Hillhouse invests $830m in China’s JD Health
Hillhouse Capital has agreed to invest $830 million in JD Health, the healthcare unit of Chinese e-commerce giant JD.com, which will remain the majority shareholder.
The deal, part of JD Health’s Series B round, is expected to be closed in the third quarter. JD Health spun out from its parent company in May last year, when a group including CPE (formerly known as CITIC Private Equity), CICC Capital, and Baring Private Equity Asia invested $1 billion, acquiring a combined stake of 14.5%.
“By leveraging Hillhouse Capital’s industry expertise and resources, JD Health will further strengthen its pharmacy supply chain capabilities and explore additional healthcare services opportunities in the broader healthcare sector,” JD.com said in a filing.
JD Health consolidates a number of healthcare-related businesses that were previously managed in separate JD.com subsidiaries. These include a B2C online pharmacy, JD Online Healthcare, which provides online medical consultations from registered doctors, a B2B drug sales platform called Yaojingcai, and a unit that uses artificial intelligence to study healthcare-related big data.
Customers accessing the service will be directed to either consult with a doctor online or, depending on the seriousness of the condition, to an offline medical institution that has partnered with the platform. Those who consult online receive digital prescriptions, and the online pharmacy will compile a list of drugs for users to purchase either online or at a brick-and-mortar pharmacy.
During the pandemic, the online consultation platform has provided free services with an average daily volume of more than 100,000 users. JD Health has become China's largest pharmaceutical retail channel, surpassing the top four listed pharmaceutical retail chains. Lijun Xin, CEO of JD Health, told local media in May that pharmacy retail represented 90% of total revenue.
JD.com listed in Hong Kong in June and recorded revenue of RMB201.1 billion ($28.5 billion) for the second quarter of 2020, up 34% year-on-year. Net profit came to RMB16.4 billion, up from RMB0.6 billion for the same period of last year. The company had 417 million annual active customer accounts by the end of June, increasing 30% year-on-year.
JD Health is touted as one of four unicorns spun out from JD Group, along with JD Digits and JD Logistics, which acquired parcel delivery company Kuayue Express earlier this week for RMB3 billion. The most recent spinout is JD MRO, a company that specializes in industrial maintenance, repair and operations (MRO). JD MRO raised $230 million in May in Series A funding led by GGV Capital, giving it a post-deal valuation of $2 billion.
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