KANGHUA HEALTH (03689) intends to sell the remaining 45% equity of Kangxin Hospital for a total of 1420.1 million yuan.

KANGHUA HEALTH (03689) announced that on March 23, 2026, the company (as the seller) entered into a share transfer agreement with the buyer, Beijing Fazheng Industry Group Co., Ltd., for the sale of the remaining 45% equity interest in Kangxin Hospital, with an estimated price of RMB 1420.1 million. Due to the continued underperformance of Kangxin Hospital and the increasingly fierce competition in the medical market in the Chongqing region, the Board of Directors carefully considered that it is not the best solution for the long-term development of Kangxin Hospital to rely solely on existing shareholders for funding. It is also not in the best interest of the company and its shareholders as a whole. In order to optimize the internal resource allocation of the group and ensure its long-term sustainable development, the company has decided to introduce investors into Kangxin Hospital and exit its investment through the sale. The Board of Directors believes that the sale is in the best interest of the company and its shareholders as a whole. The sale will allow the group to exit from a continuous loss-making investment, recover funds for the core business operations of the group and general operating funds, and optimize the overall resource allocation of the group, enabling the Board of Directors and management to focus on improving the operational efficiency and long-term value of the group's core medical business. When evaluating the fairness and reasonableness of the price, the Board has considered (including) (i) in previous sale transactions, the price was determined based on approximately 1.5 times the revenue of Kangxin Hospital for the year ended December 31, 2021; (ii) since the previous sale transactions, the financial and operational performance of Kangxin Hospital has continued to fall short of expectations; and (iii) considering the increasingly fierce competition in the medical market in the Chongqing region, management expects that the financial performance of Kangxin Hospital will not significantly improve in the short to medium term. After considering these factors, the Board believes that a valuation based on approximately 1.0 times the revenue of Kangxin Hospital for the year ended December 31, 2025, is fair and reasonable, and in line with the overall interests of the company and its shareholders.