With Pandemic Raging, Ping An's Online Medical Platform Fails to Turn a Profit

The company behind online medical app Ping An Good Doctor saw its revenue growth dramatically drop in the first six months, and remained more than 200 million yuan ($28.8 million) in the red, even as people sought to avoid hospitals while the coronavirus epidemic raged.

Ping An Healthcare and Technology Co. Ltd. narrowed its net loss by about 20% to 213 million yuan in the first half, and increased its revenue by one-fifth to 2.7 billion yuan, according to interim financial results announced Thursday.

Ping An Good Doctor provides real-time online medical services, connecting patients with doctors for consultations and diagnoses and enabling them to make outpatient appointments or get rehabilitation advice. It also sells medications and medical equipment online.

It booked an average of 831,000 consultations per day over the period, with monthly active users up 7.3% to 67.27 million. Only 2.95 million people actually paid for services on average each month, but that was an increase of 32.3% on the previous period.

The Covid-19 pandemic has boosted demand for online medical services and insurance, as medical companies, public and private hospitals and pharmacies all explore online options.

Leon Qi, head of HealthTech Research at Daiwa Capital Markets Hong Kong Ltd., said the virus could have a permanent impact on the industry, and Good Doctor was also likely to benefit from a more positive public and regulatory attitude toward internet health services. The company's investment in “AI consultations,” based on the large pile of medical records it has accumulated, was also likely to drive growth.

The company's parent, Ping An Insurance (Group) Co. of China Ltd., turned heads in May when it abruptly removed the company’s Chairman Wang Tao and four senior managers, Caixin revealed. Ping An nominated Fang Weihao as interim chairman and CEO, the leader of Ping An's medical data unit.

Fang said in the second half of the year Ping An Good Doctor would increase investment in so-called “internet hospitals” — virtual spaces that allow services to bill insurance in a similar way to brick-and-mortar hospitals — buoyed by decrees from China’s National Healthcare Security Administration that many online services for common and chronic disease could be subsidized by the country’s basic medical insurance programs during the pandemic.

Analysts were divided on whether first-half increases in Ping An Good Doctor’s revenue and paying users met expectations considering there was an epidemic on. The management reshuffle, general economic downturn, and increasing competition as more companies push into online health care, were all nominated as dragging the bottom line.

Data obtained by Caixin suggest that in July, Good Doctor’s main rival, Tencent-backed WeDoctor, booked 2.6 times more consultations than the same period last year.

Ping An Good Doctor’s core online medical business performed strongly in the first half, surging 106.8% year-on-year to 695 million yuan, swelling to make up 25.3% of Ping An Healthcare and Technology’s overall revenue, up from 14.8% in the same period a year earlier.

The company’s 20.9% decline in revenue growth in the first half — which hit a clip of 102% in the same period of 2019, was mostly due to the company’s stagnating “health mall” segment, which sells over-the-counter drugs and wellness products.

Fang blamed logistical constraints during the outbreak for squeezing inventories.

Growth of the company’s second-largest revenue segment, the consumer medical sector, also declined — to 12.2% from 56.2% in the comparable period last year.

Shares of Ping An Healthcare and Technology on the Hong Kong Stock Exchange had plunged more than 10% an hour into trading on Friday, but recovered about half of their losses by market close.

Contact reporter Flynn Murphy (flynnmurphy@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)

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