Chinese medical devices major, Mindray Medical
International Limited ( MR ) reported
first-quarter 2013 adjusted (excluding one-time expenses other than
stock-based compensation expense) earnings per share of 50 cents
beating the Zacks Consensus Estimate of 42 cents.
Reported net income rose 56.8% year over year to $57.4 million
(or 48 cents per share) in the quarter.
Revenues were up 10.5% year over year to $242.1 million in the
first quarter, missing the Zacks Consensus Estimate of $257
During the reported quarter, Mindray recorded ex-China sales of
$130.8 million, up 2.8% year over year. Revenues in China increased
21.2% year over year to $111.3 million in the reported quarter.
Patient Monitoring & Life Support Products (41.1% of total
sales) revenues grew 3.9% year over year in the reported quarter to
$99.4 million. In-Vitro Diagnostic Products (28.2% of total
revenue) revenues were $68.3 million, up 20.7%. Revenues from
reagents contributed 36.4% of In-Vitro Diagnostic segment sales
during the quarter.
Medical Imaging Systems (22% of total sales) sales rose to $53.2
million, up 0.7%. Other revenues (8.7% of total revenue) were up
52.7% to $21.2 million.
Adjusted gross profit amounted to $140.7 million in the quarter,
higher by 15.9% year over year. Adjusted gross margin was 58.1%,
higher than 55.5% in the year-ago period.
Adjusted selling expenses were $44.9 million, or 18.5% of total
net sales, compared with 17.5% a year ago. Adjusted general and
administrative expenses were $24.2 million, or 10% of sales, versus
8.7% a year ago. Adjusted research and development expenses were
$25.3 million, or 10.5% of sales, compared with 10.7% in the
Adjusted operating income stood at $46.3 million in the quarter,
up 14.3% year over year. Adjusted operating margin was 19.1%,
higher than the 18.5% in the year-ago quarter.
Balance Sheet and Cash Flow
As of Mar 31, 2013, Mindray had $891 million in cash and liquid
investments, up about 3.3% from a year ago. Long-term bank loan
stood at $59.9 million, up 19.8% from a year ago.
Mindray provides guidance on a full year basis. The company
maintained its forecast for revenue growth of 17% or more for 2013.
It continues to expect adjusted net income for the year to increase
by a minimum of 15% year over year. The guidance does not take into
account tax advantage of $19.4 million on account of software
business status during 2011 and 2012, received in 2013. The
guidance incorporates an income tax rate of 15% for the Shenzhen
subsidiary. The forecast for capital expenditure for 2013 is about
Mindray is a bellwether in the Chinese MedTech industry with a
solid international presence. A key distinction with domestic
competitors is that the majority of Mindray's products have CE Mark
and/or Food and Drug Administration (FDA) clearance.
Mindray maintains a decent product pipeline and brings out
several new products each year. New products contribute in a major
way to Mindray's revenues. In 2012, the company launched 10 new
products and acquired four companies.
The company has entered the premium segment globally, where its
competitive advantage is still unclear. Moreover, on the negative
side, health care reforms in China and the U.S. may reduce demand
for Mindray's products. Competition is fierce and will lead to
price erosion over time.
The stock carrries a Zacks Rank #2 (Buy). Other stocks such as
Accuray Incorporated ( ARAY ),
Heartware International Inc. ( HTWR ) and
Intuitive Surgical, Inc. ( ISRG ) also carry a
Zacks Rank #2 (Buy) and are expected to do well.ACCURAY INC (ARAY): Free Stock Analysis ReportHEARTWARE INTL (HTWR): Free Stock Analysis
ReportINTUITIVE SURG (ISRG): Free Stock Analysis
ReportMINDRAY MEDICAL (MR): Free Stock Analysis
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