Cordlife says irregular temperatures not disclosed earlier as board assessed 'no material impact' on financials
SINGAPORE — Cordlife Group said on Dec 10 that its board was informed of irregular temperatures in one of its tanks in February 2023. However, it did not announce this on the stock exchange as it assessed that there would be "no material impact on the financial performance of the group" for the 2022 and 2023 financial years.
The cord blood banking company — which is being investigated by the Ministry of Health (MOH) — was responding to queries from the Singapore Exchange (SGX) on why its board did not make any earlier announcements on the temperature irregularities or audit by MOH prior to Nov 30. MOH said on Nov 30 that it found that seven of Cordlife’s 22 cord blood unit storage tanks had been exposed to temperatures above the acceptable limits of below minus 150 deg C after an unannounced audit.
MOH conducted unannounced audits on the company in August and November after receiving a complaint in July 2023 by a member of the public alleging issues with storage temperatures and other service quality issues.
SGX noted that Cordlife was aware there were tanks exposed to temperatures beyond the acceptable limits for several days in February, March and June 2022 but had not made any announcements.
Cordlife said "certain members" of its management team were alerted by an employee in June 2022 to irregular temperatures in one tank on several days of that month, and that management had taken "immediate actions and carried out internal investigations to further understand the issue".
The incident was later reported to the board in February 2023. The board had assessed that there was no material impact to the firm’s financials. This was because the group had "adequate provisions to offset against the potential financial impact", such as "any fee refunds or waivers of the remaining storage years that may be offered to clients in connection with the incident".
The group said that earlier temperature irregularities in the affected tank and another tank, which occurred in February and March 2022, before the employee’s discovery in June 2022, were brought to the attention of the company during the unannounced audit by MOH in August 2023.
Cordlife — which is licensed under the Healthcare Services Act — had been inspected by MOH in September 2022 as part of a routine inspection. MOH said on Nov 30 that the group had not disclosed any incidents during or after the routine inspection.
SGX also queried the board on why it did not announce the audits by MOH in August and November at the relevant time, given the severity of the subject matter.
Cordlife said it had not been notified by MOH that it was deemed to be in breach of any rules, regulations or laws in August. It added it was informed the audit was carried out as a result of public feedback.
It added that MOH informed the company it would be conducting an inspection on Nov 16 and 17, and this was extended for a few more days in November, during which time Cordlife had been attending to MOH and its requests for information.
"Upon receipt of MOH’s notice of compliance on Nov 30, which detailed the inspection outcomes and the consequences of the same, the company released its announcement on the same day," it said.
Shares of Cordlife plunged after the temperature irregularities were made known, briefly falling as much as 65.9 per cent. The counter closed at 30 cents on Dec 8.
ALSO READ: 'Might as well put cord blood in my fridge': Parents slam Cordlife for lapses
This article was first published in The Straits Times. Permission required for reproduction.
Disclaimer: The copyright of this article belongs to the original author. Reposting this article is solely for the purpose of information dissemination and does not constitute any investment advice. If there is any infringement, please contact us immediately. We will make corrections or deletions as necessary. Thank you.
