Will the High-Growth Trajectory of New Horizon Health—Tripling Revenue and Quadrupling Gross Profit—Last?

2021 marked the first year of New Horizon Health’s full-scale commercialization. During this period, the company adopted an aggressive strategy.

Total revenue increased by 201.5%; gross profit surged by 315.2%; and gross margin climbed to 72.7%. These are the strong results reported by New Horizon Health in its annual report. However, it is also noteworthy that in 2021, New Horizon Health’s sales and marketing expenses reached RMB 270 million, representing a 316.7% increase, which was on par with the growth in gross profit.

In the first year following the approval of Changweiqing, New Horizon Health charted a trajectory of wild growth.

More than a year has passed since New Horizon Health rang the bell for its IPO listing,As we re-examine New Horizon Health, the company basking in the glory of being the “first stock for early cancer screening,” how long can its unchecked growth continue?

New Horizon Health recorded RMB 213 million in revenue in 2021, more than triple the previous year’s figure; meanwhile, driven by an increase in gross margin rate, its gross profit reached RMB 155 million, over four times that of the prior year.

In our previous analyses of New Horizon Health, we have repeatedly mentioned thatNew Horizon Health’s journey to realizing its commercial value entails a transition from market education to consumption upgrading.Step 1: Leverage low-cost, affordable products (the "Pupu Tube") to raise cancer prevention awareness among high-risk populations and penetrate the home-based cancer screening market. Step 2: Facilitate consumption upgrades within high-risk groups (from the "Pupu Tube" to "Changweiqing"), providing users with more precise and clinically valuable early cancer screening services.

In fact, the development trajectory of New Horizon Health has unfolded exactly as we analyzed, and the realization process has been even faster than we anticipated.

In the six months following the approval of Colotect, a series of market initiatives by New Horizon Health did not immediately translate into sales growth for Colotect. Instead, sales of Pupu Tube experienced rapid growth, creating a significant gap between its performance and that of Colotect. This validates the first step mentioned above.

By the end of 2021, the sales volume of Changweiqing once again equaled that of the Pupu Tube, indicating that individuals at high risk for colorectal cancer have gradually begun their process of consumption upgrading, thereby validating the second step mentioned earlier.

Market promotion drove the sales growth of the Pupu Tube, which in turn boosted the user conversion rate for Changweiqing. This snowballing growth model will sustain New Horizon Health’s continued rapid expansion in 2022.

Early screening for colorectal cancer is just one of the wheels driving New Horizon Health’s future growth. The other wheel has already begun to turn quietly.

On January 6, 2022, New Horizon Health added a new member to its product family at the start of the new year—Youyou Tube.

Although similar in product form to the Pupu Tube as a lightweight offering, New Horizon Health still subjects the Youyou Tube to the regulatory standards for Class III medical devices and continues to uphold its early screening philosophy of at-home testing.

In clinical studies, Youyouguan demonstrated a sensitivity of 96.5% and a specificity of 99.1%, using the urea breath test as the reference method. As a home-based testing product, these performance metrics are sufficient to establish Youyouguan as the first line of defense in patient screening.

As New Horizon Health has consistently emphasized, regulatory compliance is the prerequisite for at-home early screening. The package insert for the Youyou Tube, approved by the National Medical Products Administration (NMPA), explicitly states that the product is “suitable both for Helicobacter pylori antigen testing conducted by professional medical personnel in healthcare institutions and for self-testing by consumers.”The evidence supporting the NMPA’s endorsement of this statement comes from the clinical study results of Youyouguan. In the clinical studies conducted for Youyouguan, a specific comparison was made between self-test results by subjects and test results obtained by professionals, achieving a 100% concordance rate.

At 0:00 on January 18, 2022, the Youyou Tube was launched exclusively on eight major platforms at a promotional price of RMB 139, generating over RMB 5.2 million in sales revenue within just 72 hours. Given this level of market attention, as Zhu Yeqing, CEO of New Horizon Health, noted during the earnings briefing, it is highly likely that sales of the Youyou Tube will catch up with and surpass those of the Pupu Tube within the next few years.

Youyou Tube marks the beginning of New Horizon Health’s product line expansion. Following the launch of Youyou Tube, its cervical cancer screening product, Gongzhengqing, is poised for release and will enter registration clinical trials in 2021.

Behind the Explosive Growth of New Horizon Health’s Core Products—Changweiqing, Pupu Tube, and Youyou Tube—Lies Its Aggressive Market Expansion Strategy. In 2021, New Horizon Health’s sales and marketing expenses reached RMB 270 million, with growth rate aligning with that of gross profit.

Early screening is a highly specialized market. Fundamentally, it requires rigorous medical science as its theoretical foundation and must gain endorsement from key opinion leaders (KOLs) and regulatory authorities. However, during the commercialization phase, the cognitive gap between consumers and professionals makes it difficult for consumers to understand the outcomes produced during the product development stage.

The characteristics of the early screening sector have determined New Horizon Health’s unique dual-faced state in marketing. Internally, it remains rooted in serious medical practice, while externally, it increasingly resembles a consumer goods company.

New Horizon Health’s roots remain firmly planted in serious medical care.The technological innovations and clinical research investments seen in ChangWeiqing and YouYouGuan will continue to be applied to subsequent products, GongZhengQing and GanZhengQing. This is a fundamental requirement for any cancer early-screening company, ensuring that the clinical value of each product is scientifically and thoroughly validated.

To gain greater recognition among physicians, New Horizon Health launched extensive clinical promotion activities in 2021. By the end of 2021, the company had secured pricing approvals and completed hospital admission applications at more than 400 hospitals. Its multi-target stool FIT-DNA testing technology, represented by Colotect, was included in two national guidelines for colorectal cancer screening, diagnosis, and treatment. Additionally, the company hosted the inaugural Peking University–New Horizon Health Academic Frontier Forum.

This sustained academic engagement has garnered greater recognition from clinicians for New Horizon Health’s concept of “at-home early screening.” During the recent Two Sessions, multiple expert committee members highlighted the funneling role that at-home testing can play in the early screening and diagnosis of cancer.

On the other hand, New Horizon Health’s external profile is increasingly resembling that of a consumer goods company.Leverage substantial marketing expenditures to penetrate the market, capture the attention of clinicians, channel partners, and consumers, establish brand equity, and ultimately realize commercial value.

However, unlike traditional consumer goods companies, which primarily burn cash to compete with rivals in the market, New Horizon Health faces virtually no direct competition; its spending is mainly aimed at educating the market.

The absence of market competition is due to the compliance barriers established by New Horizon Health.Although both Changweiqing and Youyouguan face similar competitors, including products that have obtained Class III medical device registration certificates, it is the brief statement on the registration certificate (Changweiqing: for screening high-risk populations for colorectal cancer with poor compliance to colonoscopy / Youyouguan: also suitable for patient self-testing) that allows New Horizon Health to compliantly enter the consumer market; whereas other companies are constrained by the specified scope of product application and hesitate to enter the consumer market.

“If we follow general industry development trends, other companies should quickly follow suit after New Horizon Health completes its regulatory filing. However, the reality is quite the opposite. ‘In the nearly 18 months since Changweiqing received approval, we have not yet seen a second company initiate large-scale, prospective, multi-center trials. Therefore, we believe that we will not face homogenized competition in the Changweiqing segment in the short term,’ said Zhu Yeqing.”

“Compliance” has qualified New Horizon Health’s products for inclusion in the consumer goods category. Seizing this window of opportunity, New Horizon Health has aggressively expanded its footprint in the consumer (C-end) market.Prior to New Horizon Health’s entry, the early screening market was an untapped frontier. To penetrate this market, it is essential to raise awareness of early screening among high-risk populations.

The value of New Horizon Health’s consumer-facing promotion has been directly reflected in its sales volume. During the 618 and Double 11 e-commerce mega-sales events in 2021, New Horizon Health achieved the highest sales revenue in its industry on both JD.com and Tmall. Its flagship product, Changweiqing, retained its title as the top-selling single item in the categories of consumer healthcare and at-home testing services.

In this dual-faced state, how has New Horizon Health managed to transition from serious medical care to the general public?

First and foremost, it relies heavily on extensive marketing interactions.To simultaneously establish its influence in both the B2B and B2C markets, New Horizon Health has built a substantial marketing team. By the end of 2021, the company had 804 employees, including 462 sales personnel, accounting for 57.5% of its total workforce. These 462 individuals operate across cities of all sizes, educating clinicians, distribution channels, and the general public about the importance of early screening and the clinical value of the company’s products.

Secondly, New Horizon Health has continuously leveraged endorsements from medical professionals to educate consumers on the importance of early cancer screening.In September 2021, New Horizon Health co-organized the “Colorectal Cancer ‘Prevention, Screening, Diagnosis, Treatment, Nursing, and Management’ Science Popularization China Tour,” with plans to hold 2,000 events, cover 100 hospitals, and train 300 science communication professionals.

Therefore, if we break free from the rigid mindset of the traditional healthcare industry and evaluate New Horizon Health through the lens of consumer goods, the RMB 270 million in sales expenses can be seen as the necessary entry fee for market penetration—an unavoidable cost. So, when will the losses incurred by such large-scale marketing efforts come to an end?

“Our turnaround timeline is 2024.” These are Zhu Yeqing’s exact words.

Looking ahead, the primary challenge facing New Horizon Health is how to return to profitability in 2024.

There are many concerns that New Horizon Health need not worry about at this stage, such as the competitive landscape mentioned above or its cash reserves. Currently, New Horizon Health has no significant looming worries. The only factor limiting its growth speed is itself.

New Horizon Health is currently in a critical phase of market expansion, making continued growth in sales and administrative expenses inevitable. Given the upcoming registration clinical trials for Gongzhengqing, the company’s R&D expenditure is also expected to rise further this year. Therefore,Cost-cutting is not feasible; the key lies in expanding revenue streams, with revenue growth outpacing expenditure growth.

The market potential for New Horizon Health’s existing products is not in question.Changweiqing and the Popo Tube still have significant room for growth, and with the addition of the Youyou Tube as a new force in 2022, New Horizon Health has first and foremost ensured that its growth potential will not be constrained.

As sales volume increases, New Horizon Health’s costs can be further diluted, resulting in higher gross profit margins.

According to Gao Yu, Chief Financial Officer of New Horizon Health, the growth in gross profit margins for ColonClear and PupuTube is primarily driven by two factors. On one hand, the proportion of sales from higher-priced channels, such as clinical and internet-based channels, will continue to increase, thereby raising the average selling price of the products. On the other hand, as product sales volume grows, the fixed costs amortized per unit will steadily decline.

Capacity bottlenecks may pose a short-term challenge for New Horizon Health.Gao Yu introduced, “The annual testing volume of Colotect at our three central laboratories is currently 2 million tests. In 2021, we shipped 660,000 units, indicating substantial room for improvement in the utilization rate of our testing capacity. Pupu Tube and Youyou Tube share the same fully automated production line, with six robotic arms dedicated to manufacturing these two products at our Hangzhou production base. Capacity expansion for Pupu Tube and Youyou Tube can be achieved relatively easily. Should future capacity become constrained, we will continue to add automated production lines, while maintaining manual production lines as a backup. This will not pose a significant issue.”

Looking further into the future, New Horizon Health must also consider how to continue expanding its scope; in this regard, we have observed some interesting developments.

The first change stems from the evolution of New Horizon Health’s product portfolio.

New Horizon Health began disclosing information about its liver cancer screening product, Gan Zheng Qing, in 2021. Preliminary data presented at the CSCO conference in September 2021 showed that both its sensitivity and specificity reached 97.9%, highlighting its promising clinical value.

This product represents a fundamental shift from New Horizon Health’s other four offerings. Gan Zheng Qing departs from the core logic of “at-home early screening” by adopting a multi-omics blood-based liquid biopsy approach. It is the only test in New Horizon Health’s portfolio that requires on-site sample collection, and it carries the highest technical cost.

The second change stems from the shift in New Horizon Health’s operational model.

On August 20, 2021, the New Horizon Venture Capital Fund, co-established with a USD 30 million investment from New Horizon Health, completed its first round of fundraising. The fund focuses on investing in the field of molecular diagnostics to advance screening and early diagnosis for cancer and other major diseases. Meanwhile, New Horizon Health also announced the acquisition of Epigenomics, a German molecular diagnostics company specializing in blood-based colorectal cancer testing, and established a research and development partnership with Proteomedix, a Swiss biotechnology company focused on prostate cancer screening and detection.

These two shifts reflect New Horizon Health’s outlook on the early screening market: after several years of market education, user acceptance of early screening products is expected to rise significantly, with patients gradually embracing more intensive early screening solutions, thereby creating a new blue ocean in the hospital-based early screening market.

New Horizon Health is also aligning with this trend by dedicating resources to strengthen the connection between its product portfolio and hospital channels, while simultaneously expanding into the consumer market, thereby laying the groundwork for future growth.

But whether in B2B or B2C, New Horizon Health remains focused on early screening, pioneering one blue ocean after another.

In the process, we patiently await a more prosperous and diverse era of early screening.