160 Health Announces Organizational Restructuring Affecting One-Third of Workforce Amid Strategic Shift
Earlier today, news about the personnel adjustments at the mobile healthcare company JiuYi160 and the cancellation of its innovation business line went viral. Amidst the myriad of rumors, VCBeat (WeChat Official Account: vcbeat) has always been committed to separating fact from fiction. To uncover the truth behind the incident, VCBeat interviewed relevant executives from JiuYi160. The following is the exclusive official response:
1. In the first half of the year, JiuYi 160 exceeded its targets for user acquisition and hospital network expansion, achieving anticipated revenue results, and has grown into a leading internet healthcare service platform in China.
2. As the company shifts its business focus, it plans to optimize its organizational structure and certain business teams by implementing a last-place elimination system based on team and individual performance, with approximately one-third of the total workforce subject to optimization.
3. Jiuyi160 is striving to become the first profitable internet healthcare enterprise, rewarding shareholders with strong performance. The company has announced its first round of private placement for this year; for details, please refer to the company’s announcements on the NEEQ.
From the response content, three key pieces of information can be obtained:
1. Good revenue performance for JiuYi 160;
2. JiuYi160 is planning organizational and personnel adjustments (it seems the morning news was not baseless);
3. Personnel adjustments are significantly correlated with the company's profit growth.
Guided by these three points, VCBeat reviewed Ningyuan Technology’s (Jiuyi 160) 2015 annual report. The data disclosed in the report showed that Ningyuan Technology generated revenue of RMB 23.7198 million in 2015, an increase of RMB 9.9186 million year-on-year; its total profit and net profit both stood at -RMB 71.4104 million; net cash flow from operating activities was -RMB 56.8543 million, a decrease of RMB 42.4737 million compared to the same period last year; net cash flow from financing activities amounted to RMB 130 million, an increase of RMB 106 million year-on-year; and net cash flow from investing activities was -RMB 7.6265 million, a decrease of RMB 5.8678 million compared to the same period last year.
Ningyuan Technology (Jiuyi 160): Key Financial Highlights of 2015
Ningyuan Technology (Jiuyi160): 2015 Growth Performance
Evidently, the official explanation provided by 91160.com holds true. Although Ningyuan Technology (91160.com) has experienced rapid growth in operating revenue and total assets, and the ratio of operating costs to operating revenue remains within a normal range, the company’s profits have fallen into negative growth due to the substantial burden of administrative and selling expenses.
The primary reason for this was that Ningyuan Technology recruited a large number of R&D and sales personnel in 2015, leading to an explosive growth in the headcount of both departments. This not only significantly increased labor costs but also necessitated the procurement of corresponding computers, servers, and other related equipment. Consequently, its fixed assets surged from RMB 857,500 in 2014 to RMB 4,356,300 by the end of 2015, representing a total increase of RMB 3,498,800.
In addition, due to the large number of new hires, Ningyuan Technology’s existing office space became constrained, prompting the company to lease a new office location in 2015. Furthermore, Ningyuan Technology undertook renovation works for the newly leased office space of over 4,000 square meters, incurring substantial expenses.
In light of the above, reducing selling and administrative expenses (particularly administrative expenses) has become an imperative for Ningyuan Technology (Jiuyi 160) this year, which is precisely what triggered the recent turmoil surrounding its personnel adjustments.
From the perspective of VCBeat (WeChat Official Account: vcbeat), the personnel adjustment plan implemented by Jiuyi 160 is a normal move in terms of corporate profitability and future development. High management costs have imposed a heavy operational burden on the company. Streamlining staff and simplifying administration will not only significantly reduce administrative expenses for Jiuyi 160 but also test whether the enterprise can maintain normal and efficient operations with a reduced workforce. As a young company that has recently been listed on the New Third Board, its successful public listing provides Jiuyi 160 not only with diversified financing channels but also an excellent opportunity to refine itself into a polished gem.