Recently, Zhiyun Health, which submitted its prospectus for the second time, was listed on the Hong Kong Stock Exchange with an issue price of HK$30.5 and a market value of over HK$17 billion.
This high-profile “first stock in chronic disease management” fell below the issue price on the day of its listing, with the lowest intraday price of HK$24.35, a drop of 20.16%. As of the close, Zhiyun Health reported 28.2 Hong Kong dollars, a decrease of 7.541%, and the Hong Kong stock market value was 16.554 billion Hong Kong dollars.
In fact, the medical and health sector of the Hong Kong Stock Exchange has been in decline since the second half of 2021. Not only did the newly listed shares frequently fall below the issue price, but most of the companies that were the first to go public through 18A were unable to guarantee their initial market value.
Zhiyun is healthy and has not been able to escape the fate of breaking when it goes public. Time and life.
Loss of 7.6 billion in three years, the market must be listed
According to Zhiyun Health’s prospectus data, in the three years of 2019, 2020, and 2021, Zhiyun Health’s revenue was 524 million yuan, 839 million yuan, and 1.757 billion yuan, respectively, with a very impressive growth rate.
But at the same time, the company’s losses are also expanding year after year, respectively 565 million yuan, 2.897 billion yuan, 4.153 billion yuan.
The more you earn, the more you lose.
Zhiyun Health introduced in the prospectus that in order to promote business growth, the company continued to expand its teams in various functions including R&D, sales and marketing, and general administration, which increased staff costs and resulted in losses during the reporting period.
The 2020 loss was exacerbated by additional promotional expenses incurred from a one-time rebranding campaign in 2020.
Within three years, Zhiyun Health’s adjusted net losses were 150 million yuan, 636 million yuan, and 444 million yuan respectively. Until the listing, Zhiyun Health failed to achieve profitability, and it still relied on the wealth of financing in the past few years to survive. .
Zhiyun Health has raised funds almost every year since its establishment. 11 rounds of financing have been completed before listing, with a total financing of more than 3.5 billion yuan.
Zhiyun health investors include China Merchants Bank, SIG Global, IDG Capital, Sunshine Life Insurance, Lionet Fund, OP Financial Group, Ping An Ventures, CICC, Matrix Partners, Chow Tai Fook, Pulin Fund, etc. Its founder, Kuang Ming, is still the largest shareholder.
The information comes from the prospectus of Zhiyun Health
According to the statistics of “Market Value Wind and Cloud”, in 2021, Zhiyun Health’s cash burn rate excluding financial asset trading will reach 810 million.
As of the end of last year, the company had a total of 1.12 billion in cash and cash equivalents and wealth management products. At the rate of burning money in 2021, this money can only last for more than a year. It can be imagined that if the listing cannot be realized this year, Zhiyun may suffer a healthy loss and layoffs.
In addition, on the balance sheet of Zhiyun Health at the end of 2021, the amount of convertible redeemable preferred shares measured at fair value is as high as 8.91 billion.
Investors in the primary market who have previously invested in Zhiyun Health through preferred shares and convertible bonds and gained value in the primary market are bound to realize cash in the secondary market after the company goes public, which will also bring a lot of pressure to Zhiyun, and the stock price will inevitably will be affected.
For Zhiyun Health, listing does not mean sitting back and relax, and there is still a quagmire ahead.
Chronic disease management sale company?
In April this year, while Zhiyun Health was still waiting for the progress of its IPO application, Miao Health, which is also engaged in health management, experienced a new round of layoffs.
Leifeng.com has previously reported “Behind the Scenes of Layoffs at Miao Health: The “Industry Fate” of Financing 1 Billion, Listing Failure, and Dispersing Employees”. Due to the failure of the US stock market listing last year, Miao Health has made several layoffs in order to reduce expenses. Pay cuts, pay cuts, and try to continue life for a while in this way.
Although Zhiyun Health, which has successfully listed in Hong Kong, is more fortunate than Miao Health, the problems faced by Miao Health are also unavoidable – the business model of health management is not easy to work.
According to Zhiyun Health’s prospectus, from 2019 to 2021, the company’s revenue is mainly divided into three parts, the product revenue from sales of hospital and pharmacy supplies and personal chronic disease management products, and the provision of SaaS for hospitals and pharmacies and digital marketing for pharmaceutical companies Two service income.
Among them, product revenue has always been the main revenue of Zhiyun Health, accounting for more than 90% of revenue in 2019. Even though the proportion has declined in the past two years, it has always remained above 60% of the total revenue.
In other words, most of Zhiyun Health’s revenue is from selling goods. However, providing SaaS chronic disease management services for hospitals and pharmacies accounts for less than 10% of the revenue.
“Zhiyun Health mainly relies on special drugs to make money and manages the whole course of high-paying patients. The number of people served is small but the income is high.”
On the day of the listing, an industry insider told Leifeng.com, “They acquire customers by giving away the SaaS system to the hospital for free, and the maintenance cost of the system is very high.”
The information comes from the prospectus of Zhiyun Health
Although it wears the title of “the first stock in chronic disease management”, in fact, Zhiyun Health still makes a living by selling goods. From 2018 to 2021, Zhiyun Health’s revenue increased by 500%, and more than half of the increase came from the sale of hospital supplies.
However, Zhiyun Health does not directly sell to C-side patients, its customers are B-side medical institutions.
It is its chronic disease management SaaS product that enables Zhiyun Health to discover this revenue scenario.
As of the end of last year, there were 2,369 hospitals and pharmacies deploying Zhiyun Health SaaS products, and 172,000, including about 640 tertiary public hospitals and about 1,036 secondary public hospitals, accounting for about 21.4% of China’s tertiary public hospitals. % and about 10% of secondary public hospitals.
The information comes from the prospectus of Zhiyun Health
However, there are only 118 paying users in 2,369 hospitals, and less than half (about 84,000) of 172,000 pharmacies are willing to pay. It is obviously unrealistic to rely on SaaS products and services to generate revenue.
Therefore, Zhiyun Health took a different approach, using the native traffic attracted by SaaS products to start a business of selling goods and digital marketing. These two revenues also surpassed chronic disease management services and became the top two in Zhiyun Health’s revenue.
How did Zhiyun Health change from an Internet medical company that aspires to chronic disease management to a “selling” company?
Does “the first share of chronic disease management” still have its original intention?
The history of Zhiyun Health in chronic disease management can be traced back to the “Hundred Sugar War” period around 2014. Diabetes management has entered the field of vision of many entrepreneurs and investors. Hundreds of diabetes management software have come out one after another. In the fierce competition Few companies survived.
Zhiyun Health, which was also called “hand-held sugar doctor” at that time, was one of them. After gaining a firm foothold, Zhiyun Health is no longer limited to diabetes management, and has expanded its business scope to other chronic diseases such as hypertension.
To collect patient diagnostic data, Zhiyun Health launched the country’s first hospital SaaS product for chronic disease management in 2016. However, due to the high price, few customers are willing to pay for it, and the annual fee of up to 250,000 yuan makes many hospitals prohibitive.
After struggling on the road of SaaS paid services for a while, Zhiyun Health decided to temporarily give up generating revenue directly from this, and began to think about other ways of monetization.
In 2016, after obtaining the drug business license, Zhiyun Health directly reached customers with the help of its own SaaS products and began to sell medical supplies to hospitals. From 2018 to 2021, Zhiyun Health’s revenue increased by 500%, more than Half of the increase came from sales of hospital supplies.
However, the gross profit margin of hospital supplies sales is not high, only about 10%, and the role of distributors cannot establish barriers, which is not a good way out for enterprises.
Until 2019, Zhiyun Health started a digital marketing business. Zhiyun Health advertises for pharmaceutical companies on its own hospital SaaS system, and takes a cut of the sales revenue of pharmaceutical companies according to performance.
In 2021, the number of hospitals that deploy Zhiyun Health SaaS will reach 2,369. On the demand side, there are 15 pharmaceutical companies that cooperate with the company, and the number of SKUs for digital marketing is 22.
From 2019 to 2021, the compound annual growth rate of digital marketing revenue is as high as 237%, and the gross profit margin is as high as 87%, ranking first among all the company’s businesses.
Relying on the high gross profit margin and growth space of digital marketing, Zhiyun Health’s valuation continued to rise, and it finally successfully went public in Hong Kong.
For the company, the development of this business line is worth the money, but its original intention of chronic disease management has been squeezed into the corner again. When can the “first share of chronic disease management” rely on real chronic disease management? Stand firm?
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