Revenue surges, but "blood-making" ability remains insufficient. How likely is Tongxin Medical to succeed in its sprint to become the "First Domestic Artificial Heart Stock"?

Questioning AI · How does continuous negative cash flow affect IPO prospects?

The Shanghai Stock Exchange official website shows that Suzhou Tongxin Medical Technology Co., Ltd. (hereinafter referred to as “Tongxin Medical”) Sci-Tech Innovation Board IPO recently updated its prospectus, and is jointly striving with another artificial heart manufacturer to become the “First Domestic Artificial Heart Stock.” According to the company’s latest disclosed financial data, its operating revenue in 2025 shows a significant increase. However, in terms of net profit, Tongxin Medical remains in a loss state, and the net cash flow from operating activities is still negative. For Tongxin Medical, the outcome of this IPO remains uncertain at present.

2025 Revenue Shows Significant Growth

The prospectus indicates that Tongxin Medical is a global innovative medical device company driven by breakthrough new technologies and solutions to advance and develop the treatment of advanced heart failure. It focuses on the research, production, and commercialization of implantable artificial hearts with technological breakthroughs.

Regarding products, as of the signing date of the prospectus, in the Chinese market, the company’s first implantable full magnetic levitation left ventricular assist system CH-VAD has obtained approval from the National Medical Products Administration (NMPA) and is listed, becoming China’s first approved full magnetic levitation implantable artificial heart. Its iterative version, CH-VAD Plus, has also been approved for listing. In the U.S. market, the company’s new generation implantable full magnetic levitation left ventricular assist system BrioVAD has received FDA approval to enter clinical trials. In the European market, the company has submitted clinical trial applications in Germany, Austria, and the Netherlands, and has obtained approval from the German ethics committee. The company has signed clinical trial agreements with two centers.

According to the company’s latest disclosed financial data, its operating revenue in 2025 shows a significant increase. Financial data shows that from 2023 to 2025, Tongxin Medical achieved operating revenues of approximately 50.45 million yuan, 77.35 million yuan, and 213 million yuan, respectively. However, in terms of net profit, Tongxin Medical’s losses further increased in 2025, with figures of -306M yuan, -372M yuan, and -374M yuan during the reporting periods.

Regarding the continued losses during the reporting period, Tongxin Medical stated that although the artificial heart product CH-VAD was approved for listing in November 2021, the artificial heart products are still in the early stages of commercialization domestically, with relatively small sales revenue, and have not yet covered various costs incurred in the early and current stages.

Gao Heng, an expert from the China Society of Science and Technology News, told Beijing Business Daily that products like artificial hearts, which are “technological islands,” have clinical penetration and commercialization pace that heavily depend on early capital support.

Negative Net Cash Flow from Operating Activities Continues

Without yet achieving profitability, Tongxin Medical’s net cash flow from operating activities remains negative.

Financial data shows that from 2023 to 2025, the net cash flow from Tongxin Medical’s operating activities was -220 million yuan, -293 million yuan, and -319 million yuan, respectively.

Tongxin Medical stated that during the reporting period, the company’s domestic products were in the initial stage of market promotion. The cash inflow from operating activities rapidly increased from 76.9 million yuan in 2023 to 206.5 million yuan in 2025. During the same period, the company maintained high R&D investment, established a subsidiary in the U.S. to promote R&D and listing of products in the U.S. market, and successfully launched clinical trials in the U.S. in 2024. Due to higher local wages in the U.S., the company’s cash payments to employees and for employee-related expenses increased significantly starting in 2023, leading to higher cash outflows from operating activities than inflows during the reporting period, and the net cash flow from operating activities remained negative.

Meanwhile, the company’s asset-liability ratio fluctuated, at 31.49%, 93.48%, and 70.63% during the reporting periods. Tongxin Medical stated in the prospectus that as the company’s scale expands and clinical trials proceed, daily funding needs increase. The relevant operating funds mainly come from bank loans, external financing, and operating income, causing the overall asset-liability ratio to trend upward. In June 2025, the company completed a round of equity financing, which increased net assets, leading to a decrease in the asset-liability ratio to 70.63% at the end of the reporting period.

Regarding related issues, Beijing Business Daily sent an interview letter to Tongxin Medical, but as of the time of publication, the company had not responded.

Beijing Business Daily · Ding Ning