How can private medical institutions tap into the multi-billion dollar tumor market? Bai Ze Medical (02609) is setting a new industry standard.

On June 23, Bayzed Health Group (02609) successfully listed on the main board of the Hong Kong Stock Exchange. On the first day of listing, the company's stock price performed well, with an intraday increase reaching 24.41%, attracting enthusiastic attention from the capital market. Bayzed Health's initial public offering price was HK$4.22, with 133 million shares offered, raising a total of approximately HK$562 million. The cornerstone investor for this IPO was Harvest Oriental, subscribing to HK$149 million, accounting for 26.5% of the total funds raised and representing 2.7% of the total equity after issuance. As a rising star in China's comprehensive cancer medical services, Bayzed Health's successful listing not only signifies its market position as a new leader in the field of comprehensive cancer medical services in China, but also reflects the continued optimism of the capital market towards the high-growth track of cancer medical services. The company's performance after listing will become an important indicator for observing the development of China's private specialized medical services. The cancer early screening market is a billion-dollar blue ocean - who will dominate the scene? In recent years, with the acceleration of industrialization, the compounding effects of environmental factors, and the trend of population aging, the incidence of cancer in China has been continuously rising, making the situation of cancer prevention and treatment increasingly severe. According to data from the National Cancer Center, in 2022, the number of new cases of cancer in China reached 4.8247 million, with the standardized incidence rate of all cancer types increasing by an average of 1.4% per year. The annual medical expenses related to malignant tumors have exceeded RMB 220 billion. The World Health Organization (WHO) predicted in the "World Cancer Report 2020" that the number of global cancer cases is expected to increase by 60% over the next 20 years, highlighting the rapid growth trend in the demand for cancer medical services. Driven by the high demand for cancer medical services, the related cancer medical market is rapidly expanding. In terms of revenue, the market size of China's cancer medical services increased from RMB 337.1 billion in 2018 to RMB 495.1 billion in 2022, with a compound annual growth rate (CAGR) of 10.1%. Among them, the growth rate of the private cancer medical service market is significantly higher than the industry as a whole, with an expected CAGR of 19.8% from 2022 to 2026, and the market size is expected to exceed RMB 109.2 billion by 2026. It is understood that the early detection of cancer has a decisive impact on the prognosis and the economic burden of patients. Through early diagnosis and standardized treatment, patients can achieve relatively high cure rates and low treatment costs, while maximizing the quality of life for patients. However, due to factors such as the hidden nature of early symptoms of cancer, limitations in detection technology, insufficient public awareness of early screening, and uneven distribution of medical resources, the domestic cancer early screening industry is still in its early stages of development, and the five-year survival rate for cancer nationwide (40.5%) still lags significantly behind developed countries such as the United States (67.1%). It is worth noting that the cancer early screening market has significant potential in terms of scale and commercial value. Cancer early screening primarily targets healthy individuals and has a high repurchase rate, and its market size is expected to surpass the companion diagnostic market with lower frequency. Chen Wanqing, Director of Cancer Early Diagnosis and Treatment Office at the Cancer Hospital of the Chinese Academy of Medical Sciences, once stated that if the age range suitable for screening is 45-74 years old, then China has over 500 million eligible screening population, indicating a huge supply-demand gap in the cancer early screening market. Against the backdrop of the upgrading demand for cancer prevention and treatment, Bayzed Health has strategically laid out in the early cancer screening track, building a comprehensive medical service system covering "screening-diagnosis-treatment-rehabilitation." This layout effectively addresses the shortcomings of the public medical system being "treatment-heavy and screening-light," and has formed a significant competitive advantage through differentiation. By the end of 2024, Bayzed Health had completed the basic construction of its early cancer screening network, setting up early cancer screening and prevention centers, early cancer screening centers, or early cancer screening and evaluation centers in all its self-owned hospitals and Hefei Baidi Changrong Hospital. In 2024, the proportion of revenue from cancer-related services increased from 39.3% in 2022 to 49.4%, with revenue contribution steadily increasing and significant commercialization efficiency. At the same time, Bayzed Health continues to deepen its presence in the field of oncology specialization, with its hospitals achieving comprehensive improvements in discipline expertise, diagnostic and treatment levels, and service quality. Since March 2023, Taiyuan Ping Hospital, under the company, has been upgraded from a second-class Class A comprehensive hospital to a third-class rehabilitation specialist hospital, becoming the first third-class rehabilitation specialist hospital in Shanxi Province; Wuzhi Jimin Hospital has been upgraded from a second-class Class A comprehensive hospital to a third-class comprehensive hospital, becoming the first third-class comprehensive hospital in Wuzhi County, filling the gap in regional high-end medical resources. In the field of private cancer specialized medical services in China, Bayzed Health's market penetration continues to rise, validating its industry leadership position. According to data from Frost & Sullivan, in terms of cancer screening revenue in 2023 among all private cancer medical groups in China, Bayzed Health ranked third; in terms of tumor service revenue from its self-owned hospitals, in 2023 among all private cancer medical groups in China, it ranked fourth. When considering the number of early cancer screening centers as of December 31, 2023, and the number of gastrointestinal endoscopy cases in 2023, the company ranked first among all private cancer medical groups in China. Pushed by favorable policies, how can private medical services assist in the universality and accessibility of medical services? As China's medical system reform continues to deepen and the government introduces a series of favorable policies for social healthcare, the private medical industry has not only seen a relaxation of entry barriers but has also entered a new stage of high-quality development under standardized industry standards. At a time when relevant departments propose the development of a sound multi-level medical security system, private medical institutions are demonstrating unique competitive advantages. Compared to public hospitals, private systems have more flexible operational decision-making mechanisms and market-oriented capabilities, enabling them to respond quickly to regional specialized medical needs. In third- and fourth-tier cities and lower-tier markets where high-quality medical resources are relatively scarce, private hospitals have effectively improved the accessibility of primary medical services by filling the gaps in public medical resources. Data shows that the proportion of private hospitals in China's total number of hospitals has been increasing continuously, from 48.52% in 2014 to 69.31% in 2023. By 2023, the number of private hospitals in China had reached 26,583, with a total of 2.4687 million beds, maintaining a year-on-year growth trend. Benefiting from the rapid expansion and the resulting economies of scale, Bayzed Health's medical service network layout is becoming increasingly perfect. The company currently owns a total of six for-profit hospitals and two non-profit hospitals, including Beijing Jingxi Cancer Hospital, Tianjin Shi Hospital, Tianjin Nankai Jixing Hospital, Taiyuan Ping Hospital, and Hefei Baihuichangrong Hospital, covering areas such as Beijing, Tianjin, Anhui, Shanxi, and Henan. Most hospitals under Bayzed Health have joined the Beijing University Cancer Hospital's Cancer Prevention and Treatment Remote Collaboration Platform, and the company has established cooperative relationships with expert teams from many well-known domestic universities, pharmaceutical and medical device companies, and biotechnology companies. This has led to the formation of dedicated expert pools in their respective fields, effectively ensuring medical quality and service standards. By now, the company has established a professional and multi-level talent structure, hiring experts from well-known public hospitals as multi-point practicing physicians to ensure high-level, high-standard medical service quality. For example, the company reached in-depth cooperation with Academician Shi Xuemin of the Chinese Academy of Engineering, with Taiyuan Ping Hospital being awarded the "National Doctor Shi Xuemin Academic Inheritance Studio" and Tianjin Nankai Jixing Hospital being awarded the "Shi Xuemin Traditional Chinese Medicine Heritage Studio." In addition, the Shi Medical Hospital under the company focuses on the construction of disciplines related to traditional Chinese medicine, deeply integrating traditional Chinese medicine characteristics into cancer rehabilitation services. In terms of performance, the company has shown strong growth in recent years, gradually turning losses into profits. During the period from 2022 to 2024, operating income increased from RMB 803 million to RMB 1.189 billion, achieving a compound annual growth rate of 21.7%, reflecting the rapid expansion of business scale. Meanwhile, gross profit surged from RMB 79.56 million to RMB 208 million during the same period, with a high compound annual growth rate of 61.8%, significantly higher than the growth rate of income, indicating substantial improvements in cost control and operational efficiency. Of note is that in 2024, the company achieved an adjusted net profit (measured by non-International Financial Reporting Standards) of RMB 12.5 million, successfully reversing the previous loss situation. This key turning point marks the maturity of the company's business model, entering a stage of sustainable profitability. During the reporting period, the company's gross profit margin achieved a leap from 9% to 17.5%, due to both an increase in the proportion of high-margin businesses and the continuous optimization of operational efficiency in its hospitals, with the bed utilization rate of Beijing Jingxi Cancer Hospital rising significantly from 63% to 94%. The positive changes in a series of financial indicators not only indicate that Bayzed Health has clear profit growth expectations but also lay a solid foundation for the company's future market expansion and upward valuation in the secondary market. Conclusion With its unique comprehensive cancer service model, quality medical resource reserves, and consistently good financial performance, Bayzed Health received high recognition from the capital market on its first day of listing. This outstanding performance not only confirms the company's solid fundamentals and growth potential but also highlights the broad prospects of the Chinese cancer medical services market. Looking ahead, with the reasonable utilization of funds raised through the IPO, the company will accelerate business expansion and operational efficiency optimization through multiple measures such as strategic acquisitions, hospital management, and digital upgrades. With the end of the new hospital climbing phase within the system and the release of economies of scale, it is expected that the company's revenue and profit will maintain double-digit growth over the next few years, and its market share is poised to increase further, establishing itself as a leading enterprise and benchmark in the Chinese cancer medical services industry.