Customer refunds, business suspension send Cordlife $11.6m into the red in Q1

SINGAPORE - Beleaguered private cord blood bank Cordlife Group reported a net loss of $11.6 million for the three months ended March 31, reversing a net profit of $1.2 million in the corresponding quarter the year before.

The group announced in a bourse filing on June 11 that its revenue was recorded as minus $240,000 in the first quarter of 2024. In the first quarter of 2023, it was $14.1 million in the black.

The reversal in revenue was attributed to the financial impact of Cordlife handing out refunds to its customers whose stored cord blood samples were compromised as a result of not having been stored at the correct freezing temperature.

The group noted that the refunds and waivers of subsequent fees it offered on April 8 to active clients with stored cord blood units led to a revenue reversal of about $9.7 million, which included the recognition of $500,000 in contract liabilities related to future storage obligations for its affected clients.

Excluding the financial impact of the refund, the group’s revenue for the first quarter of 2024 would have been approximately $9.4 million, a 33 per cent decline from the year-ago figure. The group, ordered by the Ministry of Health (MOH) to suspend operations in November 2023, also lost what would have been business from new customers as a result of the suspension.

It also noted that what happened in Singapore affected the fortunes of its operations elsewhere: The number of samples stored in the first quarter of 2024 fell by about a third in Indonesia, India and Malaysia compared with the year-ago period.

The group said its net cash position remains healthy at $78.8 million, though down slightly from $82.5 million as at the end of the fourth quarter of 2023. It attributed this reduction to ongoing refunds to affected clients, rectification efforts and its fixed operational expenses in Singapore.

MOH has extended the suspension of Cordlife’s operations by another three months, starting on June 15, following inspections in April and May that found that the cord blood bank had not completed the validation of the system for cord blood processing.

The ministry said in May that Cordlife had also not completed developing the relevant operating procedures and practices for the system, or the training of the staff using it.

Cordlife noted that the extended suspension is expected to continue hurting its financial performance, and that although its overseas subsidiaries have not been directly hit, the negative publicity from the saga has affected public sentiment of its business.

Cordlife Group chief executive officer Ivan Yiu said: “While the suspension of our Singapore operations has impacted financial performance since December 2023, Cordlife has responded by enhancing processes, boosting staff expertise and strengthening its monitoring capabilities.”

“We will continue to update the relevant authorities and fulfil all requirements, so as to resume operations as soon as possible. With a stronger foundation, we look forward to a recovery of Cordlife’s business soon,” he added.

Shares of Cordlife closed on June 11 at 14 cents, down 0.7 cent or 4.8 per cent, before the announcement.

THE BUSINESS TIMES