瑞慈医疗(01526) - 2020 - 年度财报

Chairman's Report The Group achieved growth across all three business segments in 2020 despite pandemic challenges, supported by national policies and capital markets Chairman's Report Chairman Fang Yixin's report highlights the group's growth across three business segments in 2020 despite the pandemic, supported by national policies and capital markets - In 2020, despite the pandemic challenges, all three of the Group's business segments (integrated hospitals, physical examination, and specialty hospitals) achieved business growth, demonstrating operational resilience[29][31][32] - Nantong Ruici Hospital was officially designated as Nantong University Affiliated Ruici Hospital and Nantong Ruici Oncology Hospital in 2020, laying a crucial foundation for future development[29] - The physical examination business continued to advance its dual-brand strategy with "Ruici Health Checkup" and the high-end brand "Xingyuanhui," with the second Xingyuanhui opening in Shanghai, deepening its presence in key markets[31] 2020 Key Operating Data by Business Segment | Business Segment | Indicator | 2020 | 2019 | Year-on-Year Change | | :--- | :--- | :--- | :--- | :--- | | Integrated Hospitals | Revenue | RMB 579.9 million | - | - | | | Inpatient Visits | 25,587 | 26,352 | -2.9% | | | Outpatient Visits | 331,813 | 366,821 | -9.5% | | Physical Examination Business | Revenue | RMB 1.2786 billion | - | 9.2% | | | Customer Visits | 2.532 million | - | - | | Specialty Hospitals | Revenue | RMB 95 million | - | 72.5% | | | Deliveries | 799 | 517 | 54.5% | Management Discussion and Analysis This section analyzes the Group's business performance and financial position in 2020, outlining strategic directions for each segment Business Overview and Strategic Outlook The 2020 pandemic significantly impacted the healthcare service industry, with a general downturn in H1 and recovery in H2, while the Group plans to deepen its strategies across segments - In the first 11 months of 2020, national hospital outpatient and inpatient visits decreased by 12.5% year-on-year, with private hospitals seeing a 9.4% decline, indicating the widespread impact of the pandemic on hospital operations[55] - The physical examination industry was severely impacted in H1 by the pandemic, but business volume rapidly recovered in H2 as consumer health awareness increased and deferred demand was released[55] - Group Outlook: Nantong Ruici Hospital's Phase II expansion is progressing well, significantly increasing bed capacity; the physical examination business will continue its dual-brand strategy, deepening its presence in the Yangtze River Delta and exploring the Greater Bay Area market; the maternal and child specialty segment aims to become a leading brand in the Yangtze River Delta region[66][67][70] Integrated Hospital Business Nantong Ruici Hospital, celebrating its 20th anniversary, maintained revenue growth in 2020 despite pandemic-induced declines in patient visits, while advancing its Phase II expansion and securing university affiliation Nantong Ruici Hospital 2020 Operating Data | Indicator | 2020 | 2019 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Outpatient Visits | 331,813 | 366,821 | -9.5% | | Inpatient Visits | 25,587 | 26,352 | -2.9% | - Nantong Ruici Hospital's Phase II expansion is progressing smoothly, with the rehabilitation center expected to open in October 2021 and the general inpatient building in July 2022, addressing bed shortage issues[58] - Among synergistic businesses, hemodialysis center service times increased by 23.3% year-on-year to 16,601 times, showing strong growth momentum[59] Physical Examination Business As the Group's largest revenue contributor, the physical examination business achieved growth in customer visits and revenue in 2020, driven by a dual-brand strategy and rapid H2 recovery Physical Examination Business 2020 Operating Data | Indicator | 2020 | 2019 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Total Customer Visits | 2,531,668 | 2,306,195 | +9.8% | | Corporate Customer Visits | 1,964,457 | 1,891,616 | +3.9% | | Individual Customer Visits | 567,211 | 414,579 | +36.8% | | Average Spending Per Customer | RMB 504 | RMB 504 | Flat | - As of the end of 2020, the Group's physical examination center network expanded to 61 centers (+3.4% year-on-year), with 57 already operational (+11.8% year-on-year)[61] Specialty Hospital Business The Ruici Maternal and Child Specialty segment achieved significant growth in 2020, with its three hospitals serving high-net-worth individuals and seeing substantial increases in patient volumes through enhanced services Specialty Hospital 2020 Operating Data (Year-on-Year Change) | Hospital | Indicator | 2020 Visits | Year-on-Year Growth | | :--- | :--- | :--- | :--- | | Changzhou Ruici Hospital | Outpatient Visits | 23,728 | +6.6% | | | Inpatient Visits | 583 | -13.5% | | | Confinement Center Stays | 530 | +4.3% | | Ruici Narcissus (Shanghai) | Outpatient Visits | 13,706 | +132.8% | | | Inpatient Visits | 282 | +62.1% | | | Confinement Center Stays | 137 | +30.5% | | Wuxi Ruici Maternity Hospital | Outpatient Visits | 5,508 | +479.8% | | | Inpatient Visits | 168 | +2000.0% | | | Confinement Center Stays | 248 | +185.1% | - Wuxi Ruici Maternity Hospital was officially approved as a Wuxi City medical insurance designated medical institution in H2 2020, which will facilitate its future business expansion[63] Financial Review In 2020, the Group's total revenue grew by 11.5% to RMB 1.925 billion, with gross profit increasing by 20.0% and net loss significantly narrowing to RMB 92.5 million 2020 Revenue by Segment (RMB thousands) | Business Segment | 2020 Revenue | 2019 Revenue | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Integrated Hospital Business | 579,927 | 522,384 | +11.0% | | Physical Examination Business | 1,278,598 | 1,170,496 | +9.2% | | Specialty Hospital Business | 94,959 | 55,041 | +72.5% | | Total | 1,925,190 | 1,726,206 | +11.5% | - Gross profit increased from RMB 484 million to RMB 581 million, with gross margin improving from 28.0% to 30.2%, primarily due to revenue growth and optimized cost structure[80] - The annual net loss was RMB 92.5 million, a significant reduction from RMB 170.5 million in 2019, mainly driven by revenue growth across all business segments[88] Adjusted EBITDA (RMB thousands) | Indicator | 2020 | 2019 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Loss for the Period | (92,497) | (170,498) | - | | Adjusted EBITDA | 468,214 | 404,665 | +15.7% | | Adjusted EBITDA Margin | 24.3% | 23.4% | +0.9 ppt | Financial Position, Liquidity, and Capital Resources As of 2020 year-end, total assets reached RMB 4.21 billion, with increased borrowings and net current liabilities, while cash and cash equivalents significantly improved - As of the end of 2020, the Group's cash and cash equivalents were RMB 561.8 million, a significant increase from RMB 329.6 million at the end of 2019[97] - The Group's total borrowings increased from RMB 923 million to RMB 1.285 billion, and the gearing ratio rose from 80.1% to 87.1%[102][106] - A significant acquisition was completed during the year, with the Group acquiring a 30% equity stake in seven target physical examination centers for RMB 155 million, resulting in the company indirectly holding an 81% equity stake in each target company after the transaction[99] - Capital expenditure was RMB 297 million, a decrease from RMB 568 million last year, primarily used for Nantong Ruici Hospital's Phase II expansion and the construction of new physical examination centers[101] Corporate Governance Report This report details the company's corporate governance framework, including board composition, committee functions, and risk management practices Board of Directors and Committees The company maintains high corporate governance standards with a diverse Board and independent committees, ensuring oversight despite the combined Chairman and CEO roles - The Board of Directors consists of 8 members, with independent non-executive directors accounting for 37.5% (3 members) and female directors for 50% (4 members), reflecting a good diverse composition[124][126] - The company deviated from the Corporate Governance Code's recommendation for separation of Chairman and CEO roles, with Dr. Fang Yixin holding both positions; the Board believes this is beneficial for implementing new business strategies, and the independent elements of the Board ensure a balance of power[132][409] - The Board and its committees (Audit, Remuneration, Nomination) all held the required number of meetings in 2020, with 100% attendance from all members (excluding resigned directors)[139][147][172] Risk Management and Internal Control The company employs a comprehensive risk management and internal control framework, overseen by the Board and Audit Committee, addressing 11 major risks with specific monitoring and response strategies Summary of Major Risks and Response Measures | Risk Category | Risk Description | 2020 Trend | Main Response Measures | | :--- | :--- | :--- | :--- | | Business Expansion Risk | Over-rapid expansion leading to insufficient support, quality decline | Unchanged | Establish standardized expansion control mechanisms, regularly evaluate development plans | | Competitor Risk | Severe product homogenization, lack of core competitive barriers | Unchanged | Strengthen back-end health services, segment markets, focus on high-end customers, launch dual-brand operations | | Human Resources Risk | Personnel structure and quality unable to meet development needs, high turnover rate | Rising | Strengthen diversified recruitment, offer competitive compensation, reinforce corporate culture, collaborate with Nantong University | | Informatization Construction Risk | IT systems unable to meet future business needs, data security risks | Unchanged | Increase IT investment, integrate business data, develop mobile applications, establish data maintenance team | | Capital Management Risk | Low capital utilization efficiency, or payment difficulties | Unchanged | Formulate capital management policies, establish approval authorities, optimize capital utilization efficiency, establish capital plans | | Medical Dispute Risk | Inherent medical disputes and legal litigation risks in operations | Unchanged | Establish customer complaint management system, formulate standard operating procedures, strengthen training for medical staff | | Pandemic (Systemic Risk) | Revenue affected, costs not effectively controlled, credit risk | Rising | Implement prevention and control measures under government guidance, strengthen quality and safety management | - The company's internal control system is established based on COSO principles and underwent an independent annual review, with the Board deeming the system adequate and effective[212] Environmental, Social and Governance Report This report outlines the Group's commitment to environmental protection, responsible operational practices, employee welfare, and community engagement Environmental Protection The Group is committed to environmental protection, complying with regulations and implementing measures to reduce its operational impact, with detailed disclosures on resource consumption and emissions in 2020 2020 Resource Consumption | Resource Type | Total Consumption | Density (Per Square Meter Building Area) | | :--- | :--- | :--- | | Water Resources | 462,923.55 cubic meters | 1.40 cubic meters | | Electricity Resources | 27,325,934.48 kWh | 82.40 kWh | | Paper Resources | 72,973.78 kg | 0.22 kg | | Oil Resources | 195,475.04 liters | 0.59 liters | 2020 Waste and Greenhouse Gas Emissions | Emission Type | Total Amount | Notes | | :--- | :--- | :--- | | Medical Waste (Hazardous) | 410,670.83 kg | Physical Examination segment highest proportion | | Domestic Waste (Non-hazardous) | 955,249.45 kg | Integrated Hospital segment highest proportion | | Greenhouse Gas (CO2 equivalent) | 19,768.18 tons | Scope 2 (indirect emissions) accounts for majority | Operational Practices The Group prioritizes medical quality, customer service, and data privacy, maintaining stringent supplier management and addressing 76 service disputes in 2020 - In 2020, the Group experienced a total of 76 service disputes nationwide, with 63 in the physical examination segment, 8 in integrated hospitals, and 5 in specialty hospitals[266] - The Group strictly enforces customer privacy protection policies, with no substantiated complaints regarding violations of customer privacy rights or loss of customer data received during the reporting period[271] - As of the end of 2020, the Group had 5,189 suppliers, with the vast majority (4,501) located in East China, reflecting the geographical concentration of its business[275] Employee Care The Group values its 7,208 employees, providing systematic training, ensuring health and safety, and fostering belonging through various initiatives Employee Structure as of End of 2020 | Category | Subdivision | Number/Proportion | | :--- | :--- | :--- | | Total Employees | - | 7,208 | | Gender | Male | 1,442 (20%) | | | Female | 5,766 (80%) | | Age | 30 and Below | 2,450 (34%) | | | 31-50 | 2,955 (41%) | | | Above 50 | 1,803 (25%) | | Region | East China | 5,817 (81%) | | Turnover Rate | Annual Total Turnover Rate | 24.44% | - In 2020, the Group provided systematic employee training, with non-management employees accounting for 95% of trainees and an average training duration of 310 hours[304][306] - Regarding employee health and safety, 4 work-related injuries occurred in 2020, resulting in 275 lost workdays, with no work-related fatalities[292] Community Investment and Anti-Corruption The Group actively fulfills its social responsibility through significant anti-pandemic contributions and community medical services, while maintaining a robust anti-corruption framework with no reported incidents - Anti-epidemic contributions: Nantong Ruici Hospital dispatched 3 medical staff to support Huangshi, Hubei; medical staff from various branch companies supported highway checkpoints and community epidemic prevention; the Group donated RMB 10 million worth of high-end physical examination services to Hubei medical teams and their families[313][314][315] - Community medical services: Conducted medical assistance activities in Hanzhong, Shaanxi, through the "Shanghai Nantong Famous Doctors Promotion Association"; announced 100 free clinics and multiple specialized disease screenings and health poverty alleviation programs during its 20th-anniversary celebration[318][320] - The Group established a comprehensive anti-corruption system, including formulating internal regulations, providing employee training, setting up reporting channels, and incorporating anti-fraud clauses in procurement contracts; no corruption-related lawsuits were reported during the period[321][322][324][325] Directors' Report This report outlines the company's principal activities, performance, dividend policy, and financial position, including details on shareholdings, share options, and compliance Directors' Report This report outlines the company's principal activities, performance, dividend policy, and financial position, including details on shareholdings, share options, and compliance - The Board resolved not to declare any final dividend for the year ended December 31, 2020[332] - Net proceeds from the initial public offering of RMB 185 million remain unutilized, expected to be fully used by December 31, 2022, for opening new physical examination centers and upgrading existing ones[348] Unexercised Share Options (as of December 31, 2020) | Plan Name | Number of Unexercised Share Options | Exercise Price | | :--- | :--- | :--- | | Pre-IPO Share Option Scheme | 47,710,500 | HKD 1.60 | | Share Option Scheme | 64,360,000 | HKD 2.42 | - Major shareholder holdings: Controlling shareholders Dr. Mei and Dr. Fang (via Cuici) held 54.87% long position and 18.52% short position; Baring Private Equity Asia held 16.87% of shares[378][388] - Major customer and supplier concentration: The largest customer accounted for 6.7% of total revenue, and the top five customers for 9.9%; the largest supplier accounted for 14.4% of total purchases, and the top five suppliers for 44.4%[395][396] Independent Auditor's Report This report presents PricewaterhouseCoopers' unqualified opinion on the Group's 2020 consolidated financial statements, highlighting key audit matters related to deferred tax assets and asset impairment Independent Auditor's Report PricewaterhouseCoopers issued an unqualified opinion on the Group's 2020 consolidated financial statements, deeming them to present a true and fair view, while highlighting key audit matters related to deferred tax assets and asset impairment - Auditor's Opinion: PricewaterhouseCoopers issued an unqualified audit opinion, stating that the financial statements present a true and fair view of the Group's financial position[418] - Key Audit Matter One: Recognition of deferred income tax assets arising from tax losses; as of the end of 2020, the Group recognized RMB 167.6 million in related deferred income tax assets, while RMB 82.4 million in deferred income tax assets were not recognized, involving significant judgment regarding future profitability[424] - Key Audit Matter Two: Impairment assessment of property, plant, and equipment and right-of-use assets; the total carrying amount of these assets was RMB 2.6 billion, accounting for 61.7% of total assets, with auditors focusing on management's subjective judgments on future cash flows and discount rates for loss-making centers[426] Financial Statements and Notes to the Financial Statements This section presents the Group's consolidated financial statements and detailed notes, offering a comprehensive view of its financial performance and position in 2020 Consolidated Financial Statements The 2020 financial statements show total assets growing to RMB 4.21 billion, revenue increasing by 11.5% to RMB 1.93 billion, a significantly narrowed annual loss, and improved operating cash flow Consolidated Income Statement Summary (RMB thousands) | Item | 2020 | 2019 | | :--- | :--- | :--- | | Revenue | 1,925,190 | 1,726,206 | | Gross Profit | 580,664 | 483,982 | | Operating Profit/(Loss) | 75,780 | (27,439) | | Loss Before Income Tax | (108,823) | (168,248) | | Loss for the Year | (92,497) | (170,498) | | Loss Attributable to Owners of the Company | (7,876) | (69,163) | Consolidated Balance Sheet Summary (RMB thousands) | Item | December 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Non-Current Assets | 3,003,440 | 3,017,839 | | Current Assets | 1,207,554 | 1,052,738 | | Total Assets | 4,210,994 | 4,070,577 | | Current Liabilities | 1,945,226 | 1,710,258 | | Non-Current Liabilities | 1,933,328 | 1,797,383 | | Total Liabilities | 3,878,554 | 3,507,641 | | Total Equity | 332,440 | 562,936 | Consolidated Cash Flow Statement Summary (RMB thousands) | Item | 2020 | 2019 | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 444,633 | 165,026 | | Net Cash Used in Investing Activities | (355,444) | (336,260) | | Net Cash Generated from/(Used in) Financing Activities | 169,319 | (976) | | Net Increase/(Decrease) in Cash and Cash Equivalents | 258,508 | (172,210) | Summary of Notes to the Financial Statements The notes provide detailed insights into the Group's 2020 financial performance, highlighting segment contributions, borrowing structures, and significant acquisition-related equity adjustments 2020 Segment Performance (RMB thousands) | Business Segment | Revenue | Segment Profit/(Loss) | | :--- | :--- | :--- | | Integrated Hospitals | 579,927 | 155,681 | | Physical Examination Centers | 1,278,598 | 310,391 | | Specialty Hospitals | 94,959 | (111,627) | | Total | 1,953,484 | 354,345 | - As of the end of 2020, the Group's total borrowings amounted to RMB 1.285 billion, of which RMB 739 million were current liabilities due within one year[712] - The company acquired a 30% equity stake in seven physical examination centers for RMB 155 million, and due to the consideration paid exceeding the carrying amount of the acquired non-controlling interests, an acquisition loss of RMB 141.7 million was recognized in equity[775] - Related party transactions primarily included controlling shareholders Dr. Fang and Dr. Mei providing guarantees for the Group's RMB 108 million in borrowings and RMB 130 million in financial liabilities[787]