WeDoctor Attempting Hong Kong IPO Again, Says Chinese Media
COVID-19 and China
A stethoscope next to a laptop. Image credit_National Cancer Institute/Unsplash

► WeDoctor is planning to go public in Hong Kong in the third quarter of this year, at a valuation of around USD 5.5 billion, expecting to raise USD 600 to 900 million.
► Previously, the company's IPO process was repeatedly postponed.

Considered one of the largest competitors of Ping An Good Doctor, WeDoctor today is rumored to be filing a new prospectus to the Hong Kong Stock Exchange (HKSE) in the third quarter of this year. 

According to the news, the company intends to raise USD 600 to 900 million, valued at roughly the same as the previous round at USD 5.5 billion, with CMB International, CitiBank and J.P. Morgan as underwriters. Prior to this, the company’s IPO process was set back multiple times. Its first unsuccessful attempt was in May 2018.

Founded in 2010, the Tencent-backed company started as a hospital registration website, based on which it quickly connected with more than 10,000 hospitals in 30 provinces and cities, which far surpasses Ping An Good Doctor's 3,100 cooperation hospitals. With this scale advantage, the company decided to expand into diagnostic services in 2015 and soon built China's first Internet hospital, Wuzhen Internet Hospital. In 2016, the company further collaborated with Alibaba-and Tencent-backed ZhongAn Insurance to promote insurance payment for online healthcare.

Since then, the three core businesses of WeDoctor – We-Medical, We-Medicine and We-Insurance – have taken shape. At the end of 2016, the founder, Liao Jieyuan, announced in a business conference that the company's annual revenue had reached CNY 1.2 billion.  All three businesses are profitable, with revenue accounting for about 45%, 20% and 30% respectively, with a total profit of about CNY 280 million. This also marks the last time the company disclosed its financials. 

But the greatest weapon of WeDoctor didn't emerge until November 2017, when the company released a cloud platform focused on smart healthcare. We-Cloud, which can provide intelligent medical cloud service and AI solutions for government departments and hospitals, also accounted for more than half the annual revenue of the company, 

However, the optimistic profitability has not made the company invincible in the capital markets. Compared to Ping An Good Doctor, which listed in HKSE in 2018, only five years after its foundation, WeDoctor's IPO road is fraught with twists and turns. 

When the company closed a CNY 500 million Pre-IPO financing back in May 2018, it announced plans to bring its three core businesses to list in Hong Kong as a whole, while spinning off its We-Cloud business for independent listing as an A-share. Now two years have passed, neither of these IPO plans has become reality.

Many believe that the company has been having trouble finding long-term profitability models for its medicine and insurance businesses. For the past two years, WeDoctor has tried its hand at medicine e-commerce and Accountable Care Organization (ACO) businesses in succession, but the immaturity of the market and strict policy controls on the outflow of prescription drugs has limited their outcome. After that, the company has been focusing on the integration of its business segments. At the end of 2019, Liao stated in an interview that the current goal for the company is to organize the medical resources and connect online and offline services, establishing an integrated Health Maintenance Organization (HMO). 

Unfortunately, this April the company was forced to temporarily replace Credit Suisse AG, the co-insurer that had acted as the underwriter for Luckin Coffee's US IPO, which delayed the IPO again. 

But after three years of exploring profitability models and with the boost of the online healthcare industry brought by the epidemic, we have reasons to believe that this could be the time for WeDoctor to thrive.

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