Q4 2019 Earnings Call
Ladies and gents, ladies and gentlemen, today's conference Cold starts in the next two minutes.
Right.
She called Visco continued to standby we thank you for your patients once again todays conference Colin stopping the next two minutes.
And your line treatment music older piece can you just 10, but we thank you for patients. Thank you.
[music].
When do you 19 earnings conference call at this time, all participants on listen only mode. After the speakers presentation. There will be a question answer session. If you ask question during the recession that you would need to restart want any sort of Cowen. Please be advised that today's conference is being recorded I would not like down the conference I would just speaker today. This Monica move in.
Mr Relations Dr. Thank you. Please go ahead.
Thank you operator.
Hello, everyone and thank you for joining us today, So what was focused culture and fiscal year 29, <unk> earnings conference call to common is resolved, we released earlier today and available.
Please.
Hi, I.
Well one.
Doxey.
Oh the call today from 111 odd Dr. gone you co founder and executive Chairman.
Mr. Dreaming, No co founder Chairman and CEO Mr., Luke Chen Chief Financial Officer, Mr. hardly war on coal Oh.
Sure I read you coal, Oh, and Mr., Alex to finance director.
Julie will give an overview I'll d. Copeland these two phone and operation.
Followed by Luke.
Oh, gosh financials and guidance.
They will be available to answer your question is doing to Q <unk> session that follows.
I have to remind you that this call may contain forward looking statements made on Dirty Safe Harbor provision Oh Diepreye. They just Securities Litigation Reform Act of 1995.
Such statements are based upon management's current expectations at current market and to operating conditions and the relate to events that involve known and unknown risks uncertainties and other factors.
Oh, no which could.
Cause actual results to differ materially.
So no information about these risks.
Please refer to decline these filings with the as you see.
Well, one that's not always did take any obligation to update any forward looking statements.
No resolved all new information.
Future events or otherwise, except as required under applicable law.
It's now my pleasure to introduce Miss true Julie <unk>, Chile. Please go ahead.
[noise]. Thank you Michael.
Good morning, and good evening, everyone. Thank you for joining our fault.
HM.
[music].
Mason.
Yeah, I'll also provide insight.
Uh huh.
Today on the company's website.
I wouldn't others you took down late in the presentation along the earnings report.
I.
One woman.
Yeah.
[noise] halt.
<unk> a strong yeah for the company.
As I discussed all results today.
I would like.
To provide a brief summary.
Humans.
Yes.
As long as all studies, apparently this momentum.
That's the goal of transforming China's health care services industry, so that upside.
Increasingly complex and demanding schedules of the company bus centric.
[noise], that's been a background I'm kind of health care space.
As many of you are.
China people.
Okay.
Almost 60% <unk> age.
Hello.
[laughter] projecting two sets up 35 system. The next three decades, and the globe China's health care industry.
That's pretty healthy.
For the next decade.
[noise] despite helped at being among the lobby and the Boston School buses in China. So he's also one of the most the fragmented.
Yes.
Well from both the Chinese government the private industry.
That's nice to meet the better health care structure supposedly going to man.
And this has cumulated you watch speaking with ball.
<unk>.
Looking at the level of wall that it's interesting you.
Please turn to capture a piece of the industry that is projected to reach Depomed tweak feeling bad times since he said.
[noise] will be approximately 445 million people, leaving that ultimately see a one then you can see.
We stand to benefit from the significant topical.
That's.
Late by numerous companies.
One moment.
To me that's Super helpful.
However.
Mhm.
Yes, we see seasons.
HM visit.
70% of the population well.
I would also.
Our access to health.
I've been no one likes to do these companies to help service platform.
To me the slowing demand will have never see too, but even Shanghai.
Thank you for young people.
Kevin.
In population.
[noise] bigger ones is Ah that's it that's a multi.
Yeah.
This is in that bucket and the loss.
Over the last few years focused on this phone Friedman thoughts.
Yep.
Moving on celebrity games to be smart.
The infrastructure.
Its definition.
Turning that wants to facilitate the mobilization of juxtaposed to China.
[noise] something like the continued also.
It's important.
So.
Exactly.
Before that 75000.
Yep.
<unk>.
We ended the year old at 255000 Thomas.
I think all Bogot, serving 250000 policies.
HM.
This networks covers about 60% over the phone.
Which is a great milestone.
[noise] supposedly pharmacy Oldham them by reached 366000, representing an increase over 200, let's say you Libya.
[noise] this commitment.
Hello.
1.35 billion RMB four walls.
Nine team.
851.8% increase from fourth quarter, Pennsylvania.
And I think one on full system squeeze from the Cole said something like.
For the fiscal years something on team all revenue.
59.5 billion Arne.
And then 1.3% increase.
But I would have been able to disclose while also making strides in improving all profit margins.
[noise] hopefully something we will continue.
Provided.
That was particularly.
Just big cities, so solidifying our leadership position.
But generally we see you up investments.
Yes, definitely since the policy market, that's supposed to becomes already you know.
No.
Well position.
You can see in operations into public hospitals across China.
Okay, and see a three to six cities, where we believe the me, though so this is the most acute.
[noise], while many companies in talking to agree.
We recognize the need for also.
I think Paul.
Maybe you could suffer to allow us to.
Hello.
No.
And the health care.
[noise] called fulfillment centers, Suzy papazian offer which makes it shouldn't be which maybe that's the liver nationwide, we don't want spot I'm too.
Certainly done provinces within the ball.
By being a part of our network.
Able to reduce inventories I know that hold less inventory, while Susan good that's them all.
Any pent up demand.
In addition by leveraging our scale pharmacies and placed small.
I don't hold is the medication, but they otherwise must be done sort of thing.
All sophisticated supply chain and sometimes.
Which we believe will completely early but the healthcare industry.
Well have long haul smarts, assuming savages population, we don't know pharmacies to collect the persistent inventory they found that allow some nice customized recommendations. The pets claims I spoke about the man.
[noise] as an example of Oh.
That's farming industry under the policemen model pharmacies fleets older smaller telephone hundreds of asking you.
Awesome.
Right.
Yes.
Without.
All bought moves can complete the post processing 60 minutes and all the often the machine learning.
The office market recommendations for adjacent products.
A lot more accurate estimate.
A couple points.
Finally, all small supply chain tends to widen just in time for others to alleviate the need for additional sublease space.
[noise] UNFI will continue to be any food supply chain inventory management system. That's all I can see me pools healthy.
To the businesses.
The plans.
The golf mobile services HM.
Okay.
All customers and partners to make more.
<unk>.
The remains committed to customer satisfaction.
<unk> value added services for customers and partners.
Finally, thanks to the hard work at all.
And they just.
I've laid the groundwork provide an omnichannel drives most lobbyists.
[laughter] UNFI will continuously invest resources to allow companies to commercialize good sign up on all platforms.
The only something in a industry.
I look to supervise nationwide.
The channel coverage easily.
Every year.
You watch they don't all watch and see an approved.
He has pioneered oh, my God awful coupled to be about that.
That's why did a uniquely position.
All that these jobs up deliberate sort of people.
This additional model Mobilizes replied.
People is roughly two patients.
Under the bundle multichannel model pharmaceutical company.
Oh, good health care providers with me, though that's become a thing.
Significantly, reducing the time and pasta medications for these patients imagine a platform that can deliver innovative Walt.
Bob.
Since another suky across China simultaneously.
I'm bodies, the golf has really been momentum and that kind of model.
The ability for pharmaceutical companies to reach and educate patients and the health care providers on new products and completely transformed pulled medicine.
So patients.
The Pos in order to meet all Verisk health care needs, but after the duct and Poles and that's all getting a prescription food often have no choice, but to be tediously spit off schedule is around and integrated health care system.
Today through the use.
That's technology all company transforming the way usually upset I believe the health care.
Every one of us will require.
Some point you know lives and one more money is committed to a future while being the one guy I have to jump.
To become healthy.
It's that healthcare products and services would be deliberate twoc number.
No not that he's comfortable and coming to us and at a time.
I'll be lives.
No also like to pick a few minutes to talk about what we've done so help on the call in the wireless.
Well I'm carry funds.
Thank you tend to be.
In response to the formal by the speed, we don't break established I thought academic commencing.
Senior executives, let their teams to the felt winds up a bit academic Hebei province for like nicely supplies and the resources.
Oh.
Well all the time in Chinese new year holiday to meet the needs of the delays.
Well generate some people couldnt be plenty.
Infinite Hospital was one of the fast Internet based health care company, it's awful.
One medical consideration to the public <unk>.
The stuff the stuff too late to the entire who big problems.
It was also among the funds to put that lines up with this guy. This is chip individuals with chronic conditions across China.
Well.
Based on the simple many factors and the logistics companies in short supply deliberate surveys and then.
Okay.
The problems all nationwide.
Oh good.
Act quickly unexpectedly alleviated pressure.
Little bit better than hospitals and to help just could you know the focus that overtime.
I want people with chronic illnesses and medical care.
Visiting a hospital.
In addition, we donated 100000 protected masks and believe that I'm under the rain on Chinese new year.
We also launched that channel featuring real time information about Kogas nine.
News update and advice from medical professionals on containing the buyers and preventing infections.
Finally, we're offering a medical supplies once others to help businesses protect and Paul.
That's the begins resumed operations and that we cover some impact under the academic.
I'm really proud of our company, but we have done to help.
But they don't know why would be.
And with that I'll hand, the call to look to walk toll on initial results. Thanks.
Thank you Judy.
Moving to the financials.
You can see the details for the fourth quarter fiscal year 2019 things section five off all the presentation slides 23 to 25.
I would like to highlight a few keeping this in the financial matrix and I will focus on year over year comparisons.
Oh numbers I am be unless otherwise stated.
Let's start with our <unk> performance for the fourth quarter.
Total net revenues for the quarter grew 141.8% to 1.35 billion.
Which was close to our full year revenue in fiscal year 2018.
<unk> revenue.
For hoping to be segment.
247.5% to 1.15 billion as compared to 330.2 million in the same quarter last year.
We thought of Fox expansion of our pharmacy network, and increasing pharmacies order number and the sites.
Total revenues for trial would be to see segment decreased by 13% to 194 minutes from 223 minutes and the same quarter last year as we continue to focus on higher margin customers.
Compared to the same quarter last year gross margin will be to see sacrament was up 11.6% was 11.6% upfront some point.
7.6%.
And a 1.2% that you'll be to be sacrament upfront 0.5%.
The improvement in both Sarcomas was primary due to an improving cost structure and the pricing strategy.
<unk> gross profit increased by 83.8% for 42.5 million.
And the combined the gross margin was 3.2%, which was lower as compared to 4.1 cents a year ago. That's a result of dilution aside from the Fox expansion of our B to B, Sacramento, We said relatively lower margin.
Total operating expenses for the quarter was up 35.6% to 210.6 million.
However.
I would like to particularly highlights that as a percentage of net revenue total operating expenses for the quarter was down to 15.6% from 27.9% in the same quarter last year.
That's a metal effect, we have continued to improve operating leverage.
Fulfillment expenses as a percentage of net revenue was 3.6% down from 4% in the same quarter last year.
Sales and marketing expenses as a percentage of net revenue was 7.6% down from 14% in the same quarter last year.
<unk> expenses as a percentage of net revenue for 2.6% down from 6.1% in the same quarter last year.
And R&D expenses accounted for 1.5% off not revenue down from 3.7% in the same quarter last year.
That's a result.
GAAP net loss attributable to ordinary shareholders fourth quarter was 143.7 billion.
Oh from hundreds.
Not quite six me like in the same quarter last year.
Non-GAAP net loss attributable to ordinary shareholder for the quarter accounted for 10.7% off net revenue down from 19.7% in the same quarter.
Last year.
I would now quickly run through a few key full year 2019 financial results.
For the details can be found in the earnings release.
Comparisons to a full year 2018.
Net revenue was 3.95 filling up 121.3% from 1.79 billion.
<unk> revenues from B to B segment increased [noise].
43.2% to 3.17 billion from 922.8 million.
Prouder revenues from B to C sacrament decreased by 9.9%.
To 763.3 million from 847.5 minute.
Along with the robust top line growth. We have also made improvements in the bras profit margins in both B to B B to C segments.
Compared to last year gross margin you won't be to see sacrament was 14.3% up from 9.5%.
And the 1.1% beaches vsec amount upfront.
<unk>, 0.9%.
Overall gross profit increased by 58.4% 265 million.
And the combined gross margin was 4.2%, which was lower as compared with 5.8% a year ago. That's a result, again dilution effect from the Fox expansion of hoping to be segment with which has the right people lower margin.
For full year 2019, total operating expenses were up 30.5% to 658.7 billion.
That's a percentage of net revenue total operating expenses was 16.7% down from 28.3% last year.
Although we have spent 30% of more than last year, we achieved 121.3% revenue gross.
We will continue to make infrastructure investments to support rapid revenue growth.
Expect to further improve operational efficiency and effectiveness.
And then GAAP net loss attributable to ordinary shareholders 40 year was 400.
<unk> point Threemillion.
And accounted for 11% of never net revenue.
Gone from 18.4% as compared with last year.
Our cash position.
December 31st 29 team, we had cash cash equivalents restricted cash and the shorten the investments of 697.7 million compared with one.
Bill in Hum and a six 5 million that's up December 31st 2018.
[noise] update on the share repurchase.
And does the share repurchase program announced in August 14, 2019, the company used an aggregate Oh for U.S. dollar 3.26 million and the repurchased 742.
And 931.
Yes.
As to the guidance.
For the first quarter 2020.
The company expects total net revenue to be between RMB 1.4 billion and I am be 1.48 billion.
Representing a year over year gross of approximately 113.5% to 125.7%.
Oh look it's based on the current market conditions.
Reflects the Companys current and preliminary estimate aftermarket and already conditions, that's was customer demand which are subject.
To change.
This concludes our prepared remarks, thank you.
Operator, we are now ready to begin the Q any session.
Definitely ladies and gentlemen, we will now begin the question onto session. If you wish to ask your question. Please press star one on your telephone keypad and wait feed name to be announced if you wish to cancel their request leased respond perhaps ski.
We have the first question from the line of Sherri in from JP Morgan. Please go ahead.
Hello, Hello, everyone, <unk> disease, and Sherry from JP Morgan I think you.
My question I have two questions here a life, that's all I want a industry trends and data it sets out our new initiatives in the hospital market. So the first question I wanted to ask about like how would you expect the recent calling a virus outbreak and the reason policy changes too.
The shape, the China drug retail market and what specific most of the city called <unk> for our large number of often life on my decline.
Do you see the transformation or upgrade trying to put that Ah and my second question a is that Oh, what we know that outlaw off on your emission people around the end does not yet building up the team to break into the hospital market, how could you shed more color about the latest program and our long term.
All these ah thank you very much.
Yeah. Thanks for your fair into the sorry for the question.
Well first of all.
The effect of this virus.
No I think.
A different ton mile demand over the last Ah, let's say over a decade also time that is really the who.
Calmer Lee.
And I believe that side.
I'll break all now has become an Bennett.
It's really a catalyst to reach say the healthcare industry and my anticipation is not a the healthcare it's going to go through the similar consummation light the Chinese retail that's council.
And we'll be seeing that customers will move to online and Oh I also came about.
Integrated.
Online offline platform will be the month.
And I would also.
Well the government will be pushing for both directions.
And that would have been so much evidence and lock them up also.
Obviously.
Good question.
What we do we.
The customers with quiet and probably.
Leverage.
Situation.
Anyway.
We have many.
That ongoing.
The main one.
The rock welfare program.
Enable the consumers enjoy a.
The discount and they purchase and membership.
Not only they can benefit belt, but also.
By the whole Simon will will benefit from that and possible hub.
Okay. That's good CRM program and the of course our model.
HM.
So I wish I had in June so, we'll be able to accumulate individual consumers.
And because about.
The lifecycle health.
No that's whereby we could provide.
The.
Patient education, the blood compliance management.
Oh on lease pool.
You know we've constantly engagement with the customer therefore, we'll be able to retain the pessimistic utterances.
And.
With respect to how we are doing in the.
The public hospital space.
This is a new assets or you might want to go ahead of what we've already seen some.
Leasing progress.
In the hospital without a few jobs, which they left with boxes going public hospitals and those boxes actually tend to be shoot for school.
The good though the trucks to patients and that's really the intelligence.
We see that especially the new drops hospital access would become a release and all model.
To be able to solve a lot of themselves.
We'll also.
Long.
These projects.
Blends often simon.
I mean, obviously spike over the Vicki.
The recent Oh, that's what I'm most of the public hospitals.
Offices, who do want to what they've actually they pretty much sucked out.
Despite of the situation.
We've already seen revenue booked anybody that is very American cars.
Sorry, I hope to answer your question.
Yeah, that's very helpful. Thank you very much.
I think just not sure. That's a question about offline pharmacy I would like to settle at some point here.
So for China offline pharmacy, as just mentioned, they're pretty fragmented among the 480000 pharmacies.
About 50% of them out individual pharmacy, which means.
Basically up I'm Oh.
So.
Okay.
We all know that they must be or transformation.
These are indeed a industry.
So.
That's why I'm on one we have.
Set up a program call.
Let's see so good luck.
This program.
It's a in neighbouring program to use 111 technology.
For these.
Offline pharmacy.
Set up they are cloud pharmacy services.
And our cloud clinics services and cloud imaging services.
And where we launched this program that is.
Late last year and he has a very very popular a fueling this season, especially do indeed I make.
Because as we all know.
Consumer ought to patients and not able to go to pharmacy physically.
So basically we believe.
The current on virus.
Expediting the transformation often these online pharmacy.
Transformation I'm, referring to.
Traditional pharmacy to a future promise.
I sure hope.
Russia.
Yeah very clear thank you.
Welcome.
Thank you we have the next question from the line.
Wrapping things from Sea ICICI. Please go ahead.
Hi, This is chip on from sad to see.
Thank you so much for this year and leave it up questions for management.
The first one is as we noted that some traditional pharmaceuticals.
Copies are also considering to evolve their business he could be so how did your company to compete made those traditional distribution Jain.
They started to vote on it.
And the second question.
What's the carpet men operation goal for 2023, or four which part or exactly at the company going to come back or it's worth it.
And my lots of questions about tooling. So could you please share with some more information cooperation with commercial insured.
Yes.
The second question again please.
[laughter] some couple a hearing you.
Okay. My second question of.
I just wonder what's the company's men operation go for 2024.
And which part at the company stone to best.
Core resources to.
I've got here yeah.
Sure Yeah. So.
No doubt.
Okay.
We will be surprised.
You know because this is more players tomorrow.
Think about.
Moving into online and as far as all all competitive that's in that space is really I would say in acute.
It is well first of all.
Technologies and all cloud based.
Knowledge it platform I did leave out which adds full doesn't traditional.
Distributors and then the second advantage is really I think the tenant base system.
We.
The nature of the online.
Yes, and I think though.
Typical to this more ball to.
Really.
Move online in house.
I'm all challenges.
Thanks.
And on a pull some.
Most of it is online most of the to the small players in China. It's typically a state owned enterprises and the when it comes to governance, we don't have a won't have to deal we've got the red tape.
Get things done I'm done almost no believable much much smoke systems, but when it comes to the.
Decision, making and so while.
We will be a much more stressful will be a much more willing to take risks and basically.
And I don't believe the state owned.
This more players have been.
The flexibility while we do.
And.
No loss.
We are always viewed either you can see our eat.
But when not you know we are integrated online plus offline thoughtful and what we believe we absolutely do a blog commercialization.
Omni channel side, when I refer to omni channel.
While.
Additionally, all in a pharmaceutical company go to market.
They had a dog food.
Caustic and a high a whole bunch of on medical reps and become a work we've done they see a three hospitals.
I would definitely hospitals in tier one tier two cities and.
Some.
Really watch pharmacy chains.
You know and the rest is really until she is to use that as their old model and a if you look outside.
We could do too.
The upstream pharmaceutical company and then obviously no.
No.
Well, we could come from them to value is really a slow.
Customer and a lot the brands.
No I.
That is a direct to dealers to direct them to see.
And as you can tell the body.
Mineable copies of the come to Oh, the pharmacies clinics and probably the office.
As we spoke over the last or something also.
And we'll be making investments.
Into.
The hospitals.
Public hospitals and see if the sequence.
Who.
I want to come from some of them into value.
He to see the pharmacy, the clinics private hospitals and also the Gulf market, which is good.
Hi, This is not something like this you know the super So I can do and but how value proposition there there are different.
Dismissed distributor.
And and you know obviously.
You also talked about.
Got it can be Tempe.
Investments and belong on what do you all go.
In that area, obviously, but small we need to.
Continues to scale houses.
And we need four week <unk> improve our operational efficiency and the walls.
Yes.
Our pipeline is getting down on all the line on that extended trip side or the GM neighborhood fulfillment.
Sales and marketing et cetera, I don't know would also going to improve margin.
<unk> bottom line too.
I had a good.
Perfect and investment is going to be pole in total.
Okay, how become.
Our omni channel capability, and we have a special focus at three to six cities, where we believe the needs of our so small cubes and that is going to be paradigm complementary.
For the capabilities of the pharmaceutical companies.
Good.
Okay Fair Claire.
Thank you we have the next question from the line of bring your Chen from Citi. Please go ahead.
Hey, Hey, Thanks for taking my question and congratulations on your <unk> pharmacy coverage expansion. So my question.
And during the virus outbreak could you please share more.
But collaboration with clients or suppliers to ensure you're caught a conservative.
Can you share anything.
Change.
Page and happy.
Hey for chronic disease patients I'm more in terms of who refuse.
Your kids online.
[noise] like maybe.
I can had to go and maybe Barry can Ah Ah.
I know for like gold perspectives.
Yes, Indeed, we have seen.
The much more attitudes pharma.
Various levels and local governments and ER basket would have been approached.
By another government and as we speak.
We are discussing in you know embarrassment conversations on a whole serious about you know delivering I'll services, if it's going to see too and you know we understand.
The political lives of some of the.
This is a will be probably since nine how.
No the reforms in this area I tend to carry forward.
And I hope this is going to be.
No trains and as far as Ah the.
As soon as it is concerned it ultimately will have been.
Really excited about.
How many more customers are reaching out to do that because enough fundamentally the hospitals are pretty much shutdown for chronic patients no cost anything.
There are consuming tap or indeed, you know really crisis Titans enormously the capabilities will have built over the years.
Really says the pets is providing that service onto those patients not hate to citizen that effect.
For the virus.
Numbers actually shaken pretty well you know that's not the way they anticipated.
That's a factor that customers actually realize the value of the online excellent player or have you really want to help their lives and I'll comment just on that I'm very maybe.
Thanks.
Yeah.
During the academic clap head of the funding data and information I'm glad to share with deal.
First the number of the our active you whether its Honda nearly all the rest of the people pay side both increases significantly.
That's cool all work low volatility and capability.
Secure the people supply ultimately pay off our crop and proactive material.
And if it if they stay where they match the I do not all of our yield there.
Without.
Oh, Hi, lots number I'll be your there and all other dialogue in the academic.
[laughter].
Our ATP log cost coffee template talk to download day, the three medical service ATP I postal.
A number of our Atps, although increased by five times, it's worth to be followed the epidemic outbreaks.
Okay, we made it difficult multi appeal I'll run that to hernia call. Thank you.
Okay very helpful. Thank you so much.
Yes.
Thank you we have the next question from the line.
Next to shoot from.
I'm sure capitals to use go ahead.
Hey, guys. Thanks for taking my questions I'm a few questions for me first of all a can you provide liquidity on the main drivers for the substantial decrease in operating cost and expenses of two probably the Nike and how do you expect these kids.
And then as a follow up to that question what are your projections for the company to break or reach breakeven. If you have any plans to raise more quite a few any future I.
Finally, our regarding the role of virus outbreak.
Did you go to handle the challenges with a with the logistics of getting all the shouldn't make sure uses for that part.
Thank you.
Okay. Thank you are probably I would take the first question regarding the operating costs and a sub question.
Just.
Mark and probably look we're talking about breakeven.
And for operating costs.
Definitely very good news we see.
Compared to <unk>.
18, we have a significant reduction.
That's basically.
So Florida increase.
We achieved scaling.
And this was Oh consignors upgrade of our supply chain technology.
However, we are continuing calling batsmen or supply chain.
Crooning enhancement of our national and logistics network.
Automation, our fulfillment center that's first.
Set up new fulfillment center.
So the next level.
Okay about our logistic.
During the current on virus.
As we all know.
Huge challenge.
During the current Elvira.
Not only because of the current team.
It is from time to time.
But also a shortage of labor and transportation services recorded during the Chinese new year.
To overcome these challenges.
Leveraged our logistics network across the country.
We'll pick up in China.
For example, when I'll have portfolio month and home with current.
Our soon though along Dawkins, Inc. Fulfillment center will take over.
So.
Uh huh.
Hi on national wide.
Network.
<unk>.
Uh huh.
And on other hand as we.
We have a very strong direct sourcing partnership.
Domestic and international pharmaceutical company.
It's also a hell of a reserve enough eventually immediately.
Doing the.
I mean breakout and also.
Well I meant had a very stable supply.
The possible Mark.
No.
[laughter] Yeah, I think we are we care more about a growth opportunity right now.
As we shared with you in 2019.
We spend like 30% more upper we grow revenue, 521%. So internally in terms of dollar amount that we could have maybe 100 hundred million I am be more losses last year, but generate additional 2.2 billion on topline revenue.
Especially during this outbreak or you know we saw a lot opportunity. So I think when 20, Tony will continue to be Oh investment mode.
Continued to Brent.
Rhapsody some soft.
Revenue rose.
And of course, we care about cash flow position, we already see positive sign beginning in a month on.
Oh the kestrel.
So we don't have upon especially timeline around on a break even.
But we think as we constantly improving.
Failing.
Scale and improving.
You know a margin we will assume Oh, you know we will see that we will we would break even.
In the future.
[noise] extra hope we answered thanks.
Yeah actually if I can ask one more in terms of the development of the industry the regulatory environment seems to be very effective.
Second we drive big the growth in terms of your outlook what are your what does your outlook in terms of the sales of a prescription drugs, especially on the development of chronic disease management.
And what are your what are your plans and progress on this flows.
Actually it during the [noise].
Dynamic outbreak.
I see.
From National to state government.
They have officially.
No.
<unk> policies, we encourage.
Chronic disease to be refill online.
So we are also.
The.
Company launch.
So far this.
The pot.
Uh huh.
So the.
Hi, our country.
So model.
People even.
Today.
A.
The game.
Yes.
Forget consolidation and often online and also.
Yeah.
Messing Oh line Oh one.
One dropped all so.
I think it's a lot of people know.
During these are non violent.
People realize that they have a new probably like a cleaner lifestyle.
Hi, a consolidation refill.
Oh and I think.
Trend will go up.
The.
That makes outbreak finish.
Oh that subscription.
Yes, if I may I know they can very much the great thing budget.
Yeah.
That's a great question by the way I want to add a couple of points and I think Oh my anticipation is not so our prescription drugs, it's going to have a bigger mix and other falling other reasons its really about a landscape into the future and if you look at the recent government reforms, including the Paul.
Yes, the full plus seven times along.
You can go to conclusions bundy's really for the generics.
Okay times over.
And in obviously, we can still play a role.
For the pharmaceutical companies, even if you actually got de listed.
And then obviously, we can help them we are other channels such as the pharmacies the clinics and the private hospital wasn't song and even if you know you won the bid usually you. Many of you won the bid you can only operate between eight provinces maximum and obviously for generics.
We can steal help them to sale to sell outside of the Ah ha provinces.
And the other conclusion can draw is really most of the pharmaceutical company, focusing more and more innovation drugs.
We've been talking about omni channel.
You know obviously.
Our omnichannel, it's going to be one of the most important platforms that the pharmaceutical companies can leverage to really commercialize their drugs not only in the tier one tier two cities, especially hospitals, but also to all the other channels that we can provide coverage for so that fall.
No the generics and the the innovative drugs they all.
That both really prescription drugs and therefore, all anticipation that stuff that was gonna have.
Higher and higher mix of ER prescriptions open seats. Thank you.
Thank you.
Thank you we have the next question from the line of Simon Chang from told me Toby capsules. Please go ahead.
Hi, it's tough to questions. So we noticed on the presentation.
A year on year decline of 10% in your feet to see.
Business just wondering if you could comment on the dynamics of <unk> business versus B to B going forward and then also talk little about your vision costs per paying user for the segment and also the retention rates that you're seeing.
The second question is kind of given the interest.
Around the health care sector in China have you booked a potential M&A opportunities which might help.
Filled out your platform more thank you.
For seaside.
Jingling just mentioned.
We are only company with the capacity to provide a national lives.
China coverage.
Including online offline.
The next cost.
You know we reached a patient directories.
See platform all we reach patients.
Between partner.
Don't contribute to our omni channel.
On the.
Well, one omni channel model pharmaceutical company can that's all.
Health care providers.
Oh network and a seven huh.
[noise] significantly reducing the time and cost.
Medications will reach patients.
We believe it will definitely.
The transformation of healthcare industry in China.
[noise] from the last question about spreads.
Doing well go ahead.
Yeah.
Yeah, I got a I was going to jump him for the last question about 5 billion the platform a little further give them. The rest of the world is suffering from the epidemic and I mean, obviously well have been approached by.
By a number but ah different opportunities.
Included in Middle East of the runoff.
But you know, we'll keep an eye and well keep our minds open. So now you know obviously.
No we have no our focus really within the China markets.
And Oh, we have a lot of park is to execute and I would believe not a you know a 90 is going to the I'll focus, but you know if the opportunity presents itself and if it doesn't make sense.
Keep an open nine open mind about it.
To further expand call platform beyond the geography, we're covering right now.
Great. Thank you.
[noise] [noise]. Thank you I'd say no further questions I would like to hand, the conference back to Miss mounted camera for any closing remarks.
[noise]. Thank you operator.
In closing on behalf of the entire 111 management team.
I'd like to thank you for your interest and participation in today's call.
You require any further information or had any interest in mid teen I think China. Please let us know.
Thank you for joining us today. This concludes the cool.
Thank you bye bye.
[noise]. Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating you may all disconnect now thank you [noise].
[music].