Orthopedic Leader Double Medical's Controlling Shareholders' Off-Balance-Sheet Empire Surfaces Amid New Capital Moves

(Source: Investor Network - Siwei Finance)

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「The Rise and Fall of the Orthopedics Sector.」

Double Medical(002901.SZ, hereinafter referred to as the “Company”)’s actual controller has added another transaction.

In the first quarter of this year, the company's revenue and net profit attributable to shareholders were RMB 641 million and RMB 147 million, representing year-on-year increases of 16.56% and 42.16%, respectively. One of the drivers behind this performance was the growth of its emerging orthopedic business.

In fact, the company’s ability to seize opportunities and emerge as the leader in the orthopedic device sector is attributable to its multi-sector strategic layout. Meanwhile, the actual controller’s broader business empire has gradually come to light through successive rounds of capital operations.

01

How the Tip of the Iceberg Emerges

On June 26, the Company announced that its largest shareholder, Double Medical Shangtong, intends to acquire the 46.92% equity interest in Baimaisi Medical held by Qiu Xuan for RMB 4.69 million. Previously, the Company’s wholly-owned subsidiary held a 45.08% stake in the target entity and had entered into agreements with three individual shareholders, thereby cumulatively holding 53.08% of the voting rights in the target entity, constituting de facto management and control.

Upon completion of this transaction, the Company and Double Medical’s commercial arm, Dabo Shangtong, will collectively hold a 92% equity stake in Baimaisi Medical. According to the announcement, the target company is primarily engaged in the sales of various medical devices; it reported a net loss of RMB 122,000 and negative net assets of RMB 2.174 million in the first quarter of this year. Data from Tianyancha shows that Baimaisi Medical was established in 2022, and the seller in this transaction, Qiu Xuan, holds a 46.92% equity interest with a subscribed capital contribution of RMB 2.346 million.

In other words, the assets acquired by the company’s major shareholders were not only insolvent but also had a short operating history, and the transaction involved a premium. With the same shareholding ratio, comparing Qiu Xuan’s capital contribution of RMB 2.346 million with the acquisition price of RMB 4.69 million, the premium rate was nearly 100%.

In fact, the company has long had ties with Baimaisi Medical.

In 2024, the Shenzhen Stock Exchange issued regulatory letters to the Company and relevant responsible parties, including its actual controller, Lin Zhixiong. One of the violations cited was that the Company granted partial access to its OA (Office Automation) system to personnel of Baimaisi Medical for conducting activities such as business registration, human resources recruitment, material procurement, and compliance management. The regulatory authorities determined that Baimaisi Medical had a special relationship with the Company and should have been identified as a related party; however, the Company’s disclosure was incomplete.

A Corner Hidden Beneath the Iceberg Gradually Emerges. In its 2024 annual report, the company classified eight enterprises, including Baimaisi Medical, as having “specific related-party relationships,” accompanied by related-party transactions involving labor services, sales of goods, property leasing, and procurement of fixed assets. However, the market has remained unaware of the specific nature of these relationships, such as the connections between individual shareholders and the company.

In January this year, the Company announced that its subsidiary would acquire a 45.08% equity interest in Baimaisi Medical held by He Xizhong for a consideration of RMB 3.7645 million. Meanwhile, from 2025 to the date of disclosure, the total amount of various related-party transactions between the Company and such enterprise reached RMB 12.2015 million.

02

The Rise and Fall of the Orthopedics Sector

Around 2004, Lin Zhixiong returned to China after completing advanced studies in Japan. At that time, he was an attending physician in the Department of Orthopedics at Xiamen Zhongshan Hospital. However, exposure to the mature medical device market overseas broadened his horizons and ignited his entrepreneurial spirit.

After returning to China, Lin Zhixiong founded Double Medical, which primarily specializes in orthopedic products. His younger brother, Lin Zhijun, joined the company shortly thereafter. In 2017, the company was listed on the SME Board of the Shenzhen Stock Exchange, gradually triggering a wave of capital investment in China’s domestic orthopedic device sector.

During this period, includingWeigao Orthopedics、Sanyou Medical, Kailitai,Chunli MedicalCompanies in these sectors are vying to enter the capital market. Interestingly, based on the founders’ backgrounds, three main paths emerge. The first is physician-led entrepreneurship, represented by Double Medical. The second is entrepreneurship by engineers with foreign company experience, exemplified by Sanyou Medical. The third is cross-industry entrepreneurship from the manufacturing sector, represented by Weigao Orthopaedics, Kellytai, and Chunli Medical.

Three Distinct Paths, Inevitably Shaping Different Growth DNA for Listed CompaniesThe manufacturing-focused companies hold advantages in production capacity and distribution channels; foreign-backed, technology-driven firms possess strong R&D capabilities but concentrate on single therapeutic areas; while physician-founded startups, addressing clinical pain points, excel at multi-pipeline portfolio development. These inherent differences in foundational characteristics sow the seeds for future divergence.

Since 2023, the domestic orthopedic device sector in China has undergone changes following the implementation of centralized procurement. As foreign manufacturers opt for structural contraction, the trend of domestic substitution has shifted from competing for market share to filling gaps in niche segments. Previously, industry growth relied on traditional businesses such as trauma, spine, and joint implants; however, the uptake of these underserved areas has spurred the rise of emerging fields like sports medicine and minimally invasive surgery.

Under the narrative shift, Double Medical and Weigao Orthopedics have gradually stood out with their full-spectrum coverage, whereas single-segment players such as Sanyou Medical, Kylin Med, and Chunli Medical have failed to share in the benefits. To date, the market capitalizations of Double Medical and Weigao Orthopedics stand at approximately RMB 19 billion and RMB 10 billion, respectively.

Valuation disparities stem from differences in financial performance and the progress of new business ventures. On one hand, in 2025, Double Medical and Weigao Orthopaedics reported revenues of RMB 2.601 billion and RMB 1.523 billion, respectively. On the other hand, Double Medical’s innovative sectors, such as minimally invasive surgery and sports medicine, have to some extent raised its valuation ceiling. In contrast, while Weigao Orthopaedics maintains a relatively balanced presence in traditional fields, its layouts in minimally invasive procedures and dental care are still in their nascent stages.

03

Capital Operations and External Business Landscape

Lin Zhixiong's capital operations are closely tied to the company.

In 2025, Double Medical’s controlling shareholder, Dabo Shangtong, acquired 100% equity interest in Junlaixin from two individual shareholders for RMB 47.2704 million, thereby indirectly holding a 23.5% stake in Shuaide. The target company specializes in minimally invasive surgical instruments; Double Medical had previously acquired a 51% equity stake in it.

In response, the company stated that given the potential for the target product to be included in the national centralized procurement or secondary volume-based procurement, Lin Zhixiong, one of the actual controllers, could leverage his extensive experience to provide significant support to the company’s management and sales activities, thereby enhancing employees’ confidence in the long-term development of Shi Aide and mitigating risks, by increasing his shareholding ratio.

In other words, the capital operations of the company and its major shareholder formed a coordinated strategy. In the transactions involving Baimaisi Medical and Shi Aide, the company first acquired controlling equity, followed by the major shareholder purchasing a portion of the shares. Through this combined approach, Lin Zhixiong increased his shareholding ratio.

Moreover, the company’s 2025 annual report disclosed that six enterprises had “specific related-party relationships.” In late June this year, the company announced that its board of directors had reviewed and approved a proposal on the estimated additional daily related-party transactions, projecting that the total amount of such transactions with enterprises controlled or significantly influenced by Lin Zhixiong in 2026 would reach up to RMB 65.86 million.

Among these, the company expects to add related-party transactions with entities such as Zhuyan Chuanqi, Bofeidi, Ruiskang, and Bai'aojie, with a total maximum amount of RMB 12 million. According to available information, Zhuyan Chuanqi is an enterprise indirectly controlled by Lin Zhixiong, with net assets of -RMB 43 million as of the first quarter of this year; the other three newly added enterprises have not yet commenced business operations.

Ultimately, the company’s series of capital operations have formed a coordinated strategy with its controlling shareholders, and the success of its innovative businesses will determine whether it can sustain high growth. Meanwhile, the company’s affiliated entities outside its consolidated structure have also drawn regulatory scrutiny.