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After two years, iFLYTEK, the "first share of AI", spun off its medical business segment and went public, finally making new progress.
According to the documents of the Hong Kong Stock Exchange, iFLYTEK Medical has recently officially submitted a listing application to the Hong Kong Stock Exchange. Its controlling shareholder, iFLYTEK, holds 5247%, Huatai International, GF Capital (Hong Kong) and CCB International are the joint sponsors.
According to the iFLYTEK medical prospectus, in 2022, iFLYTEK Medical will occupy the top spot in China's medical artificial intelligence industry with its revenue scale. Nowadays, the concept of AI is very hot in the capital market, and iFLYTEK Medical, which focuses on "AI + medical", has naturally attracted much attention.
However, judging from the prospectus, profitability is actually a major "shortcoming" of iFLYTEK Medical at this stage. Can iFLYTEK Medical, which continues to expand its losses and debts, play a good hand with the concept of "AI + Medical"? It remains to be seen.
"AI + Healthcare" occupies the top spot in the industry
Coverage of hospitals nationwide is less than 1 per cent
In recent years, with the maturity of AI technology in China, the market size of the medical artificial intelligence industry has grown significantly. According to Frost & Sullivan data, from 2018 to 2022, the scale of this industry has increased from 1.8 billion yuan to 6.8 billion yuan, with a compound annual growth rate of 391%。It is estimated that from 2022 to 2032, the industry scale will increase to 311 billion yuan, with a compound annual growth rate of 466%。
iFLYTEK Medical Prospectus.
Salt pickers learned that the services provided by medical AI can cover both medical institutions and patients, with the former accounting for the majority of the market.
In 2022, the market size of the artificial intelligence industry in medical institutions will be 524.6 billion, accounting for about 76%, with a compound annual growth rate of 36 from 2018 to 20225%, and it is expected that from 2022 to 2032, its market size will increase from 5.2 billion yuan to 227.9 billion yuan, with a compound annual growth rate of 458%。
From the perspective of the current situation of the industry, the artificial intelligence industry of medical institutions is highly fragmented and fiercely competitive. In 2022, the total market share of CR5 is only 216%。Among them, iFLYTEK Medical is known for 4The revenue of 5.5 billion yuan ranked first, and the market share was 87%；Take 3It was followed by a revenue of 5.5 billion yuan, with a market share of 68%；Yun Zhisheng with 1The revenue of 1.1 billion yuan ranked third, with a market share of 21%。And the top 5 companies together account for less than 30% of the market share.
iFLYTEK Medical Prospectus.
It is enough to see that the players who lay out this track still have a great opportunity to fight for a large market share in the future. But this also means that the current advantages of the head enterprises are not prominent, and whether they can gain a firm foothold on the track in the future is controversial, and it is very likely to be surpassed by latecomers.
iFLYTEK Medical is an obvious example.
Compared with other AI medical companies, iFLYTEK Medical did not work auxiliary diagnosis and medical imaging business, nor did it take the lead in making breakthroughs from tertiary hospitals in terms of customer groups, but chose to accumulate resources in a larger number of primary medical care first.
According to public information, China's medical institutions can be divided into primary medical institutions, hospitals and other medical institutions. As of the end of 2022, there were 979768 primary medical institutions and 36,976 hospitals in China.
However, even though iFLYTEK Medical is currently focusing on primary care, the scale of expansion is not large. According to the prospectus, as of the end of September 2023, iFLYTEK medical products have covered 52,000 primary medical institutions, 189 ** hospitals and 35 secondary hospitals in 426 districts and counties.
It can be calculated that the coverage rate of iFLYTEK Medical to districts and counties is about 14% of the total number of districts and counties in the country, the coverage rate of primary medical institutions is about 5%, and the penetration rate of hospitals is less than 1%. Obviously, although iFLYTEK Medical has chosen to find another way, it is still not a significant gap with it, and with the current coverage of medical institutions across the country, it is far from enough to have an overwhelming advantage over competing products.
More than 50% of the revenue comes from the services of primary medical institutions
According to the prospectus, the main business of iFLYTEK Medical can be divided into four parts, namely, providing services for primary medical institutions, providing services for grade hospitals, providing services for patients, and providing regional health information platform solutions.
At present, the revenue proportion of iFLYTEK's medical primary medical institution service business remains in the lead. In 2022, iFLYTEK Medical's four businesses, namely primary medical institution services, hospital services, patient services, and regional management platform solutions, will achieve revenue of 29.8 billion yuan, 434860,000 yuan, 368940,000 yuan, 934190,000 yuan, accounting for the proportion of total revenue during the period. 8%。
From 2021 to the first three quarters of 2023, iFLYTEK Medical's revenue was 3700 million yuan, 4700 million yuan, 3200 million yuan. Among them, the service income of primary medical institutions accounts for more than 50%.
In the prospectus, iFLYTEK Medical also specifically explained the business operation logic behind the provision of services to primary medical institutions. Taking Zhuji City, Zhejiang Province as an example, by accepting the AI project of primary medical institutions in Zhuji City, Zhejiang Province, iFLYTEK Medical's intelligent assistant covers all 23 primary medical institutions and 340 village health stations in Zhuji City. iFLYTEK Medical can provide AI-assisted diagnosis suggestions, electronic medical record standardization and prescription review services.
According to financial data, in the service charges of iFLYTEK Medical for primary medical institutions, intelligent medical assistants such as Zhuji City are the main source of revenue, in 2022Of the 9.8 billion yuan in revenue, the revenue of intelligent medical assistants reached 21.7 billion yuan, and the income from chronic disease management was 80.69 million yuan.
In recent years, with the surge of AI, major technology companies have seized the opportunity to launch AI models covering the medical field. For example, the first industrial-level medical model in China, the "Lingyi Model", was officially released, and JD.com also launched the "Jingyi Qianxun" medical model on the basis of accumulating more than 100 million doctor-patient dialogue data of real doctor-patient consultations.
After iFLYTEK launched the "Xinghuo Cognitive Model" in May 2023, in October of that year, iFLYTEK launched the iFLYTEK Xinghuo Medical Model dedicated to the medical industry, and released the "Xunfei Xiaoyi" APP equipped with the Xunfei Xinghuo Medical Model.
Tao Xiaodong, President of iFLYTEK Medical, said that due to the seriousness, sensitivity, professionalism and other particularities of medical treatment, the large model in the medical field is not simply "from 0 to 1", but needs to be deeply integrated into the medical scene to meet the real needs of clinical practice.
According to the prospectus, iFLYTEK Medical's proprietary iFLYTEK Xinghuo medical model is used in more than 300 medical scenarios, and surpasses GPT in the task dimension of natural language processing ("NLP") in six dimensions of medical scenarios, including expert-level medical knowledge graph Q&A, clinical language understanding, medical document generation, disease diagnosis and recommendation, multi-round medical dialogue and multi-modal interaction.
At present, the iFLYTEK Xinghuo medical model has been successfully applied to products such as the "iFLYTEK Xiaoyi APP", and will be further applied to artificial intelligence-assisted diagnosis scenarios such as "Intelligent Medical Assistant" in the future to further improve the diagnosis and treatment capabilities of AI assistants.
The cumulative loss in three years is nearly 300 million yuan
Improving the ability of "hematopoiesis" is the top priority
From the perspective of performance, iFLYTEK Medical's performance losses have continued to expand in the past two years. From the perspective of the industry, the independent listing of iFLYTEK Medical, which does not yet have hematopoietic ability, is also an important measure for iFLYTEK to relieve pressure.
According to the prospectus, from 2021 to the first three quarters of 2023, iFLYTEK Medical's operating income will be 37.2 billion yuan, 47.2 billion and 3$2.4 billion; Gross profit was 18.8 billion yuan, 23.1 billion and 1$7.9 billion; Gross margins were: 9% and 552%。During the same period, the company's net profit attributable to the parent company was 761390,000 yuan, -7973230,000 yuan and -20.4 billion yuan; deducted non-net profit of 14.28 million yuan, -8356090,000 yuan and -21.6 billion yuan.
As for the reason for the company's loss, iFLYTEK Medical explained that it was mainly due to the company's continuous investment in research and development and sales expenses. However, iFLYTEK expects an adjusted net loss ratio to decrease in 2024 and expects to generate net profit in the near future.
According to the prospectus, from 2021 to the first three quarters of 2023, iFLYTEK Medical's R&D expenses will be 1600 million yuan, 24.2 billion yuan and 19.6 billion yuan, corresponding to the operating income. 2% and 603%；Selling expenses for the same period were 0900 million yuan, 1600 million yuan, 1300 million yuan, and the sales expense rate was respectively. 7%。
in the prospectus.
Financial data shows that the significant increase in R&D expenses and marketing expenses has led to a short-term surge in the company's costs. In the first three quarters of 2023, iFLYTEK Medical's R&D expenses increased again by 113%。
Therefore, although iFLYTEK's gross profit margin has been higher than 50% for a long time, it is still difficult to cover sales expenses and R&D expenditures. Judging from the company's coverage of primary medical institutions, iFLYTEK Medical still needs to continue to invest in market expansion, and the debt pressure is also increasing.
As of September 30, 2023, iFLYTEK Medical recorded net current liabilities of 10.9 billion yuan, and the cash and cash equivalents at the end of the period were only 576990 thousand.
It is worth noting that iFLYTEK Medical also bluntly stated in the prospectus that it "faces the credit risk of receivables". The company's accounts receivable are high and continue to increase, with a total of 23.6 billion yuan, 33.6 billion and 48.3 billion yuan, accounting for the same period of revenue. 19% and 14907%。
It can be seen that iFLYTEK Medical has accumulated losses of nearly 300 million yuan in three years, and the scale of debt continues to increase. Therefore, there are also industry views that iFLYTEK's spin-off of iFLYTEK Medical has the meaning of "throwing off the burden".
In the first three quarters of 2023, iFLYTEK achieved revenue of 126100 million yuan, a year-on-year decrease of 037%；The net profit was only 99.36 million yuan, down 76% year-on-year. In 2022, iFLYTEK's medical business revenue accounted for only 1 percent of total revenue25%。In other words, iFLYTEK Medical's contribution to iFLYTEK's revenue is only about 2%, but it is 1The loss of 700 million yuan dragged down the performance of the parent company.
iFLYTEK also said that from the perspective of asset structure optimization, the spin-off and listing of iFLYTEK Medical will help it further broaden its financing channels, thereby improving the overall financing efficiency of listed companies and reducing the overall asset-liability ratio.
Moreover, after the completion of the spin-off, iFLYTEK will still maintain control, and the relevant subsidiaries will still be subsidiaries within the scope of the consolidated statements of iFLYTEK, and its healthy, good and stable growth is conducive to maximizing the long-term value of the parent company and the shareholders of the parent company.
It can be seen that even if the AI track is hot, for iFLYTEK Medical, the ability to make profits and hematopoiesis is still a major "pain point" for the company.
Shen Meng, chief strategist of Guangke Consulting, believes that Hong Kong stocks are currently relatively flexible for the medical sector, so it is not difficult to go public. However, as an unprofitable enterprise, if the future growth prospects of iFLYTEK Medical are not clear and optimistic, then the valuation and liquidity after listing may not be too good.
Some experts also analyzed that if iFLYTEK Medical can be successfully listed, it needs to work its core competitiveness in the field of artificial intelligence medicine, further improve market recognition and coverage, and improve its own profitability and hematopoietic ability is the top priority, otherwise it will not be able to go long even if it can be successfully listed.