The stock price opened high and closed low after earnings! Ping An Good Doctor achieved its first profit, but the performance fell short of expectations?
The internet healthcare sector has always been a favored investment area in the capital markets, giving rise to many leading companies in the industry.
However, for a long time, $PA GOODDOCTOR(01833.HK) , despite its prestigious background and strong capital support, remained mired in losses.
In this regard, Ping An Good Doctor has underperformed its peers in the internet healthcare sector, such as $JD HEALTH(06618.HK) and $ALI HEALTH(00241.HK) .
It wasn't until the evening of March 12 that Ping An Good Doctor finally reached a significant milestone by achieving profitability.
Interestingly, on March 13, the stock price of Ping An Good Doctor opened nearly 3% higher but quickly retreated, at one point falling nearly 4%, reflecting weak trading sentiment.
This raises the question: for such a landmark moment for Ping An Good Doctor, is the secondary market's reaction lagging due to the long wait, or is it because the results did not meet investors' expectations?
Revenue Back on Track, Healthcare Services Perform Well
Ping An Good Doctor is the flagship of Ping An Group's healthcare and elderly care ecosystem. By continuously strengthening its two core hubs—family doctors and elderly care managers—it has become a leading provider of medical and elderly care services in China.
Since its IPO in May 2018, Ping An Good Doctor has been in a state of losses.
However, the latest earnings report shows positive changes. In 2024, Ping An Good Doctor achieved revenue of RMB 4.808 billion (hereinafter referred to as "RMB"), a year-on-year increase of 2.9%, marking a recovery, though still below the peak of RMB 7.334 billion in 2021.
By business segment, in 2024, revenue from the healthcare services segment grew 4.9% year-on-year to RMB 2.169 billion. This growth was mainly driven by deeper collaboration between Ping An Good Doctor and Ping An Group's integrated financial business, offering a range of healthcare services centered around family doctors, such as online consultations, medical assistance, expert consultations, and chronic disease management.
Meanwhile, revenue from the health services segment was RMB 2.356 billion, down 7.6% year-on-year, primarily due to one-off factors leading to concentrated fulfillment of certain businesses and a high base in 2023.
Additionally, elderly care services generated revenue of RMB 283 million for the year, surging 413.5% year-on-year, with the gross margin for this segment increasing by 16.5 percentage points to 29.1%.
From the payer perspective, revenue from the integrated financial client segment (F-end) was RMB 2.417 billion, up 9.6% year-on-year, mainly due to a 17.6% increase in ARPU (average revenue per user).
Revenue from the enterprise segment (B-end) was RMB 1.432 billion, up 32.7% year-on-year, showing significantly higher growth. Data shows that the B-end served a cumulative total of 2,049 corporate clients, up 35.9% year-on-year. Among these, 86% of clients came through Ping An Group channels, while 14% were acquired through independent channels. Meanwhile, the number of overlapping clients for "physical examination +" and "health management +" grew 18.4% year-on-year.
Further breakdown reveals that enterprise health business, the core growth driver for the B-end, saw revenue surge to RMB 1.051 billion, up 9.5% year-on-year and 69.7% quarter-on-quarter.
Effective Cost Control Leads to Annual Profitability
On the profit side, Ping An Good Doctor achieved a net profit attributable to shareholders of RMB 81.428 million in 2024, with adjusted net profit at RMB 158 million, marking its first annual profit.
In terms of shareholder returns, in 2024, Ping An Good Doctor distributed a special dividend of HKD 9.7 per share to all shareholders, who could also opt for a scrip dividend.
With revenue growing only 2.9% year-on-year, how did Ping An Good Doctor manage to turn a profit?
In 2024, Ping An Good Doctor optimized resource allocation efficiency through AI empowerment and enhanced production control.
Additionally, as economies of scale began to materialize, the expense ratio decreased by 14.4 percentage points year-on-year. Specifically, sales and marketing expenses fell 8.6% to RMB 764 million, while administrative expenses dropped 37.2% to RMB 930 million.
On one hand, Ping An Good Doctor's headcount continued to decline, from 3,425 employees in 2021 to just 1,563 in 2024.
On the other hand, effective cost control can be attributed to advancements in AI technology and its applications.
Ping An Good Doctor stated in its earnings report that, building on the "Ping An Yi Bo Tong" multimodal large model and the "Ping An Yi Jia Ren" doctor workstation, the company has completed the deployment of DeepSeek and verified its application in certain scenarios, marking a significant step in seizing the AI healthcare "trend."
Through AI empowerment, efficiency and quality metrics across healthcare services improved significantly in 2024:
AI-powered medical report interpretation achieved 100% coverage, with an accuracy rate of 98%;
Real-time medical document parsing accuracy exceeded 90%, with auxiliary diagnosis accuracy surpassing 95%;
Smart recommendation accuracy reached 99%, enabling full-process, full-volume quality control for consultations and electronic medical records;
Chronic disease management improvement rate hit 90%.
In terms of overall healthcare efficiency, family doctor service efficiency improved by about 62%, specialist doctor efficiency by about 42%, and health manager service efficiency by about 55% in 2024.
With the integration and scenario validation of the DeepSeek large model, Ping An Good Doctor will continue to expand healthcare service coverage and health record establishment for Ping An Group's 240 million individual financial clients. It will also leverage the unique advantages of closed-loop medical and insurance data to accelerate AI large model applications in complex disease multidisciplinary consultations and other scenarios.
Conclusion
Overall, Ping An Good Doctor's revenue performance in 2024 was modest, with only a slight recovery. The turnaround in profitability was primarily due to effective cost control and operational efficiency improvements. Against the backdrop of healthcare reform, whether the company can seize opportunities in commercial health insurance to achieve revenue growth and return to its peak remains to be seen.
However, the stock's high-open-then-decline pattern after the earnings release suggests that some investors may not be entirely satisfied with the 2024 results, which warrants attention.
Some analysts believe that Ping An Good Doctor's profit warning had already been reflected in the first half of 2024, with the stock rebounding from its lows and accumulating significant gains. Profit-taking by some investors post-earnings cannot be ruled out.
According to Futu data, as of March 13, Ping An Good Doctor's year-to-date stock price increase reached 25.6%, outperforming JD Health's 19% and ZhongAn Online's 6.7%.
Author: Yun Zhi Feng Qi
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