Core Viewpoint - Ark Health's valuation is considered underestimated, especially after it reported its first profit in the first half of 2025, with a revenue of 1.494 billion yuan and a net profit of 12.48 million yuan, marking a significant turnaround [1][2]. Financial Performance - Ark Health achieved a revenue of 1.494 billion yuan, a year-on-year increase of 12.9% [1]. - The company reported a net profit of 12.48 million yuan, marking its first profitable period [1]. - Adjusted net profit reached 17.58 million yuan, up 16.8% year-on-year [1]. - Online retail pharmacy revenue was 864 million yuan, growing by 28.2% [1]. Market Trends - The Chinese pharmaceutical retail market is projected to reach 501.9 billion yuan in 2024, with e-commerce channels becoming the main growth driver [1]. - E-commerce in the pharmaceutical sector is expected to grow to 64.5 billion yuan, with a growth rate of 4.6% [1]. - Ark Health's product offerings are primarily focused on chronic disease patients, with 62% of its 216,000 SKUs being prescription drugs [1]. User Engagement - The user base of Ark Health reached 52.8 million, a year-on-year increase of 15.8% [2]. - Monthly active users increased by 34.4%, reaching 11.9 million [2]. - The repurchase rate among paying users is 85.4% [2]. Industry Outlook - The chronic disease management market in China is expected to grow from 45.5 billion yuan in 2023 to 600 billion yuan by 2030, with a compound annual growth rate of 44.5% [2]. - The government is promoting the use of new technologies in healthcare, as outlined in the recent policy document encouraging AI applications in health management [2]. Technological Advancements - Ark Health is developing AI tools to enhance chronic disease management, including AI electronic medical records and AI-assisted diagnosis tools [3]. - The target price set by Citigroup for Ark Health is 8.5 HKD, indicating a potential doubling from its recent trading price of around 4 HKD [3].

Core Viewpoint - Ark Health has shown significant growth in its financial performance for the first half of 2025, driven by its focus on chronic disease management and the introduction of AI capabilities to enhance operational efficiency [1][3][7]. Financial Performance - In the first half of 2025, Ark Health reported total revenue of 1.494 billion, representing a year-on-year increase of 12.9% [3]. - The company achieved a net profit of approximately 12.5 million, marking a turnaround from losses, while adjusted net profit reached a record high of 17.58 million, up 16.8% year-on-year [3]. User Growth and Engagement - The number of registered users on the H2H service platform reached 52.8 million, a 15.8% increase year-on-year, with registered doctors totaling 229,000, of which 58.9% are affiliated with top-tier hospitals [3]. - Monthly active users grew to 11.9 million, reflecting a substantial year-on-year increase of 34.4%, and the repurchase rate among paying users stood at 85.4% [3]. Market Position and Strategy - Ark Health's online pharmacy app ranked first in monthly active users among key medical apps in June 2025, and it topped the App Store's free medical app chart in China [5]. - Prescription drug transactions accounted for 81.7% of total sales, with prescription SKUs making up 62% [5]. - The company has established strategic partnerships with over 1,650 suppliers and more than 980 pharmaceutical companies, including leading firms like Novo Nordisk and Otsuka Pharmaceutical [5]. Industry Growth Potential - The chronic disease management market in China is rapidly expanding, with the number of chronic disease patients reaching 500 million in 2023, and the market size growing from 2.4 trillion in 2015 to 7.7 trillion in 2023, maintaining a compound annual growth rate of 15.6% [6]. - Projections indicate that the chronic disease management market could reach 15 trillion by 2030, presenting significant growth opportunities for companies like Ark Health [6]. AI Integration and Innovation - The introduction of AI capabilities, including the AI electronic medical record assistant and AI pre-consultation assistant, aims to enhance operational efficiency and patient interaction [7][8]. - The company has partnered with Tencent Cloud to deepen technological collaboration, integrating advanced AI models into its H2H service platform [7]. - Ark Health is committed to leveraging AI to improve chronic disease management and enhance the overall healthcare experience for patients [8].