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Aesthetic Medical International Holdings Group Limited Reports First Quarter 2020 Unaudited Financial Results

Shenzhen, China, June 26, 2020 (GLOBE NEWSWIRE) -- Aesthetic Medical International Holdings Group Limited (the “Company” or Nasdaq: AIH), a leading provider of aesthetic medical services in China, today announces its unaudited financial results for the first quarter ended March 31, 2020.

Dr. Zhou Pengwu, the Chairman and CEO of the Company, commented, “As COVID-19 began to spread globally in the first quarter of 2020, our businesses encountered a great deal of uncertainty. We postponed the resumption of operations of our aesthetic treatment centers in China after the Chinese New Year holiday in 2020 until the end of March, which resulted in a decline of 49.7% in our revenue in the first quarter compared to same period of last year.”

Dr. Zhou continued, “The timely and proactive measures we took ensured that our business operations remained resilient and allowed us to deliver solid performance after our aesthetic treatment centers resumed operations, in spite of the challenging environment. We will continue monitoring the latest developments and taking appropriate measures in response.”

First Quarter 2020 Unaudited Financial Highlights

  • Total revenue was RMB91.0 million (US$12.9 million), a decrease of 49.7% from RMB180.9 million in the first quarter of 2019.

  • Gross profit was RMB34.9 million (US$4.9 million), a decrease of 71.2% from RMB121.2 million in the first quarter of 2019.

  • Gross margin was 38.3%, a decrease of 28.7 percentage points from 67.0% in the first quarter of 2019.

  • Loss for the period was RMB83.1 million (US$11.7 million), compared with a profit of RMB22.7 million in the first quarter of 2019.

  • EBITDA1 for the period was a loss of RMB70.6 million (US$10.0 million), a decrease of 228.1% from RMB55.1 million in the first quarter of 2019.

  • Adjusted profit1 for the period was a loss of RMB58.2 million (US$8.2 million), a decrease of 328.2% from RMB25.5 million in the first quarter of 2019.

  • Adjusted EBITDA1 for the period was a loss of RMB45.7 million (US$6.5 million), a decrease of 180.6% from RMB56.7 million in the first quarter of 2019.

  • Basic loss per share was RMB1.22 (US$0.17), compared with basic earnings per share of RMB0.53 in the first quarter of 2019. Diluted loss per share was RMB1.22 (US$0.17), compared with diluted earnings per share of RMB0.38 in the first quarter of 2019.

1 EBITDA, Adjusted EBITDA and Adjusted profit are not prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standard Board, or IFRS. For more information regarding non-IFRS financials, please refer to “Non-IFRS Financial Measures” and “Reconciliations of IFRS and Non-IFRS Results” appearing elsewhere in this press release.

First Quarter 2019 and 2020 Operational Highlights

For the Three Months Ended March 31,

2019

2020

% Change

Number

% of Total

Number

% of Total

Number

New Customers

19,836

47.4%

14,382

39.3%

-27.5%

Repeat Customers

21,978

52.6%

22,211

60.7%

1.1%

Total Active Customers

41,814

100.0%

36,593

100.0%

-12.5%

  • Repeat customers accounted for 60.7% of active customer base.

  • The total number of active customers was 36,593, a decrease of 12.5% from 41,814 in the first quarter of 2019.

First Quarter 2020 Unaudited Financial Results

For the Three Months Ended March 31,

(RMB millions, except per share data and percentages)

2020

2019

% Change

Revenue

91.0

180.9

-49.7%

Non-surgical aesthetic medical services

47.7

91.2

-47.7%

Minimally invasive aesthetic treatments

26.1

43.1

-39.4%

Energy-based treatments

21.6

48.1

-55.1%

Surgical aesthetic medical services

39.8

72.2

-44.9%

General healthcare services and other aesthetic medical services

3.5

17.5

-80.0%

Gross profit

34.9

121.2

-71.2%

Gross margin

38.3%

67.0%

-28.7pp*

(Loss)/profit for the period

(83.1)

22.7

-466.1%

(Loss)/profit margin

-91.3%

12.5%

-103.8pp*

EBITDA**

-70.6

55.1

-228.1%

Adjusted EBITDA**

-45.7

56.7

-180.6%

Adjusted EBITDA margin

-50.2%

31.3%

-81.5pp*

Adjusted (loss)/profit**

-58.2

25.5

-328.2%

Adjusted (loss)/profit margin

-64.0%

14.1%

-78.1pp*

Basic (loss)/profit per share

(1.22)

0.53

-330.2%

Diluted (loss)/profit per share

(1.22)

0.38

-421.1%

Notes:
* pp represents percentage points
** Refer to below “Non-IFRS Financial Measures”

Revenues

Total revenue was RMB91.0 million (US$12.9 million), a decrease of 49.7% from RMB180.9 million in the first quarter of 2019, primarily due to the temporary shutdown of the Company’s treatment centers in February and March 2020, partially offset by the satisfactory performance in January 2020 as a result of enhanced marketing efforts before the Chinese New Year.

Revenue from non-surgical aesthetic medical services was RMB47.7 million (US$6.7 million), a decrease of 47.7% from RMB91.2 million in the first quarter of 2019. Revenue from minimally invasive aesthetic treatments was RMB26.1 million (US$3.7 million), a decrease of 39.4% from RMB43.1 million in the first quarter of 2019. Revenue from energy-based treatments was RMB21.6 million (US$3.1 million), a decrease of 55.1% from RMB48.1 million in the first quarter of 2019.

Revenue from surgical aesthetic medical services was RMB39.8 million (US$5.6 million), a decrease of 44.9% from RMB72.2 million in the first quarter of 2019.

Revenue from general healthcare services and other aesthetic medical services was RMB3.5 million (US$0.5 million), a decrease of 80.0% from RMB17.5 million in the first quarter of 2019.

Cost of sales and services rendered

Cost of sales and services rendered was RMB56.1 million (US$7.9 million), a decrease of 6.0% from RMB59.7 million in the first quarter of 2019.

Gross profit

Gross profit was RMB34.9 million (US$4.9 million), a decrease of 71.2% from RMB121.2 million in the first quarter of 2019, primarily as a result of the decrease in revenue. Gross profit margin was 38.3%, a decrease of 28.7 percentage points from 67.0% in the first quarter of 2019, mainly due to the existence of fixed costs such as amortisation and depreciation, coupled with the decrease in revenue.

Gross profit of non-surgical aesthetic medical services was RMB17.1 million (US$2.4 million), a decrease of 74.6% from RMB67.3 million in the first quarter of 2019. Gross profit margin was 35.8%, a decrease from 73.8% in the first quarter of 2019.

Gross profit of minimally invasive aesthetic treatments was RMB10.9 million (US$1.5 million), a decrease of 64.3% from RMB30.5 million in the first quarter of 2019. Gross profit margin was 41.8%, a decrease from 70.8% in the first quarter of 2019.

Gross profit of energy-based treatments was RMB6.2 million (US$0.9 million), a decrease of 83.2% from RMB36.8 million in the first quarter of 2019. Gross profit margin was 28.7%, a decrease from 76.5% in the first quarter of 2019.

Gross profit of surgical aesthetic medical services was RMB17.7 million (US$2.5 million), a decrease of 58.5% from RMB42.6 million in the first quarter of 2019. Gross profit margin was 44.5%, a decrease from 59.0% in the first quarter of 2019.

Gross profit of general healthcare services and other aesthetic medical services was RMB0.1million (US$0.01 million), a decrease of 99.1% from RMB11.3 million in the first quarter of 2019. Gross profit margin was 2.9%, a decrease from 64.6% in the first quarter of 2019.

Selling expenses

Selling expenses were RMB78.1 million (US$11.0 million), representing 85.8% of the Company’s total revenue of the same period, compared to selling expenses of RMB75.7 million in the first quarter of 2019, which represented 41.8% of the Company’s total revenue of the same period. Selling expenses increased on a year-over-year basis, primarily because, consistent with previous years, the Company enhanced its marketing efforts before the Chinese New Year, and a significant portion of advertising and marketing expense were incurred in March 2020 to attract customers and boost sales when our operations resumed.

General and administrative expenses

General and administrative expenses were RMB50.9 million (US$7.2 million), an increase of 79.9% from RMB28.3 million in the first quarter of 2019, primarily due to the increase of share-based compensation expenses.

(Loss)/profit for the period

As a result of the foregoing, the Company recorded a loss for the first quarter of 2020 of RMB83.1 million (US$11.7 million), compared with a profit of RMB22.7 million in the first quarter of 2019. Basic loss per share was RMB1.22 (US$0.17), compared with basic earnings per share of RMB0.53 in the first quarter of 2019. Diluted loss per share was RMB1.22 (US$0.17), compared with diluted earnings per share of RMB0.38 in the first quarter of 2019.

Certain Non-IFRS items

EBITDA for the first quarter of 2020 was a loss of RMB70.6 million (US$10.0 million), a decrease of 228.1% from RMB55.1 million in the first quarter of 2019.

Adjusted profit for the first quarter of 2020 was a loss of RMB58.2 million (US$8.2 million), a decrease of 328.2% from RMB25.5 million in the first quarter of 2019.

Adjusted EBITDA for the first quarter of 2020 was a loss of RMB45.7 million (US$6.5 million), a decrease of 180.6% from RMB56.7 million in the first quarter of 2019.

EBITDA, Adjusted EBITDA and Adjusted profit are not prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standard Board, or IFRS. For more information regarding non-IFRS financials, please refer to “Non-IFRS Financial Measures” and “Reconciliations of IFRS and Non-IFRS Results” appearing elsewhere in this press release.

First Quarter 2019 and 2020 Operational Results

Repeat customer ratio

Repeat customers, defined as active customers who had previously received at least one procedure from the Company, accounted for 60.7% of the Company’s active customer base in the first quarter of 2020.

Number of treatments

The Company conducted a total of 66,946 treatments, including 14,541 surgical treatments and 52,405 non-surgical treatments, in the first quarter of 2020, representing a decrease of 3.2% and 22.4% and an increase of 3.9%, respectively, from 69,179 total treatments, 18,728 surgical treatments and 50,451 non-surgical treatments in the first quarter of 2019.

Certain balance sheet item

Cash and cash equivalents amounted to RMB100.6 million (US$14.2 million) as of March 31, 2020, compared to RMB154.5 million as of December 31, 2019.

Certain cash flow items

Net cash used in operating activities was RMB19.0 million (US$2.7 million) in 2020, compared to net cash generated from operating activities of RMB43.6 million in 2019.

Net cash used in investing activities was RMB26.7 million (US$3.8 million) in 2020, compared to RMB36.1 million in 2019.

Net cash used in financing activities was RMB8.5 million (US$1.2 million) in 2020, compared to RMB20.3 million in 2019.

Liquidity and capital resources

The Company had net current liabilities of RMB101.7 million as at March 31, 2020. During the first quarter of 2020, due to the outbreak of COVID-19, the Company shut down its aesthetic treatment centers in February and March 2020. This created a material and adverse impacts on its revenue and cash flow for the first quarter of 2020 with potential continuing impacts on subsequent periods. After considering its expected cash flow from future operations including cost cutting measures and available borrowing facilities, the Company concluded that it has sufficient financial resources to meet its financial obligations as and when they fall due in the coming 12 months.

Exchange Rate

This press release contains translations of certain Renminbi (RMB) amounts into U.S. dollars (US$) solely for the convenience of the reader. Unless otherwise specified, all translations of Renminbi amounts into U.S. dollar amounts in this press release are made at RMB7.0808 to US$1.00, which was the U.S. dollars middle rate announced by the Board of Governors of the Federal Reserve System of the United States on March 31, 2020.

Non-IFRS Financial Measures

EBITDA represents our profit before income tax, adjusted to exclude finance costs and amortization and depreciation. Adjusted EBITDA represents EBITDA, adjusted to exclude share-based compensation expense, other one-off expenses including professional fees in relation to our financing activities but are not capitalized and IT-related expenses paid to a related party pursuant to a service agreement, which was expired in June 2019.

Adjusted profit represents profit for the period/year, adjusted to exclude interest expense on convertible note, share-based compensation expense, other one-off expenses including professional fees in relation to our financing activities but are not capitalized and IT-related expenses paid to a related party pursuant to a service agreement, which was expired in June 2019.

EBITDA, Adjusted EBITDA and Adjusted profit are non-IFRS financial measures. You should not consider EBITDA, Adjusted EBITDA and Adjusted profit as a substitute for or superior to net income prepared in accordance with IFRS. Furthermore, because non-IFRS measures are not determined in accordance with IFRS, they are susceptible to varying calculations and may not be comparable to other similarly titled measures presented by other companies. You are encouraged to review the Company’s financial information in its entirety and not rely on a single financial measure.

The Company presents EBITDA, Adjusted EBITDA and Adjusted profit as supplemental performance measures because it believes that such measures provide useful information to the investors in understanding and evaluating the Company’s results of operations, and facilitate operating performance comparisons from period to period and company to company.

Other Developments

The Company continued to expand our footprint. On December 30, 2019, the Company announced the openings of two new satellite clinics – Fenghua Pengai Aesthetic Clinic and Deqing Pengai Aesthetic Clinic, in each of which the Company holds a majority equity interest. In March 2020, the Company entered into definitive agreements (the “Agreements”) to acquire controlling interest in two treatment centers. Pursuant to the Agreements, the Company acquired, in March 2020, 80% equity interest in Shanghai Mingyue Aesthetic Medical Co., Ltd., a high-end aesthetic medical service provider in Shanghai, and, in April 2020, acquired 70% equity interest in Xi'an New Pengai Yueji Aesthetic Medical Clinic Co., Ltd., an aesthetic medical service provider in Xi'an, Shaanxi.

The Company is firmly committed to its customers and community. In January 2020, the Company launched the “Four Beauties,” a new set of hyaluronic acid-based skincare products. In February 2020, the Company carried out a charity campaign and made donation of approximately RMB1.3 million of medical supplies to help combat COVID-19. Through its treatment centers across the country, the Company intensified the efforts to help people in need. The Company organized charity fund raising activities, collected and donated approximately RMB0.2 million from its employees and their family members, donated protective masks, thermometers and other medical supplies to the community, and allocated medical supplies for patients and healthcare personnel battling at the frontline.

Business Outlook

While the duration of the COVID-19 pandemic and its negative impact to market demand and the Company’s business operations still cannot be conclusively and accurately estimated at this time since there is still uncertainty of possible COVID-19 outbreak in the future, the Company currently expects that its revenue will gradually recover in the second quarter of 2020. Such expectation reflects the current and preliminary view of the Company’s management team based on the information available at the time, and may be subject to changes. The Company will continue to monitor and evaluate the development of the pandemic, and the resulting financial impact on the Company.

Conference Call Information

The Company’s management will hold an earnings conference call on June 26, 2020, at 8:00 AM U.S. Eastern Time (5:00 am Pacific Time/ 8:00 pm Beijing Time). Dial-in details for the earnings conference call are as follows:

Conference Call

Date:

June 26, 2020

Time:

8:00 am ET, U.S.

International Toll Free:

United States: +1 888-346-8982
Canada: +1 855-669-9657
Mainland China: +86 400-120-1203
Hong Kong: +852 800-905-945

International:

International: +1 412-902-4272

Conference ID:

Aesthetic Medical International Holdings Group Limited

Please dial in at least 15 minutes before the commencement of the call to ensure timely participation. For those unable to participate, an audio replay of the conference call will be available from approximately one hour after the end of the live call until July 3, 2020. The dial-in for the replay is +1 877-344-7529 within the United States or +1 412-317-0088 internationally. The replay access code is 10145204.

A live and archived webcast of the call will also be available on AIH's website at: https://ir.aihgroup.net. Please log in at least 10 minutes prior to the conference call in order to download the applicable audio software.

About Aesthetic Medical International Holdings Group Limited

AIH, known as “Peng’ai” in China, is a leading provider of aesthetic medical services in China. AIH operates through treatment centers that spread across major cities in mainland China, and also has presence in Hong Kong and Singapore. Leveraging over 20 years of clinical experience, AIH provides one-stop aesthetic service offerings, including surgical aesthetic treatments, non-surgical aesthetic treatments, and general medical services and other aesthetic services. According to certain third party industry consultant, AIH was the third-largest private aesthetic medical services provider in China in terms of revenue in 2018. For more information regarding the Company, please visit: http://ir.aihgroup.net/.

Safe Harbor Statement

This press release contains “forward-looking statements.” These statements 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,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “likely to” and similar statements. Statements that are not historical facts, including statements about the Company’s beliefs, plans and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. These risks and uncertainties and others that relate to the Company’s business and financial condition are detailed from time to time in the Company’s SEC filings, and could cause the actual results to differ materially from those contained in any forward-looking statement. These forward-looking statements are made only as of the date indicated, and the Company undertakes no obligation to update or revise the information contained in any forward-looking statements, except as required under applicable law.

Investor Relations Contact

For investor and media inquiries, please contact:

Aesthetic Medical International Holdings Group Limited
Email: ir@pengai.com.cn

Ascent Investor Relations LLC

Ms. Tina Xiao

Tel: (917) 609-0333

Email: tina.xiao@ascent-ir.com

AESTHETIC MEDICAL INTERNATIONAL HOLDINGS GROUP LIMITED

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

31 December

31 March

31 March

2019

2020

2020

RMB’000

RMB’000

US$’000

(Unaudited)

(Unaudited)

ASSETS

Non-current assets

Property, plant and equipment

519,323

504,408

71,236

Investment properties

15,373

15,025

2,122

Intangible assets

175,417

183,004

25,845

Investments accounted for using the equity method

10,256

9,875

1,395

Prepayments and deposits

42,298

62,973

8,893

Deferred income tax assets

19,774

33,523

4,734

782,441

808,808

114,225

Current assets

Inventories

26,120

26,816

3,787

Trade receivables

9,705

9,015

1,273

Other receivables, deposits and prepayments

71,278

72,782

10,279

Amounts due from related parties

3,101

2,745

388

Cash and cash equivalents

154,490

100,575

14,204

264,694

211,933

29,931

Total assets

1,047,135

1,020,741

144,156

EQUITY AND LIABILITIES

Equity attributable to owners of the Company

Share capital

469

469

67

Treasury shares

(41

)

(41

)

(6

)

Accumulated losses

(242,232

)

(321,332

)

(45,381

)

Other reserves

789,285

811,549

114,613

547,481

490,645

69,293

Non-controlling interests

43,117

39,074

5,518

Total (deficit)/equity

590,598

529,719

74,811


AESTHETIC MEDICAL INTERNATIONAL HOLDINGS GROUP LIMITED
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

31 December

31 March

31 March

2019

2020

2020

RMB’000

RMB’000

US$’000

(Unaudited)

(Unaudited)

LIABILITIES

Non-current liabilities

Borrowings

12,917

6,229

880

Lease liabilities

165,615

158,912

22,443

Deferred income tax liabilities

12,703

12,222

1,726

191,235

177,363

25,049

LIABILITIES

Current liabilities

Trade payables

17,017

21,507

3,037

Accruals, other payables and provisions

58,439

93,299

13,175

Amounts due to related parties

626

585

83

Contract liabilities

5,542

4,205

594

Borrowings

127,470

140,024

19,775

Lease liabilities

36,266

35,729

5,046

Current income tax liabilities

19,942

18,310

2,586

265,302

313,659

44,296

Total liabilities

456,537

491,022

69,345

Total equity and liabilities

1,047,135

1,020,741

144,156


AESTHETIC MEDICAL INTERNATIONAL HOLDINGS GROUP LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three months ended

31 March

31 March

31 March

2019

2020

2020

RMB’000

RMB’000

US$’000

(Unaudited)

(Unaudited)

(Unaudited)

Revenue

180,887

90,954

12,845

Cost of sales and services rendered

(59,674

)

(56,098

)

(7,923

)

Gross profit

121,213

34,856

4,922

Selling expenses

(75,655

)

(78,057

)

(11,024

)

General and administrative expenses

(28,297

)

(50,893

)

(7,187

)

Finance costs, net

(5,941

)

(5,124

)

(724

)

Other gains, net

18,208

1,197

169

Share of losses of investments accounted for using the equity method

(1,379

)

(381

)

(54

)

Profit/(loss) before income tax

28,149

(98,402

)

(13,898

)

Income tax expense

(5,440

)

15,287

2,159

Profit/(loss) for the period

22,709

(83,115

)

(11,739

)

Items that may be subsequently reclassified to profit or loss

Currency translation differences

(45

)

615

87

Total other comprehensive (loss)/income for the period, net of tax

(45

)

615

87

Total comprehensive income/(loss) for the period

22,664

(82,500

)

(11,652

)

Profit/(loss) attributable to:

Owners of the Company

21,758

(79,100

)

(11,171

)

Non-controlling interests

951

(4,015

)

(567

)

Profit/(loss) for the period

22,709

(83,115

)

(11,738

)

Earnings/(losses) per share for profit attributable to owners of the company (in RMB per share)

—Basic

0.53

(1.22

)

(0.17

)

—Diluted

0.38

(1.22

)

(0.17

)

Total comprehensive income/(loss) attributable to:

Owners of the Company

21,713

(78,485

)

(11,084

)

Non-controlling interests

951

(4,015

)

(567

)

Total comprehensive income/(loss) for the period

22,664

(82,500

)

(11,651

)


AESTHETIC MEDICAL INTERNATIONAL HOLDINGS GROUP LIMITED

RECONCILIATIONS OF IFRS AND NON-IFRS RESULTS

EBITDA and Adjusted EBITDA

For the Three Months Ended March 31,

2019

2020

2020

RMB’000

RMB’000

US$’000

Profit/(loss) before income tax for the period

28,149

(98,402

)

(13,897

)

Adjustments

+ Finance costs

5,984

5,224

738

+ Amortisation and depreciation

20,981

22,614

3,194

EBITDA

55,114

(70,564

)

(9,965

)

+ Share-based compensation expense

-

21,558

3,045

+ Professional fees

340

3,325

470

+ IT-related expenses paid to a related party

1,250

-

-

Adjusted EBITDA

56,704

(45,681

)

(6,450

)


Adjusted Profit

For the Three Months Ended March 31,

2019

2020

2020

RMB’000

RMB’000

US$’000

Profit/(loss) for the period

22,709

(83,115

)

(11,738

)

Adjustments

+ Interest expense on convertible note

1,185

-

-

+ Share-based compensation expense

-

21,558

3,045

+ Professional fees

340

3,325

470

+ IT-related expenses paid to a related party

1,250

-

-

Adjusted Profit

25,484

(58,232

)

(8,223

)