Digital Health on a Rise: JD Health Stocks Spike 70% on First Trading Day

Healthcare Author: Yingwei Fu Dec 08, 2020 03:06 PM (GMT+8)

The company is the third online healthcare platform listed on the Hong Kong bourse, also the third 'JD family' member to be listed in 2020.


After JD Group's (09618:HK) Hong Kong IPO and its delivery service DaDa's (DADA:NASDAQ) listing in the US, JD Health (06618:HK) remarks the third IPO event of (JD:NYSE). Investors' passion pumped up JD Health's stock price by 50% shortly after two hours on the first trading day. Up to the time of publication, stock price was up by 70%, pricing above HKD 120 per share from the IPO price of HKD 70.

JD Health, along with JD Digital and JD Logistics, are three unicorns that the Chinese e-commerce behemoth JD Group incubated over the last decade. While JD Digital is in the IPO pipeline, JD Health is the second JD brand public company. Serving online healthcare services from pharmacy to urgent care, the healthcare online platform is a cash printer instead of a money burner.

In the reporting period (2017, 2018, 2019 and 1H2020), JD Health's revenue was CNY 5.6 billion, CNY 8.2 billion, CNY 10.8 billion and CNY 8.8 billion with gross margin 24.9%, 24.2%, 25.9% and 25.3% respectively; operating income was CNY 256.3 million, CNY 307.1 million, CNY 433.4 million and CNY 399.4 million respectively. Due to the valuation inflation after rounds of financing, the change in fair value of preferred stocks sharply lowered the company's net profit to a negative in 2019 and the first half of 2020, which should not bother investors in a high-growth firm.

As the pandemic swept over the world at the beginning of the year, global healthcare systems came under tremendous pressure. Service capacity was pushed to the edge in many places. COVID-19 forced online healthcare to expand to satisfy the surging public health needs. JD Healthcare was one of the platforms that was pushed to the frontline to help the public healthcare system fight against coronavirus.

JD Health is a platform to provide urgent care services via connecting doctors (~65,000 doctors on the platform) and users and also a pharmacy network constituted by its own pharmacy and 9,000 other third-party pharmacies. In 2017, 2018 and 2019 and for the twelve months ending on June 30, 2020, JD Health had 43.9 million, 50.5 million, 56.1 million and 72.5 million annual active user accounts, respectively.

The pandemic forced the world to adapt to a new norm, a more digital norm. Prior to JD Health, Alibaba Health (00241:HK) and Ping An Good Doctor (01833:HK) were the only two public companies in the online healthcare platform sector. The two early runners' stock performance was mediocre until mid-2020 when China's pandemic was contained and the economy began to bounce. Healthcare and biopharma concept stocks outperform other sectors among global markets, especially with cheering COVID-19 vaccine updates. JD Health, as a new hot spot on the bourse in the healthcare sector, pushed the market's heat to a new intensity.