The Analytical Credit Rating Agency (ACRA) confirmed the credit rating of Human Stem Cell Institute (HSCI, MOEX: ISKJ) at BB+ on the Russian national rating scale with a stable outlook. HSCI’s rating was first published by ACRA in March 2021.
ACRA notes that HSCI’s project portfolio is limited to medicine and healthcare. The scope of services provided by operating companies is moderately diversified and includes such areas as gene therapy, genetic research and diagnostics, bioinsurance, innovative aesthetic medicine services, the development and implementation of new vaccines against coronavirus and influenza, etc.
ACRA believes HSCI’s financial profile to be of medium risk level. HSCI’s debt burden is low with moderate liquidity and interest coverage.
One of the main HSCI’s operating companies is still the International Medical Center for Processing and Cryostorage of Biomaterials (Gemabank: MOEX: GEMA), a bank for personal storage of umbilical cord blood stem cells for the treatment of critical illnesses. ACRA notes the leading position of the International Medical Center for Processing and Cryostorage of Biomaterials in the narrow segment of cellular technologies, average corporate governance and a wide business geography. The financial profile of International Medical Center for Processing and Cryostorage of Biomaterials is described by a small business size, a high liquidity rating and a consistently very high profitability level. The agency assesses the debt burden and interest coverage as moderate.
Genetico Center is one of the leaders in the Russian genetic testing market. According to ACRA, the services provided by the company are moderately diversified: preimplantation genetic testing, non-invasive prenatal testing, genetic research of tumors for the selection of target therapy, NGS sequencing for diagnosis and research, as well as a number of other services. The company plans to hold an IPO in 2023.
Nextgen and HSCI-Pharma, companies conducting the development, production and marketing of gene therapy drugs, also have significant shares in the structure of HSCI investments. According to ACRA, both companies have an average operating profile rating, a low debt burden with a high level of debt service, high profitability and strong liquidity. As expected by the Agency, companies began to generate additional dividend flows for HSCI.
Another significant company for HSCI is Reprobank (Reprolab). The company offers personal banking of reproductive cells and tissues, as well as donation of reproductive material for infertility treatment. ACRA estimates that Reprobank has an average operating profile rating, a low debt burden and high liquidity and profitability.
ACRA notes an improvement in the diversification of HSCI’s investments, since in 2022 dividend flows began to come not only from the International Medical Center for Processing and Cryostorage of Biomaterials, but also from Nextgen and Reprolab, however, there is still a certain bias towards the International Medical Center for Processing and Cryostorage of Biomaterials.
“HSCI continues to successfully implement the company’s development strategy and increase the stability of its operating assets,” comments Sergey Masyuk, the Director at HSCI. “We quickly respond to changes and make active use of opportunities to increase our market share as foreign companies leave.”