The financial Associated Press launched a series of interviews with the leaders of the one | to show the company’s value, industry ecology and future investment direction through their business philosophy and values. In this issue, LV Jianming, chairman of Topchoice Medical Co.Inc(600763) company, explained the real intention behind the company’s latest M & A.
financial Associated Press, may 22 (reporter Liu Ke, Chen Kang) after the disclosure of a recent acquisition news, Topchoice Medical Co.Inc(600763) ( Topchoice Medical Co.Inc(600763) . SH) fell into the dispute of “taking out all the cash and taking over the offer”, and the question of “can’t understand” was heard all the time. Chairman LV Jianming recently received an exclusive interview with the financial associated press at Tongce group headquarters. In his eyes, many people in the outside world do not really understand the real intention of Tongce’s M & A.
On May 15, Topchoice Medical Co.Inc(600763) , Heren Health Co.Ltd(300550) ( Heren Health Co.Ltd(300550) . SZ) both issued an announcement that Topchoice Medical Co.Inc(600763) transferred 29.75% of the shares of Heren Health Co.Ltd(300550) with a total transaction amount of 769 million yuan, becoming its largest shareholder.
“This acquisition will enable Tongce to focus more on its main business and become a more pure dental hospital. Other specialties such as eyes, ears, nose and throat outside the oral cavity will be stripped off to Heren Health Co.Ltd(300550) . At the same time, we will use Heren Health Co.Ltd(300550) ‘s technicians to develop the digital medical system we need,” Lu Jianming said frankly, ” Heren Health Co.Ltd(300550) will do a lot of capital operation in the future to complete the tasks that Tongce can’t complete at present.”
LV Jianming, who graduated from the Chinese Department of Hangzhou University, is used to doing business with the thinking mode of humanities. Today, Topchoice Medical Co.Inc(600763) , headed by LV Jianming, is the first public medical service company in China and the largest chain stomatological hospital in China. Its every move is watched by the market with a magnifying glass.
LV Jianming said bluntly, “the ‘shareholding’ of Tongce has been fixed, and any change will cause great controversy, which actually restricts the development of the company and slows down our pace towards an international medical group. This acquisition can remove these adverse factors.”
In the first quarter of this year, the business was greatly affected by the epidemic, and the performance growth of Tongce slowed down significantly. LV Jianming mentioned that in the first four months, the outpatient volume was in a downward state. Fortunately, it has begun to rise since May. “We judge that the repeated epidemic will become a normal state. In this case, the company can’t stop its external expansion and internal skill cultivation. If we have the opportunity, we will also consider some acquisitions and mergers.”p align=”center”>
LV Jianming said that what he wants to do now is to explore real digital hospitals. He hoped that in the future, the structure of the medical industry could be profoundly changed, not just oral medicine, but the whole health service industry. “We should really solve problems, and only by solving problems can we be valuable.”
talk about acquisition: the real decision took a week
According to public information, Topchoice Medical Co.Inc(600763) the Heren Health Co.Ltd(300550) acquired by Topchoice Medical Co.Inc(600763) is a product service provider of clinical medical informatization, represented by China’s first-class well-known hospitals such as 301 Hospital, Xijing Hospital and Tongji Hospital.
Heren Health Co.Ltd(300550) tried to transfer before Topchoice Medical Co.Inc(600763) made a purchase. According to the materials disclosed by Heren Health Co.Ltd(300550) disclosure, the major shareholder of the company tried to sell the equity as early as October 2021 and contacted the proposed counterparty and state-owned Science City (Guangzhou) information technology group at that time. According to the share transfer agreement, Panyuan investment transferred its 79.4 million shares of the company to Science City Xinke group, with a cost price of 13.58 yuan / share and a total transfer price of about 1.078 billion yuan. In April this year, Heren Health Co.Ltd(300550) announced that the effective period of the contract and the latest completion date of delivery were delayed by one month respectively.
More than a month later, Heren Health Co.Ltd(300550) announced the policy of flower falling, which seemed a little sudden.
LV Jianming told the financial associated press that he had known Yang Yibing, the actual controller of Heren Health Co.Ltd(300550) in his early years. He was also familiar with Heren Health Co.Ltd(300550) business model and related situations. The decision took about a week from before the May Day holiday to the formal decision. The previous contact was only the intention of business cooperation. “Because it was too fast and very few people knew, the market felt very sudden.”
Even though the decision-making time is fast, this acquisition is also a low-risk and high-yield acquisition in LV Jianming’s view, “Heren mainly serves the top three hospitals in China. Its assets are healthy. From a fundamental point of view, Heren has plenty of cash on its account and clear main business. It is very suitable to be the second platform of Topchoice Medical Co.Inc(600763) to build a multi specialty medical group. In addition, Heren’s customers have certain synergy with us. We can help them activate some potential unfinished businesses, and there is a possibility of business growth in the future.”
LV Jianming said that the construction and development of medical informatization in stomatological hospitals of the company can activate the potential business of Heren Health Co.Ltd(300550) , “Whether Zijingang hospital under construction or Binjiang future hospital” “, all of them are inseparable from intelligent diagnosis and treatment space, build big data platform and artificial intelligence platform, sort and analyze hospital operation and customer health information, output high-quality analysis results of diagnosis and treatment and operation management through intelligent analysis, improve medical quality and operation level, and become a Kanban for the upgrading of various hospitals in the future. The overall digital solution Heren Health Co.Ltd(300550) will also be implemented here.”
Some people’s interpretation of the acquisition is that Tongce wants cross-border informatization, which is a great misunderstanding in LV Jianming’s view. He explained that “the current informatization scheme of Heren is essentially different from the medical digitization that Tongce wants to achieve. The former responds to the management needs of large general hospitals, and the latter is a customer-centered knowledge sharing system. Therefore, Tongce should use the mature technology of Heren to develop systems that meet the ideas and needs of Tongce and explore real digital hospitals. At the same time, the independence of their business subjects remains unchanged.”
For the future planning, LV Jianming mentioned that the capital operation of Heren may occur frequently, because the purpose of the acquisition is to expand the medical service industry through Heren’s capital market operation. “Tongce will insist on being a pure dental hospital, and Heren will carry out double main business operation: the construction of multi specialty medical group and digital hospital.”
talk about the company: the “shareholding” of Tongce has been fixed
LV Jianming’s tone is quite complicated when talking about Tongce shareholders.
He said that the “stock nature” of Tongce has been fixed.
LV Jianming said, “in the eyes of the market, Tongce has formed an inherent impression: steady and abundant cash flow. The ROE (net asset growth rate) of the company has been 20% – 30% in the past five years. It has expanded step by step by relying on endogenous forces without dividend, allotment and financing. We accept this personality, get used to this rhythm and don’t want to change, which actually restricts our development.”
Therefore, the significance of this acquisition for Tongce is to kill two birds with one stone: it can not only continue to stick to the direction liked by investors, but also complete the construction goal of digital hospital through Heren Health Co.Ltd(300550) to achieve.
In the exclusive interview, LV Jianming once again mentioned the “customer-centered” model of Mayo Clinic, that is, “the doctor’s diagnostic data drives the whole treatment team and the supply chain behind it”. Previously, he had repeatedly expressed his vision of “hoping to become Mayo in China”, and said in the research, “There are many basic business models of cloud and health care system in Hangzhou that can be used as a reference for the implementation of cloud and health care system after Meiren’s M & A.”
Since 2015, Mayo Clinic has spent US $1.5 billion to move the medical record system of its 90 hospitals into the “epic” system, and transformed the headquarters building into a “training and command center” for the training of electronic medical record system. Tongce also plans to complete the cloud of its dynamic electronic medical record and build a medical system ecology through acquisition.
talk about the future: the expansion of the epidemic cannot stop under normal conditions
In the open letter to Topchoice Medical Co.Inc(600763) all shareholders, LV Jianming wrote, “From the second half of 2021 to now, the epidemic situation has been rising one after another and can not be stopped. 2022 can be determined to be a very difficult year. No matter what kind of epidemic prevention policy is adopted, it can not avoid having a significant impact on the economy and society. In the first quarter, many of our hospitals closed down in turn, and the number of outpatients fluctuated. There is no need to say more about the impact of the epidemic situation and the effect of epidemic prevention policy in the second quarter.”
Although unable to control the virus, LV Jianming did not want to give up the expansion plan, especially in the layout of other provinces. He said he focused on the Yangtze River Delta and the Pearl River Delta. “After the acquisition, Heren can share more medical resources with us. The expansion plan will not stop, but will speed up.”
Tongce’s expansion plan is called “Dandelion plan”, which adopts the mode of “regional general hospital + branch hospital”. The regional general hospital endorses the branch hospital based on its brand credibility and influence, and uses high-quality doctor resources to provide medical technology and service support; The branch hospital makes use of the influence of the general hospital to expand rapidly and sink everywhere. At the same time, it absorbs the resources of young doctors and carries out practical training. After the young doctors are mature, the replication team will carry out a new round of expansion.
At present, Tongce has 43 oral medical institutions in Zhejiang Province, and 8 branches are in the stage of preparation, construction and acceptance. In addition, 10 branches have completed the project and are about to start construction. Zijingang hospital, which will be built in 2022, is the head and face medical center of the company. After completion, it will add more than 500 dental chairs (beds) for the company in Hangzhou; After the completion of Binjiang’s “future hospital” project, 43 dental chairs will be added in Hangzhou.
interview record
talking about the industry: the market increment of the industry is far greater than the stock
financial Associated Press: what do you think of the development and future market of the whole oral market?
LV Jianming: we are facing an industry where the incremental market is much larger than the stock market. Now most industries are the opposite. The penetration rate of stomatology in China is very low. Less than 1% of people wash their teeth twice a year, but this demand exists, which is a great driving force for our development. Our future goal is to become the absolute leader and indisputable medical head of medicine.
At present, the oral cavity market is subdivided into high-end and medium and low-end. We lost the low-end market before, and now it is difficult to get it back.
talk about centralized procurement: the focus is to improve medical service resources
financial Associated Press: how much impact does the centralized collection of dental implants have on the company?
LV Jianming: the impact of centralized purchase of dental implants is mainly reflected in the response of the capital market, which has no practical impact Lbx Pharmacy Chain Joint Stock Company(603883) if we want to see a doctor cheaper, we should respond. Therefore, we must first build a planting supermarket with cheap imported products. A responsible hospital should provide a variety of products.
Centralized purchase is mainly for consumables. The pricing of public hospitals is set according to three times of consumables. This pricing system has caused everyone’s misunderstanding. We do not rely on selling consumables to make money, but on service to win. Now there is a serious shortage of high-quality medical resources and the fierce competition in the low-end market, which is the problem that needs to be solved.
