Financial Performance - In 2022, the Group's consolidated revenue was RMB1,845.6 million, a year-on-year decrease of 5.5% from RMB1,953.9 million in 2021, primarily due to a 6.4% drop in revenue from hospital services[9]. - The Group's consolidated profit for the Reporting Period was RMB27.7 million, a year-on-year decrease of 58.6% from RMB66.9 million in 2021, primarily due to lower revenue and profit from Kanghua Hospital and Renkang Hospital[12]. - The overall operating margin decreased from 18.1% to 14.2% during the Reporting Period[12]. - Adjusted EBITDA decreased by 30.0% to RMB215.8 million, down from RMB308.1 million in 2021, indicating that the Group's core operations remained profitable[19]. - The Group's total revenue for the year was RMB 1,845.6 million, a decrease of 6.4% compared to RMB 1,953.9 million in the previous year, accounting for 93.3% of total revenue[85]. - Revenue from inpatient healthcare services decreased by 14.1% to RMB 927.1 million, representing 50.2% of total revenue, down from 55.3% in the previous year[86]. - Revenue from outpatient healthcare services increased by 3.9% to RMB 640.7 million, accounting for 34.7% of total revenue, up from 31.6% in the previous year[86]. - Revenue from physical examination services rose by 7.4% to RMB 153.7 million, representing 8.3% of total revenue, compared to 7.3% in the previous year[86]. - The cost of revenue for rehabilitation and other healthcare services increased by 9.1% to RMB 93.0 million, in line with the revenue growth for the year[91]. - The overall average patient spending from inpatient healthcare services decreased, contributing to the decline in gross profit[4]. Revenue Segmentation - Revenue from rehabilitation and other related healthcare services increased by 10.1% to RMB111.7 million, up from RMB101.5 million in 2021[11]. - Revenue from rehabilitation hospital operations rose by 30.0%, driven by higher patient intake and expansion of the rehabilitation centre network[11]. - The hospital services segment recorded revenue of RMB1,721.5 million, a year-on-year decrease of 6.4%, with Kanghua Hospital and Renkang Hospital experiencing revenue declines of 8.0% and 4.2%, respectively[16]. - Kangxin Hospital, however, saw a significant revenue increase of 41.8% compared to 2021[16]. - The elderly healthcare services segment achieved revenue of RMB12.5 million, a year-on-year growth of 1.8% from RMB12.2 million in 2021, attributed to the maturation of operations since its opening in 2019[13]. - Revenue from VIP healthcare services decreased by 13.5% to RMB86.9 million compared to RMB100.5 million in 2021 due to the impact of the pandemic[41]. - Revenue from rehabilitation hospital and other healthcare services increased by 30.0% to RMB53.1 million in 2022, up from RMB40.8 million in 2021, driven by growth in rehabilitation patient visits[43]. - Revenue from rehabilitation centers and other services slightly decreased by 3.4% to RMB58.6 million in 2022, down from RMB60.7 million in 2021[43]. Strategic Developments - The Group is developing the Kanghua Qingxi Healthcare Complex, with a total construction area of over 130,000 square meters, featuring 500 inpatient beds and around 800 nursing and rehabilitation beds[9]. - The first phase of the Kanghua Qingxi Healthcare Complex is expected to commence operations by March 2025[9]. - The Group's strategic partnership with Yingshan Capital aims to introduce international management experience and expertise to improve hospital operations[7]. - The Group plans to enhance smart hospital construction and expand internet healthcare services to improve patient consultation and treatment convenience[14]. - The Group aims to optimize healthcare services and improve operational efficiency in 2023, focusing on core business and stakeholder relationships[14]. - The Group's rehabilitation and other healthcare services segments recorded a revenue increase of 10.1%[16]. - Kanghua Hospital aims to pass the Class III Grade A re-evaluation by the end of 2023, focusing on seven aspects including hospital management and medical safety[22]. - Renkang Hospital is working towards obtaining a secondary qualification by the end of 2023, enhancing medical quality control and service levels[28]. Market Trends and Future Outlook - The overall growth of the healthcare industry for the elderly is anticipated to be a major trend in the future, with the Group actively preparing for relevant evaluations and qualifications[9]. - The surge in COVID-19 cases at the end of 2022 presented both threats and opportunities, with the government increasing medical clinics and promoting online medical services[16]. - The Chinese healthcare market is transitioning to a "post-pandemic" era in 2023, presenting opportunities for restructuring and upgrading in the pharmaceutical and medical sectors[53]. - By the end of 2024, all regions in China are expected to implement DRG/DIP payment method reform, which aims to alleviate pressure on the healthcare security fund[56]. - The demand for consumption health is driven by an aging population and increased health awareness post-COVID-19, with sub-sectors like ophthalmology and medical aesthetics showing significant growth potential[60]. - The healthcare industry is undergoing reforms aimed at improving resource allocation and efficiency, including medical insurance reforms and the promotion of private healthcare services[74]. Operational Efficiency and Cost Management - The Group plans to enhance smart hospital construction and expand internet healthcare services to improve patient consultation and treatment convenience[14]. - The average bed occupancy rate at Renkang Elderly Care Centre was 86.1% in 2022, with revenue from elderly medical services increasing by 1.8% to RMB12.5 million[50]. - Staff-related costs increased by 9.8% compared to 2021, reflecting rising salary levels and competition for medical professionals[3]. - Administrative expenses increased to RMB 228.3 million, a 1.4% rise from RMB 225.2 million in 2021, mainly due to increased staff costs[102]. - The overall repair and maintenance expenditure significantly decreased to RMB 16.2 million from RMB 27.7 million in 2021[102]. - The Group's management closely monitors the credit quality of accounts receivable, with no overdue or impaired debts reported[139]. Investment and Financial Position - The Group's investments classified as financial assets at FVTPL totaled RMB572.4 million as of December 31, 2022, down from RMB603.3 million in 2021[132]. - The Group's fund investment increased to RMB18.0 million in 2022 from RMB10.0 million in 2021, indicating growth in equity investments in unlisted companies[132]. - The Group expects to maintain adequate liquidity and financial resources to meet working capital requirements for at least the next twelve months[132]. - The Group's capital expenditure during the reporting period was RMB 168.0 million, slightly down from RMB 169.3 million in 2021[180]. - The total unutilized net proceeds from the IPO as of December 31, 2022, amounted to RMB 410.8 million, with part used for purchasing financial products to achieve higher interest income[175]. - The Group's investment strategy includes low-risk structured deposit products and portfolio investment funds to maximize returns on idle cash without affecting operations[136]. - The Group's capital expenditures are primarily financed through cash flows generated from operating activities and bank loans[180]. - The company secured a total of RMB620.0 million in new bank loans for the development of Kangxin Hospital's Phase II medical facilities, with RMB345.4 million drawn down by December 31, 2022[188]. Compliance and Sustainability - The company is committed to environmental protection and sustainable development, adhering to national and local environmental laws and regulations in the PRC[200]. - The company has engaged qualified third parties for the proper disposal of medical wastes in compliance with applicable laws and regulations[200].

[Company Overview and Financial Summary](index=1&type=section&id=%E5%85%AC%E5%8F%B8%E6%A6%82%E8%A7%88%E5%8F%8A%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) This section provides an overview of the company's operations in China, presenting key financial highlights, consolidated statements, and equity structure for the fiscal year 2022 [Company and Group Information](index=5&type=section&id=%E5%85%AC%E5%8F%B8%E5%8F%8A%E9%9B%86%E5%9C%98%E8%B3%87%E6%96%99) Guangdong Kanghua Healthcare Co., Ltd., established in China with H-shares listed in Hong Kong, primarily provides hospital, rehabilitation, elderly care, and pharmaceutical sales services, with financial statements presented in RMB - The company, established in China with H-shares listed on the Hong Kong Stock Exchange, primarily operates in hospital services, rehabilitation and other medical services, elderly care services, and pharmaceutical sales[85](index=85&type=chunk) - Consolidated financial statements are presented in RMB[86](index=86&type=chunk) [Financial Highlights](index=1&type=section&id=%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) In FY2022, the Group's revenue decreased by 5.5% to RMB 1,845.6 million, profit by 58.6% to RMB 27.7 million, and adjusted EBITDA by 30.0%, with no final dividend recommended 2022 Financial Highlights | Indicator | 2022 (RMB million) | 2021 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 1,845.6 | 1,953.9 | -5.5% | | Profit | 27.7 | 66.9 | -58.6% | | Profit attributable to owners of the Company | 61.0 | 94.3 | -35.3% | | Earnings per share (RMB cents) | 18.3 | 28.2 | -35.3% | | Adjusted EBITDA | 215.8 | 308.1 | -30.0% | - The Board does not recommend the payment of a final dividend for the year[92](index=92&type=chunk) [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) For FY2022, the Group reported revenue of RMB 1,845,633 thousand and gross profit of RMB 261,350 thousand, with profit for the year at RMB 27,736 thousand, of which RMB 61,032 thousand was attributable to owners of the Company 2022 Consolidated Statement of Profit or Loss and Other Comprehensive Income Key Data | Indicator | 2022 (RMB thousand) | 2021 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 1,845,633 | 1,953,944 | | Cost of revenue | (1,584,283) | (1,601,196) | | Gross profit | 261,350 | 352,748 | | Other income | 54,858 | 45,149 | | Administrative expenses | (228,323) | (225,223) | | Profit before tax | 69,309 | 129,209 | | Income tax expense | (41,573) | (62,284) | | Profit and total comprehensive income for the year | 27,736 | 66,925 | | Profit attributable to owners of the Company | 61,032 | 94,307 | | Profit attributable to non-controlling interests | (33,296) | (27,382) | [Consolidated Statement of Financial Position](index=3&type=section&id=%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) As of December 31, 2022, the Group's total non-current assets were RMB 1,594,789 thousand, total current assets were RMB 1,124,545 thousand, total current liabilities were RMB 834,985 thousand, and net current assets were RMB 289,560 thousand 2022 Consolidated Statement of Financial Position Key Data | Indicator | 2022 (RMB thousand) | 2021 (RMB thousand) | | :--- | :--- | :--- | | Total non-current assets | 1,594,789 | 1,579,520 | | Total current assets | 1,124,545 | 1,125,082 | | Total current liabilities | 834,985 | 777,648 | | Net current assets | 289,560 | 347,434 | | Total assets less current liabilities | 1,884,349 | 1,926,954 | | Total non-current liabilities | 381,842 | 452,527 | | Net assets | 1,502,507 | 1,474,427 | [Equity](index=4&type=section&id=%E8%82%A1%E6%AC%8A) As of December 31, 2022, equity attributable to owners of the Company was RMB 1,487,869 thousand, non-controlling interests were RMB 14,638 thousand, and total equity was RMB 1,502,507 thousand 2022 Equity Structure | Indicator | 2022 (RMB thousand) | 2021 (RMB thousand) | | :--- | :--- | :--- | | Share capital | 334,394 | 334,394 | | Reserves | 1,153,475 | 1,092,443 | | Equity attributable to owners of the Company | 1,487,869 | 1,426,837 | | Non-controlling interests | 14,638 | 47,590 | | Total equity | 1,502,507 | 1,474,427 | [Accounting Policies](index=5&type=section&id=%E6%9C%83%E8%A8%88%E6%94%BF%E7%AD%96) This section details the Group's adoption of new and revised International Financial Reporting Standards and outlines those issued but not yet effective [Application of New and Revised International Financial Reporting Standards](index=5&type=section&id=%E6%87%89%E7%94%A8%E6%96%B0%E8%A8%82%E5%8F%8A%E7%B6%93%E4%BF%AE%E8%A8%82%E5%9C%8B%E9%9A%9B%E8%B2%A1%E5%8B%99%E5%A0%B1%E5%91%8A%E6%BA%96%E5%89%87) The Group has adopted several amendments to International Financial Reporting Standards for the first time, which had no material impact on the financial position or performance for the current and prior years - The Group has adopted several amendments to International Financial Reporting Standards for the first time, which had no material impact on the financial position or performance[87](index=87&type=chunk)[99](index=99&type=chunk) [New and Revised International Financial Reporting Standards Issued But Not Yet Effective](index=6&type=section&id=%E5%B7%B2%E9%A0%92%E5%B8%83%E4%BD%86%E5%B0%9A%E6%9C%AA%E7%94%9F%E6%95%88%E7%9A%84%E6%96%B0%E8%A8%82%E5%8F%8A%E7%B6%93%E4%BF%AE%E8%A8%82%E5%9C%8B%E9%9A%9B%E8%B2%A1%E5%8B%99%E5%A0%B1%E5%91%8A%E6%BA%96%E5%89%87) The Directors anticipate that the application of all new and revised International Financial Reporting Standards will not have a significant impact on the consolidated financial statements in the foreseeable future - The Directors anticipate that the future application of new and revised International Financial Reporting Standards will not have a significant impact on the consolidated financial statements[2](index=2&type=chunk) New and Revised International Financial Reporting Standards Not Yet Effective | International Financial Reporting Standard | Description | Effective Date | | :--- | :--- | :--- | | Amendments to IFRS 10 and IAS 28 | Sale or Contribution of Assets between an Investor and its Associate or Joint Venture | To be determined | | IFRS 17 | Insurance Contracts | January 1, 2023 | | Amendments to IAS 1 | Classification of Liabilities as Current or Non-current | January 1, 2023 | | Amendments to IAS 8 | Definition of Accounting Estimates | January 1, 2023 | [Revenue and Segment Information](index=7&type=section&id=%E6%94%B6%E7%9B%8A%E5%8F%8A%E5%88%86%E9%83%A8%E8%B3%87%E6%96%99) This section provides a detailed analysis of the Group's revenue by service type and operating segment, along with geographical information, major customers, and other income and expenses for FY2022 [Revenue Analysis](index=7&type=section&id=%E6%94%B6%E7%9B%8A%E5%88%86%E6%9E%90) In FY2022, the Group's total revenue was RMB 1,845,633 thousand, primarily derived from hospital services (inpatient, outpatient, physical examination), rehabilitation and other medical services, and elderly care services, with pharmaceutical sales revenue significantly reduced 2022 Revenue Analysis (by Service Type) | Service Type | 2022 (RMB thousand) | 2021 (RMB thousand) | | :--- | :--- | :--- | | Hospital services | 1,721,462 | 1,839,475 | | - Inpatient medical services | 927,086 | 1,079,632 | | - Outpatient medical services | 640,699 | 616,776 | | - Physical examination services | 153,677 | 143,067 | | Rehabilitation and other medical services | 111,714 | 101,507 | | - Rehabilitation hospital and other medical services | 53,093 | 40,841 | | - Rehabilitation center services and other services | 58,621 | 60,666 | | Elderly care services | 12,457 | 12,236 | | Pharmaceutical sales | – | 726 | | **Total Revenue** | **1,845,633** | **1,953,944** | - Pharmaceutical sales business has been significantly scaled down and gradually integrated with the hospital services segment, with no related revenue in 2022[101](index=101&type=chunk)[150](index=150&type=chunk)[261](index=261&type=chunk) [Segment Information](index=8&type=section&id=%E5%88%86%E9%83%A8%E8%B3%87%E6%96%99) The Group's operations are categorized into four reportable operating segments: hospital services, rehabilitation and other medical services, elderly care services, and pharmaceutical sales, with hospital services generating RMB 1,721,462 thousand in 2022 - The Group's operating segments include hospital services, rehabilitation and other medical services, elderly care services, and pharmaceutical sales[102](index=102&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) 2022 Segment Revenue and Profit | Segment | 2022 Revenue (RMB thousand) | 2021 Revenue (RMB thousand) | 2022 Segment Profit (RMB thousand) | 2021 Segment Profit (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | Hospital services | 1,721,462 | 1,839,475 | 238,533 | 316,669 | | Rehabilitation and other medical services | 111,714 | 101,507 | 18,762 | 16,273 | | Elderly care services | 12,457 | 12,236 | 4,055 | 4,178 | | Pharmaceutical sales | – | 726 | – | 116 | | **Total** | **1,845,633** | **1,953,944** | **261,350** | **337,236** | - Segment profit refers to the profit earned by each segment, before allocation of other income, other expenses, impairment loss allowances, administrative expenses, and finance costs[115](index=115&type=chunk) [Geographical Information and Major Customers](index=10&type=section&id=%E5%9C%B0%E7%90%86%E8%B3%87%E6%96%99%E5%8F%8A%E4%B8%BB%E8%A6%81%E5%AE%A2%E6%88%B6) All of the Group's revenue and nearly all non-current assets are derived from China, with a highly diversified patient base where no single patient category contributes over 10% of total revenue - All revenue and almost all non-current assets are derived from China[13](index=13&type=chunk) - The patient portfolio is highly diversified, with no single patient category contributing more than **10% of total revenue**[13](index=13&type=chunk) [Other Income](index=10&type=section&id=%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5) Other income for FY2022 was RMB 54,858 thousand, a 21.5% year-on-year increase, primarily driven by investment income from financial assets at fair value through profit or loss, clinical trial revenue, and COVID-19 related rent concessions, partially offset by reduced government subsidies 2022 Other Income Composition | Income Source | 2022 (RMB thousand) | 2021 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Investment income from financial assets at fair value through profit or loss | 13,285 | 8,612 | +54.3% | | Clinical trial and related income | 10,853 | 4,842 | +124.1% | | COVID-19 related rent concessions | 7,396 | – | N/A | | Government subsidies | 5,730 | 11,186 | -48.8% | | Bank and other interest income | 3,226 | 1,869 | +72.6% | | Others | 10,517 | 8,247 | +27.5% | | **Total** | **54,858** | **45,149** | **+21.5%** | - Government subsidies decreased primarily due to reduced subsidies for vaccination and COVID-19 related activities[287](index=287&type=chunk) - Investment income increased mainly due to an increase in average structured deposits[287](index=287&type=chunk) [Net Other Expenses, Gains and Losses](index=11&type=section&id=%E5%85%B6%E4%BB%96%E9%96%8B%E6%94%AF%E3%80%81%E6%94%B6%E7%9B%8A%E5%8F%8A%E8%99%A7%E6%90%8D%E6%B7%A8%E9%A1%8D) In FY2022, the Group recorded net other expenses, gains and losses of RMB 677 thousand, an improvement from a net loss of RMB 5,210 thousand in 2021, primarily due to net exchange gains from HKD-denominated financial assets, despite increased fair value losses on financial assets at fair value through profit or loss 2022 Net Other Expenses, Gains and Losses | Item | 2022 (RMB thousand) | 2021 (RMB thousand) | | :--- | :--- | :--- | | Net exchange gains/(losses) | 5,907 | (2,290) | | Fair value losses on financial assets at fair value through profit or loss | (4,436) | (2,328) | | Loss on disposal of property, plant and equipment | (579) | (451) | | Donations | (215) | (141) | | **Net** | **677** | **(5,210)** | - Net exchange gains were **RMB 5,907 thousand**, compared to a loss of **RMB 2,290 thousand** in 2021, representing a significant improvement[118](index=118&type=chunk)[164](index=164&type=chunk) [Profit Before Tax](index=11&type=section&id=%E9%99%A4%E7%A8%85%E5%89%8D%E6%BA%A2%E5%88%A9) Profit before tax for FY2022 was RMB 69,309 thousand, a significant decrease from RMB 129,209 thousand in 2021, with key expense items such as total staff costs, cost of inventories, and depreciation disclosed 2022 Profit Before Tax Related Expenses | Item | 2022 (RMB thousand) | 2021 (RMB thousand) | | :--- | :--- | :--- | | Total staff costs | 624,332 | 568,633 | | Cost of inventories recognized as expense | 814,510 | 875,486 | | Depreciation of property, plant and equipment | 113,007 | 113,603 | | Depreciation of right-of-use assets | 36,434 | 35,840 | | Research and development expenses | 1,096 | 835 | | Auditor's remuneration | 1,650 | 1,696 | [Income Tax Expense](index=12&type=section&id=%E6%89%80%E5%BE%97%E7%A8%85%E9%96%8B%E6%94%AF) Income tax expense for FY2022 was RMB 41,573 thousand, a 33.3% year-on-year decrease, with a 25% corporate income tax rate for mainland Chinese subsidiaries and preferential rates for "small and micro enterprises," while the effective tax rate increased to 60.0% due to unrecognised tax effects of Kangxin Hospital's losses 2022 Income Tax Expense | Tax Type | 2022 (RMB thousand) | 2021 (RMB thousand) | | :--- | :--- | :--- | | China corporate income tax | 42,346 | 61,103 | | Hong Kong profits tax | 78 | 72 | | Deferred tax (credit)/expense | (851) | 1,262 | | **Total** | **41,573** | **62,284** | - Mainland Chinese subsidiaries are subject to a **25% corporate income tax rate**, with some "small and micro enterprises" enjoying preferential rates of **2.5% to 10%**[120](index=120&type=chunk)[173](index=173&type=chunk) - The effective tax rate increased from **48.2% in 2021 to 60.0% in 2022**, primarily due to the unrecognised tax impact of losses incurred by Kangxin Hospital[173](index=173&type=chunk) [Dividends](index=12&type=section&id=%E8%82%A1%E6%81%AF) No dividends were paid or proposed by the Company for the year ended December 31, 2022 - No dividends were paid or proposed for the year 2022[130](index=130&type=chunk) [Earnings Per Share](index=13&type=section&id=%E6%AF%8F%E8%82%A1%E7%9B%88%E5%88%A9) Basic earnings per share for FY2022 decreased to RMB 18.3 cents from RMB 28.2 cents in 2021, with diluted earnings per share being the same due to the absence of potentially dilutive ordinary shares 2022 Earnings Per Share | Indicator | 2022 (RMB cents) | 2021 (RMB cents) | | :--- | :--- | :--- | | Basic earnings per share | 18.3 | 28.2 | | Diluted earnings per share | 18.3 | 28.2 | - Basic earnings per share are calculated based on profit attributable to owners of the Company and the weighted average of **334,394,000 ordinary shares** in issue[9](index=9&type=chunk)[10](index=10&type=chunk) - Diluted earnings per share are the same as basic earnings per share due to the absence of potentially dilutive ordinary shares[19](index=19&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) [Financial Assets at Fair Value Through Profit or Loss](index=13&type=section&id=%E6%8C%89%E5%85%AC%E5%B9%B3%E5%80%BC%E8%A8%88%E5%85%A5%E6%90%8D%E7%9B%8A%E7%9A%84%E9%87%91%E8%9E%8D%E8%B3%87%E7%94%A2) As of December 31, 2022, the Group's total financial assets at fair value through profit or loss amounted to RMB 572,449 thousand, primarily comprising structured bank deposits, portfolio funds, and fund investments, with structured bank deposits classified as current assets and the others as non-current assets 2022 Financial Assets at Fair Value Through Profit or Loss | Item | 2022 (RMB thousand) | 2021 (RMB thousand) | | :--- | :--- | :--- | | Portfolio funds | 64,449 | 63,326 | | Fund investments | 18,000 | 10,000 | | Structured bank deposits | 490,000 | 530,000 | | **Total** | **572,449** | **603,326** | | **Classification:** | | | | Current assets | 490,000 | 530,000 | | Non-current assets | 82,449 | 73,326 | - Portfolio funds primarily invest in Hong Kong-listed shares, managed by discretionary fund managers, and are intended for long-term investment[20](index=20&type=chunk)[293](index=293&type=chunk) - Fund investments primarily target unlisted companies in medical services, biotechnology, medical devices, and medical informatics[21](index=21&type=chunk)[293](index=293&type=chunk) - Structured bank deposits have maturities of less than six months, with principal generally renewed upon maturity[12](index=12&type=chunk)[293](index=293&type=chunk) [Management Discussion and Analysis](index=18&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A8%8E%E8%AB%96%E5%8F%8A%E5%88%86%E6%9E%90) This section reviews the Group's business performance in 2022, discusses the impact of COVID-19, outlines the outlook and strategies for 2023, and details performance across hospital, rehabilitation, and elderly care services [Business Review and Outlook](index=18&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7%E5%92%8C%E5%B1%95%E6%9C%9B) 2022 was a challenging year with recurring COVID-19 outbreaks and strict lockdown measures disrupting operations, leading to a decline in overall revenue and profit, but with policy relaxation at year-end, 2023 is expected to see an economic rebound, focusing on post-pandemic recovery and facility upgrades - In 2022, business development and operations faced challenges due to the COVID-19 pandemic and lockdown measures, resulting in a **6.4% reduction** in revenue for the hospital services department[34](index=34&type=chunk)[36](index=36&type=chunk) - With the easing of COVID-19 control measures at the end of 2022, the economy is expected to rebound in 2023, and the Group will focus on implementing post-pandemic recovery plans and increasing investment in hospital and elderly care facility upgrades[35](index=35&type=chunk)[42](index=42&type=chunk)[55](index=55&type=chunk) 2022 Group Overall Financial Performance | Indicator | 2022 (RMB million) | 2021 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Consolidated Revenue | 1,845.6 | 1,953.9 | -5.5% | | Adjusted EBITDA | 215.8 | 308.1 | -30.0% | | Consolidated Profit | 27.7 | 66.9 | -58.6% | [2022 Business Overview and COVID-19 Impact](index=18&type=section&id=2022%E5%B9%B4%E6%A5%AD%E5%8B%99%E6%A6%82%E8%A7%88%E5%8F%8ACovid-19%E5%BD%B1%E9%9F%BF) The persistent COVID-19 pandemic and stringent control measures in 2022 led to hospital operational disruptions, reduced patient willingness to seek medical attention, and significantly impacted demand for medical services, with year-end policy relaxation potentially still affecting supply chains and business operations in the short term - The COVID-19 pandemic and strict lockdown measures in 2022 led to hospital operational disruptions, patients avoiding medical institutions, and an adverse impact on demand for medical services[34](index=34&type=chunk) - China eased COVID-19 control measures at the end of 2022, but short-term impacts on supply chains and business operations may persist[35](index=35&type=chunk)[42](index=42&type=chunk) - The government required all first and second-tier hospitals to establish fever clinics and promote online medical services to reduce hospital crowding[74](index=74&type=chunk) [2023 Outlook and Strategies](index=20&type=section&id=2023%E5%B9%B4%E5%B1%95%E6%9C%9B%E5%8F%8A%E7%AD%96%E7%95%A5) With the easing of COVID-19 control measures at the end of 2022, the domestic economy is expected to rebound in 2023, driving business operations, and the Group will prioritize the operation and execution of its post-pandemic recovery plan, increasing investment in upgrading hospital and elderly care facilities - China's economy is expected to rebound in 2023 due to the lifting of pandemic restrictions, driving the Group's business operations[55](index=55&type=chunk) - The Group's 2023 strategic focus is on the operation and execution of its post-pandemic recovery plan, along with increasing investment in upgrading hospital and elderly care facilities[55](index=55&type=chunk) [Hospital Services](index=21&type=section&id=%E9%86%AB%E9%99%A2%E6%9C%8D%E5%8B%99) In 2022, most key performance indicators for the Group's hospital services department, including inpatient visits, average expenditure per inpatient, bed utilization rate, and total surgical procedures, recorded declines, while average expenditure per outpatient and physical examination visits saw slight increases - In 2022, key performance indicators for the hospital services department generally declined, including inpatient visits, bed utilization rate, and total surgical procedures[46](index=46&type=chunk) 2022 Hospital Services Key Operating Data | Indicator | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Inpatient visits | 63,053 | 67,546 | -6.7% | | Average length of stay (days) | 6.6 | 7.1 | -0.5 | | Average expenditure per visit (RMB) (inpatient) | 14,703.3 | 15,983.7 | -8.0% | | Outpatient visits | 1,456,072 | 1,487,674 | -2.1% | | Average expenditure per visit (RMB) (outpatient) | 440.0 | 414.6 | +6.1% | | Physical examination visits | 174,143 | 170,702 | +2.0% | | Average expenditure per visit (RMB) (physical examination) | 882.5 | 838.1 | +5.3% | | Total surgical procedures | 42,346 | 46,647 | -9.2% | [Revenue Contribution by Medical Specialties](index=28&type=section&id=%E9%86%AB%E5%AD%B8%E5%B0%88%E7%A7%91%E6%94%B6%E7%9B%8A%E8%B2%A2%E7%8D%BB) In 2022, Obstetrics and Gynecology, Cardiology, Internal Medicine, General Surgery, and Neurology remained the top five specialties contributing to hospital service revenue, accounting for approximately 50.4% of total revenue, with significant declines in Obstetrics and Gynecology, Orthopedics, Emergency, Medical Aesthetics, and Pediatrics, while Cardiology and Nephrology saw slight growth 2022 Hospital Services Revenue Contribution by Medical Specialties | Medical Specialty | 2022 (RMB thousand) | 2021 (RMB thousand) | 2022 % of Hospital Revenue | | :--- | :--- | :--- | :--- | | Obstetrics and Gynecology related departments | 230,402 | 264,436 | 13.4% | | Cardiology related departments | 206,477 | 204,550 | 12.0% | | Internal Medicine related departments | 193,127 | 209,894 | 11.2% | | General Surgery related departments | 120,944 | 133,923 | 7.0% | | Neurology related departments | 117,593 | 124,301 | 6.8% | | Orthopedics related departments | 87,888 | 106,851 | 5.1% | | Emergency related departments | 87,094 | 111,153 | 5.1% | | Nephrology related departments | 65,335 | 62,574 | 3.8% | | Medical Aesthetics related departments | 42,725 | 53,283 | 2.5% | | Pediatrics related departments | 35,128 | 42,581 | 2.0% | | Physical Examination Department | 153,678 | 143,068 | 8.9% | | **Total** | **1,721,462** | **1,839,475** | **100.0%** | - Obstetrics and Gynecology, Cardiology, Internal Medicine, General Surgery, and Neurology are the top five specialties, accounting for approximately **50.4% of total hospital service revenue**[241](index=241&type=chunk) - Revenue from Obstetrics and Gynecology, Orthopedics, Emergency, Medical Aesthetics, and Pediatrics significantly decreased, primarily due to reduced patient visits during the temporary closure of Kanghua Hospital[134](index=134&type=chunk) [Kanghua Hospital](index=22&type=section&id=%E5%BA%B7%E8%8F%AF%E9%86%AB%E9%99%A2) In 2022, Kanghua Hospital's revenue decreased by 8.0% year-on-year to RMB 1,403.9 million, with declines in both outpatient/emergency visits and discharge numbers, while the hospital continued to enhance management efficiency, update KPI assessment systems, and initiate its Grade III Class A re-evaluation, planning to deepen its "Three-Precision Management" strategy and advance smart hospital construction and internet medical services in 2023 2022 Kanghua Hospital Operating Data | Indicator | 2022 (RMB million) | 2021 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 1,403.9 | 1,526.0 | -8.0% | | Outpatient and emergency visits | 1,031,835 | 1,091,737 | -5.5% | | Discharges | 50,575 | 53,115 | -4.8% | - Kanghua Hospital continues to enhance management efficiency, update its KPI assessment system, and has initiated its Grade III Class A re-evaluation, aiming to successfully pass by the end of 2023[49](index=49&type=chunk) - In 2023, Kanghua Hospital will focus on refined management, precise treatment, and sincere service, advancing smart hospital construction and internet medical services[51](index=51&type=chunk)[59](index=59&type=chunk) - The hospital strengthened standardized management of medical technology applications, completed filing for restricted technologies, and revised the admission system for new technologies and projects[60](index=60&type=chunk) [Renkang Hospital](index=24&type=section&id=%E4%BB%81%E5%BA%B7%E9%86%AB%E9%99%A2) In 2022, Renkang Hospital's revenue decreased by 4.2% year-on-year to RMB 263.9 million, with outpatient and emergency visits increasing by 5.6% but discharges declining by 18.1%, while the hospital actively pursued Grade II accreditation, strengthened medical quality control, and increased investment in informatization and facilities, planning to reinforce its long-term development vision and build "renowned hospitals, departments, and doctors" in 2023 2022 Renkang Hospital Operating Data | Indicator | 2022 (RMB million) | 2021 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 263.9 | 275.6 | -4.2% | | Outpatient and emergency visits | 394,190 | 373,384 | +5.6% | | Discharges | 10,442 | 12,746 | -18.1% | - Renkang Hospital is actively pursuing Grade II accreditation, aiming to pass the evaluation by the end of 2023[68](index=68&type=chunk) - The hospital increased investment in informatization and facility construction, with a **60% increase** in informatization system investment in 2022 compared to 2021[71](index=71&type=chunk) [Kangxin Hospital](index=25&type=section&id=%E5%BA%B7%E5%BF%83%E9%86%AB%E9%99%A2) In 2022, Kangxin Hospital significantly improved its operating performance, with revenue increasing by 41.8% year-on-year to RMB 53.6 million, growth in both outpatient/emergency visits and discharges, and a substantial increase in interventional surgeries, while the hospital entered a management arrangement with Yinshan Capital to introduce German medical group Artemed's expertise and strengthened medical quality and collaborations 2022 Kangxin Hospital Operating Data | Indicator | 2022 (RMB million) | 2021 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 53.6 | 37.8 | +41.8% | | Outpatient and emergency visits | 30,047 | 22,553 | +33.2% | | Discharges | 2,036 | 1,685 | +20.8% | | Interventional surgeries | 694 | N/A | +56.3% | - Kangxin Hospital entered a management arrangement with Yinshan Capital to introduce the management experience and international medical expert team in cardiology from German medical group Artemed, aiming to improve and optimize operations[64](index=64&type=chunk) - The hospital strengthened medical quality and safety management, established a hospital-level medical quality control committee, and actively engaged in cooperation and exchanges, organizing academic forums[65](index=65&type=chunk)[66](index=66&type=chunk) - Kangxin Hospital continuously develops new technologies and projects, applying for three new technologies in 2022 and pioneering transesophageal echocardiography combined with right heart acoustic angiography in Chongqing[75](index=75&type=chunk) [VIP Special Services](index=29&type=section&id=VIP%E7%89%B9%E6%AE%8A%E6%9C%8D%E5%8B%99) In 2022, the Group's total revenue from special services decreased by 10.1% year-on-year to RMB 156.1 million, accounting for approximately 8.5% of total revenue, with VIP medical services, reproductive medicine, laser treatment, and plastic surgery being the main offerings, and VIP medical services being most affected by the pandemic, experiencing a 13.5% revenue decline - Special services are high-end medical services beyond basic healthcare, primarily targeting high-income patients[141](index=141&type=chunk) 2022 Special Services Revenue Contribution | Service Type | 2022 (RMB million) | 2021 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | VIP medical services | 86.9 | 100.5 | -13.5% | | Reproductive medicine | 45.1 | 46.9 | -3.8% | | Laser treatment | 19.8 | 21.7 | -8.4% | | Plastic and cosmetic surgery | 4.2 | 4.6 | -9.4% | | **Total Revenue** | **156.1** | **173.6** | **-10.1%** | - VIP medical services were adversely affected by the pandemic, with reduced VIP inpatient and outpatient visits leading to a **13.5% decline** in revenue[243](index=243&type=chunk) [Rehabilitation and Other Medical Services](index=30&type=section&id=%E5%BA%B7%E5%BE%A9%E5%8F%8A%E5%85%B6%E4%BB%96%E9%86%AB%E7%99%82%E6%9C%8D%E5%8B%99) In 2022, the Group's rehabilitation and other related medical services segment revenue increased by 10.1% year-on-year to RMB 111.7 million, with rehabilitation hospital and other medical services revenue growing by 30.0% due to the maturing business and increased patient visits at Hefei Kanghua Rehabilitation Hospital, while rehabilitation center services saw a slight 3.4% decrease due to pandemic impacts, and Anhui Hualin Group continued to expand its rehabilitation development and received multiple certifications and awards 2022 Rehabilitation and Other Medical Services Revenue | Service Type | 2022 (RMB million) | 2021 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Rehabilitation hospital and other medical services | 53.1 | 40.8 | +30.0% | | Rehabilitation center services and other services | 58.6 | 60.7 | -3.4% | | **Total Revenue** | **111.7** | **101.5** | **+10.1%** | - Revenue growth in rehabilitation hospital and other medical services is primarily attributed to the maturing business and significant increase in patient visits at Hefei Kanghua Rehabilitation Hospital[245](index=245&type=chunk)[271](index=271&type=chunk) - The decrease in rehabilitation center service revenue is mainly due to business interruptions and suspensions at children's rehabilitation centers caused by pandemic control measures[246](index=246&type=chunk)[271](index=271&type=chunk) - Anhui Hualin Group continues to strengthen standard construction, improve its management system, refine its smart rehabilitation system, and plans to develop new projects to maintain technological leadership[250](index=250&type=chunk) [Elderly Care Services](index=32&type=section&id=%E8%80%81%E5%B9%B4%E9%86%AB%E7%99%82%E6%9C%8D%E5%8B%99) In 2022, Renkang Nursing Home's elderly care services revenue increased by 1.8% year-on-year to RMB 12.5 million, with an average annual bed utilization rate of 86.1%, as the nursing home's operations matured, management capabilities strengthened, and social security regulations were strictly enforced, with future plans to actively prepare for service quality evaluations and apply for Guangdong Province Elderly-Friendly Medical Institution accreditation 2022 Elderly Care Services Operating Data | Indicator | 2022 (RMB million) | 2021 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 12.5 | 12.2 | +1.8% | | Number of beds | 108 | 108 | 0% | | Average daily elderly patients | 93 | 93 | 0% | | Average annual bed utilization rate | 86.1% | 86.2% | -0.1% | - Renkang Nursing Home's business operations are maturing, having reached maximum operating capacity, with relatively stable revenue levels[161](index=161&type=chunk) - The nursing home strengthened its management capabilities, strictly implemented Dongguan City's social insurance system regulations, and provided comprehensive functional medical assessments and professional nursing for elderly residents[136](index=136&type=chunk)[144](index=144&type=chunk) - Renkang Nursing Home will actively prepare for and undergo service quality evaluations, and apply for the Guangdong Province Elderly-Friendly Medical Institution accreditation[260](index=260&type=chunk) [Pharmaceutical Sales](index=33&type=section&id=%E9%8A%B7%E5%94%AE%E8%97%A5%E5%93%81) In FY2022, the Group's pharmaceutical sales segment recorded no revenue, as this business was scaled down in 2021 and gradually integrated with the hospital services segment - In 2022, the pharmaceutical sales segment recorded no revenue, as this business was scaled down in 2021 and gradually integrated with the hospital services segment[138](index=138&type=chunk)[150](index=150&type=chunk)[261](index=261&type=chunk) [Industry Outlook and Strategies](index=33&type=section&id=%E8%A1%8C%E6%A5%AD%E5%89%8D%E6%99%AF%E5%8F%8A%E7%AD%96%E7%95%A5) 2023 marks a pivotal year for China's healthcare market transition to a "post-pandemic" era, with industry reshaping and upgrading driven by an aging population, increased health awareness, digitalization of medical services, rapid infrastructure development, payment reforms, and the growth of traditional Chinese medicine, while the Group aims to enhance smart hospital construction, promote internet medical services, and optimize operational efficiency - 2023 is a critical year for the transformation of China's medical market into a "post-pandemic" era, with the pharmaceutical and medical industries undergoing reshaping, transformation, and upgrading[254](index=254&type=chunk) - An aging population and increased health management awareness will drive medical demand growth, with the elderly population proportion expected to reach approximately **25% by 2030**[263](index=263&type=chunk) - The trend of medical service digitalization is evident, with over **70% of Chinese patients** accepting digital medical services provided by tech giants and approximately **50% willing to pay extra** for the convenience[145](index=145&type=chunk)[264](index=264&type=chunk) - Medical infrastructure is rapidly developing, with policy support leading to a significant increase in tertiary hospital expansion and primary hospital quality improvement projects[273](index=273&type=chunk) - Medical payment reform continues to deepen, with DRG/DIP payment reforms set to cover all medical insurance統籌 regions and disease types to alleviate pressure on medical insurance funds[265](index=265&type=chunk) - The Traditional Chinese Medicine industry is experiencing rapid growth, with policy support driving its sustained and rapid development[266](index=266&type=chunk) [Aging Population and Health Management Awareness](index=34&type=section&id=%E4%BA%BA%E5%8F%A3%E8%80%81%E9%BD%A1%E5%8C%96%E8%88%87%E5%81%A5%E5%BA%B7%E7%AE%A1%E7%90%86%E6%84%8F%E8%AD%98) China's population is rapidly aging, with a steady increase in the number of elderly aged 60 and above, projected to reach approximately 25% by 2030, driving immense medical demand among this high-incidence disease group, where diagnosis and treatment rates still need improvement - The number of elderly people aged 60 and above in China is steadily increasing, with the proportion of the elderly population expected to reach approximately **25% by 2030**[263](index=263&type=chunk) - Middle-aged and elderly individuals are a high-incidence group for diseases, driving immense medical demand, and the diagnosis and treatment rates for various diseases need improvement[263](index=263&type=chunk) [Digitalization of Medical Services](index=34&type=section&id=%E9%86%AB%E7%99%82%E6%9C%8D%E5%8B%99%E6%95%B8%E5%AD%97%E5%8C%96) The COVID-19 pandemic accelerated the shift from offline to online medical services, with digital touchpoints constantly available for appointments, consultations, and medication dispensing, leading over 70% of Chinese patients to accept digital medical services and approximately 50% willing to pay extra for them - The pandemic has driven the digitalization of medical services, enabling appointment booking, consultations, and medication dispensing through digital means[145](index=145&type=chunk) - Over **70% of Chinese patients** accept digital medical services, and approximately **50% are willing to pay extra** for the convenience brought by digitalization[145](index=145&type=chunk) [Rapid Development of Medical Infrastructure](index=35&type=section&id=%E9%86%AB%E7%99%82%E5%9F%BA%E7%A4%8E%E8%A8%AD%E6%96%BD%E5%BF%AB%E9%80%9F%E7%99%BC%E5%B1%95) Since the outbreak of COVID-19, China's new medical infrastructure has entered a rapid development phase to address structural deficiencies in medical resources, with policy support significantly increasing tertiary hospital expansion and primary hospital quality improvement projects, and fiscal interest-subsidized loans expected to provide RMB 200 billion in financial support, accelerating new medical infrastructure development - Since the pandemic, China's new medical infrastructure has entered a rapid development phase to address structural deficiencies in medical resources[273](index=273&type=chunk) - With policy support, tertiary hospital expansion and primary hospital quality improvement projects have significantly increased, with fiscal interest-subsidized loans expected to provide **RMB 200 billion** in financial support[273](index=273&type=chunk) [Medical Payment Reform](index=35&type=section&id=%E9%86%AB%E7%99%82%E6%94%AF%E4%BB%98%E6%94%B9%E9%9D%A9) Medical payments face pressure, with the DRG/DIP payment reform three-year action plan aiming to cover all national medical insurance pooling regions by the end of 2024 and achieve full coverage of medical insurance funds and disease types by the end of 2025 to effectively alleviate pressure on medical insurance funds, while the commercial health insurance market, though lagging, holds significant potential - The DRG/DIP payment reform plan aims to cover all national medical insurance pooling regions by the end of 2024 and achieve full coverage of medical insurance funds and disease types by the end of 2025, to alleviate pressure on medical insurance funds[265](index=265&type=chunk) - China's commercial medical insurance development lags, but the market has immense growth potential[153](index=153&type=chunk)[265](index=265&type=chunk) [Rapid Development of Traditional Chinese Medicine Industry](index=36&type=section&id=%E4%B8%AD%E9%86%AB%E8%97%A5%E7%94%A2%E6%A5%AD%E5%BF%AB%E9%80%9F%E7%99%BC%E5%B1%95) The consumer health market has a solid demand base, and the Traditional Chinese Medicine industry is experiencing rapid growth with policy support, including the expansion of sales channels for Traditional Chinese Medicine granule preparations and their inclusion in the standard Class B medical insurance catalog - The consumer health market has solid demand, and the Traditional Chinese Medicine industry is experiencing rapid growth with policy support[266](index=266&type=chunk) - The sales scope of Traditional Chinese Medicine granule preparations has expanded to all medical institutions with Traditional Chinese Medicine practice qualifications and is included in the standard Class B medical insurance catalog[266](index=266&type=chunk) [Our Strategies](index=36&type=section&id=%E6%88%91%E5%80%91%E7%9A%84%E7%AD%96%E7%95%A5) The Group will enhance smart hospital construction, promote the improvement and expansion of internet medical services to enhance patient satisfaction, and in 2023, will continue to optimize medical services, improve operational efficiency, focus on core businesses, and strengthen management standards and stakeholder relationships - The Group will improve smart hospital construction, promote the enhancement and expansion of internet medical services, and increase patient satisfaction[267](index=267&type=chunk) - In 2023, the Group will optimize medical services and operational efficiency, focus on core businesses, raise management standards, and strengthen relationships with stakeholders[267](index=267&type=chunk) [Major Investments and Future Plans for Capital Assets](index=37&type=section&id=%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87%E5%8F%8A%E8%B3%87%E6%9C%AC%E8%B3%87%E7%94%A2%E4%B9%8B%E6%9C%AA%E4%BE%86%E8%A8%88%E5%8A%83) The Group is developing Kanghua • Qingxi Branch, a new elderly healthcare complex in Qingxi Town, Dongguan City, with Phase I construction of the main structure and acceptance expected by April 2024, and operation by March 2025 - Kanghua • Qingxi Branch is a new elderly healthcare complex development project, planned with **500 inpatient beds** and approximately **800 nursing and rehabilitation beds**[147](index=147&type=chunk)[269](index=269&type=chunk) - Phase I construction of the main structure and acceptance is expected by **April 2024**, with operation commencing by **March 2025**[147](index=147&type=chunk) [Financial Review](index=37&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) This section provides a detailed financial review of the Group's segment revenue, cost of revenue, gross profit, other income and expenses, tax, and overall financial position and liquidity for FY2022 [Segment Revenue](index=37&type=section&id=%E5%88%86%E9%83%A8%E6%94%B6%E7%9B%8A) In FY2022, the Group's total revenue decreased by 5.5% to RMB 1,845.6 million, with hospital services revenue declining by 6.4% due to reduced inpatient visits and lower revenue from certain departments, while rehabilitation and other medical services revenue grew by 10.1%, elderly care services revenue by 1.8%, and pharmaceutical sales recorded no revenue 2022 Segment Revenue Overview | Segment | 2022 (RMB million) | 2021 (RMB million) | Change (%) | % of Total Revenue | | :--- | :--- | :--- | :--- | :--- | | Hospital services | 1,721.5 | 1,839.5 | -6.4% | 93.3% | | Rehabilitation and other medical services | 111.7 | 101.5 | +10.1% | 6.1% | | Elderly care services | 12.5 | 12.2 | +1.8% | 0.7% | | Pharmaceutical sales | – | 0.7 | -100% | 0% | | **Total** | **1,845.6** | **1,953.9** | **-5.5%** | **100%** | - The decrease in hospital services revenue is primarily due to reduced inpatient visits, lower average expenditure, and declining revenue from certain departments at Kanghua Hospital and Renkang Hospital, partially offset by increased outpatient and physical examination revenue[270](index=270&type=chunk)[277](index=277&type=chunk) - The growth in rehabilitation and other medical services revenue is mainly attributed to a significant increase in rehabilitation patient visits at Hefei Kanghua Rehabilitation Hospital[271](index=271&type=chunk) - Elderly care services revenue showed stable growth, primarily because Renkang Nursing Home's operations are maturing and have reached maximum operating capacity[161](index=161&type=chunk) [Cost of Revenue](index=40&type=section&id=%E6%94%B6%E7%9B%8A%E6%88%90%E6%9C%AC) Total cost of revenue for FY2022 was RMB 1,584.3 million, a 1.6% year-on-year decrease, with hospital services cost of revenue decreasing by 1.6% due to lower variable costs and reduced inpatient visits, while rehabilitation and other medical services cost of revenue increased by 9.1% in line with revenue growth, and elderly care services cost of revenue increased by 4.3%, with pharmaceuticals, medical consumables, and staff costs being major components 2022 Segment Cost of Revenue | Segment | 2022 (RMB thousand) | 2021 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Hospital services | (1,482,929) | (1,507,294) | -1.6% | | Rehabilitation and other medical services | (92,952) | (85,234) | +9.1% | | Elderly care services | (8,402) | (8,058) | +4.3% | | Pharmaceutical sales | – | (610) | -100% | | **Total** | **(1,584,283)** | **(1,601,196)** | **-1.1%** | - The decrease in hospital services cost of revenue is primarily due to reduced operations at Kanghua Hospital and Renkang Hospital, corresponding to lower pharmaceutical and medical consumable costs and fewer inpatient visits[272](index=272&type=chunk) - Kangxin Hospital's cost of revenue increased, but its gross margin remained negative, as it is still in the expansion phase of its operations[272](index=272&type=chunk) - Pharmaceutical costs, medical consumable costs, and staff costs accounted for approximately **25.7%**, **25.7%**, and **34.2%** of total cost of revenue, respectively[279](index=279&type=chunk) - Total staff-related costs increased by **9.8%**, reflecting higher salary levels, overtime compensation, and increased competition for medical professionals[279](index=279&type=chunk) [Gross Profit and Gross Margin](index=41&type=section&id=%E6%AF%9B%E5%88%A9%E5%8F%8A%E6%AF%9B%E5%88%A9%E7%8E%87) Total gross profit for FY2022 was RMB 261.4 million, a 25.9% year-on-year decrease, with the overall gross margin falling to 14.2%, primarily due to lower average expenditure for inpatient medical services, fewer complex surgeries, temporary closure of Kanghua Hospital's outpatient department, and ongoing losses at Kangxin Hospital 2022 Segment Gross Profit and Gross Margin | Segment | 2022 Gross Profit (RMB thousand) | 2022 Gross Margin (%) | 2021 Gross Profit (RMB thousand) | 2021 Gross Margin (%) | | :--- | :--- | :--- | :--- | :--- | | Hospital services | 238,533 | 13.9% | 332,181 | 18.1% | | Rehabilitation and other medical services | 18,762 | 16.8% | 16,273 | 16.0% | | Elderly care services | 4,055 | 32.6% | 4,178 | 34.1% | | Pharmaceutical sales | – | 0% | 116 | 16.0% | | **Total** | **261,350** | **14.2%** | **352,748** | **18.1%** | - The overall gross margin decreased to **14.2%**, primarily due to lower average expenditure for inpatient medical services, fewer complex surgeries, the temporary closure of Kanghua Hospital's outpatient department, and ongoing losses at Kangxin Hospital[286](index=286&type=chunk) [Other Income (Financial Review)](index=41&type=section&id=%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5_%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) Other income for FY2022 was RMB 54.9 million, a 21.5% year-on-year increase, mainly driven by investment income from financial assets at fair value through profit or loss, clinical trial and related income, and COVID-19 related rent concessions, while government subsidies decreased 2022 Other Income Composition | Income Source | 2022 (RMB million) | 2021 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Investment income from financial assets at fair value through profit or loss | 13.3 | 8.6 | +54.3% | | Clinical trial and related income | 10.9 | 4.8 | +127.1% | | COVID-19 related rent concessions | 7.4 | – | N/A | | Government subsidies | 5.7 | 11.2 | -49.1% | | Bank and other interest income | 3.2 | 1.9 | +68.4% | | **Total** | **54.9** | **45.1** | **+21.5%** | - Government subsidies decreased primarily due to reduced subsidies for vaccination and COVID-19 related activities[287](index=287&type=chunk) - Investment income increased mainly due to an increase in average structured deposits, consistent with the Group's cash management policy[287](index=287&type=chunk)[288](index=288&type=chunk) [Net Other Expenses, Gains and Losses (Financial Review)](index=42&type=section&id=%E5%85%B6%E4%BB%96%E9%96%8B%E6%94%AF%E3%80%81%E6%94%B6%E7%9B%8A%E5%8F%8A%E8%99%A7%E6%90%8D%E6%B7%A8%E9%A1%8D_%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) In FY2022, the Group recorded net other expenses, gains and losses of RMB 0.7 million, an improvement from a net loss of RMB 5.2 million in 2021, primarily due to net exchange gains from HKD-denominated financial assets, offsetting fair value losses on financial assets at fair value through profit or loss 2022 Net Other Expenses, Gains and Losses | Item | 2022 (RMB million) | 2021 (RMB million) | | :--- | :--- | :--- | | Net exchange gains/(losses) | 5.9 | (2.3) | | Fair value losses on financial assets at fair value through profit or loss | (4.4) | (2.3) | | Loss on disposal of property, plant and equipment | (0.6) | (0.5) | | Donations | (0.2) | (0.1) | | **Net** | **0.7** | **(5.2)** | - Net exchange gains were **RMB 5.9 million**, compared to a loss of **RMB 2.3 million** in 2021, representing a significant improvement[164](index=164&type=chunk) [Net Impairment Loss Allowance Under Expected Credit Loss Model](index=42&type=section&id=%E9%A0%90%E6%9C%9F%E4%BF%A1%E8%B2%B8%E8%99%A7%E6%90%8D%E6%A8%A1%E5%BC%8F%E9%A0%85%E4%B8%8B%E4%B9%8B%E6%B8%9B%E5%80%BC%E8%99%A7%E6%90%8D%E6%92%A5%E5%82%99%E6%B7%A8%E9%A1%8D) In FY2022, net impairment loss allowance under the expected credit loss model increased to RMB 4.2 million from RMB 2.9 million in 2021, primarily due to increased balances and aging of trade and other receivables, and a decline in credit ratings for some corporate customers 2022 Net Impairment Loss Allowance Under Expected Credit Loss Model | Item | 2022 (RMB million) | 2021 (RMB million) | | :--- | :--- | :--- | | Net impairment loss allowance | 4.2 | 2.9 | - The increase in net allowance is primarily due to increased balances and aging of trade and other receivables, and a decline in credit ratings for some corporate customers[165](index=165&type=chunk) - The Group strengthened efforts to recover overdue debts, including legal actions and tightening credit reviews for corporate customers[165](index=165&type=chunk) [Administrative Expenses](index=43&type=section&id=%E8%A1%8C%E6%94%BF%E9%96%8B%E6%94%AF) Administrative expenses for FY2022 were RMB 228.3 million, an increase of approximately 1.4% year-on-year, primarily due to higher administrative staff-related costs, partially offset by a significant reduction in repair and maintenance expenses 2022 Administrative Expenses | Item | 2022 (RMB million) | 2021 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Administrative expenses | 228.3 | 225.2 | +1.4% | | Administrative staff-related costs | 83.7 | 74.4 | +12.5% | | Repair and maintenance expenses | 16.2 | 27.7 | -41.5% | - Administrative staff-related costs increased primarily due to higher staff salaries, bonus payments, and related employee welfare expenses[157](index=157&type=chunk) [Finance Costs](index=43&type=section&id=%E8%9E%8D%E8%B3%87%E6%88%90%E6%9C%AC) Finance costs for FY2022 were RMB 15.0 million, a 24.1% year-on-year decrease, primarily comprising interest on bank loans and lease liabilities, net of capitalized interest amounts 2022 Finance Costs | Item | 2022 (RMB million) | 2021 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Finance costs | 15.0 | 19.8 | -24.1% | | Interest on bank loans | 18.6 | 18.0 | +3.3% | | Interest on lease liabilities | 9.7 | 11.5 | -15.6% | | Less: capitalized amount | (13.3) | (9.7) | +37.1% | [Income Tax Expense (Financial Review)](index=43&type=section&id=%E6%89%80%E5%BE%97%E7%A8%85%E9%96%8B%E6%94%AF_%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) Income tax expense for FY2022 was RMB 41.6 million, a 33.3% year-on-year decrease, with the effective tax rate increasing from 48.2% in 2021 to 60.0% in 2022, primarily due to the unrecognised tax impact of Kangxin Hospital's losses 2022 Income Tax Expense | Item | 2022 (RMB million) | 2021 (RMB million) | | :--- | :--- | :--- | | Income tax expense | 41.6 | 62.3 | -33.3% | | Effective tax rate | 60.0% | 48.2% | +11.8% | - The increase in the effective tax rate is primarily due to the tax impact of unrecognised tax losses generated by Kangxin Hospital[173](index=173&type=chunk) [Profit for the Year](index=43&type=section&id=%E5%B9%B4%E5%85%A7%E6%BA%A2%E5%88%A9) In FY2022, the Group recorded a profit of RMB 27.7 million, with profit attributable to shareholders of the Company at RMB 61.0 million 2022 Profit for the Year | Item | 2022 (RMB million) | 2021 (RMB million) | | :--- | :--- | :--- | | Group profit | 27.7 | 66.9 | | Profit attributable to shareholders of the Company | 61.0 | 94.3 | [Financial Position](index=44&type=section&id=%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81) As of December 31, 2022, the Group maintained a sound financial position, with changes in property, plant and equipment, right-of-use assets, and trade and other receivables, alongside increases in trade and other payables and provisions - As of December 31, 2022, the Group recorded net current assets of **RMB 289.6 million** and a net asset position of **RMB 1,502.5 million**[140](index=140&type=chunk) [Property, Plant and Equipment, Right-of-Use Assets and Deposits Paid for Acquisition of Property, Plant and Equipment](index=44&type=section&id=%E7%89%A9%E6%A5%AD%E3%80%81%E5%BB%A0%E6%88%BF%E5%8F%8A%E8%A8%AD%E5%82%99%E3%80%81%E4%BD%BF%E7%94%A8%E6%AC%8A%E8%B3%87%E7%94%A2%E4%BB%A5%E5%8F%8A%E5%B0%B1%E6%94%B6%E8%B3%BC%E7%89%A9%E6%A5%AD%E3%80%81%E5%BB%A0%E6%88%BF%E5%8F%8A%E8%A8%AD%E5%82%99%E6%94%AF%E4%BB%98%E7%9A%84%E6%8C%89%E9%87%91) As of December 31, 2022, the Group paid deposits of RMB 58.1 million for the purchase of property, plant and equipment, primarily for Phase II medical equipment at Kangxin Hospital and construction costs for Kanghua • Qingxi Branch, with right-of-use assets amounting to RMB 319.9 million 2022 Property, Plant and Equipment Related Data | Item | 2022 (RMB million) | 2021 (RMB million) | | :--- | :--- | :--- | | Deposits paid for purchase of property, plant and equipment | 58.1 | 91.6 | | Right-of-use assets | 319.9 | 354.1 | - Deposits are primarily used for Phase II medical equipment at Kangxin Hospital and construction costs for Kanghua • Qingxi Branch, as well as purchasing new medical equipment and other new facilities[187](index=187&type=chunk) [Other Assets](index=44&type=section&id=%E5%85%B6%E4%BB%96%E8%B3%87%E7%94%A2) In May 2022, the Company entered into a management arrangement with Yinshan Capital to introduce German medical group Artemed to participate in the daily management and operation of Kangxin Hospital, having paid RMB 20.0 million in brand introduction fees, classified as other assets and amortized over the service period - The Group entered into a management arrangement with Yinshan Capital to introduce German medical group Artemed to participate in the daily management and operation of Kangxin Hospital for a period of **20 years**[176](index=176&type=chunk) - The Group paid a **RMB 20.0 million** brand introduction fee, classified as other assets and amortized over the service period[168](index=168&type=chunk)[178](index=178&type=chunk) [Financial Assets at Fair Value Through Profit or Loss (Financial Review)](index=47&type=section&id=%E6%8C%89%E5%85%AC%E5%B9%B3%E5%80%BC%E8%A8%88%E5%85%A5%E6%90%8D%E7%9B%8A%E7%9A%84%E9%87%91%E8%9E%8D%E8%B3%87%E7%94%A2_%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) As of December 31, 2022, the Group's total financial assets at fair value through profit or loss amounted to RMB 572.4 million, primarily comprising portfolio funds, fund investments, and structured short-term bank deposits, which are part of the Group's cash management activities aimed at achieving higher interest income and capital returns 2022 Financial Assets at Fair Value Through Profit or Loss | Item | 2022 (RMB million) | 2021 (RMB million) | | :--- | :--- | :--- | | Portfolio funds | 64.4 | 63.3 | | Fund investments | 18.0 | 10.0 | | Structured short-term bank deposits | 490.0 | 530.0 | | **Total** | **572.4** | **603.3** | - These investments are part of the Group's cash management activities, aiming to achieve higher interest income and capital returns without affecting normal business operations or capital expenditures[180](index=180&type=chunk)[293](index=293&type=chunk) [Trade and Other Receivables](index=45&type=section&id=%E6%87%89%E6%94%B6%E8%B3%A6%E6%AC%BE%E5%8F%8A%E5%85%B6%E4%BB%96%E6%87%89%E6%94%B6%E6%AC%BE%E9%A0%85) As of December 31, 2022, trade receivables decreased to RMB 229.6 million, with 73.2% aged within 90 days, and the average trade receivables turnover days were 45.1 days, while other receivables increased to RMB 54.0 million, mainly due to higher prepayments to suppliers and other receivables 2022 Trade and Other Receivables | Item | 2022 (RMB million) | 2021 (RMB million) | | :--- | :--- | :--- | | Trade receivables | 229.6 | 226.5 | | - % aged within 90 days | 73.2% | 86.0% | | Average trade receivables turnover days | 45.1 days | 40.3 days | | Other receivables | 54.0 | 44.0 | | - Prepayments to suppliers | 19.3 | 13.3 | - The increase in trade receivables and turnover days is primarily due to higher balances from social security funds, other government agencies, and certain corporate customers[169](index=169&type=chunk) - The Group conducts credit assessments for trade receivables and has deducted a net impairment loss allowance of **RMB 4.2 million**[169](index=169&type=chunk) [Trade and Other Payables and Provisions](index=46&type=section&id=%E6%87%89%E4%BB%98%E8%B3%A6%E6%AC%BE%E5%8F%8A%E5%85%B6%E4%BB%96%E6%87%89%E4%BB%98%E6%AC%BE%E9%A0%85%E4%BB%A5%E5%8F%8A%E6%92%A5%E5%82%99) As of December 31, 2022, trade and other payables and provisions increased to RMB 717.8 million, primarily due to higher trade payables, accrued expenses, advances from customers, and payables for property, plant and equipment acquisitions, while provisions for medical malpractice claims decreased 2022 Trade and Other Payables and Provisions | Item | 2022 (RMB million) | 2021 (RMB million) | | :--- | :--- | :--- | | Total trade and other payables and provisions | 717.8 | 633.4 | | Trade payables | 348.8 | 321.6 | | Accrued expenses | 106.2 | 98.2 | | Advances from customers | 197.1 | 147.2 | | Payables for acquisition of property, plant and equipment | 36.6 | 30.6 | | Provisions for medical malpractice claims | 1.2 | 1.9 | - The increase in trade payables is mainly due to increased procurement of materials, especially COVID-19 related materials, during the reporting period[172](index=172&type=chunk) - The increase in advances from customers is primarily due to increased temporary funds received from social security funds[172](index=172&type=chunk) - Provisions for medical malpractice claims decreased, with **RMB 2.4 million** provided during the year, **RMB 1.5 million** reversed, and **RMB 1.6 million** utilized[172](index=172&type=chunk)[26](index=26&type=chunk) [Net Current Assets](index=46&type=section&id=%E6%B5%81%E5%8B%95%E8%B3%87%E7%94%A2%E6%B7%A8%E5%80%BC) As of December 31, 2022, the Group recorded net current assets of RMB 289.6 million, a decrease from RMB 347.4 million in 2021 2022 Net Current Assets | Item | 2022 (RMB million) | 2021 (RMB million) | | :--- | :--- | :--- | | Net current assets | 289.6 | 347.4 | [Liquidity and Capital Resources](index=46&type=section&id=%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91%E5%8F%8A%E8%B3%87%E6%9C%AC%E8%B3%87%E6%BA%90) The Group maintains a strong financial position with sufficient cash and cash equivalents and stable cash flow from operating activities, managing cash through investment products and having clear capital expenditure plans, with bank loans primarily for Kangxin Hospital's Phase II medical facility development, facing exchange rate fluctuation risks but maintaining a reasonable gearing ratio - The Group maintains a strong financial position with sufficient cash and cash equivalents and stable cash flow from operating activities, adequate to meet working capital needs for the next 12 months[291](index=291&type=chunk) - The Group manages cash by investing excess cash in low-risk structured bank deposit products and investment funds to achieve higher interest income and capital returns[196](index=196&type=chunk)[293](index=293&type=chunk) [Financial Resources](index=46&type=section&id=%E8%B2%A1%E5%8B%99%E8%B3%87%E6%BA%90) As of December 31, 2022, the Group's cash and cash equivalents amounted to RMB 264.3 million, with no time deposits, and the Directors believe the Group has sufficient liquidity and financial resources to meet its working capital requirements for the next 12 months 2022 Financial Resources | Item | 2022 (RMB million) | 2021 (RMB million) | | :--- | :--- | :--- | | Cash and cash equivalents | 264.3 | 237.3 | | Time deposits | 0 | 3.0 | - The Group generates stable cash inflows from operating activities, and the Directors believe it has sufficient liquidity to meet working capital requirements for the next 12 months[291](index=291&type=chunk) [Cash Management Activities](index=47&type=section&id=%E7%8F%BE%E9%87%91%E7%AE%A1%E7%90%86%E6%B4%BB%E5%8B%95) The Group invests excess cash in low-risk structured bank deposit products and investment funds to achieve higher interest income, adhering to standards that ensure investment products have a maturity generally not exceeding one year, do not affect normal business operations or capital expenditures, are issued by reputable banks, and have low underlying investment portfolio risk, also investing in investment funds and equity investment funds for long-term returns - The Group invests excess cash in low-risk structured bank deposit products and investment funds to achieve higher interest income and capital returns[180](index=180&type=chunk)[196](index=196&type=chunk) - Investment products must meet standards including a maturity generally not exceeding one year, no impact on normal business operations or capital expenditures, issuance by reputable banks, and low underlying investment portfolio risk[180](index=180&type=chunk) - The Group's strategy is to explore new potential investment projects and capital market investments to diversify operational risks, broaden income sources, and maximize shareholder value[191](index=191&type=chunk)[196](index=196&type=chunk) [Cash Flow Analysis](index=48&type=section&id=%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E5%88%86%E6%9E%90) Net cash generated from operating activities for FY2022 was RMB 221.4 million, a 33.6% year-on-year decrease, primarily due to underperformance in adjusted EBITDA, while net cash used in investing activities was RMB 83.2 million, a 72.2% decrease, and net cash used in financing activities was RMB 110.9 million, compared to net cash generated of RMB 23.3 million in 2021 2022 Cash Flow Analysis | Item | 2022 (RMB million) | 2021 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Net cash generated from operating activities | 221.4 | 333.4 | -33.6% | | Net cash used in investing activities | (83.2) | (299.3) | -72.2% | | Net cash (used in)/generated from financing activities | (110.9) | 23.3 | N/A | | Net increase in cash and cash equivalents | 27.4 | 57.3 | -52.1% | - The decrease in net cash from operating activities is primarily attributed to the underperformance of adjusted EBITDA[188](index=188&type=chunk) - The decrease in net cash used in investing activities is mainly due to reduced purchases of property, plant and equipment, and a net decrease in financial assets at fair value through profit or loss[183](index=183&type=chunk) - Net cash from financing activities shifted from generated to used, primarily due to no new bank loans raised and increased repayment of bank loans[184](index=184&type=chunk) [Major Investments, Acquisitions and Disposals](index=49&type=section&id=%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87%E3%80%81%E6%94%B6%E8%B3%BC%E5%8F%8A%E5%87%BA%E5%94%AE) In January 2022, the Group acquired a 57.7% equity interest in Hefei Aikanghui Health Management Co., Ltd. for RMB 577,000, a company primarily providing home-based elderly rehabilitation and nursing services, with no goodwill arising from the acquisition - In January 2022, the Group acquired a **57.7% equity interest** in Hefei Aikanghui Health Management Co., Ltd. for **RMB 577,000**, a company primarily providing home-based elderly rehabilitation and nursing services[185](index=185&type=chunk) - No goodwill arose from this acquisition, resulting in a net cash outflow of **RMB 570,000**[185](index=185&type=chunk) [Use of Proceeds from Initial Public Offering](index=50&type=section&id=%E9%A6%96%E6%AC%A1%E5%85%AC%E9%96%8B%E7%99%BC%E5%94%AE%E6%89%80%E5%BE%97%E6%AC%BE%E9%A0%85%E7%94%A8%E9%80%94) The net proceeds from the Company's H-share initial public offering amounted to approximately RMB 782.6 million, with portions utilized for general working capital, expanding existing businesses, upgrading hospital facilities, and business acquisitions by December 31, 2022, leaving RMB 410.8 million unutilized, part of which was used to purchase financial products - The net proceeds from the H-share initial public offering amounted to approximately **RMB 782.6 million**[198](index=198&type=chunk) 2022 IPO Proceeds Utilization | Use | Amount Utilized (RMB million) | % of Net Proceeds | | :--- | :--- | :--- | | General working capital | 78.3 | 10.0% | | Expanding existing businesses and upgrading hospital facilities | 134.7 | 17.2% | | Business acquisitions and potential acquisitions | 158.8 | 20.3% | | **Unutilized

Financial Performance - Revenue for the six months ended June 30, 2022, was RMB 862,722,000, a decrease of 1.0% compared to RMB 871,485,000 in 2021[38]. - Gross profit decreased by 31.8% to RMB 88,523,000, resulting in a gross profit margin of 10.3%, down from 14.9% in the previous year[38]. - The company reported a loss before tax of RMB (8,872,000), compared to a profit of RMB 35,843,000 in the same period last year[38]. - The loss attributable to owners of the company for the period was RMB (21,602,000), a significant decline from a profit of RMB 14,799,000 in 2021[38]. - Adjusted EBITDA for the period was RMB 65,245,000, reflecting a decrease of 41.3% from RMB 111,097,000 in the prior year[38]. - Basic loss per share was RMB (1.2) cents, compared to earnings of RMB 9.2 cents per share in the previous year[38]. - The Group's consolidated loss for the Reporting Period amounted to RMB 21.6 million, compared to a profit of RMB 14.8 million in the same period last year, primarily due to decreased revenue and profit at Kanghua Hospital[58]. - The Group's total gross profit was RMB 88.5 million, a decrease of 31.8% compared to RMB 129.8 million for the six months ended June 30, 2021, with a gross profit margin dropping to 10.3% from 14.9%[165]. - The loss attributable to shareholders was RMB 4.2 million, compared to a profit of RMB 30.9 million in the same period of 2021, indicating a challenging financial environment[182]. Revenue Breakdown - Revenue from the hospital services segment decreased by 1.8%, while revenue from rehabilitation and other healthcare services increased by 11.7% and elderly healthcare services increased by 27.0%[46]. - Revenue from the rehabilitation and other related healthcare services segment was RMB 49.4 million, up from RMB 44.2 million in the same period last year, marking an increase of 11.7%[52]. - Revenue from the elderly healthcare services segment increased by 27.0%, attributed to the gradual maturity of the elderly care center operation since its opening in 2019[53]. - Revenue from inpatient healthcare services decreased to RMB 444.3 million, down 8.8% year-on-year, accounting for 51.5% of total revenue[158]. - Revenue from outpatient healthcare services increased to RMB 315.6 million, up 12.1% year-on-year, accounting for 36.6% of total revenue[158]. - Revenue from rehabilitation and other healthcare services rose to RMB 49.4 million, an increase of 11.7% year-on-year, representing 5.7% of total revenue[158]. - Revenue from elderly healthcare services increased to RMB 6.6 million, up 27.0% year-on-year, accounting for 0.8% of total revenue[158]. Operational Challenges - Patient visits to medical institutions decreased due to COVID-19, impacting demand for non-critical healthcare services[45]. - The overall business operations experienced interruptions due to government controls on healthcare services during the pandemic[45]. - The overall decrease in surgeries and patient visits was primarily attributed to the temporary closure of medical facilities at Kanghua Hospital during the reporting period[109]. - Kanghua Hospital faced a temporary closure of its outpatient department due to a COVID-19 case, adversely impacting revenue during the reporting period[67]. Strategic Focus - The company is focusing on expanding its service offerings in various medical disciplines, including orthopaedics and nephrology[15]. - Future strategies may include market expansion and potential mergers or acquisitions to enhance service capabilities[15]. - The company is investing in new technologies and product development to improve operational efficiency and patient care[15]. - Management remains cautious about market conditions and is adjusting its performance guidance accordingly for the upcoming periods[15]. Cost Management - Direct staff costs increased by 16.3% compared to the prior period, reflecting rising salary levels and competition for medical professionals[160]. - Administrative expenses increased by approximately 11.5% to RMB 115.3 million from RMB 103.4 million, primarily due to higher administrative staff costs and general expenditures[172]. - Finance costs decreased by 16.3% to RMB 8.6 million from RMB 10.2 million, with bank loan interest rising to RMB 9.6 million from RMB 8.7 million[173]. Investment and Assets - The Group's capital expenditure on property, plant, and equipment was RMB 48.9 million, an increase from RMB 32.7 million in the same period of 2021, aimed at upgrading hospital service capacity[180]. - The Group's investments classified as financial assets at fair value through profit or loss totaled RMB 701.8 million as of June 30, 2022, up from RMB 603.3 million as of December 31, 2021[195]. - The group established a partnership for a fund focused on medical services, biotechnology, medical devices, and medical informatics, with an initial term of seven years[197]. Digital Transformation - The COVID-19 pandemic has accelerated the digital transformation of the healthcare industry, increasing patient acceptance of digital healthcare services[140]. - The Chinese government is promoting digital development in the healthcare industry, including internet hospital standards and online payment for social medical insurance[139].

Financial Performance - Revenue for the year ended December 31, 2021, was RMB 1,953,944,000, representing a year-on-year increase of 12.0% from RMB 1,745,023,000 in 2020[7] - Gross profit for 2021 was RMB 352,748,000, with a gross profit margin of 18.1%, up from 15.1% in 2020, reflecting a 34.0% increase in gross profit[7] - Profit for the year attributable to owners of the Company was RMB 66,925,000, compared to a loss of RMB 50,056,000 in 2020, marking a significant turnaround[7] - Adjusted EBITDA for 2021 was RMB 308,113,000, a 56.8% increase from RMB 196,493,000 in 2020[7] - Total revenue for the Group in 2021 was RMB 1,953.9 million, representing a year-on-year increase of 12.0%[53] - The Group's consolidated profit for the year ended 31 December 2021 amounted to RMB 66.9 million, a turnaround from a loss of RMB 50.1 million in 2020[52] - Adjusted EBITDA increased by 56.8% to RMB 308.1 million, indicating solid profitability in core operations[56] - The overall operating margin improved from 15.1% in 2020 to 18.1% in the reporting period[54] Patient Visits and Services - The number of inpatient visits in 2021 was 1,487,700, an increase from 1,358,500 in 2020[12] - Outpatient visits for 2021 totaled 67,500, compared to 56,600 in 2020[12] - Total inpatient visits increased to 67,546, a year-on-year increase of 19.4%, while outpatient visits rose to 1,487,674, up 9.5% year-on-year[49] - Revenue from hospital services amounted to RMB1,839.5 million, reflecting a year-on-year increase of 13.5% due to an increase in patient visits[49] - Revenue from elderly healthcare services at Renkang Elderly Care Centre amounted to RMB12.2 million, representing a year-on-year increase of 84.8%[51] - The increase in elderly healthcare revenue was driven by maturing operations and rising demand for services, leading to higher patient intake[51] Asset and Liability Management - Total assets increased by 10.2% to RMB 2,704,602,000, while total liabilities rose by 17.6% to RMB 1,230,175,000[7] - The Company reported a net gearing ratio of 21.1%, up from 18.3% in 2020, indicating a slight increase in leverage[7] Strategic Initiatives and Future Plans - The Company plans to continue expanding its market presence and investing in new technologies to enhance service delivery and patient care[7] - Future plans include implementing a high degree of information-based integration in various management areas, enhancing decision-making capabilities[36] - The strategic theme for the Group is "Being Open to New Opportunities and Creating a New Pathway," aimed at improving medical care quality and competitiveness[21] - The Group plans to optimize medical services and improve operational efficiency in 2022[64] - The Group will continue to explore merger and acquisition opportunities in the domestic market[64] COVID-19 Response and Impact - The Group administered over 850,000 doses of COVID-19 vaccine, receiving high praise from the government and society for its efforts[29] - The impact of the COVID-19 pandemic is expected to persist, with ongoing operational challenges for healthcare service providers[58] - The Group aims to accelerate the online transformation of the healthcare industry and promote breakthroughs in the consumer medical segment[64] - The COVID-19 pandemic has led to an upsurge in online medical treatments, providing patients with more options[174] Hospital Recognition and Achievements - Kanghua Hospital was awarded as a key clinical specialty in Dongguan in 2021 and recognized as one of the top 100 private hospitals in China[30] - The hospital's teaching ability and academic research level significantly improved, with 19 projects approved by the Dongguan social science and technology development program in 2021[30] - Kanghua Hospital was awarded multiple recognitions, including being listed among the top 100 private hospitals and the top 300 prefecture-level city hospitals in China[94] Rehabilitation and Specialized Services - Revenue from rehabilitation and other healthcare services was RMB101.5 million, a year-on-year increase of 1.1%, with rehabilitation hospital services declining by 36.4% to RMB40.8 million[50] - Revenue from rehabilitation centres and other healthcare services, particularly children rehabilitation operations, increased by 67.7% to RMB60.7 million[50] - The hospital aims to enhance the functions of its rehabilitation and hypertension centers to manage chronic diseases effectively[122] Digital Transformation and Healthcare Innovation - The hospital's digitalization efforts included integrating online appointment registration, consultations, and payment systems to create a seamless medical service experience[99] - The Group has focused on upgrading hospitals and elderly healthcare facilities as part of its strategy moving forward[76] - The Group is focusing on developing internal medical businesses such as atrial fibrillation and supraventricular tachycardia to enhance technical capabilities[122] Market Trends and Industry Outlook - The healthcare industry is expected to experience transitional pains but continues to present development opportunities due to aging population and policy support[165] - The consumer healthcare market is valued at RMB 13 trillion, providing numerous opportunities for business development[184] - The demand for consumer healthcare is expected to grow as proactive health awareness increases, transitioning from a hospital-centered to a patient-centered approach in 2022[184]

Financial Performance - Revenue for the six months ended June 30, 2021, increased by 14.5% to RMB 871,485,000 compared to RMB 760,987,000 in 2020[7] - Gross profit rose by 77.4% to RMB 129,845,000, with a gross profit margin of 14.9%, up from 9.6% in 2020[7] - Profit before taxation improved by 128.8% to RMB 35,843,000, compared to a loss of RMB 124,446,000 in the previous year[7] - The company reported a profit for the period of RMB 14,799,000, a significant turnaround from a loss of RMB 126,219,000 in 2020, representing a 111.7% increase[7] - Adjusted EBITDA surged by 283.9% to RMB 111,097,000, compared to RMB 28,936,000 in the same period last year[7] - Basic earnings per share increased by 128.9% to 9.2 RMB cents, recovering from a loss of 31.8 RMB cents in 2020[7] Market Recovery - The healthcare market in the PRC, particularly in Guangdong Province, showed signs of stabilization and recovery due to effective pandemic control measures and government support[17] - The number of outpatient visits increased to 698,500 in 2021 from 566,600 in 2020, reflecting a recovery trend[12] - The company is focusing on expanding its healthcare services and enhancing operational efficiency in response to market recovery[17] - Future strategies include continued investment in healthcare infrastructure and potential new service offerings to meet growing demand[17] Hospital Operations - Revenue from Kanghua Hospital and Renkang Hospital increased by 9.7% and 45.8%, respectively, while Kangxin Hospital experienced a mild decline of 1.7%[20] - Total inpatient visits increased to 31,308, representing a 20.3% increase from 26,030 in the first half of 2020[27] - Total outpatient visits rose to 698,486, a 23.3% increase from 566,568 in the first half of 2020[27] - The total number of surgical operations increased to 19,416, representing an 8.0% increase from 17,991 in the same period of 2020[27] - Revenue from the rehabilitation and related healthcare services segment increased by 40.7% to RMB 44.2 million, compared to RMB 31.5 million in the first half of 2020[23] Revenue Breakdown - Revenue from hospital services increased to RMB 821.3 million for the six months ended June 30, 2021, representing a year-on-year increase of 13.8% and accounting for 94.2% of total revenue[102] - Revenue from inpatient healthcare services was RMB 487.4 million, a 4.2% increase from RMB 468.0 million, representing 55.9% of total revenue[105] - Revenue from outpatient healthcare services rose to RMB 281.6 million, a 24.4% increase from RMB 226.5 million, accounting for 32.3% of total revenue[105] - Revenue from physical examination services surged to RMB 52.3 million, a 92.6% increase from RMB 27.2 million, making up 6.0% of total revenue[105] Cost and Expenses - The Group's cost of revenue for the reporting period was RMB 741.6 million, leading to a gross profit of RMB 129.8 million[100] - Total staff-related costs increased by 3.7% compared to the previous year, reflecting higher salary levels and competitive compensation packages for healthcare professionals[120] - Administrative expenses for the first half of 2021 amounted to RMB 103.4 million, a decrease of approximately 16.1% compared to RMB 123.2 million for the same period in 2020[143] - Finance costs for the reporting period decreased by 9.6% to RMB 10.2 million, down from RMB 11.3 million in the first half of 2020[145] Cash Flow and Investments - The Group generated net cash from operating activities of RMB 155.8 million for the six months ended June 30, 2021, representing a 492.2% increase from RMB 26.3 million in the same period of 2020[174] - Net cash used in investing activities was RMB(163.6) million for the six months ended June 30, 2021, compared to RMB(129.2) million in the same period of 2020, reflecting a 26.7% increase[173] - The Group's investments classified as financial assets at FVTPL totaled RMB 570.5 million as of June 30, 2021, up from RMB 467.7 million as of December 31, 2020[167] Future Outlook - The Group anticipates significant business growth following the effective control of the COVID-19 pandemic[78] - The Group aims to expand healthcare operations in the PRC through selective mergers and acquisitions, with a budget of RMB 273.9 million, of which RMB 158.8 million has been utilized[188] - The Group plans to expand its current operations and upgrade hospital facilities, with an allocated budget of RMB 70.4 million, expected to be fully utilized by December 31, 2021[188] Challenges and Risks - The hospital faced challenges including high overhead costs and competition for healthcare professionals, impacting patient visits[43] - The Group's management estimates that the timeline for utilizing unutilized funds is subject to change based on operating and market conditions[189] - The Group closely monitors the credit quality of accounts receivables, considering debts that are neither past due nor impaired as having good credit quality[136]

Financial Performance - Revenue for the year ended December 31, 2020, was RMB 1,745,023,000, a decrease of 10.8% compared to RMB 1,955,525,000 in 2019[9] - Gross profit for 2020 was RMB 263,155,000, down 32.4% from RMB 389,419,000 in 2019, resulting in a gross profit margin of 15.1%, a decline of 4.83 percentage points[9] - The company reported a loss attributable to owners of RMB 25,372,000 for 2020, a significant decrease from a profit of RMB 74,264,000 in 2019, marking a 134.2% year-over-year change[9] - Adjusted EBITDA for 2020 was RMB 196,493,000, down 32.1% from RMB 289,180,000 in 2019[9] - The Group incurred a consolidated loss of RMB 50.1 million in 2020, compared to a profit of RMB 48.7 million in 2019[50] - Loss attributable to owners of the Company was RMB 25.4 million, down from a profit of RMB 74.3 million in 2019[50] - Adjusted EBITDA decreased by 32.1% to RMB 196.5 million, indicating that core operations remained profitable after adjustments[50] - The Group recognized an impairment loss on goodwill totaling RMB 77.4 million related to Kangxin Hospital and Anhui Hualin[50] Patient Visits and Services - The number of outpatient visits in 2020 was 1,358,500, a decrease from 1,753,300 in 2019[12] - The company experienced a decline in inpatient visits, with 2020 figures showing a drop compared to previous years[12] - Total inpatient visits decreased to 56,589, a year-on-year decline of 25.1%, while outpatient visits fell to 1,358,516, down 22.5%[48] - Total outpatient visits decreased to 1,358,516, representing a year-on-year decrease of 22.5%, with average spending per outpatient visit rising by 11.9% to RMB 389.3[71] - Total number of surgical operations decreased to 39,082, a year-on-year decrease of 15.1%[71] - The total number of surgeries performed in 2020 was 39,170, a decrease of 15.0% from 46,094 in 2019, with complex surgeries (level 3 or 4) decreasing by 12.1%[119] Impact of COVID-19 - The Group's operations were significantly impacted by the COVID-19 pandemic, leading to a decline in outpatient visits, inpatient visits, and surgical operations during the first half of 2020[27] - Starting from the second half of 2020, patient visit volumes quickly rebounded to pre-pandemic levels, with a notable increase in rehabilitation services[27] - The Group's operations rebounded in the second half of 2020, with patient visits gradually returning to pre-pandemic levels[61] - The pandemic caused a significant slowdown in business operations across all segments, but staff headcount remained unchanged during this period[191] Strategic Initiatives and Future Plans - The company plans to focus on expanding its healthcare services and enhancing operational efficiency in the coming years[9] - The Group plans to leverage opportunities in the Greater Bay Area to expand its healthcare network and business operations[21] - The establishment of internet hospitals is being expedited in response to the increasing demand for online medical consultations[32] - The Group aims to strengthen its healthcare services network in the Greater Bay Area and capitalize on opportunities from the "Healthy China 2030" vision[58] - The strategy includes enhancing operational efficiency and consolidating the leading position in China's private healthcare industry[58] - The Group plans to improve specialties based on existing advantages and develop both offline and online service capabilities[58] Revenue by Segment - Revenue from hospital services amounted to RMB1,620.5 million, reflecting a year-on-year decrease of 12.3% due to a decline in patient visits during the pandemic[48] - Revenue from rehabilitation and related healthcare services segment recorded revenue of RMB100.4 million, representing a year-on-year increase of 15.3%[48] - Revenue from elderly healthcare services surged to RMB 6.62 million in 2020, representing a significant year-on-year increase of 296.4% from RMB 1.67 million in 2019, driven by an increase in patient intake[156] - Revenue from pharmaceutical products and medical consumables decreased to RMB 17.54 million, down 5.6% year-on-year, accounting for 1.0% of total revenue[182] Operational Efficiency and Management - The Group is focusing on enhancing healthcare service competencies and restructuring management capabilities to improve operational efficiency[21] - The Group's management is optimistic that new internet services will mitigate the operational impacts of future pandemics[37] - The Group's strategic shift is towards delivering high-quality services while maintaining fast-paced expansion in the healthcare sector[167] - The Group has implemented numerous precautionary measures to ensure the health and safety of employees and stable operations during the pandemic[164] Recognition and Certifications - Kanghua Hospital achieved several recognitions, including a 5-star expertise rating and a 3A creditworthiness rating from the Chinese Non-governmental Medical Institute Association[38] - Kanghua Hospital's Department of Respiratory and Critical Medicine received PCCM certification as a class III hospital, aimed at improving national standards for respiratory disease treatment[79] - Renkang Hospital was recognized as a Class 2 hospital with excellent performance in the national PCCM standardization construction project[43] - Kangxin Hospital was recognized as a training project base for electrophysiology specialty by the National Health Commission, indicating its advanced capabilities in this area[108] Challenges and Risks - The company faced a significant revenue decline in the first half of 2020 due to pandemic-related restrictions, leading to an impairment loss on goodwill of RMB 27.5 million[141] - The management anticipates that rising operating costs will suppress revenue growth potential in the short to medium term[141] - The government has implemented centralized procurement policies aimed at lowering pharmaceutical purchase prices, which may influence the Group's procurement strategies[159] Other Income and Financial Metrics - Other income for the Group increased by approximately 39.2% year-on-year to RMB 41.2 million in 2020, up from RMB 29.6 million in 2019[198] - Investment income from financial assets at FVTPL rose by 13.3% to RMB 16.4 million in 2020, compared to RMB 14.5 million in 2019[198] - Government subsidies increased significantly to RMB 6.3 million in 2020, up from RMB 0.7 million in 2019, primarily due to pandemic-related support[198]

Financial Performance - Revenue for the six months ended June 30, 2020, decreased by 16.8% to RMB 760,987,000 compared to RMB 914,364,000 in 2019[7] - Gross profit fell by 60.6% to RMB 73,174,000, resulting in a gross profit margin of 9.6%, down from 20.3% in the previous year[7] - The company reported a loss before taxation of RMB 124,446,000, a decline of 246.9% compared to a profit of RMB 84,689,000 in 2019[7] - Loss for the period attributable to owners of the company was RMB 106,324,000, a decrease of 257.2% from a profit of RMB 67,637,000 in 2019[7] - Adjusted EBITDA decreased by 79.4% to RMB 28,096,000 from RMB 136,615,000 in the same period last year[7] - Basic loss per share was RMB (31.8) cents, a decline of 257.4% compared to earnings of RMB 20.2 cents per share in 2019[7] - The Group incurred a consolidated loss of RMB 126.2 million for the first half of 2020, compared to a profit of RMB 55.5 million in the same period of 2019[24] - The significant loss was attributed to a decline in patient visits across all service offerings during the pandemic[24] Patient Visits and Service Demand - Patient visits decreased significantly, with outpatient visits dropping to 566,600 from 861,900 in 2019[10] - Total inpatient visits declined to 26,030, representing a decrease of 27.7% from 36,025 in the same period last year[31] - Total outpatient visits decreased to 566,568, a decline of 34.3% from 861,872[31] - Inpatient visits at Kanghua Hospital decreased by 26.1% to 20,862, while Renkang Hospital saw a 34.8% decline to 4,500 visits[130] - Outpatient visits at Kanghua Hospital were 431,161, down 34.9% year-on-year, while inpatient visits were 20,862, a decrease of 26.1%[38] Revenue by Segment - Revenue from owned hospitals, including Kanghua Hospital, Renkang Hospital, and Kangxin Hospital, declined by 15.7%, 23.4%, and 24.2% respectively[21] - Revenue from neurology-related disciplines decreased to RMB 51,776,000 from RMB 59,624,000 in 2019, reflecting a decline in this segment[14] - Revenue from inpatient healthcare services amounted to RMB468.0 million, representing a period-on-period decrease of 12.7% and accounting for 61.5% of total revenue[118] - Revenue from outpatient healthcare services decreased to RMB226.5 million, a decline of 24.4%, accounting for 29.8% of total revenue[118] - Revenue from rehabilitation and other healthcare services amounted to RMB31.4 million, a decrease of 11.6%, accounting for 4.1% of total revenue[120] Operational Adjustments and Strategies - The company is focusing on expanding its healthcare services and enhancing operational efficiency to recover from the current financial downturn[7] - Future outlook includes potential investments in new technologies and market expansion strategies to improve service offerings and financial performance[7] - Kanghua Hospital is implementing "Internet + Medical Healthcare Services" to enhance online service capabilities and mitigate pandemic impacts[36] - The Group is actively expanding non-medical projects, including a pharmacy and a rehabilitation project for children with disabilities[86] - The establishment of internet hospitals is being expedited in response to the changing healthcare landscape due to the pandemic[97] Impairment and Goodwill - An impairment loss on goodwill totaling RMB 76.0 million was recognized for Kangxin Hospital and Anhui Hualin due to lower than anticipated future growth[24] - The Group recognized an impairment loss on goodwill of RMB 48.5 million for Kangxin Hospital during the interim period, following a loss of RMB 60.0 million in 2019[54] - The Group recognized goodwill of RMB56.6 million from the acquisition of Anhui Hualin Group and RMB125.4 million from Kangxin Hospital, with impairment losses of RMB27.5 million and RMB48.5 million respectively as of June 30, 2020[139] Cost Management and Financial Outlook - The management anticipates that rising operating costs will suppress revenue growth potential in the short- to medium-term[85] - Management anticipates a potential decrease in future cash flow forecasts due to rising fixed costs and slowing revenue growth[146] - The effective tax rate for the reporting period was -1.5%, a significant decrease from 33.7% in the previous year[150] - The Group's operations have resumed normalcy post-COVID-19, with stringent controls in place[147] Cash Flow and Financial Position - Net cash generated from operating activities was RMB26.3 million for the six months ended June 30, 2020, representing a 60.0% decrease from RMB65.7 million in the same period of 2019[172] - The net decrease in cash and cash equivalents was RMB(27.8) million, compared to an increase of RMB43.3 million in the previous year[171] - The Group's net current assets decreased to RMB253.7 million as of June 30, 2020, down from RMB378.2 million as of December 31, 2019[162] - The Group's cash management policy focuses on achieving higher interest income while managing risks associated with investment products[167] Staff and Operational Changes - The total number of staff headcounts remained unchanged during the pandemic, despite a significant slowdown in business operations across all segments[127] - As of June 30, 2020, the Group had 3,608 full-time staff, a decrease from 3,838 as of December 31, 2019[200] - Total staff-related costs increased by 10.8% compared to the same period last year, reflecting the company's commitment to maintaining its workforce during challenging times[127] Future Plans and Investments - The Group plans to expand its current operations and upgrade hospital facilities, targeting an increase to RMB 70.4 million by the end of December 2021[188] - Healthcare operations in the PRC will expand through selective mergers and acquisitions, with a target of RMB 273.9 million by the end of December 2021[188] - The Group secured new bank loan facilities totaling RMB 620.0 million in 2019 for the development of Phase II medical facilities[192]

Financial Performance - Revenue for the year increased by 19.3% to RMB 1,955.5 million compared to RMB 1,639.3 million in 2018[11] - Gross profit rose by 8.5% to RMB 389.4 million, with a gross profit margin of 19.9%, down from 21.9% in 2018[11] - Profit for the year attributable to owners of the Company decreased by 55.8% to RMB 74.3 million from RMB 167.9 million in 2018[11] - Basic earnings per share decreased by 55.8% to RMB 22.2, with no final dividend declared compared to RMB 50.2 in 2018[11] - Adjusted EBITDA decreased by 47.0% to RMB 117.5 million from RMB 221.8 million in 2018[11] - The Group's consolidated profit for the year ended December 31, 2019, decreased significantly by 69.8% to RMB 48.7 million, down from RMB 161.3 million in 2018[36] - Profit attributable to shareholders fell to RMB 74.3 million in 2019, representing a year-on-year decrease of approximately 55.7% from RMB 167.9 million in 2018[146] Operational Metrics - The number of inpatient visits increased to 75.6 thousand in 2019 from 66.4 thousand in 2018, representing a growth of 13.8%[8] - The number of outpatient visits rose to 1,753.3 thousand in 2019, up from 1,650.6 thousand in 2018, marking a growth of 6.2%[8] - The number of surgeries performed increased to 46.1 thousand in 2019, compared to 41.0 thousand in 2018, reflecting a growth of 12.4%[8] - Total inpatient visits reached 75,568 in 2019, representing a year-on-year increase of 13.8% from 66,388 in 2018[40] - Total outpatient visits rose by 8.6% to 1,753,320 in 2019, compared to 1,614,141 in 2018[135] - The total number of surgical operations increased by 12.2% to 46,056 in 2019, compared to 41,045 in 2018[40] Revenue Breakdown - Revenue from cardiovascular, emergency medicine, pediatrics, and oncology disciplines grew by over 30% compared to the previous year[23] - The revenue growth year-over-year for cardiovascular related disciplines was 31.4%, while oncology related disciplines saw a growth of 42.8%[15] - The proportion of revenue from paediatrics related disciplines was 37.6%, indicating a significant contribution to overall revenue[15] - Revenue from cardiovascular related disciplines increased by 31.4% year-on-year, reaching RMB 254,476, accounting for 13.8% of total revenue[70] - Revenue from oncology related disciplines saw a significant year-on-year increase of 42.8%, totaling RMB 51,153, which represents 2.8% of total revenue[74] - Revenue from emergency medicine related disciplines recorded a year-on-year revenue increase of 33.0%, amounting to RMB 120,420, which is 6.5% of total revenue[70] Cost and Expenses - The cost of revenue for hospital services increased to RMB 1,483.5 million, a year-on-year increase of 20.4%, primarily due to rising medical staff costs and the full consolidation of Kangxin Hospital[129] - Staff-related costs increased by 23.6% compared to the previous year, driven by higher salary levels and benefits to attract quality healthcare professionals[131] - The increase in overall depreciation and amortization expenses was 64.5%, mainly due to new medical equipment purchases and leasehold improvements[131] - Administrative expenses increased to RMB232.3 million in 2019, up 25.4% from RMB185.2 million in 2018, primarily due to higher staff costs and operational expansion[146] Strategic Initiatives - The Group plans to capitalize on the development opportunities in the Greater Bay Area to expand its healthcare networks and investments[17] - The Group aims to create social value while stabilizing its growth and accelerating the expansion of its healthcare services[17] - The Group plans to accelerate the expansion of its medical network, particularly in the Greater Bay Area, while ensuring the steady development of existing institutions[28] - The Group aims to optimize its medical management system and focus on developing key specialties to enhance its industry influence[26] Challenges and Risks - Kangxin Hospital's revenue grew by 57.0% to RMB54.8 million in 2019, but it continued to face significant operational challenges[34] - An impairment loss on goodwill of RMB60.0 million was recognized for Kangxin Hospital during the year, reflecting lower than anticipated future growth[34] - Competition for quality healthcare professionals in the Chongqing region has impacted Kangxin Hospital's ability to recruit reputable doctors, affecting patient visit growth expectations[141] - Management anticipates a decrease in future cash flow projections in the short to medium term due to slowed revenue growth and rising costs[143] Future Outlook - The Group intends to capture opportunities arising from favorable policies in response to COVID-19, such as the accelerated development of internet medical services and integration of Chinese and Western medicine[109] - The Group plans to seek opportunities for hospital management operations in the future[122] - The Group aims to expand healthcare operations in the PRC through selective mergers and acquisitions, with an allocation of RMB 273.9 million, of which RMB 116.1 million remains unutilized[168] Compliance and Governance - The Group complied with applicable environmental laws and regulations in all material respects during the reporting period[192] - There was no incident of non-compliance with relevant laws and regulations that had a significant impact on the Group during the reporting period[192] - The Board does not recommend the distribution of a final dividend for the year[192]

Financial Performance - The Group's consolidated revenue reached a record high of RMB 914.4 million for the six months ended June 30, 2019, representing a period-on-period growth of 23.8% compared to RMB 738.6 million in the same period of 2018[19]. - Gross profit for the period was RMB 185.9 million, reflecting a 10.7% increase from RMB 168.0 million in the previous year[13]. - Profit for the period attributable to owners of the Company decreased by 21.0% to RMB 67.6 million, down from RMB 85.6 million in 2018[13]. - The Group's consolidated profit for the six months ended 30 June 2019 decreased to RMB 55.5 million, a decline of 37.9% compared to RMB 89.4 million for the same period in 2018[20][22]. - Earnings per share decreased by 21.1% to RMB 20.2 from RMB 25.6 in the previous year[13]. - Adjusted EBITDA for the period was RMB 136.6 million, representing a 10.4% increase from RMB 123.7 million in 2018[13]. - The Group's Adjusted EBITDA increased by 10.4% to RMB 136.6 million, up from RMB 123.7 million in the previous year, indicating strong core operations[20][22]. Operational Metrics - The number of outpatient visits increased to 861.9 thousand in 2019, up from 765.4 thousand in 2018, marking a growth of 12.6%[16]. - The number of surgeries performed rose to 8.4 thousand in 2019, compared to 6.5 thousand in 2018, indicating a growth of 29.2%[16]. - The total number of inpatient visits increased by 18.1% to 36,025, compared to 30,507 in the same period last year[25][28]. - The average spending per inpatient visit rose by 6.5% to RMB 14,883.7, up from RMB 13,969.5[25][28]. - The average spending per outpatient visit increased by 2.8% to RMB 347.6, compared to RMB 338.1 in the same period last year[25][28]. - The number of surgeries performed at the Group increased by 49.1% to 8,380 surgeries with level 3 or level 4 complexities compared to 5,619 in the same period last year[48]. Revenue Growth by Segment - Kanghua Hospital and Renkang Hospital reported revenue growth of 20.3% and 5.6%, respectively, contributing to the overall revenue increase[19]. - Revenue from cardiovascular related disciplines increased by 36.5% to RMB 122,340, accounting for 14.1% of the Group's total revenue[45]. - Oncology related disciplines saw an 80.3% increase in revenue, reaching RMB 25,121, contributing 2.9% to the total revenue[45]. - Revenue from O&G related disciplines increased by 7.6% year-on-year, driven by workforce expansion and service growth at the VIP centre[49]. - Revenue from rehabilitation and other healthcare services surged by 142.8% to RMB 35.6 million, compared to RMB 14.7 million in the same period of 2018[68]. - Revenue from special services amounted to RMB 90.6 million, representing a period-on-period increase of 24.6%[57]. Cost and Profitability - The Group's gross profit margin decreased to 20.3% from 22.8% in the previous year, a decline of 2.5 basis points[13]. - The cost of revenue for hospital services increased to RMB 694.2 million, a 24.6% rise attributed to the consolidation of costs from Zhonglian Cardiovascular Hospital[113]. - The cost of revenue for rehabilitation and other healthcare services surged by 302.9% to RMB 27.4 million, primarily due to the full consolidation of Anhui Hualin's results[114]. - The negative gross margin from Zhonglian Cardiovascular Hospital significantly offset the overall gross profit, as the hospital was still in its initial operational phase[120]. Investments and Acquisitions - The Group acquired 60% of Zhonglian Cardiovascular Hospital in August 2018, integrating it as a non-wholly owned subsidiary, which is expected to yield significant long-term benefits[80]. - The Group plans to expand its operations and upgrade hospital facilities with an estimated expenditure of RMB 782.6 million, with various timelines for completion by December 31, 2020[162]. - The Group aims to expand healthcare operations in the PRC through selective mergers and acquisitions, with an estimated expenditure of RMB 273.9 million[162]. Cash Flow and Financial Position - The Group's net cash generated from operating activities amounted to RMB 65.7 million for the six months ended June 30, 2019, representing an 85.9% increase compared to RMB 35.3 million for the same period in 2018[153]. - The net cash used in investing activities decreased by 16.8% to RMB(103.8) million for the six months ended June 30, 2019, from RMB(124.7) million in 2018[152]. - The Group maintained cash and cash equivalents of RMB 208.5 million as of June 30, 2019, slightly up from RMB 203.3 million as of December 31, 2018[146]. - The Group's structured bank deposits amounted to RMB 422.5 million as of June 30, 2019, an increase from RMB 402.0 million as of December 31, 2018[146]. Human Resources and Governance - The Group had a total of 3,488 full-time staff as of June 30, 2019, an increase from 3,448 as of December 31, 2018[170]. - The Group organizes regular mandatory training for medical staff to keep them updated on the latest developments in healthcare[173]. - The Group encourages staff to pursue professional qualifications and specialized training, including induction training for new employees and management training for young core talent[173]. - The Company has committed to maintaining high standards of corporate governance and will continue to enhance its practices[179]. Shareholding Structure - As of June 30, 2019, Mr. Wang Junyang holds 250,000,000 Domestic Shares, representing approximately 74.76% of the total issued share capital[194]. - Mr. Chen Wangzhi and Ms. Wang Aiqin each also hold 250,000,000 Domestic Shares, with the same percentage of 74.76%[194]. - The total issued share capital as of June 30, 2019, includes 250,000,000 Domestic Shares and 84,394,000 H Shares[196].