BEIJING, March 2 /PRNewswire-Asia-FirstCall/ -- China Medical Technologies, Inc. (the "Company") (Nasdaq: CMED), a leading China-based medical device company that develops, manufactures and markets advanced in-vitro diagnostic products, today announced its unaudited financial results for the third fiscal quarter ended December 31, 2008 (“3Q FY2008”). The Company’s 2008 fiscal year ends on March 31, 2009 (“FY2008”).
3Q FY2008 Highlights
-- Revenues from continuing operation increased by 50.7% year-over-year to
RMB225.3 million (US$33.0 million).
-- Loss from continuing operation was RMB171.5 million (US$25.1 million)
including a one-time charge of RMB244.9 million (US$35.9 million) for
acquired in-process research and development (“IPR&D”).
-- Net income increased by 10.5% year-over-year to RMB108.1 million
(US$15.8 million).
-- Non-GAAP adjusted income from continuing operation, as defined below,
increased by 94.5% year-over-year to RMB119.4 million (US$17.5
million).
-- Diluted loss from continuing operation per ADS* was RMB6.54 (US$0.96).
-- Non-GAAP adjusted diluted earnings from continuing operation per ADS*,
as defined below, increased by 95.3% year-over-year to RMB4.55
(US$0.67).
*One American Depositary Share (“ADS”) = 10 ordinary shares
See “Non-GAAP Measure Disclosures” below, where the impact of certain items on reported results is discussed.
“We made a major strategic acquisition to purchase SPR technology and sold our HIFU business to become a pure advanced IVD company based in China,” commented Mr. Xiaodong Wu, Chairman and Chief Executive Officer of the Company. “Our revenue sources have changed to come only from recurring sales of our ECLIA reagent kits and FISH probes. We expect to launch our SPR-based fully automated analysis system to our existing Tier-1 hospital customers through our direct sales force in April 2009 and expect our SPR-based HPV-DNA biosensor chips used with the closed analysis system to become a new source of recurring revenues for us in the near future. We are also pleased to receive further SFDA approval for our Prenatal and Cervical Cancer FISH probes in addition to the first FISH probe approval from SFDA in China for our Breast Cancer HER-2 FISH probe as well as the high-tech certification from Beijing government authorities. We are confident in our growth prospects despite the current weak economic environment in China because the diagnostic needs are least affected by economic downturn and the PRC government has committed to make substantial additional investment in the healthcare sector to increase medical insurance coverage including 50% more subsidy to each participant of government medical insurance plans.”
Mr. Xiaodong Wu continued, “We expect to penetrate more than 400 Tier-1 hospitals in China through our direct sales force managed by our wholly-owned subsidiary, Beijing Jin Pu Jia Medical Technologies Co., Ltd. by the end of March 2009. We have been actively promoting FISH technology to different clinical departments in each hospital to drive the FISH test volume. Our promotion efforts also drew attention of China Central TV which featured our FISH technology in its series of news program. Since the launch of our FISH probes, we have successfully established relationships with almost all the top 5 Tier-1 hospitals in each province of China. For example, Beijing 301 General PLA Hospital, The Affiliated Ruijin Hospital of Shanghai Communication University, The Affiliated Hospital of Guangdong Zhongshan University, The Affiliated Oncology Hospital of Heilongjiang Medical University, The Affiliated Hospital of China Medical University in Shenyang, Tianjing General Hospital, The 1st Affiliated Hospital of Shanxi Medical University, The Affiliated Hospital of Shandong Qilu University, Jiangsu Provincial People’s Hospital, Henan Provincial People’s Hospital, The Affiliated Union Hospital of Wuhan Tongji University, Hunan Xiangya Hospital, Sichuan Huaxi Hospital, The 1st Affiliated Hospital of Gansu Medical University and The Affiliated Hospital of The 3rd PLA Medical University in Chongqing, etc. We expect to leverage our hospital resources to introduce our SPR analysis system and HPV chip. We also expect to use the same direct sales force and coverage to introduce other advanced diagnostic products available to us in the future. When we continue to grow our direct sales coverage, our revenue from direct sales to Tier-1 hospitals will exceed our revenue from distributors in the near future. Therefore, our direct sales coverage, being one of our most important assets, will serve as long term contributor to our sustainable future growth.”
“3Q is a complicated quarter to analyze our performance,” commented Mr. Sam Tsang, Chief Financial Officer of the Company. “We have taken into account the preliminary purchase price allocation of the SPR acquisition, the gain from the sale of the HIFU business and the reclassification of financial numbers relating to HIFU business to discontinued operation in this quarter. It is the first time we present our results from continuing operation and report a loss due to the one-time charge for acquired IPR&D in accordance with U.S. GAAP. This was acquired as part of the purchase consideration for our SPR acquisition. Although we charged the fair value of the acquired IPR&D to the income statement in this quarter, the related research and development projects are still ongoing after our acquisition and may create new advanced diagnostic products for us if completed in the future. Besides, due to the sale of the HIFU business, the revenue and the direct costs and expenses of the HIFU business as well as the gain from the sale of the HIFU business were reclassified to income from discontinued operation. For the ease of comparing our performance to previous quarters and prior fiscal year, we provide in the latter part of this release the condensed income statements and the non-GAAP reconciliations for these quarters and prior fiscal year which were prepared on the same basis comparable to 3Q FY2008.”
3Q FY2008 Financial Results
The Company reported revenues of RMB225.3 million (US$33.0 million) for 3Q FY2008, representing a 50.7% increase from the corresponding period of FY2007.
The Company’s revenues from continuing operation are currently generated from two product lines, ECLIA diagnostic system and FISH diagnostic system.
ECLIA system sales for 3Q FY2008 were RMB131.8 million (US$19.3 million), representing a 36.3% increase from the corresponding period of FY2007. The strong year-over-year growth in the ECLIA system sales was primarily due to the increasing utilization of the Company’s ECLIA analyzers by hospitals as well as the expanded installed base of the analyzers which resulted in increased sales of ECLIA reagents kits.
FISH system sales for 3Q FY2008 were RMB93.5 million (US$13.7 million), representing a 77.0% increase from the corresponding period of FY2007. The strong year-over-year growth in the FISH system sales was primarily due to a significant increase in sales of FISH probes to hospitals as a result of increase in new hospital customers and increased usage of the Company’s FISH probes by existing hospital customers.
Gross margin increased to 75.2% for 3Q FY2008 from 56.9% for the corresponding period of FY2007. The increase in gross margin was primarily due to the change in revenue mix where almost all revenues were from recurring sales of higher margin ECLIA reagent kits and FISH probes in 3Q FY2008.
Research and development expenses were RMB8.3 million (US$1.2 million) for 3Q FY2008, representing a 49.3% year-over-year increase. The increase was primarily due to the development of new ECLIA reagent kits and FISH probes.
Acquired IPR&D charge was RMB244.9 million (US$35.9 million) and was related to the one-time charge in connection with the acquisition of SPR technology in December 2008.
Sales and marketing expenses were RMB14.6 million (US$2.1 million) for 3Q FY2008, representing a significant year-over-year increase. The increase was primarily due to the expansion of the direct sales force for FISH system sales, increased product promotional activities as well as the cost of the ECLIA analyzers provided free of charge to customers.
General and administrative expenses were RMB38.1 million (US$5.6 million) for 3Q FY2008, representing a 70.1% year-over-year increase. The increase was primarily due to the increased headcount associated with the expansion of the Company’s operations, an increase in stock compensation expense arising from a restricted stock grant in June 2008 and an additional amortization of acquired intangible assets in connection with the acquisition of SPR technology in December 2008.
Interest income was RMB12.4 million (US$1.8 million) for 3Q FY2008, representing a 74.4% increase from the corresponding period of FY2007. The increase was primarily due to interest earned on the net proceeds from the issuance of US$276.0 million convertible notes in August 2008.
Interest expense of convertible notes was RMB27.9 million (US$4.1 million) for 3Q FY2008, representing a significant year-over-year increase. The increase was primarily due to the issuance of US$276.0 million convertible notes in August 2008. The Company’s outstanding convertible notes of US$150.0 million and US$276.0 million bear interest at 3.5% and 4.0% per annum, respectively and will mature in November 2011 and August 2013, respectively.
Interest expense of amortization of convertible notes issuance costs was RMB4.7 million (US$0.7 million) for 3Q FY2008, representing a significant year-over-year increase. The increase was primarily due to the cost of the issuance of US$276.0 million convertible notes in August 2008.
Other interest expense was RMB1.2 million (US$0.2 million) for 3Q FY2008 and was primarily due to the present value discounting of other payable of US$10.0 million for the final payment of the FISH acquisition due in March 2009.
Income tax expense was RMB13.9 million (US$2.0 million) for 3Q FY2008.
The Company’s certain PRC subsidiaries have received approval for hi-tech enterprise status from Beijing government authorities. With this status, the subsidiaries are entitled to a preferential income tax rate of 15% which is lower than the statutory income tax rate of 25%. The status is valid for three years starting from January 2008 and will be renewed after evaluation by relevant government authorities every three years.
Loss from continuing operation was RMB171.5 million (US$25.1 million) for 3Q FY2008, including a one-time charge of RMB244.9 million (US$35.9 million) for acquired IPR&D for the acquisition of SPR technology in December 2008.
Income from discontinued operation was RMB279.6 million (US$41.0 million), representing a significant year-over-year increase, primarily due to a one-time gain of RMB243.3 million (US$35.7 million) from the sale of the HIFU business completed by the end of December 2008.
Net income was RMB108.1 million (US$15.8 million) for 3Q FY2008, representing a 10.5% increase from the corresponding period of FY2007.
Adjusted income from continuing operation excluding stock compensation expense, amortization of acquired intangible assets and acquired IPR&D charge (non-GAAP) was RMB119.4 million (US$17.5 million) for 3Q FY2008, representing a 94.5% increase from the corresponding period of FY2007.
Stock compensation expense for 3Q FY2008 was RMB14.5 million (US$2.1 million), which was allocated to research and development expenses (RMB2.2 million) and general and administrative expenses (RMB12.3 million).
Amortization of acquired intangible assets for 3Q FY2008 was RMB31.6 million (US$4.6 million), which was allocated to cost of revenues (RMB22.5 million) and general and administrative expenses (RMB9.1 million).
Acquired IPR&D charge for 3Q FY2008 was RMB244.9 million (US$35.9 million).
As of December 31, 2008, the Company’s cash balance was RMB1,943.6 million (US$284.9 million). Net cash provided by operating activities for 3Q FY2008 was RMB121.0 million (US$17.7 million).
As of December 31, 2008, the Company’s accounts receivable was RMB284.3 million (US$41.7 million), representing a decrease of 12.7% from the balance as of September 30, 2008, primarily due to the sale of the HIFU business.
For the convenience of readers, certain RMB amounts have been translated into U.S. dollars at the rate of RMB6.8225 to US$1.00, the noon buying rate in New York City for cable transfers of RMB per U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York, as of Wednesday, December 31, 2008.
Outlook for FY2008
The targeted revenues from continuing operation for FY2008 are expected to be between RMB825.0 million (US$120.9 million) and RMB838.0 million (US$122.8 million), representing a year-over-year increase of 50.7% - 53.1%.
The targeted adjusted income from continuing operation excluding stock compensation expense, amortization of acquired intangible assets and acquired IPR&D charge (non-GAAP) for FY2008 are expected to be between RMB410.0 million (US$60.1 million) and RMB420.0 million (US$61.6 million), representing a
year-over-year increase of 76.8% - 81.1%.
The targeted adjusted diluted earnings from continuing operation per ADS excluding stock compensation expense, amortization of acquired intangible assets and acquired IPR&D charge (non-GAAP) for FY2008 is expected to be between RMB14.84 (US$2.18) and RMB15.13 (US$2.22) assuming a diluted weighted average number of ADS of approximately 34.2 million and excluding interest for convertible notes (RMB83.2 million) and amortization of convertible notes issuance costs (RMB14.3 million), representing a year-over-year increase of 68.6% - 71.9%.
The above targets are based on the Company’s current views on the operating and marketing conditions which are subject to change.
The Company will provide the outlook for FY2009 when it announces its unaudited financial results for 4Q FY2008 in June 2009.
Non-GAAP Measure Disclosures
To supplement its consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles (“GAAP”), the Company uses non-GAAP measures of adjusted income from continuing operation and adjusted earnings from continuing operation per ADS, which are adjusted from results based on GAAP to exclude the impact of stock compensation expense, amortization of acquired intangible assets and acquired IPR&D charge. Non-GAAP financial measures are used by the Company in their financial and operating decision-making because management believes they reflect the Company’s ongoing business in a manner that allows meaningful period-to-period comparison. The Company’s management believes that these
non-GAAP financial measures provide useful information to investors and others in understanding and evaluating the Company’s current operating performance and future prospects in the same manner as management does, if they so choose. The Company’s management also believes the non-GAAP financial measures are useful for itself and investors because it makes more meaningful comparisons of the Company’s current results of operations to those of prior periods.
The presentation of this additional financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measure, please see the financial statements included with this press release.
Conference Call
The Company’s management team will host a conference call at 8:00 a.m. Eastern Time on March 2, 2009 (or 9:00 p.m. Beijing/Hong Kong time on the same date) to discuss the results following this earnings announcement.
The dial-in details for the live conference call are as follows:
-- U.S. toll free number 1-800-901-5247
-- International dial-in number 1-617-786-4501
Passcode CMEDCALL
A live webcast of the conference call will be available on http://ir.chinameditech.com .
A replay of this webcast will be available for one month on this website.
A telephone replay of the call will be available after the conclusion of the conference call through 10:00 a.m. Eastern Time on March 3, 2009.
The dial-in details for the replay are as follows:
-- U.S. toll free number 1-888-286-8010
-- International dial-in number 1-617-801-6888
Passcode 84251245
About China Medical Technologies, Inc.
China Medical Technologies is a leading China-based medical device company that develops, manufactures and markets advanced in-vitro diagnostic products using Enhanced Chemiluminescence (ECLIA) technology, Fluorescent in situ Hybridization (FISH) technology and Surface Plasmon Resonance (SPR) technology to detect and monitor various diseases and disorders. For more information, please visit http://www.chinameditech.com .
Safe Harbor Statement
This press release contains forward-looking statements. These statements constitute “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the quotations from management in this press release, the Company’s strategic operational plans, as well as outlook for FY2008, contain forward-looking statements. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Further information regarding these and other risks is included in the Company’s filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.
For more information, please contacts:
Sam Tsang and Winnie Yam
Tel: +86-10-6530-8833
Email: IR@chinameditech.com
China Medical Technologies, Inc.
Unaudited Condensed Consolidated Balance Sheets
As of
March 31, September
2008 30, 2008 December 31, 2008
RMB RMB RMB US$
(in thousands except for per ADS information)
Assets
Current assets
Cash and cash equivalents 682,679 2,702,722 1,943,588 284,879
Trade accounts
receivable, net 289,751 325,596 284,262 41,665
Inventories 27,834 37,555 28,029 4,108
Prepayments and other 27,845 32,720 27,908 4,091
receivables
Due from a related party -- -- 204,675 30,000
Total current assets 1,028,109 3,098,593 2,488,462 364,743
Property, plant and
equipment, net 164,499 157,182 161,801 23,716
Land use rights 7,430 7,334 7,287 1,068
Goodwill 8,654 8,654 8,654 1,268
Intangible assets, net 1,541,793 1,460,312 3,532,442 517,764
Prepayments and other
receivables 154,264 149,378 -- --
Convertible notes
issuance costs 27,055 77,399 73,131 10,719
Total assets 2,931,804 4,958,852 6,271,777 919,278
Liabilities
Current liabilities
Trade accounts payable 48,040 63,597 21,160 3,101
Accrued liabilities and
other payables 238,580 268,748 1,466,097 214,892
Income taxes 69,499 81,579 82,908 12,152
Total current liabilities 356,119 413,924 1,570,165 230,145
Convertible notes 1,051,800 2,892,497 2,906,385 426,000
Deferred income taxes 1,124 2,364 21,657 3,174
Total liabilities 1,409,043 3,308,785 4,498,207 659,319
Shareholders’ equity
Ordinary shares US$0.1
par value: 500,000,000
authorized; 274,066,661
issued and outstanding as
of March 31, 2008 and
321,066,661 issued and
outstanding as of
September 30, 2008 and
December 31, 2008 225,473 257,738 257,738 37,778
Additional paid-in capital 526,264 515,773 530,259 77,722
Accumulated other
comprehensive loss (48,046) (53,701) (52,766) (7,734)
Retained earnings 819,070 930,257 1,038,339 152,193
Total shareholders’
equity 1,522,761 1,650,067 1,773,570 259,959
Total liabilities and
shareholders’ equity 2,931,804 4,958,852 6,271,777 919,278
Note:
The Company has performed preliminary purchase price allocation after
completion of SPR acquisition in December 2008. The Company will finalize
the purchase price allocation as soon as practicable.
China Medical Technologies, Inc.
Unaudited Condensed Consolidated Statements of Income
For the Three Months Ended
December September December December
31, 30, 31, 31,
2007 2008 2008 2008
RMB RMB RMB US$
(in thousands except for per ADS information)
Revenues (1) 149,494 193,967 225,296 33,022
Cost of revenues (64,368) (52,043) (55,818) (8,181)
Gross profit 85,126 141,924 169,478 24,841
Operating expenses:
Research and development (5,561) (6,338) (8,304) (1,217)
Acquired in-process research
and development -- -- (244,872) (35,892)
Sales and marketing (6,129) (16,515) (14,565) (2,135)
General and administrative (22,413) (26,859) (38,115) (5,586)
Total operating expenses (34,103) (49,712) (305,856) (44,830)
Operating income (loss) 51,023 92,212 (136,378) (19,989)
Interest income 7,137 10,301 12,448 1,825
Interest expense - convertible
notes (9,755) (18,410) (27,856) (4,083)
Interest expense - amortization
of convertible notes
issuance costs (1,978) (3,235) (4,652) (682)
Interest expense - other (1,181) (1,145) (1,165) (171)
Income (loss) before tax 45,246 79,723 (157,603) (23,100)
Income tax expense (10,789) (14,423) (13,915) (2,040)
Income (loss) from continuing
operation 34,457 65,300 (171,518) (25,140)
Income from discontinued
operation (2) 63,344 52,432 279,600 40,982
Net income 97,801 117,732 108,082 15,842
Earnings (loss) from
continuing operation per ADS
- basic 1.31 2.49 (6.54) (0.96)
- diluted (3) 1.31 2.43 (6.54) (0.96)
Earnings from discontinued
operation per ADS
- basic 2.41 2.00 10.65 1.56
- diluted (3) 2.40 2.02 10.65 1.56
Weighted average number
of ADS
- basic 26,238,264 26,242,974 26,242,974 26,242,974
- diluted (3) 26,370,834 31,278,897 26,242,974 26,242,974
Notes:
(1) Revenues RMB’000 RMB’000 RMB’000 US$’000
- ECLIA 96,663 122,160 131,782 19,316
- FISH 52,831 71,807 93,514 13,706
149,494 193,967 225,296 33,022
(2) Income from discontinued
operation RMB’000 RMB’000 RMB’000 US$’000
- Revenue from
HIFU business 115,639 96,517 85,364 12,512
- Income from
HIFU business 63,344 52,432 36,271 5,316
- Gain on disposal of HIFU
business -- -- 243,329 35,666
(3) In computing diluted earnings from continuing operation per ADS for
the three months ended September 30, 2008, interest expense and
amortization in with convertible notes were added back to income from
continuing operation before dividing income from continuing operation
by the diluted number of ADS, which included shares that may be issued
from the conversion of convertible notes. Interest expense and
amortization in connection with convertible notes were not added back
in computing diluted earnings from continuing operation per ADS for
the three months ended December 31, 2007 and 2008 because they were
anti-dilutive.
China Medical Technologies, Inc.
Reconciliations of Non-GAAP Adjusted Income from Continuing Operation to
GAAP Adjusted Income from Continuing Operation
For the Three Months Ended
December September December December
31, 30, 31, 31,
2007 2008 2008 2008
RMB RMB RMB US$
(in thousands except for per ADS information)
GAAP income (loss) from
continuing operation 34,457 65,300 (171,518) (25,140)
Adjustments:
Stock compensation expense 5,074 14,080 14,486 2,123
Amortization of acquired
intangible assets 21,876 22,447 31,586 4,630
Acquired in-process research
and development -- -- 244,872 35,892
Non-GAAP adjusted income from
continuing operation 61,407 101,827 119,426 17,505
GAAP earnings (loss) from
continuing operation per ADS
- basic 1.31 2.49 (6.54) (0.96)
- diluted 1.31 2.43 (6.54) (0.96)
Non-GAAP adjusted earnings from
continuing operation per ADS
- basic 2.34 3.88 4.55 0.67
- diluted (1) 2.33 3.60 4.55 0.67
Weighted average number of ADS
- basic 26,238,264 26,242,974 26,242,974 26,242,974
- diluted 26,370,834 31,278,897 26,242,974 26,242,974
Note:
(1) In computing diluted non-GAAP adjusted earnings from continuing
operation per ADS for the three months ended September 30, 2008,
interest expense and amortization in connection with convertible notes
were added back to non-GAAP adjusted income from continuing operation,
before dividing the non-GAAP adjusted income from continuing operation
by the diluted number of ADS, which included shares that may be issued
from the conversion of convertible notes. Interest expense and
amortization in connection with convertible notes were not added back
in computing diluted non-GAAP adjusted earnings from continuing
operation per ADS for the three months ended December 31, 2007 and
2008 because they were anti-dilutive.
China Medical Technologies, Inc.
Unaudited Condensed Consolidated Statements of Income
For the Nine Months Ended
December December December
31, 31, 31,
2007 2008 2008
RMB RMB US$
(in thousands except for per ADS
information)
Revenues (1) 366,373 581,315 85,205
Cost of revenues (170,551) (159,131) (23,324)
Gross profit 195,822 422,184 61,881
Operating expenses:
Research and development (13,969) (20,780) (3,046)
Acquired in-process research and
development -- (244,872) (35,892)
Sales and marketing (15,128) (42,365) (6,210)
General and administrative (55,417) (89,754) (13,155)
Total operating expenses (84,514) (397,771) (58,303)
Operating income 111,308 24,413 3,578
Other income 100 -- --
Interest income 23,616 26,746 3,920
Interest expense - convertible notes (29,753) (55,398) (8,120)
Interest expense - amortization of
convertible notes issuance costs (6,032) (9,738) (1,427)
Interest expense - other (3,930) (3,455) (506)
Income (loss) before tax 95,309 (17,432) (2,555)
Income tax expense (22,736) (40,899) (5,995)
Income (loss) from continuing
operation 72,573 (58,331) (8,550)
Income from discontinued operation (2) 147,436 364,409 53,413
Net income 220,009 306,078 44,863
Earnings (loss) from continuing
operation per ADS
- basic 2.77 (2.22) (0.33)
- diluted (3) 2.76 (2.22) (0.33)
Earnings from discontinued
operation per ADS
- basic 5.62 13.89 2.04
- diluted (3) 5.60 13.89 2.04
Weighted average number of ADS
- basic 26,214,926 26,242,974 26,242,974
- diluted (3) 26,326,211 26,242,974 26,242,974
Notes:
(1) Revenues RMB’000 RMB’000 US$’000
- ECLIA 268,299 365,660 53,596
- FISH 98,074 215,655 31,609
366,373 581,315 85,205
(2) Income from discontinued operation RMB’000 RMB’000 US$’000
- Revenue from HIFU business 265,146 246,588 36,143
- Income from HIFU business 147,436 121,080 17,747
- Gain on disposal of HIFU business -- 243,329 35,666
(3) In computing diluted earnings (loss) from continuing operation per ADS
for the nine months ended December 31, 2007 and 2008, interest expense
and amortization in connection with convertible notes were not added
back to income (loss) from continuing operation before dividing income
(loss) from continuing operation by the diluted number of ADS because
the convertible notes were anti-dilutive.
China Medical Technologies, Inc.
Reconciliations of Non-GAAP Adjusted Income from Continuing Operation to
GAAP Adjusted Income from Continuing Operation
For the Nine Months Ended
December December December
31, 31, 31,
2007 2008 2008
RMB RMB US$
(in thousands except for per ADS
information)
GAAP income (loss) from
continuing operation 72,573 (58,331) (8,550)
Adjustments:
Stock compensation expense 11,991 36,260 5,315
Amortization of acquired
intangible assets 66,533 76,765 11,252
Acquired in-process research
and development -- 244,872 35,892
Non-GAAP adjusted income from
continuing operation 151,097 299,566 43,909
GAAP earnings (loss) from continuing
operation per ADS
- basic 2.77 (2.22) (0.33)
- diluted 2.76 (2.22) (0.33)
Non-GAAP adjusted earnings from
continuing operation per ADS
- basic 5.76 11.42 1.67
- diluted (1) 5.74 11.42 1.67
Weighted average number of ADS
- basic 26,214,926 26,242,974 26,242,974
- diluted 26,326,211 26,242,974 26,242,974
Note:
(1) In computing diluted non-GAAP adjusted earnings from continuing
operation per ADS for nine months ended December 31, 2007 and 2008,
interest expense and amortization in connection with convertible notes
were not added back to non-GAAP adjusted income from continuing
operation before dividing the non-GAAP adjusted earnings from
continuing operation by the diluted number of ADS because the
convertible notes were anti-dilutive.
China Medical Technologies, Inc.
Unaudited Condensed Consolidated Statements of Income
For the
Year
For the Three Months Ended Ended
June September March June March
30, 30, 31, 30, 31,
2007 2007 2008 2008 2008
RMB RMB RMB RMB RMB
(in thousands except for per ADS information)
Revenues (1) 93,493 123,386 181,048 162,052 547,421
Cost of revenues (47,819) (58,364) (74,886) (51,270) (245,437)
Gross profit 45,674 65,022 106,162 110,782 301,984
Operating expenses:
Research and
development (4,915) (3,493) (6,262) (6,138) (20,231)
Acquired in-process
research and
development -- -- (672) -- (672)
Sales and marketing (4,246) (4,753) (6,884) (11,285) (22,012)
General and
administrative (13,123) (19,881) (15,522) (24,780) (70,939)
Total operating
expenses (22,284) (28,127) (29,340) (42,203) (113,854)
Operating income 23,390 36,895 76,822 68,579 188,130
Other income 100 -- -- -- 100
Interest income 8,694 7,785 5,034 3,997 28,650
Interest expense -
convertible notes (10,078) (9,920) (9,396) (9,132) (39,149)
Interest expense -
amortization of
convertible notes
issuance cost (2,043) (2,011) (1,905) (1,851) (7,937)
Interest expense -
other (1,569) (1,180) (1,299) (1,145) (5,229)
Income before
income tax 18,494 31,569 69,256 60,448 164,565
Income tax expense (4,801) (7,146) (17,457) (12,561) (40,193)
Income from
continuing operation 13,693 24,423 51,799 47,887 124,372
Income from
discontinued
operation (2) 31,130 52,962 53,414 32,377 200,850
Net income 44,823 77,385 105,213 80,264 325,222
Earnings from
continuing
operation per ADS
- basic 0.52 0.93 1.97 1.82 4.74
- diluted (3) 0.52 0.93 1.96 1.81 4.72
Earnings from
discontinued
operation per ADS
- basic 1.19 2.02 2.04 1.23 7.66
- diluted (3) 1.18 2.01 2.02 1.22 7.62
Weighted average
number of ADS
- basic 26,196,308 26,210,004 26,242,974 26,242,974 26,221,900
- diluted (3) 26,317,214 26,290,383 26,407,370 26,461,885 26,346,462
Notes:
(1) Revenues RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
- ECLIA 79,051 92,585 112,221 111,718 380,520
- FISH 14,442 30,801 68,827 50,334 166,901
93,493 123,386 181,048 162,052 547,421
(2) Income from
discontinued
operation RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
- Revenue from
HIFU business 57,997 91,510 103,171 64,707 368,317
- Income from
HIFU business 31,130 52,962 53,414 32,377 200,850
- Gain on disposal
of HIFU business -- -- -- -- --
(3) In computing diluted earnings from continuing operation per ADS,
interest expense and amortization in connection with convertible notes
were not added back to income from continuing operation before
dividing income from continuing operation by the diluted number of ADS,
because the convertible notes were anti-dilutive.
China Medical Technologies, Inc.
Reconciliations of Non-GAAP Adjusted Income from Continuing Operation to
GAAP Adjusted Income from Continuing Operation
For the
For the Three Months Ended Year Ended
June September March June March
30, 30, 31, 30, 31,
2007 2007 2008 2008 2008
RMB RMB RMB RMB RMB
(in thousands except for per ADS information)
GAAP income from
continuing
operation 13,693 24,423 51,799 47,887 124,372
Adjustments:
Stock compensation
expense 1,379 5,538 4,669 7,694 16,660
Amortization of
acquired
intangible
assets 22,475 22,182 23,700 22,732 90,233
Acquired
in-process
research and
development -- -- 672 -- 672
Non-GAAP adjusted
income from
continuing
operation 37,547 52,143 80,840 78,313 231,937
GAAP earnings from
continuing
operation per ADS
- basic 0.52 0.93 1.97 1.82 4.74
- diluted 0.52 0.93 1.96 1.81 4.72
Non-GAAP adjusted
earnings from
continuing
operation per ADS
- basic 1.43 1.99 3.08 2.98 8.85
- diluted (1) 1.43 1.98 3.06 2.96 8.80
Weighted average
number of ADS
- basic 26,196,308 26,210,004 26,242,974 26,242,974 26,221,900
- diluted 26,317,214 26,290,383 26,407,370 26,461,885 26,346,462
Note:
(1) In computing diluted non-GAAP adjusted earnings from continuing
operation per ADS, interest expense and amortization in connection
with convertible notes were not added back to non-GAAP adjusted income
from continuing operation before dividing the non-GAAP adjusted income
from continuing operation by the diluted number of ADS, because the
convertible notes were anti-dilutive.
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