BEIJING, Aug. 15, 2011 /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 in China, today announced its financial results for the second quarter ended June 30, 2011.
Second Quarter 2011 Financial Highlights
Financial Highlights for the Six Months Ended June 30, 2011
Second Quarter 2011 and Recent Business Highlights
"Increased acceptance of Dehaier products by hospitals and other healthcare facilities, as well as growth in government projects were the primary catalysts behind our strong top and bottom line performance in the second quarter," said Mr. Ping Chen, CEO of Dehaier. "We are building our brand domestically as both a distributor and a trusted partner, and making progress toward the expansion of our homecare business beyond China. Our strong intellectual property portfolio continues to distinguish Dehaier in the marketplace, and we believe the addition of Dr. Wang will contribute tremendously to our R&D capabilities as well as our product development. Dehaier remains committed to investing in ongoing innovation and enriching our product portfolio as we strive to provide customers with an all-in-one solution to meet their individual needs. We believe such initiatives will drive future financial gains and help to secure our growth over the longer term."
Mr. Chen added "Our cooperation agreement with Taiyo-Shanghai and Beijing Orient for home oxygen therapy service was a milestone for our homecare business, as were the opening of our first oxygen filling facility and first service center in July. Since launching this service in late April, we have received favorable reviews and gathered valuable customer feedback that is yielding tangible benefits that support our ongoing development and marketing efforts. In addition, we are developing a customer database that will provide us with cross-selling opportunities for our other homecare products. We are pleased with the early results of this cooperation, and believe that this segment of our business can achieve tremendous growth once legislation is passed in Beijing to provide insurance reimbursement eligibility for home oxygen therapy services. Our plan to expand this business into other cities in China remains on track, enabling Dehaier to benefit from its first-mover advantage and capture sizeable share within this emerging market.
"We believe there are significant opportunities to further penetrate the market and are confident that our innovative products, diversified marketing channels and network, growing customer database, and geographic expansion efforts collectively position Dehaier to accelerate growth among China's developing healthcare industry," concluded Mr. Chen.
Second Quarter 2011 Financial ResultsRevenuesRevenues for the three months ended June 30, 2011 were $7.7 million, compared with $4.8 million for the three months ended June 30, 2010, an increase of $2.9 million, or 60%. The increase in revenue was attributable to sales growth from the Company's medical devices and homecare solutions businesses.
Gross ProfitGross profit for the three months ended June 30, 2011 increased to $2.8 million, compared with $1.9 million in the three months ended June 30, 2010. As a percentage of revenue, the Company's gross margin was 36.8% for the three months ended June 30, 2011, compared with 39.7% for the same period in 2010. This fluctuation in gross margin is normal for the Company because we adjust our products portfolio according to customer requirements and market conditions, etc.
Income from OperationsOperating income for the three months ended June 30, 2011 totaled $1.9 million, compared with $1.4 million for the three months ended June 30, 2010.
Operating expenses for the quarter totaled $967,000, an increase of 58%, compared with $612,000 for the same period a year ago. In addition to the business expansion, the increase in operating expenses was attributable to a $0.2 million increase in G&A expenses associated with increased R&D related to oxygen and respiratory products, and, expenses associated with being a publicly traded company, including costs of maintaining and enhancing our internal controls, and a $0.1 million increase in selling expenses for marketing and network building.
Net IncomeNet income attributable to the Company for the three months ended June 30, 2011 was $1.7 million, compared with $1.1 million for the three months ended June 30, 2010. The increase in net income was primarily due to robust top line growth. Earnings per diluted share were $0.39, based on 4.5 million shares outstanding for the quarter, compared with diluted EPS of $0.27, based on 4.3 million shares outstanding for the second quarter of 2010.
Liquidity and Capital ResourcesAs of June 30, 2011, Dehaier had $3.0 million in cash and cash equivalents, compared with $5.9 million as of December 31, 2010. The decrease was primarily to the result of an increase in prepayments due to more distribution agreements requiring prepayment for products. Current assets totaled $39.0 million, with working capital of $25.1 million and total shareholders' equity of $27.0 million at June 30, 2011, respectively.
Conference Call and WebcastManagement will host a conference call to discuss these financial results on Monday, August 15, 2011 at 8:00 a.m. EDT.
To participate in the call please dial (877) 941-8416 in the U.S. and Canada, or (480) 629-9808 for international calls, approximately 10 minutes prior to the scheduled start time. Interested parties can also listen via a live Internet webcast, which can be found on the Company's website at http://www.chinadhr.com.
A replay of the call will be available approximately 2 hours after the conclusion of the live call, through August 29, 2011. The replay can be accessed by dialing (800) 406-7325 in the U.S. and Canada, or (303) 590-3030 internationally and entering the passcode: 4462671. In addition, a recording of the call will be available via the company's website at http://www.chinadhr.com for one year.
About Dehaier Medical Systems Ltd.Dehaier is an emerging leader in the development, assembly, marketing and sale of medical products in China, 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), Welch Allyn (USA), HEYER (Germany), Timesco (UK), eVent Medical (US) and JMS (Japan). Dehaier's technology is based on six patents and five software copyrights; additionally, we have two pending patents and six pending software copyrights, and proprietary technology. More information may be found at http://www.chinadhr.com.
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 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, 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 UsIn the US:
Dehaier Medical Systems LimitedThe Piacente Group, Inc.
Rita LiuInvestor Relations
CFOBrandi Floberg or Lee Roth
firstname.lastname@example.org email@example.com In China:The Piacente Group, Inc. Investor RelationsWendy Sunfirstname.lastname@example.org DEHAIERMEDICAL SYSTEMS LIMITED AND AFFILIATECONDENSED CONSOLIDATED BALANCE SHEETS(UNAUDITED)June 30,December 31, 20112010US$US$ASSETSCURRENT ASSETS:Cash and cash equivalents
3,008,0235,923,386Accounts receivable-less allowance for doubtful accounts of $89,437 and $87,555 at June 30, 2011 and December 31, 2010, respectively
3,161,6133,164,423Prepayment and other current assets
4,430,8613,518,919Total Current Assets 38,983,49133,393,993Property and equipment, net
3,404,6393,488,947Total Assets 42,388,13036,882,940LIABILITIES AND EQUITY CURRENT LIABILITIES:Short-term borrowings
1,183,20029,318Advances from customers
152,969269,189Accrued expenses and other current liabilities
307,943301,464Due to officer
-2,358Total Current Liabilities 13,881,90510,775,258OTHER LIABILITIESWarrants liability
168,242318,109Total Liabilities14,050,14711,093,367Commitments and ContingencyEquityCommon shares, $0.002731 par value, 18,307,038 shares authorized, 4,510,000 and 4,500,000 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively
12,31712,290Additional paid in capital
11,781,9439,838,452Accumulated other comprehensive income
1,985,8301,474,455Total Dehaier Medical Systems Limited shareholders' equity 26,976,44724,462,282Non-controlling interest
1,361,5361,327,291Total equity 28,337,98325,789,573Total liabilities and equity 42,388,13036,882,940The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.DEHAIERMEDICAL SYSTEMS LIMITED AND AFFILIATECONDENSED CONSOLIDATED STATEMENTS OF INCOME ANDCOMPREHENSIVE INCOME(UNAUDITED)For the six months ended
June 30, For the three months ended
June 30, 2011 2010 2011 2010US$US$US$US$Revenue 10,665,4907,471,9517,712,7844,830,862Costs of revenue (6,826,494)(4,577,795)(4,871,247)(2,911,077)Gross profit 3,838,9962,894,1562,841,5371,919,785Service income
(61,372)(68,346)(20,675)(40,325)General and administrative expense
(694,493)(482,810)(454,792)(314,959)Operating Income 2,223,3922,004,0971,925,0241,355,916Financial expenses (including interest expense of $26,993, $26,728, $10,816 and $7,900 for the six and three months ended June 30, 2011 and 2010, respectively)
(27,472)(54,686)(11,859)(35,360)Change in fair value of warrants liability
149,86718,394140,34118,394Income before provision for income taxes and non-controlling interest 2,345,7871,967,8052,053,5061,338,950Provision for income tax
(396,642)(298,180)(314,105)(203,297)Net income 1,949,1451,669,6251,739,4011,135,653Non-Controlling interest in (income) loss
(5,654)(9,991)(1,324)3,770Net income attributable to Dehaier Medical Systems Limited 1,943,4911,659,6341,738,0771,139,423Net Income1,949,1451,669,6251,739,4011,135,653Other comprehensive incomeForeign currency translation adjustments
511,375127,158324,095125,522Comprehensive Income2,460,5201,796,7832,063,4961,261,175Comprehensive income attributable to the non-controlling interest
(28,591)(8,546)(17,685)(8,335)Comprehensive income attributable to Dehaier Medical Systems Limited2,431,9291,788,2372,045,8111,252,840Earnings per share-Basic
0.430.460.390.27Weighted average number of common shares used in computation-Basic
4,506,3543,632,5004,510,0004,265,000The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. DEHAIERMEDICAL SYSTEMS LIMITED AND AFFILIATECONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)For the six months ended
June 30,20112010US$US$Cash flows from operating activitiesNet income1,949,1451,669,625Adjustments to reconcile net income to net cash used in operating activitiesStock-based compensation expense59,300-Depreciation and amortization219,976172,314Change in fair value of warrants liability(149,867)(18,394)Recovery of doubtful accounts-(25,680)Recovery of inventory obsolescence-(1,922)Changes in assets and liabilities: Increase in accounts receivable(3,451,269)(1,950,032)Increase in prepayments and other current assets(4,240,759)(2,920,603) Decrease (Increase) in o
|SOURCE Dehaier Medical Systems Ltd.|
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