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
shareholders


$

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: xupei@mdmooc.org
Phone: +86 21-3220-5987

Investor Relations:
Sherry Zheng
Weitian Group LLC
Email: shunyu.zheng@weitian-ir.com
Phone: +1 718-213-7386

 

 

 

ZHONGCHAO INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Expressed in U.S. dollar, except for the number of shares)






December 31,
2021



December 31,
2020


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
   authorized; 19,453,423  and 19,435,423 shares issued and outstanding at
   December 31, 2021 and 2020, respectively)



1,946




1,944


Class B Ordinary Share (par value $0.0001 per share, 50,000,000 shares
   authorized; 5,497,715 and 5,497,715 shares issued and outstanding at
   December 31, 2021 and 2020, respectively)



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
December 31,




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
shareholders


$

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
December 31,




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
    in) operating activities:  













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
    initial public offering, net of offering cost



-




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 
    obligations


$

555,639



$

37,919



$

419,362



  

View original content:https://www.prnewswire.com/news-releases/zhongchao-inc-reports-the-fiscal-year-2021-financial-results-301542297.html


Source: Zhongchao Inc. Related Stocks: NASDAQ:ZCMD
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