Dehaier Medical Systems Q2 Revenue Up 46% to $4.83 Million; Net Income Up 59% to 1.14 Million; EPS 0.27
Company Continues to Expand Marketing Strategies
BEIJING, Aug. 16 /PRNewswire-Asia-FirstCall/ -- Dehaier Medical Systems Ltd. (Nasdaq: DHRM), an emerging leader in the development, assembly, marketing and sale of medical devices and homecare medical products in China, today reported financial results for its second quarter 2010 ended June 30, 2010.
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Q2 2010 Financial Highlights
-- Revenue for the second quarter ended June 30, 2010 increased 46% to
$4.83 million from $3.31 million in the same quarter a year ago
reflecting the increased acceptance of the company's products among
hospitals and other healthcare facilities. Expanded product lines also
contributed to the revenue growth.
-- Gross profit increased 46% to $1.92 million for Q2 FY'10 from $1.31
million in Q2 FY'09.
-- Gross margin for the second quarter ended March 31, 2010 remained
constant at 40%, the same as the second quarter in 2009.
-- Operating income rose 52.76% to $1.36 million in Q2 FY'10 compared with
$0.89 million in Q2 FY'09 primarily due to the increased revenues.
-- Net income attributable to Dehaier for the second quarter ended June 30,
2010 increased 59% to $1.14 million, compared to $0.72 million for the
same period of 2009.
-- Earnings per diluted share in Q2 FY'10 was $0.27, compared to $0.24 per
diluted share in Q2 FY'09.
Six Months Highlights
-- Revenue for the first six months of 2010 increased by 28% to $7.47
million from $5.83 million in the first six months of 2009.
-- Gross profit increased 29% to $2.89 million from $2.25 million in the
same period of 2009.
-- Gross margin for the first six months ended June 30, 2010 remained
constant at 39%, which is the same as that of the first six months in
2009.
-- Operating income rose 49% to $2.0 million from $1.35 million in the
same period of 2009.
-- Net income attributable to Dehaier for the first six months increased
58% to $1.66 million, compared to $1.05 million for the same period of
2009.
-- Earnings per diluted share in H1 FY'10 was $0.46, compared to $0.35 per
diluted share in H1 FY'09.
Liquidity and Capital Resources
The company's cash balance on June 30, 2010 was approximately $6.54 million. On June 30, 2010 Dehaier had short-term debt of $1,474,610 in the form of a short-term bank loan due in June 2011. The company had no long-term debt. Working capital was $17,559,244, which the company said would be adequate to meet anticipated cash needs and sustain current operations for at least 12 months.
Management Comments
Dehaier CEO Mr. Ping Chen said, "The second quarter of 2010 was an exciting period for our rapidly growing company. We recorded another quarter of excellent financial results and our stock began trading on the Nasdaq Capital Market with our successful initial public offering ("IPO"), which closed on April 22, 2010. We sold 1,500,000 shares that produced net proceeds of $9,944,207.
"This has provided us with sufficient working capital to expand our marketing efforts in order to grow our revenues in China and internationally.
"The increase in revenues reflected increased acceptance of our products among hospitals and other healthcare facilities as many of our end users such as hospitals became repeat customers when they needed new medical equipment. The increase in revenue was also due to Dehaier's growing line of product offerings.
"We signed several exclusive distribution agreements this quarter with international firms Penlon, HEYER and Welch Allyn to expand our product lines. Sales of products from these companies are already contributing to revenue growth.
"We are targeting the addition of four to eight new product offerings per year. We anticipate these new products will include distributed products as well as products that are developed or acquired by Dehaier. We have designated 25 percent of the IPO proceeds for product research and development. Another 20 percent of the IPO proceeds have been budgeted for potential acquisitions, clearly showing our focus on building a pipeline of products to introduce to our customers. We will be concentrating on products that enhance our capability to serve the respiratory and oxygen homecare markets.
"Underscoring the important competitive advantage we are achieving with our proprietary home oxygen therapy products is our previously-announced new contract with Beijing C&D Co. to purchase Dehaier oxygen-chip units.
"In addition to increasing sales of our fast-growing Dehaier brand homecare medical products, we are building new revenue streams by adding to our product line offerings through complementary acquisitions, such as the emergency ventilator product line we purchased from Beijing Qiumanshi Technology Co., as announced last month. That acquisition included the production technology as well as the complete proprietary intellectual property.
"With the marketing capital provided by our IPO, we plan to open new customer experience centers ("CECs") to strengthen our market presence throughout China. These CECs give our potential customers an opportunity to experience our products first-hand in an environment similar to the environment in which they will use the products, either in a home or in a healthcare facility. Our initial CEC is already operational in Beijing and we anticipate opening three new CECs in the third quarter and up to nine CECs during the fourth quarter, so that we will operate CECs in twelve cities at the end of 2010. Our plan to open CECs in provincial capitals and big cities throughout China is a key part of our strategy for growing our high-margin homecare medical product sales.
"We have participated in several medical exhibitions and tradeshows in China and abroad to network and build relationships and alliances as we further build our distribution network in China and internationally.
"Our business outlook continues to be very favorable. We are excited to bring our growth story to the financial community, and were very pleased to participate recently in the Global Hunter investment conference in San Francisco. We remain comfortable with our previously announced earnings per share target for 2010 of $0.80," Mr. Chen said.
Conference Call
Dehaier will host an earnings conference call on Tuesday, August 17, 2010 at 9:00 a.m. Eastern Time (9:00 pm Beijing time on August 17). The call will cover the company's second quarter 2010 results, and a question-and-answer session will follow.
To participate, call U.S. toll free number 1-888-549-7735 approximately 10 minutes before the call. International callers, please dial 1-480-629-9858. The conference ID number is 4349036. A live and archived webcast of the call will be available at http://viavid.net/dce.aspx?sid=000079A8 . Both an MP3 file one hour after the call and a transcript 24 hours after the call will be available. These will be archived for 90 days via http://www.hawkassociates.com .
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 .
Information for investors, including an investment profile about Dehaier is available at http://www.hawkassociates.com/profile/dhrm.cfm . An online investor kit including press releases, current price quotes, stock charts and other valuable information for investors is available at http://www.hawkassociates.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.
For more information, please contact:
Investor contact:
Hawk Associates
Julie Marshall or Grace Huang
Tel: +1-305-451-1888
Email: [email protected]
DEHAIER MEDICAL SYSTEMS LIMITED AND AFFILIATE
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2010 2009
US$ US$
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 6,540,009 1,151,721
Accounts receivable, less allowance for
doubtful accounts of $77,783 and
$102,939 8,867,002 6,891,291
Other receivables 2,765,248 1,499,111
Prepayment and other current assets 4,611,990 1,691,387
Inventory, net 3,165,490 2,326,126
Total Current Assets 25,949,739 13,559,636
Property and equipment, net 2,803,429 2,862,625
Tax receivable 1,926,290 1,362,372
Total assets 30,679,458 17,784,633
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term borrowings 1,474,610 1,464,770
Accounts payable 16,675 93,770
Advances from customers 92,606 174,253
Accrued expenses and other current
liabilities 263,076 336,412
Tax payable 6,111,966 4,993,387
Warranty obligation 179,956 178,755
Warrants Liability 251,606 --
Due to officer -- 3,861
Total current liabilities 8,390,495 7,245,208
Commitments and contingency -- --
Shareholders' equity
Common stock, $0.002731 par value,
18,307,038 shares authorized,
4,500,000 and 3,000,000 shares
issued and outstanding at June 30, 2010
and December 31, 2009, respectively 12,290 8,193
Additional paid in capital 13,137,085 3,196,974
Retained earnings 6,958,377 5,298,742
Accumulated other comprehensive income 900,285 773,127
Total Dehaier Medical Systems Limited
shareholders' equity 21,008,037 9,277,036
Non-controlling interest 1,280,926 1,262,389
Total shareholders' equity 22,288,963 10,539,425
Total liabilities and shareholders' equity 30,679,458 17,784,633
DEHAIER MEDICAL SYSTEMS LIMITED AND AFFILIATE
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the six months ended For the three months ended
June 30, June 30,
2010 2009 2010 2009
US$ US$ US$ US$
Revenue 7,471,951 5,834,018 4,830,862 3,309,734
Costs of revenue (4,577,795) (3,586,713) (2,911,077) (1,999,225)
Gross profit 2,894,156 2,247,305 1,919,785 1,310,509
Service income 181,506 196,328 88,439 97,093
Service expenses (68,346) (74,981) (40,325) (37,713)
General and
administrative expense (520,409) (628,581) (297,024) (291,015)
Selling expense (482,810) (391,694) (314,959) (191,265)
Operating Income 2,004,097 1,348,377 1,355,916 887,609
Financial expense
(including interest
expense of $26,728,
$43,932, $7,900 and
$15,567) (54,686) (45,082) (35,360) (16,126)
Change in fair value
of warrants liability 18,394 -- 18,394 --
Income before provision
for income taxes and
non-controlling
interest 1,967,805 1,303,295 1,338,950 871,483
Provision for income
tax (298,180) (226,450) (203,297) (145,838)
Net income 1,669,625 1,076,845 1,135,653 725,645
Non-Controlling interest
in (income) loss (9,991) (23,720) 3,770 (10,376)
Net income
attributable to
Dehaier Medical
Systems Limited 1,659,634 1,053,125 1,139,423 715,269
Earnings per share
-Basic 0.46 0.56 0.27 0.38
-Diluted 0.46 0.35 0.27 0.24
-- -- -- --
Weighted average
number of common
shares used in
computation
-Basic 3,575,000 1,891,930 4,150,000 1,891,930
-Diluted 3,632,500 3,000,000 4,265,000 3,000,000
DEHAIER MEDICAL SYSTEMS LIMITED AND AFFILIATE
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the six months ended
June 30,
2010 2009
US$ US$
Operating Activities
Net income 1,669,625 1,076,845
Adjustment to reconcile net income to net
cash provided by (used in)operating
activities -- --
Depreciation and amortization 172,314 139,012
Recovery of doubtful accounts (25,680) --
Provision for (recovery
of)inventory obsolescence (1,922) 52,989
Change in Warrants Liability 18,394 --
Changes in assets and liabilities
Increase in accounts receivable (1,950,032) (1,593,441)
Decrease (increase) in prepayments and
other current assets (2,920,603) 938,541
Increase in other receivable (1,266,137) (107,157)
Increase in inventory (837,443) (1,392,611)
Increase in tax receivable (563,918) (462,317)
(Decrease) increase in accounts payable (77,095) 677,283
Decrease in advances
from customers (81,647) (43,896)
(Decrease) increase in accrued expenses
and other current liabilities 159,880 (10,911)
Increase in tax payable 1,118,579 780,699
Net cash provided by (used in) operating
activities (4,585,685) 55,036
Investing Activities
Capital expenditures and other
additions (94,397) (18,696)
Proceeds from (advances to)
related parties (3,861) 5,656
-- --
Net cash used in investing activities (98,258) (13,040)
Financing Activities
Proceeds from initial public offering 9,944,207 --
Net cash provided by financing activities 9,944,207 --
Effect of exchange rate fluctuations on
cash and cash equivalents 128,024 10,818
Net increase in cash and cash
equivalents 5,388,288 52,814
Cash and cash equivalents at
beginning of period 1,151,721 282,603
Cash and cash equivalents at end
of period 6,540,009 335,417
Supplemental cash flow information
Income tax paid 24,604 12,823
Interest paid 26,728 43,932
SOURCE Dehaier Medical Systems Ltd.
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