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

Ask AI · Why Is It Difficult for Midea Group’s Takeover to Halt the Decline in Performance?

For the first time in 29 years since it went public, WanD Medical (600055.SH) delivered an unimpressive 2025 annual performance report.

According to the annual report released late on March 25, the company’s 2025 revenue was RMB 1.35B, 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, fourth-quarter performance fell short of market expectations: revenue dropped sharply quarter over quarter to RMB 158 million, while attributable net profit recorded a loss of RMB 201 million.

With performance turning to losses, the company will not pay dividends for 2025, breaking the long-standing practice of consistently paying dividends at year-end for more than 20 years. Meanwhile, the company plans to sell a loss-making subsidiary established less than 3 years ago to a company under its controlling shareholder, Midea Group (000333.SZ). Previously, WanD Medical set up the subsidiary to support strategic expansion; now it is being divested due to a change in business planning.

Whether this transformation by WanD Medical can take effect still needs to be validated by time. Judging from the capital market’s reaction, since the start of this year the company’s share price has been fluctuating and trending downward, especially after hitting a period high on January 14, when the downward trend became even more pronounced. As of March 26, the share price had cumulatively fallen 19.24%.

A Severe Loss in the Fourth Quarter Drags Down the Full Year

After WanD Medical posted a loss in the third quarter of last year, the loss amount expanded further in the fourth quarter, leading to the first-ever annual loss since the company listed 29 years ago.

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

Multiple investors said that WanD Medical’s fourth-quarter performance in 2025 fell below expectations. The company’s actual operating results in the fourth quarter also did not match the expectations it had previously communicated during investor relations activities.

After the company disclosed its third-quarter report last year, many institutional investors and WanD Medical management held discussions. According to the investor relations activity record table disclosed by the company on October 27 last year, when responding to questions from institutions, the company’s executives said that entering the fourth quarter, centralized volume-based procurement (集采) was entering its peak delivery period. As the procurement of province- and county-level projects in Fujian, Anhui, Shanxi, Xinjiang, Sichuan, and other places took hold, the company expected the total delivery amount for centralized procurement in the entire fourth quarter to 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 the full-year results. The company’s 2025 revenue was RMB 1.35B, down 11.64% year over year; attributable net profit recorded a loss of RMB 228 million, down 244.81% year over year; net cash flow from operating activities was -RMB 252 million, down 215.44% year over year.

In its annual report, WanD Medical said its 2025 performance reflected the company’s phased results of proactive strategic adjustments and deep transformation amid a complex and shifting macro environment and industry cycles.

Regarding the reasons for the revenue decline, the company said it adjusted the company’s overall marketing strategy, insisting on going upward and expanding outward. Internally, it makes use of centralized procurement projects to capture and secure greater share in mid-to-high-end markets; externally, it actively expands international channels. Because the delivery cycle of centralized procurement projects was longer than expected, domestic revenue decreased compared with the same period last year.

Judging from contract liabilities, the data as of end-2025 was RMB 175 million. Compared with RMB 76.8037 million in the same period last year, it increased by 127.44%. The company said this mainly resulted from an increase in orders that had not yet been completed for delivery by year-end.

For the pressure on profit and operating cash flow, in its annual report the company said the main reasons were increased strategic spending. On the one hand, it actively participated in centralized volume-based procurement to accelerate penetration into mainstream public markets and optimize product structure toward a more competitive direction. On the other hand, it maintained a high level of R&D investment, focusing on breakthroughs in core technologies such as non-liquid helium MRI, and it laid out next-generation intelligent imaging technologies to accumulate core momentum for a breakthrough in the transition to high-end markets.

As WanD Medical is in the middle of its transformation, and because it incurred losses, it will not pay dividends for 2025, breaking the long-standing practice of consistent year-end dividend payments for more than 20 years. The company said that, given it did not achieve profitability in 2025 and after taking into comprehensive consideration factors including the external industry environment and the company’s future development, to maintain steady development and better safeguard the long-term interests of all shareholders, following approval by the board of directors, it will not pay cash dividends in 2025, will not issue bonus shares, will not convert capital surplus into share capital, and will not distribute profits in other forms. Retained profits will be carried forward for distribution in subsequent years.

Divesting a Loss-Making Subsidiary During the Transformation

At the same time as disclosing the annual report, WanD Medical plans to divest a loss-making subsidiary established less than 3 years ago to a subsidiary under its controlling shareholder.

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

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

Suzhou Wanying was established in November 2023, wholly established by WanD Medical. At that time, WanD Medical said that, in line with the needs of strategic development and layout, leveraging advantages of local policy and supporting industrial resources, the company would invest in Suzhou to establish a wholly owned subsidiary, Suzhou Wanying, with RMB 100 million (registered capital) of its own funds to carry out R&D and production projects for core components. The aim was to enhance the conversion of technological achievements, expand market space, and improve the company’s core competitiveness.

However, Suzhou Wanying incurred losses of RMB 5.8895 million and RMB 11.1995 million in 2024 and 2025 respectively, for a cumulative loss of RMB 17.0890 million, with operating performance continuing to decline.

According to the announcement, WanD Medical’s book cost of holding 100% equity interest in Suzhou Wanying was RMB 36.2146 million. With this sale of shareholder equity, there is an appreciation of RMB 11.7854 million, representing an appreciation rate of 32.54%.

Regarding the reasons for selling all equity of the subsidiary, WanD Medical said it is based on the needs of the company’s business plan adjustments.

WanD Medical was listed on the SSE on April 24, 1997. It is a long-established company in China’s medical imaging equipment industry. The company’s actual controller and controlling shareholder have undergone multiple changes. China Resources Group once served as the company’s actual controller, and in March 2012 the company was renamed “China Resources WanD.” In 2015, Yuyue Technology officially obtained controlling equity in WanD Medical through an acquisition, and in September 2016 the company’s name was restored to “WanD Medical.”

In 2021, Midea Group acquired 29.09% of the equity of WanD Medical from Yuyue Medical and its actual controller, Wu Guangming, becoming WanD Medical’s controlling shareholder, with He Xiangjian becoming WanD Medical’s actual controller.

During the period when Midea Group managed WanD Medical, the company’s chairman changed three times. The first chairman served the longest, for up to 4 years. The second chairman, Ma Chibing, served only 8 months; his tenure was from May 21, 2025 to January 25, 2026. After resigning for personal reasons, on January 26, 2026, Jian Guo Wang was elected chairman.

Now, a major challenge facing WanD Medical is whether it can successfully transform. In its annual report, WanD Medical said that in recent years, the global medical imaging equipment industry has been undergoing profound change driven by multiple factors including technological innovation, market demand, and policy guidance. Technical external dependence and insufficient innovation are fundamental risks. Intense market competition and payment pressure directly affect corporate profitability. A fragile global supply chain and a disconnected industrial chain impact operational stability, while increasingly stringent regulatory environments raise market-entry and ongoing-operations thresholds.

“Enterprises need to establish a comprehensive risk management system, balance short-term survival with long-term innovation at the strategic level, strengthen supply-chain resilience and deepen clinical collaboration at the operational level, and actively adapt to shifting global regulatory dynamics from a compliance perspective—in order to get through the cycle and achieve sustainable development.” The company said.

(This article comes from First Finance)