China Medical Devices & Services 2Q/1H26 Preview: Uneven Recovery Visibility; Prefer Companies with Clearer Globalization Capabilities

Overview

This report is Goldman Sachs' preview of 2Q/1H26 earnings for China's medical devices and medical services sector. The report believes the sector remains one of the weaker subsectors within healthcare coverage, with average share prices down about 21% over the past six months and rebounding 4.5% over the past month, still lagging the 8.9% gain of the broader healthcare coverage universe. Uneven demand recovery, policy cost controls, and disruptions to hospital procurement cadence remain the main constraints; however, companies with overseas expansion, order conversion, margin improvement, and shareholder return capabilities are beginning to differentiate themselves.

Core views

The core views include: first, recovery in domestic demand for medical devices and services still lacks consistent visibility, and anti-corruption, cost controls, and VBP are affecting near-term procurement and clinical volumes. Second, overseas execution capability in the medical device sector continues to be the key differentiator, especially for surgical robots and clear aligners. Third, some companies have already shown earnings and margin inflection, for example MicroPort MedBot achieved profitability in 1H26 with high growth, and AK Medical also issued positive profit guidance. Fourth, medical services companies such as Hygeia, Gushengtang, and Jinxin Fertility are showing operational recovery, but a weak consumer environment still limits market participation.

Analysis framework

The report uses a cross-validation approach combining earnings previews, company guidance, profit alerts, operating data, share price performance, target price adjustments, and the policy environment to compare differences among companies in domestic demand, overseas expansion, margins, cash collection, and shareholder returns.

Methodology notes

• equity_researchEarnings Preview and Valuation Adjustment

  2Q/1H26 earnings preview

  Use company guidance, preliminary earnings announcements, operating indicators, and policy changes to judge the direction of upcoming results, and adjust earnings forecasts and target prices accordingly.

• factor_frameworkGS Factor Profile

  Growth, financial returns, valuation multiples, and composite factors

  Goldman Sachs' factor framework compares stocks with the market and industry peers across growth, financial returns, valuation multiples, and composite dimensions to provide investment context.

• corporate_event_frameworkM&A Rank

  M&A probability ranking

  Goldman Sachs uses a 1-to-3 ranking to assess the probability that a company becomes an acquisition target; companies with high or medium probability may have M&A factors incorporated into their target prices.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• MicroPort MedBot

  Representative name for globalization and earnings inflection in surgical robotics

  Strengths

  Achieved profitability in 1H26, delivered high year-over-year revenue growth, overseas revenue growth exceeded 450%, and global order and installation data continue to advance.

  Weaknesses

  Commercialization is still in the scale-up validation stage, and investors are focused on revenue sustainability and accounts receivable collection.

  Comparison

  Compared with device companies driven by domestic demand, overseas orders and installation progress provide stronger support for differentiation.

  Risks

  Unsustainable overseas demand, slower collections, installation targets missing expectations, and sentiment drag from weakness in Intuitive Surgical's share price.

• Edge Medical

  Surgical robotics company with strong overseas execution capability

  Strengths

  Cumulative overseas system installations/shipments of about 100 units and cumulative surgeries exceeding 20k cases support operating leverage.

  Weaknesses

  Still needs continued validation of overseas order quality, utilization, and commercialization sustainability.

  Comparison

  Compared with the sector average, it has stronger globalization optionality.

  Risks

  Overseas installation conversion misses expectations, slower hospital procurement, and intensifying competition.

• Angelalign Technology (6699.HK)

  Clear aligner name with globalization and low VBP exposure

  Strengths

  Domestic and overseas growth are progressing according to plan, public hospital revenue accounts for only about 5-7%, implying limited VBP exposure; legal progress in China and Germany reduces litigation pressure.

  Weaknesses

  Still affected by consumer healthcare demand and international expansion execution.

  Comparison

  Its share price rose +16.8% over the past month, outperforming the sector average and reflecting improved market confidence in its international growth path.

  Risks

  Overseas growth below expectations, weak consumer demand, and a renewed rise in VBP or legal risks.

• AK Medical (1789.HK)

  Orthopedics and robotics commercialization improvement name

  Strengths

  Positive guidance for both 1H26 revenue and net profit, overseas revenue growth of about 40%, and progress in robot tenders.

  Weaknesses

  Domestic orthopedics and consumables businesses may still be affected by policy and pricing pressure.

  Comparison

  Better-than-expected overseas revenue performance reinforces the globalization growth narrative.

  Risks

  VBP pressure, robot order conversion below expectations, and execution risks in overseas expansion.

• Hygeia Healthcare (6078.HK)

  Medical services name focused on operating recovery and shareholder returns

  Strengths

  Improvement in outpatient visits and surgeries, slight growth in non-insured revenue, and enhanced capital discipline and shareholder returns.

  Weaknesses

  Consumer and medical services demand remain soft, and slower heavy-asset expansion may limit short-term scale growth.

  Comparison

  Compared with device companies, its drivers come more from operational stability, case mix, and dividends/buybacks.

  Risks

  Demand recovery weaker than expected, pricing pressure, medical insurance cost controls, and sentiment volatility related to Stock Connect.

• Gushengtang Holdings (2273.HK)

  Traditional Chinese medicine medical services growth and dividend/buyback name

  Strengths

  Steady sales volume growth, clear dividend and buyback plans, and Singapore expansion provides overseas growth optionality.

  Weaknesses

  Has a stronger consumer healthcare attribute and is still affected by the macro consumer backdrop.

  Comparison

  Compared with traditional hospital services, its asset-light store expansion and shareholder returns attract more attention.

  Risks

  Store expansion below expectations, risk of Singapore business missing targets, and weakening consumer demand.

• Jinxin Fertility (1951.HK)

  Assisted reproduction operating recovery name

  Strengths

  1H26 net profit and EBITDA improved substantially from the same period last year, with overseas and Kunming/Wuhan businesses driving cycle growth.

  Weaknesses

  Chengdu business declined, with uneven regional performance.

  Comparison

  Recovery elasticity is relatively evident, but sustainability of growth across regions still needs to be observed.

  Risks

  Patient volume recovery below expectations, regional demand divergence, and weak willingness to spend on assisted reproduction.

Key data

• Average sector share price performance over six months-21%China medical devices and medical services is one of the weaker subsectors within healthcare coverage.
• Sector rebound over the past month+4.5%Still lagging the broader healthcare coverage basket's +8.9%.
• Angelalign performance over the past month+16.8%Possibly driven by improved confidence in its international growth path.
• Hygeia performance over the past month+12.4%Partly helped by easing concerns over potential removal from Stock Connect.
• Gushengtang performance over the past month+7.2%Also driven by easing Stock Connect concerns and focus on operating recovery.
• Edge Medical overseas installations/shipmentsAbout 100 cumulative overseas systems, with cumulative surgeries exceeding 20k casesSupports operating leverage and the potential for upward guidance revisions.
• MicroPort MedBot commercialization progressAbout 300 cumulative global orders, of which 240+ are from overseas; 80+ installations year to dateThe company maintains its FY26 target of about 200 installations.
• MicroPort MedBot 1H26 profit alertRevenue up about 200-230% year over year, overseas revenue up more than 450% year over year, gross margin expanded by more than 15 percentage pointsInvestors remain focused on revenue sustainability and accounts receivable collection.
• AK Medical 1H26 profit alertRevenue up about 10%, net profit up more than 20%, overseas revenue up about 40% year over yearRobot commercialization is progressing; as of June, it had secured 11 tenders, including 5 overseas.
• Hygeia operating trendsAs of May 2026, outpatient visits +4% YoY, surgeries +7.6% YoYMore stable pricing and an improved mix of high-complexity cases supported performance.
• Hygeia shareholder return planAbout Rmb500mn per year during 2026-2028The company is slowing heavy-asset capex and focusing more on buybacks and dividends.
• Gushengtang operations and returns1Q sales volume +15% YoY, April-May +15-20% YoY; annual dividend guidance of no less than HK$450mn, plus a new HK$300mn buybackIts Singapore business targets about 50 stores and about Rmb300mn revenue by YE26.
• Jinxin Fertility preliminary results1H26 net profit at least Rmb90mn, EBITDA at least Rmb290mnA significant improvement from 1H25 net loss of Rmb1,044mn and negative EBITDA of Rmb938mn.
• Jinxin Fertility operating data24,169 new patient visits, +9% YoY; 14,653 OPU cycles, +6% YoYOverseas growth was 42%, Kunming/Wuhan growth was 15%, Chengdu declined 5%, and the Greater Bay Area was about +1%.
• Target price adjustmentAverage cut of about 3%Based on closing prices as of 2026-07-24.

Impact & implications

In terms of investment implications, the sector as a whole has not yet entered a broad-based recovery phase, and domestic policy and demand will likely continue to constrain valuation expansion; however, overseas commercialization, order conversion, margin improvement, and capital returns may create structural opportunities. Investors should distinguish between companies with genuine globalization revenue and installed-base validation and those still relying on domestic procurement and consumer recovery.

Risks

• Domestic demand recovery is uneven, and consumer healthcare and hospital procurement activity may be weaker than expected.
• The normalization of consumables VBP, DRG/DIP cost controls, and the 2H26 device VBP rollout may continue to pressure pricing and procurement.
• Anti-corruption measures since May may affect hospital procurement and clinical volumes in the short term.
• The sustainability of overseas orders, installations, utilization, and revenue recognition still needs to be validated.
• Accounts receivable collection and cash flow quality may affect the credibility of earnings inflection.
• Weakness in the share prices of overseas leaders such as Intuitive Surgical may weigh on sentiment in the surgical robotics sector.
• Expectations around inclusion in or removal from Hong Kong Stock Connect may cause share price volatility for medical services companies.

What to watch

• Whether revenue growth, gross margin, and net profit in the official 2Q/1H26 results validate the profit alerts.
• Overseas orders, installations, utilization, and collections data for surgical robotics companies such as MicroPort MedBot and Edge Medical.
• Angelalign's overseas growth, the implementation pace of VBP, and execution following the easing of legal risks.
• The pace of 2H26 device VBP rollout and its impact on hospital procurement.
• Summer demand recovery, especially in medical services with stronger discretionary consumption characteristics.
• Whether dividends, buybacks, and capex discipline continue at companies such as Hygeia and Gushengtang.
• Recovery in new patients and OPU cycles across different regions for Jinxin Fertility.