Global Cord Blood Corporation

Revenue increased 9% year over year to approximately RMB 317 million. Gross profit rose 10% to approximately RMB 270 million, with gross margin flat at 85%. Operating income increased about 21% year over year to approximately RMB 150 million, and operating margin improved to 47% from 43%. Non-GAAP operating income was RMB 162 million, up about 19%, with non-GAAP operating margin at 51% versus 47%. Net income attributable to shareholders increased 15% year over year to RMB 134 million, net margin improved to 42% from 40%, and basic/diluted EPS was RMB 1.11. New subscribers were 18,985, up 6.6% year over year, and accumulated subscribers exceeded 555,000. For the quarter, management said new subscriber numbers in fiscal 2022 are expected to be around the higher end of prior guidance at 75,000.

The CEO’s remarks focused on operating through a difficult environment: winter COVID-19 outbreaks, localized lockdowns, and stricter hospital access continued to weigh on client acquisition and conversion. Even so, management said subscriber growth held up and was in line with expectations. Strategically, the company said it is closely monitoring regulatory developments, especially the still-unresolved licensing regime for China’s cord blood banking industry, while also looking for ways to diversify beyond its core business.

The CFO highlighted broad-based financial improvement driven by higher processing and storage revenues. Processing fees and other services rose about 10% year over year to RMB 181 million, storage fee revenue increased 8% to RMB 136 million, and gross profit grew 10% to about RMB 270 million while gross margin stayed at 85%. Operating discipline helped as sales and marketing expense fell 5% to RMB 66 million; G&A rose 8% to RMB 47 million; cash flow details and capital allocation were not discussed in this call.

The only analyst question asked about the geographic mix of new subscribers and payment-option mix. Management said about 11% of new subscribers came from Beijing, 67% from Guangdong, and 22% from Zhejiang. On payment methods, about 30% used one option that was not clearly transcribed, 38% chose upfront payment, and 32% chose installment payment.