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HONG KONG, June 19, 2023 - (ACN Newswire) - ADICON Holdings Limited ("ADICON" or "Company", stock code: 9860.HK), the pioneer of independent clinical laboratory ("ICL") and one of the top three ICL service providers in China, today announced the proposed listing of its shares on the Main Board of The Stock Exchange of Hong Kong Limited ("SEHK").
Business Highlights
-- ADICON is one of the top three independent clinical laboratory ("ICL") service providers in China in terms of total revenues during the three years ended December 31, 2020, 2021 and 2022(1), according to Frost & Sullivan. ADICON believes its success is underpinned by its industry-leading operations, strong R&D and quality-control capabilities, as well as an experienced senior and regional management team.
-- ADICON provides comprehensive and best-in-class testing services, primarily to hospitals and health check centers through an integrated network of 33 self-operated laboratories across China.
-- ADICON offers a competitive and comprehensive catalog of over 4,000 medical diagnostic tests, including over 1,700 routine tests and over 2,300 esoteric tests. ADICON's testing volume grew at a compound annual growth rate ("CAGR") of 65.6% from 60.1 million in 2020 to 164.9 million in 2022.
-- As of June 9, 2023(2), ADICON operates a dedicated cold-chain logistics network covering more than 19,000 customers across 30 provinces and municipalities and over 1,600 cities and counties in China.
-- As a market leader in the ICL industry, ADICON is well-positioned to benefit from the growing demand for testing services in China, driven by a series of favorable government policies and industry tailwinds.
-- ADICON plans to use the proceeds to drive future growth by enhancing the breadth and depth of its ICL network; continuing to apply innovative technologies to develop new testing methods; further optimizing its laboratory processes and logistics through automation; and selectively pursuing strategic investments and alliances, and other emerging growth opportunities.
Highlights of the Global Offering
-- ADICON plans to offer an aggregate of 33,192,500 Offer Shares under the Global Offering (subject to the Over-allotment Option), consisting of 29,872,500 International Offer Shares (subject to reallocation and the Over-allotment Option) and 3,320,000 Hong Kong Offer Shares (subject to reallocation), at a price of HK$12.32 per share.
-- ADICON will start its public offering in Hong Kong at 9:00 a.m. on Monday, 19 June 2023, and end at 12:00 noon on Friday, 23 June 2023. Dealings in shares on the Main Board of The Stock Exchange of Hong Kong Limited ("SEHK") are expected to commence on Friday, 30 June 2023, with the stock code of 9860.HK, in board lots of 500 shares each.
-- Morgan Stanley Asia Limited and Jefferies Hong Kong Limited are the Joint Sponsors, Overall Coordinators, Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers.
ADICON intends to offer an aggregate of 33,192,500 Offer Shares under the Global Offering (subject to the Over-allotment Option), consisting of 29,872,500 International Offer Shares (subject to reallocation and the Over-allotment Option) and 3,320,000 Hong Kong Offer Shares (subject to reallocation), at a price of HK$12.32 per share. The net proceeds from the Global Offering will amount to HK$480.9 million.
The Hong Kong Public Offering will begin at 9:00 a.m. on Monday, 19 June 2023, and end at 12:00 noon on Friday, 23 June 2023. Dealings in shares on the SEHK are expected to commence on Friday, 30 June 2023, with the stock code of 9860.HK, in board lots of 500 shares each.
ADICON has entered into cornerstone investment agreements with cornerstone investors including MR Global (HK) Limited (Mindray), Snibe Diagnostic (Hong Kong) Company Limited, Fosun Diagnostics (Shanghai) Co., Ltd., Timestar Elite Limited and Corelink, who have agreed to subscribe for such number of the Offer Shares which may be purchased at the Offer Price with an aggregate amount of approximately US$37 million (or approximately HK$290 million).
Mr. GAO Song, Executive Director and Chief Executive Officer of ADICON, stated: "We are committed to adhering to our mission of providing expert medical testing services to all as a market leader in the rapidly growing ICL industry in China. Advanced testing capabilities, innovation and best-in-class quality control standards remain at the core of what we do, and we look to utilize the IPO proceeds to further invest in advanced testing methods and applying innovative technology, as we work to continuously serve as a trusted and reliable partner for medical professionals and the general public."
Ms. YANG Ling, Chairwoman and Non-Executive Director of ADICON, and Managing Director at Carlyle Asia, commented: "We believe the ICL market in China is still in a nascent stage compared to that of other developed countries, and there remains significant room for the industry to grow. As one of the market leaders, ADICON is well-positioned to benefit from this, particularly with its expanding service offerings and strong execution capabilities."
Morgan Stanley Asia Limited and Jefferies Hong Kong Limited are the Joint Sponsors, Overall Coordinators, Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers.
A Market Leader in the Rapidly Growing ICL Industry
Driven by a series of favorable government policies and industry tailwinds, China's ICL market size grew rapidly at a CAGR of 10.9% from RMB14.7 billion in 2017 to RMB22.3 billion in 2021 and is expected to further grow at a CAGR of 18.2% to RMB51.3 billion by 2026, according to Frost & Sullivan. As one of the top three ICL service providers in China, ADICON believes that it is well-positioned to benefit from the growing demand for testing services in China.
ADICON currently offers comprehensive and best-in-class testing services primarily to hospitals and health check centers through an integrated network of self-operated laboratories across China.
-- As of the Latest Practicable Date, ADICON has built an extensive service network of 33 self-operated laboratories covering over 30 provinces and municipalities across China.
-- ADICON also maintains an industry-leading comprehensive test menu with over 4,000 test items, including over 1,700 routine tests and over 2,300 esoteric tests, allowing the Company to provide testing services to over 19,000 customers by the end of 2022, ranging from medical institutions, health check centers, to biopharmaceutical companies and contract research organizations ("CROs").
-- In the past three years, ADICON's testing volume increased by 33.9% from 60.1 million in 2020 to 80.5 million in 2021, and further increased by 104.8% to 164.9 million in 2022.
Aided by the changes implemented by Pearl Group Limited, ADICON's Controlling Shareholders, a company owned by funds which are ultimately controlled by global investment firm, Carlyle, since 2018, ADICON experienced rapid growth and strong financial performance during the Track Record Period. The total revenues grew at a CAGR of 33.1% from RMB2,741.7 million in 2020 to RMB4,860.6 million in 2022. The adjusted EBITDA (non-IFRS measure) grew at a CAGR of 34.0% from RMB567.6 million in 2020 to RMB1,019.8 million in 2022. The adjusted net profit (non-IFRS measure) grew at a CAGR of 30.1% from RMB367.0 million in 2020 to RMB621.1 million in 2022. (3)
ADICON's non-COVID-19 business has also maintained its growth momentum, with revenues totaling RMB1.817 million, RMB2.147 million, and RMB2.576 million in 2020, 2021 and 2022, respectively. With the lift of COVID-19 restrictions in China, demand for the base testing services rebounded, which boosted ADICON's non-COVID-19 revenue growth. Revenue contribution by non-COVID-19 testing business increased significantly from the three months ended March 31, 2022 to the same period in 2023.
Top-Tier and Experienced Management Team Solidified by Shareholder Support
ADICON has assembled a senior management team with in-depth industry insights and extensive experience in global and Chinese healthcare companies and a track record of success which was further bolstered by the addition of Pearl Group Limited, a company owned by investment funds which are ultimately controlled by Carlyle, as ADICON's Controlling Shareholder since October 2018.
The additional resources, expertise and professional management from Pearl Group Limited and other investors have enhanced ADICON's corporate compliance and reset its growth path. The Controlling Shareholders have also provided ADICON with substantial strategic insights and have helped it to strengthen its management capabilities, operational efficiency, business development capabilities, and corporate governance, and have led the Company in its rapid growth and robust track record results.
Comprehensive, High-Quality and Advanced Test Portfolio, Underpinned by Strong R&D and Quality Control Capabilities
ADICON's testing portfolio is at the core of its services: ADICON offers a competitive and comprehensive catalog of over 4,000 medical diagnostic tests as of December 31, 2022, spanning a variety of specialty groups, including among others, clinical immunologic testing, clinical chemistry testing, clinical molecular biology testing, and pathology testing. Its testing portfolio allows the Company to offer a broad spectrum of testing options that facilitate physicians' diagnostic and treatment decisions, and the Company can also customize its test menu to fulfil the specific testing demands from medical institutions, pharmaceutical companies, CROs and other customers.
The comprehensive testing offerings are supported by state-of-the-art laboratories equipped with advanced testing technologies, ranging from chemical analyzers, hematology analyzers, histopathology, flow cytometry, molecular pathology and mass spectrometry to next-generation sequencing (NGS) and digital polymerase chain reaction (dPCR) technologies. Its advanced testing technologies also allow ADICON to efficiently expand into various specialty areas and rapidly develop innovative testing offerings to cater to the evolving clinical needs.
Strong R&D capabilities are the backbone of ADICON's high-quality test offerings: As of the Latest Practicable Date, ADICON owned 228 registered patents, covering its major business focus areas, namely infectious diseases and blood diseases, as well as fields with large and unaddressed clinical demand such as personalized medication, single-gene genetic diseases and solid tumors. ADICON also proactively collaborates with reputable medical research institutions, universities and hospitals to develop new testing methods and technologies to further strengthen its testing capabilities. In addition, ADICON has a dedicated R&D team led by industry veterans who have over 10 years of industry experience and expertise.
Quality control underpins ADICON's abilities to constantly offer high-quality testing services to earn trust and loyalty from its customers: As of December 31, 2022, 18 of ADICON's laboratories were accredited by ISO15189, which enables the Company to provide customers with the assurance that comes with a rigorous global standard. ADICON has established a "headquarters - laboratory" two-level quality assurance system, with all facets of its services subject to stringent quality control standards and measures.
During the Track Record Period, ADICON received over 4,100 external quality assurance ("EQA") certificates. ADICON believes its quality assurance has positioned it strongly to broaden its customer base and capture an increasing market share.
Industry-Leading ICL Operational Capabilities
As an industry leading ICL service provider with a national footprint, ADICON has excellent operational capabilities.
-- By the end of 2022, ADICON maintained a robust and nimble logistics network via ground, rail, and air, covering more than 19,000 customers across 30 provinces and municipalities and over 1,600 cities and counties in China. ADICON's logistics capacities ensure speedy transportation of samples and timely reporting of testing results. During the Track Record Period and up to the Latest Practicable Date, ADICON was able to achieve daily same-day delivery of up to 540,000 samples.
-- ADICON's effective sales and marketing activities have also helped further fuel its business growth. ADICON has a highly trained and educated in-house sales and marketing team of over 1,500 personnel nationwide, as of December 31, 2022, who actively interact with medical institutions, physicians and key opinion leaders on a regular basis to introduce and promote ADICON's services.
-- ADICON also has a specialized sales team of over 200 industry veterans who have extensive knowledge in the relevant specialty areas to promote its esoteric tests. ADICON regularly organizes, sponsors and participates in industry-leading academic conferences, seminars, and symposia to strengthen its brand awareness among medical professionals.
Strong Growth Trajectory Fueled by Expanding Service Offerings and Superior Execution
Network expansion: Supported by a replicable "headquarters - laboratory" two-level management scheme, ADICON has rapidly expanded its footprint nationwide. The number of its laboratories grew from 19 as of December 31, 2018, to 33 as of the Latest Practicable Date, allowing ADICON to serve over 11,000 customers in 2018 to over 19,000 customers in 2022 - ranging from medical institutions and health check centers to biopharmaceutical companies and CROs across 30 provinces and municipalities. Under this scheme, ADICON plans strategies and initiatives centrally and monitors the quality of local executions effectively. The headquarters establishes unified standardized operating procedures and policies which can be carried through and implemented across ADICON's laboratories nationwide, which allows it to open new laboratories and integrate acquired ones cost-effectively and efficiently.
Expanding service offerings: ADICON's test menu has expanded significantly from approximately 1,800 test items in 2018 to over 4,000 test items in 2022. In particular, ADICON's esoteric tests grew from over 650 in 2018 to over 2,300 in 2022. To expand its service offerings continuously, ADICON has entered into partnership agreements with the world's leading and internationally acclaimed companies in the life sciences industry, thus reinforcing its market leadership. In June 2022, the Company entered into a strategic partnership agreement with Guardant Health (Nasdaq: GH), a leading precision oncology company, pursuant to which, the Company is granted the exclusive rights to perform Guardant's industry-leading comprehensive genomic profiling (CGP) tests for researchers in China. ADICON is also the exclusive licensee to process Guardant's proprietary liquid and tissue biopsy assays in China. ADICON also entered into a master lab agreement with a leading global CRO in April 2021, to provide comprehensive, integrated drug development, laboratory and lifecycle management services, and testing services for its designated clinical research study or projects.
Broader customer range: After four years of rapid development, ADICON has significantly expanded its services to all types of medical institutions, health check centers, biopharmaceutical companies and CROs. In April 2019, ADICON started a collaboration with Meinian, a leading health examination and consulting service provider and provided testing services for its health check centers across the country, and soon established a strong presence in the health check market in China. By the end of 2022, ADICON has served a total of over 930 health check centers in China. By leveraging its strong testing capabilities, ADICON also offers testing services to globally and domestically reputable biopharmaceutical companies and CROs, assisting them in streamlining their drug development process and accelerating clinical trials.
Focus On Further Strengthening Its Testing Capabilities and Portfolio to Drive Future Growth
Looking ahead, ADICON plans to leverage the proceeds from this Global Offering to enhance the breadth and depth of its ICL network by strategically penetrating untapped markets; continue to develop new testing methods and apply innovative technologies; further optimize IT infrastructure as well as automate its laboratory processes and logistics; and selectively pursue strategic investments and alliances, and other emerging growth opportunities.
About ADICON Holdings Limited
ADICON Holdings Limited ("ADICON" or "Company", stock code: 9860.HK) is one of the top three independent clinical laboratory ("ICL") service providers in China, which offers comprehensive and best-in-class testing services primarily to hospitals and health check centers through an integrated network of 33 self-operated laboratories across China as of the Latest Practicable Date. Leveraging its strong R&D and quality control capabilities, ADICON offers comprehensive, high-quality and advanced test portfolios. As of December 31, 2022, ADICON offers a competitive and comprehensive catalog of over 4,000 medical diagnostic tests, including over 1,700 routine tests and over 2,300 esoteric tests, allowing ADICON to provide testing services to over 19,000 customers, ranging from medical institutions, health check centers, to biopharmaceutical companies and CROs. As a market leader in providing ICL services in China, ADICON is committed to continuously serving patients and the general public with its high-quality testing services, and becoming a trusted and reliable partner for medical professionals and the general public.
(1) Defined as the "Track Record Period".
(2) Defined as the "Latest Practicable Date".
(3) The use of such non-IFRS measures has limitations as an analytical tool, and they should not be considered in isolation from, or as substitute for analysis of, the results of operations or financial condition of the Company as reported under IFRS.
This press release is issued by Porda Havas International Finance Communications Group for and on behalf of ADICON Holdings Limited For further information, please contact:
Porda Havas International Finance Communications Group
Telephone: 852 3150 6788
Email: pearl.hk@pordahavas.com
Topic: Press release summary
Source: ADICON Holdings Limited
Sectors: Healthcare & Pharm, Clinical Trials
https://www.acnnewswire.com
From the Asia Corporate News Network
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