Singapore’s flagship bio-technology company Biosensors (SGX: B20) announced its full year results yesterday evening. The company posted a 15% year-on-year growth in annual revenue from US$292.1m to US$336.2m. Profits however, were down by almost 70% from US$364.3m to US$115.4m. On the surface this seems scary. But sometimes, we have to look beyond the surface, just like how we have to look beneath our skin for a true picture of our health. Biosensor’s profit for the previous financial year was bolstered mainly by a one-off gain of US$279.6m due to a re-measurement of the value of an acquired company, JWMS….
Singapore’s flagship bio-technology company Biosensors (SGX: B20) announced its full year results yesterday evening. The company posted a 15% year-on-year growth in annual revenue from US$292.1m to US$336.2m. Profits however, were down by almost 70% from US$364.3m to US$115.4m.
On the surface this seems scary. But sometimes, we have to look beyond the surface, just like how we have to look beneath our skin for a true picture of our health.
Biosensor’s profit for the previous financial year was bolstered mainly by a one-off gain of US$279.6m due to a re-measurement of the value of an acquired company, JWMS. If that exceptional item, along with other much smaller one-off gains and losses, were stripped away from both years’ financial statements, we’ll see a 10.5% increase in profit from US$101m to US$111.6m. But, due to an increase in share count, the profit that each share’s entitled to shrunk by 3.1% from 6.69 US cents to 6.48 US cents.
Now that we know the reason for the company’s seemingly scary plunge in earnings, let’s move on to how its business fared.
Biosensor’s main products are different types of drug-eluting stents (DES), a medical device that’s used to unclog blocked arteries. As a group (known as the Interventional Cardiology segment), they accounted for 79% of revenue for the company’s last completed financial year. The company managed to sell more DES’s, which resulted in top-line growth from the Interventional Cardiology segment of 34.6% from US$196.7m to US$264.9m.
The rest of the revenue streams include Licensing and Critical Care, which make up 17% and 4% of the company’s sales for the recently completed financial year respectively. Licensing revenue did not fare well, as it slipped by 28.6% to US$57.7m on the back of poorer licensed-DES sales in Japan. Critical Care’s contribution to the company’s top-line decreased a little as revenue from the segment fell by 6.7% to US$13.6m.
Some notable developments for the company during the course of the financial year include obtaining the CE Mark approvals for two newer products: the polymer-free drug coated stent, BioFreedomTM, and the newest addition to the DES-family, the BioMatrix NeoFlexTM. Biosensors also recently completed an acquisition of a medical imaging company called Spectrum Dynamics in a bid to diversify its product away from a heavy emphasis on DES’s.
For the on-going financial year, the company is projecting a 15% growth rate in revenue as it looks to capitalise on its new products like the BioMatrix NeoFlexTM.
Biosensors’ Chief Executive Officer, Dr. Jack Wang added, “Looking ahead, our objective remains to further develop our DES business while seeking new growth opportunities. We are also excited about our CE Mark approval for BioMatrix NeoFlex. This represents another important step forward for the BioMatrix brand, improving our flagship product with enhanced deliverability.
In the area of M&A, our recently-completed acquisition of Spectrum Dynamics’ assets demonstrates our conviction to prudently expand our product offerings. With the completion, we will now focus on integrating Spectrum Dynamics’ assets with Biosensors’ existing businesses and actively expanding its business potential. We are also continuing to make good progress in our discussions with several other potential M&A targets. All in all, we are excited about the developments taking place in Biosensors which we believe will substantially increase shareholder value.”
The company has also recommended its first ever dividend to shareholders amounting to US$0.02 per share (approximately S$0.025), subject to shareholder’s approval. At Biosensor’s current share price of S$1.16, that would represent a dividend yield of 2.2% along with a Price-Earnings ratio of around 14.3.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chong Ser Jing doesn’t own shares in any companies mentioned.