EMBATTLED cord-blood bank Cordlife Group on Thursday (Aug 15) posted a net loss of S$12.4 million for the six months ended Jun 30, compared to a net profit of S$2.2 million year on year.
This came as revenue fell 67.5 per cent to S$9.2 million from S$28.3 million in the previous corresponding period, largely due to the suspension of the group’s Singapore activities.
The decline includes around S$9.7 million in costs that arose due to the waiver of subsequent fees for active clients who stored their cord-blood units in tanks at high risk affected by storage lapses, as well as the recognition of contract liabilities related to future storage obligations of affected clients.
To recap, seven of Cordlife’s 22 storage tanks were exposed to temperatures above acceptable limits at different periods since November 2020. The lapses were uncovered by the Ministry of Health (MOH), which suspended the cord-blood bank from collecting or processing new cord blood for six months from November 2023.
The group was subsequently slapped with an additional three-month suspension, which took effect on Jun 15.
Loss per share for the six months was S$0.0482. The group had earnings per share of S$0.0087 in the first half of FY2023.
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The group noted that its Singapore operations had been its largest revenue contributor, adding that it is likely to continue being affected by the ongoing suspension and investigations.
Cordlife said it stepped up its rectification efforts during the period under review, establishing an oversight committee in May, comprising certain directors and management, that will address the group’s current challenges, such as appointing a new audit firm.
It also created a medical and technical advisory board to provide guidance and insights to its medical and technical teams.
Since July, Cordlife has engaged Shandong Qilu Stemcell Engineering Co to guide and assist the Singapore team during the rectification period.
The Shandong-based company is a subsidiary of Cordlife’s substantial shareholder Nanjing Xinjiekou Department Store, and has around one million cord-blood units in its cord-blood bank, said Cordlife.
The group also intends to grow its regional operations – for example, its Philippine unit intends to offer a range of diagnostic tests and routine prenatal screenings. Cordlife’s group chief executive Ivan Yiu said: “We are also exploring new business opportunities in other markets to mitigate the impact of our Singapore operations.”
Accreditation withdrawn
In a separate bourse filing, Cordlife said the Association for the Advancement of Blood & Biotherapies (AABB) has withdrawn Cordlife’s AABB accreditation for cord-blood activities – collection, processing, storage and distribution.
This was after the company provided an update to AABB at the organisation’s request that MOH had issued a notice to Cordlife barring it from collecting, testing and storing new cord blood for three months from June.
AABB sets standards for blood banking, transfusion medicine, blood management and cellular therapies.
AABB has notified Cordlife that the association can accredit it only after MOH permits the company to resume its business, that it has fully resolved all quality issues, and has several months of records available for on-site inspection.
AABB’s notice to Cordlife stated that the current continued closure of the company’s cord-blood banking services “makes it impossible for AABB to identify non-conforming products, processes and events, as well as successful implementation of corrective measures supporting the AABB accreditation standards”.
AABB said Cordlife can seek accreditation once MOH reinstates the group’s operations, and will undergo the same accreditation process with a self-assessment, followed by an on-site evaluation of the efficacy of the company’s quality management system.
Upon the receipt of approval from MOH to resume operations, Cordlife will evaluate the feasibility of seeking AABB accreditation at a suitable time, said the group.
Use of private placement proceeds
In a third bourse filing, Cordlife said it intends to reallocate the remaining funds it has from a private placement proposed in 2013 of 26.8 million shares at an issue price of S$1.25 per share.
At the time, the placement raised gross proceeds of S$33.5 million.
Cordlife said about S$23.5 million of the funds had initially been intended to support the group’s operations in connection with its geographical footprint, and fund additional strategic investments or opportunities deemed appropriate by its board. Around S$9.4 million was used for working capital purposes.
As at Aug 14, the company has used around S$27.2 million of the proceeds and has S$6.3 million remaining.
The company has since reviewed its cash flow requirements for the refund and waiver of fees for cord blood in the high-risk tanks, the rectification efforts taken in relation to the suspensions and brand-rebuilding efforts, and the board determined that it was “in the best interest of the company” to reallocate the remaining funds to be used for these purposes.
Cordlife also announced in a fourth filing that the claim lodged in February against the company in the Small Claims Tribunal has been withdrawn by the claimant.
Shares of Cordlife fell 2.7 per cent or S$0.004 to end at S$0.143 on Thursday, before the filings.
