CORDLIFE Group said on Sunday (Dec 10) that its board was informed of irregular temperatures in one of its tanks in February 2023 but did not make any announcement as it assessed that there would be “no material impact on the financial performance of the group” for FY2022 and FY2023.

The cord blood banking company – which is currently being investigated by the Ministry of Health (MOH) – was responding to queries from the Singapore Exchange (SGX) on why its board did not make any earlier announcements on the temperature irregularities or audit by MOH.

MOH said on Nov 30 that it had found that seven of Cordlife’s 22 cord blood units had been exposed to temperatures above the acceptable limits of below minus 150 degrees Celsius following an unannounced audit.

MOH conducted unannounced audits on the company in August and November this year after receiving a complaint in July 2023 by a member of the public alleging issues with storage temperatures and other service quality issues.

SGX noted that Cordlife was aware that there were tanks exposed to temperatures beyond the acceptable limits for several days in February, March and June 2022, but had not made any announcements.

Cordlife said “certain members” of its management team were alerted by an employee in June 2022 of irregular temperatures in one tank for several days in June, and the management had taken “immediate actions and carried out internal investigations to further understand the issue”.

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The incident was later reported to the board in February 2023, and the board had assessed no material impact to the financials, taking into account that the group had “adequate provisions to offset against the potential financial impact of any fee refunds or waivers of the remaining storage years that may be offered to clients in connection with the incident”.

The group said that earlier temperature irregularities in the affected tank and one other tank, which occurred in February and March 2022, were brought to the attention of the company during the unannounced audit by MOH in August 2023.

Cordlife – which is licensed under the Healthcare Services Act – had been inspected by MOH in September 2022 as part of a routine inspection. MOH said on Nov 30 that the group had not disclosed any incidents during or after the routine inspection.

SGX also queried the board on why it did not announce the audits by MOH in August and November at the relevant time, given the severity of the subject matter.

Cordlife said the company had not been notified by the MOH that it was deemed to be in breach of any rules, regulations or laws in August. It added it was informed the audit was carried out as a result of public feedback.

The company added that MOH informed the company that it would be conducting an inspection on Nov 16 and 17, and this was extended for a few more days in November, during which time Cordlife had been attending to MOH and its requests for information.

“Upon receipt of the MOH’s notice of compliance on Nov 30, 2023 which detailed the inspection outcomes and the consequences of the same, the company released its announcement on the same day,” Cordlife said.

Shares of Cordlife plunged after the temperature irregularities were made known, briefly falling as much as 65.9 per cent, before closing 31.9 per cent lower at S$0.31 on Dec 1.

The counter rose 1.7 per cent to close at S$0.30 last Friday.