Xunfei Healthcare Technology, spun off from Chinese artificial intelligence firm iFlytek, made its debut on the Hong Kong Stock Exchange on December 30. Shares opened higher and closed at HKD 87 (USD 11.2), a 5.07% increase from the initial public offering price of HKD 82.8 (USD 10.7), giving the company a market valuation of HKD 10.5 billion (USD 1.4 billion).
The company’s public listing attracted prominent backers, including Daan Gene and Costone China Growth, securing USD 35.57 million in cornerstone investments. Hefei state-owned capital played a notable role, contributing USD 7.97 million via Xunyi Limited, underscoring the local government’s support for domestic enterprises.
Founded in 2016, Xunfei leverages its parent company’s AI expertise to develop full-cycle healthcare solutions, from disease prevention and diagnosis to post-treatment management. However, while it capitalized on the growing demand for smart healthcare, its financial performance shows slowing revenue growth and persistent losses. Revenues increased to RMB 556 million (USD 77.8 million) in 2023, but growth slowed to 17.7% from 26.8% the previous year. Net losses have also remained significant, totaling RMB 134 million (USD 18.8 million) in the first half of 2024.
Xunfei’s reliance on patient data for its AI-powered applications has drawn regulatory scrutiny. In March 2024, China’s Ministry of Industry and Information Technology flagged the iFlytek Xiaoyi app for exceeding permissible limits on personal information collection. The incident underscores broader challenges in deploying AI within healthcare, where innovation often faces obstacles such as fragmented data systems and stringent privacy regulations.
Pre-IPO investors, including Hefei Tongchuang and Tianzheng Investment, reaped substantial returns as the company’s share price surged on its first trading day. Tianzheng, one of the earliest institutional investors, acquired its stake at RMB 19.05 per share (USD 2.7). In contrast, Hefei Tongchuang, backed by local state-owned capital, entered at RMB 66.67 (USD 9.3) per share.
Despite its IPO success, Xunfei faces an uphill battle in balancing its growth ambitions with regulatory compliance. As healthcare and technology increasingly intersect, the company’s future hinges on its ability to navigate China’s complex regulatory landscape while pushing forward with its innovations.
iFlytek’s 49.42% direct stake in Xunfei keeps the subsidiary closely aligned with its parent company’s trajectory. Meanwhile, Liu, who chairs both entities, remains instrumental in steering their shared vision and future endeavors.