China's Dehaier Medical Systems pins 2013 hopes on new strategy

For Dehaier Medical Systems ($DHRM), 2013 is going to matter a whole lot more than 2012. The Chinese medical device maker isn't that large yet. But the company will be one that the med tech industry will want to watch closely in the weeks ahead, as it continues expanding into healthcare-related government procurement projects in its home country.

That, combined with Dehaier's increased focus on distributing competitors' products as well as their own, gives companies ranging from Welch Allyn to the U.K.'s Timesco and others a way into a lucrative market that many are struggling to crack. And if the strategy shift works, those benefits will likely be more prevalent in future financial results.

As far as 2012, the Chinese medical device maker and distributor ended the year with revenue slightly down and net income a tiny bit higher, reflecting stagnant financial results that executives began to address with a shift from traditional device sales to those new Chinese government/healthcare contracts. Total 2012 revenue hit $21.37 million, down a bit from 2011's $21.64 million revenue figure. Net income hit $3.22 million for the year, up slightly from $3.13 million in 2011.

Dehaier's accomplishments during the year include a government procurement contract to provide imaging equipment for hospitals in Xi'an, Shaanxi, China, a three-year medical equipment procurement deal with at least two hospitals in Beijing, and multiple medical equipment procurement deals to help China's push to expand healthcare coverage into rural regions of the country.

For its own products, Dehaier's milestones include winning a CE mark for sleep diagnostic devices and air compressors, and software copyrights for its CPAP devices.

Dehaier's next 12 months will be crucial, then. With just under $29 million in available working capital, including $3.5 million in cash and equivalents, the company believes it will be set over the next 12 months. If its focus on procurement contracts in China is successful, that cushion will grow much larger. We'll see after the 2013 first quarter how things are going.

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