omniture

Chindex International, Inc. Reports First Quarter 2011 Financial Results

2011-05-10 05:39 973

BETHESDA, Md., May 10, 2011 /PRNewswire-Asia/ -- Chindex International, Inc. (NASDAQ: CHDX), 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, today announced financial results for the three month period ended March 31, 2011.  

First Quarter 2011 Financial Highlights

  • Revenue from healthcare services increased 14% to $24.2 million from $21.2 million in the prior year period.
  • Loss from operations was $293,000.
  • Net loss was $1.2 million, or $0.08 per diluted share, compared to net income of $0.52 million, or $0.04 per diluted share, in the prior year period.
  • Adjusted EBITDA was $2.4 million. (See reconciliation table below.)
  • Development, pre-opening and start-up expense was $798,000 compared to $413,000 in the prior year period.

The Company is presenting Adjusted EBITDA beginning in the first quarter of 2011 to better illustrate ongoing operations. Adjusted EBITDA is defined as income (loss) before interest expense, 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 loss of unconsolidated affiliate, non-recurring charges for Chindex Medical Limited (CML) joint venture formation and effect of change in corporate cost allocations. 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 EBIDTA 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.

Roberta Lipson, President and CEO of Chindex, commented, "First quarter financial performance reflects revenue growth tempered by the holiday season and the timing of our BJU expansion, as well as non-recurring expense items and increases in corporate expenses related to the joint venture formation. While the Beijing expansion is progressing slower than anticipated due to construction and regulatory timing, we are optimistic that we'll meet our phased opening plans through this year. We also anticipate steady inpatient and outpatient demand across our network."

First Quarter 2011 Financial Results

First quarter 2011 revenue from healthcare services increased 14% to $24.2 million from $21.2 million in the prior year period, reflecting growing inpatient and outpatient volume across the United Family Healthcare network. Outpatient services contributed 62% of revenue and inpatient services contributed 38% of revenue in the first quarter of 2011. This compares to 60% and 40%, respectively, in the year ago period. By service line, surgical services contributed 17.8%, OB/GYN contributed 17.8%, pediatrics contributed 7.6%, ancillary services contributed 33.4% and other services contributed 23.4% of revenue. This additional revenue data is provided in the tables below.

Operating expenses for the three months ended March 31, 2011 increased to $24.5 million from $20.0 million in the prior year period. This reflects a higher than normal level of operating expense of approximately $400,000 due to certain non-recurring legal and professional expenses related primarily to the formation and start up operations of the CML joint venture.  In addition, development, pre-opening and start up expenses rose to $798,000 compared to $413,000 in the prior year period primarily as a result of expenses related to the Company's Beijing and Tianjin projects.

Operating expenses also included certain non-cash expenses including $1.2 million of non-cash stock compensation expense compared to $854,000 in the prior year and increased corporate cost allocations of approximately $325,000 due to the change in business organization when compared to the prior year.

Adjusted EBITDA in the first quarter of 2011 was approximately $2.4 million compared to $2.5 million in the prior year period.

Loss from operations was $293,000 compared to income from operations of $1.1 million in the prior year period.

The Company recorded a $787,000 provision for taxes in the quarter ended March 31, 2011 as compared to a provision for taxes of $791,000 in the prior year period. The provision for taxes this period reflects losses in entities for which the Company could not recognize a tax benefit.

Net loss for the quarter ended March 31, 2011 was $1.2 million, or $0.08 per diluted share. This compares to net income of $515,000 or $0.04 per diluted share, in the prior year period. For the quarter ended March 31, 2011, weighted average diluted shares outstanding were 16.1 million.

As of March 31, 2011, the Company had $81.0 million in cash and cash equivalents and investments.

Chindex Medical Limited

The Chindex Medical Limited joint venture (CML) between FosunPharma and Chindex International began operations on January 1, 2011. The strategic venture merged the former Medical Products division of Chindex International and select medical device companies of FosunPharma. FosunPharma owns 51% and Chindex owns 49% of the CML joint venture. Beginning this quarter, Chindex has deconsolidated CML's operating results and recognizes its 49% interest in CML's net income using the equity method of accounting.

Accordingly, in the first quarter of 2011, other expenses include a $147,000 loss for Chindex's 49% share of the net loss of CML for the quarter.  On a stand-alone basis, the CML joint venture had a net loss of $37,000 for the quarter, which included a stock-based compensation expense charge of $279,000. In recognizing its 49% interest in the net income of CML for the quarter, Chindex also included additional expenses for amortization of certain fair value adjustments made in connection with the formation of the joint venture. CML results in the first quarter of 2011 reflected the weakest budgeted quarter for the joint venture. The Company expects improved results in future quarters which are anticipated to offset the stock-based compensation expense and recurring amortization charges.

The deconsolidation of CML's financial results include the following impacts on the Company's presentation of results:

  • Cost of goods sold, which previously reflected the Medical Products division costs, are no longer broken out on the income statement;
  • Depreciation and amortization expenses, previously consolidated within healthcare services costs, will now be presented as a separate operating expense item to provide greater clarity into the Company's hospital and clinic assets; and
  • General and administrative expenses, which previously included corporate expense and was allocated between both Healthcare Services and Medical Products divisions, is now included in other operating expenses and allocated to the Company's one division, Healthcare Services.

Conference Call

Management will host a conference call at 8:00 am ET on May 10, 2011, 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. A telephone replay will be available from the day of the call until May 17, 2011, by dialing (U.S. domestic) 1-800-642-1687 or (international) 1-706-645-9291, passcode 65853259. A webcast 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 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 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 our Transition Report on Form 10-K for the nine months ended December 31, 2010, updates and additions to those "Risk Factors" in our 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 we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We have no obligation to update these forward-looking statements.

Contact:

 

ICR, LLC

 
 

 

Ashley De Simone

 
 

 

(646) 277-1227

 
 
   


Financial Summary Attached

CHINDEX INTERNATIONAL, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands except share and per share data)


 
 

 

Three months ended March 31,

 
 

2011

 

2010

 
 

Revenue

 

 

 
 

      Healthcare services revenue

 

$24,185

 

$21,168

 
 

      Product sales

 

-

 

20,088

 
 

            Total revenue

 

24,185

 

41,256

 
 

 

 

 

 
 

Operating expenses

 

 

 
 

 

Healthcare services:

 

 

 
 

 

      Salaries, wages and benefits

 

14,755

 

12,378

 
 

 

      Other operating expenses

 

4,319

 

3,298

 
 

 

      Supplies and purchased medical services

 

2,635

 

2,120

 
 

 

      Bad debt expense

 

432

 

339

 
 

 

      Depreciation and amortization

 

1,137

 

880

 
 

 

      Lease and rental expense

 

1,200

 

976

 
 

 

24,478

 

19,991

 
 

     Products:

 

 

 
 

            Product sales costs

 

-

 

14,553

 
 

            Product selling and other operating expenses

 

-

 

5,579

 
 

 

-

 

20,132

 
 

            Total operating expenses

 

24,478

 

40,123

 
 

(Loss) income from operations

 

(293)

 

1,133

 
 

 

 

 
 

Other (expenses) and income

 

 

 
 

 

Interest income

 

142

 

137

 
 

 

Interest expense

 

(103)

 

(199)

 
 

 

Equity in loss of unconsolidated affiliate

 

(147)

 

-

 
 

 

Miscellaneous (expense) income - net

 

(42)

 

235

 
 

(Loss) income before income taxes

 

(443)

 

1,306

 
 

Provision for income taxes

 

(787)

 

(791)

 
 

Net (loss) income

 

$(1,230)

 

$515

 
 

 

 

 

 
 

Net (loss) income per common share - basic

 

$(.08)

 

$.04

 
 

Weighted average shares outstanding - basic

 

16,075,847

 

14,721,901

 
 

 

 

 

 
 

Net (loss) income per common share - diluted

 

$(.08)

 

$.04

 
 

Weighted average shares outstanding - diluted

 

16,075,847

 

16,188,973

 
 

 
 
       



CHINDEX INTERNATIONAL, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(in thousands except share data)

 
 

 

March 31, 2011

(unaudited)

 

December 31,

2010

 
 

ASSETS

 

 

 
 

Current assets:

 

 

 
 

Cash and cash equivalents

 

$42,600

 

$32,007

 
 

Restricted cash

 

300

 

300

 
 

Investments

 

37,074

 

37,631

 
 

Accounts receivable, less allowance for doubtful accounts of $7,253 and $6,748, respectively

 

11,019

 

11,601

 
 

   Receivables from affiliates

 

1,270

 

9.330

 
 

Inventories, net

 

1,432

 

1,413

 
 

Deferred income taxes

 

3,574

 

3,242

 
 

Other current assets

 

2,785

 

3,856

 
 

Total current assets

 

100,054

 

99,380

 
 

Restricted cash and sinking funds

 

990

 

980

 
 

Investments

 

1,329

 

2,439

 
 

Investment in unconsolidated affiliate

 

32,107

 

31,756

 
 

Property and equipment, net

 

38,437

 

37,099

 
 

Noncurrent deferred income taxes

 

160

 

108

 
 

Other assets

 

2,449

 

2,411

 
 

Total assets

 

$175,526

 

$174,173

 
 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 
 

Current liabilities:

 

 

 
 

Accounts payable

 

$2,710

 

$4,038

 
 

Payable to affiliates

 

1,181

 

-

 
 

Accrued expenses

 

9,343

 

8,541

 
 

Other current liabilities

 

3,521

 

3,874

 
 

Income taxes payable

 

1,890

 

2,147

 
 

Total current liabilities

 

18,645

 

18,600

 
 

Long-term debtand convertible debentures

 

23,231

 

23,070

 
 

Long-term deferred tax liability

 

431

 

431

 
 

Total liabilities

 

42,307

 

42,101

 
 

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 – 15,323,041 and 15,310,426 shares issued and

        outstanding at March 31, 2011 and December 31, 2010, respectively

 

153

 

153

 
 

     Class B stock – 1,162,500 shares issued and outstanding at March 31, 2011

        and December 31, 2010, respectively

 

12

 

12

 
 

  Additional paid-in capital

 

117,268

 

115,815

 
 

Accumulated other comprehensive income

 

5,726

 

4,802

 
 

Retained earnings

 

10,060

 

11,290

 
 

    Total stockholders' equity

 

133,219

 

132,072

 
 

    Total liabilities and stockholders' equity

 

$175,526

 

$174,173

 
 

 
 
     



CHINDEX INTERNATIONAL, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(in thousands)


 
 

 

Three months ended March 31,

 
 

 

2011

 

2010

 
 

OPERATING ACTIVITIES

 

 

 
 

Net (loss) income

 

$                (1,230)

 

$                515

 
 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 
 

    Depreciation and amortization

 

1,137

 

980

 
 

    Provision for demonstration inventory

 

-

 

137

 
 

    Inventory write down

 

(1)

 

83

 
 

    Provision for doubtful accounts

 

432

 

495

 
 

    Loss on disposal of property and equipment

 

49

 

20

 
 

    Equity in loss of unconsolidated affiliate

 

147

 

-

 
 

    Deferred income taxes

 

(354)

 

548

 
 

    Stock based compensation

 

1,202

 

854

 
 

    Foreign exchange (gain) loss

 

(19)

 

825

 
 

    Amortization of debt issuance costs

 

2

 

2

 
 

    Amortization of debt discount

 

63

 

62

 
 

    Non-cash charge for change in fair value of warrants

 

-

 

(224)

 
 

Changes in operating assets and liabilities:

 

 

 
 

    Restricted cash

 

-

 

(340)

 
 

    Accounts receivable

 

264

 

6,476

 
 

    Accounts receivable from affiliates

 

8,060

 

-

 
 

    Inventories

 

(3)

 

(1,188)

 
 

    Other current assets and other assets

 

1,070

 

431

 
 

    Accounts payable, accrued expenses, other current liabilities and deferred revenue

 

5,001

 

(131)

 
 

    Accounts payable to affiliates

 

1,181

 

-

 
 

    Income taxes payable

 

(278)

 

(721)

 
 

Net cash provided by operating activities

 

16,723

 

8,824

 
 

INVESTING ACTIVITIES

 

 

 
 

    Purchases of short-term investments and CDs

 

(20,265)

 

-

 
 

    Proceeds from redemption of CDs

 

21,987

 

20,800

 
 

    Purchases of property and equipment

 

(8,064)

 

(3,243)

 
 

Net cash (used in) provided by investing activities

 

(6,342)

 

17,557

 
 

FINANCING ACTIVITIES

 

 

 
 

    Proceeds from debt, vendor financing and convertible debentures

 

-

 

(83)

 
 

    Repayment of debt, sinking fund deposits and vendor financing

 

-

 

(212)

 
 

    Repurchase of restricted stock for income tax withholding

 

-

 

(1)

 
 

    Proceeds from exercise of stock options and warrants

 

114

 

90

 
 

Net cash provided by (used in) financing activities

 

114

 

(206)

 
 

Effect of foreign exchange rate changes on cash and cash equivalents

 

98

 

719

 
 

Net increase in cash and cash equivalents

 

10,593

 

26,894

 
 

Cash and cash equivalents at beginning of period

 

32,007

 

20,293

 
 

Cash and cash equivalents at end of period

 

$                 42,600

 

$            47,187

 
 

 

 

 
 

Supplemental disclosures of cash flow information:

 

 

 
 

Cash paid for interest

 

$                           -

 

$                 641

 
 

Cash paid for taxes

 

$                   1,418

 

$              4,770

 
 

 

 

 
 

Non-cash investing and financing activities consist of the following:

 

 

 
 

Property and equipment additions included in accounts payable

 

$                   5,921

 

$                 532

 
 

Cashless exercise of warrants at fair value

 

$                           -

 

$                 800

 
 

Exercise of warrants at fair value

 

$                           -

 

$                (201)

 
 

 
 
     



The table below reconciles our consolidated net income to Adjusted EBITDA (in thousands).

 

 
 

 

 

 

 

 

 

 
 

 

 

 

 

Three Months Ended March 31,

 
 

 

 

 

 

 
 

 

 

 

 

2011

 

 

2010

 
 

 

 

 

 

 

 

 
 

Consolidated net income (loss) 

 

$(1,230)

 

 

$515

 
 

 

 

 

 

 

 

 
 

Adjustments:

 

 

 

 
 

 

Depreciation and amortization

 

1,137

 

 

880

 
 

 

Provision for income taxes

 

787

 

 

791

 
 

 

Interest expense 

 

103

 

 

199

 
 

 

Interest and other income / expense, net

 

(100)

 

 

(372)

 
 

 

Development, pre-opening and start-up expense

 

798

 

 

413

 
 

 

Equity in earnings (loss) of unconsolidated affiliate

 

147

 

 

-

 
 

 

Non-recurring charges for CML JV formation

 

400

 

 

-

 
 

 

Effect of change in corporate cost allocations

 

325

 

 

-

 
 

 

 

 

 

3,597

 

 

1,911

 
 

 

 

 

 

 

 

 
 

Adjustments to exclude Medical Products Division:

 

 

 

 
 

 

Medical Products revenue


 

-

 

 

(20,088)

 
 

 

Medical Products cost of products sold

 

-

 

 

14,553

 
 

 

Medical Products selling and operating expenses

 

-

 

 

5,579

 
 

 

 

 

 

-

 

 

44

 
 

 

 

 

 

 

 

 
 

Adjusted EBITDA 

 

$2,367

 

 

$2,470

 
 

 

 

 

 

 

 

 
 
             




 

 

Three months ended March 31,

 
 

 

 

2011

 

 

2010

 
 

Inpatient/Outpatient revenue percentages

 

 

 

 
 

 

Inpatient services as percent of net revenue

 

38%

 

 

40%

 
 

 

Outpatient services as percent of net revenue

 

62%

 

 

60%

 
 

 

 

100%

 

 

100%

 
 

 

 

 

 

 
 

 

 

 

 

 
 

 

 

Three months ended March 31,

 
 

 

 

2011

 

 

2010

 
 

Net revenue by service line:

 

 

 

 
 

 

Surgical services

 

17.8%

 

 

17.7%

 
 

 

OB/GYN

 

17.8%

 

 

19.7%

 
 

 

Pediatrics

 

7.6%

 

 

8.8%

 
 

 

Ancillary services

 

 

 

 
 

 

Laboratory

 

10.4%

 

 

10.5%

 
 

 

Radiology

 

11.3%

 

 

12.1%

 
 

 

Pharmacy

 

11.7%

 

 

11.8%

 
 

 

All other services

 

23.4%

 

 

19.4%

 
 

 

 

100%

 

 

100%

 
 
         


Source: Chindex International, Inc.
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