Global Cord Blood Corporation Reports Financial Results for the Second Quarter and First Half of Fiscal 2020

HONG KONG,Nov. 27,2019 -- Global Cord Blood Corporation (NYSE: CO) ("GCBC" or the "Company"),China's leading provider of cord blood collection,laboratory testing,hematopoietic stem cell processing and stem cell storage services,today announced its unaudited financial results for the second quarter and first half of fiscal year 2020 ended September 30,2019.

Second Quarter of Fiscal 2020 Highlights

Revenues increased by 26.9% year over year ("YoY") to RMB313.5 million ($43.9 million).

New subscribers and accumulated subscriber base were 21,551 and 791,812[1],respectively.

Gross profit increased by 32.7% YoY to RMB265.1 million ($37.1 million).

Gross margin increased from 80.9% in the prior year period to 84.6%.

Operating income increased by 37.9% YoY to RMB144.4 million ($20.2 million).

Operating income before depreciation and amortization ("non-GAAP operating income[2]") increased by 32.8% YoY to RMB156.9 million ($22.0 million).

Net income attributable to the Company's shareholders increased by 84.8% to RMB120.4 million ($16.8 million),as last year period recorded a significant decrease in fair value for equity securities ("mark-to-market loss") of RMB30.9 million compared to that of RMB7.0 million ($1.0 million) in the reporting quarter.

Net cash provided by operating activities was RMB208.3 million ($29.1 million).

First Half of Fiscal 2020 Highlights

Revenues increased by 22.0% YoY to RMB586.8 million ($82.1 million).

New subscriber sign-up was 42,366,and accumulated subscriber base expanded to 791,812[1].

Gross profit increased by 26.2% YoY to RMB492.8 million ($68.9 million).

Operating income increased by 28.3% YoY to RMB256.8 million ($35.9 million).

Non-GAAP operating income[2] increased by 24.2% YoY to RMB281.7 million ($39.4 million).

Net income attributable to the Company's shareholders increased by 64.9% to RMB228.7 million ($32.0 million),mainly attributable to the increase in operating income and the significant decrease in mark-to-market loss in the reporting six months.

Net cash provided by operating activities for the first half of fiscal 2020 was RMB378.0 million ($52.9 million).

"Despite the prolonged cautious consumer sentiment in our markets fueled in part with slower economic growth in China,the US-China trade tensions,and our recent price adjustment,we managed to recruit 21,551 new subscribers in the second quarter,on track with our annual target." said Ms. Ting Zheng,Chairperson and Chief Executive Officer of GCBC. "With the Regulation of the People's Republic of China on the Administration of Human Genetic Resources coming into effect,we are evaluating its implications and other potential regulatory developments affecting our business. At the same time,we will continue to look for opportunities to broaden our revenue sources,and are prepared to adjust our strategy and market positioning to cope with any potential changes within the industry."

Summary – Second Quarter and First Half Ended September 30,2018 and 2019

Three Months Ended September 30,

Six Months Ended September 30,

2018

2019

2018

2019

(in thousands)

RMB

RMB

US$

RMB

RMB

US$

Revenues

247,104

313,464

43,855

480,925

586,839

82,102

Gross Profit

199,841

265,149

37,095

390,504

492,775

68,942

Operating Income[3]

104,766

144,435

20,207

200,208

256,821

35,930

Change in Fair Value of

Equity Securities

(30,945)

(7,043)

(985)

(40,266)

2,936

411

Net Income Attributable to

the Company's

Shareholders

65,114

120,353

16,838

138,656

228,697

31,996

Earnings per Ordinary

Share (RMB/US$)

– Basic

0.54

0.99

0.14

1.15

1.88

0.26

– Diluted

0.53

0.99

0.14

1.14

1.88

0.26

Revenues Breakdown (%)

Processing Fees and Other

Services

61.4%

63.9%

61.4%

62.7%

Storage Fees

38.6%

36.1%

38.6%

37.3%

New Subscribers (persons)

22,908

21,551

43,509

42,366

Total Accumulated

Subscribers(persons)

704,690

791,812[1]

704,812[1]

Summary – Selected Cash Flow Statement Items

Three Months Ended September 30,

2018

2019

2018

2019

(in thousands)

RMB

RMB

US$

RMB

RMB

US$

Net cash provided by

operating activities

211,617

208,255

29,136

386,934

378,011

52,886

Net cash (used in)/

provided by

investing activities

(8,822)

1,396

195

(15,948)

(5,229)

(732)

Net cash used in

financing activities

(18,173)

(4,039)

(565)

(18,039)

(565)

Second Quarter of Fiscal 2020 Financial Results

REVENUES. Revenues increased by 26.9% YoY to RMB313.5 million ($43.9 million) in the second quarter of fiscal 2020. The increase was mainly driven by the implementation of a new processing fee since April 2019 as well as the Company's continued enlargement of its total subscriber base.

The Company recruited 21,551 new subscriber sign-ups during the reporting quarter. Revenues generated from processing fees and other services in the second quarter increased by 32.2% YoY to RMB200.5 million ($28.1 million),representing 63.9% of total revenues compared to 61.4% in the prior year period.

Revenues generated from storage fees increased by 18.4% YoY to RMB113.0 million ($15.8 million) in the reporting quarter. The accumulated subscriber base as of September 30,2019 reached 791,812[1].

GROSS PROFIT. Gross profit for the second quarter increased by 32.7% YoY to RMB265.1 million ($37.1 million). Gross margin improved to 84.6% from 80.9% in the prior year period,mainly driven by the increase in processing fees which exceeded the increase in labor related costs.

OPERATING INCOME. With the processing fee adjustment,operating income for the reporting quarter increased by 37.9% YoY to RMB144.4 million ($20.2 million). Operating margin increased to 46.1% from 42.4% of the prior year period. Depreciation and amortization expenses for the second quarter were RMB12.5 million ($1.7 million),compared to RMB13.4 million in the same period last year. Fueled by the topline growth,non-GAAP operating income[2] increased by 32.8% YoY to RMB156.9 million ($22.0 million) in the reporting quarter.

Research and Development Expenses. Research and development expenses amounted to RMB6.4 million ($0.9 million) compared to RMB3.6 million in the prior year period,a reflection of the Company's continuous efforts to enhance operations through technology advancement.

Sales and Marketing Expenses. Sales and marketing expenses amounted to RMB64.9 million ($9.1 million) compared to RMB51.5 million in the prior year period. In order to mitigate the impact from the increased processing fee and encourage consumer spending on its services,the Company continued to strengthen its sales teams through new recruits and higher marketing and promotion spending. Sales and marketing expenses as a percentage of revenues was 20.7%,similar to 20.8% of the prior year period and down from 22.2% last quarter.

General and Administrative Expenses. As a result of the increase in staff costs,bad debt provision and legal and professional fees,general and administrative expenses amounted to RMB49.4 million ($6.9 million),compared to RMB40.0 million in the same period last year. General and administrative expenses as a percentage of revenues declined to 15.8% from 16.2% in the prior year period.

OTHER INCOME AND EXPENSES.

Change in fair value of equity securities. In the reporting period,the Company recognized a decrease in fair value of equity securities,or "mark-to-market loss",of RMB7.0 million ($1.0 million),compared to the mark-to-market loss of RMB30.9 million in the prior year period. The changes were mainly attributable to the investments in equity securities.

NET INCOME ATTRIBUTABLE TO THE COMPANY'S SHAREHOLDERS. As a result of an increase in operating income and a significant decrease in mark-to-market loss from equity securities,income before income tax for the second quarter increased by 77.8% YoY to RMB144.2 million ($20.2 million). Income tax expense for the second quarter was RMB22.1 million ($3.1 million). Net income attributable to the Company's shareholders for the reporting quarter increased by 84.8% YoY to RMB120.4 million ($16.8 million). Net margin for the reporting quarter improved to 38.4% from 26.4% in the prior year period.

EARNINGS PER SHARE. Basic and diluted earnings per ordinary share for the second quarter of fiscal 2020 was RMB0.99 ($0.14).

First Half of Fiscal 2020 Financial Results

For the first half of fiscal year 2020,total revenues increased by 22.0% YoY to RMB586.8 million ($82.1 million). The increase was mainly attributable to the new processing fee as well as an increase in the Company's storage fee revenues from its accumulated subscriber base. Revenues from processing fees and other services increased by 24.7% YoY to RMB368.0 million ($51.5 million),and revenues from storage fees increased by 17.7% YoY to RMB218.8 million ($30.6 million). Gross profit increased by 26.2% YoY to RMB492.8 million ($68.9 million). Operating income increased by 28.3% YoY to RMB256.8 million ($35.9 million). Non-GAAP operating income[2] increased by 24.2% YoY to RMB281.7 million ($39.4 million). Net income attributable to the Company's shareholders improved by 64.9% to RMB228.7 million ($32.0 million). Basic and diluted earnings per ordinary share was RMB1.88 ($0.26).Net cash provided by operating activities in the first half of fiscal 2020 was RMB378.0 million ($52.9 million).

Recent Developments

On June 4,2019,the board of directors of the Company (the "Board") received a non-binding proposal letter from Cordlife Group Limited ("Cordlife"),a company listed on the Mainboard of the Singapore Exchange Securities Trading Limited ("SGX"),pursuant to which Cordlife proposes to combine the businesses of Cordlife and the Company,by way of a statutory merger. According to the letter,Cordlife would issue approximately 2,497.9 million ordinary shares at an issue price of SGD0.5 per ordinary share in exchange for all of the outstanding ordinary shares of the Company at $7.50 per ordinary share. Upon completion of the proposed transaction,the Company's ordinary shares will be delisted from the New York Stock Exchange and the Cordlife ordinary shares will continue to trade on SGX. On June 5,the Board formed a special committee of independent directors (the "Special Committee") who are not affiliated with Cordlife to evaluate such proposal. The Special Committee intends to retain advisors,including an independent financial advisor and U.S. and Cayman Islands legal counsels,to assist it in its work.

On November 11,the Company appointed Mr. Jack Chow as an independent non-executive director of the Board. Mr. Chow has extensive professional experience and a broad network in the finance and investment industry and he replaced Mr. Mark Chen as a member of the Audit Committee and Ms. Jennifer Weng as a member of the Special Committee. Mr. Chow also joined the Board's Compensation Committee and Nominating and Corporate Governance Committee.

The Company cautions its shareholders and others considering trading its ordinary shares that no decisions have been made with respect to the Company's response to the proposed transaction with Cordlife. The proposed transaction is still subject to various conditions,including but not limited to,completion of due diligence,parties entering into definitive agreement,and/or each of Cordlife and the Company obtaining its relevant regulatory and shareholders approval. In addition,litigation has been filed in the Cayman Islands challenging the proposed transaction. There can be no assurance that any definitive offer will be made,that any agreement will be executed or that this or any other transaction will be approved or consummated.

Conference Call

The Company will host a conference call at 8:00 a.m. ET on Wednesday,November 27,to discuss its financial performance and give a brief overview of the Company's recent developments,followed by a question and answer session. Interested parties can access the audio webcast through the Company's IR website at http://ir.globalcordbloodcorp.com. A replay of the webcast will be accessible two hours after the conference call and available for seven days at the same URL above. Listeners can also access the call by dialing 1-646-722-4977 or 1-855-824-5644 for US callers,or +852-3027-6500 for Hong Kong callers,access code: 13679679#.

[1]During the three months and six months ended September 30,21,551 and 42,366 new subscribers were recruited,respectively. The Company reclassified 438 and 827 private cord blood units as donated cord blood units during the three months and six months ended September 30,respectively,after the Company determined that the recoverability of these prior private cord blood banking subscribers was remote. Therefore,the Company terminated their subscription services according to the subscription contracts and these units are being treated as if they were donated cord blood units and will be part of the Company's non-current inventories. Hence,the net accumulated subscriber base was 791,812 as of September 30,2019.

[2]See exhibit 3 to this press release for a reconciliation of non-GAAP operating income to exclude the non-cash items related to the depreciation and amortization expenses to the comparable financial measure prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP").

[3]The reported operating income for the three months ended September 30,2018and 2019 included depreciation and amortization expenses related to property,plant and equipment and intangible assets of RMB13.4 million and RMB12.5 million ($1.7 million),respectively. The reported operating income for the six months ended September 30,2018 and 2019 included depreciation and amortization expenses related to property,plant and equipment and intangible assets of RMB26.5 million and RMB24.9 million ($3.5 million),respectively.

Use of Non-GAAP Financial Measures

GAAP results for the three months and six months ended September 30,include non-cash items related to depreciation and amortization expenses. To supplement the Company's unaudited condensed consolidated financial statements presented on a U.S. GAAP basis,the Company has provided adjusted financial information excluding the impact of these items in this press release. The non-GAAP financial measure represents non-GAAP operating income. Such adjustment is a departure of U.S. GAAP; however,the Company's management believes that these adjusted measures provide investors with a better understanding of how the results relate to the Company's historical performance. Also,management uses non-GAAP operating income as a measurement tool for evaluating actual operating performance compared to budget and prior periods. These adjusted measures should not be considered an alternative to operating income,or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP. These measures are not necessarily comparable to a similarly titled measure of another company. A reconciliation of the adjustments to U.S. GAAP results appears in exhibit 3 accompanying this press release. This additional adjusted information is not meant to be considered in isolation or as a substitute for U.S. GAAP financials. The adjusted financial information that the Company provides also may differ from the adjusted information provided by other companies.

About Global Cord Blood Corporation

Global Cord Blood Corporation is the first and largest umbilical cord blood banking operator in China in terms of geographical coverage and the only cord blood banking operator with multiple licenses. Under current PRC government regulations,only one licensed cord blood banking operator is permitted to operate in each licensed region and no new licenses will be granted before 2020 in addition to the seven licenses authorized as of today. Global Cord Blood Corporation provides cord blood collection,hematopoietic stem cell processing,and stem cell storage services. For more information,please visit our website at http://www.globalcordbloodcorp.com.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933,and Section 21E of the Securities Exchange Act of 1934. These statements relate to future events or the Company's future financial performance. The Company has attempted to identify forward-looking statements by terminology including "anticipates","believes","expects","can","continue","could","estimates","intends","may","plans","potential","predict","should" or "will" or the negative of these terms or other comparable terminology. These statements are only predictions,uncertainties and other factors may cause the Company's actual results,levels of activity,performance or achievements to be materially different from any future results,performance or achievements expressed or implied by these forward-looking statements. The information in this press release is not intended to project future performance of the Company. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable,the Company does not guarantee future results,performance or achievements. The Company expectations are as of the date this press release is issued,and the Company does not intend to update any of the forward-looking statements after the date this press release is issued to conform these statements to actual results,unless required by law.

The forward-looking statements included in this press release are subject to risks,uncertainties and assumptions about the Company's businesses and business environments. These statements reflect the Company's current views with respect to future events and are not a guarantee of future performance. Actual results of the Company's operations may differ materially from information contained in the forward-looking statements as a result of risk factors some of which include,among other things: continued compliance with government regulations regarding cord blood banking in the People's Republic of China,or PRC and any other jurisdiction in which the Company conducts its operations; changing legislation or regulatory environments in the PRC and any other jurisdiction in which the Company conducts its operations; the acceptance by subscribers of the Company's different pricing and payment options and reaction to the introduction of the Company's premium-quality pricing strategy; demographic trends in the regions of the PRC in which the Company is the exclusive licensed cord blood banking operator; labor and personnel relations; the existence of a significant shareholder able to influence and direct the corporate policies of the Company; credit risks affecting the Company's revenue and profitability; changes in the healthcare industry,including those which may result in the use of stem cell therapies becoming redundant or obsolete; the Company's ability to effectively manage its growth,including maintaining effective controls and procedures and attracting and retaining key management and personnel; changing interpretations of generally accepted accounting principles; the availability of capital resources,including in the form of capital markets financing opportunities,in light of industry developments affecting issuers that have pursued a "reverse merger" with an operating company based in China,the presence of a new majority shareholder,international pressure on trade and currency against the PRC and its potential impact on the PRC consumer behavior,as well as general economic conditions; the non-binding proposal letter from Cordlife and the potential transaction contemplated by such letter,and other relevant risks detailed in the Company's filings with the Securities and Exchange Commission in the United States.

This announcement contains translations of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of readers. Unless otherwise noted,all translations from Renminbi to U.S. dollars as of and for the period ended September 30,2019 were made at the noon buying rate of RMB7.1477 to $1.00 on September 30,2019 in the City of New York for cable transfers in Renminbi per U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York. Global Cord Blood Corporation makes no representation that the Renminbi or U.S. dollar amounts referred to in this press release could have been or could be converted into U.S. dollars or Renminbi,at any particular rate or at all.

EXHIBIT 1

GLOBAL CORD BLOOD CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

As of March 31 and September 30,2019

March 31,

September 30,

2019

2019

RMB

RMB

US$

(in thousands except share data)

ASSETS

Current assets

Cash and cash equivalents

4,997,861

5,368,285

751,050

Accounts receivable,less allowance for doubtful accounts

(March 31,2019: RMB89,634; September 30,2019:

RMB106,504 (US$14,900))

96,923

97,060

13,580

Inventories

27,612

27,400

3,833

Prepaid expenses and other receivables

25,532

19,340

2,706

Total current assets

5,147,928

5,512,085

771,169

Property,plant and equipment,net

545,340

534,873

74,832

Operating lease right-of-use assets[4]

-

5,846

818

Non-current deposits

236,719

243,713

34,097

Non-current accounts receivable,less allowance for doubtful

accounts (March 31,2019: RMB74,800; September 30,

2019: RMB72,693 (US$10,170))

104,857

123,291

17,249

Inventories

77,194

80,253

11,228

Intangible assets,net

97,444

95,134

13,310

Investment in equity securities at fair value

107,362

117,359

16,419

Other equity investment

189,129

189,129

26,460

Deferred tax assets

44,981

49,469

6,921

Total assets

6,550,954

6,951,152

972,503

LIABILITIES

Current liabilities

Accounts payable

33,566

29,891

4,182

Accrued expenses and other payables

79,977

102,363

14,322

Operating lease liabilities[4]

-

2,149

301

Deferred revenue

461,986

443,615

62,064

Income tax payable

20,113

28,443

3,979

Total current liabilities

595,642

606,461

84,848

Non-current deferred revenue

2,108,442

2,211,652

309,421

Non-current operating lease liabilities[4]

-

3,322

465

Other non-current liabilities

404,482

432,953

60,573

Deferred tax liabilities

19,626

18,854

2,638

Total liabilities

3,128,192

3,273,242

457,945

EQUITY

Shareholders' equity of Global Cord Blood

Corporation

Ordinary shares

- US$0.0001 par value,250,000,000 shares authorized,

121,687,974 and 121,551,075 shares issued and

outstanding as of March 31 and September 30,

respectively

83

83

12

Additional paid-in capital

2,101,582

2,582

294,022

Treasury stock,at cost (March 31 and September 30,

2019: 136,899 shares,respectively)

(2,815)

(2,815)

(394)

Accumulated other comprehensive losses

(88,738)

(65,585)

(9,176)

Retained earnings

1,407,223

1,635,920

228,873

Total equity attributable to Global Cord Blood

Corporation

3,417,335

3,669,185

513,337

Non-controlling interests

5,427

8,725

1,221

Total equity

3,422,762

3,677,910

514,558

Total liabilities and equity

6,503

[4]Since April 1,the Company adopted Accounting Standards Update Topic 842 using a modified retrospective transition

approach which resulted in the recognition of right-of-use assets and lease liabilities for operating leases as of April 1,2019 of

approximately RMB6.9 million and RMB5.8 million,respectively.

EXHIBIT 2

GLOBAL CORD BLOOD CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three Months and Six Months Ended September 30,2018 and 2019

Three months ended September 30,

Six months ended September 30,

2018

2019

2018

2019

RMB

RMB

US$

RMB

RMB

US$

(in thousands except per share data)

Revenues

247,102

Direct costs

(47,263)

(48,315)

(6,760)

(90,421)

(94,064)

(13,160)

Gross profit

199,841

265,149

37,095

390,504

492,775

68,942

Operating expenses

Research and development

(3,590)

(6,399)

(895)

(6,381)

(11,100)

(1,553)

Sales and marketing

(51,488)

(64,880)

(9,077)

(102,903)

(125,517)

(17,560)

General and administrative

(39,997)

(49,435)

(6,916)

(81,012)

(99,337)

(13,899)

Total operating expenses

(95,075)

(120,714)

(16,888)

(190,296)

(235,954)

(33,012)

Operating income

104,766

144,435

20,207

200,208

256,821

35,930

Other (expenses)/income,net

Interest income

6,405

6,502

910

12,103

12,722

1,780

Foreign currency exchange losses

(49)

(162)

(23)

(75)

(190)

(27)

Change in fair value of equity

securities

(30,936

411

Dividend income

976

-

-

976

507

71

Others

(56)

422

59

(815)

762

107

Total other (expenses)/income,

net

(23,669)

(281)

(39)

(28,077)

16,737

2,342

Income before income tax

81,097

144,154

20,168

172,131

273,558

38,272

Income tax expense

(14,921)

(22,087)

(3,090)

(31,445)

(41,563)

(5,815)

Net income

66,176

122,067

17,078

140,686

231,995

32,457

Net incomeattributable to

non-controlling interests

(1,062)

(1,714)

(240)

(2,030)

(3,298)

(461)

Net income attributable to

Global Cord Blood Corporation's

Shareholders

65,114

120,353

16,838

138,656

228,697

31,996

Earnings per share:

Attributable to ordinary shares

- Basic

0.54

0.99

0.14

1.15

1.88

0.26

- Diluted

0.53

0.99

0.14

1.14

1.88

0.26

Other comprehensive income,

net of nil income taxes

- Foreign currency translation

adjustments

14,597

12,800

1,791

37,477

23,153

3,239

Comprehensive income

80,773

134,867

18,869

178,163

255,148

35,696

Comprehensive income attributable to

non-controlling interests

(1,298)

(461)

Comprehensive income

attributable to Global Cord Blood

Corporation's shareholders

79,711

133,153

18,629

176,133

251,850

35,235

EXHIBIT 3

GLOBAL CORD BLOOD CORPORATION

RECONCILIATION OF NON-GAAP OPERATING INCOME

For the Three Months and Six Months Ended September 30,2018 and 2019

Three months ended

Six months ended

September 30,

2018

2019

2018

2019

RMB

RMB

US$

RMB

RMB

US$

(in thousands)

GAAP amount of operating

income

104,930

Depreciation and amortization

expenses[5]

13,391

12,455

1,743

26,536

24,900

3,483

Non-GAAP operating

income

118,157

156,890

21,950

226,744

281,721

39,413

[5]Depreciation and amortization expenses relate to property,plant and equipment and intangible assets respectively.