Full Press Release Details
Concord Medical Reports Financial Results
for the First Quarter of 2016
BEIJING, May 24, 2016 /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 first quarter of 2016[1].
First Quarter 2016 Highlights
Dr. Jianyu Yang, Chairman and Chief Executive
Officer of Concord Medical, commented, "During the first quarter of 2016, our revenue and profit were under pressure due
to the closure of cooperative centers and uncertainties in the regulatory environment. During the past quarter, our Concord Cancer
Hospital in Singapore has received patients from China to receive the latest immunotherapy. Based on the inquiries we have received,
we expect that the number of patients from China will see steady growth for the rest of the year.
"Also, we have accelerated the pace to open
and operate our Meizhongjiahe network of specialty cancer hospitals. The first cancer hospital under the Meizhongjiahe brand, Datong
Meizhongjiahe Cancer Hospital, was opened preliminarily on May 19th.
"Since receiving approvals from the government
in October 2014, we have engaged in developing our first wholly-owned, Level-II specialty domestic cancer hospital in Datong,
Shanxi Province. Equipped with advanced linear accelerator and MRI, the 100-bed hospital will provide advanced treatment including
imaging diagnosis and radiotherapy to local patients.
"It is an important step for our broad strategy
of building a nationwide free-standing cancer treatment and diagnosis centers chain under the brand Meizhongjiahe'.
Our next step is to expand the Meizhongjiahe network by establishing specialty cancer hospitals in cities such as Wuxi, Hangzhou,
Taizhou, and Nanchang. There is strong patient demand in Tier II and Tier III cities in China for advanced cancer diagnosis and
treatments, and we see their challenge as ours. As part of the company's comprehensive development strategy, the network
of Meizhongjiahe will join our planned premium hospitals in Beijing, Shanghai, and Guangzhou to advance the company's domestic
2016 First Quarter Financial Results
Net revenues from the network business
were RMB121.6 million ($18.9 million), a 19.0% decrease from net revenues of RMB150.7 million in the first quarter of 2015, attributable
to the closure of certain cooperative centers in our network of centers during 2015 and to changes in the revenue-sharing split
according to the contracts signed between the Company and our public hospital partners. As of March 31, 2016, the Company operated
a network of 125 cooperative centers in 52 cities in China and had entered into agreements to establish one additional center.
Cost of revenue of the network business
was RMB72.4 million ($11.2 million), a 5.5% decrease from RMB76.3 million in the first quarter of 2015.
Gross profit from the network business
was RMB49.2 million ($7.6 million), representing a 33.8% decrease from RMB74.4 million in the first quarter of 2015. The gross
profit margin for the first quarter of 2016 was 40.5%, compared to 49.4% for the first quarter of 2015. The decrease was mainly
due to the closure of certain cooperative centers in our network of centers during 2015 and the changes in the revenue-sharing
split according to the contracts signed between the Company and our public hospital partners.
Selling expenses of the network business
were RMB18.4 million ($2.8 million), representing a 29.0% decrease from RMB25.9 million in the first quarter of 2015. Selling expenses
as a percentage of total net revenues decreased to 15.1% in the first quarter of 2016 from 17.2% in the first quarter of 2015.
The decreases were mainly due to marketing and promotion expenses.
General and administrative expenses of
the network business were RMB31.1 million ($4.8 million), representing a 45.3% increase from RMB21.4 million in the first quarter
of 2015. General and administrative expenses as a percentage of total net revenues were 25.6% in the first quarter of 2016, compared
to 14.2% in the first quarter of 2015. The increases were mainly due to higher travel, conference and rental expenses as compared
to the same quarter in 2015 as well as to expenses occurred in setting up new domestic subsidiaries.
Capital expenditures were RMB18.7 million
($2.9 million) for the first quarter of 2016, compared to RMB38.9 million in the first quarter of 2015.
Accounts receivable was RMB205.1 million
($31.8 million) as of March 31, 2016, compared to RMB218.3 million as of December 31, 2015. The average period of sales outstanding
for accounts receivable (also known as Days Sales Outstanding) was 157 days in the first quarter of 2016.
As of March 31, 2016, the Company had bank
credit lines totaling RMB3.1 billion (US$483.9 million), of which RMB1.2 billion ($184.3 million) was utilized.
During the first quarter of 2016, the Company
handled 5,093 patient treatment cases and 67,377 patient diagnostic cases, representing a 23.9% decrease and a 8.6% decrease from
the first quarter of 2015, respectively, mainly due to the closure of certain cooperative centers in 2015.
Concord Cancer Hospital[4] is
a leading privately-owned, for-profit oncology hospital in Singapore. The Company acquired Concord Cancer 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 RMB3.4 million ($0.5 million or S$0.7 million [5]).
Cost of service of the hospital business
for the first quarter of 2016 was RMB7.2 million ($1.1 million or S$1.6 million).
Gross loss from the hospital business was
RMB3.8 million ($0.6 million or S$0.8 million) in the first quarter of 2016.
Selling expenses of the hospital business
were RMB0.04 million ($0.01 million or S$0.01 million) for the first quarter of 2016.
General and administrative expenses of
the hospital business were RMB10.6 million ($1.6 million or S$2.2 million) for the first quarter of 2016, of which employee benefit
expenses were RMB6.2 million ($1.0 million or S$1.3 million).
Capital expenditures of the hospital were
RMB0.07 million ($0.01 million or S$0.01 million) in the first quarter of 2016.
As of March 31, 2016, Concord Cancer Hospital
had accounts receivable of RMB2.2 million ($0.3 million or S$0.5 million). The number of days sales outstanding was 63 days.
Concord Cancer Hospital operated 31 beds
and had 82 medical and non-medical staff as of March 31, 2016.
Share Repurchase Program - On
August 10, 2015, the Company announced a share repurchase program, under which Concord Medical is authorized to repurchase up to
$20.0 million of its outstanding ADSs for cash in open market transactions or by other means as long as the price per ADS is no
more than $7.99, depending on market conditions and other factors. As of May 20, 2016, Concord Medical had repurchased 1,511,378
ADSs, representing 4,534,134 ordinary shares, for an aggregate consideration of $7.3 million, including commissions. As of March
31, 2016, the Company had a total of 43.8 million outstanding ADSs.
Acquisition of Beijing Proton Medical
Center - In January 2016, we acquired 100% equity interest in Beijing Century Friendship Science & Technology Development
Co., Ltd., or Beijing Century Friendship, from Chang'an Information Industry (Group) Co., Ltd. for a cash consideration of
RMB70.0 million. Beijing Century Friendship is currently a 55% shareholder of Beijing Proton Medical Center ("BPMC")
and has engaged in the proton center's establishment and construction. King Cheers Holdings Ltd, a wholly subsidiary of the Company,
own approximately 25.0% of the Beijing Proton Medical Center. As a result, we ultimately own approximately 80.0% of the Beijing
Proton Medical Center, with the remaining equity interest owned by China-Japan Friendship Hospital. The financial results of BPMC
were consolidated into our financial results in this quarter. Currently we have received the relevant government approvals for
the establishment of Beijing Proton Medical Center. The construction of this hospital project is expected to commence in the third
Preliminary opening of Datong Meizhongjiahe
Cancer Hospital - On May 20, 2016, Concord Medical announced the preliminary opening of its wholly-owned Datong Meizhongjiahe
Cancer Hospital, which will provide oncology as its main service, including medical oncology and surgical oncology. Located in
Datong, Shanxi Province, the 100-bed hospital was registered as Level-II specialty cancer hospital with mandatory departments including
radiation, imaging, test laboratory, inpatient and nursing. This hospital will apply to join the local social insurance coverage.
The hospital is equipped with the advanced radiotherapy and diagnostic imaging equipment, including linear accelerator and MRI.
[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