Mindray Medical's performance sees biggest drop in nearly a decade: Stock price falls over 30% in six months, profit forecast revised downwards

$Shenzhen Mindray Bio-Medical Electronics (300760.SZ)$$Shenzhen Mindray Bio-Medical Electronics Co., Ltd. (810978.HK)$

As the industry leader in the domestic medical device sector, Mindray Medical (300760.SZ), which had strong performance in previous years, delivered an underwhelming and below-market-expectation 2025 financial report.

In 2025 (the reporting period), Mindray Medical generated revenue of 33.28 billion yuan, a year-on-year decrease of 9.38%; net profit attributable to shareholders was 8.136 billion yuan, a year-on-year decrease of 30.28%; non-recurring net profit was 8.069 billion yuan, a year-on-year decrease of 29.48%.

Similarly, the company's gross margin has dropped significantly, from 63.11% in 2024 to the current 60.32%, while the net profit margin fell from 31.97% to 25.39%.

All three core businesses declined, with performance hitting a 'worst' in nearly a decade.

Looking at the proportion of Mindray Medical's three core businesses, all have seen significant declines. During the reporting period, the company's in-vitro diagnostics business generated revenue of 12.241 billion yuan, down 9.41% year-on-year. The revenue from the in-vitro diagnostics business accounted for over 36% of the group's total revenue, making it the largest product line for the second consecutive year. Meanwhile, within the domestic revenue structure, the revenue share of the in-vitro diagnostics business reached approximately 48%, also being the largest contributor to domestic income.

During the reporting period, the company’s life information and support business generated revenue of 9.837 billion yuan, down 19.80% year-on-year, with international revenue accounting for an increased proportion of 74% of this product line’s total revenue; the medical imaging business achieved revenue of 5.717 billion yuan, down 18.02% year-on-year, with international revenue accounting for an increased proportion of 65% of this product line’s total revenue; the ultra-premium series of ultrasound products achieved revenue exceeding 700 million yuan in their second year on the market, up more than 70% year-on-year.

In addition, the company’s emerging businesses achieved revenue of 5.378 billion yuan, up 38.85% year-on-year, accounting for about 16% of the company's total business revenue, with domestic emerging business revenue accounting for over 20% of total domestic business revenue.

Indeed, Mindray Medical's international revenue and its proportion have been continuously increasing, while the decline in domestic business is undoubtedly the core factor behind the company’s overall poor performance.

During the reporting period, the company’s international business achieved revenue of 17.65 billion yuan, up 7.40% year-on-year, with the proportion of international business revenue to total company revenue further increasing to 53%; domestic business achieved revenue of 15.632 billion yuan, down 22.97% year-on-year.

Mindray Medical stated that the domestic medical device industry has undergone three consecutive years of deep adjustment, and the most difficult period has passed. Hospitals are still widely facing reduced overall procurement budgets due to operating pressures both currently and in the near future, so the equipment industry remains in a weak recovery phase.Due to the impact of multiple policies such as DRG/DIP payment reform, centralized bulk procurement of reagents, mutual recognition of test results, and medical service price regulation, the in-vitro diagnostics industry has entered an adjustment and contraction phase, with both reagent usage and prices seeing varying degrees of decline, leading to a significant shrinkage in market size.Although the implementation of these policies brought short-term industry fluctuations, they effectively standardized diagnostic practices, improved the efficiency of medical insurance payments, and placed higher demands on the diagnostic capabilities of medical institutions. This presents a historical opportunity for the company to leverage its innovative capabilities, provide value-based healthcare, and capture market share. Therefore, it can be observed that under the trend of accelerating industry concentration and import substitution rates, the market share of the company's in-vitro diagnostics business has seen significant growth.

However, the company believes that domestic emerging businesses have also shown high growth potential. The combined revenue of these businesses with in vitro diagnostics accounts for nearly 70% of the total domestic business revenue, and these businesses will be an important driver for long-term rapid growth domestically. By the whole year of 2026, the company's domestic business is expected to achieve positive growth, and from 2027 onwards, it is anticipated to enter a more stable phase of sustained rapid expansion.

Orient Securities believes that in 2025, the company’s net profit decline will exceed its revenue drop, primarily due to reduced hospital procurement budgets domestically, fierce competitive environments, and ongoing healthcare reforms. Gross margins across the company’s three major businesses have declined to varying degrees due to price reductions.

Based on past annual reports, Mindray Medical recorded its 'worst' performance in nearly a decade in 2025, marking the only year of negative growth: From 2017 to 2024, the company’s year-on-year revenue growth was 23.72%, 23.09%, 20.38%, 27.00%, 20.18%, 20.17%, 15.04%, and 5.14%, respectively, while year-on-year net profit growth for shareholders was 61.78%, 43.65%, 25.85%, 42.24%, 20.19%, 20.07%, 20.56%, and 0.74%, respectively.

Moreover, the results delivered by Mindray Medical were significantly below market expectations. In the third quarter of 2025, several brokerages estimated that the company’s profits would reach approximately 10 billion yuan.

Profit performance far lower than market expectations, with stock price falling over 30% in half a year

Southwest Securities projected at the time that the net profits attributable to shareholders from 2025 to 2027 would be 10 billion, 11.23 billion, and 12.71 billion yuan, respectively, corresponding to earnings per share (EPS) of 8.25, 9.26, and 10.49 yuan. Considering the company’s steady growth in the coming years and its position as one of the most internationalized leading medical device firms, it is recommended to continue monitoring closely.

Guosen Securities stated in a research report on November 6 last year that the company’s third quarter marked an inflection point as expected, with the company forecasting that fourth-quarter year-on-year revenue growth would accelerate compared to the third quarter. The in vitro diagnostics business has significant potential for market share increase, while the medical imaging business is driven by high-end products. Growth momentum for the life information and support business is gradually recovering, and emerging businesses such as minimally invasive surgery and cardiovascular are expanding rapidly. “Equipment + IT + AI” digital intelligence is setting industry trends. Considering that domestic operations are still in an adjustment period influenced by the market environment and healthcare policies, profitability forecasts were revised downward. The projected net profits attributable to shareholders for 2025-2027 are 9.879 billion, 11.153 billion, and 13.129 billion yuan (previously 11.093 billion, 12.616 billion, and 14.501 billion yuan), with year-on-year growth rates of -15.3%, 12.9%, and 17.7%, respectively. The current share price corresponds to price-to-earnings ratios (PE) of 25.3x, 22.4x, and 19.0x. As a leader in domestic medical devices with strong R&D capabilities, the company’s “equipment + IT + AI” digital intelligence layout is expected to redefine China’s global positioning in the medical device industry. The rating of 'Outperform' is maintained.

In a research report on April 8 this year, Guosen Securities stated,Considering that domestic operations are still in the recovery phase, we have lowered our profit forecasts for 2026-2027 and added a new forecast for 2028. We now expect net profits attributable to shareholders for 2026-2028 to be 8.328 billion, 9.428 billion, and 10.759 billion yuan (originally 11.153 billion and 13.129 billion yuan for 2026-2027), with year-on-year growth rates of 2.4%, 13.2%, and 14.1%, respectively. The current share price corresponds to PE ratios of 23.0x, 20.3x, and 17.8x. As a leader in domestic medical devices with strong R&D capabilities, the company’s digital transformation is expected to redefine China’s global positioning in the medical device industry. The 'Outperform' rating is maintained.

BOC Securities provided investment advice after the annual report was disclosed, stating that due to multiple policy impacts such as DRG/DIP payment reform and centralized procurement of reagents, the IVD industry has entered a period of adjustment and contraction, while the equipment sector is experiencing weak recovery. Based on this, we have lowered our profit forecast for the company, projecting net profits attributable to shareholders for 2026-2028 to be 9.45 billion, 11.307 billion, and 13.045 billion yuan (previously 16.089 billion and 17.213 billion yuan for 2026-2027). Corresponding earnings per share (EPS) are 7.79, 9.33, and 10.76 yuan. Based on the closing price as of March 31, the corresponding PE ratios are 21.1x, 17.7x, and 15.3x. The company’s overseas operations are proceeding steadily, domestic operations are bottoming out and rebounding, and new business growth coupled with digital scaling is expected to restore rapid growth in company performance. A buy rating is maintained.

Successive downward revisions of earnings forecasts by institutions are clearly not an optimistic signal. Meanwhile, the company’s share price has fallen by more than 30% in about half a year from the end of August last year to April 9, 2026. How to boost investor sentiment is also a test of the company's operating strategy.

At the investor conference on March 31, Mindray Medical stated that the company places great importance on investor returns. On the basis of balancing the common interests of all shareholders and the company’s long-term development, it continues to maintain multiple dividend payouts per year. Since its A-share listing in 2018, the company has implemented dividend payouts for seven consecutive years, with a total cumulative dividend of approximately 37.336 billion yuan (including 2 billion yuan in share repurchases) as of the end of last year, which is more than six times the amount raised during its IPO. In addition, the company approved the profit distribution plan for 2025, proposing to distribute a total cash dividend of 376 million yuan (including tax). Adding the three interim dividends totaling 4.935 billion yuan (including tax) implemented in May, September, and November 2025, the company’s total cash dividend for 2025 reached 5.31 billion yuan (including tax), accounting for 65.27% of this year’s net profit attributable to shareholders. (Produced by Harbor Finance)

Harbor Business Observer - Wang Lu

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