US Stock IPO Outlook | Two and a half years of losses exceeding 300 million yuan, Pomegranate Cloud, a player in patient chronic disease management, faces "common issues"

With the arrival of an "aging society," the incidence of chronic diseases such as hypertension, heart disease, and diabetes continues to rise, and the chronic disease management market is expanding. According to data from the Huajing Industry Research Institute, the market size of chronic disease management in China was 5.59 trillion yuan in 2020, a year-on-year increase of 23.21%. It is expected to exceed 10 trillion yuan by 2026, with a CAGR of 11.31%.

The industry's growth prospects are optimistic, and companies in the sector are actively expanding into the capital market. Recently, POMDOCTOR LIMITED, the substantial controlling company of Guangzhou Qilekang Digital Health Medical Technology Co., Ltd., publicly disclosed its prospectus with the U.S. Securities and Exchange Commission (SEC), planning to list on the NASDAQ in the United States under the stock code POM.

According to Zhitong Finance APP, as early as September 2021, POMDOCTOR LIMITED submitted a prospectus to the SEC, but it wasn't until January of this year that the company officially received the overseas issuance and listing filing notice from the International Cooperation Department of the China Securities Regulatory Commission, allowing the IPO to move forward.

Losses Exceed 300 Million in Two and a Half Years

As a leading online medical service platform for chronic diseases in China, the company focuses on chronic disease management and pharmaceutical services, creating a one-stop medical service platform that organically connects patients, doctors, and drug suppliers. Since launching its mobile platform in 2015, the company has accumulated rich experience in chronic disease management.

According to data from Frost & Sullivan, based on the number of contracted doctors in 2022, the company ranks sixth in China's internet hospital market. As of June 30, 2024, the total number of contracted doctors has stabilized at over 212,000, while the number of patients has grown from approximately 638,000 at the end of 2022 to 654,000 at the end of 2023, and further increased to 683,000 by June 30, 2024. By June 30, 2024, the company's contracted doctors had issued approximately 3.04 million prescriptions.

Zhitong Finance APP believes that one important reason for the growth of POMDOCTOR LIMITED is its insight into the long-term supply-demand imbalance and uneven distribution of quality medical resources. The company aims to leverage digital means to build a comprehensive healthcare service ecosystem, achieving strong interaction between doctors and patients to further meet diagnostic and treatment needs.

For patients, the more comprehensive operational model of POMDOCTOR LIMITED enhances the accessibility and convenience of medical services, making it highly attractive.

Driven by market demand, the creation of a comprehensive health service system is also becoming an industry trend. Currently, players in chronic disease management such as Zhiyun Health and Ark Jianke are also continuously improving their service ecosystems. For example, Ark Jianke adopts a combination of online and offline models to provide patients with convenient and efficient medical services and actively strengthens cooperation with major hospitals and pharmacies to achieve shared medical resources.

In this context, POMDOCTOR LIMITED may face certain competitive pressures in the market. Additionally, it is worth mentioning that how to achieve profitability remains a development challenge for chronic disease management platforms like POMDOCTOR LIMITED.

Specifically, building a chronic disease management platform requires long-term investment of substantial resources. The recruitment and training of medical personnel, the construction of warehousing and distribution systems, and the expansion of drug inventories all place high demands on funding, and the accumulated operating costs squeeze profit margins, making it difficult for the platform to enhance its profitability During the reporting period, Shiliu Cloud Medical has not been able to escape the predicament of losses. The prospectus shows that in 2022, 2023, and the first six months of 2024, Shiliu Cloud Medical's revenues were 245 million yuan (unit: RMB, the same below), 305 million yuan, and 150 million yuan, respectively, with corresponding net losses of 125 million yuan, 145 million yuan, and 67 million yuan.

Left Hand Burns Money to Nurture "Ecosystem," Right Hand Supplies Chain to Generate Cash Flow

According to Zhitong Finance APP, Shiliu Cloud Medical's revenue mainly comes from two sectors: one is the revenue from internet hospitals, which includes income from online consultations and prescription renewal services, as well as revenue from online pharmacy sales, accounting for about 25%; the other is revenue from the pharmaceutical supply chain, which includes income from pharmacy retail and pharmacy wholesale, accounting for about 75%. Although the gross profit margin of the internet hospital sector is as high as 50%, the pharmaceutical supply chain business, which accounts for nearly 80% of total revenue (with a gross profit margin of only 1.4%), is the real core, with wholesale business relying on customer expansion to support a revenue scale of 300 million.

In the view of Zhitong Finance APP, Shiliu Cloud Medical uses the loss-making ecosystem (internet hospital) to incubate the supply chain business: 3.04 million prescriptions issued by doctors flow to self-operated pharmacies, and low-margin wholesale transactions instead create a "business closed-loop" capital story.

Can this model of "left hand burns money to nurture the ecosystem, right hand supplies chain to generate cash flow" really be recognized by the capital market?

It is worth noting that before going public, Shiliu Cloud Medical had already gained favor from multiple capital sources, with several investments made in Shiliu Cloud Medical. According to Tianyancha, from 2015 to 2021, Shiliu Cloud Medical completed 9 rounds of financing, with several well-known capital firms such as Sequoia China, JD Group, and Gaotejia Investment appearing on the shareholder list.

The support from industrial capital has given Shiliu Cloud Medical a seemingly perfect "ecosystem story": Buchang Pharma provides drug resources, Focus Media covers a city population of 300 million, and JD Group empowers next-day delivery logistics for pharmaceuticals. Backed by these three parties, Shiliu Cloud Medical has the opportunity to tap into the trillion-yuan chronic disease market, and its valuation has rapidly climbed. According to iiMedia Research's 2023 China New Economy and "China Unicorn Report," Shiliu Cloud Medical's market valuation has exceeded 3 billion USD in the top 200 unicorn list.

However, even the strategic cooperation with Meinian Health in 2025—attempting to guide 30 million health check users into the chronic disease management chain—faces real challenges: the overlap between the health check population and chronic disease patients is not high, and the cost of converting healthy individuals into paying users is extremely high From the practice of Shiliu Cloud Medical, it has ultimately explored the traditional route of "doctor leads patient." The prospectus shows that the company believes that doctors are the most important resource in the healthcare service industry, thus establishing an open internet hospital business model centered around doctor services, providing a series of tools through an intelligent online medical service platform to facilitate online consultations and prescriptions by doctors.

However, it is important to note that the "doctor leads patient" model highly relies on the personal brand of doctors. Once doctors leave or policies restrict doctors from practicing in multiple locations, user growth will face a cliff risk. More critically, the tools for doctor services do not have significant differences within the industry, as similar platforms like Weiyi and Ping An Good Doctor also offer similar tools.

Nevertheless, from the perspective of the entire industry, the internet healthcare sector remains vibrant. On December 30, 2024, Health Road successfully listed on the main board of the Hong Kong Stock Exchange, marking a key step for Health Road in the internet healthcare field. On the same day, iFlytek Medical also debuted on the Hong Kong Stock Exchange, focusing on the field of medical artificial intelligence.

It should also be noted that although the overall healthcare industry remains highly active, the chronic disease management sector that Shiliu Cloud Medical is in has been facing a series of challenges related to medical technology and business models.

In July 2022, Zhiyun Health listed on the Hong Kong Stock Exchange as the "first stock in chronic disease management," with an issue price of HKD 30.50 per share, boasting an issuance market value of HKD 17.905 billion. Currently, Zhiyun Health's stock price is HKD 1.40 per share, with a market value of only HKD 904 million.

In July 2024, as a well-known chronic disease management platform under Ark Cloud Health Holdings Limited, Ark Health officially listed on the main board of the Hong Kong Stock Exchange. However, it directly broke below the issue price on its first trading day on July 9, closing at HKD 4.53 per share, down 44.62%.

This shows that the story of chronic disease management is not easy to tell in the capital market. On one hand, the profit model centered on service in chronic disease management has not been truly established. On the other hand, chronic disease management requires long-term investment of substantial resources to build platforms, attract and retain professional medical personnel, and conduct patient education, leading to high operational costs and difficulties in profitability. Just like the current Shiliu Cloud Medical, the "sexy" internet healthcare business has been in a state of blood loss, relying solely on the supply chain business for revenue