New Frontier Health Corporation (NFH) Q2 2020 Earnings Call Transcript

New Frontier Health Corporation (NYSE: NFH) Q2 2020 earnings call dated Aug. 27, 2020

Corporate Participants:

William Zima — Investor Relations

Roberta Lipson — Chief Executive Officer & Founder

Carl Wu — President

David Zeng — Chief Operation Officer, Director

Analysts:

Jason Liu — Credit Suisse — Analyst

Jamie Soo — HSBC — Analyst

Chris Wong — Yankee Capital — Analyst

Presentation:

Operator

Good day, everyone, and welcome to the New Frontier Health Corporation Second Quarter 2020 Earnings Conference Call. Please note that today’s call is being recorded.

I would now like to turn the conference over to Mr. Bill Zima of ICR. Please go ahead.

William Zima — Investor Relations

Thank you, operator. Hello, everyone, and welcome to New Frontier Health second quarter 2020 earnings conference call. The Company’s earnings results were released earlier today and are available on the Company’s IR website at www.nfh.com.cn. In addition, remarks today will be accompanied by a presentation, which can also be found on the Company’s IR website.

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. Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in our Form 20-F filed with the US Securities and Exchange Commission on March 31, 2020, other documents filed with the US Securities and Exchange Commission.

New Frontier does not assume any obligations to update any forward-looking statements, except as required under applicable law. This press release also includes financial measures that are not calculated in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board. For a reconciliation of these measures to the most comparable measures calculated in accordance with IFRS, please see the earnings release and our investor presentation published by New Frontier Health, and filed with the SEC on Form 6-K.

Allow me introduce the management team on the call today. Ms. Roberta Lipson, Chief Executive Officer of NFH; Mr. Carl Wu, President of NFH and Chairman of the Executive Committee of the Board will provide updates for the quarter. Following management’s prepared remarks, we will open up the call to questions.

During the Q&A session, Mr. Walter Xue, CFO of NFH; and David — Mr. David Zeng, COO of NFH, will also be available to answer some questions.

With that said, I would now like to turn the call over to Roberta. Roberta, please go ahead.

Roberta Lipson — Chief Executive Officer & Founder

Thank you, Bill. Hello everybody. We’re so pleased to have you who joined us today for a discussion of our second quarter 2020. Looking back on the quarter, we are happy to have seen signs of recovery, starting prior to the second wave of the COVID-19 outbreak in June as well as continued growth after the limited second half risk was contained.

Our operations [Phonetic] business increased quarter-over-quarter, driving similar sequential growth in revenues across all asset categories.Due to delivering COVID related restrictions however, these same data points were well over year-over-year basis. At the same time, we do not [Indecipherable] United Family Health continue to just navigate the challenges [Indecipherable] by the pandemic. We have also made meaningful progress toward our strategic growth initiatives.

For those of you following along with our presentation slide, please turn to slide 16 for a snapshot of our [Indecipherable] revenue. Even as we saw sequential Q-over-Q growth, overall outpatient business during the quarter still decreased by 23.3% year-over-year and inpatient admissions declined by 23.6%. The decrease in volume year-over-year was mainly due to patients postponing or cancelling non-emergency medical services. In addition, the Chinese government implemented various preventive measures during the pandemic that affected the Company’s hospital and clinic operations. Such measures included the temporary closing of non-emergency departments, including dentistry and dermatology; the temporary suspension of vaccine services; daily limitations on volume for certain specialties to maintain social distancing practices in our clinics; and the closing of certain outpatient clinics during the month of February. However, we’ve seen a significant recovery in our business in Q2.

Outpatient visits increased significantly by 40.5% from Q1. With the easing of government policy as COVID-19 cases decreased across China, our outpatient volumes began to recover in May and June. Although recovery in Beijing hospitals and clinics were temporarily affected again as Beijing experienced and now contained second surge of cases in June of 2020.

Inpatient admissions stayed relatively stable in Q2 from Q1. Due to lower admissions in Pediatrics department throughout UFH facilities, as schools stayed closed and enhanced personal hygiene and protective measures for school children were implemented. However, the Company saw a strong growth in other departments, including internal medicine, surgery and orthopedics, which recorded over 20% Q-on-Q growth in terms of inpatient admissions during Q2 of 2020.

At the same time, both outpatient and inpatient ASP increased this quarter as a result of an increase in the number of higher acuity services offered at our facilities. As a result, our revenue in Q2 2020 recorded a 27.4% increase from the prior quarter. Although our revenue level in Q2 2020 was still below the same period last year, we continue to record overall favorable recovery trends in Q3, which I’ll discuss in the next slide.

We were also pleased to report positive growth in adjusted EBITDA in the second quarter. This was primarily attributable to the strong ramp up of our expansion assets in Guangzhou and Shanghai Pudong, which recorded 30% year-on-year growth in revenue in Q2 of 2020. In addition to strong revenue growth in our expansion assets, the adjusted year-on-year EBITDA increase was also due to various cost-control measures, which were adopted during the quarter, including administrative headcount reductions at corporate headquarters, SG&A reductions throughout our facilities and headquarters and voluntary pay reductions by senior management team.

The next page, Slide 16, shows our strong revenue recovery throughout the phases of the pandemic in China. This chart spots the year-on-year change of our weekly revenue for 2020. In Q2, the Company saw a steady rebound in both the outpatient visits and inpatient admissions across the UFH network. Then, beginning at the end of May, when the government lowered its COVID-19 response level and reduced or removed many of the remaining restrictions, volumes rebounded at an even faster rate. These volume increases were primarily driven by demand in family medicine, pediatrics and emergency care as patients returned to UFH for their regular healthcare needs.

On June 11, a new outbreak of COVID-19 cases was identified in Beijing’s FengTai district. In response to the new cases, the Beijing government raised its COVID-19 response levels and mandated that many of the prior precautions be re-implemented across Beijing, including restrictions on doctors practicing at multiple sites, stricter protocols for providing care for fever patients and limitations on the number of non-COVID patients that can be seen each day in our clinics in order to maintain social distancing practices. As a result of these measures, the Company’s facilities in Beijing saw a temporary drop in patient volumes. The Company’s facilities in other cities, however, were not negatively affected by the second limited outbreak in Beijing. and continued to steadily recover during this time. Despite the impact of the June outbreak, group-wide revenue in June continued to recover to 97% of our prior-year same period revenue.

With the second outbreak brought quickly under control, the Beijing government again lowered its COVID-19 response level to Level 3 on July 20th. With this change, most of the restrictions were removed or significantly reduced, and the Company’s Beijing facility immediately saw an increase in volume. Since then, UFH has seen continued week-over-week growth and with weekly revenue consistently higher than it was during the same period in the prior year.

Now please turn to Slide 17, which illustrates our strong recovery from both our local and expat patient basis. With the closing of international borders and other travel restrictions within China, since the start of the pandemic, we’ve seen higher volume and revenue contributions from Chinese patients. Since the beginning of the second quarter, Chinese patient numbers not only returned to prior levels, but also have achieved year-over-year increases demonstrating the resilience and strong demand for premium private healthcare service from Chinese patients. Despite monthly improvements in foreign patient volumes during the same period, there was still a gap compared to pre-COVID-19 period during the second quarter. However, during July, the Company has seen the first year-over-year increase in terms of revenue from expatriate patients. This comes primarily in the fields of orthopedics, surgeries and other specialties, including ENT and dental.

With domestic travel restrictions already eased and international borders opening on a controlled basis, the Company expects foreign patient volumes to experience year-over-year growth as expatriates continue to come back into China. We are pleased with our recent recovery and believe it bodes well for the continued growth of our revenues.

I will now turn the call over to Carl Wu, who will share our latest developments from recent months. Carl, please go ahead.

Carl Wu — President

Thank you, Roberta. Please turn to Slide 18. We’re excited to report that our hospital in Guangzhou, which first opened its [Indecipherable] in the fourth quarter of 2018, began to achieve positive EBITDA for the first time in May. June and July EBITDA continued to be positive as well. Even during the COVID-19 period, Guangzhou United has seen months of continuous strong volume and revenue growth, driven by obstetrics, gynecology, postpartum care, dermatology, internal medicine, orthopedics and surgeries, as well as other services.

Expansion hospitals as a group saw only RMB19.5 million,, — EBITDA loss during Q2 2020. This number includes a RMB10 million in rentals paid per quarter for the new Beijing Datun facility, which implied our Guangzhou and Pudong hospitals approaching breakeven. We also reached notable milestones in special surgery, as shown on Slide 19. As part of our strategic focus to push into higher acuity cases and continue to enhance our medical capabilities, we achieved a number of milestones in the second quarter.

At our Beijing United Family Hospital, a team of approximately 10 physicians have completed 500 da Vinci surgeries in May 2020. In addition, we had had our first case of inserting a capsule pacemaker at Beijing United, and became one of the few leading hospitals in the country to do so. The capsule pacemaker is the world’s smallest pacemaker, which get inserted directly into the heart chamber. We also completed the first two interventional cardiac surgeries in the brand new hybrid operating theater at our Shanghai United Family Hospital. This quarter, we continued our fight against COVID-19. Examples of our efforts can be found on Slide 20.

As previously mentioned, many of our facilities have been approved to provide COVID-19 PCR antibody tests to patients on-site. In addition, we’re providing group testing for corporate and school partners at their schools — at their work sites or campuses. During the quarter, Beijing United Family Hospital was one of the only few private hospitals in the country approved to carry out the supporting lab work on-site. This ability to do work in-house gives us the opportunity to provide high quality testing for our patients under faster turnaround time. As of today, I’m pleased to say that we’ve provided more than 19,000 PCR tests and nearly 5,000 antibody tests across all of our facilities. We continue to work with some of the Chinese top multi-national corporations, state-owned enterprises, schools and embassies to tailor our offerings to meet their testing needs, including the ability to offer COVID-19 testing to the employees, students and some of our cases to our customers. These testing programs not only generate additional revenue, but also have the potential to introduce new patients to our network.

During the second quarter, we participated in several important digital marketing initiatives to support our patient acquisition efforts. This includes the largest mid-year online shopping event in China, the 618 e-commerce campaign, during which large Chinese e-commerce platforms, including Taobao, TMall and JD.com launched methods online sales beginning in late May and culminating on June 18. We’ve once again participated this year and so nearly more than 5 times the GMV we sold last year. One key event was our CEO live streaming show on TMall. This live broadcast included myself, Roberta and also our doctors from various specialty hospitals. Our doctors were available to answer questions from the online audience and help guide patients in choosing the proper products for their individual needs. During the 2-hour live broadcast, more than 1.8 million people view the show, resulting in roughly 5,000 products sold. The show was also the highest-ranked among all healthcare providers across the TMall platform.

Now please turn to Slide 23 for an update on some exciting new initiatives in Beijing. First, we launched a new corporate health clinic business model. Under this new model, we generated revenue — we generate revenues from services such as by corporate partners, which was fulfilled by sending medical stuff to our partners’ campus and provide on-site medical support, ambulance services and primary care. As a result, there is limited capex investment and overhead required on our end.

Second, we have established new partnerships. Back in April, with our newest clinic, the Tianjin clinic inside China headquarters of the Asia Infrastructure Investment Bank. This new clinic is a partnership with the bank and will provide its employees with direct access to quality healthcare. We will provide basic family medicine services at Tianjin and also patients the opportunity to access more specialty services at our other clinics and hospitals through telemedicine, as well as referrals to the other sites for care if needed. Under this model, we will have limited capital investment requirements and overhead, and we will receive a monthly health management fee from AIIB. We’re confident that this new model will be a win-win for both of us.

In addition, we’ve recently signed an agreement to be the exclusive medical provider on-site for employees and guests at the upcoming Universal Beijing results. The destination park located at Southeast of Beijing will feature its impact, hotel and iMax theater complex, as well as extensive dining and shopping attractions. The park is currently under construction with an anticipated first quarter 2021 opening dates. However, beginning in the fourth quarter of 2020, we’ll begin to staff the on-site medical center, we will provide front-line medical services, ambulance, coordination and health patrols.

As we look forward to the remainder of 2020, we remain focused on our strategic growth priorities listed on Slide 24. Already we have begun to see the results from our geographic market reorganization and consolidations. We expect to continue to pursue more revenue synergies in the coming months. The Guangdong facility is now contributing to our earnings in our new state-of-the-art facilities in Pudong and Puxi continue to make good progress on the ramp-up.

We also continue to invest in our core markets and expand our offerings. For example, in Beijing, our Beijing United Family Hospital and our New Hope Oncology Center expanded their capabilities with the investment and equipment upgrades. In particular, the Beijing hospital made a major upgrade in the [Indecipherable] system. This upgrade will enable high quality, higher speed scanning of the brain, caveat, morphology and function small joint, in addition, the new software platform and post processing will extent functional imaging and quantitative scanning for various additional conditions. As a result, we’ll be able to significantly enhance the service range and capacity of our clinical services.

In addition, our New Hope Oncology Center in Beijing upgraded its Varian Linear Accelerator to include the latest Varian Eclipse Treatment Planning software. This major upgrade will bring the latest developments in radiation therapy to the center. One key benefit is the ability to create better clinical treatment plans for our patients. With this, we’ll be able to move more quickly from assessment and diagnosis to treatment and more accurately calculate individual treatment plan for each specific case. This will also reduce patients’ treatment time and is expected to produce better clinical outcome. This upgrade will also allow us to connect with other specialty centers to collaborate more efficiently to provide the best care we possibly can offer to our patients.

We remain focused on developing our digital capability in the upcoming quarters and we’ll continue to balance cost control, while facilitating business recovery. Furthermore, we remain on track as we prepare for the opening of the Beijing Datun Hospital and the Shenzhen Hospital, which will have a new management contract model in place.

Now, I will touch on our financial performance. As Roberta mentioned previously, we saw a recovery trend that led to quarter-over-quarter growth. Slide 26 and 27 illustrates this growth from both the revenue and patient volume perspective.

Earlier, Roberta provided an overview of the changes in patient volume occurred during the quarter, and our press release provided more detailed thumb line of the event. Overall, as a result of the pandemic being largely in control in China, we have seen improvement in outpatient volumes on a quarter-over-quarter basis. Outpatient volume growth has been particularly strong in dental, family medicine, internal medicine, surgery, orthopedics and emergency medicine. Although inpatient admissions did not increase quarter-over-quarter, we did see continued growth in our expansion assets and a strong rebound in Tier 2 operating assets.

I’d like to switch gears by welcoming David Zeng to his new role as Chief Operating Officer at New Frontier Health. We welcome David to this role. And since the beginning of this year, he has made significant impact in various strategic initiatives. David — member along with myself, while also serving as a Managing Director of our Group, primarily responsible for leading the investment assets and operation of portfolio companies. He is in position at the optimal time as we aim to maximize our overall performance. I’m excited to work together with David as partner to drive the growth of our Company.

Finally, I’d like to conclude by presenting our outlook for the third quarter. In July and August, we continue to see favorable revenue growth in line with steady recovery of outpatient volume. With COVID-19 seemingly under control, daily life in China continues to return to normal. We hope that this trend will continue.

For the third quarter, we expect to see year-over-year revenue growth of approximately 2% to 5%. This forecast reflects our current and preliminary views, which are subject to change. This concludes our prepared remarks. Operator, we are ready for questions.

Questions and Answers:

Operator

Thank you. We’ll now be conducting a question-and-answer session. [Operator Instructions] Our first question will be coming from the line of Jason Liu with Credit Suisse.

Jason Liu — Credit Suisse — Analyst

Hi there. This is Jason from Credit Suisse. Thank you management for taking my question, and congrats on the results under such challenging times. I have three questions here. My first question is mainly regarding some of the ICs for second quarter, especially in first half. We do see a reduction in the salaries, wages and benefits expenses. And that really demonstrates the success of the implementation of the cost initiatives. I was wondering for the rest of this year, do we expect this to continue? Or do we see that because the situation is more under control that this may go up a bit? That’s my first question.

Carl Wu — President

Hi, Jason. Hi. Thank you for the question. So you’re right. Some of the benefits came from reduction and cost implementation initiatives. This will continue during Q3 and power set will continue throughout Q4 as well. We remain opened depending on the speed of the recovery. But we plan to reduce the small power set cost reduction during Q4, subject to continued recovery of the business. The rest is subject to review.

Jason Liu — Credit Suisse — Analyst

Got it. That’s very clear. And then my second question, maybe directed towards Roberta. But Roberta, you mentioned earlier that in the outpatient versus the inpatient volume in the quarter-over-quarter increase. I’m more curious about the inpatient volume, where — when you were talking about, it had stayed flat, primarily due to the reduction or actually due to some of the changes in the pediatrics side. I’m wondering, could you elaborate a little more on those details? Because I could see how if schools are closed — how that would affect the outpatient volumes for pediatrics? But how does that impact some of the inpatient admission volumes? Thank you.

Roberta Lipson — Chief Executive Officer & Founder

Our inpatient admissions — from growing as quickly as the rest of the business is recovering. First of all, you’re right, the pediatrics admissions have slowed and that’s because with kids out of school, they don’t come home with rotavirus, and they don’t come home with high fevers. And so they may end up with simple, but they’re mostly eating mom and dad’s food, which is really healthy and they prepare it carefully. So those kinds of terrible stomach bugs that might get a kid admitted or appendicitis because they eat something dirty or because they picked up a flu or virus at school, that’s not happening. They’re in just much say and they’re washing their hands and they’re wearing masks. So the kids aren’t getting the mistake as they would normally. That’s one of the things. And then I think a different issue is also there are people, despite the fact that China is increasingly normal, and we feel like we’re really living normal lives, I think, people are still a little bit hesitant to go to the hospital for inpatient elective procedures, if they could avoid it.

So you may ask, well, that’s interesting, because look what’s happening with inpatient revenues. And we mentioned that that has to do with our ASP going up. And I think the reason for that is that the surgeries that nobody wants to put off are those lifesaving really large surgeries that bring a lot of revenue at the same time. Does that explain it?

Jason Liu — Credit Suisse — Analyst

Yeah. That’s clear. Hopefully, the trend can continue. So kids can stay more healthy. I guess, that’s benefit in this.

Roberta Lipson — Chief Executive Officer & Founder

Right. So we want everybody to stay more healthy. But if they get really sick, we want them to come to United Family.

Jason Liu — Credit Suisse — Analyst

Yeah. And then I guess —

David Zeng — Chief Operation Officer, Director

Hey, Jason, this is David. I just want to supplement Roberta’s comments. Although we see school children stay at home, stay into for an extended period of time, we see that they might have other medical needs, including ophthalmology, because their staying go for an extended period of time. So we see an increasing number of cases, where school children have more ophthalmology issues, also oncology issues and growth issues.

So through our facilities, we are currently building our specialty clinics for pediatrics department, where we can offer psychiatric treatments, ophthalmology treatment, growth development treatments for school children given they have other needs coming up, because of the school closings.

Jason Liu — Credit Suisse — Analyst

Got it. Thanks, David. That’s very clear. And then my last question, it’s little bit more on the macro level. But recently, we’ve seen quite a few US listed companies consider a dual listing in Hong Kong to be closer to Asian markets, specifically in Mainland Chinese markets. I was wondering how does — which you see this and would this be an opportunity that the management team is considering? Thank you.

Carl Wu — President

Hi Jason. Yeah, absolutely. So given the current US and China trade relationship, we are aware of this general trend of Chinese companies coming back to Hong Kong. And others are planning to do so. And we have been preparing and believe that it’s a potential path for us. As the leading hospital group in China, I think, as you probably saw recently, a recent survey conducted by Ding Xiang Yuan has five of the New Frontier Health United Family hospitals in the top 50 in China, with Beijing United ranked as Number 1, Guangzhou ranked as Number 4, Puxi — Shanghai Puxi ranked as Number 6. All of our hospitals in cozy busy areas covering all the first tier cities in China with multiple facilities in both Beijing and Shanghai. And we believe we have among the best portfolio among our peer group and 23 years of track record. And taking into account high barriers of entry, we believe that our Company could potentially be valued at attractive valuation in Hong Kong given that — in light of how the investments due effective.

And then that page, we’ve done extensive work in analyzing this option. We’ve discussed with the number of advisors, including preliminary discussions with the regulator. So the work that we’ve done — we have a good understanding of the requirement coming and process and based on the advice we’ve received so far. The work required and the potential timelines to be somewhere during 2021. And this is a strategic initiative that is high on our priority list and we’ll continue to focus on finalizing our analysis with the view of creating value for our shareholders.

Jason Liu — Credit Suisse — Analyst

Thank you. That is very clear. That’s all my questions. Thank you.

Operator

Thanks. [Operator Instructions]The next question is from the line of Jamie Soo with HSBC.

Jamie Soo — HSBC — Analyst

Hi, everyone. Thanks for taking my question and congratulations on a great set of results, despite these challenging times. I guess some of my questions have already been asked already. But as a follow-up on that, I just wanted to ask about our current US listing. Again, given the rising tension between US-China, are there any sort of risks that the Company has identified that associates this? And what are the kind of mixed steps that we’re looking at in potentially addressing any of the risks? Thank you.

Carl Wu — President

Hi, Jamie. I think the risks you’re referring to it is obviously the geographic and macro risks. So we’ve engaged a number of parties in setting these risks, including Ernst & Young, who’s our auditor as well as other global law firms. Advisors have informed us that we are not at risk currently, but there is high level of fluidness in this whole situation. So we will continue to actively monitor such situation. So we think that our current assessment, having said that as addressed in Jason’s earlier question, a listing in Hong Kong is accurately being reviewed and prepared that to stay back up.

Jamie Soo — HSBC — Analyst

Thank you. And I guess on a side note, on that thing, understandably, the assets that we have are — I mean, there is number of notable companies that are arguably peers of yours that are listed in China and assets that are — they hold assets there either on part not lower quality. But they are trading at a much higher premium than NFH today. So I’m — it is understandable and positive to — that the management is actually looking into lot of potential listing in Asia. So thank you.

Carl Wu — President

Yeah, absolutely. That’s top of our priority.

Operator

Thank you [Operator Instructions]The next question is coming from the line of Chris Wong with Yankee Capital.

Chris Wong — Yankee Capital — Analyst

Hi. Good evening management. And I would like to congratulate you guys on such a good set of numbers. It’s very impressive and I want to just touch a bit on the expansion assets in which that — it’s a — Guangzhou Hospital has been achieved EBITDA positive after 18 months of operation. And that’s even having the COVID-19 situations right in the middle of it, that’s absolutely impressive. And the complements to management execution as well as the brand equity to UFH in China.

Now, if you just look on of back of the envelope on the numbers where that the RMB10 million was paid to back through this event and the Guangzhou being positive in time, but Shanghai Pudong is probably making like RMB10 million losses after what 14-month, 15-month of operation. And when do we expect to see that become positive sustainably? Thank you.

Carl Wu — President

Hey, Chris. Thanks for the question. So we expect obviously Guangzhou profitability to remain part of this and no powerful any busy unforeseen circumstance. Although I think our intention is to continue to invest in the team and infrastructure for the future of the Guangzhou Hospital. For the Pudong facility, we are seeing equally impressive year-on-year revenue growth, rather subsequent. So we believe that we’re probably several months away from profitability. And this moves likely that we’ll see profitability sometime early next year for Pudong. But obviously subject to continued rent up and no barring any unforeseen circumstances.

So our expectation is that both Guangzhou and Pudong as a group would be profitable next year.

Chris Wong — Yankee Capital — Analyst

Right. Thank you, Carl. And just one follow-up question. So I think we have touched expensively on the cost cutting from the corporate overhead perspective. But when I look at the numbers you just reported, for example, your Tier 2 operating and other assets revenues, you saw and made a 6% growth in the second quarter. But at the same time, your EBITDA has grown positively. I mean simple calculation tells me the cost base went down 10%, isn’t it, or the prices was up a bit, cost was down a bit. So can you touch a bit on the various cost cutting issues that programs have been — you guys have been working on both in Tier 1 operating assets as well as Tier 2 operating assets? And how many percentage of revenue are we talking about sustainably, when we come out of this? If you look a year or two from now? Thank you.

Carl Wu — President

Yeah. Thank you, Chris. So all the cost cutting only happened at headquarters level in terms of headcount. I think when you see changes in EBITDA at the operating asset level that came from several places, number one, because we’ve been less busy. So there has been less overcome salaries being paid. Secondly, there has been some reduction in social security contribution by the government that reduce in salary expenses temporarily as well. Furthermore, there are also some rental rebates, especially from those properties that we rent from the government or state-owned enterprises. So that benefited us a little bit.

Having said that, it’s little bit difficult to separate them, the impacts on these one-off — this is probably reduction. So for example, looking at our EBITDA for the entire quarter 2020, essentially you have April, that’s loss-making. And you have May and June that have been profitable, and that — which resulted in our RMB54 million in Q2 2020. We have seen, given the operating impact, we’ve seen this profitability appears to maintain into July ways of the subsidies and reductions and social security that’s have been taken away. But it’s difficult to quantify, southeast respective impacts given its significant losses within these numbers.

Chris Wong — Yankee Capital — Analyst

Thank you, Carl.

Operator

Thank you. [Operator Instructions] We have a follow-up from Jamie Soo with HSBC.

Jamie Soo — HSBC — Analyst

Hi, management. Thanks again. My question is — my follow-up question is this. With COVID-19 hopefully behind us and now that, as on the presentation, the fact that we are in a way heading back in to growth mode of our existing assets, and over the quarter, we’ve also announced new partnership and then clinics, I wanted to hear from you guys, if — what are the thoughts on future growth would look like and how it has evolved over this period? And then how we should be thinking of future growth initiatives? Would it be in the form of more clinics, maybe more hospitals or new partnerships of the sorts that we have seen in the second quarter results today? Thank you.

Roberta Lipson — Chief Executive Officer & Founder

Hi. This is Roberta. I think that you’re going to see a couple of the very exciting growth streams from us. One is continued development of these kinds of incorporate clinics, corporate schools, off-site clinics, where we take care of our customers, not only on a hospital’s patient basis, but also a business-to-business basis. So you’ll continue to see those kinds of initiatives over the next few quarters.

In addition, we are just getting ready to conclude the construction phase of the development of our new Datun Hospital in Beijing, which will be opened early next year. And that certainly will be contributing a whole new growth stream for us. And we are also working very diligently on that construction of our Shenzhen Hospital, which will contribute to our growth initiatives in the following year. But another very interesting area, which really didn’t talk about today too much was an area that’s gotten impeded from the whole COVID pandemic situation. And that’s accelerated plunge into online health.

So over this period, we’ve seen a great uptake in acceptance on the part of our patients for using services, not only in person, but also online. And we have plans of greatly expanding that online platform for our patients and also for future patients and future patient groups that at this point might not be considered as United Family potential market. So this is a very exciting initiative that I’m hoping to share more with you maybe during the next conference call with some really concrete information.

Jamie Soo — HSBC — Analyst

Okay. Thanks again. I’ll jump back on the queue.

Operator

Thank you. At this time, we’ve come to the end of our question-and-answer session. I’ll turn the floor back to management for closing remarks.

Roberta Lipson — Chief Executive Officer & Founder

So thank you all very much for joining us. I think our last conference call was everybody was in the midst of the doldrums. And we are very happy that we could give everybody some good news at this time and let you know that things are really looking up in China, if you’re calling from outside of China please be have the comfort to know that things here are really very much getting back to normal and we expect to continue to bring you better news on every call. So until that time, hope everybody stay safe. And see you again to tell you about the next quarter.