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Dehaier Medical Announces 2013 First Half Year Financial Results

Monday, August 26, 2013 5:30 PM


BEIJING, Aug. 26, 2013 (GLOBE NEWSWIRE) -- Dehaier Medical Systems Ltd. (Nasdaq:DHRM) ("Dehaier" or the "Company"), an emerging leader in the development, assembly, marketing and sale of medical devices and homecare medical products, today announced its financial results for the half year ended June 30, 2013.

Mr. Ping Chen, Chief Executive Officer of Dehaier Medical, stated, "We are pleased to have expanded into China's burgeoning sleep respiratory market by entering into a strategic agreement with an Israeli medical signal processing company. As WideMed's exclusive partner in China, we have marketed and distributed our newly-developed sleep holter to hospitals across the whole country as an accurate and user-friendly sleep apnea diagnosis solution. These products are in registration with China's SFDA and we expect to obtain SFDA approval soon. Because we believe this kind of device and business model addresses the needs of patients and the market, we expect the firm foundation we laid in the first half of the year will generate considerable revenue during the remainder of the year."

Mr. Ping Chen continued, "At the same time, we have continued to focus on our government medical procurement and key account business initiatives. We successfully bid to provide Color Doppler Ultrasound machines to county hospitals and clinics in Guizhou province and have also established a positive relationship with multinational companies like Mindray to broaden our key account business. We will continue to balance our development between our traditional business and new business initiatives and expect to drive a more diverse and robust revenue stream to the Company."

Operating Highlights for 6 months 2013

  • In January 2013, the Company won a bid to implement a government procurement project to provide Color Doppler Ultrasound machines to county hospitals and clinics in Guizhou, China.
  • In February 2013, the Company assisted Mindray Medical with a national medical procurement bid for 79 units of Mindray's M7 color Doppler ultrasound machines.
  • In April 2013, the Company became the exclusive after-sales service agent of Heyer Medical AG ("Heyer") for its anesthesia machine and ultrasound nebulizer products.
  • In May 2013, the Company entered into a strategic cooperation agreement with WideMed Ltd. (TASE:WDMD), a leading Israeli company engaged in the research, development and sale of innovative products for the growing bio-medical signal diagnostics and treatment market, to become WideMed's exclusive partner in China to market the Morpheus Ox System, a cost-effective, portable home sleep diagnostic and monitoring solution which enables to diagnose sleep disorders using a standard oximeter recording plethysmograph signal.

Half Year 2013 Financial Overview

  • Our total revenues decreased by 19.16% from $10.30 million for the six months ended June 30, 2012 to $8.33 million for the six months ended June 30, 2013. In the first half of 2013, we continuously developed our sales channels for traditional medical devices sales. At the same time, we also began to adjust our operating strategy to expand into government procurement projects and the burgeoning sleep respiratory and oxygen therapy market. Because the company reduced the marketing expenses in its traditional medical device business and invested additional resources to develop its sleep respiratory business, our revenues and net income are lower than during the same period in 2012.
  • Our gross profit decreased from $3.98 million in the six months ended June 30, 2012 to $3.27 million in the same period of 2013, while our gross margin increased slightly from 38.66% in 2012 to 39.23% in 2013 due to the faster decrease in cost than revenues. Management believes the Company's gross margin is likely to remain relatively stable over the near term.
  • As a result of the foregoing, we generated operating income of approximately $1.91 million in the six months ended June 30, 2013, compared to approximately $2.38 million in the same period of 2012. Operating income decreased by 19.67%, mainly because of the reduced revenues.
  • Our net income was approximately $1.52 million in the six months ended June 30, 2013, compared to approximately $1.81 million in 2012, a decrease by 16.13%, mainly because of the decrease of revenues. After deduction of non-controlling interest in income, net income attributable to Dehaier was approximately $1.53 million and $1.82 million in the six months ended June 30, 2013 and 2012, respectively.
  • As of June 30, 2013, we had $1,343,246 cash and cash equivalents. As a result of the total cash activities, net cash decreased from $3,505,330 at December 31, 2012, mainly because we invested in purchasing manufacturing equipment and devices for our future development of sleep respiratory business.
  • We believe that our currently available working capital of $30,035,112, including cash, should be adequate to meet our anticipated cash needs and sustain our current operations for at least 12 months.

About Dehaier Medical Systems Ltd.

Dehaier is an emerging leader in the development, assembly, marketing and sale of medical products, including respiratory and oxygen homecare medical products. The company develops and assembles its own branded medical devices and homecare medical products from third-party components. The company also distributes products designed and manufactured by other companies, including medical devices from IMD (Italy), Welch Allyn (USA), HEYER (Germany), Timesco (UK), eVent Medical (US) and JMS (Japan). Dehaier's technology is based on six patents, nine software copyrights and proprietary technology. More information may be found at http://www.dehaier.com.cn

Forward-looking Statements

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events, government approvals or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, future developments in payment for and demand for medical equipment and services and other risks contained in reports filed by the company with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

DEHAIER MEDICAL SYSTEMS LIMITED AND AFFILIATE
 
CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS
(UNAUDITED)
 
June 30,
December 31,
  2013 2012
  US$ US$
     
ASSETS    
CURRENT ASSETS:    
Cash and cash equivalents 1,343,246 3,505,330
Accounts receivable    
-less allowance for doubtful accounts of $906,506 and $865,769 12,935,416 11,960,193
Contract Deposits 2,834,619 3,027,616
Other receivables
 -less allowance for doubtful accounts of $598,747 and $598,747  
587,645 556,635
Advances to Suppliers 6,759,857 4,470,756
Prepayment and other current assets 5,198,100 4,069,975
Inventories, net 4,745,328 4,654,827
Tax receivable 337,113 328,208
Deferred tax asset 121,269 119,437
Total Current Assets 34,862,593 32,692,977
     
Property and equipment, net 3,833,499 2,895,523
Intangible assets, net 2,663,691 2,694,439
Total Assets 41,359,783 38,282,939
     
LIABILITIES AND EQUITY    
CURRENT LIABILITIES:    
Short-term borrowings 2,444,115 2,407,200
Accounts payable  39,066 37,640
Advances from customers 348,764 248,940
Accrued expenses and other current liabilities 700,801 406,452
Taxes payable 950,871 401,574
Warranty obligation 343,864 338,671
Total Current Liabilities 4,827,481 3,840,477
     
OTHER LIABILITIES    
Warrants liability 378,579 374,166
Total Liabilities 5,206,060 4,214,643
 
Commitments and Contingency
   
Equity    
Common shares, $0.002731 par value, 18,307,038 shares authorized, 4,620,000 shares issued and outstanding 12,618 12,618
Additional paid in capital 13,544,584 13,500,847
Retained earnings 17,682,139 16,147,723
Accumulated other comprehensive income 3,458,347 2,967,202
Total Dehaier Medical Systems Limited shareholders' equity 34,697,688 32,628,390
Non-controlling interest 1,456,035 1,439,906
Total equity 36,153,723 34,068,296
Total liabilities and equity 41,359,783 38,282,939
 
DEHAIER MEDICAL SYSTEMS LIMITED AND AFFILIATE
 
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)
  Six Months Ended
  June 30, June 30,
  2013 2012
  US$ US$
     
Revenue 8,325,382 10,299,059
     
Costs of revenue (5,059,745) (6,317,316)
     
Gross profit 3,265,637 3,981,743
     
Service income 99,357 132,915
Service expenses (18,195) (37,272)
General and administrative expense (868,262) (1,031,502)
Selling expense (564,315) (662,852)
     
Operating Income (Expense) 1,914,222 2,383,032
     
Financial expenses (77,863) (65,969)
Other income -- 395
Change in fair value of warrants liability (4,413) (92,067)
     
Income (Expense) before provision for income tax and non-controlling interest  1,831,946 2,225,391
     
Provision for income tax (314,883) (416,468)
     
Net income 1,517,063 1,808,923
     
Net loss (income) attributable to Non-Controlling interest 17,353 7,478
     
Net income attributable to Dehaier Medical Systems Limited 1,534,416 1,816,401
     
Net income 1,517,063 1,808,923
     
Other comprehensive income (loss)    
Foreign currency translation adjustments 491,145 (226,067)
     
Comprehensive income 2,008,208 1,582,856
Comprehensive income (loss) attributable to the non-controlling interest (16,129) 21,019
     
Comprehensive income attributable to Dehaier Medical Systems Limited 1,992,079 1,603,875
     
Earnings per share    
-Basic 0.33 0.40
-Diluted 0.33 0.39
     
Weighted average number of common shares used in computation    
-Basic 4,620,000 4,566,160
-Diluted 4,642,383 4,714,077
 
DEHAIER MEDICAL SYSTEMS LIMITED AND AFFILIATE
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
  For the six months ended
June 30,
  2013 2012
  US$ US$
Cash flows from operating activities    
     
Net income 1,517,063 1,808,923
Adjustments to reconcile net income to net cash (used in) operating activities    
Stock-based compensation expense 43,737 124,077
Depreciation and amortization 300,840 246,448
Change in fair value of warrants liability 4,413 92,067
Provision for doubtful accounts 27,224 27,942
Changes in assets and liabilities:    
(Increase) in accounts receivable (812,221) (282,688)
(Increase) in prepayments and other current assets (3,268,571) (522,831)
Decrease (Increase) in other receivables 215,084 (1,670,623)
Decrease (Increase) in inventories (18,953) 733,009
Decrease (Increase) in tax receivable (3,839) 384,599
Increase in accounts payable 840 6,115
Decrease (Increase) in advances from customers 95,181 (65,347)
Decrease (Increase) in accrued expenses and other current liabilities 285,657 (31,931)
Decrease (Increase) in taxes payable 538,466 (1,616,959)
Net cash (used in) operating activities (1,075,079) (767,199)
     
Cash flows from investing activities    
Capital expenditures and other additions (1,115,276) (2,405,707)
Net cash used in investing activities (1,115,276) (2,405,707)
     
Cash flows from financing activities    
Proceeds from bank loan 2,413,250 2,373,145
Repayment of bank loan (2,410,176) (1,580,436)
Net cash provided by financing activities 3,074 792,709
     
Effect of exchange rate fluctuations on cash and cash equivalents 25,197 (206,347)
     
Net decrease in cash and cash equivalents (2,162,084) (2,586,544)
     
Cash and cash equivalents at beginning of period 3,505,330 3,694,486
     
Cash and cash equivalents at end of period 1,343,246 1,107,942
     
Supplemental cash flow information    
Income tax paid 231,371 779,678
Interest paid 76,187 64,904
CONTACT: Dehaier Medical Systems Limited
         Surie Liu
         +86 10-5166-0080
         lius@dehaier.com.cn
         
         Dehaier Medical Systems Limited
         Tina He
         +86 10-5166-0080
         hexw@dehaier.com.cn
(Source: PrimeZone )
(Source: Quotemedia)

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