Net profit increased 375 times in the first quarter, and the big seller is going to build a factory in the United States

Jiuan Medical's revenue in the first quarter exceeded 20 billion yuan

The representative of the surge is Jiuan Medical. At present, Jiuan Medical's first quarter financial report has been officially released. The report shows that the revenue in the first quarter was 21.74 billion yuan, a year-on-year increase of 66 times; the net profit attributable to the parent was 14.31 billion yuan, a year-on-year increase of 375 times. Jiuan Medical's net profit attributable to the parent for the whole year last year was only 900 million yuan. It can be said that the performance in the first quarter is very good.

The reason for such a sharp increase is that it received multiple large orders from the United States.

Last November, iHealth obtained the US FDA EUA authorization for its COVID-19 antigen home self-test OTC kit. In other words, iHealth's kit can be sold in the United States.

Shortly after iHealth obtained the authorization, the United States ushered in a new round of epidemics under the influence of Omicron, and the demand for testing reagents exploded. Because the production increase speed of domestic manufacturing in the United States was slower than expected, testing reagents were in short supply for quite a long time.

Under such circumstances, iHealth has become an important support force for the US epidemic prevention work.

On December 21, 2021, iHealth's U.S. subsidiary received two iHealth test kit purchase orders from the New York State Department of Health, with a total order amount of US$65.31 million;

On January 10, 2022, it signed a $120 million contract with the New York State Department of Health to sell test kits;

Between December 3, 2021 and January 5, 2022, we received purchase orders for test kits from the Commonwealth of Massachusetts and the Executive Office of the Department of Health and Human Services, with a total amount of US$148 million;

On January 13, 2022, the U.S. Department of Health and Human Services, represented by the ACC, purchased 250 million test kits from iHealth. On January 26, ACC added 104 million. After the change, the contract amount reached US$1.775 billion.

In the United States, after the full lifting of controls, consumers who have self-testing needs can purchase antigen testing reagents through e-commerce, pharmacies, supermarkets and other channels without a prescription.

Jiuan Medical said that orders from the U.S. federal government accounted for half of its revenue in the first quarter. In addition, Amazon and independent websites are also important sales channels.

At present, iHealth's iHealth brand has established a certain reputation on Amazon. iHealth test kits are firmly at the top of Amazon's best-selling list of industrial science and testing kits, and the number of reviews has reached 130,000, far higher than similar products.

Not only that, iHealth's forehead thermometer is also a frequent visitor to the top of the best-selling list of baby and medical thermometers. In July 2020, the forehead thermometers sold by iHealth performed very well on Amazon, with single-day sales reaching 20,502 units.

After achieving a significant increase in revenue in the United States with the help of the test kit, iHealth said in response to investors' questions that there is still a sustained market demand for the test kit and that it will choose to apply for registration in countries with high entry requirements , such as Canada and Japan. It is currently actively applying for certification in Japan.

In addition, iHealth is currently selecting a site to build its own factory in the United States to meet domestic supply needs, and will use automated equipment for in-house and outsourced production to minimize reliance on manual labor.

The strong demand for test kits has also attracted many sellers to join this track. In addition to Jiuan Medical, Huashengchang has also recently set its sights on the test kit business.

At the end of last month, Huashengchang announced that its new coronavirus antigen detection kit had obtained the EU CE certification. This shows that the product meets the relevant EU requirements and can be sold in EU countries and countries that recognize the EU CE certification. Huashengchang has also applied for US EUA certification for the new coronavirus antigen detection kit for OTC home self-testing, and the kit samples have been tested for performance and clinically in the United States.

Intech Medical's revenue and net profit declined quarter by quarter

However, it should be noted that the sales of medical supplies such as COVID-19 test kits, masks, and medical gloves are easily affected by the epidemic.

Intech Medical was once known as the "Glove Mao" - the Moutai of the glove industry. Since the outbreak of the epidemic, Intech Medical's revenue has been rising steadily thanks to key epidemic prevention materials such as disposable gloves, reaching 13.84 billion yuan in 2020, a 5.6-fold increase from 2019. In 2021, thanks to its rapid capacity expansion and other capabilities, its revenue continued to hit a new high of 16.24 billion yuan.

It is understood that last year Intech Medical increased the construction of the glove production base in Jiujiang, Jiangxi. At the end of last year, the Jiangxi base had been partially put into production, and its disposable glove production capacity increased from 36 billion pieces in 2020 to 75 billion pieces at the end of 2021.

However, if we look at it on a quarterly basis, Intech Medical's revenue has actually been shrinking every quarter , from 6.735 billion yuan in the first quarter of last year to 2.288 billion yuan in the first quarter of this year. At the same time, net profit attributable to the parent company has also declined quarter by quarter.

In its 2021 annual report, Intech Medical mentioned that in the first quarter of 2021, the demand and price of gloves reached peak levels. Faced with such huge market demand, companies around the world have expanded their glove production capacity. At the same time, with the promotion of treatments such as vaccines, the epidemic has gradually been brought under control, and the demand for gloves has gradually become normalized. As production capacity has expanded and demand has gradually returned to a stable state, the market is facing a temporary situation where supply exceeds demand.

However, Intech Medical believes that the epidemic has also brought about an increase in medical, health and protection awareness in various industries around the world. Governments will also pay more attention to emergency reserves of medical gloves. It is expected that the demand for disposable gloves will continue to grow after the epidemic ends compared to the pre-epidemic base.

In fact, such hidden dangers also exist in iHealth. iHealth said that the future development of the epidemic in the United States is highly uncertain, and this uncertainty may significantly affect the demand for test kit products. In addition, changes in the market competition environment may also have a certain impact on the sales of the company's iHealth test kit products.

Google Trends also confirms this. When searching for "ihealth" on Google Trends, its search popularity peaked in January, then began to decline, and began to rise again from April. This is basically consistent with the trend line of the US epidemic.

Regarding future plans, in addition to continuing to pay attention to the market situation of test kits as mentioned above, iHealth said it will also develop and look for new products to bring more in vitro diagnostic products, home testing products, IoT health products, etc. to the US market.

iHealth believes that the ongoing COVID-19 pandemic has had a profound impact on people's lifestyles and habits, one of which is greater acceptance and habit of using in vitro self-testing products. In addition to COVID-19 testing, iHealth is optimistic about the market opportunities for subsequent home self-testing products and home medical and health products.

In addition, the company will increase its investment in Internet medical care and promote the new "O+O" model of diabetes diagnosis, treatment and care in China and the United States.

It can be said that companies like Jiuan Medical and Intech Medical have seen a significant increase in revenue during the epidemic, bringing in abundant funds and providing strong guarantees for their subsequent development. At the same time, this has also greatly increased the popularity of their brands in overseas markets. But whether this is a flash in the pan or a long-lasting one depends on their subsequent strategic layout.

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