On January 28, 2023, QingSong Health Group, better known as “QingSong Health,” made its intentions clear by submitting its prospectus to the Hong Kong Stock Exchange in a push for a public listing, with CICC and CMB International acting as joint sponsorsAfter a decade of navigating the entrepreneurial waters, capital expert Yang Yin made a bold move to separate from the somewhat contentious crowdfunding platform, QingSong Chou, to pave the way for QingSong Health’s IPO aspirationsDespite being a frontrunner in health services, the company has lately faced notable hurdles; user growth has stagnated, leading to a decline in active users and a troubling narrative of increasing revenues without corresponding profits.

As part of its narrative, QingSong Health is now presenting itself as a technology-driven one-stop platform focused on providing integrated health services and health insurance solutionsThe history of the company reveals its journey from primarily crowdfunding to expansive health service offerings, including insurance.

Founded in 2014 by Yang Yin and his team, QingSong made strides during the internet boom, transforming into one of China’s leading big disease crowdfunding platformsThe advent of their first online insurance policy in December 2016 marked a pivotal shift towards insurance and health servicesThe following year, they launched comprehensive health service packages tailored for both individuals and corporations, and continued expanding their service offerings with the introduction of popular science services and medical research assistance by July 2023.

However, change was essential in response to evolving regulatory requirements in China regarding foreign ownership in certain business sectorsTheir restructuring plan, initiated in June 2024, aimed to separate QingSong Chou and Duoer Hospital, which were not included in the IPO entityThis strategic shift illustrates the balancing act organizations often need to perform to ensure compliance with national laws while remaining profitable.

Evaluating QingSong’s financials reveals significant trends: In 2022, 2023, and the first nine months of 2024, the revenue from QingSong Health service steadily grew to 59.77 million yuan, 155 million yuan, and 398 million yuan, respectively

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Conversely, the company’s insurance service revenue showed a downward trajectory during the same period, indicating a pressing need for strategic rethinking within that business modelThe adjustment in composition of revenue highlights the challenges posed by user acquisition costs, underscoring the shift in revenue streams and the corresponding impact on profitability.

Despite the impressive figures for registered users, growth has lagged, with numbers reaching 155 million, 164 million, and slightly above 168 million in the past three yearsThe active user count, however, paints a more troubling picture, plummeting from approximately 70.5 million to around 50 millionThis downward spiral raises questions about the company’s current standing in the IPO marketplace, where institutional investors are keen on evaluating returns from previously invested capital.

Yang Yin, the mastermind behind QingSong Health, has positioned himself as a pivotal figure in this endeavorHe holds 23.93% shares through his wholly-owned holding company and maintains considerable voting control over 15.02% through agreements with other shareholdersOther notable stakeholders, combined, represent significant interests in the company, including IDG funds and Sun Life InsuranceThis diverse portfolio points to a robust confidence from investing institutions, reliant on a successful IPO to ensure fruitful exits.

Despite the vast user base at its disposal, QingSong's growth narrative seems contradictory, as revenue does not translate to profitFinancial insights indicate that in 2022 and 2023, the net profits from ongoing ventures were around 149 million yuan and 146 million yuan before dropping to 76.57 million yuan in the first nine months of 2024. A disconcerting decline in gross margins was noted, down to 43.4% in 2024, from figures above 82%. Given the nature of their business restructuring, this trend ascertainably necessitates a reevaluation of strategic direction to stabilize revenue streams while fostering long-term profitability.

Challenges within the insurance segment further compound the company's hurdles

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