Concord Medical Services Holding Ltd. :CCM-US: Earnings Analysis: Q2, 2016 By the Numbers : August 30, 2016

Concord Medical Services Holding Ltd. reports financial results for the quarter ended June 30, 2016.

We analyze the earnings along side the following peers of Concord Medical Services Holding Ltd. – Community Health Systems, Inc., Tenet Healthcare Corporation and Alliance HealthCare Services, Inc. (CYH-US, THC-US and AIQ-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 19.73 million, Net Earnings of USD -2.77 million.
  • Gross margins narrowed from 45.40% to 43.30% compared to the same period last year, operating (EBITDA) margins now 28.89% from 35.69%.
  • Narrowing of operating margins contributed to decline in earnings.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2015-06-30 2015-09-30 2015-12-31 2016-03-31 2016-06-30
Relevant Numbers (Quarterly)
Revenues (mil) 28.15 24.44 21.11 19.14 19.73
Revenue Growth (%YOY) -38.46 -43.41 -18.95 -20.74 -29.91
Earnings (mil) 5.89 3.53 -26.05 -4.92 -2.77
Earnings Growth (%YOY) 5 -37.1 -2679.89 -207.72 -147.02
Net Margin (%) 20.93 14.43 -123.4 -25.73 -14.04
EPS 0.13 0.08 -1.75 -0.11 -0.06
Return on Equity (%) 7.9 4.75 -40.54 -9.01 -5.2
Return on Assets (%) 4.85 2.79 -19.6 -3.61 -2.11

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Market Share Versus Profits

Revenues History
Earnings History

CCM-US‘s change in revenue this period compared to the same period last year of -29.91% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that CCM-US is holding onto its market share. Also, for comparison purposes, revenues changed by 3.08% and earnings by 43.74% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Earnings Growth Analysis

The company’s year-on-year decline in earnings was influenced by a weakening in gross margins from 45.40% to 43.30%, as well as issues with cost controls. As a result, operating margins (EBITDA margins) went from 35.69% to 28.89% in this time frame. For comparison, gross margins were 36.34% and EBITDA margins were 18.77% in the previous period.

Gross Margin Versus EBITDA Margin

Margins

The company’s decline in earnings has been influenced by the following factors: (1) Decline in operating margins (EBIT margins) from 11.29% to -0.45% and (2) one-time items that contributed to a decrease in pretax margins from 28.50% to -5.93%

EBIT Margin Versus PreTax Margin
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Concord Medical Services Holding Ltd.

Company Profile

Concord Medical Services Holding Ltd. is engaged in the operation of radiotherapy and diagnostic imaging centers. Its services include radiotherapy treatment, diagnostic imaging, and others. The radiotherapy treatment consists of Linear Accelerator, Head Gamma Knife System, Body Gamma Knife System, and Proton Beam Therapy System. The Diagnostic Imaging consists of Positron Emission Tomography, and Scanner Magnetic Resonance Imaging. Others includes MM50 Intensity-Modulated Radiation Therapy System, CT Scanner, ECT Scanner, electroencephalography and others. The company was founded on November 27, 2007 and is headquartered in Beijing, China.

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