Since 2021, the oral track has ushered in its highlight moment, with major capital intensive betting and its ability to attract money has been rising steadily.
In the first half of last year alone, there were 33 financing events in the oral track, with a total amount of 5 billion yuan, which is about twice the annual financing amount in 2020. Among them, Ruier Group has raised nearly US$200 million in Series E financing, becoming the financing "ceiling" of the oral track in recent years. Behind the rising amount and financing frequency of
is that leading institutions are beginning to quickly gather into the oral track, including internationally renowned investment giants Temasek , SoftBank China , Aobo Capital and other institutions, as well as well-known domestic institutions and enterprises such as Dachen Finance, Songbai Investment, and New Hope Group . The reason why
can attract leading institutions to bet on real money is because the oral track has entered a period of accelerated growth. On the one hand, the domestic oral medical market has huge room for development. At present, the domestic oral medical market is growing at a rate of about 25 billion yuan per year, and is expected to reach a scale of 200 billion yuan in 2024. On the other hand, oral medical companies are also continuing to expand, and the proportion of the market size of private medical institutions is continuing to increase. According to the Guanyan report, the number of private dental hospitals in my country in 2020 was 781, accounting for 82.3%; it is estimated that the number of private dental hospitals in my country will reach 866 in 2021, accounting for more than 83% of the dental hospitals.
However, the development of the oral track still requires a key "turning point". At present, there has not been a national leader in the oral medical market of hundreds of billions. Even the "Yasmao" Tongce Medical is currently mainly in Jiangsu and Zhejiang regions and has not yet been able to cover the whole country. A listed national dental chain group will undoubtedly become a milestone in the development of the dental track, and this is exactly what the leading institutions bet on.
turning point opportunity may be coming soon. On February 28, the official website of the Hong Kong Stock Exchange showed that Riel Group, one of China's largest oral medical service providers, has passed the listing hearing of the Hong Kong Stock Exchange and the China Securities Regulatory Commission. Ruier Group, which has 7 dental hospitals and 104 clinics in 15 first- and second-tier cities across the country, has become the top player in the track in terms of number of institutions and coverage, and its coverage has reached the national scope. Moreover, it has locked in the "elements" in the entire dental medical market through its unique Ruier Dental and Ruitai Dental dual brand strategies respectively targeting the high-end and mid-range markets.
Refer to Hong Kong stock medical service sector, Riel Group has a full opportunity to "ignite" the enthusiasm of the capital market, and smart investors have bet on it early. In April 2021, Riel Group just completed the investment led by the world's renowned investment giant Temasek, followed by OrbiMed Capital, the world's largest medical industry investment fund, with a total of nearly US$200 million in Series E financing. Other star investors and shareholders in the previous rounds of financing include: Goldman Sachs , Hillhouse Capital, Qiming Venture Capital, Xintianyu Capital, KPCB, etc.
In the "darkest moment" when Hong Kong stocks were in a tragic fog and new stocks broke the issue price last year, the performance of the medical service sector gave investors a lot of confidence, especially during the IPO. Both Yonghe Medical and Gushengtang broke the curse of breaking the issue price of medical stocks when they were listed, and the increase was more than 10% on the day of listing.
In fact, successful chain specialist medical institutions have always been favored by the Hong Kong stock market. The subscription was very popular during Jinxin's IPO period, and even closed the book one day in advance. Afterwards, the company's stock price also rose all the way, up nearly 80% from the issue price. The same is true for Haijiya. It has been less than three months since its listing. Compared with the IPO price, the share price has increased by 200%.
Although these chain specialized medical institutions are not in the oral track, their successes have common characteristics. After analysis, the main points are: First, there is a broad market for urgent needs, and second, the operating model is relatively standardized, which can be replicated and expanded quickly, and at the same time, the support of celebrity investment institutions is also provided. And these Riel Group already have them. The head of the golden track running at a scale of 100 billion is full of celebrity investment institutions. Once the IPO is successful, Rier Group will not only become the "first stock of China's mid-to-high-end oral chain", but will also become the first national chain oral brand listed company.
The "road to mid-to-high-end dental" for sustainable expansion
has been working from a clinic to impacting the "first stock in China's oral chain". To a certain extent, its development path is also a "micro" of the domestic oral medical market.
1999, the first clinic of the Ruier Dental Brand under the Ruier Group was established in the most prosperous Chang'an Street , Beijing. At that time, the domestic oral medical market could be said to be blank. The founder of Rier Group, Zou Qifang, conducted a lot of investigations. He believes that although the Chinese people had weak awareness of oral service at that time, with the rise of the middle class and the Chinese government's opening up of high-end medical services, the future of China's oral medical market is full of unlimited possibilities.
Rier Dental first aims at the high-end market, mainly targeting wealthy patients with high purchasing power and great lifelong value in first-tier cities. Most of its clinics are located in prime commercial areas and Grade A office buildings. Zou Qifang also created Ryer Dental completely in a model that matches the top foreign dental clinics. He promoted in-depth cooperation with the School of Stomatology of the University of Pennsylvania in the United States and formulated a blueprint for scale development. The service projects cover comprehensive treatment, cosmetic dentistry, orthodontics, dental implants, children's dentals, etc., aiming to provide one-stop, professional and high-quality oral medical services, covering the entire life cycle of patients, and bringing a healthy and confident smile to every patient.
Since the first Beijing clinic, Ruier Dental has been expanding in an orderly manner. In 2001, he opened up the Shenzhen market and established the Ruier Dental Development Center Clinic; in 2002, he entered the Shanghai market and completed the layout of super first-tier cities. Whether it is vision or layout, Riel is ahead of the curve. Of course, it comes with a price to be ahead of the market. It is not easy to "open up" the blank market. The result is that the expansion of Ruier Dental in the early stage is relatively slow, and only 5 clinics were opened within 5 years. But this "slowness" has laid a solid foundation for Riel and provided a foundation for the "fast" behind it. After successively introducing investors such as Kaipeng Huaying China, Qiming Venture Capital, Defu Capital and Xintianyu Capital in
2010, 2011 and 2014, Rier accelerated the pace of national expansion, adding more than a dozen new clinics per year, and entered Xiamen , Guangzhou, Hangzhou, Tianjin, Chengdu, Chongqing, Xi'an, Qingdao and other cities. By September 30, 2021, Ruier Dental has operated a total of 51 Ruier clinics in seven cities including Beijing, Shanghai, Shenzhen, Guangzhou, Hangzhou, Tianjin and Xiamen. What is even more commendable is that while Riel Dental is expanding rapidly, it still maintains the profitability of high-end Dental. Taking the establishment of Beijing Financial Street Clinic in 2015 as an example, from fiscal year 2016 to fiscal year 2021, it achieved an annual revenue compound growth rate of 37%. In addition, it can still accelerate this growth trend after five years of operation, with revenue growing by 55% from fiscal 2020 to fiscal 2021. According to industry insiders, the store profit margin of Ruier Dental Clinic, which has entered the mature stage, can reach more than 40%.
It is not enough to have a high-end market. With the rise of the middle class and the gradual increase in consumers' emphasis on dental protection, second- and third-tier cities have become a cake that cannot be ignored in all dental markets. At the beginning of the 20th century, China ushered in the "golden decade" of dentistry. Riel also seized this opportunity and established a more affordable and mid-range dental clinic brand outside the high-end market. In 2012, Ruitai Oral came into being.
's previous experience and brand reputation accumulated in the high-end market have made Ruitai "fast". In just four years, Ruitai Oral quickly completed the expansion of networks in core second-tier and provincial capital cities such as Chengdu, Chongqing, Xi'an, Qingdao, and Changsha. As of September 30, 2021, Ruitai Brand operated a total of 7 hospitals and 53 clinics in 10 cities, which was basically the same as Ruier Dental revenue.
, and unlike the self-built model of Ruier Dental, Ruitai Dental is driven by the dual expansion of self-built and mergers and acquisitions. The first Ruitai Dental Hospital was established in Beijing in 2012. It is Ruitai's first and largest dental chairs (nearly 70 dental chairs ). In the past decade of operation, it has attracted a large amount of patient traffic and has achieved a CAGR of 31% annual revenue growth rate from 2012 to 2021.At the cross-regional expansion level, for example, in 2014, the first dental hospital was opened in Chengdu through self-built in other places. Then, as of the end of 2020, five new self-built clinics were added. From the fiscal year 2015 to the fiscal year 2021, the company's Chengdu business revenue increased by 100% at an annual compound growth rate, while the number of dental chairs in the Chengdu system increased from 19 to 81; in Chongqing, it quickly entered the local market by acquiring ten clinics of a local chain brand. Then as of the fiscal year 2021, a second-level specialty hospital and six clinics have been opened. Since then, the revenue of the Chongqing company of Ruier Group has increased significantly, with an annual compound growth rate of revenue from 2016 to 2021 was 35%, and the number of dental chairs in the Chongqing system has increased from the initial 80 to 217. With self-built and mergers and acquisitions, Ruitai's rapid expansion speed is understandable. For Ruier Group, with Ruitai, there is an ever-expanding traffic pool.
's "dual brand" strategy is undoubtedly successful. As of the end of September 2021, the total number of hospitals and outpatient clinics under Ruier Group was 111 (7 hospitals and 104 outpatient clinics), the total number of dental chairs was nearly 1,300, and nearly 900 full-time doctors. The business has spread to 15 cities across the country. In the past 10 years, more than 7.4 million patients were served. According to Frost & Sullivan's report, in terms of total revenue in 2020, Riel Group is China's largest high-end private oral medical service provider.
is not only in the first echelon of the country in terms of quantity, but the acceleration of the expansion pace has not caused the Ruier Group to fall into the so-called "bloody expansion" trap. In fiscal year 2021, Ruier Group's operating income reached 1.5 billion yuan, achieving a year-on-year revenue growth of 37.7%. During the same period, it turned losses into profits and achieved operating profit of 124 million yuan, with operating cash flow of .243 billion yuan, and adjusted EBITDA (profit before taxes, taxes, depreciation and amortization) of 359 million yuan, and adjusted EBITDA profit margin was 23.7%. Moreover, during the past three years' performance reporting period, the proportion of major costs and expenses to revenue has shown a significant downward trend. For example, store labor costs were about 43% in fiscal year 2019 and fell to 38% in fiscal year 2021. As of December 31, 2021, Ruier Group owns cash and cash equivalents , which is RMB 1.1 billion, which can fully support sustained growth.
According to the prospectus, Ruier Group divides its hospitals and outpatient clinics into three stages: 24 hospitals and clinics with less than three years of operation and are in the climbing and expansion stage; 25 hospitals and clinics with a rapid growth stage during the operation period between three to six years and are in the rapid growth stage; 52 hospitals and clinics with a business period of more than six years and have entered a steady growth stage. After more than 20 years of development, the number of stores in Riel Group in the period of steady growth has exceeded half. Farewell to the stage of "small horses pulling big cars", the profit margins of stores in different stages are increasing. Taking the profit margins of hospitals and clinics in the period of steady growth as an example, it has increased from an average of about 24% in fiscal year 2019 to an average of about 33% in fiscal year 2021. In the future, with the continuous increase in outpatient and hospitals entering a period of steady growth, it is foreseeable that they will continue to contribute and release profits to help achieve sustainable expansion.
has broken the bottleneck of national chainization of oral
must both "run fast" and "walk steadily", which can be said to be very difficult in the oral track. The long-term fragmentation of the oral diagnosis and treatment market, the lack of professional talents, and the difficulty in acquiring customers, directly led to the "difficult delivery" of large chain brands. Large-scale expansion in the short term will also bring a series of problems. Jiamei Dental, which once opened more than 100 new stores in one or two years, has closed stores on a large scale due to its rapid pace and its opening of franchise business, and has also caused poor management. The difference is that Ruier Group also directly operates two major brands, Ruier Dental and Ruitai Dental, and the difficulty has increased exponentially.
Riel attributes his experience to the business philosophy of "one of the development priorities of chain enterprises is to replicate corporate culture". Through "moderate treatment" with a strong sense of identity, such as "moderate treatment", etc., it follows the cultural value concept of medical nature. At the same time, relying on the three pillars of corporate culture: talents, brands, and systems, a set of proven and successful and efficient cross-regional expansion and operation management models have been established, achieving replicability and sustainability of national business development and continuously expanding the business landscape.
is split, and the first keyword is "talent". This is also the key to limiting the development of oral mechanisms over the past few decades.There is insufficient dental education in China, and the number of dentists is very scarce. According to the data from China Health Statistics Yearbook , in 2019, there were only 195,000 oral practitioners in China, accounting for 6.1% of the total number of practicing physicians, and 50,000 oral practitioners, accounting for 7.6% of the total number of assistant physicians. The total number of registered dentists is far lower than the demand of public and private oral medical service institutions.
Talent is the "core" of medical services and the largest pillar of Riel Group. In the past twenty years, Ruier Group has carried out campus recruitment in dozens of professional colleges, including Peking University School of Stomatology and West China School of Stomatology, and cultivated and reserved talents by itself; the other is to recruit experienced experts and senior dentists through social recruitment channels. More importantly, Riel Group firmly binds the interests of talents with the development of the group and tries to implement Riel Partners mechanism. At present, a total of 17 dentists have been promoted as management and business partners, and an employee stock ownership plan has been implemented, and a restricted stock incentive of 22.42% is granted to 616 employees and middle and senior executives in the group. On October 1, 2021, an incentive share of about 45% in the employee stock ownership plan has been granted to front-line medical staff.
is definitely a big deal and the effect is obvious. As of September 30, 2021, there were 882 experienced full-time dentists in Riel Group, and more than 50.7% of full-time dentists have a master's degree or above. The full-time dentist team has an average of 10.2 years of industry experience. Dentists with more than five, ten and fifteen years of experience in employment account for 31.9%, 11.2% and 4.8% of the total dentists, and the retention rate of full-time dentists with three or more years of work experience is 95.8%, showing very high doctoral recognition.
Secondly, the prospectus shows that the average monthly performance of each dentist who joined the Riel Group in 2016, 2017 and 2018 increased at a compound annual growth rate of 43%, 54% and 30% during the five, four and three years of employment, respectively, which has become an important manifestation of the Riel Group's incentive and empowering dentist growth.
These people are the cornerstone of the chain expansion of Ruier Group's dual-brand strategic strategy, and what really makes the expansion land is Ruier Group's highly standardized system platform capabilities. Replicable expansion itself means standardization, which can basically be detached into internal and external.
internally, the embodiment of standardization is the operation management SaaS system, electronic case system and training platform. The current system of Ryer Group can support business operations, customer management, data analysis, online training and medical quality management across different brands, regions, organizational structures and service products. This means it can quickly open and expand new clinics and seamlessly integrate acquired clinics under centralized management. Externally, standardization is mainly reflected in supply chain and procurement, which is also a cost advantage that single clinics do not have.
's complete talent system and highly standardized platform operation capabilities make Ruier Group different from the "husband and wife store" model of oral clinics that are widely present in the market. Adhering to the mid-to-high-end route also establishes its unique brand value. These three pillars in turn have broken the widespread "difficulty in acquiring customers" problem in the oral market.
If other serious medical care is "rigid" for patients, then oral medical care is a selective consumption medical care, and patient experience is the key to customer acquisition. Ruier Group has repeatedly emphasized the business philosophy of "moderate medical care" and "establishing a lifelong trust relationship with customers". Under the guidance of such concepts and brand connotation, profitability is never the purpose. It provides reliable and high-quality medical services for every consumer's treatment, and profitability is naturally natural.
According to the data, Riel Group's customers are mainly individual patients. As of September 30, 2021, the revenue generated by individual patients and corporate customers accounted for 93% and 7% of the total revenue respectively. It is worth noting that in the 2019, 2020 and 2021 fiscal years and the 6 months ended September 30, 2021, the follow-up rate of loyal customers (i.e. the percentage of patients who come to Riel Group's clinics or hospitals again within six months after the initial visit) was 42.1%, 41.4%, 45.8% and 47.6% respectively. . Half of the customer retention rate means that "difficulty in acquiring customers" is not an insurmountable problem for Riel.At the same time, in fiscal 2021, more than 30% of new patients of Riel Group were introduced through the recommendations of existing patients, and the customer satisfaction level in the past three fiscal years was 97%, which indirectly illustrates the high stickiness of consumers and the degree of recognition of Riel Ruitai institutions.
In the past 22 years, Riel Group has established a corporate culture with cohesion and industry influence, and has explored three pillars of talent, brand and system. It has grown from a small clinic to a leading player in the oral medical track, but this is not enough. The final outcome of the dental market is not yet determined, and Riel Group needs to run faster and build a wide enough moat. How to continue to maintain healthy and rapid growth and expansion has become the main theme of Riel Group. According to its plan, on the one hand, it will increase the penetration rate in Beijing, Shanghai, Guangzhou and Shenzhen and emerging first-tier cities through Ruier Dentistry; on the other hand, it will expand to major second-tier cities through Ruitai's self-construction and mergers and acquisitions. Not only did they run forward by themselves, Riel Group wants more players upstream and downstream to run forward together.
In the future development plan of prospectus , Riel Group specifically mentioned that it will continue to develop a strong Riel ecosystem and build a DSO business model (DSO is a general term for an operation management company that provides non-clinical business support services for oral doctors and dental clinics). In the future, Riel provides business solutions such as oral clinic medical and operation support, further empowering external institutions and doctors in the industry and accelerating the digitalization and transformation and upgrading of the oral medical industry.
In the dental world, everything is far from the end, but players like Riel have already begun to have the dominance. They have majored in internal strength for the past 20 years and have now begun to empower external output. As for how it can bring greater surprises to the industry, Economic Observer will continue to pay attention.
