Despite a modest Q1 earnings per share of only NT$0.01, CHC Healthcare Group's General Manager, Ming-Lun Li, remains optimistic about the company's 2024 operations. Li revealed that the company has secured numerous equipment orders that are currently being installed. Additionally, sales of the Baxter Da Vinci surgical robot solutions are promising, and performance in the medical management services sector has rebounded since April. The rapid expansion of their FuKang Pharmacy chain, projected to reach 60 outlets by year-end, along with ongoing negotiations for their MRI linear accelerators and proton therapy systems with several hospitals, sets a positive trajectory. However, significant contributions from these will likely manifest next year. Li expects a progressive increase in revenue and profitability throughout the year, with full-year growth surpassing that of 2023.
In Q1, CHC Healthcare Group's operations were affected by the absence of large equipment orders and reduced profitability in the medical management services, resulting in revenue of NT$657 million, down 17.83% year-on-year. The gross margin fell to 21.25% from 27.88% a year ago, with operating profit plunging 80% to NT$20.35 million. The operating margin dropped to 3.09%, and net profit after tax was NT$2.26 million, compared to NT$79.24 million in the same period last year, leading to a significant drop in EPS from NT$0.49 to NT$0.01.
Revenue distribution in Q1 showed equipment sales contributing 10%, medical management services 52%, and new business ventures, including pharmaceuticals and health food sales, accounting for 38%.
During the earnings call on May 28, Li expressed optimism about the year's outlook, noting that combined revenue for the first four months was NT$867 million, down 15.2% year-on-year. This decline was attributed to the ongoing installation of large equipment yet to be recognized as revenue and reduced income from medical management and equipment leasing services, influenced by the holiday season and increased international travel. However, patient treatment numbers have been recovering since April.
Li highlighted that numerous orders for linear accelerators and other equipment, valued in the hundreds of millions to billions of NT dollars, are in the pipeline. The Baxter Da Vinci surgical solution, the only integrated bed system compatible with the Da Vinci robotic surgery system, is also performing well. With 75 units of the Da Vinci system already sold in Taiwan, the company sold three units last year at NT$10 million each and expects to sell 4-5 units this year, with further growth anticipated next year.
Regarding the Elekta MRI linear accelerator, discussions are ongoing with several large hospitals, with hopes to sell one unit this year. Given installation timelines, revenue recognition is expected in 2025. Proton therapy systems are also in negotiations with four hospitals, with potential outcomes from two this year. However, whether through outright sales or leasing agreements, significant contributions will likely only start in two years. Additionally, the installation for Chang Gung Memorial Hospital is delayed until 2026 due to construction delays.
CHC Healthcare Group recently secured the agency for Neutron Therapeutics' NeBNCT from the U.S. BNCT (Boron Neutron Capture Therapy) is a targeted radiotherapy where boron-laden drugs are absorbed by tumor cells and then exposed to neutron radiation, causing a lethal reaction within the cells. With installations in the UK, Finland, and Japan, and pending certification, the company expects to obtain approval next year and apply for sales authorization through imports. Each machine costs NT$1.2 billion, with potential for sales or leasing collaborations currently being discussed with prospective clients.
FuKang Pharmacy is in a rapid expansion phase, with around 40 outlets in Taiwan. Alongside building online channels, the company is actively seeking new store locations and partnerships with independent or regional small pharmacies, aiming to reach 60 outlets by year-end, thus driving steady growth in revenue and profitability.
Resource (mandarin)
