Haoxi Health Technology (HAO) Registration Filing summary

Company overview and business model

• Operates as an online marketing solution provider in China, primarily serving healthcare industry advertisers through short video and digital ad placements on major platforms like ByteDance's Ocean Engine, Douyin, and Toutiao.

• Offers one-stop, customized marketing services including ad planning, production, placement, and optimization, leveraging proprietary data analysis software, Bidding Compass.

• Has served approximately 2,000 advertisers since 2018, with 393 advertiser customers in FY2023, up from 243 in FY2022.

• Business model is based on cost-per-click (CPC) and cost-per-time (CPT) pricing, acting as principal in ad placements and recognizing revenue on a gross basis.

Financial performance and metrics

• FY2023 revenue was $28.23M (up 75% YoY), with net income of $0.97M (up from $0.24M in FY2022).

• For the six months ended Dec 31, 2023, revenue was $23.50M (up 157% YoY), net income $0.76M (up 70% YoY).

• Gross margin improved to 7.3% in FY2023 from 4.0% in FY2022, but declined to 5.1% for the six months ended Dec 31, 2023 due to increased competition and customer rebates.

• Cash and cash equivalents were $1.11M as of Dec 31, 2023; company raised $11.04M in its January 2024 IPO.

• Major supplier concentration: Ocean Engine accounted for 96% of purchases in FY2023 and 99% in the six months ended Dec 31, 2023.

Use of proceeds and capital allocation

• Net proceeds of ~$11.4M from the offering will be allocated: 60% to working capital and general corporate purposes, 30% to acquisitions or investments in complementary technologies/businesses, and 10% to hiring experienced employees for internal controls and compliance.

• Plans to invest $2M in R&D for Bidding Compass and recruit 20 new R&D engineers.