In 2024, Yidu Technology will usher in its 10th anniversary and will be listed for three years.
Over the past decade, new stories have been staging in AI medical care. On the one hand, the continuous breakthrough and application of AI medical technology, from AI-assisted diagnosis to AI empowerment of medical imaging, to AI acceleration of drug research and development, the potential of AI medical care seems to have no boundaries. Since 2014, the pace of reform and exploration in China's medical and health field has accelerated, and favorable policies have been issued frequently, making the medical and health industry heat up rapidly. However, in 2021, after the financing amount of China's medical and health industry reached a peak of 380 billion yuan, it ushered in a cliff-like decline. At the depths of the line, the AI medical industry urgently needs to break through the dilemma of "burning money".
Image source: Yidu Technology's FY2024 performance roadshow materials
According to the latest official financial report of Yidu Technology, Yidu Technology will achieve revenue of 807 million yuan in fiscal year 2024, and its gross profit margin will increase significantly to 42.1%, a record high. What is more noteworthy is that after excluding the strategic investment, non-cash accounts and non-operating accounts of the self-developed large model, the adjusted EBITDA of the existing business management caliber turned from a loss of RMB 327 million in the same period last year to a profit of RMB 31.1 million for the first time in the current fiscal year. This achievement has undoubtedly injected a shot in the arm for the entire AI medical industry. From its listing in 2021 to its current breakthrough in the "profit war", it has only taken less than three years for Yidu Technology to do it right.
Focus: Shift from speed of scale to quality efficiency
There is a saying in the Book of Changes: "If you are poor, you will change, and if you change, you will be long", and the key is "change".
The key to determining whether enterprises can adapt to the times and change is whether they can adapt to the situation and change in the primary and secondary markets, coupled with the uncertainty of the epidemic and the reversal of the cycle.
At the results conference, the management of Yidu Technology repeatedly mentioned that "thanks to the 'focus' strategy". Looking through the past financial reports of Yidu Technology, it can be found that they will start strategic adjustment in 2022, that is, the second year of listing, with the purpose of "achieving profitability and passing through the cycle", in the words of shareholders, "surviving competitors". The AI medical industry is moving towards an era of positive competition from the pursuit of scale and growth in the upward cycle to the pursuit of quality and profit from the business. In order to take advantage of the changing times, enterprises not only need keen cyclical insight and decisive adjustment ability, but also need strong execution.
The entire focus strategy of Yidu Technology can be summarized as "three gatherings and one synergy".
The first is to focus on the business and make the three main business sectors stable and deep.
Among them, the big data platform and solution business for the government and hospitals is the infrastructure business of Yidu Technology, which has been greatly affected during the epidemic, but in this financial report, the business revenue of this sector has achieved a substantial growth of 41.4%, showing strong resilience. According to the financial report, through the statistical analysis of public bidding information, Yidu Technology's scientific research business ranks first in the industry in terms of market share. In addition, the life sciences segment business for pharmaceutical companies also performed well, with a record gross profit margin, especially the real-world research business, which has become a flagship brand in the industry, with 246 projects and a total of 8 real-world research regulatory projects.
The second is customer focus, Yidu Technology has set its sights on high-quality customer groups. They have built a solid customer base in the top-tier hospital market, and the number of top-tier hospital clients continues to grow to 102. In addition, the revenue retention rate of the top 10 customers in the life sciences sector is as high as 151.1%, and the average customer value has increased significantly by 75.4% year-on-year, customer loyalty is undoubtedly a reflection of the continuous improvement of the value of products and services, and 16 of the top 20 multinational pharmaceutical companies are customers of Yidu Technology. In addition, in terms of "Huimin Insurance" services, Yidu Technology's users are mainly from China's top 15 provincial-level administrative regions in terms of GDP in 2023, and it has served as the main operating platform of Beijing and Jiangsu Huimin Insurance for three consecutive years, with good stability.
The third is the focus on diseases, and Yidu Technology focuses on solid tumors, hematological diseases, ophthalmology, immunity, cardiovascular and endocrine and other fields. This "focused" strategy enables companies to develop more targeted solutions and products for the characteristics and needs of specific diseases, thereby allocating resources more efficiently and improving output efficiency. Judging from the number of projects it has won in the past year, the number of projects in these disease fields is larger, and it has formed a positive brand effect.
First, synergy is the business synergy between sectors. This synergy is more obvious in the first two sectors, such as the Hainan Provincial Clinical Real-world Data Research Platform built based on the big data platform and solution sector, and the rigid scleral contact lens project of an international pharmaceutical and medical device company was successfully approved by the State Food and Drug Administration and officially marketed. Based on the national clinical research center platform, expert network and in-depth research in the field of hematology built by the big data platform and solution sector, we have undertaken a number of real-world research projects related to hematology of an international pharmaceutical company and an innovative pharmaceutical company. Next, how to further promote the synergy between the three sectors and truly connect the industrial chain of medicine, medicine, insurance and patients must also be an important topic faced by the management of Yidu Technology, which is worth waiting for the industry.>
Moat: Accumulation
Due to the cautiousness of the medical industry, as well as the uncertainty of technology and the immaturity of the public patients' acceptance of AI medicine, the imagination of AI medical care is destined to bloom after a long time.
This also means that "insiders" like Yidu Technology must be prepared to run a marathon, and at the same time, they must always think about their own "moat" with the rapid changes in the market and technology.
Image source: Yidu Technology's FY2024 performance roadshow materials
Yidu Technology will emphasize two sets of data in every performance announcement, one is the number of medical records processed and analyzed, the latest number has exceeded 5 billion, which is not only the embodiment of medical big data processing and analysis capabilities, but more importantly, through the processing and analysis of these medical records, a comprehensive disease knowledge graph can be built, a deeper understanding of the disease, and an understanding of the industry, so as to support the development of medical research, medical management, government public decision-making, innovative drug research and development and other fields. The other is the number of hospitals covered, as the core entry point in the medical field, hospitals are the intersection of medical resources and social needs, with more than 2,500 hospitals, which is not only the embodiment of industry accumulation, but also the basis for building an ecological network.
The term "accumulation" is well interpreted in the company and its executives. In the early days of Yidu Technology's business, it took more than 3 years and nearly 800 million yuan to invest in R&D technology and data processing and application platforms, which is a great risk and challenge for any company. However, looking back now, the early "tightening of belts and living a hard life" did make Yidu Technology "grow" out of its own barriers.
As a technology-based AI medical company with data and algorithms as its core capabilities, Yidu Technology's territory expansion is also traceable. From 2014 to 2021, during the heating up period of AI medical care, it continued to expand its business scope, from serving medical institutions to empowering pharmaceutical companies and insurance companies.
It is true that the "moat" of AI healthcare is by no means limited to scale, and a deep understanding of the industry, the accumulation of technology, and strategic and tactical vision, determination and patience are all part of the competitive advantage. Breaking through to profitability is not an accident for Yidu Technology.
Underestimation: Where is the growth
Although the performance has made a beautiful turnaround, the stock price of Yidu Technology is not satisfactory.
As of the close of trading on June 27, the company's price-to-book ratio has dropped to 1.06 times, and the market value is still lower than the existing capital reserves without considering the valuation of domestic and international businesses. This made Feng Xiaoying, CFO of Yidu Technology, call the company's stock price seriously undervalued at the results conference.
In order to boost confidence, Yidu Technology and its management have taken practical actions. Since the beginning of this year, the company has successively carried out share repurchases, and the CFO himself has also purchased 350,000 shares of the company in his personal name, with a total amount of about 1.5 million Hong Kong dollars.
Yidu Technology undoubtedly needs to provide investors with more imagination space. If nothing else, the large model will be the focus of Yidu Technology in 2024. The management also confirmed this in the results conference: Yidu Technology will continue to increase its resource investment in medical models, and combined with the latest AI technology, we will continue to iteratively upgrade YiduCore and application solutions to meet the diversified needs of customers.
In the 2024 fiscal year results announcement, the empowerment of large models can already be seen. The original scientific research platform products of Yidu Technology can shorten the traditional scientific research cycle of 6-12 months to 2-6 months, and the scientific research platform products empowered by large models can be accelerated by about 50% on this basis. The efficiency empowerment of large models is ongoing, but what is more exciting is the decision-making empowerment of large models and more direct commercialization projects.
To the reassurance of investors, both CEO Xu Jiming and CTO Yan Jun, who is directly responsible for the large model project, have emphasized the commercialization of large models in public speeches more than once, and the pragmatic background is different from other technical beliefs. Yan Jun made it clear: "From the first day we started to develop the large model, we had a clear commercialization path, such as health consultation and health management services for the C-end, and hospital all-in-one scenarios for the B-side.
At the just-held Global Digital Economy Conference, the clinical trial patient recruitment and data quality control project empowered by large models won a typical case of artificial intelligence large model scenario application in the medical and pharmaceutical industry. It is understood that in cooperation with Peking University Cancer Hospital, Yidu Technology uses big data + large model technology to create an intelligent screening system, which can save an average of 88.5% of the cost of manual screening for oncology projects and 69.8% on average for non-tumor projects.
The carnival and bubble of the industry are the only way for any wave of new technologies. In the end, the winners must be those technologies and products that create real value.
Write at the end:
Behind the profits, in fact, there is an immutable truth: every progress in science and technology or every slowdown in the market is a process of redistribution of "discourse power". To be able to navigate the cycle, an enterprise needs keen insight, pragmatic action and long-term strategic determination.