Zhongchao Inc. Annual Report Summary

I’ve put together this guide to help you understand Zhongchao Inc.’s performance. My goal is to turn complex filing data into clear information so you can decide if this company fits your investment goals.

1. What does this company do?

Zhongchao Inc. operates in China’s digital health and medical education market. They provide online courses, medical forums, and training for healthcare professionals and the public through their platform, "MDMOOC." They act as a bridge, connecting medical knowledge to users, with pharmaceutical companies and medical associations paying them to distribute content and manage educational programs.

2. Financial performance

In 2025, the company brought in $11.37 million in revenue, compared to $13.5 million in 2024. They earned $5.12 million in gross profit, a margin of about 45%. The company reported a net loss of $2.8 million for the year, driven by $4.2 million in general operating costs and $3.5 million in research and development to keep their digital platforms updated.

3. Cash flow and dividends

The company moved $7.9 million from its Chinese operations to its U.S. parent company over the last three years to cover U.S. corporate costs. Regarding dividends, the company plans to reinvest all earnings into the business and does not expect to pay dividends. Any future payouts would also be subject to a 10% tax under Chinese law.

4. Financial health

The company held $8.1 million in cash at the end of 2025, up from $7.8 million in 2024. Their current ratio is 1.8, which indicates they have enough assets to cover short-term obligations, though the company continues to operate at a loss.

5. Key risks

Because Zhongchao uses a "Variable Interest Entity" structure, you do not own the Chinese business directly; you own a contract that claims the profits.

• The "Money Trap": Moving money out of China is difficult due to government control over currency conversion and strict rules on profit repatriation.
• Regulatory Hurdles: The company relies on government approvals to operate and move funds. If these contracts are ever invalidated by the Chinese government, shareholders could lose their entire investment.
• Data Security: The company operates in an environment where Chinese data security laws are constantly shifting. Failure to comply with these privacy rules could lead to fines or the loss of their business license.

6. Competitive positioning

Zhongchao competes against traditional publishers and digital health platforms. Their primary edge is their existing content library and established relationships with medical groups. However, the entry of large tech companies into this space could trigger price wars and shrink their market share.

7. Leadership

CEO Weiguang Yang is the controlling shareholder, and the company’s direction is closely tied to his personal vision. Strategy remains heavily focused on high spending for research and development to maintain their platform.

8. Future outlook

Management plans to prioritize market share over immediate earnings by reinvesting all revenue into the business. Their 2026 goal is to increase user engagement on MDMOOC and expand their roster of pharmaceutical clients.

Final Thought for Investors: When considering Zhongchao, weigh the potential of their digital health platform against the structural risks of the "Variable Interest Entity" model and the regulatory environment in China. Since the company is prioritizing growth over profitability and does not pay dividends, this investment is best suited for those looking for long-term exposure to the Chinese digital health sector rather than immediate income.