BEIJING, Nov. 12, 2010 /PRNewswire via COMTEX/ -- 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 Investor Relations: Dave Gentry, U.S.
RedChip Companies, Inc.
Tel: +1-800-733-2447, Ext. 104 Email: info@redchip.com Jing Zhang, China RedChip Beijing Representative Office Tel: +86 10-8591-0635 Web: http://www.RedChip.com DEHAIER MEDICAL SYSTEMS LIMITED AND AFFILIATE CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) For the nine months ended September 30, ------------- 2010 2009 --- --- US$ US$ Revenue 12,930,769 9,422,460 Costs of revenue (7,776,867) (5,688,352) ---------- ---------- Gross profit 5,153,902 3,734,108 Service income 274,154 298,036 Service expenses (108,825) (113,066) General and administrative expense (875,840) (787,784) Selling expense (834,279) (544,470) -------- -------- Operating Income 3,609,112 2,586,824 Financial expenses ( including interest expense of $48,255, $67,704, $21,452 and $23,772) (98,411) (66,384) Change in fair value of warrants liability 114,806 - ------- --- Income before provision for income taxes and non- controlling interest 3,625,507 2,520,440 Provision for income tax (543,749) (410,162) -------- -------- Net income 3,081,758 2,110,278 Non-Controlling interest in income (14,561) (38,502) ------- ------- Net income attributable to Dehaier Medical Systems Limited 3,067,197 2,071,776 Earnings per share -Basic 0.79 1.10 -Diluted 0.77 0.69 Weighted average number of common shares used in computation -Basic 3,887,868 1,891,930 -Diluted 3,981,094 3,000,000 For the three months ended September 30, ------------- 2010 2009 --- --- US$ US$ Revenue 5,458,818 3,588,442 Costs of revenue (3,199,072) (2,101,639) ---------- ---------- Gross profit 2,259,746 1,486,803 Service income 92,648 101,708 Service expenses (40,479) (38,085) General and administrative expense (355,431) (159,203) Selling expense (351,469) (152,776) -------- -------- Operating Income 1,605,015 1,238,447 Financial expenses ( including interest expense of $48,255, $67,704, $21,452 and $23,772) (43,725) (21,302) Change in fair value of warrants liability 96,412 - ------ --- Income before provision for income taxes and non- controlling interest 1,657,702 1,217,145 Provision for income tax (245,569) (183,712) -------- -------- Net income 1,412,133 1,033,433 Non-Controlling interest in income (4,570) (14,782) ------ ------- Net income attributable to Dehaier Medical Systems Limited 1,407,563 1,018,651 Earnings per share -Basic 0.31 0.54 -Diluted 0.30 0.34 Weighted average number of common shares used in computation -Basic 4,500,000 1,891,930 -Diluted 4,657,500 3,000,000 DEHAIER MEDICAL SYSTEMS LIMITED AND AFFILIATE CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30, December 31, --------- ------------ 2010 2009 ---- ---- US$ 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 Other receivables 3,107,351 1,499,111 Prepayment and other current assets 6,124,933 1,691,387 Inventories, net 4,301,025 2,326,126 --------- --------- Total Current Assets 27,572,600 13,559,636 Property and equipment, net 3,541,763 2,862,625 Tax receivable 2,450,681 1,362,372 Total assets 33,565,044 17,784,633 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short-term borrowings 1,495,000 1,464,770 Accounts payable 37,095 93,770 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 --------- --------- Commitments and contingency Shareholders' equity Common stock, $0.002731 par value, 18,307,038 shares authorized, 4,500,000 and 3,000,000 shares issued and outstanding at September 30, 2010 and December 31, 2009, respectively 12,290 8,193 Additional paid in capital 13,137,085 3,196,974 Retained earnings 8,365,939 5,298,742 Accumulated other comprehensive income 1,185,177 773,127 --------- ------- Total Dehaier Medical Systems Limited shareholders' equity 22,700,491 9,277,036 Non-controlling interest 1,303,262 1,262,389 --------- --------- Total shareholders' equity 24,003,753 10,539,425 ---------- ---------- Total liabilities and shareholders' equity 33,565,044 17,784,633 DEHAIER MEDICAL SYSTEMS LIMITED AND AFFILIATE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the nine months ended September 30 ------------------- 2010 2009 ---- ---- US$ US$ Operating Activities Net income 3,081,758 2,110,278 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 ---------- --------- Investing Activities Capital expenditures and other additions (839,456) (915,693) 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 SOURCE Dehaier Medical Systems Ltd.
www.prnewswire.com Copyright (C) 2010 PR Newswire. All rights reserved -0- KEYWORD: China INDUSTRY KEYWORD: MEQ
HEA SUBJECT CODE: ERN
CCA