CITIC Construction Investment: The medical device sector's revenue growth turned positive in Q3 2025, while the year-on-year decline in profit narrowed significantly compared to the previous quarter

According to the Zhitong Finance APP, CITIC Construction Investment has released a research report stating that as the impact of centralized procurement policies gradually clears, inventory and base pressure weakens, tariffs between the U.S. and China ease, and new products and businesses gradually ramp up, the performance of multiple companies is expected to continue improving, with performance in 2026 accelerating compared to 2025. In the short term, it is recommended to focus on structural investment opportunities against the backdrop of improving sector performance, while in the long term, attention should be paid to opportunities in innovation, overseas expansion, and mergers and acquisitions. The medical services sector saw a slight decline in revenue year-on-year in Q3 2025, with some consumer medical service companies stabilizing and recovering their average transaction value, while the performance of serious medical service companies remains under pressure from multiple policy impacts.

The main points from CITIC Construction Investment are as follows:

Overall Medical Devices: In Q3 2025, the medical device sector's revenue, net profit attributable to the parent company, and net profit attributable to the parent company after deducting non-recurring gains and losses grew year-on-year by +0.58%, -5.07%, and -3.49%, respectively. The revenue growth rate turned positive in a single quarter, and the decline in profits narrowed compared to H1, mainly due to the continuous recovery of bidding in the medical equipment industry driving overall revenue recovery in the device sector.

Medical Equipment Sector: In Q3 2025, the sector achieved high growth in revenue and net profit year-on-year, with growth rates significantly improving compared to Q2. Looking ahead to Q4 and next year, domestic industry bidding data is expected to continue improving, and companies with delayed revenue recognition or normalized inventory levels are likely to achieve high growth; some companies are expected to show a trend of high growth followed by lower growth next year due to base effects.

Upstream Medical Devices: Haitai Xinguang, Yirui Technology, and MeHow achieved high growth in Q3 performance year-on-year or quarter-on-quarter and are actively expanding new business growth points. Some companies are expected to accelerate growth in 2026.

High-Value Consumables Sector: In Q3 2025, the sector slowly recovered, achieving single-digit revenue growth, while profits declined. Companies in various sub-sectors experienced different impacts from centralized procurement and consumption factors. Looking ahead to Q4 2025 and 2026, some companies that clear centralized procurement or have new product catalysts are expected to reach an operational turning point.

IVD Sector: Affected by centralized procurement, adjustments in inspection fees, unbundling of packages, and value-added tax, the decline in the sector narrowed in Q3 2025, and some companies are expected to reach a performance turning point in Q4 or next year.

Other Medical Device Companies: The performance of home medical device companies showed differentiation, with domestic consumer demand moderately recovering. Many enterprises are actively expanding overseas business or new growth points. Many low-value consumables companies have a high proportion of exports, and the growth rate continued to be under pressure in Q3 due to tariffs.

Medical Services: In Q3 2025, revenue slightly declined year-on-year, while some consumer medical service companies stabilized and recovered their average transaction value. In Q3 2025, the sector's revenue, net profit attributable to the parent company, and net profit attributable to the parent company after deducting non-recurring gains and losses declined year-on-year by 1.08%, 20.31%, and 14.16%, respectively. The decline in revenue year-on-year slightly narrowed compared to Q2, but the decline in profits significantly widened, largely influenced by companies like Aier Eye Hospital on the sector's profit margins. By hospital type, the slowdown in revenue growth for serious medical service companies is expected to be mainly related to multiple factors such as new hospital construction and mergers, local medical insurance fund payment reforms, and centralized procurement, with performance in the first three quarters weaker than that of consumer medical services Risk Warning: Industry policy risk, research and development underperformance risk, approval underperformance risk, macroeconomic environment fluctuation risk