Text |VB arterial network.The first private hospital IPO in 2024 has officially arrived.
On January 9, the private oncology medical leader US-China Jiahe Medical Technology Development Group Co., Ltd. *** hereinafter referred to as "US-China Jiahe") landed on the Hong Kong Stock Exchange, with a total market value of more than HK $8 billion.
As a star company focusing on oncology medical services,In the process of development, the United States and China Jiahe continue to be favored by capital。Prior to its listing, the company received investment from CICC Capital in 2018, CITIC investment in 2020, and strategic investment from CSPC Pharmaceutical Group in 2023.
After nearly 16 years of accumulation, A&C has formed two major business directions, one is self-operated medical institutions, mainly serving cancer patients, and the other is empowering third-party medical institutions through network business. According to the Frost & Sullivan report,Among all private oncology medical groups in China, as of December 31, 2022, A&C Jiahe ranked second in terms of the number of self-operated or managed oncology medical institutions.
In terms of specific revenue, the prospectus shows that in 2020-2022 and the first half of 2023, the operating income of the company will be 16.6 billion yuan, 47.1 billion yuan, 47.2 billion yuan, 28.5 billion yuan, revenue continued to grow.
However, at the same time, the United States and China Jiahe have not yet achieved profitability, and its net loss for the period from 2020 to 2022 and the first half of 2023 will be 59.1 billion yuan, 83.1 billion yuan, 63.7 billion yuan, 2$1.4 billion. That is to say, in 3 and a half years, the United States and China Jiahe have accumulated losses of 227.3 billion yuan.
What is the reason for the continuous growth but still losing money?After the listing, what kind of strategic layout will the United States and China Jiahe have?How will the private healthcare industry evolve in the future?In response to these problems, this article will be interpreted based on past industry interviews and prospectus data.
The entrepreneurial story of USA-China Jiahe began in 2008.
At that time, Yang Jianyu, who received a master's degree and a doctorate degree in economics from Liaoning University, had accumulated more than 10 years of experience in the real industry, such as Hejia Resources, a company listed on the Shenzhen Stock Exchange that specializes in solid waste** and sewage treatment, as president for many years. After leaving Hejia Resources, Yang Jianyu joined Concord at the invitation of a friend and founded the U.S.-China Jiahe, which also became Concord's medical service operation platform in China.
After the establishment of the company, the initial business was mainly to provide radiotherapy and diagnostic equipment management services for Chinese hospitals, and then gradually developed the network business, and carried out hospital business through the acquisition, establishment and operation of self-operated medical institutions.
What needs to be emphasized here is that the company is deeply engaged in the subdivision of tumors. From the perspective of the industry, cancer hospitals have the characteristics of large investment, long cycle, high barriers, and high entry thresholds. In addition, the domestic oncology medical service market is currently dominated by public hospitals, and private medical services still account for a small proportion.
In this context, the company has adopted a differentiated approach, on the one hand, it has built a full-time team of full-time doctors and nursing staff from various disciplines to provide services to patients through a multidisciplinary diagnosis and treatment model (MDT). In addition, USACahe also has long-term strategic cooperative relations with MD Anderson, Mayo Clinic and other world-renowned medical institutions.
MDT Practice Process **Prospectus.
It is worth mentioning that in Europe and the United States, MDT has become the norm, for example, the United Kingdom has passed legislation requiring every cancer patient to undergo MDT synthesis**. However, at present, the penetration rate of MDT mode** in China is not high. According to the Frost & Sullivan report, only about 6% of cancer** in China in 2022 adopted the MDT model, compared with about 80% in the same year in the United States. USAConho is one of the few private medical institutions in China that can provide MDT services, which also makes it stand out from the crowd of oncology service providers.
With its advantages in diagnosis and treatment, the company has continuously expanded its service network and has six operating self-operated medical institutions in Guangzhou, Shanghai and Datong, including two cancer hospitals, three outpatient centers (or clinics), one imaging diagnostic center, one Internet hospital, and one self-operated cancer hospital under construction in Shanghai. According to the prospectus, Guangzhou Hospital will start operating its proton center and providing proton services in 2024.
Outside of TO C (providing medical care to patients).Based on the expertise accumulated over the years in the field of oncology** and hospital operations, USA & China Jiahe has developed medical equipment, software and related servicesto b business to serve corporate customers and hospitals, especially hospitals in lower-tier cities that are not covered by the company's own facilities.
According to the prospectus, in 2020, 2021, 2022, and the first half of 2023, the number of corporate customers of medical equipment, software and related services of the company reached 29, 88, 77, and 47, respectively. As of June 30, 2023, the company has served 17 partner hospitals with cloud platform services, management and technical support, and operating leases.
Taking cloud platform services as an example, USA launched the CSS service (cloud system solution) in early 2019, and then gradually iteratively upgraded, launching the Genor Cloud Shadow telemedicine information diagnosis platform in December 2020 and the Genor Feiyun intelligent radiotherapy cloud service platform in September 2021, focusing on the improvement of the efficiency and efficacy of cancer**.
According to the previous introduction of the United States and China Jiahe, with the help of CSS, the United States and China Jiahe and the cooperative hospitals can establish a regional tumor diagnosis center and a tumor ** center through joint construction, so as to achieve the purpose of the center to provide unified medical services for cooperative medical institutions, and provide regular course training for grassroots hospitals and invite them to participate in scientific research projects.
From the perspective of the revenue of their respective businesses, the proportion of hospital business and medical equipment, software and related services is relatively close: On the hospital business side, the revenue in 2020, 2021, and 2022 will be 835140,000 yuan, 1611750,000 yuan, 2183920,000 yuan, and the revenue from the first half of 2022 to the first half of 2023 is 8,29750,000 yuan, 1592570,000 yuan;For medical equipment, software and related servers, the revenue in 2020, 2021, and 2022 will be 8280 respectively70,000 yuan, 309.33 million yuan, 25,37780,000 yuan, and the revenue from the first half of 2022 to the first half of 2023 is 608350,000 yuan, 1259220,000 yuan. The business at both ends of the business as a whole showed an upward trend.
Data**: Prospectus Arterial Network Mapping.
In addition, the prospectus specifically mentions that the revenue of China's private oncology medical institutions increased from 18.9 billion yuan in 2016 to 53 billion yuan in 2022, with a compound annual growth rate of 18.7%, which is expected to reach 109.2 billion yuan in 2026, the market growth space is huge, and the opportunities for the United States and China are still broad.
It is not difficult to find from the above that it is precisely by virtue of the continuous depth and rapid growth of the market in the two major businesses of To C and To B that the company has successfully achieved its IPO after nearly 16 years of deep cultivation in the oncology service track.
Is oncology a good business?
First of all, as mentioned earlierThe oncology service market is still in a period of rapid development, and the ceiling of the track has not yet been touched。According to the Frost & Sullivan report, the market size of China's private oncology medical service market has grown from 18.9 billion yuan in 2016 to 53 billion yuan in 2022, with a compound annual growth rate of 187%, which is expected to reach 109.2 billion yuan in 2026, with a CAGR of 198%。
China Oncology Medical Services Market Data**: Prospectus.
Therefore, for the entrants,It is more important to build the growth capacity and synergy of the business so as to get more of the "pie".
Different from private specialties such as ophthalmology, stomatology, and medical aesthetics, oncology is a cost-heavy business. According to a set of data previously released by Pacific **, the average assets of a single hospital in domestic cancer hospitals are 71.7 billion yuan, and the average equipment investment of more than 10,000 yuan in a single hospital is 22.6 billion yuan, and the average construction area of a single hospital is 440,000 square meters, which is significantly higher than other specialized hospitals. It can be seen,Oncology is an area that requires more funding.
Therefore, compared with the scale of dozens or even hundreds of service institutions in other specialties, there are only 6 self-operated medical institutions in operation at present. In order to continue to do large-scale, the company also mentioned in the prospectus that it will continue to expand the number of hospitals.
In addition,As a serious medical field, oncology is also very important in academic and clinical practice。In this regard, in addition to continuing to develop hospital business and medical equipment, software and related services, the United States is also actively participating in the national industry standard formulation project, becoming the main formulator of the national radiation industry standard, and has launched three national standard development projects, namely the "Practical Guide for Quality Assurance of Radiation Data Review", "Guide to the Design, Implementation and Quality Control Platform Construction of 5G-based Remote Radiotherapy Program" and "Practical Guide to Full (Electron Beam) Irradiation Technology".
In terms of future layout, U.S. China Jiahe is very optimistic about Proton**. The prospectus mentions that the Guangzhou Hospital of U.S.-China Jiahe has purchased a set of customized four-chamber proton ** equipment, which is equipped with a ** cabin with four rotating brackets, and is expected to obtain a license in early 2024 and start operating the Guangzhou Hospital Proton Center in March 2024. In addition, the company will also equip the hospital with a set of proton equipment and four cabins.
According to the Frost & Sullivan report, as of December 31, 2022, there are about 100 proton** centers in operation worldwide, while only two in China, and five of the world's top ten oncology institutions** have their own proton centers.
In order to better promote the application of proton technology, in 2014, the company also founded the digital journal "Proton China", which mainly provides clinical and technical information on proton and heavy ion radiation** for the reference of patients and the medical community.
Business synergy aspectsIn the process of providing management and technical support services to hospitals, A&C Jiahe has accumulated valuable industry expertise and resources, based on which it has developed its hospital business through the acquisition, establishment and operation of self-operated medical institutions, so as to form synergies.
For example, in terms of the geographical distribution of hospitals, the United States and China Jiahe have also made strategic synergies. According to the prospectus, the hospitals of the United States and China Jiahe are mainly located in the Greater Bay Area, the Yangtze River Delta and North China, and the business in their respective regions is differentiated and synergistic, as follows:
In the Greater Bay Area, Guangzhou Hospital and Guangzhou Outpatient Department specialize in nasopharyngeal cancer radiotherapy and breast cancer surgery as well as other comprehensive oncology medical services
The Shanghai Imaging Center in the Yangtze River Delta region is a diagnostic center that provides early cancer screening and diagnosis services for patients in the Yangtze River Delta region and throughout China with advanced imaging equipment and cloud platforms. Among them, as a complement to the independent diagnostic services of the Shanghai Imaging Center, the Shanghai General Practice Clinic provides general practice services and interacts with the Shanghai Imaging Center to provide referral services for patients who need imaging tests.
Datong Hospital and Datong Clinic in North China provide post-health management services using traditional Chinese medicine.
In addition, in May 2021, the company launched an internet hospital as a one-stop gateway connecting cancer patients with comprehensive oncology medical resources.
U.S.-China Jiahe Offline Medical Institutions and Medical Professionals Employed by Them ** Prospectus.
It can be seen that the United States and China JiaheIt has made many achievements in the construction and synergy of business growth capabilities, and actively plans for the future, which has laid a good foundation for its sustainable and steady development in the future.
However, the company is still in the red, and the gross profit margin has turned negative since 2021 (from 2019 to 2022, the gross profit margin was . 4%、-10.0%、-30.2%), the operating pressure is greater. The prospectus said that many of its medical institutions are still in their infancy, and the trial expansion stage of new hospitals may have a significant impact on profitability. As a result, operating results may fluctuate significantly from one period to another. In addition, financing costs (mainly including interest expense in relation to callable capital injections) are also an important cause of losses.
There is no doubt that after this listing, in the face of investors,How to improve profitability will become one of the propositions that the United States and China Jiahe need to think about for a long time.
As the first private hospital IPO this year, Meizhong Jiahe has undoubtedly given a shot in the arm to practitioners in the field of private specialized medical services: from medical cosmetology, stomatology, and ophthalmology that are partial to consumer medical care to neurology, oncology and other subdivisions that are more serious medical care, one or even more listed companies have emerged, and star companies such as Langzi Medical Aesthetics, Tongce Medical, Aier Ophthalmology, Hygeia Medical, and Sanbo Brain have emerged.
This means that as long as it has excellent diagnosis and treatment capabilities and innovation, private medical specialty services can also overcome disciplinary barriers and run out of the way in various subdivisions.
Of course, in this process, due to the need for a large amount of capital for chaining and scale, the demand for capital is also very strong. In past interviews with investors, Arterial Network sorted out two major factors for VC PE to observe whether private specialty service enterprises have high growth.
The first is the size of the market capacity in which the enterprise is located, and whether the contradiction between supply and demand in this field is prominent. You must know that the choice of track often determines the speed of enterprise growth, so for private medical specialty service enterprises, it is necessary to focus on the development of the path that does not rely on medical insurance, and does not rely on competing with public hospitals for food and customers, so as to have a better space for development.
The second is the company's own operational capabilities. In the observation of investors, if it is a single store, it will focus on measuring the ramp-up period time and input-output ratio, and will require the enterprise to meet the relevant operating and financial indicators within a certain time. For chain institutions, the regional distribution, scale effect, and degree of standardization of chain institutions will be examined accordingly, and then indicators such as transformation power, patient retention and repurchase will be examined.
Among the above two factors, the track determines the ceiling of the company's future growth, and the operational ability determines the size of the "cake" that the enterprise can share. Among them, products and services affect the strength of transformation, the optimization and efficiency improvement of medical processes determine the retention of patients, and the quality of doctors and brand operation capabilities determine the repurchase of patients, forming a closed loop of medical specialty services.
Based on this logic, Arterial Network combined with industry interviews and arguedThere are four major trends to pay attention to in the future of medical specialty services.
First, in the process of development, the ability of enterprises to use SaaS will become more and more important. This is because SaaS can bring three levels of impact, one is that the enterprise has the ability to build a "strong headquarters", the second is that the enterprise has the ability to quickly replicate, and the third is that the enterprise can accumulate data at the beginning and have the value of subsequent data mining.
In terms of timing, the sooner SaaS is built, the better. Because in the early stage, the acceptance of SaaS by employees is relatively high, but after the enterprise gradually scales, employees are accustomed to the original work habits, coupled with the increase in the number of employees in the enterprise, the acceptance of SaaS will be greatly reduced.
The company mentioned in the prospectus that it will continue to accelerate the registration process and commercialization process of SaaS products after the listing, and develop telemedicine SaaS products.
Second, for private medical specialist institutions, the aggregation of high-quality expert resources is the top priority, especially for specialist service institutions that are more serious about medical care.
Taking the listed Sanbo Brain Department as an example, the flagship hospital of Sanbo Brain Department is the Sanbo Brain Hospital of Capital Medical University, which has been ranked in the forefront of neurosurgery for many years along with Tiantan Hospital and Xuanwu Hospital in the ranking of medical service capacity announced by the Beijing Municipal Health and Family Planning Commission. In terms of expert team, Sanbo Brain Department has neuromedical experts Luan Guoming, Yu Chunjiang, Shi Xiangen, Wang Baoguo, Yan Changxiang, Wu Bin, Lin Zhixiong, Fan Tao, etc., thus forming a strong expert group.
Third, brand building will bring a stronger sense of recognition and trust to private specialist service institutions. In China, because the society's trust in public hospitals is naturally higher than that of private medical service institutions, private medical specialty service enterprises need to pay more attention to brand building to bring enough trust to patients.
However, it should be noted that paying attention to brand building is not only about marketing and publicity, but also about high-quality service experience and medical level. Because, excessive marketing not only fails to bring quality word-of-mouth and brand, but can make patients feel insecure and lose trust.
Fourth, more subdivided and even niche medical specialty service tracks will also run high-quality enterprises. For example, in the fields of pediatric dentistry, otolaryngology, and medical aesthetics, there is still a lot of room for improvement in the education level of patients.
The successful IPO of US-China Jiahe, as well as the previous listings of Hygeia Medical, Sanbo Brain and other companies, have proved to the market the infinite possibilities of medical specialty service companies.
Subsequently, with the continuous advancement of medical reform, the continuous improvement of the overall living standards of the Chinese people, and the higher emphasis and investment in health, the medical specialty service track is bound to give birth to more listed companies and bring more and better solutions to patients.