Kakao Healthcare was acquired by CHA Bio Group for 80 billion won. Chief Executive Hwang Hee, who has led the company for four years since its launch in 2022, is expected to continue to lead existing businesses, including the artificial intelligence (AI)-based mobile health management solution "Fasta" and the healthcare data business (HRS).
CHA Bio Group and Kakao Group said on the 19th they will strengthen strategic cooperation in the global Digital Healthcare business sector through a mutual equity exchange.
First, CHA Biotech's medical infrastructure management subsidiary Cha Cares and the cosmetics manufacturing subsidiary CHA AI Healthcare (formerly Jayjun Cosmetic) decided to acquire equity in Kakao Healthcare for 70 billion won. CHA AI Healthcare will also invest 10 billion won in a paid-in capital increase.
Kakao Healthcare started in 2021 as Kakao's company-in-company (CIC) and was spun off as an independent corporation in Mar. 2022.
Hwang Hee, who had been head of the Medical Information Center and a pediatrics professor at Seoul National University Bundang Hospital, was appointed the inaugural chief executive. Hwang developed Seoul National University Bundang Hospital into an institution with a top-tier medical information system in Korea, and has experience exporting electronic medical records (EMR) and hospital information systems (HIS), developed with ezCaretech, to domestic and overseas hospitals.
However, Kakao Healthcare suffered from sluggish performance and stalled growth in recent years, and rumors of a sale circulated in the market early this year. Revenue increased with the flagship product "Fasta," introduced two years after launch, but losses also widened. Last year's revenue was 11.9 billion won, up 166.3% from a year earlier, but operating loss rose 58.5% to 34.9 billion won. In particular, the accumulated deficit expanded 187% to 83.8 billion won from 29.2 billion won the previous year, surpassing paid-in capital (75.9 billion won) for the first time.
It spent more expense than the cash earned from operating activities, resulting in cash flow of –33.1 billion won. It raised a total of 180 billion won from its parent Kakao through initial investment and two paid-in capital increases, but that was not enough to improve results. This year's revenue is expected to be about 27 billion won, more than double from a year earlier.
Hwang's leadership also came under scrutiny. Kakao had pinned hopes on Hwang's IT–medical convergence capabilities, but growth in users of the flagship Fasta lagged. Fasta is a personalized blood sugar management solution that links a continuous glucose monitor (CGM) with an app. With recent additions such as sleep management and the weight management service "Pinoart," cumulative downloads reached 1 million in a little over two years.
The company focused on signing memorandums of understanding (MOUs) with startups and corporations, which expanded its outward scale, but critics say it failed to translate into tangible results. To date, it has signed MOUs with more than 20 entities, including startups such as GENINUS, Sky Labs, and Fortyfy, as well as corporations such as the Danish drugmaker Novo Nordisk and InBody, and it has also collaborated with big tech companies such as Google Cloud and SKT, as well as domestic general hospitals and insurers.
Internal conflict was also an issue. Hwang placed personnel from ezCaretech in key positions and entrusted them with major decisions, but a physician-centered, rigid decision-making structure and communication style clashed with existing Kakao staff and IT/AI personnel, drawing backlash. In recent months, dozens of people, including the head of development, part heads, and the Head of Team in the Fasta development line, resigned in succession. A former manager-level employee said, "With a stereotypical doctor-style communication, they pressured IT personnel, and the situation of pursuing multiple initiatives without a concrete business direction continued."
With this acquisition by CHA Bio Group, Kakao Healthcare plans to push for organizational stabilization and a strategy of selection and concentration. It will raise 50 billion won from outside investors, and combining paid-in capital increases by Kakao Group and CHA AI Healthcare brings total new investment to about 100 billion won.
Kakao Healthcare said it will "strengthen the competitiveness of existing businesses such as the Fasta app, the medical data business, and the hospital concierge service 'CareChat,'" adding it "plans to accelerate global expansion by operating 77 medical service platforms in six countries — the United States, Australia, Singapore, Japan, Indonesia, and Vietnam — in connection with CHA Bio Group."