Full Press Release Details
Concord Medical Reports Financial Results
for the First Half of 2017
BEIJING, Aug 25, 2017 /PRNewswire/ -- Concord
Medical Services Holdings Limited ("Concord Medical" or the "Company") (NYSE: CCM), a leading specialty hospital
management solution provider and operator of the largest network of radiotherapy and diagnostic imaging centers in China, today
announced its unaudited consolidated financial results for the six months ended June 30, 2017[1].
2017 First Half Highlights
Dr. Jianyu Yang, Chairman and Chief Executive
Officer of Concord Medical, commented, "Changes in the policies regarding the hospital partners have further led to the closure
of a number of our centers, which put pressure on our operating income in the first half of 2017 and presented us with challenges.
However, our new business model, focused on self-built high-end cancer hospital, is steadily developing and growing, which helps
mitigate the impact of these adverse factors. We believe that the new business model will bring us new growth points and more opportunities
"The Singapore Concord International
Hospital has grown rapidly since 2017, the number of patients received is increasing monthly, so that the hospital's income has
also been improved. At the same time, in order to continue growing Singapore Concord International Hospital, we are stepping up
to improve its operating and radiotherapy areas both in hardware and software facilities. We look forward to serving more cancer
patients with high-quality and efficient services in the future."
"Starting from 2016, Meizhong Jiahe
has been responsible for the daily operations of Shanghai ProMed Cancer Center ("ProMed"), and we are in the process
of acquiring ProMed. Since the first half of 2017, ProMed's medical service has become increasingly mature and well-known. In the
future, we plan to align ProMed with the MD Anderson Cancer Center at the technical level to gradually improve the functions of
ProMed as a first-class high-end cancer clinic and to provide more international medical services to patients in the region."
2017 First Half Financial Results
Net revenues from the network business
were RMB196.4 million ($29.0 million), a 20.4% decrease from net revenues of RMB246.7 million in the first half of 2016, primarily
attributable to the closure of certain centers in our network of centers. With 18 centers closed in the first half of 2017, the
Company operated a network of 60 centers in 34 cities in China as of June 30, 2017.
Cost of revenue of the network business
was RMB109.5 million ($16.2 million), representing a 20.6% decrease from RMB137.9 million in the first half of 2016.
Gross profit from the network business
was RMB86.8 million ($12.8 million), representing a 20.2% decrease from RMB108.8 million in the first half of 2016. The gross profit
margin for the first half of 2017 was 44.2%, compared to 44.1% for the same period last year.
Selling expenses of the network business
were RMB30.3 million ($4.5 million), representing a 26.3% decrease from RMB41.1 million in the first half of 2016. Selling expenses
as a percentage of net revenues was 15.4% in the first half of 2017, compared to 16.7% in the first half of 2016. The decrease
in selling expenses of the network business was mainly due to reduced marketing, conference, office and travel expenses.
General and administrative expenses of
the network business were RMB94.0 million ($13.9 million), representing a 78.4% increase from RMB52.7 million in the first half
of 2016. General and administrative expenses as a percentage of net revenues were 47.9% in the first half of 2017, compared to
21.4% in the same period last year. The increases were mainly due to management fees and consulting fees to Zhongrong Guofu Investment
Management Company Limited.
Comparing to RMB30.9 million in the same
period last year, capital expenditures decreased to RMB11.1 million ($1.6 million) in the first half of 2017.
Accounts receivable were RMB205.6 million
($30.3 million) as of June 30, 2017, compared to RMB188.7 million as of December 31, 2016. The average period of sales outstanding
for accounts receivable (also known as Days Sales Outstanding) was 182 days in the first half of 2017.
As of June 30, 2017, the Company had bank
credit lines totaling RMB5.2 billion ($760.6 million), of which RMB1.8 billion ($261.2 million) was utilized.
During the first half of 2017, the Company
handled 8,617 patient treatment cases and 115,188 patient diagnostic cases, representing a 19.5% decrease and a 18.5% decrease
from the same period last year, respectively, mainly due to the closure of certain centers during the past year and first half
Singapore Concord International Hospital[4]
is a leading privately-owned, for-profit oncology hospital in Singapore. The Company acquired Singapore Concord International Hospital,
formerly known as Fortis Surgical Hospital, in April 2015 and is now transforming it into a premium cancer hospital.
Net revenues from the hospital business
were RMB9.9 million ($1.5 million or S$2.0 million [5]) in the first half of 2017, representing a 23.8% increase from
net revenues of RMB8.0 million in the first half of 2016.
Cost of service of the hospital business
in the first half of 2017 was RMB25.5 million ($3.8 million or S$5.2 million), a 67.8% increase from cost of service of RMB15.2
million in the first half of 2016, mainly because of high construction fees to improve hardware and software facilities in hospitals.
Gross loss from the hospital business was
RMB15.6 million ($2.3 million or S$3.2 million) in the first half of 2017, compared to RMB7.2 million in same period last year.
Selling expenses of the hospital business
were RMB0.2 million ($0.03 million or S$0.04 million) in the first half of 2017, representing a 33.3% decrease from selling expenses
of RMB0.3 million in the first half of 2016.
General and administrative expenses of
the hospital business were RMB21.9 million ($3.2million or S$4.4 million) in the first half of 2017, of which employee benefit
expenses were RMB10.9 million ($1.6 million or S$2.2 million). In the same period of last year, general and administrative expenses
of the hospital business were RMB22.8 million.
Comparing to RMB5.9 million in the first
half of 2016, capital expenditures of the hospital were RMB72.6 million ($10.7 million or S$14.7 million) in the first half of
2017, which was mainly related to construction fees.
As of June 30, 2017, Singapore Concord
International Hospital had accounts receivable of RMB0.7 million ($0.1 million or S$0.1 million), a 22.2% decrease from accounts
receivable of RMB0.9 million as of December 31, 2016. The number of Days Sales Outstanding was 16 days in the first half of 2017.
Singapore Concord International Hospital
operated 34 beds and had 93 medical and non-medical staff as of June 30, 2017.
Datong Meizhong Jiahe Cancer Hospital
On May 10, 2017, Datong Meizhong Jiahe
Cancer Hospital held an opening ceremony and officially opened for operation. Datong Meizhong Jiahe Cancer Hospital is the first
cancer specialty hospital in the Concord Medical hospital system and is also one of designated hospitals by social medical insurance
programs in Datong city. The hospital has approximately 100 beds, and is equipped with linear accelerator and other international
advanced medical equipment.
[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 of RMB into U.S. dollars are made at a rate of RMB6.7793 to $1.00, the noon buying rate in New York City for cable
transfers payable in RMB, as certified for customs purposes by the Federal Reserve Bank of New York on June 30, 2017.
[2] Each ADS represents three Class
A ordinary shares of the Company.
[3] 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 gain, gain from disposal of property, plant and equipment, changes in fair value of derivative and other
[4] The financial results of Singapore
Concord International Hospital were consolidated into our financial results starting in the second quarter of 2015.
[5] Translations of Singapore dollar
amounts into U.S. dollars are made at a rate of S$1.3765 to $1.00, the noon buying rate in New York City for cable transfers payable
in Singapore dollars, as certified for customs purposes by the Federal Reserve Bank of New York on June 30, 2017.
About Concord Medical
Concord Medical Services Holdings Limited
is a leading specialty hospital management solution provider and operator of the largest network of radiotherapy and diagnostic