Core Viewpoint - The 2024 National "Two Sessions" emphasized the need to cultivate new consumption patterns and enhance services for the elderly, promoting the development of the silver economy [1] Group 1: Company Initiatives - JD Health has upgraded its "age-friendly" service system to meet the diverse health needs of the elderly, aligning with national policies [1][3] - The company launched a health and elderly care channel on its app, providing a one-stop shopping experience for health products tailored for seniors [1] - JD Health's elderly care channel includes professional shopping guides to assist elderly users in making informed decisions across eight health care categories [1] Group 2: Service Offerings - The "Year-Round Elderly Care" service was introduced to address the daily care needs of seniors, matching each elderly individual with a dedicated health manager [2] - As of February 2024, the service achieved a health risk identification rate of 98% and a chronic disease intervention rate of 85.3%, with a user satisfaction rate of 95.5% [3] - JD Health aims to continue leveraging its digital health capabilities to enhance elderly care services and contribute to the high-quality development of the elderly care sector in China [3]

Financial Performance - JD Health reported total revenue of RMB 27.1 billion for the first half of 2023, representing a year-on-year growth of 34.0%[9]. - Revenue for the six months ended June 30, 2023, reached RMB 27,110,336 thousand, a 34.1% increase from RMB 20,225,212 thousand in the same period of 2022[95]. - Sales of pharmaceutical and health products amounted to RMB 23,167,780 thousand, up from RMB 17,482,012 thousand, reflecting a growth of 32.5%[95]. - Service revenue, including platform, advertising, and other services, increased to RMB 3,942,556 thousand from RMB 2,743,200 thousand, representing a growth of 43.7%[95]. - Net profit increased significantly from RMB 223.0 million to RMB 1,562.0 million for the respective periods[31]. - The company reported a net profit attributable to owners of RMB 1,561,358 thousand for the six months ended June 30, 2023, compared to RMB 223,552 thousand in the same period of 2022, a growth of 600.5%[100]. - Basic earnings per share increased to RMB 0.50 from RMB 0.07, reflecting strong profitability growth[83]. - Total comprehensive income for the period was RMB 3,115,121 thousand, compared to RMB 2,124,345 thousand in the same period last year, indicating a 46.7% increase[84]. User Engagement and Growth - The number of annual active users reached 168.6 million as of June 30, 2023, an increase of 37.3 million from 131.3 million a year earlier[9]. - Daily online consultation volume exceeded 440,000 during the first half of 2023, showcasing enhanced user engagement[9]. - The average daily online consultation volume of the internet hospital exceeded 440,000 as of June 30, 2023[15]. - The company launched a year-round elderly care service, achieving a user satisfaction rate of 99%[16]. Supply Chain and Product Development - The company expanded its supply chain capabilities and strengthened partnerships with leading pharmaceutical companies to improve product accessibility[11]. - New innovative drugs were launched on JD Pharmacy, including AbbVie's targeted therapy for atopic dermatitis and a new drug developed by Aidi Pharmaceuticals[11]. - The company plans to enhance its medical health service capabilities and supply chain, focusing on the growth potential of retail pharmacy business and immediate retail experience upgrades[20]. Marketing and Digital Strategy - JD Health is focusing on digital marketing strategies to enhance marketing effectiveness and optimize costs across the product lifecycle[11]. - The company is collaborating with brands like Abbott and Omron to establish a digital chronic disease management system for diabetes patients[11]. - JD Health's total revenue growth is supported by the increasing demand for healthcare services driven by favorable government policies promoting "Internet + Healthcare"[9]. Financial Position and Cash Flow - Cash and cash equivalents were RMB 11.9 billion as of June 30, 2023, down from RMB 18.7 billion as of December 31, 2022[35]. - The net cash generated from operating activities was RMB 368.1 million, a significant decrease from RMB 2,256.1 million for the same period in 2022[36][37]. - The net cash used in investing activities for the six months ended June 30, 2023, was RMB 7,240.2 million, compared to RMB 2,810.5 million for the same period in 2022[36][38]. - The company reported a significant increase in financial income to RMB 936,455 thousand from RMB 220,643 thousand year-over-year, highlighting improved financial performance[83]. Employee and Management Compensation - The total employee compensation and benefits expense, including share-based payment, amounted to RMB 1.3 billion for the six months ended June 30, 2023, down from RMB 1.5 billion for the same period in 2022[43]. - The total compensation for directors and key management personnel was RMB 222,514 thousand for the six months ended June 30, 2023, down from RMB 377,716 thousand for the same period in 2022, indicating a decrease of 41.2%[141]. Shareholder Information and Equity Incentives - As of June 30, 2023, Liu Qiangdong holds approximately 402,781,973 shares of JD.com, representing 12.7% of the total ordinary shares and 73.9% of the voting rights[52]. - The company has granted a total of 2,542,276 stock options and rewards during the reporting period, accounting for approximately 0.08% of the company's issued share capital[59]. - The maximum number of shares available for grant under the post-IPO share option plan is 312,708,211 shares, which does not exceed 10% of the shares issued on the listing date[61]. Compliance and Governance - The company has adhered to all applicable provisions of the Corporate Governance Code during the reporting period[71]. - The audit committee has reviewed the interim report and unaudited consolidated financial statements for the six months ending June 30, 2023[73]. - No interim dividend has been proposed by the board for the six months ending June 30, 2023[74]. Related Party Transactions - The company provided marketing services to JD Group, generating revenue of RMB 807,155 thousand for the six months ended June 30, 2023, compared to RMB 524,351 thousand for the same period in 2022, marking an increase of about 54%[135]. - Revenue from logistics and warehousing services provided by JD Group amounted to RMB 1,664,690 thousand for the six months ended June 30, 2023, up from RMB 1,174,458 thousand in the previous year, representing an increase of approximately 42%[135].

Financial Performance - Total revenue for the six months ended June 30, 2023, reached RMB 27,110,336 thousand, representing a year-on-year increase of 34.0% compared to RMB 20,225,212 thousand in the same period of 2022[2] - Gross profit for the same period was RMB 6,203,000 thousand, up 40.5% from RMB 4,414,559 thousand in the previous year[2] - The company reported a pre-tax profit of RMB 1,831,226 thousand, a significant increase of 385.3% from RMB 377,346 thousand in the prior year[2] - Net profit for the period was RMB 1,561,992 thousand, reflecting a remarkable growth of 600.6% compared to RMB 222,958 thousand in the same period last year[2] - Revenue increased by 34.0% from RMB 20.2 billion for the six months ended June 30, 2022, to RMB 27.1 billion for the six months ended June 30, 2023[14] - Gross profit rose from RMB 4.4 billion with a gross margin of 21.8% to RMB 6.2 billion with a gross margin of 22.9%[16] - Net profit increased significantly from RMB 223.0 million to RMB 1,562.0 million for the respective periods[23] - The company reported a net profit of RMB 1.56 billion for the six months ended June 30, 2023, significantly up from RMB 223 million in the prior year, indicating a year-over-year increase of approximately 600%[36] User Engagement and Market Expansion - The number of annual active users reached 168.6 million, an increase of 37.3 million from 131.3 million as of June 30, 2022[4] - Self-operated sales through JD Pharmacy generated revenue of RMB 23,200 million, marking a 32.5% year-on-year growth[6] - Daily average online consultations exceeded 440,000 during the first half of 2023[4] - As of June 30, 2023, the online platform has over 36,000 third-party merchants, with participating merchants and products during the 618 promotion doubling year-on-year[8] - The omnichannel layout covers over 400 cities in China, with more than 1,200 partnered chain brands and over 100,000 cooperative stores, of which over 60% are located in tier-three cities and below[8] Product and Service Development - The company launched several innovative drugs online, including AbbVie's targeted therapy for atopic dermatitis and a new drug developed by Adimab[6] - JD Health is enhancing its digital marketing strategies in collaboration with partners like Abbott and Omron to improve health management services for chronic disease patients[7] - The company aims to enhance the accessibility of pharmaceutical and healthcare products, focusing on the growth potential of retail pharmacy business[13] - Plans to leverage new information technologies, including large language models, for product and service upgrades driven by AI technology[13] - The company is committed to building a closed-loop service model in specialized disease areas to meet diverse healthcare needs[13] - The integration of online and offline medical services is being enhanced through partnerships with healthcare institutions and government departments[13] Financial Position and Cash Flow - Cash and cash equivalents decreased from RMB 18.7 billion at the beginning of the period to RMB 11.9 billion at the end of the period[26] - For the six months ended June 30, 2023, net cash generated from operating activities was RMB 400 million, primarily due to a profit of RMB 1.6 billion, adjusted for non-cash and non-operating items totaling RMB 1.5 billion[28] - For the same period, net cash used in investing activities was RMB 7.2 billion, mainly due to deposits in time deposits of RMB 11.8 billion and purchases of financial assets at fair value of RMB 3.8 billion[29] - Net cash used in financing activities for the six months ended June 30, 2023, was RMB 185 million, primarily due to lease payment principal of RMB 94 million[30] - As of June 30, 2023, the company had no outstanding borrowings, thus no capital debt ratio was presented[31] Operational Efficiency - Operating costs increased by 32.2% from RMB 15.8 billion to RMB 20.9 billion, mainly due to higher sales of pharmaceutical and health products[15] - Fulfillment expenses increased by 31.9% from RMB 1.9 billion to RMB 2.6 billion, while the percentage of fulfillment expenses to revenue slightly decreased from 9.6% to 9.5%[17] - Research and development expenses rose by 26.7% from RMB 486.8 million to RMB 616.9 million, accounting for 2.3% of revenue, down from 2.4%[19] - The company continues to expand its operational network and improve merchant efficiency through targeted marketing and traffic support measures[8] Corporate Governance and Compliance - The company has complied with all applicable code provisions of the Corporate Governance Code during the reporting period[49] - The audit committee reviewed the unaudited consolidated financial statements for the six months ended June 30, 2023, ensuring adherence to accounting policies and internal controls[51] - The company did not declare or pay any dividends for the six months ended June 30, 2023, consistent with the previous year[48]

Financial Performance - Total revenue for 2022 reached RMB 46,736,150 thousand, a 52.3% increase from RMB 30,682,267 thousand in 2021[10] - Gross profit for 2022 was RMB 9,891,508 thousand, up 37.4% from RMB 7,197,282 thousand in 2021[10] - The company reported a net profit of RMB 383,229 thousand for 2022, compared to a net loss of RMB 1,072,818 thousand in 2021[10] - Non-IFRS profit for 2022 was RMB 2,616,292 thousand, an increase of 86.5% from RMB 1,402,095 thousand in 2021[10] - Revenue increased by 52.3% from RMB 30.7 billion in 2021 to RMB 46.7 billion in 2022, driven by a 54.2% increase in sales of pharmaceutical and health products[36] - Service revenue rose by 41.4% from RMB 4.5 billion in 2021 to RMB 6.4 billion in 2022, primarily due to an increase in digital marketing service fees and commissions from third-party merchants[36] - JD Health's self-operated business generated revenue of RMB 40.4 billion, representing a year-on-year growth of 54.2%[22] - The total revenue of the consolidated affiliated entity for the year ended December 31, 2022, was RMB 10,410 million, reflecting a 51.5% increase from RMB 6,898 million in 2021[178] Assets and Equity - Total assets increased to RMB 61,277,296 thousand in 2022, up from RMB 48,002,217 thousand in 2021, representing a growth of 27.5%[11] - Equity attributable to owners of the company rose to RMB 44,780,248 thousand in 2022, compared to RMB 39,853,393 thousand in 2021, marking an increase of 12.4%[11] User Engagement and Services - The annual active user count exceeded 154.3 million, with a net increase of 3.1 million compared to 2021[20] - Daily consultation volume accelerated growth, surpassing 300,000 consultations[20] - Over 100 million patients were served by JD Pharmacy during the reporting period, with significant improvements in chronic disease patient medication adherence[23] - The company established over 150 secondary clinical departments in its internet hospital, with an average of over 300,000 online consultation inquiries per day[28] - During peak periods, the online consultation volume exceeded 1.14 million inquiries in a single day, particularly during the COVID-19 pandemic[28] Strategic Initiatives - The company emphasized the importance of digital health services and the integration of online and offline medical services in response to increasing public health awareness[12] - New regulations in internet healthcare have been implemented, enhancing the quality and accessibility of online medical services[12] - The company aims to create sustainable value for shareholders by focusing on user health needs and long-term quality growth[12] - The company continues to optimize user experience and expand its ecosystem of retail pharmacies and healthcare services[12] - The company aims to enhance its digital-driven health management services, focusing on user health and creating value for stakeholders[18] Partnerships and Acquisitions - The company established strategic partnerships with dozens of pharmaceutical health brands, enhancing supply chain capabilities and digital marketing[13] - The company acquired pet health assets from JD Group, launching the "JD Pet Health" brand for comprehensive pet care services[16] - Strategic partnerships were formed with various brands in the pet health sector, enhancing the supply of pet health products and services[29] Operational Efficiency - Operating costs increased by 56.9% from RMB 23.5 billion in 2021 to RMB 36.8 billion in 2022, driven by increased sales of pharmaceutical and health products through JD Pharmacy[37] - Fulfillment expenses increased by 50.8% from RMB 3 billion in 2021 to RMB 4.5 billion in 2022, while the percentage of fulfillment expenses to revenue slightly decreased from 9.8% to 9.7%[39] - Research and development expenses grew by 19.5% from RMB 892.9 million in 2021 to RMB 1,067.2 million in 2022, with R&D expenses as a percentage of revenue decreasing from 2.9% to 2.3%[42] Leadership and Governance - The CEO, Jin Enlin, has extensive experience in the medical and TMT sectors, having joined JD.com in 2014 and held various key positions[64] - Liu Qiangdong has been the chairman of JD.com since its inception and served as CEO until April 2022, leading the company's growth since its founding in 2004[65] - The company has a strong leadership team with diverse backgrounds in finance, technology, and healthcare, enhancing its strategic decision-making capabilities[66] - The board includes independent directors with significant expertise in investment and healthcare, contributing to robust governance and oversight[66] Risks and Compliance - The company faces several risks, including reliance on JD Group, potential conflicts of interest, and the ability to manage growth and regulatory compliance in a dynamic industry[83] - The company is committed to maintaining good relationships with stakeholders and complying with relevant laws and regulations[82] - The company has faced challenges in maintaining user trust and providing a top-notch user experience in a competitive market[83] Related Party Transactions - The company received RMB 1,659,383 thousand from JD.com under the sales framework agreement, with a proposed annual cap of RMB 3,050,000 thousand[149] - The total amount paid by the company to JD.com for logistics services was RMB 2,795,468 thousand, compared to a proposed cap of RMB 4,300,000 thousand[149] - The company has established a new agreement with JD.com to renew existing continuous related transactions, setting annual caps for the next three years[151] - Independent non-executive directors confirmed that the ongoing related party transactions are conducted on normal commercial terms or better, ensuring compliance with shareholder interests[173] Future Outlook - The company aims to enhance its "retail pharmacy + medical health services" ecosystem and improve supply chain capabilities in 2023[34] - The company is committed to integrating social value with industry value, contributing to the "Healthy China 2030" initiative[35]

JD Health International Inc. (OTCPK:JDHIF) Q4 2022 Earnings Conference Call March 22, 2023 9:30 PM ET Company Participants Enlin Jin - Executive Director and CEO Dong Cao - CFO Conference Call Participants Operator Good day ladies and gentlemen, thank you for standing by. Welcome to the JD Health International Incorporated Full Year 2022 Results Conference Call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a Q&A session. Please note that this Eng ...

Financial Performance - Revenue for the year ended December 31, 2022, was RMB 46,736.15 million, representing a year-on-year increase of 52.3% from RMB 30,682.27 million in 2021[3]. - Gross profit for the same period was RMB 9,891.51 million, up 37.4% from RMB 7,197.28 million in 2021[3]. - The company reported a net profit of RMB 383.23 million for the year, a significant recovery from a net loss of RMB 1,072.82 million in 2021[3]. - Non-IFRS operating profit increased by 66.6% to RMB 1,959.16 million, compared to RMB 1,175.66 million in the previous year[3]. - Total revenue for 2022 reached RMB 46.7 billion, representing a year-on-year growth of 52.3%[10]. - Self-operated business revenue amounted to RMB 40.4 billion, showing a year-on-year increase of 54.2%[12]. - Gross profit for 2022 was RMB 9.9 billion, with a gross margin of 21.2%, down from 23.5% in 2021 due to changes in product mix and promotions[26]. - The company achieved a profit of RMB 400 million in 2022, a turnaround from a loss of RMB 1.1 billion in 2021[33]. - Service revenue grew by 41.4% to RMB 6.4 billion in 2022, driven by increased digital marketing service fees and platform usage[24]. - Financial income surged by 88.9% to RMB 864.3 million, mainly due to increased interest income from bank balances and financial products[31]. - The company's non-IFRS profit for the year ended December 31, 2022, was RMB 2,616.3 million, compared to RMB 1,402.1 million in 2021, representing a significant increase[35]. - The company reported a significant increase in cash and cash equivalents to RMB 18.72 billion as of December 31, 2022, compared to RMB 17.25 billion in 2021[48]. - The company experienced a net increase in cash and cash equivalents of RMB 744.2 million in 2022, compared to a net decrease of RMB 14.5 billion in 2021[37]. User Engagement and Services - The number of annual active users exceeded 154.3 million, with a net increase of 3.1 million compared to 2021[10]. - Daily consultation volume accelerated to over 300,000, reflecting enhanced service efficiency through innovative technology[10]. - The company has established 15 patient care centers covering over 41 diseases, significantly improving patient medication adherence[13]. - The company launched new online medical services including "Instant Consultation" and "Night Emergency" to enhance user experience[7]. - The company launched multiple innovative consultation service products, including "Instant Consultation" and "Online Expert," to improve user experience and service quality[18]. - The company has over 1,300 service merchants covering more than 500 cities and regions, providing diverse health services[19]. - The company aims to enhance user growth and engagement through the development of retail pharmacy and online healthcare services[64]. Strategic Initiatives and Partnerships - The company achieved strategic partnerships with dozens of health brands to enhance its supply chain and digital marketing capabilities[6]. - JD Health became the first internet healthcare company to pass the BSI ISO 27799 certification for personal health information security management[8]. - The company partnered with over 100 regional governments and media to launch official online medical service platforms, alleviating pressure on offline medical institutions[18]. - Strategic partnerships were formed with global pharmaceutical companies, enhancing supply chain efficiency and accessibility of innovative drugs[12]. - In 2022, the company collaborated with 19 brands, including Tongrentang Health and By-Health Group, to launch the "Precision Nutrition Navigation Plan" focusing on customized nutrition services[14]. Research and Development - Research and development expenses increased by 19.5% to RMB 1.067 billion in 2022, accounting for 2.3% of revenue, down from 2.9% in 2021[29]. - The company reported a significant increase in research and development expenses, which rose to RMB 105.6 million in 2022 from RMB 98.9 million in 2021[35]. - RMB 7.7 billion is earmarked for R&D, with no funds utilized to date[64]. Financial Management and Investments - The net cash generated from operating activities in 2022 was RMB 5,905.1 million, up from RMB 3,430.7 million in 2021, primarily due to a profit of RMB 383.2 million[38]. - The net cash used in investing activities for 2022 was RMB 42 billion, compared to RMB 178 billion in 2021, indicating a decrease in investment outflows[39]. - The net cash used in financing activities in 2022 was RMB 925.4 million, primarily due to share repurchases amounting to RMB 869 million[40]. - The company completed an acquisition of assets from JD.com, Inc. for a consideration not exceeding USD 355.4 million on June 29, 2022[41]. - The company plans to meet its liquidity requirements through cash generated from operations and net proceeds from global offerings[36]. Corporate Governance - The company has committed to maintaining high standards of corporate governance and compliance with the relevant regulations[57]. - The company has established a nomination committee and a remuneration committee in addition to the audit committee[61]. - The audit committee has reviewed the audited consolidated financial statements for the year ended December 31, 2022, ensuring compliance with accounting policies and internal controls[60].

Financial Performance - JD Health's total revenue for the first half of 2022 reached RMB 20.2 billion, representing a year-on-year growth of 48.3%[8] - Revenue increased by 48.3% from RMB 136 billion for the six months ended June 30, 2021, to RMB 202 billion for the six months ended June 30, 2022[25] - Sales of pharmaceutical and health products rose by 48.6% from RMB 118 billion to RMB 175 billion during the same period, driven by an increase in active users and online penetration[25] - Service revenue from online platforms and digital marketing grew by 46.2% from RMB 19 billion to RMB 27 billion, attributed to an increase in advertisers and sales from third-party merchants[25] - Revenue for the six months ended June 30, 2022, was RMB 20,225,212 thousand, a significant increase from RMB 13,637,832 thousand in the same period of 2021, representing a growth of approximately 48.5%[113] - Gross profit for the same period was RMB 4,414,559 thousand, up from RMB 3,307,459 thousand, indicating a gross margin improvement[113] - The net profit attributable to the owners of the company for the six months ended June 30, 2022, was RMB 222,958 thousand, compared to a loss of RMB 454,213 thousand in the prior year[114] User Growth and Engagement - The number of annual active users increased to 131.3 million, with a net addition of 2.27 million users compared to the previous year[8] - Daily consultation volume in healthcare services exceeded 250,000 during the reporting period[8] - Daily online consultation inquiries exceeded 250,000, driven by the introduction of new consultation services such as "Expert Online" and "Night Emergency"[16] - The average Days of Therapy (DOT) for users increased by 62% due to the upgrade of the JD Pharmacy single disease care center, enhancing patient compliance[13] Business Operations and Strategy - The self-operated business segment generated revenue of RMB 17.5 billion, showing a year-on-year increase of 48.6%[10] - JD Health has expanded its offline self-operated DTP pharmacies to 26 provincial-level administrative regions, enhancing the integration of online and offline membership systems[10] - The company has strengthened cooperation with pharmaceutical companies and health product suppliers to enhance supply chain management capabilities[10] - JD Health's cold chain capability for pharmaceuticals now covers over 240 cities, expanding the variety and fulfillment capacity of cold chain medicines[10] - The company continues to focus on digital healthcare services, aligning with national policies promoting the development of internet healthcare[7] - The strategic positioning emphasizes user health-centered value creation and collaboration with partners for comprehensive healthcare services[8] - The company is committed to enhancing user experience through refined operations and technological upgrades[8] Research and Development - Over 400 ongoing I-III phase clinical trial projects have been launched in collaboration with CROs and pharmaceutical companies, accelerating new drug development and market entry[12] - The company is focusing on consumer health products, launching various health consumption scenarios and providing professional health information through online services[13] Financial Position and Cash Flow - As of June 30, 2022, cash and cash equivalents amounted to RMB 16.7 billion, down from RMB 17.3 billion as of December 31, 2021, with net cash generated from operating activities of RMB 2.26 billion[37] - The net cash generated from operating activities was RMB 2.3 billion, an increase from RMB 1.9 billion for the same period in 2021, primarily due to a profit of RMB 200 million during the period[39] - The net cash used in investing activities for the six months ended June 30, 2022, was RMB 2.8 billion, compared to RMB 15 billion for the same period in 2021, mainly due to deposits in fixed-term savings[40][41] - The net cash used in financing activities for the six months ended June 30, 2022, was RMB 631.5 million, significantly higher than RMB 26.2 million for the same period in 2021, primarily due to share repurchases[42] Corporate Governance and Compliance - The company remains committed to maintaining high standards of corporate governance and has adopted the new corporate governance code effective from January 1, 2022[103] - The audit committee has reviewed the unaudited condensed consolidated financial statements for the six months ended June 30, 2022[105] - The company has confirmed compliance with the standard code for securities transactions by directors for the six months ended June 30, 2022[104] Shareholder Information - As of June 30, 2022, JD.com had a total of 3,178,400,261 shares issued, with Liu Qiangdong holding 404,141,973 shares, representing 12.9% of beneficial ownership and 74.1% of total voting rights[58] - Liu Qiangdong directly held 368,007,423 Class B shares and 36,134,550 Class A shares, with a significant portion of voting rights attributed to him through various entities[61] - The company has granted stock options under its employee incentive plan, with Liu Qiangdong eligible for up to 13,160,000 Class A shares[61] Employee Compensation and Incentives - The total employee compensation and benefits expense, including share-based payment expenses, amounted to RMB 1.5 billion for the six months ended June 30, 2022, unchanged from the same period in 2021[48] - The total compensation for directors and other key management personnel was RMB 377,716 thousand for the six months ended June 30, 2022, down from RMB 570,644 thousand in the same period of 2021, a decrease of 33.8%[181] - The company aims to attract and retain talent through its equity incentive plans, which include both stock options and restricted share units[154] Market Expansion and Future Outlook - The company is focused on expanding its health management platform, positioning itself as a go-to health management service provider[188] - The company is actively exploring new strategies for market expansion and product development in the health sector[188]

JD Health International Inc. (OTCPK:JDHIF) Q2 2022 Earnings Conference Call August 23, 2022 9:30 PM ET Corporate Participants Enlin Jin - Chief Executive Officer Cao Dong - Chief Financial Officer Conference Call Participants Justin Kwok - Goldman Sachs Unidentified Company Representative Good day ladies and gentlemen, thank you for standing by. Welcome to the JD Health International 2022 Interim Results Conference Call. This is [indiscernible] from investor relations team at JD Health. Joining us today are ...

Financial Performance - Total revenue for 2021 reached RMB 30,682.27 million, a 58% increase from RMB 19,382.57 million in 2020[5] - Gross profit for 2021 was RMB 7,197.28 million, up 46% from RMB 4,917.30 million in 2020[5] - The company reported a net loss of RMB 1,072.82 million for 2021, compared to a net loss of RMB 17,234.90 million in 2020, indicating a significant reduction in losses[5] - Non-IFRS profit for 2021 was RMB 1,402.10 million, a substantial increase from RMB 732.12 million in 2020[5] - Revenue increased by 58.3% from RMB 19.4 billion in 2020 to RMB 30.7 billion in 2021, driven by a rise in active user numbers and online penetration of pharmaceutical sales[37] - Service revenue rose by 72.7% from RMB 2.6 billion in 2020 to RMB 4.5 billion in 2021, attributed to an increase in digital marketing service fees and commissions from third-party merchants[38] Assets and Liabilities - Total assets increased to RMB 48,002.22 million in 2021, up from RMB 43,994.55 million in 2020[6] - The total liabilities increased to RMB 8,147.63 million in 2021, up from RMB 4,743.20 million in 2020, indicating increased leverage[6] - Current assets amounted to RMB 45,705.48 million in 2021, compared to RMB 42,704.77 million in 2020, reflecting strong liquidity[6] - The equity attributable to owners of the company rose to RMB 39,853.39 million in 2021, compared to RMB 39,250.84 million in 2020[6] Operational Efficiency and Strategy - The company is focused on enhancing its operational efficiency and improving profitability in the coming years[7] - The company plans to continue expanding its market presence and investing in new technologies and products[7] - The company aims to create long-term sustainable value for shareholders and society by focusing on quality growth and universal healthcare[9] - The company is committed to integrating digital economy with the physical economy in the healthcare sector, promoting high-quality development[18] Healthcare Services and Innovations - In 2021, the company focused on enhancing its "retail pharmacy + healthcare services" ecosystem, aligning with national policies to promote the rapid development of the "Internet + healthcare" sector[8] - The company aims to become the "chief health steward" for the nation, emphasizing user health needs and integrating online and offline healthcare services[9] - The company established a comprehensive drug safety system covering the entire process of medication, exceeding industry standards, and formed the "JD Health Internet Medical Expert Committee" to enhance service quality[15] - The company made significant advancements in its pharmaceutical supply chain and healthcare services, including innovations in chronic disease medication follow-up and strategic partnerships with renowned pharmaceutical companies[12] - The company provided efficient healthcare consultation services to millions of users by connecting quality medical resources and integrating various health services[12] User Engagement and Growth - Annual active user count reached 123.3 million, an increase of 3.36 million compared to 2020[19] - Daily consultation volume exceeded 190,000, indicating a rapid growth in healthcare service capabilities[19] - The company aims to enhance user growth and engagement through supply chain improvements and technology investments[101] Research and Development - R&D expenses increased by 46.6% from RMB 609.1 million in 2020 to RMB 892.9 million in 2021, accounting for 2.9% of revenue, down from 3.1% in 2020[43] - Approximately 30% of the net proceeds is expected to be used for research and development, focusing on digital infrastructure and AI-assisted services[102] Corporate Governance and Leadership - JD.com is committed to maintaining high standards of corporate governance and financial transparency through its independent board members and audit committees[77][79] - The management team has a strong background in finance and operations, with key members holding advanced degrees from prestigious institutions[75][76][78] - 徐雷 has been appointed as CEO of JD.com since April 2022, leading the company's daily operations and driving its strategic transformation towards mobile[73] Related Party Transactions - The company has established ongoing related party transactions with JD.com and its affiliates during the reporting period[178] - The company paid JD.com a transaction amount of RMB 1,271,666 thousand under the technology and traffic support service framework agreement[180] - The company paid JD.com RMB 1,712,477 thousand under the logistics service framework agreement, with a suggested annual cap of RMB 2,600,000 thousand[180] Financial Position and Cash Flow - Cash and cash equivalents decreased from RMB 32.3 billion at the end of 2020 to RMB 17.3 billion at the end of 2021[55] - Net cash generated from operating activities was RMB 3.4 billion in 2021, down from RMB 3.7 billion in 2020, primarily due to a loss of RMB 1.1 billion[56] - The company plans to meet liquidity requirements through cash generated from operations and net proceeds from the IPO[55] Employee Compensation and Structure - Total employee compensation and benefits expenses, including share-based payment expenses, amounted to RMB 3.4 billion for the year ended December 31, 2021, representing a year-on-year increase of 238.9% compared to RMB 1 billion for the year ended December 31, 2020[64] - The company had a total of 3,305 employees as of December 31, 2021, with 69.1% in procurement, 10.7% in sales and marketing, and 17.5% in R&D[63]

Financial Performance - Total revenue for the first half of 2021 reached RMB 13.6 billion, representing a year-on-year growth of 55.4%[11] - Revenue increased by 55.4% from RMB 8.8 billion for the six months ended June 30, 2020, to RMB 13.6 billion for the six months ended June 30, 2021[29] - Revenue from pharmaceutical and health products rose by 52.9% from RMB 7.7 billion to RMB 11.8 billion, driven by an increase in active users and online penetration[29] - Service revenue grew by 73.0% from RMB 1.1 billion to RMB 1.9 billion, attributed to an increase in the number of advertisers and third-party merchant sales[29] - Gross profit was RMB 3.3 billion with a gross margin of 24.3%, down from a gross margin of 25.3% in the previous period[31] - The company reported a loss of RMB 454.2 million for the six months ended June 30, 2021, compared to a loss of RMB 5.36 billion in the same period of the previous year[36] - The company reported a net loss of RMB 454,213 thousand for the six months ended June 30, 2021, compared to a net loss of RMB 5,360,915 thousand for the same period in 2020[80] - The company reported financial income of RMB 231,408 thousand for the six months ended June 30, 2021, compared to RMB 60,327 thousand in the same period of 2020[79] User Growth and Engagement - The number of annual active users as of June 30, 2021, reached 10.9 million, an increase of over 1.88 million compared to December 31, 2020[11] - The average daily consultation volume on the platform exceeded 160,000 during the reporting period, indicating strong growth in healthcare service capabilities[11] - The company has over 130,000 doctors and medical experts, covering more than 12,000 hospitals, with an average of over 160,000 online consultations per day as of June 30, 2021[18] - User data indicated an increase in active users to 30 million, up from 24 million in the previous year, representing a growth rate of 25%[157] Strategic Initiatives and Partnerships - The company aims to create a one-stop internet healthcare management platform by continuously deepening its retail pharmacy and online healthcare services[10] - The company established a strategic partnership with major pharmaceutical companies, enhancing its supply chain network and online channel capabilities[13] - The company is committed to leveraging digital technology to support industry upgrades and create more value for all parties in the supply chain[10] - The company is focused on providing accessible, convenient, and affordable healthcare products and services to the public[10] - The company has signed cooperative agreements with multiple medical institutions, enhancing the integration of online and offline medical services[19] - The company has deepened partnerships with upstream brands to enhance cancer early screening services, focusing on high-risk groups for colorectal cancer and collaborating on liver and lung cancer services[21] Operational Efficiency and Innovations - The ongoing digital transformation in the healthcare industry is expanding and refining health products and services[9] - The company is committed to continuous innovation in medical services, leveraging technology to improve user experience and healthcare delivery[23] - The integration of smart medical solutions aims to enhance operational efficiency for hospitals and improve patient management through digitalization[23] - The company is expanding its service capabilities to include smart hardware and health insurance, enhancing chronic disease management through remote monitoring[20] Financial Position and Cash Flow - For the six months ended June 30, 2021, the net cash generated from operating activities was RMB 1,933.9 million, a significant increase from RMB 359.7 million for the same period in 2020, reflecting a year-over-year growth of 437%[42] - The net cash used in investing activities for the six months ended June 30, 2021, was RMB 15,027.4 million, compared to RMB 3,097.1 million in the same period of 2020, indicating a substantial increase in investment outflows[43] - The company reported a decrease in cash and cash equivalents by RMB 13,119.6 million for the six months ended June 30, 2021, compared to a decrease of RMB 1,829.7 million in the same period of 2020[41] - The ending cash and cash equivalents as of June 30, 2021, were RMB 18,980.4 million, a significant increase from RMB 3,200.3 million at the end of June 30, 2020[41] Employee and Compensation - Total employee compensation expenses, including share-based payment expenses, amounted to RMB 1,528.4 million for the six months ended June 30, 2021, representing a 501.6% increase compared to RMB 254.1 million for the same period in 2020[47] - The company had a total of 2,576 full-time employees as of June 30, 2021, with 65.4% in procurement, 11.6% in sales and marketing, and 20.5% in research and development[47] Future Outlook and Growth Potential - The company plans to enhance its business integration with the real economy, focusing on digital rural construction and improving grassroots medical service levels[27] - Future growth potential in the retail pharmacy business is anticipated due to changing consumer habits and accelerated industry digital transformation[27] - The company expects to achieve a revenue growth of 20% for the next fiscal year, driven by new product launches and market expansion strategies[157] - A strategic acquisition of a local logistics firm is anticipated to enhance operational capabilities and reduce delivery times by 30%[157] Governance and Compliance - The audit committee has reviewed the unaudited consolidated financial statements for the six months ending June 30, 2021, ensuring compliance with accounting policies and internal controls[74] - The company has adopted and complied with all applicable provisions of the Corporate Governance Code as of June 30, 2021[72] Market Expansion and Product Development - The company plans to expand its market presence in Southeast Asia, targeting a 10% market share within the next two years[157] - The company has launched a new health management platform, aiming to capture a significant share of the growing health tech market[160] - The company is implementing a new customer loyalty program expected to increase repeat purchases by 20%[157]