Q2 2026 Ping An Healthcare and Technology Co Ltd Earnings Call
Speaker #1: Transfer on the capital, market, good morning. Thank you for joining Ping An Healthcare and Technology Company Limited 2026, entering results announcement. I am Wang Chen, host for today's event and general manager of the board office.
Speaker #1: 2026 marks Ping An service year as the core flagship of Ping An Group's healthcare and elderly care ecosystem. Our company executes the group's integrated finance and healthcare and elderly care strategy, with focus on delivering high-quality services in the first half of the year.
Speaker #1: We further deepen insurance-plus-healthcare expanded corporate health management offerings to enhance our proprietary full-access services system, powered by AI-enabled healthcare services with statutory advanced business operations and continuous improvement in operational quality.
Speaker #1: And now, we will walk you through our business overview, operation progress, and financial performance in the first half of this year. First, please allow me to introduce our management team, present: Mr. Hermin Ke, Executive Director and Chief Executive Officer.
Speaker #1: Chief Financial Officer and Board Secretary, Ms. Xu Qing. This meeting consists of two parts. In part one, Mr. He and Ms. Xu will present our business overview, operation progress, and performance for this reporting period.
Speaker #1: In part two, Mr. He and Ms. Xu will take your questions. On-site investors and analysts may raise your hands for questions. Online participants and analysts, please press start one on your keypad to raise questions.
Speaker #1: Next, let's have Ms. He for business overview and operation updates for this reporting period. You now have the floor. Dear shareholders, investors, analysts, good morning.
Speaker #1: After half a year, we are meeting again. To present the past half-year progress and performance. First of all, strategic business overview of our company.
Speaker #1: And the first one is actually a callback for the strategies. And we really want to offer the most cost-performance products and services. In our words, we want to offer worry-free time-saving and money-saving still on two sides.
Speaker #1: One is the commercial insurance within the Ping An Group company. The second is the highly increasing growing healthcare and insurance business. And this will become two pillars of our business, and we will focus more on this in terms of services.
Speaker #1: We offer full-access services online in hospital, at home, and corporate. And this is the core services system. And next, I will share with you about some cases.
Speaker #1: What is exactly looking like of our services? And for this slide, I'd like to share with you about the synergies with the Ping An Group.
Speaker #1: And it is a dual way empowerment. On the left side, that shows the group-enablement for the company. Which means that the group offers vast customer base with high ability for payment and even help us to solve the payment issue.
Speaker #1: And as a veteran in digital healthcare, we have long been suffering about the business models. Because the healthcare is a long-divided and the users' insurance and hospitals these three parties are divided.
Speaker #1: So it is difficult to find a business model with a scalable profitability. And then Ping An Group offered us a huge resources to support the business models.
Speaker #1: That's a huge enablement by the company. On the right side, and that shows the support for Ping An Group. By us in a word, we call it the Qubic Meter.
Speaker #1: Push, preserve, and push means to push the front frontier cell's 's ability. Pull means for the product teams including the policies and also products.
Speaker #1: And preserve means our solidarity together with the customers, increase our physiology with the customers. And these are all reflected in the highlights of the H1 performance.
Speaker #1: And the first one is actually the steady progress of core business. And the core business had 14% year-on-year increase. And the core customers increased by 70%.
Speaker #1: And we are also upgrading the service capabilities. And currently, we have the number of pharmacies with access to Ping An Health pay. The number of that is around 150,000.
Speaker #1: And AI is also empowering science and technology. AI grows profit contribution ratio is now 4.6% higher than previous year. Next, I'd like to share with you how we are expanding our commercial insurance and healthcare.
Speaker #1: The first slide shows how we integrating with the commercial insurance. Just now, I mentioned about the three P as the key word. And push, pull, and preserve.
Speaker #1: And with the insurance and health and senior care member ship, we are further empowering it embodied into aspects. The first one is the push in multiple scenarios.
Speaker #1: For those users the conversion rate increased by 20% in multiple scenarios. The medical and healthcare also has the highest conversion ratio in M3 policies.
Speaker #1: Another one is embodied in pull. Products and users who used our family scenario-based products had an overnight times increase. On the next slide, I'd like to share with you about the preserve aspect.
Speaker #1: The relationship with the customers and the horizontal slide. Axis shows about the different product metrics and the vertical axis shows our different customers. For example, the Anyoho critical insurance plan, etc.
Speaker #1: And that's actually a really diversified membership scenario which further enhanced operation with the customer. And the next slide shows about our corporate health management and also the most rapid growth factor.
Speaker #1: From the left side to the right side. And the first one is that we are working together with multiple channels. Under the group and to get the capability of the customers with payability.
Speaker #1: And the second part is the service system. And network building and offline service products. And those are consistently growing. And the third part is after we build up the network, we enhanced the conversion of our operations and finally those efforts are embodied into highlights.
Speaker #1: The GMV reached 1.79 billion. It already reached a certain scale with profitability. With the business growing and the spillover effect will be further presented.
Speaker #1: And the second, we have already attracted over 7,700 corporate clients. And next part, I really want to share with you about the specific services and products internally we call it a full access service system.
Speaker #1: Just now, as I mentioned the in-hospital at-home corporate online. And actually, this is actually an expanded O2O network. Two interpretations. One is online to offline.
Speaker #1: The other is offline to online. So users can enjoy the services online and the services can also be delivered offline with the payment. So that we can finish a service close loop.
Speaker #1: And from the other hand, in the offline, we continue to optimizing to offering a constantly upgrading services to the users. These are the four service systems.
Speaker #1: Maybe it sounds quite empathy for the full access services. I really want to highlight that with several cases. And the first case is actually the Ping An solutions.
Speaker #1: And it is actually a growing corporate client satisfaction and the retention also improved. And on one hand, when users are having consumption offline in hospitals, they suffer troublesome procedures of getting reimbursement from the medical care, etc.
Speaker #1: Therefore, around the users three to five kilometers radius when users open the app and by presenting the QR code, the users can directly pay and also enjoy the services and also in-hospital users can directly realize one button reimbursement creating a good and excellent experiences for that.
Speaker #1: This is what we call the Ping An circle. The in-hospital and offline service. And the second one is actually a co-mobility management launched at the early of this year.
Speaker #1: And currently, it becomes the most well-known services. es. And we often talk about the three high indicators of the blood parameters and China had a huge population of that.
Speaker #1: So it is really widespread. In China, targeting this population we offered the co-mobility management services for them. We include chronic disease doctors, nutritionists, and case managers, etc.
Speaker #1: Because some medication are really complicated. So we offer them the three values plus one. And by this astringent and continuous management, here we also show some cases to reach a better healthcare health level.
Speaker #1: And the third one is actually the on-site health event. And which means we pay visit to enterprises to offer some services. This case is really interesting.
Speaker #1: Which means the connection between the commercial insurance and also enterprise services. And actually, Li Lai is a supplier and also partner of our commercial insurance products.
Speaker #1: And together with Li Lai sign-based programs we want to large scale private enterprise and SOEs to offer professional and personalized weight management and diet and fitness recommendations.
Speaker #1: Which one good feedback which vividly demonstrated that there are a lot of synergies potential. And at very last, and you may be interested in our internet healthcare and you are interested in AI.
Speaker #1: A good news to you all. And previously, the online doctors are really popular. And this year, we further upgraded the doctors not only could offer diagnosis services but also the AI with physician services.
Speaker #1: To help users to do some physical training so that means the AI personal trainer could further boost proactive health management. Sometimes we even played a joke by ourselves.
Speaker #1: Most companies are inputting more in the tokens and also LLMs. And we are helping to get the users to consume more calories. To have more personal health.
Speaker #1: And the result, as I previously mentioned, AI rose profit contribution already reached 4.6% higher than last year in the future. I believe it will be further increased.
Speaker #1: Next, I'd like to give the mic to my colleague, Ms. Shuxin, to show some financial performance.
Speaker #2: Thank you, Mr. Ho. And thank you, analysts. And as everyone, for being here. So we'd like to take a review of our financial performances in the first half of 2026.
Speaker #2: So overall, I can summarize our performances in one sentence, just as mentioned by Mr. Ho. So all of these transformations and the business moves are reflected in our financial performances.
Speaker #2: And this has to do with our markets and this has given our shareholders as well as customers and employees a static commitment. So let's take an overview of our financial performance.
Speaker #2: Most importantly, we will share this four things. Firstly, if you look at our business structure, the core business and that contribution of it is improving gradually.
Speaker #2: And this is in line with our strategy. And the second reflection is with our improved revenue mix. As mentioned earlier, we have managed the company for better.
Speaker #2: And that means revenue mixed is improved. And the corporate health management revenue has percentage of total revenue is 28.7%. It is a 11.5 percentage year on year increase.
Speaker #2: And another highlight of the first half of this year is a steady growth in growth profit. And that growth profit is 960 million RMB.
Speaker #2: Which is a 13.9% year on year increase. And lastly, it is our improved business quality. So not only suggested net profits or other metrics, we've seen that all the indicators showing we are improving in terms of our business.
Speaker #2: Now, let's take a closer look. Firstly, let's look at the revenues and also revenue slash gross profit. So in terms of revenue, we've seen some improvements.
Speaker #2: As you can see on the left-hand side, the green graph, that is the commercial insurance enablement. This is more like the same level of last year.
Speaker #2: But thanks to the contribution of this insurers, we've seen some improvement. And if you look at this light orange part, this is our corporate supervision business, corporate health management business.
Speaker #2: And as you can see, the number in last year was 17.3%. But in the first half of this year, it has risen to 28.7%.
Speaker #2: And in contrast, our other businesses have risen for the management to take initiative to reduce. And this has two reasons why is insufficient traffic.
Speaker #2: And on the other hand, the contribution of the gross net profit contribution is less. So we did this active transformation. So as you can see, the business mix has been focusing on the core business.
Speaker #2: The second thing I'd like to share is gross profit. It has improving gradually. And the steadily. And that is 13.9% year on year increase.
Speaker #2: And behind that, there are two drivers. One is the steady growing gross margin. By better business mix. For example, we're focusing on the high margin business.
Speaker #2: And this has contributed to the overall gross profit. And the second reason is in other business segments, there are some low margin and low gross profits from the perspective of medical healthcare and elderly care.
Speaker #2: We did some active adjustments. So coupled by these two factors, you see the gross profit has been improving for the first half of this year.
Speaker #2: Now, let's look at the overall expense ratio. So for a year on year perspective, from the our expense ratio has increased from 30.1% in the first half of last year to 31.9%.
Speaker #2: Even though the increase is slight, but considering the first half of this year, our business strategy is more focused and gross profits changed. This is totally acceptable.
Speaker #2: So we'll break it down to three aspects. One is failing and marketing expense ratio. It is more like the same level of the same period last year.
Speaker #2: And this is largely because of our commercial insurance enablement. In contrast, the management fee rate has slightly increased from last year's 8.4% to this year's 10.5%.
Speaker #2: And this is because our company's strategic readjustments. And that is why we see the increase of administrative expense ratio. Particularly with our vendors. And also management readjustments.
Speaker #2: And thirdly, that is the R&D expense ratio. As you can see, we have managed it really carefully. And that number in the first half of 2025 is was 6.5%.
Speaker #2: And this year, the number is 5.8%. And this has to do with our better budget control of IT. Because we used AI and it has lowered our R&D costs.
Speaker #2: And that boost has been tremendous. So overall, it is a slight increase. But with better company strategy, all this is manageable and acceptable. Now, let's look at the profitability and cash flow performances.
Speaker #2: So if you look at the income statement, in the first half of this year, we have some we have achieved some remarkable results. So profit from the operation has been up by 90.3%.
Speaker #2: And if you look at the past two and a half years, that number our operating net profit in 2024 was almost negative 240 million yuan.
Speaker #2: And in 2025, our operating net profit is 100 million yuan. And then in the first half of this year, we have reached the operating net profit of 160 million RMB.
Speaker #2: So from this point of view, it is very important to highlight. And our adjusted net profit has reached a total of 270 million yuan, which reflects our investment income.
Speaker #2: It's quite steady. So from this two perspective, things are in line with our strategy and the transformation. Another thing is with our operating cash flow.
Speaker #2: It is considered at a relatively health level, healthy level. Of course, compared with last year, it is slightly decreased. But this is in sync with our strategic readjustments.
Speaker #2: And looking forward to the whole year, we will do better in terms of managing operating cash flow. Lastly, let's look at the finance and overall development of the company.
Speaker #2: Now, this we have been fully committed to ESG. And for this, I would like to share one important metric and one important indicator. As you can see on the upper left corner of this slide, that is our ESG ratings.
Speaker #2: Particularly MSCI, we have achieved AA ratings for two consecutive years, which is a good result in our industry. And we also include our achievements in healthcare elderly care.
Speaker #2: And this is in line with our ESG concepts. For example, we mentioned our concepts in the business development. And we put this concept in our relationship of our important enterprises clients.
Speaker #2: So from our financial performance, that is pretty much everything. Thank you. Thank you, Mr. Hu. And Ms. Xu. We're wonderful sharing. Now, we'll move to the second part of today's announcement, that is the Q&A session.
Speaker #2: So investors and analysts so if you do have a question, please raise your hands. And also for our those calling in, please press start one to ask questions.
Speaker #2: Thank you. Now, the first question will be with our audience to present here. Now, Emily, can you from CICC? Thank you for this questions.
Speaker #2: I'm a health analyst. So two questions. Let me start with the first one. At the moment, we've seen that Ping An is focusing on the integrated finance plus healthcare and elderly care.
Speaker #2: And of course, good daughter is the core focus of our group. So in terms of this strategy, in the first half of 2026, what are the specific strategic implementations?
Speaker #2: What are the concrete practice and specific measures? And also looking ahead, what can we see? Thank you. Ms. Lee, can you for your question?
Speaker #2: So our strategy has been implemented steadily. Let me give you some examples to be more specific. For example, our home care and also our and in this June this year, life insurance officially launched the two year 2.0, which has been important way for them to acquire customers.
Speaker #2: So whether it is poor or push, it is one of the things we can attract. It's a powerful tool for us to attract new users.
Speaker #2: And compared with other control groups, the first year premium is 9.7% higher. So it reflects a large value of push and pool. And our front line, the entire life insurance team is based on the pushing home based elderly care as important way to acquire customers.
Speaker #2: And also as they push level, so once we acquire this client, we need to serve them. We need to make sure it is not only the home care we give them additional services, for example, this healthcare management and this has included a lot of active and health measures, for example, personal trainers as well as in-hospital services.
Speaker #2: So our way has been comprehensive and providing more services. And if you look at the numbers just as mentioned earlier, from Ms. Xu, commercial insurance enablement and also the health corporate healthcare management contribution are both increasing.
Speaker #2: So that means we are building more core businesses. And another thing is the corporate health management. As you can see, the GMV of this business in the first half of this year is 1.7 billion RMB.
Speaker #2: So this reflects our scale. And also this reflects the sensible profitability. And going ahead, we're going to make this business as big as possible.
Speaker #2: At the moment, it is relatively small because the larger our scale, the stronger our purchasing power and negotiating powers will be. At the moment, our payment system has covered 140,000 pharmacies in China and there's around 6 million pharmacies in China.
Speaker #2: So the proportion may not seem high, but from the GMV's perspective, we have covered 90% of these pharmacies in China. So when our payment ability is stronger, our offline scenarios will cover more range.
Speaker #2: For example, hospitals clinic and traditional TCM clinics. And this will boost our service level and also our profit margin. So thank you. We will continue to do this as well.
Speaker #2: So second question, let me ask this really quick. We mentioned profitability earlier. And this has achieved the record high at this group level. And also the adjusted net profit margin.
Speaker #2: And for this, can you please elaborate on this one? What are the reasons behind this result? Thank you for your question. This is a question of great interest and also this is a things of great highlight in the first half of this year.
Speaker #2: As I touched upon earlier, this has seen some gradual increase. And this has to do with two reasons. One is commercial insurance synergy and the other is corporate health management.
Speaker #2: And for the first one, this has to do with Ping An group's insure and our in-depth synergy. On the other hand, this has to do with a newly introduced services.
Speaker #2: For example, new genetic testing and also other therapies such as CAR-T. And this provide better profits for our insurance companies clients. And also our core business is also shifted to medical health and elderly care.
Speaker #2: And this will drive the increase of our profit margin. And on the other hand, our business mix has been improved so for the low profit margin things, for example, physical checkup.
Speaker #2: This will drive things down. But the medical insurance will have introduced a lot of new platforms and this actually has contributed to the profitability.
Speaker #2: So all in all, if you take all the things into consideration, the overall profitability and margin in the first half of this year has been increasing gradually.
Speaker #2: And also our core business will continue to develop in the second half of this year, which is steady. And also at the relatively high level.
Speaker #1: Thank you, Ms. Xu and Mr. He for your answers. And next, we'd like to see if there's any questions from online next. Let's have Ms. Yen from Morgan Stanley to raise your questions.
Speaker #1: So are you offline? Can you hear me? Yes? I can hear you. Sorry, I was just muted. Well, I have two questions. The first question is regarding industries.
Speaker #1: And if you look at it by quarter, the second quarter, revenue had an 8% decrease. So what are the reasons? And second, non-core revenue, 60% decrease in H1.
Speaker #1: So just now, Mr. He also shared with us about the strategies. So we'll so how long will this impact sustain? This is the first question.
Speaker #1: Second question is regarding AI. What are your features in AI plus real doctors strategy? In the future. So compared with other peer AI applications, what is your feature and advantage?
Speaker #1: And what are the other specific indicators of the contributions made by AI? Thank you. Well, I will answer the first question. First, thank you for your questions.
Speaker #1: And the following up about our performance that's a really detailed watch in Q1 and Q2. Q1 net increase was 9% and Q2 relatively speaking, and it registered a minus 8%.
Speaker #1: The largest reason as the analyst just pointed out was mainly driven by that other revenue decrease. And focusing on our strategic focus, the management and the company choice.
Speaker #1: That's the direction. And actually, for other parts, and compare with our own relative advantage. Some weak business of us, for example, on the sales in online platforms e-commerce platforms and also the low profitability physical examination.
Speaker #1: Products and we are actively shrinking that actively by ourselves. Just now, the analyst asked the questions that the impact of this part for the second half and even the whole year.
Speaker #1: And actually, the healthcare and insurance sector, we focus more on the users services. Client services. So when we reach agreement with a client, and to the final fulfillment, and the delivery period are not even sum or long sum or short.
Speaker #1: And some may last for the whole year. And that means creating impact for the whole year. And some will even last to the early of 2027.
Speaker #1: But I hope that our analysts can take a comprehensive perspective of the company because for the insurance and healthcare, strategy and also other strategic business, so that the GMV, the revenue and profitability indicators will be more stable.
Speaker #1: Thank you. Well, let me answer the second question regarding AI. And compare with other big enterprise our differences lie in several aspects. First, we are not a company engaging building the LLM or not simply doing the agent or application.
Speaker #1: And because the latter needs to find more clients, on top of the Ping An group, we already have large number of clients we just further expand the application in those clients.
Speaker #1: AI is feature is presented in several aspects. First, we have the long-term data of the data, especially for the clients who have long been using our app for physical examination.
Speaker #1: So when they come into this AI plus real doctors system, that doesn't mean that we have no knowledge about the user because we already have the historical records.
Speaker #1: Just like when you go to a hospital, if you want to make an appointment, with a veteran doctor, you also need to answer questions about the hospital record.
Speaker #1: So in our app, we have the electronic record to help the real doctors to make decisions. So this is the first advantage of data.
Speaker #1: Second, the unique model of AI plus real doctors. And on our platform, we gathered really qualified doctors with huge experience and more values lie on the emotion value, the comfort and also follow-up management after the treatment.
Speaker #1: So I think this is also where we can offer better values and services for clients. Third advantage that we not only have services online, many large language models are also having the online services, but it's difficult for them to link it with the offline.
Speaker #1: Offline, we also have our services, which is actually a convenient in hospital. So this is actually a trend. We are also building a unique professional team which is actually caught an offline hospital companionship expert, which is also being broadcasted by the National Central Television.
Speaker #1: So we are building a closed loop connecting both online and offline. And just now, as I presented in my slides, we have diversified applications and based on AI, we also offered AI trainer shift from passive healthcare to active health, which is quite a popular word.
Speaker #1: Health and exercise integration. So that we can bring better health benefits to users. Talking about this is actually about the difference in AI. Second, how do we evaluate AI contribution?
Speaker #1: We know that the most profitable AI company is now the model companies like Anthropic over AI. And they are spending all money in token and even the average token by the staff is regarded as a indicator.
Speaker #1: However, some people just blindly use token even though you spend a lot of token. It doesn't create too much commercial value. So we're not simply just trying to use more tokens.
Speaker #1: What we want more is to help users to consume more calories to preserve a better figure. For us, internal core values as shown on those slides, we focus more on the AI contribution in gross profit instead of the contribution in revenue because for some commercial behaviors, the money you spend on token purchasing is way less than the value created by using this token.
Speaker #1: So we focus more on the gross profit contribution by AI instead of simply looking at the AI consumption amount. So I think it is more healthy.
Speaker #1: Thank you. And also everlasting. And next question. Let's come back to the offline. Mr. Xiao, thank you for this opportunity. And I'm from Zhongxing Pharmacy.
Speaker #1: I'd like to ask a question about performance in H1. You already reached a good revenue, 1.7 billion. And it is growing steadily. What is the driver behind that?
Speaker #1: And what is the gross profit rate? And what about the sales expenditure schedule? Well, thank you for your question. In terms of the corporate health management in the previous five report, actually you can see that from last year to this year.
Speaker #1: Notably, we had a gross I think there are two drivers behind that. First, corporate health management. This factor is promising. Therefore, the largest driver is that we get to the point and also catch this window.
Speaker #1: And second, from the end of last year to this year, the management team put the focus of the business in corporate health management. Therefore, the gross profit margin are from these two drivers.
Speaker #1: First, as I say that we catch we caught a good window in the market. Second, our strategic input. In terms of the gross profit margin rate, corporate health management, we focus more on the four access services strategies.
Speaker #1: And once we focus on the healthcare health and the elderly care, an integrated service system. We will relatively reduce the low margin products sales and focus more on services.
Speaker #1: And that will give us greater contribution. In terms of the sales expenditure, arrangement, actually for every business development cycle, salesperson needs to have more have related input.
Speaker #1: As I just shared with you about the overall ratio trend and breakdown, actually for corporate health management sales expenditure is relatively maintaining at a healthy range as I summarized in my presentation.
Speaker #1: The gross profit gross and the sales expenditure is controlled within a reasonable range. From a longer term, corporate health management will reach even over 50% contribution.
Speaker #1: That's a long-term target. And considering about that long-term target, and the anticipated gross profit contribution is also expected to be stable. Thank you. And next question.
Speaker #1: Let's turn to the online and generally from Citi Bank. Thank you. Well, on behalf of our chief analyst to raise two questions. And the first question is that through what services to get the group level commercial insurance and clients?
Speaker #1: And what are the constant upgrading strategies? Are there any quantitative indicators to evaluate the products sales situation? Let me get directly to that question.
Speaker #1: Actually, internally, we have a strict evaluation. In my slides, I already shared the first one is the M3 clients conversion rate. And 20% higher than the control group.
Speaker #1: And after conversion of the client, the new policy in first year ratio now we increased by over nine times. This is a solid statistic.
Speaker #1: And in terms of the word of mouth of the sales and statistics, and the insurance agents are really willing to bring the clients to offline and online elderly care services.
Speaker #1: And the conversion rate from the perspective M3 the conversion rate is the highest therefore that gives us the confidence. And the sales expenditure of this sector is also in healthy competition internally.
Speaker #1: So if that's healthy proved, it will get more shares of the sales expenditure. So those are the efforts we made. In terms of products, let me give you some examples.
Speaker #1: The high-end physical examination for example, recently we have healthcare physical examination projects programs and like gene testing. And those are really popular. And also the home care experience centers.
Speaker #1: Those are also the empowerment for the insurance agents.
Speaker #2: Thank you for your answer. My second question. Is what are the adjustments? Why this adjustments of the companies? Because we think that mistreating has rich experience at Ping An Group.
Speaker #2: So what is the reason for such adjustments? So thank you for your attention. There are a couple of directions for adjustments. One is we're going to reduce the streamlining of the board members.
Speaker #2: We have now reduced to two. Then this will make decision making more efficient. And in addition, in terms of direct independence, the proportion has actually increased compared to before.
Speaker #2: And we are maintaining three people. And the newly independent board member is from Hong Kong of China. And he's a renowned healthcare professional. And this will make our board more diverse.
Speaker #2: And we believe that the support and enablement will be there as usual. And our group's strategy will be clear. That is integrated finance plus elderly care and there's no change in that regard.
Speaker #2: Now, let's hand over to the next question to the audience. Are there any questions from the analysts? Thank you. For the opportunities. I'm a Mr. Tao Chung Ming, an analyst from the Internet Group at the Hua Tai Securities.
Speaker #2: My question is about pharmaceutical companies collaborations. We're seeing that in the first half of this year, we've seen some corporations for pharmaceutical companies, for example, the Lily China and also Roche.
Speaker #2: And this has drawn some market attention. And this patient like to ask what is the company's collaboration model with this pharmaceutical companies? And what kind of development paths will it likely to follow in the future?
Speaker #2: And also what is the partnership methods for integration and the synergy of medical insurance? Thank you. For your question. As we know, meditation plus insurance has attracted attentions, particularly in the recent two, two years.
Speaker #2: And we have been following this as well. And we have been innovating in terms of products, for example, different insurance policies. This is what we call the efficacy insurance and also recurrence insurance.
Speaker #2: These are the things we have been innovating about. But this is not like the high-end health insurance in before. But this is the direction we have been trying.
Speaker #2: And also for the pharmaceutical companies, this is something they are looking forward to because this will enrich their payment channels, not just in medical insurance.
Speaker #2: They also hope to make some breakthroughs in the commercial insurance. And also the second thing I like to say is particularly for the top pharmaceutical companies.
Speaker #2: For example, the Lily China and also other insurers. For example, in the United States, there is some common practice. For example, providing medical insurance reimbursements to employees.
Speaker #2: And also if you look at the trend, we've seen some market trends as well. For example, from this well-known brands and private enterprises and also state-owned prices.
Speaker #2: They want to try this new channels of payment. And also at the in-store level, mentioned earlier, we have covered 149,000 pharmacies in China. We're counting for more than 80% of the entire payment channel.
Speaker #2: And remember, we mentioned the Ping An cycle selected merchants. And for this scenarios, we have been promoting some drugs. For example, probiotics and some OTC drugs.
Speaker #2: Those are our innovations. Thank you, Mr. Ho, for your response. Now for the next questions. Any questions from our online audience? Now let's welcome Mr. Liu Xu from UBS.
Speaker #2: Thank you for the question, host. I'm Harry Liu, analyst and the pharmacy industry at UBS, two questions in total. One is the innovation model.
Speaker #2: That is the one-click payment. And we would like to see the progress of this promotion. And we also want to know what is the empowerment for the commercial insurance enablement.
Speaker #2: Thank you. For your interest. And I think it's part of our core strategies. We didn't mention it that much earlier, but now the value is showing itself.
Speaker #2: For our enterprises supervision service, it is usually down through one-click payment. And also at the Ping An Health and the Ping An Good Doctors, we need to display the code and then provide payment methods.
Speaker #2: But now the value is showing itself. And when it comes to the promotion of this one, I mentioned earlier, this will cover now more than 90% of Chinese pharmacies in terms of GMV.
Speaker #2: And the remaining ones are relatively long-tail single pharmacies. For example, for the top 10 pharmacies in China, we have worked with them, partnered with them.
Speaker #2: So we do have this ERP level partnerships. But going ahead, we're going to gradually expand into more pharmacies for example, some clinics as well as some wellness sports healthcare centers.
Speaker #2: And by doing this, we're going to build a more comprehensive payment system. And another thing with our commercial insurance is the connection with public hospitals.
Speaker #2: This is what we call the HIS connection. And that means when the users are at the hospital, they are medical records as well as their medical policies will be directly connected so that is how we achieved for the reimbursements.
Speaker #2: At the international level, we're seeing some corporations before, but at the domestic levels, the procedures will be slightly longer, but we believe that once we cover the top hospitals, more experience will be provided.
Speaker #2: And this also represents some of our strategic work going ahead. So Harry, you mentioned you had two questions, right? So the second question is about the finance.
Speaker #2: Now we're seeing the cash flow and also the cash reserve is relatively sufficient as a company. So we would like to know more about these future capital planning of the company.
Speaker #2: Do we consider dividends as well as mergers and acquisitions? Thank you, Harry, for this important question. Particularly for shareholders and the capital markets. Our cash reserve is for this period is the same as the previous period.
Speaker #2: And that is a close to 9.6 billion RMB and it mainly consists of low risk or risk-free assets. In terms of our current cash flow, we will support two things in the future.
Speaker #2: One is our business development. As mentioned earlier, we are focusing on the collaboration between commercial insurance and health insurance. And at our company level, whether it is introduction of this vendors or our service network, we are building this service network.
Speaker #2: For example, the four access service ecosystem. And also our cash flow will be used for the upgrade of our services. And networks. So for the business development, this require our continuous investment.
Speaker #2: From a different perspective, we mentioned AI and real physicians. And this has represented our strategic direction. So for this aspect, this will represent our very important investments in the future.
Speaker #2: Because healthcare and the senior care in China is a popular industry in China. And if we do see a suitable target we are open we will be open-minded and also for the dividends, just as briefed earlier, compared with 2024, we have achieved profits.
Speaker #2: And that profits is a significant increase. But considering we are an industry that is vital, home care and elderly care, and this is concerning people's livelihood and it requires continuous investments.
Speaker #2: So in recent time, we were prioritized more cash flow into our business development. So in the short term, we don't have any plans for dividends.
Speaker #2: Thank you, analyst. We have three more minutes. Any more questions from the floor here? Thank you, management, for this opportunity. I'm Shen Qingxi, a pharmaceutical analyst at China Securities.
Speaker #2: So two questions. Firstly, we look at this offsite service usage rate in the first half of year has been improving. So I want to know what are the main drivers behind this.
Speaker #2: And also what is the target for this? The second question is about the Ping An cycle. And that is mainly for the Ping An's employees.
Speaker #2: And this has to do with the health centers and also other select merchants. And Mr. Ho, please can you elaborate more on the Ping An circle?
Speaker #2: And what specific services are we providing to our employees and what are the progress? As you can see, this proportion of out-of-hospital care is consistently increasing this year.
Speaker #2: So that means outside of the hospital or inside of the hospital, there are tremendous business opportunities. So in the past, we couldn't achieve much business value on this side.
Speaker #2: But now we're building our new payment system. So that means our employees, our customers, they can make the payment through this system level payment code.
Speaker #2: And by that, we can achieve non-claims settlements by just one click. It provides better services. It provides better experience. And by doing this, our vendors are seeing greater value from those.
Speaker #2: So that's why we are putting more efforts into those services and products. So we hope we can cover more places, more scenarios. For example, clinics and the hospitals and health centers.
Speaker #2: So it is the first level. That is the level of this recognition. So we're providing this services to our employees and have talked with many analyst friends.
Speaker #2: But they didn't really know there are services for them. So internally at our companies, we've done a lot of events to make sure employees are aware of such things.
Speaker #2: This is what we call a wellness services. So going into the future, we're going to combine all these efforts. We're not only be focusing on the in-hospital services, but also out of the hospital services.
Speaker #2: And also we'll make sure these services are aware to our employees. And also we need to make sure all these services, these four access services, are improved and it is connected online and offline.
Speaker #2: So that will come we can provide a more seamless and smooth experience. It's very much like the AMAX payment system we're trying to build.
Speaker #2: Thank you. That brings to today's Q&A session to a close. Thank you for your question. To those who is dying and those who is with us today and also thank management team for their detailed answers.
