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Crazy integration of consumer healthcare! In half a year, 15 transactions and 230 institutions were snapped up

Crazy integration of consumer healthcare! In half a year, 15 transactions and 230 institutions were snapped up

Looking at consumer medical services, not only Aier Ophthalmology, but also many companies, including stomatology, traditional Chinese medicine, medical aesthetics, physical examination, etc., have made key acquisitions in 2024. According to publicly available data, since 2024, 15 M&A transactions involving more than 230 medical and beauty institutions have been involved in consumer medical services.

Crazy integration of consumer healthcare! In half a year, 15 transactions and 230 institutions were snapped up

Source: Arterial Network

Author: Zhang Xiaoxu

Edit: South Wing

Cover source: pixabay

Crazy integration of consumer healthcare! In half a year, 15 transactions and 230 institutions were snapped up

Since 2024, Aier Ophthalmology, a leading ophthalmology service provider, has announced three acquisitions within three months, involving a total of 106 medical institutions at home and abroad, and large-scale transactions have become the focus of the industry. Aier Ophthalmology invests in reserve projects through M&A funds, carries out in vitro incubation of projects and then selectively acquires them, and merges their performance into the listed company system - this expansion process has long been well-known in the industry; Among the medical institutions acquired in 2024, domestic projects are also carried out in this mode, which is essentially a routine operation.

However, looking at consumer medical services, not only Aier Ophthalmology, but also many companies, including stomatology, traditional Chinese medicine, medical aesthetics, physical examination, etc., have made key acquisitions in 2024. According to publicly available data, since 2024, 15 M&A transactions involving more than 230 medical and beauty institutions have been involved in consumer medical services.

The boom in consumer healthcare seems to be returning.

Crazy integration of consumer healthcare! In half a year, 15 transactions and 230 institutions were snapped up

Some mergers and acquisitions of consumer medical services since 2024, sources: corporate announcements, public reports

Crazy integration of consumer healthcare! In half a year, 15 transactions and 230 institutions were snapped up

Turnaround acquisitions are frequent

M&A expansion has become a normal path for medical service companies to expand their business scale, and with the acceleration of industry integration, medical services can also optimize resource allocation and improve operational efficiency through mergers and acquisitions.

In the field of consumer healthcare, although the economic environment has had a certain impact on the overall market, since 2024, there have been frequent acquisitions of consumer medical service companies, and many companies have made key acquisitions, setting their own "best" or "first".

Specific to Aier Ophthalmology, in May 2024, Aier Ophthalmology announced its intention to acquire part of the equity of 52 medical institutions such as Chongqing Optometry and Zhoukou Aier, with a transaction amount of 1.344 billion yuan; in June, Clínica Baviera, the European division of Aier Ophthalmology, announced the acquisition of 100% of the shares of Optimax Group in United Kingdom, which owns 19 medical institutions in United Kingdom; In July, Aier Ophthalmology issued an announcement on the acquisition of part of the shares of 35 hospitals such as Humen Aier and Yuncheng Aier, with a transaction amount of 898 million yuan.

Overseas, Aier Ophthalmology continues to expand its presence in important countries. Previously, Clínica Baviera's medical network already covered Spain, Germany, Italy and Austria in Europe, and the acquisition of Optimax marked its official entry into the United Kingdom market.

In China, by the end of 2023, Aier Ophthalmology has basically realized the layout of large and medium-sized cities across the country through self-construction and acquisition of ophthalmology hospitals. Among the medical institutions acquired since 2024, except for Chongqing Optometry, Nanchang Hongcheng Aier, and Fuzhou Aier, the vast majority of the rest are prefecture-level and county-level hospital projects, accelerating their penetration into the prefecture-level and county-level markets.

Before 2021, Aier Ophthalmology's single acquisition was mainly a single hospital, and in 2021, it gradually began to acquire multiple hospitals at a time, and by 2024, it set a record of 52 medical institutions in a single acquisition; From 2024 to the present, Aier Ophthalmology has acquired the largest number of medical institutions, the high frequency, and the large transaction amount, which has also set a record high.

In terms of stomatology, due to the high dependence of dental medical institutions on doctors and low dependence on equipment, it is difficult to standardize operation and rapid expansion, but for dental chains, it is the only way to expand the scale of operation by increasing the number of stores.

In 2023, Tongce Medical will achieve a total operating income of 2.846 billion yuan, a year-on-year increase of 4.70%, and a net profit of 500 million yuan, a year-on-year decrease of 8.72%. "The development model of burning money and piling up people is no longer appropriate." Tongce Medical summarized it in its financial report. As a result, TC Medical has now launched a new expansion model.

In March 2024, TC Medical announced that it had completed the acquisition and capital increase of Loudi Stomatological Hospital Co., Ltd. (hereinafter referred to as "Loudi Stomatology"), with a total transaction amount of 32.48 million yuan, involving a total of 8 hospitals and outpatient departments under Loudi Stomatology.

It is understood that Tongce Medical's previous expansion model was dominated by self-built medical institutions, and half of the hospitals will still be in a state of loss in 2023. Self-built medical institutions have many advantages, such as better alignment between new institutions and existing institutions in terms of service and operation standards, corporate culture, brand image, etc., better integration of new business into the overall corporate strategy, and greater control over new institutions. However, the disadvantages of self-construction are also obvious: high investment, long return cycle, and the risk of cultivation failure.

Obviously, Tongce Medical wants to avoid risks through the transformation of its expansion model. The acquisition of Loudi Dental in 2024 is the first implementation of the M&A and franchise model of Tongce Medical, which also means that in the future, the expansion of Tongce Medical will change from relying only on self-construction to focusing on mergers and acquisitions and franchises.

In the past two years, there has been a boom in the export of pharmaceutical and medical device products, and the wind of going overseas has also blown to the field of medical services; Previously, in the fields of ophthalmology and assisted reproduction, Aier Ophthalmology and Jinxin Reproductive have deployed overseas business, and now traditional Chinese medicine has also become a member of the wave of going overseas.

Since 2024, Gushengtang has acquired a number of medical institutions such as Beijing Asian Games Village Traditional Chinese Medicine Hospital, Changshu Nanshan Hall, Ningbo Yinzhou Guyuantang, Ningbo Yinzhou Mingyitang, and Ningbo Yinzhou Zhanhai Guyuantang. Among them, Gushengtang signed a contract to acquire 100% of the shares of Baozhongtang Singapore, taking the first step towards internationalization.

According to the plan, Gushengtang will continue to open stores in Singapore and other overseas regions through strategic investment, mergers and acquisitions in the future, and "medical treatment before medicine" will extend Gushengtang's model overseas.

Foreign medical assistance to TCM technology, overseas Chinese engaging in TCM services, and foreigners learning TCM have all deepened the understanding of TCM in overseas markets. With the application of digital technology, the standardization of traditional Chinese medicine has been improved, and it is organically combined with evidence-based medicine, which can gain more recognition in overseas markets and have a larger market space.

In terms of women and children, due to the declining trend in the fertility rate, investment, financing and M&A transactions in this field have not been active in the past two years. Whether private or public, obstetrics and gynecology hospitals and obstetrics and gynecology departments in general hospitals are decreasing.

At the beginning of 2024, Weiernuo announced the acquisition of Beijing Future Children's Hospital, which is the first time that Weiernuo has acquired a hospital and one of the few transactions in the field of women and children in the past two years. In addition, in the past, most of the acquisitions in the field of gynecology and children were the acquisition of clinics by chain clinics and large hospitals with sufficient funds or backed by industrial groups, while the acquisition of hospitals by Weiernuo, as a chain clinic, is equivalent to a "reverse" acquisition.

Whether it is the largest number of ophthalmic acquisitions, the opening of a new model of oral chain expansion, or the "reverse" acquisition of traditional Chinese medicine through acquisitions, and the "reverse" acquisition of women and children, all signs indicate that 2024 is a turning point for consumer medical services.

Crazy integration of consumer healthcare! In half a year, 15 transactions and 230 institutions were snapped up

Why is 2024 so active?

In 2024, consumer healthcare acquisitions will be active, which is closely related to many factors.

First of all, the gradual improvement of business has brought more sufficient funds. According to the financial report data of various companies, in 2023, except for a very small number of companies in the field of dentistry and medical cosmetology, other companies have achieved considerable revenue and profit growth.

Crazy integration of consumer healthcare! In half a year, 15 transactions and 230 institutions were snapped up

Annual revenue and profit of some listed companies in consumer medical services (Arrail Group for the year ending March 2024, others for 2023) Data source: financial reports of each company

At the same time, with the changes in the economic cycle and the investment and financing environment, medical services have ushered in a period of integration. A group of medical institutions with high-quality technology and service capabilities have to seek mergers and acquisitions when faced with the current situation of capital exit pressure, financing pressure, and operational pressure; At present, the valuation of medical and health companies has been lowered overall, and medical services are no exception, and it is a good time for acquirers to expand through mergers and acquisitions.

The slowdown in IPOs has also boosted the activity of mergers and acquisitions in healthcare services. Since 2023, the situation of medical and health IPOs has not been optimistic, but there are still many medical service companies, and consumer medical services have never been absent. For companies sprinting to IPO, the acquisition of institutions with existing revenues or profits can directly bring growth to performance, and the acquired party can smoothly achieve investor exit.

Prior to the submission of the prospectus in June 2024, Zhuozheng Medical acquired a 51.04% stake in Wuhan Shenlong Tianxia, involving a secondary hospital and two clinics. According to public information, Wuhan Shenlong Tianxia's revenue as of March 2024 is 26.7086 million yuan, and the net profit is 484,800 yuan. Zhuozheng Medical revealed in the prospectus that it will continue to look for opportunities to acquire mature medical service institutions with good performance in first-tier cities and new first-tier cities.

Tongrentang Medical Care also made continuous acquisitions when it sprinted to IPO. According to the prospectus, in January 2024, Tong Ren Tang Medical Care acquired 70% of the equity of Shanghai Chengzhitang to strengthen the business layout of the Yangtze River Delta. In June, Tongrentang Medical Care signed a contract to acquire 60% of the equity of Shanghai Zhonghetang.

Some medical service companies in specialized fields are facing transformation, expanding their specialty areas and service content through acquisitions, and women and children are typical of them.

For example, the acquisition of Future Children's Hospital means that the company is transforming from a specialist outpatient clinic to a general hospital, and after the completion of the acquisition, it will develop in the direction of "large specialty, small comprehensive".

In July 2024, Lianchi Hospital of Obstetrics and Gynecology Medical Group announced that it intends to acquire 100% of the equity of Hefei Xinhai Obstetrics and Gynecology Hospital for 70 million yuan. Previously, Lianchi Hospital had 3 hospitals providing services such as obstetrics, gynecology, pediatrics, orthopedics, health check-ups, and vaccinations. This acquisition complements Lianchi Hospital with services in reproductive medicine, confinement club, etc. Lianchi Hospital announced that this is a measure to optimize the company's strategic layout and cultivate new profit growth points.

The U.S.-China Yihe, which had previously been acquired by ByteDance, is also gradually transforming. In 2024, Am&E revealed that after 18 years of development, the company has completed the transformation from gynecology and pediatric specialty medical care to a more comprehensive medical platform, forming a diversified pattern in oncology, assisted reproduction, orthopedics/sports medicine, obstetrics and gynecology, pediatrics, medical cosmetology, internal medicine, ophthalmology, otolaryngology, stomatology, skin and other disciplines; In the fourth quarter of 2024, the large tertiary hospital under Am&C Yihe will also be put into operation. Among them, Am&E has acquired Beijing Baodao Obstetrics and Gynecology Hospital to obtain a test tube baby business license.

Crazy integration of consumer healthcare! In half a year, 15 transactions and 230 institutions were snapped up

Where will prosperity go when it returns?

In recent years, although residents' consumption has been suppressed by the objective environment to a certain extent, residents' health awareness has increased, and the corresponding expenditure has also increased. According to the National Bureau of Statistics, in 2023, the per capita health care consumption expenditure of residents nationwide will be 2,460 yuan, a year-on-year increase of 16%; It accounted for 9.2% of per capita consumption expenditure, which was also the first time in the past five years that this figure exceeded 9%.

As we all know, as a definitive trend, aging will create huge market opportunities for healthcare. For consumer healthcare, the opportunities brought by aging have already arrived and will be further highlighted.

According to BCG's China Consumer Healthcare Market Outlook 2024, the post-60s generation, with stronger economic strength and education, is entering a wave of retirement, and medical and health care is ushering in strong demand.

At present, the consumer medical demand related to aging has been significantly reflected in the services of physical examination and traditional Chinese medicine.

Meinian Health disclosed in its financial report that since 2023, the demand for physical examinations for groups and individuals has continued to increase, and the diversified and personalized needs and health service needs of government and enterprise customers, mainstream workplace groups, high-income groups, elderly people, and chronic disease groups have continued to grow.

Traditional Chinese medicine has outstanding advantages in dealing with geriatric diseases and chronic diseases. The National Health Commission, the National Office on Aging, and the State Administration of Traditional Chinese Medicine jointly issued the "Notice on Comprehensively Strengthening Health Services for the Elderly", which proposes to strengthen the health services of traditional Chinese medicine for the elderly, and by 2025, the health management rate of traditional Chinese medicine for the elderly aged 65 and above will reach more than 75%. In the future, traditional Chinese medicine will also meet the multifaceted health needs of the elderly.

The emergence of new technologies and products in consumer healthcare will provide users with more choices and stimulate more demand.

In the field of ophthalmology and dentistry, the market for myopia prevention and control and early correction in children is growing. Among them, products with higher wearing comfort, better anti-myopia effect, and more affordable products have emerged; Early orthodontic products are more functional, providing comprehensive intervention for malocclusion-related symptoms, and paying more attention to the dynamics of children's oral growth and development, and even with oral health care functions.

In terms of medical aesthetics, whether it is photoelectric therapy or injection projects, the penetration rate of light medical aesthetic services carried out in a non-surgical manner has increased; In particular, the rise of regenerative medical aesthetics can exert more natural and long-term effects than previous injection and filling products, and at the same time, the effectiveness and safety of regenerative medical aesthetic products are still constantly iterating, providing more and better options for anti-aging.

In addition, the consumer healthcare target group will be expanded from individuals to families.

Although the overall fertility rate is declining, the proportion of two- and three-child families has increased. According to the "2022 Statistical Communiqué on the Development of Health Undertakings in the Mainland", the number of births in 2022 will be 9.56 million, of which 38.9% will be second children and 15.0% will be third children and above; In other words, these families are at least four or five people, and building a family-based consumer service model means that the user base can be expanded at a lower cost.

By the end of 2023, New Century Medical has served nearly 480,000 families with women and children, and will promote the upgrade of the customer management system and the experience of member service products in 2024, and continue to increase the membership base and service reach rate calculated by family unit.

Accz Medical also has departments in pediatrics, dentistry, ophthalmology, dermatology, otolaryngology and surgery, gynecology and internal medicine in its medical institutions, and the close cooperation between various specialists meets the different medical needs of patients and their whole families, and continuously improves patient satisfaction and forms cross-disciplinary referral opportunities.

Providing consumer medical services to families can change the corresponding demand from single-time, low-frequency to multi-person, higher-frequency, and medical institutions can obtain high customer unit prices while increasing service volume. At the same time, the collaboration and referral between various specialties has also achieved a more effective allocation of medical resources.

Although the current trend of consumer healthcare is showing a boom and return, it is also necessary to control the pace of expansion and prevent the final integration of the two parties due to differences in values and other fundamental aspects during the acquisition process. In the past, there were not a few examples of "adaptation" after large-scale acquisitions of medical service companies.

In general, despite the pressure of the economic environment, with the enhancement of the corresponding health awareness of all age groups and various segments, consumer medical services still have strong certainty, and the key is to take every step in a down-to-earth manner.

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Source of this article: Arterial Network

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