Executive Summary / Key Takeaways

• Haoxi Health Technology Limited (HAO) is carving out a specialized niche in China's competitive online marketing landscape, focusing on tailored short video and, more recently, customized livestreaming solutions for the healthcare industry, particularly medical aesthetics.
• The company has demonstrated robust revenue and net income growth, with annual revenue reaching $48.52 million in 2024, reflecting strong demand for its specialized services.
• Despite revenue growth, HAO faces significant profitability and cash flow challenges, evidenced by TTM gross and net profit margins of 4.14% and 0.61% respectively, and negative operating and free cash flow.
• HAO's strategic pivot into customized livestreaming agency services for medical aesthetics clients, announced in April 2025, represents a key growth driver and technological differentiator, aiming to enhance consumer engagement and market positioning.
• Investors should closely monitor HAO's ability to convert revenue growth into sustainable profitability and positive cash flow, manage high supplier and customer concentration risks, and effectively compete against larger, more diversified technology giants in the PRC.

A Specialized Approach in China's Digital Marketing Arena

Haoxi Health Technology Limited, established in 2018 and headquartered in Chaoyang, China, operates as a dedicated online marketing solutions provider. The company's core business revolves around delivering customer-tailored internet marketing services, with a distinct focus on the burgeoning healthcare industry within China. HAO's comprehensive offerings encompass traffic acquisition from leading online media platforms, sophisticated content production, data analysis, and meticulous advertising campaign optimization. These services are strategically deployed across mainstream online short video and social media platforms, including prominent names like Toutiao, Douyin, WeChat, and Sina Weibo .

The company's overarching strategy is to provide "one-stop online marketing solutions" that address the specific needs of its advertiser client base, predominantly within the healthcare sector. This specialization allows HAO to develop deep expertise and offer highly relevant solutions, differentiating it from broader market players. The revenue model primarily operates on a Cost-Per-Click (CPC) basis, where the company recognizes revenue when a specific user action, such as a click-through, is performed. A smaller segment of clients, particularly those focused on brand promotion, utilize a Cost-Per-Time (CPT) model, with revenue recognized over the contract period based on advertisement display duration.

Technological Edge and Strategic Evolution

HAO's foundational strength lies in its application of data analysis technology to deliver highly effective and customized marketing solutions. While specific quantifiable performance metrics for this technology are not publicly detailed, its tangible benefits are evident in the company's ability to offer "customer-tailored internet marketing services" and "advertising campaign optimization." This integrated approach, combining traffic acquisition, content creation, and data-driven optimization, aims to enhance consumer engagement and conversion rates for its healthcare clients. Such precision targeting and campaign refinement are critical in a competitive digital landscape, potentially fostering stronger customer loyalty and recurring revenue within its niche.

A significant strategic and technological evolution for HAO occurred on April 21, 2025, when its wholly-owned subsidiary, Beijing Haoxi Digital Technology Co., Ltd., launched a customized livestreaming agency strategy. This initiative involves progressing partnership discussions for personalized livestreaming agency services with several long-term clients in the medical aesthetics sector. This move signals HAO's adaptability to evolving digital marketing trends and a deeper specialization within the high-growth medical aesthetics segment. Livestreaming offers a dynamic and interactive medium for advertising, and HAO's focus on personalized services within this channel could provide a distinct competitive advantage by delivering more immersive and effective campaigns, thereby strengthening its market positioning and potentially driving higher average selling prices for its services.

Financial Performance: Growth Amidst Cash Flow Headwinds

Haoxi Health Technology has demonstrated impressive top-line growth, with annual revenue surging from $16.16 million in 2022 to $28.23 million in 2023, and further to $48.52 million in 2024. This consistent increase underscores the growing demand for its online marketing solutions within the Chinese healthcare sector. Net income has also shown a positive trend, rising from $244,587 in 2022 to $969,752 in 2023, and reaching $1.29 million in 2024.

However, a closer look at the company's profitability margins reveals a more challenging picture. HAO's TTM gross profit margin stands at 4.14%, with an operating profit margin of 2.90% and a net profit margin of 0.61%. These figures are notably lower when compared to larger industry players. For instance, Tencent Holdings reported a gross profit margin of 53% and a net profit margin of 29% in 2024. This disparity highlights HAO's smaller scale and potentially higher operational costs relative to its revenue.

The company's cash flow generation presents a significant concern for investors. HAO reported negative annual operating cash flow of -$747,576 in 2024, with TTM operating cash flow further deteriorating to -$2.25 million and TTM free cash flow at -$2.26 million. This indicates that the company is not generating sufficient cash from its core operations to fund its activities.

The increase in cash and cash equivalents to $6.66 million in 2024 from $1.20 million in 2023 was primarily driven by financing activities, including the issuance of $8.98 million in capital stock in 2024. While the company maintains a strong current ratio of 6.02 and a quick ratio of 6.02, suggesting robust short-term liquidity, its reliance on external financing to cover operational shortfalls is a critical factor to monitor. The debt-to-equity ratio remains low at 0.07, indicating a conservative approach to leverage.

Competitive Arena: Niche Player Among Giants

HAO operates within a fiercely competitive digital advertising market in China, dominated by technology behemoths like Tencent Holdings (TCEHY), Alibaba Group (BABA), and Baidu (BIDU). These industry leaders possess vast ecosystems, extensive user bases, and substantial financial resources, enabling them to achieve significant economies of scale and invest heavily in research and development.

Compared to Tencent, HAO's specialized focus on healthcare and short video/livestreaming solutions offers a more targeted approach, potentially leading to higher engagement and conversion rates within its niche. However, Tencent's sheer scale, integrated social media platforms, and diversified revenue streams result in significantly lower operating costs and superior financial health, as evidenced by its much higher gross and net profit margins. HAO's strength lies in its niche innovation speed for healthcare ad formats, but it lags in overall market reach and cash flow generation.

Against Alibaba, HAO's emphasis on dynamic, engaging short video content for consumer acquisition contrasts with Alibaba's e-commerce-driven advertising, which prioritizes transaction-focused ads. While HAO's customized ad production could yield better conversion rates in healthcare, Alibaba benefits from vast data resources for personalization and a broader operational scale. HAO's profitability and cash flow metrics appear weaker than Alibaba's, which benefits from greater efficiency across its diversified operations.

Similarly, when compared to Baidu, HAO's short video marketing solutions offer more visually engaging content than Baidu's search-based, keyword-targeted ads. HAO's niche customization could foster stronger advertiser loyalty in healthcare. However, Baidu's advanced AI capabilities for ad optimization and its established search ecosystem provide a technological and operational breadth that HAO currently lacks. Baidu generally demonstrates stronger cash flow and profitability due to its robust infrastructure.

HAO's competitive advantages primarily stem from its specialized focus on short video marketing and customized ad solutions for the healthcare industry, coupled with its established relationships with platforms like Douyin and Weibo (WB). Its proprietary ad optimization technology aims to enhance consumer engagement, potentially leading to stronger customer loyalty and improved pricing power in its niche markets. However, HAO's smaller scale and potential dependencies on specific platforms represent competitive disadvantages, making it vulnerable to platform changes and limiting its operational flexibility. The company also faces significant supplier concentration risk, with Supplier L accounting for approximately 99% of total purchases for the six months ended December 31, 2024, and 100% for fiscal year 2024. Additionally, customer concentration, with four customers accounting for a substantial portion of trade receivables as of December 31, 2024, poses a credit risk.

Outlook and Risks: Balancing Opportunity with Uncertainty

The launch of HAO's customized livestreaming agency strategy for medical aesthetics clients in April 2025 signals a clear forward-looking initiative, positioning the company to capitalize on the growing trend of interactive digital marketing within a high-value sector. This strategic pivot, combined with its existing data analysis technology, could enhance HAO's ability to deliver highly effective and personalized campaigns, potentially driving future revenue growth and strengthening its market position in this specialized segment.

However, HAO operates under several significant risks. Its entire operations are concentrated in the PRC, making its business susceptible to changes in the country's political, economic, and legal environment, including governmental policies on laws, regulations, anti-inflationary measures, currency conversion, and taxation. The RMB is not freely convertible, and significant revaluation could materially affect HAO's financial condition in US dollar reporting terms. Furthermore, cash balances in mainland China bank accounts are not insured by the FDIC, and while China's deposit insurance offers some protection, HAO's aggregate deposits exceed the RMB 500,000 compensation limit per bank. While management believes the risk of Chinese bank failure is remote, this remains an inherent risk. The high concentration of a single supplier and several key customers also exposes HAO to operational and credit risks. The company is also evaluating the impact of new accounting standards (ASU 2023-7, 2023-9, 2024-3), which could affect future financial disclosures.

Conclusion

Haoxi Health Technology Limited presents a compelling, albeit high-risk, investment thesis centered on its specialized expertise in online marketing for China's healthcare industry. The company's strategic focus on tailored short video and, more recently, customized livestreaming solutions for medical aesthetics clients, leveraging its data analysis technology, positions it for continued growth within a lucrative niche. This specialization is a critical differentiator against the scale and diversified offerings of larger competitors like Tencent, Alibaba, and Baidu.

While HAO has demonstrated strong revenue and net income expansion, its low profitability margins and persistent negative operating and free cash flow highlight significant financial hurdles. The company's reliance on capital raises to fund operations underscores the need for improved operational efficiency and a clear path to sustainable profitability. Investors considering HAO should weigh the promising strategic initiatives, particularly in livestreaming, against the inherent risks associated with its concentrated operations in the PRC, currency fluctuations, bank deposit exposure, and high supplier and customer concentration. HAO's ability to translate its niche technological leadership and strategic adaptability into robust and sustainable financial performance will be the ultimate determinant of its long-term investment viability.