Image source: Oriental IC digital medical company "Zhiyun Health" has finally ushered in the highlight moment of listing on the Hong Kong Stock Exchange after submitting its listing to the Hong Kong Stock Exchange twice. It is reported that Zhiyun Health will conduct an IPO from

2024/05/2607:38:33 finance 1249
Image source: Oriental IC digital medical company

Image source: Oriental IC

After two submissions to the Hong Kong Stock Exchange, the digital medical company "Zhiyun Health" is finally about to usher in the highlight moment of listing.

It is reported that Zhiyun Health will conduct an IPO from June 23 to June 28, and plans to sell 19 million new shares globally, including 1.9 million Hong Kong shares, 17.1 million international shares, and a 15% over-allotment option. The offering price is HK$30.5 per share, with 100 shares per lot, and the shares are expected to start trading on July 6, 2022.

As the “number one stock in chronic disease management”, what is the quality of Zhiyun Health?

Revenue continues to grow, and in-hospital solutions gradually replace pharmacy solutions as the revenue pillar

Public information shows that Zhiyun Health was established in December 2014. The company submitted documents to the Hong Kong Stock Exchange in August 2021 and February 2022. prospectus book. Its business mainly includes providing medical supplies and SaaS products to hospitals and pharmacies, providing digital marketing services to pharmaceutical companies, and providing online consultations and prescriptions for patients. All businesses revolve around chronic disease management. The prospectus released by

Zhiyun Health shows that from 2019 to 2021 (hereinafter referred to as the "reporting period"), Zhiyun Health's total revenue was 524 million yuan, 839 million yuan, and 1.757 billion yuan respectively, with a compound annual growth rate of over 80 %, the growth trend is very obvious.

According to solution types and revenue sources, Zhiyun Health's revenue is divided into in-hospital solutions, pharmacy solutions, personal chronic disease management solutions and others. Among them, the proportion of revenue from in-hospital solutions in total revenue has increased year by year, from 33.8% to 72.4% during the reporting period; while the proportion of revenue from pharmacy solutions has declined year by year, from 62.3% to 19.9%; personal chronic diseases The revenue share of management solutions fluctuates within 10%.

Image source: Oriental IC digital medical company

It can be seen that the sales of medical equipment, consumables and medicines to hospitals, hospital SaaS and digital marketing services for pharmaceutical companies are gradually becoming Zhiyun Health's main source of income.

If divided by products and services, Zhiyun Health's revenue sources include product revenue and service revenue, of which service revenue is subdivided into digital marketing service revenue, SaaS and other revenue. According to this business division method, Zhiyun Health's product revenue is the mainstay of revenue, accounting for more than half of the revenue in the past three years, but it has been declining year by year, from 90.1% to 68.8%. Correspondingly, the proportion of digital marketing services revenue increased significantly, from 6.8% to 22.9% during the reporting period.

Image source: Oriental IC digital medical company

Zhiyun Health stated in its prospectus that it expects to continue to generate most of its revenue through the sale of medical supplies to hospitals and pharmacies in the near future. Industry insiders believe that although Zhiyun Health has entered the segment of chronic disease management, its revenue structure is still mainly focused on selling medical supplies.

The losses during the year have expanded year by year, with a cumulative loss of 7.615 billion yuan in three years.

However, while its revenue has grown rapidly, Zhiyun Health has been in a loss-making situation, and the year-over-year growth in losses in the past three years has become even more noticeable. The

prospectus shows that during the reporting period, Zhiyun Health's losses during the year expanded year by year, reaching 565 million yuan, 2.897 billion yuan, and 4.153 billion yuan respectively, with a cumulative loss of 7.615 billion yuan. During the reporting period, its adjusted net losses were 150 million yuan, 636 million yuan, and 444 million yuan respectively, and it has never been able to achieve profitability.

Image source: Oriental IC digital medical company

Regarding the reasons for the expansion of losses during the year, Zhiyun Health explained in the prospectus that this was mainly due to the increase in the fair value of convertible and redeemable preferred shares and convertible loans issued to investors, which increased the financial liabilities. fair value change increase.

At the same time, Zhiyun Health stated that the continuous expansion of the company's R&D, sales, marketing and general administrative staff in recent years has led to increased employee costs, and the one-time rebranding marketing campaign in 2020 has resulted in additional promotion expenses that year, which is also a loss for the company. reason for expansion.

It is worth mentioning that Zhiyun Health disclosed in its prospectus that since its establishment, the company has had net losses every year, and the amount of net losses has been growing. At the same time, during the reporting period, Zhiyun Health's operating cash flow continued to be negative. The

prospectus pointed out that Zhiyun Health has a history of net losses and negative operating cash flow. It is expected that future expenses will increase and the company may not be able to achieve or maintain profitability.In the foreseeable future, Zhiyun Health may continue to incur net losses and net operating cash outflows, and is expected to incur net losses and net operating cash outflows for the years ending December 31, 2022 and 2023.

plans to expand the network of hospitals and pharmacies, and plans to go deep into the industrial chain to expand commercialization channels

From an industry level, according to the Frost & Sullivan Report, based on the SaaS deployment volume of Chinese hospitals and pharmacies as of December 31, 2021, and Based on the calculation of the number of online prescriptions issued by Zhiyun Health's services, Zhiyun Health is China's largest digital chronic disease management solution provider. The

prospectus shows that as of December 31, 2021, Zhiyun Health's SaaS products have been deployed in more than 2,300 hospitals and more than 172,000 pharmacies; the platform has more than 87,000 registered doctors and approximately 2.38 million registered users. In 2021, approximately 153 million prescriptions were issued through the Zhiyun Health Platform.

Regarding future development, Zhiyun Health stated that the company intends to focus on key strategies such as continuing to expand its hospital and pharmacy network, expanding its user and doctor base, continuing to invest in product and technology innovation, continuing to expand participation in the medical and health value chain, and driving commercialization. , to consolidate its position in China's chronic disease management market.

Among them, at the level of expanding hospital and pharmacy networks, Zhiyun Health emphasized that it will focus on promoting more hospitals, especially in tertiary and secondary hospitals application of product solutions including hospital SaaS, and plans to continue to expand Pharmacy medical supplies supply and SaaS coverage. "We also plan to continue to allocate significant resources to optimize our existing products and develop new products for hospitals and pharmacies. We believe we will be able to further develop the commercialization potential of cooperation with hospitals and pharmacies."

In addition, Zhiyun Health also revealed that it plans to continue to increase penetration into both the upstream and downstream parts of the healthcare value chain. Specifically, it includes expanding existing partnerships with upstream pharmaceutical companies and providing medical devices, consumables and drugs to better meet the needs of hospitals and pharmacies, and providing them with digital marketing services. At the same time, downstream capabilities (such as prescription dispensing) will also be strengthened to provide more service options. Zhiyun Health believes that this will further increase the stickiness of major healthcare players to the company's solutions and diversify their commercialization channels.

It is worth mentioning that the Frost & Sullivan report also shows that based on the revenue from providing digital marketing services to Chinese pharmaceutical and medical device companies in 2020, Zhiyun Health's market share is 10.9%, ranking first in the industry Two: Yimaitong and Medi Weikang have market shares of 11.6% and 6.5% respectively.

Image source: Oriental IC digital medical company

This means that as one of the core business sectors of Zhiyun Health, digital marketing services face fierce competition that cannot be ignored.

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