Zhongchao Inc. Reports the Fiscal Year 2021 Financial Results
SHANGHAI, May 9, 2022 /PRNewswire/ -- Zhongchao Inc. (NASDAQ: ZCMD) ("Zhongchao" or the "Company"), an internet technology company offering healthcare professionals the online healthcare information, professional training and educational services platform and patient management service, today announced its financial results for the fiscal year ended December 31, 2021.
Key Financial Highlights for the Fiscal Year 2021 as compared to the Fiscal Year 2020
For the Years Ended December 31, | |||||||||||
2021 | 2020 | %Change | |||||||||
Revenues | $ | 16,296,770 | $ | 17,989,788 | -9.4% | ||||||
Gross profit | $ | 9,438,826 | $ | 11,872,148 | -20.5% | ||||||
Gross margin | 57.9% | 66.0% | -8.1pp | ||||||||
(Loss) income from operations | $ | (320,741) | $ | 4,489,353 | -107.1% | ||||||
Operating (loss) margin | -2.0% | 25.0% | -27.0pp | ||||||||
(Loss) income before income taxes | $ | (110,753) | $ | 4,941,884 | -102.2% | ||||||
Net income attributable to Zhongchao Inc.'s | $ | 238,665 | $ | 4,458,380 | -94.6% | ||||||
Earnings per share | $ | 0.010 | $ | 0.183 | -94.5% | ||||||
* pp: percentage points
- Revenues decreased by 9.4% to $16.30 million for the fiscal year 2021.
- Gross profit decreased by 20.5% to $9.44 million and gross margin decreased by 8.1 percentage points to 57.9% for the fiscal year 2021.
- Loss from operations was $0.32 million for the fiscal year 2021.
- Net income attributable to the Company's ordinary shareholders decreased by 94.6% to $0.24 million for the fiscal year 2021, primarily driven by increased cost of revenues and operating expenses.
- Earnings per share was $0.010 for the fiscal year 2021, compared to $0.183 for the same period of last year.
Financial Results for the Fiscal Year Ended December 31, 2021
Revenues
For the fiscal year 2021, revenues decreased by $1.69 million, or 9.4%, to $16.30 million from $17.99 million for the same period of last year. The decrease in revenues was primarily caused by decreased revenues from medical training and education services.
Cost of revenues
Cost of revenue increased by $0.74 million, or 12.1%, to $6.86 million for the fiscal year 2021 from $6.12 million for the same period of last year. The increase of cost of revenues was driven by increased labor costs for the patient-aid projects.
Gross profit
Gross profit decreased by $2.43 million, or 20.5%, to $11.87 million for the fiscal year 2021 from $9.44 million for the same period of last year.
Gross margin decreased by 8.1 percentage points to 57.9% for the fiscal year 2021, compared to 66.0% for the same period of last year.
Operating expenses
Selling and marketing expenses decreased by $0.30 million, or 8.9%, to $3.14 million for the fiscal year 2021 from $3.44 million for the same period of last year. The increase in selling and marketing expenses was mainly attributable to the decrease in advertising expenses. As a percentage of total revenues, selling and marketing expenses was 19.3% for the fiscal year 2021, compared to 19.1% for the same period of last year.
General and administrative expenses increased by $2.74 million, or 87.7%, to $5.86 million for the fiscal year 2021 from $3.12 million for the same period of last year. The increase in general and administrative expenses was mainly attributable to the write-off doubtful accounts against accounts receivable because of remote collection from certain NFPs. As a percentage of total revenues, general and administrative expenses was 36.0% for the fiscal year 2021, compared to 17.4% for the same period of last year.
Research and development expenses decreased by $0.06 million, or 7.1%, to $0.76 million for the fiscal year 2021 from $0.82 million for the same period of last year. As a percentage of total revenues, research and development expenses was 4.7% and 4.5% for the fiscal year 2021 and 2020.
Total operating expenses increased by $2.38 million, or 32.2%, to $9.76 million for the fiscal year 2021 from $7.38 million for the same period of last year. The increase in operating expenses was mainly attributable to increased general and administrative expenses.
Loss (income) before income taxes
Loss before income taxes was $0.11 million for the fiscal year 2021 compared to income before income taxes of $4.94 million for the same period of last year. The change in loss (income) before income taxes was primarily attributable to increased cost of revenues and operating expenses.
Income tax benefits (expenses)
Income tax benefits was $0.35 million for the fiscal year 2021 compared to income tax expenses of $0.48 million for the same period of last year.
Net income and EPS
Net income decreased by $4.22 million, or 94.6%, to $0.24 million for the fiscal year 2021 from $4.46 million for the same period of last year. The decrease in income before income taxes was primarily attributable to increased cost of revenues and operating expenses.
After deducting for non-controlling interests, net income attributable to the Company's shareholders decreased by $4.22 million, or 94.6%, to $0.24 million for the fiscal year 2021 from $4.46 million for the same period of last year.
Earnings per share was $0.010 for the fiscal year 2021, compared to $0.183 for the same period of last year. Weighted average number of shares was 24,938,513 for the fiscal year 2021, compared to 24,425,637 for the same period of last year.
Financial Condition and Cash Flows
As of December 31, 2021, the Company had cash and cash equivalents of $13.91 million, compared to $15.07 million as of December 31, 2020. Accounts receivable were $9.22 million as of December 31, 2021, compared to $10.32 million as of December 31, 2020. Working capital was $23.67 million as of December 31, 2021, compared to $26.61 million as of December 31, 2020.
Net cash provided by operating activities was $2.86 million for the fiscal year 2021, compared to net cash used in operating activities of $1.04 million for the same period of last year. Net cash used in investing activities was $4.02 million for the fiscal year 2021, compared to $4.09 million for the same period of last year. Net cash provided by financing activities was $nil for the fiscal year 2021, compared to $11.50 million, resulting from the net proceeds from the Company's IPO in February 2020, for the fiscal year 2020.
About Zhongchao Inc.
Incorporated in 2012 with headquarter offices in Shanghai and Beijing, China, Zhongchao Inc. a platform-based internet technology company. It provides online healthcare information, professional training and educational services to healthcare professionals under its "MDMOOC" platform (www.mdmooc.org), offers patient management service on the professional field of tumor and rare diseases via "Zhongxin", and operates an online information platform, Sunshine Health Forums, to general public. 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: [email protected]
Phone: +86 21-3220-5987
Investor Relations:
Sherry Zheng
Weitian Group LLC
Email: [email protected]
Phone: +1 718-213-7386
ZHONGCHAO INC. CONDENSED 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 | $ | 13,914,982 | $ | 15,072,947 | ||||
Short-term investments | 296,158 | 2,032,928 | ||||||
Accounts receivable | 9,218,883 | 10,321,837 | ||||||
Prepayments | 394,971 | 554,298 | ||||||
Loans receivable | 2,660,668 | - | ||||||
Due from a related party | 392,305 | - | ||||||
Other current assets | 375,709 | 1,613,408 | ||||||
Total Current Assets | 27,253,676 | 29,595,418 | ||||||
Investment in equity method investees | 1,993,285 | 1,258,787 | ||||||
Investment in an equity security | 150,000 | - | ||||||
Property and equipment, net | 3,923,086 | 1,997,761 | ||||||
Deposit for property | 181,233 | 700,884 | ||||||
Prepayments for lease of land | 353,347 | 367,588 | ||||||
Intangible assets, net | 30,259 | 34,973 | ||||||
Right of use assets | 205,824 | 65,137 | ||||||
Deferred tax assets | 2,176,710 | 795,547 | ||||||
Total Assets | $ | 36,267,420 | $ | 34,816,095 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 38,933 | $ | 408,426 | ||||
Advances from customers | 7,432 | 6,760 | ||||||
Income tax payable | 2,478,273 | 1,523,175 | ||||||
Operating lease liabilities, current portion | 88,968 | 62,160 | ||||||
Accrued expenses and other liabilities | 974,801 | 981,433 | ||||||
Total Current Liabilities | 3,588,407 | 2,981,954 | ||||||
Operating lease liabilities, noncurrent portion | 112,591 | - | ||||||
Total Liabilities | 3,700,998 | 2,981,954 | ||||||
Commitments and Contingencies | ||||||||
Shareholders' Equity | ||||||||
Class A Ordinary Share (par value $0.0001 per share, 450,000,000 shares | 1,946 | 1,944 | ||||||
Class B Ordinary Share (par value $0.0001 per share, 50,000,000 shares | 550 | 550 | ||||||
Additional paid-in capital | 22,986,975 | 22,775,154 | ||||||
Statutory reserve | 1,199,054 | 801,502 | ||||||
Retained earnings | 7,180,891 | 7,339,778 | ||||||
Accumulated other comprehensive income | 1,197,006 | 915,213 | ||||||
Total Shareholders' Equity | 32,566,422 | 31,834,141 | ||||||
Total Liabilities and Shareholders' Equity | $ | 36,267,420 | $ | 34,816,095 | ||||
ZHONGCHAO INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Expressed in U.S. dollar, except for the number of shares) | ||||||||||||
For the Years Ended | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Revenues | $ | 16,296,770 | $ | 17,989,788 | $ | 14,882,763 | ||||||
Cost of revenues | (6,857,944) | (6,117,640) | (4,655,827) | |||||||||
Gross Profit | 9,438,826 | 11,872,148 | 10,226,936 | |||||||||
Operating Expenses | ||||||||||||
Selling and marketing expenses | (3,137,316) | (3,441,941) | (3,196,469) | |||||||||
General and administrative expenses | (5,863,373) | (3,124,301) | (2,524,003) | |||||||||
Research and development expenses | (758,878) | (816,553) | (864,320) | |||||||||
Total Operating Expenses | (9,759,567) | (7,382,795) | (6,584,792) | |||||||||
(Loss) Income from Operations | (320,741) | 4,489,353 | 3,642,144 | |||||||||
Interest income, net | 175,987 | 146,965 | 211,479 | |||||||||
Other income, net | 34,001 | 305,566 | 534,020 | |||||||||
(Loss) Income Before Income Taxes | (110,753) | 4,941,884 | 4,387,643 | |||||||||
Income tax benefits (expenses) | 349,418 | (484,787) | (387,144) | |||||||||
Net Income | 238,665 | 4,457,097 | 4,000,499 | |||||||||
Net loss attributable to noncontrolling interests | - | 1,283 | 46,171 | |||||||||
Net Income Attributable to Zhongchao Inc.'s shareholders | $ | 238,665 | $ | 4,458,380 | $ | 4,046,670 | ||||||
Other Comprehensive Income (Loss) | ||||||||||||
Foreign currency translation adjustment | 281,793 | 1,259,984 | (173,604) | |||||||||
Comprehensive Income | 520,458 | 5,717,081 | 3,826,895 | |||||||||
Total comprehensive loss attributable to noncontrolling interests | - | 1,283 | 46,171 | |||||||||
Total comprehensive income attributable to Zhongchao Inc.'s | $ | 520,458 | $ | 5,718,364 | $ | 3,873,066 | ||||||
Weighted average number of ordinary share outstanding | ||||||||||||
Basic and Diluted | 24,938,513 | 24,425,637 | 21,600,135 | |||||||||
Earnings per share | ||||||||||||
Basic and Diluted | $ | 0.010 | $ | 0.183 | $ | 0.187 | ||||||
ZHONGCHAO INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in U.S. dollar, except for the number of shares) | ||||||||||||
For the Years Ended | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Cash Flows from Operating Activities: | ||||||||||||
Net income | $ | 238,665 | $ | 4,457,097 | $ | 4,000,499 | ||||||
Adjustments to reconcile net income to net cash provided by (used | ||||||||||||
Write-off of accounts receivable | 1,449,827 | 336,367 | - | |||||||||
Depreciation and amortization expenses | 341,608 | 202,325 | 102,905 | |||||||||
Amortization of right of use assets | 361,369 | 222,353 | 159,259 | |||||||||
Share-based compensation expenses | 211,823 | 168,350 | 159,984 | |||||||||
Deferred tax benefits | (1,346,616) | (58,424) | (318,087) | |||||||||
Equity investment loss | 13,758 | 25,622 | - | |||||||||
Changes in fair value of short-term investments | 58,403 | 10,331 | - | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
Accounts receivable | (104,230) | (5,486,914) | (3,134,065) | |||||||||
Prepayments | 171,144 | (197,402) | 231,894 | |||||||||
Other current assets | 1,302,009 | (1,143,200) | 119,523 | |||||||||
Accounts payable | (375,144) | 260,350 | 94,461 | |||||||||
Advances from customers | 496 | 6,398 | (476,261) | |||||||||
Income tax payable | 905,733 | 535,981 | 618,120 | |||||||||
Accrued expenses and other liabilities | (4,430) | 179,738 | 408,725 | |||||||||
Lease liabilities | (362,567) | (230,819) | (153,616) | |||||||||
Deferred government grants | - | (325,992) | (405,321) | |||||||||
Net Cash Provided by (Used in) Operating Activities | 2,861,848 | (1,037,839) | 1,408,020 | |||||||||
Cash Flows from Investing Activities: | ||||||||||||
Purchases of property and equipment | (1,799,860) | (160,602) | (1,312,941) | |||||||||
Payments of deposits for property purchase | - | (688,267) | - | |||||||||
Investments in short-term investments | - | (2,043,259) | (2,460,879) | |||||||||
Investment in a limited partnership | - | (1,217,039) | - | |||||||||
Investment in equity method investees | (708,129) | - | - | |||||||||
Investment in an equity security | (150,000) | - | - | |||||||||
Release from short-term investments | 1,678,367 | - | 3,618,940 | |||||||||
Buy out of a non-controlling interests | - | - | (33,718) | |||||||||
Loan (provided to) repayment from related parties | (387,549) | 14,489 | (14,476) | |||||||||
Loans provided to third parties | (3,725,211) | - | - | |||||||||
Loans repayment from third parties | 1,075,098 | - | - | |||||||||
Net Cash Used in Investing Activities | (4,017,284) | (4,094,678) | (203,074) | |||||||||
Cash Flows from Financing Activities: | ||||||||||||
Proceeds from issuance of ordinary shares in connection with | - | 11,886,363 | - | |||||||||
Payment of expenses relating to initial public offerings | - | (388,709) | (468,328) | |||||||||
Repayment of bank borrowings | - | - | (723,788) | |||||||||
Net Cash Provided by (Used in) Financing Activities | - | 11,497,654 | (1,192,116) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | (2,529) | 875,258 | (98,953) | |||||||||
Net (decrease) increase in cash and cash equivalents | (1,157,965) | 7,240,395 | (86,123) | |||||||||
Cash and cash equivalents at beginning of year | 15,072,947 | 7,832,552 | 7,918,675 | |||||||||
Cash and cash equivalents at end of year | $ | 13,914,982 | $ | 15,072,947 | $ | 7,832,552 | ||||||
Supplemental Cash Flow Information | ||||||||||||
Cash paid for interest expense | $ | - | $ | - | $ | 30,312 | ||||||
Cash paid for income tax | $ | 91,464 | $ | 2,642 | $ | 87,111 | ||||||
Noncash investing activities | ||||||||||||
Right of use assets obtained in exchange for operating lease | $ | 555,639 | $ | 37,919 | $ | 419,362 | ||||||
SOURCE Zhongchao Inc.
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