HeartCare Medical-B (06609.HK) to Sell Entire Stake in Shenji Medical for RMB 9 Million

HeartCare (06609) announced that on December 11, 2023 (after trading hours), the company entered into an equity transfer agreement with the buyers Xing Tingyu, Li Meng, Shenji Employee Shareholding Platform, and Value Magnet Limited. According to the agreement, the company conditionally agreed to sell all of its equity in Shanghai Shenji Medical Technology Co., Ltd. for a total consideration of RMB 9 million.

Shanghai Shenji Medical Technology Co., Ltd. is a limited company registered in China and a wholly-owned subsidiary of the company. The company mainly focuses on the research and development of medical devices that rely on computer-aided technology. Shanghai Shenji Medical Technology Co., Ltd. was founded by the company and is led by Li Meng and Xing Tingyu (each being the buyer). After the completion of the transaction, the company will no longer hold any equity interest in Shanghai Shenji Medical Technology Co., Ltd., and the latter will cease to be a subsidiary of the company.

The announcement stated that since its establishment, Shenji Medical has begun researching and developing potential robotic medical devices. As of the date of this announcement, none of the medical devices under development have entered the later stages due to various unforeseen or unexpected difficulties encountered during the development process. The group must invest substantial resources to commercialize these medical devices, and there is no guarantee that these products will be successfully developed and commercialized. The continued investment in Shenji Medical and its research and development work will further divert resources from the group's core business (i.e., neuro-intervention and medical devices). Therefore, the board believes it is appropriate to sell Shenji Medical through a management buyout by existing employees, with the support of experienced investors in the biotechnology field. After the completion of the transaction, it is expected that Shenji Medical will not compete with the group. Shenji Medical will focus on the research and development of intelligent surgical equipment, while the group will not and currently has no plans to develop similar or related medical devices in this field. Following the completion of the sale, the company intends to allocate internal resources to the group’s core business, focusing on the research and development and commercialization of medical devices in the neuro-intervention sector. The group will continue to develop the products under research as outlined in the interim report published on September 21, 2023, and expects that the sale will not have a materially adverse impact on the group's business operations and financial condition.