Distinct Healthcare, a benchmark enterprise in China's health consumption sector, officially launched its IPO today. The subscription period runs from January 29th to February 3rd, with an expected listing on the Hong Kong Stock Exchange on February 6, 2026. Haitong International and SPDB International are acting as joint sponsors. The company plans a global offering of 4.75 million shares, with a price range of HK$57.7 to HK$66.6 per share.
The prospectus reveals that prominent investment institutions, including Tencent, H Capital, Matrix Partners, Tiantu Capital, CICC, and Fude Life Insurance, are among its shareholders. Tencent holds nearly 20% of the company, making it the largest institutional shareholder. Additionally, KingMed Diagnostics, a leader in China's third-party testing sector, and He Xiaopeng, founder of the leading new energy vehicle company XPeng Motors, appear on the list of cornerstone investors.
Affected by fluctuations in consumer confidence, the healthcare services industry, once considered "counter-cyclical," has recently begun to face pressure. This is compounded by the intensive implementation of cost-control policies in the healthcare security system, such as centralized drug procurement, the elimination of drug markups, and DRG payment reforms, which are rapidly squeezing the profit margins of medical institutions. Financial reports from listed companies clearly show that many healthcare providers have entered a phase of zero or even negative growth.
According to the prospectus, the company's revenue for 2022, 2023, and 2024 was RMB 470 million, RMB 690 million, and RMB 960 million, respectively, representing a compound annual growth rate of 42.2%. Its gross profit also increased rapidly over the past three years, reaching RMB 43.98 million, RMB 130 million, and RMB 230 million, with a staggering compound annual growth rate of 126.7%. Distinct Healthcare began to turn a profit in 2024. Its adjusted net profits for the past three years were -RMB 123 million, -RMB 43.57 million, and RMB 10.70 million, respectively. For the first eight months of 2025, the adjusted net profit reached RMB 10.45 million. Net cash flow from operating activities was RMB 6.86 million, RMB 124 million, and RMB 171 million over the past three years, reaching RMB 112 million in the first eight months of 2025.
Public information indicates that unlike all public and most private medical institutions, whose revenue primarily comes from national healthcare security payments, Distinct Healthcare's revenue is almost entirely derived from out-of-pocket payments (over 85%) and commercial insurance (approximately 12%).
The prospectus discloses that revenue from national healthcare security accounted for only 0.2%, 0.2%, and 1.2% of its total revenue in 2022, 2023, and 2024, respectively. Consequently, while public and most private institutions have seen significant impacts on their revenue and profits from the "combination punch" of healthcare cost controls, Distinct Healthcare remains largely unaffected.
Furthermore, the prospectus shows that Distinct Healthcare's marketing expenses as a percentage of revenue for 2022-2024 were 2.7%, 1.2%, and 1.7%, respectively. The majority of these expenses were attributed to brand personnel salaries rather than sales expenditures. For the years ending December 31, 2022, 2023, and 2024, and the eight months ending August 31, 2025, the member renewal rates were approximately 42%, 56%, 64%, and 67%, while patient return rates were 75.7%, 78.2%, 80.0%, and 82.7%, respectively.
In recent years, news of numerous medical institutions falling into losses or even closing down due to poor market performance has been frequent. This signifies that the healthcare services industry is currently facing widespread challenges of slowing growth. For instance, the 2024/2025 annual results report released by the privately-owned dental chain Arrail Group, listed in Hong Kong, showed that as of March 31, 2025, Arrail's total revenue was RMB 1,688.4 million, a decrease of 3.3% compared to RMB 1,745.8 million for the year ended March 31, 2024. Moreover, the ongoing suspension of Arrail Group's shares since December continues to attract market attention.
This implies that as the "premium healthcare narrative" encounters the stringent value scrutiny of the capital markets, breaking through profitability bottlenecks, resolving business model controversies, and overcoming multiple policy risks have become critical issues urgently needing solutions for the industry.
After all, healthcare is a relatively low-frequency industry. Relying on word-of-mouth for customer acquisition can solve the problem of trust barriers, but how to transform low-frequency visits into high-frequency ones presents another significant challenge commonly faced by private medical institutions.
According to public information, Distinct Healthcare currently employs a business model highly similar to that of Costco. On one hand, it strategically focuses on departments with relatively high-frequency demand—such as common family illnesses or health management needs—rather than the low-frequency, complex specialties typically handled by public hospitals (e.g., obstetrics, oncology, complex surgeries). This approach significantly extends the lifecycle of a single customer within its ecosystem.
On the other hand, through a family membership plan, it enrolls entire families. Each customer enters through different departments and, driven by an experience that exceeds expectations, eventually extends their usage to other services within the system.
Analysis of data disclosed in the prospectus for 2024 shows that approximately 240,000 clients utilized Distinct Healthcare's offline consultations and online paid services that year, with total visit counts reaching about 900,000. This indicates an average of nearly 4 visits per client, a consumption frequency far exceeding that of single-specialty medical institutions in the market. Among these, family members accounted for nearly 720,000 visits, originating from approximately 108,000 member households that year.
A market environment analysis report on the private clinic industry points out that private clinics primarily serve middle-to-high-income populations. With the expansion of this demographic, the private clinic industry has developed rapidly. Consequently, the number of patient visits to private medical service institutions is expected to continue growing, increasing from 1.2437 billion in 2019 to 1.4812 billion in 2023, and is projected to reach 1.7034 billion by 2028.
Currently, as capital markets mature and investors apply more rational scrutiny, the premium healthcare industry needs to find its own "acceleration" on what is perceived as a "golden track."