Net profit increased by more than 500% in the first quarter, the stock price rose sharply, and there are many concerns behind the rapid expansion of Aier Ophthalmology

For private hospitals, profitability is the key to survival
.
Looking back at the development history of Aier Ophthalmology, it is inseparable from capital operations such as additional issuance and fundraising, mergers and acquisitions
.

In December 2016, Aier Ophthalmology announced that it plans to raise an additional 2.
427 billion yuan and plans to acquire the assets of nine hospitals incubated by two industry M&A funds
.

In 2018, the planned increase of 1.
72 billion yuan will be used to acquire part of the equity of 9 hospitals, including 70% of Binzhou Hubin Aier Eye Hospital, 55% of Chaoyang Eye Hospital, and 75% of Dongguan Aier Eye Hospital, and other constructions
.

In January 2020, Aier Ophthalmology announced the acquisition of 30 hospitals through the issuance of shares for 1.
87 billion yuan
.

On March 26, 2021, Aier Ophthalmology disclosed a fixed increase plan.
The total amount of funds to be raised will not exceed 3.
65 billion yuan, which will be used for the construction and relocation and expansion of leading hospitals in key provincial capitals and municipalities
.

According to statistics, at the beginning of its listing in October 2009, Aier Ophthalmology had 21 branches and subsidiaries, including 19 eye hospitals
.
The Nomura Oriental International Securities Research Report shows that as of November 2020, the total number of eye hospitals and optometries in Aier reaches more than 600, including more than 500 in Mainland China, 7 in Hong Kong, 1 in the United States, and more than 80 in Europe.
Home, 12 in Southeast Asia
.

However, the results of these outreach mergers and acquisitions are not all satisfactory
.
The 2020 annual report shows that Aier Eye Hospitals in ten cities including Changsha, Wuhan, Chengdu, Shenyang, Chongqing, Hengyang, Dongguan, Shenzhen, Guangzhou, and Nanning contribute the most to the company’s profits.
These subsidiaries will achieve a combined operating income of nearly 3 billion in 2020.
, Accounting for about 24% of total revenue, achieving a net profit of over 700 million, accounting for about 45%
.
Among these 10 subsidiaries, 6 were established before Aier Ophthalmology went public.
It can be seen that the old company is still the "mainstay" of its performance, and the endogenous growth capabilities of some hospitals that were acquired or newly built need to be improved
.

Mergers and acquisitions and expansion along the way have also caused Aier Ophthalmology's goodwill to overwhelm, especially after 2017
.
Data show that from 2014 to 2020, the goodwill of Aier Ophthalmology is 249 million yuan, 448 million yuan, 448 million yuan, 2.
122 billion yuan, 2.
062 billion yuan, 2.
638 billion yuan and 3.
878 billion yuan
.
Corresponding to each year, the ratio of its goodwill to total assets was 9.
76%, 13.
75%, 11.
01%, 22.
79%, 21.
42%, 22.
18% and 24.
95%
.

It is not difficult to find that its goodwill has been rising in recent years, and its proportion of total assets has also been increasing
.

Regarding the large amount of goodwill in 2020, Aier Ophthalmology explained in its annual report as: The acquisition of 37 eye hospitals and clinics in this period, a total of 1,593,154,501.
87 yuan of goodwill was confirmed.
The reason for the formation of goodwill is that the merger cost is greater than the acquired party.
The amount that can be recognized as a share of the fair value of net assets
.

It is also worth noting that between 2017 and 2020, Aier Ophthalmology’s provision for impairment of goodwill has also increased year by year
.
In the past four years, as of the end of the period, the total value reached 16.
3841 million yuan, 128 million yuan, 445 million yuan and 788 million yuan, respectively
.

Continuous medical disputes and high reputation are all sequelae caused by the rapid expansion of Aier Ophthalmology.
In the future, how to develop with quality and quantity may be an urgent issue for Aier Ophthalmology
.