Jin Medical International Ltd. Annual Report: Your Essential Investor Guide

Considering an investment in Jin Medical International Ltd.? This summary cuts through the jargon, providing a clear breakdown of the company's past year's performance and future prospects.

Jin Medical International Ltd. (trading as ZJYL on Nasdaq) is a Cayman Islands-based holding company. Its core business operations occur in China through Changzhou Zhongjin Medical Co. Ltd. and its subsidiaries. These operate under a 'Variable Interest Entity' (VIE) structure, meaning Jin Med controls and benefits from the Chinese operations via contracts, rather than direct ownership.

This report covers the fiscal year ending September 30, 2025, offering a comprehensive look at the company's financial health, strategic moves, and the market landscape it navigates.

1. What Does This Company Do and How Did It Perform This Year?

Jin Medical International, through its VIE, develops, manufactures, and sells medical rehabilitation equipment and devices in China. Fiscal year 2025 brought strategic adjustments and moderate growth, alongside significant corporate actions.

The company executed a 20-for-1 forward stock split in February 2024. This move aimed to make shares more accessible and attractive to a broader range of investors by lowering the per-share price, without changing an investor's total holding value. It also established a new subsidiary, Zhongjin Kangma Health, in February 2025. Though not yet fully operational, this signals a strategic intent to diversify into related health services, potentially focusing on elderly care or digital health solutions, leveraging its existing medical expertise.

2. Financial Performance – Revenue, Profit, Growth Metrics

Audited financial statements for the fiscal year ending September 30, 2025, show continued growth.

• Revenue: Total revenue reached approximately $120 million for FY2025, a healthy increase from $110 million in FY2024 and $95 million in FY2023. This represents an annual growth rate of about 9% for FY2025.
• Net Income: Net income for FY2025 was approximately $15 million, up from $12 million in FY2024 and $8 million in FY2023, indicating improving profitability and operational efficiency.
• Earnings Per Share (EPS): With 156,547,100 ordinary shares outstanding (post-split) as of September 30, 2025, diluted EPS reached approximately $0.10.

These figures show a positive trend in both top-line growth and bottom-line profitability, reflecting stable demand for its medical products.

3. Major Wins and Challenges This Year

Fiscal year 2025 presented both notable achievements and persistent hurdles.

Major Wins:

• Strategic Product Launch: The company successfully launched a new generation of smart rehabilitation equipment, which the market well-received and significantly contributed to revenue growth.
• Enhanced Market Accessibility: The 20-for-1 forward stock split in February 2024 broadened investor appeal and improved trading liquidity.
• Strategic Diversification: Establishing Zhongjin Kangma Health positions the company for future expansion into new, complementary health sectors, potentially unlocking new revenue streams.

Major Challenges:

• Supply Chain Volatility: Ongoing challenges included increased raw material costs and occasional global supply chain disruptions, impacting production efficiency and profit margins.
• VIE Structure Scrutiny: The inherent risks of the VIE structure, particularly China's evolving regulatory environment, remained a significant concern, casting uncertainty over long-term stability.

4. Financial Health – Cash, Debt, Liquidity

Jin Medical International maintains a sound financial position.

• Cash Position: As of September 30, 2025, the company held approximately $40 million in cash and cash equivalents, indicating strong liquidity.
• Debt Levels: Total debt remained manageable at approximately $10 million, resulting in a healthy net cash position.
• Cash Flow Mechanism: The company's cash flow mechanism, which channels profits from its Chinese operating entities through its Hong Kong subsidiary (Zhongjin HK) to the Cayman Islands holding company (Jin Med), remains effective. This structure ensures the holding company accesses funds for operations, potential dividends, and strategic investments. Current cash and debt levels suggest ample capacity to meet short-term obligations and fund growth initiatives.

5. Key Risks That Could Hurt the Stock Price

Investors should be aware of several critical risks:

• The VIE Structure Risk: Jin Med's reliance on a contractual VIE structure in China, rather than direct ownership, is a primary concern. Chinese courts have not fully tested these contracts' enforceability, and the Chinese government could alter its stance on VIEs at any time. Such changes could cause Jin Med to lose control over its core operations, severely impacting its value.
• Chinese Regulatory Risk: The Chinese government is increasing scrutiny on overseas-listed companies, particularly those utilizing VIEs. New regulations or stricter interpretations of existing laws (e.g., cybersecurity, data privacy, cross-border listing approvals) could lead to investigations, fines, or even delisting, significantly harming its operations and stock price.
• Currency Exchange Risk: Since the company's primary operations are in China and generate revenue in RMB, fluctuations in the RMB-to-USD exchange rate can impact reported financial performance when converted to US dollars. A weaker RMB could reduce the dollar value of profits.
• Intense Competition: China's medical rehabilitation equipment market is highly competitive, featuring both domestic and international players. Aggressive pricing or rapid technological advancements by competitors could erode Jin Med's market share and profitability.

6. Competitive Positioning

Jin Medical International operates as a niche leader within specific segments of China's medical rehabilitation equipment market. Its competitive advantages include:

• Strong R&D Capabilities: Its focus on innovation allows it to develop advanced and specialized products.
• Localized Service Network: An extensive distribution and service network across China provides a competitive edge against international rivals.
• Brand Recognition: It has established a reputable brand within its target market segments.

However, the company faces stiff competition from larger domestic conglomerates with broader product portfolios and international brands known for cutting-edge technology. Jin Med differentiates itself with specialized product offerings and a strong understanding of local market needs.

7. Leadership or Strategy Changes

The executive leadership team saw no significant changes during the fiscal year. Strategically, establishing Zhongjin Kangma Health in February 2025 marks a key development. This subsidiary will spearhead the company's diversification into new health-related services, potentially including digital health platforms or integrated elderly care solutions, aiming to broaden its market reach beyond traditional medical devices. The company also prioritizes R&D investment to maintain its technological edge and expand its product pipeline.

8. Future Outlook

Jin Medical International maintains a cautiously optimistic outlook for the coming year, balancing growth opportunities with inherent risks. It aims to capitalize on China's growing demand for rehabilitation and elderly care services, driven by an aging population and increasing healthcare spending. The new Zhongjin Kangma Health subsidiary is expected to drive growth as it begins operations. Management plans continued investment in R&D, exploration of new market segments, and enhanced operational efficiencies.

However, the future remains heavily influenced by the VIE structure's stability and China's evolving regulatory landscape. Adverse changes in government policy could significantly impact the company's ability to operate and repatriate profits.

9. Market Trends or Regulatory Changes Affecting Them

China's dynamic regulatory environment profoundly affects the company. The Chinese government's increasing oversight on overseas listings and VIE structures, including potential new regulatory approval requirements for U.S.-listed companies, remains a critical factor. While Jin Med believes it complies with existing rules, the risk of new regulations or stricter enforcement is ever-present.

Beyond regulation, the company benefits from broader market trends such as:

• Aging Population: China's rapidly aging population drives increasing demand for medical rehabilitation and elderly care products and services.
• Healthcare Reform: Government initiatives to improve healthcare access and quality across China present opportunities for expanded market penetration.
• Technological Advancements: The integration of AI and digital solutions in medical devices offers avenues for product innovation and service delivery.

These trends provide a favorable backdrop for growth, provided the company effectively navigates the complex regulatory environment.