In a mixed Q2 financial report, Mindray Medical (NYSE: MR), a major China medical device company, reported higher numbers for the period, though revenues were below analysts’ predictions. The company blamed the miss on a decline in its Q2 China revenues, largely because of a shortfall in its revenues from government tenders. International sales, on the other hand, remained robust, rising 27%.
Because of the disappointing China results, Mindray reduced its expectations for full-year 2010 revenues from $745 million to $700 million, a 6% cut.
Putting its best face on the news, Mindray emphasized that non-tender sales in China were up 9% and that the timing of government tenders cannot be predicted. Nevertheless, China revenues were off by 4% from 2009’s Q2.
The actual results for Q2 represent solid increases from the year-earlier period. Revenues for Q2 climbed 12% to $179.2 million, and net income was up 21% at $42.3 million. The problem is that both Mindray and the analyst community expected better.
International sales contributed $106.8 million to the total, about 60%. Mindray said growth in emerging markets was strong, especially in Latin America and CIS countries.
Net earnings per share were 36 cents, a rise of 22%.
Mindray’s Patient Monitoring & Life Support Products division reported 20% higher revenues at $82.8 million. In-Vitro Diagnostic Products rose 8.0% to $43.2 million. Medical Imaging Systems was the laggard, climbing just 2% to $42.7 million. Other revenues (mostly warranty period repair services) were up 16% to $10.5 million.
Because of the disappointing sales in the government tender sector, Mindray said it will realign its sales force to concentrate on higher-end products that are aimed at the China hospital self-funded sector.
In May 2008, Mindray paid $202 million to acquire Datascrope’s patient monitoring division, a business that greatly increased Mindray’s footprint in the US and Europe and provided synergies with its own patient monitoring offerings.
In early trading following the announcement, Mindray's shares were off $4.45 at $28.05, a 14% decline that puts the stock close to its year low. In the last 52 weeks, Mindray has traded between $27.69 and $40.35.
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