Admission in progress for Concord Medical (02677): A rare leader in health consumption with high stickiness and tremendous growth potential in membership system.

Recently, Zhuo Zheng Medical (02677) successfully launched its IPO, attracting the attention of many market investors. This comprehensive medical service organization, focusing on the mid to high-end market, started its IPO from January 29 to February 3, with a global offering of 4.75 million shares at a highest offering price of 66.6 Hong Kong dollars, scheduled to start trading on February 6. In the past year, the overall growth rate of the private medical service industry has slowed down, with a clearer trend of "the strong getting stronger and the weak being eliminated". On one hand, leading enterprises with standardized clinical pathways, efficient operating systems, and brand recognition continue to grow steadily, increasing their market share steadily. On the other hand, many small and medium-sized institutions are constrained by shortages of talents, high costs, extensive operations, and pressures from medical insurance payment reforms, leading to squeezed profit margins and gradual exits from the market. During this restructuring period in the industry, Zhuo Zheng Medical has delivered impressive growth results against the "winter". From 2022 to 2024, its revenue compound annual growth rate reached 42.2%, with a gross profit growth rate as high as 126.7%. Since turning a profit in 2024, its performance has been on an upward trend, with adjusted net profit in the first 8 months of 2025 breaking through ten million yuan. At the same time, the company's shareholder base is also quite impressive: Tencent, as the largest shareholder, holds nearly 20% of the shares, with many well-known institutions such as H Capital, Wei Chi Ventures, TIAN TU CAPITAL, CICC, Fidelity Life Insurance, among others. In this IPO, the company also attracted cornerstone investors such as Guangzhou Kingmed Diagnostics Group, a leading third-party inspection company in China, and the founder of the top domestic new energy car company Xiaopeng Motors, He Xiaopeng, demonstrating long-term confidence in the company's value. High-frequency, high repeat purchase: the growth code of the "Costco of the health service industry" The secret behind Zhuo Zheng Medical's growth against the odds lies in its unique business model, likened to the "Costco of the health service industry". Similar to how Costco relies on a paid membership system to ensure stable profit streams, and saves on marketing expenses by selecting high cost-effective products, Zhuo Zheng Medical has created a "family doctor" based family membership plan, providing members with a one-stop multi-specialty medical service centered around the family and combining online and offline communication technologies. Unlike traditional medical institutions focusing on single and low-frequency medical treatments, Zhuo Zheng Medical focuses on higher-frequency medical services with stronger health consumer attributes, covering the full process from disease prevention, health management to common family treatments. The company avoids low-frequency businesses such as serious illnesses, major diseases, and emergencies that public hospitals have advantages in, and instead focuses on high-frequency, long-term medical health services: from pediatrics for newborns, growth and development, desensitization treatment, to ophthalmology, dentistry, psychology, medical aesthetics, gynecology, and rehabilitation therapy for the elderly, covering the entire life cycle of the population. Through the family membership plan and multi-specialty medical service model, Zhuo Zheng Medical breaks through the bottleneck of low-frequency consumption dominated by traditional medical institutions, transforming single medical treatments into high-frequency health consumption on a household basis, while precisely filling the gap in high-end and personalized services left by the public system. In Zhuo Zheng Medical's service system centered around family doctors, patients establish long-term trust relationships with their fixed family doctors, receiving continuous long-term health management and follow-up services, greatly enhancing user stickiness and loyalty. In addition, the company's accumulation of massive continuous and dynamic health data also provides more potential for personalized health management, chronic disease intervention, and other value-added services in the future, leaving room for more imagination. A series of key data confirms the superiority of this business model: in 2024, Zhuo Zheng Medical had about 240,000 customers who visited offline and paid for online consultations, with a total of up to 900,000 consultations, equivalent to almost 4 visits per customer on average, far higher consumption frequency than single-specialty medical institutions on the market; among them, about 108,000 households are members, with nearly 720,000 total consultations, with an average of more than 6 annual visits per member family; member renewal rate and patient return rate continue to rise, reaching 67% and 82.7% by August 2025, with over 80% of patients choosing to repeat their visits. The unique business model of the "Costco of the health service industry" is expected to drive what kind of growth acceleration? Just look at the company's performance data, and you can see a glimpse of it. Commercialization ability validated by performance Profit inflection point clear From the potential on paper to actual financial statements, Zhuo Zheng Medical's commercial realization ability has been fully validated. According to the prospectus, from 2022 to 2024, the company's revenue increased from 470 million yuan to 960 million yuan, with a compound annual growth rate of 42.2%; gross profit jumped from 43.98 million yuan to 230 million yuan, with a high compound annual growth rate of 126.7%, far exceeding revenue growth. After turning profitable in 2024, profitability has also grown rapidly, with adjusted net profit reaching 10.45 million yuan by the first 8 months of 2025. At the same time, the company's operating cash flow has remained positive, reaching 6.86 million yuan, 124 million yuan, and 171 million yuan in the last three years, demonstrating a healthy self-financing capability. Thanks to its superior business model, Zhuo Zheng Medical does not need to rely on high-cost marketing to acquire customers like most private medical institutions. Its very low marketing expenses constitute a significant cost advantage. It is known that from 2022 to 2024, its marketing expenses as a percentage of revenue were only 2.7%, 1.2%, and 1.7%, much lower than the industry's common level of 10%-40%, and mainly used for brand personnel salaries rather than sales expenses. Secondly, the company's low dependence on medical insurance payments is also significantly different from the industry. The prospectus shows that over 85% of Zhuo Zheng Medical's revenue comes from cash payments, about 12% comes from commercial insurance, and only 1.2% comes from national medical insurance (data from 2024). Against the backdrop of tighter control over medical insurance costs and deepening payment reforms, this advantage undoubtedly provides the company with a natural "safe haven" in an environment where the industry is generally affected by policy fluctuations. Tapping into the mid-to-high-end medical service blue ocean, business network covering ten cities If we broaden our perspective to the broader industry level, we can see that Zhuo Zheng Medical's rise is driven by multiple factors such as aging population, increasing demand for chronic disease management, consumption upgrades, and the willingness of emerging middle-class individuals to pay for high-quality medical services. Data shows that from 2020 to 2024, the number of paying patients in private medical service institutions has grown rapidly at a compound annual growth rate of 8.1%, and is expected to reach 1.9876 billion visits by 2029; the number of affluent individuals in China has reached 123.1 million by 2024, and is expected to reach 144.7 million by 2029, with the proportion increasing from 8.7% to about 10.3%. Zhuo Zheng Medical's clear strategy focuses on the mid-to-high-end medical service market, serving the affluent mass population with strong purchasing power and a preference for more personalized medical services. Currently, the company's business network has strategically covered high-consumption first-tier and super-first-tier cities, operating 19 medical service institutions in 10 cities such as Shenzhen, Beijing, Shanghai, Chengdu, and also has a presence in overseas markets such as Singapore and Malaysia. According to a Frost & Sullivan report based on 2024 revenue, Zhuo Zheng has ranked among the top three domestic private mid-to-high-end comprehensive medical service institutions; in terms of city coverage and the number of paying patients' visits in the same year, the company ranks first and second in the industry, respectively. To ensure high-quality medical service, the company has established an excellent team of high-quality doctors, with 387 full-time doctors averaging about 15 years of clinical experience, nearly 80% of whom come from top tertiary hospitals. Furthermore, Zhuo Zheng Medical has proactively laid out in the emerging technology field, integrating AI deeply into the service chain. The company's AI assistant has been deployed in multiple scenarios like intelligent triage, medical record integration, and verification of membership benefits, and is expected to collaborate with technology companies in the future to promote AI empowerment in more personalized medical and health service scenarios. Conclusion In the era of the transformation of China's private medical and health services from "scale" to "quality", Zhuo Zheng Medical has carved out a path of growth with unique differentiation advantages based on its unique business model. In the face of intensified industry competition, the company, with the deep trust and high stickiness ecosystem built by the "membership system + family doctor" model, has not only effectively competed with the public hospital system but also precisely met consumers' urgent need for personalized, fine high-quality medical services. Additionally, the stable cash flow brought by the membership model, the low reliance on marketing expenses and medical insurance of the profit model, make it a rare investment target in the private medical sector. In the ongoing trend of steady growth in the medical and health track, investors should be looking forward to the acceleration of this "Costco of health services" after its listing.