Preview of US stocks | High growth cannot hide operational challenges, Hong Kong medical IT service provider reaches new high to "replenish blood" in the US market.

In recent years, with the rise of emerging technologies such as big data and artificial intelligence, the development of technology is profoundly and comprehensively reshaping the modern hospital's landscape, transforming it from a traditional "treatment" site to a smart center for "prevention, diagnosis, treatment, rehabilitation, and health management" throughout the lifecycle. In terms of the medical process, intelligent services, improved medical experiences, and intelligent hospital operations have also transformed hospitals from being crowded with patients to being "efficient, transparent, and humane." In the Hong Kong market, the medical system actively embraces digital transformation, with its core goal being to improve medical service efficiency, enhance patient experience, and promote medical cooperation in the Guangdong-Hong Kong-Macao Greater Bay Area. Recently, Hong Kong-based medical IT service provider Ultra High Point Holdings Limited (referred to as "Ultra High Point") updated its prospectus to the US SEC for an IPO on the NASDAQ under the ticker symbol UHP. With revenue and profits doubling, "indebtedness" expands As a company that has been deeply involved in medical information technology in Hong Kong for over 15 years, Ultra High Point's business covers 25.5% of public hospitals and 50% of private hospitals in Hong Kong, aiming to provide customized and comprehensive medical information technology solutions and services to public and private hospitals in Hong Kong. Specifically, the company positions itself as a "full-stack smart hospital solution provider," with its core business conducted through subsidiaries in Hong Kong and mainland China, focusing on providing customized medical IT solutions and services to hospitals, spanning three core aspects of medical information technology: system development (HIS), Internet of Medical Things applications (IoMT), and continuous maintenance and upgrades. Its independently developed HIS system is based on microservices architecture, supports enterprise-level databases such as Oracle and MSSQL, and achieves iteration through continuous integration/deployment (CI/CD) pipelines. Its patented technologies such as the "Intelligent Light Medication Picking System" and "Real-Time Location Tracking System (RTLS)" have been implemented in multiple projects, with the RTLS technology utilizing UWB and BLE technologies to achieve centimeter-level positioning of personnel and equipment within the hospital, assisting a hospital in Hong Kong in completing minute-level tracking of infection paths, validating the practicality of the technology. Moreover, given that the medical information technology solution industry is a specialized subdivision of the IT solution industry in Hong Kong, extensive understanding of the complexity and regulation of the Hong Kong healthcare system is required. After system delivery, the company also provides continuous maintenance, support, and upgrade services, providing potential long-term sources of income. From a financial perspective, the company has achieved steady growth in recent years. In the fiscal year ending on March 31, the company's revenue increased from $7.3285 million in the fiscal year 2024 to $9.5047 million in the fiscal year 2025, a year-on-year growth of 29.7%. Meanwhile, net profit increased from $0.848 million in the same period to approximately $0.929 million, a year-on-year growth of 9.5%. Upon closer examination, the company's medical information technology solution services are the company's undisputed "cornerstone." In the fiscal years ending in 2024 and 2025, revenue generated from providing medical customized software solutions accounted for 60.2% and 64.3% of its total revenue, respectively. During this period, revenue from medical information technology solutions significantly increased by $1.6948 million, with a year-on-year growth rate of as high as 38.4%, benefiting from the double-digit growth of this business and driving the overall revenue level up. Owing to the characteristics of the highly customized and long-term nature of medical IT projects with strong stickiness, the company typically has a project cycle of 1-3 years for a single HIS project, and maintenance service contracts can last from 2-10 years, with maintenance fees accounting for 10%-15% of the project total. By the fiscal year 2025, the revenue from maintenance services accounted for 26%, becoming an important component of revenue. However, in terms of profitability, the company's gross profit increased from $3.2696 million in 2024 to $4.0314 million in 2025, a growth rate of 23.3%. Nevertheless, the gross margin decreased from 44.6% in 2024 to 42.4% in 2025, a drop of approximately 2.2 percentage points. Meanwhile, the company's operating costs increased from approximately $4.0589 million in the fiscal year 2024 to $5.4733 million in the fiscal year 2025, a year-on-year increase of approximately 34.9%, accounting for 57.58% of revenue, with sub-contracting costs and hardware purchases being the major expenses. It is evident that during the expansion phase, the company's profitability is eroded by rising costs and operating expenses. Even with the long-term "blood-making" capability of project maintenance, the company still faces certain financial pressures. Regarding the company's cash flow, operating cash flow has been negative for two consecutive years, amounting to -$1.4238 million in 2025, indicating that the core business has yet to generate positive cash flow. As of March 31, 2025, the company's cash balance is only approximately $0.2135 million. To sustain operations, Ultra High Point has had to rely on external funding. As of March 31, 2025, the company's bank and other borrowings amounted to $4.7872 million, a significant increase from $2.1438 million in the same period the previous year, to support operations and expansion. This has led to a sharp increase in interest expenses, with the financial leverage at a relatively high level. This also means that the company's ability to withstand risks is weak. If the financing environment tightens in the future, or if repayments fall short of expectations, the company may face liquidity problems, which may also be a significant factor driving the company to seek financing in the US. Three customers contribute ninety percent of revenue, facing a "high dependence" challenge In fact, Ultra High Point's "hidden concerns" are also directly related to industry competition. While the recent trend of combining healthcare with technology has brought opportunities for its development, many technology giants and startups have accelerated their entry into the field, intensifying market competition. In order to stand out in a fiercely competitive market, it is necessary to accumulate core competitiveness in dimensions such as artificial intelligence, data analysis, and diagnosis and treatment experience. Therefore, the company plans to use forty percent of the funds raised for technological upgrades, with the goal of launching a machine learning-based medical record analysis module by 2026 to improve hospital diagnostic efficiency. However, there remains uncertainty regarding the return on research and development investment. In the increasingly fierce competition in the medical IT industry, whether massive investment can support technological iteration and innovation, and whether it can be transformed into actual market competitiveness, remains unclear. Additionally, the company's business is highly concentrated in the Hong Kong market, facing external risks such as industry policy changes, technological updates, and competition from new entrants. If Ultra High Point fails to make breakthroughs in these areas, its overall situation may be difficult to effectively resolve. Apart from intense market competition, Ultra High Point also faces other potential operational challenges, such as a high level of customer concentration. The company heavily relies on a single group of clients, which may bring operational risks. The prospectus explicitly discloses that in the fiscal year ending on March 31, 2025, the top three customers contributed 90.8% of the total revenue, namely CUHK Medical Centre Limited, The Chinese Medicine Hospital of Hong Kong, and Hong Kong Adventist Hospital. This high dependence on clients structure implies that the company's performance is almost entirely tied to a few institutions. Of concern is that these core clients operate on a project basis with no obligation to renew, meaning they have not committed to providing new business or maintaining current cooperation levels and terms. Should any of these clients terminate cooperation for reasons such as budget cutbacks or changing suppliers, Ultra High Point may struggle to quickly find alternative clients to fill the revenue gap, facing a direct impact on performance. Overall, Ultra High Point has accumulated mature technology solutions, a stable customer base, and steady growth in the medical IT field in Hong Kong over the years, positioning itself as having some development potential in the field of medical information technology. This NASDAQ listing may bring it financial support to assist in technological upgrades and business expansion. However, the realities of customer concentration, financial constraints, financial leverage, among other issues, are important factors to consider on the company's path to sustainable development. Whether its future development can balance opportunities and challenges remains to be seen, and attention should also be paid to the efficiency of fund utilization post-listing, the promotion of diversified business, and the implementation of risk response measures. For investors, while recognizing the industry prospects, they should also be wary of the investment uncertainties arising from multiple risks stacking up.