[IPO Microscope] MedicalAI Dependent on Bodyfriend: Can Its IPO Break the Ties?

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MedicalAI, a subsidiary of Bodyfriend specializing in massage chairs, is attempting to go public on the KOSDAQ. Despite having minimal operating results, MedicalAI has sustained its business through tens of billions of won in financial transactions with Bodyfriend. To this day, the company pays substantial amounts to Bodyfriend annually under lease fees.

Bodyfriend is currently experiencing internal turmoil due to lawsuits among former insiders. As a result, the market is paying close attention to whether MedicalAI can survive independently after listing and sever its reliance on Bodyfriend.

According to the financial investment industry on February 25, MedicalAI is a company providing AI-based medical solutions. Its ‘AiTiA Series’-an AI algorithm for electrocardiogram analysis and heart disease diagnosis-has been recognized as a national strategic technology by the Ministry of Science and ICT. The company recently received A and A ratings in a technology evaluation and is preparing for a ‘deep tech (disruptive technology special listing) IPO.’

MedicalAI was established in November 2019, spearheaded by emergency medicine specialist Junmyoung Kwon, a graduate of Seoul National University College of Medicine, and Jinsik Park, Chairman of the Hyewon Medical Foundation. In 2020, Bodyfriend invested 5.5 billion won to become the largest shareholder. As of the end of the third quarter last year, Bodyfriend held a 43.82% stake in MedicalAI.

Until recently, MedicalAI has operated with significant support from Bodyfriend. After acquiring MedicalAI, Bodyfriend filled most of the executive positions-aside from CEO Junmyoung Kwon-with its own personnel. Former Bodyfriend CEOs Sanghyun Park and Hongseok Kim, as well as CEO Cheolhwan Kim, Director Myeongji Heo, and Director Suhyeon Cho, have all served at MedicalAI.

The company’s operating funds have also come from Bodyfriend’s coffers. Between 2023 and 2024, MedicalAI borrowed and repaid 5 billion won from Bodyfriend, and separately borrowed and repaid 1 billion won from MC Technology and 1.95 billion won from Everyal, both Bodyfriend affiliates. Given MedicalAI’s total assets amount to 13.5 billion won, these transactions involved substantial sums. Since MedicalAI has been posting tens of billions of won in losses annually, it appears Bodyfriend has been supplying liquidity.

In addition to liquidity, MedicalAI also borrows key business assets from Bodyfriend. As of the end of 2024, MedicalAI holds 5.9 billion won in right-of-use assets, accounting for 44% of its total assets.

MedicalAI’s right-of-use assets refer to the right to use Bodyfriend’s supercomputer. The company requires a supercomputer to utilize its core AI-powered electrocardiogram analysis technology. Previously, Bodyfriend reportedly spent about 9 billion won in 2021 to acquire this supercomputer.

MedicalAI entered into a contract to use Bodyfriend’s supercomputer for a specified period, recognizing the total contract amount as right-of-use assets. MedicalAI pays Bodyfriend approximately 1.6 billion won annually in usage fees, gradually amortizing the right-of-use assets. Since it is difficult to cover these fees through its current operating results, funds raised from external investors are ultimately flowing to Bodyfriend.

It is estimated that, through the lease agreement with MedicalAI, Bodyfriend has recovered most of the funds spent on acquiring the supercomputer. In 2023, MedicalAI recognized right-of-use assets worth 8 billion won, indicating a commitment to pay Bodyfriend this sum over a set period.

Due to MedicalAI’s close relationship with Bodyfriend, it is expected that Bodyfriend will become a key focus in the upcoming IPO review. The Korea Exchange is known to consider the major shareholder’s management transparency and the stability of the governance structure during IPO assessments.

Currently, Bodyfriend’s founder and former Chairman Woongcheol Kang and Hanjuhee, Chairman of Han & Brothers, are embroiled in a legal dispute, having filed embezzlement and breach of trust charges against each other. During this process, the issue of the former chairman receiving a high salary from MedicalAI has also drawn scrutiny.

Regarding this, a MedicalAI representative stated, “The individual accused of embezzlement for receiving an excessive salary is affiliated with Han & Brothers and has no relation to the current largest shareholder. We also filed a lawsuit over this matter, but due to insufficient evidence, a non-prosecution decision was made.” The representative added, “Subsequently, we enhanced our internal control by establishing a thorough internal accounting management system.”

The representative further explained, “The reason we opted to use Bodyfriend’s supercomputer on a long-term lease is that utilizing other computational resources on a cloud basis would incur costs 3 to 5 times higher than the current structure. We determined that this was more rational from a capital efficiency perspective.”

Additionally, “To ensure transparency and independence in our governance, our board of directors is composed mainly of third parties with no ties to the largest shareholder. We have also attracted external investment to establish a stable management structure that is not subordinate to any particular shareholder’s influence,” the representative said.

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