The first share of AI: "iFLYTEK's second growth curve is to promote smart medical business?
On January 26, iFLYTEK Medical, a subsidiary of iFLYTEK, officially submitted an application for listing on the Hong Kong stock market, with Huatai International, GF Capital (Hong Kong) and CCB International as joint sponsors. Previously, on January 10, iFLYTEK announced the spin-off of its subsidiary, iFLYTEK Medical, to be listed on the Hong Kong Stock Exchange.
There is a view that the spin-off of loss-making AI medical companies and seek listing is conducive to iFLYTEK's focus on the big model, and there are also voices reminding that the spin-off of the medical sector may bring about an increase in related party transactions and market doubts.
iFLYTEK pointed out in the announcement that after the spin-off and listing of iFLYTEK Medical, it will be able to use the capital market to independently carry out equity and debt financing to meet the capital needs of continuous R&D investment and market expansion, reduce the company's financial burden, and also enable iFLYTEK to direct more resources to the research and development of general large models and other strategic emerging directions in the future.
As soon as iFLYTEK's decision came out, it became the focus of the industry. Founded in 1999, iFLYTEK is mainly engaged in the research of core AI technologies such as intelligent speech, natural language understanding, machine learning reasoning and self-directed learning. In recent years, the smart medical business has been one of the key tracks of iFLYTEK.
In December 2022, iFLYTEK launched a special project on "1+N cognitive intelligence large model technology and application". In this model, "1" refers to the general cognitive intelligence large model platform, and "n" refers to the application of cognitive intelligence large model technology in education, medical care, automotive, office, industry, intelligent hardware and other industries.
Ten months later, on October 24, 2023, at the 2023 iFLYTEK Global 1024 Developer Festival, iFLYTEK officially released the Spark Cognitive Model 30 version, Liu Qingfeng said to the outside world, Xunfei Xinghuo 3The 0 general model surpasses ChatGPT as a whole, and it will achieve benchmarking GPT-4 in the first half of 2024.
However, in recent years, its financial report has shown a downward trend, and its net profit in the first three quarters of 2023 has increased by **76 year-on-year36%, deducting non-net profit fell sharply by 175 year-on-year97%。As of the end of the third quarter of 2023, iFLYTEK's total liabilities reached 1849.5 billion yuan, with an asset-liability ratio of more than 50%. For this performance, iFLYTEK's management attributed part of the reason to the company's active seizure of new historical opportunities in general artificial intelligence and its firm investment in general artificial intelligence cognitive models.
In fact, the "abnormality" of iFLYTEK's performance has been revealed as early as the 2022 annual report. This year, the company's revenue ended the double-digit growth it had maintained since its listing, and its net profit almost fell back to the level of 2018. Specifically, during the reporting period, iFLYTEK achieved revenue of 188200 million yuan, a slight increase of 2 year-on-year77%；Net profit attributable to the parent company 56.1 billion yuan, down 6394%；Deduct non-net profit 41.8 billion yuan, down 57 percent year-on-year31%。
From the perspective of debt, the pressure faced by iFLYTEK is also increasing. According to the data, from 2018 to 2022, iFLYTEK's current liabilities increased from 581.3 billion yuan climbed sharply to 1208.2 billion yuan, in the first three quarters of 2023, the company's current liabilities were 1304.7 billion yuan, accounting for 70 percent of total liabilities5%。
Analysts generally believe that iFLYTEK's submission of the Hong Kong stock listing application may be one of iFLYTEK's strategies to seek new financing channels and business independence. iFLYTEK is facing financial pressure that needs to be resolved urgently, and the listing of iFLYTEK Medical may be a life-saving straw.
The benefits of the spin-off are obvious, iFLYTEK Medical operates independently, which is expected to attract more medical investment, increase market value, and inject new capital into iFLYTEK. However, it remains to be seen whether iFLYTEK's strategic move can become a breakthrough in its business and bring new vitality to the company.
However, judging from the 2023 financial performance forecast released by it, iFLYTEK's financial pressure has eased. On January 29, iFLYTEK released a performance forecast, with an annual net profit of 64.5 billion yuan-7300 million yuan, a year-on-year increase of 15%-30%, compared with 56.1 billion yuan.
Medtech has always been a hot area of the market, especially with the gradual application of artificial intelligence technology to healthcare. iFLYTEK began to explore the field of smart healthcare in 2015. In 2016, iFLYTEK established a subsidiary, iFLYTEK Medical, and launched its first intelligent medical product, "Cloud Medical Voice".
In 2017, the intelligent medical assistant developed by iFLYTEK Medical successfully passed the National Medical Practitioner Qualification Examination (Comprehensive Written Examination). This means that robotic medical assistants already have the same professional knowledge and skills as human doctors to provide high-quality medical services to patients. At present, the intelligent medical assistant has covered more than 400 districts and counties in more than 30 provinces across the country, providing more than 7 artificial intelligence-assisted diagnosis suggestions400 million, more than 2800 million.
At present, iFLYTEK holds 5247% of the shares are the controlling shareholders of the latter, and Liu Qingfeng, chairman of iFLYTEK, and HKUST Holdings are the actual controllers.
Backed by iFLYTEK, iFLYTEK Medical is also the main AI, according to the data, iFLYTEK Medical takes the mission of creating "AI diagnosis and treatment assistant for every doctor and AI health assistant for everyone" to create an artificial intelligence medical solution system. According to Frost & Sullivan, iFLYTEK's revenue scale in 2022 ranked first in China's medical AI industry.
However, iFLYTEK's performance is not optimistic. From 2020 to 2022, iFLYTEK Medical's revenue will be about 32.1 billion yuan, 35.6 billion and 49.4 billion yuan, and the net profit attributable to the parent company was about 76.1 billion390,000 yuan, -7973230,000 yuan and -20.4 billion yuan, deducting non-attributable net profit of 1428350,000 yuan, -8356090,000 yuan and -21.6 billion yuan, with a total loss of nearly 300 million yuan in three years.
Of course, in addition to focusing on the main performance, as a subsidiary of iFLYTEK, iFLYTEK's technical strength and innovation ability are very important. The application of artificial intelligence in the medical field requires companies to have advanced technical skills. iFLYTEK Medical's sales, administrative and R&D expenditures have caused the company to make ends meet. Specifically, in 2022, the company's revenue was 4700 million yuan, but the sales, administrative and R&D expenses were 1600 million yuan, 100 million yuan, 2400 million yuan.
According to the prospectus, iFLYTEK's current business can be divided into four major sectors. They can be simply summarized as: medical care and disease management for the grassroots level, hospital management and diagnosis and treatment assistance for hospitals, diagnosis and service for patients, and regional public health management.
At present, iFLYTEK Medical maintains a leading position in the service business of primary medical institutions. Financial data shows that in 2022, iFLYTEK medical 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%。
At the same time, in the prospectus of iFLYTEK Medical, the company also used cases to explain the business operation behind the provision of services to primary medical institutions. For example, iFLYTEK Medical was entrusted by the AI project of a primary medical institution in Zhuji City, Zhejiang Province, and provided services to Zhuji City through the business of intelligent medical assistant. The company's intelligent medical assistants can cover all 23 primary medical institutions and 340 village health stations in Zhuji City, and can provide AI-assisted diagnosis suggestions, electronic medical record standardization and prescription review services.
As of the end of September 2023, the intelligent medical assistant business has formed more than 19 million disease diagnoses in Zhuji City, provided more than 1.5 million electronic medical records, and reviewed 1.7 million prescriptions. At the same time, chronic disease management is another need for primary care. According to the iFLYTEK Medical prospectus, in 2022, the company deployed chronic disease management for hypertension, diabetes, chronic obstructive pulmonary disease and stroke in Gansu Province, covering about 190,000 primary care facilities, connecting more than 3.2 million elderly people. These all show the specific business form of iFLYTEK Medical at the grassroots level.
The rise of large-scale model technology has brought unprecedented opportunities in the field of artificial intelligence, and iFLYTEK Medical is actively exploring and pioneering in this wave. With the leading position of the controlling shareholder iFLYTEK in the artificial intelligence market, iFLYTEK Medical's proprietary iFLYTEK Xinghuo medical model is suitable for more than 300 medical applications.
With the technological leap of cognitive large models and the "dawn" of general artificial intelligence brought about by rapid evolution, the medical and health industry has also ushered in new development opportunities. According to Frost & Sullivan, the market size of China's medical AI industry increased from 1.8 billion yuan in 2018 to 6.8 billion yuan in 2022, with a compound annual growth rate of 391%；It is expected to reach 311 billion yuan by 2032, growing at a CAGR of 466%。
The prospectus clearly stated that according to a test by China's National Center for Comprehensive Utilization of Scientific and Technological Information Resources and Public Service Center, the iFLYTEK Xinghuo medical model surpasses GPT in six 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.
It can be said that iFLYTEK took advantage of the wind to spin off iFLYTEK Medical at this time, and the listing of iFLYTEK Medical is indeed a good node.
However, today's market is highly competitive. After ChatGPT caused a sensation, a number of large medical models will emerge in China in 2023, and companies such as Alibaba, Tencent, JD Health, Medical Alliance, and Zhiyun Health have launched their own large model products in the medical field.
At the end of May, the Internet Hospital, the first medical large language model in China based on the Transformer architecture of the Medical Federation, was launched. At the end of June, Dingdang Health, a digital medical and health home service provider, released Dingdang HealthGPT and launched the first application-oriented pharmaceutical AI product developed based on this - Dingdang Pharmacist and Dietitian AI Assistant. In mid-July, JD Health, a leader in the domestic Internet medical industry, launched the "Jingyi Qianxun" model for the medical and health industry on the basis of the JD Yanxi general model, covering the whole process of medical needs, realizing intelligent decision-making, and supporting multi-modal medical models. On August 17, Weimai, the country's largest full-course disease management platform, released CareGPT, the first large language model application in the field of health management in China. It is reported that based on the domestic open source large language model, Weimai caregpt is mainly committed to giving full play to the value of health management in real medical service scenarios, and realizing the full-cycle intelligent health management capabilities of prevention, consultation, appointment, and **.
From the layout of the above-mentioned enterprises, it can be seen that although they are all large medical models, they have different directions and advantages. In the future, with the innovation and application of large medical models, the medical AI industry may usher in a reshuffle, and the layout direction and application value will become the key nodes of enterprise competition.
According to the research report of Guojin**, based on the rapid development of artificial intelligence technology and its application in the field of medicine and health, considering the recent launch of a number of AI models and the prospect of cloud services in the field of medicine in the future, the application of artificial intelligence in the field of medicine and health is expected to enter an accelerated stage of development.
iFLYTEK Medical's exploration of the capital market under large-scale model technology has demonstrated its efforts in technological innovation and industry standard setting. The future of iFLYTEK Medical will benefit from its technical strength and the results of market exploration, but it also needs to move forward cautiously in the unpredictable market environment.