Yonghe Medical turns losses into profits, is a leading company with potential for revaluation?

Produced|China Invest Network

Reviewed by|Li Xiaoyan

As a leader in China’s hair-growth medical industry and “the first publicly listed company in hair transplantation,” Yonghe Medical (02279.HK) has recently released its 2025 annual report, delivering an eye-catching set of results characterized by “steady revenue growth and a turnaround in profitability”: full-year revenue reached RMB 1.81B, up slightly by 0.2% year over year; attributable net profit moved from a loss of RMB 226.6 million in 2024 to a profit of RMB 73.56 million, successfully turning losses into profits—marking that, after three years of adjustments, the company has officially entered a new stage of high-quality earnings. This breakthrough not only reflects the results of the company’s strategic shift in operations, but also underscores the steadfast determination of the industry leader to ride out the cycle and rebuild growth momentum.

From 2022 to 2024, driven by multiple factors such as the industry’s rapid expansion and high costs, Yonghe Medical suffered losses for three consecutive years, with cumulative losses over the three years totaling RMB 860 million, as the industry entered a period of deep adjustment. In the face of challenges, the company decisively abandoned the extensive model of “scale first,” and shifted to a refined operating path of “quality first and efficiency above all.” Through three major initiatives—“controlling costs, optimizing structure, and strengthening management”—the company gradually repaired its profitability.

In 2025, the company’s cost and expense management delivered remarkable results, becoming the core support for the turnaround to profitability. Total selling and service costs fell to RMB 614 million, down 14.7% year over year; selling and marketing expenses were RMB 806 million, down 10.6% year over year. With revenue basically stable, the company achieved a precise reduction in costs. A decrease in costs is not simply a matter of “tightening belts”; it comes from three optimization logics: first, optimize the store network—close and consolidate inefficient stores. By the end of 2025, the company had 63 hair-transplant medical institutions across 61 cities, with the proportion of mature hospital departments increasing, and single-store operating efficiency significantly strengthened. Second, optimize the team structure—shrink non-core positions and strengthen professional medical teams. Its professional medical staff team of 1,341 people achieved improved per-employee productivity, and employee costs were kept under reasonable control. Third, optimize the supply chain system—through large-scale procurement and refined inventory management, lowering inventory and consumables costs by more than 12%, while leveraging the “HeFan” chain medical management system to enable full-process traceability and control over consumables usage.

Alongside cost management, the quality of earnings also improved in parallel. In 2025, gross profit reached RMB 1.19B, up 10.1% year over year. The gross margin rose significantly from 60.1% to 66.0%, an increase of 5.9 percentage points, far exceeding the industry average, reflecting a double improvement in both cost control and service premium capabilities. Earnings before interest and taxes (EBITDA) reached RMB 364 million, surging 157.9% year over year, with significantly enhanced earnings sustainability and risk resistance—laying a solid foundation for stable profitability going forward.

Yonghe Medical’s turnaround in profitability is inseparable from the optimization of its business layout: “stabilizing core business and coordinating multiple businesses.” The company formed a “dual-engine” structure with hair-transplantation as the core business and medical hair strengthening and care as an important support, balancing both scale and quality to continuously optimize its business structure.

As the company’s core business base, the hair-transplantation segment generated revenue of RMB 1.38B in 2025, accounting for 76.1% of total revenue, and remains the key pillar of revenue and profitability. The number of consumers served reached 71,380 people, up 19.7% year over year, setting a record high and demonstrating the brand’s core competitiveness and market recognition. In response to the trend of consumption upgrading, the company has continued to advance high-end and refined upgrades in its hair-transplantation business. On one hand, it strengthens medical technology barriers, improves a tiered diagnosis and treatment system for doctors, establishes 24 surgical quality scoring dimensions, and ensures surgical safety and efficacy. On the other hand, it launched women-only aesthetic hair-transplantation services, rolled out a “Four Courtyards and Seven Eyes” aesthetic design system to meet women’s “overall aesthetic design” needs. The proportion of women undergoing hair transplantation has continued to rise, becoming a new growth driver.

As the second growth curve the company focuses on cultivating, the medical hair strengthening and care business achieved revenue of RMB 409 million in 2025, accounting for 22.6% of total revenue, serving 79,492 consumers, up 3% year over year, with user stickiness and repurchase ability continuing to strengthen. The company uses a “shop-in-shop” model by positioning the Shiyunxun Medical Hair Health Center within hair-transplantation institutions to provide tailored services for post-transplant patients and people with scalp health needs, promoting the transformation of the strengthening-and-care business into high-value medical-style package offerings. Data show that the repurchase rate for the medical hair strengthening and care business is 27.6%. High-frequency, continuous service demands effectively smooth revenue fluctuations and extend customer lifecycle value. In addition, the company has also rolled out niche businesses such as medical wigs and women’s aesthetic hair transplantation, completing a brand matrix across the full industry chain to further broaden its profit opportunities.

On the basis of refined operations, Yonghe Medical uses a digital and intelligence-driven transformation as its key lever to reshape operational efficiency and service capability, injecting core momentum into long-term sustainable growth. In 2025, the company upgraded its self-developed “HeFan” chain medical management system and deeply integrated AI technology to realize end-to-end digital upgrades across diagnosis and treatment, operations, and marketing.

On the diagnosis-and-treatment side, AI empowers precise medicine. The company promotes AI scalp-detection equipment and image-recognition technology to achieve precise scalp condition detection and to develop individualized treatment plans. By using AI medical large language models to optimize medical record management, it improves diagnostic efficiency and accuracy. At the same time, it establishes a pre- and post-operative outcomes comparison and tracking system to ensure transparent service quality. On the operations side, digital tools enable efficient allocation of resources. Relying on a data cockpit and a user-tag system, the company precisely maps customer needs, optimizes patient intake processes at hospital departments and resource scheduling. As a result, the customer acquisition-to-conversion rate improved by 22.6%, the cost per visit decreased by 12.2%, and the return on investment improved significantly. On the marketing side, it realizes a “synergized product-and-performance” precise transformation. It moves away from extensive advertising placements. By leveraging big data analytics to dynamically adjust its bidding and placement strategies, it focuses on audiences with high conversion intent. Meanwhile, it strengthens content development in depth, builds a private-domain traffic pool, and keeps improving marketing efficiency.

A digital and intelligence-driven transformation not only improves operational efficiency, but also builds industry barriers. Currently, the company has formed an operating model of “data-driven decision-making and technology-enabled services,” providing support for future large-scale replication and standardized expansion, and also laying a foundation for responding to industry competition and meeting consumers’ upgraded needs.

Although the company achieved a turnaround to profitability in 2025, Yonghe Medical still faces dual challenges from both the industry and the capital markets. From the industry perspective, competition in the hair-growth medical market is becoming increasingly fierce. Issues such as disorderly expansion by smaller institutions and price wars still exist. At the same time, consumers’ requirements for service quality and safety continue to rise, accelerating industry reshuffling. From the perspective of the capital markets, the company’s stock price has experienced significant volatility. On the 5th trading day after its listing in 2021, it reached a historical high of HK$19 per share. Its total market capitalization reached HK$9.14 billion. As of April 2, 2026, the stock closed at HK$1.86 per share, which is more than an 80% decline from its listing peak. Its market value has shrunk significantly, and concerns about the company’s growth sustainability remain in the market.

In the face of challenges, Yonghe Medical has not stopped, but instead clearly defined the development path for the next stage: first, continue to deepen refined operations, further optimize the store network, and improve profitability at individual stores, while strengthening supply-chain integration to further reduce costs. Second, accelerate the rollout of digital and intelligence-driven capabilities, promote AI technology across all diagnosis-and-treatment and operational scenarios to build a digital ecosystem for hair-growth medical care. Third, focus on women’s customer segments and the strengthening-and-care business to push the proportion of women in hair-transplantation to above 35%, accelerate large-scale expansion of the medical hair strengthening and care business, and build a new growth engine. Fourth, strengthen brand and academic development by partnering with industry institutions to conduct research on hair-loss prevention and treatment, increase the industry’s voice, and enhance brand credibility.

The capital markets have responded positively to the company’s performance turnaround. On April 1, 2026, Yonghe Medical’s stock surged 11.93%, with trading volume and turnover significantly expanding, showing that investors’ confidence in the company’s earnings repair and long-term development has been gradually returning. With the company’s earnings stability improving and growth momentum continuing to be released, together with the continuous expansion of the industry’s market scale (according to Frost & Sullivan’s forecast, China’s hair-growth medical services market will reach RMB 138.1 billion by 2030), Yonghe Medical is expected to gradually realize value restoration and return to a reasonable valuation range in the capital markets.

From three consecutive years of losses to a turnaround to profitability in 2025, Yonghe Medical has demonstrated the value of refined operations and a digital and intelligence-driven transformation through its actual actions. As an industry leader, the company has not only achieved a breakthrough in its own operations, but also driven the hair-growth medical industry’s shift from “extensive expansion” to “high-quality development.” In the future, as all strategic initiatives take effect, Yonghe Medical is expected to achieve high-quality growth on the basis of solidly securing its core business base and create long-term value for investors.