Aibo Medical's $1 Billion Bet on Sports Medicine: Diversification Beyond Ophthalmology

Source: China Business Journal

Reporters Su Hao and Lu Zhikun, China Economic Net, Beijing

An Investment Intent Letter worth nearly 1 billion yuan has unveiled a star ophthalmic device company's bold transformation gamble.

Recently, the leading ophthalmic device company on the STAR MarketEyebright Medical(688050.SH) announced that it plans to acquire no less than 51% of the equity in Delta Medical (Chongqing) Medical Technology Co., Ltd. ("Delta Medical"). The company estimates that the overall valuation of the target will not exceed 1 billion yuan.

Eyebright Medical believes that by acquiring a controlling stake in the target company through this acquisition, it will broaden its layout in the medical and health field. The synergy with the target company in R&D, production, manufacturing, sales channels, etc., will further enhance the company's performance and shareholder return levels.

Why is this ophthalmic device company, which focuses on intraocular lenses and orthokeratology lenses, extending its strategy to the seemingly less related field of sports medicine? Is this transaction a proactive strategic layout, or a passive survival move amid weak growth in its main business?

On January 28, 2026, a relevant official from the securities department of Eyebright Medical stated in an interview with China Business Journal that, as the audit report and related intermediary agencies' due diligence are still ongoing, the current valuation and pricing are only preliminary estimates based on historical performance and comparable cases within the same industry. Meanwhile, facing pressure from the impact of centralized procurement on its main business operations and the strategic need for continued group expansion, expanding into consumer markets or other business segments will also be part of the future development path.

"Wedding Contract" Valued at 1 Billion

It is reported that Delta Medical, established in 2016, is a technology enterprise focusing on the sports health industry, with product lines covering the entire chain from preoperative prevention, surgical treatment to postoperative rehabilitation. The company owns 276 authorized patents and is a national high-tech enterprise and a specialized and new "little giant" enterprise. It has successfully been selected into Group A of the national high-value medical consumables centralized procurement, ranking among the top tier in the industry.

According to the announcement, Eyebright Medical's acquisition plan has been preliminarily finalized. The company plans to acquire no less than 51% of Delta Medical's equity through a combination of acquisition loans and self-owned funds, thereby gaining control of this sports medicine enterprise. This merger and acquisition case has entered the substantive stage, with the core terms disclosed in the "Letter of Intent" signed by both parties.

Eyebright Medical emphasized in the announcement that this transaction does not constitute a related party transaction, nor does it constitute a major asset restructuring. However, only certain terms of this "Letter of Investment Intent," such as confidentiality and due diligence, are currently binding. Specific investment matters and the final transaction price will still need to await the results of due diligence and asset valuation.

From the perspective of the target company's fundamentals, Delta Medical's profitability is still in its early stages. The company’s revenues for 2023–2025 are projected to be RMB 178 million, RMB 236 million, and RMB 286 million, respectively, with adjusted net profits of -RMB 7.08 million, RMB 9.29 million, and RMB 23.6 million. Although it has turned losses into profits, its RMB 23.6 million net profit in 2025 still shows a significant gap compared to leading companies.

Moreover, the difficulty in fulfilling the acquisition performance commitment remains. According to the announcement, Delta Medical is required to achieve net profits of 45 million yuan, 55 million yuan, and 65 million yuan from 2026 to 2028, respectively, or accumulate a total net profit of 165 million yuan over three years. Delta Medical must realize a net profit of 45 million yuan in 2026, nearly doubling the figure from 2025, followed by maintaining growth rates of 22.2% and 18.2% in the subsequent two years.

Eyebright Medical revealed to reporters that, based on a net profit of 55 million yuan, its price-to-earnings ratio (PE) is approximately 20 times. This valuation level is lower than that of currently listed companies in the same industry (sports medicine), which is also an important market benchmark referenced in its evaluation.

"On this basis, considering the growth potential of Delta Medical as a non-listed company and its relatively complete industrial chain layout in the field of sports medicine, we preliminarily estimate that its overall valuation could reach 1 billion yuan." Eyebright Medical stated that this valuation conclusion still needs to be finalized based on exact financial and business data after the completion of the due diligence report and audit report.

However, mergers and acquisitions often come with the challenge of synergy. For Eyebright Medical, which has been deeply involved in the ophthalmology field for many years, acquiring a sports medicine company means entering an almost entirely unfamiliar area. In the announcement, Eyebright Medical also mentioned "synergy," expressing hopes to achieve synergistic effects with Delta Medical in areas such as research and development, production and manufacturing, and domestic and international sales channels.

"Indeed, there have been quite a few doubts about this aspect recently." Eyebright Medical stated that both Eyebright Medical and Delta Medical's R&D and sales teams have over a decade of extensive experience, and the maturity of the teams is a common advantage for both parties. Therefore, the core focus in the future will not be on rebuilding the teams but on how to design and implement an effective integration plan.

Main Business Growth Bottleneck

Eyebright Medical's seemingly proactive expansion is, in fact, closely related to the pressure faced by its core business.

In 2024, Eyebright Medical achieved remarkable results with operating revenue reaching 1.41 billion yuan, representing a year-on-year increase of 48.22%; the net profit attributable to shareholders was 387 million yuan, up 27.36% year-on-year. However, a turning point occurred in the first quarter of 2025: the company's revenue was 357 million yuan, a year-on-year increase of 15.07%; but the net profit attributable to shareholders was 92.5581 million yuan, down 10.05% year-on-year. This marks the first time that Eyebright Medical has experienced a quarterly net profit decline since its listing in 2020.

In the first three quarters of 2025, Eyebright Medical achieved revenue of 1.144 billion yuan, representing a year-on-year increase of only 6.43%; net profit attributable to shareholders was 290 million yuan, a year-on-year decrease of 8.64%. More concerning is the third-quarter data, with revenue down 8.17% year-on-year and net profit attributable to shareholders plummeting by 29.85%.

The core reason for the decline in profits points directly to the company's "lifeline" – the intraocular lens business. As a leading enterprise in China's high-end intraocular lens market, this product once contributed over 80% of the company's revenue.

However, since May 2024, the full implementation of the national centralized procurement policy for intraocular lenses in China has directly led to a decline in product ex-factory prices, with a short-term impact on terminal surgical volumes. In 2024, Eyebright Medical's intraocular lens business revenue increased by 17.66% year-on-year, but sales volume surged by 44.93%, showing a very clear "volume increase, price drop" trend, squeezing profit margins.

To offset the pressure from its core business, Eyebright Medical has vigorously expanded its contact lens business. In 2024, the revenue from this business surged by 211.84% year-on-year, with its revenue share increasing significantly from 14.36% in 2023 to 30.21%.

However, this is a double-edged sword. Contact lenses fall under the category of consumer healthcare, with a gross profit margin much lower than the company's traditional high-value consumables business. Eyebright Medical has admitted that this segment is still in the phase of capacity expansion, with high unit costs. While it has significantly boosted revenue, it has weighed down the overall net profit growth rate.

Star businesses are under profit pressure due to policy impacts, while new growth engines come at the cost of profit margins. Therefore, Eyebright Medical needs to find a new business that can contribute to scale and bring high-quality profits, which might be one of the major reasons for its acquisition of Delta Medical.

In addition, the sports medicine industry as a whole faces dual challenges of growth ceiling and market structure. Data from CIC Consulting shows that, influenced by the 2024 centralized procurement price, the market size is expected to undergo a phased adjustment from 6.73 billion yuan to 6.34 billion yuan, after which it may resume growth at a rate of approximately 11.8%.

Currently, the sports medicine market is highly monopolized by foreign giants such as Smith & Nephew, Johnson & Johnson, and Stryker, with a combined market share of over 80%. In 2023, the national procurement of sports medicine consumables organized by China reduced the average price by 74%. Delta Medical, as one of the few local companies whose core products were included in the procurement list, is facing fierce price competition but is also encountering a critical window period for trading price for volume and accelerating the replacement of imported products.

"Delta Medical has successfully entered the national centralized procurement market. In the future, both parties will focus on how to achieve a '1+1>2' effect through strategic synergy, thereby capturing a larger share in the incremental market brought by centralized procurement. This is because the sports medicine sector not only grows faster globally than fields like intraocular lenses, but its vast space for domestic substitution also requires companies to seize opportunities through strong alliances," said Eyebright Medical.