LinkDoc IPO Taps China’s Growing Demand for Specialized Medical Services

Money-losing medical services provider LinkDoc Technology Ltd. has filed for a New York IPO, becoming the latest in a new generation of Chinese companies trying to tap demand for higher quality health care services to supplement the basic care received under the country’s national health plan.

LinkDoc, whose backers include e-commerce giant Alibaba’s separately listed Alibaba Health Information Technology Ltd., set a preliminary fundraising target of about $100 million for the listing, according to its prospectus filed with the U.S. securities regulator on Friday. Such figures are frequently referred to as “placeholders,” and are usually raised or lowered based on how well investors receive the offering. 

“The (LinkDoc) platform integrates online and offline channels to help patients, especially those who suffer from cancer, better manage their illnesses as a chronic condition in and out of hospital,” the company said in the filing.

China is the world’s second-largest health care market, growing in step with the country’s rapid economic growth. But it is still going through a massive transformation from a previous system of basic cradle-to-grave care provided by state-owned employers, to a more European-style system where most people receive such care through a national network of publicly owned hospitals and clinics that accept payments from a national health plan.

The emerging national health plan still provides very basic coverage, leaving lots of room for providers of value-added services like those offered by LinkDoc. The company calls itself the “largest oncology patient-centric continuous care platform in China,” with a growing network of 34 patient centers nationwide at the end of March.

LinkDoc began operations in 2014, and said it has cumulatively cared for 3.5 million patients since 2015. It earns money through a number of channels, including sales of medicines, infusion and injection services, and from fees generated by service contracts with life science companies and medical associations.

Its revenue nearly doubled in 2020 to 942 million yuan ($147 million) from nearly 500 million yuan the previous year. But the year-on-year growth rate slowed to around 40% in the first quarter of this year, with revenue reaching 223 million for the period, the prospectus shows.

In 2020, the company’s loss widened to 691 million yuan from 553 million yuan the previous year. But the figure nearly doubled in this year’s first quarter to 182 million yuan from 96 million yuan a year earlier.

In addition to Alibaba Health, which owns 8.4% of LinkDoc’s shares, the company’s other major backers include South Korean private equity giant MBK Partners, which has a 6.3% stake, and Singaporean sovereign wealth fund Temasek with 11.7%.

The company is eying a Chinese health care services market expected to grow from $657 billion in 2019 to $1.4 trillion in 2030, according to data from Frost & Sullivan provided in the prospectus. It’s also eyeing a Chinese pharmaceuticals market expected to grow to $458 billion by 2030 from $236 billion in 2019, the report said.

The listing would come about a half year after another medical services provider, Yidu Tech Inc., raised HK$4.1 billion ($528 million) from an IPO in Hong Kong. Yidu offers health care products and services built on big data and artificial intelligence technologies, often working with hospitals to help them unify the vast amounts of patient and other data that pass through their various systems.

Since its January listing, Yidu Tech’s stock has risen about 67% from its IPO price of HK$26.30 to its Tuesday close of HK$43.95.

And last month, the Tencent-backed Beijing Yuanxin Technology Co. Ltd., which runs pharmaceutical e-commerce platform Miaoshou Doctor, was reportedly weighing a Hong Kong IPO that could raise at least $500 million, according to people familiar with the matter.

Contact reporter Yang Ge (geyang@caixin.com)

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