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
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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