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China Medical Technologies Reports FY2008 Fourth Fiscal Quarter and Full Year Unaudited Financial Results
Date:9/1/2009

BEIJING, Sept. 1 /PRNewswire-Asia-FirstCall/ -- China Medical Technologies, Inc. (the "Company") (Nasdaq: CMED), a leading China-based medical device company that develops, manufactures and markets advanced in-vitro diagnostic products, today announced its unaudited financial results for the fourth fiscal quarter ("4Q FY2008") and the full fiscal year ended March 31, 2009 ("FY2008").

    4Q FY2008 Highlights
    -- Revenues from continuing operations increased by 37.3% year-over-year
       to RMB248.6 million (US$36.4 million).
    -- Income from continuing operations increased by 8.6% year-over-year to
       RMB56.3 million (US$8.2 million).
    -- Net income decreased by 46.5% year-over-year to RMB56.3 million (US$8.2
       million).
    -- Non-GAAP income from continuing operations, as defined below, increased
       by 48.5% year-over-year to RMB120.0 million (US$17.6 million).
    -- Diluted earnings from continuing operations per ADS* was RMB2.14
       (US$0.31).
    -- Non-GAAP diluted earnings from continuing operations per ADS*, as
       defined below, increased by 49.0% year-over-year to RMB4.56 (US$0.67).

    FY2008 Highlights
    -- Revenues from continuing operations increased by 51.6% year-over-year
       to RMB830.0 million (US$121.5 million) which was within our targeted
       range of RMB825.0 million to RMB838.0 million.
    -- Loss from continuing operations was RMB2.1 million (US$0.3 million)
       including a charge of RMB244.9 million (US$35.8 million) for acquired
       in-process research and development ("IPR&D").
    -- Net income decreased by 21.2% year-over-year to RMB256.2 million
       (US$37.5 million).
    -- Non-GAAP income from continuing operations, as defined below,
       increased by 80.9% year-over-year to RMB419.6 million (US$61.4 million)
       which was within our targeted range of RMB410.0 million to RMB420.0
       million.
    -- Diluted loss from continuing operations per ADS* was RMB0.08 (US$0.01).
    -- Non-GAAP diluted earnings from continuing operations per ADS*, as
       defined below, were RMB15.97 (US$2.34) which exceeded the high end of
       our targeted range of RMB15.13.
    -- Annual cash dividend of US$0.55 per ADS* for FY2008 was declared which
       increased by 10.0% as compared to annual cash dividend of US$0.5 per
       ADS last year.

    * One American Depositary Share ("ADS") = 10 ordinary shares

    See "Non-GAAP Measure Disclosures" below, where the impact of certain
    items on reported results is discussed.

"In FY2008, we achieved significant operational milestones," commented Mr. Xiaodong Wu, Chairman and Chief Executive Officer of the Company. "We continue to believe that China IVD market is significantly under-developed and under-penetrated. We are confident in our positioning as an advanced in-vitro diagnostic company in China to capture the enormous growth potentials in this business segment over the next 10 years. We also maintain our steady dividend policy to reward our shareholders despite challenging circumstances."

4Q FY2008 Unaudited Financial Results

The Company reported revenues from continuing operations of RMB248.6 million (US$36.4 million) for 4Q FY2008, representing a 37.3% increase from the corresponding period of FY2007.

The Company's revenues from continuing operations are currently generated from two product lines, ECLIA diagnostic systems and FISH diagnostic systems.

ECLIA system sales for 4Q FY2008 were RMB139.0 million (US$20.3 million), representing a 23.9% increase from the corresponding period of FY2007. The year-over-year growth in the ECLIA system sales was primarily due to the increasing utilization of the Company's ECLIA analyzers by hospitals as well as the expanded installed base of the analyzers which resulted in increased sales of ECLIA reagent kits.

FISH system sales for 4Q FY2008 were RMB109.6 million (US$16.0 million), representing a 59.3% increase from the corresponding period of FY2007. The strong year-over-year growth in the FISH system sales was primarily due to significant increase in sales of FISH probes to hospitals as a result of increase in new hospital customers and the increased usage of the Company's FISH probes by existing hospital customers.

Gross margin increased to 75.8% for 4Q FY2008 from 58.6% for the corresponding period of FY2007. The increase in gross margin was primarily due to the change in revenue mix where almost all revenues were generated from recurring sales of higher margin ECLIA reagent kits and FISH probes in 4Q FY2008.

Research and development expenses were RMB10.7 million (US$1.6 million) for 4Q FY2008, representing a 70.4% year-over-year increase. The increase was primarily due to the development of new ECLIA reagent kits and FISH probes.

Sales and marketing expenses were RMB13.6 million (US$2.0 million) for 4Q FY2008, representing a 97.4% year-over-year increase. The increase was primarily due to the continued expansion of the direct sales force for FISH system sales, increased product promotional activities as well as cost of the ECLIA analyzers provided free of charge to customers.

General and administrative expenses were RMB48.1 million (US$7.0 million) for 4Q FY2008, representing a significant year-over-year increase. The increase was primarily due to the increased headcount associated with the expansion of the Company's operations, an increase in stock compensation expense arising from a restricted stock grant in June 2008 and amortization of acquired intangible assets in connection with the acquisition of the SPR technology in December 2008.

Interest expense of convertible notes was RMB27.8 million (US$4.1 million) for 4Q FY2008, representing a significant year-over-year increase. The increase was primarily due to the issuance of US$276.0 million convertible notes in August 2008. The Company's outstanding convertible notes of US$150.0 million and US$276.0 million bear interest at 3.5% and 4.0% per annum, respectively and will mature in November 2011 and August 2013, respectively.

Interest expense of amortization of convertible notes issuance costs of RMB4.6 million (US$0.7 million) for 4Q FY2008, representing a significant year-over-year increase. The increase was primarily due to the issuance of US$276.0 million convertible notes in August 2008.

Other interest expense of RMB0.8 million (US$0.1 million) for 4Q FY2008 was primarily due to the present value discounting of other payable of US$10 million for the final payment of the FISH acquisition in March 2009.

Income tax expense was RMB32.1 million (US$4.7 million) for 4Q FY2008. The high effective tax rate was primarily due to certain expenses of the Company such as amortization of acquired intangible assets, stock compensation expense and interest expense of convertible notes were not deductible for income tax computation in the PRC and the accrual for withholding income tax on distributable earnings in the PRC.

Income from continuing operations was RMB56.3 million (US$8.2 million) for 4Q FY2008, representing a 8.6% increase from the corresponding period of FY2007.

Net income was RMB56.3 million (US$8.2 million) for 4Q FY2008, representing a 46.5% decrease from the corresponding period of FY2007.

Non-GAAP income from continuing operations excluding stock compensation expense, amortization of acquired intangible assets and acquired IPR&D charge was RMB120.0 million (US$17.6 million) for 4Q FY2008, representing a 48.5% increase from the corresponding period of FY2007.

Stock compensation expense for 4Q FY2008 was RMB13.9 million (US$2.0 million), of which RMB2.3 million was allocated to research and development expenses and RMB11.6 million to general and administrative expenses.

Amortization of acquired intangible assets for 4Q FY2008 was RMB49.8 million (US$7.3 million), of which RMB22.4 million was allocated to cost of revenues and RMB27.4 million to general and administrative expenses.

As of March 31, 2009, the Company's cash balance was RMB1,456.4 million (US$213.1 million).

As of March 31, 2009, the Company's net accounts receivable was RMB343.0 million (US$50.2 million), representing an increase of 20.7% from the balance at December 31, 2008.

FY2008 Unaudited Financial Results

Revenues from continuing operations were RMB830.0 million (US$121.5 million) for FY2008, representing a 51.6% year-over-year increase. The targeted revenues from continuing operations for FY2008 ranged from RMB825.0 million to RMB838.0 million.

ECLIA system sales for FY2008 were RMB504.7 million (US$73.9 million), representing a 32.6% year-over-year increase. FISH system sales for FY2008 were RMB325.3 million (US$47.6 million), representing a 94.9% year-over-year increase.

Gross margin increased to 73.6% for FY2008 as compared to 55.2% for FY2007 primarily due to similar reasons for 4Q FY2008.

Research and development expenses were RMB31.5 million (US$4.6 million) for FY2008, representing a 55.5% year-over-year increase. The increase was primarily due to the development of new ECLIA reagent kits and FISH probes.

Acquired IPR&D charge was RMB244.9 million (US$35.8 million) which related to the acquisition of SPR technology in December 2008.

Sales and marketing expenses were RMB56.0 million (US$8.2 million) for FY2008, representing a significant year-over-year increase. This increase was primarily due to the continued expansion of the direct sales force for FISH system sales, increased product promotional activities as well as the cost of the ECLIA analyzers provided free of charge to customers.

General and administrative expenses were RMB137.8 million (US$20.2 million) for FY2008, representing a significant year-over-year increase. The increase was primarily due to an increase in headcount to meet the expansion of the Company's operations, an increase in stock compensation expense arising from a restricted stock grant in June 2008 and amortization of acquired intangible assets in connection with the acquisition of the SPR technology in December 2008.

Interest expense of convertible notes was RMB83.2 million (US$12.2 million) for FY2008, representing a significant year-over-year increase. The increase was primarily due to the issuance of US$276.0 million convertible notes in August 2008.

Interest expense of amortization of convertible notes issuance costs of RMB14.4 million (US$2.1 million) for FY2008, representing a significant year-over-year increase. The increase was primarily due to the issuance of US$276.0 million convertible notes in August 2008.

Other interest expense of RMB4.2 million (US$0.6 million) for FY2008 was primarily due to the present value discounting of other payable of US$10.0 million for the final payment of the FISH acquisition which was paid in March 2009.

Income tax expense was RMB73.0 million (US$10.7 million) for FY2008. The high effective tax rate was primarily due to certain expenses of the Company such as the charge related to acquired IPR&D, amortization of acquired intangible assets, stock compensation expense and interest expense of convertible notes were not deductible for income tax computation in the PRC and the accrual for withholding income tax on distributable earnings in the PRC.

Loss from continuing operations was RMB2.1 million (US$0.3 million) for FY2008, including a charge of RMB244.9 million (US$35.8 million) for acquired IPR&D for the acquisition of the SPR technology in December 2008.

Income from discontinued operation was RMB258.2 million (US$37.8 million) for FY2008, representing a 28.6% year-over-year increase, primarily due to a one-time gain of RMB137.2 million (US$20.1 million) from the sale of the HIFU business in December 2008. A portion of this gain amounting to RMB106.2 million (US$15.5 million) has been deferred in accordance with GAAP because of the subsequent event described in the section headed, "Recent Development on the Sale of the HIFU Business" below.

Net income was RMB256.2 million (US$37.5 million) for FY2008, representing a 21.2% year-over-year decrease.

Non-GAAP income from continuing operations excluding stock compensation expense, amortization of acquired intangible assets and acquired IPR&D charge was RMB419.6 million (US$61.4 million) for FY2008, representing a 80.9% year- over-year increase. The targeted adjusted income from continuing operations for FY2008 ranged from RMB410.0 million to RMB420.0 million.

Stock compensation expense for FY2008 was RMB50.2 million (US$7.3 million), of which RMB8.2 million was allocated to research and development expenses and RMB42.0 million to general and administrative expenses.

Amortization of acquired intangible assets for FY2008 was RMB126.6 million (US18.5 million), of which RMB90.1 million was allocated to cost of revenues and RMB36.5 million to general and administrative expenses.

For the convenience of readers, certain RMB amounts have been translated into U.S. dollars at the rate of RMB6.8329 to US$1.00, the noon buying rate in New York City for cable transfers of RMB per U.S. dollar as set forth in the H.10 weekly statistical release of the Federal Reserve Board, as of Tuesday, March 31, 2009.

Annual Cash Dividend

The Board of Directors has declared an annual cash dividend on its ordinary shares of US$0.055 per share, equivalent to US$0.55 per ADS based on the Company's unaudited net income for FY2008. The cash dividend will be paid on or around October 28, 2009 to shareholders of record as of September 30, 2009.

Outlook

Please refer to the section "Outlook for 2Q FY2009" in the earnings announcement for FY2009 First Fiscal Quarter.

Recent Development on the Sale of the HIFU Business

In June 2009, the Company received a letter from Chengxuan International Ltd. ("Chengxuan"), the buyer of the HIFU Business and a major shareholder of the Company in connection with a notice issued by the State Food and Drug Administration ("the SFDA") in April 2009. The notice from the SFDA required the submission of new clinical trial data for the renewal application of the registration certificate for the HIFU system for the further evaluation of the renewal application and did not permit the sale of the HIFU system starting from April 2009 until the approval of the renewal application. The Company recently received another letter from Chengxuan which updated their ongoing discussion with the SFDA about the requirements for the new clinical trial data for the HIFU system, Chengxuan's loss of revenues due to the unexpected prohibition on selling the HIFU system since April 2009 and their indication of seeking maximum compensation of approximately US$15.5 million. The Company has established a special committee comprising two independent directors to evaluate and handle the related matters with Chengxuan and the special committee has engaged legal counsel to advise on Chengxuan's request for compensation. Due to this subsequent event and the uncertainty of the outcome, the Company has reduced the gain on the sale of the HIFU Business recorded in December 2008 by deferring approximately US$15.5 million of the gain in accordance with GAAP. This accounting treatment does not indicate any agreement of the Company to Chengxuan's request for compensation. The Company seeks to come up with a fair and acceptable solution to both parties. As such, the outcome may be different from the current estimate, and accordingly the amounts that are recorded in our consolidated financial statements for the year ended March 31, 2009 to be included in our annual report on Form 20-F, might be lower than US$15.5 million.

Non-GAAP Measure Disclosures

To supplement its consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), the Company uses non-GAAP measures of income from continuing operations and earnings from continuing operations per ADS, which are adjusted from the results based on GAAP to exclude the impact of stock compensation expense, amortization of acquired intangible assets and acquired IPR&D charge. Non-GAAP financial measures are used by the Company in their financial and operating decision-making because management believes they reflect the Company's ongoing business in a manner that allows meaningful period-to-period comparison. The Company's management believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating the Company's current operating performance and future prospects in the same manner as management does, if they so choose. The Company's management also believes the non-GAAP financial measures are useful for itself and investors because it makes more meaningful comparisons of the Company's current results of operations to those of prior periods.

The presentation of this additional financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measure, please see the financial statements included with this earnings announcement.

Conference Call

The Company's management team will host a conference call at 8:00a.m. U.S. Eastern Time on September 1, 2009 (or 8:00p.m. Beijing/Hong Kong time on the same date) to discuss the results following this earnings announcement.

    The dial-in details for the live conference call are as follows:

    -- U.S. Toll Free Number 1-800-291-9234
    -- International dial-in number 1-617-614-3923
    Passcode CMEDCALL

A live webcast of the conference call will be available on http://ir.chinameditech.com .

A replay of this webcast will be available for one month on this website.

A telephone replay of the call will be available after the conclusion of the conference call through 10:00a.m. U.S. Eastern Time on September 2, 2009.

    The dial-in details for the replay are as follows:

    -- U.S. Toll Free Number 1-888-286-8010
    -- International dial in numbers 1-617-801-6888
    Passcode 92901366

About China Medical Technologies, Inc.

China Medical Technologies is a leading China-based medical device company that develops, manufactures and markets advanced in-vitro diagnostic products using Enhanced Chemiluminescence (ECLIA) technology, Fluorescent in situ Hybridization (FISH) technology and Surface Plasmon Resonance (SPR) technology to detect and monitor various diseases and disorders. For more information, please visit http://www.chinameditech.com .

Safe Harbor Statement

This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the quotations from management in this press release contain forward-looking statements. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Further information regarding these and other risks is included in the Company's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.



                       China Medical Technologies, Inc.
               Unaudited Condensed Consolidated Balance Sheets

                                                 As of
                           March 31,   December 31,          March 31,
                             2008          2008                2009
                              RMB           RMB          RMB          US$
                                       As adjusted(2)
                                              (in thousands)
    Assets
    Current assets
    Cash and cash
     equivalents             682,679     1,943,588    1,456,410      213,147
    Trade accounts
     receivable, net         289,751       284,262      343,037       50,204
    Inventories               27,834        28,029       16,932        2,478
    Prepayments and other
     receivables              27,845        27,908       20,425        2,989
    Due from a related
     party                        --       204,675      204,987       30,000
    Total current assets   1,028,109     2,488,462    2,041,791      298,818

    Property, plant and
     equipment, net          164,499       161,801      169,422       24,795
    Land use rights            7,430         7,287        7,239        1,059
    Goodwill                   8,654         8,654        8,654        1,267
    Intangible assets,
     net(1)                1,541,793     3,532,442    3,487,474      510,394
    Prepayments and other
     receivables             154,264            --           --           --
    Convertible notes
     issuance costs           27,055        73,131       68,596       10,039
        Total assets       2,931,804     6,271,777    5,783,176      846,372

    Liabilities
    Current liabilities
    Trade accounts payable    48,040        21,160       27,863        4,078
    Accrued liabilities
     and other payables(2)   238,580     1,572,275      999,083      146,217
    Income taxes payable      69,499        82,908       77,112       11,285
        Total current
         liabilities         356,119     1,676,343    1,104,058      161,580

    Convertible notes      1,051,800     2,906,385    2,910,815      426,000
    Deferred income taxes      1,124        21,657       29,898        4,375

        Total liabilities  1,409,043     4,604,385    4,044,771      591,955

    Shareholders' equity
    Ordinary shares US$0.1
     par value: 500,000,000
     authorized; 274,066,661
     issued and outstanding
     as of March 31, 2008,
     321,066,661 issued and
     outstanding as of
     December 31, 2008
     and March 31, 2009      225,473       257,738      257,738       37,720
    Additional paid-in
     capital                 526,264       530,259      544,178       79,641
    Accumulated other
     comprehensive loss      (48,046)      (52,766)     (51,946)      (7,602)
    Retained earnings(1)(2)  819,070       932,161      988,435      144,658
    Total shareholders'    1,522,761     1,667,392    1,738,405      254,417
    equity
    Total liabilities and
     shareholders' equity  2,931,804     6,271,777    5,783,176      846,372

    Notes:
    (1) The Company has performed a preliminary purchase price allocation
        after the completion of the SPR acquisition in December 2008.  The
        Company will finalize the purchase price allocation as soon as
        practicable.

    (2) Due to the subsequent event described in the section "Recent
        Development on the Sale of the HIFU Business" above, a portion of the
        gain on disposal from HIFU business was deferred in accordance with
        GAAP based on the Company's estimate of maximum compensation.



                       China Medical Technologies, Inc.
            Unaudited Condensed Consolidated Statements of Income

                                     For the Three Months Ended
                               March 31,  December 31,       March 31,
                                  2008       2008               2009
                                   RMB        RMB          RMB         US$
                                         As adjusted(2)
                                (in thousands except for per ADS information)
    Revenues, net(1)            181,048     225,296      248,635      36,388
    Cost of revenues            (74,886)    (55,818)     (60,206)     (8,811)
    Gross profit                106,162     169,478      188,429      27,577
    Operating expenses:
    Research and
     development                 (6,262)     (8,304)     (10,670)     (1,562)
    Acquired in-process
     research and
     development(3)                (672)   (244,872)          --          --
    Sales and marketing          (6,884)    (14,565)     (13,591)     (1,989)
    General and
     administrative(3)          (15,522)    (38,115)     (48,085)     (7,037)
    Total operating
     expenses                   (29,340)   (305,856)     (72,346)    (10,588)
    Operating income
     (loss)                      76,822    (136,378)     116,083      16,989
    Other income                     --          --           --          --
    Interest income               5,034      12,448        5,608         821
    Interest expense -
     convertible notes           (9,396)    (27,856)     (27,840)     (4,075)
    Interest expense -
     amortization of
     convertible notes
     issuance costs              (1,905)     (4,652)      (4,649)       (680)
    Interest expense -
     other                       (1,299)     (1,165)        (785)       (115)
    Income (loss) before
     income tax                  69,256    (157,603)      88,417      12,940
    Income tax expense          (17,457)    (13,915)     (32,143)     (4,704)
    Income (loss) from
     continuing
     operations                  51,799    (171,518)      56,274       8,236
    Income from
     discontinued
     operation(2)                53,414     173,422           --          --
    Net income                  105,213       1,904       56,274       8,236
    Earnings (loss) from
     continuing operations
     per ADS
     - basic                       1.97       (6.54)        2.14        0.31
     - diluted(4)                  1.96       (6.54)        2.14        0.31
    Earnings from discontinued
     operation per ADS
     - basic                       2.04        6.61          N/A         N/A
     - diluted(4)                  2.02        6.61          N/A         N/A
    Weighted average number
     of ADS
     - basic                 26,242,974  26,242,974   26,287,974  26,287,974
     - diluted(4)            26,407,370  26,242,974   26,347,906  26,347,906


                                           For the Years Ended
                                   March 31,                March 31,
                                      2008           2009
                                       RMB            RMB              US$
                                 (in thousands except for per ADS information)
    Revenues, net(1)                547,421         829,950          121,464
    Cost of revenues               (245,437)       (219,337)         (32,100)
    Gross profit                    301,984         610,613           89,364
    Operating expenses:
    Research and development        (20,231)        (31,450)          (4,603)
    Acquired in-process research
     and development(3)                (672)       (244,872)         (35,837)
    Sales and marketing             (22,012)        (55,956)          (8,189)
    General and administrative(3)   (70,939)       (137,839)         (20,173)
    Total operating expenses       (113,854)       (470,117)         (68,802)
    Operating income (loss)         188,130         140,496           20,562
    Other income                        100              --               --
    Interest income                  28,650          32,354            4,735
    Interest expense -
     convertible notes              (39,149)        (83,238)         (12,182)
    Interest expense -
     amortization of
     convertible notes
     issuance costs                  (7,937)        (14,387)          (2,105)
    Interest expense - other         (5,229)         (4,240)            (621)
    Income (loss) before
     income tax                     164,565          70,985           10,389
    Income tax expense              (40,193)        (73,042)         (10,690)
    Income (loss) from
     continuing
     operations                     124,372          (2,057)            (301)
    Income from discontinued
     operation(2)                   200,850         258,231           37,792
    Net income                      325,222         256,174           37,491
    Earnings (loss) from
     continuing operations
     per ADS
     - basic                           4.74           (0.08)           (0.01)
     - diluted(4)                      4.72           (0.08)           (0.01)
    Earnings from
     discontinued operation
     per ADS
     - basic                           7.66            9.83             1.44
     - diluted(4)                      7.62            9.83             1.44
    Weighted average number
     of ADS
     - basic                     26,221,900      26,277,629       26,277,629
     - diluted(4)                26,346,462      26,277,629       26,277,629

    Notes:
    (1) Revenues, net
                                      For the Three Months Ended
                             March 31,    December 31,        March 31,
                               2008          2008               2009
                              RMB'000       RMB'000     RMB'000      US$'000
        - ECLIA               112,221       131,782     138,995       20,342
        - FISH                 68,827        93,514     109,640       16,046
                              181,048       225,296     248,635       36,388

                                           For the Years Ended
                                    March 31,               March 31,
                                      2008                    2009
                                     RMB'000        RMB'000          US$'000
        - ECLIA                      380,520        504,655           73,857
        - FISH                       166,901        325,295           47,607
                                     547,421        829,950          121,464


    (2) Income from discontinued operation

                                       For the Three Months Ended
                              March 31,    December 31,       March 31,
                                 2008          2008              2009
                                RMB'000       RMB'000     RMB'000    US$'000
        - Revenue from HIFU
          business              103,171        85,364          --         --
        - Income from HIFU
          business               53,414        36,271          --         --
        - Gain on disposal of
          HIFU business              --       137,151          --         --

                                             For the Years Ended
                                      March 31,             March 31,
                                         2008                 2009
                                        RMB'000      RMB'000         US$'000
        - Revenue from HIFU
          business                      368,317      246,588          36,088
        - Income from HIFU
          business                      200,850      121,080          17,720
        - Gain on disposal of
          HIFU business                      --      137,151          20,072

        Due to the subsequent event described in the section "Recent
        Development on the Sale of the HIFU Business" above, a portion of the
        gain on disposal from HIFU business was deferred in accordance with
        GAAP based on the Company's estimate of maximum compensation.

    (3) The Company has performed a preliminary purchase price allocation
        after the completion of the SPR acquisition in December 2008.  The
        Company will finalize the purchase price allocation as soon as
        practicable.

    (4) In computing diluted earnings from continuing operations per ADS,
        interest expense and amortization in connection with convertible notes
        were not added back in computing diluted earnings from continuing
        operations per ADS because they were anti-dilutive.



                       China Medical Technologies, Inc.
          Unaudited Condensed Consolidated Statements of Cash Flows

                                               For the Years Ended
                                          March 31,           March 31,
                                             2008               2009
                                              RMB        RMB           US$
                                                    (in thousands)
    Net cash provided by operating
     activities                            463,334      490,758       71,823

    Net cash used in investing
     activities                           (831,551)  (1,467,195)    (214,725)

    Net cash (used in) provided by
     financing activities                  (86,149)   1,751,297      256,303

    Effect of foreign currency
     exchange rate change on cash          (36,595)      (1,129)        (165)
    Net (decrease) increase in cash
     and cash equivalents                 (490,961)     773,731      113,236
    Cash and cash equivalents:
    At beginning of year                 1,173,640      682,679       99,911
    At end of year                         682,679    1,456,410      213,147



                       China Medical Technologies, Inc.
 Reconciliations of Non-GAAP Income from Continuing Operations to GAAP Income
                          from Continuing Operations

                                      For the Three Months Ended
                            March 31,   December 31,          March 31,
                              2008          2008                2009
                               RMB           RMB          RMB          US$
                            (in thousands except for per ADS information)

    GAAP income (loss)
     from continuing
     operations              51,799      (171,518)      56,274         8,236
    Adjustments:
    Stock compensation
     expense                  4,669        14,486       13,919         2,037
    Amortization of acquired
     intangible assets(1)    23,700        31,586       49,823         7,292
    Acquired in-process
     research and
     development(1)             672       244,872           --            --
    Non-GAAP income from
     continuing operations   80,840       119,426      120,016        17,565
    GAAP earnings (loss)
     from continuing
     operations per ADS
     - basic                   1.97         (6.54)        2.14          0.31
     - diluted                 1.96         (6.54)        2.14          0.31
    Non-GAAP earnings
     from continuing
     operations per ADS
     - basic                   3.08          4.55         4.57          0.67
     - diluted(2)              3.06          4.55         4.56          0.67
    Weighted average
     number of ADS
     - basic             26,242,974    26,242,974   26,287,974    26,287,974
     - diluted(2)        26,407,370    26,242,974   26,347,906    26,347,906

                                            For the Years Ended
                                     March 31,               March 31,
                                        2008                   2009
                                         RMB              RMB          US$
                                  (in thousands except for per ADS information)
    GAAP income (loss) from
     continuing operations            124,372           (2,057)         (301)
    Adjustments:
    Stock compensation
     expense                           16,660           50,179         7,344
    Amortization of acquired
     intangible assets(1)              90,233          126,588        18,526
    Acquired in-process
     research and development(1)          672          244,872        35,837
    Non-GAAP income from
     continuing operations            231,937          419,582        61,406
    GAAP earnings (loss) from
     continuing operations
     per ADS
     - basic                             4.74            (0.08)        (0.01)
     - diluted                           4.72            (0.08)        (0.01)
    Non-GAAP earnings from
     continuing operations
     per ADS
     - basic                             8.85            15.97          2.34
     - diluted(2)                        8.80            15.97          2.34
    Weighted average number
     of ADS
     - basic                       26,221,900       26,277,629    26,277,629
     - diluted(2)                  26,346,462       26,277,629    26,277,629

    Notes:
    (1) The Company has performed a preliminary purchase price allocation
        after the completion of the SPR acquisition in December 2008.  The
        Company will finalize the purchase price allocation as soon as
        practicable.

    (2) In computing diluted non-GAAP earnings from continuing operations per
        ADS, interest expense and amortization in connection with convertible
        notes were not added back in computing diluted non-GAAP earnings from
        continuing operations per ADS because they were anti-dilutive.


    For more information, please contact:

     Sam Tsang and Winnie Yam
     Tel:   +852-2511-9808
     Email: IR@chinameditech.com

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SOURCE China Medical Technologies, Inc.
Copyright©2009 PR Newswire.
All rights reserved


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