BEIJING, March 20, 2012 /PRNewswire-Asia-FirstCall/-- Dehaier Medical Systems Ltd. (Nasdaq: DHRM) ("Dehaier" or the "Company"), an emerging leader in the development, assembly, marketing and sale of medical devices and homecare medical products, today announced its financial results for the fourth quarter and year ended December 31, 2011.
Mr. Ping Chen, Chief Executive Officer of Dehaier Medical, stated, "We were very pleased to report steady growth during 2011 as we continue to slowly transition from traditional domestic distribution of medical devices to diversified sales of homecare medical devices, both domestically and internationally. Within China, our homecare medical products, focused primarily on sleep disorder and respiratory ailments, continued to gain traction among Chinese consumers. We also have worked diligently to secure larger, State-level contracted business, as evidenced by our cooperation with China Developmental Bank for healthcare infrastructure projects in Hunan and Anhui provinces. We also worked to establish the first oxygen filling facility and service center for home oxygen therapy service in Beijing, which represents the initial step of expansion into home oxygen therapy treatment domestically."
Mr. Chen continued, "We also recently expanded outside of China, and invested time and resources during the second half of 2011 on increasing our geographic footprint. We received CE Mark certification on three of our products, our Medical Air Compressor, Oxygen Concentrator, and Sleep Diagnostic Devices. We enhanced our sales and distribution channels in international markets, most notably signing with three companies to distribute Dehaier's DHR-5L oxygen concentrators in Romania, which marked Dehaier's first entry into the European homecare medical product market. Finally, we recently established a wholly-owned subsidiary in Illinois, as part of a long-term goal of establishing sales channels in North America. Because of these strategic growth initiatives, we incurred expenses without corresponding revenue; however, as we enter 2012 we believe that these developments will begin to drive a more diverse and robust revenue stream to the Company."
Operating Highlights for Fiscal Year 2011
Financial Review
Ms. Aileen Qi, Chief Financial Officer of Dehaier, commented, "We were pleased with our financial performance during the year, as we continued to gain traction with direct sales of our respiratory and oxygen homecare products and participated in frequent bids for government centralized procurement projects. Our 2011 fourth quarter and year end results were affected by Dehaier reporting a non-cash provision for doubtful accounts of approximately $0.86 million. During 2011, we experienced delays in payments from certain distributors, largely due to difficult market conditions that affected these distributors' businesses. After a thorough review, we changed the accounting estimate on the allowance for doubtful accounts. We are also continuing to work with our distributors to collect receivables efficiently and believe that we will be able to collect on these receivables in the coming quarters. We continue to expand our accounts collection department to seek prompt payment from customers and increase the likelihood that these internal payment periods are met and continue to focus on shortening our days-sales-outstanding every quarter. Despite this provision, we reported a year of strong profitability, and would have reported a profit in the fourth quarter prior to this accounting correction. We continue to focus on cost-effective expansion, and expect to see long-term benefits from the gradual shift to selling of our own proprietary product line."
Fourth Quarter 2011 Financial Highlights
2011 Financial Review
Balance Sheet Highlights
(in millions except for percentages) |
| 12/31/2011 |
| 12/31/2010 | % Change |
Cash and Cash Equivalents | $ | 3.7 | $ | 5.9 | -37.6% |
Working Capital |
| 27.0 |
| 22.6 | 19.5% |
Total Long-term Debt |
| 0 |
| 0 | N/A |
Stockholders' Equity |
| 30.2 |
| 25.8 | 17.0% |
The Company believes that its currently available working capital of $27.0 million, including cash of $3.7 million, should be adequate to meet its anticipated cash needs and sustain its current operations for at least 12 months.
Outlook for 2012
Mr. Chen concluded, "We continue to see strong market trends on the consumer level in the homecare medical device sector in China and expect government expansion and vigorous promotion of healthcare projects by the newly-released state policies over the next five years. We remain confident about the long-term growth prospects for the healthcare sector in China and look forward to continuing to expand our unique product lines and distribution abilities throughout the country. We are also supported by a moderate balance sheet, with $27.0 million in working capital and no long-term debt. As a result, we feel that the Company is in an excellent position to expand into new markets."
Conference Call and Webcast
Dehaier's management team will host a conference call for investors tomorrow morning on Tuesday, March 20, 2012 at 8:30 a.m. ET.
Interested parties may access the call by dialing:
Live Participant Dial In (Toll Free): | 877-407-8033 |
Live Participant Dial In (International): | 001-201-689-8033 |
For those unable to participate, the call will be available as a live, listen-only webcast on the Company's website at http://www.dehaier.com.cn/IR/index.html or by clicking the following link:
http://www.investorcalendar.com/IC/CEPage.asp?ID=167810
About Dehaier Medical Systems Ltd.
Dehaier is an emerging leader in the development, assembly, marketing and sale of medical products, including respiratory and oxygen homecare medical products. The company develops and assembles its own branded medical devices and homecare medical products from third-party components. The company also distributes products designed and manufactured by other companies, including medical devices from IMD (Italy), HEYER (Germany), Timesco (UK) and eVent Medical (US). Dehaier's technology is based on six patents and five software copyrights; additionally Dehaier has two pending software copyrights and proprietary technology. More information may be found at http://www.dehaier.com.cn.
Forward-looking Statements
This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events, government approvals or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, future developments in payment for and demand for medical equipment and services, implementation of and performance under the joint venture agreement by all parties, and other risks contained in reports filed by the company with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.
Contact Us
Dehaier Medical Systems Limited
Surie Liu
+86 10-5166-0080
lius@dehaier.com.cn
Dehaier Medical Systems Limited
Tina He
+86 10-5166-0080
hexw@dehaier.com.cn
The Equity Group Inc.
Katherine Yao
+86 10-6587-6435
kyao@equityny.com
In America
The Equity Group Inc.
Adam Prior
(212) 836-9606
aprior@equityny.com
DEHAIER MEDICAL SYSTEMS LIMITED AND AFFILIATE | |||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
|
|
|
| ||||
| For the quarter ended |
| For the years ended | ||||
| 2011 |
| 2010 |
| 2011 |
| 2010 |
| US$ |
| US$ |
| US$ |
| US$ |
Revenue | 5,415,064 |
| 6,667,691 |
| 21,639,283 |
| 19,598,460 |
Costs of revenue | (3,594,955) |
| (4,204,953) |
| (13,696,743) |
| (11,981,820) |
|
|
|
|
|
|
|
|
Gross profit | 1,820,109 |
| 2,462,737 |
| 7,942,540 |
| 7,616,640 |
|
|
|
|
|
|
|
|
Service income | 66,587 |
| 65,225 |
| 281,656 |
| 339,379 |
Service expenses | (30,506) |
| (39,191) |
| (113,861) |
| (148,016) |
General and administrative expense | (1,206,793) |
| (381,681) |
| (2,620,845) |
| (1,257,520) |
Selling expense | (695,536) |
| (587,136) |
| (1,877,303) |
| (1,421,415) |
|
|
|
|
|
|
|
|
Operating Income (loss) | (46,139) |
| 1,519,955 |
| 3,612,187 |
| 5,129,068 |
|
|
|
|
|
|
|
|
Financial expenses (including interest expense) | (29,023) |
| (27,353) |
| (86,712) |
| (125,764) |
Other income | 34,965 |
| 455,950 |
| 34,965 |
| 455,950 |
Other expense | (232) |
| - |
| (232) |
| - |
Change in fair value of warrants liability | 44,282 |
| (162,915) |
| 221,640 |
| (48,109) |
|
|
|
|
|
|
|
|
Income before provision for income tax and non-controlling interest | 2,660 |
| 1,785,638 |
| 3,781,848 |
| 5,411,145 |
|
|
|
|
|
|
|
|
Provision for income tax | (27,724) |
| (306,285) |
| (656,297) |
| (850,034) |
|
|
|
|
|
|
|
|
Net income (loss) | (25,064) |
| 1,479,353 |
| 3,125,551 |
| 4,561,111 |
|
|
|
|
|
|
|
|
Non-Controlling interest in income | (11,040) |
| (6,841) |
| (22,431) |
| (21,401) |
|
|
|
|
|
|
|
|
Net income (loss) attributable to Dehaier Medical Systems Limited | (36,104) |
| 1,472,512 |
| 3,103,120 |
| 4,539,710 |
|
|
|
|
|
|
|
|
Net income (loss) | (25,064) |
| 1,479,353 |
| 3,125,551 |
| 4,561,111 |
|
|
|
|
|
|
|
|
Other comprehensive income |
|
|
|
|
|
|
|
Foreign currency translation adjustments | 335,975 |
| 332,779 |
| 1,174,044 |
| 744,829 |
|
|
|
|
|
|
|
|
Comprehensive Income | 127,388 |
| 1,812,132 |
| 4,299,595 |
| 5,305,940 |
Comprehensive income attributable to the non-controlling interest | (28,515) |
| (24,031) |
| (85,442) |
| (64,902) |
|
|
|
|
|
|
|
|
Comprehensive income attributable to Dehaier Medical Systems Limited | 98,873 |
| 1,788,101 |
| 4,214,153 |
| 5,241,038 |
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
-Basic | (0.01) |
| 0.33 |
| 0.69 |
| 1.12 |
-Diluted | (0.01) |
| 0.32 |
| 0.69 |
| 1.09 |
Weighted average number of common shares used in computation |
|
|
|
|
|
|
|
-Basic | 4,516,164 |
| 4,500,000 |
| 4,514,329 |
| 4,043,836 |
-Diluted | 4,516,164 |
| 4,657,500 |
| 4,514,329 |
| 4,153,438 |
DEHAIER MEDICAL SYSTEMS LIMITED AND AFFILIATE | |||
CONSOLIDATED BALANCE SHEETS | |||
|
| ||
| December 31, | ||
| 2011 |
| 2010 |
| US$ |
| US$ |
|
|
|
|
ASSETS |
|
|
|
CURRENT ASSETS: |
|
|
|
Cash and cash equivalents | 3,694,486 |
| 5,923,386 |
Accounts receivable | 12,159,842 |
| 9,112,077 |
Other receivables | 2,522,136 |
| 3,164,423 |
Prepayment and other current assets | 6,714,001 |
| 5,300,825 |
Inventories, net | 5,532,311 |
| 6,374,363 |
Tax receivable | 888,452 |
| 3,518,919 |
Deferred tax asset | 118,030 |
| - |
Total Current Assets | 31,629,258 |
| 33,393,993 |
|
|
|
|
Property and equipment, net | 3,348,533 |
| 3,488,947 |
Total Assets | 34,977,791 |
| 36,882,940 |
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
CURRENT LIABILITIES: |
|
|
|
Short-term borrowings | 1,585,890 |
| 1,514,620 |
Accounts payable | 32,925 |
| 29,318 |
Advances from customers | 303,000 |
| 269,189 |
Accrued expenses and other current liabilities | 349,158 |
| 330,601 |
Taxes payable | 2,042,048 |
| 8,327,708 |
Warranty obligation | 334,680 |
| 301,464 |
Due to officer | - |
| 2,358 |
Total Current Liabilities | 4,647,701 |
| 10,775,258 |
|
|
|
|
OTHER LIABILITIES |
|
|
|
Warrants liability | 96,469 |
| 318,109 |
Total Liabilities | 4,744,170 |
| 11,093,367 |
Commitments and Contingency |
|
|
|
Equity |
|
|
|
Common shares, $0.002731 par value, 18,307,038 shares authorized, 4,560,000 and 4,500,000 shares issued and | 12,454 |
| 12,290 |
Additional paid in capital | 13,281,374 |
| 13,137,085 |
Retained earnings | 12,941,572 |
| 9,838,452 |
Accumulated other comprehensive income | 2,585,488 |
| 1,474,455 |
Total Dehaier Medical Systems Limited shareholders' equity | 28,820,888 |
| 24,462,282 |
Non-controlling interest | 1,412,733 |
| 1,327,291 |
Total equity | 30,233,621 |
| 25,789,573 |
Total liabilities and equity | 34,977,791 |
| 36,882,940 |
DEHAIER MEDICAL SYSTEMS LIMITED AND AFFILIATE | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
|
|
| ||
|
| For the years ended December 31, | ||
|
| 2011 |
| 2010 |
|
| US$ |
| US$ |
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
Net income |
| 3,125,551 |
| 4,561,111 |
Adjustments to reconcile net income to net cash used in operating activities |
|
|
|
|
Stock-based compensation expense |
| 144,453 |
| - |
Depreciation and amortization |
| 450,518 |
| 365,336 |
Change in fair value of warrants liability |
| (221,640) |
| 318,109 |
(Recovery of) Provision for doubtful accounts |
| 749,280 |
| (18,311) |
(Recovery of) Provision for inventory obsolescence |
| - |
| (5,756) |
Gain on sale of equipment |
| - |
| (3,894) |
Provision for warranty reserve |
| 37,303 |
| 122,709 |
Deferred tax benefit |
| (118,030) |
| - |
Changes in assets and liabilities: |
|
|
|
|
Increase in accounts receivable |
| (3,797,045) |
| (2,202,475) |
Increase in prepayments and other current assets |
| (1,413,176) |
| (3,609,438) |
Decrease (Increase) in other receivables |
| 642,287 |
| (1,665,312) |
Decrease (Increase) in inventories |
| 842,052 |
| (4,042,481) |
Decrease (Increase) in tax receivable |
| 2,630,467 |
| (2,156,547) |
Increase (Decrease) Increase in accounts payable |
| 3,607 |
| (64,452) |
Increase in advances from customers |
| 33,811 |
| 94,936 |
(Decrease) Increase in accrued expenses and other current liabilities |
| 14,470 |
| (5,811) |
(Decrease) Increase in tax payable |
| (6,285,660) |
| 3,334,321 |
Net cash used in operating activities |
| (3,161,752) |
| (4,977,955) |
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
Proceeds from sale of equipment |
| - |
| 10,342 |
Capital expenditures and other additions |
| (153,061) |
| (887,541) |
Advances to related parties |
| (2,358) |
| (1,503) |
Net cash used in investing activities |
| (155,419) |
| (878,702) |
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
Proceeds from bank loan |
| 1,542,680 |
| - |
Repayment of bank loan |
| (1,533,604) |
| - |
Net proceeds from issuance of common stock |
| - |
| 9,944,207 |
Net cash provided by financing activities |
| 9,076 |
| 9,944,207 |
|
|
|
|
|
Effect of exchange rate fluctuations on cash and cash equivalents |
| 1,079,195 |
| 684,115 |
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
| (2,228,900) |
| 4,771,665 |
|
|
|
|
|
Cash and cash equivalents at beginning of year |
| 5,923,386 |
| 1,151,721 |
|
|
|
|
|
Cash and cash equivalents at end of year |
| 3,694,486 |
| 5,923,386 |
|
|
|
|
|
Supplemental cash flow information |
|
|
|
|
Income tax paid |
| 1,906,763 |
| 24,813 |
Interest paid |
| 82,136 |
| 70,343 |