[At the Crossroads] LabGenomics② 90 Billion Won Gone in 3 Years... Losses Deepen Amid Police Probe

90% of Cash Reserves from COVID-19 Boom Gone
Concerns Over Goodwill Impairment from Struggling U.S. CLIA Labs
"Medical Office-Run Hospital" Investigation and Talent Exodus Compound Troubles

LabGenomics, a KOSDAQ-listed company, has been on a continuous downward trajectory since its acquisition by a private equity fund (PEF). The massive cash reserves it had accumulated during the COVID-19 pandemic have shrunk to just one-tenth of their previous level in just over three years, and the company is now under police investigation regarding its core businesses. The market is expressing concerns that, due to both internal and external setbacks and the departure of key personnel, a turnaround for LabGenomics in the future looks increasingly uncertain.

According to the Financial Supervisory Service’s electronic disclosure system on September 23, LabGenomics’ largest shareholder changed from founder and former CEO Jin Seunghyun to Ruha PE (Ruha Galacticos LLC) in January 2023. Just before the sale in 2022, LabGenomics posted record-breaking performance thanks to a COVID-19 diagnostic kit boom, significantly increasing its cash reserves. As of the end of 2022, LabGenomics’ consolidated cash and cash equivalents totaled 98.5 billion won.

However, after the ownership changed hands, the company’s cash quickly dried up. As of the end of the first half of this year, LabGenomics’ cash and cash equivalents had dwindled to about 9.3 billion won. In just three and a half years, the company’s cash holdings plummeted to just one-tenth of their previous amount.

The primary reason for this precipitous decline in cash is the underperformance of its main diagnostics business. LabGenomics, which posted an operating profit of 66.2 billion won in 2022, saw its results begin to fall in 2023 and went on to record massive operating losses of 18.5 billion won in 2024 and 53.5 billion won in 2025.

In particular, last year saw the closure of “LabGenomics Diagnostic Laboratory,” which had been responsible for handling most of LabGenomics’ sample testing. This led to a substantial loss in accounts receivable and large-scale deficits. Last year, LabGenomics incurred approximately 40 billion won in accounts receivable impairment (bad debt expenses) in a single stroke.

The acquisition of a U.S.-based CLIA Lab (diagnostic reference laboratory), which was pursued as a growth engine following the PEF buyout, has also become a major source of losses. LabGenomics acquired QDx in August 2023 and IMD in October 2024, but both entities are still posting tens of billions of won in losses. As of the first half of this year, QDx reported a net loss of about 2.9 billion won, while IMD posted a net loss of about 3.2 billion won.

The reasons behind the ongoing losses at the CLIA Labs are complex. While sales related to COVID-19 have plummeted, the shift in business to pathology and cancer diagnostics has led to substantial integration and operational costs. Furthermore, as the adoption of higher-margin laboratory-developed test (LDT) reagents has been delayed, the CLIA Labs have had to rely on expensive commercial in vitro diagnostic (IVD) kits, resulting in significantly deteriorated profitability.

The market believes that the crisis facing LabGenomics will be difficult to overcome in the short term. The most prominent risk factor is the recent search and seizure by authorities of “LabGenomics Clinic.” The clinic is currently suspected of being an illegally operated so-called “medical office-run hospital” by non-medical personnel. If the investigation confirms these allegations, authorities may proceed with measures to recover criminal proceeds.

The U.S. CLIA Labs are also on shaky ground. LabGenomics plans to return to profitability by expanding the use of LDT reagents and reducing costs by more than 50%. However, given the high barriers to entry and the essential nature of insurance network operations in the U.S. medical market, analysts believe that a swift turnaround in results will be challenging.

The goodwill recognized from the CLIA Lab acquisitions is also a source of concern. As of the end of the first half of this year, LabGenomics held about 55 billion won in goodwill. If operating losses continue at the CLIA Labs, reducing their future earnings potential, the company may have to recognize impairment losses on goodwill at each year-end closing. In fact, LabGenomics has already booked over 10 billion won in goodwill impairment losses since the acquisitions.

Amid these circumstances, LabGenomics’ internal organizational strength also appears to be weakening. Since the arrival of CEO Ryu Jae-hak last year, the workforce has dropped from around 166 employees to about 58 recently. The number of employees engaged in frontline sales reportedly fell from around 60 to just over 10. There are even reports that some parts of the sales team defected en masse to a competitor. As a result, the company’s core personnel for generating new business opportunities has diminished.

Repeated inquiries to LabGenomics about how the company plans to respond to these issues went unanswered.

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