23.

SHARE-BASED AWARDS

On October 16, 2008, the Board of Directors adopted the 2008 Share Incentive Plan (the “2008 Share Incentive Plan”). The 2008 Share Incentive Plan provides for the granting of options, share appreciation rights, or other share based awards to key employees, directors or consultants, which was subsequently amended on November 17, 2009 and November 26, 2011 to increase the number of ordinary shares available for grant under the plan. The total number of the Company’s ordinary shares that may be issued under the 2008 Share Incentive Plan is up to 13,218,000 ordinary shares.

Share options

On February 18, 2014, the Company granted options to purchase 3,479,604 ordinary shares to its employees at an exercise price of $2.04 per share that have a contractual life of eight years and vest over four equal installments on the first, second, third, and fourth anniversary of the grant date. The Company recognizes the compensation expense on a straight-line basis over the requisite service period for the entire award. The Company calculated the estimated grant date fair value of the share options granted on February 18, 2014, using a Binomial Tree Model, with key assumptions as follows.

	February 18, 2014
Risk-free interest rate		2.33	%
Dividend yield		5	%
Exercise multiple		2.5
Expected volatility range		39.03	%

The risk-free rate was based on the US Treasury bond yield curve in effect at the time of grant for periods corresponding with the expected term of the option. The dividend yield was estimated based on the average of historical dividend yields of the Company. The volatility assumption was estimated based on the historical price volatility of ordinary shares of comparable companies in the health care industry. Forfeiture rate is estimated based on the historical and future expectation of employee turnover rate and will be adjusted to reflect future change in circumstances and facts, if any.

The following table summarizes employee share options activities for the year ended December 31 2017:

Share Options Granted to Employees	Number of Shares		Weighted- Average Exercise Price		Weighted Average Grant-date Fair Value		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding, January 1, 2017		7,459,046	US$	2.98	US$	0.72		5.74		—
Granted		—		—		—		—		—
Exercised		—		—		—		—		—
Forfeited		(4,241,959)	US$	1.37	US$	0.65		0.13		—
Outstanding, December 31, 2017		3,217,087	US$	5.11	US$	0.81		13.13		—
Expected to vest, December 31, 2017		3,217,087	US$	5.11	US$	0.81		13.13		—
Exercisable at December 31, 2017		2,991,291	US$	5.11	US$	0.81		13.13		—

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the fair value of the Company’s shares that would have been received by the option holders if all in-the-money options had been exercised on the issuance date.

There were no options exercised for the years ended December 31, 2015, 2016 and 2017.

As of December 31, 2017, unrecognized share-based compensation cost related to share options was RMB444 (US$68) which was expected to be recognized over a weighted-average vesting period of years. To the extent the actual forfeiture rate is different from original estimate, actual share-based compensation costs related to these awards may be different from the expectation.

Restricted shares

On February 18, 2014, July 1, 2014 and August 1, 2014, the Company granted 1,370,250, 21,132 and 69,564 restricted shares of the Company (“Restricted Shares”) to the employees of the Company, respectively. The Restricted Shares have a service condition where the grantees can remove restriction on 25% of total number of restricted shares on annual basis over a four year period ending the fourth anniversary of the grant date.

The Group did not grant any Restricted Shares in 2015 and 2016.

On August 7, 2017, August 8, 2017 and September 13, 2017, the Company granted 1,453,950, 3,319,200 and 45,000 Restricted Shares to the employees of the Company, respectively. The Restricted Shares have a service condition where the grantees can remove restriction on 25% of total number of restricted shares on annual basis over a four year period ending the fourth anniversary of the grant date.

Grant Date	Number of Awards		Fair Value per Share at the Grant date (US$)
February 18, 2014		1,370,250		1.93
July 1, 2014		21,132		2.35
August 1, 2014		69,564		2.44
August 7, 2017		1,453,950		1.33
August 8, 2017		3,319,200		1.34
September 13, 2017		45,000		1.33

The Company recognizes the compensation expense on a straight-line basis over the requisite service period for the entire award. Restricted shares activity for the year ended December 31, 2017 was as follows:

	Numbers of shares		Weighted average grant date fair value
	RMB		US$
Outstanding, January 1, 2017		1,271,085		—
Granted		4,818,150		1.48
Vested		—		—
Forfeited		(47,388)		1.93
Outstanding, December 31, 2017		6,041,847		1.17
Expected to vest, December 31, 2017		6,041,847		1.17

As of December 31, 2017, unrecognized share-based compensation cost related to restricted shares was RMB39,624 (US$6,090) which was expected to be recognized over a weighted-average vesting period of years.

The share-based compensation expense of the share options and restricted shares granted to employees for the years ended December 31, 2015, 2016 and 2017 is as follows:

	For the Years ended December 31,
	2015		2016		2017		2017
	RMB		RMB		RMB		US$
General and administrative expenses		7,304		7,573		10,099		1,552
Selling expenses		780		827		1,542		237
		8,084		8,400		11,641		1,789