Meihao Medical (1947) H1 2023 earnings summary

Executive summary

• H1 revenue fell 38.8% YoY to RMB34.985m; net loss was RMB2.12m versus profit of RMB10.873m, as COVID-related visit declines and implant price pressure weighed on results.

• Active patients across five Wenzhou dental hospitals decreased 23.5% YoY to 30,366.

• Patient visits began rebounding as pandemic effects eased; plans include expanding Wenzhou operations and investing in service capabilities.

Financial highlights

• Gross profit fell to RMB15.468m from RMB32.734m; gross margin declined to 44.2% from 57.2% as revenue fell faster than largely fixed costs.

• Loss before tax was RMB2.751m versus profit before tax of RMB15.423m; adjusted loss was RMB2.12m versus adjusted profit of RMB14.41m, excluding listing expenses.

• Other income and gains rose to RMB2.773m from RMB0.793m, mainly due to higher bank interest income.

• Selling expenses rose 63.3% to RMB9.8m; administrative expenses fell 9.0% to RMB10.1m, partly reflecting non-recurrence of listing expenses.

• Income tax was a RMB0.631m credit versus RMB4.550m expense, reflecting lower revenue and losses at certain subsidiaries.

Outlook and guidance

• Confidence in industry prospects was supported by easing pandemic effects, rising dental-health awareness, government policies, reputation and patient loyalty.

• Plans include new Wenzhou hospitals, considering Zhejiang acquisitions, and expanding paediatric, orthodontic and implant services.

• Planned investments include hospital operating software, children’s dental facilities, advanced devices and a dentist training centre.