Tencent-Backed WeDoctor Eyes $900 IPO by October

The online health care solutions provider will hope to turn profitable and take advantage of high valuations.

Author: Anthony Russo   

The online health care solutions provider, WeDoctor is aiming to raise between $700 million and $900 million in a Hong Kong public listing by October. 

The IPO would value the Tencent Holdings Ltd. (HKEX: 0700) backed company at roughly $5.5 billion, which is around the same as a $50 million May funding round did, as reported by Caixin Global today.

With the listing, WeDoctor will hope to turn profitable and seeks to cash in on the current high valuations health care firms. Early investors are also pushing the company to pursue the listing because they've been eager to cash out. 

According to financial reports snatched by Caixin, the company has been able to achieve revenue growth but on losses that have continued to widen in the full years from 2016 to 2018. 

The good news is that in 2019, WeDoctor was able to generate revenue of nearly 4 billion yuan while also narrowing losses. In 2018, WeDoctor brought in 1.2 billion yuan in revenue on losses of 818 million yuan. Profitability, however, is difficult to attain an industry in which the bulk of the fees go to doctors, not the company. 

With Covid-19 spreading across China and globally this year, the demand for online health has never been higher. Some stocks in the sector like Alibaba Health Information Technology Ltd. (HKEX: 0241) Ping An Healthcare and Technology Company Ltd. (HKEX: 1833) have surged. Shares of Ping An are up 77% year-to-date, while Alibaba Health has skyrocketed nearly 118% since the beginning of the year. 

According to WeDoctor, the company claims its China's "leading" technology-powered healthcare solutions platform. Based in Hangzhou, it operates more than 2,700 hospitals, has 220,000 leading doctors, 15,000 pharmacies, and 27 million monthly active users.

For its underwriters, WeDoctor intends on hiring CMB International, Citigroup, and JPMorgan. Previously, Credit Suisse was expected to be on the listing, but WeDoctor dropped the firm over concerns from the Swiss banks' management of the IPO of Luckin Coffee (Nasdaq: LK). 

Going forward, investors will be waiting to view WeDoctor's latest financial report in 2020 when it files its prospectus by the fall.


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