The "Midea Group" support cannot prevent the pain of transformation. Wandong Medical reports its first annual loss and suspends dividends.

First annual performance loss in its 29-year listing.

First annual performance loss in its 29-year listing: the 2025 annual performance report handed in by Wandong Medical (600055.SH) is not entirely satisfactory.

According to the annual report released late on March 25, the company’s 2025 revenue was RMB 1.347 billion, down 11.64% year over year; its attributable net profit recorded a loss of RMB 228 million, down 244.81% year over year. Among them, the fourth-quarter performance fell short of market expectations: revenue plunged quarter over quarter to RMB 158 million, and attributable net profit recorded a loss of RMB 201 million.

With the company’s performance in the red, it will not pay dividends for 2025, breaking the more-than-20-year practice of distributing dividends at year-end each year. At the same time, the company plans to sell a loss-making subsidiary established less than three years ago to a company under Meituan Group (000333.SZ), its controlling shareholder. Previously, Wandong Medical set up the subsidiary for strategic layout needs; now it is being spun off again due to adjustments to its business plan.

Whether this transformation by Wandong Medical will be effective is still subject to time. Judging by the capital market’s response, since the beginning of this year the company’s stock price has been fluctuating downward; especially after hitting a local high on January 14, the downturn has been more pronounced. As of March 26, the stock price had cumulatively fallen 19.24%.

A disastrous fourth quarter dragged down the full year

After the company’s performance turned to losses in the third quarter of last year, the loss amount for Wandong Medical expanded further in the fourth quarter, resulting in its first-ever annual performance loss in 29 years of being listed.

In the first three quarters of last year, the company’s revenue was RMB 373 million, RMB 470 million, and RMB 345 million, respectively; but in the fourth quarter it dropped sharply to RMB 158 million. Attributable net profit began to show losses starting in the third quarter, with a loss of RMB 78.5085 million, and deteriorated further in the fourth quarter, with losses reaching RMB 201 million.

Multiple investors said that the company’s fourth-quarter performance in 2025 was below expectations. The company’s actual operating results in the fourth quarter also did not match the expectations previously released during investor relations activities.

After the company disclosed its third-quarter report last year, many institutional parties exchanged views with management at Wandong Medical. According to the investor relations activity record table disclosed on October 27 last year, when responding to institutional questions, the company’s executives said that entering the fourth quarter, centralized procurement had entered a delivery peak period. With centralized procurement at the provincial-and-county level taking root in places including Fujian, Anhui, Shanxi, Xinjiang, Sichuan, and others, the company expected that the amount delivered under centralized procurement in the entire fourth quarter would reach several hundred million, driving growth in overall fourth-quarter performance.

In the end, fourth-quarter performance did not increase but instead fell sharply, dragging down full-year results. The company’s 2025 revenue was RMB 1.347 billion, down 11.64% year over year; attributable net profit recorded a loss of RMB 228 million, down 244.81% year over year; and net cash flow from operating activities was -RMB 252 million, down 215.44% year over year.

In its annual report, Wandong Medical said that its 2025 performance was a phased reflection of the company proactively carrying out strategic adjustments and a deep transformation amid a complex and ever-changing macro environment and industry cycle.

Regarding the reasons for revenue decline, the company said that it adjusted the company-wide marketing strategy, adhering to moving upward and expanding outward. Internally, it leveraged centralized procurement projects to secure and win a larger share in mid-to-high-end markets; externally, it actively expanded international channels. Because delivery timelines for centralized procurement projects were longer than expected, domestic revenue decreased somewhat compared with the same period last year.

Based on contract liabilities, the data as of end-2025 was RMB 175 million. Compared with RMB 76.8037 million in the same period last year, this represents an increase of 127.44%. The company said this was mainly due to an increase in orders that had not yet been completed and delivered by year-end.

For pressure on profit and operating cash flow, the company said in its annual report that this was mainly due to increased strategic investment. On the one hand, it proactively participated in centralized volume-based procurement, accelerating penetration into the public mainstream market and pushing product structure optimization toward a direction that is more competitive. On the other hand, it maintained high-intensity R&D investment, focusing on overcoming core technologies such as zero liquid helium magnetic resonance, and also laid out next-generation intelligent imaging technologies to accumulate core momentum for breakthroughs in transitioning to the high-end market.

Amid its ongoing transformation, Wandong Medical is also refraining from distributing dividends for 2025 due to its loss-making performance, breaking the long-standing year-end dividend practice sustained for more than 20 years. The company said that, considering that it did not achieve profitability in 2025 and also taking into comprehensive account external industry environment and the company’s future development, in order to maintain steady development and better safeguard the long-term interests of all shareholders, following deliberation by the board of directors, the company will not pay cash dividends for 2025, will not issue bonus shares, will not convert capital reserve into share capital and will not make profit distributions in other forms. Undistributed profits will be carried forward to subsequent years for distribution.

Disposing of the loss-making subsidiary during the transformation

Along with the disclosure of its annual report, Wandong Medical plans to spin off a loss-making subsidiary established less than three years ago and sell it to a subsidiary under its controlling shareholder.

According to the announcement, Wandong Medical plans to transfer 100% of its equity interest in its wholly owned subsidiary, Suzhou Wanying Medical Technology Co., Ltd. (hereinafter “Suzhou Wanying”), to Meidi Imaging Technology (Shanghai) Co., Ltd. (hereinafter “Meidi Imaging”), for a transaction price of RMB 48 million.

This transaction constitutes a related-party transaction. Meidi Imaging is a subsidiary controlled by Meituan Group, the controlling shareholder of Wandong Medical.

Suzhou Wanying was established in November 2023, wholly funded by Wandong Medical. At that time, Wandong Medical said that, based on strategic development and layout needs, it fully leveraged local policy advantages and supporting resources from the industry to set up a wholly owned subsidiary, Suzhou Wanying, in Suzhou with its own funds of RMB 100 million (registered capital), to carry out R&D and production projects for core components, improve the conversion of technological achievements, expand market space, and enhance the company’s core competitiveness.

However, Suzhou Wanying recorded losses of RMB 5.8895 million and RMB 11.1995 million in 2024 and 2025 respectively, for a cumulative loss of RMB 17.089 million, and its operating performance has shown a continuous downward trend.

According to the announcement, the book cost for Wandong Medical’s 100% equity interest in Suzhou Wanying is RMB 36.2146 million. This sale will add value of RMB 11.7854 million to the shareholders’ equity, representing an appreciation rate of 32.54%.

As for the reasons for selling all the equity interest in the subsidiary, Wandong Medical said that it is based on the company’s needs for adjustments to its business plan.

Wandong Medical was listed on the SSE on April 24, 1997. It is an old-established enterprise in China’s medical imaging equipment industry. The company’s actual controller and controlling shareholder have undergone multiple changes; China Resources Group had been the company’s actual controller. In March 2012, the company changed its name to “China Resources Wandong.” In 2015, YuYue Technology formally obtained controlling rights of Wandong Medical through acquisition, and in September 2016, the company’s name was restored to “Wandong Medical.”

In 2021, Meituan Group acquired 29.09% of the equity of Wandong Medical from YuYue Healthcare and its actual controller, Wu Guangming, becoming the controlling shareholder of Wandong Medical, while He Xiangjian became the actual controller of Wandong Medical.

During Meituan Group’s tenure in managing Wandong Medical, the chairman of the company was replaced three times. The first chairman served the longest—4 years. The second chairman, Ma Chibing, served only 8 months; his term was from May 21, 2025 to January 25, 2026. After leaving due to personal reasons, on January 26, 2026, Jian Guo Wang was elected chairman.

One major challenge facing Wandong Medical today is whether it can complete a successful transformation. In its annual report, Wandong Medical said that in recent years, the global medical imaging equipment industry has been undergoing a profound change driven by multiple factors, including technological innovation, market demand, and policy guidance. Reliance on external innovation and insufficient innovation capability are fundamental risks. Intense market competition and payment pressure directly impact corporate profitability. A fragile global supply chain and a misaligned industrial chain affect operational stability, while increasingly strict regulatory environments raise the threshold for market access and continued operations.

“Enterprises need to establish a comprehensive risk management system, balance short-term survival and long-term innovation strategically, enhance supply-chain resilience and deepen clinical collaboration operationally, and proactively adapt to changing global regulatory dynamics for compliance. Only then can they get through the cycle and achieve sustainable development,” the company said.

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