GlobeNewswire Inc | Jun 24, 2021 06:00AM EDT

June 24, 2021

SHENZHEN, China, June 24, 2021 (GLOBE NEWSWIRE) -- Aesthetic Medical International Holdings Group Limited (the Company or Nasdaq: AIH), a leading provider of aesthetic medical services in China, today announced its unaudited financial results for the first quarter ended March 31, 2021.

Dr. Zhou Pengwu, Chairman and CEO of the Company, commented, The financial results of this quarter are encouraging, thanks to the economic recovery of China from Covid-19 and our dedicated team members who seize every opportunity to help us weather the storm. We are delighted to see a strong rebound in financial and operating results in the first quarter of 2021, with an increase of 131.3% in revenue year-over-year. In a bid to cater to peoples strong pursuit of beauty, we are committed to further expanding our non-surgical aesthetic medical services across different regions in China. We hope our services can be inclusive to anyone, at any age, with any beauty preferences. With our professional and comprehensive services, everyone can achieve the ideal form they desire.

Dr. Zhou continued, In May, we have entered into a definitive share subscription agreement with Lafang China Co., Ltd., a company engaged in the production and sale of personal care products. We believe this agreement will benefit our future growth, and we will cherish the abundant resources provided by this opportunity and further upgrade our products and services. Although the world is still shrouded under haze brought by the pandemic, we pledge to strive our best and continue providing more quality services to our customers and garner fruitful returns to our shareholders.

First Quarter 2021 Unaudited Financial Highlights

-- Total revenue was RMB210.5 million (US$32.1 million), representing an increase of 131.3% from RMB91.0 million in the first quarter of 2020. -- Gross profit was RMB122.1 million (US$18.6 million), representing an increase of 249.9% from RMB34.9 million in the first quarter of 2020. -- Gross margin was 58.0%, representing an increase of 19.7 percentage points from 38.3% in the first quarter of 2020. -- Loss for the period was RMB20.3 million (US$3.1 million), compared with a loss of RMB83.1 million in the first quarter of 2020. -- EBITDA1 for the period was RMB8.2 million (US$1.2 million), compared with a loss of RMB70.6 million in the first quarter of 2020. -- Adjusted loss1 for the period was RMB8.0 million (US$1.2 million), compared with adjusted loss of RMB58.2 million in the first quarter of 2020. -- Adjusted EBITDA1 for the period was a profit of RMB20.5 million (US$3.1 million), compared with a loss of RMB45.7 million in the first quarter of 2020. -- Basic loss per share was RMB0.28 (US$0.04), compared with basic loss per share of RMB1.22 in the first quarter of 2020. Diluted loss per share was RMB0.28 (US$0.04), compared with diluted loss per share of RMB1.22 in the first quarter of 2020.

1 EBITDA, Adjusted EBITDA and Adjusted loss are not prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standard Board, or IFRS. For more information regarding non-IFRS financials, please refer to Non-IFRS Financial Measures and Reconciliations of IFRS and Non-IFRS Results appearing elsewhere in this press release.

First Quarter 2021 Operational Highlights

For the Three Months Ended March 31, 2020 2021 % Change Number % of Total Number % of Total NumberNew Customers 14,382 39.3 % 23,557 38.2 % 63.8 %Repeat Customers 22,211 60.7 % 38,166 61.8 % 71.8 %Total Active Customers 36,593 100.0 % 61,723 100 % 68.7 %

-- Repeat customers accounted for 61.8% of active customer base. -- The total number of active customers was 61,723, representing an increase of 68.7% from 36,593 in the first quarter of 2020.

First Quarter 2021 Unaudited Financial Results

For the Three Months Ended March 31,(RMB millions, except per share data and 2021 2020 % Changepercentages)Revenue 210.5 91.0 131.3 %Non-surgical aesthetic medical services 109.0 47.7 128.5 %Minimally invasive aesthetic treatments 51.8 26.1 98.5 %Energy-based treatments 57.2 21.6 164.8 %Surgical aesthetic medical services 86.8 39.8 118.1 %General healthcare services and other 14.7 3.5 320.0 %aesthetic medical servicesGross profit 122.1 34.9 249.9 %Gross margin 58.0 % 38.3 % 19.7pp^ *Loss for the period (20.3 ) (83.1 ) 75.6 %Loss margin (9.6 )% (91.3 )% 81.7pp* EBITDA^** 8.2 (70.6 ) 111.6 %Adjusted EBITDA^** 20.5 (45.7 ) 144.9 %Adjusted EBITDA margin 9.7 % (50.2 )% 59.9pp* Adjusted loss^** (8.0 ) (58.2 ) 86.3 %Adjusted loss margin (3.8 )% (64.0 )% 60.2pp* Basic loss per share (0.28 ) (1.22 ) 77.0 %Diluted loss per share (0.28 ) (1.22 ) 77.0 %

Notes:* pp represents percentage points**Refer to below Non-IFRS Financial Measures

Revenues

Total revenue was RMB210.5 million (US$32.1 million), representing an increase of 131.3% from RMB91.0 million in the first quarter of 2020, primarily due to an increase of 98.2% in the number of treatments resulted from raising customer demands, as China gradually recovers from the aftermath of Covid-19 pandemic.

Revenue from non-surgical aesthetic medical services was RMB109.0 million (US$16.6 million), representing an increase of 128.5% from RMB47.7 million in the first quarter of 2020.

Revenue from minimally invasive aesthetic treatments was RMB51.8 million (US$7.9 million), representing an increase of 98.5% from RMB26.1 million in the first quarter of 2020.

Revenue from energy-based treatments was RMB57.2 million (US$8.7 million), representing an increase of 164.8% from RMB21.6 million in the first quarter of 2020.

Revenue from surgical aesthetic medical services was RMB86.8 million (US$13.2 million), representing an increase of 118.1% from RMB39.8 million in the first quarter of 2020.

Revenue from general healthcare services and other aesthetic medical services was RMB14.7 million (US$2.2 million), representing an increase of 320.0% from RMB3.5 million in the first quarter of 2020.

Cost of sales and services rendered

Cost of sales and services rendered was RMB88.4 million (US$13.5 million), representing an increase of 57.5% from RMB56.1 million in the first quarter of 2020, primarily due to increases in the number of treatments performed.

Gross profit

Gross profit was RMB122.1 million (US$18.6 million), representing an increase of 249.9% from RMB34.9 million in the first quarter of 2020, primarily as a result of significant growth in total revenue. Gross profit margin was 58.0%, representing an increase of 19.7 percentage points from 38.3% in the first quarter of 2020. As a portion of our cost of sales are fixed costs, which remained relatively stable during the first quarter of 2021, together with an increase of 39.1% year-over-year in selling price for our surgical aesthetic medical services for the first quarter of 2021, cost of sales and services rendered grew at a slower rate than our revenues in the first quarter of 2021.

Gross profit of non-surgical aesthetic medical services was RMB51.1 million (US$7.8 million), representing an increase of 198.8% from RMB17.1 million in the first quarter of 2020. Gross profit margin was 46.9%, compared with 35.8% in the first quarter of 2020.

Gross profit of minimally invasive aesthetic treatments was RMB30.1 million (US$4.6 million), representing an increase of 176.1% from RMB10.9 million in the first quarter of 2020. Gross profit margin was 58.1%, compared with 41.8% in the first quarter of 2020.

Gross profit of energy-based treatments was RMB21.0 million (US$3.2 million), representing an increase of 238.7% from RMB6.2 million in the first quarter of 2020. Gross profit margin was 36.7%, compared with 28.7% in the first quarter of 2020.

Gross profit of surgical aesthetic medical services was RMB61.4 million (US$9.4 million), representing an increase of 246.9% from RMB17.7 million in the first quarter of 2020. Gross profit margin was 70.7%, compared with 44.5% in the first quarter of 2020.

Gross profit of general healthcare services and other aesthetic medical services grew significantly, from RMB0.1 million in the first quarter of 2020 to RMB9.6 million (US$1.5 million) in the first quarter of 2021. Gross profit margin was 65.3%, compared with 2.9% in the first quarter of 2020.

Selling expenses

Selling expenses were RMB94.0 million (US$14.3 million), representing 44.6% of the Companys total revenue of the same period, compared to selling expenses of RMB78.1 million in the first quarter of 2020, which represented 85.8% of the Companys total revenue of the same period. Selling expenses increased on a year-over-year basis, primarily because the Company launched more marketing initiatives after it gradually resumed operations in the first quarter of 2021. Consistent with previous marketing strategies, the Company enhanced its marketing efforts before the Chinese New Year, and incurred higher advertising and marketing expenses in March 2021 to attract customers and boost sales.

General and administrative expenses

General and administrative expenses were RMB42.1 million (US$6.4 million), representing a decrease of 17.3% from RMB50.9 million in the first quarter of 2020, primarily due to a decrease of RMB10.5 million in share-based compensation expense, compared with share-based compensation expense of RMB21.6 million in the first quarter of 2020.

Loss for the period

As a result of the foregoing, the Company recorded a loss for the first quarter of 2021 of RMB20.3million (US$3.1 million), compared with a loss of RMB83.1 million in the first quarter of 2020. Basic loss per share was RMB0.28 (US$0.04), compared with basic loss per share of RMB1.22 in the first quarter of 2020. Diluted loss per share was RMB0.28 (US$0.04), compared with diluted loss per share of RMB1.22 in the first quarter of 2020.

Certain Non-IFRS items

EBITDA for the first quarter of 2021 was RMB8.2 million (US$1.2 million), compared with a loss of RMB70.6 million in the first quarter of 2020.

Adjusted loss for the first quarter of 2021 was RMB8.0 million (US$1.2 million), compared with adjusted loss of RMB58.2 million in the first quarter of 2020.

Adjusted EBITDA for the first quarter of 2021 was a profit of RMB20.5 million (US$3.1 million), compared with a loss of RMB45.7 million in the first quarter of 2020.

EBITDA, Adjusted EBITDA and Adjusted loss are not prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standard Board, or IFRS. For more information regarding non-IFRS financials, please refer to Non-IFRS Financial Measures and Reconciliations of IFRS and Non-IFRS Results appearing elsewhere in this press release.

First Quarter 2021 Operational Results

Repeat customer ratio

Repeat customers, defined as active customers who had previously received at least one treatment from the Company, accounted for 61.8% of the Companys active customer base in the first quarter of 2021.

Number of treatments

The Company conducted a total of 132,676 treatments, including 22,825 surgical treatments and 109,851 non-surgical treatments, in the first quarter of 2021, representing an increase of 98.2%, 57.0% and 109.6%, respectively, from 66,946 total treatments, 14,541 surgical treatments and 52,405 non-surgical treatments in the first quarter of 2020.

Certain balance sheet item

Cash and cash equivalents amounted to RMB15.5 million (US$2.4 million) as of March 31, 2021, compared to RMB44.4 million as of December 31, 2020.

Certain cash flow items

Net cash generated from operating activities was RMB43.4 million (US$6.6 million), compared with an outflow of RMB19.0 million for the first quarter of 2020.

Net cash used in investing activities was RMB11.8 million (US$1.8 million), compared with RMB26.7 million for the first quarter of 2020.

Net cash used in financing activities was RMB60.3 million (US$9.2 million), compared with RMB8.5 million for the first quarter of 2020.

Liquidity and capital resources

As at March 31, 2021, the Company had net current liabilities of RMB134.0 million which included current borrowings of RMB109.1 million. In addition, the Company had incurred a net loss of RMB20.3 million for the first quarter ended March 31, 2021.

Management has prepared a cash flow projection covering a period of 12 months from the issuance date of this press release. The cash flow projection has taken into account the anticipated cash flows to be generated from the Companys future operations, including considerations of reasonably possible changes in its operating performance, and available financing during the period under projection, including an equity financing from a share subscription agreement entered in May 2021 to raise US$15.1 million (equivalent to approximately RMB98.9 million) and additional bank loans.

Based on the above, the directors of the Company concluded that the Company has sufficient financial resources to meet its financial obligations as and when they fall due and continue its operation in the coming 12 months after the issuance date of this press release.

Exchange Rate

This press release contains translations of certain Renminbi (RMB) amounts into U.S. dollars (US$) solely for the convenience of the reader. Unless otherwise specified, all translations of Renminbi amounts into U.S. dollar amounts in this press release are made at RMB6.5518 to US$1.00, which was the U.S. dollars middle rate announced by the Board of Governors of the Federal Reserve System of the United States on March 31, 2021.

Non-IFRS Financial Measures

EBITDA represents our loss before income tax, adjusted to exclude finance costs and amortization and depreciation. Adjusted EBITDA represents EBITDA, adjusted to exclude fair value loss of convertible note, fair value gain of contingent consideration payable, share-based compensation expense and professional fees.

Adjusted loss represents loss for the period, adjusted to exclude fair value loss of convertible note, fair value gain of contingent consideration payable, share-based compensation expense and professional fees.

EBITDA, adjusted EBITDA and adjusted loss are non-IFRS financial measures. You should not consider EBITDA, adjusted EBITDA and adjusted loss as a substitute for or superior to net income prepared in accordance with IFRS. Furthermore, because non-IFRS measures are not determined in accordance with IFRS, they are susceptible to varying calculations and may not be comparable to other similarly titled measures presented by other companies. You are encouraged to review the Companys financial information in its entirety and not rely on a single financial measure.

The Company presents EBITDA, adjusted EBITDA and adjusted loss as supplemental performance measures because it believes that such measures provide useful information to the investors in understanding and evaluating the Companys results of operations, and facilitate operating performance comparisons from period to period and company to company.

Recent Developments

On February 9, 2021, the Company and Forbes China have jointly released the Chinese Aesthetic Treatment Industry White Paper 2020, the first white paper on the aesthetic treatment industry in China.

On May 16, 2021, the Company has entered into a definitive share subscription agreement with Lafang China Co., Ltd (Lafang) to raise US$15.1 million (equivalent to approximately RMB98.9 million) through a private placement sale of 5,329,410 ordinary shares of the Company to Lafang at a sale price of US$8.50 every three ordinary shares (equivalent to US$8.50 per American Depositary Share of the Company). The private placement is subject to customary closing conditions and is expected to close within four months from the execution of the agreement. The Company intends to utilize the proceeds from this private placement to fund its business development and working capital.

Business Outlook

The Company has gradually resumed its business operations following the ease of quarantine measures in many regions of China. In light of the promising financial and operating results in the first quarter of 2021, and the recovery of Chinas economic condition and peoples social interactions from the impact of Covid-19, the Company expects that the demand of its services and its revenue will continue to increase in the second quarter of 2021. The Company also reaffirms its development plan of establishing more satellite and community hospitals in tier 3 and 4 cities in China in order to serve more customers across China.

The above outlook is based on the current market conditions and reflects the Companys preliminary estimates based on the information available at the time, which are subject to changes. As there are still uncertainty related to the resurgence of Covid-19 in certain regions of China, the Company will closely monitor and evaluate the development of the pandemic, and the resulting financial impacts on the Company.

Conference Call Information

The Company will host an earnings conference call at 8:00 AM U.S. Eastern Time (8:00 pm Beijing Time) on June 24, 2021. Dial-in details for the conference call are as follows:

Date: June 24, 2021Time: 8:00 AM Eastern TimeUnited States Toll Free: +1-844-760-0770Canada Toll Free: +1-844-422-4903Mainland China Toll Free: +86-4008-206895Hong Kong Toll Free: +852-800-906613International: +65-6713-5330Conference ID 9391488

Please dial in at least 15 minutes before the commencement of the call to ensure timely participation.

An audio replay of the conference call will be available two hours after the conclusion of the call until July 2, 2021.

Dial-in numbers for the reply are as follows:

United States: +1-855-452-5696International: +61-2-8199-0299Replay Access Code: 9391488

A live and archived webcast of the call will also be available on the Company's investor relations website at https://ir.aihgroup.net/.

About Aesthetic Medical International Holdings Group Limited

AIH, known as Pengai in China, is a leading provider of aesthetic medical services in China. AIH operates through treatment centers that spread across major cities in mainland China, and also has presence in Hong Kong and Singapore. Leveraging over 20 years of clinical experience, AIH provides one-stop aesthetic service offerings, including surgical aesthetic treatments, non-surgical aesthetic treatments, and general medical services and other aesthetic services. According to certain third-party industry consultant, AIH was the third-largest private aesthetic medical services provider in China in terms of revenue in 2018. For more information regarding the Company, please visit: http://ir.aihgroup.net/.

Safe Harbor Statement

This press release contains forward-looking statements. These statements are made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as will, expects, anticipates, aims, future, intends, plans, believes, estimates, likely to and similar statements. Statements that are not historical facts, including statements about the Companys beliefs, plans and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. These risks and uncertainties and others that relate to the Companys business and financial condition are detailed from time to time in the Companys SEC filings, and could cause the actual results to differ materially from those contained in any forward-looking statement. These forward-looking statements are made only as of the date indicated, and the Company undertakes no obligation to update or revise the information contained in any forward-looking statements, except as required under applicable law.

Investor Relations Contacts

For investor and media inquiries, please contact:

Aesthetic Medical International Holdings Group LimitedEmail: ir@pengai.com.cn

DLK Advisory LimitedTel: +852 2857 7101Email: ir@dlkadvisory.com

AESTHETIC MEDICAL INTERNATIONAL HOLDINGS GROUP LIMITEDUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

31 31 March 31 March December 2020 2021 2021 RMB?000 RMB?000 US$?000 (Unaudited) (Unaudited) ASSETS Non-current assets Property, plant and equipment 531,941 544,124 83,050 Intangible assets 208,429 217,722 33,230 Investments accounted for using the 8,330 8,291 1,266 equity methodPrepayments and deposits 51,850 36,218 5,528 Deferred income tax assets 31,372 27,390 4,180 831,922 833,745 128,254 Current assets Inventories 33,336 33,737 5,149 Trade receivables 14,324 12,945 1,975 Other receivables, deposits and 98,715 74,645 11,394 prepaymentsAmounts due from related parties 6,693 6,724 1,026 Restricted cash 8,712 8,969 1,369 Cash and cash equivalents 44,384 15,473 2,362 206,164 152,493 23,275 Total assets 1,038,086 986,238 150,529 EQUITY AND LIABILITIES Equity attributable to owners of the CompanyShare capital 469 469 72 Treasury shares (2,023 ) (2,023 ) (309 )Accumulated losses (477,905 ) (496,298 ) (75,750 )Other reserves 870,355 881,496 134,542 390,896 383,644 58,555 Non-controlling interests 34,840 33,134 5,057 Total equity 425,736 416,778 63,612

AESTHETIC MEDICAL INTERNATIONAL HOLDINGS GROUP LIMITEDUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

31 31 March 31 March December 2020 2021 2021 RMB?000 RMB?000 US$?000 (Unaudited) (Unaudited) LIABILITIES Non-current liabilities Borrowings 75,931 54,735 8,354 Lease liabilities 178,983 171,233 26,135 Convertible note 34,190 35,496 5,418 Deferred income tax liabilities 13,377 13,287 2,028 Contingent consideration payable 8,181 8,181 1,249 310,662 282,932 43,184 Current liabilities Trade payables 33,654 41,354 6,312 Accruals, other payables and provisions 68,783 72,221 11,024 Contingent consideration and 4,512 2,989 456 consideration payableAmounts due to related parties 1,224 3,200 488 Contract liabilities 8,639 8,070 1,232 Borrowings 135,814 109,081 16,649 Lease liabilities 35,868 37,656 5,747 Current income tax liabilities 13,194 11,957 1,825 301,688 286,528 43,733 Total liabilities 612,350 569,460 86,917 Total equity and liabilities 1,038,086 986,238 150,529

AESTHETIC MEDICAL INTERNATIONAL HOLDINGS GROUP LIMITEDUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three months ended 31 March 31 March 31 March 2020 2021 2021 RMB?000 RMB?000 US$?000 (Unaudited) (Unaudited) (Unaudited) Revenue 90,954 210,509 32,130 Cost of sales and services rendered (56,098 ) (88,373 ) (13,488 ) Gross profit 34,856 122,136 18,642 Selling expenses (78,057 ) (93,974 ) (14,343 )General and administrative expenses (50,893 ) (42,082 ) (6,424 )Finance costs, net (5,124 ) (5,586 ) (853 )Other gains, net 1,197 178 28 Fair value loss of convertible note - (1,070 ) (163 )Fair value gain of contingent - 1,523 232 consideration payableShare of losses of investments (381 ) (39 ) (6 )accounted for using the equity method Loss before income tax (98,402 ) (18,914 ) (2,887 )Income tax credit 15,287 (1,348 ) (206 ) Loss for the period (83,115 ) (20,262 ) (3,093 ) Items that may be subsequently reclassified to profit or lossCurrency translation differences 615 (433 ) (66 ) Total other comprehensive income/ 615 (433 ) (66 )(loss) for the period, net of tax Total comprehensive loss for the (82,500 ) (20,695 ) (3,159 )period Loss attributable to: Owners of the Company (79,100 ) (18,393 ) (2,808 )Non-controlling interests (4,015 ) (1,869 ) (285 ) Loss for the period (83,115 ) (20,262 ) (3,093 ) Loss per share for loss attributableto owners of the company (in RMB per share)?Basic (1.22 ) (0.28 ) (0.04 )?Diluted (1.22 ) (0.28 ) (0.04 ) Total comprehensive loss attributable to:Owners of the Company (78,485 ) (18,826 ) (2,874 )Non-controlling interests (4,015 ) (1,869 ) (285 ) Total comprehensive loss for the (82,500 ) (20,695 ) (3,159 )period

AESTHETIC MEDICAL INTERNATIONAL HOLDINGS GROUP LIMITEDRECONCILIATIONS OF IFRS AND NON-IFRS RESULTS

EBITDA and Adjusted EBITDA For the Three Months Ended March 31, 2020 2021 2021 RMB?000 RMB?000 US$?000 (Unaudited) (Unaudited) (Unaudited) Loss before income tax for the period (98,402 ) (18,914 ) (2,887 )Adjustments + Finance costs 5,224 5,685 868 + Amortization and depreciation 22,614 21,411 3,268 EBITDA (70,564 ) 8,182 1,249 + Share-based compensation expense 21,558 11,050 1,687 + Professional fees 3,325 1,692 258 + Fair value loss of convertible note - 1,070 163 - Fair value gain of contingent - (1,523 ) (232 )consideration payableAdjusted EBITDA (45,681 ) 20,471 3,125

Adjusted Loss For the Three Months Ended March 31, 2020 2021 2021 RMB?000 RMB?000 US$?000 (Unaudited) (Unaudited) (Unaudited) Loss for the period (83,115 ) (20,262 ) (3,093 )Adjustments + Share-based compensation expense 21,558 11,050 1,687 + Professional fees 3,325 1,692 258 + Fair value loss of convertible note - 1,070 163 - Fair value gain of contingent - (1,523 ) (232 )consideration payableAdjusted Loss (58,232 ) (7,973 ) (1,217 )