On January 18, Chimin Health Management Co.Ltd(603222) (603222. SH) closed at the limit, while the previous two trading days on January 14 and 17 were the limit.
In sharp contrast to the stock price roller coaster, Chimin Health Management Co.Ltd(603222) released the annual performance forecast for 2021 on January 17. It is expected that the net profit attributable to the parent company will be 140 million yuan – 155 million yuan, while the net profit attributable to the parent company in 2020 will be only 64 million yuan, realizing a significant increase.
Chimin Health Management Co.Ltd(603222) said that the performance growth was mainly due to: first, the company’s low net profit scale due to the provision of goodwill impairment and litigation losses in the previous year; Second, the company’s safety syringe business increased significantly this year. The wholly-owned subsidiary Jumin Biotechnology Co., Ltd. (hereinafter referred to as “Jumin biotechnology”) sold about 600 million safety syringes (needles) throughout the year, with a net profit of about 152 million yuan; Third, the company recognized the investment income from the disposal of Yuncheng new friendship hospital, and Ezhou No. 2 hospital offset part of the litigation losses accrued in the early stage.
Despite the significant improvement in performance, this old listed company in transformation still faces a lot of pressure.
In particular, affected by the policies of “limited transmission, resistance and outpatient hanging”, the “large infusion” (large volume injection of 50ml or more) business started by Chimin Health Management Co.Ltd(603222) is facing the ceiling of the industry. The revenue has declined for seven consecutive years, and the proportion of revenue has decreased from 79% in 2014 to about 29% in 2020.
Since 2015, Chimin Health Management Co.Ltd(603222) has expanded to “medical devices” and “medical services” through acquisition under the background that its starting business is facing the ceiling of the industry. According to the incomplete statistics of the 21st Century Business Herald reporter, in the “medical services” section, Chimin Health Management Co.Ltd(603222) successively obtained the assets of Boao International Hospital of Shanghai University of traditional Chinese medicine, Hubei Ezhou No. 2 hospital (including the new hospital of Ezhou No. 2 hospital), Baishui Jimin hospital, Shandong Yuncheng NEW Friendship Hospital and other private hospitals with a total of 636 million yuan.
However, contrary to their wishes, many hospitals have not improved the performance of listed companies. On the contrary, their performance commitments have repeatedly been “dishonest” and still need to pay the equity repurchase payment of listed companies.
“big infusion” started and transformed into “medical services” and “medical devices”
The Chimin Health Management Co.Ltd(603222) , known as the “double pigeon” brand syringe with a history of more than 30 years, landed on the Shanghai Stock Exchange under the name of “Jimin pharmaceutical” on February 17, 2015.
It has been listed for less than one year. In the 2016 annual report, Chimin Health Management Co.Ltd(603222) mentioned, “With the gradual implementation of the national medical insurance fee control, antibiotic use restriction and outpatient infusion policy, the overall market increment of infusion products is slowing down year by year, and the sales of infusion products of the company is facing great pressure. The company will further increase the development of new products, speed up the pace of product structure adjustment, reduce the market scale of traditional infusion products and reduce the possibility Adverse impact on the company. “
In the following years, the infusion market capacity further shrunk. Affected by the industry, Chimin Health Management Co.Ltd(603222) “big infusion” business revenue declined year by year.
From the data, from 2014 to 2020, Chimin Health Management Co.Ltd(603222) ‘s “big infusion” business achieved revenue of 386 million yuan, 345 million yuan, 320 million yuan, 317 million yuan, 310 million yuan, 314 million yuan and 260 million yuan respectively, accounting for 79%, 77%, 71%, 53%, 45%, 41% and 29.59% of the total revenue respectively. The revenue and its proportion decreased year by year.
Facing the pressure of starting business, Li Xianyu, the helmsman of Jimin pharmaceutical, put forward the layout of the big health industry of “one master and two wings”, and “one master” is to focus on the development of medical services; “Two wings” focus on the development of medical devices and chemical pharmaceuticals.
Focusing on the above strategic planning, on the one hand, for the medical service sector, since 2015, Chimin Health Management Co.Ltd(603222) has successively acquired Boao International Hospital of Shanghai University of traditional Chinese medicine (formerly known as “Hainan Boao Zhongzheng Xi’An International Medical Investment Company Limited(000516) anti-aging Center Co., Ltd.), Hubei Ezhou second hospital, Baishui Jimin hospital and Shandong Yuncheng new friendship hospital. Since it withdrew from Baishui Jimin hospital in June 2019, by the end of 2020, Jimin pharmaceutical had three private hospitals (Boao International Hospital of Shanghai University of traditional Chinese medicine, Ezhou No. 2 hospital (including the new hospital of Ezhou No. 2 hospital) and Yuncheng new friendship hospital).
On the other hand, for the medical device sector, Chimin Health Management Co.Ltd(603222) layout includes injection puncture device series products, in vitro diagnosis series products and hemodialysis series products.
Among them, the series of injection and puncture instruments are produced and operated by Jumin biology, a wholly-owned subsidiary. Jumin biology, as the only OEM manufacturer of safety syringes and safety injection needles of RTI company in the United States, the two sides have cooperated for more than ten years.
The in vitro diagnostic series products of Chimin Health Management Co.Ltd(603222) are operated by Spanish linear, a wholly-owned subsidiary acquired for € 4037500 in May 2016, including covid-19 virus detection series products (antigen rapid detection kit, nucleic acid detection kit and instrument, convenient sample collector), FOB fecal occult blood automatic immune detection products, Helicobacter pylori detection kit POCT (tumor markers and infectious diseases (influenza A + b), HIV virus, etc.) series products.
In order to demonstrate the determination of transformation, “Jimin pharmaceutical” was renamed ” Chimin Health Management Co.Ltd(603222) ” in June 2021.
From the perspective of revenue contribution, the medical device sector has gradually replaced the “big infusion” and become the main source of revenue and profit of listed companies.
According to the semi annual report of 2021, Chimin Health Management Co.Ltd(603222) medical device business achieved a revenue of 274 million yuan, accounting for 51.28% of the total revenue, of which Jumin biology achieved a net profit of 63 million yuan; Spanish linear company achieved a net profit of 13 million yuan, and the two companies achieved a total net profit of 76 million yuan; In addition, the medical service business of Chimin Health Management Co.Ltd(603222) achieved a revenue of 133 million yuan, accounting for 25%; The revenue of large infusion business was 123 million yuan, accounting for 23%.
Compared with 2018-2019, non net profit deduction was a loss (RMB -99 million and rmb-03.7 million respectively). In 2020, Chimin Health Management Co.Ltd(603222) turned loss into profit, and non net profit deduction was RMB 22 million. By the first three quarterly reports of 2021, Chimin Health Management Co.Ltd(603222) realized non net profit deduction of RMB 99 million, a year-on-year increase of 135.69%.
The latest news is that Chimin Health Management Co.Ltd(603222) expects the net profit attributable to the parent company in 2021 to be 140 million yuan – 155 million yuan, with a significant year-on-year increase.
counterproductive hospital merger
It is worth mentioning that in the process of Chimin Health Management Co.Ltd(603222) expanding its “medical service” business, the performance of many hospitals it acquired was lower than expected, and the development of big health strategy was trapped.
According to the 2020 data, the overall revenue of Chimin Health Management Co.Ltd(603222) medical services was 221 million yuan, a year-on-year decrease of 12.32%. Among them, in addition to Boao International Hospital of Shanghai University of traditional Chinese medicine, the revenue was 84.1264 million yuan, a year-on-year increase of 12.05%, Ezhou No. 2 hospital achieved 95.2585 million yuan, a year-on-year decrease of 8.31%, and Yuncheng new friendship hospital achieved 41.8351 million yuan, The year-on-year decline was 21.43%.
Taking Ezhou No. 2 hospital as an example, at the end of December 2016, Chimin Health Management Co.Ltd(603222) purchased 80% equity of Ezhou No. 2 hospital Co., Ltd. from Zhejiang niermet Knitted Garment Co., Ltd. with a total price of 208 million yuan. At the same time, the company added 136 million yuan to the second Hubei hospital and niermet added 34 million yuan to the second Hubei hospital.
At that time, Ezhou No. 2 hospital promised to deduct non net profits of no less than 23 million yuan, 26.45 million yuan and 28.43 million yuan in 2017, 2018 and 2019, and accumulated no less than 23 million yuan, 49.45 million yuan and 77.88 million yuan.
However, in the second year of the performance commitment, Ezhou No. 2 hospital failed to achieve the target. In 2018, it achieved a deduction of non net profit of 10.4178 million yuan, a total of 33.8486 million yuan, and failed to achieve the cumulative promised profit. The reason why the performance failed to meet the target was “mainly due to the impact of social security settlement differences”.
Since then, in 2019, Ezhou No. 2 hospital has realized the deduction of non net profit of 14.4294 million yuan, with a cumulative realization of 48.278 million yuan, which also failed to reach the cumulative promised profit.
Because the performance of Ezhou No. 2 hospital was lower than expected, at the end of July 2019, Chimin Health Management Co.Ltd(603222) sued Zhejiang niermet Knitted Garment Co., Ltd., and successively disclosed progress announcements, requiring the other party to fulfill the shareholder’s equity of 20% equity, the consideration price of RMB 80.02 million and the cash compensation of RMB 75.5367 million for failing to fulfill the performance commitment.
After the first instance of Taizhou intermediate people’s court and the second instance of Zhejiang Higher People’s court, the latest announcement of Chimin Health Management Co.Ltd(603222) on December 28, 2021 shows that “the judgment of first instance and second instance support the litigation claim of Chimin Health Management Co.Ltd(603222) ; the Supreme People’s court has rejected the retrial application of niermet company for this case”, the company said, “Since the execution of the judgment of second instance has not been completed, the impact on the current or future profits of the company cannot be determined”.
For the latest progress of performance compensation of Ezhou No. 2 hospital, on January 18, the reporter of 21st Century Business Herald called Chimin Health Management Co.Ltd(603222) securities affairs department as an investor, and the other party said, “at present, the case has entered the implementation stage, and the subsequent progress will be announced through announcement”.
Coincidentally, Chimin Health Management Co.Ltd(603222) acquired Baishui Jimin hospital and Shandong Yuncheng new friendship hospital successively in 2018, which did not bring satisfactory performance.
In April 2018, Chimin Health Management Co.Ltd(603222) acquired 51% equity of Yuncheng new friendship hospital Co., Ltd. held by natural person Shao pin for RMB 115 million. At that time, Shao pin promised that the net profit deducted by Yuncheng new friendship hospital from May to December 2018, 2019 and 2020 would be RMB 13 million, RMB 22.5 million and RMB 25.85 million respectively.
However, the cumulative promised performance of Yuncheng new friendship hospital in 2018 and 2019 did not meet expectations. Therefore, after Shao pin compensated Chimin Health Management Co.Ltd(603222) for 33.49% of the equity of Yuncheng new friendship hospital at the price of 0 yuan, Chimin Health Management Co.Ltd(603222) thus held 84.49% of the equity of Yuncheng new friendship hospital.
In 2020, Yuncheng new friendship hospital achieved a net profit of -8.9237 million yuan, a total of 12.5042 million yuan, and broke the appointment again.
For Yuncheng new friendship hospital’s repeated performance failure, the explanation is “affected by multiple factors such as local policies, business environment, market competition and failure to recover medical insurance settlement”.
On June 8, 2021, the listed company also received a regulatory attention letter from Zhejiang securities regulatory bureau, requiring relevant parties to “attach great importance to the compensation of performance commitments”.
In this regard, on June 9, 2021, Chimin Health Management Co.Ltd(603222) required Shaopin repurchase company to hold 84.49% equity of new friendship hospital, with a total repurchase amount of 136 million yuan. Subsequently, the announcement on July 6, 2021 showed that Shaopin had paid 30.198 million yuan, and Shaopin still had to pay a repurchase price of no less than 45.96 million yuan before June 30, 2022; Pay all the remaining repurchase price before June 30, 2023.
The most representative case is that Chimin Health Management Co.Ltd(603222) has announced its withdrawal from the investment of Baishui Jimin hospital.
On February 11, 2018, Chimin Health Management Co.Ltd(603222) acquired 60% equity of Baishui Jimin hospital with a total price of 126 million yuan (including 107.1 million yuan to acquire 51% equity of Baishui Jimin hospital held by Taizhou Huangyan Jimin junchuang investment partnership (limited partnership); Purchase the 9% equity of Baishui Jimin hospital held by natural person Zhao Xuanxuan with RMB 18.9 million).
Accordingly, Baishui Jimin hospital gives performance bets of not less than 17.25 million yuan, 19.8 million yuan and 22.8 million yuan in 2018, 2019 and 2020, and not less than 17.25 million yuan, 37.05 million yuan and 59.85 million yuan in total.
However, due to the “poor operation of the hospital physical examination market”, in the first year of performance gambling, Baishui Jimin hospital failed to complete the promised performance. In 2018, it achieved a deduction of non net profit of RMB 6.2915 million, and a total of RMB 6.2915 million, far from reaching the promised goal.
On June 10, 2019, Zhao electorate repurchased 60% of the equity of Baishui Jimin hospital at the price of RMB 139 million in cash, Chimin Health Management Co.Ltd(603222) completed the handover procedures of control on June 3, 2019 and virtually no longer controlled the company.
However, by the end of 2020, Chimin Health Management Co.Ltd(603222) had not received all the equity transfer funds.
According to the announcement, due to the epidemic situation and asset disposal, Zhao voters postponed the payment of the remaining repurchase amount (principal 76 million yuan) until December 31, 2021.
According to the latest announcement at the end of December 2021, affected by the epidemic, the progress of the real estate project of “Hefu No. 1”, the main repayment source of Zhao electorate’s plan, has been delayed. It is expected that the real estate can be sold in batches in May 2022. Therefore, Zhao electorate applied to Chimin Health Management Co.Ltd(603222) for an extension to pay off the equity repurchase before December 31, 2022. The board of directors approved the application for extension.
