SHANGHAI, Sept. 21, 2020 /PRNewswire/ -- Zhongchao Inc.
(NASDAQ: ZCMD) ("Zhongchao" or the "Company"), a healthcare
services company offering patient management, online healthcare
information, professional training and educational services, today
announced its unaudited financial results for the six months ended
June 30, 2020.
Key Financial Highlights for the First Half 2020 as compared
to the First Half 2019
|
|
For the Six Months
Ended June 30,
|
($ millions,
except per share data)
|
|
2020
|
|
2019
|
|
%
Change
|
Revenues
|
|
$8.46
|
|
$6.99
|
|
21.1%
|
Gross
profit
|
|
$5.62
|
|
$4.75
|
|
18.3%
|
Gross
margin
|
|
66.4%
|
|
68.0%
|
|
-1.6 pp
|
Income from
operations
|
|
$1.88
|
|
$1.26
|
|
49.2%
|
Operating
margin
|
|
22.2%
|
|
18.0%
|
|
4.2 pp
|
Net income attributable to
ordinary
shareholders of Zhongchao
|
|
$1.46
|
|
$1.73
|
|
-15.7%
|
Earnings per
share
|
|
$0.06
|
|
$0.08
|
|
-23.9%
|
* pp: percentage
points
|
|
|
|
|
|
|
- Revenues increased by 21.1% to $8.46
million for the first half of 2020, primarily due to
increased contribution from the patient-aid projects launched in
the fourth quarter of 2018 (the
"Patient-Aid Projects") as well as COVID-19 related online
training courses.
- Gross profit increased by 18.3% to $5.62
million while gross margin decreased by 1.6 percentage
points to 66.4% for the first half of 2020.
- Operating income increased by 49.2% to $1.88 million for the first half of 2020,
primarily due to increased gross profit and partially offset by
increased operating expenses.
- Net income attributable to the Company's ordinary shareholders decreased by 15.7% to
$1.46 million for the first half of
2020, primarily driven by decreased government subsidies and
increased income tax expenses that exceeded the increase in operating
income.
- Earnings per share was $0.06 for
the first half of 2020, compared to $0.08 for the same period of last year.
Weiguang Yang, Chairman and Chief
Executive Officer of Zhongchao, commented, "With revenues
increasing by 21.1% to a record $8.46
million and operating income increasing by 49.2% to
$1.88 million, our first half of 2020
financial results highlight continued strength in our businesses.
Bucking the trend of economic standstill for an extended period
time during the first half of the year triggered by the COVID-19
pandemic, we saw increasing orders from existing and new
non-for-profit organizations ("NFP") and pharmaceutical
enterprises, particularly after our
successful initial public offering ("IPO"). While our MDMOOC and
Sunshine Health Forum platforms continued to expand with more
courses and health information and attract more users, we also
branched out our patient management team and officially launched
Zhongxun as our third major line of business in July, positioning
us for another leg of growth in the years to come. Looking ahead,
we expect our strong order book to drive double-digit revenues
growth in the second half of 2020."
Financial Results for the Six Months Ended June 30, 2020
Revenues
For the first half of 2020, revenues increased by $1.47million, or 21.1%, to $8.46 million from $6.99
million for the same period of last year. The increase in
revenues was primarily due to increased contribution from the
Patient-Aid Projects as well as COVID-19
related online training courses.
Cost of revenues
Cost of revenue increased by $0.60
million, or 27.0%, to $2.84
million for the first half of 2020 from $2.24 million for the same period of last year.
The increase of cost of revenues was driven by increased revenues
as well as increased labor costs for the Patient-Aid Projects
business.
Gross profit
Gross profit increased by $0.87
million, or 18.3%, to $5.62
million for the first half of 2020 from $4.75 million for the same period of last
year.
Gross margin decreased by 1.6 percentage points to 66.4% for the
first half of 2020, compared to 68.0% for the same period of last
year.
Operating expenses
Selling and marketing expenses decreased by $0.13 million, or 7.1%, to $1.73 million for the first half of
2020 from $1.86 million for the
same period of last year. The decrease in selling and marketing
expenses was mainly attributable to decreased advertising expenses
during the COVID-19 pandemic and partially offset by increased
payroll and welfare expenses. As a percentage of total revenues,
selling and marketing expenses was 20.4% for the first half of
2020, compared to 26.6% for the same period of last year.
General and administrative expenses increased by $0.53 million, or 49.4%, to $1.61 million for the first half of
2020 from $1.08 million for the
same period of last year. The increase in general and
administrative expenses was mainly attributable to: 1) increased
professional service fees of $0.25
million incurred for the IPO audit fees and road shows; 2)
write-offs and provisions of $0.20
million for doubtful accounts; and 3) the increase of
$0.06 million in payroll and welfare
expenses. As a percentage of total revenues, general and
administrative expenses was 19.0% for the first half of 2020,
compared to 15.4% for the same period of last year.
Research and development expenses decreased by $0.15 million, or 27.0%, to $0.40 million for the first half of 2020 from
$0.55 million for the same period of
last year. The decrease in research and development expenses was
mainly attributable to decreased expenses paid related to a project
completed before December 31, 2019. As a percentage of total
revenues, research and development expenses was 4.8% for the first
half of 2020, compared to 7.9% for the same period of last year.
Total operating expenses increased by $0.25 million, or 7.2%, to $3.74 million for the first half of 2020 from
$3.49 million for the same period of
last year. The increase in operating expenses was mainly
attributable to increased general and administrative expenses and
partially offset by decreased selling and marketing
expenses, and research and
development expenses.
Operating income
Income from operations increased by $0.62
million, or 49.2%, to $1.88
million for the first half of 2020 from $1.26 million for the same period of last year.
The increase in income from operations was primarily driven by the
increased gross profit and partially offset by the increased
operating expenses.
Operating margin increased by 4.2 percentage points to 22.2% for
the first half of 2020 from 18.0% for the same period of last
year.
Interest and other income, net
Interest income decreased by $0.04
million, or 34.1%, to $0.08
million for the first half of 2020 from $0.12 million for the same period of last
year.
Other income, primarily consisted of government subsidies, was
$3,846 for the first half of 2020,
compared to $0.54 million for the
same period of last year.
Income before income taxes
Income before income taxes increased by $0.05 million, or 2.5%, to $1.96 million for the first half of 2020 from
$1.91 million for the same period of
last year. The increase in income before income taxes was primarily
attributable to increased income from operations and partially
offset by decreased interest and other income.
Income tax expenses increased by $0.32
million, or 153.7%, to $0.53 million for
the first half of 2020 from $0.21
million for the same period of last year.
Net income and EPS
Net income decreased by $0.27
million, or 15.7%, to $1.44
million for the first half of 2020 from $1.71 million for the same period of last year.
The decrease in net income was primarily due to decreased
government subsidies and increased income tax expenses, which
overrun the increase in income from operations.
Net margin decreased by 7.4 percentage points to 17.0% for the
first half of 2020 from 24.5% for the same period of last year.
After deducting for non-controlling interests, net income
attributable to the Company's shareholders decreased by
$0.27 million, or 15.7%, to
$1.46 million for the first half of
2020 from $1.73 million for the same
period of last year.
Earnings per share was $0.06 for
the first half 2020, compared to $0.08 for the same period of last year. Weighted
average number of shares was 23,913,351 for the first half of 2020,
compared to 21,600,135 for the same period of last year.
Financial Condition
As of June 30, 2020, the Company
had cash, and cash equivalents of $16.71
million, compared to $7.83
million as of December 31,
2019. Accounts receivable were $8.38
million as of June 30, 2020,
compared to $5.08 million as of
December 31, 2019. Working capital
was $23.83 million as of June
30, 2020, compared to $12.15
million as of December 31,
2019.
Net cash used in operating activities was $2.37 million for the first half of 2020,
compared to $1.29 million for the
same period of last year. Net cash used in investing activities was
$0.14 million for the first half of
2020, compared to $0.10 million for
the same period of last year. Net cash provided by financing
activities was $11.50 million,
resulting from the net proceeds from the Company's IPO in February 2020,
for the first half of 2020, compared to $nil for the same period of
last year.
Business Highlights in 2020
- In March, consummation of the
Company's initial public offering, raising gross proceeds of
approximately $13.26 million (with
exercise of over-allotment) before underwriting discounts and
commissions and offering expenses.
- In March, launching coronavirus
curriculum with over 60 courses covering a wide range of medical
specialties including anesthesiology, surgery, oncology, obstetrics
and gynecology, pediatrics, infectious disease, respirology,
critical medicine and psychiatry. The Curriculum includes both free
online courses developed independently by the Company and
customized courses developed through partnership/sponsorship with
leading pharmaceutical companies and not-for-profit organizations,
including Sanofi Pasteur, Fresenius Kabi, Johnson & Johnson,
Lundbeck, Boehringer Ingelheim, Chinese Journal of Anesthesiology,
Chinese Journal of Surgery, obgy.cn, China Association of Health
Promotion and Education, and the Chinese Society of
Psychiatry.
- By end of March, Sunshine Health
Forums, the Company's online portal providing healthcare and
wellness knowledge to the general public, hitting a major milestone
with accumulative subscribers and click-throughs (since its launch
in mid-2016) exceeding 5.1 million and 1.3 billion,
respectively.
- In April, launch of virtual seminar
series (the "Virtual Seminar Series") aiming to connect global
healthcare professionals through knowledge and experience sharing
in their fight against the COVID-19 ("coronavirus") pandemic,
jointly hosted by the Beijing Medical and Health
Foundation.
- In June, engagement with WentzMiller
Global Services LLC to assist in distributing self-made online
training and educational programs and recruiting medical experts in
the U.S.
- In July, official launch of its
patient management services as its third major line of business
(the "New Services"), in addition to MDMOOC and Sunshine Health
Forums. The New Services incorporates our patient-aid projects that
were launched from the fourth quarter of 2018 and also provides
additional services for the patients with drug treatment. The New
Services was branded as "Zhongxun" (众寻) and are carried out through
the Company's wholly-owned subsidiary, Shanghai Zhongxun Medical
Technology Co., Ltd.
- In July, co-organizing a virtual panel
session with the Chinese Association of Health Education and
Promotion for the China-Russia-Near East Academic Dialogue on
Gastroenterology.
- In July, joining hands with China
Health Promotion Association, the Liver Cancer Committee of Chinese
Anti-Cancer Association, and 9 leading pharmaceutical companies,
including Roche (China) Co., Ltd.,
Bayer (China) Limited, Eisai China
Inc., Merck (China) Ltd., Jiangsu
Hengrui Medicine Co., Ltd., Innovent Biologics, Inc., Junshi
Biosciences, Gilead Sciences Shanghai Pharmaceutical Technology
Co., Ltd., and BeiGene, Ltd., to carry out a multi-year online
education project on the diagnosis and treatment of primary liver
cancer.
- In August, the renewal of contract
with Johnson & Johnson (China)
Limited to continue to serve as J&J's vendor and partner in
China, extending the cooperation
between the Company and J&J in medical research, medical
training and education, and brand building since 2017.
- In August, entering into partnership
with the China Association of Health Promotion and Education on
developing live interactive programs/courses to promote and
implement the Global Initiative for Chronic Obstructive Lung
Disease in China.
- In August, offering advanced workshops
on wound care and rehabilitation physicians which are part of the
European Wound Management Association ("EWMA') Curriculums on Wound
Healing for Physicians and are exclusively licensed to the Company
in China.
About Zhongchao Inc.
Incorporated in 2012 with headquarter offices in Shanghai and Beijing, China, Zhongchao Inc. is an online provider of healthcare information,
professional training and educational services to healthcare
professionals under its "MDMOOC" platform (www.mdmooc.org) and
to the public under its "Sunshine Health Forums" platform
(www.ygjkclass.com) in China.
The Company also offers patient management services under its
"Zhongxun" platform (www.zhongxun.online). More information about
the Company can be found at its investor relations website at
http://izcmd.com.
Safe Harbor Statement
This press release contains forward-looking statements as
defined by the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include statements concerning plans,
objectives, goals, strategies, future events or performance, and
underlying assumptions and other statements that are other than
statements of historical facts. When the Company uses words such as
"may, "will, "intend," "should," "believe," "expect," "anticipate,"
"project," "estimate" or similar expressions that do not relate
solely to historical matters, it is making forward-looking
statements. Forward-looking statements are not guarantees of
future performance and involve risks and uncertainties that may
cause the actual results to differ materially from the Company's
expectations discussed in the forward-looking statements. These
statements are subject to uncertainties and risks including, but
not limited to, the following: the Company's goals and
strategies; the Company's future business development; product and
service demand and acceptance; changes in technology; economic
conditions; the growth of the professional training and educational
services market in China and the
other international markets the Company plans to serve; reputation
and brand; the impact of competition and pricing; government
regulations; fluctuations in general economic and business
conditions in China and the
international markets the Company plans to serve and assumptions
underlying or related to any of the foregoing and other risks
contained in reports filed by the Company with the SEC, the length
and severity of the recent coronavirus outbreak, including its
impacts across our business and operations. For these
reasons, among others, investors are cautioned not to place undue
reliance upon any forward-looking statements in this press release.
Additional factors are discussed in the Company's filings with the
SEC, which are available for review at www.sec.gov. The Company
undertakes no obligation to publicly revise these
forward–looking statements to reflect events or
circumstances that arise after the date hereof.
For more information, please contact:
At the Company:
Pei Xu, CFO
Email: xupei@mdmooc.org
Phone: +86 21-3220-5987
Investor Relations:
Tony
Tian,
CFA
Weitian Group LLC
Email: ttian@weitianco.com
Phone: +1 732-910-9692
ZHONGCHAO
INC.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME
For the Six Months
Ended June 30, 2020 and 2019
(Expressed in U.S.
dollar, except for the number of shares)
|
|
|
For the Six Months
Ended
June
30,
|
|
2020
|
|
2019
|
Revenues
|
$
|
8,462,250
|
|
$
|
6,987,623
|
Cost of
revenues
|
|
(2,840,759)
|
|
|
(2,237,277)
|
Gross
Profit
|
|
5,621,491
|
|
|
4,750,346
|
|
|
|
|
|
|
Operating
Expenses
|
|
|
|
|
|
Selling and marketing
expenses*
|
|
(1,725,651)
|
|
|
(1,857,902)
|
General and
administrative expenses*
|
|
(1,611,364)
|
|
|
(1,078,894)
|
Research and
development expenses
|
|
(404,111)
|
|
|
(553,282)
|
Total Operating
Expenses
|
|
(3,741,126)
|
|
|
(3,490,078)
|
|
|
|
|
|
|
Income from
Operations
|
|
1,880,365
|
|
|
1,260,268
|
|
|
|
|
|
|
Interest income,
net
|
|
78,360
|
|
|
118,943
|
Other income,
net
|
|
3,846
|
|
|
535,587
|
Income Before
Income Taxes
|
|
1,962,571
|
|
|
1,914,798
|
|
|
|
|
|
|
Income tax
expenses
|
|
(522,479)
|
|
|
(205,910)
|
|
|
|
|
|
|
Net
Income
|
|
1,440,092
|
|
|
1,708,888
|
|
|
|
|
|
|
Net loss attributable
to noncontrolling interests
|
|
18,232
|
|
|
21,641
|
|
|
|
|
|
|
Net Income
Attributable to Zhongchao Inc.'s shareholders
|
$
|
1,458,324
|
|
$
|
1,730,529
|
|
|
|
|
|
|
Other
Comprehensive Loss
|
|
|
|
|
|
Foreign currency
translation adjustment
|
|
(227,756)
|
|
|
(2,947)
|
Comprehensive
Income
|
|
1,212,336
|
|
|
1,705,941
|
|
|
|
|
|
|
Total comprehensive
loss attributable to noncontrolling interests
|
|
18,232
|
|
|
21,641
|
Total
comprehensive income attributable to Zhongchao Inc.'s
shareholders
|
$
|
1,230,568
|
|
$
|
1,727,582
|
|
|
|
|
|
|
Weighted average
number of ordinary share outstanding
|
|
|
|
|
|
Basic and
Diluted**
|
|
23,913,351
|
|
|
21,600,135
|
|
|
|
|
|
|
Earnings per
share
|
|
|
|
|
|
Basic and
Diluted**
|
$
|
0.06
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
|
|
|
*
Certain reclassifications have been made
in the six months ended June 30, 2019 financial statements to
conform
to the presentation for the six months ended June 30, 2020,
including reclassification of certain general and
administrative expenses to selling expenses, to conform with the
2020 presentation. These reclassifications have
no impact on the total asset and net assets as of December 31, 2019
and June 30, 2019, or total operating expenses
and net income for the six months ended June 30, 2019.
|
**
The number of shares for the
six months ended June 30, 2019 are presented on a retroactive basis
to reflect the
reorganization.
|
ZHONGCHAO
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
As of June 30,
2020 and December 31, 2019
(Expressed in U.S.
dollar, except for the number of shares)
|
|
|
June 30,
2020
|
|
December 31,
2019
|
|
(unaudited)
|
|
|
ASSETS
|
|
|
|
Current
Assets
|
|
|
|
Cash and cash
equivalents
|
$
|
16,713,052
|
|
$
|
7,832,552
|
Accounts receivable,
net
|
|
8,376,993
|
|
|
5,078,419
|
Prepayments
|
|
671,774
|
|
|
325,496
|
Due from a related
party
|
|
14,154
|
|
|
14,364
|
Other current
assets
|
|
1,159,072
|
|
|
1,258,040
|
Total Current
Assets
|
|
26,935,045
|
|
|
14,508,871
|
|
|
|
|
|
|
Property and
equipment, net
|
|
1,931,093
|
|
|
1,889,973
|
Land use rights,
net
|
|
350,467
|
|
|
366,409
|
Intangible assets,
net
|
|
34,860
|
|
|
37,323
|
Right of use
assets
|
|
282,891
|
|
|
245,982
|
Deferred tax
assets
|
|
843,978
|
|
|
688,994
|
Total
Assets
|
$
|
30,378,334
|
|
$
|
17,737,552
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
Accounts
payable
|
$
|
227,466
|
|
$
|
117,064
|
Advances from
customers
|
|
11,550
|
|
|
73,961
|
Deferred government
grants, current portion
|
|
318,467
|
|
|
323,192
|
Income tax
payable
|
|
1,567,285
|
|
|
897,892
|
Operating lease
liabilities, current portion
|
|
250,499
|
|
|
210,219
|
Accrued expenses and
other liabilities
|
|
725,354
|
|
|
735,334
|
Total Current
Liabilities
|
|
3,100,621
|
|
|
2,357,662
|
|
|
|
|
|
|
Operating lease
liabilities, noncurrent portion
|
|
17,879
|
|
|
41,363
|
Total
Liabilities
|
|
3,118,500
|
|
|
2,399,025
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
|
Class A Ordinary
Share (par value $0.0001 per share, 450,000,000
shares authorized; 19,417,423 and 16,102,420 shares
issued and
outstanding at June 30, 2020 and December 31, 2019,
respectively)*
|
|
1,942
|
|
|
1,610
|
Class B Ordinary
Share (par value $0.0001 per share, 50,000,000
shares authorized; 5,497,715 and 5,497,715 shares
issued and
outstanding at June 30, 2020 and December 31, 2019,
respectively)*
|
|
550
|
|
|
550
|
Additional paid-in
capital
|
|
22,753,494
|
|
|
12,044,855
|
Statutory
reserve
|
|
415,813
|
|
|
415,813
|
Retained
earnings
|
|
4,725,411
|
|
|
3,267,087
|
Accumulated other
comprehensive loss
|
|
(572,527)
|
|
|
(344,771)
|
Total Zhongchao
Inc.'s Shareholders' Equity
|
|
27,324,683
|
|
|
15,385,144
|
|
|
|
|
|
|
Noncontrolling
interests
|
|
(64,849)
|
|
|
(46,617)
|
Total
Shareholders' Equity
|
|
27,259,834
|
|
|
15,338,527
|
Total
Liabilities and Shareholders' Equity
|
$
|
30,378,334
|
|
$
|
17,737,552
|
ZHONGCHAO
INC.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months
Ended June 30, 2020 and 2019
(Expressed in U.S.
dollar, except for the number of shares)
|
|
|
For the Six Months
Ended June 30,
|
|
2020
|
|
2019
|
|
|
|
|
|
|
Net Cash Used in
Operating Activities
|
$
|
(2,372,501)
|
|
$
|
(1,290,429)
|
|
|
|
|
|
|
Cash Flows from
Investing Activities:
|
|
|
|
|
|
Purchases of property
and equipment
|
|
(140,388)
|
|
|
(835,430)
|
Investments in
short-term investments
|
|
-
|
|
|
(442,243)
|
Redemption of
short-term investments
|
|
-
|
|
|
1,179,315
|
Net Cash Used in
Investing Activities
|
|
(140,388)
|
|
|
(98,358)
|
|
|
|
|
|
|
Cash Flows from
Financing Activities:
|
|
|
|
|
|
Proceeds from
issuance of common stocks in connection with initial
public offering, net off issuance
costs
|
|
11,497,654
|
|
|
-
|
Net Cash Provided
by Financing Activities
|
|
11,497,654
|
|
|
-
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
(104,265)
|
|
|
28,444
|
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
8,880,500
|
|
|
(1,360,343)
|
Cash and cash
equivalents at beginning of period
|
|
7,832,552
|
|
|
7,918,675
|
Cash and cash
equivalents at end of period
|
$
|
16,713,052
|
|
$
|
6,558,332
|
|
|
|
|
|
|
Supplemental Cash
Flow Information
|
|
|
|
|
|
Cash paid for
interest expense
|
$
|
-
|
|
$
|
18,967
|
Cash paid for income
tax
|
$
|
2,593
|
|
$
|
25,830
|
|
|
|
|
|
|
Noncash investing
activities
|
|
|
|
|
|
Right of use assets
obtained in exchange for operating lease
obligations
|
$
|
157,906
|
|
$
|
-
|
Acquisition of
noncontrolling interests in a subsidiary
|
$
|
-
|
|
$
|
33,168
|
View original
content:http://www.prnewswire.com/news-releases/zhongchao-inc-reports-the-first-half-of-fiscal-year-2020-financial-results-301134676.html
SOURCE Zhongchao Inc.