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BETHESDA,
MD, (January 4, 2005)
- 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 revisions to its previously
disclosed guidance for the current fiscal year ended March 31, 2005
and preliminary results for its third quarter ended December 31, 2004.
Fiscal
Year Ending March 31, 2005
The
Company expects to achieve consolidated revenue growth of 15-20% in
fiscal 2005 compared to the Company's previously released guidance
of 25-35% and anticipates exceeding $100 million in revenue for the
first time. Preliminary results for the Company's consolidated revenue
for the nine months ended December 31, 2004 showed an increase of
approximately 22% compared to the same period a year ago. However,
while previous guidance stated that the Company would be profitable
in fiscal 2005, the Company now expects to report a loss, primarily
due to the loss expected in the third fiscal quarter as explained
below.
The
Company's Medical Capital Equipment division for fiscal 2005 is expected
to meet or exceed the original revenue guidance for the division of
20-30% growth over the prior fiscal year. Preliminary results for
the division's revenue for the nine-months ended December 31, 2004
showed an increase of approximately 35% compared to the same period
a year ago.
The
Healthcare Services division is expected to have a revenue increase
of 40-45% in fiscal 2005 compared to previously released guidance
of 50-60%. Preliminary results for the Healthcare Services division's
revenue for the nine-months ended December 31, 2004 showed an increase
of approximately 43% compared to the same period a year ago, despite
delays in the opening of the new hospital in Shanghai , which opened
in late October 2004. The new hospital is now fully operational with
both in-patient and out-patient services.
The
Healthcare Products Distribution division is expected to report a
5-10% decrease in revenue for fiscal 2005 compared to previously released
guidance of a 20-30% increase. This expected decrease in revenue is
a result of the planned decrease in third party logistics services,
which occurred more quickly than expected, and delays experienced
in its program for the rollout of additional branded products in the
retail pharmacy business. Preliminary results for the Healthcare Products
Distribution division's revenue for the nine-months ended December
31, 2004 showed an increase of approximately 2% compared to the same
period a year ago.
Third
Quarter Ended December 31, 2004
Preliminary
results for the Company's consolidated revenue for the third quarter
ended December 31, 2004 showed an increase of approximately 5% compared
to the same period a year ago. The Company expects to report a loss
from operations for the quarter, which is attributable primarily to
the delay in the opening of the new hospital in Shanghai . To a lesser
extent, the quarter was adversely impacted in the Healthcare Products
Distribution division by delays in its program for the rollout of
additional branded products in the retail pharmacy business and the
quicker than expected phase-out of its low margin third party logistics
operations.
Roberta
Lipson, Chindex President and CEO commented on the Company's business
operations: "While we have experienced challenges this year,
the business models for all three of our divisions are solid and we
are well positioned for continued growth in the China market. We own
the only international hospital network in China . We believe this
puts us years ahead of any potential competition. In addition, we
have a unique China-wide national distribution network for advanced
western healthcare products for hospitals and retail pharmacies."
The
nine month period and third quarter ended December 31, 2004 outlook
announced today is preliminary and subject to change as a result of
final review by management and closing adjustments for the period.
This
release includes forward-looking statements, which are based on the
Company's current expectations. Actual results could vary materially
due to changes in those expectations. These forward-looking statements
involve known and unknown risks, uncertainties and other factors (many
of which are unable to be predicted or controlled) that may cause
the Company's actual results, performance or achievements, or the
healthcare products, capital medical equipment or healthcare service
industries results, to be materially different from those expressed
or implied by the forward-looking statements. The forward-looking
statements contained in this announcement concerning revenues and
growth profit margins and actions that may be taken to improve financial
performance involve risks and uncertainties and are subject to change
based on various factors, including: the need to effectively manage
growth; dependence on key personnel; significantly variable timing
of revenues and fluctuations in financial performance not necessarily
indicating longer-term performance; the need for future financings
for customer purchases and the uncertainty of securing such financings;
dependence on and concentration with suppliers with terminable arrangements;
increasing competition, including competition resulting from China's
membership in the WTO; the impact of SARS; dependence on qualified
sales representatives and service specialists; the need to maintain
inventory; the need for sophisticated data processing systems; the
need for good relations with Chinese foreign trade corporations; delays
in the full generation of revenues from the Shanghai United Family
Hospital; the need to attract and retain qualified physicians; the
need to comply with heavy governmental regulation, including each
division and its market; the high cost of malpractice insurance of
physicians; the subjection to economic policies of the Chinese government
and the Chinese economy; the relatively undeveloped Chinese legal
system; the impact of inflation and/or foreign currency fluctuations;
the risk of product liability claims and/or product recalls; the dependence
on information systems; the dependence on sub-distributors and sub-dealers;
the regulation by the Chinese government of the conversion of Renminbi
into foreign currency; the uncertainty in the Company's markets for
its products, including its healthcare products to consumers, its
medical capital equipment to hospitals and its healthcare services
in Beijing and Shanghai; the timing and success of the roll-out by
its retail pharmacy of new branded product lines, the timing, terms
and effectiveness of completion of negotiations of the new framework
for Chinese government financing of U.S.-sourced hospital equipment,
and the need for additional capital, as to which there can be no assurances
as to availability. Given these uncertainties, investors and prospective
investors are cautioned not to rely on such forward-looking statements.
The Company disclaims any obligation, and makes no promise, to update
any such factors or forward-looking statements or to publicly announce
results of any revisions to any such forward-looking statements, whether
as a result of changes in underlying factors, to reflect new information
or as a result of the occurrence of events, developments or otherwise.
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