Core Data Highlights: A Closer Look at Performance

Revenue Performance: Navigating a Shifting Landscape

Apex Healthcare recorded a consolidated revenue of RM 238.9 million for Q1 2025. This marks a 3.8% decrease when compared to the RM 248.2 million reported in the corresponding period last year. The company attributes this decline primarily to lower Malaysian public sector sales, influenced by the timing and mix of tender contracts secured. It’s worth noting that Q1 2024 revenue was an exceptionally high benchmark, partly boosted by non-recurring Singapore public sector purchases.

Profitability: Strategic Investments Impacting Short-Term Figures

Despite the revenue dip, operating expenses were well-controlled. However, the Group’s operating profit for the first quarter stood at RM 24.8 million, a 7.9% decrease from the RM 26.9 million in Q1 2024. This reduction was largely due to increased depreciation and amortisation charges from the Cheng 2 and Techlink assets, which were acquired in the second half of 2024 to support future business expansion.

A significant factor impacting the bottom line was the share of loss from its 40%-owned associate, Straits Apex Group Sdn Bhd (SAG). The loss widened to RM 1.6 million in Q1 2025, compared to RM 0.5 million in Q1 2024, primarily due to slower-than-anticipated customer orders and ongoing amortisation and financing costs related to SAG’s divestment of a 60% equity interest in Straits Apex Sdn Bhd in May 2023.

Consequently, profit before tax (PBT) for Q1 2025 was RM 22.7 million, a 13.7% decrease from RM 26.3 million in Q1 2024. Net profit for the period followed suit, declining by 17.1% to RM 17.6 million from RM 21.2 million in the same period last year. Earnings per share (EPS) also saw a corresponding decrease to 2.46 sen from 2.97 sen.

Interestingly, when compared to the immediate preceding quarter (Q4 2024), Q1 2025 actually saw a slight improvement in profitability. Profit before tax increased by 2.7% and profit after tax by a more significant 30.6%, suggesting some sequential recovery or better cost management.

Segmental Insights

The Group operates across three main segments: Manufacturing, Distribution, and Corporate. Both the Manufacturing and Distribution segments saw a slight reduction in external revenue and segment results compared to Q1 2024. This aligns with the overall tempered revenue growth and the higher operational costs related to new asset integration.

Financial Health: A Solid Foundation

Despite the profit dip, Apex Healthcare maintains a very healthy financial position. As at 31 March 2025, total assets increased to RM 1.025 billion from RM 1.009 billion at the end of 2024. Total liabilities saw a slight decrease, leading to an increase in net assets to RM 807.4 million from RM 789.6 million. The net assets per share also improved to RM 1.13 from RM 1.10.

The Group’s cash and cash equivalents also saw a healthy increase, reaching RM 224.8 million by the end of Q1 2025. This robust cash position provides a strong buffer and flexibility for future strategic initiatives.

Operationally, the quarter saw positive developments. Xepa-Soul Pattinson (M) Sdn Bhd (“Xepa”), a subsidiary, obtained GMP Clearance from the Australian Therapeutic Goods Administration (TGA) for the Sterile Finished Product category, a significant achievement. Xepa also commenced operations at its new pharmaceutical warehouse at Cheng 2, which is expected to enhance warehousing efficiency. Furthermore, 6 new Group branded products were launched in the quarter, expanding their market reach.

Risk and Prospect Analysis: Navigating the Future

Navigating the Economic Landscape

Apex Healthcare acknowledges the evolving global economic landscape. The recent imposition of global tariffs by the United States presents a challenge to Malaysia’s economic outlook, leading to a reassessment of the nation’s projected GDP growth. Singapore has also revised its 2025 GDP growth forecast downward. These macroeconomic shifts could potentially weigh on economic activity and consumer confidence.

However, the Group’s core pharmaceutical business does not involve exports to the US, thus the newly announced tariffs are not expected to have a material direct impact on its primary operations. Its 40%-owned associate, SAG, which manufactures and exports orthopaedic devices with a focus on the US market, is proactively engaged in strategic discussions with key US customers to explore longer-term mitigation strategies.

Strategic Resilience and Future Outlook

Despite these external pressures, Apex Healthcare is optimistic about the resilience of the healthcare sector. During an economic downturn, generic pharmaceutical companies often benefit as cost-conscious consumers and healthcare providers increasingly opt for more affordable, quality alternatives. Governments and insurers also favor generics to curb healthcare costs, driving demand and expanding market share.

The Group expects healthcare spending to remain resilient in 2025. In alignment with its strategic priorities, Apex Healthcare remains committed to proactively managing risks, strengthening its operational fundamentals, and maintaining agility to capitalize on new growth opportunities. With a robust balance sheet and a strong net cash position, the company is well-equipped to swiftly navigate evolving market conditions and leverage emerging prospects, confident in its ability to deliver sustainable growth and create enduring value for stakeholders.