Net assets down 90% in a year, $6 billion in debt from gambling agreements weighing heavily, governance challenges dragging down Good Doctor Cloud Healthcare
![By Mu Qing Recently, Good Doctor Cloud Healthcare, which focuses on primary healthcare service networks, filed again with the Hong Kong Stock Exchange. The company has demonstrated its development vision through an integrated business model of 'testing-diagnosis-treatment.' However, issues such as consecutive years of declining gross margins, $6.23 billion in redemption liabilities, and R&D investment accounting for only 0.3% of revenue have made this attempt full of uncertainties. [Diverse shareholder background, integrated 'testing-diagnosis-treatment' development] Good Doctor Cloud Healthcare's story began in 2016, led by brothers Geng Furen and Geng Fuchang. Its initial strategic focus was on building a grassroots medical service network deep within China. Throughout the company’s development, a diversified shareholder base has provided crucial capital support and strategic resources. The company successfully attracted international capital, including top global biomedicine investment fund OrbiMed, while also securing investment from state-backed institutions like Chengdu Innovation Group. This shareholder structure, which integrates international perspectives with local expertise, has provided Good Doctor Cloud Healthcare with diverse viewpoints and support during strategy formulation and business expansion. Currently, the company has built a vast offline network covering over 99% of county-level administrative regions nationwide, directly serving more than 670,000 grassroots medical terminals (including village clinics, private clinics, and pharmacies), forming its most core asset and competitive barrier. Unlike traditional pharmaceutical distribution enterprises, Good Doctor Cloud Healthcare...](https://nnqimage.futunn.com/sns_client_feed/18891453/20260422/web-1776824190651-3r0eOnF9PM.png/big?area=1&is_public=true&imageMogr2/ignore-error/1/format/webp)
By Mu Qing
Recently, Good Doctor Cloud Medical, which focuses on grassroots medical service networks, submitted its listing application to the Hong Kong Stock Exchange again.
The company has demonstrated its development vision through an integrated business model of 'testing-diagnosis-medication.' However, issues such as a continuous decline in gross margin, a redemption liability of 623 million yuan, and R&D investment accounting for only 0.3% of revenue have cast uncertainty over this attempt.
[Diversified shareholder background, building an integrated 'testing-diagnosis-medication' system]
The story of Good Doctor Cloud Medical began in 2016, under the leadership of brothers Geng Furen and Geng Fuchang. Its initial strategic focus was on building a medical service network that reaches deep into grassroots China.
Throughout the company's development, its diversified shareholder background has provided crucial capital support and strategic resources. The company successfully attracted international capital, including top global biomedicine investment fund OrbiMed Capital, as well as institutional investments from entities like Chengdu Innovation Group, which has state-owned enterprise backing.
This shareholder structure, which integrates international perspectives with local wisdom, provides diverse viewpoints and support for Good Doctor Cloud Healthcare during its strategy formulation and business expansion. The company has successfully built an extensive offline network covering more than 99% of county-level administrative regions nationwide, directly serving over 670,000 grassroots medical terminals (including village clinics, health centers, and pharmacies), which represents its most core asset and competitive barrier.
Unlike traditional pharmaceutical distribution companies, Good Doctor Cloud Healthcare is dedicated to providing a closed-loop solution that connects 'testing-diagnosis-treatment' for grassroots medical institutions. In county and township markets, grassroots doctors often face multiple practical challenges such as limited testing resources, insufficient diagnostic support, and the need for stable pharmaceutical supply chains. Good Doctor Cloud Healthcare addresses these needs by integrating three major business segments: lab diagnosis solutions, specialized disease treatment support, and direct pharmaceutical supply and distribution. In 2025, proprietary branded drugs in its direct pharmaceutical supply business contributed more than half of its revenue, demonstrating the value loop of its integrated model. By establishing connections through front-end diagnostic services, it drives back-end pharmaceutical sales, creating synergy across business units.
▲Main business model, source: prospectus
However, this model, which is deeply embedded in the entire healthcare service chain and heavily reliant on offline operations, while building differentiation, also bears high operational costs. Maintaining a large ground promotion team and a dense service network requires continuous significant investment, putting sustained pressure on profitability and embedding risks within the financial structure.
[Profit Margin Continues to Decline, Financial Structure Risks Become Prominent]
In terms of operating performance, Good Doctor Cloud Healthcare exhibits the notable characteristic of 'increased revenue but not increased profit.' From 2023 to 2025, its revenue grew steadily from 3.065 billion yuan to 3.823 billion yuan, with a compound annual growth rate of 11.7%, while net profit fluctuated and declined from 62.48 million yuan to 54.05 million yuan during the same period, marking an overall decrease of 13.5%.
▲Operating performance, source: prospectus
Moreover, the overall gross margin dropped from 29.9% to 22.9% over two years, declining by 7 percentage points, indicating that profitability was impaired from the outset.
▲ Gross margin performance, source: prospectus
This change was not caused by a single business but rather by widespread adjustments in gross margins across its three major business segments. Notably, the specialized disease treatment solutions segment, once considered high-value-added by the market, saw its gross margin drop significantly from 56.9% to 31.9%. The continued decline in gross margin reflects the pressures the company faces in cost control and market pricing and reveals the position of its business model in the current competitive market environment.
An in-depth analysis of its revenue structure reveals that nearly 80% of the company's revenue relies on direct drug supply and distribution services, where significant profit disparities exist internally. Although proprietary branded drugs maintain a gross margin of 28.3%, the proportionally significant generic drug business has a gross margin of only 3.9%, creating a substantial gap between the two. This structure implies that the company's profitability is largely tied to the performance of high-margin proprietary products, the growth and stability of which are influenced by market competition and supply chain costs.
At the same time, to maintain a network covering over 670,000 grassroots terminals nationwide, the company needs to invest in corresponding sales and marketing expenses. In 2025, related sales expenses amounted to 675 million yuan, accounting for 17.6% of total revenue. Balancing channel maintenance costs with business profits remains an ongoing operational challenge for the company.
In contrast, platform-based companies like Pharmacist Helper focus more on connecting supply and demand through digital tools, adopting a lighter model that can scale revenue more easily and achieve higher profit margins.For instance, according to Pharmacist Helper’s latest annual report, it generated approximately 21 billion yuan in revenue and 237 million yuan in profit in 2025, with revenue more than five times that of Good Doctor Cloud Healthcare. However, its sales expense ratio was less than half of Good Doctor Cloud Healthcare’s, and Pharmacist Helper employed only 6,950 staff, demonstrating higher labor efficiency compared to Good Doctor Cloud Healthcare’s 8,881 flexible sales personnel.
▲ Sales personnel details, source: prospectus
Moreover, the financial structure revealed in the company’s balance sheet directly impacts its capital position. The company’s net asset value saw a significant change in 2025, decreasing from 216 million yuan in 2024 to 16.993 million yuan. Additionally, its net current assets shifted from positive to negative, turning from 270 million yuan in 2023 to -135 million yuan in 2025, indicating a net current liability situation. One core reason for this financial shift is the increase in the current portion of redemption liabilities related to equity shares, which rose to 623 million yuan.
▲ Net asset value, source: prospectus
This liability stems from agreements signed with investment institutions during previous financing rounds, which stipulated that failure to go public before December 31, 2026, would trigger redemption clauses. By the end of 2025, the company had cash and equivalents of 58.52 million yuan, creating unprecedented liquidity pressure relative to the massive redemption liabilities. The pharmaceutical distribution industry heavily relies on cash flow turnover, and such fragile capital chains will directly restrict procurement payments, business expansion, and even daily operational stability.
[High Proportion of Related-Party Transactions, Weaknesses in Technological Competitiveness]
Beyond explicit financial risks, Good Doctor Cloud Healthcare also faces scrutiny regarding corporate governance and long-term competitive strength. During the reporting period, there were overlaps among the company’s top five clients and top five suppliers, with some overlapping parties having equity ties to company directors.
Notably, the company's reliance on procurement from its controlling shareholder, Sichuan Canon, has been on the rise, increasing from 10.3% in 2023 to 15.4% in the first half of 2025, with related procurement amounting to 529 million yuan.Such related procurement may help ensure supply chain stability but also implies that a portion of the company’s costs are tied to related parties. This situation has raised market concerns about the company’s operational independence and cost fairness.
▲Related procurement details, Source: Prospectus
The situation of related transactions is tied to the corporate governance structure, while the level of R&D investment is critical to building long-term technological capabilities. Compared to its sales expenses, its R&D investment scale is relatively small, with R&D expenses accounting for 0.3% of revenue in 2025, at just 13 million yuan. The company’s medical large model capabilities primarily stem from its acquisition and cooperation with an external company, 'Full Clinic Medicine.' This resource allocation model, in the increasingly technology-driven healthcare industry, represents one development path the company needs to consider.
By comparison, although Yaoshi Bang also operates in pharmaceutical distribution, its R&D expenditure reached 95.663 million yuan in 2025, surpassing the absolute investment scale of Good Doctor Cloud Healthcare. Yaoshi Bang’s development in high-margin 'first-recommended brands' and its private label business reflects the integration of R&D investment with business innovation.
Good Doctor Cloud Healthcare’s performance in related transactions and R&D investment paints a picture closer to that of a traditional family business. For Good Doctor Cloud Healthcare, which is about to face public market scrutiny, achieving a balance between allocating resources to build long-term technological capabilities and short-term channel expansion will be a key operational challenge post-IPO.
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