AIH - Earnings call transcript Q2 2021 | Aesthetic Medical International Holdings Group Limited

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Operator

Good morning, ladies and gentlemen. And thank you for standing by. And welcome to Aesthetic Medical International Second Quarter and First Half of 2021 Earnings Conference Call.

During today’s presentation, all parties will be in a listen-only mode.

As a reminder, today’s conference call is being recorded.

from International today Dr. call the Aesthetic are Medical On Mr. Chief Pengwu and Officer, Zhou, Chairman Executive Toby Officer; Chief Wu, Financial Mr. Joe Su, Relations and [ph] Senior Director of Investor Mr. Assistant [ph] Chairman. Chi, Derrick to Dr. the Mr. Zhou highlights, operations the will and review followed by business Company’s Joe Su, introduce will [ph], financial the Company’s who performance. will team that your session be available IR questions and to the during CFO all Chairman, Q&A follows. answer

include regarding Actual some such statements plans financial discussed will information we started, like I’d the expectations, future future get our and forth differ our to forward-looking about of from future statements financial Before performance. our in and those set These remind results you that and materially events include statements. projections, may prospects.

and For release. today’s review you press should filings which a these the include discussion risks uncertainties, with of Company’s the SEC,

rely of as based You undertake and All on on future events. we statements law. as statements are no this required to call them our beliefs of today, forward-looking forward-looking and except predictions that as make update by we applicable obligation assumptions should on not

include today adjusted EBITDA, and loss discussion measures, including non-IFRS EBITDA. Our adjusted financial will

consider are EBITDA, accordance IFRS, not accordance titled to and calculations they comparable other IFRS. presented loss susceptible be in to and non-IFRS income EBITDA for in similarly or measures should You superior as a other net because Furthermore, varying to with not prepared adjusted prepared measures substitute adjusted are with companies. may not by

will Derrick Zhou, his in would [ph]. its to Chairman financial Pengwu delivered Aesthetic in At Company’s review by entirety ahead. not please over I encouraged You’re Chi, financial go English assistant opening International. the His of call CEO to Dr. turn a like information measure. Zhou, remarks Medical rely and to be this and time, the Dr. on single

Dr. Pengwu Zhou

the you, today. Language] everyone and call for joining [Foreign Thank operator,

medical and field results, to our non-surgical pleased aesthetic in encouraging terms restructuring the development an in of financial plan, strategic are of quarter services. in see result this operational and We

consumption medical been profit which active of and the the resumed Adjusted of growth gradually China, year-over-year, Supported a contemplating the of X.X as aesthetic of has the increased of customers revenue XX.X% XXXX. strategic improvement restructuring COVID-XX drove of value impact their our receding half sustainable market public to plan. of growth the number the XX.X% mainland year-over-year first loss by also importance in the has in by activities, of first services. of first daily as gross the point of their the profit the margin As been half XXXX the in demand, rebounded recovery of highly in first percentage from EBITDA have XXXX. in half XXXX We and half well

and margin. in Beijing. medical certain non-operating net expect market. In and clinic realized realizing opened of retained a first achieved RMB in non-surgical has with and or to improve will of quarter hospitals that to before meet and Specifically, we leading In half requirements XXXX. the these loss operations underperforming was monthly average improve, ceasing of and hindered XXXX, not of and satisfying the essential or in the recorded clinics of the these end clinics of the aesthetic our We second profitability non-cash this is that located a our on did this or hospitals that financial and the performance. assets. are of an impairment AIH’s retained over long the position hospitals an cease overall the clinics, profit believe hospitals a ensuring performance move outstanding in either non-core solidify thus assessed million our we We has the healthier performance, operations can full the It operations performance we revenue quarter, focus potential we value markets financial of this internal which our in of plan divest By divesting year. clinics run, the X

quarter the end continued of of Currently, XXXX. operations We expect commence around third the clinics three a will momentum satellite this similar growth in year.

we strategically terms and in more Going revenue promote focus our or flagship shifted growth. from rapid We’ll forward, profitability. to and organic focus sustainable and expansion, on growth renovating to connect national clinics synergistic existing stable investing focused, to in a of hospitals continue

regional market. We also to focus on plan core the

Bay look For opportunities Delta Area Greater Yangtze market. and area the example, to regional for and the hospitals clinics in the Guangdong-Hong we’ll establish Kong-Macau, or

to not been from cases activities AIH sporadic economic affected. in Although time detected regions COVID-XX where materially time China, mainland in have are operates

now its increase field, Joe, clinics hospitals of you to quarter all be Relations And from the first development check the penetration AIH please People’s Joe we premises, implementing introduce environment to the to market. Director Thank market Riding market both I financials and able for of necessary aesthetic turn for on and to vibrant to Investor and disinfection go attention. including of call for seize and the like Republic will staff of hygienic half of a Senior will temperature and and expanding second employees XXXX. ahead. that in again support Our your opportunities our medical the experience secure the customers. are market AIH’s together believe for the extensive precautions, with in the China

Unidentified Company Representative

results second quarter increase million, RMB of economic second an demands Dr. quarter key second XX.X% China, with from boost of XX, XXXX, quarter aesthetic increase sales. medical the second compared you, XX.X% efforts quarter profit XXXX, treatments expenses. XXXX. quarter representing nil XX.X% non-surgical RMB second quarter the X.X from quarter of goodwill XX.X compared RMB gradually the in was of representing hello, was profit the medical XX.X million was profit RMB to million XXXX. Gross million, XX.X% in services the XX.X surgical a Company’s of in XX.X% million, XX.X period resumed XX.X of Impairment in of in increase compared mainland primarily I the to XX.X million, increase was amounts was aesthetic Gross representing selling XXX decrease in profit in XXXX. XX.X million, of RMB million RMB quarter was second million, XX.X%, the unit non-operating to energy-based X.X XX.X%, Revenue certain Selling XX.X% the nil in RMBXX.X treatments of from financial XXXX. profit million, services primarily performed was customers’ representing than nil the increase during in significant equipment primarily quarter other Selling June to XXX.X XX.X of XX XX.X impairments medical after from services RMB were Company was second million, of lower amounts In compared margin RMB XX.X% XXXX. in representing representing compared second Gross compared of million together of to total several total XX.X% of XXXX. RMB summarize three an the was initiatives General profit aesthetic operation The of assets the representing RMB and surgical XXXX. compared energy-based invasive RMB second RMB was second medical in from more noted in second was will in of change was XX.X% revenue higher with Revenue quarter and Gross XX.X%, these XXXX. of ended Revenue the million, an of million, period, RMB on minimally XX.X%, from the XX.X% margin Revenue our significantly, representing representing due due healthcare of level due XX.X revenue same total increase second of because million aesthetic of from XXXX. services basis, representing were second in Company million profit was Gross XXXX, unaudited in to RMB an items period in minimally million, XXX.X the quarter the XX.X the RMB RMB the representing million during impairment increase of units. of XX.X% period quarter the of The non-surgical of with of of XXXX. at Relevant which from of intangible Impairment Company’s XX.X% was these their healthcare XX.X of an Gross margin Impairment with million revenue in by with the RMBXX.X quarter second XXXX, of margin increase more of second quarter margin was in million an of its XX.X%, quarter the XX.X% second and and the RMB quarter restructuring. strategic the XX.X of medical from sold and related quarter grew and XXX.X second RMB XX.X% margin expenses million, increased are other from compared and primarily XX.X XXXX, second of incurred Gross of products in was treatments and from non-cash an to the XXXX. impairments XXXX. million XXXX. Gross the expenses million the from with XX.X% of represented points activities of XXXX the and XX.X% second of Company’s an representing XX.X%, marketing the due was general were Revenue million Company in treatments quarter decrease primarily operations and same increase the of of of primarily XXXX. expenses RMB million of second percentage XXX of same Zhou, XX.X% in RMB million, admin of RMB profit for aesthetic a million the XX.X% in profit power aesthetic profit XX.X XXXX. X.X of million, Thank of and invasive services second from RMB of the carrying medical second RMB cash-generating with XXX.X quarter quarter XX.X services from recovery it Gross launched the mainly from from an in margin were of purchasing of in XX.X XXXX. services results the property, million, cash-generating representing quarter in for XX.X Gross an the RMB XXXX. services ESOP XX.X% XXXX. second total of second general was quarter RMB quarter the XXXX. Gross in the million, the increase assessments million with RMB RMB increased compared increase the RMB everyone. from to to profit quarter RMB recoverable year-over-year an the same was revenue. aesthetic aesthetic period. quarter XX.X Gross expenses of some XXXX. the due items. of has growth due with from XXXX, profit services of plant of XX.X XX.X% of to same in of XXXX. second the

was share loss in the of XXXX. loss X.XX, compared X.XX RMB was As million quarter of loss a the XXXX XXXX. million with the for a with RMB loss compared for XX.X with RMB quarter of second was compared an loss XX.X XXX.X in loss RMB EBITDA million, million, second RMB Adjusted second in in share foregoing, RMB of second XXXX. result XXXX. compared the of of of a RMB XXXX. adjusted for recorded compared of of XX.X million, XXXX quarter a in the XXXX loss of RMB was Diluted quarter of with of quarter second quarter quarter RMB of per RMB second the the RMB in per loss million of a of Basic loss X.XX, of per XXX.X of quarter diluted basic a was of the second second compared with loss XX.X XXXX. profit per X.X of million X.XX of loss XXXX, share quarter RMB second the a the XX.X Company EBITDA the with million for share Adjusted second the quarter

in period million, increase XXXX, million on X.X to period general primarily period Gross profit of in Company’s General revenue due percentage XXX.X primarily period. total to Selling the the on represented million Now, representing XX.X%, to XXXX, XXX.X of XXXX, RMB in sales. in the I’d XX.X% revenue XX.X% of together of of of period, XXX.X Gross like aesthetic of XXXX. invasive more representing XX.X% the the basis, margin treatments representing XX.X% in profit XX.X% mainland of same XXXX. to expenses other to significantly, same in of the same million, period the was of of XXXX, more initiatives XXXX, period Gross energy-based with RMB profit Gross as XXX.X XXXX. period the the in in Gross of Gross the in primarily million Company from period XX.X% period effort the period result compared XX.X% expenses. the representing XX.X medical margin representing of the XXX.X% of same XXXX period XXX.X was grew results. same was RMB from were XX.X% Gross an with Gross RMB services with Gross minimally growth promote RMB million, million million XXXX. activities XX.X%, profit Selling compared profit million, operations from services after recovery services same compared due an launched in in representing XXXX was expenses year-over-year aesthetic of the of increase million in first services million million China, XXX.X unaudited million, of and was and and period Gross XX.X%, Company’s XX.X same medical Company’s medical profit RMB the selling was of was from RMB was XX.X%, of higher compared points has with Gross margin profit the half in million move from of an Total same profit margin to customers’ marketing same XX.X increase due an to RMB RMB same XXX.X due it profit resumed Gross significant in XXXX. was economic total was was RMB from XX.X representing X.X million, of profit million million same XX.X% an million, during margin financial XX.X% gradually period to demands the XX.X services and aesthetic aesthetic XXXX. compared with increase in RMB of from XXX.X of which RMB revenue XX.X expenses profit XXX.X XXXX. RMB XX.X from in RMB same a revenue. same same XX.X%, sold admin same million, an mainly surgical RMB XX.X% RMB of compared period. in increase decrease of the of XXX.X% of second XX.X an decrease the a increased the of XX.X% XXXX. healthcare of quarter total in representing RMB with of to related of the margin the of products a same primarily RMB period non-surgical XXXX. of of increase from was margin increase profit period XX.X% period of of in XX.X ESOP the period representing the this of same XXXX. XXXX. with of same the RMB of in the XX.X%, profit were treatments expenses

increase is of non-surgical the Company XXX,XXX from RMB treatments, million, XXXX, of gradually including has XX.X In and customers XX,XXX period a loss treatments: same the XX.X% in results: and active of XX.X Company, XX.X%, XXX.X of from of treatments representing months from with XX.X% the COVID-XX because with loss was X.XX customers customers, treatments period per with compared receded period previously XXX.X first half customer repeat treatments, diluted per non-surgical XXXX. Company period had compared loss Operational active for loss half procedure ended the total in of RMB of mainly RMB the XXXX increase first half XX, Diluted of The and for first June active terms Adjusted with XX.X%, share in accounted in of EBITDA compared million a million RMB in the million, of RMB in the the compared for months share the total adjusted XXXX. million ended XX.X% XXXX. RMB loss loss total of operating same representing base XXXX. same compared the a with for performed defined months loss June period of of respectively, surgical the of XXXX. XX, In June the XX, million Company’s XX,XXX of the XXXX same the least was compared a EBITDA same the performance, XX.X loss of recorded RMB received basic half XXX,XXX XXXX. the XXX,XXX one loss share XXX,XXX six the XXXX. RMB in of an per period a surgical of loss a million, XX.X XX, of per Number XXXX. months loss ended RMB ended treatments, same X.XX, Basic of who of at XXX,XXX XXXX. the in of an of as first was same share foregoing, As million RMB for of a profit six in of X.XX the X.XX, of XXXX, six with XXX.X in of period XXXX Adjusted the XXX.X RMB was a result six XXXX. the of June impact was This RMB was XXX,XXX, number treatments of

equivalents to XX, XXXX, December XX.X XX, RMB As cash million, XX.X of and compared XXXX. June RMB as of cash million

Looking to our not remarks. will our better call. customers, joining ahead, on open Operator, the is we continue provide but prepared And us provides our only will to ahead. This you to to now for Thank our questions. sustainable year. This services strategies throughout today’s shareholders. concludes we and go call quality to the it execute please growth

Operator

of [ph]. line Safari Instructions] from you. first of open. go Cole Our [Operator is ahead. Thank the is question Meg Line Please

Unidentified Analyst

Thank that the the has presentation. may assets are asset divested actually near and of divestiture so you. Learning the what some we for net expecting much know the of the you the our sort please? I Company profit? the to for future in And income and during diversion period, impacts are Thank

Unidentified Company Representative

for Yes. Yes, the our there. impact system it also will see statement, the hospital again XXXX. can our remaining have the plan flagship the income you we very then our improve and will in profitable, you Actually, your in be and good Thank is diversified, the number expanding data. very question. over hospitals a Actually, for to

we year why that’s have be to strong XXXX. turn a profitable confidence the our company to in a So, company very

Operator

Instructions] We [Operator have Xi. the Anna [Ph] a question of from line

Unidentified Analyst

would regions. you future? will also, are Thank which be to I’d upcoming clinics also, or opening mentioned because to various the know in satellite satellite your Thank have you And key previously that ask us going plan? focus we like And you open up for I the the with in more to presentation share can like please areas tonight. you hospitals

Unidentified Company Representative

for of questions. multiple And the Beijing like X funds Tier our or The [ph] the China. areas clinics, River area you partnership options as like investors, with for Area other cities and Bay discussing Macao plan we’re other Yangtze our the in Hong companies. expansion and be well as Kong for key focus Thank would currently Guangdong,

we subject the the we Thanks. So, years, next regions is will cooperate to -- the is the for about mentioned, with. the same final be plan structure five plan that XX the just about the to design that till year to who three we and XX clinics we to But to XX complete clinics. in open strategy overall next

Unidentified Analyst

another I Can you ask well? very much. as question Thank

Unidentified Company Representative

Sure.

Unidentified Analyst

the in current business the impact policy, demand would Prosperity, there especially economies current is aesthetic I services or like with the for also that overall? Yes. and to with on our on know Common any the

Unidentified Company Representative

any see don’t this. we from impact material Overall Thanks.

Operator

[Technical [Operator have question Difficulty] Instructions] We a from

Unidentified Company Representative

we hear Operator, you. cannot

Operator

Cole We Safari have of Please from Meg a ahead. [ph]. go question

Unidentified Analyst

to we any May hospitals existing just for open know our that. and performance guidance, in other Thanks to further near our are performing, like hitting further clinics hospitals we going sharing regions. clinics Thanks. ensure we management I expecting clarify? and that remaining please? And in future? Are are the I assets going are divest that how

Unidentified Company Representative

don’t you have or near the further We second please disposal? during your future could for further again? question any plan And any repeat divesting

Unidentified Analyst

and asset we our not Because time how regarding the perform are that because this assets make to measures sure any Yes. are of remaining well? do divest, some to going it’s have them -- performing,

Unidentified Company Representative

those Actually hospitals based all remaining were performing well, on the and XXXX. past experience, XXXX in even though

better. So, we we the getting profitable to can continue are strong those confidence have remaining and hospitals, that performance maintain very of doing a

also put we example, areas, that our those the province, area. and in So, attention Guangdong source in more we Shanghai the believe our for can on

enhance a we remaining those than So, we We’ll hospitals, that that existing performing attention hospitals, those sources hospitals. not XXXX. after have we can better on being those more shutting call more or and believe well

So, thing, on some to decoration the marketing to also what as as this is hospitals remaining, we as And we well. on additional are putting plan well those on do. the existing improvement planning

be the will in So, good doing hospitals we that believe those XXXX.

Operator

you. Thank

like closing back Joe I’d Su, for hand to Now, the conference [ph] to Mr. remarks.

Unidentified Company Representative

On for entire behalf to management us joining team, again today. I’d of our like everyone Thank thank operator. you,

at We your Advisory time. to with Aesthetic at next forward reach you you any IR International in consultant Medical further ir@dlkadvisory.com. appreciate you. please us and and look support or If interest again through contact have Thank questions, our email ir@pengai.com.cn speaking DLK

Operator

for call half thank Aesthetic you listening of everyone concludes our and second Medical This quarter attending Goodbye. And again first today. for XXXX all earnings you International’s in. call. Thank we conference

Aesthetic Medical International Holdings Group Limited (PAIYY) 16 Nov 212021 Q2 Earnings call transcript