SHANGHAI, April 30, 2021 /PRNewswire/ -- Zhongchao Inc. (NASDAQ: ZCMD) ("Zhongchao" or the "Company"), a healthcare services company offering patient management, online healthcare information, professional training and educational services, today announced its financial results for the fiscal year ended December 31, 2020.
Key Financial Highlights for the Fiscal Year 2020 as compared to the Fiscal Year 2019
For the Years Ended December 31, | ||||||
($ millions, except per share data) | 2020 | 2019 | % Change | |||
Revenues | $17.99 | $14.88 | 20.9% | |||
Gross profit | $11.87 | $10.23 | 16.1% | |||
Gross margin | 66.0% | 68.7% | -2.7 pp | |||
Income from operations | $4.49 | $3.64 | 23.3% | |||
Operating margin | 25.0% | 24.5% | 0.5 pp | |||
Net income attributable to ordinary shareholders of | $4.46 | $4.05 | 10.2% | |||
Earnings per share | $0.183 | $0.187 | -2.6% | |||
* pp: percentage points | ||||||
- Revenues increased by 20.9% to $17.99 million for the fiscal year 2020, primarily due to the increasing orders for assistance services for patient-aid projects.
- Gross profit increased by 16.1% to $11.87 million while gross margin decreased by 2.7 percentage points to 66.0% for the fiscal year 2020.
- Operating income increased by 23.3% to $4.49 million for the fiscal year 2020, primarily due to the increased gross profit and partially offset by the increased operating expenses.
- Net income attributable to the Company's ordinary shareholders increased by 10.2% to $4.46 million for the fiscal year 2020, primarily driven by the increased income from operations and partially offset by the increased income tax expenses.
- Earnings per share was $0.183 for the fiscal year 2020, compared to $0.187 for last year.
Weiguang Yang, Chairman and Chief Executive Officer of Zhongchao, commented, "With revenues increasing by 20.9% to a record $17.99 million and operating income increasing by 23.3% to $4.49 million, our fiscal year 2020 financial results highlight continued strength in our businesses. Although our gross margin has a slight drawback, we expect to maintain a high-profit margin in the future for our reputation acknowledgment among leading pharmaceutical enterprises and non-for-profit organizations to design and produce high-quality professional content. In response to the outbreak of COVID-19, we, through our MDMOOC platform, have successfully developed and launched coronavirus curriculum with over 60 courses covering a wide range of medical specialties. In addition, our online courses increased 15% year-over-year in 2020. We are closely monitoring the fluid and uncertain situation of COVID-19, and we expect our revenues will continue to increase with the resume of work within China in the long-term."
Financial Results for the Fiscal Year Ended December 31, 2020
Revenues
For the fiscal year 2020, revenues increased by $3.11 million, or 20.9%, to $17.99 million from $14.88 million for last year. The increase in revenues was primarily due to the increasing orders for assistance services for patient-aid projects.
Cost of revenues
Cost of revenue increased by $1.46 million, or 31.4%, to $6.12 million for the fiscal year 2020 from $4.66 million for last year. The increase in the cost of revenues was driven by the increases in professional service fees and outsourced labor cost as we employed increasing outsourced staff with an increase in patient-aid projects.
Gross profit
Gross profit increased by $1.65 million, or 16.1%, to $11.87 million for the fiscal year 2020 from $10.23 million for last year.
Gross margin decreased by 2.7 percentage points to 66.0% for the fiscal year 2020, compared to 68.7% for last year.
Operating expenses
Selling and marketing expenses increased by $0.25 million, or 7.7%, to $3.44 million for the fiscal year 2020 from $3.20 million for last year. The increase in selling and marketing expenses was mainly attributable to the increase in advertising expenses to gain reputation in medical healthcare industry and the increase in salary and welfare to increase headcounts in selling and marketing department. As a percentage of total revenues, selling and marketing expenses was 19.1% for the fiscal year 2020, compared to 21.5% for last year.
General and administrative expenses increased by $0.60 million, or 23.8%, to $3.12 million for the fiscal year 2020 from $2.52 million for last year. The increase in general and administrative expenses was mainly attributable to the increase in salary and welfare expenses as a result of combining effects of an increase of headcounts in supporting functions; the increase in professional expenses since the Company became listed since February 2020; and the increase in writing off doubtful accounts against accounts receivable in accordance with the bad debt policy. As a percentage of total revenues, general and administrative expenses was 17.4% for the fiscal year 2020, compared to 17.0% for last year.
Research and development expenses decreased by $0.05 million, or 5.5%, to $0.82 million for the fiscal year 2020 from $0.86 million for last year. As a percentage of total revenues, research and development expenses was 4.5% for the fiscal year 2020, compared to 5.8% for last year.
Total operating expenses increased by $0.80 million, or 12.1%, to $7.38 million for the fiscal year 2020 from $6.58 million for last year. The increase in operating expenses was mainly attributable to the increased selling and marketing expenses and general and administrative expenses and partially offset by the decreased research and development expenses.
Operating income
Income from operations increased by $0.85 million, or 23.3%, to $4.49 million for the fiscal year 2020 from $3.64 million for last year. The increase in income from operations was primarily driven by the increased gross profit and partially offset by the increased operating expenses.
Operating margin increased by 0.5 percentage points to 25.0% for the fiscal year 2020 from 24.5% for last year.
Interest and other income, net
Interest income decreased by $0.07 million, or 30.5%, to $0.15 million for the fiscal year 2020 from $0.21 million for last year.
Other income, primarily consisted of government subsidies, was $0.31 for the fiscal year 2020, compared to $0.53 million for last year.
Income before income taxes
Income before income taxes increased by $0.55 million, or 12.6%, to $4.94 million for the fiscal year 2020 from $4.39 million for last year. The increase in income before income taxes was primarily attributable to the increased income from operations and partially offset by the decreased interest and other income.
Income tax expenses increased by $0.10 million, or 25.2%, to $0.49 million for the fiscal year 2020 from $0.39 million for last year.
Net income and EPS
Net income increased by $0.46 million, or 11.4%, to $4.46 million for the fiscal year 2020 from $4.00 million for last year. The increase in net income was primarily due to the increased income from operations and partially offset by the increased income tax expenses.
Net margin decreased by 2.1 percentage points to 24.8% for the fiscal year 2020 from 26.9% for last year.
After deducting for non-controlling interests, net income attributable to the Company's shareholders increased by $0.41 million, or 10.2%, to $4.46 million for the fiscal year 2020 from $4.05 million for last year.
Basic and diluted earnings per share was $0.183 for the fiscal year 2020, compared to $0.187 for last year. Weighted average number of shares outstanding was 24,425,637 for the fiscal year 2020, compared to 21,600,135 for last year.
Financial Condition
As of December 31, 2020, the Company had cash, and cash equivalents of $15.07 million, compared to $7.83 million as of December 31, 2019. Accounts receivable were $10.32 million as of December 31, 2020, compared to $5.08 million as of December 31, 2019. Working capital was $26.61 million as of December 31, 2020, compared to $12.15 million as of December 31, 2019.
Net cash used in operating activities was $1.04 million for the fiscal year 2020, compared to net cash provided by operating activities of $1.41 million for last year. Net cash used in investing activities was $4.09 million for the fiscal year 2020, compared to $0.20 million for last year. Net cash provided by financing activities was $11.50 million for the fiscal year 2020, compared to net cash used in financing activities of $1.19 million for last year.
Recent Business Highlights
- In March 2021, renewing the contract with China Association for Health Promotion and Education and GlaxoSmithKline (China) Investment Limited to continue the medical education program "Pulmonary Arterial Hypertension Online Course - Connections with Famous Hospitals" in 2021.
- In January 2021, co-sponsoring the National Annual Conference for Standardized Liver Cancer Diagnosis and Treatment with China Association of Health Promotion and Education and Chinese Society of Liver Cancer.
- In November 2020, expanding the scope of cooperation with Takeda Pharmaceutical in China to provide a broad range of services in medical editing, document collation, and medical training and education.
About Zhongchao Inc.
Incorporated in 2012 with headquarter offices in Shanghai and Beijing, China, Zhongchao Inc. is an online provider of healthcare information, professional training and educational services to healthcare professionals under its "MDMOOC" platform (www.mdmooc.org) and to the public under its "Sunshine Health Forums" platform (www.ygjkclass.com) in China. The Company also offers patient management services under its "Zhongxun" platform (www.zhongxun.online). More information about the Company can be found at its investor relations website at http://izcmd.com.
Safe Harbor Statement
This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. When the Company uses words such as "may, "will, "intend," "should," "believe," "expect," "anticipate," "project," "estimate" or similar expressions that do not relate solely to historical matters, it is making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause the actual results to differ materially from the Company's expectations discussed in the forward-looking statements. These statements are subject to uncertainties and risks including, but not limited to, the following: the Company's goals and strategies; the Company's future business development; product and service demand and acceptance; changes in technology; economic conditions; the growth of the professional training and educational services market in China and the other international markets the Company plans to serve; reputation and brand; the impact of competition and pricing; government regulations; fluctuations in general economic and business conditions in China and the international markets the Company plans to serve and assumptions underlying or related to any of the foregoing and other risks contained in reports filed by the Company with the SEC, the length and severity of the recent coronavirus outbreak, including its impacts across our business and operations. For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Additional factors are discussed in the Company's filings with the SEC, which are available for review at www.sec.gov. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.
For more information, please contact:
At the Company:
Pei Xu, CFO
Email:
Phone: +86 21-3220-5987
Investor Relations:
Sherry Zheng
Weitian Group LLC
Email:
Phone: +1 718-213-7386
ZHONGCHAO INC. | ||||||||||||
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | ||||||||||||
(Expressed in U.S. dollar, except for the number of shares) | ||||||||||||
For the Years Ended | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Revenues | $ | 17,989,788 | $ | 14,882,763 | $ | 12,865,870 | ||||||
Cost of revenues | (6,117,640) | (4,655,827) | (4,456,353) | |||||||||
Gross Profit | 11,872,148 | 10,226,936 | 8,409,517 | |||||||||
Operating Expenses | ||||||||||||
Selling and marketing expenses | (3,441,941) | (3,196,469) | (2,261,258) | |||||||||
General and administrative expenses | (3,124,301) | (2,524,003) | (1,425,663) | |||||||||
Research and development expenses | (816,553) | (864,320) | (1,447,949) | |||||||||
Total Operating Expenses | (7,382,795) | (6,584,792) | (5,134,870) | |||||||||
Income from Operations | 4,489,353 | 3,642,144 | 3,274,647 | |||||||||
Interest income, net | 146,965 | 211,479 | 191,609 | |||||||||
Other income, net | 305,566 | 534,020 | 37,364 | |||||||||
Income Before Income Taxes | 4,941,884 | 4,387,643 | 3,503,620 | |||||||||
Income tax expenses | (484,787) | (387,144) | (502,131) | |||||||||
Net Income | 4,457,097 | 4,000,499 | 3,001,489 | |||||||||
Net loss attributable to noncontrolling interests | 1,283 | 46,171 | 17,834 | |||||||||
Net Income Attributable to Zhongchao Inc.'s shareholders | $ | 4,458,380 | $ | 4,046,670 | $ | 3,019,323 | ||||||
Other Comprehensive Income (Loss) | ||||||||||||
Foreign currency translation adjustment | 1,259,984 | (173,604) | (379,520) | |||||||||
Comprehensive Income | 5,717,081 | 3,826,895 | 2,621,969 | |||||||||
Total comprehensive loss attributable to noncontrolling interests | 1,283 | 46,171 | 17,834 | |||||||||
Total comprehensive income attributable to Zhongchao Inc.'s | $ | 5,718,364 | $ | 3,873,066 | $ | 2,639,803 | ||||||
Weighted average number of ordinary share outstanding | ||||||||||||
Basic and Diluted | 24,425,637 | 21,600,135 | 20,764,245 | |||||||||
Earnings per share | ||||||||||||
Basic and Diluted | $ | 0.183 | $ | 0.187 | $ | 0.145 | ||||||
ZHONGCHAO INC. | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
(Expressed in U.S. dollar, except for the number of shares) | ||||||||
December 31, | December 31, | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 15,072,947 | $ | 7,832,552 | ||||
Short-term investments | 2,032,928 | - | ||||||
Accounts receivable | 10,321,837 | 5,078,419 | ||||||
Prepayments | 554,298 | 325,496 | ||||||
Due from a related party | - | 14,364 | ||||||
Other current assets | 1,613,408 | 1,258,040 | ||||||
Total Current Assets | 29,595,418 | 14,508,871 | ||||||
Investment in a limited partnership | 1,258,787 | - | ||||||
Property and equipment, net | 1,997,761 | 1,889,973 | ||||||
Deposit for property | 700,884 | - | ||||||
Prepayments for lease of land | 367,588 | 366,409 | ||||||
Intangible assets, net | 34,973 | 37,323 | ||||||
Right of use assets | 65,137 | 245,982 | ||||||
Deferred tax assets | 795,547 | 688,994 | ||||||
Total Assets | $ | 34,816,095 | $ | 17,737,552 | ||||
LIABILITIES AND EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 408,426 | $ | 117,064 | ||||
Advances from customers | 6,760 | 73,961 | ||||||
Deferred government grants, current portion | - | 323,192 | ||||||
Income tax payable | 1,523,175 | 897,892 | ||||||
Operating lease liabilities, current portion | 62,160 | 210,219 | ||||||
Accrued expenses and other liabilities | 981,433 | 735,334 | ||||||
Total Current Liabilities | 2,981,954 | 2,357,662 | ||||||
Operating lease liabilities, noncurrent portion | - | 41,363 | ||||||
Total Liabilities | 2,981,954 | 2,399,025 | ||||||
Commitments and Contingencies | ||||||||
Equity | ||||||||
Class A Ordinary Share (par value $0.0001 per share, 450,000,000 shares | 1,944 | 1,610 | ||||||
Class B Ordinary Share (par value $0.0001 per share, 50,000,000 shares authorized; | 550 | 550 | ||||||
Additional paid-in capital | 22,775,154 | 12,044,855 | ||||||
Statutory reserve | 801,502 | 415,813 | ||||||
Retained earnings | 7,339,778 | 3,267,087 | ||||||
Accumulated other comprehensive income (loss) | 915,213 | (344,771) | ||||||
Total Zhongchao Inc.'s Shareholders' Equity | 31,834,141 | 15,385,144 | ||||||
Noncontrolling interests | - | (46,617) | ||||||
Total Equity | 31,834,141 | 15,338,527 | ||||||
Total Liabilities and Equity | $ | 34,816,095 | $ | 17,737,552 | ||||
ZHONGCHAO INC. | ||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
(Expressed in U.S. dollar, except for the number of shares) | ||||||||||||
For the Years Ended | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Cash Flows from Operating Activities: | ||||||||||||
Net income | $ | 4,457,097 | $ | 4,000,499 | $ | 3,001,489 | ||||||
Adjustments to reconcile net income to net cash (used in) provided | ||||||||||||
Write off against accounts receivable | 336,367 | - | - | |||||||||
Depreciation and amortization expenses | 202,325 | 102,905 | 38,699 | |||||||||
Amortization of right of use assets | 222,353 | 159,259 | - | |||||||||
Recognition (reversal) of share-based compensation expenses | 168,350 | 159,984 | (14,483) | |||||||||
Deferred tax (benefits) expenses | (58,424) | (318,087) | 60,975 | |||||||||
Equity investment loss | 25,622 | - | - | |||||||||
Changes in fair value of short-term investments | 10,331 | - | - | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
Accounts receivable | (5,486,914) | (3,134,065) | (792,031) | |||||||||
Prepayments | (197,402) | 231,894 | (583,613) | |||||||||
Other current assets | (1,143,200) | 119,523 | (659,145) | |||||||||
Accounts payable | 260,350 | 94,461 | (548,507) | |||||||||
Advances from customers | 6,398 | (476,261) | (125,872) | |||||||||
Income tax payable | 535,981 | 618,120 | 296,904 | |||||||||
Accrued expenses and other liabilities | 179,738 | 408,725 | 85,954 | |||||||||
Lease liabilities | (230,819) | (153,616) | - | |||||||||
Deferred government grants | (325,992) | (405,321) | 552,277 | |||||||||
Net Cash (Used in) Provided by Operating Activities | (1,037,839) | 1,408,020 | 1,312,647 | |||||||||
Cash Flows from Investing Activities: | ||||||||||||
Purchases of property and equipment | (160,602) | (1,312,941) | (668,067) | |||||||||
Payments of deposits for property purchase | (688,267) | - | - | |||||||||
Payment for land use rights | - | - | (418,520) | |||||||||
Investments in short-term investments | (2,043,259) | (2,460,879) | (2,920,260) | |||||||||
Investment in a limited partnership | (1,217,039) | - | - | |||||||||
Release from short-term investments | - | 3,618,940 | 3,502,799 | |||||||||
Buy out of a non-controlling interests | - | (33,718) | - | |||||||||
Loan repayment from (provided to) a related party | 14,489 | (14,476) | - | |||||||||
Net Cash Used in Investing Activities | (4,094,678) | (203,074) | (504,048) | |||||||||
Cash Flows from Financing Activities: | ||||||||||||
Proceeds from issuance of common stocks in connection with | 11,886,363 | - | - | |||||||||
Payment of expenses relating to initial public offerings | (388,709) | (468,328) | - | |||||||||
Capital contribution from shareholders | - | - | 3,580,260 | |||||||||
Proceeds from bank borrowings | - | - | 756,544 | |||||||||
Repayment of bank borrowings | - | (723,788) | - | |||||||||
Net Cash Provided by (Used in) Financing Activities | 11,497,654 | (1,192,116) | 4,336,804 | |||||||||
Effect of exchange rate changes on cash and cash equivalents | 875,258 | (98,953) | (205,243) | |||||||||
Net increase (decrease) in cash and cash equivalents | 7,240,395 | (86,123) | 4,940,160 | |||||||||
Cash and cash equivalents at beginning of year | 7,832,552 | 7,918,675 | 2,978,515 | |||||||||
Cash and cash equivalents at end of year | $ | 15,072,947 | $ | 7,832,552 | $ | 7,918,675 | ||||||
Supplemental Cash Flow Information | ||||||||||||
Cash paid for interest expense | $ | - | $ | 30,312 | $ | 5,840 | ||||||
Cash paid for income tax | $ | 2,642 | $ | 87,111 | $ | 144,252 | ||||||
Noncash investing activities | ||||||||||||
Right of use assets obtained in exchange for operating lease | $ | 37,919 | $ | 419,362 | $ | - | ||||||
SOURCE Zhongchao Inc.
