Meinian Onehealth Reports 46.65% Revenue Surge and RMB 339 Million Net Profit in 2016 Driven by Diversified Health Screening Packages

VCBeat (WeChat: vcbeat) reported on March 21.Meinian Onehealth (002044.SZ) released its 2016 annual report on the evening of yesterday. During the reporting period, the company’s revenue reached RMB 3.081 billion, a year-on-year increase of 46.65%, while net profit amounted to RMB 339 million, representing a year-on-year growth of 30.21%.

According to historical data, Meinian Onehealth has maintained rapid growth in both revenue and net profit for five consecutive years.

Data source: Meinian Onehealth Annual Report; net profit data for 2012 and 2013 are unavailable.

Meinian Onehealth was established in 2004. It is a professional medical examination and healthcare services group centered on health check-ups, integrating health consultation, health assessment, and health intervention.

Meinian Onehealth completed its acquisition of Ciming Health Checkup in late 2014, and subsequently went public on the A-share market through a reverse merger with Jiangsu Sanyou in March of the following year, becoming the only listed company in China primarily focused on health checkup services.

According to the annual report, as of the end of 2016, Meinian Onehealth operated nearly 300 medical and health examination centers across more than 30 provinces and over 100 core cities in China. The company employed a full-time team of nearly 20,000 experts, professional medical and nursing staff, and management personnel, serving approximately 15 million customer visits annually.

In terms of product offerings, Meinian Onehealth uses health check-ups as an entry point to expand into professional preventive care, health protection, and medical concierge services, while also extending its business into mobile healthcare and health insurance.

According to the annual report, Meinian Onehealth promoted the sales of innovative products last year, including the “3650” premium health checkup package that combines capsule endoscopy, MRI, and CT scans, as well as packages for genetic testing and cancer tumor marker screening. These innovative products have achieved certain results in enhancing health examination services and increasing the average revenue per user.

A research report by Haitong Securities analyzed the number of health checkup visits and average revenue per user (ARPU) for Meinian Onehealth. It estimated that Meinian Onehealth conducted nearly 15 million health checkups in 2016, a figure that includes checkups from Ciming Health Checkup and non-controlling stake outlets of the listed company. With Ciming Health Checkup accounting for 3.5 million visits and affiliated checkup outlets contributing 1.5 million visits in 2016, the total number of checkups at outlets controlled by Meinian Onehealth’s listed entity was approximately 10 million. Based on this estimation, the ARPU for 2016 was RMB 308 per visit. Compared with historical data, the ARPU was RMB 271 per visit in 2014, representing a compound annual growth rate of 7% from 2014 to 2016.

Benefiting from an increase in average transaction value, Meinian Onehealth’s gross profit margin reached 48.31% in 2016, a slight year-on-year increase of 0.36 percentage points compared to the same period in 2015.

The top ten subsidiaries saw their revenues increase by 37% year-on-year and net profits rise by 28% year-on-year. In 2016, these top ten subsidiaries accounted for 73% of the company’s total revenue and 73% of its net profit; both shares declined slightly, reflecting the company’s rapid expansion into third- and fourth-tier cities.

In terms of the three major expenses—selling, administrative, and financial—the ratios saw a slight increase in 2016 compared to the previous year. Specifically, the selling expense ratio was 23.30%, a marginal increase of 0.27 percentage points; the administrative expense ratio was 8.56%, a slight decrease of 0.74 percentage points; and the financial expense ratio was 1.31%, a modest rise of 0.36 percentage points.

Meinian Health explained that the expansion of sales scale led to an increase in selling expenses; the increase in operational outlets resulted in higher administrative expenses, although the administrative expense ratio decreased due to economies of scale. Regarding financial expenses, the Group’s substantial investment activities increased its capital requirements, leading to a corresponding rise in financing costs.

According to the "2017-2022 China Health Checkup Market Operation Status and Investment Strategy Research Report" released by Zhiyan Consulting, the health checkup industry grew at a rate of over 25% in 2015, reaching RMB 94 billion. This represents more than a twofold increase from RMB 29.5 billion in 2010, with a compound annual growth rate (CAGR) of 21% over the five-year period, outpacing the growth rate of the broader medical services industry.

Driven by factors such as the rising incidence of chronic diseases, the growing prominence of sub-health conditions, and the increasing cancer rates, residents’ health awareness continues to strengthen. As a result, medical check-ups are receiving greater attention, and the market is expected to maintain rapid growth, surpassing the RMB 100 billion mark.

Following the acquisition of Ciming Health Checkup, Meinian Onehealth has firmly secured its position as the market leader in China’s health checkup sector. The company continues to explore emerging markets in health checkups and related services by optimizing its offerings.

In addition to its core business, Meinian has made significant inroads into the broader health and wellness sector. These initiatives include establishing industrial M&A funds for external expansion, investing in the pharmaceutical e-commerce platform Qilekang, partnering with Siemens to establish medical imaging centers, and collaborating with Taiping Life Insurance to explore insurance-related services.

Yu Rong, Chairman of Meinian Onehealth, has stated that the company is benchmarking against Kaiser Permanente in the United States by building a fully closed-loop model encompassing screening, treatment, and insurance, with a scale expected to surpass that of Kaiser. For instance, Meinian is currently promoting follow-up medical services across both general practice and specialized care, along with offerings such as the “3650” health checkup package and genetic testing. In addition to comprehensive physical examinations—including capsule gastroscopy, MRI, and CT scans—Meinian provides customers with critical illness insurance policies valued at hundreds of thousands of yuan, as well as patient navigation services at Grade 3A hospitals, thereby achieving comprehensive protection for clients from health screening through to treatment.

Meinian Onehealth “3650” Package

“Closed Loop” is the overarching goal of Meinian Onehealth’s diversification strategy. Using health checkups as an entry point, the company has gradually expanded into health big data, specialized diagnosis and treatment, genetic testing, telemedicine, and health insurance, thereby covering virtually the entire upstream and downstream industry chain of the health checkup business.

Haitong Securities’ research report views Meinian as the leading domestic player in the health checkup sector, actively striving to build a comprehensive health industry ecosystem, and maintains a long-term bullish outlook. Given that venue rents and personnel costs are relatively fixed, the health checkup industry is characterized by decreasing marginal costs. Large-scale chain operators enjoy cost and brand advantages; once scale is achieved, high barriers to entry make it difficult for downstream competitors to enter the market. As the industry leader with a strong strategic position, the company stands to benefit significantly from the expansion of its checkup centers into third- and fourth-tier cities and the rising penetration rate of private health checkup services, indicating substantial long-term growth potential. Furthermore, as the foremost gateway to healthcare, health checkups can integrate with insurance, hospitals, medical devices, third-party data, and imaging analysis. Leveraging this gateway advantage, the company is diligently building an ecosystem across the broader health industry, reinforcing confidence in its long-term growth prospects.

Boosted by positive news from the annual report, Meinian Onehealth’s stock price rose by 0.31 percentage points today, closing at 13.03, with a total market capitalization reaching RMB 31.552 billion.