Youdao Medical Group Achieves Break-even Within 6 Months, Secures Tens of Millions in Series A Funding at a Valuation of RMB 220 Million
Recently, VCBeat (WeChat ID: vcbeat) learned that Youdao Doctor Group, which specializes in weight-loss and metabolic surgery, has successfully completed a Series A financing round worth tens of millions of yuan, with exclusive investment from Fenghe Capital.
Following this round of financing, the Company will accelerate the development of its weight-loss and metabolic sub-centers in key cities across China, promptly initiate the construction of its Guangzhou clinic, continue to significantly invest in expanding and cultivating its talent pool, actively pursue strategic collaborations with medical institutions and industry partners, and simultaneously advance and refine its health management service system. These efforts aim to realize Youdao Doctor Group’s vision of becoming a leading enterprise in China’s weight-loss and metabolic surgery sector, thereby bringing substantial benefits to the vast population of patients suffering from obesity and type 2 diabetes.
Not only that, but the physician group also achieved profitability within just six months of its establishment in 2017. How did it accomplish this?
Diabetes—As the third leading threat to human health, diabetes has traditionally been regarded as an internal medicine condition that is controllable but incurable, requiring lifelong pharmacological maintenance therapy, with low rates of effective glycemic control. This results in diminished quality of life and substantial psychological burden for patients. Ultimately, long-term complications such as myocardial infarction, cerebral infarction, blindness, renal failure, and amputation are the primary causes of mortality and disability among patients.
To change this situation, in 1995, American surgeon Pories first reported the results of their 14-year study: bariatric surgery achieved an 83% cure rate for type 2 diabetes, thereby pioneering a new approach to treating type 2 diabetes through surgical intervention.
In 2016, the release of the Global Joint Guidelines on Metabolic Surgery for the Treatment of Type 2 Diabetes formally established bariatric and metabolic surgery as one of the standard treatment options for type 2 diabetes, thereby fundamentally transforming therapeutic approaches and chronic disease management strategies for this condition. Particularly for patients with obesity-related type 2 diabetes, bariatric and metabolic surgery has become a first-line treatment intervention.
This procedure, known as laparoscopic Roux-en-Y gastric bypass, is collectively referred to as bariatric and metabolic surgery along with procedures such as laparoscopic sleeve gastrectomy. The surgical duration is approximately 100 minutes; patients are encouraged to ambulate on the first postoperative day and are typically discharged around five days after surgery. In established surgical centers, the procedure is relatively safe, with a risk profile lower than that of laparoscopic cholecystectomy.
The underlying mechanism involves gastrointestinal rerouting to alter food intake and flow, thereby reducing glycemic load and body weight, alleviating insulin resistance, enhancing insulin sensitivity, regulating the endocrine environment, and improving and restoring pancreatic islet cell function. Recent studies indicate that gastric bypass surgery exerts multi-target effects in patients with diabetes by modulating gut microbiota and reconstructing biological molecular networks involving genes, proteins, and metabolites, which collectively contribute to lowering blood glucose levels.
According to the "Estimate of Bariatric Surgery Numbers," after nearly 60 years of development, bariatric and metabolic surgery has become a well-established discipline in the United States. Statistics show that 158,000 bariatric and diabetes surgeries were performed nationwide in 2011, 173,000 in 2012, 179,000 in 2013, and 193,000 in 2014. By 2015, the number of bariatric surgeries performed across the U.S. had exceeded 320,000, with a three-year waiting period for scheduled procedures and an average cost of $30,000–$40,000.
In mainland China, bariatric and metabolic surgery has reached an internationally advanced level after more than a decade of development, during which a number of leading figures have emerged in the field, including Wu Liangping and Dai Xiaojiang.
Lou Ge—Founding Partner of Youdao Medical Group, was once a patient with type 2 diabetes. By chance, he learned about Dr. Wu Liangping and Dr. Dai Xiaojiang through a CCTV report. Out of curiosity, Mr. Lou approached the two doctors and underwent metabolic surgery performed by them. The efficacy of the surgery in treating type 2 diabetes exceeded his expectations.
To better promote this surgical procedure, he conducted market research and learned that China had 150 million diabetic patients, of whom approximately 40 million met the criteria for surgical intervention. Adding roughly 12 million patients with severe obesity, the total population eligible for bariatric and metabolic surgery exceeded 50 million. Consequently, he persuaded two physicians to leave the public hospital system and become his partners. In 2017, they jointly established Youdao Doctor Group, dedicated to providing high-quality comprehensive surgical solutions for patients with obesity and type 2 diabetes. Wu Liangping and Dai Xiaojiang, each with over a decade of experience in bariatric and metabolic surgery, were placed in charge of medical affairs, while he assumed responsibility for operations and funding, serving as Chairman of the Board.
While most domestic physician groups in China have yet to achieve profitability, Louge remains confident about the development prospects of Youdao Physician Group.
He stated that after investing in the Youdao Doctor Group in March 2017, the company reached break-even within six months of operation. In 2018, a total of 253 bariatric and metabolic surgeries were performed, representing a doubling of performance compared to 2017. The treatment cost per case was RMB 85,000, which included surgical fees and subsequent health management services.
Last year, the surgical center at Guangzhou Jinshazhou Hospital generated RMB 25 million in revenue, ranking among the top three nationwide in this medical technology sector. How did a physician group that has been in existence for just over a year achieve this?
Youdao told VCBeat, “Our core business is treating obesity and type 2 diabetes through bariatric and metabolic surgery, freeing patients from the burden of medications and injections. For patients under 65 years of age with preserved pancreatic beta-cell function, a disease duration of less than 15 years, and BMI meeting established criteria, the complete remission rate exceeds 80%, significantly higher than the effective control rate achieved with internal medicine treatments. This represents a key technological advantage of our approach. Furthermore, by integrating postoperative health management services, we can further ensure treatment efficacy. Currently, the company has assembled a highly skilled professional surgical team and the largest health management team in China, establishing a comprehensive medical service system comprising preoperative assessment, standardized and personalized surgical procedures, and long-term postoperative health management. This operational model has been well received by both patients and medical professionals. It aligns with patients’ needs for disease treatment and conforms to the future development trends of the healthcare services market. Therefore, we are confident in achieving our target of performing 500 bariatric and metabolic surgeries in 2019.”
It is reported that the Youdao Medical team, led by Dr. Wu Liangping and Dr. Dai Xiaojiang, has performed over 1,200 bariatric and metabolic surgeries. The team routinely conducts all surgical procedures, including totally laparoscopic Roux-en-Y gastric bypass, sleeve gastrectomy, and single-incision bariatric surgery. Both its medical expertise and case volume rank among the top in China. Founders Dr. Wu Liangping and Dr. Dai Xiaojiang have been featured by China Central Television (CCTV) eight times, solidifying the Youdao Medical team’s domestic leadership in the surgical treatment of obesity and type 2 diabetes.
Wu Liangping, Co-Founder of Youdao Doctor Group, stated, “Youdao Doctor Group has always prioritized patients by establishing a comprehensive bariatric and metabolic surgery service system. We provide safe, professional, and high-quality surgical medical services—a model that aligns more closely with the essence of healthcare. This approach has earned recognition from both patients and the market, and we are deeply honored and proud.”
Wu Jiong, Founding Partner of Fenghe Investment, told VCBeat: “I was introduced to Lou Ge, the founder of Youdao Doctor Group, by an old friend. I first met him in Shenzhen. At that time, he told me that he had been a diabetes patient and had cured his condition through bariatric surgery. Therefore, he believed this was a highly promising technique worthy of vigorous promotion, hoping to let more patients know about it and benefit from it. This was his original intention. Subsequently, he embarked on his entrepreneurial journey with two physicians.”
“I was moved by his story, and I also resonated deeply with his insights into the industry, such as how conflicts of interest in the healthcare sector have hindered the widespread adoption of this procedure,” Wu Jiong candidly stated.
Subsequently, Wu Jiong conducted a round of market research, concluding that: on one hand, China has a massive diabetic population base, with approximately 40 million patients meeting the criteria for surgical treatment; on the other hand, while the United States performs 180,000–200,000 such procedures annually, China currently performs fewer than 10,000 cases per year. Thus, the market prospects are substantial. If China were to match the U.S. in terms of procedural volume, this would represent an 18- to 20-fold growth opportunity. In reality, given China’s significantly larger population compared to the U.S., this growth estimate is actually conservative.
Subsequently, he personally visited Guangzhou to evaluate the medical team. Surgeons aged 35–45 with extensive clinical experience in public healthcare institutions represent a scarce medical resource, and those who also demonstrate strong professional ethics and moral integrity are even rarer. This team can therefore be regarded as one of the most outstanding medical teams in China. Furthermore, concerns regarding future talent development and team expansion have been effectively addressed, as the two leading physicians in China are both members of this team, ensuring robust mentorship and the effective transfer of medical expertise.
“After conducting a series of due diligence procedures, he decided to inject capital. In addition to funding, we will also facilitate cross-marketing by connecting the physician group with industry-specific resources to support its development. ‘We have previously invested in WeDoctor Group, one of the largest companies in China’s internet healthcare sector, which boasts substantial online traffic. Going forward, we can help them establish collaboration with WeDoctor, leveraging the internet to rapidly disseminate information and attract more patients,’ said Wu Jiong.”
Wu Jiong believes that the company’s future development opportunities are substantial. According to U.S. data, 200,000 surgeries are performed annually. If China can reach a similar level, conservative estimates suggest revenues would exceed RMB 1 billion.
It is understood that since its establishment in 2010, Fenghe Investment has been committed to becoming the best partner for entrepreneurs, focusing on investing in outstanding startups and growth-stage companies in industries such as consumer goods, artificial intelligence & big data, and healthcare. It has successfully invested in many well-known enterprises, including WeDoctor Group, Mtime, Viva Biotech, Ubox, and Yibangren.
Mr. Wu Jiong, Chairman of Fenghe, stated that Youdao Doctor Group has already emerged as a notable player in the field of bariatric and metabolic surgery, demonstrating profound insights and understanding of the industry. We have high expectations for the future of Youdao Doctor Group and believe that, under the leadership of Mr. Wu Liangping and Mr. Dai Xiaojiang, the group will continue to deepen its research in bariatric and metabolic surgery, provide higher-quality services, and benefit more patients. Fenghe is committed to supporting Youdao in ushering in a new phase of development.
Dai Xiaojiang, co-founder of Youdao Doctor Group, stated that bariatric and metabolic surgery is currently an internationally recognized and long-term effective treatment for obesity and type 2 diabetes. Unlike conventional surgeries, postoperative health management is crucial; traditional medical models struggle to deliver systematic care for bariatric and metabolic surgery, which can directly impact postoperative outcomes. Leveraging strong execution capabilities, Youdao Doctor Group has long focused on the specialized field of bariatric and metabolic surgery, achieving significant breakthroughs and accumulating valuable experience in standardizing, personalizing, and humanizing surgical procedures, as well as systematizing postoperative health management. The participation of Fenghe Investors in this funding round will help Youdao Doctor Group better seize opportunities arising from the rapid development of China’s healthcare services market, bringing it one step closer to its goal of becoming the leading brand in bariatric and metabolic surgery in China.