[Click e-Stock] "Lunit Faces Tight Cash Position"

On February 13, Kiwoom Securities analyzed that Lunit, an AI medical diagnostics company, is expected to implement financial strategies to address its tight cash position.

Lunit's fourth-quarter results, announced on February 11, showed revenue of 20 billion KRW, up 271.3% year-on-year, but an operating loss of 18.5 billion KRW, continuing its deficit. Both figures fell short of Kiwoom Securities' estimates.

This year, steady revenue growth is expected across each business division.

For the imaging diagnostics solution 'Lunit INSIGHT,' non-reimbursed prescriptions for X-ray-based pulmonary nodule detection began in Korea in March last year, and for mammography-based breast cancer diagnosis in the third quarter. Annual revenue for this segment is projected to reach 2.46 billion KRW this year, representing 13.2% growth compared to the previous year.

As for the digital pathology solution 'Lunit SCOPE,' the company is expanding its business, starting with a development agreement signed last November with AstraZeneca targeting EGFR mutations in non-small cell lung cancer. Annual revenue for this segment is expected to reach 790 million KRW this year, a 96.3% increase from the previous year.

For Volpara Health, the imaging diagnostics solution company acquired last year, annual revenue is projected to reach 4.6 billion KRW, up 61.5% year-on-year.

Accordingly, Kiwoom Securities forecasts that Lunit's total annual revenue this year will be 7.85 billion KRW, marking 44.9% growth compared to last year. The operating loss is expected to decrease somewhat to 6.07 billion KRW from 6.77 billion KRW last year.

Due to continued operating losses, the acquisition of Volpara last year, and annual personnel expenses exceeding 6 billion KRW, Lunit's cash and cash equivalents stood at 6.64 billion KRW at the end of last year.

Shin Minsoo, an analyst at Kiwoom Securities, stated, "There are signs that cash will be needed going forward, including additional hiring and R&D expenditures to secure cloud systems," adding, "The time to implement financial strategies is approaching."