China Medical Technologies Fourth Quarter and Full Year Financial Results

Business Wire, June 18, 2007

FY2006 Outlook Targets Exceeded

BEIJING -- China Medical Technologies, Inc. (the "Company") (Nasdaq: CMED), a leading China-based medical device company that develops, manufactures and markets advanced in-vitro diagnostic products and high intensity focused ultrasound tumor therapy system, today announced its unaudited financial results for the fourth quarter ("4Q FY2006") and full year of the fiscal year ended March 31, 2007 ("FY2006").

FY2006 Highlights

* Net revenues increased by 47.1% year-over-year to RMB547.0 million (US$70.8 million) exceeding the high end of our targeted range of RMB533 million.

* Net income increased by 45.6% year-over-year to RMB289.7 million (US$37.5 million) exceeding the high end of our targeted range of RMB271 million. Non-GAAP adjusted net income, as defined below, increased by 48.8% year-over-year to RMB309.9 million (US$40.1 million).

* Diluted earnings per ADS* were RMB10.74 (US$1.39). Non-GAAP adjusted diluted earnings per ADS*, as defined below, were RMB11.44 (US$1.48).

* Cash dividend of US$0.40 per ADS* was declared.

4Q FY2006 Highlights

* Net revenues increased by 46.0% year-over-year to RMB163.1 million (US$21.1 million).

* Net income increased by 21.3% year-over-year to RMB83.7 million (US$10.8 million). Non-GAAP adjusted net income, as defined below, increased by 37.2% year-over-year to RMB91.8 million (US$11.9 million).

* Diluted earnings per ADS* were RMB3.11 (US$0.40). Non-GAAP adjusted diluted earnings per ADS*, as defined below, were RMB3.37 (US$0.44).

*One American Depositary Share ("ADS") = 10 ordinary shares

See "Non-GAAP Measure Disclosures" below, where the impact of certain items on reported results is discussed.

"The strong financial and operational progress we achieved in FY2006 is a direct result of the successful execution of our business strategy and our continuous commitments to our customers, shareholders and other stakeholders," commented Mr. Xiaodong Wu, Chairman and CEO of the Company. "Our ECLIA and HIFU operations continued to deliver robust results and we expect the launch of our FISH products and their sales in June to further solidify our position as a leading advanced in-vitro diagnostics company in China."

"Our performance exceeded our own targets and market consensus," commented Mr. Sam Tsang, CFO of the Company. "HIFU accounted for approximately 60% of our net revenues in FY2006. We expect that HIFU will maintain a steady growth while ECLIA will continue its growth momentum from increasing reagent revenue. We have integrated the FISH operation into our core business after completion of the acquisition in March 2007 and expect the diagnostic revenues from ECLIA and FISH will contribute more than half of our net revenues in FY 2007."

4Q FY2006 Financial Results

The Company reported net revenues of RMB163.1 million (US$21.1 million) for 4Q FY2006, representing a 46.0% increase from the corresponding period of FY2005.

The Company's revenues are currently generated from two product lines, ECLIA diagnostic systems and HIFU tumor therapy systems. ECLIA system sales include the sales of ECLIA analyzers and reagent kits.

ECLIA system sales for 4Q FY2006 were RMB65.9 million (US$8.5 million), representing a 74.3% increase from the corresponding period of FY2005. The year-over-year growth in the ECLIA system sales reflects rapid acceptance of the ECLIA technology in the medical community in China which in turn drove an increase in sales of reagent kits. Our robust growth in the sales of reagent kits in 4Q FY2006 was a direct result of strong customer reception of our reagents and the launch of more new reagents.

HIFU tumor therapy system sales for 4Q FY2006 were RMB97.2 million (US$12.6 million), representing a 31.6% increase from the corresponding period of FY2005. The year-over-year growth in this sector was driven primarily by an increase in unit sales resulting from an increased level of awareness and acceptance of the HIFU tumor therapy system in the medical community in China due to the Company's continued marketing efforts. The increase in selling price also contributed to the growth.

Gross margin increased to 73.2% for 4Q FY2006 as compared to 70.1% for the corresponding period of FY2005. This improvement in gross margin was primarily due to the price increase for the Company's HIFU tumor therapy system and higher revenue contribution from ECLIA reagents.

Research and development expenses were RMB8.0 million (US$1.0 million) for 4Q FY2006, representing a 56.8% year-over-year increase. The increase was primarily due to the HIFU-related medical study that is being conducted in partnership with the PRC Ministry of Health (the "MOH"), the pre-clinical trials on the Company's HIFU tumor therapy system that are being conducted in the United States for FDA pre-market approval and research collaboration with the Biomed-X Centre of Peking University.

Sales and marketing expenses were RMB5.4 million (US$0.7 million) for 4Q FY2006, representing a 33.6% year-over-year increase. The increase was primarily due to greater participation at exhibitions and more promotional events organized by the Company.