Original source：Goldman Sachs (Asia) L.L.C.First published on Unhidea：Original source date：
Key takeaway
Topchoice Medical’s third-quarter profit exceeded Goldman Sachs’ expectations mainly because expenses were lower than expected. Rising implant volumes, falling prices and a cut to full-year case guidance have made Goldman Sachs more cautious about the pace of recovery.
Why did profit beat expectations despite revenue falling slightly short?
In the third quarter of 2026, the company reported revenue of 915 million yuan, up 2.9% year on year and 0.4% below Goldman Sachs’ forecast of 919 million yuan. Goldman Sachs attributed the difference to weaker demand for diagnosis and treatment and a decline in average selling prices caused by an unfavorable revenue mix.
Net profit for the same period was 212 million yuan, up 3.2% year on year and 12.8% above Goldman Sachs’ forecast. The beat was mainly due to expenses coming in below the bank’s estimates.
Why was revenue growth limited despite more implant cases?
Third-quarter implant cases totaled approximately 17.9 thousand, up 15% year on year, but the blended average selling price per case fell to 7306 yuan, down 10% year on year. As a result, implant revenue rose only 3.6% to 131 million yuan.
Orthodontics revenue for the same period was 204 million yuan, up 3.6% year on year; cases totaled approximately 10 thousand, up about 4% year on year.
What does the cut to full-year case guidance mean?
Management lowered its full-year 2026 implant case guidance to 72 thousand–75 thousand cases and its orthodontic case guidance to 25.5 thousand–28 thousand cases. Goldman Sachs believes that low-price strategies and community-based customer acquisition are driving case growth more slowly than previously expected.
Against a challenging consumer environment, Goldman Sachs believes visibility into a fourth-quarter recovery has diminished and is watching whether a pricing strategy spanning different consumer tiers can support a sustained recovery in implant cases.
Management said the dental medical service price schedule has been largely implemented, except in Zhejiang and Shanghai: prices for some treatments have risen, while prices for some lower-cost services, including certain periodontal treatments, have fallen slightly. The policy has no negative impact on the overall business or orthodontics, and the overall pricing framework remains stable.
How has Goldman Sachs adjusted its earnings forecasts and valuation?
Given the slower-than-expected recovery in the implant business, Goldman Sachs lowered its earnings-per-share forecasts for 2026–2028 by 1.8%, 2.8% and 3.6%, respectively.
Goldman Sachs maintained its sell rating and lowered its 12-month target price from 37.20 yuan to 35.10 yuan. Upside risks listed by the bank include a faster-than-expected recovery in implant cases, improved execution of pricing and promotions, earlier stabilization of consumer trends, and greater-than-expected gains in operating efficiency.
