Cordlife loses accreditation with blood banking body, posts $12.4 million first-half loss

SINGAPORE - Embattled Cordlife Group said on Aug 15 that the international Association for the Advancement of Blood and Biotherapies (AABB) has withdrawn the company’s AABB accreditation for cord blood activities – collection, processing, storage and distribution. 

This was after Cordlife provided an update to AABB at the organisation’s request that Singapore’s Ministry of Health (MOH) had issued a notice to the cord blood bank barring it from collecting, testing and storing new cord blood for three months from June.

AABB sets standards for blood banking, transfusion medicine, blood management and cellular therapies.

AABB has notified Cordlife that the association can accredit it only after MOH permits the company to resume its business, after it has fully resolved all quality issues, and has several months of records available for on-site inspection.

AABB’s notice to Cordlife stated that the current continued closure of the company’s cord blood banking services “makes it impossible for AABB to identify non-conforming products, processes and events, as well as successful implementation of corrective measures supporting the AABB accreditation standards”.

AABB said Cordlife can seek accreditation once MOH reinstates the group’s operations, and it will undergo the same accreditation process with a self-assessment, followed by an on-site evaluation of the efficacy of the company’s quality management system.

On receipt of approval from MOH to resume operations, Cordlife will evaluate the feasibility of seeking AABB accreditation at a suitable time, said the group.

Seven of Cordlife’s 22 storage tanks were exposed to temperatures above acceptable limits

at different periods since November 2020. The lapses were uncovered by MOH, which suspended the cord blood bank from collecting or processing new cord blood for six months from November 2023.

The group was subsequently handed an additional three-month suspension, which took effect on June 15.

Sinks into red

In a separate filing to the Singapore Exchange, the company posted a net loss of $12.4 million for the first half of the year ended June 30, compared with a net profit of $2.2 million in the same period a year ago.

This came as revenue fell 67.5 per cent to $9.2 million from $28.3 million in the previous corresponding period, largely due to the suspension of the group’s Singapore activities.

The decline includes around $9.7 million in costs that arose due to the waiver of subsequent fees for active clients who stored their cord blood units in tanks at high risk of being affected by storage lapses, as well as the recognition of contract liabilities related to future storage obligations of affected clients.

Loss per share for the six months was 4.82 cents. The group had earnings per share of 0.87 cent in the first half of financial year 2023.

The group noted that its Singapore operations had been its largest revenue contributor, adding that it is likely to continue being affected by the

ongoing suspension and investigations.

Cordlife said it stepped up its rectification efforts during the period under review, establishing an oversight committee in May – comprising certain directors and management – that will address the group’s current challenges, such as appointing a new audit firm.

It also created a medical and technical advisory board to provide guidance and insights to its medical and technical teams.

In July, Cordlife engaged Shandong Qilu Stemcell Engineering to guide and assist the Singapore team during the rectification period.

The Shandong-based company is a subsidiary of Cordlife’s substantial shareholder Nanjing Xinjiekou Department Store, and has around one million cord blood units in its cord blood bank, said Cordlife.

The group also intends to grow its regional operations – for example, its Philippine unit intends to offer a range of diagnostic tests and routine prenatal screenings.

Cordlife’s group chief executive Ivan Yiu said: “We are also exploring new business opportunities in other markets to mitigate the impact of our Singapore operations.”

Use of private placement proceeds

In a third bourse filing, Cordlife said it intends to reallocate the remaining funds it has from a private placement proposed in 2013 of 26.8 million shares at an issue price of $1.25 per share.

At the time, the placement raised gross proceeds of $33.5 million.

Cordlife said about $23.5 million of the funds had initially been intended to support the group’s operations in connection with its geographical footprint, and fund additional strategic investments or opportunities deemed appropriate by its board. Around $9.4 million was used for working capital purposes.

As at Aug 14, the company has used around $27.2 million of the proceeds and has $6.3 million remaining.

The company has since reviewed its cash-flow requirements for the refund and waiver of fees for cord blood in the high-risk tanks, rectification efforts taken in relation to the suspensions, and brand-rebuilding efforts.

The board determined that it was in the best interest of the company to reallocate the remaining funds to be used for these purposes.

Cordlife also announced in a fourth filing that a claim lodged in February against the company in the Small Claims Tribunal has been withdrawn by the claimant.

Shares of Cordlife fell 2.7 per cent to end at 14.3 cents on Aug 15, before the filings.

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