Analysis of Ping An Good Doctor 2020 Annual Report: Connect Doctors and Patients

In 2020, the sudden outbreak of COVID-19 impacted on the world economy and people’s lifestyles to an extent, and also greatly increased doctors’ and patients’ acceptance of online consultation. Since the outbreak, increasingly more people have started to accept online healthcare, and got used to substituting it for part of offline outpatient treatment. In addition, regulators and local governments introduced a series of policies, supporting and encouraging the development of Internet healthcare, promoting online tiered diagnosis and treatment, and accelerating the process to include Internet healthcare in the SHI payment system. Bolstered by growing demand and favorable policies, Internet healthcare players have accelerated their business expansion, which led to fiercer competition in the industry, for example, Ali Health, JD Health, Wedoctor, as well as Ping An Good Doctor.

As we know, Ali Health is originated from Alibaba Group, JD Health is from JD, Ping An Good Doctor is a subsidiary of Ping An Group, and each company has different advantages. Ali Health and JD health have huge advantage of traffic from Alibaba and JD eCommerce platform, however, Ping An Good Doctor has the unique advantage of combining the insurance and health technology from Ping An health ecosystem.

First, let’s take a look at the brief financial data of Ping An Good Doctor from 2020 annual report. 

For the year 2020, total revenue of Ping An Good Doctor amounted to RMB6,866.0 million, representing an increase of 35.5% from total revenue of RMB5,065.4 million recorded in 2019. Gross profit recorded in 2020 was RMB1,864.4 million, representing an increase of 59.2% from RMB1,171.4 million recorded in 2019. Gross margin in 2020 reached 27.2%, up 4.1 percentage points from gross margin of 23.1% recorded in 2019. This is a good sign. However, the selling and marketing expenses ratio reached 23%, this is also make sense since Ping An Good Doctor don’t have user traffic advantage comparing with peers.

The bad thing is that there is still loss and the loss is growing in 2020. If the cost and expenses of Sales has improved when the market is stable, Ping An Good Doctor will be easy to have profit in future.

Next, let’s look at how the operation data performs.

So, as we can see, the number of users is growing at 18%, however, the online medical service revenue is growing at 82% and the total revenue is growing at 35%, the data was reflected under the COVID impact. 

Last, let’s see what business services Ping An Good Doctor provides and how they performed by segment in 2020.

From the above graph, revenue growth was seen across all business segments, especially the Online medical service revenue and gross margin growing fastest, which largely attributable to significant growth in revenue from membership service products (including Health 360 and Private Doctor Membership) and revenue from membership products maintained rapid growth and hit RMB925 million, representing a year-on-year increase of 124.5%.

Actually, Online medical service is the core competence and growth engine of Ping An Good Doctor. Leveraging four-tier doctor network consisting of AI-powered Doctor Assistant, in-house doctors, external doctors and renowned doctors, together with the support of diversified offline medical collaborations, Ping An Good Doctor provides a full range of 24/7 medical services from online consultation and prescribed medication purchase, to offline registration, referral, and drug delivery. 

In the 2020 annual report, the online medical service has make lots of progress as follows:

“As of 31 December 2020, we had 2,247 in-house medical staff members, representing an increase of 838 or 59.5% from 31 December 2019. Our AI-based medical system, containing more than 3,000 disease entries, has been fully applied in all 23 departments of the in-house medical team. We contracted 21,116 external doctors who mainly provide services such as non-real-time online consultation and offline second medical opinion, increasing by 15,735 from 31 December 2019. With further roll-out of our strategic upgrades, Ping An Good Doctor has accelerated collaboration with top doctors since mid-2020. As of 31 December 2020, we helped 175 domestic top doctors launch their online studios, offering our users excellent online and offline medical services. For the offline healthcare ecosystem, as of 31 December 2020, our hospital network comprised over 3,700 hospitals, up nearly 400 from the beginning of 2020, including nearly 2,000 tertiary hospitals. Our pharmacy partners increased by over 57 thousand to 151 thousand, compared to 94 thousand at the end of 2019, covering 379 cities in 32 provinces across China. For drug delivery, we greatly increased the drug logistics efficiency through our Central Warehouse Project. As of 31 December 2020, our flash drug delivery service was available at 51 front-rank cities in 26 province-level regions. Cities that have launched the Central Warehouse Project saw order growth of three times faster than those that have not.”

As online medical service attracts more users, it will also contribute to other business services, such as consumer healthcare, health mall, etc.

Let’s see what surprise Ping An Good Doctor will bring in 2021…

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