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Lotte to shut down digital health care business amid possible liquidity crisis

Published: 24 Dec. 2024, 18:41

KIM JU-YEON
[email protected]

Lotte Group's digital healthcare arm Lotte Healthcare will liquidize following poor sales and profitability. Pictured is Lotte Healthcare's booth at CES 2023 in Las Vegas on Jan. 6, 2023. [NEWS1]

Lotte is closing down its digital health care business, a sector it had once deemed a future growth engine, as it shutters down unprofitable projects amid continued speculation of a potential liquidity crisis at the group.

Lotte said Tuesday that it will liquidize Lotte Healthcare, a subsidiary it had launched around three years ago in April 2022 using an investment of 70 billion won ($48 million) as part of the group's Chairman Shin Dong-bin’s initiative.

Lotte Healthcare passed the motion to liquidize at an extraordinary general meeting on Tuesday, which will be completed by the first half of next year.

Lotte Healthcare runs a personalized health care platform, named Cazzle, that was launched in September last year. Its joint venture, Theragen Health, which it has invested 25 billion won in, provides genomics analysis services and develops drugs using AI.

The health care subsidiary recorded 836.61 million won in sales last year but remained in the red with an operating loss of 22.8 billion won, according to an audit report submitted as an electronic disclosure. Lotte Healthcare had set a goal of 1 million subscribers for Cazzle by the end of 2024 but fell far short of this number, according to local media reports.

All services provided by Lotte Healthcare, including Cazzle, will stop running from Dec. 31, according to a notice on its website.

Lotte Corporation said it “determined the personalized digital health care business unable to grow sustainably” after considering the health care market’s current state and the direction that it was taking.

The holdings company said it will instead invest in other health care businesses, including facilities for the elderly — such as its senior residence brand VL — and food tech.

Hotel Lotte will start operating two more VL residences — one each in Busan and Seoul — starting in January and October, respectively, next year, Lotte Corporation said.

The move comes as Lotte Group closes down struggling businesses amid concerns surrounding a potential liquidity crisis that stemmed from its struggling chemical business.

The company said Lotte Duty Free will close down a showroom dedicated to pop-up events and review closing down underperforming duty-free stores and that Lotte Chemical would sell its low-profit assets.

BY KIM JU-YEON [[email protected]]