Source: Heike Finance
Text丨Xu Junhao
The big health industry continues to push the boundaries.
AI healthcare, which is in the limelight, is a case in point. According to the data released by the recent 2024 Zhongguancun Forum Annual Conference "Reshaping Healthcare: Innovative Artificial Intelligence Transformation in Medicine" forum, 18 companies in Beijing have successfully obtained three types of registration certificates for 27 medical AI-assisted diagnosis scenarios.
It should be noted here that, according to the provisions of the "Classification Catalogue of Medical Devices", if the AI diagnostic software only has auxiliary diagnosis functions and does not directly give a diagnostic conclusion, it will be declared as a Class II medical device; If a clear diagnosis is provided for the lesion site, the risk level is relatively high and needs to be managed according to Class III medical devices. Compared with Class I and Class II registration certificates, the review and management of Class III registration certificates are stricter, and they are also the key threshold for AI medical diagnostic products to be introduced to the market.
Many players are involved in the field of AI medical care, such as JD Health's medical and health industry model "Jingyi Qianxun", Ping An Health's AskBob AI doctor, and Baidu's Lingyi Zhihui fundus lesion fundus image-assisted diagnosis software has also been approved for three types of certificates. These highlight the possibility of combining the big health industry with technology, and also show the prosperity of the market.
According to the "China Health Management Industry Research Report" released by iResearch, the scale of the domestic health management market will reach 1,810.7 billion yuan in 2023 and is expected to reach 3,255.8 billion yuan by 2028, with a compound annual growth rate of 12.5%; From the perspective of market segments in 2023, health insurance accounts for the highest proportion at 56.8%, Internet medical care ranks second with 19.4%, followed by health check-ups with 16.8%, commercial pension with 5.3% and genetic testing at 1.7%. In other words, the size of the Internet medical market in 2023 will be about 351.3 billion yuan.
Among the many players in Internet medicine, Ping An Health is worth paying attention to.
Ping An Health, which is backed by Ping An Group, launched the health management app "Ping An Good Doctor" in 2015 and was listed on the Hong Kong Stock Exchange in May 2018, when the average daily consultation volume of its online diagnosis and treatment reached 535,000, and now the cumulative number of consultations has exceeded 1.42 billion according to official data. Other players, such as JD Health, will only have an average of 450,000 online consultations per day in 2023.
JD Health, Ali Health, Dingdang Health and other enterprises mostly rely on the C-end capabilities of the Internet, mainly pharmaceutical e-commerce, but Ping An Health has turned to the B-end of enterprises and the F-end of financial customers as early as possible, and has expanded its layout to the field of elderly care. However, the company has lost money for 9 consecutive years from 2015 to 2023, with a cumulative loss of more than 7.1 billion yuan.
There is still room for upward exploration in the market, the "selling medicine" model is mature but not sexy, and Ping An Health is exploring more possibilities in the midst of uncertainty. After "burning money", the sustainable development ability of Xinlu has yet to be verified.
01. The mode has changed several times
The main direction of the Internet medical field is "medicine" and "medicine", that is, online diagnosis and treatment and pharmaceutical e-commerce.
The pharmaceutical e-commerce model is not complicated, and it is the source of income for many big health companies, so much so that these companies are jokingly called "called health, but actually selling drugs" by netizens. For example, JD Health, according to its recent financial report, the company takes the pharmaceutical and health product supply chain as the core, with a revenue of 53.529 billion yuan in 2023, of which the sales revenue of self-operated commodities, namely pharmaceutical and health products, will be 45.652 billion yuan, accounting for 85.3%; The revenue from platforms, advertising and other services was 7.877 billion yuan, accounting for 14.7%.
This model was also a major source of income for Ping An Health.
Taking 2021 as the boundary, Ping An Health's main business previously had four segments, namely online medical care, consumer medical care, health mall, health management and interaction. Take the 2020 financial report as an example, the company's revenue is 6.865 billion yuan, and the highest proportion is the health mall that provides users with drugs, medical devices and other commodities, accounting for 54.1% of the revenue of 3.713 billion yuan; The revenues of online medical care, consumer medical care, health management and interaction were 1.565 billion yuan, 1.382 billion yuan and 203 million yuan respectively, accounting for 22.8%, 20.1% and 3% respectively.
Pharmaceutical e-commerce is also e-commerce, and it is difficult for Ping An Health, which lacks e-commerce genes, to achieve low-cost and high-efficiency e-commerce operations like JD Health and Ali Health. As a result, Ping An Health's health mall has seen its gross profit margin decline while its revenue has increased. According to the financial report, from 2018 to 2020, the annual revenue of the health mall was 1.864 billion yuan, 2.902 billion yuan, and 3.713 billion yuan respectively, and the gross profit margin was 10.8%, 8.1%, and 6.9% respectively.
There is also Dingdang Health, which insists on "selling medicine". In 2023, Dingdang Health's revenue will be 4.857 billion yuan and its loss will be 231 million yuan, which is not in the same order of magnitude as JD Health, which has a revenue of 53.529 billion yuan and a profit of 2.142 billion yuan. Ali Health's financial reporting cycle is different, and its revenue in the half year from March to September 2023 is 12.96 billion yuan, with a profit of 445 million yuan, which is also far higher than Dingdang Health.
Therefore, Ping An Health will focus on online diagnosis and treatment, and the original product name "Good Doctor" means to provide consultation services. According to the financial report, the number of the company's own medical team in 2020 was 2,247, an increase of 59.5% over 2019, and the AI-assisted diagnosis and treatment system has penetrated into 23 departments of its own medical team; The company has also signed up more than 21,000 external doctors.
According to Heike Finance, users can send text, voice or pictures in the corresponding functions of the Ping An Good Doctor APP, and the system will provide a list of relevant doctors for screening, and users can also browse and find doctors by themselves according to the department. The general consultation in the APP lasts 15 minutes, and the fee ranges from a few yuan to dozens of yuan depending on the doctor's qualifications. Some doctors shared on social platforms that the commission of Ping An Good Doctor is about 20%. If the doctor has issued an electronic prescription, the user can directly jump to the health mall to purchase the medicine. The follow-up of the consultation may also involve referral, registration and hospitalization arrangement services, and secondary diagnosis and treatment services.
The gross profit margin of the online diagnosis and treatment business is much higher than that of pharmaceutical e-commerce. From 2018 to 2020, Ping An Health's online medical business revenue was 411 million yuan, 858 million yuan, and 1.565 billion yuan, and the gross profit margin was 40.1%, 44.2%, and 56.2%.
Compared with other online diagnosis and treatment apps, Ping An Good Doctor is significantly ahead in terms of user activity. According to data from iiMedia Consulting, the top three MAUs (monthly active users) in this field in December 2021 were Ping An Good Doctor with a MAU of 11.5 million, Chunyu Doctor with 2.1 million and Good Doctor Online with 1.89 million.
However, online diagnosis and treatment is still a C-end traffic business, and the key to user growth lies in drainage. The cost of traffic is rising, and Ping An Health has an advantage in customer acquisition compared with Alibaba, JD.com, and even leading Internet players such as Byte, Baidu, and Tencent, which also have a layout in the health field. As a result, in October 2021, Ping An Health announced the "Ping An Health Strategy 2.0" plan and began to focus on B-end users. According to the financial report, the company served a total of 520 companies in 2021, and this number will increase to 1,508 in 2023.
In other words, the focus of Ping An Health's business model has shifted from To C to To B, and it has been effective.
02. It is difficult to open source open source for cost reduction
The change of mode is not unrelated to the change of commander.
Since the establishment of Ping An Health in August 2014, Wang Tao, who has served as a senior executive in Microsoft, Kingsoft, Alibaba and other companies, is the chairman and CEO, and the Ping An Good Doctor APP has also been built by him. However, in May 2020, Ping An Health issued an announcement, saying that Wang Tao's performance of management duties did not meet the expectations of the board of directors and was removed from his position as chairman of the board of directors.
During Wang Tao's tenure, Ping An Health took the road of the so-called Internet medical platform, that is, online diagnosis and treatment and pharmaceutical e-commerce. Wang Tao's successor, Fang Weihao, changed the Internet medical platform model to the group empowerment model in 2021, and the APP was also renamed from Ping An Good Doctor to Ping An Health, weakening the concept of "good doctor" for online diagnosis and treatment.
According to the financial report, Ping An Health has optimized the C-end and focused on the B-end since 2021, integrating the original four business segments into two major sectors: medical services include online consultation, referral and appointment registration, hospitalization arrangement, disease diagnosis and treatment, and related drugs and medical device sales, with revenue of 2.288 billion yuan in 2021 and a gross profit margin of 36.1%; Health services provide a variety of standardized health service packages that integrate the services of medical and health institutions, such as physical examination and medical beauty, as well as product sales and advertising services other than drugs in medical services, with revenue of 5.046 billion yuan in 2021 and a gross profit margin of 18.9%.
In terms of revenue, health services are the company's main business. According to the financial report, the company's revenue in 2022 will be 6.205 billion yuan, including 2.592 billion yuan for medical services and 3.612 billion yuan for health services, and 4.673 billion yuan for 2023, including 2.075 billion yuan for medical services and 2.598 billion yuan for health services.
At the March 2022 results conference, Fang Weihao said that Ping An Health's unique advantage lies in the empowerment of the commercial insurance ecosystem, with 225 million personal financial users of Ping An Group, and 70 million employees of large and medium-sized enterprises through Ping An's channels, which are strongly related to Ping An Health's medical and health services.
Since then, Ping An Health has continued the path of group empowerment, and there has been no change since Li Dou replaced Fang Weihao in October 2023. Ping An Health's recently released 2023 financial report mentioned that the company will continue to focus on Ping An Group's integrated financial users and corporate users, and its business structure has been continuously optimized.
Structural optimization did lead to an increase in gross profit margin, but it was not enough to offset the decline in revenue.
According to the financial report, from 2022 to 2023, the gross profit margin of medical services will increase from 35.1% to 40%, and the revenue will decrease from 2.592 billion yuan to 2.075 billion yuan, due to the decrease in the revenue of the low-strategic synergistic business and the deepening of the synergy with the integrated financial business of Ping An Group, and the gross profit margin of the health service will increase from 21.1% to 26.1%, and the revenue will decrease from 3.612 billion yuan to 2.598 billion yuan, due to the low strategic correlation of managed care. Revenues from physical sales were also lower in some parts of the business, which were also less profitable.
However, from 2018 to 2021, Ping An Health's revenue increased from 3.337 billion yuan to 7.334 billion yuan, and fell to 6.205 billion yuan in 2022, and its revenue in 2023 is even lower than its revenue in 2019, which is 5.065 billion yuan.
Ping An Health's loss in 2023 narrowed to 323 million yuan, which is the lowest loss level since its listing in 2018. But this narrowing is the result of throttling rather than open source. In addition to the above-mentioned business cuts and product adjustments, the reduction of selling expenses and personnel adjustments were also important reasons for the narrowing of losses. According to the financial report, from 2021 to 2023, the marketing and sales expenses in the company's operating costs will drop from 1.756 billion yuan to 835 million yuan, and the management expenses will decrease from 1.846 billion yuan to 1.48 billion yuan, and the number of employees in the company in December 2023 will be 1,753, a decrease of more than 60% from the high of 4,561 in June 2021.
Ping An Health still needs to break through the dilemma of declining revenue.
03. Does potential come from pension?
In order to create a new growth curve, the solution given by Ping An Health is "pension".
Since 2021, Ping An Health has followed Ping An Group into the elderly care industry, but only recently has it been promoted to a strategic level. In the 2023 financial report, the company's strategy has been changed from the previous "comprehensive finance + medical health" to "comprehensive finance + medical pension", proposing to provide all-scenario medical and health care services for Ping An Group's comprehensive financial users. At the March 2024 results conference, Li Dou mentioned "pension" many times, highlighting the company's importance to this field.
Ping An Health tries to build a home health care service system that includes medical treatment and health management. For example, in terms of rehabilitation care products, the "Safe and Worry-free Care" product system has been launched, providing 10 short-term or long-term services such as rehabilitation and live-in care for patients with rehabilitation care needs such as nerves, bones, cardiopulmonary, and pain. The service system will also monitor the elderly in real time through intelligent monitoring equipment combined with the housekeeper platform. The device can detect the blood sugar, blood pressure, heart rate, respiration, blood oxygen and other indicators of the elderly at home, and respond in time when abnormalities are found, and notify emergency contacts and doctors to intervene if necessary.
Related products also include "Filial Piety Treasure" and "Ping An Family Doctor, Elderly Guardian Edition", etc., including housekeeper accompaniment, online diagnosis and treatment, offline hospitalization and hospitalization accompaniment, nurse door-to-door patrol and other services.
According to the financial report, Ping An Health is committed to building a pension service system integrating intelligent housekeepers, life butlers, and doctor butlers to provide 24×7 hours of all-weather service and connect more than 500 home-based elderly care services. As of the end of September 2023, the average number of contracts and total personal assets per customer of individual customers using Ping An Group's medical and elderly care ecosystem services were 1.6 times and 3.4 times that of other individual customers, respectively, and by the end of 2023, Ping An's home care services had covered 54 cities and provided home care services for 100,000 people.
This action is closely related to the social context.
The aging of the domestic population is obvious. According to the National Bureau of Statistics, at the end of 2020, there were more than 260 million people aged 60 and above in China, accounting for 18.7% of the country's population. By the end of 2023, the number of people aged 60 and over in China has exceeded 290 million, accounting for 21.1% of the national population, and the proportion of people aged 60 and over has increased by 2.4 percentage points in three years.
The "Government Work Report" released in March 2024 mentions the keyword "pension" 13 times, pointing out that it is necessary to vigorously develop pension finance and implement a national strategy to actively respond to the aging of the population.
Under this trend, the market size will inevitably grow. According to iiMedia Research, the market size of China's elderly care industry will reach 13.9 trillion yuan in 2024 and 21.1 trillion yuan in 2027, and the industry includes intelligent hardware, rehabilitation aids and other equipment and equipment, as well as information solutions, home care products, elderly care institutions, etc.
Ping An Health chose "elderly care" as the breakthrough point, and combined it with online diagnosis and treatment and medical care services, which is in line with the market trend and has differentiated advantages. It's just that it will take time from the concept to the widespread acceptance of the market, and it is difficult to quickly increase revenue in the short term. In addition, home services under the Internet model rely on smart devices, and the popularity of smart devices for the elderly needs to be improved.
In fact, the imagination space of Internet medical care, which has been pushed up by the epidemic, is falling, and overseas Internet medical platforms are also experiencing the problem of sluggish growth.
For example, Teladoc Health, a well-known Internet medical company, also focuses on online diagnosis and treatment services. The company's main services are enterprises or insurance companies that insure employees, and To B provides value-added services such as online diagnosis and treatment, and can provide expert consulting services for complex diseases in professional fields. The company, which hit a high price of about $294 per share in February 2021, has now fallen to about $14. According to the financial report, Teladoc Health's revenue in 2023 will reach $2.6 billion, a year-on-year increase of 8%, but the company expects the growth rate to be only 5% in 2024.
After the strategic focus shifted from the C-end to the B-end, Ping An Health has not yet solved the problem of declining revenue. Narrowing losses is only a small step, and it will be challenging to break even by 2025 as expected. There is still a lot to be done for Ping An Health to truly consolidate its market position and continue to move forward.