Good morning and good evening, everyone. Welcome to Concord Medical's first quarter 2016 earnings conference call. With us today are Dr. Jianyu Yang, Chairman and Chief Executive Officer of Concord Medical; Adam Sun, Chief Investment Officer of the Company; and Miss Fang Liu, IR Manager of the Company. Mr. Fang Liu, IR Manager, please go ahead..

The conference results were released earlier today and are available on the Company's investor relations Web site as well as on the respective wire services. Before we continue, please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements involve inherent risks and uncertainties and as such our results may materially differ from the views expressed today. Further information regarding those and other risks and uncertainties is included in our registration segment and our Form 10-K and other documents filed with the SEC.

Concord Medical does not assume any obligation to update any forward-looking statements, except as required under applicable law. At this time, I'd like to turn the call over to Dr. Yang. Please go ahead..

Hello, everyone. Welcome to the Concord Medical first quarter 2016 earnings conference call. During the first quarter of 2016, our revenue and profits were seeing some headwinds due to some internal and external factors. Our total net revenue fell 17% compared to the same period last year with a loss of RMB32 million.

As we initiated the business model transformation since 2014, the number of our original radiotherapy and imaging diagnostic centers has stopped increasing.

The development of our wholly-owned diagnosis centers -- the wholly-owned Level II specialty cancer hospitals featured by radiotherapy and imaging diagnosis also caused an impact on our revenue increase.

At the same time Concord Cancer Hospital, which we acquired in Singapore last April, has now come to a new stage of business and treatment process restructuring, brought obvious profit decrease.

On the other side, Concord Cancer Hospital has started to receive patient from Mainland China and provide the most advanced treatment approach and medicine since this March.

We believe, with further collaboration between Concord Cancer Hospital and MD Anderson Cancer Center, MDACC for short, on treatment, technology, knowhow and branding, it will receive more and more patients. Meanwhile, we also witnessed many inspiring achievements.

Our established business strategy of upgrading the regional network of imaging diagnosis and radiotherapy centers to wholly owned independent centers is gradually implemented. The first hospital under this Chain, Datong Meizhongjiahe Cancer Hospital has opened preliminarily last week. This is the first hospital under the Meizhongjiahe brand.

It will apply to join the local social insurance coverage and provide high-quality cancer treatment and diagnosis services to local patients at Datong and Shanxi Province. The network of Meizhongjiahe will join premium hospitals in Beijing, Shanghai and Guangzhou to advance the Company's domestic leverage.

Learning from the experience of constructing and developing Datong Meizhongjiahe Cancer Hospital, we will further optimize the processes of establishing Level-II specialty domestic cancer hospitals such as site selection, government approval, declaration, environment assessment and license applications, we will accelerate our pace of developing Level-II specialty cancer hospitals wholly-owned radiotherapy and imaging diagnosis and building our wholly-owned national chain of cancer treatment organizations.

We are pleased to see exciting breakthrough in our planned high-end medical service section. In this quarter, we’ve completed the acquisition of Beijing Proton Medical Center, BPMC for short. So far this is the first Proton center that has obtained the government approvals for establishment.

We’ve completed the commercial registration process in this quarter and currently own 80% of BPMC. After 10 year stoppage, we’re glad that the center is going to be ready to resume construction soon.

Based on the collaboration with China-Japan Friendship Hospital, BPMC will become a medical treatment and academic research platform, focused on the proton treatment for major oncology diseases, such as lung cancer.

The other two planned premium medical institutions, Shanghai Concord Cancer Hospital and Guangzhou Concord Cancer Hospital, also completed the overall design and are expected to break ground soon. MDACC is heavily involved in the preparation work, from architecture design to department planning, from technical training to personnel exchange.

With their support, the two hospitals have been designed and will operate according to MDACC standards and pursue to qualify for MD Anderson Cancer Network Associate membership program in the future. Listing of shares of Meizhongjiahe new third Board in China in December last year, we’ve deepened the connection with domestic capital markets.

Currently the healthcare reform has not only touched upon many historical challenging issues, such as multi-location practice for doctors and equipment licensing to private hospitals, but also bring more challenges to private healthcare sector providers.

We will capitalize on this growing opportunity and rely on our accumulative industry resources to contribute to the improvement of overall level of cancer treatment and diagnosis in China. This concludes my comments. At this point, I’d like to turn the call over to Mr. Adam Sun, our Chief Investment Officer to review our financial performance..

Thank you, Dr. Yang. Following first quarter 2016 financial highlights, total net revenues were RMB125 million or $19.4 million in the first quarter of 2016, a 17.1% decrease from net revenues from the network business of RMB150.7 million in the first quarter of 2015.

Total net revenues include net revenue from the network business of RMB121.6 million or $18.9 million and net revenue from Concord Cancer Hospital of RMB3.4 million or $0.5 Million. Gross profit was RMB45.4 million or $7 million, representing a 39% decrease from RMB74.4 million in the first quarter of 2015.

The gross profit margin for the first quarter of 2016 was 36.3% compared to 49.4% for the first quarter of 2015. Net loss attributable to ordinary shareholders for the first quarter of 2016 was RMB32.2 million or $5 million compared to net income of RMB28.5 million for the first quarter of 2016.

Basic and diluted loss per ADS in the first quarter of 2016 were RMB0.73 or $0.11 and RMB0.73, $0.11 respectively compared to basic and diluted profit from ADS of RMB6.8 and RMB0.68 respectively in the first quarter of 2015.

Non-GAAP net loss for the first quarter of 2016 was RMB30.2 million or $4.7 million compared to non-GAAP net income of RMB30.5 million for the first quarter of 2015. Non-GAAP basic and diluted loss per ADS in the first quarter of 2016 was RMB0.67 or $0.11 and RMB0.67, $0.11 respectively.

Adjusted EBITDA non-GAAP was RMB31 million or $4.8 million for the first quarter of 2016, representing a 55% decrease from RMB68.8 million in the first quarter of 2016.

Network business, network revenue was RMB121.6 million or $18.9 million, 19% decrease from net revenue of RMB150.7 million in the first quarter of 2015, attributable to the closure of certain cooperative centers in our network of centers during 2015, and to changes in the revenue-sharing split according to the contracts signed between the Company and our public hospital partners.

As of March 31, 2016, the Company operated a network of 125 cooperative centers in 52 cities in China and had entered into agreements to establish one additional center. Cost of revenue of the network business was RMB72.4 million or $11.2 million, a 5.5% decrease from RMB76.3 million in the first quarter of 2015.

Gross profit from the network business was RMB49.2 million or $7.6 million, representing a 33.8% decrease from RMB74.4 million in the first quarter of 2015. The gross profit margin for the first quarter of 2016 was 40.5% compared to 49.4% for the first quarter of 2015.

Selling expenses of the network business were RMB18.4 million or $2.8 million, representing a 29% decrease from RMB25.9 million in the first quarter of 2015. Selling expenses as a percentage of total net revenues increased to 15.1% in the first quarter of 2016 from 17.2% in the first quarter of 2015.

The decreases were mainly due to low marketing and promotion expenses. General and administrative expenses of the network business were RMB31.1 million or $4.8 million, representing a 45.3% increase from RMB21.4 million in the first quarter of 2015.

General and administrative expenses as a percentage of total net revenues were 25.6% in the first quarter of 2016 compared to 14.2% in the first quarter of 2015.

The increases were mainly due to higher travel, conference, and rental expenses as compared to the same centers in the 2015 as well as to expenses occurred in setting up new domestic subsidiaries. Capital expenditure were RMB18.7 million or $2.9 million for the first quarter of 2016 compared to RMB38.9 million in the first quarter of 2015.

Accounts receivable were RMB5.1 million or $1.8 million as of March 31, 2016 compared to RMB218.3 million as of December 31, 2015. The average period of sales outstanding for accounts receivable also known as days sales outstanding was 147 days (sic) [157 days] in the first quarter of 2016.

As of March 31, 2016, the Company had bank credit lines totaling RMB3.1 billion or $483.9 million of which RMB1.2 billion or $184.3 million was utilized.

During the first quarter of 2016, the Company handled 5,093 patients treatment cases and 67,377 patients diagnosis cases, representing a 23.9% decrease and 8.6% decrease from the first quarter of 2015, respectively, mainly due to closure of certain cooperative centers in 2015.

Hospital business, Concord Cancer Hospital is a leading privately owned for-profit oncology hospital in Singapore. The Company acquired Concord Cancer Hospital formerly known as Fortis Surgical Hospital, in April 2015, and is now transforming it into a premium cancer hospital.

Net revenues from the hospital business were RMB3.4 million or $0.5 million. Cost of service of this hospital business for the first quarter of 2016 was RMB7.2 million or $1.1 million. Gross loss from the hospital business was RMB3.8 million or $0.6 million in the first quarter.

Selling expenses of the hospital business was RMB0.04 million or $0.01 million for the first quarter. General and administrative expenses of the hospital business were RMB10.6 million or $1.6 million of which employee benefit expenses were RMB6.2 million or $1 million.

As of March 31, Concord Cancer Hospital had accounts receivable of RMB2.2 million or $0.3 million. The number of sales outstanding was 63 days. Concord Cancer Hospital operated 31 beds and had 82 medical and nonmedical staff as of March 31, 2016. That concludes our prepared remarks. Operator, please open up for questions..

Q - A -.

Once again thank you for joining us today. Please don’t hesitate to contact us if you have further questions. Thank you for your continued support. Have a good day..

Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect. Thank you..