Revenue for the period falls 4% to S$91.5 million

 

MAINBOARD-LISTED Q& M Dental Group&rsquo s : QC7 -1.72% net profit for the second half ended Dec 31, 2024, fell 22 per cent to S$4.8 million, from S$6.2 million in the corresponding year-ago period.

 

This was mainly due to lower revenue from its Singapore dental clinics, as well as the cessation of its medical laboratory in September 2024 due to the expiry of its clinical laboratory service licence.

 

Earnings per share for the half-year period came in at S$0.0051, compared to S$0.0065 previously.

 

Revenue for the half-year period fell 4 per cent to S$91.5 million, from S$95.6 million a year earlier. This was on the back of revenue declines for both its core and other business segments.

 

Revenue for its core dental business declined 2 per cent to S$89.1 million, from S$91.3 million previously, as revenue gains from its Malaysia dental clinics could not fully offset declines from its Singapore business.

 

Meanwhile, revenue for its other businesses tumbled 46 per cent to S$2.3 million, due to the suspension of its medical laboratory.

 

Its board proposed a second interim dividend of S$0.007 per share to be paid out on Mar 26, after books closure on Mar 12.

 

For the full-year, Q& M&rsquo s net profit was up 27 per cent at S$14.6 million, from S$11.5 million in the previous corresponding period.

 

In the bourse filing, the dental group said there are &ldquo no known significant changes in trends and competitive conditions&rdquo of the dental industry, and no other major known factors or events that may adversely affect it for the next financial year.

 

In January, EM2AI, an associated company of the group, received licenses in Thailand, Vietnam, Indonesia and the Philippines for its dential artificial intelligence solutions.

 

The group understands that EM2AI is &ldquo actively seeking distributors and potential customers in these jusrisdictions as part of its efforts to expand the business&rdquo .

 

EM2AI also entered into a memorandum of understanding on Jan 20 with an unnamed &ldquo established provider of dental solutions&rdquo in the region, serving about 1,000 dental clinics.

 

&ldquo This collaboration is part of the board&rsquo s plan for EM2AI to expand its business network in the region and represents a strategic step towards expanding (its) footprint in key regional markets.&rdquo

 

In Singapore, Q& M operates 106 dental clinics, 5 medical outlets, a dental college and a dental equipment and supplies distribution company.

 

In Malaysia, the company has 38 dental clinics and a dental equipment and supplies distribution business.

 

For FY2024, Singapore and Malaysia made up about 93 and 7 per cent of total revenue, respectively.

 

 

Q& M Dental Group (Singapore) has called for an EGM of its associate company, Aoxin Q& M Dental Group, to remove executive director Dr Ong Siew Hwa.

 

The former holds a 32.78% stake in the latter.

 

As indicated in its requisition letter of Feb 17, Acumen Diagnostics, under Aoxin and managed by Dr Ong, is no longer in operations as its clinical laboratory licence has expired.

 

" It is suggested that there is no longer any requirement for Dr Ong to manage the business of Acumen" and " no commercial benefit" for her to remain as a director.

 

Q& M further adds that Dr Ong has not resigned from her position as a director of Aoxin despite being " obliged" to do so under a service agreement between her and Aoxin.

 

EM2AI, a 49% associated company of Mainboard-listed Q& M Dental, has entered a memorandum of understanding (MOU) with a dental solutions provider to use its dental artificial intelligence (AI) solutions across 1,000 dental clinics in the region. 

 

This follows EM2AI&rsquo s announcement on Jan 13, about securing medical device licences in four Asean markets &mdash Thailand, Vietnam, Indonesia and the Philippines. 

 

EM2AI currently sells and distributes its AI solutions in Singapore and Malaysia. Founded in 2018 and headquartered in Singapore, EM2AI has developed healthcare software for the dental industry, which it claims can serve as a &ldquo second opinion to increase diagnosis accuracy&rdquo . 

 

Some of EM2AI&rsquo s AI solutions include an AI-powered patient centric cloud solution, and an AI x-ray dental condition detection and automated dental charting system. 

 

Q& M Dental disposed of 51% interest in EM2AI in March 2024, resulting in a decrease in equity interest from 100% to 49%. 

 

The group says that the parties will negotiate and agree upon the terms of separate written binding agreements, and the MOU will remain in effect for six months until the definitive agreement is signed. 

 

Upon the agreement materialising, EM2AI will provide its dental AI solutions to over 1,000 clinics across Singapore, Malaysia, Thailand and Vietnam. 

It has &ldquo no immediate plans&rdquo to reapply for its laboratory licence after it expired on Sep 15 this year

 

Q& M Dental : QC7 -1.67% and its Catalist-listed associated company, Aoxin Q& M : 1D4 -6.25%, are suspending Acumen Diagnostics&rsquo laboratory business with &ldquo no immediate plans&rdquo to reapply for its laboratory licence after it expired on Sep 15 this year.

 

Acumen is a 51 per cent subsidiary of Q& M Dental, with the remaining 49 per cent held by Aoxin Q& M.

 

Its business segments comprise the lab business as well as offering Covid-19 vaccinations to the Singapore public under its tender contract with the Ministry of Health (MOH) at its joint testing vaccination centre (JTVC) in Sengkang.

 

On Monday (Oct 28), Q& M said that while the licence is necessary for the operations of Acumen&rsquo s lab business, its business volume has been &ldquo small&rdquo since the shift away from polymerase chain reaction testing in Singapore for Covid-19 in late 2022.

 

It further emphasised the lab business&rsquo loss-making position for FY2023 and the first half ended Jun 30, 2024. Income from the Sengkang JTVC had managed to cover the losses incurred by the lab business over this year period, said the group.

 

Q& M also cited potential cost savings from its suspension of the lab business, which it said could be directed to support and develop new businesses related to medical diagnostics, or other future businesses of Acumen.

 

Sengkang JVTC closure

Q& M has further received the directive from MOH to close its Sengkang JTVC from Dec 1, in line with the ministry&rsquo s Oct 25 announcement that it was closing all remaining JTVCs. This would leave Acumen without any contributions from its sole revenue and income stream, noted the group.

 

It nonetheless said Acumen&rsquo s board would continue to actively monitor and tender for new MOH contracts as and when suitable tenders become available. This is in light of Acumen&rsquo s renewed off-site medical licence that will continue to be in force until September 2026, added Q& M.

 

Additionally, the group said Acumen may &ldquo explore the possibility of applying for a new laboratory licence from MOH for the resumption of the clinical testing services in the future&rdquo .

 

Though Q& M Dental noted that Acumen&rsquo s contribution to the group&rsquo s operating profit as at end-June 2024 was &ldquo not material&rdquo , the group expects a non-recurring material adverse financial impact should Acumen&rsquo s businesses are ceased.

 

Aoxin Q& M is also anticipating a material impact on its earnings per share and net tangible assets per share for the current financial year ending Dec 31, 2024, assuming the cessation of Acumen&rsquo s businesses.

 

Both entities said they would consult with each other&rsquo s boards and auditors, if required, along with the Acumen board to evaluate the financial impact &ldquo depending on the future plans&rdquo that the Acumen board has for the company.

 

Acumen chief executive dismissed

Prior to the lab licence&rsquo s expiry, its principal officer required alongside a clinical governance officer was the Acumen&rsquo s chief executive, Dr Ong Siew Hwa.

 

Q& M disclosed that Dr Ong&rsquo s employment as Acumen&rsquo s chief executive was contractually terminated on Oct 26 this year. On Oct 27, Aoxin requested Ong to resign from its board, along with Acumen&rsquo s board and the board of directors of Acumen&rsquo s subsidiary, Acumen Research Laboratories.

 

This comes after the doctor had been placed on a leave of absence in June this year, with Acumen commencing investigations related to Dr Ong&rsquo s acquisition of an indirect interest in the assets of a supplier of Acumen.

 

It was noted that CLA Global TS Risk Advisory, which was appointed to conduct a fact-finding and review exercise to assist in the investigation, had &ldquo not provided any conclusions up to this point regarding Dr Ong&rsquo s involvement in any misconduct under any relevant laws and regulations&rdquo .

 

Considering the recent lab business suspension, the impending cessation of the Sengkang JTVC, Dr Ong&rsquo s termination as well as additional time and costs required to conduct the investigations, Acumen&rsquo s board has decided not to pursue the matter further.

 

&ldquo Nevertheless, Acumen reserves the right to resume the investigations should any new material evidence arise,&rdquo it said. 

Acumen Diagnostics will need to apply for a new licence to continue operating

 

ACUMEN Diagnostics, a subsidiary of Q& M Dental Group : QC7 +1.82%, has temporarily ceased operations at one of its labs after its licence was allowed to lapse.

 

Acumen was notified by the Ministry of Health (MOH) that the clinical laboratory service licence of one of its labs will expire on Sep 15 two days prior.

 

The licence is issued to Dr Ong Siew Hwa, the company&rsquo s chief executive officer, but she was placed on a leave of absence in June to facilitate investigations into her acquisition of an indirect interest in the assets of Acumen&rsquo s supplier, among other things.

 

In her absence, the board appointed Dr Lua Chong Hui Joseph to assume Dr Ong&rsquo s responsibilities.

 

In a bourse filing on Monday (Sep 16) night, Acumen said it had taken steps to change the principal officer of the licensee from Dr Ong to Dr Lua, and to switch the licensee of the laboratory licence to Acumen.

 

But MOH had rejected both applications. It rejected the application to change the principal officer to Dr Lua as the request was not submitted by or on behalf of the licensee, who is Dr Ong.

 

As for the second application, MOH did not allow the change as the conditions for the laboratory licence do not allow for the transfer or assignment of such a licence.

 

MOH told Acumen that it would need to apply for a new laboratory licence to continue providing clinical laboratory services.

 

Acumen&rsquo s board of directors is considering the next steps to be taken. Depending on the future steps taken by the board, it will assess and review the consequential financial impact on the earnings per share and net tangible assets per share of the group for its current financial year ending Dec 31, 2024.

EPS stands at S$0.0104, up from S$0.0056 in the same period a year prior

 

Q& M Dental Group&rsquo s net profit for the first half ended June 2024 rose 84 per cent year on year to S$9.8 million versus S$5.3 million in H1 FY2023.

 

Earnings per share (EPS) stood at S$0.0104, up from S$0.0056 in the same period a year prior.

 

Its board has proposed a S$0.004 per share interim dividend to be paid out on Sep 2. It represents a 150 per cent increase over S$0.0016 in the prior year, and translates to a payout ratio of 39 per cent.

 

On Monday (Aug 12), Q& M Dental attributed its H1 net profit growth to higher revenue and net other gains. This mainly comprised a gain on disposal of a subsidiary, as well as compensation from ex-vendors for a settlement and termination deed.

 

Revenue for the first half grew 2 per cent to S$88.8 million from S$87.1 million, driven mostly by higher contributions from the group&rsquo s Singapore dental clinics.

 

It helped to partially offset lower revenue from the group&rsquo s medical laboratory business and dental distribution business, as well as lower profit guarantee income. 

 

Q& M Dental noted that its gearing for H1 FY2024 stood at a lower 0.71 times as at Jun 30, 2024, versus 0.78 times as at end-2023.

 

The lower gearing further strengthens Q& M Dental&rsquo s financial position, said group chief executive Ng Chin Siau.

 

&ldquo While this has been a solid performance so far for this H1 FY2024, we remain focused on and committed to solidifying the fundamentals of the group,&rdquo said Dr Ng.

 

&ldquo We will expand our network, embrace innovative technologies such as artificial intelligence, and enhance operational efficiencies to drive future success.&rdquo