LifeTech Scientific (1302.HK) Announced 2019 Annual Results

30th March, 2020, the leading company specialized in minimally invasive interventional medical devices for cardio-cerebrovascular diseases —LifeTech Scientific Corporation (the “Company”) and its subsidiaries (the “Group”) announced the audited consolidated results for the year ended 31 December 2019 (the “Reporting Period”)


Strong Financial Performance,

Revenue for Key Business Segments Increased Constantly


In 2019, the Group achieved steady growth, the revenue increased 20.2% to RMB668.9 million. China is still our largest market, and the sales generated from the Chinese market accounted for approximately 75.3% of the Group’s revenue, with an increase of 17.8% comparing to the Year of 2018. Driven by the Group’s leading position in innovation and IP protection, the Group's business had covered over 100 countries and regions. By actively expanding global sales network and building direct academic support team in certain major markets in overseas, in the Year of 2019, the revenue contribution from overseas markets accounted for 24.7% of the Group’s revenue, representing an increase of 1.6p.p, and recorded 28.1% of sales increment comparing to the last year.

 

The Group’s three core business segments achieved steady growth in the Reporting Period:


Ø  Structural Heart Diseases Business: During the Reporting Period, the advantage of the market layout of three generations of Congenital Heart Disease (“CHD) occluders had been further approved. In addition, the success of market expansion for LAmbreTM, the first domestic Left Atrial Appendage (“LAA) Closure System, had emerged gradually, supported the satisfied growth of Structural Heart Disease Business. In the Year of 2019, the revenue generated from Structural Heart Disease Business up 31.7% to RMB274.4 million, in which, the sales of HeartRTM CHD occluders increased by about 9.1%, Cera® CHD occluders increased by about 46.2% and CeraFlexTM CHD occluders increased by about 29.7%. Moreover, the sales of LAmbreTM LAA occluder recorded approximately RMB64.1 million, representing a growth of about 54.1% comparing to the last year.

Ø  Peripheral Vascular Diseases Business: The major products of the Group’s Peripheral Vascular Diseases Business maintained the leading position in the Chinese market. During the Reporting Period, the business segment achieved stable growth on a high base figure, representing a growth of approximately 8.6% to about RMB372.5 million.



Ø  Cardiac Pacing and Electrophysiology Business: The sales of the business segment significantly increased by 300.0% to RMB22.0 million. The Group will constantly support and accelerate the tendering and hospital access process of the product in the Chinese market.

Efficient Expenses Management, Robust Profit Growth


During the Reporting Period, the Group further balanced the revenue growth and the expenses, excluding the impact of shared-based payment expenses, the Group’s selling expenses ratio was stabilized at 21.8%, while the administration expenses ratio and R&D expenses ratio recorded 10.9% and 15.3%, decreased 1.3p.p and 1p.p respectively comparing to the last year. The strong sales performance and well-managed expenses of the Group brought a robust profit growth. During the Reporting Period, the gross profit up 17.5% to RMB534.8million, while the operating profit up 15.0% to RMB188.8 million. Excluding the influence of the withholding tax on inter-company dividends and shared-based payment expenses, net profit attributable to owners of the Company recorded about RMB254.6 million, representing an increase of approximately 29.8% comparing to the Year of 2018. While the basic EPS achieved RMB6.1 cent, representing an increase of 35.9% comparing to last year.

 

On 31 December 2019, the Group cancelled the two batches of share options which were granted in 2018. The two batches of share options had been recognized as share-based payment expenses which accumulated to  approximately RMB182 million (one-time non-cash items). The auditor confirmed that the accumulated recognized expenses could be transferred from the subject ‘share option reserve’ to subject ‘accumulated profits’,which reserved an enough room for the Group’s sustainable growth  in the future.


Progress in Research and Development


LifeTech Scientific is committed to in-house R&D over 20 years. During the Reporting Period, the Group continued to improve its innovation capability and speed-up the R&D and the clinical process of its innovative pipeline products, and made the following achievements:


l  8301 External Temporary Pacemaker was approved to be marketed in the U.S. by the FDA

l  LAmbre™ LAA Closure System obtained approval for an investigational device exemption application (IDE) from FDA

l  Absnow™ Absorbable ASD Closure System, FitayaTM Vena Cava Filter System and Yuranos™ Abdominal Aortic Stent Graft System had completed the domestic clinical trial enrollments

l  Lifeflow™ Iliac Artery Bifurcation Stent Graft System had completed clinical summary report, and the clinical data is positive

l  Absnow™ Absorbable ASD Closure System, GoldenFlow™ Peripheral Bare Stent System and 8301 External Temporary Pacemaker have passed the special review application of NMPA and been approved as innovative medical devices successively. As at 31 December 2019, 9 products of the Company have been approved as innovative medical devices by the NMPA.


In addition, as at 31 December 2019, the Group has filed a total of 1,081 patent applications, of which 286 have been granted, and the Company was awarded as "Intellectual Property Advantage Enterprise of the People’s Republic of China" and "Intellectual Property Demonstration Enterprise of Guangdong Province".


(Highly Recognized by the Government and the Capital Market


Future Prospects


Under the challenging macro-environment affected by COVID-19 outbreak, the Group is still confident with the global medical devices market, as the growth of the aging population and improvement of residents’ health awareness will consistently drive the development of the industry.

 

Looking forward, the Group will continue to accelerate the expansion and development of the global market, strengthen the market position of its core businesses. Meanwhile, the Group will be adhered to improve its technology, automation and product quality, and promote its innovation ability, upgrade its existing products portfolio, while speeding-up the R&D and registration process of its innovative pipeline products. Within the coming 5 years, several in-house R&D products are expected to successively launch in the market, which will bring a new growth momentum for the Group’s future development. In addition, the Group will continue to conduct post-market clinical trials of its core products, the safety and effectiveness of its novel products will be further proved via adequate evidence-based medicine data, enhancing the confidence of the market. At the same time, the Group will actively explore promising cooperation and investment opportunity in the global healthcare industry, leveraging the synergy effect with its existing business while expanding business scope. The Group is committed to create better value for doctors, patients, shareholders and all relevant parties in the society.