Shares of China's Mindray Medical International Ltd. tumbled sharply Tuesday after the medical device maker posted weaker-than-expected revenue for the second quarter and trimmed its full-year forecast.
"While we achieved better-than-expected international sales, lower-than-expected government spending in our domestic market for the first half of the year has limited our planned growth rate and therefore our planned profit for the year," said Li Xiting, Mindray's president and co-CEO.
The company said that it is realigning its sales force to focus on marketing higher-end product lines targeted toward China's private sector hospitals.
Mindray said Monday that net income rose 28 percent to $42.3 million, or 36 cents per share, in the three months that ended June 30. That compares with year-ago earnings of $33 million, or 29 cents per share. Excluding one-time items, earnings would have totaled 39 cents per share.
Revenue rose 12 percent to $179.2 million. The company said international sales grew 27 percent to $106.8 million led by emerging markets, especially Latin America. However, revenue generated inside China fell nearly 5 percent to $72.4 million because government contract sales continued to decline.
Analysts polled by Thomson Reuters had expected earnings of about 34 cents per share on higher revenue of $186.8 million. U.S.-traded shares of Mindray fell 16.7 percent, or $5.42, to $27.08 in Tuesday afternoon trading.
Looking ahead, Mindray trimmed its 2010 revenue forecast to $700 million. Capital expenditures are expected to remain between $60 million to $70 million this year.