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Concord Medical Services Holdings Limited Reports Fourth Quarter And Full Year 2015 Financial Results

Published: Mar 29, 2016

BEIJING, March 28, 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 fourth quarter and full year ended December 31, 2015[1].

Fourth Quarter 2015 Highlights

  • Total net revenues decreased by 18.7% from RMB160.3 million in the fourth quarter of 2014 to RMB135.1 million ($20.9 million) in the fourth quarter of 2015, including net revenue from network business of RMB130.4 million ($20.1 million) and net revenue from hospital business of RMB4.7 million ($0.7 million).
  • Gross profit was RMB47.6 million ($7.4 million) in the fourth quarter of 2015, compared to RMB86.9 million in the fourth quarter of 2014.
  • Net loss attributable to ordinary shareholders in the fourth quarter of 2015 was RMB166.8 million ($25.7 million), which included net loss from network business of RMB39.6 million ($6.1 million), net loss from hospital business of RMB18.2 million$2.8 million, and loss resulted from bad debt of RMB8.2 million ($1.3 million), asset impairment of RMB23.1 million ($3.6 million), as well as withholding tax of RMB77.7 million ($12.0 million), compared to net income attributable to ordinary shareholders of RMB28.1 million in the fourth quarter of 2014.
  • Basic and diluted loss per American Depositary Share ("ADS")[2] in the fourth quarter of 2015 were RMB3.74 ($0.58) and RMB3.74($0.58), respectively, compared to basic and diluted profit per ADS of RMB0.64 and RMB0.64 in the fourth quarter of 2014.
  • Non-GAAP net loss for the fourth quarter of 2015 was RMB133.5 million ($20.6 million), compared to non-GAAP net income of RMB21.6 million for the fourth quarter of 2014. Non-GAAP basic and diluted loss per ADS in the fourth quarter of 2015 was RMB2.99($0.46) and RMB2.99($0.46).
  • Adjusted EBITDA[3] (non-GAAP) was RMB2.3 million ($0.4 million) in the fourth quarter of 2015, compared to RMB101.7 million in the fourth quarter of 2014.

Full Year 2015 Highlights

  • Total net revenues for the full year 2015 were RMB616.5 million ($95.2 million), a 1.6% increase from RMB606.9 million in 2014.
  • Gross profit for the full year 2015 was RMB263.1 million ($40.6 million), a 20.8% decrease from RMB332.3 million in 2014.
  • Net loss attributable to ordinary shareholders for the full year 2015 was RMB79.4 million ($12.3 million) compared to net income attributable to ordinary shareholders of RMB124.7 million for the full year 2014. 
  • Basic and diluted loss per ADS for the full year 2015 was RMB1.77 ($0.27) and RMB1.77($0.27), respectively.
  • Non-GAAP net loss for the full year 2015 was RMB39.7 million ($6.1 million), compared to non-GAAP net income of RMB109.7 million in 2014. Non-GAAP basic and diluted loss per ADS for the full year 2015 was RMB0.89 ($0.13) and RMB0.89($0.13).
  • Adjusted EBITDA (non-GAAP) was RMB186.0 million($28.7) in 2015, compared to RMB348.6 million in 2014.
  • The number of treatment and diagnostic patient cases was 25,074 and 309,694 for the full year 2015 representing a 15.8% decrease and 4.3% decrease from 2014, respectively.

Dr. Jianyu Yang, Chairman and Chief Executive Officer of Concord Medical, commented, "The year of 2015 was crucial for the Company's strategic transformation. During the last year, we had laid a solid foundation for continuous sustainable and stable development by acquiring Concord Cancer Hospital in Singapore, optimizing its operative segments and medical processes through working closely with our strategic partner, MD Anderson Cancer Center ("MDACC"). In 2016, well prepared to receive a large number of high-end patients from mainland China, Concord Cancer Hospital will provide world-class integrated cancer treatment, including the utilization of the advanced immunotherapy and targeted drugs, to our high-end patients. The comprehensive cooperation between Concord Cancer Hospital and MDACC will satisfy the needs of Chinese patients for the highest level of medical expertise.

Since 2012, Chinese government has published a series of policies to facilitate medical reform by encouraging social capital to invest in the medical industry and form a diversified industrial landscape. Accordingly, we have been undertaking our strategic transformation since 2013 by transforming the cooperative centers with public hospitals into self-owned centers, taking advantage of our talent pool and years of experience to build our own brand, Meizhong Jiahe Cancer Center. We plan to build the Meizhong Jiahe brand into the largest radiotherapy chain throughout the country, providing high quality medical services featuring imaging diagnosis and radiotherapy. Meanwhile, we will establish a sophisticated quality control system to improve the cure rate of radiotherapy and the life quality of patients. Datong Meizhong Jiahe Cancer Center will launch its grand opening and start to treat patients at the end of April 2016. It will become our first free-standing center in the Concord Medical network and set a milestone for the Company's strategic transformation.

In order to fully reflect our asset value, we announced the listing of our subsidiary, Meizhong Jiahe Hospital Management Corp. Ltd. ("Meizhong Jiahe" or "MHM") on the New Third Board in China in the second half of last year, and officially received approval to become a listed company on the New Third Board the over-the-counter (OTC) stock exchange in China, in January 2016. In the first quarter of 2016, Meizhong Jiahe announced to undertake asset restructuring and to launch a private placement. The funds raised in such private placement will be used for its acquisition and construction of cancer centers.

Cancer is now a major challenge to the health of the Chinese people. According to the report released by the National Cancer Center, new cancer patients in China reached 4.29 million in 2015 with 2.8 million deaths from cancer. As a member of the healthcare and medical industry, we have felt the responsibility to make a contribution to the fight against cancer in China.

Healthcare and medical industry will become a real "sunrise industry" in China. We intend to capitalize on this growing opportunity and take full advantage of favorable government policies. Providing the advanced treatment technology and medical process, as well as the humanistic care, we will contribute to the improvement of overall cancer treatment and diagnosis in China, while also generating long term, stable returns for our shareholders at the same time."

Fourth Quarter 2015 Financial Results

Total net revenues were RMB135.1 million ($20.9 million) for the fourth quarter of 2015, a 15.7% decrease from the fourth quarter of 2014. Total net revenues were composed of:

  • Net revenue from network business of RMB130.4 million ($20.1 million), compared to RMB160.3 million in the fourth quarter of 2014; and
  • Net revenue from hospital business of RMB4.7 million ($0.7 million).

Cost of revenue was RMB87.5 million ($13.5 million) for the fourth quarter of 2015, as compared to RMB73.3 million for the fourth quarter of 2014. Total cost of revenue was composed of:

  • Cost of revenue of network business of RMB78.2 million ($12.1 million), as compared to RMB73.3 million in the fourth quarter of 2014; and
  • Cost of revenue of hospital business of RMB9.3 million ($1.4 million).

Gross profit was RMB47.6 million ($7.4 million) for the fourth quarter of 2015, representing a 45.2% decrease from the fourth quarter of 2014. The gross profit margin for the fourth quarter of 2015 was 35.3%, as compared to 54.3% for the fourth quarter of 2014.

Selling expenses in the fourth quarter of 2015 were RMB29.2 million ($4.5 million), representing a 15.9% increase from RMB25.2 million in the fourth quarter of 2014. Selling expenses as a percentage of total net revenues increased to 21.6% for the fourth quarter of 2015 from 15.7% for the fourth quarter of 2014.

General and administrative expenses in the fourth quarter of 2015 were RMB47.3 million ($7.3 million), representing a 266.7% increase from RMB12.9 million for the fourth quarter of 2014. General and administrative expenses as a percentage of total net revenues was 35.0% for the fourth quarter of 2015, compared to 8.0% for the fourth quarter of 2014.

The Company incurred asset impairment of RMB 23.1million ($3.6 million), which mainly include the asset impairment for our network centers.

Operating loss was RMB52.0 million ($8.0 million) for the fourth quarter of 2015, compared to operating income of RMB48.8 million for the fourth quarter of 2014.

Income tax expense was RMB82.0 million ($12.7 million) for the fourth quarter of 2015, as compared to RMB40.8 million for the fourth quarter of 2014. The effective tax rate for the fourth quarter of 2015 was 85.9%, mainly due to RMB35.8 million in withholding income tax expenses related to special dividend declared on December 11, 2015.

Net loss attributable to ordinary shareholders was RMB166.8 million ($25.7 million) for the fourth quarter of 2015, compared to net income attributable to ordinary shareholders of RMB28.1 million in the fourth quarter of 2014. The net loss included net loss from network business of RMB38.5 million, net loss from hospital business of RMB18.2 million, and loss resulted from bad debt of RMB9.3 million, asset impairment of RMB23.1 million, as well as withholding tax of RMB77.7 million, compared to net income attributable to ordinary shareholders of RMB28.1 million in the fourth quarter of 2014.

Basic and diluted loss per ADS for the fourth quarter of 2015 was RMB3.74($0.58) and RMB3.74($0.58).

Non-GAAP net loss for the fourth quarter of 2015 was RMB133.5 million ($20.6 million), compared to non-GAAP net income of RMB21.6 million for the fourth quarter of 2014. Non-GAAP basic and diluted loss per ADS in the fourth quarter of 2015 was RMB2.99 ($0.46) and RMB2.99 ($0.46), respectively.

Adjusted EBITDA (non-GAAP) was RMB2.3 million ($0.4 million) for the fourth quarter of 2015, compared to RMB101.7 million for the fourth quarter of 2014.

2015 Fourth Quarter Financial Results by Segment

Network Business

Net revenues from network business decreased by 18.6% to RMB130.4 million ($20.1 million) in the fourth quarter of 2015 from RMB160.3 million in the fourth quarter of 2014. The decrease was primarily attributable to network centers closed in the year 2015 and revenue-sharing split change according to the contracts signed between the Company and our public hospital partners.

As of December 31, 2015, the Company operated a network of 127 centers in 53 cities in China and had entered into agreements to establish one additional center. The Company had no center newly opened or closed in the fourth quarter of 2015.

Cost of revenue of the network business was RMB78.2 million ($12.1 million) in the fourth quarter of 2015, compared to RMB73.3 million in the fourth quarter of 2014. The increase was mainly due to cost increase resulting from cost-sharing split change according to the contracts signed between the Company and our public hospital partners and increased medical consumable expenses and maintenance expenses for the network.

Gross profit from the network business was RMB52.2 million ($8.1 million) in the fourth quarter of 2015, compared to RMB86.9 million in the fourth quarter of 2014. The gross profit margin of the network business for the fourth quarter of 2015 was 40.1%, compared to 54.3% for the fourth quarter of 2014.

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