Genoray Corporation, the Korean originated manufacturer of medical x-ray imaging systems published it’s half-yearly 2019 results last month. Its consolidated financial statements indicate that sales revenue growth slowed and began to contract during the second quarter. The companies sales revenue reached 27,682 million won which represents a -1.1% contraction year-on-year (YoY). This is the firms’ first revenue contraction since listing on the KOSDAQ stock market during 2018 and follows a period of sustained growth which has averaged +18.5% per annum between FY 2014 and FY 2018.
The recent weakness in sales activity was driven predominately by lower demand for its PAPAYA series of products which are panoramic, cephalometric and 3DCT x-ray systems for dental medicine. Revenues from the sale of panoramic x-ray systems were approximately -17% YoY and -20% for 3DCT devices. The companies dental systems are commonly used for diagnosis, surgical treatment or treatment planning within an orthodontic setting and target customers typically include individual dental practitioners as well as small to medium-sized hospitals or clinics with dental departments. While dental x-ray sales weakened, strong sales revenue growth was reported from its mammography as well as c-arm (fluoroscopy) x-ray systems which helped to offset the declines from dental systems, resulting in net sales growth of -1.1% YoY.
The company is continuing to invest in product development, particularly within digital mammography and c-arm x-ray systems. This is expected to help enable further sales revenue growth and there are a number of research and development projects in the pipeline. This includes the development of a new interventional mobile c-arm system with high-speed CT and angiography capability, a new DBT mammography system as well as it’s own proprietary CMOS based x-ray detector. There appears to be a focus on implementing low dose technology and there are indications that these new solutions could enter into mass production in the coming periods. These research and development efforts have been supported by various national subsidies including financial support from the Ministry of Trade, Industry and Energy and the Korea Evaluation Institute of Industrial Technology (KEIT). During the first half of 2019, the companies expenditure on research and development increased from 7.1% to 7.8% of sales revenue after deducting government subsidies.
From a geographical perspective, the companies core growth markets have historically been Korea (domestic), rest of Asia and Europe. The recent weakness in sales revenue has predominately been driven by Asia, the companies second-largest market, as well as the MEA and Oceania regions. In aggregate, sales revenue contracted by approximately -47% YoY from these regions. In contrast, sales revenue grew significantly from Korea, which has historically been the firms largest market, as well as from Europe and Latin America regions which grew approximately by 1/3. Revenues from North America, the companies third-largest market, contracted marginally by -0.2%.
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