iKang Healthcare Group, Inc. (“iKang” or the “Company”)
(Nasdaq:KANG), a major provider in China’s fast growing private
preventive healthcare services market, today announced that it will
cooperate with China Industrial Asset Management Limited (“China
Industrial Asset Management”), an asset management company with
total RMB 185 billion funds under its management, which is under
China Industrial Bank, to form certain healthcare investment funds
to invest in medical centers.
The aggregate size of the healthcare investment
funds will not exceed RMB 502 million. An affiliate of Mr.
Lee Ligang Zhang, iKang’s Chairman and CEO, and an affiliate of
China Industrial Asset Management will act as general partners and
each contribute RMB 1 million to the investment funds. iKang and
China Industrial Asset Management will each contribute up to RMB 50
million to the investment funds as limited partners. The investment
funds will admit other limited partners which will contribute up to
RMB 400 million.
Pursuant to the arrangements, the investment
funds will either set up new medical centers or acquire existing
medical centers. After operating these medical centers for a period
of at least two years, the investment funds will transfer their
interests in these medical centers to iKang at a price equal to
their original costs with an annual return rate of 15%. Since its
inception, iKang has achieved fast expansion through both organic
growth and acquisitions. Based on its past experience, iKang
believes that this is a very cost efficient way to further
accelerate iKang’s business expansion and enhance the Company’s
financial performance.
"I am very pleased to establish an investment
partnership with China Industrial Asset Management," remarked Mr.
Zhang. "This is a compelling strategic move to accelerate the
buildout of our network of medical centers nationwide. We see this
as a strategic imperative to capture the tremendous market
opportunities and drive the growth of our business, which in turn
will also enhance the quality of preventive healthcare available in
China."
"Healthcare-focused investment funds are a
standard industry practice amongst companies in the healthcare
sector in China, structured to provide healthcare-related
businesses with the initial capital investment,
incubation/development periods, and ramp-up periods they need,” Mr.
Zhang continued. "This partnership will give iKang a more cost and
time effective means to acquire medical centers after their ramp-up
period of two years. China Industrial Asset Management is a highly
respected and well-connected partner, and through the investment
fund structure, we will be able to maintain the momentum of
acquisition through external funding to advance the execution of
our growth strategies."
About iKang Healthcare Group,
Inc.iKang Healthcare Group, Inc. is one of the largest
providers in China’s fast-growing private preventive healthcare
space through its nationwide healthcare services network.
iKang’s nationwide integrated network of
multi-brand self-owned medical centers and third-party facilities,
provides comprehensive and high-quality preventive healthcare
solutions across China, including medical examination, disease
screening, outpatient service and other value-added services.
iKang’s customer base primarily comprises corporate clients, who
contract with iKang to deliver medical examination services to
their employees and clients, and receive these services at
pre-agreed rates. iKang also directly markets its services to
individual customers. In the fiscal year ended March 31, 2017,
iKang served a total of 5.58 million customer visits under both
corporate and individual programs.
As of July 19, 2017, iKang has a nationwide
network of 108(1) self-owned medical centers, covering 33 of
China’s most affluent cities: Beijing, Shanghai, Guangzhou,
Shenzhen, Chongqing, Tianjin, Nanjing, Suzhou, Hangzhou, Chengdu,
Fuzhou, Changchun, Jiangyin, Changzhou, Wuhan, Changsha, Yantai,
Yinchuan, Weihai, Weifang, Shenyang, Xi’an, Wuhu, Guiyang, Ningbo,
Foshan, Jinan, Bijie, Qingdao, Wuxi, Kaili and Mianyang, as well as
Hong Kong. iKang has also extended its coverage to over 200 cities
by contracting with approximately 400 third-party facilities, which
include select independent medical examination centers and
hospitals across all of China’s provinces, creating a nationwide
network that allows iKang to serve its customers in markets where
it does not operate its own medical centers.
(1) Among the 108 self-owned medical centers,
two medical centers are currently operated primarily by the
minority shareholders of these medical centers or their parent
company.
Forward-looking StatementsThis press release
contains forward-looking statements. These statements, including
management quotes and business outlook, are made under the “safe
harbor” provisions of the U.S. Private Securities Litigation Reform
Act of 1995. These forward-looking statements can be identified by
terminology such as ”will,” "estimate," "project," "predict,"
"believe," "expect," "anticipate," "intend," "potential," "plan,"
"goal" and similar statements. iKang may also make written or oral
forward-looking statements in its periodic reports to the U.S.
Securities and Exchange Commission, in its annual report to
shareholders, in press releases and other written materials and in
oral statements made by its officers, directors or employees to
third parties. Such statements involve certain risks and
uncertainties that could cause actual results to differ materially
from those expressed or implied in the forward-looking statements.
These forward-looking statements include, but are not limited to,
statements about: the Company’s goals and strategies; its future
business development, financial condition and results of
operations; its ability to retain and grow its customer base and
network of medical centers; the growth of, and trends in, the
markets for its services in China; the demand for and market
acceptance of its brand and services; competition in its industry
in China; relevant government policies and regulations relating to
the corporate structure, business and industry; fluctuations in
general economic and business conditions in China. Further
information regarding these and other risks is included in iKang’s
filing with the Securities and Exchange Commission. iKang
undertakes no duty to update any forward-looking statement as a
result of new information, future events or otherwise, except as
required under applicable law.
IR Contact:
iKang Healthcare Group, Inc.
Christy Xie
Director of Investor Relations
Tel: +86 10 5320 8599
Email: ir@ikang.com
Website: www.ikanggroup.com
FleishmanHillard
Email: ikang@fleishman.com
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