On August 29, GUSHENGTANG (02273), China's leading traditional Chinese medicine (TCM) chain service provider, released impressive interim results for 2025. During the period, the company achieved operating revenue of RMB 1.49 billion, up 9.5% year-on-year; net profit of RMB 150 million, surging 41.6% year-on-year; and EBITDA of approximately RMB 270 million, growing 37.3% year-on-year. Particularly noteworthy is that the company's net profit growth significantly outpaced revenue growth, reflecting continuous improvement in profitability and operational efficiency. The rapid EBITDA growth demonstrates the company's strong cash flow generation capability from core operations and robust financial structure, providing ample financial flexibility for future strategic deployment and business expansion.

The exceptional cash flow generation capability highlights the foundation of high-quality development. During the period, GUSHENGTANG's operating cash flow reached RMB 300 million, surging 111% year-on-year, reflecting the strong cash-generating power of core operations. Free cash flow performance was particularly impressive, skyrocketing 466% year-on-year to RMB 210 million, demonstrating significantly improved capital allocation efficiency. Cash reserves remained abundant with RMB 1.37 billion at period-end, providing solid support for strategic expansion and innovation investment.

More importantly, GUSHENGTANG's pioneering advantages in the "AI + TCM" field are evident, providing solid foundation for long-term development. With the construction of a complete "data layer - model layer - capability layer - application layer" AI service platform architecture and deepening global expansion, GUSHENGTANG is transforming from a chain TCM service institution into a technology-driven global healthcare platform, opening new growth engines and valuation space.

**Three Strategic Pillars Drive High-Quality Growth, Global TCM Resource Integration Platform Takes Shape**

Analysis shows that GUSHENGTANG achieved high-quality growth in the first half, with three strategic pillars working synergistically: first, user trust and doctor resources forming dual-wheel drive; second, offline business demonstrating strong organic growth momentum; third, global expansion and organizational upgrades facilitating transformation into a TCM resource integration platform. This interim report card not only reflects the company's excellent operational capabilities but also demonstrates the tremendous value of its TCM ecosystem platform model.

First, user-side and doctor-side achieved synergistic growth, building a healthcare service flywheel effect. On the user side, both user scale and loyalty climbed, demonstrating brand value enhancement. During the reporting period, clinic visits exceeded 2.747 million, up 15.3% year-on-year, reaching a historical high. More notably, return patients reached 403,000, up 14.8% year-on-year, confirming patients' high recognition and trust in the company's medical services.

Additionally, the membership economy became a growth anchor, with business resilience highlighted. Membership revenue contributed RMB 620 million, with member retention rate maintained at a high level of 85.8%, highlighting the strong stickiness of the membership system. This achievement benefits from the company's continuously improving service quality and precision health management, increasing member average consumption to RMB 2,258 with 3.95 visits per person, demonstrating significant results in deep user value mining.

On the doctor side, the physician ecosystem is becoming increasingly sophisticated, consolidating renowned doctor resource barriers. The company's physician team expanded to 41,743 people, including 847 in-house doctors, up significantly by 23.8% year-on-year. Renowned doctor studios reached 141, becoming important platforms for young physician development. Particularly noteworthy is that new doctors' performance contribution increased to 3.8%, proving the effectiveness of the company's "experienced mentoring newcomers" mechanism and comprehensive talent pipeline construction, continuously injecting fresh blood into the business.

Second, offline business, as GUSHENGTANG's core business segment, performed excellently in the first half of 2025, with both same-store growth and network expansion succeeding. The company's same-store growth was robust and exceeded expectations, with operational efficiency significantly improved. During the period, offline store revenue recorded RMB 1.37 billion, up 11.1% year-on-year; offline clinic visits reached 2.531 million, surging 17.9% year-on-year. Most notably, same-store performance accounted for 97.3% of revenue, far higher than new and acquired store revenue (2.7%), indicating that the company's growth mainly derives from operational optimization and service capability enhancement rather than simply relying on store quantity expansion, demonstrating extremely healthy growth quality.

GUSHENGTANG's store network expanded strategically, deepening national coverage. As of the first half of 2025, GUSHENGTANG had 83 offline stores across 20 cities nationwide and Singapore, forming extensive coverage. Seven new branches were added in the first half, including 4 self-built stores and 3 acquired stores, with another 3 signed and pending completion.

The excellent performance of offline business proves that GUSHENGTANG has formed a replicable and scalable standardized operational system with the capability foundation for rapid expansion. The healthy level of same-store growth reflects the company's strong brand influence and excellent operational management capabilities, providing solid support for future continued expansion.

Finally, GUSHENGTANG is transforming from a TCM service institution to a global TCM resource integration platform, with this strategic upgrade achieving significant progress in the first half of 2025. On one hand, GUSHENGTANG's internationalization accelerated. The Singapore market has become the company's first overseas expansion station, with plans to enter more countries and regions. The company focuses not only on store deployment but also on TCM standards and cultural export, achieving deep internationalization.

On the other hand, the company's organizational capabilities improved comprehensively. The company recruited multiple senior executives with international vision and professional backgrounds: Ms. Vicky Lin was appointed as Vice President of Overseas Business Strategy and Development, responsible for building TCM overseas channels; Mr. Li Zupeng was appointed as Vice President of Medical Academic Center, responsible for strengthening doctor cooperation and performance growth.

GUSHENGTANG is upgrading to a global TCM resource integration platform, integrating scattered TCM resources through standardization, digitalization, and internationalization methods to improve overall industry efficiency. This transformation not only expands business boundaries but also creates new value growth points.

**Three Growth Engines Drive Long-term Growth - AI Application Scale Implementation, Global Expansion Market Extension, Proprietary Product Volume and Price Growth**

Ten "National Medicine AI Avatars" are about to achieve scale revenue generation, Singapore market completed breakthrough from 0 to 1 and entered scale growth stage, proprietary pricing product revenue surged 209% year-on-year - these achievements all indicate that GUSHENGTANG has forged three growth engines in AI applications, global expansion, and proprietary product innovation, injecting strong momentum for future performance growth.

First, in the "AI + TCM" field, National Medicine AI Avatars have completed deployment in ten specialty areas, comprehensively covering core TCM diagnosis and treatment scenarios, and entered commercial monetization stage. This innovative application significantly improves accessibility to quality medical resources through digital replication of renowned doctors' diagnostic capabilities, with notable efficiency improvements. It is expected to contribute tens of millions in operating revenue in 2025, with clear commercial prospects.

The company's self-developed AI health assistant has built a complete service matrix, covering 9 major medical scenarios from pre-diagnosis preparation to post-diagnosis management and over 50 daily health management touchpoints. This intelligent system promotes hundreds of follow-up cases weekly, with significant improvement in user repurchase rates. While optimizing patient medical experience, it effectively reduces healthcare personnel workload, achieving dual improvement in operational efficiency and service quality.

In industry empowerment, GUSHENGTANG's AI platform accelerates young physicians' professional growth through intelligent auxiliary diagnosis systems and professional training modules. Meanwhile, standardized AI technology output provides technical support for TCM internationalization, promoting standardized and globalized development of TCM services, injecting new momentum for industry transformation and upgrading.

Second, GUSHENGTANG's internationalization strategy achieved substantial breakthroughs in 2025, with Singapore market as its first overseas expansion benchmark demonstrating excellent results in operational model verification, performance growth, and product approval.

Singapore market success validated the feasibility of its internationalization model. In product overseas expansion, GUSHENGTANG achieved a major milestone. Its in-house preparation "Hair Care and Growth Granules" successfully passed Singapore Health Sciences Authority (HSA) certification, becoming the company's first self-developed Chinese patent medicine product overseas. This not only marks GUSHENGTANG's achievement of upgrading from single TCM service export to "service + medicine" dual-wheel driven internationalization strategy but also opens channels for subsequent more Chinese medicine products' overseas certification and listing.

Additionally, GUSHENGTANG's proprietary pricing product business became the core driver of performance growth in the first half of 2025, with segment revenue surging 209.1% year-on-year, showing explosive growth and contributing significantly to overall revenue structure optimization and profitability improvement.

In product development, the company continued increasing innovation investment, adding 2 new in-house preparation registrations in the first half, with cumulative registered and marketed Chinese medicine preparations reaching 14. According to company planning, 10 new preparation registration numbers are expected to be added for the full year 2025, bringing total registered preparations to 22, with continuous product pipeline enrichment providing solid foundation for subsequent growth.

Product international certification not only opens Singapore and Southeast Asian market space, bringing direct revenue increment to the company, but more importantly establishes standardized pathways for Chinese medicine overseas expansion, providing replicable certification experience for subsequent product internationalization.

In summary, this business segment shows clear "volume and price growth" characteristics: on one hand, continuously expanding sales scale through product innovation and international expansion; on the other hand, continuously improving profitability through product uniqueness and brand premium capability. Proprietary pricing products typically have higher gross margins, with their profit contribution significantly higher than revenue proportion, becoming an important engine for company profitability improvement.

From an investment perspective, GUSHENGTANG's three innovative businesses are opening new value discovery journeys: first, AI business demonstrates technology attributes, raising company valuation benchmarks; second, international business breaks market boundaries, providing long-term growth momentum; third, proprietary product business optimizes profit structure, enhancing sustainable profitability.

More importantly, the synergistic effects formed by the three business segments deserve key attention: AI technology provides standardized tools for international expansion, international markets provide broader sales channels for proprietary products, and proprietary products in turn enhance the value of AI diagnosis systems. This positive cycle between businesses is building strong ecosystem barriers, providing a solid foundation for continuous valuation improvement.

In conclusion, GUSHENGTANG is reshaping the traditional TCM landscape with innovative technology and exploring trillion-dollar blue ocean markets with global vision. The company has created strong growth engines through deep integration of "AI + TCM," with international strategy breakthroughs and product innovation working synergistically, demonstrating excellent profitability and cash flow creation capabilities. Currently, GUSHENGTANG's prototype as a global TCM resource integration platform has emerged, and it is expected to continue leading the TCM industry upgrade wave, bringing sustained above-expectation value returns to investors.