Vincent Medical Holdings Limited (“Vincent Medical” or together with its subsidiaries, the “Group”, stock code: 1612), announces its annual results for the year ended 31 December 2022 (the “Year”).
Due to the normalized demand for respiratory products, the Group recorded a revenue of HK$629.2 million for the Year, representing a year-on-year (“YoY”) decrease of 19.1% (2021: HK$777.7 million). As a result of the allowance for inventories of HK$34.9 million for the Year and the decrease in sales and production volume of the Group’s respiratory products, gross profit decreased by 36.2% YoY to HK$165.4 million (2021: HK$259.1 million). Loss attributable to owners of the Company for the Year amounted to HK$17.4 million, as compared to a profit of HK$60.7 million in 2021.
However, it is worth mentioning that the Group witnessed a notable rebound in the second half of the Year (2H2022”). Driven by the stabilized respiratory sales, as well as solid demand for imaging disposable products, the Group recorded a revenue of HK$348.5 million in 2H2022, representing 55.4% of revenue for the Year. Gross profit also surged by 249.5% to HK$128.6 million, representing 77.8% of gross profit for the Year.
Respiratory Products: Strengthened engagement with academia and hospitals to drive clinical education and adoption
During the Year, the Group stepped up its efforts in reaching out to academics and medical institutions, with an aim of promoting its self-proprietary products, and accelerating product registrations in overseas markets. One of the successful examples include the poster presentation on the inspiredTM VHB20 humidifier by Dr. François Lellouche at the 35th Annual Congress of The European Society of Intensive Care Medicine, which recognized the VHB20 humidifier’s outstanding performance against other comparable humidifiers. In December 2022, the VHB20 humidifier has also been granted the 510(k) clearance from Food and Drug Administration (“FDA”) of the United States of America (“the U.S.”), which is the first FDA 510(k) cleared electronic device of the inspiredTM brand.
While the FDA approval will boost device and disposables sales, the demand for respiratory device during the Year continued to fall, given the relatively high inventory level across countries. As a result, the respiratory products segment has fallen short of the Group’s earlier forecasts, with revenue decreased by 41.4% to HK$250.8 million, accounting for 39.9% of total revenue. Segment gross margin also decreased from 38.3% to 20.6%, mainly due to the allowance for inventories made during the Year.
Imaging Disposables and Orthopaedic and Rehabilitation Products: Well-balanced business pillars to support sustainable development
The performance of the Group’s imaging disposable products segment remained resilient, and was able to partially offset the fluctuation in the respiratory products segment.
As a trusted partner, the Group supports its customer in the design and manufacturing of various contrast media injectors and disposable components, and is an integral of its growth strategy in the PRC. In 2022, revenue of imaging disposable products segment grew by 11.3% to HK$238.0 million (2021: HK$213.8 million), accounted for 37.8% of total revenue. Benefiting from the growing economies of scale and the improvement in production efficiency, segment gross margin also strengthened from 28.7% to 33.9% during the Year.
As for the orthopaedic and rehabilitation products segment, the Group saw huge growth potential in the domestic Chinese market due to its massive market size and increasing importance of rehabilitation. In 2022, the Group has created concrete plans to strengthen the development of its robotic rehabilitation solutions, wearable Electromyography (EMG) and movement sensors. During the Year, sales of orthopaedic and rehabilitation products segment decreased from HK$79.0 million last year to HK$69.1 million this year, representing a drop of 12.6% YoY and accounted for 11.0% of total revenue. Despite the drop in production volume, gross margin for the segment remained stable at 31.2%, thanks to the improvement in production efficiencies and cost control.
In spite of the short-term challenges, the Group has made great strides with its focused development strategy: a transition from a medical device OEM manufacturer, to a medical and technology solutions company through its in-house R&D and proprietary intellectual property portfolio, while seeking knowledge, network, installed base and disposables’ sales expansion through collaborations.
Mr. Choi Man Shing, Chairman of Vincent Medical, said, “In the near term, the successful registration of VHB 20 humidifier and the Hand of Hope should allow us to greatly increase their penetration in respective markets. Yet, in the longer-term, the Group will continue to deepen its collaboration with industry-leading partners on technology development, aiming to bring next generation products to market alongside new features on its existing product range.”
“At its 25th anniversary, Vincent Medical also took the opportunity to review its operational infrastructure. To allow more room to maneuver future market uncertainties, we see the importance to expand our production capabilities and enhance efficiency. Hence, we are planning to build a modern, purpose-designed production facilities for single-use medical disposables and rehabilitation devices in the Greater Bay Area, with planning and construction expected to commence in 2023. The expanded capability could also open up the possibility of contract development and manufacturing services, which will allow Vincent Medical to establish deeper collaborations with our partners, further strengthening our value proposition in the supply chain.”
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