(Yicai Global) Jan. 27 -- Shares in Andon Health surged as much as 9.59 percent today, ending a week-long rout as investors cashed in on the hot stock, after the Chinese medical device maker said that the US army has increased its order of Covid-19 test kits by 40 percent to a value of USD1.8 billion.

Andon’s share price [SHE:002432] was trading up 8.19 percent at CNY56.52 (USD8.90) as of 1 p.m. China time. Earlier in the day it had hit CNY57.25. The stock started to surge in early November last year when the US Food and Drug Administration approved Andon’s home-use Covid-19 detection kit for emergency use. As of Jan. 20, it had gained 13-fold to CNY77.66, but the value has slumped 27 percent since then due to profit taking by investors.

The US army’s procurement agency the US Army Contracting Command has hiked its order from iHealth Labs, in which Andon holds a 70 percent stake, by 104 million test kits, the Tianjin-based parent firm said today. The additional detection sets will be delivered before March 14.

The original deal, penned on Jan. 14, had been for 250 million test kits in a transaction worth USD1.3 billion. The Sunnyvale, California-based subsidiary has also in recent weeks signed contracts worth USD185.3 million with the state of New York and another worth USD148 million with the state of Massachusetts.

A joint study by the FDA and the US National Institutes of Health has shown that Andon’s Covid-19 test has a 100 percent detection rate of the Omicron variant, the company said on Jan. 6.

US President Joe Biden recently said that the US will double spending on rapid Covid-19 detection sets for its people, including buying another 500 million home-use test kits to curb the rapid spread of the Omicron strain.

The hot-selling product represents a great change in fortune for Andon. The company had reported an 86 percent drop in profit in the first three quarters of last year from the same period the year before to CNY50.1 million (USD7.9 million) and a 50 percent slump in revenue to CNY790 million (USD124 million). But its earnings in the fourth quarter equated to five times the firm’s entire earnings in the 14 years from 2007 to 2020.

It is now expecting profit to as much as quintuple in 2021 from the year before on revenue of up to CNY1.2 billion (USD190 million), the firm said in its earnings forecast on Jan. 19.

Editor: Kim Taylor