BETHESDA, Md., May 9, 2011 /PRNewswire-Asia/ -- Chindex International, Inc. (NASDAQ: CHDX), an American health care company providing health care services in China through the operations of United Family Healthcare, a network of private primary care hospitals and affiliated ambulatory clinics, today announced financial results for the three month period ended March 31, 2011.
First Quarter 2011 Financial Highlights
The Company is presenting Adjusted EBITDA beginning in the first quarter of 2011 to better illustrate ongoing operations. Adjusted EBITDA is defined as income (loss) before interest expense, income taxes, depreciation and amortization, and also excludes development, pre-opening and start-up expenses related to new and pending hospitals and clinics, equity in loss of unconsolidated affiliate, non-recurring charges for Chindex Medical Limited (CML) joint venture formation and effect of change in corporate cost allocations. The Company anticipates recurring development, pre-opening and start-up expense and notes that such expense is a basic element of the long term growth plan. Management believes that providing an Adjusted EBIDTA analysis to investors is a helpful metric to better illustrate the Company's operations, including development plans, and changes in presentation from historical periods. The Company uses Adjusted EBITDA for business planning and other purposes. Other companies may calculate Adjusted EBITDA differently, and therefore Chindex's Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Adjusted EBITDA is not a measure of financial performance under U.S. generally accepted accounting principles (GAAP), and should not be considered in isolation or as an alternative to net income (loss), cash flows from operating activities and other measures determined in accordance with GAAP. Items excluded from Adjusted EBITDA are significant and necessary components to the operations of the Company's business, and, therefore, Adjusted EBITDA should only be used as a supplemental measure of operating performance.
Roberta Lipson, President and CEO of Chindex, commented, "First quarter financial performance reflects revenue growth tempered by the holiday season and the timing of our BJU expansion, as well as non-recurring expense items and increases in corporate expenses related to the joint venture formation. While the Beijing expansion is progressing slower than anticipated due to construction and regulatory timing, we are optimistic that we'll meet our phased opening plans through this year. We also anticipate steady inpatient and outpatient demand across our network."
First Quarter 2011 Financial ResultsFirst quarter 2011 revenue from healthcare services increased 14% to $24.2 million from $21.2 million in the prior year period, reflecting growing inpatient and outpatient volume across the United Family Healthcare network. Outpatient services contributed 62% of revenue and inpatient services contributed 38% of revenue in the first quarter of 2011. This compares to 60% and 40%, respectively, in the year ago period. By service line, surgical services contributed 17.8%, OB/GYN contributed 17.8%, pediatrics contributed 7.6%, ancillary services contributed 33.4% and other services contributed 23.4% of revenue. This additional revenue data is provided in the tables below.
Operating expenses for the three months ended March 31, 2011 increased to $24.5 million from $20.0 million in the prior year period. This reflects a higher than normal level of operating expense of approximately $400,000 due to certain non-recurring legal and professional expenses related primarily to the formation and start up operations of the CML joint venture. In addition, development, pre-opening and start up expenses rose to $798,000 compared to $413,000 in the prior year period primarily as a result of expenses related to the Company's Beijing and Tianjin projects.
Operating expenses also included certain non-cash expenses including $1.2 million of non-cash stock compensation expense compared to $854,000 in the prior year and increased corporate cost allocations of approximately $325,000 due to the change in business organization when compared to the prior year.
Adjusted EBITDA in the first quarter of 2011 was approximately $2.4 million compared to $2.5 million in the prior year period.
Loss from operations was $293,000 compared to income from operations of $1.1 million in the prior year period.
The Company recorded a $787,000 provision for taxes in the quarter ended March 31, 2011 as compared to a provision for taxes of $791,000 in the prior year period. The provision for taxes this period reflects losses in entities for which the Company could not recognize a tax benefit.
Net loss for the quarter ended March 31, 2011 was $1.2 million, or $0.08 per diluted share. This compares to net income of $515,000 or $0.04 per diluted share, in the prior year period. For the quarter ended March 31, 2011, weighted average diluted shares outstanding were 16.1 million.
As of March 31, 2011, the Company had $81.0 million in cash and cash equivalents and investments.
Chindex Medical Limited The Chindex Medical Limited joint venture (CML) between FosunPharma and Chindex International began operations on January 1, 2011. The strategic venture merged the former Medical Products division of Chindex International and select medical device companies of FosunPharma. FosunPharma owns 51% and Chindex owns 49% of the CML joint venture. Beginning this quarter, Chindex has deconsolidated CML's operating results and recognizes its 49% interest in CML's net income using the equity method of accounting.
Accordingly, in the first quarter of 2011, other expenses include a $147,000 loss for Chindex's 49% share of the net loss of CML for the quarter. On a stand-alone basis, the CML joint venture had a net loss of $37,000 for the quarter, which included a stock-based compensation expense charge of $279,000. In recognizing its 49% interest in the net income of CML for the quarter, Chindex also included additional expenses for amortization of certain fair value adjustments made in connection with the formation of the joint venture. CML results in the first quarter of 2011 reflected the weakest budgeted quarter for the joint venture. The Company expects improved results in future quarters which are anticipated to offset the stock-based compensation expense and recurring amortization charges.
The deconsolidation of CML's financial results include the following impacts on the Company's presentation of results:
Management will host a conference call at 8:00 am ET on May 10, 2011, to discuss financial results. To participate in the conference call, U.S. domestic callers may dial 1-877-303-9231 and international callers may dial 1-760-666-3567 approximately 10 minutes before the conference call is scheduled to begin. A telephone replay will be available from the day of the call until May 17, 2011, by dialing (U.S. domestic) 1-800-642-1687 or (international) 1-706-645-9291, passcode 65853259. A webcast of the earnings call will be accessible via Chindex's website at http://ir.chindex.com/events.cfm.
About Chindex International, Inc.
Chindex is an American health care company providing health care services in China through the operations of United Family Healthcare, a network of private primary care hospitals and affiliated ambulatory clinics. United Family Healthcare currently operates in Beijing, Shanghai and Guangzhou. The Company also provides medical capital equipment and products through Chindex Medical Ltd., a joint venture company with manufacturing and distribution businesses serving both domestic China and export markets. With thirty years of experience, the Company's strategy is to continue its growth as a leading integrated health care provider in the Greater China region. Further company information may be found at the Company's website at http://www.chindex.com.
Safe Harbor Statement
Statements made in this press release relating to plans, strategies, objectives, economic performance and trends and other statements that are not descriptions of historical facts may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking information is inherently subject to risks and uncertainties, and actual results could differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, the factors set forth under the heading "Risk Factors" in our Transition Report on Form 10-K for the nine months ended December 31, 2010, updates and additions to those "Risk Factors" in our interim reports on Form 10-Q, Forms 8-K and in other documents filed by us with the Securities and Exchange Commission from time to time. Forward-looking statements may be identified by terms such as "may," "will," "should," "could," "expects," "plans," "intends," "anticipates," "believes," "estimates," "predicts," "forecasts," "potential," or "continue" or similar terms or the negative of these terms. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We have no obligation to update these forward-looking statements.Contact:
ICR, LLCAshley De Simone (646) 277-1227Financial Summary Attached
CHINDEX INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS(Unaudited)(in thousands except share and per share data)Three months ended March 31,20112010RevenueHealthcare services revenue
41,256Operating expensesHealthcare services:Salaries, wages and benefits
12,378Other operating expenses
3,298Supplies and purchased medical services
2,120Bad debt expense
339Depreciation and amortization
880Lease and rental expense
19,991Products:Product sales costs
14,553Product selling and other operating expenses
20,132Total operating expenses
40,123(Loss) income from operations
1,133 Other (expenses) and incomeInterest income
(199)Equity in loss of unconsolidated affiliate
-Miscellaneous (expense) income - net
235(Loss) income before income taxes
1,306Provision for income taxes
(791)Net (loss) income
$515Net (loss) income per common share - basic
$.04Weighted average shares outstanding - basic
14,721,901Net (loss) income per common share - diluted
$.04Weighted average shares outstanding - diluted
16,188,973CHINDEX INTERNATIONAL, INC.CONSOLIDATED CONDENSED BALANCE SHEETS(in thousands except share data)March 31, 2011(unaudited)December 31, 2010ASSETSCurrent assets:Cash and cash equivalents
37,631Accounts receivable, less allowance for doubtful accounts of $7,253 and $6,748, respectively
11,601Receivables from affiliates
9.330 Inventories, net
1,413 Deferred income taxes
3,242 Other current assets
3,856Total current assets
99,380Restricted cash and sinking funds
2,439Investment in unconsolidated affiliate
31,756Property and equipment, net
37,099Noncurrent deferred income taxes
$174,173LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable
$4,038Payable to affiliates
8,541Other current liabilities
3,874Income taxes payable
2,147Total current liabilities
18,600Long-term debtand convertible debentures
23,070Long-term deferred tax liability
42,101Commitments and contingenciesStockholders' 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 – 15,323,041 and 15,310,426 shares issued andoutstanding at March 31, 2011 and December 31, 2010, respectively
153Class B stock – 1,162,500 shares issued and outstanding at March 31, 2011and December 31, 2010, respectively
12 Additional paid-in capital
115,815Accumulated other comprehensive income
11,290Total stockholders' equity
132,072Total liabilities and stockholders' equity
$174,173CHINDEX INTERNATIONAL, INC.CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS(in thousands)Three months ended March 31,2011 2010OPERATING ACTIVITIESNet (loss) income
515Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
980Provision for demonstration inventory
137Inventory write down
83Provision for doubtful accounts
495Loss on disposal of property and equipment
20Equity in loss of unconsolidated affiliate
-Deferred income taxes
548Stock based compensation
854Foreign exchange (gain) loss
825Amortization of debt issuance costs
2Amortization of debt discount
62Non-cash charge for change in fair value of warrants
(224)Changes in operating assets and liabilities:Restricted cash
6,476Accounts receivable from affiliates
(1,188)Other current assets and other assets
431Accounts payable, accrued expenses, other current liabilities and deferred revenue
(131)Accounts payable to affiliates
-Income taxes payable
(721)Net cash provided by operating activities
8,824INVESTING ACTIVITIESPurchases of short-term investments and CDs
-Proceeds from redemption of CDs
20,800Purchases of property and equipment
(3,243)Net cash (used in) provided by investing activities
17,557FINANCING ACTIVITIESProceeds from debt, vendor financing and convertible debentures
(83)Repayment of debt, sinking fund deposits and vendor financing
(212)Repurchase of restricted stock for income tax withholding
(1)Proceeds from exercise of stock options and warrants
90Net cash provided by (used in) financing activities
(206)Effect of foreign exchange rate changes on cash and cash equivalents
719Net increase in cash and cash equivalents
26,894Cash and cash equivalents at beginning of period
20,293Cash and cash equivalents at end of period
47,187Supplemental disclosures of cash flow information:Cash paid for interest
41Cash paid for taxes
4,770Non-cash investing and financing activities consist of the following:Property and equipment additions included in accounts payable
532Cashless exercise of warrants at fair value
800Exercise of warrants at fair value
(201)The table below reconciles our consolidated net income to Adjusted EBITDA (in thousands).Three Months Ended March 31,20112010Consolidated net income (loss)
$(1,230)$515Adjustments:Depreciation and amortization
1,137880Provision for income taxes
103199Interest and other income / expense, net
(100)(372)Development, pre-opening and start-up expense
798413Equity in earnings (loss) of unconsolidated affiliate
147-Non-recurring charges for CML JV formation
400-Effect of change in corporate cost allocations
325-3,5971,911Adjustments to exclude Medical Products Division:Medical Products revenue-(20,088)Medical Products cost of products sold
-14,553Medical Products selling and operating expenses
$2,367$2,470Three months ended March 31,20112010Inpatient/Outpatient revenue percentagesInpatient services as percent of net revenue
38%40%Outpatient services as percent of net revenue
62%60%100%100%Three months ended March 31,20112010Net revenue by service line:Surgical services
11.7%11.8%All other services
|SOURCE Chindex International, Inc.|
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