Meihua International Medical Technologies Co., Ltd. Reports 2022 Financial Year Results
YANGZHOU,China,April 14,2023 --Meihua International Medical Technologies Co.,Ltd. ("MHUA" or the "Company") (NASDAQ: MHUA),a reputable manufacturer and provider of Class I,II and III disposable medical devices with operating subsidiaries in China,today reported its financial results for the fiscal year ended December 31,2022. All amounts below are in U.S. dollars.
Fiscal Year 2022 Financial Metrics:
Revenue remained stable and decreased slightly by 1% to approximately $103.3 million for the year ended December 31,2022,from approximately $104.0 million for the year ended December 31,2021.
Gross profit was approximately $38.1 million for the year ended December 31,compared with approximately $39.8 million for the year ended December 31,2021.
Gross margin decreased slightly to 37% for the year ended December 31,from 38% for the year ended December 31,2021.
Income from operations was approximately $10.8 million for the year ended December 31,compared to approximately $26.3 million for the year ended December 31,2021.
Net income attributable to shareholders was approximately $6.2 million for the year ended December 31,compared to approximately $20.9 million for the year ended December 31,2021.
For the Years Ended December 31
(in $ millions,except earnings per share;
differences due to rounding)
2022
2021
% Change
Revenues
$
103.3
$
104.0
(1%)
Gross profit
38.1
39.8
(4%)
Gross margin
37%
38%
(1 percentage
point)
Income from operations
10.8
26.3
(59%)
Net income attributable to shareholders
6.2
20.9
(70%)
Net income per share – Basic and Diluted
0.27
1.05
(75%)
Mr. Yongjun Liu,Chairman of MHUA,commented: "The Company is pleased to announce resilient results for the past fiscal year,despite experiencing some uncertainty in the macro-environment and disturbances in the supply chain and logistics network especially during the fourth quarter. We reported stable revenue of approximately $103.3 million for 2022,compared to approximately $104.0 million in 2021 and maintained our gross margin at 37%. We believe that the Company is now better positioned for the upcoming year as it is fully geared to drive through new initiatives with diversification into high-end product offerings,as well as expansion to untapped global markets. Our strategy in the new fiscal year continues to focus on growing revenues with an emphasis on long-term opportunities across multiple business strings at scale."
Fiscal Year 2022 Financial Results:
Revenues
Revenues decreased by approximately $0.7 million,or approximately 1%,to $103.3 million for the year ended December 31,2022 from approximately $104.0 million for the year ended December 31,2021. The slight decrease was mainly due to a decline in demand for customer orders.
Cost of revenues
Cost of revenues primarily include cost of materials,direct labor costs,overhead,and other related incidental expenses that are directly attributable to the Company's principal operations. Cost of revenues increased by approximately $1.0 million,or approximately 2%,to approximately $65.2 million for the year ended December 31,2022 from approximately $64.2 million for the year ended December 31,2021. The increase was mainly due to an increase in the price of materials.
Gross profit and margin
Gross profit decreased by approximately $1.7 million,or approximately 4%,to approximately $38.1 million for the year ended December 31,2022 from $39.8 million for the year ended December 31,2021. Gross profit margin decreased from 38% for the year ended December 31,2021 to 37% for the year ended December 31,2022 due to an increase in the cost of materials.
Operating costs and expenses
Our operating costs and expenses consist of selling expenses,general and administrative expenses and research and development expenses.
- Selling
Selling expenses increased by approximately $0.7 million,or approximately 10%,to approximately $7.1 million for the year ended December 31,2022 from approximately $6.5 million for the year ended December 31,2021. The increase was mainly attributable to the combined effects of the following:'
(a) Conference expenses increased by approximately $0.4 million to approximately $1.1 million for the year ended December 31,2022 from approximately $0.8 million for the year ended December 31,2021. The conference expense is mainly attributable to expenses related to the Company's market expansion,business development,business negotiation,medical expo,and exhibition affairs. These expenditures helped the Company promote its products,develop markets and channels,strengthen customer communication,and establish long-term and stable cooperative relations;
(b) Transportation expenses decreased by approximately $0.2 million,or approximately 8%,to approximately $2.6 million for the year ended December 31,2022 from approximately $2.8 million for the year ended December 31,2021. The decrease was mainly attributable to the reduction in business travel associated with business expansion,which was impacted by COVID-related controls implemented by local governments in fiscal year 2022;
(c) Salaries and benefits expenses increased by approximately $0.2 million or approximately 14%,to approximately $1.5 million for the year ended December 31,2022 from approximately $1.3 million for the year ended December 31,2021. The increase was mainly attributable to the fact that the COVID-19 pandemic in China had been brought under control and the local government canceling the social insurance relief policy; and
(d) Entertainment expenses increased by approximately $0.4 million,or approximately 50%,to approximately $1.2 million for the year ended December 31,2021. The increase was mainly attributable to the Company's business expansion and new customer acquisition.
- General and administrative expenses
General and administrative expenses increased by approximately $8.1 million,or approximately 186%,to approximately $12.5 million for the year ended December 31,from approximately $4.4 million for the year ended December 31,2021. The increase was primarily due to (a) service expenses increasing by approximately $7.0 million from approximately $0.2 million for the year ended December 31,2021 to approximately $7.2 million for the year ended December 31,(b) entertainment expenses increasing by approximately $0.4 million,or 51%,from approximately $0.8 million for the year ended December 31,2021 to approximately $1.2 million for the year ended December 31,(c) conference fee expenses increasing by approximately $0.3 million from approximately $0.5 million for the year ended December 31,2021 to approximately $0.8 million for the year ended December 31,and (d) salaries and benefits increasing by approximately $0.1 million from approximately $1.2 million for the year ended December 31,2021 to approximately $1.4 million for the year ended December 31,2022.
- Research and development expenses
Research and development expenses increased by approximately $0.2 million,or approximately 9%,to approximately $3.0 million for the year ended December 31,from approximately $2.7 million for the year ended December 31,2021. The increase was mainly due to the increase in salaries and benefits expenses which was mainly attributable to that the pandemic in China had been brought under control and the local government had canceled the social insurance relief policy.
Income from operations
As a result of the factors described above,our income from operations decreased by approximately $15.5 million,or approximately 59%,to approximately $10.8 million for the year ended December 31,2022 from approximately $26.3 million for the year ended December 31,2021.
Net income
Our net income decreased by approximately $14.8 million,or approximately 71%,to approximately $6.2 million for the fiscal year ended December 31,2022 from approximately $20.9 million for the fiscal year ended December 31,2021. The decrease was mainly due to a sharp increase in service expenses and writing off the Tai He deposit.
Recent developments
On February 21,2023,the Company announced that via its subsidiary company Hainan Guoxie Medical Technology Co.,it entered into a cooperation agreement with Qionghai City of Hainan Province to build technology park project. Hainan Guoxie also entered into cooperation agreement with Hainan Free Trade Port Boao Hope City to build MHUA a medical research and development center in the Hope City.
On February 15,the Company announced it has built up a team to lead the research and development of a robotic surgical system and efforts to apply for approval for production launch. The Company plans to engage in the design of a surgical robotic assisted surgery ("RAS") system and the integration of related software and hardware.
On February 08,the Company announced plan to explore the application of ChatGPT technologies to develop online health consultation services and is now actively laying out the research and development of related facilities application and technology platforms.
On January 11,the Company announced that its subsidiary Jiangsu Huadong Medical Device Industrial Co.,Ltd entered into a strategic cooperation agreement with Getein Biotech Inc. (SHA: 603387) to jointly produce and sell Covid-19 antigen test kits and other in vitro diagnostics (IVD) products.
About Meihua International Medical Technologies Co.,Ltd.
Meihua International Medical Technologies is a reputable manufacturer and provider of Class I,II and III disposable medical devices with operating subsidiaries in China. The Company manufactures and sells Class I disposable medical devices,such as HDPE bottles for tablets and LDPE bottles for eye drops,throat strip,and anal bags,and Class II and III disposable medical devices,such as disposable identification bracelets,gynecological examination kits,inspection kits,surgical kits,medical brushes,medical dressing,medical catheters,uterine tissue suction tables,virus sampling tubes,disposable infusion pumps,electronic pumps and anesthesia puncture kits,among other products which are sold under Meihua's own brands and are also sourced and distributed from other manufacturers. The Company has received international "CE" certification and ISO 13485 system certification and has also registered with the FDA (registration number: 3006554788) for over 20 Class I products. The Company has served hospitals,pharmacies,medical institutions and medical equipment companies for over 30 years,providing over 1,000 types of products for domestic sales,as well as over 120 products which are exported to more than 30 countries internationally across Europe,North America,South America,Asia,Africa and Oceania. For more information,please visitwww.meihuamed.com .
Forward-Looking Statements
This press 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 or performance,and underlying assumptions and other statements that are other than statements of historical facts. When the Company uses words such as "may," "will," "intend," "should," "believe," "expect," "anticipate," "project," "estimate" or similar expressions that do not relate solely to historical matters,it is making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause the actual results to differ materially from the Company's expectations discussed in the forward-looking statements. These statements are subject to uncertainties and risks including,but not limited to,the following: the Company's ability to achieve its goals and strategies,and its ability to fully execute on the planned agreement,the Company's future business development and plans of future business development,including its ability to successfully develop robotic assisted surgery systems and obtain licensure and certification for such systems,financial conditions and results of operations,product and service demand and acceptance,reputation and brand,the impact of competition and pricing,changes in technology,government regulations,fluctuations in general economic and business conditions in China,and assumptions underlying or related to any of the foregoing and other risks contained in reports filed by the Company with the U.S. Securities and Exchange Commission ("SEC"). For these reasons,among others,investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Additional factors are discussed in the Company's filings with the SEC,including under the section entitled "Risk Factors" in its annual report on Form 20-F,as filed with the SEC on April 14,as well as its current reports on Form 6-K and other filings,all of which are available for review at www.sec.gov. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.
For more information,please contact:
Janice Wang
Wealth Financial Services LLC
Phone:
+86 13811768599
+1 628 283 9214
Email: services@wealthfsllc.com
MEIHUA INTERNATIONAL MEDICAL TECHNOLOGIES CO.,LTD.
CONSOLIDATED BALANCE SHEETS
As of December 31,2022 and 2021
(US$,except share data or otherwise noted)
2022
2021
Assets
Current Assets
Cash
$
26,736,700
$
8,149,276
Bank acceptance receivables
22,085,846
19,379,845
Accounts receivable
68,945,792
67,101,297
Inventories
1,122,038
1,251,393
Prepayment and other current assets
16,428,779
1,394,539
Total current assets
135,319,155
97,276,350
Property,plant and equipment
8,758,047
7,477,744
Intangible assets
497,600
562,001
Investment
6,669,655
941,531
Other noncurrent assets
12,333,122
-
Deposits
-
30,599,755
Total assets
$
163,577,579
$
136,857,381
Liabilities and shareholders' equity
Liabilities
Current liabilities
Short-term bank borrowings
$
6,089,428
$
5,178,420
Accounts payable
16,096,165
20,981,041
Taxes payable
1,131,276
2,082,252
Accrued expenses and other current liabilities
856,698
847,066
Total current liabilities
24,173,567
29,088,779
Long term loan
724,932
-
Total liabilities
24,898,499
29,779
Commitments and contingencies
Shareholders' equity
Ordinary share,$0.0005 par value,80,000,000 shares
authorized,23,940,000 and 20,000 shares issued and
outstanding as of December 31,2022 and 2021,respectively
11,970
10,000
Preferred share,$0.0005par value,20,000shares
authorized,noshares issued and outstanding as of December
31,2022 and 2021
-
-
Additional paid-in capital
42,967,006
9,716,484
Statutory surplus reserves
15,665,860
15,467
Retained earnings
83,330,239
77,574,663
Accumulated other comprehensive income (loss)
(3,852,138)
5,288,988
Total shareholders' equity
138,937
107,768,602
Non-controlling interest
556,143
-
TOTAL EQUITY
138,679,080
107,602
Total liabilities and shareholders' equity
$
163,381
MEIHUA INTERNATIONAL MEDICAL TECHNOLOGIES CO.,LTD.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the years ended December 31,2021 and 2020
(US$,except share data or otherwise noted)
For the Years Ended December31,
2022
2021
2020
Revenues
Third party sales
$
103,317,145
$
103,461,809
$
88,244,403
Related party sales
29,196
575,901
816,607
Total revenues
103,346,341
104,037,710
89,061,010
Cost of revenues
65,247,864
64,232,469
51,900,823
Gross profit
38,098,477
39,805,241
37,160,187
Operating expenses
Selling
7,109,524
6,457,801
6,624,332
General and administrative
12,468,551
4,361,472
4,570
Research and development
2,962,904
2,725,014
2,492,059
Written-off of Tai He deposit
4,755,536
-
-
Total operating expenses
27,296,515
13,544,287
13,693,961
Income from operations
10,801,962
26,260,954
23,466,226
Other (income) expense:
Interest expense
194,667
180,744
137,160
Interest income
(63,725)
(23,855)
(36,583)
Currency exchange gain
(273,432)
(174,413)
(393,478)
Other expense,net
53,205
50,437
25,551
Total other (income) expenses
(89,285)
32,913
(267,350)
Income before income tax provision
10,891,247
26,228,041
23,733,576
Income taxes expense
4,713,543
5,278,462
4,688,321
Net income
6,177,704
$
20,949,579
$
19,045,255
Net loss attributable to non-controlling interests
(65,265)
-
-
Net income attributable to shareholders
6,242,969
20,579
19,255
Foreign currency translation adjustment – gain /
(loss)
(9,155,028)
2,083,243
4,759,973
Comprehensive (loss) income
$
(2,977,324)
$
23,032,822
$
23,228
Comprehensive loss attributable to non-
controlling interests
(79,167)
-
-
Comprehensive (loss) income attributable to
shareholders
(2,157)
23,822
23,228
Weighted average number of ordinary shares -
basic and diluted
23,411,068
20,000
20,000
Basic & diluted net income per ordinary share
$
0.27
$
1.05
$
0.95
MEIHUA INTERNATIONAL MEDICAL TECHNOLOGIES CO.,LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31,2021 and 2020
(US$)
For the Year Ended December31
2022
2021
2020
Cash Flows from operating activities:
Net income
$
6,255
Adjustments for items not affecting cash:
Depreciation
541,265
595,522
497,238
Amortization
22,196
26,951
26,195
Net loss from disposal of property,plant and
equipment
25,023
15,281
2,852
Change in bad debt allowance
4,536
-
-
Currency exchange (gain) loss
(273,432)
-
-
Changes in operating assets and liabilities:
-
Bank acceptance receivables
(4,284,515)
(6,533,717)
(5,764,940)
Accounts receivable
(7,121,889)
(20,065,904)
(13,644,830)
Inventories
35,027
105,121
(219,787)
Prepayments and other assets
(4,932,145)
(861,799)
(367,249)
Due from related parties
-
396,583
(222,504)
Accounts payable
(3,371,275)
4,908,971
5,341,710
Taxes payable
(812,412)
288,659
598,105
Accrued expenses and other current liabilities
75,879
120,090
102,749
Due to related parties
-
-
(68,798)
Net cash (used in) provided by operating activities
(9,163,038)
(54,663)
5,325,996
Cash flows from investing activities:
Purchases of property,plant and equipment
(2,698,729)
(850,231)
(3,808,259)
Payments for long-term deposits for buildings
-
-
(12,311,347)
Long term investment
(5,944,709)
-
-
Proceeds from disposal of property,plant and
equipment
23,146
16,414
25,202
Net cash used in investing activities
(8,620,292)
(833,817)
(16,094,404)
Cash flows from financing activities:
Proceeds from short-term bank borrowings
7,579,135
6,510,820
4,359,665
Proceeds from long-term bank loans
743,052
-
-
Capital contributed by non-controlling shareholders
635,310
-
-
Proceeds from initial public offering
34,529,644
-
-
Proceeds from issuance of shares
-
1,272,232
Repayments of short-term bank borrowings
(6,241,641)
(4,650,586)
(3,925,147)
Net cash provided by financing activities
37,245,500
1,860,234
1,706,750
Effect of foreign exchange rate changes
(874,746)
(9,812)
218,137
Net increase (decrease) in cash
18,587,424
961,942
(8,843,521)
Cash,beginning of year
8,276
7,187,334
16,030,855
Cash,end of year
$
26,276
$
7,334
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
INFORMATION:
Cash paid during the period for:
Interest
$
194,667
$
180,744
$
137,160
Income taxes
$
5,703,288
$
5,042,816
$
4,362,169
Non cash provided (used) in financing activities
Shareholder contribution through deferred cost
1,277,152
