As we all know, the concept of "robot" has appeared more and more frequently in various industries. Recently, a medical company with the concept of "surgical robot" has entered the public's field of vision.

On July 9, Yida Health Health Technology Holdings Co., Ltd., a provider of intelligent precision surgical solutions, formally submitted a prospectus to the Hong Kong Stock Exchange for listing on the main board of the Hong Kong Stock Exchange.

Zhitong Financial APP learned that the company, founded in 2003, focuses on precision surgery and is a pioneer in the innovation of intelligent solutions in this field. Its product line covers intelligent surgical robots and accurate surgical planning. However, despite the scarcity of surgical robots, it cannot escape the fate of most innovative medical companies to go public with injuries-the company has lost more than 500 million yuan since 2019.

Next, we might as well discuss its growth from the perspective of YIDA Health's industry prospects and operating conditions.

Covering a comprehensive product line, the market potential needs to be unleashed.

In terms of product portfolio, Yida Health's current product line covers percutaneous surgery robots (IQQA-Guide series), precision surgery solutions and consumables products.

1. Percutaneous surgery robot (IQQA-Guide series) is a percutaneous surgery robot developed by the company, covering the core product IQQA-Guide 1.0 (MII), its indication extension and IQQAGuide 2.0 (SI-ROBOT). It is reported that IQQA-Guide 1.0 (MII) was approved by FDA in November 2015, and then obtained the registration certificate of three types of medical devices issued by NMPA in January 2020 through NMPA's special approval procedure for innovative medical devices. According to NMPA, it is the first puncture surgery navigation device for adult lung and abdominal soft tissue solid organs in China, and NMPA also calls it "has significant clinical application value".

It should be pointed out that there are not many participants in percutaneous surgery robots in China, there are only three market participants, and a total of four products have been approved by NMPA, and WIDA Health IQQA-Guide 1.0 (MII) is one of the participants who got the NMPA "pass".

2. Yeda Health's precision surgery solutions mainly include IQQA-3D, IQQA-Liver and IQQA-eQMR, which are designed to make use of fully customized 3D images of patients' organs to assist in preoperative planning and postoperative evaluation. Among them, in order to solve the problem of uneven distribution of medical resources, the IQQA cloud platform was launched in January 2019. IQQA cloud platform, as the cloud platform of IQQA-3D, can be used to remotely generate eOrganMap of patients for surgery planning. In addition, the platform also allows doctors from different hospitals to communicate at the same time and carry out surgery planning in eOrganMap, which can effectively solve the pain points with uneven distribution of medical resources.

Consumables products include disposable surgical consumables compatible with the IQQA-Guide series, such as electromagnetic navigation sensors, surgical needles and navigation adapters.

Based on the above product portfolio, it is not difficult to see that the Yida Health product line has gradually established a more comprehensive product pipeline of precision surgical solutions, and in the product portfolio of surgical robots and precision surgical solutions and consumables, almost completed the chain layout related to lung and abdominal surgery.

If the layout of the chain is perfect, what about the "east wind" of the industry in which it is located, whether it has come or not yet?

Judging from the contents of the prospectus, the surgery industry has gradually entered a "precision era". Because precision surgery is different from traditional surgery, it aims to improve the accuracy of surgery in order to achieve a balance between removing lesions, protecting organs and controlling damage. In order to achieve the above goals, medical equipment support integrated with technologies such as medical imaging technology, accurate surgical planning solutions and surgical robots has become indispensable medical equipment.

That is to say, surgical robots and accurate surgical planning solutions, which are both in the two major areas of precision surgery, may usher in the development dividend of stepping into the "precision era" step by step.

Divided into two, the surgical robot industry has the characteristics of small scale, low permeability and fast growth. According to the prospectus, China's surgical robot market is still in its infancy and the penetration rate is obviously insufficient. From 2016 to 2020, China's surgical robot market increased from 900 million yuan to 3 billion yuan, with a compound annual growth rate of 36.5%. Driven by government policies, it is expected that China's surgical robot market will grow rapidly, reaching 20.9 billion yuan in 2025, with a compound annual growth rate of 47.9 percent, and eventually to 57.1 billion yuan in 2030.

The market for percutaneous surgical robots, where Yida Health is located, also has the above characteristics: the global market for percutaneous surgical robots is expected to increase to US $1203.5 million in 2025, with a compound annual growth rate of 26.0% from 2020 to 2025, and finally reach US $2793.7 million in 2030. Compared with developed countries, the market penetration of percutaneous surgery robots in China is seriously insufficient. In 2020, the penetration rate in China (as a percentage of all surgeries using percutaneous surgery robots) was only 1.36%.

In the market for accurate surgical planning, preoperative planning is a key part of improving accurate surgery, which can solve the current unmet clinical needs and surgical pain points, especially in limited visualization, poor quantification and lack of controllability. One of the main applications is chest and abdominal organs.

In 2020, only 31700 cases of thoracic and abdominal surgery were supported by precise surgical planning. this number is expected to increase rapidly, reaching 141600 cases in 2025, with a compound annual growth rate of 34.9% from 2020 to 2025. It is expected that 639200 cases of thoracic and abdominal surgery will be supported by accurate surgical planning in 2030.

Judging from the characteristics of the above-mentioned industries with low penetration and fast growth, it is not difficult to find that there may be more room for development where YIDA Health is located at present.

The gross profit margin is as high as 90%, but the cumulative loss in two years exceeds 500 million yuan.

The wind of the industry is right, and the product portfolio is also very comprehensive, so what are the fundamentals of Yida health?

As expected, like most innovative medical companies, Yida Health is growing rapidly, but it is not yet profitable.

In terms of revenue, the company achieved revenue of 20.059 million yuan in 2019 and 22.303 million yuan in 2020, an increase of 11.9 percent over the same period last year. As of the first quarter of 2021, its revenue increased significantly to 10.26 million yuan, an increase of 485.52% compared with the same period in 2020.

In terms of net profit, unlike the fast-growing revenue performance, the company has been losing money in recent years, with net losses of 247 million yuan, 286 million yuan and 61 million yuan (60.576 million yuan) respectively from 2019 to the first quarter of 2021, with a cumulative loss of more than 500 million yuan.

It should be noted that although Yida Health loses money every year, the gross profit margin is really not low.

According to the prospectus, in 2019, 2020 and the first quarter of 2021, Yida Health's overall gross profit margin was 96.3%, 95.2%, 91.8% and 92.6%, respectively. Among them, the gross profit margin of technical services for precision surgical solutions was the highest, reaching 97.0% in the first quarter of 2021, and the gross profit margin of surgical robots was also good, at 86.7%.

The gross profit margin is high and revenue is growing, but why is Yeda Health still in a state of loss?

From the financial data of expenditure, the company's R & D expenditure from 2019 to the first quarter of 2021 was 24.869 million yuan, 29.564 million yuan and 8.915 million yuan respectively, of which 2019 and 2020 exceeded the revenue of the same period. In addition to a large number of R & D costs, Yida Health also incurred a large number of sales and distribution expenses, which were 37.249 million yuan, 30.288 million yuan and 9.294 million yuan respectively during the reporting period, which were higher than the R & D expenditure in the same period.

Based on the above data, we can see that the "large" investment in R & D expenditure and sales and distribution expenditure may be the main reason why Yinda Health has not yet made a profit.

It should be pointed out that, under the influence of perennial losses, the company's cash flow is also in a relatively volatile state-from 2019 to the first quarter of 2021, the net cash used in the company's operating activities was 43.2 million yuan, 33.3 million yuan and 16.9 million yuan respectively. In response to this performance, the company also warned the risk in its prospectus that "the company cannot guarantee that it will generate cash flow from its operating activities in the future."

In addition, as of March 31, 2021, the company's cash and cash equivalents were 1.055 billion yuan. In response, Yida Health also admitted that the company's existing cash and cash equivalents may not be sufficient to complete the development or commercialization of all the products currently under research, as well as to invest in additional projects.

At the same time, Yida Health also noted liquidity risks in its prospectus, saying, "the company recorded net liabilities in the track record period." You cannot be assured that there will be no net current liabilities or net liabilities in the future, which will expose the company to liquidity risk. " Specifically, from 2019 to the first quarter of 2021, the company's net debt was 591 million yuan and 818 million yuan 883 million yuan, which is indeed a certain liquidity risk for YIDA Health, which is still in a state of loss.

To sum up, it is not difficult to find that factors such as perennial losses, high net liabilities and fluctuations in cash flow may cause the fundamentals of Yeda health not to be "good-looking". However, examples of "long-term things should be viewed" in the medical and health industry can also be found everywhere. therefore, it remains to be seen whether it can reverse this unfavorable situation through scarcity and the prospect of the industry.