[NA Eun-kyung, Edaily Reporter] Shares of dental-related companies rallied in South Korea’s pharmaceutical, biotech, and healthcare market on Aug. 11, buoyed by expectations for business expansion and strong earnings.

South Korea’s dental industry has established a strong global presence not only in dental implants but also in digital dentistry, including dental computed tomography (CT) systems, intraoral scanners, and clear aligners. Korean companies have built extensive overseas sales networks and generate a significant portion of their revenue from exports.

Graphy Inc. surged on expectations that its acquisition of RAY Co., Ltd. would expand its business, while VATECH Co., Ltd. jumped after reporting strong second-quarter earnings. Precision diagnostics company NGeneBio Co., Ltd. also regained a market capitalization of more than 20 billion won after announcing that it had obtained European certification.

Graphy Jumps as Much as 18% on RAY Acquisition

Graphy closed at 22,300 won on Aug. 11, up 10.9% from the previous session, according to MP DOCTOR (formerly MarketPoint), operated by KG Zeroin. The stock climbed as much as 18.16% intraday to 23,750 won.

Investor interest had already picked up after the company disclosed a deal to acquire management control of RAY following the close of the regular trading session the previous day. Graphy shares also gained 2.49% in the Nextrade (NXT) after-hours session.

Graphy plans to acquire 4,087,749 RAY shares—representing a 26.14% stake—from Ray Holdings and RAY CEO Lee Sang-cheol for approximately 49.2 billion won. If the transaction closes as scheduled, Graphy will become RAY’s largest shareholder on Sept. 16.

The transaction goes beyond a simple equity investment. Graphy plans to gain management control by appointing directors and an auditor of its choice at an extraordinary shareholders’ meeting.

Expectations of synergies between the two companies drove the stock price higher.

Graphy owns shape-memory alloy (SMA) technology for clear aligners, as well as 3D printing materials and manufacturing technology. RAY specializes in three-dimensional dental CT systems, intraoral scanners, and software for diagnosis and treatment planning.

Integrating their technologies could enable the companies to build a digital dentistry platform covering the entire treatment process—from imaging and scanning a patient’s mouth to treatment planning, manufacturing clear aligners, and applying them in clinical care.

RAY’s global distribution network is another potential target for synergy. The company operates in approximately 70 countries and maintains 14 overseas bases, including operations in the United States, Canada, Germany, France, Japan, and China.

Graphy could leverage RAY’s existing customer base for dental equipment to cross-sell SMA materials and finished products, thereby reducing the time and customer acquisition costs required to enter new markets. RAY, meanwhile, could add recurring revenue from materials and aligners used in individual patient treatments to its equipment business, where purchasing cycles tend to be longer.

The extent of the actual synergies, however, will depend on how quickly the companies integrate their products and software following the acquisition and ramp up sales of SMA products through RAY’s distribution network.

Graphy paid a 2.1 billion won deposit the day before and is scheduled to pay 26.78 billion won on September 15 and another 20.28 billion won on September 16.

VATECH Rebounds as 3D Sales Recover; Operating Profit Rises 45%

VATECH shares extended their gains after the company released preliminary second-quarter results at 2:13 p.m. The stock closed at 22,150 won, up 12.95% from the previous session.

VATECH reported consolidated second-quarter revenue of 121.36 billion won, up 9.7% from a year earlier. Operating profit rose 45% to 24.47 billion won, while net profit surged 200.6% to 22.19 billion won.

Its operating margin reached 20.2%, up 4.9 percentage points from a year earlier, although one-time gains contributed partly to the increase in operating profit.

Of particular note was a rebound in the company’s core 3D product business, which had slowed in the first quarter.

On a standalone basis, sales of VATECH’s three-dimensional dental cone-beam computed tomography (CBCT) products fell 20.2% year-over-year in the first quarter. In the second quarter, however, sales rebounded 6.8% to 42.13 billion won.

Sales of 2D X-ray products rose 14.3%, while revenue from intraoral sensors and other products increased 6.7%, marking growth across all product categories.

Growth accelerated particularly sharply in Europe. VATECH’s sales growth in Europe rose to 23.4% in the second quarter from 11.7% in the first.

Second-quarter sales in France, Germany, and the Czech Republic increased by 44.2%, 27.1%, and 38.9%, respectively. Sales in Asia rose 21.1%, while revenue in the United States and South America increased by 2.7% and 7.4%, respectively.

At an investor relations presentation in May, VATECH stated that demand in the dental imaging diagnostics market was shifting from 2D to 3D products.

In response, the company is pursuing a two-track strategy. It plans to expand its lineup of premium 3D products with large fields of view (FOVs) in developed markets while increasing sales of mid-range and entry-level products in emerging markets.

VATECH has identified Green X 12 as a next-generation growth product. The system combines CT, panoramic imaging, cephalometric imaging, and model-scanning functions.

The company also has an extensive global sales infrastructure. VATECH supplies products to approximately 100 countries through 25 overseas subsidiaries, with exports accounting for 92.6% of its revenue last year.

Because its overseas subsidiaries handle local marketing and after-sales service, VATECH can leverage its existing distribution network to rapidly expand sales following new product launches.

In the second half of the year, the company plans to strengthen its software capabilities alongside its regional product strategy, focusing on Clever One, a digital diagnostic platform equipped with artificial intelligence functions.

“We continued to grow in key markets, including Europe and Asia, based on our product competitiveness and local business capabilities,” said VATECH CEO Hwang Kyu-ho. “We will continue to expand our global presence by introducing differentiated solutions focused on improving patient convenience and the accuracy of dental diagnostics.”

NGeneBio Jumps 14%, but Market-Cap Risk Remains

NGeneBio closed at 2,275 won, up 13.9% from the previous session, after announcing that its hereditary cancer diagnostic panel had obtained certification under Europe’s In Vitro Diagnostic Medical Devices Regulation (CE-IVDR).

NGeneBio announced on August 11 that BRCAaccuTest PLUS, its hereditary cancer diagnostic panel, had obtained quality management system certification under CE-IVDR. According to the company, this is the first such certification among South Korean breast and ovarian cancer diagnostic panels.

NGeneBio has supplied its BRCA diagnostic panel to markets including Poland, Turkey, and Lithuania based on its previous CE-IVDD certification.

Leveraging this new certification, the company plans to expand beyond its existing hematologic cancer products into hereditary and solid cancer diagnostics in Western European markets such as Germany.

It also plans to accelerate regulatory approvals and establish new sales channels in South and Southeast Asia, where CE-IVDR certification carries regulatory and commercial credibility.

BRCAaccuTest PLUS is a next-generation sequencing (NGS) precision diagnostic panel that simultaneously analyzes mutations in the BRCA1 and BRCA2 genes.

The test is designed to assess disease risk in patients suspected of having hereditary breast and ovarian cancer syndrome and to support clinical decision-making. Compared to the previous product, the panel covers a broader range of genetic variants and uses NGeneBio’s proprietary purification algorithm to reduce data processing time by a factor of 3.6.

NGeneBio, however, continues to face market capitalization risks related to its financial condition and continued listing status.

In April, the company approved a 3-for-1 capital reduction without compensation to offset accumulated deficits and improve its financial structure.

While maintaining the par value at 1,000 won per share, the company consolidated every three common shares into one, reducing the number of outstanding shares to 8,936,583 from 26,809,750. As a result, its paid-in capital fell 66.67% to approximately 8.9 billion won from 26.8 billion won.

The capital reduction took effect on June 25, and the adjusted shares were relisted on July 13.

NGeneBio shares had closed at 737 won on June 22, immediately before trading was suspended. On the first trading day following the capital reduction, the stock rose to 1,525 won, moving above the sub-1,000 won threshold for penny stocks.

However, as of August 11, its market capitalization stood at approximately 20.3 billion won, only slightly above the 20 billion won threshold for designation as an “administrative issue” on the KOSDAQ market.

Since July, a KOSDAQ-listed company can be designated as an administrative issue if the market capitalization of its common shares remains below 20 billion won for 30 consecutive trading days.

The threshold is scheduled to rise again in January, from 20 billion won to 30 billion won. A company whose market capitalization remains below 30 billion won for 30 consecutive trading days would be subject to designation as an administrative issue.

Consequently, NGeneBio’s ability to leverage its CE-IVDR certification to secure new supply agreements, boost overseas sales, and ultimately achieve a higher corporate valuation and share price will be a key factor in maintaining its listing.

"The certification will mark a turning point as we begin a full-scale expansion of our hereditary and solid cancer portfolio in advanced Western European markets such as Germany, where our business had previously focused on hematologic cancers," said Song Myung-jun, head of NGeneBio's diagnostics business.