Healthcare marketer explores new avenuesmoney-glitz | Avery Chen 11 Jan 2021
Mediwelcome Healthcare Management & Technology is planning to raise up to HK$200 million through a Hong Kong initial public offering, as the healthcare marketing company is seeking new profit streams following declining margins of its core business.
The Beijing-based company began a public sale on the last day of 2020. It is offering 50 million shares at an indicative price range of between HK$3 and HK$4 per share. Retail investors have placed HK$1.56 billion in orders, meaning the retail portion of the deal was oversubscribed by at least 77 times.
Mediwelcome was delisted from the National Equities Exchange And Quotations, known as the New Third Board, in February 2019, three years after going public.
Established in 2000, Mediwelcome mainly provides medical conference services, patient education and screening services, as well as marketing strategy and consulting services.
It said it is the largest marketing solutions provider for cardio-cerebral-vascular diseases in mainland China by revenue in 2019, with a market share of 4.9 percent, citing a report by China Insights Industry Consultancy.
Mediwelcome generated more than half of its revenue from the medical conference business, helping pharmaceutical companies and non-governmental organizations to organize conventions and seminars.
Its revenue grew by more than 42 percent year-on-year to 427.16 million yuan (HK$512.5 million) in 2019, driven by the medical conference business. But net profit slumped by 44.4 percent to 22.06 million yuan during the year, as it slashed prices for patient education and screening as well as consulting services in face of fierce competition.
Due to the price reduction, Mediwelcome's gross profit margin dropped to 22.2 percent in 2019 from 27.6 percent in 2017.
In the first half of last year, Mediwelcome's revenue fell by 14.37 percent to 138.68 million yuan. And it incurred a net loss of 4 million yuan, compared with a profit of 2.08 million yuan a year ago. That is because its medical conventions business was disrupted by the Covid-19 pandemic. Despite shifting some conventions to online platforms, revenue was also dragged down by lower sponsorship fees and smaller scale of meetings.
The overall gross profit margin further dropped by 1.7 percentage points to 20.3 percent for the six months ended June 30, 2020.
As daily life in the mainland has returned to normal in the second half of last year, Mediwelcome expects its 2020 revenue will remain similar to that of 2019. But net profit is projected to decrease to no less than 21 million yuan, mainly due to increased selling expenses of its new internet hospital services and the one-off listing expenses.
To explore new business opportunities, Mediwelcome has started to offer contract research organization (CRO) services in late 2019, which consists of patients' recruitment and clinical data collection services, and internet hospital services, which provides online follow-up consultations to the physicians' existing patients and e-prescription.
The CRO contributed a mere 2 percent of revenue in the first half of last year. It is facing competition from high-profile players like WuXi AppTec (2359), Hangzhou Tigermed Consulting (3347), and Pharmaron Beijing (3759).
The internet hospital services have not yet recorded a profit, while Mediwelcome believes it can take advantage of huge resources of doctors and patients accumulated offline, especially in the cardiovascular and cerebrovascular diseases area.
Mediwelcome says it plans to use 58 percent of the net proceeds from the IPO to broaden customer base, disease area coverage and patient base. Some of the funds will be spent on the development of internet hospital services and CRO services, as well as working capital and general corporate purposes.
CEB International Capital is the sole sponsor of the deal.