Ruipai targets Hong Kong IPO: Ten years of consolidation in pet healthcare, but still trapped in the “labor dilemma”

The presence of chain pet hospitals has long been absent in the capital market.

Recently, the national chain pet medical service institution “Ruipai Pet Hospital” officially submitted its prospectus to the Hong Kong Stock Exchange, launching an attack in this field.

In 2024, in terms of revenue, the CR5 of China’s pet medical market reached 15.4%. Among them, Ruipai ranks second with a market share of 4.8%, with major shareholders including Mars China, Goldman Sachs Group, Yuexiu Capital, and Ringpu Bio, among others.

By the end of June 2025, Ruipai owned 548 hospitals in about 70 cities across 28 provinces.

The industry leader New Ruipeng is more than twice the size of Ruipai. It initiated the process of listing on the US stock market in 2023, but withdrew its application a year later. The market generally believes that continued losses and management issues caused by rapid expansion are the main reasons for its failed listing.

Ruipai, however, has remained overall profitable.

In 2024 and the first half of 2025, the company’s revenue was 1.76 billion yuan and 960 million yuan respectively, with adjusted net profit margins of 4% and 7.7%.

The pet medical chain industry combines both consumer and medical attributes, with services highly dependent on the individual abilities of doctors, making standardization very difficult. This makes it hard for brands to effectively empower single stores, and instead requires them to jointly bear potential medical accident risks under their institutions.

Although the industry "land grab" has lasted more than ten years, the core issue remains unresolved: Has the pet medical chain model truly matured? In the current early stage of standardization, what is the real potential for this business?

The Mystery of “Difficult Profitability”

Of all pet-related expenditures, pet medical care is undoubtedly the largest cost sector.

According to ZhongAn claim data, in 2023 the average single visit cost for a cat and a dog were 2,390 yuan and 2,786 yuan, respectively.

In stark contrast to the high perceived expenditure, the financial performance of pet hospitals is far from exorbitant.

“Pet health management business” contributed about 90% of Ruipai’s revenue, with a gross margin slightly above 20%. Even when including high-margin services like pet product sales, pet grooming and cleaning, the company's overall gross margin remains only between 21% and 25%.

Zhang Yuerui, a senior pet hospital operations expert and founder of Ruyu Consulting, told Xinfeng: The industry’s profitability must be looked at dialectically—the profit structure of stores is affected by multiple factors such as region, positioning, scale, and professional level.

“For example, the same procedure might be charged 3,000 to 4,000 yuan in first-tier cities, but may be priced under 2,000 yuan in non-first-tier cities, while the equipment and service are basically the same.” Zhang Yuerui said, “Essentially, it’s determined by local consumption capacity.”

Zhou Yue (pseudonym), with years of chain pet hospital management experience, has similar observations: Hospitals should mainly profit from fees that reflect professional services, such as registration, surgery and various operational fees, “but in reality, these fees are often hard to collect.”

Unlike the human medical system, pet care lacks extensive insurance coverage, with most costs borne directly by consumers.

Even consultation fees are often not charged by some pet doctors, who subjectively believe you wouldn't pay. “People think, it's just a short chat—why should I pay?” Zhou Yue added.

Public awareness of the value of pet medical care is closely tied to the current stage of economic development and pet health consciousness.

Ruipai mentions in its prospectus that American pet owners focus more on preventive medicine and specialist care, whereas the domestic market still mainly features “reactive” visits, i.e., only seeking treatment after pets get sick.

In the daily operation of pet hospitals, high-ticket, complex cases are limited, with most services still basic items like vaccination, neutering, and deworming. The customer unit price is low, profits are thin, and under price competition from group buying channels, many have dropped below 100 yuan.

Zhang Yuerui summarized that the current pet hospital industry is still in the growth phase with regard to its income structure and standard pricing modules. The overall immaturity of the industry leads to significant elasticity and uncertainty in its profit space.

Chain organizations can mitigate these issues to some extent through standardized operation and transparent pricing.

Currently, large chain pet hospitals commonly use a tiered diagnosis and treatment system, optimizing resource allocation by grading cases and referrals: upper-level hospitals provide technical support, while lower-level hospitals refer complex cases upward.

Take Ruipai as an example—by the end of June 2025, it had 48 urban central hospitals, 219 regional central hospitals, and 281 community hospitals, forming a three-tier service network.

Operational efficiency varies significantly across hospital levels: urban central hospitals have about 30,000 yuan per square meter, regional central hospitals 15,000 yuan, and community hospitals 8,000 yuan.

By implementing standardized diagnosis and treatment processes, improving service consistency and boosting clients’ willingness to pay, Ruipai increased average spending per visit from 409.3 yuan to 442.2 yuan in the first half of 2025, with gross margin rising from 23% to 24.8%.

Nevertheless, pet hospitals remain highly dependent on manpower and trust-building. If a doctor opens a practice independently, he or she often takes reputation and client resources along.

Zhou Yue points out labor costs have always been the largest expenditure in hospital operations. Well-managed hospitals control this to around 30%, but workforce turnover or early talent reserves can quickly push it to 35%-40%.

In Ruipai Pet Hospital's cost structure, staff expenses are even higher, approaching 50%; next is the cost of drugs and medical consumables, accounting for about 28%.

Persistently high labor costs are closely related to structural scarcity of pet doctors. The domestic pet medical sector started late, and professional veterinarians have long been in short supply; although recent years have seen increased training scale, new graduates lack experience and the market is still in a state of structural shortage.

Large organizations also face compliance cost pressures during listing preparations.

“Environmental review processes for pet hospitals have not yet been standardized, and there are differences in requirements and regulatory bodies across regions. New Ruipeng invested quite a lot in this aspect back then.” Zhang Yuerui stated.

According to the draft revision soliciting feedback, issued by the Ministry of Ecology and Environment at the end of 2025, the “animal hospital” project was reclassified from the original “report management” category to “not requiring environmental impact assessment.”

If this revision comes into effect, newly established pet hospitals will no longer require environmental review approval, significantly lowering industry entry barriers and compliance costs for expansion. Zhang Yuerui noted: “This is a favorable ‘policy wind’ for Ruipai, which is advancing its listing.”

After the Land Grab

The domestic pet medical industry has long been in a “small, scattered, weak” competitive landscape, with a very high proportion of individual operators, providing room for capital to improve industry concentration through integration.

In the past decade, “land grab” dominated by mergers and acquisitions has become the main line of industry development.

Ruipai’s nationwide layout was achieved through multiple rounds of acquisitions: in 2016, it acquired Tianjin Yangtze and Wo Chong Wo Ai, entered the Northeast market, and increased the number of hospitals to 60.

In 2017, it successively acquired Guoguo Pet Hospital, Chengdu Huaxi, Hangzhou Hongtai (now Hangzhou Hongtai), pushing its scale past 200 hospitals; after acquiring Chongqing Mingwang in 2020, it had more than 300 hospitals.

Behind rapid expansion is strong capital support. From 2017 to 2019, Ruipai completed Series A to Series C financing, raising more than 2.1 billion yuan from the primary market.

Backed by Hillhouse, New Ruipeng adopted a similar expansion strategy. At its peak in 2022, it had as many as 1,900 stores.

Compared to New Ruipeng’s highly centralized full self-operated model, Ruipai adopted a more flexible VDP (Veterinary Development Partner) model: only acquiring 60% equity during purchase, retaining 40% for the original management and medical teams, thus binding core talent.

“We must admit the driving effect of capital on the industry,” said Zhang Yuerui. “Earlier, many pet hospitals had obvious deficiencies in hygiene, aseptic awareness, service, and even medication regulation. In recent years, with capital entering, industry standards are gradually aligning with mature international systems.”

But management capability matching nationwide expansion has not yet been fully established.

Ruipai designed a matrix management structure, setting up 10 regional companies under headquarters to reach nationwide, delegating part of operating decision-making so regions could flexibly formulate market strategies and service plans.

According to Zhang Yuerui, part of the reason is: Given the broad market outlook in those years, the priority of refined store management had to give way to the expansion effect of scale.

The current chain rate of 21.8% in China is already close to the mature US market’s 30%, but CR5 concentration is only 6.5%, far below the US’s 25%.

In terms of demand structure, as young people return to their hometowns and lower-tier market consumption power rises, mid- and low-tier markets are accumulating considerable growth potential.

“In second-tier and lower cities, there are still very few pet hospitals really operating in a systematic and chain manner.” Zhang Yuerui thinks leading enterprises still face a 5 to 10 year cycle of integration and value realization.

After rapid expansion, Ruipai’s strategy has clearly become more cautious.

Since 2023, its number of hospitals has continued to decline, from 580 to 538. From 2023 to the first half of 2025, the number of hospitals acquired was 45, 10 and 7, respectively.

“Capital is now more cautious, and will set performance and profit wagering clauses with veterinary teams, and even extend the assessment period to 3-5 years.” Zhang Yuerui noted.

Against this backdrop, Ruipai’s future expansion will focus on three kinds of targets: small chain systems with integration potential; network supplements in core urban circles; and initial entry into blank cities.

On the self-built side, Ruipai promotes its “Elite Entrepreneurship Program” to encourage experienced in-house doctors to open new hospitals with a “60-40 equity structure.” Meanwhile, Ruipai plans to open its franchise system, and will treat franchise stores as potential acquisition reserves, gradually raising the proportion of self-built outlets.

Currently, single pet hospitals in the US have annual average income around 7 million yuan, more than five times the Chinese market.

In the long run, with further aging of pets, rising demand for chronic disease treatment, and increasing health awareness among owners, the frequency and average price of medical consumption are expected to rise together, further raising industry ceilings.

But these prospects have not changed one reality: Ruipai’s current profit model is still fragile.

The proportion of acquired hospitals is as high as 77.5%, and the goodwill accumulated from large-scale M&A has reached 1.79 billion yuan, accounting for over 50% of total assets and posing significant impairment risk.

In this immature and still-standardizing industry, leading enterprises that entered first still face many ongoing issues that need to be continuously explored.

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