Image courtesy of Visual China.
On December 21, Wei Ning Niankang held the third extraordinary general meeting of shareholders and deliberated and approved the "Proposal on Adjusting the Stock Claims of Key Technology to Convertible Debt Investment and Related Party Transactions" (hereinafter referred to as the "Proposal") of the first instance.
At the second extraordinary general meeting of shareholders on November 16, the "proposal" was still stuck in the deliberation stage, and the other three deliberation items in the same batch were cleared with a high proportion of more than 99% of the votes, and the above-mentioned "proposal" only received a rare vote of less than 44%.
At present, after more than a month of "communication with some shareholders who voted against it", the "Proposal" was finally passed, which also marks the phased implementation of the restructuring and merger of the innovative business sector launched by Weining Health in the past six months. The innovative business is the Internet medical and health sector, including three parts: "cloud medicine", "cloud medicine" and "cloud insurance", and the corresponding three business companies are key technology, Nali health and Weining technology.
Since the start of the transformation of the big health industry in 2015, Weining Health has formed a "two-wheel drive" pattern of tradition and innovation, of which the new round has been developed for 8 years, but the results are not satisfactory. From June last year to this year, Weining Health has carried out a large-scale restructuring of its innovative business, which is manifested in the form of equity optimization for the three major innovative business companies. Among them, the "cloud medicine" business, which accounts for the largest proportion, is the most difficult part of the restructuring and promotion, and it has staged several dramatic turns and turbulences until the No. 21 "Bill" was reconsidered and passed, and now it has come to a preliminary end.
According to the research of the company, there is a complex design behind this reorganization, and related games have also surfaced in the process of review, opposition and reconsideration again and again.
Even after the so-called "communication", the dispute can be resolved in stages at the latest extraordinary shareholders' meeting, but it is difficult to achieve the loss-making "Yunyao" business through restructuring. The previous calculations were thus reduced to partial miscalculations.
As for the market, it is necessary to continue to carefully observe its operational risks, changes in performance growth and far-reaching impact on stock prices after the completion of the restructuring.
From the perspective of revenue scale, in the Internet medical and health business segment of Weining Health, "cloud medicine" is the highest, and in this drastic equity optimization action, "cloud medicine" has twists and turns, and "cloud medicine" and "cloud insurance" have been smoothly promoted. In April 2023, Weining Technology introduced part of the strategic investment through equity transfer and capital increase and share expansion, and implemented equity incentives, and after the transaction was completed, the equity held by the listed company increased from 3682% down to 2804%。
In May 2023, Nari shares (the main body is the original Nari Health) will implement equity incentives through capital increase and share expansion, and after the implementation is completed, the total shareholding of the listed company in Nari shares will increase from 6937% down to 5549%。
When it came to Keykey Technology, Weining Health's disposal plan has been changed several times. In June 2022, Weining Health increased its stake from 4570% diluted to 3822%, which provided financial support at the beginning of this year, and finally found a "new owner" for merger and reorganization in the first half of the year, and had to increase its holdings twice out of pocket. Up to now, Weining Health's shareholding ratio in Key Technology is 4217%。
Titanium ** app mapping, data **: company announcement.
The main reason for the equity optimization of the three major business companies is that the losses of the Internet medical and health sector have intensified, which has continuously eroded the profits of listed companies.
Looking back on the past, the Internet medical industry is hot, and Weining Health has also taken advantage of the wind. In June 2015, its share price hit an all-time high of 2875 yuan, in July 2020, its share price rose to the second highest of 2731 yuan. Coincidentally, both of them are not unrelated to the company's development of the Internet medical and health industry - 8 years ago, it was a transformation to explore new outlets, and 3 years ago, it was the continuous improvement of Internet medical care during the epidemic. After the frenzy, the industry is now back to mediocrity.
Looking at Weining Health, the Internet medical and health business has also faded from Huafu, from the hero who supports imagination to the performance burden, among which the "cloud medicine" business, which has the largest revenue, has lost the most, and the company has accumulated a loss of 3 in the past 8 years6.5 billion yuan. Since then, the big cash-burning investors have embarked on a bumpy road of restructuring and merger.
Why can we only restructure and merge instead of selling in a package?Why are there frequent "stuck" in restructuring and mergers?The reason is also that the company itself is not of good quality, the innate foundation is not solid "patchwork", and the acquired operation is not appropriate to cut the layout.
At the beginning of the construction of the "cloud medicine" business, the layout was complete, and online health management and offline chain pharmacies all occupied places, but they all gave up halfway.
In 2018, Keykey Technology acquired Wuxi Xingzhou People's Pharmacy (which has been renamed as "Weining Key (Wuxi) Pharmaceutical Chain", hereinafter referred to as "Wuxi Chain"), which was established in 2007, with the intention of creating a platform for the overall linkage of "medicine" online and offline.
According to Tianyancha, the Wuxi chain once had 55 offline pharmacies, but in recent years, it has been intensively cancelled, and now only 10 remain. The 10 pharmacies once owned by the Wuxi chain's Guangdong Pharmacy were all cancelled in August and September 2022.
Today, in the offline pharmacy territory of Keykey Technology, there are only sporadic "remnants" of Wuxi chain, as well as Shanghai Jiuhetang Chinese medicine chain 75% equity.
At present, the Wuxi chain is controlled by Shanghai Dilin Biotechnology, a wholly-owned subsidiary of Keykey Technology. On the other side of the coin, Shanghai Dilin's former status was also extraordinary, carrying the ambition of Keykey Technology to bet on online business.
Since 2009, Shanghai Dilin has been operating "Ruyi Doctor", an application software focusing on oncologists to manage follow-up patients, including mobile clinics, doctor-patient communities, and surplus medicine donation platforms.
In July 2018, Keykey Technology took it into its pocket, and 5 years later, "Ruyi Doctor" disappeared. The titanium **app query "Weining Pharmaceutical Alliance" found that in June 2021, the Ruyi ** platform announced its closure.
Shanghai Dilin's financing process (picture from Tianyancha).
The stall was spread large, but it ended dismally, and Keykey Technology had to shrink its scale.
In its 2022 annual report, Weining Health said that Keykey Technology will focus on the business direction that has formed a closed loop and optimize the personnel and business structure. In the first half of 2023, Keykey Technology will continue to adjust its business and optimize its personnel. According to the latest fiscal year report, Keykey Technology's business is to provide digital solutions and Ringnex's "joint operation of medicine and health insurance" SaaS platform, connecting medical institutions, pharmaceutical companies, retail pharmacies, commercial insurance, and health management services.
Ringnex, a SaaS service platform, was released in 2020, mainly to open up the information tools of insurance institutions, chain pharmacies, health commissions and ** hospitals, and finally realize the direct payment of commercial insurance for insurance customers in pharmacies.
In addition, relying on Weining Health's IT service capabilities, Keykey Technology is also providing platform building services for public medical institutions, such as the special needs outpatient clinic of Shanghai Children's Hospital Luding Road Campus moved to a new home in 2021, and Keykey Technology has built an integrated operation platform for medicine and health insurance. The current card slot of Keykey Technology is to open up the commercial insurance payment channel for drug circulation, and the most important payer of its services is commercial insurance institutions, followed by chain pharmacies and hospitals. Keykey Technology has cooperated with the insurance company to launch the enterprise health network card, and the insurance company customers can directly pay by card at the online or offline pharmacies where the cooperation has been reached.
Tianyancha information shows that the key technology has invested in a total of 9 companies, and among the 5 existing ones, the "Qijian Network" owned by Beijing Renhe Guokang Technology Development ***, which is controlled by it, and the "Key Health" owned by the key technology are all commercial insurance direct payment service platforms.
So far, from "patchwork and organization" to business contraction, and then to focus only on insurance users, under the grand narrative and Internet medical, high-tech and other concepts, it constitutes the largest and most core part of Weining's health innovation business sector - "cloud medicine". However, fancy concepts can't hide the cold financial data, and Keytech's performance is getting worse every year.
After more than 8 years of establishment, Keykey Technology has not learned to "support itself", and it has become a performance burden for listed companies.
Titanium **APP checked the announcements and financial reports from 2015 to the present and found that Keykey Technology has been losing money year after year since its establishment, and recorded 1A huge loss of 6.6 billion yuan.
Titanium ** app mapping, data **: company announcements and financial reports.
Now that Keykey Technology has decided to focus on insurance institutions, behind the company's huge losses in 2022 is the lack of operation of related businesses.
In 2021, the number of insurance institutions cooperated with Keykey Technology increased from more than 50 to 60, but the number of medical institutions connected decreased from 200 last year to more than 100, and in 2021, Keykey Technology accessed more than 80,000 pharmacies, and in 2022, it will remain unchanged to more than 80,000.
The impact of the key technology on Weining Health's financial report is the most significant. At the end of November 2020, Weining Health began to move forward with a heavy burden, first reflected in the gross profit margin. In 2021, the overall gross profit margin of Weining Health decreased by 7% year-on-year73 percentage points to 4635%, in this regard, the company explained that it was caused by the low gross profit margin of the consolidated subsidiary's key technology business, and the gross profit margin after deducting the business was 5143%, with a small change. In contrast, Nari Health consolidated its listed company in July 2016, but the impact on the company's overall gross profit margin was not significant.
Titanium **app mapping, data**: wind
In the innovative business segment, Keykey Technology has the fastest development, and even if calculated by the equity method, its proportion of the sector's revenue should be ranked first.
Taking 2022 as an example, the revenue of the Internet medical and health sector will be 56.3 billion yuan, "cloud doctor" Nari Health income of 15.1 billion yuan, 45.8 billion yuan. Specifically, the revenue structure of Keykey Technology is dominated by the pharmaceutical business with low gross profit margin.
In May this year, a user on the Zhihu platform complained that Keykey Technology owed employees wages, and another anonymous user pointed out that "the company is looking for someone to take over, and it is said to be Universal".
On the 15th of the same month, after the A-share **, Weining Health issued the "Announcement on Capital Increase and Related Party Transaction to the Holding Subsidiary of Key Technology", and the so-called "receiver" surfaced - Weining Health, Key Technology and Beijing Global Medical and its shareholders (China Health Service Investment*** signed the "Memorandum of Merger between Weining Key Technology (Shanghai)** and Beijing Global Medical Rescue Co., Ltd." (hereinafter referred to as the "Memorandum of Merger"), agreeing that the parties intend to implement the merger and reorganization of shares through the negotiated structure. If the merger and reorganization is completed on schedule, the original shareholders of Beijing Global Medical will become the largest shareholder of Keytech, and Li Chongyuan, the actual controller and chairman of the company, will become the actual controller of Keytech, and Keytech will no longer be included in the company's consolidated financial statements.
The new owner has been found, but the information gap between Weining Health and Beijing Global Medical is not expected to be too big. A capital game has also begun, which includes not only the repeated compromises of Weining Health's real gold, but also the maintenance of the rights and interests of listed companies after the game. In the first round of the game, Beijing Global Medical first laid the groundwork in this restructuring and merger, and Weining Health, which was bent on "kicking out" the financial report of its subsidiary, could be said to be full of sincerity and rich "marriage" at the beginning of this restructuring-style "selling" transaction. According to the announcement on May 15, Weining Health subscribed to the new registered capital of Keykey Technology with its own funds of 35 million yuan and Ma Wanjun, chairman of Keykey Technology, with 10 million yuan in cash. Weining Health held a stake in Keykey Technology from 38 at the end of the previous year22% to 4370%。Weining contributed a total of 45 million yuan, which was much higher than the 10 million yuan subscribed by Li Lingbo, chairman of Shanghai Zhongwei Medical and Healthcare, and director of Beijing Global Medical, another important participant in the merger and reorganization.
In the second round of the game, Beijing Global Medical made a generous move, showing the sincerity of "welcoming relatives", while Weining Health continued to prepare a "dowry" out of its own pocket, and at the same time, it sought a new self-interested disposal plan for the previous loan. Li Lingbo subscribed 15 million yuan in the new capital increase, and Xiong'an Yun, controlled by Li Chongyuan, subscribed 60 million yuan in cash. Weining Health subscribed to the new registered capital with its own funds of 50 million yuan, and the shareholding ratio was diluted to 4217%。At the second extraordinary general meeting of shareholders held by Weining Health on November 16, there were two deliberations related to the merger and reorganization of Keykey Technology - one is the "Proposal on Introducing Investors to Increase Capital and Partially Waiver of Preemptive Subscription Rights and Related Party Transactions of the Holding Subsidiary of Key Technology" (hereinafter referred to as the "Related Party Transaction Proposal"), and the other is the "Proposal" of converting debts into convertible debt investments. The latter is not a stand-alone matter, but is included in the previous Related Party Transaction Proposal. According to the "Bill", Weining Health provided 6492 to Keykey Technology at the beginning of the yearThe loan of 510,000 yuan needs to be repaid by the end of this year, but after the merger and reorganization plan begins to advance, Weining Health intends to convert the stock of the loan into convertible debt investment, which can choose to recover the principal and interest before the expiration of the investment period of the converted debt (the end of 2025), or choose to convert it into equity under appropriate conditions. The "bill" was not passed after the first review, and Weining Health announced that the main reason was "caused by misunderstanding". In this regard, the Ministry of Weining Health ** said in response to the call that on the one hand, some investors did not pay attention to the fact that the two deliberations were actually inclusive, and the "Related Party Transaction Proposal" had been passed by a high vote, on the other hand, some investors believed that the key technology will always be out of the table, and the debt will be converted into convertible debt investment, which may damage the interests of listed companies.
Screenshot of Weining Health's announcement, but if you look at the "Proposal" for converting this debt into convertible debt investment in detail, you will find that this is more like Weining Health's repeated compromises, and finally won the "sweetness" for itself in this game. According to the "Proposal", whether it is a new equity financing of Keykey Technology, or the expiration of the investment period of convertible debt (at the end of 2025), or the completion of a transaction that leads to a change in its control, such as the acquisition of more than half of the company's equity, any of the three types of conditions trigger the conversion of shares, and Weining Health can convert part or all of the principal and unpaid interest amount of the above-mentioned convertible debt into the new registered capital of the subscribed target company. Moreover, the amount of new registered capital that can be obtained from the transfer of shares is either 09 times, or the pre-investment valuation of the company negotiated by all parties.
In addition to the conversion of shares, regarding the repayment of convertible claims, the first is to press 435% annual interest rate to repay the principal and interest, the second is that if the IPO can be completed before the maturity of the convertible debt, it needs to repay the principal and interest before the IPO, and the third is to complete the external financing within this period, and the second is that the part of the raised funds needs to be used to repay the principal and interest of the loan.
However, in this round, the "skilled" Wei Ning Health also miscalculated. In the first version of the "Related Party Transaction Proposal", Weining Health intends to "kick out" the subsidiary from its 2023 financial report through the reorganization of the board of directors. According to the announcement, there are 7 members of the board of directors after the reorganization of the board of directors of Keykey Technology, and Weining Health will appoint 3 directors, and said that "the number of appointed directors does not exceed half of the seats on the board of directors of the target company, and the company will not be able to control the target company, and the target company will no longer be included in the scope of consolidation of the company's financial statements." It is conceivable that once there is no "drag oil bottle", the profitability of Weining Health will improve. However, this ultimately failed to do so, and only 11 days after the announcement of the above-mentioned capital increase agreement, a supplementary correction announcement was issued, saying that "the understanding of the relevant provisions is biased, not comprehensive and in-depth enough", and the key technology failed to release the statement at the end of the year, and Weining Health will still appoint 4 directors to the board of directors of the subsidiary. Weining Health** Department explained that because the package of mergers and acquisitions has not yet been completed, and a series of actions such as follow-up share exchange transactions have not yet been carried out, a supplementary correction announcement was issued under the advice of accountants, and Keykey Technology is still within the scope of consolidated statements. At the same time, the first department of Weining Health also emphasized that whether the key technology will be released at the end of the year has little impact on the annual profits of listed companies, because according to the previous time point of the statement, there have been 11 months of normal consolidation of profits. However, it is undeniable that the sooner the key technology comes out of the table, the better, Weining Health can travel lightly as soon as possible, and shareholders can rest assured earlier, after all, there are risks in whether the merger and reorganization can be successfully promoted. Sometimes, capital accumulation is like playing at home, and Weining Health also announced the acquisition of entrepreneurial Huikang 5 days later, another announcement terminated the merger. If the restructuring and merger are successfully completed, what will be the follow-up development of Keykey Technology, the recent intensive announcements may have been indicated.
In the "Proposal" to convert debts into convertible debt investment, Weining Health listed the successful IPO of Keykey Technology as a key condition. In the first version of the "backtracking" of the board of directors of Keykey Technology, Weining Health attributed it to "in order to encourage the independent development of Keykey Technology, which is conducive to market-oriented financing". This adds a hint of the listing of spin-off subsidiaries to the merger and reorganization, which inevitably leads people to imagine the subsequent trend of the situation.
On the one hand, judging from the current development of Keykey Technology, the business volume has shrunk greatly, the performance continues to be staggering, and the charm value of the company itself to win the favor of investors may not be high.
On the other hand, the key technology comes from Weining Health, which is currently at a low point and is difficult to add color to. Since the beginning of this year, Weining Health has spent a lot of money to catch up with the hot spots of large models, and finally officially released the large model wingpt in the medical field on October 18, but it did not make too much splash in the capital market. Its share price is still sluggish, with a market capitalization of only 156 as of November 21**7.8 billion yuan, a difference of more than 30 billion yuan from the previous stock price high. Poor performance is a core factor.
As of the middle of the year, Weining Health has handed over three consecutive financial reports with declining profits, and Q1 recorded a loss, with a net profit of only 01.7 billion yuan, so frightened the company's shareholders, so that the news that Zhou Yi, the chairman of the company, who had been detained for investigation for a month, performed his duties normally failed to shake the decline in stock prices. In the month of the release of the semi-annual report, Weining Health fell out of the lowest stock price at the end of the year, and on August 29, the lowest intraday price was 676 yuan. It was not until the release of the third quarter report that the market sentiment eased slightly, and the company's net profit in the first three quarters increased to 15.2 billion yuan, above the low profit base of the previous year, the company is expected to get rid of negative profit growth.
However, in the first three quarters, the company's revenue growth rate was only 160%, market concerns are still there, and the stock price has not improved, hovering around 7 yuan so far.
Titanium **app mapping, data**: financial report.
In the third quarter, Wei Ning Health, which has improved slightly, has a lot of swords hanging over its head, and the problems of high goodwill, accounts receivable are too high, the risk of bad debts is too high, and the R&D capitalization rate is too high for a long time. It is undeniable that in the capital market, pessimism is most common. In this context, it will be a more difficult path for Keykey Technology to seek to go public. The merger and reorganization left Longtan, intending to go public and enter the tiger's den.
This article was first published in Ti **app, author丨Liu Min, Yang Yaru).