HealthyWay Passes HKEX Listing Hearing with Real-World Evidence Services Surpassing RMB 400 Million in Annual Revenue, Emerging as a Key Growth Driver

Another Internet Healthcare Company Is Set to Go Public!

Yesterday, according to the disclosure information on the Hong Kong Stock Exchange's HKEXnews, Health Road has passed the listing hearing.

Since its establishment in 2001, Health Road has evolved from an online appointment booking platform into a comprehensive health services provider, continuously expanding its service boundaries. It has now established two core business segments: consumer-facing (C-end) healthcare and medical services, and enterprise-facing (B-end), including hospitals, corporate services and digital marketing solutions.

Throughout the evolution of internet healthcare, Health Road has consistently capitalized on key milestones, leveraging its accumulated strengths to achieve substantial growth, with rapid performance expansion in recent years.From 2021 to 2023, Health Road’s annual revenue surged from RMB 431 million to RMB 1.244 billion; in the first half of 2024, its total revenue reached RMB 611 million, representing a year-on-year increase of 14.5%. Based on adjusted net profit, Health Road achieved profitability in each of the past three years.

Previously, Health Road had submitted its IPO application twice. A comparison of the changes in the prospectus reveals that, on the basis of a clear strategic direction and stable performance in its two major business segments, the company has identified new growth drivers.

After years of industry evolution, internet healthcare companies have continuously expanded their service offerings beyond standard features such as online consultations. Through trial and error and timely strategic pivots, these enterprises have gradually identified the most suitable strategic paths for themselves, with varying focuses across specialized segments including medical care, pharmaceuticals, nursing, and insurance.

In recent years, Health Road has maintained a stable business structure, with its core operational metrics and financial performance demonstrating steady growth, reflecting the company’s successful development of a business model tailored to its specific circumstances.

Specifically, as the two major business segments of Health Road, healthcare services and enterprise services & digital marketing services synergize with each other to drive growth, forming a diversified revenue stream primarily driven by B-side clients. Among these, revenue from enterprise services and digital marketing services accounts for over 70%, while a portion of the revenue from healthcare services also comes from corporate clients.

Health Road's Main Revenue Structure and Growth, Data Source: Prospectus

Notably,Physicians are the core to generating synergistic value across Health Road’s two major business segments.

In fact, on any internet healthcare platform, doctors are the core resource. Based on the pivotal role of physician resources, Health Road positions itself as a "medical assistant" to doctors.

Online, Health Road provides digital tools to enrolled physicians to better serve patients and strengthen patient management. In addition to common tools such as pre-consultation triage, online follow-up visits, post-consultation follow-ups, and chronic disease management, Health Road continues to enhance the compliant application of AI technologies. For example, the AI medical assistant currently under development facilitates doctor-patient communication through automated processes, including appointment scheduling, pre-visit questionnaires, diagnostic support, and post-visit summaries. Health Road also offers personalized support services tailored to individual physicians, helping them achieve efficient diagnosis and treatment.

Offline, Health Road stations on-site health assistants at hospitals to provide services such as health consultations, appointment assistance, and post-consultation follow-ups. The work of these on-site health assistants strengthens doctor-patient communication and promptly addresses various non-medical issues throughout the patient’s journey, enabling physicians to focus exclusively on clinical care without being distracted by communications unrelated to disease treatment.

Thanks to the in-depth operations of “Medical Assistants,” the number of doctors on the Health Road platform continues to grow.As of June 30, 2024, the platform had 877,000 registered physicians, including 334,000 with the title of associate chief physician or higher. By the end of October 2024, the number of registered physicians had reached 885,000.

Growth in Registered Doctors and Other Core Data of Health Road; Source: Prospectus

A breakdown of Health Road’s performance data reveals that real-world study support services have demonstrated the most remarkable growth among various segmented service offerings, with concurrent increases in client count, service volume, and service revenue, thereby emerging as a new growth driver for the company.

In recent years, real-world studies have gained increasing prominence, becoming a key area of research in evaluating drug efficacy, optimizing patient treatment strategies, and informing clinical practice, thereby continuously driving innovation and optimization in pharmaceuticals and other medical products.

Health Road launched its real-world study support services in 2022, collecting real-world clinical data to observe and analyze clinical evidence, thereby assisting pharmaceutical companies and other entities (primarily medical foundations and biotechnology firms) in the research of drugs and other medical products.

Areas Covered by Health Road’s Real-World Study Support Services, Source: Prospectus

The launch of real-world study support services yielded immediate results.

In 2022, Health Road’s real-world research support services served seven pharmaceutical companies and other entities, delivering two research reports; in 2023, the number of clients and reports grew rapidly to 33 and 450, respectively. In the first half of 2024, Health Road has provided services to 42 pharmaceutical companies and other entities, delivering 312 research reports.

Reflected in the financial data,Revenue from real-world study support services amounted to RMB 54.5 million in 2022, surged to over RMB 100 million in 2023, reaching RMB 422 million; in the first half of 2024, revenue from this service reached RMB 268 million, representing a year-on-year increase of 56.9%.

More importantly,As the volume of real-world study support services increases, economies of scale are emerging and costs are gradually decreasing, thereby enhancing the company’s profitability.

It is understood that, amid the expansion of real-world study support services, Health Road has improved its operations and controlled costs, enabling it to deliver research reports and de-identified samples at a lower average cost. The average cost per research report and de-identified sample decreased from RMB 387 in the first half of 2023 to RMB 307 in the first half of 2024. As a result, the real-world study support services have demonstrated a substantial gross profit margin, reaching 29.4% in the first half of 2024.

Real-world study support services, as a component of the “Enterprise Services and Digital Marketing Services” business segment, have made significant contributions to the segment’s growth through their sustained revenue increase, rising proportion of total revenue, and inherently high gross margin. Driven by real-world study support services, the gross margin of the “Enterprise Services and Digital Marketing Services” segment rose from 26.8% in the first half of 2023 to 30.3% in the first half of 2024.

In addition, the “Enterprise Services and Digital Marketing Services” segment also includes precision content services, a offering that Health Road has provided for many years and whose target customers overlap with those of its real-world study support services. The prospectus reveals that since 2022, multiple clients have concurrently purchased both precision content services and real-world study support services, which also helps reduce the company’s sales costs.

In general,Health Road has once again seized the development opportunity presented by real-world studies, leveraging them as a new growth engine while introducing new collaboration nodes into its existing business synergy system.

Internet healthcare platforms maintain collaborations with specialists across China. These platforms offer a range of medical and health services and inherently serve as real-world settings outside of hospitals, thereby providing natural advantages for conducting real-world studies. Other players in the industry have also engaged in real-world research.

Why Did Health Road’s Real-World Study Support Services Achieve Rapid Scale-Up, Generating Hundreds of Millions in Revenue in the Second Year? This Can Be Primarily Attributed to Multiple Factors.

One is that the platform boasts a robust internal and external team.Internally, Health Road has established a real-world study services team that directly participates in and oversees partners’ completion of the entire real-world study process; the team comprises licensed physicians as well as professionals with backgrounds in medicine, pharmacy, and nursing.

As previously mentioned, Health Road positions itself as a “medical assistant” for physicians. By the end of October 2024, the number of registered physicians had reached 885,000. Therefore, its extensive external network of physicians provides reliable support for the collection of clinical data required for real-world studies.

Second, after years of development, Health Road has accumulated profound expertise in professional medical research.

Health Road has long collaborated with medical institutions and physicians to establish specialty-oriented online disease treatment centers. As of June 30, 2024, it had established 42 such centers, covering areas including diabetes, hypertension, gout, rheumatology and immunology, depression, and oncology, thereby providing patients with comprehensive and continuous care.

Leveraging its online disease treatment center, Health Road has accumulated extensive resources and experience in researching complex medical conditions, which it effectively integrates into real-world study support services. This includes directly applying deep clinical insights and methodologies to the design and data analysis of real-world studies.

Research Directions and Methodologies of Health Road’s Real-World Study Support Services. Image Source: Prospectus

Real-world studies are complex endeavors that require a strong background in statistics, data mining, and medical knowledge. Researchers may encounter challenges such as data quality issues, missing values, sample matching, and numerous factors influencing outcomes. Implementing these studies necessitates rigorous scientific design, comprehensive reporting, sensitivity analyses, and assessments of potential biases to support the development of more scientific and effective treatment regimens.

Building on its accumulated capabilities, Health Road has established a rigorous process for supporting real-world studies.The process includes: the internal team first designs the research protocol; then collaborates with clinical trial and research service organizations, professional market research firms, and physicians to collect real-world data; the internal team conducts a preliminary review of the collected data, followed by a second-round review by external physicians; finally, the internal team summarizes the findings from the clinical data review and compiles the report. This rigorous process ensures the reliability of the research report.

Overall, Health Road’s real-world study support services focus on indications, efficacy and safety, and therapeutic effectiveness, helping clients research and evaluate post-marketing drugs and other medical products, with several representative cases generated.

In terms of indication research, Health Road assists pharmaceutical companies in identifying and validating new indications beyond the originally approved scope. In providing real-world study support services for a topical medication from a pharmaceutical company, Health Road collaborated with physicians to provide over 10,000 de-identified samples, with the study results supporting the new indication for this drug.

In terms of efficacy and safety studies, Health Road assists clients in validating and testing the post-marketing efficacy and safety of drugs or other medical products. In a study on the application of levosimendan conducted for a pharmaceutical company, Health Road collected and analyzed 3,000 de-identified samples, further supporting the safe use of the drug during its commercialization phase.

In terms of efficacy research, Health Road helps pharmaceutical companies understand the therapeutic effects of drugs and corresponding treatment regimens. For example, when a pharmaceutical company needed to gather feedback on its product across several cancer treatment protocols, Health Road designed a rigorous study protocol. Data dimensions included treatment duration, acute symptoms, medication usage, immunotherapy utilization, treatment outcomes, and adverse reactions. Over 38,000 de-identified samples were collected, providing evidence-based support for the pharmaceutical company to further optimize its treatment regimens.

Obviously,While Health Road has seized the immense opportunities presented by real-world studies, it is the professional service capabilities built over years of accumulation that have fundamentally driven the rapid scale-up of this new business, offering a reference for the industry.

It is understood that Health Road plans to continue investing in the development of “Medical Assistant”-related features.

According to the use of proceeds disclosed in the prospectus, Health Road will expand its on-site health assistant team to help more physicians serve patients; it will also recruit medical teams with extensive experience in clinical trials, research, or other clinical areas to establish additional online disease treatment centers and enhance the scale and standards of its real-world study support services.

If “medical assistant”-related functions serve as the infrastructure for Health Road, then, as this infrastructure expands and becomes more firmly established, the business models built upon it will grow more robust, even generating new incremental growth.Going public marks the beginning of a new chapter. What breakthroughs will Health Road bring to itself and the industry in this new phase? It is worth looking forward to.