##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 For the Transition Period from April 1, 2010 to December 31, 2010
 Commission File No. 0-24624
 CHINDEX INTERNATIONAL, INC.
  
 DELAWARE
(State or other jurisdiction of 
incorporation or organization)
    
    13-3097642
(I.R.S. Employer Identification No.)
 
   o þ
 o þ
 þ o
 o o
 þ
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
(Do not check if a smaller
reporting company)
    
    Smaller reporting company o
 o þ




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##### 



CHINDEX INTERNATIONAL, INC.
TABLE OF CONTENTS
 PART I
    
    
    3ITEM 1. BUSINESS
    
    
    3General
    
    
    3Healthcare Services Division
    
    
    4Medical Products Division
    
    
    7Competition
    
    
    7Employees
    
    
    8Internet Information and SEC Documents
    
    
    8ITEM 1A. RISK FACTORS
    
    
    8ITEM 1B. UNRESOLVED STAFF COMMENTS
    
    
    25ITEM 2. PROPERTIES
    
    
    26ITEM 3. LEGAL PROCEEDINGS
    
    
    26ITEM 4. RESERVED
    
    
    26PART II
    
    
    26ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
REPURCHASES OF EQUITY SECURITIES
    
    
    26ITEM 6. SELECTED FINANCIAL DATA
    
    
    29ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
    
    
    30Overview
    
    
    30Critical Accounting Policies
    
    
    31Nine months ended December 31, 2010 compared to nine months ended
December 31, 2009
    
    
    33Fiscal year ended March 31, 2010 compared to fiscal year ended
March 31, 2009
    
    
    36Liquidity and Capital Resources
    
    
    38Timing of Revenue
    
    
    41Foreign Currency Exchange and Impact of Inflation
    
    
    41ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    41ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    42ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
    
    
    77ITEM 9A. CONTROLS AND PROCEDURES
    
    
    77ITEM 9B. OTHER INFORMATION
    
    
    79PART III
    
    
    79ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    79ITEM 11. EXECUTIVE COMPENSATION
    
    
    79ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
    
    
    79ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
    
    
    79ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    79PART IV
    
    
    79ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    79Exhibit 10.3EX-10.9EX-10.10EX-23.1EX-31.1EX-31.2EX-31.3EX-32.1EX-32.2EX-32.3
  2




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PART I
 
 ITEM 1. BUSINESS
 
 General
   Change in fiscal yearend
  Recent Joint Venture
  3




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Our Healthcare Services Business
     4




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UFH  Beijing Market  Beijing United Family Hospital (BJU) and Clinics
     UFH  Shanghai Market  Shanghai United Family Hospital (SHU) and Clinics
  5




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UFH  Guangzhou Market  Guangzhou United Family Clinic (GZC)
  UFH  Tianjin Market  Tianjin United Family Hospital (TJU)
  UFH  The Investment Environment and New Market Development
  
    
    The Chinese government encourages private capital investment in hospitals.
    
    Healthcare projects will be moved from restricted to permitted in the Investment
Catalog which may decrease the time it take to get projects approved.
    
    The government hopes to gradually eliminate the 30% domestic ownership requirement
and allow wholly-foreign owned (WOFE) hospitals on a pilot basis.
    
    For-profit hospitals will be exempt from business tax and allowed to set pricing
independently.
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
    
    Chinas macro environment remained strong in 2010, poised for strength in 2011 (GDP
up 10.6%)
    
    Affluent sectors of Chinese society are extremely under-served by the Chinese
domestic healthcare system
    
    UFHs strategic growth plans now target top 3%  5% in the 10 most affluent cities
  over 2.5 million people
    
    875,000 known individuals with assets over 10 million RMB up 6.7% year on year
    
    Healthcare is second only to education in surveys of this demographic relative to
disposable income
    
    Future health insurance products in China will facilitate broad based access to
premium care
 
 Our Joint Ventures Medical Products Business
  
 Competition
  7




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Employees
  
 Internet Information and SEC Documents
  http://www.sec.gov
 
 ITEM 1A. RISK FACTORS
 You should carefully consider the risks described below, together with all of the other
information included in this Transition Report on Form 10-K . The following risks and uncertainties
are not the only ones we face. However, these are the risks our management believes are material.
If any of the following risks actually materialize, our business, financial condition or results of
operations could be harmed. This report contains statements that are forward-looking. These
statements are based on current expectations and assumptions that are subject to risks and
uncertainties such as those listed below and elsewhere in this report, which, among others, should
be considered in evaluating our future performance.
 Risks Related to Our Business and Financial Condition
 Global financial upheaval and credit restrictions may have a negative impact on operations.
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Our business is capital intensive and we may not be able to access the capital markets when we
would like to raise capital.
  We may not generate sufficient cash flow to fund our capital expenditures, ongoing operations and
indebtedness obligations.
  
    
    our future operating performance;
    
    the demand for our services and products;
    
    general economic conditions both in China and elsewhere and conditions affecting
suppliers, customers and patients;
    
    competition; and
    
    legal and regulatory factors affecting us and our business, including exchange rate
fluctuations.
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If we fail to manage our growth or maintain adequate internal accounting, disclosure and other
controls, we would lose the ability to manage our business effectively and/or experience errors or
information lapses affecting public reporting.
   If we lost the services of our key personnel, our leadership, expertise, experience, business
relationships, strategic and operational planning and other important business attributes would be
diminished.
  Our business could be adversely affected by inflation or foreign currency fluctuation.
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We have entered into loan arrangements that could impair our financial condition and prevent us
from fulfilling our business obligations.
  
    
    requiring a substantial portion of our cash flow from
operations to be dedicated to the payment of principal and interest
on indebtedness instead of funding working capital, capital
expenditures, acquisitions and other business purposes;
    
    making it more difficult for us to satisfy all of our debt
obligations, thereby increasing the risk of triggering a
cross-default provision;
    
    increasing our vulnerability to economic downturns or other
adverse developments relative to less leveraged competitors;
    
    limiting our ability to obtain additional financing for
working capital, capital expenditures, acquisitions or other
corporate purposes in the future; and
    
    increasing our cost of borrowing to satisfy business needs.
  We currently are unable and may not in the future be able to draw down under our pre-existing loan
facilities with the IFC and DEG, which facilities will be required for many of our expansion plans.
  11




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We may be unable to service or refinance our debt.
  The terms of our indebtedness impose significant restrictions on our operating and financial
flexibility.
  
    
    incur or guarantee additional indebtedness;
    
    make restricted payments, including dividends and management fees;
    
    create or permit certain liens;
    
    enter into business combinations and asset sale transactions;
    
    make investments;
    
    enter into transactions with affiliates;
    
    incur certain expenditures; and
    
    enter into new businesses.
 The terms of our agreements with JPM impose covenants that if not complied with could result
in claims for damages and the acceleration of the Tranche C Notes, which we may be unable to
convert to our common stock.
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If requisite pending governmental approvals and other conditions precedent are not achieved, the
Chindex Medical Limited joint venture will not be vested with all intended businesses, which would
adversely affect the joint venture and us; certain of our executives will devote a portion of their
time to the management of the joint venture.
    13




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Our Chindex Medical Limited joint venture with FosunPharma involves numerous risks.
    
    
    we currently own 49% of the total equity interests in CML, so there are certain decisions
affecting the business of CML that we cannot control or influence;
    
    difficulties associated with preserving relationships with our customers, partners and vendors;
    
    difficulties in retaining and integrating key sales, marketing and other personnel, the
possible loss of such employees and costs associated with their loss;
    
    risks that any technology, business plan or business model developed by CML may not perform as
well as we had anticipated;
    
    the diversion of managements attention and other resources from other business operations and
related concerns;
    
    potential impairments of goodwill and intangible assets;
    
    the requirement to maintain uniform standards, controls and procedures, including as required
under applicable U.S. securities laws and accounting requirements;
    
    the divergence of our interests from FosunPharmas interests in the future, disagreements with
FosunPharma on ongoing operational activities, or the amount, timing or nature of further
investments in CML;
    
    the terms of our joint venture arrangements may turn out to be unfavorable to us;
    
    we may not be able to realize the operating efficiencies, cost savings or other benefits that
we expect from the joint venture; and
    
    CML profits and cash flows may prove inadequate to fund cash dividends from CML to the joint
venture partners.
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We will be obligated to issue 1,057,425 shares of common stock at $15 per share in the event of the
final asset vesting of the CML joint venture, which would be dilutive to existing stockholders to
the extent that the current market price is above such price.
  There can be no assurances that all of the terms of the CML joint venture formation documents will
be enforceable.
  Risks Relating to our Healthcare Services Business
 If we do not attract and retain qualified physicians, administrators or other hospital personnel,
our hospital operations would be adversely affected.
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Our business is heavily regulated and failure to comply with those regulations could result in
penalties, loss of licensure, additional compliance costs or other adverse consequences.
  Our operations could be adversely affected by the high cost of malpractice insurance.
  We depend on information systems, which if not implemented and maintained, could adversely affect
our operations.
   Our operations face competition that could adversely affect our results of operations.
  16




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Expansion of healthcare services to reach the Chinese population depends to some extent on the
development of insurance products that are not available now.
  Our loan from the IFC places restrictions on the conduct of our healthcare services business.
   
    
    incur or guarantee additional indebtedness;
    
    make restricted payments, including dividends and management fees;
    
    create or permit certain liens;
    
    enter into business combinations and asset sale transactions;
    
    make investments;
    
    enter into transactions with affiliates;
    
    incur certain expenditures; and
    
    enter into new businesses.
  Timing of revenues due to seasonality and fluctuations in financial performance vary from quarter
to quarter and are not necessarily indicative of our performance over longer periods.
  17




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We may not be able to complete our proposed new and/or expanded hospital projects on budget if at
all, which would materially and adversely affect our financial condition and proposed expansion.
  Our proposed healthcare facilities expansion plans and related capital expenditures could adversely
affect our financial condition and results of operations.
    
    
    delays in mandatory governmental approvals
    
    additional land or facilities acquisition costs
    
    increases in the cost of construction materials and labor
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
    
    unforeseen changes in design or delays in construction permits
    
    litigation, accidents or natural disasters affecting the construction site
    
    national or regional economic, regulatory or geopolitical changes
  Risks
Relating to  CMLs Medical Products Business
 Future Losses in the Medical Products Business.
  The Medical Products Business depends on relations with suppliers and would be adversely affected
by the termination of arrangements with, or shortage or loss of any significant product line from
them.
  19




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The Medical Products Business depends to some extent on suppliers continuing to improve their products and introduce new models. If a supplier fails to upgrade its product line as quickly as
competitive manufacturers have done, our revenues could be adversely impacted.
  The sales of the Medical Products Business depend to some extent on suppliers maintaining the
required product registrations required to sell their products in China. If a supplier fails to
maintain or renew such product registrations in a timely manner, the joint venture would be unable
to sell its products.
  Timing of revenues and fluctuations in financial performance vary significantly from quarter to
quarter and are not necessarily indicative of our performance over longer periods.
  We have not been able to arrange financings, from third party banks or governments, for our
customers in every year. Future periodic financings arranged on behalf of our customers cannot be
assured. The absence of these financings could result in lower sales.
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We and the joint venture may be subject to product liability claims and product recalls, and in the
future the joint venture may not be able to obtain insurance against these claims at a reasonable
cost or at all.
    
    
    product seizures;
    
    voluntary or mandatory recalls;
    
    voluntary or mandatory patient or physician notification; and
    
    restrictions on or prohibitions against marketing the products.
 The Medical Products Business faces competition that may adversely impact that business, which
impact may be increased as a result of Chinas inclusion in the World Trade Organization.
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If the Chinese Government tightens controls or policies on purchases of medical equipment or
implements reforms which disrupt the market for medical devices, including eliminating value added
tax (VAT) and duty exemptions for procurement under KfW Development Bank or U.S. Export-Import Bank
financings, sales of medical products could be adversely affected.
  Risks Relating to Doing Business in China
  The economic policies of the Chinese Government and economic growth of China could adversely affect
us.
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The Chinese legal system is relatively new and may not provide protections to us or our investors.
    The conversion of Renminbi (RMB) into foreign currency is regulated, and these regulations could
adversely affect us.
  A new  SARS or similar outbreak, such as Avian flu or Swine Flu, could further adversely
affect our operations.
  23




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Natural disasters, such as the earthquakes in Sichuan Province in May 2008 and in Qinghai Province
in April 2010, could adversely affect our business operations.
  The Chinese Government could change its policies toward, or even nationalize, private enterprise,
which could harm our operations.
   Risks Related to our Corporate Structure
 Control by insiders and their ownership of shares having disproportionate voting rights could have
a depressive effect on the price of common stock, impede a change in control and impede management
replacement.
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Our unissued preferred stock could be issued to impede a change in control.
    
 ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS
  25




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ITEM 2. PROPERTIES
       
 ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4.
    
    RESERVED.
 
 PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER REPURCHASES
OF EQUITY SECURITIES
  High
    
    
    LowYear Ended March 31, 2010:First Quarter
    
    $
    15.20
    
    
    $
    4.93Second Quarter
    
    
    15.94
    
    
    
    10.80Third Quarter
    
    
    16.21
    
    
    
    11.48Fourth Quarter
    
    
    14.99
    
    
    
    10.20Nine Months Ended December 31, 2010:First Quarter
    
    $
    13.82
    
    
    $
    10.32Second Quarter
    
    
    15.11
    
    
    
    11.45Third Quarter
    
    
    18.36
    
    
    
    12.56
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(c)Number ofSecuritiesRemaining Available(a)
    
    
    
    
    
    
    for Future IssuanceNumber of
    
    
    
    
    
    
    Under EquitySecurities to Be
    
    
    (b)
    
    
    Compensation PlansIssued Upon
    
    
    Weighted Average
    
    
    (excludingExercise of
    
    
    Exercise Price of
    
    
    securitiesOutstanding
    
    
    Outstanding
    
    
    reflected in columnPlan Category
    
    Options, and Rights
    
    
    Options, and Rights
    
    
    (a))Equity Compensation Plans Approved By Security Holders1994 Stock Option Plan
    
    
    187,076
    
    
    $
    5.20
    
    
    
    2004 Stock Incentive Plan
    
    
    273,499
    
    
    $
    4.18
    
    
    
    2007 Stock Incentive Plan
    
    
    796,314
    
    
    $
    13.17
    
    
    
    461,985Equity Compensation Plans Not Approved By Security Holders
    
    None
    
    None
    
    NoneTotal
    
    
    1,256,889
    
    
    
    
    
    
    
    461,985
  27




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CHINDEX INTERNATIONAL, INC.
COMPARISON OF 69 MONTH CUMULATIVE TOTAL RETURN*
  
 
 *
    
    $100 invested on 3/31/05 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31. Total Return To Shareholders
 Base Period
    
    
    INDEXED RETURNS Years and Nine Months Ended3/05
    
    
    3/06
    
    
    3/07
    
    
    3/08
    
    
    3/09
    
    
    3/10
    
    
    12/10Chindex
International Inc
    
    
    100.00
    
    
    
    146.60
    
    
    
    281.88
    
    
    
    611.00
    
    
    
    120.63
    
    
    
    286.65
    
    
    
    400.24NASDAQ Composite
    
    
    100.00
    
    
    
    116.51
    
    
    
    122.84
    
    
    
    116.73
    
    
    
    78.42
    
    
    
    123.86
    
    
    
    137.74Peer Group
    
    
    100.00
    
    
    
    97.14
    
    
    
    99.17
    
    
    
    80.48
    
    
    
    36.39
    
    
    
    55.89
    
    
    
    58.62
 PEER
GROUP COMPANIES
 
 28




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ITEM 6. SELECTED FINANCIAL DATA
  Nine months endedDecember 31,
    
    
    
    
    
    
    Year ended March 31,2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007Statement of Operations Data:Revenue
    
    $
    136,676
    
    
    $
    129,934
    
    
    $
    171,191
    
    
    $
    171,442
    
    
    $
    130,058
    
    
    $
    105,921Percent increase over prior period
    
    
    5
    %
    
    
    N/A
    
    
    
    0
    %
    
    
    32
    %
    
    
    23
    %
    
    
    17
    %Net income
    
    
    5,814
    
    
    
    7,689
    
    
    
    8,204
    
    
    
    4,964
    
    
    
    3,655
    
    
    
    2,982Net income per common share  basic
    
    
    .38
    
    
    
    .53
    
    
    
    .56
    
    
    
    .34
    
    
    
    .32
    
    
    
    .29Net income per common share  diluted
    
    
    .36
    
    
    
    .48
    
    
    
    .52
    
    
    
    .31
    
    
    
    .27
    
    
    
    .26Market closing price per share  end of period
    
    
    16.49
    
    
    
    14.13
    
    
    
    11.81
    
    
    
    4.97
    
    
    
    25.17
    
    
    
    11.61Book value per share  end of period
    
    
    8.02
    
    
    
    7.18
    
    
    
    7.30
    
    
    
    6.60
    
    
    
    6.14
    
    
    
    2.62
 
 Balance Sheet Data (at end of period):Total assets
    
    $
    174,173
    
    
    $
    169,279
    
    
    $
    170,843
    
    
    $
    162,637
    
    
    $
    135,979
    
    
    $
    62,907Long term debt and capitalized leases
    
    
    23,070
    
    
    
    21,578
    
    
    
    22,593
    
    
    
    23,709
    
    
    
    22,578
    
    
    
    8,737Total stockholders equity
    
    
    132,072
    
    
    
    106,882
    
    
    
    108,911
    
    
    
    96,440
    
    
    
    87,388
    
    
    
    27,918
 Nine months endedDecember 31,
    
    
    
    
    
    
    Year ended March 31,2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007Segment information:Healthcare Services division-revenue
    
    $
    74,224
    
    
    $
    64,610
    
    
    $
    85,778
    
    
    $
    79,357
    
    
    $
    65,817
    
    
    $
    47,944Healthcare Services division -operating income
    
    
    11,898
    
    
    
    12,043
    
    
    
    14,393
    
    
    
    7,309
    
    
    
    10,342
    
    
    
    5,028Medical Products division-revenue
    
    
    62,452
    
    
    
    65,324
    
    
    
    85,413
    
    
    
    92,085
    
    
    
    64,241
    
    
    
    57,977Medical Products division -operating (loss)
income
    
    
    (1,806
    )
    
    
    25
    
    
    
    (366
    )
    
    
    508
    
    
    
    (2,607
    )
    
    
    (1,154
    )
 29




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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
 Overview
      30




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Critical Accounting Policies
  Revenue recognition
    31




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Receivable collectibility
    Inventory Obsolescence
    32




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Deferred tax valuation allowances
   
 Nine months ended December 31, 2010 compared to nine months ended December 31, 2009
 Overview of Consolidated Results
   Healthcare Services Division
  33




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Medical Products Division
      Other Income and Expenses
    Taxes
  35




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Fiscal year ended March 31, 2010 compared to fiscal year ended March 31, 2009
 Overview of Consolidated Results
  Healthcare Services Division
     Medical Products Division
  36




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Other Income and Expenses
    37




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Taxes
  
 Liquidity and Capital Resources
  December 31, 2010
    
    
    March 31, 2010Cash and cash equivalents
    
    $
    32,007
    
    
    $
    50,654Investments
    
    
    37,631
    
    
    
    37,207Receivables from affiliates
    
    
    9,330
    
    
    
    Accounts receivable
    
    
    11,601
    
    
    
    33,117
  Nine months ended December 31,
    
    
    Years ended March 31,2010
    
    
    2009
    
    
    2010
    
    
    2009OPERATING ACTIVITIESNet income
    
    $
    5,814
    
    
    $
    7,689
    
    
    $
    8,204
    
    
    $
    4,964Non cash items
    
    
    7,634
    
    
    
    7,193
    
    
    
    10,975
    
    
    
    7,969Changes in operating assets and liabilities:Restricted cash
    
    
    42
    
    
    
    689
    
    
    
    349
    
    
    
    (2,374
    )Accounts receivable
    
    
    (3,797
    )
    
    
    6,412
    
    
    
    12,888
    
    
    
    (27,676
    )Inventories
    
    
    (2,735
    )
    
    
    (2,730
    )
    
    
    (3,918
    )
    
    
    (319
    )Accounts payable, accrued expenses, other current
liabilities and deferred revenue
    
    
    2,472
    
    
    
    (3,795
    )
    
    
    (3,926
    )
    
    
    14,620Other
    
    
    (2,339
    )
    
    
    507
    
    
    
    217
    
    
    
    750Net cash provided by (used in) operating activities
    
    $
    7,091
    
    
    $
    15,965
    
    
    $
    24,789
    
    
    $
    (2,066
    )
   38




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Nine months ended December 31,
    
    
    Years ended March 31,2010
    
    
    2009
    
    
    2010
    
    
    2009INVESTING ACTIVITIESPurchases of short-term investments and CDs
    
    $
    (7,446
    )
    
    $
    (6,493
    )
    
    $
    (4,024
    )
    
    $
    (90,950
    )Proceeds from redemption of CDs
    
    
    2,843
    
    
    
    
    
    
    
    18,331
    
    
    
    38,920Deconsolidation of cash held by subsidiaries contributed to
joint venture
    
    
    (22,917
    )
    
    
    
    
    
    
    
    
    
    
    Purchases of property and equipment
    
    
    (9,941
    )
    
    
    (3,843
    )
    
    
    (7,086
    )
    
    
    (5,721
    )Net cash provided by (used in) investing activities
    
    $
    (37,461
    )
    
    $
    (10,336
    )
    
    $
    7,221
    
    
    $
    (57,751
    )
   Nine months ended December 31,
    
    
    Years ended March 31,2010
    
    
    2009
    
    
    2010
    
    
    2009FINANCING ACTIVITIESProceeds from debt, vendor financing and convertible
debentures
    
    $
    
    
    
    $
    83
    
    
    $
    
    
    
    $
    Repayment of debt, sinking fund deposits and vendor financing
    
    
    (2,425
    )
    
    
    (1,481
    )
    
    
    (1,693
    )
    
    
    (120
    )Repurchase of restricted stock for income tax withholding
    
    
    (942
    )
    
    
    (108
    )
    
    
    (109
    )
    
    
    Debt issurance cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (278
    )Proceeds from issuance of common stock
    
    
    13,803
    
    
    
    
    
    
    
    
    
    
    
    Proceeds from exercise of stock options and warrants
    
    
    641
    
    
    
    400
    
    
    
    490
    
    
    
    345Net cash provided by (used in) financing activities
    
    $
    11,077
    
    
    $
    (1,106
    )
    
    $
    (1,312
    )
    
    $
    (53
    )
    39




---



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40




---



##### Table of Contents



Contractual Arrangements
  (in thousands)Total
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    2015
    
    
    ThereafterBank Loan (1)
    
    $
    10,729
    
    
    $
    1,573
    
    
    $
    2,487
    
    
    $
    2,355
    
    
    $
    2,223
    
    
    $
    2,091
    
    
    $
    0JPM financing
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000Operating leases
    
    
    23,439
    
    
    
    3,169
    
    
    
    2,820
    
    
    
    2,363
    
    
    
    2,140
    
    
    
    2,059
    
    
    
    10,888Other (2)
    
    
    78
    
    
    
    78
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total contractual obligations
    
    $
    49,246
    
    
    $
    4,820
    
    
    $
    5,307
    
    
    $
    4,718
    
    
    $
    4,363
    
    
    $
    4,150
    
    
    $
    25,888
 
 (1)
    
    Represents sinking fund deposits and also includes interest of $1,912,000.(2)
    
    Contractual fees owed to our BJU joint venture partner.  
 Timing of Revenue
  
 Foreign Currency Exchange and Impact of Inflation
    
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  41




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 Report of Independent Registered Public Accounting Firm
 
 Internal Control  Integrated Framework
    .
  42




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##### Table of Contents



/s/ BDO USA, LLP 
 Report of Independent Registered Public Accounting Firm
 
   ,
  Internal Control  Integrated Framework
 /s/ BDO USA, LLP 
 43




---



##### Table of Contents



CHINDEX
INTERNATIONAL, INC.
 CONSOLIDATED
BALANCE SHEETS
 (in thousands except share data)
 December 31, 2010
    
    
    March 31, 2010ASSETSCurrent assets:Cash and cash equivalents
    
    $
    32,007
    
    
    $
    50,654Restricted cash
    
    
    300
    
    
    
    468Investments
    
    
    37,631
    
    
    
    37,207Accounts receivable, less allowance for doubtful accounts of $
6,748 and $6,158, respectivelyProduct sales receivables
    
    
    
    
    
    
    22,760Patient service receivables
    
    
    11,601
    
    
    
    10,357Receivables from affiliates
    
    
    9,330
    
    
    
    Inventories, net
    
    
    1,413
    
    
    
    14,411Deferred income taxes
    
    
    3,242
    
    
    
    2,843Other current assets
    
    
    3,856
    
    
    
    3,032Total current assets
    
    
    99,380
    
    
    
    141,732Restricted cash and sinking funds
    
    
    980
    
    
    
    2,556Investments
    
    
    2,439
    
    
    
    Investment in unconsolidated affiliate
    
    
    31,756
    
    
    
    Property and equipment, net
    
    
    37,099
    
    
    
    23,678Noncurrent deferred income taxes
    
    
    108
    
    
    
    103Other assets
    
    
    2,411
    
    
    
    2,774Total assets
    
    $
    174,173
    
    
    $
    170,843LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Short-term debt, current portion of long-term debt and vendor financing
    
    $
    
    
    
    $
    1,453Accounts payable
    
    
    4,038
    
    
    
    13,979Accrued expenses
    
    
    8,541
    
    
    
    14,022Other current liabilities
    
    
    3,874
    
    
    
    3,826Deferred revenue
    
    
    
    
    
    
    2,549Income taxes payable
    
    
    2,147
    
    
    
    2,218Total current liabilities
    
    
    18,600
    
    
    
    38,047Long-term debt and convertible debentures
    
    
    23,070
    
    
    
    22,593Long-term accrued liabilities
    
    
    
    
    
    
    84Long-term deferred revenue
    
    
    
    
    
    
    968Long-term deferred tax liability
    
    
    431
    
    
    
    240Total liabilities
    
    
    42,101
    
    
    
    61,932Commitments and contingenciesStockholders equity:Preferred stock, $.01 par value, 500,000 shares authorized, none issued
    
    
    
    
    
    
    Common stock, $.01 par value, 28,200,000 shares authorized, including
3,200,000 designated Class B:Common stock  15,310,426 and 13,765,857 shares issued and
outstanding at December 31, 2010 and March 31, 2010,
respectively
    
    
    153
    
    
    
    138Class B stock  1,162,500 shares issued and outstanding at
December 31, 2010 and March 31, 2010, respectively
    
    
    12
    
    
    
    12Additional paid-in capital
    
    
    115,815
    
    
    
    100,269Accumulated other comprehensive income
    
    
    4,802
    
    
    
    3,016Retained earnings
    
    
    11,290
    
    
    
    5,476Total stockholders equity
    
    
    132,072
    
    
    
    108,911Total liabilities and stockholders equity
    
    $
    174,173
    
    
    $
    170,843
  44




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CHINDEX INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except share and per share data)
 Nine months ended December 31,
    
    
    Years ended March 31,2010
    
    
    2009
    
    
    2010
    
    
    2009(Unaudited)Product sales
    
    $
    62,452
    
    
    $
    65,324
    
    
    $
    85,413
    
    
    $
    92,085Healthcare services revenue
    
    
    74,224
    
    
    
    64,610
    
    
    
    85,778
    
    
    
    79,357Total revenue
    
    
    136,676
    
    
    
    129,934
    
    
    
    171,191
    
    
    
    171,442Costs and expensesProduct sales costs
    
    
    43,773
    
    
    
    47,506
    
    
    
    62,059
    
    
    
    69,027Healthcare services costs
    
    
    57,288
    
    
    
    48,801
    
    
    
    66,467
    
    
    
    67,084Selling and marketing expenses
    
    
    11,938
    
    
    
    10,609
    
    
    
    14,361
    
    
    
    13,284General and administrative expenses
    
    
    14,129
    
    
    
    9,740
    
    
    
    13,892
    
    
    
    13,888Income from operations
    
    
    9,548
    
    
    
    13,278
    
    
    
    14,412
    
    
    
    8,159Other (expenses) and incomeInterest expense
    
    
    (560
    )
    
    
    (784
    )
    
    
    (983
    )
    
    
    (1,004
    )Interest income
    
    
    496
    
    
    
    1,350
    
    
    
    1,487
    
    
    
    1,738Loss on deconsolidation of subsidiaries
    
    
    (126
    )
    
    
    
    
    
    
    
    
    
    
    Miscellaneous (expense)  net
    
    
    (56
    )
    
    
    (851
    )
    
    
    (616
    )
    
    
    (1,242
    )Income before income taxes
    
    
    9,302
    
    
    
    12,993
    
    
    
    14,300
    
    
    
    7,651Provision for income taxes
    
    
    (3,488
    )
    
    
    (5,304
    )
    
    
    (6,096
    )
    
    
    (2,687
    )Net income
    
    $
    5,814
    
    
    $
    7,689
    
    
    $
    8,204
    
    
    $
    4,964Net income per common share  basic
    
    $
    .38
    
    
    $
    .53
    
    
    $
    .56
    
    
    $
    .34Weighted average shares outstanding  basic
    
    
    15,347,173
    
    
    
    14,533,601
    
    
    
    14,579,759
    
    
    
    14,410,033Net income per common share  diluted
    
    $
    .36
    
    
    $
    .48
    
    
    $
    .52
    
    
    $
    .31Weighted average shares outstanding  diluted
    
    
    16,703,670
    
    
    
    16,127,180
    
    
    
    16,132,339
    
    
    
    16,021,723
  45




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##### Table of Contents



CHINDEX INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 Nine months endedDecember 31,
    
    

    Years ended March 31,2010
    
    
    2009
    
    
    2010
    
    
    2009(Unaudited)OPERATING ACTIVITIESNet income
    
    $
    5,814
    
    
    $
    7,689
    
    
    $
    8,204
    
    
    $
    4,964Adjustments to reconcile net income to net cash provided by
(used in) operating activities:Depreciation and amortization
    
    
    3,004
    
    
    
    3,112
    
    
    
    4,092
    
    
    
    3,594Provision for demonstration inventory
    
    
    491
    
    
    
    404
    
    
    
    541
    
    
    
    652Inventory write down
    
    
    137
    
    
    
    259
    
    
    
    342
    
    
    
    295Provision for doubtful accounts
    
    
    1,489
    
    
    
    972
    
    
    
    1,467
    
    
    
    1,643Loss (gain) on disposal of property and equipment
    
    
    139
    
    
    
    (4
    )
    
    
    16
    
    
    
    297Deferred income taxes
    
    
    (547
    )
    
    
    156
    
    
    
    704
    
    
    
    (1,835
    )Stock based compensation
    
    
    2,059
    
    
    
    2,429
    
    
    
    3,283
    
    
    
    2,881Foreign exchange loss (gain)
    
    
    544
    
    
    
    (1,210
    )
    
    
    (385
    )
    
    
    (342
    )Amortization of debt issuance costs
    
    
    7
    
    
    
    7
    
    
    
    9
    
    
    
    9Amortization of debt discount
    
    
    185
    
    
    
    185
    
    
    
    247
    
    
    
    247Early redemption penalties for variable-return CDs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,080Loss on deconsolidation of subsidiaries
    
    
    126
    
    
    
    
    
    
    
    
    
    
    
    Non-cash interest income on variable-return CDs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (552
    )Non-cash charge for change in fair value of warrants
    
    
    
    
    
    
    883
    
    
    
    659
    
    
    
    Changes in operating assets and liabilities:Restricted cash
    
    
    42
    
    
    
    689
    
    
    
    349
    
    
    
    (2,374
    )Accounts receivable
    
    
    (3,797
    )
    
    
    6,412
    
    
    
    12,888
    
    
    
    (27,676
    )Inventories
    
    
    (2,735
    )
    
    
    (2,730
    )
    
    
    (3,918
    )
    
    
    (319
    )Other current assets and other assets
    
    
    (2,576
    )
    
    
    (863
    )
    
    
    (432
    )
    
    
    (467
    )Accounts payable, accrued expenses, other
current liabilities and deferred revenue
    
    
    2,472
    
    
    
    (3,795
    )
    
    
    (3,926
    )
    
    
    14,620Income taxes payable
    
    
    237
    
    
    
    1,370
    
    
    
    649
    
    
    
    1,217Net cash provided by (used in) operating activities
    
    
    7,091
    
    
    
    15,965
    
    
    
    24,789
    
    
    
    (2,066
    )INVESTING ACTIVITIESPurchases of short-term investments and CDs
    
    
    (7,446
    )
    
    
    (6,493
    )
    
    
    (4,024
    )
    
    
    (90,950
    )Proceeds from redemption of CDs
    
    
    2,843
    
    
    
    
    
    
    
    18,331
    
    
    
    38,920Deconsolidation of cash held by subsidiaries
contributed to joint venture
    
    
    (22,917
    )
    
    
    
    
    
    
    
    
    
    
    Purchases of property and equipment
    
    
    (9,941
    )
    
    
    (3,843
    )
    
    
    (7,086
    )
    
    
    (5,721
    )Net cash (used in) provided by investing activities
    
    
    (37,461
    )
    
    
    (10,336
    )
    
    
    7,221
    
    
    
    (57,751
    )FINANCING ACTIVITIESProceeds from debt, vendor financing and convertible debentures
    
    
    
    
    
    
    83
    
    
    
    
    
    
    
    Debt issuance costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (278
    )Repayment of debt, sinking fund deposits and vendor financing
    
    
    (2,425
    )
    
    
    (1,481
    )
    
    
    (1,693
    )
    
    
    (120
    )Repurchase of restricted stock for income tax withholding
    
    
    (942
    )
    
    
    (108
    )
    
    
    (109
    )
    
    
    Proceeds from issuance of common stock
    
    
    13,803
    
    
    
    
    
    
    
    
    
    
    
    Proceeds from exercise of stock options and warrants
    
    
    641
    
    
    
    400
    
    
    
    490
    
    
    
    345Net cash provided by (used in) financing activities
    
    
    11,077
    
    
    
    (1,106
    )
    
    
    (1,312
    )
    
    
    (53
    )Effect of foreign exchange rate changes on cash and cash equivalents
    
    
    646
    
    
    
    (1,056
    )
    
    
    (337
    )
    
    
    905Net (decrease) increase in cash and cash equivalents
    
    
    (18,647
    )
    
    
    3,467
    
    
    
    30,361
    
    
    
    (58,965
    )Cash and cash equivalents at beginning of year
    
    
    50,654
    
    
    
    20,293
    
    
    
    20,293
    
    
    
    79,258Cash and cash equivalents at end of year
    
    $
    32,007
    
    
    $
    23,760
    
    
    $
    50,654
    
    
    $
    20,293Supplemental disclosures of cash flow information:Cash paid for interest
    
    $
    668
    
    
    $
    
    
    
    $
    641
    
    
    $
    648Cash paid for taxes
    
    $
    3,416
    
    
    $
    
    
    
    $
    4,770
    
    
    $
    3,303Non-cash investing and financing activities consist of the following:Property and equipment additions included in accounts payable
    
    $
    6,482
    
    
    $
    
    
    
    $
    532
    
    
    $
    Investment in unconsolidated affiliates
    
    $
    8,839
    
    
    $
    
    
    
    $
    
    
    
    $
    Cashless exercise of warrants at fair value
    
    $
    
    
    
    $
    
    
    
    $
    800
    
    
    $
    Exercise of warrants at fair value
    
    $
    
    
    
    $
    201
    
    
    $
    
    
    
    $
    Acquisition of inventory through vendor financing agreement
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    2,294
  46




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##### Table of Contents



CHINDEX INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
For the nine months ended December 31, 2010 and years ended March 31, 2010 and 2009
(in thousands except share data)
 Retained
    
    
    AccumulatedAdditional
    
    
    Earnings
    
    
    OtherCommon Stock
    
    
    Common Stock Class B
    
    
    Paid In
    
    
    Accumulated
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Income
    
    
    TotalBalance at March 31, 2008
    
    
    13,074,593
    
    
    $
    131
    
    
    
    1,162,500
    
    
    $
    12
    
    
    $
    92,586
    
    
    $
    (7,551
    )
    
    $
    2,210
    
    
    $
    87,388Net income FY 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,964
    
    
    
    
    
    
    
    4,964Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    862
    
    
    
    862Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,826Stock based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,881
    
    
    
    
    
    
    
    
    
    
    
    2,881Options and warrants exercised
and issuance of restricted stock
    
    
    377,414
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    341
    
    
    
    
    
    
    
    
    
    
    
    345Balance at March 31, 2009
    
    
    13,452,007
    
    
    
    135
    
    
    
    1,162,500
    
    
    
    12
    
    
    
    95,808
    
    
    
    (2,587
    )
    
    
    3,072
    
    
    
    96,440Net income FY 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,204
    
    
    
    
    
    
    
    8,204Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (56
    )
    
    
    (56
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,148Cumulative effect of change in
accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (141
    )
    
    
    
    
    
    
    (141
    )Stock based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,283
    
    
    
    
    
    
    
    
    
    
    
    3,283Exercise of warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    800
    
    
    
    
    
    
    
    
    
    
    
    800Options and warrants exercised
and issuance of restricted stock
    
    
    313,850
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    378
    
    
    
    
    
    
    
    
    
    
    
    381Balance at March 31, 2010
    
    
    13,765,857
    
    
    
    138
    
    
    
    1,162,500
    
    
    
    12
    
    
    
    100,269
    
    
    
    5,476
    
    
    
    3,016
    
    
    
    108,911Net income CY 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,814
    
    
    
    
    
    
    
    5,814Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,786
    
    
    
    1,786Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,600Stock based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,059
    
    
    
    
    
    
    
    
    
    
    
    2,059Proceeds from issuance of
common stock
    
    
    933,022
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    13,794
    
    
    
    
    
    
    
    
    
    
    
    13,803Options exercised and issuance
of restricted stock
    
    
    611,547
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    635
    
    
    
    
    
    
    
    
    
    
    
    641Purchase and retirement of
restricted stock for tax
witholding
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (942
    )
    
    
    
    
    
    
    
    
    
    
    (942
    )Balance at December 31, 2010
    
    
    15,310,426
    
    
    $
    153
    
    
    
    1,162,500
    
    
    $
    12
    
    
    $
    115,815
    
    
    $
    11,290
    
    
    $
    4,802
    
    
    $
    132,072
  47




---



##### Table of Contents



CHINDEX INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010
 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     Change in fiscal yearend
  Policies and procedures
 FASB Accounting Standards Codification
  48




---



##### Table of Contents



Consolidation
  Revenue Recognition
      49




---



##### Table of Contents



Accounts Receivable
  Inventories
    Property and Equipment
   Income Taxes
   50




---



##### Table of Contents



Cash Equivalents and Restricted Cash
  Earnings Per Share
  Stock-Based Compensation
      51




---



##### Table of Contents



December 31, 2010
    
    
    March 31, 2010
    
    
    March 31, 2009Volatility
    
    
    70
    %
    
    
    75.00% - 76.80
    %
    
    
    70.00% - 72.60
    %Dividend yield
    
    
    0.00
    %
    
    
    0.00
    %
    
    
    0.00
    %Risk-free interest
rate
    
    
    1.44
    %
    
    
    2.70
    %
    
    
    3.27
    %Expected average
life
    
    5.0 years
    
    6.0 years
    
    7.0 years
   Debt Issuance Costs
  Foreign Currencies
  Use of Estimates
  Recent Accounting Pronouncements
  52




---



##### Table of Contents



2. INVESTMENTS
  53




---



##### Table of Contents



December 31, 2010
    
    
    March 31, 2010Current investments:Certificates of deposit
    
    $
    34,037
    
    
    $
    33,322U.S. Government Sponsored Enterprises
    
    
    500
    
    
    
    3,263Corporate bonds
    
    
    3,094
    
    
    
    622Total current investments
    
    $
    37,631
    
    
    $
    37,207Noncurrent investments:Corporate bonds
    
    
    2,439
    
    
    
    Total noncurrent investments
    
    $
    2,439
    
    
    $
    
   3. ACCOUNTS RECEIVABLE
 December 31, 2010
    
    
    March 31, 2010Product sales, other than loan projects
    
    $
    
    
    
    $
    11,356Loan projects
    
    
    
    
    
    
    11,404Product sales receivables
    
    
    
    
    
    
    22,760Patient service
receivables
    
    
    11,601
    
    
    
    10,357$
    11,601
    
    
    $
    33,117
  54




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##### Table of Contents



4. INVENTORIES, NET
 December 31, 2010
    
    
    March 31, 2010Inventories, net, consist of the following:Merchandise and demonstration inventory, net
    
    $
    
    
    
    $
    10,856Healthcare services inventory
    
    
    1,413
    
    
    
    1,063Spare parts, net
    
    
    
    
    
    
    2,492$
    1,413
    
    
    $
    14,411
   5. INVESTMENT IN UNCONSOLIDATED AFFILIATE
      55




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##### Table of Contents



December 31, 2010Consideration transferredChindex MPD
business (at book
value)
    
    $
    31,882Consideration received49% interest in CML
net assets (at fair
value)
    
    
    31,756Loss on deconsolidation
of Chindex MPD
    
    $
    (126
    )
   December 31, 2010Current assets
    
    $
    94,384Noncurrent assets
    
    
    25,665Total assets
    
    $
    120,049Current liabilities
    
    $
    48,105Noncurrent liabilities
    
    
    7,136Total liabilities
    
    $
    55,241
  56




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##### Table of Contents



6. PROPERTY AND EQUIPMENT, NET
 December 31, 2010
    
    
    March 31, 2010Property and equipment, net consists of
the following:Furniture and equipment
    
    $
    17,592
    
    
    $
    18,620Vehicles
    
    
    170
    
    
    
    124Construction in progress
    
    
    12,224
    
    
    
    3,885Leasehold improvements
    
    
    17,988
    
    
    
    19,65447,974
    
    
    
    42,283Less: accumulated
depreciation and
amortization
    
    
    (10,875
    )
    
    
    (18,605
    )$
    37,099
    
    
    $
    23,678
  7. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
 December 31, 2010
    
    
    March 31, 2010Accrued expenses:Accrued contract expenses
    
    $
    
    
    
    $
    4,250Accrued expenses- healthcare services
    
    
    3,331
    
    
    
    2,602Accrued compensation
    
    
    3,531
    
    
    
    5,834Accrued expenses- other
    
    
    1,679
    
    
    
    1,336$
    8,541
    
    
    $
    14,022Other current liabilities:Accrued other taxes payable- non-income
    
    $
    698
    
    
    $
    895Customer deposits
    
    
    2,609
    
    
    
    1,935Current deferred tax liabilities
    
    
    
    
    
    
    49Other current liabilities
    
    
    567
    
    
    
    947$
    3,874
    
    
    $
    3,826
  57




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##### Table of Contents



8. DEBT
  December 31, 2010
    
    
    March 31, 2010Short term
    
    
    Long term
    
    
    Short term
    
    
    Long termVendor financing  Product Sales
    
    $
    
    
    
    $
    
    
    
    $
    1,453
    
    
    $
    Long term loan
    
    
    
    
    
    
    9,797
    
    
    
    
    
    
    
    9,505Convertible notes, net of debt discount
    
    
    
    
    
    
    13,273
    
    
    
    
    
    
    
    13,088$
    
    
    
    $
    23,070
    
    
    $
    1,453
    
    
    $
    22,593
 Vendor financing  Product Sales
  Line of credit
  Long term loan- IFC 2005
  58




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##### Table of Contents



Convertible Notes- JPM
       59




---



##### Table of Contents



Loan Facility- IFC 2007
    60




---



##### Table of Contents



Loan Facility- DEG 2008
      61




---



##### Table of Contents



Debt Payments Schedule and Restricted Cash
  (in thousands)Total
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    2015
    
    
    ThereafterLong term loan less
sinking fund deposits
    
    $
    8,817
    
    
    $
    980
    
    
    $
    1,959
    
    
    $
    1,959
    
    
    $
    1,959
    
    
    $
    1,960
    
    
    $
    Convertible notes
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000Total
    
    $
    23,817
    
    
    $
    980
    
    
    $
    1,959
    
    
    $
    1,959
    
    
    $
    1,959
    
    
    $
    1,960
    
    
    $
    15,000
  9. STOCKHOLDERS EQUITY
 Common Stock
  Stock Option Plan
  62




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##### Table of Contents



Employees
   Weighted AverageNumber of Shares
    
    
    Grant-Date Fair ValueNonvested options outstanding, March 31, 2010
    
    
    658,121
    
    
    $
    9.12Granted
    
    
    18,000
    
    
    
    8.64Vested
    
    
    (225,860
    )
    
    
    9.07Canceled
    
    
    (104,880
    )
    
    
    9.47Nonvested options outstanding, December 31, 2010
    
    
    345,381
    
    
    $
    9.02
  Weighted AverageNumber of Shares
    
    
    Grant-Date Fair ValueNonvested options outstanding, March 31, 2009
    
    
    762,934
    
    
    $
    9.40Granted
    
    
    223,150
    
    
    
    8.89Vested
    
    
    (210,287
    )
    
    
    9.19Canceled
    
    
    (117,676
    )
    
    
    10.34Nonvested options outstanding, March 31, 2010
    
    
    658,121
    
    
    $
    9.12
  63




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##### Table of Contents



Weighted AverageNumber of Shares
    
    
    Grant-Date Fair ValueNonvested options outstanding, March 31, 2008
    
    
    332,776
    
    
    $
    8.91Granted
    
    
    530,050
    
    
    
    9.34Vested
    
    
    (92,579
    )
    
    
    8.66Canceled
    
    
    (7,313
    )
    
    
    9.52Nonvested options outstanding, March 31, 2009
    
    
    762,934
    
    
    $
    9.40
   Number of shares
    
    
    Aggregate Intrinsicunderlying restricted
    
    
    Value of Restrictedstock
    
    
    Stock (in thousands) *Outstanding as of March 31, 2010
    
    
    142,896Granted
    
    
    338,415Vested
    
    
    (67,977
    )Forfeited
    
    
    (560
    )Outstanding as of December 31, 2010
    
    
    412,774
    
    
    $
    6,807Expected to vest
    
    
    397,056
    
    
    $
    6,547
  Number of shares
    
    
    Aggregate Intrinsicunderlying restricted
    
    
    Value of Restrictedstock
    
    
    Stock (in thousands) *Outstanding as of March 31, 2009
    
    
    135,290Granted
    
    
    118,000Vested
    
    
    (97,225
    )Forfeited
    
    
    (13,169
    )Outstanding as of March 31, 2010
    
    
    142,896
    
    
    $
    1,688Expected to vest
    
    
    134,321
    
    
    $
    1,586
  64




---



##### Table of Contents



Number of
    
    
    Aggregate Intrinsicshares underlying
    
    
    Value of Restrictedrestricted stock
    
    
    Stock (in thousands) *Outstanding as of March 31, 2008
    
    
    121,323Granted
    
    
    96,000Vested
    
    
    (82,033
    )Forfeited
    
    
    Outstanding as of March 31, 2009
    
    
    135,290
    
    
    $
    672Expected to vest
    
    
    127,172
    
    
    $
    632
   Weighted
    
    
    Aggregate
    
    
    
    
    
    
    Weighted
    
    
    Aggregate
    
    
    
    
    
    
    Weighted
    
    
    AggregateAverage
    
    
    Intrinsic
    
    
    
    
    
    
    Average
    
    
    Intrinsic
    
    
    
    
    
    
    Average
    
    
    IntrinsicDecember 31,
    
    
    Exercise
    
    
    Value (in
    
    
    March 31,
    
    
    Exercise
    
    
    Value (in
    
    
    March 31,
    
    
    Exercise
    
    
    Value2010
    
    
    Price
    
    
    thousands)*
    
    
    2010
    
    
    Price
    
    
    thousands)*
    
    
    2009
    
    
    Price
    
    
    (in thousands)*Options outstanding, beginning of year
    
    
    1,715,286
    
    
    $
    8.64
    
    
    
    
    
    
    
    1,789,184
    
    
    $
    8.10
    
    
    
    
    
    
    
    1,309,459
    
    
    $
    6.01Granted
    
    
    18,000
    
    
    
    14.85
    
    
    
    
    
    
    
    223,150
    
    
    
    13.20
    
    
    
    
    
    
    
    530,050
    
    
    
    13.42Exercised
    
    
    (345,221
    )
    
    
    1.86
    
    
    
    
    
    
    
    (172,247
    )
    
    
    4.62
    
    
    
    
    
    
    
    (37,500
    )
    
    
    9.17Canceled
    
    
    (131,176
    )
    
    
    14.00
    
    
    
    
    
    
    
    (124,801
    )
    
    
    14.56
    
    
    
    
    
    
    
    (12,825
    )
    
    
    12.30Options outstanding, end of year
    
    
    1,256,889
    
    
    $
    10.03
    
    
    $
    8,360
    
    
    
    1,715,286
    
    
    $
    8.64
    
    
    $
    7,124
    
    
    
    1,789,184
    
    
    $
    8.10
    
    
    $
    1,976Weighted Average Remaining Contractual Term
(Years)
    
    
    6.32
    
    
    
    
    
    
    
    
    
    
    
    5.89
    
    
    
    
    
    
    
    
    
    
    
    6.43Options exercisable at end of year
    
    
    911,508
    
    
    $
    8.81
    
    
    $
    7,159
    
    
    
    1,057,165
    
    
    $
    5.80
    
    
    $
    6,873
    
    
    
    1,026,250
    
    
    $
    4.11
    
    
    $
    1,976Options exercisable at end of year and
expected to be exercisable**
    
    
    1,237,315
    
    
    $
    5.19
    
    
    $
    6,679
    
    
    
    1,675,799
    
    
    $
    8.53
    
    
    $
    7,109
    
    
    
    1,743,408
    
    
    $
    7.95
    
    
    $
    
 65




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##### Table of Contents



*
    
    The aggregate intrinsic value on this table was calculated based on the positive difference
between the closing market price of the Companys common stock on December 31, 2010, March 31, 2010
and 2009 ($16.49, $11.81 and $4.97, respectively) and the exercise price of the underlying options.**
    
    Options exercisable at December 31, 2010, March 31, 2010 and 2009, are expected to be
exercisable include both vested options and non-vested options outstanding less our expected
forfeiture rate. Nonemployees
  Security Issuances  Warrants Exercised
     Securities Issuances Private Placement:
  66




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##### Table of Contents



Securities
Purchase Agreement  IFC:
  Stock Purchase Agreement  FosunPharma
     67




---



##### Table of Contents



Shares of Common Stock Reserved
  10. EARNINGS PER SHARE
   Nine months ended December 31,
    
    
    Years ended March 31,2010
    
    
    2009
    
    
    2010
    
    
    2009(Unaudited)Basic net
income per share computation:Numerator:Net income
    
    $
    5,814
    
    
    $
    7,689
    
    
    $
    8,204
    
    
    $
    4,964Denominator:Weighted average shares outstanding- basic
    
    
    15,347,173
    
    
    
    14,533,601
    
    
    
    14,579,759
    
    
    
    14,410,033Net income per common share  basic:
    
    $
    .38
    
    
    $
    .53
    
    
    $
    .56
    
    
    $
    .34Diluted net income per share computation:Numerator:Net income
    
    $
    5,814
    
    
    $
    7,689
    
    
    $
    8,204
    
    
    $
    4,964Interest expense for convertible notes
    
    
    185
    
    
    
    
    
    
    
    256
    
    
    
    Numerator for diluted earnings per share
    
    $
    5,999
    
    
    $
    7,689
    
    
    $
    8,460
    
    
    $
    4,964Denominator:Weighted average shares outstanding- basic
    
    
    15,347,173
    
    
    
    14,533,601
    
    
    
    14,579,759
    
    
    
    14,410,033Effect of dilutive securities:Shares issuable upon exercise of dilutive
outstanding stock options, conversion of
convertible debentures, vesting of
restricted stock and exercise of warrants:
    
    
    1,356,497
    
    
    
    1,593,579
    
    
    
    1,552,580
    
    
    
    1,611,690Weighted average shares outstanding-diluted
    
    
    16,703,670
    
    
    
    16,127,180
    
    
    
    16,132,339
    
    
    
    16,021,723Net income per common share  diluted:
    
    $
    .36
    
    
    $
    .48
    
    
    $
    .52
    
    
    $
    .31
  Nine months ended
    
    
    Years ended March 31,December 31, 2010
    
    
    2010
    
    
    2009Number of shares considered antidulitive for calculating diluted
net income per share:
    
    
    244,232
    
    
    
    597,138
    
    
    
    9,000
 68




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##### Table of Contents



12. INCOME TAXES
  December 31, 2010
    
    
    March 31, 2010
    
    
    March 31, 2009U.S.
    
    $
    (1,072
    )
    
    $
    (3,311
    )
    
    $
    421Foreign
    
    
    10,374
    
    
    
    17,611
    
    
    
    7,230Total
    
    $
    9,302
    
    
    $
    14,300
    
    
    $
    7,651
  December 31, 2010
    
    
    March 31, 2010
    
    
    March 31, 2009Current:Federal
    
    $
    
    
    
    $
    (8
    )
    
    $
    (64
    )State
    
    
    
    
    
    
    
    
    
    
    Foreign
    
    
    (4,035
    )
    
    
    (5,384
    )
    
    
    (4,458
    )(4,035
    )
    
    
    (5,392
    )
    
    
    (4,522
    )Deferred:Federal
    
    
    
    
    
    
    
    
    
    
    State
    
    
    
    
    
    
    
    
    
    
    Foreign
    
    
    547
    
    
    
    (704
    )
    
    
    1,835547
    
    
    
    (704
    )
    
    
    1,835Total provision
    
    $
    (3,488
    )
    
    $
    (6,096
    )
    
    $
    (2,687
    )
  December 31, 2010
    
    
    March 31, 2010
    
    
    March 31, 2009Income tax expense at federal statutory rate
    
    
    34.0
    %
    
    
    34.0
    %
    
    
    34.0
    %State taxes (net of federal benefit)
    
    
    0.3
    %
    
    
    (1.3
    )%
    
    
    0.9
    %Foreign rate differential
    
    
    (8.4
    )%
    
    
    (12.1
    )%
    
    
    (15.6
    )%Change in valuation allowance (excluding assets transferred)
    
    
    (8.1
    )%
    
    
    11.8
    %
    
    
    (13.0
    )%Change in tax rate
    
    
    (1.4
    )%
    
    
    0.6
    %
    
    
    10.2
    %Stock-based compensation
    
    
    1.9
    %
    
    
    1.7
    %
    
    
    3.8
    %Nondeductible selling costs
    
    
    3.1
    %
    
    
    2.6
    %
    
    
    4.6
    %Organization costs of joint venture
    
    
    5.3
    %
    
    
    
    
    
    
    Impact of
assets transferred to joint venture
    
    
    9.3
    %
    
    
    
    
    
    
    Valuation allowance on assets transferred to joint venture
    
    
    (9.3
    )%
    
    
    
    
    
    
    Other permanent differences
    
    
    7.7
    %
    
    
    5.2
    %
    
    
    8.0
    %Other
    
    
    3.0
    %
    
    
    0.1
    %
    
    
    2.2
    %37.5
    %
    
    
    42.6
    %
    
    
    35.1
    %
  69




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##### Table of Contents



December 31, 2010
    
    
    March 31, 2010Deferred tax assets, net:Allowance for doubtful accounts
    
    $
    1,608
    
    
    $
    1,461Deferred revenue
    
    
    
    
    
    
    480Accrued expenses
    
    
    1,617
    
    
    
    1,410Sales commissions
    
    
    
    
    
    
    449Net operating loss carryforwards
    
    
    576
    
    
    
    2,689Alternative minimum tax
    
    
    736
    
    
    
    107Depreciation and amortization
    
    
    
    
    
    
    138Start-up costs
    
    
    72
    
    
    
    2Stock based compensation
    
    
    1,347
    
    
    
    1,171Other
    
    
    
    
    
    
    6335,956
    
    
    
    8,540Valuation allowance
    
    
    (2,340
    )
    
    
    (5,129
    )Deferred tax assets, net of valuation allowance
    
    
    3,616
    
    
    
    3,411Deferred tax liabilities:Convertible debt beneficial conversion feature
    
    
    (681
    )
    
    
    (754
    )Depreciation
    
    
    (16
    )
    
    
    Total deferred tax liabilities
    
    
    (697
    )
    
    
    (754
    )Total net deferred taxes
    
    $
    2,919
    
    
    $
    2,657
     70




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##### Table of Contents



13. COMMITMENTS
 Leases
  Year ending December 31:2011
    
    $
    3,1692012
    
    
    2,8202013
    
    
    2,3632014
    
    
    2,1402015
    
    
    2,059Thereafter
    
    
    10,888Net minimum rental commitments
    
    $
    23,439
 71




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##### Table of Contents



14. FAIR VALUE OF FINANCIAL INSTRUMENTS
  72




---



##### Table of Contents



As of December 31, 2010
 Quoted Prices inActive Markets for
    
    
    Significant Other
    
    
    SignificantIdentical Assets
    
    
    Observable Inputs
    
    
    Unobservable InputsDescription
    
    Total
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)AssetsU.S. Government sponsored enterprises
    
    $
    500
    
    
    $
    
    
    
    $
    500
    
    
    $
    Corporate Bonds
    
    
    5,533
    
    
    
    
    
    
    
    5,533
    
    
    
    Total
    
    $
    6,033
    
    
    $
    
    
    
    $
    6,033
    
    
    $
    
 As of March 31, 2010
 Quoted Prices inActive Markets for
    
    
    Significant Other
    
    
    SignificantIdentical Assets
    
    
    Observable Inputs
    
    
    Unobservable InputsDescription
    
    Total
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)AssetsU.S. Government sponsored enterprises
    
    $
    3,263
    
    
    $
    
    
    
    $
    3,263
    
    
    $
    Corporate Bonds
    
    
    622
    
    
    
    
    
    
    
    622
    
    
    
    Total
    
    $
    3,885
    
    
    $
    
    
    
    $
    3,885
    
    
    $
    
   73




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##### Table of Contents



WarrantsBalance, April 1, 2009
    
    
    Cumulative effect adjustment
    
    
    141Total (gains) losses realized or unrealized included in earnings
    
    
    659Purchases, sales, issuances, and settlements, net
    
    
    (800
    )Balance, March 31, 2010
    
    $
    
  12 MonthsEnded3/31/10Realized (gains) losses included in earnings on warrants exercised
    
    $
    659Total (gains) losses realized or unrealized included in earnings
    
    $
    659
 15. CONCENTRATIONS OF CREDIT RISK
    74




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##### Table of Contents



16. SIGNIFICANT SUPPLIERS
  17. ACCOUNTING FOR VARIABLE INTEREST ENTITIES (VIE)
   18. SEGMENT REPORTING
  75




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##### Table of Contents



Healthcare Services
    
    
    Medical Products
    
    
    TotalFor the nine months ended December 31, 2010Sales and service revenue
    
    $
    74,224
    
    
    $
    62,452
    
    
    $
    136,676Gross Profit
    
    
    n/a
    *
    
    
    18,679
    
    
    
    n/aGross Profit %
    
    
    n/a
    *
    
    
    30
    %
    
    
    n/aIncome (loss) from operations before foreign exchange
    
    $
    11,898
    
    
    $
    (1,806
    )
    
    $
    10,092Foreign exchange loss
    
    
    
    
    
    
    
    
    
    
    (544
    )Income from operations
    
    
    
    
    
    
    
    
    
    $
    9,548Other
(expense) net
    
    
    
    
    
    
    
    
    
    
    (246
    )Income before income taxes
    
    
    
    
    
    
    
    
    
    $
    9,302Assets as of December 31, 2010
    
    $
    142,417
    
    
    $
    31,756
    **
    
    $
    174,173
 Healthcare Services
    
    
    Medical Products
    
    
    TotalFor the year ended March 31, 2010Sales and service revenue
    
    $
    85,778
    
    
    $
    85,413
    
    
    $
    171,191Gross Profit
    
    
    n/a
    *
    
    
    23,354
    
    
    
    n/aGross Profit %
    
    
    n/a
    *
    
    
    27
    %
    
    
    n/aIncome (loss) from operations before foreign exchange
    
    $
    14,393
    
    
    $
    (366
    )
    
    $
    14,027Foreign exchange gain
    
    
    
    
    
    
    
    
    
    
    385Income from operations
    
    
    
    
    
    
    
    
    
    $
    14,412Other (expense), net
    
    
    
    
    
    
    
    
    
    
    (112
    )Income before income taxes
    
    
    
    
    
    
    
    
    
    $
    14,300Assets as of March 31, 2010
    
    $
    112,929
    
    
    $
    57,914
    
    
    $
    170,843
 Healthcare Services
    
    
    Medical Products
    
    
    TotalFor the year ended March 31, 2009Sales and service revenue
    
    $
    79,357
    
    
    $
    92,085
    
    
    $
    171,442Gross Profit
    
    
    n/a
    *
    
    
    23,058
    
    
    
    n/aGross Profit %
    
    
    n/a
    *
    
    
    25
    %
    
    
    n/aIncome from operations before foreign exchange
    
    $
    7,309
    
    
    $
    508
    
    
    $
    7,817Foreign exchange gain
    
    
    
    
    
    
    
    
    
    
    342Income from operations
    
    
    
    
    
    
    
    
    
    $
    8,159Other (expense), net
    
    
    
    
    
    
    
    
    
    
    (508
    )Income before income taxes
    
    
    
    
    
    
    
    
    
    $
    7,651Assets as of March 31, 2009
    
    $
    94,675
    
    
    $
    67,962
    
    
    $
    162,637
 
 *
    
    Gross profit margins not routinely calculated in the healthcare industry.**
    
    Represents investment in unconsolidated affiliate. 76




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##### Table of Contents



19. SELECTED QUARTERLY DATA (UNAUDITED)
 First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterFor the nine months ended December 31, 2010:Revenue
    
    $
    41,488
    
    
    $
    45,174
    
    
    $
    50,014
    
    
    
    N/AIncome before income taxes
    
    
    1,848
    
    
    
    4,734
    
    
    
    2,720
    
    
    
    N/ANet income
    
    
    836
    
    
    
    3,237
    
    
    
    1,741
    
    
    
    N/ANet income per common share  basic
    
    
    .06
    
    
    
    .21
    
    
    
    .11
    
    
    
    N/ANet income per common share  diluted
    
    
    .06
    
    
    
    .20
    
    
    
    .10
    
    
    
    N/AFor the year ended March 31, 2010:Revenue
    
    $
    45,331
    
    
    $
    38,119
    
    
    $
    46,484
    
    
    $
    41,257Income before income taxes
    
    
    4,826
    
    
    
    1,547
    
    
    
    6,620
    
    
    
    1,307Net income
    
    
    3,253
    
    
    
    538
    
    
    
    3,898
    
    
    
    515Net income per common share  basic
    
    
    .22
    
    
    
    .04
    
    
    
    .27
    
    
    
    .04Net income per common share  diluted
    
    
    .20
    
    
    
    .03
    
    
    
    .24
    
    
    
    .03For the year ended March 31, 2009:Revenue
    
    $
    32,068
    
    
    $
    38,110
    
    
    $
    41,600
    
    
    $
    59,664Income before income taxes
    
    
    1,003
    
    
    
    1,113
    
    
    
    1,504
    
    
    
    4,031Net (loss) income
    
    
    (161
    )
    
    
    862
    
    
    
    846
    
    
    
    3,417Net (loss) income per common share  basic
    
    
    (.01
    )
    
    
    .06
    
    
    
    .06
    
    
    
    .24Net (loss) income per common share  diluted
    
    
    (.01
    )
    
    
    .05
    
    
    
    .05
    
    
    
    .22
 
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures.
   77




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Changes in Internal Control of Financial Reporting During the Quarter
  Managements Annual Report on Internal Control over Financial Reporting
    78




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##### Table of Contents



ITEM 9B. OTHER INFORMATION
 .
 
 PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
  
 ITEM 11. EXECUTIVE COMPENSATION
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  
 PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
          79




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##### Table of Contents



Balancebeginning of
    
    Additions
    
    Additions not
    
    
    
    
    
    Balance endDescription (amounts in thousands)
    
    year
    
    expensed
    
    expensed
    
    Deductions*
    
    of yearFor the nine months ended December 31, 2010:Allowance for doubtful receivables
    
    $
    6,158
    
    
    
    1,489
    
    
    
    
    
    
    
    899
    
    
    $
    6,748Inventory valuation allowance
    
    $
    276
    
    
    
    137
    
    
    
    89
    
    
    
    502
    
    
    $
    Deferred income tax valuation allowance
    
    $
    5,097
    
    
    
    
    
    
    
    97
    
    
    
    2,854
    
    
    $
    2,340Demonstration inventory allowance
    
    $
    2,397
    
    
    
    491
    
    
    
    71
    
    
    
    2,959
    
    
    $
    For the year ended March 31, 2010:Allowance for doubtful receivables
    
    $
    5,041
    
    
    
    1,467
    
    
    
    6
    
    
    
    356
    
    
    $
    6,158Inventory valuation allowance
    
    $
    151
    
    
    
    342
    
    
    
    
    
    
    
    217
    
    
    $
    276Deferred income tax valuation allowance
    
    $
    3,424
    
    
    
    1,671
    
    
    
    2
    
    
    
    
    
    
    $
    5,097Demonstration inventory allowance
    
    $
    2,264
    
    
    
    541
    
    
    
    
    
    
    
    408
    
    
    $
    2,397For the year ended March 31, 2009:Allowance for doubtful receivables
    
    $
    3,940
    
    
    
    1,643
    
    
    
    116
    
    
    
    658
    
    
    $
    5,041Inventory valuation allowance
    
    $
    
    
    
    
    295
    
    
    
    
    
    
    
    144
    
    
    $
    151Deferred income tax valuation allowance
    
    $
    4,583
    
    
    
    
    
    
    
    (167
    )
    
    
    992
    
    
    $
    3,424Litigation accrual
    
    $
    921
    
    
    
    
    
    
    
    
    
    
    
    921
    
    
    $
    Demonstration inventory allowance
    
    $
    1,232
    
    
    
    652
    
    
    
    380
    
    
    
    
    
    
    $
    2,264
 
 *
    
    For the nine months ended December 31, 2010, deductions primarily include amounts related
to the deconsolidation of MPD.    3.1
    
    Amended and Restated Certificate of Incorporation of the Company dated October 28, 2004. Incorporated by
reference to Exhibit 3.1 to the Companys Annual Report on Form 10-K for the fiscal year ended March 31, 2005.3.2
    
    Amendment to Certificate of Incorporation dated July 10, 2007. Incorporated by reference to Exhibit 3.1 to
the Companys Current Report on Form 8-K dated July 10, 2007.3.3
    
    By-laws of the Company. Incorporated by reference to Annex C to the Companys Proxy Statement on Schedule 14A
filed with the Securities and Exchange Commission on June 7, 2002.3.4
    
    Certificate of Designations of Series A Junior Participating Preferred Stock of the Company. Incorporated by
reference to Exhibit 3.3 to the Companys Annual Report on Form 10-K for the fiscal year ended March 31, 2007.4.1
    
    Form of Specimen Certificate representing the Common Stock of the Company. Incorporated by reference to
Exhibit 4.2 to the Registrants Registration Statement on Form SB-2 (No. 33-78446) (The IPO Registration
Statement).4.2
    
    Form of Specimen Certificate representing the Class B Common Stock of the Company. Incorporated by reference
to Exhibit 4.3 to the IPO Registration Statement.4.3
    
    Rights Agreement, dated as of June 7, 2007, between the Company and American Stock Transfer & Trust Company,
as Rights Agent, which includes a form of Right Certificate as Exhibit B and a Summary of Rights to Purchase
Preferred Stock as Exhibit C. Incorporated by reference to Exhibit 4.1 to the Companys Current Report on
Form 8-K dated June 4, 2007.4.4
    
    Amendment No. 1 to Rights Agreement, dated as of November 4, 2007, between the Company and American Stock
Transfer & Trust Company, as Rights Agent. Incorporated by reference to Exhibit 10.2 to the Companys Current
Report on Form 8-K dated November 7, 2007.4.5
    
    Amendment No. 2 to Rights Agreement, dated as of June 8, 2010, between the Company and American Stock Transfer
& Trust Company, as Rights Agent. Incorporated by reference to Exhibit 10.3 to the Companys Current Report
on Form 8-K dated June 14, 2010 (the June 14, 2010 Form 8-K).
 80




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##### Table of Contents



10.1*
    
    The Companys 1994 Stock Option Plan, as amended as of July 17, 2001. Incorporated by reference to Exhibit
10.1 to the Companys Quarterly Report on Form 10-Q for the six months ended June 30, 2001.10.2*
    
    The Companys 2004 Stock Incentive Plan. Incorporated by reference to Annex B to the Companys Proxy
Statement on Schedule 14A filed with the Securities and Exchange Commission on September 14, 2004.10.3*
    
    The Companys 2007 Stock Incentive Plan, as amended and restated as of November 22, 2010 (filed herewith).10.4*
    
    The Companys 2011 Executive
Management Incentive Plan (EMIP). Incorporated by reference to Exhibit 10.1
to the Companys Quarterly Report on Form 10-Q for the
three months ended June 30, 2010.10.5*
    
    Form of Outside Director Restricted Stock Grant Letter. Incorporated by reference to Exhibit 99.2 to the
Companys Current Report on Form 8-K dated September 11, 2007 (the September 11, 2007 Form 8-K).10.6*
    
    Form of Employee Restricted Stock Grant Letter. Incorporated by reference to Exhibit 99.3 to the September
11, 2007 Form 8-K.10.7*
    
    Form of Employee Stock Option Grant Letter. Incorporated by reference to Exhibit 99.4 to the September 11,
2007 Form 8-K.10.8*
    
    Form of Stock Option Grant Letter for EMIP awards. Incorporated by reference to Exhibit 10.8 to the Companys
Annual Report on Form 10-K for the fiscal year ended March 31, 2009.10.9*
    
    Form of Employee Restricted Stock Grant Letter (filed herewith).10.10*
    
    Form of Executive Stock Option Grant Letter (filed herewith).10.11
    
    Lease Agreement dated November 8, 1995 between the School of Posts and Telecommunications and the Company.
Incorporated by reference to Exhibit 10.14 to the Companys Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1995.10.12
    
    Amendments Numbers One, Two and Three to the Lease Agreement between the School of Posts and
Telecommunications and the Company dated November 8, 1995, each such amendment dated November 26, 1996.
Incorporated by reference to Exhibit 10.13 to the Companys Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1997.10.13
    
    Lease Agreement dated May 10, 1998, between the School of Posts and Telecommunications and the Company
relating to the lease of additional space. Incorporated by reference to Exhibit 10.13 to the Companys Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1998.10.14
    
    Contractual Joint Venture Contract dated September 27, 1995 between the Chinese Academy of Medical Sciences
Union Medical & Pharmaceutical Group Beijing Union Medical & Pharmaceutical General Corporation and the
Company. Incorporated by reference to Exhibit 10.16 to the Companys Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1995.10.15
    
    First Investment Loan Manager Demand Promissory Note dated July 10, 1997 between First National Bank of
Maryland and the Company. Incorporated by reference to Exhibit 10.16 to the Companys Annual Report on Form
10-KSB for the fiscal year ended December 31, 1997.10.16
    
    Distribution Agreement dated October 11, 2001 between Siemens AG and the Company. Incorporated by reference
to Exhibit 10.18 to the Companys Quarterly Report on Form 10-Q for the nine months ended September 30, 2001.10.17*
    
    Amended and Restated Employment Agreement, dated as of December 15, 2008, between the Company and Roberta
Lipson. Incorporated by reference to Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q for the nine
months ended December 31, 2008.10.18*
    
    Amended and Restated Employment Agreement, dated as of December 15, 2008, between the Company and Elyse Beth
Silverberg. Incorporated by reference to Exhibit 10.2 to the Companys Quarterly Report on Form 10-Q for the
nine months ended December 31, 2008.10.19*
    
    Amendment, dated as of December 31, 2010, to Amended and Restated Employment Agreement, dated as of December
15, 2008, between the Company and Elyse Beth Silverberg. Incorporated by reference to Exhibit 10.6 to the
Companys Current Report on Form 8-K dated December 31, 2010 (the December 31, 2010 Form 8-K).10.20*
    
    Amended and Restated Employment Agreement, dated as of December 22, 2008, between the Company and Lawrence
Pemble. Incorporated by reference to Exhibit 10.3 to the Companys Quarterly Report on Form 10-Q for the nine
months ended December 31, 2008.10.21*
    
    Amendment, dated as of December 31, 2010, to Amended and Restated Employment Agreement, dated as of December
22, 2008, between the Company and Lawrence Pemble. Incorporated by reference to Exhibit 10.7 to the December
31, 2010 Form 8-K.10.22*
    
    Employment Agreement, dated  November 11, 2008, between the Company and Robert Low. Incorporated by
reference to Exhibit 10.5 to the Companys Quarterly Report on Form 10-Q for the nine months ended December
31, 2008.10.23
    
    Securities Purchase Agreement dated November 7, 2007 between the Company and Magenta Magic Limited.
Incorporated by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K dated November 7, 2007.10.24
    
    RMB Loan Agreement dated October 10, 2005 among Beijing United Family Health Center, Shanghai United Family
Hospital, Inc. and International Finance Corporation. Incorporated by reference to Exhibit 10.28 to the
Companys Quarterly Report on Form 10-Q for the six months ended September 30, 2005.10.25
    
    Guarantee Agreement dated October 11, 2005 between the Company and International Finance Corporation.
Incorporated by reference to Exhibit 10.29 to the Companys Quarterly Report on Form 10-Q for the six months
ended September 30, 2005.
 81




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##### Table of Contents



10.26
    
    Loan Agreement dated December 10, 2007 between the Company and International Finance Corporation.
Incorporated by reference to Exhibit 4.1 to the Companys Current Report on Form 8-K dated December 10, 2007
(the December 10, 2007 Form 8-K).10.27
    
    Amendment to Loan Agreement, dated as of January 3, 2008, between Chindex China Healthcare Finance, LLC and
International Finance Corporation. Incorporated by reference to Exhibit 4.3 to the Companys Current Report
on Form 8-K dated January 10, 2008 (the January 10, 2008 Form 8-K).10.28
    
    Securities Purchase Agreement dated December 10, 2007 between the Company and International Finance
Corporation. Incorporated by reference to Exhibit 10.1 to the December 10, 2007 Form 8-K.10.29
    
    Loan Agreement, dated as of January 8, 2008, between Chindex China Healthcare Finance, LLC and DEG-Deutsche
Investitions-Und Entwicklungsgesellschaft. Incorporated by reference to Exhibit 4.1 to the January 10, 2008
Form 8-K.10.30
    
    Amendment to Loan Agreement, dated as of May 27, 2009, between Chindex China Healthcare Finance, LLC and
DEG-Deutsche Investitions-Und Entwicklungsgesellschaft. Incorporated by reference to Exhibit 10.27 to the
Companys Annual Report on Form 10-K for the fiscal year ended March 31, 2009.10.31
    
    SPV Guarantee Agreement, dated as of January 8, 2008, between Chindex China Healthcare Finance, LLC and
DEG-Deutsche Investitions und Entwicklungsgesellschaft. Incorporated by reference to Exhibit 4.2 to the
January 10, 2008 Form 8-K.10.32
    
    Contractual Joint Venture Contract dated February 9, 2002 between Shanghai Changning District Central Hospital
and the Company. Incorporated by reference to Exhibit 10.24 to the Companys Annual Report on Form 10-K for
the fiscal year ended December 31, 2001.10.33
    
    Lease Agreement between Shanghai Changning District Hospital and the Company related to the lease of the
building for Shanghai United Family Hospital. Incorporated by reference to Exhibit 10.25 to the Companys
Annual Report on Form 10-K for the fiscal year ended December 31, 2001.10.34
    
    Lease Agreement between China Arts & Crafts Import & Export Corporation and Chindex (Beijing) Consulting
Incorporated related to the lease of the building for the Companys main office in Beijing. Incorporated by
reference to Exhibit 10.17 to the Companys Quarterly Report on Form 10-Q for the six months ended June 30,
2002.10.35
    
    Agreement between Siemens AG and the Company for long-term payment of vendor invoices. Incorporated by
reference to Exhibit 10.18 to the Companys Quarterly Report on Form 10-Q for the nine months ended September
30, 2002.10.36
    
    Form of Common Stock Purchase Warrant issued to investors on March 24, 2005. Incorporated by reference to
Exhibit 10.2 to the Companys Current Report on Form 8-K dated March 21, 2005.10.37
    
    Amendatory Letter No.1 dated February 5, 2009 to Loan Agreement dated December 10, 2007 between the Company
and International Finance Corporation. Incorporated by reference to Exhibit 10.34 to the Companys Annual
Report on Form 10-K for the fiscal year ended March 31, 2009.10.38
    
    Stock Purchase Agreement dated June 14, 2010 among the Company, Fosun Industrial Co., Limited and Shanghai
Fosun Pharmaceutical (Group) Co., Ltd. Incorporated by reference to Exhibit 10.1 to the
June 14, 2010  Form 8-K.10.39
    
    Stockholder Agreement dated June 14, 2010 among the Company, Fosun Industrial Co., Limited and Shanghai Fosun
Pharmaceutical (Group) Co., Ltd. Incorporated by reference to Exhibit 10.2 to the June 14, 2010 Form 8-K.10.40
    
    Formation Agreement dated December 28, 2010 among Fosun Industrial Co., Limited, Ample Up Limited, Shanghai
Fosun Pharmaceutical (Group) Co., Ltd., the Company, Chindex Medical Holdings (BVI) Limited and Chindex
Medical Limited. Incorporated by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K dated
December 28, 2010 (the December 28, 2010 Form 8-K).10.41
    
    Share Transfer Agreement dated December 27, 2010 between Shanghai Fosun Pharmaceutical (Group) Co., Ltd. and
Chindex Export Limited. Incorporated by reference to Exhibit 10.2 to the December 28, 2010 Form 8-K.10.42
    
    Entrusted Management Agreement dated December 31, 2010 among Shanghai Technology Innovation Co., Ltd.,
Shanghai Fosun Pharmaceutical (Group) Co., Ltd. and Chindex Export Limited. Incorporated by reference to
Exhibit 10.1 to the December 31, 2010 Form 8-K.10.43
    
    Shareholders Voting Proxy Agreement dated December 31, 2010 among Shanghai Technology Innovation Co., Ltd.,
Shanghai Fosun Pharmaceutical (Group) Co., Ltd. and Chindex Export Limited. Incorporated by reference to
Exhibit 10.2 to the December 31, 2010 Form 8-K.10.44
    
    Joint Venture Governance and Shareholders Agreement dated December 31, 2010 among Chindex Medical Holdings
(BVI) Limited, Ample Up Limited, Chindex Medical Limited and certain subsidiaries of Chindex Medical Limited
and Fosun Pharmaceutical (Group) Co., Ltd. Incorporated by reference to Exhibit 10.3 to the December 31, 2010
Form 8-K.10.45
    
    Trademark License Agreement dated December 31, 2010 between the Company and Chindex Medical Limited.
Incorporated by reference to Exhibit 10.4 to the December 31, 2010 Form 8-K.10.46
    
    Services Agreement dated December 31, 2010 between the Company and Chindex Export Medical Products, LLC.
Incorporated by reference to Exhibit 10.5 to the December 31, 2010 Form 8-K.23.1
    
    Consent of Independent Registered Public Accounting Firm (filed herewith)31.1
    
    Certification of the Companys Chief Executive Officer Pursuant to Rule 13a-14(a) (filed herewith)31.2
    
    Certification of the Companys Chief Financial Officer Pursuant to Rule 13a-14(a) (filed herewith)
 82




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##### Table of Contents



31.3
    
    Certification of the Companys Principal Accounting Officer Pursuant to Rule 13a-14(a) (filed herewith)32.1
    
    Certification of the Companys Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 (filed herewith)32.2
    
    Certification of the Companys Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 (filed herewith)32.3
    
    Certification of the Companys Principal Accounting Officer Pursuant to 18 U.S.C. Section 1350 (filed herewith)
 
 *
    
    Management contract or compensatory plan or arrangement 83




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##### Table of Contents



SIGNATURES
  CHINDEX INTERNATIONAL, INC.Dated: March 16, 2011
    By:
    /S/ Roberta LipsonRoberta LipsonChief Executive Officer
(principal executive officer)  Dated: March 16, 2011
    By:
    /S/ Kenneth A. NilssonKenneth A. NilssonChairman of the BoardDated: March 16, 2011
    By:
    /S/ Roberta LipsonRoberta LipsonChief Executive Officer and Director
(principal executive officer)Dated: March 16, 2011
    By:
    /S/ Lawrence PembleLawrence PembleExecutive Vice President-Finance, Chief Financial
Officer and Director
(principal financial officer)Dated: March 16, 2011
    By:
    /S/ Elyse Beth SilverbergElyse Beth SilverbergExecutive Vice President, Secretary and Director 84




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##### Table of Contents



Dated: March 16, 2011
    By:
    /S/ Robert C. LowRobert C. LowVice President of Finance, Chief Accounting Officer
and Corporate Controller
(principal accounting officer)Dated: March 16, 2011
    By:
    /S/ Holli HarrisHolli HarrisDirectorDated: March 16, 2011
    By:
    /S/ Carol R. KaufmanCarol R. KaufmanDirectorDated: March 16, 2011
    By:
    /S/ Julius Y. OestreicherJulius Y. OestreicherDirector 85