Chindex Signs Management Agreement for Chinese Healthcare Facility

Chindex International, Inc. (CHDX), which provides Western medical products and healthcare services to China, signed an agreement to manage the Wuxi United Family International Healthcare Center. The facility is owned by the International Travel Healthcare Association Wuxi Centre.

Previously, Chindex has been involved in running its own healthcare facilities in China, but this is the first time it has signed an “under management” agreement to run a facility for another organization.

The Wuxi facility is brand new and aims to provide top-quality healthcare to the citizens of the area. Chindex will operate the facility under its United Family brand, which is known to adhere to the international standards of healthcare delivery. Chindex owns five other facilities in China. The new “under management” initiative will allow the company to expand more rapidly in China.

Separately, Chindex reported its financial results for fiscal 2007, which ended March 31, 2007 for the company. Revenues came in at $105.9 million, a 17% increase, and net income was $3 million, considerably more than the $167,000 for the prior year. Profits represent the results from continuing operations only.

At the end of the fiscal year, Chindex had $10.7 million in cash and total assets of $62.9 million. Shareholder’s equity was $27.9 million.

The Healthcare Services division, which operates primarily in Beijing and Shanghai, made a profit of $5 million on $47.9 million in revenue. It is the only foreign-invested, multi-facility hospital network in China. Besides the Wuxi clinic, Chindex has plans to expand in Guangzhou, first with a clinic and then a hospital.

The Medical Products division markets medical equipment, instrumentation and other products. It is the only distributor for Siemens in China. The division produced $58 million in revenue, but earnings were hurt by changes in the Chinese procurement process and slowing demand. Approvals for some products were delayed. On the positive side, the U.S. Ex-Im Bank resumed financing loans to buy equipment. Chindex expects the division to be profitable, once again, in 2008.

Chindex has a market capitalization of $168 million.

CHDX 1-yr chart:

Disclosure: none.