What’s new: Shanghai Fosun Pharmaceutical Co. Ltd. (600196.SH) said its hospital business unit has secured 300 million yuan ($41.4 million) in fresh funding from a government-backed investor, a step toward a plan to spin off the unit for a separate listing.
Shanghai Fosun Health Technology Group Co. Ltd., a unit of the Shanghai, Hong Kong-listed drugmaker, sold 2.86% of its equity stake to an investment company controlled by the Chancheng district government of Foshan city. The transaction valued the company at 10.2 billion yuan, Fosun Pharma said in a filing.
As part of the deal, Fosun Health promised to go public within five years, according to Fosun Pharma.
Background: Established in 2010, Fosun Health operates offline and online healthcare services, including general and specialty hospitals. By the end of 2023, it ran 18 medical facilities across Beijing, Shanghai, Guangdong, Jiangsu and Zhejiang, and had licenses for eight internet hospitals.
Fosun Pharma has reportedly considered a spinoff of the hospital assets since late 2023 as part of parent Fosun Group’s strategy to concentrate business.
Fosun Health has recorded losses over three consecutive years amid the pandemic. In 2023, its revenue reached 6.3 billion yuan, marking a 2.8% increase from the previous year, while its net loss of 420 million yuan. Prior to the pandemic in 2019, Fosun Health achieved net profit of 1.5 billion yuan.
A pharmaceutical industry analyst told Caixin that considering Fosun Health’s equity structure, it is likely to seek an initial public offering on the domestic A-share market. However, Fosun Health remains unprofitable, and investors are generally skeptical about the asset-heavy offline medical sector, posing challenges for Fosun Health to achieve a favorable valuation at its listing.
Contact reporter Han Wei (weihan@caixin.com)
