Bonasia Revenue Under Pressure: Accounts Receivable and Turnover Days Surge, Operating Cash Flow Continues to Deteriorate

How does AI Bonaesia’s digital strategy address revenue fluctuation challenges?

“Port Harbor Business Observation” Xu Huijing

As the wave of AI technology sweeps through the healthcare sector, a company with over 20 years of experience in the clinical CRO industry is attempting to leverage digital transformation to open the door to the capital market. In February 2026, Bonaesia (Hangzhou) Pharmaceutical Technology Co., Ltd. (hereinafter referred to as Bonaesia) submitted an application for listing on the Hong Kong Stock Exchange, planning to issue H-shares, with Xingzheng International and ICBC International as joint sponsors.

Bonaesia relies on self-developed digital systems such as CTMS and eTMF to provide full-process clinical trial technical services covering IND applications to NDA registration for pharmaceutical and biotech companies. However, issues revealed in the prospectus, such as revenue volatility and decline, increasing customer concentration, and a shift from positive to negative operating cash flow, add uncertainty to its IPO journey.

1

Revenue Pressure, Improving Profit and Gross Margin

According to the prospectus and Tianyancha, Bonaesia was founded in 2004 and is a clinical contract research organization headquartered in Hangzhou, China, dedicated to empowering innovative drug clinical research through digitalization. The company’s core revenue mainly comes from clinical trial technical services and FSP services, covering new drug clinical trial applications, Phase I-IV studies, new drug registration filings, and other services.

Financial data shows that in 2023, 2024, and January-September 2025 (hereinafter referred to as the reporting period), the company’s revenue was 371 million yuan, 340 million yuan, and 245 million yuan, respectively. These figures show a clear downward fluctuation: total revenue for 2024 decreased by 8.15% compared to 2023; although revenue in the first nine months of 2025 increased slightly by 3.48% over the same period in 2024, it still has not recovered to the 2023 level.

Looking at the revenue structure, clinical trial technical services have always been the company’s main source of income. During the reporting period, this segment’s revenue was 318 million yuan, 290 million yuan, and 199 million yuan, accounting for 85.7%, 85.3%, and 81.1% of total revenue, respectively. In the first nine months of 2025, the proportion of clinical trial technical services fell below 85% for the first time, while FSP services increased from 14.8% in the same period of 2024 to 18.4%.

Regarding the revenue decline in 2024, the company explained in the prospectus that it was mainly due to the overall industry environment, with some client projects delayed or canceled. However, according to Frost & Sullivan, the Chinese clinical CRO market size continued to grow in 2024, and Bonaesia’s revenue declined against this trend, possibly indicating market share pressure in competitive positioning.

In terms of profitability, the company’s gross margin showed an initial increase followed by stabilization. During the reporting period, gross margins were 33.5%, 38.3%, and 37.8%. The 4.8 percentage point increase in 2024 compared to 2023 was mainly driven by refined management systems, excellent operational efficiency, and digitalization improving operational quality and project management. However, in the first nine months of 2025, gross margin remained flat compared to the same period in 2024, failing to continue the upward trend.

Net profit during the reporting period was 62.41 million yuan, 67.29 million yuan, and 45.22 million yuan, with net profit margins of 16.8%, 19.8%, and 18.5%, respectively. Although the net profit margin increased by 3 percentage points in 2024 compared to 2023, it decreased by 1.3 percentage points in the first nine months of 2025 compared to the same period in 2024.

As of September 30, 2025, the company had signed contracts with unrecognized revenue totaling 519 million yuan, covering multiple therapeutic areas and stages of clinical development. The company stated that these long-term stable relationships demonstrate strong customer loyalty and market reputation for high-quality services. However, the conversion speed from signed contracts to actual revenue shows that, while signed but unrecognized revenue was 442 million yuan in 2024, total revenue for the year was only 340 million yuan.

2

Customer Concentration Exceeds 60%, Accounts Receivable Rising

Another challenge Bonaesia faces is the persistently high customer concentration, which is also increasing. During the reporting period, revenue from the top five customers was 222 million yuan, 191 million yuan, and 159 million yuan, accounting for 59.9%, 56.0%, and 64.8% of total revenue, respectively. The largest customer accounted for 21.6%, 16.2%, and 20.3% of total revenue in each period.

The prospectus highlights the risk that losing any major customer or a significant reduction in service demand from key clients, without replacement by other customers, could significantly adversely affect the company’s business, financial condition, and operating results.

Jiang Han, senior researcher at Pangu Think Tank, noted that high concentration reflects typical “big client binding” characteristics. Clinical CRO services have long cycles, high technical thresholds, and strong trust dependence, with leading pharmaceutical companies tending to establish long-term strategic partnerships with a few high-quality suppliers. Over-reliance on a single client also poses significant bargaining power risks, weakening pricing power and potentially compressing gross margins. If a core client is lost, short-term customer acquisition costs could sharply increase, causing volatile performance. Additionally, high dependence just before IPO is a regulatory concern and a source of valuation discount, as capital markets worry about business independence and risk resilience. Without rapid expansion of mid- and long-tail clients post-listing and customer structure optimization, the market may assign a lower liquidity premium. The company needs to demonstrate that its digital capabilities can be broadly applied, shifting from project-based services to a platform ecosystem to diversify systemic risks from client fluctuations.

Meanwhile, accounts receivable continue to increase. Financial data shows that trade receivables and contract assets totaled 183 million yuan, 215 million yuan, and 242 million yuan, representing 52.2%, 48.7%, and 55.0% of current assets, respectively. Based on revenue scale, the receivables turnover days extended from about 180 days in 2023 to approximately 231 days in 2024, and further to about 270 days (annualized) as of September 2025, indicating a lengthening collection cycle and increasing capital occupation pressure.

During the reporting period, procurement from the top five suppliers totaled 38.3 million yuan, 29.1 million yuan, and 18.1 million yuan, accounting for 29.0%, 25.7%, and 21.2% of total procurement in each period. Although the proportion is decreasing, the largest supplier still accounted for 11.4%, 9.3%, and 11.9%, with amounts of 15.1 million yuan, 10.5 million yuan, and 10.2 million yuan.

The company cooperated with 296, 324, and 365 hospitals, covering 30 provinces/regions in China, with 212 of these being tertiary hospitals. Strategic cooperation agreements with leading hospitals typically specify cooperation models and obligations, with durations ranging from two to ten years.

Bonaesia’s fee models also carry risks, mainly including service-based and full-time equivalent (FTE) models. Under the service-based model, the company charges project-based fees for agreed deliverables and services, so project delays or cancellations directly impact revenue recognition. FTE services are billed based on fixed rates per person-month, with costs rising as labor costs increase, limiting gross margin improvement potential. During the reporting period, FTE gross margins were 31.5%, 32.5%, and 35.3%, showing an upward trend but still significantly below the 38.4% gross margin of clinical trial technical services.

3

Operating Cash Flow Turns Negative, R&D Expenses Continue to Decline

Bonaesia’s most prominent financial risk is the continuous deterioration of operating cash flow. From 2023 to 2024, net cash from operating activities dropped from 67.29 million yuan to 11.51 million yuan; in the first nine months of 2025, it turned negative at -3.535 million yuan.

The company explained in the prospectus that this decline was mainly due to increased trade receivables and contract assets. The rising trade receivables pose higher payment risk, a common industry phenomenon as CROs typically collect payments at milestones, but customer payment cycles have lengthened industry-wide.

As of September 30, 2025, the company’s cash and cash equivalents were 55.16 million yuan, down 50.39% from 111 million yuan at the end of 2024. Although the current ratio increased from 101.2% in 2023 to 131.7% as of September 2025, the quality of quick assets remains a concern. During the period, net current assets were 4.15 million yuan, 61.88 million yuan, and 106 million yuan; net assets were 16.78 million yuan, 73.13 million yuan, and 120 million yuan, indicating limited capital strength.

In this context, the company’s AI-driven strategy faces the challenge of balancing investment and returns. The company disclosed that its ongoing R&D projects focus on improving clinical trial services and enhancing digital systems. R&D expenses were 15.99 million yuan, 13.65 million yuan, and 9.38 million yuan, with R&D expense ratios of 4.3%, 4.0%, and 3.8%, respectively, showing a continuous decline.

Jiang Han commented that the decline in R&D spending conflicts with its strategic positioning of “digital empowerment.” In the context of AI sweeping through healthcare, reducing R&D investment may indicate insufficient motivation to build proprietary technological barriers, undermining its high-tech narrative. Additionally, this trend reflects short-term financial tactics under profit pressure—management may cut costs to improve short-term profitability, which is typical during a “sprint” phase. While boosting net profit margin temporarily, it sacrifices long-term competitiveness. If competitors increase investments in AI algorithms and automation, Bonaesia risks lagging in service efficiency and per capita output.

Although the company claims that digital transformation has significantly improved operational efficiency, project quality, and overall competitiveness, the actual effectiveness of digital investments remains to be seen. The prospectus states that it has developed digital systems such as CTMS, eTMF, and CTFS to accelerate clinical trial execution and improve operational efficiency.

Of particular concern is a recent related-party transaction. On October 28, 2025, the company entered into an equity transfer agreement with Mr. Zhao Min and other Guangdong Weilin shareholders, acquiring 100% equity of Guangdong Weilin at no cost. Before the acquisition, Guangdong Weilin was directly controlled by Mr. Zhao Min (80%), with Shanghai Yilian Enterprise Management Center (Limited Partnership) and Shanghai Yiguang Enterprise Management Center (Limited Partnership) holding 10% each. The agreement commits Bonaesia to inject 1 million yuan to fulfill existing shareholder capital contributions and invest 25 million yuan in Guangdong Weilin. On December 22, 2025, the registration was completed, increasing Guangdong Weilin’s registered capital to 30 million yuan, making it a wholly owned subsidiary of Bonaesia. All previous shareholders exited, Zhao Min remains the legal representative, and Gu Zhifu was added as CFO on December 29, 2025.

Bonaesia states that Guangdong Weilin has been focused on developing digital solutions for clinical trials, and this acquisition aims to strengthen internal digital capabilities. However, the fairness of the transaction price and integration effects will be closely monitored by regulators. According to accounting policies, this acquisition is regarded as a business combination under common control, with Guangdong Weilin’s financial performance and position from the prior period retroactively incorporated into the consolidated financial statements.

Additionally, the company’s equity structure has attracted market attention. As of the filing date, Mr. Zhao Min controls approximately 78.33% of the issued share capital, including about 61.01% directly and approximately 12.99% and 4.33% indirectly held through BonaDa Innovation and BonaHua Innovation, respectively. After the global offering, Mr. Zhao Min will directly and indirectly control a certain percentage of the issued share capital.

In terms of market competition, China’s clinical research services market is highly fragmented. According to Frost & Sullivan, in 2024, the top five Chinese clinical CROs accounted for 29.9% of the total market share by revenue. Bonaesia faces fierce competition from leading Chinese CROs such as Tigermed, NorthG, and Kanglong, as well as numerous small and medium-sized CROs and in-house R&D departments of biotech and pharma companies. The prospectus admits that the company faces intense competition domestically and internationally, and digital capabilities will be key to differentiation.

However, AI application in clinical CROs is still in early stages. The company’s strategy to strengthen AI-driven clinical CRO models includes the use of large language models (LLMs), AI agents, and the development and integration of Guangdong Weilin’s digital solutions with existing systems. Commercialization of these cutting-edge technologies will take time to validate, and whether the company’s limited financial resources can sustain long-term investments remains a concern. (Produced by Port Harbor Finance)