TE HEALTHCARE issued a profit warning, expecting a mid-term net loss of approximately HKD 1.7 million, a year-on-year turnaround from profit to loss
TE HEALTHCARE issued a profit warning, expecting to incur a loss of approximately HKD 1.7 million for the interim period ending June 30, 2025, compared to a profit of approximately HKD 6.3 million for the same period in 2024. The loss is mainly due to one-time professional fees of about HKD 2.5 million triggered by the change of controlling shareholder and challenges in transitioning to a B2C business model. Although the gross margin improved to 42%, the gross profit is expected to decline by approximately HKD 2.1 million compared to the same period last year, with advertising expenses increasing by about HKD 1.3 million. Excluding one-time expenses, a profit of approximately HKD 800,000 is expected
According to the announcement from TE HEALTHCARE (06877), the group expects to incur a net loss of approximately HKD 1.7 million for the six months ending June 30, 2025, compared to a net profit of approximately HKD 6.3 million for the same period in 2024.
The expected net loss is primarily due to: (a) one-time professional fees of approximately HKD 2.5 million incurred due to the change of controlling shareholder in the first half of 2025 and the subsequent mandatory general offer triggered by this change. These fees include legal, advisory, and other transaction-related professional expenses, which are one-time expenditures and are expected not to have a lasting impact on the group's future financial performance, only causing a short-term impact on the group's performance for the mid-2025 period; and (b) the group's strategic transformation towards the higher-margin B2C business segment. Although this transformation has brought positive effects, including an improvement in gross margin, it still faces periodic challenges during the process. The related transformation challenges are reflected in the expected gross profit for the mid-2025 period, which is anticipated to decline by approximately HKD 2.1 million compared to the same period last year, while advertising and promotional expenses are expected to moderately increase by approximately HKD 1.3 million to strengthen the group's long-term brand awareness and customer engagement. The transformation has led to an expected improvement in the unaudited gross margin, rising from 39% in the same period last year to 42% in the mid-2025 period, demonstrating the effectiveness of the group's strategic direction.
Excluding the aforementioned one-time professional fees, the group is expected to achieve a net profit of approximately HKD 800,000 for the mid-2025 period, indicating that the group still possesses robust operational capabilities and high adaptability during the strategic transformation period
