Full Press Release Details
Concord Medical Reports Second Quarter 2013 Financial Results
Total Net Revenue Increases 86% to RMB254 Million
--2Q13 Adjusted EBITDA Growth of 11%--
--Reiterates Full Year Financial Forecast of 40%-47% Revenue Growth
--Establishes Full Year Adjusted EBITDA Growth in Mid-teen Levels--
BEIJING, August 12, 2013 -- 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 and the parent of Chang an Hospital, today reported its unaudited consolidated
financial results for the second quarter ended June 30, 2013[1].
Second Quarter 2013 Highlights
Dr. Jianyu Yang, Chairman and Chief Executive Officer of Concord Medical, stated, We are very pleased with our revenue, gross profit and
adjusted EBITDA growth in the second quarter of 2013 as we continue to scale our network business and make further strides in our efforts to develop into a branded specialty cancer hospital company in China.
Revenue in our network business grew approximately 6.7% in the quarter with gross margin of 59.7%, both of which were notable improvements from our
first quarter results. We added three new centers in the quarter, bringing our total count to 140 centers at the end of the second quarter. We are proud that we have consolidated our position as the largest operator of radiotherapy and diagnostic
imaging centers in China.
In our Hospital segment, Chang an Hospital delivered improved financial and operating results in
the second quarter. As a hospital intended for the general population, Chang an Hospital benefits from China s enlarged social welfare network with strong patient flow. Our gross margin in this segment improved significantly since last
quarter and we believe the performance will remain stabilized in the second half of 2013.
We continue to make meaningful progress
in our telemedicine and web business units and expect these business units to start generating incremental medical revenue for our centers as well as achieve cost savings for our network business in the coming quarters.
As government policy in China increasingly favors the establishment of private healthcare institutions and higher demand for differentiated,
high-quality healthcare services, we intend to focus on the construction and operation of CCM-branded specialty cancer hospitals in China. Our projects in Beijing and Guangzhou are both moving forward and remain on schedule. Our target is to
complete the design of Concord Guangzhou Cancer Hospital in the second half of 2013 with construction expected to start in the first half of 2014.
Dr. Yang concluded, We believe our growth for the second half of 2013 will remain strong, as new centers in the network business entering productive stage and Chang an Hospital carrying
the strong momentum forward. We remain comfortable with our full year projection of 40%-47% revenue growth and adjusted EBITDA growth in the mid-teen levels for 2013.
Second Quarter 2013 Results by Segment
The Company added three diagnostic centers in the second quarter of 2013, bringing the total number of centers in operation to 140 in 54 cities in China
as of June 30, 2013. As of June 30,, the Company has agreements to establish eight additional centers, which are scheduled to open in the second half of the year.
Net revenue from the network business was RMB145.6 million ($23.7million) for the second quarter of 2013, representing an increase of 6.7% from the second quarter of 2012, primarily due to an increase in
the number of patients in the Company s existing centers as well as contribution from the new centers opened during the past 12 months.
Gross profit margin in the network business was 59.7% for the second quarter of 2013, compared to 68.7% for
the second quarter of 2012 and 55.4% in the first quarter of 2013. The lower year-over-year gross profit margin was primarily due to increased compensation and operating cost at the Company s centers. The improved quarter-over-quarter gross
profit margin was mainly due to higher revenue and cost-saving measures implemented during the quarter.
Capital expenditure of the network
business was RMB24.5 million ($4.0 million) for the second quarter of 2013, compared with RMB51.6 million in the second quarter of 2012.
Selling expenses in the network business were RMB25.6 million ($4.2 million) for the second quarter of 2013, representing an increase of 145.9% from the
second quarter of 2012. The increase was mainly due to selling expenses relating to the Company s telemedicine and web business, which amounted to RMB8.8 million ($1.4 million). The Company also incurred higher marketing and promotion expenses
relating to existing centers.
General and administrative expenses in the network business were RMB24.3 million ($4.0 million), representing a
decrease of 8.7% from the second quarter of 2012. The decrease was mainly due to lower professional fees incurred during the quarter. During the quarter, the Company spent RMB2.1 million ($0.3 million) in general and administrative expenses relating
to the telemedicine and web business.
Accounts receivable from the network business was RMB209.3 million ($34.1 million) as of June 30,
2013, compared to RMB185.9 million as of March 31, 2013. The average period of sales outstanding for accounts receivable, or days sales outstanding (DSO), was 123 days for the second quarter of 2013, as compared to 155 days for the first
quarter of 2013. The improved DSO was mainly due to strengthened collection efforts by the Company during the quarter.
2013, the Company, not including Chang an Hospital, had bank credit lines of RMB2,286 million ($372.5 million), of which RMB926.0 million ($150.9 million) was utilized.
During the second quarter of 2013, the Company handled 8,209 patient treatment cases and 84,943 patient diagnostic cases in the center network, representing a 6.9% decrease and a 60.8% increase from the
second quarter of 2012, respectively.
Please note that financial results of Chang an Hospital were consolidated into the Company s operating results effective from the third quarter of 2012 when the Company consummated its
acquisition of 52% equity interest in Chang an Hospital.
Net revenue from the hospital business was RMB108.4 million ($17.7million) for
the second quarter of 2013 compared to RMB92.3 million for the first quarter of 2013. Second quarter 2013 revenue from the hospital business consisted of:
Cost of service for the hospital business for the second quarter of 2013 was RMB90.1 million ($14.7 million), of which the medicine cost was RMB38.5
million ($6.3 million) and the medical service cost was RMB51.6 million ($8.4 million).
Gross profit margin of the hospital business was
16.9% for the second quarter of 2013, a sequential improvement of 640 basis points from 10.5% in the first quarter of 2013. The improved gross margin was mainly due to increased contribution from the outpatient and inpatient business during the
Capital expenditure of the hospital business was RMB13.3 million ($2.2 million) for the second quarter of 2013, compared with RMB9.8
million in the first quarter of 2013.
General and administrative expenses in the hospital business were RMB6.2 million ($1.0 million),
compared with RMB4.6 million in the first quarter of 2013.
As of June 30, 2013, Chang an Hospital had accounts receivable of
RMB38.1 million ($6.2 million), representing days sales outstanding of 29 days, as compared to 36 days for the first quarter of 2013.
Chang an Hospital received 151,265 outpatients and 8,164 inpatients for the second quarter of 2013. The average bed utilization for the quarter was
93.4%. The average days of hospital stay was 10.2 days per patient for the quarter. Chang an Hospital operated 1,015 beds as of June 30, 2013.
Chang an Hospital is a leading private-owned, general service, for-profit hospital, located in Xi an, Shanxi Province. Established in 2002, Chang an Hospital had 57 departments with over
1,267 medical and non-medical staff as of June 30, 2013.
Share repurchase program
During the second quarter of 2013, the Company repurchased $0.05 million worth of stock, comprised of 12,524 ADSs, representing 37,572 ordinary shares.
Through June 30, 2013, the Company repurchased 2,306,332 ADSs, representing 6,918,996 ordinary shares, in the open market, for a total
consideration of $8.12 million (including commissions) under the share repurchase program announced on October 9, 2012.
June 30, 2013, the Company had 18.9 million ADSs outstanding, representing 56.7 million ordinary shares.
Based on current market and operating conditions, estimated business expansion and forecasted Chang an Hospital financial results, Concord Medical reiterates its full year 2013 guidance forecast of
total estimated net revenue in the range of RMB930 million to RMB975 million, representing a 40% to 47% increase from 2012. Revenue from the Company s network business and hospital business as a percent of total revenue are expected to be
approximately 55% and 45% in 2013, respectively. Full year 2013 Adjusted EBITDA is expected to grow at the mid-teen level for the year compared to 2012.
Conference Call Information
Concord Medical s management will hold an earnings
conference call at 8:00 a.m. Eastern Daylight Time on August 13, 2013 (8:00 p.m. Beijing/Hong Kong time on August13, 2013).
Dial-in details for the earnings conference call are as follows:
U.K. Toll Free: 08082346646
International: 65 67239381
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 numbers for 7 days:
U.S. Toll Free: 1-855-452-5696
Conference ID: 26409831
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 and is the
parent of Chang an Hospital. As of June 30, 2013, the Company operated a network of 140 centers with 77 hospital partners that spanned 54 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
This news release may contain 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 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; technological or therapeutic changes affecting the field of cancer treatment and diagnostic imaging; and possible effects on consumers and hospitals, hospital construction, and suppliers, as a result
of inflation and the Chinese government's policies and actions to control inflation. Further information regarding these and other risks is included in the Company s filings with the U.S. Securities and Exchange Commission, which are available
at www.sec.gov. The Company does not assume any obligation to update any forward-looking statement, except as required by law.
About Non-GAAP Financial Measures