Geneplus locks onto targeted medicine for IPO pitch

After a post-Covid earnings dip, the company is seeking a stable future as a provider of data and diagnostics for precision medicine and disease prevention  

Key Takeaways:

• The company’s core business is recovering from a post-pandemic slump, with gross margin rising to 68.5% in the first half, although net losses persist
• With cash flow tight, Geneplus has turned to the Hong Kong IPO market to help fund research into improved diagnostics and AI-enabled medical care

By Lee Shih Ta

A biotech specializing in disease diagnostics and tailored treatments is about to test the Hong Kong market’s interest in AI-focused healthcare IPOs.

Geneplus Technology (Shaoxing) Co. Ltd. provides genetic testing tools for cancer and other conditions, as well as sequencing services and biomarker analysis drawing on a host of scientific disciplines.

Its history sheds light on the evolution of China’s precision medicine sector over the past decade, as new technologies have enabled individually tailored treatments and health management strategies. According to its listing application, the company began in 2015 as a provider of gene sequencing and analysis services for medical research institutions and clinical research teams.

At a time when precision medicine was still considered a cutting-edge concept, the company launched a technology platform and gradually expanded its research expertise across scientific fields such as genomics and bioinformatics.

When the Covid pandemic broke out in 2020, Geneplus rapidly scaled up its virus testing services, driving revenue to a peak of nearly 1.82 billion yuan ($260 million) in 2022 and generating an annual profit of 372 million yuan. However, the earnings spike did not represent an operating baseline.

As pandemic-related demand faded in 2023, Geneplus had to face a more challenging environment. Revenue plunged 74% that year to 473 million yuan as demand for Covid test kits plummeted.

The company reallocated resources towards precision diagnostics for oncology and organ health, accelerating the launch of in vitro diagnostic (IVD) products. Revenue rebounded 17.8% to 557 million yuan in 2024 from a year earlier, while turnover for the first half of 2025 rose 12.6% to 285 million yuan, as the core business regained some stability, albeit at a modest scale.

Geneplus revenue remains heavily concentrated in precision diagnostics, which accounted for 78.3% of revenue in 2024. In other businesses, clinical research and practical applications contributed about 16.7%, while drug development services were only around 5% of turnover. According to third-party data cited in the IPO documents, Geneplus ranked third in China’s precision diagnostics industry by revenue in 2024, with a market share of around 2.7%.

Gross margin improving

Still, the bottom line remains under strain. Geneplus turned a profit of 54.1 million yuan in 2023, even as Covid demand waned, but it swung to a net loss of 424 million yuan in 2024. Losses widened from 109 million yuan in the first half of last year to 414 million yuan in same period of 2025, primarily due to a fair value loss of 362 million yuan. But losses narrowed on an adjusted basis, from 88.2 million yuan to 47.7 million yuan.

Notably, gross margin has kept rising, from 41.9% in 2022 to 68.5% in the first half of 2025. This suggests that the losses are mostly driven by upfront investments in R&D, sales expansion and platform construction.

The company’s balance sheet, however, helps explain the decision to pursue a Hong Kong listing right now. At the mid-year point, Geneplus held only 96 million yuan in cash and cash equivalents, while net current liabilities stood at nearly 1.78 billion yuan. Operating cash flow for the first half was negative to the tune of 34.8 million yuan. Amid mounting funding pressure, a public listing appears critical to forging ahead with continued R&D efforts and market expansion.

The AI healthcare sector has not suffered a clear stock market downturn, but investor enthusiasm is no longer evenly distributed. A company that listed late last year, iFlytek Healthcare (2506.HK), reported that its revenues jumped more than 30% in the first half of 2025 and losses shrank 42%, yet its shares have fallen 13% in the year to date, with a price-to-sales ratio of around 11 times. Meanwhile, Airdoc (2251.HK) has seen its share price plunge 82.3% since its 2021 market debut and is down 2.6% this year.

The valuation premium once enjoyed by AI healthcare has largely dissipated, leaving companies such as Geneplus under pressure from investors to demonstrate credible paths to profitability.

Overall, Geneplus offers technological depth and market traction, with years of accumulated data, established ties to hospital and clinical networks and moderate growth in its core diagnostics business. The rising trajectory of gross margins indicates a shift toward higher value-added products, leaving its underlying fundamentals far from gloomy.

That said, the challenges are equally clear. Revenues remain relatively modest, the business is still heavily skewed towards diagnostics, and segments with higher upside such as drug development services have yet to deliver a meaningful earnings boost.  Meanwhile, sustained losses and tight cash flow leave little scope for a leisurely listing timetable.

As valuations for AI healthcare companies in Hong Kong have grown more rational, investor expectations for Geneplus could hinge on whether it can clearly articulate plans to improve its cash flow and advance towards the breakeven point in the next couple of years. If the company can use its platform strengths to expand beyond diagnostics, its valuation could find room to grow.

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