During the Reporting Period, due to the challenges brought by the macro environment, the in-depth changes in the medical service market and the fierce market competition, the Group’s short-term results did not meet expectations, recording a total revenue of RMB379.9 million, of which, revenue from diagnostic testing services for medical institution alliances, diagnostic outsourcing services and diagnostic testing services for non-medical institutions amounted to RMB182.3 million, RMB179.6 million and RMB18.1 million, respectively. If excluding the impact of revenue from phased testing and screening services nationwide at the beginning of 2023, the diagnostic testing services segment provided by the Group for medical institution alliances continued to maintain high-quality growth, contributing approximately 48.0% of the revenue, making it the largest source of revenue for the Group. The Group’s gross profit was RMB128.2 million and loss attributable to owners of the Company was RMB126.1 million.

The innovative model of diagnostic testing for medical institution alliances has achieved remarkable results, empowering the development of hospitals through in-depth services

Driven by the continuous increase in favorable national policies, the market demand for medical institution alliances has been gradually released. Leveraging the overall advantages of the Group’s professional, standardized and digitally intelligent solutions for the construction of regional medical institution alliances, the Group’s innovative business model – the provision of diagnostic testing services to medical institution alliances has maintained high-quality and healthy development for many years. As at the end of the Reporting Period, the Group had successfully provided professional diagnostic services for more than 1,500 medical institutions in collaboration with medical institution alliances under over 430 jointly constructed on-site diagnostic centers for medical institution alliances across the country and had created a number of benchmark joint projects, so as to facilitate the rapid development of medical institution alliances. Apart from developing customers of the joint construction business with medical institution alliances, the Group also attached importance to the deep cultivation of existing clients and lean operations. The Group not only provided “3+1” (i.e. tumor, infection, genetics and reproduction + precision medicine) technical system support but also provided support to the in-depth service system to empower the demand and long-term development of hospitals with in-depth services.

Disease- and clinical-oriented to persistently enhance product competitiveness

The Group has always adhered to the “disease and clinical” oriented service concept and built a series of high and new technology platforms including PCR, protein high-throughput sequencing, gene chip, molecular diagnosis, cytogenetic, digital remote pathology and ultramicro pathology. The technology platforms can provide over 3,500 testing items, and the annual testing specimen volume exceeds 10 million. It also has developed diversified and targeted solutions and services for clinical application scenarios in different regions and different kinds of medical institutions. In recent years, the Group has continuously increased its investment in product research and development. In the first half of 2024, the Group has launched more than 500 new testing projects, which are far ahead of its peers. New projects launched during the Reporting Period with clinical needs as the core include 12 key featured products represented by dried blood spot vitamin D, allergy gene V2.0, urinary and fungal tNGS, as well as new projects such as targeted sequencing of 158 respiratory pathogens, targeted sequencing of 265 common pathogens, intestinal flora detection (16srDNA sequencing), congenital adrenal hyperplasia (CAH) gene detection (third generation sequencing), and deafness gene screening (321 sites), which have been widely recognized by the market.

The joint innovation platform for diagnostic testing was replicated rapidly, with product innovation + model innovation entering the harvest stage

In recent years, the Group pioneered the creation of “joint innovation platform for diagnostic testing”, which has successfully developed detection products for different infection syndromes in various fields such as respiratory tract infections and central nervous system infections. During the Reporting Period, the Group continued to deepen its cooperation with many top hospitals such as Guangdong Provincial People’s Hospital with which the Group has contracted and continued to develop new products and technologies and promote them to the market, which was widely acclaimed by clinicians. At the same time, the Group attached great importance to the continued development of the joint innovation platform for diagnostic testing, it has so far cooperated with dozens of top domestic medical institutions in this innovative model. By giving full play to the top hospitals’ technological leadership, as well as leveraging on the Group’s platform foundation and innovative integration advantages in cutting-edge biotechnology, AI, cloud computing, big data and other advanced digital technologies, it will jointly explore scientific research and achievement transformation in various clinical specialty areas. During the Reporting Period, the innovative products developed based on the joint innovation platform for diagnostic testing have exceeded the annual level of the previous year in terms of testing volume and testing revenue, which has injected new momentum into the Group’s long-term high-quality growth.

Create a new model of innovative medical center, promote the development of medical technology industry

In terms of innovation in the medical technology industry, the Group joins hands with various partners and lays emphasis on policy guidance, clinical development, technological breakthroughs, industrial services and application promotion in a bid to explore a new cooperation model for joint innovation and cooperation with medical schools, local governments and medical institutions. Subsequent to the Reporting Period, the Group has signed strategic cooperation agreements with the People’s Government of Ouhai, Wenzhou City and Wenzhou Medical University. In the future, all parties will focus on the core areas of the biopharmaceutical industry to orderly promote the establishment of several key projects such as joint innovation and transformation platforms, public service platforms, and medical big data research platforms, regional diagnosis sharing centers and innovative talents training base to promote the rapid transformation and industrial application of scientific research results. The Group will fully support Wenzhou Medical University and its affiliated hospitals, promote the transformation of scientific research results into practical applications, and strengthen the development of clinical disciplines and superior specialties, so as to truly improve the regional medical level.

Focus on “AI + medical care” to empower high-quality development of the industry

The Group has continuously improved its medical testing technology research and development and digital application, further explored cutting-edge medical fields such as remote pathology, digital pathology and  AI, and built a professional service platform “AI + medical care”. Combining with its top ten digital “cloud” operation systems, the Group helps partner hospitals to accomplish remote guidance, consultation, training and other services, and accelerate the interconnection of information within the medical institution alliances. As at the end of the Reporting Period, the remote pathology consultation platform, a digital IT platform independently developed by the Group which owns all intellectual property rights thereon, covers more than 600 medical testing items and has provided standardized and intelligent professional pathology technical services to nearly 300 medical institutions. It is one of the leading remote pathology platforms in China with the most access to hospitals, and it assists medical institutions nationwide to improve examination quality and diagnosis efficiency.

In terms of the application of AI-assisted diagnosis, the Group adheres to the strategy of “introducing one project once it is mature” and has successfully introduced projects such as pathological DNA polyploid AI-assisted diagnosis, cervical liquid-based cell AI-assisted diagnosis, and chromosome AI analysis, leading to the great enhancement of diagnostic efficiency. In addition, through the perfect combination of pathological AI-assisted diagnosis and remote pathology diagnosis platform, the Group has also realized the upgrade of the human-machine remote mode of “preliminary screening by AI and review by pathologist”, significantly improving the efficiency of film reading.

Lean operations to reduce costs, increase benefits and improve the operation efficiency

During the Reporting Period, the Group launched Phase II of the Robust Project, aiming to continue to deepen the results of Phase I of the Project, to consolidate the foundation of the Group’s lean operations and management, and further improve the efficiency of the Group’s use of resources to reduce costs and increase benefits through minimizing operating costs and optimizing operation platform. Through the perseverance and efforts of the entire Group, Phase II of the Robust Project has achieved various outcomes such as improving the establishment of various operating rules and systems, optimizing the core operation and management processes, further standardizing the process supervision mechanism, and improving supervision efficiency; supported by the Group’s “cloud” system, a structured operation data support system established through IT-based means. Through lean management, the Group will comprehensively reduce costs and increase benefits from all aspects of corporate operations such as marketing, laboratories, supply chain, logistics and human resources, the outcomes of which will be seen in the second half of the year.

In the future, under the Group’s business philosophy of “in-depth services and lean operations”, the Group will continue to adhere to the principles of innovation and service orientation and actively promote the development of new quality productivity in the medical and health field by leveraging on its strong technology research and development capabilities and profound industry knowledge, thereby empowering the construction of medical institution alliances and the improvement of public healthcare system.  Meanwhile, the Group will proactively enhance in-depth customer services, foster lean operation management and digital empowerment, follow national policies directions, and seize the opportunities in the medical testing service market, in order to provide the public with better and more efficient, more accurate and more competitive diagnostic testing products and services, thereby contributing to the realization of the blueprint for Healthy China 2030.

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Yunkang Group Limited (Stock Code: 2325)

Yunkang Group is a leading medical operation service provider in China, which started to provide standardized medical diagnostic services to medical institutions at all levels as early as 2008. Leveraging its own professional diagnostic capabilities and the nationwide service network of integrated healthcare systems, Yunkang has gradually grown to become a medical operation service platform. Meanwhile, Yunkang is a medical operation service provider in China offering a full suite of diagnostic testing services which are diagnostic outsourcing services and diagnostic testing services for medical institution alliances. Yunkang provides diagnostic services through on-site diagnostic centers to collaborative hospitals in the integrated healthcare systems in China and assists them in improving their clinical diagnosis capabilities through co-developing diagnostic centers. As of June 30, 2024, Yunkang has successfully provided professional services to over 430 medical institution alliances and the hospitals it collaborated with were located across 31 provinces and municipalities in China.

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