Universal Medical Announced its 2020 Annual Results

The board of directors of Genertec Universal Medical Group Company Limited is pleased to announce the annual results of the Company and its subsidiaries for the year ended 31 December 2020.

In 2020, while leading its medical institutions in various regions to actively and effectively devote to epidemic prevention and control, Universal Medical continued to firmly promote its development  in the medical and healthcare sector, achieving growth in the annual operating results against headwinds. In 2020, the Company recorded a revenue of RMB8,521.2 million, representing an increase of 25.0% as compared to the previous year. Profit for the year was RMB1,813.9 million, representing an increase of 11.0% as compared to the previous year. Profit for the year attributable to owners of the parent was RMB1,647.5 million, representing an increase of 10.7% as compared to the previous year.

Hospital group continued to expand, with increased proportion of medical revenue

Hospital group is the essential resources of building a healthcare conglomerate. In 2020, Universal Medical continued to actively participate in the integration and takeover of medical institutions of SOEs, and build up a tightly-knit medical networks surrounding key regions and cities. As of 31 December 2020, the Company had entered into contracts in relation to takeover of 54 medical institutions (including 5 Grade III Class A hospitals and 27 Grade II hospitals) with actual capacity of over 15,000 beds in total. As of 31 December 2020, the Company had consolidated 38 medical institutions (including 3 Grade III Class A hospitals and 16 Grade II hospitals), with actual capacity of 9,699 beds.

In 2020, Universal Medical's income from hospital group business was RMB3,623.0 million, representing an increase of 77.0% over the previous year (mainly due to the revenue brought by newly consolidated medical institutions in 2020), which accounted for more than 42% of the total revenue of the Company. In the future, with the further business expansion and the improvement of core capabilities of the hospital group, it is expected that the proportion of the income from hospital group business would continue to increase.

Discipline construction was strengthened and technical strength was enhanced

In 2020, the Company adopted an overall approach of promoting core disciplines, characteristic disciplines and consumer disciplines by categories and with multiple measures. In terms of core disciplines, the Group clarifies that the development of a core discipline cluster should be prioritized including cardiovascular, orthopedics, obstetrics & gynecology, and neurology and neurosurgery, as a way to strive for building a technological highland with core clinical technology and the ability to cure intractable diseases. At the same time, in order to fully enhance development incentive of the core discipline centers within the Group, a complete internal training and cultivation system has been established. In terms of specialties, the Group identified the development of four specialties, namely digestive medicine, nephropathy, oncology, and rehabilitation medicine, and comprehensively establish a characteristic specialty operating system. In this way, the Group further integrated the advantageous resources of the hospital group's specialties, and laid a solid foundation for the promotion of the vertical management of the Group. In terms of consumptive healthcare service, pilot construction was completed in the stomatological hospital under Ansteel General Hospital, and a management mode for operating specialties that could be replicated and promoted has also been established. Meanwhile, a series of initial work such as the standardization of the physical examination center was completed to further cultivate new growth points of the hospital group.

Digital construction was enhanced to promote informatization upgrade

In the past year, the Company comprehensively implemented digital strategies. On the one hand, we consolidated the foundation for the information construction of the Group and hospitals, and fully launched the layout of data middle platform. On the other hand, we further enriched the connotation of the Internetbased health platform to fully support the digital development of the industry sector. At present, the upgrading and transformation of hospitals' core systems have been fully launched, and a data middle platform with independent intellectual property rights and advanced architecture has also been built. Five member medical institutions were officially approved to carry out Internet-based hospital business. Internet-based health platform has accumulated 17 internal hospitals and one external hospital, and played an important role in the anti-epidemic process. Among them, Hainan Genertec Universal Internet Hospital has become the Group's unified Internet-based medical entrance and the core carrier of medical industry resource integration.

Advantages of group management were leveraged to improve hospital operation efficiency

In 2020, relying on the scale of the existing hospital group, the Company made efforts to improve the overall efficiency of the hospital group through standardized and efficient group management in various aspects such as operation and management, and centralized procurement and supply. For example, in terms of medical quality management, we completed the establishment of standardized quality management systems and the revision of medical core systems to keep in line with quality management systems of advanced hospitals at home and abroad, improved the medical quality monitoring system and early warning mechanism to advance the medical quality management, and established an inspection system without prior notice to strengthen post-event supervision. Such efforts provided a practical way and approaches to manage the hospital group's quality in a standardized way. In terms of medical insurance management, in accordance with the medical insurance level, a professional technical model for DRG/DIP management was developed to achieve the goal of fully profiting from medical insurance settlement or pre-settlement in the regions with DRG/DIP payment reform. In terms of supply chain management, we further integrated the drug and consumables supply chain business of medical institutions in an orderly way, gave full play to the advantages of centralized procurement to benefit from supply chain management. In terms of equipment procurement and hospital construction, through centralized procurement and other methods, procurement costs were significantly lower than the market level. In the future, as various lines of group operations further progress and measures have been contiguously implemented to enhance quality and efficiency, the overall benefits of the hospital group will be further improved.

The expansion of layout in industrial chain was started in an orderly manner, and the business development produced initial results

Focusing on the hospital group, the Company continued to advance model exploration, project piloting and layout expansion in the health industry chain. For example, in terms of Internet-based health care, Internet-based health platform will be deeply integrated with the hospital information system, and provide comprehensive data support for doctors' online diagnosis and treatment. It will also realize personalized health services and in-depth data application to help commercialize the platform. In terms of equipment maintenance, the Company has established a highly skilled and efficient team for medical equipment maintenance business, and promotes an advanced business model of "managing medical equipment for a full life cycle" as a way to provide hospitals with services in terms of standardized maintenance and comprehensive equipment operation and management, improving the operating efficiency of the hospital equipment in an all-round way. In terms of medical inspection, the Company tailored the development plan for the inspection center of partner hospitals and built a specialized disease inspection platform based on the characteristics of different regions and hospitals. By increasing high-end inspection items and upgrading technologies, the Group helps the inspection disciplines of partner hospitals gradually reach the first-class level in the region. In addition, fully assessing the existing advantages and through the introduction of a professional team, the Group conducted pilot exploration and model evaluation in areas such as health and wellness business and insurance business, so as to lay a good foundation for future business incubation.

Financial business has achieved stable development and provided strong support to the Group

Universal Medical's financial business mainly focuses on financial leasing business, the income from which is a stable source of profits for the Company. In the first half of 2020, although the development progress of the Company's financial business and the progress of hospital customers' payment collection were delayed due to epidemic control policies in various regions, since the third quarter of the year, the business was fully restored as the business departments enhanced their development efforts to work meticulously in the region, and the Group further enhanced the overall organization and management efficiency of the financial sector. In 2020, finance and advisory business recorded a revenue of RMB4,899.7 million, representing a year-on-year increase of 2.7%; and gross profit of RMB3,059.4 million, representing a year-on-year increase of 7.6%. Among them, interest income from the financial leasing business amounted to RMB4,033.1 million, representing a year-on-year increase of 5.9%; the gross profit of interest margin was RMB2,192.9 million, representing a year-on-year increase of 16.0%; the net interest spread was 3.54%, and the net interest margin was 4.09%, still a high ranking among its domestic competitors. As of 31 December 2020, the net value of interest-earning assets of the Company reached RMB53,524.2 million, representing an increase of 9.5% from the beginning of the year; the non-performing asset ratio was 1.00%, the overdue ratio (30 days) was 0.94%, and the provision coverage ratio increased to 205.52%. The overall asset quality of the Group was safe and controllable and continued to maintain its leading position in the industry.

Outlook for 2021

2021 will be a crucial year for Universal Medical to carry out its strategies and enhance core capabilities. The Company will calmly cope with various risks and challenges, strictly control risks in the financial business, and develop steadily. We will make the medical business better and stronger and give full play to its characteristics. The layout of the health business will be improved to lay a solid foundation for future development. Committed to the mission of protecting life and health with quality medical care, we will strive for breakthroughs in the quality development of the Group as a whole, and make relentless efforts to build a trustworthy healthcare conglomerate, and create greater value and return for all shareholders.

About Genertec Universal Medical Group Company Limited

Genertec Universal Medical Group Company Limited ("Universal Medical") is a listed subsidiary (Stock code: HK.02666) of China General Technology (Group) Holding Co., Ltd ("Genertec"), one of the backbone SOEs directly administrated by the central government, and a central enterprise holding group with medical and healthcare sector as its main business. The company focuses on China's rapidly evolving healthcare industry, and is centered on medical services and supported by financial services. With reliance on modern management concepts, professional teams, high-quality medical resources, solid financial strength and inclusive corporate culture, Universal Medical contributes to construction of "Healthy China", and gradually build a shared and win-win health industry ecosystem.