Universal Medical Reports Rising Healthcare Revenue Share and 400% Surge in Health Tech Business in H1 2024 Interim Results

On August 28, Genertec Universal Medical Group Company Limited (02666.HK, hereinafter referred to as “Universal Medical”) released its 2024 interim report. The report showed that Universal Medical achieved revenue of RMB 6.543 billion in the first half of the year, a year-on-year decrease of 2.9%; net profit amounted to RMB 1.252 billion, a year-on-year increase of 4.8%; and net profit attributable to equity holders of the Company was RMB 1.137 billion, a year-on-year increase of 3.7%.

Figure 1. Genertec Universal Medical Group’s Revenue and Net Profit from 2020 to H1 2024 (Source: Company Performance Materials)

Broken down,Genertec Universal Medical’s healthcare business delivered strong performance, with revenue reaching RMB 3.888 billion in the first half of the year, a year-on-year increase of 3.6%; net profit amounted to RMB 271 million, up 16.3% year on year.It is worth noting that the healthcare business now accounts for 59.4% of total revenue, underscoring its increasingly prominent medical value proposition and accelerating release of growth potential in the healthcare sector.

Genertec Universal Medical Group Company Limited, established in 1984, is a central state-owned enterprise-controlled listed company with healthcare as its core business. Initially focused on financial leasing services, the company began accelerating the integration of social medical institutions in 2017, leveraging the reform-driven divestiture of medical facilities operated by state-owned enterprises. It has since gradually transformed into a “healthcare technology group integrating industry and finance.”

Currently,Genertec Universal Medical Group Company Limited has two core businesses: financial services and healthcare services.. Financial services remain the company’s core business, primarily providing customers with comprehensive financial solutions centered on financial leasing. As the “ballast stone” for the company’s steady development, Genertec Universal Medical’s financial services segment achieved revenue of RMB 2.667 billion in the first half of the year. Although the overall scale declined slightly, its net profit still reached RMB 981 million, representing a 2.0% year-on-year increase, thereby demonstrating strong stability and resilience.

Of course, this achievement is inseparable from Genertec Universal Medical Group Company Limited’s proactive transformation in its financial segment. After a “golden decade,” the financial leasing industry has gradually entered a downturn. As a state-owned enterprise under central government control, Genertec Universal Medical has adhered to a dual focus on adjusting the structure of interest-earning assets and strengthening risk prevention and control, while continuously enhancing post-leasing management, thereby maintaining asset quality at an industry-leading level. Meanwhile, to mitigate the negative impacts of fluctuations in domestic and international financial markets, the company has proactively optimized its financing structure, intensified efforts to promote direct financing, and improved the quality and efficiency of indirect financing growth, resulting in a significant reduction in financing costs. Furthermore, Genertec Universal Medical has strengthened innovation in financing instruments, steadily advanced the implementation of various specialized financing initiatives, and pioneered the development of green finance, thereby empowering its business transformation and upgrading.

Figure 2. Comparison of Genertec Universal Medical’s Core Businesses in 1H 2023 and 1H 2024 (Source: Company Performance Materials)

As a key breakthrough segment, Genertec Universal Medical’s healthcare business—comprising three major divisions: general medical services, specialized medical services, and health technology—achieved steady growth in the first half of the year, further solidifying its position as the primary revenue driver. This is reflected, on one hand, in its share of total revenue: during the first half, the healthcare business accounted for nearly 60% of total revenue, indicating that the company’s business transformation is gradually entering a harvest phase. On the other hand, it is evident in net profit performance, with the healthcare segment’s net profit rising by 16.3% in the first half. This growth in profitability was the key factor enabling Genertec Universal Medical to maintain an increase in net profit despite a slowdown in revenue growth during the same period.

In fact, in the current market environment, Genertec Universal Medical Group Company Limited’s ability to achieve steady progress in overall performance and continuously optimize its business structure is largely attributable to the complementary nature of its two core businesses. Specifically, the stable and sustained growth of its financial services segment provides robust assurance and support for its healthcare operations; conversely, the continuous growth and expansion of the healthcare segment create greater room for development in integrating industry with finance. This represents Genertec Universal Medical’s most distinctive competitive advantage over its peers and is the key to its rapid business transformation.

Since its transformation in 2017, Genertec Universal Medical Group Company Limited has been committed to developing its healthcare business and has gradually formed“With medical services as the core, financial services as the support, and health technology as the engine, build a shared and win-win ecosystem for the big health industry”development pattern. Currently, Genertec Universal Medical Group's healthcare business comprises three major segments: comprehensive medical services, specialized medical services, and health technology, which generated revenues of RMB 3.645 billion, RMB 4.754 million, and RMB 267 million, respectively, in the first half of the year.

Specifically, the integrated healthcare business primarily refers to hospital operating revenue. As of June 30, 2024, Genertec Universal Medical Group Company Limited owned a total of 72 medical institutions, including five Grade A tertiary hospitals and 32 secondary hospitals, with more than 16,000 beds in total. According to the performance report, integrated healthcare is the main contributor to Genertec Universal’s health services segment and a key driver of its performance growth, achieving a net profit of RMB 243 million in the first half of the year, a year-on-year increase of 9.9%.

 Figure 3. Changes in Patient Visits at Genertec Universal Medical Group Company Limited in H1 2023 and H1 2024 (Source: Company Performance Materials)

An analysis of the report readily reveals that its growth is attributable to the following four key factors: First, an increase in patient volume, with total outpatient and emergency visits rising by 5.9% and surgical cases increasing by 10.5% in the first half of the year; second, a higher revenue per patient, with annualized revenue per bed reaching RMB 500,000, a year-on-year increase of 2.3%; third, improved operational efficiency, as the overall bed occupancy rate rose to 88.9%, up by 0.5 percentage points from the same period last year; and fourth, a significant reduction in costs, with the ratio of overall pharmaceutical and consumable costs to revenue decreasing by 2.9 percentage points in the first half of the year.

In fact, the optimization of these elements stems from the enhancement of medical service quality, and Genertec Universal Medical Group Company Limited has implemented a multi-faceted strategy in this regard. For instance, in terms of environment and services, the company has upgraded and renovated its older hospital campuses, established a management mechanism for the continuous improvement of logistics and environmental conditions, and launched the “Three-Year Warm Heart Service Special Initiative.” In terms of technology and innovation, it has deeply promoted the integrated development of medical care, education, and research, having recruited 20 discipline leaders and introduced 467 new technologies and projects to date. Finally, regarding digital empowerment, the company has solidified its “standardized, integrated, and fully cloud-based” layout in areas such as smart hospital construction, self-developed data middle platforms, and internet health platforms, achieving significant results.

Having discussed integrated healthcare, we now turn our focus to specialized medical care.Specialized medical care primarily focuses on delivering innovative healthcare services in fields such as oncology, nephrology, ophthalmology, traditional Chinese medicine, and ethnic medicine, thereby extending medical value.. Based on the first-half performance, the nephrology sector demonstrated strong momentum, generating RMB 148 million in revenue within the comprehensive healthcare business segment, a year-on-year increase of 9.5%. Oncology followed closely, achieving RMB 87 million in revenue in the same segment during the first half, representing a 12% year-on-year growth. It is evident that these segments primarily serve to enhance quality and accelerate growth within the comprehensive healthcare business. Furthermore, certain progress has been made in ophthalmology, traditional Chinese medicine, and ethnic medicine, with promising prospects for development toward specialization, chain-based operations, and industrialization.

The final piece of the puzzle in Genertec Universal Medical Group’s healthcare business is its health technology segment. According to the first-half performance report, this sector has demonstrated numerous highlights.Operating revenue surged by 423%, while net profit soared by 210.9%., of course, this primarily relies on the surge in its full-lifecycle management business for medical equipment, which accounts for nearly 99% of its revenue. It is reported that full-lifecycle management of medical equipment mainly provides hospitals with a comprehensive, stewardship-style service centered on “management,” encompassing management, procurement, maintenance, utilization, and repair. Over the past six months, Genertec Universal Medical Group has successfully acquired three leading enterprises in the field of medical equipment maintenance—Kaisixuanda, Tuozhuang Medical, and Zhongtaihe Medical. Its maintenance capabilities now cover medical imaging, emergency and critical care, hemodialysis, ultrasound, and linear accelerators. Its service network spans all 31 provinces, municipalities, and autonomous regions across China, serving over 1,200 clients, with total assets under management reaching approximately RMB 22 billion. Recently, Genertec Universal Medical Group, in collaboration with the Medical Industry Branch of the China Association of Plant Engineering, released the enterprise standard “Service Specifications for Maintenance and Repair of Medical Magnetic Resonance Imaging (MRI) Equipment,” further enhancing its industry influence.

Another revenue stream for the health technology segment comes from its smart medical and elderly care business, which primarily targets the elderly population. Leveraging an information technology platform and a “finance + healthcare + wellness” model, it has established a comprehensive medical and elderly care service system. In early 2024, Genertec Universal Medical Group Company Limited successfully acquired Qingniao Ruantong, a leading domestic enterprise in smart health and elderly care. In June, the company further signed a strategic cooperation agreement with the Shaanxi Provincial Home Services Association to integrate resources from both parties and actively advance business layout and incubation. Although the scale of the smart medical and elderly care business remains relatively small in the first half of the year, its development potential is expected to be substantial following the completion of the acquisition.

Overall, in the first half of this year, all business segments of Genertec Universal Medical Group achieved varying degrees of growth, primarily driven by enhanced overall service capabilities and the synergistic coordination and support among its various businesses.

Based on the performance in the first half of this year, Genertec Universal Medical Group Company Limited has achieved steady overall progress, with its healthcare services segment registering significant growth. As we move into the second half of the year and look ahead to the next two to three years, can the company sustain this growth momentum? To address this question, VCBeat has analyzed the interim report and business layout to identify three key advantages that underscore Genertec Universal Medical’s potential for future growth:

The primary advantage is the group effect of central state-owned enterprises.. As is well known, Genertec Universal Medical Group Company Limited is a publicly listed company controlled by a central state-owned enterprise. Its shareholder, China General Technology (Group) Holding Co., Ltd. (Genertec), as the “second national team” in the healthcare sector, is currently the largest and most widely covering medical and health group in China in terms of number of hospital beds. Within its medical services segment, Genertec has only one listed entity, namely Genertec Universal Medical. In fact, the rapid transformation achieved by Genertec Universal Medical is largely attributable to its central state-owned enterprise “heritage” and its strong capability to integrate high-quality resources. Looking ahead, this advantage is expected to further expand, driving a new round of business growth.

 Figure 4. Genertec Universal Medical Group’s Overall Development Strategy and Business Chain

The second major advantage is the integrated development among core businesses.As previously stated, Universal Medical’s financial services and healthcare operations are inherently complementary. As the scale of its healthcare business continues to expand, the synergistic effects between industry and finance will further strengthen. Moreover, mutual support exists among various healthcare segments; for instance, comprehensive medical services empower specialized care, while specialized care, in turn, reinforces comprehensive services—a dynamic also observed in health technology. Therefore, as Universal Medical progresses toward a more advanced stage of development, inter-business linkages will become increasingly tight, thereby further unlocking the market potential of its integrated healthcare ecosystem.

The third major advantage is the expansion of business layout and the enhancement of service capabilities, enabling Genertec Universal Medical Group Company Limited to reach a broader population and access a larger market.It is evident that over the past few years, Genertec Universal Medical Group Company Limited has been continuously expanding its business footprint and enhancing service capabilities through mergers and acquisitions (M&A) and digitalization, achieving remarkable results. However, this is only the beginning. In the future, the company will intensify its M&A efforts to integrate industry resources and acquire more high-quality enterprises. Meanwhile, Genertec Universal Medical will maximize the empowering potential of digitalization for its operations, providing a technological engine for innovative development and thereby unlocking greater growth opportunities.

In addition, policy guidance and shifts in market demand will also “lay the groundwork” for Genertec Universal Medical Group Company Limited’s performance growth. Taking policy guidance as an example, in recent years, national authorities have issued multiple relevant documents, consistently maintaining a positive and encouraging stance toward healthcare services operated by state-owned enterprises (SOEs) and promoting innovation in their healthcare delivery models. Furthermore, at the level of market demand, taking Genertec Universal Medical’s newly developed smart medical-healthcare-elderly care business as an example, related market demand is poised for rapid expansion as population aging continues to deepen.

Therefore, standing at the critical juncture of transformation in the current healthcare industry, Genertec Universal Medical Group Company Limited, with its continuously enhancing medical value, will unlock greater potential. The future holds great promise!