Stripping off easily to raise funds and go public in Hong Kong, and playing the “AI” card easily and healthily

Photo source: Visual China

Blue Whale News, February 8 (Reporter Wang Xiaonan)On January 28, Easy Health Group (hereinafter referred to as Easy Health) submitted a prospectus to the Hong Kong Stock Exchange, planning to list on the main board, with China International Capital Corporation and China Merchants Securities International as joint sponsors.

From investors to entrepreneurs, Yang Yin, a capital magnate who has been working hard in the sea for 10 years, recommended an easy and healthy sprint to the Hong Kong Stock Exchange after the controversial easy fundraising and divestiture. In recent years, Easy Health has lacked the stamina for development, and the company’s active users have also declined despite the fatigue of user growth. Increasing income without increasing profits has also become a dilemma faced by Easy Health. Easy Health under the tired performance does not seem to be a good time to go public, but on the other hand, before the IPO, institutions represented by Sunshine Insurance, IDG, etc. invested more than US$125 million easily and healthily, and investment institutions need to exit in the secondary market. This listing in Hong Kong has easily and healthily played the AI card. Whether investors in the secondary market will buy it still needs to be tested by the market.

Capitalists went to the market to start businesses and raised US$125 million before IPO, and user growth showed signs of fatigue. Active users declined

The prospectus shows that Easy Health was founded in 2014 and was founded by capital talent Yang Yin and others. Under the Internet boom, Yang Yin, who smelled the industry’s buzz, resigned from an investment institution and founded Easy Financing Group, the predecessor of Easy Health, which has developed into one of the most important serious illness crowdfunding platforms in China.

In the early days, Easy Health focused mainly on fundraising business, and then transformed into comprehensive health services and insurance business. In December 2016, Easy Health sold its first online insurance policy and launched the Easy Insurance service. The following year, Easy Health also launched a comprehensive health service package for corporate and individual customers. Subsequently, in July 2023, Easy Health launched another popular science service. Last year, Easy Health launched medical research auxiliary services again.

In June 2024, in order to respond to the requirements of China laws and regulations on business restricted or prohibited by foreign ownership, Easy Health launched a business reorganization plan to spin off the businesses and entities of Easy Financing (online disease fundraising service) and Duo ‘er Hospital. Diversion, neither of which is a subject of this listing.

Currently, Easy Health is positioned as a technology-based one-stop platform, focusing on providing comprehensive health services and health insurance solutions. The company has two main businesses: Easy Health Services and Easy Insurance Services.

In 2022, 2023 and the first nine months of 2024, the revenue from Easy Health Services was 59.777 million yuan, 155 million yuan, and 398 million yuan respectively, accounting for 15.2%, 31.7% and 61.8% respectively, showing an upward trend; The revenue from Easy Insurance Services during the same period was 320 million yuan, 326 million yuan, and 238 million yuan respectively, accounting for 81.5%, 66.7% and 37.1% respectively.

According to the Sullivan report, Easy Health ranks second in China’s digital integrated health services and health insurance service market based on the number of active users in 2023; Easy Health ranks fourth in China’s independent health service market based on revenue for the nine months ended September 30, 2024.

In recent years, the growth of relaxed and healthy users has shown signs of fatigue. In 2022, 2023 and the first nine months of 2024, the number of registered users of Easy Health was 155 million, 164 million and 168 million respectively, and the growth rate slowed down significantly. During the same period, the company’s number of active users was approximately 70.5 million, 69.1 million and 50 million respectively, with significant declines.

The number of active users is decreasing year by year. Relax and Healthy does not seem to be a good time to go public, but investment institutions need an outlet.

At present, Easy Health has completed multiple rounds of financing. During the period from 2015 to 2021, the company has completed a total of approximately US$125 million in financing. Investors include Sunshine Insurance, IDG, Detong Global (Detong Capital), Tencent, etc.

Before the IPO, Yang Yin became the single largest shareholder holding 23.93% of the company through his wholly-owned holding company QingSongChou Holdings Corporation. At the same time, Yang Yin also controlled 15.02% of Easy Health’s voting rights through voting proxy arrangements entered into with certain other shareholders.

In addition, IDG China Media Fund IIL holds 12.89%, IDG China Capital Fund III L.P holds 4.46%, IDG China Capital III Investors L.P holds 0.4%; Sunshine Life Insurance Co., Ltd. holds 10.56%; Detong Global Consumer Investment Co., Ltd. holds 8.57%; Tencent’s ChineseRose Investment holds 0.91%.

Insufficient performance stamina, gross profit margin has dropped sharply, and I went to Hong Kong to raise funds and play the AI card.

Although the number of Easy Health users is huge, the company’s performance growth rate has increased but not increased.

In 2022, 2023 and the first nine months of 2024, Relax Health’s operating income from continuing operations was 394 million yuan, 490 million yuan and 643 million yuan respectively, and the adjusted net profit was 149 million yuan, 146 million yuan and 76.575 million yuan respectively. In the first nine months of 2023, the company’s adjusted net profit was 132 million yuan, a year-on-year decrease of approximately 42%.

At the same time, the relaxed and healthy gross profit margin showed a downward trend, at 82.6%, 79.9% and 43.4% respectively, which may also be related to changes in the company’s revenue composition in the first nine months of 2024. In the first nine months of 2024, the proportion of Easy Health Services revenue increased to 61.8%, and Easy Insurance Services decreased to 37.1%. During this period, the gross profit margins of Easy Health Services and Easy Insurance Services were 20.3% and 82.5%, respectively.

In 2022, 2023 and the first nine months of 2024, the total annualized premiums of insurance products sold by Easy Health are 1.3 billion yuan, 1.2 billion yuan and 800 million yuan respectively, and the corresponding number of policies are 2 million, 1.5 million and 1 million respectively. The company is facing greater growth pressure in this business.

In addition, the promotion cost of Easy Health is also growing. In 2022, 2023 and the first nine months of 2024, the company’s sales and marketing expenses were 65.797 million yuan, 123 million yuan and 113 million yuan respectively, compared with 44.939 million yuan in the first nine months of 2023, a year-on-year increase of approximately 60%.

Currently, Easy Health’s customers mainly include insurance company partners, pharmaceutical companies and individual customers using comprehensive health service packages, and its suppliers mainly include health service providers. However, Easy Health is facing concentrated risks with major customers and suppliers. In 2022, 2023 and the first nine months of 2024, revenue from the five major customers accounted for 75.4%, 71.7%, and 66.3% of Easy Health’s total revenue respectively, and purchases from the five major suppliers accounted for 41.9%, 36.1% and 69.5% of the company’s total purchases for the same period respectively.

In this listing in Hong Kong, the funds raised will be used to enhance brand awareness, increase user engagement and strengthen cooperation with business partners, medical research and real-world research, and expand to more regions and overseas markets.

It is worth mentioning that Easy Health has also played the AI card, and the funds raised will also be used to improve its technical capabilities in the fields of AI and big data. In 2024, Yang Yin, founder of Easy Health, once stated that he would promote AI+ health management applications to help build healthy families.