The accompanying notes are an integral part of the financial statements.

CHINDEX INTERNATIONAL, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(thousands except share and per share data)
(Unaudited)

The accompanying notes are an integral part of the financial statements. Share information has been retroactively adjusted to give effect to the stock splits, each in the form of a 100% stock dividend. The stock splits were announced by us on August 6, 2003 with a record date of August 18, 2003 and on December 29, 2003 with a record date of January 10, 2004.

CHINDEX INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(thousands)
(Unaudited)

The accompanying notes are an integral part of the financial statements.

CHINDEX INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the three months ended June 30, 2004
(thousands except share data)

The accompanying notes are an integral part of the financial statements.

CHINDEX INTERNATIONAL, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

Note 1. BASIS OF PRESENTATION

     The accompanying unaudited consolidated condensed financial statements of Chindex International, Inc. have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month period ended June 30, 2004 are not necessarily indicative of the results that may be expected for the year.

     References to “Chindex”, “we”, “us” and “our” refer to Chindex International, Inc. and subsidiaries, unless the context otherwise requires.

     For further information, refer to the consolidated financial statements and footnotes thereto included in the our annual report on Form 10-K for the fiscal year ended March 31, 2004, as amended.

     Certain balances in the March 31, 2004 financial statements have been reclassified to conform to the 2005 presentation.

     The share information has been restated after giving retroactive effect to the stock split, in the form of a stock dividend, announced by us on August 6, 2003 and having a record date of August 18, 2003 and a second stock split announced by us on December 29, 2003 and having a record date of January 10, 2004.

Note 2. INVENTORIES
                (in thousands)

Note 3. PROPERTY AND EQUIPMENT, NET
                (in thousands)

Note 4. NET EARNINGS PER SHARE

     The following is a reconciliation of the numerators and denominators of the basic and diluted Earnings per Share (EPS) computations for net income and other related disclosures:

For the periods in which losses were incurred, shares issuable upon exercise of stock options are excluded from diluted earnings per share because the effect would be anti-dilutive

STOCK-BASED COMPENSATION: We account for stock options under the provisions of Accounting Principles Board Opinion (“APB”) No. 25, under which no compensation expense is recognized when the stock options are granted to colleagues and directors at fair market value as of the grant date. Our 1994 Stock Option Plan (the Plan) provided for the grant, at the discretion of the Board of Directors, of (i) options that are intended to qualify as incentive stock options (Incentive Stock Options) within the meaning of Section 422A of the Internal Revenue Code to certain employees, consultants and directors, and (ii) options not intended to so qualify (Nonqualified Stock Options) to employees, consultants and directors. Effective April 27, 2004, our 1994 Stock Option Plan, under which all of the options were granted, terminated by its terms. Consequently, no further options may be granted under any existing equity compensation plan as of the date of this filing. There were 306,400 options granted in the period from April 1, 2004 to April 27, 2004, the date of the Plan’s termination.

Had compensation cost for the plan been determined as required under SFAS No. 123, “Accounting for Stock-Based Compensation,” amended by SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure,” our pro forma net income (loss) and pro forma earnings (loss) per share would have been as follows:

Note 5. STOCKHOLDER’S EQUITY

     As of June 30, 2004, we also had received net proceeds of approximately $12.3 million from the sale of 1.5 million shares of common stock and warrants to purchase 300,000 shares at an exercise price of $9.00 per share, which proceeds were received on March 31, April 1 and May 5, 2004. Such net proceeds were and will be used to repay a portion of our vendor financing and capital expenditures as well as for working capital purposes. The final closing of the financing took place on May 5, 2004 at which the remaining 900,000 shares of common stock together with the remaining warrants to purchase 180,000 shares of our common stock were issued to the investors. In connection with the final closing, the placement agent was issued the remaining warrants to purchase 54,000 shares of our common stock.

Note 6. SEGMENT INFORMATION

     We have three reportable segments: Medical Capital Equipment, Healthcare Products Distribution, and Healthcare Services. We evaluate performance and allocate resources based on profit or loss from operations before income taxes, not including gains or losses on our investment portfolio.

Inter-segment transactions were eliminated for the three months ended June 30, 2004 and 2003.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

Quarter ended June 30, 2004 compared to quarter ended June 30, 2003

     Our revenue for the three months ended June 30, 2004 was $26,675,000, up 31% from the three months ended June 30, 2003 revenue of $20,373,000. We experienced continued growth in each of the three segments of the business, with revenue growth of 56% in the medical capital equipment segment, 6% in the healthcare products distribution segment, and 62% in the healthcare services segment, compared to the same period last year. Costs and expenses were $26,172,000 for the period as compared with costs and expenses of $22,099,000 for the three months ended June 30, 2003. The nature of the increased costs in particular segments is discussed below. We recorded a net income of $244,000 for the three months ended June 30, 2004, as compared to net loss of $1,338,000 for the three months ended June 30, 2003.

Medical Capital Equipment Segment

     The medical capital equipment segment exports high quality Western capital medical equipment to the China market. In the three months ended June 30, 2004 this segment had revenue of $9,662,000, a 56% increase over revenue of $6,198,000 in the three months ended June 30, 2003. The Company has developed new sales channels for its capital medical equipment, involving greater use of local Chinese sub-distributors, which was a significant contributing factor to the increase in revenue. In addition, some of this increase in revenue is attributable to the fact that SARS was a significant negative factor in the prior period whereas in the current period the effects of the SARS epidemic have dissipated. Finally, the addition of a new range of ultrasound products by Siemens expanded our product portfolio and helped to increase sales. Income from operations was $229,000 in the recent period compared with a loss from operations of $1,110,000 in the prior period.

     Gross profit in the three months ended June 30, 2004 increased to $2,553,000 from $1,138,000 in the three months ended June 30, 2003. As a percentage of revenue, gross profit from the medical capital equipment segment for the recent period was 26% as compared to 18% in the prior period. The increase in gross profit percentage is attributable principally to the fact that the gross profit percentage in the prior period was depressed both because of the impact of SARS and a lower margin sales mix in that period. Expenses for the medical capital equipment segment in the three months ended June 30, 2004 increased to $2,324,000 from $2,248,000 in the three months ended June 30, 2003, and as a percentage of revenues over the period decreased to 24% from 36%. Salaries for the segment in the three months ended June 30, 2004 increased by $75,000 from the three months ended June 30, 2003, and as a percentage of revenues over the period decreased to 10% from 15%. In addition, travel and entertainment expenses for the segment decreased $40,000. The reduction in expenses as a percentage of revenue and the reduction of travel and entertainment expenses reflect improved resource allocation, including increased productivity of our staff through improved management and greater use of regionally-based sales representatives. Other costs increased $41,000 over the three months, primarily due to allocation of additional administrative costs.

Healthcare Products Distribution Segment

     The healthcare products distribution segment, consisting of medical consumables and personal healthcare products, had revenue growth of 6% to $11,217,000 in the three months ended June 30, 2004, as compared to revenue of $10,608,000 in the three months ended June 30, 2003. During the recent period the revenue attributable to third party logistics services continued to decline as planned but personal healthcare products and medical consumable sales increased significantly as compared with the prior period. The local currency sales of medical consumables and personal healthcare products are made from inventories maintained locally in China (see Foreign Currency Exchange) to a network of sub-dealers and pharmacies.

     Gross profit in the three months ended June 30, 2004 increased to $1,428,000 from $1,325,000 in the three months ended June 30, 2003. As a percentage of revenue, gross profit from the healthcare products distribution segment for the recent period was 13% as compared to 12% in the prior period. The increase in gross profit is primarily attributable to the revenue mix changing gradually to higher margin products.

     Expenses for the healthcare products distribution segment in the three months ended June 30, 2004 increased to $1,819,000 from $1,561,000 in the three months ended June 30, 2003 and increased slightly as a percentage of revenues over the periods to 16% from 15%. Salaries for the segment decreased $109,000 due to the fact that the prior period included annual bonuses and the timing of when the bonuses are earned has now changed with the Company’s modified fiscal year. In addition, travel and entertainment expense for the segment increased $32,000 and other costs increased $336,000 due primarily to additional promotion fees. The segment had a loss from operations of $391,000 in the recent period, compared with a loss from operations of $236,000 in the prior period.

Healthcare Services Segment and Hospital Development

     The healthcare services segment consists of a Western style primary care hospital, Beijing United Family Hospital and Clinics (“BJU”) as well as an affiliated satellite clinic in Beijing. The segment also includes developmental activities which consist of Shanghai United Family Hospital and Clinics (“SHU”) which is under construction, and a proposed hospital in Xiamen. For the three months ended June 30, 2004, the revenue from the segment was $5,796,000, an increase of 62% over the three months ended June 30, 2003

revenues of $3,567,000. The increase in revenue is attributable to increased patients at BJU. Total inpatient days increased 119% from the prior period. Outpatient visits increased 57% from the prior period. During the prior period the hospital was significantly impacted by the SARS crisis in Beijing which was principally responsible for the loss in that period. Healthcare services costs increased for the three months ended June 30, 2004 to $5,131,000, a 30% increase over the three months ended June 30, 2003 costs of $3,947,000. This increase was due primarily to the costs associated with increased services offered. Salaries increased by $900,000 (salaries were 49% and 55% of revenue for the three months ended June 30, 2004 and 2003, respectively), with the total staff increasing in size by 25% and the number of physicians increasing by 30% Other costs increased $284,000, including increases in professional fees and direct patient care supplies partially offset by decreases in bad debt expense and other miscellaneous expenses. Development costs related to SHU remained relatively stable at $225,000 and $205,000 for the three months ended June 30, 2004 and 2003, respectively. The healthcare services segment had income from operations of $665,000 in the recent period, compared with a loss from operations of $380,000 in the prior period.

     In the chart below we have broken out the developmental expenses in order to give a clearer picture of our hospital finances:

     SHU will open in the fall of 2004. We are currently in the process of receiving the equipment for SHU, finishing the interior decorations and otherwise preparing for the hospital’s opening.

Other Income and Expenses

     Interest expense on short-term debt of $2,635,000 and long term debt of $3,105,000 amounted to $42,000 as compared to $56,000 interest expense in the prior period. The long-term debt is for the development of SHU that is currently under construction (see Liquidity and Capital Resources).

Taxes

     We recorded a $186,000 provision for income taxes for the three months ended June 30, 2004, as compared to a benefit from income taxes of $388,000 for the three months ended June 30, 2003.

LIQUIDITY AND CAPITAL RESOURCES

     As of June 30, 2004, our cash and cash equivalents, net accounts receivable and net inventories were $13,038,000, $17,502,000 and $10,416,000, respectively, as compared to $6,791,000, $17,374,000 and $10,363,000, respectively, as of March 31, 2004.

     As of June 30, 2004, our short-term loan payable was comprised of bank loans of $1,564,000 and extended payment accounts payable to one vendor of $1,071,000. With respect to the vendor accounts payable, the vendor has agreed to provide continuing credit facilities for purchases for a seven-year period, each grant of credit bearing interest of five percent per annum and expiring at the end of 18 months, to be replaced by subsequent purchases and payables. Beijing United has a short-term financing arrangement in China with the Hong Kong and Shanghai Banking Corporation (HSBC) for $600,000 in revolving loans bearing interest at 1.75% over the three-month Singapore Interbank Money Market Offer Rate (SIBOR). Beijing United has agreed to utilize HSBC for a portion of its patient payments via credit cards. Also, a line of credit is included in the arrangement with HSBC for up to $1,200,000, bearing interest at 2.25% over SIBOR and having a term of up to three years. As of June 30, 2004, the balances on these credit lines were $600,000 and $964,000, respectively. We, on behalf of Beijing United, have guaranteed the full amount of those facilities.

     We are currently completing renovation and outfitting of our hospital facility in Shanghai, which has been financed primarily through the vendor financing, discussed above, and a local bank borrowing. The local bank borrowing for SHU consists of a loan facility with HSBC, with which we have an existing loan relationship relating to Beijing United. This new loan will provide $4 million. During the quarter ending June 30, 2004, we drew $3,000,000 against this new loan facility entered into with HSBC bank. This facility has a five year term and an interest rate of 2.5% over the six month SIBOR. Although we have sufficient capital resources to complete SHU as currently scheduled, we will continue to explore additional financing opportunities, although there are no assurances that such additional financing will be available.

     As of June 30, 2004, letters of credit in the aggregate amount of approximately $271,000 were outstanding and we had no balance outstanding under a credit facility with M&T Bank, our principal bank. The borrowings under the credit facility bear interest at 1% over the three-month London Interbank Offered Rate (LIBOR).

     As of June 30, 2004, we also had received net proceeds of approximately $12.3 million from the sale of 1.5 million shares of common stock and warrants to purchase 300,000 shares at an exercise price of $9.00 per share, which proceeds were received on March 31, April 1 and May 5, 2004. Such net proceeds were and will be used to repay a portion of our vendor financing and capital expenditures as well as for working capital purposes.

     We are continuing to consider various other financing alternatives to satisfy its future expansion, capital improvements and equipment requirements.

TIMING OF REVENUES

     The timing of our revenues is affected by several significant factors. Many end-users of the capital equipment products sold by Chindex depend to a certain extent upon the allocation of funds in the budgeting processes of the Chinese government and the availability of credit from the Chinese banking system. These processes and the availability of credit are based on policy determinations by the Chinese government and are not necessarily subject to fixed time schedules.

     In addition, the sales of certain products often require protracted sales efforts, long lead times and other time-consuming steps. Further, in light of the dependence by some purchasers of capital equipment on the availability of credit, the timing of sales may depend upon the timing of us or our abilities to arrange for credit sources, including Ex-Im Bank or other loan financing. As a result, our operating results have varied and are expected to continue to vary from period to period and year to year. In addition, a relatively limited number of orders and shipments may constitute a meaningful percentage of our revenue in any one period. As a result, a relatively small reduction in the number of orders can have a material impact on our revenues in any year. Further, because we recognize revenues and expenses as products are shipped, the timing of shipments could affect our operating results for a particular period. At the same time, a growing percentage of our revenues are attributable to hospital services and local currency sales through the healthcare products distribution segment, both of which have more even revenue streams.

FOREIGN CURRENCY EXCHANGE AND IMPACT OF INFLATION

     The results of operations of Chindex for the periods discussed have not been significantly affected by inflation or foreign currency fluctuation. Since we receive over 60% of our revenues in local Chinese currency, we have some foreign currency risk. Changes in the valuation of the Chinese Renminbi or Hong Kong dollar may have an impact on our results of operations in the future. Our subsidiaries, Chindex Tianjin, Chindex Shanghai and Beijing United, sell products and services in Renminbi. If the Chinese government allows the Renminbi to float in a broader band as against the dollar, the expectation of economists is that the Renminbi would strengthen, thus having a positive impact on us.

     We also purchase and will continue to purchase some products in Western currencies other than U.S. dollars and have sold and will continue to sell such products in China for U.S. dollars. To the extent that the value of the U.S. dollar declines against such a currency, we could experience a negative impact on profitability. We anticipate hedging transactions wherever possible to minimize such negative impacts. Currently there are no such hedges.

     As part of our risk management program, we also perform sensitivity analyses to assess potential changes in revenue, operating results, cash flows and financial position relating to hypothetical movements in currency exchange rates. Our sensitivity analysis of changes in the fair value of the Renminbi to the U.S. Dollar at June 30, 2004, indicated that if the U.S. Dollar uniformly increased in value by 10 percent relative to the Renminbi, then we would experience a 14% lower income. Conversely, a 10 percent increase in the value of the Renminbi relative to the U.S. Dollar at June 30, 2004 would have resulted in a 12% higher income.

FORWARD LOOKING STATEMENTS

     Some of the information in this Form 10-Q may contain statements regarding future expectations, plans, prospects for performance of the Company that constitute forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. The Company cannot guarantee future results, levels of activity, performance or achievements. The numbers discussed in this Form 10-Q also involve risks and uncertainties. The following factors, among others, could cause actual results to differ materially from those described by such statements: our ability to manage our growth and maintain adequate controls, the loss of services of key personnel, general market conditions including inflation or foreign currency fluctuations, our dependence on relationships with suppliers, the timing of our revenues and fluctuations in financial performance, the availability to our customers of third-party financings, product liability claims and product recalls, competition, hiring and retaining qualified sales and service personnel, management of inventory, relations with foreign trade corporations, dependence on sub-distributors and dealers, completion and opening of healthcare facilities, attracting and retaining qualified physicians and other hospital personnel, regulatory compliance, the cost of malpractice , our dependence on our information systems, the economic policies of the Chinese government, the newness and undeveloped nature of the Chinese legal system, the regulation of the conversion of Chinese currency, future epidemics in China such as SARS, the control over our operation by insiders, and those other factors contained in the section titled “Risk Factors” as

set forth on page 7 of the Company’s Registration Statement on Form S-1 (File No. 333-114299) declared effective by the Securities and Exchange Commission on July 30, 2004, as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission. The forward-looking statements and numbers contained herein represent the judgment of the Company, as of the date of this Form 10-Q, and the Company disclaims any intent or obligation to update such forward-looking statements to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions, circumstances on which such statements are based.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We are exposed to market risks in a variety of ways. The principal market risk is related to the nature of the Chinese economy and political system. Since we generate all of our revenues from China, any risk having to do with the environment in China for a foreign business operating there can have a significant impact on us.

     The Chindex growth plan includes continuing expansion of the Capital Medical Equipment business, rapid expansion of the Healthcare Products Distribution segment product portfolio, with an emphasis on increasing the number and variety of products that are sold directly to retail pharmacies, and the development of a network of private family hospitals, based on the Beijing United model, to serve China’s growing middle class. Management continues to develop this growth plan, the implementation of which will be contingent on a number of factors, including requisite financing.

ITEM 4. CONTROLS AND PROCEDURES

     Chindex maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports that are filed with the Securities and Exchange Commission is recorded, processed and reported within the time periods required for each report and that such information is reported to the our management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

     We performed an evaluation under the supervision and with the participation of Chindex management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls as of June 30, 2004. Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective.

     During the fiscal quarter ended June 30, 2004, we implemented a new financial accounting system for the local entity reporting and corporate consolidations that contains a number of additional controls. These new controls are still in the process of being fully implemented. In addition, we made the following significant changes in our internal controls or in other factors that could significantly affect our internal controls, the implementation of which changes had commenced prior to the end of our fiscal year ended March 31, 2004: our outsourced software provider has remedied its software writing problem in connection with a recent upgrade to our systems at Beijing United that is designed to permit proper accounts receivable recordkeeping; we have retained additional outside tax expertise in the U.S.,and reorganized our tax staff in China to improve our level of tax expertise in both the U.S. and China; and, as noted above, we have initiated supplemental procedures and resources in order to formalize and improve our fiscal period closing process on an ongoing basis. Reference is made to Item 9A of our annual report on Form 10-K as amended for further information regarding these changes.

PART II. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

The exhibits listed below are filed as a part of this quarterly report:

+ English translation of summary from Chinese original.

(b)     Reports on Form 8-K filed during the quarter ended June 30, 2004:

On June 29, 2004, the Company filed a Current Report on Form 8-K reporting, under items 7 and 12, its results of operations for the fiscal year ended March 31, 2004.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.