YiJiu160 Raises RMB 150 Million, Allocating One-Third to Invest in Pharmaceutical E-commerce
On August 29, Ningyuan Technology announced a private placement plan, proposing to issue 5.16 million shares at a price of RMB 29.07 per share, with expected proceeds of RMB 150 million. Of the total amount, RMB 82.5 million will be used to supplement working capital, RMB 47.5 million for investment in pharmaceutical e-commerce, and RMB 20 million for loan repayment.
In terms of total profit:VCBeat (WeChat Official Account: vcbeat) learned from Ningyuan Technology’s annual report released on August 22 that the company incurred a cumulative loss of RMB 51,729,117.43 in the first half of 2016. Ningyuan Technology attributed this loss to the substantial market expansion and research and development expenditures required during its rapid growth phase.
Assets and Liabilities:As of the reporting period, Ningyuan Technology’s total liabilities amounted to RMB 36,466,882.21, representing a 33.57% increase compared to the end of the previous year. The total net assets stood at RMB 15,254,697.33, marking a 77.23% decrease from the end of the previous year. At the end of the reporting period, the company’s asset-liability ratio was 70.51%, showing a significant upward trend compared to the previous year. According to Ningyuan Technology, this was primarily due to the company obtaining short-term bank credit loans during the reporting period; the increase in other payables was attributable to the growth in bank-deposited funds from hospital appointment registration fees; and the advance receipts resulted from the majority of customers prepaying contract amounts for the service period under the internet-based operational service model.
Cash Flow:During the reporting period, Ningyuan Technology’s net cash flow from operating activities was RMB -56,433,072.31, compared with RMB -17,488,589.96 in the same period last year. To position itself in the internet healthcare platform market, JiuYi 160 increased its investment in research and development of core technologies as well as human resources for sales channels during the current year. As a result, cash paid to and on behalf of employees amounted to RMB 59,189,022.41 in the reporting period, versus RMB 14,321,956.16 in the same period last year, representing a year-on-year increase of 313.27%. Consequently, there was a substantial rise in cash outflows from operating activities.
As of the announcement date of this share offering plan, Jiuyi 160 had over 100 million registered users, nearly 500,000 serviceable physicians, and more than 3,000 partner hospitals. Leveraging the Jiuyi 160 platform and years of dedicated operations, the Company has accumulated a vast base of active users.
As the internet healthcare industry is still in its developmental stage, with all participating parties exploring their paths forward, Jiuyi 160’s monetization capabilities will remain constrained by the existing regulatory framework for the foreseeable future. Regarding this fund-raising initiative, VCBeat analyzes that it will primarily provide benefits in three areas:
First, replenish working capital as soon as possible to enhance Jiuyi 160’s risk resilience and achieve a certain degree of improvement in its current tight financial situation;
Second, previous debts should be repaid as soon as possible. Although cash burn is unavoidable in the absence of a robust profitability model across all stakeholders, JiuYi 160’s debt issue appears particularly severe given its asset-liability ratio exceeding 70%. Therefore, leveraging this fundraising round to appropriately alleviate the company’s financial burden has become an imperative measure.
Ningyuan Technology's Debt Situation
Thirdly, the optimal approach is to allocate the limited funds raised toward asset-light business models within the healthcare sector, characterized by clear commercial logic and strong short-term profitability and cash flow. Leveraging the internet platform resources of 91160.com (Jiuyi 160), and against the backdrop of deepening healthcare reform, expanding into the terminal end of the medical industry chain through strategic layout in pharmaceutical e-commerce best aligns with its investment direction.
Ningyuan Technology Pharmaceutical E-commerce: Projected Investment Overview
Although it may not seem like a popular choice for Jiuyi 160 to enter the pharmaceutical e-commerce market at this juncture, there are still two aspects worth anticipating: one is the market, and the other is the membership dividend.
Market Aspect:According to the "2015 Statistical Analysis Report on the Operation of the Pharmaceutical Circulation Industry" released by the Ministry of Commerce in June, the total sales volume of pharmaceutical e-commerce reported directly to the Ministry of Commerce reached RMB 47.6 billion last year. Based on this calculation, the share of pharmaceutical e-commerce sales in the total sales of pharmaceutical products was less than 3%. This indicates that pharmaceutical e-commerce is still in its early stages, and B2C pharmaceutical e-commerce holds significant potential for future growth.
Member Services:With over 100 million registered users, the Jiuyi 160 platform remains China’s largest internet healthcare platform. Given this substantial user base, there is an urgent need for a viable monetization strategy. Pharmaceutical e-commerce, characterized by transaction immediacy, not only meets user demands and aligns with industry development needs but also directly contributes to bolstering Ningyuan Technology’s cash flow.