Three Years of Losses Finally Reversed! How Did Yonghe Medical Achieve Profitability Turnaround?

AI Profit Turnaround: Can It Drive the Overall Upgrading of the Hair Medical Industry?

Produced by | Zhongfang.com

Reviewed by | Li Xiaoyan

On March 3rd, Hong Kong Stock Exchange-listed “The Leading Hair Transplant Company” Yonghe Medical released a positive profit forecast, attracting widespread attention from the capital market. Data shows that the company expects a net profit of no less than 70 million yuan in 2025, marking its first annual turnaround since listing; gross profit margin has increased by 5.5 to 6.5 percentage points compared to last year, while sales and marketing expenses have decreased by 5% to 6% simultaneously. This shift not only ends a three-year cumulative loss of 860 million yuan but also signifies that this company, with 20 years of deep involvement in hair medical services, is undergoing value reshaping through strategic restructuring and mode upgrades amid industry-wide adjustments.

Looking back at Yonghe Medical’s development trajectory, it was highly successful when it listed on the Hong Kong Stock Exchange in 2021, reaching a historical high of HKD 18.907 per share on the fifth trading day. However, due to intensified industry competition and rising marketing costs, the company fell into a three-year loss cycle, with a loss of 227 million yuan in 2024. One of the core reasons for the performance pressure is the long-standing operational model of high marketing investment—between 2021 and 2024, sales and marketing expenses totaled 3.786 billion yuan, accounting for over 49% of revenue during the same period, while R&D expenses accounted for less than 2%.

In response to industry pain points, Yonghe Medical launched a comprehensive strategic transformation starting in 2024, focusing on “efficiency, quality control, and cost reduction” to optimize operations. In the first half of 2025, the company achieved its first half-year profit turnaround, with a net profit of 27.785 million yuan, and gross profit margin increased from 58.8% to 63.9%. The annual forecast shows that the transformation effects are continuing to deepen: by focusing on detailed store network layout, directing core resources to high-potential outlets, and steadily improving single-store operational efficiency; through management model restructuring, optimizing organizational structure and human resources, and gradually realizing operating leverage.

On the business structure level, Yonghe Medical has established a dual-driven pattern of “mainly hair transplant, supplemented by medical maintenance and solidification.” In the first half of 2025, hair transplant revenue reached 662 million yuan, accounting for 76.8% of total revenue, serving 33,504 customers, a 14.5% increase year-on-year, with a significant growth in female clients, making “self-pleasure” consumption a new growth point; medical maintenance revenue was 187 million yuan, accounting for 21.8%, with repurchase rates rising to 29.9%, continuously increasing long-term user value. The synergy of these two businesses provides a solid foundation for the company’s stable profitability.

The performance reversal of Yonghe Medical essentially reflects the industry’s shift from “scale expansion” to “quality and efficiency” in hair medical services. As an industry leader, the company has proactively abandoned the previous “heavy marketing, light R&D” extensive model, shifting toward a high-quality development path of “technological empowerment, compliance first, and service enhancement,” setting a benchmark for industry transformation.

Yonghe Medical leverages technological innovation to promote full-chain digital intelligence upgrades. The company’s self-developed chain medical management system “He Fan” continues to optimize; after integrating AI knowledge base engines, it significantly improves business process recognition efficiency and per-capita productivity; launching the “one item, one code” material traceability system enables full-process tracking of hair transplant consumables and equipment, providing technical security for medical safety; promoting intelligent scalp recognition technology advances hair diagnosis and treatment toward precision medicine, receiving positive market feedback. The digital transformation not only enhances operational efficiency but also builds a differentiated competitive barrier.

Medical safety is the core bottom line of the hair medical industry. Yonghe Medical places compliance management as a strategic priority. In response to past safety issues at some stores, the company has established a full-process quality control system: new doctors must complete standardized training across 10 modules and 43 courses and pass assessments; in the hair transplant doctor grading and diagnosis system, 24 surgical quality scoring dimensions are set, with daily dynamic assessments and specialized training. By mid-2025, the company’s professional hair medical team has grown to 1,320 people, including 226 doctors and 1,008 nurses, with a steady increase in professional talent supply. Through strengthening compliance management and talent development, the company is gradually restoring brand reputation and consolidating its development foundation.

Yonghe Medical focuses on consumer experience, promoting service model iteration and innovation. In 2023, the company broke industry norms by replacing the follicle-based billing model with “doctor grading diagnosis + fixed price,” tackling issues like intraoperative price hikes and promoting transparent pricing; establishing dedicated female diagnosis and treatment departments and launching specialized services to meet the needs of segmented groups; optimizing postoperative management systems to provide full-cycle health tracking services, reducing postoperative disputes. Meanwhile, the company implemented refined marketing strategies, with sales and marketing expenses decreasing by 17% in the first half of 2025, and expense ratios dropping by 7%, improving conversion efficiency while reducing costs.

Yonghe Medical’s transformative breakthroughs are not only crucial for its own development but also have a profound impact on the entire hair medical industry. Currently, China has over 250 million people suffering from hair loss, with the market size continuously expanding, presenting huge industry potential. However, challenges such as uneven medical quality, weak compliance management, and lack of consumer trust remain. As an industry leader, Yonghe Medical’s mode innovation provides a replicable path for high-quality industry development.

On the technological front, Yonghe Medical increases R&D investment, collaborates with pharmaceutical companies, renowned medical universities, and top-tier hospitals to promote innovation in hair loss prevention and transplantation techniques, helping the industry break through technical bottlenecks. In terms of compliance, the company drives industry standardization through its own practices, improving quality control systems and talent cultivation, elevating overall industry compliance levels. In service, the company promotes a shift from “single treatment” to “full-cycle health management,” meeting diverse and personalized consumer needs and activating greater market potential.

It is worth noting that Yonghe Medical still faces challenges such as intensified industry competition and rebuilding consumer trust. However, its transition from three years of losses to annual profitability demonstrates strategic resilience and determination, laying a solid foundation for future growth. As the company continues to deepen digital intelligence transformation, strengthen compliance, and optimize service systems, it is expected to further consolidate its leading position and promote higher-quality development of the hair medical industry.

From performance struggles to a profit turning point, Yonghe Medical’s transformation journey proves that the core competitiveness of medical enterprises always lies in safety, compliance, and service. In the booming hair medical industry, Yonghe Medical has demonstrated through its practices that only by abandoning extensive growth models and focusing on core value enhancement can it secure a foothold in the market. Looking ahead, as the industry continues to develop toward standardization and quality, Yonghe Medical is poised to leverage technological innovation, compliance, and service upgrades to unlock further growth potential, provide consumers with better hair medical services, and lead the industry toward ecological upgrading, writing a new chapter of value for “the leading hair transplant stock.”