[Trading Trend] 'Overcoming First Failure, Retrying for KOSDAQ' Lemon Healthcare, Will It Cross the Listing Threshold?

Medical data platform specialist Lemon Healthcare is receiving intense attention in the over-the-counter (OTC) market as it attempts to list on the KOSDAQ again after four years. Although it suffered the pain of withdrawing its listing once in the past, the company has since achieved bone-cutting financial structure improvements and an earnings turnaround, leading to a trend of its corporate value being re-evaluated in the OTC market and investment industry. Amid stricter reviews for special technology listings following the so-called 'Fadu incident' recently, the industry's attention is focused on whether Lemon Healthcare will successfully enter the stock market.

Decision by a Founder from Oracle Engineering, Dominating 80% of Tertiary Hospitals with a 'Top-Down' Strategy

Lemon Healthcare is a startup launched in 2017 through a spin-off of the healthcare division (M-Care) of IT consulting firm Databank Systems. CEO Hong Byung-jin, who worked as an engineer for 10 years at Oracle Korea and SK C&C, made the decision to spin off in order to focus on nurturing the medical service platform business.

Lemon Healthcare's core weapons are 'God of Billing', which allows patients to easily claim actual loss medical insurance using their smartphones without paper documents, and the 'LemonCare' app, which supports everything from hospital appointment bookings to guidance and medical bill payments in a one-stop manner. In particular, they took a 'Top-Down' approach, targeting Korea's core 'Big 5' tertiary general hospitals such as Seoul National University Hospital and Severance Hospital first, rather than small and medium-sized hospitals.

Currently, Lemon Healthcare has partnerships with more than about 80% of tertiary general hospitals in Korea. By building a real-time, two-way medical data relay platform (LDB) deeply integrated with various hospital information systems (HIS), the company has secured a barrier to entry that competitors cannot easily breach and a powerful 'lock-in effect'. Since its founding in 2017, it has maintained high service satisfaction, with a hospital customer churn rate close to 'zero (0)'.

Currently Trading in the 120-130 Billion Won Range Over-the-Counter

Thanks to its unrivaled market preemption effect and differentiated business model, Lemon Healthcare has received continuous love calls from venture capital (VC) firms and the financial sector since its early days of establishment. Looking at the OTC market and institutional investment history, an explosive upward trend in corporate value is clearly evident.

In 2018, it attracted a 5.4 billion won investment from Mirae Asset Capital and BNH Investment, recording an estimated corporate value in the 23 billion won range at the time. Subsequently, in 2019, it secured an additional 10 billion won investment from Shinhan Bank, Shinhan Investment Corp., and Korea Development Bank (KDB), accelerating the expansion of its converged financial and medical services. When it attracted a 17 billion won investment from Hanwha Asset Management in May 2022, its estimated corporate value surpassed 100 billion won.

In March of this year, as expectations for its listing peaked, trading has been taking place in the OTC market. Excluding meaningless odd-lot trades, the corporate value based on major transactions is formed at a level in the 120 billion to 130 billion won range.

Painful Listing Withdrawal, 4 Years of Sharpening Its Sword, and Perfect Overhaul of Financial Structure

Although its growth rate was steep, the wall of listing was higher than expected. Lemon Healthcare pushed for its first IPO under the 'Growth Exception' track at the end of 2020, but faced profitability limitations such as net losses reaching the 20 billion won range, ultimately voluntarily withdrawing its preliminary review in July 2021.

However, over the four years following the failure, the company thoroughly strengthened its internal stability. Through aggressive outward expansion, it achieved approximately 14.9 billion won in sales as of 2023, accomplishing explosive growth of over 140% compared to the previous year, and succeeded in turning an operating profit surplus of about 126 million won for the first time since its founding.

The problem of 'complete capital impairment', which had been its biggest stumbling block, was also resolved. Total equity, which stood at -31.1 billion won as of the end of last year, was cleanly resolved as the large-scale redeemable convertible preferred shares (RCPS) issued by the company were fully converted into common shares, expanding accounting liabilities into equity. In addition, the dozen or so existing financial investors (FIs) who had caused market concern also agreed to a 'unanimous lock-up' instead of a short-term exit, quelling the overhang (potential selling volume) risk. Having improved its fundamentals in this way, Lemon Healthcare obtained 'A, A' ratings from two specialized evaluation agencies and has switched to the 'Special Technology Listing' track this time, awaiting review.

Core Key to Listing Success: "Diagnosis is Complete, Prove You are a True SaaS"

While market expectations are ripe again, the industry points to the 'fundamental definition of the business model' as the final key that will determine the listing valuation.

Whether Lemon Healthcare will be evaluated simply as a one-off system integration (SI) company that builds hospital systems once and is done, or recognized as a 'Software-as-a-Service (SaaS)' company that generates stable monthly recurring revenue (MRR) is the hottest topic of debate. If recognized as a perfect SaaS platform, it can apply high valuation multiples such as the price-to-sales ratio (PSR). CEO Hong Byung-jin has also emphasized, "We are not an SI company, but a technology company based on a real-time, two-way medical data relay platform (LDB)," stating that he will raise the proportion of subscription-type recurring revenue to over 40% by 2026.

Favorable policy momentum, such as the government's mandatory simplification of actual loss medical insurance claims, and the visualization of global expansion into countries like Vietnam are positive factors. Attention is focused on Lemon Healthcare's next moves to see if it can break through the exchange's qualitative review requirements, which have become stricter since the Fadu incident, and make a splendid entry into the KOSDAQ market.