1Q19 Added 20,601 New Subscribers
Revenues Increased to RMB233.8
Million ($35.3
Million)
Operating Income Up
15.0% YoY to RMB95.4 Million
($14.4 Million)
Non-GAAP
Operating Income Up 17.7% YoY to RMB108.6
Million ($16.4
Million)
Conference Call to be Held on
August 24, 2018 at 8:00 a.m. ET
HONG KONG, Aug. 23, 2018 /PRNewswire/ -- Global Cord Blood
Corporation (NYSE: CO) ("GCBC" or the "Company"), China's leading provider of cord blood
collection, laboratory testing, hematopoietic stem cell processing
and stem cell storage services, today announced its unaudited
financial results for the first quarter of fiscal 2019 ended
June 30, 2018.
First Quarter of Fiscal 2019 Highlights
- Revenues increased to RMB233.8
million ($35.3 million) from
RMB224.2 million in the prior year
period.
- New subscribers and accumulated subscriber base were 20,601 and
682,081[1], respectively.
- Gross profit increased to RMB190.7
million ($28.8 million) from
RMB179.4 million in the prior year
period. Gross margin increased to 81.5% from 80.0% in the prior
year period.
- Operating income increased by 15.0% year-over-year ("YoY") to
RMB95.4 million ($14.4 million).
- Operating income before depreciation and amortization and
share-based compensation expense[2] ("non-GAAP operating
income") increased by 17.7% YoY to RMB108.6
million ($16.4 million). No
share-based compensation expense was recorded in the reporting
quarter.
- Net income attributable to the Company's shareholders increased
by 6.4% YoY to RMB73.5 million
($11.1 million), after taking into
account the unrealized holding loss of RMB9.3 million ($1.4
million) for equity securities following the adoption of a
new accounting standard[3].
"In the first quarter of fiscal 2019, we recorded 20,601 new
subscribers, in line with our quarterly target. Despite the
difficulty in client conversion as consumer spending became more
conservative in the face of macroeconomic uncertainty, we are
delighted to see new subscriber numbers stabilizing at current
levels." said Ms. Ting Zheng, Chairperson and Chief Executive
Officer of GCBC. "As we sail through the storm, we will remain
focused on penetrating our existing markets as well as searching
for business development opportunities in the hematopoietic cord
blood industry value chain domestically and abroad, aiming to
provide additional cord blood related healthcare and treatment
services to our clients."
Summary - First Quarter Ended June 30, 2017 and 2018
|
Three Months Ended
June 30,
|
|
2017
|
|
2018
|
(in
thousands)
|
RMB
|
|
RMB
|
|
US$
|
Revenues
|
224,222
|
|
233,821
|
|
35,336
|
Gross
Profit
|
179,440
|
|
190,663
|
|
28,814
|
Operating
Income[4]
|
82,961
|
|
95,442
|
|
14,424
|
Interest
Expense
|
(3,257)
|
|
-
|
|
-
|
Net Income
Attributable to the Company's
Shareholders
|
69,135
|
|
73,542
|
|
11,114
|
Earnings per Ordinary
Share[5] (RMB/US$)
|
|
|
|
|
|
-
Basic
|
0.62
|
|
0.61
|
|
0.09
|
-
Diluted
|
0.62
|
|
0.61
|
|
0.09
|
|
|
|
|
|
|
Revenue Breakdown
(%)
|
|
|
|
|
|
Processing Fees
and
|
|
|
|
|
|
Other
Services
|
65.6%
|
|
61.3%
|
|
|
Storage
Fees
|
34.4%
|
|
38.7%
|
|
|
|
|
|
|
|
|
New Subscribers
(persons)
|
22,523
|
|
20,601
|
|
|
Total Accumulated
Subscribers (persons)
|
597,175
|
|
682,081[1]
|
|
|
Summary - Selected Cash Flow Statement
Items
|
|
Three Months Ended
June 30,
|
|
|
2017
|
|
2018
|
(in
thousands)
|
|
RMB
|
|
RMB
|
|
US$
|
Net cash provided by
operating activities
|
|
226,417
|
|
175,317
|
|
26,493
|
Net cash used in
investing activities
|
|
(10,663)
|
|
(7,126)
|
|
(1,077)
|
Net cash provided by
financing activities
|
|
-
|
|
-
|
|
-
|
First Quarter of Fiscal 2019 Financial Results
REVENUES. Revenues increased to RMB233.8 million ($35.3
million) in the first quarter fiscal 2019 from RMB224.2 million in the prior year period. The
increase was mostly driven by the enlarged client base.
As the accumulated subscriber base grew to 682,081[1]
by the end of June 2018, revenues
generated from storage fees increased by 17.1% YoY to RMB90.4 million ($13.7
million) in the first quarter of fiscal 2019. Storage fee
revenues accounted for 38.7% of total revenues.
Revenues generated from processing fees and other services in
the reporting quarter were RMB143.4
million ($21.6 million)
compared to RMB147.0 million in the
prior year period, as recruitment of new subscribers became more
difficult under challenging conditions in the reporting quarter.
Revenues generated from processing fees accounted for 61.3% of
total revenues.
GROSS PROFIT. Gross profit for the reporting
quarter increased by 6.3% YoY to RMB190.7
million ($28.8 million). Gross
margin improved to 81.5% from 80.0% in the prior year period. Gross
margin improvement was led by a rising contribution from storage
fees and the implementation of cost saving measures.
OPERATING INCOME. Operating income for the
reporting quarter increased by 15.0% YoY to RMB95.4 million ($14.4
million), contributed by the enhanced gross margin and lower
operating expenses resulting from cost control measures. Operating
margin increased by 3.8 percentage points to 40.8% in the reporting
quarter. Depreciation and amortization expenses for the reporting
quarter were RMB13.1 million
($2.0 million) compared to
RMB12.8 million in the prior year
period. No share-based compensation expense was recorded in the
reporting quarter compared to a RMB3.4
million reversal of share-based compensation expense in the
prior year period. Non-GAAP operating income[2] amounted
to RMB108.6 million ($16.4 million), representing a 17.7% increase
year-over-year.
Sales and Marketing Expenses. Sales and marketing
expenses for the reporting quarter amounted to RMB51.4 million ($7.8
million) compared to RMB43.5
million in the prior year period because the reversal of
share-based compensation expense resulted in lower sales and
marketing expense in the prior year period. Sales and marketing
expenses as a percentage of revenues were 22.0%.
General and Administrative Expenses. General and
administrative expenses for the reporting quarter decreased to
RMB41.0 million ($6.2 million) from RMB50.4
million in the prior year period due to the absence of
share-based compensation expense. General and administrative
expenses as the percentage of revenues was 17.5%.
OTHER INCOME AND EXPENSES.
Interest Expense. No interest expense occurred in
the reporting period whereas RMB3.3
million interest expense related to convertible notes, which
were fully converted in April 2017,
was recorded in the prior year period.
Unrealized holding loss for equity securities. In
the first quarter fiscal 2019, RMB9.3
million ($1.4 million)
unrealized holding loss for equity securities was recognized as
other expenses under the new accounting standard, whereas such loss
was recorded as other comprehensive loss in prior year
period.[3]
NET INCOME ATTRIBUTABLE TO THE COMPANY'S
SHAREHOLDERS. As a result of the increase in operating
income and the absence of interest expense, offset by the
unrealized holding loss for equity securities under the new
accounting presentation, income before income tax for the reporting
quarter increased to RMB91.0 million
($13.8 million). Income tax expense
for the reporting quarter was RMB16.5
million ($2.5 million). Net
income attributable to the Company's shareholders for the reporting
quarter increased to RMB73.5 million
($11.1 million) from RMB69.1 million in the prior year period. Net
margin for the first quarter fiscal 2019 improved to 31.5% from
30.8% in the prior year period.
EARNINGS PER SHARE. Basic and diluted earnings per
ordinary share for the first quarter fiscal 2019 was RMB0.61 ($0.09).
Conference Call
The Company will host a conference call at 8:00 a.m. ET on
Friday, August 24, 2018 to discuss
its financial performance and give a brief overview of the
Company's recent developments, followed by a question and answer
session. Interested parties can access the audio webcast through
the Company's IR website at http://ir.globalcordbloodcorp.com. A
replay of the webcast will be accessible two hours after the
conference call and available for three weeks at the same URL
above. Listeners can also access the call by dialing 1-855-824-5644
or 1-646-722-4977 for US callers, or +852-3027-6500 for
Hong Kong callers, access code:
24554221#.
[1] During
the three months ended June 30, 2018, 20,601 new subscribers were
recruited. The Company reclassified 138 private cord blood units as
donated cord
blood units during the three months ended June 30, 2018 after the
Company determined that the recoverability of these prior private
cord blood banking subscribers
was low. Therefore, the Company terminated their subscription
services according to the subscription contracts and these units
are being treated as if they were
donated cord blood units and will be part of the Company's
non-current inventories. Hence, the net accumulated subscriber base
was 682,081 as of June 30, 2018.
|
|
[2] See
exhibit 3 of this press release for a reconciliation of operating
income to exclude the non-cash items related to the depreciation
and amortization and share-
based compensation expenses to the comparable financial measure
prepared in accordance with U.S. generally accepted accounting
principles ("U.S. GAAP").
|
|
[3]
Unrealized holding loss for equity securities was recognized as
other expenses instead of other comprehensive losses as practiced
previously because of the
adoption of Accounting Standards Update No. 2016-01 in the
reporting quarter. During the three months ended June 30, 2017 and
2018, unrealized holding loss for
equity securities was RMB11.9 million and RMB9.3 million ($1.4
million) respectively.
|
|
[4] The
reported operating income for the three months ended June 30, 2017
and 2018 included the following:
|
(i) Depreciation and amortization expenses for the three
months ended June 30, 2017 and 2018 were RMB12.8 million and
RMB13.1
million ($2.0
million), respectively; and
|
(ii) During
the three months ended June 30, 2017, a net reversal of RMB3.4
million in share-based compensation expense
related to the
restricted share units ("RSUs") scheme was recorded whereas no such
expense or reversal was recorded in the current period since the
RSUs
were fully
vested in the quarter ended March 31, 2018.
|
|
[5] Taking
into account the 7,080,000 shares (related to the RSU scheme)
issued and deposited to a trust sponsored and funded by the
Company, in addition to
113,524,742 outstanding shares for the three months ended June 30,
2017, basic and diluted earnings per ordinary share would be
RMB0.59 for the three months
ended June 30, 2017.
|
Use of Non-GAAP Financial Measures
GAAP results for the three months ended June 30, 2018 include non-cash items related to
the depreciation and amortization and share-based compensation
expenses. To supplement the Company's unaudited condensed
consolidated financial statements presented on a U.S. GAAP basis,
the Company has provided adjusted financial information excluding
the impact of these items in this press release. The non-GAAP
financial measure represents non-GAAP operating income. Such
adjustment is a departure of U.S. GAAP; however, the Company's
management believes that these adjusted measures provide investors
with a better understanding of how the results relate to the
Company's historical performance. Also, management uses non-GAAP
operating income as a measurement tool for evaluating actual
operating performance compared to budget and prior periods. These
adjusted measures should not be considered an alternative to
operating income, or any other measure of financial performance or
liquidity presented in accordance with U.S. GAAP. These measures
are not necessarily comparable to a similarly titled measure of
another company. A reconciliation of the adjustments to U.S. GAAP
results appears in exhibit 3 accompanying this press release. This
additional adjusted information is not meant to be considered in
isolation or as a substitute for U.S. GAAP financials. The adjusted
financial information that the Company provides also may differ
from the adjusted information provided by other companies.
About Global Cord Blood Corporation
Global Cord Blood Corporation is the first and largest umbilical
cord blood banking operator in China in terms of geographical coverage and
the only cord blood banking operator with multiple licenses.
Under current PRC government regulations, only one licensed cord
blood banking operator is permitted to operate in each licensed
region and no new licenses will be granted before 2020 in addition
to the seven licenses authorized as of today. Global Cord
Blood Corporation provides cord blood collection, laboratory
testing, hematopoietic stem cell processing, and stem cell storage
services. For more information, please visit our website at
http://www.globalcordbloodcorp.com.
Safe Harbor Statement
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, and
Section 21E of the Securities Exchange Act of 1934. These
statements relate to future events or the Company's future
financial performance. The Company has attempted to identify
forward-looking statements by terminology including "anticipates",
"believes", "expects", "can", "continue", "could", "estimates",
"intends", "may", "plans", "potential", "predict", "should" or
"will" or the negative of these terms or other comparable
terminology. These statements are only predictions, uncertainties
and other factors may cause the Company's actual results, levels of
activity, performance or achievements to be materially different
from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking
statements. The information in this press release is not intended
to project future performance of the Company. Although the Company
believes that the expectations reflected in the forward-looking
statements are reasonable, the Company does not guarantee future
results, levels of activity, performance or achievements. The
Company expectations are as of the date this press release is
issued, and the Company does not intend to update any of the
forward-looking statements after the date this press release is
issued to conform these statements to actual results, unless
required by law.
The forward-looking statements included in this press release
are subject to risks, uncertainties and assumptions about the
Company's businesses and business environments. These statements
reflect the Company's current views with respect to future events
and are not a guarantee of future performance. Actual results of
the Company's operations may differ materially from information
contained in the forward-looking statements as a result of risk
factors some of which include, among other things: continued
compliance with government regulations regarding cord blood banking
in the People's Republic of China,
or PRC and any other jurisdiction in which the Company conducts its
operations; changing legislation or regulatory environments
(including the relaxation of China's one child policy) in the PRC and any
other jurisdiction in which the Company conducts its operations;
the acceptance by subscribers of the Company's different pricing
and payment options and reaction to the introduction of the
Company's premium-quality pricing strategy; demographic trends in
the regions of the PRC in which the Company is the exclusive
licensed cord blood banking operator; labor and personnel
relations; the existence of a significant shareholder able to
influence and direct the corporate policies of the Company; credit
risks affecting the Company's revenue and profitability; changes in
the healthcare industry, including those which may result in the
use of stem cell therapies becoming redundant or obsolete; the
Company's ability to effectively manage its growth, including
implementing effective controls and procedures and attracting and
retaining key management and personnel; changing interpretations of
generally accepted accounting principles; the availability of
capital resources, including in the form of capital markets
financing opportunities, in light of industry developments
affecting issuers that have pursued a "reverse merger" with an
operating company based in China,
the presence of a new majority shareholder, international pressure
on trade and currency against the PRC and its potential impact on
the PRC consumer behavior, as well as general economic conditions;
and other relevant risks detailed in the Company's filings with the
Securities and Exchange Commission in the
United States.
This announcement contains translations of certain Renminbi
amounts into U.S. dollars at specified rates solely for the
convenience of readers. Unless otherwise noted, all translations
from Renminbi to U.S. dollars as of and for the period ending
June 30, 2018 were made at the noon
buying rate of RMB6.6171 to
$1.00 on June
29, 2018 in the City of New
York for cable transfers in Renminbi per U.S. dollar as
certified for customs purposes by the Federal Reserve Bank of
New York. Global Cord Blood
Corporation makes no representation that the Renminbi or U.S.
dollar amounts referred to in this press release could have been or
could be converted into U.S. dollars or Renminbi, at any particular
rate or at all.
For more information, please contact:
Global Cord Blood Corporation
Investor Relations Department
Tel: (+852) 3605-8180
Email: ir@globalcordbloodcorp.com
ICR, Inc.
William Zima
Tel: (+86) 10-6583-7511
U.S. Tel: (646) 405-5185
Email: William.zima@icrinc.com
EXHIBIT 1
GLOBAL CORD BLOOD
CORPORATION
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
As of March 31 and
June 30, 2018
|
|
|
|
March
31,
|
|
June
30,
|
|
2018
|
|
2018
|
|
RMB
|
|
RMB
|
|
US$
|
|
(in thousands except share
data)
|
ASSETS
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
4,250,610
|
|
4,423,165
|
|
668,444
|
Accounts receivable,
less allowance for doubtful
accounts
(March 31, 2018: RMB58,227;
|
|
|
|
|
|
June 30, 2018:
RMB64,340 (US$9,723))
|
107,818
|
|
104,583
|
|
15,805
|
Inventories
|
27,718
|
|
37,494
|
|
5,665
|
Prepaid expenses and
other receivables
|
22,276
|
|
22,828
|
|
3,449
|
Total current
assets
|
4,408,422
|
|
4,588,070
|
|
693,363
|
Property, plant and
equipment, net
|
552,960
|
|
548,803
|
|
82,938
|
Non-current
deposits
|
233,115
|
|
243,789
|
|
36,842
|
Non-current accounts
receivable, less allowance
for doubtful
accounts (March 31, 2018: RMB69,713;
|
|
|
|
|
|
June 30,
2018: RMB71,764 (US$10,845))
|
101,809
|
|
97,658
|
|
14,759
|
Inventories
|
71,758
|
|
72,945
|
|
11,024
|
Intangible assets,
net
|
102,065
|
|
100,910
|
|
15,250
|
Investment in equity
securities
|
153,882
|
|
152,571
|
|
23,057
|
Other
investment
|
189,129
|
|
189,129
|
|
28,582
|
Deferred tax
assets
|
31,295
|
|
34,194
|
|
5,168
|
Total
assets
|
5,844,435
|
|
6,028,069
|
|
910,983
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Accounts
payable
|
11,372
|
|
15,729
|
|
2,377
|
Accrued expenses and
other payables
|
73,023
|
|
79,780
|
|
12,056
|
Dividend
payable
|
-
|
|
63,610
|
|
9,613
|
Deferred
revenue
|
366,373
|
|
368,291
|
|
55,657
|
Income tax
payable
|
17,407
|
|
17,177
|
|
2,596
|
Total current
liabilities
|
468,175
|
|
544,587
|
|
82,299
|
Non-current deferred
revenue
|
1,874,014
|
|
1,934,510
|
|
292,350
|
Other non-current
liabilities
|
362,876
|
|
375,540
|
|
56,753
|
Deferred tax
liabilities
|
20,628
|
|
20,390
|
|
3,081
|
Total
liabilities
|
2,725,693
|
|
2,875,027
|
|
434,483
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
Shareholders'
equity of Global Cord Blood Corporation
|
|
|
|
|
|
Ordinary
shares
|
|
|
|
|
|
- US$0.0001 par
value, 250,000,000 shares
authorized, 120,961,641
shares issued and
120,824,742 shares
outstanding as of March
31, and June 30,
2018
|
83
|
|
83
|
|
13
|
Additional paid-in
capital
|
2,053,866
|
|
2,053,866
|
|
310,387
|
Treasury stock, at
cost (March 31 and June 30,
|
|
|
|
|
|
2018: 136,899 shares,
respectively)
|
(2,815)
|
|
(2,815)
|
|
(425)
|
Accumulated other
comprehensive loss
|
(54,654)
|
|
(94,090)
|
|
(14,219)
|
Retained
earnings
|
1,116,873
|
|
1,189,641
|
|
179,783
|
Total equity
attributable to Global Cord Blood
|
|
|
|
|
|
Corporation
|
3,113,353
|
|
3,146,685
|
|
475,539
|
Non-controlling
interests
|
5,389
|
|
6,357
|
|
961
|
Total
equity
|
3,118,742
|
|
3,153,042
|
|
476,500
|
Total liabilities
and equity
|
5,844,435
|
|
6,028,069
|
|
910,983
|
EXHIBIT 2
GLOBAL CORD BLOOD
CORPORATION
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
|
For the Three Months
Ended June 30, 2017 and 2018
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
2017
|
|
2018
|
|
RMB
|
|
RMB
|
|
US$
|
|
(in thousands
except per share data)
|
|
|
|
|
|
|
Revenues
|
224,222
|
|
233,821
|
|
35,336
|
Direct
costs
|
(44,782)
|
|
(43,158)
|
|
(6,522)
|
Gross
profit
|
179,440
|
|
190,663
|
|
28,814
|
Operating
expenses
|
|
|
|
|
|
Research and
development
|
(2,679)
|
|
(2,791)
|
|
(422)
|
Sales and
marketing
|
(43,450)
|
|
(51,415)
|
|
(7,770)
|
General and
administrative
|
(50,350)
|
|
(41,015)
|
|
(6,198)
|
Total operating
expenses
|
(96,479)
|
|
(95,221)
|
|
(14,390)
|
Operating
income
|
82,961
|
|
95,442
|
|
14,424
|
Other
income/(expenses), net
|
|
|
|
|
|
Interest
income
|
4,827
|
|
5,698
|
|
861
|
Interest
expense
|
(3,257)
|
|
-
|
|
-
|
Foreign currency
exchange gains/(losses)
|
1
|
|
(26)
|
|
(4)
|
Unrealized holding
loss for equity securities
|
-
|
|
(9,321)
|
|
(1,409)
|
Others
|
1,149
|
|
(759)
|
|
(115)
|
Total other
income/(expenses), net
|
2,720
|
|
(4,408)
|
|
(667)
|
Income before
income tax
|
85,681
|
|
91,034
|
|
13,757
|
Income tax
expense
|
(15,721)
|
|
(16,524)
|
|
(2,497)
|
Net
income
|
69,960
|
|
74,510
|
|
11,260
|
Net income
attributable to non-controlling interests
|
(825)
|
|
(968)
|
|
(146)
|
Net income
attributable to Global Cord
|
|
|
|
|
|
Blood
Corporation's shareholders
|
69,135
|
|
73,542
|
|
11,114
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
Attributable to
ordinary shares
|
|
|
|
|
|
- Basic
|
0.62
|
|
0.61
|
|
0.09
|
- Diluted
|
0.62
|
|
0.61
|
|
0.09
|
|
|
|
|
|
|
Other comprehensive
(losses)/income,
net of nil income taxes
|
|
|
|
|
|
- Foreign
currency translation adjustments
|
(11,731)
|
|
22,880
|
|
3,458
|
-
Unrealized holding losses in
|
|
|
|
|
|
available-for-sale
equity securities
|
(11,925)
|
|
-
|
|
-
|
Total other
comprehensive (losses)/income
|
(23,656)
|
|
22,880
|
|
3,458
|
Comprehensive
income
|
46,304
|
|
97,390
|
|
14,718
|
|
|
|
|
|
|
Comprehensive income
attributable to
|
|
|
|
|
|
non-controlling interests
|
(825)
|
|
(968)
|
|
(146)
|
Comprehensive income
attributable to
|
|
|
|
|
|
Global Cord
Blood Corporation's shareholders
|
45,479
|
|
96,422
|
|
14,572
|
EXHIBIT 3
GLOBAL CORD BLOOD
CORPORATION
|
RECONCILIATION OF
NON-GAAP OPERATING INCOME
|
For the Three Months
Ended June 30, 2017 and 2018
|
|
|
Three months ended
June 30,
|
|
2017
|
|
2018
|
|
RMB
|
|
RMB
|
|
US$
|
|
(in
thousands)
|
|
|
|
|
|
|
GAAP amount of
operating income
|
82,961
|
|
95,442
|
|
14,424
|
|
|
|
|
|
|
Depreciation and
amortization expenses[6]
|
12,752
|
|
13,145
|
|
1,987
|
|
|
|
|
|
|
Share-based
compensation expense[7]
|
(3,438)
|
|
-
|
|
-
|
|
|
|
|
|
|
Non-GAAP operating
income
|
92,275
|
|
108,587
|
|
16,411
|
[6]
Depreciation and amortization expenses relate to property, plant
and equipment and intangible assets respectively.
|
|
[7]
Share-based compensation expense relates to the Company's RSU
scheme of which the shares have been fully vested in the quarter
ended March 31, 2018, accordingly there will be no share-based
compensation expense relating to those RSUs amortized in future
periods.
|
View original
content:http://www.prnewswire.com/news-releases/global-cord-blood-corporation-reports-financial-results-for-the-first-quarter-of-fiscal-2019-300701497.html
SOURCE Global Cord Blood Corporation