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PomDoctor Files For Nasdaq IPO That May Be Overvalued

The online health services provider aims to raise up to $30 million through a Nasdaq listing, even as its liabilities far outweigh its assets

Key Takeaways:

PomDoc aims to raise up to $30 million with a New York listing, aiming to entice investors with its online healthcare business targeting patients with chronic conditions

The company's revenue and margins both improved last year, but its low cash and ongoing losses look problematic

Internet-based healthcare looks like a surefire bet for China, serving the hundreds of millions of people who may not have easy access to high-quality hospitals and clinics mostly concentrated in large cities. But the reality is quite different, since many of the people who could benefit most from such services are probably the least internet literate.

Industry leaders like Ping An Health (1833.HK) and JD Health (1688.HK) have both found ways to operate profitably in the sector, but have yet to find a strong audience among investors. Now, the unprofitable PomDoctor Ltd. is hoping to join their ranks as China's newest publicly traded online medical services provider, with plans to list on the Nasdaq, according to an updated version of its IPO prospectus filed last week.

The company hopes to sell investors on its niche providing services to patients with chronic diseases and conditions like diabetes and high blood pressure, which require regular medical consultations. Such a focus looks like a good choice, since such conditions often require frequent doctor visits that could easily be moved online to make patients' and doctors' lives more convenient.

But the company is still losing relatively big money, and lacks a major financial backer like Ping An Health (1833.HK), which is controlled by financial services giant Ping An Group, and JD Health (6618.HK), which is controlled by e-commerce giant JD.com. That's led PomDoc's auditor to raise concerns about the company's viability as a top vulnerability in the standard risk factor section of its prospectus.

While PomDoc would like to follow the example of Ping An Health and JD Health, there's also a more ...