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2 Slides Showing How Ping An Healthcare Generates Its Cash

Ping An Healthcare and Technology Co Ltd (SEHK: 1833) is a one-stop healthcare ecosystem platform in China.

In this article, I’ll help investors understand one aspect of the company – how does it make its money? This will help investors get a quick overview of the company’s various sources of income.

Now, there are many ways to look at this. Here, let’s explore its revenue by type and profitability.

Type

Source: Ping An Healthcare’s Results Presentation

The above is a slide from the company’s latest results presentation. Overall, we can see that it generates cash from four segments, namely Health mall (individual and corporate), Consumer Healthcare, Online Medical Services, as well as Health Management & Wellness.

Health mall provides a wide range of easy-to-access products, such as Chinese and Western pharmaceuticals, nutrition and health products, medical devices and more.

Consumer Healthcare, on the other hand, integrates the online and offline service networks to provide users with one-stop healthcare services. Here, the company provides individual and corporate clients with standardised service packages covering health check-ups, medical beauty, dental check-ups, and genetic testing services.

Another important segment, online medical services, focuses on providing 24/7 online consultation. It also provides other services like referral, registration, hospitalisation arrangement, second medical opinion, and 1-hour drug delivery.

All segments grew at breathtaking rates lately, resulting in a 102% surge in total revenue year-on-year.

Profitability

Source: Ping An Healthcare’s Results Presentation

The above is a quick overview of the margin profile for each business segment. Here, investors should pay attention to a few points.

Firstly, the biggest revenue segment – Health mall – operates with the lowest gross margin among the four major segments. On the other hand, the two smallest segments – health management & wellness interaction and online medical services – are the two most profitable segments.

Secondly, all segments grew their gross profit margin as they grew their revenue, with the exception of Consumer Healthcare. That saw its gross profit margin decline from 46% to 35%.

Putting it all together, Ping An Healthcare delivered a blended gross profit margin of 21.6%.

Conclusion

In all, we can see that there are a number of things that investors should consider when evaluating Ping An Healthcare’s revenue.

Given the difference in nature (growth potential and margin profile) of each segment’s revenue, investors should study every segment separately in order to better understand the overall business.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Hong Kong contributor Lawrence Nga doesn’t own shares in any companies mentioned.