China Medical Devices and Services 2Q/1H26 Outlook: Uneven Recovery, with Globalization Capabilities Continuing to Widen the Gap

Overview

This report previews 2Q/1H26 earnings for Chinese medical devices and healthcare services companies. Goldman Sachs believes the sector recovery remains uneven: domestic demand continues to be affected by policy, cost controls, hospital procurement timing, and weak consumption, while companies with overseas commercialization capabilities are beginning to show stronger differentiation, especially in surgical robotics, clear aligners, and certain leading service providers.

Core views

The core view is to maintain an overall neutral stance on China's medical devices and healthcare services sector, while favoring companies with globalization optionality. For medical devices, overseas installations, orders, utilization, and revenue growth are the most important validation indicators; for healthcare services, operational recovery, margin resilience, capital expenditure discipline, and shareholder returns are key to valuation recovery.

Analysis framework

The report compares medical devices and healthcare services companies on a cross-sectional basis using 2Q/1H26 earnings preannouncements, company guidance, overseas order and installation data, patient visits and procedure volumes, revenue and profit growth, target price revisions, valuations, and risk disclosures.

Methodology notes

• Valuation and factor analysisGS Factor Profile

  Growth, financial returns, valuation multiples, and composite factor percentiles

  Goldman Sachs uses indicators such as growth, financial returns, and valuation multiples to compare stocks relative to the market and industry peers; the composite factor usually combines growth, returns, and valuation attractiveness.

• M&A scenariosM&A Rank

  Tiered probability of becoming an acquisition target

  Goldman Sachs uses M&A rankings from 1 to 3 to assess the probability that a company may become an acquisition target; higher-probability scenarios may be incorporated into the target price framework.

• Earnings forecast databaseQuantum

  Database of financial history, forecasts, and ratios

  Quantum is Goldman Sachs' proprietary database used to review companies' financial history, earnings forecasts, financial ratios, and cross-company comparisons.

Asset mapping & comparison

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

• Angelalign Technology (6699.HK)

  Clear aligner company benefiting from improved confidence in international growth

  Strengths

  Overseas and domestic growth continue to progress as planned, with public hospital revenue accounting for only about 5% to 7%, implying limited exposure to volume-based procurement; legal developments in China and Germany help reduce litigation pressure.

  Weaknesses

  Still needs to validate the sustainability of international growth and the market's ability to absorb valuation.

  Comparison

  Its 16.8% gain over the past month significantly outperformed the sector's average rebound.

  Risks

  Overseas execution falling short of expectations, intensified competition, and litigation or regulatory uncertainty.

• Edge Medical (2675.HK)

  Surgical robotics company, with overseas installations and usage as the main validation points

  Strengths

  Around 100 overseas system installations or shipments cumulatively in 1H26, with cumulative procedures exceeding 20,000, supporting operating leverage.

  Weaknesses

  The market remains focused on order validation and the sustainability of overseas demand.

  Comparison

  Compared with other medical device companies, its overseas commercialization progress better reflects differentiation.

  Risks

  Slower overseas orders, weaker-than-expected conversion of installations, and commercialization expense pressure.

• MicroPort MedBot

  Surgical robotics company, with profitability inflection and overseas orders as the key catalysts

  Strengths

  Achieved profitability in 1H26, with revenue up about 200% to 230% year over year, overseas revenue up more than 450% year over year, and gross margin improving by more than 15 percentage points.

  Weaknesses

  It still needs to continuously demonstrate revenue sustainability and the quality of receivables collection.

  Comparison

  Among surgical robotics companies, it shows relatively strong momentum in overseas orders and earnings improvement.

  Risks

  Uncertainty around order execution, collections, and overseas regulatory and commercialization progress.

• AK Medical (1789.HK)

  Orthopedics and robotics-related medical device company

  Strengths

  Both revenue and net profit grew in 1H26, overseas revenue rose about 40% year over year, and progress in robot commercialization tenders was solid.

  Weaknesses

  Domestic volume-based procurement and pricing pressure may still limit growth elasticity.

  Comparison

  Better-than-expected overseas growth supports margin expansion and the overseas growth narrative.

  Risks

  Volume-based procurement pricing pressure, slower overseas expansion, and robot commercialization falling short of expectations.

• Hygeia Healthcare (6078.HK)

  Healthcare services company, with operational recovery and shareholder returns as the main focus

  Strengths

  Outpatient and surgical volumes are recovering, pricing is stable, the case mix is improving toward more complex cases, and the company plans continued buybacks and dividends.

  Weaknesses

  Consumer and healthcare service demand remains weak, and heavy-asset expansion is becoming more cautious.

  Comparison

  Compared with high-growth device companies, Hygeia is more aligned with an operational stability and cash return thesis.

  Risks

  Slower-than-expected demand recovery, healthcare insurance cost controls, and weaker-than-expected hospital operating efficiency.

• Gushengtang Holdings (2273.HK)

  Traditional Chinese medicine healthcare services company, balancing growth and shareholder returns

  Strengths

  Business volume continues to deliver double-digit growth, while dividend and buyback plans enhance shareholder returns; the Singapore store expansion target is clear.

  Weaknesses

  Overseas expansion remains in an early stage and still needs validation of store profitability and operational replicability.

  Comparison

  Among service companies, it combines growth, returns, and an overseas expansion narrative.

  Risks

  Weak consumption, slower-than-expected ramp-up of overseas stores, and changes in payment capacity and policy.

• Jinxin Fertility (1951.HK)

  Assisted reproduction healthcare services company

  Strengths

  Returned to profitability in 1H26, with recovery in new patients and OPU cycles, while overseas business is growing rapidly.

  Weaknesses

  Domestic regional performance is divergent, with declines in Chengdu dragging on overall growth.

  Comparison

  Growth in overseas markets and in Kunming/Wuhan offsets part of the pressure in domestic regions.

  Risks

  Insufficient recovery in fertility demand, regional competition, and the sustainability of profit recovery.

Key data

• Sector share price performanceAverage decline of 21% over the past six months, with a 4.5% rebound over the past monthStill lagging the broader healthcare coverage universe, which rose about 8.9% over the past month.
• Angelalign short-term performanceUp 16.8% over the past monthMainly driven by improved confidence in its international growth trajectory.
• Edge Medical overseas progressAround 100 overseas system installations or shipments cumulatively in 1H26, with cumulative procedures exceeding 20,000Improving overseas utilization supports operating leverage and upside to guidance.
• MicroPort MedBot commercializationApproximately 300 cumulative global orders, including more than 240 overseas; more than 80 installations year to dateThe company maintains its FY26 installation target of around 200 units.
• MicroPort MedBot earnings preannouncementAchieved profitability in 1H26, with revenue up about 200% to 230% year over year and overseas revenue up more than 450% year over yearGross margin improved by more than 15 percentage points; focus next on revenue sustainability and receivables collection.
• AK Medical earnings preannouncement1H26 revenue up about 10%, net profit up more than 20%, overseas revenue up about 40% year over yearRobot commercialization continues to advance, with 11 tender projects won as of June, including 5 from overseas.
• Hygeia operating trendIn the five months through May 2026, outpatient volume rose 4% year over year and surgical volume rose 7.6% year over yearThe company plans to allocate about RMB 500 million annually from 2026 to 2028 to shareholder returns.
• Gushengtang growth and returns1Q26 business volume grew 15% year over year, and 4-5M grew 15% to 20% year over yearThe company guided for an annual dividend of no less than HKD 450 million and announced an additional HKD 300 million buyback plan.
• Jinxin Fertility preannouncement1H26 net profit of at least RMB 90 million and EBITDA of at least RMB 290 millionNew patient visits rose 9% year over year, OPU cycles rose 6% year over year, and overseas cycles rose 42%.

Impact & implications

The investment implication is that a sector-wide recovery is still insufficient to support a full re-rating, so stock selection should focus on companies that can demonstrate overseas demand, order sustainability, improved profitability, and cash returns. Domestic policy pressure still limits valuation elasticity, but overseas installations, utilization, margin expansion, and shareholder returns may become sources of relative outperformance.

Risks

• Domestic demand recovery is slower than expected.
• Volume-based procurement for consumables, equipment procurement, DRG/DIP cost controls, and reimbursement policy may create pressure on pricing and margins.
• Anti-corruption measures may suppress hospital procurement and clinical volumes.
• Validation of overseas orders, installations, utilization, and collections may fall short of expectations.
• Consumer healthcare service demand remains weak, affecting revenue recovery for healthcare services companies.
• Overseas commercialization progress for surgical robotics may be affected by regulation, competition, and market sentiment.
• The average target price cut indicates that some earnings and valuation assumptions still face pressure.

What to watch

• Revenue, net profit, gross margin, and operating cash flow in formal 2Q/1H26 results.
• Whether overseas orders, installations, shipments, utilization, and collections continue to deliver.
• The implementation pace and pricing impact of equipment procurement in 2H26.
• The actual impact of anti-corruption measures since May on hospital procurement and clinical volumes.
• Recovery in healthcare service demand during the summer season, especially for services with stronger discretionary-consumption characteristics.
• Execution of dividends, buybacks, and capital expenditure discipline at companies such as Hygeia and Gushengtang.
• Spillover impact from Intuitive Surgical's share price correction on sentiment toward the surgical robotics sector.