JRSIS Health Care Corporation

What they do

Through Yongzhou Jumi, the company develops, produces and sells intelligent medical and vending equipment, including one-stop smart medicine distribution machines, automated drug sales kiosks, remote consultation terminals and unmanned pharmacy systems. It also provides cloud-based software as a service, system design, installation and maintenance, and customizable smart hardware. As of the 10-K, Yongzhou Jumi held 2 invention patents, 16 utility model patents, 6 design patents and 21 software copyrights, and operates a roughly 10-person R&D team.

Revenue drivers

• Smart medical equipment and terminals — Sale of one-stop cloud-based medicine equipment such as automated drug vending, remote consultation and unmanned pharmacy machines, plus other remote intelligent terminal products. This is the core of Yongzhou Jumi's product revenue, comprising all consolidated operations.
• Cloud-based software and system services — Design, development, installation and maintenance of cloud-based systems, along with an open platform for software as a service. These services accompany hardware sales but the 10-K does not break out their share of revenue.
• Governmental healthcare projects — Local government healthcare projects to upgrade smart medical insurance and smart epidemic response systems are listed as a customer category. The filing does not quantify revenue from this channel.
• New retail smart terminal solutions — Cloud-based vending equipment and related intelligent terminal solutions marketed as a new retail offering. No separate revenue figures are disclosed.

Recent performance

Annual revenue fell sharply from $44.4 million in 2021 to $1.7 million in 2022 and $3.5 million in 2023, after the April 2022 disposal of Harbin Jiarun Hospital and a reverse acquisition in November 2023 that made Yongzhou JIT the accounting acquirer. Net income swung from $3.2 million in 2021 to a $0.6 million loss in 2022 and an $81 thousand loss in 2023, with operating cash flow of -$1.8 million in 2022 turning to $517 thousand in 2023. Recent quarterly revenue declined from $2.2 million in the December 2023 quarter to $500 thousand in March 2024, $597 thousand in June 2024 and $223 thousand in September 2024. At September 30, 2024, total assets were $2.1 million, total liabilities $2.3 million, shareholders' equity was negative $198 thousand and cash was $1,372. No other balance sheet or income statement commentary is provided in the excerpts.

Strategy

The company is focused on commercializing Yongzhou Jumi's intelligent medical and vending technology, including its One-stop smart medicine distribution program and new retail smart terminal solution. It emphasizes internal R&D through a team of about 10 experts, roughly 25% of Yongzhou Jumi's employees, and has accumulated 2 invention patents, 16 utility model patents, 6 design patents and 21 software copyrights. It collaborates with research institutions and universities such as Hunan Institute of Technology. Management states the reverse acquisition was completed to consolidate Yongzhou Jumi as the accounting acquirer, but no specific forward revenue, margin or capital expenditure targets are given in the excerpts.

Risks

• VIE structure and lack of equity ownership — The company holds no equity in Yongzhou Jumi and relies on contractual arrangements for substantially all operations and cash flows, which may be less effective than direct ownership.
• PRC regulatory and political risk — All assets and operations are in China, and the filing states the PRC government has indicated an intent to exert more oversight over overseas securities offerings and China-based companies, which could limit or halt future offerings.
• Single source of revenue — The 10-K states the company has a single source of revenue, Yongzhou Jumi, so any disruption at that entity would impair all reported financial results.
• Negative working capital and minimal cash — At September 30, 2024, total liabilities of $2.3 million exceeded total assets of $2.1 million, shareholders' equity was negative $198 thousand and cash was $1,372, indicating limited liquidity.

Outlook

The excerpts do not provide specific forward guidance on revenue, earnings or cash flow. Management's discussion is limited to describing the reverse acquisition accounting, the Yongzhou JIT business and its R&D and patent portfolio. The company cautions that forward-looking statements involve risks and uncertainties and disclaims any obligation to update them except as required by law.