Message #7 From:
NewsBot Date: November 13, 2006 01:00:00 PM
CMED News China Medical Reports Second Quarter Unaudited Financial Results for the Fiscal Year Ending March 31, 2007
BEIJING--(BUSINESS WIRE)--China Medical Technologies, Inc. (the "Company") (Nasdaq: CMED), a
leading China-based medical device company that develops, manufactures
and markets tumor therapy systems and advanced in-vitro diagnostic
systems, today announced its unaudited financial results for the second
quarter of 2006 (“2Q FY2006”).
The Company’s 2006 fiscal year ends March 31,
2007, which makes the quarter ended September 30, 2006, the Company’s
second quarter.
2Q FY2006 Highlights
Net revenues increased by 49.2% year-over-year to RMB131.4 million
(US$16.6 million).
Net income increased by 67.0% year-over-year to RMB71.6 million
(US$9.1 million).
Diluted earnings per ADS* were RMB2.62 (US$0.33) for the quarter.
*1 ADS = 10 ordinary shares
“We had a very solid quarter, and we were
happy to see the continued growth in our business,”
commented Mr. Xiaodong Wu, Chairman and Chief Executive Officer of China
Medical. “In our ECLIA business, our results
were particularly strong, with revenues increasing 79.1% compared to the
equivalent quarter last year and 20.1% compared to the first quarter of
this fiscal year. In October, we released an upgraded version of our
semi-automatic system and we think this will help sustain the growth of
our diagnostic business. Additionally, we have also recently completed
the development of two HIV diagnostic reagents and are now waiting for
approval from the State Food and Drug Administration of China (“SFDA”)
to start selling the products. We aim to broaden our reagent offering to
a total of 70 kits within the next 12 months, which will make us one of
the leading providers of chemiluminescence immunoassay reagents in the
industry worldwide”
Financial Results
China Medical reported net revenues of RMB131.4 million (US$16.6
million) for the 2Q FY2006, representing a 49.2% increase from
corresponding period in 2005 and a 44.5% increase from the previous
quarter.
The Company’s revenues are generated from two
product lines, HIFU tumor therapy systems and ECLIA diagnostic systems.
ECLIA system sales include sales of ECLIA analyzers and reagent kits.
HIFU tumor therapy system sales for the 2Q FY2006 were RMB80.0 million
(US$10.1 million), representing a 34.7% increase from the corresponding
period in 2005 and a 66.3% increase from the previous quarter. The
year-over-year growth in this sector was primarily driven by an increase
in unit sales resulting from an increased level of awareness and
acceptance of the HIFU tumor therapy system in the medical community in
China. A slight price increase in September 2006 also contributed to
revenue growth. The sequential quarter growth was primarily due to the
seasonality in sales of this medical device. Historically, sales of HIFU
units start to pick up after the June quarter every year when hospitals
in China become active again in procuring large capital equipment.
ECLIA system sales for the 2Q FY2006 were RMB 51.4 million (US$6.5
million), representing a 79.1% increase from the corresponding period in
2005 and a 20.1% increase from the previous quarter. Both the
year-over-year and sequential growth in the ECLIA system sales reflects
rapid acceptance of the ECLIA technology in the medical community in
China and lead to an increase in sales of reagent kits. The addition of
the new reagent kits over the last 12 months from 27 to 56 broadened the
Company’s reagent portfolio, which in turn
helped to drive sales of analyzers.
Gross margin increased to 71.9% as compared to 69.8% and 70.7% for the
corresponding quarter in 2005 and previous quarter, respectively. This
improvement in gross margin is primarily due to the price increase that
was passed through for the Company’s HIFU
tumor therapy system and a higher revenue contribution from ECLIA
reagents.
Research and development expenses were RMB8.4 million (US$1.1million),
representing a significant year-over-year increase and a 42.9%
sequential increase primarily due to a medical study conducted in
partnership with the Ministry of Health of China (the “MOH”)
and pre-clinical trials conducted in the United States. The MOH
initiative focuses on the clinical benefits of the Company’s
HIFU tumor therapy system used in combination with conventional cancer
treatment. The U.S. pre-clinical trials are part of the process to
obtain regulatory approval for the Company’s
HIFU therapy system in the United States.
Sales and marketing expenses were RMB4.5 million (US$0.6 million),
representing a 13.8% year-over-year increase and a 7.1% sequential
increase primarily due to promotional activities for the Company’s
products.
General and administrative expenses were RMB12.0 million (US$1.5
million), representing a 74.3% year-over-year increase and a 4.3%
sequential increase primarily due to an increase in headcount as the
Company expanded its operations and public company expenses incurred
after the Company’s listing in August 2005.
Interest income was RMB8.0 million (US$1.0 million), representing a
significant increase from the corresponding period in 2005 but only a
2.9% increase from the previous quarter. The year-over-year increase was
primarily due to interest income generated from the net proceeds
received from the Company’s initial public
offering in August 2005.
Other income was RMB1.1 million (US$0.1 million), which related to the
government grant to support the Company’s
development of ECLIA products.
Income tax expense was RMB7.0 million (US$0.9 million). Despite a
substantial increase in taxable income, the income tax expense decreased
slightly from the corresponding period in 2005. This decrease was a
result of an income tax concession granted by the PRC tax authorities in
February 2006. The income tax rate for the Company’s
PRC subsidiary was reduced from 15% to 10% starting retrospectively in
January 2005 and ending in December 2007. As a result of the tax
concession, the Company changed the tax rate used to record its income
tax expense. The estimated effective tax rate for 2Q FY2006 was 8.9%,
which is close to 9.1% from the previous quarter.
Net income was RMB71.6 million (US$9.1 million), representing a 67.0%
increase from the corresponding period in 2005 and a 56.0% increase from
the previous quarter.
As of September 30, 2006, China Medical’s
cash balance was RMB937.2 million (US$118.6 million). Net operating cash
flow and capital expenditures for the 2Q FY2006 were RMB86.4 million
(US$10.9 million) and RMB12.1 million (US$1.5 million), respectively.
The increase in capital expenditures was mainly related to the
construction of additional manufacturing facilities to meet the
increased market demand for reagent kits.
For the convenience of readers, certain RMB amounts have been translated
into U.S. dollars at the rate of RMB7.9040 to US$1.00, the noon buying
rate in the City of New York for cable transfers of RMB per U.S. dollar
as certified for customs purposes by the Federal Reserve Bank of New
York, as of Friday, September 29, 2006.
Outlook for FY 2006
The Company maintains its previously announced financial targets for
FY2006 based on current and market operating conditions. The estimated
range of annual net revenue target for FY2006 remains between RMB521
million (US$65.9 million) and RMB533 million (US$67.4 million) and the
estimated range of annual net income target for FY2006 remains between
RMB263 million (US$33.3 million) and RMB271 million (US$34.3 million).
Given the current outstanding shares of 27.36 million equivalent ADS,
the estimated range of earnings per ADS target remains between RMB 9.61
(US$1.22) and RMB9.90 (US$1.25).
(Note – The changes in the U.S. dollar
figures are the result of the application of the exchange rate between
US dollar and RMB on September 29, 2006.)
Conference Call
China Medical’s management team will host a
conference call at 6:00 p.m. Eastern Time on November 13, 2006 (or 7:00
a.m. Beijing/Hong Kong time on November 14, 2006) 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 +1-866-383-8108
- International dial-in number +1-617-597-5343
Passcode CMEDCALL.
A live webcast of the conference call will be available on the investor
relations section of the Company’s website at www.chinameditech.com.
A replay of the 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 6:00 p.m. Eastern Time, November 14, 2006.
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 17516986
Safe Harbor Statement
This press release contains forward-looking statements. These statements
constitute “forward-looking”
statements within the meaning of Section 27A of the Securities Act of
1933, as amended, and 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 outlook for FY2006 and the
quotations from management in this press release, as well as China
Medical's strategic and operational plans, 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 China Medical’s
filings with the U.S. Securities and Exchange Commission, including its
annual report on Form 20-F. China Medical 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.
About China Medical Technologies, Inc.
China Medical Technologies, Inc. is a China-based medical device company
that develops, manufactures and markets high intensity focused
ultrasound (“HIFU”)
tumor therapy systems for the treatment of cancerous and benign tumors.
China Medical believes that it is a leader in the design and development
of HIFU tumor therapy devices in China. In addition, China Medical
believes that it is the first China-based company to offer an advanced
in-vitro diagnostics system, or IVD system, using enhanced
chemiluminescence, (“ECLIA”)
technology to detect and monitor various diseases and disorders through
laboratory evaluation and analysis of blood, urine or other body fluids.
China Medical Technologies, Inc.
Unaudited Condensed Consolidated Balance Sheets
As of
March 31, 2006
June 30, 2006
September 30, 2006
RMB
RMB
RMB
US$
(in thousands)
Assets
Current assets
Cash and cash equivalents
843,791
877,873
937,241
118,578
Trade accounts receivable
155,751
168,301
180,352
22,818
Prepayments and other receivables
26,260
27,985
31,806
4,024
Inventories
10,380
14,028
17,174
2,173
Total current assets
1,036,182
1,088,187
1,166,573
147,593
Property, plant and equipment, net
105,570
114,445
124,493
15,751
Intangible assets, net
224,744
221,015
217,285
27,490
Lease prepayments, net
7,811
7,763
7,716
976
Deferred income taxes
1,534
1,286
1,038
131
Total assets
1,375,841
1,432,696
1,517,105
191,941
Liabilities
Current liabilities
Trade accounts payable
33,833
33,823
37,120
4,696
Accrued liabilities and other payables
73,872
84,516
94,010
11,894
Income tax payable
21,602
23,123
28,870
3,653
Total current liabilities
129,307
141,462
160,000
20,243
Shareholders’ equity
Share capital
225,125
225,125
225,125
28,482
Ordinary shares US$0.1 par value: 500,000,000 authorized;
273,600,001 issued and fully paid as of March 31, June 30 and
September 30, 2006
Additional paid-in capital
739,936
740,042
740,362
93,669
General reserve fund
22,275
22,275
22,275
2,818
Unearned compensation
(226)
-
-
-
Accumulated other comprehensive loss –
cumulative translation adjustments
(5,737)
(7,287)
(13,383)
(1,693)
Retained earnings
265,161
311,079
382,726
48,422
Total shareholders’ equity
1,246,534
1,291,234
1,357,105
171,698
Total liabilities and shareholders’ equity
1,375,841
1,432,696
1,517,105
191,941
China Medical Technologies, Inc.
Unaudited Condensed Consolidated Statements of Income
For the Three Months Ended
September 30, 2005
June 30, 2006
September 30, 2006
RMB
RMB
RMB
US$
(in thousands except for per ADS information)
Revenues, net
88,088
90,948
131,411
16,626
Cost of revenues
(26,569)
(26,617)
(36,973)
(4,678)
Gross profit
61,519
64,331
94,438
11,948
Operating expenses:
Research and development
(1,668)
(5,861)
(8,377)
(1,060)
Sales and marketing
(3,916)
(4,161)
(4,457)
(564)
General and administrative
(6,899)
(11,528)
(12,026)
(1,521)
Total operating expenses
(12,483)
(21,550)
(24,860)
(3,145)
Operating income
49,036
42,781
69,578
8,803
Interest income
1,051
7,743
7,970
1,008
Other income
31
-
1,100
139
Income before tax
50,118
50,524
78,648
9,950
Income tax expense
(7,210)
(4,606)
(7,001)
(886)
Net income
42,908
45,918
71,647
9,064
Earnings per ADS – basic
1.79
1.68
2.62
0.33
- diluted (1)
1.78
1.68
2.62
0.33
Weighted average number of ADS – basic
24,031,304
27,360,000
27,360,000
27,360,000
- diluted (1)
24,046,441
27,385,701
27,381,116
27,381,116
(1) Diluted earnings per ADS for the periods ended September 30, 2005
and 2006 and June 30, 2006 have been computed to give effect to an
