First annual turnaround to profitability! Health Road's stock price surged over 29% at one point

On February 13, $HEALTHYWAY INC (02587.HK)$ the stock saw a significant rise, surging 29.75% at one point during the session. As of press time, the increase was 22.82%, trading at HKD 5.49 per share.

The unusual stock price movement is strongly supported by the company's disclosure of favorable earnings forecasts.

On February 12, Health Road issued a positive profit forecast, expecting revenue for 2025 to be no less than 1.5 billion yuan (in RMB, same below), representing year-over-year growth of no less than 25%. Profit is projected to be no less than 50 million yuan, compared to a net loss of 269 million yuan in 2024, successfully turning losses into profits. This marks the first time Health Road has achieved a net profit turnaround since 2020.

Health Road is a digital health and medical service platform. Since 2001, Health Road has been providing health and medical services to individual users on digital platforms in China; in 2015, it began offering enterprise services and digital marketing services to businesses and institutions. Therefore, Health Road operates two main business segments: health and medical services, and enterprise services and digital marketing services.

Among these, enterprise services include content services and information technology services. Content services primarily involve publishing disease education content online for fees, launching specific disease-related content for pharmaceutical companies to generate revenue, and conducting real-world research on drugs to obtain payments from pharmaceutical firms. Information technology services mainly focus on providing software development and maintenance services to pharmaceutical companies and medical institutions. Digital marketing services primarily consist of online advertising.

When discussing the 2025 earnings growth, Health Road attributed it to three main factors:

First, Health Road drove content service revenue growth through strategic adjustments such as resource integration and new service models. Revenue from this segment in 2025 is expected to be no less than 800 million yuan, reflecting year-over-year growth of approximately 38.65%.

Second, thanks to increased revenue from big data technology services and the launch of new artificial intelligence (AI) software products, IT services revenue in 2025 is projected to be no less than 350 million yuan, showing year-over-year growth of about 18.24%. Notably, Health Road’s self-developed AI software product contributed approximately 30 million yuan in revenue during its first year on the market in 2025.

Third, operational efficiency continued to improve. With business expansion, the proportion of operating expenses to revenue for Health Road in 2025 decreased compared to 29% in 2024.

In recent years, the aging population in China has accelerated, increasing pressure on chronic disease management and highlighting the urgent need for change in traditional healthcare models. At this juncture, the rapid development of AI provides an effective solution to address practical challenges in the healthcare industry, with the potential to alleviate supply-demand imbalances in medical resources by empowering the entire lifecycle of healthcare services and driving structural changes in the industry.

Some analysts believe that Health Road, as a leading digital health and medical service platform in China, could further unlock growth potential by leveraging its extensive industry experience and resources, combined with the empowerment of AI-driven solutions.

In fact, the turnaround in Health Road's financial performance was already reflected in its mid-year report for 2025. In the first half of 2025, Health Road's revenue decreased by 15.31% year-on-year to 518 million yuan, but net profit turned positive, reaching 7.04 million yuan, showing significant improvement compared to the same period last year. Gross margin increased by 1.2 percentage points year-on-year to 31.2%, reflecting an increase in the proportion of high-margin AI service revenue and notable cost control achievements.

Based on the earnings forecast, Health Road’s performance in the second half of the year was even more impressive than in the first half. According to estimates by Huabao Securities, Health Road’s revenue in the second half of the year was no less than 982 million yuan, representing a year-on-year growth of 66.72%, with net profit no less than 42.96 million yuan, achieving a substantial turnaround from losses to profits. Against the backdrop of declining revenue and only marginal profitability in the first half of the year, the robust contribution of income and profit in the second half became the core driver for the company to achieve an overall turnaround in 2025 and record its first annual profit since 2020.

Author: Pingzi

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