Ecmoho, a Health and Wellness Company, Raises $44 Million in New York IPO

The Chinese company ended its debut day up 1%, at $10.10 per share, in New York on Friday.

Belinda Zhou
    Nov 08, 2019 1:30 PM  PT
Ecmoho, a Health and Wellness Company, Raises $44 Million in New York IPO
author: Belinda Zhou   

A provider of health and wellness products, Ecmoho Ltd. (Nasdaq: MOHO), raised $44 million in its initial public offering on Friday and ended the day at $10.10 per American depositary share, up 1%.

The company sold 4.4 million American depositary shares at $10 each, the low end of the expected range of $10 to $12.

Initially, in a September filing with the U.S. Securities and Exchange Commission, Ecmoho sought to raise up to $150 million.

The Shanghai-based player in China's non-medical health and wellness industry said its mission is to improve the health and well-being of consumers in China. The company, founded in 2011, markets and distributes products including health supplements, food, mother and childcare products, personal care products and household healthcare equipment. 

The company also works as a brand distributor, offering its 64 brand partners value-added services such as operating online stores as well as organizing online and offline marketing campaigns to help them reach new customers. Particularly, Ecmoho helps its clients run business on China's retail giants Alibaba Group Holding Ltd. (NYSE: BABA) and Inc. (Nasdaq: JD).

In addition to selling products from merchant partners, Ecmoho sells household healthcare equipment and traditional Chinese herbal tonics under its own brands, KGC and HST, according to its prospectus. 

Ecmoho turned profitable for the six months through June, reporting its revenue of $151.3 million, more than double from a year ago. Its net income increased by 64% year-over-year to $1.8 million in the first half-year.

"While MOHO is growing quickly, its profitability upside may be sharply limited to its middleman, distribution strategy," Donovan Jones, financial columnist at CapitalWatch and creator of VentureBeat, said in his analysis of Ecmoho.

Jones added, "The market opportunity for health and wellness products in China is large and forecast to grow substantially due to the aging population and increasing awareness of the need for healthier products."

China's health ministry released a plan in 2017, saying it expects the market size of health industry in China to grow to 16 trillion yuan ($2.3 trillion) by 2030, according to the Healthy China 2030 plan. As reported by independent market research firm Frost & Sullivan, China's health and wellness industry saw annual growth rate of 13% from 2014 to 2018.

As early in 2014, Alibaba listed its health arm, Alibaba Health Information Technology Ltd. (HKEX: 00241), in Hong Kong, targeting a strategy of "Health and Happiness." Retailer Number Two in China, has also invested in healthcare, spinning off in May its health unit JD Health. Another Chinese titan, Tencent Holdings Ltd. (HKEX: 0700), operates a medical information platform, Tencent Medpedia.