111.com Delays Salaries Amid Restructuring; Claims Strong Cash Position and Upcoming Profitability
Shenzhen Ningyuan Technology
Integrated Internet Healthcare Service Platform
Just after the layoff turmoil in early August, Health 160 was embroiled in a “salary freeze” controversy last night. Internal employees of Health 160 revealed that the company would implement a salary freeze, with normal pay suspensions scheduled for the end of the third quarter and throughout the fourth quarter. The onset of the salary freeze and layoff controversies came less than a year after Health 160’s listing on the New Third Board.
The internet healthcare industry is forging ahead amidst turbulence. Whether they are startups or employees within these companies, all are facing various challenges. Every decision made comes with its own “helpless” rationale, making it difficult to distinguish right from wrong. VCBeat (WeChat ID: vcbeat) has no intention of escalating the incident. We have attached the full text of the employee’s whistleblowing email and the official response from Health 160 for your consideration.
Full Text of the Employee's Whistleblowing Email
I am an employee of Shenzhen Health 160 who is about to resign. Having fought alongside the company only to be unceremoniously cast out, I feel not only disheartened but also deeply angered on behalf of myself and my colleagues. Therefore, I have decided to disclose my grievances against the company to the news media, as a way of making amends for the silence I maintained during the previous round of layoffs.
Over the past year, the company has undergone dramatic changes. Following its Series B financing round, the workforce expanded significantly from over 300 to more than 800 employees, only to be cut back to just over 200 within less than six months. We initially believed that those of us who remained were fortunate, but that proved not to be the case. After the National Day holiday, the HR department sent an email announcing a salary freeze, stating that wages for the end of the third quarter and the fourth quarter would not be paid as scheduled, with payment potentially delayed until the end of the year. However, this time I chose not to believe it!
It is not that we are unwilling to stand by the company through thick and thin; rather, the leadership’s unclear industry judgment and the anti-corruption adjustments to the corporate strategy have left employees bewildered. How can a company that frequently reverses its decisions sustain itself in the long run? The company strained itself to list on the New Third Board, yet this has brought no tangible change, with many of its business lines remaining unprofitable.
What’s hard not to complain about is that in April 2015, the company publicly claimed to serve 1,000 hospitals across 50 cities, with 16 million registered users and 35 million service encounters. By this October, those figures had ballooned to over 3,000 large hospitals across 200 cities (are there really 15 large hospitals per city?), more than 100 million registered users, and over 250 million service encounters. I can only ask: what happened during the company’s tough year? Did listing on the NEEQ (New Third Board) trigger such a surge in metrics?
As reported by the media, the internet healthcare sector has entered a "capital winter." Unexpectedly, my colleagues at Shenzhen Ningyuan Technology (Jiuyi 160) are facing an "extreme freeze," with employees either being laid off or forced to sign voluntary pay-cut agreements—accepting salaries as low as RMB 3,000. How can young professionals striving in Shenzhen endure such precarious conditions? Now that the company is imposing a salary freeze, there is no longer any reason for us to hold on.
Complaints must be grounded in evidence; attached is an internal company email.
We hope you can take time out of your busy schedule to address the grievances of company employees, thereby preventing such farces from being repeated with others.
Thank you!
Jiuyi160 Responds Individually to Employee Allegations
1. About Revenue
According to the semi-annual report of Jianyi 160 (Ningyuan Technology), the company’s primary revenue sources are financial institutions such as banks and insurance companies, accounting for nearly 50% of total revenue. The top four customers are all financial institutions, and revenue from this sector continues to grow steadily. In addition, software revenue accounts for nearly 20%, with other sources contributing the remaining 30%. Private hospitals are not the main source of revenue.
In the first half of 2016, the company achieved a total operating revenue of approximately RMB 27.7 million, representing a year-on-year increase of 247% and amounting to 116.7% of the full-year total revenue recorded in the previous year. Of this, revenue from internet healthcare platform services totaled approximately RMB 24.29 million, compared to around RMB 4.95 million in the same period last year, marking an approximate fivefold increase.
In the revenue composition, the proportion of internet medical platform service revenue from Health 160 has significantly increased to 87.69%. The rapid growth in internet medical platform service revenue has driven the overall gross profit margin up by 14.64 percentage points year-over-year to 83%, markedly enhancing profitability.
In the second half of this year, the company's revenue continued to grow significantly.
2. Regarding Financing
Amid the broader capital winter, Jiuyi 160 has achieved significant counter-trend growth in valuation. Its Series B financing round in 2015 valued the company at RMB 530 million, while the pre-money valuation for this current round stands at RMB 1.5 billion. The initial tranche of RMB 56.5 million from this round has already been received, with additional funds to follow.
3. Number of On-the-Job Personnel
Currently, the company has more than 500 employees.
Earlier Official Response from Health 160
1. Currently, part of the Series C financing amounting to RMB 56.5 million has been received (please refer to the company’s announcement). The company currently has ample funds. The delay in salary payments for certain employees is due to the ongoing determination of performance assessment metrics for their respective positions, as well as the implementation of a new round of extensive equity incentive plans.
2. As the first publicly listed mobile healthcare company, Health 160 has entered a phase of rapid growth. In the appointment registration sector, where it initially established its presence, Health 160 continues to maintain and further expand its leading market share nationwide.
While other internet healthcare platforms flocked to open offline clinics and establish “doctor groups,” Jiuyi 160 remained single-mindedly focused on its goal of becoming the “Online Hospital for Chinese People.” Concentrating its efforts on hospitals, it dedicated itself to enhancing their IT capabilities and making comprehensive strides in areas such as in-consultation payments and post-consultation follow-ups. This approach significantly optimized the entire medical consultation process, improved service efficiency, enhanced the patient experience, and delivered user-centered healthcare services.
Jiuyi 160’s Full-Process Online Hospital not only leads the nation in the number of integrated hospitals but has also earned strong customer recognition for its service quality. Its in-consultation payment volume increased 15-fold year-on-year, placing it far ahead in the industry. Meanwhile, its B-side business has expanded rapidly, with the team achieving positive cash flow that is growing quickly. Although the 160 Health Mall has been online for only a short time, its monthly transaction value has grown by over 200% month-on-month, order conversion rates have risen by 300% month-on-month, and user stickiness has improved by 200%.
3. In the fourth quarter of this year, Health 160 is expected to reach break-even, and it is projected to become profitable next year. We extend our sincere gratitude to media friends for their continued care and support. Health 160 will continue to build “the online hospital for the Chinese people,” striving to improve patients’ healthcare experience, help doctors optimize their workflows via the internet, and assist hospitals in enhancing operational efficiency!