Breaking Down Zhongchao Inc. (ZCMD) Financial Health: Key Insights for Investors

You're looking at Zhongchao Inc. (ZCMD) and wondering if the recent volatility signals a deep-value play or a siren song, and honestly, the latest numbers paint a tough picture. The direct takeaway is that the company is struggling with its core business, having reported a sharp decline in its first half of 2025 total revenues to just $5.6 million, a significant drop from the prior year. This revenue slump translated directly into a net loss of $862,319 for the first six months of 2025, a stark reversal from the small profit they saw before. Here's the quick math: the trailing twelve months (LTM) revenue is down -24.64% to $13.12 million, and that kind of revenue destruction is a serious headwind, especially with the stock trading around $0.590 as of late November 2025. Still, with a market capitalization of only $27.78 million, some investors might defintely see a high-risk, high-reward turnaround opportunity, but you need to understand the negative cash flow (the money moving out of the business) and the bearish technical signals before making a move.

Revenue Analysis

You need to know the bottom line on Zhongchao Inc. (ZCMD)'s revenue trajectory, and the near-term picture is tough: the company is facing a significant contraction, with its Trailing Twelve Months (TTM) revenue falling by over a quarter, landing at $13.12 million as of late 2025. This downward trend is a critical signal for any investor or strategist looking at the China-based healthcare technology sector.

The unaudited interim financial statements for the first half of 2025 (H1 2025) show total revenues of just $5.6 million. This represents a sharp year-over-year drop, with one source indicating a decrease of -46.02% for the half-year period ending June 30, 2025. Honestly, a drop that steep in a six-month window demands a hard look at the business model's immediate viability.

Here's the quick math on the recent performance, comparing the first half of 2025 to the same period in 2024:

What this estimate hides is the breakdown, but we know the pain is spread out. Zhongchao Inc.'s revenue streams primarily come from two areas: medical-related services and product sales, and both segments have faced challenges, contributing to the overall decline. The company focuses on providing healthcare information, education, and training services to professionals-specifically under its MDMOOC brand-plus patient management services to pharmaceutical enterprises and non-profit customers.

The vast majority of the company's revenue-virtually all of it-is generated in the China region. For investors, this concentration means that regulatory shifts or economic slowdowns in China have an outsized impact on the top line. The significant change we're seeing is the sharp deceleration in sales, with the TTM revenue growth rate sitting at a concerning -24.64% year-over-year. To be fair, maintaining growth in a specialized, highly-regulated market like China's healthcare IT requires constant innovation and strategic alignment. If you want to understand the long-term vision they are working toward, you should review their Mission Statement, Vision, & Core Values of Zhongchao Inc. (ZCMD).

The primary revenue sources are:

• Selling medical-related products.
• Providing healthcare information, education, and training services to professionals.
• Offering patient management services to pharmaceutical clients and non-profits.

The simple fact is that revenue is shrinking, and that's the biggest risk right now. The drop from $15.86 million in total annual revenue for 2024 is a clear sign that the business is struggling to find stable footing in its core offerings. This negative growth trajectory is the single most important factor to consider when evaluating Zhongchao Inc.'s financial health.

Profitability Metrics

You need a clear picture of Zhongchao Inc. (ZCMD)'s ability to turn revenue into profit, and honestly, the near-term numbers show significant pressure. The latest data, which includes the trailing twelve months (TTM) up to late 2025, points to a company struggling to manage costs beyond the gross profit line, resulting in net losses.

For the first half of the 2025 fiscal year (H1 2025), Zhongchao Inc. reported a decline in total revenues to $5.6 million from the previous year, and critically, posted a net loss of $862,319. This is a clear reversal from the net income reported in the first half of 2024. Here's the quick math on the TTM margins, which smooth out quarterly noise but still paint a tough picture:

• Gross Profit Margin: The TTM margin is 52.49%.
• Operating Profit Margin: The TTM margin is a negative -8.91%.
• Net Profit Margin: The TTM margin is a negative -12.95%.

A positive Gross Margin is good, but the negative Operating and Net Margins mean the company is defintely losing money once you factor in overhead and other expenses. That's the core issue right now.

Operational Efficiency and Cost Management

The Gross Profit Margin of 52.49% suggests Zhongchao Inc. maintains a decent handle on its Cost of Revenue (CoR), which covers the direct costs of providing its medical-related services and products. But, the real problem is what happens next. The gap between the Gross Margin and the Operating Margin shows a significant drag from operating expenses, specifically Selling, General, and Administrative (SG&A) costs.

In the last twelve months, the company's Gross Profit was about $6.88 million, but Operating Income (or loss, in this case) was -$1.17 million. This massive drop indicates that operational efficiency is a major concern. The company is spending far more on running the business-salaries, marketing, rent-than it is bringing in after CoR. To understand the strategic direction they are taking to address this, you should look at the Mission Statement, Vision, & Core Values of Zhongchao Inc. (ZCMD).

Profitability Trends and Industry Comparison

Looking at the trend, Zhongchao Inc.'s profitability has been highly volatile over the past few years, moving from strong positive net margins to deep losses. For instance, the Net Profit Margin was a healthy 24.78% in 2020, but it fell to -4.05% in 2024, and is now at -12.95% (TTM). This volatility alone raises a red flag about the stability of its business model.

When we compare the TTM ratios against the industry averages for the healthcare sector, the operational struggles become even clearer. The table below shows the stark difference, mapping near-term risks to clear actions.

The industry average Net Profit Margin is also negative at -5.09%, but Zhongchao Inc.'s -12.95% is nearly two-and-a-half times worse. This tells you that while the sector faces headwinds, ZCMD's internal cost structure is amplifying the losses. The immediate action for management has to be a surgical review of all non-CoR expenditures to get that Operating Margin back to zero. You can't sustain a business model where Operating Income is a loss of $1.17 million on $13.12 million in revenue.

Debt vs. Equity Structure

You're looking at Zhongchao Inc.'s (ZCMD) balance sheet to gauge risk, and the headline is simple: the company is defintely not a debt-driven story. As of mid-2025, Zhongchao Inc. has virtually $0.0 in total debt, making its debt-to-equity (D/E) ratio a clean 0%.

This zero-debt position means the company is almost entirely financed by shareholder equity, which stood at a robust $23.748 million as of June 29, 2025. That's a fundamentally low-risk capital structure, especially when you compare it to the US Educational Services industry average D/E ratio, which sits closer to 0.87 for 2024.

• Zhongchao Inc. D/E Ratio: 0.00
• Industry Average D/E Ratio: 0.87
• Low debt means lower interest payments and less risk in a rising rate environment.

Here's the quick math: A D/E ratio of 0% means that for every dollar of equity, there is zero debt, which is a massive safety cushion. The only liabilities on the balance sheet are operational, like the $2.3 million in short-term liabilities and a minimal $214.1K in long-term liabilities, not traditional interest-bearing debt.

Since Zhongchao Inc. carries no significant debt, you won't see any recent credit ratings, debt issuances, or refinancing activity. Their growth strategy is clearly centered on equity funding, which is a common path for younger, high-growth technology or service companies. This reliance on equity is evident in the share count, which increased by a staggering 532.73% in the year leading up to November 2025, indicating significant share issuance to raise capital.

What this estimate hides is the dilution risk. While a debt-free balance sheet is great for solvency, funding growth through massive share issuance means your piece of the profit pie gets smaller. Investors need to weigh the financial stability of a 0% D/E ratio against the dilution of their ownership stake. For a deeper look at their long-term strategy, you should check out the Mission Statement, Vision, & Core Values of Zhongchao Inc. (ZCMD).

The bottom line is that Zhongchao Inc. has a fortress balance sheet from a leverage perspective. Your focus should shift entirely to their profitability and cash flow generation, as they are not using financial leverage (borrowing) to boost their return on equity (ROE).

Liquidity and Solvency

You're looking at Zhongchao Inc. (ZCMD) and wondering if they can cover their near-term bills. That's the right place to start, because a company can be profitable on paper but still go bankrupt if it runs out of cash. The short answer is that their liquidity position is defintely strong, but the underlying cash flow trends show a reliance on external funding.

As of the latest twelve-month period (LTM) data in late 2025, Zhongchao Inc. boasts a Current Ratio of 8.15 and a Quick Ratio of 7.89. These are massive numbers. The Current Ratio (current assets divided by current liabilities) tells you the company has $8.15 in short-term assets for every $1.00 in short-term debt. A ratio above 1.5x is usually considered healthy, so this is exceptional. The Quick Ratio, which strips out less liquid assets like inventory (if any), is almost identical, confirming their assets are highly liquid.

• Current Ratio: 8.15x (Exceptional liquidity)
• Quick Ratio: 7.89x (Confirms high asset liquidity)
• Working Capital: Very strong, but declining from 2024.

Here's the quick math on their working capital trends: While the ratios are high, they have actually declined from the annual figure of 12.22x at the end of 2024. This means the cushion is getting smaller, even if it remains huge. This shift is worth tracking, especially when you look at the cash flow statement, which is the true measure of a company's financial momentum.

The cash flow statement overview for the LTM period in 2025 reveals the real story. The company is not generating cash from its core business operations. Net Cash from Operating Activities was a negative $461,960 for the LTM period. Plus, they spent $949,844 on capital expenditures (CapEx) for Investing Activities, leading to a negative Free Cash Flow of approximately $1.41 million.

This negative operating cash flow, combined with investment spending, means the company must find cash elsewhere. This is where the Financing Cash Flow comes in. The latest quarter did show a net change in cash of $1.07 million, which is a positive sign for the short-term cash balance. However, the overall trend points to a reliance on raising money, often through issuing new shares, a trend seen in their 2024 financing activities. This is a potential liquidity concern down the road if they can't flip that operating cash flow to a positive number.

The high liquidity ratios give them a massive safety net now, but the negative operating cash flow is the near-term risk. You can dive deeper into the full picture in Breaking Down Zhongchao Inc. (ZCMD) Financial Health: Key Insights for Investors.

For a clear picture of the cash movements, here is the LTM data for Zhongchao Inc. (ZCMD):

The takeaway is simple: Zhongchao Inc. has excellent current liquidity, but its core business is burning cash. The solvency picture is strong, with a low Total Debt-to-Equity Ratio of just 0.12% in the latest quarter, meaning almost no debt on the books. Still, a business that consistently burns cash from operations is not sustainable without repeated capital raises.

Valuation Analysis

You're looking at Zhongchao Inc. (ZCMD) and asking the right question: Is this stock a deep-value play or a classic value trap? The direct takeaway is that Zhongchao Inc. is currently trading at a significant discount to its book value, but its negative profitability makes a simple 'undervalued' label misleading. It's a high-risk, high-reward situation.

As of November 2025, the stock price sits at about $0.59 per share, which is near its 52-week low of $0.57. The price action has been brutal, with the stock declining by over 46% in the last 52 weeks and trading far below its 52-week high of $2.50. That's a massive drop, and it tells you the market has serious concerns about its near-term prospects.

Is Zhongchao Inc. (ZCMD) Overvalued or Undervalued?

When assessing ZCMD, traditional valuation metrics (valuation multiples) give us a mixed, but clear, picture of a company in a turnaround or distress scenario. Here's the quick math on the key ratios, using the latest available TTM (Trailing Twelve Months) data:

• Price-to-Book (P/B) Ratio: At just 0.83, this is the most compelling figure. A P/B below 1.0 means the stock is trading for less than the value of its net assets (Book Value), suggesting it is potentially undervalued on an asset basis.
• Price-to-Earnings (P/E) Ratio: The P/E ratio is reported as -3.04. This negative number simply confirms that the company is currently unprofitable, with a TTM Earnings Per Share (EPS) of -$0.10. It's not a useful tool for valuation right now.
• Enterprise Value-to-EBITDA (EV/EBITDA): This ratio is currently listed as 'n/a'. This is common for companies with negative EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), meaning the company isn't generating positive operating cash flow before non-cash charges. The Enterprise Value (EV) is relatively small at $1.80 million, compared to a Market Cap of $16.81 million.

The low P/B ratio suggests a potential asset-based floor, but the negative P/E and 'n/a' EV/EBITDA scream 'profitability problem.' You're buying assets cheap, but those assets aren't generating a return yet.

Stock Trend and Analyst View

The stock trend over the last 12 months shows a clear downtrend, dropping from a high of $2.50 to the current range of $0.59. The price has declined in 8 of the last 10 days leading up to late November 2025, with a total change of -15.19% in that short period. This recent movement is a strong bearish signal, and the mid-term moving averages are also pointing to a strong bearish trend.

On the analyst front, there is no formal consensus rating (Buy, Hold, or Sell) because Zhongchao Inc. lacks sufficient analyst coverage. To be fair, this is common for micro-cap stocks. What you do see is a technical divergence: some models suggest a near-term 'Strong Buy' based on a recent pivot bottom, while others label it a 'Sell candidate' due to the falling trend and moving average signals. This lack of consensus means you need to be your own defintely own analyst.

One less complex factor: Zhongchao Inc. does not pay a dividend, meaning its dividend yield and payout ratio are both 0.00%. This is standard for a growth-focused or unprofitable company, so don't expect income here.

If you want to dig deeper into who is actually holding the bag on this volatile stock, you should check out Exploring Zhongchao Inc. (ZCMD) Investor Profile: Who's Buying and Why?

Risk Factors

You need to look past the occasional stock price spike-like the one in June 2025-and focus on the underlying financial realities for Zhongchao Inc. (ZCMD). The direct takeaway is that operational and financial struggles, particularly a sharp increase in cash burn alongside declining revenue, pose a significant near-term threat to the company's stability.

The most immediate internal risk is the company's deteriorating operational performance in the first half of the 2025 fiscal year (H1 2025). Total revenues declined to just $5.6 million in H1 2025, down from $8.3 million in the same period of 2024. This drop reflects serious challenges in both their service and product revenue streams. Honestly, revenue heading backwards is a tough look.

This decline pushed the company into a net loss of $862,319 for H1 2025, a sharp reversal from the net income of $182,933 reported the previous year. The medium-term trajectory is worrying, as operating revenue was down a staggering 18% over the last year, which is a major red flag for any investor.

Financial and Capital Structure Risks

The financial risks for Zhongchao Inc. (ZCMD) center on cash flow and capital raising. The company's cash burn situation is a primary concern. Here's the quick math: Zhongchao's cash burn-its annual negative free cash flow-increased by a stunning 475% over the last year, totaling $4.5 million. This rapid acceleration of spending while revenue is shrinking makes the business model defintely unsustainable without a major change.

While the company was debt-free and had about $13 million in cash as of December 2024, giving it a cash runway of roughly 2.9 years, that runway shortens quickly if the 475% cash burn increase continues. Plus, the company has already signaled a risk of shareholder dilution, completing a Follow-on Equity Offering of $0.9282 million in October 2024 to raise capital.

• Cash Burn: Increased 475% year-over-year.
• Net Loss: $862,319 in H1 2025.
• Dilution Risk: Recent $0.9282 million equity offering.

External and Strategic Headwinds

Zhongchao Inc. (ZCMD) is a Cayman Islands exempted company headquartered in Shanghai, China, operating in the healthcare sector. This geographic and industry focus exposes it to significant regulatory and geopolitical risks within the Chinese market, which can be unpredictable. Furthermore, as a penny stock with a low float of 1.29 million units, the shares are highly susceptible to volatility from speculative trading, making the stock price less reflective of its true business value.

Valuation metrics also look unfavorable. Despite the declining revenue, the stock traded at a Price-to-Sales (P/S) ratio of 2.3x in June 2025, which is significantly higher than the industry average of below 1.6x for many US Consumer Services companies. This suggests the market is pricing in a massive turnaround that the current financials don't support. The technical analysis also indicates a bearish trend.

Mitigation Strategies and Next Steps

The company's primary mitigation strategy appears to be a continued focus on service innovation, such as its Patient-Reported Outcome (PRO)-based symptom management model for lung cancer patients, and pursuing strategic partnerships in digital health solutions to unlock new revenue streams. These are good strategic moves, but they haven't offset the financial losses yet.

What this estimate hides is the execution risk: these initiatives need to generate substantial revenue very quickly to outpace the current cash burn rate. For a deeper dive, you should review the full analysis on Breaking Down Zhongchao Inc. (ZCMD) Financial Health: Key Insights for Investors.

Action: Finance: Model the cash runway based on the H1 2025 revenue and the 475% increased cash burn rate to determine the true time to next capital raise by the end of the month.

Growth Opportunities

You're looking at Zhongchao Inc. (ZCMD) and seeing a mixed signal: recent stock surges but a clear revenue slide. The growth story here isn't about current financials; it's defintely about the strategic pivot toward high-margin digital health solutions and underserved patient markets, which is what investors are betting on for a turnaround.

The market's optimism, which saw the stock trend up by 16.35% in a single day in June 2025, is primarily driven by news of a strategic partnership in the digital health space and multiple lucrative contracts in niche markets. This signals a shift from traditional models to a more scalable, technology-backed approach.

Key Growth Drivers: Digital Health and Niche Markets

Zhongchao Inc.'s future prospects hinge on its ability to monetize its specialized patient management platforms. The company has a competitive advantage in its focus on chronic and major diseases like cancer and Systemic Lupus Erythematosus (SLE), where patient education and long-term management are critical. They are not chasing the crowded primary care market.

Their product innovations center on comprehensive disease management models, which are sticky and create a higher barrier to entry for competitors. This includes:

• Securing lucrative contracts in underserved markets.
• Forming a strategic partnership in digital health solutions.
• Using a Patient-Reported Outcome (PRO)-based model for Lung Cancer patients.
• Providing Medication Assistance Services, having served over 7,000 SLE patients with approximately 130,000 units of medications.

The company is trying to build a moat-a sustainable competitive advantage-by integrating patient services, education, and pharmaceutical access, all supported by their Health Education Intelligent Content Production Platform.

Near-Term Financial Reality and Projections

To be fair, the near-term financials show significant headwinds. For the first half of 2025, Zhongchao Inc. reported revenue of only $5.60 million, a sharp decrease of -46.02% from the prior half-year. The trailing twelve months (LTM) revenue as of mid-2025 was $13.12 million, down -24.64% year-over-year.

Here's the quick math on the cash situation: as of December 2024, the company held $13 million in cash and was debt-free, which is great. But their annual cash burn was $4.5 million. This gives them a cash runway of about 2.9 years to execute their turnaround strategy before needing to raise capital. They need to start converting those strategic contracts into revenue fast.

What this estimate hides is the lack of formal analyst forecasts. We currently don't have consensus revenue growth projections or earnings estimates for 2025 or 2026 because the company has insufficient analyst coverage.

Investor Sentiment and Action

The stock's Price-to-Sales (P/S) ratio of 2.3x (as of June 2025) is higher than nearly half the companies in the U.S. Consumer Services industry, which is concerning given the declining revenue. This elevated P/S tells you that investors are looking past the current losses and are pricing in significant future growth from those new digital health initiatives. They're betting on the potential of the strategic pivot.

If you want a deeper dive into the company's balance sheet and cash flow, you should check out the full analysis: Breaking Down Zhongchao Inc. (ZCMD) Financial Health: Key Insights for Investors.

Finance: Track the next quarterly report for a clear breakdown of revenue contribution from the new digital health partnership.