Shineco Announces Acquisition of Medical Device Company

Rhea-AI Summary

Shineco (NASDAQ: SISI) has announced the acquisition of a 75% equity stake in FuWang Company, a specialist in medical device R&D, manufacturing, and commercialization. The deal, signed on March 20, 2025, involves a payment of US$8.8 million in cash, issuance of 3,400,000 Shineco common shares, and transfer of 71.42% equity in Dream Partner

FuWang Company develops Class II and III medical devices, including biochemical analyzers, patient monitors, and mobile medical imaging workstations. The company has a strong market presence across Chinese provinces, particularly in Gansu, Henan, Jiangsu, and Shanxi.

The acquisition target projects revenue growth from US$11.03 million in 2025 to US$17.24 million by 2027, with net profit expectations ranging from US$1.10 million to US$1.72 million during the same period. FuWang plans to expand into integrated health management, leveraging cloud computing and AI technologies for critical care networks.

Positive

• Projected revenue growth from $11.03M (2025) to $17.24M (2027)
• Expected net profit increase from $1.10M (2025) to $1.72M (2027)
• Strong existing sales network across multiple Chinese provinces
• Immediate synergies expected with Shineco's existing medical device business
• Proprietary intellectual property rights in medical devices

Negative

• Significant share dilution through issuance of 3,400,000 new common shares
• Substantial cash outlay of $8.8M for acquisition
• Divestment of 71.42% stake in Dream Partner

Insights

Financial Analyst

Shineco's acquisition of a 75% stake in FuWang Company represents a significant transaction for a company of its size. With a current market cap of just $16.4 million, Shineco is committing to a substantial financial arrangement including $8.8 million in cash, 3.4 million shares of common stock, and transferring a 71.42% equity stake in Dream Partner

The share issuance is particularly noteworthy as it likely represents considerable dilution for existing shareholders given Shineco's current market capitalization. The cash component ($8.8 million) represents over half of Shineco's entire market value, raising questions about how this payment will be financed.

FuWang brings valuable assets to the table - specialized R&D capabilities in Class II and III medical devices, proprietary intellectual property, and an established sales network across multiple Chinese provinces. According to seller projections, FuWang expects $11.03 million in revenue for 2025, growing to $17.24 million by 2027, with net profits ranging from $1.1 million to $1.72 million during this period.

The 10% projected profit margin aligns with industry standards for medical device companies. However, these are seller projections rather than independently verified figures, which warrants caution. The transfer of the Dream Partner stake also represents a significant divestiture that lacks explanation in the announcement.

While the CEO cites "immediate synergies" with Shineco's existing portfolio, the substantial financial commitment and complex transaction structure create significant execution risk that balances against the potential strategic benefits.

The Acquisition is Expected to Create Immediate Synergies with the Company’s Existing Medical Device Business 

BEIJING, March 25, 2025 (GLOBE NEWSWIRE) -- Shineco, Inc. (“Shineco” or the “Company”; NASDAQ: SISI), a provider of innovative diagnostic medical products and related medical devices, announced today that on March 20, 2025, Shineco Life Science Group Hong Kong Co., Limited (“Shineco Life Science”), a subsidiary of the Company, entered into a Stock Purchase Agreement (“SPA”) with Yi Yang (the “Seller”), for 75% of an equity interest in FuWang (HK) International Company Limited (“FuWang Company”). The Seller is the current and only shareholder of FuWang Company, which specializes in the R&D, manufacturing, and commercialization of medical devices.

Pursuant to the SPA, Shineco Life Science will acquire a 75% equity interest in FuWang Company. In consideration of the acquisition, Shineco Life Science shall pay the Seller approximately US$ 8.8 million in cash, the Company shall issue 3,400,000 shares of the Company’s common stock, and it will transfer the 71.42% equity interest in Dream Partner Limited it holds to the Seller.

FuWang Company specializes in the R&D, production and commercialization of Class II and III medical devices, including biochemical analyzers, patient monitors and mobile medical imaging workstations. FuWang Company holds proprietary intellectual property rights and maintains an extensive sales network across multiple Chinese provinces and municipalities, with a particularly strong market presence in Gansu, Henan, Jiangsu, and Shanxi provinces. FuWang Company plans a strategic expansion into integrated health management, combining preventive health screenings with emergency response systems. Leveraging cloud computing and AI technologies, Fuwang Company aims to establish a seamless pre-hospital to in-hospital critical care network, implementing tiered treatment protocols for life-threatening conditions. According to the Seller, FuWang Company will achieve steady financial growth over the next three years, with revenue targets of US$11.03 million (2025), US$13.79 million (2026) and US$17.24 million (2027). Corresponding net profit goals are set at US$1.10 million (2025), US$1.38 million (2026) and US$1.72 million (2027).

Jennifer Zhan, the CEO of Shineco, commented, “We are enthusiastic about our acquisition of a majority position of FuWang Company for its strategic positioning in the medical devices sector and its sales capabilities and channel management expertise. In addition, FuWang Company’s competitive strengths are expected to create immediate synergies with Shineco’s existing business portfolio, and its distinctive operational capabilities is anticipated to greatly enhance Shineco’s overall financial performance,” Jennifer Zhan concluded.

More complete information of the SPA is set forth in the Form 8-K and its exhibits filed with the Securities and Exchange Commission on March 20, 2025.

About Shineco, Inc.

Shineco Inc. (“Shineco” or the “Company”) aims to ‘care for a healthy life and improve the quality of life’, by providing safe, efficient and high-quality health and medical products and services to society. Shineco, operating through subsidiaries, has researched and developed 33 vitro diagnostic reagents and related medical devices to date, and the Company also produces and sells healthy and nutritious foods. For more information about Shineco, please visit www.biosisi.com/.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements can be identified by terminology such as “may”, “will”, “should”, “could”, “intend”, “expect”, “plan”, “budget”, “forecast”, “anticipate”, “believe”, “estimate”, “predict”, “project”, “potential”, “continue”, “evaluating” or similar words. Forward-looking statements should not be relied upon because they are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Examples of forward-looking statements include, among others, statements we make regarding the innovativeness and market position of our products and services, our competitive strengths, and our expectation that the healthy meals replacement joint venture will be a competitive products in its field. You are cautioned not to rely on any forward-looking statements. Actual results may differ materially from historical results or those indicated by the forward-looking statements as a result of a variety of factors including, but not limited to, risks and uncertainties associated with the Company’s ability to raise additional funding, its ability to maintain and grow its business, variability of operating results, its ability to maintain and enhance its brand, its development and introduction of new products and services, the ability to obtain all necessary regulatory approvals in the jurisdictions where it intends to market and sell its products the successful integration of acquired companies, technologies and assets into its portfolio of products and services, marketing and other business development initiatives, competition in the industry, general government regulations, economic conditions, the impact of the COVID-19 pandemic, dependence on key personnel, the ability to attract, hire and retain personnel who possess the technical skills and experience necessary to meet the requirements of its clients, its ability to protect its intellectual property, its ability to integrate acquisitions and the ability of the acquired companies to achieve the financial projections attributed to them. Shineco encourages you to review other factors that may affect its future results in its filings with the Securities and Exchange Commission. The forward-looking statements in this press release are based only on information currently available to us and speak only as of the date of this press release, and Shineco assumes no obligation to update any forward-looking statements except as required by the applicable rules and regulations.

For more information, please contact:

Shineco,Inc.
secretary@shineco.tech
Mobile: +86-010-68130220

Precept Investor Relations LLC
David J. Rudnick
david.rudnick@preceptir.com
Mobile: +1-646-694-8538

FAQ

What is the total value of Shineco's acquisition of FuWang Company (SISI)?

Shineco is acquiring 75% of FuWang Company for US$8.8 million in cash, 3,400,000 shares of common stock, and a 71.42% equity interest in Dream Partner

What are FuWang Company's revenue projections for 2025-2027 after the SISI acquisition?

FuWang projects revenues of US$11.03M (2025), US$13.79M (2026), and US$17.24M (2027), with corresponding net profits of US$1.10M, US$1.38M, and US$1.72M.

Which medical devices does FuWang Company manufacture under SISI ownership?

FuWang Company manufactures Class II and III medical devices, including biochemical analyzers, patient monitors, and mobile medical imaging workstations.

In which Chinese provinces does FuWang Company have a strong market presence under SISI?

FuWang Company has a strong market presence in Gansu, Henan, Jiangsu, and Shanxi provinces.

What technological expansion plans does FuWang have following the SISI acquisition?

FuWang plans to expand into integrated health management using cloud computing and AI technologies to establish pre-hospital to in-hospital critical care networks.