Topic: Youxun Medical Hong Kong Stock IPO: insolvent listing or bankruptcy choose one of the two
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Product: research Institute of Sina Finance listed Company
Author: Tianli
Recently, Youxun Medical Biotechnology (hereinafter referred to as "Youxun Medicine") submitted to the Hong Kong Stock Exchange for listing on the main board of Hong Kong, with China International Capital Corporation as the exclusive sponsor. According to the prospectus, Youxun Medicine is mainly engaged in the development and sale of clinical molecular testing instruments, products and services, including prenatal testing, precision oncology and pathogen detection.
Specifically, prenatal testing, according to Frost SullivanWorldpokeronlineThe upgraded version of Youxinan non-invasive Prenatal testing ('NIPT Plus') service independently developed by Youxun Medicine can detect 164kinds of fetal chromosome abnormalities using maternal blood, which is the most comprehensive NIPT screening service in China. In precision oncology, Youxun Medicine has successfully launched a series of LDT services, including endometrial cancer screening service, hereditary tumor susceptibility gene detection service, liquid biopsy circulating tumor DNA ('ctDNA') polygene mutation detection service, etc. In terms of pathogen detection, the detection kit used in the lower respiratory tract multiple nucleic acid detection is in the late stage of development.
In addition to products and services for various business sectors, Youxun Medical is one of the few companies approved by the State Drug Administration to own its own brand DNA sequencer. Since its establishment in 2015, Youxun Medicine has been blessed by CITIC Guoan, Huada Gene, Qiyun, Shandong Hongqiao Capital, Zhongguancun Science City and other well-known institutions.
However, after combing and analyzing the prospectus, it is found that there are still many hidden worries in the company. First of all, novel coronavirus testing business will still be a drag on the company's performance, and there are many doubts behind the explosive growth of LDT business. Second, the company is now insolvent and seriously short of cash, and is facing the situation of listing bankruptcy and choosing one of the two. In addition, the company's ability to create cash is worrying, the operating cash flow is negative for two consecutive years, and the accounts receivable face the risk of recovery.
Novel coronavirus's testing business will still be a drag on performance and the explosive growth of LDT business is doubtful.
According to the prospectus, Youxun Medical achieved revenue in 2021, 2022 and 2023, respectively.Worldpokeronline.66 billion yuan, 571 million yuan, 468 million yuan. Among them, the pathogen detection business involving novel coronavirus detection generated 571 million yuan in 2022, accounting for 70.9% of the current income.
With the change of epidemic prevention situation, Youxun Medical's income from COVID-19 testing has been greatly reduced by 351 million yuan to 83 million yuan in 2023, and it is not expected to generate any revenue from COVID-19 testing in 2024. This also means that the company's performance in 2024 will still be dragged down by novel coronavirus's testing business.
But at the same time, the business income of precision oncology of Youxun Medical has increased significantly from 20.72 million yuan in 2022 to 213 million yuan in 2023. Under this growth and decline, the company's revenue as a whole did not decline significantly. What needs to be paid attention to is that there are many doubts about the explosive growth of the business income of precision oncology in Youxun Medical Science.
During the track record period, most of the revenue of Youxun Medical came from the provision of LDT services, which were 245 million yuan, 555 million yuan and 286 million yuan respectively during the reporting period. While contributing to the main source of revenue of the company, the dual-track development model of LDT+IVD is also the core logic to evaluate the value of the company.
Different from IVD,LDT (Laboratory Developed Test) mode, it usually refers to the detection methods developed, verified and used by medical laboratory departments. The core problem is to solve the rigid clinical needs, but it is difficult to obtain samples, verification and so on, so it is impossible to obtain licensed IVD products in a short time. Since the LDT model entered the Chinese market, the lack of systematic policy regulation has buried unstable factors for its security and practicability, and the expansion of the market scale is also relatively slow.
Combined with the business income of Youxun Medical Division, the revenue of the company's prenatal testing-related clinical testing business remained basically stable in the past three years. The revenue of pathogen-related clinical testing business shrank due to the shrinking demand for COVID-19 testing in 2023, while the revenue of precision oncology-related clinical testing business increased from 25.737 million yuan in 2021 to 103 million yuan in 2022. It has become the second largest source of revenue for the company's LDT services.
From a horizontal point of view, the market performance of other competitors in the industry is poor, which is in sharp contrast to the blowout growth of Youxun Medicine. For example, Runda Medical said in its institutional research records, "in terms of LDT, the company has business cooperation with a number of large third-class hospitals in Beijing, Guangzhou, Shanghai and other cities. Although the policy environment affected the volume of business last year, the company is still optimistic about this new business direction. " In 2021 and 2022, the revenue of stone-burning medicine, the leading enterprise in the LDT circuit, which accounted for about 65% of the testing revenue of the central laboratory, also showed its first negative growth in five years, indicating that the market environment has not changed significantly.
LDT services related to precision oncology in Youxun Medicine have been commercialized for many years. For example, the Gongmei'an endometrial cancer screening kit was introduced by Youxun Medicine in March 2021; the accurate tumor concomitant diagnosis product Youyi launched hereditary tumor susceptibility gene testing service in September 2015; the accurate tumor concomitant diagnosis product Youte launched LDT testing service for colorectal cancer and lung cancer in November 2015, and LDT testing service for breast cancer and pan-cancer in February and March 2016. Precision tumor concomitant diagnosis product "Youxu" launched LDT testing service for colorectal cancer in December 2015 and LDT testing service for pan-cancer in April 2016.
In terms of gross profit margin, the gross profit margin of precision oncology-related clinical testing increased significantly from 66.7% in 2021 and 65.2% in 2022 to 87% in 2023. There is no systematic change in the market, and related products and services have been operating in the market for many years. Why is it that there has been an explosive growth of both volume and price in 2023 despite the mediocre performance in the past? It's quite puzzling.
Insolvent, listed, bankrupt, choose one of the two? Cash shortage accounts receivable turnover hit a new low
From 2021 to 2023, the net losses of Youxun Medical were 27.2 million yuan, 252 million yuan and 164 million yuan respectively. The net loss incurred during the track record period was mainly due to changes in the fair value of convertible redeemable preferred shares.
According to the prospectus, the amount of "convertible redeemable preferred shares" under the current liability account of the company amounts to 992 million yuan. According to the agreement between Youxun Medicine and various investors, if it fails to complete the listing by the end of this year, all such convertible redeemable preferred shares shall be redeemed at a total redemption price of the total consideration for issuing these convertible redeemable preferred shares plus their associated accrued interest. As of February 29, 2024, Youxun Medical had only 66.6 million yuan in cash and cash equivalents, or had to face the situation of going public or going bankrupt.
At present, Youxun Medical has been seriously insolvent, with net assets of 184 million yuan,-336 million yuan and-491 million yuan respectively from 2021 to 2023. The current net assets are 189 million yuan,-647 million yuan and-804 million yuan respectively.
It is worth mentioning that the company's current assets are mainly accounts receivable. During the reporting period, it was 83.6 million yuan, 286 million yuan and 329 million yuan respectively, accounting for 30.67%, 65.48% and 79.98% of the total current assets. At the same time, the turnover rate of accounts receivable continues to decline, with the number of turnover days increasing significantly from 102 days in 2021 and 122 days in 2022 to 250 days in 2023. From the perspective of age structure, the proportion of accounts receivable with more than one year in 2023 has increased significantly, and the amount of impairment of accounts receivable has doubled year after year since 2021, and the repayment may be at risk.
If we only look at the current ability to create cash, the situation is also not optimistic. The net cash flow generated by the company's operating activities has been negative for two consecutive years, and the current ratio and quick ratio have dropped to 0.3 from about 3.2 in 2021, facing greater debt repayment pressure.
In addition, in 2022, Youxun Medical acquired Hangzhou Shenyi to form a large goodwill. As of December 31, 2021, 2022 and 2023, the company's goodwill was 2.9 million yuan, 166 million yuan and 166 million yuan respectively, accounting for 0.9%, 21.2% and 21.7% of the total assets in the same period, respectively. The proportion of goodwill in assets is abnormally high, which further aggravates the company's future performance risk.