
Sales
and service revenue |
$13,989,000
|
$8,501,000
|
$5,065,000
|
$27,555,000
|
Gross
Profit |
3,556,000
|
957,000
|
n/a
|
n/a
|
Gross
Profit % |
25%
|
11%
|
n/a
|
n/a
|
Income
(loss) from operations |
$694,000
|
$(432,000)
|
$(216,000)
|
$46,000
|
Other
(expense), net |
(30,000)
|
Minority
interest |
(56,000)
|
Loss
before taxes |
$(40,000)
|
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Medical
Capital Equipment |
Healthcare
Products Distribution |
Healthcare
Services |
Total
|
As
of March 31, 2004: |
|
|
|
|
Assets
|
$22,997,000
|
$12,515,000
|
$12,339,000
|
$47,851,000
|
For
the three months ended September 30, 2003: |
|
|
Sales
and service revenue |
$9,555,000
|
$8,231,000
|
$3,369,000
|
$21,155,000
|
Gross
Profit |
3,217,000
|
925,000
|
n/a
|
n/a
|
Gross
Profit % |
34%
|
11%
|
n/a
|
n/a
|
Income
(loss) from operations |
$1,089,000
|
$(382,000)
|
$(254,000)
|
$453,000
|
Other
(expense), net |
(76,000)
|
Minority
interest |
0
|
Income
before taxes |
$377,000
|
| |
Medical
Capital Equipment |
Healthcare
Products Distribution |
Healthcare
Services |
Total
|
As
of September 30, 2004: |
|
|
|
|
Assets
|
$24,938,000
|
$17,172,000
|
$18,329,000
|
$60,439,000
|
For
the six months ended September 30, 2004: |
|
|
Sales
and service revenue |
$23,651,000
|
$19,717,000
|
$10,862,000
|
$54,230,000
|
Gross
Profit |
6,108,000
|
2,385,000
|
n/a
|
n/a
|
Gross
Profit % |
26%
|
12%
|
n/a
|
n/a
|
Income
(loss) from operations |
$922,000
|
$(822,000)
|
$448,000
|
$548,000
|
Other
(expense), net |
(103,000)
|
Minority
interest |
(56,000)
|
Income
before taxes |
$389,000
|
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Medical
Capital Equipment |
Healthcare
Products Distribution |
Healthcare
Services |
Total
|
As
of March 31, 2004 : |
|
|
|
|
Assets
|
$22,997,000
|
$12,515,000
|
$12,339,000
|
$47,851,000
|
For
the six months ended September 30, 2003 |
|
|
Sales
and service revenue |
$15,752,000
|
$18,840,000
|
$6,937,000
|
$41,529,000
|
Gross
Profit |
4,355,000
|
2,250,000
|
n/a
|
n/a
|
Gross
Profit % |
28%
|
12%
|
n/a
|
n/a
|
Loss
from operations |
$(21,000)
|
$(618,000)
|
$(635,000)
|
$(1,274,000)
|
Other
(expense), net |
(76,000)
|
Minority
interest |
0
|
Loss
before taxes |
$(1,350,000)
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