[Exclusive][At a Crossroads: Listed Companies] LabGenomics ① Searched on Suspicion of Operating a "Manager-Run Hospital"

Allegations of Manager-Run Hospital Operations at Sample Consignment Institution
Company States "Investigation in Early Stages... No Disruption to Business"

The police have carried out a search and seizure of LabGenomics, a KOSDAQ-listed company, on suspicions of operating a so-called "office-managed hospital" (Samu-jang hospital).

According to industry sources on the 28th, last month the police searched LabGenomics and both current and former CEOs and executives on allegations that they operated an office-managed hospital. An office-managed hospital refers to a hospital that is established and operated by a person without a valid medical license (such as an office manager) using a doctor's credentials. Such operations are illegal under the Medical Services Act.

LabGenomics is a company specializing in molecular diagnostics based on genomics. It provides a range of genomic molecular diagnostic services, such as prenatal screening for congenital disorders and cancer gene testing. During the COVID-19 pandemic, it also recorded massive profits from its diagnostic test kits.

The issue centers on "LabGenomics Diagnostic Laboratory & Clinic," which served as a specimen consignment agency for LabGenomics. LabGenomics has been receiving diagnostic specimens from hospitals and clinics, sending them to LabGenomics Diagnostic Laboratory & Clinic for analysis. Investigators believe that, although a physician identified as 'A' was formally managing the organization, LabGenomics was in fact the real operator.

Previously, in March, LabGenomics made a public disclosure stating that its service agreement with LabGenomics Diagnostic Laboratory & Clinic had ended. In this disclosure, LabGenomics described the clinic as an independent business partner and noted that it was merely a cooperating medical institution providing diagnostic testing services.

Currently, LabGenomics Diagnostic Laboratory & Clinic is reportedly in the process of shutting down. LabGenomics had already recognized KRW 40.7 billion in accounts receivable from this clinic as impairment loss last year. This amount represents 61% of the company’s total accounts receivable.

Regarding this matter, a representative from LabGenomics stated, "This issue includes matters that began during the tenure of previous majority shareholders and management. Since the investigation is still at an early stage, the company is verifying the details and facts and is fully cooperating with the procedures of the relevant authorities."

The spokesperson added, "Currently, there is no disruption to our ongoing operations or major business projects. If any specific impact on the company is identified during the investigation, we will promptly and transparently inform shareholders and investors through public disclosures or other appropriate channels."

Meanwhile, LabGenomics is proceeding with a reverse stock split to escape being classified as a "penny stock." Trading will be suspended from September 1 to September 22 for this process.

This content was produced with the assistance of AI translation services.