Financial Performance - The company reported a net profit of 72.38 million yuan for the first half of 2025, a year-on-year increase of 15.11% [1] - Total revenue for the same period was 4.457 billion yuan, a decrease of 0.64% compared to the previous year [1] - The gross profit margin was 35.69%, down 0.54% year-on-year, while the net profit margin increased by 19.81% to 1.63% [1] - Operating cash flow per share increased by 91.53% to 3.56 yuan [1] Business Model and Strategy - The company relies heavily on marketing-driven performance, with a historical median ROIC of 13.69% since its listing [3] - The company is actively working to reduce its dependence on medical insurance revenue, which accounted for 40% of total revenue in the first half of 2025, down 4% year-on-year [6] - The company is focusing on expanding non-medical insurance business and enhancing its differentiated operating model [6] Product and Revenue Structure - The revenue structure for prescription drugs decreased by 2.31%, while non-prescription drug revenue increased by 1.77% [7] - The company has seen growth in sales of health foods, personal care products, medical devices, and convenience items, contributing to a 1.94% increase in overall non-drug sales [7] - Inventory turnover efficiency has improved, with inventory value decreasing by 5.99 billion yuan compared to the beginning of the period [7] Fund Holdings - The largest fund holding the company’s shares is the Rongtong Health Industry Flexible Allocation Mixed A/B, with a current scale of 2.074 billion yuan [5] - The fund has seen a 43.67% increase in value over the past year [5]

Core Insights - The company reported a net profit increase of 15.11% year-on-year, despite a slight decline in total revenue [1] - The company's revenue for the first half of 2025 was 4.457 billion yuan, down 0.64% compared to the previous year [1] - The company is focusing on reducing reliance on medical insurance income, which accounted for 40% of total revenue, down 4% year-on-year [6] Financial Performance - Total revenue for the second quarter of 2025 was 2.162 billion yuan, a decrease of 0.4% year-on-year [1] - The net profit for the second quarter was 388.53 million yuan, showing a significant increase of 265.85% year-on-year [1] - Gross margin was 35.69%, a decrease of 0.54% year-on-year, while net margin improved to 1.63%, an increase of 19.81% [1] Cost and Efficiency Metrics - Total expenses (selling, administrative, and financial) amounted to 1.473 billion yuan, accounting for 33.05% of revenue, a slight decrease of 0.19% year-on-year [1] - The company's return on invested capital (ROIC) was 3.77%, indicating weak capital returns [4] - The company's cash flow per share increased by 91.53% year-on-year to 3.56 yuan [1] Business Strategy and Market Position - The company is actively working to overcome challenges in obtaining medical insurance qualifications for new stores [5] - There is a strategic shift towards non-medical insurance business, with a focus on enhancing non-drug product sales [6] - The company has adjusted its product mix, with a 1.94% increase in non-drug sales, partially offsetting the decline in prescription drug sales [6]

西部证券股份有限公司 关于重庆山外山血液净化技术股份有限公司 根据《证券发行上市保荐业务管理办法》《上海证券交易所科创板股票上市 规则》和《上海证券交易所上市公司自律监管指引第 11 号——持续督导》等有 关法律、法规的规定，西部证券股份有限公司（以下简称"保荐人"）作为重庆 山外山血液净化技术股份有限公司（以下简称"山外山"、"公司"）持续督导工 作的保荐人，负责山外山上市后的持续督导工作，并出具本持续督导跟踪报告。 一、持续督导工作情况 序号 工作内容 持续督导情况 保荐人己建立健全并有效执行了 建立健全并有效执行持续督导工作制度，并针 对具体的持续督导工作制定相应的工作计划 工作计划 根据中国证监会相关规定，在持续督导工作开 保荐人己与山外山签订《保荐协 始前，与上市公司签署持续督导协议，明确双 议》，该协议明确了双方在持续督 方在持续督导期间的权利义务，并报上海证券 导期间的权利和义务，并报上海 交易所备案 证券交易所备案 保荐人通过日常沟通、定期或不 通过日常沟通、定期回访、现场检查、尽职调 定期回访、现场检查等方式，了解 查等方式开展持续督导工作 山外山业务情况，对山外山开展 持续督导工作 持续督 ...

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of over $73 million for Q2 2025, exceeding expectations, driven by same unit revenue growth of over 6% [4][5] - Consolidated revenue decreased by just over 7%, primarily due to non-same unit activity declining by about $63 million, offset by strong same unit growth [6][7] - The full year adjusted EBITDA range has been raised and narrowed to $245 million to $255 million, reflecting improved cash position and balance sheet [5][10] Business Line Data and Key Metrics Changes - Same unit pricing increased by 3.5%, driven by increased patient acuity, strong RCM cash collections, and an increase in contract administrative fees [6][7] - Same unit patient service volumes increased by approximately 3%, with NICU days up over 6% and modest increases in maternal fetal medicine services [7][8] - G&A expenses decreased to $5.3 million from $8.8 million in the prior year, reflecting staffing reductions and decreases in other expense categories [8] Market Data and Key Metrics Changes - Payer mix remained stable compared to the prior year and on a consecutive quarter basis [6] - Accounts receivable DSO improved to 46.4 days, down over three days year over year, indicating better cash collections [9] Company Strategy and Development Direction - The company aims to be the best partner to hospitals and the employer of choice for clinicians, focusing on quality of care and operational excellence [11][12] - The addition of a new team member is expected to enhance quality efforts and identify financial and operational opportunities [14] - The company is prepared to manage through legislative changes affecting Medicaid, particularly in non-expansion states where 60% of its volume resides [15][30] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating headwinds in the healthcare environment, emphasizing the importance of a strong balance sheet [11][17] - The company is optimistic about its ability to manage through the impacts of the Neonatal Care Transparency Act and other legislative changes [15][30] - Future guidance reflects a cautious view on hospital landscape but expects stable margins moving forward [50][51] Other Important Information - The company generated $138 million in operating cash flow in Q2, up from $109 million in the prior year, driven by higher earnings [8] - The company ended the quarter with cash of $225 million and net debt of just over $380 million, reflecting a net leverage of just above 1.5 times [9] Q&A Session Summary Question: Can you talk about the hospital admin fees and their growth? - Hospital admin fees contributed about a third of the pricing growth in Q2, with negotiations showing success despite challenges [20][21] Question: What is the flow-through of admin fee increases to doctor compensation versus corporate? - The flow-through is estimated to be in the 30% to 40% range and is expected to be immediate [23][24] Question: What is driving the strong NICU growth this quarter? - The growth is attributed to multiple factors, including increased acuity and overall strong performance across services [27] Question: How will the Medicaid impact from the big beautiful bill affect the company? - The impact is unclear, but management is hopeful that the focus on pregnant women and children will shield them from cuts [30][33] Question: Can you elaborate on the buyback strategy and its pace? - The company is focused on maintaining a strong balance sheet and is open to share buybacks if deemed beneficial [38][41] Question: What is the update on IDR and arbitration with payers? - The process has been favorable, with the company remaining predominantly in-network and successfully negotiating with payers [44] Question: What is the outlook on revenue and margins for the rest of the year? - The company expects stable margins but acknowledges tougher comps as the year progresses [50][51]