BETHESDA, Md., May 9, 2013 /PRNewswire/ -- Chindex International, Inc. (NASDAQ: CHDX), an American health care company providing health care services in China through the operations of United Family Healthcare ("UFH"), a network of private primary care hospitals and affiliated ambulatory clinics, today announced financial results for the first quarter of 2013 ended March 31, 2013.
First Quarter 2013 Financial Highlights
Roberta Lipson, President and CEO of Chindex, commented, "I'm pleased to have started 2013 with strong top-line, operating income and adjusted EBITDA growth in the first quarter. Results were primarily driven by increased patient traffic at UFH's expanded network. Our oncology, cardio and neurosurgery surgical units, while still in their early stages of development, are drawing healthy levels of patients and improving profitability as income from operations more than tripled to $2.6 million, and adjusted EBITDA rose by 36% to $7.4 million, representing 18% adjusted EBITDA margin. We continue to experience growing patient demand for healthcare services both among Chinese nationals and expatriates reinforcing our expansion plans to meet the underserved demand for premium private healthcare services in China."
"During the first quarter, we continued to move forward with our ramp up of new facilities and service lines. The Beijing United Family Rehabilitation Hospital has secured the required regulatory approvals, has staff and equipment in place, and is scheduled to open for Phase I operations in June 2013. Our new facilities and services in Beijing are all ramping up quickly and we are working on future expansion in both areas. In Shanghai, we are working on a new facility in Puxi and evaluating a potential new hospital site as well. Encouraged by the positive response to our newly launched Home Healthcare service in Beijing, we have launched this service in Tianjin at the end of the first quarter and plan to expand the program to Shanghai later this year."
"We believe Chindex can continue growing at a rapid pace for the remainder of this year. Our strategic priorities will focus on the continued growth of existing facilities, ramping up new facilities and services lines, and expanding across geographies and service offerings. While these efforts may take some time to drive high consolidated growth rates, we reiterate comfort with our full year revenue percentage growth rates in the mid-high twenties and adjusted EBITDA growth in the mid-high teens."
First Quarter 2013 Financial Results
First quarter 2013 revenue from healthcare services increased 28% to $41.6 million from $32.5 million in the prior year period. These results reflect continued growth of inpatient and outpatient volume across the United Family Healthcare network as well as increasing contributions from the expansion of the Company's flagship hospital in Beijing. Outpatient services contributed 57% and inpatient services contributed 43% of revenue, compared with 62% and 38%, respectively, in the prior year period. By service line, surgical services contributed 18.1%, OB/GYN contributed 15.8%, pediatrics contributed 8.5%, ancillary services contributed 31.9% and other clinical service lines contributed 25.7% of revenue.
Operating expenses in the first quarter of 2013 increased 22% to $39.0 million from $31.9 million in the prior year period. These costs were primarily driven by the Company's recently opened expansions as well as development of new facilities. Salaries, wages and benefits in the first quarter of 2013 increased 22% to $22.7 million from $18.6 million in the prior year period, reflecting a 26% increase in headcount to support revenue growth and development activities, including newly recruited staff now on-board in anticipation of the opening of the Beijing United Family Rehabilitation Hospital. Development, pre- and post-opening and start-up expenses were $2.5 million this quarter, compared to $3.2 million for the prior year period. These expenses were driven by development projects across all markets, including particularly the Beijing United Family Rehabilitation Hospital and the ramp-up of Tianjin United Family Hospital. Operating expenses also included certain non-cash expenses including $790,000 of stock-based compensation expense compared to $614,000 for the prior year period.
Adjusted EBITDA in the first quarter of 2013 increased 36% to approximately $7.4 million from $5.5 million in the prior year period. The Adjusted EBITDA results illustrate the consistent and improving profitability and expanding earnings base of existing UFH facilities.
Income from operations increased to $2.6 million from $625,000 in the prior year period.
The Company recorded a $1.9 million provision for taxes in the first quarter of 2013 compared to $1.3 million in the prior year period. As in past quarters, the current period provision continued to be heavily impacted by losses in development and start-up entities for which the Company cannot currently recognize tax benefits.
Net loss for the quarter ended March 31, 2013 was $62,000, or $0.00 per diluted share, compared to net loss of $531,000, or $(0.03) per diluted share, in the prior year period. For the first quarter of 2013, weighted average diluted shares outstanding were 16.5 million.
As of March 31, 2013, the Company had $31.4 million in unrestricted cash, cash equivalents and investments.
Chindex Medical Limited
For Chindex Medical Limited (CML), a joint venture between Shanghai Fosun Pharmaceutical (Group) Co., Ltd. ("Fosun Pharma") and Chindex International, Chindex recognized its 49% interest in CML's net income using the equity method of accounting. In the first quarter ended March 31, 2013, Chindex recognized a loss of $900,000, for its 49% equity in the operating results of CML. This consisted of a loss of $771,000, for the stand-alone net income (loss) of CML (after recognition of stock-based compensation expense) and after deducting $129,000, for the amortization of basis differences attributable to acquired intangibles.
Non-GAAP Measures
The Company presents Adjusted EBITDA to better illustrate ongoing operational results. Adjusted EBITDA is defined as income (loss) before interest expense, interest and other income, income taxes, depreciation and amortization, and also excludes development, pre-opening and start-up expenses related to new and pending hospitals and clinics, equity in earnings (loss) income of unconsolidated affiliate, non-recurring charges for Chindex Medical Limited (CML) joint venture formation. The Company anticipates recurring development, pre-opening and start-up expense and notes that such expense is a basic element of the long term growth plan. Management believes that providing an Adjusted EBITDA analysis to investors is a helpful metric to better illustrate the Company's operations, including development plans, and changes in presentation from historical periods. The Company uses Adjusted EBITDA for business planning and other purposes. Other companies may calculate Adjusted EBITDA differently, and therefore Chindex's Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Adjusted EBITDA is not a measure of financial performance under U.S. generally accepted accounting principles (GAAP), and should not be considered in isolation or as an alternative to net income (loss), cash flows from operating activities and other measures determined in accordance with GAAP. Items excluded from Adjusted EBITDA are significant and necessary components to the operations of the Company's business, and, therefore, Adjusted EBITDA should only be used as a supplemental measure of operating performance.
Conference Call
Management will host a conference call at 8:00 am ET Thursday morning on May 9, 2013 to discuss financial results. To participate in the conference call, U.S. domestic callers may dial 1-877-303-9231 and international callers may dial 1-760-666-3567 approximately 10 minutes before the conference call is scheduled to begin. The conference ID is 55024835. A webcast and replay of the earnings call will be accessible via Chindex's website at http://ir.chindex.com/events.cfm.
About Chindex International, Inc.
Chindex is an American health care company providing health care services in China through the operations of United Family Healthcare, a network of private primary care hospitals and affiliated ambulatory clinics. United Family Healthcare currently operates in Beijing, Shanghai, Tianjin and Guangzhou. The Company also provides medical capital equipment and products through Chindex Medical Ltd., a joint venture company with manufacturing and distribution businesses serving both domestic China and export markets. With more than thirty years of experience, the Company's strategy is to continue its growth as a leading integrated health care provider in the Greater China region. Further Company information may be found at the Company's website at http://www.chindex.com.
Safe Harbor Statement
Statements made in this press release relating to plans, strategies, objectives, economic performance and trends and other statements that are not descriptions of historical facts may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking information is inherently subject to risks and uncertainties, and actual results could differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, the factors set forth under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2012, updates and additions to those "Risk Factors" in the Company's interim reports on Form 10-Q, Forms 8-K and in other documents filed by us with the Securities and Exchange Commission from time to time. Forward-looking statements may be identified by terms such as "may," "will," "should," "could," "expects," "plans," "intends," "anticipates," "believes," "estimates," "predicts," "forecasts," "potential," or "continue" or similar terms or the negative of these terms. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance or achievements. The Company has no obligation to update these forward-looking statements.
Contact:
ICR, Inc.
Bill Zima
(+86) 10-6583-7511
(646) 328-2510
Financial Summary Attached
CHINDEX INTERNATIONAL, INC. | |||
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS | |||
(in thousands except share and per share data) | |||
(Unaudited) | |||
Three months ended March 31, 2013 2012 | |||
Healthcare services revenue | $41,565 | $32,512 | |
Operating expenses | |||
Salaries, wages and benefits | 22,663 | 17,306 | |
Other operating expenses | 5,715 | 4,429 | |
Supplies and purchased medical services | 4,965 | 4,124 | |
Bad debt expense | 979 | 735 | |
Depreciation and amortization | 2,302 | 1,492 | |
Lease and rental expense | 2,361 | 1,749 | |
38,985 | 31,887 | ||
Income from operations | 2,580 | 625 | |
Other income and (expenses) | |||
Interest income | 248 | 251 | |
Interest expense | (102) | (355) | |
Equity in (loss) income of unconsolidated affiliate | (900) | 98 | |
Miscellaneous (expense) - net | (2) | (10) | |
Income before income taxes | 1,824 | 728 | |
Provision for income taxes | (1,886) | (1,259) | |
Net loss | $(62) | $(531) | |
Net loss per common share - basic | $.00 | $(.03) | |
Weighted average shares outstanding - basic | 16,549,761 | 16,291,792 | |
Net loss per common share - diluted | $.00 | $(.03) | |
Weighted average shares outstanding - diluted | 16,549,761 | 16,291,792 | |
CHINDEX INTERNATIONAL, INC. | ||
CONSOLIDATED CONDENSED BALANCE SHEETS | ||
(in thousands, except share data) | ||
(Unaudited) | ||
March 31, 2013 | December 31, 2012 | |
ASSETS | ||
Current assets: | ||
Cash and cash equivalents | $31,353 | $33,184 |
Restricted cash | 1,512 | 754 |
Accounts receivable, less allowance for doubtful accounts of $11,621 | 21,943 | 19,564 |
Receivables from affiliates | 1,901 | 2,110 |
Inventories of supplies, net | 2,434 | 2,328 |
Deferred income taxes | 3,369 | 3,209 |
Other current assets | 5,575 | 3,798 |
Total current assets | 68,087 | 64,511 |
Restricted cash and sinking funds | 19,212 | 20,351 |
Investment in unconsolidated affiliate | 33,917 | 34,847 |
Property and equipment, net | 98,425 | 97,952 |
Noncurrent deferred income taxes | 906 | 925 |
Other assets | 3,682 | 3,428 |
Total assets | $224,229 | $222,450 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Current liabilities: | ||
Short-term debt | $1,586 | $1,586 |
Accounts payable | 7,214 | 9,520 |
Payable to affiliates | 1,546 | 1,334 |
Accrued expenses | 18,321 | 15,540 |
Other current liabilities | 9,557 | 8,558 |
Income taxes payable | 2,602 | 2,772 |
Total current liabilities | 40,826 | 39,310 |
Long-term debt and convertible debentures | 32,108 | 32,812 |
Long-term deferred tax liability | 261 | 262 |
Total liabilities | 73,195 | 72,384 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $.01 par value, 500,000 shares authorized, none issued | - | - |
Common stock, $.01 par value, 28,200,000 shares authorized, including 3,200,000 designated Class B: | ||
Common stock - 15,902,784 and 15,904,836 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively | 159 | 159 |
Class B stock - 1,162,500 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively | 12 | 12 |
Additional paid-in capital | 122,899 | 122,109 |
Retained earnings | 18,521 | 18,583 |
Accumulated other comprehensive income | 9,443 | 9,203 |
Total stockholders' equity | 151,034 | 150,066 |
Total liabilities and stockholders' equity | $224,229 | $222,450 |
CHINDEX INTERNATIONAL, INC. | |||
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS | |||
(in thousands) | |||
(Unaudited) | |||
Three months ended March 31, | |||
2013 2012 | |||
OPERATING ACTIVITIES | |||
Net loss | $(62) | $(531) | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 2,302 | 1,651 | |
Inventory write down | 3 | 11 | |
Provision for doubtful accounts | 979 | 765 | |
Loss on disposal of property and equipment | 4 | 5 | |
Equity in (loss) income of unconsolidated affiliate | 900 | (98) | |
Deferred income taxes | (131) | (126) | |
Stock based compensation | 790 | 614 | |
Foreign exchange loss | 51 | 214 | |
Amortization of debt issuance costs | 2 | 2 | |
Amortization of debt discount | 62 | 62 | |
Changes in operating assets and liabilities: | |||
Restricted cash | - | 1,052 | |
Accounts receivable | (3,300) | (2,333) | |
Accounts receivable from affiliates | 209 | (583) | |
Inventories of supplies | (104) | 421 | |
Other current assets and other assets | (2,028) | (1,630) | |
Accounts payable, accrued expenses, other current liabilities and deferred revenue | 1,436 | 1,192 | |
Accounts payable to affiliates | 212 | 1,609 | |
Income taxes payable | (177) | 99 | |
Net cash provided by operating activities | 1,148 | 2,396 | |
INVESTING ACTIVITIES | |||
Proceeds from redemption of CDs | - | 21,970 | |
Purchases of property and equipment | (2,610) | (7,141) | |
Net cash (used in) provided by investing activities | (2,610) | 14,829 | |
FINANCING ACTIVITIES | |||
Restricted cash for IFC RMB loan sinking funds | 438 | (12,051) | |
Repayment of debt | (787) | - | |
Proceeds from exercise of stock options | - | 16 | |
Net cash used in financing activities | (349) | (12,035) | |
Effect of foreign exchange rate changes on cash and cash equivalents | (20) | 10 | |
Net (decrease) increase in cash and cash equivalents | (1,831) | 5,200 | |
Cash and cash equivalents at beginning of period | 33,184 | 33,755 | |
Cash and cash equivalents at end of period | $31,353 | $38,955 | |
Supplemental disclosures of cash flow information: | |||
Cash paid for interest | $18 | $- | |
Cash paid for taxes | $2,189 | $1,289 | |
Non-cash investing and financing activities consist of the following: | |||
Change in property and equipment additions included in accounts payable | $(101) | $216 | |
The table below reconciles our consolidated net loss to Adjusted EBITDA (in thousands) | ||
Three months ended March 31, | ||
2013 | 2012 | |
Consolidated net loss | $(62) | $(531) |
Adjustments: | ||
Depreciation and amortization | 2,302 | 1,651 |
Provision for income taxes | 1,886 | 1,259 |
Interest expense | 102 | 124 |
Interest and other income, net | (246) | (129) |
Development, pre-opening and start-up expense | 2,547 | 3,203 |
Equity in loss (income) of unconsolidated affiliate | 900 | (98) |
7,491 | 6,010 | |
Adjusted EBITDA | $7,429 | $5,479 |
