I want to talk about the Wealth Management side first. Our profitability on the Wealth Management side actually increased in this period. Our operating margin rose to 12.6% in this period, which was up 2.6% year-on-year. Due to the strong cost control and the scale back in sales and marketing during this period as we went more digital during COVID and lockdowns, et cetera, we were actually able to realize cost savings and therefore, a increase in our operating margin on the Wealth Management side. Now on the Hywin Health side of things, I would offer a couple of points. One is you know, this is the first time ever we begin to consolidate, right, the three acquisitions that we made in 2022 and the consolidation period of Life Infinity and Sincerity and Passion – Compassion Chengdu right actually only began in September, right?
So that’s one. So that’s – what we are reporting is not necessarily reflecting the entire half year for some of these acquired businesses. The second point is we were still in an initial phase of integration, right, post acquisition and transforming and time together the three acquired businesses post acquisitions. So I would say the operating efficiency in our health business is still being fine tuned. And then I think the last point I wanted to make was because of COVID, because of lockdowns, the financial results of our health business was actually distorted based on just what you see in the reported numbers because the clinics basically were shut down, right, for a significant amount of the reporting period. So going forward, in the next reporting period in 2023, right, you will see sort of a more true representation of a – what the happy results of Hywin Health should be.
And I hope that answers your question on what’s behind the RMB24 million losses from Hywin Health.
Operator: Thank you. Our next question comes from the line of Sandy Mehta from Evaluate Research. Please ask your question, Sandy.
Sandy Mehta: Yes. Congratulations on the very strong results. Just a follow-up on your previous comments on health care. When do you expect – what is the progression towards the health care business reporting breakeven results? And also, can you comment on from the small base, what sort of growth do you expect going forward? Thank you.
Lawrence Lok: Thank you, Sandy. Hi. Okay. So I will take this question as well. I think, as I said just now, we are still in an initial phase of transforming, integrating the business. On your question on breakeven, we don’t have – well, I’m not putting out a specific number here yet. But I think – but what I want to say here is what we’re doing here is really, first of all, as step one, the clinics that we acquired, we are unifying the management – unifying you know, the system and unifying the – our service approach, etcetera, et cetera. And there is obviously, some friction, but that’s very normal and very natural post acquisitions. And I think we did a lot of that last year. And I think in this first quarter this year, we’re doing a lot of that as well.
I think we could hope to see narrowing – well, I think we are comfortable in saying that we could be narrowing losses on a per clinic level, right? But I think it’s perhaps early for us to say exactly when they will be breakeven and that’s on the profitability. And then on the business growth side, I think what would be interesting, right, in the next reporting period is you know, it’s likely to see a very large increase, right, in the Hywin Health revenue, right? Because again, the reporting period has been – in this reporting period, it’s heavily distorted, right, because the clinics were closed because the consolidation period was really only three months, right, since September for Life Infinity and Sincerity and Compassion. So I think the growth, we are quite confident.
