Concord Medical Reports Fourth Quarter and Full Year 2011 Financial Results
Fourth Quarter Highlights
- Total net revenues increased by 1.1% to
RMB114.1 million ($18.1 million ), compared to the fourth quarter of 2010. - Net loss was
RMB310.0 million ($49.3 million ), primarily due to a goodwill impairment charge ofRMB300.2 million ($47.7 million ) and one-time bad debt and other provisions ofRMB49.1 million ($7.8 million ). Non-GAAP net income(2) wasRMB41.7 million ($6.6 million ), a 13.2% decrease from the fourth quarter of 2010. - Basic and diluted net loss per American Depositary Share ("ADS")(3) was
RMB6.56 ($1.04) , compared to basic and diluted net income per ADSRMB0.87 in the fourth quarter of 2010. Non-GAAP basic and diluted earnings per ADS wereRMB0.87 ($0.14) compared to non-GAAP basic and diluted earnings per ADS ofRMB0.96 in the fourth quarter of 2010. - Concord Medical opened four centers in the fourth quarter of 2011, bringing the total number of centers in operation to 131 across 51 cities in
China , as ofDecember 31, 2011 . - The total numbers of treatment and diagnostic patient cases were 9,052 and 43,374, respectively, representing 8.9% and 25.2% increases from the fourth quarter of 2010, respectively.
Full Year 2011 Highlights
- Total net revenues were
RMB450.1 million ($71.5 million ), a 15.6% increase from 2010. - Gross profit was
RMB290.7 million ($46.2 million ), a 9% increase from 2010. - Net loss was
RMB211.4 million ($33.6 million ), primarily due to a goodwill impairment charge ofRMB300.2 million ($47.7 million ) and bad debt and other provisions ofRMB49.3 million ($7.8 million ). Non-GAAP net income wasRMB147.3 million ($23.4 million ), a 3.0% increase from 2010. - Basic and diluted net loss per ADS was
RMB4.53 ($0.72) ; Non-GAAP basic and diluted earnings per ADS wereRMB3.03 ($0.48) , a 4.1% increase fromRMB2.91 in 2010. - The total numbers of treatment and diagnostic patient cases were 34,388 and 166,516, respectively, representing 7.7% and 28.0% increases from 2010, respectively.
(1) This announcement contains translations of certain RMB amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB6.2939 to US$1.00, the effective noon buying rate as of December 31, 2011 in the City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. |
(2) Non-GAAP net income is defined in this announcement as net income excluding share-based compensation, the impact of goodwill impairment, bad debt provision and other adjustments. Share-based compensation was RMB 2.4 million ($0.4 million) in the fourth quarter of 2011 and RMB9.2 million ($1.5 million for the full year 2011. Goodwill impairment charges in the fourth quarter totaled RMB 300.2 million ($47.7 million), and bad debt provision and other impairment charges were RMB49.1 million ($7.8 million). |
(3) Each ADS represents three ordinary shares of the Company. |
"2011 was a transformational year for Concord Medical as we built a solid foundation for CCM to become a leader in
"The government continues to encourage private investment into the healthcare system in
2011 Fourth Quarter Results
Total net revenues were
Cost of revenues was
Gross margin decreased to 60.8% from 66.5% in the third quarter of 2011 and 72.2% in the fourth quarter of 2010, primarily due to the increased cost of revenues and relatively flat revenue growth.
Operating expenses, consisting of selling expenses and general and administrative expenses, were
Operating loss was
Goodwill impairment charges
A substantial portion of goodwill on the Company's balance sheet relates to the acquisitions by the Company's predecessor before the Company's IPO in December 2009. During the year of 2011, the market circumstances prompted management to evaluate and test the fair value of the Company's assets against their carrying amount in accordance with U.S. GAAP. Based on the testing, the Company concluded that the implied goodwill is insufficient to cover the carrying amount of goodwill and consequently recorded a goodwill impairment charge of
The charge is a non-cash item and will not affect the Company's cash flows, liquidity position or borrowing capacity under its credit facilities; and is excluded from the Company's financial results in evaluating financial covenants under its credit agreements.
Net loss was
Non-GAAP net income was
Adjusted EBITDA(4) (non-GAAP) was
Share-based compensation expenses, which were allocated to related operating expense items, were
Income tax expense in the fourth quarter of 2011 was
(4) Adjusted EBITDA is defined in this announcement as net (loss) income plus interest, taxes, depreciation and amortization, share-based compensation expenses, goodwill impairment charge, bad debt provision and other adjustments. Other adjustments include foreign exchange loss and other income. |
Fiscal 2011 Full Year Results
Total net revenues were
Cost of revenues in 2011 was
Gross profit margin in 2011 was 64.6%, compared to 68.5% in 2010, primarily due to the increased cost of revenues and relatively flat revenue growth.
Selling expenses in 2011 were
General and administrative expenses in 2011 were
Goodwill impairment charge in 2011 was
Operating income was
Net loss in 2011 was
Non-GAAP net income for 2011 was
Adjusted EBITDA (non-GAAP) was
Share-based compensation expenses, which were allocated to related operating expense items, were
Income tax expense in 2011 was
As of
Capital expenditures were
As of
Accounts receivable was
During the fourth quarter of 2011, the Company repurchased 316,645 ADSs, representing 949,935 ordinary shares, for an aggregate consideration of
Recent Developments
On
"The acquisition of Chang'an Hospital is an important milestone in CCM's development," Dr. Yang commented. "We have been partners with Chang'an Hospital since 2009, and in 2010 we jointly founded CCICC, a specialty oncology hospital. We are excited about this transaction and its positive impact on CCM's overall strategy of becoming the leading hospital and management operating company in
The Company also announced that the board of directors has appointed Mr.
2012 Outlook
The Company expects to consolidate the financial results of Chang'an Hospital beginning at the third quarter of 2012. Based on current market and operating conditions, estimated business expansion and forecasted Chang'an Hospital financial results, the company provides the following financial guidance for the 2012 fiscal year:
- Total net revenues of
RMB590 million to RMB630 million , or 30%-40% year-over-year growth; - growth in total net revenues of lease and management service of 15% to 18%;
- revenue from Chang'an Hospital of
RMB190 million to RMB210 million , reflecting consolidation of 6-months financial results; and - capital expenditures of
RMB250 million to RMB275 million .
The company is targeting to obtain the license of at least one specialty oncology hospital in 2012.
The foregoing reflects Concord Medical's current and preliminary views, which are subject to change.
Conference Call Information
Concord Medical's management will hold an earnings conference call at
Dial-in details for the earnings conference call are as follows:
U.S. Toll Free: |
1-866-519-4004 |
International: |
1-718-354-1231 |
U.K. Toll Free: |
8082346646 |
China Toll Free: |
400-620-8038 / 800-819-0121 |
Hong Kong Toll Free: |
800-930-346 |
Passcode: |
CCM |
A replay of the conference call may be accessed by phone at the following number until
U.S. Toll Free: |
1-866-214-5335 |
International: |
1-718-354-1232 |
Passcode: |
58954479 |
Additionally, a live and archived webcast of this conference call will be available at http://ir.concordmedical.com/.
About Concord Medical
Safe Harbor Statement
This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "anticipate," "believe," "estimate," "expect," "forecast," "intend," "may," "plan," "project," "predict," "should" and "will" and similar expressions. In particular, many of the statements from management in this press release and the section under "Outlook for Full Year 2012" are forward-looking in nature. These forward looking statements are based upon management's current views and expectations with respect to future events and are not a guarantee of future performance. Furthermore, these statements are, by their nature, subject to a number of risks and uncertainties that could cause actual performance and results to differ materially from those discussed in the forward-looking statements as a result of a number of factors. Such factors include: the number of new radiotherapy and diagnostic imaging centers opened; the increase in the number of patients in existing centers; the establishment of specialty cancer hospitals; changes in the healthcare industry in
Statement Regarding Unaudited Financial Information
The Company's independent auditors are in the process of completing an audit of the Company's U.S. GAAP financial statements for 2011. These unaudited 2011 numbers disclosed in this announcement are, therefore, subject to change.
About Non-GAAP Financial Measures
To supplement the consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles (GAAP), Concord Medical uses certain non-GAAP measures. The Company presents certain of its financial information that is adjusted from results based on GAAP to exclude the impact of share-based compensation expense, bad debt provision and goodwill impairment loss. The Company believes excluding share-based compensation expense, bad debt provision and goodwill impairment loss from its GAAP financial measures is useful for its management and investors to assess and analyze the Company's core operating results as such expenses are not directly attributable to the underlying performance of the Company's business operations and do not impact its cash earnings. Concord Medical also believes these non-GAAP measures excluding share-based compensation expense, bad debt provision and goodwill impairment loss are important in helping investors to understand the Company's current financial performance and future prospects and to compare business trends among different reporting periods on a consistent basis. In addition, Concord Medical also presents the non-GAAP measure of Adjusted EBITDA, which is defined in this announcement as net (loss) income plus interest, taxes, depreciation and amortization, share-based compensation expenses, bad debt provision, goodwill impairment and other adjustments. Other adjustments include foreign exchange loss, gain from disposal of equipment and other income or expenses. Furthermore, Adjusted EBITDA eliminates the impact of items that the Company does not consider indicative of the performance of its network of centers. The Company believes investors will similarly use Adjusted EBITDA as one of the key metrics to evaluate its financial performance and to compare its current operating results with corresponding historical periods and with other companies in the healthcare services industry. The presentation of these additional measures should not be considered a substitute for or superior to GAAP results or as being comparable to results reported or forecasted by other companies. The non-GAAP measures have been reconciled to GAAP measures in the attached financial statements.
For more information, please contact:
Mr.
tony.tian@concordmedical.com
(+86) 10 5957-5287
In
Ms.
cli@soleburyir.com
(+86) 10 6563-0288
In
Mr.
rzubek@soleburyir.com
(+1) 203-428-3230
Concord Medical Services Holdings Co., Ltd. |
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Unaudited Condensed Consolidated Balance Sheets |
|||
(in thousands)
|
|||
|
December 31, |
December 31, |
|
|
RMB |
RMB |
US$ |
|
|
|
|
ASSETS |
|
|
|
Current assets |
|
|
|
Cash |
535,783 |
219,078 |
34,808 |
Restricted cash, current portion |
102,873 |
2,512 |
399 |
Held-to-Maturity |
- |
100,466 |
15,962 |
Time Deposit |
- |
50,372 |
8,003 |
Notes receivable |
900 |
- |
- |
Accounts receivable |
169,389 |
244,189 |
38,798 |
Prepayments and other current assets |
74,469 |
61,630 |
9,792 |
Net investments in financing leases, current portion |
19,498 |
49,821 |
7,916 |
Deferred tax assets, current portion |
1,504 |
5,589 |
888 |
Total current assets |
904,416 |
733,657 |
116,566 |
|
|
|
|
Non-current assets |
|
|
|
Property, plant and equipment, net |
907,336 |
1,068,703 |
169,800 |
Goodwill |
300,163 |
- |
- |
|
|
|
|
Acquired intangible assets, net |
146,113 |
129,018 |
20,499 |
Deposits for non-current assets |
222,019 |
207,287 |
32,935 |
Net investments in financing leases, non-current portion |
66,356 |
97,262 |
15,453 |
Deferred tax assets, non-current portion |
21,869 |
20,866 |
3,315 |
Other non-current assets |
51,867 |
87,271 |
13,866 |
Restricted cash, non-current portion |
14,792 |
22,012 |
3,497 |
Prepaid land lease payments |
28,113 |
27,370 |
4,349 |
Total non-current assets |
1,758,628 |
1,659,789 |
263,714 |
|
|
|
|
Total assets |
2,663,044 |
2,393,446 |
380,280 |
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Current liabilities |
|
|
|
Short-term bank borrowings |
83,000 |
15,000 |
2,383 |
Long-term bank borrowings, current portion |
60,906 |
77,479 |
12,310 |
Accounts payable |
10,332 |
2,170 |
345 |
Accrual for purchase of property, plant and equipment |
10,404 |
13,294 |
2,112 |
Obligations under capital leases, current portion |
3,582 |
3,582 |
569 |
Accrued expenses and other liabilities |
49,935 |
59,097 |
9,390 |
Income tax payable |
25,401 |
20,936 |
3,326 |
Deferred revenue, current portion |
11,520 |
13,115 |
2,084 |
Contingent business acquisition consideration |
14,072 |
11,999 |
1,906 |
Total current liabilities |
269,152 |
216,672 |
34,425 |
|
|
|
|
Non-current liabilities |
|
|
|
Long-term bank borrowings, non-current portion |
45,089 |
108,700 |
17,271 |
Deferred revenue, non-current portion |
9,081 |
6,839 |
1,087 |
Obligations under capitalized leases, non-current portion |
5,325 |
2,289 |
364 |
Lease deposits |
5,110 |
2,000 |
318 |
Deferred tax liabilities, non-current portion |
27,452 |
18,850 |
2,995 |
Total non-current liabilities |
92,057 |
138,678 |
22,035 |
|
|
|
|
Total liabilities |
361,209 |
355,350 |
56,460 |
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
EQUITY |
|
|
|
Ordinary shares |
105 |
104 |
17 |
Treasuary stock |
- |
1 |
- |
Additional paid-in capital |
2,604,704 |
2,551,877 |
405,452 |
Accumulated other comprehensive loss |
(14,835) |
(17,596) |
(2,796) |
Accumulated deficit |
(384,883) |
(599,886) |
(95,313) |
Total Concord Medical Services Holdings Limited shareholders' equity |
2,205,091 |
1,934,500 |
307,360 |
Non-controlling interests |
96,744 |
103,596 |
16,460 |
|
|
|
|
Total equity |
2,301,835 |
2,038,096 |
323,820 |
|
|
|
|
Total liabilities and equity |
2,663,044 |
2,393,446 |
380,280 |
|
|
|
|
(*) Amounts for the year ended December 31, 2010 were derived from the December 31, 2010 audited consolidated financial statements. |
Concord Medical Services Holdings Limited |
||||||
Unaudited Condensed Consolidated Statements of Income |
||||||
(in thousands, except per ADS data)
|
||||||
|
For The Three Months Ended |
For The Twelve Months Ended |
||||
|
December 31, 2010 (*) |
December 31, |
December 31, 2010 (*) |
December 31, |
||
|
RMB |
RMB |
US$ |
RMB |
RMB |
US$ |
Revenues, net of business tax, value-added tax and related surcharges |
|
|
|
|
|
|
Lease and management services |
80,002 |
88,596 |
14,076 |
349,248 |
380,457 |
60,449 |
management service |
22,805 |
10,578 |
1,681 |
22,805 |
33,584 |
5,336 |
Others, Net |
10,056 |
14,975 |
2,379 |
17,471 |
36,084 |
5,733 |
Total net revenues |
112,863 |
114,149 |
18,136 |
389,524 |
450,125 |
71,518 |
|
|
|
|
|
|
|
Cost of revenues |
|
|
|
|
|
|
Depreciation |
(21,592) |
(25,030) |
(3,977) |
(79,650) |
(93,079) |
(14,789) |
Amortization of acquired intangibles |
(5,333) |
(6,287) |
(999) |
(26,488) |
(25,058) |
(3,981) |
Others |
(4,410) |
(13,458) |
(2,138) |
(16,562) |
(41,279) |
(6,559) |
Total cost of revenues |
(31,335) |
(44,775) |
(7,114) |
(122,700) |
(159,416) |
(25,329) |
|
|
|
|
|
|
|
Gross profit |
81,528 |
69,374 |
11,022 |
266,824 |
290,709 |
46,189 |
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling expenses |
(8,555) |
(13,836) |
(2,198) |
(17,150) |
(37,453) |
(5,951) |
General and administrative expenses |
(21,534) |
(64,468) |
(10,243) |
(70,008) |
(114,399) |
(18,176) |
|
|
|
|
|
|
|
Operating income/(loss) |
51,439 |
(8,930) |
(1,419) |
179,666 |
138,857 |
22,062 |
Interest expenses |
(1,226) |
(2,002) |
(318) |
(7,448) |
(6,454) |
(1,025) |
Goodwill impairment loss |
- |
(300,163) |
(47,691) |
- |
(300,163) |
(47,691) |
Foreign exchange loss |
(671) |
(1,017) |
(162) |
(5,436) |
(10,975) |
(1,744) |
Gain from disposal of property, plant and equipment |
- |
- |
- |
543 |
- |
- |
Interest income |
4,672 |
8,030 |
1,276 |
7,865 |
13,357 |
2,121 |
Other expenses |
(399) |
864 |
137 |
(399) |
346 |
56 |
|
|
|
|
|
|
|
Income/(loss) before income taxes |
53,815 |
(303,218) |
(48,177) |
174,791 |
(165,032) |
(26,221) |
Income tax expenses |
(10,137) |
(6,790) |
(1,079) |
(43,873) |
(46,320) |
(7,360) |
Net income/(Ioss) |
43,678 |
(310,008) |
(49,256) |
130,918 |
(211,352) |
(33,581) |
|
|
|
|
|
|
|
Net loss attributable to noncontrolling interests |
(1,521) |
(394) |
(63) |
(1,518) |
(3,651) |
(580) |
|
|
|
|
|
|
|
Net income/(loss) attributable to ordinary shareholders |
42,157 |
(310,402) |
(49,319) |
129,400 |
(215,003) |
(34,161) |
|
|
|
|
|
|
|
Earnings per ADS |
|
|
|
|
|
|
Basic /Diluted |
0.87 |
(6.56) |
(1.04) |
2.66 |
(4.53) |
(0.72) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of ADS outstanding: |
|
|
|
|
|
|
Basic /Diluted |
48,628,990 |
47,316,183 |
47,316,183 |
48,680,198 |
47,417,151 |
47,417,151 |
|
|
|
|
|
|
|
(*) Certain amounts in the prior year quarterly financial information are being reclassified for comparison purposes. |
|
|
Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures (*) (in RMB thousands, unaudited) |
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended December 31, 2010 |
For the three months ended December 31, 2011 |
|
Twelve months ended |
|
Twelve months ended |
||||||||
|
GAAP Measure |
Adjustment |
Non-GAAP Measure |
GAAP Measure |
Adjustment |
Non-GAAP Measure |
|
GAAP Measure |
Adjustment |
Non-GAAP Measure |
|
GAAP Measure |
Adjustment |
Non-GAAP Measure |
Operating income/loss) |
51,439 |
4,320 |
55,759 |
(8,930) |
51,531 |
42,601 |
|
179,666 |
12,083 |
191,749 |
|
138,857 |
58,502 |
197,359 |
Net income/(loss) |
43,678 |
4,320 |
47,998 |
(310,008) |
351,694 |
41,686 |
|
130,918 |
12,083 |
143,001 |
|
(211,352) |
358,665 |
147,313 |
Basic earnings per ADS |
0.87 |
0.09 |
0.96 |
(6.56) |
7.43 |
0.87 |
|
2.66 |
0.25 |
2.91 |
|
(4.53) |
7.56 |
3.03 |
Diluted earnings per ADS |
0.87 |
0.09 |
0.96 |
(6.56) |
7.43 |
0.87 |
|
2.66 |
0.25 |
2.91 |
|
(4.53) |
7.56 |
3.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) The adjustment is share-based compensation, bad debt provision, other asset loss impairment (excluding tax impact) and goodwill impairment loss. |
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation from net income to adjusted EBITDA(*) (in RMB thousands, unaudited) |
|
|||
|
|
|
|
|
|
|
|
|
|
|
For the three |
For the three |
Twelve |
Twelve |
|
December 31, 2010 |
December 31, 2011 |
December 31, 2010 |
December 31, 2011 |
Net income/loss) |
43,678 |
(310,008) |
130,918 |
(211,352) |
Interest expenses, net |
(3,446) |
(6,028) |
(417) |
(6,903) |
Income tax expenses |
10,137 |
6,790 |
43,873 |
46,320 |
Depreciation and amortization |
27,400 |
32,200 |
106,138 |
121,049 |
Share-based compensation |
1,807 |
2,383 |
9,570 |
9,234 |
Bad debt provision |
- |
15,377 |
- |
15,497 |
Other impairment loss |
2,513 |
33,771 |
2,513 |
33,771 |
Goodwill impairment loss |
- |
300,163 |
- |
300,163 |
Other adjustments |
1,070 |
153 |
5,292 |
10,629 |
|
|
|
|
|
Adjusted EBITDA |
83,159 |
74,801 |
297,887 |
318,408 |
|
|
|
|
|
(*) Definition of adjusted EBITDA: Adjusted EBITDA is defined as net income plus interest, taxes, depreciation and amortization, share-based compensation expenses, bad debt provision, fixed asset impairment, goodwill impairment and other adjustments. Other adjustments include foreign exchange loss, gain from disposed of PPE and other income or expense. |
SOURCE