Alibaba Health announced its performance report for the first half of 2020 as of September 30 after the market closed on November 25. The group's interim result was profitable for the first time, mainly due to the rapid growth of pharmaceutical self-operated business and pharmaceutical e-commerce platform business and improved cost control capabilities. The group's share price rose by more than 7% after its public performance, and reached 15% in two days.
In the report, the group stated that this turnaround was mainly due to the following factors:
- The increase in the “Internet + Health” intention has led to rapid growth in the number of users of the Group’s various businesses
- High-speed growth of medical self-operated income and gross profit and efficiency improvement and cost optimization driven by economies of scale
- Completed the acquisition of the benefits of the pharmaceutical category e-commerce platform business from Ali JK Nutritional Products Holding Limited
Looking back on the interim results of the past three years, the group's revenue and gross profit have both recorded strong growth, (the three-year compound growth rate of total revenue has reached 100%), mainly due to the rapid growth of medical self-operated business and pharmaceutical e-commerce platform. Benefited from the scale effect of the pharmaceutical self-operated business, which led to the reduction of procurement costs, this year's gross profit margin also improved significantly. In addition to strong revenue growth and improvement in gross profit margin, the Group's operating capabilities continued to improve. In our consolidated income statement (below), its operating profit margin continued to improve, from negative 11% in 2017 to positive 3.2% this year. This has also become the key to making a profit this time around.
The biggest advantage of the group is its synergy with Alibaba's ecosystem. As early as 2018, Alibaba Health exclusively set up an independent medical and health service channel on the Alipay client. The huge customer traffic of Alipay has also greatly improved the group's customer acquisition capabilities and reduced its costs. Alipay has also signed contracts with different offline medical institutions and connected to medical insurance payment, and the group has created an online and offline medical ecosystem more efficiently. As of September 30, 2020, Alipay has achieved more than 35,000 medical institutions, including more than 4,000 secondary and tertiary hospitals, and more than 700 tertiary hospitals connected to medical insurance payments. In addition, during the period, the group has been authorized to take over the management of Tmall platform or open brand flagship stores to help these brands achieve good sales performance.
