Net profit increased by 27466%, with profits exceeding 10 billion in half a year due to strong sales!

Affected by the epidemic, the sales of global epidemic prevention products have seen rapid growth. Under this circumstance, many cross-border medical products have developed rapidly, especially Jiuan Medical, which has become a "dark horse" in this field.

Recently, Jiuan Medical released its semi-annual performance forecast for 2022. Standing at the forefront of the trend, Jiuan Medical's performance data is very impressive.

With a profit of nearly 10 billion in half a year, iHealth’s performance has skyrocketed!

In the first half of 2022 , iHealth's net profit attributable to shareholders of listed companies is expected to be 15.1 billion yuan to 15.5 billion yuan, a surge of 27,466% to 28,197% compared with the same period last year ; the net profit after deducting non-recurring gains and losses is 15.1 billion yuan to 15.5 billion yuan, a significant improvement compared with the loss of 4.7874 million yuan in the same period last year.

Jiuan Medical's performance surged in the first half of the year mainly due to the substantial increase in sales of COVID-19 antigen test kits. Amid the recurring global epidemic situation, sales of epidemic prevention products have remained high, especially in the United States where home testing is popular, and demand for COVID-19 antigen test kits has increased significantly.

At the same time, based on iHealth's years of experience in the IVD field and FDA applications, as well as the geographical advantages of iHealth's US subsidiary , its iHealth test kit products have obtained the US FDA EUA authorization .

It can be said that iHealth's successful turnaround is closely related to the popularity of iHealth test kits in the U.S. Currently, iHealth's test kits are mainly sold in the U.S. market by its U.S. subsidiary in both B2B and B2C formats , with orders mainly coming from the government, commercial customers, Amazon e-commerce platforms , and the U.S. subsidiary's official website.

By calculating the average gross profit margin of iHealth's test kit products, we can see that the gross profit margin trend of iHealth's test kit products sold through different channels is consistent, among which the sales gross profit margins of Amazon and the official website of its US subsidiary are slightly higher, and the sales gross profit margins of government orders and commercial customers are close .

After years of cultivating overseas markets, iHealth, iHealth's own brand, has established a good brand reputation in the U.S. According to the purchase order information disclosed by the U.S. federal government , iHealth has obtained about 70% of the first 500 million test kit procurement contract, becoming an important support force for the U.S. epidemic prevention work .

In addition, iHealth test kit products have not only appeared many times in reports by many mainstream media in the United States, but have also become one of the brands that appear in the annual Super Bowl in the United States , greatly enhancing its brand awareness and influence.

However , the market demand for iHealth test kits is closely related to the development of the epidemic in the United States . When the epidemic is severe, the demand for products will increase . However, since the future development of the epidemic in the United States is unpredictable , there is a certain degree of uncertainty as to whether iHealth's future performance and profitability can continue to maintain rapid growth.

By comparing the revenue data of the first quarter, it can be found that although iHealth is still making profits, the profit growth rate is slowing down.

In the first quarter of 2022, iHealth's net profit attributable to shareholders of listed companies was 14.3 billion yuan, while the net profit for the first half of the year is expected to be 15.1 billion yuan to 15.5 billion yuan. This means that iHealth's profit in the second quarter was around 1 billion yuan, a significant decrease compared with the first quarter.

Although the global epidemic is still at its peak, the future development of the epidemic is unpredictable. Therefore, Jiuan Medical did not put all its profits on test kit products , but instead increased the speed of research and development and strived to create another hit product.

With an increased proportion of R&D capitalization, Jiuan is accelerating the creation of another hit product

During the epidemic, Jiuan Medical successfully entered the overseas market with the dividends of going overseas, and its test kit products became popular first, driving the company's performance to soar. However, many investors have found that recently, Jiuan Medical is increasing its investment in another hit product.

Since Jiuan Medical accelerated its overseas expansion, the company has not only increased its investment in test kit products, but also increased its investment in the new "O+O" model of diabetes diagnosis, treatment and care. It is understood that the company's diabetes diagnosis, treatment and care project is currently in development. The part invested before 2021 is in the promotion stage in China and the United States, and the part newly invested in 2021 is still in the development stage.

In China, iHealth's project has opened care centers in cooperation with more than 220 hospitals in about 50 major cities across the country. Its R&D team has also upgraded the APP corresponding to the project, adding new modules such as big data analysis module and artificial intelligence module on the original basis, enhancing the user experience.

Jiuan Medical's diabetes diagnosis and care project mainly realizes the integration of software and hardware, offline and online, and in-hospital and out-of-hospital through "intelligent hardware + APP + cloud platform", and the project implementation sites are concentrated in China and the United States. The investment capital of this project is about 14.37 million yuan, accounting for 31.38% of its R&D expenses during the reporting period . Data shows that the capitalization ratio of Jiuan Medical's R&D investment during the reporting period was 40.69%, an increase of 13.51 percentage points year-on-year, and the main reason is the accelerated progress of the project.

In fact, as early as the second half of 2020, Jiuan Medical had completed a private placement and received the raised funds in March 2021. The funds raised were mainly used to invest in the procurement of project equipment and software, product research and development, and employee training. Among them, the diabetes diagnosis and care project is a major project in the fundraising project, and all the invested parts in 2021 have entered the development stage. Affected by this, its capitalization rate has increased significantly.

Compared with iHealth’s two current core products, the progress of other projects has been slower than expected, such as the research and development project of the intelligent ultraviolet air disinfector.

In 2021, iHealth Medical focused its research and development efforts on the iHealth test kit project, which temporarily suspended the development of the smart UV air disinfection machine project, causing the project's investment progress to fall short of expectations. Data shows that the company's raised funds were received in March last year, of which the funds for the smart UV air disinfection machine research and development project were adjusted from 12 million yuan to 5.3693 million yuan, and the cumulative investment amount was shown as 0 at the end of the period.

In this regard, Jiuan Medical revealed in its risk assessment of the project that the company may have focused its R&D efforts on other home self-testing products and home medical and health products, which may have led to insufficient technical support for the smart UV air disinfection machine project. In addition, the R&D difficulty of the project may exceed expectations. Under these comprehensive factors, Jiuan's smart UV air disinfection machine R&D project may not be completed within the expected time.

Although the development progress of the project is slower than expected, for iHealth, with the brand effect that iHealth forehead thermometers and test kits have formed overseas in recent years, it has a clear advantage over its peers in promoting products. However, whether other products of iHealth can continue to be popular in the future remains to be seen.

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