Mindray Medical International Limited (NYSE: MR), a leading developer, manufacturer and marketer of medical devices worldwide announced today its selected unaudited financial results for the second quarter and first half ended June 30, 2009.
Highlights for Second Quarter and First Half 2009 -- Second quarter 2009 net revenues were $160.1 million, an increase of 9.9% over the second quarter of 2008 and 19.3% over the first quarter of 2009. -- Fully diluted EPS in the second quarter of 2009 was $0.29, a 38.8% increase from the second quarter of 2008 and a 29.8% increase from the first quarter of 2009. -- EBITDA in the second quarter of 2009 was $46.7 million, a 38.8% increase from the second quarter of 2008. -- Gross margin in the second quarter of 2009 was 57.2%, up from 52.8% in the second quarter of 2008 and 55.7% in the first quarter of 2009. -- Net operating cash generated during the second quarter of 2009 was $34.5 million. -- Working capital days were 77 in the second quarter of 2009. -- A total of five products were launched in the first half of 2009. -- Mindray USA expanded its Group Purchase Organization ("GPO") contract base; the DPM product line has now been added to contracts in five of the largest GPOs, providing access to this product line to over 85% of the U.S. hospitals and surgery centers.
"Mindray continued to generate solid operational performance and earnings growth in the face of a global marketplace that remains very challenging," commented Xu Hang, Mindray's chairman and co-chief executive officer. "The ongoing realignment of core competencies within each region and continued integration of our Mahwah operations have and will continue to enable us to improve our cost structure and operational efficiency, while bringing new products to market and maintaining our competitive position in the marketplace."
SUMMARY - Second Quarter and First Half 2009 (in $ millions, except Three Months Ended Six Months Ended per-share data) June 30 June 30 2009 2008 % chg 2009 2008 % chg Net Revenues 160.1 145.7 9.9% 294.2 233.1 26.2% Revenues generated in China 76.0 57.9 31.3% 138.3 100.6 37.4% Revenues generated outside China 84.1 87.8 -4.2% 155.9 132.5 17.7% Gross Profit 91.6 77.0 18.9% 166.3 126.4 31.6% Non-GAAP Gross Profit 93.4 79.9 16.9% 169.7 130.1 30.4% Operating Income 39.0 27.8 40.2% 68.4 55.7 22.8% Non-GAAP Operating Income 43.9 40.0 9.8% 78.6 70.8 11.0% EBITDA 46.7 33.6 38.8% 82.3 64.9 26.7% Net Income 33.0 24.1 37.2% 58.4 49.1 18.8% Non-GAAP Net Income 37.8 35.2 7.5% 68.4 63.0 8.4% Diluted EPS 0.29 0.21 38.8% 0.52 0.43 19.9% Non-GAAP Diluted EPS 0.34 0.31 8.7% 0.61 0.56 9.4%
Revenues
Mindray reported net revenues of $160.1 million for the second quarter of 2009, a 9.9% increase from $145.7 million in the second quarter of 2008. Net revenues generated in China in the second quarter of 2009 increased 31.3% to $76.0 million from $57.9 million in the second quarter of 2008, while net revenues generated in international markets in the second quarter of 2009 decreased 4.2% to $84.1 million from $87.8 million in the second quarter of 2008.
Performance by Segment
Patient Monitoring & Life Support Products: Patient monitoring & life support products segment revenues increased 2.1% to $69.1 million from $67.6 million in the second quarter of 2008. The patient monitoring & life support products segment contributed 43.2% to the total net revenues in the second quarter of 2009.
In-Vitro Diagnostic Products: In-vitro diagnostic products segment revenues increased 12.8% to $40.0 million from $35.5 million in the second quarter of 2008. The in-vitro diagnostic products segment contributed 25.0% to the total net revenues in the second quarter of 2009.
Medical Imaging Systems: Medical imaging systems segment revenues increased 16.5% to $41.9 million from $36.0 million in the second quarter of 2008. The medical imaging systems segment contributed 26.1% to the total net revenues in the second quarter of 2009.
Others: Other revenues, which are primarily comprised of service fees charged for post warranty period repair services, increased 37.4% to $9.1 million from $6.6 million in the second quarter of 2008. Other revenues contributed 5.7% to the total net revenues in the second quarter of 2009.
The segment revenue amounts discussed above include shipping and handling fees charged to customers.
Gross Margins
Second quarter 2009 gross profit was $91.6 million, an 18.9% increase from $77.0 million in the second quarter of 2008. Second quarter 2009 non-GAAP gross profit was $93.4 million, a 16.9% increase from $79.9 million in the second quarter of 2008. Second quarter 2009 gross margin was 57.2% compared to 52.8% in the second quarter of 2008 and 55.7% in the first quarter of 2009. Non-GAAP gross margin was 58.3% in the second quarter of 2009 compared to 54.8% in the second quarter of 2008 and 56.9% in the first quarter of 2009.
Operating Expenses
Selling expenses for the second quarter of 2009 were $26.4 million, or 16.5% of the total net revenues, compared to 14.2% in the second quarter of 2008 and 16.2% in the first quarter of 2009. Non-GAAP selling expenses for the second quarter of 2009 were $24.9 million, or 15.5% of the total net revenues, compared to 13.3% in the second quarter of 2008 and 15.0% in the first quarter of 2009.
General and administrative expenses for the second quarter of 2009 were $11.4 million, or 7.1% of the total net revenues, compared to 6.6% in the second quarter of 2008 and 6.6% in the first quarter of 2009. Non-GAAP general and administrative expenses for the second quarter of 2009 were $10.7 million, or 6.7% of the total net revenues, compared to 6.1% in the second quarter of 2008 and 5.7% in the first quarter of 2009.
Research and development expenses for the second quarter of 2009 were $14.7 million, or 9.2% of the total net revenues, compared to 8.5% in the second quarter of 2008 and 11.0% in the first quarter of 2009. Non-GAAP research and development expenses for the second quarter of 2009 were $13.9 million, or 8.7% of the total net revenues, compared to 7.9% in the second quarter of 2008 and 10.4% in the first quarter of 2009.
Total share-based compensation expenses, which were allocated to cost of revenues and related operating expenses, were $2.6 million in the second quarter of 2009 compared to $3.0 million in the first quarter of 2009 and $2.4 million in the second quarter of 2008.
Operating income was $39.0 million in the second quarter of 2009, a 40.2% increase from $27.8 million in the second quarter of 2008. Non-GAAP operating income in the second quarter of 2009 was $43.9 million, a 9.8% increase from $40.0 million in the second quarter of 2008. Operating margin was 24.4% in the second quarter of 2009 compared to 19.1% in the second quarter of 2008 and 21.9% in the first quarter of 2009. Non-GAAP operating margin was 27.4% in the second quarter of 2009 compared to 27.5% in the second quarter of 2008 and 25.9% in the first quarter of 2009.
Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA")
Second quarter 2009 EBITDA increased 38.8% year-over-year to $46.7 million from $33.6 million in the second quarter of 2008 and increased 31.2% from $35.6 million in the first quarter of 2009.
Net Income
Net income increased 37.2% year-over-year to $33.0 million from $24.1 million in the second quarter of 2008. Non-GAAP net income increased 7.5% year-over-year to $37.8 million from $35.2 million in the second quarter of 2008. Net margin was 20.6% in the second quarter of 2009 compared to 16.5% in the second quarter of 2008 and 18.9% in the first quarter of 2009. Non-GAAP net margin was 23.6% in the second quarter of 2009 compared to 24.2% in the second quarter of 2008 and 22.7% in the first quarter of 2009. Second quarter 2009 income tax expense was $6.3 million representing an effective tax rate of 16.1%.
Second quarter 2009 basic and diluted earnings per share were $0.30 and $0.29, respectively, compared to $0.22 and $0.21 in the second quarter of 2008. Basic and diluted non-GAAP earnings per share were $0.35 and $0.34, respectively, compared to $0.33 and $0.31 in the second quarter of 2008. Shares used in the computation of diluted earnings per share for the second quarter 2009 were 112.6 million.