Gravitas Education Holdings, Inc. Reports First Half 2023 Financial Results
- Net revenues from continuing operations increased by 17.9% to $18.0 million
- Revenues from kindergarten services increased by 18.5% due to higher student numbers and tuition fees
- Gross profit from continuing operations increased to $2.7 million
- Adjusted net loss from continuing operations increased to $2.1 million
- Net loss attributable to ordinary shareholders for H1 2023 was $4.5 million
- General and administrative expenses increased by 90.9% due to transaction costs related to the Merger
- Operating loss from continuing operations increased to $3.3 million
The Company's Acquisition of eLMTree and Divestiture of its PRC Business
The Company announced on April 18, 2023, that it has entered into an agreement and plan of merger (the "Merger Agreement"), dated April 18, 2023, with Bright Sunlight Limited, a
Concurrent with the execution of the Merger Agreement, the Company has entered into a share purchase agreement (the "Divestiture Agreement") with Rainbow Companion, Inc. (the "Divestiture Purchaser"), a purchaser consortium formed by Joy Year Limited, Bloom Star Limited, Ascendent Rainbow (Cayman) Limited (and its affiliates), Trump Creation Limited and China Growth Capital Limited. Pursuant to the Divestiture Agreement, immediately prior to the Closing, the Company will transfer all its education business in
As the Company will divest its
First Six Months of 2023 Financial Results
- Net revenues from continuing operations were
US , compared with$18.0 million US for the first six months of 2022.$15.3 million - Gross profit from continuing operations was
US , compared with$2.7 million US for the first six months of 2022.$1.0 million - Net loss from continuing operations attributable to ordinary shareholders of GEHI for the first six months of 2023 was
US , compared with$2.2 million US for the same period of 2022. Adjusted net loss from continuing operations attributable to ordinary shareholders[1] of GEHI for the first six months of 2023 was$1.1 million US , compared with$2.1 million US for the same period of 2022.$1.0 million
Net loss attributable to ordinary shareholders of GEHI for the first six months of 2023 wasUS .5 million, compared with$4 US .8 million of net income attributable to ordinary shareholders of GEHI for the same period of 2022. Adjusted net loss attributable to ordinary shareholders[1] of GEHI for the first six months of 2023 was$26 US .1 million, compared with$4 US of adjusted net income attributable to ordinary shareholders[1] of GEHI for the same period of 2022.$27.3 million
First Six Months of 2023 Financial Results
Net Revenues from Continuing Operations
Net revenues from continuing operations for the first six months of 2023 were
Revenues from kindergarten services from continuing operations for the first six months of 2023 were
Revenues from student care center services from continuing operations for the first six months of 2023 were
Revenues from franchise services from continuing operations for the first six months of 2023 were
Cost of Revenues of Continuing Operations
Cost of revenues of continuing operations for the first six months of 2023 was
Gross Profit from Continuing Operations
Gross profit from continuing operations for the first six months of 2023 was
Operating Expenses of Continuing Operations
Total operating expenses of continuing operations for the first six months of 2023 were
Selling expenses of continuing operations were
General and administrative expenses of continuing operations for the first six months of 2023 were
Operating Loss from Continuing Operations
Operating loss from continuing operations for the first six months of 2023 was
Net Loss from Continuing Operations
Net loss from continuing operations attributable to ordinary shareholders of GEHI for the first six months of 2023 was
Basic and diluted net loss from continuing operations per American Depositary Share ("ADS") attributable to ordinary shareholders of GEHI for the first six months of 2023 were both
Adjusted basic and diluted net loss from continuing operations per ADS attributable to ordinary shareholders[3] of GEHI for the first six months of 2023 were both
EBITDA[4] from continuing operations for the first six months of 2023 was negative
Net Income/loss from Discontinued Operations
Loss from discontinued operations after taxes for the first six months of 2023 was
Net Income/loss
Net loss attributable to ordinary shareholders of GEHI for the first six months of 2023 was
Adjusted net loss attributable to ordinary shareholders of GEHI for the first six months of 2023 was
Basic and diluted net loss per ADS attributable to ordinary shareholders of GEHI for the first six months of 2023 were both
Adjusted basic and diluted net loss per ADS attributable to ordinary shareholders[3] of GEHI for the first six months of 2023 were both
EBITDA for the first six months of 2023 was negative
[1] Adjusted net income (loss) (from continuing operations) attributable to ordinary shareholders is a non-GAAP financial measure, which is defined as net income (loss) (from continuing operations) attributable to ordinary shareholders excluding share-based compensation expenses and changes in redeemable non-controlling interests. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release. |
[2] Adjusted operating income (loss) is a non-GAAP financial measure, which is defined as operating income (loss) excluding share-based compensation expenses. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release. |
[3] Adjusted basic and diluted net income (loss) (from continuing operations) per ADS attributable to ordinary shareholders is a non- GAAP financial measure, which is defined as basic and diluted net income (loss) (from continuing operations) per ADS attributable to ordinary shareholders excluding share-based compensation expenses and changes in redeemable non-controlling interest. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release. |
[4] EBITDA is defined as net income (loss) excluding depreciation, amortization and income tax expenses. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release. |
[5] Adjusted EBITDA is a non-GAAP financial measure, which is defined as net income (loss) excluding depreciation, amortization, income tax expenses, and share-based compensation expenses. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release. |
About Gravitas Education Holdings, Inc.
Founded on the core values of "Care" and "Responsibility," "Inspire" and "Innovate," Gravitas Education Holdings, Inc. (formerly known as RYB Education, Inc.) is a leading early childhood education service provider in
Use of Non-GAAP Financial Measures
We use EBITDA, adjusted EBITDA, adjusted operating income, adjusted net income, and adjusted basic and diluted net income per ADS, each a non-GAAP financial measure, in evaluating our operating results and for financial and operational decision-making purposes.
EBITDA is defined as net income excluding depreciation, amortization and income tax expenses; adjusted EBITDA is defined as net income excluding depreciation, amortization, income tax expenses, and share-based compensation expenses; adjusted operating income is defined as operating income excluding share-based compensation expenses; adjusted net income attributable to ordinary shareholders is defined as net income attributable to ordinary shareholders excluding share-based compensation expenses and changes in redeemable non-controlling interest; and adjusted basic and diluted net income per ADS attributable to ordinary shareholders are defined as basic and diluted net income per ADS attributable to ordinary shareholders excluding share-based compensation expenses and changes in redeemable non-controlling interest.
We believe that EBITDA, adjusted EBITDA, adjusted operating income, adjusted net income, and adjusted basic and diluted net income per ADS, help identify underlying trends in our business that could otherwise be distorted by the effect of certain expenses that we include in income from operations and net income. We believe that EBITDA, adjusted EBITDA, adjusted operating income, adjusted net income, and adjusted basic and diluted net income per ADS, provide useful information about our operating results, enhance the overall understanding of our past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making.
EBITDA, adjusted EBITDA, adjusted operating income, adjusted net income, and adjusted basic and diluted net income per ADS, should not be considered in isolation or construed as an alternative to net income or any other measure of performance or as an indicator of our operating performance. Investors are encouraged to review the historical adjusted financial measures to the most directly comparable GAAP measures. EBITDA, adjusted EBITDA, adjusted operating income, adjusted net income, and adjusted basic and diluted net income per ADS, presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the
For investor and media inquiries, please contact:
In China:
Gravitas Education Holdings, Inc.
Investor Relations
Tel: 86-10-8767-5752
E-mail: ir@geh.com.cn
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||
(in thousands of | ||
As of | ||
June 30, 2023 | December 31, | |
Current assets: | ||
Cash and cash equivalents | 19,753 | 20,510 |
Accounts receivable, net | 1,097 | 658 |
Inventories | 103 | 96 |
Prepaid expenses and other current assets | 661 | 691 |
Amount due from related parties | 526 | 504 |
Current assets for discontinued operations | 12,260 | 18,786 |
Total current assets | 34,400 | 41,245 |
Non-current assets: | ||
Property, plant and equipment, net | 4,979 | 4,780 |
Intangible assets, net | 5,614 | 5,647 |
Deferred tax assets | 33 | 34 |
Other non-current assets | 1,545 | 1,354 |
Prepayments to related parties | 1,076 | 1,009 |
Operating lease right-of-use assets | 4,589 | 5,559 |
Non-current assets for discontinued operations | 17,839 | 21,045 |
Total assets | 70,075 | 80,673 |
Liabilities | ||
Current liabilities: | ||
Prepayments from customers, current portion | 32 | 53 |
Accrued expenses and other current liabilities – third | 5,068 | 3,670 |
Accrued expenses and other current liabilities – | 344 | 232 |
Income tax payable | 835 | 949 |
Operating lease liabilities, current portion | 2,807 | 2,928 |
Deferred revenue, current portion | 400 | 892 |
Current liabilities for discontinued operations | 19,540 | 23,509 |
Total current liabilities | 29,026 | 32,233 |
Non-current liabilities: | ||
Other non-current liabilities | 3,509 | 3,604 |
Deferred income tax liabilities | 950 | 959 |
Operating lease liabilities, non-current portion | 1,943 | 2,468 |
Non-current liabilities for discontinued operations | 13,314 | 16,510 |
Total liabilities | 48,742 | 55,774 |
Mezzanine equity | ||
Redeemable non-controlling interests | 281 | 111 |
Equity | ||
Ordinary shares | 29 | 29 |
Treasury stock | (6,897) | (7,445) |
Additional paid-in capital | 134,828 | 135,060 |
Statutory reserve | 5,293 | 5,293 |
Accumulated other comprehensive loss | (1,005) | (1,625) |
Accumulated deficit | (111,512) | (107,059) |
Total Gravitas Education Holdings, Inc. | 20,736 | 24,253 |
Non-controlling interest | 316 | 535 |
Total equity | 21,052 | 24,788 |
Total liabilities, mezzanine equity and total equity | 70,075 | 80,673 |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(in thousands of | ||||||||
Six months Ended | ||||||||
June 30, | ||||||||
2023 | 2022 | |||||||
Net revenues: | ||||||||
Services | ||||||||
Services-third parties | 17,891 | 15,188 | ||||||
Services-related parties | 36 | 54 | ||||||
Total services revenues | 17,927 | 15,242 | ||||||
Products | ||||||||
Products-third parties | 91 | 42 | ||||||
Total products revenues | 91 | 42 | ||||||
Total net revenues | 18,018 | 15,284 | ||||||
Cost of revenues: | ||||||||
Services | 15,270 | 14,198 | ||||||
Products | 57 | 37 | ||||||
Total cost of revenues | 15,327 | 14,235 | ||||||
Gross profit | 2,691 | 1,049 | ||||||
Operating expenses | ||||||||
Selling expenses | 285 | 227 | ||||||
General and administrative expenses | 5,687 | 3,046 | ||||||
Total operating expenses | 5,972 | 3,273 | ||||||
Operating loss from continuing operations | (3,281) | (2,224) | ||||||
Government subsidy income | 1,199 | 1,095 | ||||||
Loss before income taxes from continuing operations | (2,082) | (1,129) | ||||||
Less: Income tax benefits | - | (3) | ||||||
Net loss from continuing operations | (2,082) | (1,126) | ||||||
Discontinued operations | ||||||||
Loss from discontinued operations, net of income taxes | (2,401) | (4,146) | ||||||
Gain on disposal, net of income taxes | - | 30,537 | ||||||
Net (loss) income from discontinued operations, net of | ||||||||
income taxes | (2,401) | 26,391 | ||||||
Net (loss) income | (4,483) | 25,265 | ||||||
Net income (loss) attributable to non-controlling interest from | ||||||||
continuing operations | 167 | (18) | ||||||
Net loss attributable to non-controlling interest from | ||||||||
discontinued operations | (197) | (1,550) | ||||||
Net (loss) income attributable to ordinary shareholders of | ||||||||
Gravitas Education Holdings, Inc. | (4,453) | 26,833 | ||||||
Net (loss) income per share attributable to ordinary | ||||||||
shareholders of Gravitas Education Holdings, Inc. – Basic | ||||||||
and diluted | ||||||||
Net loss from continuing operations | (0.08) | (0.04) | ||||||
Net (loss) income from discontinued operations | (0.08) | 1.00 | ||||||
Net (loss) income | (0.16) | 0.96 | ||||||
Net (loss) income per ADS attributable to ordinary | ||||||||
shareholders of Gravitas Education Holdings, Inc. – Basic | ||||||||
and diluted (Note 1) | ||||||||
Net loss from continuing operations | (1.59) | (0.79) | ||||||
Net (loss) income from discontinued operations | (1.56) | 19.90 | ||||||
Net (loss) income | (3.15) | 19.11 | ||||||
Weighted average shares used in calculating net (loss) | ||||||||
income per ordinary share | ||||||||
Basic and diluted | 28,234,094 | 28,078,124 | ||||||
Note 1:Each ADS represents twenty Class A ordinary shares. |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
(in thousands of | ||||
Six months Ended | ||||
June 30, | ||||
2023 | 2022 | |||
Net (loss) income | (4,483) | 25,265 | ||
Other comprehensive income (loss), net of tax of nil: | ||||
Change in cumulative foreign currency translation | (251) | (2411) | ||
Total comprehensive (loss) income | (4,734) | 22,854 | ||
Less: Comprehensive loss attributable to non- | (49) | (1,928) | ||
Comprehensive (loss) income attributable to | (4,685) | 24,782 |
RECONCILIATION OF GAAP AND NON-GAAP RESULTS | ||||
(in thousands of | ||||
Six Months Ended | ||||
June 30, | ||||
2023 | 2022 | |||
Operating loss from continuing | (3,281) | (2,224) | ||
Share-based compensation expenses on | 142 | 142 | ||
Adjusted operating loss from continuing | ||||
(3,139) | (2,082) | |||
Net loss from continuing operations | (2,249) | (1,108) | ||
Net (loss) income from discontinued | (2,204) | 27,941 | ||
Net (loss) income attributable to | (4,453) | 26,833 | ||
Share-based compensation expenses on | 142 | 142 | ||
Share-based compensation expenses on | 175 | 293 | ||
Adjusted net loss from continuing | (2,107) | (966) | ||
Adjusted net (loss) income from | (2,029) | 28,234 | ||
Adjusted net (loss) income attributable | (4,136) | 27,268 | ||
Net loss from continuing operations | (2,082) | (1,126) | ||
Net (loss) income from discontinued | (2,401) | 26,391 | ||
Net (loss) income | (4,483) | 25,265 | ||
Add: Income tax benefits on continuing | - | (3) | ||
Income tax expenses on discontinued | 292 | 6,667 | ||
Depreciation of property, plant and | 494 | 1,018 | ||
Depreciation of property, plant and | 415 | 3,393 | ||
EBITDA from continuing operations | (1,588) | (111) | ||
EBITDA from discontinued operations | (1,694) | 36,451 | ||
EBITDA | (3,282) | 36,340 | ||
Share-based compensation expenses on | 142 | 142 | ||
Share-based compensation expenses on | 175 | 293 | ||
Adjusted EBITDA from continuing | (1,446) | 31 | ||
Adjusted EBITDA from discontinued | (1,519) | 36,744 | ||
Adjusted EBITDA | (2,965) | 36,775 | ||
Net (loss) income per ADS attributable | ||||
Net loss from continuing operations | (1.59) | (0.79) | ||
Net (loss) income from discontinued operations | (1.56) | 19.90 | ||
Net (loss) income | (3.15) | 19.11 | ||
Adjusted net (loss) income per ADS | ||||
Net loss from continuing operations | (1.49) | (0.69) | ||
Net (loss) income from discontinued operations | (1.44) | 20.11 | ||
Net (loss) income | (2.93) | 19.42 | ||
Weighted average shares used in | 28,234,094 | 28,078,124 | ||
Weighted average shares used in | 28,234,094 | 28,078,124 | ||
Adjusted (loss) net income per share | ||||
Net loss from continuing operations | (0.07) | (0.03) | ||
Net (loss) income from discontinued | (0.08) | 1.00 | ||
Net (loss) income | (0.15) | 0.97 | ||
Note 1:Each ADS represents twenty Class A ordinary shares. |
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SOURCE Gravitas Education Holdings Inc.