Chindex Intl (NASDAQ:CHDX)

First Quarter 2012 Financial Highlights

• Revenue from healthcare services increased 34% to $32.5 million from $24.2 million in the prior year period.
• Adjusted EBITDA rose to $5.5 million, compared to Adjusted EBITDA of $2.0 million in the prior year period.
• Income from operations was $625,000 compared to a loss from operations of $293,000 in the prior year period, primarily due to continuing growth in existing service lines.
• Net loss was $531,000, or $0.03 per diluted share, compared to a net loss of $1.2 million, or $0.08 per diluted share, in the prior year period.
• Development, pre-opening and start-up expense was $3.2 million compared to $798,000 in the prior year period.

Roberta Lipson, President and CEO of Chindex, commented, "I am pleased that we started 2012 with outstanding top-line results for the first quarter as revenue grew 34% year-over-year to$32.5 million. This performance was mainly attributable to increased traffic at our facilities inBeijing and Shanghai, as well as early contribution from our expansion projects. Adjusted EBITDA more than doubled in the quarter to $5.5 million, representing a 17% margin well in-line with our target profitability levels and a healthy profit margin for a hospital services company in an expansion phase."

"We believe Adjusted EBITDA metrics continue to be the most important quantitative measure for our operational performance in the context of our ongoing expansion activities and the ramp-up of new facilities. During this quarter, our GAAP bottom-line was impacted by two notable items. First, as expected, we incurred significant development expenses for our expansion projects inBeijing and Tianjin. In particular, lease and development expenses related to the initiation of construction of the Beijing Rehab project were substantial. Yet we are already starting to see returns from such investments in growth at the already operational new facilities. Our newly opened hospital in Tianjin, for example, is now fully staffed and has begun to contribute revenues in addition to the excellent revenue growth we are seeing at our newly expanded Beijing facility. The second major factor impacting our bottom line was the requirement to recognize a provision for income tax of $1.3 million during the period. This figure was primarily generated by development and start-up entities that cannot recognize tax benefits on losses generated during their ramp-up stage of development."

"Looking forward to the remainder of the year, we believe Chindex will benefit from favorable government policies, growing market demand, as well as revenue acceleration from our recently expanded facilities and services," Ms. Lipson continued. "As we have been building up our United Family Healthcare brand and strengthening our market positioning, we have witnessed strong growth from our local Chinese patient base, indicating success at diversification of our traditional patient base, which had been mainly comprised of expatriate patients. This reinforces our belief in the great potential of our expanding hospital network to serve more consumers in China's increasingly affluent metropolitan cities. Also encouragingly, new government policies allow Chinese physicians who are based at university hospitals to now also provide services at private hospitals without having to give up their academic positions. This significantly widens UFH's available talent pool of high-quality physicians and surgeons."

Over the past three years, there have been continuing and significant disruptions in the world financial markets including those in China. We have not experienced significant negative impacts to operating activities as a result of these events. We have taken steps to ensure the security of our cash and investment holdings through deposits with highly liquid, global banking institutions. Our daily operations generate significant operating cash flows and have not been dependent upon credit availability. Our patient base in our current facilities are by and large considered to be in the wealthiest segment of society, for whom healthcare spending represents a very small percentage of their income and therefore is expected to be less impacted by an economic slowdown and to the extent their assets are affected, this will likely not impact their decision making on healthcare purchases. Our current expansion projects as described above are expected to be funded with existing cash and credit facilities as described above, provided that there can be no assurances that such facilities will be available or sufficient, that the preconditions to disbursements under the facilities will be satisfied or that, in any event, disbursements under the IFC Facility will be achieved.

Over the next twelve months we anticipate total capital expenditures of up to $40 million related to the maintenance and expansion of our business operations. The Beijing and Shanghai operating hospital and clinic facilities, we plan maintenance and organic growth expenditures of up to $4 million for each facility. United Family Healthcare network development plans include up to $2 million in expenditures primarily related to network IT investment. Expansion projects are expected to account for up to $30 million in expenditures. Specifically, we anticipate final payments related to the expansion of the Beijing hospital main campus and New Hope clinic to be approximately $9 million; final payments related to the opening of the Tianjin hospital to be approximately $5 million; we plan for expenditures of approximately $16 million for the Beijing Rehabilitation project. We intend to fund these expenditures through corporate capital reserves and cash flow from operations. Registered foreign debt is expected to be secured by each operating foreign invested joint venture upon obtaining required governmental and credit approvals.

In addition, as described above, we had entered into the IFC facility, which is currently not available, for the purpose of funding the expansion of our United Family healthcare network. The expansion projects in the Beijing, Shanghai, Tianjin and Guangzhou markets are underway in various states of progress. In particular, due to the timing of the development process for the planned joint venture hospital in Guangzhou, significant expenditures for that project are not expected until 2013 and beyond.

Based on the foregoing, we believe that our existing capital resources are sufficient to fund our working capital and capital expenditure requirements for the next 12 months, although there can be no assurances to this effect. We will require financing arrangements to meet our capital expenditures beyond this period.

Fourth Quarter 2011 Financial Highlights

• Revenue from healthcare services increased 22% to $31.9 million from $26.1 million in the prior year period.
• Adjusted EBITDA rose to $6.2 million, compared to Adjusted EBITDA of $4.3 million in the prior year period.
• Income from operations was $2.1 million compared to $2.8 million in the prior year period, primarily due to ramp up of new services and facilities.
• Net income was $1.2 million, or $0.07 per diluted share, compared to net income of $1.7 million, or $0.10per diluted share, in the prior year period.
• Development, pre-opening and start-up expense was $2.6 million compared to $675,000 in the prior year period.

Roberta Lipson, President and CEO of Chindex, commented, "We had a strong fourth quarter of 2011, with revenue growing 22% to $31.9 million year over year. Adjusted EBITDA increased 44% in the quarter to $6.2 million, representing a 19% adjusted EBITDA margin. For the full year of 2011, we are pleased to deliver 20% year over year growth during our first year as a pure play healthcare services company. This has been a year focused on expansion through strengthening traffic at our existing facilities and building out new facilities. Our revenue performance has begun to reflect contribution from our efforts, with growth rates rising in the second half of 2011 to the mid-teens and low-twenties."

"Looking forward to 2012, Chindex will remain dedicated to bringing our unique experience of premium, private healthcare to more consumers, across more service offerings and in more locations throughout China. We expect revenue growth to further accelerate to the mid-twenties, driven by strong demand in existing facilities as well as growing contribution from new facility openings, and adjusted EBITDA margin to remain stable in the mid-teens. Again, we stress that we believe our adjusted EBITDA performance is the best metric for judging our operational performance throughout this period of intensive hospital network expansion."

"Overall, the UFH network is well-positioned as a leading provider of premium healthcare services in Beijing,Shanghai, Tianjin and Guangzhou. These affluent metropolitan cities with rapid economic development, growing international populations and widening target patient bases offer significant room for expansion. Moreover, we believe our plans are well-timed with increasingly favorable policies and growing market demand to achieve increasing top-line growth and steady profitability."

"We would like to also help investors better understand contributions from our Chindex Medical Limited joint venture. Late in the fourth quarter, CML shipped a daVinci surgical robot system which could not be recognized as revenue in 2011 under CML's accounting policy for equipment sales. The associated revenue and gross margin will not be recognized until 2012 when the system is installed. As a result, contribution from CML during the fourth quarter was immaterial. Nevertheless, we are pleased with CML's first year of operations, which contributed significantly to our bottom line. In the coming year, we believe CML's progress in obtaining SFDA approval and initiating marketing activities for new imaging products for sale in the China market and expansion of its manufacturing base through strategic capital investments in its dental business will continue to drive growth. For the near term, however, we expect our contribution from CML to remain steady but moderate in growth."

BETHESDA, Md., December 28, 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 the appointment of Lawrence Pemble as Chief Operating Officer (while retaining his position as Chief Financial Officer of the Company's joint venture, Chindex Medical Limited) and Robert C. Low as Chief Financial Officer (while retaining his positions as Chief Accounting Officer and Controller), effective January 1, 2012.

Mr. Pemble holds a B.S. in Business and Accounting from the University of Phoenix, a B.A. in Chinese Studies and Linguistics from the State University of New York at Albany and an MBA from the University of Michigan. Mr. Low is a Certified Public Accountant and holds a B.A. in Economics from the University of Pennsylvania and an MBA from the University of Houston.

The changes are part of the Company's increased focus on strategic execution and the optimization of management's experience and resources. Roberta Lipson, President and CEO of Chindex, commented, "We are excited to announce an expanded leadership role for Mr. Pemble, who has extensive expertise in on-the-ground operations and the Company's expansion in China, while Mr. Low moves up to lead our financial functions."

Third Quarter 2011 Results

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.

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."

For the Three Months Ended December 31, 2010:

• Revenue increased 7.7% to $50.0 million from $46.5 million in the prior year period.
• Revenue from Healthcare Services increased 21% to $26.1 million, from $21.6 million in the prior year period. 
• Net income for the quarter ended December 31, 2010 was $1.7 million, or $0.10 per diluted share, compared to net income of $3.9 million, or $0.24 per diluted share, in the prior year period.  

Roberta Lipson, President and CEO of Chindex, stated, "Our 21 percent year over year growth in healthcare services reflects ongoing demand for services across our network as well as validation of the UFH brand in newer locations such as Shanghaiand Guangzhou. Entering 2011 as a pure play healthcare services company, we are more focused than ever before on our expansion opportunities whether they be new geographic locations or rolling out new service offerings within the UFH network. We are excited about the formation of the Chindex Medical Limited joint venture with our partners at FosunPharma.  We believe Chindex Medical Limited is an exciting growth opportunity as the medical device markets in China continue to grow at a rapid pace."

Fiscal year 2011 second quarter:

• Revenue in the second quarter of fiscal 2011 increased 18.6% to $45.2 million from $38.1 million in the second quarter of fiscal 2010.

• Net income in the second quarter of fiscal 2011 was $3.2 million, or $0.20 per diluted share, compared to net income of $538,000, or $0.03 per diluted share, in the second quarter of fiscal 2010 vs. analyst estimates of $0.16.

"Our performance this quarter reflects ongoing demand for services across our network. Volumes in Shanghai and Guangzhou continue to validate that we are replicating the UFH brand in these newer locations. We are on-track to more than double our capacity in the Beijing hospital by calendar year-end, and we intend to start accepting patients into our New Hope cancer facility in the next several weeks."

"In the second quarter, we witnessed strong demand for our imaging products, despite systemic headwinds relating to temporary regulatory uncertainty, which we believe could be alleviated in the coming months. Strict attention to optimizing our purchase behavior helped drive profitability this quarter, in tandem with our revenue performance. We continue to take a long-term view that the medical device market in China is extremely compelling."