Fosun’s Hospital Unit Secures $41 Million Funding With IPO Promise

Shanghai Fosun Pharmaceutical Co. Ltd. (600196.SH) announced that its hospital business unit has received 300 million yuan ($41.4 million) in funding from a government-backed investor, moving towards spinning off the unit for a separate listing [para. 1][para. 3]. Shanghai Fosun Health Technology Group Co. Ltd., another unit of the same drugmaker, sold 2.86% of its equity to an investment firm controlled by the Chancheng district government in Foshan city, valuing the company at 10.2 billion yuan [para. 2]. Fosun Health committed to going public within five years as part of the deal [para. 3].

Established in 2010, Fosun Health offers offline and online healthcare services, including general and specialty hospitals. By the end of 2023, it managed 18 medical facilities across Beijing, Shanghai, Guangdong, Jiangsu, and Zhejiang, and possessed licenses for eight internet hospitals [para. 4]. The spinoff of hospital assets has been under consideration since late 2023, aligning with parent Fosun Group’s strategy to streamline its business [para. 5].

Fosun Health suffered losses for three consecutive years during the pandemic. In 2023, its revenue was 6.3 billion yuan, a 2.8% increase from the previous year, but still posted a net loss of 420 million yuan. This contrasts with a net profit of 1.5 billion yuan in 2019, before the pandemic [para. 6]. A pharmaceutical industry analyst indicated that due to Fosun Health's equity structure, it is likely to pursue an initial public offering (IPO) on the domestic A-share market. However, its current unprofitability and the asset-heavy nature of offline medical services may lead to skepticism from investors, posing challenges for achieving a favorable valuation at listing [para. 7].