Core Insights - New Ruipeng Pet Hospital Group is shifting its strategy away from low-quality expansion, as emphasized by co-chairman Li Liang during the mid-year meeting in August 2025, following the departure of founder Peng Yonghe, which has sparked widespread discussion in the industry [1][3] - The operational control of New Ruipeng has been transferred to a representative of Hillhouse Capital, while Peng Yonghe has moved on to focus on AI medical technology and supply chain in a new venture [1][3] Company Overview - Founded in 1998 by veterinarian Peng Yonghe, Ruipeng Pet Hospital became the first listed pet medical company in China in 2016 [3] - In 2018, Ruipeng delisted from the New Third Board and formed New Ruipeng Group with significant investment from Hillhouse Capital, each holding approximately 40% of the company [3] - Despite becoming the largest pet medical platform in China, rapid expansion has led to significant financial losses, with revenues increasing from 4.784 billion to 5.74 billion yuan from 2021 to 2022, while net losses rose to 1.311 billion and 1.417 billion yuan respectively [3][4] Operational Challenges - The rapid expansion has resulted in management and service quality issues, leading to a talent gap in medical staff and dissatisfaction among employees due to high workloads and low compensation [3][4] - Consumer experience has been negatively impacted, with a reported 1,480 complaints on the Black Cat Complaint platform, focusing on issues like opaque pricing and over-treatment [4][8] Financial Performance - New Ruipeng's operational costs have surged, with labor costs rising from 22% of total revenue in 2015 to 52% in 2022, further squeezing profit margins [7] - The company has retracted its IPO application in the U.S. and is undergoing strategic contraction, reducing its number of stores from around 1,900 to approximately 1,600 [7][8] Industry Context - The challenges faced by New Ruipeng reflect broader issues within the Chinese pet medical industry, which has seen a saturation of stores and increasing operational costs, leading to a disconnect between consumer perceptions of high costs and companies' struggles with profitability [8][9] - Recent performance reports from other listed pet companies indicate similar trends, with revenue growth accompanied by declining net profits due to rising marketing expenses [9] Strategic Initiatives - New Ruipeng is focusing on specialization and digital transformation, establishing 15 specialized pet medical departments to enhance service quality [10] - The company is also exploring a network layout of "1+P+C" (one central hospital, specialized hospitals, and community clinics) to optimize resource allocation [10] - Peng Yonghe has invested 14 million yuan in Xiaowen Medical, which focuses on AI applications in the pet medical field, indicating a potential new growth area for the industry [10]