Goldman Sachs: Tinavi Medical’s third-quarter revenue falls short of Goldman Sachs’ forecast as gross margin remains under pressure

Why did third-quarter revenue miss expectations?

Revenue in the third quarter of 2026 was 71 million yuan, up 15% year over year but 19% below Goldman Sachs’ forecast. Slower medical equipment tenders in the first half delayed revenue recognition; management said tenders had partially recovered in the third quarter.
Gross margin fell from 69.2% for full-year 2025 and 67.2% in the first half of 2026 to 65.8% in the third quarter, due to factors including a lower share of direct sales, changes in the system product mix and increased competition.
Supported by expense controls, the third-quarter net loss narrowed year over year to 25 million yuan, but revenue and gross margin still fell short of Goldman Sachs’ expectations.

Surgical procedure volume exceeded 17 thousand in the third quarter of 2026, bringing the total for the first three quarters to 46 thousand. However, both systems and consumables face competition and hospital pricing pressure.
The gross margin on consumables for the first three quarters edged down from 70.2% a year earlier to 69.5%. The company plans to broaden its product categories and functions and optimize production processes, seeking volume growth and broadly stable gross margin as average selling prices decline.
Management expects increased competition and equipment procurement to drive transaction prices down. It plans to offer systems across different price points, control costs and expenses, and continue expanding overseas.

Management said most orthopedic procedures currently fall under the “participation in execution” category for robotic surgery charges, with an additional charge of approximately 0 to 13 thousand yuan. Some procedures, including joint replacement, may fall under the higher-charge “precise execution” category.
The company plans to launch a robot for procedures in the higher-charge category in 2027. However, provincial implementation details remain unclear, and management believes nationwide implementation of the charging policy and stabilization of the competitive landscape could take 3 to 5 years.

Despite pressure on revenue and gross margin, the company maintained its 2026 installed-base target and its targets of EBITDA break-even in 2026 and core-business break-even in 2027. Goldman Sachs views tender conversion, pricing and gross margin trends as critical to whether the targets can be achieved.
Citing sales and margin pressure amid intensifying competition and policy uncertainty, Goldman Sachs cut its earnings-per-share forecasts for 2026–2028 by 0.7%, 2.4% and 3.1%, respectively. It lowered its 12-month target price from 18.0 yuan to 17.1 yuan and maintained its Neutral rating.