Financial Performance - Revenue for the first half of 2022 reached RMB 702.9 million, an increase of 17.5% compared to RMB 598.2 million in the same period of 2021[5] - Gross profit decreased to RMB 198.9 million, down 25.8% from RMB 268.1 million, resulting in a gross margin of 28.3%[5] - Adjusted net profit increased by 40.1% to RMB 64.3 million, compared to RMB 45.9 million in the previous year[5] - The company reported a net profit of RMB 55.8 million, a significant turnaround from a net loss of RMB 349.7 million in the same period last year[5] - The adjusted net profit margin improved to 9.2%, up from 7.7% in the previous year[5] - Revenue from healthcare solutions increased by 16.7% to RMB 687.5 million for the six months ended June 30, 2022, compared to RMB 588.9 million for the same period in 2021[19] - Revenue from the sale of healthcare products rose by 65.2% to RMB 15.4 million for the six months ended June 30, 2022, up from RMB 9.3 million in the prior year[19] - Total revenue for the six months ended June 30, 2022, was RMB 702.9 million, representing a 17.5% increase from RMB 598.2 million in the same period of 2021[19] - The company recorded the highest revenue generated from medical health solutions among private TCM service providers in China as of June 30, 2022[15] Customer Metrics - As of June 30, 2022, the company had 246,325 new customers, an increase from 227,500 in the same period of 2021, representing an increase of approximately 8.0%[11] - The total cumulative customer count reached 2,427,150 as of June 30, 2022, compared to 1,881,505 at the end of the same period in 2021, reflecting a growth of about 29.1%[11] - The number of customer visits increased to 1,323,000 in the first half of 2022, up from 1,181,000 in the same period of 2021, marking an increase of approximately 12.0%[11] - The cumulative number of customer visits reached 11,253,000 as of June 30, 2022, compared to 8,437,000 in the same period of 2021, indicating a growth of about 33.4%[11] - The customer retention rate improved to 66.9% in the first half of 2022, up from 61.5% in the same period of 2021[11] - The average spending per visit was RMB 531 in the first half of 2022, compared to RMB 507 in the same period of 2021, reflecting an increase of approximately 4.7%[11] Operational Developments - The online healthcare platform has been integrated with offline medical institutions to enhance service delivery and customer reach[6] - A digital staff system has been established at offline medical institutions to improve customer interaction and operational efficiency[7] - The company is strategically expanding its offline presence based on online physician and customer activity levels[6] - The company expanded its medical service network by acquiring Beijing Guozong Jishi Traditional Chinese Medicine Hospital in May 2022, enhancing its offline medical service capabilities[10] - The company operates 44 medical institutions across major cities in China, including Beijing, Shanghai, and Guangzhou, as of June 30, 2022[10] - The company has established partnerships with 10 third-party online platforms to provide online appointment services, enhancing customer accessibility[10] Market and Regulatory Environment - The company is positioned to benefit from favorable government policies encouraging the development of online healthcare services[6] - The Chinese government has implemented policies to support the development of traditional Chinese medicine, which is expected to positively impact the company's operations and growth prospects[9] Financial Management - Total sales costs increased by 52.7% to RMB 504.0 million for the six months ended June 30, 2022, compared to RMB 330.1 million in the same period of 2021[24] - The cost of physicians and materials accounted for 77.2% of total sales costs, amounting to RMB 389.3 million, while additional operating expenses for offline medical institutions were RMB 114.7 million[25] - Sales cost increased by 17.9% from RMB 330.1 million for the six months ended June 30, 2021, to RMB 389.3 million for the six months ended June 30, 2022, primarily due to the expansion of the physician group and increased material costs[27] - Gross profit margin for medical health solutions was stable at 44.8% for the six months ended June 30, 2021, and decreased slightly to 44.7% for the six months ended June 30, 2022[30] - Other income and gains increased by 12.2% from RMB 10.3 million for the six months ended June 30, 2021, to RMB 11.6 million for the six months ended June 30, 2022, mainly due to increased interest income[31] Shareholder Information - As of June 30, 2022, the total number of issued shares was approximately 230,396,458[58] - Major shareholders include Wumianshan Ltd. with 30,043,777 shares (13.04%) and Action Thrive with 26,832,533 shares (11.65%)[65] - The shareholding structure indicates a concentration of ownership among a few entities, with several holding over one-third of the interests in various partnerships[69] - The pre-IPO share option plan was approved on March 31, 2021, allowing for the grant of options totaling 16,382,286 shares, which is approximately 7.11% of the total issued shares[72] Future Outlook - The company provided a future outlook, projecting a revenue growth of BB% for the next fiscal year, driven by new product launches and market expansion strategies[146] - New product development efforts include the introduction of a herbal medicine line, expected to contribute an additional CC million in revenue by the end of 2023[146] - The company is exploring market expansion opportunities in Southeast Asia, targeting a market share increase of DD% within the next two years[146] - A strategic acquisition of a local competitor is anticipated to enhance the company's market position and is expected to close by the end of Q4 2022[146] Corporate Governance - The company has established an audit committee consisting of two independent non-executive directors and one non-executive director to oversee compliance and financial reporting[50] - The company has committed to maintaining high standards of corporate governance, having adopted the corporate governance code as per the listing rules[48]

Financial Performance - The company's revenue for the year ended December 31, 2021, reached RMB 1.372 billion, representing a year-on-year growth of 48.3% compared to RMB 925.366 million in 2020[9]. - Gross profit for the same period was RMB 620.304 million, an increase of 41.8% from RMB 437.490 million in the previous year[9]. - Adjusted net profit amounted to RMB 156.719 million, reflecting an 85% increase from RMB 84.709 million in 2020[9]. - The company reported a pre-tax loss of RMB 518.022 million, which is a 114.3% increase from a loss of RMB 241.763 million in 2020[9]. - The basic loss per share was RMB (4.38), compared to RMB (3.28) in the previous year, indicating a 33.5% increase in loss per share[9]. - The gross margin for 2021 was 45.2%, down from 47.3% in 2020, showing a decrease of 2.1 percentage points[9]. - The company reported a significant increase in new customers, reaching 526,820 for the year ended December 31, 2021, compared to 361,754 in 2020, representing a growth of approximately 45.5%[25]. - Cumulative customers at the end of the year totaled 2,180,825, up from 1,654,005 in the previous year, indicating a growth of about 31.7%[25]. - The number of customer visits increased to 2,673,000, a rise from 1,787,000 in 2020, reflecting a growth of approximately 49.5%[25]. - The customer retention rate improved to 62.8% in 2021, compared to 57.5% in 2020, showing an increase of 5.3 percentage points[25]. Business Operations - The company operates a network of over 300 cities across China, establishing itself as a leading chain of traditional Chinese medicine services[11]. - The company operates 42 offline medical institutions across 11 cities, establishing a standardized and branded chain of medical halls[15]. - Over 20,000 renowned traditional Chinese medicine practitioners provide services through the company's online and offline network[15]. - The company has signed strategic cooperation agreements with over ten traditional Chinese medicine universities and top-tier hospitals to enhance clinical capabilities[15]. - The implementation of the OMO business model allowed the company to maintain service continuity during the COVID-19 pandemic, shifting to online consultations when necessary[16]. - The company aims to promote high-quality medical resources through a modernized traditional Chinese medicine medical alliance[15]. - The company aims to strengthen partnerships with public hospitals and traditional Chinese medicine universities to enhance resource allocation at the grassroots level[20]. - The company has established a rapid response mechanism to address various levels of pandemic impact, ensuring uninterrupted medical services[16]. Membership and User Engagement - Membership user count increased significantly from 25,310 in 2019 to 139,039 in 2021, with a retention rate exceeding 50%[13]. - Membership user consumption ratio rose from 8% in 2019 to 31% in 2021, with average revenue per member being about twice that of non-members[13]. - The company reported a member annual retention rate of approximately 88.2%, 89.1%, and 87.3% over the past three years[13]. - Average user spending per visit over the past three years was approximately RMB 515, 518, and 513, indicating stable customer spending[13]. - The average spending of members rose to RMB 3,118 in 2021, compared to RMB 2,782 in 2020, reflecting an increase of about 12.1%[27]. Strategic Initiatives - The company plans to develop OMO (Online-Merge-Offline) business to enhance internet-based traditional Chinese medicine services, aiming for high-quality growth in 2022[19]. - Increased R&D investment is planned to establish a product system for common prescriptions and treatment pathways for the top five diseases[20]. - The company intends to expand its membership system and explore new service models, including family doctor services[20]. - A high-quality expansion strategy will be implemented, focusing on both existing and new city layouts[20]. - The company will enhance supply chain supervision and digital capabilities to improve the quality of traditional Chinese medicine[20]. - The company aims to maintain industry-leading revenue growth while addressing public healthcare accessibility issues[20]. Digital Transformation and Compliance - The company invested significantly in digital operations and compliance management in 2021, enhancing user experience and increasing patient return rates through a digital store system[17]. - The company plans to enhance its OMO platform and attract quality medical resources to address healthcare service challenges[32]. - Future strategies include the introduction of smart hardware for remote medical services and the development of in-house formulations for various medical conditions[32]. - The company aims to strengthen risk management and internal controls to ensure stable growth amid market fluctuations and supply chain risks[33]. Governance and Management - The company has a strategic focus on expanding its business through the expertise of its board members in various sectors, including healthcare and investment[62][63][65]. - The management team is composed of individuals with extensive backgrounds in finance, investment, and healthcare, enhancing the company's strategic decision-making capabilities[63][65]. - The company is committed to maintaining high standards of governance and oversight through its experienced board and management team[63][65]. - The board includes members with significant experience in both domestic and international markets, which is expected to benefit the company's strategic direction[63][65]. - The company has established formal procedures for evaluating the independence of non-executive directors and for succession planning[172]. Environmental, Social, and Governance (ESG) - The company has established an ESG governance framework, with a dedicated ESG management committee to oversee the implementation of ESG policies[196]. - The board of directors is responsible for setting ESG management policies and strategies, with a focus on identifying and managing ESG-related risks[195]. - The company has committed to sustainable development and has set important ESG performance indicators to ensure goal achievement[195]. - The first ESG report covers the company's performance from January 1, 2021, to December 31, 2021, adhering to the ESG reporting guidelines[193]. Shareholder Relations - The company emphasizes active communication with shareholders and stakeholders, ensuring timely disclosure of significant developments[190]. - The company has a dedicated investor relations department to address shareholder inquiries and concerns[191]. - The company’s annual general meeting requires at least 21 days' notice, ensuring shareholder participation in key decisions[190]. - The company has a structured process for shareholders to propose special meetings and resolutions, enhancing shareholder rights[191].