We are an oncology healthcare service provider in China serving both cancer patients and third-party medical institutions, with a market share of 0.5% in terms of revenue in 2022 in the private oncology healthcare service market in China, according to the F&S Report.
We serve both cancer patients through our self-owned medical institutions and third-party medical institutions through our medical equipment, software and related services. In our self-owned medical institutions, we provide a full spectrum of oncology healthcare services to cancer patients, leveraging our multidisciplinary team specialists and diagnosis and treatment capabilities featuring precision radiation therapy. As of the Latest Practicable Date, we had six self-owned medical institutions in operation located in Guangzhou, Shanghai and Datong, including two cancer hospitals, three outpatient centers or clinic and one imaging diagnosis center, and an internet hospital. We had one additional self-owned cancer hospital under construction in Shanghai, as of the same date. We expect our Guangzhou Hospital to commence the operation of its proton center and provide proton therapy services in 2024.
Through our medical equipment, software and related services launched since our inception in 2008, we serve a widespread network of enterprise customers, primarily hospitals, with integrated oncology-related services, including primarily sales and installing of medical equipment and software, management and technical support, and operating lease. Furthermore, we have integrated our online and offline medical resources into our cloud platforms to offer various cloud-based services. Our cloud platforms serve to improve the quality of oncology healthcare in lower-tier cities and alleviate the uneven distribution of critical healthcare resources in China. In 2020, 2021, 2022 and the six months ended June 30, 2022 and 2023, we served 29, 88, 77, 42 and 47 enterprise customers under our medical equipment, software and related services, respectively. The number of our enterprise customers increased significantly in 2021 as a result of an upgrade of our service capabilities and a step-up of our market education efforts. As of June 30, 2023, we served 17 partnered hospitals with cloud platform services, management and technical support, and operating lease.
Our revenue increased significantly from RMB166.3 million in 2020 to RMB470.5 million in 2021. Our revenue increased by 0.4% from RMB470.5 million in 2021 to RMB472.2 million in 2022. Our revenue increased by 98.3% from RMB143.8 million in the six months ended June 30, 2022 to RMB285.2 million in the six months ended June 30, 2023. We recorded gross profit of RMB7.4 million in 2020, and incurred gross loss of RMB47.1 million, RMB142.6 million, RMB86.4 million and RMB35.0 million in 2021, 2022 and the six months ended June 30, 2022 and 2023, respectively, primarily due to the significant operation costs incurred for our medical institutions during the ramp-up stage. Our gross loss increased in 2022, primarily because our Guangzhou Hospital became operational in June 2021, with the employee benefit expenses, depreciation and amortization, and cost of pharmaceuticals, consumables and other inventories incurred during the ramp-up stage with insufficient revenue to recoup its operation costs in 2022. In 2020, 2021, 2022 and the six months ended June 30, 2022 and 2023, we recorded net loss of RMB591.3 million, RMB831.1 million, RMB637.2 million, RMB415.1 million and RMB214.3 million, respectively, primarily due to our gross loss position and our significant finance costs, primarily including interest charge on redeemable capital contribution which represented interests accrued on the special rights of the [REDACTED] Investors. We recorded adjusted net loss (non-HKFRS measure) of RMB318.7 million, RMB487.6 million, RMB471.2 million, RMB250.1 million and RMB214.0 million in the same periods, respectively. See “Financial Information—Non-HKFRS Measure” for a reconciliation of our net loss to adjusted net loss (non-HKFRS measure). In 2022 and the six months ended June 30, 2023, we recorded net operating cash outflow of RMB93.6 million and RMB130.8 million, respectively. We may not be able to turn profitable in the near future.
MARKET OPPORTUNITIES
China had a large number of newly diagnosed cancer patients and cancer-related deaths in 2022, accounting for approximately 23.8% of the new cancer cases and approximately 26.9% of the cancer-related deaths worldwide, according to the F&S Report. China’s oncology healthcare service is in the early stages of development relative to more mature markets globally, including the United States, according to the same source. China’s oncology healthcare service faces challenges in the scarcity and uneven distribution of medical resources, which causes patient overcrowding, especially in public hospitals in first-tier cities.
On the one hand, uniform standard of care and advanced methodologies, such as precision radiation therapy, are sporadically implemented in China, which leaves significant room for improvement in treatment quality, according to the F&S Report. On the other, healthcare resources are generally concentrated in major cities and in large public healthcare institutions in China, and as a result, the quality of diagnosis, treatment and patient experience in lower-tier cities may not be guaranteed. An integrated healthcare solution, consisting of offline supply-chain and operational services as well as advanced cloud technology to facilitate remote diagnosis and treatment, are expected to tackle these challenges. The provision of such solution requires a combination of various healthcare resources, hardware, software and algorithms, resulting in an underdeveloped support service market, according to the F&S Report.
As a result of these challenges, the five-year survival rate was approximately 40.5% for all cancer types combined in China, as compared to approximately 67.7% in the United States, according to the F&S Report. Driven, in part, by the economic development and consumption upgrading in China, the patient demand for patient-oriented cancer care for improved quality of life has significantly increased. Revenue of private oncology healthcare institutions in China increased from RMB18.9 billion in 2016 to RMB53.0 billion in 2022, at a CAGR of 18.7%, and is expected to reach RMB109.2 billion in 2026, at a CAGR of 19.8% from 2022 to 2026, according the F&S Report. The revenue of cancer treatment support service market in China increased from RMB4.9 billion in 2016 to RMB7.0 billion in 2022, at a CAGR of 6.2%, and is expected to reach RMB9.7 billion in 2026, at a CAGR of 8.6% from 2022 to 2026, according the F&S Report. We believe that we are well positioned to capture the market growth, leveraging our medical professionals, diagnosis and accumulated healthcare resources within our network of enterprise customers.
Source: Concord Healthcare (02453) Prospectus (IPO Date : 2023/12/29) |