Full Press Release Details
Concord Medical Reports Third Quarter 2013 Financial Results and Reiterates Financial Year Guidance Forecast
BEIJING, November 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 third quarter ended September 30, 2013[1].
Third Quarter 2013 Highlights
Dr. Jianyu Yang, Chairman and Chief Executive Officer of Concord Medical, stated, We are pleased with our
overall operating and financial results for the third quarter of 2013. The 15% revenue growth rate in our network business exceeded the 7% growth rate in the second quarter, while the gross margin remained at a favorable level. Concord Medical
remains to be the leading operator of radiotherapy and diagnostic imaging centers in China. We enhanced our market position by adding four new centers in the third quarter, bringing our total number of centers to 144.
In our Hospital segment, total revenue from our Chang an Hospital reached RMB102.9 million, an increase of 12.2% from the same quarter of last
year. We are proud that medical service revenue increased significantly by 20.6% over the prior year period, demonstrating our strong momentum in both patient volume and per patient yield. The medicine revenue accounted for 42.6% of total revenue
from hospital business in the quarter, while our long-term target is to lower the ratio to under 40%.
In mid-October, the State Council of
China issued Guidelines to promote the development of the healthcare services industry . For Concord Medical, these new guidelines will greatly improve the visibility of government approvals and equipment procurement for
establishing new private, for-profit hospitals. We feel very confident that our planned specialty cancer hospitals will significantly benefit from these new policies over time.
Currently, we are finalizing design plans for our Concord Guangzhou Cancer Hospital. Our timeline for this project remains on schedule with construction expected to start in the first half of
Dr. Yang concluded, With new government policies becoming more favorable to private healthcare services institutions, we remain
highly confident with our business strategy of providing specialized, high-quality healthcare services to patients in China. Future Concord facilities will introduce the most advanced treatment and medical procedures in our branded hospitals and
leverage our strategic relationships with world-famous medical institutions.
Third Quarter 2013 Results by Segment
The Company added three treatment
centers and one diagnostic center in the third quarter of 2013, bringing the total number of centers in operation to 144 in 55 cities in China as of September 30, 2013. As of September 30, 2013, the Company had agreements to establish nine
additional centers, which are scheduled to open in the first half of 2014.
Net revenue from the network business was RMB131.1 million ($21.4 million) for
the third quarter of 2013, representing an increase of 14.6% from the third quarter of 2012, primarily due to an increase in the number of patients in the Company s existing centers and from the contribution of new centers opened during the
Gross profit margin in the network business was 56.0% for the third quarter of 2013, compared to 61.3% for the third quarter of 2012 and
59.7% in the second quarter of 2013. The lower year-over-year gross profit margin was primarily due to increased consumable cost, compensation and operating cost at the Company s centers.
Capital expenditure of the network business was RMB20.9 million ($3.4 million) for the third quarter of 2013, compared with RMB131.4 million in the third
quarter of 2012. The capital expenditure during the third quarter of 2013 was mainly relating to ancillary equipment spending with the Company s network centers. The capital expenditure during the third quarter of 2012 was mainly composed of
deposits for equipment for new centers.
Selling expenses in the network business were RMB24.7 million ($4.0 million) for the third quarter of 2013,
representing an increase of 39.0% from RMB17.7 million in the third quarter of 2012. The increase was mainly due to higher selling expenses related to the Company s telemedicine and web businesses, which amounted to RMB4.2 million ($0.7
million). The Company also incurred higher marketing and promotion expenses at its existing centers.
General and administrative expenses in the network
business were RMB13.3 million ($2.2 million), representing a decrease of 44.9% from RMB24.3 million in the second quarter of 2013. During the third quarter of 2013, the Company spent RMB1.7 million ($0.3 million) in general and administrative
expenses relating to the telemedicine and web business.
Accounts receivable from the network business was RMB234.1 million ($38.3 million) as of September 30, 2013,
compared to RMB209.3 million as of June 30, 2013. The average period of sales outstanding for accounts receivable, or days sales outstanding (DSO), was 154 days for the third quarter of 2013, as compared to 123 days for the second quarter of
As of September 30, 2013, the Company, excluding Chang an Hospital, had bank credit lines of RMB2,699 million ($441.0 million), of which
RMB875.6 million ($143.1 million) was utilized.
During the third quarter of 2013, the Company handled 9,522 patient treatment cases and 79,255 patient
diagnostic cases in the center network, representing a 10.4% decrease and a 7.2% increase from the third 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 RMB102.9 million ($16.8 million) for the third quarter of 2013, a 12.2% increase compared to RMB91.7 million for the third quarter of 2012. Third quarter 2013 net revenue from the hospital business consisted of:
Cost of service for the hospital business for the third quarter of 2013 was RMB88.4 million ($14.5 million), of which the medicine cost was RMB37.3 million
($6.1 million) and the medical service cost was RMB51.2 million ($8.4 million).
Gross profit margin of the hospital business was 14.0% for the third
quarter of 2013, compared to 15.9% for the third quarter of 2012 and 16.9% in the second quarter of 2013. The decrease in gross margin was mainly due to seasonality factors.
Capital expenditure of the hospital business was RMB6.7 million ($1.1 million) for the third quarter of 2013, compared with RMB13.3 million in the second
General and administrative expenses in the hospital business were RMB4.5 million ($0.7 million), compared with RMB6.2 million in the
second quarter of 2013.
As of September 30, 2013, Chang an Hospital had accounts receivable of RMB39.7 million ($6.5 million),
as compared to RMB38.1 million for the second quarter of 2013, representing days sales outstanding of 34 days, as compared to 29 days for the second quarter of 2013.
Chang an Hospital received 148,506 outpatients and 7,886 inpatients for the third quarter of 2013. The average bed utilization for the quarter was 86.7%.
The average days of hospital stay was 9.6 days per patient for the quarter. Chang an Hospital operated 1,015 beds as of September 30, 2013.
of September 30, 2013, the Company had cash and cash equivalents of RMB166.6 million ($27.2 million), compared to RMB75.4 million as of December 31, 2012.
Results for the nine months ended September 30, 2013
Net revenue was RMB691.9 million ($113.1 million) for the nine months ended September 30, 2013, representing a 54.0% increase from the nine months ended
Cost of revenues was RMB427.4 million ($69.8 million) for the nine months ended September 30, 2013, representing a 105.0%
increase from the nine months ended September 30, 2012, which was primarily due to the consolidation of the financial results of Chang an Hospital since the third quarter of 2012.
Gross profit margin was 38.2% for the nine months ended September 30, 2013, compared with 53.6% for the nine months ended September 30, 2012. The
decrease in gross profit margin was primarily due to the consolidation of the financial results of Chang an Hospital since the third quarter of 2012, as gross profit margin for the hospital business was lower than that for the network business.
Operating expenses were RMB140.3 million ($22.9 million) for the nine months ended September 30, 2013, representing a 53.1% increase from RMB91.6
million for the nine months ended September 30, 2012, which was primarily due to the consolidation of the financial results of Chang an Hospital since the third quarter of 2012.
As a result, operating income was RMB124.2 million ($20.3 million) for the nine months ended September 30, 2013, representing a 16.7% decrease from
RMB149.2 million for the nine months ended September 30, 2012.
Income tax expense was RMB41.1 million ($6.7 million) for the nine months ended
September 30, 2013, as compared to RMB38.6 million for the nine months ended September 30, 2012. The effective tax rate for the nine months ended September 30, 2013 was 33.9%, as compared to 27.3% for the first nine months of 2012,
primarily attributable to accrued tax expenses relating to Chang an Hospital.
As a result, net income was RMB80.2 million ($13.1 million) for the nine months ended September 30, 2013,
representing a 21.9% decrease from RMB102.8 million for the nine months ended September 30, 2012.
Basic and diluted earnings per ADS for the nine
months ended September 30, 2013 were both RMB1.67 ($0.27), representing a 24.1% decrease from the basic and diluted earnings per ADS of RMB2.20 for nine months ended September 30, 2012.
Share repurchase program
During the third quarter
of 2013, the Company repurchased 99,445 ADSs, representing 298,335 ordinary shares, for a total consideration of $0.48 million.
From the inception of the
share repurchase program on October 9, 2012 to September 30, 2013, the Company repurchased 2,405,777 ADSs, representing 7,217,331 ordinary shares, in the open market, for a total consideration of $8.60 million (including commissions).
As of September 30, 2013, the Company had 18.8 million ADSs outstanding, representing 56.4 million ordinary shares. The weighted average number
of ordinary shares outstanding was 135,019,705.
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 from 10% to 15% compared to 2012.
Conference Call Information
Medical s management will hold an earnings conference call at 8:00 a.m. EST on November 13, 2013 (9:00 p.m. Beijing/Hong Kong time on November 13, 2013).
Dial-in details for the earnings conference call are as follows:
U.S. Toll Free: 1-866-519-4004
U.K. Toll Free: 08082346646
International: 65 67239381
China Toll Free: 400-620-8038 /
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
International: +61 2 8199 0299
Conference ID: 94822599
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