Concord Medical Announces Third Quarter 2010 Financial Results BEIJING

Concord Medical Announces Third Quarter 2010 Financial Results

BEIJING, Nov. 18, 2010 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 third quarter ended

Third Quarter Fiscal 2010 Highlights

(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 RMB6.6905 to US$1.00, the noon buying rate on September 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) Each ADS represents three ordinary shares of the Company.

(3) Non-GAAP net income is defined in this announcement as net income excluding share-based

compensation expenses Share-based compensation was RMB 2.6 million ($0.4 million) in the third

quarter of 2010. The Company did not incur share-based compensation expenses in the third quarter

of 2009 and therefore no reconciliation for this period has been provided herein.

(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

We delivered solid top line growth and business progress in the third quarter despite a stronger

than usual seasonal impact. This year, the Mid-autumn Festival in September and the October Golden

Week occurred in close proximity, causing reductions in patient volume in late September more than

in prior years, said Dr. Jianyu Yang, director, president and chief executive officer of Concord

Medical. In addition, we opened 9 new centers and acquired 2 centers during the third quarter,

which gives us continued confidence to meet our target of adding 34 to 39 centers in 2010. We made

steady headway in the past two quarters and have in place a healthy contract pipeline.

Our quality marketing and academic programs continued to effectively educate and attract patients

while further solidifying our brand and reputation, continued Dr. Yang. Combining our strong

momentum with the government s ongoing support of private investment into the healthcare industry

and medical insurance reform, we are confident that Concord Medical is well positioned to benefit

from this fast-growing market, Dr. Yang concluded.

Under a share repurchase program approved in June 2010, the Company repurchased 981,030 ADSs,

representing 2,943,090 ordinary shares, in the third quarter of 2010 for an aggregate consideration

of $6.2 million, including transaction fees. Since the inception of this share repurchase program,

the Company has repurchased a total of 1,585,299 ADSs, representing 4,755,897 common shares, for an

aggregate consideration of $10.6 million.

In October 2010, Boxun Zhang, who joined Concord Medical in September 2009 as corporate vice

president, resigned from his post during the reporting quarter to pursue other interests.

During his time at Concord Medical, Boxun was a great asset to the Company, commented Dr. Yang.

We would like to thank him for the significant contributions he made to the Company s development.

We wish him the best in his future endeavors.

Third Quarter Fiscal 2010 Results

Total net revenues were RMB101.0 million ($15.1 million) for the third quarter of 2010,

representing a 29.6% increase from the corresponding period in 2009 The increase was 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 three quarters of 2010.

Cost of revenues in the third quarter of 2010 was RMB34.1 million ($5.1 million), a 52.9% 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 three quarters of 2010.

Gross profit margin in the third quarter of 2010 was 66.2% as compared to 71.4% in the

corresponding period in 2009. The decrease was mostly due to depreciation and amortization from

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

RMB17.3 million ($2.6 million) in the third quarter of 2010, compared to RMB9.7 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 RMB49.6 million ($7.4 million), representing an 7.9% increase from the

corresponding period in 2009. Operating profit excluding share-based compensation expenses

(non-GAAP) was RMB52.2 million ($7.8 million), a 13.5% increase from the corresponding period in

Foreign exchange loss was RMB3.0 million ($0.4 million) for the third quarter compared with

RMB97,000 ($14,210) in the corresponding period in 2009, primarily due to the appreciation of the

Renminbi against the U.S. dollar.

Income tax expense was RMB12.4 million ($1.9 million), compared to an income tax expense of RMB10.2

million in the corresponding period in 2009. The effective tax rate for the third quarter of 2010

was 27.0% as compared to 28.5% in the previous quarter and 23.0% in the corresponding period in

Net income was RMB33.4 million ($5.0 million), representing a 2.2% decrease from the corresponding

period in 2009. Both basic and diluted earnings per ADS for the third quarter of 2010 were RMB0.69

Net income excluding share-based compensation expenses (non-GAAP) was RMB36.0 million ($5.4

million), a 5.3% increase from the corresponding period in 2009. Both basic and diluted earnings

per ADS excluding share-based compensation expenses (non-GAAP) for the third quarter of 2010 were

Adjusted EBITDA (non-GAAP), was RMB81.3 million ($12.2 million) for the third quarter of 2010,

representing a 24.9% increase from the corresponding period in 2009.

Capital expenditure for the third quarter of 2010 was RMB107.9 million ($16.1 million).

depreciation expenses were RMB21.0 million ($3.1 million). In addition, amortization of acquired

intangibles was RMB7.9 million ($1.2 million). The Company expects amortization of acquired

intangibles to be approximately RMB28.8 million ($4.3 million) in 2010, assuming no additional

intangibles are acquired through potential acquisitions during the year.

As of September 30, 2010, the Company had total fixed assets with a net book value of RMB863.9

million ($129.1 million) and cash of RMB515.2 million ($77.0 million). The decline in cash was

mainly due to the increased fixed assets balance and prepayment for equipment purchase for our

September 30, 2010, the Company had bank credit lines totaling RMB2.1 billion ($313.9

million), of which RMB129.2 million ($19.3million) were drawn as

of September 30, 2010.

Accounts receivable were RMB149.5 million ($22.3 million) as of September 30, 2010, as compared to

RMB111.3 million as of December 31, 2009. The average

turnover days was 127 days as of September

30, 2010, as compared to 119 days as of December 31, 2009.

Outlook for Fiscal Year 2010

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

patient volumes, 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 also 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 change.

Conference Call Information

Concord Medical s management will hold an earnings conference call at 8 AM on November 18, 2010

U.S. Eastern Time (9 PM on November 18, 2010 Beijing/Hong Kong time).

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 November 25, 2010: