Mindray Medical Q1 Profit Declines, Backs 2014 Outlook

(RTTNews) - Chinese medical device maker Mindray Medical International Ltd. (MR) reported Monday a profit for the first quarter that declined 38 percent from last year, despite revenue growth, reflecting lower operating margins amid higher expenses. The company also reaffirmed its net income and revenue growth guidance for the full-year 2014.

"In the first quarter, the dynamics in various key markets continued to be challenging for our business. Nevertheless, we are pleased with our Western Europe performance, as well as our IVD reagent sales year-over-year increase," President and Co-CEO Li Xiting said in a statement.

The Shenzhen, China-based company reported net income of $35.64 million or $0.30 per share for the first quarter, lower than $57.42 million or $0.48 per share in the prior-year quarter.

Excluding items, adjusted net income for the quarter was $44.7 million or $0.39 per share, compared to $45.2 million or $0.53 per share in the year-ago quarter.

On average, three analysts polled by Thomson Reuters expected the company to report earnings of $0.37 per share for the quarter. Analysts' estimates typically exclude special items.

Net revenues for the quarter increased 9.4 percent to $264.77 million from $242.10 million in the same quarter last year. Analysts expected revenues of $292.50 million for the quarter.

China revenues grew 4.0 percent to $115.83 million from $111.33 million, and international revenues increased 13.9 percent to $148.94 million from $130.77 million in the prior-year quarter, with Western Europe achieving double-digit sales growth.

Operating margin for the quarter contracted 430 basis points to 57.4 percent from last year as gross margin declined 230 basis points and operating expenses as a percentage of total revenues also increased.

During the quarter, the company said it launched several new products that received positive customer feedbacks at the recent CMEF trade show. These include the M9, a premium portable color ultrasound system, as well as the CAL 8000, a cellular analysis line.

"At this time, we are maintaining our financial guidance for 2014. We still expect Western Europe and some emerging countries to be the growth drivers, and the operating environment in China to gradually improve," commented Cheng Minghe, Co-CEO and chief strategic officer.

Looking ahead to fiscal 2014, the company continues to expect adjusted net income at a similar level with fiscal 2013, on projected net revenue growth of at least 15 percent over fiscal 2013. Street is currently looking for full-year 2014 earnings of $1.99 per share on revenues of $1.40 billion.

The company also still expects capital expenditure for the full-year 2014 to be around $160 million.

Additionally, the company said Chief Operating Officer Jie Liu resigned from his position for personal reasons, effective immediately. He will be succeeded by Wang Jianxin, the current chief administrative officer.

The company said Co-CEO and Chief Strategic Officer Minghe Cheng will now oversee international sales and marketing and the North America operations, which were part of Liu's previous responsibilities.

The company noted that it continues to execute its investment strategy that focuses on strengthening sales, marketing and distribution capabilities as well as product innovation, to further grow Mindray and improve long-term position in the global marketplace.

The company also added that it continues to explore merger and acquisition as well as other collaboration opportunities.

MR closed Monday's regular trading session at $33.67, up $0.50 or 1.51% on a volume of 0.46 million shares. However, the stock lost $1.50 or 4.46% in after-hours trading.