Beijing Wandong Medical Technology Co Ltd

Wandong Medical released its 2026 interim report, showing first-half operating revenue of 875 million yuan, up 3.71 percent year on year, but net profit came in at a loss of 91.67 million yuan, a decline of 278.69 percent from a year earlier, swinging from profit to loss. The company focuses on the research, development, production and sales of medical imaging equipment, and also provides AI-driven smart healthcare solutions and cloud imaging platform services. According to an earlier earnings forecast, the company is at a critical stage of strategic transformation and market structure optimization, and short-term profit pressure reflects both industry-wide conditions and the phased impact of proactive adjustments. In the future, as centralized procurement deliveries recover, the share of high-end products rises, overseas scale expands, and localization of core components accelerates, earnings quality is expected to improve.

Wandong Medical has issued its 2026 half-year performance forecast, projecting a net loss attributable to the parent company of 82.5 million to 101 million yuan for the first half, marking its first half-year loss since listing in 1997. The company reported a full-year loss of 228 million yuan in 2025, ending a 28-year streak of annual profits, and the loss trend is accelerating in 2026. The first quarter saw a net loss of 15.934 million yuan, while the second quarter loss is expected to widen to between 66.566 million and 84.896 million yuan. The main reason for the losses is the company's active participation in centralized procurement with a price-for-volume strategy. In 2025, it won 34 projects and 932 devices in provincial-level centralized procurement, with a total winning bid amount of 520 million yuan, boosting its market share by about 10 percentage points. However, the average discount rate reached 46 percent, dragging the full-year gross margin down to 26.56 percent, a drop of nearly 20 percentage points from 45.82 percent in 2021. The gross margin even fell to negative 18.86 percent in the fourth quarter of 2025. Meanwhile, research and development, sales, and financial expenses all rose across the board. R&D expenses reached 263 million yuan in 2025, with an expense ratio of 19.54 percent, while sales expenses grew 26.29 percent year-on-year to 277 million yuan. These expenses continued to increase in the first half of 2026, and exchange rate fluctuations led to greater exchange losses, further eroding profits. The Shanghai Stock Exchange has issued an inquiry letter regarding the company's operations and the impact of centralized procurement, but the company declined to be interviewed.

Wandong Medical recently replied to a Shanghai Stock Exchange inquiry letter, explaining the internal control deficiency in revenue recognition under its distribution model. The company stated that for conventional equipment distributed, revenue is recognized upon distributor acceptance, while for large imaging equipment, revenue is recognized upon terminal installation and acceptance, in line with accounting standards and industry practice. In 2025, to support market expansion under volume-based procurement, some distributors began holding buffer inventory, but the supporting inventory tracking system was not promptly improved. After period-end verification, products that had been accepted but not yet delivered to end-user medical institutions were removed from current-period revenue and reclassified as goods in transit. This involved revenue reductions of 15.85 million yuan, 38.80 million yuan, and 27.35 million yuan for the first three quarters of 2025 respectively, representing only timing differences between quarters within the same year, so no retrospective correction was made. The company determined this internal control flaw to be a significant deficiency rather than a material weakness, with no subjective fraud, and it does not affect the authenticity of full-year financial data. The company has revised its distributor management system, set a safety stock cap and a 90-day turnover period, established monthly inventory inspections, and incorporated inventory reasonableness into sales performance evaluations. The remediation is now complete and internal controls are operating effectively.

Wandong Medical disclosed a performance forecast, expecting a net loss attributable to the parent of 82.5 million to 101 million yuan in the first half of 2026, compared with a profit of 51.3 million yuan in the same period last year. The net loss after deducting non-recurring items is expected to be 93.01 million to 111 million yuan, versus a profit of 35.63 million yuan a year earlier. The company said the year-on-year decline in gross margin was mainly due to actively participating in volume-based procurement to trade price for volume, while the lengthening of procurement cycles at public hospitals led to delayed revenue recognition, healthcare payment reforms caused private hospitals to scale back procurement, core component costs remained high, and the cost-reduction effect from scale had yet to materialize. In addition, selling expenses increased due to volume-based procurement opportunities and internationalization strategy investments, research and development expenses were focused on core products such as 3.0T MR, mid-to-high-end CT, and DSA but have not yet generated returns, and financial expenses rose due to greater exchange losses from currency fluctuations. The company stated it is at a critical stage of strategic transformation, and the short-term profit pressure is a common industry phenomenon and a phased result of proactive adjustments. In the future, as volume-based procurement deliveries resume, the proportion of high-end products increases, overseas scale expands, and the localization of core components accelerates, profit quality is expected to steadily improve.