Alibaba Health-Backed LinkDoc Technology Files for US IPO, Sending Ripples through China’s Online Healthcare Sector

Chinese medical data company LinkDoc Technology filed paperwork on Monday to list shares in the US, as China’s digital healthcare industry continues to grow in the wake of the coronavirus pandemic.

The company did not disclose a specific value for its offering but listed it in the filing as $100 million, a placeholder figure typically used to calculate registration fees. However, Bloomberg previously reported that the company could raise around $500 million through the IPO, citing unnamed sources.

According to its prospectus, LinkDoc Technology’s revenue for 2020 reached $1.07 billion. In the first three months of the year, the firm reported a 41% increase in revenue year-on-year, while net losses widened to 20.7 million yuan ($21.17 million) from 61.6 million yuan ($9.62 million) a year earlier. As of March 31, the company treated a total of 2.5 million patients, and collaborated with more than 330 hospitals and 39,000 registered physicians.

Founded in 2014, the Beijing-based startup serves China’s medical institutions and pharmaceutical companies by providing cancer-focused healthcare services built on big data and artificial intelligence (AI). It operates the country’s largest data-driven digital infrastructure for precision medicine, according to consulting firm Frost & Sullivan, which consists of LinkCare, a digital continuous care platform for patients with critical diseases, LinkData, an AI-enabled curation system for longitudinal medical data, and LinkSolutions, a data-driven precision life sciences solution platform that helps life sciences companies accelerate clinical research and real-world evidence adoption.

In its filing, LinkDoc Technology stated it will dedicate 45% of the funds raised in the IPO to strengthen its research and development capacities, improve its technology infrastructure, and recruit more oncologists and data scientists. The startup also said that about 15% of the IPO proceeds will be allocated to expand its patient care center network and service offerings. Around 25% will be used to pursue potential strategic investments and acquisitions, and another 15% will be used for general corporate purposes.

Last September, the healthcare AI unicorn raised $700 million yuan ($109.3 million) in a Series D+ round of financing led by China Capital Investment Group, China Broadband Capital, and Youshan Capital, to develop new antitumor drugs. Earlier this year, Alibaba Health, the company’s Hong Kong-listed healthcare division with a market cap of more than HK$241 billion ($31 billion), invested in LinkDoc in an effort to jointly build a full-disease cycle service platform for cancer patients, according to a China Daily report.

China’s technology behemoths have stepped up their efforts to venture into the internet-based healthcare industry since the COVID-19 pandemic boosted demand for online and contactless medical services. JD Health, the healthcare unit of Chinese retail giant, launched a $3.5 billion float in December, marking the largest IPO in Hong Kong last year. Search engine and AI giant Baidu is reportedly in talks with investors to raise up to $2 billion over three years to establish a stand-alone biotech company. TikTok’s owner ByteDance acquired online medical encyclopedia and healthcare service platform Baike Mingyi last May, and started hiring for its artificial intelligence drug discovery team last December.

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According to a report issued by the China Internet Network Information Center, as of December 2020, online health service users in China totaled 215 million, accounting for 21.7% of the country’s internet population. China’s online drug sales could reach 516 billion yuan ($80.61 billion) by 2025, Citi group estimates. Analysts at UBS forecast that the size of China’s telehealth market will overtake that of the United States by 2023, and exceed $55 billion by 2025.

In a policy initiative released last April, China’s National Development and Reform Commission supported the development of virtual consultations and drug sales in a country where limited medical resources often lead to crowded hospitals and long wait times. Remote medical services could also fill the urban-rural gaps in China’s healthcare coverage, as the best doctors and equipment are concentrated in higher-tier hospitals in big cities.

LinkDoc Technology plans to list its American depositary shares on the Nasdaq under the ticker symbol “LDOC“. Morgan Stanley, BofA Securities and CICC will act as underwriters of the deal.