Mindray Medical Reports Stellar 2009 on Strength of China’s Medical Device Market

| About: Mindray Medical (MR)

Mindray Medical (NYSE: MR), the medical device company headquartered in Shenzhen, issued a very positive financial report for 2009. The company recorded revenues of $634 million, an increase of 16%, while net income climbed to $139.2 million, a 28% jump. For 2010, Mindray said it expects revenue growth to continue at a 17% pace; non-GAAP net income is expected to match that rate.

Not surprisingly, China provided the bulk of Mindray’s expansion. Revenues in its China operations rose 25%, while the increase in other markets was a comparatively meager 9%. In light of the uncertainty surrounding all financial endeavors at the beginning of 2009, the international results are more than respectable. But China’s growth underlines the huge difference between the vitality of its medical device market and that of the rest of the world.

In terms of divisions, Patient Monitoring & Life Support Products generated 44% of the company’s revenues (up 5%); In-Vitro Diagnostic Products supplied 24% of sales (a 24% increase) and Medical Imaging Systems contributed 26% of revenues (12% higher). (All of the numbers are from the fourth quarter – Mindray did not release a full-year breakdown by division).

A large part of the Patient Monitoring division’s revenue derives from its 2008 acquisition of Datascope’s patient monitoring business, a business that is located largely in the US and Europe. As a result, the segment is Mindray’s largest, but it also reported the lowest rate of growth last year.

Mindray also reiterated that it was granted key software enterprise status for its Shenzhen subsidiary in 2009. The award cuts that subsidiary’s tax rate to 10% and saved the company $8.6 million. Mindray will recognize the windfall in Q1 of 2010, when the award was made, as a one-time event because the status is awarded on a year-by-year basis. Its guidance for 2010 excludes the tax savings.

Mindray’s results are so strong that it’s difficult to remember the financial fear that was rampant at the beginning of the year. The numbers are a tribute to the strength of Mindray’s product portfolio and also the strength of China’s medical device market.

Disclosure: none.

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Tagged: , Medical Instruments & Supplies, China, Earnings
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