Full Press Release Details
Concord Medical Announces Fourth Quarter and Fiscal Year 2009
Dr. Hongbin Cai Appointed as Independent Board Member
BEIJING, March 18 /PRNewswire-Asia-FirstCall/ 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 fourth quarter and fiscal year ended December 31, 2009(1), and
the appointment of Dr. Hongbin Cai as an independent board member.
Fourth Quarter and Fiscal Year 2009 Highlights
| Total net revenues in the fourth quarter of 2009 were RMB86.8 million ($12.7 million), a 24.3% increase from the corresponding period in 2008. Total net revenues in fiscal year 2009 were RMB292.4 million ($42.8 million), a 70.2% increase from 2008. | |||
| Net income in the fourth quarter of 2009 was RMB35.9 million ($5.3 million). Net income in fiscal year 2009 was RMB124.8 million ($18.3 million), a 57.9% increase from the corresponding period in 2008. | |||
| Both basic and diluted earnings per American Depository Share ( ADS ) (2) in the fourth quarter of 2009 were RMB0.69 ($0.10). Both basic and diluted earnings per ADS in fiscal year 2009 were RMB1.86 ($0.27). | |||
| Adjusted EBITDA (3) (non-GAAP) in the fourth quarter of 2009 was RMB72.1 million ($10.6 million), a 22.3% increase from the corresponding period in 2008. Adjusted EBITDA in fiscal year 2009 was RMB246.6 million ($36.1 million), a 71.0% increase from 2008. | |||
| Concord Medical opened five centers in the fourth quarter of 2009, bringing the total number of centers in operation to 88 across 36 cities in China, as of December 31, 2009. To date, the Company has entered into agreements to establish 27 new centers in 2010. | |||
| The number of treatment and diagnostic patient cases was 49,088 and 178,658 during the fourth quarter and fiscal year 2009, representing a 23.9% and 62.4% increase from the corresponding period in 2008, respectively. | |||
| The Company raised $132.0 million in gross proceeds from its initial public offering ( IPO ) of 12 million ADSs on the New York Stock Exchange on December 11, 2009, which are expected to be used to further expand its existing network of centers, establish two specialty cancer hospitals and for general corporate purposes. |
| (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 RMB6.8259 to US$1.00, the effective noon buying rate as of December 31, 2009 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) | Each ADS represents three ordinary shares of the Company. | |
| (3) | Adjusted EBITDA is defined in this announcement as net (loss) income plus interest, taxes, depreciation and amortization, share-based compensation expenses and other adjustments. Other adjustments include change in fair value of convertible notes, foreign exchange loss and other income. |
We were encouraged to end 2009 with a solid quarter of financial performance and operational
progress, and we are very excited by the growth opportunities we see in 2010, said Dr. Jianyu
Yang, director, president and chief executive officer of Concord Medical.
Having established our first radiotherapy center in 1997, Concord Medical s success has been
driven by our outstanding ability to establish and operate these centers effectively. Looking
forward, we will continue to expand our leading network by opening new centers and to improve the
operational efficiency of existing centers. Our target is to operate at least 200 centers by 2012
and we are moving quickly toward that goal. In addition, the development of our two specialty
cancer hospitals is well under way. We expect to open our Chang an CMS International Cancer Center
in June 2010 and our Beijing Proton Medical Center in early 2012.
Mr. Yang further commented, Cancer is the leading cause of death in China and the cancer treatment
market is one of China s fastest growing healthcare segments as Chinese people increasingly
understand the importance of early-detection and high quality treatment. In addition, the Chinese
government has been encouraging private investment in the healthcare sector in order to enhance the
scope and quality of medical services provided in the country. With our leading expertise and solid
capital position combined with increasing market demand and the Chinese government s commitment to
implementing healthcare reform, we are confident that Concord Medical is well positioned to achieve
Mr. Boxun Zhang, Concord Medical s corporate vice president added, Over the past three years,
Concord Medical has consistently achieved strong top and bottom line growth and managing for
profitable growth remains a top priority for us. In the future, while supporting our expansion
strategies with positive operating cash flow, a strong cash balance and flexible bank credit, we
will also continue to improve our operational efficiency and enhance financial management.
Independent Board Member Appointment
Concord Medical also announced that Dr. Hongbin Cai joined its board as an independent director and
replaced Mr. Wai Hung Ku as a member of the audit committee. Mr. Ku will remain on the Company s
Commenting on the appointment, Dr. Yang said, We are delighted for Dr. Cai to join Concord
Medical s board and audit committee. As a nationally renowned academic leader and business advisor,
Dr. Cai brings in-depth knowledge of corporate finance and economics. We also thank Mr. Ku for his
valuable contributions to the Company during his tenure. This change in our board composition
demonstrates our commitment to observing best practices in corporate governance as a newly listed
Dr. Hongbin Cai is currently a professor in economics and an associate dean at Peking University s
Guanghua School of Management. Since 2006, he has been serving as a director of the Mirrlees
Institute of Economic Policy Research and an associate director of the Institute of Poverty
Research at Peking University. Prior to returning to Peking University as a professor, he served as
an assistant professor of the economics department at the University of California, Los Angeles
from 1997 to 2005. From 2000 to 2001, he served as a visiting assistant professor at the economics
department and the Cowles Foundation of Yale University. Dr. Cai holds a Ph.D. in Economics and an
M.A. in Statistics from Stanford University, an M.A. in Economics from Peking University and a B.A.
in Mathematics from Wuhan University. He has received various national recognitions in China,
including being named as a National Chang Jiang Scholar and a National Outstanding Young Researcher
and his academic papers have been published in renowned journals such as the American Economic
Review, the Rand Journal of Economics, the Journal of Public Economics, the Journal of Economic
Theory, and the Economic Journal.
Fourth Quarter 2009 Results
Concord Medical reported total net revenues of RMB86.8 million ($12.7 million) for the fourth
quarter of 2009, a 24.3% increase from the corresponding period in 2008, primarily due to an
increase in patient cases from existing centers and the opening of new centers.
Cost of revenues in the fourth quarter of 2009 was RMB25.0 million (US$3.7 million), a 45.2%
increase from the corresponding period in 2008, primarily due to an increase in depreciation costs
related to new equipment installation in 2009.
Gross profit margin in the fourth quarter of 2009 was 71.2% as compared to 71.4% in the previous
quarter and 75.3% in the corresponding period in 2008. The year-over-year decrease was primarily
due to sale of equipments, which had a higher margin, accounting for a higher portion of total net
revenues in the fourth quarter of 2008.
Operating expenses, consisting of selling expenses and general and administrative expenses, were
RMB13.3 million ($2.0 million) in the fourth quarter of 2009 as compared to RMB9.7 million in the
previous quarter and RMB8.6 million in the corresponding period in 2008. The quarter-over-quarter
increase was mainly due to an increase in salary and compensation expenses related to business
RMB1.0 million in share-based compensation expenses associated with certain option grants in
Operating income was RMB48.4 million ($7.1 million) in the fourth quarter of 2009, representing a
10.2% increase from the corresponding period in 2008. Operating income excluding share-based
compensation expenses (non-GAAP) was RMB49.4 million ($7.2 million), a 12.5% increase from the
corresponding period in 2008.
Income tax expense was RMB10.7 million ($1.6 million), compared to an income tax expense of RMB10.7
million in the corresponding period in 2008. The effective tax rate for the fourth quarter of 2009
was 22.9% as compared to 23.0% in the third quarter of 2009 and 21.5% for the corresponding period
Net income was RMB35.9 million ($5.3 million), representing an 8.2% decrease from the corresponding
period in 2008. This decrease was primarily due to a RMB7.7 million one-time gain recognized as
other income in the fourth quarter of 2008. Both basic and diluted earnings per ADS for the fourth
quarter of 2009 amounted to RMB0.69 ($0.10).
Net income excluding share-based compensation expenses (non-GAAP) was RMB36.9 million ($5.4
million), a 5.6% decrease from the corresponding period in 2008. Both basic and diluted earnings
per ADS excluding share-based compensation expenses (non-GAAP) for the fourth quarter of 2009
amounted to RMB0.72 ($0.11).
Adjusted EBITDA (non-GAAP), was RMB 72.1 million ($10.6 million) for the fourth quarter of 2009,
representing a 22.3% increase from the corresponding period in 2008.
As of December 31, 2009, the Company had total fixed assets valued at RMB584.9 million ($85.7
million) and cash and cash equivalents of RMB1, 037.2 million ($152.0 million).
As of December 31, 2009, the Company had bank credit lines totaling RMB2,145 million (US$314.2
Accounts receivable was RMB111.3 million ($16.3 million) as of December 31, 2009, compared to
RMB119.1 million as of September 30, 2009 and RMB92.8 million as of December 31, 2008. The
sequential decrease was mainly due to enhanced cash flow management. Days sales outstanding
decreased to approximately 120 days in the fourth quarter of 2009 from approximately 128 days in
the previous quarter.
Fiscal Year 2009 Results
Total net revenues in 2009 were RMB292.4 million ($42.8 million), representing a 70.2% increase
from RMB171.8 million in 2008, primarily due to (i) an increase in patient cases from existing
centers and the opening of new centers, and (ii) consolidation of China Medstar s revenues for the
entire fiscal year 2009 as compared to for the last five months of 2008, as a result of the
acquisition of China Medstar being completed in July 2008.