UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of August 2018

 

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Commission File Number: 001-34563

 

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CONCORD MEDICAL SERVICES HOLDINGS LIMITED

 

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18/F, Tower A, Global Trade Center

36 North Third Ring Road East, Dongcheng District

Beijing 100013

People’s Republic of China

(Address of principal executive office)

 

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Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  x         Form 40-F ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ________

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ________

 

 

 

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

  CONCORD MEDICAL SERVICES HOLDINGS LIMITED
   
       
  By: /s/ Jianyu Yang  
  Name: Jianyu Yang  
  Title: Chairman and Chief Executive Officer

  

Date: August 30, 2018

 

 

 

 

Exhibit Index 

 

Exhibit No.

 

Description

99.1   Press Release

 

 

 

 

Exhibit 99.1

 

Concord Medical Reports Financial Results for the First Half of 2018

 

BEIJING, Aug 29, 2018 /PRNewswire/ -- Concord Medical Services Holdings Limited ("Concord Medical" or the "Company") (NYSE: CCM), a leading cancer hospital operations management solutions provider and operator of a network of radiotherapy and diagnostic imaging centers in China, today announced its unaudited consolidated financial results for the six months ended June 30, 2018[1].

 

2018 First Half Highlights

 

Total net revenue was RMB105.1 million ($15.9 million) in the first half of 2018, representing a 49.0% decrease from total net revenue of RMB206.2 million in the same period last year. Total net revenue included net revenue from the network business of RMB79.4 million ($12.0 million) and net revenue from the hospital business of RMB25.7 million ($3.9 million).

 

Gross profit was RMB23.9 million ($3.6 million) in the first half of 2018, representing a 66.5% decrease from RMB71.3 million in the first half of 2017. The gross profit margin for the first half of 2018 was 22.8%, compared to 34.6% for the same period last year.

 

Net loss attributable to ordinary shareholders in the first half of 2018 was RMB128.1 million ($19.4 million), compared to RMB101.8 million in the same period last year.

 

Both basic and diluted loss per American Depositary Share ("ADS")[2] in the first half of 2018 were both RMB2.95 ($0.45), compared to RMB2.34 in the same period last year.

 

Non-GAAP net loss in the first half of 2018 was RMB121.5 million ($18.4 million), compared to non-GAAP net loss of RMB100.1 million in the same period last year. Non-GAAP basic and diluted loss per ADS in the first half of 2018 were both RMB2.81 ($0.42).

 

Adjusted EBITDA[3] (non-GAAP) was negative RMB73.3 million ($11.1 million) in the first half of 2018, compared to negative RMB3.9 million in the same period last year.

 

Dr. Jianyu Yang, Chairman and Chief Executive Officer of Concord Medical, commented, “Changes in the policies regarding the hospital partners have further led to the closure of our centers, which put pressure on our operating income in the first half of 2018 and presented us with challenges. Nevertheless, our network business still has new demands. Within the past six months, we developed new centers with reliable partners in suitable locations, including the co-established cooperative radiotherapy center at PKU Healthcare Zibo Hospital and the comprehensive management cooperative center for the departments of radiotherapy and nuclear medicine at PKU International Hospital. Based on our extensive experiences in radiotherapy and imaging diagnosis over years, we believe our network business would continue to provide Chinese cancer patients with high-quality diagnosis and treatment services.”

 

 

 

 

“Although the revenue from the network business shrinks, our self-operating independent cancer hospital business is steadily growing and developing. The revenue from the hospital business in the first half of 2018 had a year-on-year increase of 160%, while its percentage of the Company’s total revenue increased from 5% last year to 25% this year.”

 

“The cumulative number of patient visits within the first half of 2018 at our independent cancer center in Shanghai had a good increase, compared with the number of the first half of 2017. Shanghai Concord Cancer Center is an outpatient department that integrates imaging diagnosis, radiotherapy, chemotherapy, and targeted therapy. At present this center has started to develop joint consultation with MD Anderson Cancer Center in the United States and our Concord International Hospital in Singapore, offering international diagnosis and treatment plans for patients with certain demands.”

 

“The revenue of the Concord International Hospital in Singapore in the first half of 2018 had a dramatical increase of 118%, compared with that of the same period in the last year, while the net loss had also decreased by 41%, compared with that in last year. As for operational data, the number of patients visits in surgery, radiotherapy, and internal medicine has been improved in Concord International Hospital in Singapore. Among them, the number of surgical patient visits was 359 in the first half of 2018, a 122% increase from 162 in the first half of 2017.”

 

“In general, 2018 is the start of a full upgrade of the Company’s business. Our new business mode that is focusing on self-established and operating cancer hospitals is steadily growing and developing, which relieves the influence of adverse impacts on one hand, and lays a solid foundation for our future development on the other. We have high hopes and firmly believe that we can provide good-quality and efficient medical services for more cancer patients in the future.”

 

2018 First Half Financial Results

 

Network Business

 

Net revenue from the network business was RMB79.4 million ($12.0 million), representing a 59.6% decrease from net revenue of RMB196.4 million in the first half of 2017, primarily attributable to the closure of certain centers in our network of centers. With one center closed in the first half of 2018, the Company operated a network of 30 centers in 21 cities in China as of June 30, 2018.

 

Cost of revenue of the network business was RMB42.9 million ($6.5 million), representing a 60.8% decrease from RMB109.5 million in the first half of 2017.

 

Gross profit from the network business was RMB36.5 million ($5.5 million), representing a 57.9% decrease from RMB86.8 million in the first half of 2017. The gross profit margin for the first half of 2018 was 46.0%, compared to 44.2% for the same period last year.

 

 

 

 

Selling expenses of the network business were RMB9.9 million ($1.5 million), representing a 67.3% decrease from RMB30.3 million in the first half of 2017. Selling expenses as a percentage of net revenue was 12.5% in the first half of 2018, compared to 15.4% in the first half of 2017. The decrease in selling expenses of the network business was mainly due to reduced marketing, conference, office and travel expenses.

 

General and administrative expenses of the network business were RMB82.6 million ($12.5 million), representing a 12.1% decrease from RMB94.0 million in the first half of 2017. General and administrative expenses as a percentage of net revenue was 104.0% in the first half of 2018, compared to 47.9% in the same period last year. The increase in general and administrative expenses as a percentage of net revenue was mainly due to the counsel fee and travel expense related to the closure of certain centers.

 

Compared to RMB11.1 million in the same period last year, capital expenditures were RMB4.8 million ($0.7 million) in the first half of 2018.

 

Accounts receivable were RMB105.9 million ($16.0 million) as of June 30, 2018, compared to RMB127.2 million as of December 31, 2017. The average period of sales outstanding for accounts receivable ("Days Sales Outstanding") was 263 days in the first half of 2018.

 

As of June 30, 2018, the Company had bank loan totaling RMB592.6 million ($89.6 million).

 

During the first half of 2018, the Company handled 5,354 patient treatment cases and 70,562 patient diagnostic cases, representing a 37.9% decrease and a 38.7% decrease from the same period last year, respectively, mainly due to the closure of certain centers during the past year and first half of 2018.

 

Hospital Business

 

Hospital business includes Singapore Concord International Hospital, Datong Meizhong Jiahe Cancer Hospital, Shanghai Concord Cancer Hospital and Guangzhou Concord Cancer Hospital.

 

Net revenue from the hospital business was RMB25.7 million ($3.9 million) in the first half of 2018, representing a 160.0% increase from net revenue of RMB9.9 million in the first half of 2017, mainly due to the increased revenue from Singapore Concord International Hospital.

 

Cost of service of the hospital business in the first half of 2018 was RMB38.3 million ($5.8 million), a 50.2% increase from cost of service of RMB25.5 million in the first half of 2017, mainly because of the increased revenue of Singapore Concord International Hospital.

 

Gross loss from the hospital business was RMB12.6 million ($1.9 million) in the first half of 2018, a 19.2% decrease from RMB15.6 million in the same period last year, mainly due to the increased revenue of Singapore Concord International Hospital.

 

 

 

 

Selling expenses of the hospital business were RMB0.7 million ($0.1 million) in the first half of 2018. The selling expenses of the hospital business were RMB0.2 million in the first half of 2017.

 

General and administrative expenses of the hospital business were RMB31.8 million ($4.8 million) in the first half of 2018, of which employee benefit expenses were RMB10.8 million ($1.6 million). In the same period of last year, general and administrative expenses of the hospital business were RMB21.9 million.

 

Compared to RMB72.6 million in the first half of 2017, capital expenditures of the hospital were RMB282.1 million ($42.6 million) in the first half of 2018, which was mainly related to the construction fees and medical equipment payment for Shanghai Concord Cancer Hospital and Guangzhou Concord Cancer Hospital.

 

As of June 30, 2018, accounts receivable from hospital business is RMB5.7 million ($0.9 million), representing a 21.3% increase from accounts receivable of RMB4.7 million as of December 31, 2017. The number of Days Sales Outstanding was 44 days in the first half of 2018.

 

Recent Developments

 

Concord Medical and the investment institutions led by CICC Capital Management Company Limited ("CICC Capital"), a wholly-owned subsidiary of China International Capital Corporation Limited ("CICC"), jointly made a strategic investment in Concord Medical's subsidiary, Beijing Meizhong Jiahe Hospital Management Co., Ltd. ("Meizhong Jiahe"). The total investment was RMB 1.5 billion. After completion of the investment, the total shares held by the institutions led by CICC Capital accounted for 37.5% of the equity interests of Meizhong Jiahe.

 

Shanghai Concord Medical Imaging Diagnostic Center ("Imaging Center"), the first independent imaging diagnostic center of Concord Medical, obtained an independent imaging diagnostic license. The Imaging Center is expected to introduce world-class diagnostic technology and management services, cover the Medical Center and the Yangtze River Delta region through a remote sharing consultation platform, and provide a full range of imaging diagnosis and high-quality services for domestic and foreign commercial insurance patients.

 

Notes:

[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 RMB6.6171 to $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 30, 2018.

[2] Each ADS represents three Class A ordinary shares of the Company.

[3] Adjusted EBITDA is defined as net income plus interest, taxes, depreciation and amortization, share-based compensation expenses, and other adjustments. Other adjustments include foreign exchange gain, gain from disposal of property, plant and equipment and other income.

 

 

 

 

About Concord Medical

Concord Medical Services Holdings Limited is a leading specialty hospital management solution provider and operator of the largest network of radiotherapy and diagnostic imaging centers in China. As of June 30, 2018, the Company operated a network of 30 centers with 21 hospital partners that spanned 21 cities and 14 provinces and administrative regions in China. Under long-term arrangements with top-tier hospitals in China, the Company provides radiotherapy and diagnostic imaging equipment and manages the daily operations of these centers, which are located on the premises of its hospital partners. The Company also provides ongoing training to doctors and other medical professionals in its network of centers to ensure a high level of clinical care for patients. For more information, please see http://ir.ccm.cn.

 

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.

 

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 expense. The Company believes excluding share-based compensation expense 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 expense 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 income plus interest, taxes, depreciation and amortization, and share-based compensation expenses and other adjustments. Other adjustments include foreign exchange gain, gain from disposal of property, plant and equipment and other income. 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.

 

For more information, please contact:

Concord Medical Services

Mr. Ting Jia (Chinese and English)

+86 10 5903 6688 (ext. 809)

ting.jia@ccm.cn

 

 

 

 

 

Concord Medical Services Holdings Co., Ltd.
Consolidated Balance Sheets
(in thousands)
 
   December 31, 2017   June 30, 2018 
   RMB   RMB   US$ 
   (audited)   (Unaudited)   (Unaudited) 
ASSETS               
Current assets               
Cash and cash equivalents   98,191    459,968    69,512 
Restricted cash, current portion   563,986    211,727    31,997 
Accounts receivable   131,952    111,592    16,864 
Inventories   6,284    5,195    785 
Prepayments and other current assets   264,723    299,275    45,228 
Non-current assets held for sale   27,100    5,048    763 
Net investments in direct financing leases, current portion   18,900    23,646    3,573 
Total current assets   1,111,136    1,116,451    168,722 
                
Non-current assets               
Property, plant and equipment, net   793,571    815,698    123,272 
Intangible assets, net   7,799    6,946    1,050 
Deposits for non-current assets   266,180    462,947    69,962 
Net investments in direct financing leases, non-current portion   54,052    46,891    7,086 
Equity method investments   732,167    740,286    111,875 
Cost method investment   22,160    22,160    3,349 
Other non-current assets   30,392    31,223    4,719 
Prepaid land lease payments   447,933    443,351    67,001 
Prepayment for long term investment       480,688    72,643 
Total non-current assets   2,354,254    3,050,190    460,957 
                
Total assets   3,465,390    4,166,641    629,679 
                
LIABILITIES AND EQUITY               
Current liabilities               
Short-term bank borrowings   512,222    480,870    72,671 
Long-term bank borrowings, current portion   197,139    110,364    16,679 
Accounts payable   4,563    5,536    837 
Accrued expenses and other liabilities   385,919    408,765    61,774 
Income tax payable   5,990    5,512    833 
Dividend payable   2,338    2,378    359 
Total current liabilities   1,108,171    1,013,425    153,153 
                
Non-current liabilities               
Long-term bank borrowings, non-current portion   284,584    1,375    208 
Deferred tax liabilities, non-current portion   73,577    70,970    10,725 
Long-term secured borrowings   163,498    123,711    18,696 
Other long term liabilities   73,392    77,751    11,750 
Redeemable noncontrolling interest   396,281    403,279    60,945 
Amount due to related parties, non-current portion   350,969    344,725    52,096 
Total non-current liabilities   1,342,301    1,021,811    154,420 
                
Total liabilities   2,450,472    2,035,236    307,573 
                
EQUITY               
Ordinary shares   105    105    16 
Treasuary stock   (8)   (8)   (1)
Additional paid-in capital   1,860,763    1,860,763    281,205 
Accumulated other comprehensive loss   (47,418)   (52,191)   (7,887)
Accumulated deficit   (879,393)   (1,007,519)   (152,260)
Total Concord Medical Services Holdings Limited shareholders' equity   934,049    801,150    121,073 
Noncontrolling interests   80,869    1,330,255    201,033 
                
Total equity   1,014,918    2,131,405    322,106 
                
Total liabilities and equity   3,465,390    4,166,641    629,679 

 

 

 

 

 

Concord Medical Services Holdings Co., Ltd.
Consolidated Profit & Loss
(in thousands, except for number of ADS and per ADS data)
 
   June 30, 2017   June 30, 2018 
   RMB   RMB   US$ 
   (Unaudited)   (Unaudited)   (Unaudited) 
Revenues, net of business tax , value-added tax and related surcharges :               
Network   196,350    79,393    11,998 
Hospital   9,893    25,722    3,887 
Total net revenues   206,243    105,115    15,885 
                
Cost of revenues:               
Network   (109,512)   (42,882)   (6,481)
Hospital   (25,458)   (38,287)   (5,786)
Total cost of revenues   (134,970)   (81,169)   (12,267)
                
Gross profit   71,273    23,946    3,618 
                
Operating expenses:               
Selling expenses   (30,513)   (10,621)   (1,605)
General and administrative expenses   (115,802)   (114,351)   (17,281)
Impairment of long-lived assets   (28)        
                
Operating loss   (75,070)   (101,026)   (15,268)
Interest expense   (37,809)   (33,381)   (5,045)
Foreign exhange gain   9,636    10,693    1,616 
Gain (loss) from disposal of property, plant and equipment   973    (2,060)   (311)
Interest income   6,728    5,129    775 
Equity pick up of equity investee   3,967    (3,438)   (520)
Other income   3,002    2,161    327 
                
Loss before income tax   (88,573)   (121,922)   (18,426)
Income tax expenses   (15,847)   (5,949)   (899)
Net loss   (104,420)   (127,871)   (19,325)
                
Net (loss) gain attributable to noncontrolling interests   (2,641)   255    39 
                
Net loss attributable to ordinary shareholders   (101,779)   (128,126)   (19,364)
                
Loss per ADS               
Basic   (2.34)   (2.95)   (0.45)
Diluted   (2.34)   (2.95)   (0.45)
                
Weighted average number of ADS outstanding:               
Basic   43,543,956    43,363,992    43,363,992 
Diluted   43,543,956    43,363,992    43,363,992 
                
Other comprehensive income, net of tax               
Foreign currency translation   3,041    4,773    721 
Total other comprehensive income, net of tax   3,041    4,773    721 
Comprehensive loss   (101,379)   (123,098)   (18,604)
Comprehensive loss attributable to noncontrolling interests   (931)   (614)   (92)
Comprehensive loss attributable to Concord Medical Services Holdings Limited’s shareholders   (100,448)   (122,484)   (18,512)

 

 

 

 

  

Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures (*) (in RMB thousands, except ADS data, unaudited)

 

   For the six months ended   For the six months ended 
   June 30, 2017   June 30, 2018 
   GAAP
Measure
   Adjustment   Non-GAAP Measure   GAAP
Measure
   Adjustment   Non-GAAP Measure 
Operating loss   (75,070)   4,272    (70,798)   (101,026)   6,341    (94,685)
Net loss   (104,420)   4,272    (100,148)   (127,871)   6,341    (121,530)
Basic loss per ADS   (2.34)   0.10    (2.24)   (2.95)   0.15    (2.81)
Diluted loss per ADS   (2.34)   0.10    (2.24)   (2.95)   0.15    (2.81)

 

(*) The only adjustment is share-based compensation

 

 

 

 

 

  

Reconciliation from net loss to adjusted EBITDA(*) (in RMB thousands, unaudited)

 

   For the six months ended   For the six months ended 
   June 30, 2017   June 30, 2018 
Net loss   (104,420)   (127,871)
Interest expenses, net   31,081    28,252 
Income tax expenses   15,847    5,949 
Depreciation and amortization   62,901    24,835 
Share-based compensation   4,272    6,341 
Other adjustments   (13,611)   (10,794)
Adjusted EBITDA   (3,930)   (73,288)
EBITDA margin   -2%   -92%

 

(*) Definition of adjusted EBITDA: Adjusted EBITDA is defined as net income plus interest, taxes, depreciation and amortization, share-based compensation expenses and other adjustments. Other adjustments include foreign exchange gain, gain (loss) from disposal of property, plant and equipment and other income.