Recent performance forecasts from Wondfo Biotech indicate that its net profit has plummeted to the brink of breakeven. Data reveals that the company expects its 2025 net profit attributable to shareholders to be between 46 million and 69 million yuan, a sharp decline of 87.71% to 91.81% year-over-year; its estimated non-GAAP net profit ranges from a loss of 15 million yuan to 7.5 million yuan, falling 101.51% to 103.02% compared to the previous year.
Losses in the fourth quarter expanded further amidst declines in both volume and price. Wondfo Biotech's third-quarter report for 2025 showed that for the first three quarters, the company's primary operating revenue was 1.69 billion yuan, down 22.52% year-over-year; net profit attributable to shareholders was 134 million yuan, a decrease of 69.32%; non-GAAP net profit was 82.6416 million yuan, dropping 78.67%. Specifically, in the third quarter of 2025, the company's single-quarter operating revenue was 445 million yuan, falling 26.66%; its single-quarter net profit attributable to shareholders was a loss of 55.4591 million yuan, down 169.21%; and its single-quarter non-GAAP net profit was a loss of 70.9064 million yuan, plunging 213.09%. Based on these figures, it is projected that Wondfo Biotech's fourth-quarter losses may approach 100 million yuan, indicating a further widening of losses compared to the third quarter.
According to Wind data, Wondfo Biotech is dedicated to the research, production, and sales of rapid testing (point-of-care testing, POCT) products—including reagents and instruments—within the biomedical in vitro diagnosis (IVD) industry, providing customers with professional rapid diagnostic and chronic disease management products and services. The company has established comprehensive technology platforms such as colloidal gold and latex immunochromatography, fluorescent quantitative detection, dry biochemistry, electrochemical quantitative detection, and molecular diagnostics. Its product portfolio covers infectious diseases, pregnancy, cardiovascular diseases, drug abuse, oncology, metabolic diseases, and other business areas.
However, the IVD industry is facing dual constraints from centralized procurement and industry regulations, putting pressure on both volume and price. On the pricing front, against the backdrop of medical insurance cost control, the advancement of transparent reagent procurement and volume-based centralized procurement has significantly impacted prices in the IVD sector. By the end of 2024, five rounds of provincial alliance centralized procurement for IVD had been completed, including three rounds of biochemical reagent procurement led by Jiangxi and two rounds of immunoassay reagent procurement led by Anhui, essentially covering core product varieties and regions. Relevant statistics indicate that under the price constraints of centralized procurement, price reductions for some products have been as high as 70% or more, as illustrated in the chart below.
Prices for numerous testing items nationwide continue to be adjusted downward, with various provinces and cities actively responding to the National Healthcare Security Administration's pricing adjustments. Public information shows that in April 2025, the Qinghai Drug Procurement Center issued a notice reducing prices for 16 types of in vitro diagnostic reagents significantly. For instance, the price for a Human Cytomegalovirus Antibody (IgG) Detection Kit (ELISA) for 96 tests per box was cut from 10.5 yuan to 5.104 yuan. Similarly, the Anhui Medical Insurance Bureau released a related notice adjusting prices for some medical services in provincial public healthcare institutions. On March 18, 2025, the Hunan Medical Insurance Bureau publicized a notice regarding adjustments to pricing for renal function and myocardial enzyme testing medical service items.
On the volume side, the IVD industry is also constrained by industry standardization. On November 8, 2024, seven departments, including the National Health Commission, the National Development and Reform Commission, and the Ministry of Finance, jointly issued the "Guiding Opinions on Further Promoting the Mutual Recognition of Inspection and Test Results by Medical Institutions," setting clear phased goals. These include achieving mutual recognition of all items within tight-knit medical alliances by the end of 2025; having over 200 mutually recognized items between medical institutions within each prefecture-level city; exceeding 300 mutually recognized items within each province by the end of 2027; surpassing 200 mutually recognized items across regions like Beijing-Tianjin-Hebei, Yangtze River Delta, and Chengdu-Chongqing; and essentially establishing a nationwide interoperable and shared system by 2030 to achieve cross-regional and cross-institutional mutual recognition of common inspection and test results. These mutual recognition policies aim to standardize unreasonable practices in the IVD industry, such as redundant testing, which will directly impact sales volumes related to such repeated examinations.
In April 2025, the National Health Commission, the National Administration of Traditional Chinese Medicine, and the National Disease Control and Prevention Administration jointly issued the "Notice on Further Regulating Inspection and Testing in Medical Institutions." This represents another significant measure following the introduction of the "minimum necessary" principle. The notice emphasizes that secondary and higher-level medical institutions nationwide must adhere to the "minimum necessary" principle when conducting tests and examinations. By the end of June, they are required to comprehensively review and eliminate unnecessary testing panels in clinical practice to resolutely curb redundant testing and irregular charging. According to the notice, test panels in key areas such as routine blood, urine, and stool tests, blood biochemistry, coagulation, immunology, tumor markers, and genetic testing must undergo strict clinical necessity reviews.
Amidst these pressures on volume and price, what is the current state of the IVD sector? IQVIA data indicates that in the first three quarters of 2025, the scale of China's IVD market decreased by 5.9% year-over-year. The biochemical and immunoassay segment experienced the most significant decline, dragging down the overall IVD market. Public information shows that for the first three quarters of 2025, the in vitro diagnostic segment of A-shares achieved total operating revenue of 27.62 billion yuan, a decrease of 14.5% year-over-year, while net profit attributable to shareholders was 4.49 billion yuan, down 26.4%, marking the third consecutive year of decline.
Will pressures continue into 2026? Collections continue to deteriorate. Regarding the performance decline, the company explained: On the revenue side, the primary reason is the downturn in domestic revenue, influenced by adjustments in value-added tax rates and the impact of healthcare industry policies on hospital-based business, leading to volume and price pressures; overseas business development remains stable, providing crucial support for the company's overall sustainable growth. As for the profit side, the company attributed the decline to several major factors: 1) A decrease in consolidated gross profit margin due to price reductions in the domestic market and changes in product mix; 2) Maintenance of high R&D expenditures and sales expenses to strengthen product competitiveness and explore new markets and application scenarios; 3) Impairment losses incurred from the divestiture of non-core, less profitable business segments.
During an investor communication session in the fourth quarter of last year, the company discussed the impact of centralized procurement, stating that the results of the 2024 centralized procurement for chemiluminescence tumor and thyroid function tests would be gradually implemented over approximately two years, with the effects expected to persist until 2026. It is worth noting that tumor markers, thyroid function, and infectious diseases currently represent the three largest segments by market size in chemiluminescence testing. Tumor markers account for the highest share at about 30%, while thyroid function and infectious diseases each account for approximately 20%.
According to the company's 2024 annual report, chronic disease testing is Wondfo Biotech's largest business segment, contributing 44.66% of revenue; the second largest segment is infectious disease testing, accounting for 34% of revenue. Notably, in the first half of last year, these two primary segments experienced significant declines. In the first half of 2025, the company generated revenue of 563.3373 million yuan from chronic disease management testing, a decrease of 26.06% compared to the same period last year; revenue from infectious disease business was 379.3465 million yuan, down 21.14% year-over-year.
A point requiring high vigilance from investors is the significant surge in the company's accounts receivable collection period. Using data from last year's third-quarter report as an example, the days sales outstanding (DSO) for accounts receivable soared to 172 days, whereas this figure was only 32 days in 2022—an increase of over four times. As of the end of the third quarter last year, the company's accounts receivable stood at 1.046 billion yuan, accounting for approximately 60% of the revenue for the same period.
Against the backdrop of significantly high accounts receivable, is there a potential future risk of impairment? In response, the company stated that it is strengthening cash flow management, which may have a certain impact on short-term revenue growth. In other words, against the dual decline in revenue and net profit, reducing high accounts receivable could further impact the company's performance.
It is worth adding that the company mentioned its overseas business is developing steadily, providing an important pillar for sustainable overall growth. The company is deepening the localization process in key countries, with its market share among small and medium-sized laboratories in the international market continuously increasing. In the North American market, the introduction of respiratory business has brought significant incremental growth, and a long-term supply agreement for a respiratory triple-test product with a major US client has laid a solid foundation for the strategic layout of its respiratory infectious disease business in the United States.
Comments