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| CHINDEX
INTERNATIONAL, INC.
ANNOUNCES
RESULTS FOR QUARTER AND SIX MONTHS
ENDED
SEPTEMBER 30, 2005
Hospital
and Equipment Divisions Report Profitable Operations
Distribution
Division To Be Discontinued By Year End
|
 |
BETHESDA,
MARYLAND November 14, 2005 -
Chindex International, Inc. (NASDAQ: CHDX), an independent American
provider of Western healthcare products and medical services in the
People's Republic of China, today announced results for the quarter
ended September 30, 2005. The Company will report an 8% decrease in
consolidated revenue over the same quarter of the prior fiscal year
and an after-tax loss. The Medical Capital Equipment and Healthcare
Services divisions both reported profitable operations while the Healthcare
Products Distribution division reported a loss for the quarter and
operations in this division are expected to be discontinued by year
end.
Revenue
for the quarter ended September 30, 2005 was $25.4 million with a
loss from operations of $725,000 and a net loss of $717,000 or a loss
per share of $0.11. This compares to revenue of $27.6 million with
a loss from operations of $10,000 and a net loss of $89,000, or a
loss per share of $0.02, for the quarter ended September 30, 2004.
Revenue
for the six months ended September 30, 2005 was $50.6 million with
a loss from operations of $2.2 million and a net loss of $2.1 million,
or a loss per share of $0.32. This compares to revenue of $54.2 million
with income from operations of $492,000 and net income of $155,000,
or earnings per share of $0.03, for the six months ended September
30, 2004.
Roberta
Lipson, President and CEO of Chindex commented from the Company's
offices in Beijing: "During the recent quarter we continued to experience
revenue growth in the Healthcare Services segment of 67%, as compared
to the prior year period. We continue to experience significant challenges
in both Medical Capital Equipment, which reported a 23% decrease in
revenue over the prior year period, and Healthcare Products Distribution,
which reported a decrease of 29% over the prior year period. While
we reported a loss for the period, our results were significantly
improved over the first quarter of this fiscal year.
"In
the Healthcare Services segment we are very pleased to see that the
United Family Hospital network has returned to profitability on a
consolidated basis this quarter based on the revenue growth system-wide.
Growth continues in both the Beijing and Shanghai markets and we expect
continued profitability from this division. We recently announced
a long-term financing package with the International Finance Corporation
of the World Bank for approximately $8 million which is now providing
us with capital funding for expansion projects throughout the United
Family Hospital network as well as restructuring our balance sheet
debt structure along more traditional developing hospital lines. In
addition, we have received formal accreditation from the Joint Commission
International of our United Family Hospital network operations in
Beijing. This is a strong industry affirmation of our quality standard
at United Family Hospitals which is the hallmark of our brand value.
We are the first hospital network in Asia to receive this accreditation.
"In
the Medical Capital Equipment segment we are experiencing several
unexpected factors which have impacted our results so far this year.
These include lackluster sales in certain product categories due to
maturing product life cycle issues, increased competition in certain
mid-tier product markets, delays due to product registrations in other
product categories and a general slow down in the growth rate of the
market for imported medical devices in China. In addition, we continued
to experience delays in shipments of equipment sold under government
backed financing programs as well as delays in opening of letters
of credit by purchasers. Although we cannot predict when the alleviation
of these factors will result in increased sales, we do expect these
circumstances to be temporary. Meanwhile we continue to focus on cost
containment and prepare for several new planned product releases.
We have experienced such down periods in the capital equipment business
before in China. We believe there is basically no change to the underlying
demand for the products and services we provide to the Chinese hospital
markets.
"In
the Healthcare Products Distribution division we reported a loss on
operations for the quarter. Our search for a strategic partner/investor
for the retail pharmacy business unit has thus far not been successful.
We have received various proposals for the sale of the retail pharmacy
business unit. We expect to either accept the terms of a sale or instruct
that the retail pharmacy business unit be shut down by November 30,
2005. In either scenario we expect the transition to be substantially
completed by December 31, 2005 and the retail pharmacy business unit
to be discontinued from our operations during the third quarter. We
intend to retain a logistics capability to service the distribution
needs of our continuing operations."
Chindex
is an American healthcare company supplying both medical equipment
and healthcare services to the Chinese marketplace, including Hong
Kong. It sells medical equipment produced by a number of major multinational
companies including Siemens AG as its exclusive distribution partner
for the sales and servicing of color doppler ultrasound systems. It
also arranges financing packages for the supply of medical equipment
to hospitals in China utilizing the export loan and loan guarantee
programs of both the U.S. Export-Import Bank and the German KfW Development
Bank. It provides healthcare services through the operations of its
network of private primary care hospitals and affiliated ambulatory
clinics in China. With twenty-four years of experience, over 1,000
employees, and operations in the United States, China and Hong Kong,
the Company's strategy is to expand its cross-cultural reach by providing
leading edge healthcare technologies, quality products and services
to Greater China's professional communities. Further company information
may be found at the Company's websites, www.chindex.com
and www.unitedfamilyhospitals.com
.
Some
of the information in this press release may contain statements regarding
future expectations, plans, prospects for performance of the Company
that constitute forward-looking statements for purposes of the safe
harbor provisions of The Private Securities Litigation Reform Act
of 1995. The Company cannot guarantee future results, levels of activity,
performance or achievements. The numbers discussed in this press release
also involve risks and uncertainties. The following factors, among
others, could cause actual results to differ materially from those
described by such statements: our ability to manage our growth and
maintain adequate controls, our ability to obtain additional financing,
the loss of services of key personnel, general market conditions including
inflation or foreign currency fluctuations, our dependence on relationships
with suppliers, the timing of our revenues and fluctuations in financial
performance, the availability to our customers of third-party financings,
product liability claims and product recalls, competition, hiring
and retaining qualified sales and service personnel, management of
inventory, relations with foreign trade corporations, dependence on
sub-distributors and dealers, completion and opening of healthcare
facilities, attracting and retaining qualified physicians and other
hospital personnel, regulatory compliance, the cost of malpractice,
our dependence on our information systems, the economic policies of
the Chinese government, the newness and undeveloped nature of the
Chinese legal system, the regulation of the conversion of Chinese
currency, future epidemics in China such as SARS or Avian Flu, the
control over our operation by insiders, continuity of relationships
and variability of financial margins with existing suppliers, our
liquidity and availability of capital resources to meet cash requirements,
including capital expenditures, bid and performance bonds, uncertainty
about the final disposition of the Healthcare Products Distribution
segment, and those other factors contained in the section titled "Risk
Factors" as set forth in the Company's Registration Statement (File
No. 333-114996) filed with the Securities and Exchange Commission,
as well as other documents that may be filed by the Company from time
to time with the Securities and Exchange Commission. The forward-looking
statements and numbers contained herein represent the judgment of
the Company, as of the date of this press release, and the Company
disclaims any intent or obligation to update such forward-looking
statements to reflect any change in the Company's expectations with
regard thereto or any change in events, conditions, circumstances
on which such statements are based.
CHINDEX
INTERNATIONAL, INC.
CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
(thousands
except share and per share data)
(Unaudited)
|
Three-months
ended
September
30, |
Six-months
ended
September
30, |
2005
|
2004
|
2005
|
2004
|
Product
sales |
$16,923
|
$22,490
|
$34,264
|
$43,368
|
Healthcare
services revenue |
8,473
|
5,065
|
16,369
|
10,862
|
Total
revenue |
25,396
|
27,555
|
50,633
|
54,230
|
|
|
|
|
|
Cost
and expenses |
|
|
|
|
|
Product
sales costs |
12,919
|
17,977
|
27,121
|
34,875
|
|
Healthcare
services costs |
7,666
|
5,150
|
15,408
|
10,046
|
|
Selling
and marketing expenses |
3,376
|
2,839
|
6,329
|
5,665
|
|
General
and administrative expenses |
2,160
|
1,599
|
4,013
|
3,152
|
(Loss)
income from operations |
(725)
|
(10)
|
(2,238)
|
492
|
Other
(expenses) and income |
|
|
|
|
|
Interest
expense |
(99)
|
(30)
|
(193)
|
(72)
|
|
Interest
income |
31
|
18
|
67
|
33
|
|
Foreign
exchange gain (loss) |
362
|
(13)
|
331
|
(30)
|
|
Miscellaneous
income (expense) - net |
27
|
(5)
|
81
|
(34)
|
(Loss)
income before income taxes |
(404)
|
(40)
|
(1,952)
|
389
|
Provision
for income taxes |
(313)
|
(49)
|
(128)
|
(234)
|
Net
(loss) income |
$(717)
|
$(89)
|
$(2,080)
|
$155
|
Net
(loss) income per common share - basic |
$
(.11) |
$
(.02) |
$(.32)
|
$
.03 |
Weighted
average shares outstanding - basic |
6,514,244
|
5,346,720
|
6,508,903
|
5,172,274
|
Net
(loss) income per common share - diluted |
$
(.11) |
$
(.02) |
$
(.32) |
$
.03 |
Weighted
average shares outstanding - diluted |
6,514,244
|
5,346,720
|
6,508,903
|
5,875,007
|
CHINDEX
INTERNATIONAL, INC.
CONSOLIDATED
CONDENSED BALANCE SHEETS
(thousands
except share data)
(Unaudited)
|
September
30, 2005
|
March
31, 2005
|
ASSETS
|
Current
assets: |
|
Cash
and cash equivalents |
$5,665
|
$
8,173 |
|
Trade
accounts receivable, less allowance for doubtful accounts of
$2,205 and $1,851, respectively |
|
|
|
|
Equipment
sales receivables |
10,394
|
13,120
|
|
|
Patient
service receivables |
3,888
|
2,706
|
|
Inventories,
net |
14,179
|
10,856
|
|
Deferred
income tax |
56
|
222
|
|
Other
current assets |
2,655
|
2,034
|
|
Total
current assets |
36,837
|
37,111
|
Property
and equipment, net |
18,484
|
17,620
|
Long-term
deferred income taxes |
2,143
|
1,780
|
Other
assets |
711
|
777
|
|
Total
assets |
$58,175
|
$
57,288 |
LIABILITIES
AND STOCKHOLDERS' EQUITY |
Current
liabilities: |
|
|
|
Accounts
payable and accrued expenses |
|
$27,161
|
$
26,420 |
|
Short-term
portion of capitalized leases |
|
119
|
189
|
|
Short-term
debt and vendor financing |
|
3,800
|
2,839
|
|
Income
taxes payable |
|
86
|
4
|
|
Total
current liabilities |
|
31,166
|
29,452
|
Long-term
portion of capitalized leases
|
110
|
124
|
Long-term
debt and vendor financing
|
3,919
|
2,749
|
|
Total
liabilities |
|
35,195
|
32,325
|
Stockholders'
equity: |
|
|
|
|
Preferred
stock, $.01 par value, 500,000 shares authorized, none issued
|
0
|
0
|
|
Common
stock, $.01 par value, 13,600,000 shares authorized, including
1,600,000 designated Class B:
|
|
|
|
|
Common
stock - 5,750,209 and 5,728,443 shares issued and outstanding
at September 30, 2005 and March 31, 2005 , respectively |
57
|
57
|
|
|
Class
B stock - 775,000 shares issued and outstanding at September
30, 2005 and March 31, 2005 |
8
|
8
|
|
Additional
paid in capital
|
35,929
|
35,884
|
|
Accumulated
other comprehensive income
|
69
|
17
|
|
Accumulated
deficit
|
(13,083)
|
(11,003)
|
|
Total
stockholders' equity
|
22,980
|
24,963
|
|
Total
liabilities and stockholders' equity
|
$58,175
|
$
57,288 |
SEGMENT
INFORMATION
The
Company has three reportable segments: Medical Capital Equipment,
Healthcare Services and Healthcare Products Distribution. The Company
evaluates performance and allocates resources based on profit or loss
from operations before income taxes, not including gains or losses
on the Company's investment portfolio. The following segment information
has been provided per Statement of Financial Accounting Standards
No. 131, "Disclosures about Segments of an Enterprise and Related
Information:"
|
Medical
Capital Equipment |
Healthcare
Services |
Healthcare
Products
Distribution
|
Total
|
| As
of September 30, 2005
|
|
|
|
Assets
|
$24,701,000
|
$23,435,000
|
$10,039,000
|
$58,175,000
|
For
the quarter ended September 30, 2005 : |
Sales
and service revenue |
$11,322,000
|
$8,473,000
|
$5,601,000
|
$25,396,000
|
Gross
Profit |
3,635,000
|
n/a
|
368,000
|
n/a
|
Gross
Profit % |
32%
|
n/a
|
7%
|
n/a
|
Income
(loss) from operations |
$316,000
|
$373,000
|
$(1,414,000)
|
$(725,000)
|
Other
income net |
321,000
|
Loss
before income taxes |
$(404,000)
|
|
Medical
Capital Equipment |
Healthcare
Services |
Healthcare
Products
Distribution
|
Total
|
As
of March 31, 2005 |
|
|
|
|
Assets
|
$22,698,000
|
$20,878,000
|
$13,712,000
|
$57,288,000
|
For
the quarter ended September 30, 2004 |
Sales
and service revenue |
$14,630,000
|
$5,065,000
|
$7,860,000
|
$27,555,000
|
Gross
Profit |
3,772,000
|
n/a
|
740,000
|
n/a
|
Gross
Profit % |
26%
|
n/a
|
9%
|
n/a
|
Income
(loss) from operations |
$989,000
|
$(272,000)
|
$(727,000)
|
$(10,000)
|
Other
(expense) net |
(30,000)
|
Loss
before income taxes |
$(40,000)
|
|
Medical
Capital Equipment |
Healthcare
Services |
Healthcare
Products
Distribution
|
Total
|
As
of September 30, 2005 |
|
|
|
|
Assets
|
$24,701,000
|
$23,435,000
|
$10,039,000
|
$58,175,000
|
For
the six-months ended September 30, 2005: |
Sales
and service revenue |
$20,890,000
|
$16,369,000
|
$13,374,000
|
$50,633,000
|
Gross
Profit |
6,111,000
|
n/a
|
1,032,000
|
n/a
|
Gross
Profit % |
29%
|
n/a
|
8%
|
n/a
|
(Loss)
income from operations |
$(255,000)
|
$148,000
|
$(2,131,000)
|
$(2,238,000)
|
Other
income net |
286,000
|
Loss
before income taxes |
$(1,952,000)
|
|
Medical
Capital Equipment |
Healthcare
Services |
Healthcare
Products
Distribution
|
Total
|
As
of March 31, 2005 |
|
|
|
|
Assets
|
$22,698,000
|
$20,878,000
|
$13,712,000
|
$57,288,000
|
For
the six-months ended September 30, 2004 |
Sales
and service revenue |
$24,931,000
|
$10,862,000
|
$18,437,000
|
$54,230,000
|
Gross
Profit |
6,700,000
|
n/a
|
1,792,000
|
n/a
|
Gross
Profit % |
27%
|
n/a
|
10%
|
n/a
|
Income
(loss) from operations |
$1,125,000
|
$392,000
|
$(1,025,000)
|
$492,000
|
Other
(expense) net |
(103,000)
|
Income
before income taxes |
$389,000
|
|
