Customer refunds and business suspensions cause Cordlife to lose $11.6 million in the first quarter

SINGAPORE – Troubled private cord blood bank Cordlife Group reported a net loss of $11.6 million for the three months ended March 31, wiping out a net profit of $1.2 million in the corresponding quarter a year earlier.

In a stock exchange announcement on June 11, the group announced that its revenue in the first quarter of 2024 was a loss of $240,000. In the first quarter of 2023, the increase was $14.1 million.

The decrease in revenue was due to the financial impact resulting from Cordlife’s refunds to customers whose stored cord blood samples were damaged due to incorrect freezing temperatures.

The Group determined that the refunds and waivers of subsequent fees it offered to active customers with stored cord blood units on April 8 resulted in a revenue decrease of approximately $9.7 million, which included the recognition of $0.5 million in contract liabilities related to future storage obligations for the affected customers.

Without the financial impact of the refund, the group’s revenue in the first quarter of 2024 would have been approximately $9.4 million, a decrease of 33 percent from the previous year. The group, which was ordered by the Ministry of Health (MOH) to cease operations in November 2023, also lost business with new customers as a result of the suspension.

The company also noted that events in Singapore had an impact on the company’s activities elsewhere, with the number of samples stored in Indonesia, India and Malaysia in the first quarter of 2024 falling by about a third compared to the same period last year.

The group said its net cash position remained solid at $78.8 million, albeit slightly below the $82.5 million at the end of the fourth quarter of 2023. It attributed the decline to ongoing refunds to affected customers, corrective efforts and its fixed operating costs in Singapore.

The Ministry of Health has extended the suspension of Cordlife’s operations for another three months from June 15, after inspections in April and May found that the cord blood bank had not completed the validation of its cord blood processing system.

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

Cordlife pointed out that the extended suspension is likely to continue to affect the company’s financial performance. Even though its overseas subsidiaries are not directly affected, the negative publicity surrounding the affair has influenced public opinion about the company.

Ivan Yiu, CEO of Cordlife Group, said: “While the cessation of our operations in Singapore since December 2023 has impacted financial performance, Cordlife has responded by improving processes, increasing the expertise of its employees and strengthening its monitoring capabilities.”

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

Cordlife shares closed at $0.14 on June 11, down $0.007, or 4.8 percent, prior to the announcement. THE BUSINESS TIMES