Huitai Medical Devices 2025 Annual Report Analysis: Revenue increased by 25.08% to 2.584 billion yuan; R&D expenses rose by 25.56% to 365 million yuan

Operating Revenue Interpretation

In 2025, the company achieved operating revenue of RMB 258,392.73 million, representing an increase of 25.08% year over year. By business segment, coronary artery access revenue was RMB 134,289.79 million, up 27.35%; electrophysiology revenue was RMB 57,122.55 million, up 29.81%; peripheral interventional revenue was RMB 45,580.38 million, up 29.76%; non-vascular interventional revenue was RMB 5,258.92 million, up 36.52%; and OEM revenue was RMB 14,500.50 million, down 12.05% year over year.

From the perspective of sales channels, revenue under the distribution model was RMB 239,588.76 million, up 32.86%; domestic revenue was RMB 223,080.40 million, up 26.09%, while overseas revenue was RMB 33,671.73 million, up 20.25%. Both domestic and overseas businesses have maintained strong growth momentum, and the company’s product market coverage and hospital admission penetration rate have continued to improve.

Net Profit and Non-recurring Profit Interpretation

In 2025, the net profit attributable to shareholders of the listed company was RMB 82,063.66 million, up 21.91%; the net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses was RMB 79,087.59 million, up 23.00%. The growth rate of non-recurring profit (i.e., net profit after deducting non-recurring items) is higher than that of net profit, indicating that the company’s core business has strong profitability, and the impact of non-recurring gains and losses on net profit is relatively small.

Regarding non-recurring gains and losses, in 2025 the amount was RMB 2,976.07 million, mainly including government grants of RMB 3,384.34 million recognized in current profit or loss, losses from disposal of non-current assets of RMB -277.67 million, and others.

Earnings Per Share Interpretation

In 2025, the company’s basic earnings per share was RMB 5.82 per share, up 21.25%; non-recurring item-adjusted earnings per share was RMB 5.61 per share, up 22.49%. The increase in earnings per share is mainly attributable to the company’s net profit growth and the combined impact of changes in share capital. In 2025, the company’s share capital increased for reasons such as equity distribution, but the growth in net profit still drove the increase in earnings per share.

Expense Interpretation

Overall Expense Situation

In 2025, the company’s total period expenses were RMB 937,544.28 million, up 24.67%. The breakdown is as follows:

Selling Expenses

Within selling expenses, employee compensation was RMB 24,561.31 million, up 28.97%; marketing and promotion expenses were RMB 9,037.82 million, up 56.55%. The sharp increase in marketing and promotion expenses reflects the company’s increased efforts in market expansion to enhance product awareness and market share.

Administrative Expenses

Within administrative expenses, employee compensation was RMB 5,751.92 million, up 17.81%; advisory fees were RMB 2,116.34 million, up 141.64%. The increase in advisory fees is mainly because the company introduced external professional consulting services to improve management, expand its business, and so on.

Finance Expenses

Finance expenses were negative mainly because interest income exceeded interest expense. In 2025, interest income was RMB 1,379.49 million and interest expense was RMB 146.04 million. Foreign exchange rate movements affected finance expenses. The company’s overseas business involves foreign-currency settlement, and exchange-rate fluctuations lead to changes in exchange gains and losses.

Research and Development Expenses

R&D spending has continued to increase. In 2025, R&D expenses accounted for 14.12% of operating revenue, up 0.06 percentage points compared with the same period last year. Within R&D expenses, employee compensation was RMB 15,680.73 million, up 19.61%; outsourced R&D expenses were RMB 4,132.02 million, up 185.04%. The company accelerates the development of new products through a combination of internal R&D and external cooperation.

Interpretation of R&D Personnel

In 2025, the number of the company’s R&D personnel was 588, an increase of 73 from the previous year. The proportion of R&D personnel relative to the company’s total headcount was 18.86%, slightly down from the previous year, mainly because the company’s total headcount increased. The total compensation for R&D personnel was RMB 1,568.07 million, up 19.61%; the average compensation for R&D personnel was RMB 26.67 million, up from RMB 25.46 million in the prior year, reflecting the company’s emphasis on and incentives for R&D personnel.

In terms of educational background structure of R&D personnel, there were 10 PhD candidates, 174 master’s degree candidates, 271 undergraduate students, 85 junior-college students, 48 high school graduates or below. The high proportion of high-education talent provides strong human resources support for the company’s R&D innovation. In terms of age structure, there were 303 people under 30, and 232 people between 30 and 40. The proportion of younger R&D personnel exceeded 87%, and the team is full of vitality and an innovative spirit.

Cash Flow Interpretation

Overall Cash Flow Situation

In 2025, the net increase in cash and cash equivalents was RMB 16,504.27 million. The main driver was an increase in net cash flow from operating activities. Net cash flows from investing and financing activities were negative, but the scale of outflows changed.

Net Cash Flow Generated from Operating Activities

In 2025, the net cash flow generated from operating activities was RMB 96,775.97 million, up 30.18%. Cash received from the sale of goods and the provision of services was RMB 287,782.03 million, up 27.20%, which basically matched the growth in operating revenue. This indicates that the company’s customer collections are in good shape. Cash received from tax refunds was RMB 1,209.56 million, up 71.21%, mainly due to the implementation of government tax refund policies.

Net Cash Flow Generated from Investing Activities

In 2025, the net cash flow generated from investing activities was RMB -51,918.24 million, compared with RMB -61,779.18 million in the same period last year, with a reduction in the outflow scale. Cash paid for the purchase and construction of fixed assets, intangible assets, and other long-term assets was RMB 28,558.92 million, down 56.08% year over year. This was mainly because the investment timeline for part of the company’s projects under construction was adjusted. Cash paid for investments was RMB 273,850.00 million, up 16.43%. The company utilized idle funds to make investments such as financial management products, thereby improving the efficiency of capital use.

Net Cash Flow Generated from Financing Activities

In 2025, the net cash flow generated from financing activities was RMB -27,974.39 million, compared with RMB -30,789.89 million in the same period last year, with a slight reduction in the outflow scale. Cash received from the absorption of investments was RMB 3,593.61 million, mainly due to payments upon exercise by equity incentive plan participants. Cash paid for repayment of borrowings was RMB 67.10 million, down 99.06% year over year. The company reduced its borrowing scale and optimized its capital structure.

Interpretation of Possible Risks

Risk to Core Competitiveness

2. Risk of Failure in New Product R&D and Registration Risk: Developing interventional medical devices is difficult, involving multiple cross-disciplinary areas. The R&D cycle is long and investment is heavy. If the company cannot develop new products or if technology development fails according to the plan, it will affect the growth pace of the company’s operating revenue and profitability. Meanwhile, product registration requires strict approvals. If the registration process is not smooth, it will affect the time when products are launched to the market.
3. Risk of Loss of Scientific Research and Management Talent: As a high-tech enterprise, the stability and high-quality scientific research and management talent are crucial to the company’s development. If the company cannot provide competitive compensation and incentive mechanisms, it may lead to instability in the talent team, affecting the company’s business and long-term development.

Operating Risks

2. Market Competition Risk: In China, foreign brands still dominate the electrophysiology and vascular interventional medical device industry, with companies such as Johnson & Johnson and Abbott capturing most market share through their R&D, product systems, and channel advantages. As domestic pulse ablation products are successively approved for listing, competition in the electrophysiology market will intensify. If the company cannot accurately grasp the industry development trends or respond to changes in market competition, it may face risks of declining market share and profitability.
3. Risk of Product Price Decline Driven by Industry Policies: Centralized and volume-based procurement of medical devices continues to proceed. Some of the company’s products participate in centralized procurement. If centralized procurement policies are further advanced in the future or if the decline in product prices exceeds expectations, it will adversely affect the company’s product pricing, gross margin, and profitability.
4. Sales Channel Risk and Distributor Management Risk: The company mainly uses a distribution-based sales model. As the number of distributors increases, if distributors sell or provide after-sales service improperly, it may affect the company’s brand reputation. If major distributors are not aligned with the company’s development strategy, it may affect the company’s future development.
5. Product Quality and Potential Liability Risk: Interventional medical devices directly contact important human organs. If there are major quality issues with the products, or if unexpected risk incidents occur after patients use them, it may trigger claims and legal lawsuits, causing adverse effects on the company’s business, operating results, financial condition, and brand reputation.

Financial Risks

2. Risk of Changes in Tax Policies: The company and some of its subsidiaries are high-tech enterprises and enjoy a preferential corporate income tax rate of 15%. If tax preference policies change in the future, or if the company no longer meets the conditions for recognition as a high-tech enterprise, it will result in an increase in the effective tax burden, affecting operating performance.
3. Risk of Impairment of Long-term Equity Investments: The company uses the equity method to account for its long-term equity investments in associates. If the investee’s operating performance declines, there may be an impairment risk for the related long-term equity investments, affecting the net profit for the current period and the asset position.
4. Risk of Bad Debts in Accounts Receivable: Overseas sales businesses are affected by factors such as geopolitical conflicts. Some overseas customers may experience business difficulties or capital turnover pressure, leading to an extended collection cycle and an increased risk of accounts receivable recovery.
5. Risk of Gross Margin Volatility: The promotion of centralized procurement policies leads to lower terminal prices for related products. If the sales share of high-gross-margin products declines or market competition further intensifies, the company may face risks of gross margin decline and weakened overall profitability.

Industry Risks

2. Risks Related to Industry Regulation: Most of the company’s products are Class III medical devices and are subject to strict product registration management, and the international market also has strict licensing or certification requirements. If the company cannot continuously meet domestic and overseas access policies and industry regulatory requirements, production licenses and market access for products may be suspended or revoked, affecting production and operations.
3. Product Registration Risk: Interventional medical device technologies have high technical content and high entry barriers. The relevant authorities strengthen supervision over product effectiveness and safety. If certain individual products fail to obtain the registration certificate in a timely manner, it will affect the time when products are launched to the market and may have adverse effects on production and operations.

Risk from the Macroeconomic Environment

The industry in which the company operates is significantly affected by national macroeconomic policies, medical device industry policies, and the global economic situation. Factors such as international trade frictions, geopolitical uncertainty, exchange rate fluctuations, changes in international regulatory policies, and domestic centralized procurement policies may pose challenges to the company’s import and export business, market demand, and profitability structure, and may bring risks of periodic fluctuations.

Interpretation of Compensation for Senior Management and Board Members

Chairman’s Compensation

During the reporting period, the chairman, Ge Hao, had a total pre-tax remuneration amount of 0 RMB received from the company. Ge Hao also serves as the Vice President of Strategic Development of Mindray Medical Group, and his main remuneration is obtained from related parties.

CEO’s Compensation

Vice Chairman and General Manager Cheng Zhenghui had a total pre-tax remuneration amount of RMB 342.85 million received from the company during the reporting period, which increased compared with the previous year, reflecting the company’s recognition of his contribution to its business operation and management.

Vice President’s Compensation

Vice President Han Yonggui’s total pre-tax remuneration amount was RMB 126.64 million. Liu Fangyuan was RMB 139.12 million, Wang Wei was RMB 162.57 million, Wang Jinhua was RMB 233.25 million. Zhang Yong (appointed in November 2025) had his compensation statistics for the time in office as a partial amount. Different vice presidents have different compensation amounts due to differences in duties, performance contributions, and so on. Overall, the compensation level is consistent with the company’s performance and the industry level.

CFO’s Compensation

Financial负责人 Gui Qihan (appointed in August 2025) had a total pre-tax remuneration amount of RMB 49.57 million received from the company during the reporting period, paid during his/her tenure.

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