iKang Healthcare Group, Inc. (“iKang” or the “Company”)
(Nasdaq:KANG), a major provider in China’s fast growing private
preventive healthcare services market, today announced its
unaudited financial results for the first quarter ended June 30,
2017.
Fiscal First Quarter Ended
June 30, 2017 Financial Highlights
- Net revenues were US$115.6 million, an increase of 14.2%
year-over-year (an increase of 19.9% on RMB basis) (1)
- Gross profit was US$48.4 million, an increase of 8.1%
year-over-year (an increase of 13.5% on RMB basis) (1)
- Net income attributable to the Company was US$3.6 million,
an increase of 73.1% year-over-year (an increase of 81.8% on RMB
basis) (1)
- Non-GAAP net income attributable to the
Company(2) was US$4.0 million, an increase of 55.3%
year-over-year (an increase of 63.1 % on RMB basis)
(1)
- Basic and diluted income per ADS attributable to common
shareholders were US$0.05 and US$0.05, respectively,
as compared to US$0.03 and US$0.03, respectively, in the
fiscal first quarter of 2016
- Non-GAAP basic and diluted income per ADS(3) attributable
to common shareholders were US$0.06 and US$0.06,
respectively, as compared to US$0.04 and US$0.04,
respectively, in the fiscal first quarter of 2016
(1) RMB basis refers to the year on year
comparison made on local currency – Chinese Renminbi basis.(2)
Non-GAAP net income attributable to the Company is defined as net
income attributable to the Company excluding share-based
compensation expenses. For more information on these non-GAAP
financial measures, please see the section captioned under
“Non-GAAP Financial Measures” and the tables captioned
“Reconciliation of GAAP and Non-GAAP Results” set forth at the end
of this release.(3) Non-GAAP basic and diluted income per ADS is
defined as non-GAAP net income divided by the weighted average
number of basic and diluted ADS.
Mr. Lee Ligang Zhang, Chairman and Chief
Executive Officer of iKang, commented on the results.
“Our fiscal first quarter 2017 earnings
represent a solid foundation to start the fiscal year. Total
net revenues and Non-GAAP net income for the fiscal first quarter
grew by 14.2% and 55.3% respectively (by 19.9% and 63.1%
respectively on RMB basis), compared to those for the same period
last year. The solid performance is underpinned by the continued
focus on expanding the network, enhancing customer engagement and
broadening the value based services and revenue sources," said Mr.
Lee Ligang Zhang. “Over the course of June and July, we have
launched a number of strategic initiatives including iKang
Partners+ and iKangCare+ which is a comprehensive advisory
healthcare platform for corporate customers and individuals, a
healthcare investment fund to invest in medical centers and
the partnership to introduce IBM Watson for Oncology cognitive
computing solutions as part of iKangcare+ and iKang Partners+
initiatives and build the IBM Watson for Oncology Center in iKang’s
existing and future medical centers in China.
“With iKangCare+ and iKang Partners+ strategies,
iKang is now fully utilizing the latest technologies in genetic
testing and in vitro diagnosis to offer more advanced screening
services to our corporate customers and individuals. The value
proposition we bring to the marketplace is clearly resonating with
consumers as we continued to improve the quality, efficiency and
affordability of private preventive healthcare for our loyal
corporate customers and also seized opportunities from the fast
growing individual customer segment. Our growing portfolio of
facilities and services continues to provide customers with the
premium level of care. iKang’s nationwide network of 104
operating medical centers as of today creates a strong
platform for growing our core and ancillary services which we see
continued revenue growth trajectory for fiscal 2017.
“The management remains focused on and fully
committed to customers, partners and shareholders. It is because of
this that we continue to make strides in advancing our strategy to
invest in growing our network, portfolio of facilities and services
with improved efficiencies, hence, we are well positioned for a
sustainable long term business growth,” Mr. Zhang concluded.
FISCAL FIRST QUARTER ENDED
JUNE 30, 2017 UNAUDITED FINANCIAL
RESULTS
Net RevenuesNet revenues
for the fiscal first quarter were US$115.6 million,
representing a 14.2% increase from US$101.2 million in
the same period of the last fiscal year. As of June 30,
2017, the number of self-owned operating medical centers totaled
104 compared to 90 as of June 30, 2016. During the quarter,
the Company served approximately a total of 1,415,000 customer
visits under both corporate and individual programs, representing
an increase of 11.9% over the fiscal first quarter of 2016.
The table below sets forth a breakdown of net
revenues:
(US$ million) |
Fiscal First QuarterEnded June 30, 2017 |
Fiscal First QuarterEnded June 30,2016 |
YoY % Change |
Medical Examinations |
95.0 |
85.0 |
11.7% |
Disease Screening |
9.7 |
7.3 |
33.0% |
Dental Services |
2.9 |
1.3 |
127.4% |
Other Services |
8.0 |
7.6 |
4.7% |
Total |
115.6 |
101.2 |
14.2% |
Medical Examinations: Net revenues for the
quarter were US$95.0 million, representing an 11.7% increase
from US$85.0 million in the same period of the last
fiscal year.
Disease Screening: Net revenues for the
quarter were US$9.7 million, representing a 33.0% increase
from US$7.3 million in the same period of the last fiscal
year. Disease screening services refer to the additional services
requested by individuals under the basic corporate medical
examination programs as a result of individual needs.
Dental Services: Net revenues for the
quarter were US$2.9 million, representing a 127.4% increase
from US$1.3 million in the same period of the last fiscal
year.
Other Services: Net revenues for the
quarter were US$8.0 million, representing a 4.7% increase
from US$7.6 million in the same period of the last fiscal
year.
Cost of RevenuesCost of
revenues for the quarter was US$67.2 million, representing a
19.0% increase from US$56.5 million in the same period of
the last fiscal year.
Gross Profit and Gross
MarginGross profit for the quarter was US$48.4
million, representing an 8.1% increase from US$44.7
million in the same period of the last fiscal year. Gross
margin for the quarter was 41.8%, as compared to 44.2% in the first
quarter of fiscal 2016. The lower gross margins of newly operated
medical centers which were in the ramping up period have
contributed to the decrease in our overall gross margin.
Operating ExpensesTotal
operating expenses for the quarter were US$39.5 million,
representing a 4.1% increase from US$37.9 million in the
same period of the last fiscal year.
Selling and marketing expensesSelling and
marketing expenses for the quarter were US$19.3 million,
accounting for 16.7% of total net revenues as compared to 18.1% in
the same period of the last fiscal year.
General and administrative expensesGeneral and
administrative expenses for the quarter were US$19.5 million,
accounting for 16.9% of total net revenues as compared to 18.5% in
the same period of the last fiscal year.
Research and development expensesResearch and
development expenses for the quarter were US$706,000,
accounting for 0.6% of total net revenues as compared to 0.9% in
the same period of the last fiscal year.
Income from OperationsIncome
from operations for the quarter was US$8.9 million,
representing a 30.1% increase from US$6.8 million in the
same period of the last fiscal year. Excluding share-based
compensation expenses of US$384,000 for this quarter
and US$484,000 for the same quarter last year, non-GAAP
income from operations for the quarter was US$9.3
million as compared to US$7.3 million, which reflected a
rise of 26.8% as a result of improving operating leverage.
Non-GAAP EBITDANon-GAAP EBITDA
for the quarter was US$19.5 million, representing a 22.1% increase
from US$16.0 million in the same period of the last fiscal
year.
Net
Income Net income
attributable to the Company for the quarter was US$3.6
million, representing a 73.1% increase from US$2.1
million in the same period of the last fiscal year.
Non-GAAP net income for the quarter
was US$4.0 million, representing a 55.3% increase
from US$2.6 million in the same period of fiscal
2016.
Basic and Diluted
Income per ADSBasic and diluted
income per ADS attributable to common shareholders
were US$0.05 and US$0.05, respectively, compared to
basic and diluted income per ADS attributable to common
shareholders of US$0.03 and US$0.03, respectively,
in the same quarter of fiscal 2016.
Non-GAAP basic and diluted income per ADS
attributable to common shareholders
were US$0.06 and US$0.06, respectively, compared to
basic and diluted income per ADS attributable to common
shareholders of US$0.04 and US$0.04, respectively,
in the same quarter of fiscal 2016.
GUIDANCE FOR FISCAL YEAR 2017 ENDING
MARCH 31, 2018
For the Fiscal Year 2017 ending March 31, 2018,
the Company reaffirms its guidance of net revenue to be between
RMB3.57 billion and RMB3.72 billion, representing a year-on-year
increase between 22% and 27%. The Company also expects that
12-15 new medical centers will start commercial operation in Fiscal
Year 2017.
This guidance is based on the current market
conditions and reflects the Company's current and preliminary
estimates of market and operating conditions and customer demand,
which are all subject to change.
Conference Call
iKang’s management will host a conference call
at 8:00 am US Eastern Time (8:00 pm Beijing/Hong Kong
Time) on September 15, 2017, to discuss its quarterly
results and recent business activities.
To participate in the conference call, please
dial the following number five to ten minutes prior to the
scheduled conference call time:
China: |
|
4001-209-101 |
Hong Kong: |
|
800-961-105 |
United States: |
|
888-352-6803 |
International: |
|
+65
6320-9025 |
Passcode: |
|
9060883 |
The Company will also broadcast a live audio
webcast of the conference call. The webcast will be available at
http://ir.ikang.com.
Following the earnings conference call, an
archive of the call will be available by dialing:
China: |
|
4001-201-651 |
Hong
Kong: |
|
800-901-108 |
United States: |
|
888-203-1112 |
International: |
|
+65
6517-0784 |
Replay Passcode: |
|
9060883 |
Replay End Date: |
|
September 29, 2017 |
STATEMENT REGARDING UNAUDITED FINANCIAL
INFORMATION
The unaudited financial information set forth
above is subject to adjustments that may be identified when audit
work is performed on the Company’s year-end financial statements,
which could result in significant differences from this unaudited
financial information.
NON-GAAP FINANCIAL MEASURES
To supplement our consolidated financial
statements which are presented in accordance with U.S. GAAP, we
also use non-GAAP operating income, non-GAAP net income and
non-GAAP EBITDA as additional non-GAAP financial measures. We
present these non-GAAP financial measures because they are used by
our management to evaluate our operating performance. We also
believe that these non-GAAP financial measures provide useful
information to investors and others in understanding and evaluating
our consolidated results of operations in the same manner as our
management and in comparing financial results across accounting
periods and to those of our peer companies.
Reconciliation of non-GAAP operating income,
non-GAAP net income and non-GAAP EBITDA to the most directly
comparable financial measures calculated and presented in
accordance with U.S. GAAP is set forth at the end of this
release.
About iKang Healthcare Group,
Inc.iKang Healthcare Group, Inc. is one of the largest
providers in China’s fast-growing private preventive healthcare
space through its nationwide healthcare services network.
iKang’s nationwide integrated network of
multi-brand self-owned medical centers and third-party facilities,
provides comprehensive and high-quality preventive healthcare
solutions across China, including medical examination, disease
screening, outpatient service and other value-added services.
iKang’s customer base primarily comprises corporate clients, who
contract with iKang to deliver medical examination services to
their employees and clients, and receive these services at
pre-agreed rates. iKang also directly markets its services to
individual customers. In the fiscal first quarter ended June 30,
2017, iKang served a total of 1.41 million customer visits under
both corporate and individual programs.
As of September 14, 2017, iKang has a nationwide
network of 104 self-owned operating medical centers, covering 33 of
China’s most affluent cities: Beijing, Shanghai, Guangzhou,
Shenzhen, Chongqing, Tianjin, Nanjing, Suzhou, Hangzhou, Chengdu,
Fuzhou, Changchun, Jiangyin, Changzhou, Wuhan, Changsha, Yantai,
Yinchuan, Weihai, Weifang, Shenyang, Xi’an, Wuhu, Guiyang, Ningbo,
Foshan, Jinan, Bijie, Qingdao, Wuxi, Kaili and Mianyang, as well as
Hong Kong. iKang has also extended its coverage to over 200 cities
by contracting with over 400 third-party facilities, which include
selected independent medical examination centers and hospitals
across all of China’s provinces, creating a nationwide network that
allows iKang to serve its customers in markets where it does not
operate its own medical centers.
Forward-looking Statements
This press release contains forward-looking
statements. These statements, including management quotes and
business outlook, are made under the “safe harbor” provisions of
the U.S. Private Securities Litigation Reform Act of 1995. These
forward-looking statements can be identified by terminology such as
"will," "estimate," "project," "predict," "believe," "expect,"
"anticipate," "intend," "potential," "plan," "goal" and similar
statements. iKang may also make written or oral
forward-looking statements in its periodic reports to the U.S.
Securities and Exchange Commission, in its annual report to
shareholders, in press releases and other written materials and in
oral statements made by its officers, directors or employees to
third parties. Such statements involve certain risks and
uncertainties that could cause actual results to differ materially
from those expressed or implied in the forward-looking statements.
These forward-looking statements include, but are not limited to,
statements about: the Company’s goals and strategies; its future
business development, financial condition and results of
operations; its ability to retain and grow its customer base and
network of medical centers; the growth of, and trends in, the
markets for its services in China; the demand for and market
acceptance of its brand and services; competition in its industry
in China; relevant government policies and regulations relating to
the corporate structure, business and industry; fluctuations in
general economic and business conditions in China. Further
information regarding these and other risks is included in iKang’s
filing with the Securities and Exchange Commission. iKang
undertakes no duty to update any forward-looking statement as a
result of new information, future events or otherwise, except as
required under applicable law.
IR Contact:
iKang Healthcare Group, Inc.Christy XieDirector
of Investor RelationsTel: +86 10 5320
8599Email: ir@ikang.comWebsite: www.ikanggroup.com
FleishmanHillardEmail: ikang@fleishman.com
|
IKANG HEALTHCARE GROUP,
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(In thousands of US dollars, except share
data and per share data)(Unaudited) |
|
|
|
|
|
|
|
|
As
of |
|
|
As
of |
|
|
March
31, |
|
|
June
30, |
|
|
2017 |
|
|
2017 |
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and
cash equivalents |
$ |
64,898 |
|
$ |
41,530 |
Restricted cash |
|
392 |
|
|
398 |
Term
deposits |
|
4,359 |
|
|
2,213 |
Accounts
receivable, net of allowance for doubtful accounts of $14,261and
$17,125 as of March 31, 2017 and June 30, 2017, respectively |
|
79,576 |
|
|
105,622 |
Inventories |
|
6,781 |
|
|
6,218 |
Deferred
tax assets-current |
|
9,635 |
|
|
8,902 |
Amount
due from a related party |
|
4,538 |
|
|
4,575 |
Prepaid
expenses and other current assets |
|
49,736 |
|
|
52,738 |
|
|
|
|
|
|
Total current assets |
$ |
219,915 |
|
$ |
222,196 |
|
|
|
|
|
|
Property and equipment,
net |
$ |
163,081 |
|
$ |
164,784 |
Acquired intangible
assets, net |
|
25,852 |
|
|
24,190 |
Goodwill |
|
107,237 |
|
|
108,678 |
Long-term
investments |
|
180,758 |
|
|
182,565 |
Deferred tax
assets-non-current |
|
16,698 |
|
|
16,922 |
Rental deposit and
other non-current assets |
|
14,950 |
|
|
15,891 |
|
|
|
|
|
|
TOTAL ASSETS |
$ |
728,491 |
|
$ |
735,226 |
|
|
|
|
|
|
LIABILITIES, MEZZANINE
AND EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts
payable (including accounts payable of the consolidated VIEswithout
recourse to iKang Healthcare Group, Inc. of $34,637and $38,026 as
of March 31, 2017 and June 30, 2017, respectively) |
$ |
39,892 |
|
$ |
43,174 |
Accrued
expenses and other current liabilities (including accrued
expensesand other current liabilities of the consolidated VIEs
without recourseto iKang Healthcare Group, Inc. of $48,910 and
$49,049 as of March 31, 2017and June 30, 2017, respectively) |
|
59,278 |
|
|
59,515 |
Income
tax payable (including income tax payable of the consolidated
VIEswithout recourse to iKang Healthcare Group, Inc. of
$6,414and $8,650 as of March 31, 2017 and June 30, 2017,
respectively) |
|
11,951 |
|
|
9,683 |
Deferred
revenues (including deferred revenues of the consolidated
VIEswithout recourse to iKang Healthcare Group, Inc. of $57,361
and$64,179 as of March 31, 2017 and June 30, 2017,
respectively) |
|
64,740 |
|
|
69,849 |
Short
term borrowings (including short term borrowings of the
consolidatedVIEs without recourse to iKang Healthcare Group, Inc.
of $111,299and $102,385 as of March 31, 2017 and June 30, 2017,
respectively) |
|
111,299 |
|
|
102,385 |
|
|
|
|
|
|
Total current
liabilities |
$ |
287,160 |
|
$ |
284,606 |
|
|
|
|
|
|
IKANG HEALTHCARE GROUP,
INC.CONDENSED CONSOLIDATED BALANCE SHEETS -
continued(In thousands of US dollars, except share
data and per share data)(Unaudited) |
|
|
|
|
|
|
|
|
As
of |
|
|
As
of |
|
|
March
31, |
|
|
June
30, |
|
|
2017 |
|
|
2017 |
|
|
|
|
|
|
Long-term borrowings
(including long term borrowings of the consolidatedVIEs and VIEs’
subsidiaries without recourse to iKang Healthcare Group, Inc.of
$101,697 and $103,255 as of March 31, 2017 and June 30, 2017,
respectively) |
|
101,697 |
|
|
103,255 |
Deferred tax
liabilities-non-current (including deferred tax
liabilitiesnon-current of the consolidated VIEs without recourse to
iKangHealthcare Group, Inc. of $7,009 and $6,627 as of March 31,
2017 andJune 30, 2017, respectively) |
|
7,229 |
|
|
6,831 |
|
|
|
|
|
|
TOTAL LIABILITIES |
$ |
396,086 |
|
$ |
394,692 |
|
|
|
|
|
|
Equity: |
|
|
|
|
|
Total
iKang Healthcare Group, Inc. shareholders' equity |
|
312,437 |
|
|
320,142 |
Non-controlling interests |
|
19,968 |
|
|
20,392 |
|
|
|
|
|
|
TOTAL EQUITY |
$ |
332,405 |
|
$ |
340,534 |
|
|
|
|
|
|
TOTAL LIABILITIES AND
EQUITY |
$ |
728,491 |
|
$ |
735,226 |
|
|
|
|
|
|
IKANG HEALTHCARE GROUP,
INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands of US dollars, except
share data and per share
data)(Unaudited) |
|
|
|
Three-month periods |
|
ended June 30, |
|
|
2016 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
Net revenues |
$ |
101,238 |
|
|
$ |
115,599 |
|
Cost of revenues |
|
56,505 |
|
|
|
67,236 |
|
|
|
|
|
|
|
|
|
Gross profit |
$ |
44,733 |
|
|
$ |
48,363 |
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
Selling
and marketing expenses |
$ |
18,301 |
|
|
$ |
19,259 |
|
General
and administrative expenses |
|
18,702 |
|
|
|
19,489 |
|
Research
and development expenses |
|
884 |
|
|
|
706 |
|
|
|
|
|
|
|
|
|
Total operating
expenses |
$ |
37,887 |
|
|
$ |
39,454 |
|
|
|
|
|
|
|
|
|
Income from
operations |
$ |
6,846 |
|
|
$ |
8,909 |
|
Interest expense |
|
(3,281 |
) |
|
|
(3,089 |
) |
Interest income |
|
376 |
|
|
|
145 |
|
|
|
|
|
|
|
|
|
Income before income
tax expenses and loss fromequity method investments |
$ |
3,941 |
|
|
$ |
5,965 |
|
Income tax
expenses |
|
985 |
|
|
|
1,550 |
|
Loss from equity method
investments |
|
(1,037 |
) |
|
|
(870 |
) |
|
|
|
|
|
|
|
|
Net income |
$ |
1,919 |
|
|
$ |
3,545 |
|
Less: Net loss
attributable to non-controlling interest |
|
(147 |
) |
|
|
(31 |
) |
|
|
|
|
|
|
|
|
Net income attributable
to iKang Healthcare Group, Inc. |
$ |
2,066 |
|
|
$ |
3,576 |
|
|
|
|
|
|
|
|
|
Net income attributable
to common shareholdersof iKang Healthcare Group, Inc. |
$ |
2,066 |
|
|
$ |
3,576 |
|
|
|
|
|
|
|
|
|
Net income per share
attributable to common shareholdersof iKang Healthcare Group,
Inc. |
|
|
|
|
|
|
|
Basic |
$ |
0.06 |
|
|
$ |
0.10 |
|
Diluted |
$ |
0.06 |
|
|
$ |
0.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per ADS (one
common share equals to two ADSs) |
|
|
|
|
|
|
|
Basic |
$ |
0.03 |
|
|
$ |
0.05 |
|
Diluted |
$ |
0.03 |
|
|
$ |
0.05 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
used in calculating net incomeper common share |
|
|
|
|
|
|
|
Basic |
|
33,955,067 |
|
|
|
34,230,899 |
|
Diluted |
|
34,654,762 |
|
|
|
34,669,869 |
|
IKANG HEALTHCARE GROUP,
INC.RECONCILIATION OF GAAP AND NON-GAAP
RESULTS(In thousands of US dollars, except share
data and per share data)(Unaudited) |
|
|
|
Three-month periods |
|
ended June 30, |
|
|
2016 |
|
|
2017 |
|
|
|
|
|
|
Income from
operations |
$ |
6,846 |
|
$ |
8,909 |
Add: |
|
|
|
|
|
Share-based compensation expenses |
|
484 |
|
|
384 |
|
|
|
|
|
|
Non-GAAP operating
income |
$ |
7,330 |
|
$ |
9,293 |
|
|
|
|
|
|
Net income attributable
to iKang Healthcare Group, Inc. |
$ |
2,066 |
|
$ |
3,576 |
Add: |
|
|
|
|
|
Share-based compensation expenses |
|
484 |
|
|
384 |
|
|
|
|
|
|
Non-GAAP net income |
$ |
2,550 |
|
$ |
3,960 |
|
|
|
|
|
|
Income from
operations |
$ |
6,846 |
|
$ |
8,909 |
Add: |
|
|
|
|
|
Depreciation and amortization |
|
8,647 |
|
|
10,208 |
Share-based compensation expenses |
|
484 |
|
|
384 |
|
|
|
|
|
|
Non-GAAP EBITDA |
$ |
15,977 |
|
$ |
19,501 |
|
|
|
|
|
|
Non-GAAP net income
attributable to common shareholdersof iKang Healthcare Group,
Inc. |
$ |
2,550 |
|
$ |
3,960 |
|
|
|
|
|
|
Non-GAAP net income per
share attributable to common shareholdersof iKang Healthcare Group,
Inc. |
|
|
|
|
|
Basic |
$ |
0.08 |
|
$ |
0.12 |
Diluted |
$ |
0.07 |
|
$ |
0.11 |
|
|
|
|
|
|
Non-GAAP net income per
ADS (one common share equals to two ADSs) |
|
|
|
|
|
Basic |
$ |
0.04 |
|
$ |
0.06 |
Diluted |
$ |
0.04 |
|
$ |
0.06 |
IKANG HEALTHCARE GROUP, INC. (NASDAQ:KANG)
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IKANG HEALTHCARE GROUP, INC. (NASDAQ:KANG)
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