Q3 2020 Earnings Call
Expectant mothers are cutting down on hospital visits and checkups.
Meanwhile, the cost of procuring additional protection gear for staff is adding to operational costs.
Although the group is trying its utmost to achieve its new subscriber Target for fiscal 2020. It is expected that fiscal fourth-quarter results will be impacted and the Impact May spill over into next fiscal year.
As we mentioned in the earlier, press release during the reporting quarter a new regulatory policy in relation to the cord blood banking industry was rolled out by the National Health commission or NHC of China.
The new policy has not yet provided specific implementation details. So assume more specific industry related policies or implication Booth shall be issued in the future.
Bearing in mind that the current policies of one license per region and no new licenses before 20 20 May expire in the near future.
We will continue to closely monitor any policy development or implementation rule announcements and assess the potential impacts to our busy.
We will continue communicating with the NHC and other relevant government agencies while preparing ourselves for different scenarios.
Looking ahead the regulatory uncertainty and concerns over a slowing economy still remain and impact of the Corona virus outbreak lingua.
In addition, we have entered the year of the mouse which traditionally is not a year associated with high birth rates in China.
We will continue to keep a close eye on all these factors were actively address new issues remain Nimble and be ready to quickly and frequently adjust our deployment of resources.
We will also continue to explore a new marketing and sales channels to Foster organic growth and step up our efforts to assess opportunities to expand our service offerings and mitigate our business concentration risks.
This concludes my remarks regarding our fiscal 2020 third-quarter results. Thank you for your ongoing support of gcbc.
Together, I believe we will overcome this time of difficulty.
I would now turn the call over to our CFO. Mr. Albertson to review our third quarter Financial results in Greater detail.
Good morning, everyone.
Thank you for joining our call today.
In the third quarter revenues increased by 32% year-over-year to 335,000.
Which was the result of the new processing fee that became effective in April 2019 and subsequently listed as processing fees revenues.
as a result of the new pricing revenues from processing fees and other services increased by 39% of a year to 219 million room and be
this represented approximately 65% of our total revenues as compared to 62% of last year.
The group managed to recruit 23387 new subscribers in the reporting quarter representing a 1% year-over-year decrease as concern over slower economic growth in China overshadows positive progress made in relation to us China trade talks.
Which place pressure on our tag clients?
By the end of December 2019 our accumulated subscriber base reached $815,000.
accordingly
as a result of the expansion of our subscriber base.
storage fees revenues for the third quarter increased by 20% of a year to 116 million Roman be
gross profit in the third quarter grew by 37% of a year to approximately 283 million Renminbi.
S t increase in processing fees exceeded the increase in raw material costs gross margin improved to 85% off. Sedan of our second quarter.
Operating income in the third quarter increased by 65% of a year to 153 million Renminbi.
Operating margin increased to 46% similar to that of last quarter.
depreciation and amortization expenses were approximately 12 million Renminbi
non-gaap operating income increased by 57% of a year to 165 million women be
non-gaap operating margin also increased to 49%
in the third quarter
We proceeded to ramp up our marketing and promotion activities to raise awareness regarding Cord Blood storage.
To achieve conversion targets. We also extended our sales team and improve their incentives.
as a result sales and marketing expenses increased by 17% year-over-year 276 Roman be
sales and marketing expenses as a percentage of revenues was 23% down by three percentage points from last year, but up by two percentage points from last quarter.
General and administrative expenses amounted to $48 Renminbi
compared to $45 million of last year.
The increase was mainly attributable to Rising labor cost which awaited the effect of cost-saving measures and the lower path that profession.
General and administrative expenses as a percentage of revenues decreased by approximately three percentage points to 14%
In the third quarter, we recognize an increase in fair value of equity Securities or more commonly referred to as mark-to-market gain of six million Renminbi compared to the mark-to-market loss of approximately 28 million Renminbi in the prior-year.
The benefit from the new processing fee pricing coupled with the increase in fair value of equity Securities contributed to the increase in income before taxes, which searched by 129% of a year to 172 million, Renminbi.
Net income attributable to the company's shareholders increased by 136% of a year to 145 million Renminbi.
Net margin also improved to 43% from 24% of last year.
Basically until you to DPS for the third quarter were $1.19 Renminbi.
These are just the highlights of our results and we are now happy to take any questions concerning our latest Financial results are recent operations. And as well as our future development.
Thank you, Albert. Ladies and gentlemen. If you have any questions for your speaker today, please press zero followed by one on your telephone keypad and wait for your name to be announced. If you would like to cancel your request, please press zero followed by two again, that's on your telephone keypad now.
Ladies and gentlemen. Once again. If you have any questions for your speaker today, please press zero followed by one on your telephone keypad and wait for your name to be announced. If you wish to cancel your request, please press zero followed by two again that's on your telephone keypad. Also to allow everyone a chance to ask a question. Please limit yourself to one question at a time. Thank you. Again. That's zero one on your telephone keypad now.
Your first question is from Mike Smith from jail Capital. Your line is now open please go ahead.
All right. Thanks Albert. Looks like you guys had a very strong quarter operational again. So thank you for that. I did not hear if I'm assuming there's been no change to your patience for the year in terms of the total number of your subscribers suspected, but my question relates to I noticed that about twenty million dollars was spent this quarter on investing activities, which I didn't see any explanation about in the release or hear anything about yet and I noticed it looks like about 16 million of that looks like a probably went into the non-current wage deposits, which is also where the previous deposit that's kind of been sitting there for years and years with no explanation as well. But if you could maybe elaborate a little bit on you thought that was what that current amount was for in any update you have on the existing amount of that. Current deposit account. Thank you.
Thank you for the questions.
Well, first of all the answer the first question regarding the guidance as many of you are aware the corona viruses and the outbreak has certainly affected a lot of companies in the PRC and including hours as well. And we've seen a lot of challenges in in the current quarter, but based on the number that we have seen so far. I think we are still trying our very best to achieve our original guidance, which we which we have which we indicated back in June of last year. So the vitamins for current fiscal year 2020 still within the 80,000 to 85,000 new subscribers and we have still trying very hard to do a trying to achieve. So at this point in time, we have no intention of lowering our guidance for fiscal year two thousand twenty bearing in mind that wage.
And if it's already in the final quarter of the Year anyway, so but if there's anymore development obviously, we'll keep the market updated with respect to the bank deposit as you're aware. The company is is exploring multiple alternative to the whole purpose of expanding our operations over to a graphically as well as trying to address our business concentration risk. So some of the projects we have looked at previously didn't work out and we have actually received those money back. But as for this juncture, I thought the December quarter we are currently looking at home.
More than one potential targets and we have we have Parkside capital in case we need to proceed. So that's why you see an increase in on current deposit. But right now I mean, we're still in the negotiation process. So I think nothing is definitive at this stage. But if we decided to proceed on any particular transactions, we will certainly make an announcement and keep the market informed as well.
Thank you. Ladies and gentlemen. Once again. If you have any questions for your speaker today, please press zero followed by one on your telephone keypad and wait for your name to be announced. If you wish to cancel your request, please press zero followed by two and to allow everyone a chance to ask a question. Please limit yourself to one question at a time again, ladies and gentlemen wage at zero one on your telephone keypad now.
Once again, if you have any questions for your speaker today, please press zero followed by one on your telephone keypad now.
Ladies and gentlemen, once again, that's 01 on your telephone keypad now.
At this point there appears to be no further questions. I will now turn the call back to Miss Cathy by.
Thank you. I know this concludes our earnings conference call for the fiscal 2020 third-quarter. Thank you all for your participation and ongoing support. Have a great day off and you mean now disconnect. Thank you.
Thank you. Ladies and gentlemen. Thank you all for your participation. You may all disconnect your lines.