SHENZHEN, China, Nov. 13, 2015 /satPRnews.com/ -- Mindray Medical International Limited (NYSE: MR), a leading developer, manufacturer and marketer of medical devices worldwide, announced today its selected unaudited financial results for the third quarter ended September 30, 2015.
Highlights for Third Quarter 2015
SUMMARY -- Third quarter 2015
Net Revenues
Mindray reported net revenues of $327.6 million for the third quarter of 2015, a 0.9% increase from the third quarter of 2014.
Performance by Segment
Patient Monitoring & Life Support Products: Net revenues in this segment decreased 2.7% year-over-year to $114.8 million, contributing 35.1% to total net revenues in the third quarter of 2015.
In-Vitro Diagnostic Products: Net revenues in this segment increased 2.9% year-over-year to $95.2 million, contributing 29.1% to total net revenues in the third quarter of 2015. Reagents sales represented 51.0% of net revenues in this segment.
Medical Imaging Systems: Net revenues in this segment increased 3.8% year-over-year to $85.6 million, contributing 26.1% to total net revenues in the third quarter of 2015.
Others: Net revenues in this segment increased 1.0% year-over-year to $31.9 million, contributing 9.7% to total net revenues in the third quarter of 2015.Other net revenues mainly include sales from the orthopedics business, service revenues from extended warranties, sales of accessories and repair service revenues for post-warranty period.
Gross Margin
Third quarter 2015 gross profit was $178.8million, a 2.2% decrease from the third quarter of 2014. Gross margin was 54.6% in the third quarter of 2015 compared to 56.3% in the third quarter of 2014 and 54.7% in the second quarter of 2015. Third quarter 2015 non-GAAP gross profit was $180.7million, a 2.4% decrease from the third quarter of 2014. Non-GAAP gross margin was 55.1% in the third quarter of 2015 compared to 57.0% in the third quarter of 2014 and 55.2% in the second quarter of 2015.
Operating Expenses
Selling expenses for the third quarter of 2015 were $62.5 million, or 19.1% of total net revenues, compared to 20.3% in the third quarter of 2014 and 19.0% in the second quarter of 2015. Non-GAAP selling expenses for the third quarter of 2015 were $59.7 million, or 18.2% of total net revenues, compared to 18.9% in the third quarter of 2014 and18.1%in the second quarter of 2015.
General and administrative expenses for the third quarter of 2015 were $20.4million, or 6.2% of total net revenues, compared to 12.1% in the third quarter of 2014 and 10.1% in the second quarter of 2015. Non-GAAP general and administrative expenses for the third quarter of 2015 were $15.8 million, or 4.8% of total net revenues, compared to 11.1% in the third quarter of 2014 and 9.1% in the second quarter of 2015. The change is largely due to the foreign exchange gain of $16.0 million from RMB's depreciation against US dollars.
Research and development expenses for the third quarter of 2015 were $37.1 million, or 11.3% of total net revenues, compared to 10.6% in the third quarter of 2014 and 10.8% in the second quarter of 2015. Non-GAAP research and development expenses for the third quarter of 2015 were $35.9 million, or 11.0% of total net revenues, compared to 10.2% in the third quarter of 2014 and 10.4% in the second quarter of 2015.
Total share-based compensation expenses, which were allocated to cost of revenues and related operating expenses, were $3.6 million in the third quarter of 2015, compared to $4.9 million in the third quarter of 2014 and $3.7 million in the second quarter of 2015.
Operating income for the third quarter of 2015 was $58.7 million, a 35.3% increase from the third quarter of 2014. Operating margin was 17.9% in the third quarter of 2015, compared to 13.4% in the third quarter of 2014 and 14.8% in the second quarter of 2015. Non-GAAP operating income for the third quarter of 2015 was $69.3 million, a 27.3% increase from the third quarter of 2014. Non-GAAP operating margin was 21.1% in the third quarter of 2015compared to 16.8% in the third quarter of 2014 and 17.6% in the second quarter of 2015.
Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA")
Third quarter 2015 EBITDA increased 28.9% year-over-year to $74.1 million.
Net Income
Third quarter 2015 net income increased 10.5% year-over-year to $50.9 million. Net margin was 15.5% in the third quarter of 2015 compared to 14.2% in the third quarter of 2014 and 12.2% in the second quarter of 2015. Third quarter 2015 non-GAAP net income increased 7.5% year-over-year to $60.4 million. Non-GAAP net margin was 18.4% in the third quarter of 2015, compared to 17.3%in the third quarter of 2014 and 14.7% in the second quarter of 2015. Third quarter 2015 interest income was $7.6 million, compared to $9.5 million a year ago and $3.0 million in the previous quarter. Third quarter 2015 income tax expense was $14.8 million, representing an effective tax rate of 22.1%.
Third quarter 2015 non-GAAP net income (excluding the tax benefits in relation to our nationwide key software enterprise status) increased 10.4% year-over-year to $60.4 million. Non-GAAP net margin (excluding the tax benefits in relation to our nationwide key software enterprise status) was 18.4% in the third quarter of 2015, compared to 16.9% in the third quarter of 2014 and 14.7% in the second quarter of 2015.
Third quarter 2015 basic and diluted earnings per share were both $0.43, compared to $0.39 for both in the third quarter of 2014. Third quarter 2015 basic and diluted non-GAAP earnings per share were both $0.51, compared to $0.48 and $0.47 respectively, in the third quarter of 2014. Shares used in the computation of diluted earnings per share for the third quarter 2015were 118.7 million.
Other Select Data
Accounts receivable turnover days were 51 days in the third quarter of 2015, improved from 55 days in the third quarter of 2014 and the same compared to the second quarter of 2015. Inventory turnover days were 108 days in the third quarter of 2015, compared to 106 days in the third quarter of 2014 and 101 days in the second quarter of 2015. Accounts payable turnover days were 63 days in the third quarter of 2015, compared to 67 days in the third quarter of 2014 and 57 days in the second quarter of 2015. Mindray calculates the above working capital turnover days using the average of the beginning and ending net balances of the quarter.
As of September 30, 2015, the company had $958.0 million in cash and cash equivalents as well as short-term and restricted investments (excluding $7.1 million investment being held on escrow account in connection with acquisition), compared to $1,057.9 million as of June 30, 2015. Net cash generated by operating activities and net cash outflow for capital expenditures for the third quarter of 2015 were $108.8 million and $27.2 million respectively.
As of September 30, 2015, the company had around 8,400 employees.
Going Private Transaction
On November 4, 2015, the company entered into a definitive Agreement and Plan of Merger with respect to the previously announced "going private" transaction. The agreed purchase price per ADS is US$28.0.
The transaction is subject to various closing conditions, including shareholder approval. The company will prepare and file with the U.S. Securities and Exchange Commission (the "SEC") a Schedule 13E-3 transaction statement, which will include a proxy statement of the company. The Schedule 13E-3 will include a description of the Agreement and Plan of Merger and contain other important information about the transaction, the company, and the other participants in the transaction.
In the interim, investors are encouraged to review the related Form 6-K filed with the SEC at www.sec.gov on November 4, 2015 that contains certain information and attachments with respect to the going private transaction and its participants.
In light of these events the company does not intend to host a conference call to discuss the financial information contained in this press release.
Use of Non-GAAP Financial Measures
Mindray provides gross profit, selling expenses, general and administrative expenses, research and development expenses, operating income, net income and earnings per share on a non-GAAP basis that excludes share-based compensation expense, acquired intangible assets amortization expense, dISPute related legal fees and going private related expenses, all net of related tax impact, as well as EBITDA to enable investors to better assess the company's operating performance for the third quarter of 2015 and its comparative periods. The non-GAAP measures described by the company are reconciled to the corresponding GAAP measure in the exhibit below titled "Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures".
The company has reported operation results for the third quarter of 2015 and its comparative periods on a non-GAAP basis. Each of the terms as used by the company is defined as follows:
The company computes its non-GAAP financial measures using the same consistent method from quarter to quarter. The company notes that these measures may not be calculated on the same basis of similar measures used by other companies. Readers are cautioned not to view non-GAAP results on a stand-alone basis or as a substitute for results under GAAP, or as being comparable to results reported or forecasted by other companies, and should refer to the reconciliation of GAAP results with non-GAAP results for the three and nine months ended September 30, 2014 and 2015, respectively, in the attached financial information.
Cautionary Note Regarding Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements that are not historical facts are forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors, including, without limitation, competitive, pricing and other conditions in China and our international markets and our ability to effectively address or respond those conditions; our ability effectively attract and retain our key employees; the growth and expected growth of the medical device market in China and internationally; applicable government policies and regulations; our ability to satisfy the requirements imposed by relevant regulatory bodies; market acceptance of our products; our expectations regarding demand for our products; our ability to expand our production, our sales and distribution network and other aspects of our operations; our ability to stay abreast of market trends and technological advances; our ability to effectively protect our intellectual property rights and not infringe on the intellectual property rights of others; our ability to settle disputes with our customers and suppliers and related costs, expenses and potential business disruptions; competition in the medical device industry in China and internationally; and general economic and business conditions in the countries in which we operate. For a discussion of other important factors that could adversely affect our business, financial condition, results of operations and prospects, see "Risk Factors" beginning on page 6 of our annual report on Form 20-F which was filed with the Securities and Exchange Commission on April 16, 2015. Our results of operations for the third quarter as of September 30, 2015are not necessarily indicative of our operating results for any future periods. The financial information contained in this release should be read in conjunction with the consolidated financial statements and notes thereto included in our public filings with the Securities and Exchange Commission. Any projections in this release are based on limited information currently available to us, which is subject to change. Although such projections and the factors influencing them will likely change, we will not necessarily update the information. Such information speaks only as of the date of this release.
All references to "shares" are to our ordinary shares, which are divided into two classes, Class A and Class B. Each of our American Depositary Shares, which trade on the New York Stock Exchange, represents one Class A ordinary share.
About Mindray
We are a leading developer, manufacturer and marketer of medical devices worldwide. We maintain our global headquarters in Shenzhen, China, U.S. headquarters in Mahwah, New Jersey and multiple sales offices in major international markets. From our main manufacturing and engineering base in China, we supply through our worldwide distribution network a broad range of products across three primary business segments, namely patient monitoring and life support, in-vitro diagnostics, and medical imaging systems. For more information, please visit http://ir.mindray.com.
For investor and media inquiries, please contact:
In China:
Cathy Gao
Mindray Medical International Limited
Tel: +86-755-8188-8023
Email: cathy.gao@mindray.com
In the U.S:
Hoki Luk
Western Bridge, LLC
Tel:+1-646-808-9150
Email: hoki.luk@westernbridgegroup.com
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