Gushengtang's H1 2025 Net Profit Climbs 41.6% Driven by Digital Health Adoption and International Expansion

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GUANGZHOU, China, Sept. 8, 2025 /PRNewswire/ -- On August 29, Gushengtang (HKG:2273) announced its interim results for 2025, reporting strong operational and financial performance. The company posted revenue of RMB 1.49 billion, representing a 9.5% year-on-year increase. Net profit grew 41.6% year-on-year to RMB 150 million. The expansion in net profit significantly outpaced top-line growth, reflecting improved profitability and greater operating leverage.

The company also delivered robust cash flow. Operating cash flow reached RMB 300 million, up 111% from the prior year, while free cash flow totaled RMB 210 million, an increase of 466%. The Board declared an interim dividend of RMB 75.766 million, representing a 50% payout ratio. In addition, the company announced a share repurchase program of up to HKD 300 million, demonstrating its commitment to disciplined capital allocation and shareholder returns.

Digital Health Innovation: AI-Enabled Physician Avatars Advance to Commercial Scale

According to the interim report, Gushengtang's technology initiatives progressed from pilot programs to full commercial deployment. The company's proprietary innovation— an AI-enabled avatar system modeled on leading traditional Chinese medicine (TCM) physicians—has emerged as a new growth driver, addressing structural challenges such as the uneven distribution of specialized expertise across the industry.

Currently, Gushengtang has developed ten primary AI avatars covering eight core TCM specialties. Drawing on the clinical expertise of top practitioners, these digital solutions replicate diagnostic reasoning, treatment methodologies, and prescribing practices. The avatars demonstrate more than 86% alignment with physicians' decision-making processes. Clinical validation from participating doctors affirms the accuracy and quality of care, enabling providers in remote and international markets to access real-time expert support and improve patient outcomes.

The company's AI platform now supports patients across the full continuum of care. Prior to consultations, avatars assist with triage and preliminary assessments. Post-visit, the system is deployed across more than 50 use cases, including follow-up care, rehabilitation, and medication adherence. Data show that the AI health assistant facilitates hundreds of follow-up interactions weekly, shifting Gushengtang's service model from episodic consultations to longitudinal health management. This approach has strengthened patient retention and extended engagement.

The commercialization pathway is well-established, transitioning the AI program from a cost center to a revenue-generating business. The company expects the segment to contribute revenue in the tens of millions of RMB in 2025. In addition, AI is central to Gushengtang's international expansion strategy, providing overseas physicians with access to digital replicas of renowned TCM doctors, enhancing local care quality, addressing expertise shortages, and supporting asset-light scaling. 

Singapore Model Demonstrates Success, Supporting International Expansion

The AI-driven strategy provides standardized, high-quality services while enabling asset-light international growth.

In the first half of 2025, Gushengtang achieved a key milestone with the successful launch of its first international clinic in Singapore. Revenue at this location increased 119% year-on-year in July 2025, outpacing other regions. High patient retention in Singapore demonstrated the strength and adaptability of the company's operating and digital models. Based on market analysis, Gushengtang plans to expand its Singapore network to more than 20 locations by the end of 2026, significantly scaling its presence.

Navigating regulatory requirements remains a core challenge for companies expanding globally. In August 2025, Gushengtang's proprietary Hair Nourishing Granules received market authorization from Singapore's Health Sciences Authority (HSA), marking the first internationally approved proprietary TCM product developed by the company. This milestone reflects a dual-track model where both clinical services and pharmaceutical products drive global growth. Large-scale product commercialization is expected to diversify revenue streams, enhance profitability, and establish a repeatable regulatory pathway for future product approvals in international markets.

The company has identified Hong Kong SAR as the next strategic market, with Singapore serving as the blueprint for replicable, economically sustainable international growth. This model is designed to unlock a second growth trajectory while extending the reach of TCM worldwide.

Core Business Sustains Growth as Diversification Enhances Resilience

While global expansion and digital health initiatives accelerate, Gushengtang's core operations continue to deliver steady growth, providing a strong foundation for overall performance. In H1 2025, same-store sales accounted for 97.3% of total revenue, reflecting operational efficiency and high patient loyalty. 

Patient visits totaled 2.747 million during the reporting period, up 15.3% year-on-year. Membership revenue reached RMB 620 million, supported by the expansion of the medical alliance to 37 partners and a physician network of 41,743 practitioners. This ecosystem reinforces the company's growth cycle, with physician reputation driving patient acquisition and brand strength.

Revenue mix also showed improvement. Sales of proprietary products increased 209.1% year-on-year, becoming an important driver of profitability. Digital partnerships with platforms, such as Xiaohongshu and Meituan, contributed 7.6% of new offline patients, while acquisition costs remained below industry benchmarks, reflecting efficient digital marketing execution.

Operating cash flow reached RMB 300 million, up 111% year-on-year, with total cash reserves of RMB 1.37 billion. This strong liquidity position provides flexibility for future investment in organic growth, business development, and shareholder returns. To date, the company has repurchased shares worth more than HKD 84.68 million and declared an interim dividend of RMB 75.76 million, equal to 50% of net profit.

The pharmaceutical sector continues to benefit from favorable market dynamics, technological advances, and supportive policy frameworks. With integrated capabilities across healthcare services, pharmaceutical sales, and digital innovation, Gushengtang is executing its global strategy and expanding its international footprint. The company's priorities align with national initiatives to support TCM innovation and global adoption.

Gushengtang has evolved from a traditional TCM clinic operator into an integrated healthcare platform combining medical expertise with modern operational management and digital solutions. Through a diversified strategy grounded in sustainable organic growth, disciplined expansion, and new business initiatives, the company has enhanced its resilience and is well-positioned to deliver long-term, sustainable value for shareholders.

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SOURCE Gushengtang