Mindray Medical Announces Solid 3Q Results

Mindray Medical International Limited (NYSE: MR), a China-based developer, manufacturer and marketer of medical devices announced its selected unaudited financial results for the third quarter ended September 30, 2007 after the close yesterday. The company's results were strong.

The company reported third quarter 2007 net revenues of US$76.5 million, up 58.9% over the same quarter last year. Net income [GAAP] grew 70% to US$20.7 million for a net margin of over 27%. International markets accounted for US$38.2 million or half of all revenues, with revenues rising 52% over last year. China growth remained solid, with revenues increasing 66.3% to US$38.3 million.

Management reported strong sales growth across all three product divisions:

1. Patient Monitoring Devices revenues rose 48.5% to (US$27.6 million). Strength was seen in the company's higher end Beneview product line. Patient Monitoring Devices contributed 36.6% of total net revenues.
2. Diagnostic Laboratory Instruments sales grew 64.5% to US$24.9 million. Growth in China was boosted by increased Chinese government spending on rural health facilities. Growing market penetration for the company's BS-400 and BC-5500 product lines was seen internationally. Diagnostic Laboratory Instruments contributed 33.0% of total net revenues.
3. Ultrasound Imaging Systems showed revenue growth to US$21.7 million, up 66.2%. Sales rose on strong demand for color ultrasound and strong government buying contributed 28.7% as a percentage of total net revenues.

Li Xitang, Mindray's President and Co-CEO said:

In our domestic market, we continue to benefit from rising private healthcare spending, as well as a steady increase in government tenders. These trends reflect the strong growth of China's economy and the government's commitment to investing in rural healthcare infrastructure. Internationally, product sales saw healthy growth across all of our geographies, most notably in our European and South American markets. During the quarter we remained focused on building out an extensive international distribution network and further expanded our presence abroad, opening offices in Canada, Brazil, Mexico and the Netherlands.

Gross profit in third quarter 2007 was US$42.2 million, a 57.1% increase from the third quarter 2006. The consolidated gross margin for the third quarter 2007 was 55.1% compared to 56.0% in the second quarter 2007. Non-GAAP gross margin was 56.0% in the third quarter 2007 compared to 57.0% in the second quarter 2007, and 56.7% in the first nine months of 2007.Non-GAAP operating profit in the third quarter 2007 was US$23.0 million, a 62.4% increase from the third quarter 2006. GAAP operating profit in the third quarter 2007 was US$20.6 million, representing a 59.5% increase. Non-GAAP operating margins were 30.1% in the third quarter 2007, compared to 29.4% in the third quarter 2006 and 32.5% in the second quarter 2007. GAAP operating margins were 27.0% in the third quarter 2007 compared to 26.9% in the third quarter 2006 and 29.1% in the second quarter 2007.Research and development costs for the third quarter 2007 were US$7.6 million, compared to US$4.8 million in the third quarter 2006. Research and development expenses were 9.9% of total net revenues, compared to 10.1% in the third quarter 2006 and 8.8% in the second quarter 2007.

The company has targeted R&D investment at 10% of revenues.The company maintained 2007 full year revenue guidance to be US$289 million to $293 million, with non-GAAP net income of US$80.4 million to $84.5 million. Non-GAAP net income per share is expected to be in the range of US$0.71 to $0.75 on a fully diluted basis, assuming an estimated diluted share count of 113 million. On the conference call, management reported that while they were not adjusting guidance, they were "very confident" in their guidance.

Analyst consensus net earnings per share estimates for full year 2007 were US$0.68 prior to the report, indicating that Mindray Medical is on track to meet or exceed consensus estimates. This earnings report, another in a line of strong reports, is likely to lead to further upward revisions in earnings estimates. Investors like what Mindray has to say. After falling US$1.19 or 3% on the regular session, shares rose US$1.15 to US$39.72 in the after hours.

Disclosure: none

Comments

[Dan Jacome:]

a best play on China besides FMCN -- good job

2007 Nov 03 04:58 PM