CCM 泰和诚医疗 2016年第2季度财报电话会议文字稿中英文

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Executives

方柳 - 投资者关系经理杨建宇 - 董事长兼首席执行官叶康 - 首席财务官

Operator

大家早上好、晚上好。欢迎参加康达医疗2016年上半年业绩电话会议。今天出席会议的有康达医疗董事长兼首席执行官杨建宇博士；公司首席财务官叶康女士；以及公司投资者关系经理方柳女士。[接线员说明] 我必须提醒您，本次会议正在录音，时间为2016年8月25日星期四。现在，我将会议交给今天的第一位发言人方柳女士。谢谢。请开始。

Fang Liu

大家好。公司业绩已于今天早些时候发布，可在公司投资者关系网站及各新闻通讯社查阅。在继续之前，请注意今天的讨论将包含根据1995年《私人证券诉讼改革法案》安全港条款所作的前瞻性陈述。前瞻性陈述涉及固有风险和不确定性，因此我们的实际结果可能与今天表达的观点存在重大差异。有关这些及其他风险和不确定性的更多信息，包含在我们的注册声明、10-K表格以及提交给美国证券交易委员会的其他文件中。康达医疗不承担更新任何前瞻性陈述的义务，除非适用法律要求。现在，我将电话会议交给我们的董事长兼首席执行官杨博士。请开始。

Jianyu Yang

大家好，欢迎参加康华医疗2016年上半年业绩电话会议。今年上半年，由于内外部因素影响，我们的收入和利润面临一些阻力，我们已采取措施削减成本和开支以降低影响。在2016年第二季度，我们很高兴看到亏损环比明显减少。第二季度，我们的总收入较去年同期下降约21.7%，亏损1800万元人民币。自去年底以来，行业监管开始限制我们原有的与军队医院合作的业务模式。同时，自2014年启动业务模式转型以来，原有中心正在逐步调整，公司专注于我们全资医院的规划和建设。监管环境恶化和战略转型仍然是导致收入下降的主要因素。我们去年四月在新加坡收购的康华癌症医院正在进行重组，进入新的业务和治疗阶段，带来了明显的净亏损。我们很高兴看到自今年三月以来，中国大陆患者已开始访问我们的医院，并接受最先进的治疗方法和化疗。通过康华癌症医院与MD安德森癌症中心（简称MDACC）在治疗技术、专业知识和品牌方面的进一步合作，我们将能够提供更好的肿瘤服务。同时，我们在战略信息方面取得了鼓舞人心的成就。作为原有业务模式的升级版，美中嘉和全资影像诊断和放疗医院网络正在逐步实施。该连锁体系下的第一家医院——大同美中嘉和癌症医院自五月起已初步开业。大同医院将加入当地社会医疗保险覆盖范围，为大同市和山西省的当地患者提供高质量的癌症诊断。继大同项目之后，我们还加快了独立放疗医院和影像诊断中心网络的规划，下一步将扩展到无锡、杭州、南昌和上海等城市。借鉴大同医院的经验，我们将进一步优化建立二级专科癌症医院的流程，如选址、政府审批、装修、环境评估和许可证申请。中国大陆的其他优质医疗机构——上海康华癌症医院和广州康华癌症医院在本季度进展顺利。尽管由于政府审批延迟导致计划建设日期推迟，我们将尽最大努力通过加快施工进度和准备工作，确保两家医院的成功建立。中国经济已进入新常态阶段。面对监管环境带来的新挑战，我们将继续长期执行发展战略，稳步扩大美中嘉和医院和诊断影像中心网络，充分利用与MDACC的战略合作伙伴关系建立高水平医院，巩固我们在肿瘤专科医疗管理领域的领导地位。我们将充分利用积累的医疗资源和学术技能，采用国际标准，推进中国的癌症治疗和诊断，全力以赴为中国患者服务。我的发言到此结束。感谢聆听。现在，我想把电话转交给我们的首席财务官孔亚普先生，请他回顾我们的财务表现。

Jianyu Yang

Hello, everyone. Welcome to the Concord Medical first half 2016 earnings conference call. In the first half of this year, our revenue and profit was seeing some headwinds due to internal and external factors and we have taken initiatives in cutting cost and expenses to lower the impact. During the second quarter of 2016, we are glad to see our loss was apparently decreased quarter-over-quarter. In Q2, our total revenue fell about 21.7% than the same period last year with the loss of RMB18 million. Since late last year, industrial regulation has started restricting our original business model of collaborating with military hospitals. At the same time, as we initiated the business model transformation since 2014, former centers are gradually coping and the company was focused on the planning and construction of our wholly owned hospitals. Both the deteriorating regulatory environment and the strategic transformation remain the main factors contributing to the revenue decrease. Concord Cancer Hospital, which we acquired in Singapore last April, was keeping restructuring to a new stage of business and treatment process brought obvious net loss. We are delighted to see patients from mainland China have started to visit our hospital and with the most advanced treatment approach and chemotherapy since this March. We will be able to provide better oncology service with further collaboration between Concord Cancer Hospital and MD Anderson Cancer Center, MDACC for short, on treatment technology, know-how and branding. At the same time, we achieved inspiring achievements on our strategic information. As an upgraded version of our original business model, the Meizhongjiahe network of wholly owned imaging diagnosis and radiotherapy hospitals is gradually implemented. The first hospital under this chain, Datong Meizhongjiahe Cancer Hospital, has opened preliminary since May. Datong Hospital will join the local social insurance coverage and provide high quality cancer diagnosis to local patients at Datong and Shanxi Province. Followed on Datong project, we have also accelerated the planning of the network of independent radiotherapy hospitals and imaging diagnosis center by expanding our next step to cities such as Wuxi, Hangzhou, Nanchang and Shanghai. Learning from the experience of Datong Hospital, we will further optimize the processes of establishing level two specialty cancer hospitals, such as site selection, government approval, decoration, environment assessment and lessons application. The other premium medical institutions in mainland China, Shanghai Concord Cancer Hospital and Guangzhou Concord Cancer Hospital are progressing steadily in this quarter. Although the planned construction dates have been put back due to the delay in governmental troubles, we will try our best to make sure the successful establishment of both hospitals by accelerating the pace of construction and the preparation work. Chinese economy has entered into new normal stage. Facing new challenges from the regulatory environment, we will continue to execute our development strategies in the long run, steadily expand our network of Meizhongjiahe hospitals and diagnostic imaging centers, fully leverage our strategic partnership with MDACC to establish high level hospitals and solidify our leadership in cancer specialty medical management. We will make full use of our accumulated medical resources and academic skills to adopt the international standards and to advance the cancer treatment and diagnostics in China, serve the Chinese patients with might and main. This concludes my comments. Thanks for listening. At this point, I would like to turn the call over to our CFO, Mr. Kong Yap to review our financial performance.

Kong Yap

好的。谢谢杨博士。欢迎大家参加我们的电话会议。首先，我想回顾一下我们2016年上半年财务业绩的亮点。请注意，本次演示中提到的所有财务货币金额均为人民币，除非特别注明为其他货币或格式。2016年上半年，总收入为2.546亿元人民币，较去年同期的3.252亿元人民币下降21.7%。总收入由网络业务净收入2.467亿元和康生癌症医院净收入800万元组成。毛利润为1.016亿元，较2015年上半年的1.536亿元下降33.9%。2016年上半年的毛利率为39.9%，而去年同期为47.2%。2016年上半年归属于普通股股东的净亏损为5040万元，其中第一季度为3220万元，第二季度为1820万元，而去年同期为净利润6510万元。净亏损由网络业务净亏损2040万元和康生癌症医院净亏损3000万元组成。2016年上半年，每份美国存托凭证（简称ADS）的基本和摊薄亏损均为1.15元人民币或0.17美元，而去年同期每份ADS的基本和摊薄利润分别为1.45元人民币和1.44元人民币。2016年上半年的调整后EBITDA（非GAAP）为6860万元人民币，较去年同期的1.348亿元人民币下降49.1%。现在，让我按业务板块介绍我们2016年上半年的财务业绩。让我们从网络业务开始。网络业务净收入为2.467亿元人民币，较2016年上半年的净收入3.17亿元下降22.2%，这归因于过去几年我们网络中心中某些合作中心的关闭，以及根据公司与公立医院合作伙伴签订的合同，收入分成比例发生了变化。网络业务的收入成本为1.709亿元人民币，较2015年上半年的1.578亿元下降12.7%。自2015年第四季度以来，网络业务持续面临监管环境的不确定性。我们原有网络业务的收入和利润仍面临压力。截至2016年6月30日，公司在中国的52个城市运营着123个合作中心网络，并已签订协议建立一个额外的中心。网络业务的毛利润为1.088亿元人民币，较2015年上半年的1.592亿元下降31.7%。2016年上半年的毛利率为44.1%，而去年同期为50.2%。下降的主要原因是过去几年我们网络中心中某些合作中心的关闭，以及根据公司与公立医院合作伙伴签订的合同，收入分成比例发生了变化，导致收入下降幅度大于成本下降幅度。截至2016年6月30日，公司拥有总计35亿元人民币（相当于5.246亿美元）的银行信贷额度，其中已使用11亿元人民币（即1.689亿美元）。展望未来，我们将继续加大力度提高我们中心的成本效率，并且我们仍将——我们将有选择地将部分现有中心转变为独立、全资拥有的中心，以最小化原有网络业务下滑的负面影响。我们很高兴地宣布，我们的大同医院已于5月初步开业，并且我们正在加快在全国范围内扩展美中嘉和独立医院网络的步伐。现在，让我转向我们在新加坡的康生癌症医院的财务摘要，这是一家拥有31张床位的高端、私营、营利性肿瘤医院。该医院的财务业绩自2015年第二季度起并入我们的财务业绩。2016年上半年，医院业务的净收入为800万元人民币。2016年上半年医院业务的医疗服务成本为1520万元人民币。2016年上半年医院业务的毛亏损为720万元人民币。自2016年第一季度起，该医院开始接收来自中国的现有患者，接受最新的免疫疗法治疗。在MD安德森癌症中心（MDACC）的支持和指导下，我们还开始对新加坡康生癌症医院进行翻新，以更新设施并扩大放射治疗服务。这些医院将安装一台直线加速器，以更好地服务来自南亚以及中国大陆的患者。7月，董事会收到了买方团（包括公司董事长兼首席执行官杨建宇先生、Morgancreek Investment Holdings Company Limited以及杨先生和Blue Ocean Management Limited控制的投资工具）发出的私有化非约束性提议。买方团提议以每股A类普通股1.73美元或每份ADS 5.91美元的价格，收购公司所有由买方团及其关联方非实益拥有的已发行A类普通股和ADS。目前，董事会正在与其法律和财务顾问协商，仔细审查该提议，并将确定其认为最符合公司股东利益的行动方案。我们的预先准备好的发言到此结束。感谢大家的关注。现在，我们想开放提问环节。主持人，请继续。谢谢。

Kong Yap

Okay. Thank you, Dr. Yang. Welcome everyone to our call. First, I would like to review the highlights of our first half 2016 financial results. Please note that all financial currency amounts mentioned in this presentation will be in RMB, expect those which will be specifically identified in other currencies or format. For the first half of 2016, total revenues were RMB254.6 million, a 21.7% decrease from RMB325.2 million in the same period last year. Total net revenues is composed of net revenues from the network business of $246.7 million and from Concord Cancer Hospital of $8 million. Gross profit was $101.6 million, representing a 33.9% decrease from RMB153.6 million in the first half of 2015. The gross profit margin for the first half of 2016 was 39.9% compared to 47.2% for the same period last year. Net loss attributable to ordinary shareholders for the first half of 2016 were RMB50.4 million, which consist of RMB32.2 million in Q1, RMB18.2 million in Q2 compared to a net income of RMB65.1 million for the same period last year. Net loss is composed of net loss from the network business of RMB20.4 million and from Concord Cancer Hospital of RMB30 million. Basic and diluted loss per American Depositary Share, or ADS, for short, in the first half of 2016 were both RMB1.15 or $0.17 compared to basic and diluted profit per ADS of RMB1.45 and RMB1.44 respectively in the same period last year. Adjusted EBITDA non-GAAP was RMB68.6 million for the first half of 2016, representing a 49.1% decrease from RMB134.8 million in the same period last year. And now let me present our financial results for the first half of 2016 by segment. Let’s start with our network business. Net revenues from the network business were RMB246.7 million, a 22.2% decrease from the net revenues RMB317 million in the first half of 2016, attributable to the closure of certain cooperative centers in our network of centers during the past years and the changes in the revenue-sharing split according to the contracts signed within the company and our public hospital partners. Cost of revenues of the network business was RMB170.9 million, a 12.7% decrease from RMB157.8 million in the first half of 2015. Since 2015 Q4, the network business has continued facing uncertainties in the regulatory environment. Our revenues and profits of the original network business were still under pressure. As of June 30, 2016, the company operated a network of 123 cooperative centers in 52 cities in China and had entered into agreements to establish one additional center. Gross profit from the network business was RMB108.8 million, representing a 31.7% decrease from RMB159.2 million in the first half of 2015. The gross profit margins for the first half of 2016 was 44.1% compared to 50.2% for the same period last year. The decrease was mainly due to the closure of certain cooperative centers in our network of centers during the past years and the changes in the revenue-sharing split according to the contracts signed between the company and our public hospital partners, bringing more significant decrease in revenues than in cost. As of June 30, 2016, the company had bank credit lines totaling RMB3.5 billion, equivalent to $524.6 million, of which RMB1.1 billion, which is $168.9 million was utilized. Going forward, we will continue to make greater efforts to improve the cost efficiency in our centers and we are still – and we will selectively transform some of the existing centers into freestanding, fully owned centers to minimize the negative impact of the downturns of our original network business. We are pleased to have announced the primary opening of our Datong Hospital in May and we are accelerating our pace of expanding the Meizhongjiahe freestanding hospital network throughout China. Now let me turn to the financial summary of our Concord Cancer Hospital in Singapore, which is a high end, privately owned, for profit oncology hospital with 31 beds. The financial results of the hospitals were consolidated to our financial results starting from Q2 2015. In the first half of 2016, net revenues for the hospital business were RMB8 million. Cost of service of the hospital business for the first half of 2016 were RMB15.2 million. Gross loss from the hospital business was RMB7.2 million in the first half of 2016. The hospital established existing patients from China since Q1 2016 for the latest immunotherapy treatments. With the support and guidance from MD Anderson’s MDACC, we also started renovations in Concord Cancer Hospital in Singapore to update the facilities and to expand the radiotherapy services. A linear accelerator will be installed in these hospitals to better serve patients from South Asia as well as from Mainland China. In July, the Board received going private non-binding proposal from buyer parties, including Mr. Jianyu Yang, Chairman and Chief Executive Officer of the company, Morgancreek Investment Holdings Company – Limited and investment vehicles controlled by Mr. Yang and Blue Ocean Management Limited. The buyer party proposed to acquire all of the outstanding Class A ordinary shares and ADS of the company. They are not beneficially owned by the buyer’s party and their affiliates at a prize of $1.73 per Class A ordinary share or $5.91 per ADS. Currently, the Board is carefully reviewing the proposal in consultations with its legal and financial advisors and will determines the course of actions that is believed is in the best interest of the company’s shareholders. And that concludes our prepared remarks. Thank you for your attention. And now, we would like to open up to questions. Operator, please go ahead. Thank you.

Operator

翻译中...

Fang Liu

再次感谢大家今天参与我们的会议。如果您有任何进一步的问题，请随时与我们联系。感谢您一直以来的支持。祝您有美好的一天。

Operator

女士们、先生们，这还不包括我们今天的电话会议。感谢各位的参与。大家可以全部断开连接了。

Kong Yap

谢谢。