news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

The leading ophthalmologist plans to expand again. The latest announcement of Aier Eye Hospital (300015) shows that the company plans to acquire the equity of 35 hospitals including Humen Aier and Yuncheng Aier, with a total consideration of 898 million yuan. Less than two months ago, Aier Eye Hospital just spent 1.344 billion yuan to acquire part of the equity of 52 medical institutions including Chongqing Eye and Optometry and Zhoukou Aier. It is worth mentioning that the targets of these two mergers and acquisitions are mostly prefecture-level and county-level hospital projects. However, both acquisitions will bring goodwill to the company. With a large amount of goodwill on the books, the risk of goodwill impairment of Aier Eye Hospital has also become a concern for investors. In response to this, on July 31, the relevant person in charge of Aier Eye Hospital responded.

Spend 898 million yuan on mergers and acquisitions

Less than two months after its last acquisition of equity in 52 medical institutions, Aier Eye Hospital is planning to acquire another ophthalmology hospital.

According to the latest announcement from Aier Eye Hospital, the company held the 25th meeting of the 6th Board of Directors on July 29 and approved the "Proposal on Acquiring Part of the Equity of 35 Hospitals including Humen Aier and Yuncheng Aier". The transaction was paid with its own funds, and the total transaction amount was about 898 million yuan. The 35 target hospitals are located across the country, involving Shanxi, Guangdong, Fujian, Gansu, Hebei, Tianjin and other provinces and cities.

A relevant person in charge of Aier Eye Hospital said in an interview with Beijing Business Daily that the company intends to further accelerate the pace of national network construction, improve the layout of outlets, and achieve network penetration through this acquisition of the ophthalmology hospital, thereby providing a solid foundation for the company's sustained, rapid and healthy development and strengthening and consolidating its leading position in the ophthalmology medical market.

From a financial perspective, most of the target hospitals acquired this time will not realize profitability until 2023, or have not yet realized profitability. For example, Tianjin Wuqing Aier's net profits in 2022-2023 were -2.8034 million yuan and 2.1713 million yuan respectively; Weinan Aier's net profits in 2022-2023 were -5.1584 million yuan and -1.7373 million yuan respectively.

A relevant person in charge of Aier Eye Hospital said that the hospital industry has strong industry characteristics, and fixed costs account for a significant proportion of its cost structure, so there are generally losses in the early stage of opening. The subsequent growth of hospital business has experienced a climbing period. With the continued operation of the hospital and the continuous accumulation of local brand reputation, the hospital's outpatient volume and operating income have continued to increase, gradually turning from losses to profits. The overall revenue of the 35 target hospitals increased from 553.7315 million yuan in 2022 to 749.2696 million yuan in 2023, with a growth rate of 35.31%; the overall net profit increased from -70.057 million yuan in 2022 to 18.6015 million yuan in 2023. It is in the stage of breaking even or turning losses into profits, and future performance is expected to continue to grow. Therefore, the acquisition at this time is conducive to controlling acquisition costs and is beneficial to the company's future development.

Most of them are city-level and county-level hospital projects

In fact, this is the second time in the past two months that Aier Eye Hospital has launched an M&A plan.

Aier Eye Hospital announced on May 31 that it plans to acquire part of the equity of 52 medical institutions including Chongqing Eye and Optometry and Zhoukou Aier, with a total transaction amount of 1.344 billion yuan. A relevant person in charge of Aier Eye Hospital said that the company has completed the equity acquisition of 52 medical institutions.

Beijing Business Daily reporters noticed that the vast majority of the targets of these two mergers and acquisitions were city-level and county-level hospital projects. The person in charge of Aier Eye Hospital said that through mergers and acquisitions, it is conducive to promoting the sinking of high-quality medical resources, implementing the national "tiered diagnosis and treatment" policy orientation, and improving the accessibility of medical care for grassroots residents.

"Mergers and acquisitions will incorporate municipal and county-level hospitals with great development potential into the listed company system, which will not only continuously expand the company's radiation area and improve the company's hierarchical chain layout according to local conditions, but also better meet the daily and accessible diagnosis and treatment needs of local residents, enabling them to enjoy high-quality ophthalmic medical services more conveniently. In the future, the company will incorporate the reserve hospitals into the listed company in batches according to the development of the target hospitals, the conditions at each stage and the needs of integration." said the above-mentioned person in charge.

According to Fan Kun, an expert at Kant Think Tank and a lawyer at Shanghai Shenlun Law Firm, with continuous expansion, enterprises can achieve economies of scale and reduce costs; at the same time, it helps to enhance brand awareness and influence and strengthen market competitiveness. However, expansion will also increase the complexity and difficulty of management and operation, which may lead to problems such as poor management and low operational efficiency.

Aier Eye Hospital said that in recent years, national policies have encouraged the development of private medical care and the ophthalmic medical industry, and the demand for the ophthalmic market has continued to expand. The company has rich experience in domestic and overseas mergers and acquisitions, which also makes this acquisition feasible.

At present, China's ophthalmic medical market continues to expand. Deng Zhidong, founder of Hainan Boao Medical Technology Co., Ltd., said that the future development of ophthalmic hospitals will be affected by market demand, technological progress, policy environment and other factors. The future development of ophthalmic hospitals needs to pay more attention to the grasp of patient needs, strengthen technological research and development and innovation, improve the level of medical services, optimize business management, and rationally allocate resources to achieve sustainable development.

Will further increase goodwill

For investors, what is more concerning is the rising goodwill of Aier Eye Hospital after its frequent asset acquisitions. Aier Eye Hospital also stated in the announcement that goodwill will be generated in this transaction, and the specific amount of goodwill will be determined based on the net assets of the target company on the merger date.

As of the end of the first quarter, the balance of Aier Eye Hospital's goodwill on the books was 6.564 billion yuan. From 2019 to 2023, Aier Eye Hospital's goodwill was 2.638 billion yuan, 3.878 billion yuan, 4.317 billion yuan, 5.458 billion yuan, and 6.533 billion yuan, respectively. In five years, the goodwill has doubled.

According to industry insiders, if the actual future earnings of the acquired asset group cannot reach the expected earnings estimated at the time of the merger, then goodwill will be impaired, which will have a great impact on the current performance of the listed company. Companies with large amounts of goodwill on their books need to be alert to the potential risk of goodwill impairment.

Aier Eye Hospital said that before the acquisition, the company had conducted a detailed due diligence on the target hospital and conducted a comprehensive assessment of its medical quality, financial data, regional market conditions, management and operation level, and future growth potential. Before the acquisition, an accounting firm was hired to audit the financial situation of the hospital to be acquired in the past year and issue an audit report to truly and accurately grasp the financial data of the relevant hospital; an appraiser was hired to evaluate the hospital to be acquired, issue an appraisal report, and negotiate the acquisition price with reference to the appraisal value of the appraisal report. The specific amount of goodwill will be determined based on the net assets of the target company on the merger date, and the company will disclose it in subsequent periodic reports.

In addition, the relevant person in charge of Aier Eye Hospital said that after the acquisition, the company will integrate the management and improve the operation of the hospital, and directly connect with the hospital through the group's financial center, various business units, academic committees, medical management center, operation center, human resources, information center and other departments to assist the hospital in further improving its medical level and management capabilities, optimizing the talent team, refining financial management, and strengthening discipline capacity building to enhance its sustainable operation and profitability. The company will conduct prudent impairment tests on goodwill assets at the end of each year and make impairment provisions if there are signs of impairment.

Beijing Business Daily reporter Ding Ning