Full Press Release Details
Concord Medical Reports Second Quarter 2012 Financial Results and Updates Guidance for Full Year 2012 Revenues
BEIJING, Aug. 20, 2012 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 reported its unaudited consolidated financial results for the second quarter ended June 30, 2012[1].
Second Quarter 2012 Highlights
In the second quarter of 2012, we delivered healthy growth and
increased net revenues compared with the second quarter of 2011, said Dr. Jianyu Yang, Chairman and Chief Executive Officer of Concord Medical, Our core lease and management services business experienced strong growth momentum,
benefiting from the expanding social insurance program in China. We are confident in our expansion strategy and growth prospects. We are pushing forward on all fronts to establish standalone hospitals, open new centers with hospital partners,
pursue acquisition targets, and increase the utilization rate and operational efficiency at our existing facilities.
Update on Chang an Hospital Acquisition On June 18, Concord Medical announced the successful closing of its acquisition of 52% equity interests in Chang an Hospital, a leading
non-public general hospital located in Xi an, Shaanxi Province. Previously, the company announced the signing of a definite agreement in connection with the acquisition on March 22, 2012. Since then, the Company has received all
necessary government approvals including a New Business License for Chang an Hospital, and it has completed all registration procedures, including Capital Verification Report, Share Ownership Report, and Business Registration Change Report.
During the first half of 2012, Chang an Hospital generated revenues (unaudited) of RMB185.5 million, a 57.8% increase over the first half of 2011. The financial results of Chang an Hospital will be reflected in the consolidated financial
statements of the Company in the third quarter.
Update on the Guangzhou Joint Venture Project with Sun Yat-Sen University Cancer Center
The Company has obtained the approval from the Ministry of Health of Guangdong Province to build a 400-bed specialty cancer hospital. The Company expects to break ground on this project in early 2013.
Share repurchase program During the second quarter of 2012, the Company repurchased 394,169 ADSs, representing 1,182,507 ordinary shares,
for an aggregate consideration of $1.4 million (including commissions), under the share repurchase program approved by the board of directors of the Company on September 30, 2011. Since the inception of the program, the Company has repurchased
1,283,847 ADSs, representing 3,851,541 ordinary shares, for an aggregate consideration of $4.6 million (including commissions).
quarter 2012 Results
Total net revenues were RMB136.5 million ($21.5 million) in the second quarter of 2012, a 10.2% increase
from the second quarter of 2011, primarily due to the increases in the number of patient cases and centers in operation compared with the second quarter of 2011.
Cost of revenues in the second quarter of 2012 was RMB42.7 million ($6.7 million), a 6.4% increase from the second quarter of 2011, primarily due to an increase in depreciation costs related to new
equipment, partially offset by lower consumable and other center-related expenses as a result of our cost-control measures.
margin in the second quarter of 2012 was 68.7%, as compared to 67.6% in the second quarter of 2011. The higher gross profit margin is a result of cost-control measures taking effect as well as revenue contribution from recently-opened centers
which have passed their ramp-up phases.
Operating expenses, consisting of selling, general and administrative expenses, were RMB37.0
million ($5.8 million) in the second quarter of 2012 as compared to RMB28.6 million in the second quarter of 2011. Selling expenses were RMB10.4 million ($1.6 million) in the second quarter of 2012, representing 7.6% of the total net revenues as
compared to 9.0% in the second quarter of 2011. The decrease as a percentage of net revenues was mainly due to the cost control measures implemented since the beginning of 2012. General and administrative expenses were RMB26.6 million ($4.2 million)
in the second quarter of 2012, representing 19.5% of the total net revenues as compared to 14.1% in the second quarter of 2011. The increase as a percentage of net revenues was mainly due to an increase in rental expenses as well as other
headquarter-related expenses.
Operating income was RMB56.8 million ($8.9 million) in the second quarter of 2012, a 3.1% increase from
the second quarter of 2011. Operating income excluding share-based compensation expenses (non-GAAP) was RMB59.1 million ($9.3 million), a 3.1% increase from the second quarter of 2011.
Income tax expenses in the second quarter of 2012 were RMB16.9 million ($2.7 million), compared to an
income tax expense of RMB14.0 million in the second quarter of 2011. The effective tax rate for the second quarter of 2012 was 30.7% as compared to 27.2% in the second quarter of 2011.
Net income in the second quarter of 2012 was RMB38.3 million ($6.0 million), a 2.3% increase from the second quarter of 2011. Both basic and diluted earnings per ADS for the second
quarter of 2012 were RMB0.80 ($0.13), as compared to RMB0.79 in the second quarter of 2011.
Non-GAAP net income in the second quarter
of 2012 was RMB40.6 million ($6.4 million), a 2.4% increase from the second quarter of 2011. Both non-GAAP basic and diluted earnings per ADS in the second quarter of 2012 were RMB0.85 ($0.13) compared to RMB0.84 in the second quarter
Adjusted EBITDA (non-GAAP) was RMB93.7 million ($14.7 million) for the second quarter of 2012, representing a 10.0% increase
from the second quarter of 2011, primarily due to increase in operating income and depreciation expenses during the period.
expenditure in the second quarter of 2012 was RMB51.6 million ($8.1 million), primarily on purchasing new equipment for new centers.
of June 30, 2012, the Company had total fixed assets of RMB1, 087.4 million ($171.2 million), cash of RMB130.7 million ($20.6 million), and restricted cash of RMB69.9 million ($11.0 million).
As of June 30, 2012, the Company had bank credit lines of RMB765.0 million ($120.4 million), of which RMB274.9 million ($43.3 million) were
Accounts receivable was RMB250.4 million ($39.4 million) as of June 30, 2012, as compared to RMB244.2 million as of
Days sales outstanding was approximately 159 days in the second quarter of 2012, substantially less than 201
days in the first quarter of 2012, as a result of strengthened collection measures since the beginning of the year.
The Company intends to provide consolidated financial results that include the results of Chang an Hospital beginning
with the third quarter of 2012. The Company also updated its guidance for the second half of 2012 fiscal year as follows:
Conference Call Information
Concord Medical s management will hold an earnings conference call at 8:00 a.m. EDT on August 21, 2012 (8:00 p.m. Beijing/Hong Kong time on
Dial-in details for the earnings conference call are as follows:
U.S. Toll Free: 1-866-519-4004
U.K. Toll Free: 8082346646
China Toll Free: 400-620-8038 / 800-819-0121
Hong Kong Toll Free: 800-930-346
A replay of the conference call
may be accessed by phone at the following number until August 28, 2012:
U.S. Toll Free: 1-866-214-5335
International: 1-718-354-1232
Additionally, a live and archived webcast of this conference call will be available at http://ir.concordmedical.com/.
About Concord Medical
Concord Medical Services Holdings Limited operates the largest network of radiotherapy and diagnostic imaging centers in China, measured by revenues and
the number of centers in operation. As of June 30, 2012, the Company operated a network of 133 centers with 75 hospital partners that spanned 52 cities and 24 provinces and administrative regions in China. Under long-term arrangements with
top-tier hospitals in China, Concord Medical provides radiotherapy and diagnostic imaging equipment and manages the daily operations of these centers, which are located on the premises of its hospital partners. The Company also provides ongoing
training to doctors and other medical professionals in its network of centers to ensure a high level of clinical care for patients. For more information, please see http://ir.concordmedical.com.
Safe Harbor Statement
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. In particular, many of the statements from management in this press release and the section under
Outlook for Full Year 2012 are forward-looking in nature. These forward looking statements are based upon management s current views and expectations with respect to future events and are not a guarantee of future
performance. Furthermore, these statements are, by their nature, subject to a number of risks and uncertainties that could cause actual performance and results to differ materially from those discussed in the forward-looking statements as a
result of a number of factors. Such factors include: the number of new radiotherapy and diagnostic imaging centers opened; the increase in the number of patients in existing centers; the establishment of specialty cancer hospitals; changes in the
healthcare industry in China, including changes in the healthcare policies and regulations of the PRC government; and technological or therapeutic changes affecting the field of cancer treatment and diagnostic imaging. Further information
regarding these and other risks is included in the Company s filings with the U.S. Securities and Exchange Commission at www.sec.gov. The Company does not undertake any obligation to update any forward-looking statement, except as
required under applicable law.
About Non-GAAP Financial Measures
To supplement the consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles (GAAP), Concord Medical uses certain non-GAAP measures. The Company
presents certain of its financial information that is adjusted from results based on GAAP to exclude the impact of share-based compensation expense. The Company believes excluding share-based compensation expense from its non-GAAP financial measures
is useful for its management and investors to assess and analyze the Company s core operating results as such expense is not directly attributable to the underlying performance of the Company s business operations and do not impact its
cash earnings. Concord Medical also believes these non-GAAP measures excluding share-based compensation expense are important in helping investors to understand the Company s current financial performance and future prospects and to compare
business trends among different reporting periods on a consistent basis. In addition, Concord Medical also presents the non-GAAP measure of Adjusted EBITDA, which is defined in this announcement as net income plus interest, taxes, depreciation and
amortization, share-based compensation expenses and other adjustments. Other adjustments include foreign exchange losses and other income, and loss from disposal of property, plant and equipment. Furthermore, Adjusted EBITDA eliminates the impact of
items that the Company does not consider indicative of the performance of its network of centers. The Company believes investors will similarly use Adjusted EBITDA as one of the key metrics to evaluate its financial performance and to compare its
current operating results with corresponding historical periods and with other companies in the healthcare services industry. The presentation of these additional measures should not be considered a substitute for or superior to GAAP results or as
being comparable to results reported or forecasted by other companies. The non-GAAP measures have been reconciled to GAAP measures in the attached financial information.
For more information, please contact:
Concord Medical Services
Zubek rzubek@soleburyir.com
Concord Medical Services Holdings Co., Ltd.
Unaudited Condensed Consolidated Balance Sheets
| December 31, 2011 (*) | June 30, 2012 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| ASSETS | ||||||||||||
| Current assets | ||||||||||||
| Cash | 219,078 | 130,729 | 20,578 | |||||||||
| Restricted cash, current portion | 2,512 | 39,312 | 6,188 | |||||||||
| Held-to-maturity securities | 100,466 | |||||||||||
| Time deposit with original maturities exceeding three months | 50,372 | |||||||||||
| Accounts receivable | 244,189 | 250,383 | 39,412 | |||||||||
| Prepayments and other current assets | 61,630 | 72,133 | 11,354 | |||||||||
| Net investments in direct financing leases, current portion | 49,821 | 74,305 | 11,696 | |||||||||
| Deferred tax assets, current portion | 5,589 | 5,064 | 797 | |||||||||
| Total current assets | 733,657 | 571,926 | 90,025 | |||||||||
| Non-current assets | ||||||||||||
| Property, plant and equipment, net | 1,068,703 | 1,087,444 | 171,170 | |||||||||
| Acquired intangible assets, net | 129,018 | 117,254 | 18,456 | |||||||||
| Deposits for non-current assets | 207,287 | 185,910 | 29,263 | |||||||||
| Prepayment for acquisition of Chang an | 248,909 | 39,180 | ||||||||||
| Net investments in direct financing leases, non-current portion | 97,262 | 138,834 | 21,853 | |||||||||
| Deferred tax assets, non-current portion | 20,866 | 18,956 | 2,984 | |||||||||
| Equity method investments | 540 | 540 | 85 | |||||||||
| Other non-current assets | 86,731 | 84,392 | 13,284 | |||||||||
| Restricted cash, non-current portion | 22,012 | 30,601 | 4,817 | |||||||||
| Prepaid land lease payments | 27,370 | 26,998 | 4,250 | |||||||||
| Total non-current assets | 1,659,789 | 1,939,838 | 305,342 | |||||||||
| Total assets | 2,393,446 | 2,511,764 | 395,367 | |||||||||
| LIABILITIES AND EQUITY | ||||||||||||
| Current liabilities | ||||||||||||
| Short-term bank borrowings | 15,000 | 15,000 | 2,361 | |||||||||
| Long-term bank borrowings, current portion | 77,479 | 92,156 | 14,505 | |||||||||
| Accounts payable | 2,170 | 452 | 71 | |||||||||
| Accrual for purchase of property, plant and equipment | 13,294 | 11,229 | 1,768 | |||||||||
| Obligations under capital leases, current portion | 3,582 | 3,582 | 564 | |||||||||
| Accrued expenses and other liabilities | 59,097 | 59,241 | 9,325 | |||||||||
| Income tax payable | 20,936 | 23,265 | 3,662 | |||||||||
| Deferred revenue, current portion | 13,115 | 12,955 | 2,039 | |||||||||
| Contingent business acquisition consideration | 11,999 | 11,999 | 1,889 | |||||||||
| Total current liabilities | 216,672 | 229,879 | 36,184 | |||||||||
| Non-current liabilities | ||||||||||||
| Long-term bank borrowings, non-current portion | 108,700 | 172,760 | 27,193 | |||||||||
| Deferred revenue, non-current portion | 6,839 | 4,197 | 661 | |||||||||
| Obligations under capitalized leases, non-current portion | 2,289 | 653 | 103 | |||||||||
| Lease deposits | 2,000 | 2,000 | 315 | |||||||||
| Deferred tax liabilities, non-current portion | 18,850 | 18,284 | 2,878 | |||||||||
| Total non-current liabilities | 138,678 | 197,894 | 31,150 | |||||||||
| Total liabilities | 355,350 | 427,773 | 67,334 | |||||||||
| Commitments and contingencies | ||||||||||||
| EQUITY | ||||||||||||
| Ordinary shares | 105 | 105 | 17 | |||||||||
| Treasury stock | (1 | ) | (3 | ) | ||||||||
| Additional paid-in capital | 2,551,877 | 2,534,273 | 398,909 | |||||||||
| Accumulated other comprehensive loss | (17,595 | ) | (17,383 | ) | (2,736 | ) | ||||||
| Accumulated deficit | (599,886 | ) | (538,493 | ) | (84,762 | ) | ||||||
| Total Concord Medical Services Holdings Limited shareholders equity | 1,934,500 | 1,978,499 | 311,428 | |||||||||
| Non-controlling interests | 103,596 | 105,492 | 16,605 | |||||||||
| Total equity | 2,038,096 | 2,083,991 | 328,033 | |||||||||
| Total liabilities and equity | 2,393,446 | 2,511,764 | 395,367 |
Concord Medical Services Holdings Limited
Unaudited Condensed Consolidated Statements of Income
(in thousands, except per ADS data)
| For The Three Months Ended | ||||||||||||
| June 30, 2011 (*) | June 30, 2012 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Revenue, net of business tax, value-added tax and related surcharges | ||||||||||||
| Lease and management services | 103,650 | 119,542 | 18,817 | |||||||||
| Management services | 11,784 | 4,071 | 641 | |||||||||
| Other, net | 8,413 | 12,917 | 2,033 | |||||||||
| Total net revenues | 123,847 | 136,530 | 21,491 | |||||||||
| Cost of revenues | ||||||||||||
| Depreciation | (20,657 | ) | (27,319 | ) | (4,300 | ) | ||||||
| Amortisation of acquired intangibles | (6,463 | ) | (6,303 | ) | (992 | ) | ||||||
| Others | (12,998 | ) | (9,053 | ) | (1,425 | ) | ||||||
| Total cost of revenues | (40,118 | ) | (42,675 | ) | (6,717 | ) | ||||||
| Gross profit | 83,729 | 93,855 | 14,774 | |||||||||
| Operating expenses | ||||||||||||
| Selling expenses | (11,144 | ) | (10,426 | ) | (1,641 | ) | ||||||
| General and administrative expenses | (17,424 | ) | (26,580 | ) | (4,184 | ) | ||||||
| Operating income | 55,161 | 56,849 | 8,949 | |||||||||
| Interest expenses | (1,661 | ) | (3,504 | ) | (552 | ) | ||||||
| Foreign exchange (loss) gain | (3,108 | ) | 399 | 63 | ||||||||
| Gain from disposal of property, plant and equipment | 92 | 14 | ||||||||||
| Interest income | 1,052 | 1,367 | 215 | |||||||||
| Other income | 33 | 5 | ||||||||||
| Income before income taxes | 51,444 | 55,236 | 8,694 | |||||||||
| Income tax expenses | (14,015 | ) | (16,933 | ) | (2,665 | ) | ||||||
| Net income | 37,429 | 38,303 | 6,029 | |||||||||
| Net income attributable to noncontrolling interests | 1,495 | 1,087 | 171 | |||||||||
| Net income attributable to ordinary shareholders | 35,934 | 37,216 | 5,858 | |||||||||
| Earnings per ADS | ||||||||||||
| Basic /Diluted | 0.79 | 0.80 | 0.13 | |||||||||
| Weighted average number of ADS outstanding: | ||||||||||||
| Basic /Diluted | 47,451,177 | 46,359,145 | 46,359,145 | |||||||||
| Other comprehensive (loss) income, net of tax | ||||||||||||
| Foreign currency translation | (1,206 | ) | 184 | 29 | ||||||||
| Total other comprehensive (loss) income, net of tax | (1,206 | ) | 184 | 29 | ||||||||
| Comprehensive income | 36,223 | 38,487 | 6,058 |
Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures
(*) (in RMB thousands, unaudited)
| For the three months ended June 30, 2011 | For the three months ended June 30, 2012 | |||||||||||||||||||||||
| GAAP Result | Adjustment | Non- GAAP Results | GAAP Result | Adjustment | Non- GAAP Results | |||||||||||||||||||
| Operating income | 55,161 | 2,200 | 57,361 | 56,849 | 2,282 | 59,131 | ||||||||||||||||||
| Net income | 37,429 | 2,200 | 39,629 | 38,303 | 2,282 | 40,585 | ||||||||||||||||||
| Basic earnings per ADS | 0.79 | 0.05 | 0.84 | 0.80 | 0.05 | 0.85 | ||||||||||||||||||
| Diluted earnings per ADS | 0.79 | 0.05 | 0.84 | 0.80 | 0.05 | 0.85 |
Reconciliation from net income to adjusted EBITDA(*) (in RMB thousands, unaudited)