Aug 10 2009
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 results for its first quarter of fiscal 2010, ended June 30, 2009.
First Quarter Fiscal 2010 Financial Results
Revenue for the first quarter of fiscal 2010, which ended June 30, 2009, increased 41% to $45.3 million from $32.1 million in the first quarter of fiscal year 2009. Revenue from the Medical Products division increased 86% to $23.3 million from $12.5 million in the prior year period, and revenue from the Healthcare Services division increased 13% to $22.0 million from $19.6 million in the first quarter of fiscal year 2009. Revenue performance reflects increased medical products sales, including revenue from the sale of two daVinci units, and year over year growth in inpatient and outpatient revenue in the Healthcare Services division.
During the quarter, the Company recorded income from operations of $5.3 million, a significant increase from $753,000 in the same quarter of last year. Total operating costs and expenses was $40.1 million compared to $31.3 million in the prior year period.
Operating expenses in the first quarter of fiscal 2010 include multi-year physician contracts renewed at higher rates in calendar 2008, additional medical personnel in Beijing and Shanghai hospitals and the Guangzhou clinic, increased direct patient care costs and increased medical product sales activities versus the prior year period. Additionally, Chindex recognized development and startup expenses of approximately $329,000, equivalent to approximately $0.02 per diluted share, and non-cash stock compensation expense of $689,000, equivalent to approximately $0.04 per diluted share, in the first quarter of 2010. In the prior year period, the Company's development and startup expenses in the Healthcare Services division were not material and non-cash stock compensation expense was $576,000 or roughly $0.04 per diluted share.
Roberta Lipson, President and CEO of Chindex, commented, "In the first quarter of fiscal 2010, we completed deliveries under our KfW Development Bank contracts and witnessed continued demand for the products from our diversified portfolio of leading medical equipment, particularly robotic surgical systems, including the sale of two daVinci surgical systems, as well as women's health imaging systems, cosmetic laser systems and clinical chemistry product lines. For healthcare services, we were particularly pleased to see growth in both inpatient and outpatient services in Beijing and Shanghai markets, as well as increasing patient revenues at our Guangzhou facilities."
Under new U.S. accounting principles which require the Company to record its warrants at fair value, the company recorded a non-cash charge to miscellaneous expense of approximately $741,000 or $0.05 per diluted share to reflect the change in the fair value of its outstanding warrants during the quarter.
The Company's tax expense was approximately $1.6 million in the first quarter of 2010, an effective tax rate of 32.6%. In the prior year period, tax expense was approximately $1.2 million.
Net income in the first quarter of fiscal 2010 was $3.3 million, or $0.20 per diluted share. This compares to a net loss of $161,000, or $(0.01) per diluted share, in the first quarter of fiscal 2009. Excluding the impact of the change in fair value of outstanding warrants, net income per diluted share was approximately $0.25.
Medical Products division business results:
For the first quarter of fiscal year 2010, revenue increased 86% to $23.3 million from $12.5 million in the prior year quarter. The year over year comparison reflects continued growth in the Medical Products division as well as the negative impact of the Sichuan earthquake, which disrupted purchasing behavior in the comparable quarter of the prior year. Gross profit in the Medical Products division increased to $5.8 million from $2.6 million in the prior fiscal year's first quarter. Gross profit margin increased to 25%, from 21% in the prior year period. Selling, marketing, general and administrative expenses for the Medical Products division increased 19% to $5.6 million from $4.7 million in the first quarter of the prior fiscal year. Increased expenses during the period primarily reflect increased staff levels to support higher revenues.
Lipson added, "Our first quarter medical products sales were strong and continued the momentum we witnessed in the March quarter as we shipped the remainder of our KfW Development Bank contracts. As a proven leader in the sector, we remain focused on enhancing and diversifying our portfolio so that we address new and existing markets. To this end, today we announced exclusive distribution agreements with Biotest AG and Cutera, Inc. for exclusive distribution of clinical chemistry products and aesthetic laser systems in China -- two exciting new product offerings. Our Medical Products division continues to be well-positioned to meet the increasing need for high end medical products in China."
Healthcare Services division business results:
Revenue in the first quarter of the fiscal year 2010 was $22.0 million, an increase of 13% from $19.6 million in the prior year quarter. Operating costs increased by 7% to $17.9 million from $16.8 million in the prior year's first quarter, reflecting increases in compensation and direct patient care costs resulting from expansion of hospital network operations offset by a decrease in other operating costs. Income from operations before foreign exchange gains increased to $4.1 million, from the $2.8 million in the prior year period.
Lipson stated, "First quarter healthcare services performance reflects increasing inpatient and outpatient traffic in the Beijing and Shanghai markets as well as a continued focus on efficiency and cost containment. We were particularly pleased with our operating income performance in the first quarter of 2010 although I'd like to point out that in the prior year period, we experienced higher than normal operating expenses related to JCI accreditation. Our UFH brand continues to be the leading provider of premium care in China and we believe that our long term opportunity is compelling."
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 dial 1-719-457-2655 and domestic callers dial 1-888-551-9020 approximately 10 minutes before the conference call is scheduled to begin. The telephone replay will be available on the day of the call at (international) 1-719-457-0820 and (domestic) 1-888-203-1112, pass code 2725441; and continue to be available through August 24, 2009. 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 August 17, 2009.
http://www.chindex.com and http://www.unitedfamilyhospitals.com
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