Clear! iKang Healthcare Group Is Here to Save Your Portfolio

Source: Thinkstock

Source: Thinkstock

iKang Healthcare Group Inc. (NASDAQ:KANG) is a growing Chinese healthcare company. It provides preventive healthcare solutions solely in the People’s Republic of China. The company offers a range of medical examinations, which comprise internal, gynecology, ophthalmology, ENT, dental, lab tests, electrocardiogram, ultrasound, and X-ray examination items. It also provides value-added services at selected medical centers, such as disease screening focusing on cancer screening, cardiovascular disease screening, chronic disease screening, and functional medicine testing; dental care, including oral health, pediatric dentistry, cosmetic dentistry, orthodontics, and dental implants; outpatient services comprising acupuncture, Chinese medicine, gynecology, internal medicine, obstetrics, ophthalmology, pediatrics, urology, and minor surgery as well as on-site healthcare management or clinical services. In addition, the company offers relaxation and recreation services. It primarily serves corporate and individual customers.

The company provides its services through self-owned medical centers and the facilities of third-party service providers. It owns and operates a network of nearly 50 self-owned medical centers located in Beijing, Shanghai, Guangzhou, Shenzhen, Chongqing, Tianjin, Nanjing, Suzhou, Hangzhou, Chengdu, Fuzhou Changchun, and Jiangyin. The stock has been on fire, rising 30 percent in the last month. Can this momentum continue?

Well, the annual results for the company were quite strong. Net revenues were $202.3 million, which grew 51.1 percent year-over-year from $133.9 million for the fiscal year ended March 31, 2013 (the fiscal year 2012.) These results reflect a stable and solid growth across all three major service categories. The sales growth was mainly driven by a fast growing corporate and individual customer base and increasing demand for respective services, as well as the expansion of its medical center infrastructure. The number of its self-owned medical centers increased from 36 as of March 31, 2013 to 45 as of March 31, 2014. The company served in total 2.7 million individuals in fiscal year 2013 under both corporate and individual programs, an increase of 37.9 percent over the fiscal year 2012.

What about net revenues by service? Well, net revenues from medical examinations were $173.9 million, an increase of 49.3 percent year-over-year from $116.4 million in the previous fiscal year. This was mainly driven by the increase of 41.6 percent in the number of visits for the medical examination as well as an increase of 5.5 percent in the blended average selling price, as compared to the fiscal year 2012. Net revenues from disease screening were $15.0 million, an increase of 62.5 percent year-over-year from $9.2 million in the previous fiscal year. Disease screening refers to the additional service requested by individuals under the basic corporate medical examination programs as a result of individual needs.

We have seen an increasing demand for this additional service as its percentage of total revenues increased from 6.9 percent in the fiscal year 2012 to 7.4 percent in the fiscal year 2013. Net revenues from other services were $13.4 million, an increase of 63.6 percent year-over-year from $8.2 million in the previous fiscal year. The increase was primarily due to its acquisition of Yuanhua Medical Consultancy Services (Shanghai) Co., Ltd. in July 2013, which provided medical consultancy services to customers, apart from medical examination and disease screening services.