Ali Health, Alibaba's healthcare subsidiary, reported a loss of over 13 million U.S. dollars for the fiscal year ending March 31.
The company said that the loss was mainly due to the high cost of expanding business.
Ali Health began investing in its cloud hospital in 2014, aiming to offer users a one-stop online medical service from diagnosis to follow-up.
The platform has yet to be widely accepted in China.
Potential users have expressed doubts about the service.
Zha Weili, a Shanghai resident is unsure about the service's reliability.
"I don't think it is reliable because when you go to the hospital you have to have physical examinations. Even traditional Chinese medicine doctors check your pulse. So how can an online doctor make diagnoses and prescriptions just based on a patient's description of their symptoms?"
Experts say that most doctors need extra information to support their diagnoses and it is difficult to give appropriate treatment via the internet.
Cui Lili is the executive director of the Institute of E-commerce at the Shanghai University of Finance and Economics.
"Many doctors rely on information from medical exams -- such as X-rays -- when making diagnoses. It is currently difficult to collect a patient's entire medical history or diagnostic information from one doctor's visit in one place."
Despite its 27million-U.S.-dollar investment from Alibaba Group, Ali Health has fierce competition.
There are about 2,000 hospital-focused apps in China.
