On the face of it, the Q3 financial report issued by Mindray Medical International (NYSE: MR) was very positive. Revenues were up 94% at $146.5 million and non-GAAP net income climbed a smaller but still respectable 48% to $33.7 million. Nevertheless, Mindray’s stock price suffered in the aftermath, falling $4.02 to $19.91, a 17% decline and a price that is considerably lower than its $45.10 high this year. Why were investors so disappointed?

One reason is that Mindray’s big jump in revenues and profits was due in large part to its Datascope Patient Monitoring (DPM) acquisition. The DPM deal was closed on May 1, making Q3 the first full quarter of DPM contributions. Mindray paid $250 million for assets that, in 2007, produced revenues of $161 million, or about $40 million a quarter. Mindray’s revenues rose by more than $70 million in Q3, so more than half of the rise came from its DPM acquisition. That means Mindray’s underlying business is still growing at a decent rate, but perhaps a rate that is closer to 35% than 94%.

Also, Mindray disappointed investors by lowering its guidance for full-year revenue by about $15 million to a range of $550 million to $560 million. Non-GAAP net income was left unchanged at $135 million. The major cause for the decline, according to the company, is less favorable RMB currency conversion rates. In addition, the currencies for some small countries have declined, making Mindray products more expensive in those countries, and Mindray has tightened its credit policies, which has also slowed sales.

In the analysts’ conference call, Mindray said that the integration of the Datascope acquisition is proceeding on schedule. Mindray-sourced parts will start finding their way into Datascope equipment early next year, lowering their production costs and providing the synergies that Mindray is counting on. Additional product launches are expected as well.

The company acknowledged that the economic downturn will make growth more difficult, but hospitals and medical equipment are relatively immune to economic cycles. Mindray feels its economic and product strength will carry the company through any rough patches, while less robust competitors may be forced out of business. That would leave Mindray in a stronger position when the worldwide economy begins to grow again.

Mindray also said that the China Olympics had a severely negative effect on domestic China orders during July and August. September made up for part of that.

According to the company, the Patient Monitoring & Life Support Division reported $67.6 million in revenues, an increase of 147% over its year earlier figure of $27.4 million – almost all of which was due to the addition of DPM. Patient monitoring is now the biggest of Mindray’s three business segments, contributing 47% of the company’s total revenues.

The In-Vitro Diagnostic Division produced revenues of $34.8 million up 42% and Medical Imaging sales were up 52% at $32.6 million.