$Q&M Dental (QC7.SG)$ A growing revenue stream from its Covi...

A growing revenue stream from its Covid-19 PCR testing services

Q&M has expanded into the medical laboratories and research industry with the incorporation of Acumen Diagnostics Pte. Ltd. (Acumen). Acumen is Q&M’s 51% owned subsidiary, which focuses on the manufacture, sale, and distribution of Covid-19 diagnostic test kits, as well as Covid-19 testing.

On 14 September 2020, Acumen was granted the Healthcare Institution License issued by the Ministry of Health to offer PCR testing of Covid-19 in Singapore.  This license allows Q&M to sell its proprietary PCR diagnostic kits called Acu-Corona® 2.0 (Figure 6) and provide lab testing services. Currently, there are 27 testing laboratories that conduct Covid-19 tests in Singapore.

Figure 6: Acu-Corona® 2.0 Covid-19 test kits 



More recently, in May 2021, Acumen was selected as one of the six successful awardees of the open tender exercise by Health Promotion Board for the provision of Covid-19 swab and testing services. The tender entails the provision of PCR testing services for individuals residing in dormitories, as well as those going for testing at regional screening centres (RSC).

In Singapore, testing measures have recently tightened with the discovery of Covid-19 clusters at Westlite Woodlands dormitory, Tan Tock Seng Hospital and Changi Airport between April and May 2021. Subsequently, multiple clusters have emerged around karaoke lounges as well as wet markets and hawker food centres in July 2021.

The Singapore government has reported that there has been an average of 55,000 polymerase chain reaction (PCR) and antigen rapid test (ART) carried out each day in the second half of May, as part of efforts to contain the Covid-19 cluster.

We expect that there will be sustained demand for Covid-19 testing services, as the virus mutates rapidly and vaccinated individuals are still able to spread and get infected by the virus. Moreover, with Covid-19 declared an endemic, the government has reiterated that mass testing will continue as Singapore gradually reopens its economy.

This is a positive for Q&M as the Group is able to capitalise on the greater demand for PCR testing. The cost of a PCR test is between SGD 150-200, and we estimate that the net profit margin obtained from each PCR test is that of 25%.

Thus, the investment in the Covid-19 testing business has greatly added to Q&M revenue stream and has provided the Group with a hedge against any adverse effect of the pandemic on its core dental business.