BETHESDA, Md., May 8, 2014 /PRNewswire/ -- Chindex
International, Inc. (NASDAQ: CHDX), an American healthcare company
providing premium quality healthcare 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 first quarter ended March 31,
2014.
First Quarter 2014 Financial Highlights
- Revenue from healthcare services increased 20% to
$49.9 million from $41.6
million in the prior year period.
- Adjusted EBITDA increased 22% to $9.0
million from $7.4 million in
the prior year period.
- Development, pre-opening and start-up expense was
$4 million, compared to $2.5 million in the prior year period.
- Loss from operations was $1.5
million, compared to income from operations of $2.6 million in the prior year period.
- Net loss was $3.5 million, or
$(0.20) per diluted share, compared
to net loss of $62,000, or
$0.00 per diluted share, in the prior
year period.
- Merger transaction expense was $3.3
million.
Roberta Lipson, President and CEO
of Chindex, commented, "The first quarter 2014 was characterized by
continued growth in our traditionally strong primary care services:
pediatrics, obstetrics and gynecology, and family and internal
medicine. We also saw increasing contributions from our newer
surgical services. At the same time we are moving forward with
expansion both in current and new markets. We recently announced
our new Financial Street Clinic to open later this year in
Beijing and our new joint venture
agreement with the Guangdong TCM Hospital to build Guangzhou United
Family Hospital, which is projected to open in 2016. Our results
this period reflect heavy development expenses from these expansion
activities as well as significant transaction expenses related to
our pending merger."
Business Updates
On April 21, 2014, the Company
announced that it had entered into an amended and restated merger
agreement (the "Amended Agreement") with a buyer consortium (the
"Buyer Consortium") comprised of an affiliate of TPG, an affiliate
of Shanghai Fosun Pharmaceutical (Group) Co., Ltd., and Ms.
Roberta Lipson, the CEO of the
Company, and a merger subsidiary of the Buyer Consortium. Pursuant
to the Amended Agreement, upon the terms and subject to the
conditions thereof, at the effective time of the merger, the merger
subsidiary of the Buyer Consortium will be merged with and into the
Company and the Company will become a wholly-owned subsidiary of
the Buyer Consortium. Among other changes, the Amended Agreement
provides for an increase in the merger consideration from
$19.50 under the original merger
agreement entered into on February 17,
2014 with the Buyer Consortium (the "Original Agreement") to
$24.00 per share in cash and an
increase in implied equity value from $369
million under the Original Agreement to $461 million.
If the merger is completed, the Company will cease to be a
publicly traded company.
First Quarter 2014 Financial Results
First quarter 2014 revenue from healthcare services increased
20% to $49.9 million from
$41.6 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 Company's new facilities
in Beijing. Overall, outpatient
services contributed 59% of revenue while inpatient services
contributed 41%, compared with 57% and 43%, respectively, in the
prior year period. By service line, surgical services contributed
18.4%; OB/GYN contributed 14.3%; pediatrics contributed 9.9%;
ancillary services, including laboratory, radiology and pharmacy,
contributed 28.2%; internal medicine contributed 3.2%; emergency
room contributed 2.9%; dental contributed 5.7%; family medicine
2.1% and other clinical service lines contributed 15.3% of
revenue.
Operating expenses in the first quarter of 2014 increased 32% to
$51.4 million from $39 million in the prior year period. The
increase was primarily driven by merger transaction expenses of
$3.3 million which includes fees for
legal and other professional services related to the Company's
pending merger. Salaries, wages and benefits in the first quarter
of 2014 increased 24% to $28 million
from $22.7 million in the prior year
period, reflecting a 15% increase in headcount to support revenue
growth and development activities for new facilities and services.
The increase also reflects a new government mandate on increased
social benefits. Development, pre- and post-opening and start-up
expenses were $4 million this
quarter, compared to $2.5 million for
the prior year period. These expenses were driven by development
projects including the Company's Beijing United Family
Rehabilitation Hospital, expansions of the United Family Shunyi and
CBD Clinics in Beijing and the
Guangzhou United Family Hospital.
Adjusted EBITDA in the first quarter of 2014 increased 22% to
$9.0 million, compared to
$7.4 million in the prior year
period. The Adjusted EBITDA results show continued growth of the
Company's core primary care business as well as growth from
recently-expanded surgical services.
Loss from operations was $1.5
million, compared to income from operations of $2.6 million in the prior year period.
The Company recorded a $1.6
million provision for taxes in the first quarter of 2014,
compared to the tax provision of $1.9
million in the prior year period. As in past quarters, the
current period provision continued to be impacted by a higher tax
rate due to losses in development and start-up entities for which
the Company cannot currently recognize tax benefits.
Net loss for the quarter ended March 31,
2014 was $3.5 million, or
$(0.20) per diluted share, compared
to net loss of $62,000, or
$0.00 per diluted share, in the prior
year period. This included loss from the Company's minority
interest in CML of $350,000 this year
compared to a loss of $900,000 in the
prior year period. For the first quarter of 2014, weighted average
diluted shares outstanding were 17.7 million.
As of March 31, 2014, the Company
had $28.5 million in unrestricted
cash and cash equivalents.
Chindex Medical Limited
For Chindex Medical Limited (CML), a joint venture between
Shanghai Fosun Pharmaceutical (Group) Co., Ltd. and Chindex
International, Chindex recognized its 30% interest in CML's net
loss using the equity method of accounting since the acquisition of
Alma Lasers, Inc. on May 27,
2013.
In the first quarter of 2014, Chindex recognized a $350,000 loss for its equity interest in CML.
The operating results of CML in the first quarter of 2014 were
negatively impacted by traditionally slower first quarter sales
cycles in the China market offset
by strong sales of Alma Lasers in the North American market.
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 and equity in earnings (loss) of
unconsolidated affiliate and nonrecurring transaction costs. 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 9:00 am ET Thursday, May 8, 2014 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
39898301. 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 premium
quality 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 with a future facility under
construction in Qingdao. 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, 2013, 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.
Financial Summary Attached
CHINDEX
INTERNATIONAL, INC.
CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
(in thousands
except share and per share data)
(Unaudited)
|
|
|
|
Three months ended
March 31,
|
|
2014
|
2013
|
|
|
|
Healthcare services
revenue
|
$49,885
|
$41,565
|
|
|
|
|
Operating
expenses
|
|
|
|
Salaries, wages and
benefits
|
28,036
|
22,663
|
|
Other operating
expenses
|
6,440
|
5,715
|
|
Supplies and purchased medical services
|
5,955
|
4,965
|
|
Bad debt
expense
|
1,114
|
979
|
|
Depreciation and
amortization
|
3,242
|
2,302
|
|
Lease and rental
expense
|
3,265
|
2,361
|
|
Merger transaction
expenses
|
3,301
|
-
|
|
51,353
|
38,985
|
|
|
|
(Loss) income from
operations
|
(1,468)
|
2,580
|
|
|
|
Other income and
(expenses)
|
|
|
|
Interest
income
|
225
|
248
|
|
Interest
expense
|
(359)
|
(102)
|
|
Equity in loss of
unconsolidated affiliate
|
(350)
|
(900)
|
|
Miscellaneous
(expense) income - net
|
20
|
(2)
|
(Loss) income before
income taxes
|
(1,932)
|
1,824
|
Provision for income
taxes
|
(1,582)
|
(1,886)
|
Net loss
|
$(3,514)
|
$(62)
|
|
|
|
|
Net loss per common
share - basic
|
$(.20)
|
$(.00)
|
Weighted average
shares outstanding - basic
|
17,687,275
|
16,549,761
|
|
|
|
|
Net loss per common
share - diluted
|
$(.20)
|
$(.00)
|
Weighted average
shares outstanding - diluted
|
17,687,275
|
16,549,761
|
CHINDEX
INTERNATIONAL, INC.
CONSOLIDATED
CONDENSED BALANCE SHEETS
(in thousands,
except share data)
(Unaudited)
|
|
|
|
|
March 31, 2014
|
December 31, 2013
|
ASSETS
|
|
|
Current
assets:
|
|
|
Cash and cash
equivalents
|
$28,533
|
$33,107
|
Restricted
cash
|
1,524
|
1,286
|
Accounts receivable, less allowance for doubtful accounts of $15,316 and $14,338, respectively
|
23,964
|
23,041
|
Receivables from
affiliates
|
2,614
|
2,897
|
Inventories of
supplies, net
|
2,917
|
2,781
|
Deferred income
taxes
|
4,922
|
4,763
|
Other current
assets
|
5,249
|
3,787
|
Total current
assets
|
69,723
|
71,662
|
Restricted cash and
sinking funds
|
18,394
|
19,262
|
Investment in
unconsolidated affiliate
|
33,828
|
34,178
|
Property and
equipment, net
|
114,916
|
113,838
|
Noncurrent deferred
income taxes
|
835
|
811
|
Other
assets
|
3,940
|
4,817
|
Total
assets
|
$241,636
|
$244,568
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
Current
liabilities:
|
|
|
Short-term
debt
|
$4,336
|
$3,648
|
Accounts
payable
|
11,427
|
11,705
|
Payable to
affiliates
|
1,926
|
1,977
|
Accrued
expenses
|
17,047
|
17,984
|
Other current
liabilities
|
13,838
|
11,408
|
Income taxes
payable
|
3,190
|
3,658
|
Total current
liabilities
|
51,764
|
50,380
|
Long-term
debt
|
25,139
|
26,715
|
Long-term deferred
rent
|
1,560
|
1,223
|
Long-term deferred
tax liability
|
229
|
231
|
Total
liabilities
|
78,692
|
78,549
|
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 - 17,076,369 and 16,934,753 shares issued
and
outstanding at March 31, 2014 and December 31, 2013,
respectively
|
171
|
169
|
Class B stock -
1,162,500 shares issued and outstanding at March 31,
2014 and December 31, 2013, respectively
|
12
|
12
|
Additional paid-in capital
|
142,096
|
140,809
|
Retained
earnings
|
8,936
|
12,450
|
Accumulated other
comprehensive income
|
11,729
|
12,579
|
Total stockholders' equity
|
162,944
|
166,019
|
Total liabilities and stockholders' equity
|
$241,636
|
$244,568
|
CHINDEX
INTERNATIONAL, INC.
CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOWS
(in
thousands)
(Unaudited)
|
|
|
|
|
|
|
Three months ended March 31,
|
|
2014
|
2013
|
OPERATING
ACTIVITIES
|
|
|
|
|
Net loss
|
$
|
(3,514)
|
$
|
(62)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
Depreciation and
amortization
|
|
3,242
|
|
2,302
|
|
Inventory write
down
|
|
2
|
|
3
|
|
Provision for
doubtful accounts
|
|
1,114
|
|
979
|
|
Loss on disposal of
property and equipment
|
|
8
|
|
4
|
|
Equity in loss of
unconsolidated affiliate
|
|
350
|
|
900
|
|
Deferred income
taxes
|
|
(234)
|
|
(131)
|
|
Stock based
compensation
|
|
767
|
|
790
|
|
Foreign exchange
loss
|
|
349
|
|
51
|
|
Amortization of debt
issuance costs
|
|
272
|
|
2
|
|
Amortization of debt
discount
|
|
-
|
|
62
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Accounts
receivable
|
|
(2,263)
|
|
(3,300)
|
|
Accounts receivable
from affiliates
|
|
283
|
|
209
|
|
Inventories of
supplies
|
|
(164)
|
|
(104)
|
|
Other current assets
and other assets
|
|
(942)
|
|
(2,028)
|
|
Accounts payable, accrued expenses, other current liabilities and deferred revenue
|
|
1,824
|
|
1,436
|
|
Accounts payable to
affiliates
|
|
(50)
|
|
212
|
|
Income taxes
payable
|
|
(438)
|
|
(177)
|
Net cash provided by
operating activities
|
|
606
|
|
1,148
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
Purchases of property
and equipment
|
|
(5,397)
|
|
(2,610)
|
Net cash (used in)
investing activities
|
|
(5,397)
|
|
(2,610)
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
Restricted cash from
IFC RMB loan sinking funds
|
|
446
|
|
438
|
|
Repayment of
debt
|
|
(781)
|
|
(787)
|
|
Proceeds from
exercise of stock options
|
|
522
|
|
-
|
Net cash provided by
(used in) financing activities
|
|
187
|
|
(349)
|
Effect of foreign
exchange rate changes on cash and cash equivalents
|
|
30
|
|
(20)
|
Net decrease in cash
and cash equivalents
|
|
(4,574)
|
|
(1,831)
|
Cash and cash
equivalents at beginning of period
|
|
33,107
|
|
33,184
|
Cash and cash
equivalents at end of period
|
$
|
28,533
|
$
|
31,353
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
Cash paid for
interest
|
$
|
239
|
$
|
18
|
Cash paid for
taxes
|
$
|
2,235
|
$
|
2,189
|
|
|
|
|
|
|
Non-cash investing
and financing activities consist of the following:
|
|
|
|
|
Change in property and equipment additions included in accounts payable and payable
to affiliates
|
$
|
(80)
|
$
|
(101)
|
|
|
|
|
|
|
The table below
reconciles our consolidated net loss to Adjusted EBITDA (in
thousands)
|
|
|
|
Three months ended March 31,
|
|
2014
|
2013
|
|
|
|
Consolidated net
loss
|
$(3,514)
|
$(62)
|
|
|
|
Adjustments:
|
|
|
Depreciation and amortization
|
3,242
|
2,302
|
Provision for income taxes
|
1,582
|
1,886
|
Interest expense
|
359
|
102
|
Interest and other income, net
|
(245)
|
(246)
|
Development, pre-opening and start-up expense
|
3,955
|
2,547
|
Equity in loss of unconsolidated affiliate
|
350
|
900
|
Merger transaction costs
|
3,301
|
-
|
Subtotal - Adjustments
|
12,544
|
7,491
|
|
|
|
Adjusted
EBITDA
|
$9,030
|
$7,429
|
SOURCE Chindex International, Inc.