Chindex International, Inc. Reports Financial Results for the Third Quarter and First Nine Months of 2012

 Chindex International, Inc. Reports Financial Results for the Third Quarter
                        and First Nine Months of 2012

3Q12 Revenue up 29% to $37.3 Million

3Q12 Adjusted EBITDA up 40% to $6.0 Million

Reaffirming Full Year Revenue Guidance to be between $145 Million to $152
Million

Reaffirming Full Year Adjusted EBITDA Margin at an Upper-teen Percentage

PR Newswire

BETHESDA, Md., Nov. 7, 2012

BETHESDA, Md., Nov. 7, 2012 /PRNewswire/ -- 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 third quarter and first nine months of
2012 ended September 30, 2012.

Third Quarter 2012 Financial Highlights

  o Revenue from healthcare services increased 29% to $37.3 million from $28.8
    million in the prior year period.
  o Adjusted EBITDA rose by 40% to $6.0 million, from Adjusted EBITDA of $4.3
    million in the prior year period.
  o Development, pre-opening and start-up expense was $2.7 million compared to
    $2.4 million in the prior year period.
  o Income from operations was $1.5 million, compared to $490,000 in the prior
    year period.
  o Net loss was $664,000, or $(0.04) per diluted share, compared to net
    income of $315,000, or $0.02 per diluted share, in the prior year period.

Roberta Lipson, President and CEO of Chindex, commented, "We are pleased to
see continuously strong momentum on the top line and adjusted EBITDA as
Beijing and Shanghai markets recorded robust growth in patient volumes.
Revenue grew 29% year-over-year to $37.3 million--a record for the generally
slower third quarter and putting us well on track to deliver high twenties to
low thirties revenue growth for the full year. Adjusted EBITDA grew 40%
year-over-year to $6.0 million, representing a 16% margin. This quarter, our
GAAP bottom line was affected by not only continuously high development
expenses and provision of income tax, but also a loss from our equity
investment in Chindex Medical Limited.

"During the third quarter, we continued to move development projects forward
across the Beijing, Shanghai and Tianjin markets. Construction remains on
schedule for Beijing Rehabilitation Hospital and should be complete by the
first quarter of 2013. Our new clinic in Beijing's Central Business District
(CBD), where many high-income Chinese and expatriate professionals work and
live, is nearing completion and is expected to start operations by the end of
this year. We have also been broadening and deepening our human resources to
support growth in revenues and capabilities. For example, we recently welcomed
Dr. Hu Dayi, one of China's most renowned cardiologists and medical academics,
and Dr. Ling Feng, a world-famous neurosurgeon and a pioneer of interventional
neuroradiology, to join UFH's world-class medical team. The unique and
expanding quality and abilities of UFH's staff is not only supporting our
rapid growth but reinforcing our competitive positioning as well.

"Looking forward to the remainder of the year, we anticipate growing market
demand and expanded facilities and services to continue driving robust revenue
growth," Ms. Lipson continued. "We reaffirm previous guidance for revenue
expansion and EBITDA margin for the full year of 2012. We expect our topline
to reach to approximately $145 to $152 million, representing a year-over-year
percentage growth rate in the high-twenties to mid-thirties. Adjusted EBITDA
margin is expected to remain in the upper-teens range. We expect strong
performance from CML in the fourth quarter as it recognizes delayed sales
revenue and can act on increased sales opportunities. This, in turn, should
offset losses in the third quarter and result in a contribution from the
venture for the full year. We expect development expense to grow to
approximately $11 to $12 million."

Third Quarter 2012 Financial Results

Third quarter 2012 revenue from healthcare services increased 29% to $37.3
million from $28.8 million in the prior year period. These results reflect
continued growth of inpatient and outpatient volume across the United Family
Healthcare network as well as increasing contributions from the phased
expansion of the Company's flagship hospital in Beijing. Outpatient services
contributed 56% and inpatient services contributed 44% of revenue, compared
with 58% and 42%, respectively, in the prior year period. By service line,
surgical services contributed 20.0%, OB/GYN contributed 16.1%, pediatrics
contributed 7.6%, ancillary services contributed 30.4% and other clinical
service lines contributed 25.9% of revenue.

Operating expenses in the third quarter of 2012 increased 27% to $35.8 million
from $28.3 million in the prior year period. These costs were primarily driven
by the Company's recently opened expansions as well as development of new
facilities. Salaries, wages and benefits in the third quarter of 2012
increased 28% to $21.1 million from $16.5 million in the prior year period,
reflecting a 38% increase in headcount to support revenue growth and
development activities, including newly recruited staff now on-board in
anticipation of the opening of the Company's Rehabilitation Hospital.
Development, pre- and post-opening and start-up expenses were $2.7 million
this quarter, compared to $2.4 million for the prior year period. These
expenses were driven by development projects across all markets, including
particularly the Beijing Rehabilitation Hospital and the ramp-up of Tianjin
United Family Hospital. Operating expenses also included certain non-cash
expenses including $904,000 of stock-based compensation expense compared to
$878,000 for the prior year period.

Adjusted EBITDA in the third quarter of 2012 increased 40% to approximately
$6.0 million from $4.3 million in the prior year period. The Adjusted EBITDA
margin in the current period was 16%. The Adjusted EBITDA results illustrate
the consistent profitability and expanding earnings base of existing UFH
facilities.

Income from operations increased to $1.5 million from $490,000 in the prior
year period.

The Company recorded a $1.5 million provision for taxes in the third quarter
of 2012 compared to $791,000 in the prior year period. As in past quarters,
the current period provision continued to be heavily impacted by losses in
development and start-up entities for which the Company cannot currently
recognize tax benefits.

Net loss for the quarter ended September 30, 2012 was $664,000, or $(0.04) per
diluted share, compared to net income of $315,000, or $0.02 per diluted share,
in the prior year period. For the third quarter of 2012, weighted average
diluted shares outstanding were 16.4 million.

As of September 30, 2012, the Company had $27.5 million in unrestricted cash,
cash equivalents and investments.

First Nine months 2012 Financial Results

During the first nine months of 2012, revenue from healthcare services
increased 32% to $108.9 million from $82.5 million in the prior year period,
reflecting growing inpatient and outpatient volume across the United Family
Healthcare network. Outpatient services contributed 59% of revenue and
inpatient services contributed 41% of revenue in the first nine months of 2012
unchanged from the ratios of the first nine months of 2011. By service line,
surgical services contributed 20.1%, OB/GYN contributed 14.8%, pediatrics
contributed 7.5%, ancillary services contributed 32.0% and other services
contributed 25.6% of revenue.

Operating expenses for the first nine months of 2012 increased 31% to $103.4
million from $78.9 million in the prior year period. Development, pre-opening
and start up expenses rose to $8.5 million from $5.2 million 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 $2,505,000 of non-cash stock compensation expense compared to
$2,547,000 for the prior year. Income from operations increased 53% to $5.5
million compared to income from operations of $3.6 million in the prior year
period. Adjusted EBITDA was approximately $19.2 million compared to $12.8
million in the prior year period reflecting a 18% margin, meeting the
Company's upper teens target for the year.

Provision for taxes was $4.5 million compared to $2.9 million in the prior
year period. Net income was $615,000, or $0.05 per diluted share, compared to
net income of $2.0 million, or $0.13 per diluted share, in the first nine
months of 2011. For the first nine months of 2012 ended September 30, 2012,
weighted average diluted shares outstanding were 17.6 million.

Chindex Medical Limited

For Chindex Medical Limited, a joint venture (CML) between Shanghai Fosun
Pharmaceutical (Group) Co., Ltd. ("Fosun Pharma") and Chindex International,
Chindex recognizes its 49% interest in CML's net income using the equity
method of accounting. In the third quarter and first nine months of 2012 ended
September 30, 2012, Chindex recognized loss of $785,000 and $573,000,
respectively, for its 49% equity in the operating results of CML. This
consisted of losses of $1,339,000 and $381,000, respectively, for the
stand-alone net income (loss) of CML (after recognition of stock-based
compensation expense) and after deducting $129,000 and $387,000, respectively,
for the amortization of basis differences attributable to acquired
intangibles. The Company expects a CML to have a strong fourth quarter which
is expected to offset losses in the third quarter and result in a contribution
from the venture for the full year.

Non-GAAP Measures

The Company presents Adjusted EBITDA to better illustrate ongoing operational
results. Adjusted EBITDA is defined as income (loss) before interest expense,
interest and other income, 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 earnings (loss) income 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 EBITDA
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.

Conference Call

Management will host a conference call at 8:00 am ET Thursday morning on
November 8, 2012 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 webcast and replay 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, Tianjin 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 more than
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 the Company's Annual Report on Form 10-K for the twelve months ended
December 31, 2011, updates and additions to those "Risk Factors" in the
Company's 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 the Company believes that the
expectations reflected in the forward-looking statements are reasonable, the
Company cannot guarantee future results, levels of activity, performance or
achievements. The Company has no obligation to update these forward-looking
statements.

Contact:

ICR, Inc.
Robert Koepp
(+86) 10-6583-7516
(646) 328-2510 

 

CHINDEX INTERNATIONAL, INC
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in thousands except share and per share data)
                       Three months ended          Nine months ended September
                       September 30,               30,
                       2012          2011          2012           2011
Healthcare services    $     37,299  $     28,815  $    108,928   $     82,465
revenue
Operating expenses
  Salaries, wages and  21,064        16,540        60,989         46,768
  benefits
  Other operating      5,595         4,962         15,704         13,518
  expenses
  Supplies and
  purchased medical    4,532         3,247         13,582         9,109
  services
  Bad debt expense     865           466           2,260          1,396
  Depreciation and     1,797         1,459         5,268          3,653
  amortization
  Lease and rental     1,915         1,651         5,602          4,450
  expense
                       35,768        28,325        103,405        78,894
Income from            1,531         490           5,523          3,571
operations 
 Other income and
(expenses)
  Interest income      214           192           487            552
  Interest expense     (141)         (109)         (356)          (290)
  Equity in (loss)
  income of            (785)         539           (573)          1,121
  unconsolidated
  affiliate
  Miscellaneous        (5)           (6)           (5)            (73)
  expense - net
Income before income   814           1,106         5,076          4,881
taxes
Provision for income   (1,478)       (791)         (4,461)        (2,853)
taxes
Net (loss) income      $             $             $              $      2,028
                       (664)          315           615
Net (loss) income per  $(.04)        $.02          $.04           $.13
common share - basic
Weighted average
shares outstanding -   16,404,635    16,134,459    16,338,332     16,113,426
basic
Net (loss) income per  $(.04)        $.02          $.05           $.13
common share - diluted
Weighted average
shares outstanding -   16,404,635    17,250,548    17,621,675     17,411,770
diluted

 

CHINDEX INTERNATIONAL, INC.
                                              CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
                                                September 30,     December 31,
                                                2012              2011
                ASSETS
Current assets:
                Cash and cash equivalents       $                 $        
                                                 27,479            33,755
                Restricted cash                 315               -
                Investments                     -                 26,394
                Accounts receivable, less
                allowance for doubtful accounts
                of $10,502
                     and $8,300, respectively   17,551            13,947
                Receivables from affiliates     11,727            10,984
                Inventories of supplies, net    2,301             2,307
                Deferred income taxes           3,464             3,887
                Other current assets            4,575             4,652
                        Total current assets    67,412            95,926
Restricted cash and sinking funds               20,605            1,030
Investments                                     -                 100
Investment in unconsolidated affiliate          33,003            33,728
Property and                                    85,915            65,465
equipment, net
Noncurrent deferred income taxes                728               424
Other assets                                    3,064             2,719
                        Total assets            $        210,727  $      
                                                                   199,392
                LIABILITIES AND STOCKHOLDERS'
                EQUITY
Current liabilities:
                Accounts payable                $                 $          
                                                 7,441             3,957
                Payable to affiliates           11,691            9,404
                Accrued expenses                13,191            11,735
                Other current liabilities       7,557             5,549
                Income taxes payable            1,856             2,141
                        Total current           41,736            32,786
                liabilities
Long-term debt
and convertible                                 23,938            23,818
debentures
Long-term
deferred tax                                    289               287
liability
                        Total liabilities       65,963            56,891
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 – 15,881,748 and 
                15,652,917 shares issued                           
                and outstanding at September
                30, 2012 and December 31,       159               157
                2011, respectively
                             Class B stock –
                1,162,500 shares
                             issued and                            
                outstanding at September
                             30, 2012 and       12                12
                December 31, 2011,
                             respectively
                Additional paid-in capital      121,298           118,930
                Retained earnings               15,106            14,491
                Accumulated other comprehensive 8,189             8,911
                income
                       Total stockholders'      144,764           142,501
                equity
                           Total liabilities    $        210,727  $      
                and stockholders' equity                           199,392

 

CHINDEX INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
                                          Nine months ended September 30,
                                          2012                2011
OPERATING ACTIVITIES
Net income                                $              615  $         2,028
Adjustments to reconcile net income to
net cash provided by 
     operating activities:  
     Depreciation and amortization        5,268               3,653
     Inventory write down                 42                  6
     Provision for doubtful accounts      2,260               1,396
     Loss on disposal of property and     29                  78
     equipment
     Equity in (loss) income of           573                 (1,121)
     unconsolidated affiliate
     Deferred income taxes                96                  (1,257)
     Stock based compensation             2,505               2,547
     Foreign exchange loss (gain)         279                 (482)
     Amortization of debt issuance costs  7                   7
     Amortization of debt discount        186                 186
Changes in operating assets and
liabilities:
     Restricted cash                      -                   300
     Accounts receivable                  (5,977)             (3,511)
     Receivables from affiliates          (744)               2,913
     Inventories of supplies              (51)                (290)
     Other current assets and other       (354)               623
     assets
     Accounts payable, accrued expenses,
     other current
      liabilities and deferred revenue    2,734               (3,859)
     Payable to affiliates                2,287               946
     Income taxes payable                 (274)               (257)
Net cash provided by operating activities 9,481               3,906
INVESTING ACTIVITIES
     Purchases of short-term investments  -                   (23,518)
     and CDs
     Proceeds from redemption of CDs      26,530              24,179
     Purchases of property and equipment  (21,986)            (9,743)
Net cash provided by (used in) investing  4,544               (9,082)
activities
FINANCING ACTIVITIES
     Restricted cash for IFC RMB loan     (10,940)            -
     sinking funds
     Restricted cash for Exim loan        (8,957)             -
     collateral
     Repurchase of restricted stock for   (151)               (104)
     income tax withholding
     Proceeds from exercise of stock      16                  114
     options
Net cash (used in) provided by financing  (20,032)            10
activities
Effect of foreign exchange rate changes   (269)               713
on cash and cash equivalents
Net decrease in cash and cash equivalents (6,276)             (4,453)
Cash and cash equivalents at beginning of 33,755              32,007
period
Cash and cash equivalents at end of       $          27,479   $        27,554
period
Supplemental disclosures of cash flow
information:
Cash paid for interest                    $                   $            
                                           546                649
Cash paid for taxes                       $                   $          4,433
                                          4,626
Non-cash investing and financing
activities consist of the following:
Change in property and equipment          $                   $          6,304
purchases included in accounts payable    4,118

 

The table below reconciles our consolidated net income to Adjusted EBITDA (in
thousands)
                               Three months ended       Nine months ended
                               September 30,            September 30,
                               2012         2011        2012        2011
Consolidated net (loss)        ($664)       $315        $615        $2,028
income 
Adjustments:
          Depreciation and     1,797        1,459       5,268       3,653
amortization
          Provision for income 1,478        791         4,461       2,853
taxes
          Interest expense     141          109         356         290
          Interest and other   (209)        (186)       (482)       (479)
income, net
          Development,
pre-opening and start-up       2,716        2,392       8,457       5,182
expense
          Equity in loss
(income) of unconsolidated     785          (539)       573         (1,121)
affiliate
          Non-recurring        -            -           -           400
charges for CML JV formation
                               6,708        4,026       18,633      10,778
Adjusted EBITDA                $6,044       $4,341      $19,248     $12,806

SOURCE Chindex International, Inc.

Website: http://www.chindex.com
Website: http://ir.chindex.com/events.cfm