Ping An Health has suffered continuous losses, and the gross profit margin has rarely declined, will Internet medical treatment be better?

In the past year, Internet health care has been difficult.

On March 15, 2022, Ping An Good Doctor announced its 2021 annual report: total revenue of 7.334 billion yuan, an increase of 6.8% year-on-year; net loss attributable to the mother of 1.538 billion yuan, an increase of 62.2% year-on-year.

Regarding the significant expansion of losses, Fang Weihao, chairman of the board of directors and CEO of Ping An Health, said: "This is related to the investment in the strategic transformation period, which is very worthwhile and necessary. ”

Will Internet healthcare still be good?

Continuous losses, gross margins rarely declined

In February 2021, Ping An Good Doctor's share price hit an all-time high of HK$148.5 and then went all the way down. On March 16, stimulated by the favorable tone set by the state, Ping An Good Doctor rose by 11.18% to only 17.5 Hong Kong dollars, and its market value shrank by more than 80% within one year.

From 2018 to 2021, Ping An Health lost money for four consecutive years, with losses of 913 million yuan, 747 million yuan, 949 million yuan and 1.538 billion yuan respectively.

Fang Weihao explained that the overall loss increase is related to a large number of strategic investments, including doctor ecology, corporate health management services, the construction of ground hospital networks, and Internet hospitals.

What makes the market uneasy is that the gross profit margin is declining. This means that Ping An Health's profits in the Internet medical business are decreasing.

In this regard, Ping An Health blamed the sharp increase in the performance rate of medical examination services brought about by the easing of the epidemic.

In 2021, among the top five customers of Ping An Health, ping an life insurance, Ping An Bank, and Ping An Property and Casualty Insurance, there are three Ping An departments. The industry believes that Ping An's "transfer payment" is the main source of Ping An Health's income, and the more insurance users perform their contracts to check on the medical examination, the higher the cost for Ping An Health, and the gross profit margin will decline.

The C-end is still the main source of profit for Ping An Health. In 2020, Ping An Health determined Strategy 2.0 for product, channel, and capability upgrades, and began to develop into enterprise B-end customers. 2021 is the first year of its strategic transformation, and overall, the effect is not obvious.

However, Fang Weihao is not worried, at the performance conference, he believes that Ping An Health currently has 420 million cumulative registered users, there is no need to blindly pursue scale expansion, but also should deeply cultivate the medical and health business itself.

Fang Weihao said that the B-end is the channel that Ping An Health should cultivate in depth. Turning to B-side customers is a huge and complex process, "This path we are firm, I believe that in the near future, we will see more and more empirical cases landed." ”

According to Ping An Health's plan, in addition to corporate B-end customers and insurance, products with family doctors as the core will be the most important product series in the future.

The success or failure of the Internet medical model

What the outside world is more concerned about is when Ping An Health will be profitable? This is a torture for the entire Internet medical industry.

Since the birth of "Internet Healthcare" around 2010, few companies can claim to have achieved complete success on this highly anticipated track.

For example, nearly 7 years after its establishment, Ping An Health is still undergoing "transformation".

At the 2021 semi-annual report results conference, Ping An Health said that it will achieve breakeven from 2024 to 2025. On March 15, Fang Weihao once again said: "With the improvement of customer satisfaction at the B-end and C-end, there will be a positive cycle, and the revenue and profit are fully expected." ”

This time, Fang Weihao did not mention the specific time point of profit.

Ping An Health's business thinking seems to be more inclined to enter the internal closed loop. Ping An Group has insurance, finance and other businesses, and can help Ping An Health in terms of customers, products, technology and other aspects, and integrate Ping An Health into Ping An Group's grand strategy.

This has allowed Ping An Health to enter a new "Internet medical" model. Just like other Internet medical institutions want to open a third-class hospital for all patients in the whole society, Ping An Health has opened a state-owned enterprise factory hospital, mainly for specific patients.

This may be related to the policy uncertainty of Internet medical care. In the past year, Internet medical care has been under the strong supervision of relevant departments, and the outside world has also once discussed the development prospects of Internet medical treatment.

In October 2021, the National Health Commission issued the Detailed Rules for the Supervision of Internet Diagnosis and Treatment (Draft for Solicitation of Comments), which covers many aspects such as medical institution supervision, personnel supervision, business supervision, quality and safety supervision, and regulatory responsibility, and proposes that medical institutions should have special departments to manage the medical quality, medical safety, pharmaceutical services, and information technology of Internet diagnosis and treatment, and establish a corresponding management system.

Fang Weihao believes that the introduction of this policy is timely, which is a major measure and policy that is very beneficial to the long-term and healthy development of the industry, and is good news for the head company and is very welcome.

In the face of new pressure, the Health Bureau learned that Ping An Health has launched a repurchase program, announcing that it will repurchase up to 56 million shares of Ping An Good Doctor shares, and has now repurchased about 17.96 million shares. Zang Luoqi, senior vice president and chief financial officer of Ping An Health, particularly stressed that the board believes that Ping An Good Doctor's stock price is undervalued.

Referring to the future, Fang Weihao said: "We can't simply stay in a medical institution, and we are not a very pure and simple online medical institution. ”

Where will Ping An Health, which is in the throes of transformation and performance trough, go? Time will give the real answer.

#Internet Medical ##平安健康 #