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WORK Medical Technology Group LTD Reports Financial Results for Fiscal Year 2024

This Week

HANGZHOU, China, Feb. 14, 2025 /PRNewswire/ — WORK Medical Technology Group LTD (“WORK Medical” or the “Company”) (Nasdaq: WOK), a supplier of medical devices in China, today reported its financial results for the fiscal year ended September 30, 2024.

Mr. Shuang Wu, Chairman and Chief Executive Officer of WORK Medical, remarked, “We are pleased to report our Company’s performance for the fiscal year ended September 30, 2024. As the lingering effects of COVID-19 gradually subside and the global business environment returns to normal, our net revenue reflects a decline primarily due to a 69.4% decrease in mask sales. We have implemented a strategic transformation to drive growth in other key revenue streams over recent years. Specifically, our sales of medical devices, excluding masks, increased by 17.7% to $9.4 million for fiscal year 2024. This, coupled with a 33.9% growth in commodity trading, has partially mitigated the decline in mask sales. To support this transformation, we made investments in marketing and promoting medical devices other than masks, which is reflected in the 31.0% rise in selling and marketing expenses. These expenditures represent strategic investments aimed at long-term growth, which, we believe will position us on a more balanced foundation for future success. Despite the challenges mentioned, our R&D expenses increased by 0.3%. Looking ahead, we plan to leverage our cash reserves to support ongoing strategic transformations. Our focus will be on driving innovation, exploring overseas opportunities, accelerating internationalization, and securing additional global orders, so as to deliver greater value to our shareholders.”

Fiscal Year 2024 Financial Results

Net Revenue

Net revenue was $11.5 million in fiscal year 2024, representing a decrease of 15.2% from $13.6 million in fiscal year 2023. The overall decrease in net revenue was mainly due to the decline in demand and unit price of masks and was offset by the increase of revenue of medical devices other than masks and commodity trading.

For the Year Ended,
September 30,

($ millions)

2024

2023

Masks

$    1.6

$    5.1

Medical devices other than masks

9.4

8.0

Commodity trading

0.4

0.3

Others

0.1

0.2

Net revenue

$   11.5

$   13.6

  • Revenue of sales of masks was $1.6 million in fiscal year 2024, representing a decrease of 69.4% from $5.1 million in fiscal year 2023. The decrease was mainly because (i) the demand for masks and the sales volume of masks decreased for the year ended September 30, 2024; and (ii) the Company shifted its marketing focus from masks to medical devices other than masks.
  • Revenue of sales of medical devices other than masks was $9.4 million in fiscal year 2024, representing an increase of 17.7% from $8.0 million in fiscal year 2023. The increase was mainly attributable to the Company’s decision to intensify marketing efforts for medical devices other than masks, which accordingly led to higher sales volumes.
  • Revenue of commodity trading was $0.4 million in fiscal year 2024, representing an increase of 33.9% from $0.3 million in fiscal year 2023. The increase was mainly due to the increase of market demand and the Company’s business expansion.
  • Revenue of sales of others was $0.1 million in fiscal year 2024, representing a decrease from $0.2 million in fiscal year 2023.

Cost of Revenue

Cost of revenue was $8.6 million in fiscal year 2024, representing a decrease of 8.3% from $9.4 million in fiscal year 2023. The decrease in the cost of revenue was less than the decrease in net revenue, mainly because the unit cost of medical devices other than masks was relatively higher than the unit cost of masks; therefore, the increased sales of medical devices other than masks partially offset the decrease in the cost of revenue related to masks.

Gross Profit

Gross profit was $2.9 million in fiscal year 2024, representing a decrease of 30.8% from $4.1 million in fiscal year 2023.

Gross profit margin was 24.9% in fiscal year 2024, compared to 30.5% in fiscal year 2023. The decrease of gross profit margin was primarily due to the increased sales of medical devices other than masks with relatively lower profit margin and the decreased sales of masks with relatively higher profit margin for the year ended September 30, 2024.

Operating Expenses

Operating expenses were $6.9 million in fiscal year 2024, which increased $3.2 million from $3.7 million in fiscal year 2023.

  • Selling expenses were $2.1 million in fiscal year 2024, representing an increase of 31.0% from $1.6 million in fiscal year 2023. The increase was primarily due to increased marketing and promotion expenses incurred for the sales of medical devices other than masks.
  • General and administrative expenses were $4.6 million in fiscal year 2024, representing an increase of 144.8% from $1.9 million in fiscal year 2023, which was primarily due to the increase of professional consulting fees for consulting services regarding financial reporting requirements for a U.S. public company.
  • Research and development expenses were $0.302 million in fiscal year of 2024, representing an increase of 0.3% from $0.301 million in fiscal year 2023, which remained relatively stable.

Net (Loss) Income

Net loss was $3.5 million in fiscal year 2024, compared to net income of $0.06 million in fiscal year 2023.

Basic and Diluted Earnings (Loss) per Share

Basic and diluted loss per share was $0.27 in fiscal year 2024, compared to basic and diluted earnings per share of $0.01 in fiscal year 2023.

Financial Condition

As of September 30, 2024, the Company had cash and cash equivalents of $6.6 million, which increased $5.0 million from $1.6 million as of September 30, 2023.

Net cash used in operating activities was $2.2 million in fiscal year 2024, compared to net cash provided by operating activities of $2.2 million in fiscal year 2023.

Net cash used in investing activities was $9.1 million in fiscal year 2024, compared to $0.6 million in fiscal year 2023.

Net cash provided by financing activities was $15.7 million in fiscal year 2024, compared to net cash used in financing activities of $0.7 million in fiscal year 2023.

Recent Development

On August 26, 2024, the Company completed its initial public offering of 2,000,000 ordinary shares at a public offering price of US$4.00 per ordinary share. The ordinary shares began trading on the Nasdaq Capital Market on August 23, 2024 under the ticker symbol “WOK.”

About WORK Medical Technology Group LTD

WORK Medical Technology Group LTD is a supplier of medical devices that develops and manufactures Class I and II medical devices and sells Class I and II disposable medical devices through operating subsidiaries in China. The Company has a diverse product portfolio comprising 21 products, including customized and multifunctional masks and other medical consumables. All the products have been sold in 34 provincial-level administrative regions in China, with 15 of them sold in more than 30 countries worldwide. The Company has received a number of quality-related manufacturing designations and has registered 17 products with the U.S. Food and Drug Administration allowing their products to enter the U.S. market. For more information, please visit the Company’s website: https://www.workmedtech.com/corporate.

Forward-Looking Statements

Certain statements in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company’s current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can find many (but not all) of these statements by the use of words such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “will,” “would,” “should,” “could,” “may” or other similar expressions. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct. The Company cautions investors that actual results may differ materially from the anticipated results, and encourages investors to read the risk factors contained in the Company’s registration statement and other reports it files with the U.S. Securities and Exchange Commission before making any investment decisions regarding the Company’s securities. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law.

For investor and media inquiries, please contact:

WORK Medical Technology Group LTD
Investor Relations Department
Email: ir@workmedtech.com

Ascent Investor Relations LLC
Tina Xiao
Phone: +1-646-932-7242
Email: investors@ascent-ir.com

 

 

WORK MEDICAL TECHNOLOGY GROUP LTD
CONSOLIDATED BALANCE SHEETS

(In U.S. dollars, except for otherwise noted)

As of September 30,

2024

2023

Assets

Current assets:

       Cash and cash equivalents

$

6,557,605

$

1,596,096

       Restricted cash

41,187

       Cash deposited in escrow account

400,000

       Accounts receivable, net

1,648,797

3,332,322

       Inventories, net

3,183,951

4,620,191

       Amounts due from related parties

2,707,136

4,237,682

       Advance to suppliers

4,697,029

3,469,819

       Prepaid expenses and other current assets, net

1,632,702

4,855,381

Total current assets

20,827,220

22,152,678

       Property, plant and equipment, net

11,372,485

6,626,774

       Intangible assets, net

1,044,062

998,450

       Right-of-use assets, net

114,127

       Deferred tax assets, net

112,916

66,872

       Advance to suppliers for equipment

2,893,880

Total non-current assets

15,423,343

7,806,223

TOTAL ASSETS

$

36,250,563

$

29,958,901

Liabilities

Current liabilities:

       Short-term bank borrowings

$

13,323,643

$

8,840,461

       Accounts payable

1,497,152

3,961,827

       Deferred revenue

625,326

776,210

       Amount due to related parties

1,217,442

159,612

       Accrued expenses and other liabilities

3,007,901

4,398,596

       Lease liabilities, current

49,560

       Income tax payable

508,726

736,590

Total current liabilities

20,180,190

18,922,856

       Lease liabilities, non-current

50,130

Total non-current liabilities

50,130

TOTAL LIABILITIES

$

20,180,190

$

18,972,986

Shareholders’ equity

       Ordinary Shares (par value of $0.0005 per share; 100,000,000 shares
          authorized as of September 30, 2024 and 2023; 14,591,942 and
          12,500,000 shares issued and outstanding as of September 30, 2024
          and 2023, respectively)*

$

7,296

$

6,250

       Subscription receivable

(6,250)

(6,250)

       Additional paid-in capital

6,617,596

85,012

       Statutory reserve

899,731

887,482

       Retained earnings

6,076,018

9,580,585

       Accumulated other comprehensive loss

(408,465)

(676,828)

Total shareholders’ equity

13,185,926

9,876,251

Non-controlling interests

2,884,447

1,109,664

Total equity

16,070,373

10,985,915

TOTAL LIABILITIES AND EQUITY

$

36,250,563

$

29,958,901

 

*

The shares and per share information are presented on a retroactive basis to reflect the reorganization
and share reorganization by way of a subdivision and surrender of shares.

 

 

WORK MEDICAL TECHNOLOGY GROUP LTD

CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE LOSS

(In U.S. dollars, except for otherwise noted)

For the years ended
September 30,

2024

2023

2022

Net revenue from third parties

$

10,929,070

$

12,501,615

$

19,498,315

Net revenue from related party

577,370

1,064,336

212,975

Cost of revenues from third parties

(8,346,419)

(8,596,872)

(15,197,213)

Cost of revenue from related party

(291,635)

(826,095)

(95,285)

Gross profit

2,868,386

4,142,984

4,418,792

Operating expenses:

Selling expenses

(2,053,019)

(1,567,385)

(1,032,685)

General and administrative expenses

(4,558,041)

(1,861,728)

(2,563,879)

Research and development expenses

(302,511)

(301,644)

(183,900)

Total operating expenses

(6,913,571)

(3,730,757)

(3,780,464)

Other (loss) income:

Interest expense

(557,571)

(392,741)

(352,968)

Interest income

11,727

25,417

1,969

Government subsidies

346,571

74,232

1,186,641

Other income(expenses), net

578,758

(8,746)

(360,409)

Total other income(loss)

379,485

(301,838)

475,233

(Loss) income before income tax expense

(3,665,700)

110,389

1,113,561

Income tax benefit (expense)

125,291

(47,006)

(169,435)

Net (loss) income

$

(3,540,409)

$

63,383

$

944,126

Net (loss) income attributable to non-controlling interest

(48,091)

(48,647)

78,916

Net (loss) income attributable to ordinary shareholders

$

(3,492,318)

$

112,030

$

865,210

Other comprehensive loss:

Foreign currency translation adjustment

453,181

(268,068)

(1,147,710)

Total comprehensive loss

(3,087,228)

(204,685)

(203,584)

Total comprehensive income (loss) attributable to non-
controlling interests

136,727

(80,165)

(164,329)

Total comprehensive loss attributable to shareholders

$

(3,223,955)

$

(124,520)

$

(39,255)

Weighted average number of Ordinary Shares

Basic and Diluted*

12,705,011

12,500,000

12,500,000

Basic and diluted (loss) earnings per ordinary share

(0.27)

0.01

0.07

 

*    The shares and per share information are presented on a retroactive basis to reflect the reorganization
      and share reorganization by way of a subdivision and surrender of shares.

 

 

WORK MEDICAL TECHNOLOGY GROUP LTD
CONSOLIDATED STATEMENTS OF CASH FLOWS

(In U.S. dollars, except for share and per share data, or otherwise noted)

For the years ended

September 30,

2024

2023

2022

CASH FLOWS FROM OPERATING
ACTIVITIES:

Net (loss) income

$

(3,540,409)

$

63,383

$

944,126

Adjustments to reconcile net loss to net cash used
in operating activities:

Depreciation and amortization

1,410,452

1,603,129

3,258,267

Inventories write-down

762

18,320

(117,327)

Gain (loss) on disposal of equipment

42,504

8,089

(10,871)

Allowance for credit loss

262,446

149,503

1,108,999

Deferred tax benefits

(46,044)

(94,533)

(314,008)

Changes in assets and liabilities:

Accounts receivable – third parties

1,815,361

(131,950)

(4,234,997)

Accounts receivable – related party

275,993

Advance to suppliers

(1,061,321)

977,318

(191,774)

Amount due (from) to related parties

1,775,923

(3,964,077)

743,490

Inventories

1,576,799

(400,544)

2,053,675

Operating lease liabilities

(2,029)

(51,755)

(5,212)

Prepaid expenses and other current assets

293,683

1,291,145

(194,118)

Accounts payable

(2,553,902)

864,585

(5,822,547)

Income taxes payable

(250,423)

136,508

81,428

    Deferred revenue

(176,969)

52,245

(751,375)

Accrued expenses and other liabilities

(1,524,631)

1,688,370

917,303

Net cash (used in) provided by operating

activities

(2,228,087)

2,209,736

(2,258,948)

 CASH FLOWS FROM INVESTING
 ACTIVITIES:

   Purchase of intangible asset

(33,313)

(127,913)

   Purchase of property and equipment

(9,225,094)

(455,391)

(2,012,546)

   Proceed from disposal of property and equipment

194,328

601,760

   Cash acquired from Shanghai Saitumofei

63,621

Net cash used in investing activities

(9,064,079)

(583,304)

(1,347,165)

CASH FLOWS FROM FINANCING
ACTIVITIES:

   Proceeds from initial public offering

7,373,839

   Cash deposited in escrow account

(400,000)

   Contributions from non-controlling interest

2,767,032

   Proceeds from short-term borrowings

13,394,778

9,107,082

7,248,367

Repayments of short-term borrowings

(9,369,404)

(6,000,791)

(7,248,367)

Loans to related parties

(4,574,088)

(5,669,834)

(9,493,121)

Repayment from related parties

5,477,054

5,891,373

13,260,930

Loans to third parties

(1,133,656)

(2,723,935)

(1,030,628)

Repayment from loans to third parties

2,734,478

23,562

829,042

Payment of offering cost

(613,009)

(1,356,176)

      Net cash provided by (used in) financing
  activities

15,657,024

(728,719)

3,566,223

Effect of exchange rate changes

555,464

(33,852)

(59,819)

Net increase (decrease) in cash and restricted cash

4,920,322

863,861

(99,709)

Cash, cash equivalents, and restricted cash, at
beginning of year

1,637,283

773,422

873,131

Cash, cash equivalents and restricted cash, at end
of year

$

6,557,605

$

1,637,283

$

773,422

Reconciliation to amounts on consolidated
balance sheets:

Cash and cash equivalents

6,557,605

1,596,096

731,178

Restricted cash

41,187

42,244

Total cash, cash equivalents and restricted cash
shown in the statement of cash flows

6,557,605

1,637,283

773,422

SUPPLEMENTAL DISCLOSURE OF CASH
 FLOW INFORMATION:

Income taxes paid

9,973

$

160,162

$

340,024

Interest paid

543,753

$

312,035

$

312,282

 

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