TE Healthcare Warns of 27% Net Loss in 2025 Interim Results Due to One-Time Fees, Strategic Shift

TE HEALTHCARE, a prominent healthcare company, has issued a profit warning, anticipating a net loss of approximately 1.7 million Hong Kong dollars for the six months ending June 30, 2025. This marks a significant shift from the net profit of 6.3 million Hong Kong dollars reported for the same period in 2024.

The anticipated net loss is primarily attributed to two key factors. Firstly, the company incurred one-time professional fees amounting to approximately 2.5 million Hong Kong dollars due to a change in its controlling shareholder and the subsequent full takeover offer. These fees, which include legal, advisory, and other transaction-related expenses, are considered a one-off expenditure and are not expected to have a lasting impact on the company's future financial performance. However, they will affect the company's interim results for 2025.

Secondly, the company is undergoing a strategic shift towards its B2C business segment, which has a higher gross margin. While this transition has yielded positive outcomes, including an improvement in gross margin, it has also presented temporary challenges. The company expects its gross margin for the 2025 interim period to decrease by approximately 2.1 million Hong Kong dollars compared to the same period last year. Additionally, advertising and promotional expenses have increased by about 1.3 million Hong Kong dollars to enhance the company's long-term brand recognition and customer engagement. Despite these challenges, the company's un-audited gross margin is expected to improve from 39% in the previous year to 42% in the 2025 interim period, demonstrating the effectiveness of its strategic direction.

Excluding the one-time professional fees, the company is projected to achieve a net profit of approximately 800,000 Hong Kong dollars for the 2025 interim period. This indicates that the company maintains robust operational capabilities and high adaptability during its strategic transition. The company's strategic shift towards higher-margin B2C business segments is expected to yield long-term benefits, despite the short-term financial setbacks. The increase in advertising and promotional expenses is a strategic move to bolster the company's brand presence and customer engagement, which are crucial for sustained growth in the competitive healthcare market.