Core Viewpoint - The company reported a positive operational recovery in Q1 2025, with revenue and net profit showing sequential growth despite industry adjustments [1][2] Financial Performance - In Q1 2025, the company achieved revenue of 663 million yuan and a net profit of 444 million yuan, reflecting a quarter-on-quarter increase of 2.06% and 19.26% respectively [1] - The gross margin remained high at 93.85%, indicating strong pricing power amid competitive pressures [1] Product Development and Innovation - The company invested 58.54 million yuan in R&D, accounting for 8.82% of revenue, which is an increase of 1.65% year-on-year [1] - A new product, a domestic jaw filler, is expected to launch soon, leveraging its safety and support features to enhance performance in the second half of the year [1] Global Expansion Strategy - The company is accelerating its global market presence by acquiring 85% of REGEN Biotech Inc. for approximately 190 million USD, which will enhance its access to high-end regenerative products [2] - The new production facility in South Korea will alleviate capacity constraints and facilitate product penetration in 34 countries [2] Financial Health - As of March 2025, the company had cash reserves of 3.546 billion yuan, a significant increase of 134.10% from the end of 2024, and total equity exceeding 8.393 billion yuan [2] - The company’s total liabilities decreased by 17.29% compared to the end of 2024, indicating a healthy financial structure [2] Industry Context - The medical aesthetics industry is facing challenges from supply-side reforms and extended consumer decision cycles, but the company’s diversified strategies in R&D, globalization, and financial stability position it for long-term growth [2]

Financial Data and Key Metrics Changes - The company achieved 11% organic revenue growth in 2024, marking the second consecutive year of double-digit organic growth [5][10] - Adjusted operating income grew by 41%, and adjusted diluted earnings per share increased by 21% [11] - Free cash flow for the full year 2024 was $163 million, representing a 70% increase from the prior year [34] Business Line Data and Key Metrics Changes - Cardiopulmonary segment revenue for Q4 was $182 million, an 11% increase year-over-year, with full-year revenue of $684 million, growing 14% [11][13] - Epilepsy revenue increased by 1% in Q4, with U.S. epilepsy revenue growing by 4% year-over-year [15][16] - The company expects cardiopulmonary revenue to grow by 7% to 8% in 2025 and global epilepsy revenue to grow by 4% to 5% [13][17] Market Data and Key Metrics Changes - The hypoglossal nerve stimulation market for obstructive sleep apnea is expected to approach $2 billion by the end of the decade [7] - The company noted a growing worldwide prevalence of obstructive sleep apnea, with significant unmet needs in the market [60] Company Strategy and Development Direction - The company is focusing on innovation and growth, with a clear strategy to enhance its talent and culture [8][40] - Investment will be increased to accelerate product development in obstructive sleep apnea and difficult-to-treat depression [7][26] - The company aims to leverage its clinical and scientific expertise to expand into new therapeutic areas [6][8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to continue delivering strong financial results and achieving significant milestones in innovation [5][40] - The company is optimistic about the future growth potential in both core and new markets, driven by strong clinical data and market demand [60][100] Other Important Information - The company plans to submit a PMA for obstructive sleep apnea in the first half of 2025, with a limited commercial launch expected thereafter [63] - Adjusted free cash flow is projected to be between $135 million and $155 million for 2025, reflecting increased capital spending [36] Q&A Session Summary Question: Can you help us understand the U.S. and EU cardiopulmonary performance in the quarter? - Management acknowledged a challenging comparison due to previous high growth but noted sequential growth in HLM placements and strong demand for consumables [46] Question: What is the impact of the launch of the new ECMO related product? - Management highlighted that innovation is a key focus and expects the new product to drive growth in 2025 [50][57] Question: How much are you spending to prepare for the sleep apnea launch? - The company invested $27 million in 2024 and plans to invest an additional $8 million in 2025, shifting focus from clinical spend to product development [61] Question: What are the execution issues in the OUS epilepsy business? - Management identified personnel issues as isolated across different markets and expressed confidence in returning to growth [66] Question: Can you provide insight into revenue phasing for 2025? - Management indicated that Q1 is typically the lowest quarter, with growth expected to ramp up throughout the year [69] Question: What is the expected impact of the Siena ruling? - Management stated that they do not anticipate a decision at the upcoming hearing but expect a ruling in the first half of 2025 [78] Question: How does the company view capital allocation between core business and new initiatives? - Management emphasized the importance of sustaining growth in core businesses while also investing in new growth opportunities [100]