Jianxiang Hospital Group Secures RMB 110 Million Series A Funding from Zhengsheng Investment to Advance Integrated Medical and Elderly Care Model

VCBeat (WeChat ID: vcbeat) has learned that Guangdong Jianxiang Hospital Group (“Jianxiang Hospital Group”) recently completed an RMB 110 million Series A financing round, with Zhuhai Zhengsheng Investment Co., Ltd. as the investor.

Jianxiang Hospital Group has been engaged in the medical services industry since 2005. With “integration of medical care and elderly care” as its strategic direction, it is now a chain medical management enterprise whose business covers the entire health service industry chain, including medical treatment, rehabilitation, nursing, wellness, and elderly care.

The Group currently operates eight medical service institutions across four major business segments: general hospitals, specialized hospitals, rehabilitation and nursing hospitals, and elderly care and wellness health centers. As of 2018, Jianxiang Hospital Group had more than 1,000 beds and generated annual operating revenue of nearly RMB 150 million.

How Did Jianxiang Achieve RMB 150 Million in Revenue from Scratch? What Are Its Criteria and Strategic Vision for Hospital Investments? What Value Did Zhengsheng Investment See in Jianxiang Hospital Group? With these questions in mind, VCBeat (WeChat ID: vcbeat) conducted exclusive interviews with Long Xiangyu, Founder of Jianxiang Hospital Group, and Deng Jihua, Chairman of Zhengsheng Investment, to hear their insights.

Long Xiangyu, Founder of Jianxiang Hospital Group (Image source: Provided by the company)

Unlike traditional hospital groups with substantial backing, Jianxiang Hospital Group was founded by two physicians who started small and gradually expanded the business using borrowed funds.

Long Xiangyu told reporters that when he founded his first hospital—Foshan Jianxiang Cervical and Lumbar Hospital (now Foshan Chancheng Jianxiang Hospital)—he drew on his background in traditional Chinese medicine (TCM) rehabilitation, focusing on TCM rehabilitative therapies such as acupuncture and tuina. During this process, Long gradually observed that the hospital’s clientele consisted largely of elderly patients with orthopedic conditions. However, due to constraints in scale and facility space at the time, treatment was often limited to conventional methods.

Not until September 2012, when the Foshan Jianxiang Hospital (Shiken Main Campus), built to the standards of a tertiary hospital, opened its doors, did the institution introduce a wide array of advanced medical equipment and become capable of performing Western medical treatments, including orthopedic surgical procedures. This milestone marked the completion of Jianxiang Hospital Group’s comprehensive treatment chain for degenerative osteoarthropathy.

After the layout of general hospitals and specialized geriatric hospitals was completed, Long Xiangyu realized that the needs of the elderly extended beyond this point. What happens to seniors after discharge? Elderly rehabilitation, home-based care, and institutional care are all indispensable components of services for the elderly.

In October 2015, Jianxiang Wellness Center was established, dedicated to assisting the elderly with physical health management and improving their quality of life. It is a large, specialized healthcare institution integrating Traditional Chinese Medicine (TCM) treatment, health preservation, and leisure entertainment.

In September 2016, the Jianxiang Home-Based Rehabilitation Team was established, comprising more than 30 professional physicians, nurses, and rehabilitation therapists. The team primarily conducts comprehensive assessments for clients in need across various sub-districts and households, formulates individualized rehabilitation plans, and provides professional rehabilitation therapy, nursing care, and other integrated training and guidance. During this period, physicians from Jianxiang Hospital served in the capacity of family doctors.

In 2018, Foshan Jianxiang Nursing Home, a wholly-owned specialized nursing and medical institution under the group, officially commenced operations. By leveraging “professional medical rehabilitation technologies” and “intelligent monitoring and nursing care,” it provides rehabilitative treatment for conditions such as dementia, geriatric diseases, osteoarticular disorders, and sequelae of stroke, thereby addressing the daily living, nursing, and rehabilitation needs of elderly individuals with disabilities and cognitive impairments.

With this, the “medical care, elderly care, rehabilitation, and nursing” ecosystem chain of Jianxiang Hospital Group has been established. It is understood that the Foshan Jianxiang Medical-Nursing Integration Project is part of Foshan City’s Action Plan for Building a Healthcare Highland under the Initiative to Strengthen the City’s Health Sector (2016–2018). Foshan Jianxiang Hospital is a key supported entity in the construction of a healthcare highland in Chancheng District, Foshan City, and Jianxiang Nursing Home has been included as a key project in Foshan’s Initiative to Strengthen the City’s Traditional Chinese Medicine Sector.

Throughout the entire business expansion strategy, Long Xiangyu has consistently focused on middle-aged and elderly users, developing a service chain for senior care and continuously enhancing service capabilities.

Regarding user profiling, Long Xiangyu stated that Jianxiang Hospital Group primarily serves the urban elderly population, covering the entire life cycle from independent living to end-of-life care. Centered on medical services, this closed-loop system establishes a new integrated model of medical and elderly care, where medical treatment, rehabilitation, nursing, and eldercare are mutually supportive and facilitate patient referral among one another. This model fully leverages the respective roles of general hospitals, specialized hospitals, nursing hospitals, and elderly care facilities.

General Hospitals: Technical Support and Value Monetization, leveraging the large base of sticky customers formed by the aforementioned three parties to provide high-level, comprehensive medical services and offer technical support to them, thereby creating a value loop in the elderly health industry.

Specialized Hospitals: The Primary Business and Customer Gateway, Jianxiang’s specialized hospitals primarily provide orthopedic medical services for the elderly, focusing on the lumbar spine, shoulders, and neck. Leveraging over a decade of accumulated expertise and brand strength, all of its specialized hospitals now achieve an occupancy rate of over 90%.

Nursing Homes: High-Value Services for Priority Development, leveraging the large customer base of regional specialized hospitals, it focuses on developing post-discharge rehabilitation and nursing care services for the elderly, which are characterized by long-term stickiness and high economic value.

Nursing Homes: Foundational Services for Future DevelopmentPositioned for the mid-to-high-end market, it provides a more diversified range of supporting services for elderly patients in specialized hospitals and nursing homes, accumulates sufficient bed capacity and high-quality long-term clients, and drives patient referrals to other high-value services.

Jianxiang Nursing Home (Image source: Provided by the enterprise)

To date, Jianxiang Hospital Group operates one general hospital, three specialized hospitals, two nursing homes, and two elderly care facilities. In Long Xiangyu’s view, the “1-3-2-2” model represents a profitable and traffic-driving business framework that Jianxiang Hospital Group has developed through over a decade of exploration, capable of meeting the medical and elderly care needs of seniors within a defined geographic area.

“Providers of integrated medical and elderly care services are mostly specialized hospitals and nursing homes. These two types of institutions should constitute the core components of the entire service loop, and both require technical support; therefore, a general hospital is needed within each large region,” Long Xiangyu admitted. He noted that nursing homes have relatively low technological barriers and their business models are easier to replicate. Thus, the future layout will continue to prioritize specialized hospitals, nursing homes, and nursing facilities to ensure a larger customer base.

Long Xiangyu stated that after securing this round of financing, Jianxiang Hospital will acquire a general hospital and a specialized hospital. If negotiations proceed smoothly, it may also acquire a nursing home, with a focus on advancing the development of integrated medical and elderly care services in the Foshan region.

Jianxiang Nursing Home (Image source: Provided by the company)

Regarding the specific requirements for investment institutions, Long Xiangyu told reporters that, first, one must examine the institution’s operational performance, focusing on both the extent to which daily operational targets are met and its capacity for sustainable development; second, one must assess the degree of alignment between the institution and the integrated model of medical care and elderly care; third, one must evaluate whether the institution possesses the potential for sustainable growth and further business expansion; and fourth, one must consider geographic proximity to ensure accessibility.

Regarding the core competitiveness of Jianxiang Hospital Group, Long Xiangyu mainly discussed five aspects:

First, after more than a decade of dedicated development, Jianxiang Hospital Group has established a complete industry chain integrating medical care and elderly care. Through its four major business segments, the group covers the entire elderly care service spectrum, ranging from general hospitals and specialized hospitals to nursing homes and residential eldercare facilities, and extending to home-based elderly care services.

Second, Jianxiang Hospital Group has established its own brand. It has served as the president unit of the Private Medical Institutions Association for many years, and its reputation in Foshan has been widely recognized.

Third, it possesses strong professional technical capabilities. Currently, the tertiary hospitals under Jianxiang Hospital Group serve as teaching hospitals and as a joint graduate training base for Guangzhou University of Chinese Medicine, hosting numerous key specialized disciplines and research projects. The nursing home is also a key project integrating medical care and elderly care in Foshan.

Fourth, the advantage of having specialized teams. Jianxiang Hospital Group possesses the capability to independently cultivate talent and has established its own training system. In addition to pre-employment training, staff undergo rotational assignments across departments, participate in departmental and hospital-wide training programs, and engage in regular advanced studies. Furthermore, Jianxiang Hospital Group has implemented a mentorship system, wherein senior physicians guide new doctors through instruction and personal example.

Fifth, scale advantage. Currently, Jianxiang Hospital Group has over 1,000 beds and ranks in the 80s among medical groups in China.

During this round of financing, Jianxiang Hospital Group also engaged with numerous investment institutions. It ultimately selected Zhuhai Zhengsheng Investment Co., Ltd. because the firm’s profile aligns well with the medical and elderly care sector, eschewing a “quick-in, quick-out” strategy in favor of long-term partnership and shared growth with the enterprise. Regarding the specific reasons for choosing Zhuhai Zhengsheng Investment, Long Xiangyu outlined three key factors to reporters:

First, Zhengsheng Investment is based in Guangzhou, with its resources primarily concentrated in the Pearl River Delta region, which falls within the service radius of the Jianxiang Hospital Group.

Second, Zhengsheng Investment focuses on the medical and health sector, demonstrating a certain level of professionalism.

Third, Zhuhai Zhengsheng Investment Co., Ltd. boasts a highly professional team that can assist Jianxiang Hospital Group in continuing negotiations for financing and acquisition targets, as well as implementing employee equity incentive plans. This support will help Jianxiang Hospital Group achieve greater standardization in its capital market endeavors.

Zhuhai Zhengsheng Investment Co., Ltd. (hereinafter referred to as “Zhengsheng Investment”) was established in 2016 and is a private equity investment firm. Zhengsheng Investment focuses on the broader health sector centered around medical services, with an emphasis on emerging areas that hold significant growth potential, including private healthcare, primary care, specialized medical services, and internet-based healthcare.

Deng Jihua introduced that Zhengsheng Investment’s investment philosophy is built on three core pillars: value discovery, value creation, and value sharing. Zhengsheng Investment aims to identify enterprises in the healthcare industry that demonstrate sustainable development, enjoy market recognition, and deliver high-quality medical services to the public. Leveraging its professional expertise and resource advantages, the firm seeks to provide value-added services to portfolio companies, fostering their growth and enabling them to stand out in the healthcare services sector. Committed to sharing the success of outstanding enterprises with industry peers, Zhengsheng Investment prefers to invest in high-potential companies during their startup or early growth stages. In later stages, it integrates additional capital and resources to jointly share in the growth outcomes of these promising enterprises.

Jianxiang Hospital Group aligns with the investment thesis of Zhengsheng Investment. Deng Jihua emphasized his strong confidence in Jianxiang Hospital Group’s profitable model that integrates medical care with elderly care services. In his view, elderly care represents a highly promising market; as a service-oriented sector, it is difficult for the traditional public healthcare system to adequately meet its demands. As more enterprises enter this market, investment institutions should focus on whether these ventures possess viable business models and the capacity for sustainable profitability and scalable replication.

In this context, Jianxiang Hospital Group’s ability to achieve a net profit exceeding RMB 30 million serves as validation of the viability of its business model. Furthermore, Deng Jihua believes that the healthcare sector faces a significant bottleneck: scalability through chain operations. Currently, Jianxiang Hospital Group operates eight medical service institutions in a chain format, supported by a comprehensive set of standardized operational management and talent development programs, demonstrating strong replicability.

Following its investment in Jianxiang Hospital Group, Zhengsheng Investment will provide not only financial support but also assistance in at least four other areas, according to Deng Jihua.

First, Zhengsheng Investment has invested in multiple specialized hospitals in the Pearl River Delta region that focus on niche areas of geriatric diseases, which can help Jianxiang Hospital Group extend its business operations and further enhance industrial integration. Deng Jihua cited an example: Zhengsheng Investment also invested in a specialized oncology hospital in Foshan, which can create synergies with the various business segments of Jianxiang Hospital Group.

Second, to facilitate Jianxiang Hospital Group’s initial public offering (IPO). Deng Jihua stated that, strictly from the perspective of revenue and profit, Jianxiang meets the criteria for an IPO. However, given the unique characteristics of the healthcare and elderly care sectors, companies in these fields require a more robust capital structure to list on the capital markets. Zhuhai Zhengsheng Investment Co., Ltd. possesses professional expertise in this area and will strive to accelerate Jianxiang Hospital Group’s entry into the capital markets.

Third, managerial support. Standardization in finance and management is crucial for healthcare enterprises. Zhuhai Zhengsheng Investment Co., Ltd. possesses distinct advantages in financial and corporate management, and can provide professional support and assistance to Jianxiang Group in corporate governance, operational management, and financial management.

Finally, Deng Jihua stated that during the negotiation process, it was found that Jianxiang Hospital Group and Zhengsheng Investment share a high degree of consensus on brand building, product development, talent cultivation, and medical technology construction. He expressed hope that through the strong alliance between the two parties, Jianxiang Hospital Group will be built into a benchmark enterprise for the integration of medical care and elderly care.

The medical and elderly care industry possesses distinct investment characteristics. Compared with other sectors, establishing a brand in this field, cultivating a team of top-tier talent, and applying and innovating various high-tech solutions are not short-term endeavors.

Against this backdrop, both organic growth and external capital infusion are indispensable. Long Xiangyu candidly admitted that prior to this round of financing, the shareholders consisted solely of himself and his co-founder. As one of the earliest private healthcare institutions to emerge in the Foshan region, Jianxiang Hospital Group has been reflecting on its strategic positioning since its inception. It has consistently explored how to leverage technology to build an academic, innovative, and service-oriented medical platform, as well as a patient service chain covering the entire lifecycle. Furthermore, it has sought to determine how to effectively harness social capital as a lever for growth.

After more than a decade of development, Jianxiang Hospital Group has long achieved financial self-sufficiency. However, to pursue further growth, initiate an initial public offering (IPO), and expand into additional regions, it must leverage capital markets. VCBeat has learned that on the evening of July 13, Jianxiang Hospital Group will sign an industrial development fund agreement worth over RMB 800 million with Zhuhai Zhengsheng Investment Co., Ltd. The two parties plan to launch a series of strategic collaborations in areas such as industrial resource matchmaking, industry M&A and consolidation, and accessing capital markets.

With the introduction of Zhengsheng Investment, the investment fund will closely align with Jianxiang Medical’s industrial development strategy, focusing on integrated medical and elderly care investments as its core while pursuing expansionary investments. This approach aims to create an investment portfolio that uses “medical + elderly care” as an entry point and incorporates diverse medical services. The fund will actively develop or establish new hospitals, nursing homes, and long-term care facilities, thereby further expanding Jianxiang Medical’s service reach and scope. It will also promote resource integration and market segmentation within the current healthcare industry, stimulate innovation and entrepreneurship among healthcare professionals, and effectively alleviate pressures related to the distribution of medical resources, access to medical care, and elderly care.

By leveraging the “dual-engine” drive of medical technology and social capital, it is also possible to achieve shared access to high-quality resources in healthcare, elderly care, nursing, and rehabilitation, enabling clients across different regions and age groups to enjoy standardized, high-quality medical services.