Today (October 30th), Bloomage Biotech released its third quarter report for 2024. According to the financial report, the company’s operating income in the first three quarters was 3.874 billion yuan ($544.2 million), a year-on-year decrease of 8.21%; the net profit attributable to shareholders of the listed company decreased by 29.62% year-on-year to 362 million yuan ($50.86 million).
CHAILEEDO found that this is the first time since 2022 that Bloomage Biotech has fallen below 4 billion yuan ($561.9 million) in the first three quarters after breaking through the 4-billion-yuan mark. Looking at the 1.854 billion yuan ($260.5 million) revenue recorded by the company in the fourth quarter of last year, if it does not show any growth in the fourth quarter of this year, then Bloomage Biotech’s full-year revenue for this year will be difficult to exceed 6 billion yuan ($842.9 million).
Bloomage Biotech’s performance in the first three quarters has been declining continuously, and the major shareholder has been reducing holdings.
CHAILEEDO has analyzed Bloomage Biotech’s performance in the first three quarters over the past 5 years and found that since its listing in November 2019, Bloomage Biotech’s operating income in the first three quarters has shown an overall upward trend. Both revenue and net profit maintained high growth rates in 2021 and 2022. However, starting from last year, there has been a downward trend in both revenue and net profit, with the decline further expanding.
Despite the decrease in revenue and net profit, Bloomage Biotech’s research and development expenses as well as management expenses have increased. The financial report shows that Bloomage Biotech’s research and development expenses for the first three quarters of this year were 313 million yuan ($43.97 million), a year-on-year increase of 12.99%, and management expenses were 423 million yuan ($59.43 million), a year-on-year increase of 32.3%. Furthermore, Bloomage Biotech’s previously criticized high sales costs have decreased in the first three quarters of this year, dropping by 16.04% from 1.943 billion yuan ($273 million) in the same period last year to 1.63 billion yuan ($229 million).
Just looking at the third quarter of this year, Bloomage Biotech’s operating income was 1.064 billion yuan ($149.5 million), a decrease of 7.14% year-on-year; the net profit was 20.2583 million yuan ($2.85 million), a significant decrease of 77.44% year-on-year. Regarding the significant decline in net profit, Bloomage Biotech stated that it was mainly due to the year-on-year decrease in operating income and the increase in management expenses and research and development expenses.
It is well known that from 2018 to 2021, the functional skincare business was the “magic weapon” for Bloomage Biotech to maintain high growth and an important force for the company to transition from the main B-end market to conquer the C-end market. However, starting from the second half of 2023, this growth engine seems to have slowed down. It is worth mentioning that since the full-year financial report of 2023, Bloomage Biotech has not disclosed the specific revenue data of its four major brands: BIOHYALUX, QuadHA, BM, and MedRepair.
According to CHAILEEDO data, QuadHA’s GMV in Douyin sales in the first three quarters of this year showed negative growth in the months of March to July, with a year-on-year decline of over 45%. However, in August of this year, QuadHA’s sales increased significantly by 144.67% year-on-year to 80 million yuan ($11.24 million). As for the current sales situation for Double Eleven, QuadHA has not made it to the top 20 beauty brands in Li Jiaqi’s live broadcast pre-sale on the first day.
In fact, regarding the decline in revenue from the functional skincare product segment, Bloomage Biotech explained in its 2024 semi-annual report that “since 2023, the company has proactively proposed changes to the functional skincare product business, making phased adjustments to major brands. Currently, the company’s phased adjustments to its major brands are still ongoing, and the effects of the changes will take time to show.”
Another point worth noting is that on October 8th, Bloomage Biotech announced that its second largest shareholder, PICC Life Insurance Company Limited Chengda Health Industry Equity Investment Center (referred to as “PICC Chengda”), would reduce its holdings by up to 12.042 million shares, accounting for approximately 2.50% of the company’s total share capital, due to its own funding needs. Based on the closing price on that day, the estimated cash amount to be received is around 969 million yuan ($136.13 million). This is the first time PICC Chengda has reduced its holdings in Bloomage Biotech since the company went public. At that time, some industry insiders commented, “PICC Chengda’s reduction in holdings may be related to the improvement in the stock market but could also be related to the pressure on performance at Bloomage Biotech over the past two years.”
Bloomage Biotech is currently undergoing a period of transformation
Faced with performance pressure, Bloomage Biotech has also begun actively seeking change. It is worth noting that since last year, Bloomage Biotech has started a series of adjustments and changes in its organizational structure. On October 17, 2024, Bloomage Biotech’s WeChat official account published a “Letter to Everyone,” stating: “Currently, Bloomage Biotech is undergoing an unprecedented organizational management change, which is crucial for supporting the company’s long-term development and achieving modern management.” Clearly, this letter is also a signal from Bloomage Biotech to the outside world that the company is in a period of transformation.
CHAILEEDO found that in addition to organizational changes, Bloomage Biotech has also taken reformative steps in major product shaping and brand planning.
It is understood that BIOHYALUX, which used to focus on sodium hyaluronate raw materials, has repositioned its brand this year as “biotechnologically repairing and nourishing healthy skin.” Additionally, at a recent industry conference and expo for the Chinese fragrance, flavor, and cosmetics industries, Bloomage Biotech showcased its independently developed “personalized customized skincare service” technology for the first time and stated that “it is expected that in November this year, personalized customization store workstations will land at the BIOHYALUX Qingdao MixC store.”
The company’s other three major brands, MedRepair, QuadHA, and Jihuo, are also undergoing different adjustments. For example, the brand director of QuadHA, Peng Fei’er, recently stated in “The Offer for All New Girls” that “in the future, QuadHA not only aims to upgrade its ingredients and formulations, but also hopes to enhance its aromatherapy offerings to provide emotional value to users.”
Meanwhile, in recent years, Bloomage Biotech has also been focusing on the collagen protein track. For example, under BIOHYALUX, it has entered the collagen protein field, launching collagen products for firming and plumping; and last August, Bloomage Biotech also launched a brand called Runxi Quan, which uses collagen as its core ingredient.
It is worth noting that according to the National Medical Products Administration Medical Device Technical Review Center, Bloomage Biotech has completed the registration of the main documents for medical devices related to “recombinant type III human collagen raw materials” and has added several patents related to “collagen.” This indicates that Bloomage Biotech is making efforts in restructuring the collagen protein field.
From a revenue of 1.886 billion yuan ($265 million) in 2019 to 6.359 billion yuan ($893.4 million) in 2022, Bloomage Biotech achieved this growth in just five years. This high-growth performance has brought Bloomage Biotech a lot of fame and applause, but as the spotlight fades and performance is under pressure, Bloomage Biotech indeed needs to face various doubts in the market. Judging from Bloomage Biotech’s current bold reform measures, its determination is evident, but whether it can return to its former glory will still need time to prove.