Mindray Medical International Ltd. (MR) posted first-quarter adjusted earnings of 31 cents per share after the closing bell on Monday. Though the result matched the Zacks Consensus Estimate, it came in well ahead of the year-ago adjusted earnings of 23 cents per share. The year-over-year growth was primarily driven by robust performance in emerging markets. 

Mindray is a leading developer, manufacturer and marketer of medical devices based in China. The company offers products across three segments including patient monitoring devices and life support products, in-vitro diagnostic instruments and medical imaging systems. 

Quarterly Details 

Mindray’s net revenues grew by 8.7% to $145.8 million from $134.2 million in the year-ago quarter. The growth was driven by a 16.6% year-over-year expansion in international operations to $83.7 million driven by strong performance in emerging markets. However, overall revenue growth was partially offset by China revenues, which remained essentially flat at $62.2 million, compared to $62.4 million in the year-ago period, which included a tax refund of $6.5 million. Revenues from China were also affected by a slowdown in Chinese Government tender sales.
 
In terms of segments, sales from Patient Monitoring & Life Support, the flagship segment contributing 42.3% to overall revenues, grew 5.3% year-over-year to $61.7 million. In-Vitro Diagnostic products posted a growth of 17.6% year-over-year to $37.9 million, while Medical Imaging Systems and Other segments rose by 4.0% and 19.5% to $37.1 million and $9.1 million, respectively. 

Mindray’s gross profit increased 10.0% year-over-year to $82.3 million, while gross margin expanded by 70 basis points (bps) to 56.4%. The growth was mainly attributable to favorable product mix, lower product costs and reduced sales of lower margin tender sales. Total operating expenses, as a percentage of revenues, increased 70 bps year-over-year to 34.5%. Operating income rose 8.5% year-over-year to $31.9 million, while operating margin remained constant at 21.9%. 

Balance Sheet & Cash Flow 

Mindray ended the quarter with cash and equivalents of $255.1 million, compared to $103.1 million in the prior year quarter. During the quarter, the company generated $32.8 million of cash from operating activities and deployed $15.4 million towards capital expenditures. During 2010, Mindray plans to deploy $60 million to $70 million towards capital expenditure. 

Guidance and Zacks Consensus 

Moving forward, Mindray continues to expect full-year 2010 revenues to grow by 17% from 2009 levels, which comes to about $742.0 million. The company also expects adjusted net income to expand 17% from last year, which comes to about $172.5 million. The Zacks Consensus Estimate for 2010 is currently pegged at $1.35 per share, which dipped by 11 cents in just the past week. For the next year, the Zacks Consensus Estimate also moved down by 2 cents over the past week as 3 of 10 covering analysts reduced projections.
Read the full analyst report on “MR”
Zacks Investment Research