China Medical Reports Positive Results for Ongoing Business

As promised earlier, China Medical Technologies (CMED) released selected Q2 (ended September 30, 2008) results, though a full disclosure, complete with analysts’ call, will wait until December 18. The problem with a full release is reporting issues: China Medical is deciding how to account for its very large $345 million purchase of the HPV-DNA Chip and SPR-based Analysis System.

In the meantime, China Medical has the good fortune of being able to report very positive results for its ongoing business. Revenues climbed 35% to 291 million RMB ($42.8 million), while net income increased even more, rising 47% to 154 million RMB ($22.7 million) (non-GAAP). That means net income equaled a spectacular 53% of revenues. GAAP figures will have to wait for another month.

Revenues for the company’s ECLIA (Enhanced Chemiluminescence) division were $18 million, a 32% increase; the FISH (Fluorescent in situ Hybridization) division revenues were up 133% at 10.6 million; and HIFU (High Intensity Focused Ultrasound) tumor therapy system sales rose 6% to $14.2 million. Up until about a year ago, HIFU systems constituted more than half of China Medical’s revenues. While the division has continued to grow by single digit percentages, it has been overtaken by the much larger increases in revenues from its two in-vitro diagnostic divisions.

At the end of the quarter, China Medical held $398 million in cash. China Medical will spend the vast majority of that on its HPV-DNA Chip and SPR-based Analysis System acquisition.

Following the announcement, China Medical rose 49 cents to $24.99, up 2%.

Disclosure: none.