Adicon Holdings Limited (9860.HK): Continuous growth in Core Operations, Consistent Profitability Enhancement

HANGZHOU, China, Sept. 1, 2023 /PRNewswire/ — Adicon Holdings Limited (the “Company” or “Adicon”), one of the largest independent clinical laboratory (ICL) service providers listed on the Stock Exchange of Hong Kong (SEHK), has released its interim results for the first half of 2023. As a leading player in delivering ICL services in China, the Company has maintained a robust performance, marked by a significant improvement in profitability.

For the six months ended June 30, 2023, the Company’s core business experienced substantial growth, resulting in total operating revenue of RMB1.644 billion. Its traditional base testing business rebounded with a 33% year-on-year increase in revenue, while its esoteric testing business witnessed 48% growth.

Throughout the first half of 2023, the Company remained dedicated to cost reduction and efficiency enhancement, as evidenced by a 20.7% decrease in sales and marketing expenses compared to the previous year.

The Company continued its efforts to optimize profitability. During the reporting period, Adicon achieved a gross profit margin of 43.6%, an increase of 3.2 percentage points over the prior year. Adjusted EBITDA stood at RMB332 million, with adjusted net profit reaching RMB183 million, translating to a net profit margin of 11%.

Adicon saw its operating cash flow remarkably improve during the six months, due to higher cash conversion and capital turnover. Notably, inventory, receivables and payables turnover days all witnessed substantial declines, resulting in heightened efficiency in capital utilization. As of June 30, cash and cash equivalents had reached RMB1.644 billion, reflecting a substantial year-on-year surge of 69.4%.

Behind the financial metrics, Adicon showcased a resilience reminiscent of the adage ‘the strong get stronger,’ enabling it to execute multi-faceted strategies that yield substantial results..

Adicon boasts an expansive user base and a growing service footprint. As one of China’s top three ICL service providers, the Company has built an integrated national network of 33 independent ICLs. By the close of June 2023, Adicon’s coverage extended across 30 provinces and cities within China, encompassing more than 1600 counties and cities serving 19,000 entities, including medical institutions, health clinics, biopharmaceutical firms, and CROs. The company registered a 14% increase in engagement with secondary and tertiary hospitals in H1 2023, amplifying its service coverage and quality.

Through substantial product expansion, Adicon has adeptly responded to the burgeoning demand and is effectively addressing the extensive need for comprehensive medical testing. The portfolio of available tests has surged from 1,800 options in 2018 to over 4,000 in the first half of 2023, of which, 457 were added in the reporting period alone. Among the offerings, more than 1,700 routine tests cater to the broad testing requirements of a significant patient base. In addition, Adicon has remained committed to introducing novel testing technologies, with esoteric testing services driving a second wave of growth. Over the past three years, the Company has achieved noteworthy sales growth through new esoteric testing products and amplification of existing market prospects. In H1 2023, the Company’s esoteric testing segment showed impressive growth, with products spanning infections, tumors, maternal and pediatric conditions, and blood disorders, experiencing year-on-year rise of 67.3%, 56.6%, 46% and 42.7% respectively.

Looking ahead, Adicon remains poised to advance precision testing, ardently embracing digital transformation. The company’s strategic vision extends to the realm of clinical research, positioning itself as the pivotal ICL hub for global clinical trials undertaken by both international and domestic biopharmaceutical entities and CROs..