BEIJING, June 4 /PRNewswire-Asia-FirstCall/ -- China Medical Technologies,
Inc. (the "Company") (Nasdaq: CMED), a leading China-based advanced in-vitro
diagnostic ("IVD") company, today announced its unaudited financial results
for the fourth fiscal quarter ("4Q FY2009") and the full fiscal year ended
March 31, 2010 ("FY2009").
"We continued to achieve organic growth in the past quarter despite the impact of two important public holidays in China," commented Mr. Xiaodong Wu, Chairman and Chief Executive Officer of the Company. "Our business turnaround is demonstrated by the solid progress we made on every line of business, as well as imminent cost synergies we expect to come as we broaden our product offering. While the first half of FY2009 proved to be eventful for us, we executed well in the past quarter on our three strategic imperatives including formal launch of our SPR analyzer, expansion in product portfolio and investment in research and development for future growth. Our initial SPR launch has resulted in penetrating a number of our top tier hospital customers and we will start to generate revenue from sales of HPV DNA chips this quarter. Turning to our FISH business, we continue to see significant uptake in a number of applications including prenatal, urology, gynecology and hematological malignancies. We also saw momentum in companion diagnostic tests for targeted cancer drugs such as our HER-2 gene test for the use of Herceptin in breast cancer patients and stomach cancer patients as well as our EGFR gene test for the use of Iressa and Tarceva in non-small cell lung cancer patients. Our direct sales force has been focusing on these high growth areas with our existing top tier hospital customers. As for our ECLIA business, we received SFDA approval for our fully-automated analyzer in April, 2010. Our major target end users will be top tier hospitals as well as high volume users among mid size hospitals of our ECLIA existing users, which we expect to be another growth driver for our relatively maturing ECLIA business starting in 2011. Finally, we continue to invest in research and development and anticipate additional SFDA approvals in the coming quarters, most notably our HPV DNA chip in the near term. With more extensive product offering and broader coverage of top tier hospitals, we believe that we are well positioned for a phase of accelerated growth starting this quarter."
Mr. Sam Tsang, Chief Financial Officer of the Company commented, "To address certain concerns raised by some of our shareholders and potential investors regarding our high level of leverage, we have taken various measures during the past few months including the purchases of our 3.5% tranche as well as 4% tranche of convertibles notes from the open market at significant discounts on the face value of the convertible notes, the termination of our share repurchase program and the suspension of our annual dividend. We intend to continue to reduce our leverage by accumulating cash generated from our operations. When we reduce our leverage to an appropriate level, we will resume our annual dividend. Nevertheless, we will not reduce our investment in the expansion of our direct sales network serving top tier hospitals and the internal product development on our three technology platforms which will sustain our growth in the mid to long term."
4Q FY2009 Unaudited Financial Results
The Company reported revenues of RMB175.7 million (US$25.7 million) for 4Q FY2009, representing a 29.3% decrease from the corresponding period of FY2008 but a 2.0% increase from 3Q FY2009.
The Company's revenues are currently generated from two segments, molecular diagnostic systems and immunodiagnostic systems. The molecular diagnostic system segment includes FISH products and is expected to include SPR products in 1Q FY2010 while the immunodiagnostic system segment consists of ECLIA products.
Molecular diagnostic system sales for 4Q FY2009 were RMB100.9 million (US$14.8 million), representing an 8.0% decrease from the corresponding period of FY2008 but a 4.9% increase from 3Q FY2009. The year-over-year decrease was primarily due to the sales of remaining inventory of fluorescent microscopes during 4Q FY2008 while there were no such sales since 1Q FY2009.
Immunodiagnostic system sales for 4Q FY2009 were RMB74.8 million (US$11.0 million), representing a 46.2% decrease from the corresponding period of FY2008 and a 1.7% decrease from 3Q FY2009. The year-over-year decrease was primarily due to the price reduction for ECLIA reagent kits in September 2009.
Gross margin was 64.9% for 4Q FY2009 which decreased year-over-year from 75.1% for the corresponding period of FY2008 but improved sequentially from 63.4% for 3Q FY2009. The year-over-year decrease in gross margin was primarily due to the impact of the price reduction for ECLIA reagent kits. The sequential increase in gross margin was primarily due to the purchase price reduction for major raw materials used in the production of ECLIA reagent kits from January 2010.
Research and development expenses were RMB10.4 million (US$1.5 million) for 4Q FY2009, representing a 3.0% year-over-year decrease and a 3.6% sequential decrease.
Sales and marketing expenses were RMB16.7 million (US$2.4 million) for 4Q FY2009, representing a 39.6% year-over-year increase but a 12.4% sequential decrease. The year-over-year increase was primarily due to the increase in direct sales efforts for molecular diagnostic systems.
General and administrative expenses were RMB26.7 million (US$3.9 million) for 4Q FY2009, representing a 30.2% year-over-year increase and a 3.5% sequential increase. The year-over-year increase was primarily due to the increase in staff expenses.
Amortization of SPR intangible assets was RMB27.3 million (US$4.0 million) for 4Q FY2009.
Interest expense on convertible notes was RMB34.8 million (US$5.1 million) for 4Q FY2009. As of March 31, 2010, the Company's outstanding convertible notes of US$150.0 million and US$264.8 million bear interest at 3.5% and 4.0% per annum, respectively and will mature in November 2011 and August 2013, respectively. Due to the adoption of new authoritative guidance governing the accounting for convertible instruments that can be settled in cash or partially in cash upon conversion effective on April 1, 2009, the Company recorded additional non-cash interest expense of RMB7.6 million (US$1.1 million) for the US$150.0 million 3.5% convertible notes in 4Q FY2009. The Company also made an adjustment related to these convertible notes for the corresponding period of FY2008 by increasing non-cash interest expense by RMB7.2 million to adopt this guidance retrospectively. This new guidance is not applicable to the US$264.8 million 4% convertible notes.
Interest expense on amortization of convertible notes issuance costs was RMB4.3 million (US$0.6 million) for 4Q FY2009.
Other income was RMB26.3 million (US$3.8 million) for 4Q FY2009. The significant year-over-year increase was primarily due to the gain from the purchase of the Company's convertible notes on the open market.
Income tax expense was RMB15.2 million (US$2.2 million) for 4Q FY2009.
Income from continuing operations and net income was RMB9.1 million (US$1.3 million) for 4Q FY2009.
Non-GAAP income from continuing operations excluding stock compensation expense, amortization of acquired intangible assets, non-cash interest expense of convertible notes arising from the adoption of the new guidance related to convertible instruments that can be settled in cash or partially in cash upon conversion and gain on purchase of its convertible notes was RMB51.5 million (US$7.5 million) for 4Q FY2009, representing a 57.2% decrease from the corresponding period of FY2008 but a 12.8% increase from 3Q FY2009.
Stock compensation expense for 4Q FY2009 was RMB10.7 million (US$1.6 million), of which RMB1.4 million was allocated to research and development expenses and RMB9.3 million to general and administrative expenses.
Amortization of acquired intangible assets for 4Q FY2009 was RMB49.8 million (US$7.3 million), of which RMB22.4 million was allocated to cost of revenues and RMB27.4 million to operating expenses.
As of March 31, 2010, the Company's cash and cash equivalents was RMB815.5 million (US$119.5 million). Net cash generated from operating activities for 4Q FY2009 was RMB59.8 million (US$8.8 million).
As of March 31, 2010, the Company's net accounts receivable was RMB303.4 million (US$44.4 million), representing an increase of 0.8% from the balance at December 31, 2009.
FY2009 Unaudited Financial Results
Revenues were RMB723.1 million (US$105.9 million) for FY2009, representing a 12.9% year-over-year decrease.
Molecular diagnostic system sales for FY2009 were RMB384.8 million (US$56.4 million), representing an 18.3% year-over-year increase. Immunodiagnostic system sales for FY2009 were RMB338.3 million (US$49.5 million), representing a 33.0% year-over-year decrease. The year-over-year increase in molecular diagnostic system sales was primarily due to the increase in usage of the Company's FISH probes by existing and new hospital customers served by the Company's direct sales personnel. The year-over-year decrease in immunodiagnostic system sales was primarily due to the price reduction of ECLIA reagent kits from September 2009.
Gross margin decreased to 67.1% for FY2009 as compared to 72.0% for FY2008 primarily due to the price reduction of ECLIA reagent kits.
Research and development expenses were RMB42.3 million (US$6.2 million) for FY2009, representing a 34.5% year-over-year increase. The increase was primarily due to the development of FISH probes, SPR-based chips, ECLIA reagent kits as well as fully-automated ECLIA analyzers.
Sales and marketing expenses were RMB64.1 million (US$9.4 million) for FY2009, representing a 49.9% year-over-year increase. This increase was primarily due to the increase in direct sales efforts for molecular diagnostic systems.
General and administrative expenses were RMB144.7 million (US$21.2 million) for FY2009, representing a 48.2% year-over-year increase. The increase was primarily due to the costs for the independent internal investigation as well as provision for bad debts related to certain ECLIA customers.
Interest expense on convertible notes was RMB141.1 million (US$20.7 million) for FY2009, representing a 26.2% year-over-year increase. The increase was primarily due to the issuance of US$276.0 million 4% convertible notes in August 2008.
Interest expense on amortization of convertible notes issuance costs was RMB17.4 million (US$2.5 million) for FY2009, representing a 30.6% year-over-year increase. The increase was primarily due to the issuance of US$276.0 million 4% convertible notes in August 2008.
Other income was RMB26.5 million (US$3.9 million) for FY2009. The significant year-over-year increase was primarily due to the gain from the purchase of the Company's convertible notes on the open market.
Income tax expense was RMB63.6 million (US$9.3 million) for FY2009. The significant income tax expense was primarily because certain expenses of the Company such as stock compensation expense, amortization of acquired intangible assets and interest expense of convertible notes were not deductible for income tax purpose. In addition, the Company is required to accrue for withholding income tax on distributable earnings generated in China during the year.
Loss from continuing operations and net loss was RMB57.0 million (US$8.4 million) for FY2009.
Non-GAAP income from continuing operations excluding stock compensation expense, amortization of acquired intangible assets, non-cash interest expense of convertible notes arising from the adoption of the new guidance related to convertible instruments that can be settled in cash or partially in cash upon conversion and gain on purchase of its convertible notes was RMB187.3 million (US$27.4 million) for FY2009, representing a 55.5% year-over-year decrease.
Stock compensation expense for FY2009 was RMB40.4 million (US$5.9 million), of which RMB6.3 million was allocated to research and development expenses and RMB34.1 million to general and administrative expenses. The Company approved the grant of 3,250,000 restricted stock, equivalent to 325,000 ADSs to certain directors, officers and employees on May 21, 2010 which was approximately 1.0% of the Company's issued shares. The restricted stock vests at the end of a three-year period.
Amortization of acquired intangible assets for FY2009 was RMB199.1 million (US$29.2 million), of which RMB89.7 million was allocated to cost of revenues and RMB109.4 million to operating expenses.
For the convenience of readers, certain RMB amounts have been translated into U.S. dollars at the rate of RMB6.8258 to US$1.00, the noon buying rate in New York City for cable transfers of RMB per U.S. dollar as set forth in the H.10 weekly statistical release of the Federal Reserve Board, as of Wednesday, March 31, 2010. No representation is made that the RMB amounts could have been or could be converted into U.S. dollars at that rate or at any other rate on March 31, 2010 or at any other dates.
Share Repurchase Program
In September 2009, the Company's board of directors authorized a share repurchase program, under which the Company may repurchase up to US$30 million worth of its outstanding ADSs from the open market or in block trades for a period of one year, commencing on October 1, 2009. As of March 31, 2010, the Company repurchased a total of 500,000 ADSs at a cost of approximately US$6.4 million (including transaction costs). The Company has terminated the program.
Convertible Notes
The Company purchased 4% convertible notes with principal amount of about RMB76.8 million (US$11.2 million) for a total consideration of RMB50.5 million (US$7.4 million) during 4Q FY2009. As of March 31, 2010, the Company had US$264.8 million 4% convertible notes and US$150 million 3.5% convertible notes outstanding. The Company purchased additional 3.5% and 4% convertible notes subsequent to March 31, 2010.
Outlook for 1Q FY2010
The Company expects the molecular diagnostic system segment to continue its growth momentum and the immunodiagnostic system segment to rebound from its low level in 1Q FY2010.
The Company estimates the target revenues for 1Q FY2010 to be not less than RMB185.0 million (US$27.1 million).
The Company estimates the target non-GAAP income from continuing operations for 1Q FY2010 to be not less than RMB56.0 million (US$8.2 million).
The Company estimates the target non-GAAP diluted earnings from continuing operations per ADS for 1Q FY2010 to be not less than RMB2.14 (US$0.31).
The above targets are based on the Company's current views on the operating and market conditions, which are subject to change.
Outlook for FY2010
The Company expects the sales of HPV DNA chips used with its SPR analyzers to increase rapidly in later quarters of FY2010 following the increasing number of SPR analyzers placed with its hospital customers during the fiscal year. The Company also expects a higher non-GAAP net margin for FY2010 compared with that of FY2009 primarily due to increasing revenue contribution from sales of FISH probes and HPV DNA chips which generate higher non-GAAP gross margin among the Company's products.
The Company estimates the target quarterly revenues to increase in a range of 5%-7% on a quarter-over-quarter basis during FY2010.
The Company estimates the target quarterly non-GAAP income from continuing operations and target quarterly non-GAAP diluted earnings from continuing operations per ADS to increase at a rate higher than that of target quarterly revenues.
The above targets are based on the Company's current views on the operating and market conditions, which are subject to change.
Non-GAAP Measure Disclosures
To supplement its consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), the Company uses non-GAAP measures of gross profit, operating income, income from continuing operations and earnings from continuing operations per ADS, which are adjusted from the results based on GAAP to exclude the impact of stock compensation expense, amortization of acquired intangible assets, acquired in-process research and development, non-cash interest expense of convertible notes arising from the adoption of the new guidance related to convertible instruments that can be settled in cash or partially in cash upon conversion and gain on purchase of its convertible notes. Non-GAAP financial measures are used by the Company in their financial and operating decision- making because management believes they reflect the Company's ongoing business in a manner that allows meaningful period-to-period comparison. The Company's management believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating the Company's current operating performance and future prospects in the same manner as management does, if they so choose.
The presentation of this additional financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the financial information included with this earnings announcement.
Conference Call
The Company's senior management team will host an earnings conference call at 8:00a.m. U.S. Eastern Time on June 4, 2010 (or 8:00p.m. Beijing/Hong Kong time on the same date) to discuss the results following this earnings announcement.
A replay of this webcast will be available for one month on this website.
A telephone replay of the call will be available after the conclusion of the conference call through 10:00a.m. U.S. Eastern Time on June 5, 2010.
China Medical Technologies, Inc. is a leading China-based advanced IVD company using molecular diagnostic technologies including Fluorescent in situ Hybridization (FISH) and Surface Plasmon Resonance (SPR) and an immunodiagnostic technology, Enhanced Chemiluminescence Immunoassay (ECLIA), to develop, manufacture and distribute diagnostic products used for the detection of various cancers, diseases and disorders as well as companion diagnostic tests for targeted cancer drugs. The Company generates all of its revenues in China through the sale of diagnostic consumables including FISH probes, SPR-based DNA chips and ECLIA reagent kits to hospitals which are recurring users of the consumables for their patients. The Company sells FISH probes and SPR chips to large hospitals through its direct sales force and ECLIA reagent kits to small and mid-size hospitals through distributors. For more information, please visit http://www.chinameditech.com .
Safe Harbor Statement
This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the quotations from management in this press release, the Company's strategic operational plans, as well as its outlook for 1Q FY2010 and FY2010, contain forward-looking statements. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Further information regarding these and other risks is included in the Company's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.
Advertisement
4Q FY2009 Highlights
-- Revenues decreased by 29.3% year-over-year to RMB175.7 million (US$25.7
million) but increased by 2.0% sequentially.
-- Income from continuing operations and net income was RMB9.1 million
(US$1.3 million).
-- Non-GAAP income from continuing operations, as defined below, decreased
by 57.2% year-over-year to RMB51.5 million (US$7.5 million) but
increased by 12.8% sequentially.
-- Diluted earnings from continuing operations per ADS* was RMB0.35
(US$0.05).
-- Non-GAAP diluted earnings from continuing operations per ADS*, as
defined below, decreased by 56.7% year-over-year to RMB1.98 (US$0.29)
but increased by 13.8% sequentially.
-- Net cash generated from operations was RMB59.8 million (US$8.8 million).
-- Approximately 110,000 ADSs* were repurchased under the Company's share
repurchase program.
-- Approximately RMB76.8 million (US$11.2 million) 4% convertible notes
were purchased and cancelled by the Company. Approximately 192,000
ADSs* were returned to the Company under the share lending agreement in
connection with the issuance of 4% convertible notes in August 2008.
FY2009 Highlights
-- Revenues decreased by 12.9% year-over-year to RMB723.1 million
(US$105.9 million).
-- Loss from continuing operations and net loss was RMB57.0 million
(US$8.4 million).
-- Non-GAAP income from continuing operations, as defined below, decreased
by 55.5% year-over-year to RMB187.3 million (US$27.4 million).
-- Diluted loss from continuing operations per ADS* was RMB2.17 (US$0.32).
-- Non-GAAP diluted earnings from continuing operations per ADS*, as
defined below, decreased by 55.5% year-over-year to RMB7.13 (US$1.04).
Targets for 1Q FY2010
-- Target revenues are expected to be not less than RMB185.0 million
(US$27.1 million).
-- Target non-GAAP income from continuing operations is expected to be not
less than RMB56.0 million (US$8.2 million).
-- Target non-GAAP diluted earnings from continuing operations per ADS* is
expected to be not less than RMB2.14 (US$0.31).
Targets for FY2010
-- Target quarterly revenues are expected to increase in a range of 5%-7%
on a quarter-over-quarter basis during FY2010.
-- Target quarterly non-GAAP income from continuing operations and target
quarterly non-GAAP diluted earnings from continuing operations per ADS*
are expected to increase at a rate higher than that of target quarterly
revenues.
* One American Depositary Share ("ADS") = 10 ordinary shares
See "Non-GAAP Measure Disclosures" below, where the impact of certain
items on reported results is discussed.Advertisement
"We continued to achieve organic growth in the past quarter despite the impact of two important public holidays in China," commented Mr. Xiaodong Wu, Chairman and Chief Executive Officer of the Company. "Our business turnaround is demonstrated by the solid progress we made on every line of business, as well as imminent cost synergies we expect to come as we broaden our product offering. While the first half of FY2009 proved to be eventful for us, we executed well in the past quarter on our three strategic imperatives including formal launch of our SPR analyzer, expansion in product portfolio and investment in research and development for future growth. Our initial SPR launch has resulted in penetrating a number of our top tier hospital customers and we will start to generate revenue from sales of HPV DNA chips this quarter. Turning to our FISH business, we continue to see significant uptake in a number of applications including prenatal, urology, gynecology and hematological malignancies. We also saw momentum in companion diagnostic tests for targeted cancer drugs such as our HER-2 gene test for the use of Herceptin in breast cancer patients and stomach cancer patients as well as our EGFR gene test for the use of Iressa and Tarceva in non-small cell lung cancer patients. Our direct sales force has been focusing on these high growth areas with our existing top tier hospital customers. As for our ECLIA business, we received SFDA approval for our fully-automated analyzer in April, 2010. Our major target end users will be top tier hospitals as well as high volume users among mid size hospitals of our ECLIA existing users, which we expect to be another growth driver for our relatively maturing ECLIA business starting in 2011. Finally, we continue to invest in research and development and anticipate additional SFDA approvals in the coming quarters, most notably our HPV DNA chip in the near term. With more extensive product offering and broader coverage of top tier hospitals, we believe that we are well positioned for a phase of accelerated growth starting this quarter."
Mr. Sam Tsang, Chief Financial Officer of the Company commented, "To address certain concerns raised by some of our shareholders and potential investors regarding our high level of leverage, we have taken various measures during the past few months including the purchases of our 3.5% tranche as well as 4% tranche of convertibles notes from the open market at significant discounts on the face value of the convertible notes, the termination of our share repurchase program and the suspension of our annual dividend. We intend to continue to reduce our leverage by accumulating cash generated from our operations. When we reduce our leverage to an appropriate level, we will resume our annual dividend. Nevertheless, we will not reduce our investment in the expansion of our direct sales network serving top tier hospitals and the internal product development on our three technology platforms which will sustain our growth in the mid to long term."
4Q FY2009 Unaudited Financial Results
The Company reported revenues of RMB175.7 million (US$25.7 million) for 4Q FY2009, representing a 29.3% decrease from the corresponding period of FY2008 but a 2.0% increase from 3Q FY2009.
The Company's revenues are currently generated from two segments, molecular diagnostic systems and immunodiagnostic systems. The molecular diagnostic system segment includes FISH products and is expected to include SPR products in 1Q FY2010 while the immunodiagnostic system segment consists of ECLIA products.
Molecular diagnostic system sales for 4Q FY2009 were RMB100.9 million (US$14.8 million), representing an 8.0% decrease from the corresponding period of FY2008 but a 4.9% increase from 3Q FY2009. The year-over-year decrease was primarily due to the sales of remaining inventory of fluorescent microscopes during 4Q FY2008 while there were no such sales since 1Q FY2009.
Immunodiagnostic system sales for 4Q FY2009 were RMB74.8 million (US$11.0 million), representing a 46.2% decrease from the corresponding period of FY2008 and a 1.7% decrease from 3Q FY2009. The year-over-year decrease was primarily due to the price reduction for ECLIA reagent kits in September 2009.
Gross margin was 64.9% for 4Q FY2009 which decreased year-over-year from 75.1% for the corresponding period of FY2008 but improved sequentially from 63.4% for 3Q FY2009. The year-over-year decrease in gross margin was primarily due to the impact of the price reduction for ECLIA reagent kits. The sequential increase in gross margin was primarily due to the purchase price reduction for major raw materials used in the production of ECLIA reagent kits from January 2010.
Research and development expenses were RMB10.4 million (US$1.5 million) for 4Q FY2009, representing a 3.0% year-over-year decrease and a 3.6% sequential decrease.
Sales and marketing expenses were RMB16.7 million (US$2.4 million) for 4Q FY2009, representing a 39.6% year-over-year increase but a 12.4% sequential decrease. The year-over-year increase was primarily due to the increase in direct sales efforts for molecular diagnostic systems.
General and administrative expenses were RMB26.7 million (US$3.9 million) for 4Q FY2009, representing a 30.2% year-over-year increase and a 3.5% sequential increase. The year-over-year increase was primarily due to the increase in staff expenses.
Amortization of SPR intangible assets was RMB27.3 million (US$4.0 million) for 4Q FY2009.
Interest expense on convertible notes was RMB34.8 million (US$5.1 million) for 4Q FY2009. As of March 31, 2010, the Company's outstanding convertible notes of US$150.0 million and US$264.8 million bear interest at 3.5% and 4.0% per annum, respectively and will mature in November 2011 and August 2013, respectively. Due to the adoption of new authoritative guidance governing the accounting for convertible instruments that can be settled in cash or partially in cash upon conversion effective on April 1, 2009, the Company recorded additional non-cash interest expense of RMB7.6 million (US$1.1 million) for the US$150.0 million 3.5% convertible notes in 4Q FY2009. The Company also made an adjustment related to these convertible notes for the corresponding period of FY2008 by increasing non-cash interest expense by RMB7.2 million to adopt this guidance retrospectively. This new guidance is not applicable to the US$264.8 million 4% convertible notes.
Interest expense on amortization of convertible notes issuance costs was RMB4.3 million (US$0.6 million) for 4Q FY2009.
Other income was RMB26.3 million (US$3.8 million) for 4Q FY2009. The significant year-over-year increase was primarily due to the gain from the purchase of the Company's convertible notes on the open market.
Income tax expense was RMB15.2 million (US$2.2 million) for 4Q FY2009.
Income from continuing operations and net income was RMB9.1 million (US$1.3 million) for 4Q FY2009.
Non-GAAP income from continuing operations excluding stock compensation expense, amortization of acquired intangible assets, non-cash interest expense of convertible notes arising from the adoption of the new guidance related to convertible instruments that can be settled in cash or partially in cash upon conversion and gain on purchase of its convertible notes was RMB51.5 million (US$7.5 million) for 4Q FY2009, representing a 57.2% decrease from the corresponding period of FY2008 but a 12.8% increase from 3Q FY2009.
Stock compensation expense for 4Q FY2009 was RMB10.7 million (US$1.6 million), of which RMB1.4 million was allocated to research and development expenses and RMB9.3 million to general and administrative expenses.
Amortization of acquired intangible assets for 4Q FY2009 was RMB49.8 million (US$7.3 million), of which RMB22.4 million was allocated to cost of revenues and RMB27.4 million to operating expenses.
As of March 31, 2010, the Company's cash and cash equivalents was RMB815.5 million (US$119.5 million). Net cash generated from operating activities for 4Q FY2009 was RMB59.8 million (US$8.8 million).
As of March 31, 2010, the Company's net accounts receivable was RMB303.4 million (US$44.4 million), representing an increase of 0.8% from the balance at December 31, 2009.
FY2009 Unaudited Financial Results
Revenues were RMB723.1 million (US$105.9 million) for FY2009, representing a 12.9% year-over-year decrease.
Molecular diagnostic system sales for FY2009 were RMB384.8 million (US$56.4 million), representing an 18.3% year-over-year increase. Immunodiagnostic system sales for FY2009 were RMB338.3 million (US$49.5 million), representing a 33.0% year-over-year decrease. The year-over-year increase in molecular diagnostic system sales was primarily due to the increase in usage of the Company's FISH probes by existing and new hospital customers served by the Company's direct sales personnel. The year-over-year decrease in immunodiagnostic system sales was primarily due to the price reduction of ECLIA reagent kits from September 2009.
Gross margin decreased to 67.1% for FY2009 as compared to 72.0% for FY2008 primarily due to the price reduction of ECLIA reagent kits.
Research and development expenses were RMB42.3 million (US$6.2 million) for FY2009, representing a 34.5% year-over-year increase. The increase was primarily due to the development of FISH probes, SPR-based chips, ECLIA reagent kits as well as fully-automated ECLIA analyzers.
Sales and marketing expenses were RMB64.1 million (US$9.4 million) for FY2009, representing a 49.9% year-over-year increase. This increase was primarily due to the increase in direct sales efforts for molecular diagnostic systems.
General and administrative expenses were RMB144.7 million (US$21.2 million) for FY2009, representing a 48.2% year-over-year increase. The increase was primarily due to the costs for the independent internal investigation as well as provision for bad debts related to certain ECLIA customers.
Interest expense on convertible notes was RMB141.1 million (US$20.7 million) for FY2009, representing a 26.2% year-over-year increase. The increase was primarily due to the issuance of US$276.0 million 4% convertible notes in August 2008.
Interest expense on amortization of convertible notes issuance costs was RMB17.4 million (US$2.5 million) for FY2009, representing a 30.6% year-over-year increase. The increase was primarily due to the issuance of US$276.0 million 4% convertible notes in August 2008.
Other income was RMB26.5 million (US$3.9 million) for FY2009. The significant year-over-year increase was primarily due to the gain from the purchase of the Company's convertible notes on the open market.
Income tax expense was RMB63.6 million (US$9.3 million) for FY2009. The significant income tax expense was primarily because certain expenses of the Company such as stock compensation expense, amortization of acquired intangible assets and interest expense of convertible notes were not deductible for income tax purpose. In addition, the Company is required to accrue for withholding income tax on distributable earnings generated in China during the year.
Loss from continuing operations and net loss was RMB57.0 million (US$8.4 million) for FY2009.
Non-GAAP income from continuing operations excluding stock compensation expense, amortization of acquired intangible assets, non-cash interest expense of convertible notes arising from the adoption of the new guidance related to convertible instruments that can be settled in cash or partially in cash upon conversion and gain on purchase of its convertible notes was RMB187.3 million (US$27.4 million) for FY2009, representing a 55.5% year-over-year decrease.
Stock compensation expense for FY2009 was RMB40.4 million (US$5.9 million), of which RMB6.3 million was allocated to research and development expenses and RMB34.1 million to general and administrative expenses. The Company approved the grant of 3,250,000 restricted stock, equivalent to 325,000 ADSs to certain directors, officers and employees on May 21, 2010 which was approximately 1.0% of the Company's issued shares. The restricted stock vests at the end of a three-year period.
Amortization of acquired intangible assets for FY2009 was RMB199.1 million (US$29.2 million), of which RMB89.7 million was allocated to cost of revenues and RMB109.4 million to operating expenses.
For the convenience of readers, certain RMB amounts have been translated into U.S. dollars at the rate of RMB6.8258 to US$1.00, the noon buying rate in New York City for cable transfers of RMB per U.S. dollar as set forth in the H.10 weekly statistical release of the Federal Reserve Board, as of Wednesday, March 31, 2010. No representation is made that the RMB amounts could have been or could be converted into U.S. dollars at that rate or at any other rate on March 31, 2010 or at any other dates.
Share Repurchase Program
In September 2009, the Company's board of directors authorized a share repurchase program, under which the Company may repurchase up to US$30 million worth of its outstanding ADSs from the open market or in block trades for a period of one year, commencing on October 1, 2009. As of March 31, 2010, the Company repurchased a total of 500,000 ADSs at a cost of approximately US$6.4 million (including transaction costs). The Company has terminated the program.
Convertible Notes
The Company purchased 4% convertible notes with principal amount of about RMB76.8 million (US$11.2 million) for a total consideration of RMB50.5 million (US$7.4 million) during 4Q FY2009. As of March 31, 2010, the Company had US$264.8 million 4% convertible notes and US$150 million 3.5% convertible notes outstanding. The Company purchased additional 3.5% and 4% convertible notes subsequent to March 31, 2010.
Outlook for 1Q FY2010
The Company expects the molecular diagnostic system segment to continue its growth momentum and the immunodiagnostic system segment to rebound from its low level in 1Q FY2010.
The Company estimates the target revenues for 1Q FY2010 to be not less than RMB185.0 million (US$27.1 million).
The Company estimates the target non-GAAP income from continuing operations for 1Q FY2010 to be not less than RMB56.0 million (US$8.2 million).
The Company estimates the target non-GAAP diluted earnings from continuing operations per ADS for 1Q FY2010 to be not less than RMB2.14 (US$0.31).
The above targets are based on the Company's current views on the operating and market conditions, which are subject to change.
Outlook for FY2010
The Company expects the sales of HPV DNA chips used with its SPR analyzers to increase rapidly in later quarters of FY2010 following the increasing number of SPR analyzers placed with its hospital customers during the fiscal year. The Company also expects a higher non-GAAP net margin for FY2010 compared with that of FY2009 primarily due to increasing revenue contribution from sales of FISH probes and HPV DNA chips which generate higher non-GAAP gross margin among the Company's products.
The Company estimates the target quarterly revenues to increase in a range of 5%-7% on a quarter-over-quarter basis during FY2010.
The Company estimates the target quarterly non-GAAP income from continuing operations and target quarterly non-GAAP diluted earnings from continuing operations per ADS to increase at a rate higher than that of target quarterly revenues.
The above targets are based on the Company's current views on the operating and market conditions, which are subject to change.
Non-GAAP Measure Disclosures
To supplement its consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), the Company uses non-GAAP measures of gross profit, operating income, income from continuing operations and earnings from continuing operations per ADS, which are adjusted from the results based on GAAP to exclude the impact of stock compensation expense, amortization of acquired intangible assets, acquired in-process research and development, non-cash interest expense of convertible notes arising from the adoption of the new guidance related to convertible instruments that can be settled in cash or partially in cash upon conversion and gain on purchase of its convertible notes. Non-GAAP financial measures are used by the Company in their financial and operating decision- making because management believes they reflect the Company's ongoing business in a manner that allows meaningful period-to-period comparison. The Company's management believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating the Company's current operating performance and future prospects in the same manner as management does, if they so choose.
The presentation of this additional financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the financial information included with this earnings announcement.
Conference Call
The Company's senior management team will host an earnings conference call at 8:00a.m. U.S. Eastern Time on June 4, 2010 (or 8:00p.m. Beijing/Hong Kong time on the same date) to discuss the results following this earnings announcement.
The dial-in details for the live conference call are as follows:
-- U.S. Toll Free Number 1-866-543-6403
-- International Dial-in Number 1-617-213-8896
Passcode: CMEDCALL
A live webcast of the conference call will be available on
http://ir.chinameditech.com .A replay of this webcast will be available for one month on this website.
A telephone replay of the call will be available after the conclusion of the conference call through 10:00a.m. U.S. Eastern Time on June 5, 2010.
The dial-in details for the replay are as follows:
-- U.S. Toll Free Number 1-888-286-8010
-- International Dial-in Number 1-617-801-6888
Passcode: 63341451
About China Medical Technologies, Inc.China Medical Technologies, Inc. is a leading China-based advanced IVD company using molecular diagnostic technologies including Fluorescent in situ Hybridization (FISH) and Surface Plasmon Resonance (SPR) and an immunodiagnostic technology, Enhanced Chemiluminescence Immunoassay (ECLIA), to develop, manufacture and distribute diagnostic products used for the detection of various cancers, diseases and disorders as well as companion diagnostic tests for targeted cancer drugs. The Company generates all of its revenues in China through the sale of diagnostic consumables including FISH probes, SPR-based DNA chips and ECLIA reagent kits to hospitals which are recurring users of the consumables for their patients. The Company sells FISH probes and SPR chips to large hospitals through its direct sales force and ECLIA reagent kits to small and mid-size hospitals through distributors. For more information, please visit http://www.chinameditech.com .
Safe Harbor Statement
This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the quotations from management in this press release, the Company's strategic operational plans, as well as its outlook for 1Q FY2010 and FY2010, contain forward-looking statements. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Further information regarding these and other risks is included in the Company's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.
For more information, please contact:
Sam Tsang and Winnie Yam
Tel: +852-2511-9808
Email: [email protected]
China Medical Technologies, Inc.
Unaudited Condensed Consolidated Balance Sheets
As of
March 31, 2009 March 31, 2010
RMB RMB US$
(in thousands)
Assets
Current assets
Cash and cash equivalents 1,456,410 815,453 119,466
Trade accounts receivable, net 343,037 303,368 44,444
Inventories 16,932 24,889 3,646
Prepayments and other receivables 20,425 21,508 3,151
Due from a related party 204,987 204,774 30,000
Total current assets 2,041,791 1,369,992 200,707
Property, plant and equipment, net 169,422 155,825 22,829
Land use rights 7,239 7,049 1,033
Goodwill 8,654 8,654 1,268
Intangible assets, net 3,487,474 3,285,190 481,290
Convertible notes issuance costs 65,816 46,681 6,839
Total assets 5,780,396 4,873,391 713,966
Liabilities
Current liabilities
Trade accounts payable 27,863 20,126 2,948
Accrued liabilities and other
payables 892,905 183,498 26,883
Income taxes payable 77,112 57,529 8,428
Total current liabilities 997,880 261,153 38,259
Convertible notes 2,826,348 2,777,086 406,851
Deferred income taxes 29,898 67,134 9,836
Total liabilities 3,854,126 3,105,373 454,946
Shareholders' equity
Ordinary shares US$0.1 par value:
500,000,000 authorized; 321,066,661
issued and outstanding as of March
31, 2009 and 322,680,001 issued and
outstanding as of March 31, 2010 257,738 258,840 37,921
Additional paid-in capital 709,949 752,862 110,297
Treasury stock -- (45,143) (6,614)
Accumulated other comprehensive
loss (69,957) (70,316) (10,302)
Retained earnings 1,028,540 871,775 127,718
Total shareholders' equity 1,926,270 1,768,018 259,020
Total liabilities and
shareholders' equity 5,780,396 4,873,391 713,966
China Medical Technologies, Inc.
Unaudited Condensed Consolidated Statements of Income
For the Three Months Ended
March 31, December 31, March 31,
2009 2009 2010
RMB RMB RMB US$
As adjusted (5)
(in thousands except for per ADS information)
Revenues, net (1) 248,635 172,320 175,728 25,745
Cost of revenues (2) (61,834) (62,996) (61,624) (9,028)
Gross profit 186,801 109,324 114,104 16,717
Operating expenses:
Research and development
(2)(3) (10,670) (10,738) (10,352) (1,517)
Acquired in-process
research and development -- -- -- --
Sales and marketing (2) (11,963) (19,058) (16,695) (2,446)
General and administrative
(2)(3) (20,538) (25,844) (26,743) (3,918)
Amortization of SPR
intangible assets (2) (27,379) (27,343) (27,343) (4,006)
Total operating expenses (70,550) (82,983) (81,133) (11,887)
Operating income 116,251 26,341 32,971 4,830
Interest income 5,608 4,332 4,155 609
Interest expense -
convertible notes (5) (34,993) (35,421) (34,831) (5,103)
Interest expense -
amortization of
convertible notes
issuance costs (5) (4,383) (4,378) (4,263) (624)
Interest expense - other (785) -- -- --
Other income/ (expense),
net (168) 225 26,267 3,848
Income/ (loss) before
income tax 81,530 (8,901) 24,299 3,560
Income tax expense (32,143) (13,088) (15,206) (2,228)
Income/ (loss) from
continuing operations 49,387 (21,989) 9,093 1,332
Income from discontinued
operation (2) -- -- -- --
Net income/ (loss) 49,387 (21,989) 9,093 1,332
Earnings/ (loss) from
continuing operations per
ADS
- basic 1.88 (0.84) 0.35 0.05
- diluted 1.87 (0.84) 0.35 0.05
Earnings from discontinued
operations per ADS
- basic N/A N/A N/A N/A
- diluted N/A N/A N/A N/A
Weighted average number of
ADS
- basic 26,287,974 26,262,471 25,993,349 25,993,349
- diluted 26,347,906 26,262,471 26,050,599 26,050,599
Notes:
(1) Revenues, net RMB'000 RMB'000 RMB'000 US$'000
- Molecular diagnostic
systems 109,640 96,166 100,897 14,782
- Immunodiagnostic systems 138,995 76,154 74,831 10,963
248,635 172,320 175,728 25,745
(2) Depreciation and
amortization RMB'000 RMB'000 RMB'000 US$'000
- Cost of revenues 25,328 25,862 25,881 3,792
- Research and development 421 845 857 126
- Sales and marketing 32 39 116 17
- General and administrative 1,322 1,244 1,157 170
- Amortization of SPR
intangible assets 27,379 27,343 27,343 4,006
- Income from discontinued
operation -- -- -- --
54,482 55,333 55,354 8,111
(3) Stock compensation
expense RMB'000 RMB'000 RMB'000 US$'000
- Research and development 2,338 1,592 1,440 211
- General and administrative 11,581 8,642 9,252 1,355
13,919 10,234 10,692 1,566
(4) In computing diluted earnings from continuing operations per ADS,
interest expense and amortization in connection with convertible notes
were not added back in computing diluted earnings from continuing
operations per ADS because they were anti-dilutive.
(5) As a result of the adoption of new authoritative guidance changing the
accounting for convertible instruments that can be settled in cash or
partially in cash upon conversion, the Company adjusted relevant
numbers in the condensed consolidated statement of income for the
three months ended and the year ended March 31, 2009 retrospectively
in accordance with GAAP.
China Medical Technologies, Inc.
Unaudited Condensed Consolidated Statements of Income (cont.)
For the Year Ended
March 31, 2009 March 31, 2010
RMB RMB US$
As adjusted (5)
(in thousands except for per ADS information)
Revenues, net (1) 829,950 723,071 105,932
Cost of revenues (2) (232,571) (237,550) (34,801)
Gross profit 597,379 485,521 71,131
Operating expenses:
Research and development (2)(3) (31,450) (42,293) (6,196)
Acquired in-process research
and development (244,872) -- --
Sales and marketing (2) (42,722) (64,055) (9,384)
General and administrative (2)
(3) (97,596) (144,671) (21,195)
Amortization of SPR intangible
assets (2) (36,511) (109,395) (16,027)
Total operating expenses (453,151) (360,414) (52,802)
Operating income 144,228 125,107 18,329
Interest income 32,354 13,456 1,971
Interest expense - convertible
notes (5) (111,852) (141,123) (20,675)
Interest expense -
amortization of
convertible notes
issuance costs (5) (13,323) (17,402) (2,549)
Interest expense - other (4,240) -- --
Other income/ (expense), net (3,732) 26,477 3,879
Income/ (loss) before income
tax 43,435 6,515 955
Income tax expense (73,042) (63,556) (9,311)
Income/ (loss) from continuing
operations (29,607) (57,041) (8,356)
Income from discontinued
operation (2) 364,409 -- --
Net income/ (loss) 334,802 (57,041) (8,356)
Earnings/ (loss) from
continuing operations per ADS
- basic (1.13) (2.17) (0.32)
- diluted (1.13) (2.17) (0.32)
Earnings from discontinued
operations per ADS
- basic 13.87 N/A N/A
- diluted 13.87 N/A N/A
Weighted average number of ADS
- basic 26,277,629 26,254,639 26,254,639
- diluted 26,277,629 26,254,639 26,254,639
Notes:
(1) Revenues, net RMB'000 RMB'000 US$'000
- Molecular diagnostic
systems 325,294 384,762 56,369
- Immunodiagnostic systems 504,656 338,309 49,563
829,950 723,071 105,932
(2) Depreciation and RMB'000 RMB'000 US$'000
amortization
- Cost of revenues 99,678 102,801 15,060
- Research and development 1,204 3,833 562
- Sales and marketing 139 255 37
- General and administrative 5,253 4,968 728
- Amortization of SPR intangible
assets 36,511 109,395 16,027
- Income from discontinued
operation 3,953 -- --
146,738 221,252 32,414
(3) Stock compensation RMB'000 RMB'000 US$'000
expense
- Research and development 8,190 6,335 928
- General and administrative 41,989 34,102 4,996
50,179 40,437 5,924
(4) In computing diluted earnings from continuing operations per ADS,
interest expense and amortization in connection with convertible notes
were not added back in computing diluted earnings from continuing
operations per ADS because they were anti-dilutive.
(5) As a result of the adoption of new authoritative guidance changing the
accounting for convertible instruments that can be settled in cash or
partially in cash upon conversion, the Company adjusted relevant
numbers in the condensed consolidated statement of income for the
three months ended and the year ended March 31, 2009 retrospectively
in accordance with GAAP.
China Medical Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
For the Year Ended
March 31, 2009 March 31, 2010
RMB RMB US$
(in thousands)
Net cash provided by operating
activities 490,758 279,877 41,003
Net cash used in investing
activities (1,467,195) (715,522) (104,826)
Net cash provided by/ (used in)
financing activities 1,751,297 (205,061) (30,042)
Effect of foreign currency exchange
rate change on cash (1,129) (251) (37)
Net increase/ (decrease) in cash
and cash equivalents 773,731 (640,957) (93,902)
Cash and cash equivalents:
At beginning of year 682,679 1,456,410 213,368
At end of year 1,456,410 815,453 119,466
China Medical Technologies, Inc.
Reconciliations of GAAP measures to Non-GAAP measures
For the Three Months Ended
March 31, December 31, March 31,
2009 2009 2010
RMB RMB RMB US$
As adjusted (2)
(in thousands except for per ADS information)
Gross profit 186,801 109,324 114,104 16,717
Adjustment:
Amortization of
acquired intangible
assets 22,444 22,412 22,423 3,285
Non-GAAP gross profit 209,245 131,736 136,527 20,002
Gross margin 75.1% 63.4% 64.9% 64.9%
Non-GAAP gross margin 84.2% 76.4% 77.7% 77.7%
Operating income 116,251 26,341 32,971 4,830
Adjustment:
Stock compensation
expense 13,919 10,234 10,692 1,566
Amortization of
acquired intangible
assets 49,823 49,755 49,766 7,291
Acquired in-process
research and
development -- -- -- --
Non-GAAP operating
income 179,993 86,330 93,429 13,687
Operating margin 46.8% 15.3% 18.8% 18.8%
Non-GAAP operating
margin 72.4% 50.1% 53.2% 53.2%
Income/(loss) from
continuing operations 49,387 (21,989) 9,093 1,332
Adjustment:
Stock compensation
expense 13,919 10,234 10,692 1,566
Amortization of
acquired intangible
assets 49,823 49,755 49,766 7,291
Acquired in-process
research and
development -- -- -- --
Non-cash interest
expense of convertible
notes arising from the
adoption of new
guidance 7,153 7,618 7,618 1,116
Gain on purchase of
convertible notes -- -- (25,693) (3,764)
Non-GAAP income from
continuing operations 120,282 45,618 51,476 7,541
GAAP net margin 19.9% -- 5.2% 5.2%
Non-GAAP net margin 48.4% 26.5% 29.3% 29.3%
Earnings/ (loss) from
continuing operations
per ADS
- basic 1.88 (0.84) 0.35 0.05
- diluted 1.87 (0.84) 0.35 0.05
Non-GAAP earnings from
continuing operations
per ADS
- basic 4.58 1.74 1.98 0.29
- diluted (1) 4.57 1.74 1.98 0.29
Weighted average number
of ADS
- basic 26,287,974 26,262,471 25,993,349 25,993,349
- diluted (1) 26,347,906 26,262,471 26,050,599 26,050,599
Notes:
(1) Interest expense and amortization in connection with convertible notes
were not added back in computing non-GAAP diluted earnings from
continuing operations per ADS because they were anti-dilutive.
(2) As a result of the adoption of new authoritative guidance changing the
accounting for convertible instruments that can be settled in cash or
partially in cash upon conversion, the Company adjusted relevant
numbers for the three months ended and the year ended March 31, 2009
retrospectively in accordance with GAAP.
China Medical Technologies, Inc.
Reconciliations of GAAP measures to Non-GAAP measures (cont.)
For the Year Ended
March 31, 2009 March 31, 2010
RMB RMB US$
As adjusted (2)
(in thousands except for per ADS information)
Gross profit 597,379 485,521 71,131
Adjustment:
Amortization of acquired
intangible assets 90,077 89,720 13,144
Non-GAAP gross profit 687,456 575,241 84,275
Gross margin 72.0% 67.1% 67.1%
Non-GAAP gross margin 82.8% 79.6% 79.6%
Operating income 144,228 125,107 18,329
Adjustment:
Stock compensation expense 50,179 40,437 5,924
Amortization of acquired
intangible assets 126,588 199,115 29,171
Acquired in-process
research and development 244,872 -- --
Non-GAAP operating income 565,867 364,659 53,424
Operating margin 17.4% 17.3% 17.3%
Non-GAAP operating margin 68.2% 50.4% 50.4%
Income/(loss) from
continuing operations (29,607) (57,041) (8,356)
Adjustment:
Stock compensation expense 50,179 40,437 5,924
Amortization of acquired
intangible assets 126,588 199,115 29,171
Acquired in-process
research and development 244,872 -- --
Non-cash interest expense
of convertible notes
arising from the adoption
of new guidance 28,614 30,477 4,465
Gain on purchase of
convertible notes -- (25,693) (3,764)
Non-GAAP income from
continuing operations 420,646 187,295 27,440
GAAP net margin -- -- --
Non-GAAP net margin 50.7% 25.9% 25.9%
Earnings/ (loss) from continuing
operations per ADS
- basic (1.13) (2.17) (0.32)
- diluted (1.13) (2.17) (0.32)
Non-GAAP earnings from continuing
operations per ADS
- basic 16.01 7.13 1.04
- diluted (1) 16.01 7.13 1.04
Weighted average number of ADS
- basic 26,277,629 26,254,639 26,254,639
- diluted (1) 26,277,629 26,254,639 26,254,639
Notes:
(1) Interest expense and amortization in connection with convertible notes
were not added back in computing non-GAAP diluted earnings from
continuing operations per ADS because they were anti-dilutive.
(2) As a result of the adoption of new authoritative guidance changing the
accounting for convertible instruments that can be settled in cash or
partially in cash upon conversion, the Company adjusted relevant
numbers for the three months ended and the year ended March 31, 2009
retrospectively in accordance with GAAP.
SOURCE China Medical Technologies, Inc.