(Yicai Global) Aug. 23 -- Shares of Topchoice Medical, a Chinese dental hospital chain operator, fell after it said first-half profit dropped 16 percent from a year ago on reduced patient numbers mainly as a result of Covid-19 outbreaks, and regulators pointed out a number of major issues at the firm.

Topchoice [SHA: 600763] closed down 1.6 percent at CNY120.46 (USD17.55) a share today, after declining as much as 2.2 percent in the morning.

Net profit was CNY295.6 million (USD43.2 million) in the six months ended June 30, versus CNY350.8 million a year earlier, as outpatient visits dipped 5 percent from a year earlier, the Hangzhou-based company’s earnings report showed yesterday. Revenue was unchanged at CNY1.3 billion (USD190 million).

The dental implants business contributed CNY223 million of income in the period, up 6.5 percent, with its share of total revenue rising to 18 percent from 17 percent a year ago. Recent discussions about centralized procurement of implants has weighed on Topchoice's share price.

Topchoice also received a rectification note from China’s securities regulator and an inquiry from the Shanghai Stock Exchange on the same day, pointing out three major issues at the company: undisclosed connected transactions, inaccurate financial support and investment contributions, and lack of independence as a listed business.

Topchoice pointed to a positive future for China’s dental sector, saying it is still in the early and middle stages of development but has grown quickly to CNY119.9 billion (USD17.5 billion) in 2020 from CNY75.7 billion in 2015.

The company had 60 hospitals as of last year. With new ones in preparation, it has contracted more than 1,000 extra staff, increasing labor costs by over CNY40 million (USD5.8 million), Topchoice said.

Editors: Shi Yi, Futura Costaglione