Adicon Holdings (9860) H1 2023 earnings summary

Executive summary

• H1 2023 revenue fell 32.8% YoY to RMB1,644.1m as COVID-19 testing demand receded; rebounding base testing supported non-COVID revenue growth.

• Profit for the period declined 68.0% to RMB120.3m; gross margin improved to 43.6% from 40.4%.

• Adjusted EBITDA was RMB331.5m; adjusted net profit was RMB183.1m.

Financial highlights

• Revenue was RMB1,644.1m, cost of revenue RMB927.1m and gross profit RMB717.0m, versus RMB989.1m gross profit in H1 2022.

• Profit before tax was RMB151.7m versus RMB436.4m; net profit was RMB120.3m versus RMB375.4m, including RMB111.8m attributable to owners.

• Operating expenses included selling and distribution RMB233.7m, administrative RMB136.6m, R&D RMB69.1m and impairment losses RMB66.6m.

• Basic and diluted EPS were RMB0.17101 and RMB0.14206; adjusted basic and diluted EPS were RMB0.26721 and RMB0.24736.

• EBITDA was RMB268.2m versus RMB554.2m; adjusted EBITDA was RMB331.5m versus RMB481.6m.

Outlook and guidance

• Priorities include expanding routine and esoteric test portfolios, developing NGS, flow cytometry and mass spectrometry platforms, and focusing on five disease lines.

• Plans include expanding the laboratory network, upgrading automation and IT, investing in AI and R&D, and pursuing collaborations, acquisitions and direct-to-consumer opportunities.

• CRO and clinical-trial services are targeted for growth, supported by a Shanghai facility accredited by the College of American Pathologists and work with Guardant Health.