Full Press Release Details
Concord Medical Reports Fourth Quarter and Full Year 2012 Financial Results
CHINA, March 20, 2013 Concord Medical Services Holdings Limited ( Concord Medical or the Company ) (NYSE: CCM), a leading hospital management company and 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 full year ended December 31, 20121.
Fourth Quarter Highlights
Full Year 2012 Highlights
We have made steady progress towards the strategic goal of transforming Concord Medical into a market
leader in the healthcare service sector, said Dr. Jianyu Yang, Chairman and Chief Executive Officer of Concord Medical. During the year, we successfully closed two major acquisitions including a majority ownership position in
Chang An Hospital, one the largest privately-owned general hospitals in China, and 19.98% of indirect ownership of The University of Texas MD Anderson Cancer Center Proton Therapy Center. Combined, these acquisitions have helped position
Concord Medical as a leading provider of healthcare and cancer-related therapies across China.
In 2012, our network business
experienced steady growth, as revenues reached RMB 474.7 million, growing by 5.5% compared to 2011. The CCM network now covers 53 cities in China.Our policy of cost control adapted in 2012 has taken effect by improving our profitability from
the network business. In 2013, we will continue to implement the cost control policy and introduce Return on Investment (ROI) as a performance indicator for all CCM centers. All these measures will create more value to our shareholders.
Chang an Hospital demonstrated great growth momentum in 2012, as the medical revenue grew by over 40% compared to 2011. In July 2012, the Hospital
announced that it had established strategic alliance with Fox Chase, a top oncology institution in the USA. In 2013, CCM will continue to strengthen Chang an Hospital s oncology departments and develop it into a leader for cancer
The Chinese government issued multiple new policies in 2012 to encourage private investment in the healthcare system,
continued Dr. Yang. The expansion of the universal healthcare system will greatly increase the demand for the services of our network centers as well as Chang an Hospital. In 2013, we will commence construction on our first oncology
specialty hospital, the CCM Huanan Cancer Hospital. We are confident that CCM will leverage the favorable policy environment to meet the growing demand for high-quality, differentiated medical services and introduce the most advanced radiotherapy
methods to cancer patients in China.
2012 Fourth Quarter Financial Results
Total net revenues were RMB222.7 million ($35.8 million)(a), a 95.1% increase from the fourth quarter of 2011.
Cost of revenue was RMB129.6 million ($20.8 million), as compared to RMB44.8 million for the fourth
quarter of 2011. The increase reflected the consolidation of the financial results of Chang an Hospital. Total Cost of revenue is composed of:
Gross profit was RMB93.1 million ($14.9 million), representing a 34.2% increase from the fourth quarter of 2011. The gross profit margin for the
fourth quarter of 2012 was 41.8%. Gross profit for the fourth quarter of 2012 consisted of:
Operating expenses were RMB35.9 million ($5.8 million) for the fourth quarter of 2012.
Operating income was RMB57.2 million ($9.2 million) for the fourth quarter of 2012.
Income tax expense was RMB22.7 million ($3.6 million) for the fourth quarter of 2012. The effective tax rate for the fourth quarter of 2012 was 40.3%, partially due to Chang an Hospital s
accrued tax expenses in the fourth quarter.
Net income was RMB33.6 million ($5.4 million) for the fourth quarter of 2012, compared to
net loss of RMB310.0 million ($49.3 million) in the fourth quarter of 2011. The net profit margin in the fourth quarter of 2012 was 15.1%.
Basic and diluted earnings per American depositary share ( ADS ) for the
fourth quarter of 2012 were both RMB0.68 ($0.11). Each ADS represents three ordinary shares.
EBITDA(c) (non-GAAP) was RMB107.4 million ($17.2
million) for the fourth quarter of 2012, representing a 43.6% increase from the fourth quarter of 2011.
As of December 31, 2012, the
Company had RMB75.4 million ($12.1 million) in cash and RMB284.0 million ($45.6 million) in current portion of restricted cash.
quarter 2012 results by segment
Total net revenues consist of net revenues generated from the network business and hospital
The Company added two radiotherapy and diagnostic imaging centers in the fourth quarter of 2012, bringing the total number of centers in operation to 136 in 53 cities in China as of December 31,
2012. As of the same date, the Company had entered into agreements to establish 17 additional centers.
the network business were RMB117.1 million ($18.8 million) for the fourth quarter of 2012, which consisted of (i) net revenues from lease and management services of RMB104.5 million ($16.8 million), representing an 17.9% increase from the
fourth quarter of 2011; (ii) net revenues from management services of RMB2.8 million, representing an 37.2% decrease from the fourth quarter of 2011, reflecting the exclusion of Chang an Hospital-related management services; and
(iii) net revenues from others services of RMB9.8 million, representing an 34.4% decrease from the fourth quarter of 2011.
Gross profit margin of the network business was 67.6% as compared to 60.8% for the fourth quarter of 2011.
Capital expenditure of the network business was RMB44.0 million ($7.1million) for the fourth quarter of 2012.
Accounts receivable from the network business was RMB173.3 million ($27.4 million) as of December 31, 2012, as compared to RMB244.2 million as of
December 31, 2011. The average period of sales outstanding for accounts receivable (also known as Days Sales Outstanding) was 132 days for the fourth quarter of 2012, as compared to 156 days for the third quarter of 2012.
During the fourth quarter of 2012, the Company handled 10,378 patient treatment cases, representing 16.2% increases from the fourth quarter of 2011 and
68,473 patient diagnostic cases, representing 9.5% increases from the fourth quarter of 2011.
Net revenues from the hospital business were RMB105.6 million ($16.9 million) for the fourth quarter of 2012. Total medical revenues
were RMB99.7 million ($15.8 million), which consisted of:
Cost of service for the hospital business for the fourth quarter of 2012 was RMB91.6 million ($14.7
Gross profit margin of the hospital business was 13.2% for the fourth quarter of 2012.
As of December 31, 2012, Chang an Hospital had accounts receivable of RMB43.0 million ($6.9 million), representing days sales outstanding of 34
days. The accounts receivable was mainly from medical revenues covered by various government-sponsored insurance programs. Chang an Hospital settles the balance with the local social insurance bureau on a periodic basis.
Based on the preliminary purchasing price allocation (the PPA ) results, we have identified intangible assets as well as prepaid land lease
payments valued at RMB67.3 million ($10.8 million). The intangible assets include healthcare qualification and oncology operation licenses. The resulting amortization expense in the fourth quarter of RMB2.4 million ($0.4 million) was included
in Chang an Hospital s cost of revenue and operating expenses.
Chang an Hospital treated 127,751 outpatients and 8,661
inpatients for the fourth quarter of 2012. The average bed utilization rate for the fourth quarter of 2012 was over 100%. The average days of hospital stay was 10.3 days per patient for the fourth quarter of 2012. Chang an Hospital operated 978
beds as of December 31, 2012 .
Fiscal 2012 Full Year Results
Total net revenues in 2012 were RMB672.1 million ($107.9 million), representing a 49.3% increase from RMB450.1 million in 2011, of which Network
revenues were 474.7 million, Chang an Hospital s net revenues were 197.3 million.
Cost of revenues in 2012 was RMB338.2
million ($54.3 million), representing a 112.1% increase from RMB159.4 million in 2011.
Gross profit margin in 2012 was 49.7%, compared to 64.6% in 2011. This decrease reflected the
consolidation of the financial results of Chang an Hospital, which has a lower gross margin than the network business. The gross margin for the network business and hospital business was 64.3% and 14.5%, respectively.
Selling expenses in 2012 were RMB53.9 million ($8.7 million), representing a 43.9% increase from RMB37.5 million in 2011. Selling expenses as a
percentage of total net revenues decreased to 8.0% in 2012 from 8.3% in 2011. The decrease was primarily due to the cost control measures implemented since the beginning of 2012. General and administrative expenses in 2012 were RMB71.7
million ($11.5 million), representing a 11.0% decrease from RMB80.6 million in 2011. General and administrative expenses as a percentage of total net revenues decreased to 10.7% in 2012 from 17.9% in 2011.
Operating income in 2012 was RMB206.4 million ($33.1 million), a 227.9% increase from RMB-161.3 million in 2011. Operating income
excluding share-based compensation expenses (non-GAAP) in 2012 was RMB215.5 million ($34.6 million), representing a 241.7% increase from 2011.
Net income in 2012 was RMB136.4 million ($21.9 million). Both basic and diluted earnings per ADS for 2012 amounted to RMB2.82 ($0.45).
Net income excluding share-based compensation expenses (non-GAAP) in 2012 was RMB145.5 million ($23.3 million). Both basic and diluted earnings
per ADS excluding share-based compensation expenses (non-GAAP) in 2012 were RMB3.02 ($0.48).
Adjusted EBITDA (non-GAAP) was
RMB376.0 million ($60.4 million) in 2012, representing a 18.1% increase from RMB318.4 million in 2011.
Share-based compensation
expenses, which were allocated to related operating expense items, were RMB9.1 million ($1.1 million) in 2012, compared to RMB9.2 million in 2011.
Income tax expense in 2012 was RMB61.3 million ($9.8 million), compared to an income tax expense of RMB46.3 million in 2011. The effective tax rate for 2012 was 31% as compared to 28.1% in 2011.
As of December 31, 2012, the Company had total fixed assets valued at RMB1499.6 million ($240.7 million), cash and cash
equivalents of RMB75.4 million ($12.1 million), and restricted cash of RMB284.0 million ($45.6 million).
Capital expenditures were
RMB391.9 million ($62.9 million) in 2012, compared to RMB339.9 million in 2011.
As of December 31, 2012, the Company had bank credit
lines totaling RMB2165.3 million (US$347.6 million), of which RMB756.5 million ($122.9 million) were utilized.
Accounts receivable was RMB213.3 million ($34.2 million) as of December 31, 2012, compared to
RMB211.7 million as of September 30, 2012 and RMB244.2 million as of December 31, 2011. Days sales outstanding (DSO) was approximately 86 days in the fourth quarter of 2012 down from 101 days in the third quarter of 2012 and
192 days in the fourth quarter of 2011. The improved DSO was mainly due to the strengthened efforts during 2012 to accelerate collection from hospital partners, as well as the shorter DSO of Chang an Hospital.
During the fourth quarter of 2012, the Company repurchased 259,202 ADSs, representing 777,606 ordinary shares for a total $1.1 million, including
commissions. As of December 31, 2012, the Company had 19.0 million ADSs outstanding, representing 57.0 million ordinary shares, or 40% of total 47.45 million ordinary shares.
announced on January 4, 2013 that it has closed the acquisition of 19.98% of indirect ownership of The University of Texas MD Anderson Cancer Center Proton Therapy Center (MD Anderson Proton Therapy Center).
The company announced the signing of a definite agreement in connection with the acquisition on December 11, 2012. MD Anderson Proton Therapy
Center is a leading proton treatment center in the world. Concord Medical plans to invest and operate two proton centers in China. The transaction will enable Concord Medical to expand its expertise and knowledge base in preparation for the
operation of future proton centers.
After the closing, Concord Medical becomes the second largest owner of the MD Anderson Proton Therapy
Center, behind MD Anderson Cancer Center. Concord Medical will join both the Board of Directors of the PTC-Houston Management, LP, the general partner of the center, and the center s Advisory Committee.
The acquisition of interest in MD Anderson Proton Therapy Center plays a key role in accelerating Concord Medical s strategic plan to build
and operate proton centers in China, says Dr. Jianyu Yang, CCM Chairman and CEO. The transaction solidifies CCM s position as a leading radiotherapy operator in China. We look forward to working closely with MD