The hard days have arrived.

On January 14, HESH (301103.SZ) disclosed its first loss financial report since going public, with an expected net loss of RMB 21 million to 31 million for 2024;

Three days later, Chengdu Bright Eye Hospital Group (301239.SZ) also reported a loss, with an expected net loss of RMB 80 million to 120 million during the same period.

So far, two out of four ophthalmology hospitals in the A-share market have reported losses.

The main reason is that the reform of the medical insurance payment method has further compressed the profits of ophthalmology hospitals, with the limited-scale HESH and Chengdu Bright Eye Hospital Group being the hardest hit.

The already sizable Aier Eye Hospital (300015.SZ) and Huaxia Eye (301267.SZ) may also be facing certain growth pressures.

Meanwhile, new challenges are on the way.

In early 2025, the Medical Insurance Bureau released the "Guidelines for the Project Establishment of Ophthalmology Medical Service Prices (Trial)" (hereinafter referred to as "Service Guidelines"), which further clarified the charging items. Whether this will impose new price limits on ophthalmology medical projects remains to be observed based on the implementation situation.

Medical Reform in Progress

The impact of the reform of the medical insurance payment method on ophthalmology hospitals is gradually becoming apparent.

Recently, the two ophthalmology hospitals listed in 2022, HESH and Chengdu Bright Eye Hospital Group (301239.SZ), reported their first loss annual reports since going public.

HESH and Chengdu Bright Eye Hospital Group expect net losses of RMB 21 million to 31 million and RMB 80 million to 120 million for 2024, respectively.

According to their explanations, the reform of the medical insurance payment method has squeezed profit margins, which is a common reason for their losses.

Since May 2024, provinces and cities across the country have begun to fully implement the national organization of centralized procurement of cataract artificial lenses, along with policies such as the reform of medical insurance DRG/DIP payment methods, all of which have put pressure on the revenue side and further compressed profit margins.

Although Aier Eye Hospital and Huaxia Eye have not yet disclosed their performance forecasts for 2024, based on the previous third-quarter reports, their performance may also be unsatisfactory.

In the third quarter of 2024, the net profits of Aier Eye Hospital and Huaxia Eye declined by 7.95% and 17.24% year-on-year, respectively.

New shocks are arriving.

In early 2025, the Medical Insurance Bureau released the Service Guidelines, consolidating 563 technical specification items from the 2023 version of medical service project technical specifications into 125 items, reducing the number of items while further clarifying the charging items.

For example, for overlapping ophthalmic examination items, "Intraocular Pressure Test" and "Intraocular Pressure Test (Glaucoma Induction)" are explicitly stated not to be charged simultaneously.

"The issuance of the project establishment guidelines marks that the unified standardization of national medical service price projects has entered the 'fast lane.' The local implementation of the project establishment guidelines is the 'last mile' for unifying price projects. After localities implement the new price projects and price levels, medical institutions can charge according to regulations, which will help clarify charges for medical institutions and make payments clearer for patients." the Medical Insurance Bureau pointed out In the guidelines, the Medical Insurance Bureau plans to set a maximum price based on the listed items, but the specific pricing details have not yet been released.

Currently, the responses from various parties indicate that they still need to wait for the implementation situation in the provinces, and whether this will further compress the profit margins of ophthalmology hospitals remains to be seen.

"Previously, the implementation of DRG/DIP has basically clarified the charges for many surgical projects. If the service guidelines add price limits, the profit margins for many projects may be further compressed. Because medical insurance has the function of price control, price limits are a trend," said a medical industry insider in Beijing to Xinfeng (ID: TradeWind01).

However, an ophthalmology industry insider in the south explained to Xinfeng (ID: TradeWind01) that there is no necessary correlation between the two.

"The guidelines specify the charging items, but there is no necessary relationship with how much the price is set. Ultimately, each province still needs to set a benchmark price, and the specifics will depend on the implementation situation," said an ophthalmology industry insider from the south.

Whether this will bring new pressure to ophthalmology hospitals remains to be observed.

From Cities to Counties

Currently, the common strategy among various players is expansion, seeking performance growth, but due to different stages of business development, there are differences in regional focus.

HESH's goal is to further expand into markets outside Liaoning Province, focusing on economically developed areas.

This is related to HESH's revenue structure.

Historically, HESH's main revenue has been concentrated in Liaoning Province. In 2022 and 2023, revenue from this region was 914 million yuan and 1.124 billion yuan, respectively, accounting for over 90% of total revenue.

Because of this, HESH plans to build more ophthalmology hospitals through a combination of self-construction, cooperative construction, and franchise chains, focusing on the Beijing-Tianjin-Hebei, Yangtze River Delta, Guangdong-Hong Kong-Macao Greater Bay Area, and Chengdu-Chongqing regions.

However, there are still doubts about whether HESH's brand can extend beyond Liaoning Province.

For example, as early as 2022, Chengdu Bright Eye Hospital Group began to build hospitals across the country, but due to limited brand appeal and other factors, it also incurred losses.

"Newly opened hospitals have low local brand influence, and it takes time to be included in the medical insurance designated hospitals, so newly opened hospitals are still in the market cultivation period," Chengdu Bright Eye Hospital Group pointed out. "Operating income is in the process of climbing, while various fixed expenses such as asset depreciation, labor costs, and period expenses generated during hospital operations have a significant impact on cost and expense growth, thereby affecting the company's overall profit."

In April 2024, Huaxia Eye acquired Chengdu Aidi Eye Hospital (a tertiary hospital), Weishan Medical University Eye Hospital, Suining Fuxing Eye Hospital, and other hospitals, covering both cities and counties.

Among them, Chengdu Aidi and Huaxia Eye's subsidiary Chengdu Huaxia are located in the same city.

Huaxia Eye stated that it is exploring the comprehensive integration of resources between the two hospitals to further enhance its core competitiveness in the Chengdu area.

Aier Eye Hospital, which has completed its layout in first-tier cities, is now extending its reach to county towns, having acquired a total of 87 medical institutions in 2024, located in counties such as Yushu But competition also exists in county towns.

"County towns in developed areas actually have ophthalmology hospitals, and there will be various price and service competitions among them. For example, some hospitals even offer home delivery services to attract customers, picking up patients for surgery and then sending them back home," pointed out a medical industry insider from Guangdong. "Moreover, since there are also ophthalmology hospitals in urban areas, they will also go to county towns to attract patients."

Behind the large-scale expansion, more compliance risks are brought to ophthalmology medical institutions.

For example, in November 2024, Ai Fen, the director of the emergency department at Wuhan Central Hospital, reported that hospitals under Aier Eye Hospital Group had issues with false diagnosis certificates and suspected commercial bribery.

According to an investigation by the Health Commission, a total of four hospitals, including Aier Eye Hospital in Nanjing, Jiangsu, and Aier Eye Hospital in Yangzhou, are suspected of issuing false diagnosis certificates.

There are still many challenges left for ophthalmology hospitals.

Risk warning and disclaimer

The market has risks, and investment should be cautious. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial conditions, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investing based on this is at one's own risk