Concord Medical's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Concord Medical Services Holdings Limited (CCM)

Q1 2012 Earnings Call

May 22, 2012 08:00 am ET

Executives

Tony Tian – Investor Relations Manager

Jianyu Yang – Chairman of the Board and Chief Executive Officer

Adam J. Sun – Chief Financial Officer

Zheng Cheng – President and Chief Operating Officer; Director

Analysts

Christopher Lui – Morgan Stanley Asia Ltd.

Yale I. Jen – ROTH Capital Partners LLC

Sean Wu – JPMorgan Securities (Asia Pacific) Ltd.

Presentation

Operator

Hello and thank you for standing by for Concord Medical’s first quarter 2012 earnings conference call. At this time, all participants are in listen-only mode. After management’s prepared remarks, there will be a question-and-answer session. Today’s conference is being recorded. If you have any objections you may disconnect at this time.

I would now like to turn the meeting over to your host for today’s conference, Tony Tian, Investor Relations Manager of Concord Medical.

Tony Tian

Hello everyone and welcome to Concord Medical’s first quarter 2012 earnings conference call. Concord Medical’s earnings release was distributed earlier today and you can find a copy on our website as well as on newswire services.

Today, you will hear from Dr. Jianyu Yang, Concord Medical’s Chairman and Chief Executive Officer, and Mr. Adam Sun, Chief Financial Officer. After their prepared remarks, Dr. Yang and Mr. Sun will be available to answer your questions.

Before we continue, please note that the discussion today will contain forward-looking statements made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995 and within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include but are not limited to those outlined in our public filings with the SEC. Concord Medical does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Both our earnings release and remarks made during this call include discussions of certain unaudited non-GAAP financial measures. Our earnings release contains a reconciliation of the unaudited non-GAAP measures to the most directly comparable unaudited GAAP measures. As a reminder, this conference is being recorded. In addition, a webcast of this conference call will also be available on Concord Medical’s website.

I will now turn the call over to Concord Medical’s Chairman and CEO, Dr. Jianyu Yang.

Jianyu Yang

First of all, I would like to welcome everyone to our 2012 1st Quarter earnings conference call. 

Concord Medical has made solid progress in the first quarter of 2012. Total net revenues were RMB 106.7 million ($16.9 million), a 22.1% increase from the first quarter 2011. Net income in the first quarter 2012 was RMB 25.0 million ($4.0 million), a 9.2% increase from the first quarter 2011. This is the first time Concord Medical realized first quarter revenue of over RMB 100 million. This is a significant achievement as we were able to achieve this despite having fewer days in the first quarter due to the spring festival and a highly competitive market. We are very proud of our achievement, which will help pave the way to accomplishing our 2012 fiscal year business objectives. I would like to thank our operational team for the hard work.

Our focus for the remainder of 2012 is to continue our current strategies - on one hand, to improve the cost control and operational efficiency of our existing centers; and on the other hand, to improve the operations of newly opened centers which haven been in operation for less than a year and help those centers reach their investment targets.

Many investors have inquired us about the status of our acquisition of Chang’an Hospital. I am happy to share that all government approval processes are progressing as planned. We will have a board meeting in the near future to discuss the final steps to close the transaction. We expect to complete the acquisition within the 1st half of 2012, and consolidate financial results of Chang'an Hospital beginning at the third quarter of 2012.  

Chang’an Hospital has made great progress in its information system infrastructure. TheChina’s Ministry of Health organized reviews of Electronic Medical Record (EMR) capabilities among hospitals, and Chang’an hospital was ranked No.1 twice. In May, Chang’an Hospital was accredited with Stage 6 of EMR capabilities by U.S. Healthcare Information and Management Systems Society (HIMSS).

We will hold an Investor/Analyst day in Chang’an Hospital on May 31st, 2012. This event will be an opportunity for management to showcase the hospital, as well as provide an updated strategic and operating outlook for the company. So far we’ve seen enthusiastic responses from investors, and we look forward to communicating with the investment community at Chang’an Hospital at the end of May.

In this quarter, we established a Tele-radiotherapy Business Department, in collaboration with Jinwei Medical Services, Inc., a leading telemedicine company in China. We will utilize excellent resources of medical professionals in large cities and hospitals to build up core healthcare services for partner hospitals, doctors and patients, which include remote diagnosis, training, and two-way referrals.

The ongoing healthcare reform in China will provide Concord Medical significant development opportunities. By 2015, it is projected that the number of private hospitals will increase to approximately 20% of the total number of hospitals in China, according to China’s Ministry of Health. We plan to take advantage of this growing trend and build several cancer specialty hospitals with focus on radiotherapy, including standalone proton centers in Beijing and Guangzhou. These projects are moving forward according to plan. We expect to obtain the license of at least one proton center in 2012, and begin construction as soon as possible.

Read the rest of this transcript for free on seekingalpha.com

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