Concord Medical Announces First Quarter 2011 Financial Results BEIJING

Concord Medical Announces First Quarter 2011 Financial Results

BEIJING, May 18, 2011 Concord Medical Services Holdings Limited ( Concord Medical or the

Company ) (NYSE: CCM), the operator of the largest network of radiotherapy and diagnostic imaging

centers in China, today announced its unaudited consolidated financial results for the first

quarter ended March 31, 2011(1).

First Quarter Fiscal 2011 Highlights

In the first quarter of 2011, we delivered an approximately 15% increase in net revenues compared

with the first quarter of 2010, said Dr. Jianyu Yang, director, president and chief executive

officer of Concord Medical. The moderate growth can be primarily attributed to the ramp up process

in the newly opened centers. Dr. Yang continued, We are confident in our expansion strategy and

growth prospects. We are pushing forward on all fronts including establishing standalone hospitals

and centers, developing new centers with hospital partners, pursuing acquisition targets, and

increasing utility and efficiency at our existing facilities.

During the first quarter of 2011, Concord Medical entered into a joint venture agreement with the

Oncology Hospital of Zhongshan Medical University, a leading oncology hospital in China, to form a

specialty hospital in Guangzhou for cancer diagnosis and treatment. Pursuant to terms of the

agreement, Concord Medical is expected to own 70% of the equity interests in the joint venture,

which is expected to have 400 patient beds. The joint venture is expected to start operation in

The establishment of a joint venture with the Oncology Hospital of Zhongshan Medical University,

one of the top cancer hospitals in China, further underlines our strategy to establish a line of

standalone facilities alongside our center network on hospital premises, said Dr. Yang. The

purpose of these standalone facilities is to establish the highest benchmark in cancer treatment in

China and to strengthen Concord Medical s brand among patients and

doctors. Looking forward, Concord Medical intends to continue the expansion of our standalone facilities as a key part of our

On January 6, 2011, Concord Medical announced that it entered into agreements to acquire 52% of the

equity interests in Chang An Hospital from certain shareholders of the hospital for an aggregate

consideration of approximately RMB200 million, subject to satisfactory due diligence results and

relevant government approval. The acquisition is intended to expand the development of Chang An CMS

International Cancer Center ( CCICC ), a cancer specialty hospital with a focus on cancer diagnosis

and treatment services, by consolidating the full capacity of the hospital into CCICC. The

acquisition process is currently experiencing a delay in completing the due diligence and the

required government approval.

First Quarter of 2011 Results

Total net revenues were RMB87.4 million ($13.3 million) for the first quarter of 2011, a 14.7%

increase from the corresponding period in 2010. The increase is primarily due to an increase in

patient cases from existing centers and the opening of new centers, as well as income from the

preliminary operation of CCICC.

Cost of revenues in the first quarter of 2011 was RMB32.7 million ($5.0 million), a 21.0% increase

from the corresponding period in 2010, primarily due to an increase in depreciation costs related

to new equipment in 2011.

Gross profit margin in the first quarter of 2011 was 62.6% as compared to 72.2% in the fourth

quarter of 2010 and 64.5% in the first quarter in 2010. The lower gross profit margin was primarily

due to an increase in depreciation and amortization cost as a result of business expansion.

Operating expenses, consisting of selling expenses and general and administrative expenses, were

RMB19.9 million ($3.0 million) in the first quarter of 2011 as compared to RMB30.1 million ($4.6

million) in the fourth quarter of 2010 and RMB17.6 million ($2.6 million) in the corresponding

period in 2010. The year-on-year increase was primarily due to increases in professional expenses,

office and travel expenses, and operating expenses as a result of the expanded business size.

Operating income was RMB34.8 million ($5.3 million) in the first quarter of 2011, representing a

10.3% increase from the corresponding period in 2010. Operating income excluding share-based

compensation expenses (non-GAAP) was RMB37.1 million ($5.7 million), an 8.8% increase from the

corresponding period in 2010.

Income tax expense in the first quarter of 2011 was RMB8.9 million ($1.4 million), compared to an

income tax expense of RMB8.5 million ($1.2 million) in the corresponding period in 2010. The

effective tax rate for the first quarter of 2011 was 27.9% as compared to 18.8% in the fourth

quarter of 2010 and 28.3% in the corresponding quarter of 2010.

Net income in the first quarter of 2011 was RMB22.9 million ($3.5 million), representing a 6.1%

increase from the corresponding period in 2010. Both basic and diluted earnings per ADS for the

first quarter of 2011 were RMB0.48 ($0.07).

Non-GAAP net income in the first quarter of 2011 was RMB25.3 million ($3.9 million), a 5.3%

increase from the corresponding period in 2010. Both non-GAAP basic and diluted earnings per ADS in

the first quarter of 2011 were RMB0.53 ($0.08).

Adjusted EBITDA (non-GAAP) was RMB65.6 million ($10.0 million) for the first quarter of 2011,

representing a 14.7 % increase from the corresponding period in 2010.

Capital expenditure for the first quarter of 2011 was RMB31.5 million ($4.8 million). Total

depreciation expenses were RMB21.9 million ($3.3 million). In addition, amortization of acquired

intangibles was RMB6.0 million ($0.9 million).

As of March 31, 2011, the Company had total fixed assets of RMB958.2 million ($146.3 million), cash

of RMB491.1 million ($75.0 million), and restricted cash of RMB39.8 million ($6.1 million).

As of March 31, 2011, the Company had bank credit lines of RMB2.1 billion ($315 million), of which

RMB89.7 million ($13.7 million) were drawn down.

Accounts receivable was RMB181.5 million ($27.7 million) as of March 31, 2011, compared to RMB169.4

million ($25.7 million) as of December 31, 2010.

Days sales outstanding was approximately 181 days in the first quarter of 2011, up from 127 days in

the fourth quarter of 2010 primarily due to seasonality impact.

Outlook for Fiscal Year 2011

Based on current market and operating conditions, estimated business expansion and forecasted

patient volume, Concord Medical reiterates its outlook for fiscal year 2011. The Company expects to

generate total net revenues in an estimated range of RMB480 million to RMB520 million in 2011,

which would represent a 23% to 33% increase from 2010. This estimated range excludes any potential

future revenue arising as a result of the currently pending acquisition of equity interests in

Chang An Hospital but includes income from CCICC s preliminary operations. The Company notes that

any unanticipated delays in the closing of Chang An Hospital s acquisition, any failure to obtain

CCICC s clinical license and other uncertainties may result in CCICC not achieving its revenue

contribution to the Company, which in turn could have a material adverse effect on the Company s

business, financial condition and results of operations in 2011 and future periods.

The Company intends to open 25 to 30 new radiotherapy and diagnostic imaging centers, excluding any

potential major acquisitions, in 2011. The Company expects total capital expenditures related to

these new centers to be in the range of RMB300 million to RMB360 million.

The foregoing reflects Concord Medical s current and preliminary views, which are subject to

Conference Call Information

Concord Medical s management will hold an earnings conference call at 8:00 a.m. Eastern Daylight

Time on May 18, 2011 (8:00 p.m. Beijing/Hong Kong time on May 18, 2011).

Dial-in details for the earnings conference call are as follows:

A replay of the conference call may be accessed by phone at the following number until May 25,

Additionally, a live and archived webcast of this conference call will be available at