Share prices for China’s Dehaier Medical Systems (NSDQ:DHRM) jumped today after it released preliminary numbers for last year, despite massive losses incurred as it sheds unprofitable medical device businesses.
Beijing-based Dehaier said in February that it plans to ditch the medtech units to focus on its wearable sleep respiratory business. Today the company reported preliminary losses of -$36 million, or -$6.13 per share, on sales of $1.32 million for 2015, compared with profits of $1 million last year. Sales are slated to be off by -67.6% compared with 2014, Dehaier said.
Full results are due to drop some time this month, the company said.
The restructuring plan calls for Dehaier to bail out of the assembly and sale of X-ray and anesthesia machines, but retain its medical air compressor and CPR instruments businesses.
“Specifically, we continued scaling down and discontinuing, as appropriate, the unprofitable medical device businesses, including assembly and sales of mobile C-arm X-ray machines, anesthesia machines, Oxygen generator, the first generation ventilator, monitoring devices, general medical products and telemedicine products,” CEO Ping Chen said in prepared remarks. “Accordingly, the company wrote down the carrying value of the assets associated with the discontinued product lines and besides sleep respiratory business and hospital wireless solutions, the company plans to maintain only a few profitable traditional medical device businesses, such as sales of its patented products including medical air compressors and CPR instruments, the second generation ventilator, color Doppler imaging machine, laryngoscope, and common products.”
The company has said it plans to form a new subsidiary called Connection Wearable Health Technology by the end of this month, aiming to focus on “wearable sleep respiratory and mobile health related businesses.”
“Our corporate and business restructuring plan aims to concentrate the company’s resources to develop its mobile health business, including wearable sleep respiratory business and to focus more on its major businesses. We believe these changes are crucial to improve our competitiveness over the longer term. By restructuring our company to reduce our reliance on our less profitable medical devices assembly and distribution businesses, we will be more able to leverage our resources to develop smart health products and services, which we see as the future of our company,” Chen said.
Late last year Dehaier said it was considering a $20 million equity investment offer from Hangzhou Liaison Interactive Information Technology.
DHRM shares were up 6.9% to $1.82 apiece today in late-morning trading.
