Chindex International, Inc. Reports Financial Results for Second Quarter and First Half of 2013

 Chindex International, Inc. Reports Financial Results for Second Quarter and
                              First Half of 2013

-Reiterates FY13 Revenue and Adjusted EBITDA Forecast-

PR Newswire

BETHESDA, Md., Aug. 7, 2013

BETHESDA, Md., Aug. 7, 2013 /PRNewswire/ -- Chindex International, Inc.
(NASDAQ: CHDX), an American health care company providing health care services
in China through the operations of United Family Healthcare ("UFH"), a network
of private primary care hospitals and affiliated ambulatory clinics, today
announced financial results for the second quarter of 2013 ended June 30,
2013.

Second Quarter 2013 Financial Highlights

  oRevenue from healthcare services increased 18% to $46.0 million from $39.1
    million in the prior year period.
  oAdjusted EBITDA was $7.3 million, compared to $7.7 million in the prior
    year period.
  oDevelopment, pre-opening and start-up expense was $3.0 million, compared
    to $2.5 million in the prior year period.
  oIncome from operations decreased 44% to $1.9 million from $3.4 million in
    the prior year period.
  oNet loss was $122,000, or $0.01 per diluted share, compared to net income
    of $1.8 million, or $0.11 per diluted share, in the prior year period.
  oIncreased operating expenses were primarily the result of recently opened
    expansions, development of new facilities and network infrastructure
    projects, all drivers oflong-term, sustainable growth. 

Roberta Lipson, President and CEO of Chindex, commented, "Second quarter
financial performance reflects continued revenue growth driven by steady
inpatient and outpatient demand across our growing healthcare network. Since
June, we have opened two new facilities in our two largest metropolitan
markets - the Beijing United Family Rehabilitation Hospital and United Family
Quankou Clinic in Shanghai. The opening of these two facilities was a major
endeavor and our operating results for the quarter reflect our investments in
personnel and infrastructure to support our expanding UFH network. We are now
experiencing increased revenue contribution associated with greater inpatient
traffic levels as well as from our new, highly specialized services, which
will benefit our performance in the second half of the year and beyond." 

"Our main focus in the remainder of 2013 will be the ongoing execution of our
expansion and ramp-up of both our new facilities and specialized service
lines. China's healthcare sector is heavily regulated by the government. In
recent years, we have consistently met our growth and expansion targets and
established first-mover advantages in multiple healthcare service areas. These
accomplishments prove our ability to navigate China's complex regulatory
environment and demonstrate our unique ability to capitalize on favorable
domestic policies for premium private healthcare services in China. The
progress of our facility and overall resource expansion we have made year to
date provides a solid foundation to accelerate revenue and profitability
growth in the second half of the year. We reiterate comfort with our ability
to deliver revenue growth at a rate of mid to high-twenties and adjusted
EBITDA growth in the mid to high teens for the full year of 2013."

Second Quarter 2013 Financial Results

Second quarter 2013 revenue from healthcare services increased 18% to $46.0
million from $39.1 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 expansion of
the Company's flagship hospital in Beijing. Outpatient services contributed
58% and inpatient services contributed 42% of revenue, compared with 59% and
41%, respectively, in the prior year period. By service line, surgical
services contributed 22.8%, OB/GYN contributed 13.7%, pediatrics contributed
7.3%, ancillary services contributed 31%, internal medicine contributed 4%,
emergency room contributed 4.1%, dental contributed 3.6%, family medicine 1.5%
and other clinical service lines contributed 12% of revenue.

Operating expenses in the second quarter of 2013 increased 23% to $44.1
million from $35.8 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 and network infrastructure projects. Salaries,
wages and benefits in the second quarter of 2013 increased 26% to $26.8
million from $21.3 million in the prior year period, reflecting a 20.5%
increase in headcount to support revenue growth and development activities,
including newly recruited staff for the Company's Beijing United Family
Rehabilitation Hospital and United Family Quankou Clinic in Shanghai.
Development, pre- and post-opening and start-up expenses were $3.0 million
this quarter, compared to $2.5 million for the prior year period. These
expenses were driven by development projects across all markets, including
particularly the Beijing United Family Rehabilitation Hospital and the ramp-up
of Tianjin United Family Hospital. Operating expenses also included certain
non-cash expenses including $1,444,000 of stock-based compensation expense
compared to $987,000 for the prior year period.

Adjusted EBITDA in the second quarter of 2013 was approximately $7.3 million,
compared to $7.7 million in the prior year period. The Adjusted EBITDA results
reflect the delayed opening of Beijing United Family Rehabilitation Hospital
and expanded investment in resources for development of network infrastructure
supporting current operations in accordance with the 2013 strategic plan. 

Income from operations decreased by 44% to $1.9 million from $3.4 million in
the prior year period.

The Company recorded a $1.7 million provision for taxes in the second quarter
of 2013, relatively stable in terms of dollar amount as compared to the amount
in the prior year period, but reflecting a higher effective tax rate. 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 June 30, 2013 was $122,000, or $0.01 per
diluted share, compared to net income of $1.8 million, or $0.11 per diluted
share, in the prior year period. For the second quarter of 2013, weighted
average diluted shares outstanding were 16.6 million.

As of June 30, 2013, the Company had $33.8 million in unrestricted cash, cash
equivalents and investments.

First Half 2013  Financial Results

During the first half of 2013, revenue from healthcare services increased 22%
to $87.5 million from $71.6 million in the prior year period, reflecting
growing inpatient and outpatient volume across the United Family Healthcare
network. Outpatient services contributed 58% of revenue and inpatient services
contributed 42% of revenue in the first half of 2013 compared with 60% and
40%, respectively, for the first half of 2012. By service line, surgical
services contributed 21.9%, OB/GYN contributed 14.7%, pediatrics contributed
7.9%, ancillary services contributed 31.4%, internal medicine contributed 4%,
emergency room contributed 4%, dental contributed 3.5%, family medicine 1.4%
and other services contributed 11.2% of revenue.

Operating expenses for the first half of 2013 increased 23% to $83.1 million
from $67.6 million in the prior year period. Development, pre-opening and
start up expenses decreased to $5.6 million from $5.7 million in the prior
year period primarily as a result of the delayed opening of Beijing United
Family Rehabilitation Hospital. Operating expenses also included certain
non-cash expenses including $2.2 million of non-cash stock compensation
expense compared to $1.6 million for the prior year. Income from operations
increased 12% to $4.5 million compared to income from operations of $4.0
million in the prior year period. Adjusted EBITDA was approximately $14.7
million compared to $13.2 million in the prior year period reflecting expanded
investment in resources for development of network infrastructure supporting
current operations in accordance with the 2013 strategic plan. 

Provision for taxes was $3.6 million, compared to $3.0 million in the prior
year period. Net loss was $184,000, or $0.01 per diluted share, compared to
net income of $1.3 million, or $0.08 per diluted share, in the first half of
2012. For the first half of 2013 ended June 30, 2013, weighted average diluted
shares outstanding were 16.6 million.

Chindex Medical Limited

Following the official closing of the acquisition of Alma Lasers, Inc. on May
27, 2013, Chindex Medical Limited (CML), a joint venture between Shanghai
Fosun Pharmaceutical (Group) Co., Ltd. ("Fosun Pharma") and Chindex
International, began recognizing the operating results of Alma Lasers in the
results of CML.

In the second quarter of 2013, Chindex International recognized a loss of
$387,000 for its equity interest in CML. For the first half of 2013, the
Company recognized a loss of $1.29 million for its equity interest in CML.

The operating results of CML in 2013 have thus far been significantly impacted
by volatility in the capital medical equipment markets in China. The
acquisition of Alma Lasers could mitigate such volatility in future periods.

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. 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 on August 8,
2013 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. The conference ID is 21028162. 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 year ended December 31,
2012, 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.
Bill Zima
(+86) 10-6583-7511
(646) 328-2510

Financial Summary Attached

CHINDEX INTERNATIONAL, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(in thousands except share and per share data)

(Unaudited)
                        Three months ended June 30,  Six months ended June 30,
                        2013            2012         2013          2012
Healthcare services     $45,977         $39,117      $87,542       $71,629
revenue
Operating expenses
 Salaries, wages   26,834          21,309       49,497        39,925
and benefits
 Other operating   5,751           5,345        11,466        10,109
expenses
 Supplies and
purchased medical       5,590           4,812        10,555        9,050
services
 Bad debt          1,140           630          2,119         1,395
expense
 Depreciation      2,353           1,820        4,655         3,471
and amortization
 Lease and         2,410           1,834        4,771         3,687
rental expense
                        44,078          35,750       83,063        67,637
Income from operations  1,899           3,367        4,479         3,992
Other income and
(expenses)
 Interest income   241             134          489           273
 Interest         (226)           (91)         (328)         (215)
expense
 Equity in
(loss) income of        (387)           114          (1,287)       212
unconsolidated
affiliate
 Miscellaneous    39              10           37            -
expense - net
Income before income    1,566           3,534        3,390         4,262
taxes
Provision for income    (1,688)         (1,724)      (3,574)       (2,983)
taxes
Net (loss) income       $(122)          $1,810       $(184)        $1,279
Net (loss) income per   $(.01)          $.11         $(.01)        $.08
common share - basic
Weighted average shares 16,582,068      16,317,841   16,566,004    16,304,816
outstanding - basic
Net (loss) income per   $(.01)          $.11         $(.01)        $.08
common share - diluted
Weighted average shares 16,582,068      17,399,066   16,566,004    17,538,732
outstanding - diluted





CHINDEX INTERNATIONAL, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS

(in thousands, except share data)

(Unaudited)


                                                   June 30, 2013  December 31,
                                                                  2012
ASSETS
Current assets:
Cash and cash equivalents                      $33,806        $33,184
 Restricted cash                                1,534          754
 Accounts receivable, less allowance for
doubtful accounts of $12,936
 and $10,612, respectively                 22,807         19,564
 Receivables from affiliates                    2,722          2,110
 Inventories of supplies, net                   2,786          2,328
 Deferred income taxes                          3,877          3,209
 Other current assets                           5,961          3,798
  Total current assets                    73,493         64,947
Restricted cash and sinking funds                 19,492         20,351
Investment in unconsolidated affiliate             33,530         34,847
Property and equipment, net                        102,553        97,952
Noncurrent deferred income taxes                   843            925
Other assets                                       3,614          3,428
 Total assets                            $233,525       $222,450
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Short-term debt                                $2,273         $1,586
 Accounts payable                              6,619          9,520
 Payable to affiliates                          1,322          1,334
 Accrued expenses                               14,983         15,540
 Other current liabilities                      9,892          8,558
 Income taxes payable                          1,927          2,772
  Total current liabilities              37,016         39,310
Long-term debt and convertible debentures          42,634         32,812
Long-term deferred tax liability                   262            262
  Total liabilities                      79,912         72,384
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 – 16,050,877and
15,904,836 shares issued and
 outstanding at
June 30, 2013 and December 31, 2012,
  respectively      161            159
  Class B stock – 1,162,500shares
issued and outstanding at
  June 30, 2013     12             12
and December 31, 2012, respectively
Additional paid-in capital                         124,235        122,109
Retained earnings                                 18,399         18,583
Accumulated other comprehensive income             10,806         9,203
 Total stockholders' equity                  153,613        150,066
 Total liabilities and stockholders'     $233,525       $222,450
equity



CHINDEX INTERNATIONAL, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)
                                                     Six months ended June 30,
                                                     2013           2012
OPERATING ACTIVITIES
Net (loss) income                                    $(184)         $1,279
Adjustments to reconcile net income to net cash
provided by
 operating activities:
 Depreciation and amortization                      4,655          3,471
 Inventory write down                               10             38
Provision for doubtful accounts                    2,119          1,396
Loss on disposal of property and equipment         8              6
 Equity in net income (loss) of unconsolidated      1,287          (212)
affiliate
 Deferred income taxes                              (519)          92
 Stock based compensation                           2,234          1,601
 Foreign exchange (gain) loss                      (286)          242
 Amortization of debt issuance costs                5              5
 Amortization of debt discount                      124            124
Changes in operating assets and liabilities:
 Accounts receivable                                (4,967)        (5,182)
 Receivables from affiliate                         (612)          (1,069)
 Inventories of supplies                            (425)          200
 Other current assets and other assets              (2,257)        (514)
 Accounts payable, accrued expenses, other current
 liabilities and deferred revenue                  (4,232)        2,173
 Payable to affiliate                               (12)           2,419
 Income taxes payable                               (878)          119
Net cash (used in) provided by operating activities  (3,930)        6,188
INVESTING ACTIVITIES
 Proceeds from redemption of CDs                    -              26,526
 Purchases of property and equipment                (5,899)        (14,968)
Net cash (used in) provided by investing activities  (5,899)        11,558
FINANCING ACTIVITIES
 Restricted cash from (to) IFC RMB loan sinking     444            (10,968)
funds
 Restricted cash for Exim loan collateral           -              (8,664)
 Proceeds from debt                                 11,000         -
 Repayment of debt                                  (800)          -
 Repurchase of restricted stock for income tax      (220)          (98)
withholding
 Proceeds from exercise of stock options and        114            16
warrants
Net cash provided by (used in) financing activities  10,538         (19,714)
Effect of foreign exchange rate changes on cash and  (87)           (163)
cash equivalents
Net increase (decrease) in cash and cash equivalents 622            (2,131)
Cash and cash equivalents at beginning of period     33,184         33,755
Cash and cash equivalents at end of period           $33,806        $31,624
Supplemental disclosures of cash flow information:
 Cash paid for interest                             $57            $-
 Cash paid for taxes                                $5,005         $2,765
Non-cash investing and financing activities consist
of the following:
 Changes in PPE additions included in accounts      $1,691         $288
payable and payable to affiliates

The table below reconciles our consolidated net loss (income) to Adjusted
EBITDA (in thousands)
                             Three months ended June Six months ended June 30,
                             30,
                             2013        2012        2013         2012
Consolidated net (loss)      ($122)      $1,810      ($184)       $1,279
income
Adjustments:
 Depreciation and   2,353       1,820       4,655        3,471
amortization
 Provision for      1,688       1,724       3,574        2,983
income taxes
 Interest expense   226         91          328          215
 Interest and other (280)       (144)       (526)        (273)
income, net
 Development,
pre-opening and start-up     3,004       2,538       5,552        5,741
expense
 Equity in (income) 387         (114)       1,287        (212)
of unconsolidated affiliate
                             7,378       5,915       14,870       11,925
Adjusted EBITDA              $7,256      $7,725      $14,686      $13,204

SOURCE Chindex International, Inc.

Website: http://www.chindex.com
 
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