Dakang Medical Secures New Funding Round Led by October Capital

On January 15, 2024, Jiangxi Dakang Medical Management Co., Ltd. (hereinafter referred to as “Dakang Medical”), a leading domestic chain operator of independent hemodialysis centers, announced the completion of a new round of financing, exclusively invested by October Capital. This marks another significant funding injection for Dakang Medical shortly after it secured a strategic investment worth hundreds of millions of RMB from Genertec Capital Corporation Limited, a subsidiary of the central state-owned enterprise China General Technology Group, in December 2023. It is reported that following this financing, Dakang Medical will further accelerate industry consolidation and advance the chain expansion of its independent hemodialysis centers.

DiaCare Medical is the pioneer and leader of chain independent hemodialysis centers in China, and was the lead pilot unit for independent hemodialysis centers under the former Ministry of Health. Established in 2012, the company currently operates the largest number of independent hemodialysis centers nationwide, with nearly 70 centers in operation across 15 provinces, including Jiangxi, Shandong, and Guangdong. The company has also built China’s largest and most stable team of dialysis service professionals, with a group-wide workforce of over 1,300 specialized physicians, nurses, and technicians in hemodialysis, ranking first in the industry in terms of personnel size.

October Capital is a rapidly growing, emerging private equity investment management firm founded by former senior executives from leading domestic securities firms, along with core members of their equity investment and investment banking teams. October Capital operates three management platforms, with assets under management exceeding RMB 5 billion. Since its establishment in 2016, the firm has invested in over 90 projects, with nearly 30 portfolio companies successfully listed on China’s A-share market and close to 10 projects having filed for initial public offerings (IPOs).

According to data released by the Nephrology Branch of the Chinese Medical Doctor Association in July 2023, as of the end of 2022, the number of registered hemodialysis patients in mainland China reached 844,300, and the number of peritoneal dialysis patients reached 156,600. The total number of dialysis patients exceeded one million, representing a 3.5-fold increase compared to the total number of dialysis patients in 2011.

Over the three years of the pandemic, many specialized medical service sectors were impacted to varying degrees. However, due to the steady growth in patient numbers and the essential, high-frequency nature of dialysis treatment, independent hemodialysis centers played an indispensable role during the pandemic, creating significant social value. In 2022, the cumulative number of hemodialysis centers in China reached 7,298. Notably, there was a substantial increase in that year alone, with 1,234 new centers added, underscoring the strong potential of this sector.

Behind the growing demand for dialysis among patients with uremia lies not only the long-term dedication and guardianship of healthcare professionals, but also a shared health challenge confronting the entire patient community, the industry, society, and even the nation.

Regarding this investment in DiaCare Medical, Gong Hanting, Founding Partner of October Capital, stated that with China’s aging population and rising public awareness of healthcare, the number of dialysis patients in China will continue to climb in the future. DiaCare Medical has been deeply engaged in the hemodialysis medical services sector for many years, serving as a pioneer and leader in the field of independent hemodialysis centers in China. The company’s management team has accumulated extensive experience in the construction, acquisition, operation, and scaled development of independent hemodialysis centers. We are pleased to participate in this round of financing to support the company’s strategic mergers and acquisitions and integrated development, further expanding its influence across China and providing higher-quality hemodialysis medical services to patients with end-stage renal disease.

“At the turn of the year, DiaCare Medical successively completed a strategic investment from General Technology Capital, a central state-owned enterprise, and a new round of financing from Shanghai October Asset Management Co., Ltd. This fully demonstrates the attention paid by the market and investors to the nephrology dialysis industry, as well as their high recognition of DiaCare Medical’s value,” stated Chen Shaobo, Chairman and Founder of DiaCare Medical. “The nephrology dialysis industry is stable and sustainable, while also delivering significant social benefits. Although DiaCare Medical currently ranks among the industry leaders in terms of the number of hemodialysis institutions, the concentration level of China’s hemodialysis sector remains insufficient. Compared with the continuously growing population of patients with end-stage renal disease (ESRD), the number of independent hemodialysis centers is relatively low compared to other specialty fields, indicating a substantial development gap in the dialysis industry. To better serve the vast treatment needs of patients with chronic kidney disease and those undergoing dialysis, DiaCare Medical will accelerate industry consolidation efforts in the future, further promoting the chain-based, scaled, and group-oriented development of independent hemodialysis centers across China.”

In response, some investors have noted that while there are already numerous listed companies in specialized medical services such as ophthalmology, dentistry, health check-ups, oncology, neurology, and medical aesthetics, the independent hemodialysis center sector was deregulated relatively late in China. The industry remains highly fragmented, and without sufficient scale, players lack market standing. As capital has increasingly concentrated on leading enterprises in recent years, the next two to three years will witness a sharp rise in industry consolidation. Leading companies will grow stronger, and it is only a matter of time before several of them become publicly listed.