Hengdao Medical Completes Series B+ Financing, the First in China's Pathology Sector in 2024

Major Good News for the Pathology Sector.

Following five consecutive years on the prestigious “Future Healthcare 100” list in the medical sector, it is reported thatHengdao Medicine has recently completed a B+ round of financing amounting to tens of millions of yuan, led by Puhua Capital and participated in by Changxing Financial Holdings.Wang Jing, General Manager of Hengdao Medical Pathology Diagnosis (Shanghai) Center, stated,"This round of financing will continue to focus on enhancing comprehensive digital and intelligent pathology solutions, meeting the ever-evolving market demands."

Wang Jing, General Manager of Hengdao Medical Pathology Diagnosis (Shanghai) Center

According to the VCBeat database, this is also the first disclosed financing news in the pathology field in 2024. Relevant public data shows that over the two years since May 2022, capital market investment in the pathology sector has been very active, with some leading companies, including Hengdao Medical, reaching Series B+ and beyond in their financing rounds.

Note: Compiled from the VCBeat database and public sources; omissions may exist.

Under the current challenging market conditions, the injection of capital further underscores patient capital’s optimism toward the pathology industry and its confidence in the enterprise’s future development.

Zhou Mi, Managing Partner at Puhua Capital, the investor in this round of financing for Hengdao MedicalFrom the perspective of the entire pathology industry landscape, “Puhua Capital has consistently focused on strategic investments across the upstream, midstream, and downstream segments of the pathology sector. The pathology industry constitutes a critical component of the biopharmaceutical and healthcare fields. We are optimistic about the solid foundation that Hengdao Medicine has established over the past six-plus years in terms of clinical pathology capabilities and market development, and we see strong growth prospects for intelligent pathology products. We are committed to collaborating with leading professional pathology institutions in the industry to drive progress forward.”

Shen Yunfeng, General Manager of the Investment Department at Changxing Financial Holdings, an investor in this round of financing for Hengdao MedicalIt also pointed out that “clinical pathology, as the ‘gold standard’ for diagnosing tumors and other diseases, holds immense market potential. However, the industry faces numerous persistent pain points that are difficult to resolve, including a scarcity of personnel, uneven professional competency, and low levels of automation, standardization, digitalization, and intelligence. As the only enterprise in China capable of providing comprehensive pathological services and closed-loop solutions, Hengdao Medicine has established all-around competitive barriers by focusing on two core pillars: digitalization of the pathology industry and the development of artificial intelligence infrastructure.”

Clearly, the ability to ultimately secure capital favor is also tied to Hengdao Medical’s own strengths.

Wang Jing pointed out, “Against the policy backdrop of the state-driven high-quality development of hospitals and the new national performance evaluation system, the healthcare industry is placing increasing emphasis on the development of pathology. Requirements for pathology diagnostic institutions are becoming increasingly comprehensive; single services such as expert consultations and remote slide reading can no longer meet the demands of modern healthcare. Institutions must simultaneously enhance their capabilities in diagnosis, digitalization, operations, quality control systems, multi-omics technologies, research empowerment, and teaching and training, so as to drive the sustained progress, growth, and strengthening of the entire industry.”

Since its official commencement of operations in 2018, “Hengdao Pathology,” as the first comprehensive specialized pathology service provider in China to obtain a license for an independent third-party pathology diagnostic center, has maintained steady development across four key areas: clinical diagnostic services, standardized industrial services, digital and artificial intelligence support, and medical education and media support.Centered on a pathology technology platform, our comprehensive business framework meets the specialized service needs of clinical practices, pharmaceutical companies, and research institutions. By continuously deepening our professional expertise and broadening our product portfolio, we deliver high-quality, one-stop comprehensive pathology solutions to our clients.

“Hengdao Pathology” has followed a clear trajectory of development. With its continuous growth, it has gradually established “Hengdao Medicine” as its parent brand, under which several sub-segments operate, including Hengdao Pathology, Hengdao Pharmaceuticals, Hengdao Digital, Hengdao Medicine New Media, and Hengdao Intelligent Manufacturing.

Over the past six years, Hengdao Medical has developed at a pace of “achieving a leapfrog development goal every three years”—

During the first three-year development phase, Hengdao Medical achieved a breakthrough “from 0 to 1,” making significant strides in professional expertise, social impact, medical reputation, and technological innovation.It has established a comprehensive experimental medical service team; conducted exhaustive, ground-level market research; and built a pathology professional learning community based on medical new media that is “engaging, informative, and empathetic,” which has become one of the most popular learning platforms. In terms of technological innovation, it launched the “Instant Call” service product, integrating hardware design, software technology platforms, 5G network channels, and diagnostic service capabilities to facilitate the downward distribution of high-quality medical resources. It has also been designated as the medical service team supporting Xinjiang from Baoshan District, Shanghai.

During the second three-year development phase, Hengdao Medical accelerated the implementation of strategies such as "service decentralization, product closed-loop integration, and digital innovation," aligning with the overarching theme of deepening healthcare reform.In terms of medical services, it has further deepened its "bundled" comprehensive service capabilities, establishing and operating regional medical consortiums and medical community service models. Regarding medical quality, it became the first third-party pathology diagnostic center in China to pass the CNAS (ISO 15189) quality system certification. In 2024, Hengdao Pathology Laboratory achieved CAP accreditation from the United States for its entire range of pathology tests. In industrial services, leveraging accumulated project experience, a robust quality system, and high-quality service experiences, it has undertaken nearly 100 Investigator-Initiated Trials (IITs) and registration clinical projects. In digital innovation, its self-developed WisPath smart digital pathology system was officially launched, assisting hospitals in achieving digital transformation and upgrading, as well as in building regional pathology centers. The first white paper in China on the Construction of Digital Smart Pathology Departments, jointly released with Ruijin Hospital in 2023, was built upon the WisPath system. Over the past three years, Hengdao Medical’s new media platform has continuously delivered high-quality, systematic courses and training, launching paid columns such as "Grade-A Tertiary Hospital Pathology On-Site," thereby achieving commercial development and laying a solid business foundation for the long-term, stable production of premium content.

Since 2018, Hengdao Medical has garnered numerous awards.In November 2023, it was shortlisted for the Shanghai “Science and Technology Innovation Action Plan” Science and Technology Little Giant Project; in January 2024, it further received dual recognition as an AAA-rated entity in social credit evaluation and a five-star rated entity in medical quality and service capability evaluation under the 2024 National Industry Assessment for Non-Public Medical Institutions in China.

“Hengdao Medicine has been exploring a path for the professional development of pathology that aligns with national conditions and serves public livelihood, aiming to become an effective complement and optimal partner to the public healthcare system, and striving to emerge as a key enterprise within the medical services ecosystem,” said Wang Jing.

“The pathology industry is a ‘slow bull’ market that requires patient capital and a patient team to ultimately win over discerning customers and the market, thereby achieving sustained long-term growth. The companies that will ultimately emerge as leaders are those that have developed their own unique strategies throughout this process, align with national policies and market trends, return to the essence of medicine, and truly create value for their customers.” He emphasized, “Hengdao Medical is confident in becoming such an enterprise.”

Puhua Capital, founded in 2004 and headquartered in Hangzhou, maintains offices in Beijing, Shanghai, Shenzhen, and London, UK. The firm focuses on investments in four key sectors: frontier technology, new energy and advanced materials, healthcare, and consumer culture. Leveraging its deep industry insights and extensive capital market experience, Puhua Capital has adopted a “capital + industry” dual-drive strategy, committed to investing early, innovatively, specifically, and in growth-stage companies, serving as an incubator and accelerator for entrepreneurship and innovation. Currently, the firm manages assets exceeding RMB 25 billion, having continuously supported nearly 500 portfolio companies, with over 150 achieving exits through IPOs and other channels.

Changxing Zhejiang Financial Holding Group Co., Ltd. is a wholly state-owned enterprise established by the Changxing County Committee of the Communist Party of China and the Changxing County People’s Government. The Group implements corporate-style management and market-oriented operations. Its core business involves the professional and market-driven operation and management of financial services, including fund investment, equity investment, financial leasing, factoring, and private equity management, thereby promoting the healthy and orderly development of strategic emerging industries within the region. Adhering to the corporate philosophy of “integrity, prudence, pioneering, innovation, dedication, and professionalism,” the Company is committed to becoming a leading regional benchmark among state-owned enterprises. With a prudent investment style, rigorous management mechanisms, and a proactive work attitude, it is rooted in Changxing while maintaining a global perspective.