Remote Horizon (远程视界), a Chinese medical equipment and service unicorn, has plunged into a debt crisis, local media reports (in Chinese). Instead of paying back what it owes, the management team has reportedly fled, leaving cooperation partners, including around 1,000 public hospitals around the country, in shock.
According to the report, Remote Horizon’s headquarters in Beijing, which used to hold 5,000 employees and monitor 63 branches across China, now has just two receptionists.
The company created an “Internet + Medical Care” (互联网+医疗) O2O business model, which was said to allow the optimization of medical resources. Under the framework of such a model, Remote Horizon, hospitals, and financing companies signed three-party contracts. The financing companies, as capital providers, would transfer money to Remote Horizon’s accounts, and authorize Remote Horizon to purchase equipment and distribute it to partner hospitals.
The hospitals, in the end, didn’t have to pay to purchase or rent any equipment. In exchange, hospitals functioned as venues to hold the equipment. After five years, when Remote Horizon and financing companies sort out all operation and asset ownership, the hospitals would become owners of the equipment. Meanwhile, Remote Horizon’s purchasing prices for the equipment are largely higher than market prices.
According to a former employee at the company, the nature of Remote Horizon’s model is the operation of capital, which trades public hospitals’ reputation for financing channels’ money, and also for social and administrative sectors’ acknowledgment, to serve Remote Horizon’s own purposes.
As the company frequently invited well-known experts to events, it had many equipment producers and finance institutions believe in the authority of the projects. The company has also had big names including China Development Bank Technology—a technology investment branch of the China Development Bank—on its list of partners.
Although hospitals do not contractually take on financial responsibility as part of the three-party agreement, they are, by law, liable for the debt as they use the equipment and related services. Some information provided by Remote Horizon scandal’s hospital victims suggests, at this stage, at least 442 hospitals around China signed contracts with the company but received no equipment or service at all. The value of the equipment and services is estimated to be around RMB 6.3 billion.
However, Remote Horizon released a statement on its website saying it strongly condemned negative reports it deemed to be “untrue”, saying the company would seek legal protection where necessary. TechNode reached out to Remote Horizon but had not heard back at the time of publication.
Since 2016, Remote Horizon has secured over RMB 1 billion in funding and successfully become a well-known unicorn in the industry. The company’s scandal is a warning to those preparing to enter “Internet + Medical Care” projects or other sectors with loud slogans.