SHENZHEN, China, Feb. 25, 2013 /PRNewswire/ -- Mindray Medical International Limited ("Mindray", NYSE: MR), a leading developer, manufacturer and marketer of medical devices worldwide, announced today its selected unaudited financial results for the fourth quarter and full year ended December 31, 2012.
Highlights for Fourth Quarter and Full Year 2012
"2012 marks another remarkable year for Mindray, as our revenue surpassed $1 billion for the first time in the company's history. We also achieved strong revenue and net income growth, beating our financial guidance," said Mr. Li Xiting, Mindray's President and Chief Executive Officer. "In addition, our continuous focus on strengthening operating efficiency resulted in significant improvement on our gross margin, working capital and operating cash flow. China and emerging markets were again the main propellers for our company's growth in 2012, reflecting the success of our strategy to strengthen sales, distribution and services in these markets over the last few years. For our in-vitro diagnostic segment, we have successfully ramped up sales in our higher-margin reagents and are optimistic about the future growth prospects of this business."
SUMMARY – Fourth Quarter and Year Ended December 31, 2012(in $ millions, except per-share data)Three Months EndedYear EndedDecember 31December 3120122011% chg20122011% chgNet Revenues
20.4%Revenues generated in China
26.4%Revenues generated outside China
23.5%Non-GAAP Gross Profit
14.5%Non-GAAP Operating Income
8.1%Non-GAAP Net Income
13.6%Non-GAAP Net Income (ex tax benefit)
6.9%Non-GAAP Diluted EPS
12.3%Fourth Quarter 2012 ResultsRevenuesMindray reported net revenues of $316.1 million for the fourth quarter of 2012, a 19.7% increase from $264.1 million in the fourth quarter of 2011.
Performance by SegmentPatient Monitoring and Life Support Products: Revenues in this segment increased 13.0% to $135.0 million from $119.5 million in the fourth quarter of 2011, contributing 42.7% to the total net revenues in this quarter.
In-Vitro Diagnostic Products: Revenues in this segment increased 29.8% to $82.9 million from $63.9 million in the fourth quarter of 2011, contributing 26.2% to the total net revenues in this quarter. Reagents sales represented 36.9% of this segment's revenues.
Medical Imaging Systems: Revenues in this segment increased 15.8% to $75.4 million from $65.1 million in the fourth quarter of 2011, contributing 23.8% to the total net revenues in this quarter.
Others: The other revenues increased 45.3% to $22.8 million from $15.7 million in the fourth quarter of 2011, contributing 7.3% to the total net revenues in this quarter. Other revenues mainly include sales from the orthopedics business, service revenues from extended warranties, sales of accessories and repair service revenues for post-warranty period.
Gross MarginsFourth quarter 2012 gross profit was $182.8 million, a 27.7% increase from $143.1 million in the fourth quarter of 2011. Non-GAAP gross profit was $184.8 million, a 27.9% increase from $144.5 million in the fourth quarter of 2011. The gross margin was 57.8%, compared to 54.2% in the fourth quarter of 2011 and 56.0% in the third quarter of 2012. Non-GAAP gross margin was 58.5%, compared to 54.7% in the fourth quarter of 2011 and 56.5% in the third quarter of 2012.
Operating ExpensesSelling expenses for the fourth quarter of 2012 were $53.7 million, or 17.0% of the total net revenues, compared to 19.7% in the fourth quarter of 2011 and 18.5% in the third quarter of 2012. Non-GAAP selling expenses were $51.2 million, or 16.2% of the total net revenues, compared to 19.0% in the fourth quarter of 2011 and 17.8% in the third quarter of 2012.
General and administrative expenses for the fourth quarter of 2012 were $36.5 million, or 11.5% of the total net revenues, compared to 6.7% in the fourth quarter of 2011 and 13.2% in the third quarter of 2012. Non-GAAP general and administrative expenses were $36.0 million, or 11.4% of the total net revenues, compared to 6.3% in the fourth quarter of 2011 and 9.2% in the third quarter of 2012.
Research and development expenses for the fourth quarter of 2012 were $32.9 million, or 10.4% of the total net revenues, compared to 9.7% in the fourth quarter of 2011 and 9.0% in the third quarter of 2012. Non-GAAP research and development expenses were $31.9 million, or 10.1% of the total net revenues, compared to 9.3% in the fourth quarter of 2011 and 8.6% in the third quarter of 2012.
Total share-based compensation expenses for the fourth quarter of 2012, which were allocated to cost of goods sold and related operating expenses, were $2.7 million, compared to $3.2 million in the fourth quarter of 2011 and $3.1 million in the third quarter of 2012.
Operating income in the fourth quarter was $59.7 million, a 24.6% increase from $47.9 million in the fourth quarter of 2011. Non-GAAP operating income was $65.8 million, a 24.2% increase from $53.0 million in the fourth quarter of 2011. Operating margin was 18.9% compared to 18.1% in the fourth quarter of 2011 and 15.2% in the third quarter of 2012. Non-GAAP operating margin was 20.8%, compared to 20.1% in the fourth quarter of 2011 and 20.8% in the third quarter of 2012.
Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA")Fourth quarter 2012 EBITDA increased 24.8% year-over-year to $71.9 million from $57.6 million in the fourth quarter of 2011.
Net IncomeFourth quarter 2012 net income increased 19.3% to $55.8 million from $46.8 million in the fourth quarter of 2011. Non-GAAP net income increased 19.0% to $61.7 million from $51.8 million in the fourth quarter of 2011. Net margin was 17.7%, unchanged from the fourth quarter of 2011 and compared to 13.9% in the third quarter of 2012. Non-GAAP net margin was 19.5%, compared to 19.6% in the fourth quarter of 2011 and unchanged from the third quarter of 2012. Fourth quarter 2012 income tax expense was $9.9 million, representing an effective tax rate of 14.8%, compared to a 14.9% effective tax rate in the fourth quarter of 2011.
Fourth quarter 2012 basic and diluted earnings per share were $0.48 and $0.47, respectively, compared to $0.41 and $0.40 in the fourth quarter of 2011. Fourth quarter 2012 basic and diluted non-GAAP earnings per share were $0.53 and $0.51, respectively, compared to $0.45 and $0.44 in the fourth quarter of 2011. Shares used in the computation of diluted earnings per share for the fourth quarter of 2012 were 120.1 million.
Other Selected DataAccounts receivable days were 53 days in the fourth quarter of 2012, improved from 66 days both in the fourth quarter of 2011 and the third quarter of 2012. Inventory days were 83 days in the fourth quarter of 2012, compared to 78 days in the fourth quarter of 2011 and 100 days in the third quarter of 2012. Accounts payable days were 47 days in the fourth quarter of 2012, compared to 44 days in the fourth quarter of 2011 and 60 days in the third quarter of 2012. Mindray calculates the above working capital days using the average of beginning and ending balances of the quarter.
As of December 31, 2012, the company had total $862.9 million in cash and cash equivalents, and short-term investments as compared to $747.6 million as of September 30, 2012. Net cash generated from operating activities and net cash outflow for capital expenditures for the quarter were $144.9 million and $18.4 million, respectively.
As of December 31, 2012 the company had approximately 7,500 employees, including those from the acquired businesses.
Full Year 2012 ResultsMindray reported net revenues of $1,060.1 million for the full year 2012, a 20.4% increase from $880.7 million for the full year 2011.
Full year 2012 EBITDA increased 14.5% to $233.3 million from $203.7 million in 2011.
Full year 2012 net income increased 8.1% to $180.2 million from $166.6 million in 2011. Non-GAAP net income increased 13.6% year-over-year to $211.7 million from $186.3 million in 2011. Net margin was 17.0%, compared to 18.9% in 2011. Non-GAAP net margin was 20.0%, compared to 21.2% in 2011. Full year 2012 income tax expense was $37.4 million, representing an effective tax rate of 17.0%, compared to 11.9% in 2011.
Diluted earnings per share increased 6.9% year-over-year to $1.50 from $1.41 in 2011. Non-GAAP diluted earnings per share increased 12.3% to $1.77 from $1.57 in 2011.
Dividend DeclarationMindray's board of directors has declared a cash dividend on its ordinary shares of $0.50 per share, based on the company's net income for the full year 2012. The cash dividend will be payable on or around April 8, 2013, to shareholders of record as of March 8, 2013. The company has approximately 119 million outstanding ordinary shares as of January 31, 2013.
Business Outlook for Full Year 2013The company expects its full year 2013 net revenues to grow at least 17% over its full year 2012 net revenues. The company also expects its full year 2013 non-GAAP net income to grow at least 15% over its non-GAAP net income for the full year 2012. This guidance excludes the tax benefits related to the key software enterprise status for the calendar year 2011 and 2012 that we may receive in 2013 and assumes a corporate income tax rate of 15% applicable to the Shenzhen subsidiary.
The company expects its capital expenditure for 2013 to be around $130 million.
The company's practice is to provide guidance on a full year basis only. This forecast reflects Mindray's current and preliminary views, which are subject to change.
"Looking ahead, China will remain the primary engine for our growth this year, due to our strong competitive position in the domestic market and favourable spending environment on healthcare. As for emerging markets, the prospects, albeit favourable overall, are somewhat overshadowed by potential political instability and currency risks in some regions," said Li Xiting, Mindray's President and Chief Executive Officer. "We anticipate that the developed markets will remain challenging this year because of lingering uncertainties over their economies or hospital spending. But our strategy of offering great products at reasonable prices will continue to serve us well in all markets. We will work on strengthening our research and development and pursuing suitable M&A opportunities in order to drive long-term growth for Mindray."
 Emerging markets represent all countries except China and developed markets.
 The amount excludes the $7.6 million tax benefits related to the key software enterprise status for the calendar year 2010, which was recognized in the first quarter of 2011.
 Developed markets represent countries in North America and Western Europe.Conference Call InformationMindray's management will hold an earnings conference call at 8:00 AM on February 26, 2013 U.S. Eastern Time (9:00 PM on February 26, 2013 Beijing/Hong Kong Time).
Dial-in details for the earnings conference call are as follows:
International Toll Free:United States:
800-819-0121Local dial-in numbers:United States:
+852-2475-0994 China Mobile:
400-620-8038Passcode for all regions:
MindrayA replay of the conference call may be accessed by phone at the following numbers until March 12, 2012.
U.S. Toll Free:
97684615Additionally, a live and archived webcast of this conference call will be available on the Investor Relations section of Mindray's website at: http://ir.mindray.com/
Use of Non-GAAP Financial Measures Mindray provides gross profit, selling expenses, general and administrative expenses, research and development expenses, operating income, net income and earnings per share on a non-GAAP basis that excludes dispute related legal fees, dispute charges, share-based compensation expense and acquired intangible assets amortization expense, all net of related tax impact, as well as EBITDA to enable investors to better assess the company's operating performance. The non-GAAP measures described by the company are reconciled to the corresponding GAAP measure in the exhibit below titled "Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures."
The company has reported for the fourth quarter and full year of 2012 and provided guidance for full year 2013 earnings on a non-GAAP basis. Each of the terms as used by the company is defined as follows:
The company computes its non-GAAP financial measures using the same consistent method from quarter to quarter. The company notes that these measures may not be calculated on the same basis of similar measures used by other companies. Readers are cautioned not to view non-GAAP results on a stand-alone basis or as a substitute for results under GAAP, or as being comparable to results reported or forecasted by other companies, and should refer to the reconciliation of GAAP results with non-GAAP results for the three months and years ended December 31, 2011 and 2012, respectively, in the attached financial information.
Cautionary Note Regarding Forward-Looking StatementsThis press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including, without limitation, statements about Mindray's anticipated net revenues, non-GAAP net income and capital expenditure for 2013, the tax benefits related to the key software enterprise status that we may receive in 2013 for the calendar year 2011 and 2012, our assumption of a corporate income tax rate of 15% applicable to the Shenzhen subsidiary, our being optimistic about the future growth prospects of our in-vitro diagnostic segment, that China will remain the primary engine for our growth this year due to our strong competitive position in the domestic market and favourable spending environment on healthcare, that the prospects for emerging markets, albeit favourable overall, are somewhat overshadowed by potential political instability and currency risks in some regions, our anticipation that the developed markets will remain challenging this year because of lingering uncertainties over their economies or hospital spending, that our strategy of offering great products at reasonable prices will continue to serve us well in all markets, and that we will work on strengthening our research and development and pursuing suitable M&A opportunities in order to drive long-term growth for Mindray, are forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors, including, without limitation, the growth and expected growth of the medical device market in China and internationally; relevant government policies and regulations relating to the medical device industry; market acceptance of our products; our expectations regarding demand for our products; our ability to expand our production, our sales and distribution network and other aspects of our operations; our ability to stay abreast of market trends and technological advances; our ability to effectively protect our intellectual property rights and not infringe on the intellectual property rights of others; our ability to settle disputes with our customers and suppliers; competition in the medical device industry in China and internationally; and general economic and business conditions in the countries in which we operate. For a discussion of other important factors that could adversely affect our business, financial condition, results of operations and prospects, see "Risk Factors" beginning on page 5 of our annual report on Form 20-F which was filed on April 30, 2012. Our results of operations for the fourth quarter of 2012 and the full year ended December 31, 2012 are not necessarily indicative of our operating results for any future periods. The company has not completed its audit of 2012 financial statements and the selected unaudited financial results for the fourth quarter and full year ended December 31, 2012 announced today are subject to adjustment. The anticipated results for the fourth quarter and full year ended December 31, 2012 remain subject to the finalization of the company's year-end closing, reporting and audit processes, particularly as related to accrued expenses, income taxes, share-based compensation expenses, and expenses and/or amortization of intangible assets. The financial information contained in this release should be read in conjunction with the consolidated financial statements and notes thereto included in our public filings with the Securities and Exchange Commission. Any projections in this release are based on limited information currently available to us, which is subject to change. Although such projections and the factors influencing them will likely change, we will not necessarily update the information. Such information speaks only as of the date of this release.
All references to "shares" are to our ordinary shares, which are divided into two classes, Class A and Class B. Each of our American Depositary Shares, which trade on the New York Stock Exchange, represents one Class A ordinary share.
About MindrayWe are a leading developer, manufacturer and marketer of medical devices worldwide. We maintain our global headquarters in Shenzhen, China, U.S. headquarters in Mahwah, New Jersey and multiple sales offices in major international markets. From our main manufacturing and engineering base in China, we supply through our worldwide distribution network a broad range of products across three primary business segments, namely patient monitoring and life support, in-vitro diagnostic, and medical imaging systems. For more information, please visit http://ir.mindray.com.
For investor and media inquiries, please contact:
In the U.S:
Western Bridge, LLC
Mindray Medical International Limited
Email: email@example.com Exhibit 1MINDRAY MEDICAL INTERNATIONAL LIMITEDCONDENSED CONSOLIDATED BALANCE SHEETS(Dollars in thousands)As of December 31, 2011As of December 31, 2012US$ US$ (Note 1) (unaudited) ASSETSCurrent assets:Cash and cash equivalents
124,311247,859Restricted cash and restricted investment (Note 2)
479,173615,003Accounts receivable, net
94,690110,099Value added tax receivables
16,59015,704Prepayments and deposits
9,79211,081Deferred tax assets
3,4836,443Total current assets
7,33010,811Accounts receivables, net, non-current
-2,172Advances for purchase of plant and equipment
6,2393,009Property, plant and equipment, net
237,952268,010Land use rights, net
55,27256,921Intangible assets, net
1,458,9711,857,118LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities:Short-term bank loans
48,50153,244Advances from customers
65,357108,528Purchase consideration payable
2,14220,354Income taxes payable
16,84730,305Other taxes payable
7,4128,894Total current liabilities
257,231402,591Long-term bank loan
35,02550,039Other long-term payables
2,3554,004Deferred tax liabilities, net
12,92523,36950,30577,412Shareholders' equity:Ordinary shares
1515Additional paid-in capital
566,184699,992Accumulated other comprehensive income
(10,160)-Total shareholders' equity
1,151,4351,377,115Total liabilities and shareholders' equity
1,458,9711,857,118(1) Financial information is extracted from the audited financial statements included in the Company's fiscal year 2011 20F.(2) Restricted cash and restricted investment are those purchase consideration in connection with our acquisition being held on escrow accounts.
Exhibit 2MINDRAY MEDICAL INTERNATIONAL LIMITEDCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Dollars in thousands, except for share and per share data)Three months ended December 31,Year ended December 31,2011201220112012US$ US$ US$ US$ (unaudited) (unaudited) (Note 1) (unaudited) Net revenues-PRC117,630148,136374,312472,991- International 146,500167,980506,431587,063Net revenues264,130316,116880,7431,060,054Cost of revenues (121,035)(133,355)(394,302)(459,389)Gross profit143,095182,761486,441600,665Selling expenses (51,917)(53,688)(167,049)(188,804)General and administrative expenses (17,689)(36,467)(70,330)(116,228)Research and development expenses (25,589)(32,926)(82,024)(104,302)Operating income47,90059,680167,038191,331Other income, net5161773,1081,619Interest income7,2587,94920,81630,794Interest expense(470)(1,028)(1,390)(4,093)Income before income taxes and non-controlling interests55,20466,778189,572219,651Provision for income taxes(8,220)(9,895)(22,647)(37,369)Net income 46,98456,883166,925182,282Less: Net income attributable to non-controlling interests(189)(1,034)(296)(2,073)Net income attributable to the Company46,79555,849166,629180,209Basic earnings per share0.410.481.451.54Diluted earnings per share0.400.471.411.50Shares used in the computation of:Basic earnings per share115,466,221117,358,594115,254,095116,749,213Diluted earnings per share118,365,008120,099,229118,449,851119,815,004(1) Financial information is extracted from the audited financial statements included in the Company's fiscal year 2011 20F.
Exhibit 3MINDRAY MEDICAL INTERNATIONAL LIMITEDCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Dollars in thousands)Three months ended December 31,Year ended December 31,2011201220112012 US$ US$ US$ US$ (unaudited) (unaudited) (Note 1) (unaudited) Cash flow from operating activities: Net income
46,79555,849166,629180,209 Adjustments to reconcile net income to net cash from operating activities
13,35321,09149,82571,797 Changes in current assets and liabilities
36,28767,953(24,050)73,660Net cash generated from operating activities96,435144,893192,404325,666Cash flow from investing activities:Acquisition cost, net of cash acquired
(26,207)(18,361)(89,938)(65,605)Increase in restricted cash and restricted investment
-(21,528)-(21,528)Proceeds from sale of short-term investments
7,150-100,274144,395Increase in short-term investments and changes in other investing activities
(70,940)(19,727)(262,085)(255,255)Net cash used in investing activities(89,997)(62,680)(258,279)(232,545)Cash flow from financing activities:Repayment of bank loans
-(2,475)-(2,475)Proceeds from bank loans
--(34,522)(46,401)Proceeds from exercise of options
(10,160)-(10,160)-Cash contribution from non-controlling interest
--797506Net cash (used in) generated from financing activities(8,430)(511)48,63528,223Net (decrease) increase in cash and cash equivalents(1,992)81,702(17,240)121,344Cash and cash equivalents at beginning of period
124,785164,499137,502124,311Effect of exchange rate changes on cash
1,5181,6584,0492,204Cash and cash equivalents at end of period124,311247,859124,311247,859(1) Financial information is extracted from the audited financial statements included in the Company's fiscal year 2011 20F.
Exhibit 4MINDRAY MEDICAL INTERNATIONAL LIMITEDRECONCILIATIONS OF NON-GAAP RESULTS OF OPERATIONS MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES(Dollars in thousands, except for share and per share data)Three months ended December 31,Year ended December 31,2011201220112012(unaudited)(unaudited)(unaudited)(unaudited) US$ US$ US$ US$ Non-GAAP net income51,79761,658186,325211,687Non-GAAP net margin19.6%19.5%21.2%20.0%Amortization of acquired intangible assets(1,931)(3,404)(7,255)(8,298)Deferred tax impact related to acquired intangible assets87327189504Dispute related legal fees--(262)-Dispute charges---(9,700)Share-based compensation(3,158)(2,732)(12,368)(13,984)GAAP net income 46,79555,849166,629180,209GAAP net margin17.7%17.7%18.9%17.0%Non-GAAP basic earnings per share0.450.531.621.81Non-GAAP diluted earnings per share0.440.511.571.77GAAP basic earnings per share0.410.481.451.54GAAP diluted earnings per share0.400.471.411.50 Shares used in computation of: Basic earnings per share 115,466,221117,358,594115,254,095116,749,213 Diluted earnings per share 118,365,008120,099,229118,449,851119,815,004Non-GAAP operating income52,98965,816186,923223,313Non-GAAP operating margin20.1%20.8%21.2%21.1%Amortization of acquired intangible assets(1,931)(3,404)(7,255)(8,298)Dispute related legal fees--(262)-Dispute charges---(9,700)Share-based compensation(3,158)(2,732)(12,368)(13,984)GAAP operating income47,90059,680167,038191,331GAAP operating margin18.1%18.9%19.0%18.0%Non-GAAP gross profit144,503184,799491,870606,214Non-GAAP gross margin54.7%58.5%55.8%57.2%Amortization of acquired intangible assets (1,219)(1,849)(4,667)(4,738)Share-based compensation(189)(189)(762)(811)GAAP gross profit143,095182,761486,441600,665GAAP gross margin54.2%57.8%55.2%56.7%Non-GAAP selling expenses(50,249)(51,165)(160,032)(180,788)Non-GAAP as % of total revenues19.0%16.2%18.2%17.1%Amortization of acquired intangible assets (712)(1,555)(2,588)(3,560)Share-based compensation(956)(968)(4,429)(4,456)GAAP selling expenses(51,917)(53,688)(167,049)(188,804)GAAP as % of total revenues19.7%17.0%19.0%17.8%Non-GAAP general and administrative expenses(16,734)(35,966)(66,950)(102,119)Non-GAAP as % of total revenues6.3%11.4%7.6%9.6%Dispute related legal fees--(262)-Dispute charges---(9,700)Share-based compensation(955)(501)(3,118)(4,409)GAAP general and administrative expenses(17,689)(36,467)(70,330)(116,228)GAAP as % of total revenues6.7%11.5%8.0%11.0%Non-GAAP research and development expenses(24,531)(31,852)(77,965)(99,995)Non-GAAP as % of total revenues9.3%10.1%8.9%9.4%Share-based compensation(1,058)(1,074)(4,059)(4,307)GAAP research and development expenses(25,589)(32,926)(82,024)(104,302)GAAP as % of total revenues9.7%10.4%9.3%9.8%
Exhibit 5MINDRAY MEDICAL INTERNATIONAL LIMITEDRECONCILIATION OF GAAP NET INCOME TO EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION(Dollars in thousands)Three months ended December 31,Year ended December 31,2011201220112012US$US$US$US$(unaudited)(unaudited)(unaudited)(unaudited)GAAP net income46,79555,849166,629180,209Interest income(7,258)(7,949)(20,816)(30,794)Interest expense4701,0281,3904,093Provision for income taxes8,2209,89522,64737,369Earnings before interest and taxes ("EBIT")48,22758,823169,850190,877Depreciation6,3677,44523,21628,043Amortization3,0195,60610,66114,361Earnings before interest, taxes, depreciation, and amortization ("EBITDA")57,61371,874203,727233,281
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