Form 6-K New Frontier Health Corp For: Apr 08

April 8, 2021 9:11 AM EDT

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FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

Report of Foreign Private Issuer

 

Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934

 

For the month of April 2021

 

Commission File Number: 001-38562

 

NEW FRONTIER HEALTH CORPORATION
(Translation of Registrant’s Name into English)

 

10 Jiuxianqiao Road,

Hengtong Business Park

B7 Building, 1/F

Chaoyang District, 100015

Beijing, China
(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: Form 20-F x Form 40-F ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): Yes ¨ No x

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): Yes ¨ No x

 

 

 

 

 

INFORMATION CONTAINED IN THIS FORM 6-K REPORT

 

Attached as Exhibits 99.1 and 99.2 hereto are the earnings release issued by New Frontier Health Corporation (the “Company”) announcing its financial results for the fiscal year ended December 31, 2020 and associated investor presentation, respectively.

 

Exhibits 99.1 and 99.2 to this Report on Form 6-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.

 

EXHIBIT INDEX

 

Exhibit Description of Exhibit
   
99.1 Earnings Release.
   
99.2 Investor Presentation.

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  New Frontier Health Corporation
     
  By: /s/ Roberta Lipson
    Name: Roberta Lipson
    Title: Chief Executive Officer

 

Date: April 8, 2021

 

 

 

 

Exhibit 99.1 

 

New Frontier Health Corporation Announces Fourth Quarter and Fiscal 2020 Financial Results

 

BEIJING—April 8, 2021 /BUSINESS WIRE/ -- New Frontier Health Corporation (“NFH” or “the Company”) (NYSE: NFH), operator of the premium healthcare services provider United Family Healthcare (“UFH"), today announced its financial results for the fourth quarter and fiscal year ended December 31, 2020.

 

Financial and Operating Highlights1

 

All comparisons made on both a year-over-year (“yoy”) and quarter-on-quarter (“qoq”) basis. 2

 

For the Quarter Ended December 31, 2020:

 

·Revenue increased by 2.2% yoy to RMB654.0 million from RMB639.7 million and increased by 4.4% from the prior quarter, as patient volume recovered from the COVID-19 pandemic onset.

 

·Net loss decreased to RMB101.4 million from RMB251.6 million in the prior year period and increased from RMB69.8 million in the prior quarter. The yoy decrease was mainly due to the RMB148.4 million decrease in transaction costs related to the Company’s business combination, increased patient volume and strong revenue growth month-over-month in the fourth quarter of 2020, ongoing implementation of cost-saving initiatives, and overall cost reductions as a result of government policies in response to the COVID-19 pandemic, which offset an increase in finance costs related to the Company’s senior secured credit facility that it entered into in connection with the closing of the business combination (the “Senior Secured Term Loan”). The qoq increase was mainly attributable to an increase in promotion and marketing expenses from a series of promotional activities held in the fourth quarter of 2020 and an increase in exchange loss due to the appreciation of RMB as compared to the U.S. Dollar in the fourth quarter of 2020.

 

·Adjusted EBITDA (before IFRS 16 adoption)3 increased by 252.1% yoy to RMB90.5 million from RMB25.7 million and increased by 0.6% from the prior quarter. The increase was primarily due to revenue recovery and the implementation of permanent and temporary cost savings initiatives, as well as revenue ramp-up from expansion assets.

 

·Tier 1 Operating Assets: revenue increased by 0.8% yoy to RMB465.7 million from RMB462.2 million and increased by 4.4% qoq. Adjusted EBITDA (before IFRS 16 adoption) increased by 15.3% yoy to RMB124.0 million from RMB107.6 million. The yoy increases in revenue and Adjusted EBITDA were primarily attributable to recovery of patient volume across various specialties and ongoing implementation of permanent and temporary cost controls.

 

·Tier 2 Operating and Other Assets: revenue decreased by 14.3% yoy to RMB82.2 million from RMB95.9 million, primarily as a result of decreased patient volume due to lower birth rates in 2020 and lower overall pediatric patient volume. Adjusted EBITDA (before IFRS 16 adoption) increased to RMB4.3 million from RMB0.6 million due to continued implementation of permanent and temporary cost controls.

 

·Expansion Assets: revenue increased by 30.0% yoy to RMB106.2 million from RMB81.6 million due to strong growth of the new hospitals in Guangzhou and Pudong, Shanghai. Adjusted EBITDA (before IFRS 16 adoption) improved by 72.5% yoy to RMB(10.2) million from RMB(37.0) million due to the ongoing ramp-up of expansion assets.

 

 

1 All comparisons made on a year-over-year (“yoy”) basis unless otherwise indicated. As a result of the adoption of International Financial Reporting Standard (“IFRS”) 16, effective January 1, 2019, related lease expenses have been reflected in depreciation and amortization expenses and finance costs. The financial statements have been translated into United States dollars for convenience purposes at a rate of RMB6.5250 to US$1.00, the exchange rate on December 31, 2020 set forth in the H.10 statistical release of the Federal Reserve Board.

2 The Company acquired Healthy Harmony in a business combination that closed on December 18, 2019 (the “Closing Date”). Healthy Harmony was determined to be the accounting “Predecessor” while the Company succeeded to all of the business and operations of Healthy Harmony and was considered the combined Company (the “Successor”. The financial results for the three months and year ended December 31, 2020, presented herein are those of the combined Company. The Company’s financial statement presentation in 2019 is further distinguished as follows: the Successor period is from December 19, 2019 to December 31, 2019 (“2019 Successor Period”) and the Predecessor periods are from January 1, 2019 to December 18, 2019 (“2019 Predecessor Period”), and from October 1, 2019 to December 18, 2019 (“2019 Q4 Predecessor Period” or “Prior Year Period”). Management believes reviewing the Company’s operating results for the three months and year ended December 31, 2019 by combining the results of the 2019 Q4 Predecessor Period and 2019 Successor Period (the “2019 Q4 S/P Combined”), and combining the results of the 2019 Predecessor Period and 2019 Successor Period (the “2019 S/P Combined”) respectively, is more useful.

3 Adjusted EBITDA (before IFRS 16 adoption) is a non-IFRS performance measure. See “Non-IFRS Financial Measures” for a reconciliation of Adjusted EBITDA to its most comparable financial measure calculated in accordance with IFRS.

 

 

 

 

For the Fiscal Year Ended December 31, 2020:

 

·Revenue decreased by 7.7% to RMB2,260.5 million from RMB2,449.2 million due to an overall decrease in patient volume and the number of procedures performed as a result of the COVID-19 pandemic in the first half of 2020.

 

·Net loss decreased to RMB419.1 million from RMB458.7 million, mainly due to the RMB 157.0 million decrease in transaction costs from the business combination, implementation of permanent and temporary cost-saving initiatives, and cost reductions as a benefit of government policies in response to the COVID-19 pandemic, which offset an increase in finance costs relating to the Senior Secured Term Loan.

 

·Adjusted EBITDA (before IFRS 16 adoption) increased by 16.1% to RMB166.7 million from RMB143.6 million, mainly due to the implementation of cost controls and ramp up of expansion assets in Guangzhou and Pudong, Shanghai.

 

·Tier 1 Operating Assets: revenue decreased by 11.9% to RMB1,596.1 million from RMB1,810.7 million. Adjusted EBITDA (before IFRS 16 adoption) decreased by 19.9% to RMB371.5 million from RMB463.8 million due to a decline in patient volume as a result of the COVID-19 pandemic.

 

·Tier 2 Operating and Other Assets: revenue decreased by 15.6% to RMB302.9 million from RMB358.8 million due to a decrease in patient volume as a result of the COVID-19 pandemic. Adjusted EBITDA (before IFRS 16 adoption) improved to RMB0.3 million from RMB(0.2) million due to the ongoing implementation of cost-savings initiatives.

 

·Expansion asset revenue increased by 29.3% to RMB361.5 million from RMB279.6 million due to the continued ramp-up of expansion assets. Adjusted EBITDA (before IFRS 16 adoption) improved by 47.2% yoy to RMB(85.2) million from RMB(161.4) million as a result of the strong revenue growth of the new hospitals in Guangzhou and Pudong, Shanghai.

 

·Outpatient visits decreased by 17.3% yoy to 522,969 from 632,664 and increased by 1.2% qoq.

 

·Inpatient admissions decreased by 19.5% yoy to 8,699 from 10,805 and increased by 7.4% qoq.

 

·Bed utilization rate* decreased to 33.3% yoy from 38.3% due to lower inpatient admissions during the COVID-19 pandemic.

 

·ASP: outpatient ASP increased by 11.0% yoy and inpatient ASP increased by 15.0% yoy as a result of an increase in the number of higher acuity services provided at our facilities, as less urgent services were postponed due to the pandemic.

 

* Bed utilization is calculated based on the weighted average maximum bed capacity of the year.

 

Mr. Antony Leung, Chairman of NFH said, “2020 was challenging for both us and others around the world. We quickly implemented a comprehensive and active response to combat difficulties related to the pandemic in an effort to protect our employees and our patients. Thanks to the tremendous strength and determination of our entire team, we managed to navigate the pandemic in a swift, smooth manner. As the volumes for our outpatient visits and inpatient admissions continued to grow quarter-over-quarter in the fourth quarter of 2020, we were able to achieve some revenue recovery as well as improved profitability. In addition, as the number of people seeking higher acuity services increased, both inpatient and outpatient ASP increased by double digits.”

 

Ms. Roberta Lipson, Chief Executive Officer of NFH and founder of UFH, commented, “As daily life in China has mostly returned to normal, travel restrictions continue to ease, and international borders open on a controlled basis, we believe this bodes well for our ongoing recovery trends. To reach a younger target audience, we delivered a live talk show on TMall, one of China’s largest e-commerce platforms during the 11.11 festival. In the two-hour live broadcast, more than two million viewers tuned in from across the country. We are also proud of several major developments in the recent months. During the fourth quarter, we completed most of the construction on our new Women’s and Children’s Hospital (DTU) in the northwest corner of Beijing, which began soft opening in late March 2021. The hospital will be the first Level III accredited specialty hospital in the UFH network with a capacity of more than 200 beds. To offer our patients access to a wider variety of medical specialty talent, we have also signed an agreement for close cooperation between our Qingdao United Family Hospital (“QDU”) and doctors at Shandong University Qilu Hospital (QILU). In addition, in December, Shanghai United Family Hospital (“PXU”) launched its Health Management Center, which offers a full range of preventative checks with individualized follow-up health management services. Looking ahead, we remain encouraged by our expansion initiatives and will continue to execute our operational and strategic plans.”

 

 

 

 

Fourth Quarter and Fiscal Year 2020 Results

 

For management purposes, the Company is organized into business units based on the category and stage of development of the Company’s healthcare facilities and geographic locations. There are three reportable operating segments, as follows:

 

(a) Tier 1 Operating Assets: the existing general healthcare facilities located in tier 1 cities in China, such as Beijing United Family Hospital (“BJU”), Shanghai United Family Hospital (“PXU”), and their associated clinics.

 

(b) Tier 2 Operating and Other Assets: the existing general healthcare facilities located in tier 2 cities in China, such as Tianjin United Family Hospital (“TJU”), Qingdao United Family Hospital (“QDU”), and other assets, such as a Beijing United Family Rehabilitation Hospital (“Rehab”) and other clinic assets.

 

(c) Expansion Assets: the facilities recently opened or about to open, including Shanghai Xincheng United Family Hospital (“PDU”), Guangzhou United Family Hospital (“GZU”), and Beijing Jingbei Women and Children’s United Family Hospital (“DTU”).

  

Revenue (RMB mm)

 

   4Q19   4Q20   Y-o-y
Change %
   Q-o-q
Change %
   Fiscal Year
2019
   Fiscal Year
2020
   Y-o-y
Change %
 
Tier 1 Operating Assets (1)   462.2    465.7    0.8%   4.4%   1,810.7    1,596.1    (11.9%)
Tier 2 Operating and Other Assets (2)   95.9    82.2    (14.3%)   3.2%   358.8    302.9    (15.6%)
Operating Assets(3)   558.1    547.9    (1.8%)   4.2%   2169.6    1,899.1    (12.5%)
Expansion Assets(4)   81.6    106.2    30.0%   5.4%   279.6    361.5    29.3%
Total   639.7    654.0    2.2%   4.4%   2,449.2    2,260.5    (7.7%)

 

(1)Tier 1 Operating Assets: For the fourth quarter of 2020, revenue from UFH’s tier 1 facilities and their associated clinics increased by 0.8% yoy due to steady growth in various specialties, such as family medicine, internal medicine, surgery, and orthopedics; however, Tier 1 Operating Assets were also impacted by lower obstetrics revenue due to lower birth rates in 2020 and lower revenue from pediatrics yoy. Both BJU and PXU, as well as their associated clinics, achieved revenue growth qoq as a result of growth in various specialties, as previously noted. For fiscal 2020, revenue from UFH’s tier 1 facilities and their associated clinics decreased by 11.9% yoy due to an overall decline in patient volume for the year as a result of COVID-19.
(2)Tier 2 Operating and Other Assets: For the fourth quarter of 2020, revenue from UFH’s tier 2 facilities and other assets, as a group, decreased by 14.3% yoy and increased by 3.2% qoq due to the decrease in patient volume and demand for obstetrics and pediatric procedures as compared to the prior year, as well as the gradual recovery of patient volume and increase in demand for non-emergency medical services as compared to the prior quarter. For fiscal 2020, revenue from UFH’s tier 2 facilities and other assets, as a group, decreased by 15.6% yoy due to a decline in patient volume as a result of COVID-19 and a decrease in demand for pediatric and obstetric services as compared to the prior year.
(3)Total Operating Assets: For the fourth quarter of 2020 and fiscal 2020, revenue from UFH’s operating assets, as a group, decreased by 1.8% and 12.5% yoy, respectively, due to the overall decrease in patient volume and decreased demand for certain non-emergency services as a result of the COVID-19 pandemic. For the fourth quarter of 2020, revenue from UFH’s operating assets, as a group, increased by 4.2% qoq due to the recovery of patient volume and an increase in demand for such non-emergency medical services at the end of the year.
(4)Expansion Assets: As a result of increased brand recognition and new patient uptick at UFH’s GZU and PDU facilities, revenue for UFH’s expansion assets, as a group, increased to RMB106.2 million in the fourth quarter of 2020 from RMB81.6 million in the fourth quarter of 2019 and RMB361.5 million in fiscal 2020 from RMB279.6 million in fiscal 2019. In the fourth quarter of 2020, GZU recorded revenue growth of 35.4% yoy and PDU 24.6% yoy. In addition, since opening in the fourth quarter of 2018, both GZU and PDU have developed higher acuity services, such as surgery and orthopedics, which contributed significantly to revenue growth in the fourth quarter of 2020 and a qoq increase of 5.4%.

 

 

 

 

Adjusted EBITDA (before IFRS 16 adoption) (RMB mm)

   4Q19   4Q20   Y-o-Y
Change %
   Q-o-q
Change %
   Fiscal Year
2019
   Fiscal Year
2020
   Y-o-y
Change %
 
Adjusted EBITDA (before IFRS 16 adoption)                              
Tier 1 Operating Assets(1)   107.6    124.0    15.3%   (1.6%)   463.8    371.5    (19.9%)
Tier 2 Operating and Other Assets(2)   0.6    4.3    662.7%   9.9%   (0.2)   0.3    216.8%
Operating Assets(3)   108.1    128.3    18.7%   (1.3%)   463.5    371.8    (19.8%)
Expansion Assets(4)   (37.0)   (10.2)   72.5%   21.1%   (161.4)   (85.2)   47.2%
Unallocated Cost   (45.4)   (27.6)   39.0%   (1.9%)   (158.5)   (119.9)   24.4%
Total Adjusted EBITDA (before IFRS 16 adoption)(5)   25.7    90.5    252.1%   0.6%   143.6    166.7    16.1%

 

(1)Tier 1 Operating Assets: BJU, PXU, and their associated clinics achieved Adjusted EBITDA (before IFRS 16 adoption) of RMB124.0 million in the fourth quarter of 2020, an increase of 15.3% yoy due to revenue recovery and cost control. Adjusted EBITDA (before IFRS 16 adoption) of tier 1 facilities and their associated clinics decreased by 19.9% yoy due to a decline in patient volume as a result of COVID-19.
(2)Tier 2 Operating and Other Assets: TJU, Rehab, and QDU achieved Adjusted EBITDA (before IFRS 16 adoption) of RMB4.3 million in the fourth quarter of 2020, compared to RMB0.6 million in the fourth quarter of 2019, primarily attributable to the implementation of cost control measures.
(3)Total Operating Assets: UFH’s operating assets, as a group, achieved Adjusted EBITDA (before IFRS 16 adoption) increase of 18.7% yoy to RMB128.3 million in the fourth quarter of 2020, a decrease of 1.3% qoq, primarily due to strong revenue recovery and implementation of cost control measures.
(4)Expansion Assets: Expansion assets, as a group, experienced an increase in Adjusted EBITDA (before IFRS 16 adoption) to RMB(10.2) million in the fourth quarter of 2020, an improvement from RMB(37.0) million in the fourth quarter of 2019, due to strong revenue growth. Adjusted EBITDA (before IFRS 16 adoption) for GZU reached breakeven for eight consecutive months, beginning in May 2020.
(5)Total Adjusted EBITDA (before IFRS 16 adoption) for the fourth quarter of 2020 was RMB90.5 million compared to RMB25.7 million in the prior year period, primarily due to revenue recovery, strong ramp-up of expansion assets, and implementation of cost control measures. Adjusted EBITDA (before IFRS 16 adoption) of UFH’s tier 1 facilities and their associated clinics decreased by 19.9% yoy due to a decline in revenue as a result of COVID-19.

 

 

 

 

Key Operating Metrics

 

   4Q2019   4Q2020   Y-o-Y Change %   Q-o-q Change % 
   Outpatient
Volume
   Inpatient
Admission
   Outpatient
Volume
   Inpatient
Admission
   Outpatient
Volume
   Inpatient
Admission
   Outpatient
Volume
   Inpatient
Admission
 
Tier 1 Operating Assets   120,131    1,850    109,605    1,409    (8.8%)   (23.8%)   0.0%   9.0%
Tier 2 Operating and Other Assets   23,038    616    21,343    489    (7.4%)   (20.6%)   0.5%   14.3%
Operating Assets(1)   143,169    2,466    130,948    1,898    (8.5%)   (23.0%)   0.1%   10.3%
Expansion Assets(2)   20,267    446    23,884    476    17.8%   6.7%   8.2%   (2.7%)
Total UFH   163,436    2,912    154,832    2,374    (5.3%)   (18.5%)   1.2%   7.4%

 

   2019   2020   Y-o-Y Growth % 
   Outpatient
Volume
   Inpatient
Admission
   Outpatient
Volume
   Inpatient
Admission
   Outpatient
Volume
   Inpatient
Admission
 
Tier 1 Operating Assets(1)   473,471    6,924    372,355    5,150    (21.4%)   (25.6%)
Tier 2 Operating and Other Assets(1)   87,511    2,374    73,577    1,818    (15.9%)   (23.4%)
Operating Assets Subtotal   560,982    9,298    445,932    6,968    (20.5%)   (25.1%)
Expansion Assets(2)   71,682    1,507    77,037    1,731    7.5%   14.9%
Total   632,664    10,805    522,969    8,699    (17.3%)   (19.5%)

 

(1)Operating Assets (Tier 1 and Tier 2): The yoy decline of both inpatient and outpatient volume for the fourth quarter and fiscal 2020 was primarily due to circumstances related to the COVID-19 pandemic, as patients postponed or cancelled non-emergency medical services. Following the downgrade of the emergency response to Beijing’s second wave of COVID-19 cases in June, outpatient volumes began to recover gradually in August. By September, total outpatient volume of operating assets had recovered to the same level as the same month in the prior year. Inpatient volume continued to be affected as the Company was encouraged to delay non-emergency and elective procedures. The yoy decline in inpatient admission was attributable to 1) lower admissions in obstetrics department due to nation-wide low birth rates in 2020, and 2) lower admissions in the pediatrics department throughout UFH’s facilities, as schools remained closed and enhanced personal hygiene and protective measures for school children were implemented. However, the Company continued to see strong yoy growth in other departments, such as family medicine, dental, internal medicine, surgery, and orthopaedics.
(2)Expansion Assets: Both PDU and GZU had significant yoy growth in both outpatient and inpatient volumes for the fourth quarter and fiscal 2020. The increases were primarily as a result of increased patient demand due to increased brand recognition and higher demand for OBGYN, internal medicine, and other specialties. Since opening in the fourth quarter of 2018, both PDU and GZU have developed higher acuity and complex specialties, including internal medicine, emergency services, and orthopedics, and have begun to offer more complex surgeries such as breast cancer surgery, complicated endoscopic gastrointestinal surgery, intestinal massive tumor removal, kidney surgery, thyroid cancer surgery, and knee and shoulder joint arthroscopies.

 

FINANCIAL RESULTS

 

Unaudited Fourth Quarter of 2020 Results

 

Revenue increased by 2.2% yoy to RMB654.0 million ($100.2 million) from RMB639.7 million and increased by 4.4% from the prior quarter, as patient volume continued to recover since the initial outbreak of the COVID-19 pandemic in February.

 

·Tier 1 Operating Assets: revenue decreased by 0.8% to RMB465.7 million from RMB462.2 million. Adjusted EBITDA (before IFRS 16 adoption) decreased by 15.3% to RMB124.0 million from RMB107.6 million due to a decline in patient volume as a result of the COVID-19 pandemic.

 

·Tier 2 Operating and Other Assets: revenue decreased by 14.3% to RMB82.2 million from RMB95.9 million due to a decrease in patient volume as a result of the COVID-19 pandemic. Adjusted EBITDA (before IFRS 16 adoption) improved to RMB4.3 million from RMB0.6 million due to implementation of cost savings initiatives.

 

·Expansion asset revenue increased by 30.0% to RMB106.2 million from RMB81.6 million due to the continued ramp-up of expansion assets. Adjusted EBITDA (before IFRS 16 adoption) improved by 72.5% yoy to RMB(10.2) million from RMB(37.0) million as a result of the strong revenue growth of the new hospitals in Guangzhou and Pudong, Shanghai.

 

 

 

 

Operating expenses were RMB623.2 million ($95.5 million) in the fourth quarter, representing a decrease of 24.1% yoy from RMB820.7 million and an increase of 5.4% qoq.

 

·Salaries, wages and benefits expenses decreased 22.7% yoy to RMB298.5 million from RMB386.1 million and increased by 1.2% qoq. The yoy decrease was primarily due to the RMB14.0 million decrease in transaction bonuses, which were paid in connection with the business combination, the implementation of cost-saving initiatives, which include voluntary pay reductions at headquarters, utilization of employee leave, and reduction in social insurance and benefits expenses as a result of government policies during the pandemic. The qoq increase was primarily due to new hires as service needs increased at facilities such as BJU, DTU, TJU, and GZU due to expansion of such facilities and the continued recovery from the COVID-19 pandemic.

 

·Supplies and purchased medical services expenses increased 14.2% yoy to RMB127.5 million from RMB111.6 million and increased by 11.9% qoq, mainly due to the enhancement of vaccination services and increased use of medical supplies as a result of the increase in number of patients treated and the Company’s expansion to provide more complex and sophisticated services.

 

·Depreciation and amortization expenses increased 16.7% yoy to RMB105.8 million from RMB90.6 million and increased by 0.6% qoq, due to fair value appreciation of plant and equipment as well as contracts with insurers related to the business combination.

 

·Lease and rental expenses decreased 90.6% yoy to RMB0.3 million from RMB3.5 million and decreased by 52.7% qoq, primarily due to a reduction in monthly lease payments as a result of government policies implemented during the COVID-19 pandemic.

 

·Impairment of trade receivables increased 14.9% yoy to RMB4.6 million from RMB4.0 million and increased by 724.1% qoq from RMB0.6 million, primarily due to the increase in trade receivables as a result of revenue growth.

 

·Other operating expenses decreased 61.5% yoy to RMB86.6 million from RMB224.9 million, mainly due to the RMB 134.4 million decrease in transaction costs incurred in connection with the business combination and the implementation of cost-saving initiatives. Other operating expenses increased by 14.0% qoq, or RMB10.6 million, primarily attributable to an increase in promotion and marketing expenses due to a series of promotional activities put in place in the fourth quarter.

 

As a result of the above, income from operations in the fourth quarter of 2020 was RMB30.8 million ($4.7 million) compared to loss from operations of RMB181.0 million in the prior year period. Loss before income taxes in the fourth quarter of 2020 was RMB83.0 million ($12.7 million), compared to RMB244.8 million in the prior year period. Net loss in the fourth quarter of 2020 was RMB101.4 million ($15.5 million), compared to RMB251.6 million in the prior year period. Decreased losses in the fourth quarter yoy mainly resulted from a significant decrease in transaction costs by RMB148.4 million, increased patient volume and strong revenue growth month-over-month in the fourth quarter of 2020, cost-saving initiatives, and cost reductions as a benefit of government policies in response to the COVID-19 pandemic, which offset an increase in finance costs due to the Company’s Senior Secured Term Loan.

 

As of December 31, 2020, the Company had RMB640.4 million ($98.2 million) in cash and cash equivalents. Cash generated from operating activities for the fourth quarter were RMB67.1 million ($10.3 million), cash used for investing activities were RMB104.2 million ($16.0 million), and cash used for financing activities were RMB57.8 million ($8.9 million), which were used for capital lease payments and repayment of the Senior Secured Term Loan.

 

Full Year 2020 Results

 

Revenues decreased by 7.7% to RMB2,260.5 million ($346.4 million) from RMB2,449.2 million.

 

·Tier 1 Operating Assets: revenue decreased by 11.9% yoy to RMB1,596.1 million from RMB1,810.7 million, and Adjusted EBITDA (before IFRS 16 adoption) decreased by 19.9% yoy to RMB371.5 million from RMB463.8 million primarily due to decreased patient volume as a result of the COVID-19 pandemic.

 

·Tier 2 Operating and Other Assets: revenue decreased by 15.6% yoy to RMB302.9 million from RMB358.8 million, and Adjusted EBITDA (before IFRS 16 adoption) increased to RMB0.3 million from RMB(0.2) million, primarily as a result of the implementation of cost control measures, with tier 2 operating and other assets approaching break-even as a group.

 

·Expansion Assets: revenue increased by 29.3% yoy to RMB361.5 million from RMB279.6 million, and Adjusted EBITDA (before IFRS 16 adoption) improved to RMB(85.2) million from RMB(161.4) million, achieving significant progress and remaining on track with strong ramp-up expectations.

 

 

 

 

Operating expenses were RMB2,338.9 million ($358.5 million) in fiscal 2020, representing a decrease of 12.2% yoy from RMB2,665.0 million in fiscal 2019.

 

·Salaries, wages and benefits expenses decreased 16.8% yoy to RMB1,186.7 million from RMB1,425.7 million. As a percentage of revenue, salaries, wages and benefits expenses were 52.5% in 2020 compared to 58.2% in 2019. This was primarily due to the implementation of cost-saving initiatives, including voluntary pay reductions at headquarters, utilization of employee leave, and a reduction in social insurance and benefits expenses, as a result of government policies during the pandemic, despite increased service needs as evidenced by the significant revenue growth resulting from the ramp-up of new facilities such as PXU, GZU, and PDU.

 

·Supplies and purchased medical services expenses increased 5.0% yoy to RMB420.4 million from RMB400.2 million due to expansion of postpartum and vaccination related services, increased purchases of personal protective equipment, and implementation of new infection control measures at the Company’s facilities during the pandemic.

 

·Depreciation and amortization expenses increased 23.5% yoy to RMB425.2 million from RMB344.4 million due to fair value appreciation of plant and equipment, contracts with insurers related to the business combination, and the depreciation of the new, expanded PXU facility.

 

·Lease and rental expenses decreased 82.0% yoy to RMB2.5 million from RMB13.9 million, mainly due to a reduction in lease payments as a result of government policies implemented during the pandemic.

 

·Impairment of trade receivables increased 4.8% yoy to RMB7.4 million from RMB7.0 million due to the increase in trade receivables.

 

·Other operating expenses decreased 37.4% yoy to RMB296.8 million from RMB473.8 million mainly, due to cost-saving initiatives and a decrease in transaction costs by RMB143.0 million.

 

As a result of the above, loss from operations decreased 63.7% yoy to RMB78.4 million ($12.0 million) in fiscal 2020, compared to RMB215.8 million in fiscal 2019. Loss before income taxes in fiscal 2020 was RMB391.4 million ($60.0 million), compared to RMB396.5 million in fiscal 2019. Net loss in fiscal 2020 was RMB419.1 million ($64.2 million), compared to RMB458.7 million in fiscal 2019. Decreased losses in the fiscal 2020 mainly resulted from a decrease in transaction costs by RMB157.0 million, implementation of cost-saving initiatives, and other cost reductions as a benefit of government policies implemented in response to the COVID-19 pandemic, despite increased finance costs and depreciation and amortization expenses from the business combination.

 

 

 

 

RECONCILIATON OF NON-IFRS FINANCIAL MEASURES

(RMB mm)                
   S/P Combined (non-IFRS)   Successor   S/P Combined (non-IFRS)   Successor 
   For the three
months ended
December 31,
2019
   For the three
months ended
December 31,
2020
   For the
year ended
December 31,
2019
   For the
year ended
December 31,
2020
 
Net loss   (251.6)   (101.4)   (458.7)   (419.1)
Less: Finance income   (1.2)   (1.1)   (2.9)   (2.7)
Add: Finance costs   59.1    64.0    162.2    263.8 
Add: Foreign exchange (gain)/loss   (6.9)   36.5    15.8    49.4 
Less: Gain on disposal of a subsidiary   -    -    -    (3.6)
Add: Other expense, net   12.8    14.4    5.6    6.1 
Add: Income tax expense   6.8    18.4    62.2    27.7 
Operating (loss)/income   (181.0)   30.8    (215.8)   (78.4)
Add: Share-based compensation   13.4    0.1    45.0    0.7 
Add: Depreciation and amortization   90.6    105.8    344.4    425.2 
Add: Discontinued monitoring fee payable to Fosun Pharma and TPG   1.1    -    3.8    - 
Add: Transaction related costs   152.0    3.6    164.6    7.6 
Add: Relocation costs of PXU   3.3    -    6.4    - 
Add: Severance costs   -    0.7    -    13.2 
Add: Other unallocated costs   -    -    0.3    - 
Adjusted EBITDA   79.4    141.0    348.7    368.4 
Less: Lease expense adjustments as a result of IFRS 16 adoption   (53.7)   (50.5)   (205.1)   (201.7)
Adjusted EBITDA (before IFRS 16 adoption)   25.7    90.5    143.6    166.7 

 

   For the three months ended December 31, 2020 
   Operating
assets
Tier 1
   Operating assets
- Tier 2 and
other assets
   Expansion
assets
   Total 
Segment results   145.5    6.7    11.5    163.7 
Less: Segment lease expense adjustment as a result of adoption of IFRS 16   (23.2)   (5.1)   (22.2)   (50.5)
Add: Severance costs   0.1    0.1    0.5    0.7 
Add: Intersegment costs   1.6    2.6    -    4.2 
Elimination                  (4.2)
Adjusted EBITDA (before IFRS 16 Adoption)   124.0    4.3    (10.2)   113.9 
Less: Unallocated costs – others                  (23.4)
Total Adjusted EBITDA (before IFRS 16 Adoption)                  90.5 
Add: Lease expense adjustment as a result of adoption of IFRS 16                  50.5 
Adjusted EBITDA                  141.0 
Less: Share-based compensation                  (0.1)
Less: Depreciation and amortization                  (105.8)
Less: Transaction related costs                  (3.6)
Less: Severance costs                  (0.7)
Operating income                  30.8 
Add: Finance income                  1.1 
Less: Finance costs                  (64.0)
Less: Foreign exchange loss                  (36.5)
Less: Other expenses, net                  (14.4)
Less: Income tax expense                  (18.4)
Net loss                  (101.4)

 

 

 

 

RECENT DEVELOPMENTS

 

DTU Building Construction Completed and on Target for Grand Opening

 

During the fourth quarter, the majority of construction was completed on our new Women’s and Children’s Hospital (DTU) in the northwest corner of Beijing. The new facility recently opened in late March 2021 and has over 25,000 square meters of space, while being conveniently located near Beijing’s Olympic Village with direct access to major thoroughfares. The hospital will be the first Level III accredited specialty hospital in the UFH network. With capacity of more than 200 beds, the hospital is expected to provide outpatient clinic services, 24/7 pediatric emergency services, inpatient care, and neonatal intensive care services (NICU). The pediatric medical team will provide comprehensive well and sick care in addition to sub-specialty services, including Pediatric Surgery, Pediatric Orthopedics, Oral Health, Ear, Nose, and Throat (ENT), Ophthalmology. The OBGYN medical team, led by Dr. Lai Ailuan, will offer a full range of both gynecological and obstetric services, including specialization in various women’s health areas.

 

BJU Building 1 Lease Expiration

 

The lease on Building 1 of the BJU campus started in 1995 and was renewed in 2016. The renewal expired on December 31, 2020, and an extension agreement has not yet been reached. Plans are underway to potentially end this arrangement and to relocate certain existing operations to BJU’s clinics and other UFH facilities in Beijing. A majority of the clinics will be relocated to Building 2, in addition to newly leased, street-front commercial space adjacent to the hospital. Patient maternity rooms in Building 1 due to the relocation will be supplemented by a space in the new United Family Datun Women and Children’s Facility, which began soft opening at the end of March 2021.

 

Preliminary Non-binding “Going Private” Proposal

 

On February 10, 2021, the Company announced that its board of directors (the “Board”) received a preliminary non-binding proposal letter (the “Proposal Letter”), dated February 9, 2021, from New Frontier Public Holding Ltd. (“NFPH”), Carnival Investments Limited, a company affiliated with Leung Kam Chung (the “Chairman”), Roberta Lipson and her affiliates (collectively, the “CEO”), Max Rising International Limited, a company affiliated with Carl Wu (the “President”), Ying Zeng (the “COO”), Vivo Capital Fund IX (Cayman), L.P.(“Vivo”), NF SPAC Holding Limited and Sun Hing Associates Limited (together with NF SPAC Holding Limited, “Nan Fung”), Brave Peak Limited (“Shimao”), Aspex Master Fund (“Aspex”), Smart Scene Investment Limited (“Hysan”), and LY Holding Co., Limited (“Tingyi Group” and, together with NFPH Holding, the Chairman, the CEO, the President, the COO, Vivo, Nan Fung, Shimao, Aspex and Hysan (the “Buyer Group”), to acquire all outstanding ordinary shares (the “Shares”) of the Company not already beneficially owned by members of the Buyer Group or their affiliates in a going-private transaction for US$12.00 per share in cash (the “Proposed Transaction”). The Proposed Transaction, if completed, would result in the Company becoming a privately held company and delisting its ordinary shares from the New York Stock Exchange.

 

On February 10, 2021, the Company further announced that the Company received a clarification from representatives of the Buyer Group indicating that the Buyer Group intends to, at a later time and in connection with the Proposed Transaction, also propose to acquire all outstanding warrants to purchase ordinary shares of the Company not already beneficially owned by members of the Buyer Group or their affiliates.

 

On March 18, 2021, the Company announced that the Board has formed a special committee to review and evaluate the previously mentioned preliminary non-binding “going private” proposal.

 

BUSINESS OUTLOOK

 

The extent to which the COVID-19 pandemic affects NFH’s long-term results remains uncertain, and the Company is closely monitoring its impact. There remain significant uncertainties of COVID-19’s future impact, the extent of which will depend on a number of factors, including the duration and severity of COVID-19, the potential for new waves in China, the development and progress of distribution of COVID-19 vaccine and other medical treatment, the actions taken by government authorities, particularly to contain the outbreak, and economic stimulation to improve business conditions, especially for small and medium-sized enterprises (SMEs), almost all of which are beyond the Company’s control.

 

 

 

 

CONFERENCE CALL

 

A conference call and webcast to discuss New Frontier Healthcare’s financial results and guidance will be held at 8:00 a.m. U.S. Eastern Time on Thursday, April 8, 2021 (or Thursday, April 8, 2021, at 8:00 pm Beijing Time). Interested parties may listen to the conference call by dialing numbers below:

 

United States: 1-877-407-0789

International: 1-201-689-8562

China Domestic: 86 400 120 2840

Hong Kong: 800 965 561

Conference ID: 13718229

 

The replay will be accessible through April 15, 2021, by dialing the following numbers:

 

United States: 1-844-512-2921

International: 1-412-317-6671

Conference ID: 13718229

 

The webcast will be available on the Company’s investor relations website at www.nfh.com.cn and will be archived on the site shortly after the call has concluded. A presentation to accompany the call will also be available for download on the website.

 

About New Frontier Health Corporation

 

New Frontier Health Corporation (NYSE: NFH) is the operator of United Family Healthcare (UFH), a leading private healthcare provider offering comprehensive premium healthcare services in China through a network of private hospitals and affiliated ambulatory clinics. UFH currently has nine hospitals in operation or under construction in all four tier 1 cities and selected tier 2 cities. Additional information may be found at www.nfh.com.cn.

 

Forward-Looking Statements

 

Certain statements made in this release are "forward looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. When used in this press release, the words "estimates," "projected," "expects," "anticipates," "forecasts," "plans," "intends," "believes," "seeks," "may," "will," "should," "future," "propose" and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements include, without limitation, UFH’s preparedness to address the outbreak; UFH’s ability to manage patient inflows; UFH’s ability to prevent the spread of COVID-19 within its facilities; UFH’s ability to grow its business manage its growth; the benefits and synergies of the Business Combination, including anticipated cost savings, results of operations, financial condition, liquidity, prospects, growth, strategies and the markets in which the Company operates; and the Company’s ability to complete the “going private” transaction. Such forward-looking statements are based on available current market material and management’s expectations, beliefs and forecasts concerning future events impacting NFH. These forward-looking statements are not guarantees of future results and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside NFH’s control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. For a discussion of such risks, please refer to NFH’s Form 20-F filed with the U.S. Securities and Exchange Commission on March 31, 2020 and Company’s subsequent filings with the SEC. NFH undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

 

Non-IFRS Measures

 

The discussion and analysis includes certain measures, including Adjusted EBITDA (before IFRS 16 adoption) and Pro Forma Adjusted EBITDA, which have not been prepared in accordance with IFRS. This measure does not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. This measure should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with IFRS. We use this measure to evaluate our operating results and for financial and operational decision-making purposes. We believe that Adjusted EBITDA is helpful in comparing our performance over various reporting periods on a consistent basis by removing from operating results the impact of items that do not reflect core operating performance, and in identifying underlying operating results and trends.

 

Adjusted EBITDA (before IFRS 16 adoption) is calculated as net loss plus (i) depreciation and amortization, (ii) finance costs/(income), (iii) other gains or losses, (iv) other expenses (such as share based compensation), (v) provision for income taxes, as further adjusted for (vi) certain monitoring fees paid to certain shareholders prior to the Business Combination, (vii) lease expense adjustments as a result of adoption of IFRS 16, (viii) transaction related costs (such as insurance amortization), and (ix) severance costs as a result of the restructuring process mainly in corporate headquarters since the second quarter of 2020. UFH adopted IFRS 16 on January 1, 2019, and recognized lease liabilities and corresponding “right-of-use” assets for all applicable leases, and recognized interest expense accrued on the outstanding balance of the lease liabilities and depreciation of right-of-use assets. As a result, the adoption of IFRS 16 caused depreciation and amortization and finance costs to increase in 2019, and excluded all applicable lease expenses in Adjusted EBITDA. For ease of comparison to prior periods, the Company eliminated the impact of IFRS 16 on Adjusted EBITDA.

 

Please see the table captioned “Reconciliation of Non-IFRS Financial Measures.”

 

 

 

 

Exchange Rate Information

 

The translations from Renminbi to U.S. dollars for purposes of convenience were made at a rate of RMB6.5250 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on December 31, 2020.

 

Contacts

 

Investors
Arthur, Yue Chen
Tel: +86-150-0500-3258
Email: arthur@new-frontier.com

 

ICR, LLC
William Zima
Tel: +1-203-682-8200
Email: bill.zima@icrinc.com

 

Media
Wenjing Liu
Tel: +86-186-1151-5796
Email: liu.wenjing@ufh.com.cn

 

 

 

 

NEW FRONTIER HEALTH CORPORATION

 

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

 

(All amounts in thousands)

 

   Predecessor   Successor 
   Period from
October 1 to
December 18,
2019
   Period from 1
January 1 to
December 18,
2019
(Audited)
   Period from
December 19 to
December 31,
2019
(Audited)
   For the
three months ended
December 31, 2020
   For the
year ended
December 31,
2020
 
   RMB   RMB   RMB   RMB   US$   RMB   US$ 
Revenues   559,705    2,369,167    80,035    654,047    100,237    2,260,505    346,438 
Operating expenses                                   
Salaries, wages and benefits   (306,871)   (1,346,478)   (79,215)   (298,507)   (45,748)   (1,186,715)   (181,872)
Supplies and purchased medical services   (93,364)   (381,954)   (18,241)   (127,505)   (19,541)   (420,393)   (64,428)
Depreciation and amortization expense   (75,713)   (329,453)   (14,931)   (105,750)   (16,207)   (425,160)   (65,159)
Lease and rental expenses   (2,765)   (13,167)   (739)   (329)   (50)   (2,508)   (384)
Bad debt expense   (3,452)   (6,512)   (528)   (4,574)   (701)   (7,378)   (1,131)
Other operating expenses   (59,098)   (308,005)   (165,776)   (86,572)   (13,268)   (296,757)   (45,480)
Expense total   (541,263)   (2,385,569)   (279,430)   (623,237)   (95,515)   (2,338,911)   (358,454)
Operating loss   18,442    (16,402)   (199,395)   30,810    4,722    (78,406)   (12,016)
Finance income   387    2,127    779    1,141    175    2,727    418 
Finance costs   (29,588)   (132,730)   (29,503)   (63,957)   (9,802)   (263,810)   (40,431)
Foreign currency gain (loss)   9,575    (13,120)   (2,641)   (36,516)   (5,596)   (49,389)   (7,569)
Gain on disposal of a subsidiary   -    -    -    -    -    3,558    545 
Other income (expense), net   (7,049)   171    (5,798)   (14,436)   (2,212)   (6,097)   (934)
Loss before income taxes   (8,233)   (159,954)   (236,558)   (82,958)   (12,713)   (391,417)   (59,987)
Income tax (expense)/benefit   (13,027)   (68,424)   6,261    (18,427)   (2,824)   (27,708)   (4,246)
Loss for the period   (21,260)   (228,378)   (230,297)   (101,385)   (15,537)   (419,125)   (64,233)
Attributable to                                   
Limited partners/equity holders of the parent   (15,659)   (200,441)   (228,905)   (94,734)   (14,518)   (392,841)   (60,205)
Non-controlling interests   (5,601)   (27,937)   (1,392)   (6,651)   (1,019)   (26,284)   (4,028)
                                    
Loss per share attributed to equity holders of the parent                                   
Basic             (1.74)   (0.72)   (0.11)   (2.99)   (0.46)
Diluted             (1.74)   (0.72)   (0.11)   (2.99)   (0.46)
                                    
Other comprehensive income (loss)                                   
Items to be reclassified to profit or loss in subsequent periods (net of tax):                                   
Currency translation differences   (7,959)   7,934    1,909    24,515    3,757    36,480    5,591 
Other comprehensive income (loss)   (7,959)   7,934    1,909    24,515    3,757    36,480    5,591 
                                    
Comprehensive loss for the period   (29,219)   (220,444)   (228,388)   (76,870)   (11,780)   (382,645)   (58,642)
                                    
Comprehensive loss attributable to                                   
Limited partners/equity holders of the parent   (23,618)   (192,507)   (226,996)   (70,219)   (10,761)   (356,361)   (54,614)
Non-controlling interests   (5,601)   (27,937)   (1,392)   (6,651)   (1,019)   (26,284)   (4,028)

 

 

 

 

NEW FRONTIER HEALTH CORPORATION

 

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 

(All amounts in thousands)

 

   As of December 31, 
   2019
(Audited)
   2020 
   RMB   RMB   US$ 
Non-current assets               
Property and equipment   1,962,781    2,014,904    308,798 
Goodwill   6,056,253    6,088,472    933,099 
Intangible assets   2,584,893    2,526,777    387,246 
Right-of-use assets   1,773,007    1,651,748    253,141 
Deferred tax assets   59,001    46,785    7,170 
Restricted cash   350    350    54 
Investment in an associate   -    1,000    153 
Other non-current assets   106,121    73,021    11,191 
Total non-current assets   12,542,406    12,403,057    1,900,852 
Current assets               
Inventories   56,592    92,268    14,141 
Trade receivable   215,376    218,971    33,559 
Due from related parties   66,923    10,129    1,552 
Prepayments and other current assets   38,323    53,509    8,201 
Restricted cash   376,715    -    - 
Cash and cash equivalents   1,353,300    640,429    98,150 
Total current assets   2,107,229    1,015,306    155,603 
TOTAL ASSETS   14,649,635    13,418,363    2,056,455 
Current liabilities               
Trade payables   99,082    89,056    13,648 
Contract liabilities   270,196    350,146    53,662 
Accrued expenses and other current liabilities   882,158    425,940    65,278 
Due to related parties   4,045    6,104    935 
Tax payable   15,278    1,260    193 
Long-term borrowings   400,325    6,027    924 
Lease liabilities   90,521    89,181    13,668 
Total current liabilities   1,761,605    967,714    148,308 
NET CURRENT ASSETS   345,624    47,592    7,295 
TOTAL ASSETS LESS CURRENT LIABILITIES   12,888,030    12,450,649    1,908,147 
Non-current liabilities               
Long-term borrowings   2,060,933    2,054,649    314,889 
Contract liabilities   67,873    68,577    10,510 
Deferred  tax liabilities   681,715    665,962    102,063 
Lease liabilities   1,661,182    1,595,570    244,532 
Other long-term liabilities   9,358    9,016    1,382 
Total non-current liabilities   4,481,061    4,393,774    673,376 
Net assets   8,406,969    8,056,875    1,234,771 
EQUITY               
Equity attributable to the equity holders of the Company               
Ordinary shares   91    91    14 
Capital surplus   8,430,405    8,462,956    1,297,005 
Foreign currency translation reserves   6,302    42,782    6,557 
Accumulated deficit   (265,618)   (658,459)   (100,913)
    8,171,180    7,847,370    1,202,663 
Non-controlling interests   235,789    209,505    32,108 
Total equity   8,406,969    8,056,875    1,234,771 

 

 

 

 

NEW FRONTIER HEALTH CORPORATION

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(All amounts in thousands)

 

   Predecessor   Successor 
   Period from
October 1 To
December 18,
2019
   Period from
January 1 to
December 18,
2019
(Audited)
   Period from
December 19 to
December 31, 2019
(Audited)
   For the three months ended
December 31, 2020
   For the year ended
December 31, 2020
 
   RMB   RMB   RMB   RMB   US$   RMB   US$ 
Cash generated from (used for):                            
Operating activities   36,222    316,639    (80,432)   67,126    10,288    265,215    40,646 
Investing activities   (49,347)   (341,771)   (45,671)   (104,155)   (15,962)   (319,689)   (48,994)
Financing activities   (17,727)   (189,961)   (9,702)   (57,831)   (8,863)   (631,234)   (96,741)
Net decrease in cash and cash equivalents   (30,852)   (215,093)   (135,805)   (94,860)   (14,537)   (685,708)   (105,089)

 

 

 

Exhibit 99.2

 

1 1 New Frontier Health Q4 2020 Results Apr 8, 2021

 

 

2 2 Disclaimer Forward - Looking Statements This presentation includes “forward - looking statements” within the meaning of the “safe harbor” provisions of the Private Securi ties Litigation Reform Act of 1995. The actual results of New Frontier Health Corporation (the “Company”) may differ from the Company’s expectations, estimates and projections and consequently, yo u s hould not rely on these forward - looking statements as predictions of future events. Words such as “expect”, “estimate”, “project”, “budget”, “forecast”, “anticipate”, “intend”, “plan”, “may”, “w ill ”, “could”, “should”, “believes”, “predicts”, “potential”, “continue”, and similar expressions are intended to identify such forward - looking statements. These forward - looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results, including, but not limited to, the Company’s ability to manage growth; the Company’s ability to ex ecu te its business plan, including its planned expansions, and meet its projections; rising costs adversely affecting the Company’s profitability; potential litigation involving the Company; genera l e conomic and market conditions impacting demand for the Company’s services, and in particular the effects of COVID - 19 on the Company's business and financial condition as well as other economic and market conditions in the Chinese healthcare industry and changes in the rules and regulations that apply to such business, including as it relates to foreign investments in such businesses; and other ris ks and uncertainties indicated from time to time in the Company’s filings with the U.S. Securities and Exchange Commission (the “SEC”). Most of these factors are outside of the Company’s control and are d iff icult to predict. The Company cautions readers not to place undue reliance upon any forward - looking statements, which speak only as of the date made. The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward - looking statements to reflect any change in its expectations or any change in events, conditions or cir cumstances on which any such statement is based, except as required by law. Financial Information The Company acquired Healthy Harmony in a business combination that closed on December 18 , 2019 (the “Closing Date”) . Healthy Harmony was determined to be the accounting “Predecessor” while the Company succeeded to all of the business and operations of Healthy Harmony and was considered the combined Company (the “Successor” . The financial results for the three months and year ended December 31 , 2020 , presented herein are those of the combined Company . The Company’s financial statement presentation in 2019 is further distinguished as follows : the Successor period is from December 19 , 2019 to December 31 , 2019 (“ 2019 Successor Period”) and the Predecessor periods are from January 1 , 2019 to December 18 , 2019 (“ 2019 Predecessor Period”), and from October 1 , 2019 to December 18 , 2019 (“ 2019 Q 4 Predecessor Period” or “Prior Year Period”) . Management believes reviewing the Company’s operating results for the three months and year ended December 31 , 2019 by combining the results of the 2019 Q 4 Predecessor Period and 2019 Successor Period (the “ 2019 Q 4 S/P Combined”), and combining the results of the 2019 Predecessor Period and 2019 Successor Period (the “ 2019 S/P Combined”) respectively, is more useful . Industry and Market Data In this presentation, we rely on and refer to information and statistics regarding market participants in the sectors in whic h t he Company competes and other industry data. The Company obtained this information and statistics from third - party sources, including reports by market research firms and company filings. Use of Non - IFRS Financial Matters The discussion and analysis includes certain measures, including Adjusted EBITDA (before IFRS 16 adoption), Adjusted EBITDA M arg in, Free Cash Flow and Pro - forma Adjusted EBITDA, and Pro - forma Adjusted EBITDA Margin, which have not been prepared in accordance with IFRS. These measures do not have any standardiz ed meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. These measures should be considered as supplemental in nature an d n ot as a substitute for the related financial information prepared in accordance with IFRS. We use these measures to evaluate our operating results and for financial and operational decision - making purposes. We believe that Adjusted EBITDA and Pro - forma Adjusted EBITDA helps compare our performance over various reporting periods on a consistent basis by removing from operating results the impact of items that do not reflect core operating performance and helps identify underlying operating results and trends.

 

 

3 3 Disclaimer Adjusted EBITDA (before IFRS 16 adoption), is calculated as net loss plus ( i ) depreciation and amortization, (ii) finance expense/(income), (iii) other gains or losses, (iv) other expenses (such as sha re based compensation), (v) provision for income taxes, as further adjusted for (vi) certain monitoring fees paid to certain sha reh olders prior to the Business Combination, (vii) lease expense adjustments as a result of adoption of IFRS 16, (viii) transaction related costs, (ix) Gain on disposal of an associate and (x) Severance co sts as a result of the restructuring process mainly in corporate headquarters since the second quarter of 2020. UFH adopted IFRS 16 on January 1, 2019, and recognized lease liabilities and corresponding “ri ght - of - use” assets for all applicable leases, and recognized interest expense accrued on the outstanding balance of the lease liabilities and depreciation of right - of - use assets. As a result, the ad option of IFRS 16 caused depreciation and amortization and finance costs to increase in 2019 and excluded all applicable lease expenses in Adjusted EBITDA. For ease of comparison to prior periods, the Com pany eliminated the impact of IFRS 16 on Adjusted EBITDA. Pro - forma Adjusted EBITDA, is calculated as net loss plus ( i ) depreciation and amortization, (ii) finance expense/(income), (iii) other gains or losses, (iv) other expenses (such as sha re based compensation), (v) provision for income taxes, as further adjusted for (vi) certain monitoring fees paid to certain sharehold ers prior to the Business Combination, (vii) lease expense adjustment as a result of adoption of IFRS 16, (viii) transaction related costs, (ix) Gain on disposal of an associate, (x) Severance costs a s a result of the restructuring process mainly in corporate headquarters since the second quarter of 2020 and (xi) Pro - forma adjustments in PXU. See slide 42 for further information on these pro - forma adjustment s. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA (before IFRS 16 adoption), by total revenue and Pro - forma Adjus ted EBITDA margin is calculated by dividing Pro - forma Adjusted EBITDA by total revenue. Free cash flow is calculated as 1) cash flow generated from operating activities 2) minus release of restricted cash, 3) minu s c apital lease payments, 4) add interest expense paid, 5) add one - off transaction expense related to the business combination, 6) minus capital expenditure on existing operations of the facilitie s. A reconciliation of non - IFRS forward looking information to their corresponding IFRS measures are not included in this presentat ion as they cannot be provided without unreasonable effort because of the inherent difficulty of accurately forecasting the occurrence and financial impact of the various adjusting items necessar y f or such reconciliation that have not yet occurred, are out of our control, or cannot be reasonably predicted.

 

 

4 4 Q4 2020 Business Highlights Going Private Proposal Update Appendix A - Additional Materials Table of Contents

 

 

5 5 Shanghai United Family Pudong Hospital Q4 2020 BUSINESS HIGHLIGHTS

 

 

6 6 Financial Snapshot Outpatient Visit - 17.3 % YoY 522 ,969 Visits Inpatient Admission - 19.5 % YoY Utilization Rate Compared to 38.3 % in 20 19 33.3 % Operational Snapshot Adjusted EBITDA (before IFRS 16 Adoption) 1 RMB 166 .7 mn Total Revenue - 7.7 % YoY RMB 2,260 .5 mn 8 ,699 Admissions 2020 F iscal Year Operational and Financial Snapshot Notes: 1. See slide 42 for a reconciliation of net loss to Adjusted EBITDA (before IFRS 16 Adoption) Outpatient ASP 11.0 % YoY RMB 2,638 Inpatient ASP 15.0 % YoY RMB 98,511 16.1 % YoY

 

 

7 7 Financial Snapshot Outpatient Visit - 5.3 % YoY 1.2 % QoQ 154,832 Visits Inpatient Admission - 18.5 % YoY 7.4 % QoQ Utilization Rate Compared to 40.1 % in 4Q19 34.8 % Operational Snapshot Adjusted EBITDA (before IFRS 16 Adoption) 1 RMB 90.5 mn Total Revenue 2.2 % YoY 4.4 % QoQ RMB 654.0 mn 2,374 Admissions Q4 2020 Operational and Financial Snapshot Notes: 1. See slide 42 for a reconciliation of net loss to Adjusted EBITDA (before IFRS 16 Adoption) Outpatient ASP 14.0 % YoY RMB 2,710 Inpatient ASP 15.1 % YoY RMB 96,599 252.1 % YoY

 

 

8 Q4 Revenue Con tinued Recovering and Recorded Y - o - y Growth 43 55 69 74 82 65 89 101 106 61 71 79 84 87 83 93 96 64 78 80 82 391 429 405 434 435 477 437 462 302 382 446 466 654 431 640 549 604 577 562 627 507 18Q3 520 20Q4 20Q3 20Q2 20Q1 19Q4 628 470 19Q1 18Q4 19Q2 18Q1 19Q3 18Q2 18 20 23 Expansion Operating Tier 2 & Other Assets Operating Tier 1 Revenue (in million RMB) - 13% 14% - 25% Y - o - y Growth 1% - 14% 30% Y - o - y Growth 4% 4% Q - o - q Recovery 2%

 

 

9 Outpatient and Inpatient Volume by Segment Outpatient Volume Inpatient Admission 521 291 378 392 446 361 405 489 476 1,575 561 514 581 616 528 614 616 451 450 428 489 1,612 1,597 1,686 1,687 1,789 1,598 1,850 1,244 1,204 1,293 1,409 2,056 2,175 2,604 2,210 2,594 2,430 2,148 2,096 20Q1 2,374 20Q4 18Q4 163 2,695 20Q3 20Q2 18Q2 18Q3 2,912 2 37 19Q3 19Q1 2,059 19Q4 19Q2 18Q1 13,384 15,499 18,657 17,259 20,267 13,203 17,870 22,080 23,884 16,425 18,431 20,770 21,533 21,139 21,552 21,782 23,038 12,564 18,438 21,232 21,343 63,696 89,415 123,801 109,605 120,131 112,771 109,632 114,913 115,687 109,639 109,084 125,723 89,463 163,436 143,871 134,539 19Q1 164,010 20Q3 20Q2 20Q1 147,688 19Q2 19Q4 19Q3 20Q4 151,551 18Q1 9,837 153,667 9,753 114,626 18Q4 154,832 152,951 18Q3 18Q2 140,239 9,030 - 23% 11% - 41% - 9% - 7% 18% - 24% - 21% 7% Y - o - y Growth Y - o - y Growth Expansion Operating Tier 2 & Other Assets Operating Tier 1 0% 1% 7% Q - o - q Recovery Q - o - q Recovery - 24% 20% - 21% Y - o - y Growth - 15% - 5% - 19%

 

 

10 ASP 1 Increased in Q 4 Due to Higher Acuity Procedures Outpatient ASP Inpatient ASP 19Q2 86,847 18Q3 20Q1 89,755 83,932 101,024 103,386 20Q4 79,807 18Q4 19Q1 18Q2 89,969 19Q3 96,599 20Q2 19Q4 81,965 20Q3 86,379 87,019 92,964 18Q1 19Q1 18Q3 2,267 18Q1 18Q4 2,608 2,390 2,226 18Q2 19Q2 20Q3 2,341 2,710 20Q2 2,383 20Q4 19Q4 19Q3 2,580 2,358 2,240 20Q1 2,377 2,640 11% 9% 2% Y - o - y Growth Notes: 1. Average selling price 9% 14% 16% 13% - 3% Y - o - y Growth 15% 15%

 

 

11 Adjusted and Pro - forma Adjusted EBITDA 1 Tier 1 Operating Assets Tier 2 Operating and Other Assets Expansion Assets Total 52.8 5.8 5.8 5.8 1.9 36.7 18Q4 20Q4 20Q2 19Q1 18Q1 54.0 18Q2 18Q3 - 67.7 30.9 19Q2 34.2 19Q3 58.6 50.5 25.7 19Q4 20Q1 20Q3 35.9 - 10.9 8.8 40.0 27.6 89.9 90.5 - 24.1 - 37.5 - 60.6 - 63.8 - 43.6 - 40.8 - 40.0 - 37.0 - 42.6 - 19.5 - 12.9 - 10.2 18Q1 19Q4 19Q3 18Q2 19Q1 19Q2 18Q3 18Q4 20Q1 20Q2 20Q3 20Q4 - 4.2 - 1.4 - 0.7 - 3.7 0.4 - 3.5 2.3 0.6 - 11.5 3.6 3.9 4.3 20Q3 18Q1 19Q4 19Q3 19Q1 18Q2 18Q3 18Q4 19Q2 20Q1 20Q2 20Q4 5.8 19Q2 20Q3 115.7 18Q2 18Q3 141.6 18Q1 19Q4 119.4 116.3 97.3 110.5 20Q4 18Q4 20Q2 5.8 19Q1 126.1 22.9 135.8 20Q1 5.8 109.9 107.6 19Q3 1.9 88.0 116.3 109.5 98.6 124.0 15% 663% 73% 252% Y - o - y Growth Pro - forma Adjustments 1 Notes: 1. See slide 42 for a reconciliation of net loss to Adjusted EBITDA (before IFRS 16 Adoption) and Pro - forma Adjusted EBITDA Unallocated HQ Expenses - 33.1 - 30.1 - 37.6 - 39.9 - 36.5 - 38.7 - 37.9 - 45.4 - 36.4 - 28.7 - 27.2 - 27.6 19Q4 18Q1 18Q3 18Q2 20Q1 19Q1 18Q4 19Q2 19Q3 20Q2 20Q3 20Q4 39%

 

 

12 12 Building 1 Lease Expiration of Beijing United Family Hospital Situation Overview and Plan for BJU Building 1 Lease Expiration  The lease on Building 1 of the BJU campus started in 1995 and was renewed in 2016.  The renewal expires on December 31, 2020, and an extension agreement has not yet been reached.  A short term, temporary arrangement has been made in place to continue using Building 1 for a period including additional daily rental compensation, with plans for certain existing operations to be relocated to the existing satellite clinics and other facilities in Beijing.  Majority of the clinics will be relocated to Building 2, in addition to some newly - leased, street front commercial space adjacent to the current BJU hospital campus.

 

 

13 13 DTU 1 Building Construction Completed and Target for Grand Opening  Level III accredited specialty hospital with over 25,000 sqm of area and 200 licensed beds  Located near Beijing’s Olympic Village  Completed the majority of its construction in 2020 Q4  Completion ceremony on March 27th, 2021 Notes: 1. Beijing Jingbei Women and Children’s United Family Hospital (“DTU”) 2. Includes Pediatric Surgery, Pediatric Orthopedics, Oral Health, ENT, and Ophthalmology  Outpatient clinic, 24/7 pediatric emergency , inpatient care, and neonatal intensive care services (NICU)  OB/GYN: Led by Dr. Lai Ailuan , offering a full range of both gynecological and obstetric services  Pediatrics: Comprehensive well and sick care and sub - specialty services 2 DTU Overview Specialty Focus

 

 

14 14 Shanghai United Family Hospital GOING PRIVATE PROPOSAL UPDATE

 

 

15 15 Preliminary Non - binding “Going Private” Proposal  A preliminary non - binding proposal letter by a group of investors (altogether “Buyer Group”) was raised to acquire all outstanding ordinary shares in a going - private transaction for US$12.00 per share in cash . The Proposed Transaction would result in NFH becoming a privately held company and delisting its ordinary shares from the NYSE Non - Binding Offer for All O/S Shares (Feb 10 th , 2021) Non - Binding Offer for All O/S Warrants (Feb 10th, 2021) Formation of Special Committee (“SC”) (Mar 18 th , 2021) Independent Financial Advisor & Legal Counsel of SC (Mar 18 th , 2021)  In addition, Buyer Group will provide a proposal to acquire outstanding warrants  A special committee consisted of 3 independent directors (i.e. Mr. Lawrence Chia, Prof. Fred Ma, Dr. CH Leong) has been formed to review and evaluate the preliminary non - binding “going private” proposal  The Special Committee has retained Duff & Phelps, LLC and Duff & Phelps Securities, LLC as financial advisor and Davis Polk & Wardwell LLP as legal counsel

 

 

16 16 APPENDIX A – ADDITIONAL MATERIALS

 

 

17 17 Operating Expenses 386.1 298.5 19Q4 20Q4 SWB 60% As % of Revenue 46% Salary, Wages & Benefits (in million RMB) 224.9 86.6 90.6 105.8 111.6 127.5 3.5 434.6 20Q4 4.0 324.8 0.3 19Q4 4.6 Supplies & Purchased Medical Service 1 Depreciation and Amortization 3 Lease & Rental 2 Bad Debt Expense 4 Others 68% As % of Revenue 50% Other SG&A (in million RMB) Notes: 1. 2020 Q4 increase mainly due to the enhancement of vaccination services and increased use of medical supplies due to the in cre ase in number of patients treated and the company’s expansion to provide more complex and sophisticated services. 2. 2020 Q4 decreases primarily due to a reduction in rental expenses as a result of government policies implemented during th e p andemic. 3. 2020 Q4 increases due to fair value appreciation of plant and equipment, contracts with insurers related to the business c omb ination. 4. 2020 Q 4 is an expense of RMB 4.6 million due to the increase in trade receivable as a result of revenue growth. L owered Cost Structure Due to Cost Saving Initiatives

 

 

18 Strong Balance Sheet and Positive Free Cash Flow in Q4 2020 Notes: 1. Adjusted operating cash flow is defined as cash generated for operating activities less capital lease payments, adding back i nte rest expense and one - off transaction related costs. See slide 41 for detailed reconciliation 2. Free cash flow is defined as operating cash flow less maintenance CAPEX Adj. Operating Cash Flow 1 Oct to Dec 2020 52 RMB million Cash and Cash Equivalents As of December 31, 2020 640 RMB million Free Cash Flow 2 Oct to Dec 2020 40 RMB million

 

 

19 Strong Cash Flow and Balance Sheet Notes: 1. Due to IFRS 16 adoption, capital lease payments is categorized as cash used for financing activities. 2. Maintenance capex is defined as all capex spent for existing operations of the facilities. 3. Expansionary capex is defined as capex spent for building new facilities including the new site of Shanghai Puxi Hospital, Sh ang hai Pudong Hospital, Guangzhou Hospital and Beijing Jingbei Women and Children’s United Family Hospital (“DTU”) (RMB million) 4Q20 Operating Cash Flow & Free Cash Flow: Cash Flow Generated from Operating Activities 67 Less: Capital Lease Payments 1 (52) Add: Interest Expense Paid 32 Add: One - off Transaction Expense Paid 5 Adjusted Operating Cash Flow 52 Less: Maintenance CAPEX (12) Free Cash Flow 40 CAPEX: Maintenance CAPEX 2 12 Expansionary CAPEX 3 8 1 Total CAPEX 93

 

 

20 20 Reconciliation of Non - IFRS Financial Measures Notes: 1. Monitoring fee payable to TPG and Fosun is not related to business operation and is discontinued from 2020 onwards . 2. Management believes reviewing the Company’s operating results for the three months and year ended December 31, 2019 by com bin ing the results of the 2019 Q4 Predecessor Period and 2019 Successor Period (the “2019 Q4 S/P Combined”) and combining the results of the 2019 Predecessor Period and 2019 Successor Period (the “2019 S/P Combined”) respectively, is mo re useful. S/P Combined 2 (non-IFRS) Successor S/P Combined 2 (non-IFRS) Successor For the quarter ended 31 December For the year ended 31 December 2019 2020 2019 2020 Net loss (252) (101) (459) (419) Less: Finance income (1) (1) (3) (3) Add: Finance costs 59 64 162 264 Add: Foreign exchange (gain)/loss (7) 37 16 49 Less: Gain on disposal of a subsidiary - - - (4) Add: Other expense, net 13 14 6 6 Add: Income tax expense 7 18 62 28 Operating (loss)/income (181) 31 (216) (78) Add: Share-based compensation 13 0 45 1 Add: Depreciation and amortization 91 106 344 425 Add: Discontinued monitoring fee payable to Fosun Pharma and TPG 1 1 - 4 - Add: Transaction related costs 152 4 165 8 Add: Relocation costs of PXU 3 - 6 - Add: Severance costs - 1 - 13 Add: Other unallocated costs - - 0 - Adjusted EBITDA 79 141 349 368 Less: Lease expense adjustments as a result of IFRS 16 adoption (54) (51) (205) (202) Adjusted EBITDA (before IFRS 16 adoption) 26 91 144 167 (in RMB million)

 

 

 

 



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