Dr. Pengwu Zhou, the Chairman and CEO of the Company, commented, “The third quarter of 2022 was still clouded by the uncertainties arising from the resurgence of COVID-19 pandemic. To mitigate the impacts on people’s daily living and business operations, the country has adjusted its strategy of prevention and control measures, from a broad coverage of a region to a more precise implementation of specific areas with shortened lockdown period. Yet,
Third Quarter 2022 Financial Highlights1
- Total revenue was
RMB167.0 million (USD23.5 million ), a decrease of 0.3% fromRMB167.5 million in the third quarter of 2021. - Gross profit was
RMB86.6 million (USD12.2 million ), an increase of 22.5% fromRMB70.7 million in the third quarter of 2021. - Selling, general and administrative ("SG&A") expenses together were
RMB107.0 million (USD15.0 million ), a decrease of 22.0% fromRMB137.2 million in the third quarter of 2021, and SG&A expenses as a percentage of revenue decreased from 81.9% to 64.1%. - Adjusted loss after tax2 narrowed to
RMB3.7 million (USD0.5 million ), compared with a loss ofRMB17.2 million in the third quarter of 2021. - Adjusted EBITDA2 was
RMB10.6 million (USD1.5 million ), rebounded from a loss ofRMB30.0 million in the third quarter of 2021.
_______________
1 We made certain adjustments to our accounting policies in relation to revenue recognition in response to new uncertainties introduced by the impact of the prolonged COVID-19 pandemic on the marketing and sales initiatives of the treatment centers as well as the customers' consumption behavior. In particular, as most prepaid service packages were sold online without preliminary face-to-face consultations and pre-established treatment plans, it becomes increasingly difficult to estimate or determine the timing of service redemption. As a result, we believe it is prudent to recognize the portion of the prepaid service package fee for which the relevant services haven't been performed as contract liabilities instead of revenue.
Financial results of the third quarter of 2021 presented here have been adjusted to reflect the change in revenue recognition for the purpose of presenting meaningful comparison with the financial results of the third quarter of 2022.
2 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.
Third Quarter 2022 Operational Highlights
New and repeat customers
For the Three Months Ended | ||||||||||
2021* | 2022 | % Change | ||||||||
Number | % of Total | Number | % of Total | |||||||
New Customers | 13,989 | 21.1% | 12,685 | 22.1% | -9.3% | |||||
Repeat Customers | 52,245 | 78.9% | 44,622 | 77.9% | -14.6% | |||||
Total Active Customers | 66,234 | 100.0% | 57,307 | 100.0% | -13.5% |
Note:
*Including data from treatment centers that were divested or ceased operations in 2021
- As a result of the temporary business suspension of several treatment centers in the third quarter of 2022, the Company recorded a decrease of 13.5% year-on-year in the total active customers.
Number of aesthetic medical treatment cases
For the Three Months Ended | |||||||||
2021* | 2022 | % Change | |||||||
Number | % of Total | Number | % of Total | ||||||
Energy-based Treatments | 94,686 | 67.2% | 107,948 | 73.2% | +14.0% | ||||
Minimally Invasive Aesthetic Treatments | 24,025 | 17.1% | 24,860 | 16.8% | +3.5% | ||||
Surgical Treatments | 11,677 | 8.3% | 7,360 | 5.0% | -37.0% | ||||
General healthcare services and other aesthetic medical services | 10,416 | 7.4% | 7,312 | 5.0% | -29.8% | ||||
Total number of treatment cases | 140,804 | 100.0% | 147,480 | 100.0% | +4.7% |
Note:
*Including data from treatment centers that were divested or ceased operations in 2021
- Despite the mandatory suspension of operations of several treatment centers due to pandemic preventative requirements in the third quarter of 2022, the Company recorded an increase in the number of treatment cases of 4.7% year-on-year, and the number of treatment cases in retained treatment centers increased by 37.0% year-on-year. The increase was primarily driven by the increasing demand for non-surgical aesthetic medical treatments among the young generation as well as the effectiveness of the Company’s newly introduced package promotion.
- Total number of non-surgical aesthetic medical treatments as a percentage of the total number of aesthetic treatments increased by 5.8 percentage points.
Average spending per customer
- Average spending per customer increased by 15.2% from
RMB2,529 in the third quarter of 2021 toRMB2,915 in the third quarter of 2022, primarily driven by the sales of high-end bio-stimulating fillers such as CureWhite, Ellanse, and Loviselle.
Third Quarter 2022 Unaudited Financial Results
For the Three Months Ended | ||||||
(RMB millions, except per share data and percentages) | 2021 1 | 2022 | % Change | |||
Revenue | 167.5 | 167.4 | -0.3% | |||
Non-surgical aesthetic medical services | 89.7 | 118.9 | +32.5% | |||
Minimally invasive aesthetic treatments | 45.1 | 59.5 | +31.8% | |||
Energy-based treatments | 44.6 | 59.4 | +33.1% | |||
Surgical aesthetic medical services | 57.3 | 33.6 | -41.3% | |||
General healthcare services and other aesthetic medical services | 20.5 | 14.6 | -29.0% | |||
Gross profit | 70.7 | 86.6 | +22.5% | |||
Gross margin | 42.2% | 51.8% | +9.6p.p.3 | |||
(Loss) for the period | (30.3) | (52.4) | N.M.5 | |||
(Loss) margin | (18.1)% | (31.4)% | N.M.5 | |||
EBITDA4 | (43.1) | (38.1) | N.M.5 | |||
Adjusted EBITDA4 | (30.0) | 10.6 | N.M.5 | |||
Adjusted EBITDA margin | (17.9)% | 6.4% | N.M.5 | |||
Adjusted (loss) 4 | (17.2) | (3.7) | N.M.5 | |||
Adjusted (loss) margin | (10.2)% | (2.2)% | N.M.5 | |||
Basic (loss) per share | (0.22) | (0.60) | N.M.5 | |||
Diluted (loss) per share | (0.22) | (0.60) | N.M.5 |
_______________
Notes:
3 p.p. represents percentage points
4 Refer to below “Non-IFRS Financial Measures”
5 N.M. represents not meaningful
Revenue
Total revenue was
Cost of sales and services rendered
Cost of sales and services rendered was
Gross profit
Gross profit was
Selling expenses
Selling expenses were
General and administrative expenses
General and administrative expenses were
Other gains/(losses), net
Other gains/(losses), net was a loss of
Fair value loss of convertible note
Fair value loss of convertible note was a loss of
Loss for the period
As a result of the foregoing, the Company recorded a loss of
Certain Non-IFRS items6
EBITDA for the third quarter of 2022 was a loss of
Adjusted EBITDA for the third quarter of 2022 was
Adjusted loss after tax for the third quarter of 2022 was
_______________
6 EBITDA, adjusted EBITDA and adjusted loss, and 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.
Cash and cash equivalents
Cash and cash equivalents amounted to
Liquidity and capital resources
The Company had a net current asset of a loss of
Other Developments
New Marketing Strategy Proven to Be Effective in Promoting Business Growth
During the Period, the Group has continued to adjust its marketing strategy to enhance brand awareness and expand customer outreach while lowering costs. In addition to the private domain channel introduced in the second quarter, the Group started collaboration with key opinions leaders (KOLs) and tapped into livestreaming e-commerce. The campaign was successful and effective in expanding target audience to younger generation who has strong demand in self-care and aesthetic related consumption. This is reflected by a 27.8% year-on-year decrease in selling expenses during the third quarter.
Continued to Strengthen SOP and Training Programs to Enhance Service Quality
The Group has always strived to enhance its service quality to enhance its brand value and to promote repeated customer spendings and customer referral. In the third quarter, it further strengthened the training programs to staff at all levels by equipping them with the latest aesthetic medical market trends, product offerings and the latest standardized operating procedures (SOP). To better evaluate the service quality of all its centers, the Group has engaged mystery shoppers this quarter, of which they will discretely visit each treatment center with a budget of
Further Divestment of Treatment Centers to Enhance Operating Efficiency
To further improve overall operational efficiency, the Group decided to spin off its underperforming centers and focus on the development in Greater
Exercised Share Option Plan to Reward Key Employees
On
Business Outlook
Despite the government recently released some positive news to ease travel restriction, the Group will continue to closely monitor the macro environment and adjust its operating strategies in a timely manner to prepare for the unexpected.
Looking forward to the near future, the Group will continue to enhance its service quality and product offerings. During the Period, the Group has begun the renovation of the first floor of one of the flagship hospitals, Shenzhen Peng’ai
Conference Call Information
The Company will host a conference call to discuss the Company’s financial performance at
All participants wishing to attend the call must preregister online before they can receive the dial-in numbers. Preregistration may require a few minutes to complete.
Preregistration Information
Participants can register for the conference call by navigating to https://s1.c-conf.com/diamondpass/10027158-z2n7df.html. Once preregistration has been completed, participants will receive dial-in numbers and a unique access pin.
To join the conference, simply dial the number you receive after preregistering, followed by your PIN, and you will join the conference instantly.
An archive of the webcast will be available after the conclusion of the call at https://ir.aihgroup.net/ or visit https://edge.media-server.com/mmc/p/oztm9a94.
Exchange Rate
This press release contains translations of certain Renminbi (RMB) amounts into
Non-IFRS Financial Measures
EBITDA represents loss before income tax, adjusted to exclude finance costs and amortization and depreciation. Adjusted EBITDA represents EBITDA, adjusted to exclude profession fee, share-based payment, compensation for termination of supplier and fair value loss of convertible note.
Adjusted loss represents loss for the period, adjusted to exclude profession fee, share-based payment, compensation for termination of supplier and fair value loss of convertible note.
EBITDA, adjusted EBITDA and adjusted loss are non-IFRS financial measures. You should not consider EBITDA, adjusted EBITDA and adjusted loss 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 loss 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.
About
AIH, known as “Peng’ai” in
Cautionary Statements
This press release contains “forward-looking statements.” These statements are made under the “safe harbor” provisions of the
Investor Relations Contacts
For investor and media inquiries, please contact:
Email: ir@pengai.com.cn
Website: https://ir.aihgroup.net
Tel: +852 2857 7101
Email: ir@dlkadvisory.com
CONSOLIDATED BALANCE SHEETS
30 September | 30 September | 30 September | |||||||
2021 | 2022 | 2022 | |||||||
RMB’000 | RMB’000 | USD’000 | |||||||
ASSETS | |||||||||
Non-current assets | |||||||||
Property, plant and equipment | 391,780 | 361,158 | 50,771 | ||||||
Intangible assets | 59,228 | 38,942 | 5,474 | ||||||
Investments accounted for using the equity method | 10,154 | 5,164 | 726 | ||||||
Prepayments and deposits | 28,592 | 17,187 | 2,416 | ||||||
Deferred income tax assets | 43,929 | 49,737 | 6,992 | ||||||
533,683 | 472,188 | 66,801 | |||||||
Current assets | |||||||||
Inventories | 36,932 | 33,356 | 4,689 | ||||||
Trade receivables | 12,893 | 4,100 | 576 | ||||||
Other receivables, deposits and prepayments | 58,453 | 38,357 | 4,970 | ||||||
Amounts due from related parties | 6,489 | 3,562 | 501 | ||||||
Restricted cash | 811 | - | - | ||||||
Cash and cash equivalents | 31,936 | 20,446 | 2,874 | ||||||
147,514 | 99,821 | 13,611 | |||||||
Total assets | 681,197 | 572,009 | 80,412 | ||||||
EQUITY AND LIABILITIES | |||||||||
Equity attributable to owners of the Company | |||||||||
Share capital | 469 | 469 | 66 | ||||||
(2,023 | ) | (2,023 | ) | (284 | ) | ||||
Accumulated losses | (477,905 | ) | (1,064,524 | ) | (149,648 | ) | |||
Other reserves | 491,128 | 971,738 | 136,605 | ||||||
11,669 | (94,340 | ) | (13,262 | ) | |||||
Non-controlling interests | (61,002 | ) | (30,325 | ) | (4,263 | ) | |||
Total equity | (49,333 | ) | (124,665 | ) | (17,525 | ) | |||
CONSOLIDATED BALANCE SHEETS (CONTINUED)
30 September | 30 September | 30 September | |||||
2021 | 2022 | 2022 | |||||
RMB’000 | RMB’000 | USD$’000 | |||||
LIABILITIES | |||||||
Non-current liabilities | |||||||
Borrowings | 58,562 | 46,458 | 6,531 | ||||
Lease liabilities | 149,692 | 109,980 | 15,461 | ||||
Convertible note | 36,085 | 62,164 | 8,739 | ||||
Deferred income tax liabilities | (14,532 | ) | - | - | |||
Contingent consideration payable | 8,607 | - | - | ||||
238,414 | 218,602 | 30,731 | |||||
Current liabilities | |||||||
Trade payables | 39,366 | 47,845 | 6,726 | ||||
Accruals, other payables and provisions | 76,369 | 30,073 | 4,228 | ||||
Contingent consideration and consideration payable | 3,889 | 6,200 | 872 | ||||
Amounts due to related parties | 1,099 | 473 | 66 | ||||
Contract liabilities | 171,807 | 175,335 | 24,648 | ||||
Borrowings | 152,170 | 178,830 | 25,140 | ||||
Lease liabilities | 37,364 | 30,623 | 4,305 | ||||
Current income tax liabilities | 10,052 | 8,693 | 1,222 | ||||
492,116 | 478,072 | 67,206 | |||||
Total liabilities | 730,530 | 696,674 | 97,937 | ||||
Total equity and liabilities | 681,197 | 572,009 | 80,412 | ||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
30 September | 30 September | 30 September | ||||||
2021 | 2022 | 2022 | ||||||
RMB’000 | RMB’000 | USD$’000 | ||||||
Revenue | 167,524 | 167,047 | 23,483 | |||||
Cost of sales and services rendered | (96,831 | ) | (80,475 | ) | (11,313 | ) | ||
Gross profit | 70,693 | 86,572 | 12,170 | |||||
Selling expenses | (85,143 | ) | (61,483 | ) | (8,643 | ) | ||
General and administrative expenses | (52,078 | ) | (45,535 | ) | (6,401 | ) | ||
Finance costs | (7,815 | ) | (2,289 | ) | (322 | ) | ||
Other gains/(losses), net | (2,721 | ) | (10,654 | ) | (1,498 | ) | ||
Fair value loss of convertible note | - | (24,105 | ) | (3,389 | ) | |||
(Loss)/profit before income tax | (77,064 | ) | (57,494 | ) | (8,082 | ) | ||
Income tax (expense)/credit | 46,790 | 5,083 | 715 | |||||
(Loss)/profit for the period | (30,274 | ) | (52,411 | ) | (7,368 | ) | ||
Total comprehensive (loss)/income for the period | (30,274 | ) | (52,411 | ) | (7,368 | ) | ||
(Loss)/profit attributable to: | ||||||||
Owners of the Company | (14,654 | ) | (51,568 | ) | (7,249 | ) | ||
Non-controlling interests | (15,620 | ) | (843 | ) | (119 | ) | ||
(Loss)/profit for the period | (30,274 | ) | (52,411 | ) | (7,368 | ) | ||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
30 September | 30 September | 30 September | ||||||
2021 | 2022 | 2022 | ||||||
RMB’000 | RMB’000 | USD$’000 | ||||||
(Loss)/earnings per share for (loss)/profit attributable to owners of the Company (in RMB per share) | ||||||||
—Basic | (0.22 | ) | (0.60 | ) | (0.08 | ) | ||
—Diluted | (0.22 | ) | (0.60 | ) | (0.08 | ) | ||
Total comprehensive (loss)/income attributable to: | ||||||||
Owners of the Company | (14,654 | ) | (41,211 | ) | (5,793 | ) | ||
Non-controlling interests | (15,620 | ) | (11,200 | ) | (1,574 | ) | ||
Total comprehensive (loss)/income for the year | (30,274 | ) | (52,411 | ) | (7,367 | ) | ||
EBITDA | (43,057 | ) | (38,136 | ) | (5,361 | ) | ||
Adjusted EBITDA | (29,952 | ) | 10,620 | 1,493 | ||||
Adjusted (loss) | (17,169 | ) | (3,655 | ) | (514 | ) | ||
RECONCILIATIONS OF IFRS AND NON-IFRS RESULTS
EBITDA and Adjusted EBITDA | For the Three Months Ended | |||||||
2021 | 2022 | 2022 | ||||||
RMB’000 | RMB’000 | USD$’000 | ||||||
(Loss)/profit before income tax for the period | (77,064 | ) | (57,494 | ) | (8,082 | ) | ||
Adjustments | ||||||||
+ Finance costs | 7,815 | 2,289 | 322 | |||||
+ Amortization and depreciation | 26,192 | 17,069 | 2,399 | |||||
EBITDA | (43,057 | ) | (38,136 | ) | (5,361 | ) | ||
+ Professional fees | 5,017 | 1,508 | 212 | |||||
+ Share-based compensation expense | 8,088 | 14,143 | 1,988 | |||||
+ Compensation for termination of supplier | - | 9,000 | 1,265 | |||||
+ Fair value loss of convertible note | - | 24,105 | 3,389 | |||||
Adjusted EBITDA | (29,952 | ) | 10,620 | 1,493 | ||||
RECONCILIATIONS OF IFRS AND NON-IFRS RESULTS (CONTINUED)
Adjusted Loss | For the Three Months Ended | |||||||
2021 | 2022 | 2022 | ||||||
RMB’000 | RMB’000 | USD$’000 | ||||||
Loss for the period | (30,274 | ) | (52,411 | ) | (7,368 | ) | ||
Adjustments | ||||||||
+ Professional fees | 5,017 | 1,508 | 212 | |||||
+ Share-based compensation expense | 8,088 | 14,143 | 1,988 | |||||
+ Compensation for termination of supplier | - | 9,000 | 1,265 | |||||
+ Fair value loss of convertible note | - | 24,105 | 3,389 | |||||
Adjusted loss | (17,169 | ) | (3,655 | ) | (514 | ) | ||
Source:
2022 GlobeNewswire, Inc., source