Cost of Revenues. Our cost of revenues for hospital business primarily consists of medicine costs, medical consumables, labor costs of doctors, nurses and other staff involved in the care or treatment of patients, depreciation, hospital buildings rental fee, utilities as well as other related costs incurred in the normal business of a hospital.
Our cost of revenues for network business primarily consists of amortization of acquired intangibles, depreciation of medical equipment purchased, installed and operated in the network of our cooperative centers and other costs, including salaries and material costs of medical supplies.
Selling Expenses. Selling expenses consist primarily of expenses associated with the development of new cancer hospitals and cooperative centers, such as salaries and benefits for our business development personnel, marketing expenses and travel related expenses. Selling expenses decreased from 2019 to 2020 due to the decrease in advertisement and promotion fees caused by the travelling restrictions during the COVID-19 pandemic. Selling expenses increased from 2020 to 2021, primarily due to increases in marketing expenses and travel related expenses as a result of the opening of our Guangzhou Hospital since June 2021 and increased sales and traveling activities driven by the effective containment of the COVID-19 outbreak in China. Our selling expenses include share-based compensation of RMB2.9 million in 2019, RMB3.1 million in 2020 and RMB2.1 million (US$0.3 million) in 2021.
General and Administrative Expenses. General and administrative expenses consist primarily of salaries and benefits for our finance, human resources and administrative personnel, fees and expenses of legal, accounting and other professional services, insurance expenses, travel related expenses, depreciation of equipment and facilities used for administrative purposes, and other expenses. Our general and administrative expenses also include share-based compensation expenses of RMB17.7 million in 2019, RMB17.6 million in 2020 and RMB12.6 million (US$2.0 million) in 2021. See “—Share-based Compensation.”
Without taking into account the share-based compensation expenses, our general and administrative expenses increased in absolute dollar terms in 2021 due to the expansion of our network business and hospital business and the growth in our total net revenues as well as the effective containment of COVID-19 in the PRC.
Impairment of Long-lived Assets. Our impairment of long-lived assets was primarily related to property, plant and equipment in connection with our business operations. We had impairment of long-lived assets of RMB76.1 million, RMB8.5 million and nil in 2019, 2020 and 2021, respectively.
Share-based Compensation
On October 16, 2008, our board of directors adopted the 2008 share incentive plan. The plan provided for the grant of options, share appreciation rights, or other share-based awards to key employees, directors or consultants. Our board of directors and shareholders initially authorized the issuance of up to 4,765,800 ordinary shares upon exercise of awards granted under our 2008 share incentive plan. On November 26, 2011, our board of directors and the shareholders authorized the issuance of additional 5,101,968 ordinary shares under the 2008 share incentive plan. On May 29, 2015, our board of directors and the shareholders authorized the issuance of additional 4,940,550 ordinary shares under the 2008 share incentive plan.
On November 27, 2009 and September 30, 2011, we granted options to purchase a total of 4,765,800 ordinary shares at exercise prices of US$3.67 and US$2.17 per share, respectively, under our 2008 share incentive plan to our directors and employees. On February 18, 2014, we granted options to purchase 3,479,604 shares at an exercise price of US$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. We also granted 1,370,250 restricted shares, 21,132 restricted shares and 69,564 restricted shares on February 18, 2014, July 1, 2014 and August 1, 2014, respectively, to certain directors, officers and employees. On August 7, 2017, August 8, 2017 and September 13, 2017, we granted 1,453,950 restricted shares, 3,319,200 restricted shares and 45,000 restricted shares, respectively, to certain directors, officers and employees. On October 2, 2018, we granted 5,992,605 restricted shares to certain directors, officers and employees. The restricted shares vest over four equal installments on the first, second, third, and fourth anniversary of the grant date.
We recognize the compensation expense on a straight-line basis over the requisite service period for the entire award. With respect to share options, we calculated the estimated grant date fair value of the share options granted on the date of grant, using a Binomial Tree Model. 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 our historical dividend yields. The volatility assumption was estimated based on the historical price volatility of ordinary shares of comparable companies in the health care industry. The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the fair value of our shares that would have been received by the option holders if all in-the-money options had been exercised on the issuance date.
