Yidu Tech Reports Strong FY2024 Interim Results: Gross Margin Hits Record High and Net Loss Sharply Narrows

November 30, 2023,Leading Enterprises in China's Healthcare AI IndustryYidu Cloud(Stock Code: 2158.HK) held a press conference to announce its interim results for the 2024 fiscal year, during which the management team provided a detailed overview of the company’s performance in the first half of the 2024 fiscal year, as well as the “Focus” strategy and its phased achievements.

For the six months ended September 30, 2023 (“the first half of fiscal year 2024” or “the Reporting Period”), Yidu Cloud’s gross profit margin increased by 12.1 percentage points year-on-year to 38.2%, reaching a record high for the same period in previous years. Total operating expenses as a percentage of revenue decreased by 12.8 percentage points year-on-year, and the adjusted net loss narrowed by 75.9% year-on-year to RMB 54.1 million.

During the reporting period, Yidu Cloud recorded revenue of RMB 356 million, a year-on-year decrease of 24.9%. In response, Yidu Cloud’s management stated that this was primarily due to a further focus on core businesses. Despite this, the adjusted net loss decreased significantly. Furthermore, as of September 30, 2023, the company’s order backlog amounted to RMB 872 million, representing a year-on-year increase of 58%. It was reported that orders in the backlog exceeding RMB 100 million had already been delivered.

At the press conference, Yidu Cloud’s management emphasized its adherence to long-termism in decision-making logic. It was reported that since the second half of fiscal year 2023, Yidu Cloud has closely aligned with its “focus” strategy, concentrating on core businesses and key customers to enhance profitability. The company’s management has consistently integrated long-termism into strategic planning and daily operations. Rather than prioritizing business scale expansion, the company currently places greater emphasis on building profitability to further solidify its business model, thereby laying the foundation for sustained, high-quality growth over the long term.

During the reporting period, Yidu Cloud strengthened technological innovation to solidify its core competitiveness.

Leveraging the extensive accumulation of medical knowledge, knowledge graphs, and high-quality medical data processing capabilities of its “Medical Intelligent Brain,” YiduCore, Yidu Cloud continues to advance the research and development of large language models (LLMs) specialized for the healthcare sector, trained on over 100 billion refined tokens. The company has completed the training of models with 7 billion and 13 billion parameters and is currently training a model with 70 billion parameters. Yidu Cloud plans to release model versions with varying parameter scales to meet the application requirements of different terminals and scenarios.

Leveraging its continuously optimized and upgraded proprietary large model, YiduCore will also iterate from version 1.0 to version 2.0. The healthcare-specific large language model, built upon a quantifiable knowledge graph derived from multi-dimensional practical insights, will continuously refine YiduCore’s core algorithms, enabling more precise semantic understanding and enhanced reasoning capabilities.

During the reporting period, Yidu Cloud continued to invest resources to deepen its understanding of diseases. As of September 30, 2023, the YiduCore medical knowledge graph covered more than 100,000 medical entities, with the disease knowledge graph encompassing over 10,000 types of diseases. YiduCore has established disease models in nearly 80 disease areas, covering more than 1,700 hospitals. Through these accumulations, YiduCore can accurately identify more than 25,000 medical semantic fields.

Leveraging YiduCore, Yidu Cloud has continuously enhanced the efficiency of generating research-grade evidence and strengthened its research capabilities across various disease areas. As of September 30, 2023, the company had collaborated with experts and authoritative institutions to publish 19 standardized disease datasets, covering conditions such as esophageal cancer, tuberculosis, and mental disorders, thereby laying the foundation for multi-center studies in these relevant fields. Additionally, the company’s comprehensive public health solutions offer large-scale simulation and forecasting capabilities, enabling efficient dynamic decision-making, and have been implemented and validated in 25 provinces and municipalities.

During the reporting period, Yidu Cloud achieved steady business development, with enhanced synergy among its business segments and further improved overall operational efficiency.

Big Data Platform and Solutions SegmentRevenue during the period reached RMB 128 million, with a gross profit margin of 45.2%, representing a year-on-year increase of 3.9 percentage points. As of September 30, 2023, Yidu Cloud’s total number of top-tier hospital clients increased to 94, and the number of clients among regulatory authorities and policymakers rose to 38.

The Company continues to promote the commercialization of its next-generation intelligent solutions for hospital scenarios. Its “Pan-Disease Database Platform” deeply empowers medical research by providing a full suite of research tools, including hypothesis generation, multimodal electronic health record (EHR) search, intelligent data extraction, patient follow-up, statistical analysis, and AI modeling. The platform has been deployed in multiple leading research-oriented hospitals and Grade A tertiary hospitals, and is extensively used by over 250 clinical research teams. According to reports, the Company’s market share in research-oriented services for hospitals has exceeded 35%.The Company has continuously deepened its research in key disease areas. In the field of hematology, it won the bid for a national multi-center big data platform project for blood system diseases at a Grade A tertiary hospital in East China, with a contract value of nearly RMB 9 million. In ophthalmology, the “National Clinical Research Center for Ocular Diseases Big Data Platform,” constructed by the Company, was officially launched during the reporting period. Regarding solutions for regulatory authorities and policymakers, the Company has established several industry benchmark projects in public health and data platforms. During the reporting period, it further secured the bid for the Beijing Chaoyang District Medical Regulatory Platform project, contributing to the development of an operational regulatory analysis system for healthcare institutions, with a contract value of nearly RMB 10 million.

Life Sciences Solutions SegmentDemonstrating strong performance, the company achieved revenue of RMB 170 million, with a gross profit margin of 27.8%, representing a year-on-year increase of 13.3 percentage points, while operational efficiency further improved. As of September 30, 2023, Yidu Cloud had conducted 296 clinical studies and completed 221 prospective and retrospective real-world studies. The company’s intelligent clinical trial management organization services have covered 304 clinical trial institutions. The net revenue retention rate for the top 10 customers stood at 128.2%, and among the top 20 multinational pharmaceutical companies, 15 are clients of the company.

Leveraging its self-developed integrated intelligent service platform, the company has achieved significant results in various clinical trials. These include the early completion of the Phase III clinical trial for TAB014 by Zhaoke Ophthalmology, as well as patient recruitment and enrollment for a Phase III clinical trial on wet age-related macular degeneration conducted by a biopharmaceutical company. Furthermore, drawing on its extensive capabilities and experience in real-world studies, Yidu Cloud successfully won bids for three highly technically demanding retrospective real-world studies related to cancer and pain for a multinational corporation (MNC) client. The company has also established exclusive strategic cooperation intentions in this research field, solidifying its Real-World Evidence (RWE) business as an industry-leading brand. Capitalizing on synergies across business segments and in-depth research in ophthalmic diseases, the company also secured the bid for the Investigator-Initiated Trial (IIT) project on dietary intervention for myopia control in children, commissioned by the Eye Hospital of Wenzhou Medical University during the reporting period.

Health Management Platform and Solutions SegmentRevenue amounted to RMB 58 million, with a gross profit margin of 53.2%, representing a year-on-year increase of 28.1 percentage points. The number of active users who completed at least one transaction on the health management platform reached 26 million. During the reporting period, Yidu Cloud continued to increase the market penetration of its “Huimin Bao” (inclusive commercial health insurance) business. As of September 30, 2023, the company had cumulatively won bids and provided services in four provinces and twelve cities, including Jiangsu Province, Beijing, and Tianjin. As the primary operating platform for “Shenzhen Huimin Bao,” the company assisted insurers in underwriting more than 6 million policies, achieving an enrollment rate of over 35%. Both the number of enrollees and the enrollment rate ranked among the highest nationwide for Huimin Bao projects.

During the reporting period, the Company’s digital therapeutic product for diabetes achieved phased milestones. For the first time, the Company integrated its diabetes digital therapy into the paid health management services of “Tianjin Huiminbao.” Meanwhile, it was successfully selected for Hainan Province’s “2+3” Health Service Package project and will launch pilot initiatives this year to advance the innovative application of digital therapeutics and support the digital transformation of healthcare in Hainan Province.

From assisting physicians in clinical diagnosis and treatment to accelerating new drug R&D, and from empowering precise public health decision-making to personalized, multi-tiered proactive health management, Yidu Cloud’s commercial closed loop encompassing “medical care, pharmaceuticals, insurance, and patients” is continuously being refined.

Looking ahead, Yidu Cloud will continue to upgrade and iterate its core algorithms, develop and optimize vertical large language models for healthcare, and increase investment in YiduCore, with the aim of providing robust empowerment across various application scenarios in the medical field. As a leading enterprise in the rapidly growing sector of healthcare intelligence, the Company will remain committed to its mission of “making value-based precision medicine accessible to everyone.” It will seize significant market opportunities in China and other regions through independent innovation and high-quality development, delivering greater value to participants in the healthcare ecosystem via its continuously iterated “Healthcare Intelligence Brain.”