China-based New Horizon Health Ltd (HKG: 6606), a leading cancer diagnostics developer, has released its audited interim financial report for the period ended June 30, 2023. The company reported revenues of RMB 820 million (USD 112 million), marking a significant increase of 264.6% year-on-year (YOY). This period also saw the company’s first recurring profits over the past 12 months, with gross profits reaching RMB 750 million and a gross profit margin of 90.9%.
Profitability and Expense Management
Net profits for the period were recorded at RMB 61.3 million, a stark contrast to the RMB 106 million net loss in the same period last year. The company has effectively managed its expenses, with the proportion of sales and marketing expenses in total revenue decreasing from 86% in the same period of 2022 to 69.4%. Administrative expenses also saw a decrease, from 23% in the same period of 2022 to 9.3%. R&D expenditure increased from RMB 39.4 million in 2022 to RMB 63.6 million, indicating the company’s commitment to innovation. As of June 30, 2023, the company’s cash and specific financial asset balance stood at RMB 2.05 billion.
Responding to Allegations and Stock Price Impact
An investigative report by Capitalwatch on August 16 alleged financial data fraud, claiming that New Horizon created 90% of false sales revenue through continuous inventory reduction. This led to a 20% drop in the company’s stock price, which closed 6.88% lower. New Horizon promptly issued a clarification notice, refuting the allegations as false, baseless, and misleading, stating that they were aimed at negatively impacting the stock price for the private interests of the short-selling agency. CEO Zhu Yeqing emphasized that the company’s growth is well-known, driven by high-barrier innovation and efficient execution, and that all products are compliant, which is a prerequisite for the company’s business expansion.
Product Sales and Market Performance
ColoClear, the only gastrointestinal cancer screening product in China, generated RMB 490 million in sales in mainland China, up 566.2% YOY and accounting for 60% of the company’s revenue, with sales volume increasing by 354.1% to 42,900 pieces. The sales revenue of the Helicobacter pylori consumer self-testing device, You You Guan, reached RMB 210 million, up 147.4% YOY. The Pu Pu Guan, a home self-test device for occult blood, achieved sales revenue of RMB 120 million, an increase of 80.9% year-on-year.
Gong Zhengqing: A Milestone in Cervical Cancer Screening
Gong Zhengqing, the world’s first HPV screening product for cervical cancer based on urine samples, has completed baseline enrollment of prospective large-scale multicenter regulatory clinical trials, with over 16,000 subjects enrolled. The product was commercially launched in Hong Kong in March, in partnership with EC Healthcare (2138.HK), priced at HKD 1800 per piece.-Fineline Info & Tech
