Greetings, fellow investors and healthcare enthusiasts! Today, we’re diving into the latest financial pulse check of **TMC Life Sciences Berhad (TMC)**, a prominent player in Malaysia’s healthcare sector, known for its multi-disciplinary tertiary hospital and fertility centres. Their unaudited interim financial report for the third quarter ended 31 March 2025 has just been released, and it presents a mixed picture that warrants a closer look.
While the company managed to grow its revenue in the recent quarter, a significant drop in profitability has caught our attention. This report highlights TMC’s resilience in certain areas, yet it also underscores the challenges it faces in a dynamic market. Let’s break down the numbers and understand what’s truly going on beneath the surface.
Core Data Highlights: A Closer Look at Performance
Quarterly Performance (Q3 FY2025 vs. Q3 FY2024)
For the quarter ended 31 March 2025, TMC reported a commendable increase in revenue, largely driven by strategic collaborations. However, this top-line growth was overshadowed by a substantial decline in profit before taxation, leading to a net loss for the period.
Current Quarter (31 March 2025)
- Revenue: RM89.9 million
- Profit Before Taxation: RM0.1 million
- Net Loss: RM(0.8) million
- Basic Earnings Per Share: (0.05) sen
Previous Corresponding Quarter (31 March 2024)
- Revenue: RM86.1 million
- Profit Before Taxation: RM12.5 million
- Net Profit: RM10.0 million
- Basic Earnings Per Share: 0.57 sen
The **revenue grew by approximately 4.4%** to RM89.9 million, primarily boosted by the collaboration with Oncocare Medical Malaysia Sdn. Bhd. at the Oncology Centre in Thomson Hospital Kota Damansara (“THKD”). This indicates successful efforts in expanding service offerings and patient reach.
However, the story changes dramatically when we look at profitability. Profit Before Taxation (PBT) plummeted by an astounding **99.6%**, from RM12.5 million to just RM0.1 million. Consequently, the company recorded a **net loss of RM0.8 million**, a sharp reversal from the RM10.0 million net profit in the same quarter last year.
The report attributes this significant decline in profit to several factors: the discontinuation of certain customer contracts, higher operating expenses, and increased depreciation charges. It’s worth noting that a change in accounting estimates regarding the useful lives of certain intangible assets resulted in an estimated increase in depreciation expense of RM2.97 million for the full financial year, which would naturally impact profitability.
Year-to-Date Performance (9 Months Ended 31 March 2025 vs. 31 March 2024)
The year-to-date figures paint a similar challenging picture for TMC, with both revenue and profit before taxation seeing notable declines compared to the previous year’s corresponding period.
Current Year-to-Date (31 March 2025)
- Revenue: RM252.3 million
- Profit Before Taxation: RM4.0 million
- Net Profit: RM1.2 million
- Basic Earnings Per Share: 0.07 sen
Previous Year-to-Date (31 March 2024)
- Revenue: RM272.3 million
- Profit Before Taxation: RM52.3 million
- Net Profit: RM39.6 million
- Basic Earnings Per Share: 2.27 sen
For the nine months ended 31 March 2025, revenue decreased by **7.4%** to RM252.3 million, and PBT saw a drastic **92.3% reduction** to RM4.0 million. This reinforces the impact of the aforementioned factors over a longer period, indicating a sustained pressure on the company’s earnings.
Sequential Quarter Performance (Q3 FY2025 vs. Q2 FY2025)
Despite the year-on-year challenges, there’s a glimmer of improvement when comparing the current quarter to the immediate preceding quarter (Q2 FY2025, ended 31 December 2024).
Current Quarter (31 March 2025)
- Revenue: RM89.9 million
- Profit Before Taxation: RM0.1 million
Immediate Preceding Quarter (31 December 2024)
- Revenue: RM80.4 million
- Profit Before Taxation: RM(0.5) million (Loss)
Revenue increased by **11.7%** and, notably, the company swung back to a positive PBT from a loss in the previous quarter. This positive sequential trend was also driven by the THKD’s collaboration with Oncocare Medical Malaysia Sdn. Bhd. and the lowering of discounts on customer contracts, suggesting that recent strategic adjustments are starting to bear fruit.
Financial Health: Balance Sheet and Cash Flow
Balance Sheet Snapshot (As at 31 March 2025 vs. 30 June 2024)
TMC’s balance sheet shows a slight contraction in total assets, primarily due to a notable decrease in cash and bank balances. Total assets stood at RM1,140.1 million, down from RM1,189.7 million. Total equity also saw a reduction to RM850.6 million from RM888.0 million, reflecting the net loss incurred and dividend payments.
Cash and bank balances saw a significant decline from RM188.6 million to RM116.8 million. On a positive note, total borrowings decreased from RM202.8 million to RM187.2 million, indicating a reduction in debt burden.
Cash Flow Dynamics (9 Months Ended 31 March 2025 vs. 31 March 2024)
The cash flow statement reveals a challenging period for TMC. Net cash generated from operating activities significantly reduced to RM11.8 million from RM65.7 million in the previous corresponding period. This substantial drop aligns with the decline in profitability.
However, cash flow from investing activities saw a positive swing, generating RM5.3 million compared to a usage of RM45.5 million last year. This was largely due to a withdrawal of deposits placed with financial institutions. Cash flows used in financing activities increased to RM56.2 million, primarily due to higher dividend payments (RM38.6 million paid for FY2024 dividends).
Overall, the company experienced a net decrease in cash and cash equivalents of RM39.0 million, a much larger decrease than the RM4.9 million seen in the prior year, highlighting the impact of reduced operating cash flow and higher dividend payouts.
Risks and Prospects: Navigating the Future
TMC Life Sciences operates within a dynamic global and local healthcare landscape. The report acknowledges the prevailing economic headwinds and outlines the company’s strategies to navigate them.
Challenges Ahead
The global economic slowdown, exacerbated by rising tariffs and trade restrictions between major economies, is posing challenges across various industries, including healthcare. For TMC, this translates into potential risks such as increased costs of medical supplies and disruptions in the supply chain. The company acknowledges the need to proactively monitor and adjust its strategies to mitigate these risks and ensure long-term business sustainability.
Growth Drivers and Strategic Focus
Despite the external pressures, TMC remains optimistic about its future growth. Key drivers include:
- **Increased Capacity at THKD:** Expansion of bed capacity at Thomson Hospital Kota Damansara is expected to accommodate more patients and services.
- **Oncology Centre Growth:** Continued growth and development of the Oncology Centre in THKD, as evidenced by the recent collaboration with Oncocare Medical Malaysia Sdn. Bhd., is a strategic focus.
- **Customer Base Diversification:** The Group is actively working to diversify its customer base by expanding into international markets and acquiring new corporate clients. This aims to reduce reliance on existing contracts and broaden revenue streams.
- **Engagement with Insurers:** TMC is actively engaging with insurers to enhance its performance and ensure a positive financial contribution, which is crucial in the managed care environment.
The company’s material factors affecting earnings and revenue include successful recruitment of healthcare professionals, additional bed capacity and services, higher case intensity handled, and continuous marketing efforts to boost local and international branding.
Summary and
TMC Life Sciences Berhad’s latest quarterly report presents a mixed bag. While the company demonstrated resilience with a quarterly revenue increase and sequential improvement in profitability, the significant year-on-year decline in profit before taxation and the shift to a net loss for the quarter cannot be overlooked. This was primarily driven by the discontinuation of customer contracts, higher operating expenses, and increased depreciation charges, including those from a revision in accounting estimates for intangible assets.
On the positive side, the strategic collaboration with Oncocare Medical and efforts to lower customer contract discounts are starting to show sequential improvements, which is encouraging. The balance sheet shows a reduction in borrowings, but also a notable decrease in cash reserves, impacted by lower operating cash flow and dividend payments.
Looking ahead, TMC faces macroeconomic headwinds and industry-specific challenges such as rising supply costs. However, the company’s focus on expanding capacity, growing its specialized services like the Oncology Centre, diversifying its customer base, and engaging with insurers are crucial strategic moves that could underpin future growth. The company also paid a substantial dividend for the previous financial year, demonstrating its commitment to shareholder returns, though no dividend was declared for the current quarter.
Key points to consider for the future:
- The company needs to effectively manage operating expenses and the impact of discontinued customer contracts.
- The success of new collaborations and expanded capacity, particularly at THKD’s Oncology Centre, will be vital for revenue and profit recovery.
- Diversifying customer base and successful engagement with insurers will be critical for long-term stability and growth.
- Monitoring global economic slowdown and its impact on supply chain and medical supply costs is essential for risk mitigation.
TMC Life Sciences Berhad is clearly at a pivotal juncture, navigating both operational adjustments and broader economic shifts. The sequential improvement in the latest quarter offers a glimmer of hope, but the year-on-year performance highlights the scale of the challenges. The company’s strategic initiatives are sound, but their execution and impact on the bottom line will be key to watch.
What are your thoughts on TMC’s latest performance? Do you believe their strategic focus on capacity expansion and customer diversification will be enough to overcome the current profitability hurdles? Share your insights in the comments below!
