DRTECH Q3 2019 Sales Results

Sales growth continued during the third quarter although at a slower pace, for the Korean originated manufacturer of x-ray detectors. The quarterly sales revenue reached ₩11.4 billion, compared with ₩11.2 billion in 2018, an increase of approximately +2% year-on-year. On a calendar year basis, cumulative sales revenue reached ₩33.3 billion, compared with ₩31.1 billion in 2018, an increase of approximately +7% year-on-year.

Sales results by product category

From a product mix perspective, the growth during 2019 has been driven by stable sales of indirect x-ray detectors combined with higher sales of direct detectors as well as image processing software solutions. For the first nine months of 2019, revenues generated from the sale of indirect-type detectors reached ₩16.7 billion, a marginal contraction of -0.7% relative to 2018. This encompasses the EXPRIMER and EXTREAM branded products which are a-Si TFT-type detectors deposited with CsI or GoS scintillator. In contrast, revenues generated from the sale of direct-type detectors grew strongly and reached ₩4.7 billion, an increase of approximately 20% year-on-year. This encompasses the FLAATZ product series which are a-Se TFT-based detectors. Revenues from the sale of imaging software solutions approximately doubled, relative to 2018, although accounted for a small proportion of overall revenues. This encompasses the Truview branded image processing solutions. Sales growth from higher demand of direct-type detectors and image processing solutions was partially offset by lower sales of detectors for mammography. Revenues from the sale of mammography detectors were approximately -5% lower year-on-year, although this contraction was isolated to export rather than domestic sales, which continued to grow strongly. This encompasses the companies RoseM series of detectors which were originally launched during 2016.

Sales results by geography

The company does not report on sales revenue by geography within its quarterly reports, however, financial accounts do include trade receivables and internal sales between its international subsidiaries. These can provide some indication around sales and trade activity by major geographical region. The company has historically performed strongly within its domestic market and was credited as being the first Korean firm to commercialise its own proprietary x-ray detector. Since launching in Korea, the companies initial international expansion has been focused on North America, China and Turkey. Since raising funds from the capital markets in 2016, the company began to invest further in international sales and distribution operations. During 2017 alone, the company established additional sales operations in the United States, Germany, Taiwan and China.

Production volumes and unit prices

The company operates two core production plants, one located at its headquarters in Seongnam-si, South Korea and the other based in Changzhou, China. For the first nine months of 2019, the company reported consolidated maximum production capacity of 3,420 detector units, compared with 3,330 units in 2018, an increase of approximately +3% year-on-year. In terms of production volumes, the company reported total production of 2,625 units, compared with 2,076 units in 2018, an increase of approximately 25% year-on-year. The increase in production volume was driven by increased production of indirect TFT-based detectors as they accounted for approximately 60% of total volumes. That said, volumes significantly increased across all core product lines. At an overall portfolio level, the mix between sales volumes increasing faster than sales revenue resulted in a lower average unit selling price. For the first nine months of 2019, the company reported that the price of detectors was approximately -4% lower year-on-year, relative to 2018.

Investment into BIOTHLON

During the first half of 2019, the company increased its investment in BIOTHLON, Inc through acquiring an additional 50,000 preference shares, taking its total investment to ₩4.4 billion. The investment into BIOTHLON is to enable DRTECH to apply its detector technology within the Next Generation Sequencing (NGS) business. DNA analysis and protein analysis using NGS technology is a new concept research method that facilitates the analysis and treatment of various diseases including cancer. The company is seeking to diversify it’s product portfolio as well as expand by offering high value-adding products into a growing biotechnology market.

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