XUNFEIHEALTH (02506) 2024 Annual Report: Technological Leap and Business Ecosystem Resonance, Acceleration of AI Commercialization

XUNFEIHEALTH (02506) presented a milestone financial report to the market, showcasing the disruptive value of technology-enabled healthcare industry and revealing the underlying logic of AI healthcare moving from the laboratory to commercial scale. Referred to as the "first stock of the medical model," the company's 2024 financial report showed a revenue of 734 million yuan, a year-on-year growth of 32.0%, nearly doubling the growth rate of 17.9% in 2023, and far exceeding the compound growth rate of 22.09% from 2021 to 2023, with revenue doubling over three years, demonstrating accelerated scaling. Behind these impressive results is the solid foundation of the G-end business, explosive growth of the B/C-end business, and continuous deepening of the Starlight Medical Model technology barriers. In this financial report, a data point vividly outlines the nonlinear growth trajectory of technology-driven companiesreducing losses by 8.5% to 133 million yuan, showing that XUNFEIHEALTH's commercialization process is crossing the threshold from quantity change to quality change. Among these achievements, the robust growth of hospital services and patient services business contributed significantly to the 32% revenue growth. Hospital service revenue increased by 103.4% year-on-year, reaching 132 million yuan and becoming the main DRIVE for revenue growth. In addition, patient service revenue increased by 56.6% year-on-year, reaching 211 million yuan, demonstrating the company's rapid expansion capabilities in the C-end market. The breakthrough in B/C-end business has significant implications for XUNFEIHEALTH's business model transformation: the company successfully moved away from the traditional medical information enterprise's reliance on the G-end market, establishing a dual-drive growth engine of B-end (hospital services) and C-end (patient services). Behind the rise of B/C-end business, the traditional G-end business remains an important cornerstone for the company. In terms of data, although the primary healthcare service revenue in the G-end slightly decreased by 1.14%, its contribution of 237 million yuan revenue (accounting for 32.3%) with a 60.1% gross profit margin has deeper strategic significancecovering 70,000 primary healthcare institutions with the Intelligent Medical Assistant System, accumulating 910 million diagnostic assistance data points, which not only fuels the training of the Starlight Medical Model but also forms a policy barrieras a typical case of "data element X" announced by the country in the medical field, the company holds a leading position in the construction of county-level medical consortia and provincial public health platforms, forming a triple moat of "datamodelpolicy." On a different level, the slight decrease in G-end business is not a sign of decreased market competitiveness but a result of active resource allocation adjustments, forming a unique "pyramid" ecosystem architecture: the bottom builds a data foundation through the G-end business, the middle relies on the Starlight Medical Model to form a technology barrier, and the top realizes value monetization through B/C-end applications. The double spiral breakthrough in technology transformation: from technology research laboratories to the clinical application of value leap Technological innovation has always been the core competitive advantage of XUNFEIHEALTH. In 2024, the company's investment in research and development reached 297 million yuan, accounting for 40.4% of total revenue, a 3% year-on-year increase, and focused on the strategy of "calculation power priority + scenario focus." In 2024, the company launched the first industry-leading medical deep reasoning large model "XUNFEI Starlight Medical Model X1," further enhancing its technological advantage in the medical AI field through optimized algorithms and strengthened machine learning technology. The launch of the XUNFEI Starlight Medical Model X1 signifies a major breakthrough for the company in the medical AI field. This large model, based on national production calculation training, shows significant advantages in medical professional knowledge enhancement and optimized doctor evidence-based thinking, particularly in medical tasks such as diagnostic recommendations and health consultations.The performance of all of them surpasses GPT-40 and DeepSeek R1. And their technological breakthroughs have been transformed into actual productivity.iFlytek Medical is not only a leader in technology, but also a setter of industry standards. As the only company in the country participating in the formulation of the "Medical Big Model Technology Evaluation System", it has collaborated with the China Institute of Information and Communication to develop 7 standards covering security management, data governance, clinical applications, and other dimensions; with the Anhui Provincial Health Commission and the National Key Laboratory of Cognitive Intelligence, it jointly released the Full Spectrum Full Modality Medical Imaging Big Model Open Collaboration Plan, attracting over 200 research teams worldwide to participate and forming an ecological closed loop of "technology spillover, scenario innovation, data feedback". The market position confirms the effectiveness of this technology strategy. Frost & Sullivan data shows that by 2023, iFlytek Medical will rank first in China's medical AI industry. Leveraging the technological accumulation in fields such as speech recognition and NLP from its parent company iFlytek Co., Ltd., iFlytek Medical has gained intergenerational advantages in medical multimodal interaction and complex language understanding, continuously solidifying its industry position as the "first stock of medical big models". Policy dividends and industry needs resonate: ushering in a golden window of industrial growth logic Against the backdrop of rapid expansion in China's medical AI industry, the market size reached 8.8 billion yuan in 2023, and is expected to surge to 315.7 billion yuan by 2033, with a compound annual growth rate of 43.1%. This growth trend provides market participants with broad development space and unlimited potential. In addition, in 2024, national relevant heavyweight policies will inject strong momentum into the development of the medical artificial intelligence industry. The "Decision of the CPC Central Committee on Further Deepening Overall Reform and Promoting China's Modernization" clearly proposes to "strengthen grassroots medical and health services"; the National Health Commission and other departments are working together to release the "Reference Guidelines for the Application Scenarios of Artificial Intelligence in the Health Industry", promoting the optimization of the medical service system and the integration of artificial intelligence technology from grassroots to tiered hospitals. Recently, the National Health Commission proposed to further strengthen the informationization capabilities at the grassroots level and promote the application of AI-assisted technologies in grassroots medical services. In this era when national strategy and technological innovation resonate, iFlytek Medical, with its leading advantage in core technologies of medical big models and the widespread coverage of mature products nationwide, is entering a golden period of rapid market development. It is worth noting that according to the company's financial data, 76% of its accounts receivable comes from government, state-owned enterprises, and hospital clients, with a good credit status. Recently, the State Council has issued the "Regulations on Optimizing the Business Environment" and the Ministry of Finance's "Support as much as possible" policy is accelerating implementation, with the payment period from local governments expected to shorten. With the implementation of relevant economic stimulus policies, the company's operating cash flow will significantly improve, reducing the aging and bad debt risks of accounts receivable, decreasing the proportion of accounts receivable on the balance sheet, enhancing net profit, and potentially doubling the profitability and valuation level of iFlytek Medical. Looking ahead, if iFlytek Medical can exceed 50% of B-end revenue share and achieve over 10% of C-end paying users - corresponding to the download rate of the iFlytek Xiao Yi Medical APP and the number of hardware users, this will mark the company's successful transformation from a single technology provider to a comprehensive consumer medical platform.