Bgi Genomics Co.,Ltd. may currently be facing a triple dilemma: the challenges of "low gross margins, low asset turnover, and stringent compliance." Firstly, as pressure on medical insurance fund revenues and expenditures persists, cost control has become a long-term theme. Against the backdrop of centralized procurement, the profitability of the company's related products may be under pressure. Secondly, the company's business model, primarily serving business-to-business (B2B) clients, shows a provision for bad debts as high as 41%. Does such a high bad debt provision ratio indirectly reflect concerns about the quality of its earnings? Thirdly, in the context of increasingly strict policy compliance, Bgi Genomics Co.,Ltd. may be compelled to transition from an Independent Clinical Laboratory (ICL) model to an In-Vitro Diagnostics (IVD) model. However, the IVD industry is also experiencing the growing pains of declining volumes and prices.
Bgi Genomics Co.,Ltd. has not yet emerged from the quagmire of losses and remained unprofitable in 2025.
The 2025 annual report shows that the company achieved operating revenue of 37.05 billion yuan, a year-on-year decrease of 4.18%. Net profit attributable to shareholders was -617 million yuan, representing a 31.69% reduction in losses compared to the previous year. Net profit after deducting non-recurring gains and losses was -636 million yuan, marking a 30.82% reduction in losses year-on-year.
It is noteworthy that since 2022, the company's revenue has declined significantly and subsequently shown a trend of continuous contraction. Excluding the impact of products like pandemic-related testing, the company's core foundational businesses, such as reproductive health basic research and clinical application services, are also facing a sustained shrinking trend. Why has Bgi Genomics Co.,Ltd.'s operations experienced such difficulties in recent years? Why has the company's performance been so weak?
**Core Foundation Hit by Dual Impacts of Centralized Procurement and Demand?** According to information, the company's main business involves providing research services, comprehensive precision medicine testing solutions, and health management services to scientific research institutions, enterprises, public institutions, medical institutions, and social health organizations through multi-omics and big data technological means such as genetic testing, mass spectrometry testing, bioinformatics analysis, and medical AI large models.
By product segment, in 2025, revenue from comprehensive precision medicine testing solutions was 15.88 billion yuan, a year-on-year increase of 19.45%, accounting for 42.84% of operating revenue. Revenue from reproductive health basic research and clinical application services was 8.26 billion yuan, a year-on-year decrease of 28.06%, accounting for 22.3% of operating revenue. Revenue from multi-omics big data services and synthesis business was 6.68 billion yuan, a slight increase of 0.08% year-on-year, accounting for 18.02% of operating revenue. Revenue from services for tumor and chronic disease prevention/control and translational medicine was 5.11 billion yuan, a year-on-year decrease of 18.28%, accounting for 13.78% of operating revenue. Revenue from infection prevention/control basic research and clinical application services was 94.6545 million yuan, a year-on-year increase of 30.29%, accounting for 2.55% of operating revenue.
From the above data, it can be seen that the company's reproductive health basic research and clinical application services segment experienced the largest decline in 2025. In fact, this segment has been under continuous pressure in recent years.
On one hand, core products within Bgi Genomics Co.,Ltd.'s reproductive health services have been impacted by centralized procurement. Public information shows that Guangdong province has included Non-Invasive Prenatal Testing (NIPT) in centralized procurement, with new prices taking effect from November 1, 2025. According to the company's CEO Zhao Lijian, the price of this testing item has gradually dropped from over two thousand yuan to over one thousand yuan, and further decreased to 560 yuan after being included in medical insurance. Jiangsu province implemented volume-based procurement for NIPT services. According to a notice from the Jiangsu Provincial Healthcare Security Bureau on September 30, 2025, the adjusted service price shows, for example, that in Huaian city, the service price provided by a Bgi Genomics Co.,Ltd. affiliate is 480 yuan, while in Xuzhou and Suzhou, the price is 500 yuan. Hebei province implemented centralized procurement earlier through government livelihood projects. Before 2019, the price per case was about 2400 yuan, and by 2024, it had dropped to 345 yuan per case, paid by the government, making it free for citizens.
Against the backdrop of centralized procurement, not only has revenue in this business segment shrunk significantly, but its gross margin has also declined substantially. In 2020, the gross margin for the reproductive health basic research and clinical application services segment was 57.53%. By 2025, it had fallen to 43.31%, a decline of nearly 25%. Does this imply that centralized procurement is impacting the company's high-margin businesses?
On the other hand, industry demand for reproductive health basic research and clinical application services may also be facing challenges. According to data from the National Bureau of Statistics, the number of births in China in 2025 was 7.92 million, a decrease of 1.62 million compared to 2024, a drop of 17.0%, with the birth rate falling to 5.63‰.
**Is B2B Business Tough? Bad Debt Ratio as High as 41%** Meanwhile, it has been noted that Bgi Genomics Co.,Ltd.'s provision for bad debts has risen significantly in recent years. According to historical annual report data, the company's bad debt provision ratio was 27.37% in 2020. In 2024, the company's bad debt provision ratio increased sharply to 36.04%. In 2025, the ending balance of the company's accounts receivable was 2.8 billion yuan, and its bad debt provision ratio was as high as 41.14%.
With the bad debt provision ratio rising sharply and being so high, is its business model truly sound? What about the company's customer structure? According to the company's official website, its current customer structure is centered on B2B institutions, with B2C as an important supplement. The future strategy will adhere to a dual-line approach of "deepening the foundational B2B market and accelerating B2C expansion," forming a dual-driver development pattern. B2B business is the core pillar of the company's revenue, having established a multi-domain, wide-coverage institutional service system. In the domestic market, it cooperates with over 2,400 hospitals, of which more than 1,000 have adopted the "sample stays in-hospital" localized testing solution. Services cover over 20 provinces nationwide, with more than 120 public health livelihood projects implemented, cumulatively serving over 30 million people. Simultaneously, it provides sequencing and multi-omics research services to scientific research institutions such as universities and research-oriented hospitals, and offers technical platform support to industrial clients like biopharmaceutical companies and breeding enterprises.
Looking at the company's cash flow, its operating cash flow performance has been poor in recent years. Does this suggest concerns about the quality of the company's earnings? Does the large proportion of bad debt provisions validate the potential "inflation" in related businesses?
**Impact of Policy Compliance?** Bgi Genomics Co.,Ltd.'s traditional central laboratory (ICL) outsourcing service model is being impacted by policy compliance requirements. In recent years, to standardize medical practices, prevent integrity risks, ensure medical quality, and protect patient rights, national and local health authorities have intensively issued a series of management policies targeting the outsourcing of testing samples by medical institutions. These include the "Key Points for Correcting Unhealthy Practices in the Field of Medicine Procurement and Sales and Medical Services in 2025" jointly issued by the National Health Commission and 13 other ministries, as well as notices or management regulations on standardizing the outsourcing of testing samples by medical institutions released by provinces and cities like Shanghai, Jiangxi, Guizhou, Hubei, and Gansu. These documents emphasize standardizing the outsourcing of testing samples, strictly prohibiting the outsourcing of testing items that can be performed in-house by the hospital, and prohibiting improper benefit transfers.
In June 2025, the National Health Commission, the Ministry of Finance, and 12 other ministries jointly issued the "Notice on Issuing the Key Points for Correcting Unhealthy Practices in the Field of Medicine Procurement and Sales and Medical Services in 2025" (Guo Wei Yi Ji Han [2025] No. 144), explicitly listing "continuously standardizing the outsourcing of testing samples" as one of the key tasks requiring sustained deepening in the governance of the medicine procurement and sales field and systematic correction of irregularities in medical services.
Under the requirements of policy compliance, Bgi Genomics Co.,Ltd. is promoting the transition from the Independent Clinical Laboratory (ICL) model to the In-Vitro Diagnostics (IVD) model. Can this solve the company's current predicament? In fact, the IVD industry is also experiencing the pain of declining volumes and prices. On one hand, centralized procurement impacts prices; on the other hand, policy compliance and other factors may further suppress "volume." Starting January 1, 2025, the DRG/DIP 2.0 version grouping scheme was implemented nationwide, completely transforming hospital laboratory departments from "profit centers" to "cost centers." Simultaneously, the National Health Commission clearly requires that testing items follow the principle of "minimum sufficiency" and comprehensively dismantle unnecessary testing packages. This may lead to a significant decline in the volume of orders for related testing items.
According to an IQVIA report, China's immunodiagnostics market reached 30.2 billion yuan in 2025, a year-on-year decrease of 20%. The domestic clinical chemistry diagnostics market was 8.7 billion yuan in 2025, a year-on-year decrease of 16%. Related reports indicate that in 2025, following the implementation of price reductions after the inter-provincial alliance procurement for IVD reagents led by Anhui province, and with the deepening of the DRG/DIP diagnosis-related group payment policies, coupled with the impact of policies such as the "unbundling of testing packages" announced in May 2025 and the mutual recognition of test results across institutions, the testing volume for some items decreased, leading to short-term adjustments in the domestic immunodiagnostics market.
In summary, this may reflect the triple challenges currently facing Bgi Genomics Co.,Ltd.: "low gross margins, low asset turnover, and stringent compliance."
Firstly, as pressure on medical insurance fund revenues and expenditures persists, making cost control a long-term theme, and as public hospitals shift from "scale expansion" to "refined operations," and as centralized procurement expands from drugs and high-value consumables to equipment and testing reagents, is there concern about the company's future profit space?
Secondly, is the company's B2B-centric business model sound? Is the quality of its earnings high? It is worth noting that the company has over 2.8 billion yuan in accounts receivable, with a bad debt provision ratio as high as 41%.
Thirdly, with increasingly strict compliance supervision, standardization of sample outsourcing testing, and prohibitions against outsourcing testing items that can be performed in-house, is this exerting pressure on the company's business?
Regarding the performance decline, the company explained that it was affected by fluctuations in market demand and intensified industry competition, leading to further declines in terminal service/product prices and a significant year-on-year decrease in gross margins for some products. The company continues to proactively and strategically adjust its main business product structure, focusing on the operation of core advantageous product lines to promote the steady development of its main business.
The company seeks to find new future growth through a global expansion strategy. The annual report explains that it is deepening its presence in global markets, with notable achievements in expanding into emerging overseas markets. As the company's NIPT obtained certifications overseas, revenue from reproductive health services in regions with large populations and higher fertility rates, such as Asia-Pacific and Latin America, showed relatively clear growth. Meanwhile, following the implementation of overseas technology transfer projects, the company's business further expanded, and its localized service capabilities continued to strengthen, providing strong support for regional business growth. During the reporting period, the comprehensive precision medicine solutions business in regions like Southeast Asia and Latin America achieved steady growth.
Judging from the data, the overall contribution from overseas business is below 20%. Business expansion in Europe, Africa, and the Americas appears modest, while the Asia-Pacific region did not show explosive growth, with a growth rate of only 16.46%.
It should be added that while the company's Q1 revenue growth rate recovered, it still reported a loss. In the first quarter of 2026, the company achieved operating revenue of 809 million yuan, a year-on-year increase of 20.35%. Net profit attributable to shareholders was -9.5205 million yuan, representing an 81.93% reduction in losses year-on-year, indicating some improvement in operating conditions. The report shows that the Q1 performance recovery was mainly attributable to the company actively promoting the transition of its business from the ICL outsourcing service model to a dual-driver model of "equipment + reagents + services," continuously optimizing its revenue structure, leading to a year-on-year increase in revenue scale. Simultaneously, the company continued to advance cost reduction and efficiency improvement, achieving effective control on the expense side through lean operations.
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