ROKIT Healthcare(376900) sharply increased sales in the first half of this year but continued to post an operating loss due to expense increases from clinical trials and expansion of its U.S. business. As key regenerative medicine pipelines entered clinical stages, research and development costs rose more than 11-fold in a year.
ROKIT Healthcare said on the 14th that first-half sales on a consolidation basis rose 67.6% to 16.275 billion won from 9.708 billion won a year earlier. In contrast, the operating loss came to about 15.8 billion won.
Sales growth stemmed from global expansion and growth in key businesses. The company plans to continue top-line growth in the second half through ongoing clinical trials and overseas operations.
The increase in research and development expense is cited as a key factor behind the wider loss. First-half recurring research and development expense was about 2.87 billion won, up more than 11 times from 255 million won a year earlier. Research and development expense focused on domestic cartilage clinical trials and efficacy analysis of the kidney regeneration platform.
Expenses tied to expansion of the U.S. business also increased. About 2.4 billion won in fees and about 1.49 billion won in advertising and promotion expense occurred mostly at U.S. subsidiary ROKIT AMERICA. Related expenses rose as the company expanded its sales and marketing base in the U.S. market and tapped local professional services.
Personnel expenses also included expenses that did not result in actual cash outflows. Of about 7.19 billion won in salary-related expenses in the first half, about 2.53 billion won was stock-based compensation expense from fair value measurement of employee stock options.
An increase in bad debt expense also affected earnings. The company is proactively recognizing potential losses based on the aging of accounts receivable and historical noncollection rates. When receivables are actually collected, the related provision is reversed.
ROKIT Healthcare plans to make results from clinical trials and global operations visible from the second half, building on first-half investments.