Dehaier Medical Announces Third Quarter 2010 Financial Results
-- 3Q Revenues up 52.1% YoY to $5.5M
-- 3Q Net Income up 38.2% YoY to $1.4M
BEIJING, Nov. 12, 2010 /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 in China, today announced its financial results for the third quarter ended September 30, 2010. The Company posted revenues of $5.5 million and quarterly GAAP net income of $1.4 million, or $0.30 per diluted share. These results compare to revenue of $3.6 million and quarterly GAAP net income of $1.0 million, or $0.34 per diluted share, for the same period last year. Summary financial data is provided below:
Third Quarter 2010 Financial Highlights
- Revenues for the third quarter of fiscal year 2010 increased by 52.1% year-over-year to $5.5 million, up from $3.6 million in the third quarter of 2009.
- Net income attributable to the Company for the third quarter increased 38.2% year-over-year to $1.4 million, compared with $1.0 million for the third quarter of 2009.
- Gross margin for the third quarter was 41.4% based on gross profit of $2.3 million, compared with a 41.4% margin in the same period last year.
- Operating income and operating margin for the third quarter were $1.6 million and 29.4%, respectively, compared to $1.2 million and 34.5%, respectively, in the third quarter of 2009.
- Earnings per diluted share were $0.30 for the quarter, compared with diluted EPS of $0.34 achieved in the same period a year ago.
2010 Nine Months Financial Highlights
- Revenues for the nine months ended September 30, 2010 increased by 37.2% year-over-year to $12.9 million, up from $9.4 million for the nine months ended September 30, 2009.
- Net income attributable to the Company increased 48.0% year-over-year to $3.1 million, compared with $2.1 million for the first nine months of 2009.
- Gross margin was 39.9% based on gross profit of $5.2 million, compared with a 39.6% margin in the same period last year.
- Operating income and operating margin were $3.6 million and 27.9%, respectively, compared to $2.6 million and 27.5%, respectively, in the first nine months of 2009.
- Earnings per diluted share were $0.77, compared with diluted EPS of $0.69 achieved in the same period a year ago.
Mr. Ping Chen, CEO of Dehaier, stated, "We are very pleased with the 52% sales growth we achieved during the third quarter. As the domestic medical equipment market continues to grow, driven by national healthcare reform initiatives, we will capitalize upon our strong partnerships with leading global manufacturers to increase our market share."
Mr. Chen continued, "Our home healthcare equipment segment is a major strategic focus for Dehaier, and we plan to grow this part of our business by diversifying our product line, aggressively developing our domestic sales network, and expanding into international markets. Building upon our successful market penetration in China, we remain fully committed to becoming a leader in the global respiratory and oxygen homecare market."
Third Quarter 2010 Results of Operations
Revenues
Revenues for the three months ended September 30, 2010 were $5.5 million as compared to $3.6 million for the three months ended September 30, 2009. The increase of $1.9 million, or 52.1%, was primarily due to the increased acceptance of Dehaier's products among hospitals and other healthcare facilities. The Company also generated revenues from exclusive medical equipment distribution agreements signed during the second quarter with Penlon, HEYER Medical, and Welch Allyn.
Gross Profit
Gross profit for the three months ended September 30, 2010 was $2.3 million, up 52.0% from $1.5 million for the three months ended September 30, 2009. Costs of sales for the three-month period were $3.2 million as compared to $2.1 million for the same period in 2009. The Company's gross margin was 41.4% for the three months ended September 30, 2010 as compared to 41.4% for the same period in 2009.
Income from Operations
Operating income for the three months ended September 30, 2010 amounted to $1.6 million as compared to $1.2 million for the three months ended September 30, 2009. The increase of $0.4 million, or 30.0%, was primarily due to the increase in sales. Operating expenses for the three-month period totaled $0.71 million as compared to $0.31 million for the same period a year ago. The increase in operating expenses was largely attributable to the expansion of the Company's marketing strategy, implementation expenses associated with Sarbanes-Oxley Section 404 compliance, and an increase in R&D expenses.
Net Income
Net income for the three months ended September 30, 2010 was $1.4 million as compared to $1.0 million for the three months ended September 30, 2009, due to the reasons set forth above. Earnings per diluted share were $0.30 for the quarter, compared with diluted EPS of $0.34 for the same period a year ago.
Nine Months Ended September 30, 2010 Results of Operations
Revenues
Revenues for the nine months ended September 30, 2010 were $12.9 million as compared to $9.4 million for the nine months ended September 30, 2009. The increase of $3.5 million, or 37.2%, was primarily due to an increase in repeat customers among hospitals and other healthcare facilities. The Company also generated revenues from exclusive medical equipment distribution agreements signed during the second quarter with Penlon, HEYER Medical, and Welch Allyn.
Gross Profit
Gross profit for the nine months ended September 30, 2010 was $5.2 million, up 38.0% from $3.7 million for the nine months ended September 30, 2009. Costs of sales were $7.8 million for the nine-month period, up 36.7% from $5.7 million in the same period a year ago. The Company's gross margin was 39.9% and 39.6%, respectively, for the nine months ended September 30, 2010 and 2009.
Income from Operations
Operating income for the nine months ended September 30, 2010 amounted to $3.6 million as compared to $2.6 million for the nine months ended September 30, 2009. The increase of $1.0 million, or 39.5%, was primarily due to the increase in revenues. Operating expenses for the nine months ended September 30, 2010 totaled $1.7 million, up 28.4% from $1.3 million in the same period a year ago.
Net Income
Net income for the nine months ended September 30, 2010 was $3.1 million as compared to $2.1 million for the nine months ended September 30, 2009. Earnings per diluted share were $0.77 for the nine-month period, compared with diluted EPS of $0.69 for the same period in 2009.
Liquidity and Capital Resources
As of September 30, 2010, the Company had current assets of $27.6 million and current liabilities of $9.6 million. Cash and cash equivalents totaled $4.96 million as of September 30, 2010. The Company's shareholders' equity at September 30, 2010 was $24.0 million. The Company used $6.0 million in cash for operating activities during the nine months ended September 30, 2010, as compared to $1.6 million in cash provided by operating activities for the nine months ended September 30, 2009. The Company used $0.8 million in cash for investing activities during the nine months ended September 30, 2009, as compared to $0.9 million for the same period in 2009. The Company generated $9.9 million in cash from financing activities for the nine months ended September 30, 2010.
Conference Call and Webcast
Management will host a conference call to discuss these financial results on Tuesday, November 16, 2010 at 10:00 a.m. EST (7:00 a.m. PST).
To participate in the call please dial (877) 941-8602, or (480) 629-9810 for international calls, approximately 10 minutes prior to the scheduled start time. Interested parties can also listen via a live Internet webcast, which can be found via the Company's website at http://www.chinadhr.com, or alternately at http://ViaVid.net.
A replay of the call will be available for two weeks from 1:00 p.m. on November 16, 2010, EST until 11:59 p.m. EST on November 30, 2010. The number for the replay is (877) 870-5176, or (858) 384-5517 for international calls; the pass code for the replay is 4384115. In addition, a recording of the call will be available via the company's website at http://www.chinadhr.com for one year.
About Dehaier Medical Systems Ltd.
Dehaier Medical Systems is an emerging leader in the development, assembly, marketing and sale of medical products in China, including respiratory and oxygen homecare medical products. The company develops and assembles its own branded products from third-party components. The company also distributes products designed and manufactured by other companies, including medical devices and respiratory and oxygen homecare products from IMD (Italy), Welch Allyn (USA), Penlon (UK), HEYER (Germany), Timesco (UK), ResMed (Australia), and JMS (Japan). Dehaier's technology is based on two patents, five pending patents, and proprietary technology. More information may be found at http://www.chinadhr.com.
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 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, 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 |
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Investor Relations: |
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Dave Gentry, U.S. |
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RedChip Companies, Inc. |
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Tel: +1-800-733-2447, Ext. 104 |
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Email: [email protected] |
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Jing Zhang, China |
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RedChip Beijing Representative Office |
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Tel: +86 10-8591-0635 |
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DEHAIER MEDICAL SYSTEMS LIMITED AND AFFILIATE CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) |
||||||||
For the nine months ended |
For the three months ended |
|||||||
2010 |
2009 |
2010 |
2009 |
|||||
US$ |
US$ |
US$ |
US$ |
|||||
Revenue |
12,930,769 |
9,422,460 |
5,458,818 |
3,588,442 |
||||
Costs of revenue |
(7,776,867) |
(5,688,352) |
(3,199,072) |
(2,101,639) |
||||
Gross profit |
5,153,902 |
3,734,108 |
2,259,746 |
1,486,803 |
||||
Service income |
274,154 |
298,036 |
92,648 |
101,708 |
||||
Service expenses |
(108,825) |
(113,066) |
(40,479) |
(38,085) |
||||
General and administrative expense |
(875,840) |
(787,784) |
(355,431) |
(159,203) |
||||
Selling expense |
(834,279) |
(544,470) |
(351,469) |
(152,776) |
||||
Operating Income |
3,609,112 |
2,586,824 |
1,605,015 |
1,238,447 |
||||
Financial expenses ( including interest expense of $48,255, $67,704, $21,452 and $23,772) |
(98,411) |
(66,384) |
(43,725) |
(21,302) |
||||
Change in fair value of warrants liability |
114,806 |
- |
96,412 |
- |
||||
Income before provision for income taxes and non-controlling interest |
3,625,507 |
2,520,440 |
1,657,702 |
1,217,145 |
||||
Provision for income tax |
(543,749) |
(410,162) |
(245,569) |
(183,712) |
||||
Net income |
3,081,758 |
2,110,278 |
1,412,133 |
1,033,433 |
||||
Non-Controlling interest in income |
(14,561) |
(38,502) |
(4,570) |
(14,782) |
||||
Net income attributable to Dehaier Medical Systems Limited |
3,067,197 |
2,071,776 |
1,407,563 |
1,018,651 |
||||
Earnings per share |
||||||||
-Basic |
0.79 |
1.10 |
0.31 |
0.54 |
||||
-Diluted |
0.77 |
0.69 |
0.30 |
0.34 |
||||
Weighted average number of common shares used in computation |
||||||||
-Basic |
3,887,868 |
1,891,930 |
4,500,000 |
1,891,930 |
||||
-Diluted |
3,981,094 |
3,000,000 |
4,657,500 |
3,000,000 |
||||
DEHAIER MEDICAL SYSTEMS LIMITED AND AFFILIATE CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) |
||||
September 30, |
December 31, |
|||
2010 |
2009 |
|||
US$ |
US$ |
|||
ASSETS |
||||
CURRENT ASSETS: |
||||
Cash and cash equivalents |
4,964,450 |
1,151,721 |
||
Accounts receivable-less allowance for doubtful accounts of $ 74,179 and $102,939 |
9,074,841 |
6,891,291 |
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Other receivables |
3,107,351 |
1,499,111 |
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Prepayment and other current assets |
6,124,933 |
1,691,387 |
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Inventories, net |
4,301,025 |
2,326,126 |
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Total Current Assets |
27,572,600 |
13,559,636 |
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Property and equipment, net |
3,541,763 |
2,862,625 |
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Tax receivable |
2,450,681 |
1,362,372 |
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Total assets |
33,565,044 |
17,784,633 |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
||||
CURRENT LIABILITIES: |
||||
Short-term borrowings |
1,495,000 |
1,464,770 |
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Accounts payable |
37,095 |
93,770 |
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Advances from customers |
436,625 |
174,253 |
||
Accrued expenses and other current liabilities |
256,126 |
336,412 |
||
Tax payable |
6,998,807 |
4,993,387 |
||
Warranty obligation |
182,444 |
178,755 |
||
Warrants liability |
155,194 |
- |
||
Due to officer |
- |
3,861 |
||
Total Current Liabilities |
9,561,291 |
7,245,208 |
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Commitments and contingency |
||||
Shareholders' equity |
||||
Common stock, $0.002731 par value, 18,307,038 shares authorized, 4,500,000 and 3,000,000 shares issued and outstanding at September 30, 2010 and December 31, 2009, respectively |
12,290 |
8,193 |
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Additional paid in capital |
13,137,085 |
3,196,974 |
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Retained earnings |
8,365,939 |
5,298,742 |
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Accumulated other comprehensive income |
1,185,177 |
773,127 |
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Total Dehaier Medical Systems Limited shareholders' equity |
22,700,491 |
9,277,036 |
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Non-controlling interest |
1,303,262 |
1,262,389 |
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Total shareholders' equity |
24,003,753 |
10,539,425 |
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Total liabilities and shareholders' equity |
33,565,044 |
17,784,633 |
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DEHAIER MEDICAL SYSTEMS LIMITED AND AFFILIATE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) |
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For the nine months ended September 30 |
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2010 |
2009 |
|||
US$ |
US$ |
|||
Operating Activities |
||||
Net income |
3,081,758 |
2,110,278 |
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Adjustment to reconcile net income to net cash provided by (used in) operating activities |
||||
Depreciation and amortization |
261,438 |
210,231 |
||
Recovery of doubtful accounts |
(30,336) |
- |
||
Recovery of inventory obsolescence |
(5,756) |
- |
||
Change in fair value of warrants liability |
114,806 |
- |
||
Provision for warranty reserve |
3,689 |
41,662 |
||
Change in assets and liabilities |
||||
Increase in accounts receivable |
(2,153,214) |
(642,778) |
||
Decrease (increase) in prepayments and other current assets |
(4,433,546) |
498,145 |
||
Increase in other receivable |
(1,608,240) |
(274,275) |
||
Increase in inventories |
(1,969,143) |
(1,050,453) |
||
Increase in tax receivable |
(1,088,309) |
(610,511) |
||
(Decrease) increase in accounts payable |
(56,675) |
5,536 |
||
(Decrease) increase in advances from customers |
262,372 |
(170,699) |
||
(Decrease) increase in accrued expenses and other current liabilities |
(80,286) |
46,609 |
||
Increase in tax payable |
2,005,420 |
1,409,645 |
||
Net cash provided by (used in) operating activities |
(5,696,022) |
1,573,390 |
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Investing Activities |
||||
Capital expenditures and other additions |
(839,456) |
(915,693) |
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Proceeds from (advances to) related parties |
(3,861) |
1,976 |
||
Net cash used in investing activities |
(843,317) |
(913,717) |
||
Financing Activities |
||||
Net proceeds from issuance of common stock |
9,944,207 |
- |
||
Net cash provided by financing activities |
9,944,207 |
- |
||
Effect of exchange rate fluctuations on cash and cash equivalents |
407,861 |
(4,306) |
||
Net increase in cash and cash equivalents |
3,812,729 |
655,367 |
||
Cash and cash equivalents at beginning of period |
1,151,721 |
282,603 |
||
Cash and cash equivalents at end of period |
4,964,450 |
937,970 |
||
Supplemental cash flow information |
||||
Income tax paid |
17,197 |
12,824 |
||
Interest paid |
48,255 |
67,704 |
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SOURCE Dehaier Medical Systems Ltd.
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