BEIJING, Sept. 27, 2024 /PRNewswire/ -- Concord Medical Services Holdings Limited ("Concord Medical" or the "Company") (NYSE: CCM), a healthcare provider specialized in cancer treatment, research, education and prevention in China, today announced its unaudited consolidated financial results for the six months ended June 30, 2024[1].
2024 First Half Highlights
- Total net revenues were RMB218.8 million (US$30.1 million) in the first half of 2024, representing a 23.1% decrease from total net revenues of RMB284.5 million in the same period last year. Total net revenues included the net revenues from the hospital business of RMB137.8 million (US$19.0 million) and the net revenues from the network business of RMB81.0 million (US$11.1 million).
- Gross loss was RMB41.6 million (US$5.7 million) in the first half of 2024, compared to the gross loss of RMB37.4 million in the first half of 2023. The gross loss margin was 19.0% for the first half of 2024, compared to 13.2% for the same period last year.
- Net loss attributable to ordinary shareholders in the first half of 2024 was RMB172.3 million (US$23.7 million), compared to RMB91.0 million in the same period last year.
- Basic and diluted loss per share for Class A and Class B ordinary shares in the first half of 2024 were both RMB1.31 (US$0.18), compared to RMB0.69 in the same period last year.
- Non-GAAP[2] net loss in the first half of 2024 was RMB328.7 million (US$45.2 million), compared to non-GAAP net loss of RMB210.3 million in the same period last year. Non-GAAP basic and diluted loss per share for Class A and Class B ordinary shares in the first half of 2024 were both RMB1.31 (US$0.18), compared to RMB0.69 in the same period last year.
- Adjusted EBITDA[3] (non-GAAP) was negative RMB148.0 million (US$20.4 million) in the first half of 2024, compared to negative RMB148.4 million in the same period last year.
[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 translations of RMB into U.S. dollars are made at a rate of RMB7.2672 to US$1.00, the noon buying rate in New York City for cable transfers payable in RMB, as certified for customs purposes by the Federal Reserve Bank of New York on June 28, 2024.
[2] Non-GAAP net loss and non-GAAP basic and diluted loss per share for Class A and Class B ordinary shares are defined as their most directly comparable GAAP measures excluding the impact of share-based compensation expenses.
[3] Adjusted EBITDA is defined as net income/(loss) plus interest expenses, net, income tax expenses, depreciation and amortization, share-based compensation expenses and other adjustments. Other adjustments include foreign exchange loss, net, other income, net, gain on disposal of equity method investment, gain on disposal of subsidiaries, change in fair value of derivative liability, changes in fair value of short-term investments and gain on disposal of long-lived equipment.
Dr. Jianyu Yang, Chairman and Chief Executive Officer of Concord Medical, commented, "In the past few years, Concord Medical has been actively building a solid foundation for its business development, as well as looking to the future by profoundly enhancing its expertise in oncology care and strengthening the competitiveness of its international diagnosis and treatment services. Concurrently, Concord Medical has been continually exploring the untapped potential of its network business, striving for growth and expansion.
We are delighted to announce that, Guangzhou Concord Cancer Center ("Guangzhou Hospital"), a PRC subsidiary of our Company offering comprehensive cancer care services, has obtained the large medical equipment procurement license for its proton equipment, as announced by the National Health Commission of the PRC on September 14, 2024. Proton therapy services stand as a pivotal segment within Concord Medical's hospital business, anticipated to deliver a significant boost to our revenue base upon its successful implementation. This endeavor will concurrently elevate Guangzhou Hospital's profile and reputation. Looking ahead, we maintain a positive outlook on the growth potential of this sector, expecting continued development and expansion through 2025 and beyond."
2024 First Half Financial Results
Net Revenues
Hospital Business
Net revenues from the hospital business were RMB137.8 million (US$19.0 million) in the first half of 2024, representing a 13.2% decrease from net revenues of RMB158.7 million in the first half of 2023, mainly because (1) we downsized certain of our hospital business with lower profit margin, and (2) as we concentrated the resources in preparing our proton therapy business, the revenue from the medical institutions fluctuated in the short term.
Network Business
Net revenues from the network business were RMB81.0 million (US$11.1 million), representing a 35.6% decrease from net revenues of RMB125.8 million in the first half of 2023, mainly because of the decreased demand for medical equipment, software and the relevant management and technical support services by our customers in current economic environment.
Cost of Revenues
Hospital Business
Cost of revenues of the hospital business in the first half of 2024 was RMB174.0 million (US$23.9 million), representing a 14.9% decrease from cost of revenues of RMB204.4 million in the first half of 2023, mainly because of (1) our overall efforts to improve operation efficiency and reduce costs, especially for staff costs, and (2) the decrease of consumables and maintenance cost, lease cost and staff cost along with the fluctuation in hospital business.
Network Business
Cost of revenues of the network business was RMB86.4 million (US$11.9 million), representing a 26.4% decrease from RMB117.5 million in the first half of 2023, generally in line with the decrease in the business scale and revenue generated from sales and installation of medical equipment and software, management and technical support services.
Gross Loss and Gross Loss Margin
Hospital Business
Gross loss from the hospital business was RMB36.2 million (US$4.9 million) in the first half of 2024, compared to RMB45.7 million in the same period last year. The gross loss margin of the hospital business for the first half of 2024 was 26.3%, compared to the gross loss margin of 28.8% for the same period last year. The improvement in gross loss margin of the hospital business was primarily because of our overall efforts to improve operation efficiency and reduce costs.
Network Business
Gross loss from the network business was RMB5.4 million (US$0.8 million), compared to the gross profit of RMB8.3 million in the first half of 2023. The gross loss margin of the network business for the first half of 2024 was 6.7%, relatively stable compared to the gross profit margin of 6.6% for the same period last year.
Operating Expenses
Selling expenses were RMB25.0 million (US$3.4 million) in the first half of 2024, compared to RMB26.4 million in the first half of 2023. Selling expenses as a percentage of net revenues was 11.4% in the first half of 2024, compared to 9.3% in the first half of 2023.
General and administrative expenses were RMB131.2 million (US$18.1 million) in the first half of 2024, of which employee benefit expenses were RMB62.4 million (US$8.6 million). In the same period of last year, general and administrative expenses were RMB150.2 million. The decrease was mainly attributable to the decrease in staff cost and our overall efforts to improve operation efficiency. General and administrative expenses as a percentage of net revenues was 59.9% in the first half of 2024, compared to 52.8% in the first half of 2023.
Capital Expenditures
Comparing to RMB46.5 million in the first half of 2023, capital expenditures were RMB168.4 million (US$23.2 million) in the first half of 2024, mainly due to the increase in deposit for non-current assets and construction fees for our hospital business.
Accounts Receivable
As of June 30, 2024, accounts receivable were RMB78.2 million (US$10.8 million), representing a 6.4% increase from accounts receivable of RMB73.5 million as of December 31, 2023. The average period of sales outstanding for accounts receivable (also known as days sales outstanding) was 171 days in the first half of 2024.
Bank Loans and Other Borrowings
As of June 30, 2024, the Company had bank loans and other borrowings totaling RMB3.4 billion (US$463.6 million).
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 expenses, such as non-GAAP net loss and non-GAAP basic and diluted loss per share for Class A and Class B ordinary shares. The Company believes excluding share-based compensation expenses from its 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 current cash earnings. Concord Medical also believes these non-GAAP measures excluding share-based compensation expenses 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 loss plus interest expenses, net, income tax expenses, depreciation and amortization, share-based compensation expenses and other adjustments. Other adjustments include foreign exchange loss, net, other income, net, gain on disposal of equity method investment, gain on disposal of subsidiaries, change in fair value of derivative liability, changes in fair value of short-term investments and gain on disposal of long-lived equipment. Furthermore, adjusted EBITDA eliminates the impact of items that the Company does not consider to be indicative of the performance of the network business and hospital business. 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.
About Concord Medical
Concord Medical Services Holdings Limited is a healthcare provider featuring a full cycle of premium oncology services including cancer diagnosis, treatment, education and prevention. The Company focuses on providing multidisciplinary cancer care in all aspects of oncology healthcare services in its cancer hospitals and equipping them with technologically advanced equipment such as the state-of-the-art proton therapy system. The Company is striving to improve the quality and accessibility of cancer care through its network of self-owned cancer hospitals and clinics as well as partnered hospitals across China. For more information, please see .
Safe Harbor Statement
This announcement contains forward-looking statements. These forward-looking statements can be identified by words or phrases such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar expressions. Forward-looking statements are inherently subject to uncertainties and contingencies beyond the Company's control and based upon premises with respect to future business decisions, which are subject to change. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
Concord Medical Services Holdings Co., Ltd.
Consolidated Balance Sheets
(in thousands)
December 31,
2023
June 30, 2024
RMB
RMB
US$
(Audited)
(Unaudited)
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents
58,139
115,667
15,916
Short-term investment
-
211,238
29,067
Restricted cash, current portion
32,280
10,116
1,392
Accounts receivable, net
73,496
78,222
10,764
Prepayments and other current assets, net
412,946
574,330
79,030
Inventories
40,347
39,832
5,481
Total current assets
617,208
1,029,405
141,650
Non-current assets
Property, plant and equipment, net
3,546,873
3,555,860
489,303
Right-of-use assets, net
580,365
538,514
74,102
Goodwill
575,427
572,216
78,740
Intangible assets, net
323,287
300,569
41,360
Deposits for non-current assets
4,646
139,085
19,139
Long-term investments
394,711
480,873
66,170
Other non-current assets
11,426
6,171
849
Total non-current assets
5,436,735
5,593,288
769,663
Total assets
6,053,943
6,622,693
911,313
LIABILITIES AND EQUITY
Current liabilities
Accounts payable
129,236
127,334
17,522
Accrued expenses and other liabilities
731,793
740,827
101,940
Income tax payable
1,522
1,581
218
Operating lease liabilities, current
46,492
35,700
4,912
Short-term bank and other borrowings
319,625
363,446
50,012
Long-term bank and other borrowings, current portion
722,563
793,760
109,225
Derivative liability
163
109,632
15,086
Total current liabilities
1,951,394
2,172,280
298,915
Non-current liabilities
Long-term bank and other borrowings, non-current portion
1,994,014
2,211,862
304,362
Deferred tax liabilities
99,538
92,807
12,771
Operating lease liabilities, non-current
193,007
159,461
21,943
Other long-term liabilities
69,003
65,397
9,000
Total non-current liabilities
2,355,562
2,529,527
348,076
Total liabilities
4,306,956
4,701,807
646,991
EQUITY
Class A ordinary shares
68
68
9
Class B ordinary shares
37
37
5
Treasury stock
(7)
(7)
(1)
Additional paid-in capital
2,007,965
2,169,695
298,560
Accumulated other comprehensive loss
(65,419)
(71,694)
(9,865)
Accumulated deficit
(4,064,589)
(4,236,847)
(583,010)
Total Concord Medical Services Holdings Limited shareholders' deficit
(2,121,945)
(2,138,748)
(294,302)
Noncontrolling interests
3,868,932
4,059,634
558,624
Total equity
1,746,987
1,920,886
264,322
Total liabilities and equity
6,053,943
6,622,693
911,313
Concord Medical Services Holdings Co., Ltd.
Consolidated Profit & Loss
(in thousands, except for number of shares and per share data)
June 30,
2023
June 30, 2024
RMB
RMB
US$
(Unaudited)
(Unaudited)
(Unaudited)
Revenues, net of business tax, value-added tax and related
surcharges
Hospital
158,707
137,772
18,958
Network
125,806
81,038
11,151
Total net revenues
284,513
218,810
30,109
Cost of revenues:
Hospital
(204,433)
(173,963)
(23,938)
Network
(117,503)
(86,443)
(11,895)
Total cost of revenues
(321,936)
(260,406)
(35,833)
Gross loss
(37,423)
(41,596)
(5,724)
Operating expenses:
Selling expenses
(26,362)
(24,975)
(3,437)
General and administrative expenses
(150,240)
(131,173)
(18,050)
Operating loss
(214,025)
(197,744)
(27,211)
Interest expense
(84,374)
(68,668)
(9,449)
Foreign exchange loss, net
(2,444)
(30,269)
(4,165)
Gain on disposal of long-lived equipment
62
-
-
Interest income
5,800
5,990
824
Change in fair value of derivative liability
-
(108,777)
(14,968)
Income from equity method investments
10,099
6,070
835
Gain on disposal of subsidiaries
-
47,997
6,605
Other income, net
13,623
1,388
191
Gain on disposal of equity method investment
37,498
-
-
Changes in fair value of short-term investments
-
6,631
912
Loss before income tax
(233,761)
(337,382)
(46,426)
Income tax expenses
23,417
8,674
1,194
Net loss
(210,344)
(328,708)
(45,232)
Net loss attributable to noncontrolling interests
(119,359)
(156,450)
(21,528)
Net loss attributable to Concord Medical Services Holdings
Limited
(90,985)
(172,258)
(23,704)
Loss per share for Class A and Class B ordinary shares
Basic
(0.69)
(1.31)
(0.18)
Diluted
(0.69)
(1.31)
(0.18)
Weighted average number of class A and class B ordinary shares
outstanding:
Basic
131,053,858
131,053,858
131,053,858
Diluted
131,053,858
131,053,858
131,053,858
Other comprehensive loss, net of tax of nil
Foreign currency translation, net of tax of nil
(17,371)
(6,273)
(863)
Total other comprehensive loss, net of tax
(17,371)
(6,273)
(863)
Comprehensive loss
(227,715)
(334,981)
(46,095)
Comprehensive loss attributable to noncontrolling interests
(119,359)
(156,450)
(21,528)
Comprehensive loss attributable to Concord Medical Services
Holdings Limited's shareholders
(108,356)
(178,531)
(24,567)
Reconciliations of non-GAAP results of operations measures to the
nearest comparable GAAP measures
(in RMB thousands, except per share data unaudited)
For the six months ended
For the six months ended
June 30, 2023
June 30, 2024
Non-
Non-
GAAP
GAAP
GAAP
GAAP
Measure
Adjustment
Measure
Measure
Adjustment
Measure
Operating loss
(214,025)
-
(214,025)
(197,744)
-
(197,744)
Net loss
(210,344)
-
(210,344)
(328,708)
-
(328,708)
Basic loss per share for
Class A and
Class B ordinary
shares
(0.69)
-
(0.69)
(1.31)
-
(1.31)
Diluted loss per share
for Class A and
Class B ordinary
shares
(0.69)
-
(0.69)
(1.31)
-
(1.31)
Reconciliation from net income to adjusted EBITDA(*) (in RMB
thousands, unaudited)
For the six months ended
For the six months ended
June 30, 2023
June 30, 2024
Net loss
(210,344)
(328,708)
Interest expenses, net
78,574
62,678
Income tax expenses
(23,417)
(8,674)
Depreciation and amortization
55,537
43,654
Share-based compensation
-
-
Other adjustments
(48,739)
83,030
Adjusted EBITDA
(148,389)
(148,020)
EBITDA margin
-52 %
-68 %
(*) Definition of adjusted EBITDA: Adjusted EBITDA is defined as net loss plus interest expenses, net, income tax expenses,
depreciation and amortization, share-based compensation expenses and other adjustments. Other adjustments include foreign
exchange loss, net, other income, net, gain on disposal of equity method investment, gain on disposal of subsidiaries, change in fair
value of derivative liability, changes in fair value of short-term investments and gain on disposal of long-lived equipment.