Every mother wants the best for her child, and this often includes providing the best possible care she can afford. For some children who develop certain diseases, especially blood cancers, this may include engaging specialised medical services such as cord blood banking. This is where a company like Cordlife comes in.
Established in 2001, Cordlife is the first private cord blood bank in Singapore. In fact, its establishment precedes Singapore’s public cord blood bank, Singapore Cord Blood Bank which was established in 2005. Aside from its core focus on cord blood banking, Cordlife has also expanded its range of medical and banking services. As of Mar 2021, Cordlife has received its license to offer OptiQ, a corneal lenticule banking service in Singapore. This makes Cordlife the first company in Asia to allow patients cryopreserve their corneal lenticules for potential future treatment of presbyopia and other ocular conditions.
Currently, Cordlife is the largest operator of the largest private cord blood banks in Singapore, Hong Kong, the Philippines and Indonesia. They are also amongst the top 3 market leaders in India and Malaysia. They also own an indirect stake in Thailand’s largest private cord blood bank, Thai Stemlife, through their majority-owned subsidiary in Malaysia, Stemlife Berhad. Cordlife also maintains a presence in Myanmar, Vietnam, Macau, Brunei and Bangladesh. However, talks to merge with Global Cord Blood Corporation, the largest cord blood bank operator in China, have been discontinued with mutual agreement as of February 2021.
Not just a cord blood bank operator, Cordlife also continues its effort to advance stem cell technology. Announced in May 2021, Cordlife in partnership with SingHealth Duke-NUS Academic Medical Centre would be testing a new umbilical cord blood cell therapy on humans in the first in-man study in Singapore.
With such interesting advancements, here are 5 things to know about Cordlife’s business.
For someone who is new to your company, can you explain (in as little words as possible) what Cordlife does?
Cordlife is a company dedicated to safeguarding the well-being of mother and child. Established in 2001, Cordlife owns Asia’s largest network of cord blood banks with stem cell banking facilities in six key markets, namely Singapore, Hong Kong, Indonesia, India, Malaysia and the Philippines. Beyond cord blood, cord lining and cord tissue banking, Cordlife also offers diagnostic services for the family including non-invasive prenatal testing, paediatric vision screening, newborn metabolic screening and family genetic screening services.
Describe Cordlife’s financial performance over the past few years.
The Group’s total revenue remained relatively stable from 12M2018 to FY2019, mainly contributed by our banking and diagnostics segments. While banking revenue decreased in FY2020 as a result of COVID-19, while diagnostics revenue grew at a CAGR of 69% from S$0.9 million to S$2.7 million between 12M2018 and FY2020, mainly attributable to the increase in prenatal testing services.
Revenue Profit before income tax from operations grew at a CAGR of 49% between 12M2018 and FY2020. It increased 138.1% from 12M2018 to FY2019 partly due to a decrease in operating expenses contributed by improved efficiencies. FY2020’s profit before income tax from operations declined 6.7% as a result of the decrease in revenue and gross profit, offset by lower operating expenses and government grants mainly in Singapore of c.S$2.1 million. Advertising and promotion, travel and transportation expenses decreased during the year due to movement restrictions imposed on physical trade fairs and travelling.
What are some growth drivers for a business like Cordlife?
Although the banking segment remains our main revenue driver, the contribution from the diagnostics segment has increased over the past three years from 1.52% in 12M2018 to 5.27% in FY2020. We believe that the diagnostics segment has significant growth opportunities, as we seek to increase product and service offerings.
We have begun providing diagnostics services like non-invasive prenatal testing (NIPT), paediatric vision screening, newborn metabolic screening, and family genetic screening services. We believe that there is great potential in the market for NIPT. Fortune Business Insights forecasts that NIPT will grow at a CAGR of 17.8% from 2020-2027 to reach US$10.9 billion by 2027 from US$3.0 billion in 2019.
Under the banking segment, penetration rates in countries like Indonesia, India and the Philippines are still relatively low. Therefore, we see huge potential for growth in these countries as healthcare spending by middle and affluent classes is on the rise. With increased utilisation and interest in stem cell therapy, we believe that the demand and value of our accredited banking services will continue to grow
What are some of the risks for the business and how do you manage them?
We noticed the trend of middle to upper class professionals living in the urban areas having fewer babies. Thus, we have increased our service and product portfolio to increase customer lifetime value. In particular, we enhanced our suite of services under the diagnostics segment and increased the product and service bundles offered to our clients.
We have also been affected by economic trends such as the COVID-19 pandemic in early 2020, which brought about a global recessionary impact, tightening business and consumer spending. The implementation of social distancing measures reduced our ability to interact physically with potential clients. Nonetheless, we were able to pivot into conducting webinars and accelerated our implementation of an electronic enrollment platform.
Having a “moat” or a competitive advantage is something many investors look for in companies they invest in. Can you share how Cordlife has a strong business advantage?
Cordlife is the first private cord blood bank in Singapore and amongst the first in Asia to have released cord blood units for transplants and other therapeutic use. As a Group, Cordlife has released stem cell units to 17 healthcare institutions in 10 countries on behalf of our clients. All of the stem cell units were successfully used in transplants or cellular therapy. This is the best validation of Cordlife’s processing and storage capability.
All of our facilities are accredited by AABB (formerly known as American Association of Blood Banks), with several also accredited by other leading standards organisations, such as Foundation for the Accreditation of Cellular Therapy (FACT) and College of American Pathologists (CAP).
Having been in the stem cell banking business for 20 years, we have also accumulated much knowledge and we fully understand the challenges and complications brought on by life-threatening conditions. As such, we believe that we are in a good position to provide holistic and value-adding healthcare solutions to our clients.
Most recently in March 2021, we have further extended our services and cryopreservation expertise to offer the storage of corneal lenticules. Singapore’s Ministry of Health issued a licence permitting Cordlife to launch OptiQ, a corneal lenticule banking service in Singapore. This makes Cordlife the first company in Asia to let patients undergoing certain refractive eye surgery using lenticule extraction method (e.g. SMILE) for myopia or astigmatism, cryopreserve their corneal lenticules for the potential treatment of presbyopia and other ocular conditions in the future.
Cordlife is also financially healthy with a strong balance sheet. As at 31 December 2020, the Group was in a net cash position of S$71.2 million. We believe that this is especially important for a company entrusted with the responsibility of safeguarding the precious samples from our clients over a long period.
Editor’s Note: Some answers for this article were extracted from the SGX 10 in 10 series published on 15 June 2021 and have been republished with permission. You can read more on Cordlife on the SGX website.
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