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| CHINDEX
INTERNATIONAL, INC.
ANNOUNCES
RESULTS FOR QUARTER AND NINE MONTHS
ENDED
DECEMBER 31, 2005
22%
Consolidated Revenue Growth For The Quarter
Hospital
and Equipment Divisions Report Profitable Operations
Closedown
of Distribution Division in Process
|
 |
BETHESDA,
MARYLAND - February 13, 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 the quarter ended
December 31, 2005 . The Company will report a 22% increase 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 accounted for the loss in the quarter as closedown
of operations in this division were initiated.
Revenue
for the quarter ended December 31, 2005
was $27.2 million with a loss from operations of $516,000 and a net
loss of $463,000 or a loss per share of $0.07. This compares to revenue
of $22.3 million with a loss from operations of $3.3 million and a
net loss of $3.7 million, or a loss per share of $0.69, for the quarter
ended December 31, 2004 .
Revenue
for the nine months ended December 31, 2005
was $77.8 million with a loss from operations
of $2.8 million and a net loss of $2.5 million, or a loss per share
of $0.39. This compares to revenue of $76.6 million with a loss from
operations of $2.8 million and a net loss of $3.6 million, or a loss
per share of $0.68, for the nine months ended December
31, 2004 .
Roberta
Lipson, President and CEO of Chindex commented from the Company's
offices in Beijing : "During the recent quarter we reported strong
revenue growth in the Healthcare Services segment of 91%, as compared
to the prior year period. We reported modest revenue growth in the
Medical Capital Equipment segment of 7% in spite of continuing market
challenges. The results for the period were a significant improvement
over the prior year with both the equipment and hospital divisions
reporting profitable operations. In addition, we had a significant
decrease in expenses at the parent company level. Although we reported
a consolidated loss, it was attributable to the results of the Healthcare
Products Distribution division which we began closing down following
our announcement on November 23, 2005 .
"In
the Healthcare Services segment we are very pleased to see that the
United Family Hospital network has continued to increase its profitability
on a consolidated basis this quarter based on revenue growth system-wide.
Growth continues in both the Beijing and Shanghai markets and we expect
continued profitability from this division. We closed on a long-term
financing package with the International Finance Corporation of the
World Bank for approximately $8 million during the quarter which is
now providing us with capital funding for expansion projects throughout
the United Family Hospital network and which has allowed us to restructure
our balance sheet debt along more traditional hospital ratios. Our
formal accreditation from the Joint Commission International of the
United Family Hospital network operations in Beijing sets us distinctly
apart from any other healthcare network in Asia . It is a strong,
global affirmation from the premier accreditation agency in the health
services industry of our quality standard at United Family Hospitals.
This 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 our results included delivery
of goods under the current phase of our German KfW financing package
which helped to offset the continuation of several factors which are
impacting 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 and delays
due to product registrations in other product categories. We continue
to focus on cost containment and have new premium and mid-tier market
product releases scheduled during the fourth quarter. In addition,
the product registration process has recently been completed for another
line of products which has allowed sales to proceed. 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.
"On
November 23, 2005, we announced that we would close down operations
of the retail pharmacy distribution business, which comprises most
of the operations of the Healthcare Products Distribution segment.
The logistics operations of the segment will migrate to the parent
company level and continue to provide services to other business units
of the Company. During the recent quarter, the business operations
of the segment generally continued to be routine as the closedown
process began. The closedown process of the retail pharmacy business
is continuing at the time of this release. Our objective is to minimize
the overall costs to the Company through the careful migration of
personnel where possible and realization of assets. Although we originally
expected the closedown to be substantially completed by December 31,
2005 , managing the process in order to reduce associated costs to
us has extended the implementation timeline beyond our original estimate
by a few months ."
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, approximately
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, limitations
on the inter-entity transfers and other limitations imposed by existing
credit facilities, uncertainty about the costs related to the closedown
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) 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
CHINDEX
INTERNATIONAL, INC.
CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
(thousands
except share and per share data)
(Unaudited)
|
Three
months ended
December
31, |
Nine
months ended
December
31, |
2005
|
2004
|
2005
|
2004
|
Product
sales |
$17,246
|
$17,141
|
$51,510
|
$60,509
|
Healthcare
services revenue |
9,920
|
5,188
|
26,289
|
16,050
|
Total
revenue |
27,166
|
22,329
|
77,799
|
76,559
|
|
|
|
|
|
Cost
and expenses |
|
|
|
|
|
Product
sales costs |
13,784
|
13,587
|
40,906
|
48,462
|
|
Healthcare
services costs |
9,151
|
6,751
|
24,559
|
16,798
|
|
Selling
and marketing expenses |
3,018
|
3,297
|
9,347
|
8,962
|
|
General
and administrative expenses |
1,729
|
2,039
|
5,743
|
5,190
|
Loss
from operations |
(516)
|
(3,345)
|
(2,756)
|
(2,853)
|
Other
(expenses) and income |
|
|
|
|
|
Interest
expense |
(203)
|
(36)
|
(397)
|
(108)
|
|
Interest
income |
50
|
33
|
117
|
66
|
|
Foreign
exchange gain (loss) |
48
|
(20)
|
379
|
(50)
|
|
Miscellaneous
(expense) income -net |
(59)
|
(31)
|
23
|
(65)
|
Loss
before income taxes |
(680)
|
(3,399)
|
(2,634)
|
(3,010)
|
Benefit
from (provision for) income taxes |
217
|
(314)
|
90
|
(549)
|
Net
loss |
$(463)
|
$(3,713)
|
$(2,544)
|
$(3,559)
|
Net
loss per common share - basic and diluted |
$
(.07) |
$
(.69) |
$(.39)
|
$
(.68) |
|
|
|
|
|
Weighted
average shares outstanding - basic and diluted |
6,536,122
|
5,405,337
|
6,518,042
|
5,250,244
|
|
|
|
|
|
|
|
|
|
|
CHINDEX
INTERNATIONAL, INC.
CONSOLIDATED
CONDENSED BALANCE SHEETS
(thousands
except share data)
(Unaudited)
|
December
31, 2005
|
March
31, 2005
|
ASSETS
|
Current
assets: |
|
Cash
and cash equivalents |
$7,683
|
$
8,173 |
|
Trade
accounts receivable, less allowance for doubtful accounts of
$2,458 and $1,851, respectively |
|
|
|
|
Equipment
sales receivables |
11,491
|
13,120
|
|
|
Patient
service receivables |
4,532
|
2,706
|
|
Inventories,
net |
10,755
|
10,856
|
|
Deferred
income tax |
341
|
222
|
|
Other
current assets |
2,722
|
2,034
|
|
Total
current assets |
37,524
|
37,111
|
Property
and equipment, net |
18,064
|
17,620
|
Long-term
deferred income taxes |
2,210
|
1,780
|
Other
assets |
725
|
777
|
|
Total
assets |
$58,523
|
$
57,288 |
|
LIABILITIES
AND STOCKHOLDERS' EQUITY |
Current
liabilities: |
|
|
|
Accounts
payable and accrued expenses |
|
$24,371
|
$
26,420 |
|
Short-term
portion of capitalized leases |
|
82
|
189
|
|
Short-term
debt and vendor financing |
|
2,413
|
2,839
|
|
Income
taxes payable |
|
177
|
4
|
|
Total
current liabilities |
|
27,043
|
29,452
|
Long-term
portion of capitalized leases |
|
103
|
124
|
Long-term
debt and vendor financing |
|
8,802
|
2,749
|
|
Total
liabilities |
|
35,948
|
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 -5,783,515 and 5,728,443 shares issued and outstanding
at December 31, 2005 and March 31, 2005 , respectively |
58
|
57
|
|
|
Class
B stock -775,000 shares issued and outstanding at December 31,
2005 and March 31, 2005 |
8
|
8
|
|
Additional
paid in capital |
|
35,995
|
35,884
|
|
Accumulated
other comprehensive income |
|
61
|
17
|
|
Accumulated
deficit |
|
(13,547)
|
(11,003)
|
|
Total
stockholders' equity |
|
22,575
|
24,963
|
|
Total
liabilities and stockholders' equity |
|
$58,523
|
$
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 December 31, 2005 |
|
|
|
|
Assets
|
$23,310,000
|
$26,244,000
|
$8,969,000
|
$58,523,000
|
For
the quarter ended December 31, 2005 :
|
Sales
and service revenue |
$10,143,000
|
$9,920,000
|
$7,103,000
|
$27,166,000
|
Gross
Profit |
3,111,000
|
n/a
|
351,000
|
n/a
|
Gross
Profit % |
31%
|
n/a
|
5%
|
n/a
|
Income
(loss) from operations |
$15,000
|
$439,000
|
$(970,000)
|
$(516,000)
|
Other
(expense) net |
(164,000)
|
Loss
before income taxes |
$(680,000)
|
|
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 December 31, 2004 |
Sales
and service revenue |
$9,462,000
|
$5,188,000
|
$7,679,000
|
$22,329,000
|
Gross
Profit |
2,520,000
|
n/a
|
1,034,000
|
n/a
|
Gross
Profit % |
27%
|
n/a
|
13%
|
n/a
|
Loss
from operations |
$(1,035,000)
|
$(1,838,000)
|
$(472,000)
|
$(3,345,000)
|
Other
(expense) net |
(54,000)
|
Loss
before income taxes |
$(3,399,000)
|
|
Medical
Capital Equipment |
Healthcare
Services |
Healthcare
Products
Distribution
|
Total
|
As
of December 31, 2005 |
|
|
|
|
Assets
|
$23,310,000
|
$26,244,000
|
$8,969,000
|
$58,523,000
|
For
the nine-months ended December 31, 2005
: |
Sales
and service revenue |
$31,032,000
|
$26,289,000
|
$20,478,000
|
$77,799,000
|
Gross
Profit |
9,222,000
|
n/a
|
1,383,000
|
n/a
|
Gross
Profit % |
30%
|
n/a
|
7%
|
n/a
|
(Loss)
income from operations |
$(241,000)
|
$586,000
|
$(3,101,000)
|
$(2,756,000)
|
Other
income net |
122,000
|
Loss
before income taxes |
$(2,634,000)
|
|
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 nine-months ended December 31, 2004
|
Sales
and service revenue |
$34,393,000
|
$16,050,000
|
$26,116,000
|
$76,559,000
|
Gross
Profit |
9,220,000
|
n/a
|
2,826,000
|
n/a
|
Gross
Profit % |
27%
|
n/a
|
11%
|
n/a
|
Income
(loss) from operations |
$90,000
|
$(1,446,000)
|
$(1,497,000)
|
$(2,853,000)
|
Other
(expense) net |
(157,000)
|
Loss
before income taxes |
$(3,010,000)
|
|
