Core Medical Reports RMB 139 Million in Charitable Donations Amid Accumulated Losses Exceeding RMB 4 Billion

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On July 2, Shenzhen Core Medical Technology Co., Ltd. (Core Medical) will face its listing review for the STAR Market, with Huatai United Securities serving as the sponsor.

Core Medical has established a product portfolio comprising implantable and interventional artificial heart devices. The company currently offers five implantable and six interventional artificial heart products, among which one implantable and one interventional product have received regulatory approval for market launch, while multiple other artificial heart products are in clinical development stages.

Upon review, the voting rights of the actual controller, Yu Shunzhou, increased from 29.14% to 38.97%; Yu Shunzhou promptly entered into concerted action agreements with multiple shareholders; the marketing network and digitalization construction projects were removed, yet the total amount of funds raised remained unchanged; despite having ample cash flow, the company sought to supplement working capital, raising questions about its rationality; whether the high proportion of clinical expenses and R&D material costs in R&D projects is reasonable; accumulated losses amounted to RMB 466 million, with only two products approved for market launch; charitable donations over three years totaled RMB 13.9 million; there were instances where payments from hospital end-customers were received through foundations.

Yu Shunzhou’s Voting Rights Change: Rapidly Forms Concerted Action Group with Multiple Shareholders

According to the analysis by Duan Ping Kuai, Core Medical was established in August 2016, completed its joint-stock reform in March 2023, initiated tutoring registration in April, concluded the tutoring process in September 2025, and had its application for listing on the STAR Market accepted in November. Following two rounds of inquiries, the company is now facing this listing committee review.

The voting rights held by the actual controller, Yu Shunzhou, changed from 29.14% to 38.97%. The controlling shareholder and actual controller of Core Medical is Yu Shunzhou, who directly holds 21.79% of the shares. He also indirectly controls 7.35% of the voting rights through Shenzhen Xin Fu, and jointly controls an additional 9.83% of the voting rights through concerted parties He Zhou Medical, Shenzhen Xin Zhu, and Tianjin Xin Cheng. In total, Yu Shunzhou controls 38.97% of the voting rights.

Yu Shunzhou, born in 1978, holds a doctoral degree and serves as the Chairman of the Board, General Manager, and Chief Technology Officer of the company.

It should be noted that the first and second editions of the prospectus showed Yu Shunzhou controlling 29.14% of the voting rights, and it was only after Yu Shunzhou signed the "Concerted Action Agreement" with Core Medical, Shenzhen Xin Zhu, and Tianjin Xin Cheng on April 30, 2026, that his voting rights changed to the current 38.97%.

Yu Shunzhou and multiple shareholders have entered into an acting-in-concert arrangement. In fact, the Shanghai Stock Exchange, in its inquiry, required Core Medical to explain whether the basis for asserting that Yu Shunzhou does not form an acting-in-concert relationship with Hezhou Medical, Shenzhen Xin Zhu, and Tianjin Xincheng is sufficient. In the letter requesting further clarification on the implementation of opinions, it was required to further supplement the explanation regarding the sufficiency and reasonableness of the basis for asserting that Hezhou Medical, Shenzhen Xin Zhu, and Tianjin Xincheng do not form an acting-in-concert relationship with the actual controller, and whether the lock-up periods for the shares held by the relevant shareholders comply with regulations.

Core Medical stated during the second round of inquiry that there was sufficient basis for its determination that Yu Shunzhou did not have any acting-in-concert relationship with Shenzhen Xinzhhu, Tianjin Xincheng, or Hezhou Medical; and that its identification of Yu Shunli and Shenzhen Xinfu as parties acting in concert with Yu Shunzhou was accurate. The Opinion Implementation Letter stated that Shenzhen Xinzhhu, Tianjin Xincheng, and Hezhou Medical had established an acting-in-concert relationship with Yu Shunzhou by signing an acting-in-concert agreement.

Our review revealed that Yu Shunli, the younger brother of Yu Shunzhou, is one of the limited partners of Shenzhen Xinzhhu and Tianjin Xincheng, with capital contribution ratios of 1.97% and 77.77%, respectively. Furthermore, Yu Shunli held shares in the company on behalf of Yu Shunzhou since its inception, and this nominee shareholding arrangement was only terminated in June 2018. Additionally, Zhu Yonghe, a major shareholder of Hezhou Medical (with a 25.71% stake), is Yu Shunzhou’s cousin (maternal side); Geng Junna (with a 19.49% stake) is the spouse of Yu Shunzhou’s paternal cousin; and all partners of Xindong Partnership (with a 21.8% stake) are friends of Zhu Yonghe.

The determination of parties acting in concert is not complex, as it merely requires the signing of a concerted action agreement. What raises significant questions is that the prospectus disclosed by the company on April 24 indicated that Yu Shunzhou, Shenzhen Xinzhhu, Tianjin Xincheng, and Hezhou Medical were not parties acting in concert. However, these parties reached a concerted action agreement on the 30th of the same month. This pace can only be described as lightning-fast. It is important to note that once classified as parties acting in concert, shareholders are subject to a 36-month lock-up period for their shares and face numerous restrictions on reducing holdings and cashing out. What prompted the parties to reach this agreement? What role did Yu Shunzhou play in this process? These are all matters that require the attention of the Shanghai Stock Exchange.

Proposed Fundraising Exceeds 1.2 Billion, Despite Ample Cash Flow, 200 Million to Be Used for Working Capital

Deletion of Marketing Network and Digitalization Construction Project, While Total Fundraising Amount Remains Unchanged. In this IPO, Core Medical plans to publicly issue no more than 90 million shares, aiming to raise RMB 1,216,548,600, which will be used for the following projects: R&D of Frontier Products (RMB 877,159,600), Industrialization Base Construction for Artificial Hearts (RMB 139,389,000), and Replenishment of Working Capital (RMB 200,000,000).

According to the concise analysis by Duanpingkuai, the amount of funds proposed to be raised in the previously filed draft was identical to that in the version submitted for review. The filed draft included a marketing network and digitalization construction project, with a proposed use of RMB 166.0677 million in raised funds; this item was removed in the version submitted for review. Meanwhile, the proposed use of raised funds for the project supporting the continuous research and development of frontier products was adjusted from RMB 711.0919 million in the filed draft to RMB 877.1596 million in the version submitted for review, representing a difference of RMB 166.0677 million. This indicates that the funds originally allocated to the marketing network and digitalization construction project were reallocated to the project supporting the continuous research and development of frontier products.

Why was the total investment amount for the R&D project of cutting-edge products under circular support changed on the eve of the meeting? What were the specific changes in the project investment details before and after? Given the significant change in the amount, was the project investment calculation rigorous?

Ample Cash Flow Yet Seeking Supplementary Liquidity: Reasonableness Questioned. Core Medical’s asset-liability ratio is not high, standing at 8.52%, 17.02%, and 10.45% from 2023 to 2025 (the reporting period), respectively. The year-end asset-liability ratio is relatively low compared to industry peers. Bairen Medical, Huitai Medical, and Beixin Life all have higher ratios than the Company, at 19.09%, 14.28%, and 19.7%, respectively, while MicroPort Electrophysiology is slightly lower at 9.58%.

As of the end of the reporting period, the Company’s cash and cash equivalents, trading financial assets, and non-current assets due within one year (large-denomination certificates of deposit and interest) amounted to RMB 263 million, RMB 201 million, and RMB 236 million, respectively, totaling approximately RMB 700 million. The Company had no short-term or long-term borrowings, and its non-current liabilities due within one year totaled only RMB 6.4319 million. This situation has drawn significant attention from the Shanghai Stock Exchange, which has requested an explanation of the reasons and rationale for using the proceeds raised to supplement working capital despite the Company’s relatively ample liquidity.

Core Medical stated that the company's total funding requirement over the next three years amounts to RMB 1.487 billion. The total amount raised in this offering is RMB 1.217 billion, of which RMB 1.017 billion is expected to be invested in research and development and production, and RMB 200 million is expected to be used to supplement working capital. The amount allocated for supplementary working capital does not exceed the company's projected funding gap of RMB 248 million over the next three years, indicating a reasonable scale of allocation.

The aforementioned calculation of the funding gap is based on a comprehensive analysis of the company’s overall future cash inflows and outflows, and has not been reviewed by an independent third-party institution. How can the authority of the forecast be ensured?

Is it reasonable for clinical expenses and R&D material costs to account for a relatively high proportion in R&D projects? During the reporting period, Core Medical’s core R&D expenses showed an upward trend, amounting to RMB 118.6863 million, RMB 150.7076 million, and RMB 203.4239 million, respectively. Employee compensation and material costs were the major components of these expenditures, with ending balances of RMB 65.4881 million and RMB 52.5437 million, accounting for 32.19% and 25.83%, respectively.

The major expenditures for the company’s current fundraising investment project, which supports the research and development of frontier products, are clinical trial costs and R&D material costs, amounting to RMB 332.80 million and RMB 225.20 million, respectively, accounting for 37.94% and 25.67% of the total. During the reporting period, the cumulative clinical trial costs and material costs were RMB 39.0355 million and RMB 109.6185 million, respectively. What are the respective reasons for the significant surge in these two categories of expenses?

As of the end of the reporting period, the Company had 137 R&D personnel, accounting for 31.07% of its total workforce. It has obtained a total of 253 domestic authorized patents, including 115 domestic authorized invention patents, which represent approximately 45.45% of the total. The Company has achieved fruitful scientific research outcomes, with its number of invention patents ranking among the top in the domestic artificial heart sector. Additionally, it has secured 29 authorized invention patents overseas.

Amid Significant Losses, Charitable Donations Over Three Years Total RMB 13.9 Million

Accumulated losses of RMB 466 million. From 2023 to 2025, Core Medical reported operating revenues of RMB 16.5503 million, RMB 93.6884 million, and RMB 164.2645 million, respectively, with net losses of RMB 169.9464 million, RMB 131.8133 million, and RMB 172.3390 million, respectively.

According to the concise analysis by Duan Ping Kuai, in Q1 of this year, the company achieved revenue of RMB 49.8986 million, a year-on-year increase of 56.99%. The net loss was RMB 23.8505 million, showing a narrowing trend compared to the same period last year. As of the end of 2025, the accumulated balance of uncovered losses amounted to RMB 466.1099 million.

The prospectus highlights the risks of “not yet being profitable and having accumulated uncovered losses.” The company has only one implantable artificial heart product and one interventional artificial heart product approved for market launch and commercialization. If subsequent product commercialization progresses slower than expected, the company’s unprofitable status persists, and accumulated uncovered losses continue to expand, it may trigger delisting conditions, leading to delisting risks.

Only two products have been approved for market launch. The main business revenue of Core Medical is derived entirely from the sales of the implantable left ventricular assist system Corheart®6, which was approved for market launch in June 2023. All operating revenue during the reporting period was generated from the implantable left ventricular assist system.

As of the date of prospectus disclosure, the Company has a portfolio comprising five implantable and six interventional artificial heart products. Among these, one implantable product and one interventional product have received marketing approval. The interventional ventricular assist system CorVad® 4.0 was approved for marketing in China in December 2025, becoming the first interventional artificial heart product to receive such approval in the country. Additionally, several other artificial heart products are in clinical stages; however, the earliest of these is not expected to be marketed until 2027, with specific outcomes yet to be verified over time.

The development of innovative medical device products is a complex systematic engineering endeavor, characterized by high risks, substantial investment, and specialized expertise. An innovative medical device product typically undergoes a 5-10 year process from research and development initiation, design and development, design verification, clinical evaluation to product registration.

The prospectus warns that “the Issuer has laid out a portfolio of innovative medical device products, and there are risks that product development progress may fall short of expectations or even result in development failure.” If the Company is unable to overcome core design challenges in the future, or if it encounters situations such as slow patient enrollment in clinical trials, clinical trial results falling short of expectations, or failure to obtain approval for product registration applications, this will lead to the risk that the Company’s product development progress falls short of expectations or even results in development failure.

Charitable donations over three years totaled RMB 13.9 million. Although Core Medical has not yet achieved profitability, it remains deeply committed to philanthropy. During the reporting period, its charitable donation expenditures were RMB 1.098 million, RMB 7.402 million, and RMB 4.59 million, respectively. From 2023 to the first half of 2025, cumulative donations to the Beijing Kaiqi Cardiovascular Public Welfare Foundation, Beijing Denuo Public Welfare Foundation, Beijing Jiekai Cardiovascular Health Fund, and Shenzhen Charity Federation amounted to RMB 4.968 million, RMB 3.8 million, RMB 500,000, and RMB 500,000, respectively.

This matter also drew the attention of the Shanghai Stock Exchange, which requested the Company to clarify whether it participated in or determined the recipients of the donations, and whether the use of charitable funds or donated materials involved the Company’s clinical trial centers and hospitals that had awarded bids to the Company. The Company stated that no specific medical institutions were designated when making the donations; such funds were disbursed at the sole discretion of the recipient organizations. The use of the Company’s donated funds did not involve its clinical trial centers or the hospitals that had awarded bids to the Company.

It should be noted that the prospectus shows that the company donated RMB 3 million in cash to the Beijing Denuo Public Welfare Foundation in 2024, yet the company does not appear in the list of major donations in the foundation’s 2024 annual work report. What could explain this discrepancy? Is it possible that the company chose not to disclose the donation publicly?

Furthermore, the company donated RMB 3.8 million to the Beijing Kaiqi Cardiovascular Public Welfare Foundation in 2024, making it the largest single donor and accounting for as much as 15.57% of the foundation’s total donation income for that year. What is the rationale behind such a substantial donation, and is it reasonable?

There are instances where hospital end-customers are involved, but payments are settled by foundations. In 2023 and 2024, Core Medical sold a total of five implantable left ventricular assist systems to the Children's Hospital of Zhejiang University School of Medicine (Zhejiang University Children's Hospital), with sales amounts of RMB 1.0265 million and RMB 1.5398 million, respectively. The sales proceeds were paid by the Zhejiang University Education Foundation (Zhejiang University Foundation).

The Shanghai Stock Exchange requested an explanation for the reason why the payment was made by the Zhejiang University Education Foundation. The company stated that the main reason was that Zhejiang University Children's Hospital had established a research project on the development of end-stage heart failure, with funding sourced from the Zhejiang University Education Foundation. To implement the disbursement and supervisory responsibilities of the special funds from the Zhejiang University Education Foundation, and to better ensure that the funds are used exclusively for their designated purpose, the relevant payments were made by the Zhejiang University Education Foundation.

The Company further stated that, based on the audited financial statements, annual work reports, donation lists, and other materials publicly disclosed by the Zhejiang University Education Foundation, the Company did not make any charitable donations to the Zhejiang University Education Foundation during the reporting period, and the aforementioned receipts are not related to any charitable donations made by the Company.

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       Core Medical's Public Welfare Donations Reach 13.9 Million Yuan, with Cumulative Losses Exceeding 400 Million