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CHINDEX INTERNATIONAL, INC.
ANNOUNCES FIRST QUARTER 1998 RESULTS

BETHESDA, MARYLAND - May 15, 1998 - Chindex International, Inc. (NASDAQ: CHDX) (U.S.-China Industrial Exchange, Inc.), the leading independent American company providing Western healthcare products distribution and medical services in the People’s Republic of China, today announced results for its first quarter ended March 31, 1998. This year’s first quarter results were impacted negatively by a variety of factors including postponement in the opening of Letters of Credit for previously signed contracts. The Company believes that these postponements are principally attributable to bureaucratic delays resulting from the recent restructuring of the Chinese Government. Revenue for this year’s first quarter was $2.9 million with a net loss of $1.4 million, or a loss per share of $0.22. This compares to revenue of $5.5 million with net income of $165,000, or $0.03 per share for the same period last year.

According to the announcement made by Chindex Chairperson, President and CEO Roberta Lipson, the Company’s restructuring program, which positioned Chindex for future growth as a dedicated healthcare products and services company serving the China market, was implemented at the end of last year and during the first quarter of this year. While this year’s first quarter results show a modest reduction in expenses in the Healthcare Products business compared to the prior year, more significant impact of the cost reduction and containment measures will not be fully seen until later this year.

"The first quarter of 1998 marked the beginning of our operations as a dedicated healthcare company in China under our restructured organization," Lipson commented from Beijing. "The aggressive measures we have taken to address the market and operational conditions over the past months have been substantial. Our restructuring and cost containment programs are beginning to show results and we believe the impact of these measures will continue to grow through the year."

Lipson continued, "Financing for our customers remains a major issue for our business success, as it has in the past. We are working aggressively to find financing for our customers and have recently received preliminary approval from the relevant Chinese Government organizations for a $15 million loan to be guaranteed by the Export-Import Bank of the United States for the purchase of medical equipment supplied by Chindex. We are hopeful that this program will receive the necessary final governmental approvals this year."

"In tough times such as these it is important for us to maintain a longer term view," Lipson added. "The revenue from our Healthcare Products business has continued to expand, demonstrating a fundamental market need for the products we sell, in spite of the lack of financing. We have successfully launched our new business initiatives in Healthcare Services and in the distribution of consumable healthcare products. We believe they will provide a consistent and expanding revenue base for Chindex in the years to come. We believe that this revenue base, combined with our cost reductions and restructured operations, has positioned us to return to profitability in the future. We are also hopeful that when the current Chinese government restructuring is completed and new economic policies are put in place we will see some added benefit through an upturn in market demand."

In conclusion, Lipson also noted that the Company has long been commonly known as "Chindex", its original telex address acronym from the early 1980’s. Beginning in 1998 the Company will do business as Chindex International, Inc. although its legal name will remain U.S.- China Industrial Exchange, Inc.

 

 

U.S.-CHINA INDUSTRIAL EXCHANGE, INC. (CHINDEX)

Consolidated Statements of Operations

         
   

Three Months Ended

   

March 31, 1998

   

1998

 

1997

         
Net sales  

$ 2,913,000

 

$ 5,498,000

Cost of goods sold  

2,138,000

 

3,925,000

         
Gross profit on sales  

775,000

 

1,573,000

Net commission income  

0

 

114,000

         
Total gross profit on sales and net commission income  

775,000

 

1,687,000

         
Selling, general and administrative        
Salaries and payroll taxes  

1,174,000

 

835,000

Travel and entertainment  

273,000

 

305,000

Other  

887,000

 

640,000

         
   

(1,559,000)

 

(93,000)

         
Other income and expenses        
Interest Expense  

(12,000)

 

(16,000)

Interest Income  

67,000

 

209,000

Miscellaneous Income  

138,000

 

139,000

         
Total Other Income/Expenses  

193,000

 

332,000

         
(Loss) income before provision for taxes  

(1,366,000)

 

239,000

(Provision for) income taxes  

(41,000)

 

(74,000)

         
Net (loss)/income  

$ (1,407,000)

 

$ 165,000

         
Net (loss)/income per common share  

$ (0.22)

 

$ 0.03

         
Weighted average shares outstanding  

6,322,500

 

6,322,500

         

# # # #

 

 

* * * * *

Chindex is a leading American company in healthcare in the Greater Chinese marketplace including Hong Kong and Macau. It provides representative and distribution services to a number of Fortune 500 companies including Acuson, Johnson & Johnson, Kendall Healthcare Products, and Schering AG. It also operates a private hospital corporation in China. With over sixteen years experience, 200 employees, and operations in the United States, China and Hong Kong, the Chindex strategy is to expand its cross-cultural reach by providing leading edge technologies, quality products and services to Greater China’s professional communities.

The statements in this press release that relate to future plans, events or performance are forward-looking statements that involve risks and uncertainties, including risks associated with uncertainties pertaining to customer orders, demand for products and services, development of markets for the Company’s products and services and other risks identified in the Company’s SEC filings. Actual results, events and performance may differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

 

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