Concord Medical Reports Second Quarter 2012 Financial Results
Second Quarter 2012 Highlights
- Total net revenues in the second quarter of 2012 were
RMB136.5 million ($21.5 million ), a 10.2% increase from the second quarter of 2011. "Lease and management services" revenues in the second quarter of 2012 wereRMB119.5 million ($18.8 million ), a 15.3% increase from the second quarter of 2011. - Gross profit in the second quarter of 2012 was
RMB93.9 million ($14.8 million ), a 12.1% increase from the second quarter of 2011. - Gross profit margin in the second quarter was 68.7%, compared to 58.4% in the first quarter of 2012 and 67.6% in the second quarter of 2011.
- Net income in the second quarter of 2012 was
RMB38.3 million ($6.0 million ), a 2.3% increase from the second quarter of 2011. Both basic and diluted earnings per American depositary share ("ADS")[2] for the second quarter of 2012 wereRMB0.80 ($0.13) . - Non-GAAP net income[3] in the second quarter of 2012 was
RMB40.6 million ($6.4 million ), a 2.4% increase from the second quarter of 2011. Both non-GAAP basic and diluted earnings per ADS for the second quarter of 2012 wereRMB0.85 ($0.13) . - Adjusted EBITDA[4](non-GAAP) in the second quarter of 2012 was
RMB93.7 million ($14.7 million ), a 10.0% increase from the second quarter of 2011, representing an EBITDA margin of 68.6% in the second quarter of 2012 compared to 68.8% in the second quarter of 2011. - Five new centers were established and two centers were closed in the second quarter of 2012, bringing the total number of centers in operation to 133 in 52 cities across 24 provinces in China as of
June 30, 2012 . The Company had outstanding agreements to establish 36 new centers, as ofJune 30, 2012 . - The numbers of treatment and diagnostic patient cases in the second quarter of 2012 were 8,820 and 52,833, respectively, representing a 2.5% and 25.7% increase from the second quarter of 2011.
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 RMB6.353 to US$1.00, the effective noon buying rate as of June 29, 2012 in the City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York.
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2 Each ADS represents three ordinary shares of the Company.
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3 Non-GAAP net income is defined in this announcement as net income excluding share-based compensation. Share-based compensation was RMB2.2 million and RMB 2.3 million ($0.4 million) in the second quarter 2011 and 2012, respectively.
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4 Adjusted EBITDA is defined in this announcement as net income plus interest expense, income tax expenses, depreciation and amortization, share-based compensation expenses, and other adjustments, including foreign exchange gains or losses, other income, and gain from disposal of property, plant and equipment. |
"In the second quarter of 2012, we delivered healthy growth and increased net revenues compared with the second quarter of 2011," said Dr.
Recent Developments
Update on Chang'an Hospital Acquisition – On
Update on the
Share repurchase program -- During the second quarter of 2012, the Company repurchased 394,169 ADSs, representing 1,182,507 ordinary shares, for an aggregate consideration of
Second quarter 2012 Results
Total net revenues were
Cost of revenues in the second quarter of 2012 was
Gross profit margin in the second quarter of 2012 was 68.7%, as compared to 67.6% in the second quarter of 2011. The higher gross profit margin is a result of cost-control measures taking effect as well as revenue contribution from recently-opened centers which have passed their ramp-up phases.
Operating expenses, consisting of selling, general and administrative expenses, were
Operating income was
Income tax expenses in the second quarter of 2012 were
Net income in the second quarter of 2012 was
Non-GAAP net income in the second quarter of 2012 was
Adjusted EBITDA (non-GAAP) was
Capital expenditure in the second quarter of 2012 was
As of
As of
Accounts receivable was
Days sales outstanding was approximately 159 days in the second quarter of 2012, substantially less than 201 days in the first quarter of 2012, as a result of strengthened collection measures since the beginning of the year.
2012 Outlook
The Company intends to provide consolidated financial results that include the results of Chang'an Hospital beginning with the third quarter of 2012. The Company also updated its guidance for the second half of 2012 fiscal year as follows:
- Net revenues from the current network business of
RMB220 million to RMB240 million ; and - Revenues from Chang'an Hospital of
RMB190 million to RMB210 million , reflecting six months of financial results; and - Network capital expenditures of
RMB80 million to RMB120 million , primarily on purchasing new equipment for new centers.
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
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: 18045582
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 China, including changes in the healthcare policies and regulations of the PRC government; and technological or therapeutic changes affecting the field of cancer treatment and diagnostic imaging. Further information regarding these and other risks is included in the Company's filings with the
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. The Company believes excluding share-based compensation expense from its non-GAAP financial measures is useful for its management and investors to assess and analyze the Company's core operating results as such expense is 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 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 income plus interest, taxes, depreciation and amortization, share-based compensation expenses and other adjustments. Other adjustments include foreign exchange losses and other income, and loss from disposal of property, plant and equipment. 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 information.
For more information, please contact:
Mr.
tony.tian@concordmedical.com
(+86) 10 5957-5287
In China:
Ms. Ran Zhang
CCM@soleburyir.com
(+86) 10 6563-0288
In
Mr.
rzubek@soleburyir.com
(+1) 203-428-3230
Concord Medical Services Holdings Co., Ltd. | |||
Unaudited Condensed Consolidated Balance Sheets | |||
(in thousands)
| |||
December 31, 2011 (*) |
June 30, 2012 | ||
RMB |
RMB |
US$ | |
ASSETS |
|||
Current assets |
|||
Cash |
219,078 |
130,729 |
20,578 |
Restricted cash, current portion |
2,512 |
39,312 |
6,188 |
Held-to-maturity securities |
100,466 |
- |
- |
Time deposit with original maturities exceeding three months |
50,372 |
- |
- |
Accounts receivable |
244,189 |
250,383 |
39,412 |
Prepayments and other current assets |
61,630 |
72,133 |
11,354 |
Net investments in direct financing leases, current portion |
49,821 |
74,305 |
11,696 |
Deferred tax assets, current portion |
5,589 |
5,064 |
797 |
Total current assets |
733,657 |
571,926 |
90,025 |
Non-current assets |
|||
Property, plant and equipment, net |
1,068,703 |
1,087,444 |
171,170 |
Acquired intangible assets, net |
129,018 |
117,254 |
18,456 |
Deposits for non-current assets |
207,287 |
185,910 |
29,263 |
Prepayment for acquisition of Chang'an |
- |
248,909 |
39,180 |
Net investments in direct financing leases, non-current portion |
97,262 |
138,834 |
21,853 |
Deferred tax assets, non-current portion |
20,866 |
18,956 |
2,984 |
Equity method investments |
540 |
540 |
85 |
Other non-current assets |
86,731 |
84,392 |
13,284 |
Restricted cash, non-current portion |
22,012 |
30,601 |
4,817 |
Prepaid land lease payments |
27,370 |
26,998 |
4,250 |
Total non-current assets |
1,659,789 |
1,939,838 |
305,342 |
Total assets |
2,393,446 |
2,511,764 |
395,367 |
LIABILITIES AND EQUITY |
|||
Current liabilities |
|||
Short-term bank borrowings |
15,000 |
15,000 |
2,361 |
Long-term bank borrowings, current portion |
77,479 |
92,156 |
14,505 |
Accounts payable |
2,170 |
452 |
71 |
Accrual for purchase of property, plant and equipment |
13,294 |
11,229 |
1,768 |
Obligations under capital leases, current portion |
3,582 |
3,582 |
564 |
Accrued expenses and other liabilities |
59,097 |
59,241 |
9,325 |
Income tax payable |
20,936 |
23,265 |
3,662 |
Deferred revenue, current portion |
13,115 |
12,955 |
2,039 |
Contingent business acquisition consideration |
11,999 |
11,999 |
1,889 |
Total current liabilities |
216,672 |
229,879 |
36,184 |
Non-current liabilities |
|||
Long-term bank borrowings, non-current portion |
108,700 |
172,760 |
27,193 |
Deferred revenue, non-current portion |
6,839 |
4,197 |
661 |
Obligations under capitalized leases, non-current portion |
2,289 |
653 |
103 |
Lease deposits |
2,000 |
2,000 |
315 |
Deferred tax liabilities, non-current portion |
18,850 |
18,284 |
2,878 |
Total non-current liabilities |
138,678 |
197,894 |
31,150 |
Total liabilities |
355,350 |
427,773 |
67,334 |
Commitments and contingencies |
|||
EQUITY |
|||
Ordinary shares |
105 |
105 |
17 |
Treasury stock |
(1) |
(3) |
- |
Additional paid-in capital |
2,551,877 |
2,534,273 |
398,909 |
Accumulated other comprehensive loss |
(17,595) |
(17,383) |
(2,736) |
Accumulated deficit |
(599,886) |
(538,493) |
(84,762) |
Total Concord Medical Services Holdings Limited shareholders' equity |
1,934,500 |
1,978,499 |
311,428 |
Non-controlling interests |
103,596 |
105,492 |
16,605 |
Total equity |
2,038,096 |
2,083,991 |
328,033 |
Total liabilities and equity |
2,393,446 |
2,511,764 |
395,367 |
(*) Amounts for the year ended December 31, 2011 were derived from the December 31, 2011 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 | |||
June 30, 2011 (*) |
June 30, 2012 | ||
RMB |
RMB |
US$ | |
Revenue, net of business tax, value-added tax and related surcharges |
|||
Lease and management services |
103,650 |
119,542 |
18,817 |
Management services |
11,784 |
4,071 |
641 |
Other, net |
8,413 |
12,917 |
2,033 |
Total net revenues |
123,847 |
136,530 |
21,491 |
Cost of revenues |
|||
Depreciation |
(20,657) |
(27,319) |
(4,300) |
Amortisation of acquired intangibles |
(6,463) |
(6,303) |
(992) |
Others |
(12,998) |
(9,053) |
(1,425) |
Total cost of revenues |
(40,118) |
(42,675) |
(6,717) |
Gross profit |
83,729 |
93,855 |
14,774 |
Operating expenses |
|||
Selling expenses |
(11,144) |
(10,426) |
(1,641) |
General and administrative expenses |
(17,424) |
(26,580) |
(4,184) |
Operating income |
55,161 |
56,849 |
8,949 |
Interest expenses |
(1,661) |
(3,504) |
(552) |
Foreign exchange (loss) gain |
(3,108) |
399 |
63 |
Gain from disposal of property, plant and equipment |
- |
92 |
14 |
Interest income |
1,052 |
1,367 |
215 |
Other income |
- |
33 |
5 |
Income before income taxes |
51,444 |
55,236 |
8,694 |
Income tax expenses |
(14,015) |
(16,933) |
(2,665) |
Net income |
37,429 |
38,303 |
6,029 |
Net income attributable to noncontrolling interests |
1,495 |
1,087 |
171 |
Net income attributable to ordinary shareholders |
35,934 |
37,216 |
5,858 |
Earnings per ADS |
|||
Basic /Diluted |
0.79 |
0.80 |
0.13 |
Weighted average number of ADS outstanding: |
|||
Basic /Diluted |
47,451,177 |
46,359,145 |
46,359,145 |
Other comprehensive (loss) income, net of tax |
|||
Foreign currency translation |
(1,206) |
184 |
29 |
Total other comprehensive (loss) income, net of tax |
(1,206) |
184 |
29 |
Comprehensive income |
36,223 |
38,487 |
6,058 |
(*) 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 June 30, 2011 |
For the three months ended June 30, 2012 | |||||
GAAP Result |
Adjustment |
Non-GAAP Results |
GAAP Result |
Adjustment |
Non-GAAP Results | |
Operating income |
55,161 |
2,200 |
57,361 |
56,849 |
2,282 |
59,131 |
Net income |
37,429 |
2,200 |
39,629 |
38,303 |
2,282 |
40,585 |
Basic earnings per ADS |
0.79 |
0.05 |
0.84 |
0.80 |
0.05 |
0.85 |
Diluted earnings per ADS |
0.79 |
0.05 |
0.84 |
0.80 |
0.05 |
0.85 |
(*) The only adjustment is share-based compensation. |
Reconciliation from net income to adjusted EBITDA(*) (in RMB thousands, unaudited) | |||
For the three months ended |
For the three months ended | ||
June 30, 2011 |
June 30, 2012 | ||
Net income |
37,429 |
38,303 | |
Interest expenses (income), net |
609 |
2,137 | |
Income tax expenses |
14,015 |
16,933 | |
Depreciation and amortization |
27,858 |
34,568 | |
Share-based compensation |
2,200 |
2,282 | |
Other adjustments |
3,108 |
(524) | |
Adjusted EBITDA |
85,219 |
93,699 | |
(*) Definition of adjusted EBITDA: Adjusted EBITDA is defined as net income plus interest, taxes, depreciation and amortization, share-based compensation expenses and other adjustments. Other adjustments include foreign exchange losses, gain from disposal of property, plant and equipment and other income. |
SOURCE