PE-backed JD Health files for Hong Kong IPO

JD Health consolidates several 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 are 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.

“Our technology-driven platform is centered on the supply chain of pharmaceutical and healthcare products and strengthened by healthcare services, encompassing a user’s full life span for all healthcare needs. Through our end-to-end supply chain and online-plus-offline approach, we believe that we can redefine the way users manage personal health,” the company said in its prospectus.

JD Health claims to be China’s largest online healthcare platform and largest online retail pharmacy by revenue in 2019, citing a Frost & Sullivan report. As of June, it had more than 150 million users.

The retail pharmacy makes direct sales through JD Pharmacy and uses JD Group’s fulfillment infrastructure – comprising 11 drug warehouses and over 230 general warehouses – for distribution. It also operates an online marketplace that offers products from 9,000 third-party merchants and has an omnichannel initiative offering on-demand delivery services in 200 cities, in some cases fulfilling orders within 30 minutes. There were 72.5 million active users accounts as of June.

Healthcare consultation services are provided by a team of in-house doctors and external medical professionals with specific areas of expertise. There are more than 65,000 within this network. In the first half of 2020, average daily online consultations reached 90,000, a near sixfold year-on-year increase. During the coronavirus pandemic, JD Health was the first company in China to facilitate online appointments for COVID-19 nucleic acid testing.

Spun out from JD.com in 2014, the company sold a 14.5% stake to CPE, CICC and Baring for approximately $1 billion in 2019. CPE and Baring put in $200 million apiece, while China Life and CICC each contributed $150 million. This was followed by Hillhouse committing $830 million as part of a $900 million round. Several existing investors re-upped.

JD.com retains control of JD Health with an 81% stake. Hillhouse owns 4.49% as the largest external investor, CPE and Baring each hold 3.16%, CICC has 2.37% and China Life holds 2.26%.

JD Health generated RMB10.8 billion ($1.6 billion) in revenue last year, up from RMB8.2 billion the previous year. The company swung from a net profit of RMB214.9 million to a net loss of RMB971.8 million largely due to changes in the fair value of convertible preference shares. In the first six months of 2020, revenue came to RMB8.8 billion and the net loss was RMB5.2 billion, with convertible preference shares once again a key factor.

The size and pricing of the IPO have yet to be decided.

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• Topics
• Greater China
• Healthcare
• IPO
• China
• JD.com
• Hillhouse Capital Management
• Citic Private Equity
• Baring Private Equity Asia
• CICC