Xinhuanet, Beijing, April 28 (Pi Chen) Recently, Sichuan Hezong Yaoyigou Pharmaceutical Co., Ltd. (hereinafter referred to as "Yaoyigou") (300937.SZ) disclosed its first quarter report for 2025. According to the financial report, the company achieved operating income of 1.138 billion yuan, a year-on-year decrease of 8.06%; net profit attributable to shareholders was 4.1837 million yuan, a year-on-year decrease of 54.65%; net profit after deducting non-recurring gains and losses was 3.564 million yuan, a year-on-year decrease of 41.49%.

The company's earnings per share was 0.0437 yuan, the weighted average return on net assets was 0.49%, a year-on-year decrease of 0.58 percentage points, and the return on investment capital was 0.46%, which also showed a decline. Data shows that Yaoyigou's overall profitability declined significantly at the beginning of 2025.

Behind the cash flow recovery: turnover efficiency improvement + tightening of financing

Despite the weak main business, Yaoyigo's cash flow in operating activities turned positive in the first quarter of 2025, reaching 30.6196 million yuan, an increase of more than 100 million yuan over the same period last year. This transformation is mainly due to the phased achievements made by the company by improving the efficiency of operating capital management, including optimizing accounts receivable cycle, compressing inventory turnover days, and tightening expense control.

In terms of investment activities, the company's new investment in Viagra (Hainan) Health Industry Co., Ltd. reflects its long-term strategic layout in the health track, but the investment cash flow remains negative in the short term. At the same time, the company concentrated on repaying working capital loans in fundraising activities, resulting in a negative net fundraising cash flow.

Despite the improvement of operating cash flow, the overall cash structure is still under pressure. Monetary funds fell by 9.24% from the beginning of the year, and receivable financing decreased by 26.09% year-on-year. Asset turnover capacity and capital recovery efficiency still need to be followed up.

The main business is under pressure, and the transformation path is still being explored

As a company that has long focused on out-of-hospital pharmaceutical distribution, Yaoyigo has continued to promote the "B-to-C" strategy in recent years, but from the perspective of financial performance, the transformation results have not been able to effectively hedge against the pressure brought by the decline in its main business.

In 2024, the company's pharmaceutical e-commerce business revenue was 1.441 billion yuan, a year-on-year decline of 15.6%. The platform's monthly active users decreased by 3%, the average customer price decreased by 18.2%, and the traffic conversion capacity decreased. Although the online B2C business increased by 225.87% year-on-year and achieved revenue of 56.9694 million yuan, the proportion of annual revenue is still less than 1.3%, and its contribution to overall performance is very limited.

In addition, the company's pharmaceutical retail business revenue in 2024 was 68.42 million yuan, accounting for 1.56% of the annual operating income. Although the retail end has maintained growth, its overall scale is relatively small and is not enough to support the company's business center of gravity transformation. At present, pharmaceutical retail channels are still facing great competitive pressure. In addition, with changes in consumer habits and rising costs of offline traffic acquisition, Yaoyigo's expansion effect in this field is still not obvious.

In terms of offline business, the company has 1,508 chain pharmacies, but the net decrease of 161 stores in 2024, indicating that its expansion space in the "10,000-store in-volume" market environment is limited. At the same time, the company has made some arrangements in the fields of ethnic medicine, Chinese patent medicine, special medical specialty, medical equipment, synthetic biology, etc., but the related businesses are still in the investment period and have not yet formed a revenue scale.

The R&D end is also under pressure. In 2024, the company's R&D investment decreased by 19.94% year-on-year, and the number of R&D personnel under the age of 30 decreased by more than 50%, reflecting that the company also experienced a tightening of technical team reserves, which may have an impact on future innovation capabilities.

The external environment is under heavy pressure, and the business transformation path is still unclear

The dilemma faced by Yaoyigo is closely related to changes in the industry environment. In recent years, the concentration of the pharmaceutical distribution industry has remained low, and regional price wars are fierce; competition in the pharmaceutical e-commerce field is fierce, and the leading platforms squeeze the market space; the scale of the out-of-hospital drug retail terminal market continues to shrink, and demand is transmitted from the terminal to the upstream to the wholesale link, directly affecting the performance of Yaoyigo's main business. At the same time, the country continues to strengthen supervision in the drug price control and circulation links, posing additional challenges to traditional models and profit models.

Against this background, Yaoyigo has launched the second growth curve since 2021, trying to transform from "drug circulating merchandise" to a full-industry chain service platform. On the one hand, the company accelerates the integration of upstream resources and tries to master more exclusive varieties and pricing power; on the other hand, it extends to the downstream, laying out online e-commerce, B2C retail, smart pharmacies, new retail of traditional Chinese medicine and chronic disease management, and building a "platform + ecology" development model.

However, from the actual performance, the company's transformation effect did not meet expectations. The problems of low proportion of new businesses and weak profitability are more prominent, the linkage of online and offline channels is insufficient, and the product and service system have not yet been connected; at the same time, internal R&D and digital investment has shrunk, resulting in the company gradually losing its first-mover advantage in the competition for digital transformation. Coupled with changes in the macro environment and intensified market competition, Yaoyigo's second growth curve is currently more at the concept stage and has not yet become a substantial driver of performance growth.

Capital layout and business synergy effects need to be verified

In November 2024, Yaoyigo acquired 5% of the equity of Chongqing Xinhu Pharmacy for 15 million yuan, which attracted attention in the industry with a low-price strategy of "ex-factory price + 1%-14%". Although this move is expected to enhance the control of Yaoyigo's price band in the C-end price band, it has not yet formed a substantial pull on the company's revenue and profits, and the business synergy path is still unclear.

Yaoyigo's first quarter financial report for 2025 continued the previous downward trend in performance. Under the pressure of changing medical policies, fierce market competition and business model reconstruction, Yaoyigo still faces a series of real challenges such as lack of support for profit models and slow pace of implementation of strategies.

[Editor in charge: Sun Hui]