Vickie Zhao – IR Jianyu Yang – Chairman and CEO Adam Sun – CFO

Yolanda Shaun – JPMorgan Charles – CICC

Ladies and gentlemen, thank you for standing by, and welcome to Q4, 2012 Concord Medical Services, Holdings Limited Earnings Conference Call. At this point in time, all participants are in a listen-only mode. There’ll be a presentation followed by a question-and-answer session. At which point in time, if you wish to ask a question, you need to press star on your telephone keypad. I must advice you that this conference is being recorded today, Thursday, 21st of March 2013. I would now like to hand the call over to your host for today, Ms. Vickie Zhao from Solebury Communications. Thank you, Ma’am. Please go ahead.

Hello everyone and welcome to Concord Medical Fourth Quarter 2012 Earnings Conference Call. Concord Medical earnings release was distributed earlier today and you can find a copy on our website as well as newswire services. Today, we will hear from Dr. Jianyu Yang, Concord Medical’s Chairman and Chief Executive Officer and Mr. Adam Sun, Chief Financial Officer. After their prepared remarks, Dr. Yang and Mr. Sun will be available to answer your questions. Before we continue, please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995 and within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include but are not limited to those outlined in our public findings with the SEC. Concord Medical does not undertake any obligation to update any forward-looking statement except as required under applicable law. Both our earnings release and remarks made during this call include discussions of certain unaudited non-GAAP financial measures. Our earnings release contains a reconciliation of the unaudited non-GAAP measures to the most directly comparable unaudited GAAP measures. As a reminder, this conference is being g recorded. In addition, a webcast of this conference call will also be available on Concord Medical’s website. I will now turn the call over to Concord Medical’s Chairman and CEO, Dr. Jianyu Yang.

Ladies and gentlemen, welcome to CCM 2012 Fourth Quarter and Full Year Earnings Conference Call. The annum [ph] revenue of network business is RMB475 million with a 6% rise compared with 2011. Chang’an Hospital medical revenue in the second half year of 2012 reached RMB190 million with approximately 40% year on year increase. CCM has become a large medical group with 136 radiotherapy and imaging centers and one private general hospital. In 2012, CCM made great progress in both our network business and hospital business. In 2012, we completed acquisition of 52% acuity of Chang’an Hospital and 19.98% Anderson Cancer Center Proton Therapy Center which established a solid foundation for our future development. Chang’an Hospital has become a well-known general hospital in Northwest China and contributes a lot to improve the local healthcare level. The ownership acquisition of MD Anderson Cancer Center Proton Therapy Center will provide strong technical and brand support for the construction and operation of planned [ph] CCM Cancer Centers. In 2013, we want to focus our attention and resources to the construction of free-standing cancer specialty hospital. Concord Huanan Cancer Hospital located in Guangzhou will break ground at the second half of 2013 and expect to open for patients in 2016. Concord Medical will target the ever growing group of middle class population meeting their demand quality differentiated healthcare services. This is a huge business opportunity for CCM. We have developed detailed plan for the current network business in 2013. We will focus on taking advantage of several government policies of healthcare reform meeting demands for patients and exploring new business models including telemedicine or remote medical solutions. In the beginning of 2012, our operation principal is cost controlled so as to increase capital return. By the end of 2012, all costs have been controlled effectively in the working plan and the budget assessment in 2013. Return on investment is a key indicator. Every region and center should follow the cost control policy strictly in an effort to increase the capital return. The year of 2013 will see CCM’s great leap. We have every confidence in it. Here, I’d like to extend our sincere gratitude for your support and kindness to IPO. Now, I’ll give the floor to Mr. Adam Sun, our CFO to introduce CCM’s financial condition.

Thank you, Dr. Yang. Welcome everyone. First of all, I would like to go soon the highlights in our full year financial results. Total net revenues for the full year 2012 were RMB671.7 million or $107.8 million, a 49.3% increase from 2011. Gross profit for the full year 2012 was RMB334 million or $53.6 million, a 14.8% increase from 2011. Adjusted EBITDA was RMB376 million or $60 million, an 18% increase from 2011. Net income for the full year 2012 was RMB127.7 million or $20.5 million. Both basic and diluted earnings per ADS for the full year 2012 were RMB2.82 or $0.45. I would like to focus my discussion on the following topics. First, I would like to comment on the status of our network business which contributed RMB117 million in revenue during the quarter and the RMB474 million for the full year 2012 or 70% of our 2012 total net revenue. We are very glad to see that the growth margin for our network business has improved to 68% during the fourth quarter which is the highest it has been since the fourth quarter of 2011. Throughout 2012, we emphasized a focus on improving our operational network efficiencies and cost control. And we are very glad to see the benefits of this initial tips taking effect. We expect that our efforts will allow growth margins for the network business to stabilize at the current level. And for the hospital business, we are very happy to see the Chang’an Hospital growth revenue by 40% in 2012 relative to 2011. The healthcare reform policies as well as the expansion of Social Welfare System have benefited Chang’an Hospital greatly. In 2013, we will focus on improving the [inaudible] of the hospital by focusing on the following aspects. Number one, strengthen the focus on oncology related departments. We have already taken some steps towards this objective. Stay in balance [ph] by taking alliance with Fox Chase that we announced in July 2012. Number two, improve bed utilization and enhance inpatient revenue by focusing on the list of inpatient stays which now stands at over 10 days. Number three, the per capita spending of outpatients now is low. It’s below RMB200. There is a large room for improvement in this regard as well. Next, I’d like to draw your attention to our improved DSO or days sales outstanding. In 2012, we strengthened our collection efforts and incorporated DSO and the key performance indicator PPA in a review process. At the end of the fourth quarter from the network business were 132 days compared to 156 days in the third quarter. We will keep working on improving our receivable level in 2013. Our full year adjusted EBITDA was RMB376 million or $60 million, an 18% increase from 2011. And our EBITDA margin was 56%. Our current EBITDA per ADS is around $1.2. We believe that EBITDA is a key evaluation ratio that our investors should pay close attention to. We also will pay close attention to our cash flow situation which is based on the adjusted EBITDA number. Our EBITDA in 2012 reflected the strong cash generating capability of both our network and hospital business. In the end, I would like to discuss our 2013 financial guidance. We expect that our network business will grow between 10% and 15%, and Chang’an Hospital will grow by 15% to 25%. These combined, this translates into total net revenues of RMB 900 million to RMB 970 million or 35% to 45% overall revenue growth over 2012. We focus or base our current business analysis and is subject to change. Now, I would like to open to questions. Operator?

Thank you very much, Sir. Ladies and gentlemen, we’ll now begin the question-and-answer session. (Operator instructions). Your first question comes from Ding Lee [ph] of Morgan Stanley. Please ask your question.

Hi, this is Yolanda [ph] [inaudible]. Thanks for taking my questions. I have a question for Dr. Yang regarding your network expansion plan, like your new center opening schedule for this year and next year. And do you have any plans to sign more contracts with lower [ph] [inaudible] business, county-level hospitals? So what’s the timeline and what’s your expectation for the revenue contribution and [inaudible]? Thank you.

Yolanda, do you mind to repeat the question in Chinese so that we’ll not have to translate [ph]?

Okay.

Thank you.

[Foreign language – Chinese]

We have announced the plan to – about two years ago, to expand the total number of our networks to around 200. So far, we’re still working towards reaching that goal. Since last year, there is on the adjustment in the Chinese government healthcare reform policy. So the government is focusing more resource towards providing to apply of basic healthcare services to the population and open up the operation of specialty hospital to private and international capital. Our plan is to take advantage of this policy change. Also, at the same time, we have noticed that the demand for either radiotherapy or diagnostic services among the county-level hospitals has been growing, and we are paying close attention to this chance. So based on our current network of radiotherapy and diagnostic centers as well as our collective resource and in medical experts, we are planning on investing in some level of this county-level hospitals. So we are doing a research internally to see what is the best approach for this investment. Thank you.

Thank you very much. Your next question comes from Shaun [ph] of JPMorgan. Please ask your question. Shaun – JPMorgan: Thank you very much for taking this question. And Dr. Yang and Mr. Sun, congratulation on pretty solid quarter. I have like two [inaudible] questions. Number one, it’s about your net income [inaudible]. It appears you have actually [inaudible] evaluation especially in regard to the G&A. So how have you been so successful? And then should we consider like this can be lower level or G&A evaluation can stay in 2013? I have another question for Dr. Yang. It’s about whether do you see any kind of like government policy initial paper [ph] that can help you like make Chang’an Hospital more profitable? And according to my calculation, you [inaudible], you [inaudible] about like 10% to 15% growth for Chang’an Hospital revenue. Is there any like upside to this? Are you like kind of figuring leaving a bit more – too much room on the table? I’ll stop here.

Okay, so thank you for the question. Regarding your first question, regarding to our G&A expenses, first as you know we have used pieces of decrease of DNA [ph] as a percentage of revenue. Obviously, there is a reason that we have consolidated the financial results of Chang’an Hospital into our income statement so that the Chang’an Hospital, G&A expense is relatively percentage of their operation. So combined, this reduces the ratio of G&A. And also, since 2012, we have been focusing on controlling our operating expenses including the G&A expenses at the headquarters in China. So we are seeing those measures taking effect in the year ‘12. So looking forward to 2013, I think you should expect G&A at the percentage of sales revenue, it should be around 10% I would say roughly, and so this should be a very I would say, a close estimate at this moment. Obviously, we’ll still look at the cost control of the key performance indicator all over the company at this moment. We will keep strengthening our efforts to control various kinds of costs. Now, I will ask Mr. Yang to answer your second part of the question.

So the current ongoing healthcare reform in China obviously is very favorable for social capital to invest and operate in the hospital sector which can be demonstrated by our strong performance of our Chang’an Hospital. And to answer your question about our focus for the Chang’an Hospital’s revenue in 2013, we expect that the total medical revenue to grow by 15% to 25%. The reason behind it is in 2011, revenue has been growing by 14% and it has experienced a very fast growth. And currently, the bed utilization rate for the 100 beds in Chang’an Hospital is pretty much saturated. So based on this two factors, we believe that the percentage growth of 15% to 25% is a reasonable estimate. And also, while this Chang’an Hospital’s revenue has reached a certain – this level, we are looking at France to do a structural restructuring of the Chang’an Hospital’s revenue because, as you know, Chang’an Hospital is a general hospital we acquired. And its profitability as a general hospital is lower than a specialty hospital. So, our – part our goal is to build Chang’an Hospital into a hospital with large specialty and small generality, which means that is a general hospital with a strong focus in country related services. So, while we are adopting this revenue restructuring plan, so we did advertising [ph] the [inaudible] of the tough life of this woman. Thank you.

Thank you very much. (Operator Instructions) You have a question from Jessica Li from CICC. Please ask your question. Charles – CICC: Hi, this is Charles [ph] from CICC. I’m going to ask the question on behalf of Jessica. First of all, I would like to ask Adam Sun on the – on the construction plan of – in the future, what kind of timeline we have besides the Guangzhou Hospital that we’re going to stop building in 2013. What is the purpose that you can maybe say a little bit more about on the Beijing Hospital? And this is the first question about the construction of hospitals. And the second question I would like to ask is, we see the acquisition that the company has accomplished in 2013 with the Anderson Kansas Center. I would like to have Adam Sun to share a little bit more on what the company is going to use this [inaudible] to do later to develop the company’s business.

So let me translate the first part of Adam Sun’s answer. So, in China, under the current regulatory system, to set up a private hospital especially a class three hospital, it takes a relatively long period of time. For instance, our specialty hospital in Guangzhou, the Huanan – Guangzhou Huanan Hospital, we find the completion contract in the [inaudible] 2010 and that we finally got fully licensed in January of this year. So, it took almost – more than three years and that’s – so, at this moment we plan to beginning the construction – to start the construction at the second half of 2013. So as you can see, it’s a long approval process. And also, we have planned to build specialty hospitals in Beijing and Shanghai as well. And both plans are in progress and there is no substantial disclosures at this moment. And the Anderson Cancer Center is the number one cancer hospital in the U.S. and its Proton Center has been in operation and is a very mature business. And also, it has performed a lot of R&D work. So, by acquiring the ownership in the MD Anderson Proton Center, we hope that we can accumulate management and technical experiences in relating to – especially in relating to proton therapy so that there is – we also hope that our plan, especially the hospital in China will become the platform on which we can have a deeper cooperation and partnership with the MD Anderson Cancer Center.

Thank you very much. (Operator Instructions) As there are no further questions at this point in time, I’d like to hand the call back to your host for today, Ms. Vickie Zhao, thank you. Please go ahead.

Thank you. Once again, thank you for joining us today. Please don’t hesitate to contact us if you have any further questions. Thank you for continuous support.

Thank you very much. Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may now disconnect.