Full Press Release Details
Medical Announces Second Quarter 2010 Financial Results
BEIJING, Aug. 18 /PRNewswire-Asia/ 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 financial results for the second
quarter ended June 30, 2010(1).
Second Quarter Fiscal 2010 Highlights
| Total net revenues in the second quarter of 2010 were RMB99.4 million ($14.7million), a 38.3% increase from the corresponding period in 2009. | |||
| Gross profit in the second quarter of 2010 was RMB69.3 million ($10.2 million), a 39.2% increase from the corresponding period in 2009. | |||
| Non-GAAP net income (2) in the second quarter of 2010 was RMB34.9 million ($5.1 million), a 5.8% increase from the corresponding period in 2009. | |||
| Both Non-GAAP basic and diluted earnings per American Depositary Share ( ADS ) (3) for the second quarter of 2010 were RMB0.71 ($0.10). | |||
| Adjusted EBITDA (4) (non-GAAP) in the second quarter of 2010 was RMB76.2 million ($11.2 million), a 22.6% increase from the corresponding period in 2009. | |||
| Concord Medical added eleven centers in the second quarter of 2010, bringing the total number of centers in operation to 100 across 39 cities in China, as of June 30, 2010. To date, the Company has entered into agreements to establish 31 new centers. | |||
| The number of treatment patient cases and diagnostic patient cases was 8,548 and 35,786 during the second quarter of 2010, respectively. Compared to the corresponding period in 2009, treatment patient cases increased by 26.6% and diagnostic patient cases increased by 47.6% . | |||
| On July 1, 2010, Concord Medical entered into a joint venture agreement with Chang An Hospital for the preliminary operation of Chang An Hospital s cancer treatment facilities in preparation for the full operation of the future Chang An CMS International Cancer Center (CCICC). | |||
| On June 30, 2010, Concord Medical s board of directors approved a share repurchase program of up to $20 million. |
| (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 RMB6.7815 to US$1.00, the effective noon buying rate as of June 30, 2010 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 expenses, which amounted to RMB2.6 million ($0.4 million) for the second quarter of 2010. The Company did not incur share-based compensation expenses for the second quarter of 2009 and therefore no reconciliation for this period has been provided herein. | |
| (3) | Each ADS represents three ordinary shares of the Company. | |
| (4) | Adjusted EBITDA is defined in this announcement as net 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 saw another quarter of solid growth driven by healthy revenue increases in both existing
and newly added centers, said Dr. Jianyu Yang, director, president and chief executive officer of
Concord Medical. In line with our expansion plan, we opened seven new centers and acquired four
centers during the quarter. With a healthy acquisition pipeline and existing contracts for the
opening of new centers, we remain confident to meet our target of adding 34 to 39 centers in 2010.
We continue to build Concord Medical s brand awareness and reputation through high-profile
marketing and academic activities, continued Dr. Yang. In June, we hosted the largest cancer
treatment and diagnosis forum in our history, attracting more than 350 established professionals.
During the forum, we were proud to announce the publication of Concord Medical s clinical textbook
on stereotactic body radiation therapy using the body gamma knife, a first in China.
With a favorable regulatory environment and increasing consumer demand, the cancer treatment
and diagnostic market in China continues to be very strong. We will continue to work to extend our
leadership, educate the market and differentiate the Concord Medical brand. I am confident that
Concord Medical is well positioned to maximize our potential in this rapidly developing market,
Mr. Boxun Zhang, Concord Medical s corporate vice president, commented, Healthy top line
growth contributed to margin expansion compared to the first quarter, which is a seasonally slow
period due to the Chinese New Year holiday. During the second half of the year, we plan to continue
to enhance operational efficiency while strategically investing in network expansion to support
profitable growth. We also continue to progress according to our schedule for fulfilling Sarbanes
In July, Concord Medical began preliminary operations of its first specialty cancer treatment
hospital under a joint venture agreement with the Chang An Hosptal. Also in July, the Company s
second specialty cancer treatment hospital, the Beijing Proton Medical Center, received approval
from the Ministry of Health and is in the process of completing the remaining application process.
Quarter Fiscal 2010 Results
Concord Medical reported total net revenues of RMB99.4 million ($14.7 million) for the second
quarter of 2010, representing a 38.3% increase from the corresponding period in 2009, primarily due
to patient volume growth from established centers as well as from new centers added through organic
development and acquisitions in 2009 and the first half of 2010.
Cost of revenues in the second quarter of 2010 was RMB30.2 million ($4.5 million), a 36.2%
increase from the corresponding period in 2009, primarily due to the higher depreciation cost
associated with the new equipment purchases in 2009 and the first half of 2010.
Gross profit margin in the second quarter of 2010 was 69.7% as compared to 69.2% in the
corresponding period in 2009.
Operating expenses, consisting of selling expenses and general and administrative expenses,
were RMB22.2 million ($3.3 million) in the second quarter of 2010, compared to RMB7.4 million in
the corresponding period in 2009. The increase was largely due to the expanded business size and
additional post-IPO related professional expenses.
Operating income was RMB47.1 million ($6.9 million), representing an 11.2% increase from the
corresponding period in 2009. Operating profit excluding share-based compensation expenses
(non-GAAP) was RMB49.7 million ($7.3 million), a 17.3% increase from the corresponding period in
Income tax expense was RMB12.9 million ($1.9 million), compared to an income tax expense of
RMB8.8 million in the corresponding period in 2009. The effective tax rate for the second quarter
of 2010 was 28.5% as compared to 28.3% in the previous quarter and 21.1% in the corresponding
Net income was RMB32.2 million ($4.8 million), representing a 2.1% decrease from the
corresponding period in 2009. Both basic and diluted earnings per ADS for the second quarter of
2010 were RMB0.66 ($0.10).
Net income excluding share-based compensation expenses (non-GAAP) was RMB34.9 million ($5.1
million), a 5.8% increase from the corresponding period in 2009. Both Basic and diluted earnings
per ADS excluding share-based compensation expenses (non-GAAP) for the second quarter of 2010 were
Adjusted EBITDA (non-GAAP), was RMB76.2 million ($11.2 million) for the second quarter of
2010, representing a 22.6% increase from the corresponding period in 2009.
Capital expenditure for the second quarter of 2010 was RMB130.9 million ($19.3 million). Total
depreciation expenses were RMB19.8 million ($2.9 million). In addition, amortization of acquired
intangibles was RMB6.7 million ($1.0 million). The Company expects amortization of acquired
intangibles to be approximately RMB28.5 million ($4.2 million) in 2010, assuming no additional
intangibles are acquired through potential acquisitions during the year.
As of June 30, 2010, the Company had total fixed assets with a net book value of
RMB677.1million ($99.9 million) and cash of RMB863.4 million ($127.3 million). The decline was
mainly due to the increased fixed assets balance and prepayment for equipment purchase for our
As of June 30, 2010, the Company had bank credit lines totaling RMB2.0 billion
receivable was RMB137.1 million ($20.2 million) as of June 30, 2010, as compared to
RMB111.3 million as of December 31, 2009. The average turnover days was 113
days as of June 30, 2010, as compared to 119 days as of December 31, 2009.
for Fiscal Year 2010
Concord Medical reaffirms that its estimated range of total net revenues for 2010 is RMB367
million to RMB398 million, which would represent a 25.5% to 36.1% increase from 2009.
The Company reaffirms that it expects to add 34 to 39 radiotherapy and diagnostic imaging
centers in 2010, and the range of expected total capital expenditures related to these new centers
is approximately RMB400 million to RMB450 million.
This forecast reflects Concord Medical s current and preliminary view, which is subject to
Concord Medical s management will hold an earnings conference call at 8 AM on August 18, 2010
U.S. Eastern Time (8 PM on August 18, 2010 Beijing/Hong Kong time).
Dial-in details for the earnings conference call are as follows:
| US: | 1.866.270.6057 | ||
| China: | 10-800-852-1490 China Netcom (South China) 10-800-152-1490 China Telecom (North China) 10-800-130-0399 China Telecom (South China) | ||
| Hong Kong: | ###-##-#### | ||
| International: | 1-617-213-8891 | ||
| Passcode: | 70681252 |
A replay of the conference call may be accessed by phone at the following number until August
| US: | 1-888-286-8010 | ||
| International: | 1-617-801-6888 | ||
| Passcode: | 55593251 |
Additionally, a live and archived webcast of this conference call will be available at
Concord Medical operates the largest network of radiotherapy and diagnostic imaging centers in
China in terms of revenues and the total number of centers in operation per available statistics.
The Company currently operates a network of more than 100 centers
spanning 39 cities and 22 provinces and administrative regions in China. Under long-term arrangements with top-tier hospitals
in China, the Company provides radiotherapy and diagnostic imaging equipments and manages the daily
operations of these centers located on its hospital partners premises. The Company also provides
ongoing training to doctors and other medical personnel in its network of centers to ensure a high
level of clinical care for patients.
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. These forward looking statements are based upon management s