Zepp Health Corp Annual Report - How They Did This Year

I’m putting together a guide to help you make sense of Zepp Health’s latest annual report. Think of this as a plain-English breakdown of how the company is doing, where they’re headed, and what you should watch as an investor.

1. What does this company do and how did they perform?

Zepp Health designs and manufactures smart wearable devices, primarily under its "Amazfit" and "Zepp" brands. They also partner with Xiaomi to provide wearables for that ecosystem. Beyond hardware, the company is building an AI-driven health-management platform focused on sleep, heart health, and hearing insights.

The Bottom Line: It was a challenging year. The company reported a loss of $75.7 million in 2025, compared to a $31 million loss in 2024. While the company is shifting toward higher-profit health services, rising operational costs relative to sales have put significant pressure on the bottom line.

2. Financial performance

The company is currently navigating a difficult financial period. Total revenue declined from $352.9 million in 2023 to $182.6 million in 2024, driven by a sharp drop in sales volume. Because costs remain high relative to current revenue, the company is burning through cash, making it difficult to sustain operations through product sales alone.

3. Major wins and challenges

• Revenue Trends: Revenue has fallen for two consecutive years, reflecting a crowded wearable market and softening demand for older product lines.
• Concentration Risk: A significant portion of revenue is tied to the partnership with Xiaomi. Any change in Xiaomi’s strategy or pricing could have a material impact on Zepp Health’s revenue.
• Global Market Shift: The company is pivoting away from the Chinese market to prioritize growth in the U.S. and Europe. This transition requires heavy investment in marketing and software development, which is currently weighing on profitability.

4. Financial health (The "Money Pipeline")

Zepp Health utilizes a "Variable Interest Entity" (VIE) structure to comply with Chinese regulations regarding foreign investment. The Cayman Islands holding company does not directly own the Chinese operations; instead, it maintains control through a series of service contracts.

• Capital Movement: Moving earnings out of China is subject to strict regulatory oversight and potential taxes ranging from 5% to 10%. If tax authorities were to challenge these contracts, the company could face significant tax liabilities, potentially trapping earnings within China.

5. Key risks

• The "VIE" Structure: Investors should be aware that they are purchasing shares in a Cayman Islands holding company, not the underlying Chinese business. If Chinese laws change or if the contractual arrangements become unenforceable, the value of these shares could be severely impacted.
• Cash Runway: Cash reserves fell from $91 million in 2024 to $57 million in 2025. This reduction in liquidity may force the company to raise additional capital by issuing more shares, which would dilute the ownership percentage of existing shareholders.

6. Competitive positioning

Zepp Health is attempting to transition from a hardware-focused manufacturer to an AI-driven health service provider. This puts them in direct competition with industry giants like Apple, Samsung, and Garmin, all of which possess significantly larger research budgets and more established brand ecosystems.

7. Leadership and strategy

In 2024, the company executed a 16-for-1 reverse stock split to comply with exchange listing requirements. This action increased the price per share but did not change the underlying value or market capitalization of the company.

8. Future outlook

Long-term success is now tied to the company's ability to scale its AI health subscription services. Until the company can reverse the trend of declining revenue and achieve consistent profitability, it remains a high-risk investment. Investors should look for clear evidence that the AI-driven strategy is gaining traction and stabilizing the company's financial position.