Financial Impact Analysis Report on Hospital Asset Disposals by Xinhua Medical (600587)

Based on the collected data and analysis, I have prepared a detailed report on the financial impact of Xinhua Medical’s hospital asset disposals for you:

---

Xinhua Medical was founded in 1943 and listed on the Shanghai Stock Exchange in 2002, making it an established medical device enterprise. Its main business covers four segments: medical devices, pharmaceutical equipment, healthcare services, and medical trade[1][2].

Time Node	Key Event	Change in Number of Hospitals
2017	Peak period of healthcare services business	18 hospitals
Starting from 2018	Problems emerged in some hospitals, initiating transfers	17 hospitals
2020	Sold West Campus of Zichuan District Hospital and Nanyang Orthopedic Hospital	14 hospitals
2022	Transferred 12.85% equity in Chenwei Zhongde	10 hospitals
January 2025	Listed 55% equity in Shandong Changguo Hospital for transfer	Continuously decreasing
August 2025	Transferred Zibo Xinhua Hospital for RMB 200,000	7 hospitals
January 2026	Official website shows only 7 hospitals remaining	7 hospitals [1][2]

, completing a systematic “exit from healthcare services” initiative.

---

Based on 2024 annual report data, the healthcare services segment shows a continuous downward trend[1][2]:

Financial Indicator	2024 Data	YoY Change	Industry Comparison
Healthcare Services Revenue	RMB 834 million	-9.51%	Gross profit margin only 16.28%
Medical Devices Revenue	RMB 6.86 billion	Steady growth	Core business
Pharmaceutical Equipment Revenue	RMB 2.171 billion	Steady growth	Core business
Total Revenue	RMB 10.021 billion	+0.09%	Tending to stabilize
Net Profit	RMB 692 million	+5.75%	Improved profitability

1. Low Gross Profit Margin
   : The gross profit margin of the healthcare services segment is only 16.28%, far lower than that of the medical devices business
2. Declining Revenue Share
   : Healthcare services account for approximately 8.3% of total revenue, a significant decrease from its historical peak
3. Sustained Loss Pressure
   : In 2024, Xiangyin Huaya Hospital voluntarily applied for suspension of operations and has been listed as a person subject to execution multiple times[1][2]

---

Transaction Time	Target Asset	Transaction Consideration	Transfer Method
January 2025	55% equity in Shandong Changguo Hospital	RMB 113 million	Listed on Shandong Property Rights Exchange Center
August 21, 2025	100% equity in Zibo Xinhua Hospital	RMB 200,000	Listed on Shandong Property Rights Exchange Center
December 2025	Subsidiary equity and related claims	Undisclosed	Pre-listed for transfer

1. Significant Discounted Sale
   : The 100% equity in Zibo Xinhua Hospital was priced at only RMB 200,000, equivalent to a “fire sale”
2. Asset Impairment Pressure
   : The net assets of some hospitals are negative, and the sale price is far lower than the initial investment
3. Clear Transaction Purpose
   : To realize capital recovery and optimize resource allocation[1][2]

---

Through the disposal of inefficient hospital assets, the company’s revenue structure has improved significantly:

Before Disposal (Typical Structure in 2017)        After Disposal (2024 Structure)
├── Medical Devices: ~60%            ├── Medical Devices: 68.4%
├── Pharmaceutical Equipment: ~20%            ├── Pharmaceutical Equipment: 21.7%
├── Healthcare Services: ~15%            ├── Healthcare Services: 8.3%
└── Medical Trade: ~5%             └── Medical Trade: ~1.6%

, demonstrating the clear effect of the company’s strategic focus[1].

Indicator	2023	2024	Trend
Net Profit	RMB 654 million	RMB 692 million	+5.75%
Net Profit Margin	6.5%	6.9%	Increased
ROE	~6.0%	6.55%	Improved

Although revenue in the healthcare services segment decreased,

[0][1].

The positive impact of asset disposal on the company’s cash flow is reflected in:

1. Capital Recovery
   : Recovered over RMB 115 million through hospital asset disposals
2. Loss Reduction
   : Reduced sustained losses in the healthcare services segment
3. Optimized Allocation
   : Funds can be used for R&D and expansion of the core medical devices business

In January 2025, the company increased capital by RMB 60 million to its wholly-owned subsidiary Xinhua Medical Rehabilitation Industry (Xi’an) Co., Ltd., which reflects the strategy of tilting funds towards core businesses[2].

Indicator	Data
Controlling Shareholder’s Increase in Holdings	Cumulative increase of 3.8638 million shares as of November 2025
Equity Incentive	2021 restricted stock incentive plan is in implementation
ESG Rating	Awarded “AA+pi” rating, leading the industry in sustainable development strength[2]

---

Time Period	Opening Price	Closing Price	Price Change	Average Daily Trading Volume
Full Year 2024	RMB 19.62	RMB 16.65	-15.14%	7.92 million shares
Full Year 2025	RMB 16.20	RMB 14.40	-11.11%	9.78 million shares

Event	Time	Stock Price Performance	Trading Volume Change
Disposal of Shandong Changguo Hospital	Q1 2025	-0.80%	Normal level
Disposal of Zibo Xinhua Hospital	August 2025	-1.99%	Increased to 19.64 million shares per day
Pre-listed transfer of subsidiary	December 2025	-5.64%	Normal level

Indicator	Current Value	Market Interpretation
Current Price	RMB 16.09	-
20-day Moving Average	RMB 15.63	Above short-term moving average
50-day Moving Average	RMB 15.27	Weak medium-term trend
52-week Fluctuation Range	RMB 14.28 - 18.62	In the lower-middle part of the range
P/E Ratio (TTM)	18.83x	Reasonable level for the medical device industry

---

Xinhua Medical’s asset disposal is not an isolated case, but part of a collective “great retreat from cross-border hospital operation” among A-share listed companies[1][2]:

Company	Disposal Target	Disposal Status
Yonghe Zhikong	Dazhou Medical Oncology Hospital, etc.	Listed at 10% of original price but still unsold
Great Eastern	Multiple medical subsidiaries	Sold for a symbolic RMB 1
China Resources Sanjiu	Healthcare services assets	Cut off “toxic assets”
Yibai Pharmaceutical	Hospital equity	Gradually exited
Genview Pharmaceuticals	Healthcare services assets	Sold hospital business

1. Long Payback Period
   : Hospitals are long-term investments, and pharmaceutical companies face tight cash flow
2. Policy Changes
   : Volume-based procurement, bidding, and medical anti-corruption increase operational pressure
3. Stricter Regulation
   : Supervision over private hospitals has been strengthened, leading to increased compliance costs
4. Underperforming Results
   : Most hospitals continue to incur losses, dragging down the performance of listed companies[1][2]

---

Impact Dimension	Specific Performance
Revenue Side	Healthcare services revenue decreased by approximately RMB 834 million, but only accounts for 8.3% of total revenue
Cost Side	Reduced hospital operating losses and improved overall gross profit margin
Cash Flow	Recovered over RMB 100 million through asset disposals
Stock Price	Short-term pressure, market holds a wait-and-see attitude towards asset disposals

Impact Dimension	Specific Performance
Strategic Focus	Resources focused on core businesses of medical devices and pharmaceutical equipment
Profitability	Increased revenue share of manufacturing products and improved net profit margin
Valuation Reconstruction	Market re-evaluates the value of the company’s core businesses
Competitive Advantage	Focusing on core businesses is expected to consolidate leading industry position

1. Intensified Competition in Core Business
   : Sustained pressure from volume-based procurement of medical devices
2. Valuation Volatility
   : Stock price may fluctuate during asset disposal period
3. Transformation Growing Pains
   : Business structure adjustment requires time to be absorbed

---

1. Strategic Level
   : The disposal of hospital assets is a
   proactive strategic contraction
   by the company, which aligns with the overall strategy of “focusing on core businesses and optimizing resource allocation”

2. Financial Level
   :
   • Healthcare services segment revenue continues to decline (-9.51% YoY in 2024) with a low gross profit margin (16.28%)
   • Disposal of inefficient assets helps
     improve overall profitability and cash flow
   • Net profit grew 5.75% YoY in 2024, indicating initial effectiveness of strategic adjustment

3. Market Level
   : The stock price performed weakly during the asset disposal period, but
   increased trading volume
   indicates rising market attention

4. Industry Level
   : Against the backdrop of the retreat from “private hospital operation”, Xinhua Medical’s exit is a
   rational choice in line with industry trends

---

[1] Caifuhao - “Xinhua Medical Hurriedly Sells 11 Hospitals: RMB 1 Fire Sale, 10% Price Unanswered” (https://caifuhao.eastmoney.com/news/20260120114606991919650)

[2] Sohu - “Xinhua Medical Hurriedly Sells 11 Hospitals: The Great Collapse of Listed Companies’ ‘Hospital Operation Trend’” (https://m.sohu.com/a/977949723_617205)

[0] Jinling AI Financial Database - Real-time Quotes and Financial Data of Xinhua Medical (600587.SS)