Deeply cultivate the field of digital chronic diseases and gradually usher in a harvest period
Zhiyun Health Technology Group is the largest digital chronic disease management solution provider in China. It was founded in Hangzhou in 2014 and launched China's first hospital SaaS product for chronic disease management in 2016. After many rounds of domestic and foreign equity financing, the company has begun to take shape and gradually entered the harvest period. In 2023, the number of registered doctors on the Group platform reached 103,000, and there were about 31 million registered users. From 2019 to 2023, the company's revenue increased from 524 million yuan to 3,691 billion yuan, and profitability continued to grow.
In 2023, the three major sectors are working simultaneously.
In-hospital solutions segment: 2,719 hospitals with SaaS installations, +5.9% YoY; 40 top 100 hospitals, +5.3% YoY; 815 tertiary hospitals, +14.1% YoY; digital marketing services cover 59 SKUs, +73.5% YoY.
Pharmacy Solution Division: 219,716 pharmacies have installed SaaS, 13.6% YoY; 1,232 trading customers, +26.4% YoY; average revenue generated by each trading customer is 487,000 yuan.
Personal Chronic Disease Management Solution Section: 103,000 registered doctors; 185 million online prescriptions issued; number of registered users > 31 million.
The company has entered the chronic disease management market. The AIM model increases hospital stickiness. In recent years, China's medical and health care demand has risen sharply. The domestic chronic disease management market has a huge patient base and high growth potential, and the market space is broad. The company uses the digitization of chronic disease management as an entry point to promote the digitization of in-hospital scenarios. By providing hospitals with hospital SaaS and supplies, the company digitizes and standardizes in-hospital chronic disease management processes to provide patients with chronic diseases throughout the life cycle from inside to outside the hospital.
Using the “hospital first” strategy and the “AIM model” (access, installation, monetization), Zhiyun Health focuses on serving the chronic disease management needs of public hospitals. Through its pioneering hospital SaaS Zhiyun Medical Exchange, it digitizes and standardizes medical procedures, and connects with the systems of more than 80 domestic and foreign manufacturers to improve medical operation efficiency. As of 2023, 2,719 hospitals have deployed Zhiyun Health's solutions. Furthermore, by providing digital marketing services and value-added services, the company cooperated with 39 pharmaceutical companies to achieve growth in the hospital business and high customer retention rates, thereby enhancing the company's monetization capacity and market share.
The P2M strategy enhances the company's profits, and the rich pipeline is worth looking forward to
By implementing the P2M (Patient to Manufacturer) model, Zhiyun Health effectively connects patients to the pharmaceutical industry, and uses its large-scale SaaS network covering the whole country and digital capabilities to achieve a direct connection from patients to industry. Through strategic cooperation with Shaanxi Pharmaceutical Holding Group, Hong Kong Maijikang Healthcare, China Resources 39, and Shanxi Jinbo Biomedical, etc., Zhiyun Health has strengthened its business development and service capabilities in the fields of medical digitalization, drug supply chain, cross-border access to innovative pharmaceutical devices, and chronic disease management. In addition, the company not only promoted its own medicines, such as escularine and tangjingdagliflozin tablets to improve drug accessibility and treatment efficiency, but also promoted its own products through digital marketing, showing the scalability of its SaaS network and appeal to high-quality industrial products, providing significant support for the company's long-term business growth and profit growth. At the same time, the company has multiple P2M drug pipelines and is expected to continue to generate revenue in the future.
The company's P2M drug pipeline lays out various fields such as central nervous system, oncology, metabolism, antiallergies/anesthesia, respiratory diseases, rare diseases, etc., and has a total of 16 self-operated drug pipelines. Among them, escularine tablets, dapagliflozin tablets, and sevilamgane suspensions are already on the market. The market size is impressive, and it is expected that it will continue to bring revenue to the company in the future. In addition, many of the company's products will be launched in 2024-2026, and the market size will basically exceed 10 billion yuan.
The organic combination of inside and outside the hospital forms a deep closed loop flywheel effect to steadily promote in-hospital solutions, while the company continues to develop pharmacy solutions and personal chronic disease management solutions. In 2019, the company launched Pharmacy SaaS Zhiyun Consultation to enable pharmacies to provide real-time in-store online consultation and prescription issuance services for customers without an appointment. As of December 31, 2023, 219,716 pharmacies have installed Zhiyun Consultation, covering 35% of pharmacies in China. In terms of personal chronic disease management solutions, the company mainly provides out-of-hospital monitoring, consultation and prescriptions for patients with chronic diseases. As of December 31, 2023, the company had more than 100,000 registered doctors and about 30 million registered users, with a cumulative total of over 500 million prescriptions in 2021-2023.
The company continues to lay out data applications, develop industry models to accelerate the application of artificial intelligence policies to support the development of the data application industry, and continue to lay out this field. In 2023, “Opinions on Further Improving the Medical and Health Service System” was issued. The document advocates “the active use of Internet, artificial intelligence and other technologies to continuously optimize service processes”. At the company level, Zhiyun Health is vigorously strengthening medical artificial intelligence technology and accelerating the application of artificial intelligence based on the two major industry models Cloud GPT and CloudDTX. The former is used to support clinical decision-making, and the latter is used to assist in drug and medical device development.
Investment advice
We are optimistic about the company's nearly 2,800 hospitals and nearly 220,000 pharmacies, more than 100,000 registered doctors, channel resources and built AI systems with nearly 200 million online prescriptions every year, the release of proprietary products in 2024, and the continuous cooperation with the company.
We estimate that the company's revenue for 2024-2026 will be 48.3/61.3/7.73 billion yuan, respectively, up 30.8%/27.0%/26.1% year-on-year, net profit to mother of -0.4/0.03/66 billion yuan, and adjusted profit for 2024/2025/2026 to be 0.45/1.5/340 million yuan, respectively. First coverage, giving a “buy” investment rating.
Risk warning
Industry regulatory risks, increased competition risks, commercialization risks, etc.