BEIJING, Aug. 13, 2012 /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, today announced its financial results for its second quarter and six months ended June 30, 2012.
Mr. Ping Chen, Chief Executive Officer of Dehaier Medical, stated, "Throughout the first half of 2012, we continued to focus on diversifying our revenues. While we have continued to build on our medical device sales and distribution foundation, we have also devoted sales resources to growing our proprietary respiratory and oxygen homecare products, explored international expansion possibilities and put more energy into developing and researching homecare products and protecting our intellectual property. Throughout this process we have continued to report strong operating profits. We improved our gross and operating margins and continue to leverage a strong balance sheet with minimal long-term debt. We believe that our business will continue to grow at a healthy rate in the long term as we strengthen our medical device distribution network; increase the market recognition and demand for our proprietary products; research, develop and begin to sell new products; and ramp up our international expansion."
In April 2012, Dehaier renewed its strategic cooperation agreement with Timesco of London Ltd ("Timesco"). The agreement appointed Dehaier as the exclusive distributor for Timesco's CXL and Eclipse series laryngoscope products in mainland China for three years.
In May 2012, the Company extended its exclusive distribution authorization with INTERMEDICAL ("IMD"), to distribute IMD's RADIUS C-arm X-ray machines in mainland China. The extended term runs through 2014.
In June 2012, Dehaier entered a three-year strategic mutual cooperation agreement with HEYER Medical AG ("Heyer"). According to this agreement, Dehaier will continue to be one of the key Chinese distributors for Heyer's anesthesia machines and the exclusive distributor of its nebulizers in China.
Also in June 2012, the Company co-developed a "High-Efficiency Oxygen Inhaler" with Dr. Ding Jianzhang of Beijing Haidian Hospital. This inhaler is expected to begin selling in mainland China in the third quarter of 2012. The portable device is designed for use in homecare oxygen therapy, emergency treatment, disaster relief activities and high-altitude settings.
Between April and June 2012, the company obtained software copyrights from China's National Copyright Administration for four of its proprietary technologies, including (1) Analysis and Monitoring Software of Adsorption Tower Oxygen Generation Process, (2) Dehaier Homecare CPAP Controlling Software, (3) Ventilator of CPAP Controlling Software and (4) Air Compressor Controlling Software. These copyrights have been approved for 50 years from the grant date.
In July 2012, Dehaier received approval from China's State Food and Drug Administration ("SFDA") for its proprietary homecare medical CPAP device, the DHR-CPAP-C5.
Second Quarter 2012 Financial Highlights
Total revenues were $7.0 million for the three months ended June 30, 2012, compared to $7.7 million in the prior-year quarter. The decrease was largely a result of the aforementioned change in operating strategy to focus on Dehaier's own homecare products and larger government procurement projects.
The Company's gross profit for the quarter ended June 30, 2012 was $2.7 million, or 39.2% of revenue, compared to $2.8 million, or 36.8% of revenue, in the prior-year period. Gross margin improved largely as a result of improved operating efficiencies and inventory management.
Dehaier's income from operations improved slightly, or 0.1%, to $1,928,212 in the 2012 second quarter from $1,925,024 in the prior-year period, largely due to lower selling expenses for the period. The Company expects its selling expenses to grow as it invests in strengthening its distribution network, growing relationships with customers, developing the homecare device market (in particular its oxygen therapy service initiative) and driving top-line growth in these areas.
The Company reported net income attributable to the Company of $1.7 million, or $0.36 per diluted share in the 2012 second quarter, compared to $1.7 million, or $0.39 per diluted share in the prior year.
Fiscal 2012 Six Month Financial Highlights
Total revenues decreased by 3% to $10.3 million for the six months ended June 30, 2012, from $10.7 million in the prior-year period.
The Company's gross profit for the six months ended June 30, 2012 was $4.0 million, or 39% of revenue, compared to $3.8 million, or 36% of revenue, in the prior-year period.
Dehaier's income from operations improved 7% to $2.4 million for the six months ended June 30, 2012, from $2.2 million in the prior-year period.
The Company reported net income attributable to the Company of $1.8 million, or $0.39 per diluted share in the six months ended June 30, 2012, compared to $1.9 million, or $0.43 per diluted share in the prior year.
Balance Sheet Highlights
Cash and Cash Equivalents
Total Long-term Debt
As a result of the total cash activities, net cash decreased from $3.7 million at December 31, 2011 to $1.1 million at June 30, 2012. This is mainly because we invested in obtaining copyright protection for our software, for our future development.
The Company believes that its currently available working capital of $25.9 million, including cash of $1.1 million, should be adequate to meet its anticipated cash needs and sustain its current operations for at least 12 months.
About Dehaier Medical Systems Ltd.
Dehaier is an emerging leader in the development, assembly, marketing and sale of medical products, including respiratory and oxygen homecare medical products. The Company develops and assembles its own branded medical devices and homecare medical products from third-party components. The company also distributes products designed and manufactured by other companies, including medical devices from IMD (Italy), HEYER (Germany), Timesco (UK) and eVent Medical (US). Dehaier's technology is based on six patents and five software copyrights; additionally Dehaier has two pending software copyrights and proprietary technology. More information may be found at http://www.dehaier.com.cn.
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, government approvals 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, future developments in payment for and demand for medical equipment and services, implementation of and performance under the joint venture agreement by all parties, 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.