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BETHESDA,
MARYLAND - June 26, 2006 - 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 its fiscal year end and fourth quarter ended March 31,
2006. For the fiscal year, the Company reported total revenue of $90.8
million, an increase of 9% over the prior year, and net income from
continuing operations of $167,000 compared to a loss in the prior
year. During the year the Company discontinued its retail business
unit and restructured its operating divisions. Due to the loss from
discontinued operations, the Company reported a net loss for the three
and twelve month periods.
Revenue
for the quarter ended March 31, 2006 was $23.2 million, a 11% increase
over revenue of $21.0 million in the quarter ended March 31, 2005
. Revenue for the year ended March 31, 2006 was $90.8 million, an
increase of 9% over revenue of $83.2 million for the 2005 fiscal year.
The
net loss for the quarter ended March 31, 2006 was $394,000, or a loss
per share of $0.06. This compares to a net loss of $2.1 million, or
a loss per share of $0.38, for the quarter ended March 31, 2005 .
The net loss for the year ended March 31, 2006 was $2.9 million, or
a loss per share of $0.45. This compares to a net loss of $5.7 million,
or a loss per share of $1.07, for the year ended March 31, 2005 .
The
Company's balance sheet as of March 31, 2006 shows cash, cash equivalents
and restricted cash of $9.4 million, total assets of $57.0 million,
a current ratio of 1.4:1 and stockholders' equity of $22.6 million.
Roberta
Lipson, President and CEO of Chindex, commented on the results:
"We
continue to see great opportunity in healthcare services in China
and our results for the fiscal year 2006 have begun to reflect the
potential.
"The
Healthcare Services division operates our United Family Hospital (UFH)
network of private hospitals and clinics in China . We are the only
foreign-invested, multi-facility hospital network in China ."
Revenue
from the Healthcare Services division for the year was $36.5 million,
an increase of 60% over the prior year with income from operations
of $1.6 million, compared with a loss in the previous year. These
results reflect profitability in both the Beijing and Shanghai markets.
Lipson
commented, "It is remarkable that our hospital in Shanghai was
able to show profitability in it's first full year of operations.
Our more mature Beijing operations are still showing a 26% growth
in primarily same store revenues even in its eighth year of operations."
During
the year, Beijing United Family Hospital (BJU) and Shanghai United
Family Hospital (SHU) obtained approximately $8 million in long term
debt financing from the International Finance Corporation of The World
Bank. These funds were used to retire bank debt for these entities
and will also be used to fund a portion of their future capital growth
programs.
During
fiscal 2006 the Company also announced the successful Joint Commission
International (JCI) accreditation of the BJU network operations. JCI
is the international arm of the American hospital accreditation organization.
The UFH network in Beijing is the only integrated healthcare network
in Asia to have received that accreditation. This formal recognition
by JCI is a testament to the hospital's commitment and achievements
in the area of quality and is an objective recommendation about the
hospital's quality to the market.
"In
fiscal 2007 in the Healthcare Services division we expect continued
revenue growth of 30-35% across the network and growing profitability
at the divisional level. We are also developing network expansion
projects in both hospital development and hospital management in several
key geographic areas of China
outside our existing markets," said Lipson.
The
Medical Products division (formerly named the Medical Capital Equipment
division) markets, distributes and sells select medical capital equipment,
instrumentation and other medical products for use in hospitals in
China and Hong Kong . This now includes certain medical products formerly
handled through the discontinued Healthcare Products Distribution
(HPD) division.
Revenue
for the division during the year was $54.3 million, a 10% decrease
from the prior year The decrease was attributable to lackluster sales
in certain product categories due to maturing product life cycles,
increased competition in certain mid-tier product markets, delays
due to increasing requirements for public tendering in capital equipment
markets and a general slowdown in the growth rate of the market for
imported medical devices in China in the first half of the year. This
was offset by final delivery of goods in the third quarter under a
government-backed financing program. The Company reported a greater
loss for this division than in the prior year.
"In
the fourth quarter we launched exciting new premium and mid-tier market
products on a nationwide basis. In 2007 we will also deliver products
under previously-awarded contracts financed by the German KfW Development
Bank programs. These sales along with the roll out of our new product
offerings should allow us to return to historical levels of revenue
growth in the range of 10-15% annually and profitability on the divisional
level. We are expecting that most of the market issues impacting our
2006 period will find resolution in the coming year," said Lipson.
"Our
financial statements for fiscal 2006 have been restructured to reflect
the discontinuation of the retail business and the closedown of the
HPD division. This closedown was substantially completed by the end
of the year. The closedown allowed staff reductions of approximately
130 employees from the retail business unit and other administrative
departments in the company. It also allowed us to downsize office
and warehouse space in China .
We sold off some inventories at reduced margins and reported a $3
million loss from discontinued operations on the year. The
distribution and logistics services, which had been part of the discontinued
division, have been migrated to the parent company. Medical products
distributed by the logistics business unit have been migrated to the
Medical Products division.
Lipson
concluded, "We now operate in two very synergistic segments,
Healthcare Services and Medical Products. We have great faith
in the opportunity in China in the Healthcare space and feel we are
uniquely positioned with "first to market advantage" in
these areas."
About
Chindex International, Inc.
Chindex
is an American healthcare company that provides healthcare services
and supplies medical capital equipment, instrumentation and products
to the Chinese marketplace, including Hong Kong . It provides healthcare
services through the operations of its United Family Hospitals and
Clinics, a network of private primary care hospitals and affiliated
ambulatory clinics in China . The Company's hospital network currently
operates in the Beijing and Shanghai metropolitan areas. The Company
sells medical products manufactured by various major multinational
companies, including Siemens AG, which is the Company's exclusive
distribution partner for the sale and servicing of color doppler ultrasound
systems. It also arranges financing packages for the supply of medical
products 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. With twenty-five years of experience, 950 employees,
and operations in China , Hong Kong , the United States and Germany
, 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, political
and trade 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 and bid and performance bonds, limitations
on the inter-entity transfers and other limitations imposed by existing
credit facilities and those other factors contained in the section
titled "Risk Factors" as set forth in the Company's Registration
Statement (File No. 333-114996) declared effective by the Securities
and Exchange Commission on December 5, 2005, 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.
#
# # #
Financial
Summary Attached
CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
(thousands
except share and per share data)
|
Three
months ended March 31, |
Year
ended March 31, |
2006
(unaudited)
|
2005
(unaudited)
|
2006
|
2005
|
Product
sales |
$13,074
|
$14,252
|
$54,336
|
$60,358
|
Healthcare
services revenue |
10,211
|
6,752
|
36,500
|
22,801
|
Total
revenue |
23,285
|
21,004
|
90,836
|
83,159
|
|
|
|
|
|
Cost
and expenses |
|
|
|
|
|
Product
sales costs |
9,695
|
10,907
|
40,913
|
46,249
|
|
Healthcare
services costs |
8,896
|
7,839
|
33,455
|
24,636
|
|
Selling
and marketing expenses |
2,801
|
2,391
|
10,195
|
9,993
|
|
General
and administrative |
1,559
|
1,699
|
5,723
|
6,058
|
Income
(loss) from continuing operations |
334
|
(1,832)
|
550
|
(3,777)
|
Other
(expenses) and income |
|
|
|
|
|
Interest
expense |
(192)
|
(122)
|
(589)
|
(229)
|
|
Interest
income |
56
|
18
|
173
|
84
|
|
Miscellaneous
(expense) income - net |
(40)
|
6
|
(18)
|
(59)
|
Income
(loss) from continuing operations before income taxes |
158
|
(1,930)
|
116
|
(3,981)
|
(Provision
for) benefit from income taxes |
(38)
|
606
|
51
|
57
|
Net
income (loss) from continuing operations |
120
|
(1,324)
|
167
|
(3,924)
|
Loss
from discontinued operations |
(514)
|
(776)
|
(3,105)
|
(1,734)
|
Net
loss |
$(394)
|
$
(2,100) |
$(2,938)
|
$(5,658)
|
Net
loss per common share -basic |
$
(0.06) |
$
(0.38) |
$
(0.45) |
$
(1.07) |
Weighted
average shares outstanding |
6,605,118
|
5,507,077
|
6,539,572
|
5,313,573
|
CONSOLIDATED
CONDENSED BALANCE SHEETS
(thousands
except share data)
|
March
31, 2006 |
March
31, 2005 |
ASSETS
|
Current
assets: |
|
Cash
and cash equivalents |
$9,034
|
$
8,173 |
|
Restricted
Cash |
383
|
--
|
|
Trade
accounts receivable, less allowance for doubtful accounts of
$2,250 and $1,851, respectively |
|
|
|
|
Equipment
sales receivables |
7,685
|
13,120
|
|
|
Patient
service receivables |
5,468
|
2,706
|
|
Inventories
|
8,681
|
10,856
|
|
Deferred
income tax |
177
|
222
|
|
Other
current assets |
2,322
|
2,034
|
|
Current
assets of discontinued operations |
1,006
|
--
|
|
Total
current assets |
34,756
|
37,111
|
Property
and equipment, net |
19,119
|
17,620
|
Long-term
deferred income taxes |
2,452
|
1,780
|
Other
assets |
719
|
777
|
|
Total
assets |
$57,046
|
$
57,288 |
LIABILITIES
AND STOCKHOLDERS' EQUITY |
Current
liabilities: |
|
|
|
Accounts
payable and accrued expenses |
|
$21,727
|
$
26,420 |
|
Short-term
portion of capitalized leases |
|
50
|
189
|
|
Short-term
debt and vendor financing |
|
3,080
|
2,839
|
|
Income
taxes payable |
|
143
|
4
|
|
Current
liabilities of discontinued operations |
|
748
|
--
|
|
Total
current liabilities |
|
25,748
|
29,452
|
Long-term
portion of capitalized leases |
|
91
|
124
|
Long-term
debt and vendor financing |
|
8,569
|
2,749
|
|
Total
liabilities |
|
34,408
|
32,325
|
Commitments
and contingencies |
|
|
|
Stockholders'
equity: |
|
|
|
|
Preferred
stock, $.01 par value, 500,000 shares authorized, none issued
|
|
0
|
0
|
|
Common
stock, $.01 par value, 13,600,000 and 6,800,000 shares authorized,
including 1,600,000 and 800,000 designated Class B at March
31, 2006 and 2006, respectively: |
|
|
|
|
|
Common
stock - 5,946,873 and 5,728,443 shares issued and outstanding
at March 31, 2006
and 2005 respectively |
60
|
57
|
|
|
Class
B stock - 775,000 shares issued and outstanding at March
31, 2006 and 2005 |
8
|
8
|
|
Additional
capital |
|
36,436
|
35,884
|
|
Accumulated
other comprehensive income |
|
75
|
17
|
|
Accumulated
deficit |
|
(13,941)
|
(11,003)
|
|
Total
stockholders' equity |
|
22,638
|
24,963
|
|
Total
liabilities and stockholders' equity |
|
$57,046
|
$
57,288 |
SEGMENT
INFORMATION
The
Company has two reportable segments: Healthcare Services and Medical
Products. Prior to fiscal year 2006, the Company had three reportable
segments, Medical Capital Equipment, Healthcare Products Distribution
and Healthcare Services. In fiscal 2006, the Company discontinued
the retail sales portion of the Healthcare Products Distribution segment
and the remaining portion of the segment was grouped together with
the Medical Capital Equipment segment to become the Medical Products
Division. The following
segment information has been restated to reflect the new segment structure.
We evaluate performance and allocate resources based on profit or
loss from continuing operations before income taxes, not including
gains or losses on our investment portfolio.
|
Healthcare
Services |
Medical
Products |
Total
|
As
of March 31, 2005 :
|
|
|
|
Assets
|
$29,801,000 |
$26,239,000
|
$56,040,000
|
| For
the three months ended March
31, 2005 :
|
|
|
Sales
and service revenue |
$10,211,000
|
$13,074,000
|
$23,285,000
|
| Gross
Profit |
n/a
|
3,379,000
|
n/a
|
Gross
Profit % |
n/a
|
26%
|
n/a
|
Income (loss) from continuing
operations before foreign exchange |
$1,055,000
|
$(743,000)
|
$
312,000 |
Foreign
exchange loss |
22,000
|
Loss
from continuing operations |
$334,000 |
Other
(expense), net |
(176,000)
|
Income from continuing
operations before income taxes |
$158,000
|
Total
consolidated assets of $57,046,000 as of March 31, 2006 include $1,006,000
of assets pertaining to our healthcare products retail business which
was discontinued in fiscal year 2006.
|
Healthcare
Services |
Medical
Products |
Total
|
As
of March 31, 2005 :
|
|
|
|
Assets
|
$21,304,000
|
$30,669,000
|
$51,973,000
|
For
the three months ended March
31, 2005 :
|
|
|
Sales
and service revenue |
$6,752,000
|
$14,252,000
|
$21,004,000
|
Gross
Profit |
n/a
|
3,344,000
|
n/a
|
Gross
Profit % |
n/a
|
23%
|
n/a
|
Loss
from continuing operations before foreign exchange |
$(1,399,000)
|
$(430,000)
|
$(1,829,000)
|
Foreign
exchange loss |
(3,000)
|
Loss
from continuing operations |
$(1,832,000)
|
Other
(expense), net |
(98,000)
|
Loss
from continuing operations before income taxes |
$(1,930,000)
|
Total
consolidated assets of $57,288,000 as of March
31, 2005 include $5,315,000 of assets pertaining
to our healthcare products retail business which was discontinued
in fiscal year 2006.
|
Healthcare
Services |
Medical
Products |
Total
|
As
of March 31, 2006 :
|
|
|
|
Assets
|
$29,801,000
|
$26,239,000
|
$56,040,000
|
For
the twelve months ended March
31, 2006 : |
|
|
Sales
and service revenue |
$36,500,000
|
$54,336,000
|
$90,836,000
|
Gross
Profit |
n/a
|
13,423,000
|
n/a
|
Gross
Profit % |
n/a
|
25%
|
n/a
|
Income
(loss) from continuing operations before foreign exchange |
$1,585,000
|
$(1,436,000)
|
$149,000
|
Foreign
exchange gain |
401,000
|
Income
from continuing operations |
$550,000
|
Other
(expense), net |
(434,000)
|
Income
from continuing operations before income taxes |
$116,000
|
Total
consolidated assets of $57,046,000 as of March 31, 2006 include $1,006,000
of assets pertaining to our healthcare products retail business which
was discontinued in fiscal year 2006.
|
Healthcare
Services |
Medical
Products |
Total
|
As
of March 31, 2005 :
|
|
|
|
Assets
|
$21,304,000
|
$30,669,000
|
$51,973,000
|
| For
the twelve months ended March
31, 2005 :
|
|
|
Sales
and service revenue |
$22,801,000
|
$60,358,000
|
$83,159,000
|
Gross
Profit |
n/a
|
14,109,000
|
n/a
|
Gross
Profit % |
n/a
|
23%
|
n/a
|
(Loss)
from continuing operations before foreign exchange |
$(2,844,000)
|
$(880,000)
|
$(3,724,000)
|
Foreign
exchange loss |
(53,000)
|
Loss
from continuing operations |
$(3,777,000)
|
Other
(expense), net |
(204,000)
|
Loss
from continuing operations before income taxes |
$(3,981,000)
|
Total
consolidated assets of $57,288,000 as of March
31, 2005 include $5,315,000 of assets pertaining
to our healthcare products retail business which was discontinued
in fiscal year 2006.
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