CHENGDU, China, April 4, 2011 /PRNewswire-Asia-FirstCall/ -- China SHESAYS Medical Cosmetology Inc. (OTC Bulletin Board: CSAY) ("China SHESAYS" or the "Company"), which operates a network of specialized medical cosmetology hospitals, clinics and skincare centers in Sichuan province, China, today announced financial results for full year ended December 31, 2010.
FY 2010 Financial Results
Full Year 2010 Results (audited)
GAAP EPS (Diluted)
Revenue for the year ended December 31, 2010 totaled $12.2 million, up approximately 37.8% from $8.8 million for the year ended December 31, 2009. The revenue growth was driven by new outpatient clinics in Leshan, Yibin and Zigong launched in late 2010, and continued efforts to attract new customers in the headquarter hospital. The Company served approximately 25,682 customers in the headquarter hospital and three clinics in 2010 compared to approximately 20,514 customers in 2009. For 2010, revenues of the headquarter hospital increased by 33.0% to $11.7 million, compared to $8.8 million in 2009, while three new clinics contributed approximately $0.5 million in revenues.
"We are pleased to report our fiscal 2010 results with strong revenue growth. Our marketing strategy was successful and complemented by the expansion of our outpatient clinics, which enable us to gain additional market share in Sichuan province and achieve record sales for the year," commented Yixiang Zhang, Chairman and Chief Executive Officer of China SHESAYS. "Year 2010 is a very important milestone for our company as we achieved U.S. listing and closed a PIPE financing of $1.2 million. In addition, we expanded outside our home market of Chengdu and into other cities including Leshan, Yibin and Zigong in Sichuan province, which we believe will further improve our brand name and build toward a leading position in Sichuan province."
Revenue generated from cosmetic surgery service increased by 28.1% from 2009 to $6.2 million, with a gross margin of 71.6%. Cosmetic surgery service represented approximately half of 2010 revenues. Revenue of professional medical beauty service was strong, growing by 64.7% to $4.9 million with a gross margin of 82.9%. Revenue of cosmetic dentistry services totaled $0.4 million in 2010, compared to $0.6 million in 2009. Revenue generated from sales of cosmetic goods in 2010 was approximately $0.6 million, an increase of 45.0% compared to $0.4 million in 2009.
Cost of revenue was $3.4 million for 2010, or 27.5% of revenues, compared to $2.6 million, or 29.3%, of revenues for 2009. The increase in cost of revenue was mainly due to the increase in revenues in 2010.
Gross profit for 2010 was $8.8 million, up 41.3% from $6.2 million for 2009. The increase in gross profit was mainly attributable to increased revenues in 2010. Gross margin for the year ended December 31, 2010 was approximately 72.5% as compared to gross margin of approximately 70.7% for the year ended December 31, 2009.
Operating expenses increased 129.1% to $6.8 million in 2010 from $4.2 million in 2009 mainly due to marketing and advertising expenses and professional and consultant fees relating to being a public company.
Operating Income increased 1.1% to $2.0 million for 2010 and operating margins were 16.7% compared to 22.7% in 2009.
Income tax was $0.6 million for 2010, as compared to $0.2 million for 2009, an increase of approximately 176.2%, with an effective tax rate of 32.1% and 11.4% in each respective period. The increase was mainly due to the expiration of the income tax rate which was calculated based on net income for income tax purposes assessed at 10% of services revenue with the applicable tax rate of 25% in 2009. From 2010 onwards, the Company has an income tax rate of 25%.
Net income was $1.3 million for the year ended December 31, 2010 as compared to $1.8 million for the year ended December 31, 2009, representing a decrease of approximately 24.0%. The decrease was due to the increase of operating expenses related to being a public company and change of tax rate in 2010. Earnings per share in 2010 amounted to $0.08, down 38.5% from $0.13 in 2009, based on weighted average shares outstanding of 16.2 million and 13.5 million respectively.
Balance Sheet and Cash Flow
As of December 31, 2010, cash and cash equivalents totaled $1.0 million compared to $1.4 million as of December 31, 2009. Stockholders' equity was $5.0 million compared to $2.6 million as of December 31, 2009, with total assets of $9.1 million versus total liabilities of $3.9 million on December 31, 2010. For the twelve months of 2010, the Company generated $2.3 million in cash from operations, compared to $2.1 million for twelve months ended December 31, 2010.
"We expect our three outpatient clinics to be profitable and start to contribute incremental growth to the Company in fiscal 2011. In addition, we will launch our new flagship hospital in Chengdu in June 2011, which will significantly increase our scale and meet the growing consumer demand for our services. We have established a solid foundation by building a recognized brand name in the cosmetology industry in the region to leverage the consumer's desire to pursue their beauty of life and capitalize on the significant secular growth drivers," concluded Mr. Zhang.
About China SHESAYS Medical Cosmetology Inc.
China SHESAYS, founded in 2005, operates a chain of specialized medical cosmetology hospitals, clinics and skincare centers in Sichuan province. The Company has a full range of services including cosmetic surgery, cosmetic dermatology, cosmetic dentistry and cosmetic Traditional Chinese Medicine ("TCM"). Headquartered in Chengdu, China, China SHESAYS has become one of the most renowned cosmetology hospital chains in Sichuan province. Currently, the Company serves more than 20,000 patients each year. For more information about the Company, please visit the Company's website at www.chinashesays.com.
Safe Harbor Statements
This press release contains forward-looking statements made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward looking statements are based upon the current plans, estimates and projections the Company's management and are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from the forward looking statements. Such statements include, but are not limited to, those concerning the Company's market and industry segment growth and penetration and demand; the acceptance of the Company's cosmetic services and products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance, including earning ability; uncertainties related to conducting business in China, as well as all assumptions, expectations, hopes, beliefs, predictions, and intentions about future events. Therefore, you should not place undue reliance on these forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: business conditions in China, general economic conditions; geopolitical events and regulatory changes, availability of capital, the Company's ability to maintain its competitive position as well as other relevant risks, including but not limited to risks outlined in the Company's periodic filings with the U.S. Securities and Exchange Commission. Accordingly, although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. China SHESAYS does not assume any obligation to update the forward-looking information contained in this press release.
CHINA SHESAYS MEDICAL COSMETOLOGY INC.
("CHINA SHESAYS") AND SUBSIDIARIES
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