Puxin Limited Announces Second Quarter 2020 Unaudited Financial Results

BEIJING,Aug. 24,2020 -- Puxin Limited (NYSE: NEW) ("Puxin" or the "Company"),a successful consolidator of the after-school education industry in China,today announced its unaudited financial results for the second quarter ended June 30,2020.

Highlights for the Second Quarter Ended June 30,2020

Net revenues were RMB601.1 million (US$85.1 million),a decrease of 5.0% from RMB632.9 million in the second quarter of 2019.

Operating loss was RMB25.8 million (US$3.7 million),a decrease of 84.7% from RMB168.7 million in the second quarter of 2019.

Adjusted operating loss[1] was RMB19.1 million (US$2.7 million),a decrease of 64.3% from RMB53.3 million in the second quarter of 2019.

Net income attributable to Puxin Limited was RMB36.6 million (US$5.2 million),compared to net loss attributable to Puxin Limited of RMB194.6 million in the same period of 2019.

Adjusted net income attributable to Puxin Limited[2] was RMB45.2 million (US$6.4 million),compared to adjusted net loss attributable to Puxin Limited of RMB60.7 million in the second quarter of 2019.

Adjusted EBITDA[3] was RMB80.4 million (US$11.4 million),compared to RMB(25.8) million in the second quarter of 2019.

Student enrollments increased by 18.1% to 856,674 from 725,118 for the second quarter of 2019.

Highlights for the Six Months Ended June 30,2020

Net revenues were RMB1,352.4 million (US$191.4 million),an increase of 8.3% from RMB1,248.6 million in the first half of 2019.

Operating loss was RMB22.2 million (US$3.1 million),a decrease of 92.7% from RMB305.3 million in the same period of 2019.

Adjusted operating loss was RMB7.0 million (US$1.0 million),a decrease of 92.7% from RMB95.1 million in the first half of 2019.

Net loss attributable to Puxin Limited was RMB6.9 million (US$1.0 million),a decrease of 98.5% from RMB443.4 million in the same period of 2019.

Adjusted net income attributable to Puxin Limited was RMB70.6 million (US$10.0 million),compared to adjusted net loss attributable to Puxin Limited of RMB134.4 million in the same period of 2019.

Adjusted EBITDA was RMB145.4 million (US$20.6 million),compared to RMB(42.7) million in the first half of 2019.

Student enrollments increased by 59.2% to 1,794,949 from 1,127,179 for the same period of 2019.

Mr. Yunlong Sha,Chairman and Chief Executive Officer of Puxin,commented,"During the second quarter of 2020,Puxin spared no effort in gradually resuming classes and business operations under the guidance of the Ministry of Education and the National Health Commission. We have once again won the recognition of students and parents with our excellent teaching quality: accordingly,student enrollments increased by 18.1% year-over-year. Net revenues of K-12,the core business segment of Puxin,increased by 14.0% year-over-year. Meanwhile,Puxin Online School successfully completed a smooth online migration of the offline courses and achieved a high rate of course completion – its net revenues increased more than six times year-over-year. Looking ahead at post COVID-19 recovery,we will never slacken our efforts. We plan to further implement our K-12-oriented Online-Merge-Offline strategy and target to maintain a robust growth."

Mr. Peng Wang,Chief Financial Officer of Puxin,"We are pleased to see an encouraging recovery of the after-school tutoring industry in China. In the second quarter of 2020,Puxin's core business segments obtained a solid organic growth. Although study-abroad services are still facing a downturn,the EBITDA of study-abroad business turned positive to RMB4.0million. Progress is also seen in cost control. Our non-GAAP selling expenses decreased by 12.4% year-over-year as a result of adjusted marketing and sales strategy,and non-GAAP administrative expenses dropped by 30.3% year-over-year. In the future,Puxin will continue to implement the dual-engine strategy of 'organic growth + M&A' and regularly review the acquired schools' revenues,non-GAAP income,as well as student enrollments to evaluate this strategy's effectiveness. We are confident to present our achievements of this strategy,advanced competitiveness of core business segments,operational and financial performance as well as sustainable shareholder value."

Financial and Operational Results for the Second Quarter of 2020

Net Revenues

Net revenues decreased by 5.0% to RMB601.1 million (US$85.1 million) from RMB632.9 million in the second quarter of 2019. This decrease was primarily due to the adverse impact of the COVID-19 pandemic on the demand for study-abroad tutoring services.

Net revenues of K-12 tutoring services increased by 14.0% to RMB419.7 million (US$59.4 million) from RMB368.0 million in the second quarter of 2019. In the second quarter of 2020,the student enrollments of K-12 tutoring services,including group class,personalized tutoring and full-time tutoring services,reached 598,369.

Net revenues of Puxin Online School significantly increased to RMB24.0 million (US$3.4 million) from RMB3.0 million in the same period of 2019. Student enrollments of Puxin Online School were 249,452 in the second quarter of 2020.

Net revenues of study-abroad tutoring services decreased by 39.9% to RMB157.4 million (US$22.3 million) from RMB261.9 million in the second quarter of 2019. This was primarily due to a sharp drop in student enrollments from 15,696 to 8,853 in the second quarter of 2020 affected by the global spread of the COVID-19 pandemic in major countries of the world.

Cost of Revenues

Cost of revenues slightly decreased by 0.4% to RMB331.4 million (US$46.9 million) from RMB332.8 million in the second quarter of 2019,primarily due to a decrease in staff cost which reflected the decreased demand for study-abroad services attributable to the COVID-19 pandemic. Cost of revenues,excluding share-based compensation expenses,decreased by 0.3% to RMB330.8 million (US$46.8 million) from RMB331.7 million in the second quarter of 2019.

Gross Profit and Gross Margin

Gross profit was RMB269.7 million (US$38.2 million),a decrease of 10.1% from RMB300.1 million in the second quarter of 2019. Gross margin was 44.9%,compared to 47.4% for the same period in 2019.

Operating Expenses

Total operating expenses decreased by 37.0% to RMB295.5 million (US41.8 million) from RMB468.8 million in the second quarter of 2019.

Selling expenses decreased by 13.1% to RMB210.2 million (US$29.7 million) from RMB241.7 million in the second quarter of 2019. Selling expenses,decreased by 12.4% to RMB207.0 million (US$29.3 million) from RMB236.4 million in the second quarter of 2019,primarily due to a decrease in sales staff's performance-based compensation attributable to decreased demand for our study-abroad services caused by the COVID-19 pandemic,as well as our cost control measures to improve operation efficiency.

General and administrative expenses decreased by 62.4% to RMB85.3 million (US$12.1 million) from RMB227.1 million during the same period of 2019. General and administrative expenses,decreased by 30.3% to RMB82.4 million (US$11.7 million) from RMB118.2 million in the second quarter of 2019. The decreases were primarily due to our cost control measures to improve operation efficiency.

Total share-based compensation expenses allocated to related cost of revenues and operating expenses decreased by 94.1% to RMB6.8 million (US$1.0 million) from RMB115.4 million in the second quarter of 2019. The decrease was primarily due toa decrease in the number of options vested in the second quarter of 2020 compared to the same period of 2019.

Operating Income (Loss) and Operating Margin

Operating loss was RMB25.8 million (US$3.7 million),a decrease of 84.7% fromRMB168.7 millionin the second quarter of 2019. Operating margin was (4.3)% in the second quarter of 2020,compared to (26.7)% for the same period in 2019.

Operating income of K-12 tutoring services was RMB19.3 million (US$2.7 million),compared to operating loss ofRMB54.5 million in the second quarter of 2019 while operating margin improved to 4.6% from (14.8)% in the second quarter of 2019.

Adjusted operating loss was RMB19.1 million (US$2.7 million),a decrease of 64.3% from RMB53.3 million in the second quarter of 2019.

Adjusted operating margin[4] was (3.2)%,compared to (8.4)% in the same period of the prior year.

Net Income (Loss)

Net income attributable to Puxin Limited was RMB36.6 million (US$5.2 million),compared to net loss attributable to Puxin Limited of RMB194.6 million during the second quarter of 2019. Basic and diluted net income per ADS attributable to Puxin Limited were RMB0.42 (US$0.06) and RMB0.42 (US$0.06),compared to basic and diluted net loss per ADS attributable to Puxin Limited of RMB2.28 and RMB2.28 during the same period of 2019.

Adjusted net income attributable to Puxin Limited was RMB45.2 million (US$6.4 million),compared to adjusted net loss attributable to Puxin Limited of RMB60.7 million during the second quarter of 2019. Adjusted basic and diluted net income per ADS attributable to Puxin Limited[5] were RMB0.52 (US$0.07) and RMB0.51 (US$0.07),compared to adjusted basic and diluted net loss per ADS attributable to Puxin Limited of RMB0.71 and RMB0.71 during the same period of 2019.

EBITDA

EBITDA was RMB71.8 million (US$10.2 million),compared to RMB(159.8) million in the second quarter of 2019.

EBITDA of K-12 tutoring services was RMB109.1 million (US$15.4 million),compared to RMB(50.3) million in the second quarter of 2019.

EBITDA margin[6] was 12.0% in the second quarter of 2020,compared to (25.2)% in the same period in 2019.

Adjusted EBITDA was RMB80.4 million (US$11.4 million),compared to RMB(25.8) million in the second quarter of 2019.

Adjusted EBITDA margin[7] was 13.4%,compared to (4.1)% in the same period in 2019.

[1]Adjusted operating loss is a non-GAAP financial measure,which is defined as operating 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.

[2]Adjusted net income (loss) attributable to Puxin Limited is a non-GAAP financial measure,which is defined as net income (loss) attributable to Puxin Limited excluding share-based compensation expenses and loss on changes in fair value of derivative liabilities. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release.

[3]EBITDA is a non-GAAP financial measure,which is defined as net income (loss) excluding depreciation,amortization,interest expense,interest income and income tax expenses (benefits); adjusted EBITDA is a non-GAAP financial measure,which is defined as net income(loss) excluding depreciation,interest income,income tax expenses (benefits),share-based compensation expenses and loss on changes in fair value of derivative liabilities. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release.

[4]Adjusted operating margin is a non-GAAP financial measure,which is defined as adjusted operating loss divided by net revenues. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release.

[5]Adjusted basic and diluted net income (loss) per ADS attributable to Puxin Limited is a non-GAAP financial measure,which is defined as basic and diluted net income (loss) per ADS attributable to Puxin Limited excluding share-based compensation expenses,loss on changes in fair value of derivative liabilities. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release.

[6]EBITDA margin is a non-GAAP financial measure,which is defined as EBITDA divided by net revenues. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release.

[7]Adjusted EBITDA margin is a non-GAAP financial measure,which is defined as adjusted EBITDA divided by net revenues. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release.

Financial and Operational Results for the Six Months Ended June 30,2020

Net Revenues

Net revenues increased by 8.3% to RMB1,352.4 million (US$191.4 million) from RMB1,248.6 million for the first six months of 2019. This increase was primarily due to the continued growth momentum of student enrollments.

Net revenues of K-12 tutoring services increased by 26.3% to RMB943.0 million (US$133.5 million) from RMB746.6 million for the first half of 2019. In the first half of 2020,the total student enrollments of K-12 tutoring services,reached 1,165,074.

Net revenues of Puxin Online School significantly increased to RMB47.0 million (US$6.7 million) from RMB4.9 million for the same period of 2019. Student enrollments of Puxin Online School were 607,066 for the first six months of 2020.

Net revenues of study-abroad tutoring services decreased by 27.1% to RMB362.4 million (US$51.2 million) from RMB497.1 million for the first six months of 2019. Study-abroad consulting and tutoring services had 22,809 student enrollments in the first half of 2020 compared to 32,366 in the same period of 2019. This was primarily due to the global spread of the COVID-19 pandemic in major countries of the world.

Cost of Revenues

Cost of revenues increased by 9.5% to RMB731.6 million (US$103.6 million) from RMB668.4 million for the first six months of 2019.Cost of revenues,increased by 9.7% to RMB730.4 million (US$103.4 million) from RMB665.8 million in the first six months of 2019.

Gross Profit and Gross Margin

Gross profit was RMB620.8 million (US$87.9 million),an increase of 7.0% from RMB580.2 million for the first six months of 2019. Gross margin was 45.9%,compared to 46.5% for the same period in 2019.

Operating Expenses

Total operating expenses decreased by 27.4% to RMB642.9 million (US$91.0 million) from RMB885.4 million for the first six months of 2019.

Selling expenses decreased by 5.1% to RMB440.7 million (US$62.4 million) from RMB464.4 million for the first six months of 2019. Selling expenses,decreased by 4.1% to RMB433.5 million (US$61.4 million) from RMB451.9 million in the same period of 2019.

General and administrative expenses decreased by 52.0% to RMB202.3 million (US$28.6 million) from RMB421.0 million during the same period of 2019. General and administrative expenses,decreased by 13.5% to RMB195.5 million (US$27.7 million) from RMB226.0 million in the first half of 2019. The decreases were primarily due to our cost control measures to improve our operation efficiency under the COVID-19 pandemic.

Total share-based compensation expenses allocated to related cost of revenues and operating expenses decreased by 92.8% to RMB15.2 million (US$2.2 million) from RMB210.1 million in the same period of 2019. The decrease was primarily due toa decrease in the number of options vested in the first six months of 2020 compared to the same period of 2019.

Operating Income (Loss) and Operating Margin

Operating loss decreased by 92.7% to RMB22.2 million (US$3.1 million) from RMB305.3 million in the first half of 2019. Operating margin was (1.6)% in the first six months of 2020,compared to (24.4)% for the same period in 2019.

Operating income of K-12 tutoring services was RMB86.0 million (US$12.2 million),compared to operating loss of RMB80.4 million in the same period of 2019 while operating margin improved to 9.1% from (10.8)%.

Adjusted operating loss decreased by 92.7% to RMB7.0 million (US$1.0 million) from RMB95.1 million in the same period of 2019.

Adjusted operating margin was (0.5)%,compared to (7.6)% in the same period of 2019.

Net Loss

Net loss attributable to Puxin Limited was RMB6.9 million (US$1.0 million),a decrease of 98.5% from net loss attributable to Puxin Limited of RMB443.4 million during the same period of 2019. Basic and diluted net loss per ADS attributable to Puxin Limited were RMB0.08 (US$0.02),compared to basic and diluted net loss per ADS attributable to Puxin Limited of RMB5.28 during the same period of 2019.

Adjusted net income attributable to Puxin Limited was RMB70.6 million (US$10.0 million),compared to adjusted net loss attributable to Puxin Limited of RMB134.4 million during the same period of 2019. Adjusted basic and diluted net income per ADS attributable to Puxin Limited were RMB0.81 (US$0.11) and RMB0.79 (US$0.11),compared to adjusted basic and diluted net loss per ADS attributable to Puxin Limited of RMB1.60 and RMB1.60 during the same period of 2019.

EBITDA

EBITDA was RMB67.9 million (US$9.6 million),compared to RMB(351.7) million for the first six months of 2019.

EBITDA of K-12 tutoring services was RMB170.3 million (US$24.1 million),compared to RMB(112.1) million in the same period of 2019.

EBITDA margin was 5.0% in the first six months of 2020,compared to (28.2)% in the same period in 2019.

Adjusted EBITDA was RMB145.4 million (US$20.6 million),compared to RMB(42.7) million in the same period of 2019.

Adjusted EBITDA margin was 10.8%,compared to (3.4)% in the same period in 2019.

Cash and Current Bank Balances

As of June 30,2020,the Company had an aggregate amount of cash and cash equivalents and the current portion of restricted cash of RMB569.6 million (US$80.6 million),compared to RMB606.3 million as of December 31,2019. The current portion of restricted cash consisted primarily of deposits with Chinese commercial banks as collateral for our bank borrowings within one-year term.

Business Outlook

For the third quarter ended September 30,based on the information available as of the date of this press release,the Company expects net revenues to be between RMB816.8 million and RMB866.6 million,which represents a decrease of 18% to 13% year-over-year. These forecasts reflect the Company's current and preliminary views on the market and operational conditions,which are subject to change.

Conference Call Information

Puxin's management team will hold a conference call on August 24,at 8:00 AM U.S. Eastern Time (or 8:00 PM on the same day,Beijing/Hong Kong Time) following the quarterly results announcement. Participants may access the call by dialing the following numbers:

International: +1-412-902-4272

Mainland China:4001-201203

US: +1-888-346-8982

Hong Kong:+852-301-84992

Passcode:Puxin

Please dial in 10 minutes before the call is scheduled to begin. When prompted,ask to be connected to the Puxin Limited Call. Participants will be required to state their name and company upon entering the call.

A replay of the conference call will be accessible two hours after the conclusion of the conference call through August 31,2020 by dialing the following numbers:

International: +1-412-317-0088

US: +1-877-344-7529

Passcode: 10147111

A live webcast and archive of the conference call will be available on the Investor Relations section of Puxin's website at http://ir.pxjy.com/.

Exchange Rate

The Company's business is primarily conducted in China and all of the revenues are denominated in Renminbi ("RMB"). This announcement contains translations of certain RMB amounts into U.S. dollars ("USD" or "US$") at specified rates solely for the convenience of the readers. Unless otherwise noted,all translations from RMB to USD are made at the rate of RMB 7.0651 to US$1.00,the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on June 30,2020. No representation is made that the RMB amounts could have been,or could be,converted,realized or settled into US$ at that rate on June 30,2020 or at any other rate.

Use of Non-GAAP Financial Measures

To supplement the Company's financial results presented in accordance with U.S. GAAP,the Company also uses non-GAAP financial measures,including adjusted operating loss,adjusted operating margin,adjusted net income (loss) attributable to Puxin Limited,EBITDA,adjusted EBITDA,EBITDA margin,adjusted EBITDA margin,adjusted basic and diluted net income (loss) per ADS attributable to Puxin Limited,as supplemental measures to review and assess the Company's operating performance. Adjusted operating loss is defined as operating loss excluding share-based compensation expenses; adjusted operating margin is defined as adjusted operating loss divided by net revenues; adjusted net income (loss) attributable to Puxin Limited is defined as net income (loss) attributable to Puxin Limited excluding share-based compensation expenses and loss on changes in fair value of derivative liabilities;EBITDA is defined as net income (loss) excluding depreciation,interest income and income tax expenses (benefits); adjusted EBITDA is defined as net income (loss) excluding depreciation,share-based compensation expenses and loss on changes in fair value of derivative liabilities; EBITDA margin is defined as EBITDA divided by net revenues; adjusted EBITDA margin is defined as adjusted EBITDA divided by net revenues; adjusted basic and diluted net income (loss) per ADS attributable to Puxin Limited are defined as basic and diluted net income (loss) per ADS attributable to Puxin Limited excluding share-based compensation expenses and loss on changes in fair value of derivative liabilities.

The Company believes that these non-GAAP financial measures provide useful information about the Company's operating results,enhance the overall understanding of the Company's past performance and future prospects and allow for greater visibility with respect to key metrics used by the Company's management in its financial and operational decision-making.

Non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. These non-GAAP financial measures have limitations as analytical tools,and when assessing the Company's operating performance,investors should not consider them in isolation. In addition,calculations of this non-GAAP financial information may be different from calculations used by other companies,and therefore comparability may be limited.

The Company mitigates these limitations by reconciling the non-GAAP financial measures to the most comparable U.S. GAAP performance measures,all of which should be considered when evaluating our performance.

For more information on this non-GAAP financial measure,please see the table captioned "Reconciliations of GAAP and non-GAAP results" set forth at the end of this press release.

Safe Harbor Statement

This press release contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934,as amended,and the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "may," "would," "expect," "anticipate," "future," "intend," "aim," "plan," "believe," "estimate," "predict," "project," "continue," "confident" and similar statements. The Company may also make written or oral forward-looking statements in its reports filed with or furnished 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. Any statements that are not historical facts,including statements about the Company's beliefs and expectations,are forward-looking statements that involve factors,risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include,but not limited to the following: its goals and strategies,its ability to achieve and maintain profitability,its ability to attract and retain students to enroll in its courses,its ability to effectively manage its business expansion and successfully integrate businesses it acquired,its ability to identify or pursue targets for acquisitions,its ability to compete effectively against its competitors,its ability to improve the content of its existing courses or to develop new courses,and relevant government policies and regulations relating to the Company's corporate structure,business and industry. Further information regarding these and other risks is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is current as of the date of the press release,and the Company does not undertake any obligation to update such information,except as required under applicable law.

About Puxin Limited

Puxin Limited (NYSE: NEW,"Puxin" or the "Company") is a successful consolidator of the after-school education industry in China. Puxin has a strong acquisition and integration expertise to effectively improve education quality and operational performance of acquired schools. Puxin offers a full spectrum of K-12 and study-abroad tutoring programs designed to help students achieve academic excellence,as well as prepare for admission tests and applications for top schools,universities and graduate programs in China and other countries. The Company has developed a business model effectively combining strategic acquisitions and organic growth achieved through successful post-acquisition integration,which has differentiated the Company from other after-school education service providers in China. For more information,please visit http://www.pxjy.com/.

Contacts

Puxin Limited

Phone: +86-10-6269-8930

E-mail: ir@pxjy.com

ICA (Institutional Capital Advisory)

Mr. Kevin Yang

Phone: +86-021-8028-6033

E-mail: puxin@icaasia.com

PUXIN LIMITED

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of RMB and USD,except for share,per share and per ADS data)

As of December31,

As of June30,

2019

2020

2020

RMB

RMB

USD

ASSETS

Current assets

Cash and cash equivalents

256,763

124,487

17,620

Restricted cash,current portion

349,540

445,101

63,000

Inventories

13,311

16,496

2,335

Prepaid expenses and other current assets

117,148

151,059

21,381

Loan receivable,current portion

191,230

-

-

Total current assets

927,992

737,143

104,336

Non-current assets

Restricted cash,non-current portion

36,727

38,019

5,381

Operating lease right-of-use assets

1,045,941

937,900

132,751

Property,plant and equipment,net

298,719

274,772

38,891

Intangible assets

264,540

237,445

33,608

Goodwill

2,055,922

2,035,577

288,117

Deferred tax assets

2,199

1,975

280

Rental deposit

75,015

75,482

10,684

Loan receivable,non-current portion

-

205,007

29,017

Other non-current assets

-

59,400

8,408

TOTAL ASSETS

4,707,055

4,602,720

651,473

LIABILITIES

Current liabilities

Accrued expenses and other current liabilities (including

accrued expenses and other current liabilities of the

consolidated VIE without recourse to the Group of

RMB930,674 and RMB822,356 as of December 31,2019

and June 30,respectively)

983,715

864,693

122,389

Income tax payable of the consolidated VIE without recourse

to the Group

21,248

19,157

2,711

Deferred revenue,current portion (including deferred revenue,

current portion of the consolidated VIE without recourse to

the Group of RMB1,195,723and RMB1,039,195 as of

December 31,2019 and June 30,respectively)

1,205,609

1,048,911

148,464

Operating lease liabilities,current portion (including operating

lease liabilities,current portion of the consolidated VIE

without recourse to the Group of RMB275,893and

RMB263,174 as of December 31,

respectively)

276,877

263,929

37,357

Amounts due to related parties,current portion (including

amounts due to related parties,current portion of the

consolidated VIE without recourse to the Group of RMB254

and RMB15,047 as of December 31,

respectively)

1,451

15,374

2,176

Bank borrowings of the consolidated VIE without recourse to

the Group

318,600

495,000

70,063

Loans payable to third parties,current portion (including loans

payable to third parties,current portion of the consolidated

VIE without recourse to the Group of RMB292,952and

RMB232,252 as of December 31,

respectively)

413,838

341,159

48,288

Promissory note,current portion (including promissory note,

current portion of the consolidated VIE without recourse to

the Group of RMB niland RMB nilas of December 31,

2019 and June 30,respectively)

87,023

88,314

12,500

Total current liabilities

3,308,361

3,136,537

443,948

PUXIN LIMITED

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of RMB and USD,

2019

2020

2020

RMB

RMB

USD

Non-current liabilities

Deferred revenue,non-current portion of the consolidated VIE

without recourse to the Group

101,372

79,120

11,199

Deferred tax liabilities of the consolidated VIE without

recourse to the Group

81,969

75,994

10,756

Amounts due to related parties,non-current portion (including

amounts due to related parties,non-current portion of the

consolidated VIE without recourse to the Group of RMB nil

and RMB nil as of December 31,

respectively)

-

7,292

1,032

Franchise deposits of the consolidated VIE without recourse to

the Group

2,533

2,549

361

Operating lease liabilities,non-current portion of the

consolidated VIE without recourse to the Group

693,505

605,288

85,673

Loan payable to third parties,non-current portion (including

loan payable to third parties,non-current portion of the

consolidated VIE without recourse to the Group of RMB nil a

nd RMB nilas of December31,

respectively)

-

101,031

14,300

Promissory note,non-current portion (including promissory

note,non-current portion of the consolidated VIE without

recourse to the Group of RMB nil and RMB nilas of

December31,022

88,500

Derivative liabilities (including derivative liabilities of the

consolidated VIE without recourse to the Group of RMB nil

and RMB nil as of December 31,

respectively)

172,235

93,730

13,267

TOTAL LIABILITIES

4,446,997

4,189,855

593,036

SHAREHOLDERS' EQUITY

Ordinary shares (par value of USD0.00005 per share;

1,000,000 and 1,000 shares authorized,

188,627,228 and 188,640,348 shares issued and

174,025,810and 174,079,074 shares outstanding

as of December31,respectively)

62

62

9

Additional paid-in capital

2,175,652

2,335,274

330,537

Statutory reserve

7,979

7,979

1,129

Accumulated other comprehensive income

68,707

70,688

10,005

Accumulated deficit

(1,991,220)

(1,998,085)

(282,811)

Total Puxin Limited shareholders' equity

261,180

415,918

58,869

Non-controlling interest

(1,122)

(3,053)

(432)

TOTAL SHAREHOLDERS' EQUITY

260,058

412,865

58,437

TOTAL LIABILITIES AND TOTAL SHAREHOLDERS'

EQUITY

4,473

PUXIN LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of RMB and USD,per share and per ADS data)

Forthe three months ended June30,

2019

2020

2020

RMB

RMB

USD

Net revenues

632,922

601,053

85,074

Cost of revenues (including share-based compensation expenses of

RMB1,178 and RMB573 for the three months ended June 30,2019 and

2020,respectively)

332,828

331,350

46,900

Gross profit

300,094

269,703

38,174

Operating expenses:

Selling expenses (including share-based compensation expenses of

RMB5,347 and RMB3,203 for the threemonths ended June 30,

2019 and 2020,respectively)

241,739

210,165

29,747

General and administrative expenses (including share-based

compensation expenses of RMB108,844 and RMB2,977 for the

three months ended June 30,2019 and 2020,respectively)

227,063

85,343

12,080

Total operating expenses

468,802

295,508

41,827

Operating loss

(168,708)

(25,805)

(3,653)

Interest expense

10,193

20,658

2,924

Interest income

4,144

11,860

1,679

Foreign exchange gain (loss)

179

(21)

(3)

Loss on changes in fair value of derivative liabilities

18,617

1,848

262

Other income,net

-

14,114

1,998

Gain on disposal of subsidiaries

-

60,968

8,629

Impairment loss on intangible assets

-

4,100

580

(Loss) income before income taxes

(193,195)

34,510

4,884

Income tax expenses (benefits)

1,424

(1,110)

(157)

Net (loss) income

(194,619)

35,620

5,041

Less: Net income (loss) attributable to non-controlling interest

18

(978)

(138)

Net (loss) income attributable to Puxin Limited

(194,637)

36,598

5,179

Net (loss) income per share attributable to Puxin Limited

Basic and diluted

(1.14)

0.21

0.03

Net (loss) income per ADS attributable to Puxin Limited

Basic and diluted

(2.28)

0.42

0.06

Weighted average shares used in calculating basic net (loss)

income per share

170,511,022

174,069,766

174,766

Weighted average shares used in calculating diluted net (loss)

income per share

170,022

177,950,175

177,175

Note: Each ADS represents two ordinary shares.

PUXIN LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands of RMB and USD)

For the three monthsended June 30,

2019

2020

2020

RMB

RMB

USD

Net (loss) income

(194,041

Other comprehensive income (loss),net of tax:

Change in cumulative foreign currency translation adjustments

4,383

(425)

(60)

Total comprehensive (loss) income

(190,236)

35,195

4,981

Less: comprehensive income (loss) attributable to non-controlling interest

18

(978)

(138)

Total comprehensive (loss) income attributable to Puxin Limited

(190,254)

36,173

5,119

PUXIN LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of RMB and USD,per share and per ADS data)

Forthe six months ended June30,

2019

2020

2020

RMB

RMB

USD

Net revenues

1,248,597

1,352,398

191,420

Cost of revenues (including share-based compensation expenses of

RMB2,580 and RMB1,254 for the six months ended June 30,respectively)

668,427

731,628

103,555

Gross profit

580,170

620,770

87,865

Operating expenses:

Selling expenses (including share-based compensation expenses of

RMB12,465 and RMB7,192 for the sixmonths ended June 30,respectively)

464,373

440,662

62,372

General and administrative expenses (including share-based

compensation expenses of RMB195,072 and RMB6,752 for the six

months ended June 30,respectively)

421,048

202,261

28,628

Total operating expenses

885,421

642,923

91,000

Operating loss

(305,251)

(22,153)

(3,135)

Interest expense

40,232

41,511

5,876

Interest income

4,910

23,816

3,371

Foreign exchange (loss) gain

(10)

121

17

Loss on changes in fair value of derivative liabilities

98,879

62,283

8,816

Other income,net

-

35,962

5,090

Gain on disposal of subsidiaries

-

60,100

580

Loss before income taxes

(439,462)

(9,180)

(1,300)

Income tax expenses (benefits)

3,917

(417)

(59)

Net loss

(443,379)

(8,763)

(1,241)

Less: Net income (loss) attributable to non-controlling interest

36

(1,898)

(269)

Net loss attributable to Puxin Limited

(443,415)

(6,865)

(972)

Net loss per share attributable to Puxin Limited

Basic and diluted

(2.64)

(0.04)

(0.01)

Net loss per ADS attributable to Puxin Limited

Basic and diluted

(5.28)

(0.08)

(0.02)

Weighted average shares used in calculating basic and diluted

net loss per share

167,791,531

174,063,142

174,142

Note: Each ADS represents two ordinary shares.

PUXIN LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands of RMB and USD)

For the six monthsended June 30,

2019

2020

2020

RMB

RMB

USD

Net loss

(443,241)

Other comprehensive (loss) income,net of tax:

Change in cumulative foreign currency translation adjustments

(2,081)

1,981

280

Total comprehensive loss

(445,460)

(6,782)

(961)

Less: comprehensive income (loss) attributable to non-controlling interest

36

(1,898)

(269)

Total comprehensive loss attributable to Puxin Limited

(445,496)

(4,884)

(692)

PUXIN LIMITED

RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS

(In thousands of RMB and USD,per share and per ADS data)

For the three months ended June30,

2019

2020

2020

RMB

RMB

USD

Operating loss

(168,653)

Add: Share-based compensation expenses

115,369

6,753

956

Adjusted operating loss

(53,339)

(19,052)

(2,697)

Adjusted operating margin

(8.4)%

(3.2)%

(3.2)%

Net (loss) income attributable to Puxin Limited

(194,179

Add: Share-based compensation expenses

115,753

956

Losson changes in fair value of derivative liabilities

18,848

262

Adjusted net (loss) income attributable to Puxin Limited

(60,651)

45,199

6,397

Net (loss) income

(194,041

Add: Income tax expenses (benefits)

1,110)

(157)

Depreciation of property,plant and equipment

19,357

20,196

2,859

Amortization of intangible assets

8,002

8,337

1,180

Interest expense

10,924

Less: Interest income

4,679

EBITDA

(159,787)

71,841

10,168

EBITDA margin

(25.2)%

12.0%

12.0%

Add:Share-based compensation expenses

115,848

262

Adjusted EBITDA

(25,801)

80,442

11,386

Adjusted EBITDA margin

(4.1)%

13.4%

13.4%

Net (loss) income per ADS attributable to Puxin Limited

- Basic and diluted

(2.28)

0.42

0.06

Adjusted net (loss) incomeper ADS attributable to Puxin Limited

- Basic

(0.71)

0.52

0.07

Adjusted net (loss) incomeper ADS attributable to Puxin Limited

- Diluted

(0.71)

0.51

0.07

Weighted average shares used in calculating basic adjusted

net (loss) incomeper share

170,766

Weighted average shares used in calculating diluted adjusted

net (loss) incomeper share

170,175

Note: Each ADS represents two ordinary shares.

PUXIN LIMITED

RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS

(In thousands of RMB and USD,per share and per ADS data)

For the six months ended June30,

2019

2020

2020

RMB

RMB

USD

Operating loss

(305,135)

Add: Share-based compensation expenses

210,117

15,198

2,151

Adjusted operating loss

(95,134)

(6,955)

(984)

Adjusted operating margin

(7.6)%

(0.5)%

(0.5)%

Net loss attributable to Puxin Limited

(443,865)

(972)

Add: Share-based compensation expenses

210,151

Loss on changes in fair value of derivative liabilities

98,816

Adjusted net (loss) income attributable to Puxin Limited

(134,419)

70,616

9,995

Net loss

(443,241)

Add: Income tax expenses (benefits)

3,917

(417)

(59)

Depreciation of property,plant and equipment

36,663

41,824

5,920

Amortization of intangible assets

15,769

17,599

2,491

Interest expense

40,876

Less: Interest income

4,371

EBITDA

(351,708)

67,938

9,616

EBITDA margin

(28.2)%

5.0%

5.0%

Add: Share-based compensation expenses

210,816

Adjusted EBITDA

(42,712)

145,419

20,583

Adjusted EBITDAmargin

(3.4)%

10.8%

10.8%

Net loss per ADS attributable to Puxin Limited

- Basic and diluted

(5.28)

(0.08)

(0.02)

Adjusted net (loss) income per ADS attributable to Puxin Limited

- Basic

(1.60)

0.81

0.11

Adjusted net (loss) income per ADS attributable to Puxin Limited

- Diluted

(1.60)

0.79

0.11

Weighted average shares used in calculating basic adjusted

net (loss) income per share

167,142

Weighted average shares used in calculating diluted adjusted

net (loss) income per share

167,531

178,266

178,266

Note: Each ADS represents two ordinary shares.

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