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Dehaier Medical Announces 2012 First Quarter Financial Results

BEIJING, May 9, 2012 /PRNewswire-Asia-FirstCall/ -- Dehaier Medical Systems Ltd. (Nasdaq: DHRM) ("Dehaier" or the "Company"), an emerging leader in the development, assembly, marketing and sale of medical devices and homecare medical products, today announced its financial results for its first quarter ended March 31, 2012.

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First Quarter 2012 Financial and Operating Highlights (percentage comparisons are year over year)

  • Revenues of $3.3 million, up 12.3%
  • Gross profit of $1.2 million, up 24.4%; gross margin improved to 37.4% from 33.8%
  • Income from operations of $454,820, an increase of 52.4%
  • Net income attributable to the Company of $126,021, or $0.03 per basic and diluted share, compared to $205,414, or $0.04 per diluted share in the prior year.  Net income included a non-cash change in fair value of warrants liability of $199,508 in the first quarter of 2012.
  • Mr. Ping Chen, Chief Executive Officer of Dehaier Medical, stated, "In the first quarter of 2012, we continued to show strong growth in China and have begun to enter international markets. We continue to grow our medical device distribution platform business, which includes working with a number of larger international manufacturers.  We recently extended our exclusive agreement with Timesco of London Ltd., a progressive surgical and medical company.  Simultaneously, we are developing our own branded product line domestically and abroad.  Within China, our homecare medical products, focused primarily on sleep disorder and respiratory ailments, continued to gain traction among Chinese consumers." 

    Mr. Chen continued, "We are also continuing to diversify our revenues.  In the first quarter of 2012, we focused on implementing state-level government-contracted projects.  We have placed a strong emphasis on obtaining provincial contracts throughout China, which are larger in size and scale. In March, Dehaier won a new bid to implement a government procurement project to provide imaging equipment for township hospitals in Xi'an, Shaanxi, China.  We believe this bid demonstrates how far our Company has grown, indicates the government's faith in our ability to complete these projects, and could significantly contribute to our revenues in 2012."

    Financial ReviewMs. Aileen Qi, Chief Financial Officer of Dehaier, commented, "We were pleased with our first quarter financial results, which were in line with the Company's expectations.  Our favorable mix of product sales and market share gains led to a 12.3% revenue increase over the prior-year's quarter.  Dehaier's growth was mainly driven by sales of our traditional medical devices and government procurement projects.  We have also focused on streamlining our costs and improving our inventory management and were pleased to lower our operating expenses as a percentage of sales.  This has benefitted the Company considerably during a time of inflationary pressures on our products and has allowed Dehaier to remain cost-competitive." 

    First Quarter 2012 Financial Highlights

  • Total revenues increased by 12.3% to $3.3 million for the three months ended March 31, 2012 from $3.0 million in the prior-year quarter, largely as a result of wider distribution of third-party products and the expansion of Dehaier's own branded respiratory products. 
  • The Company's gross profit for the quarter ended March 31, 2012 was $1.2 million, or 37.4% of revenue, compared to $1.0 million, or 33.8% of revenue in the prior-year period.  Gross margin improved largely as a result of improved inventory management by the Company, along with increased operating effectiveness.
  • Dehaier's income from operations improved 52.4% to $454,820 in the 2012 first quarter from $298,368 in the prior-year period, largely as a result of increased sales, improved gross margin, and lower selling, general, and administrative expenses ("SG&A") as a percent of revenue.
  • The Company reported net income attributable to the Company of $126,021, or $0.03 per diluted share in the 2012 first quarter, compared to $205,414, or $0.04 per diluted share in the prior year. The decrease in net income per diluted share was due to a non-cash expense related to changes in the fair value of warrant liability of $199,508, compared to a gain for the prior year period of $9,526.  
  • Balance Sheet Highlights(in millions except for percentages)3/31/201212/31/2011

    % ChangeCash and Cash Equivalents





    -37.8%Working Capital27.527.0

    2%Total Long-term Debt00

    N/AStockholders' Equity30.530.2

    0.8%The Company believes that its currently available working capital of $27.5 million, including cash of $2.3 million, should be adequate to meet its anticipated cash needs and sustain its current operations for at least 12 months.

    Outlook for 2012Mr. Chen concluded, "Over the next few months, our primary focus is to utilize our existing distribution business as a platform to expand and grow into new revenue streams.  We launched our home oxygen therapy service ("HOTS") in Beijing in the third quarter of 2011, and our management team remains focused on development and research of products as well as identifying the target customers, which we feel will contribute significantly to our future growth.  We also have continued our expansion into the International healthcare market.  In early 2012, we received CE Mark approval for our sleep diagnostic devices and air compressors, which will facilitate our efforts to sell our products in the European Union. We are seeking new and cost-effective means of distributing our products worldwide and are always looking for ways to corporate with others. Medical equipment sales and distribution will remain our main source of revenue going forward, and we expect this segment to develop at a stable pace and to serve as our foundation for growth.  We will continuously leverage our cross-selling opportunities by expanding existing relationships of third-party distributed products, seeking new distribution partners and building international business for our proprietary products." 

    Conference Call and WebcastDehaier will host a conference call for investors tomorrow morning on Thursday, May 10, 2012 at 8:30 a.m. ET.

    Interested parties may access the call by dialing:

    Live Participant Dial In (Toll Free):
    Live Participant Dial In (International – Country Code - 001):

    For those unable to participate, the call will be available as a live, listen-only webcast on the Company's website at or by clicking the following link:

    About Dehaier Medical Systems Ltd.Dehaier is an emerging leader in the development, assembly, marketing and sale of medical products, including respiratory and oxygen homecare medical products. The Company develops and assembles its own branded medical devices and homecare medical products from third-party components. The company also distributes products designed and manufactured by other companies, including medical devices from IMD (Italy), HEYER (Germany), Timesco (UK) and eVent Medical (US). Dehaier's technology is based on six patents and five software copyrights; additionally Dehaier has two pending software copyrights and proprietary technology. More information may be found at

    Forward-looking StatementsThis news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events, government approvals or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, future developments in payment for and demand for medical equipment and services, implementation of and performance under the joint venture agreement by all parties, and other risks contained in reports filed by the company with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

    Contact UsDehaier Medical Systems Limited
    Surie Liu
    +86 10-5166-0080

    Dehaier Medical Systems Limited
    Tina He
    +86 10-5166-0080 The Equity Group Inc.
    Katherine Yao
    +86 10-6587-6435

    In AmericaThe Equity Group Inc.
    Adam Prior
    (212) 836-9606 DEHAIER MEDICAL SYSTEMS LIMITED AND AFFILIATECONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED) For the three months endedMarch 31,20122011US$US$Revenue 3,315,9312,952,706Costs of revenue (2,074,656)(1,955,247)Gross profit 1,241,275997,459Service income

    40,39784,833Service expenses

    (17,460)(40,697)General and administrative expense

    (490,713)(503,526)Selling expense

    (318,679)(239,701)Operating Income 454,820298,368Financial expenses ( including interest expense of $27,163 and $16,177)

    (27,649)(15,613)Change in fair value of warrants liability

    (199,508)9,526Income before provision for income tax227,663292,281Provision for income tax

    (97,048)(82,537)Net income 130,615209,744Non-Controlling interest in income

    (4,594)(4,330)Net income attributable to Dehaier Medical Systems Limited126,021205,414Net income 130,615209,744Other comprehensive incomeForeign currency translation adjustments

    42,795187,280Comprehensive Income173,410397,024Comprehensive loss (income) attributable to the non-controlling interest

    (6,766)6,576Comprehensive income attributable to Dehaier Medical Systems Limited166,644403,600Earnings per share-Basic


    0.030.04Weighted average number of common shares used in computation-Basic



    2,299,2703,694,486Accounts receivable
    -less allowance for doubtful accounts of $860,826 and $859,509

    12,899,57912,159,842Other receivables

    4,223,1422,522,136Prepayment and other current assets

    6,632,0886,714,001Inventories, net

    4,157,5475,532,311Tax receivable

    371,283888,452Deferred tax asset

    118,210118,030Total Current Assets 30,701,11931,629,258Property and equipment, net

    3,240,4763,348,533Total Assets 33,941,59534,977,791LIABILITIES AND EQUITY CURRENT LIABILITIES:Short-term borrowings

    1,747,1521,585,890Accounts payable 

    28,38632,925Advances from customers

    194,197303,000Accrued expenses and other current liabilities

    322,523349,158Taxes payable

    548,8972,042,048Warranty obligation

    335,193334,680Total Current Liabilities 3,176,3484,647,701OTHER LIABILITIESWarrants liability

    295,97796,469Total Liabilities3,472,3254,744,170Commitments and ContingencyEquity Common shares, $0.002731 par value, 18,307,038 shares authorized, 4,565,000 and 4,560,000 shares issued and outstanding at March 31, 2012 and December 31, 2011, respectively

    12,46712,454Additional paid in capital

    13,341,42913,281,374Retained earnings

    13,067,59212,941,572Accumulated other comprehensive income

    2,628,2832,585,488Total Dehaier Medical Systems Limited shareholders' equity 29,049,77128,820,888Non-controlling interest

    1,419,4991,412,733Total equity 30,469,27030,233,621Total liabilities and equity 33,941,59534,977,791DEHAIER MEDICAL SYSTEMS LIMITED AND AFFILIATECONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)For the three months endedMarch 31,20122011US$US$Cash flows from operating activitiesNet income130,615209,744Adjustments to reconcile net income to net cash used in operating activitiesStock-based compensation expense60,06859,300Depreciation and amortization118,724109,373Change in fair value of warrants liability199,508(9,526)Increase in accounts receivable(739,737)(752,897)Decrease (Increase) in prepayments and other current assets81,913(2,884,433)Decrease (Increase) in other receivables(1,701,006)167,707Decrease in inventories1,374,764484,029Decrease (Increase) in tax receivable517,169(69,169)Increase (Decrease) Increase in accounts payable(4,539)116,617Decrease (Increase) in advances from customers(108,803)25,248Increase in accrued expenses and other current liabilities(26,122)(17,345)(Decrease) Increase in tax payable(1,493,151)447,618Net cash used in operating activities(1,590,597)(2,113,734)Cash flows from investing activitiesCapital expenditures and other additions(5,758)(8,274)Advances to related parties-(2,358)Net cash used in investing activities(5,758)(10,632)Cash flows from financing activitiesProceeds from bank loan791,315-Repayment of bank loan(631,428)(610,816)Net cash provided by (used in) financing activities159,887(610,816)Effect of exchange rate fluctuations on cash and cash equivalents 41,252184,469Net decrease in cash and cash equivalents(1,395,216)(2,550,713)Cash and cash equivalents at beginning of period3,694,4865,923,386Cash and cash equivalents at end of period2,299,2703,372,673Supplemental cash flow informationIncome tax paid775,1234,583Interest paid27,16316,177


    SOURCE Dehaier Medical Systems Ltd.
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