Deep Analysis of the Contradiction Between High Customer Unit Price and Low Profitability at Ruipai Pet Healthcare

Based on search results, I provide a systematic analysis of the core contradiction between high customer unit price and low profitability at Ruipai Pet Healthcare for you.

From publicly disclosed financial data, Ruipai Pet Healthcare shows a typical characteristic of ‘increasing revenue without increasing profits’ [1]:

• Operating revenue from 2022 to 2024 was 1.455 billion yuan, 1.585 billion yuan, and 1.758 billion yuan respectively
• It reached 943 million yuan in the first half of 2025, maintaining a steady growth trend

• Net profit performance: -58.713 million yuan in 2022, -251 million yuan in 2023, and significantly narrowed in 2024
• Although it achieved a net profit of 15.54 million yuan in the first half of 2025, the net profit margin was only 1.6%
• Operating profit margin was only 9.3%, far lower than the level of general consumer goods enterprises

• Gross margin over the past three years was 22.4%, 21%, and 22% respectively
• It rose to 24.8% in the first half of 2025, which is already the highest level in the industry [1][2]

The scarcity of veterinary talent leads to high salary costs. Ruipai clearly stated in its prospectus that it needs to attract professional talents by improving compensation packages [1]. This cost has the following characteristics:

• Rigid characteristic
  : Once salaries are raised, it is difficult to reduce them back
• Continuous growth
  : Industry talent competition drives up salary levels
• Low substitutability
  : Professional veterinarians have a long training cycle and are difficult to replenish quickly

The threshold for opening a compliant pet hospital is relatively high:

• Need to be equipped with various professional inspection facilities (CT, MRI, ultrasound, etc.)
• Surgical equipment and anesthesia systems require huge investments
• Equipment maintenance costs occur continuously
• Technology updates rapidly, requiring continuous investment [3]

The market size of pet-specific drugs is limited:

• Domestic pet drug R&D and production scale is small
• Many core drugs rely on imports
• Procurement costs are higher than human drugs
• Limited bargaining power for large-scale procurement [1]

Ruipai adopts a rapid expansion strategy of ‘acquisition + integration’:

• As of June 2025, there are 548 pet hospitals
• Among them, 120 are self-built and 428 are acquired hospitals
• This model brings heavy financial burdens [2]

• As of June 2025, the goodwill book value is as high as 1.792 billion yuan
• In 2023, due to underperformance of some hospitals, a goodwill impairment provision of 137 million yuan was made
• Directly led to the expansion of net loss to 251 million yuan that year [3]

• Diagnostic service revenue accounts for more than 90%
• Single business structure, weak anti-risk ability
• Highly sensitive to medical service prices and doctor costs [3]

• Early institutions predicted that the market size could reach 136 billion yuan by 2026
• But the actual industry size in 2024 was only 36.6 billion yuan
• The target achievement time is almost delayed by nearly a decade
• Industry development speed is lower than expected [1]

• New Ruipeng, the industry leader, accumulated losses of over 3.7 billion yuan from 2020 to 2022
• Capital-driven rapid expansion leads to industry-wide losses
• Price competition compresses profit margins [2]

Pet healthcare has

• Medical attribute
  : High professional threshold, service pricing refers to human medical care
• Consumption attribute
  : Pet owners have strong willingness to spend on their ‘fur babies’ and low price sensitivity

This characteristic allows the customer unit price to remain at a high level, but it also means that cost rigidity is transmitted to terminal prices.

• Labor, equipment, and drug costs continue to rise
• Terminal pricing is already at a high level, with limited room for further price increases
• Profit margins are squeezed by both upstream and downstream

• Acquisition integration costs offset scale advantages
• Longer management radius reduces operational efficiency
• Regional differences lead to inconsistent service standards

1. Goodwill impairment risk may continue to affect profits
2. Labor cost上涨 pressure remains
3. Dependence on a single business leads to weak anti-risk ability
4. Intensified industry competition may further compress profit margins

1. Long-term growth trend of the pet economy is clear
2. Ruipai has scale advantages in industry integration
3. Capital market attention provides financing support

[1] Yahoo Finance - Pet healthcare has low profits and is prone to losses; does Ruipai have few investment highlights? (https://hk.finance.yahoo.com/news/寵物醫療利潤低易虧損-瑞派投資亮點乏善足陳-232148566.html)

[2] 36氪 - Is running a pet hospital easy? The answer is in Ruipai’s prospectus (https://m.36kr.com/p/3611594421077249)

[3] The Paper - 100 million cats and dogs, leading to an IPO (https://m.thepaper.cn/newsDetail_forward_32259877)