GenePlus sees sharp revenue drop and profit turning from positive to negative: weak debt repayment ability, large fluctuations in operating cash flow

$Geneplus Technology (Shaoxing) Co., Limited* (811024.HK)$

In December 2025, GenePlus Technology (Shaoxing) Co., Ltd. (hereinafter referred to as GenePlus) filed for listing on the Hong Kong Stock Exchange, with CCB International and Minsheng Capital acting as joint sponsors.

As one of the leading players in China's precision medicine sector, GenePlus experienced a sharp drop in revenue exceeding 70% following the end of the pandemic in 2023 and has yet to recover to 2022 levels. On the profit side, the company also faces continuous profitability pressure, recording losses multiple times since 2023. Net current liabilities have been rising year by year, reaching 1.775 billion yuan by the end of June 2025. Additionally, the top five suppliers account for over 60% of procurement, with nearly 60% reliance on the largest supplier, raising questions about the stability of the company’s supply chain.

This Hong Kong IPO presents an opportunity for Geneplus to break through its development bottleneck with the raised funds. Whether its performance can justify the value proposition in the precision medicine sector remains a point of interest for external observers.

Sharp decline in revenue, continuous pressure on profitability

According to the prospectus and Tianyancha, Geneplus was founded in 2015 and is one of China’s leading precision medicine companies. By deeply integrating AI capabilities into key aspects of the biomarker value chain, the company has established end-to-end capabilities spanning from multi-omics biomarker discovery, validation, product development, to commercialization.

In simple terms, Geneplus is committed to accelerating the large-scale clinical application of AI-driven multi-omics technologies through an innovative framework that synergizes multi-omics and AI. This aims to better meet growing medical demands. The company primarily serves hospitals, pharmaceutical and biotech firms, and medical research institutions by providing three main solutions: precision diagnostics, drug R&D support, and clinical research and translation.

According to CIC data, the market size for multi-omics solutions grew from 23.3 billion yuan in 2019 to 46.4 billion yuan in 2024, at a compound annual growth rate (CAGR) of 14.8%, and is expected to reach 122.6 billion yuan by 2030, with a CAGR of approximately 17.6% between 2024 and 2030.

CIC data shows that Geneplus has already built one of the earliest large-scale multi-omics baseline databases in the industry. Based on 2024 revenues, the company ranks third in China's precision diagnostics solutions market.

As of the date of the prospectus signing, Geneplus has served over 1,000 hospitals and established partnerships with more than 200 pharmaceutical companies and 500 clinical research institutions. Its product portfolio covers multiple disease areas, including cancer, infectious diseases, organ health, cardiovascular and cerebrovascular diseases, and autoimmune disorders. Its R&D pipeline spans the entire clinical lifecycle, from early screening, diagnosis, disease monitoring, to treatment response prediction.

As a leader in the precision medicine sector, Geneplus’ profitability may still need time to prove itself. During the reporting period of 2022 to the first half of 2025, the company reported revenues of 1.815 billion yuan, 473 million yuan, 557 million yuan, and 285 million yuan, respectively. In 2023, the company's revenue plummeted by 73.95% and has yet to recover to 2022 levels.

On the profit side, Geneplus faced continued pressure, with operating profits during each period recorded as 126 million yuan, -300 million yuan, -144 million yuan, and -45.868 million yuan, respectively. Net profits were 372 million yuan, 54.127 million yuan, -424 million yuan, and -415 million yuan, respectively. In the first half of 2025, the net loss widened by 107% compared to the same period last year.

Regarding the sharp drop in revenue in 2023, Geneplus explained that it was mainly due to the gradual phasing out of nucleic acid testing services following the end of the COVID-19 pandemic, along with a reduction in clinical laboratory testing services. Losses in the first halves of 2024 and 2025 were also primarily attributed to the withdrawal of COVID-19 nucleic acid testing solutions post-pandemic.

Indeed, from the perspective of the business structure, the company primarily relies on precision diagnostics solutions, with revenue contributions reaching 95.6%, 71%, 78.3%, and 77.7% respectively. Revenue from clinical research and translational solutions accounted for 3.4%, 23.6%, 16.7%, and 17.7%, while contributions from drug R&D enabling solutions were only at 1%, 5.4%, 5%, and 4.6%.

Although the revenue share of precision diagnostics solutions has declined in recent years, its gross margin has increased rapidly, standing at 42.8%, 61.3%, 67.6%, and 75.6% respectively. The gross margins for clinical research and translational solutions were 6.4%, 18.6%, 23.4%, and 36.7% respectively.

The overall gross margin for Geneplus during these periods was 41.9%, 51.4%, 60.3%, and 68.5% respectively.

Geneplus explained that the increase in the gross margin of precision diagnostics solutions is mainly due to the significant income contribution from clinical laboratory services, which benefited from economies of scale, leading to year-over-year margin improvements. The rise in gross margin for clinical research and translational solutions is primarily due to research projects conducted in collaboration with hospitals and universities, which yield higher profit margins compared to standard sequencing services.

Suppliers are relatively concentrated, with direct sales accounting for over 80%.

On the other side of rising gross margins, Geneplus's upstream suppliers are relatively concentrated. During each period, purchases from the top five suppliers accounted for 41.5%, 71.5%, 67.4%, and 68.1% of total procurement respectively, with the largest supplier representing 17.1%, 61.0%, 55.2%, and 58.8%. These purchases mainly include instruments, instrument components, reagents, consumables, and maintenance services.

Some professionals in the financial sector believe that if purchases from the top five suppliers exceed 60%, this could limit the company’s bargaining power upstream. If there are fluctuations in the prices of upstream raw materials, it will directly impact the company’s gross margin. Additionally, for companies like Geneplus in the medical device industry, changing raw materials requires redoing performance validation, stability testing, clinical comparisons, and submitting change applications to the National Medical Products Administration, a process that takes considerable time. Concentration among suppliers means that in the event of a need for substitution, the company would be forced into a passive position.

The company admitted that due to the complex proprietary nature of its products, any catastrophic event or business disruption at a supplier facility would make transitioning to a new supplier a lengthy process, potentially causing adverse effects on inventory, operations, business performance, and financial condition.

Additionally, on the sales side, although the company has mainly relied on direct sales, the revenue share from distributors has been increasing year by year. During each period, the proportion of direct sales revenue for Geneplus was 98.5%, 87.3%, 84.9%, and 85.2%, while distributor revenue shares were 1.5%, 12.7%, 15.1%, and 14.8% respectively.

This is reflected in the number of distributors, with Geneplus having 17, 30, 48, and 47 distributors at the end of each reporting period respectively. Moreover, under the direct sales model, the company also employs channel agents to strengthen its sales and marketing teams, and the number of channel agents at the end of each period has increased significantly, reaching 69, 92, 125, and 129 respectively.

Possibly for this reason, the company's distribution and sales expenses have consistently been in the hundreds of millions, with respective amounts of 345 million yuan, 236 million yuan, 273 million yuan, and 144 million yuan. In contrast, R&D expenses during the same periods were only 177 million yuan, 180 million yuan, 117 million yuan, and 62.783 million yuan.

Within the distribution and sales expenses, sales commissions accounted for 40.9%, 35.8%, 54.9%, and 59.1% respectively, corresponding to amounts of 141 million yuan, 84.53 million yuan, 150 million yuan, and 85.315 million yuan.

The company stated that the decrease in sales commissions in 2023 was mainly due to the gradual phasing out of COVID-19 nucleic acid testing services, leading to a reduction in service fees related to this business.

However, based on the data, even as sales commissions rebounded in 2024, the company's performance did not return to the levels seen before the cancellation of nucleic acid services in 2022.

Additionally, following the elimination of nucleic acid testing services in 2023, there was a sharp decline in customer concentration, with revenue from the top five customers dropping from 32.1% at the end of 2022 to around 10% by the end of 2024, with respective figures of 32.1%, 10.4%, 9.4%, and 6.9%.

Capacity utilization increased while operating cash flow experienced significant fluctuations.

While upstream supplier concentration rose, Geneplus’s trade payables also increased significantly, amounting to 88.664 million yuan, 43.71 million yuan, 84.846 million yuan, and 136 million yuan respectively. The turnover days for trade payables increased from 28 days in 2022 to 222 days by the end of June 2025, with respective figures of 28 days, 105 days, 106 days, and 222 days.

The company explained that the increase in trade payable turnover days was primarily due to bulk purchases and enhanced bargaining power, with suppliers offering longer credit periods.

It is also worth noting that Geneplus’s inventory turnover days increased significantly, reaching 23 days, 96 days, 91 days, and 136 days respectively, with inventory values of 72.104 million yuan, 49.107 million yuan, 60.643 million yuan, and 74.541 million yuan. According to the prospectus, the rise in inventory turnover days was mainly due to the cancellation of nucleic acid testing services and an increase in IDV equipment inventory.

At the same time, the company’s trade receivables amounted to 623 million yuan, 233 million yuan, 196 million yuan, and 214 million yuan respectively, with trade receivable turnover days being 77 days, 330 days, 141 days, and 130 days.

As of the end of October 2025, approximately 33.3% of Geneplus's trade receivables have been settled.

The slowdown in inventory turnover and trade receivables reaching hundreds of millions coincides with Geneplus's current liabilities for each period being 2.14 billion yuan, 1.618 billion yuan, 1.945 billion yuan, and 2.298 billion yuan, respectively, while current assets are 1.096 billion yuan, 648 million yuan, 583 million yuan, and 523 million yuan, respectively. For each period, the company’s current ratio is only 0.5, 0.4, 0.3, and 0.2, with a quick ratio of 0.5, 0.4, 0.3, and 0.2.

Reflected in cash flow, Geneplus's operating cash flow for January to June 2025 turned negative again, with figures for each period at -112 million yuan, 85.325 million yuan, 6.325 million yuan, and -34.778 million yuan, respectively.

As of the end of June 2025, the company's cash and cash equivalents fell by 46.93% year-on-year to 96.006 million yuan. Figures from 2022 to 2024 were 292 million yuan, 249 million yuan, and 264 million yuan, respectively.

The proceeds from this IPO will be mainly used for: (1) enhancing R&D capabilities and expanding the product portfolio over the next five years; (2) marketing and commercialization capabilities over the next five years, such as supporting sales channel expansion, promotional activities, and strengthening and diversifying business models; (3) upgrading production lines and expanding capacity to further enhance the automation level of central laboratories and increase capacity; (4) working capital and general corporate purposes.

It is worth mentioning that despite mediocre performance, the company's capacity utilization rate has risen significantly. The capacity utilization rate for reagent kits surged from 40% in 2022 to 94% in 2024, with figures for each period at 40%, 72.9%, 94%, and 93.6%, respectively. The capacity utilization rate for instruments increased sharply from 57.9% in 2022 to 90.6% in 2023, with figures for each period at 57.9%, 90.6%, 92.5%, and 91.0%, respectively.

As of the signing date of the prospectus, Geneplus has completed seven rounds of financing, with investors including Jianxin Financial Investment, BGI Group, and CCB International Industrial Investment. The last round, Series D financing, was completed in November 2025, with a post-investment valuation of 4.3 billion yuan.

In terms of equity structure, Geneplus's controlling shareholders are Tibet Geneplus and Tibet Limited Partnership (China), collectively holding 36% of the company's shares. Among them, Tibet Geneplus is held by Dr. Yi Xin and Dr. Yang Ling with stakes of 40% and 30%, respectively, while Xiong Li, Tian Chao, and Xia Xuefeng each hold 10%. Tibet Limited Partnership (China), which serves as the company's employee incentive platform, is managed by Tibet Geneplus as the general partner.

In terms of company management, Yi Xin serves as chairman and CEO, responsible for overall strategic planning and daily operational decisions, while Yang Ling serves as vice-chairman, and Xiong Li serves as executive director, senior vice president, and board secretary.

In 2016, Yi Xin, Yang Ling, Xiong Li, Tian Chao, and Xia Xuefeng signed a voting agreement to confirm that they would act in concert when exercising their shareholder rights at the Tibet Geneplus level.

According to Tianyancha, Beijing Jiyingjia Technology Co., Ltd., one of the domestic operating entities of Jiyingjia, became an enforcement target in July 2020 due to labor and personnel disputes, with an enforced amount of 158,600 yuan. (Reported by Harbor Finance)

Harbor Business Observer, Chen Qian

1273 Views