Aesthetic Medical International Holdings Group Limited (NASDAQ:AIH) Q1 2021 Earnings Conference Call June 24, 2021 8:00 AM ET
Pengwu Zhou - Chairman and CEO
Toby Wu - CFO
Conference Call Participants
Good morning ladies and gentlemen. Thanks for standing by and welcome to Aesthetic Medical International First Quarter of 2021 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. As a reminder, today's conference call is being recorded.
On the call today Aesthetic Medical International are Dr. Pengwu Zhou, Chairman and Chief Executive Officer, and Toby Wu, Chief Financial Officer. Dr. Zhou will review the business operations and the company highlights, followed by Mr. Wu, who will discuss financial performance. There'll be a Q&A session that follows.
Before we get started, I'd like to remind you that some of the information is cost will include forward-looking statements regarding future events and our future financial performance. These include statements about our future expectations, financial projections, and our plans and prospects. Actual results may differ materially from those set forth in such statements. For discussion of these risk and uncertainties you should review the company's filings with the SEC, which include today's press release. You should not rely on our forward-looking statements as predictions of future events.
All forward looking statements that we make on this call are based on assumptions and beliefs as of today, and we undertake no obligation to update them except as required by applicable law. Our discussion today will include non-IFRS financial measures, including EBITDA, adjusted profit and adjusted EBITDA, which is not considered EBITDA, adjusted EBITDA and adjusted profit as a substitute for or superior to net income prepared in accordance with IFRS.
Furthermore, because non-IFRS measures are not determined in accordance with IFRS, they are susceptible to varying calculations and may not be comparable to other similarly titled measures presented by other companies. You're encouraged to review the company's financial information in its entirety and not rely on a single financial measure.
At this time, I would like to turn the call over to Dr. Pengwu Zhou, Chairman and CEO of Aesthetic Medical International. Dr. Zhou please go ahead.
Thank you, operator and everyone for joining the call today. We are pleased to announce that we recorded a strong financial and operating result in the first quarter of 2021 with revenue increase 131.4% year-on-year. Thanks to the economic recovery of China from the COVID-19 pandemic and our dedicated team members who seize every opportunity to help us weather the storm.
In a bid to cater people’s strong pursuit of beauty, we are committed to integrating the Aesthetic medical industry with the overall market continues to expand and government policy to support standardization, will further radiate our non-surgical aesthetic medical services across different regions in China. Recently, we plan to accelerate the establishment of satellite and community hospitals in the Southern and Eastern China regions to meet the local demand for non-aesthetic medical services and to provide more satellite services to clients.
As of the first quarter of 2021, we own about 26 Aesthetic medical clinics across region including Beijing, Shanghai, and Shenzhen. We hope our services can be inclusive to anyone at any age with any beauty preferences. With our professional and comprehensive services, everyone can achieve the ideal from they desire.
In May 2021, we have entered into a Definitive Share Subscription agreement with Lafang China Company Limited in May. Lafang is a company engaged in production and sale of personal care products. The private placement is subject to customary closing conditions and expected to close within four months from the execution of the agreement. We intend to utilize the proceeds from this private placement to fund our business environment and working capital. I believe this will benefit our future growth and we will cherish the abundant resources provided by this opportunity and further upgrade our products and services.
Going forward, in light of the promising financial and operating results in the first quarter of 2021 and the recovery of China's economic position and people's social interaction from the impact of COVID-19, we believe that the demand of aesthetic medical services will continue to increase. Although the world is still shrouded under haze brought by the current pandemic, we pledge to strive our best and continue providing more quality services to our customers and garner fruitful returns to our shareholders. Thank you again for all your support and attention.
And I would like to turn the call to our CFO, Toby Wu to discuss the first quarter financials. Toby, please go ahead.
Okay, thank you Dr. Zhou and hello everyone. I will summarize some of our key unaudited financial result and operating results for the first quarter ended March 31, 2021. In Q1 of 2021, our total revenue rose 131.3% to RMB210.5 million or USD32.1 million primarily due to an increase of 98.2% of a number of achievements we saw from raising customer demand as China greatly recovered from the aftermath of the COVID-19 pandemic.
Revenue from non-surgical aesthetic medical service in the first quarter was RMB109 million or USD16.6 million increased by 128.5% year-on-year from RMB47.7 million in the first quarter of 2020. Revenue from minimally invasive aesthetic treatments was RMB51.8 million or USD7.9 million, representing an increase of 98.5% from RMB26.1 million in the first quarter of 2020. Revenue from energy-based treatments was RMB57.2 million or USD8.7 million, representing an increase of 164.8% from RMB21.6 million in the first quarter of 2020.
Revenue from surgical aesthetic medical service was RMB86.8 million or USD13.2 million representing an increase of 118.1% from RMB39.8 million in the first quarter of 2020. Revenue from general healthcare service and other aesthetic medical service was RMB14.7 million or USD2.2 million, representing an increase of a 320% from RMB3.5 million in the first quarter of 2020. Gross profit was RMB122.1 million or USD18.6 million representing an increase of a 249.9% from RMB34.9 million in the first quarter of 2020, primarily as a result of a significant growth in the revenue.
Gross profit margin was 58.0%, representing an increase of a 19.7 percentage point from 38.3% in the first quarter of 2020. As a portion of our cost of sales our fixed costs, which remained relatively stable during the first quarter by 2021. Together with an increase of 39.1% year-over-year in the selling price of surgical aesthetic medical service for the first quarter of 2021. Cost of sales and service rendered rate at a slower rate than our revenue in the first quarter of 2021.
Gross profit of our non-surgical aesthetic medical service was RMB51.1 million or USD7.8 million representing an increase of 198.8% from RMB17.1 million in the first quarter of our 2020. Gross profit margin was 46.9% compared with 35.8% in the first quarter of 2020. Gross profit of minimally invasive aesthetic treatment was RMB13.1 million or USD4.6 million representing an increase of 176.1% from RMB10.9 million in the first quarter of 2020.
Gross profit margin was 58.1% compared with 41.8% in the first quarter of 2020. Gross profit of our energy-based treatment was RMB21 million or USD3.2 million representing an increase of 238.7% from RMB6.4 million in the first quarter of 2020. Gross profit margin was 36.7% compared with 28.7% in the first quarter of 2020. Gross profit of a surgical aesthetic medical service was RMB61.4 million or USD9.4 million, representing an increase of a 246.9% from RMB17.7 million in the first quarter of 2020.
Gross profit margin was 17.7% compared with 14.5% in the first quarter of 2020. Gross profit of general healthcare service and other aesthetic medical services raised significantly from RMB0.1 million in the first quarter of 2020 to RMB9.6 million or USD1.5 million in the first quarter of 2021. Gross profit margin was 65.3% compared with 2.9% in the first quarter of 2020.
Selling expenses was RMB94.4 million or USD14.3 million representing 44.6% of a company's total revenue at the same period, compared to the selling expenses of RMB78.1 million in the first quarter of 2020, which represented 85.8% of the company's total revenue of the same period. Selling expenses increased on the year-over-year basis, primarily because of the Company launched more marketing initiatives after it gradually resumed operations in the first quarter of 2021.
Consistently with previously marketing strategy, the Company enhanced the marketing efforts before the Chinese New Year and incurred higher advertising and expenses in the March 2021 to attract customers and boost the sales. G&A expenses was RMB42.1 million or USD6.4 million representing a decrease of 17.3% from RMB50.9 million in the first quarter of 2020, primarily due to decrease of RMB10.5 million in the share-based compensation expenses compared with the share-based compensation expenses of RMB21.6 million in the first quarter of 2020.
As a result of the foregoing, the company recorded a loss for the first quarter of 2021 of RMB20.3 million or USD3.1 million, compared with loss of RMB83.1 million in the first quarter of 2020. Basic loss per share was RMB0.28 or USD0.04 compared with a basic loss of RMB1.22 in the first quarter of 2020. Diluted loss per share was RMB0.28 or USD0.04 compared with diluted loss per share of RMB1.22 in the first quarter of 2020.
EBITDA for the first quarter of 2021 was RMB8.2 million or USD1.2 million, compared with a loss of RMB70.6 million in the first quarter of 2020. Adjusted loss for the first quarter of 2021 was RMB8 million or USD1.2 million compared with adjusted loss RMB58.2 million in the first quarter of 2020. Adjusted EBITDA for the first quarter of 2021 was a profit of RMB20.5 million or USD3.1 million, compared with a loss of RMB45.7 million in the first quarter of 2020.
Operational results, in terms of our operating performance repeat customer defined as the active customer who has previously received at least one procedure from the company accounted for 61.8% of the company's active customer base in the first quarter of 2021. Number of the treatments, the company conducted a total of 132,676 treatments, including 22,828 surgical treatments and 109,851 non-surgical treatments in the first quarter of 2021, representing an increase of 98.2%, 57% and 109.6% from 66,946 total treatments, 14,541 surgical treatments and 52,405 non-surgical treatments in the first quarter of 2020.
As of March 31, 2021 we have RMB15.5 million and USD2.4 million in cash compared to RMB44.4 million as of December 31, 2020. Looking ahead, we will continue to fuel our strategy throughout the year. This is not only to provide better and quality service to our customer, but provide substantial growth to our shareholder. This concludes our prepared remarks. Thank you for joining us on today's call. We will now open the call to question. Operator, please go ahead.
Thank you. [Operator Instructions]. Thank you. Our first question comes from the line of Lisa Lee [ph]. Your line is open. Please go ahead.
Hi, dear management, thank you so much for the presentation today. I actually have two questions here. First, the first question would be previously you have mentioned that we are actually developing those satellite clinics to facilitate a venture and also the expansion of our network in China. And do you have a plan or target for the number of satellite clinics that are going to establish in this year? That's the first question.
And my second question is about our collaboration with Lafang. I saw that because Lafang -- shall we consider Lafang as a passive financial investor, or shall we consider Lafang as a strategic investor? Are we going to have any strategic collaborations or a strategic plan to co-develop any business with Lafang in the future? Thank you very much.
Okay, thank you Ms. Lee. Thank you for your question. For the second one, actually, we are planning to set up. We will be around the first place where we will fill up those clinics in the Shenzhen city. So, in the Shenzhen and also in the Guangzhou or some other suburban cities, so the number of satellite clinics clinic setup for this year, we are planning to set 10 to 20 clinics. So, this is our plan, but for the future, we will fill up about 100s clinic through three to five years. So, we will be around Shanghai and Shenzhen, Guangzhou this area to source our satellite clinic. So, this is the first question.
For the second, the cooperation with Lafang we see -- we define Lafang as a strategic investor for us, because we still want, as I mentioned that we will set up more than 100s satellite clinics in China. So what they're starting [ph] not only the energy-based treatment starting in this clinic, also we want to have some medical products for the skin or for some after treatment for the recovery of those treatments. So, we are still negotiating with Lafang on those areas.
Thank you. Can I also add one more question? So, what would be the CapEx or the expected CapEx for each of those satellite clinics? Or do you have a total number of CapEx that we are going to invest in this year?
Hello? Sorry, shall I repeat my question?
Please go ahead. Go ahead with the question.
I'm sorry, Ms. Lee just disconnect. My phone just -- is connected just now. So, for the CapEx for each clinic we plan is we’ll need to invest about RMB2 million to RMB3 million for each of clinics. So, for this year, we’re planning to have about RMB60 million to invest on those clinic.
Okay, I see. Thank you very much. Thanks a lot.
Thank you. [Operator Instructions]. Yes, we have a question from the line of Tom Zhang [ph]. Your line is open. Please go ahead.
Thank you, management for your presentation. Could you please provide some guidance on the Q2 performance? And also appreciate if you could provide some color on both the top line and margin trend in the coming quarter? Thank you.
Okay, Mr. Tom, thank you for your question. So, as you know that now we are talking about the Q1 results so, I cannot give you the specific numbers of Q2’s results. Also, you know that have a one week to go to finish though for the Q2. What I can say is now that at the top line we can say that we will have at least double-digit growth compared with the Q1 and also if we compared to the Q2 at the same period of 2020, there will be a huge number. So, normally I just want to go back to 2019.
If Q2 on Q2 comparison 2019 I still believe that we can have double-digit in terms of our percentage on the growth of sales. So secondarily because of the sales growth, the gross profit margin will be, I think will be slightly better than Q1 as well. So also, we -- actually I believe on that, so in the Q2 we can make profit from that. So, this is what I believe the result of Q2.
Thank you. [Operator Instructions]. As there are no further questions, I'd now like to hand the conference back to Mr. Toby Wu. Please go ahead.
Thank you. Thank you, operator. On behalf our entire management team, I would like to thank you everyone again for joining us today for our conference call. If you have any questions, please contact us or email at email@example.com or reach our IR consultant DLK Advisory at firstname.lastname@example.org. We appreciate your interest and support in Aesthetic Medical International and look forward to speaking with you again next time. Operator, please go ahead.
Thanks everyone again for attending Aesthetic Medical International’s first quarter of 2021 unaudited earnings conference call. This concludes our call today and we thank you all for listening in. Good-bye.