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Chindex International, Inc. Reports Fourth Quarter and Full Year Fiscal 2010 Financial Results
Date:6/14/2010

BETHESDA, Md., June 14 /PRNewswire-Asia/ -- Chindex International, Inc. (Nasdaq: CHDX), a leading independent American provider of Western healthcare products and services in the People's Republic of China, today announced financial results for the fourth quarter and fiscal year ended March 31, 2010.

    Financial Highlights:
    -- Revenue of $171.2 million in the fiscal year 2010
    -- Operating income up 76.6% year over year to $14.4 million in the fiscal
       year 2010
    -- Net income up 65% year over year to $8.2 million in the fiscal year
       2010, or $0.52 per diluted share, from $5.0 million, or $0.31 per
       diluted share in the prior year

Roberta Lipson, President and CEO of Chindex, commented, "We are pleased with our fiscal year 2010 financial results in which we demonstrated steady growth in Healthcare Services of 8% and increased profitability for the firm as a whole. We remain enthusiastic about the healthcare services and medical device market opportunity in China, particularly with the confluence we see in China right now, specifically economic development, government support for leading providers and consumer demand for premium care."

Fourth Quarter 2010 Financial Results

Revenue in the fourth quarter of fiscal year 2010 decreased 30.9% to $41.3 million from $59.7 million in the fourth quarter of fiscal year 2009, reflecting continued growth in Healthcare Services offset by revenue performance in the Medical Products division. Revenue from the Healthcare Services division increased 4.9% to $21.2 million from $20.2 million in the fourth quarter of fiscal year 2009, and reflected growing inpatient and outpatient volume across the network despite construction-related disruption at the Company's Beijing facility. Consistent with prior quarters, Chindex expects the impact of the expansion work to continue through the opening of the expanded facilities, currently planned for the fall of 2010. Revenue from the Medical Products division was down 49.1% to $20.1 million from $39.5 million in the prior year period. The Company believes that the Ministry of Health Class A review process and timing, along with a general uncertainty around healthcare reform and expenditure, undermined this division's performance in the fourth quarter of fiscal 2010.

Income from operations in the fourth quarter of fiscal year 2010 was $1.1 million, compared to income from operations of $3.9 million in the same quarter last year. Total operating costs and expenses for the fourth quarter of fiscal year 2010 decreased 28.1% to $40.1 million from $55.8 million in the prior year period, primarily reflecting the decrease of 52.2% in product sales costs to $14.6 million in the fourth quarter of 2010. Operating costs also included $236,000 of development and startup expenses for new clinics, equivalent to $0.01 per diluted share, and non-cash stock compensation expense of $853,000 or $0.05 per diluted share. In the prior year period, the Company's development and startup expense were $536,000, or $0.03 per diluted share, and non-cash stock compensation expense was $848,000, or $0.05 per diluted share.

The Company recorded a $791,000 provision for taxes, an effective tax rate of 60.6%, in the fourth quarter of fiscal year 2010 as compared to a provision for taxes of $615,000, or an effective tax rate of 15.3%, in the prior year period. The tax rate reflects losses in entities for which the Company cannot yet recognize a benefit.

Net income for the quarter ended March 31, 2010 was $515,000, or $0.04 per diluted share. This compares to net income of $3.4 million, or $0.22 per diluted share, in the prior year period.

Healthcare Services division business results:

In the fourth quarter of fiscal year 2010, revenue increased 4.9% to $21.2 million from $20.2 million in the prior year period. The increase reflects growing inpatient and outpatient volume across the Company's network offset by near-term disruption related to expansion construction in Beijing.

In the fourth quarter of fiscal year 2010, operating costs were flat on a year over year basis at $18.8 million, and income from operations before foreign exchange loss increased 75.4% to $2.4 million from $1.3 million in the prior year period.

Lipson continued, "Our growth this quarter was consistent with our expectations and reflects continued demand for services across our network, offset slightly by construction-related disruption at our Beijing facility, where we are more than doubling our capacity by calendar year-end. We moved several exciting projects forward this quarter including officially launching the New Hope Oncology Center, entering design phase for the new facility in Tianjin, as well as meeting further demand for our services in Shanghai and Guangzhou. Overall, we remain uniquely positioned as a leading premium provider in China's healthcare services space and we are looking forward to more progress in the fiscal year ahead."

Medical Products division business results:

For the fourth quarter of fiscal year 2010, revenue was $20.1 million, down 49.1% from $39.5 million in the prior year period. Revenue performance mainly reflects the Ministry of Health's Class A review process and timing, which impacts daVinci order flow, along with a general uncertainty around healthcare reform and expenditure, which impacts overall demand and order for medical devices.

Gross profit for the Medical Products division was $5.5 million, compared to $9.0 million in the prior year period. Gross margin was 28% compared to 23% in the prior year period, in line with historical averages and revenue mix. Selling, marketing, general and administrative expenses for the Medical Products division decreased to $5.9 million from $6.3 million in the fourth quarter of the prior year.

Revenue from the Medical Products division was $85.4 million in the fiscal year 2010, a decrease of 7.2% from $92.1 million in the prior year. Gross profit in the division was $23.4 million, which yielded a gross margin of 27%, compared to $23.1 million, which yielded a gross margin of 25%, in the fiscal year 2009. Selling, marketing, general and administrative expenses for the Medical Products division increased 5.2% to $23.7 million from $22.6 million in the prior year, reflecting the increased selling activity.

Lipson added, "Despite the temporary challenges in our Medical Products division, we believe the medical device market in China remains extremely compelling. We believe order and shipment delays related to the regulatory review of high-value technologies is a temporary reality which substantiates the overall demand in the market for these products. Additionally, we are delighted to announce today our strategic partnership with Fosun Pharmaceuticals, a transformative event for Chindex and for our Medical Products division in particular."

Full Year 2010 Financial Results

During the fiscal year 2010, revenue remained flat on a year over year basis at $171.2 million, compared to $171.4 million in the prior year. Revenue from the Healthcare Services division increased 8.1% to $85.8 million from $79.4 million in fiscal year 2009. Revenue from the Medical Products division was $85.4 million, down 7.2% from $92.1 million in the prior year.

Income from operations increased 76.6% to $14.4 million for the full year ended March 31, 2010, from $8.2 million in the prior year. Total operating costs and expenses for the fiscal year 2010 decreased 4.0% to $156.8 million from $163.3 million in the prior year.

The Company recorded a $6.1 million provision for taxes, or an effective tax rate of 42.6%, in the fiscal year 2010, compared to a provision for taxes of $2.7 million, or an effective tax rate of 35.1%, for the fiscal year 2009.

In the fiscal year 2010, net income increased 65.3% to $8.2 million, or $0.52 per diluted share, from $5.0 million, or $0.31 per diluted share, in the prior year. Non-cash stock compensation expense was $3.3 million during the fiscal year 2010 compared to $2.9 million in the prior year.

Fourth Quarter Fiscal 2010 Conference Call

Management will host a conference call today at 8:00 am ET to discuss financial results.

To participate in the conference call, international callers should dial 1-760-666-3567 and domestic callers should dial 1-877-303-9231 approximately 10 minutes before the conference call is scheduled to begin.

The telephone replay will be available from the day of the call at (international) 1-706-645-9291 and (domestic) 1-800-642-1687, passcode 79429622.

This call is also being webcast and will be accessible at Chindex's website: http://ir.chindex.com/events.cfm . The event will be archived and available for replay through June 28, 2010.

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 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 .

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 annual report on Form 10-K for the year ended March 31, 2009, 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.

    For further information, please contact:

    ICR, LLC
     Ashley M. Ammon
     Tel: +1-646-277-1227



                      CHINDEX INTERNATIONAL, INC.
            CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
              (in thousands except share and per share data)
                            (Unaudited)

                             Three months ended March31  Year ended March 31
                                   2010        2009        2010        2009
    Product sales                 $20,088     $39,478     $85,413     $92,085
    Healthcare services
     revenue                       21,168      20,186      85,778      79,357
    Total revenue                  41,256      59,664     171,191     171,442

    Cost and expenses
    Product sales costs            14,553      30,451      62,059      69,027
    Healthcare services costs      17,666      17,498      66,467      67,084
    Selling and marketing
     expenses                       3,752       3,693      14,361      13,284
    General and administrative
     expenses                       4,152       4,161      13,892      13,888
     Income from operations         1,133       3,861      14,412       8,159
     Other (expenses) and
      income
    Interest expense                 (199)       (266)       (983)     (1,004)
    Interest income                   137         422       1,487       1,738
    Miscellaneous income
     (expense) - net                  235          15        (616)     (1,242)
    Income before income taxes      1,306       4,032      14,300       7,651
    Provision for income taxes       (791)       (615)     (6,096)     (2,687)
    Net income                       $515      $3,417      $8,204      $4,964

    Net income per common
     share - basic                   $.04        $.24        $.56        $.34
    Weighted average shares
     outstanding - basic       14,721,901  14,479,237  14,579,759  14,410,033

    Net income per common
     share - diluted                 $.04        $.22        $.52        $.31
    Weighted average shares
     outstanding - diluted     16,188,973  15,744,153  16,132,339  16,021,723




                         CHINDEX INTERNATIONAL, INC.
                     CONSOLIDATED CONDENSED BALANCE SHEETS
                       (in thousands except share data)

                                            March 31, 2010     March 31, 2009
            ASSETS
    Current assets:
    Cash and cash equivalents                      $50,654           $20,293
    Restricted cash                                    468             1,854
    Investments                                     37,207            51,502
     Accounts receivable, less allowance
      for doubtful accounts of $6,158 and
      $5,041,respectively
      Product sales receivables                     22,760            37,994
      Patient service receivables                   10,357             8,837
    Inventories, net                                14,411            11,346
    Deferred income taxes                            2,843             2,410
    Other current assets                             3,032             3,239
    Total current assets                           141,732           137,475
    Restricted cash                                  2,556             1,437
    Property and equipment, net                     23,678            20,633
    Noncurrent deferred income taxes                   103             1,031
    Other assets                                     2,774             2,061
    Total assets                                  $170,843          $162,637
           LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
    Short-term debt, current portion of
     long-term debt and vendor financing            $1,453            $1,631
    Current portion of capitalized leases               --                22
    Accounts payable                                13,979            12,259
    Accrued expenses                                14,022            21,141
    Other current liabilities                        3,826             3,614
    Deferred revenue                                 2,549             1,539
    Income taxes payable                             2,218             1,568
    Total current liabilities                       38,047            41,774
    Long-term debt, vendor financing and
     convertible debentures                         22,593            23,709
    Long-term accrued liabilities                       84                --
    Long-term deferred revenue                         968               595
    Long-term deferred tax liability                   240               119
    Total liabilities                               61,932            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 - 13,765,857 and
      13,452,007 shares issued and
      outstanding at March 31, 2010 and
      March 31, 2009, respectively                     138               135
     Class B stock - 1,162,500 shares
      issued and outstanding at March 31,
      2010 and March 31, 2009,
      respectively                                      12                12
     Additional paid-in capital                    100,269            95,808
    Accumulated other comprehensive
     income                                          3,016             3,072
    Retained earnings (accumulated
     deficit)                                        5,476            (2,587)
     Total stockholders' equity                    108,911            96,440
     Total liabilities and stockholders'
      equity                                      $170,843          $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.

                        (in thousands except share data)

                                          Healthcare    Medical
                                            Services   Products     Total
    For the three months ended March 31,
     2010:
    Sales and service revenue                $21,168    $20,088     $41,256
    Gross Profit                                n/a *     5,535          n/a
    Gross Profit %                              n/a *       28%          n/a
    Income (loss) from operations before
     foreign exchange                         $2,351      $(393)     $1,958
    Foreign exchange (loss)                                            (825)
    Income from operations                                           $1,133
    Other income, net                                                   173
    Income before income taxes                                       $1,306
    As of March 31, 2010:
    Assets                                  $112,929    $57,914    $170,843


                                          Healthcare    Medical
                                            Services   Products     Total
    For the three months ended March 31,
     2009:
    Sales and service revenue                $20,186    $39,478     $59,664
    Gross Profit                                n/a *     9,027          n/a
    Gross Profit %                              n/a *       23%          n/a
    Income from operations before foreign
     exchange                                 $1,340     $2,693      $4,033
    Foreign exchange (loss)                                            (172)
    Income from operations                                           $3,861
    Other income, net                                                   171
    Income before income taxes                                       $4,032
    As of March 31, 2009:
    Assets                                   $94,675    $67,962    $162,637

                                          Healthcare    Medical
                                            Services   Products     Total
    For the twelve months ended March 31,
     2010:
    Sales and service revenue                $85,778    $85,413    $171,191
    Gross Profit                                n/a *    23,354          n/a
    Gross Profit %                              n/a *       27%          n/a
    Income (loss) from operations before
     foreign exchange                        $14,393      $(366)    $14,027
    Foreign exchange gain                                               385
    Income from operations                                          $14,412
    Other (expense), net                                               (112)
    Income before income taxes                                      $14,300
    As of March 31, 2010:
    Assets                                  $112,929    $57,914    $170,843


                                          Healthcare    Medical
                                            Services   Products     Total
    For the twelve months ended March 31,
     2009:
    Sales and service revenue                $79,357    $92,085    $171,442
    Gross Profit                                n/a *    23,058          n/a
    Gross Profit %                              n/a *       25%          n/a
    Income from operations before foreign
     exchange                                 $7,309       $508      $7,817
    Foreign exchange gain                                               342
    Income from operations                                           $8,159
    Other (expense), net                                               (508)
    Income before income taxes                                       $7,651
    As of March 31, 2009:
    Assets                                   $94,675    $67,962    $162,637


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SOURCE Chindex International, Inc.
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