Chindex tumbles on 1Q results and outlook

Shares of Chindex International Inc., which sells medical products in China, fell Thursday after the company reported disappointing fiscal first-quarter results, and said conditions in China will hurt its results over the coming months.

For the three months ended June 30, the Bethesda, Md., company fell to a loss of $161,000, or a penny per share. A year ago, Chindex earned $809,000, or 8 cents per share. Revenue grew 20 percent, to $32.1 million from $26.7 million.

Health care services revenue rose to $19.6 million from $15.6 million, which fell short of Chindex's expectations, and medical product sales edged up to $12.5 million from $11.2 million. That unit is currently not profitable, the company said, although it expects that to change by the end of fiscal 2009.

"The turnaround in the medical products division is taking longer than anticipated," said Chief Executive Roberta Lipson. Chindex said medical product orders dropped after the May 12 earthquake in the Sichuan Province, which killed almost 70,000 people, and left more than 5 million homeless.

The earthquake also delayed government approval of some Chindex products, which hurt sales. The company said those approvals are now complete.

A light flu season and a higher income tax provision also harmed results in the first quarter.

Chindex said the Beijing Olympics are affecting business, as freight transportation in Beijing and Shanghai is restricted and business travel decreased as visas were harder to obtain. Chindex expects those restrictions to hurt its second-quarter results, pushing sales toward the second half of the fiscal year, which ends March 31.

The company expects medical products revenue of at least $40 million in second half, and said health care revenue will grow about 30 percent compared with fiscal 2008, which implies about $85.6 million in sales.

Chindex did not offer a specific second-quarter forecast, but its outlook for the year appeared to fall short of expectations, as analysts polled by Thomson Reuters anticipate full-year revenue of $161.2 million, on average.

In afternoon trading, shares dropped $1.44, or 9.6 percent, to $13.52.