This article first appeared in The Edge Malaysia Weekly on June 1, 2026 – June 7, 2026

UMEDIC Group Bhd (KL:UMC) enjoyed a strong run after its initial public offering nearly four years ago before investor sentiment weakened amid uneven earnings growth.

Yet behind the softer share price performance, the Penang-based medical device group has continued laying the foundation for a more resilient and sustainable business model.

Following a major manufacturing upgrade in Penang, UMediC is positioning for a new growth phase driven by export expansion, higher-value consumables and specialised healthcare technologies.

The group, best known for its HYDROX pre-filled humidifiers and nebulisers, has completed a second manufacturing plant in Batu Kawan that more than doubles its production footprint while strengthening its push into new medical consumables and pharmaceutical-related products.

UMediC is also expanding its medical product distribution business with a first-to-market strategy, highlighted by its neurostimulation device business, ambulance supply operation and post-acute healthcare services as part of a broader ambition to build an integrated healthcare ecosystem.

“We are not an explosive growth kind of business, but in good times or bad, there will always be demand for our products,” Ng Sze Hui, the company’s alternate director to the non-executive chairman, tells The Edge in an interview.

UMediC’s newly completed Batu Kawan plant increases its manufacturing and warehousing space to about 50,000 sq ft from less than 30,000 sq ft previously.

The new facility includes ISO 7 and ISO 5 clean rooms that support the production of HYDROX pre-filled humidifiers and nebulisers. The group has also implemented the Water for Injection (WFI) standard to prepare for future pharmaceutical-related products and regulatory expansion.

Earlier this year, UMediC secured additional industrial land from the Penang Development Corporation for future manufacturing of solution-based consumables, with production expected by end-2027.

A defining feature of UMediC’s manufacturing business is that customer acquisition takes time, often requiring years of regulatory approvals, distributor cultivation and hospital adoption before meaningful revenue contribution emerges.

Medical consumables require lengthy regulatory approvals and hospital adoption before sales can scale, creating high barriers to entry and sticky distributor relationships. Once products are registered and integrated into hospital procurement systems, switching suppliers becomes difficult unless there are major quality or pricing issues.

UMediC typically works with a single distributor per country, granting exclusivity only after sufficient sales commitment and market-building capability are demonstrated.

“In medical devices, confidence is very important. If you promise six weeks [delivery], then it must arrive in six weeks,” says Ng.

The newly completed Batu Kawan plant is expected to strengthen UMediC’s ability to support larger export opportunities by shortening delivery lead times and improving production scalability.

UMediC’s core manufacturing products, of which more than 90% are exported, are used in oxygen therapy to humidify oxygen provided to patients. There are fewer than five manufacturers globally producing pre-filled humidifiers at scale, giving the company a relatively defensive position in the respiratory consumables segment.

UMediC exports to more than 30 countries, with Europe remaining a key market due to its stringent quality standards and stronger pricing structures. The group is also expanding further into Eastern Europe, where management sees rising demand for respiratory consumables.

The company recently secured a Brazilian customer expected to place monthly container orders.

Meanwhile, UMediC is in the process of registering its products to comply with US Food and Drug Administration standards, with management expecting approval within the next 12 months. This could potentially open another sizeable export market for the group.

Despite the larger manufacturing base, management says the full financial benefits are unlikely to materialise immediately as the group ramps up production, onboards customers and introduces redesigned product configurations.

“You cannot install machines today and expect revenue to jump tomorrow,” says Ng. “This year is more about market penetration and customer onboarding. The stronger revenue impact should become clearer next year.”

Management expects revenue to continue trending upwards, although margins may remain affected in the near term by depreciation and logistics costs.

Still, Ng says underlying demand remains healthy. “I actually have a lot of orders. The challenge now is managing delivery timing because customers are also trying to manage freight costs.”

Since its financial year ended July 31, 2023 (FY2023), UMediC’s earnings have moderated, with its net profit declining from RM10.32 million in FY2023 to RM8.99 million in FY2024 and RM8.13 million in FY2025. Revenue came in at RM45.43 million in FY2023, RM54.57 million in FY2024 and RM48.56 million in FY2025.

The softer earnings partly explains the company’s weak share price performance. After touching a high of 90 sen in April 2023, the stock gradually declined to about 31 sen recently, below its 32 sen IPO price in July 2022.

CEO Eric Lim Taw Seong attributes part of the earnings softness to slower government hospital procurement activities in the domestic distribution segment.

During this period, the group has increasingly turned to private hospitals, which now contribute more than half of its distribution revenue. Meanwhile, export revenue grew from RM5.85 million in FY2021 to RM18.38 million in FY2024 before easing slightly to RM16.37 million in FY2025.

Ng says the moderation was partly deliberate as UMediC consolidated its distributors in Spain to avoid unhealthy price competition.

Beyond manufacturing, UMediC is pursuing a differentiated medical distribution strategy focused on first-to-market healthcare technologies rather than commoditised medical equipment.

One key growth area is its 90%-owned Ateria Medika Sdn Bhd, established in 2024, which distributes neurostimulation technologies used in treating Parkinson’s disease and epilepsy. The company works closely with neurologists and neurosurgeons, sponsors overseas specialist training, develops key opinion leaders and helps build awareness among doctors and patients.

“We invest in doctors and training because this kind of business needs ecosystem development first,” says Lim.

While this approach lengthens the initial commercialisation cycle, management believes it creates a competitive advantage or stronger economic moat over time. That is because once doctors are trained on a particular platform and hospitals establish treatment protocols around it, switching suppliers becomes clinically difficult and operationally disruptive.

For implant-based and neurostimulation technologies, UMediC is deeply embedded in surgical workflows, technical support and after-sales clinical services. The group says this explains why margins for specialised medical technologies can exceed 40%, significantly higher than conventional medical equipment distribution.

UMediC has also expanded into ambulance supply and post-acute healthcare services as part of its broader healthcare ecosystem strategy.

The ambulance business targets government hospitals, university hospitals and private healthcare providers, with management estimating annual domestic demand at roughly 200 to 300 units.

Meanwhile, its Batu Kawan post-acute care centre focuses on rehabilitation, elderly care and transitional recovery services for patients discharged from hospitals but not yet ready for home care. “We want to close the gap between hospital care and home care,” says Ng.

UMediC’s listing was transferred to Bursa Malaysia’s Main Market in April 2024.

The group remains in a net cash position, with cash holdings of RM9.5 million against short-term loans of RM3.22 million and long-term borrowings of RM3.19 million.

At 31 sen per share, the company has a market capitalisation of about RM116 million and a trailing price-earnings ratio of 14.2 times.

There are currently three analysts covering the counter, with two “hold” recommendations and one “buy” call. The consensus target price is 35 sen, implying an upside potential of 12.9% from the current level.