Mindray Profit Drops, Cuts View On China Hospital Purchase Slowdown

(RTTNews) - Medical device maker Mindray Medical International Ltd. (MR) Monday said third-quarter profit declined from the prior year, hurt by a surge in income tax expense. Further, the company cut its full year outlook, citing hospital purchase slowdown in China. The stock fell more than 8 percent in the extended trade.

Net income fell to $30.1 million or $0.25 per share from $35.8 million or $0.30 per share last year.

Excluding items, adjusted earnings were $57.4 million or $0.47 per share, while it totaled $50.1 million or $0.42 per share a year ago.

On average, six analysts polled by Thomson Reuters estimated earnings of $0.44 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues climbed 15.3 percent to $296 million from $257 million in the prior year. Analysts estimated revenues of $319.41 million.

International sales climbed 17.9 percent to $164.3 million and China sales increased 12.1 percent to $132 million.

The company noted that recent weak market sentiment in the Chinese healthcare sector caused some delays in purchasing activities in the quarter. However, the industry fundamentals remain solid, it added.

Results for the quarter were impacted by income tax expense that climbed to $27.94 million from $9.12 million in the prior year.

Looking ahead to the year, the company now expects at least 11 percent growth in adjusted net income from 2012. Net revenues are forecast to increase at least 13 percent from the prior year.

The previous forecast was for at least 15 percent growth in adjusted net income and at least 18 percent growth in net revenues.

Cheng Minghe, Co-Chief Executive Officer and Chief Strategic Officer, said, "We are revising our financial guidance for 2013, primarily due to the enduring hospital purchase slowdown in China. In other geographies, we expect some countries to perform well in the emerging markets, but political and currency issues will affect other areas."

Separately, the company said its Board of Directors approved a $200 million share repurchase program. The program is authorized to be in effect starting from Monday and will last through the next nine months.

MR, which closed up 0.7 percent on Monday at $37.11, declined 8.4 percent in the extended trade to $34.01.