Summary of the Conference Call for Sanbo Brain Science Company Overview - **Company**: Sanbo Brain Science - **Industry**: Healthcare, specifically focusing on brain-machine interface technology and neurosurgery Key Points and Arguments Financial Performance - **Revenue Stability**: Revenue for the first half of the year remained flat compared to the previous year, with growth observed in Beijing, Henan, and Fujian regions, while Kunming faced challenges due to relocation [2][3] - **Profit Growth**: Expected single-digit profit growth attributed to supply chain optimization and contributions from newly acquired hospitals, with the Chengdu hospital maintaining positive profitability [2][3] Technological Advancements - **Clinical Trials**: Successful completion of an interventional brain-machine interface trial in Fujian, with plans for another trial in Beijing [2][5] - **Research Collaboration**: Joint research projects with universities focusing on early-stage technology research for epilepsy and Parkinson's disease, with minimal fees charged [10][11] New Hospital Developments - **New Facilities**: Progress on new hospital locations, with the Beijing facility expected to relocate in Q1 2025, and the Kunming facility now operational after relocation [2][6] Industry Challenges - **Impact of DRG Payment System**: The implementation of the DRG (Diagnosis-Related Group) payment system has led to a decrease in inpatient costs by approximately 10%, necessitating an increase in patient volume to offset revenue losses [4][16] - **Market Dynamics**: A shift in patient preferences towards pharmacies and clinics due to perceived cost-effectiveness, impacting hospital visit numbers [16] Future Growth Strategies - **M&A Fund**: Establishment of a 300 million yuan merger and acquisition fund aimed at acquiring and incubating hospitals, with contributions from the company, local governments, and large pharmaceutical companies [4][13] - **Expansion Plans**: Plans to expand into the Yangtze River Delta and Pearl River Delta regions through acquisitions, with a focus on enhancing operational efficiency and service quality [16][17] Clinical Application of Brain-Machine Interface Technology - **Current Status**: The technology is in the early clinical validation stage, primarily focused on experimental verification, with applications in neuro-regulation for conditions like Parkinson's disease and epilepsy [7][9] Talent Acquisition and Incentives - **Attracting Talent**: The hospital offers flexible mechanisms and equity incentives to attract core experts, providing significant career advancement opportunities compared to traditional public hospitals [18][19] Collaboration with Universities - **Resource Utilization**: Collaboration with universities to leverage resources for research and teaching, ensuring high-quality support for clinical and academic endeavors [20] Financial Management of Acquisitions - **Risk Management**: Contracts for new acquisitions include provisions for potential risks such as Medicare deductions and legal disputes, ensuring effective management of hidden liabilities [26] Additional Important Information - **AI Integration**: Current clinical and management operations have not fully integrated AI models, with a cautious approach towards evaluating the effectiveness of such technologies [22][23] - **Patient Volume Trends**: Observations indicate a decline in hospital visits, with a notable increase in business for clinics and pharmacies [16][24] This summary encapsulates the key insights from the conference call, highlighting the company's performance, strategic initiatives, and industry challenges.

Group 1: Brain-Computer Interface (BCI) Developments - The first successful case of an interventional brain-computer interface in China was completed on June 14, helping a hemiplegic patient regain motor function [2][3] - This technology demonstrates China's independent innovation capabilities in BCI, marking a significant step in precise control, neural reconstruction, and intelligent rehabilitation [3] - Compared to invasive BCIs, interventional BCIs reduce trauma and recovery time, enhancing safety, although they capture lower intracranial EEG signals [3] Group 2: New Hospital Districts Progress - Beijing Sanbo is planning a new district with 480 beds, expected to be operational by Q1 2026, to improve service capacity [4] - The Kunming Sanbo district relocated in May 2025, upgrading facilities and introducing advanced medical equipment, enhancing diagnostic capabilities [4] - The Xi'an Sanbo district is awaiting fire safety approval to commence operations [4] - The Hunan Sanbo district is under construction, with plans for future opening [4] Group 3: Financial and Operational Insights - In Q1 2025, Beijing Sanbo's medical insurance revenue accounted for approximately 30%, with other hospitals showing higher percentages, such as Chongqing Sanbo at 66% [8] - New hospital districts are expected to increase business scale and revenue post ramp-up period, enhancing overall profit levels [5][9] Group 4: Strategic Development and Mergers - The company aims to establish over 10 group-controlled hospitals nationwide, focusing on key regions to expand its service radius and enhance industry influence [6] - Mergers will target neuro-specialty and general hospitals, particularly in the Yangtze River Delta and Pearl River Delta regions [6] Group 5: Talent Development and Training - The talent training system includes local recruitment, training in Beijing, and incentives for high-end talent to join as entrepreneurs [7] - The company provides a comprehensive platform for professional development and complex case management [7] Group 6: ESG and Community Engagement - The company engages in social responsibility by providing financial aid to impoverished patients and conducting free clinics in remote areas [13] - A new brain health community initiative was launched in May 2025, focusing on a full-service system from prevention to rehabilitation [13] Group 7: Impact of Policies and Regulations - The inclusion of certain BCI projects in the medical insurance guidelines is expected to have a long-term positive impact on revenue [14] - DRG payment systems have varying effects on different hospital types, with specialized hospitals facing less impact due to the complexity of cases [14] Group 8: Clinical Applications of BCI - Current clinical applications of BCI are in the experimental phase, focusing on neuro-regulation for conditions like Parkinson's and epilepsy [15] - Ongoing research includes potential applications for awakening patients in a vegetative state and rehabilitation for stroke victims [15]